ITEM 4. INFORMATION ON THE COMPANY
History and Development of the Company
Last Minute Network Limited was incorporated in England and Wales on April
1, 1998 as a private limited company and commenced offering products and
services on the lastminute.com website in October 1998. In February 2000, the
Company implemented a share capital reorganisation whereby the shares of Last
Minute Network Limited were exchanged for shares in lastminute.com Limited
having equivalent rights and restrictions. Subsequently, lastminute.com Limited
re-registered as a public limited company, lastminute.com plc.
Our primary activities during the period prior to launch of the UK version
of the lastminute.com website consisted of creating our website, recruiting and
training employees, developing a business model, implementing systems to support
the business model, developing relationships with suppliers and developing the
lastminute.com brand. Operations commenced on October 1, 1998 on the UK website
with the sale of last minute deals on flight and hotel room reservations,
entertainment and gifts.
After the launch of the UK website, other lastminute.com websites were
launched principally within Europe over the following two years. Since 2000, we
have also significantly increased the breadth and size of the Group's business
through a number of strategic acquisitions including:
In 2000 - Degriftour (principally French based)
In 2002 - Travelselect.com (UK based)
- Destination Group (UK based)
- Travelprice.com (principally French based)
- eXhilaration (UK based)
In 2003 - holiday autos (principally UK and German based)
- Med Hotels (UK based)
In 2004 - First Option Hotel Reservations Ltd (UK based)
Capital expenditure for the year ended September 30, 2003 was 17.8 million
compared to 7.0 million for the year ended September 30, 2002 and 8.4 million
for the year ended September 30, 2001. In each of the three years capital
expenditure principally related to purchase and development of computer systems
and equipment.
Business Overview
lastminute.com remains the number one online travel agency in Europe in
terms of total sales (per PhoCusWright, leading independent analysts). We offer
comprehensive travel and leisure services including flight bookings, hotel
reservations, car hire, holidays (self packaged and third party packaged),
cruise, Eurostar and train tickets, entertainment events, rock and pop concerts,
theatre tickets, restaurant reservations, sporting events, gifts, auctions and
some speciality services such as our restaurant food delivery service and DVD
home delivery service.
Total revenues by activity and geographic market are as follows:
Turnover
(by product)
Year ended September 30,
2001 2002 2003
(000)
By product
Flights 6,899 19,254 96,785
Holidays 10,059 12,769 19,274
Hotels 750 1,490 41,654
Car hire 156 621 2,094
Other* 47 187 2,311
18,416 35,077 190,705
* Other includes advertising and sponsorship revenue
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Turnover
(by destination and source)
Year ended September 30,
2001 2002 2003
(000)
By geographical area
United Kingdom 6,899 19,254 96,785
France 10,059 12,769 19,274
Germany 750 1,490 41,654
Italy 156 621 2,094
Spain 291 68 468
Other European Union countries 214 688 28,119
Joint ventures 47 187 2,311
18,416 35,077 190,705
lastminute.com is headquartered in London and the UK remains our primary
market. We have operations in 13 European markets, and three international joint
ventures. We have additional presence in various further global markets through
our acquisition of the holiday autos group, Europes leading leisure car rental
broker.
Our vision is to strengthen our position as Europes number one online
travel and leisure retailer by continuing to delight our customers with great
value inspiration and solutions, providing a service that customers can use
everyday to make the most of their valuable leisure time.
We believe our customers buy from lastminute.com because we aim to offer:
real-time access to attractively priced, last minute deals, including
some of the lowest prices on many travel and entertainment deals;
the convenience of a broad range of attractive packaged or individual
offers which our customers can access quickly and with minimal effort; and
the benefit of our ideas - we believe we have a reputation for offering
our customers novel and distinctive products that inspire them to try
something different.
We aim to provide a service that is accessible by our customers on the
communications device which is most convenient to them and our service is
available online, mobile phone, PDA, interactive TV, voice recognition, and via
our customer service team. At September 30, 2003 we had approximately 7.7
million registered subscribers and had served over 2.7 million customers since
inception. During the year we sold 3.5 million items. Customers are defined as
individuals who have purchased goods and services over our distribution
platforms. An item sold is an individually priced product purchased by a
customer. Our registered subscribers do not pay to register for our services.
The lastminute.com solution
We intend to remain true to our original vision of leveraging the power of
the internet to match supply and demand to the benefit of suppliers and
customers. We believe that our business model could only happen through digital
distribution and that our continuing investment in technology, our comprehensive
database and deep relationships with our suppliers will ensure that we retain
our competitive edge.
We believe we have established a powerful alternative distribution channel
for our suppliers that supplements and enhances their core business and enables
lastminute.com to have access to some of the best deals available. Further to
this, we observe that travel, technology and lifestyle trends are moving in
lastminute.coms favour. Our target audience is young and mobile, more
adventurous with their leisure time, keen to make the most of their free time,
are having families later in life, and keep up to speed with the latest
technology developments like broadband and WIFI. All these developments will
help accelerate lastminute.coms growth.
The lastminute.com growth strategy
The financial year 2003 has been a year of continuing transformation for the
Group.
