Forward-Looking Statements

Transcription

1 SEPTEMBER 15, 2009 Forward-Looking Statements Certain statements in this presentation may contain forward-looking statements. 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, 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 or forward-looking predictions or statements cannot be relied upon due to, amongst 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, risks related to the business and the industry, dependency on top Accumulation Partners, Air Canada or travel industry disruptions, Air Canada liquidity issues, Airlines industry changes and increased airline costs, reduction in activity, usage and accumulation of Aeroplan Miles, retail market/economic downturn, greater than expected redemptions for rewards, industry competition, supply and capacity costs, unfunded Future Redemption Costs, failure to safeguard databases and consumer privacy, consumer privacy legislation, changes to the Aeroplan and Nectar Programs, seasonal nature of the business, other factors and prior performance, regulatory matters, VAT appeal, reliance on key personnel, labour relations and pension liability, technological disruptions and inability to use third party software, failure to protect intellectual property rights, currency fluctuations, interest rate and currency fluctuations, leverage and restrictive covenants in current and future indebtedness, dilution of Groupe Aeroplan shareholders, uncertainty of dividend payments, level of indebtedness-refinancing risk, managing growth, as well as the other factors identified throughout the MD&A. The forward-looking statements contained herein represent Groupe Aeroplan's expectations as of September 15, 2009, and are subject to change after that date. However, Groupe Aeroplan 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. 1

2 2 A Global Leader in Loyalty Management 3

3 Pursuing Our Vision To become the global leader in loyalty management 4 Strong Investment Thesis Strong proven financial track record Long-term recurring revenue contracts with industry leading partners Flexible business model Investment grade profile 25 years industry experience 5

4 Gross Billings (1) Results for the fiscal years 2005, 2006 and 2007 presented for comparative purposes are those of the Partnership. 6 Solid & Consistent Cash Flow (3) (3) (1) Results for the fiscal years 2005, 2006 and 2007 presented for comparative purposes are those of the Partnership. (2) Calculated in accordance with the definition of Standardized Free Cash Flow on page 20 of the Corporation s 2008 Annual Report. (3) 2008 includes temporary acceleration of $63 million in payments to Air Canada. 7

5 Strong and Consistent Distributions and Dividends Quarterly dividends as a corporation Monthly distributions as an income trust Current annual dividend policy is $0.50 per share, which represents a yield of approximately 6% 8 Strong Cash Position (1) Results presented for comparative purposes are those of the Partnership. (2) 2008 includes temporary acceleration of $63 million in payments to Air Canada. 9

6 Redemption Reserve Aeroplan Considered prudent at time of IPO to establish the $400 million reserve to provide safety net in the event of unusually high redemption activity or loss of a major partner Policy is to conservatively invest in high investment grade securities The reserve is not required under agreements with commercial partners Reserve is not restricted according to the GAAP definition of restricted cash, and therefore is not segregated on the balance sheet Nectar Working capital coverage ratio based on a percentage of the outstanding unfunded points liability (it is not a cash reserve) Working capital coverage ratio includes 40 million note receivable from Sainsbury s 10 Capital Structure Investment grade profile Rating Agency DBRS S&P Rating BBB (stable) BBB- (stable) No debt due until 2012 Issued two series of bonds in tight credit market $200M senior secured notes Series 1 mature April 12, 2012 $150M senior secured notes Series 2 mature September 2, 2014 Secured term facility of $300 million and a revolving facility of $250 million, both of which mature on April 23,

7 Liquidity (in millions, except where indicated) June 30, 2009 As at Dec. 31, 2008 July 31, 2009* Cash and cash equivalent $ $ $ Short-term investments Total cash and short-term investments Long-term debt Shareholders' equity 1, ,948.6 N/A *Note: On September 2, 2009, Groupe Aeroplan closed a public offering of $150 million aggregate principal amount of 7.90% Senior Secured Notes Series 2 maturing on September 2, Use of proceeds: $100,000,000 for the prepayment of the bank bridge facility entered into on June 12, 2009; $25,000,000 for the repayment of a portion of the amount outstanding under the bank term facility; and $25,000,000 for general corporate purposes. Attractive Central Bank Model Earning Miles Member buys products or services & earns miles Commercial partners buy miles from Aeroplan Miles deposited in member s account Redeeming Miles Member redeems miles with Aeroplan Aeroplan buys product or service from partners Member enjoys rewards 13

