Investor Presentation - August 2011

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NDR Rio de Janeiro - 12/08/2011


  • 1.Investor PresentationAugust 2011

2. Disclaimer This notice may contain estimates for future events. These estimates merely reflect the expectations of the Companys 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 managements 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. About MultiplusTAMs Loyalty ProgramLaunched in 1993 The first airline loyalty program in Brazil More than 1,000 destinations worldwideMultiplusPowerful support for partners to acquire andEstablished as separated business unit in 2009 retain clientsBeginning of operations and IPO in 2010 Members can gather all points from several programs in one single account Broad portfolio of rewards More than 8 million members More than 160 commercial partnerships Scalable business Low CAPEX requirement Recurring Free Cash Flow Market Cap of R$ 4.2 billion**based on August 3rd 20113 4. Flexible Business ModelAcmuloAccrual Redemption CoalitionOutsourcingCRM PartnersPartners Partners Partners Partners buy Multiplus buysTwo-way flow: Multiplus Multipluspoints frompoints, productsexchange ofmanages theleverages the Multiplus to awardor services frompoints, productsloyalty program of database from itsits customers partners to deliver and services (buythe partnernetwork and to its members and sell) between(systems andoffers CRMMultiplus and operations) servicescoalition partners4 5. Coalition Partnerships Network (members can earn and redeem points)MagazineAir TravelTravel Agency Gas Stations Bookstore Hotels Telecom Pay-TV Apparel Education Suscriptions UniversitiesStock ExchangeGymDrugstoreFood Beauty andGroup buyingFurniture andHome CentersGroceriesCar Rental Insurance Pension Plane-CommerceHealthy DecorationNote: blank slots refer to targeted segments5 6. Accrual and Redemption Partnerships* AccrualRedemption Financial Institutions *non exhaustive 6 7. Business Model Gross Billings of points Multiplus sells points Costs of rewards TAMAir Tickets Retail, Industry and Servicesand buys rewards Others BanksCurrent Current26%Sources of Profit98%SpreadMargin between point price and3%cost of rewards2% 71%Breakage zPoints expiring without beingredeemed Long Term Target Interest income on the floatLong Term TargetGap between sales and redemptionsof pointsCross-selling of servicesOutsourcing and CRM 15 to 20% 15 to 20% Note: based on 2Q11 7 8. Growth OpportunitiesCredit Card Usage Consumption Credit Card Transaction Value (R$ billions) Personal Consumption Expenditure (R$ billions) CAGR +22%CAGR +12% 2.2261.9661.787314 1.594 256 1.429215 174142 2006 2007 2008 2009 2010 2006 2007 20082009 2010 Source: ABECS Source: IBGE Passenger Traffic (Airline Segment)Wealth Distribution RPK in Brazil (billions)Social classes* (% of the population)23% 7057 48 4440 2006 20072008 2009 201020052010 Source: ANACSource: 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. 8 9. Loyalty Market Penetrationas % of populationMultiplus member base penetration as % of populationNorth 52,83,6 Northeast2,5 46,9Central-West6,4Southeast35,75,231,027,6 27,3 South 4,523,7 23,521,018,015,713,413,0 9,59,44,4 3,8 2,3Club Premier MEX AirMiles UK Velocity AUS JAL Mileage Bank JPN Miles&More DEUFlyBuys AUSFlying Blue FRA Aeroplan CANMultiplus BRASmiles BRA AirMiles CAN Nectar UK Nectar ITA LANPASS CHLSky Miles USA FlyBuys NZL AAdvantage USA 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. 