annual report 2011 -...

AnnuAl RepoRt 2011

TogeTher we can do more

When you combine the points, it is much faster to redeem for the award you want.

TogeTher is much beTTer.TogeTher is mulTiplus.

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Message froM the Ceo highlights

Profile

The loyalty program industryPromising futureAbout Multiplus The history of MultiplusRelationship with TAMProducts and servicesValue generationBusiness ModelStrategies and objectives

CorPorate governanCe

Differentiated corporate governance practicesInvestor relationsProcesses, quality and internal controlsSocio-environmental responsibility Board of directors, executive board, committees and audit

101212131416293031

3437404141

464750505151

58646667

Table of conTenTs

finanCial results

Earnings from the sale of pointsNet revenuePoint redemption costFinancial expense/revenueHedgeIncome Tax and Social Contribution

intangible assets

PeopleBrandInformation technologyRisk management

glossary

CorPorate inforMation

Credits

04 46

06

10

58

70

71

72

34

4

2011: an inTense year

2011 was an important milestone for Multiplus. With

just two years of operations, we have consolidated

our role in the loyalty programs industry and

have announced a new positioning and a new

visual identity to the market. Through a view that

“Together we can do more”, we are reinforcing our

mission of connecting people and companies using

a vast network of relationships, in which the entire

value chain wins.

Our new logo features a design with points that

join together in colorful tones, showing that

the experience of bringing points together can

be something simple, light and enjoyable. Our

upcoming years goal is to be able to definitively –

and without complication – integrate consumer’s

routine through a strong, complete and attractive

coalition network.

According to this strategy and in an effort to offer

the participants in our network an increasingly

larger portfolio of products and services, we are

ending the year with around 190 partnerships,

adding important partners like BM&FBOVESPA,

PontoFrio.com, Droga Raia, Instituto Ayrton Senna

and Fundação SOS Mata Atlântica.

message from The ceo

eduardo gouveia CEO

AnnuAl RepoRt 2011 5

I would also like to note that in 2011 we were

included in the portfolio of the BM&FBOVESPA

IBrX-100 index, which is an evidence of our

commitment to delivering results and to the best

corporate governance practices in the market.

In 2011, we placed special priority on relationships

with partners, expanding the Multiplus network and

structuring the Company’s future.

During this year and in the coming years, we will

focus our endeavor on ensuring experiences that

are increasingly simple, agile and enjoyable for our

participants, consolidating our brand and seeking

growing returns for shareholders.

Happy reading!

through a view that “together we can do more”, we are reinforcing our mission of connecting people and companies using a vast network of relationships, in which the entire value chain wins. Another highlight is the implementation

of the first phase of the Capillarity Project,

in which participants can directly accumulate

points in partner establishments using the

Redecard machine.

With these new initiatives, Multiplus ended last

year with earnings of BRL1.5 billion in points issued

and a net profit of BRL274.2 million. In an effort

to maximize shareholder returns, the Company

distributed BRL260.5 million, or 95% of the

bottom line, in the form of dividends or Interest on

Shareholder Capital (ISC), including the dividends

proposed by the Board of Directors. Furthermore,

we reinvested BRL600 million back into the market

by reducing capital.

In November, it was announced that Multiplus and

Aimia (Aeroplan group) had signed an agreement;

this was considered to be a decisive step towards

creating a new marketing loyalty program

services company in Brazil, which will be focused

on conceptualizing, developing, managing and

consulting for analytic services geared towards

loyalty programs and third party incentives.

6

highlighTs

march 2011disclosure of company’s capital

reduction of approximately brl600

million, aimed at improving its

financial structure.

february 2010Multiplus became a listed

company with shares traded at the

bM&fbovesPa. shares were sold

at brl16.00, having ended 2011

priced at brl32.25 – after paying

out brl6.04 per share in dividends

and interest on shareholder

capital since 2010.

augusT 2010the Company transferred

its corporate headquarters to the

Centro empresarial nações unidas, in

the city of são Paulo, and no longer

shares facilities with taM. during this

same month, it finished implementing

its technological platform, through

which it began to manage

its operations.


sepTember 2011branding study that resulted in new

vision, Mission, Positioning,

values and logo for the Company.

through the view that “together

we can do more”, Multiplus reinforced

its mission of connecting people

and companies through a vast

network of relationships, in which

everyone wins.

november 2011a joint venture was

established with Canada’s aimia

(formerly groupe aeroplan),

an international leader in the

loyalty market. the partnership is

focused on: concept, development,

management and consulting

for analytic services geared

towards loyalty programs and

third party incentives.

december 2011Multiplus was added to the brazil

index (ibrX-100), which measures return

on investment in a theoretical portfolio

comprised of the 100 most traded

stocks at the bM&fbovesPa,

in terms of the amount of business

and financial volume. the Company

closed the year with 9.4 million

members, 190 partners, brl1.5 billion

in earnings on points, and net profit

of brl274.2 million.

Table of indicaTors

2010 2011 growthMembers (millions) 8,0 9,4 17.1%Partners 156 190 21.8%Points issued (millions) 53,236 76,159 43.1%

TAM Linhas Aéreas (TLA) 18,656 20,229 8.4%

Banks, retail, manufacturing and services 34,580 55,930 61.7%

Points redeemed (millions) 16,783 49,764 196.5%Air travel 16,711 48,713 191.5%

Other products/services 72 1,051 1,351.9%Breakage rate (average over the last 12 months, %) 22.6% 24.1% 1.5 p.p.

Number of employees 81 109 34.6%

8

In 2011, there was a growth of 26% in the number of members that carried out transactions (accumulation or redemption) at Multiplus.(growth in relation to 2010)

Every second, 2,405 points are accumulated at Multiplus.(based on the monthly average of accumulated points)

Multiplus has a simple and attractive business model that, based on information technology and brand construction, it is not very dependent on fixed capital investments.


“Multiplus plays a fundamental rolein the KM DE VANTAGENS portfolio,o�ering benefits with a wide rangeof possibilities. Nowadays, it is dicult to imagine a company that does not consider loyaltyas a part of its business strategy.”

JERONIMO SANTOSDirector of Retail and Marketing at Ipiranga

IPIRANGA IS ALSO A MULTIPLUS PARTNER.

AF_ANUNCIO_IPIRANGA_240x240.indd 1 2/29/12 8:15 PM

10

The loyalTy program indusTry

The industry in which Multiplus is active includes

awards tools and practices – such as the

accumulation of points, which vary according

to the degree of customer loyalty at partner

companies.

There are currently two loyalty modalities:

• Individual programs: through which accumulation and redemption of points are done

by acquiring products and services from one

sole company.

• Coalition networks: used by Multiplus to allow for accumulation and redemption of points in

various companies.

profile by connecting different companies and loyalty programs, Multiplus allows its members to accumulate and redeem points in partners from several segments.


benefits for partners: benefits for consumers:

• Lower customer acquisition and retention cost; • Faster accumulation of points;

• Chance to access consumer bases from other segments; • More options for redemption;

• Opening of a new publicity channel for the brand; • Improved point control and management.

• Chance to carry out joint promotions with other partners.

Find out about the main advantages of coalition networks:

Loyalty programs for airlines (frequent flyer programs) and for credit card issuing banks are still the

most popular programs in the Brazilian market; yet, the advantages of coalition networks in relation to

individual programs (both for partner companies and consumers) are causing a change in this scenario.

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Profile

over the last five years, credit card payments increased 22% per year, and household consumption, 12%.

promising fuTure

Estimates point to high rates of growth in the

loyalty programs industry in the coming years.

This is not only based on today’s results, but also

on favorable forecasts regarding the performance

of the Brazilian economy. The industry is expected

to move forward in pace with increased standard

of living, causing consumption and use of credit

cards to rise.

abouT mulTiplus

Multiplus is a coalition network that joins various

companies and loyalty programs. It was created

in June 2009 as a business unit of Grupo TAM.

In October 2009, it was legally established as an

independent operation, and in February 2010, it

was listed on the BM&FBOVESPA (MPLU3). Today,

Multiplus is a subsidiary of TAM S.A., which holds

73.14% of its shares.

By connecting different companies and loyalty

programs, Multiplus allows its members to

accumulate and redeem points in several partners

from different segments. The network is currently

made up of over 190 partners, with more than 9.4

million members, who can earn Multiplus points

directly or indirectly (through transference from a

partner program) at more than 12,500 commercial

establishments. Moreover, points can be redeemed

for over 50 thousand products and services.

