Institutional Presentation. Fourth Quarter of 2010

Transcription

1 Institutional Presentation Fourth Quarter of 2010

2 Index Agenda 1. Investment Highlights 2. Strategic Positioning 3. GRV acquisition 4. Financial Highlights 5. Appendix 2

3 1. Investment Highlights 3

4 CETIP and GRV Highlights Business Model: Main Characteristics Strong operating leverage and cash flow generation Core mission Provide critical market infrastructure High growth and high margin profile Growth driver Credit Business Model Competition Strong barriers to entry Relatively high integrated model Client Same client base Resilient and predictable cash generative business with low execution risk Asset Classes Strong diversification Less diversified 4

5 Competition: Barriers to entry + = Dominant position Stable Prices Low prices compared to different alternatives Network effect (>10,000 clients) & System integration with customers Reputation ( Ativo Cetipado ) Strong relations with banks and assets managers Broad portfolio of services and asset classes served Network effect (> 5,000 clients) & System integration with customers Nationwide integration of DMV s Database Current system works well for all participants New Players / competitors Scale and Regulatory framework Nationwide system with zero fraud 5

6 Business Model (CETIP Stand Alone) Registration - Fixed income instruments Financial Institutions - CDs, IDs, others - Loans participants (CCBs) - Real estate financing (CCI, LCI, others) - Agribusiness financing (LCA, CCA, others) - Export financing - Others Corporations - Corporate Bonds, Debentures, Commercial Papers - OTC Derivatives 24%* Custody - Debentures - Quota of Funds - Other assets held in custody 22%* 14%* Transactions (custody services) - Management of Corporate Events Monthly Utilization - Connectivity Fee 25%* Others - CIP services 15%* (*) % of revenue (2010) 6

7 Securities Actions Depository OTC Derivatives Fixed Income Revenue Drivers (Gross Revenues) Registrar Services Processing Bps (usual); R$/unit (exception) Intra vs. extra group; tenors 2010 average margin on volume ($) 0.12 bps R$/contract (usual); bps (exception) Structured and non-structured 2010 average margin R$ / contract Depository & Repository Services R$/transfer (decreasing fees schedule) Connectivity Increasing fees schedule / customer Number of customers and level of activity 2010 average margin R$ 774 / customer/month Bps (usual); R$/unit (exception) Structured and non-structured 2010 average margin on volume ($) 0.05 bps R$ / unit 2010 average margin R$ 0.73 / transaction Liens R$/lien 2010 average margin R$ 22 / lien Auto Loans Contracts Clearing & Settlement Bps (cap & floor) R$/contract 2010 average margin R$ 20 / contract 7 7

8 Multiple Growth Drivers Credit Growth in Brazil Volume (R$ billion) % GDP 44% 47% 40% 26% 25% 22% 24% 25% 28% 31% 33% (Source: Brazilian Central Bank) 8

9 Underdeveloped capital markets OTC Derivatives Annual Volume of OTC Derivatives Trading per Country 1 Multiple of GDP 18,3 Growth Drivers Increase in usage of fixed rate debt Lengthening of tenors 13,6 13,2 Progressive regulatory environment 7,0 4,1 CAGR 63% 2,8 Increase in variety of underlying assets and sophistication of managers and investors United States 0,4 Japan Germany Italy Mexico Brazil 07 Brazil 12 Development of collaterization and tools for fair value calculation ¹ Volumes for other countries in 2007 Source: BIS, Global Insight, Oliver Wyman analysis 9

10 Turkey Brazil Australia Mexico South AFrica UK Japan United States Spain 07 Brazil 10 Brazil Turkey Mexico Chile South AFrica Japan Ireland Spain United States UK Underdeveloped capital markets Fixed Income Corporate Bonds¹ Debt outstanding as % of GDP (Sep/2010) Mortgage Loans Debt outstanding as % of GDP (2007) 44, , Developed markets average 64% 0,1 1,6 5,1 7,2 9,0 14,1 16,0 Developed markets average 18% Best emerging economies average 8% CAGR 21% 2 3, Best emerging economies average 12% ¹ Exclude bonds issued by financial institutions Source:Oliver Wyman, McKinsey, Brazilian Central Bank, International Monetary Fund, Bank for International Settlement 10

