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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 20-F

| | REGISTRATION STATEMENT PURSUANT
        TO SECTION 12(b) or 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
| | --------------------------------------------------------------------------------------------------------
| |                                                                                                         
| | or                                                                                                      
| |                                                                                                         
| | ANNUAL REPORT PURSUANT TO SECTION
        13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934            
| | For the fiscal year ended: September
        30, 2003                                                   
| |                                                                                                         
| | or                                                                                                      
| |                                                                                                         
| | TRANSITION REPORT PURSUANT TO
        SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934        
| | Commission file number: 0-30604                                                                         
| |                                                                                                         

lastminute.com plc(Exact name of Registrant as specified
in its charter)

England and Wales(Jurisdiction of incorporation or organisation)

4 Buckingham GateLondon SW1E 6JPUnited Kingdom(Address of principal executive offices)

|Securities
          registered or to be registered pursuant to Section 12(b) of the
          Act:           
|--------------------------------------------------------------------------------------------------------------
|None                                                                                                          
|(Title
          of Class)                                                                                    
|                                                                                                              
|Securities
          registered or to be registered pursuant to Section 12(g) of the Act:                     
|Ordinary
          Shares of 1p each                                                                          
|(Title
          of Class)                                                                                    
|                                                                                                              
|Securities
          for which there is a reporting obligation pursuant to Section 15(d)
          of the Act:
|None                                                                                                          
|(Title
          of Class)                                                                                    

Indicate the number of outstanding
    shares of each of the issuer's classes of capital or common stock as of the
    close of period covered by the Annual Report:

Ordinary Shares 296,939,244

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Indicate
    by check mark whether the registrant (1) has filed all reports required to
    be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
    the preceding 12 months (or for such shorter period that the registrant was
    required to file such reports), and (2) has been subject to such filing requirements
    for the past 90 days.

Yes            No

Indicate
    by check mark which financial statement item the registrant has elected to
    follow.

Item 17            Item
    18

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TABLE
      OF CONTENTS

|INTRODUCTION                                                |  
|----------------------------------------------------------- | -
|Presentation
            of Financial and Other Information | 3
|Forward-Looking
            Statements                      | 3
|PART
            I                                          |  
|Item
            1:                                         |  
|Item 2:                                                     |  
|Item 3:                                                     |  
|Item 4:                                                     |  
|Item 5:                                                     |  
|Item 6:                                                     |  
|Item 7:                                                     |  
|Item 8:                                                     |  
|Item 9:                                                     |  
|Item 10:                                                    |  
|Item 11:                                                    |  
|Item 12:                                                    |  
|PART II                                                     |  
|Item 13:                                                    |  
|Item 14:                                                    |  
|Item 15:                                                    |  
|Item 16A:                                                   |  
|Item 16B:                                                   |  
|Item 16C:                                                   |  
|Item 16D:                                                   |  
|Item 16E:                                                   |  
|PART III                                                    |  
|Item 17:                                                    |  
|Item 18:                                                    |  
|Item 19:                                                    |  

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INTRODUCTION

As
    used herein, except as the context otherwise requires, the terms “Company” and “lastminute.com
    plc” refer to lastminute.com plc or, where appropriate, the Company’s
    Board of Directors. Except as the context otherwise requires, the terms “lastminute.com”,
    the “lastminute.com Group” or the “Group” are used
    for convenience to refer to the Company and its subsidiaries.

Presentation
      of Financial and Other Information

In
    this Annual Report, references to “$”, “US$”, “US
    dollars”, and “dollars” are to the currency of the United
    States, references to “euro” or “€” are to the
    euro, the currency of the European Economic and Monetary Union, and reference
    to “pounds sterling”, “pounds”, “£”, “pence”,
    and “p” are to the currency of the United Kingdom. This report
    contains translations of pounds sterling amounts into US dollars at specified
    rates solely for the convenience of the reader. No representation is made
    that the amounts referred to in this report as convenience translations could
    have been or could be converted from pounds sterling into US dollars at these
    rates, or at any particular rate or at all. Unless otherwise indicated, all
    translations in this report of pounds sterling amounts into US dollars are
    at the rate of £1.00 : $1.8830, the noon buying rate in New York City
    for cable transfers in pounds sterling as certified for customs purposes
    by the Federal Reserve Bank of New York on February 13, 2004. See “Item
    3 — Key Information — Exchange Rate Information” for historical
    information regarding the noon buying rate for pounds sterling.

The
    noon buying rate at February 13, 2004 was $1.8830 = £1.00.

We
    maintain our financial books and records in pounds sterling and present our
    financial statements in conformity with accounting principles generally accepted
    in the United Kingdom, or UK GAAP. As applicable to our financial statements,
    UK GAAP and US GAAP differ as described in note 30 of notes to the financial
    statements.

Forward-Looking
      Statements

This
    document includes statements that we believe constitute forward-looking statements
    within the meaning of the Private Securities Litigation Reform Act of 1995,
    including, without limitation, statements regarding expectations of future
    profitability and turnover growth, market growth and developments. We have
    based these forward-looking statements on our current expectations and projections
    about future events. These forward-looking statements appear throughout this
    document and are subject to risks, uncertainties and assumptions about us,
    which are difficult to predict.

Words
    like “believe”, “anticipate”, “expect”, “intend”, “seek”, “will”, “plan”, “could”, “may”, “might”, “project”, “goal”, “target” and
    similar expressions often identify forward-looking statements but are not
    the only way we identify these statements.

These
    statements may be found in the sections of this Annual Report entitled “Information
    on the Company”, “Risk Factors”, “Operating and Financial
    Review and Prospects” and “Regulation” and in this Annual
    Report generally. Our actual results could differ materially from those anticipated
    in these forward-looking statements as a result of various factors, including
    industry conditions, such as the strength of product demand, the intensity
    of competition, pricing pressures, and the acceptability of new product or
    service introductions; slower than anticipated growth of the Internet and
    on-line commerce; technological innovations with respect to the Internet;
    the anticipated benefits and advantages of new technologies not being realised;
    the commencement of litigation against us; changes in the regulatory environment
    concerning services provided over the Internet; general economic conditions,
    such as the rate of economic growth in our principal geographic markets or
    fluctuation in exchange rates; as well as all the risks discussed in “Risk
    Factors”, “Operating and Financial Review and Prospects” and “Regulation”.
    You should understand that a number of important factors could cause our
    actual results to differ materially from the plans, objectives, expectations,
    estimates and intentions expressed in such forward-looking statements.

Except
    as otherwise indicated, all information in this Annual Report does not include
    shares issuable upon exercise of options granted as of the date of this Annual
    Report pursuant to our employee share option plans.

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PART I

ITEM 1. IDENTITY
      OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not
    applicable to Annual Reports.

ITEM 2. OFFER
      STATISTICS AND EXPECTED TIMETABLE

Not
    applicable to Annual Reports.

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ITEM 3. KEY INFORMATION

Selected Financial Data

The
    selected consolidated financial data set forth below should be read in conjunction
    with, and are qualified in their entirety by, reference to the consolidated
    financial statements and notes thereto included elsewhere in this Annual
    Report.

The
    selected consolidated financial data are derived from the consolidated financial
    statements of the Group, which have been prepared in accordance with UK GAAP
    and audited by Ernst & Young LLP, our independent auditors. As applied
    to our financial statements, UK GAAP and US GAAP differ as described in note
    30 of notes to the financial statements.

US
    dollar amounts have been translated at the noon buying rate on February 13,
    2004 of $1.8830 = £1.00 solely for convenience.

Profit and Loss Account Data:

|                                                                                | Year ended September 30,                                                 |   
|------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | --
|                                                                                |                                                                          |   
|                                                                                | 1999                                                                     |   
|                                                                                |                                                                          |   
|                                                                                | (£)                                                                      |   
|                                                                                | (in thousand,
          except shares and per share and per ADS amounts) |   
|                                                                                |                                                                          |   
|Total Transaction Value (1)                                                     | 2,647                                                                    |   
|                                                                                |                                                                          |   
|Turnover                                                                        |                                                                          |   
|Group and share of joint ventures                                               | 195                                                                      |   
|Less share of joint ventures                                                    |                                                                         |   
|Continuing operations                                                           |                                                                          |   
|- Ongoing                                                                       | 195                                                                      |   
|- Acquisitions                                                                  |                                                                         |   
|Group turnover (2)                                                              | 195                                                                      |   
|Cost of sales                                                                   | 18                                                                       |   
|                                                                                |                                                                          |   
|Gross profit                                                                    | 177                                                                      |   
|                                                                                |                                                                          |   
|Operating costs                                                                 |                                                                          |   
|Product development                                                             | 1,398                                                                    |   
|Sales and marketing                                                             | 1,597                                                                    |   
|General and administration                                                      | 1,716                                                                    |   
|                                                                                |                                                                          |   
|Operating costs before depreciation
          and goodwill amortisation         | 4,711                                                                    |   
|Depreciation                                                                    | 33                                                                       |   
|Goodwill amortisation                                                           |                                                                         |   
|Total operating costs                                                           | 4,744                                                                    |   
|                                                                                |                                                                          |   
|Operating (loss)/profit                                                         |                                                                          |   
|Continuing operations                                                           |                                                                          |   
|- Ongoing                                                                       | (4,567                                                                   | ) 
|- Acquisitions                                                                  |                                                                         |   
|Group operating loss                                                            | (4,567                                                                   | ) 
|Share of operating loss in joint
        ventures                               |                                                                         |   
|Share of operating loss in associate                                            |                                                                         |   
|Goodwill amortisation arising
        on an investment in an associate          |                                                                         |   
|                                                                                |                                                                          |   
|Total operating loss: group
          and share of joint ventures and associate | (4,567                                                                   | ) 
|Continuing operations:                                                          |                                                                          |   
|- Exceptional costs of a fundamental
        reorganisation                     |                                                                         |   
|                                                                                |                                                                          |   
|Loss on ordinary activities
          before interest and taxation              | (4,567                                                                   | ) 
|Interest receivable                                                             | 68                                                                       |   
|Interest payable and similar
        charges                                    | (1                                                                       | ) 
|                                                                                |                                                                          |   
|Loss on ordinary activities
          before taxation                           | (4,500                                                                   | ) 
|Tax on loss on ordinary activities                                              |                                                                         |   
|                                                                                |                                                                          |   
|Loss for the financial period                                                   | (4,500                                                                   | ) 
|                                                                                |                                                                          |   
|Loss per share — basic
        and diluted (4)                                  | (13.51                                                                   | )p
|Loss per ADS — basic and
        diluted (4), (5)                               | (67.55                                                                   | )p
|Weighted average number of Ordinary
        Sharesoutstanding (4)               | 33,595,515                                                               |   
|Amounts under US GAAP                                                           |                                                                          |   
|Group operating loss                                                            | (4,404                                                                   | ) 
|Loss for the financial period                                                   | (4,504                                                                   | ) 
|Loss per share — basic
        and diluted (4)                                  | (13.53                                                                   | )p
|Loss per ADS — basic and
        diluted (4), (5)                               | (67.65                                                                   | )p

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__________

|(1) | Total transaction value does
        not represent our turnover. Where the Group acts as agent or cash collector,
        total transaction value represents the price at which goods have been
        sold across the Group's various platforms, net of value added tax. In
        other cases, for example the reservation of restaurant tables, a flat
        fee is earned, irrespective of the value of goods provided. In such cases
        total transaction value represents the flat fee commission earned. Where
        the Group acts as principal, total transaction value represents the price
        at which products or services are sold across the Group's various platforms,
        net of value added tax. This is a UK industry wide measure which clearly
        shows the volume of sales going through the business. Management believes
        TTV is a useful measure because it includes the total price to the customer
        for each product or service and enables like for like comparison across
        all products.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Turnover represents the aggregate
        amount of revenue from products sold and it is stated exclusive of recoverable
        VAT and associated taxes. Where the Group acts as agent and does not
        take ownership of the products or services being sold, turnover represents
        commission earned, less amounts due or paid on any commission shared.
        Where the Group acts as principal and purchases the product or services
        for resale, turnover represents the price at which products or services
        have been sold across the Groups various platforms. Turnover also includes
        advertising and sponsorship income which is recognised over the period
        to whichit relates. Travel turnover is recognised on the date of departure.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | EBITDA consists of Group operating
        profit/loss before interest, taxes, depreciation and amortisation. EBITDA
        is included because management believes it is a useful additional measure
        of performance and allows for meaningful comparison between periods.
        EBITDA should not be considered as a substitute for operating loss, net
        income, cash flow or other statements of operations or cash flow data
        computed in accordance with UK GAAP or US GAAP or as a measure of our
        results of operations or liquidity. The EBITDA measures presented may
        not be comparable to similarly titled measures used by other companies.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Shares and per share amounts
        have been retroactively adjusted for the 284 for 1 bonus issue of Ordinary
        Shares which occurred on February 15, 2000.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Each ADS represents five shares.
|--- | --------------------------------

Balance Sheet Data:

|                                                                |  | At September
          30, |  
|--------------------------------------------------------------- |  | -------------------------- | -
|                                                                |  |                            |  
|                                                                |  | 1999                       |  
|                                                                |  |                            |  
|                                                                |  | (£)                        |  
|                                                                |  | (in thousands)             |  
|Amounts under UK GAAP                                           |  |                            |  
|Fixed assets                                                    |  | 403                        |  
|Current assets                                                  |  | 5,063                      |  
|                                                                |  |                            |  
|Total assets                                                    |  | 5,466                      |  
|Creditors: amounts falling due
        within one year          |  | 2,289                      |  
|                                                                |  |                            |  
|Total assets less current liabilities                           |  | 3,177                      |  
|Creditors: amounts falling due
        after more than one year |  |                           |  
|Provisions for liabilities and
        charges                  |  | 614                        |  
|                                                                |  |                            |  
|Net assets                                                      |  | 2,563                      |  
|                                                                |  |                            |  
|Share capital                                                   |  | 3                          |  
|                                                                |  |                            |  
|Amounts under US GAAP                                           |  |                            |  
|Total assets                                                    |  | 5,466                      |  
|Redeemable preferred stock                                      |  | 6,462                      |  
|Net (liabilities)/assets                                        |  | (3,903                     | )
|Share capital                                                   |  | 1                          |  
|                                                                |  |                            |  

Non-financial Operating Data:

Non-financial
    operating data are prepared to enable the Directors to monitor the Company’s
    performance and manage the business.

|                                                               |  | Year ended
          and at September 30 | 
|-------------------------------------------------------------- |  | ---------------------------------------- | 
|                                                               |  |                                          | 
|                                                               |  | 1999                                     | 
|                                                               |  |                                          | 
|Number of items sold in the
        period (1)                 |  | 23,866                                   | 
|Number of registered subscribers
        at the period end (2) |  | 364,750                                  | 
|Number of customers at the period
        end (3)              |  | 10,189                                   | 
|Number of suppliers at the period
        end (4)              |  | 548                                      | 

__________

|(1) | An item sold is an individually
        priced product or service purchased by a customer within the period.
|--- | ------------------------------------------------------------------------------------------------------------

|(2) | Registered subscribers are
        users of our website who have submitted their e-mail addresses and other
        data and have elected to receive lastminute.com’s weekly e-mail.
        This does not include users who register with the Company, but elect
        not to receive its weekly e-mails. Since lastminute.com counts its registered
        subscribers based on their e-mail addresses, users who registered multiple
        times using different e-mail addresses will count as multiple registered
        subscribers. For example, if a user has registered with lastminute.com
        using an e-mail address at work and one at home, the user will be counted
        as two registered subscribers.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The number of customers is
        the cumulative number of unique customers (excluding repeat customers)
        since the inception of lastminute.com and the cumulative number of Degriftour,
        Travelselect.com, Destination Group, Travelprice.com, eXhilaration and
        holiday autos unique customers (excluding repeat customers) since October
        2000, April 2002, June 2002, July 2002 , November 2002 and March 2003
        respectively. Customers are defined as individuals who have purchased
        goods and services over lastminute.com Group’s platforms.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | The number of suppliers includes
        individual airlines, hotels, holiday package suppliers, entertainment
        vendors, gift suppliers, restaurants, specialty service suppliers and
        car hire.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | Dividend Policy
| | ---------------

We
    have not paid cash dividends to our shareholders, and we currently do not
    expect to pay cash dividends for the immediate future. This is consistent
    with the intentions of the Group set out in the Registration Statement filed
    in connection with our Initial Public Offering (“IPO”) in 2000.
    We expect that all available cash from operations will be used to finance
    the growth and development of our business and to meet our projected capital
    and other expenditure requirements.

Under
    English law, any payment of dividends would be subject to the Companies Act
    1985 of Great Britain, which requires that all dividends be approved by our
    Board of Directors and, in some cases, our shareholders. Moreover, under
    English law, we may pay dividends on our shares only out of profits available
    for distribution determined in accordance with the Companies Act and UK GAAP.
    In the event that dividends are paid in the future, holders of the ADSs will
    be entitled to receive payments in U.S. dollars in respect of dividends on
    the underlying shares in accordance with the Deposit Agreement.

Exchange Rate Information

A proportion
    of our assets, liabilities, revenues and expenses are denominated in currencies
    other than pounds sterling. Accordingly, fluctuations in the value of the
    pound sterling relative to other currencies can have a significant effect
    on the translation into sterling of non-sterling assets, liabilities, revenues
    and expenses.

The
    following table shows, for the periods and dates indicated, certain information
    regarding the US dollar/pound sterling exchange rate, based on the noon buying
    rate, expressed in US dollars per £1.00.

Fluctuations
    in the exchange rate between the pound sterling and the US dollar will affect,
    among other things, the US dollar equivalent of the pound sterling price
    of our shares on the London Stock Exchange, which is likely to affect the
    market price of our ADSs on the Nasdaq National Market.

|Year ended September 30,                          |  |  | Period endUS$ |  |  | Average rate
      US$(1) |  |  | HighUS$ |  |  | LowUS$ | 
|------------------------------------------------- |  |  | ------------- |  |  | ------------------------- |  |  | ------- |  |  | ------ | 
|                                                  |  |  |               |  |  |                           |  |  |         |  |  |        | 
|1999                                              |  |  | 1.65          |  |  | 1.63                      |  |  | 1.72    |  |  | 1.55   | 
|2000                                              |  |  | 1.48          |  |  | 1.55                      |  |  | 1.68    |  |  | 1.40   | 
|2001                                              |  |  | 1.47          |  |  | 1.44                      |  |  | 1.50    |  |  | 1.37   | 
|2002                                              |  |  | 1.57          |  |  | 1.48                      |  |  | 1.58    |  |  | 1.41   | 
|2003                                              |  |  | 1.66          |  |  | 1.61                      |  |  | 1.68    |  |  | 1.54   | 
|Month                                             |  |  |               |  |  |                           |  |  |         |  |  |        | 
|August 2003                                       |  |  | 1.58          |  |  | 1.59                      |  |  | 1.62    |  |  | 1.57   | 
|September 2003                                    |  |  | 1.66          |  |  | 1.62                      |  |  | 1.66    |  |  | 1.57   | 
|October 2003                                      |  |  | 1.70          |  |  | 1.68                      |  |  | 1.70    |  |  | 1.66   | 
|November 2003                                     |  |  | 1.72          |  |  | 1.69                      |  |  | 1.72    |  |  | 1.67   | 
|December 2003                                     |  |  | 1.78          |  |  | 1.75                      |  |  | 1.78    |  |  | 1.72   | 
|January 2004                                      |  |  | 1.82          |  |  | 1.83                      |  |  | 1.85    |  |  | 1.79   | 
|February 2004 (through February
        13, 2004) |  |  | 1.88          |  |  | 1.86                      |  |  | 1.89    |  |  | 1.82   | 

__________

|(1) | The average rate is the average
        of the noon buying rates on the last day of each month during an annual
        period and the average of the noon buying rates on each day during a
        month period.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Capitalisation and Indebtedness

Not
    applicable to Annual Reports.

Reasons for the Offer and Use
      of Proceeds

Not
    applicable to Annual Reports.

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Risk Factors

The
    risks described below, should be carefully considered as our business, financial
    condition or results of operations could be materially adversely affected
    by such risks. Additional risks not presently known to us, or that we currently
    deem immaterial, may also impair our business operations.

Declines or disruptions in the
      travel industry generally could reduce our turnover

A large
    proportion of our total transaction value is driven by the trends, including
    seasonal fluctuations, which occur in the travel industry, including the
    airline, hotel, car rental and package holiday industries. As with the other
    products and services we offer, the travel industry is highly sensitive to
    business and personal discretionary spending levels and tends to decline
    during general economic downturns. In addition, other adverse trends or events
    that tend to reduce travel are likely to reduce our gross profit, including:

| | increased prices in the airline, hotel, car
        rental or other travel-related industries;           
|- | ---------------------------------------------------------------------------------------------------------
|  |                                                                                                          
| | shortages in the supply of lifestyle tickets
        available to the Group due to unusually high demand;
|  |                                                                                                          
| | increased occurrence of travel-related accidents;                                                        
|  |                                                                                                          
| | airline or other travel-related strikes;                                                                 
|  |                                                                                                          
| | regional hostilities, war and terrorism;                                                                 
|  |                                                                                                          
| | political instability; and                                                                               
|  |                                                                                                          
| | poor weather conditions (including exceptional
        local weather).                                   

We continue to face competition
      and if we are unable to compete effectively we may be unable to maintain
      or expand our unique customers and we may lose customers

If
    we are unable to adequately respond to the competitive challenges we face
    or establish a sustainable competitive advantage, we may be unable to maintain
    or expand our customers and we may lose market share. The markets for the
    products and services offered on our websites are increasingly competitive.
    As we compete with various companies across numerous product and service
    categories, we may be unable to predict or adequately plan for the strategies
    of our existing competitors. We may be unable to respond quickly or adequately
    to the changes in the marketplace brought on by new product and service offerings,
    the introduction of new website features and functionality, and the marketing
    and promotional efforts of our existing competitors or new competitors. We
    also expect that we will be continually challenged by new and existing competitors
    who may have longer operating histories, larger customer bases and greater
    brand recognition. In addition, our competitors may have significantly greater
    financial, technical, marketing and other resources than we do. Furthermore,
    our competitors may be established in a country or market prior to our entry
    or may replicate and successfully execute a business plan similar to ours.
    Any of those occurrences may increase our entry costs and decrease our ability
    to compete effectively.

We
    compete with both traditional and web-based distribution channels. In the
    travel industry, we face competition from airlines, traditional travel agents
    and on-line travel agents. In the entertainment industry, we face competition
    from traditional distribution channels, such as venue box offices and ticket
    shops, and on-line distribution channels. In connection with our ability
    to provide gifts and auctions, we face competition from popular stores, well-known
    auction houses and well-established on-line vendors.

In
    addition, given the recent alliances forming in the travel industry among
    airlines and hotels, it is possible that major airlines and hotels not participating
    in our service could exert pressure on other alliance partners not to supply
    us with airline tickets or hotel bookings. Alternatively, the alliance partners
    could establish their own e-commerce websites or other similar services to
    bundle their branded or unbranded products. If any of these events were to
    occur, they could have a negative effect on the breadth of products and services
    we offer and our turnover.

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Historically we have not been
      profitable

We
    have experienced losses in each year since our inception on April 1, 1998
    and in the period from April 1, 1998 to September 30, 2003 we have incurred
    losses of £103.5 million before goodwill amortisation of £76.3
    million, which resulted in total losses for that period of £179.8 million.

We
    had a net cash inflow from operating activities in 2003. EBITDA was positive
    for the first time in 2003, although operating results after depreciation
    and goodwill amortisation continued to show an operating loss. However, if
    we are not able to increase turnover, maintain margin levels, or control
    our cost base we will not be able to reach operating or total profitability.

If we do not maintain our relationships
      with suppliers, we may be unable to increase the attractiveness of our
      services or provide satisfactory services to our registered subscribers,
      which would limit our potential market share

Some
    of our suppliers, such as airlines, offer their products or services directly
    to consumers through the Internet and may not use our website. Although we
    are not aware of any airlines having decided to concentrate exclusively on
    offering last minute services through an Internet-based platform, a number
    of airlines now offer Internet-based travel services. These initiatives could
    prove to be a serious threat to our supplier base and one of our product
    categories.

Our
    business model relies on our relationships with suppliers to increase the
    number and variety of products that we offer and provide additional services
    and content to attract new users. Despite the growth in size of our business
    giving us buying power within the market, supplier relationships are fundamental
    to our success. In turn, we believe a large customer base encourages our
    suppliers to accept our website as an efficient and profitable distribution
    channel for their products and services and to expand their use of it. If
    we do not maintain the quality of our supplier relationships, the number
    and breadth of products and services we offer could significantly decrease.
    As a result, we may be prevented from increasing the attractiveness of our
    services to our customers, which would limit our potential market share.

Although
    we have either formal contracts or letter agreements with the majority of
    our suppliers, not all of our suppliers are under an obligation to offer
    their products and services through our website. It is possible that suppliers
    may choose not to distribute their products and services through our website,
    or through the Internet at all. Suppliers could elect to terminate our contracts
    at any time or upon short notice, pursue relationships with our competitors,
    develop or acquire services that compete with our services or sell exclusively
    through other sales and distribution channels.

In
    addition, we rely on our suppliers' computer and distribution systems. Any
    interruption in the services of these computer and distribution systems or
    deterioration in our suppliers' services will negatively affect our customers'
    perception of our services. If the products and services that we are able
    to offer are not well received by our customers, our reputation could be
    damaged and our gross profit could decrease.

If our systems are unable to provide
      acceptable performance as the use of our services increases, we may not
      be able to attract new customers and suppliers and may lose existing customers
      and suppliers to our competitors

If
    we are unable to provide reliable, real-time access to our information systems
    for our customers and suppliers, we may not be able to attract new customers
    and suppliers and may lose our existing customers and suppliers to our competitors.
    As our operations grow in both size and scope we will need to continuously
    improve and upgrade our systems and infrastructure to maintain and improve
    the reliability, security and speed of, as well as access and availability
    to, our website.

Historically,
    we have at times experienced slow delivery times, unreliable service levels
    or insufficient capacity. We have also experienced relatively brief computer
    system interruptions, and these interruptions may recur. Our servers are
    vulnerable to computer bugs, viruses, physical or electronic break-ins and
    similar disruptions. Our systems and operations are also vulnerable to damage
    or interruption from a number of sources, including fire, flood, power loss,
    telecommunications failure, physical and electronic break-ins and other similar
    events. Any substantial disruption of this sort could significantly impair
    our ability to generate sales from our website.

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Recent acquisitions may have adverse
      effects on our business

We
    have made a number of acquisitions of companies in the last financial year.
    These acquisitions involve certain risks that may adversely affect our business
    in several respects. For example, the integration of the acquired companies
    requires significant attention from our management, which could have an adverse
    affect on our ability to manage our business and could increase our losses.

As
    expected, the internal controls in a number of the smaller acquired businesses
    were not as mature or robust as required in a public company because they
    were typically small growing entrepreneurial businesses. Management has worked
    on improving these controls during the year and believe they will be strengthened
    further as all businesses are moved to Oracle in the next financial year.

In
    addition, our recent acquisitions aimed to improve distribution channels,
    increase market share and bring synergies to various areas of the business.
    There is a risk that those expected synergies may not be realized and our
    cost base may not be reduced to the extent anticipated. Finally, the impact
    of integration of acquired companies on our cultures, policies and locations
    may cause disruption affecting both our TTV and our margins.

Rapid growth may cause control
      issues if the risk is not managed correctly

Following
    46% organic growth and in excess of 100% growth through acquisition year-on-year,
    there is the ongoing risk that control may be lost. Problems may be addressed
    reactively rather than pro-actively as senior management seeks to maintain
    control over the rapidly grown business. For example acquired businesses
    do not normally use the same systems as us, so unless we integrate efficiently,
    there may be reporting issues, or our current systems may not be robust enough
    to cope with our current level of organic growth.

We will be less competitive in
      our industry if we are unable to attract, retain and motivate key individuals
      and highly skilled employees

While
    we have employment agreements with restrictive covenants with each of our
    executive officers and other key employees, these agreements do not prevent
    these executives from terminating their employment at any time. As a result,
    these executives may elect to pursue other opportunities at any time. The
    loss of the services of any executive officer or other key employee could
    adversely affect our business.

In
    addition, as our business has expanded, we have needed to add new information
    technology and engineering personnel to maintain and expand our website and
    systems and customer support personnel to serve our increased customers base.
    If we become unable to hire and successfully train sufficient employees or
    contractors in these areas, users of our website may have negative experiences
    and we may lose customers, which could decrease our gross profit and the
    value of our brand.

We rely on services from third
      parties to carry out our business and to deliver our products to customers.
      If there is any interruption or deterioration in the quality of these services
      our customers may not continue using our services

We
    rely on third-party computer systems and third-party service providers, including
    the central reservation systems of airlines and hotels and our marketing
    partners, to make airline tickets and hotel room reservations and credit
    card verifications and confirmations, to host our website and to advertise
    and deliver the products sold on our website to customers. We also rely on
    third-party licenses for the software underlying our technology platform.
    Any interruption in our ability to obtain the products or services of these
    or other third parties or a deterioration in their performance could impair
    the timing and quality of our own service. If our service providers fail
    to deliver high-quality products and services in a timely manner to our customers,
    our services will not meet the expectations of our customers and our reputation
    and brand will be damaged. Furthermore, if our arrangements with any of these
    third parties are terminated, we may not find an alternative source of systems
    support on a timely basis or on terms as advantageous to us.

Our operating results may fluctuate
      and be difficult to predict, and if we fail to meet the expectations of
      securities analysts or investors, the market price of our shares and ADSs
      may decline significantly

If
    our operating results fall below the expectations of securities analysts
    or investors, the trading price of our shares and ADSs may decline significantly.
    Since our operating results may fluctuate and be difficult to predict, we
    believe that quarter-to-quarter comparisons of our operating results may
    not provide a good indication of our future performance.

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Our
    quarterly operating results may fluctuate significantly in the future due
    to a variety of factors, many of which are outside our control. These factors
    include:

| | any change in the mix of products
        since some of our offerings, such as gifts, earn higher commission rates
        than others, such as airline tickets; and
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                     
| | seasonal and economic patterns
        and trends which affect the different markets for the products we offer.                                                     

A decline in commissions or the
      availability of our merchant rates or the elimination of commissions could
      reduce our gross profit

Currently,
    the principal source of our gross profit is commissions or merchant rates
    paid to us or provided to us by suppliers for bookings or purchases made
    through our website. If current industry standard gross margins decline or
    otherwise change or if our suppliers reduce their commission rates or eliminate
    commissions entirely, it is possible that our gross profit would be reduced.
    Travel suppliers are not obligated to pay any fixed commission rate for bookings
    or purchases made through our website and, as a result, the level of our
    commissions may fluctuate. Moreover, commissions in the airline industry
    have been falling over the past few years.

We
    generally earn industry standard commissions on most of the products we offer
    on our website, which vary by industry segment. Commission rates in jurisdictions,
    other than the United Kingdom, in which we operate may be based on fixed
    amounts rather than stated as a percentage of the total value of the product
    or service sold, which may cause turnover to be lower in those jurisdictions
    than in jurisdictions where commissions are paid on a percentage basis.

Rapid technological changes may
      render our technology obsolete or decrease the competitiveness of our services

If
    our competitors introduce new services that employ new technologies, or if
    new industry standards and practices emerge, our existing website and proprietary
    technology and systems may become obsolete. The Internet and the e-commerce
    industry are rapidly changing. In particular, the on-line travel industry
    is characterised by increasingly complex systems and infrastructures. Unless
    we are able to respond to technological advances and emerging industry standards
    and practices on a cost-effective and timely basis we may not be able to
    respond to competitive challenges.

We
    may also use or procure new technologies ineffectively or we may fail to
    adapt our website's transaction-processing systems and network infrastructure
    to customer requirements or emerging industry standards. If we face material
    delays in introducing new products, services and enhancements, our customers
    and suppliers may not use our website and we may be at a competitive disadvantage.

If either we or our third-party
      ticketing agents lose licence accreditations, we may experience temporary
      difficulty in furnishing tickets to our customers

In
    certain jurisdictions, we use third-party ticketing agents to furnish our
    customers' airline tickets for flight reservations made through our website.
    Each country where we operate has its own travel agent licensing requirements
    that either we or, depending on the jurisdiction, our ticketing agents must
    meet to operate as a travel agent and to furnish airline tickets. If either
    we or any of our third-party ticketing agents were to lose the relevant licences
    or accreditations, we may not be able to furnish tickets to our customers
    until we located a substitute agent to provide ticketing services. Furthermore,
    the terms and conditions of any substitute arrangements may not be on the
    same terms or on terms as favourable as our current arrangements.

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Our strategy to develop internationally depends on our ability to develop an adequate international supplier and customer base, and if we fail to attract sufficient international demand for our services, our growth will be limited and our operating results may be harmed

We launched our website in France, Germany and Sweden in 1999, and in Spain, The Netherlands and Italy in 2000. The acquisitions in September 2000 of the Degriftour Group in France and at the end of July 2002 of the Travelprice.com Group, which operates in France, Belgium, Italy and Spain, form part of our strategy to further expand our business in continental Europe. In 2003 our acquisition of holiday autos increased our scale in Germany and gave us a significant business presence in Scandinavia. We may pursue expansion through further acquisitions or otherwise. If we do not develop adequate local supplier or customer bases we do not believe that the local versions of our website will be accepted as a viable market
for our products and services in these or other European countries. In this case, our growth will be limited and our operating results may be harmed. We continue to invest in promoting our websites in France, Germany, Sweden, The Netherlands, Spain, Belgium and Italy.

We are also exploring opportunities to expand into other markets. We established joint ventures with Travel.com.au in Australia and New Zealand in March 2000 and Tourvest in South Africa in May 2000. In August 2000, lastminute.com was launched in the Australian market. In September 2001 we completed a joint venture agreement with Sol Melia Travel SA in Spain, repurchased in September 2003. We also announced a joint venture partnership in January 2002 with Kinki Nippon Tourist Co. Limited, Nippon Travel Agency Co. Limited, Japan Efund, Mitsubishi Corporation/MC Capital fund and Credit Saison Co. Limited, establishing an e-commerce business in Japan. If these joint ventures do not develop an adequate supplier or
customer base we do not believe that the local version of our website operated by these joint ventures will be accepted as a viable market for our products and services, in which case our growth may be limited and our operating results may be harmed.

Our future turnover and operating results depend upon consumers continuing to access our website from the United Kingdom, France, Germany, Sweden, Belgium, The Netherlands, Italy, Spain, Australia, South Africa, Japan and, over time, other parts of Europe and elsewhere.

Our international operations involve risks relating to purchasing, travel patterns, practices and Internet-based commerce in foreign markets, and if we are unable adequately to address these risks, the growth of our international operations will slow down

In order to achieve widespread acceptance in each country in which we operate, we believe that we must tailor our services to the unique customs and cultures of that country. Learning the customs and cultures of various countries, particularly with respect to purchasing and travel patterns and practices, is difficult and our failure to do so adequately could slow our growth in those countries.

We also face risks specific to Internet-based commerce in foreign markets. Among others, any of the following international risks could delay our international growth and harm our operating results:

| | delays in the development of the Internet
    as a medium of commerce in international markets;                 
|- | ----------------------------------------------------------------------------------------------------------------
|  |                                                                                                                 
| | delays in the development of the backbone
    and bandwidth of the Internet;                                    
|  |                                                                                                                 
| | difficulties in managing operations due to
    distance, language and cultural differences;                     
|  |                                                                                                                 
| | consumer unwillingness or inability to use
    credit cards or other similar modes of payment, like smart cards;
|  |                                                                                                                 
| | unexpected changes in regulatory requirements;                                                                  
|  |                                                                                                                 
| | tariffs and trade barriers and limitations
    on fund transfers;                                               
|  |                                                                                                                 
| | difficulties in staffing and managing foreign
    operations;                                                   
|  |                                                                                                                 
| | exchange
rate fluctuations;                                                                                     
|  |                                                                                                                 
| | increased risk of piracy and limits on our
    abilities to enforce our intellectual property rights; and       
|  |                                                                                                                 
| | brand confusion where similarly named ventures
    already exist.                                               



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If the growth in the use of the Internet by consumers and businesses for e-commerce does not continue or declines, our business will not succeed and the value of our shares and ADSs will decline

Our future gross profit and operating results depend upon the widespread acceptance and use of the Internet and on-line services as a medium for commerce throughout Europe and elsewhere. Acceptance of the use of on-line services in turn depends in part on acceptance of the Internet as a secure environment in which to release credit card and other personal data. Rapid growth in the use of the Internet and on-line services may not continue. The growth in use of the Internet by consumers for e-commerce purposes may not continue or use may decline. Demand for and market acceptance of recently introduced products and services over the Internet as well as Internet security is subject to a level of uncertainty.

Our success will depend on the development and maintenance of an infrastructure to cope with the Internet's increased traffic. We believe that a reliable network backbone with the necessary speed, data capacity and security, which may be accessed in a cost effective way, and the timely development of complementary products for providing reliable Internet access and services are essential to the development of the Internet as a vehicle of commerce. Major on-line service providers and the Internet itself have experienced outages and delays. Outages and delays are likely to negatively affect the level of Internet usage and the processing of transactions on our website.

Consumers may also find that buying products through traditional or other methods may be more attractive or reliable than using our website.

If we fail to increase our brand recognition among consumers, we may not be able to attract and expand our customer base

We believe that enhancing and maintaining the lastminute.com brand is fundamental to our efforts to attract customers and to expand our registered subscriber base, especially since there are a number of websites that offer potentially competing services. Many competing websites already have well-established brands in on-line services or the travel industry generally. Promotion of our brand may well depend on personal recommendations and repeat business based on our success in providing a high-quality on-line experience supported by a high level of customer service. Our marketing and advertising expenditures may not be effective to support our brand. Even if recognition of our brand increases, it may not lead to an
ongoing increase in our customer base.

We may be unable to acquire or maintain domain names, or prevent third parties from acquiring domain names that are similar to, infringe or otherwise decrease the value of our trade marks and other proprietary rights

We depend on domain names that are consistent with our brand identity to deliver consumers to our website who are familiar with our brand. We intend to continue to acquire domain names as suitable opportunities arise. We may not be able to acquire or maintain the “lastminute” domain name in all countries in which we operate or into which we may seek to expand our operations. Companies with similar domain names and which offer similar products or services to ours may impair our ability to compete effectively on the Internet or use the lastminute.com brand in one or more jurisdictions and, if our brand name is confused with theirs and their products and services are inferior, may dilute the value of our
brand and damage our reputation. Domain names including “lastminute”, but with differing country modifiers which we would wish to use in some of the countries into which we have and may continue to expand, such as www.lastminute.de in Germany and www.lastminute.nl in The Netherlands, are owned by third parties. The acquisition and maintenance of domain names generally is regulated by applicable laws, as they are applied by the courts, governmental agencies and their designees and Internet regulatory bodies. The system for registration is subject to change as the Internet Corporation for Assigned Names and Numbers ("ICANN") assumes increased responsibility for that system from Verisign Inc. and the US Department of Commerce and as new registrars are accredited by
ICANN. The introduction of new domain suffixes is still possible. There can be no assurance that our domain names or their value will not be affected by changes related to the registration and protection of domain names. If we were to lose the exclusive right to use our domain names, or were unable to prevent our brand being diluted through the introduction of new domains or the use of similar domains, our Internet sales may be irreparably damaged because customers may be unable to find our website or may be diverted to other sites. Governing bodies may establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. Even if we acquire domain names that include “lastminute” in the relevant jurisdictions, we
may be compelled to use a different domain name than lastminute.com. Depending on the laws of a particular jurisdiction, we might not be able to make certain offers under the name or domain name “lastminute”.

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If we are unable to protect our intellectual property from copy or use by others, our competitors may gain access to our content and technology

We regard much of our content and technology as proprietary and try to protect our intellectual property rights by relying on trade mark and copyright protection and confidentiality laws and contracts. If we are unable to protect our intellectual property, it would be possible for someone else to copy or otherwise obtain and use our proprietary content and technology without our authorisation or to develop a similar business model independently, which would put us at a competitive disadvantage. There may not be effective trade mark, copyright and confidentiality protection in every country in which our services are made available and policing unauthorised use of proprietary information is difficult and expensive. For
example, French law does not provide for any patent protection for software and know-how.

The steps we have taken may be inadequate to prevent the misappropriation of our proprietary information. Any misappropriation could have a negative effect on our business, our operating results and the value of our brand. Furthermore, in the future, we may need to go to court to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. Litigation relating to our intellectual property might result in substantial costs and diversion of resources and management attention.

If we are unable to obtain trade mark registrations for our brands and prevent third parties from using similar names, the value of our brand may be diminished

We may not be able to obtain trade mark registrations in the European Union and in any of the countries in which we operate or into which we may expand. In addition, there may be substantial delays in obtaining registrations. Our application to obtain registered trade mark protection  in the European Union for the name “lastminute.com” has met with a number of objections from the European Union trade mark registry that the name is not descriptive of our services and other objections may be received from other relevant trade mark registers or third parties. Furthermore, several competitors in relation to their late booking or late purchase services use the term “last minute”. These two factors
may make it difficult for us to register our name as a trade mark and prevent third parties from using similar names in relation to competing products and services, which may result in dilution or devaluation of our brand.

We may be sued for infringing a third party's intellectual property rights and, if we were to lose our intellectual property rights, we could be unable to carry on our business in its current form or to expand our operations internationally

We could be sued based on a claim that we have infringed the patents, copyrights, trade marks, service marks or other intellectual property rights of a third party. In particular, we are aware of the existence in several jurisdictions of third parties who have company names, trade marks or domain name registrations which are similar to our name. The existence of these third-party company names, trade marks and domain names may have a material effect on our ability to carry on our present operations, or to expand our operations into those jurisdictions..

We have not launched a US or Canadian version of our lastminute.com website, although we may do so in the future. The existence of third-party rights in the United States, Canada and some other jurisdictions may prevent us from operating successfully there under our current brand name, as we are aware of a number of third parties who use the words last minute in their company or business names or domain name registrations. Some of these third parties have also obtained trade mark registrations incorporating the words last minute, and it is possible that any of these third parties may sue us for trade mark infringement or related claims.

If we were sued for infringing the trade mark rights or other intellectual property rights of a third party, it may be costly for us to defend these claims and we may have to pay substantial damages and third-party costs as well as our own legal fees, or discontinue any of our operations, including the use of our domain names, which have been determined to be within the scope of the third party's intellectual property rights. Any of these outcomes could have a negative impact on the value of our brand, our operating results, our ability to implement our business plan and our ability to carry on our business in its current form or to expand our business to new markets.

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If we are unable to ensure the security and privacy of the confidential information of our customers, they may discontinue using our services

Any publicised security problems affecting e-commerce companies could inhibit the growth of Internet-based commerce and, accordingly, cause our customers to discontinue using our services and inhibit our gross profit growth. The secure transmission of confidential information over the Internet and the security of our systems, in general, is essential in maintaining consumer and supplier confidence in our services. We rely on licensed encryption and authentication technology to effect secure transmission of confidential information, including credit card numbers.

There have been external instances where unidentified third parties have individually or collectively taken action to deliberately disrupt the operations of major commercial websites similar to ours. If similar action were taken against our website, it could limit our ability to operate our website and damage the systems we use to operate our business, which could have a negative impact on our reputation and our results of operations. A party that is able to circumvent our security systems also could steal proprietary information. Security breaches also could expose us to a risk of loss or litigation and possible liability. Under current credit card practices, we may be held liable for fraudulent credit card
transactions and other payment disputes with customers. In the event of a security breach, the extent to which we may be able to claim against our firewall provider for any losses suffered by us arising out of a failure of our firewall, which is a network device that separates the public Internet from the private network to allow the enforcement of data security policies, is limited and may be insufficient to repair our computer systems or recover our losses.

Government regulation relating to e-commerce may restrict our ability to collect and use data that is of commercial use to us

We may face restrictions on our ability to collect and use personal data and possible civil and criminal sanctions for its unauthorised or improper use

The European Union has adopted a directive which imposes restrictions on the collection, use and processing of personal data. Pursuant to the directive, we need to ensure that we use personal data in the most commercially beneficial way within the provisions of applicable data protection legislation. We currently do this through our registration process and privacy policy, but we may be unable or it may be impractical, to obtain the required consents in the future and this may limit our ability to use personal data.

The directive has been implemented in the United Kingdom through the Data Protection Act 1998, which came into force in March 2000. It has not yet been implemented in some other EU member States in breach of EU requirements. To the extent that existing data protection legislation in those non-compliant member States conflicts with the directive, the provisions of the directive will prevail.

Furthermore, member States have discretion in the implementation of some provisions and any resulting laws may vary to a substantial extent from country to country. We may therefore be obliged to comply with different legislative requirements which could have an impact on our ability to collect and share data with third parties, such as advertisers or suppliers. These requirements could restrict our ability to capture and use data that is of commercial value to us. Failure to comply with data protection legislation in the countries where we operate may leave us open to criminal and civil sanctions. If we breach applicable data protection legislation, we may be subject to claims from our users claiming that we have
infringed their privacy, and we could face administrative proceedings initiated against us by the applicable data protection regulatory authorities. In certain jurisdictions, the regulatory authorities have the authority to levy substantial fines for breaches of applicable interest.

If we are unable to use "cookies", we may be unable to provide targeted offerings

Cookies are pieces of information sent by a web server to a web browser that the browser is expected to save and which can later be used to identify a user. Websites typically place cookies on a user's hard drive without the user's knowledge or consent. We use cookies for a variety of reasons, including collecting data derived from the user's activity while visiting our website, and we currently require users to enable the usage of cookies before they can make purchases from our website. However, most currently available web browsers allow users to remove cookies at any time or to prevent cookies from being stored on their hard drives. Also, users accessing websites using their employers' computer systems may be
restricted in their ability to receive and store cookies by virtue of their employers' security policies. There is a directive relating to processing of personal data and the protection of privacy in the electronic communications sector (the “Electronic Communications Sector Directive”). The Electronic Communications Sector Directive was to be implemented by the member states by October 31, 2003 (in the United Kingdom it was implemented on December 11, 2003 by the Privacy and Electronic Communications (EC Directive) Regulations 2003) as this Directive requires companies in the EU members States to give clear and comprehensive information about the use of cookies prior to using any website, and give the user an option to

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refuse such use. In France, CNIL (La Commission Nationale de l'Informatique et des Libertés) has issued a recommendation that the use of cookies should be disclosed to users and that users should be informed of their right to oppose their use and that the misuse of cookies can give rise to criminal liability in certain circumstances. Under the Directive, cookies are to be considered as a means of processing data and will be regulated by the principles of the Directive if data qualifying as personal data is collected. Cookies are now subject to increased levels of legislation limiting or prohibiting their use. Limitations on, or the elimination of, our use of cookies, or obligations on us to allow registered
subscribers to object to the use of cookies could limit the effectiveness of the advertisements that are delivered on our websites and could also limit the effectiveness of our sales and marketing efforts.

Due to our presence on the Internet and operation as an e-commerce website we may be open to civil and criminal sanctions in numerous jurisdictions

E-commerce is new and rapidly changing, and regulation relating to the Internet and e-commerce is new and evolving. The European Union has recently adopted a directive dealing with certain aspects of electronic commerce such as liability for intermediate service providers and electronic contracting and has adopted another directive dealing with electronic signatures. We will need to comply with certain aspects of the directive on electronic commerce, such as information that will need to be provided to consumers in conducting e-commerce. EU member states were expected to implement the directive before January 17, 2002, although not all have done so. The United Kingdom implemented them through the Electronic Commerce
(EC Directive) Regulations 2002 which came into force on August 21, 2002. The European Union's distance selling directive is also applicable to e-commerce and is already required to be implemented by the member states of the European Union. The United Kingdom implemented this directive as the Consumer Protection (Contracts Concluded by Means of Distance Communication) Regulations 2000, which came into force on October 30, 2000. These regulations provide for certain information to be provided to consumers prior to and after concluding a contract over the Internet and further provide consumers with a cancellation period with respect to the purchase of certain goods and services. It is possible that additional laws will be enacted in respect of the sale of goods and services over the
Internet, such as tougher consumer protection laws, which could reduce the rate of growth of e-commerce and could harm our business both directly and indirectly.

France has recently adopted several laws that include provisions specific to Internet and e-commerce such as provisions dealing with the liability of access providers or host providers and provisions dealing with electronic signatures as well as provisions dealing with auction sales of certain types of goods on the Internet. There are a number of other laws and regulations that also indirectly affect e-commerce such as the regulation on encryption or more generally consumer protection (such as the use of the French language and the regulation of distance selling), commercial law (such as the regulation of advertising, pricing and sales practices, lotteries and games), or regulated activities (such as the regulation
of travel agencies) that may place constraints on the integration of the business.

Due to the global nature of the Internet, it is possible that, although the servers and infrastructure used to provide our services are based in the United Kingdom and France and transmission by us of the content over the Internet originates primarily in the United Kingdom, the governments of other countries might attempt to regulate the content of our website or transmissions using our services or might prosecute us for violations of their laws. Any legislation or regulation prescribing the content of our website or transmissions, the application of existing laws and regulations from jurisdictions whose laws do not currently apply to our business, or the application of laws and regulations to the Internet and other
on-line services could make it difficult for us to operate our business. Failure to comply with relevant Internet and e-commerce legislation or regulation may leave us open to civil and criminal sanctions.

In addition, the EU Council of Ministers adopted a regulation in December 2000, which came into force on March 1, 2002, regarding the jurisdiction, recognition and enforcement of judgements in civil and commercial matters. This is likely to mean that consumers who are party to on-line contracts will in many cases be entitled to sue in their own jurisdiction irrespective of the location of the contractual counter-party. This is likely to substantially increase costs in the case of litigation, and may have an adverse impact on the development of e-commerce in Europe as a whole.

