LML Reports Profitable Results for the Second Quarter and Six Month Period of Fiscal 2012


Q2 and Six Month Revenue Increase 124% and 73% Respectively

Profitability Achieved Across All Three Business Units

VANCOUVER, British Columbia, Nov. 9, 2011 (GLOBE NEWSWIRE) -- LML PAYMENT SYSTEMS INC. ("LML") (Nasdaq:LMLP), a leading payments technology provider of financial payment processing solutions for e-commerce and traditional businesses, reports results for its second quarter and six month period ended September 30, 2011.

Revenue for the second quarter ended September 30, 2011 was $13,006,000, an increase of 124% over the $5,819,000 in revenue for the second quarter ended September 30, 2010. Gross profit for the quarter was $7,396,000 or 57%. Net income for the quarter was $3,477,000, or $0.12 per share, compared to net income of $184,000, or $0.01 per share, for the second quarter ended September 30, 2010, an improvement of $3,293,000 or $0.11 per share.

Revenue for the six month period ended September 30, 2011 was $18,983,000 an increase of 73% from revenue of $10,950,000 for the six month period ended September 30, 2010. Gross profit for the six months ended September 30, 2011 was $10,050,000 or 53%. Net income for the same period was $4,169,000, or $0.15 per share, compared to net income of $725,000 or $0.03 per share, for the same period during fiscal 2011, an improvement of $3,444,000 or $0.12 per share. 

"We are pleased to announce these profitable results for both the second quarter and first six month period of our fiscal year. All three of our business units achieved profitability. Revenue from our TPP segment continued to grow over 30% for both the quarter and the six month period, easily eclipsing the industry growth rate of 15%. Despite declining check usage, our check segment produced a modest profitable contribution for both the quarter and six month period. We continued the successful monetization of our intellectual property assets as we licensed more defendants in our patent litigation on a fully paid-up non-recurring basis resulting in total IPL segment revenue of $8.6 million for the quarter and $10.3 million for the six month period. We anticipate the successful monetization of our intellectual property assets will support partnerships and other inorganic growth objectives as the payments landscape continues onward with its exciting evolution," said Patrick H. Gaines, Chief Executive Officer. 

Q2 Highlights

  • Overall revenue increases 124% year over year
  • Transaction Payment Processing segment revenue increases 31% year over year
  • Subsidiary Beanstream launches innovative shopping cart and AIR MILES® reward miles program for city of Edmonton's Transit System
  • IP segment revenue of $8.6 million
  • Net income of $3,477,000 compared to $184,000 last year


6 Months Highlights

  • Overall revenue increases 73% year over year
  • Transaction Payment Processing segment revenue increases 31% year over year
  • Subsidiary LML Patent Corp. settles litigation with four defendants in Eastern District of Texas cases driving IP revenue of $10.3 million. 
  • All three business segments achieve profitability
  • Net income of $4,169,000 compared to $725,000 last year


Conference Call

Management will host a conference call on November 10, 2011 at 1:30pm Pacific Time (4:30pm Eastern Time) to discuss these results. To participate in the conference call, please dial in 5-10 minutes before the start of the call and follow the operator's instruction. If you are calling from the United States or Canada, please dial 888-754-4437. International callers please dial 212-231-2902. 

If you are unable to join the call, an audio recording of the call will be available on our website at www.lmlpayment.com.

About LML Payment Systems Inc. (www.lmlpayment.com)

