Edenred Sa · EURONEXT:EDEN
Edenred Sa — Investor Day (November 2013)
178 slides from Edenred Sa's investor day presentation, Nov 12, 2013
Slide 1: Investor Day
INVESTOR DAY NEW YORK/12™ NOVEMBER 2013 Edenred
Slide 2: Agenda
AGENDA 1 Executive summary 10:0010:20 INVESTOR DAY NEW YORK/12TH NOV. 2013 Growth potential in 2 existing benefits markets 10:2011:05 New options for growth 3.a Strategy & benefits illustrations 11:0511:40 Q&A session & lunch 11:401:10 New options for growth 3.b Focus on Expense management 1:10
Slide 3: Speakers
Jacques Stern Speakers Chairman & CEO INVESTOR DAY Loïc Jenouvrier NEW YORK/12TH NOV. 2013 Executive Vice President, Finance and Legal Affairs Antoine Dumurgier Executive Vice President, Strategy and Development Virginie Monier Head of Financial communication and IR Gilles Coccoli Executive Chief Op
Slide 4: Executive summary
Executive summary Jacques Stern, CEO
Slide 5: Edenred, a successful creation and listing
Edenred, a successful creation and listing Establish an efficient governance system Dedicated and experienced Board of directors & management teams Roll out of a strategic plan With a strong alignment between Invest in technology shareholders’ and management’s To accelerate innovation within the Gro
Slide 6: A positive track record in terms of financial results
A positive track record in terms of financial results… Normalized 3-year target(1) 2010 2011 2012 average Issue volume L/L growth +6-14% +10.0% +9.7% +10.1% +9.9% Flow-through ratio(2) 40-50% 49% 47% 50% 49% FFO L/L growth >+10% +15.1% +20.8% +12.8% +16.2% Financial targets met over the last 3 years
Slide 7: …and strategic achievements
…and strategic achievements Key achievements 51 digital issue volume % at end-2012 Four strategic focuses 3 enablers new countries opened New modes Shift to digital Conquer 28 New geographies Open new countries new 2012 solutions New solutions Create & deploy new solutions launched New clients Expan
Slide 8: Where we are today…
Where we are today… clients 30% 2012 market share worldwide in benefits 610k (companies and public institutions) countries, 40 beneficiaries of which >60% in emerging 38m of our four families of solutions World markets leader in benefits Major player affiliates in B2B prepaid employees, services 6,0
Slide 9: …and where we want to go: our ambition
… and where we want to go: our ambition 2012 2016 Be the referent of our Customers Solution manager World improving leader in benefits efficiency of Major player in B2B prepaid organizations services and bringing purchasing power to individuals Our goal: generate strong and sustainable growth 9
Slide 10: Our strategic vision
Our strategic vision Short-term contribution Exploit growth potential Increase penetration in existing benefits markets rates and face value Launch new solutions Develop new options for growth and new countries in: based on our current know-how • Benefits • Expense management From a transaction Open
Slide 11: How to achieve our goal
How to achieve our goal enablers New modes Enrich our benefits programs with services Shift to digital Invent New geographies Open new countries New solutions Develop solutions for affiliates & beneficiaries Accelerate the roll-out of Expense management solutions Conquer 2012 Create & deploy new sol
Slide 12: Focus on the new strategic paths
Focus on the 3 new strategic paths Expected benefits at Group’s level: New solutions Accelerate the roll-out of Expense management solutions Leverage our expertise in fuel & fleet segment in Latin America, and roll out solutions in other countries and segments New volume and revenue Develop solution
Slide 13: Revised targets
Revised targets VOLUME DRIVERS Issue volume target(1) narrowed New geographies 0-1% +8% to +14% L/L growth per year New solutions 2-4% Flow-through ratio(2) >50% New clients 3-5% from 2014 FFO target (1) PRICE DRIVER confirmed > +10% Face value 3-4% L/L growth per year Contribution to issue volume L
Slide 14: Towards sustainable growth
Towards sustainable growth By 2016 Country diversification +3 new countries 2016 target Increase the business 20 Solution of issue volume diversification > % from Expense management model’s sustainability and diversification Revenue sources diversification 10 countries offering A&B solutions 15 Incr
Slide 15: Agenda
AGENDA 1 Executive summary 10:0010:20 INVESTOR DAY NEW YORK/12TH NOV. 2013 Growth potential in 2 existing benefits markets 10:2011:05 New options for growth 3.a Strategy & benefits illustrations 11:0511:40 Q&A session & lunch 11:401:10 New options for growth 3.b Focus on Expense management 1:10
Slide 16: Growth potential in existing benefits markets
Growth potential in existing benefits markets INVESTOR DAY NEW YORK/12TH NOV. 2013
Slide 17: Growth potential in existing benefits markets
Growth potential in existing benefits markets Short-term contribution Exploit growth potential Increase penetration in existing benefits markets rates and face value Launch new solutions Develop new options for growth and new countries in: based on our current know-how • Benefits • Expense managemen
Slide 18: External and internal growth factors
External and internal growth factors External factors Internal factors Internal factors Increased Increased Increased potential market market penetration market share Formalization of the Continue to increase Develop key economy and job penetration in large differentiating creation companies in all
Slide 19: Agenda
Agenda External factors Internal factors Internal factors Increased Increased Increased potential market market penetration market share Enablers to differentiate 1 Market potential and penetration 2 our offer Loïc Jenouvrier – Executive VP, Finance and Legal Affairs Gilles Coccoli – Executive COO,
Slide 20: Growth potential in benefits markets
Growth potential in benefits markets Market potential and penetration Loïc Jenouvrier, Executive VP, Finance and Legal Affairs Enablers to differentiate our offer Gilles Coccoli, Executive COO, Edenred Brazil Illustrations Gilles Coccoli, Executive COO, Edenred Brazil
Slide 21: Potential market
Potential market Informal Formalization economy rate Defined as the formal economy as a % of total GDP Potential market = Formal labor force Formalization of the economy, a driver to increase the size of the potential market 21
Slide 22: Market penetration
Market penetration Informal economy Potential = Employees eligible for market the solution, according to local regulations Addressable market = All beneficiaries of the solution Penetration Addressed rate market [Addressed market / Addressable market] Penetration rate, a measure of market maturity 2
Slide 23: Four types of market dynamics
