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Neovia reports disappointing 2008 full year and Q1 2009 results

Neovia plc's full year results to December 31, 2008 were published this week, and will do little to cheer investors. Indeed, as the Board commented: "Nonetheless, the Board is not fully satisfied with the Group's progress towards its strategic aims. Trading in the year to date has been disappointing and reflects a weakening trend in Europe, due to an increasingly competitive market, challenging economic conditions, volatile currency markets and limitations in new product introductions."

  • Group revenue was up 9% at $75.6 million - excluding North America (2007: $69.1 million)
  • Fee revenue (excluding North America) was a bright spot with a rise of 26% to $69.5 million in 2008
  • Gross margin improved 6.2% to 61.8% in 2008 due to cost management
  • Profit before tax and other items improved at $6.4 million vs. 2007's loss $12.8 million
  • Total group cash was $82.3 million at 31 December 2008

The Board has withheld a dividend as it seeks to preserve cash to retain financial flexibility.

Key Performance Indicators over the year included:

  • Active e-wallet users (exc North America) totalled 97,673 in Q4,2008 were down compared to Q4,2007's 99,984
  • However, E-wallet fee revenue per active e-wallet user increased to $ 128 for 2008 (2007: US$ 111)
  • Average daily sign ups were more-or-less static at 981 for 2008 (2007: 985); and
  • Average daily receipts reached $ 457,442 for 2008, well down from 2007's $ 656,809 (including North American receipts).

Neovia chairman Dale Johnson commented: "During 2008 progress was made by the NEOVIA Group in building the foundations to be a pre-eminent provider of bold online payment solutions to selected e-commerce communities. Creditable financial performance was achieved, in line with market expectations, despite a sharp deterioration in economic conditions worldwide. While the Board remains confident about the Group's prospects, the overarching themes for 2009 will be leveraging high potential initiatives, cost control and prudent cash management."

First Quarter 2009 trading update

The trading results for the first quarter of 2009 are disappointing.

  • Group revenue of $16.4 million is down 3% compared to Q1, 2008
  • E-wallet revenue is flat at $11.4 million, although overall fee revenue, including gateway businesses, is up 3% from Q1, 2008 to $15.8 million
  • Average daily receipts are down 4% from Q4, 2008 and 11% from Q1, 2008
  • Active e-wallet users are down 5% at 92,757 compared to Q4, 2008
  • E-wallet revenue per active e-wallet user is $122 for Q1, 2009, an 8% increase on Q1, 2008
  • Gross margin is at 58%, a decline compared to the 62% and 64% recorded respectively for Q1, 2008 and Q4, 2008
  • Income from operations is up 29% to $3.1 million compared to $2.4 million in Q1, 2008
  • Total group cash is $76.5 million as at 31 March 2009

Dale Johnson, Neovia's chairman, commented: "Trading in the first three months of 2009 is disappointing and reflects a weakening trend in Europe due to an increasingly competitive market, challenging economic conditions, volatile current markets and limitations in new product introductions until Newteller (the Company's new technology platform) is launched in Q3, 2009.

"The future benefits of Newteller will include cost savings and greater operating efficiencies within the Group. We expect 2009 to be a year of both significant challenge and exciting opportunity. Investment in the business will continue, especially for completion of the Newteller programme. Strategic opportunities are being examined, particularly in support of the Group's card strategy. The work to create greater differentiation, accompanied by a cost structure that creates competitive advantage, will be accelerated.

"While the Board remains confident about the Group's prospects, the overarching themes for 2009 will be leveraging high potential initiatives, cost control and prudent cash management."

Source: InfoPowa News

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