NET INCOME REACHES R$1.0 BILLION AND CIELO BRASIL FINANCIAL VOLUME EX AGRO GROWS 4.3% IN 1Q17

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1 NET INCOME REACHES R$1.0 BILLION AND CIELO BRASIL FINANCIAL VOLUME EX AGRO GROWS 4.3% IN 1Q17 Barueri, May 2, 2017 Cielo S.A. (BM&FBOVESPA: CIEL3 / OTCQX: CIOXY) announces today its results for the first quarter of The Company s consolidated financial statements are presented in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and in accordance with the accounting practices adopted in Brazil. CIELO CONSOLIDATED 1Q17 HIGHLIGHTS Financial volume of transactions at Cielo Brasil, excluding the Agro product, totaled R$142.3 billion, up 4.3% year-on-year and down 8.6% compared to 4Q16, in line with the Company s expectation; Net operating revenue totaled R$2.8 billion, down 8.1% year-on-year and 10.2% compared to 4Q16, negatively influenced by macroeconomic and market scenarios; EBITDA of R$1.3 billion, down 6.1% year-on-year and 5.3% lower than 4Q16, with EBITDA margin of 47.2%, up 1.0 percentage point compared to 1Q16 and 2.5 percentage points compared to 4Q16; Cielo s Net Income totaled R$1,001.8 million, up 0.6% year-on-year and down 1.0% quarter-on-quarter; Cielo s Adjusted Net Income totaled R$1,069.2 million, up 0.6% year-on-year and down 0.9% quarter-onquarter; Main financial indicators (R$ millions) 1Q17 1Q16 Var. % 4Q16 Var. % Net operating revenue 2, , % 3, % EBITDA 1, , % 1, % % EBITDA Margin 47.2% 46.2% 1.0pp 44.7% 2.5pp Net Product of Purchase of Receivables % % % Purchased volume over Total Credit Volume 20.3% 20.1% 0.2pp 19.4% 0.9pp Net income as reported 1, % 1, % % Net margin as reported 35.8% 32.7% 3.1pp 32.4% 3.3pp Adjusted net income (cash earnings) 1, , % 1, % % Adjusted net margin 38.2% 34.9% 3.3pp 34.6% 3.6pp Main operational indicators 1Q17 1Q16 Var. % 4Q16 Var. % Financial credit volume (R$ millions) 79, , % 87, % Financial debit excluding Agro volume (R$ millions) 62, , % 68, % Total financial volume excluding Agro (R$ millions) 142, , % 155, % POS total ('000) 1,844 2, % 1, % 1

2 CIELO CONSOLIDATED ============================================================================= The first quarter of 2017 did not show variations in the business trend, which is still under pressure of a challenging macroeconomic scenario, requiring ongoing focus on the discipline of our operations. Our results are presented below: Income Statement Cielo Consolidated R$ millions 1Q17 1Q16 Var. % 4Q16 Var. % Gross operating revenue 3, , % 3, % Taxes on services (284.9) (301.9) -5.6% (320.9) -11.2% Net operating revenue 2, , % 3, % Cost of service rendered (1,144.4) (1,233.9) -7.3% (1,292.5) -11.5% Depreciation and amortization (223.2) (229.0) -2.6% (220.2) 1.4% Gross income 1, , % 1, % Operating expenses (339.2) (408.4) -16.9% (440.6) -23.0% Depreciation and amortization (17.4) (18.6) -6.4% (18.7) -7.2% Equity Interest % % Total cost + expenses (1,724.2) (1,889.8) -8.8% (1,972.0) -12.6% Operating income 1, , % 1, % EBITDA 1, , % 1, % EBITDA Margin 47.2% 46.2% 1.0pp 44.7% 2.5pp Financial income % % Income before income tax and social contribution 1, , % 1, % Income tax and social contribution (439.7) (463.0) -5.0% (480.5) -8.5% Net income 1, , % 1, % Net margin 37.3% 34.1% 3.3pp 34.1% 3.2pp Atributted to ow ner s of the Company 1, % 1, % Atributted to non controlling interest % % Net Revenue 1Q17 X 1Q16 Cielo s consolidated net revenue went down R$246.6 million or 8.1% to R$2,801.3 million in 1Q17 compared to R$3,047.9 million in 1Q16. Lower net revenues from capture, transmission, processing and financial settlement of credit and debit transactions is mainly related to the average price drop, mostly due to higher percentage from debit card product, concentration of clients in Large Accounts segment and competitive environment, as well as lower revenues from rental of POS equipment due to decreased installed POS base and lower revenue from the US subsidiary Merchant E-Solutions, chiefly due to the effec of average US dollar depreciation in the quarter. 2

3 1Q17 X 4Q16 Cielo s consolidated net revenue decreased R$319.2 million or 10.2% to R$2,801.3 million in 1Q17, compared to R$3,120.5 million in 4Q16. Such decrease is substantially related to the seasonality of business of the Company and its subsidiaries (including Cateno) in 4Q16, especially due to year-end festivities. In addition, revenues from capture, transmission, processing, financial settlement of credit and debit card transactions and rental revenue decreased, mostly related to lower prices and decreased installed POS base. Cost of Services Provided 1Q17 X 1Q16 The cost of services provided decreased R$95.3 million or 6.5% to R$1,367.6 million in 1Q17, compared to R$1,462.9 million in 1Q16. The decrease was chiefly due to the following: (i) Decrease of R$82.7 million in the costs of subsidiaries Merchant e-solutions, due to the average US dollar depreciation in the quarter, partially offset by higher expenditures incurred in the period; and M4U, due to the change in the remuneration model of certain products, which were changed from resale to sales commission, partially offset by the growth of mobile credit sales; (ii) Decrease of R$18.5 million in the costs related to the management of the Ourocard Arrangement, such as brand fees and expenditures with banks, chiefly due to the effect of US dollar depreciation over trade payables and cost-savings initiatives results; (iii) Net increase of R$5.9 million in the costs of acquiring activities, mostly represented by: a) Increase of R$20.3 million in transactions costs, such as higher expenditures incurred with settlement, brand fees and transaction processing services, chiefly due to increased volume and higher number of transactions when compared to the same quarter of previous year; b) Decrease of R$11.8 million in the costs related to equipment, connected with lower demand of installation, repair and maintenance of POS terminals, basically due to decreased installed POS base; and c) Decrease of R$2.6 million in the costs related to the contracting of professional services, chiefly due to cost-savings initiatives results. 1Q17 X 4Q16 The cost of services provided decreased 9.6% to R$1,367.6 million in 1Q17 compared to 4Q16. The decrease was chiefly due to the following: (i) Net decrease of R$90.7 million in the costs related to the acquiring business, mostly represented by: 3

