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2012 Annual and Special Meeting of Shareholders
 

2012 Annual and Special Meeting of Shareholders

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    2012 Annual and Special Meeting of Shareholders 2012 Annual and Special Meeting of Shareholders Presentation Transcript

    • 2012 ANNUAL AND SPECIALMEETING OF SHAREHOLDERSMay 4, 2012
    • ROBERT BROWNChairman
    • BOARD OF DIRECTORSLeft to right: Alan Rossy, Rupert Duchesne, Joanne Ferstman, John Forzani, Hon. Michael Fortier, Douglas Port, Robert Brown, David Laidley, Roman Doroniuk• Robert Brown (Chairman) • Joanne Ferstman • David Laidley• Roman Doroniuk • Michael Fortier • Douglas Port• Rupert Duchesne • John Forzani • Alan Rossy Annual and Special Meeting of Shareholders 3
    • INVESTMENT HIGHLIGHTS• Solid performance in 2011• Strong balance sheet• Demonstrated solid cash flow over the past 6 years• Attractive dividend• Share buyback Annual and Special Meeting of Shareholders 4
    • TODAY’S AGENDA• Formal Part of the Meeting• Financial Highlights• Strategic Overview• Q&A• Closing Remarks Annual and Special Meeting of Shareholders 5
    • FORMAL PARTOF THE MEETING
    • FORWARD-LOOKING STATEMENTSForward-looking statements are included in the following presentations. These forward-looking statements are identified by the use of terms andphrases such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “will”, “would”, and similar terms andphrases, including references to assumptions. Such statements may involve but are not limited to comments with respect to strategies, expectations,objectives, goals, aspirations, intentions, planned operations or future actions.Forward-looking statements, by their nature, are based on assumptions and are subject to important risks and uncertainties. Any forecasts,predictions or forward-looking statements cannot be relied upon due to, among other things, changing external events and general uncertainties of thebusiness and its corporate structure. Results indicated in forward-looking statements may differ materially from actual results for a number of reasons,including without limitation, dependency on top accumulation partners and clients, conflicts of interest, greater than expected redemptions for rewards,regulatory matters, retail market/economic conditions, industry competition, Air Canada liquidity issues, Air Canada or travel industry disruptions,airline industry changes and increased airline costs, supply and capacity costs, unfunded future redemption costs, failure to safeguard databases andconsumer privacy, changes to coalition loyalty programs, seasonal nature of the business, other factors and prior performance, foreign operations,legal proceedings, reliance on key personnel, labour relations, pension liability, technological disruptions and inability to use third party software,failure to protect intellectual property rights, interest rate and currency fluctuations, leverage and restrictive covenants in current and futureindebtedness, uncertainty of dividend payments, managing growth, credit ratings, as well as the other factors identified throughout this presentationand throughout our public disclosure record on file with the Canadian securities regulatory authorities.The forward-looking statements contained herein represent the expectations of Groupe Aeroplan Inc., doing business as Aimia (“Aimia”), as of May 3,2012, and are subject to change after such date. However, Aimia disclaims any intention or obligation to update or revise any forward-lookingstatements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.For further information, please contact Investor Relations at 416 352 3728 or trish.moran@aimia.com. Annual and Special Meeting of Shareholders 7
    • DAVID ADAMSExecutive Vice President andChief Financial OfficerFinancial Highlights
