2010 roadshow csu (eua)

Clique para editar o estilo do título mestre

CSU – ROAD SHOW 2010

Clique para editar o estilo do título mestreDisclaimer

The material that follows is a presentation of general information about CSU’s antecedents on the presentation date. The information

contained in this presentation is summarized and not intended to be complete and, therefore, should not be understood as a

recommendation to potential investors. This presentation is confidential and shall not be disclosed to third parties. We do not make any

declarations, nor do we give any guarantee whatsoever regarding corrections, adjustments or the comprehensiveness of the information

presented here, which should not be used as a basis for investment decisions.

This presentation contains prospective statements and information according to Provision 27 of the Securities Act of 1933 and Provision

21E of the Securities Exchange Act of 1934. These prospective statements and information are merely projections and, therefore, do not

constitute any guarantee of future performance. We warn investors that these statements and information are and will be subject to

risks, uncertainties, and factors related to business operations and the business environment of CSU and its subsidiaries, and therefore,

2

risks, uncertainties, and factors related to business operations and the business environment of CSU and its subsidiaries, and therefore,

the companies’ real performance may differ significantly from the future results shown or implicit in the statements and information

contained in this presentation.

Although CSU believes that the expectations and premises contained in these prospective statements and information are reasonable

and based on data that is available to its management, CSU cannot guarantee any results or future events. CSU does is not required to

update any of these prospective statements and information.

In the United States, the offer or sale of securities that are not registered or exempt from registration pursuant to the Securities Act of

1933 is not permitted. Any offer of securities in the United States must be made by means of an offering memorandum, which can be

obtained from underwriters. The offering memorandum must contain or reference detailed information about CSU, its business and

financial results, in addition to its financial statements.

This presentation does not constitute an offer, invitation or request of subscription offering or purchase of any securities, nor does this

presentation, or any information contained in it, constitute the basis of a contract or any sort of commitment.

Clique para editar o estilo do título mestreCSU is a compelling investment opportunity in the paymentprocessing industry in Brazil

• Rapidly growing industry that benefits from increased usage of

financial services and growth in consumption

• Largest independent payment transaction processor in Brazil

• Acquirer processing is a substantial opportunity that will be open

to CSU in July 2010

3

to CSU in July 2010

• Our Contact Center is well-positioned for profitable growth

• Our strategy is supported by a state-of-the-art, Brazil-specific

operating platform

Clique para editar o estilo do título mestreThe Brazilian card market has experienced explosive growthin the last several years

336388

453514

565628

309369

444509

594

Number of Cards(million)

Number of Transactions(million/month)

CAGR 04-10E

15%CAGR 04-10E

19%

4

277336

2004 2005 2006 2007 2008 2009 2010E

Private Label Debit Credit

210263

309369

2004 2005 2006 2007 2008 2009 2010E

Private Label Debit Credit

Source: ABECS

Brazilian GDP CAGR from 2004 to 2009 was 3.6% and expected growth in 2010 is 5.5%

Clique para editar o estilo do título mestreGrowth in card issuance is underpinned by powerful trends

Share of Card Usage in Family Spending

Population by Consumption Level

(% of total)

• Card penetration in Brazil has increased from 8% of families’ spending in 1999 to 21% in 2008.

• Access to banking services has been fueled by the intense migration of individuals to consumption level (classes A, B and C).

• The increase in disposable income and accessibility to banking services constitutes a powerful lever for the future growth in card usage and transactions.

5

8%

21%

38%42%

1999 2008 2017E* 2008

Spending

Brazil USSource: ABECS; CPS/FGV from PNAD/IBGE data * - ABECS Projection

(% of total)

45,2%47,4%

50,1%

54,3%56,6%

59,6%

54,9%52,6%

50,1%

45,7%43,4%

40,4%

2003 2004 2005 2006 2007 2008

ABC DE






to CSU in July 2010

6

to CSU in July 2010



operating platform


Issuer(Banks and Retailers)

Brands (Visa, MasterCard, Amex)

Acquirer

The electronic payment value chain

Approval request

Approval request

Approval Approval

Cash Cash

7

Card holder Merchant

Card / Invoice

Commercial transaction

Electronic captures

transactionCash Cash


Issuer(CSU’s client)

CSU provides a full suite of services to card issuers in Brazil

• Authorization • MIS• Contact Center• Accounting• Processing• Fraud prevention• Operational Control


• Financial Information• Interchange• Processing of Electronic Transactions

Acquirer

CSU CardSystem

• Statement• Billing• Dispute Resolution• Customer Support

Card holder

CSU has a central role in the electronic

transactions business in Brazil.