4 a) Decrease of R$57.3 million in transaction costs, such as call centers, brand fees, processing and telecommunications services, chiefly due to decreased volume and lower number of captured transactions; b) Decrease of R$17.8 million in the costs related to equipment, basically due to lower demand of installation, repair and maintenance of POS terminals, in view of decreased installed POS base, as well as the seasonality of expenditures in 4Q16 (preparation for year-end festivities); and c) Decrease of R$15.6 million in other costs, mainly related to the contracting of professional services connected with strategic projects and operating systems development. (ii) Decrease of R$28.7 million in the costs related to the management of the Ourocard Arrangement, especially card management and brand fees, due to 4Q16 seasonality and cost-savings initiatives results; and (iii) Decrease of R$25.7 million in the costs of subsidiaries Merchant e-solutions, chiefly due to the average US dollar depreciation in the quarter; and M4U, due to the change in the remuneration model of certain products during 4Q16, which were changed from resale to sales commission, partially offset by the growth of mobile credit sales in the period. Operating Expenses 1Q17 X 1Q16 Operating expenses decreased 17.1% to R$352.1 million in 1Q17, compared to R$424.9 million in 1Q16. The main variations are described below: Personnel expenses Personnel expenses increased 10.5% to R$139.7 million in 1Q17, compared to R$126.5 million in 1Q16. Such increase is chiefly due to the average adjustment over wages established in Collective Agreement (8.56%), in August 2016, and effects on provision for 13 rd -month pay, profit sharing, vacation and related charges. General and Administrative Expenses - General and administrative expenses, excluding depreciation, decreased 18.5% to R$104.3 million in 1Q17, compared to R$128.0 million in 1Q16. The decrease is chiefly related to lower expenses with internal projects, reduced administrative expenses (due to the move of Merchant E-Solutions headquarters from California to Atlanta in 1Q16) and partnership fees in subsdiiary Merchant E- Solutions, both also impacted by average US dollar depreciation in the quarters. Sales and Marketing Expenses- Sales and marketing expenses decreased 37.7% to R$38.1 million in 1Q17, compared to R$61.0 million in 1Q16. The decrease is chiefly due to reduced expenses with institutional campaigns and marketing actions, as well as measures related to client loyalty at Cielo. Other Net Operating Expenses Other net operating expenses decreased 38.5% to R$57.1 million in 1Q17, compared to R$92.9 million in 1Q16. Such decrease is mainly related to lower losses with POS equipment and the recognition of provision for investment loss and goodwill impairment in associated company in 1Q16. These impacts were partially offset by higher expectation of losses with bad debts in 1Q17. 4

5 1Q17 X 4Q16 Operating expenses decreased 21.9% to R$352.1 million in 1Q17, compared to 4Q16. The main variations are described below: Personnel Expenses Personnel expenses increased 1.7% to R$139.7 million in 1Q17, compared to R$137.4 million in 4Q16. Such increase is chiefly due to executive s severance pay expenses incurred in 1Q17, partially offset by reversal of surplus provision for 2016 profit sharing. General and Administrative Expenses - General and administrative expenses, excluding depreciation, decreased 19.2% to R$104.3 million in 1Q17, compared to R$129.0 million in 4Q16. The decrease is chiefly due to lower expenditures with corporate projects, as well as the concentration of expenditures with advisory and professional services in 4Q16. Sales and Marketing Expenses- Sales and marketing expenses decreased 55.7% to R$38.1 million in 1Q17, compared to R$85.9 million in 4Q16. The decrease is chiefly due to the scheduling of institutional campaigns and the media acquisition concentrated in 4Q16, as well as reduced marketing expenses with issuing banks and sales partners and measures related to client loyalty. Other Net Operating Expenses Other net operating expenses decreased 35.3% to R$57.1 million in 1Q17, compared to R$88.3 million in 4Q16. This decrease is mainly related to the lower expectations of losses with bad debts at Cielo and Cateno, in estimated losses and disposals of POS equipment, partially offset by increased provisions for labor and civil contingencies at Cielo. Total Cost + Expenses Total expenses (cost of services rendered added to operating expenses) totaled R$1,724.2 million in 1Q17, down 8.8% year-on-year and 12.6% over 4Q16, as shown below. Cost + Expenses (R$ million) 1Q17 1Q16 Var. % 4Q16 Var. % Total cost of service rendered (1,367.6) (1,462.9) -6.5% (1,512.7) -9.6% Cost of service rendered (1,144.4) (1,233.9) -7.3% (1,292.5) -11.5% Depreciation and amortization (223.2) (229.0) -2.6% (220.2) 1.4% Operating expenses (356.6) (426.9) -16.5% (459.3) -22.4% Operating expenses (339.2) (408.4) -16.9% (440.6) -23.0% Depreciation and amortization (17.4) (18.6) -6.4% (18.7) -7.2% Total cost + expenses (1,724.2) (1,889.8) -8.8% (1,972.0) -12.6% EBITDA EBITDA 1 totaled R$1,322.1 million in 1Q17, a decreased of 6.1% compared to 1Q16 and down 5.3% over 4Q16, as shown below: 1 Management believes that the EBITDA is an important parameter for the investors because it provides relevant information about our operating results and the profitability. 5

6 EBITDA 1Q17 1Q16 Var. % 4Q16 Var. % Cielo Net Income 1, % 1, % Share of non-controlling shareholders % % Financial Income (404.0) (341.3) 18.4% (387.6) 4.2% Tax and Social Contribution % % Depreciation and Amortization % % EBITDA 1, , % 1, % EBITDA Margin 47.2% 46.2% 1.0pp 44.7% 2.5pp FINANCIAL RESULT 1Q17 X 1Q16 The financial income totaled R$404.0 million in 1Q17, up 18.4% compared to 1Q16, which presented a figure of R$341.3 million. The main variations are described as follows: Financial Revenues Financial revenues increased 88.2% to R$110.6 million in 1Q17, compared to R$58.8 million in 1Q16. The increase is chiefly due to higher average balance of financial investments held by Cielo and subsidiary Cateno in 1Q17. Financial Expenses Financial expenses decreased 16.8% to R$281.8 million in 1Q17, compared to R$338.8 million in 1Q16. The decrease mainly derives from the lower average indebtedness with third parties, basically due to the amortization of the first tranche and payment of public debentures interest rates, in April 2016, totaling R$1.9 billion. Net Product of Purchase of Receivables Purchase of receivables, performed by Cielo or via FIDC, net of funding with third parties and taxes decreased 7.7% to R$575.5 million in 1Q17, compared to R$623.4 million in 1Q16. Despite higher financial volume of purchased receivables, such decrease is chiefly due to the drop of average DI interest rate, as well as higher percentage from single payment credit, which decreases the average term of operations, also impacted by higher funding with third parties expenses. 1Q17 X 4Q16 The financial income totaled R$404.0 million in 1Q17, up 4.2% compared to R$387.6 million presented in 4Q16. The main variations are described as follows: Financial Revenues Financial revenues increased 33.9% to R$110.6 million in 1Q17, compared to R$82.6 million in 4Q16. The increase is chiefly due to higher average balance of financial investments held by Cielo and subsidiary Cateno in 1Q17, arising from cash generated in their operations. Financial Expenses Financial expenses increased 3.7% to R$281.8 million in 1Q17, compared to R$271.8 million in 4Q16. Such increase mainly derives from higher debt cost with third parties, when compared to the previous quarter. The EBITDA is not an accounting measurement used in the accounting practices adopted in Brazil. It does not represent the cash flow for the presented periods and it should not be considered as an alternative to net income as an operating performance measure or as an alternative to operating cash flow or as a measurement of liquidity. 6

