February 11, 2011
4Q10 Earnings Release
SUMMARY
HIGHLIGHTS ................................................ 2
MANAGEMENT DISCUSSION AND ANALYSIS ..... 3
IMPROVEMENT IN BREAKAGE ACCOUNTING METHODOLOGY ............................................ 4
OPERATING PERFORMANCE ............................ 5
FINANCIAL PERFORMANCE ............................. 6
GROSS BILLINGS OF POINTS .............................. 6 INCOME STATEMENT ....................................... 7 ADJUSTED EBITDA ....................................... 10 CASH FLOW ................................................ 11 BALANCE SHEET ........................................... 12
CAPITAL MARKETS ....................................... 13
OWNERSHIP STRUCTURE ................................. 13 STOCK PERFORMANCE .................................... 13
GLOSSARY .................................................. 14
CONFERENCE CALL
(Click here for access)
February 14, 2011 12:30 am (Brazil time) 11:30 am (US EDT) Phone: +1 (412) 317-6776 Password: Multiplus
Replay: Phone: +1 (412) 317-0088
Available from 02/14/2011 until 02/20/2011 Code: 447775 #
Webite: www.multiplusfidelidade.com.br/ir
2/14
HIGHLIGHTS
7,5
23,1
44,5 43,3
18,3% 24,7% 34,2% 21,0%
1Q10 2Q10 3Q10 4Q10
Gross Billings of points of R$ 325.2 million, up by 8.4%
Net Revenue of R$ 205.6 million, growth of 58.2%
Adjusted EBITDA of R$ 46.2 million, an increase of 51.4% (15.4% margin)
Adjusted EBITDA based on the old methodology of R$ 64.5 million, a reduction of 36.3%
(19.8% margin)
Net Income of R$ 43.3 million, a decrease of 2.8% (margin of 21.0%)
8.0 million members, an increase of 5.3% (22.1% over 4Q09)
16.1 billion points issued, a growth of 11.2%
7.7 billion points redeemed, an increase of 68,0%
Average Breakage ratio remained at 22.6% (new methodology with 12 months average)
Operating Highlights 4Q10 vs 3Q10
Financial Highlights 4Q10 vs 3Q10
Gross Billings of points of R$ 1,119.5 million
Adjusted EBITDA of R$ 290.1 million (28.2% margin)
Net Income of R$ 118.4 million (25.2% margin)
Distribution of R$ 112.3 million – 95% payout
2010 Highlights
29,5% 28,7%26,9%
25,7%
22,6% 23,0% 22,6% 22,6%
1Q10 2Q10 3Q10 4Q10
24 months average 12 months average
Breakage (%) Acrrual and Redeemed Points (billion)
Gross Billings (R$ million) Net Income (R$ million)
10,5
12,2
14,4
16,1
1,3
3,2
4,6
7,7
1Q10 2Q10 3Q10 4Q10
Points issued Points redeemed
230,3
264,0
300,0
325,2
1Q10 2Q10 3Q10 4Q10
margem
2010: R$ 1,119.5 million 2010: R$ 118.4 million
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MANAGEMENT DISCUSSION AND ANALYSIS
In the fourth quarter of 2010, the Company speeded up the expansion of its network, which
grew from 133 to 151 partnerships between September and December. It is particularly worth
mentioning five new coalition partners in the quarter, ending 2010 with 12 partnerships in
this category1.
On October 4, the Company announced a partnership with Editora Globo, one of Brazil’s
leading publishers, which regularly publishes 14 magazines with more than 7 million readers.
On October 26, the Company announced a partnership with SKY, a pay-tv provider, through
the VIVA SKY loyalty program. In November, the first coalition partnership in the clothing
segment was closed with GEP, which owns 77 Luigi Bertolli, Cori and Emme brand stores. On
December 13, Multiplus announced a new partnership with Multi Holding, which owns 3,520
schools distributed in nine language, IT and vocational training school brands: Wizard, Skill,
Alps, People, Yázigi, Quatrum, SOS, Microlins and Bit Company. The last announcement of the
year was on December 21, when the Multiplus coalition network entered the drugstore
segment through a partnership with Drogaria Rosário, the largest pharmaceutical retailer in
the Midwest, with 80 stores.
