Edenred Sa · EURONEXT:EDEN
Edenred Sa — FY2018 Earnings Presentation
59 slides from Edenred Sa's earnings presentation, Feb 22, 2019
Slide 1: 2018 Annual Results
2018 Annual Results February 22, 2019
Slide 2: Disclaimer
DISCLAIMER Financial data for 2018 are provided in accordance with IFRS 15 and IFRS 9, effective since January 1, 2018. To ensure a meaningful comparison with 2017, financial data for the period included in this presentation have been restated in accordance with the new standards. Reconciliation tab
Slide 3: Executive Summary
EXECUTIVE SUMMARY Another record year of profitable growth across all business lines and all regions Accelerated double-digit organic operating revenue growth EBIT(1): €461m, up 17.5% L/L, in line with the 2018 EBIT guidance of between €440m and €470m Significant outperformance of Edenred’s
Slide 4: Agenda
Agenda 1. 2018 Key Figures 2. Strategic Update 3. Q4 & FY 2018 Financial Results 4. 2019 Outlook & Conclusion 4
Slide 5: The everyday companion for the working world
THE EVERYDAY COMPANION FOR THE WORKING WORLD Connecting a growing ecosystem 830,000 corporate clients 1.5 billion 47 million meals served €28.1 billion employee users 2.8 million (+15% L/L) fuel card & toll tags business volume 1.7 million partner merchants 55
Slide 6: 2018 Key Financial Figures (1/2)
2018 KEY FINANCIAL FIGURES (1/2) Another record year driven by double-digit organic growth Net profit, Total revenue EBITDA EBIT Group share €1,378m €536m €461m €254m +11.9% L/L +16.2% L/L +17.5% L/L +4.4% as reported +6.7% as reported +7.3% as reported +5.2% as reported 6
Slide 7: 2018 Key Financial Figures (2/2)
2018 KEY FINANCIAL FIGURES (2/2) Medium-term objectives significantly outperformed Reported figures in € millions FY 2016 FY 2017 FY 2018 ANNUAL MEDIUM- Like-for-like growth figures (excluding Venezuela) TERM OBJECTIVES Operating revenue 1,253 1,327 +8% +9% +13% > +7% 2017 2018 Operating EBIT 362 41
Slide 8: 2018 Operating Revenue Breakdown & Growth by Geography
2018 OPERATING REVENUE BREAKDOWN & GROWTH BY GEOGRAPHY Double-digit growth across all regions Europe 45 +14.6% L/L countries 57% +15.7% as reported Rest of the World 6% +11.6% L/L Latin America -1.7% as reported +12.0% L/L 37% (excluding Venezuela) -5.2% as reported % of 2018 Group operating revenue
Slide 9: 2018 Operating Revenue Breakdown & Growth by Business Line
2018 OPERATING REVENUE BREAKDOWN & GROWTH BY BUSINESS LINE Double-digit organic growth across all business lines EMPLOYEE BENEFITS FLEET & MOBILITY COMPLEMENTARY SOLUTIONS SOLUTIONS Corporate Payment Services % OF FY 2018 Incentive & Rewards GROUP OPERATING 65% 25% 10% Public Social Programs REVENUE
Slide 10: New ESG Strategy in 2018
NEW ESG STRATEGY IN 2018 People, Planet, Progress Improve quality of life Preserve the environment Create value responsibly 10
Slide 11: Focus on People, a Key Pillar of Growth Strategy
FOCUS ON PEOPLE, A KEY PILLAR OF EDENRED’S GROWTH STRATEGY Edenred accelerates its investment in people NURTURING OUR TALENTS IN 2018 8,500 employees HIRE: Edenstep Graduate Program +2,200 people in the Group since 2015 IDENTIFY: Talent Review ► 450+ profiles 49% under 35 TRAIN: Executive Academy &
Slide 12: Agenda
Agenda 1. 2018 Key Figures 2. Strategic Update 3. Q4 & FY 2018 Financial Results 4. 2019 Outlook & Conclusion 12
Slide 13: Significant Potential in Core and Adjacent Markets
SIGNIFICANT POTENTIAL IN CORE AND ADJACENT MARKETS Long-term potential for sustainable and profitable growth Edenred’s markets (Employee Benefits, Fleet & Mobility Solutions, Corporate Payment Services) remain largely under-penetrated Markets Fast Forward Strong progress in go-to-market Further prog
