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2009 Audited Results

17th Mar 2010 07:00

RNS Number : 6956I

Neovia Financial PLC

17 March 2010

NEOVIA Financial Plc

2009 Audited Results

Wednesday, 17 March 2010 - NEOVIA Financial Plc (LSE: NEO) ("NEOVIA" or the "Group"), the leading alternative payments business, presents its audited results for the year ended 31 December 2009.

Financial highlights

·; Group total revenue of $64.5m, down 15% (2008: $75.9m);

·; Fee revenue of $62.9m in 2009, down 10% (2008: $69.8m);

·; Gross margin at 54.6% in 2009 (2008: 61.8%);

·; EBITDA of $8.0m in 2009 (2008: $16.0 million);

·; Loss before tax and other items of $1.7m (2008: profit $6.4m); and

·; Total Group cash of $73.5m at 31 December 2009 (2008: $82.3m).

Key performance indicators

·; Active e-wallet users totalled 99,978 in Q4 2009 (Q4 2008: 97,673);

·; E-wallet fee revenue per active e-wallet user $116 for 2009 (2008: $128);

·; Average daily sign ups 1,048 for 2009 (2008: 981); and

·; Average daily receipts $488,641 for 2009 (2008: $457,442).

Operational highlights

·; Newteller platform running, completion in April 2010 after extended testing period;

·; Focus on cost control with Business Transformation process commenced in first quarter; and

·; Transition to new CEO completed; substantial progress on evolving Group strategy.

Dale Johnson, Chairman, commented: "Following a transition year characterised by progress in dealing with internal and external challenges, including weaker market conditions, the Board has renewed confidence in its updated business strategy and executive leadership to deliver significantly improved shareholder value in 2010 and beyond.

A relentless pursuit of improved operational efficiency, energetic organic revenue growth and a disciplined approach to strategic development opportunities are expected to drive materially improved financial performance.

The fourth quarter of 2009 saw stronger performance for both the e-wallet and NETBANX businesses compared to the third quarter, and revenue for the first two months of 2010 was in line with management's expectations. The Board continues to be optimistic about the outlook for NEOVIA and remains confident about the Group's prospects going forward with its adoption of a renewed strategy for growth."

For further information contact:

NEOVIA Financial Plc Email: investorrelations@neovia.com + 44 (0) 207 638 9571 (17 March)


Mark Mayhew	President & CEO
Doug Terry	CFO
Andrew Gilchrist	VP Communications	+ 44 (0) 1624 698 713

Citigate Dewe Rogerson		+ 44 (0) 207 638 9571
Sebastian Hoyle / George Cazenove

Daniel Stewart & Co Plc		+ 44 (0) 207 776 6550
Paul Shackleton

Conference call details and further information

NEOVIA will hold a briefing for invited UK-based analysts at the offices of Citigate Dewe Rogerson, 3 London Wall Buildings, London, EC2M 5SY, later this morning at 11.00 a.m. From this time, copies of the analyst presentation and the Group's annual report and accounts will be available on the Company's website, www.neovia.com.

NEOVIA management will also host a conference call on 17 March 2010 at 2.00 pm GMT (10.00 a.m. EST) for analysts and institutional investors that can be accessed by dialling 0800 028 1277 (UK free call) or +44 (0)20 7806 1957 (International) or 1888 935 4577 (USA free-call). This call will take the format of a short introduction by management, followed by a Question and Answer session. A recording of the conference call will be available for a period of 7 days from 18 March 2010 (until 25 March 2010). To access the recording please dial the following replay telephone number: +44 (0)20 7111 1244. The passcode for this replay is 1370486#.

For any other information please contact NEOVIA Investor Relations at investorrelations@neovia.com.

* * * * *

About NEOVIA Financial

Trusted by consumers and businesses in over 170 countries to move and manage billions of dollars each year, NEOVIA Financial Plc is a leading alternative payments business. Through the NEOVIA Payment Network, merchants use the NETBANX processing service to simplify how they accept and settle card, direct-from-bank, and cash payments, and the NETELLER payment account to increase margins, capture new customers and increase customer lifetime values. Being independent has allowed the company to support tens-of-thousands of retailers and merchants in many geographies and across multiple industries.

NEOVIA Financial Plc is quoted on the London Stock Exchange's AIM, with a ticker symbol of NEO. Subsidiary company NETELLER (UK) Ltd is authorised by the Financial Services Authority (FSA) to operate as a regulated e-money issuer.

* * * * *

Disclaimer

This document contains forward-looking statements relating to future events and future performance. In some cases, forward looking statements can be identified by terminology such as "may", "will", "should", "expects", "projects", "plans", "anticipates" and similar expressions. These statements represent management's expectations or beliefs concerning among other things, future operating results and various components thereof or the economic performance of the NEOVIA Group. The projections, estimates and beliefs contained in such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause the actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted.

Chairman's Statement

Introduction

It is 10 years since the original NETELLER e-wallet was founded in Calgary, Canada. During that time, NEOVIA (formerly NETELLER Plc) has enjoyed much success and faced more challenges than many entities would in a lifetime. Following a difficult year in 2009, we enter 2010 with a renewed sense of direction and optimism based on the vision and intense drive of our new CEO Mark Mayhew, and on improving market opportunities.

2009 performance

NEOVIA Group total revenues declined from $75.9 million in 2008 to $64.5 million in 2009. Group EBITDA was $8.0 million in 2009, down from $16.0 million in 2008. The loss after tax for 2009 was $9.8 million (2008: $8.1 million).

The Group faced many challenges during 2009, both internal and external, These included the significant impact of a globally challenging economy on our core customer market but also the consequences of internal events attaching to organisational changes and unfulfilled acquisition activity. The Group demonstrated resilience in addressing these challenges and setting the stage for significant improvement this year.

In the light of the 2009 results, the Board does not recommend the payment of a dividend but continues to keep this position under review.

People and the Board

I thank the management team and all our staff and acknowledge their efforts in a trying economy for our merchants and our members. Our ability to adapt and innovate has been one of NEOVIA's key strengths, and these characteristics remain as cornerstones to support our next phase of growth.

A key objective for the Board in 2009 was to appoint and achieve a successful transition to a new Chief Executive Officer, following the resignation of Ron Martin early in the year.

After an extensive global search, the Board was pleased to announce on 19 August the appointment of Mark Mayhew as President & Chief Executive Officer. With his strong background in payments, cards, international operations, Plc governance, consumer management and strategy formulation, Mark stood out as the right leader for NEOVIA to fulfil its vision as the global online payments business. Mark has made considerable progress since he started in the role on 1 September and he adds significantly to our confidence in delivering much improved financial results for 2010 and beyond.

I thank the members of the Board for their work throughout the year, especially during the period when the Group was without a CEO. As reported last year, the Board welcomed John Bateson and Jonathan Comerford as Non-Executive Directors in January 2009.

I extend a special thank you to two of our Non-Executive Directors, Don Lindsay and John Webster, who have indicated their intent not to seek re-election at the Company's next Annual General Meeting. Don and John have been Non-Executive Directors since the Company's admission to AIM in April 2004 and have served the Company with outstanding commitment, loyalty and professionalism throughout NEOVIA's life as a public company. The Board is currently assessing a slate of prospective Non-Executive Director candidates so that timely appointments can be made to ensure that the composition of the Board remains appropriate.

Finally, Doug Terry, the Company's Chief Financial Officer, will be stepping down from his role to pursue personal interests following the publication of the Company's results for 2009. We are grateful for Doug's contribution to the Group over the past four years in managing and controlling the Group's finance function. The Board, through the Nominations Committee, is well advanced in the process of identifying a replacement and it is intended that this individual will join the Board on appointment.

Governance

The Company remains committed to complying with the Combined Code in so far as it is applicable to a company of NEOVIA's size and nature, being an AIM quoted company. During the year the Board formed a Nominations Committee in recognition of the importance of ensuring that the composition of the Board reflects the needs of the Group on an ongoing basis.

Dividends

Given the challenging market conditions the Group faced during 2009 and the financial performance during this transition year, the Board believes it is prudent not to make a dividend payment for 2009. The Board continues to keep this position under review.

Strategy

The Group's strategy has been comprehensively reviewed, updated and refined over the past few months in pursuit of our desire to create a world class alternative payments business. Short term, we are focusing on taking advantage of the growth opportunities that leverage NEOVIA's strengths and improving broader market conditions whilst strengthening the business's positioning for a newly defined longer term strategy. This longer term strategy sees us growing the NEOVIA payment network to become the leading alternative payments company in our chosen vertical, product and geographic markets, targeting online gaming and broader e-commerce market sectors through a "twin pillars" approach based on sustainable stored value and straight-through-processing ("STP") businesses. We will do this through organic growth, stimulated by significant improvements in operating efficiency and the energetic development of our trusted brands, augmented by high quality acquisitions that deliver access to new vertical, product and geographic markets and/or provide specific skills.

Outlook

Following a transition year characterised by progress in dealing with internal and external challenges, including weaker market conditions, the Board has renewed confidence in its updated business strategy and executive leadership to deliver significantly improved shareholder value in 2010 and beyond. A relentless pursuit of improved operational efficiency, energetic organic revenue growth, and a disciplined approach to strategic development opportunities are expected to drive materially improved financial performance.

Dale Johnson

Chairman

16 March 2010

CEO's Statement

Introduction

I have been in position for six months. I have now had sufficient time to effect reviews of the operational health of the Company as well as the prevailing strategy and ambition of the Board and management colleagues to achieve the strategy.

What is clear from the financial results for 2009 is that the Board's expectations were not met; this in part reflects the significant impact of a globally challenging economy on our core customer market but also the consequences of specific internal events attaching to organisational changes and unfulfilled acquisition activity. A material loss of momentum resulted and unhelpful distractions hindered us from our key role in servicing merchants and members.

What is less clear from short term financial results is achievement against other objectives. As the Business Review that follows articulates, the position looking forward is more rosy: the outlook for "alternative payments" is very positive. The strong growth in online transactions, especially in e-commerce, appears assured into the medium term at least; further development of channels other than desktop will further stimulate traffic, whether smartphone, TV or hybrid devices; continued maturity of "social networking" and monetising the behaviour and sense of belonging to these tribal communities. Just these three factors, the market participants driving their development and the geodemographic shifts we are witnessing provide spectacular opportunity for the payments industry, globally.

My job is to see NEOVIA is both an agitator for, and beneficiary of, these changes. Ten years after the launch of the NETELLER e-wallet seems a good place to start the next chapter in the Company's development. The focus for 2010 will be to drive success on the operational agenda to deliver much improved financial health AND the key first steps to realising our strategic ambition.

Strategic and operational review

One of my first tasks was to understand what was required to make NEOVIA "fit for purpose" and to institute an immediate review of the business strategy, a collective process involving the Group's Executive Management Team and Board. Visiting the Group's operations globally, and spending the time to understand how NEOVIA operates, I came to appreciate the efforts undertaken to refocus the business following its withdrawal from the key markets of North America in 2007. However, as the broader economic climate continues to challenge even the largest, most diversified businesses, including many of our core customers, I concluded that further steps could and should be taken to align NEOVIA's cost structures and operational processes against current revenue expectations. The key focus of our efforts in 2010 will be significant simplification - what we do, how we do it and why we do it. Everything from operational footprint, via corporate structures to the service provided to our merchants. And points in between. We refer to this as Business Transformation.

The Board has therefore adopted a plan to streamline NEOVIA's costs and processes throughout this current year with the aim of delivering a sustainable improvement in operating performance as evidenced in our reported EBITDA. The first steps have already been taken in this programme which will result in a significant reduction in the employee count as certain roles are reallocated, relocated or removed. The second phase of this programme focuses on improving existing processes, removing inefficiencies and simplifying how NEOVIA operates. The full financial benefits will likely be seen in the full year 2011 performance, but the operational efficiency improvements are expected to bear material fruit this year.

To structure and lead this process, the Group recruited two individuals in December 2009 who have considerable experience of managing business transformation programmes with the scope and scale we seek. Dennis Jones joined the executive team as Head of Business Transformation and Major Programmes from RBS with substantial operational, cards, mergers and acquisitions, and international business transformation expertise. Together with Stuart Minster, Director of Business Transformation, (also from RBS

where he had senior executive responsibility for major change within the cards division and was CEO of RBS US Commercial Cards) Dennis has oversight responsibility for the change programme within NEOVIA. Phil Deeker has joined the Group as Head of Human Resources - mobilising the resources at hand requires strategic development of our skill-sets and Phil brings a wealth of experience in helping organisations focus, align and achieve outstanding results and is working alongside our existing HR team as we build our programmes, acknowledging the importance of people to our success.

2010 objectives

NEOVIA has established three key objectives for 2010: first, to "conclude, embed and leverage" the Newteller platform development. We are on track to switch over our core e-wallet processing capabilities to the new platform in April following an extensive testing regime. We will then look to "embed" Newteller within our day-to-day operations, developing new products and programmes which take full advantage of the enhanced capabilities Newteller provides. Later in 2010 will see the launch of a series of technology applications, neither feasible nor cost effective under "OldTeller", which will leverage the significant investment the Group has made and provide improved functionality and offering to our customers.

Second, we will drive the Business Transformation programme to ensure that material benefits can be achieved by end 2010, and sustained into the future. This process will impact the entire business, and we look to our people to help NEOVIA achieve the performance it is capable of.

Third, we will take the first steps to achieving the longer term strategy for the business.

Longer term strategy

NEOVIA is a payment network focused on two "core" propositions - stored value services, (through our NETELLER e-wallet and Net+ prepaid cards - together, our NETELLER Payment Account) and straight through processing (STP) through our NETBANX gateway offering. These are our "twin pillars". Success in the payments business is about achieving scale; payments is a supply-side innovative industry. Our revised strategy is to drive each of these lines of business through organic growth and investment to achieve scale. Our historic focus has been largely on the e-wallet product offering. We will seek to give greater prominence to STP going forward. We will devote significant resources to develop our capabilities so that we provide market-leading offerings to compete effectively in the vertical, product and geographic markets we choose to focus on.

Traditionally, online gaming has been the strong focus vertical for NEOVIA. Our expertise in this segment is well established (along with our brands), and we believe that we can leverage these skills across adjacent verticals. We will therefore seek to extend our offerings into additional e-commerce markets, particularly digital content and adjacent gaming markets (such as online multi-role player and video gaming). Our stored value offering has particular application for micropayments and we believe we can develop innovative products to meet the difficult payment challenges where traditional consumer products do not reach.

In pursuit of growth we will adopt "and" strategies: we will not reduce our focus on online gaming as we continue to believe significant success is achievable here. The market has been tested in 2009 and even stronger players are emerging as a result of market "conditioning" and an evolving regulatory landscape. We stand ready to serve our merchants as their business activities change and see continued relevance of our knowledge, skills product and service offerings.

Finally, our focus since 2007 has been on Europe and our emerging Asian business. We have been successful at adding local payment and funding options across many European countries. However, no alternative payments business can be truly global without exposure to North American markets. We continue to explore the best means to re-enter the online gaming market. Its regulatory situation is complex and it would be premature to conclude definitively on if, when or how the US market might be regulated. However, this fluidity presents a substantial opportunity for those organisations that are well-positioned prior to any potential regulatory change and the NETELLER brand remains a "power brand" in our armoury.

NEOVIA has identified a number of key strategic and operational objectives to clarify our intent for 2010 and beyond in support of our adopted Vision: to be the leader in frictionless payments.

Strategic objectives

·; Deliver enhanced end-to-end straight through processing capability for merchants;

·; Develop a meaningful North American market presence;

·; Build greater scale in our stored value business;

·; Broaden distribution through opening up our payment network; and

·; Extend verticals outside of gaming.

Operational objectives

·; Complete Business Transformation programme in 2010;

·; Deepen penetration in online gaming market;

·; Enhance risk management processes; and

·; Build awareness of the brand portfolio - a unified brand and identity.

Measurement of objectives

The Group has historic objectives which were established at the end of 2007 as part of the three year strategy through to 2010. Performance against these measures has been impacted by the pressures of the challenging economic environment and an inadequate focus on execution.

Objective	Measures include	Target - by end of 2010	FY 2008	FY 2009
Gaming sector pre-eminence	Active e-wallet users (1)	More than 250,000	97,673	99,978
Diversification	Non e-gaming revenue (2)	More than 30% revenue	16%	16%
Profitable business	Operating margin (3)	Greater than 35%	22%	13%

(1) Active e-wallet users are those that make any transaction with their e-wallet or Net+ card within the previous 90 day period

(2) Non e-gaming revenue is classified as revenues earned from non e-gaming merchants, NETBANX (excluding e-gaming merchants), P2P and non-gaming related investment income as a percentage of total reported revenue

(3) Operating margin is defined as operating profit before depreciation and amortisation, stock option expense, foreign exchange gain/loss, restructuring costs, impairment charges and investment gains or losses

A key part of developing a cohesive strategy is setting objectives against which our performance can be measured. The three objectives above remain valid as part of the Group's broader strategic goals, however in certain cases the measures identified do not provide a sufficiently full picture of how the Group is achieving against each objective.

The Board has therefore decided to adopt a broader basket of performance measures against which it can track achievement of the Group's strategic and operational objectives as set out above. Providing transparency as to what drives our business helps to build confidence and understanding amongst our shareholders, customers, staff and other stakeholders, which generates sustainable longer term benefits, in terms of stock market valuation, profitability and cash management.

Leveraging our key assets

A key element in achieving our Vision (and implied growth) will be the successful leadership of our people - one of NEOVIA's greatest assets. We have engaged our employees throughout the Transformation process to date, and the Executive Management Team has worked to communicate the Group's strategy and business goals. I believe strongly that a unified and clear vision with clear objectives, supportive strategies and unambiguous policies attaching to our values are essential for long-term success. Almost everything in this is new for NEOVIA for 2010 - as will be the creation of a performance culture.

The Board recognises that rewarding performance will underpin the success of the company. Therefore the Board recently approved adoption of a Long Term Incentive Plan ("LTIP") which aligns the performance of the Executive Management Team (including the CEO) with shareholders' interests. This will form part of a revised approach to incentivising the leadership team to delivering improved performance, placing a higher proportion of total compensation "at risk". The Board has set aggressive targets for the LTIP vesting criteria which are EBITDA focused. The Company's principal shareholders, representing almost 50%, were consulted in advance and indicated their support in principle for the adoption of such a plan.

Outlook

We seek to see NEOVIA poised to take full advantage of opportunities presented in our chosen markets, whether from an improved macroeconomic environment, greater effectiveness in our customer engagement or competitor deficiencies. The pace at which we are working is materially greater than has existed in recent years. We are mobilised to win. Our 2010 objectives are necessarily focused on improving our operational capabilities and building an effective, streamlined business with materially enhanced financial outcomes. Our longer term strategic efforts will be concentrated on developing our payment network along the "twin pillars" of stored value and straight-through-processing, leveraging our significant intellectual property and technology investment, especially in Newteller.

Mark Mayhew

President & CEO

16 March 2010

*****

Business Review

Introduction

NEOVIA delivered a broadly satisfactory performance for 2009 given the challenging market conditions which continued throughout the year. Group revenues decreased by 15% to $64.5 million (2008: $75.9 million) of which interest income, considerably lower at $1.6m (2008: $6.1m), was a material change.

2009 results

Revenue performance was disappointing reflecting in part the challenges faced by our core online gaming merchants for much of the year. Fee revenues from our e-wallet business fell 12%, while fees from NETBANX payment processing fell 10%, despite improvements in Asia, largely as a result of the weakening of sterling against the US dollar, our reporting currency.

Markets and customers

Online gaming remained the core market vertical for NEOVIA as we continued to reinforce our leading position in providing payment solutions to merchants in this sector. The traditional focus on online gambling merchants, particularly poker, casino and sports betting operators, has been extended to bingo and lottery operators. We announced a number of new merchants during the year, including SBOBET and JAXX. Since the year end we have seen further success with the signing of BSkyB, SEGA, Beatya!, GWBet and UWin, demonstrating the continuing attractions of the NETELLER payment account for gaming merchants.

Estimates for growth for the online gaming market in 2010 range between zero and around 10 per cent, according to certain industry commentators' assessments of the combined negative macroeconomic factors alongside market evolution. Regulation of online gaming markets, for example in Europe, is likely to be a driver of growth, as evidenced in Italy in 2009, as well as anticipated consolidation amongst the major operators as they seek to take advantage of economies of scope and scale in serving and extending their customer bases.

NEOVIA has seen some early success in extending its payment solutions into adjacent market verticals, such as the massive multiplayer online gaming market (MMOG), virtual worlds and the gaming affiliate payments market. Contract wins were announced with Mindark, the operator of the Entropia virtual universe, and with other merchants such as Travian, a leading MMOG games developer and Virwox, a virtual world currency exchanger. The NETELLER payment account has helped affiliates who drive much online gaming business to be paid simply and quickly. NETELLER won, for the third consecutive year, the iGaming Business Affiliate Award for "Best Payment System for Affiliates" and our presence at the Affiliate Trade Shows this year generated substantial interest in our offering to affiliates. Similarly, the NETELLER payment account has proven an attractive alternative option for customers to bring (and withdraw) funds from online foreign exchange trading sites. NEOVIA signed ATLAS eForex in November 2009, bringing to six the number of merchants using NETELLER in the forex trading market, with AvaFX, FxPro, RetailFX, UWC (United World Capital) and FineXO already customers of the Group.

As an alternative payments business, our growth and prospects are closely allied to the growth and development of the broader e-commerce market, particularly within our focus geographic markets of Europe and Asia Pacific. The trend for transactions moving online continued throughout 2009 despite the significant contractions in the broader economy, and it is estimated that the potential market for online e-commerce could be as large as US$450 billion (excluding North America) by 2012. We anticipate that our chosen markets could grow around 10% in 2010, as online purchasing activity is driven by increased broadband penetration and customer familiarity and trust in alternative payments.

Key performance indicators

The Group's primary driver of fee revenue from its e-wallet is the active e-wallet user base. An active e-wallet user is defined as a consumer whose e-wallet account balance has changed during the past quarter. The change in balance may be due to adding, removing, transferring or receiving funds.

The number of active e-wallets at the end of 2009 was 99,978, an improvement of 2% from the same period in 2008. European active e-wallets of 75,884 were down 3% from 2008 while Asian active e-wallets grew 15% to 15,843 (2008: 13,794). Rest of world (ROW) active e-wallets numbered 8,251 - an increase of 38% over the previous year. The overall increase is mainly attributable to an improving trend in activity levels which the Group began to see in the latter half of 2009.

Active customers	Q4 2009	Q4 2008	% growth	Q3 2009	% growth
Europe	75,884	77,916	-3 %	74,332	2 %
Asia Pacific	15,843	13,794	15 %	16,096	-2 %
Rest of World	8,251	5,963	38 %	7,929	4 %
Total	99,978	97,673	2 %	98,357	2 %

In contrast to the growth in active e-wallet numbers, the average fee revenue earned per active e-wallet declined across all regions except Asia Pacific. European fees per active e-wallet decreased by 11% to $117 in 2009 from $131 in 2008. Asia Pacific showed an improvement of 6% to $129. A decline of 20% in ROW ($75 in 2009 vs. $93 in 2008) is due to the evolving product and promotion mix. The Net+ prepaid MasterCard card is becoming the withdrawal method of choice for e-wallet users, and is especially prevalent in countries where payment is difficult. However, fees per transaction are generally lower, resulting in more active e-wallet accounts but with lower fees per account. Similarly, fee based promotions and bonuses are contributing to increased customer activity, but also lead to a reduction in fees earned.

E-wallet revenue per active e-wallet user ($)	FY 2009	FY 2008	% growth
Europe	117	131	-11 %
Asia Pacific	129	123	6 %
Rest of World	75	93	-20 %
Total	116	128	-10 %

In 2009, members deposited a daily average of $488,641 with the Group - up by 7% from $457,442 in 2008. The increase is primarily due to penetration into new geographic territories in both Central and Eastern Europe as well as Asia. Deposits also increased since NETELLER members found it easier to withdraw funds through improved withdrawal channels such as the Net+ prepaid MasterCard card. Total receipts in 2009 totalled $178.4 million, an increase from $167.4 million in 2008 which included deposits from North America.

Average daily sign-ups of new customers continued a positive trend throughout the year. In 2009, 1,048 new customers signed up per day, an increase from 981 in 2008. Expansion of the NETELLER offering and improved conversion rates as a result of a streamlined sign-up process helped drive this growth. As a lead indicator of future business this is an encouraging trend.

The table below shows the Group's sign ups by region:

Average daily sign ups	Q1 2009	Q2 2009	Q3 2009	Q4 2009	FY 2009	FY 2008
Europe	721	675	702	727	706	706
Asia Pacific	148	164	194	155	165	160
Rest of World	154	172	207	172	176	115
Total	1,023	1,011	1,103	1,053	1,048	981

The Group also generates revenue from non e-wallet related sources, including its NETBANX gateway business and interest income on its own cash balances as well as those held on behalf of members and merchants in trust accounts.

Developing our stored value solutions

The cornerstone of our stored value proposition is the NETELLER payment account, which celebrated its tenth anniversary during 2009. We have signed up more than 1.7 million members since the first e-wallet was issued back in 1999, excluding those that we issued to our former US members prior to 2007. The NETELLER e-wallet provides a simple, secure and anonymous way for individuals to transfer, pay and withdraw funds online to any number of merchants. NEOVIA's focus has traditionally been on the online gaming market since payments to merchants in this space have proven difficult and sometimes risky, due to geographical, currency or timing issues. Our NETELLER e-wallet solution allows merchants to receive indemnified funds from a signed up NETELLER consumer ("member") in return for payment of a fee to NEOVIA. We compete with more traditional payment methods such as cards, but the incremental benefits of the e-wallet are the anonymity, security and flexibility in funding, withdrawing and managing money online that has been established over ten years.

We have continued to invest in the NETELLER payment account during 2009 to ensure we offer our members and merchants the broadest range of payment solutions. We launched a number of new deposit options, enabling consumers in key European and Asian markets to more easily top up their e-wallets or pay on our hosted checkout pages, including: Ukash in 9 new countries (Austria, Belgium, Finland, France, Germany, Italy, Netherlands, Portugal and Greece); free local bank deposits using the SEPA scheme for EU members; free local bank deposits in India and Japan; and the addition of DIRECTebanking.com in Belgium.

The award winning Net+ prepaid MasterCard card, launched in October 2008, had a successful first year in 2009. NETELLER members use their Net+ physical and virtual MasterCard cards for instant payouts from their e-wallets and for making secure online purchases. More than 70,000 Net+ cards have been issued to date, with total spend via the Net+ card amounting to more than $200 million in more than 1 million transactions. We continue to improve the Net+ value proposition for our members, with the ability to earn NETPoints on Net+ transactions and offering our VIP members reduced foreign exchange fees on their Net+ cards. The innovative features of this industry-leading prepaid card were recognized with a number of card industry awards (including the "Best New Prepaid Card" award at the prestigious Cards & Payments Europe 2009 Awards) and the Net+ card regularly features strongly in prepaid card comparison tables.

Early in the first quarter, our Person-to-Person (P2P) service was extended to NETELLER Express-level members, allowing instant transfer of funds between NETELLER e-wallet members. Building on this, the NETELLER Money Transfer service (www.sendmoney.neteller.com) went live in July 2009 and is already showing promising trends for new sign ups and volumes of funds transferred. This builds on the unique feature of our stored value account by integrating the e-wallet capabilities with the ease of use of the Net+ card and multi-account functionality.

Payment processing

The Group's NETBANX business continues to make solid progress in developing a leading gateway processing solution. We announced a number of significant contract wins for NETBANX during 2009 including RSA MoreTH>N, a leading UK and international insurer, the renewal of nPower's processing contract, and a number of smaller merchants who rely on NETBANX's capabilities to power their online commerce sites. The recently announced contract win with Arqiva's SeeSaw, the new IPTV service, to use the NETBANX international gateway for all its online payments represents a major success in our strategy to broaden our verticals from the traditional gaming market focus and extend NETELLER product capabilities into the new micropayments segment.

Continued investment in gateway processing was recognised by the industry as the NETBANX Unified PayPageTM was nominated for the E-Consultancy "Innovation in e-Commerce" Award in December 2009. The Unified PayPageTM allows merchants to offer multiple payment types through a single integration and with the continued addition of further payment options during the year (including PayPal) our merchants now have access to an unrivalled number of payment options to offer their customers.

Our NETBANX Asia business continued to be successful in attracting new merchant business for its payment processing services across Asia Pacific. We will continue to invest to ensure that we have a reliable, secure and efficient operation, and anticipate further growth as more merchants appreciate the capabilities we offer.

Newteller

Substantial progress was made during 2009 in the Group's Newteller technology replatforming, and parallel running with the "OldTeller" platform ongoing during the last two quarters of 2009 as part of scheduled deployment. The Newteller platform is already running in production as part of the shadowing of the existing platform, and a planned and sequential cut-across is scheduled to be complete during April 2010. The anticipated benefits of Newteller lie in its capacity to enable significant improvements to our operating environments (e.g. more effective support for our global contact centre staff), cost savings captured from automating numerous manual processes, greater operating efficiencies by migrating multiple current systems on to a single platform and flexibility to rapidly develop new functionalities to meet evolving market opportunities. In addition, Newteller will provide enhanced capability in such key areas as disaster recovery, service availability, risk management and significantly reduced new product development and deployment lead times. A number of exciting product initiatives are already being worked on to take advantage of the availability of the Newteller platform later in 2010, themselves an integral part of our Group-wide Business Transformation programme launched in the fourth quarter of 2009.

Building our brand identity

We took further steps in 2009 to reinforce our brand identity, building on the renaming of the Company in November 2008 to NEOVIA Financial Plc. Our NETELLER, NETBANX and NET+ brands are recognised and trusted in their target markets. We have actively promoted the NETELLER Payment Network at a number of major sporting events, focusing on the gaming community with the "Payments you can bet on" message.

The Group also delivered a number of targeted marketing programmes throughout the year to drive member reactivation, conversion and retention. Such programmes included the "What's my Sport" and "Chance" promotions, sponsorship of a series of merchant events and tournaments, and a revamped NETPoints loyalty programme.

Operational improvements

We continued to make progress in reducing our direct customer support costs, while maintaining an effective and competitive service to our members. As highlighted in our first half results, we successfully migrated all of our English, non-voice, customer support to our Hong Kong operations. This has already resulted in a 25% increase in member service efficiency through the end of 2009. Further initiatives to improve and streamline our customer support capabilities are being investigated for deployment within Business Transformation.

Managing the risks the Group faces remains a key focus for us. As set out in more detail in our Annual Report in the Business Risks section, we have identified the key risks to our operations and performance within the following areas: complex global operations; regulation and compliance; global economic conditions; competition; product innovation; attracting the best talent; security and fraud; transaction processing; and acquisitions and partnerships. The Group adopts an Enterprise Risk Management ("ERM") approach to identifying, assessing and mitigating risks it may face. Investment in this area has continued during 2009 both as part of the Newteller replatforming and through separate initiatives such as the ERTMS service, provided by Actimize, which allows risk monitoring in real-time of transactions being processed through the NETELLER payment account.

US update

On 21 August 2009, the Group announced that the Deferred Prosecution Agreement ("DPA") entered into effective 18 July 2007 with the US Attorney's Office for the Southern District of New York had expired as scheduled. The Company also received a copy of the Nolle Prosequi (Notice of Dismissal) of the Complaint filed against it in this matter in the United States District Court for the Southern District of New York. The

Company has complied with the DPA and is no longer subject to oversight by the Monitor appointed pursuant to the DPA. The Group continues to believe that it is strategically important to have a US-facing business as part of its market-facing strategy and continues to investigate the most appropriate means to achieve this objective.

Current trading and outlook

The Group ended 2009 with a stronger performance in the fourth quarter. Revenue from our e-wallet was $12.3 million in Q4 compared to $11.4 million in Q3 2009, largely resulting from growth of 10% in our European e-wallet fee revenue. NETBANX also saw a promising improvement in revenue in the same period, with $4.2 million in Q4, an increase of 22% from the $3.5 million in Q3 2009 with European revenues growing 29% (21% after stripping out impact of currency translation). Overall, revenue for Q4 was $16.8 million compared to $15.2 million in Q3 2009, an increase of 11%.

Revenue in the first two months of 2010 has been in line with management's expectations and the Board continues to be optimistic about the outlook for NEOVIA and remains confident about the Group's prospects going forward with its adoption of a renewed strategy for growth.

*****

Financial Review

NEOVIA made steady progress despite the challenging market conditions which persisted throughout most of 2009. The resilience of the Group's business model has produced a broadly satisfactory financial performance. The results for the Company and the consolidated Group results for the year ended 31 December 2009 are presented below.

Highlights

The Group's performance did not meet our full expectations: revenue, gross margin and cash flow declined in 2009 compared to 2008, and as a result cost management continued to be a major focus during 2009.

The Group reported a net loss of $9.8 million in 2009 (2008: $8.1 million loss). The Group continued with development of its new stored value technology platform, Newteller, throughout the year. Newteller consumed significant resources and remains on track to launch in April 2010 following an extended testing programme.

Revenue

Total revenue in 2009 decreased by 15% to $64.5 million (2008: $75.9 million). Revenue is earned through fees charged to merchants and members for processing of transactions via the NETELLER e-wallet or NETBANX gateway services. Revenue is also earned on the Group's cash and the cash held by the Group on behalf of merchants and members.

Revenue

($ millions) 2009 2008 % growth Q3 2009 Q4 2009 % growth

Europe 35.7 42.2 -15 % 8.7 9.6 10 %

Asia Pacific 7.9 7.7 2 % 2.1 2.1 -3 %

Rest of World 2.2 2.0 14 % 0.6 0.6 -2 %

North America (1) 0.2 0.3 -37% 0.0 0.1 nm

Total e-wallet revenue 46.0 52.2 -12 % 11.4 12.3 8 %

NETBANX 4.8 6.2 -23 % 1.1 1.4 29 %

NETBANX Asia 12.1 11.4 6 % 2.4 2.8 18 %

Total fee revenue 62.9 69.8 -10 % 14.9 16.5 11 %

Interest 1.6 6.1 -73 % 0.3 0.3 -2 %

Total 64.5 75.9 -15 % 15.2 16.8 11 %

(1) Comprises fee revenue earned from Group's Canadian customers related to non-gambling transactions

Transaction fee revenue from our top five countries represented 54% of the total for 2009 (2008: 53%) while the top ten countries accounted for approximately 76% (2008: 79%) of total transaction fees.

Fee revenues for the second half of 2009 totalled $31.4 million, compared with $31.5 million for the first half.

E-wallet fee revenue

European e-wallet revenue decreased 15% to $35.7 million in 2009 (2008: $42.2 million). The recession and competitive pressure both had a significant impact on the European market for online payments. Fee rebates continued to be used to drive member activity, and this also reduced European revenues. A marginal 2% increase in Asian e-wallet revenue from $7.7 million in 2008 to $7.9 million in 2009 was the result of an improving economic environment and fewer marketing rebates being used. ROW e-wallet revenue increased 14% from $2.0 million in 2008 to $2.2 million in 2009 with new market penetration and good uptake of the Net+ prepaid MasterCard card.

Gateway fee revenue

Gateway fees were earned from NETBANX Europe and NETBANX Asia, and totalled $16.9 million in 2009, a decrease of 4% from 2008 revenues of $17.6 million. NETBANX Europe revenue is mainly derived from the UK and saw a 23% decline from $6.2 million in 2008 to $4.8 million in 2009, driven by the 15% depreciation of sterling relative to the US dollar. NETBANX Asia gateway fees increased 6% from $11.4 million in 2008 to $12.1 million in 2009. In July 2009, the NETBANX Asia gateway was competitively re-priced to attract new business and increase existing volume. The result was lower revenue, but correspondingly lower fee rebates, allowing gross margins to improve. The growth in NETBANX Asia has already out-paced the lower fee structure to show an overall growth year-on-year of 6%. The success comes from leveraging the first-to-market advantage and continuing to build strong, trusted relationships with merchants as the Asian marketplace expands.

Interest revenue

Interest revenue in 2009 was $1.6 million, a significant decrease of 73% from $6.1 million in 2008. In the first half of 2008, interest rates were approximately 4%, which decreased to 1% at the end of 2008. Rates in 2009 stabilised between ½% to 1% resulting in a significant decline in interest revenue. Low interest rates are expected to continue throughout 2010. Cash was also consumed throughout the year due to Newteller development and other capital expenditures, reducing principal balances by $18.8 million, further impacting interest revenue.

Gross margin and direct costs

Gross margin declined in 2009 from 61.8% in 2008 to 54.6% in 2009.

