A copy of this document, which comprises a prospectus relating to lastminute.com plc (""lastminute.com'') in accordance with the listing rules of the London Stock Exchange made under section 142 of the Financial Services Act 1986, has been delivered to the Registrar of Companies in England and Wales for registration in accordance with section 149 of that Act. Application has been made to the London Stock Exchange for all of the ordinary share capital of lastminute.com, issued and to be issued in connection with the oÅering described in this prospectus, to be admitted to the OÇcial List of the London Stock Exchange (""Admission''). Conditional dealings in the ordinary shares are expected to commence on the London Stock Exchange on March 14, 2000. It is expected that Admission will become eÅective and that unconditional dealings in the ordinary shares will commence on March 21, 2000. American Depositary Shares (""ADSs''), each representing Ñve ordinary shares and evidenced by American Depositary Receipts (""ADRs''), are expected to be approved for quotation on the Nasdaq National Market, subject to oÇcial notice of issuance, under the symbol LMIN. All dealings before the commencement of unconditional dealings will be of no eÅect if Admission does not take place and such dealings will be at the sole risk of the parties concerned. The directors of lastminute.com, whose names appear on page 4, accept responsibility for the information contained in this prospectus. To the best of the knowledge and belief of the directors (who have taken all reasonable care to ensure that such is the case), the information contained in this prospectus is in accordance with the facts and does not omit anything likely to aÅect the import of such information. This prospectus does not constitute an oÅer to sell or issue or the solicitation of an oÅer to buy or subscribe for ordinary shares or ADSs in any jurisdiction in which such oÅer or solicitation is unlawful and, in particular, is not for distribution into the United States, Canada, Australia or Japan. The ordinary shares have not been and will not be registered under the applicable securities laws of Canada, Australia and Japan and, subject to certain exceptions, may not be oÅered or sold within Canada, Australia or Japan or to any national, resident or citizen of Canada, Australia or Japan. The distribution of this prospectus in other jurisdictions may be restricted by law and therefore persons into whose possession this prospectus comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdictions. Prospective investors should be aware that an investment in lastminute.com involves a high degree of risk. In particular, prospective investors should consider ""Risk Factors'' in Part 1 of this prospectus. lastminute.com does not have a three-year trading record and has made its application for Admission under the provisions of Chapter 25 of the Listing Rules of the London Stock Exchange (""Innovative High Growth Companies''). lastminute.com plc (incorporated in England and Wales under the Companies Act 1985 with registered no. 3852152) OÅering of 33,000,000 ordinary shares at a price expected to be between 190 pence and 230 pence per share and admission to listing on the London Stock Exchange

sponsored by Morgan Stanley & Co. International Limited

Issued, and to be issued, Authorised Ordinary shares following fully paid(1) Number Amount closing of the offering Number Amount 10,053,660,000 100,536,600 Ordinary Shares of 1p each 150,332,505 1,503,325.05

(1) Assuming no exercise of the over-allotment option described below. In connection with the oÅering, Morgan Stanley Securities Limited, on behalf of the underwriters, may over-allot or eÅect transactions which stabilise or maintain the market price of the ordinary shares or ADSs at levels which might not otherwise prevail in the open market. Such transactions may be eÅected on the London Stock Exchange, the Nasdaq National Market, in the over-the-counter market or otherwise. Such stabilising, if commenced, may be discontinued at any time. In connection with the oÅering, lastminute.com will grant Morgan Stanley Securities Limited, on behalf of the underwriters, an option, exercisable within 30 days from the date the oÅering price is set, to acquire up to an aggregate of 4,950,000 additional ordinary shares (all or a portion of which may, at the election of Morgan Stanley Securities Limited, be in the form of ADSs) at the oÅering price to cover over-allotments, if any, made in connection with the oÅering and to cover short positions resulting from stabilisation transactions. Morgan Stanley & Co. International Limited and Morgan Stanley Securities Limited, which are regulated by The Securities and Futures Authority Limited, are advising lastminute.com and no one else in relation to the oÅering and will not be responsible to anyone other than lastminute.com for providing the protections aÅorded to their customers or for providing any advice in relation to the oÅering.

MORGAN STANLEY DEAN WITTER CAZENOVE & CO. DEUTSCHE BANK DONALDSON, LUFKIN & JENRETTE WARBURG DILLON READ CONTENTS

Page Page Basis on which this Document has been Part 6 Business ******************** 35 Prepared *************************** 2 Part 7 Accountants' Report ********* 60 Directors, Secretary, Registered Of®ce and Part 8 Pro Forma Balance Sheet of Advisers *************************** 4 the Group ****************** 88 Offering Statistics ********************* 5 Part 9 Accountants' Letter on Expected Timetable for the Offering ****** 5 Pro Forma Balance Sheet of Prospectus Summary******************* 6 the Group ****************** 89 Summary Financial and Other Data******* 7 Part 10 Regulation ****************** 90 The Offering ************************* 10 Part 11 Management **************** 93 Part 1 Risk Factors **************** 12 Part 12 The Offering **************** 99 Part 2 Use of Proceeds************** 22 Part 13 Additional Information ******* 103 Part 3 Dividend Policy ************** 22 Part 14 Applications and Allocations in Part 4 Selected Financial and Other the Retail Offering *********** 135 Data *********************** 23 Part 15 Terms and Conditions of Part 5 Management's Discussion and Application for the Retail Analysis of Financial Condition Offering ******************** 137 and Results of Operations***** 26

BASIS ON WHICH THIS DOCUMENT HAS BEEN PREPARED

This prospectus includes forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about lastminute.com.

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 Parts of this prospectus entitled ``Prospectus Summary'', ``Risk Factors'', ``Management's Discussion and Analysis of Financial Condition and Results of Operations'', ``Business'' and ``Regulation'' and in this prospectus generally. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including all the risks discussed in ``Risk Factors'', ``Management's Discussion and Analysis of Financial Condition and Results of Operations'', ``Business'' and ``Regulation''.

This prospectus includes statistical data regarding lastminute.com, the Internet and the industries in which we operate. The statistical data that we have included in this prospectus are based on our records or are taken or derived from information published or prepared by various sources, including reports dated December 1998 and June 1999 by International Data Corporation, a provider of market and strategic information for the information technology industry, a report commissioned and paid for, in part, by us dated November 1998 by Fletcher Research Limited, a third-party market research organisation, and a report commissioned and paid for by us exclusively dated January 2000 by the British Market Research Bureau, a third-party market research organisation.

This market data includes projections that are based on a number of assumptions, including the following: no catastrophic failure of the Internet will occur; the number of people on-line and the total number of hours spent on-line will increase signi®cantly over the next ®ve years; the value of on-line advertising dollars spent per on-line user hour will increase; the download speed of content will increase dramatically; and Internet security and privacy concerns will be adequately addressed.

If any one or more of the foregoing assumptions turns out to be incorrect, the actual results may differ from the projections based on these assumptions. The Internet-related markets may not grow over the next several years at the rates projected by these market data, or at all. The failure of these markets to grow at these projected rates may have a material adverse effect on our business, results of operations, ®nancial condition and the market price of our shares and ADSs.

2 In this prospectus, references to ``$'', ``U.S.$'', ``U.S. dollars'' and ``dollars'' are to the currency of the United States, and references to ``pounds sterling'', ``pounds'', ``£'', ``pence'' and ``p'' are to the currency of the United Kingdom. We maintain our ®nancial books and records in pounds sterling and present our ®nancial statements in conformity with accounting principles generally accepted in the United Kingdom, or U.K. GAAP. As applicable to our ®nancial statements, U.K. GAAP and U.S. GAAP differ as described in note 25 in the Accountants' Report in Part 7. lastminute.com's logo and some of the titles and logos of lastminute.com's products and services mentioned in this prospectus are lastminute.com's trade marks. Each trade mark, trade name or service mark of any other company appearing in this prospectus belongs to its holder. Our World Wide Web site is www.lastminute.com. The information on our web site, any web site mentioned in this prospectus or any web site directly or indirectly linked to our or any other web site mentioned in this prospectus is not incorporated by reference into this prospectus and you should not rely on it.

3 DIRECTORS, SECRETARY, REGISTERED OFFICE AND ADVISERS

Directors Name Position Pieter Bouw ******************************************** Chairman and Non-executive Director Robert Bryan Collier ************************************* Vice Chairman and Non-executive Director Brent Hoberman***************************************** Co-founder and Chief Executive Of®cer Martha Lane Fox **************************************** Co-founder and Chief Operating Of®cer Brian Collie ******************************************** Non-executive Director Laurent Pierre Marie Raoul Edmond Laffy ******************* Non-executive Director Linda Fayne Levinson ************************************ Non-executive Director Thomas Alfred Teichman ********************************* Non-executive Director All of Park House, 4th Floor, 116 Park Street, London W1Y 3RA

Secretary Registered Of®ce and Head Of®ce Hackwood Secretaries Limited Park House One Silk Street 4th Floor London EC2Y 8HQ 116 Park Street London W1Y 3RA

Advisers

Sponsor and Financial Adviser Principal Banker to lastminute.com Morgan Stanley & Co. International Limited Barclays Bank Plc 25 Cabot Square 50 Pall Mall Canary Wharf P.O. Box 15161R London E14 4QA London SW1A 1QA

Global Coordinator and Broker to lastminute.com Financial Adviser to Management Morgan Stanley Securities Limited NewMedia Investors Ltd 25 Cabot Square 30 Glasshouse Street Canary Wharf London W1R 5RG London E14 4QA

Legal Adviser to lastminute.com as to English and U.S. law Linklaters One Silk Street London EC2Y 8HQ

Legal Advisers to the Sponsor and Global Coordinator as to English law as to U.S. law Fresh®elds Davis Polk & Wardwell 65 Fleet Street 99 Gresham Street London EC4Y 1HS London EC2V 7NG

Auditors and Reporting Accountants Ernst & Young Becket House 1 Lambeth Palace Road London SE1 7EU Receiving Agent Registrar IRG plc IRG plc New Issues Department Bourne House P.O. Box 166 34 Beckenham Road Bourne House Beckenham 34 Beckenham Road Kent BR3 4TU Beckenham Kent BR3 4TH

4 OFFERING STATISTICS

Price range(1) **************************************************************** 190p to 230p Number of ordinary shares being offered ) assuming no exercise of the over-allotment option(2)************************** 33,000,000 ) assuming exercise of the over-allotment option in full ************************* 37,950,000 Market capitalisation(3)********************************************************* £315,700,000 Estimated net proceeds receivable by lastminute.com(4) ****************************** £61,600,000

(1) The price range may be changed during the course of the offering and the offering price may be set within, above or below the price range. (2) The over-allotment option will be granted by lastminute.com to Morgan Stanley Securities Limited, on behalf of the underwriters, to acquire up to an aggregate of 4,950,000 additional ordinary shares. (3) The ®gure for market capitalisation is based on an offering price of 210 pence per share (being the mid-point of the price range) and assumes no exercise of the over-allotment option. (4) The estimated net proceeds receivable by lastminute.com are stated after deduction of the estimated commissions and other fees and expenses of the offering of £7.7 million and are based on an offering price of 210 pence per share (being the mid-point of the price range) and assumes no exercise of the over- allotment option.

EXPECTED TIMETABLE FOR THE OFFERING(1)

Latest date and time for receipt of completed application forms and cheques under the retail offering ********************************************************** 5.00 p.m. on March 10, 2000 Latest time for receipt of bids under the institutional offering ********************* 4.00 p.m. on March 13, 2000 Announcement of the offering price and allocations ***************************** March 14, 2000 Conditional dealings in shares expected to commence on the London Stock Exchange and Nasdaq National Market ********************************************** March 14, 2000 Admission and unconditional dealings in shares commence on the London Stock Exchange************************************************************** 8.00 a.m. March 21, 2000 Unconditional dealings in ADSs commence on the Nasdaq National Market ********* 2.30 p.m. on March 21, 2000 Shares credited to CREST Accounts and despatch of de®nitive share certi®cates (where applicable) ****************************************************** March 21, 2000

(1) Each of the times and dates in this timetable is subject to change. References to times are to London time.

5 PROSPECTUS SUMMARY You should read the following summary together with the more detailed information and our ®nancial statements and related notes appearing elsewhere in this prospectus.

lastminute.com currently offers consumers in the United Kingdom, France, Germany and Sweden last minute opportunities for airline tickets, hotel rooms, package holidays, entertainment tickets, restaurant reservations, speciality services, gifts and auctions. Our strategic objective is to be the global marketplace for all last minute services and transactions. We believe that our customers buy from lastminute.com because we deliver: ) 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 our customers can access quickly and with minimal effort; and ) the bene®t of our ideas Ð we believe we have a reputation for offering our customers novel and distinctive products and services that inspire them to try something different. Although our registered subscribers may make a purchase by telephoning us directly, our service is based on the utilisation of the Internet and our web site. For the year ended December 31, 1999, approximately 90% of purchases were made on-line. At January 31, 2000, 15 months after we ®rst launched our web site, we had over 800,000 registered subscribers, including over 600,000 in the United Kingdom and almost 200,000 internationally. Our registered subscribers do not pay to register for our services. Turnover for the three months ended December 31, 1999 was £409,000 and for the year ended September 30, 1999 was £195,000. Our turnover was generated through transactions using our web site with a total value of £4.3 million for the three months ended December 31, 1999 and £2.6 million for the year ended September 30, 1999. From January 1, 1999 to December 31, 1999, our turnover increased by a compound monthly growth rate of approximately 51% relative to an increase in registered subscribers equivalent to a compound monthly growth rate of 33% over the same period. At December 31, 1999, we had secured relationships with over 25 international scheduled airlines, over 500 hotels, over 70 package tour operators, over 165 theatre, sports and entertainment promoters, over 45 restaurants, over 20 speciality service providers and over 200 gift suppliers. Our key supplier relationships include:

) Airlines. British Airways, British Midland, KLM, Lufthansa and Virgin Atlantic Airways; ) Hotels. Bass Hotels and Resorts, the Forte Hotels, Kempinski Hotels, Millennium Hotels and Resorts, Sol MeliÂa Hotels and Starwood Hotels and Resorts Worldwide; ) Tour Operators. Airtours, British Airways Holidays, Kuoni Travel and Thomas Cook Holidays; ) Entertainment. English National Ballet, First Call, The Really Useful Group and The Royal Albert Hall; ) Restaurants. A-Z Restaurants, Chez Gerard and Conran Restaurants; ) Services. The Fresh Food Company, The Keyholding Company, Les Concierges de Paris and One for the Road; and ) Gifts. Bodum, Carphone Warehouse and The House of Chocolate, as well as suppliers of unique experiences, such as balloon rides and Ferrari rentals. We have entered into agreements and other arrangements to market our web site with key Internet sites, portals and Internet service providers that have a presence in the jurisdictions where we have focused our international expansion strategy, including: Excite U.K., Freeserve and MSN in the United Kingdom; Voila and Wanadoo in France; T-Online in Germany; and Reisefeber in Sweden. In addition, we have recently entered into a pan-European agreement with AOL Europe, as a preferred partner for last minute gift and travel products and services. We intend to introduce a new open three-tier architecture for our web site by June 30, 2000 that will be readily expandable as we grow our traf®c and transaction levels. A move to a three-tier architecture involves inserting an application-server layer in between the front-end web-servers and the back-end database-servers (see ``Business Ð Technology and Customer Interfaces'' in Part 6). Our strategic aim is to be able to reach consumers wherever they are with last minute opportunities. We believe that alternative distribution platforms, such as interactive television, mobile telephones and personal digital assistants are ideally suited to offer last minute deals. Accordingly, we have entered into strategic partnerships to offer our content using these new channels.

6 SUMMARY FINANCIAL AND OTHER DATA Prospective investors should read the whole prospectus and not just rely on the summary information set out below. In particular, the summary ®nancial data set forth below should be read in conjunction with the ``Management's Discussion and Analysis of Financial Condition and Results of Operations'' in Part 5 and the Accountants' Report and related notes in Part 7. The summary ®nancial data have been extracted without adjustment from the Accountants' Report in Part 7 and have been prepared in accordance with U.K. GAAP and audited by Ernst & Young, our independent auditors. As applied to our ®nancial statements, U.K. GAAP and U.S. GAAP differ as described in note 25 in the Accountants' Report. The following table sets forth summary historical consolidated ®nancial and other data for lastminute.com at September 30, 1998 and 1999 and December 31, 1999 and for the period April 1, 1998 (inception) to September 30, 1998, the year ended September 30, 1999 and the three months ended December 31, 1999.

Additional Information

April 1, 1998 Three months (inception) to Year ended ended September 30, September 30, December 31, 1998 1999 1999 (£) (£) (£) (in thousands) Total transaction value(1)*********************************** Ð 2,647 4,255

Pro®t and Loss Account Data

April 1, 1998 Three months (inception) to Year ended ended September 30, September 30, December 31, 1998 1999 1999 (£) (£) (£) (in thousands, except shares and per share and per ADS amounts) Turnover (revenues)(2) ************************************* Ð 195 409 Cost of sales ********************************************* Ð1859 Gross pro®t ********************************************** Ð 177 350 Operating costs: Product development************************************* 179 1,110 1,457 Sales and marketing ************************************* 27 1,181 2,417 General and administration******************************** 86 1,193 1,492 Non-cash share-based compensation(3) ********************** Ð 672 540 National Insurance provision(3) **************************** Ð 600 479 Total operating costs************************************* (292) (4,756) (6,385) Other operating income ************************************ Ð12Ð Operating loss ******************************************** (292) (4,567) (6,035) Interest receivable ***************************************** 76840 Interest payable and similar charges ************************** Ð (1) (9) Loss on ordinary activities before taxation ********************* (285) (4,500) (6,004) Tax on loss on ordinary activities **************************** 1ÐÐ Loss for the ®nancial period ******************************** (286) (4,500) (6,004) Loss per share Ð basic and fully diluted ********************** (0.94)p (13.51)p (17.09)p Loss per ADS Ð basic and fully diluted(4) ******************** (4.70)p (67.55)p (85.45)p Weighted average number of ordinary shares outstanding(5)******* 31,488,429 33,595,515 35,192,940 Amounts under U.S. GAAP Loss for the ®nancial period ******************************** (286) (4,504) Loss per share Ð basic and fully diluted ********************** (0.94)p (13.53)p Loss per ADS Ð basic and fully diluted (4) ******************* (4.70)p (67.65)p

7 Balance Sheet Data:

At September 30, At December 31, 1998 1999 1999 (£) (£) (£) (in thousands) Amounts under U.K. GAAP Fixed assets************************************* 28 403 1,417 Current assets *********************************** 417 5,063 5,185 Total assets ************************************* 445 5,466 6,602 Creditors: amounts falling due within one year ******** (140) (2,289) (4,840) Total assets less current liabilities ******************* 305 3,177 1,762 Provisions for liabilities and charges***************** Ð (614) (1,096) Shareholders' funds ****************************** 305 (2,563) 666

Amounts under U.S. GAAP Redeemable preferred stock************************ 500 6,462 Shareholders' funds (de®cit) *********************** (195) (3,903)

Non-®nancial Operating Data(6):

Three months Year ended and at ended and at September 30, 1999 December 31, 1999 Number of items sold in the period(7) ************************** 23,866 39,683 Number of registered subscribers at the period end(8)************** 364,750 571,687 Number of customers at the period end(9) *********************** 10,189 28,687 Number of suppliers at the period end(10) *********************** 548 1,102

(1) Total transaction value does not represent our statutory turnover. In the majority of transactions, where we act as agent or cash collector, total transaction value represents the price at which products or services have been sold across our web site, net of value added tax and associated taxes. In other cases, for example the reservation of restaurant tables, a ¯at fee is earned, irrespective of the value of products or services provided. In such cases total transaction value represents the ¯at fee commission earned. In the small number of cases where we act as principal, total transaction value represents the price at which products or services are sold across the web site, net of value added tax and associated taxes. (2) In the majority of cases, we do not take ownership of the products or services being sold and act as agent, receiving a commission from the supplier of the products or services being sold. In these cases, turnover represents commission earned, less amounts due or paid on any commission shared. In a limited number of cases, we act as principal and purchase the products or services for resale. Where we act as principal, turnover represents the price at which the products or services have been sold across our web site. Turnover is recognised once charges to the customer's credit card have been made and is stated exclusive of value added tax and associated taxes.

8 (3) Non-cash share-based compensation and our provision for National Insurance contributions can be analysed as follows: April 1998 Three months (inception) to Year ended ended September 30, September 30, December 31, 1998 1999 1999 (£) (£) (£) (in thousands) Non-cash share-based compensation: Product development************************* Ð 169 130 Sales and marketing ************************* Ð 218 178 General and administration******************** Ð 285 232 Ð 672 540 National Insurance provision in relation to non-cash share-based compensation: Product development************************* Ð 144 115 Sales and marketing ************************* Ð 198 158 General and administration******************** Ð 258 206 Ð 600 479

(4) Each ADS represents ®ve shares. (5) 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. (6) Non-®nancial operating data is prepared to enable our directors to monitor our performance and manage our business. Non-®nancial operating data will be included in subsequent quarterly and annual reports. (7) We de®ne an item sold as an individually priced product or service purchased by a customer. (8) We de®ne registered subscribers as users of the lastminute.com web site 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 us, but elect not to receive our weekly e-mails. Since we count our registered subscribers based on their e-mail addresses, users who register multiple times using different e-mail addresses will count as multiple registered subscribers. For example, if a user has registered with us using an e-mail address at work and one at home, the user will be counted as two registered subscribers. At September 30, 1999, the number of registered subscribers includes those in the United Kingdom and France. At December 31, 1999, the number of registered subscribers includes those in the United Kingdom, France, Germany and Sweden. (9) The number of customers is cumulative from our inception date and at September 30, 1999, includes those in the United Kingdom and France and at December 31, 1999, includes those in the United Kingdom, France, Germany and Sweden. (10) The number of suppliers includes individual airlines, hotels, package holiday suppliers, entertainment vendors, gift suppliers, restaurants and speciality service suppliers.

9 THE OFFERING

The Offering In this document, unless the context otherwise requires, references to the ``offering'' mean the offering comprising the retail offering, the eligible employee offering, the priority offering and the institutional offering, in each case, outside the United States and the public offering in the United States. Further details of the offering are set out in ``The Offering'' in Part 12 and, in the case of the retail offering, the eligible employee offering and the priority offering in ``Applications and Allocations in the Retail Offering'' in Part 14. The terms and conditions of the retail offering, the eligible employee offering and the priority offering are set out in ``Terms and Conditions of Application for the Retail Offering'' in Part 15. 33,000,000 new shares are being offered for subscription by lastminute.com pursuant to the offering by means of: ) an offering of shares (in the form of shares and ADSs) in the United Kingdom and elsewhere outside the United States; and ) an offering of shares (in the form of shares and ADSs) in the United States. The offering outside the United States comprises: ) a retail offering by lastminute.com under which registered subscribers of lastminute.com who are resident in the United Kingdom, Jersey or the Isle of Man and who are aged 18 or older will be able to apply for shares at the offering price, using the web site of Interactive Investor International Limited, a third party host; ) an eligible employee offering by lastminute.com under which employees of the group who ful®l certain eligibility criteria will be able to apply for shares at the offering price; ) a priority offering by lastminute.com under which certain speci®ed individuals known to the directors and executive of®cers of lastminute.com as determined by Pieter Bouw, the Chairman of lastminute.com, will be able to apply for shares at the offering price; and ) an institutional offering under which institutional investors in the United Kingdom and elsewhere will be able to apply for shares in lastminute.com at the offering price. Applications made under the eligible employee offering or the priority offering will be given preference when allocations of shares are made (but will not receive any preference in terms of price) although, depending on total demand for shares, such applications may not be met in full. A total of 2,237,877 shares have been reserved to satisfy applications under the eligible employee offering and the priority offering. Allocations made under the institutional offering will be subject to allocations made under the retail offering, the eligible employee offering and the priority offering. In connection with the institutional offering, Morgan Stanley Securities Limited has agreed to allocate Orange plc 525,000 shares at the offering price. In addition, Orange plc has entered into a conditional share purchase agreement with Dotcom Investments Holdings, Inc., Martha Lane Fox, Tom Teichman, Peter Teichman and Jan Swainston, pursuant to which Orange plc would, on Admission, acquire a further 1,125,000 shares at the offering price. The Company is also a party to this conditional share purchase agreement. Morgan Stanley Securities Limited in consultation with us will decide the number of shares which will be allocated to each offering based on a number of factors, including without limitation, the demand for our shares in the respective offerings. Announcement of the offering price and allocations is expected to take place on March 14, 2000, when a supplementary prospectus will be published. In connection with the offering, lastminute.com will grant Morgan Stanley Securities Limited, on behalf of the underwriters, an option exercisable within 30 days from the date the offering price is set to acquire up to an aggregate of 4,950,000 additional ordinary shares (all or a portion of which may, at the election of Morgan Stanley Securities Limited, be in the form of ADSs) at the offering price to cover over-allotments, if any, made in connection with the offering and to cover short positions resulting from stabilisation transactions. Admission is expected to take place and unconditional dealings in the shares are expected to commence on the London Stock Exchange at 8.00 a.m. (London time) on March 21, 2000. Unconditional dealings in the ADSs are expected to commence on the Nasdaq National Market at 2.30 p.m. (London time) on March 21, 2000.

10 Use of Proceeds The net proceeds that lastminute.com will receive from the offering will be approximately £61.6 million, based on an offering price at the mid-point of the price range and assuming no exercise of the over-allotment option, after deducting the underwriters' commissions and offering expenses payable by us. Assuming the above, we intend to use the majority of the net proceeds of the offering over at least the next 12 months, of which about half will be used to increase our sales and marketing activities and the other half will be used for product development and to expand in the United Kingdom and internationally. We intend to use the remainder of the net proceeds for general corporate purposes.

Lock-up Arrangements We, each of our directors and senior management who hold shares or options (being Pieter Bouw, Robert Collier, Brent Hoberman, Martha Lane Fox, Thomas Teichman, Julian Culhane, Dominic Cameron, Charles McKee, Clive Eisen, Thomas Virden, Sepand Riahi, Peter Flint, David Kelly, Stephan Uhrenbacher and Laurent Therezien), all bene®cial shareholders (other than individual shareholders whose shareholdings were deemed insigni®cant) (representing an aggregate of approximately 95% of our issued share capital at the date of this document) have entered into lock-up arrangements under which we and they have agreed (subject to some exceptions), for the period to and including the date 180 days after the pricing of the offering, not to, amongst other things, transfer or encumber any shares of lastminute.com owned by us or them (see ``Additional Information Ð Underwriting Arrangements'' in Part 13). In addition, Orange plc has entered into a similar lock-up arrangement in respect of any shares acquired by it in the offering and from Dotcom Investments Holdings, Inc., Martha Lane Fox, Thomas Teichman, Peter Teichman and Jan Swainston as referred to above.

11 PART 1. RISK FACTORS You should carefully consider the risks described below before making an investment decision. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. Our business, ®nancial condition or results of operations could be materially adversely affected by any of these risks. The trading price of our shares and ADSs could decline due to any of these risks and you may lose all or part of your investment.

You may have dif®culty assessing our business and our future prospects because we have a limited operating history and because we operate in a new and rapidly evolving market Last Minute Network Limited, our wholly owned and principal operating subsidiary in the United Kingdom, was founded on April 1, 1998, and the lastminute.com web site was launched in October 1998. Because we have only a limited operating history, it is dif®cult to evaluate our business and our future prospects. For example, it is dif®cult to predict whether the market will accept our services and the level of turnover we can expect to derive from our services. Because we are an early stage company in the on-line market for last minute services and transactions, which is a new and evolving e-commerce market, we cannot be certain that our business model will be successful. If we do not successfully implement our business model or if we are unable to anticipate or unprepared to take advantage of changes in the market for our products and services, our business could be harmed or fail entirely.

We are not pro®table and expect to continue to incur losses We have experienced losses from operations in each period since our inception. From April 1, 1998 to December 31, 1999, we have incurred losses of £8.5 million, before giving effect to £2.3 million of non-cash charges arising from share issuances to a number of our employees which resulted in total losses for that period of £10.8 million. For both U.K. and U.S. GAAP purposes, we expect to incur National Insurance charges relating to options granted after April 6, 1999 under our unapproved share option schemes at a rate of 12.2% of the difference between the share value at the exercise date and the grant price, which may be signi®cant. In addition, on January 31, 2000 and February 14, 2000, we executed performance-based warrant instruments pursuant to which we may grant warrants to two of our key airline suppliers, Lufthansa and Virgin Atlantic Airways, if they achieve speci®ed levels of ticket sales through our web site over ®ve six-month measuring periods commencing January 1, 2000 and March 1, 2000, respectively (see ``Business Ð Strategic Alliances Ð Travel Services'' in Part 6). In connection with these warrants, for U.S. GAAP purposes, we expect to incur non-cash charges which may, depending on the market price of our shares, have a signi®cant impact on our results of operations, although we will not recognise any expense for U.K. GAAP purposes (see note 25 in the ``Accountants' Report'' in Part 7). We may enter into similar agreements to issue warrants from time to time. The amount and timing of the National Insurance charges related to the options and the non-cash charges associated with the warrants cannot currently be determined. If our turnover does not increase substantially or if our expenses increase more than we expect, we will not be pro®table. We expect that our losses will increase as we expend substantial resources on our product development, sales and marketing and administration and we may not be pro®table for the foreseeable future.

Our operating results may ¯uctuate and be dif®cult 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 signi®cantly If our operating results fall below the expectations of securities analysts or investors, the trading price of our shares and ADSs may decline signi®cantly. Since our operating results may ¯uctuate and be dif®cult to predict, we believe that quarter-to-quarter comparisons of our operating results do not provide a good indication of our future performance. Our quarterly operating results may ¯uctuate signi®cantly in the future due to a variety of factors, many of which are outside our control. These factors include: ) an increased level of sales and marketing expenses as we continue to build our brand; ) the expenses associated with the implementation of our international expansion strategy and customer and supplier acceptance of our products and services internationally;

12 ) any change in the mix of products and services 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 markets for the products and services we offer.

Our rapid growth has placed a strain on our operational, ®nancial and other resources, and if we fail to handle future growth successfully, we may be unable to execute our business plan The rapid growth of our business has placed, and we expect it will continue to place, a signi®cant strain on our operational and ®nancial resources and personnel. We are currently experiencing a period of signi®cant expansion in our number of employees, facilities and infrastructure. We anticipate that further expansion will be required to take advantage of market opportunities and to ensure we have the operating and ®nancial resources and personnel appropriate to our business. Our technology and customer support are two areas where our rapid growth has also put strain which, if not addressed, may result in unacceptably low levels of customer service. In addition, as a result of our rapid growth, our operating costs, including marketing expenses and capital expenditures relating to the expansion of our business, have increased. As we continue to grow, we expect our operating costs to continue to increase.

If the new architecture for our web site that we intend to introduce by June 30, 2000 does not function properly, our customers and suppliers may not use our web site and we may have to increase spending on product development We intend to introduce a new architecture for our web site by June 30, 2000 (see ``Business Ð Technology and Customer Interface'' in Part 6). At the outset, we anticipate that certain of its features will not function properly and that our web site will be unstable. As a result, our customers may not be able to access our web site for short periods of time or may not be able to execute transactions and we may have to revert to our previous architecture on a temporary basis. Because of these dif®culties in the introduction of our new design, our customers and suppliers may not use our web site and we may be at a competitive disadvantage. Furthermore, we may have to increase spending on product development to maintain our previous architecture and to resolve problems with our new architecture.

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 in the United Kingdom and elsewhere, we will need to 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 web site. We have at times experienced slow delivery times, unreliable service levels or insuf®cient capacity (see ``Business Ð Technology and Customer Interface'' in Part 6). 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 ®re, ¯ood, power loss, telecommunications failure, physical and electronic break-ins and other similar events. Any substantial disruption of this sort could signi®cantly impair our ability to generate sales from our web site. We do not presently have a comprehensive disaster recovery plan in effect and do not carry suf®cient business interruption insurance to compensate us for all losses that could occur.

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 web site 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.

13 We may also use or procure new technologies ineffectively or we may fail to adapt our web site'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 web site and we may be at a competitive disadvantage.

We will be less competitive in our industry if we are unable to attract, retain and motivate key individuals and highly skilled employees We depend substantially on the continued services and performance of our senior management, particularly our co-founders, Brent Hoberman and Martha Lane Fox. While we have employment agreements with each of our executive of®cers 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 of®cers or other key employees could hurt our business. In addition, as our business expands, we need to add new information technology and engineering personnel to maintain and expand our web site and systems and customer support personnel to serve our increased registered subscriber base. If we are unable to hire and successfully train suf®cient employees or contractors in these areas, users of our web site may have negative experiences and we may lose customers, which could decrease our turnover and the value of our brand. The market for recruiting appropriately quali®ed information technology and other personnel is currently extremely competitive and we may experience dif®culties in attracting and retaining employees. Should we fail to retain or attract quali®ed personnel, we may not be able to compete successfully in our industry.

If we do not maintain our relationships with suppliers and expand our supplier base, 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, may offer their products or services directly to consumers through the Internet and may not use our web site. Although we are not aware of any airlines having decided to concentrate on offering last minute services through an Internet-based platform, we are aware of a number of European airlines that have announced new initiatives to offer Internet-based travel services. These initiatives could prove to be a serious threat to our supplier base and one of our core markets. If we do not maintain or expand these supplier relationships, the number and breadth of products and services we offer could signi®cantly decrease. As a result, we may be prevented from increasing the attractiveness of our services and providing satisfactory services to our registered subscribers, which would limit our potential market share. 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. In turn, we believe a large registered subscriber base encourages our suppliers to accept our web site as an ef®cient and pro®table distribution channel for their products and services and to expand their use of it. Although we have either formal contracts or letter agreements with some of our suppliers and have executed performance-based warrant instruments pursuant to which we may grant warrants to Lufthansa and Virgin Atlantic Airways (see ``Business Ð Strategic Alliances Ð Travel Services'' in Part 6), none of our suppliers is under any obligation to offer its products and services through our web site. It is possible that suppliers may choose not to distribute their products and services through our web site, 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 turnover could decrease.

A decline in commission rates or the elimination of commissions would be likely to reduce our turnover, which could cause the trading price of our shares to decline Currently, the principal source of our turnover is commissions paid to us by suppliers for bookings or purchases made through our web site. If current industry standard commissions decline or otherwise change or if our suppliers reduce their commission rates or eliminate commissions entirely, it is likely that our turnover would

14 be reduced, which could depress the trading price of our shares. In many cases, we do not have written commission agreements with our suppliers, but rely on informal arrangements for the payment of commissions. Travel suppliers are not obligated to pay any ®xed commission rate for bookings or purchases made through our web site and, as a result, the level of our commissions may ¯uctuate. Moreover, commissions in the travel industry have been falling steadily in the past few years.

We generally earn industry standard commissions on most of the products and services we offer on our web site, which vary by industry segment. However, from time to time 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. Finally, commission rates in jurisdictions other than the United Kingdom, France, Germany and Sweden may be based on ®xed 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.

We rely on services from third parties to carry out our business and to deliver our products to customers, and 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 ticket and hotel room reservations and credit card veri®cations and con®rmations, to host our web site and to advertise and deliver the products sold on our web site to customers. We also rely on third-party licences 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 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 is terminated, we may not ®nd an alternate source of systems support on a timely basis or on terms as advantageous to us.

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

We launched our web site in France in September 1999, in Germany in October 1999 and in Sweden in December 1999. Our strategy is to expand our business to other major countries in Europe. We are exploring opportunities to expand into other markets, including Asia, Australasia and the United States. We may pursue this expansion through acquisitions or otherwise. If we do not develop an adequate supplier or customer base in France, Germany and Sweden, we do not believe that the local versions of our web site will be accepted as a viable market for our products and services in these or other European countries. If this occurs, our growth will be limited and our operating results may be harmed. We are investing in marketing and promoting our web site in France, Germany and Sweden. Our future turnover and operating results depend upon consumers continuing to access our web site from the United Kingdom, France, Germany, Sweden and, over time, other parts of Europe and elsewhere.

Our international operations involve risks relating to purchasing and travel patterns and 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 wide-spread acceptance in each country we enter, 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 dif®cult and our failure adequately to do so could slow our growth in those countries.

We also face risks speci®c 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;

) dif®culties in managing operations due to distance, language and cultural differences;

15 ) 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; ) dif®culties in staf®ng and managing foreign operations; ) potential adverse tax consequences; ) exchange rate ¯uctuations; and ) increased risk of piracy and limits on our abilities to enforce our intellectual property rights.

We face intense competition and, if we are unable to compete effectively, we may be unable to maintain or expand our registered subscriber base and we may lose customers If we are unable to respond adequately to the competitive challenges we face or establish a sustainable competitive advantage, we may be unable to maintain or expand our registered subscriber base and we may lose market share. The markets for the products and services offered on our web site 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 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 web site features and functionality, the marketing and promotional efforts of our competitors or new competitors. We also expect that we will be continually challenged by new and existing competitors who may have signi®cantly longer operating histories, larger customer bases and greater brand recognition. In addition, our competitors may have signi®cantly greater ®nancial, 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 traditional travel agents, such as Trail®nders and L'tur, and on-line travel agents, such as DÂegriftour and ebookers.com. In the entertainment industry, we face competition from traditional distribution channels, such as venue box-of®ces and ticket shops, and on-line distribution channels, such as Ticketmaster U.K. On-line. In connection with our ability to provide gifts, services and auctions, we face competition from popular stores, well-known auction houses and well-established on-line vendors, such as Amazon.com and eBay.

If we fail to increase our brand recognition among consumers, we may not be able to attract and expand our registered subscriber base We believe that establishing, enhancing and maintaining the ``lastminute.com'' brand is fundamental to our efforts to attract and expand our registered subscriber base, especially since there are a number of web sites that offer competing services. Many of these web sites already have well-established brands in on-line services or the travel industry generally. Promotion of our brand will depend largely 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 promote our brand. Even if recognition of our brand increases, it may not lead to an increase in our registered subscriber 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 If we are unable 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. In addition, we may be unable to 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, it may dilute the value of our brand and damage our reputation. Domain names including ``lastminute'', but with differing country modi®ers which we would wish to use in some of the countries into which we may expand, are owned by third parties. We intend to continue to acquire domain names as suitable opportunities arise. 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

16 Internet regulatory bodies and is subject to change. Governing bodies may establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. Although we own the domain name ``lastminute.com'', we may be unable to acquire local domain names which include ``lastminute'' in any relevant jurisdiction. Depending on the laws of a particular jurisdiction, we might not be able to offer products and services which are available for long periods of time under the name or domain name ``lastminute''. 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 con®dentiality 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 con®dentiality protection in every country in which our services are made available, and policing unauthorised use of proprietary information is dif®cult and expensive. 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 the name lastminute.com, 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 ``last minute'' has met an objection from the European Union trade mark registry that the name is descriptive of our services and other objections may be received from other relevant trade marks registries or third parties. Furthermore, the term ``last minute'' is used by several competitors in relation to their late booking or late purchase services. These two factors may make it dif®cult 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 diminish the value 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, under the name lastminute.com. We have not yet launched a U.S. or Canadian version of our web site, although we may do so in the future. The existence of third-party rights in the United States and Canada 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.

17 If the growth in the use of the Internet by consumers and business for e-commerce purposes does not continue or declines, our business will not succeed and the value of our shares and ADSs will decline Our future turnover 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. The growth in use of the Internet by consumers for e-commerce purposes may not continue or use may decline. As the valuation of our company, our shares and our ADSs relies in part on the expected growth rates to be achieved by the Internet and e- commerce industry as a whole, any stagnation of, or decrease in, industry growth rates will decrease the value of our company, our shares and our ADSs. Growth in the use of the Internet for e-commerce and, as a result, the success of our company depends on the development and maintenance of an infrastructure to cope with the Internet's increased traf®c. 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. We may experience outages and delays which are likely negatively to affect the processing of transactions on our web site. As a result, consumers may ®nd that buying products and services through traditional or other methods may be more attractive or reliable than using our web site.

If we are unable to ensure the security and privacy of the con®dential information of our registered subscribers, 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 registered subscribers to discontinue using our services and inhibit our turnover growth. The secure transmission of con®dential information over the Internet and the security of our systems, in general, is essential in maintaining consumer and supplier con®dence in our services. We rely on licensed encryption and authentication technology to effect secure transmission of con®dential information, including credit card numbers. There have been instances where unidenti®ed third parties have individually or collectively taken action to deliberately disrupt the operations of major commercial web sites similar to ours. If similar action were taken against our web site, it could limit our ability to operate our web site and damage the systems we use to operate our business, which could have a negative impact on our reputation and our turnover. A party that is able to circumvent our security systems 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 ®rewall provider for any losses suffered by us arising out of a failure of our ®rewall is limited and may be insuf®cient 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 will need to ensure that we obtain all required consents to use personal data in the most commercially bene®cial way within the provisions of applicable data protection legislation. We currently do this through our registration process and privacy policy (see ``Business Ð Privacy Policy'' in Part 6), 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. 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 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. Web sites typically place cookies on a user's hard drive without the

18 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 web site and we currently require users to enable the usage of cookies before they can make purchases from our web site. 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 web sites using their employers' computer systems may be restricted in their ability to receive and store cookies by virtue of their employers' security policies. In addition, there is legislation in certain jurisdictions such as data protection legislation in the United Kingdom, and there are proposals in others, restricting the use of cookies. Any reduction or limitation in the use of cookies could limit the effectiveness of our sales and marketing efforts. See ``Regulation Ð Data Protection'' in Part 10.

Due to our presence on the Internet and operation as an e-commerce web site we may be open to civil and criminal sanctions in numerous jurisdictions Failure to comply with relevant Internet and e-commerce legislation or regulation may leave us open to civil and criminal sanctions. E-commerce is new and rapidly changing, and regulation relating to the Internet and e- commerce is evolving. Currently, there are few laws or regulations directly applicable to the Internet or e- commerce. Due to the increasing popularity of the Internet, it is possible that laws and regulations may be enacted with respect to the Internet, covering issues like user privacy, pricing, taxation, content, copyright, distribution, antitrust and quality of products and services. Additionally, the rapid growth of e-commerce may trigger the development of tougher consumer protection laws. The adoption of additional laws or regulations relating to the Internet could reduce the rate of growth of e-commerce and could harm our business both directly and indirectly. 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 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 web site or transmissions using our services or might prosecute us for violations of their laws. Any legislation or regulation prescribing the content of our web site or transmissions, 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 make it dif®cult for us to operate our business. 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. In particular, it is possible that the unfair trade practices law of Germany may prohibit the use of a second-level-domain name, including the term ``last minute'', to promote our business, as well as the product and service offerings that we provide. As a result, 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 web site, which may be costly and time-consuming to defend Because users may access content on our web site, 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 web site contains links to other web sites, which may contain links to further web sites. As a result, we may be subject to claims alleging that, by directly or indirectly providing links to other web sites, we are liable for intellectual property right infringement or the wrongful actions of third parties through their web sites. 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 web site, 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 reliance on such information. Our general liability insurance will not cover potential claims of third parties to which we are exposed.

19 Declines or disruptions in the travel industry generally could reduce our turnover A large part of our business is currently driven by the trends, including seasonal ¯uctuations, which occur in the travel industry, including the airline, hotel 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 thus tends to decline during general economic downturns. In addition, other adverse trends or events that tend to reduce travel are likely to reduce our turnover including: ) increased prices in the airline, hotel or other travel-related industries; ) shortages in the supply of tickets offered due to unusually high demand; ) increased occurrence of travel-related accidents; ) airline or other travel-related strikes; ) political instability; ) regional hostilities and terrorism; and ) poor weather conditions. We could be severely affected by changes in the travel industry, and, in many cases, will have little or no control over those changes. 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. Furthermore, the alliance partners could establish their own buyer-driven, e-commerce web sites 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.

If our third-party ticketing agents lose their licences, we may experience temporary dif®culty in furnishing tickets to our customers We use third-party ticketing agents to furnish our customers' airline tickets for ¯ight reservations made through our web site. Each country where we operate has its own travel agent licensing requirements that each of our ticketing agents must meet to operate as a travel agent and to furnish airline tickets. If any of our third-party ticketing agents were to lose its licences or accreditations we would 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 arrangements with our current ticketing agents.

In the future we may need to raise additional capital in order to remain competitive in our industry, and this capital may not be available on acceptable terms, if at all In our opinion, taking into account the net proceeds to lastminute.com of the offering, the working capital available to us and our group is suf®cient for our present requirements, that is, for at least the next 12 months from the date of publication of this document. After that time, we may need additional capital. Alternatively, we may want to raise additional funds sooner in order to fund more rapid expansion, to develop or obtain new or enhanced technology or to respond to competitive pressures. We currently do not have commitments for additional ®nancing. We may not be able to raise additional ®nancing and it may not be available to us in the future on acceptable terms or at all. If we raise additional funds by issuing equity or convertible debt securities, the percentage ownership of our shareholders will be diluted. Any securities could have rights, preferences and privileges senior to those of the shares and ADSs.

The price of our shares and ADSs is likely to be highly volatile and subject to wide ¯uctuations, which could lead to losses for our shareholders The market price for our shares and ADSs is likely to be highly volatile and subject to wide ¯uctuations in response to a variety of factors, which could lead to losses for our shareholders. These factors include the following: ) announcements of technological innovations or new services by us or our competitors; ) ¯uctuations in our quarterly operating results; ) conditions or trends in the Internet or e-commerce industries;

20 ) changes in the economic performance or market valuations of other Internet, e-commerce or travel companies; ) announcements by us or our competitors of signi®cant acquisitions, strategic partnerships, joint ventures or capital commitments; ) additions or departures of key personnel; ) release of lock-up or other transfer restrictions on our outstanding shares and ADSs or the issue or sales of additional shares or ADSs; ) potential litigation; and ) press, newspaper and other media reports. The market prices of the securities of Internet-related and e-commerce companies have been especially volatile and we expect our share price to be similarly volatile. As only a limited number of our shares will be distributed publicly, the market price of our shares and ADSs may increase substantially due to the market demand for our shares and ADSs being greater than the supply. The market price of our shares and ADSs may exceed a price which is supported by our underlying business or prospects. Broad market and industry factors may adversely affect the market price of our shares and ADSs, regardless of our actual operating performance and any negative change in the public's perception of the prospects of Internet-related and e-commerce companies could depress the price of our shares and ADSs.