The Company closed the year with gross billings from the sale of points of R$ 1,119.5 million
and net income of R$ 118.4 million. In order to maximize returns to shareholders, Multiplus
paid R$ 112.3 million, or 95% of net income, as dividends or interest on equity2.
In the quarter, Multiplus issued 16.1 million points, 11.2% over the previous quarter. Gross
billings from the sale of points totaled R$ 325.2 million, 8.4% up on 3Q10. Net revenue was
R$ 205.6 million, for growth of 58.2%. The total cost of services rendered increased by
91.6% over the previous three months, while the number of points redeemed moved up by
68.0% and operating expenses increased 141.4%. If marketing and non-recurring expenses
are excluded, the increase would be 33.6%. Fourth-quarter net income was at R$ 43.3
million, 2.8% down from 3Q10, representing a net margin of 21.0%.
Management maintained its focus on the structuring of the main areas, in preparation for
taking advantage of the growth opportunities in Brazil’s loyalty program market. In the fourth
quarter, the Company appointed Ademar Bandeira, former Project Manager of Roland Berger,
a consulting firm, to the position of New Business Manager. Multiplus also strengthened its
financial area by electing Mr. André Neris as Chief Financial Officer. Mr. Neris has 23 years of
experience and has worked as finance executive for Symantec, Cummins, Marconi and
Coopers&Lybrand. Most recently, he was CFO of Grupo BuscaPé.
1 On December 28, the Company published a Notice to the Market announcing the end of the Bomclube program, the
Walmart Brazil loyalty card used in Bompreço and Hiper Bompreço stores, as of January 2, 2011, in accordance with its business strategy aimed at a “low price policy”. As of January 2011, therefore, Walmart has no longer been a part of Multiplus’ coalition partner network
2 Includes R$16.9 million in interest on equity paid in 2011 and R$66.4 million as proposed dividends.
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IMPROVEMENT IN BREAKAGE ACCOUNTING METHODOLOGY
As explained in previous releases, revenue from the points sold by Multiplus is only
recognized when the points are redeemed. However, as each point issued expires in two
years, some points expire before they are redeemed. This is called breakage and generates
revenue free of costs. At the end of each month, the Company (i) constitutes a provision for
the expected breakage revenue, called breakage liability, and (ii) gradually recognizes it as
breakage revenue in the income statement.
The breakage ratio tends to decline in the long run to a level that the Company believes to be
more sustainable as clients develop a better understanding of the Multiplus concept and
because of the greater proportion with redemptions of less than 10,000 points in relation to
total redemptions (promotional redemptions of airline tickets and new product and service
redemption options in the coalition network).
In order to make the constitution of the provision for breakage liability and the recognition of
breakage revenue even more efficient and transparent, the Multiplus’ Audit and Financial
Committee has made certain improvements to the methodology, namely:
Item Breakage ratio calculation Provision for breakage liability
Previous Average breakage in the last 24 months The balance of the breakage liability was
simply added to the monthly provision
New
Average breakage in the last 12 months,
considering only those points issued after
January 2010
The balance of the breakage liability is fully
reversed and the provision is reconstituted
using the most recent breakage ratio
Advantage Use of a more current breakage ratio
The entire balance of the breakage liability is
close to the fair value, thereby reducing the
risk of future adjustments
Impacts
Balance Sheet: reduced breakage liability and greater deferred revenue
Income Statement: increased breakage revenue
In addition to the impact on the financial statements shown above, the change in the
calculation of the breakage ratio resulted in a higher balance of points to be redeemed, in
turn reducing Adjusted EBITDA.
The 4Q10 results were adjusted for the retroactive use of the methodology. These amounts
are presented in the analysis of breakage revenue, under “Financial Results – 4Q10”. A
spreadsheet with previous quarterly results based on the new methodology can be
downloaded from the website www.multiplusfidelidade.com.br/ri (click on Releases and
Results and then Multiplus Spreadsheet).