11 Underdeveloped capital markets Auto Finance New Car Sales¹ Million Car penetration Cars / population (%) 1,6 1,8 2,3 CAGR 16% 2,7 2,8 3, France United Kingdom EU United States Korea Russia Brazil % Vehicles Financed 2009 (Includes Leasing) Total Vehicles Financing ² ,6 CAGR 25% 139,1 157,1 179,4 59,1 77, % GDP 2.4% 3.0% 4.1% 4.8% 5.4% 5.8% Note: ¹New vehicles sales; ²Includes leasing Source: Fenabrave, BACEN, EIV, ANFAVEA, ANEF, CNW Marketing Research, CETIP, ACEA and UBS (not including motorcycles and light trucks) 11

12 Experience and Corporate Governance In 2009 CETIP committed to the highest corporate governance standards with the Novo Mercado listing CTIP3 CETIP is created as a non-forprofit organization Agreement with ANDIMA to operate SND Advent becomes a shareholder with 32% stake Novo Mercado Listing One class of shares with voting rights CETIP starts its operations Demutualization process, creating CETIP SA GRV Acquisition Lien and Contract 12

13 Experience and Corporate Governance Key Management Luiz Fernando Vendramini Fleury (CEO) Former CEO of IBI Bank / Redecard Corporate Governance Francisco Carlos Gomes (CFO) Former CFO of Bovespa, created CBLC Carlos Eduardo Ratto Pereira (Commercial & Product Development Director) Formerly at BankBoston, Bank of America, Banco Itaú and HSBC Bank Board Committees Self Regulation Board Shareholders Board of Directors Wagner Anacleto (COO) Formerly at BM&FBovespa and CBLC Pricing Committee Maurício Rebouças dos Santos (CIO) Formerly at Mercabolsa (Portugal), ANDIMA (Selic manager) Executive Bodies Self Regulation Officer CEO Fabricio Bossle (Credit Operations Director) Formerly at GRV Solutions and Delloitte Credit Operations CFO and Investor Relations Commercial & Product Development Chief Operations Officer Chief Technology Officer Carlos Menezes (Self regulation Director) Formerly at Unibanco and BPN Brasil Bank 13

14 Board of Directors Directors Title Date of appointment¹ Edgar da Silva Ramos Chairman May 8, 2009 Martín Emiliano Escobari Liftchtz Vice Chairman May 8, 2009 Roberto de Jesus Paris Director May 8, 2009 Marco Antonio Sudano Director May 8, 2009 Robert Taitt Slaymaker Director May 8, 2009 Pedro Paulo Mollo Neto Director May 8, 2009 Gustavo Summers Albuquerque Director October 5, 2009 Reinaldo Le Grazie Independent Director August 12, 2009 Reinaldo Pereira da Costa Rios Independent Director May 8, 2009 Flavio Benício Jansen Ferreira Independent Director May 8, 2009 ¹ 2012: term to end 14

15 2. Strategic Positioning 15

16 Strategy I. Continuous improvement on current core business III. Develop connected businesses Improve quality of services and systems Depository Introduction of new functionalities Resettable swaps and forwards Broaden asset classes served Bank Corporate Bonds (LF) Structured Notes (COE)* OTC Equity Derivatives Innovation: Introduction of new services MtM and Collateral Management Securities lending Renewal CIP contract and GRV acquisition IV. Enlarge and develop the customer base Bill the beneficial owners and increase customer base by the connected business V. Reinforce relationship with stakeholders I. Expand the core business to adjacent layers 1 Trading of fixed income securities Corporate bonds Bank corporate bonds (LF) Trading of cash instruments New exchange traded derivatives Clearing & Settlement platform for specific OTC Derivatives (*) Pending approval by the Brazilian Central Bank. Competitive prices, state of the art services, product innovation and flexibility VI. Rationalize costs and maximize operational leverage Efficient capital structure 16

17 2011 Strategic initiatives Integrate GRV Roll Out Collateral Management Roll Out Real Estate Solutions Develop right strategy for our new trading fixed income platform 17

18 Main Initiative (i) Collateral Management: Targeted benefits Neutral and independent collateral management agent Integration of CETIP, SELIC and Clearstream assets in one virtual collateral pool Enabler for new business opportunities (e.g. trade of forwards) Outsourcing of burdensome administrative tasks Daily mark-to-market of exposures and collateral Automatic allocation, substitution and optimisation of collateral Standardised and reliable collateral profiles Transparent and consolidated reporting (*) in a second phase. 18

19 Main Initiative (ii) Electronic Trading Platform: Fixed Income On November 11, CETIP and Deutsche Böerse AG signed a non-binding letter of intention (LOI) to possibly establish an electronic platform, initially focused on fixed income security trading. The scope of the possible strategic partnership will include joint promotion and commercialization of an electronic trading platform for market participants, and the parties will define the type of partnership to be established according to their needs, as well as the market understanding. The scope of the agreement has not yet been defined. 19

