AIMIA reports fourth quarter and year end results

Record Adjusted EBITDA and Net Earnings, benefits from stronger
operational performance in all regions and prior year investments

• Strong EMEA performance driven by Nectar UK delivers robust Gross
  Billings performance for the year
• Record Adjusted EBITDA and Net Earnings, benefits from strong
  operational performance in all regions and a distribution from our
  investment  in Premier Loyalty & Marketing (PLM)
• 2013 outlook calls for Gross Billings growth of between 3 and 5 per
  cent, continued improvements in operational leverage contributing to
  approximately $425 million in Adjusted EBITDA and ongoing investment in
  global footprint

FOURTH QUARTER HIGHLIGHTS1	Three Months Ended December 31,		Years Ended December 31,		Year Over Year
(in millions of Canadian dollars, except per share amounts)	2012	2011	2012	2011	% Change
	As Reported		As Reported		As Reported	Constant Currency
Gross Billings	615.1	621.1	2,243.0	2,233.2	0.4	0.5
Total Revenue	678.2	560.7	2,248.9	2,115.9	6.3	6.4
Net Earnings (loss)	57.3	(142.6)	166.7	(77.0)	316.6	na
Earnings (loss) per Common Share	0.31	(0.74)	0.89	(0.40)	322.5	na
Adjusted EBITDA	118.1	90.0	402.6	342.2	17.7	17.9
Free Cash Flow before Dividends Paid	77.1	12.4	299.5	197.6	51.5	na

1.

Non-recurring items included within 2011 numbers are detailed in the Notes to table section of this release on page 7. Non-GAAP measures (Adjusted EBITDA and Free Cash Flow) are explained on pages 6 and 7 in the section entitled Use of Non-GAAP Financial Information. Discrepancies in variances may arise due to rounding.

MONTREAL, Feb. 27, 2013 /CNW Telbec/ – (TSX: AIM) Aimia today reported
its financial results for the fourth quarter and full year ended
December 31, 2012. All financial information is in Canadian dollars
unless otherwise noted.

“Our coalition programs continue to focus on driving engagement with our
members and value to our partners even in tougher economic
conditions. The clear gains from the renewal of a key partner contract
at Nectar UK in 2011 drove stronger growth in EMEA in 2012, while
Aeroplan attracted another 0.7 million new members to an already strong
member base in 2012” said Rupert Duchesne, Group Chief Executive. “Our
record profitability is consistent with the operational leverage and
returns delivered through investments in our coalition loyalty programs
and strong operational management in all regions. The investments we
have made to grow our business elsewhere are also demonstrating
returns, with a distribution from PLM contributing to strong Adjusted
EBITDA and free cash flow this quarter.”

Fourth Quarter and Year End Financial Highlights (Period ended December
31, 2012 versus period ended December 31, 2011)
Consolidated – Adjusted EBITDA up on improved contributions from all
regions

• Fourth quarter Gross Billings of $615.1 million, a decrease of 1.0 per cent or 0.2 per cent on a constant currency basis compared to the same period of 2011. Full year Gross Billings of $2,243.0 million, an increase of 0.4 per cent or 0.5 per cent on a constant currency basis over 2011; excluding the impact of Qantas
  in-sourcing rewards fulfillment and the results of operations of EIM,
  2012 Gross Billings increased 2.3 per cent.
• Fourth quarter Adjusted EBITDA of $118.1 million, an increase of 31.2 per cent; full year Adjusted EBITDA of $402.6 million, an increase of 17.7 per cent over 2011. The quarter and year both include the impact of a
  distribution from PLM in 2012 and variances against last year when we
  recorded adjustments, including breakage, in EMEA in relation to the UK
  and the Middle East businesses.
• The $15.7 million PLM contribution to consolidated Adjusted EBITDA
  results from the solid growth in the program in its first two years,
  with Gross Billings for PLM’s Club Premier up 27.0% year over year, and
  over 3.3 million premium card members at the end of 2012.

