2012 ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS. May 4, 2012

Transcription

1 2012 ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS May 4, 2012

2 ROBERT BROWN Chairman

3 BOARD OF DIRECTORS Left to right: Alan Rossy, Rupert Duchesne, Joanne Ferstman, John Forzani, Hon. Michael Fortier, Douglas Port, Robert Brown, David Laidley, Roman Doroniuk Robert Brown (Chairman) Joanne Ferstman Roman Doroniuk Michael Fortier Rupert Duchesne John Forzani David Laidley Douglas Port Alan Rossy 3

4 INVESTMENT HIGHLIGHTS Solid performance in 2011 Strong balance sheet Demonstrated solid cash flow over the past 6 years Attractive dividend Share buyback 4

5 TODAY S AGENDA Formal Part of the Meeting Financial Highlights Strategic Overview Q&A Closing Remarks 5

6 FORMAL PART OF THE MEETING

7 FORWARD-LOOKING STATEMENTS Forward-looking statements are included in the following presentations. These forward-looking statements are identified by the use of terms and phrases such as anticipate, believe, could, estimate, expect, intend, may, plan, predict, project, will, would, and similar terms and phrases, including references to assumptions. Such statements may involve but are not limited to comments with respect to strategies, expectations, objectives, goals, aspirations, intentions, planned operations or future actions. Forward-looking statements, by their nature, are based on assumptions and are subject to important risks and uncertainties. Any forecasts, predictions or forward-looking statements cannot be relied upon due to, among other things, changing external events and general uncertainties of the business and its corporate structure. Results indicated in forward-looking statements may differ materially from actual results for a number of reasons, including without limitation, dependency on top accumulation partners and clients, conflicts of interest, greater than expected redemptions for rewards, regulatory matters, retail market/economic conditions, industry competition, Air Canada liquidity issues, Air Canada or travel industry disruptions, airline industry changes and increased airline costs, supply and capacity costs, unfunded future redemption costs, failure to safeguard databases and consumer privacy, changes to coalition loyalty programs, seasonal nature of the business, other factors and prior performance, foreign operations, legal proceedings, reliance on key personnel, labour relations, pension liability, technological disruptions and inability to use third party software, failure to protect intellectual property rights, interest rate and currency fluctuations, leverage and restrictive covenants in current and future indebtedness, uncertainty of dividend payments, managing growth, credit ratings, as well as the other factors identified throughout this presentation and throughout our public disclosure record on file with the Canadian securities regulatory authorities. The forward-looking statements contained herein represent the expectations of Groupe Aeroplan Inc., doing business as Aimia ( Aimia ), as of May 3, 2012, and are subject to change after such date. However, Aimia disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations. For further information, please contact Investor Relations at or trish.moran@aimia.com. 7

8 DAVID ADAMS Executive Vice President and Chief Financial Officer Financial Highlights

9 FY 2011 CONSOLIDATED FINANCIAL HIGHLIGHTS Year Ended December 31, % Change on an adjusted basis ($ millions except per share amounts) Reported 2011 Adjustments Adjusted 2011 Reported 2010 Adjustments (5) Adjusted 2010 Adjusted Year Over Year Constant Currency (6) Gross Billings 2, , ,187.8 (17.4) 2, % 3.1% Gross Billings from sale of Loyalty Units 1, , , , % 7.2% Total Revenue (1) 2, , , , % 9.7% Cost of rewards and direct costs 1, , ,295.3 (53.1) 1, % 7.3% Gross margin (1) (2) % 13.3% Gross margin (%) 37.0% 40.8% 37.0% 39.6% 122 bps 130 bps Depreciation and amortization % 5.9% Operating expenses (3) (53.9) (3.4%) (2.7%) Operating income (1) (3) % 102.9% Share of net earnings of PLM (4.4) - (4.4) na na Net earnings (1) (3) (77.0) ** ** Non-GAAP Adjusted EBITDA (1) % 23.6% Adjusted EBITDA margin (%) 15.3% na 15.8% 13.1% na 13.2% 263 bps 261 bps Free Cash Flow before dividends paid (10.7%) na Free Cash Flow before dividends paid per common share (4) (3.8%) na (1) Reported 2011 includes the $136.0 million effect of an adjustment to the Breakage estimate related to the Nectar and Air Miles Middle East programs, impacting Revenue from Loyalty Units by $95.2 million and $40.8 million, respectively, and Adjusted EBITDA by $10.4 million. (2) Before depreciation and amortization. (3) A $53.9 million impairment charge was recorded in the fourth quarter of 2011 related to the US proprietary loyalty Cash Generating Unit. (4) Calculated as: (Free Cash Flow before common and preferred dividends paid, less preferred dividends)/ weighted average common shares outstanding. (5) Reported 2010 results included the positive impact on Gross Billings and Adjusted EBITDA of an accounting reclassification of deferred revenue amounts previously recorded in customer deposits, offset by the net negative impact on Operating Income and Adjusted EBITDA of the ECJ VAT Judgment. (6) Constant Currency excludes the translation effect of foreign operations on the consolidated results. For more information on Constant Currency, please refer to Aimia s February 22, 2012 earnings press release. ** information not meaningful 9

