Annual Report

2000

lastminute.com

Annual Rep

ort 2000

The Overall Winner of the Revolution Award 1999

Intel Revolution AwardBest use of New Media for Electronic Commerce

Customer testimonials

Contents Directors and Advisors

I did not realise just how easy it was to order things on the internet.The organisation was first class, the holiday was brilliant and I willbe using the service again. Cheers once again” Mr Kendall

My husband and I sincerely appreciate your superb service forour hotel stay in The Netherlands at the Bilderbeh hotel deKeiserzroon in Apeldoom. Because of the 2000 Sail Amsterdamfestivities, all the hotels in Amsterdam were booked solid and we had hoped your service would be able to locate a pleasanthotel for us, and thankfully you did!” Mr & Mrs Rivers

On Saturday night we went to see the Reduced ShakespeareCompany’s Musical Millennium performance. Not only was it a cracking, laugh a minute show, we also had brilliant seats –booked through lastminute.com – and for only £10 each! This is the second time I’ve booked tickets through lastminute.com and each time we’ve had great seats at a good price – all completely hassle free” Mr Williams

My wife and I have just returned from seeing the West End show‘Spend, Spend, Spend’ but we ‘Saved, Saved, Saved’ thanks toyou guys. It was a fantastic evening and all for £10 a ticket. Thanksvery much lastminute.com. I look forward to finding some bargainsin the near future from you” Mr Dixon

These are genuine testimonials, but our customers’ names have been changed in order to protect their anonymity.

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Growing Business Awards 1999 – CBICompany of the Year

The Revolution Media Surface AwardBest Online Business

E-Business 2000 E-Commerce AwardMost Effective Marketing Campaign

Awards

Directors

Allan LeightonBrent HobermanMartha Lane FoxPierre AlzonRobert CollierPieter BouwBrian CollieLaurent LaffyLinda LevinsonThomas Teichman

Secretary

Hackwood Secretaries LimitedOne Silk StreetLondon EC2Y 8HQ

Auditors

Ernst & YoungBecket House1 Lambeth Palace RoadLondon SE1 7EU

Registered office

4 Buckingham GateLondon SW1E 6JP

Solicitors

Bird & Bird90 Fetter LaneLondon EC4A 1JP

Bankers

Barclays Bank50 Pall MallP.O. Box 15161RLondon SW1A

Registrar

Capita IRG plcBourne House34 Beckenham RoadBeckenhamKent BR3 4TU

Designed and produced by Merchant with NB: Studio / Printed by Royle Corporate Print

1 Vision and Highlights 2 Strategy 4 Technology 5 Suppliers 6 Brand 7 Culture 9 Chairman’s letter 10 Chief Executives’ review 12 Financial review 14 Directors’ CVs 16 Directors’ report 18 Statement of Directors’ responsibilities 19 Corporate governance 22 Remuneration report 25 Report of the Auditors 26 Consolidated profit and loss account 26 Statement of total recognised gains and losses 27 Balance sheets 28 Consolidated statement of cash flows 28 Reconciliation of cash flow to movement in net funds 29 Notes to the financial statements 51 Notice of Meeting 53 Annual General Meeting – memorandum to shareholders 56 Definitions

Registrar

Please contact our Registrar at the address above to advise change of address and also for any enquiriesrelating to lost share certificates or other enquiries relating to share registration.

Share dealing service

lastminute.com plc shares may be dealt through DLJdirect, online share dealing specialists. DLJdirect will offershareholders one commission-free trade within 30 days of opening a DLJdirect account. If you would like toreceive further information you may visit www.lastminute.com/shares or call DLJdirect on 0800 358 4477.

Website

Additional shareholder information including press releases can be found on the Group’s Investor Relationswebsite at www.lastminute.com/ir.

11

Vision Our vision is to build a global last minute marketplace. For ourcustomers this will mean a service they can access every day through almost any compatible device to find inspiration andsolutions at short notice. lastminute.com is an aspirational lifestylebrand that seeks to understand its customers and makes theircomplex lives easier. For our supply partners this means havingaccess to an international customer base with demand for timesensitive products.

Our business currently operates in the UK, France, Germany, Italy,Spain, Sweden, The Netherlands and through a Joint Venture in Australia. Customers can also access us around the globe throughthe website, WAP enabled phones, interactive digital TV, PDAs and most recently through any fixed line or mobile phone with thelaunch of our voice commerce platform.

We are continually expanding our product range and improving our service as we move towards this vision.

Registered subscribers at year end 2,850,678 364,750 7.8x

Consumers since inception 156,196 10,189 15.3x

Cumulative items sold in the year 312,912 23,866 13.1x

Number of suppliers at year end 9,221 548 16.8x

Total transaction value (£000) 34,189 2,647 12.9x

Gross profit (£000) 3,339 177 18.9x

9.8% 6.7%

Net loss for the period (£000) 35,748 4,540 7.9x

All metrics except the number of suppliers are exclusive of the Degriftour Group.

Year ended Year ended Growth

30 September 30 September2000 1999

Highlights

up 3.1

percentage points

Gross margin(see Definitions on page 56)

2

The right offer to the rightcustomer at the right time on the right device

An interview with Allan Leighton, Brent Hoberman and Martha Lane Fox

What does it mean when you say

lastminute.com is a lifestyle solution?

Brent: We aim to provide a one-stop shop for alllastminute needs across a wide range of categories – whether that is leisure, services, travel or retail. We believe that doing things at the last minute is a lifestyle decision. Our strategy is to deliver acomplete range of last minute solutions, from bookinga taxi to arranging an entire trip or evening. We aim tobe accessible in as many ways as possible. We wantour customers to know that they can rely on ourbusiness to provide them with a last minute solution or an appropriate inspirational alternative. These arethe clear goals on our collective mind as we continueto expand the business.

This relies then on continuing to build

a broad range of products and services?

Martha: The breadth and depth of our productoffering is key to our differentiation. An extensivetravel, leisure and retail offering ensures we arecreating a compelling site that is of use every day.This in turn ensures that we are learning about our customer base across a wide range ofpreferences, which will allow us to better serve them in the future.

You recently acquired the Degriftour Group,

France’s largest e-travel group. Why?

Martha: Degriftour is a natural fit since it was thepioneer of unbranded online last minute travel inFrance. Through this acquisition, we have becomeone of the leading e-commerce companies inEurope. Degriftour not only adds invaluable supplierrelationships and expertise that greatly benefit ourbusiness but has also proved that the last minuteconcept can be profitable. This acquisition has led to a scale jump in all our key metrics and reducedour risk profile.

Strategy

3

So now, what is the focus of your

international strategy?

Allan: Europe is still the key. We aim to consolidateour position as one of Europe’s leading players in the online marketplace. The Degriftour purchasehas already helped us in that regard. We now havelocalised websites available in numerous Europeanmarkets, where we have sourced local supply whichis then made available across all our websites.Despite the European focus, we continuouslyexplore opportunities in other markets and evaluatejoint venture opportunities. This summer welaunched a fully localised Australian version of thewebsite and we also have a further joint ventureagreement in place for an operation in South Africa.

Competition must be huge. How have you

built barriers to entry?

Brent: While we are never complacent aboutcompetition we believe it would be extremely difficult for any other company to rapidly encroach on ourmarket. The complexity of our technology, breadth of product offering and high profile brand act asstrong barriers to entry. We still have a way to go untilwe realise our corporate vision, but we have, to date,executed ahead of plan and no one has yet emergedto take us on directly.

However, your vision is not only based on a

deep product offering, owning key geographic

markets but also on developing new distribution

channels, is that right?

Martha: Yes. We are an electronic retailer andplatform agnostic. This means that our customers canaccess our offering on five distribution platforms, notonly via our website. To date, we have expanded ouroffer into the interactive television, mobile telephoneand personal assistant markets and have alsolaunched a transactional voice platform, which webelieve to be a strategic break-through.

You are one of the most visited e-commerce

sites in Europe, but your conversion rate is

still quite low. How do you intend to increase

conversion within the next 12 months?

Allan: We believe that we can achieve step changesof improvements in conversion. Many things are being

done in parallel throughout the Company but webelieve two of the key areas that affect conversion aretechnology and product range. With the recent launchof our new technology platform we are now able tofocus on improving the user interface of the websiteand the search functionality. These changes shouldensure that users find what they want more easily.

On the product range side, we are developing directelectronic links into supplier systems so that customerscan use our website for special deals as well as fullservice solutions.

These improvements coupled with more advancedpersonalisation of the service are how we believe wecan make sure that users are hit with the right offersat the right time on the right device.

Pro forma* totaltransaction value – £91 million

Pro forma* gross profit – £13 million

Over 45% brandawareness in France

Convenience element (full service)now offered on the French website(Discounted,Negotiated, PublicFares)

Pioneer in French e-commerce andonline travel with 10years of experience

*As if the Degriftour Group had been part of lastminute.com for the full year ended 30 September 2000.

4

You recently launched a new version of your

website. Why?

Martha: The new website is built on a three-tierarchitecture, which is thoroughly scalable and robust.The site is already much faster and has increasedfunctionality but most importantly we believe it allowsus to add new great features for customers muchmore rapidly. The development time was long partlybecause as one of the highest traffic sites in Europewe had to get the customer experience exactly right.However, that development time has paid offbecause we believe that the new website has givenus a competitive advantage and has provided us with the technology platform from which we can driveour vision forward.

Surely other companies will replicate

your technology?

Allan: The good news is that the technology we useis complex and cannot just be bought off the shelf – it has a lot of proprietary features. It was expensive andtime intensive to develop. We have built a specialistin-house team which continues to improve on theexisting technology. This is invaluable in a time when knowledge of how to develop this technologyis scarce.

So you are saying the new technology

architecture will drive the business forward?

Brent: Technology is core to the business. The newarchitecture was built to allow for the fast integrationof sophisticated technologies and personalisation.Furthermore the new platform enables us, forexample, to track our users’ movements around thesite and data-mine our customers’ transaction history.We are also developing an improved search functionincorporating sophisticated geo-spatial technologythat will allow us to minimise dead-end searches. By learning more about our users, sourcing deepersupply and improving our search functionality, we believe that we will provide a more valuableservice to our customers and thereby improve theconversion rate of users to customers and drive the business forward.

digitaltv

wap voice

Technology

Our digital television services give us access to a wider group of customers by bringinglastminute.com into homes of people that do not haveaccess to other platforms. For example, it allows non-professional groups of all ages to become familiar with our products and services. Our service iscurrently live on NTL/CWCand Telewest in the UK and on TPS satellite service inFrance. We have redesignedthe screens for our digitaltelevision service to match the medium. The result is larger font sizes and simpler navigation, giving users easy accessregardless of whether they are using their televisionremote control or keyboard.

Personal digital assistants(PDAs) have become popularwith one of our targetaudiences – young, urbanprofessionals – providing themwith functional access tolastminute.com’s services awayfrom their desktop. Our PDAoffering is currently part ofAvantgo, an easily accessibleportal service. We are in theprocess of creating anapplication for the Palmoperating system that will make lastminute.comofferings available to a growing number of PDA users.

Our new three-tier web-architecture increases therobustness of the site throughimproved speed, stability andscalability. The greatestfunctionality that the newarchitecture offers ispersonalisation, designed toimprove customer experienceand enhance the conversion of casual surfers into payingcustomers. The system is ableto interact with best of breedthird-party technologies,including supplier databasesand customer relationshipmanagement tools. Theseenable us to introduce supplymore quickly by maximisingthe two-way links to suppliers.The new architecture facilitates the rapid addition of technological enhancementsas they are developed.

Our WAP service is alreadyavailable over every majortelephone operator in the UKand an increasing number incontinental Europe. The WAPsite has no graphics and allowsfor easy movement throughchoices using a mobiletelephone handset. Most of our WAP products andservices are designed for usewithin the next week. We havealso launched a commercialWAP restaurant bookingservice in the UK, enablingcustomers to make reservationsat over 200 UK restaurants.

We consider our recentlylaunched voice recognitionservice a strategic breakthrough since currently noother European e-commercecompany has transactionalvoice capabilities in e-business.The voice recognition serviceshould enable our consumersto benefit from our extensiveproduct offering, even if theydo not have access to onlinemedia. Ultimately customerswill be able to browselastminute.com’s database by talking as well as clicking.Transactions will be madeover the telephone without the need for an operator. We believe the new voicerecognition system will help to broaden our customer reachand effectively create a newrevenue channel.

lastminute.com has developed and maintained its position as theUK’s best-known web brand through excellent service, innovativemarketing, and strong business management. Sun is delighted tohave provided the technology foundation for the 24 by 7 by 365business model that customers expect in the Net economy.” Shanker Trivedi, Vice President Sun Microsystems UK & Ireland

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internet

pda

5

How and why have you built relationships

with so many suppliers?

Martha: Our relationship with suppliers is based on partnership. As one supplier said to us“lastminute.com reaches the parts other websitescannot”. We have over 9,200 suppliers whom we work with on an individually contracted basis and who supply us with inventory across a wide range of products and services.

Through establishing these relationships we havestrengthened our customer proposition and built a barrier to entry to other players.

Are there any product categories you

particularly want to expand?

Brent: We are focused on providing quality and depthof supply across all of our categories. However, our strategic vision also requires a furtherstrengthening of the non-travel element of ouroffering. Those categories – gifts, restaurants,auctions and other services – are set to expand. In addition to sales of our suppliers’ distressedinventory, we are also expanding our sale of full priceitems in order to cater for customers looking for lastminute convenience. We want our customers to beable to rely on our service, whether they come to uslooking for inspiration or a solution.

Through the acquisition of Degriftour your

supplier base has more than doubled. How does

this benefit the business as a whole?

Martha: Degriftour has invaluable long-standingsupplier relationships with major European travel and leisure suppliers. These relationships bring scale to our existing partnerships and enable us tofurther deepen our product offering across our entirerange of products and services. We have already met with a number of their suppliers and they havebeen very positive about their continued partnershipwith the whole Group.

How do you ensure your suppliers do not

see you as a threat?

Brent: A consensus seems to be among our suppliersthat they, in general, prefer to use three or fourdistributors for their products, where these distributorsadd real value. We are not perceived as a threat but offer an opportunity for our suppliers to tap into new demand. By offering them the opportunity topromote their products unbranded, they can avoidcannibalisation. We believe that our suppliers wantpartners who are both effective across Europe andhere for the long term. We are both of these things.

What do your suppliers gain from

lastminute.com’s international expansion?

Allan: The technology we have developed means thatwe can offer customers in, say, Australia, productsand services that were originally sourced in the UK.And vice versa. Furthermore, we are not onlyavailable in overseas markets, but back our productsand services with a locally-recognised brand andmarketing campaign that adds value to the supplierby driving targeted traffic to our site. Localrelationships enrich the total range of lastminute.comproduct and service offerings. Our overseasexpansion provides an international registeredsubscriber base for our suppliers and a broader,more appealing selection for our customers.

Such a large number of relationships must be

costly to maintain. How will you generate back-

end efficiencies?

Martha: We are developing an extranet so thatsuppliers will be able to input their products directly into our database, while also developing directconnectivity into suppliers databases. Suppliers willthen gain more control of the process, strengtheningour partnership with them, while we reduce our costs by automating elements of the process. Customersgain by having access to a wider range of productsand services. We think lastminute.com customerswant to be able to come to our sites with an idea ofwhat they want and know they will be able to obtain it – or something very close to it. We are focused on achieving that level of convenience across all our platforms.

Suppliers

We are delighted to work with lastminute.com as a fantastic sales media. lastminute.com provides a sophisticated, highly-reliable and consumer friendly service, that helps increase consumers loyalty and enhance the customer service offering” Didier Rougé-Biscaye, Groupe Accor

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Number of suppliers (*including Degriftour)

IPO - 21 March 00

Q4 99 Q1 00 Q2 00 Q4 00

5481,102

2,466

3,458

9,122*

Q3 00

6

The lastminute.com brand is widely recognised.