7 Net Product of Purchase of Receivables Purchase of receivables, performed by Cielo or via FIDC, net of funding with third parties and taxes decreased 0.7% to R$575.5 million in 1Q17, compared to R$579.3 million in 4Q16. The decrease is chiefly due to the lower financial volume of purchased receivables, due to 4Q16 seasonality, the drop of average DI interest rate, as well as higher percentage from single payment credit, which decreases the average term of operations. Net Income The net income attributable to controlling shareholders increased 0.6% to R$1,001.8 million in 1Q17, compared to R$995.4 million in 1Q16. Compared to 4Q16, the net income attributable to controlling shareholders decreased 1.0%. 1Q17 MANAGERIAL PERFORMANCE Cielo Consolidated is a result of the performance of the several businesses of the group. The table below presents unaudited information regarding the managerial performance of these different businesses, highlighting Cielo Brasil and Cateno. It is important to highlight that in Cielo Brasil s analysis, we are considering the financial expenses referring to the debts contracted by Cielo to create Cateno.These financial expenses are recorded under financial income. Referring to Cateno, the figures pointed out refer to the accounting result. The analysis referring to Cateno cash basis contribution is highlighted herein. Income Statement Cielo Brasil Cateno - Accounting value Other Subsidiaries Cielo Consolidated R$ millions 1Q17 1Q16 Var. % 1Q17 1Q16 Var. % 1Q17 1Q16 Var. % 1Q17 1Q16 Var. % Gross operating revenue 1.884, ,9-7,2% 672,2 664,9 1,1% 529,8 654,0-19,0% 3.086, ,8-7,9% Taxes on services (194,9) (209,8) -7,1% (73,7) (71,9) 2,6% (16,3) (20,1) -19,1% (284,9) (301,9) -5,6% Net operating revenue 1.689, ,0-7,2% 598,5 593,0 0,9% 513,5 633,9-19,0% 2.801, ,9-8,1% Cost of service rendered (452,2) (441,6) 2,4% (290,8) (309,3) -6,0% (401,5) (483,0) -16,9% (1.144,4) (1.233,9) -7,3% Depreciation and amortization (102,9) (103,7) -0,7% (96,4) (96,4) 0,0% (23,9) (29,0) -17,6% (223,2) (229,0) -2,6% Gross income 1.134, ,8-11,1% 211,3 187,3 12,8% 88,2 121,9-27,7% 1.433, ,0-9,5% Operating expenses (230,7) (265,8) -13,2% (27,2) (23,4) 16,3% (81,3) (119,2) -31,8% (339,2) (408,4) -16,9% Depreciation and amortization (6,6) (6,1) 9,4% (0,1) (0,0) 0,0% (10,7) (12,5) -14,5% (17,4) (18,6) -6,4% Equity Interest 4,5 2,0 124,3% ,5 2,0 124,3% Total cost + expenses (792,5) (817,1) -3,0% (414,4) (429,1) -3,4% (517,3) (643,6) -19,6% (1.724,2) (1.889,8) -8,8% Operating income 901, ,9-10,4% 184,1 163,9 12,3% (3,8) (9,7) -61,0% 1.081, ,0-6,8% EBITDA 1.010, ,6-9,4% 280,5 260,3 7,8% 30,7 31,7-3,1% 1.322, ,6-6,1% EBITDA Margin 59,8% 61,3% -1,4pp 46,9% 43,9% 3,0pp 6,0% 5,0% 1,0pp 47,2% 46,2% 1,0pp Financial income 378,4 327,5 15,6% 36,0 29,3 23,0% (10,5) (15,5) -32,5% 404,0 341,3 18,4% Income before income tax and social contribution 1.279, ,4-4,0% 220,1 193,2 13,9% (14,3) (25,2) -43,5% 1.485, ,3-1,1% Income tax and social contribution (367,7) (402,5) -8,6% (74,8) (65,7) 13,9% 2,9 5,2-44,8% (439,7) (463,0) -5,0% Net income 912,0 930,9-2,0% 145,2 127,5 13,9% (11,3) (20,1) -43,7% 1.045, ,3 0,7% Net margin 54,0% 51,1% 2,9pp 24,3% 21,5% 2,8pp -2,2% -3,2% 1,0pp 37,3% 34,1% 3,3pp Atributted to owner s of the Company 912,0 930,9-2,0% 101,7 89,2 14,0% (11,9) (24,7) -51,8% 1.001,8 995,4 0,6% Atributted to non controlling interest - - 0,0% 43,6 38,2 13,9% 0,5 4,6-89,0% 44,1 42,9 2,8% 7