Customer support comprises call centre services such as live chat, phone support, translation services and verification services. Cost saving programmes initiated in 2008 have continued to produce benefits in 2009. Reducing long distance telephony use and translation services has continued to minimise costs in the year. Furthermore, these services are now jointly provided by both the Canadian and Asian offices. Costs incurred in Asia are significantly less expensive. Lastly, the Canadian dollar depreciated relative to the US dollar by 7% on average, thereby reducing costs.

Website maintenance increased by 24% from $4.0 million in 2008 to $4.9 million in 2009. In mid-2009, new disaster recovery facilities and server hosting were established for both the current "OldTeller" platform and to support Newteller on its completion - making up the increase.

Marketing and promotions decreased by 71% to $0.4 million from $1.5 million in 2008. The promotions in 2009 have been more focused which resulted in the savings.

Deposit and withdrawal fees arise on facilitating the movement and settlement of cash via the banking system and third party processors. These fees increased marginally by 3% to $13.7 million in 2009 (2008: $13.3 million). During the year, the NETBANX Asia gateway was re-priced, eliminating the need for fee rebates. The decline in rebates was offset by the growth in volume through the NETBANX Asia gateway. The depreciation of the pound sterling relative to the US dollar and the general decline in volume through the NETBANX gateway in Europe also contributed to savings. This was offset by increased costs from the e-wallet. Payments outside of Europe are typically more expensive and both Asia and ROW regions had volume growth in 2009. The use of the Net+ prepaid card grew throughout the year, contributing to the increase in costs. The Net+ card programme continues to support e-wallet growth, while diversifying the Group's business.

Bad debt expense was $1.7 million in 2009, up from $0.2 million in 2008. Significant provisions were recorded against member and merchant accounts in the year. Approximately $1.0 million are non-recurring provisions that are required due to indications of receivables impairment that arose in the year.

Operating expenses

General and administrative expenses decreased by 12% to $26.5 million from $30.2 million. Salary costs in both the UK and Canada were reduced in the year due to the depreciation of the pound sterling (by 15%) and the Canadian dollar (by 7%) relative to the US dollar, as well as targeted headcount reductions where efficiencies could be found. Further savings in professional fees of $0.9 million are the result of reduced legal and professional work upon completion and full adoption of the Group's market presence policy in 2008.

Share option expense decreased nominally by 3% to $2.6 million in 2009 (2008: $2.7 million). No significant share option transactions took place in 2009.

The results from the Group's subsidiaries in Canada, the UK and Macau are reported in local functional currencies. As required under IFRS, foreign exchange gains or losses on consolidation of a subsidiary's balance sheet are captured in equity, but the subsidiary's individual exposure to foreign currency is captured in income. During 2009, foreign exchange losses of $0.1 million were generated compared to gains of $0.3 million in 2008. The Group employs forward foreign exchange contracts to mitigate exposure to financial risk associated with foreign currency balances.

In 2009, depreciation and amortisation of $6.3 million (2008: $6.4 million) included $3.9 million of amortisation of intangible assets (2008: $3.4 million) and $2.5 million in depreciation of capital assets (2008: $3.0 million). Depreciation of Newteller will begin on completion in 2010.

At each balance sheet date and upon events indicating an impairment assessment is required, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. In the second quarter of 2009, impairment testing was performed on the investment in Centricom Pty Ltd. These tests revealed the cost of $4.6 million may not have a recoverable value and the entire amount was recognised as an impairment loss. In the fourth quarter of 2009, the Group realised the mortgage receivable for $0.3 million less than the carrying value and recognised this difference as a loss on disposal of assets.

Restructuring costs

Restructuring costs increased significantly from $1.1 million in 2008 to $2.4 million in 2009. The Group has selectively reduced headcount where efficiencies can be realised resulting in severance payments in the year. Provisions against suppliers and professional and legal fees relate to the previous North American facing business.

Impairment of acquisition costs

On 1 December 2008, the Group entered into an agreement to acquire IDT Corporation's European prepaid payment services division, IDT Financial Services Holdings Limited ("IDTFSH"). The acquisition was conditional on Gibraltar FSC regulatory approval, which NEOVIA became aware would not be granted on 20 March 2009. The Group incurred $0.9 million of acquisition costs including professional and legal fees, travel expenses and internal labour in 2009 compared to $0.6 million in 2008. All of these costs have been recognised as an expense.

Taxes

The tax model is based on the mark-up of services provided by various subsidiaries to the Group's parent in the Isle of Man, where source revenues are non-taxable because of the zero rate of tax on companies other than banks. In 2009, the provision for income taxes was a recovery of $0.2 million compared to a recovery of $1.8 million in 2008.

In 2009, tax instalments to Canadian authorities were paid as assessed based on 2008 operating levels. The reduced business activity as a result of the economic recession has reduced the actual tax payable.

Balance sheet

The cash and cash equivalents balance at 31 December 2009 of $61.0 million represents the unrestricted cash of the Group (2008: $76.2 million). Included in cash and cash equivalents is a transient cash balance that relates to merchant transactions processed via the NETBANX and 1-Pay Direct gateway operations. The gateway operations do not fall within the EU definition of "e-money" nor does a legal right of offset exist between this cash and the corresponding merchant liabilities. The cash and the merchant liabilities relating to gateway operations are therefore both recognised on the face of the balance sheet as cash and cash equivalents and trade and other payables respectively.

The gross quantum of cash available to the Group, including restricted cash surpluses and the excess of qualifying liquid assets held in respect of e-money issued to European members over balances payable, totalled $73.5 million. This compared with $82.3 million at 31 December 2008. These cash figures are before deduction of current liabilities. The decline in cash is due to decreased revenue in 2009 and continued investment into Newteller.

The Group maintains bank accounts which are segregated from operating funds and which contain funds held on behalf of merchants and non-European members, representing pooled customer funds. The bank accounts are designated as client accounts. Balances in the segregated client accounts are maintained at a sufficient level to fully offset amounts owing to the Group's merchants and non-European members. A legal right of offset exists between the balances owing to the merchants and non-European members and the cash balances segregated in the client accounts. As such, only the net balance of surplus cash is disclosed on the balance sheet as Restricted Cash. The Group, as a matter of policy, holds small amounts of excess cash in the account to ensure intraday balance movements do not result in a shortfall in the cash position. The net excess is disclosed as a corporate asset.

In compliance with FSA rules and regulations, the Group held qualifying liquid assets in respect of e-money issued to European members totalling $83.6 million as at 31 December 2009. These funds are segregated from operating funds. The balances are maintained at levels which are at least equal to the amounts owing to European members of $76.4 million as at 31 December 2009. These qualifying liquid assets and the amounts payable to European members are reported gross on the balance sheet.

Total current liabilities of $100.0 million have increased from $80.5 million due to the growth in amounts payable to European members as a result of greater receipts from members in 2009. The increase in liabilities and the decrease in total cash have resulted in a current ratio of 1.54 to 1 in 2009 (2008: 1.84 to 1).

In the fourth quarter of 2009, the Group realised the mortgage receivable for $0.3 million less than the carrying value and recognised this difference as a loss on disposal of assets.

The net book value of intangible assets as at 31 December 2009 was $32.1 million compared to $17.9 million as at 31 December 2008. During the year, the Group incurred significant development costs on the Newteller platform.

In the second quarter of 2009, the Group recorded the complete impairment of its investment in Centricom Pty Limited of $4.6 million. This is classified on the Company and Group balance sheets as an "Investment in associate".

Foreign currency exposure

Operating globally necessitates an increasing foreign currency exposure. The objective of our treasury policy is to identify material foreign currency exposures and to manage those exposures to minimise the potential effects of currency fluctuations on our reported consolidated cash flow and results of operations.

Off balance sheet arrangements

As of 31 December 2009, the Group had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources. All merchant and non-European member funds are held in designated client accounts and excluded from our consolidated balance sheet. There are no investments held at 31 December 2009 that are part of US sub-prime investment vehicles.

* * *

The Group's audited consolidated financial statements and accompanying notes are set out in Part 2 of the Audited Results statement and are also available at www.neovia.com.

The Group's 2009 annual report and audited accounts is today published on the Company's website and is being sent to shareholders accordingly. The Company will hold its seventh annual general meeting in the Isle of Man on 29 April 2010. For further information, please contact investorrelations@neovia.com.

Consolidated Balance Sheet as at 31 December 2009
	31 DECEMBER 2009	31 DECEMBER 2008
	$	$
ASSETS
Current
Cash and cash equivalents	61,070,438	76,246,169
Restricted cash (Note 4)	5,152,253	2,941,543
Qualifying Liquid Assets held for European members (Note 5)	83,612,310	63,444,278
Receivable from members (Note 6)	354,000	702,000
Trade and other receivables	793,188	1,253,586
Prepaid expenses and deposits	2,554,780	3,309,125
	153,536,969	147,896,701
Non-current assets
Mortgage receivable (Note 7)	-	616,119
Property, plant & equipment (Note 8)	7,828,139	8,759,068
Intangible assets (Note 9)	32,072,846	17,872,820
Investment in associate (Note 10)	-	5,085,074
	193,437,954	180,229,782

LIABILITIES
Current
Trade and other payables (Note 12)	21,370,500	18,318,683
Payable to European members (Note 5)	76,384,591	60,307,346
Taxes payable (Note 14)	2,224,304	1,904,472
	99,979,395	80,530,501


SHAREHOLDERS' EQUITY
Share capital (Note 15)	39,725	39,725
Share premium	50,554,492	50,554,492
Capital redemption reserve	147	147
Equity reserve on share option issuance	8,601,168	5,954,728
Translation reserve (Note 16)	(392,908)	(1,320,417)
Retained earnings	34,655,935	44,470,606
	93,458,559	99,699,281
	193,437,954	180,229,782

Consolidated Statement of Cash Flows for the Year Ended 31 December 2009
	YEAR ENDED 31 DECEMBER 2009	YEAR ENDED 31 DECEMBER 2008
	$	$
OPERATING ACTIVITIES
Loss before tax	(9,997,473)	(9,917,550)

Adjustments for:
Depreciation and amortisation	6,342,598	6,351,788
Unrealised foreign exchange (gain)/loss	(3,571,426)	7,158,047
Share option expense	2,646,440	2,735,222
Investment loss (Note 10)	533,116	773,143
Impairment loss (Notes 9 & 10)	4,568,511	14,498,163
Asset disposal (Notes 7, 8 & 9)	381,302	110,753
Operating cash flows before movements in working capital	903,068	21,709,566

Decrease/(increase) in receivable from members	348,000	(227,000)
Decrease/(increase) in trade and other receivables	460,398	(518,186)
Decrease/(increase) in prepaid expenses and deposits	754,345	(600,878)
Increase/(decrease) in trade and other payables	2,751,524	(4,859,987)
Forfeiture payable (Note 13)	-	(38,250,415)
Cash generated/(consumed) by operations	5,217,335	(22,746,900)

Tax refunded	502,634	1,408,512

Net cash generated/(consumed) by operating activities	5,719,969	(21,338,388)

INVESTING ACTIVITIES
Increase in payable to European members	16,077,245	3,274,682
Purchase of property, plant & equipment and intangible assets	(18,793,817)	(14,774,124)
Proceeds from disposal of property, plant & equipment	-	32,894,740
(Increase)/decrease in restricted cash accounts	(2,210,710)	7,876,062
Increase in Qualifying Liquid Assets held for European members	(20,168,032)	(1,559,175)
Investment in associate (Notes 10 & 11)	(16,553)	(1,486,768)
Investment in joint venture (Note 11)	-	(205,564)

Net cash (consumed)/generated by investing activities	(25,111,867)	26,019,853

FINANCING ACTIVITIES
Mortgage receivable (Note 7)	284,563	148,432

Net cash generated by financing activities	284,563	148,432

(Decrease)/increase in cash and cash equivalents during the year	(19,107,335)	4,829,897
Net effect of foreign exchange on cash and cash equivalents	3,871,720	(3,716,493)
Translation of foreign operations	59,884	(5,617,518)

Cash and cash equivalents, beginning of year	76,246,169	80,750,283

Cash and cash equivalents, end of year	61,070,438	76,246,169

Consolidated Statement of Comprehensive Income for the Year Ended 31 December 2009
	YEAR ENDED 31 DECEMBER 2009 $	YEAR ENDED 31 DECEMBER 2008 $

Revenue
Transaction fees (Note 17)	62,888,197	69,803,341
Investment income	1,644,620	6,141,380
	64,532,817	75,944,721

Cost of sales
Customer support	8,616,979	9,996,766
Website maintenance	4,918,297	3,959,698
Marketing and promotions (Note 18)	439,085	1,538,955
Deposit and withdrawal fees	13,669,776	13,309,669
Bad debts	1,664,048	174,399
Gross profit	35,224,632	46,965,234

Operating expenses
General and administrative	26,521,093	30,170,128
Share option expense (Note 23)	2,646,440	2,735,222
Management bonus	708,934	799,212
Foreign exchange loss/(gain)	144,919	(289,991)
Depreciation and amortisation (Note 19)	6,342,598	6,351,788
Loss on investment (Note 10)	533,116	773,143
(Loss)/profit before other items	(1,672,468)	6,425,732

Other items
Impairment loss (Notes 9 & 10)	4,568,511	14,498,163
Restructuring costs (Note 20)	2,442,875	1,113,927
Loss on disposal of assets (Notes 7, 8 & 9)	381,302	110,753
Acquisition costs impairment (Note 28)	932,317	620,439
Loss before tax	(9,997,473)	(9,917,550)

Income tax recovery (Note 14)	(182,802)	(1,830,929)

Net loss for the year	(9,814,671)	(8,086,621)
Other comprehensive income/(loss)	927,509	(10,733,230)
Foreign currency translation differences for foreign operations, net of income tax	927,509	(10,733,230)

Total comprehensive loss for the year	(8,887,162)	(18,819,851)

Basic (loss) per share (Note 21)	$(0.08)	$(0.07)

Diluted (loss) per share (Note 21)	$(0.08)	$(0.07)

Company Statement of Changes in Equity

for the Year Ended 31 December 2009

SHARE CAPITAL - ORDINARY SHARES

SHARE CAPITAL - DEFERRED SHARES

TOTAL

SHARE CAPITAL

PREMIUM

EQUITY

RESERVE ON SHARE OPTION ISSUANCE

TRANSLATION RESERVE ON FOREIGN OPERATIONS

CAPITAL REDEMPTION RESERVE

RETAINED EARNINGS

TOTAL

Balance as at 1 January 2008

21,725

18,000

39,725

50,554,492

3,219,506

9,412,813

147

52,557,227

115,783,910

Net loss for the year

(8,086,621)

Other comprehensive loss for the year

Foreign currency translation differences

(10,733,230)

Total comprehensive loss

(10,733,230)

(8,086,621)

(18,819,851)

Equity reserve on option issuance

2,735,222

Balance as at 31 December 2008

21,725

18,000

39,725

50,554,492

5,954,728

(1,320,417)

147

44,470,606

99,699,281

Balance as at 1 January 2009

21,725

18,000

39,725

50,554,492

5,954,728

(1,320,417)

147

44,470,606

99,699,281

Net loss for the year

(9,814,671)

Other comprehensive loss for the year

Foreign currency translation differences

927,509

Total comprehensive loss

927,509

(9,814,671)

(8,887,162)

Equity reserve on option issuance

2,646,440

Balance as at 31 December 2009

21,725

18,000

39,725

50,554,492

8,601,168

(392,908)

147

34,655,935

93,458,559

Notes to Consolidated Financial Statements for the Year Ended 31 December 2009

1. GENERAL

NETELLER plc (the "Company") was a private company incorporated under the laws of the Isle of Man ("IOM") on 31 October 2003 and was registered as a public company on 1 April 2004. NETELLER plc changed its name to NEOVIA Financial Plc on 17 November 2008. The principal activities of the Company and the Group are described in Note 2. The Group includes the Company and its wholly owned subsidiaries as set out under "Principles of consolidation" in note 3 and "Subsidiaries" in note 25.

These financial statements are presented in US dollars ("$") which is the Company's functional currency.

At 31 December 2009, the Group had 447 employees (2008: 450 employees).

2. NATURE OF OPERATIONS

The Group provides services to businesses and individuals to allow the processing of direct debit, electronic cheque and credit card payments. The Group processes direct debit, electronic cheque and credit card payments for internet merchants. NETELLER (UK) Ltd (a wholly-owned subsidiary of NEOVIA Financial Plc) is authorised and regulated by the Financial Services Authority in the United Kingdom as an e-money issuer.

3. SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared in accordance with applicable IOM law and International Financial Reporting Standards ("IFRS"). The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities, except as explained in the note 'changes in accounting policies'. The following principal accounting policies have been applied:

Changes in accounting policies

Determination and presentation of operating segments

As of 1 January 2009 the Group determines and presents operating segments based on the information that internally is provided to the CEO, who is the Group's chief operating decision maker. This change in accounting policy is due to the adoption of IFRS 8 Operating Segments. Previously operating segments were determined and presented in accordance with IAS 14 Segment Reporting. The new accounting policy in respect of segment operating disclosures is presented as follows.

Comparative segment information has been re-presented in conformity with the transitional requirements of such standard. Since the change in accounting policy only impacts presentation and disclosure aspects, there is no impact on earnings per share.

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. An operating segment's operating results are reviewed regularly by the CEO to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Presentation of financial statements

The Group applies revised IAS 1 Presentation of Financial Statements (2007), which became effective as of 1 January 2009. As a result, the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income. Comparative information has been re-presented so that it also is in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.

Principles of consolidation

The consolidated financial statements incorporate the financial statements of the Company and enterprises controlled by the Company (and its subsidiaries) as at the year end. Control is achieved where the Company has the power to govern the financial and operating policies of an investee enterprise so as to obtain benefits from its activities. The consolidated financial statements include the accounts of the Company and its principal wholly owned subsidiaries, NETELLER Operations Limited, NetAdmin Limited, Net ID Limited, NT Services Limited, NETELLER (UK) Ltd, NetBanx Limited, Quick Access International Limited, 1155259 Alberta Limited, NT Services Building Corporation, NETELLER Express Limited, and Cardload Incorporated. All inter-company transactions and balances between Group enterprises are eliminated on consolidation.

In the non-consolidated financial statements of the Company, investments in subsidiaries are stated at cost.

Investments in associates

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting. Under the equity method, investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group's share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate) are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group's interest in the relevant associate.

Interests in joint ventures

A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control and when the strategic financial and operating policy decisions relating to the activities of the joint venture require the unanimous consent of the parties sharing control.

Joint venture arrangements that involve the establishment of a separate entity in which each venturer has an interest are referred to as jointly controlled entities. The Group has significant influence on the entity and reports its interests in jointly controlled entities using the equity method of accounting. Under the equity method, investments in joint ventures are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group's share of the net assets of the entity, less any impairment in the value of individual investments.

Where the Group transacts with its jointly controlled entities, unrealised profits and losses are eliminated to the extent of the Group's interest in the joint venture.

Cash and cash equivalents

Cash equivalents are defined as short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Intangible assets

Intellectual property is recorded at cost and is amortised on a straight-line basis over its estimated useful life which is assessed to be three years.

Website development costs are recorded at cost and are amortised over their estimated useful life using the declining-balance method at 30%.

Property, plant & equipment

Land is not depreciated. Property, plant & equipment are recorded at cost and are amortised over their estimated useful lives, using the declining-balance method, on the following basis:

Communication equipment 20%

Furniture and equipment 20%

Computer equipment 30%

Other assets are depreciated over their estimated useful lives, using the straight-line method, on the following basis:

Computer software 2 years

Building & Leasehold Improvements 4% and 10 years respectively

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income.

Impairment

The carrying amount of the Group's assets, other than deferred tax assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. For goodwill and intangible assets that are not yet available for use, the recoverable amount is estimated each year at the same time. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of subsidiaries at the date of acquisition.

Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement and is not subsequently reversed.

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Receivable from customers

Trade and other receivables, including receivables from customers, are stated at their amortised cost less impairment losses and doubtful accounts.

Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

The Group uses the balance sheet liability method of accounting for income taxes. Temporary differences arising from the difference between the tax basis of an asset or liability and its carrying amount on the balance sheet are used to calculate deferred tax assets or liabilities. Deferred tax assets or liabilities are calculated using tax rates anticipated to exist in the periods that the temporary differences are expected to reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. All operating segments' operating results are reviewed regularly by the Group's CEO to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Revenue recognition

The Group is involved in transaction processing services. Revenues from transaction processing services are recognised at the time services are rendered. Member revenue is recognised either as a fee calculated as a percentage of funds processed or as a charge per transaction, pursuant to the respective member agreements. Merchant revenue is recognised as a fee calculated as a percentage of funds processed on behalf of merchants.

Interest income is accrued on a monthly basis, by reference to the principal outstanding and at the effective interest rate applicable.

Leases

All leases are classified as operating leases as the terms of the lease do not transfer substantially all the risks and rewards of ownership to the lessee. Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.

Foreign exchange

The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in United States dollars, which is the functional currency of NEOVIA Financial Plc, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period, except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations (including comparatives) are expressed in United States dollars using exchange rates prevailing on the balance sheet date. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the Group's translation reserve. Such translation differences are recognised in profit or loss in the period in which the foreign operation is disposed of.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operation and translated at the closing rate.

Related party transactions

Monetary related party transactions in the normal course of operations are recorded at fair value, and transactions between related parties, not in the normal course of operations, are recorded at the carrying value as recorded by the transferor.

Use of estimates

The preparation of the Group's financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingencies at the date of the Group's financial statements, and revenue and expenses during the reporting period. Actual results could differ from those estimated. Significant estimates in the Group's financial statements include depreciation and amortization, impairment testing of long-lived assets, and share based payments. By their nature, these estimates and assumptions are subject to measurement uncertainty and the effect on the Group's financial statements of changes in estimates in future periods could be significant.

Foreign exchange contracts

The Group uses foreign exchange contracts to reduce its exposure to adverse fluctuations in foreign exchange rates. These financial instruments are presented in the accompanying consolidated financial statements at fair value. Fair values are based on market quotes, current foreign exchange rates or management estimates, as appropriate, and gains and losses on the foreign exchange contracts are reflected in the consolidated income statement. The increase or decrease in the fair value of the contracts has been taken to income.

Research and development

Research expenditure is written off to the income statement in the period in which it is incurred.

Development expenditure is written off in the same way unless management is satisfied as to the technical, commercial and financial viability of the individual projects generating future economic benefits, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. In this situation, the expenditure is capitalised at cost, less a provision for any impairment in value, and is amortised on the commencement of use over the period in which benefits are expected to be received by the Group. The expenditure capitalised includes the cost of materials, direct labour and overhead costs that are directly attributable to preparing the asset for its intended use.

Share-based payments

The Company issues share options to certain employees, including Directors. Share options are measured at fair value at the date of grant. The fair value determined at the grant date of the share option is expensed on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest. Fair value is measured using the trinomial lattice pricing model. When necessary, the expected life used in the model is adjusted, based on management's best estimates, for the effects of non-transferability, exercise restrictions and behavioural considerations.

Offsetting

Financial assets and liabilities are set off and the net amount presented in the balance sheet when, and only when, the Group has a legal enforceable right to set off the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis only when permitted by the accounting standards, or for gains and losses arising from a group of similar transactions such as in the Group's trading activity.

Defined contribution pension plans

Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement in the periods during which services are rendered by employees.

Restructuring

A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly. Future operating losses are not provided for.

Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held and for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees.

New standards and interpretations not yet adopted

Other than those adopted early as explained above under 'changes in accounting policies', a number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 December 2009, and have not been applied in preparing these consolidated financial statements. None of these are expected to have a significant effect on the consolidated financial statements of the Group.

4. RESTRICTED CASH

For NETELLER and NETELLER Asia E-wallet merchants and non-European members, the Group maintains bank accounts with the Company's principal bankers which are segregated from operating funds and which contain funds held on behalf of customers, representing pooled customer funds. Balances in the segregated accounts are maintained at a sufficient level to fully offset amounts owing to the Group's merchants and members. A legal right of offset exists between the balances owing to the merchants and members and the cash balances segregated in the client accounts. As such, only the net balance of surplus cash is disclosed on the balance sheet as Restricted Cash.

In 2009 the Company prospectively adjusted the classification of the Asian member and merchant liabilities. Previously, Asian merchant and member liabilities were classified under Quick Access International Limited. Starting in 2009, all merchant and Non-European member balances are classified in the Company.