The acquisition of eXhilaration in November 2002, which sells experience
products, has enhanced our lifestyle product offering - one of the areas we
believe differentiates us from our competitors by offering our customers a more
comprehensive service.
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In April, the Group completed its acquisition of holiday autos group for
39.0 million. holiday autos is a logical extension to lastminute.coms existing
travel and leisure offerings, is a further component for the Groups dynamic
packaging product and has provided an enhanced gross margin and geographic
extension for the enlarged Groups customers. Integration into the Group has
started and is in line with the expectations set at the time of acquisition.
In September, we raised approximately 102.6 million from the issue of
unsecured convertible bonds. These funds were raised to enable us to:
fund small scale acquisitions in growing European markets and in the
lifestyle categories of our business;
accelerate the delivery of a number of development projects which are
intended to bring operational efficiencies and enhance conversion of
lookers to bookers; and
invest in key brands across Europe.
We used part of these funds in September 2003 for the repurchase of the 70%
shareholding we did not own in lastminute.com Spain from our joint venture
partner, Sol Meli, for 6.0 million. We believe that integrating our businesses
in Spain, one of the fastest growing European online travel markets, should
enable us to further strengthen our position in Europe.
In the current financial year we have completed the acquisition of Med
Hotels, a UK based hotel consolidator and package holiday re-seller, for a
consideration of 16.1 million, 8.0 million of which was paid in cash and the
remainder in lastminute.com shares. This acquisition provides the Group with a
significantly advanced portfolio of resort based hotels. We have also completed
the acquisition of First Option, a UK based hotel consolidator and corporate
travel specialist; First Option have some 21 retail kiosks principally at UK
mainline railway stations and airports, which will provide the Group with an
additional distribution medium for its products.
On Wednesday March 3, 2004 lastminute.com announced its proposal to acquire
Online Travel Corporation plc, an online travel services supplier and retailer.
Online Travel Corporation plc provides a comprehensive range of web based travel
products for leisure and corporate clients. The offer made to Online Travel
Corporation plc shareholders was 0.1319 lastminute.com shares for each Online
Travel Corporation plc share held, valuing each Online Travel Corporation plc
share at 31p per share. The offer, if accepted in full, will result in the issue
of approximately 24.5 million new lastminute.com shares.
We believe that a number of further strategic acquisition opportunities are
available in a number of areas.
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Our Offering
We believe we provide an extensive range of travel and leisure products to
customers. Product offerings comprise hotels, holidays (both pre-packaged and
dynamically packaged), most modes of transport including flights, cars, trains,
ferries and cruise and leisure activities including music, sports, events,
theatre, restaurants and food, experiences and resort tours and gifts:
Flights
lastminute.com has preferred partnership agreements with major airlines
giving access to multimarket product at preferential rates. We have
increased our charter flight supply during the year and have signed deals
with two charter flight GDS suppliers which provides customers with even
more flight availability.
Hotels
During the third quarter of 2003 we centralised our internal hotel
contracting function. This transition from locally resourced and
contracted hotel supply to one controlled from one focal point in London
has enabled the Group to build stronger relationships with suppliers and
to pass on an even greater selection of good value, high quality offers to
lastminute.com customers.
We believe we have also significantly expanded the accommodation choice
and availability to customers through a strategic commercial agreement
with Sol Meli, which gives access to Sol Melis hotel search engine,
together with exclusive Sol Meli promotions. In November 2003, we
announced an agreement with WorldRes, a leading hotel booking engine for
websites worldwide. These relationships provide an even more comprehensive
range of hotel product to our customers. We aim to provide access to over
45,000 properties around the world in the short term by further
connectivity projects.
Holidays
We believe we have continued to strengthen and deepen our relationships
with major tour operators thus generating more exclusive product at
special rates.
Car hire
The acquisition of holiday autos significantly enhanced car hire supply.
As a leading car hire brand in Europe, holiday autos has strong historic
relationships with international and local major car rental companies. In
2003, holiday autos secured an exclusive relationship with Alamo/National
for car rental supply in North America.
Travel extras
During the year we announced an exclusive deal with BCP, the UK's leading
airport parking booking service, which allows UK customers booking travel
online to save money on airport parking. In addition, we announced a
partnership with Mondial to provide customers with cost effective travel
insurance.
Lifestyle
In 2003, in the UK, over 300,000 customers purchased lifestyle products.
Lifestyle products represent over 20% of items sold during the year and
are counter cyclical with the travel business quiet periods of Winter and
Spring with many repeat purchases.
We also established a partnership with Theatrenow, the independent
information service for theatre-goers and late availability online ticket
channel in London. This partnership creates a new independent ticket sale
and marketing channel for producers and theatre venues.
Launch of Dynamic Packaging
Dynamic packaging was launched, initially in the UK, in November 2002. It
enables customers, in the same shopping basket, to build a holiday which suits
their individual needs and receive an integrated invoice for those products.
When this service was launched, only flights and hotels were available for
packaging. During 2003, the product range available within dynamic packaging was
extended to include car hire, insurance and airport parking. Dynamic packaging
has mainly featured scheduled airlines and city hotels, therefore enabling
customers to create traditional city break holidays.