Merchant

8

Clique para editar o estilo do título mestreCSU is a Full BPO that works with a one stop shop philosophy, offering turn-key solutions for all its costumers

Services Provided CSUIssuer

ProcessorMerchant Processor

Services performed on

behalf of

Vis-à-visCard Holder

Authorizations � �

Billing and Credit Cycle Management �

Collection � �

Contact Center � �

Disputes with Establishments � �

Issue and sent of cards � �

Loyalty Programs / CRM �

9

behalf of Issuer

Loyalty Programs / CRM �

Statement � �

Unblock Cards � �

Vis-à-visBrands

Financial Information � �

Interchange � � �

Processing � � �

Relationship with Brands �

Value-added services provided to the issuer

Accounting �

Back-Office �

Fraud prevention � � �

MIS - System Inteligence �

Operational Structure �

Operation Control and Management �

Clique para editar o estilo do título mestreCSU is the largest Independent payment processor in Brazil

44,8287,9

Processed by third

Number of Credit and Private Label Cards(2009)

Share of Outsourced Market(2009)

CSU;

Fidelity; 14.7%

Others; 2.0%

10

44,8287,9 by third

parties

Processed in-house

Total = 333 million* Total = 44.8 million

More than half of the total 333 million cards in the market are Private Label cards that can

potentially be converted to Visa/MasterCard brands and processed by CSU

Source: ABECS; *Does not include debit cards (233 million in 2009)

CSU; 54.3%

Orbital; 29.0%

Clique para editar o estilo do título mestreOur client base is well diversified and composed of financial institutions, retailers and non-traditional issuers

Banking Non-Banking

11

Clique para editar o estilo do título mestreOur Business Model: multiple revenue sources, high client loyalty and economies of scale

• We generate the same level of revenue per card than our US peers, in an environment of lowest transaction values

• First Data higher gross margins due to Vision Plus royalties, which represents most of its revenues

16 16 1719

Clients Turn Over(units)

• Low client turn-over

• High quality services at attractive prices

8.57.1

2.8

7.1

First Data Fidelity Tsys CSU

Revenue per Card in 2008 (US$)

61.8%23.5% 36.0%

14.5%

12

54.4 50.9

71.2

94.3

2006 2007 2008 2009

Gross Profit and Gross Margin(million)

37.7% 34.4% 36.0%

40.4%

Source: CSU and Annual Reports of Corporations 2008

2 1 1 0

2006 2007 2008 2009

Number of Clients Clients Turn Over

• High quality services at attractive prices

• High switching costs

• Multi-year contracts with high exit penalties

• High fixed processing costs gives CSU a cost advantage as market leader

• We share our cost advantage with our clients to increase customer loyalty and discourage competition






to CSU in July 2010

13

to CSU in July 2010



operating platform

Clique para editar o estilo do título mestreThe acquirer business is about to undergo significant change in Brazil, prompted by new regulation

• Two merchant acquirers dominate the market

• Exclusivity agreements with Visa and MasterCard limit competition

• Extraordinary profits produced

Current Situation

• Market open to competition

• Multiple acquirers

With New Regulation

Anti-trust authorities force end of exclusivity agreements after

July/10

771700

101215

Cielo Redecard Fidelity Tsys

2009 Net Income and Net Margins

(million US$/%)

14

• Extraordinary profits produced by acquirers New entrants in the Brazilian

acquirer market

Source: Annual Reports of Companies

42.4%45.4%

2.7%12.7%

58.1

5.37.7

0.81032 10 12

USA Brazil UK Mexico

Number of POS Transactions and Number of Acquirers

Number of Transactions (billions/2008)

Number of Acquirers

Source: BIS, Central Banks and ABECS

Clique para editar o estilo do título mestreCSU is ready to provide a full suite of processing services to merchant acquirers

Acquirer(CSU’s client)

New Services• Operation Management• Authorization• Statement • Network• Accounting• Processing• Back Office• MIS

Issuer(CSU’s client)


15

CSU CardSystem

Card holder Merchant

• Capture Network (POS)• Contact Center• Disputes

Resolutions• Statement






to CSU in July 2010

16

to CSU in July 2010



operating platform

Clique para editar o estilo do título mestreOur Contact Center has undergone a profound operating change and is positioned for profitable growth

• 9th largest Contact Center in Brazil

• Turnaround completed in February 2010

• 5 sites closed

• 1 site opened with lower operating

costs

Atento 18.2%

Contax 18.2%

Tivit 6.6%

Dedic GPTI 5.5%Teleperf. 3.2%

TMKT 2.9%

CSU 2.5%

Others 36.4%

Contact Center Companies – Market Share

17

costs

• Over 10 contracts terminated due to

poor financial performance

• Financial Results have improved and will

continue to do so as occupancy rises –

current focus on commercial development

Source: CSU

Source: callcenter.inf

0.9

(5.4)

2.4

11.6

2006 2007 2008 2009

Gross Profit and Gross Margin(R$/million)

