Vernalis plc Annual report and accounts 2003
Vernalis plc Annual report and accounts 2003 Contents
2 Highlights
3 Chairman’s review
4 Refocusing
6 Discovering
8 Strengthening
10 Chief Executive Officer’s review 
of operations
16 Financial review
18 Board of Directors 
20 Report of the Directors
22 Remuneration report
30 Corporate governance
34 Statement of Directors’ 
responsibilities
35 Independent auditors’ report 
to the members of Vernalis plc
36 Consolidated profit and 
loss account
37 Balance sheets
38 Consolidated cash flow statement
39 Notes to the financial statements
58 US accounting policies and 
financial statements
63 Five-year summary
64 Shareholder information
IBCAddresses and advisers 1
Vernalis 
Annual report and accounts 2003
Building
a competitive 
new biotechnology
company
Vernalis is a new force in UK biotechnology formed 
from the combination of British Biotech, RiboTargets 
and Vernalis Group. The Company has significant 
growth potential through sales of its marketed product,
frovatriptan, and the successful development and
commercialisation of product pipeline candidates, 
arising from its competitive research in oncology and
neuroscience. It is the Company’s goal to participate
further in the consolidation of the biotechnology sector. 2
Vernalis 
Annual report and accounts 2003
Frovatriptan
• May 2004: rights to frovatriptan in North America reacquired from Elan 
for $50 million, payable in instalments up to 31 December 2005.
• 2003 sales of frovatriptan of $37.5 million in North America.
• Initiation of a second Phase IIIb study with frovatriptan for short-term
prophylaxis of menstrually-associated migraine.
Highlights
Pipeline products and research
• Positive data from Phase II clinical study of V10153 in acute myocardial
infarction patients and plans for a follow-up study in stroke. The product
showed similar efficacy to marketed thrombolytic therapies and with no
spontaneous bleeds. 
• Positive results from Phase I study of V2006 (Parkinson’s disease). 
The product was safe and well tolerated, achieving potentially therapeutic
concentrations at the lowest dose tested. It also displayed a prolonged
half-life consistent with once-daily dosing.
• Successful early Phase I studies with the novel analgesic V140. 
• Roche selects development candidate to treat obesity from 5-HT2C
receptor agonist research programme, currently undergoing pre-clinical
studies by Roche.
• New oncology research collaboration with Novartis Institutes for Biomedical
Research Inc. agreed in December 2003.
• Integration of British Biotech, RiboTargets and Vernalis Group completed 
in Q1 2004. 
Financial highlights
• Revenue: £8.6 million (year ended April 2003: £9.1 million).
• Total operating loss: £29.4 million (year ended April 2003: £36.2 million). 
Operating loss before acquisitions: £17.3 million. 
• Cash and short-term investments of £24.2 million at 31 December 2003. 
• Restructuring to achieve full-year cost savings of £12.9 million completed;
additional savings realised from further post-merger restructuring which 
will reduce headcount to 110 during H1 2004. Last year, in my first review following my appointment, 
I outlined the business strategy that your Company is
pursuing. This aims to build new value through the
Company taking an active role in consolidation within 
the biotechnology sector. Significant value creation
opportunities can arise by restructuring merged
companies in order to focus their resources upon 
their most competitive pipeline products, and by 
reducing the combined cost base.
During the past year, Vernalis has made important
advances in successfully implementing this strategy. 
The new Company, which was created by combining 
British Biotech, RiboTargets and Vernalis Group, 
has undergone extensive restructuring. Investment in 
R&D has been refocused upon the clinical development 
of four priority products, from an original portfolio of eight,
and upon a small group of key discovery programmes. 
The combined headcount of 270 will be reduced to 
about 110. This restructuring has decreased the cost
base of the merged business by approximately 
£13 million per annum.
There has also been significant value enhancement
through the clinical progress of the key pipeline products,
and through the new commercial strategies which are
being implemented for them.
Most importantly, in May 2004 Vernalis reacquired 
from Elan the entire North American rights for frovatriptan.
This represents a major opportunity for Vernalis, since the
Company believes that this product has substantial growth
potential if its use can be extended to the prophylaxis 
of menstrually associated migraine, and if a competitive
marketing effort can be undertaken with primary care
physicians. Vernalis will pay Elan a total of $50 million
over the period to 31 December 2005, and intends to seek
additional equity funding to assist with these payments.
Over the coming year the key priorities for the Company
are to realise fully the opportunity provided by regaining
these rights to frovatriptan, and to continue to advance
other key products and programmes within the R&D
portfolio.
Three current Non-Executive Directors plan to retire during
this year. Ian Kent, who was Chairman of RiboTargets and
was then appointed as a Director of Vernalis, will retire at
the forthcoming AGM. Eugene Williams, who has served
since 2001 as a Director of British Biotech, now Vernalis,
will also retire at the forthcoming AGM. Keith Merrifield,
who was appointed in 1995 as a Director of the Company,
plans to retire at the end of this year, having served for 
a total of nine years as a Director of British Biotech, now
Vernalis. The Board wishes to thank all of them for their
very important contributions to Vernalis during its
evolution and development.
Finally, I would like to express the Board’s appreciation of
the outstanding support provided by all of the Company’s
employees during the recent period of very extensive
change, and to thank our shareholders for their continued
commitment to the Company and its strategy.
Peter Fellner
Executive Chairman
3
Vernalis 
Annual report and accounts 2003
Chairman’s review 4
Vernalis 
Annual report and accounts 2003
Refocusing
Following the combination of British
Biotech, RiboTargets and Vernalis
Group in 2003 the Company 
has prioritised its research and
development portfolio, focusing 
on the programmes capable of
driving the Company’s growth in 
the medium term. These are mainly
in neuroscience and oncology. 5
Vernalis 
Annual report and accounts 2003 6
Vernalis 
Annual report and accounts 2003 7
Vernalis 
Annual report and accounts 2003
Discovering
The discovery of novel medicines 
to treat human disease is the
cornerstone of our business.
Pioneering research in the fields of
neuroscience and cancer have led 
to the development of a competitive
pipeline. 
Beyond the science, we are also
striving to find new ways to create
value, such as through the creation
of successful new partnerships 
for our research and development
projects or the expansion of our
product offerings to new geographic
and therapeutic markets.  We are constantly working to make
Vernalis stronger. The foundations
we have laid down for the Company
of a committed workforce, a
balanced product pipeline and 
a coherent and rational business
strategy have been bolstered by 
the new opportunity to enhance 
the earning potential of our lead
product, frovatriptan. 
Increasing the range and scope 
of our scientific and commercial
collaborations will be a key element
of our approach to future R&D. 
8
Vernalis 
Annual report and accounts 2003
Strengthening 9
Vernalis 
Annual report and accounts 2003 10
Vernalis 
Annual report and accounts 2003
The restructuring and rationalisation of the merged
companies’ resources is now largely complete. In the
process, we have reduced our cost base and sharpened 
our development focus to concentrate on what we believe
are the most promising opportunities in our portfolio. 
The pace of our turnaround has also been accelerated by
the reacquisition of North American rights for frovatriptan
from Elan for a total of $50 million. I believe this is 
a transforming moment for Vernalis that will have far-
reaching benefits. It regains control of the Company’s
most valuable asset in its most important market and
allows the Company a much greater influence over 
the future strategy for frovatriptan and in particular, 
the potential menstrually-associated migraine indication. 
It is our goal to repartner frovatriptan for North America with
a company which shares our aspirations for the product
and, in particular, its potential in the prophylactic treatment
of menstrually-associated migraine. We expect to benefit
from upfront and milestone payments and an improved
royalty return from any such commercialisation partner. 
We also expect to benefit as frovatriptan is rolled out 
in new European territories. In the longer term we also
anticipate sales will be boosted should frovatriptan 
receive approval as a prophylactic for menstrually-
associated migraine.
The positive results recently announced from our clinical
studies with V10153 and V2006 have also enhanced the
outlook for the Company. Partnering remains a key element
of the Company’s strategy and detailed discussions on 
co-development and co-commercialisation of some aspects
of the pipeline are ongoing with potential collaborators.
Additionally, we have made good progress in our
collaborations with Roche in obesity and with Serono in
inflammatory/immune disorders with the objective that
both programmes yield development candidates within the
next 12 months. Towards the end of 2003, a new cancer
research collaboration was initiated with Novartis Institutes
for Biomedical Research Inc.
In summary, Vernalis is well positioned to play a leading
role in the biotechnology sector. Regaining the rights to
frovatriptan in the world’s largest pharmaceutical market
is an extremely exciting opportunity and our priority will 
be to maximise its potential. At the same time we will
continue to build value through the progression of our
products and research and by participating in further
consolidation of the industry. 
Chief Executive Officer’s review of operations
2003 was a transforming year for Vernalis in which 
your Company embarked on a new strategy of using
mergers and acquisitions to assemble the assets for 
a sustainable, self-funding, R&D-driven biotechnology
company. The first transaction combined British Biotech
and RiboTargets, strengthening the Company’s balance
sheet and management capabilities and rejuvenating its
research. This was followed by the merger with Vernalis
Group, through which your Company gained its most
valuable asset, frovatriptan, and further strengthened 
its scientific base as a result of Vernalis’ expertise in
neuroscience and central nervous system disorders. period to 31 December 2005. Vernalis has stated that 
it intends seeking additional equity funding to assist with
these payments. 