Why is that important?

Allan: The substantial awareness, particularly in theUK, that our brand has achieved already is not onlykey in keeping marketing costs under control but is also a valuable asset and a barrier to entry for any potential competitor. Our brand tells potentialcustomers what to expect from the Company. We believe that it is a lifestyle brand, a call to actionand we hope that people are reactive to it.

This year we were approached by NTL, Sun Microsystems and Psion who all wished to use our brand in their advertising campaigns. Their endorsement clearly shows the strength and credibility of our customer proposition.

How are you evolving the brand?

Martha: We are continuing to build deep partnershipsboth on and offline while also becoming moretargeted in our advertising.

How will you keep your marketing cost effective

in the future?

Brent: Contrary to what many people believe, wehave achieved this high level of brand recognition at a relatively low cost (compared to the sector as awhole) and are committed to continue to grow thebrand through innovative marketing initiatives ratherthan full blown TV advertising.

We recently launched a new advertising directionwith a consumer-centric campaign on the theme of‘Making every minute count’. This campaign isintended to help our customers to better understandour offering and why we are of value to them.

The lastminute.com brand was built through acomplex mixture of online distribution partners, both local and European. For example, Expedia,Freeserve, AOL, T-Online and Voila. It was also builtthrough public relations and consumer press focusingon the product. Finally we have done a number ofmarketing deals with some of our strategic partnersand investors. In the final quarter of this year thelastminute.com brand was on 50 million bars of Nestle chocolate. In the summer the brand was onKronenbourg beer in supermarkets.

We have good coverage in Heathrow and Gatwickdue to our relationship with British Airports Authority.Another important tool in our marketing strategy isour weekly newsletter that is currently received byover three million subscribers and pushes the bestoffers on the sites to them on a weekly basis.

You talk about more targeted offerings to

customers in the future. Does that also mean

more targeted marketing and branding in

the future?

Allan: Some of our marketing and brand building willcontinue to be done in a high profile manner becauseit gains the widest audience. However, digitalmediums allow targeting of key audiences. With theintroduction of our advanced personalisation softwarewe will also be extending our key competence ofdirect marketing sending customers targeted offersbased on their preferences, what the site learnsabout them and what other customers like to do onthe site. We believe that this helps create loyalty inthe customer base.

Does your brand also represent the way you

behave as a company?

Brent: Our operational brand represents the entirelast minute lifestyle solution. It is young and fresh. Our corporate brand is more business focused.There is a genuine demand for last minute goods and services but there is a difference between theidea and the execution of that idea. We continuallyensure we are reaching our goals and expanding the market we have developed.

Brand

No. 2 UK

e-commerce site

e25 surveyBain/ManagementToday, Aug 00

lastminute.com

most visited travel

website in the UK

and Germany

Netvalue, Aug 00

Degriftour most

visited travel

website in France

Netvalue, Aug 00

7

Culture Describe the lastminute.com culture of today.

Martha: Our culture is based on a shared vision and shared belief. Our staff are helping to drive theCompany towards the vision of a global last minutemarketplace. We operate in a market that moves at a fast pace and our culture produces an innovative,exciting place in which to work. It also enables us toempower bright, young people to take decisions,which perhaps other companies would struggle overfor months.

Who is the senior management team?

Allan: Around that dynamic young team we havelayered a strong, experienced management group all of whom have relevant industry experience. In addition to Brent, Martha and Julian, our ChiefFinancial Officer, I would like to mention in particularDavid Kelly, our Chief Information Officer, who wasformerly with Amazon.com, and Charlie McKee, Head of Commercial, who was a former Head ofDistribution at Virgin Atlantic. Still, we are a youngcompany with an appetite for new ventures that we never want to lose. We believe those attributescombine to produce a solid business concept withgood prospects.

In your sector it has become notoriously difficult

to recruit top notch people – how do you manage

to attract the right people to the Company?

Martha: From the start we have searched for the beststaff, suppliers and investors – quality dominates thewhole culture of our business. Our focus on qualityhas more than paid off because it attracts morequality to the Company. We believe the high profile of the Company coupled with a clear concept hasalways made it easy to attract an outstanding level oftalent within the Company. Now, retaining thesepeople is critical and we have been delighted withthe relatively low turnover of staff from the Company.

Has the thinking behind the business changed

from initial start up?

Brent: The vision will always remain the same –getting the right offer to the right customer at the right time via the right device. It is embedded in ourcorporate culture. We started this business becausewe realised that many people were looking for thistype of service but no-one was providing it. Our visionis to build a utility that people will want to useeveryday, yet there is still a lot to do.

A culture should reflect the deep structure of an organisation. The values and beliefs held by the employees at lastminute.comreflect a passion for our customers, practical ambition for ourshareholders, their creativity and enthusiasm. In my experience, it is rare to find such a ‘can do’ attitude in a group of peopleworking at such a pace in a competitive market” David Kelly, CIO

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8

9

Chairman’s letter

Solid growth

In this, our first Annual Report, I am pleased to present a year of solid growth, which shows the considerable progress ourbusiness has made over the past year.

Business performance

Over the last 12 months, we havemade a scale jump in creating and developing the last minutemarketplace as demonstrated bythe acceleration in all key metrics.

The total transaction value ofproducts and services sold throughour website for the year was £34.2 million. Over 150,000customers have now bought fromthe website and over three millionconsumers across Europe havesubscribed to our weeklynewsletter.

We have established websites ineight countries – in the UK, France,Germany, Sweden, Italy, Spain and The Netherlands, and through a joint venture agreement inAustralia and are available on theInternet, WAP, idTV, PDA and onour recently launched transactionalvoice platform, which we considerto be a strategic break through.

In only two years, lastminute.comhas become one of the mostvisited websites across Europe.

Our aim is now to increase the rate of conversion of browsers topaying customers and to increasethe number of items eachcustomer purchases.

Degriftour

The acquisition of Degriftour,France’s largest e-travel group,announced in August last year,makes us the clear last minutemarket leader in two of Europe’smost important geographic e-commerce markets. Integrationand product cross selling acrossthe websites are progressing well.

The acquisition immediatelyachieved what our business planwould have taken two to threeyears to achieve in France andprovides a very strong positionfrom which to penetrate the rest of Europe. It changes the scale of our business and offerssignificant synergies. It also enhances our capability to create a serious European platform.

Technology platform

The introduction of a newtechnology platform for ourwebsite is one of the ways we haveincreased the barriers to entry toour business.

The new system, which is quicker,more robust and more scalablethan the previous version, offerssignificant benefits for ourcustomers and suppliers and will enable us to introduce greaterpersonalisation by targetingproducts and services to specificcustomer preferences.

Creating the last minute

marketplace

When lastminute.com waslaunched in 1998, the aim was to create an aspirational lifestylebrand that offers an outstandingproposition for both suppliers and customers understands its

customers and makes theircomplex lives easier. In just over two years real progress has been made.

Looking ahead, the marketopportunities for lastminute.comare substantial. E-commerceactivity is growing, with the size of the online market in the UKexpected to increase by £1.4 billion in 2000 to £17.9 billionin 2004 and travel estimated to be the largest e-commerce categoryin Europe, representing 35% of all online spending (JupiterCommunications).

We will continue to concentrate on the provision of last minuteservices and solutions via a varietyof platforms.

None of the above could havebeen achieved without the energy,loyalty and dedication of our staff.

The volatility of share prices in the internet and telecom sectorshas not distracted us from the key tasks of increasing marketshare, maintaining our efficiencyand building for the future. Wehave made good progress inpursuing our strategic objectivesand we remain confident in the prospects for the continuinggrowth of the business.

Allan Leighton

Chairman

10

Solid results

On 21 March 2000 lastminute.comfloated on the London StockExchange and on the NASDAQNational Market. These resultsrepresent the first year end resultsas a publicly traded company andshow the considerable progresswe have made over the past yearin building the last minutemarketplace.

The financial results show solidgrowth, across all key metrics, with costs and losses containedwithin plan.

Gross margin increased from 6.7% in FY 1999 to 9.8% in FY 2000,reflecting operating marginsimprovement as well as the successful establishment of advertising and sponsorship as additional revenue streams.

During the year ended 30September 2000, we added over2.4 million registered subscribersacross Europe taking the total at 30 September 2000 to 2,850,678,nearly an 8-fold increase year-on-year. At year end we had 156,196unique customers, an over 15-foldincrease year-on-year.

The breadth of our supplier base increased almost 17-fold to 9,221 over the year. Thisincrease was substantially due to the continued expansion of our product offering across allcategories and the integration of Degriftour’s supplier base.

We believe that by increasing our product and services range,there will be an increase in the rate of conversion of subscribers to customers and a subsequentincrease in the number of itemseach customer purchases.

In only two years, lastminute.comhas become one of the most visitede-commerce sites in Europe.

Degriftour brings scale in all

key metrics

The acquisition of the DegriftourGroup, France’s largest e-travelgroup, makes us the last minutemarket leader in two of Europe’smost important e-commercemarkets – a very strong positionfrom which to create a Europeanplatform. Pro-forma total transactionvalue and gross profit, as if theDegriftour Group had been part of lastminute.com for the entirefinancial year ended 30 September2000, is approximately £91 millionand £12.7 million respectively.

The integration process is alreadyunderway. To capture the upside of product cross selling across thetwo customer bases, the twowebsites have been linked withlastminute.com being immediatelyvisible to Degriftour Group visitorsand vice versa. All travel productsare hosted from co-brandedwebsites and lastminute.comvisitors have access to Degriftour’sfull service travel engine. TheDegriftour management team isnow leading the enlarged Frenchoperation and the re-location ofstaff has already taken place withlastminute.com and Degriftour staffworking in integrated teams.

Expanding geographical reach

Further to our operations in the UK and France, we also launchedlocalised websites in Germany and Sweden in October andDecember 1999 respectively andprepared ourselves for entry intonew markets and accumulatedsupply and content not only inSpain and The Netherlands butalso in Italy. We have launchedthese websites since year end,extending lastminute.com’s reachto seven European markets. InAugust 2000, we launched a fullylocalised Australian version of ourwebsite in partnership with ourJoint Venture partner for Australiaand New Zealand, travel.com.au. A further joint venture agreementis in place for South Africa.

Strengthening the senior

management team

Allan Leighton, former Presidentand CEO of Wal-Mart Europe, wasappointed the new Chairman oflastminute.com in October 2000.Allan adds invaluable retail andmanagement skills, and sinceappointment has been closelyinvolved in driving the businessforward.

Pierre Alzon, former GeneralManager of Degriftour, wasappointed as an Executive Director of lastminute.com and is responsible for managing theenlarged French operations.

Building thelast minutemarketplace

ChiefExecutives’review

11

During the last year we continuedto strengthen our seniormanagement team with theappointment of Julian Culhane toChief Financial Officer, formerlywith Broadview; David Kelly, ChiefInformation Officer, formerly withAmazon.co.uk; Charlie McKee,Head of Commercial, formerly withVirgin Atlantic Airways. We believewe now have a stronger team withhighly relevant experience tocontinue to grow and expand our business both in the UK and internationally.

Technology is core to

the business

We believe that lastminute.comhas gained a competitiveadvantage through earlyinvestment in advancedtechnologies. By establishingpartnerships with leadingtechnology suppliers andstrengthening the in-housedevelopment team, we areconstantly increasing barriers to entry to our business.

Since 30 September 2000,lastminute.com has introduced its new three-tier technologyarchitecture.

The new system offers threesignificant benefits forlastminute.com’s customers and suppliers:

Speed – access to products andservices on the site will be quickerfor customers, as will theirtransactions. Suppliers will be ableto download their inventory on thesite faster and integrate theirdatabases with lastminute.commore effectively.

Stability – the new system will be able to supportlastminute.com’s growingsubscriber base, providing greater reliability and improvingthe customer experience.

Scalability – the new architecturehas been designed to supportlastminute.com’s rapid growth and to provide a solid and “open”platform from which it can rapidly introduce new services and applications in numerouslanguages and countries.

The conversion rate of visitors tocustomers should increase byintroducing greater personalisation;the new architecture allows productsand services to be targeted tospecific customer preferences.

The right offer to the right

customer at the right time

on the right device

The recent launch of a voicerecognition platform in partnershipwith Nortel Networks constitutesthe creation of an innovativecustomer portal and significantlyexpands lastminute.com’s reach toapproximately 95% of Europeanhouseholds.

Brent Hoberman

Chief Executive Officer & Director

Martha Lane Fox

Chief Operating Officer & Director

Cumulative customers

IPO - 21 March 00

Q4 99 Q1 00 Q2 00 Q4 00

10,189

28,687

65,387

107,993

156,196

Q3 00

Alternative platform – distribution agreementsInteractive television Mobile telephone/WAP portals Personal digital assistants

NTL BT Cellnet PalmpilotCable & Wireless Communications1 Bouygues Telecom Psion OrganisersTelewest Deutsche TelekomTelevision par Satellite Excite Mobile

France TelecomMViva

One2OneOrange2

Vodafone

The cable television assets of Cable and Wireless Communications Limited were acquired by NTL in May 2000The acquisition of Orange by France Telecom was announced in May 2000

1

2

12

Financialreview

Total transaction value of productsand services sold through ourwebsite for the year ended 30 September 2000 was £34.2 million, representing nearly a 13-fold increase over totaltransaction value for the yearended 30 September 1999 of £2.6 million.

Turnover for the year ended 30 September 2000 was £3.7 million,representing a 19-fold increaseover turnover for the year ended30 September 1999 of £195,000.

Total cost of sales for the yearended 30 September 2000 amountedto £401,000, more than a 22-foldincrease over total cost of sales forthe year ended 30 September 1999of £18,000. The low level of cost of sales relative to total transactionvalue and turnover reflects the lowlevel of investment in inventory bythe Group.

Gross profit for the year ended 30 September 2000 was £3.3 million, representing nearly a 19-fold increase over gross profitfor the year ended 30 September1999 of £177,000.

Total transaction value, turnoverand gross profit increasedprimarily due to the expansion of products and services availablethrough our website and, as market awareness and functionalityof our website improved, from the expansion of our registeredsubscriber base, both in the UK and internationally.

Gross profit consists primarily ofcommissions earned on productsand services sold, including airlinetickets, hotel room reservations,package holidays, tickets toentertainment events, restaurantreservations and gifts. In addition,during the year ended 30 September 2000, we earnedincome from the sponsorship ofour weekly email and fromadvertisements placed on ourwebsites that contributed toturnover and gross profit.

Operating expenses

Product development

Total product developmentexpenses for the year ended 30 September 2000, before anycharges for non-cash share-basedcompensation and the provision for National Insurance, were £9.0 million, an increase from £1.1 million for the year ended 30 September 1999. Theseexpenses primarily consisted ofcosts associated with the ongoing build and testing of our new three-tier architecture, which is nowcompleted, personnel costs, webhosting, software license fees andother expenses associated with theongoing operations of our website.In addition, during the year ended30 September 2000 we capitalised£6.5 million of costs as the siteupgrade had reached applicationdevelopment stage.

Sales and marketing

Total sales and marketing expensesfor the year ended 30 September2000, before any charges for non-cash share-based compensationand the provision for NationalInsurance, were £19.1 million, anincrease from £1.2 million for theyear ended 30 September 1999.

General and administration

General and administrative costsfor the year ended 30 September2000, before any charges for non-cash share-based compensationand the provision for NationalInsurance, increased to £10.2 millionfrom £1.2 million for the yearended 30 September 1999.

