Investor Presentation December 2012
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.
Innovative business model
Multiple growth drivers
Diversification goals
Driving value to members and partners
Branding, innovation and knowledge
Investment case
Coalition model: an evolution from traditional loyalty scheme
Single loyalty scheme Coalition loyalty scheme
Commercial partners • access to consumer bases from other segments • possibility of promotional actions with other partners
Members • better accumulation power • more redemption options
4
Strong partnership network
Accrual partners Coalition partners Redemption partners
5
Created from TAM Fidelidade, Multiplus has already
expanded its network in the last two years…
1993 Creation of TAM Fidelidade
2009 Spin-off from TAM Fidelidade
Feb/2010 Multiplus’ IPO
Out/2011 Multiplus present its new brand
Nov/2011 Announcement of JV with AIMIA
Dez/2012 Multiplus becomes one of TOP 100 most liquid stocks in Bovespa
Aug/2010 New headquarters and IT loyalty platform
Mar/2012 Multiplus reaches 200 partners
Apr/2012 Multiplus reaches 10 mn members
8
Sep/2012 Non-air redemptions surpasses 6% for the first time in a quarter
Much more than points…
Brazilian largest loyalty network, with more than 10.5 million members and over 200 partners
Designs, builds and manages customer and
employee loyalty programs for individual clients
9
Coalition
# of months ~10 0 24
3
2
points selling redemption
unit revenue less unit cost
spread 1
CASH IN CASH OUT ~10 months float
interest income
point expiration
breakage
THREE SOURCES OF PROFIT
10
Analytics and Proprietary Loyalty
The consolidation of Prismah’s results is being done by the accounting process called equity method
50% 50%
Design and develop loyalty scheme for third-party
Manage and perform on data analytics services
Create incentive campaigns for third-party
11
A young company with great track record
230,3 264,0
300,0 325,2
339,9 354,6
397,3
433,6 430,4 457,1
491,4
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
More than R$650 million in FCF* Almost 100% dividend payout
Gross Billings (BRL mn)
Solid growth
12
*Sep/2012 LTM
Innovative business model
Multiple growth drivers
Diversification goals
Driving value to members and partners
Branding, innovation and knowledge
Investment case
132
163
202
240 241
312
365
328 352
377 399
2005 2006 2007 2008 2009 2010 2011 2012e 2013e 2014e 2015e
Domestic consumption growth
Source: Brazilian Central Bank
14
Estimates point to 7.3% growth in net sales for 2013
Retail Net Sales in Brazil (USD bn)
Source: Euromonitor
A and B social classes will reach 15% of Brazilian population by 2014
Brazil’s wealth distribution improve
Social classes in Brazil (% of the population)
7%
38%
55%
2003
A and B
C
D and E
29%
2014
15%
56%
15
Multiplus’ focus
Source: Social Policies Center of FGV-Rio
Note: Average income of classes D and E - R$ 6,126/year; class C - R$13,944/year; and classes A and B - R$ 75,942 /year.
95 115
142 174
215 256
314
386 426
485
550
622
2004 2005 2006 2007 2008 2009 2010 2011 2012e 2013e 2014e 2015e
Credit card usage increase
Credit Card Transaction Value in Brazil (BRL bn)
In 2015, credit card transaction value may exceed R$600 bilion
16
Sources: ABECS and LCA Consultores/Valor
29 36
41 46
50 57
70
81 85
89 92
96
2004 2005 2006 2007 2008 2009 2010 2011 2012e 2013e 2014e 2015e
Air transportation growth
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Board pax in domestic flights (mn)
Argentina
Peru
Brazil
Colombia
Ecuador
Chile
UK
Mexico
USA
2,74
2,56
0,76
0,49
0,47
0,46
0,46
0,40
0,39
Trips per capta (as of 2011)
Latin America is the second fastest growing region in RPK
Sources: ANAC, Bain & Company and LCA Consultores
Brazilian loyalty industry in early stages
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60,7%
43,8%
37,7%
28,9% 28,6%
24,1% 21,9%
19,5%
14,0% 12,9% 8,9%
5,2% 4,1% 3,5% 2,5%
Penetration of loyalty programs in total population (%)
Sources: loyalty programs websites and each country statistic data bureau (Updated in Dec/2012)
Innovative business model
Multiple growth drivers
Diversification goals
Driving value to members and partners
Branding, innovation and knowledge
Investment case
Long term goals
12%
3%
85%
Current
TAM Retail, Industry and Services Banks
Note: based 3Q12
Long term target
Long term target
15 to 20%
15 to 20%
Costs of redemptions
Gross billings
