Aimia Reports Fourth Quarter & Year End Results

Strong Underlying Operating Performance as Aeroplan and Nectar Programs Post Record Results; Key Long-Term Contract Renewal Signed with Sainsbury's

Marketwired

MONTREAL, QUEBEC--(Marketwire -02/22/12)- (TSX: AIM.TO - News)

 

--  Record Gross Billings and Adjusted EBITDA driven by solid performance in
    Canada and EMEA
--  Seven year contract renewal signed with anchor coalition partner
    Sainsbury's in the UK
--  Contract extension signed with HSBC, anchor partner in the Middle East
    Region
--  2012 outlook calls for growth in both top line and Adjusted EBITDA along
    with further investment in global footprint
--  Results impacted by $54 million non-cash goodwill impairment charge
    taken against US operations and $136 million non-cash Breakage
    adjustment in the EMEA region

                                         Quarter Ended           Year Ended
HIGHLIGHTS                                 December 31,         December 31,
(in millions, except per share
 amounts)                                2011      2010      2011       2010
                                    ----------------------------------------
                                            $         $         $          $
Gross Billings(1)                         621       594     2,233      2,188

  Gross Billings Growth Rate in
   Constant Currency(2)                   4.2%                3.1%

Total Revenue(3)                          561       619     2,116      2,056

Total Revenue excluding Breakage
 Adjustments(3,5)                         697       619     2,252      2,056

Net Earnings (Loss)(4)                   (143)       (3)      (77)         8

Net Earnings (Loss) per Common
 Share(3, 4)                            (0.74)    (0.03)    (0.40)      0.02

Net Earnings (Loss) excluding
 Breakage Adjustment and Impairment
 of Goodwill(3,4,5)                        43        (3)      108          8

Net Earnings (Loss) per Common Share
 excluding Breakage Adjustment and
 Impairment of Goodwill(3,4,5)           0.18     (0.03)     0.55       0.02

Adjusted EBITDA(1,3,5)                     90        85       342        286

Adjusted EBITDA excluding Breakage
 Adjustment(1,3,5)                        100        85       353        286

Free Cash Flow before Dividends Paid
 per Common Share(5)                     0.06      0.42      1.04       1.08
----------------------------------------------------------------------------

1    The year ended December 31, 2010 includes the positive effect of a
     $17.4 million adjustment as a result of a reclassification of deferred
     revenue amounts previously included in customer deposits.
2    Gross Billings growth calculated excluding the $17.4 million adjustment
     recorded in the second quarter in 2010 and in constant currency.
     Constant currency excludes the translation effect of foreign operations
     on consolidated results. For more information on constant currency
     please refer to the Use of Non-GAAP Financial Information section of
     this news release.
3    Adjustments to the Breakage estimates related to the Nectar and Air
     Miles Middle East programs as a result of the contract renewal and
     extension resulted in a reduction of $136.0 million to revenue from
     Loyalty Units, with $113.3 million being attributable to prior years
     and $22.7 million to the 2011 year (including $8.9 million attributable
     to the fourth quarter of 2011). The net full year impact to Adjusted
     EBITDA was $10.4 million recorded in the fourth quarter of 2011.
4    A goodwill impairment charge of $49.4 million ($53.9 million charge,
     net of a tax recovery of $4.5 million) related to the US proprietary
     loyalty cash generating unit was recorded in the fourth quarter of
     2011.
5    A non-GAAP measurement, please refer to the Use of Non-GAAP Financial
     Information section of this news release.

Aimia (TSX: AIM.TO - News) today reported its financial results for the fourth quarter and year ended December 31, 2011. All financial information is in Canadian dollars unless otherwise noted.

"2011 was a record year on several fronts" said Rupert Duchesne, President and Chief Executive Officer. "Our Canadian and EMEA regions, fueled by the performance of our cornerstone coalition programs of Aeroplan and Nectar, posted record results and further advanced their leading positions in their respective markets. There were, of course, challenges given the weakness in many economies around the globe and we have taken aggressive action, particularly in the US, to ensure our long-term success. Most importantly, our company is well positioned to achieve our long-term growth objectives."

Added Duchesne, "In 2011, we launched our new brand and global identity, signaling to the market that we are fully aligned and mobilized to deliver increased value as well as fuel our growth as the recognized global leader in loyalty. The key contract renewals announced today with Sainsbury's and HSBC, as well as the strategic initiatives undertaken throughout the year, including our global partnership with Cardlytics and joint ventures with The TATA Group in India and Multiplus in Brazil, position us for significant growth in the coming years."

Fourth Quarter and Year End Financial Highlights

Consolidated - Strong Underlying Operating Performance

 

--  Fourth quarter Gross Billings of $621.1 million, an increase of 4.6 per
    cent or 4.2 per cent on a constant currency basis compared with the same
    period in 2010; Full year 2011 Gross Billings of $2.233 billion, an
    increase of 2.1 per cent or 2.3 per cent on a constant currency basis
    over 2010. Excluding the $17.4 million reclassification adjustment
    recorded in the second quarter of 2010, full year Gross Billings
    increased 2.9 per cent or 3.1 per cent on a constant currency basis
--  Record year despite challenging global economic environment with Gross
    Billings growth driven by strong performance in Aeroplan and Nectar
    coalition programs
--  Adjusted EBITDA of $90 million ($100.4 million excluding Breakage
    adjustment) in the fourth quarter, an increase of 5.3 per cent (17.4 per
    cent excluding Breakage adjustment) compared to the same period in 2010;
    Full year Adjusted EBITDA of $342.2 million ($352.6 million excluding
    Breakage adjustment), an increase of 19.9 per cent (23.5 per cent
    excluding Breakage adjustment) over 2010
--  In the fourth quarter of 2011, the Adjusted EBITDA margin (excluding the
    Breakage adjustment) improved to 16.2 per cent from 14.4 per cent in the
    same period in 2010. For the year, the Adjusted EBITDA margin (excluding
    the Breakage adjustment) rose by 274 basis points reflecting synergies
    realized from the acquisition of Carlson Marketing and prudent cost
    management

Canada - Record Performance for the Year

 

--  Fourth quarter Gross Billings of $335.0 million compared with $336.3
    million in the same period in 2010; Gross Billings of $1,299.5 million
    for the full year 2011, an increase of 4.1 per cent over 2010
--  Adjusted EBITDA of $98.7 million in the fourth quarter, an increase of
    3.3 per cent compared to the same period in 2010; Full year Adjusted
    EBITDA of $372.6 million, an increase of 10.2 per cent over 2010
--  Record Gross Billings for the year at Aeroplan with an increase of $45.7
    million resulting from increased financial partner activity due to an
    increase in the number of active credit cards, an increase in average
    consumer spend per active credit card, an increase in airline partner
    activity, the positive contribution from an Aeroplan Miles conversion
    promotion campaign, continued growth in the retail sector and a recovery
    in the travel segment. Fourth quarter Gross Billings growth of $3.1
    million resulted from increased financial partner activity due to an
    increase in number of active credit cards and a positive contribution
    from an Aeroplan Miles conversion program offset by a decrease in
    activity in the airline sector
--  For both the year and fourth quarter, Aeroplan posted improved margins
    due to reward mix, cost containment and the benefit of synergies
--  Aeroplan Miles issued increased by 1.5 per cent in the quarter and 4.0
    per cent for the year
--  Total Aeroplan Miles redeemed increased by 18.3 per cent in the quarter
    and 13.7 per cent for the year driven primarily by the introduction of a
    new air redemption product and an increase in non-air redemptions
--  Gross Billings for the year within the Proprietary Loyalty Services
    operations (formerly Carlson Marketing Canada) increased 3.1 per cent
    driven by growth in the financial vertical while margins improved due to
    mix and the benefit of synergies. There were $83.5 million of
    intercompany billings to Aeroplan in 2011