9 10. Main Strategic Objectives User-friendly Interface (new website, new tools, etc.) New Partners (and partnerships of higher added value) CustomerNew redemption optionsExperience (coalition)Operational EfficiencyShareholder BrandReturn PublicityNew membersBreakage ManagementCash ManagementPublicity of new conceptNew services Actions at sales outlet(CRM and outsourcing)Costs sharing with partner 11. Appendix 12. Appendix I:2Q11 HighlightsOPERATING HIGHLIGHTS 18.5 bln points issued, a growth of 51.4% versus 2Q10 and of 9.2% versus 1Q11 10.9 bln points redeemed, compared to 3.2 bln points in 2Q10 and 9.0 bln points in 1Q11 Average Breakage rate (12 months) of 23.3%, versus 23.0% in both periods 2Q10 and 1Q11 FINANCIAL HIGHLIGHTS Gross Billings of points of R$ 354.6 mln, an growth of 34.3% versus 2Q10 and of 4.3% compared to 1Q11 Net Revenue of R$ 285.1 mln, compared to R$ 93.5 mln in 2Q10 and R$ 242.0 mln in 1Q11 Net Income of R$ 81.2 mln, versus R$ 23.1 mln in the 2Q10 and R$ 70.9 mln in 1Q11 (margin of 28.5%) Adjusted EBITDA of R$ 81.2 mln, 2.8% higher than 2Q10 and 7.9% lower than 1Q11 (margin of 24.8%) 12 13. Appendix II:Exclusive and Strategic Relationship with TAMOperational Agreement Assures the Most Appealing Products to the Members = Air TicketsAirlines Leading airline in the Brazilian market and largest airline in Latin America Only Brazilian company with long haul flights Most Desired Airline in Brazil Ibope Research High penetration in South American flights There is no restriction to redeem points in domestic and within South America flights Access to Star Alliance benefits 15 years tenor Operational Agreement (automatically extended for additional five-year periods ) Detachment from cost and perceived valuewith the most appealing product to the public 13 14. Appendix III:Typical Accrual and Redemption FlowsAccrual flow: cash in due to sales of points to partnersPARTNER WITH STANDALONE PROGRAM POINTSA earnsaccumulatesPartners converts toPointsProgramMEMBERbuys Products andPARTNER WITH NO STANDALONE PROGRAM (consumer)ServicesB earnsRedemption flow: cash out due to purchase of points, products and services from partners and suppliers COALITION AND REDEMPTION PARTNERSPOINTSC converts toaccumulates Partners earnsPointsProducts ProgramandMEMBER redeemsServicesDearns (consumer)MULTIPLUS WEBISITEProductsandE earnsServices 14 15. Appendix IV:Income Statement (R$ thousand)2Q10 2Q112Q11 vs 2Q10 1Q112Q11 vs 1Q11 Income Statement Gross revenue102.951 314.567 205,6% 266.10418,2% Sale of points75.250224.200197,9%191.749 16,9% TAM Airlines - TLA 7.312 44.821513,0% 35.883 24,9% Banks, Retail, Industry and Services67.938179.379164,0%155.866 15,1% Breakage24.239 83.621245,0% 71.145 17,5% Hedge03.448 N.A.0N.A. Other revenues 3.4623.299-4,7% 3.2102,8% Taxes on sales-9.482-29.505211,2%-24.124 22,3% Net Revenue 93.469 285.063 205,0% 241.98017,8% Cost of the points redeemed-51.205 -174.085240,0% -136.226 27,8% Air tickets-51.087 -171.880236,4% -135.621 26,7% Other products / services -118 -2.205 1762,2% -605264,4% Accounting Adjustments -20--100,0%0N.A. Total cost of services rendered-51.225 -174.085239,8% -136.226 27,8% Gross Profit42.244 110.978 162,7% 105.754 4,9% Gross Margin45,2%38,9% -6,3p.p. 43,7% -4,8p.p. Shared services -2.012 -1.907-5,2%-1.9070,0% Personnel expenses-3.257 -6.991114,6% -9.256 -24,5% Marketing -269 -4.175 1449,5% -2.052103,4% Depreciation 0 -1.173 N.A.-1.032 13,7% Other -5.532 -6.399 15,7% -7.948 -19,5% Total Operating Expenses -11.070-20.645 86,5%-22.194 -7,0% Total Costs and Operating Expenses -62.295 -194.730212,6% -158.420 22,9% Operating Income31.17490.333 189,8%83.560 8,1% Operating Margin33,4%31,7% -1,7p.p. 34,5% -2,8p.p. Financial Income/Expenses3.853 33.825778,0% 25.184 34,3% Income before income tax and social contribution35.027 124.158 254,5% 108.74414,2% Income tax and social contribution -11.898-42.990261,3%-37.857 13,6% Net Income23.12981.168 250,9%70.88714,5% Net Margin24,7%28,5%3,7p.p. 29,3% -0,8p.p.15 16. Appendix V:Balance Sheet and Cash Flow(R$ thousands)2Q11 vs 2Q11 vs2Q102Q111Q11(R$ thousand)Balance Sheets2Q101Q11Cash Flow2Q11Assets1.062.523 1.013.420-4,6%1.482.205 -31,6%Net Income81.168Current assets 789.208 830.8185,3%1.306.111 -36,4%Cash and cash equivalentes2.40323.820 891,3% 16.86841,2%Depreciation/Amortization1.173Investments 333.862 644.88493,2%928.663-30,6%Accounts Receivable -10.208Accounts Receivable64.638 131.529 103,5%121.321 8,4%Related Parties 382.91922.320-94,2% 236.848-90,6% Accounts Payable