Four types of market dynamics FORMALIZATION HIGH Long-term Mature markets with low growth market growth potential strong potential in all corporate segments untapped market mainly in SMEs PENETRATION +3-5% +0-2% (1) (1) LOW HIGH Very long-term Moderate growth market growth market untapped market mai
Slide 24: Overview by country – meal and food markets
Overview by country – meal and food markets FORMALIZATION PENETRATION HIGH Japan 90% France Czech Rep. Sweden Slovakia 80% Portugal Belgium Spain LOW HIGH Greece Italy Romania 70% Turkey Chile Brazil Uruguay 60% Mexico Venezuela Colombia 50% India 40% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 24 Sou
Slide 25: Growth potential in benefits markets
Growth potential in benefits markets Market potential and penetration Loïc Jenouvrier, Executive VP, Finance and Legal Affairs Enablers to differentiate our offer Gilles Coccoli, Executive COO, Edenred Brazil Illustrations Gilles Coccoli, Executive COO, Edenred Brazil
Slide 26: Digital, a key enabler to differentiate benefits
Digital, a key enabler to differentiate benefits Streamlined DIGITAL Increased program processes customization thanks to the elimination of thanks to paper distribution logistics proprietary authorization platforms Easier and less costly More attractive offers roll-out for Edenred and clients for HR
Slide 27: Focus on proprietary authorization platforms
Focus on proprietary authorization platforms Strategic advantages of Differentiating in-house platform capacity Specialized in prepaid programs (versus debit/credit) Authorization control customization (FlexiControl) Allows functionalities developed in one market to be rolled-out to all markets Netw
Slide 28: Focus on benefit platforms
Focus on benefit platforms CLIENTS BENEFICIARIES On-line platforms Flexible Optimized HR benefits policies Self-service Reporting, benefits advicing platform Benefits Exclusive valuation offers Overview of all Increased benefits purchasing received power Illustration – Benefity Café in Czech Republi
Slide 29: Growth potential in benefits markets
Growth potential in benefits markets Market potential and penetration Loïc Jenouvrier, Executive VP, Finance and Legal Affairs Enablers to differentiate our offer Gilles Coccoli, Executive COO, Edenred Brazil Illustrations Gilles Coccoli, Executive COO, Edenred Brazil
Slide 30: Brazil
Growth potential in benefits markets Brazil Gilles Coccoli, Executive COO, Edenred Brazil Illustration
Slide 31: Brazil meal & food market overview
Brazil meal & food market overview Informal economy 36% of GDP Potential market 48m people 7.2m beneficiaries FOOD 18.1% penetration Addressable market 40m people 6.7m beneficiaries Addressed MEAL 16.7% penetration market Sources: http://www.worldbank.org and internal estimates. 31
Slide 32: Focus on market formalization
Focus on market formalization 8% 7.0% 6.8% 7% 6.5% 6.4% 6.0% 6% 5.7% 5.5% 5.0% 5% 4.6% 4.3% 3.8% 4% 2.9% 2.8% 3.5% 3% 3.2% On average, around 4 pts difference 2% 2.1% 1.6% 1.6% 1% 1.3% 0.9% 1.0% 0.0% 0.0% 0% -0.9% -1% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total labor force annu
Slide 33: Competitive landscape
Competitive landscape 3 main players Three main players >200 localplayers 202 local players Pioneer and leading position Entered market in 2003 (ex Visa Vale) 8 Owned by: 12 + 15 Acquisition of in 2008 33 18 14 Players with a national presence 33
Slide 34: Our approach to increase market penetration
Our approach to increase market penetration Sales strategy, Differentiation through segmentation and strategy, alternative distribution to enrich our programs with channels services Expected volume increase in meal and food vouchers excluding face value: CAGR of +6% in the coming three years 34
Slide 35: Sales strategy
Sales strategy Segmentation Alternative distribution channels Adaptation of sales channels by client size Bank networks and retailers Face to Face >500 employees Call center 100-499 employees Internet 0-499 employees Alternative 0-499 employees channels An effective segmentation strategy to addres
Slide 36: Focus on Carrefour partnership
Focus on Carrefour partnership Sales channel + Service provider Private label for Ticket Alimentação® and Ticket Car® Issuer, acquirer & processor Distribution of Ticket Merchant manager Restaurante® Sales planning Production, processing & operation Sales team Contract owner Invoicing (236
Slide 37: Differentiation strategy
Differentiation strategy AFFILIATES CLIENTS BENEFICIARIES Product Exclusive Optimized offers promotion HR policies Increased Deals, special Reporting, purchasing offers, … advicing power Enrich meal & food programs with services, to differentiate our offer in the market 37
Slide 38: Ticket Up! in Brazil
Illustration Ticket Up!® in Brazil 38
Slide 39: Portugal
Growth potential in benefits markets Portugal Gilles Coccoli, Executive COO, Edenred Brazil Illustration
Slide 40: Portugal meal voucher market overview
Portugal meal voucher market overview Informal economy 23% of GDP Potential market 4.5m people Addressable market 2.8m people 200k beneficiaries MEAL 7.3% penetration Addressed market Based on 2012 figures. Sources: http://www.worldbank.org and internal estimates. 40
Slide 41: A favorable context
A favorable context A favorable Stronger interest change in in benefits Booming market regulations solutions Increased tax efficiency For clients More users Maximum meal allowance exemption Voucher +13% €6.83 More tax 500k Cash +33% +60% efficient €4.27 2011 2012 2013 Positive impact For beneficiari
Slide 42: Focus on the change in regulations
Focus on the change in regulations Reasons for favoring meal vouchers versus cash allowance Increase domestic consumption Create employment +10-15% of +1 job/30 users in restaurants(2) domestic consumption(1) +1 job/120 users in supermarkets(3) Cash could be used for Vouchers ensure that • Vouchers
Slide 43: Market overview and potential
Market overview and potential Market potential Competitive landscape >2m Clear leadership Cash 500k 200k Other players 2012 2013e Potential market One regional player Today: >2m users Seven local banks of cash allowance Replacement Two other local players A replacement market: time-to-market i
Slide 44: Our approach to capture growth opportunities
Our approach to capture growth opportunities 1 FOCUS ON VOLUME 2 INCREASE PROFITABILITY Strategic alliance with Differentiation strategy, to Banco Espirito Santo, increase the level of services to increase our sales force and revenue Expected issue volume: >€400m by 2016 44
Slide 45: Strategic alliance with Banco Espirito Santo
