Points International Ltd. Reports Record Fourth Quarter and 2006 Financial Results



    
    -   4Q06 core revenue (which excludes interest income) increased 62%
        year-over-year
    -   Cumulative points/miles transacted increased 50% year-over-year to
        23.2 billion at year end
    -   2.1 billion points/miles transacted in the fourth quarter
    -   Added over 450,000 new registered users on Points.com in 2006
    -   Reported positive EBITDA in fourth quarter
    

    TORONTO, March 7 /CNW/ - Points International Ltd. (TSX: PTS; OTCBB:
PTSEF; "Points" or the "Company"), the owner and operator of Points.com, the
world's leading reward program management portal, announced today results for
the fourth quarter and full year ended December 31, 2006.
    "2006 was a milestone year for Points International as we achieved record
top-line performance, forged several premier partnerships and successfully
expanded our product offering. On a financial basis, we are very pleased to
have met our previously given revenue guidance, and to have achieved an
operating profit (i.e., earnings before interest, amortization and other
items) in the fourth quarter," said Rob MacLean, Chief Executive Officer of
Points. "At the end of 2006, the number of Points' total partners reached 51
which include many of the leading loyalty programs worldwide, and we added
approximately 454,000 registered users to Points.com during the year,
achievements of which we are particularly proud."

    Recent Business Highlights
    
    -   Signed long term contract extension with American Express broadening
        the redemption options that are currently available to American
        Express(R) Membership Rewards(R) members
    -   Established a new partnership with Marriott International, Inc. such
        that members of Marriott Rewards(R) award-winning loyalty program can
        purchase Marriott Rewards points online
    -   Partnered with Bally Technologies(R) to introduce the Points.com
        portal and Points.com Business Solutions products to the evolving
        reward programs available throughout the gaming industry.
    -   Launched the Hudson's Bay Company ("Hbc") Rewards "Top Up" Program
        which allows Hbc Rewards members to conveniently buy additional
        points online
    -   Announced agreement with Jumeirah Group, owner of some of the most
        luxurious and innovative properties in the world, to add Jumeirah's
        Sirius Recognition and Rewards Programme to Points.com
    -   Named Stephen K. Bannon as Chairman of the Board
    

    Mr. MacLean continued, "As our products and services continued to gain a
wider acceptance among our partners, we were able to expand our offerings to
American Airlines, Continental Airlines, Alaska Airlines, and most recently to
Marriott International. We are confident that our focus on innovation and
customer satisfaction will enable us to continue to expand within our existing
partner base as well as help us to grow. Our recently established
relationships with American Express and Bally Technologies continue to
solidify Points' leadership role in the marketplace, and provide us with
exciting opportunities in the growing financial services and gaming
verticals."
    Mr. MacLean concluded, "We have been executing on our strategy which was
evident in the record results we reported for 2006, particularly our achieving
positive EBITDA in the fourth quarter, which provides us increased financial
flexibility for continued growth. As we enter 2007, we remain excited about
the opportunities ahead, and are confident that we have the right initiatives
in place to continue the current momentum in 2007 and beyond."

    Fourth Quarter 2006 Results
    ---------------------------
    Total revenues in the fourth quarter of 2006 were $3.8 million, an
increase of 52.3% versus the $2.5 million reported in the fourth quarter of
2005, and a 35.4% sequential increase from the third quarter of 2006. The
Company continues to have a strong recurring revenue base, with 87% of its
revenues in the quarter being recurring in nature, compared to 97% in the
fourth quarter of 2005.
    Fourth quarter core revenues from Points Solutions (defined as revenues
excluding interest income), which represented 99% of the total, increased
62.2% year-over-year, and 36.1% versus the third quarter of 2006. During the
fourth quarter of 2006, the Company achieved an operating profit (i.e. income
before interest, amortization, and other items) of $0.2 million compared to a
loss of $1.3 million in the same period in 2005, and versus a loss of
$0.7 million in the third quarter of 2006.
    The Company reported a net loss for the fourth quarter of 2006 of
$0.6 million, or $0.01 per share, based on 108.3 million weighted-average
shares outstanding, versus a net loss of $2.9 million, or $0.03 per share, on
88.1 million weighted average shares, in the fourth quarter of 2005, and
versus a net loss of $1.9 million, or $0.02 per share, on 103.1 million
weighted-average shares outstanding in the third quarter of 2006.
    Total operating expenses for the fourth quarter of 2006 were
$3.7 million, a 3.0% decrease versus $3.8 million in the fourth quarter of
2005, and a 3.1% increase versus the third quarter of 2006. The increase in
operating expenses versus the third quarter was primarily attributable to
higher marketing and sales commissions.
    Non-cash charges, including foreign exchange loss, accrued interest, the
amortization of property, plant and equipment, intangible assets, stock option
expense and deferred costs, accounted for $0.8 million of the net loss in the
fourth quarter of 2006, compared to $1.6 million in the previous year.