8 1Q17 x 1Q16 During 1Q17, Cielo Brasil recorded reduction of its net operating revenue of 7.2% compared to 1Q16 due to macroeconomic and competitive scenarios and client mix (large accounts x retail), debit and credit products. These circumstances only reinforce Cielo s commitment to expenditures control, which decreased 3.0% in 1Q17, thus, the Company s EBITDA went down 9.4% compared to 1Q16. Due to the financial deleveraging process and purchase of receivables results, the financial income grew 15.6% in 1Q17, but decreased net income by 2.0%. Cateno, on its turn, recorded 0.9% growth of its net operating revenue, while total expenses went down 3.4% compared to 1Q16. Thus, EBITDA grew 7.8% in 1Q17, and net income attributable to Cielo s shareholders increased 14.0%, this also due to the growth of financial income compared to 1Q16 (23.0%). Together, Cielo Brasil, Cateno and other subsidiaries of the Company contributed to Cielo Consolidated record a net income of R$1,001.8 million in 1Q17, up 0.6% year-on-year. Income Statement Cielo Brasil Cateno - Accounting value Other Subsidiaries Cielo Consolidated R$ millions 1Q17 4Q16 Var. % 1Q17 4Q16 Var. % 1Q17 4Q16 Var. % 1Q17 4Q16 Var. % Gross operating revenue 1.884, ,2-10,8% 672,2 759,3-11,5% 529,8 568,8-6,9% 3.086, ,4-10,3% Taxes on services (194,9) (220,2) -11,5% (73,7) (83,7) -11,9% (16,3) (17,0) -4,4% (284,9) (320,9) -11,2% Net operating revenue 1.689, ,1-10,8% 598,5 675,6-11,4% 513,5 551,8-6,9% 2.801, ,5-10,2% Cost of service rendered (452,2) (544,9) -17,0% (290,8) (319,4) -9,0% (401,5) (428,1) -6,2% (1.144,4) (1.292,5) -11,5% Depreciation and amortization (102,9) (98,8) 4,2% (96,4) (96,4) 0,0% (23,9) (25,0) -4,6% (223,2) (220,2) 1,4% Gross income 1.134, ,4-9,2% 211,3 259,8-18,7% 88,2 98,6-10,6% 1.433, ,8-10,8% Operating expenses (230,7) (326,6) -29,3% (27,2) (32,0) -15,1% (81,3) (82,0) -0,9% (339,2) (440,6) -23,0% Depreciation and amortization (6,6) (6,5) 2,0% (0,1) (0,1) 0,0% (10,7) (12,2) -12,2% (17,4) (18,7) -7,2% Equity Interest 4,5 8,5-47,8% ,5 8,5-47,8% Total cost + expenses (792,5) (976,7) -18,9% (414,4) (447,9) -7,5% (517,3) (547,3) -5,5% (1.724,2) (1.972,0) -12,6% Operating income 901,3 924,9-2,6% 184,1 227,7-19,2% (3,8) 4,4-185,9% 1.081, ,0-6,5% EBITDA 1.010, ,1-1,9% 280,5 324,2-13,5% 30,7 41,6-26,1% 1.322, ,9-5,3% EBITDA Margin 59,8% 54,4% 5,4pp 46,9% 48,0% -1,1pp 6,0% 7,5% -1,5pp 47,2% 44,7% 2,5pp Financial income 378,4 365,3 3,6% 36,0 33,8 6,6% (10,5) (11,5) -9,1% 404,0 387,6 4,2% Income before income tax and social contribution 1.279, ,2-0,8% 220,1 261,5-15,8% (14,3) (7,1) 100,8% 1.485, ,6-3,8% Income tax and social contribution (367,7) (396,6) -7,3% (74,8) (88,9) -15,9% 2,9 5,0-43,2% (439,7) (480,5) -8,5% Net income 912,0 893,6 2,1% 145,2 172,6-15,9% (11,3) (2,1) 443,9% 1.045, ,1-1,7% Net margin 54,0% 47,2% 6,8pp 24,3% 25,5% -1,3pp -2,2% -0,4% -1,8pp 37,3% 34,1% 3,2pp Atributted to owner s of the Company 912,0 893,6 2,1% 101,7 120,8-15,8% (11,9) (2,8) 323,0% 1.001, ,6-1,0% Atributted to non controlling interest ,6 51,8-15,8% 0,5 0,7-31,3% 44,1 52,5-16,1% 1Q17 x 4Q16 Quarter-on-Quarter, Cielo Brasil s net operating revenue decreased 10.8%, negatively affected by seasonality, macroeconomic and market factors, which, amongst other events impacted revenues from capture, processing and financial settlement, but total expenses went down 18.9%, implying 1.9% reduction of the Company s EBITDA compared to 4Q16. The net income was up 2.1%, totaling R$912.0 million. 8

9 Quarter-on-quarter Cateno recorded 11.4% decrease of its net operating revenue, with total expenses down 7.5%. Thus, EBITDA decreased 13.5% compared to 4Q16. The net income attributable to Cielo s shareholders was down 15.8% compared to 4Q16. Considering all the business units exposed herein on a managerial basis, Cielo Consolidated recorded 1.0% decrease of its net income compared to 4Q16. Total Managerial Expenses As shared with the market early in the year, the Company has, amongst other commitments, an adequate control of its costs and expenses (total expenses) as one of its goals for the year. In this aspect, it is worth pointing out its efforts and performance in its main business units, Cielo Brasil and Cateno. On a combined basis (Cielo Brasil and Cateno), according to the criterion adopted in our guidance, total expenses totaled R$1,206.9 million in 1Q17, down 3.2% compared to 1Q16 and 15.3% quarter-on-quarter. Such result evidences the Company s commitment to the market. Cielo Brasil Cateno Cielo Brasil + Cateno Cost + Expenses (R$ million) 1Q17 1Q16 Var. % 1Q17 1Q16 Var. % 1Q17 1Q16 Var. % Total cost of service rendered (555.1) (545.2) 1.8% (387.2) (405.8) -4.6% (942.3) (951.0) -0.9% Fixed Cost (108.5) (100.6) 7.8% (2.2) (2.2) -1.5% (110.7) (102.8) 7.6% Variable Cost (343.7) (341.0) 0.8% (288.6) (307.1) -6.0% (632.3) (648.1) -2.4% Depreciation and amortization (102.9) (103.7) -0.7% (96.4) (96.4) 0.0% (199.4) (200.1) -0.4% Operating expenses (237.4) (271.9) -12.7% (27.3) (23.4) 16.6% (264.6) (295.2) -10.4% Operating expenses (230.7) (265.8) -13.2% (27.2) (23.4) 16.3% (257.9) (289.2) -10.8% Depreciation and amortization (6.6) (6.1) 9.4% (0.1) (0.0) 100.0% (6.7) (6.1) 10.4% Total cost + expenses (792.5) (817.1) -3.0% (414.5) (429.1) -3.4% (1,206.9) (1,246.2) -3.2% Cielo Brasil Cateno Cielo Brasil + Cateno Cost + Expenses (R$ million) 1Q17 4Q16 Var. % 1Q17 4Q16 Var. % 1Q17 4Q16 Var. % Total cost of service rendered (555.1) (643.6) -13.8% (387.2) (415.9) -6.9% (942.3) (1,059.5) -11.1% Fixed Cost (108.5) (131.7) -17.6% (2.2) (5.6) -61.4% (110.7) (137.3) -19.4% Variable Cost (343.7) (413.2) -16.8% (288.6) (313.8) -8.0% (632.3) (727.1) -13.0% Depreciation and amortization (102.9) (98.8) 4.2% (96.4) (96.4) 0.0% (199.4) (195.2) 2.1% Operating expenses (237.4) (333.1) -28.7% (27.3) (32.0) -14.9% (264.6) (365.1) -27.5% Operating expenses (230.7) (326.6) -29.3% (27.2) (32.0) -15.1% (257.9) (358.6) -28.1% Depreciation and amortization (6.6) (6.5) 2.0% (0.1) (0.0) 100.0% (6.7) (6.5) 2.9% Total cost + expenses (792.5) (976.7) -18.9% (414.5) (447.9) -7.5% (1,206.9) (1,424.7) -15.3% Adjusted Net Income It is important to highlight that Cateno has amortization expenses with no cash effect. For this reason, we present below Cielo s consolidated adjusted net income, which excludes this amortization effect from Cateno s intangible assets ("Cateno cash basis" concept). In addition, we considered the financial expenses related to the debts contracted by Cielo Brasil to create Cateno as part of Cateno itself, so as to state the net combination of its results. 9

