Edenred Sa · EURONEXT:EDEN
Edenred Sa — FY2012 Earnings Presentation
55 slides from Edenred Sa's earnings presentation, Feb 13, 2013
Slide 1: 2012 Annual Results Conference
2012 Annual Results Conference February 13, 2013
Slide 2: 2012 Key Figures
2012 Key Figures FY L/L In € millions Targets 2012 growth Issue volume 16,657 +10.1% 6%-14%(1) Revenue 1,067 +7.3% na EBIT 367 +8.7% €355-€375m(2) Funds from operations 282 +13.4% > 10%(1) Robust performance in 2012, with financial targets met (1) Normalized organic growth target: normalized growth
Slide 3: Conquer 2012: A Successful Step
2016 Conquer 2012: A Successful Step Invent 2012 Conquer 2010 Win Invent 2016 2016 Invent Conquer 2012 • Organic Growth Strategy: accelerate new solution and new country development 28 new solutions launched out of the objective of 26(1) 2012 Conquer 3 countries opened out of the objective of
Slide 4: Organic Growth Strategy
2016 Organic Growth Strategy Invent 2012 Conquer 2010 Win €989m(1) XX new XX new beneficiaries beneficiaries additional Sales issue volume performance from new XX new XX new contracts beneficiaries beneficiaries 1.4% 28 New 0.6% 0.8% Increasing contribution(3) new solutions solutions(2) 0.3% of new
Slide 5: Shift to Digital Strategy
2016 Shift to Digital Strategy Invent 2012 Conquer 2010 Win Digital issue volume Transition phase Target (in number of countries) 2016 2009 pro forma 2012 2012 2011 >50% digital IV(1) Done 6 11 2009 5% to 50% >70% digital IV In process 4 10 51% 41% 30% 0% to 5% 4 15 digital IV Launch No project 23 3
Slide 6: 2012 Recommended Financial Policy and Dividend
Financial Policy and Dividend Financial Policy Balanced use of free cash flow between return for shareholders, gross debt repayment and targeted acquisitions, while maintaining a sound financial position (strong investment grade rating(1)) Long-term shareholder policy: recurring increase of divi
Slide 7: 2012 Results
2012 Results Chapter 1 Titre du document - date - Arial regular 8pts 7
Slide 8: Focus on Q4 Trends
Focus on Q4 Trends ISSUE VOLUME +11.0% L/L growth vs +9.8% in the first nine months, reflecting: Very strong momentum in Latin America (+21.6% L/L vs +21.1% L/L in the first nine months) Moderate growth in Europe (+3.5% L/L excluding Hungary(1) vs +1.9% L/L in the first nine months) in a difficu
Slide 9: Income Statement – Key Figures
Income Statement – Key Figures Change Change In € millions 2011 2012 reported L/L(1) Issue volume 15,188 16,657 +9.7% +10.1% Operating revenue 940 976 +3.7% +7.7% Financial revenue 92 91 -0.7% +3.2% Total revenue 1,032 1,067 +3.3% +7.3% Operating EBIT(2) 263 276 +4.7% +10.6% Financial EBIT(3) 92 91
Slide 10: 2012 Issue Volume: €16,657m
2012 Issue Volume: €16,657m Like-for-like Issue Volume (L/L) +10.1% €1,541m 10.9% 11.0% 10.4% 10.5% Scope (1) 9.8% 9.7% 10.1% +0.8% 9.0% 9.1% €114m 8.5% Currency -1.2% €(186)m Reported +9.7% Q1 11 Q2 11 Q3 11 Q4 11 FY 11 Q1 12 Q2 12 Q3 12 Q4 12 FY 12 €1,469m Issue volume up +10.1% in 2012, in line w
Slide 11: 2012 Issue Volume by Type of Solution
2012 Issue Volume by Type of Solution B2B B2G EMPLOYEE BENEFITS PUBLIC EXPENSE INCENTIVE & SOCIAL TOTAL MEAL AND QUALITY OF MANAGEMENT REWARDS PROGRAMMES FOOD LIFE Issue volume 12,897 1,302 1,666 602 190 16,657 (in € millions) As a % of IV 77% 8% 10% 4% 1% 100% L/L change +9.3% +5.5% +24.4% +10.1% +
Slide 12: 2012 Issue Volume by Region