Slide 14: Business Excellence at the Heart of Performance
1 BUSINESS EXCELLENCE AT THE HEART OF EDENRED’S PERFORMANCE 9 business excellence levers systematically optimized Key business excellence levers Field Sales Efficiency SME Targeting Indirect Sales Channels Illustration 1: Generation of new SME contracts Customer Retention Cross- & Up-Selling Illustr
Slide 15: Illustration 1: Generation of New SME Contracts
1 BUSINESS EXCELLENCE AT THE HEART OF EDENRED’S PERFORMANCE Illustration 1: Generation of new SME contracts Almost x2 new SME contracts in 2018 vs. 2017 SME Targeting Leverage digitization in product and sales channels to improve commercial reach: Organization Fast ramp-up of telesales teams Sim
Slide 16: Illustration 2: Light Fleet Solution in Italy
1 BUSINESS EXCELLENCE AT THE HEART OF EDENRED’S PERFORMANCE Illustration 2: Light fleet solution in Italy Fast ramp-up of light fleet solution in Italy (launched in January 2018) 2nd largest local acceptance network (>6,000 service stations, multibrand) 4,500+ clients signed in year 1 Business
Slide 17: Why a Global Digital Platform? (1/2)
BRING DIGITAL INNOVATION TO CORE PRODUCTS VIA A GLOBAL PLATFORM 2 Why a global digital platform? (1/2) Strong competitive advantage to accelerate growth 80% GLOBAL REACH TIME TO MARKET COST EFFICIENCY VALUE-ADDED SERVICES digital business volume in 2018 TAILOR-MADE SOLUTIONS DIFFERENTIAT
Slide 18: Global Platform Leveraging Proprietary and Partner Capabilities (2/2)
BRING DIGITAL INNOVATION TO CORE PRODUCTS VIA A GLOBAL PLATFORM 2 By leveraging proprietary and partner capabilities to fit customer needs (2/2) PROPRIETARY MULTI-TECHNOLOGY OMNICHANNEL Smart Automated Mobile Cards NFC tag transfers routing system - NFC - Plastic/virtual - QR code - Prepaid/postpaid
Slide 19: Illustration 1: Leader in Mobile Payment
2 ILLUSTRATION 1: LEADER IN MOBILE PAYMENT Enhance user experience to adapt to new payment trends in 12 countries on 3 continents 15m transactions Worldwide mobile payment market (in value) expected to almost double every two years in the coming years(1) Top adoption and user engagement rates
Slide 20: Illustration 2: Leader in Direct Payment Services
2 ILLUSTRATION 2: LEADER IN DIRECT PAYMENT SERVICES (APP-TO-APP) The most advanced digital payment means empowering Edenred’s ecosystem Daily transactions x3 vs. July 2018 Enlarge the network to digital players: €23bn digital food delivery market, with 18% CAGR expected in 2018-2021(1) Top ado
Slide 21: Value-Added Services Around the Fuel Card
LEVERAGING EDENRED’S GROWING ECOSYSTEM TO DEVELOP 2 ADDITIONAL SERVICES AND NEW SOLUTIONS Illustration 1: Value-added services around the fuel card EETS European Additional services interoperable on-board Fuel additive unit for toll collection New solutions Repairs National tags for toll collection
Slide 22: Scaling-Up Most Promising Adjacency Initiatives
LEVERAGING EDENRED’S GROWING ECOSYSTEM TO DEVELOP 2 ADDITIONAL SERVICES AND NEW SOLUTIONS Illustration 2: Scaling-up most promising adjacency initiatives across the Group Additional services New solutions Rolling out a continental Building the leading corporate expense platform neobank in UAE A cust
Slide 23: Acquisitions Fueling Sustainable and Profitable Growth
3 ACQUISITIONS FUELING SUSTAINABLE AND PROFITABLE GROWTH Recent acquisitions have followed a consistent M&A strategy Employee Benefits Fleet & Mobility Corporate Payment Solutions Services Bolt-on acquisitions to consolidate Build-up acquisitions to become a Expand Edenred’s footprint in Edenred’s l
Slide 24: CSI: A Large Addressable North American Market