Europe, Middle East & Africa (EMEA) - Solid Progress

 

--  Fourth quarter Gross Billings of $172.8 million, an increase of 23.1 per
    cent or 22.2 per cent on a constant currency basis compared with the
    same period in 2010; Full year 2011 Gross Billings of $571.0 million, an
    increase of 13.6 per cent or 14.2 per cent on a constant currency basis
    over 2010
--  Adjusted EBITDA of $6.2 million in the fourth quarter, an increase of
    $3.5 million compared to fourth quarter 2010; Full year Adjusted EBITDA
    of $28.2 million, versus a loss of $18.3 million in 2010
--  Nectar Points issued in the fourth quarter increased by 20.1 per cent
    compared to the same period in 2010, driven by strong underlying growth
    and greater bonusing activity in the grocery sector, and higher issuance
    in the energy sector as a result of new program partner, British Gas;
    For the year, Nectar Points issued increased by 9.1 per cent compared to
    the same period in 2010, driven by strong underlying growth and the 11
    month inclusion of new program partner, British Gas
--  Redemption activity for the Nectar Program increased by 11.0 per cent in
    the quarter and by 8.4 per cent for the year, mainly driven by an
    increase in the number of Nectar Points in circulation and the continued
    popularity of online rewards
--  In the fourth quarter, Nectar Italia Gross Billings increased by $3.2
    million or 17.1 per cent, while Nectar Italia Points issued increased by
    10.9 per cent in comparison to the prior period as the program continued
    to grow in its second year of operations
--  For the year, Nectar Italia Gross Billings increased by $11.4 million or
    18.5 per cent, while Nectar Italia Points issued increased by 8.3 per
    cent in comparison to the prior period
--  Within the Loyalty Analytics services, Intelligent Shopper Solutions
    (ISS) posted a revenue increase of 82.8 per cent in the fourth quarter
    and 59.8 per cent for the year driven by increased activity in the UK
    and international expansion of ISS services
--  Sainsbury's Contract Renewal & HSBC Contract Extension: As announced
    earlier today (see February 22, 2012 press release titled "Aimia
    announces renewal of contract with anchor coalition partner Sainsbury's
    in the UK and the extension of its contract with HSBC in the Middle East
    region"), Aimia has signed a long-term contract renewing its agreement
    with founding coalition partner Sainsbury's for its participation in
    Nectar, the UK's largest loyalty coalition program. As part of the
    renewal, Sainsbury's is extending its commitment to the program to
    secure an even higher level of engagement and value for Nectar members.
    At the same time, the Corporation announced that it has extended its
    agreement with anchor partner HSBC for its participation in the Air
    Miles Middle East program. Similarly, HSBC will also be increasing its
    investment in the Air Miles Middle East program to provide its customers
    with an improved value proposition. Aimia is reducing its estimates of
    the long term Breakage rates for the Nectar and Air Miles Middle East
    programs to reflect these higher levels of engagement. On a go forward
    annual basis, the net impact of the renewed commercial terms and the
    reduction in the Breakage rates will be accretive to Adjusted EBITDA and
    Free Cash Flow. Sainsbury's will repay the GBP 40 million promissory
    note due to Nectar on July 1, 2012. The GBP 40 million will form part of
    Nectar's redemption reserve, replacing the loan note.
--  Breakage Adjustments: The impact of the adjustments resulting from the
    changes to the Breakage rate estimates for each of the programs is a
    reduction of $136.0 million to revenue from Loyalty Units, with $113.3
    million being attributable to prior years and $22.7 million to the
    current year (including $8.9 million attributable to the fourth quarter
    of 2011). Of the total adjustment, $95.2 million is attributable to the
    Nectar Program and $40.8 million to the Air Miles Middle East program.
    The net full year impact to Adjusted EBITDA was $10.4 million recorded
    in the fourth quarter 2011.

US & Asia Pacific - Right-sizing, Restructuring and Positioned for Market Recovery

 

--  Fourth quarter Gross Billings of $113.3 million, a decrease of 3.1 per
    cent or 4.3 per cent on a constant currency basis compared to the same
    period in 2010; Gross Billings of $362.7 million for the full year 2011,
    a decrease of 16.9 per cent or 16.5 per cent on a constant currency
    basis compared with 2010
--  Fourth quarter Adjusted EBITDA loss of $2.5 million, compared to
    Adjusted EBITDA of $0.2 million in 2010. Full year 2011 Adjusted EBITDA
    loss of $11.6 million, compared to Adjusted EBITDA of $15.8 million in
    2010.
--  Results continued to be negatively impacted by the phasing out of a
    portion of the Visa business in the US ($55.9 million in Gross Billings
    for the year) as well as weakness in the US economy. In 2011, $11.8
    million in restructuring and reorganization charges were incurred
    related to the right-sizing of the US operation.
--  Goodwill Impairment Charge: The Corporation recorded a goodwill
    impairment charge of $53.9 million for the year ending December 31, 2011
    related to its US proprietary loyalty cash generating unit (CGU). The
    impairment charge in the US CGU relates to the prevailing weakness in
    the US economy which impacts consumer and marketing spending in the key
    business verticals where the Corporation operates. After consideration
    of these factors, projected Gross Billings and Adjusted EBITDA have been
    reduced, resulting in lower projected cash flows.

Cash Flow and Financial Position

At December 31, 2011, Aimia had $202.1 million of cash and cash equivalents, $15.1 million of restricted cash, $58.4 million of short-term investments and $279.7 million of long-term investments in bonds, for a total of $555.3 million.

Aimia's Free Cash Flow (before dividends paid) was $197.6 million at year end 2011 compared to $221.2 million in 2010. As anticipated, Free Cash Flow was lower in the year due to higher redemptions in all loyalty programs, funding of prepaid cards, and higher inventory related to in-sourcing of non-air rewards.

Normal Course Issuer Bid

On May 12, 2011, Aimia received approval from the Toronto Stock Exchange and announced the renewal of its Normal Course Issuer Bid (NCIB) to repurchase up to 18,001,792 of its issued and outstanding common shares during the period from May 16, 2011 to May 13, 2012. Total common shares repurchased and cancelled during the period from May 16, 2011 to December 31, 2011, pursuant to the NCIB, amounted to 6,262,800 for a total cash consideration of $75.8 million.