    Full Year 2006 Results
    ----------------------
    For the twelve months ended December 31, 2006, Points generated total
revenue of $12.2 million, a 22.1% increase versus the twelve months ended
December 31, 2005 and a 29.3% increase excluding the foreign exchange impact.
The Points Solutions products generated revenues of $12.0 million, a 27.5%
increase compared to the twelve months ended December 31, 2005 and a 34.7%
increase excluding the foreign exchange impact.
    The Company reported an operating loss (i.e. loss before interest,
amortization, and other items) of $3.4 million for the twelve months ended
December 31, 2006, versus $4.3 million for the twelve months ended December
31, 2005. Total operating expenses increased 9.5% in 2006 to $15.7 million.
The increase was primarily the result of higher sales and marketing costs.
    Net loss for the twelve months ended December 31, 2006 totaled
$7.9 million, or $0.07 per share on 108.3 million weighted average shares
outstanding, versus a net loss of $9.9 million, or $0.11 per share based on
88.1 million weighted average shares outstanding, a year ago.
    As of December 31, 2006, Points' balance sheet remained strong with cash
and cash equivalents of $24.7 million.

    Business Metrics in the Fourth Quarter

    

    Total
    -----
    -   Total points/miles transacted during the fourth quarter increased 32%
        versus last year to 2.1 billion, bringing total cumulative
        points/miles transacted to 23.2 billion.
    -   The total number of transactions increased 35% versus last year to
        approximately 252,000

    Private Branded Channels
    ------------------------
    -   Total points/miles transacted on products distributed through Points'
        partner channels rose 29% to 1.7 billion bringing the cumulative
        total to 20.6 billion.
    -   Approximately 223,000 transactions took place, a 34% increase
        compared to a year ago.

    Points.com Channel
    ------------------
    -   Nearly 404 million points were transacted on Points.com, a 47%
        increase versus 2005.
    -   The number of points/miles transactions grew 38% to approximately
        29,000.
    -   Cumulative registered users on Points.com increased 41%
        year-over-year to 1.5 million.
    

    Business Outlook
    For the year 2007, the Company expects revenue to be in the range of
$17 million and $20 million and anticipates positive operating income (i.e.,
earnings before interest, amortization and other items) for the year. The
revenue outlook assumes that the existing products and services will continue
to perform along historical growth curves and that the transaction rates of
new contracted products and services will grow in a manner consistent with the
Company's experience with existing partners. In addition to the revenue
assumptions above, the expense outlook incorporates modest expense growth
versus the prior year. This outlook is based on the Company's current views.
For more information see the safe harbor statement below.

    Conference Call
    The Company's executives will hold a conference call today at 4:30 p.m.
Eastern Time to discuss the results and business outlook. To participate in
the conference call, investors from the US and Canada should dial (800) 231-
9012 ten minutes prior to the scheduled start time. International callers
should dial (719) 457-2617. If you are unable to participate in the live call,
a replay will be available through March 22, 2007. To access the replay, dial
(888) 203-1112 (passcode: 3842462). International callers should dial (719)
457-0820 and use the same passcode.

