Final Results - Part 2

365 Corporation PLC
31 May 2001


PART 2

Notes to the fourth quarter and full year results

1. Basis of preparation

The financial statements for the quarter and year ended 31 March 2001 have
been prepared using accounting policies consistent with those set out in the
Company's consolidated 2000 statutory accounts, apart from those relating to
the costs of share option schemes. Following the issue of UITF25 the Company
is now required to spread employer's National Insurance contributions and
other similar taxes over the period to when the share options become
exercisable (see Note 9).  These statements do not constitute statutory
accounts within the meaning of section 240 of the Companies Act 1985 and are
unaudited.

Financial information for the quarter and year ended 31 March 2001 has been
extracted from the accounting records of the group.

The balances and results as at 31 March 2000 have been extracted from the
statutory accounts which have been filed with the Registrar of Companies,
restated to reflect the change in accounting policy detailed above.  The
auditors' report on those accounts was unqualified and did not contain any
statement under section 237 of the Companies Act 1985.

The results for the quarter and preliminary results for the year ended 31
March 2001 were approved by the Board on 30 May 2001 and will be posted on the
Company's web site, www.365corp.com, on 31 May 2001

2. Operating data March 2000 to March 2001

Consumer Division               Mar        Jun        Sep        Dec        Mar
Unique users(1)
Sport                     1,214,000  1,484,000  1,645,000  1,846,000  2,164,000
Entertainment               366,000    318,000    436,000    614,000    390,000
Lifestyle                   172,000    289,000    310,000    404,000    397,000
Total unique users        1,752,000  2,091,000  2,391,000  2,864,000  2,951,000
User sessions(2)
Sport                    10,651,000 11,416,000 11,829,000 11,258,000 13,638,000
Entertainment               760,000    721,000    917,000  1,251,000  1,101,000
Lifestyle                   921,000  1,243,000  1,219,000  1,167,000  1,230,000
Total user sessions      12,332,000 13,380,000 13,965,000 13,676,000 15,969,000
Voice services minutes    5,784,000  7,792,000  6,968,000  5,869,000  5,949,000
(3)
Business Division
Business customers(4)         2,989      3,473      3,945      4,518      5,159
Business minutes(5)      14,448,000 16,409,000 17,488,000 14,188,000 20,388,000

Notes:



  1.  365 defines the number of unique users in a month as the number of people
who visit one of 365's web sites (including those web sites created and hosted
by 365 for third parties) during a month, telephone one of 365's voice
services during a month or are registered to receive an e-mail product at a
selected mid-month date.  If a person uses the same 365 service more than once
in a month they are counted only once as a unique user.  If, however, that
person uses more than one 365 service during that month, they are counted as a
unique user once for each service used.

  2.  365 defines the number of user sessions in a month as the number of times
that each 365 service is used.  If a user leaves a web site and returns more
than 30 minutes later the return visit is counted as a separate user session.
E-mail user sessions represent the number of registered subscribers at the
date selected to determine the number of unique e-mail users multiplied by the
number of issues in that month of the e-mail service they are registered to
receive.  Each incoming call to 365's voice services represents a user
session.

  3.  365 defines the number of voice services minutes in a month as the number
of minutes recorded by 365 and its carriers in respect of calls to 365's voice
services in that month.

  4.  365 defines the number of business customers at each month end as the
total number of customers at that month end who have been billed for that
month.

  5.  .365 defines the number of business minutes in a month as the number of
minutes tracked by the carriers' systems which are billed to the Business
Division's customers in that month.


3. Segmental analysis - for the quarter ended 31 March 2001

Turnover and loss before taxation are classified below by class of business
and by geographical area by origin, which is not materially different from
geographical area by destination.


Business Analysis (£'000)                   Consumer Division Business Division
                                             Quarter  Quarter  Quarter  Quarter
                                            ended 31 ended 31 ended 31 ended 31
                                            Mar 2001 Mar 2000 Mar 2001 Mar 2000
Turnover
Consumer internet+                             1,398      701        -        -
Voice services*+                               5,801    3,647        -        -
Business services+                                 -        -    6,774    2,928
Other+                                           554       43        -        -
                                               7,753    4,391    6,774    2,928
Cost of sales                                  5,188    2,346    4,515    2,054
Gross profit                                   2,565    2,045    2,259      874
Administrative expenses (excluding sales &
marketing costs) before goodwill
amortisation and impairment, NIC and
similar taxes on share options and shares
issued at under value                          4,392    2,037    1,516      999
Operating (loss)/profit (excluding sales &
marketing costs) before goodwill
amortisation and impairment, NIC and
similar taxes on share options and shares
issued at under value                        (1,827)        8      743    (125)
Sales and marketing costs                      1,815    1,319    2,453      783

