25th Jul 2007 15:30
NETeller PLC25 July 2007 NETELLER Plc Restoration of Trading on AIM and Trading Update Wednesday, 25 July 2007 - NETELLER Plc (LSE: NLR), the independent global onlinepayments business, today announced the restoration of trading of the Company'sordinary shares to AIM and provides the following trading update in respect ofthe first quarter ended 31 March 2007. Highlights • 2006 annual report and audited accounts published on the Company's website today and sent to shareholders.• The Company's shares will be restored to trading on AIM with immediate effect.• Daniel Stewart & Co Plc is appointed as the Company's nominated adviser and broker with immediate effect.• The Group continues to progress its plans to implement the Distribution Plan for the return of US customers' funds by 30 July 2007.• Trading update for Q1 2007 demonstrates resilience of European and Asia Pacific business.• Cash available at 30 June was $210.5 million (prior to the Company's $136 million US settlement).• The Company's AGM will be held on 20 August 2007. Ron Martin, President and CEO said: "The restoration of trading in theCompany's shares marks the first step in a new chapter for the NETELLER Groupfollowing our resolution with the US authorities announced last week. With ourvision to provide innovative payment solutions for e-commerce communities, ourinitial focus will be to dominate payments in our chosen online gaming markets. Online payments in many market sectors are growing rapidly and we believe thatthe e-wallet will continue to grow in popularity due to its convenience andsafety as more and more people source goods and services through e-commercecommunities. While there is much work to do and many challenges lie ahead, webelieve that the Company is well positioned to benefit from these trends. Ilook forward to being able to provide you with further updates on our progressin due course." Enquiries: Andrew Gilchrist + 44 (0) 1624 698 713VP Communications, NETELLER Plc Daniel Stewart & Co Plc + 44 (0) 207 776 6550Paul Shackleton Citigate Dewe Rogerson + 44 (0) 207 638 9571Sarah Gestetner / Sebastian Hoyle / George Cazenove Update on recent developments The Company today published its 2006 annual report and accounts on the Company'scorporate website, at http://www.neteller-group.com/file/26.pdf and the 2006annual report is also being sent to the Company's shareholders today. TheCompany's shares will be restored to trading with immediate effect. TheCompany's shares have been suspended from trading on AIM since 16 January 2007.The Company is pleased to announce that with immediate effect it has appointedDaniel Stewart & Co Plc as its nominated adviser and broker. The Board islooking forward to working with Daniel Stewart in the future. The Group continues to progress its plans to implement the Distribution Plan forthe return of approximately $94 million of US customers' funds by 30 July 2007.A further announcement will be made as soon as the Company has furtherinformation for its US customers. Trading Update Operational Highlights Average daily receipts from customers was approximately $1.71 million during Q12007 (Q4 2006: $5.75 million). The decrease of 70% was principally due to thewithdrawal from the North American market during the first quarter. Totalreceipts from customers during the period totalled $154.3 million. Our totalcustomer base (including North American customers) totalled 3,671,724 customersat 31 March 2007, an increase of 5% from the figure at 31 December 2006. During Q1 2007, our active customer base totalled 385,781, which included286,206 active customers from North America. Excluding North America, ouractive customer base was 99,575, a small increase from 91,381 at 31 December2006. However, this represented an increase of 50% from the total number ofnon-North American customers of 66,342 at the end of Q1 2006. European active customers totalled 79,615 at 31 March 2007, an increase from71,493 at 31 December, and a 55% increase from the 51,435 active customers in Q12006. Asia Pacific / Rest of World active customers totalled 19,960 at 31 March 2007,a marginal decrease from 20,410 at 31 December 2006, and a 34% increase from the14,907 active customers in Q1 2006. Average daily sign-ups of new customers was 1,797 during Q1 2007 (Q4 2006:3,493) - representing a decrease of 49%. Again, this decrease was almostentirely attributable to the withdrawal from servicing the North American marketduring Q1 2007. Throughout Q2 2007, approximately 850 to 950 new customers perday signed up for the Group's e-wallet. Financial Highlights Performance during the first quarter of 2007 was clearly impacted, to a materialextent, by the Company's voluntary withdrawal from the US market on 18 January2007. The Company also announced the cessation of online gaming relatedtransfers for Canadian residents on 26 March 2007. The Group recorded revenueof $32.7 million for Q1 2007, compared to $71.8m in the prior quarter. Thisincluded approximately $14 million in revenue from the US market prior to theGroup's withdrawal from that market and a full quarter's contribution from theCanadian business. Interest revenue for the quarter was approximately $3.9million. Transaction revenue from outside the USA and Canada was approximately$14.7 million. Gross margin was $16.8 million, or 51.4% of revenue, which compared to 66.7% inQ4 2006. The primary factor in the reduction in margin was the higher level ofbad debts incurred as a result of the US withdrawal programme implemented by theGroup in January 2007. Deposit and withdrawal fees were also higher due to anincreased focus on European and Asia Pacific markets where banking costs aremore expensive. Operating income was $4.5 million, or 13.6% of revenue. Subsequent to theannouncement of cessation of North American online gambling relatedtransactions, the Group undertook a major exercise to realign its cost base withanticipated revenues on a worldwide basis. Following this, the Group employedapproximately 425 staff