95%
5%
Current
Air Tickets Others
20
Increased retail share will help to sustain margins and make members to better understand the concept
Non-air redemptions growth supports unit cost control and member experience improvement
0,03 0,06 0,07 0,09 0,10
0,25
0,43
0,56 0,61 0,62
1,06
22,6% 23,0% 22,6% 22,6% 23,0% 23,3% 24,0% 24,1% 23,4% 22,5% 22,0%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Breakage rate is declining slowly as expected while non-air
redemptions become robust
Non-air redemptions x breakage rate (bn & %)
21
Non-air redemptions surpassed 6% of total for the first time in 3Q12
Innovative business model
Multiple growth drivers
Diversification goals
Driving value to members
and partners
Branding, innovation and knowledge
Investment case
Two side market: members and partners
23
168
190 200 207
230
3Q11 4Q11 1Q12 2Q12 3Q12
8,9 9,4
9,8 10,1 10,5
3Q11 4Q11 1Q12 2Q12 3Q12
Partners
Members, in R$ million 10.5 mn members can gather
points from several programs in
one single account
230 partners gain a powerful
support acquiring and retaining
clients
Members (mn)
Generate value to members and partners will sustain
growth
24
Branding, Innovation and Knowledge
Sustainable Growth
Adding value to partners
• sales increase • lower retention costs • vacancy management • new business insights based on client
data and behavior
Creating a good member experience
• broad network • targeted offers • fair pricing • recognition
Adding value to partners: sales increase
25
Adding value to partners: vacancy management
26
Adding value to partners: new clients
27
Creating a good member experience: fair pricing
28
Multiplus 69,400
Program B 75,647
Program C 81,800
Program D 98,400
Program E 115,800
32-Inch LED TV
Dec/2012
Program C 71,700
Program B 48,600
Multiplus 35,900
Wine cellar
Dec/2012
Creating a good member experience: targeted offers
29
Creating a good member experience
30
Sample A members collect
about 60% more points
than Sample B members during 12 months following
redemption date
Sample A
Sample B
redemption
no redemption
Sample A and B members with same accrual behavior
Measuring accrual gap after redemption date
Note: CRM analysis based on Multiplus‘ 2011-2012 data
Innovative business model
Multiple growth drivers
Diversification goals
Driving value to members and partners
Branding, innovation and
knowledge
Investment case
Using Multiplus you can accumulate points from different loyalty programs
in a single account
Branding a very new concept
32
Redeem your points to have moments you would never put on sale
Emotional as of Oct/2012
Functional Jan/2010 ~ Oct/2012
Online media
Channels
Strategy
Radio spots Partner channels Press media
Marketing campaign (1/4)
33
Marketing campaign (2/4)
34
Marketing campaign (3/4)
35
Marketing campaign (4/4)
36
Innovation
37
Evo
luti
on
Points based loyalty
program
Free tickets issuance
IT F
ocu
s
Integration with alliances and banks
Multi-partners platform
Point of sales features
Multi-channel e-commerce
platforms
Advanced analytics tools
Loyalty program based on # of
flights
Coaliton expansion
Coalition network
Best next offer to partner,
member and Multiplus
Strong increase in # of offers
We are here
Knowledge: finding the next best offer
38
Portfolio map Member segmentation
Breakage rate
Profitabi-lity
Transac-tion
behavior
Engage-ment
Accrual volume
Profile data
Member behavior
Expected breakage
impact
Product category
Partner needs
Product cost
Product seasona-
lity
Next best offer
maximizes member experience, value
added to partner and Multiplus profitability
Innovative business model
Multiple growth drivers
Diversification goals
Driving value to members and partners
Branding, innovation and knowledge
Investment case
High corporate governance standards
40
Novo Mercado (New Market)
100% tag along rights
Audit committee and Fiscal Counsel
Independent board member
Ordinary share only
Good results
41
High Growth R$491,4 million in Gross Billings in the 3Q12, a 23,7% growth vs same quarter of 2011
More than R$650 million in FCF
(Sep 12, last 12 months)
More than R$1 billion in dividends and interest on
capital since IPO
Strong cash generation
MPLU3 is one of top 100 most liquid Brazilian
stocks (average of R$15 million per trading session)
Attractive dividend payout
Improving stock liquidity
Contact IR Team +55 11 5105 1847 [email protected] www.multiplusfidelidade.com.br/ir