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NDR London - 17/11/2011 - 18/11/2011
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Investor Presentation
November 2011
2
Disclaimer
• This notice may contain estimates for future events. These estimates merely reflect the expectations of
the Company’s management, and involve risks and uncertainties. The Company is not responsible for
investment operations or decisions taken based on information contained in this communication. These
estimates are subject to changes without prior notice.
• This material has been prepared by Multiplus S.A. (“Multiplus“ or the “Company”) includes certain
forward-looking statements that are based principally on Multiplus’ current expectations and on
projections of future events and financial trends that currently affect or might affect Multiplus’ business,
and are not guarantees of future performance. They are based on management’s expectations that
involve a number of business risks and uncertainties, any of each could cause actual financial condition
and results of operations to differ materially from those set out in Multiplus’ forward-looking statements.
Multiplus undertakes no obligation to publicly update or revise any forward looking statements.
• This material is published solely for informational purposes and is not to be construed as a solicitation or
an offer to buy or sell any securities or related financial instruments. Likewise it does not give and should
not be treated as giving investment advice. It has no regard to the specific investment objectives,
financial situation or particular needs of any recipient. No representation or warranty, either express or
implied, is provided in relation to the accuracy, completeness or reliability of the information contained
herein. It should not be regarded by recipients as a substitute for the exercise of their own judgment.
points from several programs in
one single account
Multiplus is a growing loyalty network
3
around 9 mln members
almost170 partnerships
+17.0% YoY +26.3% YoY
powerful support for partners to
acquire and retain clients
positive network effect
generating strong growth
20.0 bln points sold in 3Q11
+38.5% YoY
Exclusive and Strategic Relationship with TAM
Long term agreement (15 years + additional 5 year periods)
Most desired airline in Brazil (Ibope Research) and Star Alliance member
Air tickets: most appealing redemption with high value perception
Multiplus
2009: spin-off from TAM’s loyalty program
2010: launched as separated business unit and IPO
TAM SA holds 73,2% stake
Note: based on 3Q11
Network connecting people and companies
# of months ~10 0 24
$
$
points selling redemption
unit revenue less unit cost
spread $
CASH IN CASH OUT ~10 months float
interest income
point expiration
breakage
outsourcing and CRM
services $
Innovative business model
4
Debt free
Negative working capital Scalable business
Strong cash generation Low CAPEX requirement
Dividend player
Sources of Profit
(Joint Venture)
Growing coalition network…
5
Apparel Education Gas Stations Bookstore Magazine
Suscriptions Pay-TV Telecom Hotels Air Travel
Note: blank slots refer to targeted segments
Drugstore
Members can collect and also redeem points
in any coalition partner.
Travel Agency
Pension Plan Furniture and
Decoration
Beauty and
Healthy Home Centers Car Rental Group Buying Insurance Groceries Gym Food
Universities
Real Estate
Stock Broker
Others
e-Commerce
Stock Exchange
5
… and strong accrual and growing redemption network*
Redemption Accrual
*non exhaustive
Financial Institutions
6
Hotels
Car Rental Retail and others
Magazines and Newspapers
Charity
Other
Leisure
how?
24%
3%
73%
Current
TAM Retail, Industry and Services Banks
Strategy: to diversify gross billings and redemptions
7
Note: based on 3Q11
Long term target
98%
2%
Current
Air Tickets Others
Long term target
15 to 20%
15 to 20%
Costs of rewards
Gross billings of points
• Average unit price increase
• Average unit cost reduction
• Controlled breakage decline,
favoring member experience
and volume growth
Long term margin expansion
why?
to diversify gross billings
and redemptions
what?
• Expanding partnerships
network
• Increasing marketing actions
• Improving client experience
133 151
166 161 168
7 12 15 19 20
3Q10 4Q10 1Q11 2Q11 3Q11Total Coalition
Expanding partnerships network
8
Groceries, entertainment, restaurants,
beauty, others.
Drugstore Group buying
Pension Plan Car Rental
NOTE: Some partnerships with bad performance were canceled in 2Q11.
Increasing non-airline redemptions
Expanding partnership network
#
+4.3% +26.3%
As % of total points redeemed
NOTE: it includes points issued before 2010 (TAM’s inventory)
0,8% 0,8% 0,9%
2,0%
3,2%
3Q10 4Q10 1Q11 2Q11 3Q11
New partnerships
Roadmap
Tickets Charity
Increasing marketing actions
9
TV commercial On board videos
(collect points here)
Radio spots, etc
Expanding member base
In millions
7,6 8,0 8,3 8,6 8,9
3Q10 4Q10 1Q11 2Q11 3Q11
+3.7% +17.4%
R$ millions
Growing gross billings
300,0 325,2 339,9 354,6 397,3
3Q10 4Q10 1Q11 2Q11 3Q11
+12.1% 32.4%
Press media
Point-of-sale materials
Media investments Together is so much better. Together is Multiplus.