Strategic alliance with Banco Espirito Santo Client Key accounts Small & medium-sized companies portfolio 60% with >200 employees 70% with <200 employees Sales argument Financial products Client service aligned Bundled offer Tailor made offers with market for key clients and client care needs BES ne
Slide 46: A differentiating solution
A differentiating solution AFFILIATES On-line platforms BENEFICIARIES Offers directly loaded Product on users’ cards Exclusive offers promotion Increase Deals, special purchasing offers, … power Online codes E-couponing Corporate rates A unique solution in the market Objective of profitability incre
Slide 47: Agenda
AGENDA 1 Executive summary 10:0010:20 INVESTOR DAY NEW YORK/12TH NOV. 2013 Growth potential in 2 existing benefits markets 10:2011:05 New options for growth 3.a Strategy & benefits illustrations 11:0511:40 Q&A session & lunch 11:401:10 New options for growth 3.b Focus on Expense management 1:10
Slide 48: New options for growth: Strategy & benefits illustrations
New options for growth Strategy & benefits illustrations INVESTOR DAY NEW YORK/12TH NOV. 2013
Slide 49: Set up new options for growth
Set up new options for growth Short-term contribution Exploit growth potential Increase penetration in existing benefits markets rates and face value Launch new solutions Develop new options for growth and new countries in: based on our current know-how • Benefits • Expense management Open new growt
Slide 50: New options for growth
New options for growth Strategy Virginie Monier, Head of Financial communication and IR Illustrations Gilles Coccoli, Executive COO, Edenred Brazil Antoine Dumurgier, Executive VP Strategy and Development Future developments Virginie Monier, Head of Financial communication and IR
Slide 51: Roll-out of new options for growth over the past three years
Roll-out of new options for growth over the past three years CONTRIBUTION TO ROLL-OUT PHASE FROM 2010 TO 2012 GROWTH FROM 2013 L/L IV GROWTH 3 new Open new countries Conquer countries opened 0-1% 2012 28 new Create & deploy new solutions Win solutions launched 2-4% 2010 New solutions and new countri
Slide 52: Focus on new solutions
Focus on new solutions Development process Types of new solutions • Business developers, Complementary solution 70%* * reporting to the local managing director Low to medium volume and accretive to margins (leveraging existing • Industrialized innovation platforms) process (innovation pipeline) Pote
Slide 53: Focus on new countries
Focus on new countries Development process Types of new countries • Screening and rating of countries according to a list of criteria Strategic country Large population, significant potential • Selection of priority countries and for benefits: objective to establish a definition of the opening strat
Slide 54: Three illustrations
Three illustrations Ticket Cultura® • A potential blockbuster in Brazil • Launched in September 2013 Ticket Plus® Card • A potential blockbuster in Germany • Launched in March 2012 Japan • A strategic country • Acquisition of the unique player in July 2012 54
Slide 55: New options for growth
New options for growth Strategy Virginie Monier, Head of Financial communication and IR Illustrations Gilles Coccoli, Executive COO, Edenred Brazil Antoine Dumurgier, Executive VP Strategy and Development Future developments Virginie Monier, Head of Financial communication and IR
Slide 56: Ticket Cultura - Brazil
Create and deploy new solutions Illustration ® Ticket Cultura - Brazil Gilles Coccoli, Executive COO, Edenred Brazil New options for growth
Slide 57: A promising market in Brazil
A promising market in Brazil Favorable new A large addressable Competitive legislation market environment Number of beneficiaries An addressable market of more than Edenred Decree adopted in 40 million employees August 2013 First player to get the license to operate from the Government in September
Slide 58: An easy-to-use solution
An easy-to-use solution Ticket Cultura® • 100% digital • Dedicated to the purchase of cultural good and services (books, theater and concert tickets, movie tickets..) • Similar business model to that for meal and food vouchers • Take-up rate expected to be close to food vouchers A new solution that
Slide 59: Edenred well-positioned to grasp market potential
Edenred well-positioned to grasp market potential The largest existing Existing experienced Strong legitimacy in network sales force the culture field ~12,000 90 existing benefits sales Main partner of the annual National Culture Week forces started to sell over the past six years points of sale Tic
Slide 60: Ticket Plus Card - Germany
Create and deploy new solutions Illustration Ticket Plus® Card - Germany Antoine Dumurgier, Executive VP Strategy and Development New options for growth
Slide 61: A promising market
A promising market A favorable regulation A large and Low level change underpenetrated market of competition A complex system Number of beneficiaries Edenred before 2011 Tax exemption for physical goods, An addressable market of more than Leader with the only multipartner only granted if goods are c
Slide 62: A unique solution
A unique solution Ticket Plus® Card • Dedicated to the purchase of basic goods (mainly food, fuel..) • Large acceptance network of fuel stations (5,000), supermarkets (3,900) and retailers (4,000) • Branding with company logo or a customized layout • Similar business model to that for other benefits
Slide 63: Key advantages for stakeholders
Key advantages for stakeholders CLIENTS BENEFICIARIES On-line platforms Easy process Purchasing for tax power compliance for basic needs Additional purchasing Choice power in a large acceptance to attract and network retain employees Employer Discounts branding and savings to reinforce the on Edenre
Slide 64: Ticket Plus Card movie
Ticket Plus® Card movie 64
Slide 65: Development strategy
Development strategy Affiliation 1 Sales 2 • Dedicated sales team to affiliate a Increase in physical sales force private network • Extension to other types of retailers Set up of (clothing stores, telesales drugstores, discounters) >13,000 ~90,000 POS beneficiaries Edenred: first mover in the marke
Slide 66: Japan
Open new countries Illustration Japan Antoine Dumurgier, Executive VP Strategy and Development New options for growth
Slide 67: Favorable macro factors for benefits
Favorable macro factors for benefits Socio-economic factors Cultural factors • Large working population • Lunch break habits during the (>60m employees), mainly in working day the Services sector (69% of the total workforce) • No purchasing power • HR practice of granting increase, versus expected b
Slide 68: Meal vouchers: a promising market