Frovatriptan – clinical development in menstrually-
associated migraine Vernalis is currently conducting
further studies to develop frovatriptan as a prophylactic
oral treatment for menstrually-associated migraine, 
a form of migraine suffered by over 50 per cent of female
migraineurs. None of the triptan class of drugs is currently
approved for prophylactic use in migraine. Frovatriptan’s
long half-life (approximately 26 hours) makes it ideally
suited to this novel application.
In October 2002 Vernalis reported positive preliminary 
results from a study conducted at 36 clinics in the US 
and involving more than 500 menstrual migraine sufferers.
Patients were evaluated over three menstrual cycles over
the course of which each patient received all three dose
regimens – placebo, 2.5mg frovatriptan once daily and
2.5mg frovatriptan twice daily. During each cycle they took
the treatment for a total of six days commencing two days
before the expected onset of their headache. 
The results showed that both once- and twice-daily dose
regimens of frovatriptan were highly effective in reducing
the incidence, severity and duration of menstrually-
associated migraines compared with placebo. By the
intention-to-treat analysis 50 per cent of patients were
completely headache-free during the six-day period when
they took 2.5mg frovatriptan twice daily and 39 per cent
were headache-free at a once-daily dose of 2.5mg,
compared with only 26 per cent on placebo. The results 
of the study were presented to the American Academy 
of Neurology in the US in April 2003, and will be published
in key scientific and clinical journals in due course. 
A long-term Phase III safety study is under way and a
confirmatory Phase IIIb efficacy trial is planned for Q2
2004 to support extension of frovatriptan’s existing label 
R&D operations
Development pipeline
Frovatriptan Frovatriptan is a selective 5-HT1B/1D receptor
agonist approved as an acute oral treatment for migraine
headache and its associated symptoms. It is one of 
a class of prescription drugs called triptans, a number 
of which are already approved for this indication. 
Having licensed the product from SmithKline Beecham,
the discoverer of the compound, in 1994, Vernalis
completed the outstanding pre-clinical work and in January
1995 began a series of Phase I clinical trials. These were
followed in January 1996 by Phase II clinical trials in more
than 1,600 migraineurs. Phase III clinical trials in more
than 3,000 migraineurs across 17 countries were started
in March 1997. 
Following these studies, frovatriptan was granted
marketing approval in the US in November 2001 for 
the acute treatment of migraine. Since June 2002 it 
has been marketed as Frova™ by a combined sales force
from Elan and UCB. In 2003 Elan reported Frova sales 
of $37.5 million and by December 2003, 18 months after
launch, Frova had achieved a share of more than three per
cent of the US market for triptans (source: IMS Health). 
Our European licensee, Menarini International, launched
frovatriptan in Germany, the first European market, in
November 2002. After one year on the market it had gained
around seven per cent of the German triptan prescription
market. Menarini has also launched frovatriptan in Austria,
Eire and the UK. In January 2004 the product gained
marketing approval in Switzerland and pricing approval in
Italy. Further European launches are expected during 2004. 
In May 2004 shareholders approved the reacquisition 
of rights for frovatriptan in North America from Elan for 
a total of $50 million, payable in instalments over the 
11
Vernalis 
Annual report and accounts 2003 to include this novel indication. If the positive initial results
are confirmed, these studies should lead to regulatory
submissions in the US and Europe during 2005. 
V10153 V10153 (formerly BB-10153) is a recombinant
protein designed to improve the treatment of diseases
such as stroke, acute myocardial infarction (AMI) and
deep vein thrombosis (DVT). The drug has been designed
in such a way that it only becomes active in the presence
of newly-formed or forming bloodclots. This may be
important in helping to overcome the major drawback 
of existing thrombolytic agents, that of internal bleeding.
Conditions such as stroke may be under-treated because
of this risk, particularly intracranial haemorrhage. 
In March 2002, the FDA gave clearance for a Phase II study
of V10153 in AMI patients by the US-based Thrombolysis 
In Myocardial Infarction Study Group. The trial was designed
to test the ability of V10153, administered at doses up to
10mg/kg, to dissolve clots and restore blood flow in the
coronary arteries of heart attack patients. The study also
evaluated the safety of treatment with V10153, especially
with respect to bleeding. 
This study has now been successfully completed. V10153
was well tolerated throughout the dose range of 1-10mg/kg
to patients with AMI. Full restoration of blood flow was
observed in blocked coronary arteries in around 40 per cent
of patients after 60 minutes following doses of 5mg/kg and
greater. This is comparable to the efficacy reported for other
marketed thrombolytic therapies using a similar experimental
protocol. Initial analysis of safety (episodes of bleeding) is
encouraging with no spontaneous bleeds. 
The next stage in development of V10153 will be a Phase
II study in approximately 100 patients with acute stroke.
Vernalis is currently evaluating whether to undertake this
study itself or wait until a collaboration has been secured. 
V2006 (formerly VR-2006) Vernalis initiated research in
1998 to assess the potential of selective adenosine A2A
receptor antagonists in the chronic treatment of Parkinson’s
disease, a debilitating and progressive movement disorder
that affects approximately one per cent of the population
over 65. Common Parkinson’s disease symptoms include
stiffening of the muscles, difficulty in movement, tremors
and shaking. The primary cause of these problems is
nerve degeneration and cell death in the brain. This leads
3 2110 7.5 SK**
(90 mins)
tPA* 5
V10153
Coronary artery thrombolysis by V10153
tPA
Streptokinase
*  TIMI 14:  Antman et al. 
 Circulation 1999, 
 99: 2720
**  GUSTO-1: N. Eng. J. Med. 
 1993; 329: 1615
% of patients with successful blood
 flow restoration at 60 minutes
0
5
10
15
20
25
30
35
40
45
12
Vernalis 
Annual report and accounts 2003
Frovatriptan
Frovatriptan
V10153
V2006
V140
5-HT 2C agonists
MEIs
A 2A antagonists
Hsp90
CB 1 antagonists
Acute treatment of migraine
Prophylactic treatment of menstrual migraine
Stroke; peripheral arterial occlusion
Parkinson’s disease
Cancer pain
Obesity
Inflammatory
Depression
Cancer
Obesity
Menarini
Serono
Roche
Late
research
Pre clinical Phase I Phase II Phase III Market
Dev/mkt
partner
Product Indication
Product pipeline
Chief Executive Officer’s review of operations continued
0
10
20
30
40
50
60
5.0mg 2.5mg Placebo
***(p<0.0001)
Efficacy of frovatriptan in preventing MAM headache
Proportion of patients headache-free throughout treatment period
Sources: Silberstein et al. 
Neurology 60 Suppl 1.
A94. 2003
%of patients
***
*** to the loss of dopamine, a chemical in the brain involved 
in controlling voluntary movement. Most conventional
therapies for Parkinson’s disease are based on dopamine
replacement. Whilst these treatments are generally
effective in the short term, they can have severe, 
or even disabling, side effects and their effectiveness
tends to decrease over time. 
Adenosine is another brain chemical that plays an
important role in motor co-ordination and movement
control. Vernalis believes that by using selective
adenosine A2A receptor antagonists to restore the
imbalance of neurotransmitters caused by the loss of
dopamine, it may provide a novel approach to treat the
symptoms of Parkinson’s disease and to slow or stop 
the progression of the disease. In particular, A2A receptor
antagonists may be able to restore function in Parkinson’s
disease patients without inducing unwanted side effects
such as nausea and dyskinesia (uncontrolled movements). 
V2006 was selected as a development candidate from this
research programme in April 2002. An initial Phase I study
of V2006, a single ascending dose study in healthy male
volunteers designed to investigate the drug’s safety and
pharmacokinetics, has been successfully completed. 
The drug was safe and well tolerated and exposure was
observed to increase with dose. Potentially therapeutic
blood levels (based on predictions from pre-clinical studies)
were achieved following the lowest dose of 5mg, which
provides reassurance that a wide therapeutic ratio might
be achieved in patients. Also, the long plasma half-life (18
hours) of V2006 in normal subjects would be consistent
with a simple, once-daily dosing regimen. The Phase I
clinical programme continues and is expected to be
completed during 2004. Discussions are currently in
progress with a number of companies interested in
collaborating in the V2006 programme. Such collaborations
may also encompass Vernalis’ research into the A2A
receptor subtype as a novel target for a new class of
antidepressant drugs.
V140 V140 (formerly R140) is targeted at the treatment
of pain in cancer patients. It was in-licensed from Monash
University, Melbourne, Australia, and was previously 
tested in patients in an open label pilot study conducted
in Australia under the Clinical Trial Notification (CTN)
Scheme. In this study, indications of analgesic efficacy
were seen in patients who received a single dose of V140
after orthopaedic knee surgery. No sedative side effects
were seen in this study. 
V140 presents an opportunity to be used alongside, or 
as a replacement for, current opiate-based pain therapies. 
