RESULTATS-SFAF-29-3-2007

Document Sample
RESULTATS-SFAF-29-3-2007 Powered By Docstoc
					                    SFAF Meeting
                    29 March 2007

Christophe Crémer
    Chairman                    1
                                                                             Overview

   meilleurtaux
    Seven years of robust growth resulting in the leading mortgage broker in France
    A unique, proven multi-channel business model

   2006 business review
    Major strategic investments
    74% surge in revenue

   2006 results
    Profit temporarily impacted by the opening of the Le Havre call centre and
    aggressive branch office expansions

   2007 goals
    Continue gaining market share with a priority on improving margins
                                                                                      2
         meilleurtaux
 Seven years of robust growth
    resulting in the leading
 mortgage broker in France; a
unique, proven business model


                                3
                                                                            Robust revenue growth

                                                   2006 – 45 offices, 35 franchises, 2 call centres (Paris
                                                            and Le Havre)
                                                                                                              €45.5M

                                                    Oct. 2006 – Transferred to Eurolist
                                                                                                        74%
                                         2005 – 32 offices, start of the insurance, savings,
                                                   and franchise businesses                    €26.2M

                                                                                  152%
   Branch office            2004 – 18 offices, 1 call centre in Paris €10.4M
   Franchise

                                                             89%
                      2003 – 5 offices
                                                   €5.5M
          2001 – 1 office                 x 4.4
                                 €0.8M
               1999
   meilleurtaux is launched       2001              2003                 2004                   2005           2006

                                                        Revenue quadrupled in two years
meilleurtaux
                                                                                                                      4
                                                             meilleurtaux in 2006:
                                                       a leading mortgage broker

           Individuals                                                                       Banks

           Over 370,000
                                       11% market share*                               110 banking partners
        applications filed in
                                                                                             in 2006
           2006 (up 22%)
                                      A strong brand with
  Complete information on            growing recognition                           An additional channel for
  mortgage-related issues                                                           generating business
                                     The largest network of
  Qualified advisors to help                                                       Lower customer acquisition
  assemble a loan application
                                     banking partners in the
                                                                                    costs
                                             market
  Lower financing costs for loans                                                  Access to a portfolio of
  and borrower’s insurance                                                          qualified prospects (high-
                                      meilleurtaux: the                             income group)
                                       leading online
     Benefit for individuals         mortgage broker in                                Benefit for banks
                =                                                                              =
     A free service without                France                                  A single commission rate
           obligation

meilleurtaux
                                                                                                                 5
                                                               *Source: meilleurtaux
                          The power of a proven business model


                                 website



         Individuals                                      Banks

                            Generates business for
                               branch offices




               Advisors                        offices

                                             franchises

meilleurtaux
                                                                  6
                                         The benefits of multi-channel distribution

         A retail website to leverage the boom in internet use and e-commerce
               –   4 million unique visitors in 2006, with 370,681 applications filed (up 22%)
         Two call centres to meet customers’ needs
               –   Paris opened in 2004 (48 advisors at end 2006)
               –   Le Havre opened in 2006 (59 advisors at end 2006)
         Branch offices to promote meilleurtaux’s products and new brokerage services through
          a local agent
               –   45 offices at end 2006 (292 advisors) – up by a factor of 10 in four years
         A franchise network for towns with between 50,000 and 100,000 residents
               –   35 franchises at end 2006



                                             All the resources are in place …
                          … to execute an aggressive market share acquisition strategy
meilleurtaux
                                                                                                 7
                                     A business model with profitable growth

    Lower customer acquisition costs
    through:
       increased website use, coupled with                          website
        more call centre business
                                                                 Generates applications



    Higher loan application conversion rates through:
        an expanded chain of branch offices in high-potential
         cities with >100,000 residents; and                         offices
        more franchises in towns with 50,000-100,000
         residents


     Greater branch office profitability relative to their
     age:
        breakeven during the first year
        profit growth from the second year
                                                                   franchises

meilleurtaux
                                                                                          8
         2006 business review
Major strategic investments; a surge in
               revenues