LML Payment Systems Inc., through its Canadian subsidiary Beanstream Internet Commerce Inc., and its U.S. subsidiaries Beanstream Internet Commerce Corp. and LML Payment Systems Corp., is a leading provider of financial payment processing solutions for e-commerce and traditional businesses. We provide credit card processing, online debit, electronic funds transfer, automated clearinghouse payment processing and authentication services, along with routing of selected transactions to third party processors and banks for authorization and settlement. Our intellectual property estate, owned by subsidiary LML Patent Corp., includes U.S. Patent No. RE40,220, No. 6,354,491, No. 6,283,366, No. 6,164,528, and No. 5,484,988 all of which relate to electronic check processing methods and systems.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all passages containing verbs such as "aims," "anticipates," "estimates," "expects," "intends," "plans," "predicts," "projects" or "targets" or nouns corresponding to such verbs. Forward-looking statements also include any other passages that are primarily relevant to expected future events or that can only be evaluated by events that will occur in the future. Forward-looking statements are based on the opinions and estimates of the management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could affect LML's actual results include, among others, the impact, if any, of stock-based compensation charges, the potential failure to establish and maintain strategic relationships, inability to integrate recent and future acquisitions, inability to develop new products or product enhancements on a timely basis, inability to protect our proprietary rights or to operate without infringing the patents and proprietary rights of others, and quarterly and seasonal fluctuations in operating results. More information about factors that potentially could affect LML's financial results is included in LML's quarterly reports on Form 10-Q and our most recent annual report on Form 10-K filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance upon these forward-looking statements that speak only as to the date of this release. Except as required by law, LML undertakes no obligation to update any forward-looking or other statements in this press release, whether as a result of new information, future events or otherwise.

 
LML PAYMENT SYSTEMS INC.
 
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
(In U.S. Dollars)
(Unaudited)
     
  Three Months Ended Six Months Ended
  September 30 September 30
  2011 2010 2011 2010
         
REVENUE $13,006,477 $5,819,252 $18,982,801 $10,950,171
COST OF REVENUE 5,610,876 3,166,567 8,932,702 5,772,349
GROSS PROFIT 7,395,601 2,652,685 10,050,099 5,177,822
         
OPERATING EXPENSES        
 General and administrative 939,234 1,186,941 1,828,380 2,244,858
 Sales and marketing 117,439 252,459 327,662 360,795
 Product development and enhancement 222,016 179,836 469,211 306,884
 Amortization of intangible assets 165,645 165,643 331,290 331,288
INCOME BEFORE OTHER INCOME AND INCOME TAXES 5,951,267 867,806 7,093,556 1,933,997
         
 Foreign exchange (loss) gain (34,394) (66,831) (2,744) 1,071
 Other expense -- (4,838) -- (4,838)
 Interest income 11,708 6,178 28,885 12,297
 INCOME BEFORE INCOME TAXES 5,928,581 802,315 7,119,697 1,942,527
         
 Income tax expense (recovery)        
 Current 2,244,201 43,465 2,452,233 (297,753)
 Deferred 207,485 575,154 497,999 1,515,479
  2,451,686 618,619 2,950,232 1,217,726
         
NET INCOME 3,476,895 183,696 4,169,465 724,801
         
OTHER COMPREHENSIVE (LOSS) INCOME        
 Unrealized foreign exchange (loss) gain on translation of foreign
 operations
 
(398,154)
 
105,762
 
(383,791)
 
13,826
         
TOTAL COMPREHENSIVE INCOME $3,078,741 $289,458 $3,785,674 $738,627
         
EARNINGS PER SHARE, basic $0.12 $0.01 $0.15 $0.03
EARNINGS PER SHARE, diluted $0.12 $0.01 $0.14 $0.03
         
WEIGHTED AVERAGE SHARES OUTSTANDING        
 Basic 28,233,434 27,251,984 28,191,808 27,251,984
 Diluted 28,898,811 27,475,899 28,932,332 27,517,600
 
LML PAYMENT SYSTEMS INC.
 
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In U.S. Dollars, except as noted below)
(Unaudited)
     
  As at September 30, As at March 31,
  2011 2011
ASSETS    
     
Current assets    
Cash and cash equivalents $24,920,284 $26,917,491
Funds held for merchants 8,559,944 7,164,420
Short term investments 3,100,553 --
Restricted cash 175,000 175,000
Accounts receivable, less allowance of $26,129 and $28,152, respectively 1,163,726 1,103,529
Corporate taxes receivable 259,054 101,162
Prepaid expenses 228,115 266,066
Total current assets 38,406,676 35,727,668
     
Property and equipment, net 138,782 163,222
Patents 204,167 287,877
Restricted cash 250,448 262,644
Deferred tax assets 691,748 1,189,747
Goodwill 17,874,202 17,874,202
Other intangible assets 3,967,612 4,215,187
Other assets 20,387 21,041
     