Dividends Declared

Common Shares

The Board of Directors declared a quarterly dividend of $0.15 per common share, payable on March 30, 2012 to shareholders of record at the close of business on March 16, 2012.

Preferred Shares

The Board also declared a quarterly dividend in the amount of $0.40625 per Cumulative Rate Reset Preferred Share, Series 1, payable on March 30, 2012 to the holders of record at the close of business on March 16, 2012.

Dividends paid by Aimia to Canadian residents on both its common and preferred shares are "eligible dividends" for Canadian income tax purposes.

2012 Outlook

For the year ending December 31, 2012, Aimia expects to report the following:

 

----------------------------------------------------------------------------
Key Financial Metric                  Target Range
----------------------------------------------------------------------------
Consolidated Outlook
----------------------------------------------------------------------------
Gross Billings Growth (1)             Between 3% and 5%
----------------------------------------------------------------------------
Adjusted EBITDA(2)                    Between $370 and $380 million
----------------------------------------------------------------------------
Free Cash Flow (2,3)                  Between $220 million and $240 million
----------------------------------------------------------------------------
Capital Expenditures                  To approximate $55 million
----------------------------------------------------------------------------
Income Taxes                          Current income tax rate is anticipated
                                      to approximate 27% in Canada and 17%
                                      in Italy. The Corporation expects no
                                      significant cash income taxes will be
                                      incurred in the rest of its foreign
                                      operations.
----------------------------------------------------------------------------
Business Segment Gross Billings Growth Outlook
----------------------------------------------------------------------------
Canada                                Between 2% and 4%
----------------------------------------------------------------------------
EMEA                                  Between 8% and 11%
----------------------------------------------------------------------------
US & APAC(1)                          Between -2% and 2%
----------------------------------------------------------------------------
Other
----------------------------------------------------------------------------
Nectar Italia                         Greater than EUR60 million in Gross
                                      Billings
----------------------------------------------------------------------------

1    The Gross Billings growth guidance excludes the effect of a client loss
     (Qantas) in APAC at the end of the first quarter of 2012. The target
     growth ranges are based on 2011 reported Gross Billings, excluding $40
     million related to Qantas. The client loss will have a negligible
     impact on Adjusted EBITDA.
2    The Adjusted EBITDA and Free Cash Flow outlook range includes an
     assumption of planned incremental operating expenses in business
     development activities, principally in the U.S., India and Brazil,
     technology platform related expenditures that are operating in nature
     and additional brand related expenses associated with our new branding,
     which in total will approximate $20 million in 2012.
3    Free Cash Flow before dividends.

The above guidance excludes the effects of fluctuations in currency exchange rates. In addition, Aimia made a number of economic and market assumptions in preparing its 2012 forecasts, including assumptions regarding the performance of the economies in which the Corporation operates and market competition and tax laws applicable to the Corporation's operations. The Corporation cautions that the assumptions used to prepare the above forecasts for 2012, although reasonable at the time they were made, may prove to be incorrect or inaccurate. Accordingly, our actual results could differ materially from our expectations as set forth in this news release. The outlook provided constitutes forward-looking statements within the meaning of applicable securities laws and should be read in conjunction with the "Caution Concerning Forward-Looking Statements" section.

Use of Non-GAAP Financial Information

In order to provide a better understanding of the results, the following indicators are used:

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization

EBITDA adjusted for certain factors particular to the business, such as changes in deferred revenue and Future Redemption Costs ("Adjusted EBITDA"), is used by management to evaluate performance, and to measure compliance with debt covenants. Management believes Adjusted EBITDA assists investors in comparing the Corporation's performance on a consistent basis without regard to depreciation and amortization, which are non-cash in nature and can vary significantly depending on accounting methods and non-operating factors such as historical cost.

Adjusted EBITDA is not a measurement based on GAAP, is not considered an alternative to operating income or net income in measuring performance, and is not comparable to similar measures used by other issuers. For a reconciliation to GAAP, please refer to the Summary of Consolidated Operating Results and Reconciliation of EBITDA, Adjusted EBITDA, Adjusted Net Earnings and Free Cash Flow included in the attached schedule. Adjusted EBITDA should not be used as an exclusive measure of cash flow because it does not account for the impact of working capital growth, capital expenditures, debt repayments and other sources and uses of cash, which are disclosed in the statements of cash flows.

Adjusted Net Earnings

Adjusted Net Earnings provides a measurement of profitability calculated on a basis consistent with Adjusted EBITDA. Net earnings attributable to equity holders of the Corporation are adjusted to exclude Amortization of Accumulation Partners' contracts, customer relationships and technology, share of net earnings (loss) of PLM and impairment charges. Adjusted Net Earnings includes the Change in deferred revenue and Change in Future Redemption Costs, net of the income tax effect and non controlling interest effect (where applicable) on these items at an entity level basis.

Adjusted Net Earnings is not a measurement based on GAAP, is not considered an alternative to net earnings in measuring profitability, and is not comparable to similar measures used by other issuers. For a reconciliation to GAAP, please refer to the Summary of Consolidated Operating Results and Reconciliation of EBITDA, Adjusted EBITDA, Adjusted Net Earnings and Free Cash Flow included in the attached schedule.

Standardized Free Cash Flow ("Free Cash Flow")

Free Cash Flow is a non-GAAP measure recommended by the CICA in order to provide a consistent and comparable measurement of free cash flow across entities of cash generated from operations and is used as an indicator of financial strength and performance.

Free Cash Flow is defined as cash flows from operating activities, as reported in accordance with GAAP, less adjustments for:

 

a.  total capital expenditures as reported in accordance with GAAP; and

b.  dividends, when stipulated, unless deducted in arriving at cash flows
    from operating activities.

For a reconciliation to cash flows from operations please refer to the Summary of Consolidated Operating Results and Reconciliation of EBITDA, Adjusted EBITDA, Adjusted Net Earnings and Free Cash Flow included in the attached schedule.

EBITDA and Free Cash Flow are non-GAAP measurements recommended by the CICA in accordance with the draft recommendations provided in their February 2008 publication, Improved Communications with Non-GAAP Financial Measures - General Principles and Guidance for Reporting EBITDA and Free Cash Flow.

Constant Currency

Because exchange rates are an important factor in understanding period to period comparisons, the presentation of various financial metrics on a constant currency basis or after giving effect to foreign exchange translation, in addition to the reported metrics, helps improve the ability to understand operating results and evaluate performance in comparison to prior periods. Constant currency information compares results between periods as if exchange rates had remained constant over the periods. Constant currency is derived by calculating current-year results using prior-year foreign currency exchange rates. Results calculated on a constant currency basis should be considered in addition to, not as a substitute for, results reported in accordance with GAAP and may not be comparable to similarly titled measures used by other companies.

Q4 2011 Conference Call / Audio Webcast

Aimia will host a conference call to discuss its fourth quarter 2011 financial results at 8:00 a.m. ET on Thursday, February 23, 2012. The call can be accessed by dialing 1-800-931-6427 or 416-981-9000 for the Toronto area. The call will be simultaneously audio webcast at: http://www.gowebcasting.com/events/aimia/2012/02/23/aimia-q4-2011-conference-call/play.