    • FY 2011 CONSOLIDATED FINANCIAL HIGHLIGHTS Year Ended % Change on an adjusted basis December 31, Reported Adjusted Reported Adjusted Adjusted Constant Adjustments Adjustments(5)($ millions except per share amounts) 2011 2011 2010 2010 Year Over Year Currency (6)Gross Billings 2,233.2 - 2,233.2 2,187.8 (17.4) 2,170.4 2.9% 3.1%Gross Billings from sale of Loyalty Units 1,560.8 - 1,560.8 1,457.8 - 1,457.8 7.1% 7.2%Total Revenue (1) 2,115.9 136.0 2,251.9 2,056.2 - 2,056.2 9.5% 9.7%Cost of rewards and direct costs 1,332.9 - 1,332.9 1,295.3 (53.1) 1,242.2 7.3% 7.3%Gross margin (1) (2) 783.0 136.0 919.0 761.0 53.1 814.1 12.9% 13.3% Gross margin (%) 37.0% 40.8% 37.0% 39.6% 122 bps 130 bpsDepreciation and amortization 129.5 - 129.5 122.8 - 122.8 5.5% 5.9%Operating expenses (3) 612.5 (53.9) 558.6 542.6 35.7 578.3 (3.4%) (2.7%)Operating income (1) (3) 41.0 189.9 230.9 95.6 17.4 113.0 104.3% 102.9%Share of net earnings of PLM (4.4) - (4.4) - - - na naNet earnings (1) (3) (77.0) 185.4 108.5 8.3 17.4 25.7 ** **Non-GAAPAdjusted EBITDA(1) 342.2 10.4 352.6 285.5 - 285.5 23.5% 23.6% Adjusted EBITDA margin (%) 15.3% na 15.8% 13.1% na 13.2% 263 bps 261 bpsFree Cash Flow before dividends paid 197.6 197.6 221.2 221.2 (10.7%) naFree Cash Flow before dividends paid per common share (4) 1.04 1.04 1.08 1.08 (3.8%) na (1) Reported 2011 includes the $136.0 million effect of an adjustment to the Breakage estimate related to the Nectar and Air Miles Middle East programs, impacting Revenue from Loyalty Units by $95.2 million and $40.8 million, respectively, and Adjusted EBITDA by $10.4 million. (2) Before depreciation and amortization. (3) A $53.9 million impairment charge was recorded in the fourth quarter of 2011 related to the US proprietary loyalty Cash Generating Unit. (4) Calculated as: (Free Cash Flow before common and preferred dividends paid, less preferred dividends)/ weighted average common shares outstanding. (5) Reported 2010 results included the positive impact on Gross Billings and Adjusted EBITDA of an accounting reclassification of deferred revenue amounts previously recorded in customer deposits, offset by the net negative impact on Operating Income and Adjusted EBITDA of the ECJ VAT Judgment. (6) Constant Currency excludes the translation effect of foreign operations on the consolidated results. For more information on Constant Currency, please refer to Aimia’s February 22, 2012 earnings press release. ** information not meaningful 9
    • SAINSBURY’S AND HSBC CONTRACT RENEWAL + + Middle East Wins with existing clients in both Customer Loyalty and Business Loyalty • Win-Win-Win 7-year agreement • Extension of agreement with anchor Billings Decrease in Gross sponsor in mostly explained by the • Sainsbury’s – more engaged members program phasing out of a portion of the Visa business in the US • Members – improved value proposition • HSBC to fund higher engagement$5.8MM representing • Nectar – improved economics • HSBC – more engaged members • £40 million promissory note to be repaid on • Members – improved value proposition July 1, 2012 • Air Miles Middle East – improved economics These 2 contracts will be accretive to Adjusted EBITDA and Free Cash Flow commencing in 2012 Annual and Special Meeting of Shareholders 10
    • PROPRIETARY LOYALTY UPDATE AND US IMPAIRMENT• Proprietary Loyalty (formerly Carlson Marketing), a key business in our full suite offering, continues to demonstrate: – A significant improvement in overall value for the entire business as a whole when compared to our original purchase price – Adjusted EBITDA margins which are holding to our expectations – Tens of millions of $ in synergies savings• Our US business has not performed to our expectations, mainly on account of the economy, accordingly we: – Installed new management team and right sized the business for future growth – Took an impairment charge of $54 million against goodwill, based on lower cash flow projections and our outlook for the US economy Proprietary Loyalty - Global Business Year Ended % Change on an adjusted basis (Formerly Carlson Marketing) December 31, Constant ($ millions) 2011 2010 Year Over Year Currency (4) (1) (3) Gross Billings 642.3 617.9 4.0% 4.3% (2) (3) Adjusted EBITDA 48.7 42.1 15.7% 14.5% Adjusted EBITDA margin (%) 7.6% 6.8% 77 bps 66 bps (1) Gross Billings including $83.5 million of inter-company billings to Aeroplan Canada for non-air rewards for the year ended December 31, 2011 and excluding a $17.4 million positive accounting