10 Income Statement (1) Cielo Brasil + Other Subsidiaries R$ millions 1Q17 1Q16 Var. % 4Q16 Var. % Net operating revenue 2, , % 2, % Total cost + expenses (1,305.3) (1,458.7) -10.5% (1,515.6) -13.9% Operating income % % Financial income % % Income before income tax and social contribution 1, , % 1, % Income tax and social contribution (364.9) (397.4) -8.2% (391.6) -6.8% (+) Financial expenses related to Cateno % % (-) Atributted to non controlling interest % % Net income 1, , % 1, % Income Statement (2) Managerial Cateno R$ millions 1Q17 1Q16 Var. % 4Q16 Var. % Net operating revenue % % Total cost + expenses (ex-amortization) (318.0) (332.7) -4.4% (351.5) -9.5% Operating income % % Financial income % % Income before income tax and social contribution % % Income tax and social contribution adjusted w ith efect over amortization (74.8) (65.7) 13.9% (88.9) -15.9% Net income % % Share Cielo 70% % % (-) Financial expenses net of taxes related to Cateno (143.4) (189.9) -24.5% (143.4) 0.0% Adjusted net income (cash earnings) 25.7 (33.2) % % Income Statement (1) + (2) Cateno s Net contribution R$ millions 1Q17 1Q16 Var. % 4Q16 Var. % Cielo s and Other Subsidiaries net income 1, , % 1, % Cateno s adjusted net income (cash basis) 25.7 (33.2) % % Consolidated net income (cash basis) 1, , % 1, % CIELO BRASIL ============================================================================= OPERATING PERFORMANCE Transaction Financial Volume In 1Q17, the transaction financial volume, excluding the Agro product, totaled R$142.3 billion, an expansion of 4.3%, or R$5.9 billion compared to R$136.4 billion in the same period of prior year and down 8.6 %, or R$13.4 billion, compared to R$155.7 billion recorded in 4Q16. Specifically with credit cards, transaction financial volume totaled R$79.6 billion in 1Q17, it did not change over 1Q16 and 8.9% quarter-on-quarter. With debit cards, transaction financial volume totaled R$65.0 billion in 1Q17, an increase of 8.5% compared to 1Q16 and down 9.6% quarter-on-quarter. 10

11 The Agro product, which is included in total debit transactions, had financial volume of R$2.3 billion in 1Q17, down 25.3% compared to 1Q16 and 35.8% quarter-on-quarter. Excluding the Agro product from the total debit cards transactions, the financial volume captured would have been R$62.7 billion in 1Q17, up 10.3% compared to 1Q16 and down 8.2% quarter-on-quarter. Financial and transaction volume 1Q17 1Q16 Var. % 4Q16 Var. % Credit and Debit Cards excluding Agro Financial transaction volume (R$ million) 142, , % 155, % Number of transactions (million) 1, , % 1, % Credit and Debit Cards Financial transaction volume (R$ million) 144, , % 159, % Number of transactions (million) 1, , % 1, % Credit Cards Financial transaction volume (R$ million) 79, , % 87, % Number of transactions (million) % % Debit Cards Financial transaction volume (R$ million) 65, , % 71, % Number of transactions (million) 1, % 1, % Agro Product Financial transaction volume (R$ million) 2, , % 3, % Number of transactions (million) % % Debit Excluding Agro Financial transaction volume (R$ million) 62, , % 68, % Number of transactions (million) 1, % 1, % It is worth noting that Elo s volume, which currently is considered in Cielo s total volume came to R$25.5 billion, up 43.8% year-on-year and down 7.6% quarter-on-quarter. Out of total, R$5.0 billion or 19.7% of entire volume of Elo brand is currently captured by other acquirers under the multivan model. Considering the entire volume captured by the Company, the volume captured today by other acquirers under the multivan model accounts for 3.5% of total. Financial Volume (R$ millions) 1Q17 1Q16 Var. % 4Q16 Var. % Multivan Volume 5, % 4, % Elo Volume 25, , % 27, % Multivan Volume / Elo Volume 19.7% 2.4% 17.4pp 15.1% 4.6pp Total Volume 144, , % 159, % Multivan Volume /Total Volume 3.5% 0.3% 3.2pp 2.6% 0.9pp 11

12 Active Points of Sales and Equipment Base The number of Points of Sales Merchants totaled 1.6 million at the end of 1Q17, down 7.9% over 1Q16 and 4.7% over 4Q16. Active clients are those points of sale that have made at least a single transaction in the last 30 days. Points of Sales Merchants 1Q17 1Q16 Var. % 4Q16 Var. % Points of Sales Merchants 30 days ('000)* 1,571 1, % 1, % Points of Sales Merchants 60 days ('000)* 1,693 1, % 1, % * We are considering only the merchants affiliated to Cielo s network. Thus, we are excluding the new affiliations of the Multivan Elo Project. The installed POS base decreased 11.4% year-on-year and 5.3% over 4Q16. The WiFi/GPRS equipment represented 71.4% of the installed base at the close of 1Q17, an increase of 3.0 p.p year-on-year and 0.4 p.p quarter-on-quarter. Base de equipamentos Pos (mil) 1T17 1T16 Var. % 4T16 Var. % # POS instalado ('000) 1,844 2, % 1, % % Wireless 71.4% 68.4% 3.0pp 71.0% 0.4pp FINANCIAL PERFORMANCE Income Statement Cielo Brasil R$ millions 1Q17 1Q16 Var. % 4Q16 Var. % Gross operating revenue 1, , % 2, % Taxes on services (194.9) (209.8) -7.1% (220.2) -11.5% Net operating revenue 1, , % 1, % Cost of service rendered (452.2) (441.6) 2.4% (544.9) -17.0% Depreciation and amortization (102.9) (103.7) -0.7% (98.8) 4.2% Gross income 1, , % 1, % Operating expenses (230.7) (265.8) -13.2% (326.6) -29.3% Depreciation and amortization (6.6) (6.1) 9.4% (6.5) 2.0% Equity Interest % % Total cost + expenses (792.5) (817.1) -3.0% (976.7) -18.9% Operating income , % % EBITDA 1, , % 1, % EBITDA Margin 59.8% 61.3% -1.4pp 54.4% 5.4pp Financial income % % Income before income tax and social contribution 1, , % 1, % Income tax and social contribution (367.7) (402.5) -8.6% (396.6) -7.3% Net income % % Net margin 54.0% 51.1% 2.9pp 47.2% 6.8pp Atributted to ow ner s of the Company % % Atributted to non controlling interest %