3 CSI: A LARGE ADDRESSABLE NORTH AMERICAN MARKET A multi-trillion dollar corporate payment market undergoing a digital transition Global B2B payment volume(1): $120tn Card penetration: 2% B2B PAYMENT VOLUME IN NORTH AMERICA $25tn 4% 10% 64% B2B payment volume in North America still in check 10% >70%
Slide 25: CSI Helps Improve the Accounts Payable Process
3 CSI HELPS IMPROVE THE ACCOUNTS PAYABLE PROCESS More efficiency, new revenue streams From a traditional highly manual … to CSI’s comprehensive corporate corporate payment process… payment automation solution Check ACH Vendor A Mail Sign Print Approve Vendor B Single CSI Any Client payment workflow
Slide 26: Unique Corporate Payment Automation Platform
3 UNIQUE CORPORATE PAYMENT AUTOMATION PLATFORM Connected to any payer system, using any payment methods to pay any vendor Serving 800+ clients with a comprehensive payment offering including the most advanced virtual payment methods Highly connected technology platform Virtual Private ACH Purchasing
Slide 27: CSI, a Leading, Fast-Growing and Profitable Fintech
3 CSI, A LEADING, FAST-GROWING AND PROFITABLE FINTECH A strong growth track record and ambitious target A fast-growing and profitable fintech A multichannel go-to-market strategy DIRECT TO Strong regional and Payment industry expertise 2018 FIGURES $11bn volume CLIENTS $43m Revenue PARTNERSHIP AND I
Slide 28: Agenda
Agenda 1. 2018 Key Figures 2. Strategic Update 3. Q4 & FY 2018 Financial Results 4. 2019 Outlook & Conclusion 28
Slide 29: 2018 Operating Revenue
2018 OPERATING REVENUE Organic growth acceleration throughout 2018, major currency headwinds Q4 2018 FY 2018 L/L operating growth €374m €1,327m 14.6% 15.3% 13.4% 13.3% 9.8% Reported +9.0% +5.9% 9.3% vs. restated 2017 Venezuela -0.1% -0.2% FY 17 Q1 18 Q2 18 Q3 18 Q4 18 FY 18 2017 growth rates do no
Slide 30: FY 2018 Operating Revenue – Europe
FY 2018 OPERATING REVENUE – EUROPE Steady organic growth in France and Rest of Europe, in all businesses FY 2018 operating revenue 2018 vs. 2017 L/L growth Q1 Q2 Q3 Q4 FY of Group operating 57% €755m France +8.6% +10.2% +12.4% +9.1% +10.0% +14.6% L/L Europe excl. France +13.8% +15.9% +20.6% +17.0% +
Slide 31: FY 2018 Operating Revenue – Latin America
FY 2018 OPERATING REVENUE – LATIN AMERICA Sustained double-digit organic growth region-wide over the year FY 2018 2018 vs. 2017 L/L growth (excluding Venezuela) Q1 Q2 Q3 Q4 FY operating revenue 37% of Group operating €497m Hispanic Latin America +15.8% +15.4% +16.8% +22.7% +17.7% revenue +12.0% L/L
Slide 32: FY 2018 Other Revenue (Formerly Financial Revenue)
FY 2018 OTHER REVENUE (FORMERLY FINANCIAL REVENUE) Decrease mainly linked to less favorable investment conditions in Europe and negative currency effects in Latin America Reported L/L change In €m 2017 Q1 Q2 Q3 Q4 FY change (excluding Venezuela) FY 2018 Latin America 38 8 8 8 8 32 -17.8% -5.4% Other
Slide 33: FY 2018 Total Revenue: €1,378m
FY 2018 TOTAL REVENUE: €1,378M Record high total revenue despite major currency and interest rates headwinds Q4 2018 FY 2018 €388m €1,378m Total revenue growth in Q4 2018 Reported +7.9% +4.4% In €m Q4 18 Q4 17 Reported L/L change (excluding vs. restated 2017 change Venezuela) Operating revenue 374
Slide 34: FY 2018 Total EBIT: €461m
FY 2018 TOTAL EBIT: €461M 23.5% like-for-like operating EBIT growth Reported FY 2017 In € millions FY 2018 FY 2017 L/L change(1) change reported Operating revenue 1,327 1,253 +5.9% +13.3% 1,272 Other revenue (A) 51 67 -24.1% -14.7% 67 Total revenue 1,378 1,320 +4.4% +11.9% 1,339 EBITDA 536 502 +6.7%
Slide 35: FY 2018 Total EBIT: €461m (bridge)