                                          9
                                                                      Market environment:
                                                                  Robust mortgage demand
                               New mortgage originations in France

                                                                   15%   166
           In billion €
                                                      21%   144
                                 23%      118
                          96




                          2003                 2004         2005         2006
                    Source: Banque de France



                           The mortgage market jumped 15% in 2006


Business
                                                                                      10
                                                                            Mortgage brokerage:
                                                                 A high-potential, growing market
   Mortgage broker market share in 2006                                Mortgage broker market share in France
                (estimate)
                                                         68%
                               64%
                                                                                                       19%

                                                                                                18%

                                                                        15%
     19%




    France                      UK                       USA               2004                 2005   2006
Source: meilleurtaux, Wholesale Access, and Mortgage Finance Gazette     Source: meilleurtaux




                   Mortgage brokers had 19% of the French market in 2006


          Business
                                                                                                                11
                                                                      Revenue skyrocketed 74% in 2006

              Number of applications billed*                                         Revenue growth (million €)
                                                                23,715                                                      45.5

                                                   68%                                                                74%

                                            14,088                                                             26.2
                              124%                                                                   152%
              89%         6,298                                                     894%         10.4
      3,333                                                                   5.5


       2003               2004                2005               2006         2003               2004          2005         2006
*Total applications billed to customers less cancelled applications


                        meilleurtaux is gaining market share
  ~2% of the mortgage market in 2006, up from 1.4% in 2005*
  ~11% of the mortgage broker market in 2006, up from 8% in 2005*

              Business
                                                                                                                                   12
                                                                                       *Source: meilleurtaux
                                                                           2006 highlights

   Remarkably successful franchise openings
     –   14 total franchises at end of June; 35 at year-end
   16 new branch offices
     –   4 advisor offices
     –   3 relocations
   Le Havre call centre opened in March
     –   59 financial advisors at year-end
   Launch of the meilleurtaux borrower’s insurance
    Two types:
     –   meilleurtaux Borrower – for branch office and website customers
     –   Premium Borrower – for brokers
   A partnership with FNAIM (French property federation)
     –   Largest professional property association (a network of 11,000 agencies)
   Transferred to Eurolist on 25 October 2006

         Business
                                                                                       13
                                          Higher loan application conversion

                             Loan application conversion rate*

                                                         43%
                                              40%


                   25%                                                                             2005
           18%                                                                                     2006
                                                                                             14%
                                                                                    9%



              Total                              Offices                                 Website

              *Applications billed to customers as a percent of applications submitted


       Branch offices logically have a higher conversion rate because
                       applications are fully prepared

Business
                                                                                                          14
                                          Focus on the Le Havre call centre


   Goals
     –   Create a second website
     –   Allocate additional resources to meet customers’ needs
   What’s already been done
     –   Call centre opened in early March 2006
     –   Ramp-up has been slower than expected
   A clear revenue shortfall in the fourth quarter due to:
     –   organizational difficulties related to insufficiently-qualified new hires; and
     –   poor distribution of online loan applications between the call centres and branch
         offices => too few applications handled by call centres

                      Weaker-than-expected revenue growth in the fourth quarter


         Business
                                                                                             15
                                                               Weaker-than-expected
                                                                revenue growth in Q4

                     Quarterly revenue growth (million €)

                                                        12.3             12.0
                                        11.3                    33%
                                               71%
                         9.3                                      9.0
                               88%
           133%                                  7.2                            2005
                                 6.0                                            2006
              4.0




                    Q1                 Q2              Q3               Q4



95% increase in the first 9 months, but €1.6 million below target in the
                             fourth quarter


Business
                                                                                       16
                                                                                      Revenue boosted by a
                                                                                      pick-up in internet use

                                 2005                                                                 2006
                 Consolidated revenue breakdown                                       Consolidated revenue breakdown

                                          3%                                                                  5%
                     24%                                                                23%


68% generated                                          29%
                                                                     60% generated                                           35%
by the website
                                                                     by the website