13 Net Revenues 1Q17 X 1Q16 Cielo Brasil s net revenue decreased 7.2% to R$1,689.3 million in 1Q17, compared to R$1,821.0 million in 1Q16. Revenue yield in 1Q17 stood at 1.17% compared to 1.31% in 1Q16. Excluding the Agro product, the revenue yield would record a variation from 1.33% in 1Q16 to 1.19% in 1Q17. Lower net revenues from capture, transmission, processing and financial settlement of credit and debit transactions is mainly related to the average price drop, mostly due to higher percentage from debit card product, concentration of clients in Large Accounts segment and competitive environment, as well as lower revenues from rental of POS equipment due to decreased installed POS base. 1Q17 X 4Q16 Quarter-on-quarter, Cielo Brasil s net revenue decreased 10.8% to R$1,689.3 million compared to R$1,893.1 million in 4Q16. The revenue yield in 1Q17 stood at 1.17%, compared to 1.19% in 4Q16. Excluding the Agro product, the yield would have varied from 1.21% in 4Q16 to 1.19% in 1T17. Such decrease is chiefly due to the seasonality of business, especially in view of year-end festivities. In addition, revenue from capture, transmission, processing and financial settlment of credit and debit card transactions and rental revenue decreased, mostly related to lower prices and decreased installed POS base. Total Cost + Expenses 1Q17 X 1Q16 Total expenses decreased 3.0% to R$792.5 million in 1Q17, compared to R$817.1 million in 1Q16. The decrease is chiefly due to reduced expenditures with institutional campaigns and marketing actions, as well as measures related to client loyalty and lower losses with POS equipment. 1Q17 X 4Q16 Quarter-on-quarter, total expenses decreased 18.9% to R$792.5 million, compared to R$976.7 million. The decrease is primarily due to lower financial volume captured and decreased number of transactions; lower demand of installation, repair and maintenance of POS terminals, in view of decreased installed POS base, as well as the seasonality of expenditures in 4Q16; lower costs with contracting of professional services connected with strategic projects and operating systems development; reduced sales and marketing expenses. Purchase of Receivables The purchase of receivables is the operation in which the merchant s receivables portfolio is acquired directly by Cielo or via FIDC 2 (Receivables Investment Fund), at an agreed pricing structure. In this case, the merchant 2 Cielo Non-Standardized Receivables Investment Fund: Cielo Non-Standardized Receivables Investment Fund initiated in August 2016, ( FIDC ), a company incorporated for an indeterminate term, with specific purpose of conducting the securitization of receivables deriving from 13

14 receives from Cielo for the sale of future receivables already performed, at any given moment. Given the importance of the business for Cielo Brasil, we present its key metrics below. Purchase of Receivables 1Q17 1Q16 Var. % 4Q16 Var. % % Purchased volume over Total Credit Volume 20.3% 20.1% 0.2pp 19.4% 0.9pp Financial Volume of Purchase of Receivables (R$ million) 16, , % 16, % Average Term (Calendar Days) (3.9) 51.6 (2.2) Average Term (Business Days) (3.0) 35.0 (1.7) Gross Product of Purchase of Receivables (R$ million) % % Cost of Funding w ith Third Parties (R$ million) (43.8) (30.2) 45.1% (45.3) -3.4% Taxes (PIS / COFINS) (R$ million) (29.3) (31.3) -6.3% (30.3) -3.1% Net Product of Purchase of Receivables (R$ million) % % Managerial Exercise (R$ million) 4Q16 4Q15 Var. % 3Q16 Var. % Gross Product of Purchase of Receivables % % Cost of Funding* (245.0) (309.4) -20.8% (299.7) -18.2% Taxes (PIS / COFINS) (29.3) (31.3) -6.3% (30.3) -3.1% Net Product Pro-Forma of Purchase of Receivables % % * Assuming the cost of 104% of CDI in the Financial Volume of Purchase of Receivables 1Q17 X 1Q16 Net product of purchase of receivables, made by Cielo or via FIDC, net of funding with third parties and taxes decreased 7.7% to R$575.5 million in 1Q17, compared to R$623.4 million in 1Q16. Despite the higher financial volume of purchased receivables, the decrease is chiefly due to the drop of average DI interest rate, higher percentage from single payment credit, which decreases the average term of operations, also impacted by higher funding with third parties expenses. The average ticket of these operations in 1Q17 was R$1.8 thousand, 20.0% lower than the R$2.3 thousand recorded in 1Q16. In a managerial analysis performed we verified the net product of purchase of pro forma receivables assuming 100% of the financing volume with third parties, at a rate of 104% of the CDI (interbank deposit certificate), in this analysis, the pro forma net product of purchase of receivables would be R$374.3 million, an increase of 8.7% compared to the same period in the prior year. 1Q17 X 4Q16 When compared to 4Q16, net product of purchase of receivables, performed by Cielo or via FIDC, net of funding with third parties and taxes on financial revenues totaled R$575.5 million in 1Q17, down 0.7%, compared to R$579.3 million in 4Q16. The decrease is chiefly due to lower financial volume of purchased receivables, due to payment transactions operated in Cielo s acquiring system. FIDC s assets structure as of March 31, 2017 is composed of 6,407,559 quotas owned by Cielo in the amount of R$1, each, totaling R$ 8.4 billion. 14

15 4Q16 seasonality, the drop of average DI interest rate, as well as higher percentage from single payment credit, which decreases the average term of operations. The average ticket of these operations in 1Q17 was R$1.8 thousand, down 7.7% on R$2.0 thousand recorded in 4Q16. Quarter-on-quarter of managerial exercise, as described above, net product of purchase of pro forma receivables increased 15.2%. Net Income Cielo Brasil s net income decreased 2.0% to R$912.0 million in 1Q17, compared to R$930.9 million in 1Q16. Compared to 4Q16, Cielo Brasil s net income increased 2.1%. CATENO ============================================================================= Cateno, established on February 27, 2015, is a company formed in association with Banco do Brasil aimed at making the processing (card embossing, monthly print invoices, delivery of the card and invoices to the cardholder, security management of transactions and payment of fees of payment arrangements) of credit and debit transactions using cards issued by the Ourocard Arrangement (all cards issued by Banco do Brasil, except private label, government and pre-paid cards). Financial volume (R$ millions) 1Q17 1Q16 Var. % 4Q16 Var. % Total financial volume 57, , % 64, % Credit volume 28, , % 31, % Debit volume 28, , % 32, % *Amortization of R$11.6 billion in intangible assets within 30 years. 15