Meal vouchers: a promising market Favorable regulatory A large and An environment for meal underpenetrated open market vouchers market Tax exemption on the Number of beneficiaries Edenred distribution of meal vouchers for both employees and A potential market of more than Pioneer and the only player
Slide 69: Edenred Japan assets
Edenred Japan assets 2 locations Around 40 employees 1,000 organizations, many of National coverage with more than which are large and well-recognized groups in the 40,000 affiliates: Affiliates Clients Japanese market 23,000 convenience stores 17,000 restaurants Shipping to over 7,000 locations Ben
Slide 70: What has been done over the last year
What has been done over the last year UNDERSTANDING OF THE MARKET ACTION PLANS AND HR EXPECTATIONS An overall interest in meal voucher Action plans implemented over the solutions from HR, but: past year: • Limited understanding and • In-depth revision of sales process awareness of the meal voucher a
Slide 71: Illustration of sales and marketing efforts
Illustration of sales and marketing efforts Advertising New homepage Event sponsorships New window stickers for affiliates 71
Slide 72: Development strategy
Development strategy Short-term Increase penetration rates for meal voucher based on existing assets Shift to digital to increase the attractiveness of our solution Launch new solutions to diversify our business and leverage our platform Long-term A constant focus: increase visibility and awareness
Slide 73: New options for growth
New options for growth Strategy Virginie Monier, Head of Financial communication and IR Illustrations Gilles Coccoli, Executive COO, Edenred Brazil Antoine Dumurgier, Executive VP Strategy and Development Future developments Virginie Monier, Head of Financial communication and IR
Slide 74: Future developments
Future developments Innovation pipeline Countries pipeline 33 solutions(1) ~10 countries under consideration(2) under consideration(2) 9% 6% 18% 46% 39% 82% Employee benefits Expense management Strategic countries Incentives & Rewards Public Social Programs Tactical countries Contribution to IV L/L
Slide 75: Agenda
AGENDA 1 Executive summary 10:0010:20 INVESTOR DAY NEW YORK/12TH NOV. 2013 Growth potential in 2 existing benefits markets 10:2011:05 New options for growth 3.a Strategy & benefits illustrations 11:0511:40 Q&A session & lunch 11:401:10 New options for growth 3.b Focus on Expense management 1:10
Slide 76: Agenda
AGENDA 1 Executive summary 10:0010:20 INVESTOR DAY NEW YORK/12TH NOV. 2013 Growth potential in 2 existing benefits markets 10:2011:05 New options for growth 3.a Strategy & benefits illustrations 11:0511:40 Q&A session & lunch 11:401:10 New options for growth 3.b Focus on Expense management 1:10
Slide 77: New options for growth: Focus on Expense management
New options for growth Focus on Expense management INVESTOR DAY NEW YORK/12TH NOV. 2013
Slide 78: Set up new options for growth
Set up new options for growth Short-term contribution Exploit growth potential Increase penetration in existing benefits markets rates and face value Launch new solutions Develop new options for growth and new countries in: based on our current know-how • Benefits • Expense management Open new growt
Slide 79: Expense management
Expense management Market and strategy Antoine Dumurgier, Executive VP Strategy and Development Jacques Stern, CEO Illustration in Fuel & Fleet: Ticket Car®, Mexico Diego Frutos, Managing Director, Edenred Mexico Illustration in Travel & Entertainment: ExpendiaSmart®, Italy Andrea Keller, Managing D
Slide 80: Expense management
Expense management Key objectives • Simplify administrative procedures • Control and optimize costs • Ensure systematic VAT recovery • Enhance convenience for employees Increasing needs from companies around the world 80
Slide 81: Market segments
Market segments Sector- Fuel Travel & Specific & Fleet Entertainment Expenses Related Expenses Expenses incurred Other expenses expenses dedicated to the by an related to sector- business use of a employee for specific needs vehicle business purposes (ex. uniform cleaning) F&F T&E SSE Three differen
Slide 82: Fuel & Fleet market
Market & strategy Fuel & Fleet market F&F Expense management
Slide 83: Fuel & Fleet
Fuel & Fleet Targeted expenses Market needs Expenses dedicated to the pre-trip on-trip post-trip business use of a vehicle • Define rules of • Pay for fuel • Improve 10% Other expenses usage (profile (potentially with administration Maintenance, tires, management, discount) (VAT recovery, car wash,
Slide 84: Market overview
Market overview Spending volumes 90% fuel / 10% others €199bn €129bn €124bn > €526bn <10% 42m 54m 50% 35% 8m 6m 30m Market penetration 15m ~25% 17% Expense management growth +5-10% €74bn p.a. Nb of heavy Nb of light Fuel & Fleet Penetrated vehicles vehicles €bn expenses x% market share A vast and gr
Slide 85: Focus on market segments
Focus on market segments Light fleets • Cars General Core • Light commercial expense business vehicles <3.5t • Example: company • Example: package car delivery, utilities, … • Low criticality for • High criticality for business business Heavy fleets OTR – Over the Road Domestic International • Truck
Slide 86: Organization of fuel distribution: a determining factor
Organization of fuel distribution: a determining factor to define the market opportunity FUEL DISTRIBUTION MARKET MAIN TYPES OF F&F SOLUTIONS CONCENTRATION Consolidated Fragmented Multibrand(1) Independent / Accessible for F&F franchise domestic management players solutions Multibrand OWNERSHIP OF F
Slide 87: Trend in the fuel distribution market by region
Trend in the fuel distribution market by region North America Europe (excl. UK) & UK • Historically fragmented distribution market • Domestic fuel distribution mostly owned by with ~30 major oil companies, which moved to oil companies franchise in the 80s • Few specialized players moving from • Main
Slide 88: Current landscape by region
Current landscape by region Domestic needs International needs CONCENTRATION Consolidated Fragmented Fragmented UK North Independent / Domestic America franchise multibrand Latin Europe OWNERSHIP America Mono- trend? Transnational brand multibrand trend? Oil company Domestic subsidiaries Europe mult
Slide 89: Competitive landscape
Competitive landscape Domestic needs International needs CONCENTRATION Consolidated Fragmented Fragmented Independent / franchise Mainly present in Latam OWNERSHIP Oil company subsidiaries Mainly present Mainly present in Europe in the US/UK Edenred present in the Latin America market, mainly made u
Slide 90: Edenred offer
Edenred offer Fuel management Fleet management • Closed loop or open loop payment • Closed loop payment solution with solutions with basic platform of services sophisticated platform of services • No pre-trip/post-trip functionalities; • High level pre-trip/post-trip control limited to payment funct