2012 Issue Volume by Region 40 countries(1) Emerging countries 61% of issue volume (2) +18.9% L/L Growth Developed countries 39% of issue volume +2.4% L/L Growth Strong momentum in emerging markets which represent 61% of Edenred’s business Resilient developed markets in a tough economic environment
Slide 13: Contribution of Growth Drivers to 2012 Issue Volume
Contribution of Growth Drivers to 2012 Issue Volume New geographies 2012 organic issue 10.1% Targeted contribution of 1% to 2% from 2015 volume growth = 3 new countries opened: Finland (2011), Japan (2012), Colombia (2013) Enter new 4 0.0% New solutions geographies +1.4% L/L growth in 2012 Tic
Slide 14: 2012 Revenue: €1,067m
2012 Revenue: €1,067m Change Change In € millions reported L/L 2011 2012 Operating revenue with issue volume 782 838 +7.1% +9.0% Operating revenue without issue volume 158 138 -12.8% +1.0% Total operating revenue 940 976 +3.7% +7.7% Financial revenue 92 91 -0.7% +3.2% Total revenue 1,032 1,067 +3.3%
Slide 15: 2012 EBIT: €367m
2012 EBIT: €367m Change Change In € millions reported L/L 2011 2012 Total revenue 1,032 1,067 +3.3% +7.3% Operating EBIT 263 276 +4.7% +10.6% Financial EBIT 92 91 -0.7% +3.2% Total EBIT 355 367 +3.3% +8.7% EBIT performance by region Latin America, €243m: very strong performance, with EBIT up +20.1
Slide 16: Flow-through Ratio
Flow-through Ratio(1) Financial Operating Digital Currency effect revenue revenue and changes L/L∆: €3m L/L∆: €72m Extra costs in scope Flow-through Flow-through ratio ratio 100% 50% 2012 EBIT 2011 EBIT (reported) €(8)m (reported) €36m €(19)m €367m €355m €3m of which: • Currency: €(7)m • France: €(2
Slide 17: Change in Operating EBIT as a Percentage of Operating Revenue
Change in Operating EBIT as a Percentage of Operating Revenue Operating Currency effect Digital and changes in flow-through(1) Extra costs scope ratio of 50% Operating EBIT/operating Operating revenue EBIT/operating (reported) +1.6pt -0.8pt revenue (reported) -0.5pt 28.0% 28.3% 2011 2012 1.6pt L/L i
Slide 18: 2012 Net Profit
2012 Net Profit In € millions 2011 2012 EBIT 355 367 Net financial expense (40) (36) Operating profit before tax and non-recurring items 315 331 Non-recurring income and expenses, net (7) (25) Income tax expense (103) (103) Minority interests (11) (20) Net profit, Group share 194(1) 183 Recurring ne
Slide 19: 2012 Dividend
2012 Dividend Change 2011 2012 reported Recurring net profit after tax (in € millions) 203 208 +2.5% Average number of shares (millions) 226 226 Recurring net profit after tax, per share (in €) 0.90 0.92 Dividend per share (in €) 0.70 0.82 +17% Dividend (in € millions) 158 185 Payout ratio 78% 89% R
Slide 20: Cash Flows
Cash Flows In € millions 2011 2012 Funds From Operations 257 282 (Increase)/decrease in float(1) 112 67 (Increase)/decrease in restricted cash (56) (19) (Increase)/decrease in working capital (excl. float) 28 40 Recurring capex (35) (40) Free Cash Flow 306 330 Development capex (34) (76) Proceeds fr
Slide 21: Negative Working Capital: €2.5bn at End-2012
Negative Working Capital: €2.5bn at End-2012 Negative working capital (in € millions) 2012 2011 2010 2009 2008 2,456 2,343 2,249 1,976 2,032 8.1 8.5 8.4 8.0 7.7 # of weeks of Issue Volume Steady increase in the negative working capital over time, to €2.5bn at end-2012 21
Slide 22: Investment and Debt Maturities
