lastminute.com N.V. (LMN) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to lastminute.com's Investor and Media Conference Call and Live Webcast on the Full Year 2022 Results. I'm Alice, the Chorus Call operator. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Silvia Sanchez, Investor Relations Officer of lastminute.com. Please go ahead, madam.

Thank you, Alice. Good morning, everyone. Thank you all for joining us today for this webcast on our final full year 2022 figures. The speakers today will be Luca Concone, our Chief Executive Officer; and Sergio Signoretti, our CFO. As you may already know, Luca Concone was appointed CEO and Executive Director of lastminute.com at the Extraordinary General Meeting in December 2022. So it's the first time that we have been presenting results to you in this format. Sergio has been CFO of last lastminute.com since 2017. So most of you know him already very well. On the next slide, you can see the agenda for today for this webcast. So Luca Concone will start walking you through the highlights, taking you through an overview on 2022 and a number of important points and actions we would like to draw your attention to. Then Sergio will take over for a deep dive on the 2022 financials. After that, Luca will give you an overview of the current trading in Q1 2023 and will close the formal part of the presentation with a key takeaways. Then we will, of course, address your questions in a Q&A session. You can post any questions already during the presentation or then during the Q&A session itself in the question field that you see next to the slides on your webcast screen and we'll address as much as we can in the Q&A session following the presentation. And with that, I hand over to Luca, who will start with the highlights.

Good morning to everyone or good afternoon, depending where you are. Thank you for joining us on this call. And let me say that I want to welcome you to this presentation and to thank you for your support, especially those of you who are our investors. Let's start by looking at the market. As you can see, we index everything to 2019, which was the last "normal" year in our industry. Then we all know, COVID impacted 2020 disastrously, 2021 and still 2022 has not yet recovered. So these are figures from Eurostat. But basically, the whole industry expects to recover 2019 level next year in 2024. There has been a good recovery last year, especially in the beginning of the year, and then it flattened out. We all know that there were disruptions in capacity. We have been through probably London Heathrow Airport in light of flight cancels. And then the add-on of the inflation with the impact on fuel and the war in Ukraine definitely did not help. What happened for us on the 21st of December, there has been a significant change in the governance of our group, a whole new Board has been nominated. I came in as CEO, so a little more than 3 months ago. And the reason was that we wanted to turn the page and start what I call lastminute 2.0, a new company that is based on the strength of the old company, but with stronger governance and processes compared to what it was before. During the year, the company basically invested in tech because we are a leader, thanks to our technology mainly. So we hired over 100 tech experts. We've been hiring significantly also in customer care because we got feedback from our travelers that we could improve in our customer care. So we hired 350 people. And basically, we expanded our hub in India, in Bangalore. And we started investing heavily also on our B2B partnership. The reason being that having this advantage in technology, we want to leverage it to the maximum extent, which means to really focus on the B2B in parallel with the B2C side. The Board has taken a number of decisions very relevant. One of them, I would say, is to accept the SECO ruling. SECO is the Swiss authority that has given us the COVID support and we've decided to reimburse them all. We have done new committees and expanded the old committees. As we announced last time, we initiated a strategic review to really understand where to focus. We have done a new organization, both at top level and at business level and this has been very important because we now have a much better accountability for our managers. And we launched 3 key projects, 1 about enterprise risk management in order to identify when risks are and then starting having measures of risk-adjusted returns, which is something that is not typical of the industry, but we believe is very important. Another project is to rethink our HR in order to be more flexible, more agile, given the fact that a larger and larger percentage of our employees are now working full remote. And the third is because it's something always needed cost control. so rightsizing our teams and reviewing completely all our expenses. Now all of this has been done in the first 3 months. So as you can see, we picked up pace. And we think that this will deliver significant value already in 2023 and for sure in the coming years. Now an important point is the Freesailors transaction. Now some of you who follow us more closely, may remember that on 29th of June of last year, we announced this transaction in which the company was purchasing minority participation in Freesailors. Freesailors is our largest shareholder. This transaction has been announced. So null ab initio which is very important. So basically, we have now been reimbursed of the advanced payment that was made, which was EUR 15 million. We reversed the transaction. So we are no longer shareholders of Freesailors, and we are back to where we were before. This -- due to a difference of timing between when the transaction was done, 29th of June and when it was declared now 29th of March of 2023 has a temporary negative effect. So if you're looking in detail on our net equity, you will find that for a moment at the 31st of December, we have decreased our net equity of EUR 25 million, which has already been adjusted. The other important part, of course, is the EUR 34 million that we posted. These include our reimbursement of SECO for EUR 29 million -- EUR 28-point-something million, let's say, EUR 29 million, plus additional provision due to legal costs and other reimbursement. Now all of this is already in the numbers that you see, and we do not expect to have any other provision during 2023. So from an accounting financial point of view, this for us puts the end to the SECO investigation into our COVID support from the Swiss state. One thing on the upside definitely is our integrated annual report. Again, I know you didn't have time to see and to go through it yet, but you will find that it is a comprehensive document. And there is also the ESG part, which is not yet compulsory, but we decided to move ahead and try to be best-in-class. So you're going to have the classic overview of lastminute management report, then the corporate governance and remuneration report, but there is a sustainability report, which is for the first time has been done. So you can have a single document where you have an integrated view of everything that happens to lastminute Group. Just as a reminder, lastminute Group is 28 legal entities, 1,700 employees in 11 countries. So as you can imagine, it's quite a complex machine. And this report allows you to have a very quick view of everything that's in it. In terms of the overview of numbers, before I hand it over to Sergio to go into the big dive, we've had a significant increase from 2021. If you remember in my first slide, the market clearly helped us here because the whole market was much larger. But still 84% compared to 2021 in bookings, 145% in terms of gross travel value, this is all-time high. And there is a combination of effect. One is prices were higher. So for the same London Madrid flight, clearly, we were booking more money, but we also moved them in. So we started selling more and more that Holiday packages, which has an intrinsic value, which is definitely higher than just hotel or just flight. Our revenues doubled, which is always something nice. And again, plus 103% compared to plus 84% of bookings tells you that our revenue per booking has definitely moved in the right direction. Our holiday packages are the main contributor to our business, and we have very good technology here, which we are leveraging. So we sell dynamic packages in 18 markets, either directly or through very important partnerships. Our adjusted EBITDA is in line with our revenue growth, which is always good. But -- and this Sergio will specifically highlight if we remove the issue of government subsidies, which we received and then returned our adjusted EBITDA would be 8x bigger than the previous year. Finally, the net financial position is strong, plus 43%. The company does not have real significant debt compared to the size of the business. So we can definitely say it's in a very healthy financial state. Now, I hand it over to Sergio for the deep dive on the 2022 result.