Slide 91: Travel & Entertainment market
Market & strategy Travel & Entertainment market T&E Expense management
Slide 92: Travel & Entertainment
Travel & Entertainment Targeted expenses Market needs Expenses incurred by an employee pre-trip on-trip post-trip for business purposes • Define rules of • Pay for business • Improve usage (profile expenses administration Entertainment management, (according to (expense claims 40-30% Accommodation,
Slide 93: Market overview
Market overview Spending volumes €181bn €200bn €111bn > €518bn <10% 18% 17% Market penetration ~20% 5% Expense management growth €26bn +10-20% p.a. T&E Penetrated €bn expenses x% market share A vast T&E market, mostly untapped Source: Concomitance (Asia: over 7 countries / Australia, China, India, I
Slide 94: Competitive landscape: value chain positioning
Competitive landscape: value chain positioning pre-trip on-trip post-trip Travel booking • Booking solutions companies only Payment instrument Banks • Corporate cards Corporate focused on payment providers Cards with limited services • Software approach to Expense management +software solutions asso
Slide 95: Competitive landscape: targeted clients
Competitive landscape: targeted clients Large Large Small & multinational domestic medium-sized Market focus companies companies enterprises Comments Travel booking • Dedicated services only companies for large companies Payment instrument • Focus on managers and providers travelers only Expense man
Slide 96: Edenred offer
Edenred offer Payment Expense management card platform • Controls based on • Profile management - loop management (FlexiLoop) • Online booking tools - or other rules (FlexiControl) • Travel preparation • Expense claims management • Invoicing • Tax recovery A solution focused on SMEs with a simple en
Slide 97: Sector-Specific Expenses market
Market & strategy Sector-Specific Expenses market SSE Expense management
Slide 98: Sector-Specific Expenses
Sector-Specific Expenses Targeted expenses Market needs Other expenses Specific needs by sector with generic objectives related to sector- specific needs Simplify administrative processes Better control and monitor expenses Freight Uniform dry New worlds to explore, new needs to discover, cleaning n
Slide 99: Strategy in Expense Management
Market & strategy Strategy in Expense Management Expense management
Slide 100: Expense management: a strategic priority for the Group
Expense management: a strategic priority for the Group Promising growth Recurring business Low penetration and increasing market Frequent usage and client stickiness demand Synergies with benefit Scalable business model solutions with a take-up rate of ~4% and an • Client cross-selling opportunities
Slide 101: Strategy in Fuel & Fleet
Strategy in Fuel & Fleet Offer segmentation Organic roll-out Acquisitions Enhance our platform Leverage our platform Target F&F program with modularization & (WATTS in Latam and managers around the functional enrichment to PrePay Solutions in world to gain volume and better address segment- Europe)
Slide 102: Strategy in Travel & Entertainment
Strategy in Travel & Entertainment Increase functionalities Organic roll-out of of our T&E platform Edenred T&E solution Enrich functionalities to meet • Leverage our T&E platform to roll clients’ needs such as: out end-to-end solutions in countries where Edenred is already present • Invoices scanni
Slide 103: Strategy in Sector-Specific Expenses
Strategy in Sector-Specific Expenses Acquisition in new sectors Organic roll-out • Screening of every market where Edenred is already present to find new opportunities A long-term growth opportunity, A long-term growth opportunity, through an organic development through acquisitions and organic deve
Slide 104: Expense management
Expense management Market and strategy Antoine Dumurgier, Executive VP Strategy and Development Jacques Stern, CEO Illustration in Fuel & Fleet: Ticket Car®, Mexico Diego Frutos, Managing Director, Edenred Mexico Illustration in Travel & Entertainment: ExpendiaSmart®, Italy Andrea Keller, Managing D
Slide 105: Mexican F&F market: potential and addressable markets
Mexican F&F market: potential and addressable markets Total potential market: annual fuel consumption in the BtoB sector $24bn Independent segment Business segment Not yet addressable: $16bn $8bn Addressable market: • Small companies or independent drivers mostly 4.5m 1m • Companies looking for cost
Slide 106: Mexican F&F market: structure and segments
Mexican F&F market: structure and segments Mexican market specificities CONCENTRATION Consolidated Fragmented • All stations operating under Pemex brand but as franchisees Independent / franchise MEX • A market with multibrand domestic solutions (1) OWNERSHIP • Two segments: Oil company Light Fleets
Slide 107: Mexican F&F market: existing offer and players
Mexican F&F market: existing offer and players Light Fleets GENERAL EXPENSE CORE BUSINESS Leaders Leaders Followers Followers Heavy Fleets DOMESTIC FREIGHT INTERNATIONAL FREIGHT Leaders Mostly non addressable* Followers Ticket Car® is the market leader *At least for the US. 107
Slide 108: Ticket Car: value proposition
Ticket Car®: value proposition pre-trip on-trip post-trip Vehicle profiles Validation controls Management reports Fuel Analysis of card balance Vehicle use policies payment and reporting Define places and Control and validation of Statistics, operating and period for refueling the payment accounting
Slide 109: Ticket Car value proposition for companies
Ticket Car® value proposition for companies 109
Slide 110: Ticket Car key figures
Ticket Car® key figures Ticket Car® • Leader in Fuel & Fleet management • >100m liters of fuel per month • 7,000 clients and 300,000 active cards • >3,500 affiliated fuel stations • +24% CAGR 2002-2012 • Take-up rate of ~3% • 50% of Edenred Mexico issue volume 110
Slide 111: Development strategy
Development strategy Increase our Expand our • offering capacity Development of new features 1 • client target 2 Increased focus on heavy fleet and services: segment Wheel control Parking lots Road assistance Size Self consumption Consulting services $4.4bn • Data analysis for operational Penetratio
Slide 112: Expense management
Expense management Market and strategy Antoine Dumurgier, Executive VP Strategy and Development Jacques Stern, CEO Illustration in Fuel & Fleet: Ticket Car®, Mexico Diego Frutos, Managing Director, Edenred Mexico Illustration in Travel & Entertainment: ExpendiaSmart®, Italy Andrea Keller, Managing D
Slide 113: T&E market in Italy: a large and underpenetrated market
