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Points International Reports Fourth Quarter and 2009 Financial Results
Mar 10, 2010 (03:03 PM EST)


    -  Record Full Year Revenue of $79.8 Million

    -  2009 EBITDA(1) of $607,000; Third Consecutive Year of Positive EBITDA
       While Aggressively Investing to Drive Growth

    -  Announces Upcoming New Service Rollouts for Partners Globally

    -  Reiterates 2010 Guidance for Revenue of $75 Million to $85 Million,
       Net Income Profitability and 3% to 5% EBITDA Margins

TORONTO, March 10 /PRNewswire-FirstCall/ - Points International Ltd. (TSX: PTS; OTCBB: PTSEF), the owner and operator of Points.com, the world's leading reward program management Web site, where users can manage their reward point programs - today announced results for the fourth quarter and full year ended December 31, 2009. All financial results are in US Dollars.

"2009 was a pivotal year for Points as we added important new loyalty partners to our industry leading platform including AirFrance-KLM, Mexicana Airlines and Chase while renewing or expanding our relationships with a number of major partners including American Airlines, BMI, Hawaiian Airlines, JetBlue, Lufthansa Airlines, Virgin Atlantic, Intercontinental Hotels Group and Starwood Hotels. We delivered record revenue despite undergoing a significant recasting of our business with Delta, and began to execute across the core elements of our strategic growth plan, underpinned by the design and development of our project ePoch technology platform," said CEO Rob MacLean. "Looking ahead, we see tremendous opportunity for Points as we will expand our current partnerships with new product implementations and increase usage penetration among their membership bases, while aggressively closing and implementing new partnerships worldwide. Business metrics for the first two months of 2010 are up sharply, and we expect to announce a number of new partners, programs and implementations, along with the launch of our new consumer destination at www.points.com in the coming months. All of our efforts will be focused on driving increased leverage through an improving gross margin(2) profile, which combined with continued expense control should result in increased profitability over time."

Fourth Quarter 2009 Financial Results

The following results reflect the Company's restructured relationship with Delta Air Lines, which was effective October 1, 2009, and which for the fourth quarter of 2009 resulted in a decrease in principal revenue and receipt of a series of one-time payments with no associated direct costs recorded within other partner revenue.

Total revenue was $16.6 million for the fourth quarter of 2009. Revenue was down 24% over the $21.7 million reported in the fourth quarter of 2008, and down 20% over the $20.7 million reported in the third quarter of 2009. Principal revenue totaled $12.9 million, a decrease of 35% over $19.7 million in the same period last year, and down from $18.9 million in the third quarter of 2009. Other partner revenue was $3.7 million, up from $1.8 million reported in the same period of last year and $1.8 million in the third quarter of 2009.

Points reported net income for the fourth quarter of 2009 of $1.9 million, or $0.01 per share. This compares to a net loss in the fourth quarter of 2008 of $3.0 million, or ($0.02) per share, which included non-cash, non-recurring charges of $1.3 million related to the impairment of long-lived assets, and to a net loss in the third quarter of 2009 of $265,000, or $(0.00) per share, which included restructuring charges of $332,000.

During the fourth quarter of 2009, Points reported positive EBITDA of $1.7 million compared to positive EBITDA of $41,000 in the same period of 2008 and $72,000 in the third quarter of 2009.

    Fourth Quarter 2009 Business Metrics
                                                    Q4/09              Q4/09
                                                     vs.                vs.
                               Q4/09        Q3/09   Q3/09       Q4/08  Q4/08
    TOTAL ALL CHANNELS(1)

      Points/Miles
       Transacted
       (in 000s)           3,146,513    2,395,492    31%    2,268,481    39%
      # of Points/Miles
       Transactions          277,261      255,233     9%      234,965    18%

    PRIVATE BRANDED
     CHANNELS(1)

      Points/Miles
       Transacted
       (in 000s)           2,733,109    2,113,388    29%    1,855,080    47%
      #of Points/Miles
       Transactions          252,418      231,221     9%      206,791    22%

    POINTS.COM CHANNELS

      Points/Miles
       Transacted
       (in 000s)             413,405      282,104    47%      413,401     0%
      # of Points/Miles
       Transactions           24,843       24,012     3%       28,174   -12%
      Cumulative
       Registered
       Users               2,404,108    2,324,611     3%    2,131,878    13%

    Notes:
    (1) For comparative purposes, Buy, Gift and Transfer activity for Delta
        have been excluded from the metrics presented

Full Year 2009 Results

For the twelve months ended December 31, 2009, Points generated total revenue of $79.8 million, up 6% versus the twelve months ended December 31, 2008. Principal revenue totaled $70.8 million, an increase of 8% compared to the twelve months ended December 31, 2008. Other partner revenue totaled $8.9 million, down 3% compared to the twelve months ended December 31, 2008.

