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Investor Presentation - November 2011
Investor Presentation - November 2011
Investor Presentation - November 2011
Investor Presentation - November 2011
Investor Presentation - November 2011
Investor Presentation - November 2011
Investor Presentation - November 2011
Investor Presentation - November 2011
Investor Presentation - November 2011
Investor Presentation - November 2011
Investor Presentation - November 2011
Investor Presentation - November 2011
Investor Presentation - November 2011
Investor Presentation - November 2011
Investor Presentation - November 2011
Investor Presentation - November 2011
Investor Presentation - November 2011
Investor Presentation - November 2011
Investor Presentation - November 2011
Investor Presentation - November 2011
Investor Presentation - November 2011
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Investor Presentation - November 2011

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NDR Frankfurt, Amsterdam, Paris - 21/11/2011, 22/11/2011, 23/11/2011

NDR Frankfurt, Amsterdam, Paris - 21/11/2011, 22/11/2011, 23/11/2011

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  • 1. 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. 2
  • 3. Multiplus is a growing loyalty network Network connecting people and companies around 9 mln 20.0 bln almost 170 members points sold in 3Q11 partnerships +17.0% YoY +38.5% YoY +26.3% YoY points from several programs in positive network effect powerful support for partners to one single account generating strong growth acquire and retain clients Multiplus Exclusive and Strategic Relationship with TAM 2009: spin-off from TAM’s loyalty program Long term agreement (15 years + additional 5 year periods) 2010: launched as separated business unit and IPO Most desired airline in Brazil (Ibope Research) and Star Alliance member TAM SA holds 73,2% stake Air tickets: most appealing redemption with high value perceptionNote: based on 3Q11 3
  • 4. Innovative business model Strong cash generation Low CAPEX requirement Negative working capital Scalable business Debt free Dividend player Sources of Profit (Joint Venture) outsourcing and CRM points selling $ services redemption unit revenue less unit cost $ spread point expiration $ breakage # of months 0 ~10 24 CASH IN CASH OUT ~10 months float $ interest income 4
  • 5. Growing coalition network… Magazine Air Travel Travel Agency Gas Stations Bookstore Hotels Telecom Pay-TV Apparel Education Suscriptions Others Stock Exchange Members can collect and also redeem points in any coalition partner. Stock Broker Drugstore Real Estate Universities e-Commerce Beauty and Furniture and Gym Food Home Centers Groceries Insurance Car Rental Group Buying Pension Plan Healthy DecorationNote: blank slots refer to targeted segments 5
  • 6. … and strong accrual and growing redemption network* Accrual Redemption Charity Hotels Financial Institutions Leisure Car Rental Retail and others Other Magazines and Newspapers *non exhaustive 6
  • 7. Strategy: to diversify gross billings and redemptions Gross billings of points what? to diversify gross billings Current Long term target and redemptions 24% why? 3% • Average unit price increase • Average unit cost reduction 15 to 20% 73% • Controlled breakage decline, favoring member experience TAM Retail, Industry and Services Banks and volume growth Costs of rewards Long term margin expansion Current Long term target how? 98% • Expanding partnerships network 2% 15 to 20% • Increasing marketing actions • Improving client experience Air Tickets OthersNote: based on 3Q11 7
  • 8. Expanding partnerships networkNew partnerships Expanding partnership network # +26.3% +4.3% Drugstore Group buying 166 161 168 151 133 7 12 15 19 20 Pension Plan Car Rental 3Q10 4Q10 1Q11 2Q11 3Q11 Total Coalition NOTE: Some partnerships with bad performance were canceled in 2Q11. Tickets Charity Increasing non-airline redemptions As % of total points redeemed 3,2% 2,0%Roadmap 0,8% 0,8% 0,9% Groceries, entertainment, restaurants, beauty, others. 3Q10 4Q10 1Q11 2Q11 3Q11 NOTE: it includes points issued before 2010 (TAM’s inventory) 8