Multiplus strategic partners include large

companies like TAM Linhas Aéreas (airlines)

and TAM Viagens (tourism operator); Ipiranga

(gas stations); Livraria Cultura (bookstore);

Accor (hotel); Oi (telecommunications); Editora

Globo (publisher); SKY (Pay TV); Luigi Bertolli

(apparel); XP Educação, Microlins and Wizard

(education); Drogaria Rosário, Extrafarma, Panvel

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AnnuAl RepoRt 2011

and Droga Raia (drugstores); BM&FBOVESPA

(stock exchange); PontoFrio.com (e-commerce);

New, Favorita and Dell Anno (furniture and

decoration); Icatu Seguros (pension plan);

Groupon (group buying); and Movida (car rental).

The hisTory of mulTiplus

Before creating Multiplus, TAM was responsible

for issuing points to participants and for the

redemptions for award flights.

In January 2010, when Multiplus was created,

it took over the operational activity of point

accumulation and redemption, as well as the sale

of points to business partners. Accordingly, TAM

continued to be responsible for issuing award travel

and defining the rules for TAM Fidelidade, such as

the number of points accumulated per flight, the

number of points necessary for redeem travel, and

the classification of customers into categories.

The creation of a coalition program from a

frequent flyer program maximized the potential

advantages of the network by gathering in a

single points system consumers with repurchase

behavior (frequent shoppers) and loyal airline

customers (frequent flyers).

14

relaTionship WiTh Tam

operaTing agreemenT

On December 10, 2009, Multiplus signed an operating

agreement with TAM Linhas Aéreas that established

the terms and conditions governing the relationship

between the two Companies as of January 1, 2010,

when the company assumed the management,

administration and operation of the TAM Fidelidade

program. Based on this agreement, Multiplus

grants exclusivity to TAM Linhas Aéreas, preventing

partnerships with other airline loyalty programs or

competitors from accessing the TAM Linhas Aéreas

database. TAM Linhas Aéreas, in turn, agrees to deny

the TAM Fidelidade program permission to participate

in other loyalty program networks and will not grant

Multiplus competitors access to its database.

The operating agreement is valid for 15 years, starting

on January 1, 2010, and can be automatically extended

for additional five years periods, provided there is no

manifestation to the contrary from Multiplus or TAM

Linhas Aéreas within at least 120 days.

Both Multiplus and TAM Linhas Aéreas may terminate

the operating agreement at any time and for any

reason, regardless of payment of a fine, provided

that written notice is sent to the other party within at

least 12 months, during which time all clauses of the

agreement shall remain in force. Without affecting any

possible compensation due, as well as any other rights

or judicial actions, any of the parties, through written

notice to the other, may terminate the agreement if any

one of the following events occurs.

It is important to point out here that the following are

not considered a failure to comply with service levels –

which results in other specific penalties:

(i) Serious breach of the agreement, not resolved by

the breaching party as quickly as possible and within

a period not surpassing 30 (thirty) days after receipt

of notification of the breach sent by the other party;

(ii) Repeated failure to comply with the obligations

established in the agreement, regardless of whether

said failures are resolved by the breaching party or

otherwise resolved to the satisfaction of the parties,

whose cumulative effect shall be understood as a

serious breach of the agreement;

(iii) (One of the parties) becomes insolvent;

(iv) Court-supervised reorganization is deferred for or

bankruptcy is declared by (one of the parties);

(v) In other events set forth by law.

In this case, upon the act of termination and for a period

of 24 (twenty-four) months, the breaching party will

pay the other party a fine calculated by multiplying the

average of the three last earnings posted for the months

preceding the termination date.

The TAM Fidelidade program continues to exist.

However, since January 1, 2010, it began to issue

Multiplus points to its members. Based on the operating

agreement, Multiplus is responsible, for example, for

processing information on accumulation and redemption

of points in the program and for delivery of awards, for

example, based on the regulations of both companies.

Multiplus is paid each month to do this. In order to

maintain the principles of cooperation, transparency,

and economic and financial balance in the relationship,

the operating agreement states that TAM Linhas

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Profile

AnnuAl RepoRt 2011

Aéreas shall consult Multiplus regarding any change it

intends to implement in the TAM Fidelidade regulation

and award provisions that may affect the management,

administration and operation of the program.

Furthermore, on January 1, 2010, TAM Linhas Aéreas

agreed to acquire Multiplus points for TAM Fidelidade

program participants. Likewise, Multiplus has agreed to

acquire TAM Linhas Aéreas airline tickets to be given to

Multiplus participants.

Pursuant to the operating agreement, TAM Linhas Aéreas

has agreed to bear responsibility for the costs of awards

related to points accumulated up to December 31, 2009,

by TAM Fidelidade program participants for a period of

30 months, counted from January 1, 2010. As a result,

on the statement of income and loss Multiplus only

recognizes the revenue and expense or the corresponding

cost of redeemed points that have been accumulated

after January 1, 2010.

TAM Linhas Aéreas was furthermore required to transfer

all of its commercial partner agreements to Multiplus in

order to prevent new point accumulations in the TAM

Fidelidade program, as a result of these agreements, after

January 1, 2010. All business partnership agreements were

transferred to Multiplus by June 30, 2010.

service sharing agreemenT

Through a service sharing agreement, dated December 10,

2009, TAM Linhas Aéreas agreed to offer Multiplus legal

and controllership services, treasury, planning and financial

management support, facilities and infrastructure, human

resources, information technology, auditing and supplies.

It also began to provide employees, equipment, tools,

technology and other necessary resources with the same

degree of diligence, qualification and caution normally

exercised in relation to its own operations.

In order to maintain the economic and financial balance

at the same level that it was at on the date the agreement

was signed, Multiplus and TAM Linhas Aéreas have agreed

to review contract service amounts every 12 months,

counted from the term start date; in other words, starting

on January 1, 2010.

The agreement has a term of five years, is automatically

extended for equal and successive periods of five years,

and may be terminated at any time, with no requirement

to pay any fine, compensation or penalty of any kind,

provided that the other party is given prior written notice

within at least 90 days.

commiTmenT To advance The purchase

and sale of airline TickeTs

On January 12, 2010, Multiplus signed a payment

commitment with TAM Linhas Aéreas for the pre-

purchase and sale of airfare – to remain in force until all

funds have been used – in order to serve redemption

requests from Multiplus participants wanting to convert

their points into TAM Linhas Aéreas award travel.

In an effort to optimize return for its shareholders,

the Company signed a new payment commitment

with TAM Linhas Aéreas for purchase of future airfare,

totaling BRL400 million, providing a discount in relation

to current contract prices, which was used in full by

December 2011.

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Profile

producTs and services

Multiplus uses a hybrid business model, which is the result of joining two existing ones: individual

programs and coalition networks. In this sense, the network does not compete, but rather cooperates

with its business partners’ loyalty programs, offering them highly attractive redemption alternatives

while encouraging them to continue their relationship with their consumers. Services offered can be

split into three categories: accumulation of points, redemption of awards, and coalition partnerships.

The Three business modaliTies

The partner purchases Multiplus points to award its consumers and defines how

to offer the benefit

accumulaTion

Multiplus purchases awards (products and/or services) from partners to offer to members as redemption

options

redempTion

ParTNers

The partner purchases Multiplus points to award its consumers, and Multiplus purchases partner points, products and/or services to offer members as redemption options

coaliTion

ParTNersParTNers

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Profile

AnnuAl RepoRt 2011

1. accumulaTion of poinTs

In an effort to draw customers and earn their loyalty, point accumulation partners offer these customers

so-called “Multiplus points”, which can be redeemed for products and services from any coalition partner.

In 2011, Multiplus had 190 commercial point accumulation partners from various economic segments,

including financial institutions, hotels and car rental companies, as well as publishers, drugstores, gas

stations and e-commerce companies. Financial institutions are especially noteworthy, considering

their tradition of working with customer loyalty practices in the credit card segment.

accumulaTion parTners

The partner purchases Multiplus points to award its consumers and defines how to offer the benefit.

example: BrL1 in purchases = 1 Multiplus point1

parTners WiTh loyalTy programs parTners WiThouT loyalTy programs

The coNsuMer acquires a

ProDucT or a service FroM The ParTNer

The coNsuMer gaiNs PoiNTs iN The ParTNer’s

PrograM

The coNsuMer TraNsFers

The PoiNTs To MuLTiPLus



The coNsuMer gaiNs MuLTiPLus

PoiNTs

1Amounts are for illustrative purposes only.