A slide presentation intended for simultaneous viewing with the conference call will be available the evening of February 22, 2012 at: http://www.aimia.com/English/Investors/Financial-Reports/Quarterly-Reports/default.aspx and an archived audio webcast will be available at: http://www.aimia.com/English/Investors/Presentations-and-Events/Events/default.aspx for ninety days following the original broadcast.

The audited consolidated financial statements, the MD&A and a financial highlights presentation will be accessible on the investor relations website at: http://www.aimia.com/English/Investors/Financial-Reports/Quarterly-Reports/default.aspx.

About Aimia

Groupe Aeroplan Inc., doing business as Aimia ("Aimia"), is a global leader in loyalty management. Aimia's unique capabilities include proven expertise in delivering proprietary loyalty services, launching and managing coalition loyalty programs, creating value through loyalty analytics and driving innovation in the emerging digital and mobile spaces. Aimia owns and operates Aeroplan, Canada's premier coalition loyalty program and Nectar, the United Kingdom's largest coalition loyalty program. In addition, Aimia has majority equity positions in Air Miles Middle East and Nectar Italia as well as a minority position in Club Premier, Mexico's leading coalition loyalty program, and Cardlytics, a US-based private company operating in merchant-funded transaction-driven marketing for electronic banking.

Aimia is a Canadian public company listed on the Toronto Stock Exchange (TSX: AIM.TO - News) and has over 3,800 employees in more than 20 countries around the world. For more information about Aimia, please visit www.aimia.com.

Caution Concerning Forward-Looking Statements

Forward-looking statements are included in this news release. These forward-looking statements are identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and similar terms and phrases, including references to assumptions. Such statements may involve but are not limited to comments with respect to strategies, expectations, planned operations or future actions.

Forward-looking statements, by their nature, are based on assumptions and are subject to important risks and uncertainties. Any forecasts, predictions or forward-looking statements cannot be relied upon due to, among other things, changing external events and general uncertainties of the business and its corporate structure. Results indicated in forward-looking statements may differ materially from actual results for a number of reasons, including without limitation, dependency on top accumulation partners and clients, conflicts of interest, greater than expected redemptions for rewards, regulatory matters, retail market/economic conditions, industry competition, Air Canada liquidity issues, Air Canada or travel industry disruptions, airline industry changes and increased airline costs, supply and capacity costs, unfunded future redemption costs, failure to safeguard databases and consumer privacy, changes to coalition loyalty programs, seasonal nature of the business, other factors and prior performance, foreign operations, legal proceedings, reliance on key personnel, labour relations, pension liability, technological disruptions and inability to use third party software, failure to protect intellectual property rights, interest rate and currency fluctuations, leverage and restrictive covenants in current and future indebtedness, uncertainty of dividend payments, managing growth, credit ratings, as well as the other factors identified in this news release and throughout Aimia's public disclosure record on file with the Canadian securities regulatory authorities.

The forward-looking statements contained herein represent Aimia's expectations as of February 22, 2012, and are subject to change after such date. However, Aimia disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

SUMMARY OF CONSOLIDATED OPERATING RESULTS AND RECONCILIATION OF EBITDA, ADJUSTED EBITDA, ADJUSTED NET EARNINGS AND FREE CASH FLOW

Years ended December 31, 2011 and 2010

 

                                          For the years ended     Year over
                                                 December 31,  year % delta
(in thousands,
 except share                                                   2011   2010
 and per share                                                  over   over
 information)     2011(a)           2010(a)        2009(b)(o)   2010   2009

