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2013 11 18   investor presentation (en) 2013 11 18 investor presentation (en) Presentation Transcript

  • Investor Presentation November 2013
  • 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 forwardlooking 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. 2
  • Four main reasons to be confident in Multiplus case 4 3 2 First mover 1 Early stages We are pioneers in this industry in Brazil and we already have a strong partnership network, Brazilian loyalty industry highlighting LATAM has very low Airlines, all local banks penetration and presents solid growth drivers and the joint venture with our international peer, AIMIA Group. Solid strategy Track record Our business sustainability is based on network Multiplus has already 3 years of proven focus on diversification, member engagement shareholders return with high dividend payouts. Moreover, we are continuously improving our governance structure following the best market practices. and value delivery to partners
  • Four main reasons to be confident in Multiplus case 4 3 2 First mover 1 Early stages We are pioneers in this industry in Brazil and we already have a strong partnership network, Brazilian loyalty industry highlighting LATAM has very low Airlines, all local banks penetration and presents solid growth drivers and the joint venture with our international peer, AIMIA Group. Solid strategy Track record Our business sustainability is based on network Multiplus has already 3 years of proven focus on diversification, member engagement shareholders return with high dividend payouts. Moreover, we are continuously improving our governance structure following the best market practices. and value delivery to partners
  • Brazilian loyalty industry is still in early stages Penetration of loyalty programs in total population (%) 60,7% 43,8% 37,7% 28,9% 28,6% 24,1% 21,9% Average (ex-Multiplus): 22.2% 19,5% 14,0% 12,9% High growth potential 8,9% 5,2% Sources: loyalty programs websites and each country statistic data bureau (Updated in Dec/2012) 5 4,1% 3,5% 2,5%
  • Multiple long term growth drivers Credit Card usage Expected double digit growth for next 3 years 35% of customers understands that they have enrolled in a bank loyalty program (vs. 31% in Only 2011) Air transportation Latin America is the region in RPK trips per capita is only 0.5 in Average Brazil vs more than 2.0 in mature markets Consumption Possible high single digit growth for next 3 years second fastest growing Wealth distribution A/B classes expected to reach 15% in 2014 (vs 7% in 2003) Loyalty culture still in the 6 early stages Multiplus network focus on A, B and C+
  • Coalition model: an evolution from traditional loyalty scheme Single Loyalty Scheme Traditional Coalition Loyalty Loyalty program managed by Coalition Co Flexible Coalition Loyalty Loyalty program managed by Coalition Co Loyalty program managed by Partner Commercial partners • Limited number of partners Members • Low accumulation power • Redemption option limited to airline tickets 7 Commercial partners • Access to a broader consumer base • Limited capacity to attract new partners (loyalty program managed by Coalition Co.) Members • Better accumulation power • More redemption options Commercial partners • Access to a broader consumer base • More flexible structure is more appealing for new partners (especially those who already have an own loyalty program) Members • Better accumulation power • More redemption options
  • Sources of profit: coalition THREE SOURCES OF PROFIT points selling redemption 1 unit revenue less unit cost spread 3 # of months 0 ~10 CASH IN 2 8 ~10 months float interest income CASH OUT point expiration breakage 24
  • Sources of profit: analytics and proprietary loyalty 50% 50% Design and develop loyalty scheme for third-party Manage and perform on data analytics services Create incentive campaigns for third-party The consolidation of Prismah’s results is being done by the accounting process called equity method 9
  • Four main reasons to be confident in Multiplus case 4 3 2 First mover 1 Early stages We are pioneers in this industry in Brazil and we already have a strong partnership network, Brazilian loyalty industry highlighting LATAM has very low Airlines, all local banks penetration and presents solid growth drivers and the joint venture with our international peer, AIMIA Group. Solid strategy Track record Our business sustainability is based on network Multiplus has already 3 years of proven focus on diversification, member engagement shareholders return with high dividend payouts. Moreover, we are continuously improving our governance structure following the best market practices. and value delivery to partners