T&E market in Italy: a large and underpenetrated market Market structure Favorable factors for T&E solutions development Payment media for T&E business expenses (as a % of total number of companies in Italy) Corporate cards - E (1) 33% High use of cash advances Personal credit card 15% Corporate car
Slide 114: T&E market in Italy: existing offer and players
T&E market in Italy: existing offer and players pre-trip on-trip post-trip Travel booking companies Payment instrument Banks Corporate providers Cards Expense management +software solutions associated to external payment tools providers solutions No end-to-end player 114
Slide 115: ExpendiaSmart: three modules to meet clients' needs
ExpendiaSmart®: three modules to meet clients’ needs pre-trip on-trip post-trip Booking module Travel offer search in partnership with Reporting & Business Online booking tools intelligence ExpendiaSmart® lodge account F&F module Cost reporting consulting Fleet management Maintenance VAT recovery Pr
Slide 116: ExpendiaSmart movie
ExpendiaSmart® movie 116
Slide 117: Key competitive advantages compared to corporate credit card
Key competitive advantages compared to corporate credit card Broad All employees, incl. occasional Dedicated to executives distribution scope travellers (anonymous cards) Easier expense Integrated online platform for Payment solution associated management T&E process management with post-trip report
Slide 118: ExpendiaSmart key figures
ExpendiaSmart® key figures ExpendiaSmart® • ~€15m issue volume • >400 clients • 5,500 cards • 100% pre-paid Float Main Clients Affiliates Clients Take-up rate Interchange ~3.6% Client fee fee ~ 1.1% ~2.5% Beneficiaries N/A Based on 2013 estimated figures. 118
Slide 119: Development strategy
Development strategy Solution Strategic Sales upgrade partnerships • After a two-year • Client co-creation • First partnership incubation period, meetings, to develop with Amadeus, a cross-selling with new features European leader in benefits clients travel technology • New features: mobile • Launch
Slide 120: Expense management
Expense management Market and strategy Antoine Dumurgier, Executive VP Strategy and Development Jacques Stern, CEO Illustration in Fuel & Fleet: Ticket Car®, Mexico Diego Frutos, Managing Director, Edenred Mexico Illustration in Travel & Entertainment: ExpendiaSmart®, Italy Andrea Keller, Managing D
Slide 121: The Frete market
The Frete market 121
Slide 122: Competitive landscape
Competitive landscape Repom Competitors USD 1.7bn USD 1.1bn • 20 companies with the government license, but only three companies really operating in the market • Most of them started after the USD 44.2bn regulation voted in 2011 • The vast majority offer a simple solution, restricted to tools used t
Slide 123: Repom: a strong experience in the market
Repom: a strong experience in the market 2012 New regulations 2004 1993 1999 “Toll payment Repom first Company “Freight payment” card” to get the created launched launched license 1995 2001 2011 2013 “Fuel cards for Fuel card MasterCard Acquisition of heavy fleets” product issuer 62% stake by launch
Slide 124: Repom value proposition
Repom value proposition Management Payment Aggregated system solutions services • Full solution for the • Private network (with • Pre-operational freight hiring process specific features) diagnosis • Integrated system • Mastercard network • Full implementation process • Security and tracing • ATM fe
Slide 125: Repom key figures
Repom key figures Repom • >300k truck drivers have used a Repom solution since 1999 • Close to 2.5m heavy fleet trips processed by Repom platform in 2013 • >11m toll tickets used in 2013 Main Clients • >200 clients in 2013 • >25% CAGR in business volume since 2008 125
Slide 126: Repom: business model
Repom: business model Issue volume (IV) Client fee Fuel (closed loop) ~0.7% on BV Volume ~25% w/o affiliate Affiliate fee ~1.9% (cash Business fee on IV withdrawal/ wired Volume Toll ~0.5-0.7% transfers) (BV) ~6% on BV ~68% MasterCard ~1% network Average take-up rate: 1.2%-1.4% on BV Great opportuni
Slide 127: Opportunities in the market
Opportunities in the market Regulatory Services for Synergies with change truck-drivers Edenred • Main sales focus on • A priority for the • Cross-selling corporate clients until government to opportunities recently reduce the informal economy and • Leverage Edenred • Since 2012, focus increase tax
Slide 128: Expense management
Expense management Market and strategy Antoine Dumurgier, Executive VP Strategy and Development Jacques Stern, CEO Illustration in Fuel & Fleet: Ticket Car®, Mexico Diego Frutos, Managing Director, Edenred Mexico Illustration in Travel & Entertainment: ExpendiaSmart®, Italy Andrea Keller, Managing D
Slide 129: Conclusion
Conclusion Sector- An offer covering Fuel Travel & Specific all segments & Fleet Entertainment Expenses F&F T&E SSE Expected contribution to Group’s issue volume: >20% by 2016 A high potential market, and a development through both organic growth and acquisitions 129
Slide 130: Agenda
AGENDA 1 Executive summary 10:0010:20 INVESTOR DAY NEW YORK/12TH NOV. 2013 Growth potential in 2 existing benefits markets 10:2011:05 New options for growth 3.a Strategy & benefits illustrations 11:0511:40 Q&A session & lunch 11:401:10 New options for growth 3.b Focus on Expense management 1:10
Slide 131: Financial focus
Financial focus Loïc Jenouvrier, Executive VP, Finance and Legal Affairs
Slide 132: Financial focus
Financial focus Business model Basics Developments Sensitivity Use of Free Cash Flow
Slide 133: Issue Volume is key in the business model
Issue Volume is key in the business model 3 Cash and 4 Float 1 Revenue and 2 Profits Issue Volume (IV) 133
Slide 134: Revenue generation
1 Revenue generation Mechanism Sensitivity Generated through client fees (~1.0% of • Mix effects, related to products, IV) and merchant fees (~3.5% of IV), countries, contract size, and type of defined contract by contract merchants Operating revenue with IV + Non-spent vouchers (~0.5%) • Pressure o
Slide 135: Focus on operating revenue with IV - Mix effects
1 Focus on operating revenue with IV- Mix effects Product mix Country mix Higher growth of expense Take-up rates vary by country, management solutions, with depending on the market’s a lower take-up (~4%) level of development and size Contract mix Network mix Merchant fees vary depending Lower take-
Slide 136: Profit generation – EBIT bridge
2 Profit generation – EBIT bridge 50% flow- 100% flow- Digital extra- Currency effect through of L/L ∆ costs and changes in through of L/L ∆ in financial scope in operating revenue revenue €3m €(8)m €(19)m €36m 2012 EBIT 2011 EBIT €367m €355m L/L change L/L change in % in value Operating revenue +7.
