Slide 1: Inspiring Loyalty
/\IMI/A\ INSPIRING LOYALTY
Slide 2: Q4 2014 Highlights
Q4 2014 HIGHLIGHTS February 27, 2015
Slide 3: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Forward-looking statements are included in this presentation. These forward-looking statements are typically identified by the use of terms such as “outlook”, “guidance”, “target”, “forecast”, “assumption” and other similar expressions or future or conditional terms such a
Slide 4: Rupert Duchesne, Group Chief Executive
RUPERT DUCHESNE GROUP CHIEF EXECUTIVE
Slide 5: 2014 Was a Year of Exceptional Progress
2014 WAS A YEAR OF EXCEPTIONAL PROGRESS • Aeroplan: fantastic year with new financial partners and launch of Distinction • Expanded the coalition business in Asia, Spain Met or exceeded our guidance on all key • Intelligent Shopper Solutions financial metrics (ISS) data analytics business momentum •
Slide 6: 2014 Progress Mapped Against Our Strategy
2014 PROGRESS MAPPED AGAINST OUR STRATEGY Aeroplan transformation delivered exceptional results • Net new co-branded cards acquired with TD, CIBC, and AMEX ~400,000(1) • Miles issued excluding promotional miles climbed 5.6% YoY • Market Fare Flight Rewards up 128% YoY • Distinction members more enga
Slide 7: 2014 Progress Mapped Against Our Strategy
2014 PROGRESS MAPPED AGAINST OUR STRATEGY Further opportunities for growth using a coalition loyalty model • Club Premier: Gross Billings grew 14% CAGR since 2011 with $45 million distributions received, equity stake now worth at least double • Replicate model with Air Asia, evolving pure FFP into m
Slide 8: 2014 Progress Mapped Against Our Strategy
2014 PROGRESS MAPPED AGAINST OUR STRATEGY Global growth strategy adding value and returns on investments • Significant addressable market in proprietary loyalty • Product sale successes with ALP, ACP, Smart Button • Partnership strategy allows capabilities to be shared quickly with lower risk • Fair
Slide 9: 2015 and Beyond
2015 AND BEYOND Leverage our unique capabilities and experience to replicate our success globally Continue to build breadth and scale in our business to serve global clients Make investments to enter new markets or to efficiently access capabilities; and exit investments if not generating an accepta
Slide 10: David Adams, Executive Vice-President and CFO
DAVID ADAMS EXECUTIVE VICE-PRESIDENT AND CFO
Slide 11: Gross Billings
GROSS BILLINGS Q4 2014 FY 2014 2014 Guidance $688.1M $2,686.6M +4.6% +13.5% +7% to +9%* +2.1% in c.c. +9.3% in c.c. * 2014 Gross Billings growth rate guidance was based on a constant currency (c.c.) basis. 11
Slide 12: Adjusted EBITDA
ADJUSTED EBITDA Q4 2014 FY 2014 2014 Guidance $60.0M $316.4M ~12.0% 8.7% 11.8% margin* margin* margin* * Adjusted EBITDA as a % of Gross Billings. 12
Slide 13: Free Cash Flow
FREE CASH FLOW* Q4 2014 FY 2014 2014 Guidance $17.1M $287.0M $230M to $250M(1) * Free cash flow before common and preferred dividends paid. (1) The original 2014 guidance issued on February 26, 2014 for Free Cash Flow was a target range of $230.0 to $250.0 million which was updated on August 14, 201
Slide 14: Canada Performance
CANADA PERFORMANCE Q4 2014 FY 2014 Total Gross Air Canada +7.7% +18.5% Billings • Air rewards up >30% Gross Billings from • Ticket purchases: +12.2% +23.6% the sale of • Q4 2014: +63% Loyalty Units • FY 2014: +50% +$180M Other Gross (14.7%) (7.6%) Billings 14