An active public market for our securities may not develop or be sustained and the market price of our shares and ADSs may fall below the initial public offering price Prior to this offering, you could not buy or sell our shares or ADSs publicly. An active public market for our shares and ADSs may not develop or be sustained after this offering, and the market price might fall below the initial public offering price. The initial public offering price may bear no relationship to, and may be higher than, the price at which the shares and ADSs will trade upon completion of this offering.

Our management may use the proceeds of the offering in ways with which our shareholders may not agree, which could cause a decline in our share price We intend to use the majority of the net proceeds of the offering to increase our sales and marketing activities, for product development and to expand in the United Kingdom and internationally. We intend to use the remainder of the net proceeds for general corporate purposes. Our sales and marketing expenditures and international expansion may not result in increased turnover and we may spend the rest of the proceeds in ways that are ineffective or with which our shareholders do not agree, any of which could cause a decline in our share price.

Substantial sales of our shares or ADSs could cause the price of our shares and ADSs to decline An aggregate of 112,620,855 shares, or 74.9%, of our outstanding shares will become eligible for resale in the public market 180 days after the closing of this offering. The market price of our shares and ADSs could decline as a result of any sales of shares by our existing shareholders or the perception that these sales could occur. If these, or any other, sales were to occur, we may have dif®culty in selling securities in the future at a time or at a price we deem appropriate.

21 PART 2. USE OF PROCEEDS The net proceeds that we will receive from the sale of the shares and ADSs will be approximately £61.6 million, or $98.3 million, based on an offering price at the mid-point of the price range, which is 210 pence per share or $16.76 per ADS, and assuming no exercise of the over-allotment option, after deducting the underwriters' commissions and estimated offering expenses payable by us. Assuming the above, we intend to use the majority of the net proceeds of the offering over at least the next 12 months, of which about half will be used to increase our sales and marketing activities and the other half will be used for product development and to expand in the United Kingdom and internationally. This expansion may include broadening our supplier base and potentially making acquisitions should attractive opportunities arise. We intend to use the remainder of the net proceeds for general corporate purposes. Until the balance of the net proceeds is used, we intend to invest our net proceeds from this offering in short-term, interest bearing, investment grade securities.

PART 3. DIVIDEND POLICY We have never paid cash dividends to our shareholders, and we currently do not expect to pay dividends for the foreseeable future. We expect that all available cash from operations, together with a portion of the net proceeds from the offering, will be used to ®nance the growth and development of our business, to meet our projected capital and other expenditure requirements and to fund our operating losses. Under English law, any payment of dividends would be subject to the Companies Act 1985 (the ``Companies Act''), 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 pro®ts available for distribution determined in accordance with the Companies Act and accounting principles generally accepted in the United Kingdom, which differ in some respects from U.S. 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 (see ``Memorandum and Articles of Association of lastminute.com Ð Dividends'' and ``Description of American Depositary Receipts Ð Share Dividends and Other Distributions'' in ``Additional Information'' in Part 13).

22 PART 4. SELECTED FINANCIAL AND OTHER DATA

Prospective investors should read the whole prospectus and not just rely on the selected information set out below. In particular, the selected ®nancial data set forth below should be read in conjunction with the ``Management's Discussion and Analysis of Financial Condition and Results of Operations'' in Part 5 and the Accountants' Report and related notes in Part 7.

The selected ®nancial data have been extracted without adjustment from the Accountants' Report in Part 7 and have been prepared in accordance with U.K. GAAP and audited by Ernst & Young, our independent auditors. As applied to our ®nancial statements, U.K. GAAP and U.S. GAAP differ as described in note 25 in the Accountants' Report.

The following table sets forth selected historical consolidated ®nancial and other data for lastminute.com at September 30, 1998 and 1999 and December 31, 1999 and for the period April 1, 1998 (inception) to September 30, 1998, the year ended September 30, 1999 and the three months ended December 31, 1999.

Additional Information

April 1, 1998 Three months (inception) to Year ended ended September 30, September 30, December 31, 1998 1999 1999 (£) (£) (£) (in thousands) Total transaction value(1)*********************************** Ð 2,647 4,255

Pro®t and Loss Account Data

April 1, 1998 Three months (inception) to Year ended ended September 30, September 30, December 31, 1998 1999 1999 (£) (£) (in thousands, except shares and per share and per ADS amounts) Turnover (revenues)(2) ************************************* Ð 195 409 Cost of sales ********************************************* Ð1859 Gross pro®t ********************************************** Ð 177 350 Operating costs: Product development************************************* 179 1,110 1,457 Sales and marketing ************************************* 27 1,181 2,417 General and administration******************************** 86 1,193 1,492 Non-cash share-based compensation(3) ********************** Ð 672 540 National Insurance provision(3) **************************** Ð 600 479 Total operating costs*************************************** (292) (4,756) (6,385) Other operating income ************************************ Ð12Ð Operating loss ******************************************** (292) (4,567) (6,035) Interest receivable ***************************************** 76840 Interest payable and similar charges ************************** Ð (1) (9) Loss on ordinary activities before taxation ********************* (285) (4,500) (6,004) Tax on loss on ordinary activities **************************** 1ÐÐ Loss for the ®nancial period ******************************** (286) (4,500) (6,004) Loss per share Ð basic and fully diluted ********************** (0.94)p (13.51)p (17.09)p Loss per ADS Ð basic and fully diluted(4) ******************** (4.70)p (67.55)p (85.45)p Weighted average number of ordinary shares outstanding(5)******* 31,488,429 33,595,515 35,192,940 Amounts under U.S. GAAP Loss for the ®nancial period ******************************** (286) (4,504) Loss per share Ð basic and fully diluted ********************** (0.94)p (13.53)p Loss per ADS Ð basic and fully diluted(4) ******************** (4.70)p (67.65)p

23 Balance Sheet Data:

At September 30, At December 31, 1998 1999 1999 (£) (£) (£) (in thousands) Amounts under U.K. GAAP Fixed assets ************************************************ 28 403 1,417 Current assets *********************************************** 417 5,063 5,185 Total assets ************************************************* 445 5,466 6,602 Creditors: amounts falling due within one year ******************** (140) (2,289) (4,840) Total assets less current liabilities******************************* 305 3,177 1,762 Provisions for liabilities and charges **************************** Ð (614) (1,096) Shareholders' funds ****************************************** 305 2,563 666

Amounts under U.S. GAAP Redeemable preferred stock *********************************** 500 6,462 Shareholders' funds (de®cit) *********************************** (195) (3,903)

Non-®nancial Operating Data(6):

Three months Year ended and at ended and at September 30, 1999 December 31, 1999 Number of items sold in the period(7) ************************** 23,866 39,683 Number of registered subscribers at the period end(8)************** 364,750 571,687 Number of customers at the period end(9) *********************** 10,189 28,687 Number of suppliers at the period end(10) *********************** 548 1,102

(1) Total transaction value does not represent our statutory turnover. In the majority of transactions, where we act as agent or cash collector, total transaction value represents the price at which products or services have been sold across our web site, net of value added tax and associated taxes. In other cases, for example the reservation of restaurant tables, a ¯at fee is earned, irrespective of the value of products or services provided. In such cases total transaction value represents the ¯at fee commission earned. In the small number of cases where we act as principal, total transaction value represents the price at which products or services are sold across the web site, net of value added tax and associated taxes. (2) In the majority of cases, we do not take ownership of the products or services being sold and act as agent, receiving a commission from the supplier of the products or services being sold. In these cases, turnover represents commission earned, less amounts due or paid on any commission shared. In a limited number of cases, we act as principal and purchase the products or services for resale. Where we act as principal, turnover represents the price at which the products or services have been sold across our web site. Turnover is recognised once charges to the customer's credit card have been made and is stated exclusive of value added tax and associated taxes.

24 (3) Non-cash share-based compensation and our provision for National Insurance contributions can be analysed as follows:

April 1998 Three months (inception) to Year ended ended September 30, September 30, December 31, 1998 1999 1999 (£) (£) (£) Non-cash share-based compensation: Product development ****************************** Ð 169 130 Sales and marketing******************************* Ð 218 178 General and administration ************************* Ð 285 232 Ð 672 540 National Insurance provision in relation to non-cash share- based compensation: Product development ****************************** Ð 144 115 Sales and marketing******************************* Ð 198 158 General and administration ************************* Ð 258 206 Ð 600 479

(4) Each ADS represents ®ve shares. (5) Share and per share amounts have been retroactively adjusted for the 284 for 1 bonus issue of ordinary shares which occurred on February 15, 2000. (6) Non-®nancial operating data is prepared to enable our directors to monitor our performance and manage our business. Non-®nancial operating data will be included in subsequent quarterly and annual reports. (7) We de®ne an item sold as an individually priced product or service purchased by a customer. (8) We de®ne registered subscribers as users of the lastminute.com web site 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 us, but elect not to receive our weekly e-mails. Since we count our registered subscribers based on their e-mail addresses, users who register multiple times using different e-mail addresses will count as multiple registered subscribers. For example, if a user has registered with us using an e-mail address at work and one at home, the user will be counted as two registered subscribers. At September 30, 1999, the number of registered subscribers includes those in the United Kingdom and France. At December 31, 1999, the number of registered subscribers includes those in the United Kingdom, France, Germany and Sweden. (9) The number of customers is cumulative from our inception date and at September 30, 1999, includes those in the United Kingdom and France and at December 31, 1999, includes those in the United Kingdom, France, Germany and Sweden. (10) The number of suppliers includes individual airlines, hotels, package holiday suppliers, entertainment vendors, gift suppliers, restaurants and speciality service suppliers.

25 PART 5. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of the ®nancial condition and results of operations of lastminute.com should be read in conjunction with the ``Accountants' Report'' and related notes thereto in Part 7.

Overview We were incorporated on April 1, 1998 as Last Minute Network Limited and we commenced offering products and services on our web site in October 1998. In February 2000, we implemented a share capital reorganisation whereby the shares of Last Minute Network Limited were exchanged for shares in lastminute.com limited having equivalent rights. Subsequently, we re-registered as a public limited company. Our primary activities during the period prior to launch of the U.K. version of our web site consisted of creating our web site, recruiting and training employees, developing our business model, implementing systems to support our business model, developing relationships with suppliers and developing the lastminute.com brand. We commenced operations on October 1, 1998 on the U.K. version of our web site with the sale of last minute deals on ¯ight and hotel room reservations, entertainment and gifts. Since that time, our business has grown signi®cantly and we now offer last minute opportunities for travel services, including airline tickets, hotel room reservations and package holidays; leisure, including entertainment events, restaurant reservations and services; gifts; and auctions. We commenced operations on the French version of our web site in September 1999, the German version in October 1999 and the Swedish version in December 1999.

Turnover For the three months ended December 31, 1999, our turnover was £409,000. For the year ended September 30, 1999, our turnover was £195,000. In the majority of cases, where we act as agent, turnover represents commissions earned, less amounts due or paid on any commission shared. Where we act as principal, turnover represents the price at which the products or services have been sold across our web site. Turnover excludes value added tax and associated taxes. Our turnover was generated through transactions using our web site having a total value of £4.3 million for the three months ended December 31, 1999 and £2.6 million for the year ended September 30, 1999. In the majority of transactions where we act as agent or cash collector, and in a small number of cases where we act as principal, total transaction value represents the price at which products or services are sold across the web site, net of value added tax and associated taxes. In other cases, for example the reservation of restaurant tables, we earn a ¯at fee irrespective of the value of products or services provided. In such cases, total transaction value represents the ¯at fee commission earned. For the three months ended December 31, 1999, 63% of our turnover was derived from travel, 16% from leisure, 17% from gifts, which includes traditional gifts as well as our unique offerings, and 4% from auctions. For the year ended September 30, 1999, 75% of our turnover was derived from travel, 15% from leisure, 5% from gifts and 5% from auctions. Nearly all of our services are sold on an agency basis whereby we do not take ownership of a product and therefore do not take inventory risk. 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. Since our inception £400,316, or 5.8%, of total transaction value generated through our web site has been on a ``cash-collector'' basis where we collect payments from customers. We expect this percentage to increase as a result of our recent introduction of a gift voucher scheme. Vouchers can be purchased on-line in return for cash and redeemed for products or services offered on our web site. The cash-collector sales model is similar to a consignment framework. Although we collect the 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 also bene®t from a higher commission from the supplier. In limited instances, usually with respect to entertainment tickets, we act as principal, where we take inventory risk and 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. We generally earn industry standard commissions on most of the products and services we offer on our web site, which vary by industry segment. However, from time to time 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.

26 Cost of Sales Cost of sales principally represents the cost of entertainment tickets purchased in transactions where we act as principal.

Losses Since our inception, we have incurred losses in each ®scal quarter. We incurred a loss of £6.0 million in the quarter ended December 31, 1999, and a loss of £ 4.5 million for the year ended September 30, 1999. We expect to continue to incur losses as we spend substantial resources on product development, sales and marketing and administration. We expect to incur National Insurance charges relating to options granted after April 6, 1999 under the unapproved share option schemes at a rate of 12.2% on the difference between the share value at the exercise date and the grant price. On January 31, 2000 and February 14, 2000, we executed performance-based warrant instruments pursuant to which we may grant warrants to acquire up to 5,544,675 and 5,543,250, respectively, of our ordinary shares to each of Lufthansa and Virgin Atlantic Airways, two of our key airline suppliers in equal instalments at the end of ®ve six-month measuring periods commencing January 1, 2000 and March 1, 2000, respectively, if they achieve speci®ed levels of ticket sales through our web site. Each warrant will be exercisable for an ordinary share during a 60 day period commencing three years after the date it is issued at an exercise price of £0.37 per share, subject to customary adjustments in the event of speci®ed events. We may terminate either warrant instrument and cancel the related warrants in exchange for a cash payment if the relevant airline fails to achieve speci®ed minimum levels of sales in the ®rst two measuring periods. We also may cancel a portion of the warrants granted in respect of a measuring period if the airlines fail to achieve a speci®ed minimum level of sales in the subsequent measuring period. In connection with these warrants, lastminute.com will not recognise any expense for U.K. GAAP purposes (see ``Business Ð Strategic Alliances Ð Travel Services'' in Part 6). However, for U.S. GAAP purposes, under Emerging Issues Task Force Consensus 96-18, ``Accounting for Equity Instruments that are issued to other than Employees for Acquiring, or in conjunction with Selling, Goods or Services'', we expect to incur non-cash charges commencing December 31, 2000 which may have a signi®cant impact, depending on the market price of our shares, on our results of operations. As these charges will be based on the fair value of the warrants on the date they are issued, the amount of these charges cannot currently be determined. We may enter into similar agreements to issue warrants from time to time.

Non-®nancial Operating Data Since the launch of the U.K. version of our web site, we have experienced rapid growth. The following table summarises selected operating data on a monthly basis from October 1998 to December 1999:

Number of registered Number of Total Number of subscribers customers Number of transaction items sold at the month for the suppliers at value Turnover in the month end(1) month month end (in £ thousands) 1998 October ****************** 1 Ð 14 1,405 3 54 November **************** 8 1 142 6,846 73 75 December***************** 16 1 261 18,128 160 110 1999 January******************* 40 3 599 33,877 305 167 February****************** 79 8 910 56,141 468 198 March******************** 156 14 1,573 90,074 774 223 April********************* 187 14 1,497 117,899 760 246 May ********************* 169 16 1,677 149,391 793 282 June ********************* 220 19 2,624 188,710 1,160 320 July********************** 508 27 3,873 244,683 1,641 377 August ******************* 595 38 4,656 285,529 2,311 442 September **************** 691 54 6,040 364,750 2,834 548 October ****************** 1,022 92 8,097 412,095 3,969 725 November **************** 1,366 126 12,752 464,075 6,929 910 December***************** 1,867 191 18,834 571,687 9,791 1,102

(1) Number of registered subscribers includes registered subscribers:

27 ) to August 1999, only in the United Kingdom; ) in September 1999, in the United Kingdom and France; ) in October and November 1999, in the United Kingdom, France and Germany; and ) in December 1999, in the United Kingdom, France, Germany and Sweden.

Employee Share Schemes The number of full-time employees of lastminute.com increased from 2 to 75 during the period from inception to September 30, 1999, and at December 31, 1999 lastminute.com had 163 full-time employees. Between June 29, 1998 and February 15, 2000, the date of the share capital reorganisation, Last Minute Network Limited entered into option agreements with its employees in respect of Last Minute Network Limited's ordinary shares. These option agreements are on the same terms as the 1998 Unapproved Executive Share Option Scheme and the 1999 Unapproved Executive Share Option Scheme, as amended. (See ``Additional Information Ð Employee Share Schemes'' in Part 13). Pursuant to the Share Exchange Agreement entered into on February 15, 2000, substantially all holders of options over ordinary shares in Last Minute Network Limited agreed to exchange their options for options over ordinary shares in lastminute.com. All the remaining optionholders will be asked to enter into an agreement on substantially the same terms. lastminute.com has established two new employee share schemes Ð the 2000 Unapproved Executive Share Option Scheme and the 2000 Approved Share Option Scheme. As of February 15, 2000, we had outstanding options to subscribe for 14,923,166 shares issued to various employees and directors. The options entitle holders to purchase shares at a weighted average exercise price of approximately 23.80p per share. We expect to incur National Insurance charges relating to options granted after April 6, 1999 on the terms of the unapproved share option schemes at a rate of 12.2% on the difference between the share value at the exercise date and the grant price. We make provision for this liability at each period end based on the difference between the period-end share value and the grant price. In accordance with UITF Abstract 17, ``Employee Share Schemes'', share-based compensation represents the difference between the exercise price of the share options granted under the executive share option schemes and the fair market value of the underlying shares at the date of grant. All of the options vest over a three-year period, and the difference is charged to the pro®t and loss account over the period in which the options vest. The maximum total amount remaining to be charged to the pro®t and loss account for options outstanding at December 31, 1999 is £2.9 million.

Impact of Currency Fluctuations The functional currency of Last Minute Network Limited, our principal operating subsidiary, is the pound sterling and the majority of our transactions are conducted in pounds sterling. Currently, substantially all of our turnover, cost of sales and operating expenses are denominated in pounds sterling. However, we launched the French version of our web site in September 1999, the German version in October 1999 and the Swedish version in December 1999, and we intend to expand into other geographical regions. In connection with our international expansion plans, we anticipate that turnover derived from the non-U.K. versions of our web site will be generally denominated in the currency associated with the country or region targeted by the relevant version. Likewise, we expect a signi®cant portion of our operating expenses relating to our operations outside the United Kingdom to be denominated in local currencies. The net effect of these transactions will be subject to periodic foreign exchange translations that may impact our ®nancial statements. We have not incurred and do not expect to incur any material expense in connection with the introduction and use of the euro. We do not currently undertake hedging transactions to cover our transaction or translation exposures, but we may choose to hedge a portion of these exposures in the future as we deem appropriate.

Results of Operations Last Minute Network Limited, our principal operating subsidiary, was formed on April 1, 1998 and the U.K. version of our web site was launched in October 1998. Accordingly, we have a limited operating history upon

28 which to base an evaluation of us and our business and prospects and comparisons with prior periods are not meaningful.

Three Months Ended December 31, 1999 Turnover Turnover for the three months ended December 31, 1999 was £409,000. Our turnover consisted 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 in the limited instances where we acted as principal, mainly in connection with sales of some entertainment tickets. Turnover increased each month during the three months ended December 31, 1999, particularly in December. This resulted from a combination of increased sales of airline tickets and hotel rooms relating to Millennium celebrations and increased sales of gifts for the holiday season. The increase in gift sales also resulted in an increase in margins for the period, as we typically earn higher margins on gifts than on travel products. Our top 20 suppliers accounted for approximately 40% of our turnover. We launched the French version of our web site on September 10, 1999 and the German version on October 15, 1999, which together contributed £25,000 to our turnover for the three months ended December 31, 1999. The Swedish version of our web site was launched in December 1999 and did not contribute to our turnover for the three months ended December 31, 1999.

Cost of Sales Cost of sales, principally consisting of the cost of entertainment tickets purchased by us as principal for resale, totalled £59,000 for the three months ended December 31, 1999.

Operating Expenses Product development. Product development expenses, excluding non-cash share-based compensation and amounts provided for company National Insurance contributions, for the three months ended December 31, 1999 totalled £1.5 million. Product development expenses include expenses incurred by us to develop, enhance, manage, monitor and operate our web site and databases. These expenses are comprised primarily of compensation to our information technology and product development staff and payments to outside contractors, web hosting and Internet communications and other expenses associated with operating our web site and, to a lesser extent, depreciation on computer hardware and licensing fees for computer software. These costs are expensed as incurred. However, with respect to expenses relating to our new architecture, during the three months ended December 31, 1999, we began capitalising costs rather than expensing them as we determined that the project had reached application development stage. For the three months ended December 31, 1999, we capitalised costs of £494,000, which are being amortised over two years. Sales and marketing. Sales and marketing expenses, excluding non-cash share-based compensation and amounts provided for company National Insurance contributions, for the three months ended December 31, 1999 totalled £2.4 million. 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' web sites and commissions paid to our on-line marketing partners on purchases made by customers who were referred from their web sites; ) compensation for our sales and marketing personnel; ) ticketing expenses and credit card veri®cation and processing fees; and ) provisions for redemption of Award Minutes. Near the close of our year ended September 30, 1999, we initiated a customer loyalty scheme, where our customers collect redeemable Award Minutes in proportion to the value of goods purchased and can redeem the Award Minutes against offers on our web site. We make a provision against the expected liability based on an anticipated redemption pro®le determined by our management. At December 31, 1999, we had recorded a total provision of £17,000.

29 General and administration. General and administration costs, excluding non-cash share-based compensation and amounts provided for company National Insurance contributions, for the three months ended December 31, 1999 totalled £1.5 million. General and administration costs consist primarily of compensation for ®nancial, human resources and administrative personnel, excluding non-cash share-based compensation, fees for outside professionals, telecommunications and other overhead costs, including occupancy expense. Share-based compensation. A non-cash charge of £540,000 was recorded as an expense during the three months ended December 31, 1999. National Insurance charges. A provision of £479,000 for company National Insurance contributions in relation to share-based compensation was recorded as an expense during the three months ended December 31, 1999. At December 31, 1999, we had recorded a total provision of £1.1 million.

Year Ended September 30, 1999 Turnover Turnover for the year ended September 30, 1999 was £195,000. Our turnover consisted of commissions earned on products and services sold, including airline tickets, hotel room reservations, package holidays, tickets to entertainment events and gifts, as well as the value of the transactions in the limited instances where we acted as principal in connection with sales of some entertainment tickets. Turnover increased each month except April during the year ended September 30, 1999, due primarily to the expansion of products and services available on our web site and, as market awareness and user functionality of our web site improved, from the expansion of our registered subscriber base. Our top 20 suppliers accounted for approximately 44% of our turnover. No individual supplier accounted for 10% or more of our turnover. On September 10, 1999, we launched the French version of our web site, which generated negligible turnover for the year ended September 30, 1999.

Cost of Sales Cost of sales, principally consisting of the cost of entertainment tickets purchased by us as principal for resale, totalled £18,000 for the year ended September 30, 1999.

Operating Expenses Product development. Product development expenses excluding non-cash share-based compensation and amounts provided for company National Insurance contributions for the year ended September 30, 1999 totalled £1.1 million. These expenses are comprised primarily of compensation to our information technology and product development staff and payments to outside contractors, web hosting and Internet communications and other expenses associated with operating our web site and, to a lesser extent, depreciation on computer hardware and licensing fees for computer software. Sales and marketing. Sales and marketing expenses, excluding non-cash share-based compensation and amounts provided for company National Insurance contributions for the year ended September 30, 1999 totalled £1.2 million. 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' web sites and commissions paid to our on-line marketing partners on purchases made by customers who were referred from their web sites; ) compensation for our sales and marketing personnel; and ) ticketing expenses and credit card veri®cation and processing fees. At September 30, 1999, we recorded a provision of £14,000 relating to Award Minutes, our customer loyalty scheme, which we launched at the close of our ®nancial year. General and administration. General and administration costs, excluding non-cash share-based compensation and amounts provided for company National Insurance contributions, for the year ended September 30, 1999 totalled £1.2 million. General and administration costs for this period consisted primarily of compensation for ®nancial, human resources and administrative personnel, excluding non-cash share-based

30 compensation, fees for outside professionals, telecommunications and other overhead costs, including occupancy expense. Share-based compensation. A non-cash charge of £672,000 was recorded as an expense during the year ended September 30, 1999. National Insurance charges. A provision of £600,000 for company National Insurance contributions in relation to share-based compensation was recorded as an expense during the year ended September 30, 1999.

Tax on Loss on Ordinary Activities As a result of the loss for the year ended September 30, 1999, no corporation tax charge arose. At September 30, 1999, we had approximately £10.0 million of U.K. tax losses available to carry forward without expiry and to offset against future trading pro®ts.

Period Ended September 30, 1998 During the period from April 1, 1998 through September 30, 1998, we were engaged in start-up activities and incurred £292,000 of operating expenses. These operating expenses primarily consisted of investments in technology and personnel-related expenses. Our web site was not operational during this period and consequently we had no turnover. We incurred £1,000 of tax relating to bank interest earned. For the period ended September 30, 1998, we incurred a loss of £286,000.

Quarterly Results of Operations The following table sets forth, for the periods presented, data regarding total transaction value, turnover, cost of sales, operating expenses and losses and supplemental operating data. Data regarding total transaction value and our turnover, cost of sales, operating expenses and losses have been derived from our unaudited ®nancial statements which, in the opinion of our management, have been prepared on substantially the same basis as the audited ®nancial statements, and include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation. The operating results in any quarter are not necessarily indicative of the results that may be expected for any future period.

April 1, 1998 Quarter Quarter Quarter Quarter Quarter (inception) to Ended Ended Ended Ended Ended September 30, December 31, March 31, June 30, September 30, December 31, 1998 1998 1999 1999 1999 1999 (in £ thousands, except non-®nancial operating data) Pro®t and Loss Account Data: Total transaction value ******** Ð 25 275 544 1,803 4,255 Turnover ******************* Ð 2 25 49 119 409 Cost of sales **************** ÐÐ28859 Gross pro®t ***************** Ð 2 23 41 111 350 Operating costs: Product development******** 179 82 115 244 669 1,457 Sales and marketing ******** 27 56 89 188 848 2,417 General and administration*** 86 56 94 400 643 1,492 Non-cash share-based compensation************ Ð 6 18 184 464 540 National Insurance provision Ð Ð Ð 157 443 479 Total operating costs********** (292) (200) (316) (1,173) (3,067) (6,385) Other operating income ******* ÐÐÐ66Ð Operating loss *************** (292) (198) (293) (1,126) (2,950) (6,385) Non-®nancial Operating Data: Number of items sold in period Ð 417 3,082 5,798 14,569 39,683 Number of registered subscribers at period end(1)************ Ð 18,128 90,074 188,710 364,750 571,687 Number of customers at period end(2)************** Ð 219 1,662 4,070 10,189 28,687 Number of suppliers at period end **************** Ð 110 223 320 548 1,102

(1) Number of registered subscribers includes registered subscribers:

31 ) at June 30, 1999, only in the United Kingdom; ) at September 30, 1999, in the United Kingdom and France; and ) at December 31, 1999 in the United Kingdom, France, Germany and Sweden. (2) Number of customers is cumulative since inception and includes customers: ) at June 30, 1999, only in the United Kingdom; ) at September 30, 1999, in the United Kingdom and France; and ) at December 31, 1999 in the United Kingdom, France, Germany and Sweden.

Our turnover increased in each quarter since the quarter ended December 31, 1998, during which we launched the U.K. version of our web site. Our turnover is based on total transaction value, which also increased in each quarter since the quarter ended December 31, 1998. These increases resulted from the expansion of products and services available on our web site and from the expansion of our registered subscriber base, as market awareness and user functionality of our web site improved. In addition, for the quarter ended December 31, 1999, turnover increased signi®cantly due to increased sales of travel products in connection with Millennium celebrations and of holiday gifts.

Our operating expenses also increased in each quarter. Product development expenses increased, especially for the quarters ended September 30, 1999 and December 31, 1999, due to increased staff levels necessary to maintain our two-tier architecture as the number of transactions on our web site increased, as well as, to a lesser extent, expenses incurred to begin work on the new three-tier architecture for our web site. Sales and marketing expenses have also increased substantially for the quarters ended September 30, 1999 and December 31, 1999 as a result of expenses incurred for the off-line advertising campaign that began in August 1999, as well as increased on-line marketing expenses and the implementation of our international expansion strategy. General and administration costs increased for the quarters ended June 30, 1999, September 30, 1999 and December 31, 1999 compared to earlier quarters, as we added several executive of®cers to our management team, incurred increased legal fees associated with our international expansion programme and incurred increased occupancy expenses associated with higher staff levels. Expenses related to non-cash charges for share-based compensation and related provisions made for company National Insurance contributions have also increased in each quarter as we have hired executive of®cers and staff in each of product development, sales and marketing, and general and administrative positions, increasing our number of employees from two employees at inception to 163 employees at December 31, 1999.

Our quarterly operating results will be affected by a variety of factors, including an increased level of sales and marketing expenses as we continue to build our brand, the implementation and success of our international expansion strategy, increased spending in product development relating to the new architecture and the increase in total transaction value that we are able to achieve. Some of these factors are outside our control.

As a result of our limited operating history and the emerging nature of the market for e-commerce, it is dif®cult for us to forecast our turnover accurately. We may be unable to adjust spending in a timely manner to compensate for any unexpected shortfall in turnover. Accordingly, any signi®cant shortfall in turnover relative to our planned expenditures would have an immediate adverse effect on our business, results of operations and ®nancial condition.

Our limited operating history and rapid growth make it dif®cult for us to assess the impact of seasonal factors on our business. Nevertheless, we expect our business may be subject to seasonal ¯uctuations, re¯ecting a combination of seasonality trends for the products and services offered by our web site and seasonality patterns affecting Internet use. For example, demand for leisure travel may increase over the summer vacation period and demand for travel services and gifts may increase over holiday periods, while Internet usage may decline during the summer months. Our results also may be affected by seasonal ¯uctuations 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 downturns.

Due to the foregoing factors, our quarterly turnover and operating results are dif®cult to forecast. We believe that period-to-period comparison of our operating results may not be meaningful and should not be relied upon as an indication of future performance. In addition, it is possible that in one or more future quarters our operating results will fall below the expectations of securities analysts and investors. If that happens, the trading price of our shares and ADSs may decline signi®cantly.

32 Liquidity and Capital Resources To date, we have ®nanced our operations primarily through the issue of ordinary and redeemable convertible preference shares. Our net proceeds from ®nancing activities from April 1, 1998 to February 4, 2000 were approximately £36.4 million. After inception, our ®rst capital increase consisted of an issuance of preference shares, which raised £600,000 from four private equity ®rms, Cheetah International Investments Limited, with Arts Alliance Advisors acting as its investment adviser, NewMedia Investors Limited, Venture Partners and Innovacom 3, and £350,000 raised through a bridge loan from Cheetah International Investments Limited, Venture Partners and Innovacom 3. In May and June 1999, we converted the £350,000 bridge loan into preference shares at a 25% discount and raised £6.0 million additional capital through the issuance of ordinary and preference shares to our existing shareholders and key employees, corporate and institutional investors, including Intel Corporation, and a group of private equity ®rms, including Amadeus Capital Partners Limited, Global Retail Partners, L.P. and T-Telematik Venture Beteiligungsgesellschaft GmbH. NewMedia Investors Limited acted as our ®nancial adviser in connection with our May 1999 ®nancing. In August 1999, we agreed the terms of our third capital increase, which was completed in November 1999. Our existing shareholders that exercised their rights to acquire additional ordinary and preference shares provided $5.0 million, or £3.1 million, and Morgan Stanley Dean Witter Equity Funding, Inc. provided $2.5 million, or £1.6 million. Morgan Stanley & Co. International Limited, an af®liate of Morgan Stanley Dean Witter Equity Funding, Inc., has also served as our ®nancial adviser and is acting as ®nancial adviser and sponsor in relation to the offering to which this prospectus relates. On February 4, 2000, we completed a private placement of preference shares to strategic partners that we consider to be key to our business. This private placement raised cash proceeds of approximately $30 million, or approximately £18.5 million. The new investors are BAA plc, Bass plc, Mitsubishi Corporation Finance PLC, Priceline.com Incorporated, Sony Music, Sheraton International Inc. and Viventures FCPR. In this fourth round of ®nancing we raised an additional amount of approximately $10 million, or approximately £6.2 million, through the issuance of ordinary and preference shares to some of our existing shareholders that exercised their rights to acquire additional ordinary and preference shares, as the case may be. In our fourth round of ®nancing, preference A shares were allotted to our existing shareholders, Cheetah International Investments Limited, Innovacom 3 and Venture Partners Multimedia ASA. Our existing shareholders, except as disclosed below, and Venture Partners Multimedia ASA were allotted preference A shares for cash at a price of $616.75 per share. Innovacom 3 was allotted preference A shares for cash at a price of $340.54, pursuant to the shareholders' agreement dated November 16, 1999. Cheetah International Investments Limited was allotted shares for cash at a price of $616.75 and $340.54 pursuant to the shareholders' agreement dated November 16, 1999. On admission to the Of®cial List of the London Stock Exchange, which will occur on the closing date of the offering to which this prospectus relates, each outstanding Preference A Share and Preference B Share will be converted into 285 ordinary shares. At February 15, 2000, our employees and directors had options outstanding over 14,923,166 of our shares that are exercisable at a weighted average exercise price of 23.80p per share. Net cash out¯ow from operating activities was £4.4 million for the three months ended December 31, 1999, £1.9 million for the year ended September 30, 1999 and £212,000 for the period from April 1, 1998 to September 30, 1998. The development of our three-tier architecture is nearly complete and will move to the testing stage shortly. Costs associated with the development and implementation of the new architecture have been paid from existing cash derived from the private placement of ordinary and preference shares. In the three-month period ending December 31, 1999, we capitalised £494,000 of costs, which will be amortised over two years. We have entered into a number of contracts relating to this new architecture under which we are committed to spend an additional £500,000, which will be capitalised and amortised over two years. This additional amount will be funded from existing cash derived from the private placement of our ordinary and preference shares (see ``Business Ð Technology and Customer Interface'' in Part 6). Capital expenditure for the three months ended December 31, 1999 was £1.2 million and for the year ended September 30, 1999 was £408,000 in each case for purchases of computer systems and equipment. For the period from April 1, 1998 (inception) to September 30, 1998, capital expenditure and ®nancial investment was £28,000, all of which was used to acquire tangible ®xed assets.

33 For a period of two years following the closing of this offering, we plan to increase spending on our operating activities, including increasing the number of employees in each of sales and marketing, product development and general and administrative positions. Except for the approximately £500,000 relating to our three-tier architecture referred to above and $1.0 million relating to the development of our Scandinavian operations referred to in ``Business Ð Strategic Alliances Ð Travel Services'' in Part 6, we currently have no signi®cant commitments for increased expenditure. Our current commitments will be met fully out of our existing cash and cash equivalents.

Current Trading and Prospects

The current ®nancial year has started encouragingly and our directors believe that we can look forward to continued growth for the remainder of the ®nancial year. Since December 31, 1999, we have continued to experience growth in the number of our registered subscribers and at February 25, 2000, we had over 1.1 million registered subscribers. Since December 31, 1999, our total transaction value and turnover have grown relative to comparable prior periods but we have continued to incur operating losses. We continue to incur additional sales, marketing and product development expenses.

Over the course of our ®nancial year ending September 30, 2000, we expect our sales and marketing expenses to increase signi®cantly compared to the year ended September 30, 1999, as a result of additional advertising expenses we have incurred and expect to continue to incur in connection with our off-line marketing initiative, increased on-line marketing efforts and continued expansion in the United Kingdom and internationally. This expansion may include broadening our supplier base and potentially making acquisitions should attractive opportunities arise. In particular we expect to expand our operations to several further countries in Europe.

We expect our general and administration costs to increase for the year ending September 30, 2000 compared to the year ended September 30, 1999, primarily due to staff increases and expenses associated with expanding our international operations. We also expect our product development expenses for the year ending September 30, 2000 to increase compared to the year ended September 30, 1999. These expenses will be particularly high in the six months to March 31, 2000, since we expect to incur expenses associated with the introduction of a new three-tier architecture for our web site.

U.S. GAAP Reconciliation

We prepare our ®nancial statements in accordance with U.K. GAAP, which differs from U.S. GAAP. The differences applicable to us are described in note 25 in the Accountants' Report in Part 7. The differences between the U.K. GAAP and U.S. GAAP accounting treatment of any warrants that may be granted to Lufthansa and Virgin Atlantic Airways will also have an impact on our reported results under U.S. GAAP.

Market-Related Risks

We currently have no ¯oating rate indebtedness and hold no derivative instruments. Accordingly, changes in interest rates do not generally have a direct effect on our ®nancial position. However, we would also be affected by any changes in interest rates that affect general economic conditions.

Year 2000

We have not experienced any problems as a result of the Year 2000 issue and we do not expect to experience any Year 2000 problems in the future.

34 PART 6. BUSINESS

Overview lastminute.com currently offers consumers in the United Kingdom, France, Germany and Sweden last minute opportunities for airline tickets, hotel rooms, package holidays, entertainment tickets, restaurant reservations, speciality services, gifts and auctions. Our strategic objective is to be the global marketplace for all last minute services and transactions. We believe that customers buy from lastminute.com for three primary reasons: ) Price. We generate some of the lowest prices for many travel and entertainment deals, as they constitute ``perishable'' inventory for our suppliers. We consider perishable inventory to be inventory of our suppliers that, if not purchased by a particular time, can not be used. Examples include airline tickets for seats on scheduled ¯ights and available hotel rooms, concert tickets and restaurant reservations for particular dates. We guarantee the lowest prices on the majority of the perishable inventory that we sell. We believe that consumers are encouraged to buy the products and services we offer on our web site because we are able to provide real-time, on-line access to attractively priced, last minute deals. ) Convenience. We believe that consumers want to identify and take advantage of attractive offers quickly and with minimal effort. We want our customers to rely on us to present them with high-quality products and services, so they do not have to spend valuable time searching for good deals. We also package and deliver products and services, making organisation at the last minute easier for our customers. ) Ideas. We believe lastminute.com has a reputation for offering novel and distinctive products and services that inspire consumers to try something different. Since we work with many high-quality suppliers, we can provide access to numerous items that are unusual and entertaining. Although our registered subscribers may make a purchase by telephoning us directly, our service is based on the utilisation of the Internet and our web site. For the calendar year ended December 31, 1999, approximately 90% of purchases were made on-line. At January 31, 2000, 15 months after we ®rst launched our web site, we had over 800,000 registered subscribers, including over 600,000 in the United Kingdom, and almost 200,000 internationally. Our registered subscribers do not pay to register for our services. Turnover for the three months ended December 31, 1999 was £409,000 and for the year ended September 30, 1999 was £195,000. Our turnover was generated through transactions using our web site with a total value of £4.3 million for the three months ended December 31, 1999 and £2.5 million for the year ended September 30, 1999. From January 1, 1999 to December 31, 1999, our turnover increased by a compound monthly growth rate of approximately 51% relative to an increase in registered subscribers equivalent to a compound monthly growth rate of 33% over the same period. We de®ne registered subscribers as users of the lastminute.com web site 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 us, but elect not to receive our weekly e-mails. Since we count our registered subscribers based on their e-mail addresses, users who register multiple times using different e-mail addresses will count as multiple registered subscribers. For example, if a user has registered with us using an e-mail address at work and one at home, the user will be counted as two registered subscribers. At December 31, 1999, we had secured relationships with over 25 international scheduled airlines, over 500 hotels, over 70 package tour operators, over 165 theatre, sports and entertainment promoters, over 45 restaurants, over 20 speciality service providers and over 200 gift suppliers. Our key supplier relationships include:

) Airlines. British Airways, British Midland, KLM, Lufthansa and Virgin Atlantic Airways; ) Hotels. Bass Hotels and Resorts, the Forte Hotels, Kempinski Hotels, Millennium Hotels and Resorts, Sol MeliÂa Hotels and Starwood Hotels and Resorts Worldwide; ) Tour Operators. Airtours, British Airways Holidays, Kuoni Travel and Thomas Cook Holidays; ) Entertainment. English National Ballet, First Call, The Really Useful Group and The Royal Albert Hall; ) Restaurants. A-Z Restaurants, Chez Gerard and Conran restaurants;

35 ) Services. The Fresh Food Company, The Keyholding Company, Les Concierges de Paris and One for the Road; and ) Gifts. Bodum, Carphone Warehouse and The House of Chocolate. We believe that we have been able to gain a preferred position with many of our suppliers because we have demonstrated our ability to help them promote their inventory more ef®ciently and sell their products and services to an enthusiastic marketplace. We believe that we have successfully created a strong identity around lastminute.com. In addition, we believe that the feedback generated by our customers will be an important tool for our suppliers. Our suppliers can take advantage of our customers' feedback to improve product and service design, inventory ¯ow and resource allocation. Generally, we charge our suppliers commissions on the products and services sold through our web site, which vary by industry segment. Our web site was launched in the United Kingdom in October 1998. We launched localised versions of our web site in France in September 1999, in Germany in October 1999 and in Sweden in December 1999. We intend to establish additional fully localised services with local suppliers, language and character in several other European countries over the next year. We have targeted countries based on overall e-commerce readiness, population size and strategic importance to lastminute.com. By leveraging existing technology and capabilities, we have developed a framework for rapid international expansion. When we expand into new countries, we establish additional multinational supplier relationships, which bene®t not only our operations in those countries, but also our existing operations. Furthermore, we expect each local site to bene®t from shared supply and technological infrastructure, product development and marketing expenditure across borders.

We have entered into agreements and other arrangements to market our web site with key Internet sites, portals and Internet service providers that have a presence in the jurisdictions where we have focused our international expansion strategy, including: Excite U.K., Freeserve and MSN in the United Kingdom; Voila and Wanadoo in France; T-Online in Germany; and Reisefeber in Sweden. In addition, we have recently entered into a pan-European agreement with AOL Europe, as a preferred partner for last minute gift and travel products and services. Our strategic aim is to be able to reach consumers wherever they are with last minute opportunities. We believe that alternative distribution platforms, such as interactive television, mobile telephones and personal digital assistants are ideally suited to offer last minute deals. Accordingly, we have entered into strategic partnerships to offer our content using these new channels. Our web site operates on a complex technology platform. We continually seek to enhance our three key technology areas: ) connectivity to supplier databases; ) functionality for users of our web site; and ) infrastructure to handle our rapid growth. We intend to introduce a new open three-tier architecture for our web site by June 30, 2000 that will be readily expandable as we grow our traf®c and transaction levels.

Industry Background The Internet and E-commerce in Western Europe The Internet has emerged as a global medium that enables millions of people worldwide to communicate and conduct business electronically. The Internet has also become a useful tool which allows consumers to take advantage of the global marketplace with greater ease. In its report entitled ``The Global Market Forecast for Internet Usage and Commerce Based on Internet Commerce Market ModelÏ, Version 5'', published in June 1999, International Data Corporation estimated that the number of Internet users worldwide was approximately 142 million at the end of 1998 and will grow to approximately 399 million by the end of 2002. In its report entitled ``Internet Usage and Commerce in Western Europe 1997-2002'', published in December 1998, IDC estimated that the number of Internet users in Western Europe was approximately 41 million at the end of 1998 and would increase to approximately 136 million by the end of 2002. IDC estimates that approximately 35% of the Western European population will be using the Internet by the end of 2002. IDC expects global e-commerce business conducted will grow from approximately $50.4 billion in 1998 to approximately $733.6 billion in 2002. IDC further expects that the total business-to-consumer e-commerce conducted in Western Europe will grow from approximately $1.9 billion in 1998 to approximately

36 $48.6 billion in 2002. IDC estimates that by the end of 2002, Internet users in the United Kingdom, Germany, France and Scandinavia will represent approximately 65% of the total number of Internet users in Western Europe and will account for 76% of the value of business-to-consumer e-commerce in Western Europe.

Many Western European businesses have been unable to capitalise on the opportunities offered by the Internet and e-commerce. Although the establishment of the European Union has effectively removed many barriers to the free ¯ow of goods and capital across Western Europe, the fragmented, regional nature of Western Europe can make it dif®cult for buyers and sellers to meet in a common marketplace. This inability has the potential to inhibit businesses from reaching previously untapped demand and to prevent consumers from realising best value.

Our management expects the Internet and e-commerce growth in Western Europe to be driven by:

) a growth in the number of users;

) a decrease in transaction costs;

) the proliferation of various devices which provide more ef®cient access to the Internet;

) the presence of European on-line content and e-commerce web sites;

) the recognition by Western European businesses and consumers of the economic bene®ts of the Internet; and

) improvements in network security, infrastructure and bandwidth.

We believe a signi®cant opportunity exists for an e-commerce company that can create a common marketplace where consumers bene®t from good value and timely and novel product and service offerings and where suppliers can market and distribute their products and services more ef®ciently. We expect that such a new common marketplace must offer consumers a blend of content, community, commerce and customer service, all delivered in a highly reliable and ef®cient manner.

Business Development and Prospects

The lastminute.com Solution

In developing the concept of using the power of the Internet to match supply and demand at the last minute, we believe that we have created an exciting opportunity for both suppliers and consumers. We have created a web site offering suppliers a viable alternative distribution channel that does not threaten their core businesses, at the same time offering customers real-time access to a wide range of last minute products and services from a large number of unrelated suppliers and databases at attractive prices, which are often lower than the lowest available fare for bookings made off-line. Unlike other e-commerce companies that have pasted an existing framework designed for the physical world onto the new landscape of the Internet, we believe that we have constructed a business model that could happen only through digital distribution, as we believe that it is not currently possible for our competitors to replicate our business model off line.