                        $                 $                 $
----------------------------------------------------------------------------
Gross Billings  2,233,226         2,187,753    (l)  1,447,322    2.1   51.2
----------------------------------------------------------------------------
Gross Billings
 from the sale
 of Loyalty
 Units          1,560,801         1,457,751         1,363,010    7.1    7.0
----------------------------------------------------------------------------
Revenue from
 Loyalty Units  1,433,747    (c)  1,352,802         1,352,527    6.0    0.0
Revenue from
 proprietary
 loyalty
 services         567,258           610,580                 -   (7.1) 100.0
Other revenue     114,900            92,853            84,312   23.7   10.1
----------------------------------------------------------------------------
Total revenue   2,115,905    (c)  2,056,235         1,436,839    2.9   43.1
Cost of
 rewards and
 direct costs  (1,332,874)       (1,295,282)   (d)   (903,060)   2.9   43.4
----------------------------------------------------------------------------
Gross margin
 before
 depreciation
 and
amortization(e
 )                783,031    (c)    760,953           533,779    2.9   42.6
Depreciation
 and
 amortization     (36,033)          (32,454)          (19,280)  11.0   68.3
Amortization
 of
 Accumulation
 Partners'
 contracts,
 customer
 relationships
 and
 technology       (93,474)          (90,308)          (80,246)   3.5   12.5
----------------------------------------------------------------------------
Gross margin      653,524    (c)    638,191    (d)    434,253    2.4   47.0
Operating
 expenses        (612,548)   (m)   (542,593)   (d)   (270,489)  12.9  100.6
Amortization
 of
 Accumulation
 Partners'
 contracts,
 customer
 relationships
 and
 technology        93,474            90,308            80,246    3.5   12.5
----------------------------------------------------------------------------
Operating
 income before
 amortization
 of
 Accumulation
 Partners'
 contracts,
 customer
 relationships
 and
 technology       134,450 (c)(m)    185,906    (d)    244,010  (27.7) (23.8)
----------------------------------------------------------------------------
Depreciation
 and
 amortization      36,033            32,454            19,280   11.0   68.3
Impairment of
 goodwill          53,901                 -                 -  100.0    0.0
----------------------------------------------------------------------------
EBITDA
 (e)(g)(n)        224,384    (c)    218,360    (d)    263,290    2.8  (17.1)
----------------------------------------------------------------------------
Adjustments:
Change in
 deferred
 revenue
  Gross
   Billings     2,233,226         2,187,753    (l)  1,447,322
  Revenue      (2,115,905)   (c) (2,056,235)       (1,436,839)
Change in
 Future
 Redemption
 Costs (f)            472    (i)    (64,344)            7,861
  (Change in
   Net Loyalty
   Units
   outstanding
   x Average
   Cost of
   Rewards per
   Loyalty
   Unit for
   the year)
----------------------------------------------------------------------------
Subtotal of
 Adjustments      117,793            67,174            18,344
----------------------------------------------------------------------------
Adjusted
 EBITDA (g)       342,177    (i)    285,534 (d)(l)    281,634   19.8    1.4
----------------------------------------------------------------------------
Net earnings
 attributable
 to equity
 holders of
 the                      (c)(j)
 Corporation      (59,678)   (m)     14,923 (d)(j)     89,275
Weighted
 average
 number of
 shares       179,146,339       194,748,024       199,443,084
Earnings per
 common                   (c)(j)
share(h)            (0.40)   (m)       0.02 (d)(j)       0.45
----------------------------------------------------------------------------
Net earnings
 attributable
 to equity
 holders of
 the                      (c)(j)
 Corporation      (59,678)   (m)     14,923 (d)(j)     89,275 (499.9) (83.3)
Amortization
 of
 Accumulation
 Partners'
 contracts,
 customer
 relationships
 and
 technology        93,474            90,308            80,246
Share of net
 loss of PLM        4,444                 -                 -
Impairment of
 goodwill          53,901                 -                 -
Adjusted
 EBITDA
 Adjustments
 (from above)     117,793            67,174            18,344
Tax on
 adjustments
 (k)                6,273           (10,918)           (3,303)
Non-
 controlling
 interests
 share on
 adjustments
 above            (18,042)           (5,314)           (2,505)
----------------------------------------------------------------------------
Adjusted net                                (d)(j)
 earnings (g)     198,165 (i)(j)    156,173    (l)    182,057   26.9  (14.2)
Adjusted net
 earnings per
 common share                               (d)(j)
 (g)(h)              1.04 (i)(j)       0.75    (l)       0.91
----------------------------------------------------------------------------
Net earnings
 attributable
 to equity
 holders of
 the                      (c)(j)
 Corporation      (59,678)   (m)     14,923 (d)(j)     89,275
Earnings per
 common                   (c)(j)
share(h)            (0.40)   (m)       0.02 (d)(j)       0.45
----------------------------------------------------------------------------
Cash flow from
 operations       242,541           268,105           288,489   (9.5)  (7.1)
Capital
 Expenditures     (44,919)          (46,877)          (23,469)
Dividends        (113,481)         (107,577)          (99,988)
----------------------------------------------------------------------------
Free cash flow
 (g)               84,141           113,651           165,032  (26.0) (31.1)
----------------------------------------------------------------------------
Total assets    4,931,733         5,140,964         5,217,992
Total long-
 term
 liabilities    1,313,201         1,621,735         1,618,201
Total
 dividends        113,481           107,577            99,988
Total
 dividends per
 preferred
 share              1.625             1.530               N/A
Total
 dividends per
 common share       0.575             0.500             0.500
----------------------------------------------------------------------------
(a)  Reported under IFRS.
(b)  Reported under previous Canadian GAAP
(c)  Includes the impact of the adjustments to the Breakage estimates
     related to the Nectar and Air Miles Middle East programs, which
     resulted in a reduction of $136.0 million to revenue from Loyalty
     Units, with $113.3 million being attributable to prior years and $22.7
     million to the 2011 year. Of the total adjustment, $95.2 million is
     attributable to the Nectar program and $40.8 million to the Air Miles
     Middle East program.
(d)  Includes the non comparable effect of a $17.4 million (GBP 10.9
     million) net charge to earnings recognized as a result of the ECJ VAT
     Judgment for the year ended December 31, 2010. Of this amount, $53.1
     million (GBP 33.4 million), representing input tax credits
     attributable to the period from 2002 to 2009 (of which $5.4 million
     (GBP 3.4 million) relates to 2009 and $47.7 million (GBP 30.0 million)
     relates to the period from 2002 to 2008), was charged to cost of
     rewards and $1.6 million (GBP 1.0 million) to operating expenses.
     Operating expenses were also reduced by the reversal of a provision of
     $7.2 million (GBP 4.5 million) payable to certain employees in the
     event of a favourable VAT outcome and by the release of the contingent
     consideration of $30.1 million (GBP 19.0 million) related to the LMG
     acquisition following the unfavourable ECJ VAT Judgment.
(e)  Excludes depreciation and amortization as well as amortization of
     Accumulation Partners' contracts, customer relationships and
     technology.
(f)  The per unit cost derived from this calculation is retroactively
     applied to all prior periods with the effect of revaluing the Future
     Redemption Cost liability on the basis of the latest available average
     unit cost.
(g)  A non-GAAP measurement.
(h)  After deducting dividends paid on preferred shares in 2011 and 2010.
(i)  The Change in Future Redemption costs for the year ended December 31,
     2011 includes the unfavourable impact resulting from the adjustments
     to the Breakage estimates related to the Nectar and Air Miles Middle
     East programs amounting to $15.8 million.
(j)  Interest expense for the period includes the effect of a net charge
     recognized as a result of the ECJ VAT Judgment amounting to $4.4
     million (GBP 2.8 million) for the year ended December 31, 2011
     compared to $7.2 million (GBP 4.5 million) for the year ended December
     31, 2010.
(k)  The effective tax rates, calculated as income tax expense / earnings
     before taxes for the period on an entity level basis, are applied to
     the related entity level adjustments noted above.
(l)  Includes the positive effect of a $17.4 million adjustment, as a
     result of a reclassification of deferred revenue amounts previously
     included in customer deposits.
(m)  Includes a goodwill impairment charge amounting to $53.9 million
     related to our US Proprietary Loyalty cash-generating unit.
(n)  Excludes the goodwill impairment charge.
(o)  These figures do not include any effect related to the adverse impact
     of the ECJ VAT Judgment.


Three months ended December 31, 2011 and 2010

 

                                          Three months ended
                                                 December 31,       % delta
(in thousands, except share
 and per share information)        2011                  2010            Q4

