Lastminute sales soar but costs go beyond expectations

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The Independent Online

A mismatch between costs and income left shares in lastminute.com down more than 4 per cent yesterday after the company issued a second-quarter trading update.

A mismatch between costs and income left shares in lastminute.com down more than 4 per cent yesterday after the company issued a second-quarter trading update.

One impact of its falling share price has been to dent the value of its all-share offer for the Online Travel Corporation (OTC), which it announced in early March and which closes tomorrow at 3pm.

The declining lastminute share price - yesterday its shares fell 4.2 per cent to 215.5p - has knocked 8 per cent or £4.4m off the value of the £54.9m offer that originally valued each OTC share at 31p. That has now slipped to 28.5p at last night's closing price of 215.5p for lastminute shares.

As of 25 March, lastminute had received acceptances representing 50.3 per cent of OTC's existing issued share capital.

The company said trading in the second quarter had been ahead of expectations and that its total transaction value would be "materially" ahead of the £170m previously stated. But the company's accounting policies mean the costs of generating sales are recognised in the quarter in which those sales are generated, which is not necessarily the quarter in which the income is recognised.

"Due to the significant growth of the forward order position, sales and marketing costs for the quarter will be ahead of consensus expectations. This position will correct itself during the remainder of the financial year as the order bank unwinds," the company said.

Lastminute also said it had generated marginally positive operating cash inflow after capital expenditure during the second quarter. It said this would show considerable growth in the remainder of the financial year.

"Trading during the second quarter has been ahead of our expectations created at the time of the first-quarter results and when we announced our offer for OTC in early March," the company said.

The company announced last week that Clive Jacobs would be leaving his job as vice-chairman. He took the role in March last year after lastminute bought his Holiday Autos business.

Another famous name linked to the company, Martha Lane Fox, a co-founder of the business with Brent Hoberman, sold 2 million shares in the company last month. She raised £4.6m from the sale although she retains more than 10 million shares in the business equal to a 3.4 per cent stake that is now worth £22m.

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