We initially focused on marketing the inventories of travel, entertainment and gift vendors. We chose these areas because they are ideally suited to last minute buying. We provide airlines, hotels, tour operators, event promoters, restaurants, services and gift suppliers with a viable channel to distribute excess inventory at short notice. With perishable inventories, suppliers face increasing pressure to sell merchandise as time passes. However, we believe they are reluctant to re-price last minute offers for fear of undermining their core businesses, fare schedules and brands. We effectively create targeted demand and, where requested by the supplier and where permitted by law, protect the supplier's brand by shielding its identity until after the sale is closed and also by providing a distribution channel distinct from its own. As a result, we help suppliers manage and distribute their inventories more ef®ciently, while consumers bene®t by gaining access to good value at the last minute.

We have capitalised on our position as a destination for last minute shoppers to expand beyond perishable inventories to target consumers looking for convenience or inspiration. We market novel gifts and fun experiences which can be delivered on short notice. We have identi®ed professional on-line and off-line gift suppliers that can deliver premium and discounted products quickly. Featured merchandise, such as Waterford crystal, is sold at set prices and at auction. We also source unusual experiences. Our web site has offered helicopter rides, gliding sessions, pre-released Internet mobile phones and afternoons behind the wheel of a Formula One race car. We believe that many consumers now turn to lastminute.com to suggest one-of-a-kind excursions and gift ideas.

37 We believe that our key advantages include the following: ) Pro-Consumer yet Supplier-Friendly. Our model is based on a desire actively to promote the products and services we offer to the consumer. In order for us to be a desirable distribution channel for our suppliers and an attractive solution for our customers, we must highlight, promote and sell our offerings. We believe that we offer our suppliers a dynamic channel to distribute their soon-to-perish products and services. We protect many of our suppliers' core franchises by providing both a ``brand shield'', where possible, and a distinct distribution channel. We believe that, as a result, they are more likely to offer discounts to our customers. We believe our customers bene®t from our model because it provides them with a well-organised marketplace to access high-quality items at attractive prices. ) Business Model can be Transferred Inexpensively and Rapidly into New Markets. Our web site was launched in France in September 1999, in Germany in October 1999 and in Sweden in December 1999. We have recruited local management, established our operational structure and developed new marketing relationships. In addition to leveraging our multinational suppliers, these local versions of lastminute.com include specially sourced travel, entertainment and gift deals from regional vendors. A number of factors have contributed to our rapid international expansion: (1) we were able to cite our strong track record in selling excess inventory in the U.K. market; (2) our supplier relationships are expandable on a pan-European basis, such as through relationships with international scheduled airlines and hotel chains; (3) we have focused our marketing efforts on establishing a global brand name; and (4) the French, German and Swedish offerings leverage our core technology infrastructure, including web technology, database systems and technical support personnel. Our management believes that these factors should enable us to outpace our competitors when entering new markets. ) Network Bene®ts Arising from Multinational Presence. As part of our international expansion, our supplier relations team has built partnerships with local travel, entertainment and gift vendors in each country. As a result, we now have access to select inventory from a range of airlines, hotels, event promoters and gift vendors from France, Germany and Sweden to offer on our web site. Our ability to promote our offers across geographical regions creates network bene®ts for our web site. For example, allocations of premium French resort reservations can be offered on the U.K., German and Swedish versions of our web site. Using our web site, a consumer located in France has the ability to access the product and service offerings in the United Kingdom to make transportation, accommodation, restaurant and theatre reservations for a trip to London. Local relationships enrich the total range of lastminute.com product and service offerings and will provide a larger, pan-European registered subscriber base for our suppliers and a broader and more appealing selection for our users. We may also tailor our web pages to attract users from countries outside of those where we currently have a presence, for example, we may create a web page designed to attract users based in the United States who may be travelling in Europe. ) Large and Rapidly Expanding User Base. At January 31, 2000, with relatively limited advertising, we had 802,104 registered subscribers and, in the month of January, over 22 million page views. Furthermore, we maintain regular contact with our base of registered subscribers through weekly e- mails, which highlight some of the best products and services we have to offer. In addition to the weekly e-mails, we have recently introduced a personalised e-mail feature. Our registered subscribers can indicate particular products and services that they are interested in and will receive e-mails notifying them whenever we have last minute deals available that meet their criteria. To encourage repeat purchases from our registered subscribers, we have introduced a loyalty program, where our customers earn redeemable Award Minutes for each purchase they make on our web site. ) Attractive Market Segment. We believe that our U.K. user base exhibits attractive demographic characteristics. According to the Fletcher Research report, approximately 67% of our users are 25 to 44 years-old and, within the last year, 65% of our users have taken a holiday outside of the United Kingdom and 53% have purchased a mobile phone. We believe that consumers such as these are an important segment of the travel and entertainment markets. This demographic is consistent with our positioning as a one-stop destination for high-quality air fares, accommodation, event tickets, restaurants, services and gifts. Over time, as we expand our product and service mix, we expect our service to attract a wider range of customers. ) Recognisable Brand with Clearly Differentiated Message. Since the launch of our web site in the United Kingdom, we believe that we have developed a distinctive and recognisable brand among U.K. Internet users. According to the British Market Research Bureau report, approximately 45% of London- based Internet users, out of a sample size of 330, and approximately 22% of Internet users in Great Britain, out of a sample size of 3,298, aged 18 to 45 are aware of lastminute.com. Furthermore,

38 approximately 35% of current or intended Internet users, both in London and in Great Britain, out of the sample sizes of 180 and 538, respectively, said they were likely to make a purchase from us in the next 12 months. As a result, we believe that we have the potential to become one of the most recognised e- commerce brands in Europe. We believe that our brand has differentiated us from our competitors and helped us to attract valuable suppliers. ) Broad, High-Quality Product Range through Strong Supplier Relationships. We have agreements with international scheduled airlines and luxury hotel chains to sell their distressed inventory, often at the lowest available prices. Our relationships with major event promoters allow us to secure allocations of scarce tickets. We offer last minute reservations to many well-known restaurants in London. We also have established relationships with many well-known on-line and off-line gift suppliers. We believe a competitor would have to replicate these relationships in order to be able to offer a compelling and competitive alternative. Importantly, suppliers are now approaching us with requests to place their products and services on our web site. Much of the value that we create lies in the processes that we have developed with our suppliers. We have consistently sought to protect our suppliers' identities when necessary by listing generic, unbranded offers. Furthermore, to facilitate long-term relationships with our suppliers, we have built a tailor-made database to interface with suppliers. We believe this database has reduced investment and effort on the part of our suppliers. ) Valuable Distribution Arrangements. Our arrangements with key Internet sites, portals and Internet service providers across Europe have generated substantial traf®c to our web site and to date have contributed to our low effective cost-per-registration. Speci®cally, we have negotiated payment schemes based on cost-per-new customer or registered subscriber, rather than the more common ¯at cost-per-page view. As a result, we have been able to build a sizeable base of registered subscribers very quickly with a relatively low average acquisition cost although we expect our average acquisition cost to rise as we expand our sales and marketing efforts.

The lastminute.com Growth Strategy We have identi®ed a number of critical initiatives which we intend to undertake in order to enhance our market position further. Broadly, these initiatives focus on: ) Expanding Our Products and Services. In order to provide a wider range of last minute solutions to our customers, we must continue to broaden our products and services offerings. We gather customer feedback about the most appealing products and services offered on our web site. We plan to expand our offerings aggressively in light of this market feedback. In addition, we may expand our web site to include products and services beyond those which we currently offer. We intend to continue to expand our core services to include a broader range of business-class air tickets, sport events, restaurants, services and gifts. In addition to sales of our suppliers' distressed inventory, we intend to expand our sale of full price items so that our web site becomes the global marketplace for all last minute needs, catering to customers looking for last minute convenience or inspiration, as well as those interested in lower prices. We expect that an increase in the sale of full price items will increase margin. However, we are unable to predict whether we will succeed in increasing full price sales or what proportion of turnover these products will account for. In addition, we expect to continue to develop our choice and volume of travel destinations. In order to strengthen our position as a provider of last minute solutions, we intend to develop the capability to offer air tickets to almost any destination by including air travel offers beyond those that we independently source directly from suppliers. We expect to build this capability either through in-house development or through potential acquisition. In either case, we expect to add price and availability information from ticket consolidators and airlines and aggregate the content into a searchable database. ) Expanding Supplier Relationships. We plan to expand our direct sales force and to continue to expand our relationships with new suppliers in both existing and new sectors so that we may attract more registered subscribers and increase our turnover. An important element of our success has been our ability to demonstrate to our suppliers that we are able to sell their excess inventory. We intend to leverage our strong track record to attract and maintain relationships with industry leaders in each of the categories of products and services that we offer. ) Expanding into Other Countries. Following our successful launch of the French, German and Swedish versions of our web site, we plan, in 2000, to expand our web site to include versions accessible

39 in other European countries. We have hired key personnel to assist us in progressing our plans to launch localised versions of our web site in Spain and the Benelux region by the end of 2000. We are exploring opportunities to expand our business into other markets, including Asia, Australasia, and the United States and may take advantage of opportunities when, and if, a suitable business partner or model is available. We may pursue this expansion through acquisitions or otherwise. As we expand into other countries, we intend to acquire additional domain names and the cost of these domain names may be material. ) Developing New Distribution Channels. The increased use of the Internet to distribute content through alternative platforms, coupled with the rapid increase in the use of mobile devices in our core target market, presents attractive opportunities for lastminute.com. Last minute deals and offers are an ideal application for these new channels (see ``Business Ð Alternative Distribution Channels'' in this Part 6). We have targeted, and will continue to target, alternative platforms to reach our high-end customers. We are particularly focused on new distribution channels, such as interactive digital television; mobile phones which use Internet applications, allowing a mobile phone user to access the Internet using a mobile phone handset; mobile phones using short message service, allowing short text messages to be sent to the handset of a mobile phone user; and popular personal digital assistants, such as Palm Pilot and Psion. To date, we have experienced limited sales through these new distribution channels. We intend to utilise the distribution channel provided by mobile telephones for all appropriate products, including ¯ights, entertainment tickets and restaurants. However, as this particular distribution channel has only been recently introduced, it is dif®cult for us to predict which products will prove most suitable. ) Accelerating Marketing Initiatives. We initially grew primarily through word-of-mouth advertising and did not invest heavily in on-line or off-line advertising and branding. In August 1999, we launched a series of concentrated off-line marketing and brand development initiatives and these initiatives are continuing. We believe that a comprehensive marketing campaign, including mass media advertising placements, can help us reach a new audience base and increase traf®c on our web site. ) Enhancing Technology. We plan to invest in three key technology areas: (1) improved connectivity into supplier databases, allowing a wider product range and more detailed and timely information about products; (2) increased and enhanced functionality for users of our web site; and (3) a system that can readily handle the rapidly rising number of transactions in the United Kingdom and elsewhere. We frequently update and enhance the features of our service to improve further our customers' experiences on our web site. As part of the effort to achieve these goals, we intend to introduce a new three-tier architecture for our web site by June 30, 2000. ) Developing the lastminute.com Site Content. We are seeking to develop the informational content on our web site. We have hired a content editorial team that writes copy and sources third-party content for our web site to give our visitors access to information about every destination, tour package, accommodation, service, restaurant or gift featured on our web site. In addition, we have created a customer-generated content area and we encourage customer feedback. We intend to expand on this feature of our web site, so that registered subscribers will be able to provide reviews of speci®c destinations, accommodations or events that will be available to all visitors to our web site. ) Further Strengthening the Management Team. We believe that we have been successful in hiring highly talented and motivated people. We are in the process of recruiting additional personnel at all levels in conjunction with our expansion program.

Products and Services Our strategy is to expand each of our travel services, leisure, gifts and auctions operations, while reducing the overall percentage of revenues directly derived from travel services.

Travel Services

Flights. One of the initial services we offered to our customers and suppliers was the marketing and sale of airline tickets. The facilitation of airline travel still remains a fundamental part of our operations. We currently do not book any individual ¯ight reservations on so called ``no-frills'' airlines. We have introduced premium air travel offers on our web site and, in response to customer demand, began sourcing business-class tickets for a range of airlines.

40 Our users can take advantage of the ¯ights we have to offer by searching for a ¯ight based on: ) a particular date and destination; ) a general geographic location, like Europe, the United States or the rest of the world; ) the class of travel, for instance, business or economy class; or ) ``Fantastic Flight Deals''. Hotels. In addition to the sale of airline tickets, we believe that lastminute.com has also been a valuable distribution channel for many of the world's leading hotels. We have cultivated relationships with many selected, quality hotels in the United Kingdom, France, Germany and Sweden. We have also established a wide network of hotels in many popular destinations, including Amsterdam, Madrid, New York, Brussels and Vienna. As we expand our operations into new countries and regions throughout Europe, we expect to continue forging relationships with local hotels so that we may expand our inventory of hotel rooms and the choice we can offer to our customers. Our knowledge of local markets, as is the case in the United Kingdom, France, Germany and Sweden, allows us to furnish our customers with the most appropriate hotel for their particular tastes and budgets. Users of our web site have the option to identify an available hotel based on: ) a particular city and arrival date; ) a general geographic location, like International, United Kingdom and Ireland or London; ) our quality rating of the hotel which can be a 3, 4 or 5-star rating; ) the type of property desired, such as bed and breakfast; and ) hotels we have chosen to ``Highlight''. Package Holidays. We work with a selection of high-quality package tour operators to offer package holidays, which bundle transportation, which may include charter ¯ights, with accommodation. The type of package holidays we offer include ``Citybreaks'' to locations like Madrid, Barcelona and Paris and holidays to destinations like Egypt, Israel and Central America. Our package holidays are sourced in three ways, in order to offer our customers a wider selection: (1) directly sourced from our package holiday suppliers; (2) jointly sourced with Apollo Travel Limited; and (3) sourced from our feed into the Comtec database. Our users have the option of taking advantage of the package holidays we have assembled or conducting a search for a customised package holiday based on their travel preferences, such as speci®c dates, particular destinations or particular weekends. lastminute.com has developed an innovative search feature which allows users to search for package holiday destinations by the temperature at and the length of the ¯ight to the destination. Our package holiday service provides us with an additional way to handle excess inventory from ¯ight and hotel operators and to create additional value for us and our customers by bundling the products and services we offer.

Leisure Entertainment. We source entertainment tickets that fall into either of two categories: tickets that can be offered at a discount, particularly as part of a package, and tickets to premium events which are often unavailable elsewhere. Our strategy has been always to have access to the largest events which may otherwise be sold out and to attract visitors to our web site by releasing last minute tickets. Our available inventory of tickets may either be sold by us at a set price or offered at auction as part of a customised package. Our relationships with suppliers in the United Kingdom, France, Germany and Sweden, assist us in obtaining dif®cult-to-get tickets. Users of our web site have the option to search for the following types of tickets: ) theatre and comedy; ) pop and rock; ) classical, dance and musicals; ) sports and events; and ) those we have identi®ed as our ``top picks''.

41 While we currently provide a wide range of entertainment options for our users, we plan to enhance the current range of entertainment offered and, in response to our customer feedback, we will focus our efforts on regional and international sporting events, such as tickets to pan-European soccer matches, championship boxing matches, National Football League games in the United States and other similar high pro®le events. We believe that our ability to source tickets to regional and international sporting events provides us with an opportunity to sell other products and services we offer, such as ¯ight reservations and hotel accommodations. Restaurants. We recently launched the ``Restaurants'' page of our U.K. web site which allows our users to: ) view table availability and make reservations at London restaurants; ) review features on some of London's top chefs; ) get special offers from participating restaurants; ) learn about our ``Restaurant of the Week''; and ) provide feedback on their dining experiences. Our web site provides our users with the ability to make last minute reservations at well-known restaurants in London. We allow users to search for available restaurants which best suit their needs based on the size of the party, the date and time of the reservation, the location within London and the type of cuisine. Once a user chooses a restaurant, we provide brief summary details about the restaurant, a selection of available times in order to make the reservation and the opportunity to book the reservation. We do not charge our customers to make reservations, as currently we collect fees from restaurants on bookings made through our web site. Lastminute Services. As our objective is to become a one-stop destination for last minute needs, this web page is designed to cater to the immediate needs of our users. We have secured relationships with speciality service providers that provide service solutions, such as short notice babysitting and 5-star room service at home. Gifts At December 31, 1999, we offered over 800 different gift items. The types of gifts that are offered on lastminute.com range from gift vouchers for exciting excursions, such as skydiving, to food hampers. We allow gift suppliers to take advantage of our distribution channels and we provide a presence on the Internet for suppliers that do not have one. We believe that in order for us to offer a complete and convenient solution to our customers, we must add value to their shopping experience. We strive to add value by having a well-organised marketplace where we can offer quality products and services at attractive prices. The gifts section of our web site is sub-divided into various search categories based on the type of gift sought, those which we have highlighted as being ``This Week's Star Buys!'' or ``Tried and Tested by Us!'', or the nature of the recipient. Also, we intend to introduce a gift reminder service where our registered subscribers can record dates of special occasions. The gift reminder service will allow our registered subscribers to establish a ``gift pro®le'' for a particular person and receive reminders of upcoming events. Not only does the gift reminder service remind our registered user of an important date, but also will give gift suggestions.

Auctions Another feature of our web site is our ``Auctions'' page. Our implementation of the auction feature underscores our recognition that the Internet is an ideal vehicle to market and distribute scarce and distinctive goods which may be made available to us prior to becoming available to the general public, such as Internet application mobile phones and the Psion Revo, a personal digital assistant. Our on-line auctions also provide another channel for our suppliers to move excess inventory. We believe our ``Auction'' capability is another valuable tool we provide to our suppliers for inventory control and yield management. We may act on an agent or cash-collector basis with respect to auctions on which we receive commissions, depending on the supplier, and in very limited instances, we may act as principal in respect of an auction. Users of our web site have had the opportunity to participate in the following types of auctions: ) auctions of the week; ) auctions of art, antiques and furnishings; ) auctions of tickets to special events as part of customised packages; ) charity auctions; ) seasonal auctions, such as for Christmas, the Millennium and Valentine's Day;

42 ) auctions of indulgent items, like ®ne wines, cigars and champagne; ) auctions of memorabilia and collectibles; and ) travel auctions. The products available at auction on lastminute.com are all provided by professional suppliers and include offers for all budgets. In order to place a bid in one of our auctions, the user must enter a bid for a particular item and, where the number of available items exceeds one, for example, when we auctioned 50 available tickets on board Virgin Atlantic Airways' inaugural ¯ight to Cape Town, or 1,000 tickets to the British Airways London Eye, the quantity of the item bid for.

Unique Offerings In addition to those products and services mentioned above, we give our users the opportunity to take advantage of novel product and service offerings. The U.K. version of our web site has recently featured the following web pages which have offered something a little unexpected: ) Fully Booked. On our ``Fully Booked'' web page, we have offered our registered subscribers the ability to take advantage of our access to exclusive or otherwise sold-out travel destinations, hotel accommodations, events, gifts, restaurants and services. For example, we have offered our registered subscribers special access to popular night-clubs and bars in London, the Teatro dell'Opera di Roma for a concert performed by Placido Domingo and Luciano Pavarotti and gol®ng breaks where they have exclusive use of a private jet. ) Skiing is Believing. On this web page we have offered our registered subscribers information about ski holidays. We provide up-to-date information about ski resorts, weather conditions and holiday packages. Our registered subscribers in France, Germany and Sweden have access to ``Skiing is Believing'' offers on the local versions of our web site. ) How to Blow Your Bonus. ``How to Blow Your Bonus'' has offered a range of luxurious products and services. Listings have included hiring your own private island and a ¯ight in a MiG ®ghter jet. Our registered subscribers in France, Germany and Sweden have access to a web page which has a similar theme and offerings, but is tailored to the local market. ) Pick a Gift. We have recently developed a new feature of our web site which allows our registered subscribers to buy a gift for a friend and experience a bit of fun at the same time. Using the ``Pick a Gift'' web page, our registered subscribers have the ability to choose up to ®ve items which are offered on our web site as a gift they would like to give to a particular friend. Once the items have been chosen by the registered subscriber, the intended recipient is provided with a ``secret saying'' by the gift giver and we send the intended recipient an e-mail which informs them of the presents awaiting them on our web site. Upon visiting our web site, the intended recipient is taken to a web page customised to highlight the available choices. When the intended recipient has chosen a gift and provided the ``secret saying'' to us, the registered subscriber's credit card is debited and the gift is delivered to the intended recipient. ) Desperate to Impress. This web page includes a range of gifts and services for the individual who wants to make more of an impact. This is a tongue-in-cheek page designed to give people ideas about how to gain respect, in¯uence and even love, all at the last minute. Items include everything from chauffeur driven cars to hired private jets. ) Party Page. The ``Party Page'' allows our registered subscribers to prepare for that last minute social engagement. We can make arrangements for party locations and entertainment, food and beverages, party paraphernalia and other necessities. ) In Your Suitcase. ``In Your Suitcase'' allows registered subscribers to shop for vacation, business or general travel needs. In addition, we can help our registered subscribers arrange for passports and visas, travel insurance, health insurance, transportation to the airport and other personal chores, such as a plant watering service. We expect to continue to build relationships with a wide network of service suppliers. These include speci®c services, such as babysitting, and more comprehensive ``concierge'' services, such as personal assistant services. Some of these services can be effectively bundled with other travel and entertainment deals. For example, a comprehensive vacation package might include a taxi to the airport, airline tickets, hotel accommodation and a housewarming service for the return.

43 Ful®lment Arrangements Through our strategic alliances, we offer our suppliers' products and services directly to our registered subscribers on our web site. However, we often rely on third party service providers to help us ful®l our customers' purchases of our suppliers' products or services. Services for which we rely on third parties include making airline reservations and credit card veri®cations and con®rmations. In addition, we rely on links to computerised central reservation systems of airlines 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 web site are made through direct links into global distribution systems, such as Galileo and Amadeus, and are queued to our ticketing partners for ticket issuance. The International Air Transport Association (IATA) imposes rules and regulations regarding air travel and the issuance of airline tickets on its members. IATA is a voluntary organisation primarily concerned with international, scheduled air transport. Most of the world's major airlines are members. IATA operates an accredited travel agent program for those agents selling scheduled air transport services. 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. We are not a member of IATA; however, our ticketing agents, Apollo Travel in the United Kingdom, Vacances Carrefour in France, Aeroworld in Germany and Resia in Sweden, are IATA members. Since our ticketing agents currently carry out the actual ful®lment of airline ticketing for our customers, we are able to rely on their memberships. In order to increase our ¯exibility we have applied for our own IATA membership. IATA acknowledged receipt of it on January 10, 2000 and we are currently awaiting a reply. In general, in order to obtain and maintain IATA accreditation, ticketing agents are required to show a pro®t before tax and have current assets that exceed current liabilities at the end of each ®scal year. In addition, ticketing agents may qualify for IATA accreditation by having a paid up share capital of at least £40,000. Our application has been made on that basis and remains subject to the approval by member airlines of IATA. It is customary for IATA to decide on applications approximately 60 days after publication of the application to all IATA member airlines. In addition, each country where we operate has its own travel agent licensing requirements. In the United Kingdom, where, to date, substantially all of our ¯ight reservations have been made, the U.K. 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. We have been granted an ATOL. Apollo Travel is covered under the ATOL held by its af®liate, Cosmosair plc. In order to obtain and maintain an ATOL, a travel agent must have ``free assets,'' which are net current assets and freehold premises, equal to at least 5% of risk revenue. Risk revenue is determined by measuring the amount of risk that each element of a travel agent's business attracts. On August 14, 1998, we entered into an agreement with Apollo Travel under which Apollo Travel agreed to provide booking, ticketing, delivery and customer support services for ¯ight, ¯ight travel package or other ancillary service reservations in the United Kingdom. We agreed with Apollo Travel that it will be our exclusive ticketing partner in the United Kingdom in respect of reservations made through our web site that require bonding by the Association of British Travel Agents, IATA or ATOL. Consequently, substantially all of the airline suppliers that make last minute tickets available to us for sale on the U.K. version of our web site do so pursuant to written agreements with Apollo Travel rather than directly with us. In addition, our access to Galileo and Amadeus is governed by agreements between these parties and Apollo Travel. The original commission terms of our agreement with Apollo were amended by a supplemental letter on April 31, 1999, whereby we agreed to pay Apollo Travel a ¯at-rate fee per ticket. The term of our agreement with Apollo Travel is ®ve years and may be terminated by either party on six months' written notice. John Lockwood, who is the Managing Director of Apollo Travel, owns 534,945 of our shares, less than 0.5% of our outstanding shares. On September 30, 1999, our French subsidiary, Lastminute S.A.R.L., entered into an exclusive agreement with Vacances Carrefour under which it has agreed to provide ticketing and delivery services to our customers who have purchased airline tickets using the French version of our web site. Vacances Carrefour has agreed to share the commission it receives for ticketing our customers' reservations with us, less any fees and taxes. Our agreement with Vacances Carrefour is renewable for one-year periods and may be terminated by either party upon six months' written notice. In Germany, we have entered into an agreement with Aeroworld under which Aeroworld agreed to ful®l the reservation requests of our customers accessing the German version of our web site. Aeroworld has agreed to share the commission it receives for ticketing our customers' reservations with us, less any fees and taxes, and to maintain a customer support line dedicated to our customers. Our non-exclusive agreement with Aeroworld

44 commenced on August 1, 1999 and is for an inde®nite period, but may be terminated by either party upon two months' written notice. On October 13, 1999, we entered into a letter of intent with Reisefeber to establish a commercial partnership in Sweden and, eventually, the rest of Scandinavia. In the letter, Reisefeber agreed to our ful®lling the last minute ¯ight, hotel, entertainment, auction and gift purchases which occur on its web site. We agreed to fund all costs relating to development, staff, technology, interaction with the other versions of our web site and supplier inventory. Furthermore, in the letter of intent, we agreed to commit $1.0 million to the development of our Scandinavian operations. We agreed with Reisefeber that the term of any contractual arrangement would be for one year, renewable for a second. For ful®lment of hotel reservations, we entered into a two-year agreement on September 9, 1999 with Pegasus, the provider of the Private Label Reservation Service, which is a distribution access database. This agreement allows our registered subscribers to make real-time, on-line reservations at over 30,000 hotels around the world. We believe that one of the attractive features of the Private Label Reservation Service is that it allows us to provide our registered subscribers with access to the entire reservation database or to highlight only those hotels with which we have negotiated special rates. We believe the Private Label Reservation Service 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 of up to 70,000 last minute holiday deals from some of the premier holiday tour operators in the United Kingdom. In order to create such a large database, we have combined package holidays offered by our package holiday suppliers with the package holiday database provided by Comtec. On September 28, 1999, Apollo Travel entered into a three-year agreement with Comtec whereby Comtec provides Apollo Travel with access to the holiday package databases of over 30 package holiday operators. Under the terms of the agreement, Comtec provides details of ``late availability'' package holidays to Apollo Travel, which has been granted a non- exclusive licence to use and display the package holidays on our web site. Unlike our package holidays which are directly sourced through a provider, when registered subscribers access a holiday provided by Comtec, they are directed to a telephone service and are unable to make an on-line booking. Strategic Alliances We have successfully built relationships with premier suppliers in the travel services, leisure and gift sectors. We believe that, through repeated interaction, vendors have become increasingly comfortable with our approach and have gained con®dence in our ability to sell excess inventory and services without compromising their brands or standard pricing. As a result, many vendors have improved their pricing and increased our product allocation.

Travel Services Flights. We have cultivated supplier relationships with major international scheduled airlines including: British Airways, British Midland, Continental Airlines, KLM, Lufthansa and Virgin Atlantic Airways. Our airline suppliers service the most popular destinations for world travellers. As a result of our relationships with the airline suppliers named above we have been able to sell net fares on our web site. Net fares are airline fares where distribution costs have been reduced or eliminated, allowing us to offer some of the lowest fares available. The net fares which we are able to sell are provided to us by the airline, through Apollo, immediately prior to the period in which they are applicable. Pursuant to our arrangements with Apollo, we receive the difference between the price of the net fare and the price at which we sell it, less the ¯at-rate per ticket fee we pay to Apollo. Generally the agreements continue until terminated. However, the agreements with Continental Airlines and Virgin Atlantic Airways, the durations of which are one year, expire on December 31, 2000. On January 31, 2000 and February 14, 2000 we executed performance-based warrant instruments pursuant to which we may grant warrants to acquire up to 5,544,675 and 5,543,250 of our ordinary shares to each of Lufthansa and Virgin Atlantic Airways, respectively, in equal instalments at the end of ®ve six-month measuring periods commencing January 1, 2000 and March 1, 2000, respectively, if they achieve speci®ed levels of ticket sales through our web site. Each warrant will be exercisable for an ordinary share during a 60-day period commencing three years after the date it is issued at an exercise price of £0.37 per share, subject to customary adjustments in the event of speci®ed events. We may terminate either warrant instrument and cancel the related warrants in exchange for cash payments if the relevant airline fails to achieve speci®ed minimum levels of sales in the ®rst two measuring periods. We may also cancel a portion of the warrants granted in respect of a measuring

45 period if the airline fails to achieve a speci®ed minimum level of sales in the following measuring period. We may enter into similar agreements to issue warrants from time to time. Following priceline.com's recent investment in us, we have entered into a memorandum of understanding with a view to eventually developing a strategic partnership, which may include hyperlinks to some products or services offered on our respective web sites. Hotels. We have entered into arrangements with individual hotels or hotel groups throughout Western Europe, North America, Central America, the Middle East and Asia. We have supply contracts for last minute inventory with selected hotels that are members of the world's major hotel groups, including Bass Hotels and Resorts, Forte Hotels, Kempinski Hotels, Millennium Hotels and Resorts, Sol MeliÂa Hotels and Starwood Hotels and Resorts. We have relationships with local hotels in the United Kingdom, including English Lakes Hotels, Grange Hotels and Thistle Hotels, and in France, including Carlton Intercontinental and HÃotel de Crillon and Prince de Galles. We have also entered into relationships with several premium properties in London. Furthermore, we have sourced offers from individual small hotels and hotel groups in the United Kingdom, France, Germany and Sweden. The arrangements by which we are able to access available rooms at member hotels of the international hotel groups and individual hotels named above include terms whereby the hotel agrees to: ) guarantee rooms that it allocates to us, if any; ) a fee or commission structure; ) process our customers' credit card details upon arrival at the hotel; and ) receive an invoice directly from us for the payment of our fees or commissions. Furthermore, our hotel suppliers named above have agreed to refrain from offering hotel rooms at lower prices than are offered to us. The rates offered to us by our suppliers are not exclusive and may be available through other vendors pursuant to discounts or special promotions. On January 12, 2000, we entered into a letter of intent with Bass Hotels and Resorts. Under the letter of intent, we have agreed to work with Bass Hotels and Resorts to capitalise on cross-marketing, co-branding and cross-selling opportunities. Some of the avenues we may pursue include using our alternative distribution channels to offer the products and services of Bass Hotels and Resorts and cross-promotions on each of our web sites and to each of our registered users. Also, in connection with our most recent round of ®nancing, we entered into a preliminary memorandum of understanding with Starwood Hotels and Resorts with a view to developing and pursuing joint marketing and promotion opportunities, such as promoting lastminute.com on Starwood Hotels and Resorts web sites and offering bene®cial placement for Starwood Hotels and Resorts on our web site. Tour Operators. We work with a selection of high-quality package tour operators. Our package holidays are organised and supplied by a range of reputable operators, including Airtours, British Airways Holidays, Kuoni Travel and Thomas Cook Holidays. Our letters of understanding with Thomas Cook Holidays and agency agreement with Airtours provide for the following: ) noti®cation to us if the holiday is offered at the same discount elsewhere; ) a guaranteed allocation of products to us; ) details of the supplier's booking conditions via e-mail; and ) the basis on which we receive our commission. These suppliers, excluding Airtours, have agreed to refrain from offering their products at lower prices than are available through us. In other words, the rates offered to us by our suppliers are not exclusive and may be available through other vendors pursuant to discounts or special promotions. On January 1, 2000, Apollo Travel entered into an agreement with Kuoni Travel, whereby Kuoni Travel appointed Apollo Travel as its agent for the purpose of offering various Kuoni holiday packages. Kuoni Travel has noti®ed Apollo Travel of its approval of our offering its package holidays through our web site. Furthermore, in conjunction with Apollo Travel, we have gained access to numerous package holidays to be offered on our web site including those made available to us through Comtec's database of package holidays.

46 Leisure Entertainment. We have established relationships with our entertainment providers and we believe we enjoy a preferred position with many event promoters. This helps to ensure a secured allocation of many scarce tickets. We have established relationships with key entertainment suppliers, including M.C.P. and The Really Useful Group in the United Kingdom, and Corida and Garance in France. We have entered into supply agreements with both large ticket providers, such as First Call, and local venues, such as the Royal Albert Hall. In addition, we also deal directly with particular entertainment companies, such as the English National Ballet. The terms and nature of our agreements with each of the entertainment suppliers named above include: ) a determination whether we are to act as agent or cash-collector; ) an agreement that the supplier will handle ticket distribution; and ) an agreement concerning our fee or commission rate. In addition, excluding our agreements with the Royal Albert Hall, Corida and Garance, each of the entertainment suppliers named above has agreed that the offerings made available on our web site are exclusive to us, while displayed on our web site. In some cases, we purchase entertainment tickets for resale on our web site. In those instances, we act as principal and the entire value of the transactions represents turnover. Restaurants. We believe that our ability to provide our users with real-time access to the reservation systems of some of the premier restaurants in London increases the traf®c of the U.K. version of our web site and the degree to which Internet users are attracted by its content. We have been able to offer this service, free of charge to our users, because of the partnerships we have formed with restaurants in London, which currently pay us fees for bookings made through our web site. Among others, our registered subscribers can make reservations to dine at restaurants owned by A-Z, Chez Gerard and Conran. We intend to expand our existing relationships in London, as well as introduce this feature in other major cities. Our agreements with the restaurant suppliers named above include the following terms and conditions: ) our agreement to position the restaurant's details, without charge, on our ``Restaurants'' booking web page; ) the restaurant's agreement to provide details of tables reserved, if any, exclusively for our users; ) the restaurant's agreement to update us concerning table availability each week or once every two weeks; ) the restaurant's agreement to provide ``full and ef®cient service''; and ) the basis for our commission paid by the restaurant for each booking made. We receive a ¯at fee commission for restaurant bookings, irrespective of the value of the transaction to the restaurant. Services. In order to be a one-stop destination for almost all last minute needs, we have also included a range of convenient services on the U.K. version of our web site. Speci®c service vendors include: Childminders, a short notice babysitting service; ``London Luxury Delivery Service'', a 5-star room service at home provided by Les Concierges de Paris; One for the Road, a designated-driver service; National Association of Dogsitters; and The Fresh Food Company, a food-delivery service. We also work with a number of comprehensive service providers to assist customers who need help at short notice, such as The Keyholding Company, which organises access to its customers' homes for deliveries while they are away, and Smoothe Operators, a concierge service that can perform a wide range of errands. The terms and conditions of our agreements with the suppliers named above, excluding our agreement with One for the Road, include: ) our agreement to list the company as one of our recommended service suppliers; ) an undertaking by the supplier to provide a timely and ef®cient service; ) an agreement by the supplier to track our customers referred to them by our web site; ) an agreement by the supplier to handle all customer enquiries and ful®lment relating to its service; and ) the basis upon which we receive our commissions.

47 Our agreement with One for the Road provides for the offering of its services on our web site, the method by which it will track customers referred by our web site and the basis upon which we will receive commission.

Gifts We have identi®ed on-line and off-line gift suppliers that can deliver premium and discount products quickly. Some of our most popular gift items are excursions, such as balloon rides or Ferrari rentals, which are supplied by a wide variety of vendors. Our gift suppliers also include large vendors, such as Bodum and Carphone Warehouse, and smaller speciality retailers, such as The House of Chocolate. As we have attempted continually to increase the breadth of our product and service offerings, we have arrangements with many gift suppliers, both large and small. Our letters of understanding with the gift suppliers named above request the suppliers to commit to: ) the payment of our fees or commissions in respect of the sale; ) handling of all customer service and ful®lment of the orders; ) providing us with adequate product information; and ) offering us exclusive and special offers from time to time. Our gift suppliers named above have also agreed to offer our customers the most ``compelling'' price available, meaning that our suppliers offer attractive and competitive prices to us and our customers, although the prices may not be exclusive and may be available through other avenues. Furthermore, we have agreed to promote the suppliers within the gifts section of our web site, using graphical branding, individual product promotion, text and a recommendation. We have agreed with the House of Chocolate to promote its products on each local version of our web page. In addition, we seek assurances from our gift suppliers that they will deliver their products to our customers in a timely manner. Our Web Site Developing Our Web Site Content In order to develop the lastminute.com community, we are improving the informational content of our web site. We believe content should enhance our web site's ability to attract and retain users, strengthen our identity and increase the sales of products and services through our web site. One of our key objectives is to increase our sales by ensuring the quality and accuracy of product descriptions and by providing destination-related information, such as: ) customer testimonials; ) local web-cams; ) local listings and guides; and ) local weather and health information. We endeavour to give our customers every possible reason to buy using our web site. We believe that the one-stop lastminute.com solution adds value to their purchase and on-line shopping experience. In addition, the content of our web site may attract new registered subscribers and increase the frequency of visits to our web site by providing news, entertainment and information services. Furthermore, we intend to re®ne the content of our direct marketing products, such as the weekly e-mails to our registered subscribers. Personalisation and Platforms. As our ability to personalise our offerings improves, the content of our web site may be used to provide tailored windows into our products, open up new markets and strengthen brand loyalty. We believe, as new alternative distribution channels grow and become more popular, our ability to deliver the appropriate content to the appropriate platform with a suitable frequency of customer contact will be essential. International Strategy. Where relevant, our content-driven deals will be leveraged across the whole international network. However, the lastminute.com presence in each market will feature much locally-generated or sourced content. We seek to ensure that local content managers respond rapidly and ¯exibly to their evolving markets, so that each international presence is not simply a translation of one central presence, but is a ®nely tuned, culturally relevant merchandising operation.

48 Customer-Generated Content. We believe that we have successfully created a strong identity around lastminute.com. We believe that we have acquired a distinctive ``voice'', which communicates spontaneity and a sense of adventure and has attracted a loyal community of registered subscribers. We seek to expand this sense of community by encouraging extensive customer feedback on our U.K. web site. For example, once a week we award a bottle of champagne to the registered subscriber who submits our favourite comment, which we post on the web site. We intend to develop further the customer feedback component of our web site so that our users will be able to give reviews of speci®c destinations, accommodation or events. We believe that users will place substantial value on this content, since it is generated by like-minded individuals. Importantly, our management believes customer-created content will create a barrier to entry for our competitors and will preserve our distinctiveness in the e-commerce marketplace. Our management also believes that our use of customer-generated content will enable us to boost unbranded sales, since customer recommendations are more likely to increase the con®dence levels of our prospective customers. In addition, we believe that the feedback generated by our customers will be an important tool for our suppliers. Our suppliers can take advantage of our customers' feedback to improve product and service design, inventory ¯ow and resource allocation.

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 web site purchasing any of our product and services 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 also request various personal details, including name, address, phone number, age, gender and income, it is possible to register during the purchasing process without providing this additional information. By registering, our subscribers agree to the terms and conditions posted on our web site, including: ) once purchased, tickets are non-exchangeable, non-refundable and non-transferable and all other purchases are non-refundable and non-exchangeable; ) lastminute.com does not accept liability for any indirect or consequential losses arising out of the use of the web site or for any products or services purchased from the web site; ) lastminute.com limits its liability for direct losses to the total price of the product or service purchased; ) lastminute.com will not send unwanted e-mail to its registered subscribers, but cannot guarantee that hotels and other suppliers will not send unsolicited e-mail; ) if a registered subscriber wins an auction, the subscriber's credit card will be debited automatically and, if the credit card is rejected, lastminute.com reserves the right to award the item to another bidder; and ) registered subscribers may only make reservations with their own credit cards. We have established a programme to reward our customers' loyalty. Customers collect redeemable Award Minutes based on the value of the transactions effected on our web site. Customers can redeem their Award Minutes for selected deals, which may change from month to month.

Operation of Our Transaction-processing System We believe that one of the key elements necessary for our web site to be successful is that it be easy to use. We want our customers to feel comfortable using our web site and, as a result, we have placed the utmost importance on the features and functionality of our transaction-processing system. To this end, we have attempted to standardise the way in which transactions are completed using our web site. Generally, our system works in the following stages: Identifying the Product or Service. In this stage, our customer may conduct a search for a particular product or service, such as a ¯ight reservation to Paris, based upon his or her individual preferences or a selection of gifts from a particular supplier. Initiating Inquiry. Prior to commencing the transaction process, our customer has an opportunity to learn more information about the particular item he or she is interested in. For example, if the customer wanted to make a ¯ight reservation, the description would include the destination, the location of departure, the price range for the

49 available tickets, the type of ticket, either one-way or return, the available dates and any limitations on travel. If a customer were buying a pashmina scarf, the description would include the colour and the size. Finalising the Reservation or Purchase. At this stage, our system guides our customer through a series of web pages which request various details which we use, as applicable, to narrow the range of product and service offerings made to that customer. When our customer has provided all of the requested information, a summary is provided and the customer is given an opportunity to review the reservation request or the details of his or her purchase prior to ®nalising the transaction. Once the transaction has been ®nalised, our customer may: add the reservation to his or her ``basket'' and continue to shop on our web site; remove the item from the basket; or purchase the product or service. Purchasing the Item. Generally, if our 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 limited 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 speci®ed by the customer, or we use the delivery mechanisms of our third-party suppliers. Pricing and Security Guarantees. Customers of lastminute.com are entitled to the bene®t of our pricing and security guarantees. In our pricing guarantee, we agree that if a customer can ®nd a seat on the same ¯ight and with the same booking conditions, or a room at the same hotel on the same day, or a package holiday which we source with the same dates with the same operator at a cheaper price than that which the customer paid using our web site, we will refund the difference in price and give the customer an additional £20 for the inconvenience. Our security guarantee provides that, in the event that a fraudulent transaction is processed on a customer's credit card because we have been negligent in safeguarding the customer's credit card details, we will reimburse the customer's outstanding liability to the credit card issuer, up to £50, and give the customer an additional £20 for the inconvenience. This does not affect the statutory or legal rights that the customer may have or any statutory obligation on us to act reasonably in limiting our liability. International Expansion France Our web site was launched in France on September 10, 1999. We have established a subsidiary based in Paris, Lastminute S.A.R.L., that employed 11 people at December 31, 1999. Lastminute.com has a 99% interest in Lastminute S.A.R.L. The remaining 1% is held by our chief executive of®cer, Brent Hoberman. The site is in French and is fully localised, offering a broad range of last minute products and services similar to those offered by the other versions of our web site, but with a French character and from predominantly French suppliers. We have, or our French subsidiary has, relationships with around 150 local suppliers in France, including Air France, Air LibertÂe, and Continental France, over 90 independent hotels and a variety of entertainment and gift suppliers, including Corida and Garance. In addition, we are able to enhance the offers on the French version of our web site by including last minute opportunities in France from suppliers with whom we have relationships on a pan-European basis, such as Starwood Hotels and Resorts. We have agreed distribution deals with Caramail, les Echos, MSN, Nomade, Voila and Wanadoo. Germany Our web site was launched in Germany on October 15, 1999. We have established a wholly owned subsidiary in Munich, Last Minute Network Germany GmbH, that employed 14 people at December 31, 1999. We bene®t from an agreement between Apollo Travel and with Lufthansa pursuant to which Lufthansa acts as a ¯ight supplier to lastminute.com and we offer a range of high quality hotels, package tours, entertainment and gifts similar to those offered on the U.K., French and Swedish versions of our web site. At December 31, 1999, we had arrangements with around 150 local suppliers. This local selection of suppliers is in addition to those suppliers with whom we have relationships on a pan-European basis. For example, we have established relationships with many local hotels in Germany, including Hotel Adton Berlin and Hotel Bayrischer Hof. Moreover, we can provide our German registered subscribers with offers in Germany from multinational suppliers. We have, or our Germany subsidiary has, signed on-line distribution agreements with Cabana.net, Cityweb, T-Online and Lycos. Sweden The locally-focused Swedish version of our web site, which contains offers in both Swedish and English, became operational in December 1999. Similar to our strategy in France and Germany, we have set up a wholly owned subsidiary based in Stockholm, Lastminute AB, that is developing the strategic relationships required for

50 fully localised offerings in Sweden. At December 31, 1999, we had established relationships with 40 local suppliers, including Aspa HerrgÊard, Berns Hotel and Grand HÃotel, and Lastminute AB had one employee. In order to launch more quickly, we have negotiated a framework for distribution relationship with Reisefeber, the largest full service Scandinavian travel site, to supply all of Reisefeber's last minute offerings. Rest of Europe After Sweden, we expect to extend our franchise to several European countries in 2000. To assist in our expansion efforts we have hired key personnel in Spain and the Benelux region. These key personnel are expected to lay the groundwork for launches of localised versions of our web site while also further developing the product and service offerings made available on our web site. As a result, we expect these new additions will further expand our registered subscriber base. In addition to expanding our registered subscriber base to new markets, we expect these local versions to help us to continue to build attractive destination content on our web site. Given the substantial size and heterogeneity of the European market, we may launch independent versions of our web site in several countries with locally-sourced content and last minute opportunities. We will seek creative partnerships which can accelerate our traf®c and expand our registered subscriber base. Other Opportunities for Expansion We are exploring opportunities for expanding our business into other markets, including Asia, Australasia and the United States, and may take advantage of opportunities when, and if, a suitable business partner or model is available. We may consider joint venture arrangements with local companies, including Internet service providers and telecommunications ®rms, to develop co-branded last minute offerings. In addition, if we are presented with an attractive opportunity, we may consider growing through acquisitions or otherwise. In particular, we have proposed entering into a joint venture with travel.com.au for the purposes of developing our business and the lastminute.com brand in Australia and New Zealand. We have also entered into a memorandum of understanding with Mitsubishi Corporation with the intention of developing a framework for establishing a strategic relationship. If we decide to expand into Asia, Mitsubishi Corporation has agreed that it will assist us in developing our business and media and press interest in Japan. Mitsubishi Corporation has also agreed to assist us in securing additional strategic partnerships in the region.