Slide 15: Canada Performance: Accumulation and Redemption
CANADA PERFORMANCE Accumulation and Redemption YoY% Burn Earn % 15.7% 14.6% 101.0% 10.5% 93.0% 82.0% 80.0% 79.7% 85.4% 7.0% 78.7% 76.6% 71.9% 74.3% Q4 2014 FY 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 Accumulation Redemption Burn Earn Burn Earn excluding Promotional Miles 15
Slide 16: Aeroplan Transformation
AEROPLAN TRANSFORMATION • Investing to drive long-term growth Operational and • Gross Billings better than expected Financial Success • Margins impacted as expected 16
Slide 17: Yield
YIELD 2014 2015 Higher than expected card • Welcome Bonus activity should acquisitions but price per mile diluted taper because of: • Marketing and bonus program 1. Welcome Bonus miles on New Card ongoing Acquisitions • Impact of Interchange embedded in 2. Miles used for Marketing and Bonus guidance
Slide 18: Card Spend
CARD SPEND 2014 2015 • New vs. Tenured • Renewal trends • New card spend 50% of tenured • Spending patterns • Split card spending 18
Slide 19: Rewards Mix
REWARDS MIX 2014 2015 • Customers embrace Market Fare • Stronger USD Flight Rewards • Expected continued popularity of • Half of Air Canada rewards are MFFR more-expensive MFFR • Airfares remain stable • Higher USD makes Star Alliance redemptions more costly 19
Slide 20: Canada 2015 Outlook
CANADA 2015 OUTLOOK • Yield + Spend + Rewards Mix resulted in 2014 margin pressure • Mid-to-high single digit growth from financial partners • Growth from Air Canada’s increased capacity • Loss of large financial service client in proprietary business • Interchange factored into guidance Adjusted EB
Slide 21: EMEA Performance
EMEA PERFORMANCE Q4 2014 FY 2014 +2.2% +9.7% Total Gross Billings (3.1%) in c.c. (1.7%) in c.c. (1.7%) Gross Billings from the sale of +6.6% (6.6%) in c.c. Loyalty Units (4.6%) in c.c. Other Gross Billings +29.1% +34.0% +21.9% in c.c. +21.3% in c.c. 21
Slide 22: Nectar UK
NECTAR UK 2014 2015 • Q4 Gross Billings lower • Grocery price deflation ongoing • Price deflation in UK grocery • Sainsbury’s Base/Bonus rebalance sector targeting high-valued members • British Gas regulation • Lower top and bottom line • Q4 points issuance down, redemption up 22
Slide 23: Nectar Italia
NECTAR ITALIA 2014 2015 • Q4 points issuance down 8.4% and • In discussion with new grocery points redeemed up 21% partner; unlikely to launch this year • Impact of recession on Groupe • Impact to Nectar Italia: $45M Gross Auchan performance Billings, $8M Adjusted EBITDA, and $13M FCF factored in gu
Slide 24: Middle East
MIDDLE EAST 2014 2015 • Q4 points issued up 2.5% and • Strong returns from coalitions and redemptions up 9.2% proprietary programs in the region • New multi-year contract extension with Air Miles Middle East anchor partner HSBC 24
Slide 25: EMEA 2015 Outlook
EMEA 2015 OUTLOOK • Continued sales momentum in proprietary loyalty and analytics • Delivering Aimia Loyalty Platform and Aimia Campaign Product pushing up global product costs slightly • Industry and macroeconomic factors ongoing in Italy and UK $94.0 $76.1 $24.0 EMEA excluding the one- time 2013 V
Slide 26: US & APAC