Investment and Debt Maturities Net cash position of €85m at end-2012 Current financial assets: €1,473m Gross debt: €(1,388)m Investments by maturity (Group) Maturities of gross debt 58% End-2011 End-2012 < 1 year > 1 year 20% 17% 5% 0% 0% 0% 0% 0% 30% 32% 70% 68% Gross debt repayment ► €100m of gros
Slide 23: 2012 Financial Performance
2012 Financial Performance Strong operating performance Sound financial position Issue volume ► +10.1% L/L, in line with group target of 6% to 14% ► A net cash position of €85m at 2012 year-end ► €367m, in line with the EBIT target of €355-375m ► Strong investment grade rating(1) maintained ► +13.4%
Slide 24: Conquer 2012 Strategy: A Successful Step
Conquer 2012 Strategy A Successful Step Chapter 2 Titre du document - date - Arial regular 8pts 24
Slide 25: Conquer 2012: A Successful Step
Conquer 2012: A Successful Step Invent 2016 2016 Invent Conquer 2012 • Organic Growth Strategy: accelerate new solution and new country development 28 new solutions launched out of the objective of 26(1) 2012 Conquer 3 countries opened out of the objective of 6 to 8(2) Shift to digital strat
Slide 26: Ramp-up of Two Organic Growth Drivers
2016 Invent 2012 Conquer 2010 Win Ramp-up of Two Organic Growth Drivers Titre du document - date - Arial regular 8pts 26
Slide 27: New Solutions
New Solutions Employee Benefits Expense Management Incentive & Reward End-2010 69 programs End-2010 16 programs End-2010 33 programs 2011 / 2012 +10 2011 / 2012 +8 2011 / 2012 + 10 new programs new programs new programs Brazil Brazil France Germany Brazil Spain Mexico Italy Ramp up of new solutions:
Slide 28: Focus on Ticket Cultura
Focus on Ticket Cultura A new solution in the Brazilian market Context Recent favorable new legislation intended to promote employees’ access to culture. Companies: exempt from payroll taxes (~45%). Tax Tax credit for the amount given to employees, capped framework at 1% of the company’s income tax.
Slide 29: “Frete” Market Overview
“Frete” Market Overview Fuel & Fleet Expense Management Market in Brazil A large untapped market Estimated: Penetration rate: Light vehicle ~ €25bn ~ 6% fleet segment Full-time employee N°1 drivers Heavy vehicle fleet segment Offering strong growth potential ► New measures to regulate the market thr
Slide 30: Repom, Leader in the “Frete” Market
Repom, Leader in the “Frete” Market Business volume: €1bn in 2012e N°1 of which ~€310m of issue volume(1) More than 20 years’ expertise MasterCard Leadership network ~1.5% ~1.6% Toll position More than 100 clients 1% (low attrition rate) Fuel 5% (closed loop) 25% Volume Customized platform w/o
Slide 31: Creation of a Unique Player
Creation of a Unique Player 20 years expertise Partnership with ITAU sales 20 years’ expertise network Strong sales capabilities: Unique solution and Contracts signed with Ticket Frete for a functionalities potential business volume of R$800m in 2012, of which R$28m already loaded Strong IT capabili
Slide 32: Focus on Ticket Plus Card
Focus on Ticket Plus Card Market data Description : benefit for basic products like food or fuel, with a maximum face value(1) of €44 per employee per month 2016 expected addressed market : 700,000 beneficiaries 2012 Edenred figures Launch date: March 2012 Affiliate network: 11,000 merchants
Slide 33: New Geographies