Alternative Distribution Channels We believe the increasing distribution of Internet content through alternative platforms presents attractive opportunities for us. Last minute deals and offers are an ideal application for these new channels. To date, we have focused on companies in the digital television, mobile phone and personal digital assistant markets. We entered into agreements with Cable & Wireless Communications Programming Limited for its Digital Interactive Television platform on August 11, 1999 and Telewest Communications Group Limited for its Active Digital platform on November 30, 1999. We are providing an interactive television version of the lastminute.com web site for Cable & Wireless' cable television users in England. At February 15, 2000, Cable & Wireless had taken 100,000 orders for its digital platform and installed its service with approximately 77,000 digital customers in England. We expect a gradual roll-out to the rest of the Cable & Wireless franchises throughout 2000. The launch of Telewest's Active Digital Service in England is expected to take place in March 2000. In preparation for the Cable & Wireless, Telewest and other interactive television services, we have developed a new site design, taking into consideration the nuances associated with the medium of television and accessing our service from a living room environment. The ®rst version of our mobile data service has been developed and is accessible via Internet ready mobile phones. On December 16, 1999, we entered into agreements with Telecom Securicor Cellular Radio Limited, known as BT Cellnet, and Orange Personal Communications Services Limited to provide the content of our U.K. web site to mobile phone users in the United Kingdom, as well as to customers of BT Cellnet's and Orange's Internet portals. We have agreed to furnish BT Cellnet's mobile phone customers with selected highlights from our travel database, including ¯ights, hotels and package holidays, as well as hyperlinks which enable the mobile phone customer to conduct a ¯ight search on our web site directly from his or her mobile phone. In addition, we supply BT Cellnet and Orange with a list of travel offers on a weekly basis in a format suitable to send as a short message service alert. In addition, we have agreed to provide the content of our U.K. web site to the customers of BT Cellnet's and Orange's Internet portals. We believe that these relationships and access to the additional distribution channel will provide us with a valuable opportunity to increase our brand awareness and the loyalty of our registered subscribers.

51 In order to strengthen our relationship with Orange further, we, Dotcom Investments Holdings, Inc., which is wholly owned by a discretionary trust of which Brent Hoberman is a bene®ciary, Martha Lane Fox, Thomas Teichman, Peter Teichman and Jan Swainston entered into a conditional share purchase agreement whereby Orange plc will become one of our strategic investors following the closing of the offering.

On February 4, 2000, we entered into the GPRS Applications Alliance with Ericsson to foster the development of the mobile Internet Market. Once operational, GPRS, which stands for general packet radio services, will enable wireless data communications services, namely wireless Internet and Intranet services, at a faster speed than the one currently available through the global system for mobile communications. Through the use of general packet radio services, a mobile phone, a personal digital assistant or a lap top computer user will have the ability to remain connected to the Internet rather than having to dial-up for access. As a result, these users with general packet radio service capability will be able to access and take advantage of our latest last minute deals without having to stop to dial in.

We have also reached an agreement with the U.S. ®rm AvantGo, Inc., a developer of custom software for distribution of content and services to popular personal digital assistants, including the Palm Pilot and Psion. The ®rst version of our personal digital assistant service has been developed and is accessible via Palm Pilot with AvantGo software. We recently reached an agreement with Psion GmbH to develop a lastminute.com service for their ``Psion and more'' portal in Germany, which is expected to launch in 2000. Our management believes that our last minute content, particularly announcements for scarce and limited time offers, is ideal for downloading to a handheld personal digital assistant.

Although the majority of our initiatives in alternative distribution channels have been focused toward the United Kingdom to date, we have already established contacts with similar key platform providers in other European countries and we intend to offer our services in those markets using alternative platforms. We recognise that different distribution channels will have different customer pro®les, purchasing dynamics and technology characteristics. As a result, while we utilise the same database as our web site, we may adapt the user interface for use on the various platforms.

Marketing and Brand Awareness

Through advertising, web site design, promotions and content, we believe that we have created a culture around the lastminute.com brand that communicates spontaneity, adventure, good value and a high standard of customer service. We believe the deals offered on the lastminute.com site reinforce these associations and, in doing so, create loyalty in the emerging ``last minute'' community. In addition, we will continue to forge new marketing partnerships where we have identi®ed suitable partners and can enter into mutually bene®cial arrangements.

On-line Distribution

To date, we have secured marketing deals with over 30 U.K. and European high-traf®c and targeted web sites. Internet service providers, portals and content and utility providers have proven to be good value for lastminute.com. Our agreements with our marketing partners take the form of either an advertising arrangement or an electronic commerce agreement. In most instances, irrespective of whether it is an advertising or electronic commerce agreement, we maintain a permanent ``button'' or dynamic content for last minute offers on each web site rather than rotating advertising banners or links. In many cases, we have negotiated a mutually bene®cial compensation framework under which we pay a fee for each registered user or new customer referred from a web site rather than a ¯at traditional cost-per-page view. We believe this has proved an effective method for driving traf®c to our web site and overall has resulted in relatively low effective cost to date for each registration. By giving a mixture of new customer bounties, promotional offers and competition prizes to these sites, we believe that we are building the framework for long-term, mutually bene®cial relationships with key sources of traf®c and customers.

52 Our On-line Marketing Partners

United Kingdom France Germany Sweden

Internet Service Portals Content & Utility Internet Service Internet Service Internet Service Providers Excite U.K. BAA.co.uk Providers Provider Provider AOL Europe Freeserve Cheap¯ights.com AOL Europe AOL Europe X-Stream Network Handbag.com Genie Internet Egg Line One MSN Expedia U.K. Portals Portals Portal X-Stream Network Tiny Online FT.com Nomade.fr Cityweb Passagen Yahoo U.K. Hotmail Wanadoo Lycos (Tripod) Voila T-Online Content & Utility Virgin Net Interactive Investor Reisefeber Content & Utility Content & Utility Caramail Cabana.net les Echos

Our advertising agreements allow us to purchase a ®xed space on a particular web site for a ®xed price. During the term of these agreements, which is usually 12 months, we have the ability to advertise our web site and product and service offerings. In the United Kingdom, we have advertising agreements or other arrangements with BAA plc to advertise on BAA.co.uk, Hotmail, MSN and Yahoo U.K. The duration of our arrangement with BAA plc will continue until terminated. The duration of our agreement with Yahoo U.K. is three months and expires in May 2000. In France, we have a three-month long advertising agreement with les Echos which is due to expire on March 31, 2000. In Germany, we have advertising agreements with T-Online and Lycos (Tripod). Our agreement with Lycos (Tripod) is for six months, ending in August 2000, and our agreement with MSN is ongoing. In Sweden, we have an advertising arrangement with Passagen. Our advertising agreement with AOL Europe covers the U.K., French and German versions of the AOL web site. We believe that the primary bene®ts that these advertising arrangements provide are co-branding and content integration. As a result of this type of arrangement we bene®t from the attractiveness and Internet traf®c of our marketing partner. In addition, we may have the ability to integrate the content of our web site with that of our marketing partner. In other words, if our marketing partner offers travel opportunities on its web site, we may have the ability to advertise and provide last minute ¯ight or hotel reservations.

The other type of agreement we have entered into is an electronic commerce agreement. Under our electronic commerce agreements, as is the case with our advertising agreements, we are provided with a ®xed location on a particular web site, but our cost is, in part, based on performance. Electronic commerce agreements provide for a lower tenancy cost, or the cost of having a ®xed location on a web site, but require us to pay our marketing partners a percentage of our sales based on the number of customers they pass on to our web site. The terms of our electronic commerce agreements are generally for 12 months. In the United Kingdom, we have electronic commerce agreements with BT Internet (Genie Internet), Cheap¯ights.com, Egg, Excite U.K., Expedia U.K., Freeserve, FT.com, Handbag.com, Interactive Investor, Line One, Virgin.net and X-Stream Network. Our electronic commerce agreement with BT Internet (Genie Internet) will continue until terminated. In France, we have electronic commerce agreements with Caramail, Voila and Wanadoo. In Germany, we have electronic commerce agreements with Cabana.net and Cityweb. Our agreement with Cityweb is a month-to-month agreement. In Sweden, our on-line marketing partners with electronic commerce agreements are Reisefeber and X-Stream Network. Our electronic commerce agreements have allowed us to work closely with our marketing partners and reward them based on their ability to generate sales for us.

In addition to entering into marketing partnerships with relatively experienced on-line companies, we have entered into a preliminary memorandum of understanding with Sony Music which expresses our mutual intention to develop and execute a strategic and mutually-bene®cial cross-marketing and cross-promotion arrangement. Under the preliminary memorandum, Sony Music will market and promote our European-based product and service offerings to the U.S. subscribers of Sony Music's on-line services. If we expand our web site to include a U.S. version, we have agreed to discuss entering into a performance-based warrant agreement with Sony Music. The web site address for Sony Music is www.sonymusic.com.

On February 29, 2000, we entered into a pan-European agreement with AOL Europe, as a preferred partner for last minute gift and travel products and services. In addition, the agreement provides us with advertising and promotion opportunities on the Netscape Online service in the United Kingdom. The term of the agreement is 12 months and may be terminated by either party upon written notice.

We have also actively sought partnerships with leading travel sites. At present, we maintain a menu-link on the web sites of Expedia U.K. and Cheap¯ights.com. In the near future, we intend to launch an af®liate program

53 whereby individual site owners will be able to link directly to lastminute.com, which we expect to generate additional traf®c for our web site and sales for us.

Advertising We have retained the advertising ®rm of M&C Saatchi to create a comprehensive global branding and off- line marketing campaign promoting lastminute.com. The campaign, which was launched in August 1999, includes extensive signage and print and radio advertisements in the United Kingdom. We have also used radio advertising in France and a combination of print advertising and direct marketing in Germany to build the lastminute.com brand in our markets outside the United Kingdom. As part of our most recent round of funding, we entered into a memorandum of understanding with BAA plc whereby, in exchange for an additional investment of $750,000 in our equity, BAA plc has agreed to assist us in implementing our new marketing programs in U.K. airport terminals controlled by BAA plc. We will be provided with prime advertising space in these terminals and BAA plc will maintain a hyperlink to our web site. In addition, we will also establish a pick-up point in each of these terminals, thereby giving our customers a recognisable and consistent location to pick up their airline tickets purchased through our web site.

Public Relations We have been pro®led as an innovative Internet company and we have drawn the interest of both the U.K. and international press and have been featured in news stories on television, such as on BBC, CNN and CNBC, and in publications such as the European edition of Business Week, Newsweek, The Times, The Daily Telegraph, The Guardian, The Financial Times and The Wall Street Journal Europe. Furthermore, we have won the following awards: ) ``Best U.K. Internet Start-Up''. In October 1999, we were awarded ``Best U.K. Internet Start-Up'' for ranking ®rst in the e25 index. The e25 index was created by Bain & Company, the management consultants, and Management Today magazine to attempt to identify the most successful Internet companies in Britain. Bain and Management Today researched the accounts and business plans of 300 U.K. start-up Internet companies, which were judged on their potential to create customer value, the economic advantage of their on-line business models over their ``bricks and mortar'' alternatives, the size of the market addressed, the opportunity to dominate that market, the quality of the brand, the traf®c to the companies' Internet sites, the extent of their ®nancing and their public pro®le; ) ``Best Retail Web Site''. In 1999, we were presented with the award for ``Best Retail Web Site'' by New Media Age magazine in association with The Times in the third annual New Media Age Effectiveness Awards, an annual event that awards achievements in the U.K.'s new media industry; ) ``Best Commercial Web Site''. We won the award for ``Best Commercial Web Site'' in the 1999 Yell U.K. Web Awards. These awards are sponsored by Yell, the yellow page web site owned by British Telecommunications, .tv and Internet magazine. The Yell U.K. Web Awards were set up in 1996 to recognise the quality of web sites produced in the United Kingdom, set standards for the industry and promote usage of the Internet in the United Kingdom. Winners of the Yell U.K. Web Awards are chosen from nominations sent in by Yell users; and ) ``Company of the Year''. In December 1999, we received the award for ``Company of the Year'' in the 1999 Growing Business Awards. Intending to celebrate the achievements of innovative and wealth-creating businesses in the United Kingdom, the awards were launched in 1999 by the Confederation of British Industry, a leading independent employers' organisation that represents over 250,000 public and private sector companies, and Real Business magazine. We believe that the awards we have received have had a positive effect on our reputation and have helped raise our public pro®le and brand awareness. Competition We compete with both on-line and traditional sellers of the products and services offered on our web site. The market for selling products and services over the Internet is new, rapidly evolving and intensely competitive. Current and new competitors can launch new sites at a relatively low cost. In addition, the traditional retail industry for the products and services we offer is intensely competitive. The suppliers who have the potential to be our competitors include suppliers who aggregate across sectors and suppliers focusing on speci®c sectors. Suppliers who aggregate across sectors collect a wide range of

54 products, services and content from different suppliers and locations into one easy access point. Companies who currently aggregate across sectors and content and have recognised brands that could be positioned to become last minute aggregators include Priceline.com Incorporated, EMAP On-line, ONSale and QXL.com plc. Some suppliers who have businesses that originated off-line and are focused on speci®c sectors such as travel, entertainment or gifts have migrated elements of their businesses to the Internet. With respect to travel suppliers, our potential competitors include: ) Internet travel agents such as DÂegriftour, ebookers.com, Expedia, Mr. Jet and Travelocity; ) full service travel agencies, such as Always, Flightbookers, Havas Voyages, L'tur, Nouvelles FrontiÁeres, Thomas Cook and Trail®nders; ) consolidators of both ¯ights and holidays such as Globepost, which owns TravelSelect, that sell typically to the top travel agencies; and ) individual airlines, such as American Airlines, or groups of airlines that may create joint web sites that market on the Internet. In Germany, another travel web site, 5 vor 12, owns the Internet domain name ``lastminute.de'' (see ``Intellectual Property'' in this Part 6). With respect to hotels, our competitors include travel sites that have added hotels to their offerings and certain sector specialists, such as Hotel Reservation Network, Hotels and Travel, The Hotel Guide, Travlang, the AA Hotel Guide and the Good Hotel Guide. In the entertainment sector, some on-line sites are information providers for off-line ticket retailers, while others offer consumers the ability to purchase entertainment tickets on-line. Potential competitors 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 on-line commerce and in facilitating Internet traf®c, including Amazon.com, AOL, Microsoft and Yahoo!, who could choose to compete with lastminute.com either directly or indirectly through af®liations 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 ®nancial condition. We believe that the principal competitive factors that we must address include: ) a recognisable and defensible brand identity; ) strong relationships with suppliers and access to inventory; ) a broad geographic marketplace; ) maintenance of a sizeable registered user base; ) web site accessibility and ease of use; ) customer service and reliability of delivery; and ) technical capabilities and expertise. Although we believe we compete favourably with respect to these factors, new or existing competitors may replicate and successfully execute a business plan similar to ours. We also expect that we will be continually challenged by new and existing competitors who may have signi®cantly longer operating histories, larger customer bases and greater brand recognition. In addition, our competitors may have signi®cantly greater ®nancial, technical, marketing and other resources than we do. As a result, these competitors may be able to secure merchandise from suppliers on more favourable terms than we are able to do. In addition, many of these competitors may be able to devote signi®cantly greater resources to: ) marketing and promotional campaigns; ) attracting traf®c to their web sites; ) attracting and retaining key employees; and ) web site and systems development.

55 Technology and Customer Interface We have a complex technology platform that comprises four major components: ) automated links into supplier databases for inventory allocation and order con®rmation; ) multiple product and sales databases; ) a Microsoft-based front-end for the presentation of web-pages; and ) a set of systems and tools to support ``Customer Relationship Management'' through automated e-mail handling and telephone-operator support. The original lastminute.com web site was built in four months on a low budget and, during the last 12 months, its two-tier architecture has been re-engineered to sustain large traf®c increases while simultaneously improving the speed and reliability of the customer experience. The current two-tier architecture is based on Microsoft IIS web-servers located on an array of Compaq servers running Microsoft NT back-ended by Informix IDS databases located on Sun servers running the Solaris operating system. Our new three-tier architecture is substantially complete and is currently being tested, and we expect it to be introduced by June 30, 2000. A move to a three-tier architecture involves inserting an application-server layer between the web-server, or the front-end, and database-servers, or the back-end. Web-servers are relatively unsophisticated systems that are designed to handle high-volume communications, in particular web-traf®c between customers' browsers and our site. Web-servers are relatively fast, stable, secure and cheap, allowing easy scalability in communications. However, they are generally not appropriate in large e-commerce enterprises for storing web site programming logic, nor for transaction management, load-balancing or session management, which involves retaining information during a customer's session as he or she moves from page to page, or other necessary tasks. Database-servers are sophisticated systems designed to store and manipulate structured information. These can accommodate large amounts of information, are relatively stable and easy to maintain and can execute rapid searches and complex data-manipulation operations. However, database-servers are also not ideal for storing web site programming logic nor are they well-suited to the stable management of large volumes of simultaneous ``sessions'' of Internet transactions. We intend to move all our web site programming logic out of our web-servers and database-servers into an application-server layer. The new middle tier application-server technology will be ATG Dynamo from Art Technology Group running on Sun servers with Solaris. ATG Dynamo is built in Java and is the basis for our progression towards a fully open and standards-based architecture. This is a set of systems, hardware and software that have been built to comply with openly published and ``standards-based'' methods that have been agreed by independent industry bodies. Adoption of an open and standards-based architecture increases the degree of ¯exibility we have with our web site, will help reduce the risk of system failure and will increase the extent to which our engineers are able to understand our system and to control every aspect of its evolution. This middle tier should allow us to minimise the weaknesses of a two-tier structure, and to enhance the ability of our web site's architecture to scale, balance load, execute session management, including after failure of a component, manage code more effectively, and manage multiple back-ends, encompassing internal and external databases.

Supplier Connectivity We have designed a range of technologies to support our business model and relationships with suppliers. These technologies need to be optimised for very rapid handling of a wide range of highly volatile inventory. An individual product may be available for a few hours, then become unavailable and then, once again, be available a few hours later. We must only present customers with opportunities for which inventory is available. Distressed stock is allocated both automatically by polling reservation systems and manually by fax transmissions. While we seek to make this process as automated as possible, we have designed a ¯exible system that allows both manual entry of products, as well as automated updating of ¯ight and hotel room availability using electronic data interfaces to global distribution systems such as Galileo, Amadeus and Pegasus over X25 and TCP/IP datalinks. Where we do not have an electronic link to a supplier's order system, we communicate with our suppliers by fax transmission. This allows us to communicate effectively with all suppliers, including those that are not technologically sophisticated. We continue to enhance the ¯exibility and functionality of these systems through our work with various travel industry systems and technical experts to seek to ensure increasingly accurate inventory counts and rapid transactional processes. The bene®t of the investment in this system is that it allows

56 our customers to have real-time availability and booking on-line, the combination of which differentiates us from many other on-line product and service providers. Most signi®cantly, it enables us to offer some of the lowest prices available.

Hosting and Internet Communications Our public-server systems infrastructure, web and database servers are hosted at a facility built in 1999 by Exodus Communications in West London, which provides links to the Internet through backbone providers including COLT Telecom and MCI WorldCom, as well as 24-hour monitoring and engineering support. The Exodus facility has multiple stand-by power generators and multiple back-up systems, as well as advanced security, safety and ®re-prevention facilities and procedures. Our databases are the subject of regular on-site and off-site back-ups. We have achieved a high standard of connectivity and we believe that we have sustained our high quality of service into the French, German and Swedish markets from London. We believe we have achieved this through the quality and rapidly growing capacity of Exodus in Europe, as well as through our own measures to monitor, understand and drive our ``site-visibility'' in the fragmented European Internet service provider marketplace using our own engineering measures and ``personal network'' of European technical contacts. We believe the ¯exibility of our systems has been further demonstrated in the rapid deployment of multilingual sites in Europe hosted from common infrastructure, but with separate national inventory databases synchronised at the level of individual shared product sets.

Customer Interfaces We built a transaction-ready web site in four months. In evolving the web site, we have emphasised ease of use, reliability and functionality that presents the most relevant offers as quickly as possible to the user. New features and services are introduced at the rate of about one per week. Examples of these have been: ) On-line: a choice of up to 70,000 package holidays, seasonal features and gift vouchers; ) E-mail: personalised e-mail and customer feedback invitations; ) Interactive digital television: interactive digital television service on the Liberate platform with Cable & Wireless; ) Phone: special offers delivered by wireless application protocol to Internet-ready mobile phones with Orange and BT Cellnet; and ) Personal digital assistants: daily downloads of lastminute.com offers through AvantGo. We are steadily enhancing our ability to serve customers individually. We intend to introduce a personal e-mail service which enables customers to set their desired destinations, date of travel and style of holiday so that we can alert them when suitable inventory becomes available. We have systems in place that are capable of analysing our transactions in a variety of ways, allowing us to respond to recognised trends. We expect to expand such ``explicit'' targeting schemes in our three-tier architecture with implicit techniques based on tracking customer activity and presenting product recommendations accordingly. We expect these measures will enhance our buy-rate and improve our overall conversion ratios, as well as further enhance the loyalty of our registered subscribers. In the future, we may introduce an initiative to allow customers to build their own packages of products, allowing us to offer even better value in ``instant bundles'' while shielding product and supplier speci®c pricing from the customer. Other enhancements we are pursuing include: ) direct links to car rental systems; ) luxury package holiday, entertainment and restaurant reservations systems; and ) supplier extranets, which allow direct inventory entry by suppliers worldwide.

Customer Support and Services We have locally based customer support and service teams in London, Paris, Munich and Sweden that deal with all e-mail and telephone inquiries that arise from our web site, press coverage or marketing activities. Our customer support staff is multilingual and all communication concerning each localised version is conducted in the relevant native language. Our customer support policy aims to ensure that customer e-mails are answered

57 within two hours if received during working hours and overnight if received out of working hours. Telephone support is also provided for callers nervous about buying on-line or experiencing dif®culties while trying to buy. In order to achieve the standards we have established in our customer support policy in view of the growth of our customer base in the United Kingdom, we have entered into an agreement with a third-party supplier to whom we have outsourced our over¯ow U.K. customer support and service functions. We endeavour to establish a reputation for high quality customer service, and it is integral to our vision that customers have a positive experience when buying from lastminute.com. Our management believes high-quality customer service and immediate, ef®cient ful®lment of orders are essential to the lastminute.com brand. We will attempt to achieve this by: ) building a well-quali®ed in-house customer service team; ) using Apollo Travel, Vacances Carrefour, Aeroworld and Resia for ful®lment of airline tickets and package tours; and ) carefully selecting third parties for the ful®lment of other products. Apollo Travel provides the following to lastminute.com: ) customer support seven days a week and on-site representatives in our local of®ces; ) payment processing by e-mail or fax with next day delivery by mail; and ) commitment to implement e-ticketing for lastminute.com once it becomes ubiquitous in Europe. When products purchased on our web site require delivery, we use the delivery mechanisms of our third-party suppliers. For example, when customers order wine or champagne, our ful®lment partner, ChÃateau Online, contractually commits to the customer to deliver the wine within a speci®ed period of time.

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 web site, technology platform, software and other aspects of our business. We own the lastminute.com domain name. We rely on a combination of trade mark, copyright and con®dentiality 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 licence from third-party suppliers. These third-party licences 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 and/or at greater costs or may interrupt our operations. To date, we have not been noti®ed that the technology underlying our web site infringes the intellectual property rights of third parties. We have made applications to register the name ``lastminute'' and a ``lastminute.com'' logo as trade marks in the European Union and ``last minute'' and a lastminute.com logo as trade marks in Norway. We have applied to register the ``lastmin'' mark in the United Kingdom and the European Union. We recently acquired trade mark registrations in Belgium, France, Luxembourg and The Netherlands for a device comprising a clock face with the words ``last minute'' across it. In Germany, third parties own trade mark registrations incorporating the words ``last minute''. No applications have been made to register our trade marks 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 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 trade mark applications we may make in these jurisdictions from being granted. We were noti®ed in March 1999 by a third party that they believe we are infringing their Canadian and U.K. trade mark registrations by our use of the words ``last minute''. Our advisers wrote to the third party at the time informing it that we were not infringing its trade mark registrations in the United Kingdom or Canada. Since that time there has been no further material correspondence between us. On January 11, 2000, we received a letter from a competitor in Germany alleging, among other things, that the use of the name ``lastminute.com'' in relation to offers of travel more than 14 days from the date of the offer violates unfair trade practices law in Germany. Our advisers wrote to the competitor on January 21, 2000

58 informing it that we do not believe that the use of the name lastminute.com is misleading or that we are violating unfair trade practices law in Germany. Since that time there has been no further material correspondence between us.

Privacy Policy We recognise the importance of maintaining the con®dentiality 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 web site. 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 offer registered subscribers 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, content and e-mail purposes. For example, in the future we may, on behalf of an advertiser, send e-mail offers to all registered users who frequent a speci®c area of the site.

Employees At December 31, 1999, we had 163 full-time employees, 137 of whom are in the United Kingdom, 11 of whom are in France, 14 of whom are in Germany and one of whom is in Sweden. Of our employees, 100 are in sales and marketing positions, 35 are in product development and 28 are in general and administrative positions. We consider our relations with our employees to be good. We believe that our future success will depend, in part, on our continuing ability to attract, integrate, retain and motivate highly quali®ed technical, ®nancial and managerial personnel, for whom competition is intense. All of our full-time employees are eligible to participate in our share schemes.

Facilities Our principal of®ces are located on the 4th and 7th ¯oors of Park House, 116 Park Street, London, United Kingdom and have a combined ¯oor area of approximately 8,087 square feet. We have separate underleases of each ¯oor at Park House, both of which expire on June 20, 2012 and are subject to landlord and tenant break options under which they may be terminated on June 24, 2002 or June 24, 2007. The total annual rent for these underleases is currently £219,624. We also lease of®ce space at Triumph House, 185-191 Regent Street, London W1R 7WF. The total annual rent in respect of this lease is £13,160. We also lease of®ce space in Paris located at 36, rue des Jeuneurs, 75002 Paris, in Munich at Kirchenstrasse 68, 81675 Munich, and in Stockholm at Olof Palmes Gata 13, 11137 Stockholm. The total annual rents for these of®ces are FF320,000, DM144,000 and SEK175,000, respectively.

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 ®nancial position. We are not aware of any threatened or potential legal or arbitration proceedings which could have a signi®cant effect on our ®nancial position.

59 PART 7. ACCOUNTANTS' REPORT

Becket House 1 Lambeth Palace Road London SE1 7EU

March 1, 2000 The Directors, lastminute.com plc Park House 116 Park Street London W1Y 3RA The Directors, Morgan Stanley & Co International Limited 25 Cabot Square Canary Wharf London E14 4QA

Ladies and Gentlemen lastminute.com plc Introduction We report on the ®nancial information set out below. This ®nancial information has been prepared for inclusion in the prospectus (the ``Prospectus'') dated March 1, 2000 of lastminute.com plc (the ``Company''). 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 acquired Last Minute Network Limited, a private limited company incorporated on April 1, 1998, in a share for share exchange. On February 24, 2000, the Company re-registered as a public limited company and changed its name to lastminute.com plc. Last Minute Network Limited and its subsidiaries and, subsequent to October 1, 1999, the Company and its subsidiaries are referred to as the ``Group'', as appropriate.

Basis of preparation The ®nancial information set out below is based on the audited consolidated statutory ®nancial statements of Last Minute Network Limited for the period from incorporation to September 30, 1999, and the audited non- statutory consolidated ®nancial statements of lastminute.com plc for the three months ended December 31, 1999, to which no adjustments were considered necessary.

Responsibility Such ®nancial information is the responsibility of the directors of the Company and Last Minute Network Limited, who approved its issue. The directors of the Company are responsible for the contents of the Prospectus in which this report is included. It is our responsibility to compile the ®nancial information set out in our report from the ®nancial statements, to form an opinion on the ®nancial information and to report our opinion to you.

Basis of opinion We conducted our work in accordance with the Statements of Investment Circular Reporting Standards issued by the Auditing Practices Board. Our work included an assessment of evidence relevant to the amounts

60 and disclosures in the ®nancial information. The evidence included that previously obtained by us relating to the audit of the ®nancial statements underlying the ®nancial information. Our work also included an assessment of signi®cant estimates and judgements made by those responsible for the preparation of the ®nancial statements underlying the ®nancial information and whether the accounting policies are appropriate to the circumstances of the Group, consistently applied and adequately disclosed. We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with suf®cient evidence to give reasonable assurance that the ®nancial information is free from material misstatement, whether caused by fraud or other irregularity or error.

Opinion In our opinion, the ®nancial information gives, for the purposes of the Prospectus, a true and fair view of the state of affairs of the Group as at the dates stated and of its losses, cash ¯ows and recognised gains and losses for the periods then ended.

61 lastminute.com plc

ADDITIONAL INFORMATION ON TOTAL TRANSACTION VALUE

April 1, 1998 Three (inception) to Year ended months ended September 30, September 30, December 31, Notes 1998 1999 1999 £000 £000 £000 Total transaction value(1) ************************** 2Ð2,647 4,255

CONSOLIDATED PROFIT AND LOSS ACCOUNTS

April 1, 1998 Three (inception) to Year ended months ended to September 30, September 30, December 31, Notes 1998 1999 1999 (£000, except shares and per share amounts) Turnover *************************************** 2 Ð 195 409 Cost of sales ************************************* Ð1859 Gross pro®t************************************** Ð 177 350 Operating costs Product development **************************** 179 1,423 1,702 Sales and marketing ***************************** 27 1,597 2,753 General and administration *********************** 86 1,736 1,930 Total operating costs ****************************** 292 4,756 6,385 Other operating income **************************** Ð12Ð Operating loss *********************************** 3 (292) (4,567) (6,035) Interest receivable********************************* 8 7 68 40 Interest payable and similar charges ****************** 9Ð(1)(9) Loss on ordinary activities before taxation ********** (285) (4,500) (6,004) Tax on loss on ordinary activities ******************** 10 1 Ð Ð Loss on ordinary activities after taxation(2) ********* (286) (4,500) (6,004) Dividends Ð non equity Accrued preference dividends *********************** 11 10 40 10 Retained loss for the ®nancial period *************** (296) (4,540) (6,014) Loss per share Ð basic and fully diluted(3) *********** 12 (0.94)p (13.51)p (17.09)p Weighted average number of Ordinary Shares outstanding(3)********************************** 31,488,429 33,595,515 35,192,940

Additional pro®t and loss information per quarter is set forth in Note 4 of Notes to the Financial Information.

(1) Total transaction value, which is stated exclusive of value added tax and associated taxes, does not represent the Group's statutory turnover. In the majority of transactions, where the Group acts as agent or cash collector, total transaction value represents the price at which goods or services have been sold across the web site. In other cases, for example the reservation of restaurant tables, a ¯at fee is earned, irrespective of the value of goods or services provided. In such cases total transaction value represents the ¯at fee commission earned. In the small number of cases where the Group acts as principal, total transaction value represents the price at which goods or services have been sold across the web site. (2) 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 Group is set forth in Note 25 of Notes to the Financial Information. (3) Shares and per share amounts have been retroactively adjusted for the 284 for 1 bonus issue of Ordinary Shares on February 15, 2000.

62 lastminute.com plc

CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

April 1, 1998 Three (inception) to Year ended months ended September 30, September 30, December 31, 1998 1999 1999 £000 £000 £000 Loss for the ®nancial period ************************ (286) (4,500) (6,004) Foreign currency translation differences *************** ÐÐ26 Total recognised gains and losses for the period ******** (286) (4,500) (5,978)

63 lastminute.com plc

CONSOLIDATED BALANCE SHEETS

At At At September 30, September 30, December 31, Notes 1998 1999 1999 £000 £000 £000 Fixed assets Tangible ®xed assets ********************** 13 28 403 1,417 28 403 1,417 Current assets Stocks ********************************** 14 Ð 1 2 Debtors ********************************* 15 49 743 2,372 Cash at bank and in hand ****************** 368 4,319 2,811 417 5,063 5,185 Creditors: amounts falling due within one year 16 140 2,289 4,840 Net current assets *********************** 277 2,774 345 Total assets less current liabilities********** 305 3,177 1,762 Provision for liabilities and charges ******** Ð 614 1,096 305 2,563 666 Capital and reserves(1) Called up share capital(2)(3)**************** 20 2 3 3 Share premium account(3) ***************** 21 599 6,724 10,327 Pro®t and loss account ******************** 21 (296) (4,826) (10,866) Other reserves *************************** 21 Ð 662 1,202 Shareholders' funds: Equity ********************************** (195) (3,899) (9,409) Non-equity ****************************** 500 6,462 10,075 Total shareholders' funds***************** 305 2,563 666

(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 Group is set forth in Note 25 of Notes to the Financial Information. (2) On February 4, 2000, the Group completed a private placement of 49,856 Preference B Shares with a number of its strategic partners for approximately £19.0 million. In addition, £6.2 million was raised through the issue of Ordinary Shares, Preference A Shares and Preference B Shares to existing shareholders. (3) On February 15, 2000, the Group effected a bonus issue of 284 Ordinary Shares for each existing Ordinary Share held by capitalising £355,000 of its share premium account.

64 lastminute.com plc

CONSOLIDATED STATEMENTS OF CASH FLOWS

April 1, 1998 Three months (inception) to Year ended ended September 30, September 30, December 31, Notes 1998 1999 1999 £000 £000 £000 Net cash out¯ow from operating activities*********** 22(a) (212) (1,904) (4,380) Returns on investments and servicing of ®nance Interest received********************************** 76840 Interest paid ************************************* Ð (1) (9) 76731 Taxation Corporation tax paid ****************************** Ð Ð (1) Ð Ð (1) Capital expenditure and ®nancial investment Payments to acquire tangible ®xed assets ************* (28) (408) (1,155) (28) (408) (1,155) Net cash out¯ow before ®nancing ****************** (233) (2,245) (5,505) Issue of share capital****************************** 601 5,776 3,603 Bridge loan received ****************************** 22(b) Ð 350 Ð Increase/(decrease) in cash ************************ 22(c) 368 3,881 (1,902)

RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET CASH Movement in net cash ***************************** 368 3,881 (1,902) Net cash at the beginning of the period*************** 22(c) Ð 368 4,249 Net cash at the end of the period ****************** 22(c) 368 4,249 2,347

The signi®cant differences between the consolidated statement of cash ¯ows presented above and that required under United States generally accepted accounting principles is set forth in Note 25 of Notes to the Financial Information.

65 lastminute.com plc

NOTES TO THE FINANCIAL INFORMATION

1. ACCOUNTING POLICIES The ®nancial information is prepared under the historical cost convention and in accordance with applicable United Kingdom accounting standards, including the early adoption of Financial Reporting Standard (``FRS'') 15, Tangible Fixed Assets, and FRS 16, Current Tax.

Basis of preparation The ®nancial information consolidates the accounts of Last Minute Network Limited and its subsidiary undertakings, all of which are wholly owned, to September 30, 1999 and the accounts of the Company and its subsidiary undertakings to December 31, 1999 as if the acquisition by lastminute.com plc had occurred on October 1, 1999. The results of subsidiaries are included in the consolidated pro®t and loss account from their date of incorporation. Last Minute Network Limited was incorporated in England and Wales on April 1, 1998 as a private limited company. The Company was incorporated in England and Wales on October 1, 1999 as a private limited company with the name Vibetron Limited. On incorporation, the Company had an authorised share capital of £100 consisting of 100 Ordinary Shares, nominal value £1.00, of which two were issued. On February 15, 2000, Last Minute Network Limited increased its authorised share capital and effected a bonus issue of 284 Ordinary Shares for each existing Ordinary Share held. Shares and per share amounts have been retroactively adjusted to re¯ect the bonus issue. 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. On February 24, 2000, the Company re-registered as a public limited company and changed its name to lastminute.com plc. This combination will be accounted for using merger accounting principles.

Turnover In the majority of cases, the Group does not take ownership of the products or services being sold and acts as agent, receiving a commission from the supplier of the products or services being sold. In these cases, turnover represents commission earned less amounts due or paid on any commission shared. In a limited number of cases, the Group acts as principal and purchases the products or services for resale. Where the Group acts as principal, turnover represents the price at which the products or services have been sold across the web site. Turnover is recognised once charges to the customer's credit card have been made and is stated exclusive of value added tax and associated taxes.

Product development costs Product development costs include expenses incurred by the Group to develop, enhance, manage, monitor and operate the web site and databases. Costs are expensed as incurred. Costs incurred in developing software for internal use are capitalised when the software reaches the application development stage and are amortised over the expected useful life of the software.

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.

66 lastminute.com plc

NOTES TO THE FINANCIAL INFORMATION

1. ACCOUNTING POLICIES Ð (continued) Deferred taxation

Provision is made or recovery anticipated in respect of all timing differences likely to reverse in the foreseeable future at rates at which the liability or the asset is expected to crystallise.

Foreign currency translation

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

The results of overseas operations are translated into pounds sterling at weighted average rates of exchange for the period. 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. All other exchange differences are charged or credited to income.

To date, the Group has not entered into any foreign currency exchange contracts or other derivative instruments.

Tangible ®xed assets

Tangible ®xed assets are stated at cost.

Depreciation is provided on all tangible ®xed 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:

Furniture and equipment********************************************************* 3 years Computer systems and equipment ************************************************* 3 to 5 years Computer software ************************************************************* 2 to 3 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 and net realisable value.

Customer loyalty scheme

The Group operates a customer loyalty scheme. Customers collect redeemable ``Award Minutes'' in proportion to the value of goods purchased and can redeem the ``Award Minutes'' against offers on the web site.

The Group provides for the cost of the expected liability based on the anticipated redemption pro®le.

Employee share schemes

In accordance with UITF Abstract 17, ``Employee Share Schemes'', the difference between the exercise price of share options granted under the Group's share option schemes and the fair market value of the underlying Ordinary Shares at the date of grant is charged to the pro®t and loss account over the period in which the options vest.

The Group provides for its National Insurance contributions on options granted on or after April 6, 1999 under its unapproved share option schemes. Provision is 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.

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2. 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. All of the Group's total transaction value and turnover are generated within this segment. Total transaction value and turnover, all of which are derived from continuing operations, analysed by class of business, are as follows:

Total transaction value Turnover April 1, 1998 Three months April 1, 1998 Three months (inception) to Year ended ended (inception) to Year ended ended September 30, September 30, December 31, September 30, September 30, December 31, 1998 1999 1999 1998 1999 1999 £000 £000 £000 £000 £000 £000 By class of business Travel*************** Ð 2,163 3,490 Ð 147 260 Leisure************** Ð 316 315 Ð 29 66 Gifts**************** Ð 118 350 Ð 9 68 Auction ************* Ð50100Ð1015 Ð 2,647 4,255 Ð 195 409

By geographical area United Kingdom ****** Ð 2,647 4,093 Ð 195 384 Other European Union countries ********** Ð Ð 162 Ð Ð 25 Ð 2,647 4,255 Ð 195 409

Total assets Net operating assets At At At At At At September 30, September 30, December 31, September 30, September 30, December 31, 1998 1999 1999 1998 1999 1999 £000 £000 £000 £000 £000 £000 By geographical area United Kingdom ****** 445 5,301 6,307 (62) (535) (583) Other European Union countries ********** Ð 165 295 Ð (41) (130) 445 5,466 6,602 (62) (576) (713) Non-operating assets and liabilities: Cash at bank and in hand************ 368 4,319 2,811 Overdrafts ********* Ð (70) (464) Corporation tax ***** (1) (1) Ð Cash received in advance of the issue of share capital ********** Ð (1,109) (968) 305 2,563 666

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3. OPERATING LOSS This is stated after charging:

April 1, 1998 Three months (inception) to Year ended ended September 30, September 30, December 31, 1998 1999 1999 £000 £000 £000 Auditors' remuneration Ð audit services**************** Ð5Ð Ð non-audit services ************ Ð23Ð Advertising expenditure****************************** Ð 750 1,874 Depreciation and amortisation************************* Ð 33 141 Operating lease rentals Ð land and buildings ************ 36381 Non-cash share-based compensation: Product development ****************************** Ð 169 130 Sales and marketing******************************* Ð 218 178 General and administration ************************* Ð 285 232 Ð 672 540 Provision for Group National Insurance contributions in relation to non-cash share-based compensation: Product development ****************************** Ð 144 115 Sales and marketing******************************* Ð 198 158 General and administration ************************* Ð 258 206 Ð 600 479

4. ADDITIONAL PROFIT AND LOSS INFORMATION BY PERIOD

Quarter Quarter Quarter Quarter ended ended ended ended December 31, March 31, June 30, September 30, 1998 1998 1999 1999 £000 £000 £000 £000 Total transaction value ******************* 25 275 544 1,803 Turnover ****************************** 22549119 Cost of sales**************************** Ð288 Gross pro®t***************************** 22341111 Operating costs Product development ******************* (83) (119) (333) (887) Sales and marketing******************** (58) (95) (297) (1,146) General and administration ************** (59) (102) (542) (1,034) Total operating costs ********************* (200) (316) (1,172) (3,067) Other operating income ******************* ÐÐ66 Operating loss************************** (198) (293) (1,126) (2,950) Interest receivable************************ 43556 Interest payable and similar charges ********* ÐÐÐ (1) Loss on ordinary activities before taxation (194) (290) (1,121) (2,895) Tax on loss on ordinary activities *********** ÐÐÐÐ Loss on ordinary activities after taxation*** (194) (290) (1,121) (2,895) Preference dividends on non-equity shares**** 10 10 10 10 Loss for the period********************** (204) (300) (1,131) (2,905)

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5. DIRECTORS' REMUNERATION The remuneration of the directors was as follows:

April 1, 1998 (inception) to September 30, 1998 Basic salary and fees Pensions Bene®ts Total £ £££ Executive Directors Brent Hoberman ************************************* 11,306 Ð Ð 11,306 Martha Lane Fox************************************* 8,940 350 Ð 9,290 20,246 350 Ð 20,596

Year ended September 30, 1999 Basic salary and fees Pensions Bene®ts Total £ £££ Executive Directors Brent Hoberman ************************************* 55,083 Ð 700 55,783 Martha Lane Fox************************************* 45,000 6,300 450 51,750 Non-executive Directors Pieter Bouw***************************************** 5,500 Ð Ð 5,500 Robert Collier *************************************** 5,500 Ð Ð 5,500 111,083 6,300 1,150 118,533

Three months ended December 31, 1999 Basic salary and fees Pensions Bene®ts Total £ £££ Executive Directors Brent Hoberman ************************************* 20,008 Ð 900 20,908 Martha Lane Fox************************************* 19,400 1,000 194 20,594 Non-executive Directors Pieter Bouw***************************************** 1,500 Ð Ð 1,500 Robert Collier *************************************** 1,500 Ð Ð 1,500 42,408 1,000 1,094 44,502

The directors' bene®cial interests in Ordinary Shares, restated for the effects of the 284 for 1 bonus issue on February 15, 2000, were as follows:

At At At September 30, September 30, December 31, On inception 1998 1999 1999 No. No. No. No. Brent Hoberman ************************** Ð 16,929,000 16,929,000 16,429,395 Martha Lane Fox************************** Ð 11,286,000 11,024,655 10,491,135 Thomas Teichman ************************* Ð 1,482,000 1,879,005 1,879,005 Ð 29,697,000 29,832,660 28,799,535

Since December 31, 1999, Brent Hoberman increased his interest by a further 231,135 Ordinary Shares prior to transferring 701,670 Ordinary Shares to other investors. Since December 31, 1999, Martha Lane Fox has transferred 58,710 Ordinary Shares to other investors.

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5. DIRECTORS' REMUNERATION Ð (continued) Thomas Teichman also has an interest in 427 Preference B Shares held by NewMedia Investors of which he is the chairman and founder. Linda Levinson has an interest in 45,142 Preference B Shares held by Global Retail Partners, L.P., in which she is a partner, and its af®liates. Since December 31, 1999, Global Retail Partners, L.P. and its af®liates have increased their interest by a further 4,266 Preference B Shares. No director has any other interest in Preference A Shares or Preference B Shares. The directors' interests in share options over Ordinary Shares, restated for the effects of the 284 for 1 bonus issue on February 15, 2000, were as follows:

At At At September 30, September 30, December 31, On inception 1998 1999 1999 No. No. No. No. Brent Hoberman******************* Ð 151,335 151,335 151,335 Martha Lane Fox ****************** Ð 129,675 129,675 129,675 Pieter Bouw ********************** Ð Ð 641,250 641,250 Robert Collier ******************** Ð Ð 320,625 320,625 Ð 281,010 1,242,885 1,242,885

6. EMPLOYEE SHARE SCHEMES The Group has four employee share schemes Ð the 1998 Unapproved Executive Share Option Scheme, the 1999 Unapproved Executive Share Option Scheme, the 2000 Unapproved Executive Share Option Scheme (the ``Unapproved Executive Schemes'') and the 2000 Approved Executive Share Option Scheme. To date, the Company has only granted options under the 1998 and 1999 Unapproved Executive Schemes. Under the 1998 and 1999 Unapproved Executive Schemes, options may not normally be exercised before June 29, 2000. Following this date, subject to the satisfaction of any performance condition and the continuous employment of the option holder for at least six months prior to exercise, options are normally exercisable in accordance with a formula set out in the Unapproved Executive Schemes. The formula allows for the gradual vesting of the options over a three-year period from the date of grant. To date, no options have been granted with performance criteria attaching. Options which have not been exercised will normally lapse on the tenth anniversary of grant. In certain circumstances, options may be exercised early. In April 1999, at the discretion of the directors, an employee exercised 225 share options prior to their vesting in accordance with the terms of the scheme. Options may also be exercised early in the event of a sale of more than 50% of the issued share capital. In these circumstances, an option will become exercisable for a period of 30 days from the date on which the sale 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.