(Points transferred from various partners are together in one single account at Multiplus)

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Profile

examples of accumulaTion parTners of The mulTiplus neTWork

financial insTiTuTions

Travel and enTerTainmenT

reTail, manufacTuring and services

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AnnuAl RepoRt 2011

2. redempTion of aWards

Award redemption partnerships allow customers

to convert Multiplus points into products and

services. In 2011, Multiplus expanded and diversified

the redemption portfolio with new products,

services, experiences and donations, through new

partnerships that supported the strategy to

offer other options than the airline. Altogether,

there were 13 new partnerships in 2011:

The MeMBer has MuLTiPLus

PoiNTs

MuLTiPLus Purchases

awarDs (ProDucTs aND/

or services) FroM ParTNers To oFFer To MeMBers

The MeMBer chooses a ParTNer

aND reDeeMs aN awarD (DoNaTioNs,

exPerieNces, ProDucTs aND

services)

• Pandora • T4F • Centro de Pilotagem • Central do Carnaval • Senna Store • Sem Parar • Glossybox

• Ingresso.com • iMusica • Evolubike • Fundação SOS Mata Atlântica • Instituto Ayrton Senna • Make a Wish Brasil

redempTion parTners of The mulTiplus neTWork

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3. coaliTion parTnerships

Traditionally, consumers have been in the

habit of using their points for award airline

travel. However, redemptions at other coalition

partners are expected to grow, allowing

for both the accumulation and redemption

of points in the network. Some have been

partners since 2009, such as TAM Linhas

Aéreas, TAM Viagens, Ipiranga and Livraria

Cultura; accordingly, they have a higher volume

of accumulated and redeemed points.

Some have their own loyalty programs and

others use Multiplus as their program.

The partner purchases Multiplus points to award its consumers, and Multiplus purchases partner

points, products and/or services to offer members as redemption options.

parTners WiTh loyalTy programs

Accumulation Accumulation

redemption redemption



The coNsuMer geTs PoiNTs iN The ParTNer’s

PrograM

The coNsuMer TraNsFers The

PoiNTs FroM The ParTNer’s PrograM

To MuLTiPLus aND is auToMaTicaLLy regisTereD wiTh

MuLTiPLus

The coNsuMer TraNsFers

MuLTiPLus PoiNTs To The ParTNer

PrograM

The coNsuMer uses MuLTiPLus

PoiNTs For DirecT reDeMPTioN oF a ParTNer ProDucT aND/or a service

The coNsuMer uses ParTNer

PrograM PoiNTs To reDeeM aN

awarD

parTners WiThouT loyalTy programs



The coNsuMer geTs MuLTiPLus PoiNTs aND is

auToMaTicaLLy regisTereD wiTh

MuLTiPLus

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AnnuAl RepoRt 2011

coaliTion parTners of The mulTiplus neTWork

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Profile

Find out about all of the companies that are part

of the Multiplus network through this modality.

accor hospiTaliTy

The Accor Group holds the largest

and most complete accommodations

offerings in Latin America, where

it operates the Sofitel, Pullman,

Novotel, Mercure, Ibis and Formule 1 international

chains. There are a total of 170 units, with 143

in Brazil and 27 in the rest of Latin America:

Argentina, Colombia, Peru, Ecuador, Guatemala,

Chile, Paraguay and Uruguay. Brazil is the

Company’s fourth largest market worldwide,

behind only France, Germany and the United

Kingdom. The partnership between Accor and

Multiplus is done through the A|Club loyalty

program. Both accumulation and redemption

of points is done by converting A|Club program

points into Multiplus points and vice versa.

bm&fbovespa

BM&FBOVESPA is Brazil’s top capital

market transaction intermediaries

and the only stock, commodities and

futures exchange market operating

in Brazil; it is notable for being one of the world’s

largest in terms of market value and for being the

second largest in the Americas and the largest in

Latin America. Its Fica Mais relationship program

awards individual investors based on how long

they maintain their stock market investments.

Accumulation is done by converting Fica Mais

program points into Multiplus points. Upon

redemption, participants can exchange their

points for personal financial consulting as well as

other network awards.

drogarias panvel

The Drogarias Panvel Network is

the largest pharmacy network in

southern Brazil. With more than

290 stores in 85 cities in the States

of Rio Grande do Sul, Santa Catarina and Paraná,

it has 4 thousand employees and serves an

average of 2.5 million customers each month.

Points are both accumulated and redeemed

by converting them from the Panvel Fidelidade

program into Multiplus points and vice versa.

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AnnuAl RepoRt 2011

droga raia

Droga Raia is one of the oldest

pharmacy networks in Brazil. With

106 years of tradition, today it has

more than 400 branch stores in the

States of São Paulo, Rio de Janeiro, Minas Gerais,

Paraná, Rio Grande do Sul and Santa Catarina.

Its partnership with Multiplus occurs through

the Muito Mais Raia program. At store locations,

points are both accumulated and redeemed by

converting them from the Mais Raia program into

Multiplus points and vice versa. While for online

purchases at www.drogaraia.com.br, customers

are awarded Multiplus points directly, without

requiring any transfer.

drogaria rosário

With over a hundred stores, Drogaria

Rosário is the largest pharmaceutical

retailer in Brazil’s Central-West

region. It has its own relationship

program: Cartão Mais Vantagens. Points are

accumulated and redeemed by converting them

from the Cartão Mais Vantagens program into

Multiplus points and vice versa.

ediTora globo

Editora Globo has earned a

distinguished place in Brazil’s

publishing market, with regular

publication of 14 magazines read by

8.6 million readers every month. Its partnership

with Multiplus allows Multiplus points to be

directly accumulated and redeemed on magazine

subscriptions with no need to convert points.

espaço laser

With 20 units, Espaço Laser offers

the latest in hair removal technology,

providing beauty and healthcare at

the same time, as well as security

and reliability. The network has operated in the

market since 2002 and is found in 11 States. The

partnership allows Multiplus points to be directly

accumulated and redeemed on Espaço Laser

services with no need to convert points.

exTrafarma

Extrafarma is one of the largest

pharmacy networks operating in

Brazil’s Northern and Northeaster

regions, with 180 stores spread

throughout the States of Amapá, Ceará, Pará, Piauí

and Maranhão. The network uses the Club Extra

relationship program to recognize and reward its

member clients. Points are both accumulated and

redeemed by converting them from Club Extra

program points into Multiplus points and vice versa.

the Multiplus network does not compete, but rather it cooperates with its business partners’ loyalty programs.

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Profile

groupon

Groupon, the pioneer website in group

buying in the world, holds a prominent

place in the online collective purchase

market not only in Brazil (covering 49

cities), but also globally, operating in 45 countries.

Founded in November 2008 and working in the

Brazilian market since 2010, it has over 140 million

users. In 2011, it began a partnership with Multiplus

that will allow Multiplus points to be accumulated

and redeemed for Groupon products directly, with

no conversion needed.

icaTu seguros

Icatu Seguros is a company

specializing in Life Insurance,

Pensions and Investment by

Capitalization. Synonymous with

experience and solidity in Brazil’s financial and

insurance market, the company, which started

with Grupo Icatu, has been on the market for

20 years. The company has more than 4 million

individual clients and 9 thousand corporate

clients, in addition to 30 business partners

throughout Brazil. The partnership allows

Multiplus points to be directly accumulated and

redeemed on Icatu products with no need to

convert points.

The Multiplus network has more than

business partners from various economic segments.

190

gep (luigi berTolli, cori, emme)

GEP operates in the area of fashion

retail, with the Luigi Bertolli, Cori and

Emme brands in a network of over

80 branch stores. The partnership

with Multiplus occurs through the relationship

programs of each participating brand. In order to

accumulate and redeem points in the Multiplus

network, points need to be converted from store

programs into Multiplus points and vice versa.

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AnnuAl RepoRt 2011

ipiranga

The largest private gas station

network in Brazil, according to the

country’s National Oil Agency (ANP),

the company launched a proprietary

loyalty program called Km de Vantagens in 2009,

which has 8 million members. With Multiplus, both

accumulation and redemption of points is done by

converting Km de Vantagens program points into

Multiplus points and vice versa.

livraria culTura

With more than 60 years and 13

stores, in addition to the online

store, Livraria Cultura is a quality

reference in the Brazilian market.

A traditional meeting point for intellectuals and

readers with more than 1,5 thousand employees

and over 3 million book titles, as well as CDs, DVDs,

games, magazines and an exclusive product line.

