LONDON, Feb. 12, 2001 (PRIMEZONE) - lastminute.com (Nasdaq:LMIN) - Commenting, Allan Leighton, Chairman said: "These are another set of satisfactory financial results with solid growth in our key metrics. We are particularly pleased with the increase in gross margins and conversion.
"As we have said before, there is a lot to do. However, our strong brand, our widening offer, the successful integration of Degriftour, our new technology platform and our cash position continue to provide us with confidence as we build the business towards profitability."
Brent Hoberman, Chief Executive, said: "lastminute.com has made good progress and continues to deliver versus our strategy. Our sales in the quarter remained buoyant and since 31 December 2000, we have seen continued growth in our subscriber and customer bases."
About lastminute.com
Based on the idea of matching supply and demand, lastminute.com currently offers consumers last minute opportunities to acquire airline tickets, hotel rooms, package holidays, entertainment tickets, restaurant reservations, specialty services, gifts and auctions in the United Kingdom, France, Germany, Italy, Sweden, Spain, The Netherlands and Australia.
A localized version of lastminute.com in South Africa will be launched shortly in partnership with lastminute.com's joint venture partner Tourvest.
At 31 December 2000, lastminute.com had approximately 9,200 individual supplier relationships and had successfully established its non-travel offering, with 43% of items sold being non-travel related.
Supplier relationships include Lufthansa, British Midland, United Airlines, Virgin Atlantic Airways, Starwood Hotels and Resorts Worldwide, Forte Hotel Group, Kempinski Hotels, English National Ballet, The Royal Albert Hall, Conran Restaurants and SFX.
On 23 October 2000, lastminute.com announced the completion of the acquisition of the Degriftour Group making lastminute.com one of the leading e-commerce companies in Europe.
OPERATING REVIEW
Degriftour/lastminute.com integration
On 23 October 2000, lastminute.com formally completed the acquisition of the entire issued share capital of the Degriftour Group. Effective control passed from the vendors to lastminute.com plc on 30 September 2000 and accordingly, this interim report contains the consolidated results of the enlarged entity for the whole quarter.
Following the acquisition of Degriftour, the integration of the two companies has progressed on plan. Degriftour's management is leading the enlarged French operation and the staff are now working in integrated teams.
The Degriftour full service-booking engine is in the process of being deployed across all of lastminute.com's European web sites, which enables lastminute.com customers to browse special negotiated and published fares.
In January 2001 French online travel industry analyst eTourism recognized lastminute.com/Degriftour as the No. 1 French online travel site. The independent audit was based on over 200 criteria, including security, ease of browsing and coherence.
lastminute.com is also No.1 in the latest UK traffic figures issued by NetValue, one of the leading Internet monitoring companies. In NetValue's December 2000 analysis of the travel sector, NetValue identified that lastminute.com had considerably more than double the amount of unique visitors than the nearest ranked site. The same source places degriftour.com as No.1 and lastminute.com as No.2 in the travel category in France.
International expansion
Lastminute.com expanded its European presence to seven countries with the official launch of localized versions of the web site in Italy, Spain and The Netherlands.
All web sites offer locally sourced content and provide lastminute.com's customers with a deeper product offering, while its existing supplier partners benefit through the increased visibility of their products and services across a Europeanwide distribution platform.
Technology
In the run-up to Christmas, shoppers on lastminute.com were able to purchase a wide range of gifts via the web site using an interactive voice recognition (IVR) portal developed with Nortel Networks. This pilot voice recognition shopping service enables customers to order products and arrange delivery over the telephone quickly, efficiently and without the need to speak to an operator. lastminute.com partnered with iForce(tm), one of the UK's leading e-fulfillment providers, to enable lastminute.com to offer same day delivery of any product purchased from its site.
The first phase of lastminute.com's User Interface improvements is soon to go live. The new UI features improved search functionality with better product visibility, and is friendlier to navigate and should therefore lead to higher conversion. Online problem-solving should also lead to back-end efficiencies and thereby reduce costs.
Supplier and product focus
thomascook.com and lastminute.com have today announced that they are forming a reciprocal commercial partnership. The relationship, which will initially be piloted until May 2001, is three-fold:
-- thomascook.com will be one of lastminute.com's `first minute' travel partners. This means that customers who visit lastminute.com looking for a holiday more than six weeks in advance will be directed to a joint site showing millions of holidays available on thomascook.com.
-- lastminute.com will be providing last minute solutions to thomascook.com's customers, allowing them access to its wide range of products and services, such as theatre tickets, restaurant bookings, gifts and experiences.
-- thomascook.com will be one of lastminute.com's preferred flight partners.
Individual supplier relationships totalled 9,200 at the period end.
Non-travel products and services made up 43% of the total number of items sold in the quarter. The number of items sold during the quarter was 160,819 compared to 108,188 in the quarter ended 30 September 2000. Due to an increase in non-travel items sold in the UK over the Christmas period, as well as the strong sale of package holidays in France, gross margin increased by 3.6 percentage points quarter on quarter and 5.5 percentage points year on year to 13.7%.
Income from third party sponsorship of the weekly newsletter and advertisements on lastminute.com's web sites continued successfully and contributed to increased turnover and gross profit relative to the previous quarter.
FINANCIAL REVIEW
Total transaction value for the quarter ended 31 December 2000 was 20.2 million Pounds, representing a 53% increase compared to the quarter ended 30 September 2000 (13.2 million Pounds) and an increase of nearly 4.8 times total transaction value for the equivalent period in the prior year.