Slide 137: Profit generation – Operating leverage
2 Profit generation – Operating leverage Excluding digital extra-costs 2009 2010 L/L 2011 L/L 2012 L/L Operating revenue 808 +51 859 +81 940 +72 1,012 Operating flow-through 49% 47% 50% ratio (1) Operating EBIT 233 +25 258 +38 296 +36 332 +1.3 pts +1.5 pts 32.8% Operating EBIT/ +1.2 pts 31.5% 30.3%
Slide 138: FFO generation
3 FFO generation EBIT to FFO Correlation between FFO and IV FFO (€m) 2012 Average 280 2011 In € millions 2010 2011 2012 L/L growth 230 2008 EBIT 328 355 367 +10.0% 2007 2010 Net financial 180 (62) (40) (36) expense 2006 2009 Income tax (91) (97) (102) 130 2005 Depreciation and 2004 80 other non-cash
Slide 139: FCF generation
3 FCF generation FFO to FCF High cash flow conversion ratio Example based on 2012 results Impact of a €1bn increase in issue volume In € millions Impact % of Take-up 2010 2011 2012 in €m IV rate FFO 213 257 282 Operating revenue 50 5.0% Flow- (Increase)/decrease in float 100 112 67 though Operating
Slide 140: Float structure
4 Float structure By solution By region 44% Nb of weeks of float Europe Meal 6-8 weeks 70% X% 53% 3% Food 3-5 weeks Latin America RoW 26% 4% Expense - management Incentive & >3 months Rewards X% IV breakdown X% Float breakdown Float breakdown between Latin America and Europe reflecting product mix(1
Slide 141: Float generation
4 Float generation Increase in float Correlation between Float and IV Float (€bn) 2.5 2012 2011 2.3 2010 2.1 2009 2007 2008 In € millions 2009 2010 2011 2012 1.9 Float(1) 2,032 2,249 2,343 2,456 1.7 2006 In nb of weeks 8.5 8.4 8.0 7.7 1.5 2005 1.3 2004 1.1 2003 0.9 5 7 9 11 13 15 17 Issue volume (€b
Slide 142: A prudent float investment policy
4 A prudent float investment policy Centralized cash • Strictly defined policies management • Monthly reporting by counterparty, country and structure, and internal audit policy controls • No bonds, no equities Investment • Only money market instruments in local currency (bank term deposits with no
Slide 143: Float average investment rate
4 Float average investment rate In € millions 2,650 140 129 2,456 2,450 130 2,343 2,249 2,250 120 1,976 2,032 2,050 110 Float 1,850 94 92 100 91 Financial 1,650 90 revenue 80 1,450 80 1,250 70 2008 2009 2010 2011 2012 Financial revenue at a low point due to historically low interest rates, and despi
Slide 144: Financial focus
Financial focus Business model Basics Developments Sensitivity Use of Free Cash Flow
Slide 145: Effects associated with 2016 strategic developments
Effects associated with 2016 strategic developments Accelerate the roll-out of Invent Expense management solutions Increased weight of Expense management in the Group (>20% of total issue volume in 2016) Shift to digital Conquer >75% digital issue volume by 2016 2012 (vs. 51% at end-2012) Win 145
Slide 146: Shift to digital: overview by region
Shift to digital: overview by region Digital issue volume as a % of total issue volume by geography (end-2009) Latin Rest of Europe Total America World 6% 30% 59% 59% (end-2012) 81% 15% 62% 51% Shift to digital at an advanced stage in Latin America and on its way in Europe 146
Slide 147: Shift to digital: effects on P&L and Float
Shift to digital: effects on P&L and Float New volume opportunities: Issue volume • Increase penetration in SMEs (simpler solutions and lower cost of acquisition) • Create new solutions thanks to tighter control of fund allocation • Reduce lost products (~0.25% of IV). No impact on expired. Revenue
Slide 148: Shift to digital: cost developments at the country level
Shift to digital: cost developments at the country level 60% decrease in production & logistics costs 0 Total costs -18% decrease: +10% 10 -5% to -10% 30 New recurring 12 digital costs 35 35 Whatever the media, Sales 0 35 35 remains at the heart of the 00 business 0 Paper cost structure Digital cost
Slide 149: Shift to digital: change in flow-through ratio
Shift to digital: change in flow-through ratio Flow-through ratio, including digital extra-costs Acceleration of the No more digital digital shift extra-costs >50% 49% <50% 39% 31% 2010 2011 2012 2013E 2014 2015 2016 Digital Issue 35% 41% 51% >56% … >75% volume Considering the change in project cost
Slide 150: Shift to digital: float developments at the solution level
Shift to digital: float developments at the solution level Order/ Merchant delivery Beneficiary retention retention & reimbursement 1 2 3 ~80% of the retention period is related to beneficiary use habits, which do not change with the shift to digital With cards: fewer logistics in phase 1 and phase
Slide 151: Shift to digital: float evolution at the Group level
Shift to digital: float evolution at the Group level FLOAT EVOLUTION EXCLUDING EXPENSE MANAGEMENT 2007 2012 Issue volume (in €bn) 10.8 +39% 15.0 Digital IV in % 12% x4 46% Float (in €bn) 1.9 +30% 2.5 Mix effect on Nb of weeks 9.2 -0.7 8.5 float holding period Nb of weeks on paper 9.2 9.2 ~13% differ
Slide 152: Expense management: business model characteristics
Expense management: business model characteristics Expense Incentive & Meal Food Management Rewards As a % of issue volume(1) 77% 10% 4% Average L/L issue volume +3.9% +19.8% +20.6% -5.8% growth (2010-12) Take-up rate ~5.5% ~4.5% ~4% ~7% Operating EBIT /Operating Similar level: ~30% revenue Float ho
Slide 153: Expense management: FCF-accretive
Expense management: FCF-accretive Standalone Standalone Benefit Illustration Expense 1 benefit 2 benefit Management Year 1 Year 5 Issue volume 300 365 456 Take-up (1) 5.0% 5.0% 4.8% Mix effect on take-up Op. margin (2) 28.0% 31.9% 31.6% No impact on margins FFO 3.7 4.2 4.9 Float variation 1.9 2.3 2.