FY 2018 TOTAL EBIT: €461M Strong operating leverage and successful integration of acquisitions more than offsetting negative currency impacts Operating revenue Changes 2017 EBIT L/L∆: €167m(1) Other revenue in scope Currency effect(1) Venezuela 2018 EBIT €429m €85m €(10)m €4m €(46)m €(1)m €461m of w
Slide 36: FY 2018 Net Profit: €254m
FY 2018 NET PROFIT: €254M Increase in net profit, Group share Reported In € millions FY 2018 FY 2017 change EBITDA 536 502 +6.7% Depreciation and amortization (excluding PPA) (54) (51) Purchase price allocation (PPA) (21) (22) EBIT 461 429 +7.3% 2018 2017 Acquisition fees (16) (2) Share of net profi
Slide 37: FY 2018 Funds from Operations: €400m
FY 2018 FUNDS FROM OPERATIONS: €400M +17% like-for-like FFO growth Reported In € millions 2018 2017 change L/L change EBITDA 536 502 +6.7% +16.2% Funds from operations 400 379 +5.5% +17.0% Increase/(decrease) in cash linked to changes in float(1) 161 271 (Increase)/decrease in restricted cash (279)
Slide 38: FY 2018 Net Debt: €659m
FY 2018 NET DEBT: €659M Strong free cash flow generation fueling acquisitions and shareholder return Currency December 31, 2017 effects(1) and December 31, 2018 Net debt position Free cash Acquisitions Shareholder other non- Net debt position (IFRS 9 restated) flow (incl. put options) return recurri
Slide 39: A Well-Balanced Debt Profile
A WELL-BALANCED DEBT PROFILE Gross debt Floating-rate Fixed-rate Cost of debt ACHIEVEMENTS 3.0% (in €m) 2 500 2.5% Completed successful €500 million bond issue 2.5% 2 000 in December 2018 (7 years and 3 months - 1.875%) 1.8% 2.0% 1 500 Lowered cost of debt to 1.2%(1) 1.2% 1.5% -60bps vs. 2017 1
Slide 40: Capital Allocation Policy
CAPITAL ALLOCATION POLICY Proposed 2018 dividend Reflecting Edenred’s capital allocation policy Maximize value creation for shareholders through a Record dividend proposed(1) balanced deployment of capital between: Immediate return to shareholders with a payout ratio of €0.86 per share at least
Slide 41: Agenda
Agenda 1. 2018 Key Figures 2. Strategic Update 3. Q4 & FY 2018 Financial Results 4. 2019 Outlook & Conclusion 41
Slide 42: 2019 Outlook
2019 OUTLOOK Tackling 2019 with confidence Sustained growth in all regions and all business lines, driven by: Disciplined go-to-market approach and digital Integration and ramp-up of 2018 acquisitions and agility to further grow in under-penetrated markets partnerships Employee Benefits: Inn
Slide 43: Save the Date – October 23, 2019
SAVE THE DATE – OCTOBER 23, 2019 Capital Markets Day in London October 23, 2019 43
Slide 44: Appendices
Appendices 44
Slide 45: Further Penetration as a Key Growth Driver
FURTHER PENETRATION AS A KEY GROWTH DRIVER Sustainable growth mainly fueled by new clients wins, especially among SMEs Employee Benefits Fleet & Mobility 13.4% 13.5% 11.8% 11.7% 19.7% 8.5% 17.9% 18.4% 7.1% 16.0% 16.8% 14.7% FY 17 Q1 18 Q2 18 Q3 18 Q4 18 FY 18 FY 17 Q1 18 Q2 18 Q3 18 Q4 18 FY 18 L/L
Slide 46: Strong Growth Prospects in Corporate Payment Services
STRONG GROWTH PROSPECTS IN CORPORATE PAYMENT SERVICES A full offer to make payment smarter and more efficient for corporates VIRTUAL CARDS CORPORATE IDENTIFIED BANK TAILOR-MADE ACCOUNTS PAYABLE TRAVEL TRANSFERS PROGRAMS NEW PAY-OUT CASH-IN MasterCard virtual Best-in-class cloud- Virtual card Ident
Slide 47: Environment, Social & Governance (ESG)
ENVIRONMENT, SOCIAL & GOVERNANCE (ESG) A recognized commitment Since 2013, Edenred has been listed in the Dow Jones Sustainability Indices. Launched in 1999, the DJSI were the first global indices tracking the financial performance of leading sustainability-driven companies worldwide Edenred is pa
Slide 48: IFRS Restated 2017 Operating Revenue