Net income for the twelve months ended December 31, 2009 was $64,000, or $0.00 per share, which included a third quarter $332,000 restructuring charge, compared to a net loss of $3.6 million, or ($0.03) per share in 2008, which included a fourth quarter $1.3 million impairment charge of long-lived assets.

Points reported positive EBITDA of $607,000 for the twelve months ended December 31, 2009 compared to positive EBITDA of $556,000 for fiscal 2008.

As of December 31, 2009, Points' total cash, comprised of cash and cash equivalents together with security deposits, short-term investments and amounts with payment processors, totaled $35.5 million, up from $33.5 million at the end of the third quarter of 2009. The Company remains debt-free, and Points believes that its strong balance sheet and proven ability to generate positive free cash flow on an ongoing basis establishes a very strong operating position going forward.

Business Outlook

"We look forward to solid growth and full-year gross margin improvements as we continue to grow our business. In March and April, we expect to launch a number of new programs including the rollout of Transfer functionality for British Airways representing our first Transfer product with a major carrier in Europe, multi-language support for Mexicana Airlines, and third-party mileage programs for Delta Air Lines on points.com. Additionally, we expect to launch multiple new partners and products in the second quarter which are currently in development. Momentum across our business, including positive trends in our metrics and the recent expansion of our partnership with US Airways, provides further comfort in the upwardly revised guidance issued on January 28, 2010. By the end of 2010 we expect to have completely replaced the former revenue from Delta, with EBITDA margins at levels accretive to our historical trends. In short, by driving new revenue growth and continuing to aggressively manage costs, we can deliver and maintain annual gross margins in the 20 to 30 percent range moving forward, resulting in EBITDA expansion well beyond the three to five percent levels expected in 2010," concluded MacLean.

Investor Conference Call

Points' quarterly conference call with Rob MacLean, CEO, Christopher Barnard, President and Anthony Lam, CFO, will be held today at 5:00 pm. Eastern Time. To participate in the conference call, investors from the US and Canada should dial 877-941-1427 ten minutes prior to the scheduled start time. International callers should dial 480-629-9664. Points International will also offer a live and archived webcast, accessible from the "Investor Relations" section of the company's Web site at www.pointsinternational.com.

About Points International Ltd

Points International Ltd. is the owner and operator of Points.com, the world's leading reward program management Web site which was recently named one of the 28 Best Travel Sites by Kiplinger's. 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, Aeroplan(R), AsiaMiles(TM), British Airways Executive Club, Wyndham Rewards(R), Delta SkyMiles(R) and InterContinental Hotels Group's Priority Club(R) Rewards. Redemption partners include Amazon.com(R) and Starbucks. For more information, visit http://www.points.com

Caution Regarding Forward-Looking Statements

This press release contains or incorporates forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, as amended, and forward-looking information within the meaning of Canadian securities legislation (collectively "forward-looking statements"). These forward-looking statements include our guidance for 2010 with respect to revenue, net income and EBITDA, our gross margin outlook and statements regarding the launch schedule for the redesigned consumer portal at www.points.com. These statements are not historical facts but instead represent only Points' expectations, estimates and projections regarding future events.

Although Points believes the expectations reflected in such forward-looking statements are reasonable, such statements are not guarantees of future performance and are subject to important risks and uncertainties that are difficult to predict. Certain material assumptions or estimates are applied in making forward-looking statements, and may not prove to be correct. In particular, the financial outlooks herein assume we will be able to generate new business from our pipeline at expected margins, our in-market and newly launched products and services will perform in a manner consistent with the Company's past experience, and we will be able to contain costs and realize operational efficiencies from our upgraded technology platform. The launch schedule for the redesigned consumer portal is subject to project implementation risks and delays inherent to technology projects. Other important risk factors that could cause actual results to differ materially include the risk factors discussed in Points' annual information form, Form-20-F, annual and interim management's discussion and analysis, and annual and interim financial statements and the notes thereto. These documents are available at www.sedar.com and www.sec.gov.

The forward-looking statements contained in this press release are made as at the date of this release and, accordingly, are subject to change after such date. Except as required by law, Points does not undertake any obligation to update or revise any forward-looking statements made or incorporated in this press release, whether as a result of new information, future events or otherwise.

    ---------------------------
    (1) EBITDA (Earnings (loss) before interest, taxes, amortization, foreign
        exchange, impairment and restructuring charges) is considered by
        management to be a useful measure of performance. EBITDA is not a
        recognized measure under generally accepted accounting principles.
    (2) Gross margin is comprised of total revenue less direct cost of
        principal revenue and processing fees and related charges and is
        considered an integral measure of performance. Gross margin is not a
        recognized measure under generally accepted accounting standards.