At 31 December 2009, the Group had the following balances:

	CLIENT ACCOUNT FUNDS	BALANCE OWING	RESTRICTED CASH
	$	$	$

Non-European members	26,400,113	25,375,833	1,024,280

Merchants	60,954,194	56,826,221	4,127,973

	87,354,307	82,202,054	5,152,253

At 31 December 2008, the Group had the following balances:

	CLIENT ACCOUNT FUNDS	BALANCE OWING	RESTRICTED CASH
	$	$	$

Non-European members	24,062,805	23,489,751	573,054

Merchants	61,934,429	59,565,940	2,368,489

	85,997,234	83,055,691	2,941,543

At 31 December 2009, the Company had the following balances:

	CLIENT ACCOUNT FUNDS	BALANCE OWING	RESTRICTED CASH
	$	$	$

Non-European members	26,400,113	25,375,833	1,024,280

Merchants	60,954,194	56,826,221	4,127,973

	87,354,307	82,202,054	5,152,253

At 31 December 2008, the Company had the following balances:

	CLIENT ACCOUNT FUNDS	BALANCE OWING	RESTRICTED CASH
	$	$	$

Non-European members	24,062,804	22,960,796	1,102,008

Merchants	61,934,429	56,238,035	5,696,394

	85,997,233	79,198,831	6,798,402

The Company holds client account funds and balances owing to Merchants and non-European members on behalf of its wholly owned subsidiary NETELLER Operations Limited.

5. QUALIFYING LIQUID ASSETS HELD FOR EUROPEAN MEMBERS

In compliance with the Financial Services Authority rules and regulations, the Group holds Qualifying Liquid Assets at least equal to the amounts owing to European members. These amounts are maintained in accounts which are segregated from operating funds.

The Group had the following balances:

	AS AT 31 DECEMBER 2009 $	AS AT 31 DECEMBER 2008 $
Qualifying Liquid Assets held for European members	83,612,310	63,444,278
Payable to European members	(76,384,591)	(60,307,346)
	7,227,719	3,136,932

6. RECEIVABLE FROM CUSTOMERS

The Group had the following balances:

	AS AT 31 DECEMBER 2009	AS AT 31 DECEMBER 2008
	$	$

Receivable from customers	1,334,748	994,765

Provision for doubtful accounts	(980,748)	(292,765)

	354,000	702,000

The Company had the following balances:

	AS AT 31 DECEMBER 2009	AS AT 31 DECEMBER 2008
	$	$

Receivable from customers	31,199	11,360

Provision for doubtful accounts	(31,199)	(11,360)

	-	-

Receivable from customers consists of balances that are due from customers and are in the process of collection. The net receivable from customers represents the amounts which are expected to be collected through the normal course of business.

7. MORTGAGE RECEIVABLE

The Group held a CAD $750,000 mortgage as a portion of the proceeds on the sale of the Group's 41st Avenue property in Calgary, Alberta. On 17 December 2009, a final cash payment of CAD $400,000 (US $378,920) was received. The remaining CAD $350,000 (US$331,555) was written off and shown as a loss on the income statement due to the inability of the purchaser to repay the full amount. The amount shown on the cash flow statement is net of foreign currency translation differences.

8. PROPERTY, PLANT & EQUIPMENT

The Group had the following balances:

	COMMUNICATION EQUIPMENT $	FURNITURE AND EQUIPMENT $	COMPUTER EQUIPMENT $	COMPUTER SOFTWARE $	BUILDING AND IMPROVEMENTS $	LAND $	TOTAL $
Cost
As at 31 December 2007	4,173,212	2,562,164	4,182,918	7,954,073	29,580,155	6,626,100	55,078,622
Additions	150,706	133,197	315,885	1,921,057	42,826	-	2,563,671
Disposals	-	(44,649)	(13,421)	(96,863)	(28,261,507)	(6,434,350)	(34,850,790)
Exchange difference	(1,117,703)	(471,646)	(797,452)	(940,614)	(929,710)	(191,750)	(4,448,875)
As at 31 December 2008	3,206,215	2,179,066	3,687,930	8,837,653	431,764	-	18,342,628
Additions	214,658	61,232	631,858	1,609,478	-	-	2,517,226
Disposals	-	(2,981)	-	-	-	-	(2,981)
Re-classification (Note 9)	-	-	-	(1,658,622)	-	-	(1,658,622)
Exchange difference	508,150	301,608	570,974	707,220	58,621	-	2,146,573
As at 31 December 2009	3,929,023	2,538,925	4,890,762	9,495,729	490,385	-	21,344,824

Accumulated depreciation
As at 31 December 2007	1,464,320	866,036	2,740,135	3,712,860	1,990,118	-	10,773,469
Charge for the year	659,070	343,740	417,684	1,514,372	21,663	-	2,956,529
Disposals	-	(13,217)	(9,905)	(96,863)	(1,877,097)	-	(1,997,082)
Exchange Difference	(610,897)	(206,410)	(556,217)	(712,364)	(63,468)	-	(2,149,356)
As at 31 December 2008	1,512,493	990,149	2,591,697	4,418,005	71,216	-	9,583,560
Charge for the year	439,495	251,497	396,289	1,371,070	17,824	-	2,476,175
Disposals	-	(1,610)	-	-	-	-	(1,610)
Exchange Difference	311,687	162,560	424,611	552,645	7,057	-	1,458,560
As at 31 December 2009	2,263,675	1,402,596	3,412,597	6,341,720	96,097	-	13,516,685

Net book value
As at 31 December 2007	2,708,892	1,696,128	1,442,783	4,241,213	27,590,037	6,626,100	44,305,153
Net book value
As at 31 December 2008	1,693,722	1,188,917	1,096,233	4,419,648	360,548	-	8,759,068
Net book value
As at 31 December 2009	1,665,348	1,136,329	1,478,165	3,154,009	394,288	-	7,828,139

The Company had the following balances:

	COMMUNICATION EQUIPMENT $	FURNITURE AND EQUIPMENT $	COMPUTER EQUIPMENT $		COMPUTER SOFTWARE $	BUILDING AND IMPROVEMENTS $	TOTAL $
Cost
As at 31 December 2007	44,793	63,998	129,342	2,662,058		32,380	2,932,571
Additions	11,099	6,470	2,963	1,036,751		16,026	1,073,309
As at 31 December 2008	55,892	70,468	132,305	3,698,809		48,406	4,005,880
Additions	-	-	206,646	456,735		-	663,381
Disposals	-	(2,902)	-	-		-	(2,902)
Re-classification (Note 9)	-	-	-	(1,658,622)		-	(1,658,622)
As at 31 December 2009	55,892	67,566	338,951	2,496,922		48,406	3,007,737

Accumulated depreciation
As at 31 December 2007	23,789	32,723	70,696	571,111		28,414	726,733
Charge for the year	6,052	7,025	18,394	304,714		5,412	341,597
As at 31 December 2008	29,841	39,748	89,090	875,825		33,826	1,068,330
Charge for the year	5,210	6,048	19,817	376,243		1,609	408,927
Disposals	-	(1,589)	-	-		-	(1,589)
As at 31 December 2009	35,051	44,207	108,907	1,252,068		35,435	1,475,668

Net book value
As at 31 December 2007	21,004	31,275	58,646	2,090,947		3,966	2,205,838
Net book value
As at 31 December 2008	26,051	30,720	43,215	2,822,984		14,580	2,937,550
Net book value
As at 31 December 2009	20,841	23,359	230,044	1,244,854		12,971	1,532,069

2008

Disposal of property, furniture and equipment

The Group completed the sale of its principal property at 27th Avenue in Calgary, Canada on 10 July 2008 for total consideration of CAD $33.5 million. A loss of $75,805 was recorded on disposition. The Group will continue to lease two areas of the property from the purchaser on usual commercial terms for a period of three years and five years respectively following the sale. The Group also disposed of furniture during the year with a carrying value of $34,948 for net proceeds of $Nil. The total loss on disposal of assets was $110,753 for the year.

2009

Disposal of property, furniture and equipment

The Group disposed of furniture and equipment with a net book value of $1,371 for Nil proceeds during the year. The total loss on disposal of furniture and equipment was $1,014 for the Group (Company: $239). The Group recognised a further loss on disposal of the 27th Avenue property of $4,075 due to legal fees incurred subsequent to the sale.

9. INTANGIBLE ASSETS

The Group had the following balances:

	INTELLECTUAL PROPERTY $	WEBSITE DEVELOPMENT $	TOTAL $
Cost
As at 31 December 2007	18,425,350	12,253,294	30,678,644
Additions	118,787	11,939,882	12,058,669
Impairment loss	(8,638,038)	-	(8,638,038)
Exchange difference	(3,164,125)	(1,951,368)	(5,115,493)
As at 31 December 2008	6,741,974	22,241,808	28,983,782
Additions	44,349	16,228,525	16,272,874
Disposals	-	(60,984)	(60,984)
Re-classification (Note 8)	-	1,658,622	1,658,622
Exchange difference	-	626,609	626,609
As at 31 December 2009	6,786,323	40,694,580	47,480,903
Accumulated amortisation
As at 31 December 2007	9,130,885	3,662,031	12,792,916
Charge for the year	1,142,334	2,252,925	3,395,259
Impairment loss	(2,777,914)	-	(2,777,914)
Exchange difference	(946,568)	(1,352,731)	(2,299,299)
As at 31 December 2008	6,548,737	4,562,225	11,110,962
Charge for the year	87,077	3,779,346	3,866,423
Disposal	-	(16,326)	(16,326)
Exchange difference	-	446,998	446,998
As at 31 December 2009	6,635,814	8,772,243	15,408,057
Net book value
As at 31 December 2007	9,294,465	8,591,263	17,885,728
Net book value
As at 31 December 2008	193,237	17,679,583	17,872,820
Net book value
As at 31 December 2009	150,509	31,922,337	32,072,846

The Company had the following balances:

	INTELLECTUAL PROPERTY $	WEBSITE DEVELOPMENT $	TOTAL $
Cost
As at 31 December 2007	6,617,143	7,556,520	14,173,663
Additions	118,787	11,128,279	11,247,066
As at 31 December 2008	6,735,930	18,684,799	25,420,729
Additions	44,348	15,496,192	15,540,540
Disposals	-	(60,984)	(60,984)
Re-classification (Note 8)	-	1,658,622	1,658,622
As at 31 December 2009	6,780,278	35,778,629	42,558,907
Accumulated amortization
As at 31 December 2007 6,503,254		1,840,013	8,343,267
Charge for the year	45,484	1,232,760	1,278,244
As at 31 December 2008	6,548,738	3,072,773	9,621,511
Charge for the year	87,076	1,890,827	1,977,903
Disposal	-	(16,326)	(16,326)
As at 31 December 2009	6,635,814	4,947,274	11,583,088
Net book value
As at 31 December 2007	113,889	5,716,507	5,830,396
Net book value
As at 31 December 2008	187,192	15,612,026	15,799,218
Net book value
As at 31 December 2009	144,464	30,831,355	30,975,819

The Group performs goodwill and intangible impairment tests at least annually or whenever events or changes in circumstances indicate that the goodwill and intangible carrying value for a business unit may not be recoverable.

2008

In the fourth quarter of fiscal 2008, the Group recorded goodwill and intangible asset impairment of $8.6 million and $5.9 million respectively (net of any related accumulated amortisation) representing complete impairment of goodwill and intangible assets acquired on the purchase of NetBanx Limited in 2005. In accordance with IAS 36, an impairment loss should be recognised when the recoverable amount of an asset is less than its carrying amount. The recoverable amount was deemed to be zero, based on an analysis of the unit's future cash flow projections and management's best estimate of the set of economic conditions that will exist over the remaining useful life of the assets.

The recoverable amount of NetBanx Limited ('the cash-generating unit') was based on value-in-use calculations. Those calculations used cash flow projections based on actual operating results. A pre-tax discount rate of 5.5% had been used in discounting the projected cash flows. The recoverable amount of the cash-generating unit exceeded its carrying amount. The Board believed that any reasonably possible change in the key assumptions on which the cash-generating unit's recoverable amount was based would not cause the cash-generating unit's carrying amount to exceed its recoverable amount.

2009

The Group and the Company recorded a write down of $44,658 (net of accumulated amortization) for website development specifically related to a processer that is no longer being used.