We expect to expand dynamic packaging further in 2004 by adding resort
destinations to the offering, extending the flights product to charter flights
and including restaurants and entertainments. In July 2003, we increased charter
flight availability through the
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normal flight engine by an agreement with Avro, the UK's leading charter
flight-only operator. This provided access to approximately two million charter
seats for customers to the all important summer sun destinations.
Dynamic packaging was launched in France and Italy during the last
financial year. Spain went live in December and Germany has gone live in
February.
Alternative Distribution Channels
We continue to support our belief that our service should be available to
our customers wherever they are and on the communications device of their
choice. We have deepened our relationship with the leading interactive
television companies and mobile operators to ensure that our services are
available to their customers. During the year we announced two significant deals
with Vodafone Live! and 3 which enabled customers to browse lastminute.com in
colour from their mobile phones.
In the next 12 months we are looking forward to developing these
technologies to provide location based services for customers. We utilize the
same database as our website for these multi-platform opportunities, and adapt
the user interface and content depending on the device.
Our Website
During 2003, we have achieved further scale through both significant
organic growth and key acquisitions.
During the year we have made significant steps to improve the usability and
reliability of the website, we have extensively deepened our product offering
and feel we have provided customers with a lifestyle proposition which they can
use on a daily basis to deliver inspiration and great value solutions. These
enhancements have contributed towards the significant increases in the number of
subscribers to our newsletters and the conversion of those subscribers to
customers. Subscribers have increased to over 7.7 million at September 30, 2003,
which represents an increase over last year of 20%, whilst customers have
increased by 116% to 2.8 million at September 30, 2003, up from 1.3 million at
September 30, 2002.
Our improved conversion rate has been supported by our increased level of
customer satisfaction. In a recent online survey (conducted during September
2003), of those who responded, over 50% of visitors to the site have made a
purchase from lastminute.com, 79% of users are returning visitors and 93% of
visitors are satisfied with the lastminute.com offering.
Strategic Relationships
We have continued to develop strategic brand partnerships. We have sourced
a number of white label arrangements whereby lastminute.com provides booking
engine technology for use by third parties, exclusive marketing partnership
deals and the supply of products to new technology platform providers.
We are the online travel partner for Tesco.com, the UKs largest online
retailer, Voyages Auchan, a leading French supermarket retailer and developed a
combined microsite with Eurostar called le weekend. Customers on these sites are
offered exciting lastminute.com travel offers which are promoted by the
respective websites homepages and online customer communications. In 2003, we
also entered into an agreement with Egg, Europe's largest online bank, to
provide a monthly online newsletter to Egg's UK customers containing a full
range of lifestyle offers and some exclusive lastminute.com offers for flights,
holidays, hotels, dynamic packaging, entertainment and restaurants.
Also during 2003 lastminute.coms range of products including travel deals,
theatre tickets and retail products, was offered to users via Sky Active. In
addition we entered into a partnership with video mobile phone company 3 whereby
lastminute.com offers products on Third Generation mobile services using product
images.
Marketing, Brand awareness and Promotion
On October 16, 2003, lastminute.com celebrated its fifth anniversary. We
believe lastminute.com remains Europes number one online travel and leisure
retailer in terms of total sales and site usage. During October 2003
www.lastminute.com was again placed Number One in the top 10 UK online travel
agency sites by Hitwise (agency specialising in real-time competitive
intelligence).
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We continue to adapt our marketing strategy to an ever more demanding
market and to tailor the 7.7 million newsletters to customers' needs. In the UK
our weekly newsletter continues to act as a vehicle to drive sales, bring
traffic to the website, provide a platform for advertising and provide an
opportunity for us to communicate with our subscribers. It is additionally
tailored to 3 further discrete editions - theatre, food and sports events
produced on a weekly/monthly basis. Our efforts were recognised by the industry
at the 2003 New Media Age Awards where our weekly e-mail newsletter won the
'Best Consumer Products and Services' award.
Throughout the year, we have undertaken a number of tactical offline
marketing campaigns including airport and underground posters, a media and
advertising campaign and radio adverts, in our main European markets.
During October 2003, lastminute.com won the CNET Networks e-commerce Site
of the Year award, beating tesco.com and easyjet.com. The award was given to the
candidate which was considered to have best harnessed the Internet to provide
easy-to-use buying experiences that have lead to increased turnover, improved
distribution and/or saved costs.
Customer Support and services
We continue to work with a third party supplier to outsource our UK data
entry and a proportion of post sales customer support. We have locally based
customer support and service teams for our European operations that deal with
all direct sales related enquiries that arise from our website, press coverage
or marketing activities. Our customer support staff are multilingual and all
communication concerning each local website is conducted in the relevant native
language. We have also developed sophisticated online assistance channels
through our website, and are in the process of developing a Caller
Pre-Qualification system to improve efficiency and enhance the customer
experience.
Our Registered Subscribers
A user may register with lastminute.com either by selecting the Register
hyperlink and electing to receive our weekly e-mails or when prompted by our
transaction-processing system while making a purchase. Users of our website
purchasing any of our product offerings are required to enable their web
browsers to receive cookies and must be registered subscribers of
lastminute.com. We ask each registered subscriber to provide us with an e-mail
address and password. Although we sometimes request various personal details,
including name, address, phone number, age and gender, it is possible to
register during the purchasing process without providing this additional
information.
Operation of Our Transaction-processing System
We believe that one of the key elements necessary for our website to be
successful is that it be easy to use. We place great importance on the features
and functionality of our transaction-processing system to ensure customers have
a simple booking experience.
Our booking experience is typically: (1) initially the customer identifies
the product or service; (2) prior to commencing the transaction process, the
customer has the opportunity to acquire more information about the particular
item he or she is interested in; (3) the reservation or purchase is finalised as
the customer is guided through a series of web pages which request certain
transaction details, given an opportunity to review the transaction details, and
given the choice of either adding the product to his or her basket, removing the
item from the basket or purchasing the item; and (4) if the customer chooses to
purchase an item, the customer furnishes his or her credit card details, we
pre-authorise the customer's credit card and the supplier charges the customer's
credit card for the amount of the product or service, plus applicable taxes. In
those instances where we act as cash-collector or principal in a transaction, we
will charge the customer's credit card and, if applicable, remit the purchase
price, less our commission, to the supplier. If applicable, the product is
delivered to the customer by the delivery method specified by the customer, or
we use the delivery mechanisms of our third-party suppliers.
Fulfilment Arrangements
In the majority of transactions over our website we act as agent between
supplier and customer. We do not acquire the inventory and are therefore not
responsible for fulfilment. However, in some areas of the business and in
certain jurisdictions, we often rely on third party service providers to help us
fulfil our customers' purchases of our suppliers' products. Services for which
we rely on third parties include making airline reservations and credit card
verifications and confirmations. In addition, we rely on links to computerised
central reservation systems of airlines, car hire companies and hotels and other
databases to provide us with real-time access to information about our
suppliers' products available for sale to our customers. Flight reservations
made through our website
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are made through direct links into two global distribution systems: Worldspan
and Amadeus.
The Destination Group works with airlines, hotels and ground handlers to
create tailor-made holidays for customers. While allocations may be held with
these suppliers, only a very limited amount of risk is taken on inventory.
We hold International Air Transport Association (IATA) licences in most
countries in which we operate. IATA imposes rules and regulations on its members
regarding air travel and the issuance of airline tickets. Although there is no
legal requirement for a company selling airline tickets to be a member of IATA,
it is unlikely that any airline would allow a non-IATA member to sell its
tickets.
In addition, each country where we operate has its own travel agent and tour
operator licensing requirements. In the United Kingdom the UK Civil Aviation
(Air Travel Organisers Licensing) Regulations 1995 require any person
advertising or selling air travel in the United Kingdom to be bonded under an
Air Travel Organisers Licence (ATOL) granted by the Civil Aviation Authority.
Each of our UK operating entities, selling air travel, is bonded under ATOL
regulations. The Destination Group and Globepost Ltd also holds an Association
of British Travels Agents (ABTA) licence, which enable them to operate as a tour
operator in respect of non air-related travel packages under UK legislation.
In other European countries, we are required to be licensed through the
appropriate national organisation in order to act as both a travel agent and a
tour operator.
In addition to issuing some flight tickets in house, the majority of flight
tickets are now ticketed by our outsource partner, TRX. Towards the end of the
year almost 80% of tickets were produced through our autoticketing process. In
addition, we have commercial agreements with other third parties in the United
Kingdom which provide booking, ticketing, delivery and customer support services
for package holidays. In France, we issue all airline tickets using the IATA
number of Degriftour. In Germany, we entered into a commercial agreement to
fulfil the reservation requests of our customers accessing the German version of
our website. In certain non-core countries we use a third party IATA accredited
agent to issue airline tickets on our behalf.
For fulfilment of some hotel reservations, we entered into a commercial
agreement with a third party, WorldRes. This agreement allows our registered
subscribers to make real-time, on-line reservations at over 45,000 hotels around
the world. We believe this arrangement increases the depth and breadth of the
hotel accommodations we can offer to our customers. At the same time, it
provides us with the ability to focus our customers' attention on the hotels
where they are likely to get the best value.
For package holidays, users choosing to conduct searches for a customised
package holiday will have access to a database containing last minute holiday
deals from some of the premier holiday tour operators in the United Kingdom,
France, Italy and Germany.
Seasonality
Our business is subject to seasonal fluctuations, reflecting a combination
of seasonality trends with respect to the products and services offered by us,
as well as seasonality patterns affecting Internet use. For example, in the
summer holiday periods the demand for travel services increases, and in winter
holiday periods demand for gifts and, to a lesser extent travel services,
increases. Internet usage tends to decline during the summer months. These
seasonality factors result in our highest revenues being in the fourth quarter
of our financial year and the lowest revenues being in the first quarter, as
summer travel purchases generate significantly higher revenue than Christmas
gifts and travel. Our results also may be affected by seasonal fluctuations in
the products and services made available to us by participating suppliers.
Furthermore, our business may be subject to cyclical variations for the products
and services offered; for example, leisure travel and sales of luxury items tend
to decrease in economic downturn.
Technology
Throughout the year we have continued to invest significantly in technology
in order to deliver new products to customers, improve website reliability,
responsiveness and search capabilities, generate efficiencies through the
streamlining and elimination of back office processes and to ensure that we have
scalable technology in place to support significant future growth.