Thank you, Luca. Good morning, all also on my side. Nice to be back together to comment the 2022 figures. So Luca has already anticipated the key highlights. I'm going to Page 13. This has been really a very good year in terms of demonstrating the solidity and the growth of the company because when you double your fundamental [ TDI ] it's a signal of very good strength. Starting from bookings and from volumes, we have achieved the 4.3 million bookings in 2022 versus 2.3 million in 2021, so plus 84% as we mentioned before. And as you see, every figure is compared versus last year, so versus '21 and versus '19 because we believe it's also good to measure our performance with respect to what was the level of it pre-COVID. And versus pre-COVID, the overall volume sold have been minus 17%. So as Luca was mentioning before, the market recovered, but still not entirely versus 2019. And we are today since, I would say, the second part of 2022 at market level at minus 16%. At the beginning of 2022, we were at minus 40%. So the fact that we have done in minus 17% means that we grew more than the market. And this, of course, has been one of the driver for the revenue growth, which you will see in the next page. In terms of gross travel value, as also Luca was anticipating, we reached the all-time high value of EUR 3.2 billion. So it's like a small to medium bank, 2.5x higher than 2021 and even higher than 2019. Of course, a good part of this is a mix effect. So the more we sell holiday packages, the more, of course, the average booking value increases. The more we sell sand and beaches destination, within the holiday package, the more we benefit both in terms of gross travel value and revenues from this mix effect. Going to the next page. As we said, revenues doubled year-on-year. So EUR 304 million -- EUR 305 million revenues versus EUR 150 million in 2021, which is a combination of the volume growth and of the -- more than doubled gross travel value. In particular, if you look at the OTA piece, so the OTA is represented by the Magenta color, OTA is practically almost back to where it was pre-COVID, so minus 6%. And half of the difference, which is EUR 20 million is related to lower media revenues because, as you know, the advertising business on travel website properties has decreased quite structurally from what it was pre-COVID. The Metasearch business unit represents 8% of the overall revenues of the group. Still has not recovered entirely, but is on the way to do it. In terms of gross profit, gross profit has been EUR 111 million versus EUR 69 million in 2021. So growing 62%, which is slightly less than the revenue growth due to the fact that we have invested. So as Luca was saying, 2022 has been a year of investment, not only in people but also in marketing, in order to recover volumes, in order to recover market share, in order to grow more. This has affected the growth of the gross profit on a percentage basis. Still, we are growing a lot and recovering on the way versus 2019 with a minus 25% gap. Looking at the cost base. So I'm switching to Page 15. As we said before, this has been a year of investment. HR cost on a gross basis are EUR 63 million, which is higher versus 2021, EUR 10 million approximately still lower than 2019, but the choice of the company has been investing. So we hired more than 100 developers in order to reinforce our capability and our, let me say, on a make versus buy strategy, possibility of improving every solution we offer to our customer base. So progressively, the HR cost will go in line with 2019. Whereas on the running costs, so on the operating expense side, which is represented on the right of the slide, which is mostly the IT expenses, the SG&A or overhead expenses and travel, training and events related, they are still significantly lower than what they were in 2019, minus 17%, minus EUR 5 million. And these are efficiencies, which have been generated, as you may remember, during the COVID period, which are actually structural. So we want to keep it going forward. Also leveraging on 1 of the 3 projects that Luca was mentioning before, which is the, I would call it, spending review. So it's rightsizing of our cost base, both on the running cost side and also on the organizational side. Having said that, I move to Page 16 and without reentering into the comment of the various numbers, this is a synthetic P&L over the major KPI, again, comparing 2022 versus 2021 versus 2019. I think it's important to concentrate on the last 2 lines. So you see that adjusted EBITDA had doubled. So again, almost double revenues -- sorry, almost double bookings, double revenues, double EBITDA. So this is the key message, I think that you should have in mind. But if we stabilize adjusted EBITDA of the subsidies received comparing versus '21, you see that we have growth like-for-like in terms of performance 9 times. So from EUR 4 million in 2021 to EUR 36 million in 2022, which is, I would say, the real message of growth in terms of like-for-like performance of the company. What is -- let's have a look of what is below adjusted EBITDA, which is Page 17. So first of all, we have the cancellation impact. We were talking at the beginning of the presentation of Luca about the operational issues that affected the travel market over last summer caused by problem of capacity of the airlines, operational problems in the airport and so on. This has caused the cancellations also in 2022 with an average rate of 6%, which is, I would say, more than triple to what it was prior to COVID, of course, much less than what we experienced in 2020. And in 2021, what it was on average between 12% and 15%. The cancelation impact has counted for approximately EUR 19 million has been for, I would say, 2/3 of the amount compensated by voucher misredemption. You know the vouchers is, I would say, a very powerful tool commercially speaking, and also on the risk management side in order to prevent from huge cash absorption related to the cancelations. So 50% approximately of the overall outstanding vouchers when expired have not been redeemed by our customer, that has trigger a positive effect of EUR 12 million, which has, I would say, 2/3 compensated the cancellation impact. Then we have registered positive for P&L impact of the lower value of the liabilities towards employees for the incentive plan, which is strictly related to the trend of the share price year-on-year. And then, of