10 SAINSBURY S AND HSBC CONTRACT RENEWAL Win-Win-Win 7-year agreement + + Sainsbury s more engaged members Members improved value proposition Nectar improved economics 40 million promissory note to be repaid on July 1, 2012 These 2 contracts will be accretive to Adjusted EBITDA and Free Cash Flow commencing in 2012 Middle East Wins with existing clients in both Customer Loyalty and Business Loyalty Extension of agreement with anchor sponsor in program Decrease in Gross Billings mostly explained by the phasing out of a portion of the Visa business in the US representing $5.8MM HSBC to fund higher engagement HSBC more engaged members Members improved value proposition Air Miles Middle East improved economics 10

11 PROPRIETARY LOYALTY UPDATE AND US IMPAIRMENT Proprietary Loyalty (formerly Carlson Marketing), a key business in our full suite offering, continues to demonstrate: A significant improvement in overall value for the entire business as a whole when compared to our original purchase price Adjusted EBITDA margins which are holding to our expectations Tens of millions of $ in synergies savings Our US business has not performed to our expectations, mainly on account of the economy, accordingly we: Installed new management team and right sized the business for future growth Took an impairment charge of $54 million against goodwill, based on lower cash flow projections and our outlook for the US economy Proprietary Loyalty - Global Business (Formerly Carlson Marketing) Year Ended December 31, ($ millions) Year Over Year % Change on an adjusted basis Constant Currency (4) Gross Billings (1) (3) % 4.3% Adjusted EBITDA (2) (3) % 14.5% Adjusted EBITDA margin (%) 7.6% 6.8% 77 bps 66 bps (1) Gross Billings including $83.5 million of inter-company billings to Aeroplan Canada for non-air rewards for the year ended December 31, 2011 and excluding a $17.4 million positive accounting adjustment relating to the reclassification of customer deposits to deferred revenue, recorded in the year ended December 31, (2) Adjusted EBITDA excluding $20.2 million of restructuring and reorganization costs for the year ended December 31, 2011 and $14.4 million of migration costs for the year ended December 31, (3) Gross Billings and Adjusted EBITDA excluding a $17.4 million positive accounting adjustment recorded in the second quarter of (4) Constant Currency excludes the translation effect of foreign operations on the consolidated results. For more information on Constant Currency, please refer to Aimia s February 22, 2012 earnings press release. 11

12 CONSOLIDATED GROSS BILLINGS FY 2010 ($ millions) $2,187.8 ($17.4) $2,170.4 FY 2011 ($ millions) $2, %growth; +3.1% in c.c. (1) 2010 Reported Accounting Adjustment (US / EMEA) Excluding Accounting Adjustment 2011 Reported (1) Constant Currency excludes the translation effect of foreign operations on the consolidated results. For more information on Constant Currency, please refer to Aimia s February 22, 2012 earnings press release. 12

13 DELIVERING HEALTHY GROSS BILLINGS GROWTH FY 2005 ($ millions) 2,187.8 FY 2011 ($ millions) 2, , , %growth (1) (1) (2) (1) Pre-2007 results are those of the partnership. (2) Has been derived by adding the results of the Partnership prior to March 14, 2007 to the results of the Fund for the year. 13

14 CONSOLIDATED ADJUSTED EBITDA $285.5 $17.4 FY 2010 ($ millions) $285.5 $20.4 $14.4 $9.1 $329.4 $342.2 $10.4 FY 2011 ($ millions) (3) $20.7 $352.6 ($4.9) $368.4 ($17.4) +11.8%growth; +11.9% in c.c. (1) 2010 Reported Accounting Adjustment (US / EMEA) VAT Loss (EMEA) Excluding Accounting Adjustment and VAT Nectar Italia Launch Costs Carlson Marketing Migration Costs Corporate Costs Excluding Noted Items 2011 Reported Breakage Adjustment Excluding Breakage Adjustment Restructuring & Reorganization Charges Online Store Adjustment Excluding Noted Items FY 10 margin (2) = 15.2% FY 11 margin (2) = 16.5% (1) Constant Currency excludes the translation effect of foreign operations on the consolidated results. For more information on Constant Currency, please refer to Aimia s February 22, 2012 earnings press release. (2) Adjusted EBITDA excluding noted items over Gross Billings excluding accounting adjustment. (3) Restructuring and reorganization charges of $23.3 million net of $2.6 million related to forfeiture of stock based rewards. 14