Canada – Strong operating leverage despite a softer than expected Q4
finish   

• Fourth quarter Gross Billings of $336.2 million compared with $335.3 million in the same period of 2011, an increase of 0.3 per cent; full year Gross Billings of $1,292.6 million, a decrease of 0.6 per cent over 2011.
• Adjusted EBITDA of $100.3 million in the fourth quarter, an increase of 1.6 per cent compared to the prior year period; operating leverage as a result of
  lower redemption costs and lower direct costs in proprietary loyalty
  drove a full year increase of 6.3 per cent over 2011 to $396.1 million.
• Gross Billings with financial partners were up for the full year but
  accounted for the softer than expected Gross Billings in the fourth
  quarter. This was partly accounted for by a tough fourth quarter
  comparative, with an Aeroplan Miles conversion promotion campaign in
  2011 which did not recur in 2012. An increase in the number of active
  credit cards was also more than offset by lower fourth quarter spend
  per card. Lower business volumes in financial services also affected
  proprietary loyalty Gross Billings in the fourth quarter.
• Air and non-air Gross Billings for Loyalty Units were up in the fourth
  quarter but the changes to the Air Canada accumulation grid impacted
  Gross Billings for the full year.
• The increase in Aeroplan Miles issuance and redemption were broadly
  aligned. Despite reductions in accumulation mostly explained by changes
  in the Air Canada accumulation grid, Aeroplan Miles issued increased by
  0.4 per cent in the year while total Aeroplan Miles redeemed increased 0.5 per cent in 2012 over 2011.
• The Aeroplan Program added 0.7 million members and more than 0.3 million
  new financial cards were issued during the year. At the end of 2012,
  Aeroplan had approximately 4.7 million active members. Of the 2.3
  million rewards issued in 2012, more than 1.6 million were for flights
  on Air Canada and Star Alliance carriers with around 0.7 million in
  non-air rewards.

Europe, Middle East & Africa (EMEA) – Strong EMEA performance driven by
Nectar UK

• Fourth quarter Gross Billings of $177.6 million, an increase of 2.7 per cent or 4.6 per cent on a constant currency basis compared to the same period of 2011. Full
  year Gross Billings of $639.9 million, up 11.9 per cent or 12.9 per cent on a constant currency basis over 2011, mainly due to an increase in
  Gross Billings from the sale  of Loyalty Units issued in the UK in the
  grocery and energy sectors along with the benefit of the new contract
  terms with the main sponsors in the UK and the Middle East
• Adjusted EBITDA of $16.0 million in the quarter, an increase of $9.8 million; Full year Adjusted EBITDA of $49.2 million, an increase of $21 million when compared with $28.2 million in the prior year period, with increased volumes driving improvements in
  operating leverage.
• At the end of 2012, Nectar UK had approximately 19 million active
  members, up from 18.5 million in 2011. Nectar UK Points issued in 2012
  increased by 16.1 per cent compared to 2011, with higher issuance at British Gas and Sainsbury’s
  continuing to drive improvement into the fourth quarter.
• Redemption activity for Nectar UK increased by 10.6 per cent in the year mainly driven by an increase in the number of Nectar Points
  in circulation.
• A more difficult economic environment in Italy saw points issuance
  decrease 0.6 per cent in 2012 compared to 2011. 9.5 million members
  have joined Nectar Italia since the inception of the program, up from
  8.5 million last year. Nectar Italia points redeemed increased
  significantly in 2012 consistent with members having increased
  availability of points in their accounts due to the program’s growth,
  resulting in increased engagement among members.
• Other Gross Billings increased by $1.9 million or 2.1 per cent compared
  to 2011, with a full year of delivery under international
  contracts driving a 13.2 per cent increase in Gross Billings for Intelligent Shopper Solutions (ISS)
  during the year.
• The i2c joint venture with Sainsbury’s in the UK will launch its first
  fully integrated multi-channel marketing campaigns from the first
  quarter of 2013.

US & Asia Pacific – Profitable despite a Challenging US Environment

• Fourth quarter Gross Billings of $102.3 million, a decrease of 11.6 per cent or 10.5 per cent on a constant currency basis compared to the same period 2011. Full year Gross Billings of $315.2 million. Excluding the impact of Qantas in-sourcing rewards fulfillment and the
  results of operations of EIM, Gross Billings for the full year were
  down 4.4 per cent or 5.7 per cent on a constant currency basis.
• Fourth quarter Adjusted EBITDA at $6.7 million, compared to $(2.5) million in the same period of 2011; full year Adjusted EBITDA of $7.4 million compared to $(11.6) million in 2011.
• Under new management, the US region is making good strides in terms of
  repositioning and focusing on higher value-add strategic loyalty
  services, offsetting the impact of client losses in the prior year and
  benefiting from restructuring undertaken in 2011. In 2012, the US
  accounted for $191.5 million of Gross Billings, compared to $196.3 million in the prior year, and
  contributed to the profitability of the US&APAC segment.
• Gross Billings for the region included $16.5 million from the Excellence
  in Motivation (EIM) acquisition which was completed on September 24,
  2012.
• The APAC region remains focused on new business development as well as
  the 2013 deployment of a redemption technology and rewards fulfillment
  contract for Standard Chartered Bank.

