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Aimia CFO David Adams presents at the CIBC Retail and Consumer Conference


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March 28, 2012

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Aimia CFO David Adams presents at the CIBC Retail and Consumer Conference

  1. 1. CIBC Retail &Consumer ConferenceMarch 28, 2012
  2. 2. FORWARD-LOOKING STATEMENTSForward-looking statements are included in the following presentations. These forward-looking statements are identified bythe use of terms and phrases such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”,“project”, “will”, “would”, and similar terms and phrases, including references to assumptions. Such statements may involvebut are not limited to comments with respect to strategies, expectations, objectives, goals, aspirations, intentions, plannedoperations 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, changingexternal events and general uncertainties of the business and its corporate structure. Results indicated in forward-lookingstatements may differ materially from actual results for a number of reasons, including without limitation, dependency on TopAccumulation 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 tosafeguard databases and consumer privacy, changes to coalition loyalty programs, seasonal nature of the business, otherfactors and prior performance, foreign operations, legal proceedings, reliance on key personnel, labour relations, pensionliability, technological disruptions and inability to use third party software, failure to protect intellectual property rights, interestrate and currency fluctuations, leverage and restrictive covenants in current and future indebtedness, uncertainty of dividendpayments, managing growth, credit ratings, as well as the other factors identified throughout this presentation andthroughout our public disclosure record on file with the Canadian securities regulatory authorities.The forward-looking statements contained herein are subject to change. However, Groupe Aeroplan Inc., doing business asAimia (“Aimia”), disclaims any intention or obligation to update or revise any forward-looking statements whether as a resultof 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 . 3
  4. 4. A MULTINATIONAL COMPANY INSPIRING LOYALTYTHROUGH A FULL-SUITE GLOBAL OFFERING Coalition Loyalty Programs Loyalty Data Analytics Proprietary Loyalty Services 5
  6. 6. UNMATCHED GLOBAL SCALE AND SCOPE Canada UK Italy USA Japan Lebanon Bahrain Jordan Qatar Mexico Egypt UAE Hong Kong Oman India Singapore Brazil Malaysia Indonesia Consolidated Gross Billings Chile F2011 Australia $2.23B New Zealand 58% THE LARGEST PURE PLAY 42% Canada LOYALTY COMPANY IN Rest of World THE WORLD 7
  7. 7. . . . WITH SIGNIFICANT OPPORTUNITY FOR EXPANSION Canada UK Italy Japan USA Bahrain Lebanon Jordan Qatar Mexico Egypt UAE Hong Kong Oman India Malaysia Singapore Brazil Indonesia Consolidated Gross Billings Chile (Projected) Australia New Zealand 50% Area’s for potential global expansion Canada Rest of World 50% THE LARGEST PURE PLAY LOYALTY COMPANY IN THE WORLD 8
  8. 8. DELIVERING HEALTHY GROSS BILLINGS GROWTH F2005 F2011 ($ millions) ($ millions) 2,187.8 2,233.2 1,501.0 1,447.3 952.2 851.9 754.8 +196%growth 2005 2006 2007 2008 2009 2010 2011 9
  9. 9. GROWING CONSOLIDATED ADJUSTED EBITDA F2005 F2011 ($ millions) ($ millions) 342.2 316.2 281.6 285.5 251.7 216.4 168.1 +13 per cent CAGR 2005 2006 2007 2008 2009 2010 2011 (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. (3) Restructuring and reorganization charges of $23.3 million net of $2.6 million related to forfeiture of stock based rewards. 10
  10. 10. A SIGNIFICANT GENERATOR OF FREE CASH FLOW Free Cash Flow (1) Free Cash Flow / Common ($ millions) Share (2) $1.08 $1.04 (3) $221.5 $221.2 $197.6 $0.42 $81.5 (3) $36.3 $0.06 FY 2011 FY 2010 Q4 2011 Q4 2010 FY 2011 FY 2010 Q4 2011 Q4 2010Dividends(4) $ 113.5 $ 107.6 $ 28.9 $ 26.2Free Cash Flow(5) $ 84.1 $ 113.7 ($ 16.5) $ 55.3 (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. (3) Free Cash Flow before common and preferred dividends paid as reported of $197.6 million excluding funding of the prepaid card liability of $23.9 million in the US business in the fourth quarter of 2011. (4) Common and preferred dividends paid. (5) Free Cash Flow after common and preferred dividends paid. 11