15 GROWING CONSOLIDATED ADJUSTED EBITDA (1) FY 2005 ($ millions) FY 2011 ($ millions) per cent CAGR 2005 (2) (2) (3) (1) Adjusted EBITDA pre-2010 as reported under previous Canadian GAAP; 2010 and 2011 as reported under IFRS. (2) Pre-2007 results are those of the partnership. (3) Has been derived by adding the results of the Partnership prior to March 14, 2007 to the results of the Fund for the year. 15

16 FREE CASH FLOW Free Cash Flow (1) ($ millions) $221.5 $221.2 FCF/ Common Share (2) $1.08 $197.6 $197.6 $1.08 $1.04 YTD FY 2011 YTD FY 2010 FY 2011 FY 2010 (1) Free Cash Flow before common and preferred dividends paid. (2) Calculated as: (Free Cash Flow before common and preferred dividends paid, less preferred dividends)/ weighted average common shares outstanding. 16

17 LIQUIDITY ($ millions) Mar 31, 2012 Dec 31, 2011 Cash and cash equivalents $179.8 $202.1 Restricted cash $17.4 $15.1 Short-term investments $52.9 $58.4 Long-term investments in bonds $280.7 $279.7 $530.8 $555.3 Current portion of long-term debt $200.0 $200.0 Long-term debt $372.1 $386.7 On April 13, 2012, Aimia extended the term of its existing $300 million revolving facility by 2 years to April 23, 2016 and obtained an additional revolving facility in an amount not to exceed $200 million, for any term it may request not extending beyond the new maturity date. On April 23, 2012, Senior Secured Notes Series 1 of $200 million were repaid with funds drawn from the additional revolving facility. Total Debt $572.1 $

18 COMMON DIVIDENDS AIM Payout Ratio Dividend Yield Dividend policy will continue to be reviewed annually to ensure that growth in the payout ratio is proportionate to Aimia s free cash flow generation. $113 $108 $ % 5.0% 4.0% 3.0% $29 2.0% Common Preferred Common Share Dividend Increase of 6.7% to $0.64 per share per year Dividend yield exceeds 5% based on May 3, 2012 closing price 1.0% 0.0% Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q /4/2010 2/4/2010 3/4/2010 4/4/2010 5/4/2010 6/4/2010 7/4/2010 8/4/2010 9/4/ /4/ /4/ /4/2010 1/4/2011 2/4/2011 3/4/2011 4/4/2011 5/4/2011 6/4/2011 7/4/2011 8/4/2011 9/4/ /4/ /4/ /4/2011 1/4/2012 2/4/2012 3/4/2012 4/4/

19 COMMON SHARE REPURCHASE SUMMARY Initial NCIB Common Shares Repurchased Total Consideration (MM) Average Price Per Common Share Total Shares Repurchased to May 13, ,983,631 $233.0 $11.66 Renewed NCIB May 16, 2011 December 31, 2011 January 1, 2012 March 31, 2012 Initial and Renewed NCIB 6,262, ,000 $75.8 $5.9 $12.10 $12.30 Common Shares Repurchased (MM) Average Price per Common Share $12.58 $ $12.34 Total Shares Repurchased to March 31, ,726,431 $314.7 $11.77 March 31, 2012 May 3, ,481,900 $18.3 $12.35 Total Shares Repurchased 28,208,331 $333.0 $11.81 Total Common Shares Outstanding as at: March 31, million FY 2010 FY 2011 Q May 3, million 19

20 Q AND 2012 GUIDANCE For Q1 2012: Gross Billings of $537 million, up 2.1% on a constant currency basis, excluding Qantas. Adjusted EBITDA was $89 million or a 22.5% increase from last year. Free Cash Flow before dividends paid was up $39.5 million to $18.3 million Confirming 2012 Guidance: Gross Billings growth of between 3% to 5% (1) Adjusted EBITDA of between $370 to $380 million and Free Cash Flow before dividends paid of between $220 and $240 million (1) The Gross Billings growth guidance excludes the effect of a client loss (Qantas) in APAC at the end of the first quarter of The target growth ranges are based on 2011 reported Gross Billings, excluding $40 million related to Qantas. The client loss will have a negligible impact on Adjusted EBITDA 20

21 RUPERT DUCHESNE Group Chief Executive Strategic Overview

22 EXECUTIVE TEAM Left to right: Vince Timpano, Susan Doniz, Rupert Duchesne, Liz Graham, Mark Hounsell, Sandy Walker, David Johnston, Melissa Sonberg, David Adams Rupert Duchesne David Adams Susan Doniz Liz Graham Mark Hounsell David Johnston Melissa Sonberg Vince Timpano Sandy Walker 22