  • 9. Increasing marketing actionsMedia investments Expanding member base Together is so much better. Together is Multiplus. In millions +17.4% +3.7% On board videos TV commercial 8,6 8,9 8,0 8,3 7,6 Press media 3Q10 4Q10 1Q11 2Q11 3Q11 Radio spots, etc Growing gross billings R$ millions 32.4% +12.1%Point-of-sale materials 397,3 325,2 339,9 354,6 300,0 3Q10 4Q10 1Q11 2Q11 3Q11 (collect points here) 9
  • 10. Improving client experience Point of Sale 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 ($) = 1 Multiplus point Special rules allowed (such as minimum ticket) adding more value to the partner Multiplus as one product of Redecard’s sales team New website coming soon Other actions Call Center improvements Educational mailings Systems improvements 10
  • 11. Loyalty market has multiples growth opportunities Expanding credit card usage in Brazil Increasing domestic consumption Credit Card Transaction Value (R$ billions) Personal Consumption Expenditure (R$ billions) CAGR +22% CAGR +12% 2,226 1,966 1,787 314 1,594 256 1,429 215 174 142 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Source: ABECS Source: IBGE Growing passenger traffic (Airline Segment) Improving wealth distribution RPK in Brazil (billions) 23% Social classes in Brazil* (% of the population) Multiplus’ target 70 57 48 44 40 2005 2010 2006 2007 2008 2009 2010 Source: ANAC Source: Research Cetelem- Ipsos 2010 *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. 11
  • 12. Appendix
  • 13. Appendix I:Business Model Partnerships network Loyalty Marketing Services Accrual Redemption Coalition Outsourcing CRM (Joint Venture) Partners Partners Partners Partners Partners buy Multiplus buys Two-way flow: The JV will The JV will points from points, products exchange of manage the leverage theMultiplus to award or services from points, products loyalty program of database from its its customers partners to deliver and services (buy(Ex. banks, parking the partner network and to its members and sell) between and stores) (Ex. donation and (systems and offers CRM Multiplus and tickets) operations) services coalition partners (Ex. air travel, e-commerce and gas station) Status Status Operational Planning 13
  • 14. Appendix II:Shareholders’ Structure and Stock Performance Shareholders’ Structure Average Stock Price and Average Daily Trading Volume Average Daily Trade Volume (R$ million) 29,66 29,28 Average Stock Price 28,85 28,32 27,95 27,40 27,54 27,28 26,29 25,80 25,48 24,99 TAM S.A. 23,36 24,74 19,96 17,48 17,87 15,99 16,58 16,17 14,90 19,4 z z 73,14% 26,86% 15,3 13,3 12,3 11,4 10,5 9,7 9,5 8,8 8,2 8,2 7,9 7,6 6,1 6,6 6,4 5,0 5,6 4,1 2,1 2,4 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct 2010 2011 14
  • 15. Appendix III:Loyalty Market Penetration as % of population Multiplus member base penetration as % of population North 52,8 3,6 Northeast 2,5 46,9 Central-West 6,4 Southeast 35,7 5,2 31,0 27,6 27,3 South 4,5 23,7 23,5 21,0 18,0 15,7 13,4 13,0 9,5 9,4 4,4 3,8 2,3 Nectar UK Smiles BRA Flying Blue FRA Miles&More DEU AirMiles CAN AirMiles UK Club Premier MEX FlyBuys AUS Sky Miles USA Aeroplan CAN Nectar ITA JAL Mileage Bank JPN LANPASS CHL Multiplus BRA FlyBuys NZL AAdvantage USA Velocity AUS Qantas Program AUSSource: Principal Global Indicators and Companies’ website and reportsNotes: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 AeroMexico2. 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. 15
  • 16. Appendix IV:3Q11 results Operating highlights Item 3Q11 YoY QoYPoints issued 20.0 bln +38.5% +7.9%Points redeemed 12.5 bln +171.7% +14.7%Breakage rate 24.0% +140bps +70bps Financial highlights Item 3Q11 YoY QoYGross 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 +64.5% -14.6% (margin of 24.3%)Adjusted EBITDA R$ 82.3 mln -7.0% +1.3% (margin of 22.2%)Net Income R$ 51.3 mln +15.3% -36.8% (margin of 16.0%) 16
  • 17. Appendix V:Income Statement (R$ thousand) 3Q11 vs 3Q11 vs 3Q10 3Q11 2Q11 Income Statement 3Q10 2Q11 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. 17
