2006 investor’s meeting presentation

34
1 Meeting with Investors Meeting with Investors December December 2006 2006

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Page 1: 2006 investor’s meeting presentation

1

Meeting with InvestorsMeeting with Investors

DecemberDecember 20062006

Page 2: 2006 investor’s meeting presentation

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Disclaimer

This presentation may include forward-looking statements of future events or results according to the regulations of the Brazilian and International securities and exchange commissions. These statements are based on certain assumptions and analyses by the Company that reflect its experience, the economic environment, future market conditions and expected events by the company, many of which are beyond the control of the Company. Important factors that may lead to significant differences between the actual results and the statements of expectations about future events or results include the company’s business strategy, Brazilian and International economic conditions, technology, financial strategy, financial market conditions, uncertainty regarding the results of its future operations, plans, objectives, expectations and intentions, among others. Considering these factors, the actual results of the company may be significantly different from those shown or implicit in the statement of expectations about future events or results.

The information and opinions contained in this presentation should not be understood as a recommendation to potential investors and no investment decision is to be based on the veracity, current events or completeness of this information or these opinions. No advisors to the company or parties related to them or their representatives should have any responsibility for any losses that may result from the use or contents of this presentation.

Page 3: 2006 investor’s meeting presentation

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Company Overview

Company Profile

Page 4: 2006 investor’s meeting presentation

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Leading Technology Services Provider In Brazil

CardSystem33%

TeleSystem45%

Credit&Risk15%

MarketSystem7%

Revenue in 2005**

R$ 357 mm

CardSystem67%

TeleSystem18%

Credit&Risk4%

MarketSystem11%

Gross Profit in 2005**

R$ 71 mm

** Reflects MarketSystem's Pro-forma results

The largest independent administrator of credit cards

11.3 million cards*

117 million processed transactions

44% of market share

Largest independent call center in Brazil 2,837 Workstations

Leading collection services provider 594 Collection Workstation

Leading loyalty programsmanagement

4.0 million managed accounts

* Does not include the cards from Caixa Econômica Federal Contract

Page 5: 2006 investor’s meeting presentation

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CSU Is The Backbone Of The Credit Card Business Of Its Clients

� Authorization

� Card Issuance� Billing� Customer Support/ Call Center

� Credit analysis and processing

� Collection� Processing� Operational Control

� Data exchange� Fraud Prevention

� Purchase� Withdrawal

CREDIT CARD BRAND

ISSUERSACQUIRER – NETWORK

COMMERCIAL ESTABLISHMENT

Other

CARDHOLDER

CSU Provides its Clients a Fully Outsourced Solution to Card Administration

Page 6: 2006 investor’s meeting presentation

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Our Excellence In Credit Card Administration Fostered Other Leading Business Units

System development/ Implementation

Card Issuance

Transaction Process

Full Service

Credit and

Collection analysis

CustomerSupport

Loyalty Programs

� New business opportunities/ cross-selling

� Lower costs from scale gains

� High switching cost

Fraud Prevention

Operational Control

Diversification brought us:

Interchange

Page 7: 2006 investor’s meeting presentation

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Timeline

1992 1994 1996 1997 1999 2000 2001 2004 2005 2006

Implementation of card

embossing, credit analysis, product safety and collection procedures

IPO

Establishment ofCardSystem Ltda. -first independent credit cards

administrator in Brazil

CSU is the first company to work with the 3 major credit card labels

CardSystembecomes a Corporation

Change of name to CSUCardSystem

1998

CSU develops the electronic Voucher using the Smartcard

technology

3 new Business Units are created: CSUTeleSystem, CSU Credit&Risk and

MarketSystem Ltda.

CSU receives the ISO 9001 Certification

CSU expands and starts operation in 7 sites located in important cities

MarketSystem Ltda. is incorporated to CSU, becoming a new business unit: CSU MarketSystem

... ... ...