20 Main Initiative (iii) SNG Real Estate With the acquisition of GRV, we may jointly enhance and continue the project of developing a platform to standardize and automatize registration of the real estate financing contracts, integrating real estate notaries, lenders and consumers. SNG Real Estate will allow more agility and security in the process of real estate registration in Brazil, as well as better management of credit approval process. Seller Buyer Registration Bank Protocol Lien Notary 20

21 Main Initiative (iv) Letra Financeira Historical Growth Balance outstanding R$ billion 54,3 Main Characteristics 47,3 Private and Public Offering; 31, Remuneration: Fixed; DI; SELIC; IPCA; IGP-M; INPC; IGP-DI; Minimum term : 2 years; 1,0 2,3 4,0 5,9 8,5 12,4 18,3 20,3 21,1 Compulsory requirement: exempt Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-10 Feb-11 Mar-11 Approved by Brazilian Central Bank on February 2010 Public Placement regulation approved by Brazilian Securities and Exchange Commission CVM on December 2010 Effective introduction on January 17, 2011 Source: CETIP and Brazilian Central Bank (BACEN). 21

22 3. GRV acquisition 22

23 Investment Highlights Natural Extension of our Core Business Focus on registration/custody. Serves the same client base. Provides mission critical market infrastructure. High Growth, High Margins Preservation of high growth rates and high margin profile. Strong Barriers to Entry Nationwide network with zero fraud track record. Operates online with 27 DMVs and 8,000 clients. Attractive Deal Structure Highly accretive. Optimizes capital structure. CETIP will continue committed to the highest Corporate Governance standards, being listed at the Novo Mercado 23

24 GRV deal Highlights Description Price GRV was valued at R$2.0 billion R$1.0 billion in cash at closing R$445 million to be paid in CETIP shares R$555 million in 3 equal installments Payment Conditions The equal installments will be paid: R$185 million on 30/Dec/2011, R$185 million on 30/Dec/2012 and R$185 million on 31/May/2013. Values are adjusted by IGP-M+2% p.a. Debentures Issue Amount: R$900 million Cost: DI + 2.0% p.a. Total Tenure: 7 years ¹ Underwriters: Bradesco, Itaú, Santander, Votorantim Source: GRV, CETIP Note: ¹ Two years grace on amortization. First 12 installments equivalent to 0.80% of issue amount; 47 amortization installments of 1.88% of issue amount and the last installment % of issue amount 24

25 Principal Debt Inssuance Debentures DI +2% 7 years R$900 million Installments IGPM+2% R$555 million 3 equal installments ~ R$16 mm ~R$18 mm (2.04%) R$ 185 mm R$ 185 mm R$ 185 mm ~R$7 mm 1.88% Grace Period 0.80% 0 R$ 900 mm /31/ /01/ /01/ /31/ /31/ /01/1900 Extraordinary Amortization 2/3 = 0.50% 1/3 = 0.75% 25

26 4. Financial Highlights 26

27 (% of 2010 Revenues) Time Deposits Fixed Income Instruments Interbank Deposits Other Corporate Bonds & Securitization Instruments Quotas of funds OTC Derivatives Fund Transfer Auto Loan Sw aps Forw ards Options TED s Liens Contracts 100% 53% 47% CETIP + GRV CETIP Stand Alone GRV Stand Alone Registrar Services 4,1% 8,8% 1,5% 1,5% 0,3% 3,3% 0,6% 1,4% 0,0% 48,6% 29,9% 59.7% 59,7% 24.2% 24,2% 100,0% 100.0% Depository & Repository Services 25,5% 0,2% 17,7% 41,6% 10,4% 3,9% 0,6% 0,1% 0,0% 0,0% 0,0% 19.0% 19,0% 35.8% 35,8% 0,0% 0.0% Trading 92,3% 0,0% 0,0% 7,7% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 2.8% 2,8% 5,2% 5.2% 0,0% 0.0% Clearing &Settlement 0,0% 0,0% 6,4% 93,6% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0.0% 0,0% 0,0% 0.0% 0,0% 0.0% Processing 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 100,0% 0,0% 0,0% 4.5% 4,5% 8,4% 8.4% 0,0% 0.0% Other 0,0% 0,0% ##### 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0.5% 0,5% 0,9% 0.9% 0,0% 0.0% Connectivity Fee 21,1% 2,5% 35,3% 6,3% 31,9% 2,3% 0,6% 0,1% 0,0% 0,0% 0,0% 13.5% 13,5% 25.5% 25,5% 0,0% 0.0% 12.7% 5.6% 9.5% 9.9% 6.5% 3.0% 0.6% 0.8% 4.5% 29.0% 17.9% Total 12,7% 5,6% 9,5% 9,9% 6,5% 3,0% 0,6% 0,8% 4,5% 29,0% 17,9% 100.0% 100,0% 100.0% 100,0% 100,0% 100.0% CETIP Market Share 100% 100% 100% 97% 100% 73% 100% 46% 54% 92% 100% 67% 1 Derivatives market share is 75% (weighted average based on nominal values Source: CETIP, GRV and BM&FBovespa 2 - Other includes: fees for corrections, distribution, info services and GRV Patio 3- Depository comprises Custody and Transactions revenues. 27