  • Created from TAM Fidelidade, Multiplus has already three years of track record Dec/2011 Multiplus becomes one of TOP 100 most liquid stocks in Bovespa Oct/2011 Multiplus presents its new brand Apr/2012 Multiplus reaches 10 mn members Feb/2010 Multiplus’ IPO 1993 Creation of TAM Fidelidade Nov/2011 Announcement of JV with AIMIA 2009 Spin-off from TAM Fidelidade 11 Aug/2010 New headquarters and IT loyalty platform Mar/2012 Multiplus reaches 200 partners Mai/2013 launched the new‖ campaign on several media vehicles Oct/2013 Improved corporate governance structure Jun/2013 Non-air redemptions reached 8% for the first time in a quarter
  • Consistent network growth 466 partners gain a powerful support acquiring and retaining clients 11.9 Members, in R$ million mn members can gather points from several programs in one single account 11,9 Members (mn) 10,9 466 Partners SMEs 369 Main partners Total 9,4 190 8,0 151 2010 12 2011 2012 2013 2010 2011 2012 2013
  • Strong partnership network Accrual partners 13 Coalition partners Redemption partners
  • Strategic long-term agreement with TAM Airlines Exclusive relationship Superior frequent flyer program High flexibility Wide redemption window High recognition to premium clients 14 15 years agreement automatically renewable for additional 5-year periods lower earn-to-burn ratios redemptions via TAM, LAN and their airline partners Points per seat vary according to flight fare with 100% availability, improving Multiplus competitive advantage up to 360 days before flight date fee exemptions, lowered points requirement, complimentary upgrades and up to 100% bonus points
  • Solid relationship with banks 1 Activation bonus points per each new credit card activated 2 Spending bonus points according to the volume of points transferred 3 Targeting segmented offers to engage an specific member group Targeted redemption offers 15
  • Four main reasons to be confident in Multiplus case 4 3 2 First mover 1 Early stages We are pioneers in this industry in Brazil and we already have a strong partnership network, Brazilian loyalty industry highlighting LATAM has very low Airlines, all local banks penetration and presents solid growth drivers and the joint venture with our international peer, AIMIA Group. Solid strategy Track record Our business sustainability is based on network Multiplus has already 3 years of proven focus on diversification, member engagement shareholders return with high dividend payouts. Moreover, we are continuously improving our governance structure following the best market practices. and value delivery to partners
  • Sales growth: consistent track record Gross Billings (BRL mn) Points issued (bn) 2.021 85,2 1.871 85,2 2012 LTM Sep 13 76,2 1.525 53,2 1.119 2010 17 2011 2012 LTM Sep 13 2010 2011
  • Cash generation and shareholders’ return FCF* (BRL mn) Dividends and Interest on own capital (BRL mn) 589,0 861,3 460,6 489,4 387,8 222,4 225,2 2012 LTM Sep 13 112,3 2010 2011 2012 LTM Sep 13 *Excluding Dividends, Interest on Capital and variations of Prepaid Expenses and Capital (2012 and 2013 are adjusted with R$ 71.3 of anticipated settlement in Accounts Payable) 18 2010 2011* *Including a BRL 600 million capital reduction More than BRL 1.4 billion already distributed since the IPO
  • High corporate governance standards 1 2 Novo Mercado (New Market) Related Parties Subjects Special Committee 100% tag along rights Independent members 3 Ordinary share only 4 30% of independent board members If rejected The proposal needs majority Board approval 5 If approved The proposal needs unanimity Board approval Special Committee Special Committee: Audit, Finance, Governance and Related Parties Committee 19
  • Four main reasons to be confident in Multiplus case 4 3 2 First mover 1 Early stages We are pioneers in this industry in Brazil and we already have a strong partnership network, Brazilian loyalty industry highlighting LATAM has very low Airlines, all local banks penetration and presents solid growth drivers and the joint venture with our international peer, AIMIA Group. Solid strategy Track record Our business sustainability is based on network Multiplus has already 3 years of proven focus on diversification, member engagement shareholders return with high dividend payouts. Moreover, we are continuously improving our governance structure following the best market practices. and value delivery to partners