adjustment relating to the reclassification of customer deposits to deferred revenue, recorded in the year ended December 31, 2010. (2) Adjusted EBITDA excluding $20.2 million of restructuring and reorganization costs for the year ended December 31, 2011 and $14.4 million of migration costs for the year ended December 31, 2010. (3) Gross Billings and Adjusted EBITDA excluding a $17.4 million positive accounting adjustment recorded in the second quarter of 2010. (4) Constant Currency excludes the translation effect of foreign operations on the consolidated results. For more information on Constant Currency, please refer to Aimia’s February 22, 2012 earnings press release. Annual and Special Meeting of Shareholders 11
    • CONSOLIDATED GROSS BILLINGS FY 2010 FY 2011 ($ millions) ($ millions) $2,233.2 $2,187.8 ($17.4) $2,170.4 +2.9%growth; +3.1% in c.c.(1) 2010 Reported Accounting Adjustment (US / Excluding Accounting 2011 Reported EMEA) Adjustment (1) Constant Currency excludes the translation effect of foreign operations on the consolidated results. For more information on Constant Currency, please refer to Aimia’s February 22, 2012 earnings press release. Annual and Special Meeting of Shareholders 12
    • DELIVERING HEALTHY GROSS BILLINGS GROWTH FY 2011 FY 2005 ($ millions) ($ millions) 2,187.8 2,233.2 1,501.0 1,447.3 952.2 851.9 754.8 +196%growth (1) (1) 2005 2006 2007 (2) 2008 2009 2010 2011 (1) Pre-2007 results are those of the partnership. (2) Has been derived by adding the results of the Partnership prior to March 14, 2007 to the results of the Fund for the year. Annual and Special Meeting of Shareholders 13
    • CONSOLIDATED ADJUSTED EBITDA FY 2011 ($ millions) FY 2010 $20.7 (3) $368.4 ($ millions) $342.2 $10.4 $352.6 ($4.9) $9.1 $329.4 $14.4 $20.4 $285.5 $17.4 $285.5 ($17.4) +11.8%growth; +11.9% in c.c.(1) 2010 Reported Accounting VAT Loss (EMEA) Excluding Nectar Italia Carlson Marketing Corporate Costs Excluding Noted 2011 Reported Breakage Excluding Restructuring & Online Store Excluding Noted Adjustment (US / Accounting Launch Costs Migration Costs Items Adjustment Breakage Reorganization Adjustment Items EMEA) Adjustment and Adjustment Charges VAT FY’10 margin(2) = 15.2% FY’11 margin(2) = 16.5% (1) Constant Currency excludes the translation effect of foreign operations on the consolidated results. For more information on Constant Currency, please refer to Aimia’s February 22, 2012 earnings press release. (2) Adjusted EBITDA excluding noted items over Gross Billings excluding accounting adjustment. 14 (3) Restructuring and reorganization charges of $23.3 million net of $2.6 million related to forfeiture of stock based rewards.
    • GROWING CONSOLIDATED ADJUSTED EBITDA (1) FY 2005 FY 2011 ($ millions) ($ millions) 342.2 319.2 316.2 281.6 285.5 251.7 216.4 168.1 +13 per cent CAGR (2) (3) 2005 (2) 2006 2007 2008 2009 2010 2011 (1) Adjusted EBITDA pre-2010 as reported under previous Canadian GAAP; 2010 and 2011 as reported under IFRS. (2) Pre-2007 results are those of the partnership. (3) Has been derived by adding the results of the Partnership prior to March 14, 2007 to the results of the Fund for the year. Annual and Special Meeting of Shareholders 15
    • FREE CASH FLOWFree Cash Flow (1) FCF/ Common Share (2)($ millions) $221.5 $221.2 $1.08 $197.6 $197.6 $1.08 $1.04 YTD2011 FY 2011 FY 2010 FY 2011 YTD2010 FY 2010 (1) Free Cash Flow before common and preferred dividends paid. (2) Calculated as: (Free Cash Flow before common and preferred dividends paid, less preferred dividends)/ weighted average common shares outstanding. Annual and Special Meeting of Shareholders 16
    • LIQUIDITY Mar 31, 2012 Dec 31, 2011 ($ millions) On April 13, 2012, Aimia extended the term of its existing Cash and cash equivalents $179.8 $202.1 $300 million revolving facility by 2 years to April 23, 2016 and Restricted cash $17.4 $15.1 obtained an additional revolving facility in an amount not to Short-term investments $52.9 $58.4 exceed $200 million, for any term it may request not extending Long-term investments in bonds $280.7 $279.7 beyond the new maturity date. $530.8 $555.3 On April 23, 2012, Senior Secured Notes Series 1 of $200 Current portion of long-term debt $200.0 $200.0 million were repaid with funds drawn from the additional Long-term debt $372.1 $386.7 revolving facility. Total Debt $572.1 $586.7 Annual and Special Meeting of Shareholders 17