CardSystem becomes the largest

independent credit cards administrator in

Latin America

Page 8: 2006 investor’s meeting presentation

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Initial Public Offering

Offering Structure

� Registered in Brazil and United States, with international sales efforts under Reg S and rule

144A

� Listed in Bovespa´s Novo Mercado (Symbol CARD3)

Offering Size

� Total offering’s volume reached R$ 341 million with the issuance of 18.9 million common shares

(price of R$ 18.00 per share)

� Primary offering amounted to R$ 100 million (5.5 million per share)

� Secondary offering amounted to R$ 241 million (13.3 million per share)

Demand

� The book of orders exceeded the offer by 8 times

� Demand split in foreign (65%) and local investors (35%)

� About 70 investors were contacted during international road shows (USA and Europe)

Free Float39%

Controlling

Group61%

Shareholder CompositionShareholder Composition

Page 9: 2006 investor’s meeting presentation

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Company Overview

Our Businesses

Page 10: 2006 investor’s meeting presentation

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Attractive Industry Fundamentals ToCredit Cards…

23.628.0

35.341.5

47.552.5

68.0

1999 2000 2001 2002 2003 2004 2005

CAGR

18%

CAGR

18%

Number of Credit Cards - BrazilNumber of Credit Cards - Brazil

Million

Most Used Credit Instruments in BrazilMost Used Credit Instruments in Brazil

75.0

Sept/06

3%

3%

8%

15%

15%

16%

21%

37%

59%

Payroll Deductible

Real State Loans

Personal Loans

Overdraft Facility

C.C. Payment in Equal

Installments

C.C. Minimum Payment

Invoice

C.C. Interest Bearing

Purchases

Payment Book

C.C Interest Free

Purchases

Source: Abecs and O Globo

Credit Cards per ‘000 Inhabitants*Credit Cards per ‘000 Inhabitants*

1,990Japan

1,257USA

1,200United Kingdom

835Singapore

264Brazil

In 2003

Credit

Page 11: 2006 investor’s meeting presentation

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Call Center Services Revenue - GlobalCall Center Services Revenue - Global

… And the Call Center Industry Showing Consistent Growth Potential

Call Center Services Revenue - BrazilCall Center Services Revenue - Brazil

13% 13% 13% 12% 10%Annual growth

51.458.1

65.774.3

83.592.0

2005 2006 2007 2008 2009 2010

4.04.6

5.36.1

6.97.7

2005 2006 2007 2008 2009 2010

In US$ bi

15% 15% 15% 13% 12%Annual growth

In R$ million

Fonte: IDC

Page 12: 2006 investor’s meeting presentation

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Leading Competitive Position AmongIndependent Players

2005 data

Market Share: Credit Card Processing Segment *

Market Share: Credit Card Processing Segment *

Market Share:Largest Call Center Operators

Market Share:Largest Call Center Operators

Independents

* Notes:- CSU’s Market Share considers credit cards from Caixa - Orbitall: 100% owned by Itaú- Fidelity (51%): 49% owned by ABN Real and Bradesco

16%

and

44%

Sources: Cardnews and IDC

In Outsourcing

Orbitall

27%

Fidelity

20%

EDS

9%

Page 13: 2006 investor’s meeting presentation

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Caixa Econômica Federal Project

� The largest contract in industry (3 million credit cards)

� Strong growth potential

� Beginning of monthly revenue starting on Feb/07

� Initial period of rendering services does not change (2 years)

Page 14: 2006 investor’s meeting presentation

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Recent Achievements and Products Launched

• Carrefour / Visa

• Panamericano

• HSBC / Losango

• Terra

• Bradesco / Finasa

• Banco IBI

• Nossa Caixa

• Telemar

CardSystem TeleSystem and Credit&Risk

MarketSystem

Page 15: 2006 investor’s meeting presentation

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CSU – Strong and Diversified Clients Portfolio

Page 16: 2006 investor’s meeting presentation

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Financial Information

Operational and Financial Information

Page 17: 2006 investor’s meeting presentation

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Strong Growth Track Record

41,627

23,16225,347

2003 2004 2005

5,238 5,7877,421

2,1492,290

2,638

2003 2004 2005

Credit Cards Private Label

3,308

991

2,096

2003 2004 2005

Cards base*

(‘000)