Non-cash share-based

compensation

Non-cash share-basedcompensation is based on thedifference between the exerciseprice of share options granted and the fair value of the underlyingordinary shares at the date of grant. Total non-cash share-basedcompensation charges for the year ended 30 September 2000increased to £4.6 million comparedto £0.7 million for the year ended30 September 1999.

National Insurance charges

Up until 30 June 2000 charges to the profit & loss account weremade so as to fully provide for the employer’s National Insuranceliability that might be incurred on any gain in share optionsgranted after 5 April 1999. Thisprovision was revised at the end of each quarter to take account of movements in lastminute.com’sshare price at each balance sheet date.

On plan

119

409

834

1,016

1,481

111

350

707

1,332

950

Turnover/gross profit (000s/£)

IPO - 21 March 00

Q4 99 Q1 00 Q2 00 Q4 00Q3 00

13

On 27 July 2000, with the issue of UITF abstract 25 (NationalInsurance contributions on shareoption gains), the Companychanged its accounting policy withrespect to National Insurance onshare options, and now providesfor the expected liability over theperiod of performance. The effectof this on the prior year wasimmaterial. Total charges inrespect of National Insurance onemployee stock options for theyear ended 30 September 2000amounted to £0.1 million,compared to a charge for NationalInsurance on employee stockoptions for the year ended 30September 1999 of £0.6 million.

Loss on ordinary activities

before taxation

The loss on ordinary activitiesbefore taxation for the year ended 30 September 2000 was £35.7 million compared to £4.5 million for the year ended 30 September 1999.

Acquisition of Degriftour

On 23 October 2000,lastminute.com plc formallycompleted the acquisition of theentire issued share capital of theDegriftour Group, France’s largeste-travel group. Goodwill arising on the transaction amounted to £58.6 million under UK GAAP andis being amortised on a straight-line basis over four years. Effectivecontrol of Degriftour passed fromthe vendors to lastminute.com plcon 30 September 2000 andaccordingly the consolidatedbalance sheet of lastminute.complc and its subsidiaries as at 30 September 2000 incorporatesthe assets and liabilities of theDegriftour Group of companies.

The year ended 30 September2000 includes a share of the costsassociated with the Australian JointVenture company, lastminute.comAustralia Pty Limited.

Net cash balance

As at 30 September 2000, beforeaccounting for the cash payable in respect of the acquisition of theDegriftour Group, the net cashposition of the Group stood at £103.7 million compared to £4.3 million as at 30 September1999. The increase in the net cashposition was due to funds receivedfrom the private placement of theCompany’s shares in November1999 and February 2000 as well as funds received from the sale of shares in the Company’s initialpublic offering in March 2000. Cashis placed on deposit with AAA/AArated credit institutions and earnscompetitive rates of interest.

Loss per share

The loss per share amount hasbeen based on the weightedaverage number of ordinary sharesin issue during the year, adjustedfor the effects of the 284 for 1bonus issue on 15 February 2000.

Julian Culhane

Chief Financial Officer

Total transaction value (000s/£)

IPO - 21 March 00

Q4 99 Q1 00 Q2 00 Q4 00

1,803

4,255

7,162

9,585

13,187

Q3 00

14

Pierre Alzon

Pierre was appointed an ExecutiveDirector of the Company inOctober 2000. He has been at theDegriftour Group since April 1992and was promoted to GroupGeneral Manager in 1995.Previously Pierre was anindependent consultant andspecialised in the administrationand building of software solutions.He was also a consultant atCabinet Mazars and a consultantmanager at Cabinet Constantin.

Pieter Bouw

Pieter has been a Non-ExecutiveDirector of the Company sinceNovember 1998 and served as its Chairman until October 2000.He has been a Managing Directorof Invest BV, an investmentcompany, since 1997. PreviouslyPieter was President and CEO of KLM Royal Dutch Airlines from1991 to 1997. He also serves on the Supervisory Boards of De Nederlandsche Bank N.V.,Nederlandsche Spoorwegen N.V.,Getronics N.V., Océ N.V., VopakN.V., CSM N.V and was, until hisresignation in August 1997, also aDirector of IATA.14

Martha Lane Fox

Martha Lane Fox is Co-founder of lastminute.com and has been its Chief Operating Officer andan Executive Director since itsinception in April 1998. From May 1997 to April 1998 she wasBusiness Development Manager at Carlton Communications. Prior to that she was an Associateat Spectrum Strategy Consultants,where she specialised in paytelevision and managed teams in both the UK and Asia.

Directors’ CVs

Allan Leighton

Allan was appointed Chairman and Non-Executive Director of theCompany in October 2000. Hepreviously served as President and Chief Executive Officer ofWal-Mart Europe. He worked at Asda Group from June 1992 toNovember 2000 and was GroupChief Executive from 1996 to 2000.Allan is also the Chairman of BritishHome Stores Limited and of WilsonConnolly Holdings PLC, DeputyChairman of Leeds Sporting PLC,and a Non-Executive Director ofDyson Appliances Limited andBSkyB PLC.

Brent Hoberman

Brent is the Co-founder, Chief Executive Officer and an Executive Director oflastminute.com. Previously Brent was a Senior Associate at Spectrum Strategy Consultants,and held the business developmentresponsibilities at Line One, aninternet service provider owned by News International, BritishTelecom and United News &Media. Brent was also part of the founding team of the UKauction site QXL.com.

1515

Tom Teichman

Tom is the Chairman and Founderof New Media Spark and of New Media Investors and a Non-Executive Director of EO.net andseveral other high-tech businesses.Tom was a founder of M.A.I.D.(The Dialog Corporation) in 1985and became Vice-Chairman. Hehas 25 years investment bankingexperience with Bankers Trust,Credit Suisse First Boston,Mitsubishi and Nesbitt Burns. He has raised over £2 billion indebt, equity and convertibles andbacked many successful earlystage e-businesses includingArgonaut and ARC.

Brian Collie

Brian has been a Non-ExecutiveDirector of lastminute.com sinceFebruary 2000. He is the GroupRetail Director on the Board of BAA plc and has served in thatposition since 1997, responsible all commercial income at BAA’sairports across the world. Brian is a Director of the European Travel Research Foundation and a founding Director of the BritishInstitute of Retailing. He is also amember of the Board of Directorsof BAA McArthur Glen andChairman of World Duty Free plc.

Laurent Laffy

Laurent has served as a Non-Executive Director oflastminute.com since June 1998.From June 1998 to 1 November1998, Laurent served as Chairman.He is a partner in Arts AllianceAdvisors, which acts as investmentadviser to Cheetah InternationalInvestment Limited. Laurent serveson the Boards of Château-OnlineSA, Venture Capital Report Limited,KeeBoo Corporation, Servista.comLimited and Maastricht MultimediaLuxembourg.

Linda Fayne Levinson

Linda has been a Partner at GRP, Inc.,a venture capital firm, since 1997.Earlier in her career, her experienceincludes: McKinsey & Company,where she was the first womanelected Partner; American ExpressTRS Co., Inc. where she was aSenior Vice President responsiblefor the leisure travel business; andWings Partners, where she playeda key role in taking NorthwestAirlines private. Linda currently sits on the boards of Administaff,CyberSource, GoTo.com, Jacobs Engineering Group, NCRCorporation and 24/7 Media.

Robert Collier

Robert has been the Vice-Chairman and a Non-ExecutiveDirector of the Company sinceOctober 1998. Since 1998 Roberthas been a principal in RBCAssociates. He previously servedas a Vice-Chairman of SaisonOverseas, the former parentcompany of Intercontinental Hotels Group, after serving as Joint Managing Director ofIntercontinental Hotels Group from1994 to 1997. He also serves on theBoards of Directors of the followingcompanies: All Hotels/ArticulateSolutions, Bristol Golf Club Limited,Corporate Insignia Limited,easiSolutions.com, Green Globe,Loftus Road plc, My Hotels Limited,Pegasus Solutions Inc. and WaspsRugby Football Club Limited.

Directors’report

The Directors present their reportand the financial statements for theyear ended 30 September 2000.

Principal activities and

development

The Group offers consumers lastminute opportunities to acquireairline tickets, hotel rooms,package holidays, entertainmenttickets, restaurant reservations,speciality services, gifts, auctionsand car hire in the UK, France,Germany, Italy, Spain, Sweden,The Netherlands and Australia.

Total transaction value andturnover increased significantlyduring the year and the Directorsbelieve that the trend will continue.

Since year end lastminute.com hascompleted the acquisition of theDegriftour Group, France’s largeste-travel group, makinglastminute.com one of the leadinge-commerce companies inEurope. The acquisition enhanceslastminute.com’s key performancemetrics and accelerates theachievement of positive cash flow.

The Directors intend to continue to grow the business and haveidentified a number of criticalinitiatives, which they intend to

undertake in order to enhancelastminute.com’s market positioneven further. Broadly theseinitiatives focus on drivingconversion, managing costsacross all areas and improving theoperating margins. Furthermorethe Directors are concentrating on the development of newdistribution channels as well as the continued enhancement of the technology architecture.

A more detailed review of thebusiness of the Company and itssubsidiary undertakings and anindication of likely futuredevelopments are contained inthe Chairman’s letter on page 9,the Chief Executives’ review onpages 10 and 11 and the Financialreview on pages 12 and 13.

Proposed dividends

The Directors do not recommendthe payment of a dividend. This is consistent with theintentions of the Group set out in the Listing Particulars relating to lastminute.com plc dated 1 March 2000.

Events since the balance

sheet date

Events since the balance sheetdate are as disclosed in note 25 of the Notes to the financialstatements.

Directors and their interests

The names of the Directors at thedate of this report, together withbrief biographical details, are setout on pages 14 and 15. With theexception of Messrs Leighton andAlzon, all Directors who held officeduring the period were appointedto the Board prior to the initial publicoffering of lastminute.com plc.

The interests of Directors in theshare capital of the Group and in share options are given in theRemuneration report on pages 22 to 24.

Substantial shareholdings

As at 8 January 2001, the Directorswere aware of the followinginterests (within the meaning of Part IV of the Companies Act1985), other than interests held by Directors, which will representthree per cent or more of theissued share capital of theCompany. At that date, theCompany had not been notified,pursuant to the provisions of theCompanies Act 1985, of anyfurther interests.

16

Number ofOrdinary Shares %

Arts Alliance 25,738,065 15.1The Reverse Family 15,366,000 9.0Global Retail Partners 13,371,280 7.9Innovacom 7,595,820 4.5BAA plc 6,122,655 3.6Intel Corporation 5,587,710 3.3Venture Partners Multimedia 5,103,210 3.0

17

Employees

lastminute.com’s human resourcesstrategy is to attract and retaintalented, high-calibre employeesfocused on achieving excellentresults. The Directors believe thatlastminute.com’s market profileand remuneration strategy will help to achieve this aim. The involvement of employees in the Group’s performance is encouraged through theemployee share option schemesas disclosed in note 4 of the Notesto the financial statements.

The Directors recognise the needfor strong employee relations as a foundation for businessperformance and place enormousimportance on the contributions of its employees. Employees arekept informed of developments in the Group by way of regular

meetings, the Group intranet ‘TheMatrix’, the employee newsletter‘fastminute’, together with thedistribution of the Annual Report.

It is lastminute.com’s policy toconsider fully applications foremployment by disabled persons,bearing in mind the aptitude of theapplicant concerned. In the eventof a member of staff becomingdisabled, every effort would bemade to ensure their continuedemployment.

Suppliers payment policy

The Group agrees payment termsand conditions with individualsuppliers which vary according tothe commercial relationship andthe terms of the agreementsreached. It is the Group’s policythat payments to suppliers aremade in accordance with thoseterms and conditions agreedbetween the Group and itssuppliers, provided that all tradingterms and conditions have beencomplied with.

At 30 September 2000, the Grouphad an average of 34 daysoutstanding in trade creditors,excluding Degriftour.

Political and charitable

contributions

The Group made total charitabledonations of £6,014 in the year and no political donations.

Notice of meeting

The notice of the Annual GeneralMeeting is set out on pages 51 and52 of the full Annual Report. Thenotice contains the date, time andlocation of the Annual GeneralMeeting together with details ofthe business to be conducted atthe meeting.

Auditors

A Resolution to reappoint Ernst & Young as Auditors will be put to the members at the AnnualGeneral Meeting.

By order of the Board

Hackwood Secretaries LimitedCompany Secretary

18

Statement of Directors’responsibilitiesin respect ofthe financialstatements

Company law requires theDirectors to prepare financialstatements for each financial yearwhich give a true and fair view ofthe state of affairs of the Companyand the Group, and of the profit orloss of the Group for that period. In preparing those financialstatements, the Directors arerequired to:

– select suitable accountingpolicies and then apply themconsistently;

– make judgements and estimatesthat are reasonable and prudent;

– state whether applicableaccounting standards have been followed, subject to anymaterial departures disclosed and explained in the financialstatements.

The Directors are responsible for keeping proper accountingrecords which disclose withreasonable accuracy at any timethe financial position of the Groupand enable them to ensure that the financial statementscomply with the Companies Act1985. They are also responsible for safeguarding the assets of the Group and hence for takingreasonable steps for theprevention and detection of fraud and other irregularities.

This statement describes how theprinciples of corporate governanceare applied to the Company andthe Company’s compliance withthe code provisions set out insection 1 of the Combined Codeappended to the Listing Rules ofthe Financial Services Authority.

Prior to listing, the Company wasnot subject to the listing rules ofthe Financial Services Authorityand did not comply with theCombined Code during this time.However, during this period, inreadiness for listing, the Companyestablished the necessaryprocedures to enable it to complywith the relevant provisions of the code.

The Company can confirm that,since the listing of its shares on the London Stock Exchange and Nasdaq National Market on 21 March 2000, it has substantiallycomplied with the Provisions of the Code of Best Practice.Explanations of non-complianceare described below.

The Board of Directors

As at 30 September 2000 the Boardcomprised the Independent Non-Executive Chairman, the ChiefExecutive, the Chief OperatingOfficer and five other Non-Executive Directors who meetregularly throughout the year.

Subsequent to the year end, Allan Leighton was appointed as Chairman and Non-ExecutiveDirector to the Board, replacing Mr Bouw. Mr Bouw remains as aNon-Executive Director of theBoard. The Board considers Mr Leighton to be an IndependentNon-Executive Director.

On 23 October 2000, as part of the acquisition of the DegriftourGroup, Pierre Alzon wasappointed as an ExecutiveDirector to the Board. Mr Alzonwas Chief Executive Officer ofthe Degriftour Group prior to itsacquisition by the Company.

Prior to each Board meeting,Directors are sent an agenda anda full set of Board papers for eachagenda item to be discussed atthe meeting. Additional informationis provided as appropriate. All the major decisions affecting theGroup are made by the Board,including those relating tocorporate strategy, operatingpolicy, Board appointments andinvestment decisions.

The composition and effectivenessof the Board is reviewed regularly,particularly with regard to the skills and experience required ofthe Executive and Non-ExecutiveDirectors in relation to theCompany’s business.

The Company does not complywith provision A.3.2. of theCombined Code as the majority ofNon-Executive Directors (MessrsLaffy, Collie and Teichman and Ms Levinson) have an interest in the ordinary share capital of theCompany as they are affiliated to major shareholders.

Mr Bouw and Mr Collier areconsidered by the Board to beIndependent Non-ExecutiveDirectors and Mr Collier isconsidered the senior IndependentNon-Executive Director.

The Company does not comply withprovision B.2.2 of the CombinedCode as the remunerationcommittee is chaired by MsLevinson and does not thereforeexclusively consist of IndependentNon-Executive Directors.

All Directors have access to theadvice and services of theCompany Secretary, andindependent professional advice,if required. Mr Hoberman and Ms Lane Fox received appropriatetraining, as this was their firstappointment to the Board of alisted company, in accordancewith provision A.1.6. of theCombined Code.