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OPERATING PERFORMANCE
Operating Data 3T10 4T10 4T10 vs 3T10 2010
Members (million) 7.6 8.0 5.3% 8.0
Partnerships 133 151 13.5% 151
Points issued (thousand) 14,444,295 16,065,982 11.2% 53,236,120
TAM Airlines 5,247,434 5,943,197 13.3% 18,656,185
Banking, Retail, Industrial and Services 9,196,861 10,122,785 10.1% 34,579,935
Points redeemed (thousand) 4,587,505 7,705,582 68.0% 16,782,991
Air tickets 4,565,702 7,668,732 68.0% 16,710,594
Coalition Partners and Multiplus Catalogue 21,803 36,851 69.0% 72,397
Burn/earn (pro forma, %) 63.1% 68.2% 5.0p.p. 65.8%
Breakage Ratio (LTM, %) 22.6% 22.6% 0.0p.p. 22.6%
Employees 71 81 14.1% 81
Members: At the end of 4Q10, Multiplus’ base consisted of 8.0 million members, up 5.3%
over 3Q10 and 22.1% higher than TAM’s Fidelidade members’ base in 4Q09.
Points issued: 16.1 billion points, 11.2% higher than in the previous quarter, due to:
o the 13.3% increase in the number of points sold to TAM Airlines, mainly due to
the growth of 10.1% in this company’s domestic RPK (Source: ANAC).
o increase of 10.1% in the number of points sold to companies in the banking,
retail, industrial and services sectors, due to the growth of number of
partnerships and Real appreciation (Brazilian banks issue points to its
customers based on a US dollar equivalence expenditures).
Points Redeemed: 7.7 billion points, an increase of 68.0% versus 3Q10, which is in line with
the higher number of Multiplus points available for redemption (12 months of issued points,
compared to 9 months in the previous quarter), in addition to a reduction in the promotional
redemptions offer, which tends to increase the number of points redeemed.
Breakage (average of last 12 months): 22.6%, remained stable compared to 3Q10.
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FINANCIAL PERFORMANCE
Gross Billings of points
(R$ thousand) 3Q10 4Q10 4Q10 vs 3Q10 2010
Gross Billings of points 299,984 325,247 8.4% 1,119,475
TAM Airlines 89,206 101,034 13.3% 317,155
Banking, Retail, Industrial and Services 210,778 224,213 6.4% 802,320
Gross billings of points: R$ 325.2 million in the quarter, for growth of 8.4% in relation to
3Q10. A description of the company’s gross billings of points by source follows:
o TAM Airlines: R$ 101.0 million, an increase of 13.3% from 3Q10, in line with the
13.3% increase in points sold;
o Banking, Retail, Industrial and Services companies: R$ 224.2 million, up 6.4% from
3Q10, explained by:
i. the increase of 10.1% in the number of points sold;
ii. the appreciation of 2.4% of the Brazilian real against the U.S. dollar in relation
to 3Q10, since the agreements with financial institutions are based on the U.S.
dollar; and
iii. the slight reduction in the unit price that Multiplus charges certain financial
institutions, reflecting the contractual discounts granted to financial partners,
which increased the number of points purchased in the period.
