Institutional Presentation 1Q14 1
I. GENERAL OVERVIEW II. BUSINESS ENVIRONMENT III. 1Q14 RESULTS IV. GROWTH OPPORTUNITIES 2
Cetip s Timeline 1984 Cetip is established as a not-for-profit organization 1986 Cetip starts its operations 1988 Agreement with ANDIMA to operate SND 1994 The beginning of registration of OTC derivatives 2008 Demutualization process: creation of Cetip S.A. 2009 Advent becomes a shareholder with 32% stake 2009 Novo Mercado Listing 2010 Acquisition of GRV Solutions 2011 Advent is no longer shareholder and ICE becomes a shareholder with a 12% stake 3
Shareholding Structure IPO OCT/2009 APR/2014 Board 0.6% Santander 2.8% Others 55.6% Others 84.7% Bradesco 4.4% Itaú Unibanco 10.1% Advent 18.1% FEMCO 8.4% Board + Management 3.2% Breakdown of Others (APR/2014) Individuals 2.4% ICE 12.1% Local Investors 27.8% Foreign Investors 69.8% 4
CTIP3 Performance 300 CTIP3 vs. Ibovespa since the IPO until 04/30/2014 (Base 100-10/27/2009) 2014 (YTD - until 04/30/2014) 250 CTIP3 Ibovespa 235.5 +17.7% CTIP3 200 +0.2% IBOV 150 100 81.7 50 Oct-09 Feb-10 Jun-10 Oct-10 Feb-11 Jun-11 Oct-11 Feb-12 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Apr-14 60 50 40 30 20 10 CTIP3 Daily Average Traded Volume (12 months rolling average) 7000 (12 Months rolling average) 6000 5000 4000 3000 2000 1000 CTIP3 Daily Average Number of Trades 0 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13 Oct-13 Apr-14 0 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13 Oct-13 Apr-14 5
Cetip As Brazilian financial market integrator, Cetip is Latin America s largest depositary of private fixed income securities and Brazil s largest private asset clearing house; Complete solution for financial instruments, from the analysis of potential issuances, registration and custody until trading, settlement, risk management and market data; Leading provider of solutions for registration of contracts and financial restrictions related to vehicle financing. Clients International Peers Financial Institutions; Mutual Funds; Pension Funds; Insurers and Consortia; Corporations; Brokerage Houses and Broker Dealers; Leasing Companies; Securitization Companies. 6
Diversified Revenue Gross Revenue in 2013: R$ 1,075.7 million Securities Unit Financing Unit R$ 690.1 million in 2013 64.2% of total gross revenue R$ 385.6 million in 2013 35.8% of total gross revenue 3.4% 4.2% 9.8% 10.5% 14.8% CIP Other revenues from services Transaction Fees Registration 0.3% 4.3% 13.5% Other revenues from services Market Data and Solutions Sircof 21.5% Monthly Utilization Custody 17.7% SNG 7
Unique and Integrated Solution for Fixed Income and OTC Derivatives Markets Securities Unit Registration of fixed income securities and OTC derivatives Central depository Custody and Guarantee Settlement DVP settlement Settlement processing Collateral control Mark to market Collateral Management Negotiation Registration of transactions Trading platform for fixed income securities 8
Operating Model in Vehicle Market Financing Unit Negotiation of vehicle purchase Analysis and credit approval Delivery of Vehicle Credit release Customer Resale Financial Institutions Insertion of information related to financial restrictions and contracts details into Cetip s systems Transmission of system s database to departments of motor vehicle Financial Institutions Market data and development of solutions Detran checks SNG to verify the existence of lien DETRAN Owner of vehicle requires the document to be issued by Detran Customer Emission of vehicle document DETRAN 9
More Solid Regulatory Environment for the Financing Unit BACEN DENATRAN o Resolution No 4,088/2012 o Letter No 67/2011 o Circular Letter No 3,596/2013 o Cetip registers credit operations related to vehicles given as collateral o Ordinance No 18/2014 o Cetip has been accredited by DENATRAN, under Ordinance No 18, to have access to its database for 5 years 10