  11. 11. DEMONSTRATING RELIABILITY WITH A STRONGBALANCE SHEET AND INVESTMENT GRADE RATINGBalance Sheet Dec 31, 2011 Dec 31, 2010 Completed multiple bond issues with declining yieldsCash and cash equivalents $202.1 $538.6Restricted cash $15.1 $12.6Short-term investments $58.4 -- Long-term debt withLong-term investments in bonds $279.7 $176.9 laddered maturities $555.3 $728.1 Strong free cash flowCurrent portion of long-term debt $200.0 -- generation = flexibilityLong-term debt $386.7 $643.9Equity attributable to equity holders of the Corporation $1,305.6 $1,632.2Equity $1,291.5 $1,635.1 INVESTMENT GRADE RATING IS CRITICAL TO EXECUTION OF GLOBAL EXPANSION 12
  12. 12. INCREASING SHAREHOLDER RETURNWITH AN ATTRACTIVE COMMON SHARE DIVIDENDDividends Paid($ millions) Current annual dividend is $0.60 per common share – $113 increased by 20% $108 in 2011 $100 Dividend to be reviewed annually Payout ratio has historically been approximately 50% 2009 2010 2011 Common Preferred 13
  13. 13. INCREASING SHAREHOLDER RETURNTHROUGH A COMMON SHARE REPURCHASEPROGRAMAimia Common Shares Outstanding 26.2 million common 200M shares repurchased since May 2010 173.8M Average repurchase price: $11.77 Reduced common shares outstanding by 13% since May 2010 14
  14. 14. A STRONG CORE AND MORE: CREATING LONG-TERM VALUETHROUGH GLOBALIZATION AND EXPANSION STRATEGY• Grow core coalition & proprietary loyalty businesses – Top line growth – Value-added digital products and services – Operating leverage and margin expansion• Expand operations – Greenfield coalition programs (e.g. Italy, India, U.S.) – Investments in frequent flyer programs (Aeromexico / Club Premier) – Joint ventures with industry leaders (Tata in India, Multiplus in Brazil)• Globalize our world leading data analytics expertise and capitalize on digital revolution – ISS – head room to grow with strong worldwide retail pipeline and 100+ retailers with sales of $10B+ – Aggressively pursuing digital and mobile strategy and looking at possible partners leading the space 15
  16. 16. CLUB PREMIER: AN OPPORTUNITY TO REPLICATE THESUCCESSFUL AEROPLAN CANADA BUSINESS IN MEXICO• Aimia acquired 28.6% of Club Premier, Aeromexico’s frequent flyer program for cash consideration of US$35 million – currently Aimia exercises joint control with Aeromexico through governance and significant shareholder rights• After first year in business, Club Premier has 3 million members and delivered: − US$115 million in Gross Billings − More than 30% Adjusted EBITDA margin (more than US$34.5 million)• 2011 was first full year of operations with many successes, including: − Launched co-branded credit card with Banamex, Mexico’s leading retail bank − Signed on key retail partnerships which are expected to launch in early 2012• The Club Premier investment should exceed Aimia’s target return on equity hurdle of 15 per cent over a 5-year hold period.• Given Club Premier’s performance to date, it is anticipated that Aimia will recover its initial investment within 3-4 years• It is anticipated that Club Premier will be in a position to begin paying dividends to Aimia in 2012 17
  17. 17. DATA IS AT THE HEART OF EVERYTHING THAT WE DO• and we are well positioned with the advance of mobile and digital in global loyalty . . . Digital Mobile Social 18
  18. 18. INTELLIGENT SHOPPER SOLUTIONS:WORLD LEADING EXPERTS IN LOYALTY DATA ANALYTICS# 1 drug retailer # 2 supermarket #2 supermarket #2 Grocery retailer in world in Switzerland in Australia in Canada 19
  19. 19. 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 20
  20. 20. WE ARE DEFINING THE FUTURE OF GLOBAL LOYALTY• Aimia is a global leader in loyalty management• New brand supports our vision of inspiring loyalty• Aimia is best positioned to compete in increasingly OUR PRIORITIES intense competitive environment by offering the ARE FOCUSED ON global full-suite of products and services – DELIVERING LONG- TERM coalition, proprietary and data analytics SUSTAINABLE GROWTH FOR OUR• Loyalty data analytics and digital/mobile are at the SHAREHOLDERS core of everything we do and will define the future of loyalty• Global loyalty market represents significant growth opportunity by 2015: ~$100B (estimated) 21
  21. 21. A STRONG INVESTMENT THESIS ANDCOMPELLING RISK-ADJUSTED RETURN • Barriers to Entry / Member, Partner and Client Stickiness AttractiveBusiness Model • Full-Suite Offering / Proprietary Systems / Unparalleled Expertise • Strong Brands / Solid Market Share/ Operating Leverage Strong Free • Low Capital Intensity / High ROIC Cash Flow • $0.60 Annual Dividend per Common Share Generation • Common Share Repurchase Attractive • Track Record for Consistent Gross Billings Growth Growth • Large Global Loyalty Market OpportunityOpportunities • Unparalleled Loyalty and Data & Analytics ExpertiseSolid Financial • Substantial Free Cash Flow / Increasing Capital FlexibilityCharacteristics • Investment Grade Rating • Solid Cash / Reserve Position and Low Refinancing Risk 22
  22. 22. THANK YOUFor further information, please contact: