Trintech cuts losses with payments systems divestment

Following the announcement of the impending sale of its payments systems business to VeriFone Holdings Inc., Trintech is required to present its financial results on a continuing and discontinuing basis. This requirement has resulted in the presentation of financial results showing second quarter revenues for the continuing business (the Funds Management Systems business) of $6.0 million and a net loss in the quarter for the continuing business of $94,000. The net loss incurred in the quarter for the continuing and discontinuing businesses amounted to $2.1 million.

Highlights

• Revenue for the continuing business amounted to $6.0 million compared to $5.3 million last year, reflecting growth in the Funds Management Systems ("FMS") business. Revenue for the discontinuing payment systems business amounted to $6.5 million compared to $7.3 million in the corresponding quarter last year
• Gross profit for the continuing business amounted to $4.6 million in Q2, representing 76% of revenue, compared to $4.3 million and 80% in Q2 last year
• Trintech has increased expenditure quarter on quarter in research and development for the FMS business from $587,000 in Q2 last year to $1.1 million in the same quarter this year. This investment is focused on enhancing the functionality of the FMS software platform with a view to targeting new vertical markets for its reconciliation suite of products. This investment has had a short term negative impact on earnings and will continue to do so through the end of the 2007 fiscal year
• Trintech has also increased expenditure quarter on quarter in sales and marketing for the FMS business from $1.2 million in Q2 last year to $1.8 million in the same quarter this year. This investment is targeted at growing the sales and distribution network for Trintech's reconciliation products both in the USA and internationally
• Trintech incurred a net loss from continuing operations of $94,000 and Adjusted EBITDA net income from continuing operations of $164,000. When combined with the loss from discontinuing operations of $2.0 million, Trintech incurred a total loss in the quarter of $2.1 million
• Combined basic and diluted net loss per equivalent ADS for the quarter ended July 31, 2006 was $0.14, compared with a basic and diluted net loss per equivalent ADS of $0.24 for the corresponding quarter ended July 31, 2005. Basic and diluted net loss per equivalent ADS for the continuing and discontinuing operations amounted to $0.01 and $0.13, respectively for the quarter ended July 31, 2006.

"Trintech is divesting its payment systems business to reinforce its strategic focus on its FMS business," said Cyril McGuire, Chairman and Chief Executive Officer. "Trintech established a successful track record of innovation and leadership in key emerging segments of the payments market. Trintech's payments product set will have a strong strategic fit with VeriFone's business. The proposed transaction represents an excellent opportunity for the customers, employees and shareholders of Trintech. The future growth of Trintech will be focused on its FMS software business which is a proven business with a strong core customer base and an established market position. We propose to expand this business franchise through our investment in new products and markets. We will also continue to seek further acquisition opportunities in the FMS target market."

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