                      44%                                                                37%

        Offices (online applications)   Call centres                          Offices (online applications)   Call centres
        Other                           Offices (own applications)            Other                           Offices (own applications)


           Multi-channel distribution in which the website plays a key role (60% of total revenue)

             Business
                                                                                                                                   17
                                          Branch offices starting to benefit
                                                     from advisor referrals
                2005                                               2006
 Branch office revenue breakdown                      Branch office revenue breakdown


 28%                                                  29%




                                                                                        51%
                                    60%
12%
                                                        20%

      Website   Referral   Direct                        Website   Referral   Direct




           Advisor referrals are a new, continuously-expanding growth engine

Business
                                                                                              18
                                                       Premium Borrower:
                                         meilleurtaux borrower’s insurance

   Premium Borrower was introduced in 2006 with great success
     –   Policies are taken out with Direct Assurance (part of the AXA group)
     –   Wide distribution through meilleurtaux offices, insurance brokers, and mortgage brokers
   A product tailored to customers’ needs
     –   Customers can save an average of €10,000
     –   70% of purchasers fit the target customer profile (under 35 years old)
   An innovative product
     –   Includes partial disability and unemployment insurance (optional)
   Attractive to meilleurtaux partners
     –   Some of the lowest rates in the market combined with the best guaranties
   A source of recurring revenue



         Business
                                                                                               19
         2006 results
A surge in revenue with profit
 impacted by new openings



                                 20
                                                                       Solid revenue growth

                                Total revenue                Branch office revenue


                                                                            45.5

                 In million €
                                                                                     32.4
                                                26.2
                                                            19.0

                   10.4
                                6.7


                        2004                        2005                       2006

A surge in revenue fuelled by the website (60% of revenue, quadrupled in two years) and carried
             by the branch offices (70% of revenue, up by a factor of 5 in two years)

                       Results
                                                                                                  21
                                                IFRS data
                                      Profit still has room for improvement

                                  Operating profit              Net profit


                                                                         2.9
         In million €                        2.5


                                                          1.5                         1.4

              0.7
                            0.5



                   2004                            2005                        2006

Major growth spending over the past two years continue to weigh on margins, with Q4
                temporarily hurt by lagging revenue from Le Havre.

                        Results
                                                                                            22
                                              IFRS data
                                                      IFRS income statement

                                                                         Change
                                            As % of            As % of
In million €                        2006               2005              2006 vs.
                                            revenue            revenue
                                                                          2005
Revenue                             45.5       100%    26.2     100%      73.5%
  Other income                      0.4        0.9%     0.2     0.6%     158.7%
  Purchases                         -11.7     25.8%    -5.7    21.6%     107.0%
  Personnel expenses                -26.5     58.4%    -15.2   57.9%      74.9%
  Depreciation, amortisation, and
                                    -1.7       3.8%    -1.3     5.0%      31.5%
  provisions
  Other operating expenses          -3.0       6.6%    -1.7     6.6%      74.6%
Operating profit                    2.9        6.4%     2.5     9.5%      15.8%
Profit from financing activities     --       --        --       --         --
  Other income and expenses         -0.8       1.8%     --       --         --
  Income tax expense                -0.7       1.6%    -1.0     3.8%      -26.1%
Net profit                          1.4        3.1%     1.5     5.9%      -7.0%
                                                                                    23
                                             Operating expense breakdown

             2005                                                      2006
           5%                                                          4%
      7%                                                          7%
                                        Personnel
                                        expenses

                                        Purchases
24%                                                         27%
                                        Other operating
                                        expenses
                                                                                         62%
                               64%
                                        Dep., amort., and
                                        provisions



             Personnel expenses made up 60% of operating expenses in 2006
      7.7% of revenue is spent on fees related to business premises (vs. 7.6% in 2005)
                         and 8.3% on advertising (vs. 4.4% in 2005)


                 Results
                                                                                               24
                                         IFRS data
                                   A short-term dip in operating margin