Under French law, if a web page can be viewed in France, any potential offence which arises out of that web page will be subject to the jurisdiction of the French courts and French law.

Furthermore, in many jurisdictions, marketing and advertising are heavily regulated. Applicable laws in some jurisdictions impose more restrictions on the methods and terminology used to approach prospective customers in relation to the products and services offered. For example, in its report of July 2, 1998 on the Internet and digital networks, the Conseil d'Etat, France's highest administrative tribunal, specifically stipulated that the Internet should be considered as advertising space and that existing legal rules should be applied. These rules encompass a wide range of areas, such as rules on the protection of minors, the nature and content of advertising, the regulation of unsolicited email, and the
Loi Toubonon the obligation to use the French language. These regulations are applicable to web pages, as well as banners, e-mail, icons, sound, text, pictures and even hypertext links. As a result of this type of

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regulation, we may have to rely on more conservative marketing methods, may not be able to maintain or increase our market share in those countries or may have to discontinue some of our offerings.

We may be subject to litigation for content provided or representations made on our website, which may be costly and time-consuming to defend

Because users may access content on our website, download our content and transmit it to others over the Internet, we may be subject to intellectual property infringement claims against us as content service providers. Any claims, with or without merit, could:

| | be time-consuming to defend;                
|- | --------------------------------------------
|  |                                             
| | result in costly litigation; or             
|  |                                             
| | divert management's attention and resources.

Our website contains links to other websites, which may contain links to further websites. As a result, we may be subject to claims alleging that, by directly or indirectly providing links to other websites, we are liable for intellectual property right infringement or the wrongful actions of third parties through their websites. Due to the combination of windows, deep links and hyperlinks, there is a risk that users will consider us the direct supplier of products and services advertised and offered by our partners on our site.

In addition, successful actions for defamation have been brought against service providers in the past in the United Kingdom, the United States and other jurisdictions in which we operate or may operate in the future. It is also possible that if any information, accessible on our website, contains errors or false or misleading information, or if we are negligent in providing information, third parties could take action against us for losses incurred in connection with such information.

Our general liability insurance will not cover all potential claims of third parties to which we are exposed.

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ITEM 4. INFORMATION ON THE COMPANY

History and Development of the Company

Last Minute Network Limited was incorporated in England and Wales on April 1, 1998 as a private limited company and commenced offering products and services on the lastminute.com website in October 1998. In February 2000, the Company implemented a share capital reorganisation whereby the shares of Last Minute Network Limited were exchanged for shares in lastminute.com Limited having equivalent rights and restrictions. Subsequently, lastminute.com Limited re-registered as a public limited company, lastminute.com plc.

Our primary activities during the period prior to launch of the UK version of the lastminute.com website consisted of creating our website, recruiting and training employees, developing a business model, implementing systems to support the business model, developing relationships with suppliers and developing the lastminute.com brand. Operations commenced on October 1, 1998 on the UK website with the sale of last minute deals on flight and hotel room reservations, entertainment and gifts.

After the launch of the UK website, other lastminute.com websites were launched principally within Europe over the following two years.  Since 2000, we have also significantly increased the breadth and size of the Group's business through a number of strategic acquisitions including:

|In 2000 | - | Degriftour
(principally French based)          
|------- | - | -----------------------------------------------
|        |   |                                                
|In 2002 | - | Travelselect.com
(UK based)                    
|        | - | Destination Group (UK based)                   
|        | - | Travelprice.com (principally French based)     
|        | - | eXhilaration (UK based)                        
|        |   |                                                
|In 2003 | - | holiday autos (principally UK and German based)
|        | - | Med Hotels (UK based)                          
|        |   |                                                
|In 2004 | - | First Option Hotel Reservations Ltd (UK based) 

Capital expenditure for the year ended September 30, 2003 was £17.8 million compared to £7.0 million for the year ended September 30, 2002 and  £8.4 million for the year ended September 30, 2001. In each of the three years capital expenditure principally related to purchase and development of computer systems and equipment.

Business Overview

lastminute.com remains the number one online travel agency in Europe in terms of total sales (per PhoCusWright, leading independent analysts).   We offer comprehensive travel and leisure services including flight bookings, hotel reservations, car hire, holidays (self packaged and third party packaged), cruise, Eurostar and train tickets, entertainment events, rock and pop concerts, theatre tickets, restaurant reservations, sporting events, gifts, auctions and some speciality services such as our restaurant food delivery service and DVD home delivery service.

Total revenues by activity and geographic market are as follows:

|               |  |  | Turnover(by product)               | 
|-------------- |  |  | ---------------------------------- | 
|               |  |  |                                    | 
|               |  |  | Year ended
          September 30, | 
|               |  |  |                                    | 
|               |  |  | 2001                               | 
|               |  |  |                                    | 
|               |  |  |                                    | 
|By
    product |  |  |                                    | 
|Flights        |  |  | 6,899                              | 
|Holidays       |  |  | 10,059                             | 
|Hotels         |  |  | 750                                | 
|Car hire       |  |  | 156                                | 
|Other*         |  |  | 47                                 | 
|               |  |  |                                    | 
|               |  |  | 18,416                             | 
|               |  |  |                                    | 

* Other includes advertising and sponsorship revenue

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|                               |  |  | Turnover(by destination and source)  | 
|------------------------------ |  |  | ------------------------------------ | 
|                               |  |  |                                      | 
|                               |  |  | Year
            ended September 30, | 
|                               |  |  |                                      | 
|                               |  |  | 2001                                 | 
|                               |  |  |                                      | 
|                               |  |  |                                      | 
|By
    geographical area       |  |  |                                      | 
|United Kingdom                 |  |  | 6,899                                | 
|France                         |  |  | 10,059                               | 
|Germany                        |  |  | 750                                  | 
|Italy                          |  |  | 156                                  | 
|Spain                          |  |  | 291                                  | 
|Other European Union countries |  |  | 214                                  | 
|Joint ventures                 |  |  | 47                                   | 
|                               |  |  |                                      | 
|                               |  |  | 18,416                               | 
|                               |  |  |                                      | 

lastminute.com is headquartered in London and the UK remains our primary market.  We have operations in 13 European markets, and three international joint ventures.  We have additional presence in various further global markets through our acquisition of the holiday autos group, Europe’s leading leisure car rental broker.

Our vision is to strengthen our position as Europe’s number one online travel and leisure retailer by continuing to delight our customers with great value inspiration and solutions, providing a service that customers can use everyday to make the most of their valuable leisure time.

We believe our customers buy from lastminute.com because we aim to offer:

| |    real-time access to attractively priced, last minute deals, including some of the lowest prices on many travel and entertainment deals;                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                               
| |  the convenience of a broad
      range of attractive packaged or individual offers which our customers can
    access quickly and with minimal effort; and                  
| |                                                                                                                                                                               
| |  the benefit of our ideas  we
      believe we have a reputation for offering our customers novel and distinctive
    products that inspire them to try something different.
| |                                                                                                                                                                               

We aim to provide a service that is accessible by our customers on the communications device which is most convenient to them and our service is available online, mobile phone, PDA, interactive TV, voice recognition, and via our customer service team.  At September 30, 2003 we had approximately 7.7 million registered subscribers and had served over 2.7 million customers since inception.  During the year we sold 3.5 million items.  Customers are defined as individuals who have purchased goods and services over our distribution platforms.  An item sold is an individually priced product purchased by a customer.  Our registered subscribers do not pay to register for our services.

The lastminute.com solution

We intend to remain true to our original vision of leveraging the power of the internet to match supply and demand to the benefit of suppliers and customers.  We believe that our business model could only happen through digital distribution and that our continuing investment in technology, our comprehensive database and deep relationships with our suppliers will ensure that we retain our competitive edge.

We believe we have established a powerful alternative distribution channel for our suppliers that supplements and enhances their core business and enables lastminute.com to have access to some of the best deals available.  Further to this, we observe that travel, technology and lifestyle trends are moving in lastminute.com’s favour.  Our target audience is young and mobile, more adventurous with their leisure time, keen to make the most of their free time, are having families later in life, and keep up to speed with the latest technology developments like broadband and WIFI.  All these developments will help accelerate lastminute.com’s growth.

The lastminute.com growth strategy

The financial year 2003 has been a year of continuing transformation for the Group.

The acquisition of eXhilaration in November 2002, which sells “experience” products, has enhanced our lifestyle product offering  one of the areas we believe differentiates us from our competitors by offering our customers a more comprehensive service.

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In April, the Group completed its acquisition of holiday autos group for £39.0 million.  holiday autos is a logical extension to lastminute.com’s existing travel and leisure offerings, is a further component for the Group’s dynamic packaging product and has provided an enhanced gross margin and geographic extension for the enlarged Group’s customers.  Integration into the Group has started and is in line with the expectations set at the time of acquisition.

In September, we raised approximately €102.6 million from the issue of unsecured convertible bonds.  These funds were raised to enable us to:

| | fund small scale acquisitions in growing European markets and in the lifestyle categories of our business;
|- | ----------------------------------------------------------------------------------------------------------

| | accelerate the delivery of a number of development projects which are intended to bring operational efficiencies and enhance conversion of “lookers to bookers”; and
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | invest in key brands across Europe.
|- | -----------------------------------

We
    used part of these funds in September 2003 for the repurchase of the 70%
    shareholding we did not own in lastminute.com Spain from our joint venture
    partner, Sol Meliá, for €6.0 million.  We believe that integrating
    our businesses in Spain, one of the fastest growing European online travel
    markets, should enable us to further strengthen our position in Europe.

In the current financial year we have completed the acquisition of Med Hotels, a UK based hotel consolidator and package holiday re-seller, for a consideration of £16.1 million, £8.0 million of which was paid in cash and the remainder in lastminute.com shares.  This acquisition provides the Group with a significantly advanced portfolio of resort based hotels.  We have also completed the acquisition of First Option, a UK based hotel consolidator and corporate travel specialist; First Option have some 21 retail kiosks principally at UK mainline railway stations and airports, which will provide the Group with an additional distribution medium for its products.

On
    Wednesday March 3, 2004 lastminute.com announced its proposal to acquire
    Online Travel Corporation plc, an online travel services supplier and retailer.
    Online Travel Corporation plc provides a comprehensive range of web based
    travel products for leisure and corporate clients. The offer made to Online
    Travel Corporation plc shareholders was 0.1319 lastminute.com shares for
    each Online Travel Corporation plc share held, valuing each Online Travel
    Corporation plc share at 31p per share.The
    offer, if accepted in full, will result in the issue of approximately 24.5
million new lastminute.com shares.

We believe that a number of further strategic acquisition opportunities are available in a number of areas.

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Our Offering

We believe we provide an extensive range of travel and leisure products to customers.  Product offerings comprise hotels, holidays (both pre-packaged and dynamically packaged), most modes of transport including flights, cars, trains, ferries and cruise and leisure activities including music, sports, events, theatre, restaurants and food, experiences and resort tours and gifts:

| | Flights                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | lastminute.com has preferred partnership agreements with major airlines giving access to multimarket product at preferential rates.  We have increased our charter flight supply during the year and have signed deals with two charter flight GDS suppliers which provides customers with even more flight availability.

| |       
| | ------
| | Hotels

| | During the third quarter of 2003 we centralised our internal hotel contracting function.  This transition from locally resourced and contracted hotel supply to one controlled from one focal point in London has enabled the Group to build stronger relationships with suppliers and to pass on an even greater selection of good value, high quality offers to lastminute.com customers.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We believe we have also significantly expanded the accommodation choice and availability to customers through a strategic commercial agreement with Sol Meliá, which gives access to Sol Meliá’s hotel search engine, together with exclusive Sol Meliá promotions.  In November 2003, we announced an agreement with WorldRes, a leading hotel booking engine for websites worldwide.  These relationships provide an even more comprehensive range of hotel product to our customers.  We aim to provide access to over 45,000 properties around the world in the short term by further connectivity projects.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Holidays                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | We believe we have continued to
      strengthen and deepen our relationships with major tour operators thus
    generating more exclusive product at special rates.                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| | Car hire
| | --------

| | The acquisition of holiday autos significantly enhanced car hire supply.  As a leading car hire brand in Europe, holiday autos has strong historic relationships with international and local major car rental companies. In 2003, holiday autos secured an exclusive relationship with Alamo/National for car rental supply in North America.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                               
| | Travel extras                                                                                                                                                                                                                                                                                                                                 
| | During the year we announced an
      exclusive deal with BCP, the UK's leading airport parking booking service,
      which allows UK customers booking travel online to save money on airport
      parking. In addition, we announced a partnership with Mondial to provide
    customers with cost effective travel insurance.            
| |                                                                                                                                                                                                                                                                                                                                               
| | Lifestyle                                                                                                                                                                                                                                                                                                                                     
| | In 2003, in the UK, over 300,000
      customers purchased lifestyle products. Lifestyle products represent over
      20% of items sold during the year and are counter cyclical with the travel
    business’ quiet periods of Winter and Spring with many repeat purchases.                                                                
| |                                                                                                                                                                                                                                                                                                                                               
| | We also established a partnership
      with Theatrenow, the independent information service for theatre-goers
      and late availability online ticket channel in London. This partnership
      creates a new independent ticket sale and marketing channel for producers
    and theatre venues.                                          

Launch of Dynamic Packaging

Dynamic
    packaging was launched, initially in the UK, in November 2002. It enables
    customers, in the same shopping basket, to build a holiday which suits their
    individual needs and receive an integrated invoice for those products. When
    this service was launched, only flights and hotels were available for packaging.
    During 2003, the product range available within dynamic packaging was extended
    to include car hire, insurance and airport parking. Dynamic packaging has
    mainly featured scheduled airlines and city hotels, therefore enabling customers
    to create traditional city break holidays.

We expect to expand dynamic packaging further in 2004 by adding resort destinations to the offering, extending the flights product to charter flights and including restaurants and entertainments. In July 2003, we increased charter flight availability through the

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normal flight engine by an agreement with Avro, the UK's leading charter flight-only operator.  This provided access to approximately two million charter seats for customers to the all important summer sun destinations.

Dynamic packaging was launched in France and Italy during the last financial year.  Spain went live in December and Germany has gone live in February.

Alternative Distribution Channels

We continue to support our belief that our service should be available to our customers wherever they are and on the communications device of their choice.  We have deepened our relationship with the leading interactive television companies and mobile operators to ensure that our services are available to their customers.  During the year we announced two significant deals with Vodafone Live! and “3” which enabled customers to browse lastminute.com in colour from their mobile phones.

In the next 12 months we are looking forward to developing these technologies to provide location based services for customers.  We utilize the same database as our website for these multi-platform opportunities, and adapt the user interface and content depending on the device.

Our Website

During
    2003, we have achieved further scale through both significant organic growth
    and key acquisitions.

During the year we have made significant steps to improve the usability and reliability of the website, we have extensively deepened our product offering and feel we have provided customers with a lifestyle proposition which they can use on a daily basis to deliver inspiration and great value solutions.  These enhancements have contributed towards the significant increases in the number of subscribers to our newsletters and the conversion of those subscribers to customers.  Subscribers have increased to over 7.7 million at September 30, 2003, which represents an increase over last year of 20%, whilst customers have increased by 116% to 2.8 million at  September 30, 2003, up from 1.3 million at September 30, 2002.

Our improved conversion rate has been supported by our increased level of customer satisfaction.  In a recent online survey (conducted during September 2003), of those who responded, over 50% of visitors to the site have made a purchase from lastminute.com, 79% of users are returning visitors and 93% of visitors are satisfied with the lastminute.com offering.

Strategic Relationships

We have continued to develop strategic brand partnerships.  We have sourced a number of white label arrangements whereby lastminute.com provides booking engine technology for use by third parties, exclusive marketing partnership deals and the supply of products to new technology platform providers.

We are the online travel partner for Tesco.com, the UK’s largest online retailer, Voyages Auchan, a leading French supermarket retailer and developed a combined microsite with Eurostar called “le weekend”.  Customers on these sites are offered exciting lastminute.com travel offers which are promoted by the respective website’s homepages and online customer communications.  In 2003, we also entered into an agreement with Egg, Europe's largest online bank, to provide a monthly online newsletter to Egg's UK customers containing a full range of lifestyle offers and some exclusive lastminute.com offers for flights, holidays, hotels, dynamic packaging, entertainment and restaurants.

Also during 2003 lastminute.com’s range of products including travel deals, theatre tickets and retail products, was offered to users via Sky Active.  In addition we entered into a partnership with video mobile phone company ‘3’ whereby lastminute.com offers products on Third Generation mobile services using product images.

Marketing, Brand awareness and Promotion

On October 16, 2003, lastminute.com celebrated its fifth anniversary.  We believe lastminute.com remains Europe’s number one online travel and leisure retailer in terms of total sales and site usage.  During October 2003 www.lastminute.com was again placed Number One in the top 10 UK online travel agency sites by Hitwise (agency specialising in real-time competitive intelligence).

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We continue to adapt our marketing strategy to an ever more demanding market and to tailor the 7.7 million newsletters to customers' needs.  In the UK our weekly newsletter continues to act as a vehicle to drive sales, bring traffic to the website, provide a platform for advertising and provide an opportunity for us to communicate with our subscribers.  It is additionally tailored to 3 further discrete editions  theatre, food and sports events produced on a weekly/monthly basis.  Our efforts were recognised by the industry at the 2003 New Media Age Awards where our weekly e-mail newsletter won the 'Best Consumer Products and Services' award.

Throughout the year, we have undertaken a number of tactical offline marketing campaigns including airport and underground posters, a media and advertising campaign and radio adverts, in our main European markets.

During October 2003, lastminute.com won the CNET Networks ‘e-commerce Site of the Year’ award, beating tesco.com and easyjet.com.  The award was given to "the candidate which was considered to have best harnessed the Internet to provide easy-to-use buying experiences that have lead to increased turnover, improved distribution and/or saved costs."

Customer Support and services

We continue to work with a third party supplier to outsource our UK data entry and a proportion of post sales customer support.  We have locally based customer support and service teams for our European operations that deal with all direct sales related enquiries that arise from our website, press coverage or marketing activities. Our customer support staff are multilingual and all communication concerning each local website is conducted in the relevant native language.  We have also developed sophisticated online assistance channels through our website, and are in the process of developing a Caller Pre-Qualification system to improve efficiency and enhance the customer experience.

Our Registered Subscribers

A user may register with lastminute.com either by selecting the "Register" hyperlink and electing to receive our weekly e-mails or when prompted by our transaction-processing system while making a purchase. Users of our website purchasing any of our product offerings are required to enable their web browsers to receive cookies and must be registered subscribers of lastminute.com. We ask each registered subscriber to provide us with an e-mail address and password. Although we sometimes request various personal details, including name, address, phone number, age and gender, it is possible to register during the purchasing process without providing this additional information.

Operation of Our Transaction-processing System

We
    believe that one of the key elements necessary for our website to be successful
    is that it be easy to use. We place great importance on the features and
    functionality of our transaction-processing system to ensure customers have
    a simple booking experience.

Our booking experience is typically: (1) initially the customer identifies the product or service; (2) prior to commencing the transaction process, the customer has the opportunity to acquire more information about the particular item he or she is interested in; (3) the reservation or purchase is finalised as the customer is guided through a series of web pages which request certain transaction details, given an opportunity to review the transaction details, and given the choice of either adding the product to his or her basket, removing the item from the basket or purchasing the item; and (4) if the customer chooses to purchase an item, the customer furnishes his or her credit card details, we pre-authorise the
customer's credit card and the supplier charges the customer's credit card for the amount of the product or service, plus applicable taxes. In those instances where we act as cash-collector or principal in a transaction, we will charge the customer's credit card and, if applicable, remit the purchase price, less our commission, to the supplier. If applicable, the product is delivered to the customer by the delivery method specified by the customer, or we use the delivery mechanisms of our third-party suppliers.

Fulfilment Arrangements

In the majority of transactions over our website we act as agent between supplier and customer. We do not acquire the inventory and are therefore not responsible for fulfilment. However, in some areas of the business and in certain jurisdictions, we often rely on third party service providers to help us fulfil our customers' purchases of our suppliers' products. Services for which we rely on third parties include making airline reservations and credit card verifications and confirmations. In addition, we rely on links to computerised central reservation systems of airlines, car hire companies and hotels and other databases to provide us with real-time access to information about our suppliers' products available for
sale to our customers. Flight reservations made through our website

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are made through direct links into two global distribution systems: Worldspan and Amadeus.

The
    Destination Group works with airlines, hotels and ground handlers to create
    tailor-made holidays for customers. While allocations may be held with these
    suppliers, only a very limited amount of risk is taken on inventory.

We hold International Air Transport Association (“IATA”) licences in most countries in which we operate. IATA imposes rules and regulations on its members regarding air travel and the issuance of airline tickets. Although there is no legal requirement for a company selling airline tickets to be a member of IATA, it is unlikely that any airline would allow a non-IATA member to sell its tickets.

In addition, each country where we operate has its own travel agent and tour operator licensing requirements. In the United Kingdom the UK Civil Aviation (Air Travel Organisers Licensing) Regulations 1995 require any person advertising or selling air travel in the United Kingdom to be bonded under an Air Travel Organisers Licence (“ATOL”) granted by the Civil Aviation Authority. Each of our UK operating entities, selling air travel, is bonded under ATOL regulations.  The Destination Group and Globepost Ltd also holds an Association of British Travels Agents (“ABTA”) licence, which enable them to operate as a tour operator in respect of non air-related travel packages under UK legislation.

In other European countries, we are required to be licensed through the appropriate national organisation in order to act as both a travel agent and a tour operator.

In addition to issuing some flight tickets in house, the majority of flight tickets are now ticketed by our outsource partner, TRX.  Towards the end of the year almost 80% of tickets were produced through our autoticketing process.  In addition, we have commercial agreements with other third parties in the United Kingdom which provide booking, ticketing, delivery and customer support services for package holidays. In France, we issue all airline tickets using the IATA number of Degriftour. In Germany, we entered into a commercial agreement to fulfil the reservation requests of our customers accessing the German version of our website. In certain non-core countries we use a third party IATA accredited agent to issue
airline tickets on our behalf.

For fulfilment of some hotel reservations, we entered into a commercial agreement with a third party, WorldRes. This agreement allows our registered subscribers to make real-time, on-line reservations at over 45,000 hotels around the world. We believe this arrangement increases the depth and breadth of the hotel accommodations we can offer to our customers. At the same time, it provides us with the ability to focus our customers' attention on the hotels where they are likely to get the best value.

For package holidays, users choosing to conduct searches for a customised package holiday will have access to a database containing last minute holiday deals from some of the premier holiday tour operators in the United Kingdom, France, Italy and Germany.

Seasonality

Our business is subject to seasonal fluctuations, reflecting a combination of seasonality trends with respect to the products and services offered by us, as well as seasonality patterns affecting Internet use. For example, in the summer holiday periods the demand for travel services increases, and in winter holiday periods demand for gifts and, to a lesser extent travel services, increases. Internet usage tends to decline during the summer months. These seasonality factors result in our highest revenues being in the fourth quarter of our financial year and the lowest revenues being in the first quarter, as summer travel purchases generate significantly higher revenue than Christmas gifts and travel. Our results also
may be affected by seasonal fluctuations in the products and services made available to us by participating suppliers. Furthermore, our business may be subject to cyclical variations for the products and services offered; for example, leisure travel and sales of luxury items tend to decrease in economic downturn.

Technology

Throughout the year we have continued to invest significantly in technology in order to deliver new products to customers, improve website reliability, responsiveness and search capabilities, generate efficiencies through the streamlining and elimination of back office processes and to ensure that we have scalable technology in place to support significant future growth.

In the first half of the year we introduced a new flights engine and technology to support the dynamic packaging product.  The flights engine delivered faster performance and operational booking efficiencies.  During the third quarter, a new shopping basket,

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ebasket was launched which makes integration and connection to other websites much faster.  BCP (car parking) and Mondial (travel insurance) were subsequently integrated into the new shopping basket.

The
    new shopping basket is fully integrated into the back office operational,
    financial, and customer services systems which means that the completion
    of transactions is quicker, significantly enhancing the customer experience
    and new products and acquisitions can be more easily integrated into the
    website.

In 2003 our website responsiveness improved significantly and from June 2003 we delivered European industry leading performance of under four second response times.  This performance is sustainable with the anticipated TTV growth and has been achieved by firstly implementing caching technology and secondly installing IBM Blade server hardware, which run at nearly twice the speed of the previous hardware.  We believe we now have the technology platforms that will support TTV of over £1 billion.

We have also developed a proprietary search tool that has halved search times.  The guided navigation tool was introduced for holiday searches which enables holidays to be clustered and allows customers to interrogate on geographic regions and property information until they find a holiday in the country that they desire.

In October 2003, we launched a call pre-qualification tool for customer services, which recognises a customer from their telephone number and automatically populates the customer service agent's screen with the customer’s details.  This will bring further efficiencies and reductions to customer service costs and enhance the customer experiences.

We continue to invest in technology in order to maintain a leading edge website and to further drive down operating costs. We firmly believe that technology has helped maintain our leading position and continues to provide a significant competitive advantage.

Competition

We compete with both online and traditional sellers of the products and services offered on our website. The market for selling our product offerings over the internet is intensely competitive, as is the traditional retail industry for the same services, but we believe that by negotiating some of the best deals available, merchandising them in an attractive manner, and by continuing to develop a strong relationship with our core user base which continues to grow we will strengthen our leading position in Europe.

With respect to travel suppliers, our potential competitors include:

| | Internet travel agents such as ebookers.com, Expedia, OTC and Travelocity;
|- | --------------------------------------------------------------------------

| | full service travel agencies, such as Always, Flightbookers, Havas Voyages, L'tur, Nouvelles Frontières, Thomas Cook and Trailfinders;
|- | --------------------------------------------------------------------------------------------------------------------------------------

| | consolidators of both flights and holidays that typically sell to the top travel agencies; and
|- | ----------------------------------------------------------------------------------------------

| | individual airlines, such as United or American Airlines, or groups of airlines, such as Opodo and Orbitz, that may create joint websites that sell over the Internet.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

With respect to hotels, our competitors include travel sites that have added hotels to their offerings and certain sector specialists, such as Hotels.com, Hotels and Travel, The Hotel Guide, Travlang, the AA Hotel Guide and the Good Hotel Guide.

In the entertainment sector, some online sites are information providers for offline ticket retailers, while others offer consumers the ability to purchase entertainment tickets online.  Potential completitors in this sector include Tickets.com, Inc. and Ticketmaster-Citysearch.

We potentially face competition from a number of large Internet companies and services that have expertise in developing online commerce and in facilitating Internet traffic, including Amazon.com, AOL, Microsoft eBay and Yahoo!, who could choose to compete with lastminute.com either directly or indirectly through affiliations with other e-commerce companies.  Other large companies with strong brand recognition, technical expertise and experience in Internet commerce could also seek to compete with us.

Competition from these and other sources could have a material adverse effect on our business, results of operations and financial condition.

Industry trends

The macro trends for internet usage throughout Europe are very positive and moving in our favour.  We have strengthened our

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position as the clear European leader in the online travel and leisure market and are well placed to take advantage of the continued growth in the sector.  We remain confident of further developments during 2004 in all key metrics.

The industry is consolidating through vertical integration.

Intellectual Property

Our intellectual property rights include trade marks and domain names associated with the name "lastminute.com" and copyright and other rights associated with our website, technology platform, software and other aspects of our business.

We rely on a combination of trademark, copyright and confidentiality laws to establish and protect our business and proprietary rights and information. We also rely on the English law of "passing-off," which may give rise to liability for misrepresentations made by other traders that result in damage to the goodwill or reputation of our business. We have no patents. We do not own the intellectual property rights in the software underlying our technology platform, but rely on software that we license from third-party suppliers. These third-party licenses may not continue to be available to us on commercially reasonable terms. The loss of any of the technology that we rely on could require us to obtain
substitute technology of lower quality or performance standards or at greater costs or may interrupt our operations. To date, we have not been notified that the technology underlying our website infringes the intellectual property rights of third parties.

We have a community trademark registration for the lastminute.com logo in the European Union and are currently in the process of converting this registration for the purposes of obtaining a national trademark in each of Spain, France and the United Kindgom. We have made applications to register the names "last minute", “Doitlastminute” and "lastminute.com" in the European Union and "last minute" and a lastminute.com logo as trademarks in Norway. We have trademark registration in the "lastmin" and “lastminute.com” (black and white and colour) marks in the United Kingdom and as a community trademark in the European Union. We have acquired trademark
registrations in Belgium, France, Luxembourg and The Netherlands for a device comprising a clock face with the words "last minute" across it.  We have also acquired trademarks in the lastminute.com logo and the name “lastminute.com”, “do something lastminute.com” and “lastminute.com in Katakana” in Japan. We have registrations in the name “lastminute.com” in Japan.  In Belgium, Germany and The Netherlands, third parties own trademark registrations incorporating the words "last minute."

We have acquired trade mark registrations in the United Kingdom through our acquisition of the Destination Group in the names “The Destination Group”, “New York City Hotels4less”, “travel4less” and “travel4less.co.uk”, and through our acquisition of Globepost Limited, in the names “travelselect” and “miles away” and a community trademark in the European Union in the name “travelselect”. In addition, we have acquired trademark registrations in France, United Kingdom, Canada and with the World Intellectual Property Organisation (which covers signatories to the Madrid Union) through our acquisition of Travelprice in the names
“travelprice” and “travelprice.com”. We have acquired trademark registration in the "travelprice", “roco productions”, “roco resa” and “internight” marks and associated logos in France.

We have made an application to register a lastminute.com logo as a trademark in Australia, China, Indonesia, Malaysia, Singapore and South Korea, and have made an application to register a lastminute.com logo and the name “lastminute” in Hong Kong and an application to register a lastminute.com logo and the name “lastminute.com” in South Africa. We have registrations in a lastminute.com logo and the name “last minute” in Chile. No applications have been made to register “lastminute.com” trademarks in the United States or Canada. In the United States and Canada there are a number of existing trade mark registrations that include the words "last minute". In
particular, in the United States there are a large number of third parties who use the words "last minute" in their names. These two factors are likely to prevent any trademark applications we may make in these jurisdictions from being granted.

Through our acquisition of eXhilaration Incentive Management Limited, we have acquired a community trademark registration in the European Union and a trademark in the United Kingdom in the “eXhilaration” brand as held by Exhilaration Incentive Management Limited.  Through our acquisition of the Holiday Autos Group Limited, we have acquired trademark registrations in the United Kingdom in the names “Holiday Autos” and “Re-inventing Renting” as held by Holiday Autos International Limited.  In addition, Holiday Autos International Limited have acquired national trademark registrations in Austria, Australia, Brazil, Canada, Cyprus, Denmark, Estonia, Finland, Germany, Greece, Guernsey,
Hong Kong, Iceland, Ireland, Israel, Japan, Jersey, Malta, Mexico, New Zealand, Norway, Poland, Russia, Scandinavia, Singapore, South Africa, Spain, Switzerland, Tunisia, Turkey, Uruguay, USA and World Intellectual Property Organisation (which covers signatories to the Madrid Union) in the name “Holiday Autos”.  We have a community trademark registration for the “Holiday Autos” logo in the European Union and national trademark registrations in Australia, Brazil, Canada, Denmark, Finland, Germany, Hong Kong, Iceland, Israel, Japan, Jersey, New Zealand, Norway, Poland,

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Singapore, Spain, Tunisia, Turkey,
    USA and the World Intellectual Property Organisation (which covers signatories
    to the Madrid Union) as held by Holiday Autos International Limited.

We have also acquired a trademark in Finland and Norway in the brand “Intercar” as held by Holiday Autos Scandinavia AB together with trademarks in Germany in the brands “Travel connect”, “Connect Travel” and “Holiday Extra” and a trademark in the logo “Holiday and More” as held by Holiday Autos GmbH.

We have made an application to register the "Holiday Autos" and “holiday hotels” brands as separate community trademarks in the European Union on behalf of Holiday Autos GmbH and Holiday Hotels Limited respectively.  We have similar applications in Argentina, Cyprus and South Africa in the name of Holiday Autos International Limited.  We also have an application to register the brand “holiday flights” in the United Kingdom and as a community trademark in the European Union on behalf of Holiday Flights Limited.

Privacy Policy

We recognise the importance of maintaining the confidentiality of registered subscriber information and complying with applicable data protection legislation. We have established a privacy policy to help us to achieve this. Our current privacy policy can be found on our website. We do not sell to any third party any registered subscriber's personal identifying information unless the registered subscriber has provided consent in accordance with relevant data protection legislation. We may also directly e-mail registered subscribers with details of future products and services if the registered subscriber has given its consent for us to do so. We may compile information provided by registered subscribers and
information built from user behaviour for targeted advertising and content. For example, in the future we may, on behalf of an advertiser, send e-mail offers to all registered users who frequent a specific area of the site.

Legal Proceedings

We are not currently involved in any material legal or arbitration proceedings. Since our inception, we have not been involved in any legal or arbitration proceedings that have had or may have a material effect on our financial position or results of operations. We are not aware of any threatened or potential legal or arbitration proceedings which could have a significant effect on our financial position.

In February 2001 Last Minute Tour (“LMT”) issued proceedings in Milan against Last Minute Network Limited (“LMNL”) and our Italian subsidiary lastminute.com sprl for trade mark infringement of their Italian trade mark “last minute tour (word and device)”, unfair competition and seeking a declaration of non infringement in relation to LMNL registrations.  Our defence was served on October 23, 2001. LMT also commenced interim proceedings against Lastminute.com sprl following the registration by lastminute.com sprl of the domain name lastminute-tour.com.  Lastminute.com sprl undertook to transfer to LMT the domain name free of charge and not in future to register any domain name or
trade mark in Italy which included the words “last minute” and “tour” together.  The interim injunction sought was granted and the advertisement was withdrawn. At an interim hearing on April 24, 2002 the parties asked the Judge to grant them a term for filing evidence. The Judge gave the parties a deadline of July 20, 2002 to file a brief together with evidence and the deadline of October 19, 2002 to file a brief in response to the evidence filed by the other side. LMNL filed its brief on July 20, 2002. LMT was delayed in filing its brief but filed its brief in response in October 2002. A new hearing was fixed for October 29, 2002. During this hearing the Judge decided which witnesses should be heard and fixed the next hearing for September 19, 2004. At this hearing
the final conclusions of the parties will be heard.

Regulation

Internet Regulation

There is at present no specific regulator for the Internet in the United Kingdom or in Europe. However, there are many applicable laws relating to the provision of Internet services and use of the Internet and Internet-related applications. Currently, the enforcement of these laws may fall within the powers and duties of a number of regulatory bodies.

The application of some of these laws to the Internet is currently being clarified and refined. There are a number of new legislative and regulatory proposals in the European Union. This environment gives rise to considerable uncertainty and, due to the lack of case law relating to recently adopted laws, the interpretation of ambiguous provisions significantly contributes to the uncertain situation. The issues in the main areas affecting our business are set out below.

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Data Protection

Because our websites provide us with the ability to collect information about our customers, we are subject to rules and regulations concerning the treatment of this information.

The European Union has adopted the "Directive on the protection of individuals with regard to the processing of personal data and the free movement of such data" (the "Directive"). The Directive imposes restrictions on the collection, use and processing of personal data. Under the Directive, EU citizens are guaranteed rights, including the right of access to their personal data, the right to know where the data originated, the right to have inaccurate data rectified, the right to recourse in the event of unlawful processing and the right to withhold permission to use their data for direct marketing. The Directive could, among other things, affect companies like us that collect information over the
Internet from individuals in EU member states.

Unless certain exemptions apply, including obtaining the unambiguous consent of the individual, personal data may not be sent out of the European Economic Area ("EEA") unless the country to which it is sent has "adequate" data protection measures. The Directive does not, however, define what standards of privacy are "adequate". While a small number of countries, including Switzerland, have been found by the European Commission to provide an adequate degree of protection, the European Commission has not yet reached conclusions about the majority of countries with which we might wish to trade. As a result there can be no assurance that the Directive, or other independent national
legislation, will not adversely affect our ability to send data collected from customers in EU member states to non-EEA countries. With respect to the United States, while the United States as a whole is not considered "adequate" in terms of data protection, the European Commission and the United States have agreed certain "safe harbour" arrangements, in force since November 2000, by which US companies may agree to adhere to, which the European Commission consider to offer "adequate" protection. Subject to adherence by a US company to the "safe harbour" arrangements, transfers of data to that company in the United States are permitted.

The Directive was required to be implemented into national laws by the fifteen EU member states by October 25, 1998, although in many member states the laws implementing the Directive are not yet in force. The UK implementing legislation, the Data Protection Act 1998, came into force on March 1, 2000. Even though the purpose of the Directive is to harmonise the various national laws on data protection in the European Union, the requirements with respect to the collection and processing of data, the rights of users and the obligations imposed on companies collecting data vary to a substantial extent from country to country and may continue to do so in the future once the Directive has been implemented by the EU member
states.

French Law no 78-17 of January 6, 1978 "relative à l'informatique, aux fichiers et aux libertés" pre-dates the Directive but imposes similar requirements regarding personal data protection, including the obligation to make a declaration to the Commission Nationale Informatique et des Libertés ("CNIL"). As required in France, we have filed the necessary declaration with CNIL prior to processing member data and have complied with the requirement to inform members of various information relating to their right of access to personal information and their right to rectify any incorrect information held by us. In France, the Directive may also affect our European
business by requiring the processing of data to be subjected to a prior authorisation procedure instead of a simple declaration to the CNIL and by strengthening the investigative powers of the CNIL.

We may therefore be obliged to comply with different legislative requirements which could have an impact on our ability to collect data and share it with third parties, such as suppliers and advertisers. Further, we could be exposed to regulatory and judicial proceedings relating to privacy issues in any EU member state where our customers reside or where we are processing, or are deemed to process, personal data. Under the requirements of the national laws of many EU member states and the principles of the Directive, we will have to take steps to advise customers and registered subscribers when personal data is, or may be, collected and allow them the option to object to such collection.

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The European Union has also adopted "the Directive concerning the processing of personal data and protection of privacy in the telecommunications sector" (the "Telecommunications Sector Directive"). The Telecommunications Sector Directive covers the processing of personal data in connection with publicly available telecommunications services and public networks, and includes provisions relating to use of traffic and billing data and the use of personal data for direct marketing. These restrictions may limit the amount of time we can hold such data and restrict our ability to use personal information, which we hold for this purpose. The EU member states were, subject to exceptions, required to
implement the Telecommunications Sector Directive by October 25, 1998. The Telecommunications Sector Directive has now been implemented in the United Kingdom. Delays in implementation have occurred in some of the other EU member states.

A new directive relating to processing of personal data and the protection of privacy in the electronic communications sector (the “Electronic Communications Sector Directive”) which extends the ambit of the Telecommunications Sector Directive to private as well as public service companies, was implemented in the UK on 11 December 03.

We also make use of cookies, to track demographic information and to target advertising, that may become subject to increased levels of legislation limiting or prohibiting their use. Germany has specific legislation, which prevents providers of Internet access from using cookies without the prior approval of users. The aforementioned Electronic Communications Sector Directive, as presently proposed, will require companies in the EU members states to give clear and comprehensive information about the use of cookies prior to using any website, and give the user an option to refuse such use. In France, CNIL has issued a recommendation that the use of cookies should be disclosed to users and that users should be informed
of their right to oppose their use and that the misuse of cookies can give rise to criminal liability in certain circumstances. Under the Directive, cookies are likely to be considered as a means of processing data and may be regulated by the principles of the Directive if data qualifying as personal data is collected. It is also possible that cookies will be subject to increased levels of legislation limiting or prohibiting their use. Limitations on, or the elimination of, our use of cookies, or obligations on us to allow registered subscribers to object to the use of cookies could limit the effectiveness of the advertisements that are delivered on our websites.

To the best of our knowledge, we are in compliance with data protection registration or registration requirements in the other jurisdictions in which we operate and our registrations are sufficient for our current operations. We also actively monitor our collection and use of personal data to ensure compliance with the data protection legislation in force, and to be implemented, to ensure that we can continue to use and disclose personal data relating to our customers and registered subscribers in a way which is beneficial to our business.

Content Regulation

There is little specific regulation of Internet content in the United Kingdom or the European Union. However, the provision of content on the Internet may fall within generally applicable legislation in these and other jurisdictions. For example, general advertising laws and regulations in the United Kingdom and other jurisdictions apply to advertising on the Internet in the same way as advertising by way of other media. Laws relating to obscene publications and defamation may result in limitations on the type of content, including advertisements, available on our service or increased liability to us for information carried on our service.

Under French law, if a web page can be viewed in France, any potential offence that arises out of this web page will be subject to the jurisdiction of the French courts and French law.

lastminute.com's liability stems from advertisements and the release of information to users of its site. In its report of July 2, 1998 on the Internet and digital networks, the Conseil d'Etat, France's highest administrative tribunal, stipulated that the Internet should be considered as advertising space and that existing legal rules should be applied.

The rules governing circulation of advertising messages and information include:

| | Rules on the protection of minors (regulation
    of pornographic or violent messages);
|- | ---------------------------------------------------------------------------------------
|  |                                                                                        
| | Ban on deceitful or misleading advertising
    (advertising must be truthful);         
|  |                                                                                        
| | Regulations on comparative advertising;                                                
|  |                                                                                        
| | Obligation to specify that a message is an
    advertisement;                          

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| | Specific regulations
    for certain products (tobacco, alcohol, drugs, etc.);
|- | ------------------------------------------------------------------------------
|  |                                                                               
| | Rules on sending unwanted advertising messages by e-mail (spamming);          

|  |                                                    
|- | ---------------------------------------------------
| | Obligation to use the French language (Loi Toubon);

|  |                                                                                                                                     
|- | ------------------------------------------------------------------------------------------------------------------------------------
| | Application of the Sapin Act of January 29, 1993 on bribery prevention and transparency in economic relations and public procedures;
|  |                                                                                                                                     
| | Special rules on audiovisual advertising;
    and                                                                                   
|  |                                                                                                                                     
| | Press publication offences.                                                                                                         

These texts cover all aspects of Internet sites and therefore not only concern web pages, but also banners, e-mail, icons, sound, text, pictures and hypertext links.

Domain Names and Trade Mark Rights

We may be prevented, by reason of third party trade mark rights, from using the name "lastminute.com" or other of our brand names and images and we may be unable to prevent others using these or similar names as domain names, brand names or otherwise in competition with us. Our ability to register additional domain names may be limited by the requirements of local or national domain name registrars or administrators, including the requirement to have a local subsidiary or be a resident of the country for which a domain name is applied, as well as by the existence of third parties' domain name registrations. See "Intellectual Property."

Under French law, the registration authority for .fr domain names, the Association Françoise pour le Nommage Internet en coóperation, requires, in order to register a domain name, proof that this name is either the trade name of a company or an association, a family name, or a registered trademark. Thus, there are limited risks that a particular domain name can be registered with someone who has no right over it.

Jurisdictional Exposure

Due to the global nature of the Internet, it is possible that, although the servers and infrastructure used to provide our services are based in the United Kingdom and France and transmission by us and our users of content over the Internet originates primarily in the United Kingdom, the governments of other countries might attempt to regulate the content contained in or transmitted using our services or prosecute us for violations of their laws. As our content is available over the Internet all around the world, these jurisdictions may claim that we are required to qualify to do business in each country or that we are required to notify governmental authorities of our activities, including those activities relating
to the collection and processing of personal data, for example. Any such legislation or regulation, the application of laws and regulations from jurisdictions whose laws do not currently apply to our business, or the application of existing laws and regulations to the Internet and other on-line services could increase our costs or restrict the areas in which we may conduct business. In this vein, the EU Council of Ministers adopted a regulation in December 2000, which came into effect on March 1, 2002, on the jurisdiction and recognition and enforcement of judgement in civil and commercial matters.

This is likely to mean that consumers that are party to on-line contracts will in many cases be entitled to sue in their own jurisdiction irrespective of the location of the contractual counter-party.

E-commerce and Electronic Signatures

The laws relating to e-commerce are being reviewed, and in many cases formulated, in differing jurisdictions around the world.

In June 2000 the EU Council of Ministers formally adopted the European Commission's proposed directive on "legal aspects of electronic commerce in the Internal Market" (the "E-Commerce Directive"). The aim of the E-Commerce Directive is to ensure the free movement of electronically provided services, including e-commerce, within the member states of the European Union. EU member states were expected to implement the directive before January 17, 2002 and the United Kingdom implemented it through the Electronic Commerce (EC Directive) Regulations 2002 which came into force on August 21, 2002. To date not all member states have implemented the regulations. Significant provisions of the draft
E-Commerce Directive provide:

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| | that a ‘country of origin’ provision shall apply which, save for certain exceptions, should ensure that an on-line company operating within the regulatory regime of the member state within which it is established shall be deemed to be operating within the regulatory regime of the other member states;
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|  |                                                                                                                                                                                                                         
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | that on-line companies should provide its users with certain important information (such as basic details about the company itself and information about how a contract is formed) in a clear and comprehensive way; and

|  |                                                                                                                                                   
|- | --------------------------------------------------------------------------------------------------------------------------------------------------
| | that mere carriers of information over, or providers of access to, communications networks will not be liable for the content of that information.

Closely connected with electronic commerce is the issue of electronic signatures. In December 1999, the EU Council of Ministers adopted a "Directive on a common framework for electronic signatures" (the "Electronic Signatures Directive"). The Directive establishes a framework in which "certification service providers" issue "qualified certificates" which link individuals to their public keys in the case of public key cryptography or other devices used to verify their electronic signatures. Public keys are codes that are used in public key cryptography, also known as asymmetric cryptography, together with so-called private keys. Every user of the system has a pair of private and
public keys. The private key is kept secret, but the public key is published and made available to third parties. The combination of the private key and a third party's public key can be used for confidential correspondence between the parties, authentication of encrypted documents and verification of the document's integrity. This system is enhanced when a third verification party is included. That party administers a database of public keys, enabling verification of the source of documents "signed" with a particular private key. The Electronic Signatures Directive also sets out criteria for the legal recognition of electronic signatures, in the hope that this will promote e-commerce both within the European Union and other countries.

In the United Kingdom the Electronic Signatures Directive has been substantially implemented through the Electronic Communications Act 2000. This provides for an approval scheme for businesses and other organisations providing cryptography services and for the legal recognition of electronic signatures.

In France, Law no. 2000-230 of March 12, 2000 implements the Electronic Signatures Directive although it has not yet received final decree so there is some uncertainty as to whether an electronic signature will in practice be treated the same as a written signature. Law no. 96-659 of July 26, 1996 and four decretspassed in 1996 otherwise strictly regulate cryptology in France. A declaration to Service Central de la Securité des Systèmes d'Information ("SCSSI") is required for encryption devices using a key between 40 and 128 bits and prior authorisation is required for devices using a key exceeding 128 bits.

The distance selling directive was adopted by the EU in 1997 (the "Distance Selling Directive") and was required to be implemented by EU member states by June 4, 2000. Essentially, it applies to consumer transactions where the buyer and seller never meet and would cover buying products over the Internet. The purpose of the Distance Selling Directive is to ensure there is a minimum level of information given to the buyer. This information includes the identity of the seller, the characteristics of the goods being sold, the full price and the cost of delivery. It also gives the buyer a cooling-off period. Most of the provisions of the Distance Selling Directive do not, however, apply to contracts for the
provision of certain travel related services (e.g. transport, leisure or accommodation). Contracts for certain financial services are also entirely excluded and are to be regulated separately. In the United Kingdom, the Distance Selling Directive has been implemented through the Consumer Protection (Distance Selling) Regulations 2000 that came into force on October 31, 2000.

In France, Law no. 2001-1 of January 3, 2001 entitles the French government to implement the Distance Selling Directive by means of an "ordonnance" and French law otherwise provides similar protection to English law on distance selling.

In July 1999, the European Commission issued a revised proposal for a directive on distance marketing of consumer financial services. If implemented, it would require legislation to be passed by EU member states imposing consumer protection measures upon financial services product providers and their intermediaries. These would apply to the extent they market such products (including mortgages and other loans of credit and insurance) exclusively by means of an organised distance sales scheme, including by Internet and e-mail. Until these directives and other national measures are implemented in the United Kingdom and other relevant jurisdictions, our activities in the field of electronic commerce will be subject to a
large number of uncertainties within Europe and elsewhere.

As part of our expansion into distribution channels other than the Internet, we will be acting as a content provider to third-party interactive television provider Sky, wireless access protocol providers T-Motion, Vizzavi, O2 and Orange. We will not be required to obtain any additional regulatory licenses for this content provision as the relevant third-party providers will provide services under

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their relevant licenses pursuant to the Broadcasting Acts 1990 and 1996, Telecommunications Act 1984 and the Wireless Telegraphy Acts 1949-1967, as applicable.

Organisational Structure

Following a number of acquisitions during the year to September 30, 2003 and also since that date, the lastminute.com group has changed significantly. lastminute.com plc is the parent company of the lastminute.com group. The Group now has operating subsidiaries or joint ventures within 16 countries and the number of companies in which the Group has an investment has increased since 2003.