8 Breakage Our breakage methodology and technology is amongst the most advanced in the world today Breakage, which represents miles which are not expected to be redeemed, is a significant contributor to profitability By its nature breakage is a long-term estimate subject to assumptions and judgment Groupe Aeroplan has a consolidated weighted average breakage rate of 17%, which is low relative to many other programs 14 Four Pillars of Coalition Loyalty Travel Financial Retail Data Analytics Aeroplan Canada Groupe Aeroplan Europe 15

9 Resilient and Stable Business The strength, resiliency and stability of our business is derived from our: 1. Unique and flexible business model 2. Highly engaged members 3. Stability of our key brand-name partners 4. Power of consumer data and program statistics 16 Unique & Flexible Business Model REVENUE Number of members & partners Engagement of members Sales price for miles Service fees and other revenue REDEMPTIONS Reward mix Reward availability Cost of rewards / price grid 17

10 Reward Mix Dictates Minimum Cost of Rewards & Gross Margin Increased Gross Margin Cost Per Mile Redeemed Non-Air Rewards Classic Flight Rewards Star Alliance Flight Rewards Classic Plus Flight Rewards Gross Margin 18 Superior Redemption Value Underpins Highly Engaged Members Value per Mile Redeemed - Cents (Canadian Program) CIBC BMO Mosaik Aerogold Low Season Classic Flight BMO Gold Mosaik High Season Economy RBC Avion Platinum TD Platinum Travel Business Class National Platinum Scotia Gold Passport Source: Credit Suisse s initial coverage report on Groupe Aeroplan, September 4,

11 Partner Value Proposition Improve Margins Increase Frequency of Visits Collect Invaluable Data Attract New Customers Retain Existing Customers Increase Propensity To Spend 20 Collecting & Translating Data into Valuable Insight Data analysis is critical to success of loyalty programs Groupe Aeroplan s valuable data insight allows partners to: Attract customers Retain customers Better market to customers 21

12 Growth Strategy Accelerate Organic Growth of Current Business Pursue Strategic Acquisitions & Greenfield Development Opportunities 22

13 Growing Our Partnership Network 24 Organic Growth Opportunities Commercial Partners Relationship Growth Commercial Partner Revenue Current Commercial Partners (Consumer & Nectar Business) Additional Partner Revenue New Partner Advanced Analytic Services Employee Incentives Campaign Marketing Revenue Member Relationship Growth Other Revenue Grow/Deliver/Explore estores Survey Child Trust Funds Online Retail 25

14 A New Era in Retail Insight Web based Customer & EPOS data Business tool Customised reports Latest technology The breadth of data available, and the speed at which we can access it, are unavailable anywhere else Maria Manly, Insights Director - Birds Eye Self Serve is an exciting development for Sainsbury s. Allowing more simple and faster access to shopping trends. Mike Coupe - Sainsbury's Trading Director Expanding I&C Internationally Insight Promotional Effectiveness Availability NPD Retailer Services Range & Assortment Brand Management Communication Creative Evaluation Segmentation / Profiling Retailer Mailings Retailer Customer Data Budget allocation Campaign Evaluation Quarterly Mailing Real Time Coupons Media Mix Optimisation E-commerce New Targeted Channels Retail Media Communication Supplier Services 27

15 New Title: Pursuing Strategic Acquisition and Development Opportunities 28 Attractive Markets Offer Potential High Return G20 countries Canada USA Mexico UK Germany France Italy EU Turkey Saudi Arabia Russia India China Japan S. Korea Hong Kong Brazil Singapore Indonesia Argentina S. Africa Australia 29

16 Targeting Business Development Acquiring Existing Coalition Loyalty Programs Investing in Frequent Flier Programs Launching Greenfield Programs in Attractive Markets Pursuing Small Strategic Add-on Acquisitions 30 31

17 Disciplined Approach to Acquisitions Solid Return (5 years) Strategically Aligned Scalable Synergistic 32 Air Canada The airline s cash position has been bolstered by more than $1 billion in financing, including $150 million advanced by Aeroplan as part of a much larger club loan provided to Air Canada on commercial terms Amounts drawn under the loan bear interest at a minimum annual rate of 12.75% and are secured by substantially all of the present and future property of Air Canada and its subsidiaries The inclusion of warrants to purchase equity in the airline is also part of the package and will allow Aeroplan to benefit from any upside in the airline s recovery Similar to previous periods of slowdown Air Canada is issuing additional Aeroplan Miles as an incentive to stimulate demand Allocation of additional Classic seats assists the airline in maximizing load factors and revenue without eroding pricing 33

18 Investment Highlights Scalable growth platform Diversified and recurring revenues with long-term agreements Predictable and flexible business model significant control over the value and mix of rewards available for redemption Strong free cash flow generation and cash position Investment grade profile Strong dividend 34 35

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