                                               Operating profit and operating margin
Capital expenditures for                                                                        2.90
business expansion                                                         2.50
   New branch offices
                                                                           9.5%
   Le Havre call centre opening                    7.2%                                        6.4%
   Headquarters move to La
    Défense                                         0.75
Non-recurring expenses
   Transfer to Eurolist
                                                    2004                   2005                 2006

                                            Operating profit (million €)          Operating margin (EBIT/revenue)



                                        CapEx spending and slower revenue growth in Q4

                                    Operating profit €1.4 million below target (in line with 2005)

                  Results
                                                                                                                    25
                                        IFRS data
                                 Operating margin by distribution channel

                                             2006 revenue and operating margin

                                     45.5

                                                         32.4
2006 revenue (million €)                                              18.3%

Operating margin
                                     6.4%
                                                         4.1%          10.6
                                                                                    2.5

                                     Total         Branch offices   Call centres    Other


       Branch offices: operating margin hurt by an aggressive expansion strategy
       Call centres: lower-than-expected operating margin from delays at Le Havre


                       Results
                                                                                            26
                                             IFRS data
                                                  Branch offices: profit pressure
                                                          from expansion costs

   An aggressive expansion strategy was launched in 2004
     –   45 branch offices at year-end 2006, up from18 at year-end 2004
     –   292 financial advisors at year-end 2006, up from 117 at year-end 2004
     –   Revenue up by a factor of 5 in two years
   Profitability is low because most offices are still new
     –   37 offices are less than two years old
   Margins have been squeezed by the rapid expansion
     –   An ambitious recruitment policy has weighed on personnel expenses
     –   New advisors generate no revenue during their first three months


    Branch office profits are under pressure from new openings and the large percentage of
                                     relatively young offices


                      Results
                                                                                             27
                                                             Branch offices: typical
                                                                    maturity cycle

   Model: an office should reach maturity in two years and achieve a 15%
    operating margin going forward

   Typical maturity cycle
     –   Breakeven on direct costs after 8 months
     –   Breakeven on all operating expenses after 16 to 18 months
     –   After two years, the gross operating margin (after direct costs) should be 30%, with a
         total operating margin of 15%
     –   In 2006, 8 offices were over 2 years old, 15 over 1 year old, and 22 less than 1 year
         old
     –   In 2006, 5 offices had >15% operating margin, 16 between 0% and 15%, and 24 were
         negative

              The large percentage of young offices has logically weighed on margins

                      Results
                                                                                                  28
                                                     New Le Havre call centre:
                                                  lower-than-expected revenue

   Operating challenges related to starting-up a new centre
     –   Hiring is taking longer than planned (building a team from scratch)
     –   Additional resources have been allocated to train employees
   Business volume at the call centre remains sluggish despite a climbing
    conversion rate
     –   7% increase in loan applications sent to banks from call centres vs. a 57% increase from
         branch offices
     –   Poor distribution of online loan applications between call centres and branch offices due
         to the ~100 newly-hired financial advisors in the offices



              The timing delay at Le Havre does not diminish the call centre’s potential
                                       over the medium-term


                      Results
                                                                                                29
                                                                 Growth in free cash flow


In million €                              2006            2005      2004    2003      2003-2006
Cash flow from operating activities        5.9            3.2       1.0      0.9          11.0

Cash flow from investing activities        -5.9           -3.0      -1.8    -0.1          -10.8

Cash flow from financing activities        2.2            5.2       0.8      0             8.2

Change in cash and cash
                                           2.2            5.4       0.0      0.8           8.4
equivalents
Cash and cash equivalents at the
                                           9.0            6.8       1.4      1.4
end of the year


               All capital expenditures between 2003 and 2006 (IT systems, new offices,
                     and the new call centre) were paid for by operating cash flow


                       Results
                                                                                                  30
                                              IFRS data
                                                                                   A healthy balance sheet

                      2006 (million € )                                                              2005 (million €)

Non-current assets   8.7      Equity                   10.8               Non-current assets   4.3        Equity                   9.1
Receivables          8.7      Liabilities              15.6               Receivables          5.8        Liabilities              7.7
Cash                 9.0       Financial liabilities   4.2                Cash                 6.8         Financial liabilities   2.3