Investment thesis in Cetip High exposure to growth in fixed income and credit markets; Resilient, diversified and vertically integrated business model; Strong cash generation with low execution risk and high predictability; Low capital requirement for implementing its business plan; Dividend yield growth. 11
I. GENERAL OVERVIEW II. BUSINESS ENVIRONMENT III. 1Q14 RESULTS IV. GROWTH OPPORTUNITIES 12
Credit Market Expansion 30.7 Credit Growth (%) 15.1 20.6 18.8 16.4 14.6 13.0 2008 2009 2010 2011 2012 2013 2014E* Source: Brazilian Central Bank / * Estimate: Brazilian Central Bank 70% 60% 50% 40% 30% 20% 10% 0% Credit Expansion in Brazil 40.7 43.9 45.4 35.5 944 1,234 1,421 1,713 53.8 56.1 49.1 2,034 59% 2,368 64% 66% 41% 34% 36% 2,715 2007 2008 2009 2010 2011 2012 2013 58% 62.0 3,067 4000 3500 3000 2500 56% 2000 1500 1000 42% 44% 500 0 2014E * 52% 48% 49% Volume (R$ Billion) % GDP Source: Brazilian Central Bank / * Estimate: Brazilian Central Bank 13
Strong Growth Prospects for Debentures Market Volume of Issuance (R$ billion) 130.9 90.2 49.2 63.6 55.3 54.5 63.3 12.6 21.8 29.3 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Cetip Number of Issuances 261 282 Number of New Issuers 138 148 147 172 85 92 32 43 43 49 32 73 7 8 14 15 7 38 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Cetip 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Cetip Reduction in the Brazilian interest rate encourages the search for investments with higher risk and return IR exemption for investments in debentures related to infrastructure sector 14
Challenging Scenario in 2014 Vehicle Financing 14,304 14,138 9,458 9,295 Vehicle Sales (Million) 16,494 11,050 11,663 11,880 12,514 4,846 4,843 5,444 5,751 5,643 5,478 2008 2009 2010 2011 2012 2013 Source: Fenabrave New 17,413 17,524 17,992 Used % Penetration: Vehicle Financing/ Vehicle Sales 71.6% 55.4% 47.2% 67.4% 72.5% 48.3% 47.8% 67.3% 44.2% 38.3% 35.7% 32.8% 63.6% 64.2% 39.7% 37.6% 28.4% 26.0% 2008 2009 2010 2011 2012 2013 % New vehicles financed / New vehicles sold % Used vehicles financed / Used vehicles sold % Total vehicles financed / Total vehicles sold Source: SNG / Fenabrave Delinquency Ratio of Individuals Vehicle Financing 8% 7.2% 6.6% 7.0% 7% 6.4% 7% 6% 6.0% 6% 4.8% 5% 5,2% 5% 4% 3.7% Individuals Delinquency 4% Individuals Delinquency Average (mar/11 - dec/13) 3% Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13Dec-13 Source: Brazilian Central Bank 15
I. GENERAL OVERVIEW II. BUSINESS ENVIRONMENT III. 1Q14 RESULTS IV. GROWTH OPPORTUNITIES 16
Highlights 1Q14 x 1Q13 FINANCIAL Gross Revenue: R$ 287.6 million 17.6% Adjusted Net Income (cash earnings): R$ 133.3 million 14.7% Securities Unit: R$ 185.8 million 18.9% Adjusted Net Margin: 55.7% -0.4 p.p. Financing Unit: R$ 101.7 million Net Revenue: R$ 239.2 million Adjusted EBITDA: R$ 168.5 million Adjusted EBITDA Margin: 70.5% 15.3% 15.6% 12.8% -1.7 p.p. Adjusted EPS 1 : R$ 0.5118 (R$ 0.5106 Diluted) Cash Flow from Operations 2 : R$ 173.7 million 12.5% 1 Adjusted basic earnings per share, based on the average weighed number of shares in the period. 2 Cash flow from operations before income tax and social contribution paid and before the allocation of excess cash for investments. 17
Highlights 1Q14 x 1Q13 PAYMENT OF ISE AND DIVIDENDS Interest on Shareholders Equity ( ISE ): Total Gross Amount: R$ 20.8 million Gross Amount per Share: R$ 0.0800 Interim Dividends: Total Amount: R$ 54.1 million Dividends per Share: R$ 0.2074 Total Distribution to Shareholders: R$ 74.9 million Payout of 75.0% in 1Q14 18
Revenue Performance by Business Unit Securities Unit Financing Unit 156.2 +18.9% +1.0% 183.9 185.8 88.2 +15.3% -2.9% 104.8 101.7 Cetip s Revenue Breakdown Market data and Devel. of Solutions 5.1% Sircof 14.2% 1Q14 Other 7.3% Registration 10.2% Custody 22.7% Market data and Devel. of solutions 3.8% Sircof 13.9% 1Q13 Other 7.4% Registration 9.0% Custody 21.8% SNG 15.8% Transactions 9.5% Monthly Utilization 15.2% SNG 18.1% Transactions 10.3% Monthly Utilization 15.7% 19