    • COMMON DIVIDENDSAIM Payout Ratio Dividend YieldDividend policy will continue to be reviewed annually to ensure that 6.0%growth in the payout ratio is proportionate to Aimia’s free cash flowgeneration. 5.0% $113 $108 $100 4.0% 3.0% $29 2.0% 1.0% 2009 2010 2011 2012 0.0% Common Preferred Q110 Q210 Q310 Q410 Q1Q111 Q2 Q211 Q311 Q411 1/4/2010 2/4/2010 3/4/2010 4/4/2010 5/4/2010 6/4/2010 7/4/2010 8/4/2010 9/4/2010 10/4/2010 11/4/2010 12/4/2010 1/4/2011 2/4/2011 3/4/2011 4/4/2011 5/4/2011 6/4/2011 7/4/2011 8/4/2011 9/4/2011 10/4/2011 11/4/2011 12/4/2011 1/4/2012 2/4/2012 3/4/2012 4/4/2012 Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q112 2010 2010 2010 2010 2011 2011 2011 2011 2012 • Common Share Dividend Increase of 6.7% to $0.64 per share per year Dividend yield exceeds 5% based on May 3, 2012 closing price Annual and Special Meeting of Shareholders 18
    • COMMON SHARE REPURCHASE SUMMARY Average Common Total Common Shares Repurchased (MM) Price PerInitial NCIB Shares Consideration Common Average Price per Common Share Repurchased (MM) ShareTotal Shares Repurchased to May 13, 2011 19,983,631 $233.0 $11.66 $12.58 $12.34Renewed NCIBMay 16, 2011 – December 31, 2011 6,262,800 $75.8 $12.10 $10.94January 1, 2012 – March 31, 2012 480,000 $5.9 $12.30 13.0 13.2Initial and Renewed NCIBTotal Shares Repurchased to 26,726,431 $314.7 $11.77March 31, 2012March 31, 2012 – May 3, 2012 1,481,900 $18.3 $12.35Total Shares Repurchased 28,208,331 $333.0 $11.81 2.0Total Common Shares Outstanding as at: FY 2010 FY 2011 Q1 2012March 31, 2012 173.4 millionMay 3, 2012 171.9 million Annual and Special Meeting of Shareholders 19
    • Q1 2012 AND 2012 GUIDANCEFor Q1 2012: • Gross Billings of $537 million, up 2.1% on a constant currency basis, excluding Qantas. • Adjusted EBITDA was $89 million or a 22.5% increase from last year. • Free Cash Flow before dividends paid was up $39.5 million to $18.3 millionConfirming 2012 Guidance: • Gross Billings growth of between 3% to 5%(1) • Adjusted EBITDA of between $370 to $380 million and • Free Cash Flow before dividends paid of between $220 and $240 million (1) The Gross Billings growth guidance excludes the effect of a client loss (Qantas) in APAC at the end of the first quarter of 2012. The target growth ranges are based on 2011 reported Gross Billings, excluding $40 million related to Qantas. The client loss will have a negligible impact on Adjusted EBITDA Annual and Special Meeting of Shareholders 20
    • RUPERT DUCHESNEGroup Chief ExecutiveStrategic Overview
    • EXECUTIVE TEAM Left to right: Vince Timpano, Susan Doniz, Rupert Duchesne, Liz Graham, Mark Hounsell, Sandy Walker, David Johnston, Melissa Sonberg, David Adams• Rupert Duchesne • Liz Graham • Melissa Sonberg• David Adams • Mark Hounsell • Vince Timpano• Susan Doniz • David Johnston • Sandy Walker Annual and Special Meeting of Shareholders 22
    • STRATEGIC OVERVIEW• 2011: A record year for Aimia• Advancements in our EMEA region• Officially launched the new brand Annual and Special Meeting of Shareholders 23
    • STORY OF AIMIA Only full suite loyalty providerwith operations in more than 20 countries Aeroplan formed Groupe Aeroplan as stand-alone entity Italia becomes Aimia of Air Canada1984 1991 2002 2005 2006 2007 2008 2009 2010 2011 IPO of Aeroplan Income Fund Aeroplan to a Corporation 1984-1990 Income Fund (Groupe Aeroplan Inc.) Annual and Special Meeting of Shareholders 24
    • UNMATCHED GLOBAL SCALE AND SCOPE Canada UK Italy USA Japan Lebanon Bahrain Jordan Qatar Mexico Egypt UAE Hong Kong Oman India SingaporeConsolidated Gross Billings Brazil Indonesia Malaysia F2011 $2.23B Chile Australia New 58% THE Zealand LARGEST Canada PURE PLAY 42% Rest of World LOYALTY COMPANY IN THE WORLD Annual and Special Meeting of Shareholders 25
    • A MULTINATIONAL COMPANY INSPIRING LOYALTY THROUGHA FULL-SUITE GLOBAL OFFERING Coalition Loyalty Programs Loyalty Data Analytics Proprietary Loyalty Services Annual and Special Meeting of Shareholders 26