course, as we were mentioning before, there is the one-off hit of the expenses related to the repayment of government subsidies. And in Switzerland and the related legal expenses, which has overall accounted for EUR 35 million, minus EUR 1 million of ForEx effect that was anticipated before. So net bottom line is EUR 34 million. This is -- this is a one-off hit. As Luca was mentioning before, this has been already, as I mentioned also in the last investor call accounted in Q3 results and the -- and that we do not accept any further liability related to these matters as we already were anticipating in the last investor call. As a consequence, the reported IFRS EBITDA grows to EUR 5 million. But I think it's important to point out the headlines. So if we gross up the expenses related to the investigation, both for the repayment and for the legal costs, the pro forma 2022, IFRS EBITDA would have been EUR 38.5 million, which is in line with the adjusted EBITDA, okay, which I think is a strong message on the performance like-for-like. And the similar message, if you go on Page 18, I think we can say at bottom line level because, again, here, I will concentrate your attention on the last 2 lines. So of course, net of the provision, the net result reported is minus EUR 15 million versus minus EUR 13 million of 2021. But again, [indiscernible] the expenses related to the repayment of the subsidies and the legal cost, the net result would have been in the range of EUR 70 million versus EUR 21 million in 2019. So not far from what was our performance bottom line pre-COVID in the record year for the company in terms of profitability generation. Now I'll move to the accounting impact related to the Freesailors transaction that Luca has described before. So -- and in order to explain it, it is pretty technical, but I think it's important to read it together. So as Luca was saying, as you know, Freesailors is the controlling vehicle of lastminute.com. At the moment owns lastminute.com shares only. And according to international accounting principle, the purchase, even if it was pending from the confirmation of the EGM of minority interest, which was done at June 2022 had to be treated at year-end 2022 as a repurchase of lastminute.com shares. This happened even though the deal was pending because the general meeting -- the general shareholder meeting, which should have approved it did never happen. This has generated a temporary negative effect on our net equity and on our net financial position, which is purely accounting of approximately EUR 25 million, which has been entirely reversed, entirely restored as of now and actually at the end of March already. So when we -- when you will have the chance of participating to the investor call to see the trading update of Q1, you will see these numbers. So the restated number of net equity is EUR 37 million as well as the restated net financial position is EUR 66 million, given the fact that the deals have been annulled on the 29th of March, as Luca was anticipating before. Going to -- we have anticipated the concept of net financial position. So let's look at cash on a gross and net basis, which is represented in Page 20. So the gross cash is the dotted red line. We started at EUR 110 million at the end of 2021. There was a very strong first half in terms of business recovery, which has led gross cash to peak to EUR 220 million in June and July. Then we had, as you remember, a flat summer. Most of that was due to the operational constraints and to the issues that were experienced in the travel industry in Europe and the seasonal softer Q4, also for holiday packages business. So at the end, the overall gross cash has been EUR 118 million, so approximately EUR 9 million higher versus the beginning of the year. This number does not include the EUR 7 million of restricted cash following the start of the investigation in Switzerland. If you look at the net cash, so the net financial position that is represented on the blue line. So we started from EUR 29 million as of the end of 2021 and we finished at EUR 42 million. But again, remember, this EUR 42 million is impacted by a one-off effect, which is -- which has been explained in the previous page, which is purely a timing difference, and it's purely accounting related to the accounting treatment of the purchase of -- from minority investors of Freesailors membership. So restated of that, that would be in EUR 66 million. As is mentioned on the right side of the slide, the liabilities for the government subsidies repayment to SECO are not included here, are related to social security contributions and therefore, are not represented as a financial liability, are though represented as a short-term liability because they will be repaid in 2023. Just the last slide, Page 21, on the cash generation because if you compare it year-on-year in terms of balances, it looks like it's EUR 9 million only, but the operating cash generation of the company has been very strong. So if you concentrate on the first 2 boxes, the pink boxes, the combination of the IFRS EBITDA, of course, stabilized by the provision and the net working capital, considering a structural advance of cash that our business generates, which is, of course, proportional to the level of recovery of the business has generated EUR 78 million operating cash. And this is actually net of approximately EUR 61 million of refunds and vouchers utilizations, which are related to cancellations, which means that the gross operating cash, net other the cancellation impact is EUR 140 million. Then, of course, this has been partially absorbed by capital expenditures by EUR 11 million repayment of financing according to the various amortization plan by the EUR 7 million fixed cash related to the investigation. And by also the advance payment that was already commented in the investor call of November related to the first tranche of the Freesailors memberships that, as Luca was anticipating before, as of now has been refunded to the company. That leads to the EUR 180 million gross cash as of the end of the year, which translates into EUR 42 million net cash, again, considering the purely accounting temporary impact described before of EUR 25 million related to the Freesailors transaction. And with this, Luca, I would hand it over to you again in order to comment on the current trading and to give the key takeaways of the presentation to the audience.