Included in the website development total cost of $35.8 million is an amount of approximately $24 million recognised for the total cost of development of the Group's new platform. The Board has determined the recoverable amount of the asset under construction based on value-in-use calculations. Those calculations use cash flow projections based on actual

operating results. A pre-tax discount rate of 5.5% has been used in discounting the projected cash flows. The Board believes that any reasonably possible change in the key assumptions on which the cash-generating unit's recoverable amount is based would not cause the cash-generating unit's carrying amount to exceed its recoverable amount.

10. INVESTMENT IN ASSOCIATE

In the second quarter of fiscal 2009, the Group recorded an impairment loss of $4.6 million, representing complete impairment of the investment in Centricom Pty Ltd. In accordance with IAS 36, an impairment loss should be recognised when the recoverable amount of an asset is less than its carrying amount. The recoverable amount was deemed to be zero, based on an analysis of the unit's future cash flow projections and management's best estimate of the set of economic conditions that will exist over the remaining useful life of the assets.

	AS AT 31 DECEMBER 2009 $	AS AT 31 DECEMBER 2008 $
Cost
Opening balance	5,085,074	4,115,626
Share purchase	-	1,742,591
Contributions to associate	16,553	-
Group and Company's share of investment loss	(533,116)	(773,143)
Impairment loss	(4,568,511)	-
	-	5,085,074

11. INTEREST IN JOINT VENTURE

On 24 November 2008, the Group disposed of its 50% interest in Centricom Europe Limited, combined with cash of $1,486,768, for shares in Centricom Pty. During 2008, the Group contributed $205,564 to the operations of the joint venture. As detailed in Note 10, the entire investment in Centricom Pty Ltd was subsequently written off in 2009. The Group retains an economic interest in Centricom Pty Limited of 25.4%.

12. TRADE AND OTHER PAYABLES

The Group had the following balances:

	AS AT 31 DECEMBER 2009 $	AS AT 31 DECEMBER 2008 $
Accounts payable	14,898,990	11,741,354
Accrued accounts payable	5,855,662	6,029,454
Payroll liabilities	615,848	547,875
	21,370,500	18,318,683

The Company had the following balances:

	AS AT 31 DECEMBER 2009 $	AS AT 31 DECEMBER 2008 $
Accounts payable	1,959,940	1,020,114
Accrued accounts payable	4,933,507	5,017,663
Payroll liabilities	46,654	120,442
	6,940,101	6,158,219

Included in Group accounts payable are merchant processing liabilities arising from the gateway operations of NetBanx and NetBanx Asia. In addition, included in cash and cash equivalents is a transient cash balance that relates to merchant transactions processed via the gateway operations. The gateway operations do not fall within the EU definition of "e-money" nor does a legal right of offset exist between this cash and the corresponding merchant liabilities.

13. FORFEITURE PAYABLE

On 18 July 2007, the Company entered into a Deferred Prosecution Agreement ("DPA") with the United States Attorney's Office for the Southern District of New York ("USAO"). Pursuant to the DPA, the Company forfeited $136 million to the USAO as disgorgement of certain profits received by the Group from the activities described in the Statement of Admitted Facts attached to the DPA. This amount included approximately $57.7 million which the USAO previously seized. The Company satisfied the remaining portion of its forfeiture obligation with a payment of $40 million on 15 October 2007, and $38.25 million paid on 16 January 2008.

On 18 July 2009, the Group's DPA formally expired as scheduled. Since 18 July 2007, the Group has complied with the DPA and is no longer subject to oversight by the external audit monitor firm appointed under the DPA. The Group received a copy of the Notice of Dismissal of the Complaint filed against NETELLER Plc on 19 August 2009.

The following details have been recorded:

	YEAR ENDED 31 DECEMBER 2009	YEAR ENDED 31 DECEMBER 2008
	US$	US$

Opening balance	-	(38,250,415)
16 January 2008 payment	-	38,250,415
Forfeiture payable at the end of the year	-	-

During 2008, NEOVIA Financial Plc reallocated $13,252,615 of the forfeiture to NT Services Limited in recognition of NT Services Limited's share of related profits in 2004 and 2005. On a consolidated basis, there were no additional penalties assessed or recovered in 2008.

14. TAX

The Company is incorporated in the IOM and is subject to a tax rate of zero percent and accordingly pays no tax in the IOM.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

The charge for the year can be reconciled to the profit per the consolidated income statement as follows:

	YEAR ENDED 2009 $	YEAR ENDED 2008 $
Loss before tax	(9,997,473)	(9,917,550)
Effect of different tax rates of subsidiaries operating in other jurisdictions	182,802	1,830,929
Effective tax rate for the year	-1.83%	-18.46%

At 31 December 2009, foreign taxes of $2,224,304 (2008: $1,904,472) were outstanding.

15. SHARE CAPITAL

	AS AT 31 DECEMBER 2009	AS AT 31 DECEMBER 2008
	£	£
Authorised:
200,000,000 ordinary shares of £0.0001 per share (At 31 December 2008: 200,000,000 ordinary shares of £0.0001 per share)	20,000	20,000

1,000,000 deferred shares of £0.01 per share (At 31 December 2008: 1,000,000 deferred shares £0.01 per share)	10,000	10,000

Issued and fully paid	$	$
119,920,953 ordinary shares of £0.0001 per share (At 31 December 2008: 119,920,953 ordinary shares of £0.0001 per share)	21,725	21,725

1,000,000 deferred shares of £0.01 per share (At 31 December 2008: 1,000,000 deferred shares of £0.01 per share)	18,000	18,000

Total share capital	39,725	39,725

Holders of the ordinary shares are entitled to receive dividends and other distributions, to attend and vote at any general meeting, and to participate in all returns of capital on winding up or otherwise.

Holders of the deferred shares are not entitled to vote at any annual general meeting of the Company and are only entitled to receive the amount paid up on the shares after the holders of the ordinary shares have received the sum of £1,000,000 for each ordinary share held by them and shall have no other right to participate in assets of the Company.

16. TRANSLATION RESERVE

	YEAR ENDED 31 DECEMBER 2009 $	YEAR ENDED 31 DECEMBER 2008 $
Balance at beginning of year	(1,320,417)	9,412,813
Arising on translation of foreign operations	927,509	(10,733,230)
Balance at end of year	(392,908)	(1,320,417)

Exchange differences relating to the translation from the functional currencies of the Group's foreign subsidiaries into US dollars are brought to account by entries made directly to the foreign currency translation reserve.

17. SEGMENTED REPORTING

The Group has two segments as disclosed below. For each of the segments, the Group's CEO reviews internal management reports on at least a quarterly basis. The following summary describes the operations in each of the Group's reportable segments.

E-wallet: fees are generated on transactions between members and merchants using the NETELLER and NETELLER Asia e-wallet systems.

Gateway: fees are generated through the NETBANX and NETBANX Asia gateway platforms where consumer send money directly to merchants.

Information regarding the results of each reportable segment is included below. Performance is measured based on revenue only given the transaction based business model of the Group in which cost of sales and operating expenses are shared across all products and regions and cannot be reasonably allocated amongst the segments.

Reportable segments:

	YEAR ENDED 31 DECEMBER 2009 $	YEAR ENDED 31 DECEMBER 2008 $
E-wallet	46,006,831	52,285,510
Gateway	16,881,366	17,517,831
	62,888,197	69,803,341

Geographical information:

	YEAR ENDED 31 DECEMBER 2009 $	YEAR ENDED 31 DECEMBER 2008 $
Europe	40,479,088	48,394,378
Asia	19,941,461	19,090,091
Rest of World	2,467,648	2,318,872
	62,888,197	69,803,341

Major customer

The Group has one merchant who represents 13% of total fee revenue across all reportable segments and geographies. In 2008 the merchant balances were not material.

18. MARKETING AND PROMOTIONS

Total marketing and promotions costs for the year were $439,085 (2008: $1,538,955). These consisted of targeted VIP rebates, fee rebates and cash paid to contest winners.

19. PROFIT FROM OPERATIONS

Profit from operations has been arrived at after charging:

	GROUP		COMPANY
	YEAR ENDED 31 DECEMBER 2009 $	YEAR ENDED 31 DECEMBER 2008 $	YEAR ENDED 31 DECEMBER 2009 $	YEAR ENDED 31 DECEMBER 2008 $
Depreciation of property, plant and equipment	2,476,176	2,956,529	408,927	341,597
Amortisation of intellectual property	3,866,422	3,395,259	1,977,902	1,278,244
	6,342,598	6,351,788	2,386,829	1,619,841

Remuneration of the auditors for audit, advisory and other services has been recorded as follows:

	YEAR ENDED 31 DECEMBER 2009 $	YEAR ENDED 31 DECEMBER 2008 $
Audit services
Statutory audit	415,000	420,000

Non-audit services
Tax and other advisory services	132,000	71,000
Total	547,000	491,000

20. RESTRUCTURING COSTS

The Group incurred restructuring costs relating to the challenging economic conditions and the follow-on impact on the Group's operations post cessation of its North American-facing business in the first quarter of 2007. Severance was paid in 2009 to certain executives and call centre employees in response to reduced business levels and the resulting need to achieve efficiencies. Other restructuring costs included the write down and disposal of assets, amending and settling vendor contracts and professional and legal fees incurred in the resolution of the US situation (including the distribution of funds to US members and negotiating potential sanctions against the Group culminating in the DPA on 18 July 2007).

The Group has incurred the following costs:

	YEAR ENDED 31 DECEMBER 2009 $	YEAR ENDED 31 DECEMBER 2008 $
Severance and retention	1,840,359	-
Supplier contract renegotiation (recovery)	(94,922)	421,363
Provision for supplier receivable	147,031	600,080
Settlement of third party litigation	-	6,523
Professional and legal fees and expenses	512,409	82,784
Other restructuring costs	37,998	3,177
	2,442,875	1,113,927

The Company has incurred the following costs:

	YEAR ENDED 31 DECEMBER 2009 $	YEAR ENDED 31 DECEMBER 2008 $
Severance and retention	954,751	-
Supplier contract renegotiation (recovery)	(94,922)	421,363
Provision for supplier receivable	147,031	600,080
Settlement of third party litigation	-	6,523
Professional and legal fees and expenses	512,409	82,784
Other restructuring costs	37,998	2,389
	1,557,267	1,113,139

21. LOSS PER SHARE FROM CONTINUING OPERATIONS

The calculation of the basic and diluted earnings or loss per share is based on the following data:

	YEAR ENDED 31 DECEMBER 2009	YEAR ENDED 31 DECEMBER 2008
	$	$
Loss
Loss for the purposes of basic and diluted earnings per share being net loss attributable to equity share holders of the parent	(9,814,671)	(8,086,621)

Number of shares
Weighted average number of ordinary shares for the
purpose of basic loss per share	119,920,953	119,920,953
Effect of dilutive potential ordinary shares due to employee share options	4,267	-
Weighted average number of ordinary shares for the	119,925,220	119,920,953
purpose of diluted loss per share	119,925,220	119,920,953

Basic loss per share	$(0.08)	$(0.07)
Fully diluted loss per share	$(0.08)	$(0.07)

22. OPERATING LEASE ARRANGEMENTS

At the balance sheet date, the Group had outstanding commitments for future minimum lease payments, which fall due as follows:

	AS AT 31 DECEMBER 2009	AS AT 31 DECEMBER 2008
	$	$
Within one year	1,853,289	1,651,017
In the second to fifth years inclusive	2,541,205	2,722,187
After five years	140,998	179,042

Operating lease payments represent rentals payable by the Group for certain of its office properties. Current leases have a remaining average life of three years. The lease payments recognised in expense for the year are $1,921,557 (2008: $965,746).

23. SHARE BASED PAYMENTS

The Company's share option plan was adopted pursuant to a resolution passed on 7 April 2004 and amended by the Board on 15 September 2008. The 2008 amendment included the addition of a new 'approved' plan for UK based employees. Under the 'approved' and 'unapproved' plans, the Board of Directors of the Company may grant share options to eligible employees including directors of Group companies to subscribe for ordinary shares of the Company.

No consideration is payable on the grant of an option. Options may generally be exercised to the extent that they have vested. Options vest according to the relevant schedule over the grant period following the date of grant. Typically,

options have been granted for a three and a half year grant period and have vested in equal thirds on or about the anniversary of the grant date. However, the Directors are permitted under the Plan Rules to alter the vesting schedule and the grant period. The exercise price is determined by the Board of Directors of the Company, and shall not be less than the market value at the date of grant. The option plan provides for a grant price to equal the average quoted market price of the Company shares on the three days prior to the date of grant. Share options are forfeited if the employee leaves the Group before the options vest. A participant of the share option plan has 30 days following the date of grant to surrender the option and if surrendered, the option will not be deemed granted.