The partnership with Multiplus occurs through

the loyalty program of the bookstore chain, the

+cultura program. Points are both accumulated

and redeemed by converting them from +cultura

program points into Multiplus points and vice versa.

movida renT a car

One of the largest car rental

companies in Brazil, Movida Rent a

Car has been renting vehicles since

2006, and although it has been on

the market for a short time, it already has a network

of 29 rental offices throughout Brazil. The company

also offers customers 27 hour daily rental (customers

receive a 3-hour grace period on the return of

vehicles), carbon free rental (neutralizing the CO2

from the rental), a mobile website, and an iPhone

application. Its partnership with Multiplus allows

points to be directly accumulated and redeemed on

vehicle rentals with no need to convert points.

mulTi holding

(Wizard and microlins)

Multi Holding works mostly with

education through its ten language,

computer and vocational school

brands at approximately 3,520

schools. Its partnership with Multiplus involves the

Wizard and Microlins brands and allows for both

direct accumulation of points and redemption on

classes, with no need to convert points.

$

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Profile

oferTas.com.br

Working in the group buying

market in the one hundred largest

cities in Brazil, the Ofertas.com.br

website is focused on the sale of

various services, such as food, education, beauty

and tourism. With over 6 million users already

registered, its partnership with Multiplus allows

for direct accumulation of Multiplus points and

redemption of Ofertas.com.br product or services,

with no need to convert points.

oi

A pioneer in providing convergent

services in Brazil, offers local and

long distance voice transmission,

mobile telephony, data communication and internet

nationwide. In September 2011, the company had

67.1 million customers. Of this total, there were

42.9 million mobile phone users, 19.1 million fixed

line users, 4.8 million broadband users, and 330

thousand cable TV users.

For the fourth year in a row, Oi is part of the

Corporate Sustainability Index (ISE) at the

BM&FBOVESPA, reflecting the company’s

substantial commitment to social responsibility

and its adoption of sustainable management

practices. It is also part of the first portfolio for

BM&FBOVESPA Carbon Efficient Index (ICO2).

In 2010, the company launched its Oi Pontos

relationship program. Customers of Oi Móvel Pós-

Pago (contract cell phone plans), Oi Conta Total

and the Oi Credit Card are automatically included

in the program and accumulate points on these

and other Oi services (Oi Fixo, Oi Velox, Oi Velox

3G, Oi Dados, intercountry long distance (DDD)

and international long distance (DDI) using the Oi

code). With Multiplus, points are accumulated and

redeemed by converting them from Oi program


ponTofrio.com

Created in 2008 from the separation

of Internet and telephone sales

operations at Ponto Frio, one of the

country’s largest retailers, PontoFrio.com is part

of Nova Pontocom, a Brazilian company focused

on e-commerce. With an average of 12.8 million

visitors each month, it registered in 2011 earnings of

BRL3.5 billion, an increase of 42% in relation to the

previous year. Its partnership with Multiplus allows

points to be directly accumulated and redeemed

on products with no need to convert points.

sky

SKY is Latin America’s largest high-

definition pay TV operator. With

more than 3.6 million clients, SKY

offers its customers VIVA SKY, a

relationship program through which points can be

used for programming, gifts and experiences. With

Multiplus, both accumulation and redemption of

points is done by converting VIVA SKY program


27

Profile

AnnuAl RepoRt 2011

Tam cargo

TAM Cargo, the cargo division of TAM

Linhas Aéreas, has over 850 daily flights

to over 50 Brazilian airports and is present

in about 50 countries. Its partnership with

Multiplus allows points to be accumulated and directly

redeemed on the product TAM CARGO PRÉ-PAGO,


Tam linhas aéreas

TAM Linhas Aéreas is one of Brazil’s

leading airlines, with a 41.2% share

in the national market and 88.1% in

the international market in 2011 YTD,

according to Brazil’s National Civil Aviation Agency

(Anac). Points acquired through the TAM Fidelidade

program are credited when participants use the

commercial passenger airline services of TAM

Linhas Aéreas or of Star Alliance member airlines.

The partnership with Multiplus allows points to be

directly accumulated and redeemed on air travel,


Tam viagens

TAM Viagens, the tourism unit of TAM

Linhas Aéreas, offers over 600 travel

packages and has established itself in

the market as one of Brazil’s largest

operators. Founded in 1998, it serves 5 thousand

agencies nationwide. As a promoter of tourism

development, its actions are focused on training

agents, in an effort to publicize destinations with a

social commitment. The partnership allows Multiplus


tourism packages, with no need to convert points.

unicasa (dell anno, favoriTa and neW)

As part of the furniture and decoration

industry Unicasa, Dell Anno, Favorita

and New have 1,200 group stores

throughout the country. Unicasa has

operated in Brazil for more than 25 years and has a

factory complex with a production capacity of 188

thousand modules per month that is among the

most modern manufacturing units in Latin America.

Its partnership allows Multiplus points to be directly

accumulated and redeemed on modular furnishings,


xp educação

XP Educação has the largest financial

education program in Brazil, operating

in more than 140 cities. The company

offers on-site and interactive courses

(video classes, including complementary material),

as well as webinars (live online seminars) discussing

the most varied subjects, such as investment,

personal finance, the stock market, and graph

analysis of stocks. The partnership allows Multiplus


courses, with no need to convert points.

Partnerships established until December 2011.

28

Profile

segmenTed iniTiaTives

Multiplus carries out segmented initiatives based on the

transactional behavior and registration of each participant,

including joint initiatives with partners. To make more assertive

campaigns, detailed analyses are carried out on the database,

measurements of results, and enhancement activities

(ex. cross-checking partner databases). In 2011, an analytical

database was implemented and initiatives were carried out

in several communication channels, improving the quality,

timeframes and return on commercial activities.

For 2012, the aim is to improve the quality of participant data

and build initiatives based on their current experience with

Multiplus (from initial registration to an eventual inactivation).

mulTiplus and aimia: ouTsourcing

loyalTy programs and crm

In November 2011, Multiplus and Aimia, an international

leader in the loyalty market headquartered in Canada,

announced that they had closed a deal to create a loyalty

marketing services company in Brazil. The joint venture will

be focused on conceptualization, development, management

and consulting for analytic services geared towards loyalty

programs and CRM.

Multiplus and Aimia will be equal shareholders in the new

company and will be involved in continual support of the

business, exploring a broader relationship as time goes by, if

market opportunities arise.

Formation of the new company is subject to the usual

regulatory approvals. Right now, there is no plan to transfer

assets, with the investment to be made by each of the parties

being less than US$25 million over a three year period.

abouT aimia

A new Groupe Aeroplan Inc. brand, Canada’s Aimia is listed on

the Toronto Stock Exchange (TSX:AIM) and is an international

leader in loyalty programs, with over 3,800 employees in

more than 20 countries worldwide. The company owns and

operates Aeroplan, a leading coalition program in Canada, and

Nectar, the largest coalition program in the United Kingdom.

Aimia is also a majority shareholder in Air Miles Middle East

and in Nectar Italia, as well as a minority shareholder in

Club Premier, a leading coalition program in Mexico, and in

Cardlytics, a private company based in the United States that

runs marketing e-banking operations.

For more information go to www.aimia.com.

a new groupe aeroplan inc. brand, Canada’s aimia is listed on the toronto stock exchange (tsX:aiM) and is an international leader in loyalty programs, with over 3,800 employees in more than 20 countries worldwide.

29

Profile

AnnuAl RepoRt 2011

value generaTion

Multiplus has a flexible business model and a

solid cash flow. The Company integrates various

business partnerships, with which it shares loyalty

marketing expenses. Furthermore, the Company

offers an attractive value proposal to consumers,

who are able to accumulate points quickly and

gain access to a wide-ranging portfolio of awards.

sales of poinTs

Multiplus sells its points to partner programs

at the moment that the customer accumulates

them. In other words, points are sold when

participants convert them into Multiplus points,

which is recorded as cash inflow. Initially, however,

it does not recognize this revenue in its bottom

line, with this amount being computed in deferred

revenue, under liabilities.

When points are redeemed for products or services

offered by redemption or coalition partners,

Multiplus recognizes both the cost of the redemption

as well as revenue from the sale of points.

In 2011, the redemption of points for air travel

accounted for approximately 98.4% of the

BRL842.1 million in costs. During this same period,

the Company earned BRL1.5 billion from the sale

of points, with TAM Linhas Aéreas accounting

for 22.2% of this amount. The rest corresponded

to the sale of points to banks, retailers,

manufacturers and service companies.

from the sale of points, resulting in growth of 36.3% compared to the previous year.