23 STRATEGIC OVERVIEW 2011: A record year for Aimia Advancements in our EMEA region Officially launched the new brand 23

24 STORY OF AIMIA Only full suite loyalty provider with operations in more than 20 countries Aeroplan formed as stand-alone entity of Air Canada Italia Groupe Aeroplan becomes Aimia IPO of Aeroplan Income Fund Aeroplan Income Fund to a Corporation (Groupe Aeroplan Inc.) 24

25 UNMATCHED GLOBAL SCALE AND SCOPE Canada UK USA Mexico Italy Lebanon Bahrain Jordan Qatar Egypt UAE Oman India Japan Hong Kong Consolidated Gross Billings F2011 $2.23B Chile Brazil Malaysia Singapore Indonesia Australia 42% 58% Canada Rest of World THE LARGEST PURE PLAY LOYALTY COMPANY IN THE WORLD New Zealand 25

26 A MULTINATIONAL COMPANY INSPIRING LOYALTY THROUGH A FULL-SUITE GLOBAL OFFERING Coalition Loyalty Programs Loyalty Data Analytics Proprietary Loyalty Services 26

27 US & ASIA PACIFIC 2011: A year of repositioning Continue to build out loyalty capabilities Signed with Standard Chartered Bank 27

28 EUROPE, MIDDLE EAST AND AFRICA UK Middle East Italy 28

29 EUROPE, MIDDLE EAST AND AFRICA Nectar UK Key driver of growth in 2011 All-time high with 18.5 million members British Gas has already become our second largest partner Addition of easyjet 29

30 CONTRACT RENEWAL WITH SAINSBURY S 30

31 EUROPE, MIDDLE EAST AND AFRICA Middle East Contract extension with HSBC Nectar Italia Country s largest loyalty program with 9 million members Good year despite tough trading environment 31

32 INTELLIGENT SHOPPER SOLUTIONS: World Leading Experts in Loyalty Analytics # 1 drug retailer in world # 2 supermarket in Switzerland #2 supermarket in Australia #2 Grocery retailer in Canada 32

33 CANADA Record results in 2011 Proprietary Loyalty Strong cost management Expansion to new verticals Realization of synergies 33

34 AEROPLAN CANADA 2011: A record year for Aeroplan Solid top line growth Low cost per mile redeemed Focus on effective productivity and expense management Expanded earn potential with Costco Canada Contract renewals with Imperial Oil Esso and Home Hardware Ongoing improvements 34

35 INVESTING IN OUR FUTURE Becoming the recognized global leader in loyalty management 2011: Aimia completed a number of important strategic initiatives that will further our objectives. 35

36 CLUB PREMIER An opportunity to replicate the successful Aeroplan Canada business in Mexico Aimia increased its equity investment to nearly 30% of Club Premier, Aeromexico s frequent flyer program After first year in business, Club Premier has more than 3 million members Launched co-branded credit card with Banamex, Mexico s leading retail bank Signed on key retail partnerships: Soriana, one of the major Mexican grocers, launched earlier this year Sanborn s, a large chain of convenience stores, is expected to launch in Q Club Premier has exceeded expectations It is anticipated that Club Premier will provide significant return to Aimia shareholders 36

37 CARDLYTICS: UNLOCKING THE SIGNIFICANT POTENTIAL VALUE OF NON-CURRENCY LOYALTY Merchant Consumers Banks Significantly better ROI from precise targeting Unparalleled visibility Trusted advertising channel Superior consumer experience Valuable customer rewards at no cost Revenue share Protects customer data 37

38 NEW VENTURES Brazil Joined forces with Multiplus, Brazil s leading loyalty network Build, grow and transform the loyalty marketing services industry India Partnership with Tata Capital, a major force in the Indian market Develop and seek out partners Establish a retail coalition 38

39 CORPORATE SOCIAL RESPONSIBILITY Support employee-led initiatives around the globe Enhancing our global corporate carbon footprint measurement Refining and establishing our global CSR philosophy 39

40 AN EXCITING FUTURE AHEAD New brand supports our vision of inspiring loyalty Large geographic scope Aimia is best positioned to compete in increasingly intense competitive environment by offering the global full-suite of products and services coalition, proprietary and loyalty analytics OUR PRIORITIES ARE FOCUSED ON DELIVERING LONG- TERM SUSTAINABLE GROWTH FOR OUR SHAREHOLDERS Investing in our future 40

41 AN EXCITING FUTURE AHEAD COALITION LOYALTY LOYALTY ANALYTICS PROPRIETARY LOYALTY 41

42 Q&A

43 THANK YOU