In the first half of the year we introduced a new flights engine and
technology to support the dynamic packaging product. The flights engine
delivered faster performance and operational booking efficiencies. During the
third quarter, a new shopping basket,
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ebasket was launched which makes integration and connection to other websites
much faster. BCP (car parking) and Mondial (travel insurance) were subsequently
integrated into the new shopping basket.
The new shopping basket is fully integrated into the back office
operational, financial, and customer services systems which means that the
completion of transactions is quicker, significantly enhancing the customer
experience and new products and acquisitions can be more easily integrated into
the website.
In 2003 our website responsiveness improved significantly and from June
2003 we delivered European industry leading performance of under four second
response times. This performance is sustainable with the anticipated TTV growth
and has been achieved by firstly implementing caching technology and secondly
installing IBM Blade server hardware, which run at nearly twice the speed of the
previous hardware. We believe we now have the technology platforms that will
support TTV of over 1 billion.
We have also developed a proprietary search tool that has halved search
times. The guided navigation tool was introduced for holiday searches which
enables holidays to be clustered and allows customers to interrogate on
geographic regions and property information until they find a holiday in the
country that they desire.
In October 2003, we launched a call pre-qualification tool for customer
services, which recognises a customer from their telephone number and
automatically populates the customer service agent's screen with the customers
details. This will bring further efficiencies and reductions to customer service
costs and enhance the customer experiences.
We continue to invest in technology in order to maintain a leading edge
website and to further drive down operating costs. We firmly believe that
technology has helped maintain our leading position and continues to provide a
significant competitive advantage.
Competition
We compete with both online and traditional sellers of the products and
services offered on our website. The market for selling our product offerings
over the internet is intensely competitive, as is the traditional retail
industry for the same services, but we believe that by negotiating some of the
best deals available, merchandising them in an attractive manner, and by
continuing to develop a strong relationship with our core user base which
continues to grow we will strengthen our leading position in Europe.
With respect to travel suppliers, our potential competitors include:
Internet travel agents such as ebookers.com, Expedia, OTC and Travelocity;
full service travel agencies, such as Always, Flightbookers, Havas
Voyages, L'tur, Nouvelles Frontires, Thomas Cook and Trailfinders;
consolidators of both flights and holidays that typically sell to the top
travel agencies; and
individual airlines, such as United or American Airlines, or groups of
airlines, such as Opodo and Orbitz, that may create joint websites that
sell over the Internet.
With respect to hotels, our competitors include travel sites that have
added hotels to their offerings and certain sector specialists, such as
Hotels.com, Hotels and Travel, The Hotel Guide, Travlang, the AA Hotel Guide and
the Good Hotel Guide.
In the entertainment sector, some online sites are information providers
for offline ticket retailers, while others offer consumers the ability to
purchase entertainment tickets online. Potential completitors in this sector
include Tickets.com, Inc. and Ticketmaster-Citysearch.
We potentially face competition from a number of large Internet companies
and services that have expertise in developing online commerce and in
facilitating Internet traffic, including Amazon.com, AOL, Microsoft eBay and
Yahoo!, who could choose to compete with lastminute.com either directly or
indirectly through affiliations with other e-commerce companies. Other large
companies with strong brand recognition, technical expertise and experience in
Internet commerce could also seek to compete with us.
Competition from these and other sources could have a material adverse
effect on our business, results of operations and financial condition.
Industry trends
The macro trends for internet usage throughout Europe are very positive and
moving in our favour. We have strengthened our
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position as the clear European leader in the online travel and leisure market
and are well placed to take advantage of the continued growth in the sector. We
remain confident of further developments during 2004 in all key metrics.
The industry is consolidating through vertical integration.
Intellectual Property
Our intellectual property rights include trade marks and domain names
associated with the name lastminute.com and copyright and other rights
associated with our website, technology platform, software and other aspects of
our business.
We rely on a combination of trademark, copyright and confidentiality laws
to establish and protect our business and proprietary rights and information. We
also rely on the English law of passing-off, which may give rise to liability
for misrepresentations made by other traders that result in damage to the
goodwill or reputation of our business. We have no patents. We do not own the
intellectual property rights in the software underlying our technology platform,
but rely on software that we license from third-party suppliers. These
third-party licenses may not continue to be available to us on commercially
reasonable terms. The loss of any of the technology that we rely on could
require us to obtain substitute technology of lower quality or performance
standards or at greater costs or may interrupt our operations. To date, we have
not been notified that the technology underlying our website infringes the
intellectual property rights of third parties.
We have a community trademark registration for the lastminute.com logo in
the European Union and are currently in the process of converting this
registration for the purposes of obtaining a national trademark in each of
Spain, France and the United Kindgom. We have made applications to register the
names last minute, Doitlastminute and lastminute.com in the European Union and
last minute and a lastminute.com logo as trademarks in Norway. We have trademark
registration in the lastmin and lastminute.com (black and white and colour)
marks in the United Kingdom and as a community trademark in the European Union.
We have acquired trademark registrations in Belgium, France, Luxembourg and The
Netherlands for a device comprising a clock face with the words last minute
across it. We have also acquired trademarks in the lastminute.com logo and the
name lastminute.com, do something lastminute.com and lastminute.com in Katakana
in Japan. We have registrations in the name lastminute.com in Japan. In Belgium,
Germany and The Netherlands, third parties own trademark registrations
incorporating the words last minute.