  • Diversification goals Points sold Current Long term target 19% 78% 10 to 15% 3% TAM Retail, Industry and Services Increased retail share will help to sustain margins and improve members engagement Banks Points redeemed Long term target Current 14% 86% Air Tickets Note: based 3Q13 21 Others 20 to 25% Non-air redemptions growth supports unit cost control and member experience improvement
  • Breakage rate: gradual decline as expected while non-air redemptions becomes robust 2,85 Non-air redemptions x breakage rate (bn points & %) 24,0% 24,1% 23,4% 23,0% 22,6% 22,6% 23,0% 23,3% 22,6% 22,5% 22,0% 21,3% 19,9% 19,6% 19,1% 1,25 1,15 1,06 0,84 0,56 0,61 0,62 4Q11 1Q12 2Q12 0,43 0,25 0,03 0,06 0,07 0,09 0,10 1Q10 2Q10 3Q10 4Q10 1Q11 22 2Q11 3Q11 3Q12 4Q12 1Q13 2Q13 3Q13
  • Generate value to members and partners will sustain growth Adding value to partners Creating a good member experience • • • • • • • • • • • • • sales increase lower retention costs vacancy management new business insights based on client data and behavior develop loyalty schemes data analytics services Incentive campaigns broad network targeted offers fair pricing recognition user friendly e-commerce platform mobile applications Branding, Innovation and Knowledge Sustainable Growth 23
  • Adding value to partners: sales increase 24
  • Adding value to partners: vacancy management 25
  • Adding value to partners: vacancy management 26
  • Redemptions turn people more interested in collecting points redemption Sample A members collect Sample A Sample B 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 27 about 60% more points than Sample B members during 12 months following redemption date
  • Creating a good member experience: fair pricing 32-Inch LED TV Multiplus 69,400 Program B 75,647 Program C 81,800 Program D 98,400 Program E 115,800 Dec/2012 Wine cellar Program C 71,700 Dec/2012 28 Program B 48,600 Multiplus 35,900
  • Segmented offers by a balance of points generates attractiveness increases in approximately 30% the amount of sending offers points redeemed within 3 days following the sending (vs. average) And contributes to the activation rate of members 29
  • Communication from the amount of points to expire generates engagement 35% increase in the number of members who joined the offers vs control group 30
  • Branding the emotional concept Strategy Functional Emotional Jan/2010 ~ Oct/2012 as of Oct/2012 Using Multiplus you can accumulate points from different loyalty programs in a single account Redeem your points to have moments you would never put on sale Channels Online media 31 Radio spots Press media Partner channels
  • Campaign: “Points you collect, moments you will never forget” 32
  • Appendix
  • New air-ticket redemption model: Member experience and business sustainability 1 Stability of unit cost The cap and floor ensure a maximum variation of 5% in unit cost 2 Alignment of interests with the airline Number of points per seat based on classes 3 Natural hedge The international airline tickets are denominated in U.S. dollars 4 Attractiveness of the redemption offers 360 days window and more promotional offers Effective since June 2013 34
  • New pricing model methodology ILLUSTRATIVE Previous model Setup period New pricing model Multiplus` implicit discount Unit cost (R$) Discounted market price Air tickets market price Cap Average Floor Today 12 months data gathering Jun/2013 ~Aug/2014 • Unit cost set according to a combination of TAM’s marginal cost and revenue displacement • Data gathering of fares available at redemption moment • Short term fluctuations due to TAM’s promotional activity • Discount measurement • Multiplus pays discounted market price per seat • 5% cap and floor protect margin and guarantee business sustainability Long haul and South America flights priced in USD 35
  • Income statement (1/2) 3Q13 vs 3Q12 (R$ thousand) Income Statement Gross revenue 3Q12 3Q13 3Q13 vs 2Q13 2Q13 417,668 520,027 24.5% 439,332 18.4% Sale of points 364,984 469,120 28.5% 379,447 23.6% TAM Airlines 52,619 43,456 -17.4% 40,838 Banks, Retail, Industry and Services 6.4% 312,365 425,664 36.3% 338,609 Breakage 57,829 60,893 5.3% 64,532 -5.6% Hedge (5,956) (10,661) 79.0% (5,457) 95.4% Other revenues Taxes on sales 810 (39,226) 675 (49,155) -16.7% 25.3% 810 (40,767) 25.7% -16.7% 20.6% Net Revenue 378,442 470,872 24.4% 398,565 18.1% C ost of the points redeemed (274,669) (356,697) 29.9% (286,634) 24.4% (261,853) (321,120) 22.6% (270,388) 18.8% Air tickets Other products / services Total cost of services rendered Equity Share on Results from Investments in JV Gross Profit Gross Margin 36 (12,816) (35,577) 177.6% (16,246) 119.0% (274,669) (356,697) 29.9% (286,634) 24.4% (1,081) (2,082) 92.6% (1,703) 22.2% 102,692 27.1% 112,093 23.8% 9.2% -3.3p.p. 110,228 27.7% 1.7% -3.9p.p.