16 Income Statement Cateno R$ millions 1Q17 1Q16 Var. % 4Q16 Var. % Gross operating revenue % % Taxes on services (73.7) (71.9) 2.6% (83.7) -11.9% Net operating revenue % % Cost of service rendered (290.8) (309.3) -6.0% (319.4) -9.0% Depreciation and amortization (96.4) (96.4) 0.0% (96.4) 0.0% Gross income % % Operating expenses (27.2) (23.4) 16.3% (32.0) -15.1% Depreciation and amortization (0.1) (0.0) 0.0% (0.1) 0.0% Equity Interest Total cost + expenses (414.4) (429.1) -3.4% (447.9) -7.5% Operating income % % EBITDA % % EBITDA Margin 46.9% 43.9% 3.0pp 48.0% -1.1pp Financial income % % Income before income tax and social contribution % % Income tax and social contribution (74.8) (65.7) 13.9% (88.9) -15.9% Net income % % Net margin 24.3% 21.5% 2.8pp 25.5% -1.3pp Atributted to ow ner s of the Company % % Atributted to non controlling interest % % Net Revenue Cateno s net revenue increased 0.9% to R$598.5 million in 1Q17, compared to R$593.0 million in 1Q16. The growth is mainly related to higher financial volume captured in the Ourocard Arrangement. Quarter-on-quarter, Cateno s net revenue decreased 11.4%. Such decrease is related to lower financial volume captured in the Ourocard Arrangement compared to 4Q16 due to Christmas seasonality. Total Cost + Expenses Total expenses decreased 3.4% to R$414.4 million in 1Q17, compared to R$429.1 million in 1Q16. The decrease is chiefly due to lower brand fee cost and expenditures with banks, basically related to the effect of US dollar depreciation over trade payables, card embossing and postage expenses and cost-savings initiatives results. Quarter-on-quarter, Cateno s total expenses decreased 7.5%. The decrease is due to reduced costs related to the card embossing and postage, cards management and brand fees, in view of 4Q16 seasonality. 16

17 Financial Income The financial income increased 23.0% in 1Q17 year-on-year and 6.6% quarter-on-quarter. The increase is chiefly due to higher average balance of financial investments. Net Income Cateno s net income increased 14.0% to R$101.7 million in 1Q17, compared to R$89.2 million in 1Q16. Quarteron-quarter, Cateno s net income decreased 15.8%, chiefly due to seasonality. OTHER SUBSIDIARIES ============================================================================= Income Statement Other Subsidiaries R$ millions 1Q17 1Q16 Var. % 4Q16 Var. % Gross operating revenue % % Taxes on services (16.3) (20.1) -19.1% (17.0) -4.4% Net operating revenue % % Cost of service rendered (401.5) (483.0) -16.9% (428.1) -6.2% Depreciation and amortization (23.9) (29.0) -17.6% (25.0) -4.6% Gross income % % Operating expenses (81.3) (119.2) -31.8% (82.0) -0.9% Depreciation and amortization (10.7) (12.5) -14.5% (12.2) -12.2% Equity Interest Total cost + expenses (517.3) (643.6) -19.6% (547.3) -5.5% Operating income (3.8) (9.7) -61.0% % EBITDA % % EBITDA Margin 6.0% 5.0% 1.0pp 7.5% -1.5pp Financial income (10.5) (15.5) -32.5% (11.5) -9.1% Income before income tax and social contribution (14.3) (25.2) -43.5% (7.1) 100.8% Income tax and social contribution % % Net income (11.3) (20.1) -43.7% (2.1) 443.9% Net margin -2.2% -3.2% 1.0pp -0.4% -1.8pp Atributted to ow ner s of the Company (11.9) (24.7) -51.8% (2.8) 323.0% Atributted to non controlling interest % % Net Revenue Net revenues from Other Subsidiaries decreased 19.0% to R$513.5 million in 1Q17, compared to R$633.9 million in 1Q16. The decrease is related to lower revenue generated from the US subsidiary Me-S, chiefly due to the 17

18 effect of average US dollar depreciation in the quarter; and M4U, due to change in the remuneration model of certain products, which were changed from resale to sales commission, partially offset by the growth of mobile credit sales. Quarter-on-quarter, net revenues from Other Subsidiaries decreased 6.9% compared to R$551.8 million. The decrease is also related to lower revenue generated from the US subsidiary Me-S, chiefly due to the effect of average US dollar depreciation in the quarter; and M4U, due to change in the remuneration model of certain products, which were changed from resale to sales commission, partially offset by the growth of mobile credit sales. Total Cost + Expenses Total expenses from Other Subsidiaries decreased 19.6% to R$517.3 million in 1Q17, compared to R$643.6 million in 1Q16. The decrease is related to the drop in the costs of subsidiaries Merchant e-solutions, due to the average US dollar depreciation in the quarter, partially offset by higher expenditures incurred in the period; and M4U, due to change in the remuneration model of certain products, which were changed from resale to sales commission, partially offset by the growth of mobile credit sales; lower administrative expenses (due to the move of Me-S headquarters from California to Atlanta in 1Q16) and partnership fees at Me-S, both also impacted by average US dollar depreciation in the quarters; and the recognition of provision for investment losses and goodwill impairment in associated company in 1Q16. Quarter-on-quarter, total expenses decreased 5.5% compared to R$547.3 million. The decrease derives from lower costs from subsidiaries Merchant e-solutions, chiefly due to the average US dollar depreciation in the quarter; and M4U, due to the change in the remuneration model of certain products during 4Q16, which were changed from resale to sales commission, partially offset by the growth of mobile credit sales in the period. Net Income Net income from Other Subsidiaries presented a change of R$12.8 million, i.e., a loss of R$11.9 million in 1Q17, compared to a loss of R$24.7 million in 1Q16. Quarter-on-Quarter, net income from Other Subsidiaries presented a change of R$9.1 million. GUIDANCE Our expectations regarding the performance of the market and our commitments were disclosed at the beginning of the year and we present below a follow up of their status. * Considering the volume of credit and debit Indicators Estimates 1Q17 Cielo Brasil Financial Volume 4% to 6% 3.7% Cielo Brazil + Cateno: Total Costs + Expenses 4% to 6% -3,2% CAPEX (purchase of terminals) R$400 mn R$53.4mn The growth of Cielo Brasil s financial volume was 3.7% in 1Q17. In line with the Company s expectation for the year, since the basis of comparison in the first half is less favorable. 18