The Company does not complywith provision B.1.4. of theCombined Code as theremuneration packages of theExecutive Directors do not containsignificant performance-relatedelements (see Remunerationreport).

The Company does not complywith provision D.3.1. of theCombined Code as the auditcommittee does not consist of a majority of Independent Non-Executive Directors.

In the opinion of the Board, theseare necessary departures from thecode, given the size anddevelopment stage of the Group.The Board is working towards full compliance.

19

Corporategovernance

20

The following committees wereset up on 15 February 2000, anddeal with the specific aspects of the Group’s affairs.

The audit committee ensuresthat an objective and professionalrelationship is maintained with theexternal Auditors. Mr Collierchairs the committee and its other members are Messrs Bouwand Laffy and Ms Levinson.Meetings are also attended, by invitation, by the Chief Financial Officer.

The audit committee is responsiblefor reviewing a wide range ofmatters including the quarterlyresults and annual financialstatements before their submissionto the Board and monitoring theinvolvement of our Auditors in thatprocess, focusing particularly oncompliance with legal requirementsand accounting standards and therequirements of the FinancialServices Authority, the NasdaqNational Market and the Securitiesand Exchange Commission.

The nomination committee meetsas necessary and is responsiblefor nominating candidates to fillBoard vacancies and for makingrecommendations on Boardcomposition and balance. Duringthe year the nomination committeecomprised Messrs Laffy andTeichman and Ms Levinson underthe chairmanship of Mr Bouw.

Ms Levinson chairs the

remuneration committee and its other members are MessrsBouw and Collier. This committeedetermines, within agreed termsof reference, our policy oncompensation of ExecutiveOfficers and specific remunerationpackages for each of theExecutive Directors, includingpension rights. The Remunerationreport is on pages 22 to 24.

All Directors are subject to re-election at least every three years.

Relationship with shareholders

Communications with shareholdersare given high priority. The ChiefExecutives’ review and Financialreview on pages 10 to 13 includesa detailed review of the businessand future developments. There isregular dialogue with institutionalshareholders includingpresentations after the Company’spreliminary announcement of theyear end results and at the halfyear as applicable.

The Board recognises that not allthe Company’s private investorshave regular access to marketinformation.

The Board will use the AnnualGeneral Meeting to communicatewith private and institutionalinvestors and welcomes theirparticipation. The Chairperson of the audit, remuneration andnomination committees will normallyattend the Annual General Meeting.Details of Resolutions to beproposed at the Annual GeneralMeeting on 14 February 2001 canbe found in the Notice of meetingon pages 51 and 52.

In addition the Company operatesan Investor Relations website,www.lastminute.com/ir, on which itpublishes its Annual Report as wellas all quarterly earnings releases,general press releases and othersuch information concerning the Company’s business anddevelopment.

Internal control

For the year ended 30 September2000, the Group adopted thetransitional arrangements forcompliance with the internalcontrol requirements of theCombined Code, set out in theletter from the London StockExchange to listed companies in September 1999. The Boardexpects to have in place by 30 September 2001, all formalprocedures required for fullcompliance with the guidance“Internal control: Guidance forDirectors on the Combined Code”.

Corporategovernance(continued)

21

Internal financial control

The Directors are responsible forthe Group’s system of internalfinancial control and alsoreviewing its effectiveness. Anysystem of financial control canprovide only reasonable and notabsolute assurance againstmaterial misstatement or loss.

The main elements of the internalfinancial control system are:

– The Group’s organisationalstructure has clear lines ofresponsibility, which arecommunicated throughout the Group.

– The Executive Managementteam reviews the keyperformance indicators on aweekly basis. In addition, theGroup operates a budgeting and financial reporting system.The budgets are updated on aquarterly basis; performance ismeasured against budget withvariances reported to the Board.

– Integrity and competence ofpersonnel is ensured through high recruitment standards andsubsequent training courses.

– The Board is responsible foridentifying the major businessrisks faced by the Group and fordetermining the appropriate courseof action to manage those risks.

– A budgetary process andauthorisation levels regulateexpenditure. For expenditurebeyond specified levels, writtenproposals, including proposals for product developmentprogrammes, are submitted for review and authorisation.

– The audit committee monitorsthe controls, which are in force,and any perceived gaps in thecontrol environment. The auditcommittee also considers anddetermines relevant action inrespect of any control issuesraised by the external Auditors.

The audit committee has reviewedthe effectiveness of the system of internal financial control as it operated during the year andreported its conclusions to the Board.

Going concern

The Directors fully appreciate the importance of sufficient cashresources in the industry that theGroup operates in. This, togetherwith a lack of borrowing facilities,has meant that throughout the lifeof the Company significantresource has been expended on cash flow forecasting. TheDirectors are satisfied that theCompany and the Group haveadequate resources to continue in operational existence for theforeseeable future. Accordinglythey consider it appropriate toadopt the going concern basis inpreparing the financial statements.

22

Ms Levinson chairs theremuneration committee and its other members are Messrs Bouwand Collier. The committee wasformed in February 2000. It is thecommittee’s responsibility, withinagreed terms of reference, to makerecommendations to the Board inrespect of the remuneration policyfor Executive Officers and specificremuneration packages for eachof the Executive Directors, includingpension rights. The remunerationcommittee also sets shareallocations and performanceconditions under the Company’sshare option plans.

The Group’s remuneration policyfor Executive Directors is to:

– have regard to the Directors’experience, responsibility, and thenature and complexity of theirwork in order to pay a competitivesalary that attracts and retainsDirectors of high calibre;

– link individual remunerationpackages to the Group’s long termperformance through the award ofshare options, details of which areprovided below;

– provide pension contributions to defined contribution pensionschemes, and

– provide employment relatedbenefits in kind.

Basic salary and benefits in kind

Brent Hoberman and Martha LaneFox have service contracts withLast Minute Network Limited each,dated 24 February 2000. In thesecontracts they were granted asalary increase following theCompany’s initial public offering.No other Director received anincrease in basic salary. Benefitsprincipally comprise life insurance,permanent health and privatemedical insurance. Their serviceagreements can be terminatedwith immediate effect by making a payment in lieu of notice based on the salary that would have beenpayable during the notice period,which is two months.

No part of the remunerationpackage is performance relatedwith the exception of a bonus thatmay be payable at the discretionof the remuneration committee. As such the Company does notcomply with provision B.1.4 of the code. However, given theirrespective significant share andoptions holdings, their interestsare aligned with the othershareholders.

Subsequent to the year end, PierreAlzon, former Managing Directorof the Degriftour Group, wasappointed to the Board as anExecutive Director. Mr Alzon has a service contract with Voyagessur Mesures, a company within theDegriftour Group, dated 23 October2000. This employment agreementis terminable on six months’ noticeby Voyages sur Mesures and threemonths’ notice by Pierre JacquesAlzon. As part of his remunerationpackage he is eligible to aperformance related bonus

payment for the financial yearending 30 September 2001, whichis subject to meeting or exceedingan agreed net revenue target setfor the business.

Pensions

During part of the year ended 30 September 2000, Martha LaneFox was a member of the Group’s defined contributionpension scheme. As part of herremuneration package £500 was contributed to the Scheme.She has since left the scheme.Currently, there are no pensionarrangements for the Executiveand Non-Executive Directors.

Share options

The Company currently operatesfour employee share schemes.Options are viewed as an integralpart of the total remunerationpackage for employees. A moredetailed review of the Company’sshare schemes is contained innote 4 of the Notes to the financialstatements on page 33.

Non-Executive Directors

All Non-Executive Directors haveletters of appointment from theCompany. Messrs Bouw and Collierreceive fees equal to £500 permonth. Messrs Collie, Laffy andTeichman and Ms Levinsonreceive reimbursement forreasonable expenses.

Subsequent to the year end, AllanLeighton was appointed to theBoard as Non-Executive Chairman.He also receives reimbursementfor reasonable expenses.

Remunerationreport

23

Directors’ remuneration and interests

The remuneration of the Directors was as follows:

We do not compensate our other Directors for their services on the Board of Directors or any committee of theBoard of Directors.

Total remuneration for 1999 above includes £6,300 of Company contributions to the Group’s defined contributionpension scheme on behalf of Martha Lane Fox. There were no pension contributions for any other Director in 1999.

The Directors’ interests in Ordinary Shares were as follows (the 1999 comparatives have been restated for theeffects of the 284 for 1 Bonus issue on 15 February 2000).

30 September 2000 1 October 1999No. No.

Robert Collier 13,157 –Brent Hoberman 15,708,860 16,929,000Martha Lane Fox 10,182,425 11,024,655Brian Collie 13,155 –Laurent Laffy1 25,738,065 21,909,660Linda Fayne Levinson2 13,371,280 11,623,440Thomas Teichman3 1,750,700 1,879,005

1 Arts Alliance Advisers is the investment advisor to Cheetah International Investments Limited. Mr Laffy is a partner in Arts AllianceAdvisers and has a beneficial interest in 45,600 of the Ordinary Shares held by Cheetah International Investments Limited.

2 Ms Levinson is a partner of Global Retail Partners, L.P. and its affiliates, which have an interest in 13,371,280 Ordinary Shares. Ms Levinson disclaims beneficial ownership of these shares, except for her proportional interest therein, if any.

3 Comprises 1,629,005 shares owned directly by Mr Teichman and 121,695 shares owned by NewMedia Investors Limited. Mr Teichman is the Chairman and founder of NewMedia Investors Limited and owns 57.6 per cent of the outstanding shares inNewMedia Investors Limited. Therefore he shares beneficial ownership of the shares held by NewMedia Investors Limited.

Basic salary Total Totaland fees Pensions Benefits 2000 1999

£ £ £ £ £

Executive Directors:

Brent Hoberman 133,058 – 3,122 136,180 55,783Martha Lane Fox 110,600 500 3,331 114,431 51,750

Non-Executive Directors:

Pieter Bouw 6,000 – – 6,000 5,500Robert Collier 6,000 – – 6,000 5,500

The options were granted in accordance with the terms and conditions laid out in the 1998 UnapprovedExecutive Share Option Scheme and are exercisable between 11 December 2000 and 1 November 2008.

The market price of the Company’s shares on 30 September 2000 was 139p. Since the admission to the OfficialList of the London Stock Exchange and Nasdaq National Market on 21 March 2000, the high and low share pricesduring the year were 333.5p and 122.5p.

On 8 January 2001, Mr Leighton was awarded one million share options at an exercise price of 137.5p as feesfor services over the term of his appointment, and Pierre Alzon was awarded 84,995 share options at an exerciseprice of 119.5p, the mid-market closing price as at 31 October 2000.

There have been no changes in the Directors’ interests in share options since the balance sheet date.

24

There have been no changes in the Directors’ shareholdings since the balance sheet date.

However, on 11 October 2000, Allan Leighton purchased 70,000 shares in the market for 135.21p per share. On 23 October 2000, Pierre Alzon was allotted 1,983,835 shares for £1.39 per share as part of the consideration for the acquisition of the Degriftour Group. On 8 December 2000, Brian Collie purchased 6,000 shares in themarket for 80p per share.

Interests in options

The Directors’ interests in share options over Ordinary Shares were as follows (the 1999 comparatives havebeen restated for the effects of the 284 for 1 bonus issue on 15 February 2000).

At Granted Exercised Total 30 Exercise 1 October during during September

price 1999 year year 2000pence No. No. No. No.

Executive Directors:

Brent Hoberman 2.31 151,335 – – 151,335

Martha Lane Fox 2.31 129,675 – – 129,675

Non-Executive Directors:

Pieter Bouw 2.31 641,250 – – 641,250

Robert Collier 2.31 360,265 – – 360,265

Remunerationreport(continued)

25

We have audited the financialstatements on pages 26 to 50,which have been prepared underthe historical cost convention andthe accounting policies set out onpages 29 to 31.

Respective responsibilities

of Directors and Auditors

The Directors are responsible for preparing the Annual Report. As described on page 18 thisincludes responsibility forpreparing the financial statementsin accordance with applicableUnited Kingdom law andaccounting standards. Ourresponsibilities, as independentauditors, are established in theUnited Kingdom by Statute, theAuditing Practices Board, theListing Rules of the FinancialServices Authority and by ourprofession’s ethical guidance.

We report to you our opinion as towhether the financial statementsgive a true and fair view and areproperly prepared in accordancewith the Companies Act. We alsoreport to you if, in our opinion, theDirectors’ report is not consistentwith the financial statements, if theCompany has not kept properaccounting records, if we have notreceived all the information andexplanations we require for ouraudit, or if the informationspecified by law or the ListingRules regarding Directors’remuneration and transactions with the Group is not disclosed.

We review whether the Corporategovernance statement on pages19 to 21 reflects the Company’scompliance with the sevenprovisions of the Combined Codespecified for our review by theListing Rules, and we report if itdoes not. We are not required toconsider whether the Board’sstatements on internal controlcover all risk and controls, or forman opinion on the effectiveness of either the Group’s corporategovernance procedures or its riskand control procedures.

We read the other informationcontained in the Annual Report,including the corporate governancestatement, and consider whether it is consistent with the auditedfinancial statements. We considerthe implications for our report ifwe become aware of any apparentmisstatements or materialinconsistencies with the financialstatements.

Basis of audit opinion

We conducted our audit inaccordance with AuditingStandards issued by the AuditingPractices Board. An audit includesexamination, on a test basis, ofevidence relevant to the amountsand disclosures in the financialstatements. It also includes anassessment of the significantestimates and judgements madeby the Directors in the preparationof the financial statements, and ofwhether the accounting policiesare appropriate to the Group’scircumstances, consistentlyapplied and adequately disclosed.

We planned and performed our audit so as to obtain all theinformation and explanations whichwe considered necessary in order to provide us with sufficientevidence to give reasonableassurance that the financialstatements are free from materialmisstatement, whether caused byfraud, other irregularity or error. Informing our opinion we alsoevaluated the overall adequacy ofthe presentation of information in the financial statements.

Opinion

In our opinion the financialstatements give a true and fairview of the state of affairs of theGroup and the Company as at 30 September 2000 and of the lossof the Group for the year thenended and have been properlyprepared in accordance with theCompanies Act 1985.

Ernst & YoungRegistered AuditorLondon

8 January 2001

to the shareholders of lastminute.com plc

Report of the Auditors

Consolidatedprofit and loss account

for the year ended 30 September 2000

26

Notes £000 Year ended 30 September 2000 Year ended 30 September 1999

2 Total transaction value1 34,189 2,647

2 Turnover

Group turnover 3,740 195Cost of sales 401 18

Gross profit 3,339 177

Operating costsProduct development 10,353 1,423Sales and marketing 20,711 1,597General and administration 11,792 1,736

Total operating costs (42,856) (4,756)Other operating income 66 12

3 Group operating loss (39,451) (4,567)Share of operating loss in joint venture(net of amortisation of negative goodwill) (33) –

Total operating loss: group and share of joint venture (39,484) (4,567)

6 Interest receivable 3,777 687 Interest payable and similar charges (41) (1)

Loss on ordinary activities before taxation (35,748) (4,500)8 Tax on loss on ordinary activities – –

Loss for the financial year (35,748) (4,500)

Appropriations

10 Non equity: Preference Shares – 40

23 Transfer from reserves (35,748) (4,540)

11 Loss per share – basic and diluted (36.35)p (13.51)p

1 Total transaction value does not represent the Group’s statutory turnover.

Statement of totalrecognisedgains andlosses

for the year ended 30 September 2000

£000 Year ended 30 September 2000 Year ended 30 September 1999

Loss for the year (35,748) (4,500)

Foreign currency translation difference 22 –

Total recognised gains and losses for the year (35,726) (4,500)

Balancesheets

at 30 September 2000

27

Group Group CompanyNotes £000 2000 1999 2000

Fixed assets

12 Intangible assets 58,636 – –

13 Tangible assets 13,972 403 –

14 Investments – – 1,370

14 – joint ventures – gross assets 230 – –

– gross liabilities (23) – –

– negative goodwill (246) – –

(39) – –

72,569 403 1,370

Current assets

15 Stocks 52 1 –

16 Debtors 10,543 743 116,786

Cash at bank and in hand 103,688 4,319 –

114,283 5,063 116,786

17 Creditors: amounts falling due within one year 38,301 2,289 –

Net current assets 75,982 2,774 116,786

Total assets less current liabilities 148,551 3,177 118,156

18 Creditors: amounts falling due after more than one year 6,031 – –

20 Provisions for liabilities and charges 1,410 614 –

Net assets 141,110 2,563 118,156

Capital and reserves

22 Called up share capital 1,505 3 1,505

23 Share premium account 112,923 – 112,923

23 Shares to be issued 197 – 197

23 Profit and loss account (40,464) (4,826) (1,672)

23 Other reserves 5,203 662 5,203

23 Merger reserve 61,746 6,724 –

Shareholders’ funds:

Equity 141,110 (3,899) –

Non-equity – 6,462 –

23 Total shareholders’ funds 141,110 2,563 118,156

These financial statements were approved by the Board of Directors on 8 January 2001.