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6. EMPLOYEE SHARE SCHEMES Ð (continued) A summary of activity for share options, restated for the effects of the 284 for 1 bonus issue on February 15, 2000, issued is shown below:

April 1, 1998 (inception) Year ended Three months ended to September 30, 1998 September 30, 1999 December 31, 1999 Number of Weighted Number of Weighted Number of Weighted options average options average options average granted exercise price granted exercise price granted exercise price No. p No. p No. p Options outstanding: Beginning of the period ****************** Ð Ð 1,274,805 2.31 10,995,015 5.74 Granted ******************************* 1,274,805 2.31 9,784,335 6.15 2,006,966 41.25 Exercised****************************** Ð Ð (64,125) 2.31 Ð Ð End of period ************************** 1,274,805 2.31 10,995,015 5.74 13,001,981 11.22 Range of exercise prices ***************** 2.31 2.31 to 73.93 36.96 to 73.93 Options exercisable, end of the period ****** ÐÐÐ ÐÐ Ð

The following tables summarise information about the range of exercise prices, restated for the effects of the 284 for 1 bonus issue on February 15, 2000, for share options outstanding at September 30, 1999 and December 31, 1999:

September 30, 1999

Weighted average Weighted Exercise Number remaining average price outstanding contractual life exercise price p No. Years p 2.31 8,568,240 9.15 2.31 12.05 1,045,950 9.63 12.05 17.21 1,257,705 9.70 17.21 73.93 123,120 9.86 73.93 10,995,015 9.62 5.74

December 31, 1999

Weighted average Weighted Exercise Number remaining average price outstanding contractual life exercise price p No. Years p 2.31 8,568,240 8.90 2.31 12.05 1,045,950 9.38 12.05 17.21 1,257,705 9.45 17.21 36.93 1,774,125 9.88 36.93 73.93 355,961 9.72 73.93 13,001,981 9.59 11.22

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6. EMPLOYEE SHARE SCHEMES Ð (continued) The weighted average fair values, restated for the effects of the 284 for 1 bonus issue on February 15, 2000, of share options granted during the period April 1, 1998 (inception) to September 30, 1998, the year ended September 30, 1999 and the three months ended December 31, 1999 were 0.32p, 22.07p and 32.60p, 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:

April 1, 1998 Three (inception) to Year ended months ended September 30, September 30, December 31, 1998 1999 1999 Dividend yield ************************************* 0% 0% 0% Expected volatility ********************************** 0.001% 0.001% 0.001% Risk free interest rate ******************************* 7.2% 5.9% 6.0% Expected life ************************************** 2.1 years 1.8 years 1.8 years

7. STAFF COSTS (including directors)

April 1, 1998 Three months (inception) to Year ended ended September 30, September 30, December 31, 1998 1999 1999 £000 £000 £000 Wages and salaries ********************************** 35 688 927 Social security costs ********************************* 2 64 114 Non-cash share-based compensation ******************** Ð 672 540 Group National Insurance contributions on share options *** Ð 600 479 37 2,024 2,060

For executive directors and employees, the Group contributes to a grouped personal pension plan to provide retirement and death bene®ts for employees. 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. The total pension contributions made during the three months ended December 31, 1999 were £9,529 (year ended September 30, 1999: £20,600; period ended September 30, 1998: £nil). These are included in wages and salaries. 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 pro®t and loss account as an operating expense over the vesting period. The average monthly number of employees, including executive directors during the period comprised:

April 1, 1998 Three months (inception) to Year ended ended September 30, September 30, December 31, 1998 1999 1999 No. No. No. Product development ********************************* 1629 Sales and marketing ********************************* 11576 General and administration **************************** 2826 4 29 131

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8. INTEREST RECEIVABLE

April 1, 1998 Three months (inception) to Year ended ended September 30, September 30, December 31, 1998 1999 1999 £000 £000 £000 Bank interest *************************************** 76840

9. INTEREST PAYABLE AND SIMILAR CHARGES

April 1, 1998 Three months (inception) to Year ended ended September 30, September 30, December 31, 1998 1999 1999 £000 £000 £000 Bank overdrafts ************************************* Ð19

10. TAXATION

April 1, 1998 Three months (inception) to Year ended ended September 30, September 30, December 31, 1998 1999 1999 £000 £000 £000 U.K. corporation tax ********************************* 1ÐÐ

As a result of the losses for the year ended September 30, 1999 and the three months ended December 31, 1999, no corporation tax charge arises in those periods. The charge for the period ended September 30, 1998 arose on bank interest receivable which was not relievable against operating losses. At December 31, 1999 the Group had estimated U.K. tax losses of £10,085,000 available to carry forward without expiry and offset against future trading pro®ts.

11. DIVIDENDS AND OTHER APPROPRIATIONS

April 1, 1998 Three months (inception) to Year ended ended September 30, September 30, December 31, 1998 1999 1999 £000 £000 £000 Preference A Share dividends payable******************* 10 40 10

Dividends on Preference A Shares are cumulative and payments of arrears of preference dividends would be due to be made before payments of dividends on Ordinary Shares commenced. Cumulative arrears of preference dividends at December 31, 1999 were £60,000 (September 30, 1999: £50,000; September 30, 1998: £10,000).

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12. LOSS PER ORDINARY SHARE

April 1, 1998 Three months (inception) to Year ended ended September 30, September 30, December 31, 1998 1999 1999 £000 £000 £000 Earnings used for calculation of loss per share************ (296) (4,540) (6,014)

No. No. No. Weighted average number of Ordinary Shares in issue, restated for the effects of the 284 for 1 bonus issue on February 15, 2000, for calculation of loss per share ***** 31,488,429 33,595,515 35,192,940

The weighted average number of shares for 1998 is calculated as if the subdivision of Ordinary Shares with a nominal value of £1.00 into new Ordinary Shares with a nominal value of £0.01 had taken place on April 1, 1998, in order to provide a consistent comparison.

Securities that could potentially dilute basic earnings per share in the future include the Preference A Shares, the Preference B Shares and share options.

13. TANGIBLE FIXED ASSETS Computer Furniture and systems and Computer equipment equipment software Total £000 £000 £000 £000 Cost: On incorporation ******************************* ÐÐÐÐ Additions ************************************* 325Ð28 At September 30, 1998 ************************** 325Ð28 Additions ************************************* 28 340 40 408 At September 30, 1999 ************************** 31 365 40 436 Additions ************************************* 135 522 498 1,155 At December 31, 1999 ************************** 166 887 538 1,591 Depreciation: On incorporation and at September 30, 1998 ******** ÐÐÐÐ Provided during the year************************* 329133 At September 30, 1999 ************************** 329133 Provided during the period *********************** 7 69 65 141 At December 31, 1999 ************************** 10 98 66 174 Net book value: At December 31, 1999 ************************** 156 789 472 1,417 At September 30, 1999 ************************** 28 336 39 403 At September 30, 1998 ************************** 325Ð28

14. STOCKS At At At September 30, September 30, December 31, 1998 1999 1999 £000 £000 £000 Entertainment tickets held for resale******************** Ð12

The difference between the balance sheet amount of stocks and their replacement cost is not material.

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NOTES TO THE FINANCIAL INFORMATION

15. DEBTORS At At At September 30, September 30, December 31, 1998 1999 1999 £000 £000 £000 Trade debtors ************************************** Ð 136 420 Other debtors ************************************** 41 443 1,018 Prepayments and accrued income ********************** 8 164 934 49 743 2,372

16. CREDITORS: amounts falling due within one year At At At September 30, September 30, December 31, 1998 1999 1999 £000 £000 £000 Bank overdrafts ************************************ Ð 70 464 Trade creditors ************************************* 81 852 2,785 Corporation tax************************************* 11Ð Other taxes and social security costs ******************* 4 84 211 Other creditors ************************************* 1 1,111 968 Accruals and deferred income************************* 43 121 352 Preference dividend payable ************************** 10 50 60 140 2,289 4,840

Included in other creditors at December 31, 1999 was £968,000 (September 30, 1999: £1,109,000) relating to cash received in advance of the issue of share capital.

The interest rate on the overdraft facility at December 31, 1999 was 8% (September 30, 1999: 7.5%).

17. OPERATING LEASE COMMITMENTS

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

Land and buildings At At September 30, December 31, 1999 1999 £000 £000 Operating leases which expire: In two to ®ve years*********************************************** 315 662

The aggregate payments, for which there are commitments under operating leases at September 30, 1999, fall due as follows:

Land and buildings At September 30, 1999 £000 Amounts payable: Due within one year ******************************************** 315 One to two years*********************************************** 315 Two to three years ********************************************* 230 860

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18. PROVISIONS FOR LIABILITIES AND CHARGES

Redemption Group of Award National Minutes Insurance Total £000 £000 £000 On incorporation and at September 30, 1998 ********************** ÐÐÐ Provided during the year*************************************** 14 600 614 At September 30, 1999 **************************************** 14 600 614 Provided during the period ************************************* 3 479 481 At December 31, 1999 **************************************** 17 1,079 1,096

19. FINANCIAL INSTRUMENTS The Group's ®nancial instruments comprise trade debtors, trade creditors, cash, overdrafts and non-equity shares. The Group has not entered into any derivative or other hedging transactions. As permitted by FRS 13, Derivatives and Other Financial Instruments, amounts dealt with in the numerical disclosures in this note, with the exception of the currency analysis, exclude short-term debtors and creditors.

Interest rate risk The Group does not currently have any borrowings other than amounts outstanding under its overdraft facilities, which attract a ¯oating rate of interest.

Liquidity risk The Group's policy is to ®nance its operations and expansion through the sale of equity and non-equity share capital.

Currency risk The Group has investments in overseas subsidiaries and as a result has potential currency exposure in respect of items denominated in foreign currencies. These risks are: ) transactional exposure in respect of costs and revenues denominated in currencies other than the transacting company's functional currency; and ) structural exposure in respect of retranslation of net investments in overseas subsidiaries. As the operations denominated in foreign currencies giving rise to either structural or translational currency exposure are not signi®cant to the Group at this time, the Group does not hedge against currency risk.

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19. FINANCIAL INSTRUMENTS Ð (continued) Interest rate pro®le of ®nancial assets and liabilities (all are based on ¯oating rates linked to LIBOR):

Total Cash Overdrafts net cash £000 £000 £000 At September 30, 1998 Sterling******************************************************* 368 Ð 368 At September 30, 1999 Sterling******************************************************* 3,084 (70) 3,014 U.S. Dollars *************************************************** 1,105 Ð 1,105 Deutschmark ************************************************** 40 Ð 40 French Franc ************************************************** 82 Ð 82 Swedish Krona ************************************************ 8Ð 8 4,319 (70) 4,249 At December 31, 1999 Sterling******************************************************* 179 (400) (221) U.S. Dollars *************************************************** 2,398 Ð 2,398 Deutschmark ************************************************** 165 Ð 165 French Franc ************************************************** Ð (64) (64) Swedish Krona ************************************************ 46 Ð 46 Euro ********************************************************* 23 Ð 23 2,811 (464) 2,347

Interest rate risk pro®le of non-equity shares The Group has in issue convertible cumulative redeemable Preference A Shares denominated in sterling, with paid up consideration of £500,000. A ®xed coupon rate of 8% is payable on the paid up consideration. The Group also has in issue convertible cumulative redeemable Preference B Shares denominated in sterling, with paid up consideration of £5,962,000 and no coupon. Preference A Shares and Preference B Shares automatically convert into Ordinary Shares immediately prior to the completion of an initial public offering. Should an initial public offering not have occurred before June 4, 2004, each Preference A shareholder and Preference B shareholder has the option to redeem the preference shares.

Currency risks The table below shows the Group's currency exposure; in other words those transactional exposures that give rise to net currency gains and losses recognised in the pro®t and loss account. Such exposures comprise the monetary assets and liabilities of the Group that are not denominated in the functional currency of operations.

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19. FINANCIAL INSTRUMENTS Ð (continued) Other European Functional currency of Group operations US Dollar Union currencies Total (£000) (£000) (£000) As at September 30 1999 Sterling ************************************************* 1,105 130 1,235 French Francs ******************************************** Ð 114 114 Deutschmarks ******************************************** Ð8989 1,105 333 1,438

As at December 31, 1999 Sterling ************************************************* 2,398 170 2,568 French Francs ******************************************** Ð 223 223 Deutschmarks ******************************************** Ð 610 610 2,398 1,003 3,401

There were no other foreign currency assets or liabilities at September 30, 1999 or December 31, 1999.

Fair values of ®nancial assets and ®nancial liabilities The Group's ®nancial instruments are carried at cost, which approximates to their fair value other than for Preference A Shares and Preference B Shares:

Book value Fair value Book value Fair value September 30, 1999 September 30, 1999 December 31, 1999 December 31, 1999 £000 £000 £000 £000 Cash ***************************** 4,319 4,319 2,811 2,811 Overdrafts ************************ (70) (70) (464) (464) Preference A Shares **************** 500 20,941 500 28,934 Preference B Shares **************** 5,962 34,153 9,575 53,733 The fair values of Preference A Shares and Preference B Shares are determined by reference to the arm's length prices paid by investors during the four private ®nancing rounds since incorporation, adjusted to take into account subscriber growth.

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20. SHARE CAPITAL

Ordinary Preference Preference Shares A Shares B Shares Total No.(1) £ No.(1) £ No.(1) ££ Authorised On incorporation Ð Ordinary Shares of £1.00 ************************** 285,000 1,000 Ð Ð Ð Ð 1,000 Ordinary Shares of £1.00 authorised *** 139,650 490 Ð Ð Ð Ð 490 Subdivision of existing Ordinary Shares into Ordinary Shares of £0.01 ****** 42,040,350 Ð Ð Ð Ð Ð Ð Preference A Shares of £1.00 authorised ********************** Ð Ð 760 760 Ð Ð 760 At September 30, 1998************** 42,465,000 1,490 760 760 Ð Ð 2,250 Ordinary Shares of £0.01 authorised *** 14,535,000 510 Ð Ð Ð Ð 510 Preference B Shares of £1.00 authorised ********************** Ð Ð Ð Ð 350,000 350,000 350,000 Subdivision of existing Preference A and Preference B Shares into Preference A and Preference B Shares of £0.01 ****************** Ð Ð 75,240 Ð 34,650,000 Ð Ð At September 30, 1999 and December 31, 1999(1)(3) ********** 57,000,000 2,000 76,000 760 35,000,000 350,000 352,760 Issued On incorporation Ð Ordinary Shares of £1.00 ************************** 570 2 Ð Ð Ð Ð 2 Ordinary Shares of £1.00 issued for cash *************************** 327,750 1,150 Ð Ð Ð Ð 1,150 Subdivision of existing Ordinary Shares into Ordinary Shares of £0.01 ****** 32,503,680 Ð Ð Ð Ð Ð Ð Preference A Shares of £1.00 issued for cash *************************** Ð Ð 760 760 Ð Ð 760 At September 30, 1998************** 32,832,000 1,152 760 760 Ð Ð 1,912 Ordinary Shares of £0.01 issued for cash *************************** 2,320,470 81 Ð Ð Ð Ð 81 Subdivision of existing Preference A and Preference B Shares into Preference A and Preference B Shares of £0.01 ****************** Ð Ð 75,240 Ð Ð Ð Ð Preference B Shares of £0.01 issued for cash *************************** Ð Ð Ð Ð 114,432 1,239 1,239 Preference B Shares issued on conversion of bridge loan(4) ******* Ð Ð Ð 9,516 Ð Ð At September 30, 1999************** 35,152,470 1,233 76,000 760 123,948 1,239 3,232 Ordinary Shares and Preference B Shares of £0.01 issued for cash ***** 80,940 3 Ð Ð 17,191 172 175 At December 31, 1999(3)************ 35,233,410 1,236 76,000 760 141,139 1,411 3,407

(1) On February 4, 2000, 76,000 and 200,000 of the authorised Preference B Shares were redesignated as 76,000 Preference A Shares and 57,000,000 Ordinary Shares, respectively. (2) On February 4, 2000, the Group completed a private placement of 49,856 Preference B Shares with a number of its strategic partners, for approximately £19.0 million. In addition, £6.2 million was raised through the issue of Ordinary Shares, Preference A Shares and Preference B Shares to existing shareholders.

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20. SHARE CAPITAL Ð (continued) (3) On February 15, 2000, the Group increased its authorised share capital to £708,238 by the creation of 35,547,712 new Ordinary Shares. On the same date, the Group effected a bonus issue of 284 Ordinary Shares for each existing Ordinary Share held by capitalising £355,477 of its share premium account. This bonus issue has been re¯ected in the numbers of Ordinary Shares shown above. (4) On May 21, 1999, the Group converted a £350,000 bridge loan into Preference B Shares. The loan was an 8% unsecured convertible loan, convertible at the holders' option at a 25% discount to the fair value of the share price at the date of conversion.

Rights to dividends

The Preference A Shares carry a ®xed cumulative dividend of 8% per annum. Subject to the availability of distributable pro®ts, the ®rst payment is due on September 1, 2001 and annually in arrears on the same date thereafter. Preference B Shares do not carry rights to dividends.

Upon an initial public offering accrued and unpaid dividends on Preference A Shares will be forfeited.

Return of capital

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

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

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

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

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

Conversion

Upon an initial public offering, each Preference A Share and Preference B Share will be converted into 285 Ordinary Shares.

Redemption

If an initial public offering has not occurred by June 4, 2004, holders of Preference A Shares may redeem Preference A Shares for a sum equal to their nominal value together with any premium paid and any accrued and unpaid dividends. Holders of Preference B Shares may redeem Preference B Shares for a sum equal to their nominal value together with any premium paid plus an amount which would result in a compound annual return of 8% from the date of subscription.

For three years from the noti®cation of redemption to the Company, the maximum number of Preference A Shares and Preference B Shares (taken together) to be redeemed is restricted to an amount equal to 50% of the cash ¯ow before capital expenditure.

Voting rights

Each holder of Ordinary Shares, Preference A Shares and Preference B Shares is entitled to one vote on a show of hands or one vote per share on a poll.

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NOTES TO THE FINANCIAL INFORMATION

21. RECONCILIATION OF SHAREHOLDERS' FUNDS

Share Pro®t Total Share premium and loss Other shareholders' capital account account reserves funds £000 £000 £000 £000 £000 On incorporation ****************************** ÐÐ ÐÐ Ð Shares issued ********************************* 2 599 Ð Ð 601 Loss for the period **************************** Ð Ð (296) Ð (296) At September 30, 1998 ************************* 2 599 (296) Ð 305 Shares issued ********************************* 1 6,125 Ð Ð 6,126 Loss for the year ****************************** Ð Ð (4,529) Ð (4,529) Share-based compensation ********************** Ð Ð Ð 672 672 Transfer relating to options exercised ************* Ð Ð 10 (10) Ð At September 30, 1999 ************************* 3 6,724 (4,815) 662 2,574 Shares issued ********************************* Ð 3,603 Ð Ð 3,603 Loss for the period **************************** Ð Ð (6,013) Ð (6,013) Foreign currency translation differences *********** Ð Ð (26) Ð (26) Share-based compensation ********************** Ð Ð Ð 540 540 At December 31, 1999(1)(2) ******************** 3 10,327 (10,854) 1,202 678

(1) On February 4, 2000, the Group completed a private placement of 49,856 Preference B Shares with a number of its strategic partners, for approximately £19.0 million. In addition, £6.2 million was raised through the issue of Ordinary Shares, Preference A Shares and Preference B Shares to existing shareholders. (2) On February 15, 2000, the Group effected a bonus issue of 284 Ordinary Shares for each existing Ordinary Share held by capitalising £355,000 of its share premium account.

22. NOTES TO THE STATEMENT OF CASH FLOWS (a) Reconciliation of operating loss to net cash out¯ow from operating activities

April 1, 1998 Three months (inception) to Year ended ended September 30, September 30, December 31, 1998 1999 1999 £000 £000 £000 Operating loss *********************************** (292) (4,556) (6,034) Depreciation ************************************* Ð 33 141 Increase in debtors******************************** (49) (694) (1,629) Increase in stocks********************************* Ð (1) (1) Increase in creditors******************************* 129 2,039 2,122 Increase in provisions ***************************** Ð 603 481 Share-based compensation************************** Ð 672 540 Net cash out¯ow from operating activities************* (212) (1,904) (4,380)

(b) In January 1999, the Group received from three of its investors a convertible unsecured bridge loan of £350,000. In May 1999, this loan was converted into Preference B Shares at a 25% discount to the fair value of the shares at that date.

82 lastminute.com plc

NOTES TO THE FINANCIAL INFORMATION

22. NOTES TO THE STATEMENT OF CASH FLOWS Ð (continued) (c) Analysis of net cash position

At April 1, At At At 1998 September 30, September 30, December 31, (inception) Cash ¯ow 1998 Cash ¯ow 1999 Cash ¯ow 1999 £000 £000 £000 £000 £000 £000 Cash at bank ******** Ð 368 368 3,951 4,319 (1,508) 2,811 Bank overdrafts ****** Ð Ð Ð (70) (70) (394) (464) Ð 368 368 3,881 4,249 (1,902) 2,347

23. RELATED PARTY TRANSACTIONS There were no related party transactions requiring disclosure.

24. POST BALANCE SHEET EVENTS On January 31, 2000 and February 14, 2000, the Group executed performance-based warrant instruments with Lufthansa and Virgin Atlantic Airways, respectively, giving them the right to subscribe for up to 5,544,675 Ordinary Shares and 5,543,250 Ordinary Shares, respectively, depending upon performance conditions relating to speci®ed levels of ticket sales through the Group's web site during ®ve six-month measuring periods between January 1, 2000 and June 30, 2002 and March 1, 2000 and August 31, 2002, respectively. If the performance conditions speci®ed in the instruments are met, the Group will issue Ordinary Shares at an exercise price, as adjusted for the 284 for 1 bonus issue on February 15, 2000, of 37p per share. Any excess over the nominal value of the shares issued will be taken to the share premium account on the date the Ordinary Shares are issued. On January 26, 2000, the Group acquired Last Minute S.P.R.L, a company incorporated on January 7, 1999 in Belgium. The consideration of $100,000 was satis®ed by issuing 32 Ordinary Shares in Last Minute Network Limited and the balance of $80,000 was paid in cash. The entire purchase price will be capitalised as a domain name and amortised over its estimated useful life. On February 4, 2000, the Group completed a private placement of 49,856 Preference B Shares with a number of its strategic partners, for approximately £19.0 million. In addition, £6.2 million was raised through the issue of Ordinary Shares, Preference A Shares and Preference B Shares to existing shareholders.

25. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES The ®nancial statements are prepared in accordance with accounting principles generally accepted in the United Kingdom (``U.K. GAAP'') which differ in certain respects from those generally accepted in the United States (``U.S. GAAP''). The signi®cant differences as they apply to the Group are summarised below.

Share options Share-based compensation Under U.K. GAAP, 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 all of the options granted to date vest over a three year period, the difference is being taken to the pro®t and loss account as an operating expense over the period in which the options vest. Under U.S. GAAP, the Group has elected to follow the intrinsic value method in Accounting Principles Board Opinion No. 25 (``APB 25'') in determining share-based compensation expense. Under this methodology, the difference between the option exercise prices and the fair value of the underlying Ordinary Shares at the date of grant of options to employees would be expensed over the vesting period. The options granted to two non- executive directors would be accounted for using the fair value method in Statement of Financial Accounting Standards 123, Accounting for Stock-Based Compensation. The difference between the compensation expense

83 lastminute.com plc

NOTES TO THE FINANCIAL INFORMATION

25. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES Ð (continued) arising under the fair value method with respect to these options and that arising under the intrinsic value method is insigni®cant.

At September 30, 1998 and 1999, the unearned compensation expense was £nil and £1,691,000, respectively. For grants up to September 30, 1999, the Group currently expects to amortise £1,165,000 in the year ending September 30, 2000, £438,000 in the year ending September 30, 2001 and £88,000 in the year ending September 30, 2002.

Group National Insurance contributions

Under U.K. GAAP, the Group provides for National Insurance contributions on options granted on or after April 6, 1999 under the unapproved share option schemes. Provision is made at a rate of 12.2% on the difference between the period-end share value and the grant price, being the Company's best estimate of the ultimate liability at each period end.

Under U.S. GAAP, provision would be made for the estimated liability over the vesting period of the options.

Convertible unsecured loan

Under U.K. GAAP, on conversion of the bridge loan in May 1999 into Preference B Shares at a 25% discount to the fair value of the shares at that date, no charge to pro®t and loss account was made for the discount.

Under U.S. GAAP, the discount would have been expensed over the period to the earliest conversion date. Accordingly, in the reconciliations below the discount has been expensed in the year ended September 30, 1999.

Deferred taxation

Under U.K. GAAP, the Group provides for deferred taxation using the liability method on all material timing differences to the extent that it is probable that the liabilities will crystallise in the foreseeable future.

Under U.S. GAAP, deferred taxation is generally provided on a full liability basis on all temporary differences between the book and tax basis of assets and liabilities. As the Group has incurred operating losses since its inception no deferred tax asset would be recognised under U.S. GAAP because it is more likely than not that it will not be realised.

Redeemable convertible preference shares

Under U.K. GAAP, amounts relating to the Preference A Shares and the Preference B Shares are re¯ected as non-equity shareholders' funds within shareholders' funds.

Under U.S. GAAP, these amounts would not be included within shareholders' funds but would be re¯ected within liabilities as redeemable preferred stock.

84 lastminute.com plc

NOTES TO THE FINANCIAL INFORMATION

25. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES Ð (continued) The effect of the above differences on the loss for the period and shareholders' funds is shown in the following reconciliations.

Pro®t and loss account

April 1, 1998 (inception) to Year ended September 30, September 30, 1998 1999 (£000, except shares and per share amounts) Loss for the period as reported in the consolidated pro®t and loss account under U.K. GAAP********************************************** (286) (4,500) Discount on convertible loan *************************************** Ð (167) Provision for Group National Insurance contributions ******************* Ð 163 Loss and comprehensive income for the period as adjusted to accord with U.S. GAAP *************************************************** (286) (4,504) Loss per Ordinary Share as so adjusted Ð basic and diluted ************* (0.94)p (13.53)p Loss per American Depositary Share(1) Ð basic and diluted ************* (4.70)p (67.65)p

(1) Each American Depositary Share represents 5 Ordinary Shares.

Shareholders' funds

At At September 30, September 30, 1998 1999 £000 £000 Shareholders' funds as reported in the consolidated balance sheet under U.K. GAAP *************************************************** 305 2,563 Discount on convertible loan *************************************** Ð (167) Provisions for liabilities and charges Ð Group National Insurance contributions ************************************************** Ð 163 Non-equity shareholders' funds ************************************* (500) (6,462) Shareholders' funds (de®cit) as adjusted to accord with U.S. GAAP ******* (195) (3,903)

Consolidated statements of cash ¯ows The consolidated statements of cash ¯ows presented under U.K. GAAP present substantially the same information as those required under U.S. GAAP but differ with regard to the classi®cation of items within the statements and as regards the de®nition of cash under U.K. GAAP and cash and cash equivalents under U.S. GAAP. Under U.S. GAAP, cash and cash equivalents include short-term highly liquid investments but do not include bank overdrafts. Under U.K. GAAP, if applicable, cash ¯ows are presented separately for operating activities, dividends from associates, returns on investments and servicing of ®nance, taxation, capital expenditure and ®nancial investment, acquisitions, equity dividends and management of liquid resources and ®nancing. U.S. GAAP, however, require only three categories of cash ¯ow to be reported; operating, investing and ®nancing. Under U.S. 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.

85 lastminute.com plc

NOTES TO THE FINANCIAL INFORMATION

25. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES Ð (continued) Under U.S. GAAP, the following would be reported:

April 1, 1998 (inception) to Year ended September 30, September 30, 1998 1999 £000 £000 Net cash used in operating activities ********************************* (205) (1,697) Net cash used in investing activities ********************************* (28) (408) Net cash provided by ®nancing activities ***************************** 601 6,056 Increase in cash and cash equivalents ******************************** 368 3,951 Cash and cash equivalents at beginning of period ********************** Ð 368 Cash and cash equivalents at end of period *************************** 368 4,319

Additional disclosures required by U.S. GAAP in respect of deferred taxation Deferred tax comprises the following:

At At September 30, September 30, 1998 1999 £000 £000 Net operating losses carried forward ********************************* Ð 1,329 Less: Valuation allowance****************************************** Ð (1,329) Net deferred tax asset ********************************************* ÐÐ

Additional information required under U.S. GAAP in respect of share-based compensation Under U.S. 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''). Under SFAS 123, using the fair values given in Note 6, net loss for the year ended September 30, 1999 would have been £4,537,000 (1998: £296,000) and basic and diluted net loss per share would have been 13.51p (1998: 0.94p). The total difference between the fair value of options calculated using the intrinsic value method and the Black-Scholes Option Pricing Model was £65,000 at September 30, 1999.

Concentration of credit risk Financial instruments that potentially subject the Group 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 ®nancial institutions. The Group's debtors comprise commissions receivable and amounts due from credit card processors. The Group generally requires no collateral from its suppliers. At September 30, 1999, the Group did not consider there to be any signi®cant concentration of credit risk.

Impact of recently issued accounting standards In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (``SFAS 133''). SFAS 133 establishes a new model for accounting for derivatives and hedging activities and supersedes and amends a number of existing standards. SFAS 133 is effective for ®nancial statements for years beginning after June 15, 2000. Upon initial application, all derivatives are required to be recognised in the statement of ®nancial position as either assets or liabilities and measured at fair value. In addition, all hedging relationships must be reassessed

86 lastminute.com plc

NOTES TO THE FINANCIAL INFORMATION

25. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES Ð (continued) and documented pursuant to the provisions of SFAS 133. The Group does not currently enter into derivative instrument transactions and thus does not anticipate that this pronouncement will have a signi®cant effect on its results of operations, ®nancial position or cash ¯ows. U.S. GAAP accounting for the warrants issuable under the warrant instruments entered into in January 2000 and February 2000. Under U.K. GAAP, no charges are recognised for Ordinary Shares issued under warrant instruments when the exercise price is below fair market value on the date of issue. On exercise, the excess of the proceeds received over the nominal value of the shares issued will be taken to the share premium account. Under U.S. GAAP, in accordance with Emerging Issues Task Force Abstract 96-18, ``Accounting for Equity Instruments that are issued to other than Employees for Acquiring, or in conjunction with Selling, Goods or Services'', the Group would record a charge against pro®t based on the fair value of the warrants on the date they are issued.

Yours faithfully

Ernst & Young

87 PART 8. PRO FORMA BALANCE SHEET OF THE GROUP The following pro forma balance sheet of lastminute.com and its subsidiaries (``pro forma statement'') has been prepared on the bases set out in the notes below and is presented for illustrative purposes only in order to give an indication of the balance sheet of lastminute.com and its subsidiaries had the changes to the capital structure and the offering been completed on December 31, 1999. The pro forma statement, because of its nature, may not give a true picture of ®nancial position of lastminute.com and its subsidiaries.

At December 31, Share The 1999(a) issues(b) offering(c) Pro forma £000 £000 £000 £000 Fixed Assets Intangible assets *************************************** Ð61Ð61 Tangible assets***************************************** 1,417 Ð Ð 1,417 1,417 61 Ð 1,478 Current assets Stocks************************************************ 2ÐÐ2 Debtors*********************************************** 2,372 463 Ð 2,835 Cash at bank and in hand******************************** 2,811 24,106 61,577 88,494 5,185 24,569 61,577 91,331 Creditors: amounts falling due within one year ************* 4,840 (1,016) Ð 3,824 Net current assets ************************************* 345 25,585 61,577 87,507 Total assets less current liabilities *********************** 1,762 25,646 61,577 88,985 Provision for liabilities and charges ********************** 1,096 Ð Ð 1,096 666 25,646 61,577 87,889 Capital and reserves Called up share capital ********************************** 3 1,171 330 1,504 Share premium account ********************************* 10,327 (10,327) 61,247 61,247 Pro®t and loss account ********************************** (10,866) Ð Ð (10,866) Other reserves ***************************************** 1,202 34,802 Ð 36,004 Total shareholders' funds ****************************** 666 25,646 61,577 87,889

(a) The balance sheet of lastminute.com and its subsidiaries at December 31, 1999 is extracted from the Accountants' Report in Part 7. (b) The impact of the share issues was: Ð The acquisition of Last Minute S.P.R.L. on January 26, 2000 was satis®ed by the issue of 9,120 ordinary shares at a price of £1.34 per share and cash of £49,000, creating an intangible asset of £61,000; Ð the private placement of 430,350 ordinary shares at a price of £1.34 per share of which consideration of $750,000 was waived in return for future marketing with BAA plc creating prepaid marketing costs of £463,000; 4,211 preference A shares were issued at a price of £380.71 per share and 60,346 preference B shares were issued at a price of £380.71 per share, less expenses of £535,000. Net cash consideration amounted to £24,155,000. Ð the issue of 66,690 ordinary shares on February 23, 2000 at a price of 73.93p in settlement of outstanding liabilities of £50,000; Ð the issue of 4,595 preference A shares on February 4, 2000 at a price of £210.21, the cash for which had been received prior to December 31, 1999 and included in creditors; Ð the share for share exchange by lastminute.com with Last Minute Network Limited; Ð the conversion of each outstanding preference A share and preference B share into 285 ordinary shares immediately prior to the offering. (c) The proceeds of the offering represents the issue of 33,000,000 shares at a price of 210 pence per share, less expenses of £7,723,000. (d) No adjustments have been made to re¯ect any trading or other transactions since December 31, 1999 other than those disclosed above.

88 PART 9. ACCOUNTANTS' LETTER ON PRO FORMA BALANCE SHEET OF THE GROUP

Becket House 1 Lambeth Palace Road London SE1 7EU March 1, 2000 The Directors, lastminute.com plc Park House 116 Park Street London W1Y 3RA The Directors, Morgan Stanley & Co International Limited 25 Cabot Square Canary Wharf London E14 4QA Ladies and Gentlemen lastminute.com plc We report on the pro forma ®nancial information set out in Part 8 of the prospectus dated March 1, 2000, which has been prepared, for illustrative purposes only, to provide information about how the changes to the capital structure subsequent to December 31, 1999, including the share offer, might have affected the ®nancial information presented. Responsibility It is the responsibility solely of the directors of lastminute.com plc to prepare the pro forma ®nancial information in accordance with paragraph 12.29 of the Listing Rules. It is our responsibility to form an opinion, as required by the Listing Rules of the London Stock Exchange, on the pro forma ®nancial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any ®nancial information used in the compilation of the pro forma ®nancial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue. Basis of opinion We conducted our work in accordance with the Statements of Investment Circular Reporting Standards and the Bulletin 1998/8 ``Reporting on pro forma ®nancial information pursuant to the Listing Rules'' issued by the Auditing Practices Board. Our work, which involved no independent examination of any of the underlying ®nancial information, consisted primarily of comparing the unadjusted ®nancial information with the source documents, considering the evidence supporting the adjustments and discussing the pro forma ®nancial information with the directors of lastminute.com. Our work has not been carried out in accordance with auditing standards generally accepted in the United States of America and accordingly should not be relied upon as if it had been carried out in accordance with those standards. Opinion In our opinion: (a) the pro forma ®nancial information has been properly compiled on the basis stated; (b) such basis is consistent with the accounting policies of lastminute.com; and (c) the adjustments are appropriate for the purposes of the pro forma ®nancial information as disclosed pursuant to paragraph 12.29 of the Listing Rules of the London Stock Exchange. Yours faithfully Ernst & Young

89 PART 10. REGULATION There is no speci®c 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. 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 clari®ed and re®ned, and there are a number of new legislative and regulatory proposals in the United Kingdom and European Union. The European regulatory environment is characterised by different and sometimes con¯icting rules and regulations at the local level in respect of licences, electronic commerce, data protection, tax and other areas. There is harmonisation under way in some of these areas among the E.U. member states, but implementation of these harmonisation directives could take several years. The issues in the main areas affecting our business are set out below.

Data Protection 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, E.U. 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 recti®ed, 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 E.U. member states. In particular, companies with facilities located in E.U. member states or using equipment in an E.U. member state for the purpose of processing data will not be allowed to send personal information to countries which are not E.U. members and do not maintain adequate standards of privacy. The Directive does not, however, de®ne what standards of privacy are adequate. As a result, we can not predict with certainty the extent to which the Directive will adversely affect our ability to send data collected from customers in E.U. member states to non-E.U. member states. The Directive was required to be implemented into national laws by the 15 E.U. member states by October 26, 1998, although in many member states, including the United Kingdom, the laws implementing the Directive are not yet in force. The U.K. 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 E.U. member states. 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 E.U. 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 E.U. 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. On December 21, 1998, the European Union approved an ``action plan to promote safer use of the Internet by combating illegal and harmful content on global networks'' (the ``Action Plan''). The Action Plan will serve as, among other things, the basis of legislative efforts on issues relating to the protection of minors, rating and ®ltering systems and content. Any legislation which may be adopted by E.U. member states pursuant to the Action Plan could impose additional obligations on us and impact on our activities. It is also possible that cookies, which are used to track demographic information and to target advertising, may become subject to increased levels of legislation limiting or prohibiting their use. Germany has speci®c legislation which prevents providers of Internet access from using cookies without the prior approval of users. 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. In addition, a number of Internet commentators, advocates and governmental bodies in several countries have urged the passage of laws limiting or abolishing the use of cookies. 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 web sites. 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

90 telecommunications services and public networks, and includes provisions relating to use of traf®c 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 E.U. member states were, subject to exceptions, required to implement the Telecommunications Sector Directive by October 26, 1998. While the direct marketing provisions of the Telecommunications Sector Directive have now been implemented in the United Kingdom, the remainder of the obligations will not come into force until March 2000. Delays in implementation have also occurred in many of the other E.U. member states. We are currently registered under data protection legislation in the United Kingdom. To the best of our knowledge, we are in compliance with data protection registration requirements in the other jurisdictions in which we operate and our registrations are suf®cient 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 bene®cial to our business.

Content Regulation There is no speci®c 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.

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 ``Business Ð Intellectual Property'' in Part 6).

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 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.

E-commerce and Electronic Signatures The laws relating to e-commerce are being reviewed, and in many cases formulated, in differing jurisdictions all around the world. On November 18, 1998, the European Commission published a proposed ``directive on legal aspects of electronic commerce in the Internal Market'' (the ``E-Commerce Directive''). This proposed directive aims to ensure the free movement of electronically provided services, including e-commerce, within the member states of the European Union. The draft E-Commerce Directive is proposed to be adopted in 2000 following which E.U. member states will have one year to implement it. Signi®cant provisions of the draft E-Commerce Directive provide that: ) E.U. member states must ensure that their legislation allows contracts to be concluded electronically, subject to a limited number of exceptions; ) mere carriers of information over, or providers of access to, communications networks will not be liable for the content of that information; and

91 ) a provider of hosting services will not be liable for the information hosted, except where it knows that it is illegal and does not disable access to that information.

) it also clari®es jurisdictional and contract formation issues.

Closely connected with electronic commerce is the issue of electronic signatures. On December 1, 1999, the E.U. Council of Ministers adopted a ``directive on a common framework for electronic signatures'' (the ``Electronic Signatures Directive''). The directive establishes a framework in which ``certi®cation service providers'' issue ``quali®ed certi®cates'' 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 con®dential correspondence between the parties, authentication of encrypted documents and veri®cation of the document's integrity. This system is enhanced when a third veri®cation party is included. That party administers a database of public keys, enabling veri®cation 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.

On November 18, 1999, an Electronic Communications Bill was introduced in the House of Commons in the United Kingdom. This bill included, amongst other things, provisions providing for the legal recognition of electronic signatures in the United Kingdom.

Until the proposed E-Commerce Directive is adopted and the scope, timescale and method of its implementation and that of the Electronic Signatures Directive in the United Kingdom and other relevant jurisdictions is known, our activities in the ®eld 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 providers, Cable and Wireless and Telewest, and wireless access protocol providers such as BT Cellnet and Orange. We will not be required to obtain any additional regulatory licences for this content provision as the relevant third-party providers will provide services under their relevant licences pursuant to the Broadcasting Acts 1990 and 1996, Telecommunications Act 1984 and the Wireless Telegraphy Acts 1949 ± 1967, as applicable.

92 PART 11. MANAGEMENT

Directors

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

Name Age Position Pieter Bouw *********************** 58 Chairman and Non-executive Director Robert Bryan Collier **************** 60 Vice Chairman and Non-executive Director Brent Shawzin Hoberman ************ 31 Co-founder, Chief Executive Of®cer and Director Martha Lane Fox ******************* 27 Co-founder, Chief Operating Of®cer and Director Brian Collie *********************** 45 Non-executive Director Laurent Pierre Marie Raoul Edmond Laffy*************************** 37 Non-executive Director Linda Fayne Levinson *************** 57 Non-executive Director Thomas Alfred Teichman ************ 52 Non-executive Director

Executive Of®cers

The executive of®cers of lastminute.com and their ages and positions are:

Julian Charles Culhane ************** 33 Finance Director Dominic St. John Euan Cameron ****** 43 Chief Technology Of®cer Charles Dunn McKee, Jr. ************ 34 Executive Vice President Clive Brian Eisen******************* 43 Head of Technical Operations and Travel Technology Thomas William Virden ************* 42 Vice President, International Sepand Jordan Riahi **************** 32 Vice President, Business Development Peter David Clucas Flint ************* 25 Head of Distribution David Kelly *********************** 36 Head of U.K. Operations Stephan Christian Uhrenbacher******** 30 Head of Northern European Operations Laurent Yves Therezien ************* 36 Head of Southern European Operations and Vice President, Product Strategy

Pieter Bouw has served as our Chairman and a non-executive director of lastminute.com since November 1, 1998. Mr. Bouw has been a Managing Director of 4Invest BV, an investment company, since 1997. Mr. Bouw was President and CEO of KLM Royal Dutch Airlines from 1991 to 1997. While with KLM, he was an active member of the World Tourism and Travel Council. Mr. Bouw is a Professor of Strategic Alliances at the University of Twente and is the Vice Chairman of the Advisory Council to the Ministry of Transportation, Communication and Infrastructure, The Hague, a member of the Supervisory Board of the Free University, Amsterdam and Chairman of the Instituut Nederlandse Kwaliteit (Dutch Quality Institute). He is also a member of the Supervisory Boards of the following companies: De Nederlandsche Bank (Dutch Federal Bank) N.V., Nederlandse Spoorwegen (Dutch Railways) N.V., Getronics N.V., OcÂe N.V., Vopak N.V. and CSM N.V. From October 1990 until his resignation in August 1997, Mr. Bouw was a director of IATA. Mr. Bouw holds a Masters in Economics from Free University, Amsterdam.

Robert Collier has served as our Vice-Chairman and a non-executive director of lastminute.com since October 1998. Since 1998, Mr. Collier has been a principal in RBC Associates. From 1997 to 1998, he acted as Vice-Chairman of Saison Overseas, the parent company of Intercontinental Hotels Group. From 1994 to 1997, Mr. Collier was the Joint Managing Director of Intercontinental Hotels Group. Furthermore, Mr. Collier has held a number of senior executive positions in the United Kingdom, Europe and the United States with the major hotel groups ITT Sheraton Corporation and Trusthouse Forte. At ITT Sheraton, he was Senior Vice President, Director of Marketing. While on the Board of ITT Sheraton and based in Boston, he became the ®rst non-U.S. citizen to become national Chairman of the Travel Industry Association of America. Mr. Collier serves on the boards of directors of the following companies: Air Harbour Technologies, All Hotels/Articulate Solutions, Bristol Golf Club Ltd., Corporate Insignia Ltd., Green Globe, Loftus Road, My Hotels Ltd., 066, Pegasus Systems Inc. and Wasps Rugby Football Club Limited. Mr. Collier holds an MA from Cambridge University.

Brent Hoberman is the Co-founder, Chief Executive Of®cer and a director of lastminute.com. Previously Mr. Hoberman was a Senior Associate at Spectrum Strategy Consultants, a media and telecom strategy consultancy. He held business development responsibilities at Line One, an Internet service provider owned by

93 News International, British Telecom and United News & Media. Mr. Hoberman was part of the founding team of the U.K. on-line auction company, QXL.com plc. Mr. Hoberman holds an MA from Oxford University. Martha Lane Fox is Co-founder of lastminute.com and has been its Chief Operating Of®cer and a director since its inception in April 1998. From September 1994 to May 1997, Ms. Lane Fox was an Associate at Spectrum Strategy Consultants, where she specialised in pay television and managed teams both in the U.K. and Asia. From May 1997 to April 1998, she was Business Development Manager of Carlton Communication's initiatives in pay TV Internet and digital channels. Ms. Lane Fox holds an MA from Oxford University. Brian Collie was appointed to our board of directors as a non-executive director in February 2000. Mr. Collie is the Group Retail Director of BAA plc and has served in that position since June 1997 and has been responsible for establishing World Duty Free, the international duty free company of BAA plc. Since November 1997, Mr. Collie has also served as a member of the board of directors of BAA plc. From 1992 until his appointment to his current position, Mr. Collie acted as retail director at Gatwick Airport in the United Kingdom where he was responsible for the development, management and pro®tability of all commercial activity of BAA plc located there. Mr. Collie is a director of the European Travel Research Foundation and a founding director of the British Institute of Retailing. Mr. Collie currently is also a member of the board of directors of BAA McArthur Glen and World Duty Free plc. Mr. Collie was appointed as a representative of BAA plc pursuant to a right granted to BAA plc in connection with our private placement completed on February 4, 2000. This right will terminate upon the closing of the offering, although he will continue to hold of®ce as a director. Laurent Laffy has served as a non-executive director of lastminute.com since June 1998. From June 1998 to November 1, 1998, Mr. Laffy served as Chairman. He is a Partner in Arts Alliance Advisors, which acts as investment adviser to Cheetah International Investments Limited. Mr. Laffy serves on the boards of ChÃateau- Online SA, Venture Capital Report Limited, KeeBoo Corporation, Servista.com Limited and Maastricht Multimedia Luxembourg. Mr. Laffy has worked in equity research for J.P. Morgan Securities Ltd. and Warburg Dillon Read in London and as a consultant for Bain & Company in Paris and Sydney. A French national, Mr. Laffy is a graduate of Ecole des Hautes Etudes Commerciales (H.E.C.) in Paris and holds an MBA from Harvard Business School. Linda Fayne Levinson has served as a non-executive director of lastminute.com since June 1999. She has been a partner, since 1997, of Global Retail Partners, L.P., a private equity venture capital fund focused on the Internet. From 1994 to 1997, she was president of Fayne Levinson Associates, an independent consulting ®rm advising major corporations and early stage companies on issues of strategy. In 1993, Ms. Levinson was an executive at Creative Artists Agency. From 1989 to 1992, Ms. Levinson was a Partner of Alfred Checchi Associates, Inc. From 1984 to 1987, Ms. Levinson was a Senior Vice President of American Express Travel Related Services Co., Inc., responsible for the U.S. travel agencies and U.S. originating tour business. Ms. Levinson worked as an independent consultant from 1982 to 1984. From 1972 to 1981, Ms. Levinson was a consultant at McKinsey & Co. Inc. where she was elected the ®rst woman partner in 1979. Ms. Levinson serves on the boards of directors of the following public companies: NCR Corporation, Administaff, Inc., Jacobs Engineering Group, Inc., GoTo.com, Exactis.com, Inc. and CyberSource, Inc. Until June 1999, she also served on the Board of Directors of Genentech, Inc. She is also a director of the following privately held companies: Homestead.com, Esurance.com and Mercata.com. Ms. Levinson has an AB from Barnard College, with a major in Russian Studies; an MA from Harvard University in Russian Literature and an MBA from the Stern School at New York University. Thomas Teichman has served as a director of lastminute.com since May 1998. He is the Chairman and founder of NewMedia Investors Ltd., a corporate ®nance and venture capital ®rm in London. He formed NewMedia Investors in 1996 to facilitate investment in the U.K. Internet and technology industry. Mr. Teichman also acts as Chairman and a director of NewMedia SPARK plc. From 1985 to 1996, Mr. Teichman served as a director of MAID plc, now the Dialog Corporation, where he was responsible for corporate development. Prior to joining MAID, he held positions as head of Corporate Finance for Mitsubishi Finance International, London and then Bank of Montreal Nesbitt Thomson, the European investment banking arm of Bank of Montreal. Prior to that, Mr. Teichman held a series of investment banking positions with Bankers Trust, William Brandt's Sons & Co. and Credit Suisse/CSFB. Mr. Teichman serves on the boards of directors of the following companies: Advanced Visual Technology Ltd., Argonuaut Software Ltd., Clickipo Limited, Grovebase Limited, New Caledonian Residents Management Ltd., Exquisite Carriages Ltd., 10Invest.com plc, NewMedia Investors Ltd., OC Team, Wellington Investments Ltd., Wellington Pub Company plc and System C Ltd. Mr. Teichman has previously served on the board of directors of The Apex Group Limited and Virtual Business Information Limited. Mr. Teichman holds a BSc in Economics (Hons.) from University College London. He is a member of The Securities Institute, London.