                                      $                     $
----------------------------------------------------------------------------
Gross Billings                  621,109               593,617           4.6
----------------------------------------------------------------------------
Gross Billings from the
 sale of Loyalty Units          425,208               394,698           7.7
----------------------------------------------------------------------------
Revenue from Loyalty Units      364,358       (f)     426,999         (14.7)
Revenue from proprietary
 loyalty services               162,264               166,802          (2.7)
Other revenue                    34,061                24,778          37.5
----------------------------------------------------------------------------
Total revenue                   560,683       (f)     618,579          (9.4)
Cost of rewards and direct
 costs                         (423,788)             (392,348)          8.0
----------------------------------------------------------------------------
Gross margin before
 depreciation and
 amortization(a)                136,895       (f)     226,231         (39.5)
Depreciation and
 amortization                   (11,698)              (10,258)         14.0
Amortization of
 Accumulation
 Partners'contracts,
 customer relationships and
 technology                     (24,143)              (20,300)         18.9
----------------------------------------------------------------------------
Gross margin                    101,054       (f)     195,673         (48.4)
Operating expenses             (204,216)      (i)    (146,606)         39.3
Amortization of
 Accumulation
 Partners'contracts,
 customer relationships and
 technology                      24,143                20,300          18.9
----------------------------------------------------------------------------
Operating income (loss)
 before amortization of
 Accumulation Partners'
 contracts, customer
 relationships and
 technology                     (79,019)   (f)(i)      69,367        (213.9)
----------------------------------------------------------------------------
Depreciation and
 amortization                    11,698                10,258          14.0
Impairment of goodwill           53,901                     -         100.0
----------------------------------------------------------------------------
EBITDA (a)(c)(j)                (13,420)      (f)      79,625        (116.9)
----------------------------------------------------------------------------
Adjustments:
Change in deferred revenue
  Gross Billings                621,109               593,617
  Revenue                      (560,683)      (f)    (618,579)
Change in Future Redemption
 Costs (b)                       42,972       (g)      30,810
  (Change in Net Loyalty
   Units outstanding x
   Average Cost of Rewards
   per Loyalty Unit for the
   period)
----------------------------------------------------------------------------
Subtotal of Adjustments         103,398                 5,848
----------------------------------------------------------------------------
Adjusted EBITDA (c)              89,978       (g)      85,473           5.3
----------------------------------------------------------------------------
Net earnings attributable
 to equity holders of the
 Corporation                   (126,267)(f)(h)(i)      (3,186)  (h)
Weighted average number of
 shares                     173,774,352           187,291,363
Earnings per common share
 (d)                              (0.74)(f)(h)(i)       (0.03)  (h)
----------------------------------------------------------------------------
Net earnings attributable
 to equity holders of the
 Corporation                   (126,267)(f)(h)(i)      (3,186)  (h)(3,863.2)
Amortization of
 Accumulation Partners'
 contracts, customer
 relationships and
 technology                      24,143                20,300
Share of net loss of PLM         10,303                     -
Impairment of goodwill           53,901                     -
Adjusted EBITDA Adjustments
 (from above)                   103,398                 5,848
Tax on adjustments (e)              405                   860
Non-controlling interests
 share on adjustments above     (26,372)               (1,246)
----------------------------------------------------------------------------
Adjusted net earnings (c)        39,511 (f)(g)(h)      22,576   (h)    75.0
Adjusted net earnings per
 common share (c)(d)               0.21 (f)(g)(h)        0.11   (h)
----------------------------------------------------------------------------
Net earnings attributable
 to equity holders of the
 Corporation                   (126,267)(f)(h)(i)      (3,186)  (h)
Earnings per common share
 (d)                              (0.74)(f)(h)(i)       (0.03)  (h)
----------------------------------------------------------------------------
Cash flow from operations        27,623                97,355         (71.6)
Capital Expenditures            (15,185)              (15,861)
Dividends                       (28,900)              (26,175)
----------------------------------------------------------------------------
Free cash flow (c)              (16,462)               55,319        (129.8)
----------------------------------------------------------------------------
Total assets                  4,931,733             5,140,964
Total long-term liabilities   1,313,201             1,621,735
Total dividends                  28,900                26,175
Total dividends per
 preferred share                  0.406                 0.406
Total dividends per common
 share                            0.150                 0.125
----------------------------------------------------------------------------
(a)  Excludes depreciation and amortization as well as amortization of
     Accumulation Partners' contracts, customer relationships and
     technology and the impairment of goodwill.
(b)  The per unit cost derived from this calculation is retroactively
     applied to all prior periods with the effect of revaluing the Future
     Redemption Cost liability on the basis of the latest available average
     unit cost.
(c)  A non-GAAP measurement.
(d)  After deducting dividends paid on preferred shares.
(e)  The effective tax rates, calculated as income tax expense / earnings
     before taxes for the period on an entity level basis, are applied to
     the related entity level adjustments noted above.
(f)  Includes the impact of the adjustments to the Breakage estimates
     related to the Nectar and Air Miles Middle East programs, which
     resulted in a reduction of $136.0 million to revenue from Loyalty
     Units, with $113.3 million being attributable to prior years and $22.7
     million to the 2011 year (including $8.9 million attributable to the
     fourth quarter of 2011). Of the total adjustment, $95.2 million is
     attributable to the Nectar program and $40.8 million to the Air Miles
     Middle East program.
(g)  The Change in Future Redemption costs for the quarter ended December
     31, 2011 includes the unfavourable impact resulting from the
     adjustments to the Breakage estimates related to the Nectar and Air
     Miles Middle East programs amounting to $15.8 million (of which $4.5
     million relates to the current quarter).
(h)  Includes the effect of a $1.0 million (GBP 0.7 million) net charge to
     interest expense recognized as a result of the ECJ VAT Judgment for
     the three months ended December 31, 2011, compared to a $0.8 million
     (GBP 0.5 million) net charge to interest expense recognized during the
     three months ended December 31, 2010.
(i)  Includes a goodwill impairment charge amounting to $53.9 million
     related to our US Proprietary Loyalty cash-generating unit.
(j)  Excludes the goodwill impairment charge.


SEGMENTED INFORMATION

At December 31, 2011, the Corporation had three operating segments: Canada, EMEA and US & APAC.

The table below summarizes the relevant financial information by operating segment:

Years ended December 31, 2011 and 2010

 

(in thousands)                                      Year ended December 31,
                             2011     2010(m)           2011        2010(m)
Operating segments            Canada                      EMEA
---------------------------------------------------------------------------
                                $           $          $              $
---------------------------------------------------------------------------
                                                                        (d)
Gross Billings          1,299,492   1,248,569    571,012 (d)    502,879 (j)
---------------------------------------------------------------------------
Gross Billings from
 the sale of Loyalty
 Units                  1,078,504   1,033,223    482,297        424,528
---------------------------------------------------------------------------
Revenue from Loyalty
 Units                  1,102,463     956,412    331,284 (h)    396,390
Revenue from
 proprietary loyalty
 services                 177,695     157,315     25,057         32,611
Other revenue              49,714      49,266     65,186         43,587
---------------------------------------------------------------------------
Total revenue           1,329,872   1,162,993    421,527 (h)    472,588
Cost of rewards and
 direct costs             725,562     665,371    383,522        386,325 (g)
---------------------------------------------------------------------------
Gross margin before
 depreciation and
 amortization(a)          604,310     497,622     38,005 (h)     86,263 (g)
Depreciation and
 amortization(b)          100,197      99,850     13,884         13,665
---------------------------------------------------------------------------
Gross margin              504,113     397,772     24,121 (h)     72,598 (g)
Operating expenses
 before share-based
 compensation and
 impairment of
 goodwill                 223,482     207,682    137,600        107,950 (g)
Share-based
 compensation                   -           -          -              -
Impairment of
 goodwill(k)                    -           -          -              -
---------------------------------------------------------------------------
Total operating
 expenses                 223,482     207,682    137,600        107,950 (g)
---------------------------------------------------------------------------
Operating income
 (loss)                   280,631     190,090   (113,479)(h)    (35,352)(g)
---------------------------------------------------------------------------
                                                                        (g)
Adjusted EBITDA(l)        372,642     338,105     28,168 (i)    (18,329)(j)
---------------------------------------------------------------------------
Additions to non-
 current assets(e)         24,056      22,655     16,455          8,690
Non-current assets(e)   3,259,974   3,331,272    459,729 (f)    450,316 (f)
Deferred revenue        1,815,595   1,845,284    412,815        265,662
Total assets            3,796,092   4,016,306    931,724        889,233
---------------------------------------------------------------------------