Our investments in significant subsidiaries and joint ventures are as follows:

|Name of company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |  | Country of registration or incorporation                                                                                                                                                                                                                                                                                            |  | Principal Activity                                                                                                                                                                                                            |  | Ordinary shares held (%)                                                 | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------ | 
|Investments in subsidiariesHoliday Autos Group Limited*eXhilaration Incentive Management Limited*Last Minute Network Limited*Lastminute.com GmbHLast Minute Network S.A.R.L.Voyages Sur Mesures S.A.Lastminute.com BVGlobepost LimitedTravelselect.com Limited *The Destination Holdings Group Limited *The Destination
Group LimitedTravelprice Italia S.R.LTravelprice Spain SLTravelprice Belgium SALastminute Network S.L. **Holiday Autos International LimitedHoliday Autos UK & Ireland LimitedHoliday Autos GmbHHoliday Autos Holdings LimitedLastminute.com S.R.L.Lastminute.com Theatrenow LimitedMed Hotels LimitedTravelbargains
LimitedFirst Option Hotel Reservations (1) LtdHotel and Travel Reservations Ltd |  |  | England and WalesEngland and WalesEngland and WalesGermanyFranceFranceThe NetherlandsEngland and WalesEngland and WalesEngland and WalesEngland and
WalesItalySpainBelgiumSpainEngland and WalesEngland and WalesGermanyEngland and WalesItalyEngland and WalesEngland and WalesEngland and WalesEngland and WalesEngland and Wales |  | MarketerMarketerMarketerMarketerMarketerMarketerMarketerMarketerHolding CompanyHolding
CompanyMarketerMarketerMarketerMarketerMarketerMarketerMarketerMarketerHolding CompanyMarketerMarketerMarketerMarketerMarketerMarketer |  | 100100100100991001001001001001001001001001001001001001009980100100100100 | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |                                                                                                                                                                                                                                                                                                                                     |  |                                                                                                                                                                                                                               |  |                                                                          | 
|Investments in joint venturesLastminute.com (Australia) Pty LimitedLastminute.com (Pty) LimitedLastminute.com Japan Limited                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |  | AustraliaSouth AfricaJapan                                                                                                                                                                                                                                                                                                          |  | MarketerMarketerMarketer                                                                                                                                                                                                      |  | 25.125.132.9                                                             | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |                                                                                                                                                                                                                                                                                                                                     |  |                                                                                                                                                                                                                               |  |                                                                          | 

|* | directly held by lastminute.com plc
|- | -----------------------------------

|** | 70% directly held by lastminute.com plc
|-- | ---------------------------------------

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Property, Plants and Equipment

Facilities

We have leased offices within each country of operation with the exception of our joint ventures. In addition to these operating offices, we have a freehold property at 324 and 324A Kennington Park Road, London which is currently unoccupied and awaiting sale. All our offices are used solely for the purposes of the operation and administration of our businesses, although certain of our hardware for our hosted servers are maintained at locations of our suppliers.

Our principal offices are located at 4 Buckingham Gate, London SW1E 6JP, United Kingdom; these offices are leased.  We also lease office space at:

| | 14 Greville Street, London EC1N
    8SB, United Kingdom
|- | -------------------------------------------------------

|  |                                                                                        
|- | ---------------------------------------------------------------------------------------
| | Holiday Autos House, Pembroke Broadway,
    Camberley, Surrey, GU15 3XD, United Kingdom

|  |                                                                          
|- | -------------------------------------------------------------------------
| | Albion House, Chertsey Road, Woking,
    Surrey, GU21 6BF, United Kingdom

|  |                                                                              
|- | -----------------------------------------------------------------------------
| | Edward House, Edward Street, Stockport,
    Cheshire, SK1 3DQ, United Kingdom

|  |                                                                  
|- | -----------------------------------------------------------------
| | 12, avenue des Beguines, 95800 Cergy
    Saint Christophe, France

|  |                                                          
|- | ---------------------------------------------------------
| | 54/56 boulevard Victor Hugo, 93585
    Saint-Ouen, France

|  |                                                           
|- | ----------------------------------------------------------
| | 66 Avenue des Champs Elysees, 75008
    Paris, France     
|  |                                                           
| | Kirchenstrasse 68, 81675 Munich,
    Germany              
|  |                                                           
| | Via Copernico 30a 20124 Milan,
    Italy                  
|  |                                                           
| | Gran Via de las Corts, Catalanes
    184, Barcelona, Spain
|  |                                                           
| | 510 Kroonlaan, 1050 Brussels,
    Belgium; and            
|  |                                                           
| | Hamngatan 33, Sundbyberg, Sweden                          

For further information on our operating lease commitments please refer to note 22 of notes to the financial statements.

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ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes thereto included elsewhere in this Annual Report. This discussion and analysis is based on our financial statements, which have been prepared in accordance with UK GAAP. A discussion of the principal differences between UK GAAP and US GAAP, in so far as they affect net income and shareholders' equity, is set out in note 30 of notes to the financial statements.

Overview

During the year ended September 30, 2003 we increased our international and domestic offering through the acquisition of the holiday autos group, which has a presence in 13 countries across Europe and the rest of the world, eXhilaration, which is wholly UK based and the buyback of our Spanish joint venture which is wholly Spain based.  We are continuing our strategy of focusing on the core markets of the United Kingdom, France and Germany, whilst at the same time growing the non-core satellite markets and our product base.

Definitions

Key factors in understanding the results of the Group’s operations are total transaction value (TTV), turnover and gross margin, and the relationships among these variables.  The following definitions apply:

Total Transaction Value (TTV)

Total transaction value does not represent our turnover. Where the Group acts as agent or cash collector, total transaction value represents the price at which goods have been sold across the Group's various platforms, 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 goods provided. In such cases total transaction value represents the flat fee commission earned. Where the Group acts as principal, total transaction value represents the price at which products or services are sold across the Group's various platforms, net of value added tax. This is an industry wide measure which clearly shows the volume of
sales going through the business.  Management believes TTV is a useful measure because it includes the total price to the customer for each product or service and enables a like-for-like comparison across all products.

Turnover

Turnover consists of commissions earned on products and services sold, including airline tickets, hotel room reservations, package holidays, tickets to entertainment events, restaurant reservations and gifts, as well as the value of the transactions where we acted as principal.

Where the Group acts as agent or cash collector and does not take ownership of the products or services being sold, turnover represents commission earned, less amounts due or paid on any commission shared. Where the Group acts as principal and purchases the products or services for resale, turnover represents the price at which the products or services have been sold across the Group's various platforms.

Turnover also includes advertising and sponsorship income which is recognised over the period to which it relates.

When we act on an agency basis, we do not receive payment for the sale, but are paid a direct commission from the supplier. We verify that the credit card being used by the customer is valid, but the supplier authorises the purchase and pays the transaction fee on the credit card. The cash-collector sales model is similar to a consignment framework. Although we collect payment for the sale of merchandise or vouchers, we do not carry any inventory risk. When we act on a cash-collector basis, we authorise the purchase and pay transaction fees on the credit card; however, we may also benefit from a higher commission from the supplier.When we act as principal, where we take inventory risk, we recognise as turnover the
entire value of the transaction. Whether we act as agent, cash-collector or principal, turnover is recognised once charges to the customer's credit card have been made or payment is received, except in the case of travel, where turnover is recognised at the date of departure.

We generally earn industry standard commissions on most of the products we offer on our website, which vary by industry segment. However, from time to time for strategic reasons, we have entered into, and may in the future enter into, arrangements with our suppliers to accept commissions that are lower than industry standards, which may have an adverse effect on our turnover.

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Cost
      of Sales

Cost
    of sales principally represents the cost products purchased in transactions
    where we act as principal.

Gross
      Profit and Gross Margin

Gross
    profit is turnover less cost of sales. Gross margin is defined as gross profit
    as a percentage of total transaction value.

Critical Accounting Policies
        and Estimates

lastminute.com’s
    operating and financial review and prospects are based upon lastminute.com’s
    consolidated financial statements, which have been prepared in accordance
    with UK GAAP. The preparation of these financial statements requires lastminute.com
    to make estimates and judgements that affect the reported amounts of assets,
    liabilities, revenues and expenses. On an on-going basis, lastminute.com
    evaluates its estimates, including those related to intangible assets. lastminute.com
    bases its estimates on historical experience and on various other assumptions
    that are believed to be reasonable under the circumstances, the results of
    which form the basis for making judgments about the carrying values of assets
    and liabilities that are not readily apparent from other sources. Actual
    results may differ from these estimates under different assumptions or conditions.

Revenue
      Recognition

Revenue
    is recognised in two different ways with advertising and sponsorship revenue
    being recognised over the period to which it relates and travel turnover
    being recognised on the date of departure. This is considered a prudent policy
    in respect of travel income as it ensures that pre-departure cancellations
    are accounted for.

Goodwill

lastminute.com
    reviews goodwill for signs of impairment at the end of the first full year
    following the acquisition and in other periods if events or changes in circumstances
    indicate that the carrying value may not be recovered. Future adverse changes
    in market conditions or poor operating results of underlying investments
    could result in an inability to recover the carrying value of goodwill that
    may not be reflected in the current carrying value, thereby possibly requiring
    an impairment charge in the future.

Capitalisation
      of Software

Costs
    incurred in developing software for internal use, which have measurable economic
    viability, are capitalised when the software reaches the application development
    stage and are amortised over two years. Costs incurred in developing and
    enhancing the website are capitalised as incurred if the measurable economic
    viability of the expenditure can be determined and are amortised over two
    years.

Future
    adverse changes in technology or customer spending patterns could result
    in an inability to recover the carrying value of capitalised software costs,
    thereby requiring an impairment charge.

Impact of Currency Fluctuations

The
    Company’s functional currency and that of our UK subsidiaries is pounds
    sterling. The functional currency of our French, German, Italian, Dutch,
    Spanish and Belgian subsidiaries is the euro. Approximately 96% of our turnover
    and operating expenses are denominated in either pounds sterling or euro.
    However, the lastminute.com brand has established websites in Sweden and
    through joint venture agreements in Australia, South Africa and Japan and
    holiday autos operates in 16 countries internationally including Switzerland,
    Australia, South Africa, the Nordic region and the Middle East. In connection
    with our international growth, we anticipate that turnover derived from the
    non-UK versions of our website will be generally denominated in the currency
    associated with the country or region targeted by the relevant version. Likewise,
    we expect a significant portion of our operating expenses relating to our
    operations outside the United Kingdom to be denominated in euro. In addition,
    a significant portion of our car hire costs are contracted and denominated
    in US Dollars.

Transaction
    revenues and expenses in a foreign currency are recorded at the average rate
    of exchange for the month during which the transaction or expense occurs.
    Monetary assets and liabilities denominated in foreign currencies are translated
    at the rate of exchange at the balance sheet date. Exchange differences arising
    from the retranslation of opening net assets denominated in foreign currencies
    to period end rates are taken direct to shareholders' funds. All other exchange
    differences are charged or credited to income.

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As
    a result of the significant investment in our French and other euro zone
    subsidiaries net of the €102.6 million unsecured Convertible Bonds due
    2008 which were raised during September 2003, the Group’s balance sheet
    could be significantly affected by movements in the euro/sterling exchange
    rate. The Group has not sought to hedge against this structural currency
    risk due to the relatively stable nature of the relationship between the
    two currencies. See note 24 of notes to the financial statements.

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Acquisitions

During
    the year ended September 30, 2003, the Group made three acquisitions. eXhilaration
    Incentive Management Limited and holiday autos group were acquired in November
    2002 and March 2003 respectively. The results of operations of these acquisitions
    have been included in the Group’s financial statements from the respective
    date that management control passed to lastminute.com. In September 2003
    the Group acquired the 70% shareholding in lastminute.com Spain held by its
    joint venture partner, Sol Meliá.

Operating Results

|                                                                      |  |  | 2001                                        |   |  | % Change |    |  | 2002    |   |  | % Change |   |  | 2003    |  
|--------------------------------------------------------------------- |  |  | ------------------------------------------- | - |  | -------- | -- |  | ------- | - |  | -------- | - |  | ------- | -
|                                                                      |  |  |                                             |   |  |          |    |  |         |   |  |          |   |  |         |  
|                                                                      |  |  | (£ thousands,
          except percentages) |  
|                                                                      |  |  |                                             |  
|Total transaction value (TTV)                                         |  |  | 124,210                                     |   |  | 98       | %  |  | 245,971 |   |  | 125      | % |  | 552,445 |  
|                                                                      |  |  |                                             |   |  |          |    |  |         |   |  |          |   |  |         |  
|Group turnover                                                        |  |  | 18,369                                      |   |  | 90       | %  |  | 34,890  |   |  | 440      | % |  | 188,394 |  
|Cost of sales                                                         |  |  | 1,165                                       |   |  | 40       | %  |  | 1,626   |   |  | 5278     | % |  | 87,447  |  
|                                                                      |  |  |                                             |   |  |          |    |  |         |   |  |          |   |  |         |  
|Gross profit                                                          |  |  | 17,204                                      |   |  | 93       | %  |  | 33,264  |   |  | 203      | % |  | 100,947 |  
|                                                                      |  |  |                                             |   |  |          |    |  |         |   |  |          |   |  |         |  
|Gross margin                                                          |  |  | 13.9                                        | % |  |          |    |  | 13.5    | % |  |          |   |  | 18.3    | %
|                                                                      |  |  |                                             |   |  |          |    |  |         |   |  |          |   |  |         |  
|Operating costs before depreciation
        and goodwill amortisation |  |  | 50,794                                      |   |  | (20      | )% |  | 40,590  |   |  | 124      | % |  | 90,995  |  
|Depreciation                                                          |  |  | 8,744                                       |   |  | 12       | %  |  | 9,781   |   |  | 51       | % |  | 14,798  |  
|Goodwill amortisation                                                 |  |  | 14,660                                      |   |  | 27       | %  |  | 18,666  |   |  | 126      | % |  | 42,261  |  
|                                                                      |  |  |                                             |   |  |          |    |  |         |   |  |          |   |  |         |  
|Total operating costs                                                 |  |  | 74,198                                      |   |  |          |    |  | 69,037  |   |  |          |   |  | 148,054 |  
|                                                                      |  |  |                                             |   |  |          |    |  |         |   |  |          |   |  |         |  
|                                                                      |  |  |                                             |   |  |          |    |  |         |   |  |          |   |  |         |  
|Group operating loss                                                  |  |  | (56,994                                     | ) |  |          |    |  | (35,773 | ) |  |          |   |  | (47,107 | )
|                                                                      |  |  |                                             |   |  |          |    |  |         |   |  |          |   |  |         |  
|Share of operating loss in joint
        ventures                     |  |  | (196                                        | ) |  |          |    |  | (413    | ) |  |          |   |  | (183    | )
|Share of operating loss in associate                                  |  |  |                                            |   |  |          |    |  | (4      | ) |  |          |   |  | (5      | )
|Amortisation of goodwill in
        associate                         |  |  |                                            |   |  |          |    |  | (148    | ) |  |          |   |  | (592    | )
|                                                                      |  |  |                                             |   |  |          |    |  |         |   |  |          |   |  |         |  
|Total operating loss                                                  |  |  | (57,190                                     | ) |  |          |    |  | (36,338 | ) |  |          |   |  | (47,887 | )
|Exceptional cost of a fundamental
        reorganisation              |  |  |                                            |   |  |          |    |  | (3,094  | ) |  |          |   |  |        |  
|Interest receivable                                                   |  |  | 3,480                                       |   |  |          |    |  | 1,419   |   |  |          |   |  | 1,402   |  
|Interest payable and similar
        charges                          |  |  | (36                                         | ) |  |          |    |  | (62     | ) |  |          |   |  | (1,222  | )
|Tax on loss on ordinary activities                                    |  |  | 158                                         |   |  |          |    |  | (6      | ) |  |          |   |  | 62      |  
|                                                                      |  |  |                                             |   |  |          |    |  |         |   |  |          |   |  |         |  
|Loss for the financial year                                           |  |  | (53,588                                     | ) |  |          |    |  | (38,081 | ) |  |          |   |  | (47,645 | )
|                                                                      |  |  |                                             |   |  |          |    |  |         |   |  |          |   |  |         |  

Year ended September 30, 2003
        compared with year ended September 30, 2002

Total
      Transaction Value (TTV) and Turnover

TTV
    of products and services sold through our website, electronic platforms and
    call centres for the year ended September 30, 2003 was £552.4 million
    compared to £246.0 million for the year ended September 30, 2002. Turnover
    for the year ended September 30, 2003 was £188.4 million, compared
    to £34.9 million for the year ended September 30, 2002. These increases
    were achieved as a result of our acquisitions and our continued organic expansion,
    increased conversion of registered subscribers to customers as well as the
    expansion of products and services available to our customers.

The
    increase in turnover as a percentage of TTV is due to an increase in products
    sold as principal, where the Group purchases the products or services for
    resale.

For
    the year ended September 30, 2003, 49.3% of our turnover was derived from
    sales outside the United Kingdom compared to 45.1% in the prior year. The
    increase is due to the slightly higher proportion of business derived in
    the UK in the holiday autos business which was acquired during 2003.

Cost
      of Sales

Total
    cost of sales for the year ended September 30, 2003 amounted to £87.4
    million, compared to £1.6 million for the year ended September 30,
    2002. The increase in cost of sales was primarily due to the acquisition
    of holiday autos group which predominately trades on a principal basis. The
    low level of cost of sales relative to turnover continues to reflect the
    low level of inventory risk carried by the Group.

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Gross
      Profit and Gross Margin

Gross
    profit for the year ended September 30, 2003 was £100.9 million, compared
    to £33.3 million for the ended September 30, 2002.

Gross
    margin has increased to 18.3% for the year ended September 30, 2003 compared
    to 13.5% for the year ended September 30, 2002. The trend of margins achieved
    during the year largely reflects the benefit of the holiday autos acquisition
    which provides car hire at significantly enhanced margins than other product
    segments together with higher sponsorship and advertising revenue. We continue
    to be successful in securing strong contributions to margins from advertising
    and sponsorship revenues as well as enhancing margins through improved relationships
    and arrangements with suppliers brought about through scale and negotiation.

Operating
      Costs before Depreciation and Amortisation

|                           |  |  | 2002          |  |  | % Change |    |  | 2003          | 
|-------------------------- |  |  | ------------- |  |  | -------- | -- |  | ------------- | 
|                           |  |  |               |  |  |          |    |  |               | 
|                           |  |  | (£ thousands) |  |  |          |    |  | (£ thousands) | 
|                           |  |  |               |  |  |          |    |  |               | 
|Product development        |  |  | 6,081         |  |  | (3       | %) |  | 5,900         | 
|Sales and marketing        |  |  | 21,932        |  |  | 187      | %  |  | 62,966        | 
|General and administration |  |  | 12,577        |  |  | 76       | %  |  | 22,129        | 
|                           |  |  |               |  |  |          |    |  |               | 
|                           |  |  | 40,590        |  |  |          |    |  | 90,995        | 
|                           |  |  |               |  |  |          |    |  |               | 

Product
      Development

Product
    development expenses consist of the costs associated with maintaining our
    technology platform, personnel costs, web hosting fees, software license
    fees and other expenses associated with the ongoing operations of our website
    and associated electronic platforms. Costs are expensed as incurred.

Costs
    incurred in developing software for internal use, which have measurable economic
    viability, are capitalised when the software reaches the application development
    stage and are amortised over the expected useful life of the software, which
    is between two to three years. Costs incurred in developing and enhancing
    the website are capitalised as incurred if the measurable economic viability
    of the expenditure can be determined and are amortised over the expected
    useful life of the website, which is between two to three years.

Product
    development expenses for the year ended September 30, 2003, were £5.9
    million, a decrease of 3.4% from £6.1 million for the year ended September
    30, 2002. The reduction in total product development costs year-on-year reflects
    the benefit from ongoing cost control measures. Product development costs
    include £0.3 million arising from the integration of holiday autos
    into the Group. These costs primarily consist of a reduction in headcount,
    consolidation of properties and termination of certain contracts.

Sales
      and Marketing

Sales
    and marketing expenses include:

| | off-line advertising expenses,
        such as radio, newspaper and other print advertising and outdoor media;                                                                                                                                                        
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                       
| | on-line advertising expenses,
        including fees paid to maintain links from our on-line marketing partners'
        websites and commissions paid to our on-line marketing partners on purchases
        made by customers who were referred from their websites;
|  |                                                                                                                                                                                                                                                                       
| | compensation for our sales and
        marketing personnel;                                                                                                                                                                                                           
|  |                                                                                                                                                                                                                                                                       
| | ticketing expenses and credit
        card verification and processing fees;                                                                                                                                                                                          
|  |                                                                                                                                                                                                                                                                       
| | provisions for redemption of
        Award Minutes, a customer loyalty scheme introduced in 1999; and                                                                                                                                                                 
|  |                                                                                                                                                                                                                                                                       
| | customer service.                                                                                                                                                                                                                                                     

We
    expense the cost of advertising at the time production occurs and expense
    the cost of communication advertising in the period in which the advertising
    space or airtime is used.

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Sales
    and marketing costs include £1.0 million arising from the integration
    of holiday autos into the Group, together with redundancy costs incurred
    following the outsourcing of various non-core functions in order to improve
    the flexibility of our cost base.

Total
    sales and marketing expenses for the year ended September 30, 2003 were £63.0
    million, a increase of 188% from £21.9 million for the year ended September
    30, 2002. This increase is predominantly as a result of the acquisition of
    holiday autos group, where a high proportion of sales are sold through agents
    and the commission paid to these agents recognised as a sales and marketing
    expense.

General
      and Administration

General
    and administration costs consist primarily of compensation for financial,
    human resources and administrative personnel, fees for outside professionals,
    telecommunications and other overhead costs, including occupancy expense.
    General and administration costs for the current year, increased to £22.1
    million for the year ending September 30, 2003 from £12.6 million for
    the year ending September 30, 2002, falling as a percentage of TTV from 5.1%
    to 4.0%. Efficiency improvements continue to be derived from the reorganisation
    of operations in France and Italy in 2002 which were fundamentally restructured
    following the acquisition of Travelprice.com Group acquired in 2002. Further
    efficiency improvements will be derived from the integration of holiday autos
    into the Group. This process was largely completed by 30 September 2003.

General
    and administration costs include £0.9 million arising from the integration
    of holiday autos into the Group, together with redundancy costs incurred
    following the outsourcing of various non-core functions in order to improve
    the flexibility of our cost base.

Depreciation

The
    depreciation charge relates to the depreciation of computer systems, equipment
    and computer software. Depreciation amounted to £14.8 million for the
    year ended September 30, 2003 compared to £9.8 million for the year
    ended September 30, 2002. Charges have increased by 51% during the year,
    reflecting the depreciation of the ongoing investments in the technical infrastructure
    and the inclusion of depreciation from the acquired entities.

Goodwill
      Amortisation

For
    the year ended September 30, 2003, goodwill amortisation totalled £42.2
    million compared to £18.7 million for the year ended September 30,
    2002. The increase largely reflects the amortisation of goodwill relating
    to the acquisitions of holiday autos group, eXhilaration incentive management
    ltd. and lastminute.com Spain, together with the full year impact of prior
    year acquisitions. Goodwill is being amortised over four years from the respective
    dates of acquisition.

Exceptional
      cost of a fundamental reorganisation

For
    the year ended September 30, 2003, non-operating exceptional costs of a fundamental
    reorganisation totalled £nil million compared to £3.1 million
    for the year ended September 30, 2002. This cost related to the nature and
    focus of our combined operations in France and Italy being restructured following
    the acquisition of travelprice.com. Such costs included moving to a single
    technology platform and changing the management structure.

Interest
      Receivable

Interest
    receivable consists primarily of interest income on cash held. Interest income
    was £1.4 million for the year ended September 30, 2003 and the year
    ended September 30, 2002.

Interest
      payable and similar charges

Interest
    payable and similar charges largely comprises interest and charges on bank
    overdraft facilities, finance leases and, for the year ended September 30,
    2003, the charges incurred on the convertible bond, which are amortised over
    the period of the convertible bond.

Interest
    payable and similar charges were £1.2 million for the year ended September
    30, 2003 and £0.1 million for the year ended September 30, 2002.

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Tax on Loss on Ordinary Activities

As a result of the loss for the years ended September 30, 2003 and 2002, no UK corporation tax charge arose. An overseas corporate taxation charge of £732,000 arose in the year ended September 30, 2003 (2002: £6,000) which was offset by deferred tax.  The deferred tax asset rose largely from capital allowances and other timing differences which have been recognised to the extent that it is sufficiently certain that the Group will have enough suitable tax profits to offset these losses. At September 30, 2003 the Group has estimated tax losses of £128.6 million (2002: £98.4 million).

Loss for the Financial Year

The loss on ordinary activities for the year ended September 30, 2003 was £47.6 million compared to a loss of £38.1 million for year ended September 30, 2002. The loss for the year includes a share of the operating losses from the joint ventures operated in Australia, South Africa and Japan of £183,000.

Loss per Share

The Group’s loss per share for the year ended September 30, 2003 is (17.88)p per share, or (89.39)p per ADS compared to a loss of (20.15)p per share or (100.75)p per ADS, in the year ended September 30, 2002.

Year ended September 30, 2002 compared with year ended September 30, 2001

Total Transaction Value (TTV) and Turnover

TTV of products and services sold through our website and other electronic platforms for the year ended September 30, 2002 was £246.0 million compared to £124.2 million for the year ended September 30, 2001. Turnover for the year ended September 30, 2002 was £34.9 million, compared to £18.4 million for the year ended September 30, 2001. These increases were achieved as a result of our acquisitions (which contributed £7.1 million to turnover for the year ended September 30, 2002) and our continued organic expansion, increased conversion of registered subscribers to customers as well as the expansion of products and services available to our customers.

For the year ended September 30, 2002, 45.1% of our turnover was derived from sales outside the United Kingdom compared to 62.5% in the prior year.

Cost of Sales

Total cost of sales for the year ended September 30, 2002 amounted to £1.6 million, compared to £1.2 million for the year ended September 30, 2001. The increase in cost of sales was primarily due to the increased turnover. The low level of cost of sales relative to turnover continues to reflect the low level of inventory risk carried by the Group.

Gross Profit and Gross Margin

Gross profit for the year ended September 30, 2002 was £33.3 million, compared to £17.2 million for the ended September 30, 2001.

Gross
    margin remained relatively constant at 13.5% for the ended September 30,
    2002 compared to 13.9% for the year ended September 30, 2001. The trend of
    margins achieved during the year reflected the mix impact of the differing
    margins generated by the acquired businesses. The contribution from the sale
    of flights by Travelselect.com was generally at lower margins. However, these
    were offset by the stronger margins earned from the sale of packages and
    car hire derived from the Destination Group. We were successful in securing
    strong contributions to margins from advertising and sponsorship revenues
    as well as enhancing margins through improved relationships and arrangements
with suppliers brought about through scale and negotiation.

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Operating Costs before Depreciation and Amortisation

|                           |  |  | 2001          |  |  | % Change |    |  | 2002          | 
|-------------------------- |  |  | ------------- |  |  | -------- | -- |  | ------------- | 
|                           |  |  |               |  |  |          |    |  |               | 
|                           |  |  | (£ thousands) |  |  |          |    |  | (£ thousands) | 
|Product development        |  |  | 7,800         |  |  | (22      | %) |  | 6,081         | 
|Sales and marketing        |  |  | 27,207        |  |  | (19      | %) |  | 21,932        | 
|General and administration |  |  | 15,787        |  |  | (20      | %) |  | 12,577        | 
|                           |  |  |               |  |  |          |    |  |               | 
|                           |  |  | 50,794        |  |  |          |    |  | 40,590        | 
|                           |  |  |               |  |  |          |    |  |               | 

Product Development

Costs incurred in developing software for internal use, which have measurable economic viability, are capitalised when the software reaches the application development stage and are amortised over the expected useful life of the software, which is between two to three years. Costs incurred in developing and enhancing the website are capitalised as incurred if the measurable economic viability of the expenditure can be determined and are amortised over the expected useful life of the website, which is between two to three years. During the year, we capitalised £4.0 million of website development costs (2001: £5.3 million).

Product
    development expenses for the year ended September 30, 2002 were £6.1
    million, a decrease of 21.8% from £7.8 million for the year ended September
    30, 2001. The reduction in total product development costs year-on-year reflects
    the benefit from ongoing cost control measures.

Sales and Marketing

Total sales and marketing expenses for the year ended September 30, 2002 were £21.9 million, a decrease of 19.5% from £27.2 million for the year ended September 30, 2001. This decrease was significant as it was achieved despite the additional costs arising from the acquired businesses as well as the growth in the scale of the business generally.  The reduction in sales and marketing costs year-on-year has been delivered through the use of more efficient marketing techniques, such as viral campaigns and further on-line activities.  As a proportion of TTV, sales and marketing costs have fallen from 21.9% to 8.9% as we continue to leverage our largely fixed cost base across a wider income stream. We
anticipate further efficiency gains will flow from our decision, announced in September 2002, to outsource UK data entry and a proportion of post sales customer support.

General and Administration

General and administration costs consist primarily of compensation for financial, human resources and administrative personnel, fees for outside professionals, telecommunications and other overhead costs, including occupancy expense. General and administration costs for the year ended September 30, 2002, before any charges for non-cash share-based compensation and the provision for National Insurance, decreased to £12.6 million for the year ending September 30, 2002 from £15.8 million for the year ending September 30, 2001, falling as a percentage of TTV from 12.7% to 5.1%.  Efficiency improvements are beginning to be derived from the new Oracle financial reporting system which was implemented in three
countries shortly before the financial year end. The roll-out of this software to the rest of the Group is scheduled to be completed during the course of the new financial year and will provide benefits through further operational efficiencies, consistent systems as well as enhanced financial reporting.

Depreciation

The depreciation charge related to the depreciation of computer systems, equipment and computer software. Depreciation amounted to £9.8 million for the year ended September 30, 2002 compared to £8.7 million for the year ended September 30, 2001. Charges have increased by 12% during the year, reflecting the depreciation of the ongoing investments in the technical infrastructure and the inclusion of depreciation from the acquired entities.

Goodwill Amortisation

For the year ended September 30, 2002, goodwill amortisation totalled £18.7 million compared to £14.7 million for the year ended September 30, 2001. The increase reflects the amortisation of goodwill relating to the acquisitions of Travelselect.com, The Destination Group and Travelprice.com. Goodwill is being amortised over four years from the respective dates of acquisition.

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Exceptional cost of a fundamental reorganisation

For the year ended September 30, 2002, exceptional costs totalled £3.1 million compared to £nil for the year ended September 30, 2001. Following the acquisition of the Travelprice.com Group, the nature and focus of our combined operations in France and Italy are being fundamentally restructured, including moving to a single technology platform, the introduction of a more efficient management structure and restructuring our call centre and operating locations. The costs relate principally to redundancy and surplus property costs.

Interest Receivable

Interest receivable consists primarily of interest income on cash held.  Interest income decreased by 59% to £1.4 million for the year ended September 30, 2002 from £3.5 million for the year ended September 30, 2001. Interest income decreased due to a reduction in the average cash balance held.

Tax on Loss on Ordinary Activities

As a result of the loss for the years ended September 30, 2002 and 2001, no UK corporation tax charge arose. An overseas corporate tax charge of £6,000 arose in the year ended September 30, 2002 (2001: credit £158,000). At September 30, 2002 the Group has estimated tax losses of £98.4 million (2001: £59.7 million) available to carry forward without expiry and to offset against future trading profits.

Loss for the Financial Year

The loss on ordinary activities for the year ended September 30, 2002 was £38.1 million compared to a loss of £53.6 million for year ended September 30, 2001. The loss for the year includes a share of the operating losses from the joint ventures operated in Australia, South Africa, Spain and, from June 2002, Japan.

Loss per Share

The Group’s loss per share for the year ended September 30, 2002 is (20.15)p per share, or (100.75)p per ADS compared to a loss of (31.50)p per share or (157.50)p per ADS, in the year ended September 30, 2001.

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Liquidity and Capital Resources

Our shares have been listed on the Official List of the UK Listing Authority and traded on the London Stock Exchange and our ADSs have been quoted on the Nasdaq National Market since March 21, 2000. The total proceeds to us from our IPO were approximately £125.4 million, before expenses.

During the year to September 30, 2002, the Company issued a total of 62,937,621 shares, principally as consideration and in relation to the acquisitions of Travelselect.com, the Destination Group and Travelprice.com and the investment in LCC24.com.

During the year to September 30, 2003, the Company issued a total of 60,623,442 shares, principally as consideration and in relation to the acquisitions of holiday autos group and eXhilaration, the prior year acquisitions of Travelprice.com, Travelselect.com and Destination Group.

At September 30, 2003 our employees and Directors had options outstanding over 17,861,428 (2002: 19,349,662) of our shares that are exercisable at a weighted average exercise price of 82 pence per share.

As at September 30, 2003 the cash position of the Group stood at £112.7 million compared to £49.6 million as at September 30, 2002. This includes the proceeds of the €102.6 million bond issue in September 2003.  The increase in cash is due to cash inflows resulting from proceeds of the convertible bond and the acquisition of subsidiary undertakings partially offset by the reduced cash outflow from operating activities. Cash is placed on deposit with AAA rated credit institutions and earns competitive rates of interest. Net cash inflow from operating activities for the year ended September 30, 2003 was £29.1million compared to an outflow of £2.7 million for the year ended September 30,
2002. This increase in cash inflow from operating activities is consistent with the increase in the scale of business during the year achieved through growth and acquisition and the increased contribution from trading.

We believe that existing cash and cash equivalents, as well as cash flows from operations, will be sufficient to meet our anticipated cash needs for working capital and capital expenditure for at least 12 months from the date of this document. Our capital requirements will depend on a number of factors, including the amount of resources devoted to brand promotion and rapid expansion, to respond to competitive pressures, or to acquire complementary businesses, technologies or services. We may raise additional funds through public or private financing, strategic alliances or other arrangements. We may not be able to raise additional funding. Further, any additional equity financing may be dilutive to shareholders, and
debt financing, if available, may involve restrictive covenants. Our failure to raise capital when needed may harm our business and operating results.

We currently have no floating rate indebtedness. Accordingly, changes in interest rates do not generally have a direct effect on our financial position except with respect to the returns on our cash position. However, we would be affected by any changes in interest rates that affect general economic conditions.

Capital expenditure for the year ended September 30, 2003 was £17.8 million compared to £7.0 million for the year ended September 30, 2002 and  £8.4 million for the year ended September 30, 2001. In each of the three years capital expenditure principally related to purchase and development of computer systems and equipment.

As of September 30, 2003 (and subsequent to this date up to February 13, 2004)the Group had no commitments for capital expenditures.

Borrowings

During September 2003, the Group issued €102.6 million of Convertible Bonds.  These bonds are unsecured liabilities of the Group, incur interest at a fixed rate of 6% per annum and mature on September 12, 2008.  The Bonds are convertible into fully paid Ordinary Shares at a conversion price of 364.5p per Ordinary Share subject to partial redemption in cash not exceeding 38% of the principal redeemed and to the right of the Company to make a cash alternative election upon the exercise of conversion rights.  Conversion is at the Bondholder’s option at any time from October 23, 2003 until six days prior to final maturity of the Convertible Bonds.

The Group may at its election redeem the Bonds at their principal amount, together with interest accrued to the redemption date, which may be

|i) | at any time on or after October 3, 2006 if the share price is at least 150% of the Conversion price for more than 20 days during
|-- | --------------------------------------------------------------------------------------------------------------------------------

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| | any period of 30 consecutive dealing days prior to such election; or
| | --------------------------------------------------------------------

|iii) | at any time if at least 85% of the original issued Bonds have been exercised or purchased or cancelled.
|---- | -------------------------------------------------------------------------------------------------------

Off balance sheet arrangements

lastminute.com does not have any off balance sheet arrangements as defined by the SEC.

Contractual obligations

The following table sets out our contractual obligations as at 30 September 2003.

|                                      |  |  | Payments due by period | 
|------------------------------------- |  |  | ---------------------- | 
|                                      |  |  | Total                  | 
|                                      |  |  |                        | 
|                                      |  |  | (£)                    | 
|                                      |  |  |                        | 
|Convertible Bonds                     |  |  | 69,264                 | 
|Operating leases                      |  |  | 5,131                  | 
|Finance leases                        |  |  | 2,340                  | 
|Deferred consideration on aquisitions |  |  | 4,550                  | 
|Onerous lease contracts               |  |  | 1,729                  | 
|                                      |  |  |                        | 
|                                      |  |  | 83,014                 | 
|                                      |  |  |                        | 

Impact of recently issued accounting standards

FRS17, Retirement Benefits, issued in November 2000, is fully effective for accounting periods beginning on or after January 1, 2005. Certain of the disclosure requirements are effective for periods prior to the January, 2005 deadline. FRS 17 will have no impact on the Group’s financial position and results under UK GAAP.

Application Note G to FRS 5 on revenue recognition was published in November 2003 and applies to accounting periods ending after December 23, 2003.  The implementation of this Application Note is not expected to have an impact in the Group’s financial position and results under UK GAAP.

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Research and Development, Patents and Licences, etc.

No material research and development costs have been incurred by the Group other than the amounts capitalised as detailed in “Item 5 — Operating Expenses  Product Development” above.

Trend Information

The first quarter of 2004 has started well and will benefit from the strong order book carried forward at the end of the 2003 financial year.  In addition, with the funding raised through our convertible bond offering, the Group is in a strong position to continue its programme of strategic acquisitions which will supplement the significant organic growth currently being delivered.  During December 2003 the Group announced the acquisition of Med Hotels Limited and Travel Bargains Limited, a UK hotel consolidator and package holiday reseller respectively for £16.1 million.  In January 2004, the Group announced the acquisition of a specialist leading UK hotel booking agency, First Option Hotel Reservations
Limited for £12.1 million.

Trading Report Review

The 2004  financial year has started well and the Group has continued to make signifcant  progress during Quarter 1 2004. Gross margins remain strong and have increased  year on year mainly due to an improved mix following the acquisition of holiday  autos and additional scale in key areas. The success of flights sales in the  quarter has diluted the overall margins compared with the final quarter of last  year.

Dynamic
    Packaging (the ability for the customer to create a packaged break that is
    unique to them) was launched in the UK in November 2002 and continues to
    show substantial growth. Dynamic Packaging was introduced in France, Italy
    and Spain towards the end of 2003 and in Germany in February 2004. Increasing
    flexibility in the product now enables the customer to also include car hire,
    insurance, car parking, tours, attractions and transfers in their package.

Customer metrics  (which include number of subscribers, new unique customers and number of items  sold) have also continued to show improvement during the quarter. The conversion  of the subscriber base to customers since inception is now over  40%.

Many new  agreements with such companies as Iberia, Alitalia, and SNCF, the French  national railway have improved product availability. New ventures have also  started through Quarter 1, including and agreement to introduce a lastminute.com  credit car in conjunction with Virgin Money and MBNA in the UK and Ego Visa in  Italy, new connectivity to two major hotel consolidators, jactravel and Worldres  as well as  a new lastminute.com website in Ireland. All these new ventures  are increasing both our range and our visibility to our  customers.

During the  quarter we also announced the acquisition of a UK hotel consolidator and package  holiday reseller, Med Hotels and the UK hotel booking agency First Option Hotel  Reservations Ltd. These both increase our product availability as well as  enabling visibility and presence throughout the major railway stations and  airports.

In
    January 2004, we announced the appointment of Richard Bowden-Doyle as Managing
    Director of our UK business to further strengthen the core management team
    within the business.

Quarter 1 has  been broadly in line with expectations with quarter 2 beginning strongly  too. Proforma organic like-for-like growth in quarter 1 was 23.2%, growing to 36.6% in January 2004.

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ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Directors and Senior Management

The Directors of lastminute.com plc and their ages and positions are:

|Name            |  |  | Age |  |  | Position                                         | 
|--------------- |  |  | --- |  |  | ------------------------------------------------ | 
|                |  |  |     |  |  |                                                  | 
|Allan Leighton  |  |  | 50  |  |  | Chairman                                         | 
|Brent Hoberman  |  |  | 34  |  |  | Co-founder, Chief Executive Officer and Director | 
|David Howell    |  |  | 54  |  |  | Chief Financial Officer and Director             | 
|Clive Jacobs    |  |  | 42  |  |  | Executive Vice Chairman                          | 
|Ian McCaig      |  |  | 37  |  |  | Chief Operating Officer                          | 
|Robert Collier  |  |  | 63  |  |  | Vice Chairman and Non-Executive Director         | 
|Brian Collie    |  |  | 49  |  |  | Non-Executive Director                           | 
|                |  |  |     |  |  |                                                  | 
|Martha Lane Fox |  |  | 30  |  |  | Co-founder and Non-Executive Director            | 
|Agnès Touraine  |  |  | 48  |  |  | Non-Executive Director                           | 
|Sven Boinet     |  |  | 50  |  |  | Non-Executive Director                           | 
|                |  |  |     |  |  |                                                  | 

The senior management and officers of lastminute.com plc and their ages and positions are:

|Name           |  |  | Age |  |  | Position                       | 
|-------------- |  |  | --- |  |  | ------------------------------ | 
|               |  |  |     |  |  |                                | 
|Andrew Windsor |  |  | 40  |  |  | Group Commercial Director      | 
|Chip Steinmetz |  |  | 48  |  |  | Chief Technical Officer        | 
|Liane Hornsey  |  |  | 45  |  |  | Group Human Resources Director | 
|Simon Watkins  |  |  | 38  |  |  | Group Company Secretary        | 

Allan Leighton was appointed Chairman of the Company in October 2000. He previously served as President and Chief Executive Officer of Wal-Mart Europe. He worked at Asda Group from June 1992 to November 2000 and was Group Chief Executive from 1996 to 2000. Allan is also the Chairman of Royal Mail Group plc, British Home Stores Limited, Cannons Group and Wilson Connolly Limited and a Non-Executive Director of BSkyB PLC, Dyson Limited and George Weston Limited.

Brent Hoberman is the Chief Executive Officer of the Company. He was the Co-Founder of lastminute.com and has been an Executive Director of the Company since February 2000 and of Last Minute Network Limited since inception in April 1998. Previously Brent was a Senior Associate at Spectrum Strategy Consultants, held the business development responsibilities at Line One, an internet service provider owned by News International, British Telecom and United News & Media and had 5 years of strategic consultancy experience. Brent was also part of the founding team of the European auction site, QXL. Brent received the Time Magazine Digital 25 Award for Outstanding Achievement in 2002.

David Howellwas appointed Chief Financial Officer and an Executive Director of the Company in July 2001. Prior to this appointment he was Group Finance Director of First Choice Holidays PLC between 1997 and 2001. Previously David was Group Finance Director of Central Transport Rental Group PLC and Group Chief Executive of GN Comtext Limited, a subsidiary of GN Great Nordic. David was previously a Non-Executive Director of Nestor Healthcare Group PLC from 1999 until October 2003.

Clive Jacobs was appointed Executive Vice Chairman of the company in April 2003 following the acquisition of holiday autos. He started his own flight company at the age of 21 and then co-founded holiday autos in 1987. Since then, Clive has grown and diversified the holiday autos business and received carious travel industry awards.

Ian McCaig was appointed a Director of the Company on November 20, 2003 and has been the Chief Operating Officer of the Group since August 2003.  Previously Ian has held senior management positions at Nokia, most recently as a Global Vice President.

Martha Lane Fox was Group Managing Director of the Company until December 31, 2003 and since that date has been a Non-Executive Director. She was the Co-Founder of lastminute.com and has been an Executive Director of the Company since February 2000 and of Last Minute Network Limited since inception in April 1998. From May 1997 to April 1998 she was Business Development Manager at Carlton Communications. Prior to that she was an Associate at Spectrum Strategy Consultants, where she specialised in pay television and managed teams both in the United Kingdom and Asia.  In November 2003, Martha was voted Business Person of the Year at the London Business Awards.

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Robert Collier has been Vice Chairman and a Non-Executive Director of the Company since February 2000, and was previously a Director of Last Minute Network Limited from October 1998.  He previously served as a Vice-Chairman of Saison Overseas BV, the former parent company of Intercontinental Hotels Group, after serving as Joint Managing Director of Intercontinental Hotels Group from 1994 to 1997. He is Non-Executive Chairman of both Bristol Golf Club Ltd and Myhotels Limited, and is also a Non-Executive Director of Green Globe Limited, London Wasps Holdings PLC, Daniel Thwaites PLC and Pegasus Solutions Inc.

Brian Collie has been a Non-Executive Director of the Company since February 2000. He has been Group Retail Director and an Executive Director of BAA plc since 1997, responsible for all commercial income at BAA’s airports globally, and was responsible for establishing World Duty Free, the international duty free subsidiary of BAA; he was previously Retail Director at Gatwick Airport. Brian is also a Non-Executive Director of Jurys Doyle Hotel Group plc.

Agnès Tourainewas appointed as a Non-Executive Director in May 2003.  Based in France, she is a well respected and experienced businesswoman in both growth and large scale businesses.  In her previous role she was Chairman and CEO of Vivendi Universal Publishing and has held a number of senior executive and consultancy positions, principally within media and publishing businesses, during her career.  Agnès is currently the Managing Director of Act III Consultants, a management consultancy firm.

Sven Boinet was appointed as a Non-Executive Director in August 2003.  During the 15 years to January 2003, he was with the Accor Group.  During that period he was a member of the Executive Board and responsible for worldwide hotels and gaming.  He was also CEO of their Leisure Division.  He is currently a Non-Executive Director of Geodis, France's largest road transport company and Pierre et Vacances, the largest French leisure residential company.

Andrew Windsor was appointed Group Commercial Director in February 2003. Andrew is well respected in the travel industry having previously been Managing Director, Distribution for Thomas Cook UK and Canada with responsibility for all channels to market including retail shops, call centres, ecommerce and TV; he was also a director of accoladia, a joint venture between Thomas Cook and British Airways.  Prior to 2001, Andrew held various roles within Thomas Cook and B&Q.

Chip Steinmetzwas appointed Chief Technology Officer in January 2003. Chip has previously held senior technology positions in a number of leading global organizations including American Airlines, UBS, Barclays Capital and the Walt Disney Internet Group.

Liane Hornsey was appointed HR Director in September 2003. Liane has extensive HR experience most recently at NTL where she overhauled the recruitment and reward process. Most of her career has been within telecommunications, including BT, and media and entertainment, including Bertelsmann. Liane has worked across most functions from sales and marketing, corporate strategy and human resources and has had extensive global experience.

Simon Watkinswas appointed as Group Company Secretary in September 2001. Prior to joining lastminute.com, Simon held a number of roles with Rank Group within their Corporate Secretariat from 1989 to 2000, being Assistant Secretary from 1997, and was responsible for all areas of Global compliance, share schemes and worked on a number of large corporate transactions. Before 1989, Simon held a number of Company Secretarial roles in private practice. Simon qualified as a Chartered Secretary in 1987.

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Compensation

Remuneration Policy for Executive Directors

The objective of the remuneration policy is to provide a remuneration package which is competitive to attract, motivate and retain Directors and Senior management of high calibre.

Following recent acquisitions, material corporate growth and senior executive recruitment, the Remuneration Committee decided that this year was an appropriate time to conduct an extensive review of the remuneration of the Company's Executive Directors and senior executives.

As a result of the review, which was completed in December 2003 with the assistance of external consultants and benchmarking, the Remuneration Committee is implementing a new remuneration policy which it believes will retain and develop further the Group's entrepreneurial culture whilst also focusing the majority of future executive remuneration on performance-related compensation, which the Committee believes will be in shareholders' best interests.  The new policy provides a framework to motivate and retain the existing Executive Directors and senior executives and enables the Company to be competitive when recruiting.

To support the principles of this new policy the Remuneration Committee has introduced or is proposing to introduce , subject to shareholder approval, a number of changes to the existing compensation structures:

| | a new annual share bonus plan from October 1, 2003 which will operate so that 50% of any bonus is payable in cash with the remainder in shares; half of these bonus shares will be held within the plan and belong to the participant immediately and the other half of the shares will be deferred and released to the participant after three years and may be forfeited in certain circumstances;
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                     

| | A new Long-Term Incentive Plan with the release of awards based on the Company's comparative total shareholder return performance against the comparator group set out below;
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                              

| | A change to granting options on an annual basis rather than block grants, with new grants vesting over three years and having performance conditions which initially are likely to be based on earnings per share growth and comparative total shareholder return measures; and
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                

| | The introduction of a minimum shareholding requirement for the Executive Directors and senior executives.
|- | ---------------------------------------------------------------------------------------------------------

In addition, the Company is proposing to introduce an Inland Revenue approved all employee Share Incentive Plan to allow employees to invest tax efficiently in shares of the Company.

Remuneration of Non-Executive Directors

All
    Non-Executive Directors have letters of appointment. Allan Leighton receives
reimbursement for reasonable expenses. Robert Collier, Brian Collie, Agnès Touraine and Sven Boinet receive fees of £20,000 per annum, with the recommendation that all post tax income be used to purchase shares in the Company.

Directors' and Senior Management Remuneration

With the exception of the amounts set out in note 6 of notes in the financial statements, we do not compensate our other Directors for their services on the Board of Directors or any committee of the Board of Directors. The aggregate remuneration paid to and accrued on behalf of all our Directors and senior management as a group for the year ended September 30, 2003 was £1,381,494   (2002: £1,531,168), in salaries, fees, commissions and bonuses. These amounts exclude pension and related benefits, other than those required to be paid or contributed to by law but include other benefits such as life and health insurance. They do not include expenses such as business travel, professional and business
association dues and expenses reimbursed. With the exception of the cash supplement paid in lieu of pension benefits, there were no pension contributions paid or accrued in respect of the Directors in the year ended September 30, 2003.

Further information regarding the details of compensation we paid to each of our Directors for the years ended September 30, 2001, 2002 and 2003 is set out in note 6 of notes to the financial statements.

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Board Practices

The dates of appointment of the Board members are discussed within "Directors and Senior Management" above.