11%

7,3878,077

10,059

Workstations* Billing contacts**

(‘000)

CAGR 17% CAGR 83% CAGR 28%

19%

* Monthly average ** Active and receptive* Annual average

Page 18: 2006 investor’s meeting presentation

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4,8%

Operational Performance by Business Units

CardSystem - CardsCardSystem - Cards

20.8%*4,8%-4.0%

TeleSystem and Credit&Risk –Workstations Under Operation

TeleSystem and Credit&Risk –Workstations Under Operation

Average of the periodIn thousand

MarketSystem – Loyalty AccountsMarketSystem – Loyalty Accounts

4,8%60.8%

* Adjusted by the credit cards data base’s cleaning

10,067

11,349

9M05 9M06

3,575 3,431

9M05 9M06

2,505

4,029

9M05 (Pro Forma) 9M06

Page 19: 2006 investor’s meeting presentation

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Consolidated Financial Performance

Net RevenuesNet Revenues Gross Profit Gross Profit

30.637.0

42.3

55.3

63.7

2001 2002 2003 2004 2005

60.3

46.3

34.2

22.917.0

2001 2002 2003 2004 2005

96.7

134.4

177.9

229.4

313.6

2001 2002 2003 2004 2005

EBITDAEBITDA

R$ MM

R$ MM

6.6 6.5

10.2

12.9

16.1

2001 2002 2003 2004 2005

Net ProfitNet Profit

R$ MM

R$ MM

CAGR 37%

CAGR 34%CAGR 20%

CAGR 25%

Page 20: 2006 investor’s meeting presentation

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Business Units’ Gross Revenue Evolution

MarketSystem*MarketSystem*

22.6

14.9

2003 2004 2005

23.7

R$ MM

* Pro-forma

CAGR 26%

91.2

118.0

97.6

2003 2004 2005

CardSystemCardSystem

R$MMCAGR 14%

TeleSystemTeleSystem

66.4

107.3

163.3

2003 2004 2005

R$MMCAGR 57%

Credit & RiskCredit & Risk

32.3

41.1

51.8

2003 2004 2005

R$MMCAGR 27%

Page 21: 2006 investor’s meeting presentation

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227.4253.5

9M05 9M06

42.5 45.0

9M05 9M06*

4,8%

Consolidated Financial Performance

Net RevenueNet Revenue Gross ProfitGross Profit

11.5%

43.9

35.0

9M05 9M06

10.1

-3.3

9M05 9M06*

4,8%-20.3%

EBITDAEBITDA Net ProfitNet Profit

4,8%6.0%R$ MM

R$ MM R$ MM

R$ MM

* Adjusted by the IPO’s expenses

Page 22: 2006 investor’s meeting presentation

229M05 9M06

** MarketSystem 2005 pro-forma

Financial Performance of the Business Units

CardSystemCardSystem TeleSystemTeleSystem

R$ MM R$ MM

Credit & RiskCredit & Risk MarketSystem**MarketSystem**

R$ MM R$ MM

* Adjusted by the IPO’s expenses

37.3

0.81.7(2.0)

30.0

(3.7)

Gross Revenue Gross Profit EBITDA*

11.9 3.4

122.1

11.2

122.0

(2.7)

Gross Revenue Gross Profit EBITDA*

17.0

2.9

25.7

7.25.25.6

Gross Revenue Gross Profit EBITDA*

84.0

29.834.1 38.431.0

95.3

Gross Revenue Gross Profit EBITDA*

Page 23: 2006 investor’s meeting presentation

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Gross Debt Gross Debt / EBITDA

Cash and Debt Position

R$ MMR$ MM

* Bank debt + leasing

2005

103.2

1.7x

93.0

9M06

0.7

20.5

42.5

2003 2004 2005 Sept./06

1.4

1.5x

Cash at the end of the periodCash at the end of the period Gross Debt* / EBITDA last 12 monthsGross Debt* / EBITDA last 12 months