Improving client experience
10
Accrual and balance checking at the point-of-sale
• spread the loyalty concept
• speed up the capillarity strategy penetrating new market segments
• increase sales in retail market
Standard rule: 1 Real ($) = 1 Multiplus point
Special rules allowed (such as minimum ticket) adding more value to the partner
Multiplus as one product of Redecard’s sales team
Call Center improvements
Educational mailings
Systems improvements
Point of Sale
New website coming soon Other actions
11
Loyalty market has multiples growth opportunities
*Note: Average income of classes D and E - R$ 6,126/year; class C - R$13,944/year; and classes A and B - R$ 75,942 /year.
Credit Card Transaction Value (R$ billions)
CAGR +22%
Expanding credit card usage in Brazil
Source: ABECS
Personal Consumption Expenditure (R$ billions) CAGR +12%
Increasing domestic consumption
Source: IBGE
Growing passenger traffic (Airline Segment)
RPK in Brazil (billions) 23%
Source: ANAC
Improving wealth distribution
Social classes in Brazil* (% of the population)
Source: Research Cetelem- Ipsos 2010
2005
2010
142174
215256
314
2006 2007 2008 2009 2010
1,4291,594
1,7871,966
2,226
2006 2007 2008 2009 2010
4044
48
57
70
2006 2007 2008 2009 2010
Multiplus’
target
Appendix
Two-way flow:
exchange of
points, products
and services (buy
and sell) between
Multiplus and
coalition partners (Ex. air travel,
e-commerce and
gas station)
The JV will
manage the
loyalty program of
the partner
(systems and
operations)
Partners buy
points from
Multiplus to award
its customers (Ex. banks, parking
and stores)
The JV will
leverage the
database from its
network and
offers CRM
services
Partners Partners Partners
Partners
13
Multiplus buys
points, products
or services from
partners to deliver
to its members (Ex. donation and
tickets)
Coalition Redemption Accrual
Partnerships network Loyalty Marketing Services
Status
Operational
Status
Planning
Appendix I:
Business Model
(Joint Venture)
CRM Outsourcing
15,3
4,1
6,1
2,1 2,4
5,0 6,6
9,7 10,5
13,3
7,9 6,4
9,5 8,8
19,4
7,6 8,2
5,6
12,3 11,4
8,2
14,90 15,99
17,48 16,58 16,17
17,87
19,96
23,36 24,74
28,85 29,66 29,28
25,48 24,99 26,29
28,32 27,95 27,40 25,80
27,54 27,28
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Average Daily Trade Volume (R$ million)
Average Stock Price
2010 2011
z z 26,86% 73,14%
TAM S.A.
14
Appendix II:
Shareholders’ Structure and Stock Performance
Shareholders’ Structure Average Stock Price and Average Daily Trading Volume
52,8
46,9
35,7
31,0
27,6 27,3
23,7 23,5
21,0
18,0
15,7
13,4 13,0
9,5 9,4
4,4 3,8 2,3
Fly
Buys N
ZL
Fly
Buys A
US
Qan
tas P
rogra
m A
US
Air
Mile
s C
AN
Ne
cta
r U
K
Fly
ing
Blu
e F
RA
LA
NP
AS
S C
HL
Sky M
iles U
SA
AA
dvan
tage
US
A
Mile
s&
More
DE
U
JA
L M
ileag
e B
an
k J
PN
Ae
rop
lan C
AN
Air
Mile
s U
K
Ne
cta
r IT
A
Ve
locity A
US
Multip
lus B
RA
Sm
iles B
RA
Clu
b P
rem
ier
ME
X
Source: Principal Global Indicators and Companies’ website and reports
Notes:
1. Programs belonging to airlines: Flying Blue to AirFrance/KLM; Sky Miles to Delta Airlines; AAdvantage to American Airlines; Miles&More to Lufthansa; JAL Mileage Bank to Japan Airlines; Velocity to Virgin Blue; Smiles to Gol Airlines; and Club
Premier to AeroMexico
2. Programs associated with airlines: FlyBuys NZL with Air New Zealand; FlyBuys AUS with Jet Set; Aeroplan with AirCanada; AirMiles UK with British Airways; and Multiplus with TAM Airlines.