Employment Agreements

Brent Hoberman has a service agreement with the Company dated February 24, 2000.  David Howell, Clive Jacobs and Ian McCaig have employment agreements with Last Minute Network Limited dated June 21, 2001, April 17, 2003 and August 01, 2003. Each of the agreements may be terminated by either the Director or the respective company by giving six months notice.  With the exception of the payment of any salary and benefits and any accrued bonus for David Howell, for the six month notice period, no further compensation is payable on any termination of contract.

In addition to basic salary, each Executive Director is entitled to a supplement of up to 14% of basic salary, which may be taken as cash or by way of a contribution to their individual pension arrangements and the following benefits: paid holiday, company sick pay, participation in our private health and life assurance schemes, and participation in our share schemes.

David Howell has entitlement to a performance based bonus, details of which are outlined below.  The Committee has approved a policy which, if approved by shareholders, would entitle all the Directors to revised annual bonuses and share incentives subject to certain performance conditions.

The service agreements provide for, amongst other things, each of the individuals to render their services to us on a full time basis or, if we request, to one of our subsidiaries or affiliates. In addition, the employment agreements contain an express obligation of confidentiality in respect of our trade secrets and confidential information and provide that we will own any intellectual property rights created by any Director in the course of their employment. The agreements also contain restrictive covenants, which prevent the employees from competing with us and soliciting key customers and employees of ours and our group companies.

The Non-Executive Directors have letters of appointment with us. They will be re-elected at regular intervals and at least every three years.

Corporate Governance

The Board has the following Committees which deal with specific aspects of our affairs.

The Senior Management Boardhas been established during the year. The SMB consists of senior executive management and deals with the on-going day to day management of the Group, as well as reviewing and making recommendations in respect of the Group's operating and strategic policy and investment decisions to ensure that the long term interests of the shareholders, employees, customers and suppliers are considered.

The Audit Committeeis
    responsible for reviewing a wide range of matters including the quarterly
    results and annual financial statements before their submission to our Board
    and monitoring the involvement of our auditors in that process, focusing
    particularly on risk management, compliance with legal requirements and accounting
    standards and the requirements of the UK Financial Services Authority, the
    Nasdaq National Market and the Securities and Exchange Commission. Robert
    Collier chairs the Committee and its other members are Brian Collie and,
    since 28 May 2003, Agnès Touraine. Laurent Laffy was a member of the committee until March 6, 2003. Meetings are also
attended, by invitation, by the Chief Financial Officer.

The Remuneration Committeeis responsible for developing policy on remuneration for Executive Directors and senior management, to make recommendations to the Board in respect of the framework for senior management remuneration and to determine specific remuneration packages for each of the Executive Directors.  The Committee also oversees the operation of the Company’s
    share incentive schemes and approves allocations to Executive Directors and
senior management. Brian Collie chairs the committee with Agnès Touraine (since May 28, 2003) and Sven Boinet (since October 1, 2003) as committee members.

The Nomination Committee has been re-established during the year and is responsible for reviewing all board appointments. The Committee consists of Allan Leighton, who chairs the Committee, Brian Collie and Agnès Touraine. The Committee has not met

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during the year but all members of
    the Committee met Sven Boinet prior to his appointment as a Director and
    recommended his appointment to the Board.

Removal of Directors under
        English Law

Pursuant
    to English law and our Articles of Association, our shareholders may, by
    ordinary resolution passed by a simple majority, remove any Director from
    office, notwithstanding any agreement between us and the Director, but without
    prejudice to any claim the Director may have for damages for breach of any
    agreement to which we are a party.

Employees

As
    at September 30, 2003, we had 1,300 employees. This number relates to the
    total number of employees of lastminute.com plc and its subsidiaries, but
    excludes those of joint ventures. Of the above total number of employees,
    486 were employed in the United Kingdom and 314 in France. As at September
    30, 2002, we had 916 employees, of which 509 were employed in the United
    Kingdom and 294 in France. As at September 30, 2001, we had 592 employees,
    of which 297 were employed in the United Kingdom and 215 in France. Our human
    resources strategy is to attract, retain and reward talented, high-calibre
    employees focused on achieving excellent results. We believe that lastminute.com's
    market profile and remuneration strategy will help to achieve this aim. The
    involvement of employees in our financial performance is encouraged through
    the employee share option schemes as disclosed below.

Pensions

Employee Pension Schemes

In
    the United Kingdom, we contribute to a group personal pension plan, a defined
    contribution plan, managed by Standard Life to provide retirement and death
    benefits for employees. We currently contribute up to a maximum of 14% of
    our employees' basic salaries to an investment account in the name of the
    individual employee, or pay the cash equivalent direct to the employee. Employees
    may contribute to the extent that Inland Revenue limits are not exceeded.
    All due contributions had been paid at September 30, 2003. The assets of
    the plan are separate from the assets of lastminute.com.

We
    also contribute 1% of our employees' basic salaries to provide a package
    of health benefits for employees. This package consists of permanent health
    insurance and life assurance, insured through Royal & Sun Alliance, and
    private medical insurance insured through Prime Health. All due contributions
    had been paid at September 30, 2003.

Our
    Directors receive benefits identical to those described above.

In
    France most employees benefit from a government provided retirement plan,
    the costs of which are included within social security costs, although some
    senior employees are also members of a separate defined contribution pension
    plan to which the Group contributes. Most other Group companies have defined
    contribution pension plans which vary from country to country.

Executive
      Directors pension arrangements.During part of the year ended September
      30, 2000, Martha Lane Fox was a member of our defined contribution pension
      scheme. As part of her remuneration package £500 was contributed
      to that scheme. She has since left the scheme. Currently, there are no
      pension arrangements for the Executive and Non-Executive Directors.

Employee Share Schemes

We
    currently operate five employee share schemes in which all employees and
    Directors in the Group in the Group participate and one scheme which has
    been utilised to grant options to Non-Executive Directors.

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 Executive
    Schemes. The formula allows for the gradual vesting of the options over a
    three-year period from the date of grant. Options, which have not been exercised,
    will normally lapse on the tenth anniversary of grant. Under the Sharesave
    Scheme employees save each month over a three year period and can use these
    savings to purchase shares at a price set at the time the option was granted.
    Options are normally exercisable for six months following the three year
    savings period.

As
    at September 30, 2003, 17,861,428 options over our Ordinary Shares were outstanding.
    The details of the prices at which these

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options were granted are set out
    in note 7 of notes to the financial statements. All options were granted
    for no consideration.

We
    expect to incur National Insurance charges relating to options granted after
    April 6, 1999 under the terms of the unapproved share option schemes at a
    rate of 11.8% on the difference between the share value at the exercise date
    and the grant price. We make provision for this liability over the period
    of performance (the period in which the employee performs the services necessary
    to become unconditionally entitled to the options) based on the difference
    between the period-end share value and the grant price.

Options on the terms of the Last
      Minute Network Limited 1998 Unapproved Executive Share Option Scheme

Last
    Minute Network Limited entered into option agreements in respect of its Ordinary
    Shares on the terms of the Last Minute Network Limited 1998 Unapproved Executive
    Share Option Scheme, as amended. These options were transferred to options
    over lastminute.com shares under the same terms immediately prior to the
    group’s IPO in March 2000. No further options will be granted under
    the Scheme. The terms of the Scheme as amended are summarised below.

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| | Eligibility.All of Last
        Minute Network Limited's employees and Directors and those of any subsidiaries
        are eligible to participate in the Scheme.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Grant of options.Last
        Minute Network Limited's Board or an authorised committee may, at their
        discretion, grant options to subscribe for shares. Options may be granted
        subject to a performance condition based on objective criteria. Options
        may be granted at an exercise price, which is equal to the price per
        share at which shares were sold under the placing of shares to investors
        most recent to the grant or, at the discretion of the Board, an amount
        determined by the Board, which may be higher or lower than the most recent
        placing price. No consideration was payable for the grant of options.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Exercise of options.Options
        may be exercised 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 Scheme. The formula allows for the gradual vesting
        of the options on a straight-line basis over a three year period. Options
        that have not been exercised will normally lapse on the tenth anniversary
        of grant.

| |                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If an optionholder ceases to
        be an employee, his option will lapse to the extent that it has not vested.
        Any part of his option, which has vested, will remain exercisable.

| |                                                                                                        
| | -------------------------------------------------------------------------------------------------------
| | Options are not transferable
        and may only be exercised by the persons to whom they are granted.

| |                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

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

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Amendments.Last Minute
        Network Limited's Board or an authorised committee may amend any provision
        of the Scheme provided that any amendment which would prejudice the subsisting
        rights of optionholders requires the prior written consent of existing
        optionholders who hold options exercisable over at least three quarters
        of the total number of shares underlying options granted under the Scheme.

| |                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Termination.Last Minute
        Network Limited's Board or an authorised committee may, at any time,
        terminate the Scheme. If this happens, no further options will be granted
        but the provisions of the Scheme will continue in relation to options
        already granted.

Options on the terms of the Last
      Minute Network Limited 1999 Unapproved Executive Share Option Scheme

The
    terms of this Scheme, as amended, are, in all material respects, the same
    as those of the 1998 Unapproved Executive Share Option Scheme, as amended.
    Last Minute Network Limited entered into option agreements in respect of
    its ordinary shares on the terms of the Scheme, as amended. These options
    were transferred to options over lastminute.com shares under the same terms
    immediately prior to the Group’s IPO in March 2000. No further options
    will be granted under this Scheme.

The lastminute.com plc 2000 Unapproved
      Executive Share Option Scheme

| | Eligibility.All of our
        employees and Directors and those of any subsidiaries are eligible to
        participate in the Scheme.
| | ---------------------------------------------------------------------------------------------------------------------------------------

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Grant of options.Our
        Board or an authorised committee may, at their discretion, grant options
        to acquire our shares. Options can be granted at any time. They may be
        granted subject to a performance condition based on an objective criteria.
        Prior to the listing of the lastminute.com plc's Ordinary Shares on a
        recognised investment exchange, options had to be granted at an exercise
        price that was equal to the price per share at which shares were sold
        under the placing of shares to investors most recent to the grant. On
        or after the listing date, options had to be granted at an exercise price
        equal to the then current market value of an Ordinary Share. No consideration
        is payable for the grant of options.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Exercise of options. Options
        are normally exercisable in accordance with a formula set out in the
        Scheme unless our Board has stipulated otherwise on the date of grant.
        The formula allows for the gradual vesting of the options over a three
        year period. Options that have not been exercised will normally lapse
        on the tenth anniversary of grant. Options may, however, be exercised
        early, for example, if an optionholder ceases to be an employee due to
        injury, disability, redundancy or retirement.

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| | If an optionholder ceases to
        work for lastminute.com on grounds of poor performance or misconduct
        all his/her options will lapse immediately.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| | In the circumstances of a takeover,
        scheme of arrangement or winding-up, the options must be exercised within
        six months of such cessation.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In the event of a voluntary
        winding-up options may be exercised until the start of the winding up
        and any options which have not been exercised will lapse on the winding
        up. In the event of a winding up by the court options may be exercised
        within two months after the date of the winding-up-order and any options
        which have not been exercised during the two month period will lapse
        at the end of the period.

| |                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Exchange of options.In
        the event of a change of control, optionholders may exchange their options
        for options over shares in the acquiring company.

| |                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Variation in share capital.Options
        may be adjusted following certain variations in share capital, including
        a capitalisation of reserves, an issue of securities by way of rights,
        open offer or placing, or a sub division, reduction 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
        exceed 15% of our issued share capital when added to the total number
        of shares allocated in the previous 10 years under the Scheme and any
        other employee share scheme operated by us. For these purposes, allocate
        means, in relation to a share option scheme, placing unissued shares
        under option, and, in relation to other types of employee share schemes,
        the issue and allotment of shares.

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

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

The lastminute.com plc 2000 Approved
      Executive Share Option Scheme

The
    rules of this Scheme are drafted as an Inland Revenue-approved scheme, with
    the intention that all options granted under the Scheme would be eligible
    for favourable tax treatment. The Scheme obtained approval by the Board of
    the Inland Revenue on June 1, 2000. The terms of this Scheme are, in all
    material respects, the same as those of the 2000 Unapproved Executive Share
    Option Scheme, subject to the differences described below:

| | Individual limit. An
        employee's participation in the Scheme is limited so that, at any one
        time, the aggregate market value of our shares subject to outstanding
        options granted to him under approved executive share option schemes
        established by us or any associated company does not exceed £30,000.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The lastminute.com plc Non-Executive
      Share Option Scheme 2000

The
    terms of this Scheme are, in all material respects, the same as those of
    the 2000 Unapproved Executive Share Option Scheme, subject to the differences
    outlined below.

| | Eligibility.Any of our
        Directors are eligible to participate in the Scheme. (It is intended
        that this Scheme will be used only for Non-Executive Directors).
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Grant of options.Our
        Board may grant options at its discretion and options may be granted
        at any time but may not be granted after 10 years beginning from the
        date the Scheme was adopted. In relation to any option granted during
        2000 the exercise price was the market value of a share on the date on
        which the appointment of the optionholder as a Director was publicly
        announced and subject to any exceptional circumstances acknowledged by
        the Board, the exercise price of any option granted during or after 2001
        will be the market value of a share on a date of grant.

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| | Scheme limits. The number
        of shares, which may be allocated under the Scheme on any day, must not
        exceed 12% of our issued share capital when added to the total number
        of shares allocated in the previous ten years under the schemes and any
        other employee share scheme operated by us. For these purposes, allocate
        means, in relation to a share option scheme, placing unissued shares
        under option, and, in relation to other types of employee share scheme,
        the issue and allotment of shares.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The lastminute.com plc Sharesave
      Scheme

The
    Sharesave Scheme is approved by the Inland Revenue under the Income and Corporation
    Taxes Act 1988. The operation of the Scheme is supervised by the Remuneration
    Committee of the Board of Directors (the “Committee”).

| | Eligibility. All UK resident
        employees of the Company and participating subsidiaries (including directors
        who are required to work at least 25 hours a week) are eligible to participate.
        The Board may amend the eligibility conditions (within the limits set
        by the relevant legislation).
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Grant of options. Invitations
        to apply for options to acquire Ordinary Shares may be issued within
        six weeks following the announcement by the Company of its results for
        any period, as well as at any other time if the Board considers that
        there are exceptional circumstances. No invitations may be issued later
        than ten years after the adoption of the Scheme. Options may only be
        granted to employees who enter into Inland Revenue approved savings contracts,
        under which monthly savings are made over a period of three or five years.

| |                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The number of ordinary shares
        over which an option is granted will be such that the total amount payable
        on its exercise will correspond to the proceeds on maturity of the related
        savings contract. An option will be personal to the optionholder and
        may not be transferred by him/her.

| |                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Individual participation.Monthly
        savings by an employee under all savings contracts linked to options
        granted under any savings related share option scheme may not exceed
        the statutory maximum (currently £250).

| | 
| | 

| | Acquisition price.The
        price per Ordinary Share payable upon the exercise of options will not
        be less than the higher of:
      (a) 80% of the average of the
        middle-market quotations of an Ordinary Share on the London Stock Exchange
        on four dealing days within the period of 30 days (or 42 days, if applications
        are scaled down) ending with the date of grant of options (or such other
        day or days as may be agreed with the Inland Revenue), provided that
        no such days may fall before the Company last announced its results for
        any period; and
        (b) the nominal value of an Ordinary Share (except to the extent the
        Board is authorised to capitalise reserves or the option relates solely
    to existing Ordinary Shares).
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Limit on subscription.
        Not more than 10% of the issued Ordinary Share capital of the Company
        may
        be subscribed on the exercise of options granted since March 14, 2000
        under the Scheme or any other share option scheme adopted by the Company
        or issued over that period under any other type of employees’ share
        scheme adopted by the Company.

| |                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A similar 5% limit applies to “executive” options
        i.e. those granted under the Company’s other share option schemes
        other than where the grants are made on any occasion either to the majority
        of those eligible to participate in those schemes or on a similar basis
        to such grants to new recruits.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Exercise of options.
        Options will normally be exercisable only for six months from the third,
        fifth, or seventh anniversary of the commencement of the related savings
        contracts. Earlier exercise is permitted following cessation of employment
        in specified compassionate circumstances, or if an employee reaches age
        60. Options will otherwise lapse on cessation of employment. Early exercise
        is also permitted in the event of a takeover, amalgamation, reconstruction
        or winding-up of the Company.

| |                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Rights attaching to Ordinary
          Shares. All Ordinary Shares allotted under the Scheme will rank
          equally with all other Ordinary Shares of the Company for the time
          being in issue (except as regards any rights attaching to such shares
          by reference to a record date prior to the date of allotment).

| |                                                                                   
| | ----------------------------------------------------------------------------------
| | Pensionability.Benefits
        received under the Scheme will not be pensionable.

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| | Variation of capital. In the event of any variation of the Company’s share capital, the Board may make such adjustments as it considers appropriate to the number of Ordinary Shares subject to options and the price payable on the exercise of options.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Alterations. The Board may at any time alter the Scheme in any respect, subject to the prior approval of shareholders for alterations to the advantage of participants to the rules governing eligibility, the individual limit on participation, the overall limit on the issue of Ordinary Shares, the terms of options, the rights attaching to Ordinary Shares acquired on the exercise of options, the adjustment of options in the event of a variation of capital and the amendment of the Scheme. The requirement to obtain prior shareholder approval will not, however, apply to any minor alteration to benefit the administration of the Scheme, or to take account of a change in legislation, or to obtain or maintain
favourable tax, exchange control, or regulatory treatment for participants or a lastminute.com group company.

Share Ownership

Directors' Interests in Shares and Share Options

The interests of the Directors in the Ordinary Shares of the Company and share options granted by the Company as atSeptember
30, 2001, 2002 and 2003 are set out in note 6 of notes to the financial statements.

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ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Major Shareholders

The following table sets forth information with respect to the beneficial ownership of our major shareholders as at February 13, 2004, being the nearest practicable date to the filing of the annual report for the fiscal year ended September 30, 2003.

|At February
    13, 2004          |  |  | Number
      ofordinary shares |  |  | %     |  
|--------------------------------- |  |  | ------------------------------ |  |  | ----- | -
|                                  |  |  |                                |  |  |       |  
|Fidelity Investments Limited      |  |  | 33,255,637                     |  |  | 10.99 | %
|American Express Group            |  |  | 30,901,254                     |  |  | 10.22 | %
|Deutsche Bank AG                  |  |  | 10,442,223                     |  |  | 3.45  | %
|Brent Hoberman                    |  |  | 15,836,133                     |  |  | 5.24  | %
|Clive Jacobs                      |  |  | 11,334,657                     |  |  | 3.75  | %
|Martha Lane Fox                   |  |  | 10,207,879                     |  |  | 3.38  | %
|The Capital Group Companies, Inc. |  |  | 12,927,500                     |  |  | 4.28  | %
|Legal and General                 |  |  | 14,060,272                     |  |  | 4.65  | %
|Goldman Sachs                     |  |  | 11,765,789                     |  |  | 3.89  | %

The following table sets forth information with respect to the beneficial ownership of our major shareholders as at January 17, 2003, being the nearest practicable date to the filing of the annual report for the fiscal year ended September 30, 2002.

|At January 17, 2003                       |  |  | Number ofordinary shares |  |  | %    | 
|----------------------------------------- |  |  | ------------------------ |  |  | ---- | 
|                                          |  |  |                          |  |  |      | 
|Deutsche Bank AG                          |  |  | 23,906,661               |  |  | 9.85 | 
|Cheetah International Investments Limited |  |  | 17,738,065               |  |  | 7.31 | 
|Brent Hoberman                            |  |  | 15,836,133               |  |  | 6.52 | 
|Martha Lane Fox                           |  |  | 10,207,879               |  |  | 4.20 | 
|Global Retail Partners                    |  |  | 9,371,280                |  |  | 3.86 | 
|AGF Private Equity                        |  |  | 7,189,628                |  |  | 2.96 | 

The following table sets forth information with respect to the beneficial ownership of our major shareholders at March 6, 2002, being the nearest practicable date to the filing of the annual report for the fiscal year ended September 30, 2001.

|At March 6, 2002                          |  |  | Number ofordinary shares |  |  | %     | 
|----------------------------------------- |  |  | ------------------------ |  |  | ----- | 
|                                          |  |  |                          |  |  |       | 
|Cheetah International Investments Limited |  |  | 25,738,065               |  |  | 14.75 | 
|Brent Hoberman                            |  |  | 15,836,133               |  |  | 9.08  | 
|The Reverse Family                        |  |  | 15,366,000               |  |  | 8.81  | 
|Global Retail Partners                    |  |  | 13,371,280               |  |  | 7.67  | 
|Martha Lane Fox                           |  |  | 10,207,879               |  |  | 5.85  | 

On February 15, 2000, lastminute.com plc acquired Last Minute Network Limited in a share for share exchange. Holders of Last Minute Network Limited's Ordinary Shares, Preference A Shares and Preference B Shares received the equivalent number of Ordinary Shares, Preference A Shares and Preference B Shares, respectively, in lastminute.com plc.

Our existing Ordinary Shares carry equal voting rights.

As at February 13, 2004, we have approximately 151,000 shareholders and 14 ADR holders of record.

So far as we are aware, we are neither directly nor indirectly owned or controlled by one or more corporations or by any government.

We do not know of any arrangements the operation of which might result in a change in control of lastminute.com.

Transactions with Related Parties

There have been no related party transactions entered into during the past three years.

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ITEM 8.  FINANCIAL INFORMATION

Consolidated Statements and Other Financial Information

Reference is made to Item 18 for a list of all financial statements filed as part of this Annual Report.

For information on legal proceedings, please refer to “Item 4 — Information on The Company — Legal Proceedings” above.

Significant Changes

Please refer to “Item 5 — Operating and Financial Review and Prospects, Trend Information”.

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ITEM 9.  THE OFFER AND LISTING

Offer and Listing Details

Our shares have been listed on the Official List of the UK Listing Authority and traded on the London Stock Exchange under the symbol "LMC" and our ADSs, each representing five shares, have been quoted on the Nasdaq National Market under the symbol "LMIN" since March 2000.

The following table sets forth for the periods indicated the highest and lowest middle market quotations for the ordinary shares, as derived from the Daily Official List of the UK Listing Authority and the reported high and low stock prices of our ADSs on the Nasdaq National Market:

|                                             |  |  | Ordinary Shares |  |  | ADS | 
|-------------------------------------------- |  |  | --------------- |  |  | --- | 
|                                             |  |  |                 |  |  |     | 
|Year ended September 30                      |  |  | High            |  |  | Low | 
|                                             |  |  |                 |  |  |     | 
|                                             |  |  | (p)             |  |  | (p) | 
|2000                                         |  |  |                 |  |  |     | 
|Annual                                       |  |  | 488             |  |  | 123 | 
|2001                                         |  |  |                 |  |  |     | 
|Annual                                       |  |  | 140             |  |  | 20  | 
|2002                                         |  |  |                 |  |  |     | 
|1st Quarter                                  |  |  | 44              |  |  | 19  | 
|2nd Quarter                                  |  |  | 70              |  |  | 33  | 
|3rd Quarter                                  |  |  | 96              |  |  | 60  | 
|4th Quarter                                  |  |  | 102             |  |  | 78  | 
|2003                                         |  |  |                 |  |  |     | 
|1st Quarter                                  |  |  | 117             |  |  | 85  | 
|2nd Quarter                                  |  |  | 104             |  |  | 77  | 
|3rd Quarter                                  |  |  | 180             |  |  | 85  | 
|4th Quarter                                  |  |  | 295             |  |  | 173 | 
|2004                                         |  |  |                 |  |  |     | 
|1st Quarter                                  |  |  | 316             |  |  | 205 | 
|Month                                        |  |  |                 |  |  |     | 
|August 2003                                  |  |  | 276             |  |  | 211 | 
|September 2003                               |  |  | 295             |  |  | 253 | 
|October 2003                                 |  |  | 307             |  |  | 256 | 
|November 2003                                |  |  | 316             |  |  | 237 | 
|December 2003                                |  |  | 292             |  |  | 205 | 
|January 2004                                 |  |  | 240             |  |  | 207 | 
|February 2004 (through to February 13, 2004) |  |  | 235             |  |  | 206 | 

On February 13, 2004, the closing price on the London Stock Exchange was 235p per share.

On February 13, 2004 the closing price on the Nasdaq National Market was $22.15 per ADS.

As at February 13, 2004, there were 14 holders of record of ADRs and approximately 151,000 holders of shares. ADRs represented approximately 8.29% of the outstanding shares as of such date.

Morgan Guaranty Trust Company of New York is our depositary issuing ADRs under the deposit agreement dated as of March 14, 2000 among us, Morgan Guaranty Trust Company of New York, as depositary, and the holders from time to time of ADRs.

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ITEM 10.  ADDITIONAL INFORMATION

Memorandum and Articles of Association

Our Memorandum of Association provides that our objects are, amongst other things, (1) to carry on business as an e-commerce site, (2) to carry on business as agents and dealers in all products and services, (3) to act as a holding company and (4) to carry on any business, trade or activity that the Directors deem to be related to our business and capable of enhancing the value or profitability of our business. Our objects are set out in full in Clause 4 of our Memorandum of Association which is available for inspection at our principal executive offices.

The Articles of Association of lastminute.com were adopted with effect immediately prior to our IPO and contain, among others, provisions to the following effect:

Shareholder Meetings

An annual general meeting of our shareholders must be held once each year within a period of not more than 15 months after the previous annual general meeting.

Voting Rights

Subject to the Articles generally and to any special voting rights or restrictions attached to any class of shares, at a general meeting, every shareholder who is present in person will have one vote on a show of hands, and every shareholder who is present in person or by proxy will have one vote for every share he holds on a poll. No shareholder will, unless the Directors otherwise determine, be entitled, in respect of any of his shares, to vote either personally or by proxy at a shareholders’ meeting or to exercise any other right conferred by his shareholding in relation to shareholders’ meetings, if he owes us for any call or other sum in respect of his shares.

There are currently no limitations, either under English law or in our Articles of Association, on the rights of non-residents of the United Kingdom to hold or vote shares. In addition, there are currently no UK foreign exchange control restrictions on the conduct of our operations or which affect the remittance of dividends on listed shareholder’s equity.

Dividends

We have not paid or declared any dividends to date. We may, by ordinary resolution, declare dividends to be paid to our shareholders, not to exceed the amount recommended by our Directors. If our Directors believe that dividends are justified, they may pay dividends on any class of shares where a dividend is payable on fixed dates. They may also occasionally pay interim dividends on shares of any class in amounts and on dates as they think fit. Where shares are not fully paid throughout the relevant period, unless the rights of the shares otherwise provide, all dividends will be apportioned and paid pro rata according to the amounts paid on the shares during any portion or portions of the period in respect of
which the dividend is paid. For this purpose, no amount paid on a share in advance of calls will be treated as paid on the share.

No dividend will be paid other than out of our profits available for distribution under the provisions of the Companies Act 1985 and every other statue for the time being in force concerning companies and affecting lastminute.com.

Any dividend that is unclaimed for 12 years from the date on which it was declared or became due for payment will be forfeited and will revert to lastminute.com.

Our Directors may offer shareholders the right to receive new shares instead of a dividend.

Winding Up

If we are dissolved, a liquidator may, with the authority of an extraordinary resolution: (1) divide among the shareholders our assets and may determine and assign fair value to the property to be divided and may decide how any division will be carried out between the shareholders of different classes of shares; and (2) place any part of our assets in trusts for the benefit of shareholders as the liquidator will think fit, and our liquidation may be closed and we may be dissolved. No shareholder may be compelled to accept any shares or other property in respect of which there is a liability.

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Issues of Shares and Pre-emptive Rights

All of our unissued shares may be allotted by our Directors and they may grant options over, or otherwise dispose of, our shares to persons, at times and on terms as they think proper, subject to the provisions of applicable English law and to the obtaining of a resolution of our shareholders passed in a general meeting.

Subject to applicable English law and the rules under the CREST regulations, our Directors may determine that any class of shares may be held in uncertificated form and title to shares may be transferred by means of a relevant system in accordance with the CREST regulations or that shares of any class should cease to be held and transferred as stated above. Any provisions of our Articles that are inconsistent with this right of our Directors will not apply to shares of any class that are in uncertificated form.

Transfer of Shares

All transfers of shares that are in certificated form may be effected in writing in any common form or in any other form acceptable to our Directors. The transfer instrument will be signed by or on behalf of the transferor and, except in the case of fully paid shares, by or on behalf of the transferee. The transferor will remain the holder of the shares until the transferee’s name is entered in our share register. All transfers of shares that are in uncertificated form may be effected by means of a relevant system.

Our Directors may decline to recognise any transfer instrument relating to shares in certificated form unless it is (1) in respect of only one class of share and (2) registered at the transfer office, duly stamped if required, accompanied by the relevant share certificate(s) and other evidence reasonably required by our Directors to show the transferor’s right to make the transfer and, if the transfer instrument is executed by some other person on the transferor’s behalf, the authority of that person to do so.

Our Directors may, in the case of shares in certificated form, in their absolute discretion and without giving any specific reason, refuse to register any transfer of shares that are not fully paid provided that the exercise of such discretion does not prevent dealings of shares which are admitted to the Official List of the UK Listing Authority or which are listed on any other recognised stock exchange or the Nasdaq National Market from taking place on an open and proper basis. Our Directors also may refuse to register an allotment or transfer of shares, whether fully paid or not, in favour of more than four persons jointly.

If our Directors refuse to register an allotment to transfer, they will send to the allottee or transferee notice of the refusal within two months after the date on which (1)  the letter of allotment or transfer was lodged with us, in the case of shares held in certificated form, or (2) the Operator-instruction required by the CREST regulations was received by us, in the case of shares held in uncertificated form.

Untraced Shareholders

We will be entitled to sell shares held by untraceable shareholders at the best price reasonably obtainable as long as:

| | during the period of 12 years prior to the date of the publication of the advertisement referred to below at least three dividends in respect of the shares have become payable and no such dividend has been claimed;
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                       

| | we have, on expiry of this 12 year period, advertised in both a national newspaper and in a newspaper circulating in the area in which the last known address of the shareholder, or the address at which service of notices may be effected under the Articles is located, giving notice of our intention to sell the shares;
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                               

| | during the period of three months following the publication of the advertisements referred to above, we have not received any communication from the shareholder; and
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                      

| | notice has been given to a regulatory information service of our intention to make a sale of shares held by untraceable shareholders.
|- | -------------------------------------------------------------------------------------------------------------------------------------

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The net proceeds of sale will belong to us, and we will be obliged to account to the former shareholder for the net proceeds of any sale. No trust will be created in respect of this debt, no interest will be payable on it, and we will not be required to account for any money earned on the net proceeds which may be used by our Directors as they see fit, other than investing in our shares.

Disclosure of Interests

The Companies Act requires that if you become directly or indirectly interested in 3% or more of any class of our issued shares, including shares held in the form of ADSs, that carry the right to vote at our general meetings, you must notify us of this interest within two business days. After the 3% threshold is exceeded, you must notify us in respect of increases or decreases of 1% or more.

For the purposes of the notification obligation, the interest of a person in shares means any kind of interest in shares including interests in any shares:

| | in which a spouse or child or stepchild under the age of 18 is interested;
|- | --------------------------------------------------------------------------
|  |                                                                           

| | in which a corporate body is interested and either (1) that corporate body or its Directors generally act in accordance with that person’s directions or instructions or (2) that person controls one-third or more of the voting power of that corporate body; or
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                   

| | in which another party is interested and the person and that other party are parties to a “concert party” agreement under Section 204 of the Companies act. A concert party agreement is one that provides for one or more parties to acquire interests in shares of a particular company and imposes obligations or restrictions on any one of the parties as to the use, retention or disposal of such interests in shares of a particular company acquired pursuant to a concert party agreement and any interest in the company’s shares is in fact acquired by any of the parties pursuant to the agreement. Interests defined in the Companies Act, such as those held by investment fund managers, may be disregarded for the purposes of calculating the 3% threshold, but
the disclosure obligation will still apply where these interests exceed 10% or more of any class of the company’s relevant share capital and to increases or decreases of 1% or more thereafter.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, Section 212 of the Companies Act provides that a public company may, by written notice, require a person whom the company knows or has reasonable cause to believe to be, or to have been at any time during the three years immediately preceding the date on which the notice is issued, interested in shares consisting of the company’s relevant share capital to confirm that fact or to indicate whether or not that is the case and, where a person whom the company knows or has reasonable cause to believe to be, or to have been at any time during the three years immediately preceding the date on which the notice is issued, interested in shares consisting of the company’s relevant share capital holds
or, during the relevant time, had held an interest in shares consisting of the company’s relevant share capital, to give any further information as may be required relating to this interest in shares consisting of the company’s relevant share capital at any time during the three years immediately proceeding the date on which the notice is issued and any other interest in the shares of which he or she is aware.

Where notice is served by a company under the foregoing provisions on a person that is or was interested in shares of the company and that person fails to give the company any information required by the notice with the time specified in the notice, the company may apply to the English courts for an order directing that the shares in question be subject to restrictions prohibiting, among other things, any transfer of those shares, any exercise of voting rights and any other rights in respect of these shares including, other than in liquidation, payments in respect of these shares.

A person who fails to fulfil the obligations imposed by Section 198 and Section 212 of the Companies Act described above is subject to criminal penalties.

Restrictions on Voting

If any shareholder, or any other person with an interest in a shareholder’s shares, has been duly served with a notice under Section 212 of the Companies Act and is in default for a period of 14 days in supplying us with the information required, then, unless our Directors determine otherwise, the shareholder will not, for so long as the default continues, be entitled to attend or vote, either personally or by proxy, at a shareholders’ meeting or to exercise any other right conferred to shareholders in relation to shareholders’ meetings in respect of the shares to with the default relates (the “Default Shares”) and any other shares held by the shareholder.

Where the Default Shares represent 0.25% or more of the issued shares of the class in question, any of our Directors or our corporate secretary may, in their absolute discretion, by notice (a “Direction Notice”) to a shareholder holding Default Shares

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representing 0.25% or more of the issued shares in question, direct that (1) any dividend or part of any dividend or other money that otherwise would be payable in respect of the Default Shares will be retained by us, without any liability to pay interest when the dividend in respect of the Default Shares or other money is finally paid to the shareholder, and the shareholder will not be entitled to elect to receive share instead of a dividend; and/or (2) no transfer of any of the shares held by the shareholder will be registered unless the transfer is an approved transfer as defined in our Articles or the shareholder is not himself in default in supplying the information required and the transfer is only part of the
shareholder’s holding and, when presented for registration, is accompanied  by a certificate by the shareholder, in a form satisfactory to our Directors, to the effect that, after due and careful enquiry, the shareholder is satisfied that none of the shares subject to the transfer is a Default Share. In the case of shares in uncertificated form, our Directors may only exercise their discretion to register a transfer if the Uncertificated Securities Regulations 2001, including any modification thereof or any regulation in substitution thereof made under Section 307 of the Companies Act 1989 and for the time being in force (the “CREST regulations”) permit it. Any Direction Notice will cease to have effect in relation to any shares that are transferred by a shareholder
holding Default Shares representing 0.25% or more of the issued shares in question by means of an approved transfer or as described above.

Variation of Rights

Whenever the share capital of lastminute.com is divided into different classes of shares, the special rights attached to any class may, subject to the provisions of applicable English law, be varied or abrogated either with the written consent of the holders of three-quarters in nominal value of the issued shares of the class or with the sanction of an extraordinary resolution passed at a separate meeting of the holders of the shares of the class, but not otherwise. These rights may be so varied or abrogated either while we are a going concern or during or in contemplation of a winding-up. At every separate meeting of holders of the shares of any class the necessary quorum will be at least two persons holding, or
representing by proxy, at least one third of the issued share of the class. If the meeting is adjourned, any holder of shares of the class present in person or by proxy may demand a poll and every holder of the issued shares of the class will on a poll have one vote for every share of the class held by him.

Alteration of Share Capital

We may occasionally, by ordinary resolution:

| | increase our capital by sums to be divided into shares of amounts the resolution will prescribe;
|- | ------------------------------------------------------------------------------------------------
|  |                                                                                                 

| | consolidate and divide all or any of our share capital into shares of a large nominal amount than our existing shares;
|- | ----------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                       

| | cancel any shares that, at the date of the resolution, have not been taken, or agreed to be taken, by any person and reduce our share capital by the amount of the shares so cancelled; and
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                            

| | Subdivide our shares into shares of a smaller nominal amount than is fixed by our Memorandum of Association, subject to the provisions of applicable English law, and so that the resolution whereby any share is subdivided may determine that, as between the holders of the shares resulting from the subdivision, one or more of the shares may, as compared with the others, have any preferred, deferred or other special rights or be subject to any restrictions as we have power to attach to unissued or new shares.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Subject to the provisions of applicable English law, we may purchase, or may enter into a contract under which we will or may purchase, any of our own shares of any class, including any redeemable shares. If there will be in issue any shares or other securities that are convertible into our equity share capital of the class proposed to be purchased, then we will not purchase, or enter into a contract under which we will or may purchase, equity shares into which any shares or securities in issue are convertible unless either (1) the terms of issue of the convertible shares or other securities include provisions permitting us to purchase our own equity shares or providing for adjustment to the conversion terms upon a
purchase of our own equity shares or securities or (2) the purchase or the contract first has been approved by an extraordinary resolution passed at a separate meeting of the holders of shares or other securities convertible into our equity share capital of the class proposed to be purchased.

Subject to the provisions of the Companies Act and to any rights conferred on the holders of any class of shares, we may, by special resolution, reduce our share capital or any capital redemption reserve, share premium account or other undistributable reserve in any way.

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Reserves

Our Directors may occasionally set aside a portion of our profits and reserve sums as they think proper that in their discretion, will be applicable for any purposes that our profits may be used. Pending any application, these profits may either be employed in our business or invested. Our Directors may divide the reserve into any special funds as they think fit and may consolidate into one fund any special funds or parts of special funds into which the reserve may have been divided. Our Directors may carry forward any profits rather than place them in reserve.

Capitalisation of Profits and Reserves

Our Directors may, with the sanction of an ordinary resolution, capitalise any sum in our reserve accounts, including any share premium account, capital redemption reserve or other undistributable reserve, or our profit and loss account. Capitalisation of any sum in our reserve accounts will be effected by appropriating a sum to shareholders on our register at the close of business on the date of the resolution, or any other date as may be specified or determined, in proportion to their then shareholdings and applying that sum in paying up in full unissued shares or, subject to any special rights of any shares or class of shares, unissued shares of any other class, to be allotted and distributed to them as bonus
shares. Our Directors may do anything considered necessary for capitalisation of any sum in our reserve accounts and have full power to make any necessary provisions for entitlements to fractional shares which arise. Our Directors may authorise any person to enter into an agreement with us on behalf of all our interested shareholders in relation to any capitalisation of any sum in our reserve accounts and incidental matters, and any agreement made under our Directors’ authority will be effective and binding on all concerned.

Board Actions and Powers

Our Articles of Association, provide that unless otherwise determined by ordinary resolution, our Board of Directors will consist of not fewer than three nor more than 15 Directors. A Director will not be required to hold any of our shares to qualify as a Director. A Director who is not a shareholder will nevertheless be entitled to attend and speak at Shareholders’ meeting.

At each annual general meeting, all those Directors who were elected or last re-elected at or before the annual general meeting held in the third calendar year before will retire from office by rotation. A retiring Director will be eligible for re-election.

No person will be disqualified from being appointed or re-appointed a Director, and no Director will be required to vacate that office, by reason only of the fact that he has attained the age of 70 years of any other age nor will it be necessary be reason of his age to give special notice under the Companies Act of any resolution. Where the Directors convene any general meeting of lastminute.com at which a Director will be proposed for appointment or re-appointment who at the date for which the meeting is convened will have attained the age of 70 or more, the Board will give notice of his age in years in the notice convening the meeting or in any document accompanying the notice, but the accidental omission to do so
will not invalidate any proceedings, or any appointment or re-appointment of that Director, at that meeting.

Directors’ interests in Contracts

A Director may be a party to any contract, arrangement or transaction with the Company, or have an interest in a third party entering into such arrangement with the Company so long as the Director discloses his interest to the Directors of the Company. However, a Director may not vote in respect of any contract or arrangement in which he has a material interest unless such interest is solely as a shareholder of the Company, if the contract or arrangement is in respect of the giving of any security or guarantee for the benefit of the Company, is in respect of any proposal concerning an offer for the Company's shares or is an arrangement with a third party in which the Director holds less than 1% of issued voting
capital.

Borrowing Powers

Our Board may exercise all our powers to:

| | borrow money,
|- | -------------
|  |              

| | mortgage and/or charge all or any part of our business, property or assets and uncalled capital,
|- | ------------------------------------------------------------------------------------------------
|  |                                                                                                 

| | issue debenture and other securities, and
|- | -----------------------------------------

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| | give security, either outright or as collateral
        security, for any of our debts, liabilities or obligations or those of
        a third party.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------

There
    is no requirement on our Directors, under our Articles of Association, to
    limit the borrowings of lastminute.com and our subsidiaries.

Remuneration and Expenses

As
    provided by our Articles of Association, the ordinary remuneration of our
    Directors will be determined by the Directors from time to time. The ordinary
    remuneration of our Directors will not exceed £10 million per annum
    in aggregate or any higher amount as may be determined by an ordinary resolution
    of our shareholders. Any Director that holds an executive office, including
    for this purpose the office of chairman or deputy chairman, or that serves
    on any committee of the Directors, or that otherwise performs services that,
    in the opinion of the Directors, are outside the scope of ordinary duties
    of a Director, may be paid extra remuneration or may receive any other benefits
    as the Directors may determine. A Director will be paid all reasonable expenses
    properly incurred by him in the course of his duties including his expenses
    of travelling to and from Directors’ or shareholders’ meetings
    or otherwise in connection with the business. Our Directors have the power
    to pay and agree to pay gratuities, pensions or other retirement, superannuation,
    death or disability benefits to or on behalf of any person that is or has
    been at any time one of our Directors and, for the purpose of providing gratuities,
    pensions or other benefits to or on behalf of any person that is or has been
    at any time one of our Directors, to contribute to any scheme or fund or
    to pay premiums.

Indemnification and Insurance

Subject
    to applicable English law, each of our Directors, secretaries and officers
    will be indemnified by us and/or exempted by us from all costs, charges,
    losses and liabilities incurred by them in the actual or purported exercise
    or discharge of their powers of duties. This indemnity and exemption extends
    to any liability incurred by them in defending any civil or criminal proceedings
    which relate to anything done or alleged to have been done by them as our
    officer or employee and in which judgement is given in their favour; or where
    proceedings are disposed of without any finding or admission of any material
    breach on their part; or in which they are acquitted or in respect of which
    relief from liability is granted.

Our
    Directors have the power to purchase and maintain insurance for, or for the
    benefit of, any persons that are or were at any time a Director or officer
    of any company we control or that is part of our group (a “Relevant
    Company”) or that are or were trustees of any pension fund or employees’ share
    scheme in which employees of any Relevant Company are interested. Insurance
    purchased and maintained by our Directors may include insurance against any
    liability incurred by them in respect of any act or omission, in the actual
    or purported exercise or discharge of their powers or duties in relation
    to any Relevant Company, or any pension fund or employees’ share scheme.

Material Contracts

The
    only material contracts entered into during the year relate to the acquisition
    agreements and investment in associate, details of which are set out in Item
    5.

Exchange Controls

Other
    than withholding tax (see “Taxation” below), and other than as
    described in the next paragraph, there are currently no UK governmental laws,
    decrees or regulations that restrict the export or import of capital or that
    affect the payment of dividends, interest or other payments to non-resident
    holders of lastminute.com shares or ADSs.

However,
    subject to various exceptions, it may be unlawful for us to (a) cause or
    permit a non-resident body corporate over which we have control to create
    or issue any shares or debentures, or (b) transfer to any person, or cause
    or permit to be transferred to any person, shares in or debentures of a non-resident
    body corporate over which we have control, without in either case first seeking
    the consent of the UK Treasury. In addition, a 1.5% charge to stamp duty
    or stamp duty reserve tax is generally payable upon the deposit of Ordinary
    Shares in connection with the creation of but not subsequent dealing in American
    Depositary Receipts. This is in lieu of the normal 0.5% stamp duty charge
    on all purchases of (and the normal 0.5% stamp duty reserve tax charge on
    all agreements to transfer) ordinary shares.

Fluctuations
    in the exchange rate between the pound sterling and the US dollar will affect,
    among other things, the US dollar

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equivalent
    of the pound sterling price of our shares on the London Stock Exchange which
    is likely to affect the market price of our ADSs on the Nasdaq National Market.

There
    are currently no limitations, either under English law or in our articles
    of association, on the rights of non-residents to hold or vote. In addition,
    subject as described above, there are currently no UK foreign exchange control
    restrictions on the conduct of our operations or affecting the remittance
    of dividends on listed shareholders' equity.

It
    is, however, the current practice of lastminute.com to send notices or other
    documents to all shareholders regardless of the country recorded in the register
    of members as part of the service to the overseas shareholder save where
    this would not be permissible under specific jurisdictions.

Taxation of US Holders

The
    following is a summary of certain material UK and US federal income tax consequences
    of the ownership and disposition of shares or ADSs evidenced by ADRs.

This
    summary applies only to US Holders. You are a "US Holder" if you
    are a beneficial owner of shares or ADSs and holds such shares or ADSs as
    capital assets and you are one of the following:

| | a citizen or individual resident
        of the United States for US federal income tax purposes,
|- | -------------------------------------------------------------------------------------------------

|  |                                                                                                                                                                            
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a corporation (or other entity
        treated as a corporation) created or organized under the laws of the
        United States or any State within the United States, or

|  |                                                                                                           
|- | ----------------------------------------------------------------------------------------------------------
| | otherwise subject to US federal
        income tax on a net income basis in respect of the shares or ADSs.

United Kingdom Tax Considerations

The
    following summary is of a general nature and does not address all of the
    tax consequences that may be relevant to a US Holder in light of each Holder's
    particular situation. For example, this summary does not apply to US expatriates,
    insurance companies, banks, tax-exempt organizations, regulated investment
    companies, financial institutions, persons subject to the alternative minimum
    tax, securities broker-dealers, individual retirement accounts and other
    tax-deferred accounts, persons who hold their shares or ADSs as part of a
    straddle, hedging transaction or conversion transaction, persons who acquired
    their shares or ADSs pursuant to the exercise of employee stock options or
    otherwise as compensation, persons who own directly, indirectly or by attribution
    10 percent or more of our outstanding share capital or voting stock, persons
    resident or ordinarily resident in the UK or persons whose functional currency
    is not the US dollar.

The
    tax treatment of a partner generally will depend upon the status of the partner
    and the activities of the partnership. A partnership that holds shares or
    ADSs is urged to consult its own tax advisor regarding the specific tax consequences
    to its partners of owning and disposing of shares or ADSs.

This
    summary is based upon:

| | existing UK tax law and UK
        Inland Revenue practice, and US law and US Internal Revenue Service practice,
        including the US Internal Revenue Code of 1986, as amended (the “Internal
        Revenue Code”), Treasury regulations, rulings, judicial decisions
        and administrative practice, all as currently in effect, and all of which
        are subject to change or changes in interpretation at any time, possibly
        with retroactive effect;
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|  |                                                                                                                                                
|- | -----------------------------------------------------------------------------------------------------------------------------------------------
| | the USUK Income Tax Convention that
        entered into force on March 31, 2003, as amended by a Protocol (the “New
        Convention”); and

|  |                                                
|- | -----------------------------------------------
| | in part upon representations of the depositary.

This
    summary assumes that each obligation provided for in, or otherwise contemplated
    by, the deposit agreement and any related agreement will be performed in
    accordance with its respective terms.

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The
    summary of UK tax and US federal income tax consequences set out below is
    for general information only. You should consult your own tax advisor as
    to the particular tax consequences to you of acquiring, owing and disposing
    of the shares or ADSs, including the applicability and effect of state, local,
    foreign and other tax laws and possible changes in tax law as well as your
    eligibility for the benefits of the New Convention.

Taxation of Dividends and Distributions

Under
    current UK taxation legislation, no tax is required to be withheld at source
    from cash dividend payments by us.

Taxation of Capital Gains

If
    you are not resident or ordinarily resident in the United Kingdom then, subject
    to the comments below, you will not ordinarily be liable for UK tax on capital
    gains realised on the disposal of a share or ADS for tax purposes unless,
    at the time of the disposal, you carry on a trade, profession or vocation
    in the United Kingdom through a branch, agency or permanent establishment
    and the share or ADS you dispose of is, or has been used, held or acquired
    for the purposes of that trade, profession or vocation carried on by you
    in the United Kingdom or for the purposes of that branch, agency or permanent
    establishment in the United Kingdom.

If
    you are an individual and on or after March 17, 1998 have ceased to be resident
    or ordinarily resident for tax purposes in the United Kingdom and continue
    not to be resident or ordinarily resident in the United Kingdom for a period
    of less than five years of assessment and dispose of shares or ADSs during
    that period, you may also be liable on your return to the United Kingdom
    to UK tax on capital gains, subject to any available exemption or relief,
    notwithstanding that you are not resident or ordinarily resident in the United
    Kingdom at the time of the disposal.

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United Kingdom Stamp Duty and
        Stamp Duty Reserve Tax (“SDRT”)

UK
    stamp duty will, subject to specific exceptions, be payable on any instrument
    pursuant to which shares in registered form are transferred:

| | to, or to a nominee or agent
        for, a person whose business is or includes the provision of clearance
        services or
|- | -------------------------------------------------------------------------------------------------------------------------------

|  |                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------
| | to, or to a nominee or agent
        for, a person whose business is or includes issuing depositary receipts.