1.5 billion In 2011, the Company earned

30

Profile

business model

Multiplus has a business model that, although

unique, could be considered as simple and, most

of all, attractive. Based on information technology

and brand construction, it is not very dependent

on fixed capital investments. Moreover, its growth

is closely tied to the expansion and consolidation

of its network of partners and to growth in some

sectors of economy, such as the credit card,

consumer and air transport sectors. See below

the Company’s four main sources of income:

1. spread: difference between the sale price and redemption cost of points.

2. Income from float revenue: because of its positive cash flow, Multiplus has financial

investment revenue.

3. Breakage: points issued that are not redeemed and, accordingly, do not generate costs.

4. Loyalty marketing services: Multiplus and Canada’s Aimia companies have been

structuring a company that will soon offer

conceptualization, development, management

and consulting services for analytic services

geared towards third party loyalty programs.

months months

˜10 months float Interest revenue

Per unit revenue less per unit cost spread

expiration of the pointBreakage

˜100

1

2

4

3

cash infloW cash ouTfloW

loyalty marketing services

aiMiasale of points redemption

four sources of income

31

Profile

AnnuAl RepoRt 2011

recogniTion of breakage revenue

The points sold by Multiplus are only recognized

as revenue when redeemed. Nevertheless,

because each point issued is valid for two years,

some expire before they are redeemed. This

situation is known as breakage, and it creates

revenue that is free of cost. At the end of each

month, the network makes a provision for an

amount equal to the forecast breakage revenue

(called breakage liability), promoting a gradual

recognition of this revenue in the results under

breakage revenue.

The breakage rate tends to naturally trend

downward throughout the term until reaching

a sustainable operating level. This is due to a

growing understanding by consumers of the

Multiplus concept and to a higher proportion of

redemptions of less than 10 thousand points in

relation to total points redeemed (promotional air

travel redemptions and new options for redemption

of products and services in the growing partner

network).

sTraTegies and objecTives

visionTogether we can do more.

missionTo connect companies and people through

a relationship network in which everyone wins.

ValuesSimplicity, agility, reliability, fun and innovation.

posiTioning

Multiplus is a loyalty program company that

offers recognition and rewards, through the best

partner network, for the consumer choices

its members make.

sTraTegic objecTives

• Growing diversification of resources to

accumulate points and redeem them for awards;

• Continual expansion of the partner network;

• Constant improvement of the member and

business partner experience;

• Publicity on the new concept of multi-company

loyalty programs;

• Consolidation of the Multiplus brand;

• Greatest market penetration, resulting

in a growing member base.

32

In 2011, there was a 30% increase in the number of members that carried out their first transaction at Multiplus.(growth in relation to 2010)

Multiplus uses a hybrid business model, which is the result of joining two existing ones: individual programs and coalition networks. In this sense, the network does not compete, but rather cooperates with its business partners’ loyalty programs, offering them highly attractive redemption alternatives while encouraging them to continue their relationship with their consumers.

After a redemption at Multiplus, a member accumulates 61% more points, which indicates that receiving the award is a strong motivator for the member to consume even more in the network partners.


“Customer loyalty has always been part ofSKY's strategy. The partnership allowed manypossibilities and o�ers for points redemption.Being a Multiplus partner provides a greatnumber of options and new opportunitiesfor consumers to interact with the companies.”

VITO CHIARELLA NETOVice President of Clients at SKY

SKY IS ALSO A MULTIPLUS

PARTNER.

AF_SKY_240x240.indd 1 2/29/12 8:16 PM

34

differenTiaTed corporaTe

governance pracTices

According to the Brazilian Institute of Corporate

Governance (IBGC), corporate governance

is the system through which companies are

run and monitored, involving relationships

among shareholders, boards of directors, the

executive board, independent auditors and audit

committees. The following are the basic principles

that guide this practice:

• Transparency

• Fairness

• Accountability

• Corporate responsibility

corporaTe governance in 2011, the ir team took part in 9 conferences, roadshows and breakfasts in brazil, versus 6 in 2010, in addition to 13 foreign events, which is 7 more than in 2010. Moreover, 1,312 interactions took place with investors through meetings, visits, phone conferences and e-mails.

e


Among the corporate governance practices

recommended by IBGC in its Code of Best

Corporate Governance Practices, Multiplus has

adopted the following:

• Exclusive issuance of ordinary shares;

• “One share, one vote” policy;

• Contracting of an independent audit company to

analyze financial balance sheets and statements

– with said company not being contracted to

provide other services that may compromise its

independence;

• Clear definition in the Articles of Incorporation

of how to call the shareholders’ meeting and the

procedure for electing and dismissing members

of the Board of Directors and the Executive

Board and the length of their terms;

• Transparency in public disclosure of annual

management reports;

• Provision in the Articles of Incorporation for

formation of an Audit Committee;

• Calling of the shareholders’ meeting, with

pertinent document available as from the date

of the first call, detailing agenda topics, with the

persistent aim of holding shareholder meetings

during times and at locations that allow for

attendance by the most shareholders possible;

• Record, whenever requested, the opposing votes

in the shareholder or regular meeting minutes;

• Have a policy for disclosing material information;

• Provision of the Articles of Incorporation for use

of arbitration to resolve any disputes between

the Company, its shareholders, its administrators

and members of the Audit Committee;

• Board members with experience in operational

and financial issues;

• Provision of the Articles of Incorporation prohibiting

board members with a conflict of interests access

to information and the right to vote;

• Tender offers that result in transfer of control

must be directed at all shareholders, who will

have the option of selling their shares under the

same conditions as the controlling shareholder.

In the case of sale of the entire controlling block,

the acquirer shall direct the public bid at all

shareholders under the same conditions as the

controlling shareholder (tag along);

• Between five and nine board members on the

Board of Directors;

• Maintenance and disclosure of a record

containing the number of shares that each

partner owns, identifying them by name;

• Non-election of alternate board members;

• Free access to Company information and

facilities by numbers of the Board of Directors;

• Disclosure of operations with related parties;

• Provision of non-financial information each

quarter, such as the number of shares held by

Company administrators and the number of

outstanding shares.

36

Corporate GovernanCe

novo mercado

In December 2000, BM&FBOVESPA created

a special stock trading segment called Novo

Mercado, aimed at attracting public traded

companies who are willing to provide market and

their shareholders information related to their

businesses beyond that is required by law. They

also commit to adopt corporate governance

practices, such as differentiated initiatives for

administration, transparency and protection of

minority shareholders.

Companies that join Novo Mercado voluntarily

submit to more rules that are more rigid than

those set forth in Brazilian law. For example, they

are required to:

• Issue only ordinary shares;

• Maintain a minimum free float of 25% of the

Company’s stock;

• Detail and include additional information in

quarterly reports;

• Provide annual financial statements in English

based on internationally accepted accounting

principles or Brazilian corporate law. In this

case, accompanied by an explanatory note

showing reconciliation of the result for the

fiscal year, of the independent audit report and

of shareholder equity – calculated based on

Brazilian accounting criteria and internationally

accepted accounting standards, indicating the

main differences between each.

Multiplus shareholders enjoy all of the rights

and guarantees established by Novo Mercado

regulations, as included in the Company’s

Articles of Incorporation, maintaining high

standards of corporate governance by basing

its operations on principles that emphasize

transparency and respect for shareholders. On

January 15, 2010, Multiplus signed an agreement

with BM&FBOVESPA to take part in the Novo

Mercado, which became valid as of February 4,

2010, the publication date of the Announcement

of Commencement. The Articles of Incorporation

contain all minimum clauses required by

BM&FBOVESPA Novo Mercado regulations.

In January 2011, the Company was added to

the Brazil Index (IBrX-100), a price indicator

measuring return on a theoretical portfolio

comprised of one hundred stocks selected

from BOVESPA’s most traded stocks in terms

of business and financial volume. These stocks

traded on the market and included in the index

portfolio according to how many shares they have.

37


AnnuAl RepoRt 2011

invesTor relaTions

During the two years that Multiplus has operated,

its administrators have striven to build and maintain

transparent dialogue that is consistent with the

capital market, increasing understanding of the

Company’s business model and liquidity of its

shares through various initiatives. Among them are:

• Accessibility of the Investor Relations

Department;

• Publication of quarterly reports;

• Phone conferences1 and public meetings

held with analysts;

• Information (reports, notices, relevant facts,

meeting minutes) made available on the IR

website in two languages;

• Participation in roadshows and conferences

in Brazil and abroad;

• Adoption of a blackout period and a

disclosure policy2;

• Publication of Annual Reports.