Total assets $61,554,022 $59,741,588
     
 LIABILITIES    
     
Current liabilities    
Accounts payable $578,941 $702,820
Accrued liabilities 999,025 1,390,847
Corporate taxes payable 2,101,633 4,796,157
Funds due to merchants 8,559,944 7,164,420
Current portion of obligations under finance lease 2,460 2,460
Current portion of deferred revenue 1,334,469 1,420,228
Total current liabilities 13,576,472 15,476,932
     
Obligations under finance lease 6,060 7,380
     
Deferred revenue 370,050 935,979
     
Total liabilities 13,952,582 16,420,291
     
COMMITMENTS AND CONTINGENCIES    
     
 SHAREHOLDERS' EQUITY    
Capital stock    
Class A, preferred stock, $1.00 CDN par value, 150,000,000 shares authorized, issuable in series, none issued
or outstanding
 
--
--
Class B, preferred stock, $1.00 CDN par value, 150,000,000 shares authorized, issuable in series, none issued
or outstanding
 
--
--
Common shares, no par value, 100,000,000 shares authorized, 28,233,434 and 28,127,184 issued and
outstanding, respectively
 
53,883,659
53,557,276
     
Contributed surplus 8,987,092 8,819,006
Warrants 113,662 113,662
Deficit (15,393,736) (19,563,201)
Accumulated other comprehensive income 10,763 394,554
Total shareholders' equity 47,601,440 43,321,297
     
Total liabilities and shareholders' equity $61,554,022 $59,741,588
 
LML PAYMENT SYSTEMS INC.
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. Dollars)
(Unaudited)
     
  Three Months Ended Six Months Ended
  September 30 September 30
  2011 2010 2011 2010
         
Operating Activities:        
Net income $3,476,895 $183,696 $4,169,465 $724,801
Adjustments to reconcile net income to net cash provided by operating
activities
       
 Amortization of property and equipment 25,038 29,804 59,278 67,333
 Amortization of intangible assets 165,645 165,643 331,290 331,288
 Share-based payments 152,657 654,297 289,094 784,811
 Deferred income taxes 207,485 575,154 497,999 1,515,479
 Foreign exchange loss (gain) 195,701 (1,496) 191,998 (1,496)
         
Changes in non-cash operating working capital        
Funds held in trust -- (361,684) -- (361,684)
Accounts receivable 746,074 (67,015) (138,794) (123,070)
Corporate taxes receivable (106,308) (81,834) (165,477) (426,127)
Prepaid expenses 10,818 (21,890) 32,325 (9,825)
Accounts payable and accrued liabilities (309,966) 10,847 (447,990) 243,710
Corporate taxes payable 1,654,084 -- (2,682,836) --
Deferred revenue (332,653) (285,835) (638,600) (552,778)
Net cash provided by operating activities 5,885,470 799,687 1,497,752 2,192,442
         
Investing Activities:        
Acquisition of short term investments (3,294,525) -- (3,294,525) --
Acquisition of property and equipment (20,334) (26,861) (41,576) (30,281)
Net cash used in investing activities (3,314,859) (26,861) (3,336,101) (30,281)
         
Financing Activities:        
Principal payments on finance leases (1,321) (4,884) (1,321) (9,202)
Proceeds from exercise of stock options -- -- 205,375 --
Net cash (used in) provided by financing activities (1,321) (4,884) 204,054 (9,202)
         
Effects of foreign exchange rate changes on cash and cash equivalents (375,299) 63,696 (362,912) (690)
         
INCREASE (DECREASE)  IN CASH AND CASH EQUIVALENTS 2,193,991 831,638 (1,997,207) 2,152,269
         
Cash and cash equivalents, beginning of period 22,726,293 6,390,394 26,917,491 5,069,763
         
Cash and cash equivalents, end of period $24,920,284 $7,222,032 $24,920,284 $7,222,032
         
Supplemental disclosure of cash flow information        
Interest paid $-- $-- $-- $--
Taxes paid $697,000 $-- $5,296,921 $--

            

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