D. Developing a Public Social Programs offer
This priority concerns countries in which Edenred already operates and where the Group can leverage existing solutions, platforms and networks. These programs are designed to meet the needs of public institutions looking to improve the control and traceability of allocated funds.
The faster development and deployment of new solutions in 2011 and 2012 is intended to
drive issue volume growth of 2% to 4% a year after 2012
. Little additional expenditure will be needed to create the solutions, which will be deployed via existing in-house platforms. Their gradual ramp-up will involve
extra development and launch costs estimated at approximately €3 million in 2011 and €4 million in 2012
This capacity for innovation will enable Edenred to maintain a pattern of sustained, long-term growth, in line with its
target of annual organic issue volume growth of 6% to 14%
THE DIGITAL TRANSITION STRATEGY
The second priority of the "Conquer 2012" strategy is the transition to digital solutions. This represents an important technological turning point for
all stakeholders in the Edenred business model
clients, affiliates, beneficiaries and public authorities
- that want to cut costs, optimize processes, get convenient and simple solutions, and ensure the control and traceability of dedicated funds.
As a growth step up, the digital transition plays a
key role in increasing issue volume
, both by making deployment more efficient and by creating new capacity for innovation.
Over the long term, the digital transition will strengthen Edenred's
by improving its ability to:
Once the transition is complete, Edenred is aiming for an operating flow-through ratio
of more than 50%.
- Generate additional revenue from affiliates, clients and beneficiaries, to offset the post-transition reduction in revenue from lost and expired products, thereby ensuring the stability of the take-up-rate .
- Reduce the cost structure by around 5% to 10%, mainly by lowering production and logistics expenses .
Moreover, the increase in issue volume will offset the impact of 10% to 15% shorter float
holding periods (based on estimates for a 100% shift from paper to digital programs), thereby
increasing the float value
Deployment is now moving forward at a
, leading to
extra operating costs of approximately €10
million to €15
million a year in 2011 and 2012
no additional investment
is planned beyond the recurring envelop set by the Group of €30 million to €40 million a year.
Based on this faster deployment, Edenred
is confirming its goal of generating 50% of issue volume via paperless solutions by year-end 2012 and more than 70% by 2016.
By the end of the year
the Group expects paperless issue volume to account for 41% of the total
(versus 34% at year-end 2010), thanks in particular to
, the most advanced region in this segment, where digital solutions are expected to represent
of the total by the end of the year.
The transition is underway in
, where paperless solutions should account for around
of issue volume by the end of the year. In this regard, the in-house authorization and redemption platform operated by
, which partners with MasterCard in
, represents a considerable competitive advantage for the Group. Capable of connecting to the payment terminals installed at affiliated merchants by local and international acquirers or payment networks
, PrePay Solutions will in time process all digital transactions in
while also contributing to Edenred's innovation drive. With ten years' experience in the business and with partners such as PayPal and Orange, PrePay Solutions has earned recognition as a
vanguard innovator in prepaid technologies,
in particular through its contactless mobile solutions and e-wallet offers.
OUTLOOK: "Invent 2016"