Thank you, Sergio. I decided to take this occasion to also start illustrating to you some key numbers of our quarter 1 because we wanted to show how well we started this year. The details of our quarter 1 are going to be illustrated on the 17th of May as per our corporate calendar. But the key elements are this, you can see on the screen, we have 20% growth in bookings, and this is compared to quarter 1 of last year. 37% growth in revenue, which is, again, very significant given the 20% growth in bookings and over 30% growth in adjusted EBITDA. So while we finished the quarter 4 of last year on a source of flat level with no particular enthusiastic numbers. We really started the quarter 1 in a very effective way, of course, thanks to the market, but mainly also thanks to our regained focus on the business and on growing the business. We moved even further more towards holiday packages, which is now definitely out -- the cornerstone of our strategy and of our business results. And as you can imagine, we are leveraging even more our assets, which means that we are growing revenues in a more than proportional way compared to cost. Now all the details, as I said, will be released on the 17th of May. So you have to wait until there to get all the additional details. So key takeaways, let's recap where we are here. We started off very well in quarter 1. We did a major change board, CEO, mindset, projects, attitude, whatever you can think of to turn the page to have a new company and this is already starting to show. The new organizational setup has empowered more our managers on whom we rely heavily to bring home the bacon. So I have to say that there is a very positive feedback from the management team and from our employees who now have a direction and have regained their focus, which, as you can imagine, has been disruptive significantly due to the events of last summer and we basically put the final word on the financial impact of the investigation. The provision is confirmed. Our auditors gave us a clean opinion. So everything is fine and we are going to finalize the reimbursement of SECO shortly before -- that is before the end of 2023 because we have the cash in order to do it. So we are now looking forward to come to you with news about business, about strategy, about growth opportunities and put this terrible situation of the investigation behind us. I'll now give back to Silvia to manage the Q&A section. Thank you.