  • Income statement (2/2) 3Q13 vs 3Q12 (R$ thousand) Income Statement Gross services Sharedrevenue Sale of points Personnel expenses TAM Airlines Marketing 3Q12 3Q13 3Q13 vs 2Q13 2Q13 417,668 (1,907) 520,027 (882) 24.5% -53.7% 439,332 (473) 18.4% 86.4% 364,984 (10,367) 469,120 (11,806) 28.5% 13.9% 379,447 (11,964) 23.6% -1.3% 52,619 (4,394) 43,456 (8,027) -17.4% 82.7% 40,838 (6,404) 6.4% 25.3% 25.7% 16.7% Banks, Retail, Industry and Services Depreciation 312,365 119 425,664 (2,308) 36.3% -2036.6% 338,609 (1,978) Breakage Other 57,829 (14,955) 60,893 (17,047) 5.3% 14.0% 64,532 (16,539) -5.6% 3.1% (5,956) (31,503) (10,661) (40,070) 79.0% 27.2% (5,457) (37,359) 95.4% 7.3% Hedge Total Operating Expenses Other revenues Taxes on sales Total Costs and Operating Expenses Net Revenue Operating Income C ost of the points Operating Margin redeemed Air tickets Other products / services Financial Income/Expenses Total cost of services rendered Hedge Equity IncomeShare on Results from Investments before income tax and social in JV contribution Gross Profit Income tax and social contribution Gross Margin Net Income Net Margin 37 810 675 (39,226) (307,253) (49,155) (398,849) 378,442 -16.7% 810 -16.7% (40,767) (325,695) 470,872 25.3% 29.8% 24.4% 71,189 (274,669) 18.8% (261,853) 72,023 (356,697) 15.3% (321,120) 1.2% 29.9% -3.5p.p. 22.6% 72,869 (286,634) 18.3% (270,388) -1.2% 24.4% -3.0p.p. (12,816) 20,972 (274,669) 9,691 (35,577) 25,977 (356,697) (4,142) 177.6% 23.9% 29.9% -142.7% (16,246) 17,880 (286,634) (7,972) 119.0% 45.3% 24.4% -48.0% (1,081) 101,852 (2,082) 93,858 92.6% -7.8% (1,703) 82,777 22.2% 13.4% 102,692 (35,274) 112,093 (31,662) 110,228 (25,342) 27.1% 23.8% 9.2% -10.2% -3.3p.p. 1.7% 24.9% -3.9p.p. -6.6% 57,434 66,578 17.6% 62,196 13.2% -4.4p.p. 398,565 27.7% 14.4% 20.6% 22.5% 18.1% 18.8% 8.3% -1.2p.p.