94 Julian Culhane has been lastminute.com's Finance Director since November 1999. From 1996 to 1999, Mr. Culhane was with Broadview International Limited and acted as a Principal from January 1, 1998 until the commencement of his employment with us. While at Broadview International Limited, Mr. Culhane was involved in leading international merger and acquisition transactions in information technology. From 1994 to 1996, Mr. Culhane was an Assistant Director in the Media and Telecommunications group of Natwest Markets, an investment bank. Mr. Culhane has a Bsc (Hons) in Chemistry from Bristol University and quali®ed as a Chartered Accountant with Coopers & Lybrand. Dominic Cameron was appointed lastminute.com's Director of Technology on a full-time basis in July 1999. From March 1999, Mr. Cameron provided his services to lastminute.com on a part-time basis. Mr. Cameron previously worked for Aztec Internet Limited, now NC Company Limited. Mr. Cameron still acts as a non-executive Chairman and director of NC Company Limited. He has also worked for UpMyStreet.com Ltd., BBC Worldwide Ltd., BBC New Online, Chelsea Multimedia Group Ltd., BBC Television and British Broadcasting Corporation. Mr. Cameron has a BS from the University of Edinburgh and a Masters from Cambridge University. Charles McKee, Jr. was appointed to the position of Executive Vice President of lastminute.com in February 2000. From May 1996 until his appointment at lastminute.com, Mr. McKee held a variety of senior positions at Virgin Atlantic Airways. While at Virgin Atlantic, Mr. McKee was General Manager of Global Distribution, with responsibility for sales, call centres and distribution channel development; Senior Vice President ± North America and Vice President ± Asia/Paci®c. During his career at Virgin Atlantic Airways, Mr. McKee has been based in London, Tokyo and New York. Prior to joining Virgin Atlantic Airways, Mr. McKee worked for AVMARK, Inc., aviation consultants, and Hong Kong-based Dragonair. Mr. McKee has attended Brown University and received his AB in East Asian Studies from Harvard University in 1987. Clive Brian Eisen was appointed as our Head of Technical Operations and Travel Technology in January 2000. Prior to joining us, Mr. Eisen worked as a technology consultant to the U.K. travel industry, primarily to Travel 2 Ltd., a tour operator in the United Kingdom. Mr. Eisen obtained his BS (Hons) in computers and cybernetics from the University of Kent at Canterbury in 1977. Thomas Virden has been the Vice President, International of lastminute.com since March 1999. Prior to joining lastminute.com, Mr. Virden founded VEO in Paris in December 1997. From December 1997 to March 1999, Mr. Virden was employed by VEO and worked as a contractor for Netscape Communications, Inc. where he was responsible for the operations of Netscape's web sites. From 1995 until December 1997, Mr. Virden worked for Katz Media SARL. From 1992 to 1995, Mr. Virden was Vice President of Marketing at Digidesign. Prior to that, Mr. Virden spent 10 years at Apple Computer Inc. in marketing. He is a director of Ideanet, a privately held company in Paris, France. Mr. Virden has a BA from Stanford University. Sepand Riahi has been lastminute.com's Vice President, Business Development since April 1999. From 1997 to 1999, Mr. Riahi was Director of Development and Marketing of Central European Media Enterprises in London, Prague and Budapest. From 1994 to 1997, he was a Senior Manager, Corporate Development, at Sony Pictures Entertainment in Los Angeles and London. His other professional experience includes working for The Walt Disney Studios, American International Group and American General Corporation. Mr. Riahi has a BA from the University of Texas and an MBA from the Wharton School of Business. Peter Flint joined lastminute.com in July 1998 and became Head of Distribution in September 1999. From 1998 to 1999, Mr. Flint managed e-commerce, commercial and advertising projects for Line One. Mr. Flint has previously worked for Delphi Creative, JP Morgan and IBM U.K. Mr. Flint has a Masters in Physics from Oxford University. David Kelly was appointed as the Head of U.K. Operations in February 2000. From February 1999 until joining lastminute.com, Dr. Kelly was the Director of customer service for Amazon.co.uk. From 1995 until he assumed his position with Amazon.co.uk Dr. Kelly was a strategy and marketing professor at City University Business School in London. Dr. Kelly obtained his BA (Hons) from Leicester University in 1986, his MBA (Distinction) from City University Business School in London in 1995 and his PhD from City University Business School in London in 1999. Stephan Uhrenbacher has been Head of Northern European Operations of lastminute.com since October 1999. From 1994 to 1999, Mr. Uhrenbacher was employed by Gruner & Jahr AG & Co. in Hamburg, Germany, in a variety of capacities, the most recent as Project Manager of G & J Electronic Media Service GmbH. Mr. Uhrenbacher has a ``Diplom Wirtschaftsingenieur'' from University Kaiserslautern and has a MBA from Queen's University School of Business, Kingston, Ontario, Canada.

95 Laurent Therezien has been Head of Southern European Operations and Vice President, Product Strategy since he joined lastminute.com on December 13, 1999. Prior to joining lastminute.com, from May 1997 to December 1999, Mr. Therezien was employed by Club Med as a Director of Special Projects and Tour Operating and was a member of its executive committee. From September 1994 until April 1997, Mr. Therezien was an Engagement Manager for the management consulting ®rm of McKinsey & Co. Inc. Mr. Therezien obtained a MBA from Harvard Business School in 1994 and a Masters in Management from Ecole SupÂerieure de Commerce de Paris in 1986.

Issues Affecting Directors and Executive Of®cers No director or executive of®cer: ) except as disclosed above, has been a director or partner of any companies or partnerships at any time in the ®ve years prior to the date of this prospectus; or ) has any unspent convictions in relation to indictable offences; or ) except as disclosed below, has been adjudged bankrupt or been a party to a deed of arrangement or any form of voluntary arrangement; or ) except as disclosed below, has been a director with an executive function of any company which, while he or she was such a director or within 12 months after his or her ceasing to be such a director, was put into receivership or compulsory liquidation or creditors' voluntary liquidation or company voluntary arrangements or had an administration or an administrative or other receiver appointed or entered into any composition or arrangement with its creditors generally or any class of its creditors; or ) has been a partner in any partnership which, while he or she was a partner, or within 12 months after his or her ceasing to be a partner, was put into compulsory liquidation or had an administrator or an administrative or other receiver appointed or entered into any voluntary arrangement; or ) has had an administrative or other receiver appointed in respect of any asset belonging to him or her or to a partnership of which he or she was a partner at the time of such event or within 12 months after his or her ceasing to be such a partner; or ) has received any public criticism by any statutory or regulatory authorities, including recognised professional bodies, or been disquali®ed by a court from acting as a director of a company or from acting in the management or conduct of the affairs of any company. Mr. Teichman was a director of Hampton Securities Limited when the company was dissolved on May 2, 1995 never having traded; Mr. Teichman resigned as a director of Bank of Montreal Capital Markets Limited on May 23, 1991 and the company was dissolved by means of a creditors' solvent voluntary winding up on March 31, 1992; Mr. Cameron was a director of Chelsea Multimedia Group Limited until 1992 and the company was put into receivership and dissolved on June 13, 1995 owing approximately £106,000 to creditors who received approximately £78,000; Mr. Cameron ®led for personal bankruptcy in February 1993, having personally guaranteed a lease for the above-mentioned company that was enforced against him, and the bankruptcy was discharged in February 1996; and Mr. Virden was a director of Katz Media S.A.R.L., which was put into liquidation on July 1, 1997 owing approximately £1,306,000 and proceedings are on-going.

Corporate Governance Our board established an audit committee, a remuneration committee and a nomination committee on February 15, 2000. The audit committee will be chaired by Mr. Bouw and its other members will be Messrs. Collier and Laffy and Ms. Fayne Levinson. This committee will have responsibility for, among other things, planning and reviewing our annual and quarterly reports and accounts and the involvement of our auditors in that process, focusing particularly on compliance with legal requirements and accounting standards and the requirements of the London Stock Exchange, the Nasdaq National Market and the Securities and Exchange Commission. The ultimate responsibility for reviewing and approving our annual and quarterly reports and accounts will be with our board. The remuneration committee will be chaired by Ms. Fayne Levinson and its other members will be Messrs. Bouw and Collier. This committee will determine, within agreed terms of reference, our policy on compensation of executive of®cers and speci®c remuneration packages for each of the executive directors, including pension rights.

96 The nomination committee will be responsible for nominating candidates to ®ll board vacancies and for making recommendations on board composition and balance. This committee will be chaired by Mr. Bouw and its other members will be Messrs. Laffy and Teichman and Ms. Fayne Levinson. Although our board does not currently comply with the requirements of the principles of good governance and code of best practice appended to the listing rules of the London Stock Exchange, the directors intend to work towards compliance in the future, except that (i) a majority of our non-executive directors and (ii) some members of the remuneration committee and the audit committee will be af®liated with signi®cant shareholders. We consider that Messrs. Bouw and Collier are independent for the purposes of the principles of good governance and code of best practice mentioned above.

Compensation of Directors and Of®cers The following table presents information regarding the compensation paid by lastminute.com for the year ended September 30, 1999 to Mr. Hoberman, Chief Executive Of®cer and a director, Ms. Lane Fox, Chief Operating Of®cer and a director, Mr. Bouw, a non-executive director, and Mr. Collier, a non-executive director.

Year ended September 30, 1999 Basic salary and fees Pensions Bene®ts Total ££££ Brent Hoberman *********************************** 55,083 Ð 700 55,783 Martha Lane Fox ********************************** 45,000 6,300 450 51,750 Pieter Bouw ************************************** 5,500 Ð Ð 5,500 Robert Collier************************************* 5,500 Ð Ð 5,500 Total ******************************************** 111,083 6,300 1,150 118,533

Mr. Bouw, the chairman of the board, and Mr. Collier, vice chairman, each receive £500 per month as reimbursement of expenses. We do not compensate our other directors for their services on the board of directors or any committee of the board of directors. At December 31, 1999, Mr. Hoberman held options over 151,335 ordinary shares, Ms. Lane Fox held options over 129,675 ordinary shares, Mr. Bouw held options over 641,250 ordinary shares and Mr. Collier held options over 320,625 ordinary shares. All of these options were granted at a price of 2.31p. Mr. Hoberman's and Ms. Lane Fox's options expire in June 2008, while Mr. Bouw's and Mr. Collier's options expire in July 2008. The aggregate remuneration paid to or accrued on behalf of all our directors as a group for the year ended September 30, 1999 was £118,533, or $73,168, in salaries, fees, commissions and bonuses. The aggregate remuneration paid to or accrued on behalf of all of our of®cers as a group for the year ended September 30, 1999 was £189,467, or $116,955, in salaries, fees, commissions and bonuses. These amounts exclude all pension, retirement and bene®ts provided to our directors and executive of®cers, other than those required to be paid or contributed to by law. These amounts include amounts expended for parking spaces made available to of®cers, but does not include expenses such as business travel, professional and business association dues and expenses reimbursed to of®cers. Pension contributions paid in respect of the directors and executive of®cers as a group were £9,600 for the year ended September 30, 1999. At December 31, 1999, the aggregate number of ordinary shares over which options were held by all our directors and of®cers as a group, representing 18 persons, was 9,295,845 ordinary shares. The weighted average exercise price of these options was 10.01p. All options were granted for no consideration. These options expire on the tenth anniversary of their grant dates. The expiration dates for these options range from June 2008 to December 2009. Under the arrangements in force at the date of this prospectus, the aggregate amounts payable to all persons serving in the capacity of director is expected to be £282,000 for the year ending September 30, 2000.

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 of®ce, 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.

97 Pensions We contribute to a group personal pension plan managed by Standard Life to provide retirement and death bene®ts 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 December 31, 1999. At present, 18 employees are contributing to the arrangement. 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 bene®ts 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 December 31, 1999. Our directors receive bene®ts identical to those described above. We do not operate or participate in any pension arrangements, other than state arrangements, for employees or directors outside the United Kingdom.

98 PART 12. THE OFFERING Description of the Offering General Description 33,000,000 new shares are being offered for subscription by lastminute.com pursuant to the offering by means of an offering of shares (in the form of shares and ADSs) in the United Kingdom and elsewhere outside the United States and an offering of shares (in the form of shares and ADSs) in the United States. Based on an offering price of 210p per share (the mid-price in the range set out on the cover page of this prospectus), the offering will raise approximately £61,600,000 of new capital for us (net of costs associated with the offering). The offering outside the United States includes a retail offering in the United Kingdom, the Isle of Man and Jersey and offerings to Eligible Employees (as de®ned below) and to Priority Persons (as de®ned below). Save for a total of 2,237,877 shares which have been reserved to satisfy applications under the eligible employee offering and the priority offering, there is no ®xed allocation of shares to Eligible Employees, Priority Persons, other retail investors and institutional investors. The number of shares available under the retail offering will be decided by Morgan Stanley & Co. International Limited in consultation with us after the closing date for applications. The remaining shares in respect of the offering will be allocated to institutional investors in the United Kingdom and elsewhere on the basis determined by Morgan Stanley Securities Limited and the other underwriters in consultation with us. Morgan Stanley Securities Limited in consultation with us will decide the number of shares which will be allocated to each offering based on a number of factors, including without limitation, the demand for our shares in the respective offerings. Announcement of the offering price and allocations is expected to take place on March 14, 2000, when a supplementary prospectus will be published. The offering will lapse if the underwriting agreement is terminated in accordance with its terms prior to Admission, and any moneys received in respect of the offering will be returned to applicants without interest (see ``Additional Information Ð Underwriting Arrangements'' in Part 13 of the Prospectus and ``Terms and Conditions of Application for the Retail Offering'' in Part 11). Immediately following Admission, it is expected that 25.1 per cent. of the shares will be held in public hands (as de®ned in paragraph 3.20 of the Listing Rules of the London Stock Exchange). Certain lock-up arrangements will be in place following Admission (see ``Additional Information Ð Underwriting Arrangements'' in Part 13 of the Prospectus).

The Retail Offering Individuals who are aged 18 or over, who are resident in the United Kingdom, the Isle of Man or Jersey and who are registered subscribers of lastminute.com will have the opportunity to subscribe at the offering price (subject to it being determined) for the shares offered by us in the offering in the manner outlined in ``Applications and Allocations in the Retail Offering'' in Part 10. The terms and conditions of application for the retail offering, which are set out in Part 15, provide, amongst other things, that the minimum application is £500, applications must be in multiples of £500, the maximum application is £3,000 and multiple and joint applications are not permitted. In the event that demand for the shares being offered exceeds the number of shares made available in the offering, Morgan Stanley & Co. International Limited, in consultation with us, will determine the basis of allocation of the shares and may carry out a ballot of applicants in the retail offering. Accordingly you may not receive all of the shares that you apply for and it is possible that you may not receive any. Because the offering price will not be known until after the closing date for applications and because the price range may change after the closing date for receipt of application forms, applications for shares should be based on the amount you wish to invest and not the number of shares you wish to subscribe for. For further details of the terms and conditions which will apply if the offering price is set at a price which is lower or higher than the price range set out on the cover page of this prospectus, please see condition 2(c) in ``Terms and Conditions of Application for the Retail Offering'' in Part 11. If you are a registered subscriber of lastminute.com and you decide to apply for shares in the retail offering, you should download, print and complete a registered subscriber application form (carefully following the instructions in the guidance notes which accompany the form) and return the completed form to IRG plc, New Issues Department, PO Box 166, Bourne House, 34 Beckenham Road, Beckenham, Kent BR3 4TH together with a cheque, banker's draft or money order as soon as possible but in any event, so that it is received by 5.00 p.m.

99 on March 10, 2000. You must not alter the application form in any way as this may result in your application being rejected in whole or in part.

Eligible Employee Offering The terms and conditions of application for the offering to Eligible Employees (as de®ned below), which are set out in Part 11, provide, amongst other things, that the minimum application is £500, applications must be in multiples of £500, the maximum application is £5,000 and multiple applications are not permitted. In the event that demand for the shares being offered exceeds the number of shares made available in the offering, lastminute.com and Morgan Stanley & Co. International Limited will give preference in the allocation of shares under the retail offering to Eligible Employees whose applications have been made on employee application forms. lastminute.com and Morgan Stanley & Co. International Limited reserve the right to scale down such applications in individual circumstances as they consider appropriate. The Eligible Employees comprise employees of lastminute.com and/or any of its subsidiaries resident in the United States, the United Kingdom, France, Germany, Sweden or Spain who (i) had not given notice to terminate their employment on or prior to February 10, 2000 and (ii) are not casual employees, temporary employees or short term employees (i.e. employees on a ®xed term contract of less than one year's duration). The directors have absolute discretion to decide in any individual case whether such individual is an Eligible Employee. Eligible Employees may only make one application under the retail offering and may not apply jointly with others on an employee application form.

Priority Offering The terms and conditions of application for the offering to Priority Persons (as de®ned below), which are set out in Part 11, provide, amongst other things, that the minimum application is £500, applications must be in multiples of £500, the maximum application is £200,000 and multiple applications are not permitted. In the event that demand for the shares being offered exceeds the number of shares made available in the offering, lastminute.com and Morgan Stanley & Co. International Limited will give preference in the allocation of shares under the retail offering to Priority Persons whose applications have been made on priority person application forms. lastminute.com and Morgan Stanley & Co. International Limited reserve the right to scale down such applications in individual circumstances as they consider appropriate. Priority Persons comprise those persons whose names appear on a list of persons known to the directors and executive of®cers as determined by Pieter Bouw, the Chairman of lastminute.com, who has absolute discretion to decide in any individual case whether such individual is a Priority Person. Priority Persons may only make one application under the retail offering and may not apply jointly with others on a priority person application form.

The Institutional Offering Subject to allocations made under the retail offering (including the eligible employee offering and the priority offering), the shares being offered by us in the offering will be available to institutional investors in the United Kingdom and elsewhere. Morgan Stanley Securities Limited will, in its sole discretion, determine the categories of institutional investors who can participate in the offering. In connection with the institutional offering, Morgan Stanley Securities Limited has agreed to allocate Orange plc 525,000 shares at the offering price. In addition, Orange plc has entered into a conditional share purchase agreement with Brent Hoberman, Martha Lane Fox, Tom Teichman, Peter Teichman and Jan Swainston pursuant to which Orange plc has agreed to acquire a further 1,125,000 shares at the offering price conditional on Admission.

Pricing All of the shares to be issued in the offering will be issued, payable in full, at the offering price.

Dealing Arrangements The offering is subject to the execution of the underwriting agreement and the satisfaction of the conditions to be contained therein and in the sponsor's agreement. These conditions will include the absence of any breach of representation or warranty in the sponsor's agreement and/or the underwriting agreement and Admission occurring by 8.00 a.m. (London time) on March 21, 2000 or such later time and date (being not later than April 30, 2000) as lastminute.com may agree with Morgan Stanley & Co. International Limited and Morgan

100 Stanley Securities Limited. Further details of the sponsor's agreement and the underwriting agreement are set out in ``Additional Information Ð Underwriting Arrangements'' in Part 13 of the Prospectus. Admission is expected to take place and unconditional dealings in the shares are expected to commence on the London Stock Exchange at 8.00 a.m. (London time) on March 21, 2000. It is expected that dealings in the shares will commence on a conditional basis on the London Stock Exchange on March 14, 2000. The date for settlement of such dealings will be March 21, 2000. All dealings between the commencement of conditional dealings and the commencement of unconditional dealings will be on a ``when issued basis''. If the offering does not become unconditional all such dealings will be of no effect and any such dealings will be at the sole risk of the parties concerned. Where applicable, the posting of de®nitive share certi®cates in respect of the offering is expected to commence on March 21, 2000. No temporary documents of title will be issued.

CREST CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by a certi®cate and transferred otherwise than by written instrument. Upon Admission, our articles of association will permit the holding of shares under the CREST system. The directors will apply for the shares to be admitted to CREST with effect from Admission. Accordingly, settlement of transactions in the shares following Admission may take place within the CREST system if the relevant shareholders so wish. CREST is a voluntary system and holders of shares who wish to receive and retain share certi®cates will be able to do so. Investors applying for shares in the offering may, however, elect to receive shares in uncerti®cated form if that investor is a system-member (as de®ned in The Uncerti®cated Securities Regulations 1995) in relation to CREST.

Underwriting Arrangements Immediately prior to the announcement of the offering price, we, Morgan Stanley Securities Limited, Cazenove & Co., Deutsche Bank A.G., London, Donaldson, Lufkin & Jenrette Securities Corporation and UBS A.G. (acting through its division Warburg Dillon Read) are expected (but are not obliged) to enter into the underwriting agreement pursuant to which Morgan Stanley Securities Limited, Cazenove & Co., Deutsche Bank A.G., London, Donaldson, Lufkin & Jenrette Securities Corporation and UBS A.G. (acting through its division Warburg Dillon Read) will agree, subject to certain conditions, to procure subscribers for or, failing which, to subscribe themselves for, the shares being offered in the offering. All such subscriptions will be at the offering price. The underwriting agreement will contain a provision entitling Morgan Stanley & Co. International Limited or Morgan Stanley Securities Limited to terminate the offering (and the arrangements associated with it) at any time prior to Admission in certain circumstances. If this right is exercised, the offering and the arrangements associated with it will lapse and any monies received in respect of the offering will be returned to applicants without interest. The underwriting agreement will provide for Morgan Stanley Securities Limited (on behalf of itself and the other underwriters) to be paid commissions in respect of the shares allotted pursuant to the offering. Any commissions received by Morgan Stanley Securities Limited (on behalf of itself or the other underwriters) may be retained, and any shares acquired by Morgan Stanley Securities Limited, Cazenove & Co., Deutsche Bank A.G., London, Donaldson, Lufkin & Jenrette Securities Corporation and UBS A.G. (acting through its division Warburg Dillon Read) may be retained, or dealt in, by them for their own bene®t. Further details of the terms of the underwriting agreement are set out in ``Additional Information Ð Underwriting Arrangements'' in Part 13 of the Prospectus.

Over-allotment and Stabilisation In connection with the offering, we will grant Morgan Stanley Securities Limited, on behalf of the underwriters, an option, exercisable within 30 days from the date the offering price is set, to subscribe, or procure subscribers, for up to an aggregate of 4,950,000 additional shares (all or a portion of which may, at the option of Morgan Stanley Securities Limited, be in the form of ADSs) at the offering price, to cover over-allotments, if any, made in connection with the offering and to cover short positions resulting from stabilisation transactions.

101 In connection with the offering, Morgan Stanley Securities Limited may over-allot or effect transactions which stabilise or maintain the market price of the shares or ADSs or any options, warrants or rights with respect to, or interest in, the shares or ADSs, in each case at levels which might not otherwise prevail in the open market. Such transactions may be effected on the London Stock Exchange, the Nasdaq National Market, in the over-the- counter market or otherwise. Such stabilisation, if commenced, may be discontinued at any time.

Registration Rights Only a portion of our outstanding shares will be registered with the U.S. Securities and Exchange Commission under the U.S. Securities Act of 1933 in connection with this offering and only shares which are registered will be eligible for sale to the public in the United States. After this offering, some of the shareholders who are parties to the amended and restated shareholders' agreement dated May 21, 1999, a description of which is contained in ``Additional Information Ð Material Contracts'' in Part 13, will continue to hold unregistered shares and so we have agreed that they will have the right to require us to register their shares (``registration rights''). If the registration rights are exercised, we must ®le a registration statement with the U.S. Securities and Exchange Commission, which will contain a prospectus relating to our business, on the basis of which such shareholders will be able to sell their shares in the United States. Under the terms of the shareholders' agreement, the holders of not less than 25% of unregistered shares that remain unregistered are entitled to exercise these rights. No more than two written registration requests may be made. These registration rights are exercisable no earlier than 180 days after the date on which the registration statement being ®led with the U.S. Securities and Exchange Commission in connection with this offering becomes effective. We are required to pay all expenses incurred in effecting any registration of our shares with the U.S. Securities and Exchange Commission pursuant to the amended shareholders' agreement, except underwriting discounts, selling commissions, stock transfer taxes and the legal fees of the holders. These registration rights do not constitute the shares to which they relate as a separate class of shares, and are commonly given to investors who provide equity ®nancing prior to the initial public offering of a company in order to enable them to realise their investment. Without these registration rights, the investors would not be able to sell the shares to the public in the United States, although they will be able to trade their ordinary shares on the London Stock Exchange, after the expiry of any lock-up agreement they have entered into with Morgan Stanley Securities Limited.

102 PART 13. ADDITIONAL INFORMATION Incorporation lastminute.com was incorporated in England and Wales with registration number 3852152 on October 1, 1999 under the Companies Act as a private company with limited liability with the name Vibetron Limited. The Company changed its name to lastminute.com limited on January 14, 2000 and re-registered as a public limited company on February 24, 2000 under the name lastminute.com plc. lastminute.com is the holding company of Last Minute Network Limited. Last Minute Network Limited (the ``Subsidiary'') was incorporated in England and Wales with registration number 3538456 on April 1, 1998 under the Companies Act as a private company with limited liability. Share Capital The share capital history of the Subsidiary is as follows: (i) The Subsidiary's authorised share capital on incorporation was £1,000 divided into 1,000 ordinary shares of £1 each. Two shares were subscribed for and paid in full by the subscribers to the memorandum and articles of association. These shares were transferred on April 1, 1998, one to Riverdale International S.A. and one to Martha Lane Fox. (ii) On May 14, 1998, 98 ordinary shares of £1 each were allotted fully paid up in cash to Riverdale International S.A. and Martha Lane Fox, for an aggregate consideration of £98. (iii) On June 15, 1998, 540 ordinary shares of £1 each were allotted fully paid up in cash to Riverdale International S.A. and 360 ordinary shares of £1 each to Martha Lane Fox, for an aggregate consideration of £900. These shares were originally agreed to be allotted on May 14, 1998. (iv) On July 3, 1998: (a) the authorised share capital of the Subsidiary was increased to £2,250 divided into 1,490 ordinary shares of £1 each and 760 preference shares of £1 each; (b) 760 preference shares of £1 each and 152 ordinary shares of £1 each were allotted for cash at a premium of £657 per share pursuant to a subscription and shareholders' agreement dated 29 June 1998. The preference shares were subscribed by Cheetah International Investments Limited, Innovacom 1 and Venture Partners Multimedia ASA for an aggregate consideration of approximately £500,000. The ordinary shares were subscribed by a number of new individual shareholders for an aggregate consideration of approximately £100,000; and (c) each ordinary share of £1 each was sub-divided into 100 ordinary shares of £0.01 each. (v) On January 10, 1999, the authorised share capital of the Subsidiary was increased to £352,250 divided into 350,760 preference shares of £1 each and 149,000 ordinary shares of £0.01 each. (vi) On April 30, 1999, 225 ordinary shares of £0.01 were allotted for cash at a premium of £6.57 to Dominic Cameron, an employee, for an aggregate consideration of £1,480.50 pursuant to the exercise of share options. (vii) On May 21, 1999: (a) new Articles of Association were adopted by the Subsidiary specifying in effect that all issued preference shares were designated preference A shares and all unissued preference shares were designated preference B shares; (b) the authorised share capital of the Subsidiary was increased to £352,760 divided into 350,760 preference shares of £1 each and 200,000 ordinary shares of £0.01 each; (c) each of the preference shares of £1 each was subdivided into 100 preference shares of £0.01 each; (d) 9,516 preference B shares of £0.01 each were allotted for cash at a premium of £36.77 to Cheetah International Investments Limited, Innovacom 3 and Venture Partners Multimedia ASA, for an aggregate consideration of approximately £350,000 paid by the capitalisation of a bridging loan made to the Subsidiary; and (e) 7,917 ordinary shares of £0.01 each and 114,431 preference B shares of £0.01 each were allotted for cash at a premium of £49.03, for an aggregate consideration of approximately

103 £6.0 million. These equity securities were issued to existing shareholders, key employees, corporate, institutional and individual investors, and private equity ®rms. The ordinary shares were subscribed by a group of new individual shareholders. The preference shares were subscribed by Cheetah International Investments Limited, Innovacom 3, Venture Partners Multimedia ASA, Global Retail Partners, L.P. and its af®liates, Michael Van Swaij, Harvey Goldsmith Pension Fund and NewMedia Investors Limited. (viii) On June 4, 1999, a further 36,909 preference B shares of £0.01 each were allotted for cash at a premium of £49.03 to Intel Corporation, Kilda Investments Limited, T-Telematik Venture Beteiligungsgesellschaft GmbH, Amadeus 1 Af®liates Fund LP and Amadeus 1 for an aggregate consideration of approximately £1.8 million. (ix) On November 16, 1999, 4,595 preference A shares of £0.01 each were agreed to be allotted for cash, 17,191 preference B shares of £0.01 each were allotted for cash and 284 ordinary shares of £0.01 each were allotted for cash, in each case at a premium of U.S.$340.53. These shares were purchased by existing shareholders and Morgan Stanley Equity Fund, Inc. The preference A shares were agreed to be purchased by Cheetah International Investments Limited and Innovacom 3, for an aggregate consideration of approximately U.S.$1.6 million; the preference B shares were purchased by Morgan Stanley Equity Fund, Inc., Cheetah International Investments Limited, Innovacom 3, Global Retail Partners, L.P. and its af®liates, Michael Van Swaij, Intel Corporation, T-Telematik Venture Beteiligungsgesellschaft GmbH, Kilda Investments Limited, Amadeus 1 and Amadeus 1 Af®liates Fund L.P., for an aggregate consideration of approximately U.S.$5.9 million; and the ordinary shares were purchased by a group of new and existing shareholders for an aggregate consideration of approximately U.S.$0.1 million. The total aggregate consideration for the November 16, 1999 sale of equity securities was approximately U.S.$7.5 million (£4.6 million). (x) On January 26, 2000, the Subsidiary allotted 32 ordinary shares of £0.01 each to Christian Gourmet, Carine Gregoire and Fabrice Louette in part consideration for the purchase of Last Minute S.P.R.L., a company incorporated in Belgium. (xi) On February 4, 2000: (a) 200,000 unissued preference B shares of £0.01 each in the authorised share capital of the Subsidiary were redesignated as ordinary shares of £0.01 each; (b) 76,000 unissued preference B shares of £0.01 each in the authorised share capital of the Subsidiary were redesignated as preference A shares of £0.01 each; (c) the directors were authorised to allot 4,595 preference A shares as if section 89(1) of the Companies Act did not apply to such allotment for a period expiring on September 27, 2004; and (d) the directors were authorised under section 95 of the Companies Act to allot the shares as if section 89(1) of the Companies Act did not apply to such allotment up to an aggregate nominal value of £170 in connection with a rights issue for a period of 3 months from February 4, 2000, unless previously revoked, and to the allotment, other than by way of a rights issue for a period of ®ve years from February 4, 2000, unless previously revoked, of £500 in nominal amount comprising preference B shares, £420 in nominal amount comprising warrants to subscribe for ordinary shares and £243 in nominal amount comprising any class of shares in favour, in each case, of such persons as the directors may in their discretion select. (xii) On February 4, 2000, the Subsidiary allotted 1,510 ordinary shares of £0.01 each for cash to existing ordinary shareholders; 4,211 preference A shares of £0.01 each for cash to Cheetah International Investments Limited and Venture Partners Multimedia ASA; and 60,346 preference B shares of £0.01 each for cash (or, in the case of BAA plc in-kind consideration consisting of marketing support with a value of U.S.$ 750,000) to BAA plc, Bass plc, Mitsubishi Corporation Finance plc, priceline.com Limited, Sheraton International Inc., Sony Music - a division of Sony Music Entertainment, Inc., Viventures F.C.P.R. and existing shareholders, in each case at a premium of $616.74 per share. In addition, 4,595 preference A shares of £0.01 each were allotted to Cheetah International Investments Limited and Innovacom 3 at a premium of U.S.$340.53 pursuant to the shareholders' agreement of November 16, 1999. (xiv) On February 15, 2000:

104 (a) the authorised share capital of the Subsidiary was increased from £352,760 to £708,238 by the creation of 35,547,712 new ordinary shares of £0.01 each to rank pari passu in all respects with the existing ordinary shares in the capital of the Subsidiary and be subject to the rights and restrictions set out in the Subsidiary's existing Memorandum and Articles of Association; and (b) the directors were empowered pursuant to section 95 of the Companies Act to allot equity securities (as de®ned in section 94(2) of the Companies Act) as if section 89(1) of the Act did not apply to any such allotment, such power to be limited to the allotment of equity securities up to an aggregate nominal value of £355,478 credited as fully paid in connection with a bonus issue in favour of the holders of ordinary shares of the Subsidiary on the register of the Subsidiary on February 15, 2000 on the basis of 284 new ordinary shares for every one ordinary share held. This power expires on May 15, 2000 unless previously revoked or varied by special resolution. (xv) On February 15, 2000, the Subsidiary allotted 35,547,712 ordinary shares of £0.01 each credited as fully paid by way of a bonus issue on the basis of 284 new ordinary shares for every one ordinary share held. These shares were allotted to the Subsidiary's existing ordinary shareholders. The bonus issue was effected prior to the entry into the share exchange agreement referred to in paragraph (xvi) below to reduce the valuation of each ordinary share prior to the offering in order to create more liquidity in the market when the offering closes. (xvi) On February 15, 2000, lastminute.com acquired the entire issued share capital of the Subsidiary pursuant to the share exchange agreement described in paragraph (f) in ``Additional Information Ð Material Contracts'' in this Part 13. The share capital history of lastminute.com plc is as follows: (i) lastminute.com's authorised share capital on incorporation was 100 ordinary shares of £1 each of which two were issued at par fully paid. (ii) On February 11, 2000: (a) each of the existing ordinary shares of £1 each in the capital of lastminute.com was subdivided into 100 ordinary shares of £0.01 each and the authorised share capital of lastminute.com was increased from £100 to £100,536,600 by the creation of 152,000 preference A shares of £2.85 each, 34,724,000 preference B shares of £2.85 each and 113,990,000 new ordinary shares of £0.01 each; and (b) the directors were empowered pursuant to section 95 of the Companies Act, to allot equity securities (as de®ned in section 94(2) of the Companies Act) as if section 89(1) of the Companies Act did not apply to any such allotment provided that this power was limited to (i) the allotment of equity securities up to an aggregate nominal value of £1,172,660 credited as fully paid in exchange for the acquisition of all the outstanding preference A shares, preference B shares and ordinary shares in the Subsidiary, (ii) the allotment of equity securities up to an aggregate nominal value of £119,700 comprising warrants to subscribe for ordinary shares and (iii) the allotment of up to £69,255 in nominal amount of ordinary shares. This power expires on May 11, 2000, unless previously revoked or varied by special resolution. (iii) On February 15, 2000 lastminute.com acquired the entire issued share capital of the Subsidiary pursuant to the share exchange agreement described in paragraph (f) in ``Additional Information Ð Material Contracts'' in this Part 13, in consideration for the issue to the shareholders of the Subsidiary of 84,806 preference A shares of £2.85 each credited as fully paid; 201,485 preference B shares of £2.85 each credited as fully paid; and 35,547,712 ordinary shares of £0.01 each credited as fully paid. (iv) On February 23, 2000, 66,690 ordinary shares of £0.01 each in the capital of lastminute.com were allotted to consultants to lastminute.com, credited as fully paid, in satisfaction of their outstanding invoices for professional services. (v) On February 29, 2000: (a) the directors were unconditionally authorised, pursuant to and in accordance with, Section 80 of the Companies Act, to exercise all or any powers of lastminute.com to allot relevant securities (within the meaning of Section 80(2) of the Companies Act) up to an aggregate nominal amount of £460,000 in connection with the initial public offering of shares in lastminute.com, such authority to expire (unless previously renewed, varied or revoked) on June 30, 2000 and

105 thereafter up to (i) an aggregate nominal amount of £62,108 in respect of warrants to subscribe for ordinary shares and (ii) £69,255 in any other case, in both cases for a period expiring (unless previously renewed, varied or revoked) at the conclusion of the annual general meeting of lastminute.com falling in 2001 (in each case on terms that during such period, lastminute.com may make an offer or an agreement which would or might require relevant securities to be allotted after the expiry of such period and the directors may allot relevant securities in pursuance of such an offer or agreement as if such authority had not expired) and all previous authorities granted to the directors pursuant to Section 80 of the Companies Act were revoked without prejudice to any allotments made or agreed to be made pursuant to the terms of such authorities; and (b) the directors were empowered, pursuant to Section 95 of the Companies Act, to allot equity securities (within the meaning of Section 94(2) of the Companies Act) wholly for cash pursuant to and for the period of the authorities referred to in paragraph (iv)(a) above as if Section 89(1) of the Companies Act did not apply to any such allotment on terms that lastminute.com may make an offer or agreement which would or might require equity securities to be allotted after the expiry of such period in connection with the initial public offering of shares of lastminute.com; and (ii) thereafter for a period expiring (unless previously renewed, varied or revoked) at the conclusion of the annual general meeting of lastminute.com falling in 2001, such power to be limited to (A) the allotment of equity securities in connection with an offer of such securities, to holders on the register on a record date or dates ®xed by the directors, of ordinary shares in proportion (as nearly as practicable) to their respective holdings but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in relation to fractional entitlements or legal or practical problems under the law of, or the requirements of any recognised regulatory body or any stock exchange in any territory; and (B) the allotment otherwise than as described in (A) above of equity securities (i) in respect of warrants to subscribe for ordinary shares up to an aggregate nominal amount of £62,108 and (ii) otherwise for cash up to an aggregate nominal amount equal to £69,255. (vi) Immediately prior to Admission pursuant to the Articles of Association of lastminute.com in effect prior to Admission, each of the outstanding preference A shares and each of the outstanding preference B shares will convert into 285 ordinary shares. This will happen automatically without the need for further shareholder approval.

Summary of allotments by the Subsidiary: Ordinary shares of £1 each

Date Number Issued Consideration Nature of the Issue April 1, 1998 ************ 2 £2.00 Issued credited as fully paid for cash to the subscribers to the memorandum of association May 14, 1998 ************ 98 £98.00 Issued credited as fully paid for cash June 15, 1998 ************ 900 £900.00 Issued credited as fully paid for cash July 3, 1998 ************* 152 £100,016.00 Issued credited as fully paid for cash

106 Ordinary shares of £0.01 each

Date Number Issued Consideration Nature of the Issue April 30, 1999******* 225 £1,480.50 Issued credited as fully paid upon the exercise of employee share options May 21, 1999 ******* 7,917 £388,249.68 Issued credited as fully paid for cash November 16, 1999 ** 284 $96,710.52 Issued credited as fully paid for cash January 26, 2000***** 32 Part consideration for the Issued credited as fully paid acquisition of Last Minute S.P.R.L. February 4, 2000***** 1,510 $931,292.50 Issued credited as fully paid for cash February 15, 2000**** 35,547,712 Nil Issued credited as fully paid by way of a bonus issue to ordinary shareholders on the basis of 284 ordinary shares for every one held

Preference shares of £1 each

Date Number Issued Consideration Nature of the Issue July 3, 1998 ******** 760 £500,080 Issued credited as fully paid for cash

Preference A shares of £0.01 each

Date Number Issued Consideration Nature of the Issue February 4, 2000***** 4,211 $2,597,134.25 Issued credited as fully paid for cash February 4, 2000***** 4,595 $1,564,781.30 Issued credited as fully paid for cash

Preference B shares of £0.01 each

Date Number Issued Consideration Nature of the Issue May 21, 1999 ******* 9,516 £349,998.48 Issued credited as fully paid for cash upon capitalisation of a bridging loan May 21, 1999 ******* 114,431 £5,610,551.93 Issued credited as fully paid for cash June 4, 1999 ******** 36,909 £1,810,017.36 Issued credited as fully paid for cash November 16, 1999 ** 17,191 $10,602,549.25 Issued credited as fully paid for cash February 4, 2000***** 60,346 $37,218,395.50 Issued credited as fully paid for cash and in-kind consideration

Summary of allotments by lastminute.com:

Ordinary shares of £1 each

Date Number Issued Consideration Nature of the Issue October 1, 1999 ***** 2 £2 Issued credited as fully paid for cash to the subscribers to the memorandum of association

107 Ordinary shares of £0.01 each

Date Number Issued Consideration Nature of the Issue February 15, 2000**** 35,547,712 Consideration for the Issued credited as fully paid acquisition of all the outstanding ordinary shares of £0.01 each in the capital of the Subsidiary February 23, 2000**** 66,690 Consideration for the Issued credited as fully paid provision of consultancy services

Preference A shares of £2.85 each

Date Number Issued Consideration Nature of the Issue February 15, 2000**** 84,806 Consideration for the Issued credited as fully paid acquisition of all the outstanding preference A shares of £0.01 each in the capital of the Subsidiary

Preference B shares of £2.85 each

Date Number Issued Consideration Nature of the Issue February 15, 2000**** 201,485 Consideration for the Issued credited as fully paid acquisition of all the outstanding preference B shares of £0.01 each in the capital of the Subsidiary

Memorandum and Articles of Association of lastminute.com

When this offering is completed, our authorised share capital will consist of 10,053,660,000 ordinary shares with a nominal value of £0.01 per share. Assuming no exercise of the over-allotment option, 150,332,505 of our shares will have been issued and fully paid or credited as fully paid, all of which will be in registered form. No holder of our shares will be required to make additional contributions of capital in respect of those shares in the future.

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 U.K. foreign exchange control restrictions on the conduct of our operations or which affect the remittance of dividends on listed shareholder's equity.

Memorandum 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 pro®tability 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 of®ces (see ``Documents Available for Inspection'' in this Part 13).

Articles of Association

The Articles of Association of lastminute.com have been adopted with effect immediately prior to Admission and contain, among others, provisions to the following effect:

108 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.

Dividends We have never paid or declared any cash dividends. 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 justi®ed, they may pay dividends on any class of shares where a dividend is payable on ®xed dates. They may also occasionally pay interim dividends on shares of any class in amounts and on dates as they think ®t. 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 pro®ts available for distribution under the provisions of the Companies Act 1985, the Uncerti®cated Securities Regulations 1995, including any modi®cation 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''), and every other statute 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 bene®t of shareholders as the liquidator will think ®t, 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.

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 uncerti®cated 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 uncerti®cated form.

Transfer of Shares All transfers of shares that are in certi®cated 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 uncerti®cated form may be effected by means of a relevant system.

109 Our directors may decline to recognise any transfer instrument relating to shares in certi®cated form unless it is (1) in respect of only one class of share and (2) registered at the transfer of®ce, duly stamped if required, accompanied by the relevant share certi®cate(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 certi®cated form, in their absolute discretion and without giving any speci®c 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 Of®cial List of the London Stock Exchange 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 or 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 certi®cated form, or (2) the Operator-instruction required by the CREST regulations was received by us, in the case of shares held in uncerti®cated 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 the London Stock Exchange of our intention to make a sale of shares held by untraceable shareholders. 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 ®t, 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 noti®cation 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 de®ned in the Companies Act, such as those held by investment fund managers, may be disregarded for the purposes of

110 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 con®rm 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 preceding 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 within the time speci®ed 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 ful®l 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 which 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 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 ®nally paid to the shareholder, and the shareholder will not be entitled to elect to receive shares 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 de®ned 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 certi®cate by the shareholder, in a form satisfactory to our directors, to the effect that, after due and careful enquiry, the shareholder is satis®ed that none of the shares subject to the transfer is a Default Share. In the case of shares in uncerti®cated form, our directors may only exercise their discretion to register a transfer if 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

111 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 larger 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 ®xed 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 other securities or (2) the purchase or the contract ®rst 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.

Reserves Our directors may occasionally set aside a portion of our pro®ts and reserve sums as they think proper that, in their discretion, will be applicable for any purposes that our pro®ts may be used. Pending any application, these pro®ts may either be employed in our business or invested. Our directors may divide the reserve into any special funds as they think ®t 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 pro®ts rather than place them in reserve.