28 CETIP + GRV (Combined Pro-forma) Net Revenues R$ mm Adjusted Op. Expenses (ex-d&a) R$ mm & % of Net Revenues 49.6% % 35.0% 33.3% 32.6% 46.1% % % Q09 4Q Q09 4Q

29 CETIP + GRV (Combined Pro-forma) Adjusted EBITDA (R$ mm) & Margin (%) Adjusted Net Income (Cash Earnings) R$ mm 64.9% 64.9% 66.7% 67.4% 51.3% % % % Q09 4Q Q09 4Q Note: For the adjusted net income the presented financial information is unaudited pro-forma and was based on reasonable premises. For 2009 comparisons, CETIP and GRV results were merely combined for better comparison with

30 Revenue Breakdown (%) 5% 5% 5% 5% 2% 4% 15% 14% 35% 36% 25% 28% 7% 7% 9% 8% 8% 8% 8% 7% 15% 14% 16% 14% 12% 12% 12% 12% Selling Information GRV Contracts SNG Vehicle (Lien) Other Revenues Transactions Monthly Utilization Custody Registration 12% 11% 14% 13% 4Q09 4Q

31 Adjusted Operating Expenses Breakdown CETIP GRV CETIP+GRV General 13% Other 2% General 10% Other 2% General 12% Other 1% Outsourced Services 17% Personnel 68% Outsourced Services 39% Personnel 49% Outsourced Services 28% Personnel 59% R$93.0 mm R$88.6 mm R$181.6 mm Note: Combined pro-forma for CETIP and GRV 31

32 EBITDA D&A (Acquisition Effect) FR (Acquisition Effect) Financial Result D&A Equity in the result of associate Income Tax & Social Contrib. Income Tax (Acquisition Effect) NET INCOME Non recurring expenses Stock Option Intangible goodwill amortization Goodwill amortization: tax credit Goodwill amortization: Acquisition Effect CASH EARNINGS CETIP + GRV (Combined Pro-forma) Reconciliation of Adjusted Net Income (Cash Earnings) R$ mm Cash Earnings per share = R$1.02 Adjusted Net Margin = 45.5% (8.9) (52.4) 21.5 (190.9) 0.6 (101.8)

33 Key Revenue Lines - CETIP Registration (R$ mm) Custody (R$ mm) Monthly Utilization (R$ mm) Transactions (R$ mm)

34 Key Revenue Lines - GRV SNG SNG Veículo Vehicles (R$ (R$ mm) mm) SNG Veículo (R$ mm) GRV Contracts (R$ mm) % 12.7% % Note: Contract Additions began in September

35 CAPEX (R$ million) & Net Revenues (%) CETIP GRV 3.7% 3.1% 4.5% 5.4% Q09 4Q

36 Adjusted Cash Flow R$ million Adjusted CF - Quarter 3Q10 4Q % (997.6) /30/2010 Operating Financing 12/30/2010 Investment 36

37 Shareholder Structure Total: 249,775,847 Total: 249,809,697 (December 31 st, 2010) (March 21 st, 2011) Advent 16% Advent 10% FEMCO 10% Free Float 48% ex-shareholders GRV 9% FEMCO 12% Bradesco 4% Santander 1% Board 1% Itaú Unibanco 9% Free Float 60% Itaú Unibanco 6% Bradesco 4% Santander 1% Board 1% Former shareholders GRV 8% 37

38 30-Oct 16-Nov 1-Dec 15-Dec 4-Jan 18-Jan 2-Feb 18-Feb 4-Mar 18-Mar 1-Apr 16-Apr 3-May 17-May 31-May 15-Jun 29-Jun 14-Jul 28-Jul 11-Aug 25-Aug 9-Sep 23-Sep 7-Oct 22-Oct 8-Nov 23-Nov 7-Dec 21-Dec 6-Jan 20-Jan 4-Feb 18-Feb 4-Mar 22-Mar Price (R$) Volume (R$ mm) Price vs. Volume CTIP3 (R$) vs. Volume (R$ mm): (10/30/09 03/31/11) Volume-R$mm Price Source: Bloomberg 38