Page 24: 2006 investor’s meeting presentation

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Capex and Dividends

Capital ExpendituresCapital Expenditures Dividend Payout*Dividend Payout*

R$ MM R$ MM

43.6

15.610.912.59.8

2001 2002 2003 2004 2005

% Net Profit

* Includes Interest on Shareholder´s Equity

9M06

20.7

11.4

4.0

11.8

3.2

5.6

2001 2002 2003 2004 2005

85% 49% 116% 31% 71%

Page 25: 2006 investor’s meeting presentation

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R$ MM

200520042003

4046

4856

4957

64

7668

8393 92 90 90

1T 2T 3T 4T 1T 2T 3T 4T 1T 2T 3T 4T 1T 2T

Gross Revenue Evolution

2006

93

3T

2002

2934

38 39

1T 2T 3T 4T

Page 26: 2006 investor’s meeting presentation

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Financial Information

Value Creation Agenda

Page 27: 2006 investor’s meeting presentation

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Strategy

Implementation Strategy

OBJECTIVE

Focus on our

Business Model:- Independence

- Diversification

- Technology

- Specialization

Develop New

Business

Opportunities

Efficient

Management

of our Operations

Expand our

activities

rapidly

MAINTAIN AND EXPAND OUR LEADERSHIP AS AN INDEPENDENT COMPANY IN THE BRAZILIAN

MARKET OF CREDIT CARDS ADMINISTRATION, CALL CENTER, CREDIT PROCESSING,

COLLECTION AND LOYALTY PROGRAM SERVICES

Page 28: 2006 investor’s meeting presentation

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Growth Opportunities

OrganicMarket Growth

Cross-SellingOpportunities

Entrance inNew Markets

AcquiringNew Clients& Outsourcing

Page 29: 2006 investor’s meeting presentation

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� CardSystem• Implementation of Caixa Project– Feb/07• Focus on Co-Branded Private Label Cards• Leverage in business based on our competitive advantages

� TeleSystem and Credit&Risk• New Management in charge of the Units• Strengthening of structure, commercial processes and financial management• Strong emphasis on commercial efforts

� MarketSystem• Focus on gaining clients of the financial, telecommunication and retail industries

Main Strategic Actions - 2007

� CSU Corporate• Complete the commercial achievements and strategies of 2005 and 2006 • Expansion of volumes – growth of the businesses already conquered• Enlargement of profitability by cost management and scale gains• Entrance in new business segments and new markets

Page 30: 2006 investor’s meeting presentation

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High Level of Corporate Governance

100% common shares

Bovespa´s Novo Mercado (100% Tag Along)

Free float of 39% voting shares

Active Board of Directors, with diversified and complementary experiences and presence in the business management:

� Independent members: Mailson F. da Nóbrega e Rubens Barbosa

Solid relationship track record with minority shareholders� Private Equity funds investment in 1997

Page 31: 2006 investor’s meeting presentation

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High Level of Corporate Governance

Dedicated Investor Relations Team

Development of a Stock Option program for the executives� Alignment of interests between administration and shareholders

Controlling Committee held by an Independent Member of the Board of Directors

Code of Ethics / Disclosure and Stock Trading Policies

Page 32: 2006 investor’s meeting presentation

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Social Responsibility

� 10,051 employees (Sep/06)

� CSU Institute

� CSU University

� Incentive to social and educative programs along with Abrinq and other Institutions

� Encouragement to voluntary work

� First Trainee Program launched in 2006/2007

Page 33: 2006 investor’s meeting presentation

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Conclusion: Attractive Investment Opportunity

Attractive Industry Growth Fundamentals

Market Leadership

Superior Corporate Governance

Strong Growth Prospects

Premium Diverse Client Portfolio with Excellent

Relationship Track Record

Impressive Growth In All Financial Metrics

Page 34: 2006 investor’s meeting presentation

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www.www.csucsu.com..com.brbr