Appendix III:
Loyalty Market Penetration
as % of population
as % of population
North
3,6 Northeast
2,5
Central-West
6,4 Southeast
5,2
South
4,5
Multiplus member base penetration
15
16
Operating highlights
Financial highlights
Item 3Q11 YoY QoY
Points issued 20.0 bln +38.5% +7.9%
Points redeemed 12.5 bln +171.7% +14.7%
Breakage rate 24.0% +140bps +70bps
Item 3Q11 YoY QoY
Gross Billings of points R$ 397.3 mln +32.4% +12.1%
Net Revenue R$ 321.5 mln +147.3% +12.8%
EBITDA R$ 78.1 mln
(margin of 24.3%) +64.5% -14.6%
Adjusted EBITDA R$ 82.3 mln
(margin of 22.2%) -7.0% +1.3%
Net Income R$ 51.3 mln
(margin of 16.0%) +15.3% -36.8%
Appendix IV:
3Q11 results
17
Appendix V:
Income Statement
(R$ thousand) 3Q10 3Q11
3Q11 vs 3Q10
2Q11 3Q11 vs
2Q11 Income Statement
Gross revenue 143,940 353,652 145.7% 314,568 12.4%
Sale of points 105,163 249,834 137.6% 224,200 11.4%
TAM Airlines - TLA 13,535 54,605 303.4% 44,821 21.8%
Banks, Retail, Industry and Services 91,628 195,229 113.1% 179,379 8.8%
Breakage 35,962 93,130 159.0% 83,621 11.4%
Hedge 0 7,097 N.A. 3,448 105.8%
Other revenues 2,815 3,591 27.6% 3,299 8.9%
Taxes on sales -13,863 -32,172 132.1% -29,505 9.0%
Net Revenue 130,077 321,480 147.1% 285,063 12.8%
Cost of the points redeemed -69,544 -218,818 213.3% -174,085 25.7%
Air tickets -69,275 -214,890 210.2% -171,880 25.0%
Other products / services -269 -3,928 1360.2% -2,205 78.1%
Accounting Adjustments 420 1,209 187.9% 0 N.A.
Total cost of services rendered -69,124 -217,609 214.8% -174,085 25.0%
Gross Profit 60,953 103,870 70.4% 110,978 -6.4%
Gross Margin 46.9% 32.3% -14.5p.p. 38.9% -6.6p.p.
Shared services -1,482 -1,907 28.7% -1,907 0.0%
Personnel expenses -4,619 -8,750 89.4% -6,991 25.2%
Marketing -1,025 -6,457 529.9% -4,175 54.7%
Depreciation -46 -1,288 2700.0% -1,173 9.8%
Other -6,337 -8,612 35.9% -6,399 34.6%
Total Operating Expenses -13,509 -27,014 100.0% -20,645 30.8%
Total Costs and Operating Expenses -82,633 -244,623 196.0% -194,730 25.6%
Operating Income 47,444 76,856 62.0% 90,333 -14.9%
Operating Margin 36.5% 23.9% -12.6p.p. 31.7% -7.8p.p.
Financial Income/Expenses 12,162 21,286 75.0% 33,825 -37.1%
Hedge - -19,347 N.A. - N.A.
Income before income tax and social contribution 59,606 78,796 32.2% 124,158 -36.5%
Income tax and social contribution -15,105 -27,480 81.9% -42,990 -36.1%
Net Income 44,501 51,316 15.3% 81,168 -36.8%
Net Margin 34.2% 16.0% -18.2p.p. 28.5% -12.5p.p.
18
Appendix VI:
Balance Sheet and Cash Flow
(R$ thousands)
Balance Sheets
Assets 1,257,006 1,140,986 -9.2% 1,013,420 12.6%
Current assets 1,102,918 929,163 -15.8% 830,818 11.8%
Cash and cash equivalentes 19,166 5,372 -72.0% 23,820 -77.4%
Investments 614,647 474,115 -22.9% 644,884 -26.5%
Accounts Receivable 91,647 175,483 91.5% 131,529 33.4%
Related Parties 363,136 267,435 -26.4% 22,320 1098.2%
Current account 30,157 28,916 -4.1% 22,320 29.5%
Prepaid expenses 332,979 238,520 -28.4% 0 N.A.
Deferred income tax and social contribution 14,115 2,298 -83.7% 1,823 26.1%
Derivative Instruments 0 3,712 N.A. 5540 -33.0%
Other receivables 207 747 260.6% 901 -17.0%
Non-current assets 154,088 211,823 37.5% 182,602 16.0%
Prepaid expenses 142,377 0 -100.0% 0 N.A.
