Investors presentation - November, 2017 - Edenred
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Investors presentation
November, 2017
1
GENERAL
PRESENTATION
2
1960’- 2017: FROM A PIONEER CONCEPT,
TO A SUCCESSFUL BUSINESS MODEL
1962 1976 1980 – 90’s
Creation International Development
of Ticket expansion: of fuel cards
Restaurant® Brazil, Italy, and Incentive
by Jacques Borel Belgium, & Rewards
Germany, Spain solutions
2010 2016 2017
Listing of Fast Listed on
Edenred on Paris Forward Cac Next 20
strategic plan
Stock exchange Market
Market capitalization:
capitalization: €5.7bn
€4.0bn
3
EDENRED IN A NUTSHELL
A LARGE NETWORK A WIDE PORTFOLIO OF SOLUTIONS
43m Employee benefits
employees Meal & Food
750k 2bn Gift, commuting…
companies transactions
in 2016 Fleet and mobility solutions
1.4m Fuel and fleet
merchants Travel and expenses
A WORLD
Complementary solutions
LEADER
Corporate payment
A UNIQUE KNOW-HOW #1 worldwide Incentive and rewards
in Employee Public social programs
Financial Intermediation benefits with
Selected ecosystems 30% market share
A global player
A UNIQUE CULTURE
in Fleet & mobility
solutions 70% digital 5 corporate values
FinTech
RegTech #1 in Latin transactions volume Entrepreneurial spirit
Issuer
& Processor Compliance America 8,000 employees Passion for customers
#2 issuer in 42 countries Simplicity
of multi-brand Imagination
Data Intermediation Europe-wide
solutions Respect
Big data & Analytics
4
9M 2017 OPERATING REVENUE BREAKDOWN & GROWTH BY BUSINESS LINE
A rebalanced portfolio generating sustained growth in all business lines
EMPLOYEE BENEFITS FLEET & MOBILITY COMPLEMENTARY
SOLUTIONS SOLUTIONS
Corporate Payment
% OF YTD 2017 Incentive & Rewards
GROUP OPERATING 64% 26% 10% Public Social Programs
REVENUE
vs. 71% vs. 17% vs. 11%
in YTD 2016 in YTD 2016 in YTD 2016
YTD 2017 OPERATING
REVENUE IN €M €583m €234m €92m
YTD 2017 REPORTED
OPERATING REVENUE GROWTH +8.3% +78.8% +7.2%
+5.3%(1) +19.3% +7.5%
YTD 2017 L/L
OPERATING REVENUE GROWTH
9M 2017 TOTAL OPERATING REVENUE AT €909M up +20.4% reported and +8.0% LFL
(1) YTD 2017 like-for-like growth in Employee Benefits, excluding Venezuela from July 1, 2017, was 5.7%.
5
EDENRED’S VALUE PROPOSITION
EMPLOYEE BENEFITS FLEET & MOBILITY COMPLEMENTARY
SOLUTIONS SOLUTIONS
Corp. Payment: Secure, instant,
Managing
▌
▌ Anti-fraud & cost-effective efficient and smart payment
transactional flows ▌ Tax-effective employee solutions ▌ I&R: Convenient solutions for
efficiently compensation booster ▌ Ensure expense tax sales force motivation and
for corporates deductibility distribution
I&R : Business volume &
Driving business and ▌
revenue driver for affiliate
generating ▌ Business volume & revenue driver for affiliate network network
incremental revenues
for merchants ▌ I&R: Retain consumers
Increasing purchasing No need to advance I&R: Increasing
Offering additional ▌ ▌ ▌
power cash purchasing power
purchasing power to
Positive impact on health Simplified reporting
employees ▌
& work-life balance
▌
procedure
Formalization of economy
Improving Formalization of economy
▌
effectiveness of
▌
▌ Formalization of economy ▌ PSP: Improved traceability of
▌ Job creation Carbon emission control the funds allocated / avoid
public institutions’ ▌ Lower health spending
▌
cash distribution
policies
6
9M 2017 OPERATING REVENUE BREAKDOWN BY GEOGRAPHY
Sustained growth across all regions
EUROPE 51%
+22.7% of YTD Group
operating
revenue
(+9.5% L/L)
ROW 6%
+2.0% of YTD Group
operating
(+7.9% L/L) revenue
LATIN AMERICA 43%
of YTD
+20.9% Group
operating
(+6.3% L/L)(1) revenue
(1) YTD 2017 like-for-like growth in Latin America, excluding Venezuela from July 1, 2017, was 6.8%.
7
Q3 & YTD 2017 OPERATING REVENUE BY GEOGRAPHY
YTD 2017 L/L growth Q1 Q2 Q3 YTD
operating revenue
Europe excl.
of total
€465m France
+8.8% +9.3% +9.2% +9.1%
51% +22.7%
operating
revenue vs. France +9.2% +9.2% +12.7% +10.2%
€380m in YTD 2016
Total Europe +8.9% +9.3% +10.3% +9.5%
YTD 2017
L/L growth Q1 Q2 Q3 YTD operating revenue
Hispanic Latin America +37.2% +18.9% +11.6%(1) +22.3%(1) €388m 43% of total
+20.9% operating
Brazil -0.9% -0.6% +1.1% +0.0% revenue
vs.