Operating loss before goodwill amortisation
and impairment, NIC and similar taxes on
share options and shares issued at under
value                                        (3,642)  (1,311)  (1,710)    (908)
                                             
Goodwill amortisation                          5,857    2,926      563      383
Goodwill impairment                            5,900        -        -        -
Provision for NIC and similar taxes on           (5)     (44)      (5)       65
share options
Shares issued at under value                       -        -        -        -
Operating loss                              (15,394)  (4,193)  (2,268)  (1,356)
Net interest receivable (payable)                  6        5        4      (8)
(Loss)/profit on ordinary activities before (15,388)  (4,188)  (2,264)  (1,364)
taxation


Business Analysis (£'000)                    Group Overhead      Total Group
                                             Quarter  Quarter  Quarter  Quarter
                                            ended 31 ended 31 ended 31 ended 31
                                            Mar 2001 Mar 2000 Mar 2001 Mar 2000
Turnover
Consumer internet+                                 -        -    1,398      701
Voice services*+                                   -        -    5,801    3,647
Business services+                                 -        -    6,774    2,928
Other+                                             -        -      554       43
                                                   -        -   14,527    7,319
Cost of sales                                      -        -    9,703    4,400
Gross profit                                       -        -    4,824    2,919
Administrative expenses (excluding sales &
marketing costs) before goodwill
amortisation and impairment, NIC and
similar taxes on share options and shares
issued at under value                          1,128      642    7,036    3,678
Operating (loss)/profit (excluding sales &
marketing costs) before goodwill
amortisation and impairment, NIC and
similar taxes on share options and shares
issued at under value                        (1,128)    (642)  (2,212)    (759)
                                             
Sales and marketing costs                          -        -    4,268    2,102
Operating loss before goodwill amortisation
and impairment, NIC and similar taxes on
share options and shares issued at under
value                                        (1,128)    (642)  (6,480)  (2,861)
Goodwill amortisation                              -        -    6,420    3,309
Goodwill impairment                                -        -    5,900        -
Provision for NIC and similar taxes on          (16)       23     (26)       44
share options
Shares issued at under value                       -        -        -        -
Operating loss                               (1,112)    (665) (18,774)  (6,214)
Net interest receivable (payable)                372      839      382      836
(Loss)/profit on ordinary activities before    (740)      174 (18,392)  (5,378)
taxation

*  previously described as audiotext - this area has expanded to include other
voice services
+  in view of the convergent nature of 365's Consumer Division activities, the
Company is reviewing the appropriateness and feasibility of reporting
segmented turnover in future periods.

All operations during the quarter were continuing.

                                 Operating loss before goodwill amortisation
                                 and impairment, provision for NIC and similar
                                 taxes on share options and shares issued at
                                 under value
                  Turnover
Geographical
analysis (£
'000)
               Quarter   Quarter   Quarter ended 31 Mar   Quarter ended 31 Mar
              ended 31  ended 31                   2001                   2000
              Mar 2001  Mar 2000

United          14,231     7,217                (5,936)                (2,209)
Kingdom and
Ireland
France              77        41                  (405)                  (293)
Germany              -         -                    (2)                   (29)
Chile               74        47                   (15)                   (37)
South Africa        29         1                   (82)                  (195)
USA                116        13                   (40)                   (98)

                14,527     7,319                (6,480)                (2,861)


4. Segmental analysis - for the year ended 31 March 2001

Turnover and loss before taxation are classified below by class of business
and by geographical area by origin, which is not materially different from
geographical area by destination.