The applicable stamp duty rate will
    be 1.5%, rounded up to the nearest £5, of the amount or value of any
    consideration given for the shares or of the value of the shares where the
    transfer is otherwise than on sale. The latter would include transfers of
    shares in registered form to the custodian for deposit under the ADS deposit
    agreement. UK SDRT would also be payable in these circumstances, and on the
    issue of shares to the custodian. The applicable rate of SDRT will be 1.5%
    of:

| | (i) | the issue price where shares
        are issued;
| | --- | ------------------------------------------------

| |      |                                                                                                                                      
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------
| | (ii) | the amount or value of the consideration
        where shares are transferred for consideration in money or money's worth;
        or

| |       |                                                   
| | ----- | --------------------------------------------------
| | (iii) | the value of the shares in any
        other case.

In
    practice no SDRT will be payable if stamp duty equal to the SDRT liability
    is paid. In circumstances where stamp duty is not payable on the transfer
    of shares in registered form to the custodian at the rate of 1.5%, for example
    where there is no chargeable instrument, SDRT will be payable. In accordance
    with the terms of the ADS deposit agreement, any tax or duty payable by the
    custodian or its nominees or agents on any transfers of shares to them in
    registered form will be charged by the custodian to the party to whom the
    corresponding ADRs are delivered.

lastminute.com
    agreed to pay any stamp duty or SDRT charges arising as a result of the issue
    by lastminute.com of shares to the custodian pursuant to the March 2000 offering.
    In accordance with the terms of the deposit agreement, any stamp duty, SDRT
    or other taxes or duties payable by the custodian on any other deposit of
    shares will be charged by the custodian to the holder of the ADS or any deposited
    security represented by the ADS.

No
    stamp duty, in practice, will be payable on a transfer of an ADS, provided
    that the relevant instrument of transfer is not executed in or brought into
    the United Kingdom. An agreement to transfer an ADS will not give rise to
    SDRT. On a transfer of shares from the custodian to a holder of an ADS upon
    cancellation of the ADS, a fixed stamp duty of £5 per instrument of
    transfer will be payable. Any transfer for value of the underlying shares
    represented by ADSs or agreement to transfer these underlying shares may
    give rise to a liability to stamp duty or SDRT which would generally be satisfied
    by the transferee.

No
    stamp duty and, except as described above, no SDRT will be payable on the
    issue of shares by lastminute.com.

Subject
    to some exceptions, a transfer on sale of shares in registered form will
    attract ad valorem stamp duty at the rate of 0.5% (rounded up to the
    nearest £5) of the amount or value of the consideration for the transfer.
    SDRT at a rate of 0.5% of the amount or value of the consideration may be
    payable on an agreement to transfer shares in registered form. If within
    six years of the date of the agreement an instrument transferring the shares
    is executed and stamped, any SDRT paid may be repaid or, if it has not been
    paid, the liability to pay the SDRT, but not necessarily interest and penalties,
    may be cancelled. SDRT is chargeable whether the agreement is made or effected
    in the United Kingdom or elsewhere and whether or not any party is resident
    or situated in any part of the United Kingdom.

SDRT
    is generally a liability of the purchaser and stamp duty is normally paid
    by the purchaser.

United States Federal Income Taxation
      Considerations

US Holders of ADSs

For
    US federal income tax purposes, an owner of ADSs will be treated as the owner
    of the corresponding number of underlying shares held by the depositary,
    and references to shares in the following discussion refer also to ADSs representing
    the shares.

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Taxation of Dividends

We
    have never paid cash dividends to our shareholders and we currently do not
    anticipate paying dividends for the foreseeable future. If we were to pay
    a dividend, then, subject to the PFIC rules discussed below, you would be
    subject to tax on the gross amount of these dividends as foreign source dividend
    income to the extent they were paid out of our current or accumulated earnings
    and profits, as determined for US federal income tax purposes, and would
    not be eligible for the dividends received deduction allowed to corporations.
    Any dividends that exceeded our current and accumulated earnings and profits
    would be treated as a non-taxable return of capital to the extent of your
    basis in the shares and thereafter as capital gain. We do not currently intend
    to calculate our earnings and profits in accordance with US federal income
    tax principles.

For purposes of computing allowable
    foreign tax credits for US federal income tax purposes, dividends paid by
    us generally will be treated as "passive income", or in the case
    of certain holders, "financial services income".

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Foreign Currency Dividends

For
    US federal income tax purposes, the amount of any dividend paid in pounds
    sterling will be included in your gross income in an amount equal to the
    US dollar value of the pounds sterling on the date they are received by you,
    in the case of shares, or by the depositary, in the case of ADSs, based on
    the exchange rate in effect on that date. If you or the depositary convert
    dividends received in pounds sterling into US dollars on the day they are
    received, you generally will not be required to recognize foreign currency
    gain or loss in respect of this dividend income. If the pounds sterling received
    are not converted into US dollars on the date of receipt, you will have a
    basis in the foreign currency equal to the US dollar value on the date of
    receipt. Any gain or loss recognized upon a subsequent conversion or other
    disposition of the foreign currency will be treated as US source ordinary
    income or loss.

Effect of UK Tax Credit

US
    Holders should be aware that the New Convention generally will have effect
    in respect of any dividends paid by us on or after May 1, 2003. Unlike the
    provisions of the prior tax treaty, under the New Convention there will be
    no entitlement to any UK tax credit and no notional UK withholding tax applied
    to a dividend payment and, therefore, it will not be possible to claim a
    foreign tax credit in respect of any dividend payment paid by us on or after
    May 1, 2003. However, if we were to pay a dividend prior to May 1, 2004,
    certain provisions of the prior tax treaty could be relevant to US Holders
    who elect to have the prior tax treaty continue in force. In such case, US
    Holders should consult their tax advisors as to the availability of the credit,
    the corresponding notional UK withholding, the procedure for making the election
    and the resulting implications and filing requirements for US federal income
    tax purposes.

Recent US Tax Law Changes Applicable
        to Individuals

Under
    2003 US tax legislation, individual US Holders (and some trusts and estates)
    are eligible for reduced rates of US federal income tax (currently a maximum
    of 15%) in respect of "qualified dividend income" received in taxable
    years beginning after December 31, 2002 and beginning before January 1, 2009,
    provided that the holders meet certain holding period and other requirements.
    For this purpose, qualified dividend income generally includes dividends
    paid by non-US corporations if the non-US corporation is not a passive foreign
    investment company and, among other things, (i) the shares (or ADSs) with
    respect to which the dividend has been paid are readily tradable on an established
    securities market in the United States, or (ii) the non-US corporation is
    eligible for the benefits of a comprehensive US income tax treaty (such as
    the New Convention) which provides for the exchange of information. We do
    not anticipate paying dividends in the near future, and because we do not
    determine whether we are a passive foreign investment company (a "PFIC")
    each year (as described below in " Passive Foreign Investment
    Company Considerations"), we may not be able to determine whether any
    dividends paid by us are eligible for this reduced rate. In the future, the
    Internal Revenue Service is expected to issue certification procedures whereby
    a non-US corporation will have to certify as to the eligibility of its dividends
    for the reduced US federal income tax rates. If we were to pay a dividend
    on our shares and ADSs, we will review our policy regarding the determination
    of PFIC status in light of the fact that the reduced rates are available
    only to non-US corporations that are not PFICs.

Exchange of ADSs for Shares

You
    will not recognise gain or loss if you exchange ADSs for your proportionate
    interest in shares. Your tax basis in withdrawn shares will be the same as
    your tax basis in the ADSs surrendered, and your holding period for the shares
    will include the holding period of the ADSs.

Taxation of Capital Gains

Subject
    to the PFIC rules discussed below, upon a sale or other disposition of ADSs
    or shares, other than an exchange of ADSs for shares, you will generally
    recognise capital gain or loss for US federal income tax purposes equal to
    the difference between the amount realised and your adjusted tax basis in
    the ADSs or shares. This capital gain or loss will be long-term capital gain
    or loss if your holding period in the ADSs or shares exceeds one year, and
    will generally be US source.

Passive Foreign Investment
        Company Considerations

A foreign
    corporation will be a PFIC in any taxable year if:

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| | at
    least 75% of its gross income is "passive income," or                                                                                                           
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                        
| | at least 50% of the average
        value of its assets is attributable to assets that produce passive income
        or are held for the production of passive income.

Since
    the market price of our shares and ADSs is likely to be highly volatile and
    subject to wide fluctuations, it would be difficult to determine, and we
    do not intend to determine, whether we will be a PFIC in any year. We may
    therefore be a PFIC in any year.

If
    we are a PFIC in any year during which you own shares, you generally will
    be subject to special rules (regardless of whether we continue to be a PFIC)
    with respect to:

| | distributions exceeding 125%
        of the average annual distributions received from us in the previous
        three taxable years or, if shorter, your holding period for the shares,
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                          
| | any
    gain realised on the sale or other disposition of shares.                                                                                                                        

Under
    these rules:

| | the distribution or gain will
        be allocated rateably over your holding period,
|- | -------------------------------------------------------------------------------------

|  |                                                                                                                                                                                    
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the amount allocated to the
        current taxable year and any taxable year prior to the first taxable
        year in which we were a PFIC will be taxed as ordinary income, and

|  |                                                                                                                                                                                                                                                                                                                             
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the amount allocated to each
        of the other taxable years will be subject to tax at the highest rate
        of tax applicable to you for that year and an interest charge for the
        deemed deferral benefit will be imposed on the resulting tax attributable
        to each of these other taxable years, and

|  |                                                                                                                              
|- | -----------------------------------------------------------------------------------------------------------------------------
| | any dividend paid by us will
        not be eligible for the reduced rate of taxation on dividends (described
        above).

If
    we are a PFIC, you will generally be subject to similar rules with respect
    to distributions to us by, and dispositions by us of the stock of, any of
    our direct or indirect subsidiaries that are also PFICs.

If
    we are a PFIC, you must make an annual return on US Internal Revenue Service
    Form 8621, reporting distributions received and gains realised with respect
    to each PFIC in which you hold a direct or indirect interest.

You
    should consult your tax advisor concerning the potential application of the
    PFIC rules.

Backup Withholding and Information
        Reporting

Dividend
    payments with respect to shares or ADSs and proceeds from the sale, exchange
    or redemption of shares or ADSs may be subject to information reporting to
    the IRS and possible US backup withholding at a current rate of 28%. Backup
    withholding will not apply to you, however, if you furnish a correct taxpayer
    identification number or certificate of foreign status and make any other
    required certification or if you are otherwise exempt from backup withholding.
    If you are required to establish your exempt status, you generally must provide
    such certification on IRS Form W-9 (Request for Taxpayer Identification Number
    and Certification). Non-U.S. holders generally will not be subject to US
    information reporting or backup withholding. However, such holders may be
    required to provide certification of non-US status in connection with payments
    received in the United States or through certain US-related financial intermediaries.

Backup
    withholding is not an additional tax. Amounts withheld as backup withholding
    may be credited against your US federal income tax liability, and you may
    obtain a refund of any excess amounts withheld under the backup withholding
    rules by filing the appropriate claim for refund with the IRS and furnishing
    any additional information.

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ITEM 11. QUANTITATIVE AND QUALITATIVE
      DISCLOSURES ABOUT MARKET RISK

Interest Rate Sensitivity

We
    had significant cash balances at September 30, 2003 and 2002.

Our
    exposure to market risk for changes in interest rates relates primarily to
    our cash equivalents and short-term investments. We invest surplus funds
    in AAA rated credit institutions and earn interest at a floating rate that
    follows LIBOR.

We
    do not use derivative financial instruments in our investment portfolio.
    We seek to ensure the safety and preservation of our invested funds by limited
    default and market risks by investing with high rated financial institutions.

The
    outstanding financial liabilities which arose as a result of the acquisitions
    of holiday autos group and exhilaration incentive management have been recorded
    at their undiscounted values due to the timing of settlement. No interest
    was payable in relation to this liability at year end.

We
    incurred a relatively small interest expense due to the financial leases
    that were undertaken during the year. The interest incurred on these leases
    is at a fixed rate, and further details have been disclosed in note 22 of
    notes to the financial statements.

Exchange Rate Sensitivity

We
    publish our consolidated financial statements in pounds sterling, which is
    our functional currency. In the year ended
  September 30, 2003, 51% of our total revenues were recorded in pounds sterling,
  as compared to 55% in 2002, and substantially all the rest was in euro or European
  currencies that were replaced by the euro from January 1, 2002. In the future,
  we expect this trend to continue with a greater portion of our sales in the
  European countries that have adopted the euro as their currency, as well as
  sales from European countries such as Norway, Sweden, Switzerland and others
  that have not adopted the euro. Pounds sterling purchases and expenses represented
  approximately 51% of our cost of sales and operating expenses in the year ended
  September 30, 2003, as compared to 66% in the previous year. A weakening of
  the euro or other European currencies that are not part of the euro market
  against the pound sterling would reduce our reported revenues and could reduce
  our reported operating and net income.

During
    the year the Group did not seek to hedge this foreign currency exposure apart
    from in the Degriftour Group, where US dollar exposures were hedged in accordance
    with Degriftour’s exchange rate policy as stated in note 22 of notes
    to the financial statements.

As
    a result of the significant investment in its euro denominated subsidiaries,
    the Group's balance sheet could be significantly affected by movements in
    the euro/sterling exchange rate. The Group has not sought to hedge against
    this structural currency risk due to the reasonably stable nature of the
    relationship between the two currencies. Other operations denominated in
    foreign currencies giving rise to structural currency exposure are not significant
    to the Group. As such the Group does not hedge against these currency risks.

ITEM 12.
      DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable to Annual Reports.

PART II

ITEM 13.
      DEFAULTS, DIVIDENDS, ARREARAGES AND DELINQUENCIES

None.

ITEM 14.
      MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

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ITEM 15. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our
    Chief Executive Officer and Chief Financial Officer, after evaluating the
    effectiveness of our disclosure controls and procedures (as defined in the
    US Securities Exchange Act of 1934 Rule 13a-14(c), 15(e)) as at September
    30, 2003, have concluded that, as of such date, our disclosure controls and
    procedures were effective.

There
    were no changes in our internal controls over financial reporting or in other
    factors that could materially affect these controls subsequent to the date
    of this Form 20-F, nor were there any significant deficiencies or material
    weaknesses in such internal controls requiring corrective actions.

ITEM 16A.
      AUDIT COMMITTEE FINANCIAL EXPERT

Our
    Board has determined that we do not have an "audit committee financial
    expert" serving on our audit committee as defined by the U.S. Securities
    and Exchange Commission, as none of the members of our audit committee have
    the "experience preparing, auditing, analysing or evaluating financial
    statements" to the extent required. The Board believes, nonetheless,
    that the members of our audit committee understand the issues facing a fast
    growing e-commerce business and have relevant business experience that will
    enable them to diligently and zealously question management and the company's
    auditor about our financial statements.

ITEM 16B.
      CODE OF ETHICS

Code of Ethics for Chief Executive
      Officer and Principal Financial Officers

lastminute.com’s
    Chief Executive Officer, Chief Financial Officer, Chief Operating Officer
    and Group Financial Controller hold important roles in corporate governance.
    They are uniquely capable and empowered to ensure that lastminute.com’s
    and its shareholders’ interests are protected.

The
    code of ethics below provides principles to which these officers are expected
    to adhere and which they are expected to advocate. This code of ethics complements
    other policies and procedures available on the company intranet. This code
    of ethics is published on lastminute.com’s website.

Any
    change to this code of ethics and any explicit or implicit waiver from it
    for these officers will be disclosed in accordance with applicable law and
    regulations of the stock exchange, including, without limitation, on lastminute.com’s
    website within five business days after the date of the change or waiver
    and for at least a 12-month period thereafter.

The Chief Executive Officer, Chief
    Operating Officer and aforementioned principal financial officers will:

|1. | act with honesty and integrity, including
        ethically handling actual or apparent conflicts of interest between their
        personal relationships or financial or commercial interests and their
        responsibilities to lastminute.com;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|   |                                                                                                                                                                                                                                           
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | make full, fair, accurate, timely and understandable
        disclosure in all reports and documents that lastminute.com files with,
        or submits to, the U.S. Securities and Exchange Commission or otherwise
        makes public;

|   |                                                                                                                                                     
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|3. | comply with all governmental laws, rules
        and regulations applicable to lastminute.com and to its relationship
        with its shareholders;

|   |                                                                                                                                                                    
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4. | report known or suspected violations of
        this code of ethics promptly to Liane Hornsey, HR Director in accordance
        with the applicable procedure; and

|   |                                                                                                                                                                                                                                                         
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5. | ensure that their actions comply not only
        with the letter but the spirit of this code of ethics and foster a culture
        in which compliance with the law and lastminute.com’s policies
        is at the core of lastminute.com activities.

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If
    any such officer acts in contravention of these principles, lastminute.com
    will take appropriate steps in terms of the procedures in place for fair
    disciplinary action. This action may, in cases of severe breaches, include
    dismissal without benefits or the initiation of judicial proceedings.

ITEM 16C.
      PRINCIPAL ACCOUNTANT FEES AND SERVICES

Not
    applicable.

ITEM 16D.
      EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not
    applicable.

ITEM 16E.
      PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILLIATED PURCHASERS

Not
    applicable.

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PART III

ITEM 17.  FINANCIAL STATEMENTS

We have responded to Item 18 in lieu of responding to this item.

ITEM 18.  FINANCIAL STATEMENTS

The following audited financial statements and related schedule, together with the report thereon of Ernst and Young LLP, are filed as part of this Annual Report:

|Report of Independent Auditors                                                                                     | F-1  | 
|------------------------------------------------------------------------------------------------------------------ | ---- | 
|Consolidated Profit and Loss Accounts
    for the years ended September 30, 2001,
    2002 and 2003                | F-2  | 
|Consolidated Statements of Total Recognised Gains and Losses for the years ended September 30, 2001, 2002 and 2003 | F-3  | 
|Consolidated Balance Sheets as at September 30, 2002 and 2003                                                      | F-4  | 
|Consolidated Statements of Changes in Shareholders' Funds for the years ended September 30, 2001, 2002 and 2003    | F-5  | 
|Consolidated Statements of Cash Flows for the years ended September 30, 2001, 2002 and 2003                        | F-10 | 
|Notes to the Financial Statements                                                                                  | F-11 | 
|Schedule for the years
    ended September 30, 2001, 2002 and 2003 Schedule II  Valuation and Qualifying Accounts | S-1  | 

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ITEM 19.  EXHIBITS

The following exhibits are filed as part of this Annual Report:

|ExhibitNumber |   | Description
|------------- | - | -----------
|              |   |            
|1.1           | * |            
|2.1           | * |            
|2.2           | * |            
|4.1           | * |            
|4.2           | * |            
|4.3           | * |            
|4.4           | * |            
|4.5           | * |            
|4.6           | * |            
|4.7           | * |            
|4.8           | * |            
|4.9           | * |            
|4.10          | * |            
|4.11          | * |            
|4.12          | * |            
|4.13          | * |            
|4.14          | * |            
|4.15          | * |            
|4.16          | * |            
|4.17          | * |            
|4.18          | * |            
|4.19          | * |            
|4.20          | * |            
|4.21          | * |            
|4.22          | * |            
|4.23          | * |            
|4.24          | * |            
|4.25          | * |            
|4.26          | * |            
|4.27          | * |            
|4.28          |   |            
|4.29          |   |            
|4.30          |   |            
|4.31          |   |            
|8.1           |   |            
|12            |   |            
|13            |   |            

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__________

|* | Previously filed as exhibits to
    Registration Statement on Form F-1 (Registration No. 333-11582), or the Annual
    Report on Form 20-F for the fiscal years ending September 30, 2001 and 2002
    of lastminute.com plc and incorporated herein by reference.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorised the undersigned to sign this Annual Report on its behalf.

lastminute.com plc

| | By:    | /s/ David Howell       
| | ------ | -----------------------
| |        |                        
| | Name:  | David Howell           
| | Title: | Chief Financial Officer
| | Dated: | March 31, 2004         

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LASTMINUTE.COM PLC

REPORT OF INDEPENDENT AUDITORS

To:  The Board of Directorslastminute.com plc

We have audited the accompanying consolidated balance sheets of lastminute.com plc at September 30, 2002 and 2003, and the related consolidated profit and loss accounts and consolidated statements of total recognised gains and losses, changes in shareholders' funds and cash flows for each of the three years in the period ended September 30, 2003. Our audits also included the financial statement schedule listed in the Index at Item 18. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with United Kingdom auditing standards and United States generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of lastminute.com plc at September 30, 2002 and 2003, and the consolidated results of its operations and its consolidated cash flows for each of the three years in the period ended September 30, 2003 in conformity with accounting principles generally accepted in the United Kingdom which differ in certain respects from those generally accepted in the United States (see Note 30 of Notes to the Financial Statements). Also in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole presents fairly
in all material respects the information set forth therein.

| | ERNST & YOUNG LLP
| | -----------------

London, England
November 20, 2003, except for
Note
29  Post Balance Sheet Events,as
to which the date is March 3, 2004

F-1

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LASTMINUTE.COM PLC

CONSOLIDATED PROFIT AND LOSS
ACCOUNTS

|                                                                                      |       |  | Year ended September 30, |   
|------------------------------------------------------------------------------------- | ----- |  | ------------------------ | --
|                                                                                      |       |  |                          |   
|                                                                                      | Notes |  | 2001                     |   
|                                                                                      |       |  |                          |   
|                                                                                      |       |  | Total                    |   
|(£000, except shares and per share amounts)                                           |       |  |                          |   
|Turnover                                                                              | 3     |  |                          |   
|Group and share of joint ventures                                                     |       |  | 18,416                   |   
|Less share of joint ventures                                                          |       |  | (47                      | ) 
|                                                                                      |       |  |                          |   
|Continuing operations:                                                                |       |  |                          |   
|- Ongoing                                                                             |       |  | 18,369                   |   
|- Acquisitions                                                                        |       |  |                         |   
|                                                                                      |       |  |                          |   
|Group turnover                                                                        |       |  | 18,369                   |   
|Cost of sales                                                                         |       |  | 1,165                    |   
|                                                                                      |       |  |                          |   
|Gross profit                                                                          |       |  | 17,204                   |   
|                                                                                      |       |  |                          |   
|Operating costs                                                                       |       |  |                          |   
|Product development                                                                   |       |  | 7,800                    |   
|Sales and marketing                                                                   |       |  | 27,207                   |   
|General and administration                                                            |       |  | 15,787                   |   
|                                                                                      |       |  |                          |   
|Operating costs before depreciation and 
     amortisation                            |       |  | 50,794                   |   
|Depreciation                                                                          |       |  | 8,744                    |   
|Goodwill amortisation                                                                 |       |  | 14,660                   |   
|                                                                                      |       |  |                          |   
|Total operating costs                                                                 |       |  | 74,198                   |   
|                                                                                      |       |  |                          |   
|Operating (loss)/profit                                                               |       |  |                          |   
|Continuing operations:                                                                |       |  |                          |   
|- Ongoing                                                                             |       |  | (56,994                  | ) 
|- Acquisitions                                                                        |       |  |                         |   
|                                                                                      |       |  |                          |   
|Group operating (loss)/profit                                                         | 4     |  | (56,994                  | ) 
|Share of operating loss in joint ventures                                             | 16    |  | (196                     | ) 
|Share of operating loss in associate                                                  | 16    |  |                         |   
|Amortisation of goodwill arising
    on the investment 
   in an associate            | 16    |  |                         |   
|                                                                                      |       |  |                          |   
|Total operating (loss)/profit : group and share of 
     joint ventures and associate |       |  | (57,190                  | ) 
|Continuing operations:                                                                |       |  |                          |   
|- Exceptional costs of a fundamental reorganisation                                   | 5     |  |                         |   
|                                                                                      |       |  |                          |   
|(Loss)/profit on ordinary activities before interest 
     and taxation               |       |  | (57,190                  | ) 
|Interest receivable                                                                   | 9     |  | 3,480                    |   
|Interest payable and similar charges                                                  | 10    |  | (36                      | ) 
|                                                                                      |       |  |                          |   
|(Loss)/profit on ordinary activities before taxation                                  |       |  | (53,746                  | ) 
|Tax on loss on ordinary activities                                                    | 11    |  | 158                      |   
|                                                                                      |       |  |                          |   
|(Loss)/profit for the financial year(1)                                               |       |  | (53,588                  | ) 
|                                                                                      |       |  |                          |   
|(Loss)/profit per share  basic and diluted                                           | 13    |  | (31.50                   | )p
|                                                                                      |       |  |                          |   

_______________________

|(1) | A summary of the differences between
    accounting principles generally accepted in the United Kingdom and those
    generally accepted
in the United States applicable to the Company is set forth in note 30 of notes
to the financial statements.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The notes to the financial statements are an integral part of these financial statements.

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LASTMINUTE.COM
PLC
CONSOLIDATED STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES

|                                                                                                              |       |  |  | Year ended September 30, |  
|------------------------------------------------------------------------------------------------------------- | ----- |  |  | ------------------------ | -
|                                                                                                              |       |  |  |                          |  
|                                                                                                              | Notes |  |  | 2001                     |  
|                                                                                                              |       |  |  |                          |  
|                                                                                                              |       |  |  | (£000)                   |  
|Loss for the financial year excluding share of losses in joint ventures and 
     associate                   |       |  |  | (53,392                  | )
|Share of joint ventures’ loss for the year                                                                    | 16    |  |  | (196                     | )
|Share of associate’s loss for the year and amortisation of goodwill arising 
     on acquisition of associate | 16    |  |  |                         |  
|Gain on the establishment of joint ventures                                                                   |       |  |  | 202                      |  
|Foreign currency translation differences                                                                      |       |  |  | (414                     | )
|                                                                                                              |       |  |  |                          |  
|Total recognised gains and losses for the year                                                                |       |  |  | (53,800                  | )
|Prior year adjustment                                                                                         | 16    |  |  | 184                      |  
|                                                                                                              |       |  |  |                          |  
|Total gains and losses recognised                                                                             |       |  |  | (53,616                  | )
|                                                                                                              |       |  |  |                          |  

---

|(1) | The statements of comprehensive income required
under United States generally accepted accounting principles are set forth in
note 30 of notes to the financial statements.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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LASTMINUTE.COM
PLC
CONSOLIDATED BALANCE SHEETS

|                                                        |  |  | Notes |  |        | 2002     |   |  |  | 2003     |  
|------------------------------------------------------- |  |  | ----- |  | ------ | -------- | - |  |  | -------- | -
|                                                        |  |  |       |  |        |          |   |  |  |          |  
|                                                        |  |  |       |  | (£000) |         
|Fixed assets                                            |  |  |       |  |        |          |   |  |  |          |  
|Intangible assets                                       |  |  | 14    |  |        | 81,457   |   |  |  | 127,018  |  
|Tangible assets                                         |  |  | 15    |  |        | 12,081   |   |  |  | 21,815   |  
|Investments                                             |  |  |       |  |        |          |   |  |  |          |  
|– joint
    ventures                                    |  |  |       |  |        |          |   |  |  |          |  
|– gross assets                                          |  |  |       |  |        | 1,255    |   |  |  | 1,139    |  
|– gross liabilities                                     |  |  |       |  |        | (396     | ) |  |  | (180     | )
|                                                        |  |  | 16    |  |        | 859      |   |  |  | 959      |  
|– associate                                             |  |  | 16    |  |        | 2,232    |   |  |  | 1,644    |  
|                                                        |  |  |       |  |        |          |   |  |  |          |  
|Total investments                                       |  |  |       |  |        | 3,091    |   |  |  | 2,603    |  
|                                                        |  |  |       |  |        |          |   |  |  |          |  
|Total fixed assets                                      |  |  |       |  |        | 96,629   |   |  |  | 151,436  |  
|                                                        |  |  |       |  |        |          |   |  |  |          |  
|Current assets                                          |  |  |       |  |        |          |   |  |  |          |  
|Stocks                                                  |  |  | 17    |  |        | 75       |   |  |  | 240      |  
|Debtors                                                 |  |  | 18    |  |        | 16,101   |   |  |  | 38,905   |  
|Cash at bank and in hand                                |  |  |       |  |        | 49,617   |   |  |  | 112,741  |  
|                                                        |  |  |       |  |        |          |   |  |  |          |  
|                                                        |  |  |       |  |        | 65,793   |   |  |  | 151,886  |  
|Creditors: amounts falling due within one year          |  |  | 19    |  |        | 53,690   |   |  |  | 131,669  |  
|                                                        |  |  |       |  |        |          |   |  |  |          |  
|Net current assets                                      |  |  |       |  |        | 12,103   |   |  |  | 20,217   |  
|                                                        |  |  |       |  |        |          |   |  |  |          |  
|Total assets less current liabilities                   |  |  |       |  |        | 108,732  |   |  |  | 171,653  |  
|Creditors: amounts falling due after more than one year |  |  | 20    |  |        | 42       |   |  |  | 70,620   |  
|Provisions for liabilities and charges                  |  |  | 23    |  |        | 4,114    |   |  |  | 3,892    |  
|                                                        |  |  |       |  |        |          |   |  |  |          |  
|                                                        |  |  |       |  |        | 104,576  |   |  |  | 97,141   |  
|                                                        |  |  |       |  |        |          |   |  |  |          |  
|Capital and reserves(1)                                 |  |  |       |  |        |          |   |  |  |          |  
|Called up share
    capital                             |  |  |       |  |        | 2,360    |   |  |  | 2,969    |  
|Share premium account                                   |  |  |       |  |        | 123,631  |   |  |  | 143,805  |  
|Shares to be issued                                     |  |  |       |  |        | 3,600    |   |  |  | 4,095    |  
|Merger reserve                                          |  |  |       |  |        | 99,848   |   |  |  | 123,555  |  
|Other reserves                                          |  |  |       |  |        | 6,439    |   |  |  | 4,160    |  
|Profit and loss account                                 |  |  |       |  |        | (131,302 | ) |  |  | (181,443 | )
|                                                        |  |  |       |  |        |          |   |  |  |          |  
|Total equity shareholders’ funds                        |  |  |       |  |        | 104,576  |   |  |  | 97,141   |  
|                                                        |  |  |       |  |        |          |   |  |  |          |  

---

|(1) | A summary of the differences between accounting
principles generally accepted in the United Kingdom and those generally accepted
in the United States applicable to the Company is set forth in note 30 of notes
to the financial statements.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The notes to the financial statements are an integral
        part of these financial statements.


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LASTMINUTE.COM
PLC
CONSOLIDATED STATEMENTS OF CHANGES IN THE SHAREHOLDERS FUNDS

Share Capital

|lastminute.com
        plc                                                                 |  |  | Ordinary
    Shares | 
|------------------------------------------------------------------------------------------ |  |  | ------------------- | 
|                                                                                           |  |  |                     | 
|                                                                                           |  |  | (No.)               | 
|                                                                                           |  |  |                     | 
|Authorised                                                                                 |  |  |                     | 
|At October 1, 2000 and September 30, 2001, 2002 and 2003                                   |  |  | 10,053,660,000      | 
|                                                                                           |  |  |                     | 
|Issued                                                                                     |  |  |                     | 
|At October 1, 2000                                                                         |  |  | 150,574,229         | 
|Share options exercised                                                                    |  |  | 2,661,801           | 
|£0.01 Ordinary Shares issued in consideration for the acquisition of Degriftour Group      |  |  | 19,700,000          | 
|£0.01 Ordinary Shares issued in consideration for the acquisition of Urbanbite Limited     |  |  | 442,151             | 
|                                                                                           |  |  |                     | 
|At September 30, 2001                                                                      |  |  | 173,378,181         | 
|Share options exercised                                                                    |  |  | 2,541,464           | 
|£0.01 Ordinary Shares issued in consideration for the acquisition of Travelselect.com      |  |  | 13,774,242          | 
|£0.01 Ordinary Shares placed in relation to the acquisition of Travelselect.com            |  |  | 1,343,143           | 
|£0.01 Ordinary Shares issued as consideration for the acquisition of Destination Group     |  |  | 4,835,298           | 
|£0.01 Ordinary Shares placed in relation to the acquisition of Destination Group           |  |  | 9,638,555           | 
|£0.01 Ordinary Shares issued in consideration for the investment in LCC24.com              |  |  | 2,804,136           | 
|£0.01 Ordinary Shares issued in consideration for the acquisition of Travelprice.com Group |  |  | 28,000,783          | 
|                                                                                           |  |  |                     | 
|At September 30, 2002                                                                      |  |  | 236,315,802         | 
|Share options exercised                                                                    |  |  | 8,052,979           | 
|£0.01 Ordinary Shares issued in consideration for the acquisition of Travelprice.com Group |  |  | 6,279,518           | 
|£0.01 Ordinary Shares issued in consideration for services to the Company                  |  |  | 19,118              | 
|£0.01 Ordinary Shares issued in consideration for the acquisition of Travelselect.com      |  |  | 1,955,709           | 
|£0.01 Ordinary Shares issued as consideration for the acquisition of Destination Group     |  |  | 1,354,422           | 
|£0.01 Ordinary Shares issued as consideration for the acquisition of holiday autos group   |  |  | 27,191,771          | 
|£0.01 Ordinary Shares placed in relation to the acquisition of holiday autos group         |  |  | 14,814,815          | 
|£0.01 Ordinary Shares issued as consideration for the acquisition of eXhilaration          |  |  | 955,110             | 
|                                                                                           |  |  |                     | 
|At September 30, 2003                                                                      |  |  | 296,939,244         | 
|                                                                                           |  |  |                     | 



The notes to the financial statements are an integral part of these financial statements.

F-5

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LASTMINUTE.COM
PLC
CONSOLIDATED STATEMENTS OF CHANGES IN THE SHAREHOLDERS FUNDS (continued)

Total Shareholders’ Funds

|                                                   |  |  | Sharecapital |  |  | Sharepremiumaccount |   |  | Shares tobe issued |   |  | Mergerreserve |  |  | Otherreserves |   |  | Profitand lossaccount |   |  | Totalshareholders’funds |  
|-------------------------------------------------- |  |  | ------------ |  |  | ------------------- | - |  | ------------------ | - |  | ------------- |  |  | ------------- | - |  | --------------------- | - |  | ----------------------- | -
|                                                   |  |  |              |  |  |                     |   |  |                    |   |  |               |  |  |               |   |  |                       |   |  |                         |  
|                                                   |  |  | (£000)       | 
|                                                   |  |  |              |  |  |                     |   |  |                    |   |  |               |  |  |               |   |  |                       |   |  |                         |  
|At October 1, 2000                                 |  |  | 1,505        |  |  | 112,923             |   |  | 197                |   |  | 61,746        |  |  | 5,203         |   |  | (40,280               | ) |  | 141,294                 |  
|Loss for the year                                  |  |  |             |  |  |                    |   |  |                   |   |  |              |  |  |              |   |  | (53,588               | ) |  | (53,588                 | )
|Foreign currency translation differences           |  |  |             |  |  |                    |   |  |                   |   |  |              |  |  |              |   |  | (414                  | ) |  | (414                    | )
|Gain arising on the establishment of joint venture |  |  |             |  |  |                    |   |  |                   |   |  |              |  |  |              |   |  | 202                   |   |  | 202                     |  
|Consideration in relation to purchase of:          |  |  |              |  |  |                     |   |  |                    |   |  |               |  |  |               |   |  |                       |   |  |                         |  
|Degriftour Group                                   |  |  | 197          |  |  |                    |   |  | (197               | ) |  |              |  |  |              |   |  |                      |   |  |                        |  
|Urbanbite Limited                                  |  |  | 4            |  |  |                    |   |  |                   |   |  | 146           |  |  |              |   |  |                      |   |  | 150                     |  
|Shares issued on exercise of options               |  |  | 27           |  |  | 162                 |   |  |                   |   |  |              |  |  |              |   |  |                      |   |  | 189                     |  
|Other                                              |  |  |             |  |  | (102                | ) |  |                   |   |  |              |  |  |              |   |  |                      |   |  | (102                    | )
|Share-based compensation                           |  |  |             |  |  |                    |   |  |                   |   |  |              |  |  | 1,181         |   |  |                      |   |  | 1,181                   |  
|                                                   |  |  |              |  |  |                     |   |  |                    |   |  |               |  |  |               |   |  |                       |   |  |                         |  
|At September 30, 2001                              |  |  | 1,733        |  |  | 112,983             |   |  |                   |   |  | 61,892        |  |  | 6,384         |   |  | (94,080               | ) |  | 88,912                  |  
|Loss for the year                                  |  |  |             |  |  |                    |   |  |                   |   |  |              |  |  |              |   |  | (38,081               | ) |  | (38,081                 | )
|Foreign currency translation differences           |  |  |             |  |  |                    |   |  |                   |   |  |              |  |  |              |   |  | 859                   |   |  | 859                     |  
|Consideration in relation to purchase of:          |  |  |              |  |  |                     |   |  |                    |   |  |               |  |  |               |   |  |                       |   |  |                         |  
|Travelselect.com Group                             |  |  | 138          |  |  |                    |   |  | 2,100              |   |  | 8,462         |  |  |              |   |  |                      |   |  | 10,700                  |  
|Destination Group                                  |  |  | 48           |  |  |                    |   |  | 1,500              |   |  | 4,013         |  |  |              |   |  |                      |   |  | 5,561                   |  
|Travelprice.com Group                              |  |  | 280          |  |  |                    |   |  |                   |   |  | 25,481        |  |  | 2,540         |   |  |                      |   |  | 28,301                  |  
|LCC24.com                                          |  |  | 28           |  |  | 2,355               |   |  |                   |   |  |              |  |  |              |   |  |                      |   |  | 2,383                   |  
|Share placing for acquisition
    of:              |  |  |              |  |  |                     |   |  |                    |   |  |               |  |  |               |   |  |                       |   |  |                         |  
|Travelselect.com Group                             |  |  | 13           |  |  | 753                 |   |  |                   |   |  |              |  |  |              |   |  |                      |   |  | 766                     |  
|Destination Group                                  |  |  | 96           |  |  | 7,748               |   |  |                   |   |  |              |  |  |              |   |  |                      |   |  | 7,844                   |  
|Shares issued on exercise of options               |  |  | 24           |  |  | 184                 |   |  |                   |   |  |              |  |  |              |   |  |                      |   |  | 208                     |  
|Other                                              |  |  |             |  |  | (392                | ) |  |                   |   |  |              |  |  |              |   |  |                      |   |  | (392                    | )
|Share-based compensation                           |  |  |             |  |  |                    |   |  |                   |   |  |              |  |  | (2,485        | ) |  |                      |   |  | (2,485                  | )
|                                                   |  |  |              |  |  |                     |   |  |                    |   |  |               |  |  |               |   |  |                       |   |  |                         |  
|At September 30, 2002 (2)                          |  |  | 2,360        |  |  | 123,631             |   |  | 3,600              |   |  | 99,848        |  |  | 6,439         |   |  | (131,302              | ) |  | 104,576                 |  
|Loss for the year                                  |  |  |             |  |  |                    |   |  |                   |   |  |              |  |  |              |   |  | (47,645               | ) |  | (47,645                 | )
|Foreign currency translation differences           |  |  |             |  |  |                    |   |  |                   |   |  |              |  |  |              |   |  | (2,496                | ) |  | (2,496                  | )
|Shares issued in relation to the acquisition of:   |  |  |              |  |  |                     |   |  |                    |   |  |               |  |  |               |   |  |                       |   |  |                         |  
|holiday autos group                                |  |  | 272          |  |  |                    |   |  | 3,268              |   |  | 22,705        |  |  |              |   |  |                      |   |  | 26,245                  |  
|eXhilaration                                       |  |  | 10           |  |  |                    |   |  |                   |   |  | 1,002         |  |  |              |   |  |                      |   |  | 1,012                   |  
|Travelselect.com Group                             |  |  | 20           |  |  | 1,618               |   |  | (1,638             | ) |  |              |  |  |              |   |  |                      |   |  |                        |  
|Destination Group                                  |  |  | 14           |  |  | 1,121               |   |  | (1,135             | ) |  |              |  |  |              |   |  |                      |   |  |                        |  
|Travelprice.com Group                              |  |  | 63           |  |  | 3,052               |   |  |                   |   |  |               |  |  |               |   |  |                       |   |  | 3,115                   |  
|Share placing in relation to:                      |  |  |              |  |  |                     |   |  |                    |   |  |               |  |  |               |   |  |                       |   |  |                         |  
|holiday autos group                                |  |  | 148          |  |  | 11,852              |   |  |                   |   |  |              |  |  |              |   |  |                      |   |  | 12,000                  |  
|Shares issued on exercise of options               |  |  | 82           |  |  | 2,531               |   |  |                   |   |  |              |  |  |              |   |  |                      |   |  | 2,613                   |  
|Share-based compensation                           |  |  |             |  |  |                    |   |  |                   |   |  |              |  |  | (2,279        | ) |  |                      |   |  | (2,279                  | )
|                                                   |  |  |              |  |  |                     |   |  |                    |   |  |               |  |  |               |   |  |                       |   |  |                         |  
|At September 30, 2003                              |  |  | 2,969        |  |  | 143,805             |   |  | 4,095              |   |  | 123,555       |  |  | 4,160         |   |  | (181,443              | ) |  | 97,141                  |  
|                                                   |  |  |              |  |  |                     |   |  |                    |   |  |               |  |  |               |   |  |                       |   |  |                         |  

---

|(1) | The Group has taken advantage
        of the relief provided by Section 131 of the Companies Act 1985 from
        setting up a share premium account for the shares issued in respect of
        the acquisitions of eXhilaration, holiday autos group, Travelselect.com,
        the Destination Group, Travelprice.com, the Degriftour Group and Urbanbite
        Limited.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Retained losses of £181,443,000 at September
30, 2003 (2002: £131,302,000; 2001: £94,080,000) include cumulative
retained losses of £884,000 (2002: £710,000; 2001: £288,000)
in respect of joint ventures.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The notes to the financial statements are an integral part of these financial statements.

F-6

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LASTMINUTE.COM
PLCCONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                                 |  |       |     |  | Year ended September 30, |  
|------------------------------------------------------------------------------------------------ |  | ----- | --- |  | ------------------------ | -
|                                                                                                 |  |       |     |  |                          |  
|                                                                                                 |  | Notes |     |  | 2001                     |  
|                                                                                                 |  |       |     |  |                          |  
|                                                                                                 |  |       |     |  | (£000)                   |  
|Net cash (outflow) / inflow from operating activities                                            |  | 25    | (a) |  | (31,079                  | )
|                                                                                                 |  |       |     |  |                          |  
|Cash outflow from exceptional item                                                               |  | 5     |     |  |                         |  
|                                                                                                 |  |       |     |  |                          |  
|                                                                                                 |  |       |     |  | (31,079                  | )
|Returns on
    investments and servicing of finance                                              |  |       |     |  |                          |  
|Bond issue costs                                                                                 |  |       |     |  |                         |  
|Interest received                                                                                |  |       |     |  | 3,480                    |  
|Interest paid                                                                                    |  |       |     |  | (36                      | )
|Interest element of finance lease rental payments                                                |  |       |     |  |                         |  
|                                                                                                 |  |       |     |  |                          |  
|Net returns on investment and servicing of finance                                               |  |       |     |  | 3,444                    |  
|                                                                                                 |  |       |     |  |                          |  
|Taxation                                                                                         |  |       |     |  |                          |  
|Overseas tax paid                                                                                |  |       |     |  |                         |  
|Capital expenditure
    and financial investment                                                 |  |       |     |  |                          |  
|Payments to acquire
    tangible fixed assets                                                    |  |       |     |  | (8,420                   | )
|Receipts from sale of tangible fixed assets                                                      |  |       |     |  | 87                       |  
|                                                                                                 |  |       |     |  |                          |  
|Net cash (outflow) / inflow before acquisitions and management of liquid resources and financing |  |       |     |  | (35,968                  | )
|                                                                                                 |  |       |     |  |                          |  
|Acquisitions                                                                                     |  |       |     |  |                          |  
|Overdraft acquired
    with subsidiary undertakings                                              |  |       |     |  |                         |  
|Cash acquired with subsidiary undertakings                                                       |  |       |     |  | 160                      |  
|Payments to acquire subsidiary undertakings/joint venture (1)                                    |  |       |     |  | (21,350                  | )
|                                                                                                 |  |       |     |  |                          |  
|Net cash outflow before management of liquid resources and financing                             |  |       |     |  | (57,158                  | )
|Management
    of liquid resources                                                               |  |       |     |  |                          |  
|Increase in short
    term deposits                                                              |  | 25    | (b) |  | (1,502                   | )
|                                                                                                 |  |       |     |  |                          |  
|Net cash outflow before financing                                                                |  |       |     |  | (58,660                  | )
|Financing                                                                                        |  |       |     |  |                          |  
|Issue of bond                                                                                    |  |       |     |  |                         |  
|Issue of share capital                                                                           |  |       |     |  | 87                       |  
|Share issue costs                                                                                |  |       |     |  |                         |  
|Repayment of loan                                                                                |  |       |     |  |                         |  
|Repayments of capital elements of finance leases                                                 |  |       |     |  |                         |  
|                                                                                                 |  |       |     |  |                          |  
|(Decrease)/increase in cash                                                                      |  | 25    | (b) |  | (58,573                  | )
|                                                                                                 |  |       |     |  |                          |  
|RECONCILIATION OF CASH FLOW TO MOVEMENT IN NET FUNDS                                             |  |       |     |  |                          |  
|Movement in
    cash                                                                             |  |       |     |  | (58,573                  | )
|Cash inflow from issue of bond                                                                   |  |       |     |  |                         |  
|Bond issue costs                                                                                 |  |       |     |  |                         |  
|Cash outflow from short term deposits                                                            |  | 25    | (b) |  | 1,502                    |  
|Repayments of capital elements of finance leases                                                 |  |       |     |  |                         |  
|                                                                                                 |  |       |     |  |                          |  
|Changes in net funds resulting from cashflows                                                    |  |       |     |  | (57,071                  | )
|New finance leases                                                                               |  |       |     |  |                         |  
|Exchange difference                                                                              |  |       |     |  |                         |  
|Net funds at the beginning of the year                                                           |  | 25    | (b) |  | 103,688                  |  
|                                                                                                 |  |       |     |  |                          |  
|Net funds at the end of the year                                                                 |  | 25    | (b) |  | 46,617                   |  
|                                                                                                 |  |       |     |  |                          |  

---

|(1) | Payments to
        acquire subsidiary undertakings/joint venture include £904,000
        in respect of the investment in Lastminute.com Japan Limited for the
        year ended September 30, 2002 and £6,268,000 of deferred consideration
        in respect of acquisition of Degriftour for the year ended September
        30, 2001. For the year ended September 30 2003, payments to acquire subsidiary
        undertakings includes £2,338,000 deferred consideration in respect
        of the acquisition of Travelprice.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2)                                                                                               | The significant differences between the consolidated statements of cash flows
presented above and those required under United States generally accepted accounting
principles are set forth in note 30 of notes to the financial statements.
|------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                  |                                                                                                                                                                                                                                             
|The notes to
        the financial statements are an integral part of these financial statements.

F-7

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

1.
        ORGANISATION

Last Minute Network Limited was incorporated in England and Wales on April 1, 1998 as a private limited company.

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

On February 15, 2000, the Company acquired Last Minute Network Limited in a share for share exchange. Holders of Last Minute Network Limited's Ordinary Shares, Preference A Shares and Preference B Shares received the equivalent number of Ordinary Shares, Preference A Shares and Preference B Shares, respectively, in the Company. This Group reconstruction was 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.

Immediately prior to the initial listing of the Company's shares on March 21, 2000, each of the outstanding preference A shares and preference B shares were converted into 285 ordinary shares of the company. In addition, through the Company's initial public offering, lastminute.com plc issued 33,000,000 Ordinary shares on March 21, 2000 raising approximately £125.4 million before expenses.

The Degriftour group of companies was acquired in September 2000 and Urbanbite Limited was acquired in July 2001.

The Travelselect.com Group, the Destination Group and the Travelprice.com Group were acquired in April 2002, June 2002 and at the end of July 2002 respectively.

eXhilaration, holiday autos group and Lastminute Network S.L. were acquired in November 2002, March 2003 and September 2003 respectively.

2.   ACCOUNTING POLICIES

Basis of preparation

The financial statements are prepared under the historical cost convention and are in accordance with applicable United Kingdom accounting standards. The financial statements are prepared on the going concern basis.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiary undertakings (together the “Group”), drawn up to September 30, 2003.  The results of the businesses acquired, or disposed of, are included for the period that they were under the Group’s control.

The
    Travelselect.com Group (comprising Travelselect.com Limited and Globepost
    Limited), the Destination Group (comprising The Destination Holdings Group
    Limited and The Destination Group Limited) and the Travelprice.com Group
    (comprising Travelprice.com SA and subsidiaries) have been included in the
    consolidated financial statements for the periods from April 2002, June 2002
    and the end of July 2002 respectively using the acquisition method of accounting.
    The purchase consideration has been allocated to the assets and liabilities
    on the basis of their fair values at the respective dates of the acquisitions.

eXhilaration and holiday autos group (comprising holiday autos group limited and subsidiaries) have been included in the consolidated financial statements for the periods from November 2002 and March 2003 respectively using the acquisition method of accounting. The purchase consideration has been allocated to the assets and liabilities on the basis of their fair values at the respective dates of the acquisitions.

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

F-8

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

2.   ACCOUNTING POLICIES (continued)

Entities, other than subsidiary undertakings or joint ventures, in which the Group has a participating interest and over whose operating and financial policies the Group exercises a significant influence are treated as associates.  In the consolidated financial statements, associates are accounted for using the equity method.

Turnover

Turnover represents the aggregate amount of revenue from products sold and is stated exclusive of recoverable VAT and associated taxes.