It has the potential to improve the overall management 
of pain in cancer patients. Preliminary pre-clinical studies
indicate that V140 is capable of providing an improved
profile over current therapies since it is expected to
produce non-sedating analgesia. 
A Phase I clinical programme to evaluate V140’s safety
and pharmacokinetic properties in single and multiple
dose studies was started in September 2003. Following
the conclusion to the initial Phase I studies, a Phase Ic
study to test the analgesic properties of the compound 
in healthy volunteers has commenced. The test system 
is believed to be a model of neuropathic pain; the results
from this study are expected during the middle of 2004. 
Other products A Phase II clinical trial of VLM670
involving approximately 240 male and female patients
with sexual dysfunction failed to achieve its primary
endpoint, although some secondary endpoints were
positive. Following an internal review, Vernalis
announced in October 2003 that it would not undertake
any further development of VML670. The agreements
with ImmunoGen and MethylGene to develop BB-10901
and MG98 respectively have been renegotiated.
Vernalis has relinquished all rights to these products
and will not undertake any further development beyond
the completion of certain ongoing clinical studies. 
13
Vernalis 
Annual report and accounts 2003
Studies suggest
menstruation acts 
as a trigger for more
than half of women
who suffer from
migraine attacks.
Reports also indicate 
that menstrually-
associated migraines
tend to last longer
than other migraines
and are more likely 
to recur after initial
response to treatment. 14
Vernalis 
Annual report and accounts 2003
Page heads
Research programmes 
Oncology Our principal research programme in oncology 
is aimed at developing a synthetic small-molecule inhibitor
of Hsp90, a drug target predicted to have relevance to 
a broad range of cancer types. This programme is being
conducted in collaboration with the Institute of Cancer
Research and Cancer Research Technology, under an
exclusive research and development agreement which
provides access to relevant cancer models. 
The scientific rationale for Hsp90 as a therapeutic cancer
target is based on the hypothesis that many of the
signalling proteins that behave aberrantly in cancer cells
require Hsp90 as a chaperone molecule to ensure that
they are maintained in an active form. Inhibition of Hsp90
results in interference in multiple signalling pathways 
that mediate cancer growth and cell survival. 
Vernalis has been optimising small molecule compounds
which inhibit the ATPase function of Hsp90 and has filed
patent applications in this area. The project is in the 
lead optimisation phase and is scheduled to identify 
a pre-clinical development candidate in 2004. 
In December 2003 Vernalis formed a new research
collaboration with the Novartis Institutes for BioMedical
Research, Inc. (NIBRI) in Cambridge, MA, USA, to
investigate inhibitors of a target implicated in the
progression of a range of cancers. Under the agreement
Vernalis is providing elements of its ongoing oncology
research to NIBRI for an initial six-month evaluation period
after which NIBRI will have the right to enter a longer-term
research and development collaboration. During this
evaluation period NIBRI is conducting its own research
and funding research at Vernalis’ laboratories in
Cambridge, UK.
Obesity Vernalis’ research into treatments for obesity 
and related disorders is in two fields: the potential use 
of selective 5-HT 2C receptor agonists; and the potential 
of CB1 receptor antagonists. 
The World Health Organisation (WHO) has declared obesity
as the largest global chronic health problem in adults.
Indeed, by 2025, WHO estimates that obesity will emerge
as a more serious world problem than malnutrition. In the
US it is claimed that 300,000 Americans now die from
obesity-related diseases every year, with the economic
cost of obesity to the US healthcare system estimated 
at $100 billion annually. A recent survey estimated 
that 15 per cent of US children and adolescents were
overweight (National Health and Nutrition Examination
Survey 1999-2000). A similar picture is emerging in Britain.
A report by the National Audit Office (Tackling Obesity 
in Britain 2001) estimated that one in five UK adults 
is obese, and that 30,000 lives may be lost each year 
as a result of the condition. 
In 1997, Vernalis scientists discovered that 5-HT 2C is a 
key receptor for controlling satiety. This was a significant
finding since it is known that 5-HT 2C receptors are present
in high density in the brain (in particular in areas that
control eating) but not in the cardiovascular system. Hence,
adverse effects seen with older obesity drugs (due to their
non-selective activity across a variety of 5-HT receptors)
may be avoided with a selective 5-HT 2C receptor agonist. 
In 1999 Vernalis partnered its 5-HT 2C programme with
Roche, the world’s leading pharmaceutical company in
sales of prescription treatments for obesity. The first
compound nominated for development was discontinued
early in Phase I in July 2002 after failing to achieve
pharmacokinetic criteria for further development. Roche
has since selected a second development candidate which
is currently undergoing pre-clinical studies. The agreement
gives Roche exclusive worldwide rights to develop and
commercialise compounds discovered in the programme. 
Chief Executive Officer’s review of operations continued
Much of the science
supporting the
Company’s
collaborative 
research activities 
is performed at
Vernalis’ modern
laboratories in
Winnersh and
Cambridge In our other obesity research programme we are aiming 
to develop potent and selective cannabinoid CB1 receptor
antagonists. Currently, two cannabinoid receptors have
been described: the CB1 receptor, which is distributed
widely in the central nervous system; and the CB2 receptor
which is generally localised in the periphery (e.g. immune
cells). Extensive pre-clinical data support the hypothesis
that CB1 receptor antagonists have potential utility for 
the treatment of obesity. A focused medicinal chemistry
programme has rapidly identified novel, selective CB1
receptor antagonists with oral efficacy in pre-clinical
feeding models. The programme aims to identify a 
lead candidate during 2004. 
Depression Recent pre-clinical research by Vernalis
suggests that adenosine, and specifically the adenosine
A2A receptor subtype, may be a novel target for the
discovery of a new class of antidepressant drugs.
Transgenic animals with the A2A receptor gene deleted
have shown a pattern of activity in pre-clinical models of
depression that appears to be predictive of antidepressant
activity in humans. Vernalis has also synthesised selective
adenosine A2A receptor antagonists that show activity in
pre-clinical models of depression and we are currently
working to optimise the selectivity and pharmacokinetic
properties of the most promising compounds. 
Inflammation In October 2000, Vernalis entered into a
two-year research collaboration with Serono, to identify
new compounds for clinical development for the treatment
of inflammatory diseases. In October 2002, the term of
the research collaboration was extended for a further year
to October 2003, with the aim of identifying candidates for
development. That research collaboration has now expired
and the parties are in discussion about selection of
candidates for further development. Serono will undertake
the further development of any candidates selected, with
Vernalis receiving milestone payments and royalties upon
successful commercialisation of products. 
Infection In August 2002, Vernalis entered into a
collaboration with GeneSoft Pharmaceuticals Inc (now 
part of Oscient Pharmaceuticals Corp.) to discover and
develop novel anti-infectives based on Vernalis’ proprietary
anti-bacterial PDF and other metalloenzyme inhibitors. 
In October 2003 Vernalis’ peptide deformylase inhibitor
research programme in the antibiotic field was out-
licensed to Oscient in its entirety. Under this out-licensing
agreement, Oscient has assumed responsibility for all
further research and development, with Vernalis receiving
milestone and royalty payments if products progress
through development and to market.
Simon Sturge
Chief Executive Officer
15
Vernalis 
Annual report and accounts 2003 16
Vernalis 
Annual report and accounts 2003
The combination of British Biotech and RiboTargets has
been accounted for as an acquisition with an effective date
of 23 April 2003 and the results for RiboTargets have
therefore been consolidated from this date. The combination
of British Biotech and Vernalis Group has been accounted
for as a merger with an effective date of 1 September 2003.
The results for Vernalis Group are therefore included as 
if the businesses had always been combined and are fully
reflected in the results for both the eight months ended
31 December 2003 and the year ended 30 April 2003.
The profit and loss account for the eight months ended 
31 December 2003 has been split into “acquisition”,
reflecting RiboTargets, and “merged business”, reflecting
British Biotech and Vernalis Group. As a result, the
merged business figures for 2003 are prepared on the
same basis as the comparatives for the prior period. 
As a result of the transaction with Elan, Vernalis has
exchanged its royalty income and potential milestone
payments for enhanced cash flows arising from the full
sales of frovatriptan in North America and intends to seek
a new commercialisation partnership for frovatriptan which
may include upfront and milestone payments. However, 
in order to meet its obligations to Elan, Vernalis will require
additional equity funds during the next 12 months, which
the directors believe can be obtained. 
Profit and loss account
The two business combinations are expected to generate
substantial savings following the necessary restructuring.
The expected annualised cost savings of £12.9 million
from those transactions detailed in the 2003 Listing
Particulars will now be achieved. As expected, only minor
net savings from this restructuring are reflected in the
financial results for the eight months ended 31 December
2003. Additional post-merger restructuring is continuing 
to take place to reduce the cost base of the business 
and plans have been implemented to reduce headcount
further to approximately 110 during H1 2004. 
The net loss for the eight months ended 31 December
2003 was £34.2 million compared with £30.6 million 
for the year ended 30 April 2003. 