New Geographies 2011 Finland ► Opportunistic expansion ► 2 solutions launched : Ticket Mind & Body® and a meal voucher benefit 2012 Japan ► Strategic expansion 2013 Colombia ► Existing meal voucher solution ► Strategic expansion ► Existing benefits regulation 10 countries still under review Objectiv
Slide 34: Focus on Japan and Colombia
Focus on Japan and Colombia Japan Colombia 39th country of 40th country of Edenred Edenred ► Acquisition in July 2012 of Barclay Vouchers, only player ► Acquisition in February 2013 of Big Pass, a major in the meal voucher market: player in the benefits market : Key data Issue volume of €100m in 2
Slide 35: The Shift to Digital
2016 Invent 2012 Conquer 2010 Win The Shift to Digital Titre du document - date - Arial regular 8pts 35
Slide 36: Shift to Digital by Region
Shift to Digital by Region Digital issue volume Status at end-2012 Target 2016 Digital issue volume as a % of total issue volume by geography 2012 2011 (end-2009) 2009 >70% 51% 41% 30% (end-2012) A significant step forward in the shift to digital in 2012: more than 50% of issue volume is now digital
Slide 37: Focus on Latin America and Europe
Focus on Latin America and Europe Digital issue volume as a % of total issue volume by geography United Brazil Kingdom Belgium 96% 90% 20%(1) France Mexico 3% 75% Italy 10% Digital shift at an advanced stage in Latin America and well on its way in Europe (1) Number of beneficiaries signed to shift t
Slide 38: Change in Cost with Digital
Change in Cost with Digital Change in costs Digital project costs 2010-2013 at country level Project Ramp-up Post- 2014-2016 2010 2011 2012 2013 2014-2016 phase phase transition €5m of the forecasted 2012 Types of costs (2 to 4 years) extra-costs will occur in 2013, mainly due to France Digital extr
Slide 39: Digital: New Growth Territories
Digital: New Growth Territories Opening new horizons Improve existing solutions: simpler solutions to address the untapped SMEs segment Create new solutions: thanks to tighter control of fund allocation Offer new value-added services to all stakeholders Beneficiaries Affiliates Clients B A C Discoun
Slide 40: Conclusion
Conclusion Titre du document - date - Arial regular 8pts 40
Slide 41: Our Long-term Strategy
Our Long-term Strategy Invent 2016 Solution manager strategy: from product manager to solution manager Expense management strategy: development of 2016 the expense management business Invent Multi-stakeholders strategy: leverage our relationships with all stakeholders to grow the business 2012
Slide 42: Appendices
Appendices Titre du document - date - Arial regular 8pts 42
Slide 43: Issue Volume
Issue Volume Q1 Q2 Q3 Q4 FY 2012 In € millions 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 France 659 666 617 613 512 524 810 817 2,598 2,620 Rest of Europe 1,148 1,127 1,232 1,157 1,112 1,103 1,278 1,259 4,770 4,646 Latin America 1,628 1,987 1,742 2,054 1,836 2,209 2,131 2,554 7,337 8,804 Res
Slide 44: Focus on Issue Volume by Region
Focus on Issue Volume by Region Issue volume L/L growth Q1 Q2 Q3 Q4 2012 Brazil 21.5% 23.8% 22.0% 18.3% 21.3% Hispanic Latin America 23.1% 17.8% 16.7% 25.7% 21.2% Total Latin America 22.1% 21.5% 19.9% 21.6% 21.3% Q1 Q2 Q3 Q4 2012 Western Europe 2.6% -0.1% 4.0% 3.4% 2.5% Central Europe -17.3% -22.8%
Slide 45: Operating Revenue
Operating Revenue Q1 Q2 Q3 Q4 FY 2012 2011 2012 2011 2012 In € millions 2011 2012 2011 2012 2011 2012 France 36 34 34 32 31 29 43 43 144 138 Rest of Europe 81 76 78 72 71 69 96 92 327 309 Latin America 94 113 100 115 107 122 113 129 414 479 Rest of the world 17 11 16 12 12 13 10 14 56 50 OPERATING R
