14 Dec 2000
Egg plc pre close season briefings with analysts
Egg will be holding meetings with analysts ahead of its close period for the year ending 31 December 2000. Full results for the third quarter were published on 16 October 2000 where Egg confirmed it was bang on track to deliver against its published commitments. In the final quarter of the year, progress has continued in line with business plans and market expectations.
Strong customer acquisition has been the dominant theme in the last quarter of 2000. Gross acquisition from 1 October to 11 December was 141,000, taking our total number of customers, net of attrition, to 1.33 million at that date. These new customers have primarily come through the refreshed Egg card offering and in addition acquisition has been boosted by the launch of the joint branded Egg/Boots credit and loyalty card. The rate of acquisition via the Boots powered by Egg card is expected to increase significantly in the first quarter next year when Boots roll out their in-store advertising and sales campaign. Egg has also continued to see growth in unsecured lending and mortgages.
The cross-buying rate within Egg's existing customer base has continued to increase and the fourth quarter is on track to be the best ever for cross sales.
Egg continues to increase its number of deposit account customers, net of attrition. New Internet friendly customers typically bring lower average balances than the telephone based customers who are leaving us. The net outflow of deposit funds has slowed considerably (£154 million net outflow between 1 October and 11 December compared with the reduction of £443 million in Quarter 3).
Net interest margin continues to improve compared with the third quarter and intermediation revenues are growing, especially in Egg Shop, which earned £194,000 for the month of November.
New Products and Services
Egg has delivered an array of new products and services over the last year including launching the first online mutual fund supermarket in the UK in March, share trading service in July, a general insurance online supermarket in August and the Boots powered by Egg card in September.
The other focus of 2000 has been on utilising new technologies to enhance the customer experience, opening up new channels and ways for customers to access Egg's services. For example Egg's WAP service started in August and Egg TV is about to launch on Open. In addition, Egg's new rejuvenated website, which has improved navigation and enables faster application times and more efficient servicing, went into live pilot effective from 11 December.
Egg continues to provide industry leading Internet security and is now helping customers improve the security on their own PCs. Egg's offer of over £100 worth of market leading security software, free to customers, became available on 6 December 2000. To encourage further online transacting within Egg Shop, the Egg Wallet, our online secure payments mechanism is planned to launch at the start of 2001. Egg will also be the UK's first Internet financial services company to implement Visa's new e-commerce security programme, 3D SET. The combination of the two, in addition to Egg's Internet fraud credit card guarantee will further protect both Egg Shop customers and Egg Shop merchants against Internet fraud.
Egg's mortgage intermediation service, home and contents insurance offering, and current account are planned for pilot by the end of 2000, with full launch in quarter 1 next year.
Egg has also announced the launch of a new third party mortgage administration joint venture with Marlborough Stirling, the financial services sector solutions provider. The company, to be called MSMS Ltd. (Marlborough Stirling Mortgage Services), will target both lenders and intermediaries with an end-to-end mortgage management solution and outsourcing service. Egg will be the first customer of the new venture. This venture leverages Egg's existing mortgage processing assets and will drive cost efficiencies.
In summary, Egg is continuing to develop and enhance its range of products and services, utilising new technologies for the benefit of its customers, and retaining its market leading position. Customer growth continues and cross sales numbers are encouraging.
Website Traffic and Trends
Levels of website activity to www.egg.com remain encouraging, with unique visitors in October, as measured by MMXi, rising by 46% month on month to 754,000. Egg's share of audience of the overall banking and finance category was 18.1%. This rose from 17.0% in September. The figures demonstrate that Egg's new advertising campaign has been successful in attracting traffic to the Egg website. They also reflect an increase in usage of online banking services as a whole in the UK, as confirmed in a recent report commissioned by Egg, and conducted by MORI, into predicted take up of new technologies by the UK consumer.
The report published on 28 November 2000 revealed a nation on the verge of a fundamental shift in terms of technology usage. Some 17 million people are expected to access a new technology product for the first time over the next six months and by mid 2001, more than 23 million people in the UK could be online.
Over the next four to five years, some 14 million people say they will depend on new technology for banking, 10 million for shopping, and 6 million people say they will make investments online.
Egg's full year results for the year ending 31 December 2000 will be announced on 19 February 2001.
Group Financial Controller and Head of Investor Relations
Tel: 0207 526 2648
Mobile: 07711 717358
Tel: 020 7526 2600