Cash Flow and Financial Position
At December 31, 2012, Aimia had $498.0 million of cash and cash equivalents, $28.3 million of restricted cash, $42.5 million of short-term investments and $313.3 million of long-term investments in bonds, for a total of $882.1 million.

Aimia’s Free Cash Flow (before dividends paid) was $77.1 million for the fourth quarter of 2012 compared to $12.4 million for the fourth quarter of 2011. For the full year, Free Cash Flow
(before dividends paid) was up 51.5% to $299.5 million. In addition to benefiting from a $15.7 million distribution
from Club Premier, Free Cash Flow for the quarter and the year
increased due to higher cash generated from operations.  This was
primarily due to lower cost of rewards and lower direct costs as well
as the timing of changes in net operating assets and was only partially
offset by higher capital expenditures as we continued to invest in the
future of the business.

Dividends Declared
Common Shares
The Board of Directors declared a quarterly dividend of $0.16 per common
share, payable on March 29, 2013 to shareholders of record at the close
of business on March 15, 2013.

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
29, 2013 to the holders of record at the close of business on March 15,
2013.

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

2013 Outlook

For the year ending December 31, 2013, Aimia expects to report the
following:

Consolidated Outlook
		2012 Actual		2013 Target Range
Gross Billings		$2,243.0 million		Growth of between 3% and 5%
Adjusted EBITDA		$402.6 million		To approximate $425 million
Free Cash Flow before dividends		$299.5 million		Between $255 and $275 million
Capital Expenditures		$58.0 million		To approximate $70 million
Income Taxes		Canadian income tax rate of 26.2%		Current income tax rate is anticipated to approximate 27% in Canada. The Corporation expects no significant cash income taxes will be incurred in the rest of its foreign operations.
Business Segment Gross Billings Growth Outlook
		2012 Actual		2013 Target Range
Canada		$1,292.6 million		Between 1% and 3%
EMEA		$639.9 million		Between 5% and 7%
US & APAC		$315.2 million		Above 5%

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 2013 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. In
addition, the above forecasts do not reflect the potential impact of
any non-recurring or other special items or of any dispositions,
mergers, acquisitions, other business combinations or other
transactions that may be announced or that may occur after February 27,
2013. The financial impact of these transactions and non-recurring and
other special items can be complex and depends on the facts particular
to each of them. We therefore cannot describe the expected impact in a
meaningful way or in the same way we present known risks affecting our
business. 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 also includes distributions and dividends received from
equity-accounted investments.

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 Selected Information 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 equity
accounted investments 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 also includes distributions and dividends received from
equity-accounted investments.

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 Selected Information 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
Selected Information 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 recommendations provided in their October
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.

Notes to table
2011 numbers in the table on page 1 include:

• Adjustments to breakage estimates for Nectar UK and Air Miles Middle
  East recorded during the fourth quarter of 2011. The impact resulted in
  a $136.0 million reduction to revenue. Of this amount, $113.3 million
  is attributable to the years prior to 2011, $13.8 million to the first
  three quarters of 2011 and $8.9 million to the fourth quarter of 2011.
• A goodwill impairment charge of $49.4 million, or $53.9 million net of a
  tax recovery of $4.5 million, recorded during the fourth quarter of
  2011 in relation to the US proprietary loyalty business which affected
  net earnings.
• A net unfavourable impact on Adjusted EBITDA for the fourth quarter of
  2011 of $5.9 million representing breakage adjustments for Nectar UK
  and Air Miles Middle East offset in part by a contribution from a
  coalition anchor partner in connection with the extension of its
  participation in the program.

