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Investor Presentation
October, 2010
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.
What is Multiplus?
3
Market Cap of R$ 4.4 billion•
Free float of R$ 1.2 billion
•
Controlled by TAM S.A. (73.2% stake)•
BM&FBovespa
“Novo Mercado”
listed
Market Cap of R$ 4.4 billion• Free float of R$ 1.2 billion • Controlled by TAM S.A. (73.2% stake)• BM&FBovespa
“Novo Mercado”
listed
3
The Leading Loyalty Coalition Network in Brazil•
Originated from TAM Fidelidade
Program •
7.2 million members
•
125 partnerships
The Leading Loyalty Coalition Network in Brazil• Originated from TAM Fidelidade
Program • 7.2 million members• 125 partnerships
1
Unique Business Model•
Scalable business with low CAPEX requirement
•
Recurring and solid Free Cash Flow•
High margins and high returns
Unique Business Model• Scalable business with low CAPEX requirement• Recurring and solid Free Cash Flow• High margins and high returns
2
Note: based on Oct 1 2010 data
Flexible Business Model
Partner A
PartnerA
Program
Partner A
PartnerC
Partner D
Partner B
PartnerA
ProgramA
Partners buy points from Multiplus to award its customers
Two-way flow: exchange of points (buy and sell) between Multiplus and coalition partners
Multiplus as the loyalty program of the partner
Multiplus leverages the database from its network and offers CRM services
CRM
4
AccrualAccrual CoalitionCoalition OutsourcingOutsourcing CRMCRM
growthopportunities
increases the attractiveness of partners’ loyalty program by connecting them to Multiplus
reaches
more sectors and companies
Typical Accrual and Redemption Flows
5
MEMBER(consumer)
Pointsearns Partner’sProgramaccumulates converts to
PARTNER WITH STANDALONE PROGRAM
PARTNER WITH NO STANDALONE PROGRAM
Accrual flow: cash in due to sales of points to partnersAccrual flow: cash in due to sales of points to partners
Redemption flow: cash out due to purchase of points, products and services from partners and suppliersRedemption flow: cash out due to purchase of points, products and services from partners and suppliers
earns
MEMBER(consumer)
Points
redeems
converts to Partner’sProgramaccumulates earns
COALITION PARTNER
earns
Products and
Services
Products and
Services
earns Multiplus Catalogue
buys
POINTS
POINTS
A
B
C
D
E
Gross Billings and Redemption breakdown
6Note: based on 1H10 data
Gross BillingsGross Billings Redemption CostsRedemption Costs
Airline Tickets99%
Other productsand services
1%
TAM26%
Banks, Retail, Industry and Services
74%
Spread(Margin between point price and
redemption cost)
Breakage revenue(points expiring before being
redeemed)
Interest incomeon the float
(gap between sales points and the redemptions of products and services)
Cross-selling of services
(outsourcing and
CRM)
Spread(Margin between point price and
redemption cost)
Breakage revenue(points expiring before being
redeemed)
Interest incomeon the float
(gap between sales points and the redemptions of products and services)
Cross-selling of services
(outsourcing and
CRM)
Sources of Profit
7
Broad Partnership Network*
Retail, Industries and Services
Retail, Industries and Services
Travel and Entertainment
Travel and EntertainmentFinancial InstitutionsFinancial InstitutionsCoalitionCoalition
High penetration potential in several other industries: financial, retail, clothing, education, public sector, corporate programs, etc.
*non
exhaustive
8
Growth Opportunities
142174
215256
2006 2007 2008 2009
Credit Card Transaction Value (R$ billions)CAGR +22%
Credit Card Usage
Source: ABECS
1,429 1,594 1,812 1,972
2006 2007 2008 2009
Personal Consumption Expenditure (R$ billions)
CAGR +11%
Consumption
Source: IBGE
4044
48
56
2006 2007 2008 2009
Passenger TrafficRPK in Brazil (billions)
17%
Source: ANAC
Wealth DistributionSocial classes* (% of the population)
Source: Ministry of Finance and FVG
36.0% 33.2% 30.9% 30.8%
50.0% 52.0% 53.8% 53.6%
14.0% 14.7% 15.3% 15.6%
2006 2007 2008 2009
A and B
C
D and E
*Note: classes D and E -
less than R$13,380/year; class C -
from R$13,380/year to R$57,684/year; and classes A and B -
above R$ 57,684/year.
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Exclusive and Strategic Relationship with TAM Leads to Significant Competitive Advantage
●
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 value with the most appealing product to the publicDetachment from cost and perceived value with the most appealing product to the public
Operational Agreement Assures the Most Appealing Products to the Members = Air TicketsOperational Agreement Assures the Most Appealing Products to the Members = Air Tickets
Airlines
10
Strategy
GrowthPartnershipsExpansion of the loyalty concept to new segmentsNew business with current partners
Members Higher penetration in the partners’ client baseIncreasing activationNew markets
StructurePeople
Corporate Governance
Systems
BrandingNew Concept Creation
Actions at the Point of Sale
Sharing costs with partners
MarginsRevenueTargeting high value added partnershipsNew services (outsourcing and CRM)
Costs New reward options with lower costBreakage management
2Q10 Results
12
2Q10 Highlights
Operating Highlights 2Q10 vs 1Q10
•
7.2 mln members, an increase of 4.1% (19.7% versus 2Q09)
•
12.2 bln points issued, a growth of 16.8%
•
3.2 bln points redeemed, an increase of 143.3%
•
125 accrual partnerships, representing an net increase of 4 partnerships
•
7 coalition partnerships, including the most recent partnership with Oi
(telecom company)
•
Breakage ratio of 28.7%, compared to 29.5%
Financial Highlights 2Q10 vs 1Q10
•
Gross Billings of points of R$ 264.0 mln, an increase of 14.6%
•
Net Revenue of R$ 93.5 mln, representing a growth of 129.2%
•
Adjusted EBITDA of R$ 90,2 mln, a growth of 11,8% (34,2% margin)
•
Net Income of R$ 23,1 mln, an increase of 209,2% (24,7% margin)
Promised and Delivered
13
Corporate Governance
Dividends and Interest on Equity•
Total amount: R$ 29.0 mln
(R$ 0.18 per share)
• Dividends: R$ 13.9 mln
(R$ 0.086 per share)
• Interest on Equity: R$ 15,2 mln
(R$ 0.094 per share)
•
Ex-date: August 5, 2010
•
Payment date: August 18, 2010
95% dividend Pay-out in the 1st semester of 2010
•
New CEO
•
New head office as the first step
for Multiplus’
values and culture
•
Own marketing structure focused on retail segment
•
Migration of TAM’s
agreements to Multiplus
Siebel Loyalty
Implementation will allow:
•
Simultaneous operation of different loyalty programs
•
Improvement of commercial capacity through Customer Portal and Customer Service
•
Agility in the inclusion of new partners and faster transaction processing
•
Increase of data storage capacity
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