31.1%29.7%26.6%24.6%
75.4% 68.9%70.3%73.4%
1Q10 2Q10 3Q10 4Q10
TAM Airlines Other partners
Gross Billings of points per source (%)
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Income Statement
(R$ thousand)
3T10 4T10 4T10 vs 3T10 2010 Income Statement
Gross revenue 143,941 225,995 57.0% 517,875
Sale of points 105,163 168,899 60.6% 382,271
TAM Airlines 13,534 32,465 139.9% 54,686
Banks, Retail, Industry and Services 91,628 136,434 48.9% 327,585
Breakage 35,964 51,223 42.4% 122,645
Other revenues 2,815 5,872 108.6% 12,960
Taxes on sales (13,947) (20,401) 46.3% (48,032)
Net Revenue 129,994 205,594 58.2% 469,843
Cost of the points redeemed (69,460) (132,274) 90.4% (274,258)
Air tickets (69,190) (131,813) 90.5% (273,370)
Coalition Partners and Multiplus Catalogue (269) (461) 71.2% (888)
Accounting Adjustments 420 0 N.A. 0
Total cost of services rendered (69,040) (132,275) 91.6% (274,258)
Gross Profit 60,954 73,319 20.3% 195,585
Gross Margin 46.9% 35.7% -11.2p.p. 41.6%
Shared services (1,482) (2,367) 59.7% (7,871)
Personnel expenses (4,619) (6,845) 48.2% (17,693)
Marketing (1,025) (9,838) 859.7% (11,987)
Depreciation (46) (1,026) N.A. (1,091)
Other (6,337) (12,532) 97.8% (26,672)
Total Operating Expenses (13,509) (32,608) 141.4% (65,313)
Total Costs and Operating Expenses (82,548) (164,882) 99.7% (339,571)
Operating Income 47,446 40,711 -14.2% 130,272
Operating Margin 36.5% 19.8% -16.7p.p. 27.7%
Financial Income/Expenses 12,162 16,918 39.1% 33,259
Income before income tax and social contribution
59,607 57,630 -3.3% 163,531
Income tax and social contribution (15,106) (14,354) -5.0% (45,145)
Net Income 44,501 43,276 -2.8% 118,386
Net Margin 34.2% 21.0% -13.2p.p. 25.2%
Revenue
Net revenues totaled R$ 205.6 million in 4Q10, improving 58.2% over 3Q10, which is
explained by the following factors:
o Revenue from point sales: R$ 168.9 million, 60.6% more than in the previous quarter
due to: (i) 68.0% growth in the number of points redeemed and (ii) the change in the
mix of points recognized as revenue, with a higher share of the redemption of points
originally sold to TAM Airlines. The mix of points recognized as revenue tends to
8/14
converge to the breakdown seen in the gross billing of points, following the partner's
redemption curves.
o Breakage revenue: R$ 51.2 million, 42.4% up on 3Q10, due to the increasing balance
of breakage points between the quarters, reflecting the higher number of Multiplus
points issued (12 months compared to 9 months in the previous quarter). This line was
adjusted in accordance with the new accounting methodology (see “Improvement in
Breakage Accounting Methodology"), as shown below:
o
(R$ thousand)
1Q10 2Q10 3Q10 4Q10 2010 Breakage Revenue
Booked Breakage Revenue 11.219 24.239 35.964 51.223 122.645
Adjustments to the new methodology -2.837 -2.525 1.535 3.827 0
Adjusted Breakage Revenue 8.382 21.714 37.499 55.050 122.645
o Other revenue: R$ 5.9 million, growth of 108.6% over 3Q10, due to the increase in
profit sharing revenue from the co-branded TAM Fidelidade card.
Costs and Operating Expenses
Cost of point redemptions: R$ 132.3 million, up 91.6% from 3Q10, mainly due to:
o Airline tickets: R$ 131.8 million, 90.5% more than in 3Q10, as a result of: (i)
68.0% growth in the volume of points redeemed; and (ii) increase in unit cost
due to the end of promotional redemptions campaign that allowed free airline
tickets for domestic flights to be redeemed for only 4,000 points in the previous
quarter (promotional redemptions have a lower unit cost than standard 10,000
points redemption as per operation agreement between Multiplus and TAM).
o Coalition Partners and Multiplus Catalogue: R$ 461 thousand, an increase of
71.2% from 3Q10, as a result of the increase of 69.0% in the volume of points
redeemed.
Shared services: R$ 2.4 million, up 59.7% from 3Q10. If we exclude non-recurring expenses
adjustments with the Call Center in the amount of R$ 0.5 million in 3Q10, shared services
figures are in line with the previous quarter, at approximately R$ 1.9 million.