Q4 2012 Conference Call / Audio Webcast
Aimia will host a conference call to discuss its fourth quarter and full
year 2012 financial results at 8:00 a.m. ET on Thursday, February 28,
2013. The call can be accessed by dialing 1-888-231-8191 or
647-427-7450 for the Toronto area. The call will be simultaneously
audio webcast at: http://www.newswire.ca/en/webcast/detail/xx

A slide presentation intended for simultaneous viewing with the
conference call will be available the evening of February 27, 2013 at: https://www.aimia.com/English/Investors/Financial-Reports/Quarterly-Reports/default.aspx and an archived audio webcast will be available at: https://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: https://www.aimia.com/English/Investors/Financial-Reports/Quarterly-Reports/default.aspx.

About Aimia

Aimia Inc. (“Aimia”) is a global leader in loyalty management. Employing
more than 4,000 people in over 20 countries worldwide, Aimia offers
clients, partners and members proven expertise in launching and
managing coalition loyalty programs, delivering proprietary loyalty
services, creating value through loyalty analytics and driving
innovation in the emerging digital, mobile and social communications
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 owns stakes in Air Miles Middle East,
Nectar Italia, Mexico’s leading coalition loyalty program Club Premier,
Brazil’s Prismah Fidelidade, and i2c, a joint venture with Sainsbury’s
offering insight and data analytics services in the UK to retailers and
suppliers. Aimia also holds a minority position in Cardlytics, a
US-based private company operating in transaction-driven marketing for
electronic banking. Aimia is listed on the Toronto Stock Exchange (TSX:
AIM). For more information, visit us at 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 27, 2013, 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.

 

SELECTED INFORMATION AND RECONCILIATION OF EBITDA, ADJUSTED EBITDA,
ADJUSTED NET EARNINGS AND FREE CASH FLOW

			For the years ended December 31,						%∆
(in thousands of Canadian dollars , except share and per share information)			2012		2011		2010 (i)		2012 over 2011		2011 over 2010
Gross Billings			2,243,023		2,233,226		2,187,753	(j)	0.4		2.1
Gross Billings from the sale of Loyalty Units			1,628,429		1,560,801		1,457,751		4.3		7.1
Total revenue			2,248,918		2,115,905	(f)	2,056,235		6.3		2.9
Cost of rewards and direct costs			(1,300,925)		(1,332,874)		(1,295,282)	(k)	(2.4)		2.9
Gross margin before depreciation and amortization (a)			947,993		783,031	(f)	760,953	(k)	21.1		2.9
Depreciation and amortization			(38,425)		(36,033)		(32,454)		6.6		11.0
Amortization of Accumulation Partners’ contracts, customer relationships and technology			(87,234)		(93,474)		(90,308)		(6.7)		3.5
Gross margin			822,334		653,524	(f)	638,191		25.8		2.4
Operating expenses			(566,847)		(612,548)	(g)	(542,593)	(k)	(7.5)		12.9
Amortization of Accumulation Partners’ contracts, customer relationships and technology			87,234		93,474		90,308		(6.7)		3.5
Operating income before amortization of Accumulation Partners’ contracts, customer relationships and technology			342,721		134,450	(f)(g)	185,906	(k)	154.9		(27.7)
Depreciation and amortization			38,425		36,033		32,454		6.6		11.0
Impairment of goodwill			—		53,901		—		(100.0)		100.0
EBITDA (a)(c)(l)			381,146		224,384	(f)	218,360	(k)	69.9		2.8
Adjustments:
Change in deferred revenue
		Gross Billings	2,243,023		2,233,226		2,187,753	(j)
		Revenue	(2,248,918)		(2,115,905)	(f)	(2,056,235)
	Change in Future Redemption Costs (b)		11,640		472		(64,344)
		(Change in Net Loyalty Units outstanding x Average Cost of Rewards per Loyalty Unit for the period)
	Distribution received from an equity-accounted investment		15,712		—		—
Subtotal of Adjustments			21,457		117,793		67,174
Adjusted EBITDA (c)			402,603		342,177		285,534	(j)(k)	17.7		19.8
Net earnings (loss) attributable to equity holders of the Corporation			165,167	(h)	(59,678)	(f)(g)(h)	14,923	(h)(k)
Weighted average number of shares			173,015,589		179,146,339		194,748,024
Earnings per common share (d)			0.89	(h)	(0.40)	(f)(g)(h)	0.02	(h)(k)
Net earnings (loss) attributable to equity holders of the Corporation			165,167	(h)	(59,678)	(f)(g)(h)	14,923	(h)(k)
Amortization of Accumulation Partners’ contracts, customer relationships and technology			87,234		93,474		90,308
Share of net (earnings) loss of equity-accounted investments			(2,917)		4,444		—
Impairment of goodwill			—		53,901		—
Adjusted EBITDA Adjustments (from above)			21,457		117,793		67,174
Tax on adjustments (e)			(196)		6,273		(10,918)
Non-controlling interests share on adjustments above			(2,252)		(18,042)		(5,314)
Adjusted Net Earnings(c)			268,493	(h)	198,165	(h)	156,173	(h)(j)(k)	35.5		26.9
Adjusted Net Earnings per common share (c)(d)			1.49	(h)	1.04	(h)	0.75	(h)(j)(k)
Cash flow from operations			357,443		242,541		268,105
Capital expenditures			(57,955)		(44,919)		(46,877)
Dividends			(119,992)		(113,481)		(107,577)
Free Cash Flow (c)			179,496		84,141		113,651		113.3		(26.0)
Total assets			5,246,581		4,931,733		5,140,964
Total long-term liabilities			1,758,139		1,313,201		1,621,735
Total dividends per preferred share			1.625		1.625		1.530
Total dividends per common share			0.630		0.575		0.500

