Edenred Sa · EURONEXT:EDEN
Edenred Sa — Debt Investor Presentation (September 2010)
45 slides from Edenred Sa's debt investor presentation, Sep 20, 2010
Slide 1: Credit Investor Presentation
September 2010 CREDIT INVESTOR PRESENTATION
Slide 2: Edenred Overview
@ Chapter 1 EDENRED OVERVIEW
Slide 3: Two Categories and Five Families of Products
Two Categories and Five Families of Products Benefits Performance Solutions designed Solutions designed to provide benefits to employees and citizens to improve the performance of organizations Expense Incentive & New Prepaid Meal & Food Quality of Life Management Reward Solutions Employee benefits
Slide 4: A Unique Business Model Based on a Win-Win Relationship
A Unique Business Model Based on a Win-Win Relationship Refund Claims Edenred Design & Management Merchant at the heart of Customer Customer fees fees: 3.1% a win-win BtoBtoC fees: 1.6% 1.6% + relationship Merchant fees 3.1% + Lost and expired Expired/lost prepaid 0.6% 1.2 million products: 0.6% = M
Slide 5: Robust Benefits Business/Fast Growing Performance Products
Robust Benefits Business/Fast Growing Performance Products Benefits Performance Total Meal & New In € millions Quality of Expense Incentive & Total Prepaid Total Food Life Mgt Reward Solutions Issue Volume (IV) 9,755 1,198 10,953 827 627 N/S 1,454 12,407 IV (% of total) 78% 10% 88% 7% 5% N/S 12% CAG
Slide 6: Geographical Exposure Well-Balanced Between Developed and Emerging Markets
Geographical Exposure Well-Balanced Between Developed and Emerging Markets Developed Markets Emerging Markets Total Benefits Performance Total Benefits Performance Total Total Issue Volume (IV) 5,394 582 5,976 5,559 872 6,431 12,407 IV (% of total) 43% 5% 48% 45% 7% 52% CAGR 2005-2009 8.3% 29.9% 9.6
Slide 7: A Growth-Driven, Cash Generative, Low Capital-Intensive Business Model
A Growth-Driven, Cash Generative, Low Capital-Intensive Business Model with a Strong Track Record A growth-driven model A cash generative model Issue volume (in €bn) Funds from operations* (in €m) +10.5% CAGR 12.7 12.4 11.4 10.0 8.4 6.8 7.1 +25% CAGR 217 184 166 141 92 2003 2004 2005 2006 2007 2008
Slide 8: Competitive Landscape
Competitive Landscape Number of Competitors Market Position Edenred’ market Meal & food Quality of Life position France 3 12 No.1 Two Global Players Brazil 147 92 No.1 UK 0 42 No.1 Italy 12 3 No.1 Other International smaller Belgium 2 1 No.1 player No.1 players Hungary 11 11 No.2 No.2 No.3 Mexico 11
Slide 9: Edenred Strategy
Chapter 2 EDENRED STRATEGY
Slide 10: Our Strategy
Our Strategy 1 1 Increase penetration rate 2-5% Volume 5 2 2 Create / rollout new products 2-4% Strategy 5 growth 3 Extend geographical coverage 1-2% drivers 4 3 4 Increase face value 1-3% Product/Service Systematic Paperless Migration Innovation Rollout 5 Select targeted acquisitions Objective of n
Slide 11: Increase Penetration Rates
1 5 Volume 2 1 5 growth Increase Penetration Rates 4 drivers 3 Still low penetration rates: Penetration rates e.g. only 12% in France (in %) 75% Uruguay Numerous factors to deepen penetration 70% 65% Hungary rates: 60% Product range 55% Distribution channels 5 1 Volume 5 growth 2 1 …By offering
Slide 12: Our Product Strategy: From One to Multiple Blockbusters
1 5 Volume 2 2 …Our Product Strategy: From One to Multiple Blockbusters 5 growth drivers 4 3 Average annual growth Issue volume > 20% Long-Term Future New Prepaid Solutions + 10 to 20% blockbusters Quality of Life Benefits, + 4 to 10% Expense Management, 2016 E Incentive & Reward Take -off of 3 new
Slide 13: Extend Geographical Coverage
1 5 Volume 2 3 Extend Geographical Coverage 5 growth drivers 4 3 Number of operating countries 1+ new country per annum (1990-2009) New Services geographical coverage (2009) 60 46 to48 48 50 40 Number of Countries 40 31 30 20 13 10 0 1990 2000 2009 2016E 15 countries under study today, 2 to 4 new co
Slide 14: Increase Face Value
1 5 Volume 2 4 Increase Face Value 5 growth drivers 4 3 Inflation Upsale Projected annual CPI growth Current average face value 2010-2015E (in %) vs. maximum face value (defined by law) FRANCE HUNGARY Maximum face value Maximum face value 48% gap 48% gap Average face value Average face value BELGIUM
Slide 15: Select Targeted Acquisitions
