365 Q1 Results - Part 2

365 Corporation PLC
31 August 2000


PART 2


9.   Future liabilities

On exercise of share options issued after 6 April 1999, the Company will be
required to pay National Insurance and similar foreign taxes on the
difference between the exercise price and market value of the shares issued.
The Company will become unconditionally liable to pay the National Insurance
and similar foreign taxes upon exercise of the options, which are exercisable
over a period of up to seven years from the date of the grant.  Following the
issue of UITF25 the Company is now required to spread the liability over the
period to vesting.  Previously the Company made a full provision following
the grant of options and as a result has made a prior year adjustment of
£1,992,000 to reflect the change in accounting policy. Prior year and quarter
comparatives have been restated to reflect the new policy.

The amount of the National Insurance payable will depend on the number of
employees who remain with the Company and exercise their options, the market
price of the Company's ordinary shares at the time of exercise and the
prevailing National Insurance rates at the time. The accounts for the first
quarter 2000/01 include an adjustment arising from the movement in the
Company's share price between 31 March 2000 and 30 June 2000 and the exercise
or lapsing of options.