(a)	Excludes depreciation and amortization as well as amortization of Accumulation Partners’ contracts, customer relationships and technology.
(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 declared 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 $113.3 million to revenue from Loyalty Units attributable to the years prior to 2011. Of the total adjustment, $82.0 million is attributable to the Nectar Program and $31.3 million is attributable to the Air Miles Middle East program.
(g)	Includes a goodwill impairment charge of $53.9 million recorded in the fourth quarter of 2011 related to the US proprietary loyalty business.
(h)	Interest expense for the years ended December 31, 2012, 2011 and 2010 includes the effect of a charge recognized as a result of the ECJ VAT Judgment amounting to $4.5 million (£2.8 million), $4.4 million (£2.8 million) and $7.2 million (£4.5 million), respectively.
(i)	These figures exclude any effect attributable to the change in Breakage estimates made in the fourth quarter of 2011 in the Nectar and Air Miles Middle East programs.
(j)	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.
(k)	Includes the non comparable effect of a $17.4 million (£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 (£33.4 million), representing input tax credits attributable to the period from 2002 to 2009, was charged to cost of rewards and $1.6 million (£1.0 million) to operating expenses. Operating expenses were also reduced by the reversal of a provision of $7.2 million (£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 (£19.0 million) related to the LMG acquisition following the unfavourable ECJ VAT Judgment.
(l)	Excludes the goodwill impairment charge.

			Three Months Ended December 31,				%∆
(in thousands of Canadian dollars , except share and per share information)			2012		2011		Q4
Gross Billings			615,055		621,109		(1.0)
Gross Billings from the sale of Loyalty Units			429,534		425,208		1.0
Total revenue			678,179		560,683	(f)	21.0
Cost of rewards and direct costs			(412,651)		(423,788)		(2.6)
Gross margin before depreciation and amortization (a)			265,528		136,895	(f)	94.0
Depreciation and amortization			(12,013)		(11,698)		2.7
Amortization of Accumulation Partners’ contracts, customer relationships and technology			(24,831)		(24,143)		2.8
Gross margin			228,684		101,054	(f)	126.3
Operating expenses			(153,551)		(204,216)	(h)	(24.8)
Amortization of Accumulation Partners’ contracts, customer relationships and technology			24,831		24,143		2.8
Operating income (loss) before amortization of Accumulation Partners’ contracts, customer relationships and technology			99,964		(79,019)	(f)(h)	226.5
Depreciation and amortization			12,013		11,698		2.7
Impairment of goodwill			—		53,901		(100.0)
EBITDA (a)(c)(j)			111,977		(13,420)	(f)	934.4
Adjustments:
Change in deferred revenue
		Gross Billings	615,055		621,109
		Revenue	(678,179)		(560,683)	(f)
	Change in Future Redemption Costs (b)		53,504		42,972	(g)
		(Change in Net Loyalty Units outstanding x Average Cost of Rewards per Loyalty Unit for the period)
Distribution received from an equity-accounted investment			15,712		—
Subtotal of Adjustments			6,092		103,398
Adjusted EBITDA (c)			118,069		89,978	(g)	31.2
Net earnings (loss) attributable to equity holders of the Corporation			56,812	(i)	(126,267)	(f)(h)(i)
Weighted average number of shares			172,123,799		173,774,352
Earnings per common share (d)			0.31	(i)	(0.74)	(f)(h)(i)
Net earnings (loss) attributable to equity holders of the Corporation			56,812	(i)	(126,267)	(f)(h)(i)
Amortization of Accumulation Partners’ contracts, customer relationships and technology			24,831		24,143
Share of net loss of equity-accounted investments			374		10,303
Impairment of goodwill			—		53,901
Adjusted EBITDA Adjustments (from above)			6,092		103,398
Tax on adjustments (e)			(1,377)		405
Non-controlling interests share on adjustments above			(889)		(26,372)
Adjusted Net Earnings(c)			85,843	(i)	39,511	(g)(i)	117.3
Adjusted Net Earnings per common share (c)(d)			0.48	(i)	0.21	(g)(i)
Cash flow from operations			100,570		27,623
Capital expenditures			(23,506)		(15,185)
Dividends			(30,374)		(28,900)
Free Cash Flow (c)			46,690		(16,462)		383.6
Total assets			5,246,581		4,931,733
Total long-term liabilities			1,758,139		1,313,201
Total dividends per preferred share			0.406		0.406
Total dividends per common share			0.160		0.150