Turnover for the eight months ended 31 December 2003
was £8.6 million and primarily comprised £2.4 million 
in respect of frovatriptan and £6.0 million in respect 
of revenue recognised under collaboration and similar
agreements. Turnover for the year ended 30 April 2003 was
£9.1 million and primarily comprised £1.9 million in respect
of frovatriptan and £7.0 million in respect of revenue
recognised under collaboration and similar agreements. 
Research and development expenditure for the eight
months ended 31 December 2003 was £26.9 million 
and included expenditure of £18.1 million on internal 
R&D and £7.0 million on external costs associated 
with development of the product portfolio. In addition,
there was a loss on disposal of intangible assets of 
£1.8 million following the portfolio review. Research 
and development expenditure for the year ended 30 April 
2003 was £30.5 million and included expenditure of
£20.2 million on internal R&D and £10.3 million on
external costs associated with development of the 
product portfolio. 
Administrative expenses for the eight months ended 
31 December 2003 were £10.9 million and comprised
goodwill amortisation of £3.0 million, restructuring 
costs of £2.3 million and other costs of £5.6 million.
Administrative expenses for the year ended 30 April 2003
were £14.3 million and comprised goodwill amortisation
of £1.9 million, restructuring costs of £1.6 million,
terminated deal costs of £1.5 million and other costs of
£9.3 million. The goodwill amortisation has increased as
a result of the acquisition of RiboTargets. Restructuring
costs result from the integration of the three businesses
and will continue to be incurred during H1 2004. Other
administrative costs reflect ongoing business overheads
and have decreased due to cost-reduction initiatives and 
a high level of legal and professional fees in the year ended
30 April 2003. As a result, the operating loss for the eight
During the period the Company adopted a financial 
year end of 31 December. The reported results of 
Vernalis plc for the eight-month period are consolidated
from the results of the three constituent companies 
(British Biotech, Vernalis Group and RiboTargets). 
Financial review months ended 31 December 2003 was £29.4 million
compared with £36.2 million for the year ended 30 April
2003. The operating loss for the eight months ended 
31 December 2003 excluding the effects of the
acquisition of RiboTargets was £17.3 million. 
The charge for loss on disposal of fixed assets for the
eight months ended 31 December 2003 of £3.0 million
reflects the write-down of the property, plant and
machinery at the Oxford location, which was vacated 
in November 2003. The Oxford property is not required
within the business and is being divested. 
Merger transaction expenses for the eight months ended
31 December 2003 of £5.4 million relate to the combination
of British Biotech and Vernalis Group and have been
charged in the profit and loss account in line with the
requirements for merger accounting. The tax credit for the
eight months ended 31 December 2003 of £2.6 million
represents amounts that are expected to be received
under current legislation on research and development 
tax credits for small and medium-sized companies. 
Balance sheet 
Intangible assets at 31 December 2003 were 
£22.9 million (30 April 2003: £28.7 million) and
comprised goodwill of £8.0 million and other intangibles 
of £14.9 million. Other intangibles represented the
capitalisation of payments conditionally due to
GlaxoSmithKline (GSK) to buy out royalties due to GSK 
on sales of frovatriptan. Tangible assets decreased to 
£7.5 million (30 April 2003: £11.6 million) due to the
provision against the Oxford facility described above 
and an excess of depreciation over capital expenditure. 
Debtors decreased to £11.0 million (30 April 2003: 
£12.0 million) with the principal amounts being 
£5.8 million in respect of research and development 
tax credits, £1.7 million in respect of VAT recoverable 
and £1.1 million in respect of trade debtors, principally 
on sales of frovatriptan. 
Cash and short-term investments were £24.2 million
compared with £48.5 million at 30 April 2003. The
reduction in cash and short-term investments of 
£24.3 million included repayment in November 2003 of 
a £7 million convertible loan (plus interest of £0.2 million)
and benefited from the net receipt of £14.4 million from
the placing and open offer completed by Vernalis Group
plc in May 2003. Excluding these amounts, cash and
short-term investments reduced by £31.5 million.
Payments associated with the two business combinations
and related restructuring in the period were £9.0 million. 
Creditors falling due within one year decreased to 
£19.8 million (30 April 2003: £21.0 million). The balance
at 31 December 2003 included £5.6 million due to GSK
and £4.7 million of deferred income. Under the agreement
with GSK to buy out frovatriptan royalties, Vernalis is
committed to making four annual payments of $5 million,
the first payment having been made in September 2002,
and the following three due on each anniversary of the
first payment. A fifth payment of $5 million is due if
cumulative global sales of frovatriptan exceed $300 million.
After discussion with GSK, the payment due in September
2003 was deferred, with $2.5 million paid in March 2004
and $2.5 million payable in September 2004. Creditors
due within one year includes $10 million in respect of
GSK, being $5 million in respect of both the 2004 and 
the September 2003 deferred payments.
Creditors falling due after more than one year reduced to
£8.1 million (30 April 2003: £24.8 million) and principally
comprises $10 million payable to GSK, a mortgage on 
the Oxford facility of £1.2 million and long-term deferred
income of £1.3 million. Creditors due after more than 
one year at 30 April 2003 included £7.0 million in respect 
of a convertible loan. Provisions for liabilities and charges
increased to £4.1 million (30 April 2003: £2.5 million) and
primarily relates to property dilapidation and restructuring.
Tony Weir
Chief Financial Officer
17
Vernalis 
Annual report and accounts 2003 18
Vernalis 
Annual report and accounts 2003
Peter Fellner (60)*
Dr Fellner was appointed as Chairman in January 2003, 
and as Executive Chairman in April 2003. He is also
Chairman of Celltech Group plc, having previously been
Chief Executive since 1990. Before joining Celltech he was
Chief Executive of Roche UK from 1986 to 1990. Prior to
this he was Director of the Roche UK Research Centre, 
and previously Director of Research at Searle UK Research
Laboratories. Dr Fellner is also Chairman of two private
biotechnology companies, Astex Technology Ltd and Ionix
Pharmaceuticals Ltd, and is a director of Isis Innovation Ltd
and a member of the Medical Research Council. 
Simon Sturge (45)*
Mr Sturge was appointed to the Board as Chief Executive
Officer in April 2003. He has more than 20 years’
experience in the pharmaceutical industry. After graduating 
in biology from Sussex University in 1980 Mr Sturge became
Product Manager of Napp Laboratories, Head of Sales and
Marketing at Smiths Industries and Business Development
Manager at Astra Pharmaceuticals. He joined Celltech in
1988 and was appointed Chief Executive of Celltech
Biologics plc (now Lonza Biologics plc) in 1995 before joining
RiboTargets Holdings plc as Chief Executive. He founded
RiboTargets in July 1997 when it was spun out from the
Medical Research Council’s Laboratory of Molecular Biology
with a £7 million venture capital investment. 
John Hutchison (48)
Dr Hutchison was appointed as Development Director on 
1 September 2003 following the merger with Vernalis Group.
Prior to that he was Senior Vice President Development and
Chief Medical Officer of Vernalis Group. In February 2000 
he was appointed a Director of Vernalis Group, where 
he was responsible for drug development, taking potential 
new therapies from early pre-clinical testing through to
registration and commercialisation. He was previously 
a main board director of Cerebrus where he was also
responsible for drug development since joining the company 
in 1997. Dr Hutchison began his industrial career 15 years
ago as a clinical pharmacologist with Fisons, before moving
to Experimental Medicine with Astra Pharmaceuticals Ltd. 
In addition to being a UK registered physician, Dr Hutchison
has a first class Honours degree in Human Physiology and 
a PhD in Neuroscience from the University of Liverpool. 
Dr Hutchison is a Fellow of the Royal College of Physicians
and a Fellow of the Faculty of Pharmaceutical Medicine 
in London.
Tony Weir (43) 
Mr Weir has a degree in Mathematics from Oxford University
and is a Fellow of the Institute of Chartered Accountants.
Following qualification he advised a variety of businesses 
as a financial consultant, joining the Company in 1990 as
Chief Accountant and Company Secretary. In April 1999 
he was promoted to the Board as Finance Director with
responsibility for Finance, Corporate Communications, 
Facilities and IT. Following the combinations with
RiboTargets and Vernalis Group he continues as Chief
Financial Officer. 
Peter Worrall (49) 
Mr Worrall was appointed as Corporate Development
Director on 1 September 2003 following the merger 
with Vernalis Group. Mr Worrall joined Vernalis Group 
in 1993 and was appointed to the Board of that company
in February 1997 as Finance Director. In March 2003, 
he became acting Chief Executive Officer of Vernalis
Group. Prior to joining Vernalis Group, Mr Worrall served
as Finance Director of Danby Medical, which was acquired
by Baxter Healthcare Corporation in 1993. He has over 
22 years’ experience in the healthcare industry, including
seven years with Imed Corporation becoming General
Manager of its UK subsidiary before founding his own
company, Isys Medical, which he sold to Danby in 
1991. He received a Masters degree in Economics 
from St Andrews University and qualified as a chartered
accountant with Arthur Andersen in 1980. 