We have acquired trade mark registrations in the United Kingdom through our
acquisition of the Destination Group in the names The Destination Group, New
York City Hotels4less, travel4less and travel4less.co.uk, and through our
acquisition of Globepost Limited, in the names travelselect and miles away and a
community trademark in the European Union in the name travelselect. In addition,
we have acquired trademark registrations in France, United Kingdom, Canada and
with the World Intellectual Property Organisation (which covers signatories to
the Madrid Union) through our acquisition of Travelprice in the names
travelprice and travelprice.com. We have acquired trademark registration in the
travelprice, roco productions, roco resa and internight marks and associated
logos in France.
We have made an application to register a lastminute.com logo as a
trademark in Australia, China, Indonesia, Malaysia, Singapore and South Korea,
and have made an application to register a lastminute.com logo and the name
lastminute in Hong Kong and an application to register a lastminute.com logo and
the name lastminute.com in South Africa. We have registrations in a
lastminute.com logo and the name last minute in Chile. No applications have been
made to register lastminute.com trademarks in the United States or Canada. In
the United States and Canada there are a number of existing trade mark
registrations that include the words last minute. In particular, in the United
States there are a large number of third parties who use the words last minute
in their names. These two factors are likely to prevent any trademark
applications we may make in these jurisdictions from being granted.
Through our acquisition of eXhilaration Incentive Management Limited, we
have acquired a community trademark registration in the European Union and a
trademark in the United Kingdom in the eXhilaration brand as held by
Exhilaration Incentive Management Limited. Through our acquisition of the
Holiday Autos Group Limited, we have acquired trademark registrations in the
United Kingdom in the names Holiday Autos and Re-inventing Renting as held by
Holiday Autos International Limited. In addition, Holiday Autos International
Limited have acquired national trademark registrations in Austria, Australia,
Brazil, Canada, Cyprus, Denmark, Estonia, Finland, Germany, Greece, Guernsey,
Hong Kong, Iceland, Ireland, Israel, Japan, Jersey, Malta, Mexico, New Zealand,
Norway, Poland, Russia, Scandinavia, Singapore, South Africa, Spain,
Switzerland, Tunisia, Turkey, Uruguay, USA and World Intellectual Property
Organisation (which covers signatories to the Madrid Union) in the name Holiday
Autos. We have a community trademark registration for the Holiday Autos logo in
the European Union and national trademark registrations in Australia, Brazil,
Canada, Denmark, Finland, Germany, Hong Kong, Iceland, Israel, Japan, Jersey,
New Zealand, Norway, Poland,
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Singapore, Spain, Tunisia, Turkey, USA and the World Intellectual Property
Organisation (which covers signatories to the Madrid Union) as held by Holiday
Autos International Limited.
We have also acquired a trademark in Finland and Norway in the brand
Intercar as held by Holiday Autos Scandinavia AB together with trademarks in
Germany in the brands Travel connect, Connect Travel and Holiday Extra and a
trademark in the logo Holiday and More as held by Holiday Autos GmbH.
We have made an application to register the Holiday Autos and holiday
hotels brands as separate community trademarks in the European Union on behalf
of Holiday Autos GmbH and Holiday Hotels Limited respectively. We have similar
applications in Argentina, Cyprus and South Africa in the name of Holiday Autos
International Limited. We also have an application to register the brand holiday
flights in the United Kingdom and as a community trademark in the European Union
on behalf of Holiday Flights Limited.
Privacy Policy
We recognise the importance of maintaining the confidentiality of
registered subscriber information and complying with applicable data protection
legislation. We have established a privacy policy to help us to achieve this.
Our current privacy policy can be found on our website. We do not sell to any
third party any registered subscriber's personal identifying information unless
the registered subscriber has provided consent in accordance with relevant data
protection legislation. We may also directly e-mail registered subscribers with
details of future products and services if the registered subscriber has given
its consent for us to do so. We may compile information provided by registered
subscribers and information built from user behaviour for targeted advertising
and content. For example, in the future we may, on behalf of an advertiser, send
e-mail offers to all registered users who frequent a specific area of the site.
Legal Proceedings
We are not currently involved in any material legal or arbitration
proceedings. Since our inception, we have not been involved in any legal or
arbitration proceedings that have had or may have a material effect on our
financial position or results of operations. We are not aware of any threatened
or potential legal or arbitration proceedings which could have a significant
effect on our financial position.
In February 2001 Last Minute Tour (LMT) issued proceedings in Milan against
Last Minute Network Limited (LMNL) and our Italian subsidiary lastminute.com
sprl for trade mark infringement of their Italian trade mark last minute tour
(word and device), unfair competition and seeking a declaration of non
infringement in relation to LMNL registrations. Our defence was served on
October 23, 2001. LMT also commenced interim proceedings against Lastminute.com
sprl following the registration by lastminute.com sprl of the domain name
lastminute-tour.com. Lastminute.com sprl undertook to transfer to LMT the domain
name free of charge and not in future to register any domain name or trade mark
in Italy which included the words last minute and tour together. The interim
injunction sought was granted and the advertisement was withdrawn. At an interim
hearing on April 24, 2002 the parties asked the Judge to grant them a term for
filing evidence. The Judge gave the parties a deadline of July 20, 2002 to file
a brief together with evidence and the deadline of October 19, 2002 to file a
brief in response to the evidence filed by the other side. LMNL filed its brief
on July 20, 2002. LMT was delayed in filing its brief but filed its brief in
response in October 2002. A new hearing was fixed for October 29, 2002. During
this hearing the Judge decided which witnesses should be heard and fixed the
next hearing for September 19, 2004. At this hearing the final conclusions of
the parties will be heard.