Brent Hoberman

Director

Consolidatedstatement of cash flows

for the year ended 30 September 2000

28

Year ended Year ended30 September 30 September

Notes £000 2000 1999

24(a) Net cash outflow from operating activities (34,652) (1,904)

Returns on investments and servicing of finance

Interest received 3,777 68Interest paid (41) (1)

3,736 67

Capital expenditure and financial investment

Payments to acquire tangible fixed assets (12,289) (408)

Acquisitions

14 Cash acquired with subsidiary 747 –

Net cash outflow before management of liquid resources and financing (42,458) (2,245)

Management of liquid resources

24(c) Increase in short term deposits (2,547) –

Financing

Issue of share capital 153,875 5,776Costs associated with issue of share capital (11,978) –Bridge loan received – 350

24(b) Increase in cash 96,892 3,881

Reconciliationof cash flow to movement in net funds

Year ended Year ended30 September 30 September

Notes £000 2000 1999

Movement in cash 96,892 3,88124(c) Cash outflow from short term deposits 2,547 –

99,439 3,88124(b) Net funds at the beginning of the year 4,249 368

24(b) Net funds at the end of the year 103,688 4,249

29

1 Accounting policies

Basis of preparation

The financial statements are prepared under the historical cost convention and in accordance with applicableUnited Kingdom accounting standards.

Basis of consolidation

The Company was incorporated as a private limited company on 1 October 1999 as Vibetron Limited. On 15 February 2000, the Company re-registered as a public limited company and changed its name to lastminute.com plc.

The Group financial statements consolidate the financial statements of the Company and its subsidiaryundertakings, comprising mainly Last Minute Network Limited and the Degriftour Group, drawn up to 30September 2000. No separate profit and loss account is presented for lastminute.com plc as permitted by section 230 of the Companies Act 1985.

On 15 February 2000 following a Group reconstruction, there was a share for share exchange betweenlastminute.com plc and Last Minute Network Limited.

The Group reconstruction has been accounted for in accordance with the principles of merger accounting set out in Financial Reporting Standard No. 6 (FRS 6) and Schedule 4A to the Companies Act 1985. The financialstatements are therefore presented as if Last Minute Network Limited and its subsidiaries had been ownedand controlled by the Company throughout the periods ended 30 September 1999 and 30 September 2000.

The comparative amounts in the Group financial statements are based on those reported in the Group financialstatements of Last Minute Network Limited for the year ended 30 September 1999.

lastminute.com plc was incorporated on 1 October 1999 and therefore the amounts for the year ended 30 September 1999 do not represent the statutory comparatives of the Group.

The Degriftour Group of companies (Revalfi S.A.R.L., Voyages Sur Mesures S.A. and Activnet S.A.R.L.) havebeen included in the Group financial statements using the acquisition method of accounting. The purchaseconsideration has been allocated to assets and liabilities on the basis of fair value at the date of acquisition.The date of acquisition was 30 September 2000. Accordingly, the Group profit and loss account and statementof cash flows do not include any results of the Degriftour Group for the year ended 30 September 2000.

Entities in which the Group holds an interest on a long term basis and which are jointly controlled by the Group and one or more other venturers, under a contractual arrangement, are treated as joint ventures. In the Groupfinancial statements, joint ventures are accounted for using the gross equity method.

Total transaction value

Total transaction value, which is stated net of value added tax and associated taxes, does not represent theGroup’s statutory turnover.

In the majority of transactions, where the Group acts as agent or cash collector, total transaction valuerepresents the price at which goods or services have been sold across the website.

In other cases, for example the reservation of restaurants tables, a flat fee is earned, irrespective of the value of goods or services provided. In such cases total transaction value represents the flat fee commission earned.

In the small number of cases where the Group acts as principal, total transaction value represents the price at which goods or services have been sold across the website.

Notes to thefinancialstatements

at 30 September 2000

Notes to thefinancialstatements(continued)

at 30 September 2000

30

1 Accounting policies (continued)Turnover

In the majority of cases, the Group does not take ownership of the products or services being sold and acts as agent, receiving a commission from the supplier of the products or services being sold. In these cases,turnover represents commission earned less amounts due or paid on any commission shared.

In a limited number of cases, the Group acts as principal and purchases the products or services for resale.Where the Group acts as principal, turnover represents the price at which the products or services have beensold across the website.

Turnover is recognised once charges to the customer’s credit card have been made, except for travel as noted below, and is stated exclusive of value added tax and associated taxes.

In previous years turnover related to travel business has been recognised on the date of the booking by thecustomer. The nature of the business is such that the booking date is close enough to the departure date forthere to be no significant difference between recognition on the booking date rather than on the departuredate which is the industry norm.

As a result of the acquisition of the Degriftour Group, which has historically recognised revenue on the date of departure, the Directors believe that, for consistency, all revenue related to travel business should berecognised on the date of departure. The effect of this change in policy for the year ended 30 September 2000results in total transaction value being £500,000 less and turnover being £50,000 less than would have beenreported under the previous policy. No adjustment has been made to the 1999 figures due to the immaterialityof the adjustment required.

Product development costs

Product development costs include expenses incurred by the Group to manage, monitor and operate thewebsite and databases. Costs are expensed as incurred.

Costs incurred in developing software for internal use, which have measurable economic viability, arecapitalised when the software reaches the application development stage and are amortised over theexpected useful life of the software. Costs incurred in developing and enhancing the website are capitalisedas incurred, if the measurable economic viability of the expenditure can be determined, and are amortisedover the expected useful life of the website.

Advertising costs

The Group expenses the cost of advertising, at the time production occurs, and expenses the cost ofcommunicating advertising in the period in which the advertising space or airtime is used.

Deferred taxation

Provision is made or recovery anticipated in respect of all timing differences likely to reverse in theforeseeable future without being replaced at rates at which the liability or the asset is expected to crystallise.

Foreign currency translation

Transaction revenues and expenses in a foreign currency are recorded at the average rate of exchange forthe month during which the transaction or expense occurs. Monetary assets and liabilities denominated inforeign currencies are translated at the rate of exchange at the balance sheet date.

The results of overseas operations are translated into pounds sterling at weighted average rates of exchangefor the year. Exchange differences arising from the retranslation of opening net assets and results fromoperations denominated in foreign currencies to period end rates are taken direct to shareholders’ funds. All other exchange differences are charged or credited to income.

The Group uses forward foreign currency contracts to reduce exposure to foreign exchange risk. Instrumentsare used to hedge a committed, or probable, future transaction, and are deferred until the transaction occurs.

It is not the Group’s policy to enter into any other derivative instruments.

31

1 Accounting policies (continued)Intangible fixed assets

Goodwill arising on acquisitions is capitalised, classified as an asset on the balance sheet and amortised on a straight-line basis over its useful economic life subject to a maximum life of 20 years. It is reviewed forimpairment at the end of the first full financial year following the acquisition and in other periods if events orchanges in circumstances indicate that the carrying value may not be recovered.

Negative goodwill arising on acquisitions is recognised in the balance sheet. Amounts up to the fair value of non-monetary assets acquired are recognised in the profit and loss account in the years in which the non-monetary assets are expected to be recovered. Amounts in excess of the fair values of the non-monetaryassets acquired are recognised in the years expected to benefit.

Tangible fixed assets

Tangible fixed assets are stated at cost.

Depreciation is provided on all tangible fixed assets at rates calculated to write off their cost, less estimated residualvalue based on prices prevailing at the date of acquisition, over the estimated useful lives of the assets, as follows:

Leasehold improvements – remaining period of the leaseFurniture and office equipment – three yearsComputer systems and equipment – three to five yearsComputer software – two to three years

Repair and maintenance costs are expensed as incurred.

Stocks

Stocks represent entertainment tickets held for resale which are stated at the lower of cost on a first in first out basisand net realisable value.

Customer loyalty scheme

The Group operates a customer loyalty scheme. Customers collect redeemable “Award Minutes” in proportion to the volume of goods purchased and can redeem the “Award Minutes” against offers on the website.

The Group provides for the cost of the expected liability based on the anticipated redemption profile.

Employee share schemes

In accordance with UITF Abstract 17, “Employee Share Schemes”, the difference between the exercise price of share options granted under the Group’s share option schemes and the fair market value of the underlyingOrdinary Shares at the date of grant is charged to the profit and loss account on a straight line basis over theperiod in which the options vest.

In previous periods the Group provided for its National Insurance contributions on options granted on or after 6 April 1999 under its unapproved share option schemes. Provision was made at a rate of 12.2% on the difference between the period end share value and the grant price, being the Group’s best estimate of the ultimate liability at each period end.

With the issue of UITF published Abstract 25, “National Insurance on share option gains”, the Company changedits accounting policy with respect to National Insurance on share options and now provides for the expectedliability over the period of performance. The impact on the year ended 30 September 2000, had the prior policy been used, would have been to increase the charge by £1.3 million. The effect of this on the prior yearwas immaterial.

Notes to thefinancialstatements(continued)

at 30 September 2000

32

2 Turnover and segmental analysis

The Group is engaged in the provision of last minute travel, leisure and gift solutions to its customers via theInternet and other related electronic distribution platforms. All of the Group’s total transaction value andturnover are generated within this segment.

Geographical analysis:Total transaction value Turnover

(by destination (by destination and source) and source)

£000 2000 1999 2000 1999

By geographical areaUnited Kingdom 33,614 2,647 3,085 195Other European Union countries 575 – 655 –

34,189 2,647 3,740 195

Net loss Net assets/(liabilities)£000 2000 1999 2000 1999

By geographical areaUnited Kingdom 29,937 4,396 20,999 (1,520)Other European Union countries 9,514 131 16,462 (236)

39,451 4,527 37,461 (1,756)

Joint venture 33 – (39) –Interest (3,736) (27) – –Interest bearing assets – – 103,688 4,319

35,748 4,500 141,110 2,563

3 Operating loss

This is stated after charging:Year ended Year ended

30 September 30 September£000 2000 1999

Auditors’ remuneration – audit services 172 5– non-audit services1 141 23

Advertising expenditure 8,979 750Depreciation 1,317 33Operating lease rentals – land and buildings 522 63

Non-cash share-based compensation:Product development 1,374 169Sales and marketing 1,604 218General and administration 1,604 285

4,582 672

Provision for Group National Insurance contributions in relationto non-cash share-based compensation:Product development 26 144Sales and marketing 31 198General and administration 31 258

88 600

1 This amount excludes the Ernst & Young fees charged in relation to the Company’s initial public offering and listing on the LondonStock Exchange and Nasdaq National Market and the Company’s acquisition of the Degriftour Group. The total of these feesamounted to £930,000.

33

4 Employee share schemes

The Group has four employee share schemes – the 1998 Unapproved Executive Share Option Scheme, the 1999 Unapproved Executive Share Option Scheme, the 2000 Unapproved Executive Share Option Scheme (the “Unapproved Executive Schemes”), and the 2000 Approved Executive Share Option Scheme. To date, the Group has granted options under all these schemes.

Subject to the satisfaction of any performance condition and the continuous employment of the option holder for at least six months prior to exercise, options are normally exercisable in accordance with a formula set out in the Unapproved Executive Schemes. The formula allows for the gradual vesting of the options over athree-year period from the date of grant. Options which have not been exercised will normally lapse on thetenth anniversary of grant.

Options may also be exercised early in the event of a change in control of the Company. In thesecircumstances, an option will become exercisable for a period of 30 days from the date on which the salebecomes unconditional (following which it will lapse), provided that the optionholder exercises his option on terms that he agrees to sell the shares acquired on the terms offered to him by the acquiring company.

A summary of activity for share options issued is shown below:

19991999 Weighted

Number of averageoptions exercisegranted price

No. p

Options outstanding:Beginning of the year 1,274,805 2.31Granted 9,784,335 6.15Exercised (64,125) 2.31Lapsed – –

End of year 10,995,015 5.74

Range of exercise prices 2.31p to 73.93p

Options exercisable, end of the year – –

Notes to thefinancialstatements(continued)

at 30 September 2000

34

4 Employee share schemes (continued)2000

2000 WeightedNumber of average

options exercisegranted price

No. p

Options outstanding:Beginning of the year 10,995,015 5.74Granted 6,521,721 100.65Exercised (232,604) 6.49Lapsed (491,593) 130.82

End of year 16,792,539 40.64

Range of exercise prices 2.31p to 218p

Options exercisable, end of the year 7,125,473 2.31p to 133.87p

The following table summarises information about the range of exercise prices for share options outstanding at30 September 1999:

Weightedaverage Weighted

remaining averageExercise Number contractual exercise

price outstanding life pricep No. Years p

2.31 8,568,240 9.15 2.3112.05 1,045,950 9.63 12.0517.21 1,257,705 9.70 17.2173.03 123,120 9.86 73.93

10,995,015 9.62 5.74

The following table summarises information about the range of exercise prices for share options outstanding at30 September 2000:

Weightedaverage Weighted

remaining averageExercise Number contractual exercise

price outstanding life pricep No. Years p

2.31 8,244,134 7.85 2.3112.05 1,045,950 8.63 12.0517.21 1,147,140 8.70 17.2136.96 1,774,125 9.13 36.9673.93 719,896 9.03 73.93

106.87 855,000 9.33 106.87133.87 2,066,639 9.34 133.87210.00 22,483 9.39 210.00218.00 15,794 9.50 218.00138.00 290,869 9.58 138.00209.00 43,452 9.67 209.00152.00 418,685 9.75 152.00186.00 44,816 9.83 186.00139.00 63,556 9.91 139.00150.00 40,000 9.92 150.00

16,792,539 8.5 40.64

35

5 Staff costs (including Executive Directors)Year ended Year ended

30 September 30 September£000 2000 1999

Wages and salaries 8,770 668Social security costs 1,154 64Pension contributions 60 20Non-cash share-based compensation 4,582 672Group National Insurance contributions on share options 88 600

14,654 2,024

Details, for each Director, of remuneration, compensation for loss of office, pension entitlements and interestsin share options are set out in the Remuneration report on pages 22 to 24.

The principal Group defined contribution pension scheme is available to UK Executive Directors andemployees only. The Group contributes to a grouped personal pension plan to provide retirement and deathbenefits. The Group currently contributes up to a maximum of 14% of the employees’ basic salary to aninvestment account in the name of the individual employee or pays the cash equivalent direct to the employee.The assets of the plan are separate from those of the Group and are managed by Standard Life.

Most other Group companies have defined contribution pension plans, the forms and benefits of which varywith conditions and practices in the countries concerned.