Board of Directors Carol Ferguson (57)† 
Carol Ferguson was appointed as a Non-Executive Director
on 1 September 2003. She joined the Board of Vernalis
Group as a Non-Executive Director in May 2002. She
began her investment career with Ivory and Sime, an
Edinburgh fund management group. Thereafter she moved
to Wood Mackenzie, then a stock broking company,
becoming a partner in 1984. Her most recent position
was as Finance Director for Timney Fowler, a textiles
company. Her current appointments include the Dental
Practice Board, where she is a non-executive director 
and chairs the Audit Committee, and the Chartered
Accountants Compensation Scheme where she is a non-
executive director. She is also a non-executive director of
Gartmore Smaller Companies Investment Trust plc, Monks
Investment Trust plc and the Association of Investment
Trusts Companies. Ms Ferguson has a Masters degree in
Philosophy and Economics from St Andrews University and
was admitted as a member of the Institute of Chartered
Accountants of Scotland in 1973. 
George Kennedy (63)*†‡
Mr Kennedy was appointed as Deputy Chairman and Senior
Independent Director on 1 September 2003. He was Non-
Executive Chairman of Vernalis Group from May 2000. 
He was previously with Smiths Industries PLC from 1973 
to 2000, where he was appointed to the board in 1983,
becoming Executive Director and Chairman of the Medical
Division. His other current appointments include non-
executive Chairman of Carclo PLC; Chairman of the Inprint
Group, a privately held specialist printing company;
Chairman of Eschmann Holdings Limited, a manufacturer 
of medical equipment; and non-executive director of Isotron
PLC. In August 2000 he was appointed by the Department
of Trade and Industry as Chairman of the Trade Advisory
Group for Africa and the Middle East. He was awarded 
a CBE in 1997 for services to the healthcare industry 
and exports. 
Ian Kent (60)†‡
Appointed to the Board in April 2003, Mr Kent was 
Non-Executive Chairman of RiboTargets. He is also 
a non-executive director of Biofocus plc and Chairman 
of Ardana Bioscience Ltd, Intercytex Ltd, LGC Holdings Ltd
and Etiologics Ltd.
Keith Merrifield (61)*‡
Appointed to the Board in 1995, Mr Merrifield was
formerly a main board director of Wellcome plc from 1990
until its acquisition in 1995 by Glaxo Holdings plc, with
responsibility for marketing and international operations.
Until May 2003, Mr Merrifield was also a non-executive
director of Coats plc. 
Peter Read (65)*†‡
Dr Read was appointed as a Non-Executive Director on 
1 September 2003. He joined the Board of Vernalis Group
as a Non-Executive Director in March 1998. He is a former
Chairman of the Hoechst Group of Companies in the UK
and a past President of the Association of the British
Pharmaceutical Industry. Current appointments include
non-executive directorships of each of Celltech Group plc,
SSL International plc and Innogenetics Group. He is a
board member of the South East of England Development
Agency and chairs its Business Board. He is a Fellow 
of the Royal College of Physicians and of the Faculty 
of Pharmaceutical Medicine. In January 2000 he was
awarded a CBE for services to the pharmaceutical industry.
Eugene Williams (44)†‡
Appointed to the Board in January 2001, Mr Williams 
is also Senior Vice President, Therapeutics and General
Manager of immune mediated diseases at Genzyme Corp.
in the USA. Mr Williams also sits on the board of directors
of Adheris, Inc. 
Board changes 
Mr Kent and Mr Williams will retire from the Board at the 2004 Annual
General Meeting. Mr Merrifield will retire at the end of the year. Mr Tim
Edwards served as an Executive Director during the financial period until
10 September 2003.
19
Vernalis 
Annual report and accounts 2003
Facing page from left: 
Peter Fellner
Simon Sturge
John Hutchison
Tony Weir
Peter Worrall
This page from left:
Carol Ferguson
George Kennedy
Keith Merrifield
Peter Read
* Nominations and Corporate Governance Committee
† Audit Committee 
‡ Remuneration Committee 20
Vernalis 
Annual report and accounts 2003
Report of the Directors
The Directors are pleased to present their annual report on the affairs of the Group, together with the financial
statements and auditors’ report, for the eight-month period ended 31 December 2003.
Principal activity
The principal activity of the Group during the period was pharmaceutical research and development (see Chief Executive
Officer’s review of operations).
Results and dividends
The turnover of the Group during the period was £8,631,000 (April 2003: £9,143,000). The loss after taxation
amounted to £34,219,000 (April 2003: £30,586,000). The Directors do not recommend the payment of a dividend
(April 2003: nil). 
Substantial shareholdings
At 30 April 2004, the Directors had been notified of the following disclosable holdings representing three per cent, 
or more, of the issued share capital of the Company.
Shareholder having a major interest Number of shares held % of issued shares
Amvescap plc 41,909,773 29.49
Apax (OCS) Nominees Limited 12,143,679 8.54
Jupiter Asset Management Limited 8,529,960 6.00
HBOS plc 7,060,123 4.97
JP Morgan Partners (BHCA) Limited 5,294,086 3.73
Fidelity Investment Services Limited 5,257,295 3.70
Advent 4,873,605 3.43
Legal & General Investment Management Limited 4,335,781 3.05
Directors
The Directors of the Company who served during the year were:
Executive
Dr P J Fellner (Executive Chairman) 
S J Sturge (Chief Executive Officer)
Dr J B Hutchison (appointed 1 September 2003)
A J Weir
P B Worrall (appointed 1 September 2003) 
T P W Edwards (resigned 10 September 2003)
Non-Executive
C C Ferguson (appointed 1 September 2003)
G M Kennedy (appointed 1 September 2003)
I F Kent 
K J Merrifield
Dr P R Read (appointed 1 September 2003)
E W Williams
Re-election At the forthcoming Annual General Meeting, Mr Kent, Mr Merrifield and Mr Williams will retire by rotation. 
Mr Merrifield, being eligible, will be proposed for re-election. None of the Directors retiring by rotation has a service
contract with the Company. 
it is the Board’s considered opinion that Mr Merrifield has excellent commercial experience and that he will be able to
make a valuable contribution towards the Company’s efforts to find a new commercialisation partner for frovatriptan
prior to his retirement at the end of 2004.
Directors’ interests Details of the beneficial interests of the Directors and their families in the ordinary shares of the
Company, as disclosed in the Register of Directors’ Interests, are given in the remuneration report. 
Share option schemes The Directors remain committed to the principle that all employees should be able to participate
in the Group’s progress through share ownership schemes. Details of the Company’s share option schemes are given
on pages 27 to 29.
Important events since the year end 
On 30 March 2004 the Company announced it had reached agreement with Elan to reacquire the North American rights
for frovatriptan, subject to shareholder approval. The agreement was approved by shareholder vote at an Extraordinary
General Meeting of the Company held on 13 May 2004. Health, safety and the environment
The Company has well-developed health and safety policies and procedures, safeguarding staff, contractors and visitors,
and it complies with current legislation and best practice. The Company follows principles to minimise the impact of its
activities on the environment by reducing waste and, wherever possible, recycling. Mr Weir is the Executive Director
responsible for health, safety and the environment.
Health and safety is managed on each site through committees with competent persons representing all disciplines and
with external expert support. The Company’s health and safety policies and procedures are published on the Company’s
intranet and are readily available in hard copy; they form a key component in the staff induction programme. Appropriate
health and safety training is provided (for example manual handling, fire safety, cylinder gas safety) with quarterly
internal safety audits, and annual audits by specialists and governmental agencies (for example the Environment
Agency). No significant issues have been identified by these audits. Risk and COSHH assessments are regularly
reviewed and updated as necessary.
Waste is minimised with packaging and containers returned to suppliers where possible. Paper waste is recycled and
confidential paper waste is shredded on site and recycled. The Company does not knowingly discharge toxic materials
into the environment other than very small amounts via fume cupboard extraction systems, arising from small scale
synthetic chemistry, and low-level radioactive waste which is discharged into public drainage, as permitted under our
Certificate of Authorisation from the Environment Agency. 
The Group made no charitable or political contributions (April 2003: nil). 
Employee involvement 
The Group believes it is important that employees are aware of the Group’s business strategy and objectives, to assist
them to focus on working towards these goals. Communications at the time of key announcements, including
presentations by Directors to all employees, together with briefings throughout the year, are part of the communication
and consultation programme. In addition, regular meetings are held with staff and managers, both to raise issues and
to assist with the two-way flow of information. The Company has an elected staff consultative group which meets on 
a regular basis, and email and the Company’s intranet site are used to update employees. The Group also actively
encourages and financially supports a wide range of sports and social functions, many of which are organised by the
Sports and Social Club. 
Further education, training and development
Continuing education, training and development are important to ensure the future success of the Group. The Group
supports individuals who wish to obtain appropriate further education qualifications.
Equal opportunities
The Group operates an equal opportunities policy. Full consideration is given to all job applicants who can demonstrate
that they have the necessary skills and abilities. All employees accept the commitment within this policy that the Group
will not allow pressure to discriminate or harassment by employees or others acting on the Group’s behalf, in respect 
of sex, race, nationality, disability or religious or political beliefs.