Capitalisation of Pro®ts 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 pro®t 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 speci®ed 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, as in effect upon completion of this offering, provide that, unless otherwise determined by ordinary resolution, our board of directors will consist of not fewer than three nor more than 15

112 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' meetings. 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 of®ce by rotation. A retiring director will be eligible for re-election. No person will be disquali®ed from being appointed or re-appointed a director, and no director will be required to vacate that of®ce, by reason only of the fact that he has attained the age of 70 years or any other age nor will it be necessary by 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.

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 debentures and other securities, and ) 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 of®ce, including for this purpose the of®ce 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 bene®ts 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 our business. Our directors have the power to pay and agree to pay gratuities, pensions or other retirement, superannuation, death or disability bene®ts 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 bene®ts 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.

Indemni®cation and Insurance Subject to applicable English law, each of our directors, secretaries and of®cers will be indemni®ed 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 or 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 of®cer or employee and in which judgement is given in their favour; or where proceedings are disposed of without any ®nding 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 bene®t of, any persons that are or were at any time a director or of®cer 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.

113 Interested Director Transactions Subject to the provisions of applicable English law, and provided that he has disclosed to the board of directors the nature and extent of any interest, a director: ) may be party to, or otherwise interested in, any contract, transaction or arrangement with us or in which we are otherwise interested; ) may be a director or other of®cer of, or be employed by, or be a party to any contract, transaction or arrangement with, or otherwise interested in, any body corporate promoted by us or in which we are otherwise interested; ) may act in a professional capacity for us, other than as auditor, and be appropriately remunerated; and ) will not, except as otherwise agreed by him, be accountable to us for any bene®t that he derives from any contract, transaction or arrangement disclosed to the directors or from any of®ce or employment disclosed to the directors or from any interest in any body corporate or for remuneration, and no contract, transaction or arrangement disclosed to the directors will be voidable because of any interest or bene®t disclosed to the directors. Except as provided below, our directors will not vote at board meetings in respect of any contract, arrangement or proposal in which they have any material interest, other than by virtue of an interest in our shares, debentures or other securities or otherwise. A director will not be counted in the quorum at a board meeting in relation to any resolution on which he is not entitled to vote at board meetings. Subject to the provisions of applicable English law, a director generally will be entitled to vote at board meetings, and generally will be entitled to vote and be counted in the quorum at board meetings in respect of any resolution concerning: ) giving any security, guarantee or indemnity in respect of (1) money lent or obligations incurred by him or by any other person at the request of or for the bene®t of us or any of our subsidiaries or (2) a debt or other obligation of us or any of our subsidiaries for which he himself has assumed responsibility in whole or in part under a guarantee or indemnity or by giving security; ) any proposal concerning an offer of shares, debentures or other securities by us or any of our subsidiaries in which he is or may be entitled to participate as a holder of securities or as an underwriter or subunderwriter; ) any proposal concerning any other body corporate in which he is interested, directly or indirectly, as an of®cer, shareholder or otherwise, provided that he and any persons connected with him, within the meaning of Section 346 of the Companies Act, does not have an interest in 1% or more of the issued equity share capital of any class of that body corporate, or of any third company through which his interest is derived, or of the voting rights available to shareholders of the relevant body corporate; ) any proposal relating to an arrangement for the bene®t of our employees or those of any of our subsidiaries which does not award him any privilege or bene®t not generally awarded to the employees to whom the arrangement relates; or ) any proposal concerning insurance that we propose to maintain or purchase for the bene®t of directors.

Description of American Depositary Receipts American Depositary Receipts Morgan Guaranty Trust Company of New York, as depositary, will issue the ADSs which you will be entitled to receive in the offering. Each ADS will represent an ownership interest in ®ve shares which we will deposit with the custodian, as agent of the depositary, under the deposit agreement among ourselves, the depositary and yourself as an ADR holder. In the future, each ADS will also represent any securities, cash or other property deposited with the depositary but not distributed by it directly to you. Your ADSs will be evidenced by what are known as ADRs. An ADR may be issued in either book-entry or certi®cated form by the depositary. If an ADR is issued in book-entry form, you will receive periodic statements from the depositary showing your ownership interest in ADSs. The depositary's of®ce is located at 60 Wall Street, New York, NY 10260. You may hold ADSs either directly or indirectly through your broker or other ®nancial institution. If you hold ADSs directly, by having an ADS registered in your name on the books of the depositary, you are an ADR holder. This description assumes you hold your ADSs directly. If you hold the ADSs through your broker or

114 ®nancial institution nominee, you must rely on the procedures of such broker or ®nancial institution to assert the rights of an ADR holder described in this section. You should consult with your broker or ®nancial institution to ®nd out what those procedures are. Because the depositary's nominee will actually be the registered owner of the shares, you must rely on it to exercise the rights of a shareholder on your behalf. The obligations of the depositary and its agents are set out in the deposit agreement. The deposit agreement and the ADSs are governed by New York law. The following is a summary of the material terms of the deposit agreement. Because it is a summary, it does not contain all the information that may be important to you. For more complete information, you should read the entire deposit agreement and the form of ADR which contains the terms of your ADSs.

Share Dividends and Other Distributions How will I receive dividends and other distributions on the shares underlying my ADSs? We may make various types of distributions with respect to our securities. The depositary has agreed to pay to you the cash dividends or other distributions it or the custodian receives on shares or other deposited securities, after deducting its expenses. You will receive these distributions in proportion to the number of underlying shares your ADSs represent. Except as stated below, to the extent the depositary is legally permitted it will deliver such distributions to ADR holders in proportion to their interests in the following manner: Cash. The depositary will convert cash distributions from foreign currency to U.S. dollars if this is permissible and can be done on a reasonable basis. The depositary will endeavour to distribute such cash in a practicable manner, and may deduct any taxes required to be withheld, any expenses of converting foreign currency and transferring funds to the United States, and certain other expenses and adjustments. In addition, before making a distribution, the depositary will deduct any taxes withheld. If exchange rates ¯uctuate during a time when the depositary cannot convert a foreign currency, you may lose some or all of the value of the distribution. Shares. In the case of a distribution in shares, the depositary will issue additional ADRs to evidence the number of ADSs representing such shares. Only whole ADSs will be issued. Any shares which would result in fractional ADSs will be sold and the net proceeds will be distributed to the ADR holders entitled thereto. Rights to Receive Additional Shares. In the case of a distribution of rights to subscribe for additional shares or other rights, if we provide satisfactory evidence that the depositary may lawfully distribute such rights, the depositary may arrange for ADR holders to instruct the depositary as to the exercise of such rights. However, if we do not furnish such evidence or if the depositary determines it is not practical to distribute such rights, the depositary may: ) sell such rights if practicable and distribute the net proceeds as cash; or ) allow such rights to lapse, in which case ADR holders will receive nothing. We have no obligation to ®le a registration statement under the U.S. Securities Act of 1933 in order to make any rights available to ADR holders. Other Distributions. In the case of a distribution of securities or property other than those described above, the depositary may (1) distribute such securities or property in any manner it deems fair and equitable; (2) sell such securities or property and distribute any net proceeds in the same way it distributes cash; or (3) hold the distributed property in which case the ADSs will also represent the distributed property. Any U.S. dollars will be distributed by cheques drawn on a bank in the United States for whole dollars and cents (fractional cents will be withheld without liability for interest and added to future cash distributions). The depositary may choose any practical method of distribution for any speci®c ADR holder, including the distribution of foreign currency, securities or property, or it may retain such items, without paying interest on or investing them, on behalf of the ADR holder as deposited securities. The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADR holders. There can be no assurances that the depositary will be able to convert any currency at a speci®ed exchange rate or sell any property, rights, shares or other securities at a speci®ed price, nor that any of such transactions can be completed within a speci®ed time period.

115 Deposit, Withdrawal and Cancellation How does the depositary issue ADSs? The depositary will issue ADSs if you or your broker deposits shares or evidence of rights to receive shares with the custodian. In the case of the ADSs to be issued under this prospectus, we will arrange for the shares to be deposited. Shares deposited in the future with the custodian must be accompanied by certain documents, including instruments showing that such shares have been properly transferred or endorsed to the person on whose behalf the deposit is being made. The custodian will hold all deposited shares, including those being deposited by or on our behalf in connection with the offering to which this prospectus relates, for the account of the depositary. ADR holders thus have no direct ownership interest in the shares and only have such rights as are contained in the deposit agreement. The custodian will also hold any additional securities, property and cash received on or in substitution for the deposited shares. The deposited shares and any such additional items are referred to as ``deposited securities''. Upon each deposit of shares, receipt of related delivery documentation and compliance with the other provisions of the deposit agreement, including the payment of the fees and charges of the depositary and any taxes or other fees or charges owing, the depositary will issue an ADR or ADRs in the name of the person entitled thereto evidencing the number of ADSs to which such person is entitled. Certi®cated ADRs will be delivered at the depositary's principal New York of®ce or any other location that it may designate as its transfer of®ce. All of the ADSs issued outside of this offering will, unless speci®cally requested to the contrary, be part of the depositary's book-entry direct registration system, and a registered holder will receive periodic statements from the depositary which will show the number of ADSs registered in such holder's name. An ADR holder can request that the ADSs not be held through the depositary's direct registration system and that a certi®cated ADR be issued. If ADRs are in book-entry form, a statement setting forth such ownership interest will be mailed to holders by the depositary.

How do ADR holders cancel an ADS and obtain deposited securities? When you turn in your ADS at the depositary's of®ce, the depositary will, upon payment of certain applicable fees, charges and taxes, and upon receipt of proper instructions, deliver the underlying shares at the custodian's of®ce. At your risk, expense and request, the depositary may deliver at such other place as you may request. The depositary may only restrict the withdrawal of deposited securities in connection with: ) temporary delays caused by closing our transfer books or those of the depositary, or the deposit of shares in connection with voting at a shareholders' meeting, or the payment of dividends; ) the payment of fees, taxes and similar charges; or ) compliance with any U.S. or foreign laws or governmental regulations relating to the ADRs. This right of withdrawal may not be limited by any other provision of the deposit agreement.

Voting Rights How do I vote? If you are an ADR holder and the depositary asks you to provide it with voting instructions, you may instruct the depositary on how to exercise the voting rights for the shares which underlie your ADSs. After receiving voting materials from us, the depositary will notify the ADR holders of any shareholder meeting or solicitation of consents or proxies. This notice will describe how you may instruct the depositary to exercise the voting rights for the shares which underlie your ADSs. For instructions to be valid, the depositary must receive them on or before the date speci®ed. The depositary will try, as far as is practical, subject to the provisions of and governing the underlying shares or other deposited securities, to vote or to have its agents vote the shares or other deposited securities as you instruct. The depositary will only vote or attempt to vote as you instruct. The depositary will not itself exercise any voting discretion. Neither the depositary nor its agents are responsible for any failure to carry out any voting instructions, for the manner in which any vote is cast or for the effect of any vote.

116 There is no guarantee that you will receive voting materials in time to instruct the depositary to vote and it is possible that you, or persons who hold their ADSs through brokers, dealers or other third parties, will not have the opportunity to exercise a right to vote.

Record Dates

The depositary will ®x record dates for the determination of the ADR holders who will be entitled to:

) receive a dividend, distribution or rights; or

) give instructions for the exercise of voting rights at a meeting of holders of ordinary shares or other deposited securities; all subject to the provisions of the deposit agreement.

Reports and Other Communications

Will I be able to view reports from lastminute.com?

The depositary will make available for inspection by ADR holders any written communications from the Company which are both received by the custodian or its nominee as a holder of deposited securities and made generally available to the holders of deposited securities. These communications will be furnished by us in English.

Fees and Expenses

What fees and expenses will I be responsible for paying?

ADR holders will be charged a fee for each issuance of ADSs, including issuances resulting from distributions of shares, rights and other property, and for each surrender of ADSs in exchange for deposited securities. The fee in each case is $5.00 for each 100 ADSs, or any portion thereof, issued or surrendered. ADR holders or persons depositing shares may also be charged the following expenses:

) stock transfer or other taxes and other governmental charges;

) cable, telex and facsimile transmission and delivery charges;

) transfer or registration fees for the registration of transfer of deposited securities on any applicable register in connection with the deposit or withdrawal of deposited securities; and

) expenses of the depositary in connection with the conversion of foreign currency into U.S. dollars.

We will pay all other charges and expenses of the depositary and any agent of the depositary, except the custodian, pursuant to agreements from time to time between us and the depositary. The fees described above may be amended from time to time.

Payment of Taxes

ADR holders must pay any tax or other governmental charge payable by the custodian or the depositary on any ADS or ADR, deposited security or distribution. If an ADR holder owes any tax or other governmental charge, the depositary may (i) deduct the amount thereof from any cash distributions or (ii) sell deposited securities and deduct the amount owing from the net proceeds of such sale. In either case the ADR holder remains liable for any shortfall. Additionally, if any tax or governmental charge is unpaid, the depositary may also refuse to effect any registration, registration of transfer, split-up or combination of deposited securities or withdrawal of deposited securities, except under limited circumstances mandated by securities regulations. If any tax or governmental charge is required to be withheld on any non-cash distribution, the depositary may sell the distributed property or securities to pay such taxes and distribute any remaining net proceeds to the ADR holders entitled to them.

Reclassi®cations, Recapitalisations and Mergers

If we take certain actions that affect the deposited securities, including (i) any change in par value, split-up, consolidation, cancellation or other reclassi®cation of deposited securities or (ii) any recapitalisation,

117 reorganisation, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all of our assets, then the depositary may choose to: ) amend the form of ADR; ) distribute additional or amended ADRs; ) distribute cash, securities or other property it has received in connection with such actions; ) sell any securities or property received and distribute the proceeds as cash; or ) none of the above. If the depositary does not choose any of the above options, any of the cash, securities or other property it receives will constitute part of the deposited securities and each ADS will then represent a proportionate interest in such property.

Amendment and Termination How may the deposit agreement be amended? We may agree with the depositary to amend the deposit agreement and the ADSs without your consent for any reason. ADR holders must be given at least 30 days' notice of any amendment that imposes or increases any fees or charges, except for taxes and other charges speci®cally payable by ADR holders under the deposit agreement, or affects any substantial existing right of ADR holders. If an ADR holder continues to hold ADRs after being so noti®ed, such ADR holder will be considered to have agreed to such amendment. Notwithstanding the foregoing, an amendment can become effective before notice is given if this is necessary to ensure compliance with a new law, rule or regulation. No amendment will impair your right to surrender your ADSs and receive the underlying securities. If a governmental body adopts new laws or rules which require the deposit agreement or the ADS to be amended, we and the depositary may make the necessary amendments, which could take effect before you receive notice thereof.

How may the deposit agreement be terminated? The depositary may terminate the deposit agreement by giving the ADR holders at least 30 days' prior notice, and it must do so at our request. After termination, the depositary's only responsibility will be (1) to deliver deposited securities to ADR holders who surrender their ADRs and (2) to hold or sell distributions received on deposited securities. As soon as practicable after the expiration of six months from the termination date, the depositary will sell the deposited securities which remain and hold the net proceeds of such sales, without liability for interest, in trust for the ADR holders who have not yet surrendered their ADRs. After making such sale, the depositary will have no obligations except to account for such proceeds and other cash. The depositary will not have to invest such proceeds or pay interest on them.

Limitations on Obligations and Liability to ADR holders Limits on our obligations and the obligations of the depositary; limits on liability to ADR holders and holders of ADSs The deposit agreement expressly limits the obligations and liability of the depositary, ourselves and our respective agents. Neither we nor the depositary nor any such agent will be liable if it: ) is prevented or hindered in performing any obligation by circumstances beyond its control, including, without limitation, requirements of law, rule, regulation, the terms of the deposited securities, and acts of God; ) exercises or fails to exercise discretion under the deposit agreement; ) performs its obligations without gross negligence or bad faith; ) takes any action based on advice or information from legal counsel, accountants, any person presenting shares for deposit, any holder, or any other quali®ed person; or ) relies on any documents it believes in good faith to be genuine and to have been properly executed. Neither the depositary nor its agents have any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities or the ADRs. We and our agents will only be obligated to

118 appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities or the ADRs, which in our opinion may involve us in expense or liability, if indemnity satisfactory to us against all expense (including fees and disbursements of counsel) and liability is furnished as often as we require. The depositary will not be responsible for failing to carry out instructions to vote the ADSs or for the manner in which the ADSs are voted or the effect of the vote. The depositary may own and deal in deposited securities and in ADSs.

Disclosure of Interest in ADSs We may from time to time request you and other holders and bene®cial owners of ADSs to provide information as to: ) the capacity in which you and other holders and bene®cial owners own or owned ADSs; ) the identity of any other persons then or previously interested in such ADSs; and ) the nature of such interest and various other matters. You agree to provide any information requested by us or the depositary pursuant to the deposit agreement. The depositary has agreed to use reasonable efforts to comply with written instructions received from us requesting that it forward any such requests to you and other holders and bene®cial owners and to forward to us any responses to such requests to the extent permitted by applicable law.

Requirements for Depositary Actions We, the depositary or the custodian may refuse to: ) issue, register or transfer an ADR or ADRs; ) effect a split-up or combination of ADRs; ) deliver distributions on any such ADRs; or ) permit the withdrawal of deposited securities, unless the deposit agreement provides otherwise, until the following conditions have been met: ) the holder has paid all taxes, governmental charges, and fees and expenses as required in the deposit agreement; ) the holder has provided the depositary with any information it may deem necessary or proper, including, without limitation, proof of identity and the genuineness of any signature; and ) the holder has complied with regulations established by the depositary under the deposit agreement. The depositary may also suspend the issuance of ADSs, the deposit of shares, the registration, transfer, split- up or combination of ADRs, or the withdrawal of deposited securities (unless the deposit agreement provides otherwise), if the register for ADRs or any deposited securities is closed or if we or the depositary decides it is advisable to do so.

Books of Depositary The depositary or its agent will maintain a register for the registration, transfer, combination and split-up of ADRs. You may inspect such records at such of®ce during regular business hours, but solely for the purpose of communicating with other holders in the interest of business matters relating to the deposit agreement. The depositary will maintain facilities to record and process the issuance, cancellation, combination, split-up and transfer of ADRs. These facilities may be closed from time to time, to the extent not prohibited by law.

Pre-release of ADSs The depositary may issue ADRs prior to the deposit with the custodian of shares (or rights to receive shares). This is called a pre-release of the ADS. A pre-release is closed out as soon as the underlying shares, or other ADRs, are delivered to the depositary. The depositary may pre-release ADSs only if the depositary has received

119 collateral for the full market value of the pre-released ADRs and each recipient of pre-released ADRs agrees in writing that he or she: ) owns the shares; ) assigns all rights in the shares to the depositary; ) holds the shares for the account of the depositary; and ) will deliver the shares to the custodian as soon as practicable, and promptly if the depositary so demands. In general, the number of pre-released ADSs will not evidence more than 30% of all ADSs outstanding at any given time excluding those evidenced by pre-released ADRs. However, the depositary may change or disregard this limit from time to time as it deems appropriate.

The Depositary Who is the depositary? Morgan Guaranty Trust Company of New York, a New York banking corporation, is a commercial bank offering a wide range of banking and trust services to its customers in the New York metropolitan area, throughout the United States and around the world. Directors' and Others' Interests Each of our directors (other than Mr. Hoberman, Ms. Lane Fox and Mr. Laffy) will be applying for up to 25,000 shares in the offering. Following Admission, the directors will have the following interests over our shares:

Shares Bene®cially Shares Bene®cially Owned Owned Prior to Offering(5) After Offering(6) Number of Shares Issuable Number of ordinary Upon Exercise of ordinary Name of Bene®cial Owner shares Percent Share Options shares Percent Pieter Bouw ******************** Ð Ð 641,250 25,000 Ð Robert B. Collier **************** Ð Ð 320,625 25,000 Ð Brent Hoberman(1)*************** 15,958,860 13.6 151,335 15,708,860(4) 10.4 Martha Lane Fox **************** 10,432,425 8.9 129,675 10,182,425(4) 6.8 Brian Collie ******************** Ð Ð Ð 25,000 Ð Laurent P. Laffy ***************** 45,600 Ð Ð 25,000 Ð Linda Fayne Levinson(2) ********** 14,081,280 12.0 Ð 25,000 9.4 Thomas A. Teichman(3) ********** 2,000,700 1.7 Ð 1,775,700(4) 1.2

(1) Comprises ordinary shares held by Dotcom Investments Holdings, Inc., which is wholly owned by a discretionary trust of which Mr. Hoberman is a bene®ciary. (2) Comprises ordinary shares held by Global Retail Partners, L.P. and its af®liates referred to in note (2) on page 121. Ms. Levinson is a Partner of Global Retail Partners, L.P. Ms. Levinson disclaims bene®cial ownership of these shares, except for her proportional interest therein, if any. (3) Includes 1,879,005 ordinary shares owned directly by Mr. Teichman and includes 121,695 ordinary shares owned by NewMedia Investors Ltd. Mr. Teichman is the Chairman and founder of NewMedia Investors Ltd. and owns 57.6% of the outstanding shares in NewMedia Investors Ltd. (4) The number of shares and percentage re¯ects the conditional sale of 250,000 ordinary shares by each of Dotcom Investments Holdings, Inc., Ms. Lane Fox and Mr. Teichman to Orange plc at the offering price. Any sale of shares to Orange plc is conditional upon Admission. (5) The percentage of issued share capital prior to the offering is based on the ordinary issued share capital of lastminute.com immediately prior to Admission of 117,332,505 ordinary shares of £0.01 each. (6) The percentage of issued share capital after the offering is based on the ordinary issued share capital of lastminute.com on Admission of 150,332,505 ordinary shares of £0.01 each. These ®gures assume an offering price at the mid-point of the range, full allocation to each of the directors and no exercise of the over-allotment option.

120 Except as disclosed above, none of the directors has or will, immediately following Admission, have any interest in our share capital or that of any of our subsidiaries which has been or will, following Admission, be required to be noti®ed to us pursuant to sections 324 or 328 of the Companies Act or which is or will, immediately following Admission, be required to be registered in the register maintained by us under section 325 of the Companies Act or which is or will, following Admission, be an interest of a connected person (within the meaning of section 346 of the Companies Act) of a director which would, if the connected person were a director, be required to be disclosed as aforesaid and the existence of which is known or could with reasonable diligence be ascertained by that director. Subject to the arrangements set out in ``Additional Information Ð Underwriting Arrangements'' in this Part 13, the directors are aware of the following interests (within the meaning of Part VI of the Companies Act) (other than interests held by directors) which will represent, directly or indirectly, 3% or more of our issued share capital immediately following Admission:

Shares Bene®cially Owned Shares Bene®cially Owned Prior to Offering(6) After Offering(7) Number of Number of Name of bene®cial owner ordinary shares Percent ordinary shares Percent Cheetah International Investments Limited(1) ***** 25,738,065 21.9 25,738,065 17.1 Global Retail Partners, L.P.(2) ***************** 14,081,280 12.0 14,081,280 9.4 Innovacom 3(3)****************************** 7,595,820 6.5 7,595,820 5.1 BAA plc *********************************** 6,122,655 5.2 6,122,655 4.1 Intel Corporation **************************** 5,587,710 4.8 5,587,710 3.7 Venture Partners Multimedia ASA(4) ************ 5,103,210 4.3 5,103,210 3.4 T-Telematik Venture(5) *********************** 4,682,835 4.0 4,682,835 3.1

(1) Includes 45,600 ordinary shares in which Mr Laffy has a bene®cial interest. (2) Includes 8,246,475 ordinary shares held by Global Retail Partners, L.P., 2,457,840 ordinary shares held by DLJ Diversi®ed Partners, L.P., 1,895,820 ordinary shares held by DLJ Diversi®ed Partners-A, L.P., 708,510 ordinary shares held by Global Retail Partners Funding, Inc., 536,940 ordinary shares held by GRP Partners, L.P., and 232,845 ordinary shares held by DLJ ECS II, L.P. Global Retail Partners, Inc. is the managing general partner of Global Retail Partners, L.P. and an indirect wholly-owned subsidiary of Donaldson Lufkin & Jenrette, Inc. (3) Innovacom 3 is the wholly-owned venture capital subsidiary of France Telecom. (4) Venture Partners Management AS is the investment adviser to Venture Partners Multimedia ASA. (5) T-Telematik Venture is the wholly-owned venture capital subsidiary of Deutsche Telekom. (6) The percentage of issued share capital prior to the offering is based on the ordinary issued share capital of lastminute.com immediately prior to Admission of 117,332,505 ordinary shares of £0.01 each. (7) The percentage of issued share capital after the offering is based on the ordinary issued share capital of lastminute.com on Admission of 150,332,505 ordinary shares of £0.01 each, and assumes no exercise of the over-allotment option. The directors are not aware of any person who is or will be, immediately following Admission, directly or indirectly, jointly or severally, able to exercise control of lastminute.com.

Directors' Transactions and Loans Brent Hoberman has agreed to sell two domain names to us for a total consideration of £1,000. Martha Lane Fox has given a personal bond to CAA for £131,000 on our behalf in connection with our ATOL licence. Ms. Lane Fox received no remuneration for providing this guarantee. No director has, or has had, an interest in any transaction which is or was unusual in its nature or conditions or signi®cant to the business of lastminute.com or any of its subsidiaries effected in the current or immediately preceding ®nancial year or during an earlier ®nancial year and which remains in any respect outstanding or unperformed. There are no outstanding loans granted by any member of the lastminute.com group to any of the directors nor any guarantees provided by any member of the lastminute.com group for the bene®t of any director.

121 Directors' Employment Agreements Mr. Hoberman and Ms. Lane Fox have service contracts with us each dated February 24, 2000. Each of the agreements is terminable on six months' notice. The basic salary of Mr. Hoberman is £150,000 per annum. The basic salary of Ms. Lane Fox is £120,000 per annum. In addition to basic salary, Mr. Hoberman and Ms. Lane Fox are entitled to the following bene®ts: paid holiday, company sick pay, participation in our private health, life assurance and pension schemes, and participation in our share schemes. A bonus may be paid to each of the executive directors at the discretion of the remuneration committee. The service agreements allow us to terminate their employment with immediate effect by making a payment in lieu of notice based on salary that would have been payable during the notice period. 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 af®liates. In addition, the employment agreements contain an express obligation of con®dentiality in respect of our trade secrets and con®dential information and provide that we will own any intellectual property rights created by Mr. Hoberman and Ms. Lane Fox 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 for a period of 12 months following the termination of employment. The non-executive directors have letters of appointment with us. Messrs. Bouw and Collier receive reimbursement of expenses equal to £500 per month. Messrs. Collie, Laffy and Teichman and Ms. Fayne Levinson receive reimbursement for reasonable expenses. The non-executive directors will be re-elected at regular intervals and at least every three years. The elections will be staggered so that, in any one year, no more than two non-executive directors will come up for re- election at the same time.

Employee Share Schemes Between June 29, 1998 and February 15, 2000, the date of the share capital reorganisation, Last Minute Network Limited entered into option agreements with its employees in respect of Last Minute Network Limited's ordinary shares. Such option agreements are on the terms of the 1998 Unapproved Executive Share Option Scheme and the 1999 Unapproved Executive Share Option Scheme, as amended, as summarised below. Pursuant to the share exchange agreement entered into on February 15, 2000, substantially all holders of options over ordinary shares in Last Minute Network Limited agreed to exchange the existing options for options over ordinary shares in lastminute.com. The new options were granted on the same terms as the corresponding existing options and are in all respects equivalent to the existing options. In particular, the new options are to be treated as having been acquired at the same time as the corresponding existing options and be exercisable in the same manner and at the same time as the corresponding existing options. All the remaining optionholders will be asked to enter into an agreement on substantially the same terms. lastminute.com has established two new employee share schemes Ð the 2000 Unapproved Executive Share Option Scheme and the 2000 Approved Share Option Scheme. In due course, lastminute.com intends to adopt an Inland Revenue approved SAYE Share Option Scheme.

122 As at February 15, 2000, 14,923,166 options over our ordinary shares were outstanding, as set out in the table below. All options were granted for no consideration. The earliest date for exercise of each of the outstanding options is June 29, 2000 and each option will lapse on the tenth anniversary of grant.

Number of shares Option price under option 2.31p 8,568,240 12.05p 1,045,950 17.21p 1,253,715 36.96p 1,774,125 73.93p 782,321 £1.07 855,000 £1.34 643,815 We expect to incur National Insurance charges relating to options granted after April 6, 1999 on the terms of the unapproved share option schemes at a rate of 12.2% on the difference between the share value at the exercise date and the grant price. We make provision for this liability at each period end based on the difference between the period-end share value and the grant price. We are in discussions with the Inland Revenue concerning the application of National Insurance to options granted prior to April 6, 1999 on the terms of the unapproved share option schemes, and are awaiting the Inland Revenue's conformation that no National Insurance charges will arise in relation to these options.

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. No further options will be granted under the scheme. The terms of the scheme as amended are summarised below. 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 can be granted at any time. They 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 is payable for the grant of options. Exercise of options. Options may not normally be exercised before June 29, 2000. Following this date, subject to the satisfaction of any performance condition and the continuous employment of the optionholder 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 which have not been exercised will normally lapse on the tenth anniversary of grant. Options may, however, subject to the satisfaction of any performance condition, be exercised early, before June 29, 2000 and before vesting in accordance with the formula in the event of a sale of more than 50% of lastminute.com's issued share capital which results in a change in control of lastminute.com. In these circumstances, an option will become exercisable for a period of 30 days from the date on which the sale becomes unconditional following which it will lapse, provided that the optionholder exercises his option on terms that he agrees to sell the shares acquired on exercise on the terms offered to him by the acquiring company. 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.

123 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. lastminute.com's board or an authorised committee or the shareholders 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. No further options will be granted under the scheme.

The lastminute.com plc 2000 Unapproved Executive Share Option Scheme At February 29, 2000, no options have been granted under this scheme, which was adopted by the Company on February 15, 2000. However, lastminute.com has made offers of employment to various individuals that include the offer of a grant of share options. It is intended to grant options to each employee on commencement of employment to a value of 10% of the employee's annual salary in lieu of annual bonus payments. If the employment offers are accepted and all bonus payments made, lastminute.com will be obliged to grant options under this scheme over a maximum of 1,352,618 shares. If the offers are accepted, lastminute.com will be obliged to grant options under this scheme over a maximum of 410,970 shares. It is intended to grant options to each employee on commencement of employment to a value of 10% of the employee's salary at market value on the date of grant. 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 objective criteria. Before the date on which lastminute.com plc's ordinary shares are ®rst admitted to listing on a recognised investment exchange, options must 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. On or after the listing date, options must 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. The formula allows for the gradual vesting of the options over a three year period. Options which 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 or, at the discretion of the directors, in the event of a takeover, scheme of arrangement or winding-up. Exchange of options. In the event of a change of control, optionholders may exchange their options for options over shares in the acquiring company. Our board may determine in its discretion that, in the event of a takeover, scheme of arrangement, demerger or a winding-up, options may not be exercised but optionholders will be granted new options to replace their old options. A new option may be over shares in any company determined by the directors but must be equivalent to the corresponding old option, be treated as having been acquired at the same time and be exercisable in the same manner as the old option and otherwise subject to the rules of the scheme. Variation in share capital. Options may be adjusted following variations in our share capital, including a capitalisation or rights issue, sub-division or consolidation of capital. Issue of shares. Shares issued on the exercise of options will rank equally with shares in issue at that time, except in respect of rights arising by reference to a prior record date. Scheme limits. The number of shares which may be allocated under the scheme on any day must not 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

124 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. 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 or the shareholders 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 has been submitted to the Inland Revenue for approval. 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: Eligibility. Any employee of us or any of our subsidiaries is eligible to participate in the scheme, provided that options may not be granted to any person who has, or has within the preceding 12 months had, a material interest in a close company. Grant of options. No options may be granted under the scheme until we receive the formal approval of the Inland Revenue. The exercise price may not be less than the higher of the market value of a share at the date of grant and its nominal value. 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. Exchange of options. In the event of a change of control optionholders may exchange their options for options over shares in the acquiring company. Amendments. Amendments to the scheme will not have effect until approved by the Inland Revenue.

Subsidiaries and other undertakings We have ®ve subsidiaries. Last Minute Network Limited, our wholly owned subsidiary, is a company incorporated in England and Wales with its registered of®ce at 4th Floor, Park House, 116 Park Street, London W1Y 3RA. It has an authorised share capital comprising of £708,238 divided into 35,547,712 ordinary shares of £0.01 each, 152,000 preference A shares of £0.01 each and 34,724,000 preference B shares of £0.01 each. Last Minute Network Limited was incorporated on April 1, 1998. No dividends have ever been paid by it. Last Minute Network Limited is important for the purpose of assessing our assets and liabilities, ®nancial position and pro®ts and losses. Lastminute S.A.R.L is our subsidiary in France and its registered of®ce is located at 36, rue des Jeuneurs, 75002 Paris. We own, indirectly, 100 issued shares of FF 500 each in Lastminute S.A.R.L representing 99% of the total share capital. Last Minute Network GmbH is our wholly owned subsidiary in Germany and its registered of®ce is located at Kirchenstrasse 68, 81675 Munich. We own, indirectly, one issued share of £25,000 in Last Minute Network GmbH. Lastminute AB is our wholly owned subsidiary in Sweden and its registered of®ce is located at Olof Palmes Gata 13, 11137 Stockholm. We own, indirectly, 100,000 issued shares of KR1 each in Lastminute AB. Our wholly owned Danish subsidiary, Last Minute, A/S has its registered of®ce at Kroman Reumert, 26 Bredgate, 1021 Copenhagen K. We own, indirectly, 500 issued shares of Dk 100 each in Last Minute, A/S.

Underwriting Arrangements Underwriting Agreement Prior to the announcement of the offering price, lastminute.com, Morgan Stanley Securities Limited and the other underwriters are expected to enter into an underwriting agreement. Pursuant to the underwriting agreement, it is expected that: (a) we will agree, subject to certain conditions, to allot and issue, at the offering price, the shares to be issued in connection with the offering;

125 (b) the underwriters will agree, subject to certain conditions, to procure subscribers for or, failing which, to subscribe themselves (in such proportions as will be set out in the underwriting agreement) the shares to be issued in the offering at the offering price; (c) we will grant to Morgan Stanley Securities Limited, on behalf of the underwriters, an option, exercisable for 30 days after the date the offering price is set, to subscribe, or procure subscribers, for up to an aggregate of 4,950,000 additional shares (all or a portion of which may, at the election of Morgan Stanley Securities Limited, be in the form of ADSs) at the offering price, to cover any over- allotments made in connection with the offering and to cover short positions resulting from stabilisation transactions. To the extent such option is exercised, each underwriter will become obliged, subject to certain conditions, to subscribe, or procure subscribers, for approximately the same percentage of such additional shares or ADSs as the number set out opposite such underwriter's name in the underwriting agreement bears to the total number of shares or ADSs set out therein; (d) we will agree to pay to the underwriters a commission equal to 7% of the offering price multiplied by the aggregate number of shares issued by us in the offering. In addition, we will agree to pay to the underwriters a commission of 7% of the offering price multiplied by the number of shares (if any) issued by us pursuant to the over-allotment option described in paragraph (c) above. All commissions will be paid together with any value added tax chargeable thereon. Assuming an offering price at the mid-point of the price range (expected to be between 190p and 230p per share) total commission paid to the underwriters would amount to £4,851,000, assuming no exercise of the over-allotment option; (e) our obligations to issue shares and the obligations of the underwriters to procure subscribers for or, failing which, themselves to subscribe for ordinary shares will be subject to certain conditions. These conditions will include the absence of any breach of representation or warranty under the sponsor's agreement (described below) and/or the underwriting agreement and Admission occurring by not later than 8.00 a.m. on March 21, 2000 or such later time and/or date (not later than April 30, 2000) as Morgan Stanley Securities Limited may agree with us. The underwriters may terminate the underwriting agreement in certain circumstances prior to Admission. These circumstances include the occurrence of certain changes in ®nancial, political or economic conditions (as more fully set out in the underwriting agreement); (f) we will agree to pay any stamp duty and/or stamp duty reserve tax arising on the issue of shares under the offering and we will agree to pay stamp duty and/or stamp duty reserve tax as described in the underwriting agreement in connection with the over allocation arrangements; (g) we will agree to pay or cause to be paid (together with any related value added tax) certain costs, charges, fees and expenses of, or in connection with, or incidental to, inter alia, the offering and/or Admission; and (h) we will give certain representations, warranties, undertakings and indemnities to the underwriters under the underwriting agreement. In addition, certain additional representations, warranties, undertakings and indemnities will be given to Morgan Stanley Securities Limited under the sponsor's agreement.

Sponsor's Agreement (a) lastminute.com, the directors, Morgan Stanley & Co. International Limited and Morgan Stanley Securities Limited have entered into a sponsor's agreement dated March 1, 2000 whereby Morgan Stanley & Co. International Limited has agreed to assist us, as our agent, with the arrangements for the retail offering, the eligible employee offering and the priority offering and pursuant to which lastminute.com has appointed Morgan Stanley & Co. International Limited to act as its sponsor for the purposes of the application for Admission; (b) the sponsor's agreement provides for the payment by us (together with any related value added tax) of certain costs, charges, fees and expenses of, or incidental to, the offering and the arrangements referred to in, or contemplated by, the sponsor's agreement; (c) the sponsor's agreement contains (i) representations and warranties given by us and each of the executive directors to Morgan Stanley & Co. International Limited and Morgan Stanley Securities Limited as to the accuracy of the information contained in this prospectus and certain other documents and in relation to other matters relating to lastminute.com and its business, (ii) an indemnity from lastminute.com in favour of Morgan Stanley & Co. International Limited and Morgan Stanley

126 Securities Limited, and (iii) undertakings from lastminute.com and the directors to Morgan Stanley & Co. International Limited and to Morgan Stanley Securities Limited. Our liabilities under the sponsor's agreement are not limited as to time or amount whereas the liabilities of the executive directors are limited as to time and amount. The sponsor's agreement also contains con®rmations given by the non-executive directors to Morgan Stanley & Co. International Limited and Morgan Stanley Securities Limited in relation to certain of the representations and warranties given by us and the executive directors; and (d) the sponsor's agreement will terminate automatically in the event that the underwriting agreement is not entered into by April 14, 2000 or, once executed, is terminated in accordance with its terms.

Lock-up Arrangements (a) We, each of our directors and senior management who hold shares or options (being Pieter Bouw, Robert Collier, Brent Hoberman, Martha Lane Fox, Thomas Teichman, Julian Culhane, Dominic Cameron, Charles McKee, Clive Eisen, Thomas Virden, Sepand Riahi, Peter Flint, David Kelly, Stephan Uhrenbacher and Laurent Therezien), all bene®cial shareholders (other than individual shareholders whose shareholdings were deemed to be insigni®cant) (representing in aggregate approximately 95% of our issued share capital at the date of this document) have represented and agreed to the effect that, for the period to and including the date 180 days after the pricing of the offering, we and they have not and will not (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, (or in our case, issue) any shares or any securities that are convertible into or exercisable or exchangeable for shares or (ii) enter into any swap, or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of shares whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of shares or other securities, in cash or otherwise. (b) The foregoing restrictions will not apply to any of the following: (i) transactions relating to the shares or other securities acquired in open market transactions after the completion of the offering; (ii) any disposal made in and for the purpose of the offering pursuant to the underwriting agreement; (iii) any disposal which is noti®ed in writing in advance to Morgan Stanley Securities Limited and to which it gives its prior consent in writing and effected in accordance with the reasonable requirements of Morgan Stanley Securities Limited so as to ensure an orderly market in lastminute.com listed securities; (iv) the sale by each of Dotcom Investments Holdings, Inc., Martha Lane Fox, Tom Teichman, Peter Teichman and Jan Swainston of 250,000 (or, in the case of Jan Swainston, 125,000) ordinary shares at the offering price to Orange plc pursuant to a conditional share purchase agreement. The share purchase agreement is conditional upon Admission; (v) in the case of lastminute.com only, the issuance by us of shares upon the exercise of an option or warrant or the conversion of a security outstanding on the date hereof of which the underwriters have been advised in writing; (vi) the issuance or grant of options to purchase shares pursuant to our existing share option schemes; (vii) in the case of lastminute.com only, any such transaction described in paragraph (a)(i) or (a)(ii) above involving the issuance or grant of shares, options, rights, warrants to purchase or any securities convertible into shares which, in the aggregate, does not exceed 5% of the shares outstanding as of the date of Admission (a ``Permitted Transfer''); provided, however, that we may engage in a Permitted Transfer only if (1) we provide Morgan Stanley Securities Limited with written notice of such Permitted Transfer at least ®ve business days prior to the earlier of (aa) entering into any commitment, obligation or arrangement to enter into such Permitted Transfer or (bb) the issuance or grant of any shares, options, rights, warrants to purchase or any securities convertible into shares pursuant to a Permitted Transfer and (2) as a condition to the consummation of the Permitted Transfer, all recipients of any shares, options, rights, warrants to purchase or securities convertible into shares pursuant to such Permitted Transfer have entered

127 into a lock-up arrangement with Morgan Stanley Securities Limited for a period of 180 days from the date of such issuance or grant and otherwise substantially similar to those described in this paragraph. (c) Morgan Stanley Securities Limited, on behalf of the underwriters, may exercise its discretion to grant the consents referred to above based on, among other things, the existence of an outstanding offer to purchase all or a substantial portion of lastminute.com's shares, the terms of the proposed disposal and the identity and circumstances of the proposed seller and the identity of the buyer. Morgan Stanley will not consider its own position in the shares as a factor when making this determination. To our knowledge, and save as disclosed above in paragraph (b), none of our of®cers, directors or current shareholders intends to ask for consent to offer, sell or otherwise dispose of the ordinary shares within the lock-up period.

Miscellaneous (a) No action has been or will be taken in any jurisdiction (except in the United States and the United Kingdom) that would permit a public offering of the shares, or the possession, circulation or distribution of this prospectus or any other material relating to us or the shares, in any jurisdiction where action for that purpose is required. (b) Certain of the underwriters have from time to time provided investment banking services to lastminute.com and its subsidiaries, and expect to provide such services in the future to lastminute.com and its subsidiaries, for which services such underwriters have received and expect to receive customary fees and commissions. In August 1999, Morgan Stanley Dean Witter Equity Funding, Inc. committed to purchase up to $4 million (£2.4 million) of our equity securities in our third ®nancing round. That private placement was completed in November 1999 with the sale of $2.5 million (£1.6 million) of our equity securities to Morgan Stanley Dean Witter Equity Funding, Inc. (c) Morgan Stanley & Co. International Limited, an af®liate of Morgan Stanley Dean Witter Equity Funding, Inc., acted as placement agent for lastminute.com in connection with the private placement of our ordinary shares completed in January 2000. We incurred customary placement fees to Morgan Stanley & Co. International Limited for such services. The investors participating in such private placement have agreed with lastminute.com not to sell, transfer, assign, pledge or hypothecate the shares purchased in this private placement for 180 days after the date of the offering. (d) Subscribers for the shares may be required to pay stamp taxes and other charges in accordance with the laws and practices of the country of purchase in addition to the initial public offering price. For a discussion of certain U.K. tax provisions, see ``Additional Information Ð United Kingdom Taxation'' in this Part 13. (e) The underwriters have informed us that they may sell to discretionary accounts a number of shares or ADSs estimated not to exceed 5% of the total number of securities agreed by them. (f) Prior to the offering, there has been no public market for the shares or ADSs. The initial public offering price for the shares and ADSs offered hereby has been determined by agreement between us and the underwriters. Among the factors considered in making such determination were the history of and the prospects for the industry in which we compete, an assessment of our management, our present operations, the historical results of our operations and the trend of our turnover, our prospects for future earnings, the general condition of the securities markets at the time of the offering and the prices of similar securities of generally comparable companies.