Non-cash share-based compensation is based on the difference between the exercise price of share optionsgranted and the fair market value of the underlying Ordinary Shares at the date of grant. As the optionsgranted to date vest over three years, the difference is being taken to the profit and loss account as anoperating expense on a straight line basis over the vesting period.

The average monthly number of employees, including Executive Directors during the year comprised:

Year ended Year ended30 September 30 September

No. 2000 1999

Product development 44 15Sales and marketing 182 6General and administration 81 8

307 29

6 Interest receivableYear ended Year ended

30 September 30 September£000 2000 1999

Bank interest 3,777 68

Notes to thefinancialstatements(continued)

at 30 September 2000

36

7 Interest payable and similar chargesYear ended Year ended

30 September 30 September£000 2000 1999

Bank charges 41 1

8 Tax on loss ordinary activities

Year ended Year ended30 September 30 September

£000 2000 1999

UK corporation tax – –

As a result of the loss for the year ended 30 September 2000, no corporation tax charge arose in either period.The Group has UK tax losses of approximately £35.5 million (1999: £3.3 million) available to carry forwardwithout expiry and offset against future trading profits.

9 Loss attributable to members of the parent company

The loss dealt with in the financial statements of the parent company was £1,173,000.

10 Appropriations

Year ended Year ended30 September 30 September

£000 2000 1999

Non Equity:Accrual of Preference Dividends – 40

11 Loss per ordinary share (basic and diluted)

Year ended Year ended30 September 30 September

£000 2000 1999

Earnings used for calculation of loss per share (35,748) (4,540)

No. No.

Weighted average number of Ordinary Shares in issue adjusted for the effects of the 284 for one bonus issue on 15 February 2000, for the calculation of loss per share 98,347,405 33,595,515

Securities that could potentially dilute basic earnings per share in the future include share options and warrants.

37

12 Intangible fixed assets

Group

£000 Goodwill Total

Cost – –At 1 October 1999Acquisition of subsidiary undertaking 58,636 58,636

At 30 September 2000 58,636 58,636

AmortisationAt 1 October 1999Charged during the year – –

At 30 September 2000 – –

Net book valueAt 30 September 2000 58,636 58,636

At 30 September 1999 – –

Goodwill arises on the acquisition of the Degriftour Group (see note 14) and is being amortised evenly over theDirectors’ estimate of its useful economic life of four years.

13 Tangible fixed assets

Group Furniture ComputerLeasehold and office systems and Computer

£000 improvements equipment equipment software Total

Cost At 1 October 1999 – 31 365 40 436Additions 830 1,330 3,147 7,225 12,532Acquisition of subsidiary – 798 1,119 437 2,354

At 30 September 2000 830 2,159 4,631 7,702 15,322

DepreciationAt 1 October 1999 – 3 29 1 33Provided during the year 69 172 674 402 1,317

At 30 September 2000 69 175 703 403 1,350

Net book valueAt 30 September 2000 761 1,984 3,928 7,299 13,972

At 30 September 1999 – 28 336 39 403

Company

The Company does not hold any tangible fixed assets as at 30 September 2000, and has not held any duringthe year.

Notes to thefinancialstatements(continued)

at 30 September 2000

38

14 Investments

Group

Joint VenturesShare of Negative

£000 net assets goodwill Total

At 1 October 1999 – – –Incorporation 288 (288) –Share of loss retained by joint venture (75) – (75)Exchange loss taken to reserves (6) – (6)Amortisation – 42 42

At 30 September 2000 207 (246) (39)

During the year the Group entered into two joint venture agreements with Travel.com.au Limited in Australiaand Tourvest Holdings (Proprietary) Limited in South Africa to set up operations in those countries. The jointventure companies are, respectively, lastminute.com Australia (Pty) Limited and lastminute.com South Africa(Pty) Limited. lastminute.com Australia (Pty) Limited was incorporated in March 2000 and commenced tradingat that time; lastminute.com South Africa (Pty) Limited was not incorporated until October 2000, local regulatoryapproval not having been granted until then.

Although the Group only holds 25.1% of the share capital of the Australian joint venture entity, its investment inthe Company is treated as a joint venture because Board control is split between the investing entities and bothparties have power of veto over any major decision. As purchase consideration for its share of the ordinaryshare capital of the joint venture entity, the Group entered into two contractual agreements with the Company.The first committed to providing technical know-how and support in the set-up and continued service of theentity’s website. The second allows for use of the Group’s licensed trademark in the geographical areas inwhich the joint venture company operates.

As the value of these agreements cannot be measured reliably, nil cost has been recognised in respect of the joint venture. In the Group accounts, the Group’s share of the net assets of the joint venture on formation(principally cash contributed by the other venturer) has given rise to an equivalent amount of negativegoodwill. This negative goodwill will be recognised in the profit and loss account in the years expected tobenefit, being four years, the period over which the majority of the know-how and support will be provided to the joint venture.

39

14 Investments (continued)Company Subsidiary£000 undertakings Total

Cost At 1 October 1999 – –Additions – –Last Minute Network Limited 1,173 1,173Degriftour Group 197 197

At 30 September 2000 1,370 1,370

At 30 September 1999 – –

Principal subsidiary undertakings are as follows, held by Group companies unless indicated:

Country of registration OrdinaryName of company or incorporation Principal activity held shares

Investments in subsidiaries

Last Minute Network Limited* England and Wales Marketer 100%Last Minute Network GmbH Germany Marketer 100%Last Minute Network SA France Marketer 99%Last Minute Network AB Sweden Marketer 100%Last Minute Voyages S.A.R.L. France Marketer 100%Revalfi S.A.R.L. (part of Degriftour Group)† France Marketer 100%Voyages Sur Mesure S.A. (part of Degriftour Group) France Marketer 100%Activnet S.A.R.L. (part of Degriftour Group) France Marketer 100%Lastminutetravel AB Sweden Marketer 100%Lastminute Sweden AB Sweden Marketer 100%Last Minute Network S.L. Spain Marketer 100%lastminute.com BV Netherlands Marketer 100%lastminute.com s.r.l Italy Marketer 99%Last Minute s.p.r.l Belgium Marketer 100%Last Minute Network Limited Ireland Marketer 50%Last Minute A/S Norway Marketer 100%Last Minute A/S Denmark Marketer 100%

Investment in joint venture

lastminute.com Australia Pty Limited Australia Marketer 25.1%

*directly held by lastminute.com plc† 48% owned by lastminute.com plc

Notes to thefinancialstatements(continued)

at 30 September 2000

40

14 Investments (continued)Acquisitions

On 30 September 2000 the Group acquired the Degriftour Group (comprising Revalfi S.A.R.L. and itssubsidiary undertakings, Voyages Sur Mesure S.A. and Activnet S.A.R.L.) for a consideration of £54,522,496,satisfied by 34,999,998 Euros paid on 23 October 2000, 10,000,000 Euros payable on 23 October 2001 by Last Minute Network S.A.R.L. and the issue of 19,700,000 new ordinary shares at £1.39 each by lastminute.com plc.At the balance sheet date the consideration payable on 23 October 2000 is classified within ‘creditors:amounts falling due within one year’; the deferred consideration payable is classified within ‘creditors:amounts payable after more than one year’.

Goodwill arising on the acquisition of the Degriftour Group has been capitalised and is being amortised overfour years. The investment in the Degriftour Group, is held by lastminute.com plc and Lastminute VoyagesS.A.R.L., and has been included in the Group balance sheet using the acquisition method of accounting at its fair value at 30 September 2000.

Analysis of the acquisition of the Degriftour Group:Book and fair

value of assets£000 acquired

Tangible fixed assets 2,354Debtors 4,203Creditors (7,883)Cash 747Provisions (506)Taxation (129)

Net liabilities acquired (1,214)

Goodwill (note 12) 58,636

Cost of net business 57,422

The Degriftour Group earned a profit on ordinary activities after tax of £177,437 for the year ended 31 March 2000of which £1,000 was attributable to minority interests.

The summarised profit and loss account for the period from 1 April 2000 to the effective date of acquisition isas follows:

Six months ended£000 30 September 2000

Turnover 5,819Operating loss 3,061Loss before tax 2,891

Loss after tax for the six months ended 30 September 2000 2,894

There were no recognised gains and losses in the six months ended 30 September 2000, other than the loss of£2,894,000 above.

41

15 StocksGroup Group Company

£000 2000 1999 2000

Entertainment tickets held for resale 52 1 –

There is no material difference between the replacement costs of stocks and their balance sheet amounts.

16 DebtorsGroup Group Company

£000 2000 1999 2000

Trade debtors 2,827 136 –

Other debtors 5,980 443 –

Amounts owed by Group undertakings – – 116,786

Prepayments and accrued income 1,736 164 –

10,543 743 116,786

17 Creditors: amounts falling due within one year

Group Group Company£000 2000 1999 2000

Bank overdrafts – 70 –

Trade creditors 10,250 852 –

Corporation tax – 1 –

Other taxes and social security costs 1,788 84 –

Other creditors 331 1,111 –

Consideration payable in relation to acquisition of subsidiary undertaking 21,350 – –

Accruals and deferred income 4,582 121 –

Accrued preference dividend – 50 –

38,301 2,289 –

18 Creditors: amounts falling due after more than one yearGroup Group Company

£000 2000 1999 2000

Deferred consideration for purchase of subsidiary undertaking 6,031 – –

19 Operating lease commitments

Annual commitments under non-cancellable operating leases are as follows:

Group Group Company£000 2000 1999 2000

Operating leases for land and buildings which expire:In two to five years 2,771 315 –

Notes to thefinancialstatements(continued)

at 30 September 2000

42

20 Provisions for liabilities and charges

NationalInsurance

on granted Onerous£000 options contract Other Total

At 1 October 1999 600 – 14 614Provided during the year 88 – 202 290Acquisition of subsidiary undertaking – 452 54 506

At 30 September 2000 688 452 270 1,410

The Group provides for National Insurance contributions on options granted. A provision is made at a rate of12.2% over the vesting period of the options on the difference between the period end share value and thegrant price, being the Company’s best estimate of the ultimate liability at each period end.

A provision is recognised for an onerous lease contract in the Degriftour Group, and is based on the futurecharges of the lease over the remaining two and a half years of the lease.

Other includes the provision for loyalty minutes.

21 Financial instruments

The Group’s financial instruments comprise trade and other debtors, trade and other creditors, accruals, cash,overdrafts, deferred consideration in relation to the purchase of the Degriftour Group, non-equity shares andforward currency exchange contracts.

As permitted by FRS 13, Derivatives and Other Financial Instruments: Disclosures, amounts dealt with in thenumerical disclosures in this note, with the exception of the currency analysis, exclude short term debtors and creditors.

Interest rate risk

The Group has significant cash balances at 30 September 2000.

The majority of this is held on short term deposits with AAA/AA rated credit institutions. This earns interest at a floating rate that follows LIBOR.

Non-equity share capital was converted into equity share capital during the year. All outstanding liabilitiesassociated with the shares were waived by Shareholders upon conversion.

No interest is payable in relation to the financial liability which has arisen as a result of deferring payment forthe acquisition of the Degriftour Group of companies.

Liquidity risk

The Group’s policy has previously been to finance its operations and expansion through the sale of equity and non-equity share capital. On 21 March 2000, the Company completed an initial public offering of OrdinaryShares. Consequently the Group’s policy is to hold cash in appropriately short term funds to enable it to financeits operations and expansion.

The purchase of the Degriftour Group of companies was financed using partly deferred consideration. This acquisition structure does not significantly affect the Group’s liquidity profile.

43

21 Financial instruments (continued)Currency risk: structural

As a result of the significant investment in its French subsidiaries, the Group’s balance sheet will besignificantly affected by movements in the Euro/Sterling exchange rate. The Group will not seek to hedgeagainst this structural currency risk due to the stable nature of the relationship between the two currencies.Other operations denominated in foreign currencies giving rise to structural currency exposure are notsignificant to the Group at this time, as such the Group does not hedge against these currency risks.

Currency risk: transactional

The Group faces transactional exposure in respect of costs and revenues denominated in currencies otherthan the transacting company’s functional currency (see table below).

During the year the Group did not seek to hedge this exposure. However, following the purchase of the DegriftourGroup certain exposures may be hedged in accordance with Degriftour’s policy as noted on page 45.

Interest rate profile of financial assets (all are based on floating rates linked to LIBOR):

Total£000 cash

At 30 September 1999Sterling 3,084US Dollars 1,105Euro 122Swedish Krona 8

4,319

At 30 September 2000Sterling 72,439US Dollars 2,676Euro 28,493Swedish Krona 80

103,688

Interest rate profile of financial liabilities

At 30 September 1999, the Group had a Sterling bank overdraft of £70,000, which incurred interest at floatingrates based on LIBOR.

At 30 September 1999 the Group had in issue convertible cumulative redeemable Preference A Sharesdenominated in sterling, with paid up consideration of £500,000. A fixed coupon rate of 8% was payable on thepaid up consideration.

The Group also had in issue convertible cumulative redeemable Preference B Shares denominated in sterling,with paid up consideration of £5,962,000 and no coupon.

The Preference A Shares and Preference B Shares automatically converted into Ordinary Shares immediatelyprior to the completion of the initial public offering. Should the offering not have occurred before 4 June 2004,each Preference A shareholder and Preference B shareholder had the option to redeem the Preference Shares.

At 30 September 2000 the Group had a financial liability of £6,031,000 in respect of the deferred considerationpayable for the acquisition of the Degriftour Group. No interest is payable on this liability. The amount will besettled on 23 October 2001.

Notes to thefinancialstatements(continued)

at 30 September 2000

44

21 Financial instruments (continued)Currency risks

The table below shows the Group’s currency exposure; in other words those transactional exposures that giverise to net currency gains and losses recognised in the profit and loss account. Such exposures comprise themonetary assets and liabilities of the Group that are not denominated in the functional currency of operations.

As at 30 September 1999:Swedish

£000 Sterling Euro US Dollar Krona Total

Functional currency of Group operationsSterling – 130 1,105 – 1,235

– 130 1,105 – 1,235

As at 30 September 2000:Swedish

£000 Sterling Euro US Dollar Krona Total

Functional currency of Group operationsSterling – 27,119 2,676 2 29,797

– 27,119 2,676 2 29,797

Fair values of financial assets and financial liabilities

Book value Fair value£000 30 September 1999 30 September 1999

Cash 4,319 4,319Overdraft (70) (70)Preference A Shares 500 20,941Preference B Shares 5,962 34,153

The fair values of the Preference A Shares and Preference B Shares of Last Minute Network Limited aredetermined by reference to the arm’s length prices paid by investors during the four private financing roundssince incorporation of the Company, adjusted to take into account subscriber growth.