Turnover almost doubled compared to the period ended 30 September 2000 and was over 7 times that in the corresponding period in the prior year. Gross profit for the quarter ended 31 December 2000 was 2,779k Pounds compared to 1,332k Pounds in the previous quarter, an increase of 109% and nearly 8 times that in the corresponding quarter in 1999.
The conversion rate in the quarter increased from 5.5% to 8.9%.
Operating expenses
As planned, product development costs increased compared to the prior quarter reflecting the introduction of the new version of the company's web site and a larger technology department as a result of the acquisition of Degriftour. The company continued to capitalize the costs associated with the development of new software. The total amortization charge during the quarter in respect of computer hardware and software amounted to 1.6 million Pounds.
Sales and marketing costs rose from 6.0 million Pounds in the quarter ended 30 September 2000 to 7.2 million Pounds in the quarter ended 31 December 2000. This is the result of our increased presence in France as well as in other Continental European markets.
General and administration costs rose by 24.3% compared to the previous quarter for the same reason.
Goodwill arose on the acquisition of Degriftour in September 2000 and is being amortised evenly over the estimated useful economic life of 4 years.
The charge for non-cash share-based compensation is based on the difference between the exercise price of share options granted and the fair value of the underlying ordinary shares at the date of grant.
The company provides for the expected liability for National Insurance on share options over the period of performance. The cost in the profit and loss account represents the charge for the period to meet the expected liability given the period end share price.
Cash balance
At 31 December 2000, the cash position of the group stood at approximately 70.9 million Pounds. The decrease of 32.8m Pounds relative to 30 September 2000 includes approximately 21.4 million Pounds used as part of the consideration in the acquisition of Degriftour.
INDEPENDENT REVIEW REPORT TO LASTMINUTE.COM PLC
Introduction
We have been instructed by the Group to review the financial information set out on pages 6 to 9 and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The Listing Rules of the Financial Services Authority require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board.
A review consists principally of making enquiries of Group management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and =verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the three months ended 31 December 2000.
Ernst & Young London, 12 February 2001
Definitions
Registered subscribers are users of the lastminute.com web site who have submitted their e-mail addresses and other data and have elected to receive lastminute.com's weekly e-mail. This does not include users who register with the company, but elect not to receive its weekly e-mails. Since lastminute.com counts its registered subscribers based on their e-mail addresses, users who register multiple times using different e-mail addresses will count as multiple registered subscribers. For example, if a user has registered with lastminute.com using an e-mail address at work and one at home, the user will be counted as two registered subscribers.
Total transaction value does not represent statutory turnover. In the majority of transactions, where lastminute.com acts as agent or cash collector, total transaction value represents the price at which products or services have been sold across the web site, net of value added tax and associated taxes. In other cases, for example the reservation of restaurant tables, a flat fee is earned, irrespective of the value of products or services provided. In such cases total transaction value represents the flat fee commission earned. In the small number of cases where lastminute.com acts as principal, total transaction value represents the price at which products or services are sold across the web site, net of value added tax and associated taxes.
In the majority of cases, lastminute.com does not take ownership of the products or services being sold and acts as agent, receiving a commission from the supplier of the products or services being sold. In these cases, turnover represents commission earned, less amounts due or paid on any commission shared. In a limited number of cases, lastminute.com acts as principal and purchases the products or services for resale. Where lastminute.com acts as principal, turnover represents the price at which the products or services are sold across the web site. Turnover is recognized once charges to the customer's credit card have been made except for travel, which is recognized on the date of departure, and is stated exclusive of value added tax and associated taxes. Additional revenue streams (e.g. sponsorship) also contribute to turnover.
Gross margin is defined as gross profit over total transaction value.
Operating cash outflow is defined as net cash outflow before management of liquid resources, financing and acquisitions.
Conversion is defined as the number of customers over the number of registered subscribers (excluding those applicable to joint ventures).
The number of customers is the cumulative number of customers (excluding repeat customers) since the inception of lastminute.com and the cumulative number of Degriftour's customers (excluding repeat customers) since 1 October 2000. Customers are defined as individuals who have purchased goods and services over lastminute.com's and Degriftour's platforms.
An item sold is an individually priced product or service purchased by a customer.
The number of suppliers includes individual airlines, hotels, holiday package suppliers, entertainment vendors, gift suppliers, restaurants and specialty service suppliers.
This press release may contain forward-looking statements. Expressions of future goals, including without limitation, "intend", "will", "should", "are well on track", "expect" or "continue", and similar expressions reflecting something other than historical fact are intended to identify forward looking statements. The following factors, among others, could cause lastminute.com's actual results to differ materially from those described in the forward looking statements: management of lastminute.com's rapid growth; speed of technological change, including introduction of new architecture for its web sites; systems-related failures; the ability to attract and retain qualified personnel; adverse changes in lastminute.com's relationships with airlines and other product and service providers; adverse changes in the services provided by lastminute.com's suppliers; lastminute.com's ability to attract and develop an adequate international supplier and customer base; potential adverse changes in its commission rates; the effects of increased competition; risks relating to operating in internet - based commerce in foreign markets; lastminute.com's dependence on its ability to establish its brand; lastminute.com's ability to protect its domain names and other intellectual property rights; legal and regulatory risks; a slow down in the continued growth of e-commerce and the internet; unforeseen events affecting the travel industry; and factors adversely affecting lastminute.com's share price. All such forward-looking statements are made in reliance on the safe harbour provision of the US Private Securities Litigation Reform Act of 1955. These and other risk factors are described in detail in lastminute.com's shareholder circular dated 8 September 2000, which has been filed with the Securities and Exchange Commission, USA and the London Stock Exchange, UK.
For full Q1 Earnings Releas with tables, please follow this link: Q1 Earnings Release