39 5. Appendix 39

40 Registration Revenue R$ million (CETIP Stand Alone) +47.5% % 5.3 Others OTC Derivatives + 8.7% Fixed Income 4Q09 1Q10 2Q10 3Q10 4Q

41 Custody Revenue R$ million (CETIP Stand Alone) +64.0% % % Q09 1Q10 2Q10 3Q10 4Q

42 Revenues and Volumes of Transactions and monthly utilization (CETIP Stand Alone) Transactions Quantity (million) Transactions Revenues (R$ million) +44.3% +22.6% +27.2% % +24.0% +36.0% Q09 1Q10 2Q10 3Q10 4Q Q09 1Q10 2Q10 3Q10 4Q Monthly Utilization Number of Participants +12.8% +3.3% +13.4% 8,601 8,827 9,118 9,395 9,705 8,163 9,261 Monthly Utilization Revenues (R$ million) +48.8% +26.9% % Q09 1Q10 2Q10 3Q10 4Q Q09 1Q10 2Q10 3Q10 4Q

43 DIs and CDBs - Volumes and Revenues (CETIP Stand Alone) DI Volume (R$ billion) +6.7% DI Revenue (R$ million) +43.3% +92.8% % , % -9.1% ,9 11,4 7,7 7, Q09 1Q10 2Q10 3Q10 4Q Q09 1Q10 2Q10 3Q10 4Q CDB Volume (R$ billion) +76.4% % 1,814 CDB Revenue (R$ million) +66.0% +31.9% 14, % 1, % 10, ,9 2,7 3,2 3,3 4,8 4Q09 1Q10 2Q10 3Q10 4Q Q09 1Q10 2Q10 3Q10 4Q

44 Swaps - Volume and Revenue (CETIP Stand Alone) SWAPS Quantity ( 000) SWAPS Revenue (R$ million) -30.9% % -43.2% +2.0% 12,2 12,4 +1.4% % ,2 3,2 3,8 3,1 2,4 4Q09 1Q10 2Q10 3Q10 4Q Q09 1Q10 2Q10 3Q10 4Q

45 Debentures and Investment fund-quota Volumes and Revenues (CETIP Stand Alone) Debentures Average Volume (R$ billion) Debentures Revenue (R$ million) +19.7% +4.7% % % +29.1% +29.7% 45,3 34,9 9,0 9,7 10,4 11,0 14,2 4Q09 1Q10 2Q10 3Q10 4Q Investment fund-quota Average Volume (R$ billion) 4Q09 1Q10 2Q10 3Q10 4Q Investment fund-quota Revenue (R$ million) +27.7% +7.4% +35.2% +51.2% +73.1% 11, % 6,6 2,3 2,5 2,6 2,8 3,5 4Q09 1Q10 2Q10 3Q10 4Q Q09 1Q10 2Q10 3Q10 4Q

46 CIP Revenue and Volume (CETIP Stand Alone) Processed EFTs CIP Revenue (R$ million) +33.5% % % 86,3 67,4 +8.7% +2.1% 25, % 27,0 18,4 18,3 20,0 23,3 24,6 6,6 6,6 6,2 7,0 7,2 4Q09 1Q10 2Q10 3Q10 4Q Q09 1Q10 2Q10 3Q10 4Q Processed EFTs (Quantity MM) Processed EFTs/day (Quantity - thousand) Note: Revenue refers only to services of SITRAF Transfer Funds System. 46

47 GRV Market Information ( million) Volume Changes (%) Market Information / /2008 Number of Vehicles Sold % -1.2% New % -0.1% Used % -1.7% Number of Vehicles Financed % -14.4% New % -6.3% Used % -20.6% - Contracts Additions (Units) % Financed / Sold 47.6% 48.2% 55.6% - - Source: GRV Solutions and Fenabrave. Contract additions began in September,

48 Investor Relations Legal Disclaimer The forward-looking statements contained in this document relating to business prospects, projections of operating and financial results, and those related to the growth prospects of CETIP are merely estimates and as such are based exclusively on the Management s expectations about the future of the business. These forward-looking statements depend substantially on the approvals and licenses necessary for the projects, market conditions, and performance of the Brazilian economy, the sector and international markets and hence are subject to change without prior notice. This performance report includes accounting data and nonaccounting data such as operating, pro forma financial data and projections based on the Management s expectations. Non-accounting data has not been reviewed by the Company s independent auditors. 48