Book value Fair value£000 30 September 2000 30 September 2000

Cash 103,688 103,688

Deferred consideration 27,381 27,381

45

21 Financial instruments (continued)Hedges

The Degriftour Group’s policy is to hedge against transactional currency exposure on significant transactions.Gains and losses on instruments used for hedging are not recognised until the exposure, which is beinghedged is itself recognised. Unrecognised gains and losses on instruments used for hedging, and themovements therein, are as follows:

£000 Gains

Unrecognised gains and losses on hedges at 30 September 2000 2

Of which:Gains and losses expected to be recognised in the year to 30 September 2001 2

22 Share capital

Ordinary Preference PreferenceShares A Shares B Shares Total

No. £000 No. £000 No. £000 £000

Authorised:

On Incorporation: £1 Ordinary Shares 100 – – – – – –

Split of £1 Ordinary Shares to £0.01 Ordinary Shares 9,900 – – – – – –

Increase in AuthorisedShare Capital: £0.01 Ordinary Shares £2.85 Preference A Shares£2.85 Preference B Shares 113,990,000 1,140 152,000 433 34,724,000 98,964 100,537

Redesignation of Preference BShares and Preference A Shares to Ordinary Shares 9,939,660,000 99,397 (152,000) (433) (34,724,000) (98,964) –

At 30 September 2000 10,053,660,000 100,537 – – – – 100,537

Notes to thefinancialstatements(continued)

at 30 September 2000

46

22 Share capital (continued)Group Ordinary Preference Preference

Shares A Shares B Shares TotalNo. £000 No. £000 No. £000 £000

Issued:

At 30 September 1999

As previously reportedIssued to former shareholders

of Last Minute Network Limited 123,342 1 76,000 1 123,948 1 3

Merger adjustment – – – 216 – 352 568

123,342 1 76,000 217 123,948 353 571

£0.01 Ordinary Shares and £2.85 Preference B shares 284 – – – 17,191 49 49

£0.01 Ordinary Shares issued in part consideration for the purchase of Last Minute S.P.R.L. 32 – – – – – –

£2.85 Preference A Shares issued for cash – – 4,595 13 – – 13

£0.01 Ordinary Shares and £2.85Preference A and Preference BShares issued for cash 1,510 – 4,211 12 60,346 172 184

284 for 1 Bonus issue of Ordinary Shares 35,547,712 355 – – – – 355

£2.85 Preference A and B Shares converted into £0.01 Ordinary Shares 81,592,935 816 (84,806) (242) (201,485) (574) –

£0.01 Ordinary Shares issued in the Initial Public Offering 33,000,000 330 – – – – 330

£0.01 Ordinary Shares issued in the consideration for provision of services 66,690 1 – – – – 1

Options exercised 241,724 2 – – – – 2

At 30 September 2000 150,574,229 1,505 – – – – 1,505

On 4 February 2000 the Group completed a private placement of 49,856 Preference B Shares with a number of strategic partners for approximately £19.0 million. In addition, £6.2 million was raised through the issue ofOrdinary Shares, Preference A Shares and Preference B Shares to existing shareholders.

On 15 February 2000 the Group affected a bonus issue of 284 Ordinary Shares for each existing Ordinary Share held by capitalising £355,000 of its share premium account.

47

22 Share capital (continued)Company Ordinary Preference Preference

Shares A Shares B Shares TotalNo. £000 No. £000 No. £000 £000

Issued:

On incorporation£1 Ordinary Shares 2 – – – – – –

Split of £1 Ordinary Shares to £0.01 Ordinary Shares 198 – – – – – –

£0.01 Ordinary Shares issued in consideration for the acquisitionof Last Minute Network Limited 35,672,680 356 – – – – 356

£2.85 Preference Shares issued in consideration for the acquisitionof Last Minute Network Limited – – 84,806 242 201,485 574 816

£2.85 Preference Shares convertedinto £0.01 Ordinary Shares 81,592,935 816 (84,806) (242) (201,485) (574) –

£0.01 Ordinary Shares issued for the Initial Public Offering 33,000,000 330 – – – – 330

£0.01 Ordinary Shares issued in consideration for theprovision of services 66,690 1 – – – – 1

Options exercised 241,724 2 – – – – 2

At 30 September 2000 150,574,229 1,505 – – – – 1,505

On 21 March 2000, the Group completed its initial public offering of 33 million Ordinary Shares, raisingapproximately £125.4 million, before expenses.

Rights to dividends

The Preference A Shares carried a fixed cumulative dividend of 8% per annum. Preference B Shares did notcarry rights to dividends.

Upon the initial public offering, accrued and unpaid dividends on Preference A Shares were forfeited.

Return of capital

On a winding up, the amounts returnable to shareholders would have been as follows:

(1) to holders of Preference A Shares pro rata to the number of Preference A Shares held, the nominal value of the Preference A Shares together with any share premium paid and any accrued unpaid dividends;

(2) to holders of Preference B Shares pro rata to the number of Preference B Shares held, the nominal value of the Preference B Shares together with any share premium paid plus an amount which would result in a compound annual return of 8% from the date of subscription;

(3) to holders of Ordinary Shares pro rata to the number of Ordinary Shares held, the nominal value of theOrdinary Shares and any accrued unpaid dividends; and

Notes to thefinancialstatements(continued)

at 30 September 2000

48

22 Share capital (continued)Return of capital (continued)

(4) any remaining balance, pro rata to the holders of Preference A Shares, to the holders of Preference BShares and to the holders of Ordinary Shares.

Conversion

At the date of the initial public offering, each Preference A Share and Preference B Share was converted into285 Ordinary Shares.

Warrants

On 31 January 2000 and 14 February 2000 the Group executed performance–based warrant instrumentspursuant to which the Group may grant warrants to acquire up to 5,544,675 and 5,543,250 of Ordinary Shares to each of Lufthansa and Virgin Atlantic Airways, respectively, in equal instalments at the end of five six-monthmeasuring periods commencing on 1 January 2000 and 1 March 2000, respectively, if they achieve specifiedlevels of ticket sales through our website. Each warrant will be exercisable for an Ordinary Share during a 60-day period commencing three years after the date it is issued at an exercise price of £0.37 per share,subject to customary adjustments in the event of specified events. The Group may terminate the warrantinstrument and cancel the related warrants in exchange for cash payments if the relevant airline fails toachieve specified minimum levels of sales in the first two measuring periods. The Group may also cancel a portion of the warrants granted in respect of a measuring period if the airline fails to achieve a specifiedminimum level of sales in the following measuring periods.

As at 30 September 2000 neither airline was in line to meet the sales performance targets set and as a resultthe Group has not issued any warrants under these agreements.

23 Reconciliation of shareholders’ funds

Group Share Profit TotalShare premium and loss Other Merger Shares to shareholders’

£000 capital account account reserves reserve be issued funds

On 1 October 1999As previously reported 3 6,724 (4,826) 662 – – 2,563Merger adjustment – (6,724) – – 6,724 – –

As restated 3 – (4,826) 662 6,724 – 2,563

Shares issued in Last Minute Network Limited 1 29,004 – – – – 28,192

Bonus issue 355 (355) – – – – –Share conversion 813 (813) – – – – 813Merger adjustment – (27,836) – – 27,836 – –Shares issued 331 112,910 – – – – 113,241Loss for the period – – (35,748) – – – (35,748)Foreign currency translation

differences – – 22 – – – 22Share-based compensation – – – 4,582 – – 4,582Shares issued as options 2 13 – – – – 15Transfer relating to options

exercised – – 41 (41) – – –Write back of preference A dividend – – 47 – – – 47Consideration in relation to purchase

of subsidiary undertaking – – – – 27,186 197 27,383

At 30 September 2000 1,505 112,923 (40,464) 5,203 61,746 197 141,110

49

23 Reconciliation of shareholders’ funds (continued)As explained in more detail in Note 1, the Group reconstruction has been accounted for in accordance with the principles of merger accounting. For this reason the Group balance sheet as at 30 September 1999 hasbeen restated to reflect the effect of the merger, which resulted in a share for share exchange.

The Group and Company have taken advantage of the relief provided by Section 131 of the Companies Act1985 from setting up a share premium account for the shares issued in respect of the acquisition of Last MinuteNetwork Limited and those in respect of the acquisition of the Degriftour Group.

On 4 February 2000 the Group completed a private placement of 49,856 Preference B Shares with a number of strategic partners for approximately £19.0 million. In addition, £6.2 million was raised through the issue ofOrdinary Shares, Preference A Shares and Preference B Shares to existing shareholders.

On 15 February 2000 the Group affected a bonus issue of 284 Ordinary Shares for each existing Ordinary Shareheld by capitalising £355,000 of its share premium account.

On 21 March 2000 the Group completed its initial public offering of 33 million Ordinary Shares, raisingapproximately £125.4 million before expenses.

On 30 September 2000 the Group obtained control of the Degriftour Group of companies as explained in detailin Note 14. 19,700,000 Ordinary £0.01 Shares are to be issued as part consideration on 23 October 2000.

Company Share Profit TotalShare premium and loss Other Shares to shareholders’

£000 capital account account reserves be issued funds

On incorporation 3 – – – – 3Shares issued 1,500 112,910 – – – 114,410Loss for the period – – (1,713) – – (1,713)Share-based compensation – – – 5,244 – 5,244Share options exercised 2 13 – – – 15Consideration in relation to purchase

of subsidiary undertaking – – – – 197 197Transfers relating to options exercised – – 41 (41) – –

At 30 September 2000 1,505 112,923 (1,672) 5,203 197 118,156

24 Notes to the statement of cash flows

(a) Reconciliation of operating loss to net cash outflow from operating activities Year ended Year ended30 September 30 September

£000 2000 1999

Operating loss (39,451) (4,556)Depreciation 1,317 33Increase in debtors (5,732) (694)Increase in stocks (51) (1)Increase in creditors 4,686 2,039Increase in provisions 290 603Foreign exchange losses (293) –Share-based compensation 4,582 672

Net cash outflow from operating activities (34,652) (1,904)

Notes to thefinancialstatements(continued)

50

24 Notes to the statement of cash flows (continued)(b) Analysis of net cash position Year ended Year ended

30 September 30 September£000 2000 1999

Cash at bank 103,688 4,319Bank overdrafts – (70)

103,688 4,249

(c) Liquid resources

Liquid resources comprise money held by the Group’s bank on short term deposits. £1.9 million of this is heldas a financial guarantee for the Group to comply with the Civil Aviation Authority’s terms and conditions on Air Travel Organiser’s Licence.

25 Post balance sheet events

On 23 October 2000, the Group paid £21,108,496 as part consideration for the Degriftour Group. On the same day 19,700,000 £0.01 Ordinary Shares were issued at a market value of £1.39 also in consideration for the acquisition.

26 Commitments and contingencies

The Company has made a guarantee on behalf of a subsidiary to the Civil Aviation Authority in relation tomeeting its obligations in respect of its Air Travel Organiser’s Licence, as detailed in note 24.

The Group did not have any capital commitments outstanding at year end.

27 Related party transactions

There have been no related party transactions entered into during the year.

51

Notice ofMeeting

Notice is hereby given that the Annual General Meeting of lastminute.com plc will be held at WestminsterTheatre, 12 Palace Street, London SW1E 5JF on 14 February 2001 at 10.00 a.m. for the following purposes:

Ordinary business

1 To receive and adopt the Company’s financial statements and the reports of the Directors and Auditors for the year ended 30 September 2000.

2 To re-appoint Pierre Jacques Alzon as a Director of the Company.

3 To re-appoint Allan Leslie Leighton as a Director of the Company.

4 To re-appoint Ernst & Young as Auditors of the Company to hold office until the conclusion of the next GeneralMeeting at which financial statements are laid before the Company and to authorise the Directors to fix theremuneration of the Auditors.

Special Business

To consider and, if thought fit, to pass the following Resolutions. Resolutions 5 and 6 will be proposed asOrdinary Resolutions and Resolution 7 as a Special Resolution.

5 That:(a) the Rules of the lastminute.com Non-Executive Share Option Scheme 2000, the principal terms of which

were posted to shareholders on 23 January 2001 and a copy of which is produced to the meeting andinitialled by the Chairman for the purposes of identification only, be approved;

(b) the Directors be authorised to do all things necessary or appropriate to establish and operate suchScheme; and

(c) the grant of options to Allan Leighton on 8 January 2001 details of which were posted to shareholders on 23 January 2001 be and is hereby approved and ratified.

6 That:(a) the Directors be generally and unconditionally authorised pursuant to and in accordance with Section 80

of the Companies Act 1985 to exercise all the powers of the Company to allot relevant securities up to anaggregate nominal amount of £567,678;

(b) such authority shall expire on the date of the Annual General Meeting in 2006 or on 14 February 2006,whichever is the earlier, and shall be in substitution for all previous authorities pursuant to the said Section 80, which are hereby revoked, without prejudice to any allotment of securities pursuant thereto;

(c) by such authority the Directors may make offers or agreements which would or might require relevantsecurities to be allotted after the expiry of such period; and

(d) for the purpose of this Resolution, words and expressions defined in or for the purposes of the saidSection 80 shall bear the same meanings herein.

7 That:(a) pursuant to the Resolution conferring authority under Section 80 of the Companies Act 1985 (the “Act”)

passed on the date hereof, the Directors be empowered to allot equity securities wholly for cash:(i) in connection with a rights issue; and(ii) otherwise than in connection with a rights issue, up to an aggregate nominal amount of £85,151; as if Section 89(1) of the Act did not apply to any such allotment;

(b) such power shall expire on the date of the Annual General Meeting in 2006 or on 14 February 2006,whichever is the earlier, and shall be in substitution for all previous disapplications of Section 89 of the Act, which shall cease to have effect, without prejudice to any allotment of securities pursuant thereto;

Notice ofMeeting(continued)

52

(c) by such power the Directors may make offers or agreements which would or might require equitysecurities to be allotted after the expiry of such period; and

(d) for the purposes of this Resolution:(i) “rights issue” means an offer of equity securities open for acceptance for a period fixed by the

Directors to (a) holders on the register on a record date fixed by the Directors of ordinary shares inproportion to their respective holdings (for which purpose holdings in certificated and uncertificatedform may be treated as separate holdings) and (b) other persons so entitled by virtue of the rightsattaching to any other equity securities held by them, but subject in both cases to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractionalentitlements or legal or practical problems under the laws of, or the requirements of any recognisedregulatory body or any stock exchange in any territory;

(ii) the nominal amount of any securities shall be taken to be, in the case of rights to subscribe for orconvert any securities into shares of the Company, the nominal amount of such shares which may be allotted pursuant to such rights; and

(iii) words and expressions defined in or for the purposes of Part IV of the Act shall bear the same meanings herein.

Registered office: By order of the Board

4 Buckingham Gate Hackwood Secretaries LimitedLondon SW1E 6JP Company Secretary

8 January 2001

Notes:

1 A shareholder entitled to attend and vote is entitled to appoint one or more proxies to attend and, on a poll, vote instead of him. A proxy need not be a shareholder of the Company.

2 A form of proxy is enclosed with this document for use in connection with the meeting to which this notice relates and anyadjournment thereof. The appointment of a proxy will not prevent a shareholder from subsequently attending and voting at themeeting in person.

3 To be effective the instrument appointing a proxy, and any letter or power of attorney under which it is executed (or a duly certifiedcopy of any such letter or power of attorney), must (failing previous registration with the Company) be received at the offices of theCompany’s registrars, Capita IRG plc (Proxies), PO Box 25, Bourne House, 34 Beckenham Road, Beckenham, Kent BR3 4TU not lessthan 48 hours before the time for holding the meeting or any adjournment thereof or (in the case of a poll taken otherwise than at or on the same day as the meeting or adjourned meeting) for the taking of the poll at which it is to be used.

4 The Rules of the lastminute.com Non-Executive Share Option Scheme 2000 and copies of all contracts of service under whichDirectors of the Company are employed by the Company or any of its subsidiaries and which have a notice or contract period ofone year or more or which have provisions for predetermining compensation on termination of an amount which equals or exceedsone year’s salary and benefits in kind will be available for inspection at the Company’s registered office during business hours on any weekday (Saturdays and public holidays excluded) until the date of the Annual General Meeting, and at the place of theAnnual General Meeting from 15 minutes before it is held until its conclusion. A copy of the register of interests of the Directors ofthe Company will also be available for inspection at the place of the meeting from 15 minutes before it is held until its conclusion.

5 The Company, pursuant to Regulation 34 of the Uncertificated Securities Regulations 1995, specifies that only those shareholdersentered on the Company’s register of members at the close of business on 11 February 2001 or, if the meeting is adjourned, on theCompany’s register of members 48 hours before the time fixed for the adjourned meeting, shall be entitled to attend or vote at themeeting in respect of the number of shares registered in their name at that time. Changes to entries on the Company’s register ofmembers after the close of business on 11 February 2001 or, if the meeting is adjourned, 48 hours before the time fixed for theadjourned meeting, shall be disregarded in determining the rights of any person to attend or vote at the meeting.