Payment of creditors
The Group does not follow a specific payment code but has a policy to pay its suppliers in accordance with the specific
terms agreed with each supplier. The number of days’ purchases outstanding at 31 December 2003 for the Group was
32 days (30 April 2003: 75 days). The Company has negligible trade creditors. 
Annual General Meeting
The notice convening the Annual General Meeting of the Company together with explanatory notes on the proposed
resolutions accompanies this report. The meeting will be held at 11am on Thursday 24 June at Ironmongers’ Hall,
Shaftesbury Place, Aldersgate Street, Barbican, London EC2Y 8AA. In addition to the ordinary business, shareholders
will be asked to approve two ordinary resolutions and one special resolution relating to, respectively, the approval of the
remuneration report, the renewal of the authority of the Directors to allot shares, and the disapplication of pre-emption
rights in certain circumstances. 
International Financial Reporting Standards
In June 2002, the Council of the European Union adopted a regulation requiring listed companies in its member states
to prepare their consolidated financial statements in accordance with International Financial Reporting Standards (IFRS).
Under this regulation the Group will prepare its first financial statements under IFRS during the year ending 
31 December 2005. A project to implement the conversion from UK GAAP to IFRS is under way. 
By Order of the Board
Jonathan Bond
Company Secretary
13 May 2004
21
Vernalis 
Annual report and accounts 2003 22
Vernalis 
Annual report and accounts 2003
Remuneration report 
This report covers the eight-month period ended 31 December 2003 with comparative figures provided for the year
ended 30 April 2003. It has been prepared in compliance with the UKLA Listing Rules, the Combined Code (as it applied
to the Company for the period ended 31 December 2003), and the Companies Act 1985 as amended. In accordance
with the Companies Act 1985, a resolution to approve the remuneration report will be proposed at the Company’s
Annual General Meeting on 24 June 2004. Details of the resolution may be found in the notice of the meeting
accompanying this annual report. The vote will be advisory and will be considered carefully by the members of the
Remuneration Committee in the formulation and approval of the Company’s future remuneration policies. 
The Remuneration Committee
The Remuneration Committee (“the Committee”) is made up entirely of independent Non-Executive Directors of the
Company and met four times during the financial period. Mr K J Merrifield is the Chairman of the Committee with 
Mr E W Williams, Mr I F Kent, Mr G M Kennedy and Dr P R Read as its other members. Mr Kennedy and Dr Read 
were both appointed to the Committee on 18 September 2003. Where appropriate the Committee invited the views 
of the Executive Chairman, Chief Executive Officer and Director of Human Resources, and from external remuneration
consultants Deloitte & Touche. Deloitte & Touche was appointed at the behest of the Committee and has not provided
any other services to the Company during the financial period. 
Policy on employee remuneration
The Company’s policy on the remuneration of employees, including Executive Directors, is established by the Committee
and approved by the Board. The overall budget for remuneration of employees and the individual remuneration packages
of each Executive Director and senior employee is determined by the Committee. No Executive Director or employee
participates in discussions relating to the setting of their own remuneration. 
The objective of the Company’s remuneration policies is that all employees, including Executive Directors, should
receive appropriate remuneration given their performance, scale of responsibility, skills and experience. Remuneration
packages enable the Company to attract and retain key employees by ensuring they are remunerated appropriately 
and competitively and that they are motivated to achieve the highest level of Company performance in line with the 
best interests of shareholders. A proportion of remuneration is performance-related, see details below. Performance
conditions for performance-related bonus and long-term incentives are designed with a view to alignment of executive
and shareholder interests. The Committee believes that the performance conditions are demanding and appropriate, in
that they measure value for shareholders when compared with comparable companies. Share options under the current
Share Option Plan will only become exercisable in full if the Company’s share price growth equals or exceeds that of the
upper quartile company in the FTSE Small Cap Index and no option will be exercisable if share price growth is below that
of the median company. Options currently held by Executive Directors are subject to various performance conditions
which are set out on page 27.
Policies on remuneration take account of the pay structure and employment conditions within the Group and also the
industry sector. To determine the elements and level of remuneration appropriate to each employee and Executive
Director, the Committee considers remuneration levels in comparable biotechnology and pharmaceuticals companies,
reviews pay and benefits surveys relating to industry sector or professional specialism and considers individual skills,
experience and performance. 
Components of remuneration
Employees’ remuneration currently comprises annual salary, a performance-related bonus, a long-term incentive in 
the form of share options, pension contributions and other benefits.
Annual salary The Committee approves the overall budget for employee salary increases and specific increases for
Executive Directors and other members of the Management Team (MT). In determining appropriate salary levels for each
Executive Director and senior employee, the Committee considers both the nature and the status of the Company’s
operations and the responsibilities, skills, experience and performance of each Executive Director and other members
of the MT. The Committee compares the Company’s remuneration packages for its employees with those for employees
of similar seniority in companies whose activities are comparable with the Group and with which it competes for staff. 
Performance-related bonus All employees participate in a performance-related bonus scheme. The level of bonus, 
if any, is based on overall Group performance and, in the case of Executive Directors and senior employees, 
on individual performance measures against criteria established at the beginning of the financial year. 
Maximum bonus levels are 50 per cent of salary for Executive Directors, between 15 and 40 per cent for senior
employees and between four and 10 per cent of salary for other employees. Bonuses are awarded wholly in cash.
Performance-related bonuses were paid to the Directors of Vernalis Group just prior to the merger with British Biotech 
as detailed in the tables on page 25. No bonuses were paid during the period to the Directors of Vernalis plc. Long-term incentives The Board believes that long-term incentive schemes are important in retaining and recruiting 
high-calibre individuals and ensuring that the performance of executives is focused on creating long-term shareholder
value whilst allowing the Company’s cash reserves to be conserved.
Pensions benefits All employees are invited to participate in either a Group Personal Pension Plan or an Occupational
Pension Scheme. The only pensionable element of remuneration is annual salary. All schemes are money purchase 
in nature and have no defined benefits. During the period, the Group contributed a maximum of 10 per cent of base
salary in relation to employees, 15 per cent in relation to senior employees and 19 per cent in relation to Executive
Directors to the schemes. The Group has no obligation to the pension scheme beyond the payment of contributions.
Other benefits All employees are also entitled to private health insurance, the cover being extended to spouse and family
for Executive Directors and some senior employees. Terms and conditions of service for employees will be harmonised 
in 2004.
Chairman’s remuneration
The remuneration of the Company’s Chairman is determined by the Committee, led by the Deputy Chairman and Senior
Non-Executive Director, in the absence of the Chairman, after taking into account appropriate professional advice. 
The Chairman receives an annual salary, but does not participate in the performance-related bonus scheme or pension
scheme, nor does he receive any other benefits. In addition to his salary, under the terms of his contract he is entitled 
to receive certain fixed bonus payments once the Company’s share price has reached pre-determined levels, payment
being conditional on exercise of a corresponding part of the option referred to below and such payment being equal 
to approximately half of the option price payable by the Chairman in respect of such options (see table on page 28). 
Appointment of Directors and service contracts
The Company’s policy in entering into service contracts with Executive Directors, including the Chairman, is to enable
the recruitment of high-quality executives and to obtain protection from their sudden departure to competitor
companies. In addition, service contracts are an important element in maintaining maximum protection for the Group’s
intellectual property rights and other commercially sensitive information. All service contracts are approved by the
Committee and are one-year rolling contracts. Each service contract may be terminated by mutual agreement or by
either party giving 12 months notice to the other. If an Executive Director is guilty of serious misconduct, serious 
breach (after due warning) or persistent breach of failure to carry out his duties then the Company is entitled summarily
to terminate his service contract without notice and without paying compensation in respect of that termination. 
Should an Executive Director be dismissed he would receive a sum equal to 12 months’ pay and benefits 
(unless for gross misconduct, or the like, where no payments would be made). 
The service agreements of Dr Fellner and Mr Sturge were made on 21 March 2003 and came into effect on completion
of the acquisition of RiboTargets Holdings plc on 23 April 2003. The service agreement of Mr Weir was made on 
24 June 1999. The service agreements of Dr Hutchison and Mr Worrall were made on 2 July 2003 and came into 
effect on the offer to acquire the entire issued share capital of Vernalis Group plc becoming unconditional on 
1 September 2003. 
Mr Edwards’ service agreement was made on 24 June 1999. Mr Edwards resigned from the Board on 10 September
2003 and ceased employment on 26 September 2003. Mr Edwards received a compensation payment for loss 
of office. He has subsequently provided consulting services to the Company. Full details of his compensation for 
loss of office are given in the Directors’ remuneration section on page 24.
Non-Executive Directors’ appointments and remuneration
Non-Executive Directors are appointed by letter of engagement for periods not exceeding three years. They receive fees
for services as members of the Board and its committees and the Chair of each Board committee is paid an additional
fee for performing that role. Mr Kennedy is also paid additional remuneration to reflect his additional responsibilities 
as Deputy Chairman. The level of fees is determined by the Chairman after taking into account appropriate advice. 
