Press Release

Third Quarter Trading Update


NETELLER Plc ("NETELLER" or the "Company"), a leading online money transfer service provider, has continued to make further progress and rapidly expand its base of customers and merchants during the third quarter of operations ending 30 September 2005.

Highlights

  • Average daily sign ups for the quarter: 3,085; total customers at quarter end: 2,026,413 
  • Average daily receipts from customers: $ 3.64m, up from $ 3.15m in Q2 2005  
  • Revenues $ 44.9m, up 106 % over Q3 2004; gross margin for quarter of 73.9 % 
  • Income before tax $ 26.3m; net income after tax: $ 23.6m; net margin 52.5 % 
  • EPS for quarter $ 0.196 (11.1 pence) per share 
  • Continued investment in developing the business through key appointments and increased management focus on Asia region
  • Acquisition of NetBanx, a leading UK full service payment service provider for $ 21.9 million (£12.36 million)
  • Strong current trading in line with seasonal variations
  • NETELLER remains comfortable with market expectations for 2005

Gord Herman, Chief Executive Officer, commented "I am pleased that we have continued to grow the business in line with our strategic objectives. The third quarter is traditionally strong and we have seen excellent growth across all areas of the business on a year-to-date basis. Since his appointment as Chief Operating Officer, Ron Martin has made a considerable contribution to all operational aspects of the business, in particular the implementation of the next generation system which remains on course. We look forward to the final quarter of 2005 with confidence and expect to demonstrate continued progress."

Operational and Financial Highlights

All financial figures in US$ unless otherwise noted. All conversions to £ Sterling are at a rate of US$ 1.77 to £1.

Sign ups

  • The Company surpassed two million customers in September and closed the 3rd quarter with 2,026,413 customers. Daily sign ups averaged 3,085 customers for the quarter which was up 48 % from 2,085 in Q3 2004. Year-to-date sign ups are up 64 % over the previous year. Traditional volume increases in the month of August were less than expected for the season as a result of the phased migration to the next generation IT platform which caused some disruption to operations. Volumes returned to seasonally normal levels in September.

Average daily receipts

  • Average daily receipts from customers for the quarter were $ 3.64 million which was up 88 % on Q3 2004 and up 16 % on Q2 2005. Year-to-date average daily receipts are up 98 % over the previous year.

Revenue

  • Revenue for the quarter was $ 44.9 million which is up 106 % from $ 21.9 million in Q3 during 2004. Year-to-date revenue of $ 118.4 million is up 115 % from $ 55.0 million for the same period in 2004.

Gross margins

  • Gross margin of 73.9 % has improved from 73.2 % recorded for the first six months of 2005, and represents a considerable increase from the 69.6 % gross margin recorded in the same quarter period for 2004. The Company's scalable operating platform continues to allow for increased volume of transactions to be handled while maintaining a stable gross margin.

Income before tax

  • Income before tax improved 106 % to $ 26.3 million in the third quarter compared with $ 12.8 million in Q3 2004. Year-to-date income before tax is $ 66.9 million, which represents an increase of 122 % from $ 30.2 million in the prior year.

Income tax

  • Income tax expense for the current quarter is at approximately 10 % of pre-tax income or $2.7 million.

Net income

  • Net income for the quarter rose to $ 23.6 million (up 176 % from $ 8.6 million in Q3 2004) bringing the year-to-date net income to $ 60.6 million (up 203 % from $ 20.0 million for the same period in 2004). Net income margin was 52.5 % for the quarter compared with 39.4 % for Q3 2004.

Earnings per share

  • Basic EPS for the quarter was $ 0.196 (equivalent to 11.1 pence per share) based on the total shares outstanding of approximately 120 million. This compares to EPS of $ 0.071 for the corresponding quarter in 2004.