US & APAC • Realigned and refocused for growth • Momentum in proprietary and platforms with sales of ACP and ALP platforms in US and Asia Measured investments to Pacific pursue growth • Continued investment in coalition development across the region 26
Slide 27: 2015 Guidance
2015 GUIDANCE* ($ in millions) 2014 Reported 2014 Normalized(1) 2015 Guidance Gross Billings $2,686.6 $2,586.6 Between $2,560 to $2,610 Adjusted EBITDA $316.4 $216.4 Adjusted EBITDA margin and margin 11.8% 8.4% approximately 9% Free Cash Flow before $287.0 $94.3 Between $220 to $240 Dividends Paid C
Slide 28: 2015 Outlook
2015 OUTLOOK ($ IN MILLIONS) Gross Billings Adjusted EBITDA Free Cash Flow $2,686.6 $316.4 $287.0 (1) $2,560 - $2,610 $220 - $240 $2,586.6 ~9% Margin (1) ~2.5x $216.4 (2) 2014 8.4% Margin $94.3 Consolidated: +17.0% growth; 12.1% in c.c.(1) Canada: +22.4%; EMEA: +12.7%; -1.2% in c.c.(1) US & APAC: 20
Slide 29: Thank You
AIMIA INSPIRING LOYALTY
Slide 30: Appendix
APPENDIX
Slide 31: 2014 Normalized
2014 NORMALIZED 2014 2014 As Reported Normalized (in millions CAD) Adjustments Consolidated Gross Billings 2,686.6 (100.0)(1) 2,586.6 Consolidated Adjusted EBITDA 316.4 216.4 (100.0)(1) and margin 11.8% 8.4% Free Cash Flow before Dividends Paid 287.0 (192.7)(2) 94.3 (100.0)(1) Canada Gross Billings
Slide 32: Attractive Dividend Record
ATTRACTIVE DIVIDEND RECORD Quarterly Dividends Per Common Share(1) $0.20 $0.18 $0.16 $0.14 $0.12 $0.10 $0.170 $0.180 $0.08 $0.150 $0.160 $0.06 $0.125 $0.04 $0.02 $0.00 2010 2011 2012 2013 2014 (1) Quarterly dividends paid in June of each year. 32
Slide 33: Financial Services Momentum FY 2014
FINANCIAL SERVICES MOMENTUM FY 2014 • Active co-branded credit • Higher spend per card cards base broadly stable among tenured cardholders • Net new cards acquired taking AMEX base up by almost 40% YoY Aeroplan Spend Per Card Active Card Base Financial Sector Gross Billings* FY 2014 +20.5% $ Price P
Slide 34: Aeroplan Accumulation & Redemption
AEROPLAN ACCUMULATION & REDEMPTION ACCUMULATION PATTERN REDEMPTION PATTERN 17.9% 29.4% 15.4% 14.8% 19.8% 15.7% 10.4% 11.0% 10.5% 9.6% 8.7% 8.2% 2.9% 0.5% 6.9% 3.6% 2.1% -8.9% Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Accumulation with Accumulation without Redemption Redemption at 2
Slide 35: FY 2014 Consolidated Gross Billings Growth
FY 2014 CONSOLIDATED GROSS BILLINGS GROWTH ($ IN MILLIONS) $12.4 $2,686.6 $140.1 $68.1 $100.0 $2,366.4 EMEA US & APAC Canada TD Contribution (Canada) Consolidated: +17.0% growth; 12.1% in c.c.(1) Canada: +22.4%; EMEA: +12.7%; -1.2% in c.c.(1) US & APAC: +5.2%; 0.0% in c.c.(1) Consolidated +60.1% gro
Slide 36: FY 2014 Consolidated AEBITDA Growth
FY 2014 CONSOLIDATED AEBITDA GROWTH ($ IN MILLIONS) $100.0 ($37.4) ($76.8) $200.0 ($24.0) Impact of promotional miles on ($13.0) $19.1 $2.3 ($4.3) $316.4 VAT TD change in impact Contribution FRC Canada US & Corporate Product EMEA (EMEA) APAC development costs Canada EMEA $150.5 Conveyance items (Can
Slide 37: Free Cash Flow
FREE CASH FLOW* ($ IN MILLIONS) $22.5 HST(1) ($100.0) $150.0 TD Contribution $287.0 ($92.7) $268.1 CIBC Tax Payment Refunds(2) $95.6 $94.3 FY 2013 FY 2013 FY 2014 FY 2014 Reported Normalized Reported Normalized * Free Cash Flow before Dividends Paid (Common and Preferred). (1) Harmonized sales tax o
Slide 38: Q4 2014 Gross Billings Growth by Region