Slide 46: Focus on Operating Revenue by Region
Focus on Operating Revenue by Region L/L growth Q1 Q2 Q3 Q4 2012 Latin America 19.7% 19.9% 15.5% 16.3% 17.7% Europe -1.1% -1.3% -0.5% 1.7% -0.2% Europe excl. Hungary 2.4% 2.3% 3.1% 4.8% 3.2% Rest of the World 14.1% 8.8% 10.7% 17.3% 12.7% Operating revenue with issue volume 9.4% 9.2% 8.2% 9.2% 9.0% O
Slide 47: Financial Revenue
Financial Revenue Q1 Q2 Q3 Q4 FY 2012 In € millions 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 France 5 5 5 5 5 5 5 5 20 20 Rest of Europe 7 8 8 7 8 7 8 6 32 28 Latin America 9 10 9 9 9 10 9 10 36 39 Rest of the world 1 1 1 1 1 1 1 1 3 4 FINANCIAL REVENUE 22 24 23 22 24 23 23 22 92 91 Q1 Q2 Q
Slide 48: Total Revenue
Total Revenue Q1 Q2 Q3 Q4 FY 2012 In € millions 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 France 41 39 39 37 36 34 48 48 164 158 Rest of Europe 88 84 87 79 80 75 105 99 359 337 Latin America 102 123 109 124 116 133 123 138 450 518 Rest of the world 18 12 17 13 13 14 11 15 59 54 TOTAL REVENUE
Slide 49: EBIT
EBIT In € millions Change 2011 2012 Change L/L* reported France 46 45 -2.4% 8.9% Rest of Europe 111 95 -14.7% -13.1% Latin America 206 243 18.1% 20.1% Rest of the world 3 3 ns ns Worldwide structures -11 -19 ns ns EBIT 355 367 3.3% 8.7% * At constant scope of consolidation and exchange rates. 49
Slide 50: Focus on EBIT by Region
Focus on EBIT by Region In € millions Change 2011 2012 Change L/L* reported Europe Operating EBIT 105 92 -12.1% -8.1% Financial EBIT 53 48 -9.1% -3.7% (1) Total EBIT 158 140 -11.1% -6.6% Change 2011 2012 Change L/L* reported Latin America Operating EBIT 170 204 20.0% 22.1% Financial EBIT 36 39 9.5%
Slide 51: Balance Sheet
Balance Sheet In € millions 2010 2011 2012 In € millions 2010 2011 2012 Intangible assets 96 101 113 Total equity (1,044) (1,011) (1,033) Property, plant & equipment 40 55 87 Other non-current assets 584 552 575 Provisions and deferred tax 121 139 146 Working capital assets 1,279 1,291 1,407 Working
Slide 52: Exchange rates
Exchange rates 2012 vs. 2012 vs. 1€ = X foreign Q4 2011 Q4 2012 2011 Change FY 2011 FY 2012 2011 Change currency average rate average rate (in %) average rate average rate (in %) Bolivar Fuerte 7.21 6.87 -4.7% 7.38 6.82 -7.6% (VEF) Brazilian real 2.42 2.66 +10.1% 2.33 2.51 +7.8% (BRL) Hungarian Fori
Slide 53: Bolivar Devaluation Effect
Bolivar Devaluation Effect Government Announcement (Feb. 8, 2013) Intention to devalue the official rate: 6.3VEF/$ versus 4.3VEF/$ previously Withdrawal of the Sitme system(1) (alternative official rate at 5.3VEF/$, used by Edenred) Impact on Edenred P&L impact Balance Sheet impact ► 2012 Pro Fo
Slide 54: Bolivar Devaluation Effect by Quarter
Bolivar Devaluation Effect by Quarter Q1 Q2 Q3 Q4 FY 2012 In € millions Reported Pro forma Impact Reported Pro forma Impact Reported Pro forma Impact Reported Pro forma Impact Reported Pro forma Impact Issue volume 3 909 3 860 (49) 3 956 3 901 (55) 3 999 3 941 (58) 4 793 4 721 (72) 16 657 16 423 (23
Slide 55: 2013 Expected Calendar Effects
2013 Expected Calendar Effects Q1 Q2 Q3 Q4 2013 Nb of Nb of Nb of Nb of Nb of Var % Var % Var % Var % Var % days days days days days Europe (2) -2.8% 0 0.1% 1 0.8% (1) -1.4% (2) -0.8% Latin America (3) -4.5% 0 0.4% 1 2.1% 1 1.5% (0) -0.1% Rest of the world (1) -2.0% (2) -2.5% (1) -1.1% (1) -1.6% (4)