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Egg, the UK-based Internet bank, says it is on target to break even by the fourth quarter of 2001.
On 24 July 2001, Egg announced pre-tax losses of STG25.5 million for second quarter of 2001. This represents a reduction of 33 percent in pre-tax losses from the first quarter of 2001, when the company announced losses of STG37.9 million.
The company also announced a pre-tax loss of STG63.4 million for the first half of 2001 (year ending 30 June) compared with a loss of STG80.7 million for the first half of 2000. The figure for the first half of 2001 compares with analysts' expectations of losses of between STG65 million and STG70 million.
Egg also announced a loss of STG0.06 per share for the first half of 2001, compared with a loss of STG0.08 per share for the first half of 2000.
However, the company also reported that operating income for the first half of 2001 was up by 130 percent, to STG76.2 million, from STG33.2 million for the first half of 2000.
In addition, Egg announced customer growth of 370,000 during the first half of 2001, up by 19 percent from the first half of 2000. In addition, the company reported that credit card balances of over STG1.5 billion for the first half of 2001 and substantially reduced customer acquisition costs.
"We acquired 370,000 net new customers at reduced acquisition cost and we increased our momentum towards our target of breakeven during the fourth quarter of 2001," said Egg chief executive officer, Paul Grattan.
"This has been a strong performance for the first half of the year. We are growing our customer base whilst driving down acquisition costs significantly, and this positions us well to deliver a profitable business in line with our stated plans," he said.
"The business is progressing well and we will continue to capitalise on the opportunities provided by the digital economy," he added.
"The results are completely in line with our own expectations, and they are within analysts' expectations," said a spokesperson for the company.
"This has been our best ever half year," the spokesperson added. "It has always been our intention to break even by the fourth quarter of 2001." The global downturn in technology stocks has not made any particular difference to Egg's performance, and the company would not have expected to break even before the fourth quarter of 2001 without the downturn, he added.
Last week, Egg announced a strategic alliance with Microsoft to set up an Internet fund supermarket. The fund supermarket will be available on the money channel of the UK-based Web site, MSN. The supermarket will provide investors with a means of purchasing funds and keeping them all under one roof, said the spokesperson.
The venture is to be piloted in Autumn 2001, and will initially be targeted at some 11 million investors in the UK, with subsequent expansion into Europe, he explained.
Microsoft was chosen as Egg's partner because of the size of Microsoft's European user base, which currently amounts to about 41 million.
Egg was launched in October 1998 by the financial services and insurance giant, Prudential, and was floated on the London Stock Exchange in June 2000.
The company employs 2,000 people, all in the UK.
Egg is at http://new.egg.com or http://www.egg.com .
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