Slide 154: Financial focus
Financial focus Business model Basics Developments Sensitivity Use of Free Cash Flow
Slide 155: EBIT sensitivity to macro-economic indicators
EBIT sensitivity to macro-economic indicators Unemployment (1) Inflation (2) Interest rates (3) Exchange rates +/- 1% +/- 1% +/- 50bp +/- 5% (4) EURO LATAM OTHER BRL VEF MXN ~ €5.8m ~ €4.0m €6.9m €3.3m €2.1m €7.3m €2.6m €0.9m (1) Unemployment rate in our existing client portfolio. (2) Assuming that
Slide 156: Financial focus
Financial focus Business model Basics Developments Sensitivity Use of Free Cash Flow
Slide 157: Free cash flow use policy
Free cash flow use policy Strong Investment Grade rating(1) Sound financial position Reccurring net profit after tax Additional Free cash flow ~90% Reinforced strategy of targeted return in dividends acquisitions Free cash flow structurally higher than profits which allows a strong return to shareho
Slide 158: Agenda
AGENDA 1 Executive summary 10:0010:20 INVESTOR DAY NEW YORK/12TH NOV. 2013 Growth potential in 2 existing benefits markets 10:2011:05 New options for growth 3.a Strategy & benefits illustrations 11:0511:40 Q&A session & lunch 11:401:10 New options for growth 3.b Focus on Expense management 1:10
Slide 159: Open new growth territories
Open new growth territories Short-term contribution Exploit growth potential Increase penetration in existing benefits markets rates and face value Launch new solutions and new countries in: Develop new options for growth based on our current know-how • Benefits • Expense management From a transacti
Slide 160: New growth territories
New growth territories Jacques Stern, CEO
Slide 161: From an off-line to an online transaction world
From an off-line to an online transaction world ….. Digital transition Clients Affiliates Employees Electronic credit Personal account Payment tools No visibility (no physical distribution, (personal profile + balance until profile management) consultation) reimbursement Affiliates Clients Beneficia
Slide 162: To a world of information
….to a world of information Digital transition New business From transaction… … to information opportunities Personal new enablers account interactions Enrich our benefits programs with services Beneficiary Affiliate Beneficiary Digital Affiliate transactions Enrich the beneficiary experience throug
Slide 163: Enrich our benefits programs with services
Enrich our benefits programs with services Optimization of Maximization of the value clients’ HR processes perceived by the beneficiary Flexible benefits Exclusive offers Self-service platform Increased for employees purchasing with or without power by adding salary sacrifice value to benefits HR po
Slide 164: Benefity Café in Czech Republic
Illustration Benefity Café in Czech Republic Value proposal Access and manage a large choice of benefits from a single platform How does it work? An online self-service platform accessible to employees to manage their benefits What is the benefit of this offer? Clients Easier administration and incr
Slide 165: Enrich the beneficiary experience through mobile
Enrich the beneficiary experience through mobile Personal account new interactions Beneficiary Affiliate Digital transactions data collection New purchasing Geolocation Mobility experience services Mobile, the second step of our digital strategy Objective: digital issue volume >75% by 2016 165
Slide 166: Cash on Tap in the UK
Illustration Cash on Tap in the UK Value proposal Contactless payment with a mobile An EE solution processed by PrePay Solutions How does it work? • Payment with the phone tapped on a contactless card reader to pay <£20 • One of the few "over the air e-wallets” (1) • Auto load allows automatic top-u
Slide 167: PrePay Solutions expertise in mobile payment
PrePay Solutions expertise in mobile payment PrePay Solutions role Positive effects for in EE solution Edenred Developer of the e-wallet solution TSM(1) integration Capacity to roll out this technology to Edenred solutions E-money issuer Additional business with PrePay Solutions third-party clients
Slide 168: Develop solutions for Affiliates & Beneficiaries
Develop solutions for Affiliates & Beneficiaries 0.6m Clients 1.3m 38m Affiliates Digital Beneficiaries enabling to know beneficiaries (individual account, …) Discounts Product promotion Special discounts, deal of Deals, special offers, … the day, … Distribution Savings Mono-brand cards On-line plat
Slide 169: MyWorkOffers in the UK
Illustration MyWorkOffers® in the UK Value proposal Increase purchasing power of employees thanks to access to savings and discounts How does it work? A web platform for employees to access to a wide range of vouchers, cards and SMS offers What is the benefit of this offer? Affiliates Products promo
Slide 170: NutriSavings in the US
Illustration NustriSavingsTM in the US 170
Slide 171: NutriSavings in the US
Illustration NutriSavingsTM in the US Value proposal Cash back based on the healthiness of the products purchased by the employees How does it work? Purchasing data collected at the product level enabling the corresponding cash back to be credited according to nutrition quality What is the benefit o
Slide 172: New expertise in data analytics and multi-stakeholder approach
New expertise in data analytics and multi-stakeholder approach Revenue stream Data analytics from new stakeholders Distinctive program features: • A more complex eco-system, involving health plans and • Use of UPC (unit product code) producers, on top of clients, to "filter" the use of funds benefic
Slide 173: Agenda
AGENDA 1 Executive summary 10:0010:20 INVESTOR DAY NEW YORK/12TH NOV. 2013 Growth potential in 2 existing benefits markets 10:2011:05 New options for growth 3.a Strategy & benefits illustrations 11:0511:40 Q&A session & lunch 11:401:10 New options for growth 3.b Focus on Expense management 1:10
Slide 174: Conclusion
Conclusion Jacques Stern, CEO
Slide 175: A constant focus on growth
A constant focus on growth Short-term contribution Exploit growth potential Increase penetration in existing benefits markets rates and face value Launch new solutions Develop new options for growth and new countries in: based on our current know-how • Benefits • Expense management Open new growth t
Slide 176: Our revised targets
Our revised targets VOLUME DRIVERS Issue volume target(1) narrowed New geographies 0-1% +8% to +14% L/L growth per year New solutions 2-4% Flow-through ratio(2) >50% New clients 3-5% From 2014 FFO target (1) PRICE DRIVER confirmed > +10% Face value 3-4% L/L growth per year Contribution to issue volu
Slide 177: Key investment highlights
Key investment highlights Balanced geographic Growth story exposure High potential of issue volume growth and strong operating leverage between developed countries and emerging countries (~60% of IV) High FCF generation Sound financial position Low capex requirement and structurally A confirmed BBB+
Slide 178: Investor Day
INVESTOR DAY NEW YORK/12™ NOVEMBER 2013 Edenred