Personnel expenses: R$ 6.8 million, a growth of 48.2% versus the previous quarter. Excluding
non-recurring amounts of approximately R$ 2.0 million, recurring personnel expenses totaled
R$ 4.8 million, in line with the 3Q10 figures. Non-recurring amounts refer to (i) additional
provisions for profit sharing due to the Company’s good performance and (ii) provisions for
the stock option plan related to previous quarters, which was approved in October 2010.
Marketing expenses: R$ 9.8 million, compared with approximately R$ 1.0 million in 3Q10, due
to the concentration of marketing campaigns in 4Q10.
Depreciation: R$ 1.0 million, compared with approximately R$ 0.1 million in 3Q10, due to
depreciation in operational systems and management systems.
Other expenses: R$ 12.5 million, an increase of 97.8% over 3Q10. Excluding non-recurring
expenses totaling R$ 3.5 million, other expenses would total R$ 9.0 million in the period,
42.9% up from 3Q10. Among other expenses, we highlight expenses with IT, whose increase
was due to:
i. strong growth of the partnership network to 151 in December, specially 7 new coalition
partnerships, totaling 12, which requires the some systems’ setup;
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ii. efforts to improve customer experience, which requires the development and
improvement of applications such as the website and the possibility to accumulate and
redeem points at the point of sale (in partnership with Redecard).
Financial Income/Expenses
Financial Income/Expenses: financial income of R$ 16.9 million, mainly reflecting the interest
earned on the investment of Multiplus’ cash, net of other financial expenses such as interest
expenses and financial transaction tax.
Income tax and social contribution
Income tax and social contribution: reduction from 25.3% to 24.9% in the tax rate due to the
interest on capital payment of R$ 16.9 million made in 3Q10 related to the distribution of net
income for the first half of 2010.
10/14
Adjusted EBITDA
(R$ thousand) 1Q10 2Q10 3Q10 4Q10
4Q10 vs 3Q10
2010 Adjusted EBITDA
Operating Income 10,941 31,174 47,446 40,711 -14.2% 130,272
Depreciation and Amortization 18 0 46 1,026 N.A. 1,091
EBITDA 10,959 31,174 47,492 41,737 -12.1% 131,363
Margin 26.9% 33.4% 36.5% 20.3% -16.2 p.p. 28.0%
Gross Billings of points 230,276 263,968 299,984 325,247 8.4% 1,119,475
Other Revenues in the period 810 3,462 2,815 5,872 108.6% 12,960
Tax on Gross Billings (21,375) (24,737) (28,009) (30,629) 9.4% (104,750)
Net Billings 209,711 242,693 274,790 300,491 9.4% 1,027,685
Revenue from the sale of points (44,178) (99,489) (141,126) (220,122) 56.0% (504,915)
Other Revenues in the period (810) (3,462) (2,815) (5,872) 108.6% (12,960)
Tax on Revenue 4,161 9,523 13,315 20,905 57.0% 47,903
Net Revenue (40,827) (93,428) (130,627) (205,090) 57.0% (469,972)
Future redemptions costs:
Breakage ratio variation 0 706 (1,369) 62 -104.5% (602)
Balance of points to be redeemed variation (113,041) (101,514) (103,109) (77,254) -25.1% (394,917)
Average cost per 1,000 points variation 0 2,456 7,870 (13,784) -275.2% (3,459)
Total future redemption costs (113,041) (98,352) (96,608) (90,976) -5.8% (398,977)
Adjusted EBITDA 66,802 82,088 95,047 46,161 -51.4% 290,098
Margin 31.9% 33.8% 34.6% 15.4% -19.2 p.p. 28.2%
Note: A spreadsheet with a calculation log of the cost of future redemptions is available on the Company’s IR website (www.multiplusfidelidade.com.br/ri). Below is a short description of the main lines: Change in the breakage ratio: represents the impact of the breakage ratio on total number of points issued in the
previous 24 months (Multiplus points mature in 2 years). Change in the balance of points to be redeemed: the impact of the change in the balance of points to be
redeemed (excluding points already redeemed and breakage points) considering the average cost in the last 12 months.
Average cost per 1,000 points variation: the impact of variation of average cost on the balance of points to be redeemed in the previous period.