53

Resolutions 2 and 3: Re-appointment of Directors

The Company’s Articles of Association require Pierre Alzon and Allan Leighton to retire at the conclusion of theMeeting as they have been appointed Directors since the last General Meeting of the Company. Resolutions 2and 3 propose their re-appointment as Directors.

Pierre Alzon (37) is an Executive Director. He was appointed to the Board on 23 October 2000. He was GeneralManager of Degriftour prior to its acquisition by the Company earlier this year. He joined Degriftour in April1992 as the Head of Finance and the IT Division and was appointed General Manager in 1995. Between 1989and April 1992 he worked for Cabinet Constantin where his role was assignment management. From 1988 to1989 he worked for Cabinet Mazars as an Accountant in audit. Between 1986 and 1987 he worked as anIndependent Consultant and specialised in the administration and building of software solutions. Mr Alzon is a French national, a graduate of Ecole Supérieure Libre des Sciences Commerciales Appliquées with a majorin finance and holds a finance and accounting degree (Diplôme D’Etudes Comptables et Financières.)

Allan Leighton (47) is a Non-Executive Director and the Non-Executive Chairman. He was appointed to theBoard on 20 October 2000. He is also the Chairman of British Home Stores Limited, and of Wilson ConnollyHoldings PLC, Deputy Chairman of Leeds Sporting PLC, and a Non-Executive Director of Dyson AppliancesLimited and of BSkyB PLC. He worked at Asda Group from June 1992 to November 2000, and was Group ChiefExecutive from 1996 to 2000. He was named President and Chief Executive Officer of Wal-Mart Europe afterWal-Mart, Inc. took over Asda Group PLC. Prior to joining Asda, he worked at the Mars Corporation from 1974 to 1992 where he was Marketing and Sales Director of Pedigree Petfoods from 1991 to 1992.

Resolution 5: lastminute.com Non-Executive Share Option Scheme 2000

As mentioned above, Allan Leighton was appointed Non-Executive Chairman on 20 October 2000. He willreceive reimbursement for his reasonable expenses but will not receive any cash fee for his role. Instead hehas been granted options over 1,000,000 Ordinary Shares exercisable at 137.5p (being the closing mid-marketprice on 10 October 2000, the day immediately prior to the announcement of his appointment). The optionshave been granted under the lastminute.com Non-Executive Share Option Scheme, which has been adoptedby the Directors subject to shareholder approval. These options will lapse if the adoption of the Scheme andthe grant of the options are not approved at the Meeting. Resolution 5 is an Ordinary Resolution to approve the proposed Scheme and the options granted to Mr Leighton. The details of the proposed Scheme and theoptions granted to Mr Leighton are as follows:

Eligibility. The Directors of lastminute.com plc alone are eligible to participate in the Scheme.

Grant of options. Our Board or an authorised committee may, at their discretion, grant options to acquire ourshares but optionholders under the Scheme are not permitted to vote or otherwise take part in Board orcommittee meetings relating to their options. Options can be granted at any time. They may be grantedsubject to a performance condition based on objective criteria. Options granted during 2000 must be grantedat an exercise price equal to the market value of an ordinary share on the day before announcement of theoptionholder’s appointment as a Director. Options granted during or after 2001 must be granted at an exerciseprice equal to the then current market value of an ordinary share, unless our Board resolves that exceptionalcircumstances exist justifying a different exercise price. No consideration is payable for the grant of options.

Exercise of options. Options are exercisable in accordance with a vesting schedule which allows for thegradual vesting of the options over a three year period, but no option may be exercised until the optionholderhas held office for a period of six months. Options may, however, be exercised early in certain circumstances,for example, if an optionholder ceases to be a Director of the Company due to injury, disability or retirement by agreement with the Company or, at the discretion of the Directors, in the event of a takeover, scheme ofarrangement or winding-up.

Annual GeneralMeeting –memorandumto shareholders

Annual GeneralMeeting –memorandumto shareholders(continued)

54

Lapse of option. Options will ordinarily lapse on the optionholder ceasing to be a Director of the Company but, in addition to the circumstances described above, the Directors may allow exercise for a limited period at their discretion. On resignation, the optionholder may exercise any of his options which have becomeexercisable to the date of his resignation under the applicable vesting schedule but all other options will lapse.

Exchange of options. In the event of a change of control, in certain circumstances, optionholders mayexchange their options for options over shares in the acquiring company.

Our Board may determine in its discretion that, in the event of a takeover, scheme of arrangement, demergeror a winding-up, options may not be exercised but optionholders will be granted new options to replace theirold options. A new option may be over shares in any company determined by the Directors but must beequivalent to the corresponding old option, be treated as having been acquired at the same time and beexercisable in the same manner as the old option and otherwise subject to the rules of the scheme.

Variation in share capital. Options may be adjusted following certain variations in our share capital, including a capitalisation or rights issue, sub-division or consolidation of capital.

Issue of shares. Shares issued on the exercise of options will rank equally with shares in issue at that time,except in respect of rights arising by reference to a prior record date.

Scheme limits. The number of shares which may be allocated under the Scheme on any day must not exceed15% of our issued share capital when added to the total number of shares allocated in the previous ten yearsunder the Scheme and any other employee share scheme operated by us. For these purposes, allocatemeans, in relation to a share option scheme, placing unissued shares under option, and, in relation to othertypes of employee share scheme, the issue and allotment of shares.

Amendments. Our Board or an authorised committee may amend any provision of the Scheme provided thatany amendment which would prejudice the subsisting rights of optionholders requires the prior written consentof existing optionholders who hold options exercisable over at least three quarters of the total number ofshares underlying options granted under the Scheme.

Termination. Our Board or an authorised committee or the Shareholders may, at any time, terminate theScheme. If this happens, no further options will be granted but the provisions of the Scheme will continue in relation to options already granted.

Options granted to Allan Leighton under the Scheme

Date of grant – 8 January 2001Number of shares under option – 1,000,000Option price – 137.5p

Resolution 6: Authority to allot securities

Resolution 6 will be proposed as an Ordinary Resolution and will renew the authority granted to the Directorson 29 February 2000 to allot shares or grant any rights to subscribe for or convert any securities into shares. The nominal amount of securities which the Directors will have authority to allot pursuant to this power is£567,678 representing 56,767,800 shares. This represents approximately one third of the Company’s existingissued share capital and is consistent with the guidelines issued by the Institutional Investment Committees. The authority is being renewed as it would otherwise expire at the conclusion of the Meeting and will now last for five years expiring on 14 February 2006 or the date of the Company’s AGM in 2006, whichever is theearlier. The Directors do not have any present intention of exercising any part of the above authority, other thanin connection with performance based warrant instruments for key suppliers, but consider it desirable that theyshould have the flexibility to issue shares from time to time.

55

Resolution 7: Disapplication of pre-emption rights

Any equity securities which the Company wishes to allot for cash must generally be offered first to shareholdersin proportion to their existing shareholdings under statutory pre-emption rights. On 29 February 2000, theDirectors were given power to allot equity securities for cash, other than in accordance with the statutory pre-emption right, to a limited extent. Although your Board has no immediate intention of exercising the power other than in connection with performance based warrant instruments for key suppliers, Resolution 7 is a Special Resolution to renew this power as it would otherwise expire at the conclusion of the Meeting. This Resolution gives the Directors power to allot equity securities for cash, other than proportionately toexisting shareholders, in connection with a rights issue and also up to a limit of an aggregate nominal value of £85,151 representing 8,515,100 shares. This represents approximately 5% of the Company’s existing issuedshare capital which complies with Institutional Investment Committee guidelines. This power expires on 14 February 2006 or the date of the Company’s AGM in 2006, whichever is the earlier. The Directors intend to seek its renewal at that time, if not before.

Recommendation and action to be taken

The Board is unanimous in their view that the adoption of the Resolutions set out in the Notice of AnnualGeneral Meeting on pages 51 and 52 are in the best interests of the Company and its shareholders.Accordingly, the Board recommends that you vote in favour of the Resolutions set out in the Notice of Meetingand as explained in this Memorandum. Each Director intends to vote in favour of these Resolutions in respectof their own beneficial holdings of 29,728,132 Ordinary Shares, representing 17.4% of the issued ordinary sharecapital of lastminute.com.

You will find enclosed with this document a Form of Proxy. You are asked to complete this Form and return

it to Capita IRG plc (Proxies), PO Box 25, Bourne House, 34 Beckenham Road, Beckenham, Kent BR3 4TU

as soon as possible but, in any event, in order to be valid so as to arrive no later than 10.00a.m. on

11 February 2001. Completion and return of the Form of Proxy will not prevent you from attending and voting at the Meeting in person should you so wish. Attached to the Form of Proxy is your admission card to theAnnual General Meeting. Please detach and retain the admission card and bring it with you to the AnnualGeneral Meeting if you wish to attend and vote in person. I look forward to welcoming those shareholders who wish to attend.

Allan LeightonChairman

8 January 2001

Definitions

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Registered subscribers are users of the lastminute.com web site who have submitted their e-mail addressesand other data and have elected to receive lastminute.com’s weekly e-mail. This does not include users whoregister with the company, but elect not to receive its weekly e-mails. Since lastminute.com counts its registeredsubscribers based on their e-mail addresses, users who register multiple times using different e-mail addresseswill count as multiple registered subscribers. For example, if a user has registered with lastminute.com usingan e-mail address at work and one at home, the user will be counted as two registered subscribers.

Total transaction value does not represent statutory turnover. In the majority of transactions, wherelastminute.com acts as agent or cash collector, total transaction value represents the price at which products or services have been sold across the web site, net of value added tax and associated taxes. In other cases,for example the reservation of restaurant tables, a flat fee is earned, irrespective of the value of products orservices provided. In such cases total transaction value represents the flat fee commission earned. In the smallnumber of cases where lastminute.com acts as principal, total transaction value represents the price at whichproducts or services are sold across the web site, net of value added tax and associated taxes.

In the majority of cases, lastminute.com does not take ownership of the products or services being sold andacts as agent, receiving a commission from the supplier of the products or services being sold. In these cases,turnover represents commission earned, less amounts due or paid on any commission shared. In a limitednumber of cases, lastminute.com acts as principal and purchases the products or services for resale. Wherelastminute.com acts as principal, turnover represents the price at which the products or services are soldacross the web site. Turnover is recognised once charges to the customer’s credit card have been madeexcept for travel, which is recognised on the date of departure, and is stated exclusive of value added tax and associated taxes. Additional revenue streams (e.g. sponsorship) also contribute to turnover.

Gross margin is defined as gross profit over total transaction value.

The number of customers is the cumulative number of customers (excluding repeat customers) since theinception of lastminute.com. Customers are defined as individuals who have purchased goods and servicesover lastminute.com’s platform.

An item sold is an individually priced product or service purchased by a customer.

The number of suppliers includes individual airlines, hotels, holiday package suppliers, entertainmentvendors, gift suppliers, restaurants and speciality service suppliers.

This Annual Report may contain forward-looking statements. Expressions of future goals, including withoutlimitation, “intend”, “will”, “should”, “are well on track”, “expect” or “continue”, and similar expressionsreflecting something other than historical fact are intended to identify forward looking statements. Thefollowing factors, among others, could cause lastminute.com’s actual results to differ materially from thosedescribed in the forward looking statements: management of lastminute.com’s rapid growth; introductionof new architecture for its websites; systems-related failures; the ability to attract and retain qualifiedpersonnel; adverse changes in lastminute.com’s relationships with airlines and other product and serviceproviders; potential adverse changes in its commission rates; the effects of increased competition;lastminute.com’s dependence on its ability to establish its brand; lastminute.com’s ability to protect itsdomain names and other intellectual property rights; legal and regulatory risks; and unforeseen eventsaffecting the travel industry. All such forward-looking statements are made in reliance on the safe harbourprovision of the US Private Securities Litigation Reform Act of 1955. These and other risk factors aredescribed in detail in lastminute.com’s shareholder circular dated 8 September 2000, which has beenfiled with the Securities and Exchange Commission, USA and the London Stock Exchange, UK.

The Overall Winner of the Revolution Award 1999

Intel Revolution AwardBest use of New Media for Electronic Commerce

Customer testimonials

Contents Directors and Advisors

I did not realise just how easy it was to order things on the internet.The organisation was first class, the holiday was brilliant and I willbe using the service again. Cheers once again” Mr Kendall

My husband and I sincerely appreciate your superb service forour hotel stay in The Netherlands at the Bilderbeh hotel deKeiserzroon in Apeldoom. Because of the 2000 Sail Amsterdamfestivities, all the hotels in Amsterdam were booked solid and we had hoped your service would be able to locate a pleasanthotel for us, and thankfully you did!” Mr & Mrs Rivers

On Saturday night we went to see the Reduced ShakespeareCompany’s Musical Millennium performance. Not only was it a cracking, laugh a minute show, we also had brilliant seats –booked through lastminute.com – and for only £10 each! This is the second time I’ve booked tickets through lastminute.com and each time we’ve had great seats at a good price – all completely hassle free” Mr Williams

My wife and I have just returned from seeing the West End show‘Spend, Spend, Spend’ but we ‘Saved, Saved, Saved’ thanks toyou guys. It was a fantastic evening and all for £10 a ticket. Thanksvery much lastminute.com. I look forward to finding some bargainsin the near future from you” Mr Dixon

These are genuine testimonials, but our customers’ names have been changed in order to protect their anonymity.

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Growing Business Awards 1999 – CBICompany of the Year

The Revolution Media Surface AwardBest Online Business

E-Business 2000 E-Commerce AwardMost Effective Marketing Campaign

Awards

Directors

Allan LeightonBrent HobermanMartha Lane FoxPierre AlzonRobert CollierPieter BouwBrian CollieLaurent LaffyLinda LevinsonThomas Teichman

Secretary

Hackwood Secretaries LimitedOne Silk StreetLondon EC2Y 8HQ

Auditors

Ernst & YoungBecket House1 Lambeth Palace RoadLondon SE1 7EU

Registered office

4 Buckingham GateLondon SW1E 6JP

Solicitors

Bird & Bird90 Fetter LaneLondon EC4A 1JP

Bankers

Barclays Bank50 Pall MallP.O. Box 15161RLondon SW1A

Registrar

Capita IRG plcBourne House34 Beckenham RoadBeckenhamKent BR3 4TU

Designed and produced by Merchant with NB: Studio / Printed by Royle Corporate Print

1 Vision and Highlights 2 Strategy 4 Technology 5 Suppliers 6 Brand 7 Culture 9 Chairman’s letter 10 Chief Executives’ review 12 Financial review 14 Directors’ CVs 16 Directors’ report 18 Statement of Directors’ responsibilities 19 Corporate governance 22 Remuneration report 25 Report of the Auditors 26 Consolidated profit and loss account 26 Statement of total recognised gains and losses 27 Balance sheets 28 Consolidated statement of cash flows 28 Reconciliation of cash flow to movement in net funds 29 Notes to the financial statements 51 Notice of Meeting 53 Annual General Meeting – memorandum to shareholders 56 Definitions

Registrar

Please contact our Registrar at the address above to advise change of address and also for any enquiriesrelating to lost share certificates or other enquiries relating to share registration.

Share dealing service

lastminute.com plc shares may be dealt through DLJdirect, online share dealing specialists. DLJdirect will offershareholders one commission-free trade within 30 days of opening a DLJdirect account. If you would like toreceive further information you may visit www.lastminute.com/shares or call DLJdirect on 0800 358 4477.

Website

Additional shareholder information including press releases can be found on the Group’s Investor Relationswebsite at www.lastminute.com/ir.

Annual Report

2000

lastminute.com

Annual Rep

ort 2000