    • US & ASIA PACIFIC• 2011: A year of repositioning• Continue to build out loyalty capabilities• Signed with Standard Chartered Bank Annual and Special Meeting of Shareholders 27
    • EUROPE, MIDDLE EAST AND AFRICA UK Middle East Italy Annual and Special Meeting of Shareholders 28
    • EUROPE, MIDDLE EAST AND AFRICANectar UK• Key driver of growth in 2011• All-time high with 18.5 million members• British Gas has already become our second largest partner• Addition of easyJet Annual and Special Meeting of Shareholders 29
    • CONTRACT RENEWAL WITH SAINSBURY’S Annual and Special Meeting of Shareholders 30
    • EUROPE, MIDDLE EAST AND AFRICAMiddle East• Contract extension with HSBCNectar Italia• Country’s largest loyalty program with 9 million members• Good year despite tough trading environment Annual and Special Meeting of Shareholders 31
    • INTELLIGENT SHOPPER SOLUTIONS:World Leading Experts in Loyalty Analytics # 1 drug retailer # 2 supermarket #2 supermarket #2 Grocery retailer in world in Switzerland in Australia in Canada Annual and Special Meeting of Shareholders 32
    • CANADA• Record results in 2011Proprietary Loyalty• Strong cost management• Expansion to new verticals• Realization of synergies Annual and Special Meeting of Shareholders 33
    • AEROPLAN CANADA2011: A record year for Aeroplan• Solid top line growth• Low cost per mile redeemed• Focus on effective productivity and expense management• Expanded earn potential with Costco Canada• Contract renewals with Imperial Oil – Esso and Home Hardware• Ongoing improvements Annual and Special Meeting of Shareholders 34
    • INVESTING IN OUR FUTUREBecoming the recognized global leader in loyalty management2011: Aimia completed a number of important strategic initiatives that willfurther our objectives. Annual and Special Meeting of Shareholders 35
    • CLUB PREMIERAn opportunity to replicate the successful Aeroplan Canada business in Mexico• Aimia increased its equity investment to nearly 30% of Club Premier, Aeromexico’s frequent flyer program• After first year in business, Club Premier has more than 3 million members• Launched co-branded credit card with Banamex, Mexico’s leading retail bank• Signed on key retail partnerships: • Soriana, one of the major Mexican grocers, launched earlier this year • Sanborn’s, a large chain of convenience stores, is expected to launch in Q2 2012• Club Premier has exceeded expectations• It is anticipated that Club Premier will provide significant return to Aimia shareholders Annual and Special Meeting of Shareholders 36
    • CARDLYTICS: UNLOCKING THE SIGNIFICANTPOTENTIAL VALUE OF NON-CURRENCY LOYALTY Merchant Consumers Banks • Significantly better ROI • Trusted advertising channel • Valuable customer rewards from precise targeting • Superior consumer at no cost • Unparalleled visibility experience • Revenue share • Protects customer data Annual and Special Meeting of Shareholders 37
    • NEW VENTURESBrazil• Joined forces with Multiplus, Brazil’s leading loyalty network• Build, grow and transform the loyalty marketing services industryIndia• Partnership with Tata Capital, a major force in the Indian market• Develop and seek out partners• Establish a retail coalition Annual and Special Meeting of Shareholders 38
    • CORPORATE SOCIAL RESPONSIBILITY• Support employee-led initiatives around the globe• Enhancing our global corporate carbon footprint measurement• Refining and establishing our global CSR philosophy Annual and Special Meeting of Shareholders 39
    • AN EXCITING FUTURE AHEAD• New brand supports our vision of inspiring loyalty• Large geographic scope OUR PRIORITIES ARE FOCUSED ON• Aimia is best positioned to compete in increasingly DELIVERING LONG- intense competitive environment by offering the global TERM SUSTAINABLE full-suite of products and services – coalition, proprietary GROWTH FOR OUR SHAREHOLDERS and loyalty analytics• Investing in our future Annual and Special Meeting of Shareholders 40
    • AN EXCITING FUTURE AHEAD COALITION LOYALTY PROPRIETARY LOYALTY ANALYTICS LOYALTY Annual and Special Meeting of Shareholders 41
    • Q&A
    • THANK YOU