0.5%

-3.2%

1.5%

7.2%CAGR 06-09

135%

Dedic GPTI 5.5%

Algar 3.4%AeC 3.0%TMKT 2.9%






to CSU in July 2010

18

to CSU in July 2010



operating platform

Clique para editar o estilo do título mestreOur Business is supported by a state-of-the-art, Brazil-specific operating platform

Belo Horizonte Back-Up site (São Paulo) Alphaview site

19

• Our version of the Vision Plus software was extensively customized for the Brazilian

market in the course of 20 years of development and is the only platform in Brazil fully

prepared to deal with multiple clients

• Highly experienced technical and development teams

• Alphaview Contact Center is a state-of-the-art facility with low operating costs

Clique para editar o estilo do título mestreOur strategy is geared to produce growth with high profitability

Continue to grow issuer processing

business

Build a acquirer processing business

20

Grow Contact Center business by

increasing occupancy with financial

discipline

Continue to invest in IT and software development


Financial Summary

21

Financial Summary


213.9253.7

Gross Revenue(R$/million)

Payment transaction services: strong operating performance

• Rapidly growing industry and new clients

supports company’s card base expansion

• Above-market growth in the last 4 years

12.1

16.620.1

24.3

2006 2007 2008 2009

Cards in CSU's Base(million)

CAGR 06-0926%

• Our full suite of financial services assures high

revenue per cardCAGR 06-09

17%

156.7 159.2

213.9

2006 2007 2008 2009

22

54.4 50.971.2

94.3

2006 2007 2008 2009


37.7%34.4% 36.0%

40.4%

revenue per card

• Continuous revenues growth also supported by

new products and low client turn over

• Costs advantage due to constant investments in

technology and large cards base

• Benefits of scale shared with customers to

increase loyalty and discourage competition

CAGR 06-0920%

17%


Gross Revenue (R$/million)

Contact Center: positioned for profitable growth

4,0553,322 3,596 3,229

228 1,474 629265

4,2834,796

4,2253,494

2006 2007 2008 2009

# of Workstations vs. Occupancy(units)

Occupied Available

• Turn around finalized in March-2010

• Number of workstations drop due to

termination of poor profitability contracts

• Revenues remained stable spite of lower

number of workstations197.6

174.3 177.2 172.7

2006 2007 2008 2009

(R$/million)

23

0.9

(5.4)

2.4

11.6

2006 2007 2008 2009


0.5%

-3.2%1.5%

7.2%

CAGR 06-09135%

• Management focused on growth with margin

discipline

• Profitability should increase as occupancy

recovers

number of workstations

• Revenues recover expected due to focus on

commercial development

Clique para editar o estilo do título mestreConstant investments in our software and substantial net debt improvement

19.3 15.0 25.9 21.1

29.2

24.4 13.9

21.0

4.3

11.4

43.7

28.9

46.9

25.4

40.6

2005 2006 2007 2008 2009

Capex(R$/million)

Software Others

• We generate enough cash

24

21.6

59.5

109.1

95.0

55.5

2005 2006 2007 2008 2009

Net Debt and Net Debt/EBITDA(R$/million)

0.4x

1.5x

3.2x

1.5x

0.7x

Software Othersto fund our Capex program

and reduce our net debt

Clique para editar o estilo do título mestreFinancial Summary – Consolidated

In millions (R$) 2006 2007 2008 2009

Net Revenues 317.9 318.6 363.7 394.8

Gross Profit

Gross Margin

46.3 45.5 73.7 106

14.6% 14.3% 20.3% 26.8%

Processing Services

Gross Margin

54.4 50.9 71.2 94.3

37.7% 34.4% 36,0% 40.4%

25

Gross Margin 37.7% 34.4% 36,0% 40.4%

Contact Center

Gross Margin

-8.1 -5.4 2.4 11.6

0.5% -3.2% 1.5% 7.2%

EBITDA 39.2 33.9 64.4 78.9

Net Income -16.9 -6.3 9.5 17.9

Net Debt 59.5 109.1 95.0 55.5

Capex 28.9 46.9 25.4 40.6

Clique para editar o estilo do título mestreHigh standards of corporate governance

Independent Audit Board Three members, one of which is appointed by the minority shareholders

Majority of independent board members

Novo Mercado (100% Tag Along)

100% common shares and 44% free-float

26

Three members, one of which is appointed by the minority shareholders

Internal Audit and Compliance Department

Stock option plan for executives

Solid investor relations culture Financial Investors in the shareholder base since 1997

No Poison Pills

26


Questions?

Décio Burd

Phone: (55 11) 3030-3821

E-mail: [email protected]

Site: www.csu.com.br/ri

2010 roadshow csu (eua)

Documents

Transcript of 2010 roadshow csu (eua)