Where the group acts as agent and does not take ownership of the products or services sold, turnover represents commissions earned less amounts due or paid on any commission shared.  Where the group acts as principal and purchases the products or services for resale, turnover represents the price at which the products or services have been sold across the Group’s various platforms.

Turnover also includes advertising and sponsorship income which is recognised over the period to which it relates.

Travel turnover, which includes flights, holidays and car hire, is recognised at the date of departure.  Other turnover is recognised based on booking date.

Product development costs

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

Costs incurred in developing software for internal use, which have measurable economic viability, are capitalised when the software reaches the application development stage and are amortised over the expected useful life of the software. Costs incurred in developing and enhancing the website are capitalised as incurred if the measurable economic viability of the expenditure can be determined and are amortised over 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 of communicating advertising in the period in which the advertising space or airtime is used.

Deferred taxation

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more tax or a right to pay less tax in the future have occurred at the balance sheet date.

Deferred tax assets are recognised only when their recovery is considered more likely than not in that there will be suitable taxable profits from which the future reversal of underlying timing differences can be deducted.  Deferred tax is recognised in respect of the retained earnings of overseas subsidiaries, associates and joint ventures only to the extent that, at the balance sheet date, dividends have been accrued as receivable.  Deferred tax is calculated on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse.

F-9

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

2.   ACCOUNTING POLICIES(continued)

Foreign currency translation

UK transaction revenues and expenses in a foreign currency are recorded at the actual rate of exchange for the month during which the transaction revenue or expense occurs.  Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange at the balance sheet date.  All exchange differences are taken to the profit and loss account.

The
    results of overseas subsidiaries, joint ventures and associate are translated
    into pounds sterling at actual rates of exchange for the period. Assets and
    liabilities of overseas subsidiaries, joint ventures and associates are translated
    into pounds sterling at the rate of exchange at the balance sheet date. Exchange
    differences arising from the retranslation of opening net assets and results
    from operations denominated in foreign currencies to period end rates are
    taken direct to shareholders’ funds.

Financial instruments

The Group uses a limited number of derivative financial instruments to hedge its exposures to fluctuations in foreign exchange rates.  Instruments are used to hedge a committed or probable future transaction and are not recognised until the transaction occurs.  The Group’s policy is not to enter into any other derivative instruments.

Costs incurred in arranging debt facilities are deducted from the amount raised and amortised over the life of the debt.

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 for impairment at the end of the first full financial year following the acquisition and in other periods if events or changes in circumstances indicate that the carrying value may not be recovered.

Tangible fixed assets

Tangible fixed assets are stated at cost less depreciation.

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

|Freehold land and buildings    | buildings over fifty years   
|------------------------------ | -----------------------------
|Leasehold improvements         | remaining period of the lease
|Motor vehicles                 | four years                   
|Furniture and office equipment | four to five years           
|Computer systems and equipment | three years                  
|Computer software              | one to two 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 basis, and net realisable value.

Employee share schemes

In accordance with UITF Abstract 17 (revised 2000), “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 underlying ordinary shares at the date of grant is charged to the profit and loss account on a straight line basis over the period in which the options vest.

F-10

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

2.   ACCOUNTING POLICIES(continued)

The Group provides for National Insurance contributions on options granted to UK employees on or after April 6, 1999 under its unapproved share option schemes in accordance with UITF Abstract 25, “National Insurance contributions on share option gains”. The expected charge is allocated over the period in which the options vest on a straight-line basis.

Pension costs

The Group provides pensions to eligible employees through defined contribution plans. The amounts charged to the profit and loss account in respect of pension costs are the contributions payable for the year.

Leases

Assets held under finance leases, which are leases where substantially all the risks and rewards of ownership of the asset have passed to the Group are capitalised in the balance sheet and are depreciated over their useful economic lives.  The capital element of future obligations under finance leases is included as a liability in the balance sheet.  The interest element of the rental obligations is charged to the profit and loss account over the periods of the leases and represents a constant proportion of the balance of capital repayments outstanding.

Rentals payable under operating leases are charged to the profit and loss account on a straight-line basis over the lease term. Provision is made for future rentals where properties are not in use at the period end.

3.  TURNOVER AND SEGMENTAL ANALYSIS

The Group is engaged in the provision of last minute travel, leisure and gift solutions to its customers via the Internet and other related electronic distribution platforms.

|                               |  |  | Turnover(by destination and source) | 
|------------------------------ |  |  | ----------------------------------- | 
|                               |  |  |                                     | 
|                               |  |  | Year ended September 30,            | 
|                               |  |  |                                     | 
|                               |  |  | 2001                                | 
|                               |  |  |                                     | 
|                               |  |  | (£000)                              | 
|By geographical area           |  |  |                                     | 
|United Kingdom                 |  |  | 6,899                               | 
|France                         |  |  | 10,059                              | 
|Germany                        |  |  | 750                                 | 
|Italy                          |  |  | 156                                 | 
|Spain                          |  |  | 291                                 | 
|Other European Union countries |  |  | 261                                 | 
|                               |  |  |                                     | 
|                               |  |  | 18,416                              | 
|                               |  |  |                                     | 

|                                                                 |  |  | Net assets/(liabilities) (2) |   |  | Net loss on ordinary activities before taxation (3) |  
|---------------------------------------------------------------- |  |  | ---------------------------- | - |  | --------------------------------------------------- | -
|                                                                 |  |  |                              |   |  |                                                     |  
|                                                                 |  |  | September 30,                |   |  | Year ended September 30,                            |  
|                                                                 |  |  |                              |   |  |                                                     |  
|                                                                 |  |  | (£000)                       |  
|                                                                 |  |  | 2002                         |   |  | 2003                                                |  
|                                                                 |  |  |                              |   |  |                                                     |  
|By geographical area                                             |  |  |                              |   |  |                                                     |  
|United Kingdom
    (1)                                           |  |  | 69,176                       |   |  | 29,992                                              |  
|France                                                           |  |  | (10,484                      | ) |  | 41,432                                              |  
|Germany                                                          |  |  | (7,037                       | ) |  | (11,889                                             | )
|Italy                                                            |  |  | (1,470                       | ) |  | 195                                                 |  
|Spain                                                            |  |  | (63                          | ) |  | (1,941                                              | )
|Other European Union countries                                   |  |  | 4,837                        |   |  | (4,125                                              | )
|                                                                 |  |  |                              |   |  |                                                     |  
|                                                                 |  |  | 54,959                       |   |  | 53,664                                              |  
|Amortisation of goodwill arising on the acquisition of associate |  |  |                             |   |  |                                                    |  
|Net interest receivable                                          |  |  |                             |   |  |                                                    |  
|Convertible bond                                                 |  |  |                             |   |  | (69,264                                             | )
|Interest bearing assets                                          |  |  | 49,617                       |   |  | 112,741                                             |  
|                                                                 |  |  |                              |   |  |                                                     |  
|                                                                 |  |  | 104,576                      |   |  | 97,141                                              |  
|                                                                 |  |  |                              |   |  |                                                     |  

F-11

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS



3.  TURNOVER AND SEGMENTAL ANALYSIS(continued)

|          |  |  | Gross Profit                 | 
|--------- |  |  | ---------------------------- | 
|          |  |  | Year
    ended September 30, | 
|          |  |  |                              | 
|          |  |  | (£000)                       | 
|          |  |  | 2002                         | 
|          |  |  |                              | 
|Flights   |  |  | 7,242                        | 
|Holidays  |  |  | 17,201                       | 
|Hotels    |  |  | 4,889                        | 
|Car hire  |  |  |                             | 
|Other (4) |  |  | 3,932                        | 
|          |  |  |                              | 
|          |  |  | 33,264                       | 
|          |  |  |                              | 

2001 figures not available

|____________
|------------

|(1) | The following amounts are included for acquisitions:
Turnover (by destination and source) £56,011,000 in the United Kingdom
(2002: £5,597,000; 2001: £nil), £4,736,000 in France (2002: £1,190,000;
2001: £nil), £40,085,000 in Germany (2002: £nil; 2001: £nil)
and £27,829,000 in other European Union countries (2002: £287,000;
2001: £nil). Net profit/(loss) on ordinary activities before taxation £4,936,000
in the United Kingdom (2002: £1,628,000; 2001: £nil), £(74,000)
in France (2002: £(1,399,000); 2001: £nil), £2,535,000 in Germany
(2002: £nil; 2001: £nil) and £1,709,000 in other European Union
countries
(2002: £(367,000); 2001:£nil).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The United Kingdom losses for 2001, 2002 and 2003
include central technical development and maintenance costs and the expenses
related to the Group management functions, which are not apportioned across the
Group’s operating businesses.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Net loss on ordinary activities before taxation
for 2003 includes £42,853,000 of goodwill amortisation (2002: £18,814,000,
2001: £14,660,000). Net assets/(liabilities) include £128,651,000
of goodwill for 2003 (2002: £83,673,000, 2001: £43,992,000) allocated
between the following geographical areas (United Kingdom: 2003: £86,205,000;
2002: £24,289,000; 2001: £14,000), (France: 2003: £35,892,000;
2002: £57,168,000; 2001: £43,978,000) and (Germany: 2003: £1,633,000;
2002: £2,216,000; 2001: £nil).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Other includes advertising and sponsorship revenue
|--- | --------------------------------------------------



|                               |  |  | Long-lived assets | 
|------------------------------ |  |  | ----------------- | 
|                               |  |  | September 30,     | 
|                               |  |  |                   | 
|                               |  |  | 2002              | 
|                               |  |  |                   | 
|                               |  |  | (£000)            | 
|By geographical area           |  |  |                   | 
|United Kingdom                 |  |  | 33,834            | 
|France                         |  |  | 59,344            | 
|Germany                        |  |  | 189               | 
|Italy                          |  |  | 91                | 
|Spain                          |  |  |                  | 
|Other European Union countries |  |  | 80                | 
|                               |  |  |                   | 
|                               |  |  | 93,538            | 
|                               |  |  |                   | 

F-12

---



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LASTMINUTE.COM PLC
  NOTES TO THE FINANCIAL STATEMENTS

4. OPERATING LOSS

This
    is stated after charging/(crediting):

|                                                     |  |  | Year ended
          September 30, |  
|---------------------------------------------------- |  |  | ---------------------------------- | -
|                                                     |  |  |                                    |  
|                                                     |  |  | 2001                               |  
|                                                     |  |  |                                    |  
|                                                     |  |  | (£000)                             |  
|Auditors' remuneration — audit
        services      |  |  | 135                                |  
|— non-audit
        services (1)                     |  |  | 257                                |  
|Advertising expenditure                              |  |  | 10,280                             |  
|Depreciation of owned assets                         |  |  | 8,744                              |  
|Depreciation of assets under
        finance lease   |  |  |                                   |  
|Goodwill amortisation                                |  |  | 14,660                             |  
|Operating lease rentals — land
        and buildings |  |  | 1,491                              |  
|Operating lease rentals — other                      |  |  | 82                                 |  
|Profit on sale of fixed assets                       |  |  | (26                                | )
|                                                     |  |  |                                    |  

__________

(1)      In
      the year ended September 30, 2002, this amount excluded the Ernst & Young
      LLP fees of £535,000 in relation to the acquisitions made by the
      Company in the year. Operating costs comprise the administrative expenses
      of the Group, of which £37,484,000 relates to acquisitions made during
      the year.

5.  EXCEPTIONAL ITEMS

Operating exceptional items

|                                                               |  |  | Year ended
          September 30, | 
|-------------------------------------------------------------- |  |  | ---------------------------------- | 
|                                                               |  |  |                                    | 
|                                                               |  |  | 2001                               | 
|                                                               |  |  |                                    | 
|                                                               |  |  | (£000)                             | 
|Exceptional costs of integration
        of holiday autos      |  |  |                                   | 
|Exceptional costs of a reorganisation
        of the cost base |  |  |                                   | 
|                                                               |  |  |                                    | 
|                                                               |  |  |                                   | 
|                                                               |  |  |                                    | 

The exceptional costs of integration
    of holiday autos relate to the implementation of the synergies relating to
    the acquisition. These primarily consist of a reduction in headcount, consolidation
    of properties and termination of certain contracts.

During
    2003 exceptional costs were incurred in order to improve the flexibility
    of the cost base by moving more costs from fixed to variable. These exceptional
    costs principally relate to redundancy costs following the outsourcing of
    various non-core functions.

The
    tax effect of the exceptional items was £nil.

Non-operating exceptional items

|                                                          |  |  | Year ended
          September 30, | 
|--------------------------------------------------------- |  |  | ---------------------------------- | 
|                                                          |  |  |                                    | 
|                                                          |  |  | 2001                               | 
|                                                          |  |  |                                    | 
|                                                          |  |  | (£000)                             | 
|Exceptional costs of a fundamental
        reorganisation |  |  |                                   | 
|                                                          |  |  |                                    | 

Following
    the acquisition of the Travelprice.com Group in 2002, the nature and focus
    of the combined operations in France and Italy were fundamentally restructured.
    This included moving to a single technology platform, the introduction of
    a more efficient management structure and restructuring our call centre and
    operating locations. The costs related principally to redundancy and surplus
    property costs.

The
    tax effect of the exceptional item was £nil.

F-13

---



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LASTMINUTE.COM PLC
  NOTES TO THE FINANCIAL STATEMENTS

6.  DIRECTORS' REMUNERATION

The
    remuneration of the Directors was as follows:

|                        |  |  | Year ended
          September 30, 2001 | 
|----------------------- |  |  | --------------------------------------- | 
|                        |  |  |                                         | 
|                        |  |  | Basic salaryand fees                    | 
|                        |  |  |                                         | 
|                        |  |  | (£)                                     | 
|Executive Directors     |  |  |                                         | 
|Brent Hoberman          |  |  | 150,000                                 | 
|Martha Lane Fox         |  |  | 118,500                                 | 
|David Howell            |  |  | 35,000                                  | 
|Pierre Alzon (1)        |  |  | 99,882                                  | 
|Non-Executive Directors |  |  |                                         | 
|Pieter Bouw             |  |  | 500                                     | 
|Robert Collier          |  |  | 6,000                                   | 
|                        |  |  |                                         | 
|                        |  |  | 409,882                                 | 
|                        |  |  |                                         | 

|                        |  |  | Year ended September 30,
          2002 | 
|----------------------- |  |  | --------------------------------------- | 
|                        |  |  |                                         | 
|                        |  |  | Basic salaryand fees                    | 
|                        |  |  |                                         | 
|                        |  |  | (£)                                     | 
|Executive Directors     |  |  |                                         | 
|Brent Hoberman          |  |  | 150,000                                 | 
|Martha Lane Fox         |  |  | 126,583                                 | 
|David Howell            |  |  | 140,000                                 | 
|Vimal Khosla            |  |  | 39,600                                  | 
|Non-Executive Directors |  |  |                                         | 
|Robert Collier          |  |  | 9,500                                   | 
|Brian Collie            |  |  | 5,000                                   | 
|Laurent Laffy           |  |  | 5,000                                   | 
|                        |  |  |                                         | 
|                        |  |  | 475,683                                 | 
|                        |  |  |                                         | 

|                           |  |  | Year ended September 30,
          2003 |  |  |                                         | 
|-------------------------- |  |  | --------------------------------------- |  |  | --------------------------------------- | 
|                           |  |  |                                         |  |  |                                         | 
|                           |  |  | Basic salaryand fees                    |  |  | Cashsupplementin lieu ofpensionbenefits | 
|                           |  |  |                                         |  |  |                                         | 
|                           |  |  | (£)                                     | 
|Executive Directors        |  |  |                                         |  |  |                                         | 
|Brent Hoberman             |  |  | 150,000                                 |  |  | 21,000                                  | 
|Martha Lane Fox            |  |  | 140,000                                 |  |  | 19,600                                  | 
|David Howell               |  |  | 140,000                                 |  |  | 19,600                                  | 
|Vimal Khosla (4)           |  |  | 100,000                                 |  |  | 17,074                                  | 
|Clive Jacobs
        (5)   |  |  | 70,191                                  |  |  | 9,577                                   | 
|Non-Executive Directors    |  |  |                                         |  |  |                                         | 
|Robert Collier             |  |  | 20,000                                  |  |  |                                        | 
|Brian Collie               |  |  | 20,000                                  |  |  |                                        | 
|Agnès
        Touraine (6) |  |  | 6,667                                   |  |  |                                        | 
|Sven Boinet (7)            |  |  | 3,333                                   |  |  |                                        | 
|                           |  |  |                                         |  |  |                                         | 
|                           |  |  | 650,191                                 |  |  | 86,851                                  | 
|                           |  |  |                                         |  |  |                                         | 

__________

|(1) | In addition to his remuneration paid during
        employment, Pierre Alzon received a total of £102,877 compensation
        payable as a result of the termination of his employment contract. This
        amount was fully accrued in the year to September 30, 2001.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The bonus for Pierre Alzon was paid during
        the year to September 30, 2001, but accrued within the Degriftour Group
        in the year to September 30, 2000 prior to the acquisition of Degriftour
        by the Company.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Laurent Laffy resigned as Director on 6
        March 2003.
|--- | -----------------------------------------------------------

|(4) | Vimal Khosla’s termination payment
        is made up of payments made to him on the terms of his leaving the company,
        including 4 months notice in lieu of notice, accrued holiday pay and
        untaken sabbatical of £16,385. Vimal Khosla resigned as a Director
        on July 31, 2003.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Clive Jacobs was appointed a Director on
        April 17, 2003.
|--- | ----------------------------------------------------------------

|(6) | Agnès Touraine was appointed a Director
        on May 28, 2003.
|--- | ----------------------------------------------------------------

|(7) | Sven Boinet was appointed a Director on
        August 5, 2003.
|--- | ---------------------------------------------------------------

F-14

---



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LASTMINUTE.COM PLC
  NOTES TO THE FINANCIAL STATEMENTS

6. DIRECTORS' REMUNERATION(continued)

The
    benefits received during the year related to the provision of healthcare
    insurance for each of the Executive Directors, with the exception of Clive
    Jacobs whose benefits included provision of a company car, healthcare, contribution
    to chauffer costs and permanent health insurance.

Other
    than as stated above, the Company does not remunerate any other Director
    for services on the Board of Directors or any Committee of the Board.

F-15

---



Back to Financials

LASTMINUTE.COM PLC
  NOTES TO THE FINANCIAL STATEMENTS

6. DIRECTORS' REMUNERATION(continued)

The
    Directors’ beneficial interests in the Ordinary Shares were as follows:

|                        |  |  | At September 30,(or date of appointment if later) | 
|----------------------- |  |  | ------------------------------------------------- | 
|                        |  |  |                                                   | 
|                        |  |  | 2001                                              | 
|                        |  |  |                                                   | 
|                        |  |  | (No.)                                             | 
|Executive Directors     |  |  |                                                   | 
|Brent Hoberman          |  |  | 15,836,133                                        | 
|Martha Lane Fox         |  |  | 10,207,879                                        | 
|Clive Jacobs            |  |  |                                                  | 
|Non-Executive Directors |  |  |                                                   | 
|Brian Collie            |  |  | 19,155                                            | 
|Robert Collier          |  |  | 13,157                                            | 
|Allan Leighton          |  |  | 197,273                                           | 
|                        |  |  |                                                   | 
|                        |  |  | 26,273,597                                        | 
|                        |  |  |                                                   | 

Directors'
    interests in share options over Ordinary Shares are as follows:

|                            |  |  | Exercise
    price |  |  | At September 30,
    2001 |  |  | At September 30,
    2002 |  |  | Granted
    during year |  |  | Lapsed
    during year |  |  | Total
      September 30,
    2003 | 
|--------------------------- |  |  | ------------------ |  |  | ------------------------- |  |  | ------------------------- |  |  | ----------------------- |  |  | ---------------------- |  |  | ---------------------------------- | 
|                            |  |  |                    |  |  |                           |  |  |                           |  |  |                         |  |  |                        |  |  |                                    | 
|                            |  |  | (pence)            |  |  |                           |  |  |                           |  |  | (No.)                   |  |  |                        |  |  |                                    | 
|Executive Directors:        |  |  |                    |  |  |                           |  |  |                           |  |  |                         |  |  |                        |  |  |                                    | 
|Brent Hoberman (1)          |  |  | 2.31               |  |  | 151,335                   |  |  | 151,335                   |  |  |                        |  |  |                       |  |  | 151,335                            | 
|Brent Hoberman (7)          |  |  | 107.00             |  |  |                          |  |  |                          |  |  | 140,187                 |  |  |                       |  |  | 140,187                            | 
|Martha Lane Fox (1)         |  |  | 2.31               |  |  | 129,675                   |  |  | 129,675                   |  |  |                        |  |  |                       |  |  | 129,675                            | 
|Martha Lane Fox (7)         |  |  | 107.00             |  |  |                          |  |  |                          |  |  | 130,841                 |  |  |                       |  |  | 130,841                            | 
|David Howell (2)            |  |  | 34.00              |  |  | 1,000,000                 |  |  | 1,000,000                 |  |  |                        |  |  |                       |  |  | 1,000,000                          | 
|David Howell (3)            |  |  | 48.00              |  |  |                          |  |  | 19,791                    |  |  |                        |  |  |                       |  |  | 19,791                             | 
|Clive Jacobs (8)            |  |  | 93.25              |  |  |                          |  |  |                          |  |  | 1,000,000               |  |  |                       |  |  | 1,000,000                          | 
|Former Executive Directors: |  |  |                    |  |  |                           |  |  |                           |  |  |                         |  |  |                        |  |  |                                    | 
|Vimal Khosla (4)            |  |  | 61.25              |  |  |                          |  |  | 600,000                   |  |  |                        |  |  | 290,000                |  |  | 310,000                            | 
|Non-Executive Directors:    |  |  |                    |  |  |                           |  |  |                           |  |  |                         |  |  |                        |  |  |                                    | 
|Allan Leighton (5)          |  |  | 137.50             |  |  | 1,000,000                 |  |  | 1,000,000                 |  |  |                        |  |  |                       |  |  | 1,000,000                          | 
|Robert Collier (6)          |  |  | 2.31               |  |  | 320,625                   |  |  | 320,625                   |  |  |                        |  |  |                       |  |  | 320,625                            | 

__________

|(1) | The options were granted in accordance
        with the terms and conditions laid out in the 1998 Unapproved Executive
        Share Option Scheme and are exercisable until June 28, 2008.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The options were granted in accordance
        with the terms and conditions laid out in the 2000 Unapproved and Approved
        Executive Share Option Schemes and are exercisable until July 3, 2011.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The options were granted in accordance
        with the terms and conditions laid out in the Sharesave Scheme and are
        exercisable until December 1, 2005.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | The options were granted in accordance
        with the terms and conditions laid out in the 2000 Unapproved and Approved
        Executive Share Option Schemes and are exercisable until April 8, 2012.
        Of these options, 300,000 Ordinary Shares are granted under option to
        Gillian Khosla over which Vimal Khosla has an interest.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | The options were granted in accordance
        with the terms and conditions laid out in the Non-Executive Share Option
        Scheme 2000 and are exercisable until January 7, 2011.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | The options were granted in accordance
        with the terms and conditions laid out in the 1998 Unapproved Executive
        Share Option Scheme and are exercisable until October 31, 2008.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | The options were granted in accordance
        with the terms and conditions laid out in the 2000 Unapproved Executive
        Share Option Scheme and are exercisable until December 2, 2012.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | The options were granted in accordance
        with the terms and conditions laid out in the 2000 Unapproved and Approved
        Executive Share Option Schemes and are exercisable until April 16, 2013.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All of the above options were granted
    for nil consideration. No options held by any Director were exercised during
    the year.

The options granted to Brent Hoberman
    and Martha Lane Fox during the year are exerciseable subject to the satisfaction
    of the following performance conditions

1. The Group must be profitable over
    two successive quarters  this being measured by profit before tax and
    goodwill amortisation; and

F-16

---



Back to Financials

LASTMINUTE.COM PLC
  NOTES TO THE FINANCIAL STATEMENTS

2. EPS of the Group must grow by
    3% over the UK Retail Prices Index each year over a three year period or
    failing this EPS must grow by 9% over the UK Retail Prices Index over any
    successive four year period.

The options granted to Clive Jacobs
    during the year are not subject to the satisfaction of any performance conditions,
    with the exception that the options vest on a monthly basis over a three
    year period from the date of grant.

The options for Vimal Khosla relate
    to options held by himself and his spouse until his date of cessation as
    a Director.

The market price of the Company’s
    shares on September 30, 2003 was 255.0p and the high and low share prices
    during the year were 294.5p and 77.6p respectively (2002: 102.0p and 19.0p;
    2001: 140.0p and 19.5p).

No other Director has any interest
    in ordinary shares. As at November 20, 2003 there were no changes in the
    interests of the Directors shown above.

F-17

---



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LASTMINUTE.COM PLC
  NOTES TO THE FINANCIAL STATEMENTS

7.  EMPLOYEE SHARE SCHEMES

The
    Group has six share option schemes — the Last Minute Network Limited
    1998 Unapproved Executive Share Option Scheme, the Last Minute Network Limited
    1999 Unapproved Executive Share Option Scheme, the lastminute.com plc 2000
    Unapproved Executive Share Option Scheme (the "Unapproved Executive
    Schemes"), the lastminute.com plc 2000 Approved Executive Share Option
    Scheme, the lastminute.com plc Non-Executive Share Option Scheme 2000 and
    the Approved lastminute.com plc Sharesave Scheme. To date, the Group has
    granted options under all of these schemes.

Under
    the Executive Share 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 respective scheme rules. The formula normally
    allows for the gradual vesting of the options over a three-year period from
    the date of grant. Options which have not been exercised, will normally lapse
    on the tenth anniversary of grant.

Options
    may also be exercised in the event of a change in control of the Company.
    In these circumstances, an option will become exercisable for a period of
    30 days from the date on which a sale of the Company becomes unconditional
    (following which it will lapse), provided that the option holder 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:

|                                             |  |  | Year ended September 30, |  
|-------------------------------------------- |  |  | ------------------------ | -
|                                             |  |  |                          |  
|                                             |  |  | 2001                     |  
|                                             |  |  |                          |  
|                                             |  |  | Number of                |  
|                                             |  |  | options                  |  
|                                             |  |  | granted                  |  
|                                             |  |  |                          |  
|                                             |  |  | (No.)                    |  
|Options outstanding:                         |  |  |                          |  
|Beginning of the year                        |  |  | 16,792,539               |  
|Granted                                      |  |  | 7,340,786                |  
|Exercised                                    |  |  | (2,661,801               | )
|Lapsed                                       |  |  | (3,178,295               | )
|                                             |  |  |                          |  
|End of year                                  |  |  | 18,293,229               |  
|                                             |  |  |                          |  
|                                             |  |  |                          |  
|Range of exercise prices                     |  |  |                          |  
|                                             |  |  |                          |  
|                                             |  |  |                          |  
|Options exercisable, end of
        the year |  |  | 10,205,509               |  
|                                             |  |  |                          |  
|                                             |  |  |                          |  

F-18

---



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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

7. EMPLOYEE SHARE SCHEMES(continued)

The following tables summarise information about the range of exercise prices, restated for the effects of the 284 for 1 bonus issue of Ordinary Shares on February 15, 2000, for share options outstanding at September 30, 2001, 2002 and 2003.

September 30, 2001

|Exercise price |  |  | Numberoutstanding |  |  | Weighted averageremainingcontractual life | 
|-------------- |  |  | ----------------- |  |  | ----------------------------------------- | 
|               |  |  |                   |  |  |                                           | 
|(pence)        |  |  | (No.)             |  |  | (Years)                                   | 
|2.31           |  |  | 6,663,674         |  |  | 6.85                                      | 
|12.05          |  |  | 473,030           |  |  | 7.63                                      | 
|17.21          |  |  | 541,108           |  |  | 7.70                                      | 
|19.50          |  |  | 85,000            |  |  | 9.92                                      | 
|20.00          |  |  | 320,991           |  |  | 10.00                                     | 
|27.50          |  |  | 1,302,719         |  |  | 9.83                                      | 
|31.50          |  |  | 31,746            |  |  | 9.79                                      | 
|33.00          |  |  | 439,684           |  |  | 9.71                                      | 
|34.00          |  |  | 1,000,000         |  |  | 9.75                                      | 
|35.00          |  |  | 1,464,257         |  |  | 9.92                                      | 
|36.96          |  |  | 1,012,535         |  |  | 8.13                                      | 
|46.00          |  |  | 170,114           |  |  | 9.46                                      | 
|47.50          |  |  | 85,589            |  |  | 9.50                                      | 
|48.50          |  |  | 30,555            |  |  | 9.63                                      | 
|55.50          |  |  | 83,760            |  |  | 9.38                                      | 
|72.50          |  |  | 547,644           |  |  | 9.13                                      | 
|73.93          |  |  | 664,068           |  |  | 8.03                                      | 
|74.00          |  |  | 126,932           |  |  | 9.21                                      | 
|76.50          |  |  | 60,536            |  |  | 9.29                                      | 
|119.50         |  |  | 40,652            |  |  | 9.08                                      | 
|133.87         |  |  | 1,694,999         |  |  | 8.34                                      | 
|137.50         |  |  | 1,000,000         |  |  | 9.04                                      | 
|138.00         |  |  | 205,513           |  |  | 8.58                                      | 
|139.00         |  |  | 37,070            |  |  | 8.91                                      | 
|150.00         |  |  | 40,000            |  |  | 8.92                                      | 
|152.00         |  |  | 94,948            |  |  | 8.75                                      | 
|186.00         |  |  | 29,265            |  |  | 8.83                                      | 
|190.00         |  |  | 3,630             |  |  | 8.42                                      | 
|209.00         |  |  | 28,935            |  |  | 8.67                                      | 
|210.00         |  |  | 3,706             |  |  | 8.39                                      | 
|218.00         |  |  | 10,569            |  |  | 8.50                                      | 
|               |  |  |                   |  |  |                                           | 
|               |  |  | 18,293,229        |  |  | 8.23                                      | 
|               |  |  |                   |  |  |                                           | 

F-19

---



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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS



7.   EMPLOYEE SHARE SCHEMES(continued)

September 30, 2002

|Exercise
          price |  |  | Numberoutstanding |  |  | Weighted averageremainingcontractual life | 
|------------------------ |  |  | ----------------- |  |  | ----------------------------------------- | 
|                         |  |  |                   |  |  |                                           | 
|(pence)                  |  |  | (No.)             |  |  | (Years)                                   | 
|2.31                     |  |  | 4,965,624         |  |  | 6.34                                      | 
|12.05                    |  |  | 37,217            |  |  | 6.50                                      | 
|17.21                    |  |  | 435,323           |  |  | 6.71                                      | 
|19.50                    |  |  | 520,897           |  |  | 8.92                                      | 
|20.00                    |  |  | 208,404           |  |  | 8.92                                      | 
|22.00                    |  |  | 380,645           |  |  | 9.00                                      | 
|27.50                    |  |  | 592,784           |  |  | 8.71                                      | 
|30.25                    |  |  | 114,156           |  |  | 9.17                                      | 
|31.50                    |  |  | 31,746            |  |  | 8.75                                      | 
|32.00                    |  |  | 500,000           |  |  | 9.08                                      | 
|33.00                    |  |  | 604,309           |  |  | 8.59                                      | 
|34.00                    |  |  | 1,000,000         |  |  | 8.75                                      | 
|35.00                    |  |  | 772,834           |  |  | 8.83                                      | 
|36.25                    |  |  | 363,891           |  |  | 9.25                                      | 
|36.75                    |  |  | 1,083,550         |  |  | 9.08                                      | 
|36.90                    |  |  | 51,085            |  |  | 7.19                                      | 
|36.96                    |  |  | 887,535           |  |  | 7.04                                      | 
|39.25                    |  |  | 70,750            |  |  | 9.08                                      | 
|46.00                    |  |  | 40,261            |  |  | 8.39                                      | 
|47.50                    |  |  | 59,400            |  |  | 8.42                                      | 
|48.00                    |  |  | 754,426           |  |  | 9.58                                      | 
|48.50                    |  |  | 34,616            |  |  | 8.56                                      | 
|50.75                    |  |  | 51,429            |  |  | 9.33                                      | 
|55.50                    |  |  | 67,382            |  |  | 8.33                                      | 
|59.50                    |  |  | 133,710           |  |  | 9.42                                      | 
|61.25                    |  |  | 1,000,000         |  |  | 9.50                                      | 
|72.50                    |  |  | 543,078           |  |  | 8.01                                      | 
|73.92                    |  |  | 17,738            |  |  | 6.92                                      | 
|73.93                    |  |  | 585,646           |  |  | 7.14                                      | 
|74.00                    |  |  | 122,649           |  |  | 8.11                                      | 
|76.50                    |  |  | 53,283            |  |  | 8.22                                      | 
|80.00                    |  |  | 100,000           |  |  | 9.42                                      | 
|88.50                    |  |  | 83,026            |  |  | 9.92                                      | 
|89.25                    |  |  | 83,291            |  |  | 9.67                                      | 
|94.75                    |  |  | 548,208           |  |  | 9.67                                      | 
|119.50                   |  |  | 34,741            |  |  | 8.01                                      | 
|133.87                   |  |  | 1,220,829         |  |  | 7.23                                      | 
|137.50                   |  |  | 1,000,000         |  |  | 8.00                                      | 
|138.00                   |  |  | 37,618            |  |  | 7.61                                      | 
|139.00                   |  |  | 28,330            |  |  | 7.82                                      | 
|150.00                   |  |  | 40,000            |  |  | 7.83                                      | 
|152.00                   |  |  | 30,100            |  |  | 7.74                                      | 
|186.00                   |  |  | 22,222            |  |  | 7.83                                      | 
|190.00                   |  |  | 3,280             |  |  | 7.33                                      | 
|209.00                   |  |  | 23,765            |  |  | 7.66                                      | 
|210.00                   |  |  | 2,209             |  |  | 7.37                                      | 
|218.00                   |  |  | 7,675             |  |  | 7.51                                      | 
|                         |  |  |                   |  |  |                                           | 
|                         |  |  | 19,349,662        |  |  | 7.94                                      | 
|                         |  |  |                   |  |  |                                           | 

F-20

---



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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS



7.   EMPLOYEE SHARE SCHEMES(continued)

September 30, 2003

|Exercise
          price |  |  | Numberoutstanding |  |  | Weighted
          averageremainingcontractual life | 
|------------------------ |  |  | ----------------- |  |  | --------------------------------------------------- | 
|                         |  |  |                   |  |  |                                                     | 
|(pence)                  |  |  | (No.)             |  |  | (Years)                                             | 
|2.31                     |  |  | 1,521,129         |  |  | 5.07                                                | 
|12.05                    |  |  | 37,217            |  |  | 5.50                                                | 
|17.21                    |  |  | 282,276           |  |  | 5.70                                                | 
|19.50                    |  |  | 520,897           |  |  | 7.92                                                | 
|20.00                    |  |  | 100,455           |  |  | 7.92                                                | 
|22.00                    |  |  | 251,667           |  |  | 8.00                                                | 
|27.50                    |  |  | 44,719            |  |  | 7.75                                                | 
|30.25                    |  |  | 108,627           |  |  | 8.17                                                | 
|31.50                    |  |  | 31,746            |  |  | 7.75                                                | 
|33.00                    |  |  | 552,425           |  |  | 7.59                                                | 
|34.00                    |  |  | 1,000,000         |  |  | 7.75                                                | 
|35.00                    |  |  | 354,181           |  |  | 7.83                                                | 
|36.25                    |  |  | 327,967           |  |  | 8.25                                                | 
|36.75                    |  |  | 677,509           |  |  | 8.08                                                | 
|36.96                    |  |  | 314,938           |  |  | 6.08                                                | 
|39.25                    |  |  | 23,673            |  |  | 8.08                                                | 
|40.00                    |  |  | 50,285            |  |  | 7.00                                                | 
|43.50                    |  |  | 172,414           |  |  | 7.42                                                | 
|46.00                    |  |  | 20,099            |  |  | 7.40                                                | 
|47.50                    |  |  | 13,107            |  |  | 7.43                                                | 
|48.00                    |  |  | 627,767           |  |  | 8.58                                                | 
|48.50                    |  |  | 16,806            |  |  | 7.57                                                | 
|50.75                    |  |  | 39,760            |  |  | 8.33                                                | 
|55.50                    |  |  | 43,929            |  |  | 7.33                                                | 
|59.50                    |  |  | 63,657            |  |  | 8.42                                                | 
|61.25                    |  |  | 185,696           |  |  | 8.50                                                | 
|72.50                    |  |  | 27,345            |  |  | 7.08                                                | 
|73.92                    |  |  | 39,911            |  |  | 5.92                                                | 
|73.93                    |  |  | 200,469           |  |  | 6.05                                                | 
|74.00                    |  |  | 96,237            |  |  | 7.10                                                | 
|76.50                    |  |  | 34,729            |  |  | 7.23                                                | 
|80.00                    |  |  | 11,111            |  |  | 8.42                                                | 
|83.75                    |  |  | 533,723           |  |  | 9.42                                                | 
|88.50                    |  |  | 79,027            |  |  | 9.06                                                | 
|89.00                    |  |  | 817,048           |  |  | 9.75                                                | 
|93.25                    |  |  | 3,171,550         |  |  | 9.50                                                | 
|94.75                    |  |  | 400,750           |  |  | 8.68                                                | 
|95.25                    |  |  | 500,000           |  |  | 9.33                                                | 
|103.00                   |  |  | 93,520            |  |  | 9.20                                                | 
|103.75                   |  |  | 650,000           |  |  | 9.25                                                | 
|107.00                   |  |  | 277,438           |  |  | 9.08                                                | 
|119.50                   |  |  | 21,470            |  |  | 7.01                                                | 
|133.87                   |  |  | 902,841           |  |  | 6.23                                                | 
|137.50                   |  |  | 1,000,000         |  |  | 7.00                                                | 
|138.00                   |  |  | 24,890            |  |  | 6.62                                                | 
|139.00                   |  |  | 27,206            |  |  | 6.82                                                | 
|150.00                   |  |  | 40,000            |  |  | 6.83                                                | 
|152.00                   |  |  | 19,849            |  |  | 6.75                                                | 
|174.50                   |  |  | 340,620           |  |  | 9.67                                                | 
|186.00                   |  |  | 13,991            |  |  | 6.84                                                | 
|190.00                   |  |  | 3,280             |  |  | 6.33                                                | 
|209.00                   |  |  | 814,942           |  |  | 9.67                                                | 
|210.00                   |  |  | 2,209             |  |  | 6.37                                                | 
|218.00                   |  |  | 6,409             |  |  | 6.42                                                | 
|255.00                   |  |  | 181,610           |  |  | 9.91                                                | 
|258.00                   |  |  | 26,326            |  |  | 9.92                                                | 
|276.00                   |  |  | 200,000           |  |  | 9.83                                                | 
|                         |  |  |                   |  |  |                                                     | 
|                         |  |  | 17,941,447        |  |  | 8.14                                                | 
|                         |  |  |                   |  |  |                                                     | 

F-21

---





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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS





7.   EMPLOYEE SHARE SCHEMES(continued)

The weighted average fair values, of share options granted during the year ended September 30, 2001, 2002 and 2003, were 28.87p, 48.94p and 57.99p respectively. The fair values were determined using the Black-Scholes option-pricing model. The weighted average assumptions used in the Black-Scholes model were as follows:

|                        |  |  | Year ended September 30, |  
|----------------------- |  |  | ------------------------ | -
|                        |  |  |                          |  
|                        |  |  | 2001                     |  
|                        |  |  |                          |  
|Dividend yield          |  |  | 0                        | %
|Expected volatility     |  |  | 71                       | %
|Risk free interest rate |  |  | 6.1                      | %
|Expected life           |  |  | 4.0 years                |  

F-22

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS





8.   STAFF COSTS (including Executive Directors)

|                                                  |  |  | Year ended September 30, |  
|------------------------------------------------- |  |  | ------------------------ | -
|                                                  |  |  |                          |  
|                                                  |  |  | 2001                     |  
|                                                  |  |  |                          |  
|                                                  |  |  | (£000)                   |  
|Wages and salaries                                |  |  | 21,364                   |  
|Social security costs                             |  |  | 3,297                    |  
|Pension contributions                             |  |  | 613                      |  
|Non-cash share-based compensation                 |  |  | 1,181                    |  
|National Insurance contributions on share options |  |  | (568                     | )
|                                                  |  |  |                          |  
|                                                  |  |  | 25,887                   |  
|                                                  |  |  |                          |  

The principal Group defined contribution pension scheme is available to UK Executive Directors and employees only. The Group contributes to a grouped personal pension plan to provide retirement and death benefits. The Group currently contributes up to a maximum of 14% of the employees’ basic salary to an investment 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.

In France there are various elements to the pension arrangements. First, employees benefit from a government provided retirement plan, the costs of which are included within social security costs. In addition, a number of employees receive retirement benefits through a defined contribution pension plan. Certain senior executives are also members of a separate defined contribution pension plan to which the Group contributes.

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

Non-cash share-based compensation represents the difference between the exercise price of share options granted and the fair market value of the underlying Ordinary Shares at the date of grant. As the options granted to date gradually vest over three years, the difference is being taken to the profit and loss account as an operating expense on a straight-line basis over the vesting period. When an employee leaves before exercising their options, the expense recognised in respect of these options is reversed, resulting in a credit to the profit and loss account for that period.

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

|                           |  |  | Year ended  September 30, | 
|-------------------------- |  |  | ------------------------- | 
|                           |  |  |                           | 
|                           |  |  | 2001                      | 
|                           |  |  |                           | 
|                           |  |  | No.                       | 
|Product development        |  |  | 100                       | 
|Sales and marketing        |  |  | 436                       | 
|General and administration |  |  | 123                       | 
|                           |  |  |                           | 
|                           |  |  | 659                       | 
|                           |  |  |                           | 

9.   INTEREST RECEIVABLE

|                                                 |  |  | Year ended  September 30, | 
|------------------------------------------------ |  |  | ------------------------- | 
|                                                 |  |  |                           | 
|                                                 |  |  | 2001                      | 
|                                                 |  |  |                           | 
|                                                 |  |  | (£000)                    | 
|Bank interest                                    |  |  | 3,480                     | 
|Share of joint ventures’ interest
    receivable |  |  |                          | 
|                                                 |  |  |                           | 
|                                                 |  |  | 3,480                     | 
|                                                 |  |  |                           | 

10.   INTEREST PAYABLE AND SIMILAR CHARGES

|                                                                    |  |  | Year ended  September 30, | 
|------------------------------------------------------------------- |  |  | ------------------------- | 
|                                                                    |  |  |                           | 
|                                                                    |  |  | 2001                      | 
|                                                                    |  |  |                           | 
|                                                                    |  |  | (£000)                    | 
|Bank interest and charges                                           |  |  | 36                        | 
|Other interest payable and charges
    payable under finance leases |  |  |                          | 
|Finance costs of convertible bond                                   |  |  |                          | 
|Share of joint ventures’ interest
    payable                       |  |  |                          | 
|                                                                    |  |  |                           | 
|                                                                    |  |  | 36                        | 
|                                                                    |  |  |                           | 

F-23

---





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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS





11. TAX ON LOSS ON ORDINARY ACTIVITIES

a)
    Analysis of (credit)/charge in year.

|                                        |  |  | Year ended
          September 30, |  
|--------------------------------------- |  |  | ---------------------------------- | -
|                                        |  |  |                                    |  
|                                        |  |  | 2001                               |  
|                                        |  |  |                                    |  
|                                        |  |  | (£000)                             |  
|Overseas tax
        (credit)/charge    |  |  | (158                               | )
|Deferred tax                            |  |  |                                   |  
|                                        |  |  |                                    |  
|Corporation
        tax (credit)/charge |  |  | (158                               | )
|                                        |  |  |                                    |  

b)
    Factors affecting the tax (credit)/charge for the year.

|                                                                                                       |  |  | Year ended
          September 30, |  
|------------------------------------------------------------------------------------------------------ |  |  | ---------------------------------- | -
|                                                                                                       |  |  |                                    |  
|                                                                                                       |  |  | 2001                               |  
|                                                                                                       |  |  |                                    |  
|                                                                                                       |  |  | (£000)                             |  
|Group loss on ordinary activities
        before tax                                                   |  |  | (53,746                            | )
|                                                                                                       |  |  |                                    |  
|Loss on ordinary activities
        multiplied by UK standard rate of 30.0% (2002: 30.0%, 2001: 30.0%) |  |  | (16,124                            | )
|Effects of:                                                                                            |  |  |                                    |  
|Higher tax rates on overseas
        results                                                           |  |  | (650                               | )
|Expenses not deductible for
        tax purposes (including goodwill amortisation)                     |  |  | 7,193                              |  
|Capital allowances for the year
        in excess of depreciation                                      |  |  | 905                                |  
|Other timing differences                                                                               |  |  |                                   |  
|Current tax profit/(loss) not
        recognised                                                       |  |  | 8,676                              |  
|Adjustment to tax charge in
        respect of previous years                                          |  |  | (158                               | )
|                                                                                                       |  |  |                                    |  
|Current tax (credit)/charge
        for the year                                                       |  |  | (158                               | )
|Deferred tax                                                                                           |  |  |                                   |  
|                                                                                                       |  |  |                                    |  
|Total tax (credit)/charge for
        the year                                                         |  |  | (158                               | )
|                                                                                                       |  |  |                                    |  

c)
    Factors that may affect future tax charges.

The
    Group has potential deferred tax assets at the year end as follows:

|                                                        |  |  | At September
          30, | 
|------------------------------------------------------- |  |  | -------------------------- | 
|                                                        |  |  |                            | 
|                                                        |  |  | 2002                       | 
|                                                        |  |  |                            | 
|                                                        |  |  | (£000)                     | 
|                                                        |  |  |                            | 
|Losses                                                  |  |  | 32,899                     | 
|Capital allowances and other
        timing differences |  |  | 3,900                      | 
|                                                        |  |  |                            | 
|                                                        |  |  | 36,799                     | 
|                                                        |  |  |                            | 

The
    Group has provided deferred tax assets at the year end as follows:

|                                                        |  |  | At September
          30, | 
|------------------------------------------------------- |  |  | -------------------------- | 
|                                                        |  |  |                            | 
|                                                        |  |  | 2002                       | 
|                                                        |  |  |                            | 
|                                                        |  |  | (£000)                     | 
|                                                        |  |  |                            | 
|Losses                                                  |  |  |                           | 
|Capital allowances and other
        timing differences |  |  |                           | 
|                                                        |  |  |                            | 
|                                                        |  |  |                           | 
|                                                        |  |  |                            | 

The
    potential deferred tax has been recognised to the extent that it is sufficiently
    certain that the Group will have enough suitable taxable profits to offset
    these losses.

As
    at September 30, 2003, the Group’s gross losses were £128.6 million
    available to carry forward (2002: £98.4 million).

F-24

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS





12. APPROPRIATIONS

During
    the years ended September 30, 2003, 2002 and 2001, there were no appropriations
    through dividends which is consistent with the intentions of the Group set
    out in the Company’s Registration Statement relating to lastminute.com
    plc dated March 21, 2000.

13. LOSS PER ORDINARY SHARE

|                                                            |  |  | Year ended
          September 30, |  
|----------------------------------------------------------- |  |  | ---------------------------------- | -
|                                                            |  |  |                                    |  
|                                                            |  |  | 2001                               |  
|                                                            |  |  |                                    |  
|                                                            |  |  | (£000)                             |  
|Loss for the financial year                                 |  |  | (53,588                            | )
|                                                            |  |  |                                    |  
|                                                            |  |  |                                    |  
|                                                            |  |  |                                    |  
|                                                            |  |  |                                    |  
|Weighted average number of Ordinary
        Shares in issue |  |  | 170,137,039                        |  
|                                                            |  |  |                                    |  

Securities
    that could potentially dilute basic earnings per share in the future include
    the convertible bond (see note 24) and share options.

14. INTANGIBLE FIXED ASSETS

|                                               |  |  | Goodwill | 
|---------------------------------------------- |  |  | -------- | 
|                                               |  |  |          | 
|                                               |  |  | (£000)   | 
|Cost:                                          |  |  |          | 
|At October 1, 2001                             |  |  | 58,652   | 
|Acquisition
        of subsidiary undertaking  |  |  | 56,131   | 
|                                               |  |  |          | 
|At September 30, 2002                          |  |  | 114,783  | 
|Acquisition
        of subsidiary undertakings |  |  | 87,822   | 
|                                               |  |  |          | 
|At September 30, 2003                          |  |  | 202,605  | 
|                                               |  |  |          | 
|Amortisation:                                  |  |  |          | 
|At October 1, 2001                             |  |  | 14,660   | 
|Charged during
        the year                |  |  | 18,666   | 
|                                               |  |  |          | 
|At September 30, 2002                          |  |  | 33,326   | 
|Charged during
        the year                |  |  | 42,261   | 
|                                               |  |  |          | 
|At September 30, 2003                          |  |  | 75,587   | 
|                                               |  |  |          | 
|Net book
          value:                      |  |  |          | 
|At October 1, 2001                             |  |  | 43,992   | 
|                                               |  |  |          | 
|At September 30, 2002                          |  |  | 81,457   | 
|                                               |  |  |          | 
|At September 30, 2003                          |  |  | 127,018  | 
|                                               |  |  |          | 

Goodwill
    is being amortised over four years.

During
    the year ended September 30, 2003 goodwill arose on the acquisitions of the
    holiday autos group, eXhilaration and Lastminute Network S.L. During the
    year ended September 30, 2002 goodwill arose on the acquisitions of the Travelselect.com
    Group, the Destination Group and the Travelprice.com Group.