Thanks, Luca. So we will now start the Q&A session. [Operator Instructions] I can also see that there are already questions posted. I just quickly wanted to mention a few housekeeping items before we start. So to be able to address as much as possible, we will need to bundle similar questions because questions arrive on the same topic, slightly raised a bit differently. So if I bundle them together and read them out, they might be phrased in the end and differ a bit from the exact way you posted it. And in case we won't have time to answer all of the questions during the call because I see that there are quite a few entering. Please feel free to reach out to us through the Investor Relations team, and we can schedule you a follow-up call, so we can address any questions that left offline. Without further ado, then let's dive into the questions. The first question would be for Luca. It is -- Luca, at what are your priorities for the year? Picking up on what you said at the end of the presentation, what would be the priorities for 2023?

So our priority for 2023 and even going forward is profitable growth. And this is very important because given the size of the market, which is over EUR 300 billion and our ability to intercept, let's say, one or more than 1% of that market, it makes no sense for our company to say, to reduce profit in order to gain market share. Whether we are 1% or 2%, really, it does not make the difference in the market out there. So what we need to focus on is profit, bring home significant profit, but at the same time, keep on growing in line or a little bit better than the market. Will we be able to do it? The answer is actually yes because we have the technological advantage, which we are leveraging and is tying with also the next question. And we also have the right people. So we have the right product, the right people, we have enough money in order to keep on investing and to be present in all the markets where we want to be, and we will keep on growing and be present in more and more markets. So by leveraging our technology and people, we will start growing the top line, we will keep a strict control on the cost and bring home more and more profits, doing this while growing. So it's not the classic or short-term impact they stop investing and suddenly they show up profits. We will keep on investing. We will keep on growing at market or better than market. But definitely, profit will be first on our mind. And I don't know Silvia if somebody mentioned our relationship with Booking.com. So I want to touch on that.

Yes. If you can provide an update on the relationship with them.