1Phone conferences on results are conducted on

the day following disclosure of the accounting

statements, with their content being made

available later on the IR website in transcription

and audio file formats.

2The Company adopts procedures to safeguard

the confidentiality of privileged information,

such as use of a blackout period before public

disclosure of financial results and a material

information disclosure and confidentiality policy.

interactions took place with investors through meetings, visits, phone conferences and e-mails.

More than

1,300

In 2011, the IR team took part in 9 conferences,

roadshows and breakfasts in Brazil, versus 6 in

2010, in addition to 13 foreign events, which is 7

more than in 2010. Moreover, 1,312 interactions

took place with investors through meetings,

visits, phone conferences and e-mails, compared

to 832 the year before.

38


on december 31, 2011, MPlu3 shares were priced at brl32.25 (worth 135% than their iPo price), representing a market value of brl5.2 billion.

corporaTe sTrucTure

Tam s.a.

73.14% 26.86%

39AnnuAl RepoRt 2011

share performance

On December 31, 2011, MPLU3 shares were priced

at BRL32.25 (worth 135% than their IPO price),

representing a market value of BRL5.2 billion.

The average daily share volume at BM&FBOVESPA

in 2011 was approximately BRL9.5 million,

compared to BRL7.3 million in 2010.

This larger volume had a positive impact on

Multiplus share liquidity indicators, which have

been part of the BM&FBOVESPA Brazil Index

(IBrX-100) since December 2011.

Average daily share volume (BRL million)

Average monthly price (BRL)

6.4

27.76

24.16 23.7024.95

26.86 26.52 25.98

24.4626.11 25.86

28.7630.69

jan 11

9.5

feb 11

8.8

mar 11

19.4

apr 11

7.6

may 11

8.2

jun 11

5.6

jul 11

12.3

aug 11

11.4

sep 11

8.2

oct 11

7.8 9.0

nov 11 dec 11

40


processes, QualiTy

and inTernal conTrols

Throughout 2011, Multiplus sought to conduct

improved and more efficient business, striving

to structure and document its processes and

formalize standards and procedures, in addition to

hold internal workshops on process management.

That is because Multiplus considers alignment

and integration between people, processes and

technologies to be extremely important. It therefore

prioritizes adoption of simple and agile processes,

led by trained people with team spirit, in addition to

the best technology available on the market.

It is not by chance that the Company has a

Processes Bureau, which acts as a service provider

for internal areas using three cornerstones:

• Alignment of Multiplus processes and strategy;

• Definition of methodologies and standards for

mapping and documenting processes;

• Training and acculturation of employees aiming

excellence in process management.

Throughout 2011, the Company’s key controls were

also permanently monitored. With support from

the Controller’s Internal Auditing department,

points were redeemed on donations to NGOs such as Instituto Ayrton Senna and Make a Wish.

In 2011,

1.6million

41


AnnuAl RepoRt 2011

audits were carried out on systems and processes.

This was aimed at ensuring the business’ reliability

and compliance with the United States’ Sarbanes-

Oxley act, which seeks to make administrative

decisions and corporate processes directly

affecting the results of these decisions more

transparent and reliable.

socio-environmenTal responsibiliTy

environmenT

Multiplus is aware of international standards of

environmental protection and generates neither

direct nor significant environmental impacts.

social responsibiliTy, sponsorship

and culTural incenTive

In 2011, Multiplus included Instituto Ayrton Senna

and Make a Wish Brasil in its network of partners;

since being included, participants are able to

redeem points that are converted into money and

given to NGOs.

board of direcTors, execuTive board, commiTTees and audiT

board of direcTors

Maurício rolim amaro, the Chairman of the Board of Directors, is also the Vice President of the

Board of Directors of the Controlling Shareholder

of Multiplus, the CEO at TAM Empreendimentos

e Participações S.A. (the holding company of

the Controlling Shareholder of Multiplus), and

the Chairman of the Board of Directors at TAM

Aviação Executiva e Táxi Aéreo S.A. (a subsidiary

of the Controlling Shareholder). He holds a

degree in Business Administration and in Aviation

Administration from Broward Community College,

in Florida (USA).

egberto vieira Lima, Vice Chairman of the Board of Directors, served as a Managing Treasurer at Alcoa

Alumínio, as the Chief Financial Officer and Chief

Investor Relations Officer at Santista Têxtil and

Moinho Santista (Bunge group companies), and he

is currently the CEO of TAM S.A. He holds degrees

in Economics and Business Administration from the

School of Economic Sciences at Fundação Escola

de Comércio Álvares Penteado (FECAP).

42


Flávia Turci, a member of the Board of Directors, is an attorney and partner at the law firm of Turci

Advogados Associados, specializing in Corporate

Law Litigation and Advising. She served as the

advising attorney and sub-coordinator of the

Office of the Coordinator on Parliamentary Action

for the Federation of Industries of the State of São

Paulo (FIESP) and as a general consultant to the

Itamarati Group. She holds a degree in Law from

Mackenzie Presbyterian University.

Maria cláudia oliveira amaro is the Chairwoman of the Board of Directors of the Controlling

Shareholder of Multiplus. She holds a degree in

Business Administration and is also the CEO of

TAM Empreedimentos e Participações and the

Vice Chairwoman of the Board of Directors for

TAM Aviação Executiva e Táxi Aéreo S.A. From

April 1992 to January 1997, she was the Chief

Marketing Executive at TAM Linhas Aéreas S.A.

Prior to this, she served as the assistant manager

at Colony Shops of Florida and as a broker at

Banco Itamaraty.

antonio Luiz rios da silva, an independent member of the Board of Directors, served as

Executive Vice President for the Notre Dame

Intermédica Group, as CEO of Companhia

Brasileira de Meios de Pagamento (VisaNet

and Brasilveículos Companhia de Seguros),

and as Vice President of Retail/Distribution and

Control/Investor Relations at Banco do Brasil.

He is currently the CEO of Editora FTD, a leader

in the publishing market. He was a member of

the Boards of Directors of the Banco do Brasil

Employee Retirement Fund (Previ), the La Fonte

Participações group, Brasilveículos Companhia de

Seguros, Aliança do Brasil Companhia de Seguros,

Companhia Brasileira de Meios de Pagamento

(VisaNet), Telemar Ceará, Grupo Paranapanema,

and Companhia Brasileira de Gestão em Serviços

– Orizon. He holds a degree in Economic Sciences

from the Catholic University of Brasília, an MBA

in Finance from Instituto Brasileiro de Mercado

de Capitais (IBMEC) and a specialization in

International Finance from Fundação Getúlio Vargas

(FGV) and the University of Texas (USA). He also

earned an MBA in Controlling from the University

of São Paulo, an MBA in Accounting Sciences from

FGV and a Breakthrough for Senior Executives

from the International Institute for Management

Development, in Lausanne (Switzerland).

sTaTuTory officer

eduardo campozana gouveia, CEO and the chief investor relations executive for Multiplus,

has served as the Chief Commercial and

Marketing Officer at Cielo. He was Vice President

of Marketing and Vice President of the Special

Business units at Walmart (drugstores, gas

stations, photo development and e-commerce).

43


AnnuAl RepoRt 2011

audiT and finance commiTTee

On June 22, 2010, the Multiplus Board of

Directors approved the creation of an Audit and

Finance Committee made up of members of the

Board of Directors in order to comply with the

best practices of corporate governance. Below

are its responsibilities:

• Approve and hire independent auditors,

including services provided and budget to be

used for payment of these fees;

• Monitor any conflict of interest or factors that

could compromise independence in relation to

outside auditors;

• Monitor and ensure the quality of work done by

the Internal Auditing department;

• Guarantee that the Executive Board develops

reliable internal control mechanisms;

• Review financial statements prepared by the

Company and recommend their approval to the

Board of Directors;

• Discuss and recommend approval of the

Executive Board’s proposed annual Company

budget and monitor it.

The board members elected to the Audit and

Finance Committee to serve a one-year term

are Egberto Vieira Lima, Carlos Daniel Rizzo da

Fonseca and Antonio Luiz Rios da Silva; they are

eligible for reelection.

inTernal audiTing

Multiplus monitors the efficacy of its internal

controls in order to continually enhance its

processes. To do this, the Internal Corporate

Audit department carries out review and control

procedures in compliance with the United

States’ Sarbanes-Oxley Act, using testing and

assessments of key company controls.