Material Contracts The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by us or our subsidiaries (i) within the two years immediately preceding the date of this prospectus (or, in the case of the underwriting agreement referred to in paragraph (k) and the deposit agreement referred to in paragraph (m), are expected to be entered into prior to Admission), and are, or may be, material; or (ii) contain provisions under which we or any of our subsidiaries have obligations or entitlements which are material to us and our subsidiaries as at the date of this prospectus: (a) a subscription and shareholders' agreement dated June 29, 1998 between Last Minute Network Limited, Brent Hoberman, Martha Lane Fox, Riverdale International S.A., Cheetah International

128 Investments Limited, Venture Partners Multimedia ASA, Innovacom 1 and a group of individual investors (Walid Abu-Zalaf, Richard Compton-Burnett, Anthony Duffy, a nominee for Askim Investments Limited, Jan Swainston, Thomas Teichman and Peter Teichman) (collectively, the ``Investors''), pursuant to which the Investors agreed to subscribe for shares in Last Minute Network Limited and the parties agreed on a number of provisions for the management and regulation of our business. 760 preference shares of £1 each and 152 ordinary shares of £1 each were allotted for a total consideration of approximately of £600,000. Further details of the shares that were allotted pursuant to this agreement are contained in ``Additional Information Ð Share Capital'' in this Part 13; (b) a shareholders' agreement dated May 21, 1999 between Last Minute Network Limited, Brent Hoberman, Martha Lane Fox, the Investors and a number of new investors pursuant to which the new investors agreed to subscribe for further shares in Last Minute Network Limited and agreed a number of provisions for the management and regulation of our business. This agreement provided that the June 29, 1998 subscription and shareholders' agreement be terminated. 123,947 preference B shares of £0.01 each and 7,917 ordinary shares of £0.01 each were allotted for a total cash consideration of approximately £6.35 million. Further details of the shares that were allotted pursuant to this agreement are contained in ``Additional Information Ð Share Capital'' in this Part 13. This agreement will be terminated upon the closing of the offering, except in relation to the investors' registration rights. A description of these registration rights is contained in ``The Offering Ð Registration Rights'' in Part 12; (c) a supplemental shareholders' agreement dated June 4, 1999 between Last Minute Network Limited and various investors pursuant to which a number of new investors agreed to subscribe for 36,909 preference B shares of £0.01 each in Last Minute Network Limited for a total consideration of approximately £1.8 million; (d) a second supplemental shareholders' agreement dated November 16, 1999 between Last Minute Network Limited and various investors pursuant to which the Investors, other existing shareholders and Morgan Stanley Equity Fund, Inc. agreed to subscribe for 4,595 preference A shares of £0.01 each, 17,191 preference B shares of £0.01 each and 284 ordinary shares of £0.01 each in Last Minute Network Limited for a total consideration of approximately U.S.$7.5 million (£4.63 million); (e) a third supplemental shareholders' agreement dated February 4, 2000 between Last Minute Network Limited and Brent Hoberman, Martha Lane Fox and other existing investors, pursuant to which BAA plc, Bass plc, Mitsubishi Corporation Finance PLC, Priceline.com Inc., Sony Music, Sheraton International Inc., Viventures FCPR and some of the existing investors agreed to subscribe for shares in Last Minute Network Limited and to become party to its amended shareholders' agreement. 1,510 ordinary shares of £0.01 each, 4,211 preference A shares of £0.01 each and 60,346 preference B shares of £0.01 each were allotted for a total consideration of approximately $40.5 million (£25.2 million). Further details of the shares that were allotted pursuant to this agreement are contained in ``Additional Information Ð Share Capital'' in this Part 13; (f) a share exchange agreement dated February 15, 2000 between lastminute.com and all the shareholders in Last Minute Network Limited, pursuant to which such shareholders agreed to exchange their shares in that company for shares in lastminute.com having the same rights; (g) a deed of adherence to the amended shareholders' agreement dated May 21, 1999, entered into by lastminute.com on February 15, 2000; (h) performance-based warrant instruments dated January 31, 2000 and February 14, 2000 between Last Minute Network Limited and Lufthansa and Virgin Atlantic Airways, respectively, pursuant to which we may grant warrants to acquire up to 5,544,675 and 5,543,250 respectively of our ordinary shares to each of Lufthansa and Virgin Atlantic Airways if they achieve speci®ed levels of ticket sales through our web site during ®ve six-month measuring periods commencing January 1, 2000 and March 1, 2000 respectively. Each warrant will be exercisable for an ordinary share during a 60 day period commencing three years after the date it is issued at an exercise price of £0.37 per share, subject to customary adjustments in the event of speci®ed events. We may terminate the warrant instruments and cancel the related warrants in exchange for cash payments if the airlines fail to achieve speci®ed minimum levels of sales in the ®rst two measuring periods. We may also cancel a portion of the warrants granted in respect of a measuring period if the airlines fail to achieve a speci®ed minimum level of sales in the following measuring period (see ``Business Ð Strategic Alliances Ð Travel Services'' in Part 6);

129 (i) an agreement dated January 26, 2000 between Last Minute Network Limited and Christian Gourmet, Carine Gregoire, Fabrice Louette, Alain Mbange and Olivier Renard pursuant to which we acquired all the outstanding shares in Last minute S.P.R.L., a Belgian company for a total consideration of $100,000 of which approximately $20,000 was settled by the allotment of 32 ordinary shares of £0.01 each; (j) a deed of indemnity dated February 22, 2000 between Last Minute Network Limited and lastminute.com pursuant to which Last Minute Network Limited agreed to bear any costs or expenses incurred by lastminute.com prior to Admission and only to re-charge to lastminute.com amounts which it could set off against its share premium account; (k) the underwriting agreement (in draft form, subject to such amendments as may be agreed between the relevant parties, to be dated on or about March 14, 2000) described under ``Additional Information Ð Underwriting Arrangements'' in this Part 13; (l) the sponsor's agreement dated March 1, 2000 described under ``Additional Information Ð Underwriting Arrangements'' in this Part 13; and (m) the deposit agreement (in draft form, subject to such amendments as may be agreed between the relevant parties, to be dated on or about March 14, 2000) described under ``Additional Information Ð Description of American Depositary Receipts'' in this Part 13.

Working Capital In our opinion, taking into account the net proceeds to lastminute.com of the offering, the working capital available to the group is suf®cient for the group's present requirements, that is, for at least the next 12 months from the date of publication of this document.

United Kingdom Taxation United Kingdom Tax Considerations The statements set out below are intended only as a general guide to current U.K. tax law and practice. They are intended to apply only to holders of shares or ADSs who are resident for tax purposes in the United Kingdom (except insofar as express reference is made to the treatment of non-United Kingdom residents). The summary does not purport to be a complete analysis or listing of all the potential tax consequences of holding shares or ADSs. Prospective purchasers of shares or ADSs are advised to consult their own tax advisers concerning the consequences under U.K. law of the acquisition, ownership and disposition of shares or ADSs. This summary is based upon U.K. law and U.K. Inland Revenue practice in effect as of the date of this document and which may be subject to change, perhaps with retroactive effect. The statements are not applicable to all categories of holders of shares or ADSs, and in particular are not addressed to (i) holders who do not hold their shares or ADSs as capital assets, (ii) holders of shares or ADSs who own (or are deemed to own) 10% or more of the voting power of lastminute.com, (iii) special classes of holders of shares or ADSs such as dealers in securities, broker-dealers, insurance companies and investment companies, (iv) holders who hold shares or ADSs as part of hedging or conversion transactions, and (v) holders who hold shares or ADSs in connection with a trade, profession or vocation carried on in the U.K. (whether through a branch or agency or otherwise).

Taxation of Dividends and Distributions lastminute.com will not be required to withhold tax at source when paying a dividend. An individual holder of shares or ADSs who is resident in the United Kingdom (for tax purposes) and who receives a dividend from lastminute.com will be entitled to a tax credit which such holder may set off against his total income tax liability on the dividend. The tax credit will be equal to 10 per cent. of the aggregate of the dividend and the tax credit (the ``gross dividend''), which is also equal to one-ninth of the cash dividend received. A United Kingdom resident individual holder of shares or ADSs who is liable to income tax at the starting or basic rate will be subject to tax on the dividend at the rate of 10 per cent. of the gross dividend, so that the tax credit will satisfy in full such holder's liability to income tax on the dividend. With limited exceptions (relating to shares held in individual savings accounts or personal equity plans prior to April 5, 2004), a United Kingdom resident individual holder of shares or ADSs who is not liable to income tax in respect of the gross dividend will not be entitled to repayment of the tax credit. The rate of income tax applied to U.K. company dividends received by U.K. resident individuals liable to income tax at the higher rate will be 32.5 per cent. In the case of a United

130 Kingdom resident individual holder of shares or ADSs who is liable to income tax at the higher rate, the tax credit will be set against but not fully match his tax liability on the gross dividend and he will have to account for additional tax equal to 22.5 per cent. of the gross dividend (which is also equal to 25 per cent. of the net cash dividend received) to the extent that the gross dividend when treated as the top slice of his income falls above the threshold for higher rate income tax.

United Kingdom resident taxpayers who are not liable to United Kingdom tax on dividends, including pension funds and charities, will not be entitled to claim repayment of the tax credit attaching to dividends paid by lastminute.com, although charities will be entitled to limited compensation in lieu of repayable tax credits until April 5, 2004.

Tax credits on dividends paid by lastminute.com in respect of shares held in personal equity plans (``PEPs'') or individual savings accounts (``ISAs'') will be repayable on dividends paid on or before April 5, 2004.

United Kingdom resident corporate holders of shares or ADSs will generally not be subject to corporation tax on dividends paid by lastminute.com. Such holders of shares or ADSs will not be able to claim repayment of tax credits attaching to dividends.

Non-United Kingdom resident holders of shares or ADSs will not generally be able to claim repayment from the Inland Revenue of any part of the tax credit attaching to dividends paid by lastminute.com. A holder of shares or ADSs resident outside the United Kingdom may also be subject to foreign taxation on dividend income under local law. A holder of shares or ADSs who is not resident in the United Kingdom (for tax purposes) should consult his own tax adviser concerning his tax liabilities on dividends received from lastminute.com.

United Kingdom Taxation of Capital Gains

(i) U.K. resident shareholders

A disposal of shares by a shareholder who is resident or ordinarily resident in the U.K. for tax purposes may give rise to a gain (or loss) for the purposes of taxation of capital gains.

(ii) Shareholders temporarily non-resident in the United Kingdom

A shareholder who is an individual and who has, on or after March 17, 1998 ceased to be resident and ordinarily resident in the United Kingdom for tax purposes for a period of less than ®ve years of assessment and who disposes of shares during that period, may, under anti-avoidance legislation, still be liable to U.K. tax on any capital gain realised (subject to available exemptions or reliefs).

(iii) Non-U.K. resident shareholders

Shareholders who are not resident or ordinarily resident for tax purposes in the U.K. and who do not return to the U.K. within ®ve years of the disposal will not be liable to U.K. tax on capital gains realised on the disposal of their shares unless such shares are used, held or acquired for the purposes of a trade, profession or vocation carried on in the U.K. through a branch or agency or for the purpose of such branch or agency. Such shareholders may be subject to foreign taxation on any gain under local law.

The above comments in relation to U.K. taxation of capital gains on a disposal of shares apply equally to a disposal of ADSs.

United Kingdom Inheritance Tax

The shares will be assets situated in the U.K. for the purposes of U.K. inheritance tax. A gift of such assets by, or the death of, an individual holder of such assets may (subject to certain exemptions and reliefs) give rise to a liability to U.K. inheritance tax even if the holder is neither domiciled in the U.K. nor deemed to be domiciled there under certain rules relating to long residence or previous domicile. For inheritance tax purposes, a transfer of assets at less than full market value may be treated as a gift and particular rules apply to gifts where the donor reserves or retains some bene®t. Special rules also apply to close companies and to trustees of settlements who hold shares bringing them within the charge to inheritance tax. Shareholders should consult an appropriate professional adviser if they make a gift of any kind or intend to hold any shares through trust arrangements.

The above comments in relation to U.K. inheritance tax on gifts by, or on the death of, holders of shares apply equally to gifts by, or on the death of, holders of ADSs.

131 United Kingdom Stamp Duty and Stamp Duty Reserve Tax (``SDRT'') Holders of shares will be registered on the register of lastminute.com in the U.K.. Persons who are a ``system member'' of CREST (as de®ned in the CREST regulations) may elect to hold their shares through CREST for trading on the London Stock Exchange. (i) Shares registered on the U.K. share register of lastminute.com No stamp duty or SDRT will be payable on the issue of shares pursuant to the offering. Stamp duty at the rate of 0.5% of the actual consideration paid is payable on an instrument transferring the shares. A charge to SDRT will also arise on an unconditional agreement to transfer the shares (at the rate of 0.5% of the consideration paid), although the liability will be cancelled and any SDRT already paid will be repaid, generally with interest, provided that the instrument transferring the shares is executed and duly stamped within six years of the date on which the liability to SDRT arises. Higher rates may apply in certain circumstances. (ii) Shares held through CREST Under the CREST system for paperless share transfers, no stamp duty or SDRT will arise on a transfer of shares into the system unless such a transfer is made for a consideration in money or money's worth, in which case a liability to SDRT (usually at a rate of 0.5% of the value of the consideration given) will arise. Paperless transfers of shares within CREST will be liable to SDRT rather than stamp duty. (iii) Shares represented by ADSs SDRT will be payable as a result of the issue of ADRs evidencing the ADSs issued in connection with the offering at 1.5 per cent of the value of the shares underlying the ADSs at the time the shares are transferred to the depositary (or its nominee). lastminute.com will meet this SDRT liability. No stamp duty will be payable on the acquisition or transfer of the ADSs or bene®cial ownership of the ADSs, provided that any instrument of transfer or written agreement to transfer remains at all times outside the U.K., and provided further that any instrument or written agreement to transfer is not executed in the U.K. and the transfer does not relate to any matter or thing to be done in the U.K. An agreement for the transfer of the ADSs or bene®cial ownership of the ADSs will not give rise to a liability for SDRT. On a transfer of shares from the custodian of the Depositary to a holder of an ADS upon cancellation of the ADS, only a ®xed stamp duty of ®ve pounds per instrument of transfer will be payable by such holder. The statements in this United Kingdom Stamp Duty and SDRT paragraph summarise the current position and are intended as a general guide only. Special rules apply to agreements made by, amongst others, intermediaries and certain categories of person may be liable to stamp duty or SDRT at higher rates or may, although not primarily liable for the duty or tax, be required to notify and account for it under the Stamp Duty Reserve Tax Regulations 1986.

Individual Savings Accounts (``ISAs'') The shares will be qualifying investments for the stocks and shares component of both a maxi-account and a mini-account under the current ISA regulations. No taxation will be chargeable on an account investor on any dividends, distributions or gains received in respect of the shares held through an ISA. The opportunity to invest in shares through an ISA is restricted to individuals. Individuals wishing to invest in shares through an ISA should contact their professional advisers regarding their eligibility. Such individuals may invest up to £7,000 for the tax year 1999-2000 and £5,000 for subsequent tax years in shares through a maxi- account, and up to £3,000 in shares through a mini-account in any tax year. Individual investors contemplating investing in shares through an ISA should note that there is always a risk that their current rights to hold such shares through an ISA may be prejudiced by future changes to the regulations which govern ISAs.

Any person who is in any doubt as to his or her taxation position, or who is subject to tax in any jurisdiction other than the U.K., should consult his or her professional advisers. Miscellaneous (i) It is expected that dealings in the shares on the London Stock Exchange and the Nasdaq National Market will commence on a conditional basis on March 14, 2000. It is expected that the shares will be admitted to the Of®cial List of the London Stock Exchange on March 21, 2000 and that unconditional dealings in the shares on the London Stock Exchange will commence at 8.00 a.m. (London time) on

132 March 21, 2000. Unconditional dealing in ADSs will commence on the Nasdaq National Market at 2.30 p.m. (London time) on March 21, 2000. All dealings between the commencement of conditional dealings and the commencement of unconditional dealings will be on a ``when issued'' basis. If the offering does not become unconditional in all respects, all such dealings will be of no effect and any such dealings will be at the sole risk of the parties concerned. (ii) A proportion of the shares will be marketed or made available to the public in conjunction with the offering. (iii) No person has been authorised to give any information or to make any representations other than those contained in this document and, if given or made, such information or representations must not be relied upon as having been authorised. This document does not constitute an offer to sell or the solicitation of an offer to buy any securities in any circumstances in which such offer or solicitation is unlawful. (iv) Ernst & Young have given and not withdrawn their written consent to the inclusion of their reports and letter as set out in Parts 7 and 9 of this document and the references thereto and to their name in the form and context in which they appear and have authorised the contents of those Parts of this document for the purposes of section 152(l)(e) of the U.K. Financial Services Act 1986. (v) No temporary documents of title will be issued in respect of the shares. (vi) The mid-point of the indicative price range of the offering of our shares, expected to be between 190p and 230p as set out on the cover page of this document, represents a premium of 209p over the nominal value of 1p each per share. (vii) The ®nancial information contained in this document does not comprise the statutory accounts of any company within the meaning of Section 240 of the Companies Act 1985, as amended. Statutory accounts of Last Minute Network Limited have been delivered to the Registrar of Companies for the period April 1, 1998 (inception) to September 30, 1999. In respect of these statutory accounts, the company's auditors, Ernst & Young, have given reports which were unquali®ed and did not contain a statement under Section 237(2) or (3) of that Act. (viii) Subject to our Memorandum and Articles, the directors may determine that any class of shares may be held in uncerti®cated form and title to such shares may be transferred by means of a relevant system (as de®ned in the applicable provisions of English law) or that shares of any class should cease to be held and transferred as aforesaid. (ix) Save as disclosed under the heading ``Management's Discussion and Analysis of Financial Condition and Results of Operations Ð Current Trading and Prospects'' in Part 5, there has been no signi®cant change in the ®nancial or trading position of lastminute.com since December 31, 1999 the date to which the latest audited ®nancial statements of lastminute.com have been published. (x) Brent Hoberman and Martha Lane Fox are promoters of lastminute.com. The only cash, securities or bene®ts paid, issued or given to them by lastminute.com within the two years immediately preceding the date of this document were those paid, issued or given to them in their capacity as directors of lastminute.com, as described in the ``Accountants' Report'' in Part 7.

Documents Available for Inspection Copies of the following documentation may be inspected at the of®ces of Linklaters, One Silk Street, London EC2Y 8HQ and at the registered of®ce of lastminute.com, 4th Floor, Park House 116 Park Street, London W1Y 3RA, during usual business hours on any weekday (Saturdays, Sundays and public holidays excepted) until close of business on March 15, 2000. (a) the Memorandum and Articles of Association of lastminute.com; (b) the material contracts referred to on pages 128 to 130 of this document; (c) the directors' employment agreements and letters of appointment referred to on page 122; (d) the audited accounts of lastminute.com for the year ended September 30, 1999; (e) the audited accounts of lastminute.com for the three months ended December 31, 1999; (f) the Accountants' Report in Part 7;

133 (g) the Pro Forma Balance Sheet of the Group by Ernst & Young in Part 8; (h) the Ernst & Young Report on the Pro Forma Balance Sheet of the Group in Part 9; (i) the letter of consent from Ernst & Young referred to above in paragraph (iv) of ``Additional Ð Miscellaneous'' in this Part 13; (j) International Data Corporation reports dated December 1998 and June 1999 referred to in ``Basis on which this Document has been Prepared'' on page 2 of this prospectus; (k) Fletcher Research Limited report dated November 1999 referred to in ``Basis on which this Document has been Prepared'' on page 2 of this prospectus; and (l) British Market Research Bureau report dated January 2000 referred to in ``Basis on which this Document has been Prepared'' on page 2 of this prospectus. March 1, 2000.

134 PART 14. APPLICATIONS AND ALLOCATIONS IN THE RETAIL OFFERING The terms and conditions of application for the shares are set out in Part 15 of this prospectus. Applications under the retail offering to registered subscribers of lastminute.com must be for a minimum of £500, must be in multiples of £500, are subject to a maximum of £3,000 and multiple applications are not permitted. Applications under the offering to Eligible Employees (as de®ned in ``The Offering'' in Part 12) must be for a minimum of £500, must be in multiples of £500, are subject to a maximum of £5,000 and multiple applications are not permitted. Applications under the offering to Priority Persons (as de®ned in ``The Offering'' in Part 12) must be for a minimum of £500, must be in multiples of £500, are subject to a maximum of £200,000 and multiple applications are not permitted. In the event that demand for shares exceeds the number of shares made available in the offering, preference in the allocation of shares will be given to Eligible Employees and Priority Persons and a total of 2,237,877 shares have been reserved to satisfy applications under the eligible employee offering and the priority offering. If demand for shares exceeds the number of shares available in the offering, Morgan Stanley & Co. International Limited in consultation with lastminute.com will determine the basis of allocation of shares and may carry out a ballot of applicants in the retail offering. Accordingly you may not receive all of the shares you apply for and it is possible that you may not receive any. The number of shares available to registered subscribers of lastminute.com in the U.K., the Isle of Man and Jersey, to Eligible Employees and to Priority Persons and the offering price will be decided after the closing date for applications in the offering and is expected to be announced to the national press on March 14, 2000. Because the offering price will not be known until after the closing date for applications and because the price range may change after the closing date for receipt of application forms, applications for shares should be based on the amount you wish to invest and not the number of shares you wish to subscribe for. If you are an Eligible Employee, you should use the employee application form and if you are on the list of Priority Persons you should use the priority person application form.

No Multiple Applications Multiple applications are not permitted. You may only apply once for shares in the offering.

Joint Applications Joint applications are not permitted.

Action Required to Apply for Shares If you are a registered subscriber and you decide to apply for shares in the retail offering, you should download, print and complete the lastminute.com registered subscriber application form by following the instructions on our web site (carefully following the instructions in the accompanying guidance notes) and return it with a sterling cheque, banker's draft or money order as soon as possible. lastminute.com will, upon requests by Eligible Employees and Priority Persons, forward the relevant application form which should be completed (carefully following the instructions in the accompanying guidance notes) and returned with a sterling cheque, bankers' draft or money order as soon as possible. In all cases, your completed application form together with a sterling cheque, bankers' draft or money order must be received by IRG plc by 5 p.m. on March 10, 2000. You must not alter the application form in any way as this may result in your application being rejected in whole or in part.

Pricing All successful applicants will pay the same price for the shares. This price is called the offering price and is expected to be between 190p and 230p per share, although the actual price could be above or below this range. Any change in the price range will be noti®ed to you via e-mail. You must therefore ensure that the e- mail address that you supply in connection with your application is an appropriate address for you to receive such noti®cation and that you check your e-mail address frequently. If the price range is changed, you will be required to con®rm your application by return e-mail within the time limit set out in the noti®cation e-mail so as to ensure that your application is not withdrawn. If you fail to respond within the time limit set out in the noti®cation e-mail, your application will be withdrawn and you will not be

135 allocated any shares in the offering. The e-mail noti®cation will provide a unique identi®er number that you will be required to include in your return e-mail. Your attention is drawn to paragraphs 2(c)(i) to 2(c)(vii) and to paragraphs 10(n) to 10(o) of ``Terms and Conditions of Application for the Retail Offering'' in Part 15 in relation to the use of e-mails in this manner. Prior to this offering, there has been no public market for the shares or the ADSs. The offering price for the shares will be determined by negotiation among lastminute.com and the underwriters. Among the factors to be considered in determining the offering price will be prevailing market and economic conditions, revenue and earnings of lastminute.com, market valuations of other companies engaged in activities similar to lastminute.com, estimates of the business potential and prospects of lastminute.com, the present state of lastminute.com's business operations, lastminute.com's management and other factors deemed relevant. The estimated offering price range set out on the cover page of this document is subject to change as a result of market conditions and other factors. lastminute.com cannot assure you that a regular trading market for the shares or the ADSs can be sustained. Accordingly, the offering price will not necessarily be the highest price at which all of the shares and ADSs subject to the offering could be sold. The prices at which the shares or ADSs will sell in the public markets after this offering may be lower than the price at which the shares or ADSs are sold in this offering.

Underwriting lastminute.com and the underwriters intend to enter into the underwriting agreement on or around March 14, 2000 and prior to the announcement of the offering price. The underwriting agreement will provide that the underwriters will procure subscribers or, failing which, will themselves subscribe for all of the shares in this offering to the extent that shares are not allotted to subscribers in the retail offering, eligible employee offering, priority persons offering or the institutional offering, other than those shares covered by the over-allotment option. The underwriting agreement will also provide that, if an underwriter defaults, the purchase commitments of non-defaulting underwriters may be increased. See ``Additional Information Ð Underwriting Arrangements'' in Part 13.

136 PART 15. TERMS AND CONDITIONS OF APPLICATION FOR THE RETAIL OFFERING 1 The retail offering is being made by lastminute.com. Registered subscriber application forms will be available on-line by following the instructions found at lastminute.com's web site together with the prospectus dated March 1, 2000 published in connection with the offering, the mini prospectus and the answers to frequently asked questions. If you apply for shares on a lastminute.com registered subscriber application form, an employee application form or a priority person application form you will be agreeing with lastminute.com, Morgan Stanley & Co. International Limited, Morgan Stanley Securities Limited and IRG plc as follows: 2 You as the applicant or, if signing on behalf of another person, that person: (a) offer to subscribe at the offering price the maximum number of shares that may be applied for with the amount speci®ed in the relevant application form as the amount that you wish to invest (or any smaller amount in respect of which your offer is accepted) (the ``Offer'') provided that your application must be for a minimum of £500, subject to these terms and conditions, the terms of the relevant application form and accompanying guide, and solely on the basis of information contained in this document, the mini prospectus and the Memorandum and Articles of Association of lastminute.com; (b) authorise IRG plc, as receiving agent on behalf of lastminute.com, to send you a de®nitive share certi®cate and/or a sterling cheque for any monies returnable (without interest) crossed ``Account Payee'' or your cheque, banker's draft or money order, by post at the risk of the person entitled to it, to your address, and to ensure that your name is placed on the register of members of lastminute.com in respect of any shares for which your application is accepted; (c) in consideration of lastminute.com making the offering and as a collateral contract between you and the parties referred to in paragraph 1 above which will become binding on despatch by post or delivery to IRG plc of your application form: (i) agree that the Offer referred to in paragraph 2(a) above may not be withdrawn prior to March 31, 2000 in the event Admission has not taken place provided that the Offer may be withdrawn in the manner described in paragraph (ii) below in the event that the price range is changed; (ii) hereby notify lastminute.com that the Offer shall be immediately withdrawn in whole if (a) an e-mail has been despatched by or on behalf of lastminute.com to the e-mail address supplied by you in the application form notifying you of a change to the price range (a ``noti®cation e-mail''); and (b) no e-mail has been received by lastminute.com (or any person acting on its behalf) in response to the noti®cation e-mail within the time limit speci®ed in the noti®cation e-mail con®rming that the Offer has not been withdrawn; (iii) con®rm that you understand and agree that withdrawal of the Offer on the basis set out in paragraph 2(c)(ii) will mean that no shares will be allocated to you or any person on whose behalf you are applying; (iv) agree that noti®cation e-mails may be despatched to you at the e-mail address supplied by you in the application form and that neither lastminute.com nor any person acting on its behalf is under any obligation to establish whether any such e-mail has been received or accessed by you; (v) agree that any e-mail sent by you in response to a noti®cation e-mail shall only be effective when received by lastminute.com (or any person acting on its behalf); (vi) agree that lastminute.com (and any person acting on its behalf) shall be entitled to rely upon any e-mail which appears on its face to have been received in response to a noti®cation e-mail despatched to the e-mail address supplied by you in the application form as having been sent by you or with your knowledge, approval and authority (and that of any person on whose behalf you may have been acting in connection with the Offer) and that neither lastminute.com nor its agents shall be obliged to make any enquiry as to whether such e-mail was so sent; (vii) agree that neither lastminute.com nor those acting on its behalf shall be liable for any loss (whether direct, indirect, consequential or otherwise) arising from the use of e-mail in connection with any change to the price range as contemplated in this paragraph 2 (save to the extent that any loss arises from negligence, fraud or wilful default of lastminute.com, its directors, of®cers and employees);

137 (viii) undertake to pay the offering price for the shares (payable in full on application) in respect of which your application is accepted (if any) and warrant that your remittance will be honoured on ®rst presentation and in any event by 2 p.m. on March 20, 2000, failing which you will not be entitled to receive a share certi®cate, nor to enjoy or receive any rights in respect of such shares unless and until you make payment in cleared funds for such shares and such payment is accepted by IRG plc (which acceptance shall be in its absolute discretion and on the basis that you indemnify IRG plc in respect of any costs, expenses, losses or liabilities incurred as a result) and, pending receipt of cleared funds, IRG plc, on behalf of lastminute.com and Morgan Stanley & Co. International Limited, may terminate the agreement to allocate shares to you and re-allocate the shares to another person; (ix) agree that any share certi®cate to which you may become entitled and monies returnable to you be retained pending clearance of your remittance or pending investigation of any suspected breach of any of the con®rmations, representations and warranties contained in paragraph 10 below and any interest accruing on such retained monies shall accrue to, and be for the bene®t of, lastminute.com; (x) agree, on request by Morgan Stanley & Co. International Limited or IRG plc, to disclose promptly in writing to Morgan Stanley & Co. International Limited or IRG plc such information as they may request in connection with your application and authorise them to disclose any information relating to your application to such persons, in each case, as either Morgan Stanley & Co. International Limited or IRG plc considers in its absolute discretion necessary or appropriate; (xi) agree that any share certi®cate in respect of any shares to which you may become entitled and monies returnable to you may be retained pending clearance of your remittance, investigation of any suspected breach of these terms and conditions (including, for the avoidance of doubt, any of the con®rmations, representations and warranties herein contained) and any veri®cation of identity which is, or which Morgan Stanley & Co. International Limited or IRG plc considers may be, required for the purposes of the Money Laundering Regulations 1993 and that any interest accruing on such retained monies shall accrue to, and be for the bene®t of, lastminute.com; (xii) agree that, if evidence of identity satisfactory to Morgan Stanley & Co. International Limited or IRG plc is not provided on or before March 20, 2000, lastminute.com may terminate the contract of allocation with you and, in such case, the shares which would otherwise have been allocated to you will be sold as soon as is reasonably practicable (and for which purpose you hereby irrevocably authorise lastminute.com or any person appointed by it for this purpose to execute on your behalf any instrument of transfer which may be necessary to effect such sale (if any)) and, as soon as is reasonably practicable after such sale, your application monies (or, if less, an amount equal to the proceeds of such sale net of all expenses of the sale including for the avoidance of doubt any stamp duty and/or stamp duty reserve tax that may be payable) will be returned to the bank or other account on which the cheque or other remittance accompanying the application was drawn and you agree that, in such event, you will have no claim against lastminute.com, Morgan Stanley & Co. International Limited, Morgan Stanley Securities Limited or IRG plc or any of their respective of®cers, agents or employees in respect of the balance of your application monies, if any (such balance being retained by lastminute.com as compensation for breach of contract), or for any loss arising from the price, the timing or the manner of such sale or otherwise in connection therewith; (xiii) agree that you are not applying on behalf of a person engaged in money laundering; (xiv) undertake to ensure that, in the case of an application signed by someone else on your behalf, the original of the relevant power of attorney or other authority (or a complete copy certi®ed by a solicitor or notary) is enclosed with your application form; (xv) agree that any future communication sent by lastminute.com to you in your capacity as a shareholder of lastminute.com may be in the English language; (xvi) agree that, subject to any scaling down as set out in paragraph 6 below, the number of shares allocated to you will be calculated as the sterling amount applied for divided by the offering price and rounded down to the nearest whole number of shares;

138 (xvii) acknowledge that the offering price may be set within, above or below the price range set out in this document and in the mini prospectus and that the offering price and the allocation of shares the subject of the offering may be determined prior to, or later than, 5 p.m. on March 14, 2000; (xviii) agree that Morgan Stanley & Co. International Limited, in consultation with lastminute.com, reserves the right to alter any arrangements in connection with the retail offering (including the timetable and terms of application); and (xix) agree that the contract arising from acceptance of applications (in whole or in part) under the offering will be, or will be deemed to be, entered into by you (if you are a successful applicant) and lastminute.com on these terms and conditions of application for the retail offering subject to paragraph (xviii) above and any changes, additions or alterations made to any application form will have no effect. 3 If your application form is not completed correctly or is amended or if the accompanying cheque, banker's draft or money order is for the wrong amount or currency or if your application form is not accompanied by a power of attorney or other authority where required, your application form may still be treated as valid. In these circumstances, the decision of Morgan Stanley & Co. International Limited or IRG plc, in consultation with lastminute.com, as to whether to treat your application as valid, and how to construe, amend or complete it, shall be ®nal. You will not, however, be treated as having offered to invest a higher amount than is indicated in your application. 4 lastminute.com reserves the right to reject, in whole or in part, or to scale down any application, or to conduct a ballot, or in the case of paragraph 4(iv) below, to cancel any contract of allocation of shares including, without limitation: (i) multiple or suspected multiple applications; (ii) any application for an amount which is less than £500; (iii) any application which has not been received by IRG plc by 5 p.m. on March 10, 2000 accompanied by a cheque, banker's draft or money order in sterling for the sum stated in the application form; (iv) any application in relation to which the cheque, banker's draft or, as the case may be, money order for the sum stated in the application form has not been cleared on ®rst presentation and, in any event, by 2 p.m. on March 20, 2000; (v) any application where the accompanying application form is not properly completed in all respects in accordance with the instructions on the accompanying application form, or as otherwise provided; (vi) any application where as a result of such application the provisions of paragraph 10 below are, or, but for the rejection of such application, would be, breached; (vii) any application made on an application form that has been, or is suspected of having been, changed by way of any addition, deletion or alteration or otherwise; and (viii) any application in names that are, or are suspected to be, ®ctitious, or which are otherwise unsuitable for share registration purposes.

Acceptance of your offer 5 lastminute.com or Morgan Stanley & Co. International Limited on behalf of lastminute.com may accept your offer to subscribe (if your application is received by the due date, is valid (or treated as valid), is processed and is not rejected) either: (a) by notifying the London Stock Exchange of the basis of allocation (in which case the acceptance will be on that basis); or (b) by notifying acceptance to IRG plc. 6 lastminute.com will endeavour to satisfy valid applications on application forms. However, if demand for shares exceeds the number of shares available in the offering, Morgan Stanley & Co. International Limited, in consultation with lastminute.com, will determine the basis of allocation of shares including any scaling down or balloting. In the event of any such scaling down or balloting, allocation between individual applicants will be made by Morgan Stanley & Co. International Limited in consultation with lastminute.com. Accordingly, you may not receive all of the shares you apply for and you may not receive any at all.

139 Conditions 7 The contract arising from acceptance of applications (in whole or in part) under the offering will be entered into by you (if you are a successful applicant) and lastminute.com under which you will be required to subscribe for the shares (at the offering price in respect of such number of shares for which your application has been accepted) and will be conditional upon (a) Admission becoming effective in accordance with paragraph 7.1 of The Listing Rules of the London Stock Exchange on or before March 21, 2000 or such later date as Morgan Stanley & Co. International Limited, Morgan Stanley Securities Limited and lastminute.com may agree (not being later than April 30, 2000), and (b) the entering into of the underwriting agreement referred to in ``Additional Information Ð Underwriting Arrangements'' in Part 13 of this document by each of the relevant parties and such agreement becoming wholly effective and, thereafter, wholly unconditional and neither the underwriting agreement nor the sponsor's agreement referred to in ``Additional Information Ð Underwriting Arrangements'' in Part 13 of this document being terminated before Admission and (c) the right of termination under paragraph 20 below not having been exercised prior to Admission and (d) the offering price having been determined prior to Admission. 8 You will not be entitled to exercise any remedy of rescission for innocent misrepresentation (including pre- contractual representations) at any time after acceptance. This does not affect any other right you may have.

Return of application monies 9 If any application is not accepted or if any contract created by acceptance does not become unconditional your cheque, banker's draft or money order or a cheque from IRG plc for the relevant amount (without interest) will be returned to you by post at the risk of the applicant not later than March 31, 2000. If any application is accepted for an amount lower than that offered, subject as hereinafter provided, the balance of the amount paid on application (as the case may be) will be returned to the applicant by cheque crossed ``Account Payee'' in favour of the relevant payee(s) without interest by post at the risk of the applicant or payee(s) not later than March 31, 2000. In the meantime, application monies will be retained by IRG plc in an account designated for the purposes of the offering and any interest accrued on the application monies shall be retained by, and for the bene®t of, lastminute.com. The cheque and/or banker's draft and/or money order accompanying your application may be presented on receipt and before acceptance of your application, but this will not constitute acceptance of your application, either in whole or in part. The proceeds of this presentation will be held pending acceptance and, if your application is accepted and the conditions of paragraph 7 above are satis®ed, will be applied in discharging the total amount due for the shares you have been allocated. Share certi®cates and surplus application monies (if any) may be retained pending clearance of the applicant's cheque and/or banker's draft and/or money order. The right is also reserved to reject any application in respect of which the applicant's cheque, banker's draft or, as the case may be, money order has not been cleared on ®rst presentation and, in any event, by 2 p.m. on March 20, 2000. lastminute.com may require an applicant to pay interest or other resulting costs (or both) if the cheque, banker's draft or money order accompanying his application is not honoured on ®rst presentation. No refund cheques will be issued for amounts less than the offering price per share and any such amount will be donated to a charity nominated by lastminute.com. Sums refunded will be paid in sterling.

Warranties 10 By completing and submitting an application form, you as the applicant and, if signing on behalf of another person, that person: (a) represent and warrant that, if the laws of any territory outside the U.K. are relevant to your application, in connection with your application, you have complied with all such laws, obtained all governmental and other consents which may be required, complied with all requisite formalities and paid any issue, transfer or other taxes due in connection with your application in any territory, other than the U.K., and that you have not taken any action or omitted to take any action which will or may result in Morgan Stanley & Co. International Limited, Morgan Stanley Securities Limited, lastminute.com, IRG plc or any of their respective directors, employees, agents, of®cers and advisers acting in breach of the regulatory or legal requirements of any territory outside the U.K. in connection with the offering or your application or lastminute's acceptance of your application; (b) represent and warrant that, if you sign an application form on behalf of somebody else, you have the authority to do so and that such other person will be bound accordingly and will be deemed also to have given the con®rmations, warranties and undertakings contained in these terms and conditions and undertake to enclose with your application form your power of attorney or other authority or a

140 complete copy thereof duly certi®ed by a solicitor or notary where required by the instructions contained in the guide to completing the application form and otherwise comply with such instructions; (c) con®rm that, in making an application, neither you nor any person on whose behalf you are applying is relying on any information or representation in relation to lastminute.com or to any of its subsidiaries other than such as may be contained in this document and/or the mini prospectus and you agree that none of Morgan Stanley & Co. International Limited, Morgan Stanley Securities Limited, lastminute.com, IRG plc and none of their respective directors, employees, agents, of®cers and advisers nor any person acting on behalf of them or any person responsible solely or jointly for this document and/or the mini prospectus, or any part of them, shall have any liability for any information or representation not contained in this document; (d) agree that, having had the opportunity to obtain and read this document and the mini prospectus, you shall be deemed to have noted all information and representations concerning lastminute.com or any of its subsidiaries contained in such documents; (e) acknowledge that no person is authorised in connection with the offering to give any information or make any representation other than as contained in this document and, if given or made, any information or representation must not be relied upon as having been made by Morgan Stanley & Co. International Limited, Morgan Stanley Securities Limited, lastminute.com or IRG plc; (f) con®rm that you have reviewed the restrictions contained in paragraph 14 below and represent and warrant, to the extent relevant, that you (and any person on whose behalf you apply) comply or have complied with the provisions of paragraph 14 below; (g) represent and warrant that you (and any person on whose behalf you are applying) are not a person who is under 18 years of age on the date of your application and you have authority to sign the application form; (h) agree that all documents in connection with the offering and any returned monies will be sent at your (and any person on whose behalf you are applying) risk and may be sent by post to you at your address set out in the application form; (i) represent and warrant that, in the case of an application made on an employee application form, (i) you are (or, if you are signing on behalf of another person, that other person is) an Eligible Employee (as de®ned in ``The Offering'' in Part 12 of this document); (ii) only one application has been made by you or on your behalf in the offering; and (iii) the employee application form signed by you has been downloaded and printed out or otherwise supplied to you directly by lastminute.com without any changes, additions, deletions or alterations being made to it; (j) represent and warrant that, in the case of an application made on a lastminute.com registered subscriber application form (i) you are (or, if you are signing on behalf of another person, that other person is) a registered subscriber of lastminute.com; (ii) only one application has been made by you or on your behalf in the offering; and (iii) the application form signed by you has been downloaded and printed out without any changes, additions, deletions or alterations being made to it; (k) represent and warrant that, in the case of an application made on a priority person application form, (i) you are (or, if you are signing on behalf of another person, that other person is) a person on the list of Priority Person (as de®ned in ``The Offering'' in Part 12 of this document); (ii) only one application has been made by you or on your behalf in the offering; and (iii) the priority person application form signed by you has been downloaded and printed out or otherwise supplied to you directly by lastminute.com without any changes, additions, deletions or alterations being made to it; (l) represent and warrant that you are not applying as, or as nominee or agent of, a person who is or may be a person mentioned in any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary receipts and clearance services); (m) represent and warrant that you are a resident of the U.K., the Isle of Man or Jersey and are not, and are not acting on behalf of, a U.S. Person (as such term is de®ned in Regulation S of the U.S. Securities Act of 1933) or a person resident in the United States; (n) agree that e-mails in connection with any change in the price range may be sent to you at your e-mail address set out in the application form;

141 (o) agree that any return e-mail sent in response to an e-mail noti®cation of a change in price range shall be deemed to have been sent with your knowledge, approval and authority; (p) agree that any material downloaded in relation to the offering (i) is done at your own risk and discretion and that you will be solely responsible for any damage to your computer system or loss of data that results from the download of any such material (ii) will be used solely for personal use and you will not distribute any such materials to any U.S. Persons (as such term is de®ned in Regulation S of the U.S. Securities Act of 1933) or in the United States; and (q) agree and understand that lastminute.com shall not be liable for any direct, indirect, incidental, special, consequential or exemplary damages, including but not limited to, damages for loss of pro®ts, goodwill use, data or other intangible losses resulting from unauthorised access to or alternative use of your transmissions or data.

Money laundering 11 You agree that, in order to ensure compliance with the Money Laundering Regulations 1993, IRG plc may at its absolute discretion require veri®cation of identity from any person lodging an application form who either (i) tenders payment by way of sterling banker's draft or cheque or money order drawn on, or by way of telegraphic transfer or similar electronic means from, an account in the name of another person or persons or (ii) appears to IRG plc to be acting on behalf of some other person. In the former case, veri®cation of identity of the applicant may be required. In the latter case, veri®cation of identity of any persons on whose behalf the applicant appears to be acting may be required. Failure to provide the necessary evidence of identity may result in your application being rejected or delays in the despatch of documents. 12 Without prejudice to the generality of paragraph 11 above, veri®cation of the identity of applicants may be required if the value of the shares applied for (at the offering price) exceeds £10,000 in the case of an application made in the U.K. If, in such circumstances, you use a building society cheque, banker's draft or money order you should ensure that the bank or building society enters the name, address and account number of the person whose account is being debited on the reverse of the cheque banker's draft or money order and adds its stamp. If in such circumstances you use a cheque drawn by a third party, you may be requested to provide a copy of the applicant's passport or driving licence certi®ed by a solicitor or notary or a recent original bank or building society statement or utility bill in the applicant's name and showing his current address (which originals will be returned by post at the applicant's risk). 13 If you are making the application as agent for one or more persons, you should indicate in the application form whether you are a U.K. or EU regulated person or institution and specify your status.

Overseas investors 14 It is the responsibility of any person outside the U.K. wishing to make an application in the offering to satisfy himself as to full observance of the laws of the relevant territory in connection therewith, including obtaining any requisite governmental or other consents or approvals, observing any other formalities required to be observed in such territory and paying any issue, transfer or other taxes required to be paid in such territory. No person receiving a copy of this document, the mini prospectus or an application form in any territory, other than the U.K., the Isle of Man or Jersey may treat the same as constituting an invitation or offer to him to subscribe for shares in lastminute.com nor should he in any event use such application form. This document has not been submitted to the clearance procedures of any authorities other than the London Stock Exchange, as the competent authority in the U.K. Any application made by or on behalf of a person outside the U.K., the Isle of Man or Jersey, other than an Eligible Employee or a Priority Person, may be rejected.

Allocation to Employees and Priority Persons 15 A total of 2,237,877 shares have been reserved to satisfy applications by Eligible Employees and Priority Persons. The directors have the absolute discretion to decide in any individual case whether an individual is an Eligible Employee or a Priority Person. Applications by Eligible Employees or Priority Persons must be made on employee application forms or priority person application forms as appropriate. Eligible Employees and Priority Persons may only make one application each under the offering and may not apply jointly with others on an employee application form or priority person application form as appropriate. lastminute.com and its agents will endeavour to satisfy valid applications made on employee and priority person application

142 forms in full but reserve the right to scale down such applications in individual circumstances as they consider appropriate.

Miscellaneous

16 To the extent permitted by law, all representations, warranties and conditions, express or implied and whether statutory or otherwise (including, without limitation, pre-contractual representations but excluding any fraudulent representations), are expressly excluded in relation to the shares and the offering.

17 Save where the context requires otherwise, terms de®ned in this document and the mini prospectus bear the same meaning when used in the application forms, these terms and conditions and in the guides to completing the application forms.

18 The rights and remedies of lastminute.com, Morgan Stanley & Co. International Limited, Morgan Stanley Securities Limited and IRG plc under these terms and conditions are in addition to any rights and remedies which would otherwise be available to any of them and the exercise or partial exercise of any one will not prevent the exercise of others or full exercise.

19 Morgan Stanley & Co. International Limited reserves the right to delay the closing time of the retail offering, the eligible employee offering and the priority persons offering from 5 p.m. on March 10, 2000 by giving notice to the London Stock Exchange. In this event, the revised closing time will be published in such manner as Morgan Stanley & Co. International Limited in its absolute discretion determines subject, and having regard, to the listing requirements of the London Stock Exchange.

20 The underwriting agreement provides that the offering may be terminated in certain circumstances at any time prior to Admission. If the offering is so terminated, applications received up to the date of termination will automatically lapse, applications received after that date will be of no effect and any application monies relating thereto will be returned to you without interest.

21 You agree that all applications, acceptances of applications and contracts resulting from them under the offering shall be governed by and construed in accordance with English law and that you submit to the exclusive jurisdiction of the English courts and agree that nothing shall limit lastminute.com's right to bring any action, suit or proceedings arising out of or in connection with any such application, acceptances or contracts in any other manner permitted by law or in any court of competent jurisdiction.

22 You authorise lastminute.com and its agents, on your behalf, to make any appropriate returns to the Inland Revenue in relation to stamp duty reserve tax (if any) on any contract arising on acceptance of your application and in relation to stamp duty (if any) payable on any transfer of shares as a result of such contract.

23 You agree that neither Morgan Stanley & Co. International Limited nor Morgan Stanley Securities Limited will treat you as its customer by virtue of an application being accepted and that neither Morgan Stanley & Co. International Limited nor Morgan Stanley Securities Limited will be responsible to you for providing to you the protections afforded to its customers and that neither Morgan Stanley & Co. International Limited nor Morgan Stanley Securities Limited owes you any duties or responsibilities concerning the price of the shares or concerning the suitability of the shares for you as an investment or (save as expressly set out in these terms and conditions) otherwise in connection with the offering.

24 You irrevocably authorise IRG plc and its agents to do all things necessary to effect registration into your name of any shares subscribed for by you and authorise any representative of IRG plc to execute and/or complete any document of title required therefor.

25 The dates and times referred to in these terms and conditions, this document, the mini prospectus and/or the application forms may be altered by lastminute.com and Morgan Stanley & Co. International Limited or Morgan Stanley Securities Limited to be consistent with the underwriting agreement and/or the sponsor's agreement (as the same may be altered in accordance with their terms).

26 References in these terms and conditions of application for the retail offering to ``you'' and the ``applicant'' are, where the content requires, to the person on whose behalf the relevant application is being made and the person making that application.

27 All documents sent by post are sent at the risk of the person entitled thereto.

143 O Printed in London U41486