NETELLER READY TO MAKE FINAL PUNITIVE PAYMENT

18 January 2008

Fourth quarter and full year results should meet expectations


Online e-cash processor Neteller's bruising clash with the US Department of Justice last year was front-and-centre in the company's pre-close trading update for the year ended 31 December this week, which reported that the directors are confident that fourth quarter and annual performance will be in line with expectations.

Neteller will make the final payment of US$ 38.25 million on 16 January 2008 to the US authorities in respect of its obligations under the deferred prosecution agreement.

This amount reflects recent discussions with US authorities confirming that US$ 57.7 million of the group’s funds were seized, as opposed to the US$ 60 million previously thought and announced. The total amount to be paid to the US authorities in connection with this matter remains the same as previously announced (US$ 136 million).

As part of the arrangements with the US authorities, Neteller has also implemented a distribution plan to return approximately US$ 94 million in funds owed to US customers. To date approximately US$ 81 million of this amount has been disbursed. Any unpaid amounts are currently held in trust accounts with the group’s bank. Under the terms of the distribution plan, US customers have until 26 January 2008 to withdraw their funds using the Neteller website.

The sale of Neteller’s principal Canadian property in Calgary has run into trouble and been delayed as a result of the lenders for the intended purchaser introducing significantly less attractive terms in the wake of the recent developments in North American financial and mortgage markets. Consequently, the final condition to the Purchase and Sale Agreement for the property has not been satisfied.

Constructive discussions with the intended purchaser and its lenders are continuing but there can be no certainty that a transaction will be concluded. However, the Calgary property market is reportedly strong, and the e-cash processor is confident that the property will be sold.

Unspecified litigation by a third party vendor concerning an alleged breach of contract has also hit Neteller's coffers, with an agreement to pay an amount of approximately CAD$ 1.75 million in final settlement.

On the positive side, the group makes a 2008 promise to deliver on a "significant number of initiatives in support of its strategic goal of providing innovative payment solutions for online communities." These include:

Revitalised Consumer Brand: At the beginning of January the group updated its Neteller Payment Network brand for consumers, at www.neteller.com. The bold new brand is designed to appeal directly to the Group’s core demographic, with an offer of a suite of lifestyle financial services for the online generation. The update creates a new brand platform for the release of new consumer services throughout the year.

Stronger Consumer Offer: During the first half of the 2008 Neteller will introduce significant enhancements to its consumer services, including a new suite of highly secure and convenient card products, a new rewards program, and a range of new payment options.

Enhanced Merchant Value Proposition: During the first quarter the group will be announcing details of a broad new suite of e-commerce applications for both gaming and non-gaming merchants. The suite, based around the Neteller’s existing core gateway and e-money wallet services, will help online merchants create stronger customer relationships than are possible with other payment solutions such as credit cards. The suite has already been deployed to a limited number of merchants, with a broader deployment planned for the first half.

Updated Merchant Branding: As the e-cash processor introduces its new payment suite it will also be revising its merchant facing brands. The first of these will be the high velocity NetBanx payment gateway, in the first quarter.

Neteller President and CEO Ron Martin said: “Considering the significant challenges that our company has faced during the past year, I am pleased with the performance of the business in 2007 and I am excited about the prospects for 2008.

"We have a number of key strategic initiatives which will be launched in 2008, commencing this week with the rebranding of our consumer-facing site, www.neteller.com. These developments represent a step change in the products and services we can offer our merchants and customers. I am confident about our strategy and that these initiatives will be reflected in our performance for 2008.”

Neteller’s next update will be the announcement of its preliminary results for the year ended 31 December 2007 on Tuesday, 11 March 2008.

Online Casino News courtesy of InfoPowa