Business Analysis (£'000)                         Consumer        Business
                                                  Division        Division
                                                  Year    Year    Year    Year
                                                 ended   ended   ended   ended
                                                31 Mar  31 Mar  31 Mar  31 Mar
                                                  2001    2000    2001    2000
Turnover
Consumer internet                                5,777   1,537       -       -
Voice services                                  21,368  13,139       -       -
Business services                                    -       -  20,961   7,701
Other                                            2,036      43       -       -
                                                29,181  14,719  20,961   7,701
Continuing operations                           22,438  14,719  16,641   7,701
Acquisitions                                     6,743       -   4,320       -
Cost of sales                                   17,001   7,235  13,972   5,375
Gross profit                                    12,180   7,484   6,989   2,326
Administrative expenses (excluding sales &      15,270   6,576   4,977   1,731
marketing costs) before goodwill amortisation
and impairment, NIC and similar taxes on share
options and shares issued at under value
Operating (loss)/profit (excluding sales &
marketing costs) before goodwill amortisation
and impairment, NIC and similar taxes on share
options and shares issued at under value       (3,090)     908   2,012     595
Sales and marketing costs                        5,493   2,806   6,450   2,153
Operating loss before goodwill amortisation
and impairment, NIC and similar taxes on share
options and shares issued at under value       (8,583) (1,898) (4,438) (1,558)
Goodwill amortisation                           23,272   4,338   2,121     759
Goodwill impairment                              5,900       -       -       -
Provision for NIC and similar taxes on share     (181)     198   (164)     175
options
Shares issued at under value                         -       -       -       -
Operating loss                                 (37,574) (6,434) (6,395) (2,492)
Continuing operations                          (35,846) (6,434) (6,032) (2,492)
Acquisitions                                   (1,728)       -   (363)       -
Net interest receivable/(payable)                   11      20      82     (9)
Loss on ordinary activities before taxation    (37,563) (6,414) (6,313) (2,501)



Business Analysis (£'000)                      Group Overhead    Total Group
                                               Year       Year Year       Year
                                               ended     ended ended     ended
                                               31 Mar   31 Mar 31 Mar   31 Mar
                                               2001       2000 2001       2000
Turnover
Consumer internet                                    -       -   5,777   1,537
Voice services                                       -       -  21,368  13,139
Business services                                    -       -  20,961   7,701
Other                                                -       -   2,036      43
                                                     -       -  50,142  22,420
Continuing operations                                -       -  39,079  22,420
Acquisitions                                         -       -  11,063       -
Cost of sales                                        -       -  30,973  12,610
Gross profit                                         -       -  19,169   9,810
Administrative expenses (excluding sales &       3,845   2,453  24,092  10,760
marketing costs) before goodwill amortisation
and impairment, NIC and similar taxes on share
options and shares issued at under value
Operating (loss)/profit (excluding sales &
marketing costs) before goodwill amortisation
and impairment, NIC and similar taxes on share
options and shares issued at under value       (3,845) (2,453) (4,923)   (950)
Sales and marketing costs                            -       -  11,943   4,959
Operating loss before goodwill amortisation
and impairment, NIC and similar taxes on share
options and shares issued at under value       (3,845) (2,453) (16,866) (5,909)
Goodwill amortisation                                -       -  25,393   5,097
Goodwill impairment                                  -       -   5,900       -
Provision for NIC and similar taxes on share     (347)     331   (692)     704
options
Shares issued at under value                         -   2,261       -   2,261
Operating loss                                 (3,498) (5,045) (47,467) (13,971)
Continuing operations                          (3,498) (5,045) (45,376) (13,971)
Acquisitions                                         -       - (2,091)       -
Net interest receivable/(payable)                2,272   1,197   2,365   1,208
Loss on ordinary activities before taxation    (1,226) (3,848) (45,102) (12,763)


Geographical                   Operating loss before goodwill amortisation and
analysis (£                    impairment, provision for NIC and similar taxes
'000)                          on share options and shares issued at under
                               value

                 Turnover
                 Year     Year  Year ended 31 Mar 2001  Year ended 31 Mar 2000
             ended 31 ended 31
             Mar 2001 Mar 2000

United         49,241   21,953                (13,738)                 (4,665)
Kingdom and
Ireland
France            335       90                 (2,082)                   (658)
Germany             -       93                    (25)                    (45)
Chile             210      263                    (74)                    (28)
South Africa       78        1                   (524)                   (422)
USA               278       20                   (423)                    (91)
               50,142   22,420                (16,866)                 (5,909)



5. Loss per ordinary share of 0.25p each


                                                 Quarter   Quarter Year  Year
                                                ended 31  ended 31 ended ended
                                                   March    March  
                                                    2001     2000     31    31  
                                                                   March March  
                                                                    2001  2000
                                                   £'000   £'000  £'000    £'000

Loss for the period before the following:       (6,056) (1,955)(14,439) (4,549)

Goodwill amortisation                           (6,420) (3,309)(25,393) (5,097)

Goodwill impairment                             (5,900)      -  (5,900)      -

Provision for NIC and similar taxes on share          26      (44)   692 (704)
options