across its operations in Europe, Canada and AsiaPacific. The total cash costs associated with staff restructuring are expected to be inthe region of $3.7 million in 2007 - approximately $770,000 was incurred in thefirst quarter of 2007. Other 2007 non-cash write downs associated with USwithdrawal are expected to total between approximately $13 million and $15million, related to impairment of assets including website development,leasehold improvements, redundant servers and unamortised portion of licensesand trademarks. This compares favourably with amount of $18 million to $20million of writedowns previously estimated in the Company's press release of 18January 2007. The Company took an impairment charge in the first quarter of 2007 related tothe carrying amount of its intangible and other assets (including websitedevelopment, leasehold improvements, redundant servers and unamortized portionof licenses and trademarks) relating to its North American business. Based uponthe impairment analysis, a charge of $12.0 million was recorded for theimpairment of these assets. Cash position of the Group The total amount of cash available to the Group totalled $213.5 million at 31March 2007. The Group purchased the building in Calgary where its principaloperations are based during the first quarter of 2007 for a cost of $20 millionwhich augmented approximately $12 million in improvements the Company hadcapitalised in 2006. The Group's total cash available at 30 June 2007 totalled$210.5 million. Both of these total cash figures are stated before allowing forthe up to $60 million of funds seized by the US authorities in January 2007 andthereafter. Cash available to the group is the total of cash and "RestrictedCash" which are funds held in trust for customers and merchants in excess of therelevant liabilities. As part of the resolution with the US authorities in July 2007 the Companyagreed to forfeit a total of $136 million to the US. This amount included up to$60 million which was seized by the US authorities and which shall be applied tosatisfy a portion of NETELLER's forfeiture obligation. NETELLER agreed that itwill pay a further amount of $40 million on or before 15 October 2007, with theremaining balance to be paid on or before 17 January 2008. The Company has also agreed that it will, as part of the US resolution,implement the Distribution Plan to return approximately $94 million of fundsowed to US customers. This amount is currently held in trust accounts with theGroup's European bankers. The repayment of this amount will have no impact onthe Group's own cash position. Other information The Company's Annual General Meeting will be held on Monday 20 August 2007 inthe Isle of Man. The notice for that meeting is contained in the Annual Reportwhich is being posted to shareholders today. . The Company's registered office will change to Bourne House, 97 Woodbourne Road,Douglas, Isle of Man IM2 3AW, with effect from 27 July 2007. The Company'scorrespondence address will change with effect from that date to PO Box 165,Douglas, Isle of Man IM99 3NX. The Company's website at www.netellergroup.com has been updated to reflect theadditional disclosures required under the AIM Rules. * * * * * In this announcement, "NETELLER" or "the Company" refers to NETELLER Plc whichtogether with its subsidiaries, are referred to as the "Group". All amountsreferred to in this announcement are in US dollars unless otherwise stated. Further information Further information is available on the Group's website in the form of updatedFAQs athttp://www.netellergroup.com/content/en/news_media_faqs_index.htm. Notes to Editors About the NETELLER Group Trusted by millions of customers in over 160 countries to move and managebillions of dollars each year, the NETELLER Group operates the world's leadingindependent online payments business. The Group specialises in providinginnovative and instant payment services where money transfer is difficult orrisky due to identity, trust, currency exchange or distance. Being independenthas allowed the Group to support thousands of retailers and merchants in manygeographies and across multiple industries. NETELLER Plc is quoted on the London Stock Exchange's AIM market, with a tickersymbol of NLR. NETELLER (UK) Limited is authorised and regulated by theFinancial Services Authority (FSA) to operate as a regulated e-money issuer. Formore information about the Group visit www.netellergroup.com. Additional Financial Information The additional information presented below has been prepared for information purposes only. Pleasenote that this information is outside of the scope of the audited financial statements Q1 - 2007 Q4 - 2006 Q1 - 2006 Q1 2007 vs Q1 2007 vs Q4 2006 Q1 2006 US$ US$ US$ % change % changeRevenue -54% -44% 32,664,171 71,783,364 57,891,523Direct Costs -33% 4% 15,880,434 23,879,323 15,321,501Gross profit -65% -61% 16,783,737 47,904,041 42,570,022 General and Admin 8% 40% 12,332,168 11,428,267 8,808,432Operating income -88% -87% 4,451,569 36,475,775 33,761,590 Other income (expense)Foreign exchange gain (309,352) 708,060 (465,498)Management bonus (374,779) (2,300,000) (1,949,710)Depreciation andAmortisation (2,858,239) (3,368,651) (2,409,288)Stock option expense (2,224,016) (1,757,876) (1,195,155)Impairment loss (11,693,316) - -Restructuring costs (769,991) (1,160,177) -Intangible asset write (12,011,768)down - -Income before tax -183% -151% (14,096,576) 16,903,815 27,741,939Income taxes -13% -22% 929,360 1,070,019 1,197,090 Net income after tax -195% -157% (15,025,936) 15,833,796 26,544,849 1,797 3,493 3,609 -49% -3% KEY METRICS Daily sign ups 3,671,724 3,510,033 2,645,502 5% 39% Total customers (atperiod end)Total active customers 385,781 640,701 495,698 -40% -20%(in quarter) Average daily receipts 1,714,807 5,751,318 4,692,661 -70% -63%from customersTotal customer receipts -71% -63% 154,332,615 529,121,218 422,339,463 END This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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