Regulation
Internet Regulation
There is at present no specific regulator for the Internet in the United
Kingdom or in Europe. However, there are many applicable laws relating to the
provision of Internet services and use of the Internet and Internet-related
applications. Currently, the enforcement of these laws may fall within the
powers and duties of a number of regulatory bodies.
The application of some of these laws to the Internet is currently being
clarified and refined. There are a number of new legislative and regulatory
proposals in the European Union. This environment gives rise to considerable
uncertainty and, due to the lack of case law relating to recently adopted laws,
the interpretation of ambiguous provisions significantly contributes to the
uncertain situation. The issues in the main areas affecting our business are set
out below.
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Data Protection
Because our websites provide us with the ability to collect information
about our customers, we are subject to rules and regulations concerning the
treatment of this information.
The European Union has adopted the Directive on the protection of
individuals with regard to the processing of personal data and the free movement
of such data (the Directive). The Directive imposes restrictions on the
collection, use and processing of personal data. Under the Directive, EU
citizens are guaranteed rights, including the right of access to their personal
data, the right to know where the data originated, the right to have inaccurate
data rectified, the right to recourse in the event of unlawful processing and
the right to withhold permission to use their data for direct marketing. The
Directive could, among other things, affect companies like us that collect
information over the Internet from individuals in EU member states.
Unless certain exemptions apply, including obtaining the unambiguous
consent of the individual, personal data may not be sent out of the European
Economic Area (EEA) unless the country to which it is sent has adequate data
protection measures. The Directive does not, however, define what standards of
privacy are adequate. While a small number of countries, including Switzerland,
have been found by the European Commission to provide an adequate degree of
protection, the European Commission has not yet reached conclusions about the
majority of countries with which we might wish to trade. As a result there can
be no assurance that the Directive, or other independent national legislation,
will not adversely affect our ability to send data collected from customers in
EU member states to non-EEA countries. With respect to the United States, while
the United States as a whole is not considered adequate in terms of data
protection, the European Commission and the United States have agreed certain
safe harbour arrangements, in force since November 2000, by which US companies
may agree to adhere to, which the European Commission consider to offer adequate
protection. Subject to adherence by a US company to the safe harbour
arrangements, transfers of data to that company in the United States are
permitted.
The Directive was required to be implemented into national laws by the
fifteen EU member states by October 25, 1998, although in many member states the
laws implementing the Directive are not yet in force. The UK implementing
legislation, the Data Protection Act 1998, came into force on March 1, 2000.
Even though the purpose of the Directive is to harmonise the various national
laws on data protection in the European Union, the requirements with respect to
the collection and processing of data, the rights of users and the obligations
imposed on companies collecting data vary to a substantial extent from country
to country and may continue to do so in the future once the Directive has been
implemented by the EU member states.
French Law no 78-17 of January 6, 1978 relative l'informatique, aux
fichiers et aux liberts pre-dates the Directive but imposes similar requirements
regarding personal data protection, including the obligation to make a
declaration to the Commission Nationale Informatique et des Liberts (CNIL). As
required in France, we have filed the necessary declaration with CNIL prior to
processing member data and have complied with the requirement to inform members
of various information relating to their right of access to personal information
and their right to rectify any incorrect information held by us. In France, the
Directive may also affect our European business by requiring the processing of
data to be subjected to a prior authorisation procedure instead of a simple
declaration to the CNIL and by strengthening the investigative powers of the
CNIL.
We may therefore be obliged to comply with different legislative
requirements which could have an impact on our ability to collect data and share
it with third parties, such as suppliers and advertisers. Further, we could be
exposed to regulatory and judicial proceedings relating to privacy issues in any
EU member state where our customers reside or where we are processing, or are
deemed to process, personal data. Under the requirements of the national laws of
many EU member states and the principles of the Directive, we will have to take
steps to advise customers and registered subscribers when personal data is, or
may be, collected and allow them the option to object to such collection.
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The European Union has also adopted the Directive concerning the processing
of personal data and protection of privacy in the telecommunications sector (the
Telecommunications Sector Directive). The Telecommunications Sector Directive
covers the processing of personal data in connection with publicly available
telecommunications services and public networks, and includes provisions
relating to use of traffic and billing data and the use of personal data for
direct marketing. These restrictions may limit the amount of time we can hold
such data and restrict our ability to use personal information, which we hold
for this purpose. The EU member states were, subject to exceptions, required to
implement the Telecommunications Sector Directive by October 25, 1998. The
Telecommunications Sector Directive has now been implemented in the United
Kingdom. Delays in implementation have occurred in some of the other EU member
states.