Other 3rd Quarter Highlights

  • The Company has continued to strengthen its management team and has made key appointments within the organisation, in particular in the marketing and product development areas. In addition, the Company announced that Dale Johnson, Director and Executive Vice President, has assumed the role of President – Asia region on an interim basis to support and expand the work which Benjamin Lee, Vice President & General Manager, has commenced in Asia. While progress is being made, NETELLER is seeking to accelerate the pace of its Asian programme in order to meet its key strategic objectives for this region.
  • The Company announced on 31 October the acquisition of Netinvest Limited and its wholly owned subsidiary Netbanx Limited (together "Netbanx"), a UK based card processor, for $  21.9 million (£12.36 million) in cash, from Transact Group. This is a key strategic acquisition for NETELLER, enabling integration of the payment processing solution from customer to merchant. Netbanx will provide NETELLER with the ability to process its own card transactions, retaining a greater proportion of margins in-house, whilst also generating additional revenue opportunities from leveraging Netbanx’s existing merchant base in the UK. The acquisition underlines NETELLER’s position as a leading payment provider to the e-commerce sector and the acquisition is expected to enhance earnings in the first full year after acquisition and provide operational synergies.

Current Trading

  • Since the end of September trading has continued to show positive growth trends in both sign ups and average daily receipts, in line with typical seasonal variations. The Company remains comfortable with consensus forecasts for revenue, operating income and EPS for the current financial year.

Third Quarter 2005 Unaudited Financial Information

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

% change

Q3 – 2005

9 months 2005

Q3 – 2004

9 months 2004

Q2 – 05

2005 to 2004

2005

US $

US $

US $

US $

US $

Q3

YTD

Q3 to Q2

Revenue

44,942,816

118,427,490

21,865,128

54,989,202

39,291,120

106%

115%

14%

Direct Costs

11,722,016

31,429,535

6,652,711

16,897,467

10,376,466

76%

86%

13%

Gross profit

33,220,800

86,997,955

15,212,417

38,091,735

28,914,654

118%

128%

15%

General and Admin

4,411,649

12,468,939

2,126,393

5,131,643

4,473,552

107%

143%

(1)%

Operating income

28,809,151

74,529,016

13,086,024

32,960,092

24,441,102

120%

126%

18%

Other income (expense)

Foreign exchange gain

(216,532)

(53,048)

330,278

179,393

96,053

Management bonus

-

(1,795,622)

-

(1,058,000)

(17,613)

Depreciation and

Amortisation

(1,335,674)

(3,612,782)

(647,513)

(1,870,371)

(1,363,910)

Stock option expense

(981,249)

(2,149,294)

(693,044)

Income before tax

26,275,696

66,918,270

12,768,789

30,211,114

22,462,588

106%

122%

17%

Income taxes

2,663,921

6,339,129

4,200,567

10,213,765

1,859,682

Net income after tax

23,611,775

60,579,141

8,568,222

19,997,349

20,602,906

176%

203%

15%

Daily sign ups

3,085

2,840

2,085

1,729

2,604

48%

64%

18%

Total customers

2,026,413

2,026,413

1,060,167

1,060,167

1,745,602

91%

16%

Average daily receipts from customers

3,640,823

3,222,446

1,935,976

1,628,825

3,152,212

88%

98%

16%

 


    About NEOVIA Financial Plc

    Trusted by consumers and merchants in over 160 countries to move and manage billions of dollars each year, NEOVIA Financial Plc (formerly NETELLER Plc) operates the world's leading independent online payments business. Through its Payment Suite, featuring NETELLER®, NETBANX®, Net+™ and 1-PAY™ brands, NEOVIA specialises in providing innovative and instant payment services where money transfer is difficult or risky due to identity, trust, currency exchange, or distance. Being independent has allowed NEOVIA to support thousands of retailers and merchants in many geographies and across multiple industries.

    Subsidiary company NETELLER (UK) Limited is authorised by the Financial Services Authority (FSA) to operate as a regulated e-money issuer. For more information about NEOVIA Financial visit www.neovia.com.

    NEOVIA Financial Plc recently changed its corporate identify from NETELLER Plc to better reflect the strength and breadth of its individual product brands. At the same time its ticker symbol changed from NLR to NEO.

    Media and Investor Contacts

    NEOVIA's media relations are managed by McEntegart Marketing. Contact them through the Media Relations Contact page. NEOVIA investor relations are managed by Citigate Dewe Rogerson. Contact them through the Investor Relations Contact page.