1 5 Volume 2 5 Select Targeted Acquisitions 5 growth drivers 4 3 Edenred’ focus: BtoBtoC businesses + Acquire businesses to accelerate deployment of Edenred’ strategy focused on growing issue volume Acquisition + Criteria Acquire competitors in markets offering high potential for cash flow growth +
Slide 16: Paperless & Electronic Strategy
Paperless & Electronic Strategy Edenred issue volume per type of media (in %) Paper Long Term PPS and Watts Electronic our authorization 20% platforms that give us strategic control 2016 over the value chain 2010 50% 80% MasterCard a quick, standardized 70% way to access the network POS 50% 30%
Slide 17: Successful Migration to Electronic Media in Brazil and the UK
Example: Successful Migration to Electronic Media in Brazil and the UK A wide range of Food & Meal vouchers in Brazil Edenred media (Issue volume in €m) 3.4% 2 000 3.2% 1 500 2.8% Cards 2.3% 2.3% 2.2% 1 000 2.1% Web 500 0 Mobile phones 2003 2004 2005 2006 2007 2008 2009 Childcare vouchers in the UK
Slide 18: Financial Overview
Chapter 3 FINANCIAL OVERVIEW
Slide 19: Strength of Business Model Driven by Issue Volume
Strength of Business Model Driven by Issue Volume Issue Volume €12.4bn 03A-09A CAGR: 10.5% Cash Flow Engine EBIT FFO €327m €184m UNLEVERED FREE CASH FLOW CHANGE IN FREE FLOAT (1) CAPEX €280m €98m €(30)m Notes: Based on 2009 pro forma figures. (1) At constant perimeter and exchange rate. 19
Slide 20: Profit & Loss Statement Overview
Profit & Loss Statement Overview In €m 2007 2008 2009 Issue Volume 11,437 12,696 12,407 % LfL Growth NA 13.5% 5.7% Revenue 837 946 902 EBIT 320 365 327 Recurring Profit After Tax 131 167 154 Number of Shares (in million of shares) 225 225 225 Clean EPS (Recurring Profit After Tax per share) 0.58 0.7
Slide 21: Revenue
Revenue In €m 2007 2008 2009 Issue Volume 11,437 12,696 12,407 Operating Revenue with Issue Volume 619 673 661 % of Issue Volume 5.4% 5.3% 5.3% Operating Revenue without Issue Volume 122 144 147 Operating Revenue 741 817 808 Financial Revenue on Free Float 81 110 72 Financial Revenue on Restricted F
Slide 22: Net Profit
Net Profit In €m 2007 2008 2009 EBIT 320 365 327 Financial Result (1) (92) (87) (104) Recurring Profit before Tax 228 278 223 Income Tax (68) (86) (62) Minority Interests (17) (25) (7) Recurring Profit After Tax 131 167 154 Non-Recurring Expenses (26) (15) (211) o/w Restructuring Costs & Other Non-R
Slide 23: Pro Forma Balance Sheet
Pro Forma Balance Sheet In €m 2007 2008 2009 In €m 2007 2008 2009 Total Shareholders’ Equity and Intangible Assets 101 110 99 (1,203) (1,137) (1,187) Minority interests Tangible Fixed Assets 29 37 37 Other Non-Current Assets 713 673 588 Provisions and Deferred Tax 109 99 141 Working Capital Assets 1
Slide 24: Funds From Operations (FFO)
Funds From Operations (FFO) In €m 2007 2008 2009 EBIT 320 365 327 D&A 25 31 36 Financial Result (92) (87) (104) Income Tax (78) (83) (77) Non-Cash Items 2 9 3 Non-Recurring Provisions (11) (18) (1) Funds From Operations 166 217 184 Like for Like Growth NA 23.7% 13.2% Double digit growth of FFO even
Slide 25: Unlevered Free Cash Flow
Unlevered Free Cash Flow Fees & Commissions Tax - 5.3% €79m Commissions Operating Issue + Revenue Volume with Operating EBIT before D&A Expenses + Unlevered Affiliates Volume Financial €36m Fees 4.3% I.V. Revenue on Free €12.4bn Free Float Cash €661m 2.1% I.V. + €539m Flow €255m Recurring Capex Lost
Slide 26: Current Trading
Chapter 4 CURRENT TRADING
Slide 27: Creation of a New Company
Creation of a New Company Main steps achieved in H1 2010 Set up a new management team Set up a new Board together with governance principles Define a new strategy, with aligned KPIs Launch a corporate mission project to ensure the roll out of the strategy Create and install the new brand Edenred Sha
Slide 28: H1 2010 Context
H1 2010 Context Macro economic conditions Edenred’s positioning Europe: Geographical diversification Still growing unemployment rates Strong exposure to emerging (+0.4pt in Euro zone*) countries (50% of Issue Volume) Low inflation in Europe (1.4% in Euro zone*) Start of the implementatio
Slide 29: Income Statement Highlights
Income statement highlights June (1) June (1) ∆ ∆ In € millions 2009 2010 reported L/L(2) Issue Volume 6,152 6,615 +7.5% +7.8% Total Revenue 444 461 +3.8% +0.7% Of which Operating Revenue 392 422 +7.7% +4.2% Of which Financial Revenue 52 39 -25.6% -25.3% EBIT 166 155 -7.1% -2.4% Of which operating E
Slide 30: H1 2010 EBIT: €155m