(in thousands)                                Year ended December 31,
                                         2011                 2010(m)
Operating segments                       US & APAC
---------------------------------------------------------------------
                                        $                       $
---------------------------------------------------------------------
                                                                  (d)
Gross Billings                    362,722 (d)             436,305 (j)
---------------------------------------------------------------------
Gross Billings from
 the sale of Loyalty
 Units                                  -                       -
---------------------------------------------------------------------
Revenue from Loyalty
 Units                                  -                       -
Revenue from
 proprietary loyalty
 services                         364,506                 420,654
Other revenue                           -                       -
---------------------------------------------------------------------
Total revenue                     364,506                 420,654
Cost of rewards and
 direct costs                     223,790                 243,586
---------------------------------------------------------------------
Gross margin before
 depreciation and
 amortization(a)                  140,716                 177,068
Depreciation and
 amortization(b)                   15,426                   9,247
---------------------------------------------------------------------
Gross margin                      125,290                 167,821
Operating expenses
 before share-based
 compensation and
 impairment of
 goodwill                         150,547                 176,959
Share-based
 compensation                           -                       -
Impairment of
 goodwill(k)                       53,901                       -
---------------------------------------------------------------------
Total operating
 expenses                         204,448                 176,959
---------------------------------------------------------------------
Operating income
 (loss)                           (79,158)                 (9,138)
---------------------------------------------------------------------
Adjusted EBITDA(l)                (11,615)                 15,760 (j)
---------------------------------------------------------------------
Additions to non-
 current assets(e)                  4,408                  15,532
Non-current assets(e)              43,948 (f)             106,582 (f)
Deferred revenue                   14,324                  16,105
Total assets                      149,512                 211,345
---------------------------------------------------------------------

(in thousands)                                       Year ended December 31,
                            2011      2010(m)         2011           2010(m)
Operating segments         Corporate(c)                Consolidated
----------------------------------------------------------------------------
                               $            $            $              $
----------------------------------------------------------------------------
                                                                         (d)
Gross Billings                 -            -    2,233,226(d)   2,187,753(j)
----------------------------------------------------------------------------
Gross Billings from
 the sale of Loyalty
 Units                         -            -    1,560,801      1,457,751
----------------------------------------------------------------------------
Revenue from Loyalty
 Units                         -            -    1,433,747(h)   1,352,802
Revenue from
 proprietary loyalty
 services                      -            -      567,258        610,580
Other revenue                  -            -      114,900         92,853
----------------------------------------------------------------------------
Total revenue                  -            -    2,115,905(h)   2,056,235
Cost of rewards and
 direct costs                  -            -    1,332,874      1,295,282(g)
----------------------------------------------------------------------------
Gross margin before
 depreciation and
 amortization(a)               -            -      783,031(h)     760,953(g)
Depreciation and
 amortization(b)               -            -      129,507        122,762
----------------------------------------------------------------------------
Gross margin                   -            -      653,524(h)     638,191(g)
Operating expenses
 before share-based
 compensation and
 impairment of
 goodwill                 41,282       38,926      552,911        531,517(g)
Share-based
 compensation              5,736       11,076        5,736         11,076
Impairment of
 goodwill(k)                   -            -       53,901              -
----------------------------------------------------------------------------
Total operating
 expenses                 47,018       50,002      612,548        542,593(g)
----------------------------------------------------------------------------
Operating income
 (loss)                  (47,018)     (50,002)      40,976(h)      95,598(g)
----------------------------------------------------------------------------
                                                                         (g)
Adjusted EBITDA(l)       (47,018)     (50,002)     342,177(i)     285,534(j)
----------------------------------------------------------------------------
Additions to non-
 current assets(e)           N/A          N/A       44,919         46,877
Non-current assets(e)        N/A          N/A    3,763,651(f)   3,888,170(f)
Deferred revenue             N/A          N/A    2,242,734      2,127,051
Total assets              54,405       24,080    4,931,733      5,140,964
----------------------------------------------------------------------------
(a)  Excludes depreciation and amortization as well as amortization of
     Accumulation Partners' contracts, customer relationships and
     technology.
(b)  Includes depreciation and amortization as well as amortization of
     Accumulation Partners' contracts, customer relationships and
     technology.
(c)  Includes expenses that are not directly attributable to any specific
     operating segment. Corporate also includes the investments in PLM and
     Cardlytics.
(d)  Includes Gross Billings of $137.6 million in the UK and $56.6 million
     in the US for the three months ended December 31, 2011, compared to
     Gross Billings of $114.8 million in the UK and $60.8 million in the US
     for the three months ended December 31, 2010. Third party Gross
     Billings are attributed to a country on the basis of the country where
     the contractual and management responsibility for the customer
     resides.
(e)  Non-current assets includes amounts relating to goodwill, Accumulation
     Partners' contracts, trade names, customer relationships, other
     intangibles, software and technology and property and equipment.
(f)  Includes non-current assets of $408.4 million in the UK and $38.0
     million in the US as of December 31, 2011, compared to non-current
     assets of $399.1 million in the UK and $100.8 million in the US as of
     December 31, 2010.
(g)  Includes the impact of the adjustments to the Breakage estimates
     related to the Nectar and Air Miles Middle East programs, which
     resulted in a reduction of $136.0 million to revenue from Loyalty
     Units, with $113.3 million being attributable to prior years and $22.7
     million to the 2011 year (including $8.9 million attributable to the
     fourth quarter of 2011). Of the total adjustment, $95.2 million is
     attributable to the Nectar program and $40.8 million to the Air Miles
     Middle East program.
(h)  The Change in Future Redemption costs for the quarter ended December
     31, 2011 includes the unfavourable impact resulting from the
     adjustments to the Breakage estimates related to the Nectar and Air
     Miles Middle East programs amounting to $15.8 million (with $4.5
     million relating to the current quarter).
(i)  The goodwill impairment charge recorded during the three months ended
     December 31, 2011 relates to our US Proprietary Loyalty cash-
     generating unit.
(j)  A non-GAAP measurement.
(k)  Comparative figures have been reclassified to conform with the new
     segmentation.


Three months ended December 31, 2011 and 2010

 

(in thousands)                               Three months ended December 31,
                          2011     2010(k)             2011          2010(k)
Operating segments         Canada                        EMEA
----------------------------------------------------------------------------
                             $           $          $                 $
----------------------------------------------------------------------------
Gross Billings         335,009     336,337    172,762   (d)     140,343  (d)
----------------------------------------------------------------------------
Gross Billings
 from the sale of
 Loyalty Units         279,103     275,801    146,105           118,897
----------------------------------------------------------------------------
Revenue from
 Loyalty Units         291,230     243,548     73,128   (g)     183,451
Revenue from
 proprietary
 loyalty services       44,017      44,880      5,375             8,143
Other revenue           12,080      12,263     21,981            12,515
----------------------------------------------------------------------------
Total revenue          347,327     300,691    100,484   (g)     204,109
Cost of rewards
 and direct costs      181,992     167,155    168,559           150,052
----------------------------------------------------------------------------
Gross margin
 before
 depreciation and
 amortization(a)       165,335     133,536    (68,075)  (g)      54,057
Depreciation and
 amortization(b)        24,730      24,879      3,727             3,015
----------------------------------------------------------------------------
Gross margin           140,605     108,657    (71,802)  (g)      51,042
Operating expenses
 before share-
 based
 compensation and
 impairment of
 goodwill               60,418      55,394     34,897            36,572
Share-based
 compensation                -           -          -                 -
Impairment of
 goodwill (i)                -           -          -                 -
----------------------------------------------------------------------------
Total operating
 expenses               60,418      55,394     34,897            36,572
----------------------------------------------------------------------------
Operating income
 (loss)                 80,187      53,263   (106,699)  (g)      14,470
----------------------------------------------------------------------------
Adjusted EBITDA
 (j)                    98,701      95,584      6,176   (h)       2,733
----------------------------------------------------------------------------
Additions to non-
 current assets
 (e)                     7,771       6,714      6,268             5,202
Non-current assets
 (e)                 3,259,974   3,331,272    459,729   (f)     450,316  (f)
Deferred revenue     1,815,595   1,845,284    412,815           265,662
Total assets         3,796,092   4,016,306    931,724           889,233
----------------------------------------------------------------------------

