Neteller (LSE: NLR), the leading global independent online money transfer business, today issued the following update from its Board of Directors with regard to its principal operations in Calgary, Canada and the UK.
As a result of the Group's voluntary withdrawal from the US market, the Group has substantially completed the necessary reorganisation and restructuring of its operations to reduce its headcount and align related costs with anticipated revenues of its worldwide business.
This rationalisation programme has focused on the Group's Calgary-based operations where the principal teams serving the US market were employed. As previously highlighted, transfer volumes and customer enquiries through the Group's contact centres have decreased substantially since the Group ceased processing transfers for US residents. Staff reductions will total around 220 employees, across all levels, from the Group's contact centre and security teams, as well as related support functions in marketing, processing and IT/ product support. Approximately half of the reductions were through the Group's voluntary redundancy programme.
In addition, as part of the rationalisation of the Group's UK facilities, it is expected that around a further 30 redundancies will arise from the relocation of the Group's Gatwick-based operations to Cambridge where they will share premises with the Group's NetBanx business. This move is expected to be completed by the end of March 2007.
Following these staff reductions, the Group will employ approximately 425 staff across its European, Americas and Asia Pacific operations, down from a peak of over 1,000 during 2006. A further part of the Group's rationalisation programme will include a review of the Group's property requirements and may include a sale or partial lease of certain of the Group's Calgary-located facilities. As stated in our trading update of 18 January 2007, the total cash costs associated with staff restructuring are expected to be in the region of US$ 1.1 million in 2006 and a further US$ 3.7 million in 2007.
Ron Martin, Group President and CEO said: "The events of the past months have led to challenging times for the Group and the Board has taken these measures to ensure the Group has a sustainable business going forward. We would like to thank all of our employees who have contributed to the growth of the NETELLER business over the past few years, and for those who have left or will be leaving the Group, we wish you well for the future. The Board believes NETELLER continues to have a strong future ahead and presents many exciting opportunities for its employees."
The Group's shares will continue to be suspended from trading on AIM for the time being in view of the continuing uncertainty. Further announcements will be made as appropriate.