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Acquisition of
ZAO United Card Service
September 2008
Safe Harbor Provision
This presentation and comments made by management may contain forward-looking
statements pursuant to the “safe harbor” provision of the Private Securities Litigation
Reform Act of 1995. Statements that are not historical facts, including revenue and
earnings estimates and management’s expectations regarding future events and
developments, are forward-looking statements and are subject to significant risks and
uncertainties. Important factors that may cause actual events or results to differ
materially from those anticipated by such forward-looking statements include the
following: continued certification by credit card associations, foreign currency risks,
competition and pricing, product demand, market and customer acceptance,
development difficulties, the effect of economic conditions and consumer spending,
security breaches or systems failures, costs of capital, changes in state, federal or
foreign laws and increases in credit card association fees, utility or system interruptions,
the ability to consummate and integrate acquisitions, and other risks detailed in the
Company's SEC filings, including the most recently filed Form 10-Q or Form 10-K, as
applicable. The Company undertakes no obligation to revise any of these statements to
reflect future circumstances or the occurrence of unanticipated events.
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Transaction Overview
Expanding Presence in Eastern Europe
• Acquiring ZAO United Card Service (“UCS”)
– leading direct merchant acquirer and indirect payment processor in the
Russian Federation
• UCS recently entered into a 10-year marketing alliance and agent
bank agreement with Rosbank (majority owned by Société
Générale)
– Rosbank is one of the largest privately owned retail banks in Russia
• Global will pay US$120 million in cash in a stock purchase
transaction
• Accretive to EPS in first year
• Acquisition subject to regulatory and noteholders’ approval and
other customary closing conditions
3
UCS:
A Leading Presence in Russia
• Largest non-bank direct merchant
processor in Russia
– 20% market share by merchant
locations
– 30% market share by processed
volume
– Over 40 agent bank referral partners
• Largest indirect payment processor
in Russia
A $10.9 Billion Market
(Total Credit Sales Volume1)
State or
Quasi-State
Owned
– Over 70 financial institution clients
– 2,500 ATMs
• Rosbank will continue to provide
Visa and MasterCard bank
sponsorship
• $34.2M in 2007 calendar year
revenue
• 400 employees
Regional Banks
Competitive positions based on volume
Note 1: Based on statistics from Central Bank of Russia and company estimates.
4
UCS:
Revenue & Portfolio Breakdown
Volume by Vertical Market
Revenue
Telecom
Travel
Agencies
Other
Direct
Acquiring
Other
Airlines
Hotels
Retail
Card
Processing &
Personalization
Automobiles
Restaurants
Healthcare
Restaurants
Note: The above reflects approximate calendar year 2006 revenue and processed volume mix for calendar year 2005.
5
UCS:
Competitive Advantages
9
Local, experienced management team
9
Local market presence in direct and indirect acquiring
9
Outstanding industry reputation
9
Long, successful operating history
9
Full suite of product and service offerings
6
Russian Federation Market
• Population = 141 million
– Approximately 70% are urban-based
• Attractive macroeconomic indicators
– GDP growth of ~8%
– Household real disposable income growth
• ’01-’06 CAGR ~26%
• ’01-’06 bank card growth = 47%
Source: The World Fact Book; The World Bank and Russian Card Market Review
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Converging to Western Card Levels –
Strong Tailwind for Growth
• Transaction value has increased
more than 10x over the past 7
years to RUB 4.4 trillion
Payment Cards per Person
2.6
• 90% of payment card business is
concentrated in the top 14 federal
regions
– Moscow and St. Petersburg having
the largest share
– Remaining 10% located in 70
federal regions less densely
populated
1.2
• Card payments account for just
over 2% of total retail turnover in
Russia
0.5
0.5
0.2
Source: The Nilson Report – May, 2005 (includes all VISA/MC credit and debit
cards). CIA, The World Factbook, Russian Card Market Review
U.S.
Western Eastern
Europe Europe
Russia
China
0.1
India
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Key Areas of Focus
Expand into
surrounding countries
Leverage existing
technology &
infrastructure
Expand into other
Federal regions
Invest and expand
sales area
9
Strategic Transaction Provides
Long Term Growth
• Large population with fast-growing economy and wealth
generation
• Low card payment penetration
– Cards per person
– Geographical dispersion
• Local market knowledge and payments expertise
• Infrastructure that can be leveraged with additional business
• Long-term revenue growth and earnings accretion potential
• Fits with Global Payments’ international expansion strategy
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Acquisition of ZAO United Card Service