  • Balance sheet: assets (R$ thousand) Balance Sheet 3Q12 3Q13 vs 3Q12 3Q13 3Q13 vs 2Q13 2Q13 Assets 1,470,506 1,533,838 4.3% 1,529,342 0.3% Current assets 1,367,809 1,452,130 6.2% 1,437,166 1.0% 3,410 58.3% 747,623 27.7% C ash and cash equivalentes 791 5,399 1,004,160 954,572 Financial assets held-to-maturity 164,700 13,072 Accounts receivable 157,084 162,310 3.3% 3,302 4,264 29.1% 20,592 299,676 Financial assets at fair value through profit and loss Deferred income tax and social contribution Related Parties Derivative instruments 582.6% -4.9% -92.1% 1355.3% 12,782 2.3% 215,802 -24.8% 5,269 -19.1% 429,630 -30.2% - - N.A. - N.A. Prepaid expenses 5,089 - -100.0% - N.A. Other receivables 12,091 12,837 6.2% 22,650 -43.3% 102,697 81,708 92,176 -11.4% Non-current assets Financial assets - bank deposits - Financial assets held-to-maturity Deferred income tax Derivative financial instruments Other accounts receivable -20.4% - N.A. 12,113 - 19,562 10,067 - 68 - N.A. -100.0% - N.A. -48.5% 16,008 -37.1% -100.0% - N.A. 12,754 532 -95.8% 5,293 -89.9% Investments 5,491 9,181 67.2% 11,263 -18.5% Property, plant and equipment 2,370 6,942 3,951 75.7% 50,339 54,986 9.2% 55,661 -1.2% - - N.A. - N.A. Intangible assets Related Parties 38 192.9%
  • Balance sheet: liabilities and shareholders' equity (R$ thousand) Balance Sheet 3Q12 3Q13 vs 3Q12 3Q13 3Q13 vs 2Q13 2Q13 Liabilities and shareholders' equity Assets 1,470,506 1,533,838 4.3% 1,529,342 0.3% Current liabilities assets 1,219,161 1,367,809 1,365,449 1,452,130 12.0% 6.2% 1,378,760 1,437,166 -1.0% 1.0% Suppliers cash equivalentes C ash and 122,222 791 154,240 5,399 26.2% 582.6% 151,022 3,410 2.1% 58.3% 9,415 1,004,160 12,187 954,572 29.4% -4.9% 9,509 747,623 28.2% 27.7% Tax, charges and contributions Financial assets held-to-maturity 3,767 164,700 4,113 13,072 9.2% -92.1% 3,963 12,782 Income and social contribution tax Accounts receivable 24,104 157,084 9,870 162,310 -59.1% 3.3% 12,523 215,802 -21.2% -24.8% N.A. 29.1% 5,269 N.A. -19.1% 34,870 429,630 -53.3% -30.2% Salaries and payroll taxes Financial assets at fair value through profit and loss Interest on own capital and dividends Deferred income tax and social contribution 3,302 4,264 32,522 20,592 16,294 299,676 Deferred revenue Derivative instruments 875,464 - 1,031,089 - Breakage liabilities Prepaid expenses 140,801 5,089 134,054 - Other liabilities receivables 10,866 12,091 3,602 12,837 Dividends payable - - Derivative financial instruments Related Parties Non-current assets -49.9% 1355.3% 3.8% 2.3% 1,022,699 - 0.8% N.A. -4.8% -100.0% 136,676 - -1.9% N.A. -66.9% 6.2% 7,498 22,650 -52.0% -43.3% N.A. - 17.8% N.A. N.A. 102,697 81,708 -20.4% 92,176 Non-current liabilities Financial assets - bank deposits 9,595 - 99 - -99.0% N.A. 107 - Related parties held-to-maturity Financial assets 12,113 - N.A. -100.0% - N.A. Derivative financial instruments Deferred income tax 9,464 19,562 10,067 -100.0% -48.5% 16,008 N.A. -37.1% Deferred revenue instruments Derivative financial 131 68 -99 -24.4% -100.0% 107 - -7.5% N.A. 12,754 532 -95.8% 5,293 -89.9% 241,750 5,491 168,290 9,181 -30.4% 67.2% 150,475 11,263 11.8% -18.5% 100,555 2,370 102,886 6,942 2.3% 192.9% 102,886 3,951 Other accounts receivable Equity Investments Share capital and equipment Property, plant -11.4% -7.5% N.A. 0.0% 75.7% C apital reserve Intangible assets (4,956) 50,339 333 54,986 -106.7% 9.2% (996) 55,661 -133.4% -1.2% EarningsParties Related reserve 18,744 - 20,577 - 9.8% N.A. 20,577 - 0.0% N.A. C arrying value adjustments (44,024) (22,718) -48.4% (31,570) -28.0% Retained Earnings (loss) 171,431 -60.8% 59,578 12.8% 39 67,212
  • Thank you! Contact IR Team +55 11 5105-1847 invest@pontosmultiplus.com.br www.pontosmultiplus.com.br/ir Ronald Domingues Ivan Bonfanti Filipe Scalco Fernanda Camiña