19 Referring to the cost variation of Cielo Brasil and Cateno jointly, eliminating the impact of subsidiaries via equity interest, in 1Q17 decreased 3.2% compared to 1Q16. This result demonstrates the company's commitment to cost control. Finally, regarding the investments in POS terminals, we made purchases in 2016 totaling R$53.4 million, bearing in mind that this volume is partially funded by BNDES Finame credit facility. INDEBTEDNESS FINAME Finame is a loan provided by BNDES with the purpose to fund purchase of machines and new equipment, domestically produced. This credit line finances the purchase of POS equipment using a weighted average interest rate which was 8.67% p.a. on March 31, 2017 (8.31% p.a. on December 31, 2016). Long Term Financing - ten years bonds In November 2012, U$875 million were raised through a bond issuance, of which US$470 million were issued by the Parent Company and US$405 million were issued by the subsidiary Cielo USA. The amount raised by Cielo USA was used to pay for the controlling stake of Me-S, while the Parent Company used the funds mainly for working capital. The transaction pays interest of 3.75% per year, to be paid every six months, and the principal to be paid in November There are no clauses of financial covenants imposing financial constraints related to this issuance of bonds. On March 31, 2017, the spread was 247 bps (on the bond issue date the spread was 222 bps). Private Debentures On February 27, 2015, Cielo issued its 1 st, 2 nd and 3 rd private simple debentures in the amount of R$3.5 billion, paying 111% of the average DI interest rate, maturing in 2023 and putcall for The compensatory interests will be paid biannually as from the issuance date. There are no clauses of financial covenants imposing financial constraints related to the issuance of bonds. Public Debentures On April 13, 2015, the Company issued its 4th debentures for public distribution. The issue was held at the amount of R$4.6 billion, maturing on April 13, The remuneration of public debentures is 105.8% of the average daily interest rate of the DI - Interbank Deposits. The principal amount will be paid in three equal annual installments, in April of each year and bear interest payable semi-annually in April and October of each year. On April 13, 2017, the balance was partially amortized in the amount of R$1,7 billion. The Public Debentures have covenants that require the Company to maintain its debt ratio (Net Debt/Adjusted Consolidated EBITDA) lower than or equal to 3, as measured annually. Bank of Tokyo-Mitsubishi Loan On December 22, 2016, the Company took out a loan with BTMU in the amount of US$297.3 million, equivalent to R$1.0 billion which encompasses fixed compensatory interest rates of 1.78% p.a. for the period between 12/22/2016 and 3/21/2017 and 1.88% p.a. for the period between 3/22/2017 until the expiration of agreement on 6/21/2017. At the same time, derivative financial instruments (swaps) were hired with the specific objective of protecting such loans from exchange rate and interest rate variations, and with final monthly payment equivalent 19

20 to 101.4% of the average daily rate of DI Interbank Deposits. The interest on loans and the settlements of financial instrument contracted will be paid on 3/21/2017 and 6/22/2017, the latter jointly with the main balance of loan. The loans raised with the Bank of Tokyo-Mitsubishi UFJ, Ltd have covenants binding the Company to maintain the debt ratio (Net Debt/Consolidated Adjusted EBITDA) equal to or lower than 3, measured annually. Debt Ratio LTM Net Debt/Adjusted EBITDA ratio adjusted to result from purchases of receivables on March 31, 2017 was 0.8x. Debt Amotization Schedule 20

21 CAPITAL MARKETS Ownership Structure Cielo S.A. stock debuted on the BM&FBovespa s Novo Mercado on June 29, 2009, initially under the ticker symbol VNET3 and, due to the Company s name change, since December 18, 2009 under CIEL3. Cielo s stock is currently included on the Bovespa Index (Ibovespa), the Brazil Broad-Based Index (IBRA), the Brazil 50 Index (IBXL), the Brazil 100 Index (IBXX), the Carbon Efficiency Index (ICO2), the Financial Index (IFNC), the Corporate Governance Trade Index (IGCT), the Differentiated Corporate Governance Index (IGCX), Novo Mercado Corporate Governance Equity Index (IGNM), Corporate Sustainability Index (ISE), the Differentiated Tag Along Rights Index (ITAG), the Mid-Large Cap Index (MLCX) and Dow Jones Sustainability Index of the New York Stock Exchange (DJSI). Shareholder s structure ON % Controlling shareholders 1,594,957, % Banco Bradesco 816,637, % Columbus Holding S.A 778,319, % Tempo Serviços LTDA* 38,318, % Banco do Brasil (BB Banco de Investimento S.A. ) 778,320, % Free-float 1,117,346, % Treasury 4,510, % Total 2,716,815, % * Shares of Tempo Serviços LTDA do not compose the Shareholders Agreement between Columbus and BB Banco de Investimento Stock Performance In 1Q17, while the Ibovespa appreciated 7.9%, Cielo s stock (adjusted for remuneration) appreciated 2.5%. On March 31, 2017, CIEL3 shares were quoted at R$23.59/share (ajusted amount with bonus approved on April 12, 2017), brinbing the market cap to R$64.1 billion. The average daily trading volume from January to March 2017 totaled 6.8 million shares, with an average daily volume of R$185.0 million, representing 0.7% of the free float. Since the IPO, the average daily trading volume has been of 2.9 million shares, with an average daily trading volume of R$121.3 million, or 0.5% of the free float. 21

22 Share Bonus The Annual and Extraordinary General Meetings held on April 12, 2017 resolved on the capital increase, from R$3.5 billion to R$4.7 billion, i.e., a R$1.2 billion increase, with the issue of four hundred, fifty-two million, eight hundred, two thousand, five hundred and ten (452,802,510) new common shares, at face value, assigning to shareholders, free of charge, as bonus, one (1) new common share for each five (5) common shares and ADRs American Depositary Receipts to which they hold final position as of April 12, 2017, and resulting amendment to Article 7 of the Company s Bylaws. Shares deriving from bonus were included in shareholding position of April 18, 2017 with preemptive right in the share subscription and full receipt of dividends and/or interest on equity declared as of referred date. After bonus, the Company s common shares now total 2,716,815,061 shares. CIEL3-12/31/2016 Total Shares ('000) 2,716, Closing Price (R$/Share) Mkt. Cap (R$'000) 64,089, Free-float ('000) 1,117, Free-float (R$ '000) 26,358, ADTV (1) (R$'000) 171,482.3 ADTV (1) / Free-float 0.65% Dividends(*)(R$'000) 1,237, Dividends (*)/Net Income 32.5% Dividends /Share 0.46 (1) ADTV = Average Daily Trading Volume betw een 01/01/2017 and 03/31/2017. (*) Considering only the dividends related to the first half of fiscal year CORPORATE GOVERNANCE Corporate Governance is a priority for the Company, which has as one of its goals its continuous improvement to support sustainable, long-term corporate performance. In this spirit, the Company voluntarily adopts the best corporate governance practices other than those required for companies listed on BM&FBovespa Novo Mercado, evidencing the commitment of the Company and its Management with the interest of its shareholders and investors. The maximization of its efficiency and creation of long-term value translate, for example, into: (a) the adoption of appropriate decision-making system and the monitoring of its compliance by the system; (b) the maintenance of a Corporate Governance Office, which aims to support management agencies and committees/advisory forums of the Company and its subsidiaries, as well as to ensure the compliance with the best corporate governance practices; (c) the adoption of ethical and sustainable conduct; (d) the formal performance assessment of the Board of Directors members on an individual and group basis; (e) the presence of distinct personnel holding the positions 22