Yes. So definitely this ties in together nicely. Booking.com is a giant in our industry, okay? And everybody wants to work with Booking.com. Now you should ask yourself why with all the opportunities out there that Booking.com use lastminute to provide the holiday packages in a seamless way, which is very well received by the customers. It is because we have the best technology. So as simple as that, our relationship with Booking is long lasting. It is expanding, getting into more markets and getting into deeper and deeper integration. And this speaks to the value of our technology compared to everyone else.

Okay. Super. The next question would be for Sergio. Is it correct that the 31st December 2022 net financial position considers, what you have to reimburse in 2023 for the COVID subsidies to the Swiss government?

Thank you, Silvia, and thank you the audience for the question. Actually, the net financial position is gross of what has to be reimbursed. So it's not considered in the net financial position. And as I was explaining before, what we need to be back to the Swiss state, which is EUR 29 million is related to social security contribution. So it's not, let me say, a financial debt, is an operational debt, which is, therefore, not included into that number. Consider that, again, very important to remark that the EUR 42 million as of year-end is impacted by the net -- by the one-off accounting impact of EUR 25 million, which has been already reversed. The classification of this payable, of course, is consistent, by the way, with the accounting principles. So it's something that we did in compliance with our auditors. I hope this is clear. Any other questions Silvia for me?

Yes. Quite a few questions on financial outlook and guidance. So could you please provide a guidance for 2023 with regards to sales and adjusted EBITDA? Also, if you have a midterm vision for the company, so any midterm targets or anything you can say.

I mean we are not going to give a precise guidance at this stage. But what we can say is that, again, we expect this year the market to grow, but not to recover yet the level of 2019. All the external sources that are accessible speak about an end of year target point of minus 5% versus what was the level in 2019. The market will recover in 2024. What we expect in this context, which is a recovery, but still not entire is a growth -- double-digit growth, I would say, in terms of volumes, in terms of revenues. And we want to keep the level of profitability in percentage terms, growing, therefore, also in terms of EBITDA. Then what we expect is a progressive recovery to 2019 levels from 2024 because this year, it will be, again, a double-digit growth, but not yet at the 2019 level in terms of profitability.

Okay. And then also tying into that people are asking for the financial vision, if we are more top line-focused or more margin focused or cash conversion focused. And also if and when we would return to the margin levels seen in 2019...

We expect that there is a progressive recovery towards the level of EBITDA margin that we already recovered as I said, is a recovery path going forward, we recovered already -- we are recovering already because as you will see from Q1 and also Q2, the EBITDA margin is already increasing. So it will be a progressive recovery, which will match we expect in 2024 versus what we were doing pre-COVID.

Okay. The next question would be for Luca. Also a bit time in -- on the outlook or what we are seeing also in Q1 2023. If 2023 will come in well, how will the shareholders benefit from it? So are we planning share repurchases or dividends?

We are going to analyze the various options and the Board will come to decisions about it. Up to today, there are no specific plans of share buyback and -- or dividend distribution. But as part of our strategic review, we will also ask ourselves if those are viable options.

Okay. And then another question for Sergio. It seems that the META segment's results have softened. How do you plan to improve the performance of the segment of the business?

Okay. Thank you again for the question. I mean, let's elaborate a moment about the reason for the softening of the META business, which is essentially 2 versus pre-COVID. One is the fact that part of the business was related to the hotel Metasearch capabilities that is not anymore there in a significant manner. And the second is related to the size in terms of revenues and profitability of the French market, which has shrinked a lot. So it's a matter of geographical footprint and of the profitability of the French market. How are we going to reboost? And what we are doing is leveraging more and more on direct traffic. So jet cost, which is the brand of the META business has launched already in 2021, for 2022, it's up, and it's more and more and more going to push and invest in stimulating and pushing direct traffic in order to safe in terms of marketing performance spend. This will -- in the trajectory of the next, let me say, a couple of years reboost the profitability to levels which should be comparable again to what it was in 2019.

Okay. Another more technical question. Could you please explain the way the vouchers in terms of cash flow and business.