Q4 2014 GROSS BILLINGS GROWTH BY REGION ($ IN MILLIONS) $26.7 $4.3 ($0.8) $688.1(1) $658.0 EMEA US & APAC Canada 2013 Reported 2014 Reported (1) Variance related to intercompany elimination of $(0.1) million which has been excluded from the bridge. 38
Slide 39: Q4 2014 Gross Billings Growth by Activity
Q4 2014 GROSS BILLINGS GROWTH BY ACTIVITY ($ IN MILLIONS) $35.2 ($2.9) ($2.2) $688.1(1) $658.0 EMEA Loyalty Proprietary Loyalty Canada Loyalty Units & Other Units Consolidated Loyalty Units: +12.7% growth; +8.9% in c.c.(1) Canada Loyalty Units: +17.5% growth; EMEA Loyalty Units: +4.1% growth; (6.6%)
Slide 40: Q4 2014 Consolidated AEBITDA
Q4 2014 CONSOLIDATED AEBITDA ($ IN MILLIONS) $200.0 ($35.2) $0.2 $0.2 ($9.5) $8.7 $6.7 $60.0 US & Distributions from Canada EMEA APAC equity-accounted Corporate Stock investments based compensation 2013 &CIBC Payment Card Migration 2014 Reported Provision Reported ($111.1) 40
Slide 41: Q4 2014 Financial Highlights – Canada
Q4 2014 FINANCIAL HIGHLIGHTS – CANADA Three months ended December 31, (in millions of Canadian dollars) 2014 2013 Variance Reported Reported % Gross Billings Aeroplan 334.0 300.9 11.0% Proprietary Loyalty 66.6 68.1 -2.2% Intercompany eliminations (26.8) (21.9) n.m. 373.8 347.1 7.7% Total revenue Aer
Slide 42: FY 2014 Financial Highlights – Canada
FY 2014 FINANCIAL HIGHLIGHTS – CANADA Year ended December 31, (in millions of Canadian dollars) 2014 2013 Variance Reported Reported % Gross Billings Aeroplan(2) 1,384.3 1,133.2 22.2% Proprietary Loyalty 236.2 247.3 -4.5% Intercompany eliminations (80.3) (80.4) n.m. 1,540.2 1,300.1 18.5% Total reven
Slide 43: Aeroplan Revenue
AEROPLAN REVENUE ($ in millions) Q4 2014 Q4 2013 FY 2014 FY 2013 Miles revenue 233.5 200.8 967.3 900.3 (1) Breakage revenue 28.7 24.6 118.5 (506.8) Other 9.4 11.5 47.6 47.4 Total Revenue 271.6 236.9 1,133.4 440.9 (1) Includes the non-comparable unfavourable impact of the change in the Breakage estim
Slide 44: Gross Billings from Sale of Loyalty Units by Major Partner
GROSS BILLINGS FROM SALE OF LOYALTY UNITS BY MAJOR PARTNER Other CIBC Other CIBC 14.9% 30.3% 20.2% 24.1% Q4 2013 Air Q4 2014 $464.7M Canada $497.0M 13.8% 13.4% 20.6% Air Canada Sainsbury’s AMEX 21.6% 10.6% Sainsbury’s 10.7% TD AMEX 19.8% 44
Slide 45: Gross Billings from Sale of Loyalty Units by Major Partner
GROSS BILLINGS FROM SALE OF LOYALTY UNITS BY MAJOR PARTNER Other CIBC Other CIBC 21.6% 14.7% 24.5% 32.1% FY 2013 Air FY 2014 $1,711.4M Canada $1,909.2M* Air Canada 13.1% 19.4% Sainsbury’s 14.0% AMEX AMEX Sainsbury’s 11.9% TD 10.2% 19.2% 19.3% *Excludes the $100.0 million upfront contribution receive
Slide 46: Balance Sheet at December 31, 2014
BALANCE SHEET AT DECEMBER 31, 2014 AVAILABLE CASH DEBT Annual December Interest December $ millions 31, 2014 $ millions Rate Maturing 31, 2014 Cash and cash equivalents 567.6 Revolving Facility(1) Apr. 23, 2018 - Restricted cash 28.8 Senior Secured Notes 3 6.95% Jan. 26, 2017 200.0 Short-term invest
Slide 47: Foreign Exchange Rates
FOREIGN EXCHANGE RATES Q4 2014 Q4 2013 % Change Average Average Period Average Average Period Average Average Period Quarter YTD End Quarter YTD End Quarter YTD End £ to $ 1.7975 1.8182 1.8058 1.6975 1.6111 1.7633 5.9% 12.9% 2.4% AED to $ 0.3091 0.3005 0.3165 0.2855 0.2803 0.2911 8.3% 7.2% 8.7% USD