F-25

---





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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS



15. TANGIBLE FIXED ASSETS

|                                       |  |  | Freehold land and buildings |  |  | Leaseholdimprovements |   |  | Furnitureand officeequipment |   |  | Computersystems andequipment |   |  | Computersoftware |   |  | Motor Vehicles |   |  | Total  |  
|-------------------------------------- |  |  | --------------------------- |  |  | --------------------- | - |  | ---------------------------- | - |  | ---------------------------- | - |  | ---------------- | - |  | -------------- | - |  | ------ | -
|                                       |  |  |                             |  |  |                       |   |  |                              |   |  |                              |   |  |                  |   |  |                |   |  |        |  
|                                       |  |  | (£000)                      | 
|Cost:                                  |  |  |                             |  |  |                       |   |  |                              |   |  |                              |   |  |                  |   |  |                |   |  |        |  
|At October 1, 2001                     |  |  |                            |  |  | 901                   |   |  | 2,270                        |   |  | 5,623                        |   |  | 14,443           |   |  |               |   |  | 23,237 |  
|Additions                              |  |  |                            |  |  | 35                    |   |  | 441                          |   |  | 506                          |   |  | 5,972            |   |  |               |   |  | 6,954  |  
|Disposals                              |  |  |                            |  |  | (31                   | ) |  | (91                          | ) |  | (1,066                       | ) |  | (4               | ) |  |               |   |  | (1,192 | )
|Acquisition of subsidiary undertaking  |  |  | 397                         |  |  | 121                   |   |  | 643                          |   |  | 352                          |   |  | 127              |   |  |               |   |  | 1,640  |  
|                                       |  |  |                             |  |  |                       |   |  |                              |   |  |                              |   |  |                  |   |  |                |   |  |        |  
|At September 30, 2002                  |  |  | 397                         |  |  | 1,026                 |   |  | 3,263                        |   |  | 5,415                        |   |  | 20,538           |   |  |               |   |  | 30,639 |  
|Additions                              |  |  |                            |  |  | 78                    |   |  | 181                          |   |  | 1,440                        |   |  | 16,063           |   |  | 4              |   |  | 17,766 |  
|Disposals                              |  |  |                            |  |  | (436                  | ) |  | (314                         | ) |  | (398                         | ) |  | (494             | ) |  | (101           | ) |  | (1,743 | )
|Acquisition of subsidiary undertakings |  |  | 2,227                       |  |  |                      |   |  | 410                          |   |  | 1,167                        |   |  | 3,643            |   |  | 163            |   |  | 7,660  |  
|                                       |  |  |                             |  |  |                       |   |  |                              |   |  |                              |   |  |                  |   |  |                |   |  |        |  
|At September 30, 2003                  |  |  | 2,674                       |  |  | 668                   |   |  | 3,540                        |   |  | 7,624                        |   |  | 39,750           |   |  | 66             |   |  | 54,322 |  
|                                       |  |  |                             |  |  |                       |   |  |                              |   |  |                              |   |  |                  |   |  |                |   |  |        |  
|                                       |  |  |                             |  |  |                       |   |  |                              |   |  |                              |   |  |                  |   |  |                |   |  |        |  
|Depreciation:                          |  |  |                             |  |  |                       |   |  |                              |   |  |                              |   |  |                  |   |  |                |   |  |        |  
|At October 1, 2001                     |  |  |                            |  |  | 254                   |   |  | 705                          |   |  | 2,564                        |   |  | 6,058            |   |  |               |   |  | 9,581  |  
|Provided during the year               |  |  | 1                           |  |  | 258                   |   |  | 744                          |   |  | 1,533                        |   |  | 7,245            |   |  |               |   |  | 9,781  |  
|Disposals                              |  |  |                            |  |  | (31                   | ) |  | (21                          | ) |  | (749                         | ) |  | (3               | ) |  |               |   |  | (804   | )
|                                       |  |  |                             |  |  |                       |   |  |                              |   |  |                              |   |  |                  |   |  |                |   |  |        |  
|At September 30, 2002                  |  |  | 1                           |  |  | 481                   |   |  | 1,428                        |   |  | 3,348                        |   |  | 13,300           |   |  |               |   |  | 18,558 |  
|Provided during the year               |  |  | 103                         |  |  | 698                   |   |  | 705                          |   |  | 1,672                        |   |  | 11,591           |   |  | 29             |   |  | 14,798 |  
|Disposals                              |  |  |                            |  |  | (511                  | ) |  | (200                         | ) |  | (12                          | ) |  | (58              | ) |  | (68            | ) |  | (849   | )
|                                       |  |  |                             |  |  |                       |   |  |                              |   |  |                              |   |  |                  |   |  |                |   |  |        |  
|At September 30, 2003                  |  |  | 104                         |  |  | 668                   |   |  | 1,933                        |   |  | 5,008                        |   |  | 24,833           |   |  | (39            | ) |  | 32,507 |  
|                                       |  |  |                             |  |  |                       |   |  |                              |   |  |                              |   |  |                  |   |  |                |   |  |        |  
|                                       |  |  |                             |  |  |                       |   |  |                              |   |  |                              |   |  |                  |   |  |                |   |  |        |  
|Net book value:                        |  |  |                             |  |  |                       |   |  |                              |   |  |                              |   |  |                  |   |  |                |   |  |        |  
|At September 30, 2001                  |  |  |                            |  |  | 647                   |   |  | 1,565                        |   |  | 3,059                        |   |  | 8,385            |   |  |               |   |  | 13,656 |  
|                                       |  |  |                             |  |  |                       |   |  |                              |   |  |                              |   |  |                  |   |  |                |   |  |        |  
|At September 30, 2002                  |  |  | 396                         |  |  | 545                   |   |  | 1,835                        |   |  | 2,067                        |   |  | 7,238            |   |  |               |   |  | 12,081 |  
|                                       |  |  |                             |  |  |                       |   |  |                              |   |  |                              |   |  |                  |   |  |                |   |  |        |  
|At September 30, 2003                  |  |  | 2,570                       |  |  |                      |   |  | 1,607                        |   |  | 2,616                        |   |  | 14,917           |   |  | 105            |   |  | 21,815 |  
|                                       |  |  |                             |  |  |                       |   |  |                              |   |  |                              |   |  |                  |   |  |                |   |  |        |  

The
    net book value of £21,815,000 above includes an amount of £1,895,000
    in respect of assets held under finance leases (2002: £250,000; 2001: £nil).
    The Group has no capital commitments outstanding at the year end (2002 and
    2001: £nil)

16. INVESTMENTS

Joint Ventures

|                                                                             |  |  | Share of net assets |  
|---------------------------------------------------------------------------- |  |  | ------------------- | -
|                                                                             |  |  |                     |  
|                                                                             |  |  | (£000)              |  
|At October 1, 2001                                                           |  |  | 377                 |  
|Additions during the year                                                    |  |  | 904                 |  
|Share of loss retained by joint
        ventures                             |  |  | (413                | )
|Exchange loss taken to reserves                                              |  |  | (9                  | )
|                                                                             |  |  |                     |  
|At September 30, 2002                                                        |  |  | 859                 |  
|Transfer of lastminute.com S.L.
        from a joint venture to a subsidiary |  |  | 300                 |  
|Share of loss retained by joint
        ventures                             |  |  | (183                | )
|Exchange loss taken to reserves                                              |  |  | (17                 | )
|                                                                             |  |  |                     |  
|At September
        30, 2003                                                |  |  | 959                 |  
|                                                                             |  |  |                     |  

Lastminute.com Japan Limited

On
    December 2, 2001 the Group entered into a joint venture agreement with Kinki
    Nippon Tourist Co. Limited, Nippon Travel Agency Co. Limited, Mitsubishi
    Corporation /MC Capital Fund, Credit Saison co. Limited and Japan Efund to
    establish a new e-commerce business in Japan.

The
    Group holds 32.9% of the share capital of the Japanese company and its investment
    in the company is treated as a joint venture because the board control is
    split between lastminute.com plc and the other investing entities.

Payment
    by the Group in respect of the investment was ¥175,000,000 (£904,000)
    in cash.

F-26

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS



16. INVESTMENTS (continued)

Associate

|                                    |  |  | Share ofnet tangible assets |   |  | Goodwill |   |  | Total |  
|----------------------------------- |  |  | --------------------------- | - |  | -------- | - |  | ----- | -
|                                    |  |  |                             |   |  |          |   |  |       |  
|                                    |  |  |                             |   |  | (£000)   |   |  |       |  
|At October 1, 2001                  |  |  |                            |   |  |         |   |  |      |  
|Additions during the year           |  |  | 19                          |   |  | 2,364    |   |  | 2,383 |  
|Share of loss retained by associate |  |  | (4                          | ) |  |         |   |  | (4    | )
|Amortisation of goodwill            |  |  |                            |   |  | (148     | ) |  | (148  | )
|Exchange gain taken to reserves     |  |  | 1                           |   |  |         |   |  | 1     |  
|                                    |  |  |                             |   |  |          |   |  |       |  
|At September 30, 2002               |  |  | 16                          |   |  | 2,216    |   |  | 2,232 |  
|Additions during the year           |  |  |                            |   |  | 9        |   |  | 9     |  
|Share of loss retained by associate |  |  | (5                          | ) |  |         |   |  | (5    | )
|Amortisation of goodwill            |  |  |                            |   |  | (592     | ) |  | (592  | )
|                                    |  |  |                             |   |  |          |   |  |       |  
|At September 30, 2003               |  |  | 11                          |   |  | 1,633    |   |  | 1,644 |  
|                                    |  |  |                             |   |  |          |   |  |       |  

LCC24 AG

In June, 2002 the
    Group purchased a 20% holding in LCC24.com, the newly established German
    online travel agency of Lufthansa City Center for a consideration of £2,383,000
    satisfied by the issue of 2,804,136 new shares in lastminute.com plc at an
    average price of £0.85 per share.

This
    investment has been treated by the Group as an associated undertaking due
    to the presence of both significant influence, through lastminute.com having
    representation on the Board, and a participating interest. The fair value
    of the Group’s share of the net assets at the date of investment was £19,000
    generating £2,364,000 of goodwill. This goodwill is being amortised
    over a period of four years from acquisition.

Acquisitions

eXhilaration

On
    November 15, 2002 the Group completed the acquisition of Exhilaration Incentive
    Management Limited (“eXhilaration”) for consideration of £1.1
    million with contingent consideration payable of up to £2.0 million.
    The consideration comprised:

|i)  | 955,110 new ordinary shares in lastminute.com
        plc issued at £1.06 each on November 20, 2002.                                                                                                                            
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ii) | Up to £2.0 million payable in new ordinary
        shares or cash at the option of lastminute.com plc on March 31, 2005,
        dependent on the level of sales and gross value of such sales for the
        year then ending.

The
    contingent consideration payable has been estimated by management at £nil
    on the basis of the expected level of sales and gross value of such sales
    for eXhilaration for the year ending March 31, 2005.

The
    primary reasons for the acquisition were that eXhilaration is a strong existing
    supplier of product to lastminute.com, adds materially to the existing lastminute.com
    lifestyle categories, is capable of significant international and UK growth
    and is profitable and cash generative.

The
    investment in eXhilaration is held by lastminute.com plc, and has been included
    in the Group balance sheet using the acquisition method of accounting at
    its fair value at November 15, 2002. Goodwill arising on the acquisition
    of eXhilaration has been capitalised and is being amortised over four years.

F-27

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Back to Financials

LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

16. Investments(continued)

|                             |  |        | Book value |   |  | Accountingpolicyalignments |   |     |  | Revaluations |  |     |  | Fair value |  
|---------------------------- |  | ------ | ---------- | - |  | -------------------------- | - | --- |  | ------------ |  | --- |  | ---------- | -
|                             |  |        |            |   |  |                            |   |     |  |              |  |     |  |            |  
|                             |  | (£000) |           
|Tangible fixed assets        |  |        | 74         |   |  | (31                        | ) | (a) |  |             |  |     |  | 43         |  
|Debtors                      |  |        | 204        |   |  |                           |   |     |  |             |  |     |  | 204        |  
|Cash                         |  |        | 79         |   |  |                           |   |     |  |             |  |     |  | 79         |  
|Creditors                    |  |        | (495       | ) |  | (130                       | ) | (b) |  |             |  |     |  | (625       | )
|Long term creditors          |  |        | (20        | ) |  |                           |   |     |  | 20           |  | (c) |  |           |  
|                             |  |        |            |   |  |                            |   |     |  |              |  |     |  |            |  
|Net liabilities acquired     |  |        | (158       | ) |  | (161                       | ) |     |  | 20           |  |     |  | (299       | )
|                             |  |        |            |   |  |                            |   |     |  |              |  |     |  |            |  
|Goodwill                     |  |        |            |   |  |                            |   |     |  |              |  |     |  | 1,370      |  
|                             |  |        |            |   |  |                            |   |     |  |              |  |     |  |            |  
|Cost of acquisition          |  |        |            |   |  |                            |   |     |  |              |  |     |  | 1,071      |  
|                             |  |        |            |   |  |                            |   |     |  |              |  |     |  |            |  
|                             |  |        |            |   |  |                            |   |     |  |              |  |     |  |            |  
|Satisfied by:                |  |        |            |   |  |                            |   |     |  |              |  |     |  |            |  
|Issue of new ordinary shares |  |        |            |   |  |                            |   |     |  |              |  |     |  | 1,012      |  
|Acquisition costs            |  |        |            |   |  |                            |   |     |  |              |  |     |  | 59         |  
|                             |  |        |            |   |  |                            |   |     |  |              |  |     |  |            |  
|                             |  |        |            |   |  |                            |   |     |  |              |  |     |  | 1,071      |  
|                             |  |        |            |   |  |                            |   |     |  |              |  |     |  |            |  

Adjustments:

|(a) | Alignment of depreciation policies.
|--- | -----------------------------------

|(b) | Alignment of revenue recognition policies
        to recognise turnover at the date of departure.
|--- | -------------------------------------------------------------------------------------------------

|(c) | Revaluation of taxation liability for over
        accrual in previous year.
|--- | ----------------------------------------------------------------------------

eXhilaration made a profit on ordinary
    activities after tax of £100,000 for the year ended March 31, 2002.

The summarised profit and loss account
    for the period from April 1, 2002 to the date of acquisition is as follows:

|                |  |  | Period Ended     |  
|--------------- |  |  | ---------------- | -
|                |  |  | 15 November 2002 |  
|                |  |  |                  |  
|                |  |  | (£000)           |  
|Turnover        |  |  | 744              |  
|Operating loss  |  |  | (91              | )
|Loss before tax |  |  | (91              | )
|Taxation        |  |  |                 |  
|                |  |  |                  |  
|Loss after tax  |  |  | (91              | )
|                |  |  |                  |  
|                |  |  |                  |  

There
    were no recognised gains and losses in the period ended November 15, 2002,
    other than the loss of £91,000. The costs incurred in the year ended
    September 30, 2003 in integrating exhilaration into the lastminute.com Group
    were not significant.

For
    the period November 16, 2002 to September 30, 2003, eXhilaration contributed
    an outflow of £97,000 to the Group’s operating cashflows.

F-28

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS



16. Investments (continued)

holiday autos group

On
    March 26, 2003 the Group announced the acquisition of holiday autos (comprising
    holiday autos group limited and its subsidiary undertakings) for consideration
    of £39.0 million with contingent consideration payable of up to £3.3
    million. The consideration comprised:

|i) | 27,191,771 new ordinary shares in lastminute.com
        plc issued at £0.845 each.
|-- | -----------------------------------------------------------------------------------

|ii) | £16.0 million cash part funded by
        a placing for cash of 14,814,815 new ordinary shares in lastminute.com
        plc issued at £0.81 each on March 28, 2003.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

|iii) | Contingent consideration of up to £1.7
        million payable in new ordinary shares or cash at the option of lastminute.com
        plc, dependent on the total transaction value of the business for the
        year ended October 31, 2003.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|iv) | Deferred consideration of £1.6 million
        payable in new ordinary shares or cash at the option of lastminute.com
        plc in March 2004
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------

The
    total deferred and contingent consideration payable has been estimated at £3.3
    million.

The
    primary reasons for the acquisition were that holiday autos significantly
    increases the size and scale of lastminute.com, immediately enhances earnings,
    considerably enhances average margins before synergies, substantially increases
    lastminute.com’s critical mass in Germany and enhances lastminute.com’s
    dynamic packaging product (Breakbuilder).

The
    investment in holiday autos is held by lastminute.com plc, and has been included
    in the Group balance sheet using the acquisition method of accounting at
    its fair value. Goodwill arising on the acquisition of holiday autos has
    been capitalised and is being amortised over four years.

|                                                |  |  | Book value |   |  | Revaluations |        |     |  | Fair value |  
|----------------------------------------------- |  |  | ---------- | - |  | ------------ | ------ | --- |  | ---------- | -
|                                                |  |  |            |   |  |              |        |     |  |            |  
|                                                |  |  |            |   |  | (£000)       |        |     |  |            |  
|Intangible assets                               |  |  | 448        |   |  | (448         | )      | (a) |  |           |  
|Tangible fixed assets                           |  |  | 7,543      |   |  |             |        |     |  | 7,543      |  
|Investments                                     |  |  | 261        |   |  | (261         | )      | (b) |  |           |  
|Debtors                                         |  |  | 12,956     |   |  | (172         | )      | (c) |  | 12,784     |  
|Overdraft                                       |  |  | (9,376     | ) |  |             |        |     |  | (9,376     | )
|Creditors                                       |  |  | (38,899    | ) |  | (4,782       | )      | (d) |  | (43,681    | )
|                                                |  |  |            |   |  |              |        |     |  |            |  
|Net liabilities acquired                        |  |  | (27,067    | ) |  | (5,663       | )      |     |  | (32,730    | )
|                                                |  |  |            |   |  |              |        |     |  |            |  
|Provisional goodwill                            |  |  |            |   |  |              |        |     |  | 77,869     |  
|                                                |  |  |            |   |  |              |        |     |  |            |  
|Cost of acquisition                             |  |  |            |   |  |              |        |     |  | 45,139     |  
|                                                |  |  |            |   |  |              |        |     |  |            |  
|                                                |  |  |            |   |  |              |        |     |  |            |  
|Satisfied by:                                   |  |  |            |   |  |              |        |     |  |            |  
|Issue of new ordinary shares                    |  |  |            |   |  |              |        |     |  | 22,977     |  
|Cash consideration  from
        cash reserves |  |  |            |   |  |              | 4,000  |    
|Cash consideration  from
        placing       |  |  |            |   |  |              | 12,000 |    
|Contingent consideration                        |  |  |            |   |  |              |        |     |  | 3,268      |  
|Acquisition costs                               |  |  |            |   |  |              |        |     |  | 2,894      |  
|                                                |  |  |            |   |  |              |        |     |  |            |  
|                                                |  |  |            |   |  |              |        |     |  | 45,139     |  
|                                                |  |  |            |   |  |              |        |     |  |            |  

F-29

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS



16. Investments (continued)

Adjustments:

(a) Elimination of historical goodwill.(b) The value of investments has been written
  down.(c) Write down of debtors following an assessment
  of the recoverable values.(d) Recognition of unprovided amounts and
foreign exchange losses arising, mainly in respect of supplier creditors.

holiday
    autos made a loss on ordinary activities after tax of £1,697,000 for
    the year ended October 31, 2002.

As
    it has not been possible to complete the investigation to determine the fair
    value of holiday autos, provisional valuations have been made. Further valuations
    will be made which might, if necessary, result in adjustments being made
    to goodwill in the next annual financial statements.

The
    summarised profit and loss account for the period from November 1, 2002 to
    the date of acquisition is as follows:

|                |  |  | Period Ended     |  
|--------------- |  |  | ---------------- | -
|                |  |  | February 28 2003 |  
|                |  |  |                  |  
|                |  |  | (£000)           |  
|Turnover        |  |  | 29,504           |  
|Operating loss  |  |  | (5,698           | )
|Loss before tax |  |  | (5,735           | )
|Taxation        |  |  |                 |  
|                |  |  |                  |  
|Loss after tax  |  |  | (5,735           | )
|                |  |  |                  |  

There
    were no recognised gains and losses in the period ended February 28, 2003,
    other than the loss of £5,735,000. The costs incurred in the year ended
    September 30, 2003 in integrating holiday autos into the lastminute.com Group
    were £2,822,000 (see note 4).

For
    the period March 1, 2003 to September 30, 2003, holiday autos contributed £17,450,000
    to the Group’s operating cashflows.

Lastminute Network S.L.

On
    September 15, 2003, the Group acquired 70% of the issued share capital of
    Lastminute Network S.L, increasing the Group’s interest to 100%. 70%
    of the investment in Lastminute Network S.L. is held by lastminute.com plc,
    the remainder being held by Lastminute Network Limited. The acquisition has
    been included in the Group balance sheet using the acquisition method of
    accounting at its fair value at September 15, 2003.

The consideration comprised:

|i)  | €3.0 million cash paid on October 8,
        2003.                                                                                                  
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                     
|ii) | €3.0 million deferred consideration
        payable in cash or new ordinary shares at the option of lastminute.com
        plc by December 15, 2003.

Goodwill
    arising on the acquisition of Lastminute Network S.L. has been capitalised
    and is being amortised over four years.

F-30

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Back to Financials

LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS



16. Investments (continued)

Analysis of the acquisition of the
    Lastminute Network S.L.

|                                                                                |  |  | Book value |   |  | Accounting
      policy
    alignments |  |  | Revaluations |  |  | Fair Value |  
|------------------------------------------------------------------------------- |  |  | ---------- | - |  | -------------------------------------- |  |  | ------------ |  |  | ---------- | -
|                                                                                |  |  |            |   |  |                                        |  |  |              |  |  |            |  
|                                                                                |  |  | (£000)     |  
|Tangible fixed assets                                                           |  |  | 74         |   |  |                                       |  |  |             |  |  | 74         |  
|Debtors                                                                         |  |  | 1,682      |   |  |                                       |  |  |             |  |  | 1,682      |  
|Cash                                                                            |  |  | 1,163      |   |  |                                       |  |  |             |  |  | 1,163      |  
|Creditors                                                                       |  |  | (3,938     | ) |  |                                       |  |  |             |  |  | (3,938     | )
|                                                                                |  |  |            |   |  |                                        |  |  |              |  |  |            |  
|                                                                                |  |  | (1,019     | ) |  |                                       |  |  |             |  |  | (1,019     | )
|                                                                                |  |  |            |   |  |                                        |  |  |              |  |  |            |  
|Share of net liabilities previously
        held as investment in joint venture |  |  |            |   |  |                                        |  |  |              |  |  | 306        |  
|                                                                                |  |  |            |   |  |                                        |  |  |              |  |  |            |  
|Net liabilities acquired                                                        |  |  |            |   |  |                                        |  |  |              |  |  | (713       | )
|                                                                                |  |  |            |   |  |                                        |  |  |              |  |  |            |  
|Provisional
        goodwill                                                    |  |  |            |   |  |                                        |  |  |              |  |  | 4,921      |  
|                                                                                |  |  |            |   |  |                                        |  |  |              |  |  |            |  
|Cost of acquisition                                                             |  |  |            |   |  |                                        |  |  |              |  |  | 4,208      |  
|                                                                                |  |  |            |   |  |                                        |  |  |              |  |  |            |  

|                       |  |  |       | 
|---------------------- |  |  | ----- | 
|Satisfied by:          |  |  |       | 
|                       |  |  |       | 
|Cash                   |  |  | 2,079 | 
|Deferred consideration |  |  | 2,079 | 
|Acquisition costs      |  |  | 50    | 
|                       |  |  |       | 
|                       |  |  | 4,208 | 
|                       |  |  |       | 

As
    it has not been possible to complete the investigation to determine the fair
    value of Lastminute Network S.L. provisional valuations have been made. Further
    valuations will be made which might, if necessary, result in an adjustment
    being made to goodwill in the next annual financial statements.

Lastminute
    Network S.L. made a loss on ordinary activities after tax of £867,000
    for the year ended September 30, 2002. The summarised profit and loss account
    for the period from October 1, 2002 to the date of acquisition is as follows:



|                       |  |  | Period ended
    August 31 2003 |  
|---------------------- |  |  | ------------------------------- | -
|                       |  |  |                                 |  
|                       |  |  | (£000)                          |  
|                       |  |  |                                 |  
|Turnover               |  |  | 1,236                           |  
|Operating
        loss |  |  | (436                            | )
|Loss before tax        |  |  | (433                            | )
|Taxation               |  |  |                                |  
|                       |  |  |                                 |  
|Loss after tax         |  |  | (433                            | )
|                       |  |  |                                 |  

There
    were no recognised gains and losses in the period ended August 31, 2003,
    other than the loss of £433,000.

For
    the period September 1, 2003 to September 30, 2003, Lastminute Network S.L.
    contributed £751,000 to the Group’s operating cash flows.

The
    costs to be incurred integrating Lastminute Network S.L. into the lastminute.com
    Group are not expected to be significant.

Travelselect.com Group

On
    April 8, 2002 the Group completed the acquisition of the Travelselect.com
    Group (comprising Travelselect.com Limited and its subsidiary undertaking
    Globepost Limited) for consideration of £10.3 million with contingent
    consideration payable of up to £0.8 million. The consideration comprised:

|i) | 13,194,868 new Ordinary Shares in lastminute.com
        plc issued at £0.61 each on April 8, 2002.
|-- | ---------------------------------------------------------------------------------------------------

| | 
| | 



F-31

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Back to Financials

LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENT

16. Investments(continued)

|ii) | 579,374 new Ordinary Shares in lastminute.com
        plc issued at £0.93 each on September 25, 2002.
|--- | -----------------------------------------------------------------------------------------------------
|    |                                                                                                      

|iii) | £1.7 million payable in new Ordinary
        Shares in lastminute.com plc or loan notes at the option of lastminute.com
        plc on March 31, 2003.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                       

|iv) | Contingent consideration of up to £0.8
        million, payable in new Ordinary Shares in lastminute.com plc or loan
        notes at the option of lastminute.com plc, dependent on the total transaction
        value of the Global Flights business for the period ended March 31, 2003.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                                               
| | ----------------------------------------------------------------------------------------------
| | The contingent consideration
        payable has been estimated by management at £0.4 million.

In
    addition to the above consideration a further 1,343,143 new Ordinary Shares
    in lastminute.com plc were placed at £0.57 each on April 8, 2002. The
    proceeds were subsequently used to repay the debt of the acquired group.

The
    primary reasons for the acquisition were that it was immediately earnings
    enhancing and operating cash flow positive, together with the creation of
    cost synergies and additional gross profit and the significant impact on
    the existing lastminute.com UK flights volume.



F-32

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Back to Financials

LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS



16. Investments(continued)

Travelselect.com Group(continued)

The
    investment in the Travelselect.com Group was included in the consolidated
    balance sheet using the acquisition method of accounting at its fair value
    at April 8, 2002. Goodwill arising on the acquisition of the Travelselect.com
    Group has been capitalised and is being amortised over four years.

Analysis of the acquisition of the
    Travelselect.com Group

|                                    |  |        | Book value |   |  | Accounting
      policy
    alignments |   |     |  | Revaluations |   |     |  | Fair Value |  
|----------------------------------- |  | ------ | ---------- | - |  | -------------------------------------- | - | --- |  | ------------ | - | --- |  | ---------- | -
|                                    |  |        |            |   |  |                                        |   |     |  |              |   |     |  |            |  
|                                    |  | (£000) |           
|Intangible assets                   |  |        | 8,654      |   |  |                                       |   |     |  | (8,654       | ) | (a) |  |           |  
|Tangible fixed
        assets       |  |        | 3,452      |   |  |                                       |   |     |  | (2,869       | ) | (b) |  | 583        |  
|Debtors                             |  |        | 1,599      |   |  |                                       |   |     |  |             |   |     |  | 1,599      |  
|Cash                                |  |        | 2,761      |   |  |                                       |   |     |  |             |   |     |  | 2,761      |  
|Creditors                           |  |        | (6,983     | ) |  | (528                                   | ) | (c) |  |             |   |     |  | (7,511     | )
|                                    |  |        |            |   |  |                                        |   |     |  |              |   |     |  |            |  
|Net assets / (liabilities) acquired |  |        | 9,483      |   |  | (528                                   | ) |     |  | (11,523      | ) |     |  | (2,568     | )
|                                    |  |        |            |   |  |                                        |   |     |  |              |   |     |  |            |  
|Goodwill (note 14)                  |  |        |            |   |  |                                        |   |     |  |              |   |     |  | 13,718     |  
|                                    |  |        |            |   |  |                                        |   |     |  |              |   |     |  |            |  
|Cost of acquisition                 |  |        |            |   |  |                                        |   |     |  |              |   |     |  | 11,150     |  
|                                    |  |        |            |   |  |                                        |   |     |  |              |   |     |  |            |  

|                                 |  |  |        | 
|-------------------------------- |  |  | ------ | 
|Satisfied by:                    |  |  |        | 
|Issue of new ordinary shares     |  |  | 8,600  | 
|New ordinary shares to be issued |  |  | 1,700  | 
|Contingent consideration         |  |  | 400    | 
|Acquisition costs                |  |  | 450    | 
|                                 |  |  |        | 
|                                 |  |  | 11,150 | 
|                                 |  |  |        | 

Adjustments:

| | (a) | Elimination of historical goodwill.
| | --- | -----------------------------------

| | (b) | Write-off of previously capitalised product
        development and website development costs which have no realisable value.
| | --- | -----------------------------------------------------------------------------------------------------------------------------

| | (c) | Alignment of revenue recognition policies
        to recognise turnover at date of departure.
| | --- | ---------------------------------------------------------------------------------------------

The Travelselect.com Group made a
    loss on ordinary activities after tax of £3,582,000 for the year ended
    January 31, 2002.

The summarised profit and loss account
    for the period from February 1, 2002 to the date of acquisition is as follows:

|                |  |  | Period ended
    April 8, 2002 |  
|--------------- |  |  | ------------------------------ | -
|                |  |  |                                |  
|                |  |  | (£000)                         |  
|                |  |  |                                |  
|Turnover        |  |  | 721                            |  
|Operating loss  |  |  | (445                           | )
|Loss before tax |  |  | (449                           | )
|Taxation        |  |  |                               |  
|                |  |  |                                |  
|Loss after tax  |  |  | (449                           | )
|                |  |  |                                |  

There
    were no recognised gains and losses in the period ended April 8, 2002, other
    than the loss of £449,000.

The
    costs incurred in the year ended September 30, 2002 of integrating the Travelselect.com
    Group into the lastminute.com Group were not significant.

Travelselect.com
    contributed £3,245,000 to the Group’s operating cash flows in
    the year ended September 30, 2002.

F-33

---



Back to Financials

LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS



16. Investments(continued)

The Destination Group

On
    June 12, 2002 the Group completed the acquisition of The Destination Group
    (comprising The Destination Holdings Group Limited and its 100% owned subsidiary
    The Destination Group Limited) for consideration of £12.1 million with
    contingent consideration payable of up to £3.0 million. The consideration
    comprised:

|i) | 4,835,298 new Ordinary Shares in lastminute.com
        plc issued at £0.84 on June 12, 2002.
|-- | ---------------------------------------------------------------------------------------------
|   |                                                                                              

|ii) | £8.0 million cash funded by a vendor
        placing of 9,638,555 new Ordinary Shares in lastminute.com plc issued
        at £0.83 each on June 12, 2002.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                           

|iii) | Contingent consideration of up to £3.0
        million payable in new Ordinary Shares or loan notes at the option of
        lastminute.com plc, if the Destination Group achieves operating profit
        before tax targets adjusted for Group synergies achieved for the year
        ended April 30, 2003.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The contingent consideration
        payable has been estimated at £1.5 million by management on the
        basis of the expected level of adjusted profit before tax for the Destination
        Group for the year ending April 30, 2003.

The
    primary reasons for the acquisition were that it significantly enhances earnings,
    immediately contributes positive operating cash flow, creates the opportunity
    for cost synergies, strengthens the lastminute.com product portfolio by providing
    tailor-made holiday solutions for clients for both long-haul destinations
    and city breaks and cements the relationships with key airline and hotel
    suppliers.

The
    investment in Destination Group was included in the consolidated balance
    sheet using the acquisition method of accounting at its fair value at June
    12, 2002. Goodwill arising on the acquisition of the Destination Group has
    been capitalised and is being amortised over four years.

Analysis of the acquisition of the
    Destination Group.

|                                    |  |        | Book value |   |  | Accounting
      policy
    alignments |   |     |  | Revaluations |   |     |  | Fair Value |  
|----------------------------------- |  | ------ | ---------- | - |  | -------------------------------------- | - | --- |  | ------------ | - | --- |  | ---------- | -
|                                    |  |        |            |   |  |                                        |   |     |  |              |   |     |  |            |  
|                                    |  | (£000) |           
|                                    |  |        |            |   |  |                                        |   |     |  |              |   |     |  |            |  
|Intangible assets                   |  |        | 46         |   |  |                                       |   |     |  | (46          | ) | (a) |  |           |  
|Tangible fixed
        assets       |  |        | 253        |   |  |                                       |   |     |  | (126         | ) | (b) |  | 127        |  
|Debtors                             |  |        | 1,344      |   |  | 225                                    |   | (c) |  | (37          | ) | (d) |  | 1,532      |  
|Cash                                |  |        | 7,111      |   |  |                                       |   |     |  |             |   |     |  | 7,111      |  
|Creditors                           |  |        | (8,169     | ) |  | (97                                    | ) | (e) |  | (144         | ) | (f) |  | (8,410     | )
|Taxation                            |  |        | 83         |   |  | (38                                    | ) | (g) |  | 53           |   | (g) |  | 98         |  
|                                    |  |        |            |   |  |                                        |   |     |  |              |   |     |  |            |  
|Net assets / (liabilities) acquired |  |        | 668        |   |  | 90                                     |   |     |  | (300         | ) |     |  | 458        |  
|                                    |  |        |            |   |  |                                        |   |     |  |              |   |     |  |            |  
|Goodwill (note 14)                  |  |        |            |   |  |                                        |   |     |  |              |   |     |  | 13,416     |  
|                                    |  |        |            |   |  |                                        |   |     |  |              |   |     |  |            |  
|Cost of acquisition                 |  |        |            |   |  |                                        |   |     |  |              |   |     |  | 13,874     |  
|                                    |  |        |            |   |  |                                        |   |     |  |              |   |     |  |            |  

|                             |  |  |        | 
|---------------------------- |  |  | ------ | 
|Satisfied by:                |  |  |        | 
|Issue of new ordinary shares |  |  | 4,062  | 
|Cash                         |  |  | 8,000  | 
|Contingent consideration     |  |  | 1,500  | 
|Acquisition costs            |  |  | 312    | 
|                             |  |  |        | 
|                             |  |  | 13,874 | 
|                             |  |  |        | 

|Adjustments:
|------------

|(a) | Elimination of historical goodwill.
|--- | -----------------------------------

|(b) | The value of furniture and office equipment
        has been written down based on a valuation by the Directors.
|--- | ----------------------------------------------------------------------------------------------------------------

|(c) | Alignment of accounting policies to accrue
        for supplier incentives.
|--- | ---------------------------------------------------------------------------

|(d) | Write down of debtors following an assessment
        of the recoverable values.
|--- | --------------------------------------------------------------------------------

|(e) | Alignment of revenue recognition policies
        to recognise turnover at the date of departure.
|--- | -------------------------------------------------------------------------------------------------

F-34

---



Back to Financials

LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

16.
        INVESTMENTS (continued)

The Destination Group(continued)

|(g) | Recognition of unprovided amounts in respect
        of airline creditor accounts.
|--- | ----------------------------------------------------------------------------------

|(h) | Recognition of provision for tax liability
        on fair value adjustments.
|--- | -----------------------------------------------------------------------------

The
    Destination Group made a profit on ordinary activities after tax of £58,000
    for the year ended April 30, 2002.

The
    summarised profit and loss account for the period from May 1, 2002 to the
    date of acquisition is as follows:

|                  |  | Period ended
    June 12, 2002 |  
|----------------- |  | ------------------------------ | -
|                  |  |                                |  
|                  |  | (£000)                         |  
|                  |  |                                |  
|Turnover          |  | 542                            |  
|Operating profit  |  | 38                             |  
|Profit before tax |  | 41                             |  
|Taxation          |  | (12                            | )
|                  |  |                                |  
|Profit after tax  |  | 29                             |  
|                  |  |                                |  

There
    were no recognised gains and losses in the period ended June 12, 2002, other
    than the profit of £29,000.

The
    costs incurred in the year ended September 30, 2002 of integrating the Destination
    Group into the lastminute.com Group were not significant.

Destination
    Group contributed £2,977,000 to the Group’s operating cashflows
    in the year ended September 30, 2002.

Travelprice.com Group

On
    July 22, 2002 the Group announced the acquisition of the Travelprice.com
    Group (comprising Travelprice.com SA and its subsidiary undertakings) for
    consideration of £28.3 million. The transaction completed on August
    29, 2002. The consideration comprised:

|i) | 28,000,783 new Ordinary Shares in lastminute.com
        plc issued at £0.92 on August 29, 2002.
|-- | ------------------------------------------------------------------------------------------------
|   |                                                                                                 

|ii) | A second issue of up to 6,644,305 new Ordinary
        Shares in lastminute.com plc to be issued on or before February 28, 2003
        in respect of warrants outstanding over 4,620,739 Travelprice.com SA
        ordinary shares. The cost, net of proceeds, has been provisionally assessed
        by the Directors at £2,540,000.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
    primary reasons for the acquisition were that it was earnings enhancing (after
    anticipated synergies and before goodwill amortisation) in the first full
    financial year following acquisition, provides the opportunity to develop
    margin and operating synergies, reinforces the lastminute.com position as
    the leading online travel and leisure group in France and establishes lastminute.com
    as the leading online travel and leisure group in Italy.

The
    investment in the Travelprice.com Group was included in the consolidated
    balance sheet using the acquisition method of accounting at its fair value
    at July 22, 2002. Goodwill arising on the acquisition of the Travelselect.com
    Group has been capitalised and is being amortised over four years.

F-35

---



Back to Financials

LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

16. INVESTMENTS(continued)

Travelprice.com Group (continued)

Analysis of the acquisition of the
    Travelprice.com Group

|                                              |  | Book value |   | Accounting policy alignments |      | Revaluations |      | Fair Value |  
|--------------------------------------------- |  | ---------- | - | ---------------------------- | ---- | ------------ | ---- | ---------- | -
|                                              |  |            |   |                              |      |              |      |            |  
|                                              |  |            |   |                              |      |              |      |            |  
|Intangible
          assets                   |  | 24         |   |                             |      | (24          | )(a) |           |  
|Tangible
          fixed assets               |  | 1,125      |   |                             |      | (195         | )(b) | 930        |  
|Debtors                                       |  | 4,408      |   |                             |      |             |      | 4,408      |  
|Cash                                          |  | 9,216      |   |                             |      |             |      | 9,216      |  
|Creditors                                     |  | (13,046    | ) | (312                         | )(c) |             |      | (13,358    | )
|Provisions                                    |  | (684       | ) |                             |      | (131         | )(d) | (815       | )
|                                              |  |            |   |                              |      |              |      |            |  
|Net
          assets / (liabilities) acquired |  | 1,043      |   | (312                         | )    | (350         | )    | 381        |  
|                                              |  |            |   |                              |      |              |      |            |  
|Goodwill
          (note 14)                  |  |            |   |                              |      |              |      | 28,997     |  
|                                              |  |            |   |                              |      |              |      |            |  
|Cost
          of acquisition                 |  |            |   |                              |      |              |      | 29,378     |  
|                                              |  |            |   |                              |      |              |      |            |  
|Satisfied
          by:                       |  |            |   |                              |      |              |      |            |  
|Issue of new
        ordinary shares          |  |            |   |                              |      |              |      | 25,761     |  
|Fair value
        of options                 |  |            |   |                              |      |              |      | 2,540      |  
|Acquisition
        costs                     |  |            |   |                              |      |              |      | 1,077      |  
|                                              |  |            |   |                              |      |              |      |            |  
|                                              |  |            |   |                              |      |              |      | 29,378     |  
|                                              |  |            |   |                              |      |              |      |            |  

Adjustments:

|(a) | Elimination of historical goodwill. | 
|--- | ----------------------------------- | 

|(b) | The value of furniture and office equipment
        has been written down based on a valuation by the Directors. | 
|--- | ---------------------------------------------------------------------------------------------------------------- | 

|(c) | Alignment of revenue recognition policies
        to recognise turnover at the date of departure. | 
|--- | ------------------------------------------------------------------------------------------------- | 

|(d) | Recognition of unprovided amounts in respect
        of an onerous leasehold contract. | 
|--- | -------------------------------------------------------------------------------------- | 

The
    Travelprice.com Group made a loss after tax of £14,569,000 for the
    year ended December 31, 2001. Included within this result were reorganisation
    and restructuring costs of £1,093,000.

The
    summarised profit and loss account for the period from January 1, 2002 to
    the date of acquisition is as follows:

|                          |  | Period
              ended 
        July 22,
          2002 |  
|------------------------- |  | ----------------------------------------------------------- | -
|                          |  |                                                             |  
|                          |  | (£000)                                                      |  
|                          |  |                                                             |  
|Turnover                  |  | 3,871                                                       |  
|Operating
          loss  |  | (4,039                                                      | )
|Loss
          before tax |  | (5,482                                                      | )
|Taxation                  |  |                                                            |  
|                          |  |                                                             |  
|Loss
          after tax  |  | (5,482                                                      | )
|                          |  |                                                             |  

There
    were no recognised gains and losses in the period ended July 22, 2002, other
    than the loss of £5,482,000.

Included
    within the above are reorganisation and restructuring costs of £1,384,000.

For
    the period July 23, 2002 to September 30, 2002 Travelprice.com Group utilised £2,310,000
    of the Group’s operating cashflows.

F-36

---



Back to Financials

LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

16. INVESTMENTS(continued)

The
    table below shows the revenues and losses for the years ended September 30,
    2001, 2002 and 2003 as if the Travelselect.com Group, the Destination Group,
    the Travelprice.com Group, eXhilaration, the holiday autos group and Lastminute
    Network S.L. had been part of the Group at the start of the year preceding
    the respective year of their acquisition.

|                                             |  | Year endedSeptember
          30, |   
|-------------------------------------------- |  | --------------------------------- | --
|                                             |  |                                   |   
|                                             |  | 2001                              |   
|                                             |  |                                   |   
|                                             |  | (£000)                            |   
|                                             |  |                                   |   
|Turnover                                     |  | 29,583                            |   
|Loss
          for the financial year        |  | (67,711                           | ) 
|                                             |  |                                   |   
|Loss
          per share  basic and diluted |  | (29.91                            | )p
|                                             |  |                                   |   

17.
        STOCKS

|                                                |  | At
            September 30, | 
|----------------------------------------------- |  | ---------------------------- | 
|                                                |  |                              | 
|                                                |  | 2002                         | 
|                                                |  |                              | 
|                                                |  | (£000)                       | 
|                                                |  |                              | 
|Entertainment
          tickets held for resale |  | 75                           | 
|                                                |  |                              | 

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

18.
        DEBTORS

|                                         |  | At
    September 30, | 
|---------------------------------------- |  | -------------------- | 
|                                         |  |                      | 
|                                         |  | 2002                 | 
|                                         |  |                      | 
|                                         |  | (£000)               | 
|                                         |  |                      | 
|Trade
          debtors                  |  | 8,314                | 
|Other
          debtors                  |  | 4,996                | 
|Deferred
          tax (see note 21)     |  |                     | 
|Prepayments
          and accrued income |  | 2,791                | 
|                                         |  |                      | 
|                                         |  | 16,101               | 
|                                         |  |                      | 

Trade debtors are stated net of provisions for
bad and doubtful debts of £2,098,000 (2002: £1,262,000).

19.
        CREDITORS: amounts falling due within one year

|                                                                                          |  | At
            September 30, | 
|----------------------------------------------------------------------------------------- |  | ---------------------------- | 
|                                                                                          |  |                              | 
|                                                                                          |  | 2002                         | 
|                                                                                          |  |                              | 
|                                                                                          |  | (£000)                       | 
|                                                                                          |  |                              | 
|Trade
          creditors                                                                 |  | 38,510                       | 
|Other
          taxes and social security costs                                           |  | 762                          | 
|Other
          creditors                                                                 |  | 3,879                        | 
|Consideration
        payable in relation to acquisition ofsubsidiary
        undertaking |  |                             | 
|Accruals
          and deferred income                                                    |  | 10,384                       | 
|Obligations
          under finance leases                                                |  | 155                          | 
|                                                                                          |  |                              | 
|                                                                                          |  | 53,690                       | 
|                                                                                          |  |                              | 

F-37

---



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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

20. CREDITORS: amounts falling
      due after more than one year

|                                           |  | At
            September 30, | 
|------------------------------------------ |  | ---------------------------- | 
|                                           |  |                              | 
|                                           |  | 2002                         | 
|                                           |  |                              | 
|                                           |  | (£000)                       | 
|                                           |  |                              | 
|Convertible
          Bond due 2008        |  |                             | 
|Obligations
          under finance leases |  | 42                           | 
|                                           |  |                              | 
|                                           |  | 42                           | 
|                                           |  |                              | 

The €102.6
    million 6% coupon Convertible Bonds (issued in September 2003) are unsecured
    liabilities of the Group and mature on September 12, 2008. The Bonds are
    convertible into fully paid Ordinary Shares at a conversion price of 364.5p
    per Ordinary Share subject to partial redemption in cash not exceeding 38%
    of the principal redeemed and to the right of the Company to make a cash
    alternative election upon the exercise of conversion rights. Conversion is
    at the Bondholder’s option at any time from October 23, 2003 until
6 days prior to final maturity of the Convertible Bonds.

|The
          Group may at its election redeem the Bonds at their principal amount,
    together with interest accrued to the redemption date, which may be | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|i) | at any time on or after October 3, 2006
          if the share price is at least 150% of the Conversion price for more
          than 20 days during any period of 30 consecutive dealing days prior
          to such election; or
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|ii) | at any time if at least 85% of the original
          issued Bonds have been exercised or purchased or cancelled. | 
|--- | ----------------------------------------------------------------------------------------------------------------- | 

21. DEFERRED
        TAX ASSET

Included
      within debtors due within one year:

|                                                                           |  | 2002   |  | 2003 | 
|-------------------------------------------------------------------------- |  | ------ |  | ---- | 
|                                                                           |  |        |  |      | 
|                                                                           |  | (£000) | 
|                                                                           |  |        |  |      | 
|At
          October 1,                                                    |  |       |  |     | 
|Credit
          in the profit and loss account for the year (see note 11) |  |       |  | 794  | 
|                                                                           |  |        |  |      | 
|At
          September 30 — tax losses carried forward                     |  |       |  | 794  | 
|                                                                           |  |        |  |      | 

22. LEASE COMMITMENTS

|(a) | Annual commitments under non-cancellable
        operating leases are as follows:
|--- | ---------------------------------------------------------------------------------

|                                         |  | Land
            andbuildingsAt September 30, |  | Other
              operating leasesAt September 30, | 
|---------------------------------------- |  | --------------------------------------------- |  | ---------------------------------------------------- | 
|                                         |  |                                               |  |                                                      | 
|                                         |  | 2002                                          |  | 2003                                                 | 
|                                         |  |                                               |  |                                                      | 
|                                         |  | (£000)                                        |  | (£000)                                               | 
|Operating
          leases which expire: |  |                                               |  |                                                      | 
|Within
          one year                |  | 447                                           |  | 343                                                  | 
|In
          one to two years            |  | 365                                           |  | 902                                                  | 
|In
          two to three years          |  | 867                                           |  | 987                                                  | 
|In
          three to four years         |  | 18                                            |  | 188                                                  | 
|In
          four to five years          |  | 190                                           |  | 221                                                  | 
|Over
          five years                |  | 193                                           |  |                                                     | 
|                                         |  |                                               |  |                                                      | 
|                                         |  | 2,080                                         |  | 2,641                                                | 
|                                         |  |                                               |  |                                                      | 

F-38

---



Back to Financials

LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

22. LEASE COMMITMENTS(continued)

|(b) | Total commitments under non-cancellable
        operating leases are as follows: | 
|--- | -------------------------------------------------------------------------------- | 

|                              |  | Land
              and buildingsAt September 30,
    2003 |  | Other
              operating leasesAt September 30,2003 | 
|----------------------------- |  | --------------------------------------------------------- |  | -------------------------------------------------------- | 
|                              |  |                                                           |  |                                                          | 
|                              |  | (£000)                                                    |  | (£000)                                                   | 
|                              |  |                                                           |  |                                                          | 
|Within
          one year     |  | 2,641                                                     |  | 2,490                                                    | 
|One
          to two years    |  | 2,298                                                     |  | 1,416                                                    | 
|Two
          to three years  |  | 1,396                                                     |  | 431                                                      | 
|Three
          to four years |  | 409                                                       |  | 156                                                      | 
|Four
          to five years  |  | 221                                                       |  | 29                                                       | 
|Over
          five years     |  |                                                          |  |                                                         | 
|                              |  |                                                           |  |                                                          | 
|                              |  | 6,965                                                     |  | 4,522                                                    | 
|                              |  |                                                           |  |                                                          | 

|(c) | Amounts due under non-cancellable
        finance leases are as follows: | 
|--- | ------------------------------------------------------------------------ | 

|                                                            |  | At September
              30,2002 |   | At September
              30, 2003 |  
|----------------------------------------------------------- |  | ---------------------------------- | - | ----------------------------------- | -
|                                                            |  |                                    |   |                                     |  
|                                                            |  | (£000)                             |   | (£000)                              |  
|                                                            |  |                                    |   |                                     |  
|Within
          one year                                   |  | 161                                |   | 969                                 |  
|In
          one to two years                               |  | 42                                 |   | 877                                 |  
|In
          two to three years                             |  | 2                                  |   | 494                                 |  
|                                                            |  |                                    |   |                                     |  
|                                                            |  | 205                                |   | 2,340                               |  
|Less:
          Finance charges allocated to future periods |  | (8                                 | ) | (274                                | )
|                                                            |  |                                    |   |                                     |  
|                                                            |  | 197                                |   | 2,066                               |  
|                                                            |  |                                    |   |                                     |  

23.
        PROVISIONS FOR LIABILITIES AND CHARGES

|                                                 |  | Share
              option provisions |   | Onerous
    contract |   | Restructuring |   | Integration
  (see note 5) |  | Other   |   | Total  |  
|------------------------------------------------ |  | ------------------------------------- | - | -------------------- | - | ------------- | - | -------------------------- |  | ------- | - | ------ | -
|                                                 |  |                                       |   |                      |   |               |   |                            |  |         |   |        |  
|                                                 |  | (£000)                                |  
|                                                 |  |                                       |   |                      |   |               |   |                            |  |         |   |        |  
|At
          October 1, 2000                     |  | 688                                   |   | 452                  |   |              |   |                           |  | 270     |   | 1,410  |  
|Provided
          during the year               |  | 33                                    |   |                     |   |              |   |                           |  | 267     |   | 300    |  
|Utilised
          during the year               |  | (94                                   | ) | (148                 | ) |              |   |                           |  | (161    | ) | (403   | )
|Released
          during the year               |  | (601                                  | ) |                     |   |              |   |                           |  | (163    | ) | (764   | )
|                                                 |  |                                       |   |                      |   |               |   |                            |  |         |   |        |  
|At
          September 30, 2001                  |  | 26                                    |   | 304                  |   |              |   |                           |  | 213     |   | 543    |  
|Provided
          during the year               |  | 259                                   |   |                     |   | 3,094         |   |                           |  |        |   | 3,353  |  
|Utilised
          during the year               |  |                                      |   | (184                 | ) | (378          | ) |                           |  | (7      | ) | (569   | )
|Released
          during the year               |  |                                      |   |                     |   |              |   |                           |  | (28     | ) | (28    | )
|Acquisition
          of subsidiary undertakings |  |                                      |   | 187                  |   |              |   |                           |  | 628     |   | 815    |  
|                                                 |  |                                       |   |                      |   |               |   |                            |  |         |   |        |  
|At
          September 30, 2002                  |  | 285                                   |   | 307                  |   | 2,716         |   |                           |  | 806     |   | 4,114  |  
|Provided
          during the year               |  | 1,083                                 |   | 3,329                |   |              |   | 858                        |  |       |   | 5,270  |  
|Utilised
          during the year               |  | (54                                   | ) | (1,907               | ) | (2,716        | ) |                           |  | (806    | ) | (5,483 | )
|Released
          during the year               |  | (9                                    | ) |                     |   |              |   |                           |  |        |   | (9     | )
|                                                 |  |                                       |   |                      |   |               |   |                            |  |         |   |        |  
|At
          September 30, 2003                  |  | 1,305                                 |   | 1,729                |   |              |   | 858                        |  |        |   | 3,892  |  
|                                                 |  |                                       |   |                      |   |               |   |                            |  |         |   |        |  

The
    Group provides for National Insurance contributions on options granted under
    the unapproved share option scheme. A provision is made at a rate of 12.8%,
    over the vesting period of the options 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. This provision is utilised
    as options are exercised.