So I mean, as I said, the vouchers were -- during COV1D-19 a way of refunding customers from cancellations. You may remember, we managed at the point in time, 1.2 million cancellations, refunding more than EUR 500 million to customers. Out of that, EUR 500 million, if I remember correctly, 50% was refunded through vouchers. So the voucher is actually granted to the customers and is according to the various regulations. So depending on what is the type of business that we are in, if the voucher is related to a reimbursement of a holiday package, it has certain characteristics. It is approved and regulated by the specific regulators. It can be converted into cash at the expiry date. So of course, this is not going to present the potential misredemption when it expires, if the customer can convert it into cash. Different story is for the business where we are agent. So for example, when we sell a flight or when we sell a hotel, with this respect, the voucher can expire and can also not be necessarily converted into cash, which can be a commercial decision of the company, but it's not necessarily related to the regulation. So in this aspect, when it expires and not converted into cash, generates a misredemption for us. So most of the misredemption that you are seeing in the P&L is, let me say, a seized liability for those kind of vouchers that are not converted into cash as of the related expiry date. I hope it has been clear.

Yes. Thank you. So the next question is for Luca. It came in different phrasing, but it all comes down to how we look at M&A opportunities because of our strong financial position. What type of targets we would potentially be looking for? And is it likely to see some acquisitions as we have done in the past?

So the answer is yes in a support way. We always look at M&A opportunities. We don't have an M&A plan, so we don't have a target like we want to grow in South Africa, and so let's go and find somebody local to purchase. We mainly look at M&A opportunities where we can buy technology and our profitable market share. So the company is always on the outlook for innovation. So don't expect a very large M&A transaction where we acquire huge assets. We rather focus on buying companies that we can integrate into our technological platform. So that is, I would say, in a nutshell, our M&A strategy. We have the cash and we have valuable stocks, which hopefully will be more and more appreciated by the market. So we have the means to pursue M&A growth.

Another question for you, Luca. It's a bit around the key pillars to drive top line growth, industry trends and outside of the growth of our package business, what else do we observe in terms of consumer behavior? And how would these trends or these behaviors drive and how we are thinking about our proposition?

So consumers are getting more and more sophisticated. They used to just get online to find the best deal. Now they want to get online to have the best experience. This is what we aim to give them. So I'll give you an example. The flight business is now a cash flow business. There is no margin everybody is competing very aggressively. But it opens up the opportunity to sell additional products to those who purchase flight, either convert them to dynamic packages by adding hotels, by adding transportation, by adding other experiences on site and more important insurance products. So what we want is to give our customers the kind of feeling I'm taken care of when I book on lastminute.com or any of other web properties, things are going to be flawless. So that is for us the ability to integrate additional value-enhancing experiences that the customer will link to us and to our brand and to our experiences so that it becomes a returning customer without the need to spend additional market money on it. In all of this, I would say the app will play a larger and larger role. We are investing heavily on the upside in order to allow consumers to have a go-to point directly on their mobile phones, where it will become natural and distinctive to go and look for holidays, but also for editorial content for ideas on experiences that they can leave in their holiday destinations.

Okay. Next question is for Sergio. If we can provide a greater detail on the split of our gross travel value and comment a bit on any possible dependency on B2B partners.

Okay. Thank you for the question. I mean rather than dependency, I will speak about opportunity in the sense that if the question is related to Booking.com, I mean here, the part of the strategy is to leverage on the Booking.com relation in order to differentiate also our B2B2C offer with further and more partners because that's a source of traffic, revenues and profitability that we believe going forward is to be key also outside travel because this is exactly one of the assets that our distinctive technology related to holiday package to look into. So enlarge the portfolio of partners that are not necessarily within travel. It can be offered -- in offering travel solution to their customers with a B2B2C proposition in order to strengthen their own customer proposition. You may have read recently our press releases regarding the partnership with Virgin with O2 in the U.K., which is exactly in that direction. So this is the type of business proposition mindset, which is not just necessarily B2C on our customer base, but is targeted to provide services to third parties in order to differentiate more and more.

Okay. The next question is for Luca. On improvement of the customer services. So on Trustpilot, lastminute.com receives at the moment, just 2.4 out of 5 stars. How have we planned to improve our image here?