Financial Highlights Net Revenue +15.6% -1.3% 242.3 239.2 Adjusted Operating Expenses 1 % of Net Revenue 27.8% 31.4% +22.6% 29.5% 207.0 57.6 76.1-7.2% 70.7 Adjusted EBITDA & Margin (%) 72.2% 70.5% 68.6% Adjusted Net Income (cash earnings) & Margin (%) 56.1% 54.0% 55.7% 149.4 +12.8% +1.4% 166.2 168.5 +14.7% +2.0% 116.2 130.7 133.3 1 Excludes expenses with share based incentive and depreciation & amortization. 20
Revenues that Depend on Inflows Registration Securities Unit SNG Financing Unit +2.6% +33.1% 22.1-10.9% 32.9 29.4 44.3 50.1-9.3% 45.5 SIRCOF Financing Unit +20.0% 34.0 +6.9% 38.2 40.8 21
Revenues that Depend on Stock Securities Unit Custody Monthly Utilization +22.2% +13.7% 53.3 +5.6% 61.8 65.2 +6.9% 38.4 40.9 43.7 Transactions +7.8% +4.7% 25.2 26.0 27.2 22
Other Revenues EFTs Processing Securities Unit Market Data and Development of Solutions Financing Unit +21.6% +56.4% 7.6-9.1% 10.2 9.2 9.3-4.7% 15.3 14.6 Other Services¹ +18.9% 10.2-10.2% 13.5 12.1 1 Includes other revenues from Securities Unit and Financing Unit, excluding revenues from EFTs processing (CIP). 23
Adjusted Operating Expenses Breakdown 1 1Q13 R$ 57.6 million 1Q14 R$ 70.7 million General and administrative 12.5% Other 1.7% General and administrative 12.4% Other 1.2% Outsourced services 30.2% Personnel 2 55.6% Outsourced services 30.6% Personnel 2 55.8% 1 Excludes expenses with share based incentive and depreciation & amortization. 2 Includes expenses with board members and advisory committees. 24
60 40 20 00 Strong Cash Generation Cash Flow from Operations ¹ CAPEX 154.5 +12.5% -3.8% 180.7 173.7 5.0% 11.1% -7.0% 26.9-64.0% 4.1% 10.4 9.7 CAPEX % Net Revenue Net Debt & Net Debt / Adjusted EBITDA (12 months) 502.7 0.9 229.9 0.4 125.7 0.2 Net Debt Net Debt / Adjusted EBITDA 1 Operational cash generation before income tax and social contribution paid and before the allocation of excess cash for investments. 25
I. GENERAL OVERVIEW II. BUSINESS ENVIRONMENT III. 1Q14 RESULTS IV. GROWTH OPPORTUNITIES 26
Securities Business Unit CCP Cetip Trader Expansion of Captação services for fixed Infrastructure for income and OTC COE trading and registration of derivatives markets Funding funding instrument instruments for Cetip Certifica combined with banks and Cetip Trader + ICE Link Complete solution Cetip Conecta New tool of connection between Seal that ensures the identification and actual registration of assets on profitability between fixed and variable financial entities for trading and post customers and Cetip behalf of the beneficial trading of fixed owner income instruments 27
Financing Business Unit Electronic Cetip Plataforma Imobiliária Gestão de Garantias Resolution 4.088 Expansion of services for the mortgage market Insurance Expansion of services for the insurance market Cetip Infoauto Pagamentos Automates and Market Data Cetip Performance Cetip InfoAuto Análise Cetip Panorama Formalization Implementation of an electronic formalization flow of vehicle financing Automates the process of mortgage granting speeds up the process of vehicle financing 28
Investor Relations dri@cetip.com.br Contacts Willy Jordan CFO and Investor Relations Executive Officer Bernardo Garcia Investor Relations Manager Erika Lima Investor Relations Analyst Jean Karlus Teixeira Investor Relations Analyst This presentation was issued by CETIP S.A. Mercados Organizados ( Cetip, Company ). Cetip is authorized to operate by the Brazilian Securities and Exchange Commission ( CVM ) and regulated by both CVM and Brazilian Central Bank. This presentation may include statements representing expectations about future events or results of Cetip. These statements are based upon projections and analyses which reflect present views and/or expectations of the Management of the Company with regards to its performance and to the future of its business. Risks and uncertainties related to the Cetip s businesses, to the competitive and market environment, to the macro-economical conditions and other factors described in Risk Factors in the Reference Form, filed with the CVM, may cause effective results to differ materially from such plans, objectives, expectations, projections and intentions. 29