On 17 June 2009, the Company granted 100,000 share options to eligible employees to acquire ordinary shares at an exercise price of £0.50 per share, expiring on 5 December 2012.

On 15 April, 2009, 78,809 options granted on 3 November 2005 with an exercise price of £7.11 expired. Also on 15 April 2009, 7,000 options granted on 15 December 2005 with an exercise price of £7.15 expired.

On 14 October 2009, a total of 309,999 options granted on 14 April 2006 with an exercise price of £8.06 expired.

Options recorded under share option expense may not agree to the total options granted in the period. The accounting for options coincides with the day following the last day for acceptance of the option, which is subsequent to their date of grant.

Equity-settled share option plan

	31 DECEMBER 2009 WEIGHTED AVERAGE EXERCISE PRICE £	YEAR ENDED 31 DECEMBER 2009 OPTIONS	31 DECEMBER 2008 WEIGHTED AVERAGE EXERCISE PRICE £	YEAR ENDED 31 DECEMBER 2008 OPTIONS
	31 DECEMBER 2009 WEIGHTED AVERAGE EXERCISE PRICE £	YEAR ENDED 31 DECEMBER 2009 OPTIONS	31 DECEMBER 2008 WEIGHTED AVERAGE EXERCISE PRICE £	YEAR ENDED 31 DECEMBER 2008 OPTIONS
Outstanding at the beginning of year	1.49	8,216,215	1.50	6,699,116
Granted during the year	0.50	100,000	0.53	2,789,100
Forfeited during the year	0.72	(630,156)	1.34	(696,149)
Exercised during the year	-	-	-	-
Expired during the year	7.85	(395,808)	5.09	(575,852)
Outstanding at the end of year	0.86	7,590,521	1.49	8,216,215
Exercisable at the end of the year	1.00	5,037,519	1.36	2,799,126

The weighted average share price at the date of exercise for share options exercised during the year was £nil as no options were exercised in the year. The options outstanding at the end of the period had a weighted average remaining contractual life of 1.65 years (31 December 2008: 2.71 years).

The options granted in 2009 are priced using a trinomial lattice model to better reflect factors including employee exercise behaviour, option life and option forfeitures.

The inputs into the model are as follows:

	YEAR ENDED 31 DECEMBER 2009	YEAR ENDED 31 DECEMBER 2008
Weighted average exercise price	£0.50	£0.53
Expected volatility	56%	56%
Expected life	3.5 years	4 years
Risk free interest rate	0.5%	2%
Expected dividends	-	-
Employee exit rate	7%	6.2%

Expected volatility was determined by calculating the historical volatility of the Company's share price from the time of issue to the date of grant. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

The Company recognised total expenses of $2,646,440 (2008: $2,735,222) related to the equity-settled share-based payments transactions in 2009.

24. FINANCIAL INSTRUMENTS

Financial instruments consist of cash and cash equivalents, restricted cash, Qualifying Liquid Assets held for European members, receivable from customers, trade and other receivables, payable to members and merchants, payable to European members and trade and other payables.

i) Fair values

The fair values of cash and cash equivalents, restricted cash, Qualifying Liquid Assets held for European members, receivable from customers, trade and other receivables, payable to European members and trade and other payables approximate the carrying values due to the short-term nature of these instruments.

ii) Credit risk and concentrations

The Group is exposed to credit risk to the extent that its members may charge back credit card purchases. The Group manages the exposure to credit risk by employing various online identification verification techniques, enacted transaction limits and having a significant number of members. As these members are geographically widespread and the merchants are active in various industries, the exposure to credit risk and concentration is mitigated.

iii) Interest rate risk

The Group is exposed to interest rate risk to the extent that investment revenue earned on cash and cash equivalents, client account funds, and Qualifying Liquid Assets held for European members is subject to fluctuations in interest rates. The Group's exposure to interest rate risk is limited as investments are held in liquid and short-term funds.

iv) Currency risk

The Group is not significantly exposed to foreign currency exchange risk, as the majority of the transactions are denominated in US dollars. The Group manages the exposure to currency risk by commercially transacting in US dollars and by limiting the use of other currencies for operating expenses, thereby minimising the realised and unrealised foreign exchange gain/(loss). Where limited exposures exist, these are managed through entering into forward foreign exchange contracts as appropriate (Note 3).

v) Market segment risk

Market segment risk may arise due to adverse changes in legislation relating to internet, payment processing or on-line gambling. The Group is exposed to market segment risk to the extent that legislation impacts operational presence and related revenue streams, which may be significant. The Group manages this exposure through geographical diversification and participation in non gambling sources of revenue. The Group closely monitors local legislation in key markets (new or existing) and does not have economic reliance on any one country.

vi) Liquidity risk

Liquidity risk is the risk that the Group will be unable to meet its financial obligations as they fall due. The Group's major exposure relates to trade payables and amounts owed to European members. The latter are fully supported by qualifying liquid assets (see note 4 for further details). Management controls and monitors the Group's cash flow on a regular basis, including forecasting future cash flows.

25. SUBSIDIARIES

Details of the Company's principal subsidiaries as at 31 December 2009 are as follows:

NAME OF SUBSIDIARY	PLACE OF INCORPORATION AND OPERATION	PROPORTION OF OWNERSHIP INTEREST	PROPORTION OF VOTING POWER HELD	PRINCIPAL ACTIVITY
NETELLER (UK) Ltd	United Kingdom	100%	100%	Authorised e-money issuer
NT Services Limited	Canada	100%	100%	Processing payments on behalf of the Company
NetBanx Limited	United Kingdom	100%	100%	Full service payment processing
Quick Access International Limited	Macau	100%	100%	Debit card payment processing
1155259 Alberta Limited	Canada	100%	100%	Financing
NT Services Building Corporation	Canada	100%	100%	Property leasing company
Cardload Incorporated	Canada	100%	100%	Dormant
NETELLER Express Limited	Isle of Man	100%	100%	Dormant
Lime Enterprises Limited	Isle of Man	100%	100%	Holding company
Jade Enterprises Limited	Isle of Man	100%	100%	Holding company
Net Group Holdings Limited	Isle of Man	100%	100%	Holding company
NetAdmin Limited	Isle of Man	100%	100%	Employment & administration
Neteller Operations Limited	Isle of Man	100%	100%	e-money issuer
Net ID Limited	Isle of Man	100%	100%	Identification verification
NetB Limited	Isle of Man	100%	100%	Holding company
Cardload Europe Limited	Isle of Man	100%	100%	Dormant
Greenscroft Limited	Isle of Man	100%	100%	Holding company
NEOVIA Financial Limited (formerly NX Systems UK Limited)	United Kingdom	100%	100%	Dormant
Netinvest Limited	United Kingdom	100%	100%	Holding company
Netpro Limited	United Kingdom	100%	100%	Holding company
Netbanx BV	Netherlands	100%	100%	Holding company
Charter Access Limited	Hong Kong	100%	100%	Property leasing company
NEOVIA (Gibraltar) Limited	Gibraltar	100%	100%	Holding company
NEOVIA Financial (UK) Limited	United Kingdom	100%	100%	Dormant

26. INTERCOMPANY BALANCES

Details of the Company's intercompany balances are as follows:

	YEAR ENDED 31 DECEMBER 2009 $	YEAR ENDED 31 DECEMEBER 2008 $
Receivable from subsidiaries
Receivable from NETELLER (UK) Ltd	17,343,665	11,510,722
Receivable from NetBanx Limited	1,996,676	1,785,896
Receivable from Quick Access International Limited	3,415,741	-
Receivable from 1155259 Alberta Limited	167,391	104,642
Receivable from NetAdmin Limited	91,071	137,166
Receivable from Net ID Limited	183,343	268,969
	23,197,887	13,807,395
Investment in subsidiaries
Investment in NETELLER (UK) Ltd	3,430,418	3,430,418
Investment in NT Services Limited	100	100
Investment in NetBanx Limited	8,435,634	8,435,634
Investment in Quick Access International Limited	720,540	720,540
Investment in 1155259 Alberta Limited	67,001	67,001
	12,653,693	12,653,693
Due to subsidiaries
Due to NT Services Limited	11,779,487	3,031,205
Due to Quick Access International Limited	-	949,313
Due to Charter Access Co. Ltd.	908,606	-
	12,688,093	3,980,518

27. INTERCOMPANY TRANSACTIONS

Details of the Company's intercompany transactions are as follows:

Transaction fees, as noted in the Company financial statements, represent transaction fees earned in the Company's wholly owned subsidiary Neteller Operations Limited, an e-money issuer. The Company holds trust account funds and balances owing to Members and Merchants on behalf of Neteller Operations Limited. All revenues are transferred to the Company in exchange for transaction and processing services. Neteller Operations Limited is a company registered in the Isle of Man and incorporated on 23 December 2005. There were no intercompany balances at year end.

NetAdmin Limited, a wholly owned subsidiary of the Company, is a company registered in the Isle of Man and incorporated on 23 December 2005. NetAdmin Limited provides employment and administration services to the Company. All expenses incurred in NetAdmin Limited are charged to the Company at cost. These expenses were recognised in the Company income statement.

Net ID Limited, a wholly owned subsidiary of the Company, is a company registered in the Isle of Man and incorporated on 11 April 2006. Net ID Limited provides identification verification services to the Company. All expenses incurred in Net ID Limited are charged to the Company at cost. These expenses were recognised in the Company income statement.

28. ACQUISITION COSTS IMPAIRMENT

On 1 December 2008, the Group entered into an agreement to acquire IDT Corporation's European Prepaid Payment Services Division, IDT Financial Services Holdings Limited ("IDTFSH"). The proposed acquisition was subject to the approval of the Gibraltar FSC and MasterCard accepting the proposed change of control of IDTFSH. On 20 March 2009, the Gibraltar FSC advised the Group that it was unable to consent to the acquisition. A substantial underlying shareholder of the Company, who under Gibraltar banking law was to become a controller of IDTFSH and about whom information therefore needed to be provided to the FSC in connection with the approval process, refused to provide the requisite notification to the FSC. The FSC in these circumstances determined that it was unable to consent to the change of control of IDTFSH from IDT Corporation to the Company.

Acquisition costs of $932,317 were expensed in 2009 (2008: $620,439). They are considered to have no future economic benefit and have accordingly been expensed in the year.

29. RELATED PARTIES

During the year, the Group and Company entered into the following transactions with related parties who are not members of the Group or Company:

	Purchase of goods and services in 2009 £	Amounts owed to related parties 2009 £	Purchase of goods and services in 2008 £	Amounts owed to related parties 2008 £
Amber Business Limited	17,982	-	41,979	5,031
Intelligence Limited	136,061	-	-	-
JAC Group Holdings Limited	1,995	1,995	-	-

Amber Business Limited was a related party of the Group and Company as John Webster, a director and majority shareholder of Amber Business Limited, was a Director of the Company throughout the period. Amber Business Limited provided secretarial and administrative services to the Group in the Isle of Man, and all transactions were at fair market value.

Intelligence Limited was a related party of the Group and Company as John Webster, a director and majority shareholder of Intelligence Limited, was a Director of the Company throughout the period. Intelligence Limited provided executive search and recruitment services to the Group and all transactions were at fair market value.

JAC Group Holdings Limited was a related party of the Group and Company as Mark Mayhew, a director and shareholder of JAC Group Holdings Limited, was a Director of the Company from 1 September 2009. A subsidiary of JAC Group Holdings Limited provided travel and related booking services to the Group and all transactions were at fair market value.

During the year, Dale Johnson (Non-Executive Chairman) provided consulting services to the Group amounting to £10,687 (2008: £75,416).

30. CONTINGENT LIABILITIES

From time to time the Group is subject to legal claims and actions. The Group takes legal advice as to the likelihood of success of the claims and actions and no provision or disclosure is made where the Directors feel, based on that advice, the action is unlikely to result in a material loss or a sufficiently reliable estimate of the potential obligation cannot be made.

As at 31 December 2009, NetBanx Limited, a wholly owned subsidiary, has net current liabilities. NEOVIA Financial Plc will continue to provide financial support to enable NetBanx Limited to meet its existing and future liabilities and continue as a going concern.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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