H1 2010 EBIT: €155m June June ∆ ∆ In € millions 2009 2010 reported L/L Operating EBIT 114 116 +1.3% +7.9% Financial EBIT 52 39 -25.6% -25.3% Total EBIT 166 155 -7.1% -2.4% Total EBIT/Issue Volume 2.7% 2.3% -0.4 pt Operating EBIT/Issue Volume 1.9% 1.8% -0.1 pt Good growth of Operating EBIT: up 7.9% L
Slide 31: Net Profit
Net profit June June In € millions 2009 2010 EBIT 166 155 Net financial expense (41) (41) Operating profit before tax and non-recurring items 125 114 (1) Demerger costs and other non-recurring items (5) (35) Income tax expense (43) (40) Minority interests 12 2 Net profit, Group share 65 37 Recurring
Slide 32: FY 2010 Guidance
FY 2010 Guidance Given this economic environment, and assuming: L/L Operating EBIT: L/L Financial EBIT: 40% to 50% flow-through 100% flow-through FY 2010 EBIT target: €300m to €330m FY 2010 Net Financial Expense: €70 to €75m 32
Slide 33: Financial Position at End-June 2010
Chapter 5 FINANCIAL POSITION AT END-JUNE 2010
Slide 34: Float Position at End-June 2010
Float position at end-June 2010 June Dec. June June Dec. June In € millions In € millions 2009 2009 2010 2009 2009 2010 Trade Receivables 877 894 934 Vouchers in circulation 2,584 2,883 2,904 Other Receivables, 243 261 273 Trade & Other Payables 394 304 279 Accruals & Inventories Working Capital Ass
Slide 35: Cash Flow Statements at End-June 2010
Cash Flow Satements at end-June 2010 June June In € millions 2009 2010 EBITDA 183 167 Net Financial Expense (41) (41) Income Tax (48) (40) Non-Cash Items 0 3 Funds From Operations 94 89 (Decrease)/Increase in working capital (140) (147) Recurring (Decrease)/Increase in restricted cash (4) (8) Recurr
Slide 36: Financial Policy and Capital Structure
Financial Policy and Capital Structure Objective of maintaining a strong corporate Investment Grade rating (BBB+ by Standard & Poor’s since June 2010) Objective of diversified and well-balanced financing Already fully secured sources of financing at the time of demerger, with a mix of short an
Slide 37: Strong Investment Grade Rating by S&P
Strong Investment Grade rating by S&P On June 9, 2010, Standard & Poor's Ratings Services assigned its 'BBB+'long-term and 'A-2' short-term corporate credit ratings; Outlook Stable Rationale: The ratings on Edenred reflect our view on its leading industry position in the prepaid benefits industr
Slide 38: S&P Rating on a Potential Bond Issue
Strong Investment Grade rating by S&P S&P Rating on a potential bond issue would be ‘BBB flat’ (S&P Press release dated September 20, 2010) Rationale: In line with our corporate ratings criteria for debt subordination, we would expect that any bond issued at the parent company level would be rat
Slide 39: Net Debt Position at End-June 2010
Net Debt Position at end-June 2010 June Dec. June In € millions 2009 2009 2010 Other long-term debt 1,517 1,515 903 Short-term debt 4 10 613 Bank Overdrafts 27 41 17 Derivatives - - 1 Total Debt 1,548 1,566 11,534 Short-term loans - - (1) Marketable Securities (1,143) (1,222) (1,174) Cash (57) (41)
Slide 40: Long and Short-term Borrowings
Long and Short-term Borrowings Debt structure before bond issue Debt structure after potential bond issue By currency By maturity By currency By maturity By type of rate <1 2% year <1 41% year 2-5 Fixed 55% EUR 97% years 59% rate EUR 97% 2-5 59% years Floating >5 45% 39% rate years Other 3% Other 3%
Slide 41: Conclusion
@ Chapter 6 CONCLUSION
Slide 42: Investment Highlights
Investment Highlights 1 Strong, Sustainable Market Fundamentals 2 A Unique Business Model with a Strong Track Record 3 Global Leadership Built on Innovation and Entrepreneurial Capabilities 4 A Well-Balanced Presence in Emerging and Developed Markets 5 A New Strategy Designed to Capture Growth and D
Slide 43: Offering's Characteristics
Offering's Characteristics S&P Corporate rating: BBB+ reflecting Edenred’s solid business model, solid financial position and its leading position on an industry offering good medium-term growth prospects S&P Bond rating: expected BBB flat reflecting the fact that the cash of Edenred is loca
Slide 44: Q&A
Q&A
Slide 45: Disclaimer
Disclaimer By attending the meeting where this presentation is made you are deemed to have taken notice of the following limitations: This presentation has been prepared by EDENRED (the “Company”). It is confidential and may not be reproduced or redistributed to any other person. Deutsche Bank (“D
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