Long term investments 0 160,572 N.A. 155,588 3.2%
Deferred income tax and social contribution 755 20,039 2555.0% 268 7371.0%
Derivative Instruments 0 36 0.0% 0 0.0%
Property, plant and equipment 760 1,158 52.3% 1,127 2.7%
Intangible 0 16,852 N.A. 17,900 -5.9%
Intangible assets 10,196 13,166 29.1% 7,720 70.5%
Liabilities and shareholder’s equity 1,257,006 1,140,986 -9.2% 1,013,421 12.6%
Current liabilities 541,993 847,427 56.4% 779,941 8.7%
Suppliers 5,139 3,569 -30.5% 3,151 13.3%
Taxes and fees payable 20,780 10,996 -47.1% 15,465 -28.9%
Deferred revenue 354,302 666,455 88.1% 604,173 10.3%
Breakage liabilities 155,162 124,158 -20.0% 133,683 -7.1%
Derivative Instruments 0 23,514 N.A. 2,663 782.9%
Other liabilities 6,610 18,734 183.4% 20,806 -10.0%
Non-current liabilities 0 33,464 0.0% 0 0.0%
Derivative Instruments 0 33,464 0.0% 0 0.0%
Equity 715,012 260,095 -63.6% 233,479 11.4%
Capital 669,063 69,049 -89.7% 69,049 0.0%
Hedge 0 -27,231 N.A. 0 N.A.
Remuneration Plan 0 8,984 N.A. 6,455 39.2%
Reserves 0 5,919 N.A. 5,919 0.0%
Retained Earnings (loss) 45,949 203,373 342.6% 152,056 33.7%
3Q11 vs
3Q10
3Q11 vs
2Q113Q10 3Q11 2Q11
(R$ thousand)
Cash Flow 3Q11
Net Income 51.317
Depreciation/Amortization 1.288
Accounts Receivable -43.954
Accounts Payable 418
Taxes -24.715
Related Parties -16.114
Prepaid Expenses Increase -400.000
Prepaid Expenses Reduction 161.480
Deferred Revenue and Breakage liabilities 52.758
Derivative Instruments 56.107
Other assets and liabilities 7.599
Operating Cash Flow -153.815
Investiment -5.717
Cash Flow from Investing Activities -5.717
Net proceeds from public offer 0
Capital 0
Dividends 0
Other -24.701
Cash Flow from Financing Activities -24.701
Increase (Decrease) in Cash -184.233
Cash at beginning of period* 824.292
Cash at end of period* 640.059
19
• Multiplus is exposed to
foreign exchange risk as
most of the agreements with
financial institutions are
denominated in USD.
• These partners represented
approximately 70% of
Multiplus’ gross billings in
3Q11.
• The Financial Risk
Policy determines coverage
limits and the list of eligible
financial instruments
5,4
11,2 11,2 11,9 12,1
15,2 15,2 15,0 13,8
2,5
5,8 5,8 6,0 6,3
9,0 9,0 9,0 8,5
-1,6 -0,7 -0,7
0,1 1,5
3,8 3,8 4,0 3,9
-6,1 -6,6 -6,6 -5,5
-3,1 -1,9 -1,8
-1,1 -0,5
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13
R$1,65/USD R$1,75/USD R$1,85/USD R$1,95/USD
SENSITIVITY ANALYSIS
Impact on company’s cash flow (Notional: USD 609.0 mln)
R$ million
4Q11 2012 2013 Total
NOTIONAL 51.0 303.0 255.0 609.0
PUT* 1.75 1.80 1.88 1.83
CALL* 1.85 1.90 1.99 1.93
* average strike prices (BRL/USD)
Fundamentals Position in September 2011 (USD mln)
Appendix VII:
Currency Hedge
Intrinsic Value
recorded in Equity
and Time value in
Financial results.
20
Zero Cost Collar
(purchase of a put
option and the sale of a
call option) or other
instruments.
1 2 3
Balance Sheet
Financial
Results
4
HEDGE
MULTIPLUS
POINTS
Hedge
Construction Mark-to-Market Hedge Expiration
Points
Redemption
Cash results of hedge
operations are
assigned to some
points sold in the same
period (based on first
out rule)
Points
Sale
Balance Sheet
Cash results of hedge
operations are
recorded in operating
results
Operating
Results
NON-CASH
EQUITY
EQUITY AND CASH
COMMENTS
RESULTS
Intrinsic Value
Time Value
IMPORTANT:
The Company does not have any CSA in place
and thus cannot be called for margin in any of its
derivative contracts whichever the scenario.
Item Main variables
Option value Intrinsic value + Time value
Intrinsic value Strike price and Current exchange rate
Time value Maturity, Volatility and Interest Rate Differential (BRL vs USD)
Appendix VIII:
Hedge Accounting in 4 steps
Contact IR team
+55 11 5105 1847
www.multiplusfidelidade.com.br/ir Debit free
Negative working capital Scalable business
Strong cash generation Low CAPEX requirement
Dividend player