(a)	Excludes depreciation and amortization as well as amortization of Accumulation Partners’ contracts, customer relationships and technology.
(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 declared 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 $127.1 million to revenue from Loyalty Units, with $113.3 million attributable to the years prior to 2011 and $13.8 million attributable to the first three quarters of 2011.  Of the total adjustment, $89.0 million is attributable to the Nectar Program and $38.1 million is attributable to the Air Miles Middle East program.
(g)	The Change in Future Redemption costs for the quarter ended December 31, 2011 includes an unfavorable impact of $11.3 million resulting from the adjustments to the Breakage estimates related to the Nectar and Air Miles Middle East programs attributable to the first three quarters of 2011.
(h)	Includes a goodwill impairment charge of $53.9 million recorded in the fourth quarter of 2011 related to the US proprietary loyalty business.
(i)	Interest expense for the three months ended December 31, 2012 and 2011 includes the effect of a charge recognized as a result of the ECJ VAT Judgment amounting to $1.1 million (£0.7 million) and $1.0 million (£0.7 million), respectively.
(j)	Excludes the goodwill impairment charge.

SEGMENTED INFORMATION

At December 31, 2012, the Corporation had three reportable and operating
segments: Canada, EMEA and US & APAC. The tables below summarize the
relevant financial information by operating segment:

		Years Ended December 31,
(in thousands of Canadian dollars)		2012		2011(f)		2012		2011(f)		2012		2011(f)		2012		2011		2012		2011(f)		2012		2011(f)
Operating Segments		Canada				EMEA				US & APAC				Corporate(b)				Eliminations				Consolidated
Gross Billings		1,292,551		1,300,510		639,851	(c)	571,598	(c)	315,205	(c)	366,502	(c)	—		—		(4,584)		(5,384)		2,243,023	(c)	2,233,226	(c)
Gross Billings from the sale of Loyalty Units		1,079,793		1,078,504		548,636		482,297		—		—		—		—		—		—		1,628,429		1,560,801
Revenue from Loyalty Units		1,109,523		1,102,463		528,359		331,284	(g)	—		—		—		—		—		—		1,637,882		1,433,747	(g)
Revenue from proprietary loyalty services		158,169		177,695		15,191		25,057		312,337		364,506		—		—		—		—		485,697		567,258
Other revenue		49,731		49,714		75,608		65,186		—		—		—		—		—		—		125,339		114,900
Intercompany revenue		17		1,018		304		586		4,263		3,780		—		—		(4,584)		(5,384)		—		—
Total revenue		1,317,440		1,330,890		619,462		422,113	(g)	316,600		368,286		—		—		(4,584)		(5,384)		2,248,918		2,115,905	(g)
Cost of rewards and direct costs		693,044		726,580		438,639		384,108		169,563		224,616		—		—		(321)		(2,430)		1,300,925		1,332,874
Gross margin before depreciation and amortization		624,396		604,310		180,823		38,005	(g)	147,037		143,670		—		—		(4,263)		(2,954)		947,993		783,031	(g)
Depreciation and amortization (a)		95,170		100,197		17,005		13,884		13,484		15,426		—		—		—		—		125,659		129,507
Gross margin		529,226		504,113		163,818		24,121	(g)	133,553		128,244		—		—		(4,263)		(2,954)		822,334		653,524	(g)
Operating expenses before the undernoted		225,040		223,482		141,995		137,600		138,277		153,501		53,260		41,282		(4,263)		(2,954)		554,309		552,911
	Share-based compensation	—		—		—		—		—		—		12,538		5,736		—		—		12,538		5,736
	Impairment of goodwill (h)	—		—		—		—		—		53,901		—		—		—		—		—		53,901
Total operating expenses		225,040		223,482		141,995		137,600		138,277		207,402		65,798		47,018		(4,263)		(2,954)		566,847		612,548
Operating income (loss)		304,186		280,631		21,823		(113,479)	(g)	(4,724)		(79,158)		(65,798)		(47,018)		—		—		255,487		40,976	(g)
Adjusted EBITDA (i)		396,137		372,642		49,187		28,168		7,365		(11,615)		(50,086)	(j)	(47,018)		—		—		402,603	(j)	342,177
Additions to non-current assets (d)		32,269		24,056		18,675		16,455		7,011		4,408		2,273		—		N/A		N/A		60,228		44,919
Non-current assets (d)		3,190,837		3,259,974		468,782	(e)	459,729	(e)	77,805	(e)	43,948	(e)	2,156		—		N/A		N/A		3,739,580	(e)	3,763,651	(e)
Deferred revenue		1,790,540		1,815,595		438,985		412,815		24,133		14,324		—		—		N/A		N/A		2,253,658		2,242,734
Total assets		3,883,248		3,796,092		998,514		931,724		228,291		149,512		136,528		54,405		N/A		N/A		5,246,581		4,931,733