    POINTS INTERNATIONAL LTD.
    CONSOLIDATED BALANCE SHEETS
    Unaudited
    (Expressed in thousands of United States dollars)

    AS AT DECEMBER 31,                                      2009        2008
    -------------------------------------------------------------------------
    ASSETS

      Current Assets
      Cash and cash equivalents                         $ 23,914    $ 22,854
      Funds receivable from payment processors             5,855       5,066
      Short-term investments                               3,302         792
      Security deposits                                    2,463       2,250
      Accounts receivable                                  1,907       2,448
      Future income tax asset                                945         601
      Current portion of deferred costs                      139         247
      Prepaid and sundry assets                              759       1,548
    -------------------------------------------------------------------------
                                                          39,284      35,806
    -------------------------------------------------------------------------

    Property and Equipment                                   607         809
    Intangible Assets                                      2,014         998
    Goodwill                                               4,205       4,205
    Deferred Costs                                            82         144
    Other Assets                                             951         752
    -------------------------------------------------------------------------
                                                           7,859       6,908
    -------------------------------------------------------------------------
                                                        $ 47,143    $ 42,714
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES
    Current Liabilities
      Accounts payable and accrued liabilities          $  3,087    $  3,217
      Current portion of deferred revenue                    609       1,087
      Payable to loyalty program partners                 30,215      25,967
    -------------------------------------------------------------------------
                                                          33,911      30,271
    Deferred Revenue                                         301         259
    -------------------------------------------------------------------------
                                                          34,212      30,530
    -------------------------------------------------------------------------
    SHAREHOLDERS' EQUITY

    Accumulated Other Comprehensive Loss                  (2,566)     (2,566)
    Accumulated Deficit                                  (49,463)    (49,527)
    -------------------------------------------------------------------------
                                                         (52,029)    (52,093)

    Capital Stock                                         56,662      56,662
    Contributed Surplus                                    8,298       7,615
    -------------------------------------------------------------------------
                                                          12,931      12,184
    -------------------------------------------------------------------------
                                                        $ 47,143    $ 42,714
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    POINTS INTERNATIONAL LTD.
    CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
    Unaudited
    (Expressed in thousands of United States dollars,
     except per share amounts)

                                For the three months   For the twelve months
                                       ended                   ended
                              -----------------------------------------------
                                December    December    December    December
                                31, 2009    31, 2008    31, 2009    31, 2008
    -------------------------------------------------------------------------
    REVENUE
      Principal                 $ 12,896    $ 19,712    $ 70,781    $ 65,483
      Other partner revenue        3,679       1,774       8,946       9,194
      Interest                         2         216          52         920
    -------------------------------------------------------------------------
                                  16,577      21,702      79,779      75,597
    -------------------------------------------------------------------------
    GENERAL AND ADMINISTRATION
     EXPENSES
      Direct cost of principal
       revenue                    10,153      16,928      60,902      55,786
      Processing fees and
       related charges               379         617       2,155       2,931
      Employment costs             2,641       2,895      10,637      11,175
      Marketing and
       communications                691         298       1,749       1,259
      Technology services            240         198         935         882
      Amortization                   233         363         783       1,533
      Foreign exchange (gain)
       loss                           (3)      1,441        (242)        756
      Operating expenses             792         725       2,794       3,008
      Restructuring charges            -           -         332           -
    -------------------------------------------------------------------------
                                  15,126      23,465      80,045      77,330
    -------------------------------------------------------------------------
    OPERATING LOSS - before
     undernoted                    1,451      (1,763)       (266)     (1,733)
    -------------------------------------------------------------------------
    OTHER EXPENSES
      Interest on preferred
       shares                          -           -           -         517
      Interest and other charges      19           8          14          49
      Impairment of long-lived
       assets                          -       1,256           -       1,256
    -------------------------------------------------------------------------
                                      19       1,264          14       1,822
    -------------------------------------------------------------------------
    LOSS BEFORE INCOME TAXES       1,432      (3,027)       (280)     (3,555)
    -------------------------------------------------------------------------
      Recovery of future income
       taxes                        (466)          -        (344)          -
    -------------------------------------------------------------------------
    NET INCOME (LOSS)           $  1,898    $ (3,027)   $     64    $ (3,555)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    EARNINGS (LOSS) PER SHARE
      Basic                     $   0.01    $  (0.02)   $   0.00    $  (0.03)
      Diluted                   $   0.01    $  (0.02)   $   0.00    $  (0.03)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
    AND ACCUMULATED OTHER COMPREHENSIVE LOSS
    (Expressed in thousands of United States dollars)