Adjusted EBITDA: R$ 46.2 million, 51.4% more than 3Q10, due to factors that negatively
impacted quarter results, as: (i) increase in the average unit cost; (ii) marketing expenses
concentration; (iii) extraordinary operating expenses ; and (iv) appreciation of Brazilian real.
According to the old methodology, Adjusted EBITDA was R$ 64.5 million, as shown below:
80.7
91.2
101.2
64.5 66.8
82.1
95.0
46.2
1Q10 2Q10 3Q10 4Q10
Old methodology (24 months average Breakage)
New methodology (12 months average Breakage)
Adjusted EBITDA (R$ million)
11/14
Cash Flow
(R$ thousand)
Cash Flow 1Q10 2Q10 3Q10 4Q10
Net Income
7,479
23,129
44,501
43,276
Depreciation/Amortization 18
-
46
1,026
Accounts Receivable
(62,178)
(2,460)
(27,010)
22,948
Accounts Payable
3,590
(2,677)
3,374
11,439
Taxes
(12,380)
12,790
5,501
(8,570)
Related Parties
(156,263)
58,561
64,440
(23,360)
Prepaid Expenses
(606,799)
53,397
78,046
143,478
Deferred Revenue and Breakage liabilities
189,656
160,953
158,855
105,086
Other assets and liabilities
2,542
1,215
2,692
1,123
Operating Cash Flow
(634,334)
304,909
330,446
296,445
Capex
(2,783)
(590)
(3,866)
(11,278)
Cash Flow from Investing Activities
(2,783)
(590)
(3,866)
(11,278)
Net proceeds from public offer
(23,322)
-
- -
Capital
692,384
-
- -
Dividends -
-
(29,033) -
Capital Reserve -
- - 314
Cash Flow from Financing Activities
669,062
-
(29,033) 314
Increase (Decrease) in Cash 31,946 304,320 297,548 285,480
Cash at beginning of period* -
31,946
336,265
633,813
Cash at end of period*
31,946
336,265
633,813
919,296
Capex: R$ 11.3 million due to investments in operational systems (Siebel Loyalty) and
management systems.
*Cash and cash equivalents, investments and long term investments.
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Balance Sheet
(R$ thousands)
3Q10 4Q10 4Q10 vs 3Q10 Balance Sheets
Assets 1,257,006 1,403,549 11.7%
Current assets 1,102,918 1,330,844 20.7%
Cash and cash equivalentes 19,166 17,186 -10.3%
Investments 614,647 851,830 38.6%
Accounts Receivable 91,647 68,699 -25.0%
Related Parties 363,136 388,507 7.0%
Current account 30,157 56,629 87.8%
Prepaid expenses 332,979 331,879 -0.3%
Deferred income tax and social contribution 14,115 3,769 -73.3%
Other receivables 207 852 311.5%
Non-current assets 154,088 72,705 -52.8%
Prepaid expenses 142,377 0 -100.0%
Long term investments 0 50,280 N.A.
Deferred income tax and social contribution 755 1,217 61.3%
Property, plant and equipment 760 935 23.1%
Intangible 0 18,997 N.A.
Intangible assets 10,196 1,276 -87.5%
Liabilities and shareholder’s equity 1,257,006 1,403,548 11.7%
Current liabilities 541,993 644,946 19.0%
Suppliers 5,139 16,579 222.6%
Taxes and fees payable 20,780 2,328 -88.8%
Deferred revenue 354,302 484,055 36.6%
Breakage liabilities 155,162 130,495 -15.9%
Other liabilities 6,610 11,490 73.8%
Equity 715,012 758,602 6.1%
Capital 669,063 669,063 0.0%
Remuneration Plan 0 1,538 N.A.
Reserves 0 5,919 N.A.
Retained Earnings (loss) 45,949 82,082 -78.6%
Related parties:
Prepaid expenses: balance related to the advance for the purchase and sale of air tickets
for future delivery totaling R$ 622.1 million. Up to December 31, 2010, R$ 290.2 million
were already used.
Current Account: the balance receivable from TAM Airlines related mainly due to the gross
billings of points.