(a)	Includes depreciation and amortization as well as amortization of Accumulation Partners’ contracts, customer relationships and technology.
(b)	Includes expenses that are not directly attributable to any specific operating segment. Corporate also includes the financial position and operating results of our operations in India, the investments in PLM, Prismah and Cardlytics.
(c)	Includes third party Gross Billings of $525.2 million in the UK and $191.5 million in the US for the year ended December 31, 2012, compared to third party Gross Billings of $466.8 million in the UK and $196.3 million in the US for the year ended December 31, 2011. 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.
(d)	Non-current assets includes amounts relating to goodwill, intangible assets and property and equipment.
(e)	Includes non-current assets of $418.2 million in the UK and $71.1 million in the US as of December 31, 2012, compared to non-current assets of $408.4 million in the UK and $38.0 million in the US as of December 31, 2011.
(f)	Intercompany revenue and expenses related to the comparative period have been reclassified to conform with the presentation adopted in the current period.
(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 $113.3 million to revenue from Loyalty Units attributable to the years prior to 2011. Of the total adjustment, $82.0 million is attributable to the Nectar Program and $31.3 million is attributable to the Air Miles Middle East program.
(h)	The goodwill impairment charge recorded during the year ended December 31, 2011 related to the US proprietary loyalty business.
(i)	A non-GAAP measurement.
(j)	Adjusted EBITDA includes distributions received from an equity-accounted investment, amounting to $15.7 million for the year ended December 31, 2012.