At the same time, Multiplus has a department

that is responsible for establishing the culture and

internal management of its processes. The goal is to

boost results in a systemic and structured manner,

ensuring the integrity and reliability of the business.

44

Product redemption still is something new in the network. Even so, in 2011, more than 145 million points were redeemed on TVs, mobile phones, videogames and GPS navigators.

In 2011, the number of members that joined Multiplus through coalition partners tripled.(growth in relation to 2010)


“A partner like Multiplus gives much morecredibility to our loyalty program. The networko�ers a wide range of alternatives for youto think about your business and yourclients in a di�erent and strategically way.”

MARCELLO DE ZAGOTTIS

Vice President of Marketingand Sales at Droga Raia

DROGA RAIA IS ALSO MULTIPLUS PARTNER.

AF_ANUNCIO_RAIA_24x24.indd 1 2/29/12 8:15 PM

46

earnings from The sale of poinTs

BRL1,525.3 million in 2011, a variation of 36.6%

• TLA: there was a 6.7% increase compared to 2011, equal to BRL338.5 million. This is the result

of 8.4% growth in the amount of points sold and

to periodical review of pricing between Multiplus

and TLA, which has resulted in an approximate

reduction on the sale price of points to the

airline of 20% since December 2011.

financial resulTs the Company ended last year with earnings of brl1.5 billion and a net profit of brl274.2 million.

47AnnuAl RepoRt 2011

• Banks, retail, manufacturing and services: 47.9% higher in relation to 2011, or BRL1,186.9 million. This result was attributed to growth of 61.7% in the amount of points sold (i), to a 5% reduction in the

average price of the USD versus the fourth quarter of 2010, since bank contracts stipulate pricing in

USD, (ii) and to reduced amounts per unit charged to some banks (iii). The figures show contractual

discounts given to the banks, which increased their volume of points acquired in the period.

(in thousands of brl) 2010 20112011

vs. 2010

Earnings from sale of points 1,119,475 1,525,348 36.3%

TAM Linhas Aéreas (TLA) 317,155 338,467 6.7%

Banks, retail, manufacturing and services 802,320 1,186,881 47.9%

neT revenue

BRL398.3 million in 4Q11, a variation of 165.4%

• Revenue from sale of points: there was a 168.5% increase compared to 2010, equal

to BRL1,026.5 million. This is the result of

growth of 196.5% in the number of points

redeemed (i) and of the variation in the point

mix recognized as revenue, with redemption

of points that had been sold to TLA having a

greater share (ii). The point mix recognized

as revenue tends to converge with the

composition seen in point revenue, following

partner redemption curves.

48

financial Results

• Breakage revenue: up 159.9% compared to 2010, or BRL318.7 million. This result was mostly

attributed to a higher balance of breakage

points between quarters, resulting from the

larger amount of Multiplus points issued

(24 months, compared to 12 months in 2010).

• Hedge revenue: BRL9.7 million, resulting from contracts that matured in 2011.

• Other revenues: there was a 42.8% increase compared to 2010, equal to BRL18.5 million. This

result is the result of revenue from profit sharing

from the co-branded TAM Fidelidade card.

example of hoW breakage revenue and breakage liabiliTy are calculaTed

information unit 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11Gross earnings of points in the last 24 months (A) BRL million 230.3 494.2 794.2 1,119.5 1,459.4 1,813.9 2,211.2 2,644.8

Breakage rate (average of 12 months) (B) % 22.6% 23.0% 22.6% 22.6% 22.9% 22.7% 22.4% 21.5%

Breakage (C) = (A * B) BRL million 52.0 113.6 179.5 253.1 333.6 411.1 494.7 569.3

Recognition rate of the breakage revenue (D) % 16.1% 19.1% 20.9% 21.7% 21.3% 20.3% 18.8% 12.4%

Breakage revenue (c * D) BrL million 8.4 21.7 37.5 55.1 71.2 83.6 93.1 70.9

Breakage revenue in the last 24 months (E) BRL million 8.4 30.1 67.6 122.6 193.8 277.4 370.5 441.4

Breakage liability (c - e) BrL million 43.6 83.5 111.9 130.5 139.8 133.7 124.2 127.9

49

Financial Results

AnnuAl RepoRt 2011

(in thousands of brl) Profit and loss statement 2010 2011

2011 vs. 2010

gross profit 517,875 1,373,446 165.2%Sale points 382,271 1,026,457 168.5%

TAM Linhas Aéreas (TLA) 54,686 203,554 272.2%Banks, retail, manufacturing and services 327,585 822,904 151.2%

Breakage 122,645 318,742 159.9%Hedge 0 9,741 N/AOther revenues 12,960 18,506 42.8%Taxes on sales and services -48,032 -126,634 163.6%Net revenue 469,843 1,246,812 165.4%

Cost of redeeming points -274,258 -842,069 207.0%Air travel -273,370 -828,427 203.0%Other products/services and services -888 -13,642 1,436.1%

Accounting adjustments 0 0 N/ATotal cost of services provided -274,258 -842,069 207.0%gross income 195,585 404,743 106.9%Gross margin 41.6% 32.5% -9.2 p.p.

Shared services -7,871 -7,626 -3.1%Personnel expenditures -17,693 -32,638 84.5%Marketing -11,987 -19,248 60.6%Depreciation -1,091 -5,022 360.3%Others -26,672 -29,960 12.3%Total operating expenses -65,313 -94,495 44.7%

Total costs and operating expenses -339,571 -936,564 175.8% operating income 130,272 310,248 138.2%Operating margin 27.7% 24.9% -2.8 p.p.

Financial revenue/expenses 33,259 101,716 205.8%Hedge – -6,584 N/A

Profit before income Tax (ir) and social contributions (cs) 163,531 405,380 147.9%

Income Tax and Social Contribution -45,145 -131,136 190.5%

Net profit for the period 118,386 274,244 131.7%Net margin 25.2% 22.0% -3.2 p.p.

50

financial Results

poinT redempTion cosT

A total of BRL842.1 million, a variation

of 207% in relation to 2010.

• Airline tickets: 203% higher than in 2010, or BRL828.4 million, based mostly on growth of

191.5% in the volume of points redeemed for air

travel (i) and on the increased per unit cost due

to inventory running out in August 2011, for pre-

payment tickets using IPO funds (ii).

• Other products/services: BRL13.6 million, compared to BRL0.9 million in 2010, as a

consequence of the higher volume of points

redeemed – from 72.4 million to 1.05 billion.

• Shared services: BRL7.6 million, 3.1% lower due to the reduced scope of the services sharing

agreement with TLA, implemented after the

Marketing area was internalized.

• Personnel expenses: BRL32.6 million, a variation of 84.5%, in relation to a 34.6% increase in

staff, since the Company has been adapting its

internal structure since mid-2010. Moreover, this

is based on the collective bargaining agreement

and higher provisions for variable remuneration.

• Marketing expenses: BRL19.2 million, a variation of 60.6% as a result of initiatives geared towards

brand publicity, which includes cooperative

actions with partners, point of sale materials,

and communication campaigns on select

mediums, in addition to publicizing the new

positioning and branding launched during the

third quarter of 2011.

• Depreciation: BRL5 million, resulting from depreciation of IT systems.

• Others: BRL30 million, a variation of 12.3%, mostly occurring because of higher costs with

advising and consulting, in addition to greater

call center expenditures.

FInAnCIAL ExPEnSE/REVEnuE

A total of BRL101.7 million in 2011, compared to

BRL33.3 million the year before. This amount

mostly regards interest on Multiplus cash financial

investments, net of other financial expenses such as

deposit interest and taxes on financial transactions.

51

Financial Results

AnnuAl RepoRt 2011

balance sheeT, cash floW and avs

asset note december 31, 2011 december 31, 2010

current

Cash and cash equivalents 6 9,186 111,235

Financial assets measured by fair value 4.4 880,535 758,787

Accounts receivable 7 147,449 68,699

Taxes recoverable 8 5,219 3,769

Related parties 9 39,425 388,507

Derivative financial instruments 4.2 2,465

Other accounts receivable 8,923 853

1,093,202 1,331,850

hedge

Expenditure of BRL6.6 million in 2011, regarding

mark to market accounting of the non-effective

portion of the cash flow hedge.

income Tax and social conTribuTion

BRL131.1 million in 2011, compared to BRL45.1 million

the previous year. The increase in the effective rate

from 27.6% in 2010 to 32.3% in 2011 is mostly due

to lower interest payments on shareholder capital,

given that the Company implemented a capital

reduction of BRL600 million in June 2011.