Provisions
    are recognised for onerous lease contracts and are based on the future charges
    of the leases over the remaining lease periods.

The
    restructuring provision related to costs associated with restructuring the
    French and Italian businesses.

The
    integration provision relates to costs associated with the integration of
    holiday autos. These costs primarily consist of a reduction in headcount,
    consolidation of properties and termination of certain contracts.

Other
    includes the provision for Award Minutes, which were utilised during the
    year.

F-39

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

24.
  FINANCIAL INSTRUMENTS

The
    Group finances its operations by a mixture of equities, convertible debt
    and overdraft facility. In addition various financial assets and liabilities,
for example trade debtors, trade creditors, and other creditors and accruals.

As
    permitted by FRS 13, Derivatives and Other Financial Instruments: Disclosures,
    short-term debtors and creditors have been excluded from these disclosures,
other than in relation to the currency risks.

Interest rate risk

Interest payable on the €102.6 million eurobond is fixed at 6%.  At September 30, 2003, €90
    million was invested at fixed interest rates of between 4% to 6% with maturity
dates from October 2003 to March 2004. These funds can be accessed on demand.

The remaining cash balances are held
    on short-term deposits with AAA rated credit institutions.  These
deposits earn interest at a floating rate that follows LIBOR.

Interest rate profile of financial assets:

|                             |  | At September
            30,
|---------------------------- |  | ----------------------------
|                             |  |                             
|                             |  |                             
|                             |  |                             
|                             |  |                             
|                             |  |                             
|                             | 
|Sterling                     |  |                             
|US
          dollars         |  |                             
|Euro                         |  |                             
|Swedish
          krona      |  |                             
|Australian
          dollars |  |                             
|Swiss
          francs       |  |                             
|South
          African rand |  |                             
|Other                        |  |                             
|                             |  |                             
|                             |  |                             
|                             |  |                             

At September 30, 2002, there were no fixed rate financial assets.

Interest rate profile of financial liabilities:

|                                                       |  |  | At September
    30, |  
|------------------------------------------------------ |  |  | -------------------- | -
|                                                       |  |  |                      |  
|                                                       |  |  | 2002                 |  
|                                                       |  |  |                      |  
|                                                       |  |  | (£000)               |  
|                                                       | 
|Fixed
    rate financial liabilities                   | 
|Euro                                                   |  |  |                     |  
|Sterling                                               |  |  | (197                 | )
|                                                       |  |  |                      |  
|Total                                                  |  |  | (197                 | )
|                                                       |  |  |                      |  
|Weighted average period (years)                        |  |  | 1.3                  |  
|Weighted average interest rate                         |  |  | 5.3                  | %
|                                                       |  |  |                      |  
|Financial
    Liabilities on which no interest is paid | 
|Sterling                                               |  |  | (307                 | )
|                                                       |  |  |                      |  
|Total                                                  |  |  | (307                 | )
|                                                       |  |  |                      |  
|Weighted average period (years)                        |  |  | 0.9                  |  
|Weighted average interest rate                         |  |  | N/a                  |  

F-40

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Back to Financials

LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

24. FINANCIAL INSTRUMENTS(continued)

Liquidity risk

On March 21, 2000, the Company completed an initial public offering of Ordinary Shares. Since that time the Group’s policy has been to hold cash in appropriate short term funds to enable it to finance its operations. The Group's policy is to finance its expansion through a mixture of the sale of equity share capital and long term debt.

The Group also has an undrawn £10
million unsecured overdraft facility which is repayable on demand.

Currency risk: structural

As a result of the significant investment
    in its Euro zone subsidiaries, the Group’s balance sheet could be significantly
    affected by movements in the euro/sterling exchange rate. The Group has not
    sought to hedge against this structural currency risk due to the reasonably
    stable nature of the relationship between the two currencies. Other operations
    denominated in foreign currencies giving rise to structural currency exposure
    are not significant to the Group currently, and 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 that are not denominated in the functional currency of the transacting company (see table below).  The Group’s policy is to hedge against significant US dollar exposures.  Gains and losses on instruments used for hedging are not recognised until the hedged position is recognised.

At 30 September 2003, the Group had
    outstanding foreign exchange contracts, entered into in the ordinary course
    of business, with an underlying sterling equivalent value of £9.0 million (2002: £nil)
and, with the last expiry date of December 22, 2003.

Unrecognised gains and losses on instruments used for hedging, and the movements therein, are as follows:

|                                                      |  |  | At September 30, | 
|----------------------------------------------------- |  |  | ---------------- | 
|                                                      |  |  |                  | 
|                                                      |  |  | 2002             | 
|                                                      |  |  |                  | 
|                                                      |  |  | Losses  (£000)   | 
|                                                      | 
|Unrecognised losses on hedges at end of the year      |  |  | —                | 
|                                                      |  |  |                  | 
|Of which:                                             |  |  |                  | 
|Losses expected to be recognised
    in the next year |  |  | —                | 
|                                                      |  |  |                  | 

The table below shows the Group’s
    currency exposures that give rise to the net currency gains and losses that
    are recognised in the profit and loss account. Such exposures comprise the
    monetary assets and liabilities of the Group that are not denominated in
the functional currency of operations.

|                                          |  | Euro   |  | US
    dollar |  | Swedishkrona |  | Australian
  dollar |  | Swiss
    francs |  | South
    African
    rand |  | Other |  | Total  | 
|----------------------------------------- |  | ------ |  | ------------- |  | ------------ |  | ------------------- |  | ---------------- |  | -------------------------- |  | ----- |  | ------ | 
|                                          |  |        |  |               |  |              |  |                     |  |                  |  |                            |  |       |  |        | 
|                                          |  | (£000) | 
|                                          | 
|Functional currency of Company operations |  |        |  |               |  |              |  |                     |  |                  |  |                            |  |       |  |        | 
|As at September 30, 2001                  |  |        |  |               |  |              |  |                     |  |                  |  |                            |  |       |  |        | 
|Sterling                                  |  | 7,252  |  | 1,162         |  | 65           |  | 27                  |  |                 |  |                           |  |      |  | 8,506  | 
|                                          |  |        |  |               |  |              |  |                     |  |                  |  |                            |  |       |  |        | 
|As at September 30, 2002                  |  |        |  |               |  |              |  |                     |  |                  |  |                            |  |       |  |        | 
|Sterling                                  |  | 895    |  | 1,210         |  | 10           |  | 69                  |  |                 |  |                           |  | 6     |  | 2,190  | 
|                                          |  |        |  |               |  |              |  |                     |  |                  |  |                            |  |       |  |        | 
|As at September 30, 2003                  |  |        |  |               |  |              |  |                     |  |                  |  |                            |  |       |  |        | 
|Sterling                                  |  | 71,096 |  | 1,192         |  | 199          |  | 170                 |  | 259              |  | 424                        |  | 149   |  | 73,489 | 
|                                          |  |        |  |               |  |              |  |                     |  |                  |  |                            |  |       |  |        | 

F-41

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Back to Financials

LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

24. FINANCIAL INSTRUMENTS(continued)

Fair values of financial assets and financial liabilities

The table below shows a comparison
    of the book values and the estimated fair values of the Group’s financial
assets, liabilities and associated derivative instruments.

|                                   |  |  | Book valueSeptember 30,2002 |   |  | Fair valueSeptember 30,2002 |   |  | Book valueSeptember 30,2003 |   |  | Fair valueSeptember 30,2003 |  
|---------------------------------- |  |  | --------------------------- | - |  | --------------------------- | - |  | --------------------------- | - |  | --------------------------- | -
|                                   |  |  |                             |   |  |                             |   |  |                             |   |  |                             |  
|                                   |  |  | (£000)                      |  
|                                   | 
|Cash                               |  |  | 49,617                      |   |  | 49,617                      |   |  | 112,741                     |   |  | 112,741                     |  
|Finance leases                     |  |  | (197                        | ) |  | (197                        | ) |  | (2,067                      | ) |  | (2,067                      | )
|Convertible bond                   |  |  |                            |   |  |                            |   |  | (69,264                     | ) |  | (69,264                     | )
|Onerous lease contract             |  |  | (307                        | ) |  | (307                        | ) |  | (1,729                      | ) |  | (1,729                      | )
|Forward foreign currency contracts |  |  |                            |   |  |                            |   |  |                            |   |  | (136                        | )
|                                   |  |  |                             |   |  |                             |   |  |                             |   |  |                             |  

The fair value of the lease contracts are estimated by discounting the future cash flows to the net present value.  The fair value of forward exchange contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles.

The fair value of the convertible bond, which is the result of a private placement, has been determined using the appropriate forward interest and currency exchange rates prevailing at the year-end.

25. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

|(a) | Reconciliation of operating loss to net cash outflow from operating activities
|--- | ------------------------------------------------------------------------------

|                                                      | 
|----------------------------------------------------- | 
|                                                      | 
|                                                      | 
|                                                      | 
|                                                      | 
|                                                      | 
|                                                      | 
|Operating loss                                        | 
|Depreciation                                          | 
|Amortisation of goodwill                              | 
|(Increase)/decrease in debtors                        | 
|Decrease/(increase) in stocks                         | 
|Increase in creditors                                 | 
|(Decrease)/increase in provisions                     | 
|Share-based compensation                              | 
|Profit on sale of fixed assets                        | 
|                                                      | 
|Net cash (outflow) / inflow from operating activities | 
|                                                      | 



|(b) | Analysis of net funds position
|--- | ------------------------------

|                         | 
|------------------------ | 
|                         | 
|                         | 
|                         | 
|                         | 
|At October 1, 2000       | 
|Cash flow                | 
|                         | 
|At September 30, 2001    | 
|Cash flow                | 
|Other non cash movements | 
|                         | 
|At September 30, 2002    | 
|Cash flow                | 
|Other non cash movements | 
|Exchange differences     | 
|                         | 
|At September 30, 2003    | 
|                         | 

---

|(1) | Short term deposits are included within cash
    at bank and in hand in the balance sheet.
|--- | ------------------------------------------------------------------------------------------

F-42

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Back to Financials

LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

25. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS(continued)

|(c) | Liquid resources comprise money held by the Group’s bankers on short term deposits totalling £15.7 million (2002: £10.1 million).  £5.2 million (2002: £2.7 million) of this is held as a financial guarantee for the Group to comply with the Civil Aviation Authority’s terms and conditions on an Air Travel Organiser’s Licence, £nil million (2002: £2.0 million) as a financial guarantee in relation to IATA, and £10.2 million (2002: £2.9
million) is held as a financial guarantee for other travel licences.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

26. COMMITMENTS AND CONTINGENCIES

The Group had no material guarantees to third parties at September 30, 2001, 2002 and 2003.

27. RELATED PARTY TRANSACTIONS

There have been no related party transactions entered into during the year which require disclosure under FRS 8.

28. COMPANIES ACT 1985

These financial statements are not the Company’s statutory accounts within the meaning of section 240 of the Companies Act 1985 of Great Britain. Audited statutory financial statements have been prepared and delivered to the Registrar of Companies for England and Wales for lastminute.com plc for the years ended September 30, 2001, 2002 and 2003. Unqualified audit opinions were given for each of these financial statements.

29. POST BALANCE SHEET EVENTS

In December 2003 the Group announced
    the acquisition of Med Hotels (comprising of Med Hotels Limited and Travel
    Bargains Limited) for an initial consideration of £16.1 million which will be satisfied by £8.0
million in cash and the issue of 2,941,176 new shares in lastminute.com plc.

In January 2004 the Group announced
    the acquisition of a leading UK hotel booking agency, First Option Hotel
Reservations Ltd (First Option) for £12.1 million.

On
    Wednesday  March 3, 2004 lastminute.com announced its proposal
    to acquire Online Travel Corporation plc, an online travel services supplier
    and retailer. Online Travel Corporation plc provides a comprehensive range
    of web based travel products for leisure and corporate clients. The offer
    made to Online Travel Corporation plc shareholders was 0.1319 lastminute.com
    shares for each Online Travel Corporation plc share held, valuing each Online
    Travel Corporation plc share at 31p per share.The
    offer, if accepted in full, will result in the issue of approximately 24.5
million new lastminute.com shares.

30. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The financial statements are prepared
    in accordance with accounting principles generally accepted in the United
    Kingdom (“UK GAAP”), which differ in certain respects from those generally accepted in the United States (“US GAAP”).
The significant differences as they apply to the Company are summarised below.

Company National Insurance contributions on share options

The Group, under UK GAAP, provides
    for its National Insurance contributions on options granted on or after April
    6, 1999 under its unapproved share option schemes. In previous periods 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. The National Insurance employers’ contribution
rate changed to 11.8% on April 6, 2001.

Following the issue of UITF published
    Abstract 25, “National Insurance on share option gains”, the
    Group changed its accounting policy with respect to National Insurance on
    share options and now provides for the expected liability over the period
of performance.

US GAAP requires that payroll taxes incurred in connection with stock-based compensation be recognised on the date of the event that triggers the payment, i.e. the date of the exercise. No provision would therefore be made for the expected liability before the exercise date.

F-43

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

Restructuring provision

Under UK GAAP, the costs of a fundamental
    reorganisation or restructuring are shown separately on the face of the profit
    and loss account after operating loss and before interest. In the year ended
    September 30, 2002, the Group charged £3,094,000 of costs relating
    to a fundamental reorganisation following the acquisition of the Travelprice.com
Group.

Under US GAAP, £2,246,000 of these costs would have been included in operating expenses. The remaining costs of £848,000
    would have been included in the fair value of assets and liabilities acquired,
as explained below.

Goodwill

eXhilaration Acquisition

On November 15, 2002, lastminute.com
    plc completed the acquisition of the entire issued share capital of Exhilaration
    Incentive Management Limited (“eXhilaration”). Control of eXhilaration passed from the vendors to lastminute.com plc on November 15, 2002. As consideration for that acquisition lastminute.com plc issued 955,110 Ordinary Shares at a market value of £1.06. The shares were valued at the date of transfer of control. In addition an estimate of the contingent consideration payable has been made of £nil as required under UK GAAP. Goodwill arising on the transaction amounted to £1.4
    million under UK GAAP and is being amortised on a straight-line basis over
four years.

Under US GAAP, the shares would have
    been valued at the average of the quoted price for a reasonable period before
    and after the terms of the acquisition were agreed and announced. Hence,
    under US GAAP, the shares issued would have been recorded at £1.07 per share. The effect of using different share prices is to increase the consideration paid for eXhilaration by £12,000.
    Under US GAAP, goodwill arising on acquisitions from July 1, 2001 would not
    be amortised, but would be subject to an annual impairment review. There
has been no impairment in the period ended September 30, 2003.

holiday autos group Acquisition

On March 26, 2003, lastminute.com
    plc announced the acquisition of the entire issued share capital of holiday
    autos group. Control of holiday autos group passed from the vendors to lastminute.com
    plc on March 26, 2003. As consideration for that acquisition lastminute.com
    plc issued 27,191,771 Ordinary Shares at a market value of £0.845.  These shares were valued at the date of transfer of control.  In addition, £16.0 million in cash was paid which was part funded by a placing of 14,814,815 Ordinary Shares at a market value of £0.81, and further consideration of £1.6 million is payable in Ordinary Shares or cash at the option of lastminute.com plc. An estimate of the contingent consideration
payable has also been made of £1.7 million, as required under UK GAAP. Provisional goodwill arising on the transaction amounted to £77.9
million under UK GAAP and is being amortised on a straight-line basis over four
years.

Under US GAAP, the shares issued
    would have been recorded at £0.87 per share.  The effect of using different share prices would be to increase the consideration paid for holiday autos group by £789,000. Under US GAAP, contingent consideration would not be recognised until the contingent criteria have been satisfied reducing the consideration paid for holiday autos group by £1.7 million. In addition, a deferred taxation liability would be recognised under US GAAP in respect of the separable intangible assets acquired, which would result in an increase in goodwill of £5,971,000.
    These differences have been reflected in the valuation of intangible assets
    acquired shown below. Under US GAAP, goodwill arising on acquisitions from
    July 1, 2001 would not be amortised, but would be subject to an annual impairment
review. There has been no impairment in the period ended September 30, 2003.

Values would be attributable to intangible assets under US GAAP as follows:

|                                   |  |  | At September 30,2003 | 
|---------------------------------- |  |  | -------------------- | 
|                                   |  |  |                      | 
|                                   |  |  | (£000)               | 
|Fixed assets
    Intangible assets |  |  |                      | 
|Trademarks/trade names             |  |  | 16,851               | 
|Supplier relations                 |  |  | 3,051                | 
|Goodwill                           |  |  | 63,026               | 
|                                   |  |  |                      | 
|                                   |  |  | 82,928               | 
|                                   |  |  |                      | 

F-44

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

The intangible assets recorded for trademarks and supplier relations would be amortised on a straight-line basis over their useful lives of four years.

Lastminute Network S.L.

On September 15, 2003, lastminute.com plc acquired 70% of the issued share capital of Lastminute Network S.L., increasing its interest to 100%. As consideration for that acquisition lastminute.com plc paid €3.0 million in cash on October 8, 2003, and further consideration of €3.0 million was paid in cash on December 15, 2003.

Goodwill arising on the transaction amounted to £4.9 million under UK GAAP and is being amortised on a straight-line basis over four years.

Under US GAAP, goodwill arising on acquisitions from July 1, 2001 would not be amortised, but would be subject to an annual impairment review.  There has been no impairment in the period ended September 30, 2003.

Fair value adjustments

In the year ended September 30, 2003 certain adjustments to fair values and acquisition costs recognised on acquisitions made in 2002 were on a provisional basis.  During the 12 months since acquisition there have been a number of adjustments to amend these assessments, resulting in additional goodwill of £3,662,000 being recognised under UK GAAP.  These revisions are mainly in respect of onerous contracts and unprovided liabilities.  This additional goodwill is being amortised on a straight-line basis over four years.

Under US GAAP, goodwill arising on acquisitions from July 1, 2001 is not amortised, but subject to annual impairment review. There has been no impairment in the period ended September 30, 2002 or 2003.

Additional goodwill recognised as follows:

|                       |  | At
          September 30,2003 | 
|---------------------- |  | ------------------------------ | 
|                       |  |                                | 
|                       |  | (£000)                         | 
|                       |  |                                | 
|Goodwill               |  |                                | 
|Travelprice.com Group  |  | 2,100                          | 
|Travelselect.com Group |  | 600                            | 
|Destination Group      |  | 962                            | 
|                       |  |                                | 
|                       |  | 3,662                          | 
|                       |  |                                | 

Travelselect.com Acquisition

On April 8, 2002, lastminute.com plc completed the acquisition of the entire issued share capital of the Travelselect.com Group. Control of Travelselect.com passed from the vendors to lastminute.com plc on April 8, 2002. As consideration for that acquisition lastminute.com plc issued 13,194,868, £0.01 Ordinary Shares at a market value of £0.61. The Shares were valued at the date of transfer of control. In addition, 579,374, £0.01 Ordinary Shares were issued at a market value of £0.93 on September 25, 2002 and a further £1.7 million is payable in Ordinary Shares or loan notes on March 31, 2003. An estimate of the contingent consideration payable has also been made of £400,000, as
required under UK GAAP. Goodwill arising on the transaction amounted to £13.7 million under UK GAAP and is being amortised on a straight-line basis over four years.

Under US GAAP, the Shares would have been valued at the average of the quoted price for a reasonable period before and after the terms of the acquisition were agreed and announced. Hence, under US GAAP, the Shares issued would have been recorded at £0.63 per Share. The effect of using different share prices would increase the consideration paid for Travelselect.com by £248,000. Under US GAAP, the contingent consideration would not be recorded until the contingent criteria have been satisfied, which would reduce the consideration by £400,000. In addition, a deferred taxation liability would be recognised under US GAAP in respect of the separable intangible assets acquired, which would result in an
increase in goodwill of £1,730,000. These differences have been reflected in the valuation of intangible assets acquired shown below. Under US GAAP, goodwill arising on acquisitions from July 1, 2001 would not be amortised, but would be subject to an annual impairment review. There has been no impairment in the periods ended September 30, 2002 or 2003.

F-45

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Back to Financials

LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

Values would be attributable to intangible assets under US GAAP as follows:

|                                    |  | At
          September 30,2002 | 
|----------------------------------- |  | ------------------------------ | 
|                                    |  |                                | 
|                                    |  | (£000)                         | 
|                                    |  |                                | 
|Fixed assetsIntangible
      assets |  |                                | 
|Trademarks/trade names              |  | 4,303                          | 
|Supplier relations                  |  | 1,464                          | 
|Goodwill                            |  | 9,529                          | 
|                                    |  |                                | 
|                                    |  | 15,296                         | 
|                                    |  |                                | 

The intangible assets recorded for trademarks and supplier relations would be amortised on a straight-line basis over their useful lives of four years.

The Destination Group Acquisition

On June 12, 2002, lastminute.com plc completed the acquisition of the entire issued share capital of the Destination Group. Control of the Destination Group passed from the vendors to lastminute.com plc on June 12, 2002. As consideration for that acquisition lastminute.com plc issued 4,835,298, £0.01 Ordinary Shares at a market value of £0.84 and paid £8.0 million in cash raised through placing a further 9,638,555, £0.01 Ordinary Shares at a market value of £0.83. These Shares were valued at the date of transfer of control. In addition, an estimate of the contingent consideration payable has been made of £1.5 million as required under UK GAAP. Goodwill arising on the transaction
amounted to £13.4 million under UK GAAP and is being amortised on a straight-line basis over four years.

Under US GAAP, the Shares issued would have been recorded at £0.86 per Share. The effect of using different share prices would increase the consideration paid for Destination Group by £81,000. Under US GAAP, contingent consideration would not be recognised until the contingent criteria have been satisfied which would reduce the consideration paid for Destination Group by £1,500,000. In addition, a deferred taxation liability would be recognised under US GAAP in respect of the separable intangible assets acquired, which would result in an increase in goodwill by £2,568,000. Under US GAAP, goodwill arising on acquisitions from July 1, 2001 would not be amortised, but would be subject to an
annual impairment review. There has been no impairment in the period ended September 30, 2002 or 2003.

Values would be attributable to intangible assets under US GAAP as follows:

|                                    |  | At
          September 30,2002 | 
|----------------------------------- |  | ------------------------------ | 
|                                    |  |                                | 
|                                    |  | (£000)                         | 
|                                    |  |                                | 
|Fixed assetsIntangible
      assets |  |                                | 
|Trademarks/trade names              |  | 3,979                          | 
|Supplier relations                  |  | 4,582                          | 
|Goodwill                            |  | 6,005                          | 
|                                    |  |                                | 
|                                    |  | 14,566                         | 
|                                    |  |                                | 

F-46

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Back to Financials

LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

30. DIFFERENCES BETWEEN UNITED
      KINGDOM AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (continued)

Goodwill(continued)

The
intangible assets recorded for trademarks and supplier relations would be amortised on a straight-line basis over their useful lives of four years.

Travelprice.com Group Acquisition

On August 29, 2002, lastminute.com plc formally completed the acquisition of the entire issued share capital of the Travelprice.com Group. Control of the Travelprice.com Group passed from the vendors to lastminute.com plc on July 22, 2002. As consideration for that acquisition lastminute.com plc issued 28,000,783, £0.01 Ordinary Shares at a market value of £0.92. The Shares were valued at the date of transfer of control. In addition up to 6,644,305, £0.01 Ordinary Shares may be issued in respect of warrants over 4,620,739  Travelprice.com SA shares. Goodwill arising on the transaction amounted to £29.0 million under UK GAAP and is being amortised on a straight-line basis over four years.

Under US GAAP the Shares issued would have been recorded at £0.93 per Share. The effect of using different share prices would increase the consideration paid for the Travelprice.com Group by £350,000. In addition, the warrants over the Travelprice.com SA shares would have been valued on the basis of the fair value method set forth in Statement of Financial Accounting Standards 123 (“SFAS 123”) and the consideration paid for the Travelprice.com Group would have increased by £146,000. Under US GAAP, account would be taken of the acquirer’s intentions when identifying and allocating fair values to the assets and liabilities acquired. Costs of £848,000 relating to the restructuring
described in note 5 of notes to the financial statements would have been included in the fair value assessment, reducing the net assets acquired accordingly. These differences have been reflected in the valuation of intangible assets acquired shown below. Under US GAAP, goodwill arising on acquisitions from July 1, 2001 would not be amortised, but would be subject to annual impairment review. There has been no impairment in the period ended September 30, 2002 or 2003.

Values would be attributable to intangible assets under US GAAP as follows:

|                                    |  | At
          September 30,2002 | 
|----------------------------------- |  | ------------------------------ | 
|                                    |  |                                | 
|                                    |  | (£000)                         | 
|                                    |  |                                | 
|Fixed assetsIntangible
      assets |  |                                | 
|Trademarks/trade names              |  | 5,650                          | 
|Customer databases                  |  | 169                            | 
|Goodwill                            |  | 24,521                         | 
|                                    |  |                                | 
|                                    |  | 30,340                         | 
|                                    |  |                                | 

The intangible assets recorded for trademarks and supplier relations would be amortised on a straight-line basis over their useful lives of four years.

Degriftour Acquisition

On October 23, 2000, lastminute.com plc formally completed the acquisition of the entire issued share capital of the Degriftour Group. Goodwill arising on the transaction amounted to £58.6 million under UK GAAP and is being amortised on a straight-line basis over four years. Effective control of Degriftour passed from the vendors to lastminute.com plc on September 30, 2000. lastminute.com plc paid, as part consideration for that acquisition, £21.1 million. 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. The Shares were valued at the date of transfer of effective control.

Under US GAAP the Shares issued would have been recorded at £1.615 per Share. The effect of using different share prices would increase the consideration paid for the Degriftour Group by £4,433,000. This has been reflected in the valuation of intangible assets acquired shown below.

F-47

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Back to Financials

LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

30. DIFFERENCES BETWEEN UNITED
      KINGDOM AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (continued)

Goodwill(continued)

| | Values would be attributable to intangible assets under US GAAP as follows:
| | ---------------------------------------------------------------------------

|                                           |  | AtSeptember 30,2000 | 
|------------------------------------------ |  | ------------------- | 
|                                           |  |                     | 
|                                           |  | (£000)              | 
|                                           |  |                     | 
|Fixed assetsIntangible
      assets        |  |                     | 
|Internally developed technological systems |  | 282                 | 
|Trademarks/trade names                     |  | 2,092               | 
|Supplier relations                         |  | 3,789               | 
|Goodwill                                   |  | 56,906              | 
|                                           |  |                     | 
|                                           |  | 63,069              | 
|                                           |  |                     | 

|In accordance with FAS 142 there is no goodwill amortisation after October 1, 2002.
|-----------------------------------------------------------------------------------

Urbanbite Acquisition

On July 13, 2001 the Group acquired Urbanbite Limited for a consideration which was satisfied by the issue of 442,151 new Ordinary Shares at 33.9p each by lastminute.com plc.  Under UK GAAP the goodwill arising of £16,000 has been capitalised and is being amortised over four years.  Under US GAAP, goodwill arising on acquisitions from July 1, 2001 would not be amortised, but would be subject to an annual impairment review.  There has been no impairment in the periods ended September 30, 2001, 2002 or 2003.

Associated Undertakings

LCC24.com

In June, 2002 the Group purchased a 20% holding in LCC24.com, the newly established German online travel agency of Lufthansa City Center for a consideration of £2,383,000 satisfied by the issue of 2,804,136 new Ordinary Shares at £0.85 each by lastminute.com plc.  Under UK GAAP the goodwill arising of £2,364,000 has been capitalised and is being amortised over four years.

Under US GAAP the Shares issued would have been recorded at £0.81 per Share. The effect of using different share prices would increase the consideration paid for the investment in LCC24.com by £112,000. Under US GAAP, goodwill arising on equity investments from July 1, 2001 would not be amortised, but would be subject to an annual impairment review.  There has been no impairment in the period ended September 30, 2002 or 2003.

Joint Ventures

Under UK GAAP joint ventures are accounted for using the gross equity method in consolidated financial statements. The Group’s share of the joint venture’s net sales, operating profit, exceptional items, interest and taxation are reflected in the appropriate line items in the Group's income statement.

Under US GAAP joint ventures would be accounted for using the equity method in consolidated financial statements. The Group’s share of the joint venture’s net income would be reported as a one line item after income tax.

Under UK GAAP, the Group has followed the requirements of UITF Abstract 31, “Exchanges of businesses or non-monetary assets for an interest in a subsidiary, joint venture or associate”, on the establishment of joint ventures where the Group contributed non-monetary assets and unrealised gains of £226,000 and £202,000 were recognised in the years ending September 30, 2000 and 2001 respectively.

F-48

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

30. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(continued)

Under US GAAP, on the establishment of joint ventures where the Group contributed non-monetary assets, no gain would have arisen and the negative goodwill arising would be amortised over the periods expected to benefit there from, being four years. On October 1, 2002, date of first application of FAS 141, the amount of unamortised negative goodwill was credited as the effect of a change in accounting principle.

Restricted Cash

Under UK GAAP, amounts on deposit in respect of guarantees are included in cash in the balance sheet.  Under US GAAP, such restricted cash would be disclosed separately in the balance sheet.

Bond

Under UK GAAP the costs associated with issuing bonds are capitalised and amortised over the period of the bond.  The liability is disclosed net of the unamortised bond issue costs.  Under US GAAP these costs are also capitalised and amortised over the period of the bond.  The liability and unamortised bond issue costs are separately disclosed.

Under UK GAAP the convertible bond is treated as a long term liability.  Under US GAAP the convertible element of the bond is treated as a stock option and taken to equity.  There is also an implied interest adjustment under US GAAP.

Derivatives

Under UK GAAP instruments used to hedge a committed or probable future transactions are not recognised until the transaction occurs.  Fair values are shown as a disclosure item.

Under US GAAP all derivatives are required to be recognised in the balance sheet as either assets or liabilities and measured at fair value.  The change in fair value is recognised in net income or other comprehensive income depending on whether a derivative is designated and qualifies as part of a hedge transaction.  US GAAP prescribes requirements for designation and documentation of hedging relationships and ongoing assessments of effectiveness in order to qualify for hedge accounting.  Lastminute.com did not meet all the requirements to hedge account and the change in fair value is therefore recognised in net income.

Stock Based Compensation

Under UK GAAP non-cash share-based compensation represents the difference between the exercise price of share options granted and the fair market value of the underlying Ordinary Shares at the date of grant. As the options granted to date gradually vest over three years, the difference is being taken to the profit and loss account as an operating expense on a straight-line basis over the vesting period.

Under US GAAP, shares with performance criteria are revalued at fair value at the end of each accounting period and the difference between the intrinsic value at grant date and accounting period end is written off over the vesting period.

Exchange Difference on Goodwill

Under UK GAAP goodwill is accounted for in Sterling and there is no exchange difference.  Under US GAAP goodwill is accounted for as a currency asset and exchange differences arising on retranslation are taken to a separate component of shareholders’ equity.

Adoption of SFAS 141 and SFAS 142

SFAS141, Business Combinations and SFAS 142 Goodwill and Other Intangible Assets became effective for the year ended September 30,2003.

As a result the goodwill amortisation charge was reduced by £14.7 million in the year ended September 30, 2003 under US GAAP

F-49

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

in respect of the Degriftour acquisition.
    The accumulated depreciation balance in respect of Degriftour goodwill at
    September 30, 2002 has been offset against the cost of goodwill. This has
    the effect of reducing both the cost and accumulated depreciation by £28,452
    million, and making the net book value at September 30, 2002 the revised
    cost of goodwill.

Other
    intangible assets, except for workforce in place, continue to be amortised
    over their useful lives. Workforce in place relating to the Degriftour acquisition
    has been subsumed into goodwill and is no longer amortised under US GAAP.

The
    effect of the above differences on the loss for the period and shareholders’ funds
    is shown in the following reconciliations.

Profit and loss account

|                                                                                                                           |                                                                         | Year
            ended September 30, |  
|-------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | ------------------------------------ | -
|                                                                                                                           |                                                                         |                                      |  
|                                                                                                                           |                                                                         | 2001                                 |  
|                                                                                                                           |                                                                         |                                      |  
|                                                                                                                           |                                                                         | (£000)                               |  
|                                                                                                                           |                                                                         |                                      |  
|Loss for the period
        as reported in the consolidated profitand
        loss account under UK GAAP                   |                                                                         | (53,588                              | )
|                                                                                                                           |                                                                         |                                      |  
|Operating costs
        of a fundamental reorganisation                                                                    |                                                                         |                                     |  
|Provision for Company
        National Insurance contributions                                                             |                                                                         | (662                                 | )
|Impairment goodwill                                                                                                        |                                                                         |                                     |  
|Stock-based compensation                                                                                                   |                                                                         |                                     |  
|Goodwill amortisation
        charge                                                                                       |                                                                         | 586                                  |  
|Intangible asset
        amortisation charge                                                                               |                                                                         | (1,694                               | )
|Amortisation of
        goodwill arising on the investment in associate                                                    |                                                                         |                                     |  
|Share of operating
        loss in joint ventures                                                                          |                                                                         | 107                                  |  
|Exceptional costs
        of a fundamental reorganisation                                                                  |                                                                         |                                     |  
|Implied interest                                                                                                           |                                                                         |                                     |  
|Hedges recognised                                                                                                          |                                                                         |                                     |  
|                                                                                                                           |                                                                         |                                      |  
|Net income adjustment                                                                                                      |                                                                         | (1,663                               | )
|                                                                                                                           |                                                                         |                                      |  
|Loss for the period
        as adjusted to accord with US GAAP                                                             |                                                                         | (55,251                              | )
|                                                                                                                           |                                                                         |                                      |  
|Arising from:                                                                                                              |                                                                         |                                      |  
|Loss from operations  before
        effect of restatement of joint ventures                                              |                                                                         | (55,251                              | )
|Effect of change
        in accounting principal on adoption of FAS 142                                                    |                                                                         |                                     |  
|                                                                                                                           |                                                                         |                                      |  
|Net loss                                                                                                                   |                                                                         | (55,251                              | )
|                                                                                                                           |                                                                         |                                      |  
|                                                                                                                           |                                                                         |                                      |  
|                                                                                                                           |                                                                         | (Per Share
          (pence))        |  
|                                                                                                                           |                                                                         |                                      |  
|Loss per Ordinary
        Share as so adjusted  basic anddiluted  before
        effect of restatement of joint ventures |                                                                         | (32.47                               | )
|Effect of change
        in accounting principal on adoption of FAS 142                                                    |                                                                         |                                     |  
|                                                                                                                           |                                                                         |                                      |  
|Total                                                                                                                      |                                                                         | (32.47                               | )
|                                                                                                                           |                                                                         |                                      |  
|                                                                                                                           |                                                                         |                                      |  
|Loss per American
        Depositary Share  basic anddiluted  before
        effect of restatement of joint ventures(1)  |                                                                         | (162.35                              | )
|Effect of change
        in accounting principal on adoption of FAS 142                                                    |                                                                         |                                     |  
|                                                                                                                           |                                                                         |                                      |  
|Total                                                                                                                      |                                                                         | (162.35                              | )
|                                                                                                                           |                                                                         |                                      |  
|                                                                                                                           |                                                                         |                                      |  
|(1)                                                                                                                        | Each American Depositary Share represents
        five Ordinary Shares. |                                      |  

Comprehensive income

Comprehensive
    income under US GAAP, is summarised as follows:

|                                                             |  | Year
            ended September 30, |  
|------------------------------------------------------------ |  | ------------------------------------ | -
|                                                             |  |                                      |  
|                                                             |  | 2001                                 |  
|                                                             |  |                                      |  
|                                                             |  | (£000)                               |  
|                                                             |  |                                      |  
|Loss in accordance with US GAAP                              |  | (55,251                              | )
|Currency translation differences                             |  | (414                                 | )
|                                                             |  |                                      |  
|Comprehensive income adjusted
        to accord with US GAAP |  | (55,665                              | )
|                                                             |  |                                      |  

F-50

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

Movements
    in other comprehensive income amounts are as follows:

|                      |  | Currencytranslationdifferences |  
|--------------------- |  | ------------------------------ | -
|                      |  |                                |  
|                      |  | (£000)                         |  
|                      |  |                                |  
|At October 1, 2000    |  | 22                             |  
|Arising in the period |  | (414                           | )
|                      |  |                                |  
|At September 30, 2001 |  | (392                           | )
|Arising in the period |  | 859                            |  
|                      |  |                                |  
|At September 30, 2002 |  | 467                            |  
|Arising in the period |  | 4,026                          |  
|                      |  |                                |  
|At September 30, 2003 |  | 4,493                          |  
|                      |  |                                |  

F-51

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

30. DIFFERENCES BETWEEN UNITED
      KINGDOM AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(continued)

Shareholders’ funds

|                                                                                                                      |  | At
            September 30, |  
|--------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | -
|                                                                                                                      |  |                              |  
|                                                                                                                      |  | 2002                         |  
|                                                                                                                      |  |                              |  
|                                                                                                                      |  | (£000)                       |  
|                                                                                                                      |  |                              |  
|Shareholders’ funds as reported
        in the consolidated balancesheet
        under UK GAAP                        |  | 104,576                      |  
|Intangible fixed assets                                                                                               |  |                              |  
|Cost                                                                                                                  |  |                              |  
|Cost  Goodwill                                                                                                       |  | (17,806                      | )
|Cost  Other Intangibles                                                                                              |  | 26,310                       |  
|                                                                                                                      |  | 8,504                        |  
|Amortisation                                                                                                          |  |                              |  
|Amortisation  Goodwill                                                                                               |  | 4,869                        |  
|Amortisation  Other Intangibles                                                                                      |  | (4,696)                      |  
|                                                                                                                      |  | 173                          |  
|                                                                                                                      |  |                              |  
|                                                                                                                      |  | 8,677                        |  
|Investments  joint ventures                                                                                          |  | (181                         | )
|Investments  associate                                                                                               |  | 36                           |  
|Debtors  other debtors  deferred
        bond issue costs                                                           |  |                             |  
|Cash                                                                                                                  |  | (10,092                      | )
|Restricted cash                                                                                                       |  | 10,092                       |  
|Creditors: amounts falling due
        within one year  other creditors  deferred bond issue costs                  |  |                             |  
|Creditors: amounts falling due
        within one year  other creditors  Implied interest                           |  |                             |  
|Creditors: amounts falling due
        within one year  other creditors  derivatives                                |  |                             |  
|Creditors: amounts falling due
        after more than one year  other creditors  deferred bond
        issue costs |  |                             |  
|Creditors: amounts falling due
        after more than one year  Conversion feature of bond due 2008                 |  |                             |  
|Provisions for liabilities and
        charges                                                                       |  |                              |  
|Company National Insurance
        contributions                                                                      |  | 285                          |  
|                                                                                                                      |  |                              |  
|Shareholders’ funds as adjusted
        to accord with US GAAP                                                        |  | 113,393                      |  
|                                                                                                                      |  |                              |  

Consolidated statements of cash
      flows

The
    consolidated statements of cash flows presented under UK GAAP present substantially
    the same information as those required under US GAAP but differ with regard
    to the classification of items within the statements and as regards the definition
    of cash and cash equivalents.

Under
    US GAAP, cash and cash equivalents do not include bank overdrafts. The Company
    classifies deposits with a remaining maturity of more than three months and
    those temporarily restricted as short term deposits.

Under
    UK GAAP, if applicable, cash flows are presented separately for operating
    activities, dividends from associates, returns on investments and servicing
    of finance, taxation, capital expenditure and financial investment, acquisitions,
    equity dividends and management of liquid resources and financing. US GAAP,
    however, require only three categories of cash flow to be reported; operating,
    investing and financing. Under US GAAP, cash paid or received for interest
    and income taxes would be included in operating activities and capital expenditure
    would be included within investing activities.

F-52

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

30. DIFFERENCES BETWEEN UNITED
      KINGDOM AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(continued)

Under
    US GAAP, the following would be reported:

|                                                           |  | Year
            ended September 30, |  
|---------------------------------------------------------- |  | ------------------------------------ | -
|                                                           |  |                                      |  
|                                                           |  | 2001                                 |  
|                                                           |  |                                      |  
|                                                           |  |                                      |  
|                                                           |  |                                      |  
|Net cash (used) / provided by
        operating activities |  | (27,635                              | )
|Net cash used in investing activities                      |  | (31,025                              | )
|Net cash provided by financing
        activities          |  | 87                                   |  
|                                                           |  |                                      |  
|(Decrease)/increase in cash
        and cash equivalents   |  | (58,573                              | )
|Exchange differences                                       |  |                                     |  
|Cash and cash equivalents at
        beginning of period   |  | 101,141                              |  
|                                                           |  |                                      |  
|Cash and cash equivalents at
        end of period         |  | 42,568                               |  
|                                                           |  |                                      |  

Additional disclosures required by
    US GAAP in respect of deferred taxation

Deferred
    tax comprises the following:

|                                                                 |  | At September
          30, |  
|---------------------------------------------------------------- |  | -------------------------- | -
|                                                                 |  |                            |  
|                                                                 |  | 2002                       |  
|                                                                 |  |                            |  
|                                                                 |  | (£000)                     |  
|                                                                 |  |                            |  
|Deferred taxation liabilities:                                   |  |                            |  
|Excess of value of fixed assets
        over book value          |  | (6,855                     | )
|                                                                 |  |                            |  
|                                                                 |  | (6,855                     | )
|Deferred taxation assets:                                        |  |                            |  
|Excess of taxation value over
        book value of fixed assets |  | 2,075                      |  
|Taxation effect of losses carried
        forward                |  | 32,899                     |  
|Other temporary differences                                      |  | 1,825                      |  
|                                                                 |  |                            |  
|                                                                 |  | 36,799                     |  
|Less: Valuation allowance                                        |  | (29,944                    | )
|                                                                 |  |                            |  
|                                                                 |  | 6,855                      |  
|                                                                 |  |                            |  
|Total deferred taxation asset                                    |  |                           |  
|                                                                 |  |                            |  

Additional information required
      under US GAAP in respect of share-based compensation

Under
    US GAAP, where the intrinsic value method in APB 25 is used for the measurement
    of stock based compensation, disclosure of the pro forma effect on net loss
    and net loss per share is required on the basis of the fair value method
    set forth in Statement of Financial Accounting Standards 123 (“SFAS
    123”). At September 30, 2003 the company had six share option schemes
    which are described more fully in Note 7.

|                                                                                           |  | Year
            ended September 30, |   
|------------------------------------------------------------------------------------------ |  | ------------------------------------ | --
|                                                                                           |  |                                      |   
|                                                                                           |  | 2001                                 |   
|                                                                                           |  |                                      |   
|                                                                                           |  |                                      |   
|                                                                                           |  |                                      |   
|Net loss as reported                                                                       |  | (55,251                              | ) 
|Stock-based compensation under
        APB 25                                              |  | 1,181                                |   
|Stock-based employee compensation
        expense determined under fair value based method |  | (604                                 | ) 
|                                                                                           |  |                                      |   
|Proforma net loss                                                                          |  | (54,674                              | ) 
|                                                                                           |  |                                      |   
|Loss per share                                                                             |  |                                      |   
|Basic and diluted  as
        reported                                                    |  | (32.47                               | )p
|Basic and diluted  proforma                                                               |  | (32.14                               | )p

F-53

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

Concentration of credit risk

Financial
    instruments that potentially subject the Company to a concentration of credit
    risk consist of cash and cash equivalents and accounts receivable. Cash and
    cash equivalents are deposited with high credit, quality financial institutions.

The
    Company’s debtors comprise commissions receivable and amounts due from credit
    card processors. The Company generally requires no collateral from its suppliers.

At
    September 30, 2003, the Company did not consider there to be any significant
    concentration of credit risk.

F-54

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LASTMINUTE.COM PLC

NOTES TO THE FINANCIAL STATEMENTS

30. DIFFERENCES BETWEEN UNITED
      KINGDOM AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(continued)

Impact of recently issued accounting
      standards

UK GAAP

In
    November 2003, the Accounting Standards Board published Application Note
    G to FRS 5 on revenue recognition. The Application Note applies to accounting
    periods ending after December 23, 2003 and, although not a comprehensive
    revenue recognition standard, it is intended to codify existing practice
    in the UK. It contains specific rules on long-term contracts, the separation
    and linking of contractual arrangements, bill and hold arrangements, sales
    with rights of return and the presentation of turnover as principal or agent.
    Management do not consider that the implementation of this application note
    would have an impact on the financial statements.

US GAAP

SFAS
    149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities,
    issued in April 2003, is effective for contracts entered into or modified
    after June 30, 2003 and for hedging relationships designated after June 30,
    2003. SFAS 149 clarifies accounting for derivative instruments. Its scope
    includes certain derivative instruments embedded in other contracts and hedging
    activities under SFAS133. SFAS 149 is not expected to have an effect on the
    Group's financial position.

SFAS
    150, Accounting for Certain Financial Instruments with Characteristics of
    both Liabilities and Equity, issued in May 2003 is effective from June 15,
    2003. SFAS150 requires that certain financial instruments that issuers could
    account for as equity, be classified as liabilities on the balance sheet,
    SFAS 150 is not expected to have an effect on the Group’s financial position.

F-55

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Schedule II

Valuation and Qualifying Accounts

|                                      | Valuation and Qualifying Accounts | 
|------------------------------------- | --------------------------------- | 
|                                      |                                   | 
|                                      | Balance atbeginning ofperiod      | 
|                                      |                                   | 
|                                      |                                   | 
|                                      |                                   | 
|Year ended September 30, 2000         |                                   | 
|Provisions for bad and doubtful debts | 10                                | 
|                                      |                                   | 
|Year ended September 30, 2001         |                                   | 
|Provisions for bad and doubtful debts | 282                               | 
|                                      |                                   | 
|Year ended September 30, 2002         |                                   | 
|Provisions for bad and doubtful debts | 242                               | 
|                                      |                                   | 
|Year ended September 30, 2003         |                                   | 
|Provisions for bad and doubtful debts | 1,262                             | 

S-1

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As filed with the Securities
      and Exchange Commissionfor the year ended September 30, 2003

|
|
|
|

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549_______________ EXHIBITS TO FORM 20-FANNUAL REPORT UNDER THE SECURITIES ACT OF 1934_______________LASTMINUTE.COM PLC

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