Total assets         26.4      Total equity and        26.4               Total assets         16.8        Total equity and        16.8
                               liabilities                                                                 liabilities
Net cash position    4.7
                                                                          Net cash position    4.5



          2006 summary balance sheet                                              2005 summary balance sheet



               A healthy balance sheet with 41% equity and a positive cash position


                            Results
                                                                                                                                          31
                                                              IFRS data
                          meilleurtaux shareholders



                  4% 1%
      16%
                                   Float

                                   C. Crémer

                             47%
                                   Galiléo

10%                                Ventech

                                   Rothschild

                                   Employee
                                   savings plan
            22%



      Results
                                                  32
             2007 goals
Continue gaining market share with
 a priority on improving margins




                                     33
                                Goals



           
20% revenue growth (at least)

           
   10% operating margin




       Goals
                                   34
                                                       Action plan



1.   Restructure the Le Havre call centre
2.   Boost business at both call centres
3.   Enhance branch office performance
4.   Develop products and services complementary to the
     meilleurtaux core business – combine credit and insurance




                        Goals
                                                                 35
                                                     1. Restructure the Le Havre
                                                                      call centre


   Develop specialised advisors
    –   25 front-office financial advisors responsible for assembling loan applications with
        banks
    –   35 back-office telephone advisors responsible for finishing incomplete loan
        applications
         • missing signatures
         • additional credit checks


                  Loan application target: 5 applications/day per advisor
                        Revenue target: €15,000/month per advisor




                                      Goals
                                                                                               36
                                                        2. Boost business at both
                                                                      call centres


   Couple higher volumes with better call-centre organisation:
     –   Allocate qualified loan applications
     –   “Nurse” loan applications
     –   Re-qualify loan applications
     –   Strengthen synergies with branch offices (loan applications not sent to banks)




                  Call centre target: 15% loan application conversion rate
                               Target reached in January 2007



                                   Goals
                                                                                          37
                                                          3. Enhance branch office
                                                                     performance

   Support profitability
     –   Underscore performance tracking
     –   Improve management and training applications

   Slow the pace of new openings
     –   7 new branch offices in 2007 (vs. 16 in 2006)
          • Marseille Canebière, St Germain en Laye, Perpignan, Valence, Auteuil, Angers, and Le Havre
     –   25 new franchises (vs. 35 in 2006, out of 150 requests)
          • Select franchise applicants
     –   Build an advisor referral network


                            Continue with a selective expansion plan


                                    Goals
                                                                                                    38
                                                    4. Develop complementary
                                                        products and services

Two priority growth drivers related to meilleurtaux’s core business

   Borrower’s insurance
    –   A huge market (insurance is mandatory)
    –   90,000 branch office appointments; privileged customer relationships

   Loan refinancing
    –   A growing market
    –   A value-added service => substantial margins


          Goal: Set up a loan refinancing department and create a meilleurtaux
                                   refinancing service


                                 Goals
                                                                                 39
                                                             2007 year-to-date:
                                                       in line with projections


Q1 was on track with full-year forecasts
 Loan applications put together during the previous quarter were finalised
  => Revenue from applications started at the end of 2006

Q1 broke all loan-application processing records
 Average of 1,500 applications/calendar day in March, with a high of 1,900
  (2006 average was 1,000)

         meilleurtaux is in an excellent position to benefit from the swelling
                                  brokerage market


                              Goals
                                                                                 40
                                         A long-term growth strategy


The power of multi-channel distribution
 Online: quick responses, large volumes, in tune with customer needs
 Branch offices: advice, personal service, partnerships with real estate
  professionals (55% of the market), meets banks’ stringent demands, broad
  range of services

meilleurtaux’s strong reputation enables it to leverage both channels, to:
 Become a major player in mortgage distribution; and
 Enlarge its range of services, so as to better meet retail customer needs and
  generate additional revenue.

                                      Solid, profitable, and long-term growth

                            Goals
                                                                                41
SFAF Meeting
29 March 2007


            42

				
DOCUMENT INFO