Mr Kent, Mr Merrifield and Mr Williams signed new appointment letters dated 21 March 2003, which became effective
on 23 April 2003. Mr Kent’s appointment is for a fixed term of three years to 22 April 2006. Mr Merrifield, who was
appointed in December 1995, also has a current fixed term to 22 April 2006. Mr Williams’ appointment, which 
was effective from 26 January 2001, terminated on 25 January 2004 but has been rolled over to 24 June 2004. 
Ms Ferguson, Mr Kennedy and Dr Read signed new appointment letters dated 17 July 2003, each of which letters
became effective on 1 September 2003. Each of Ms Ferguson, Mr Kennedy and Dr Read has an appointment for 
a fixed term of three years to 30 August 2006. 
All of these appointments are subject to the Directors being re-elected under the rotation provisions in the Company’s
Articles of Association, and subject to Companies Act provisions and there is a reference to retirements by rotation 
at the 2004 AGM on page 20. Each Non-Executive Director still serving at the end of his/her term will have his/her
appointment reviewed by the Board and a further term of office may be agreed. Where a Non-Executive Director does
not serve until the end of his/her term, the policy is to pay the fees due pro rata to the date of cessation. 
23
Vernalis 
Annual report and accounts 2003 24
Vernalis 
Annual report and accounts 2003
Remuneration report continued
TSR performance 
The chart below shows the Company’s total shareholder return (TSR) performance over the period 1 May 1998 
to 31 December 2003 alongside the performance of the FTSE Small Cap Index and meets the requirements of
Schedule 7A to the Companies Act 1985. This index is considered suitable as the Company was a constituent 
member during the period. 
Total shareholder return for the five financial years to 31 December 2003
Directors’ remuneration (audited)
Performance- Compensation December April December April
related for loss 2003 2003 2003 2003
Salary/fees Benefits bonus of office Total Total Pension Pension
£000 £000 £000 £000 £000 £000 £000 £000
Executive
Dr P J Fellner (Chairman) 136––– 136 37(iv) – –
S J Sturge (CEO) 200 9 – – 209 7(iv) 38 –
Dr J B Hutchison (ii), (v) 59 4 – – 63 – 11 –
A J Weir 120 9 – – 129 225 23 31
P B Worrall (ii), (v) 75 4 – – 79 – 14 –
TPW Edwards (i) 99 5 – 302 406 276 18 40
Dr E P Goldstein (iii) –––– – 749 – 40
689 31 – 302 1,022 1,294 104 111
Performance- Compensation December April December April
related for loss 2003 2003 2003 2003
Salary/fees Benefits bonus of office Total Total Pension Pension
£000 £000 £000 £000 £000 £000 £000 £000
Non-Executive
C C Ferguson (ii), (v) 11––– 11 – – –
I F Kent 27––– 27 2 – –
G M Kennedy (ii), (v) 20––– 20 – – –
K J Merrifield 23––– 23 23 – –
Dr P R Read (ii), (v) 11––– 11 – – –
E W Williams 23––– 23 23 – –
C Hampson (iii) –––– – 60 – –
Dr P A Nicholson (iii) –––– – 15 – –
PG Rogerson (iii) –––– – 23 – –
115––– 115 146––
Total 804 31 – 302 1,137 1,440 104 111
0
20
40
60
80
100
120
140
160
180
April 1999 April 2000 April 2001 April 2002 April 2003 Dec 2003
TSR (rebased to 100 at 1 May 1999)
Financial year end
Vernalis FTSE Small Cap (excluding investment trusts) Source: Datastream i) Remuneration from 1 May 2003 to 26 September 2003 (date of resignation as director 10 September 2003).
Compensation for loss of office was paid in cash and was based on his 12-month notice period. In addition 
to the compensation for loss of office, an amount of £150,000 was paid in respect of consultancy provided 
by Mr Edwards following his resignation.
ii) Remuneration from date of appointment, 1 September 2003.
iii) Remuneration from 1 May 2002 to date of resignation.
iv) Remuneration from date of appointment to 30 April 2003.
v) During the period (and for the year ended 30 April 2003), the remuneration paid by Vernalis Group plc to the
Directors of Vernalis plc is set out below.
Performance- Compensation December April December April
related for loss 2003 2003 2003 2003
Salary/fees Benefits bonus of office Total Total Pension Pension
£000 £000 £000 £000 £000 £000 £000 £000
PB Worrall (vi) 76 – 23 – 99 226 – –
Dr J B Hutchison (vii) 52 5 23 – 80 201 8 18
GM Kennedy 18 – 50 – 68 55 – –
Dr P R Read 11––– 11 39 – –
CC Ferguson 11––– 11 39 – –
168 5 96 – 269 560 8 18
vi) On 1 September 2003, 16,137 Ordinary shares of 10 pence each in Vernalis Group plc awarded to Mr Worrall
under that company’s Restricted Share Scheme vested and were transferred to him.
vii) Dr Hutchison’s performance-related bonus includes £5,250 under-accrued in the previous accounting period.
Comparatives have not been restated for this.
During the period (and for the year ended 30 April 2003), the remuneration paid by Vernalis Group plc to other Directors
of that company is set out below.
Performance- Compensation December April December April
related for loss 2003 2003 2003 2003
Salary/fees Benefits bonus of office Total Total Pension Pension
£000 £000 £000 £000 £000 £000 £000 £000
Dr C T Dourish (viii) 57 6 12 – 75 223 16 14
RG Mansfield (ix) –––– – 755 – –
Sir William Asscher –––– – 8 – –
ME Jaffe 28––– 28 32 – –
85 6 12 – 103 1,018 16 14
viii) Dr Dourish’s performance-related bonus includes an adjustment for £5,950 over-accrued in the previous accounting
period. Comparatives have not been restated for this.
ix) In September 2003 Mr Mansfield realised a gain of £9,687 on the exercise of 101,964 share options in Vernalis
Group plc with an exercise price of 59 pence per share.
Total emoluments of the highest-paid Director, excluding pension contributions, amounted to £406,000 (April 2003:
£749,000). Pension contributions made during the period for the highest-paid Director were £18,000 (April 2003:
£40,000). The Company’s policy is not to pay an expense allowance to Directors. 
25
Vernalis 
Annual report and accounts 2003 26
Vernalis 
Annual report and accounts 2003
Remuneration report continued
Directors’ options (audited) 
At 1 May Granted Lapsed At 31 December Exercise Date from 
2003 in the period in the period 2003 price which Performance 
Number Number Number Number £ exercisable Expiry date conditions
T P W Edwards
Executive Scheme 2,500 – – 2,500 47.00 Apr 2000 Sep 2004 (iv)
2,500 – – 2,500 47.00 Apr 2002 Sep 2004 (v)
3,540 – – 3,540 20.30 Dec 2000 Sep 2004 (iv)
3,540 – – 3,540 20.30 Dec 2002 Sep 2004 (v)
6,250 – – 6,250 8.00 Sep 2001 Sep 2004 (iv)
6,250 – – 6,250 8.00 Sep 2003 Sep 2004 (v)
12,500 – – 12,500 4.40 Jul 2002 Sep 2004 (iv)
12,500 – – 12,500 4.40 Jul 2004 Jan 2005 (v)
Option Plan 717,940 – – 717,940 0.585 Sep 2003 Sep 2004 (viii)
Bonus Scheme 1,500 – – 1,500 1.00 Apr 1999 Apr 2004 (i)
1,850 – – 1,850 1.00 Jul 1998 Sep 2004 (i)
3,700 – – 3,700 1.00 Jul 2000 Sep 2004 (i)
62,500 – (62,500) – 1.00 Jul 2002 Jul 2003 (vi)
62,500 – – 62,500 1.00 Aug 2003 Sep 2004 (vii)
899,570 – (62,500) 837,070
Dr P J Fellner
Option Deed 2,670,071 – – 2,670,071 1.00 Apr 2003 Apr 2013 (ix)
2,670,071 – – 2,670,071
Dr J B Hutchison
Share Option Plan – 431,138 – 431,138 0.835 Oct 2006 Oct 2013 (viii)
– 431,138 – 431,138
S J Sturge
Share Option Plan 1,367,520 – – 1,367,520 0.585 Apr 2006 Apr 2013 (viii)
1,367,520 – – 1,367,520
A J Weir
1992 Scheme 2,708 – (2,708) – 6.52 Jul 1996 Jul 2003 (i)
5,077 – – 5,077 7.19 Jul 1997 Jul 2004 (ii)
7,615 – – 7,615 7.19 Jul 1999 Jul 2004 (iii)
Executive Scheme 1,202 – – 1,202 42.00 Dec 2000 Dec 2006 (iv)
1,202 – – 1,202 42.00 Dec 2001 Dec 2006 (v)
3,078 – – 3,078 20.30 Dec 2000 Dec 2007 (iv)
3,078 – – 3,078 20.30 Dec 2002 Dec 2007 (v)
6,250 – – 6,250 8.00 Sep 2001 Sep 2008 (iv)
6,250 – – 6,250 8.00 Sep 2003 Sep 2008 (v)
12,500 – – 12,500 4.40 Jul 2002 Jul 2009 (iv)
12,500 – – 12,500 4.40 Jul 2004 Jul 2009 (v)
Share Option Plan 615,380 – – 615,380 0.585 Apr 2006 Apr 2013 (viii)
SAYE Scheme 370 – – 370 5.60 Oct 2003 Mar 2004 (i)
Bonus Scheme 98 – – 98 1.00 Jul 1997 Jul 2004 (i)
196 – – 196 1.00 Jul 1999 Jul 2004 (i)
1,608 – – 1,608 1.00 Jul 1998 Jul 2005 (i)
3,217 – – 3,217 1.00 Jul 2000 Jul 2005 (i)
62,500 – (62,500) – 1.00 Jul 2002 Jul 2007 (vi)
62,500 – – 62,500 1.00 Aug 2003 Aug 2008 (vii)
807,329 – (65,208) 742,121
P B Worrall
Share Option Plan – 550,898 – 550,898 0.835 Oct 2006 Oct 2013 (viii)
Total 5,744,490 982,036 (127,708) 6,598,818
None of the Non-Executive Directors who served during the financial period (Ms Ferguson, Mr Kent, Mr Kennedy, 
Mr Merrifield, Dr Read or Mr Williams) held share options at any time during the period.  Performance conditions Option awards are subject to share price growth performance conditions as compared with the
following various comparators:
i) No performance conditions apply to the bonus scheme options
ii) RPI
iii) Pharmaceuticals Index
iv) Median FTSE 100
v) Upper quartile FTSE 100
vi) Progressively as share price increases from £9.00 to £18.00 by July 2003. These options have now lapsed.