    About Points International Ltd.
    Points International Ltd. is owner and operator of Points.com, the
world's leading reward-program management portal. At Points.com consumers can
Swap, Earn, Buy, Gift, Share and Redeem miles and points from more than 25 of
the world's leading reward programs. Participating programs include American
Airlines AAdvantage(R) program, American Express(R) Membership Rewards(R),
Aeroplan(R), AsiaMiles(TM), Cendant TripRewards(R), Delta SkyMiles(R), Gold
Points Reward Network, InterContinental Hotels Group's Priority Club(R)
Rewards, and S&H greenpoints. Redemption partners include Amazon.com(R) and
Starbucks.

    Website: http://www.points.com

    Safe Harbor Statement

    This press release may contain or incorporate forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995,
including those statements relating to Points' strategies and other statements
that are predictive in nature, that depend upon or refer to future events or
conditions, or that include words such as "expects," "anticipates," "intends,"
"plans," "believes," "estimates" or similar expressions, are forward-looking
statements within the meaning of applicable securities laws. Forward-looking
statements include, without limitation, the information concerning possible or
assumed future results of operations of Points as set forth herein. These
statements are not historical facts but instead represent only Points'
expectations, estimates and projections regarding future events.
    The forward-looking statements contained or incorporated by reference in
this press release are not guarantees of future performance and involve
certain risks and uncertainties that are difficult to predict. The future
results and shareholder value of Points may differ materially from those
expressed in the forward-looking statements contained or incorporated by
reference in this press release due to, among other factors, the risks and
uncertainties discussed herein, the matters set forth under "Risks and
Uncertainties" contained in Points' Annual Information Form filed with
applicable securities regulators and the factors detailed in Points' other
filings with applicable securities regulators, including the factors detailed
in Points' annual and interim financial statements and the notes thereto.
Points does not undertake any obligation to update or release any revisions to
these forward-looking statements to reflect events or circumstances after the
date of this press release or to reflect the occurrence of unanticipated
events, except as required by law. All dollar amounts herein are in Canadian
dollars unless otherwise specified.

    

                          POINTS INTERNATIONAL LTD.
                    UNAUDITED CONSOLIDATED BALANCE SHEETS

                                                 December 31,    December 31,
    AS AT                                               2006            2005
    -------------------------------------------------------------------------
                                   ASSETS
                                   ------
    CURRENT
      Cash and cash equivalents                 $ 24,689,040    $ 19,983,607
      Short-term investments                                       2,348,418
      Accounts receivable                          2,310,252       2,739,224
      Prepaids and sundry assets                   2,124,925       1,893,605
                                                -------------   -------------
                                                  29,124,218      26,964,854

      PROPERTY, PLANT AND EQUIPMENT                2,934,239       3,606,840
      GOODWILL AND INTANGIBLE ASSETS               6,837,155       7,602,503
      DEFERRED COSTS                               1,167,331       1,699,030
      FUTURE INCOME TAXES RECOVERABLE                590,000         590,000
                                                -------------   -------------
                                                  11,528,724      13,498,372
                                                -------------   -------------
                                                $ 40,652,942    $ 40,463,226
                                                -------------   -------------
                                                -------------   -------------

                                 LIABILITIES
                                 -----------
    CURRENT
      Accounts payable and accrued liabilities     3,342,869       2,284,257
      Deposits                                    21,159,193      15,810,853
      Current portion of loan payable                 33,515          33,515
      Current portion of acquisition
       loan payable                                        -         390,166
                                                -------------   -------------
                                                  24,535,576      18,518,791
      LOAN PAYABLE                                     5,289          35,107
      CONVERTIBLE DEBENTURE                                -       9,699,180
      CONVERTIBLE PREFERRED SHARES                19,506,279      18,396,456
                                                -------------   -------------
                                                  44,047,144      46,649,533
                                                -------------   -------------


                          SHAREHOLDERS' DEFICIENCY
                          ------------------------

      CAPITAL STOCK                               43,051,048      36,404,342
      WARRANTS                                       186,688       2,758,688
      CONTRIBUTED SURPLUS                          8,703,518       2,079,423
      DEFICIT                                    (55,335,455)    (47,428,760)
                                                -------------   -------------
                                                  (3,394,202)     (6,186,307)
                                                -------------   -------------
                                                $ 40,652,942    $ 40,463,226
                                                -------------   -------------
                                                -------------   -------------



     UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

     FOR THE THREE MONTHS ENDED DECEMBER 31          2006            2005
                                               Oct-Dec 31/06   Oct-Dec 31/05
    -------------------------------------------------------------------------
     REVENUES
      Points operations                         $  3,794,781    $  2,339,022
      Interest income                                 48,274         183,682
                                                -------------   -------------
                                                   3,843,054       2,522,704

     GENERAL AND ADMINISTRATION EXPENSES           3,678,097       3,792,543
                                                -------------   -------------

     INCOME/(LOSS)- Before interest,
      amortization and other items                   164,957      (1,269,839)
                                                -------------   -------------

      Foreign Exchange Loss (Gain)                  (259,979)         70,220
      Interest on convertible debenture                    -         183,003
      Interest on Preferred Shares                   277,456         277,456
      Interest, loss on short-term
       investment and capital tax                     (6,742)        168,583
      Amortization of property, plant and
       equipment, intangible assets
       and deferred costs                            771,405         882,920
                                                -------------   -------------
                                                     782,140       1,582,183
                                                -------------   -------------
     LOSS                                       $   (617,183)    $(2,852,022)
                                                -------------   -------------

     LOSS PER SHARE                                   ($0.01)         ($0.03)
                                                -------------   -------------
                                                -------------   -------------

     FOR THE THREE MONTHS ENDED DECEMBER 31          2006            2005
                                               Oct-Dec 31/06   Oct-Dec 31/05
                                                -------------   -------------
    -------------------------------------------------------------------------
     DEFICIT - Beginning of period              $(54,718,273)   $(44,576,738)
     NET LOSS - For the period                      (617,183)     (2,852,022)
                                                -------------   -------------
     DEFICIT - End of period                    $(55,335,455)   $(47,428,760)
                                                -------------   -------------
                                                -------------   -------------



                            POINTS INTERNATIONAL LTD.
     UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

    FOR THE YEARS ENDED DECEMBER 31                  2006            2005
    -------------------------------------------------------------------------
    REVENUES
      Points operations                         $ 12,024,134    $  9,429,253
      Interest income                                222,555         598,556
                                                -------------   -------------
                                                  12,246,689      10,027,809

    GENERAL AND ADMINISTRATION EXPENSES           15,678,821      14,321,370
                                                -------------   -------------

    LOSS- Before interest, amortization
     and other items                              (3,432,132)     (4,293,561)
                                                -------------   -------------

      Foreign Exchange Loss (Gain)                   (19,329)        514,625
      Interest on convertible debenture              194,753         778,806
      Interest on Preferred Shares                 1,109,823       1,049,367
      Interest, loss on short-term
       investment and capital tax                     64,736         265,974
      Amortization of property, plant
       and equipment, intangible assets
       and deferred costs                          3,124,581       3,021,902
                                                -------------   -------------
                                                   4,474,563       5,630,674
                                                -------------   -------------
    LOSS                                        $ (7,906,695)   $ (9,924,235)
                                                -------------   -------------

    LOSS PER SHARE                              $      (0.07)   $      (0.11)
                                                -------------   -------------


    FOR THE YEARS ENDED DECEMBER 31                  2006            2005
    -------------------------------------------------------------------------
    DEFICIT - Beginning of year                 $(47,428,760)   $(37,504,525)
    NET LOSS - For the year                       (7,906,695)     (9,924,235)
                                                -------------   -------------
    DEFICIT - End of year                       $(55,335,455)   $(47,428,760)
                                                -------------   -------------
    




For further information:

For further information: Christopher Barnard, Points International Ltd.,
(416) 596-6381, christopher.barnard@points.com; Allyson Pooley, Integrated
Corporate Relations, (310) 954-1100, allyson.pooley@icrinc.com

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POINTS INTERNATIONAL LTD.

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