                                           2011                      2010(k)
Operating segments                         US & APAC
----------------------------------------------------------------------------
                                     $                            $
----------------------------------------------------------------------------
Gross Billings                 113,338      (d)             116,937      (d)
----------------------------------------------------------------------------
Gross Billings
 from the sale of
 Loyalty Units                       -                            -
----------------------------------------------------------------------------
Revenue from
 Loyalty Units                       -                            -
Revenue from
 proprietary
 loyalty services              112,872                      113,779
Other revenue                        -                            -
----------------------------------------------------------------------------
Total revenue                  112,872                      113,779
Cost of rewards
 and direct costs               73,237                       75,141
----------------------------------------------------------------------------
Gross margin
 before
 depreciation and
 amortization(a)                39,635                       38,638
Depreciation and
 amortization(b)                 7,384                        2,664
----------------------------------------------------------------------------
Gross margin                    32,251                       35,974
Operating expenses
 before share-
 based
 compensation and
 impairment of
 goodwill                       42,565                       41,579
Share-based
 compensation                        -                            -
Impairment of
 goodwill (i)                   53,901                            -
----------------------------------------------------------------------------
Total operating
 expenses                       96,466                       41,579
----------------------------------------------------------------------------
Operating income
 (loss)                        (64,215)                      (5,605)
----------------------------------------------------------------------------
Adjusted EBITDA
 (j)                            (2,464)                         217
----------------------------------------------------------------------------
Additions to non-
 current assets
 (e)                             1,146                        3,945
Non-current assets
 (e)                            43,948      (f)             106,582      (f)
Deferred revenue                14,324                       16,105
Total assets                   149,512                      211,345
----------------------------------------------------------------------------

                         2011     2010(k)        2011                2010(k)
Operating segments      Corporate(c)                 Consolidated
----------------------------------------------------------------------------
                            $           $           $                 $
----------------------------------------------------------------------------
Gross Billings              -           -     621,109   (d)     593,617  (d)
----------------------------------------------------------------------------
Gross Billings
 from the sale of
 Loyalty Units              -           -     425,208           394,698
----------------------------------------------------------------------------
Revenue from
 Loyalty Units              -           -     364,358   (g)     426,999
Revenue from
 proprietary
 loyalty services           -           -     162,264           166,802
Other revenue               -           -      34,061            24,778
----------------------------------------------------------------------------
Total revenue               -           -     560,683   (g)     618,579
Cost of rewards
 and direct costs           -           -     423,788           392,348
----------------------------------------------------------------------------
Gross margin
 before
 depreciation and
 amortization(a)            -           -     136,895   (g)     226,231
Depreciation and
 amortization(b)            -           -      35,841            30,558
----------------------------------------------------------------------------
Gross margin                -           -     101,054   (g)     195,673
Operating expenses
 before share-
 based
 compensation and
 impairment of
 goodwill              12,887       9,881     150,767           143,426
Share-based
 compensation            (452)      3,180        (452)            3,180
Impairment of
 goodwill (i)               -           -      53,901                 -
----------------------------------------------------------------------------
Total operating
 expenses              12,435      13,061     204,216           146,606
----------------------------------------------------------------------------
Operating income
 (loss)               (12,435)    (13,061)   (103,162)  (g)      49,067
----------------------------------------------------------------------------
Adjusted EBITDA
 (j)                  (12,435)    (13,061)     89,978   (h)      85,473
----------------------------------------------------------------------------
Additions to non-
 current assets
 (e)                      N/A         N/A      15,185            15,861
Non-current assets
 (e)                      N/A         N/A   3,763,651   (f)   3,888,170  (f)
Deferred revenue          N/A         N/A   2,242,734         2,127,051
Total assets           54,405      24,080   4,931,733         5,140,964
----------------------------------------------------------------------------
(a)  Excludes depreciation and amortization as well as amortization of
     Accumulation Partners' contracts, customer relationships and
     technology.
(b)  Includes depreciation and amortization as well as amortization of
     Accumulation Partners' contracts, customer relationships and
     technology.
(c)  Includes expenses that are not directly attributable to any specific
     operating segment. Corporate also includes the investments in PLM and
     Cardlytics.
(d)  Includes Gross Billings of $137.6 million in the UK and $56.6 million
     in the US for the three months ended December 31, 2011, compared to
     Gross Billings of $114.8 million in the UK and $60.8 million in the US
     for the three months ended December 31, 2010. Third party Gross
     Billings are attributed to a country on the basis of the country where
     the contractual and management responsibility for the customer
     resides.
(e)  Non-current assets includes amounts relating to goodwill, Accumulation
     Partners' contracts, trade names, customer relationships, other
     intangibles, software and technology and property and equipment.
(f)  Includes non-current assets of $408.4 million in the UK and $38.0
     million in the US as of December 31, 2011, compared to non-current
     assets of $399.1 million in the UK and $100.8 million in the US as of
     December 31, 2010.
(g)  Includes the impact of the adjustments to the Breakage estimates
     related to the Nectar and Air Miles Middle East programs, which
     resulted in a reduction of $136.0 million to revenue from Loyalty
     Units, with $113.3 million being attributable to prior years and $22.7
     million to the 2011 year (including $8.9 million attributable to the
     fourth quarter of 2011). Of the total adjustment, $95.2 million is
     attributable to the Nectar program and $40.8 million to the Air Miles
     Middle East program.
(h)  The Change in Future Redemption costs for the quarter ended December
     31, 2011 includes the unfavourable impact resulting from the
     adjustments to the Breakage estimates related to the Nectar and Air
     Miles Middle East programs amounting to $15.8 million (with $4.5
     million relating to the current quarter).
(i)  The goodwill impairment charge recorded during the three months ended
     December 31, 2011 relates to our US Proprietary Loyalty cash-
     generating unit.
(j)  A non-GAAP measurement.
(k)  Comparative figures have been reclassified to conform with the new
     segmentation.

Contact:

Media
JoAnne Hayes
416-352-3706
joanne.hayes@aimia.com
Analysts & Investors
Trish Moran
416-352-3728
trish.moran@aimia.com

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