  • 18. Appendix VI: Balance Sheet and Cash Flow(R$ thousands) 3Q11 vs 3Q11 vs (R$ thousand) 3Q10 3Q11 2Q11Balance Sheets 3Q10 2Q11 Cash Flow 3Q11Assets 1,257,006 1,140,986 -9.2% 1,013,420 12.6% Net Income 51.317Current assets 1,102,918 929,163 -15.8% 830,818 11.8%C ash and cash equivalentes 19,166 5,372 -72.0% 23,820 -77.4% Depreciation/Amortization 1.288Investments 614,647 474,115 -22.9% 644,884 -26.5% Accounts Receivable -43.954Accounts Receivable 91,647 175,483 91.5% 131,529 33.4%Related Parties 363,136 267,435 -26.4% 22,320 1098.2% Accounts Payable 418 C urrent account 30,157 28,916 -4.1% 22,320 29.5% Taxes -24.715 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% Related Parties -16.114Derivative Instruments 0 3,712 N.A. 5540 -33.0%Other receivables 207 747 260.6% 901 -17.0% Prepaid Expenses Increase -400.000 Prepaid Expenses Reduction 161.480Non-current assets 154,088 211,823 37.5% 182,602 16.0%Prepaid expenses 142,377 0 -100.0% 0 N.A. Deferred Revenue and Breakage liabilities 52.758Long term investments 0 160,572 N.A. 155,588 3.2% Derivative Instruments 56.107Deferred income tax and social contribution 755 20,039 2555.0% 268 7371.0%Derivative Instruments 0 36 0.0% 0 0.0% Other assets and liabilities 7.599Property, plant and equipment 760 1,158 52.3% 1,127 2.7%Intangible 0 16,852 N.A. 17,900 -5.9% Operating Cash Flow -153.815Intangible assets 10,196 13,166 29.1% 7,720 70.5% Investiment -5.717Liabilities and shareholder’s equity 1,257,006 1,140,986 -9.2% 1,013,421 12.6% Cash Flow from Investing Activities -5.717Current liabilities 541,993 847,427 56.4% 779,941 8.7%Suppliers 5,139 3,569 -30.5% 3,151 13.3% Net proceeds from public offer 0Taxes 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% C apital 0Breakage liabilities 155,162 124,158 -20.0% 133,683 -7.1%Derivative Instruments 0 23,514 N.A. 2,663 782.9% Dividends 0Other liabilities 6,610 18,734 183.4% 20,806 -10.0% Other -24.701Non-current liabilities 0 33,464 0.0% 0 0.0% Cash Flow from Financing Activities -24.701Derivative Instruments 0 33,464 0.0% 0 0.0%Equity 715,012 260,095 -63.6% 233,479 11.4% Increase (Decrease) in Cash -184.233C apital 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% C ash at beginning of period* 824.292Reserves 0 5,919 N.A. 5,919 0.0%Retained Earnings (loss) 45,949 203,373 342.6% 152,056 33.7% C ash at end of period* 640.059 18
  • 19. Appendix VII:Currency Hedge Fundamentals Position in September 2011 (USD mln) 4Q11 2012 2013 Total• Multiplus is exposed to NOTIONAL 51.0 303.0 255.0 609.0 foreign exchange risk as PUT* 1.75 1.80 1.88 1.83 most of the agreements with CALL* 1.85 1.90 1.99 1.93 financial institutions are * average strike prices (BRL/USD) denominated in USD.• These partners represented SENSITIVITY ANALYSIS approximately 70% of Impact on company’s cash flow (Notional: USD 609.0 mln) R$ million Multiplus’ gross billings in 15,2 15,2 15,0 13,8 11,9 12,1 3Q11. 11,2 11,2 9,0 9,0 9,0 8,5• The Financial Risk 5,4 5,8 5,8 6,0 6,3 3,8 3,8 4,0 3,9 2,5 Policy determines coverage 1,5 0,1 limits and the list of eligible -0,7 -0,7 -1,1 -0,5 financial instruments -1,6 -1,9 -1,8 -3,1 -6,1 -5,5 -6,6 -6,6 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 19
  • 20. Appendix VIII:Hedge Accounting in 4 steps 1 2 3 4 HedgeHEDGE Mark-to-Market Hedge Expiration ConstructionMULTIPLUS Points PointsPOINTS Sale Redemption Zero Cost Collar Intrinsic Value Cash results of hedge Cash results of hedge (purchase of a put recorded in Equity operations are operations areCOMMENTS option and the sale of a and Time value in assigned to some recorded in operating call option) or other Financial results. points sold in the same results instruments. period (based on first Intrinsic Value out rule) Balance Sheet EQUITY OperatingRESULTS Time Value Balance Sheet Results Financial EQUITY AND CASH Results NON-CASH Item Main variables IMPORTANT:Option value Intrinsic value + Time value The Company does not have any CSA in placeIntrinsic value Strike price and Current exchange rate and thus cannot be called for margin in any of its derivative contracts whichever the scenario.Time value Maturity, Volatility and Interest Rate Differential (BRL vs USD) 20
  • 21. Strong cash generation Low CAPEX requirement Contact IR team +55 11 5105 1847Negative working capital Scalable business invest@multiplusfidelidade.com.br www.multiplusfidelidade.com.br/irDebit free Dividend player

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