A new directive relating to processing of personal data and the protection
of privacy in the electronic communications sector (the Electronic
Communications Sector Directive) which extends the ambit of the
Telecommunications Sector Directive to private as well as public service
companies, was implemented in the UK on 11 December 03.
We also make use of cookies, to track demographic information and to target
advertising, that may become subject to increased levels of legislation limiting
or prohibiting their use. Germany has specific legislation, which prevents
providers of Internet access from using cookies without the prior approval of
users. The aforementioned Electronic Communications Sector Directive, as
presently proposed, will require companies in the EU members states to give
clear and comprehensive information about the use of cookies prior to using any
website, and give the user an option to refuse such use. In France, CNIL has
issued a recommendation that the use of cookies should be disclosed to users and
that users should be informed of their right to oppose their use and that the
misuse of cookies can give rise to criminal liability in certain circumstances.
Under the Directive, cookies are likely to be considered as a means of
processing data and may be regulated by the principles of the Directive if data
qualifying as personal data is collected. It is also possible that cookies will
be subject to increased levels of legislation limiting or prohibiting their use.
Limitations on, or the elimination of, our use of cookies, or obligations on us
to allow registered subscribers to object to the use of cookies could limit the
effectiveness of the advertisements that are delivered on our websites.
To the best of our knowledge, we are in compliance with data protection
registration or registration requirements in the other jurisdictions in which we
operate and our registrations are sufficient for our current operations. We also
actively monitor our collection and use of personal data to ensure compliance
with the data protection legislation in force, and to be implemented, to ensure
that we can continue to use and disclose personal data relating to our customers
and registered subscribers in a way which is beneficial to our business.
Content Regulation
There is little specific regulation of Internet content in the United
Kingdom or the European Union. However, the provision of content on the Internet
may fall within generally applicable legislation in these and other
jurisdictions. For example, general advertising laws and regulations in the
United Kingdom and other jurisdictions apply to advertising on the Internet in
the same way as advertising by way of other media. Laws relating to obscene
publications and defamation may result in limitations on the type of content,
including advertisements, available on our service or increased liability to us
for information carried on our service.
Under French law, if a web page can be viewed in France, any potential
offence that arises out of this web page will be subject to the jurisdiction of
the French courts and French law.
lastminute.com's liability stems from advertisements and the release of
information to users of its site. In its report of July 2, 1998 on the Internet
and digital networks, the Conseil d'Etat, France's highest administrative
tribunal, stipulated that the Internet should be considered as advertising space
and that existing legal rules should be applied.
The rules governing circulation of advertising messages and information
include:
Rules on the protection of minors (regulation of pornographic or
violent messages);
Ban on deceitful or misleading advertising (advertising must be
truthful);
Regulations on comparative advertising;
Obligation to specify that a message is an advertisement;
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Specific regulations for certain products (tobacco, alcohol, drugs, etc.);
Rules on sending unwanted advertising messages by e-mail (spamming);
Obligation to use the French language (Loi Toubon);
Application of the Sapin Act of January 29, 1993 on bribery prevention
and transparency in economic relations and public procedures;
Special rules on audiovisual advertising; and
Press publication offences.
These texts cover all aspects of Internet sites and therefore not only
concern web pages, but also banners, e-mail, icons, sound, text, pictures and
hypertext links.
Domain Names and Trade Mark Rights
We may be prevented, by reason of third party trade mark rights, from using
the name lastminute.com or other of our brand names and images and we may be
unable to prevent others using these or similar names as domain names, brand
names or otherwise in competition with us. Our ability to register additional
domain names may be limited by the requirements of local or national domain name
registrars or administrators, including the requirement to have a local
subsidiary or be a resident of the country for which a domain name is applied,
as well as by the existence of third parties' domain name registrations. See
Intellectual Property.
Under French law, the registration authority for .fr domain names, the
Association Franoise pour le Nommage Internet en coσperation, requires, in order
to register a domain name, proof that this name is either the trade name of a
company or an association, a family name, or a registered trademark. Thus, there
are limited risks that a particular domain name can be registered with someone
who has no right over it.
Jurisdictional Exposure
Due to the global nature of the Internet, it is possible that, although the
servers and infrastructure used to provide our services are based in the United
Kingdom and France and transmission by us and our users of content over the
Internet originates primarily in the United Kingdom, the governments of other
countries might attempt to regulate the content contained in or transmitted
using our services or prosecute us for violations of their laws. As our content
is available over the Internet all around the world, these jurisdictions may
claim that we are required to qualify to do business in each country or that we
are required to notify governmental authorities of our activities, including
those activities relating to the collection and processing of personal data, for
example. Any such legislation or regulation, the application of laws and
regulations from jurisdictions whose laws do not currently apply to our
business, or the application of existing laws and regulations to the Internet
and other on-line services could increase our costs or restrict the areas in
which we may conduct business. In this vein, the EU Council of Ministers adopted
a regulation in December 2000, which came into effect on March 1, 2002, on the
jurisdiction and recognition and enforcement of judgement in civil and
commercial matters.
This is likely to mean that consumers that are party to on-line contracts
will in many cases be entitled to sue in their own jurisdiction irrespective of
the location of the contractual counter-party.