Shares issued at under value                           -         -     - (2,261)

Loss for the period                             (18,350) (5,308)(45,040)(12,611)

Weighted average number of shares in the
period:

Basic and diluted               201,550,957 188,609,005 200,196,253 154,120,345

Basic and diluted loss per share before             3.0p      1.0p  7.2p  3.0p
goodwill amortisation and impairment,
provision for NIC and similar taxes on share
options and shares issued at under value

Goodwill amortisation and impairment                6.1p      1.8p 15.6p  3.3p

Provision for NIC and similar taxes on share        0.0p      0.0p (0.3p)  0.4p
options

Shares issued at under value                           -         -     -  1.5p

Basic and diluted loss per share                    9.1p      2.8p 22.5p  8.2p




The weighted average number of shares has been restated to reflect the 4-for-1
share split in November 1999.



None of the contingently issuable shares or share options gives rise to a
dilution in the loss per share due to the losses made in the period.



6. Share capital and reserves


                               Ordinary Shares to      Share  Merger Profit and
                                  share be issued    premium reserve       loss
                                capital              account            account
                                  £'000     £'000      £'000   £'000      £'000

At 1 April 2000                     493        80     72,220  34,844   (14,688)

Prior year adjustment                 -         -          -       -      1,992

Retained loss for the period          -         -          -       -   (45,040)

Exchange adjustments                  -         -          -       -      (120)

Shares issued in respect of           2         -         44       -          -
share options exercised

Shares issued for                     9      (50)          -   3,692          -
acquisitions

Shares issued in part                 1         -         74       -          -
settlement of purchase of
intangible asset

Premium on shares issued to           -         -         87       -          -
employees

Contingent share                      -       795          -       -          -
consideration for
acquisitions

Movement in fair value of             -      (73)          -       -          -
contingent share
consideration

At 31 March 2001                    505       752     72,425  38,536   (57,856)




Shares were issued for the acquisitions during the year.  The difference
between the fair value and nominal value of the shares has been transferred to
the merger reserve.





7. Reconciliation of movement in shareholders' funds


                                  Quarter      Quarter Year ended  Year ended
                                 ended 31     ended 31 31 March    31 March
                               March 2001   March 2000 2001        2000
                                    £'000        £'000       £'000       £'000
Opening shareholders' funds*       73,326       72,139      94,941      14,629
Retained loss for the period     (18,350)      (5,308)    (45,040)    (12,611)
New share capital (net of               -         (51)           -      60,826
expenses) issued for cash

Charge in respect of shares             -            -           -       2,076
issued at under value

Shares issued for                       -       29,109       3,701      29,949
acquisitions

Shares issued in part                  75            -          75           -
settlement of purchase of
intangible asset

Premium on shares issued to             -            -          87           -
employees

Net movement in contingent          (607)        (921)         672          80
share consideration

Employee share options                 33            9          46           9
exercised

Exchange adjustments                (115)         (36)       (120)        (17)

Closing shareholders' funds        54,362       94,941      54,362      94,941




* opening shareholders' funds on 1 April 2000 were originally £92,949,000
before adding the prior year adjustment of £1,992,000.





8. Net cash outflow from operating activities


                         Quarter ended Quarter ended Year  ended   Year ended
                         31 March 2001 31 March 2000 31 March 2001 31 March
                                                                   2000
                                 £'000         £'000         £'000        £'000
Operating loss                (18,774)       (6,214)      (47,467)     (13,971)
Depreciation                       299           109         1,213          408
Amortisation and                12,342         3,342        31,456        5,130
impairment of intangible
assets

Decrease/(Increase) in             564         (159)         (356)        (186)
stock

(Increase) in debtors            (457)         (817)       (5,483)      (3,669)

Increase in creditors/             434         (941)           821        2,741
provisions

Charge in respect of                 -             -             -        2,076
shares issued at under
value

(Profit) on disposal of          (312)             -         (312)            -
intangible fixed assets

Loss on disposal of                 76             8            76            8
tangible fixed assets

                               (5,828)       (4,672)      (20,052)      (7,463)






9. National Insurance and similar taxes on share options



On exercise of share options issued after 6 April 1999, the Company is
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 to reduce the
provision by £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 fourth
quarter and year ended 31 March 2001 include adjustments arising from the
movement in the Company's share price between 31 March 2000 and 31 March 2001
and the granting, exercise or lapsing of options.