                                For the three months   For the twelve months
                                       ended                   ended
                              -----------------------------------------------
                                December    December    December    December
                                31, 2009    31, 2008    31, 2009    31, 2008
    -------------------------------------------------------------------------
    COMPREHENSIVE INCOME (LOSS)
      NET INCOME (LOSS)         $  1,898    $ (3,027)   $     64    $ (3,555)
    -------------------------------------------------------------------------
    Comprehensive income (loss) $  1,898    $ (3,027)   $     64    $ (3,555)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    ACCUMULATED OTHER
     COMPREHENSIVE LOSS

      Balance - Beginning of
       period                   $ (2,566)   $ (2,566)   $ (2,566)   $ (2,566)
    -------------------------------------------------------------------------
      Balance - End of period   $ (2,566)   $ (2,566)   $ (2,566)   $ (2,566)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    POINTS INTERNATIONAL LTD.
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    Unaudited
    (Expressed in thousands of United States dollars)


                                For the three months   For the twelve months
                                       ended                   ended
                              -----------------------------------------------
                                December    December    December    December
                                31, 2009    31, 2008    31, 2009    31, 2008
    -------------------------------------------------------------------------
    CASH FLOWS FROM OPERATING
     ACTIVITIES
    Net income (loss)           $  1,898    $ (3,027)   $     64    $ (3,555)
    Items not affecting cash
      Amortization of property
       and equipment                 179         177         446         582
      Amortization of deferred
       costs                           -           8           2         331
      Amortization of intangible
       assets                         54         178         335         620
      Future income tax recovery    (466)          -        (344)          -
      Unrealized foreign exchange
       (gain) loss                   125       1,795        (368)        987
      Employee stock option
       expense                       183         154         683         648
      Interest on Series Two and
       Four preferred Shares           -           -           -         517
      Impairment of long-lived
       assets                          -       1,256           -       1,256
    Changes in non-cash balances
     related to operations        (1,901)     (7,647)      3,981      (5,939)
    -------------------------------------------------------------------------
    CASH FLOWS PROVIDED BY
     (USED IN) OPERATING
     ACTIVITIES                       72      (7,106)      4,799      (4,553)
    -------------------------------------------------------------------------
    CASH FLOWS FROM INVESTING
     ACTIVITIES
      Additions to property and
       equipment                     (21)        (48)       (244)       (487)
      Additions to intangible
       assets                       (731)        (71)     (1,351)       (350)
      Sale of short-term
       investments                     -         119           -      11,589
      Purchase of short-term
       investments                (2,510)          -      (2,510)     (4,975)
    -------------------------------------------------------------------------
    CASH FLOWS (USED IN)
     PROVIDED BY INVESTING
     ACTIVITIES                   (3,262)          -      (4,105)      5,777
    -------------------------------------------------------------------------
    CASH FLOWS FROM FINANCING
     ACTIVITIES
      Loan repayments                  -           -           -          (6)
      Share issuance on capital
       transaction                     -          (4)          -       1,688
      Issuance of capital stock
       on exercise of stock options
       and warrants                    -           -           -         270
    -------------------------------------------------------------------------
    CASH FLOWS PROVIDED BY
     FINANCING ACTIVITIES              -          (4)          -       1,952
    EFFECT OF EXCHANGE RATE
     CHANGES ON CASH HELD IN
     FOREIGN CURRENCY                (40)     (1,829)        366      (1,858)
    -------------------------------------------------------------------------
    INCREASE IN CASH AND CASH
     EQUIVALENTS                  (3,230)     (8,939)      1,060       1,318

    CASH AND CASH EQUIVALENTS -
     Beginning of period          27,144      31,793      22,854      21,536
    -------------------------------------------------------------------------
    CASH AND CASH EQUIVALENTS -
     End of period              $ 23,914    $ 22,854    $ 23,914    $ 22,854
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental Information
    ------------------------
      Interest Received         $      3    $    245    $     68    $    947
      Interest Paid             $      7    $      -    $     15    $      2



    POINTS INTERNATIONAL LTD.
    RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA
    Unaudited
    (Expressed in thousands of United States dollars)


                                For the three months   For the twelve months
                                       ended                   ended
                              -----------------------------------------------
                                December    December    December    December
                                31, 2009    31, 2008    31, 2009    31, 2008
    -------------------------------------------------------------------------
    Operating income (loss)     $  1,451    $ (1,763)   $   (266)   $ (1,733)
    Amortization                     233         363         783       1,533
    Foreign exchange (gain)/loss      (3)      1,441        (242)        756
    Restructuring charges              -           -         332           -
    -------------------------------------------------------------------------
    EBITDA                      $  1,681    $     41    $    607    $    556
    -------------------------------------------------------------------------

SOURCE Points International Ltd.