52

financial Results

asset note december 31, 2011 december 31, 2010

current

Cash and cash equivalents 6 9,186 111,235

Financial assets measured by fair value 4.4 880,535 758,787

Accounts receivable 7 147,449 68,699

Taxes recoverable 8 5,219 3,769

Related parties 9 39,425 388,507


Other accounts receivable 8,923 853

1,093,202 1,331,850

Non-current

Financial assets – bank deposits 10 138,009 49,274

Deferred Income Tax and Social Contribution 19 18,542 1,217

Derivative financial instruments 4.2 77

Other accounts receivable 16,416

Fixed assets 1,381 935

Intangible 11 40,807 20,273

215,232 71,699

asset total 1,308,434 1,403,549

$

53

Financial Results

AnnuAl RepoRt 2011

december 31, 2011 december 31, 2010Liability note

current

Trade payables 114,884 16,579

Payroll and related charges 7,825 5,961

Taxes, fees, and contributions 12 13,423 2,328

Interest on own capital and dividends payable 14 65,355 1,223


Deferred revenue 13 794,297 614,550

Other accounts payable 4,615 382

1,020,888 641,023

Non-current

Related parties 9 3,923


28,408 3,923

Liability total 1,049,296 644,946

Net worth

Equity capital 14 93,722 692,385

Capital reserve (11,869) (21,784)

Profit reserve 211,496 88,002

Equity valuation adjustment 4.2 (34,211)

Total net worth 259,138 758,603

Total liabilities and net worth 1,308,434 1,403,549

54

financial Results

(in thousands of brl )cash flow 1Q11 2Q11 3Q11 4Q11

Net profit 70,887 81,169 51,317 70,872

Depreciation/amortization 1,032 1,173 1,288 1,529

Accounts receivable -52,622 -10,208 -43,954 28,034

Accounts payable 1,285 -14,712 418 15,653

Taxes 10,621 5,412 -24,715 1,004

Related parties -3,700 45,822 -16,114 82,934

Realization of advances to suppliers 0 0 -400,000 0

Use of advances to suppliers 152,180 179,699 161,480 213,895

Deferred revenue and breakage liability 77,005 46,301 52,758 3,683

Derivative instruments 0 -2,877 56,107 -6,876

Other assets and liabilities 4,169 -2,714 7,599 61,312

operating cash flow 260,856 329,063 -153,815 472,043

Investments -4,071 -3,672 -5,717 -12,541

investment cash flow -4,071 -3,672 -5,717 -12,541

Cost of share issue 0 0 0 0

Equity capital 0 -600,014 0 1,352

Dividends -82,082 0 0 -68,670

Other 2,617 2,300 -24,701 -4,512

Loan cash flow -79,465 -597,714 -24,701 -71,830

increase (decrease) in cash 177,320 -272,323 -184,233 387,671

Initial cash* 919,296 1,096,614 824,292 640,059

End cash* 1,096,614 824,292 640,059 1,027,730

55

Financial Results

AnnuAl RepoRt 2011

december 31, 2011 december 31, 2010note

Revenues

Sales, goods, products, and services 15 1,373,446 517,875

inputs acquired from third parties

Cost of goods, products, and services provided (843,037) (274,424)

Materials, power, third party service and others (54,254) (46,190)

gross value added 476,155 197,261

retentions (5,022) (1,091)

Depreciation and amortization 16

471,133 196,170

Net value added produced

Transferred value added 102,022 35,374

Financial income 18

573,155 231,544

Total value added to pay out

573,155 231,544

Payout of value added

People 27,630 13,832

Direct compensation 1,171 539

Benefits 943 457

FGTS (severance pay)

Taxes, fees, and contributions 260,542 95,521

Federal 387 195

Municipal

compensation of third party capital 6,889 43

Interest 1,347 498

Rentals 2,071

Other

compensation of own capital 46,577 15,094

Dividends 14(d) 22,092 15,162

Interest on own capital 14(d) 205,577 88,132

Retained earnings for the year

56

Every 23 seconds, a person joins Multiplus. In the next minute, for example, three people will join the network.

In 2011, there was an increase of 85% in the number of members that carried out their first transaction in coalition partners.(growth in relation to 2010)


“The partnership allows us to impact,in a very practical way, about 7 millionclients overnight. This is the moste�cient way to strengthen ourrelationship with the clients ando�er better products and services.It is also a way of recognizing the clientand motivating them to buy again.”

VICENTE REZENDE Marketing PontoFrio.com

PONTOFRIO.COMIS ALSO MULTIPLUS PARTNER.

AF_PONTO FRIO_240x240.indd 1 2/29/12 8:17 PM

58

inTangible asseTs to guarantee that the Company’s objectives are aligned with those of its shareholders, Multiplus has a long-term incentive plan designed to retain executives and engage them in generating sustainable value for the Company.

people

managemenT of TalenT

Based on the growth in Multiplus business, 68 new

employees were hired in 2011, which means a 72%

increase in relation to the spin off group member.

The average age of the network’s employees is

30 years old; most of them are women (59%)

and have worked for around three years at TAM

(considering work done at TAM Linhas Aéreas

and at Multiplus itself, pre- and post-spin-off).


For Multiplus, its employees play a leading

role in building a new business, which is why

the Company invests in those who are new to

the labor market and are able to successfully

collaborate with the Company’s success with bold

attitudes and new ideas. In 2011 the 1st Internship

Program was implemented, helping to train

11 interns for various areas.

The Company was chosen as one of the best

companies to intern at by O Estado de São Paulo

newspaper (according to a CIEE/IBOPE survey),

ending 2011 with 80% of interns hired.

Because this is a young group with little

professional experience, the strategy used to

encourage everyone’s professional growth was to

guarantee a close relationship with the business

and guide them in building their careers. To do

this, the Internship Program involves training

courses, strategy alignment breakfasts with

various company departments, and self-awareness

and reflection activities.

The initiative sets forth that each intern is

overseen by a mentor – creating a rich exchange

of knowledge for both – and should be submitted

to quarterly assessments through which the

intern receives guidance on how to develop and

contribute to the success and the future of the

Company. After all, Multiplus understands that the

drive and satisfaction of its workers have a direct

impact on the Company’s competitiveness and on

the creation of value for its partners, members and

shareholders. Therefore, using the results of the

2010 Climate Survey and the impressions gathered

from discussion groups formed in 2011 by all of the

employees, the Personnel Management area has

invested in the development of plans of action to

increase team engagement.

To measure the impact of these investments, a

quick survey, called a “climate thermometer”, was

given in December 2011 to calculate the progress

of initiatives and projects geared towards personal

and professional development. Result: the average

favorability rate rose by 21% in relation to 2010.

60

IntangIble assets

aTTracTion and reTenTion

In striving to attract, retain and recognize its

talent, Multiplus maintains an internal recruitment

incentive which favors company employees for

fulfillment of openings at group companies and

fosters their professional development. In 2011,

28% of the total staff was recognized through

promotion and merit policies, which resulted in a

turnover rate of just 8%.

Multiplus believes and invests in workers who

are willing to grow along with the business,

showing their commitment to creating results,

facing any adversity and taking advantage of

the opportunities that the Company offers for

development. Based on this, in the second half of

2011, mapping was done of competencies aimed at

ensuring alignment of these expectations, leaving

it increasingly clear what behavior is expected of

different hierarchical levels. The purpose of this

information is to orient development, assessment

and talent recognition processes.

In 2010, Multiplus also began the process of forming

its organizational culture and identity in order to

instill pride in working in the Company among the

internal public. To continue this initiative, 2011 was

the year when executives worked to rebuild the

brand, defining the Company’s brand positioning,

vision, mission and values.

In this sense, a major milestone was the launch of

the essence of Multiplus in August. The results of

this work could not have been better. According to

the latest “climate thermometer”:

• 94% of employees know the Company’s mission,

vision and values;

• 97% are willing to go beyond formalities;

• 90% are proud to work at the Company.

Furthermore, employees rely on the 180 degree

evaluation (self-assessment and assessment of

peers and the employee’s immediate supervisor),

interviews with specialized consultants, and

periodical feedback meetings.

61

IntangIble assets

AnnuAl RepoRt 2011

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