IFRS RESTATED 2017 OPERATING REVENUE Q1 2017 Q2 2017 Q3 2017 Q4 2017 FY 2017 In € millions Reported Restated Change Reported Restated Change Reported Restated Change Reported Restated Change Reported Restated Change Europe 156 161 +5 160 155 -5 149 149 0 208 187 -21 673 652 -21 France 50 57 +7 50 49
Slide 49: IFRS Restated 2017 Operating EBIT & EBIT
IFRS RESTATED 2017 OPERATING EBIT & EBIT H1 2017 H2 2017 FY 2017 In € millions Reported Restated Change Reported Restated Change Reported Restated Change Europe 85 92 +7 98 83 -15 183 175 -8 France 18 25 +7 24 14 -10 42 39 -3 Rest of Europe 67 67 0 74 69 -5 141 136 -5 Latin America 89 90 +1 99 99 0
Slide 50: Operating Revenue
OPERATING REVENUE Q1 Q2 Q3 Q4 FY In € millions 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 Europe 183 161 179 155 179 149 214 187 755 652 France 63 57 55 49 54 47 67 62 239 215 Rest of Europe 120 104 124 106 125 102 147 125 516 437 Latin America 119 132 124 132 116 125 138 136 497 525 Rest of
Slide 51: Other Revenue (Formerly Financial Revenue)
OTHER REVENUE (FORMERLY FINANCIAL REVENUE) Q1 Q2 Q3 Q4 FY In € millions 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 Europe 4 6 3 6 3 6 4 6 14 24 France 2 3 1 3 1 2 2 2 6 10 Rest of Europe 2 3 2 3 2 4 2 4 8 14 Latin America 8 10 8 9 8 10 8 9 32 38 Rest of the world 1 2 1 1 1 1 2 1 5 5 Other rev
Slide 52: Total Revenue
TOTAL REVENUE Q1 Q2 Q3 Q4 FY In € millions 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 Europe 187 167 182 161 182 155 218 193 769 676 France 65 60 56 52 55 49 69 64 245 225 Rest of Europe 122 107 126 109 127 106 149 129 524 451 Latin America 127 142 132 141 124 135 146 145 529 563 Rest of the
Slide 53: FY 2018 Cash Flow Statement
FY 2018 CASH FLOW STATEMENT In € millions 2018 2017 Funds from operations 400 379 Increase/(decrease) in cash linked to changes in float (1) 161 271 (Increase)/decrease in restricted cash -279 -204 (Increase)/decrease in working capital (excl. float) 243 31 Recurring capex -90 -78 Free cash flow 435
Slide 54: EBITDA, Operating EBIT & EBIT
EBITDA, OPERATING EBIT & EBIT L/L (excl. L/L (excl. In € millions 2018 2017 Reported In € millions 2018 2017 Reported Venezuela) Venezuela) Europe 284 232 +22.3% +20.0% Europe 234 175 +32.7% +30.3% France 66 59 +12.2% +11.8% France 49 39 +24.0% +23.5% Rest of Europe 218 173 +25.8% +22.8% Rest of Eur
Slide 55: Summarized Balance Sheet
SUMMARIZED BALANCE SHEET As of December 31st, 2018 Dec 17 Dec 17 In € millions Dec 18 In € millions Dec 18 Restated* Restated* Goodwill 976 994 Total equity (1,451) (1,362) I ntangible assets 432 433 Property, plant & equipment 52 46 Gross debt and other financial I nv estments in associates 66 62 2
Slide 56: No Major Repayments Due Before 2025
NO MAJOR REPAYMENTS DUE BEFORE 2025 Debt repayment schedule (€m) FY 2018 Total gross debt: €2.489bn Repayments (bonds, Schuldschein loan, bank loans, NEU CP) Undrawn revolving credit facility 700 500 500 500 (1) 270 254 229 117 137 2019 2020 2021 2022 2023 2024 2025 2026 2027 Share of total debt (%)
Slide 57: Average Exchange Rate
AVERAGE EXCHANGE RATE Average rates 2018 vs. 2018 vs. 2018 vs. 2018 vs. 2018 vs. Spot rate Spot rate 2017 2017 2017 2017 2017 €1 = X foreign currency Q1 2018 Q1 2017 Q2 2018 Q2 2017 Q3 2018 Q3 2017 Q4 2018 Q4 2017 FY 2018 FY 2017 as of as of Change Change Change Change Change 31.12.2018 31.12.2017 (
Slide 58: 2019 Expected Calendar Effects
2019 EXPECTED CALENDAR EFFECTS Q1 Q2 Q3 Q4 2019 Nb of Nb of Nb of Nb of Nb of Working days days days days days days Europe -1 0 1 0 0 Latin America 0 -1 2 2 2 Rest of the world -1 1 1 0 2 TOTAL -1 0 2 0 1 58
Slide 59: Contact
CONTACT Solène Zammito solene.zammito@edenred.com Loïc Da Silva loic.dasilva@edenred.com 59