Neteller Doubles Profits Again

Published: Friday, September 09, 2005 Online-Casinos.com

NETELLER DOUBLES PROFITS FOR THIRD CONSECUTIVE HALF-YEAR

Online cash processor says Asian activity will drive its earnings for foreeable future.

The Isle of Man-based online financial processor Neteller has announced doubled profits for the third consecutive half year.

The company predicts that Asia's growing appetite for online gaming will drive earnings at for several years, and that the craze for online gambling, which made up 80 percent of the company's transfers in the first half, was still going strong in Western markets, and Asia had huge potential to continue that growth, Chief Executive Gord Herman reported.

"Asia hasn't even started in this industry yet. It's potentially a massive industry that right now probably has, at least, a 2 to 3 year growth cycle," Herman told Reuters news service in an interview.

Neteller's pretax profit jumped 126 percent to $40.6 million (GBP 22.1 million) in the six months to end-June, while it increased revenue by 122 percent to $73.5 million. Herman said he saw this level of growth continuing into the second half and beyond.

"For the last half of the year that's certainly sustainable. For 2006, ... I would guess with what's happening, and our ability to penetrate the Asian market, that that's highly probable," he said.

Although the percentage of Chinese people hooked up to broadband internet was tiny, the actual number -- around 80 million -- was the same as in the United States, Herman said. This figure was expected to grow to 280 million by the end of next year.

At present gambling is restricted in China to certain economic zones such as Macao, but Herman said the issue was to what extent the Chinese government could control a new generation who are online and like gaming.

On the heels of the report, Neteller shares climbed 2 percent to 883-1/2 p, valuing the business at GBP 1.07 billion. It sold shares at 200 pence when it floated last April.

Herman estimates that the company has a 15 percent slice of its market, but said this percentage had the potential to grow as banks in the United States and Britain became more reluctant to process online gaming payments.

Neteller's membership doubled to 1.75 million year on year, with 3,000 new members joining daily.