UIGEA hurts Neteller full year results

11.03.2008

Online cash processor Neteller plc released its audited preliminary results for the full year 2007 this week, showcasing pre-tax losses of US$185.7 million for the full year (2006: profit of $107 million).

A $136 million settlement with the US Department of Justice in respect of alleged involvement in online gambling (see previous InfoPowa reports) and related costs of $37 million were mainly responsible for the dismal performance.

The US situation and Neteller's withdrawal from that market also impacted full year group revenues, which dropped to $84 million compared with $257.3 million in 2006. Non-US operations contributed $69 million of that total - a 15 percent rise over 2006.

European revenue grew 28 percent to $ 41.7 million in 2007, whilst the Asia Pacific business grew 44 percent to $ 11.4 million.

Margins for 2007 were 56 percent (2006: 70 percent), and fees per active customer were $124 for 2007, an 8 percent increase on 2006's $115. Neteller's non-North American active users totalled 99 984 in Q4 2007, up 9 percent from Q4 2006.

The company reported a solid balance sheet at 31 December 2007 with $ 80.8 million in cash and cash equivalents.

Trading during the first two months of 2008 showed continued growth, and the final payment of $ 38.25 million was made to US authorities on 16 January 2008.

The results included an announcement regarding a joint venture with Centricom Europe to distribute the POLi online bank payment platform in Europe, and the UK launch of the POLi payment service through subsidiary Netbanx. In August 2007, Neteller announced it had taken a 25 percent strategic stake in Australian POLi operator, Centricom Pty Ltd (see previous InfoPowa report). The European initiative is a 50/50 joint venture between both parties.

Ron Martin, President & Chief Executive Officer of Neteller, said: "2007 represented a milestone for the Group as we successfully resolved our issues with the US authorities, and energetically refocused the business to put into action our updated vision and mission. The renewal of the Group's businesses to leverage changed market opportunities has created energy and enthusiasm throughout the organisation. I am confident this will be reflected in our performance in 2008. I would like to thank all our employees for their contributions during a very challenging period in 2007 and I look forward to greater progress into 2008 and beyond."