€321m in YTD 2016
Total Latin America +11.8% +4.7% +3.8%(2) +6.3%(2)
(1) Q3 2017 and YTD 2017 like-for-like growth in Hispanic Latin America, excluding Venezuela from July 1, 2017, was 16.9% and 24.1% respectively.
(2) Q3 2017 and YTD 2017 like-for-like growth in Total Latin America, excluding Venezuela from July 1, 2017, was 5.1% and 6.8% respectively. 8
EDENRED DIGITALIZATION
Acceleration from 65% to 70% with a 7pt improvement in Europe
In 2016
DIGITAL
% OF ISSUE VOLUME EUROPE
43% +7PTS VS 2015 Ambition
LATIN AMERICA
>85%
96% +2PTS VS 2015
70%
REST OF THE WORLD by 2020
73% +3PTS VS 2015
of Group IV
vs. 65% in 2015
Shift to digital lead to a total cost decrease of ~5% to ~10%
9
Q3 & YTD 2017 – FINANCIAL REVENUE
Financial revenue up 5.0% YTD 2017
YTD reported YTD L/L
In €m Q1 Q2 Q3 YTD growth growth
Latin America 10 9 10 29 +20.4% +10.1%
Europe 6 6 6 18 -12.7% -11.7%
Rest of the World 2 1 1 4 +4.7% +21.0%
Total 18 16 17 51 +5.0% +1.5%
Financial revenue decline in Europe, reflecting negative trends in interest rates in
the region, more than offset by Latin America
Most of Brazilian float invested at a 12% fixed rate until end-2018
10FULL YEAR 2017 – OUTLOOK
Confirmation of expected business trends
Europe: sustained growth across all countries thanks to:
Combined effects of Fast Forward strategic levers: digital acceleration, marketing mix and
sales efficiency improvements, and ramp-up of new products
Continued improvements in macroeconomic conditions
Latin America:
Sustained growth in Hispanic Latin America, particularly in Mexico and Argentina, where
Employee Benefits and Fleet & Mobility solutions are offering excellent development
opportunities
Contrasted growth patterns in Brazil in a difficult macroeconomic environment, with Fleet &
Mobility solutions benefiting from a low penetration rate, and Employee Benefits impacted
by a high unemployment rate
L/L operating revenue growth by business line:
Mid-single-digit for Employee Benefits
Double-digit for Fleet & Mobility solutions
11H1 2017 KEY FINANCIAL FIGURES
A profitable and cash-generative business model
L/L annual
H1 H1 Reported L/L medium-
In € million term
2017 2016 growth growth
targets
Operating revenue 616 494 +24.6% +8.5% >7%
Financial revenue 34 32 +9.4% +2.7%
Total revenue 650 526 +23.7% +8.2%
Operating EBIT 167 130 +28.3% +17.6% >9%
Operating EBIT margin 27.0% 26.3% +0.7pt +2.2pts
Financial EBIT 34 32 +9.4% +2.7%
Total EBIT 201 161 +24.6% +14.7%
Net profit, Group
share
120 71 +68.2%
Funds from operations 174 125 +39.1% +16.2% >10%
(1) As of June end, 2017
12FULL YEAR 2017 – OUTLOOK
Confirmation of annual targets
Confirmation of the annual medium-term targets for 2017
> +7 % > +9 % > +10%
L/L operating L/L operating
L/L FFO growth
revenue growth EBIT growth
Confirmation of the total EBIT guidance for 2017
Amount in €m
FY 2017 TOTAL EBIT GUIDANCE(1):
420
-
445(1)
343 343 341
370
€420m – €445m
2013 2014 2015 2016 2017e
(1) Calculated based on an assumption of an average Brazilian real / euro exchange rate
for the second half of the year equal to the actual rate as of June 30, 2017.
13DEBT PROFILE AND CAPITAL ALLOCATION POLICY
Well-balanced debt profile Capital allocation policy
Net debt: €(588)m as of end-Dec 2016 2016 dividend : €0.62 per share, 80% of
2016 net profit, Group share
Average cost of debt(1): 2.1%
Maximize value creation for
Average debt maturity(1): 5.3 years shareholders through a balanced
deployment of capital between:
Immediate return to shareholders through a
“Strong investment grade” BBB+ payout ratio of at least 80% of net profit,
Group share.
Group rating by Standard & Poor’s
Selected growth investments, applying
stringent financial criteria while maintaining
strong credit rating.
14EMPLOYEE
BENEFITS
15CREATOR OF THE TICKET RESTAURANT CONCEPT
Which has been extended to food vouchers to be
used in supermarkets (card, mobile, web or paper
vouchers)
850,000
restaurants
or food shops
affiliated
Edenred offers More than
its solutions in
more than 1 billion
35
countries
meals served per year
using Edenred solutions
Figures as of 2016
16EMPLOYEE BENEFITS: BUSINESS MODEL
A highly profitable model
Issue
volume(1) Edenred is at the heart of a network
of clients, beneficiaries and affiliates
Take-up rate
Edenred
Merchant fees Client fees
Client & Affiliates Other
fees (as a % of IV) rev.