So this is one of the data that use technical terms pisses me off so much. Because I know of all the efforts and the quality that the organization is putting in order to set the customers. We have decided last year, so before I joined to basically bring in-house our customer service. We have 350 people. So we brought our customer service team from 210 to 560 internal employees. The reason was we want to have full control, not just of the scripts, but really the way in which we interact with the customers. We have significantly improved our ability to solve issues in just one call, so allowing all our front-end colleagues to directly access the back-end systems and deal with customers' requests and/or complaints. As you can imagine, the more we manage, we are talking of billions of euros of travel and so millions of customers, the more likely it is that a small percentage is unhappy with the outcome. And those that are unhappy are those that went on Trustpilot or other similar websites while the millions that are happy simply don't bother going out and putting a 4- or 5-star review. So we will address this to try and get our customers after they return from their trip to express their opinions. Overall, our internal numbers say that the percentage of less than happy customers is absolutely in line with our industry. Let's not all forget that when you book a holiday package or when you book a flight and the flight gets canceled, basically, people don't get mad with Ryanair, they have mad with lastminute. My flight is canceled as if we actually run the airline or we actually run the hotels to destination. So we have to accept this as part of doing business on the retail side, and we need to focus to be preemptive in reaching out to customers as much as possible before the problems present themselves. Particularly on the hotel side, we are integrating with a number of information providers that will allow us to get the evolution of the rating of the hotels very early on, so that we can put in evidence or simply not offer hotels who are going through whatever reason, local travels. Again, this is to preempt any potential complaint from other customers.

Thanks, Luca. We have 2 minutes left. So maybe let's get in 2 further important questions. So the first one is, what's the scope of the strategic review? And if we have engaged or the Board has engaged financial advisers to consider possible sale of the business?

So strategic review, frankly, it's pretty normal when there is a new Board and the new CEO because we just want to see what are the options out there. All the options are on the table. So there is nothing that we think should not be analyzed. Clearly, if and when among our strategic options, there would be M&A opportunities of any sort, we will absolutely adhere to fixed regulations. We are a listed company and so we will inform stakeholders and shareholders and the market at the appropriate time. So we are looking to protect the interest of all shareholders, and we are definitely looking to protect the interest of stakeholders in a much wider sensing than just all our shareholders.

Thanks, Luca. And the last question before we need to close in interest of time. Considering the circumstances under which Mr. Andrea Bertoli left the business, why is the company continuing to loan him approximately EUR 4.4 million under the 2 LTIPs, long-term incentive plan?

So Mr. Bertoli had a contract as employee with a number of clauses and it was a very complex contract. The contract has been terminated and not just Mr. Bertoli but also other people in the business left and this is a normal part of the reshuffling again when a new CEO comes in. We are discussing with Mr. Bertoli to finalize the severance. And the -- at the end of 2022, Andrea Bertoli was still an employee of lastminute. And so from an accounting perspective, the liability was still open. But clearly, it's part of the negotiations with Mr. Bertoli.

Thanks, Luca. So we are out of time, unfortunately. So we need to close the Q&A session. Thanks to all of you for the questions you posted. I think 1 or 2 have been left open. So please reach out to us if you feel that something was left unanswered. Just drop us an e-mail at [email protected]. Before we close the overall call, I would just quickly like to draw your attention to the financial calendar in the next upcoming date. So on 17 May 2023, we will have our Q1 trading update. And as we are now already mid-April, we decided to not have a conference call on that date, but just release the Q1 figures via press release. So on that date, you can expect the press release with the figures. And of course, always feel free to approach us in case you would like to walk through or have any questions on that press release. And with that, I hand over to Luca for the last words. Good bye from my side, and thanks again for joining us. Luca, any last words?

No. I mean not really something that people would differ, so definitely not. I just would like to thank you and especially thank our shareholders who have not been fleeing and have been supporting us through this difficult period of the investigation and arrest that happened last year, really you've proven to be faithful and my modest opinion also smart to play the long-term game with us. So thank you for having speak with us. You can rest assured that this is now behind us, myself, the board, the management now is solely focused on the business, on the profit growth and on nothing else. So you will start seeing this coming through this year and the following years.

Thank you very much also on my side.

Ladies and gentlemen, the conference is now over.