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CAPITAL MARKETS
Ownership Structure
The ownership structure of Multiplus is as follows:
Stock Performance
The shares of Multiplus S.A. closed December 31, 2010 at R$ 33.75 (up 113% since the IPO), representing a market capitalization of R$ 5.4 billion. In the 4Q10 the shares appreciated 23% compared to a depreciation of 3% of Ibovespa index (IBOV) and the daily financial volume averaged around R$ 10.5 million.
FREE FLOAT
26.83% 73.17%
TAM S.A.
MPLU3 vs IBOV (base 100) e Volume (R$ milhões)
-
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
90
95
100
105
110
115
120
125
130
135
140
01
-Oct
6-O
ct
11
-Oct
15
-Oct
20
-Oct
25
-Oct
28
-Oct
3-N
ov
8-N
ov
11
-No
v
17
-No
v
22
-No
v
25
-Nov
30
-No
v
03
-De
c
08
-De
c
13
-De
c
16
-De
c
21
-De
c
27
-De
c
30
-Dec
R$ (millon)%
Volume
MPLU
IBOV
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GLOSSARY
Adjusted EBITDA: non-accounting measure which corresponds to the operating income for the year or period, adjusted by some items that impacts Multiplus results, adding the gross billings, depreciation and amortization expenses for the period, excluding the revenue for the period and also the future redemption cost.
ANAC: National Civil Aviation Agency - Brazil
Breakage deferred revenue: amount related to the percentage (=Breakage ratio) of points issued that will not be redeemed based on company estimates.
Breakage rate: Average of the last 12 Monthly Breakages.
Breakage revenue: amount related to recognition of Breakage deferred revenue as Breakage revenue based on redemptrion curve.
Monthly Breakage: points expired and not redeemed as a percentage of points issued 2 years before (Ex: pontos expired and not redeemed in Jan 2010 as a percentage of points issued in Jan 2008).
Bur/earn: total redeemed points divided by the total accrued points during the same period
Flexibilization: the redemption of points for air tickets involving less than 10,000 points
Free Air Tickets: air ticket issued by an airline as a result of redemption by a member of loyalty programs or loyalty coalition networks
Gross Billings of points: amount related to Multiplus points issued during the period, recognized as deferred revenue.
Member: person registered as a member of loyalty programs or loyalty coalition networks
Point expiration date: The date after which a point is no longer valid. According to Multiplus expiry policy, points expires 2 years after the issuance date.
Pro forma: numbers considering liabilities accounts as points issued prior to Jan/10 (which are in TAM’s balance sheet) as subsequent (Multiplus points).
Redemption Curve: percentage of points redeemed in the same month they were issued
Revenue from points sale: amount related to recognition of gross billings as revenue when points are redeemed.
RPK: Revenue passenger-kilometers, or transported passenger-kilometer, corresponding to the product of multiplying the number of paying passengers transported by the number of kilometres flown by such passengers
Investor Relations Contacts Ronald Domingues André Junqueira Ferreira
Phone: +55 11 5105-1847 | [email protected] | www.multiplusfidelidade.com.br/ri
About Multiplus Multiplus (BM&FBOVESPA: MPLU3) operates under the concept of a loyalty programs coalition network with 151 partnerships through which its 8.0 million members may accrue points (4Q10 data). Currently, its key partners that allow both accrual and redemption of points are TAM Airlines, TAM Viagens (travel agency), Ipiranga and Texaco gas stations, Livraria Cultura (bookstore), Accor Hotels, Oi (telecom), Editora Globo (publisher), SKY (pay-TV), Luigi Bertolli (clothing), Microlins and Wizard (education), Drogaria Rosário (drugstore), BM&FBOVESPA (stock exchange), Central do Carnaval (entertainment) and PontoFrio.com (e-commerce).
Disclamer
This notice may contain forward-looking statements. These statements merely reflect the expectations of the Company's management and involve risks and uncertainties. The Company is not responsible for any investments, operations or decisions taken based on information contained herein. These estimates are subject to change without prior notice.