Affiliates Clients
Financial Total
Operating revenue
revenue Revenue
Participating Companies and
merchants public sector
100%
Beneficiaries
Financial
Operating EBIT(3) Total EBIT Employees
EBIT(4)
(1) Issue volume: total face value of the preloaded employee benefit services issued by Edenred to its corporate and public sector clients
(2) The free float increase is contributing to the Free Cash Flow generation
(3)
(4)
30% of operating EBIT margin
100% of financial revenue is converted to EBIT.
17EMPLOYEE BENEFITS
Competitive landscape: Edenred is the industry leader on
a large, global and growing market
3 global players Local and regional players1
#1 or #2 #1 to #3 Challenger
in all in most position
countries countries
A STILL UNDERPENETRATED INDUSTRY:
€40bn addressed market, €180bn addressable market, €340bn potential market (2)
(1) Non exhaustive
(2) Source: Edenred estimates 18FLEET &
MOBILITY
SOLUTIONS
19FLEET & MOBILITY SOLUTIONS
Edenred helps companies manage their fleets
Optimization of vehicle fleet servicing costs
(fuel, toll & maintenance cards, etc.)
A network of More than
2.6 million 6 billion
fuel cards 70,000
or toll solutions fuel stations liters of fuel
managed
Figures as of 2016
20FLEET & MOBILITY SOLUTIONS: BUSINESS MODEL
Fuel & Fleet and Travel & Expense solutions
Fleet & Mobility Edenred is at the heart of a network of clients, beneficiaries and merchants
solutions Edenred
Volume(1)
Numerous additional merchant categories
Hotels Transport Maintenance Tolls Fuel stations Clients
% Other fees
(by liter, km…)
Companies and
public sector
Fees as a % Other
of volume rev. Beneficiaries
Employees
Operating revenue
Operating revenue generation is a mix of:
Operating expenses • Percentage based fees on transaction value
• Other fees related and not related to volumes
• Operating EBIT generation is comparable to Employee Benefits (~30% of margin)
Operating EBIT • DPO/DSO optimization generates negative working capital contributing to the Free Cash flow
generation
(1) Not a preloaded business, the volume cannot be compared to Employee Benefits issue volume 21FLEET & MOBILITY SOLUTIONS
Fuel & Fleet competitive landscape of a globally underpenetrated
market
US specialist players
NORTH LATIN AFRICA &
AMERICA AMERICA MIDDLE-EAST EUROPE APAC TOTAL
Pan European specialist issuer
Spend €225bn €100bn €35bn €300bn €375bn >€1,000bn
Average
Light vehicles Low- penetration International, regional and national oil
Medium Low Low Low
Penetration Medium
25% companies
Average Fuel &
Fleet
Heavy vehicles solution annual
Penetration
High Medium Low High Low growth …
+5-10%
22FLEET & MOBILITY SOLUTIONS
Edenred’s value proposition
+ A full suite of services Innovative means of
depending on customer segments payment
EMV
0000 0000 0000 0000
0000 VALID 00/00
COMPANY NAME
Toll Road Advanced
payment Parking Car wash assistance reporting
MOBILE
VAT Preventive Wheel Carbon Other
refund maintenance management control expenses NFC TAG
Edenred offers multi-services and multi-brands solutions
23COMPLEMENTARY
SOLUTIONS
24COMPLEMENTARY SOLUTIONS
Several families of solutions
CORPORATE INCENTIVE & PUBLIC SOCIAL
PAYMENT REWARDS PROGRAMS
Smarter & more efficiently Boost motivation of teams,
Value- improve sale force performance
Deliver specifically allocated
manage financial flows between public funds to citizens
proposition companies and build customer loyalty
Virtual cards, Private payment Incentives programs, Social benefits solutions
Solutions network, payment API, … gift cards… (human service or education)
Brands &
Products
25CORPORATE PAYMENT
Edenred to develop and manage IATA EasyPay in more than 70 countries
International Air Transport Association
IATA EasyPay by
representing 275 airlines from 181 nations
A prepaid eWallet for accredited agents to pay for airline
Processes payments related to bookings
between accredited travel agents and tickets, in addition to traditional cash remittances and
400+ airlines credit cards
Introduces EasyPay as part of its IATA
Broaden the list of IATA-accredited travel agents by
Settlement System modernization project reducing the financial security requirements, while
which includes new threshold for agents reducing risk for airlines through this prepaid service
to hold remittances to IATA Faster, more secure and cost-effective solution for airlines
Once ramp-up is complete, Edenred and IATA will manage a private payment
network representing:
Progressive ramp-up More than Over A full potential of More than
1st country in August 2017
7 countries to be opened in 2017
All countries to be opened by 2020
70 10k 40m $20bn
countries travel agents transactions in transaction volume
Business model based on implementation fees and on the number of transactions
26CONTACT
Solène Zammito
solene.zammito@edenred.com
Loïc Da Silva
loic.dasilva@edenred.com
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