		Three Months Ended December 31,
(in thousands of Canadian dollars)		2012		2011(f)		2012		2011(f)		2012		2011(f)		2012		2011		2012		2011(f)		2012		2011(f)
Operating Segments		Canada				EMEA				US & APAC				Corporate(b)				Eliminations				Consolidated
Gross Billings		336,232		335,307		177,586	(c)	172,919	(c)	102,265	(c)	115,735	(c)	—		—		(1,028)		(2,852)		615,055	(c)	621,109	(c)
Gross Billings from the sale of Loyalty Units		278,780		279,103		150,754		146,105		—		—		—		—		—		—		429,534		425,208
Revenue from Loyalty Units		267,678		291,230		223,728		73,128	(g)	—		—		—		—		—		—		491,406		364,358	(g)
Revenue from proprietary loyalty services		45,314		44,017		4,276		5,375		101,858		112,872		—		—		—		—		151,448		162,264
Other revenue		12,546		12,080		22,779		21,981		—		—		—		—		—		—		35,325		34,061
Intercompany revenue		5		298		48		157		975		2,397		—		—		(1,028)		(2,852)		—		—
Total revenue		325,543		347,625		250,831		100,641	(g)	102,833		115,269		—		—		(1,028)		(2,852)		678,179		560,683	(g)
Cost of rewards and direct costs		172,597		182,290		182,578		168,716		57,529		74,063		—		—		(53)		(1,281)		412,651		423,788
Gross margin before depreciation and amortization		152,946		165,335		68,253		(68,075)	(g)	45,304		41,206		—		—		(975)		(1,571)		265,528		136,895	(g)
Depreciation and amortization (a)		25,257		24,730		4,881		3,727		6,706		7,384		—		—		—		—		36,844		35,841
Gross margin		127,689		140,605		63,372		(71,802)	(g)	38,598		33,822		—		—		(975)		(1,571)		228,684		101,054	(g)
Operating expenses before the undernoted		58,912		60,418		36,910		34,897		38,018		44,136		18,172		12,887		(975)		(1,571)		151,037		150,767
	Share-based compensation	—		—		—		—		—		—		2,514		(452)		—		—		2,514		(452)
	Impairment of goodwill (i)	—		—		—		—		—		53,901		—		—		—		—		—		53,901
Total operating expenses		58,912		60,418		36,910		34,897		38,018		98,037		20,686		12,435		(975)		(1,571)		153,551		204,216
Operating income (loss)		68,777		80,187		26,462		(106,699)	(g)	580		(64,215)		(20,686)		(12,435)		—		—		75,133		(103,162)	(g)
Adjusted EBITDA (j)		100,312		98,701		16,013		6,176	(h)	6,718		(2,464)		(4,974)	(k)	(12,435)		—		—		118,069	(k)	89,978	(h)
Additions to non-current assets (d)		12,351		7,771		8,964		6,268		2,191		1,146		—		—		N/A		N/A		23,506		15,185
Non-current assets (d)		3,190,837		3,259,974		468,782	(e)	459,729	(e)	77,805	(e)	43,948	(e)	2,156		—		N/A		N/A		3,739,580	(e)	3,763,651	(e)
Deferred revenue		1,790,540		1,815,595		438,985		412,815		24,133		14,324		—		—		N/A		N/A		2,253,658		2,242,734
Total assets		3,883,248		3,796,092		998,514		931,724		228,291		149,512		136,528		54,405		N/A		N/A		5,246,581		4,931,733

(a)	Includes depreciation and amortization as well as amortization of Accumulation Partners’ contracts, customer relationships and technology.
(b)	Includes expenses that are not directly attributable to any specific operating segment. Corporate also includes the financial position and operating results of our operations in India, the investments in PLM, Prismah and Cardlytics.
(c)	Includes third party Gross Billings of $148.4 million in the UK and $67.0 million in the US for the three months ended December 31, 2012, compared to third party Gross Billings of $137.6 million in the UK and $56.6 million in the US for the three months ended December 31, 2011. 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.
(d)	Non-current assets includes amounts relating to goodwill, intangible assets and property and equipment.
(e)	Includes non-current assets of $418.2 million in the UK and $71.1 million in the US as of December 31, 2012, compared to non-current assets of $408.4 million in the UK and $38.0 million in the US as of December 31, 2011.
(f)	Intercompany revenue and expenses related to the comparative period have been reclassified to conform with the presentation adopted in the current period.
(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 $127.1 million to revenue from Loyalty Units, with $113.3 million attributable to the years prior to 2011 and $13.8 million attributable to the first three quarters of 2011. Of the total adjustment, $89.0 million is attributable to the Nectar Program and $38.1 million is attributable to the Air Miles Middle East program.
(h)	The Change in Future Redemption costs for the quarter ended December 31, 2011 includes an unfavorable impact of $11.3 million resulting from the adjustments to the Breakage estimates related to the Nectar and Air Miles Middle East programs attributable to the first three quarters of 2011.
(i)	The goodwill impairment charge recorded during the year ended December 31, 2011 related to the US proprietary loyalty business.
(j)	A non-GAAP measurement.
(k)	Adjusted EBITDA includes distributions received from an equity-accounted investment, amounting to $15.7 million for the three months ended December 31, 2012.

 

 

 

 

 

 

SOURCE: AIMIA

 

Contact:

Media
Krista Pawley
416- 352 3794
krista.pawley@aimia.com

JoAnne Hayes
416-352-3706
joanne.hayes@aimia.com

Analysts & Investors
Karen Keyes
514-205-7163
karen.keyes@aimia.com

Trish Moran
416-352-3728
trish.moran@aimia.com

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