vii) Progressively as share price increases from £5.00 to £8.00 by July 2004
viii) See Share Option Plan description below
ix) See Option Deed in respect of the Chairman below
No price was paid for the grant of options, nor were any options exercised by Directors during the year.
The market price of the Company’s shares at 31 December 2003, the last working day of the financial year, was 
66 pence.
During the period, the market price of the Company’s shares ranged from 57 pence to 84 pence (year to 30 April 2003:
44 pence to 250 pence).
Directors’ interests in shares
The table below sets out the interests of the Directors in the Company’s shares. There have been no changes 
in Directors’ interests in shares since 31 December 2003.
5 pence Ordinary shares owned
5 pence Ordinary shares owned at 30 April 2003
at 31 December 2003 or date of appointment 
Number Number
Dr P J Fellner 50,000 50,000
C C Ferguson 27,810 27,810
Dr J B Hutchison 35,811 35,811
G M Kennedy 29,274 29,274
K J Merrifield 1,500 1,500
Dr P R Read 2,583 2,583
S J Sturge 56,435 56,435
A J Weir 51,728 51,728
P B Worrall 94,349 94,349
Mr A J Weir is the holder of the 33,375,891 deferred shares of 95 pence each that result from the capital
reorganisation in April 2003. The deferred shares are only of negligible monetary value (see note 19 to the financial
statements). 
Share option schemes
The Company currently operates two share option schemes, the Share Option Plan (which comprises an Inland Revenue-
approved company share option plan and an option plan that has not been approved by the Inland Revenue) and the 
SAYE Plan, under which grants of options may be made. Option incentive arrangements under the British Biotech Group
1992 Share Option Scheme (the “1992 Scheme”), the British Biotech Executive Share Option Scheme (the “Executive
Scheme”); the British Biotech SAYE Share Option Scheme (the “SAYE Scheme”) and the British Biotech Deferred Share
Bonus Scheme (the “Bonus Scheme”) remain in place but will not be operated again. The total number of shares that
have been, or may be issued in pursuance of rights granted after 18 September 1996, under the Share Option Plan, 
SAYE Plan, Executive Scheme, the SAYE Scheme and the Bonus Scheme may not exceed 10 per cent of the issued share
capital of the Company at any time. The performance criteria are stated in the tables above and relate directly to share
price performance. These criteria were chosen as being in the best interests of shareholders after consideration of the
particular circumstances of the Company. 
In addition, the Company has provided options by deed for the Chairman (see below).
Share Option Plan
Eligibility Employees and Executive Directors of the Company, other than those within two years of their normal
retirement date, will be able to participate in the Share Option Plan at the discretion of the Committee. 
27
Vernalis 
Annual report and accounts 2003 28
Vernalis 
Annual report and accounts 2003
Remuneration report continued
Exercise of options Options will normally be exercisable between three and 10 years following grant provided that 
any performance target set by the Committee has been satisfied. Following shareholder consultation and as detailed 
in the Listing Particulars dated 25 July 2003, the performance conditions for options granted on 23 April 2003 were
harmonised with options granted during the period and going forward. The performance condition is share price growth
against the FTSE Small Cap Index. No options will vest if performance is below median; 50 per cent of the shares under
options will vest at median and there will only be full vesting if the Company’s share price performance is in the upper
quartile (with options vesting pro rata between median and upper quartile). These conditions are considered appropriate
in that the focus on delivering shareholder value is retained whilst being simple to measure and communicate.
SAYE Plan
The SAYE Plan is a save-as-you-earn share option scheme approved by the Inland Revenue. No Plan offer was made 
to employees or Directors during the period.
Option deed in respect of the Chairman (audited)
A share option over 2,670,071 shares was granted to the Chairman in April 2003. The grant was made under an option
deed made by British Biotech plc with the Chairman. The exercise price is 100 pence per share. The option will vest and
become exercisable as follows: 
Shares subject to the option vesting % Vernalis share price equal to or greater than
50 100p
25 200p
25 300p
For the option to vest in respect of any of the percentages of shares, the Vernalis target share price must be met 
(using the mid-market closing price as quoted in the daily official list of the London Stock Exchange) over 30 consecutive
trading days. 
The option will vest on a change of control of Vernalis to the extent that the Vernalis share price has reached the target
set out above. 
Outstanding options (audited)
At 31 December 2003 the following options over shares had been granted to employees and Directors and remained
outstanding.
1992 Scheme
Date of grant Exercise period Number of shares Exercise price £ 
05 July 1994 July 1997 – July 2004 12,692 7.19
05 July 1994 July 1999 – July 2004 17,769 7.19
20 October 1995 October 1998 – October 2005 2,481 16.39
20 October 1995 October 2000 – October 2005 3,803 16.39
36,745
Executive Scheme
Date of grant Exercise period Number of shares Exercise price £ 
16 December 1996 December 2000 – December 2006 2,460 42.00
16 December 1996 December 2001 – December 2006 2,460 42.00
14 April 1997 April 2000 – April 2007 2,500 47.00
14 April 1997 April 2002 – April 2007 2,500 47.00
10 July 1997 July 2000 – July 2007 517 31.00
10 July 1997 July 2002 – July 2007 517 31.00
15 December 1997 December 2000 – December 2007 25,201 20.30
15 December 1997 December 2002 – December 2007 14,842 20.30
30 September 1998 September 2001 – September 2008 22,500 8.00
30 September 1998 September 2003 – September 2008 53,750 8.00
01 July 1999 July 2002 – July 2009 35,125 4.40
01 July 1999 July 2004 – July 2009 75,000 4.40
26 January 2000 January 2003 – January 2010 7,500 6.00
26 January 2000 January 2005 – January 2010 5,000 6.00
249,872 SAYE Scheme
Date of grant Exercise period Number of shares Exercise price £ 
27 August 1996 October 2003 – March 2004 104 37.20
20 August 1998 October 2003 – March 2004 7,022 5.60
7,126
Bonus Scheme
Date of grant Exercise period Number of shares Exercise price £ 
14 April 1997 April 1999 – April 2004 1,500 1.00
10 July 1997 July 1997 – July 2004 240 1.00
10 July 1997 July 1999 – July 2004 480 1.00
31 July 1998 July 1998 – July 2005 5,050 1.00
31 July 1998 July 2000 – July 2005 8,458 1.00
01 July 1999 July 2001 – July 2006 5,483 1.00
26 January 2000 January 2002 – January 2007 10,000 1.00
17 July 2000 July 2002 – July 2007 46,886 1.00
13 December 2000 December 2002 – December 2007 2,712 1.00
13 February 2001 February 2003 – February 2008 2,500 1.00
22 August 2001 August 2003 – August 2008 367,530 1.00
06 January 2003 January 2005 – January 2010 52,000 1.00
502,839
Option Plan
Date of grant Exercise period Number of shares Exercise price £ 
23 April 2003 April 2006 – April 2013 2,700,840 0.59
03 October 2003 October 2006 – October 2013 3,858,036 0.835
6,558,876
Option Deed
Date of grant Exercise period Number of shares Exercise price £ 
23 April 2003 April 2003 – April 2013 2,670,071 1.00
2,670,071
Approved by the Board of Directors
Keith Merrifield
Chairman, Remuneration Committee
13 May 2004
29
Vernalis 
Annual report and accounts 2003 30
Vernalis 
Annual report and accounts 2003
Corporate governance
The Combined Code
The Company is committed to practising good corporate governance of its affairs as part of its management of
relationships with its shareholders and other stakeholders. The Company seeks to uphold, and to report on compliance
with, best practice in corporate governance.
The Combined Code, issued in June 1998 and now appended to the Listing Rules, sets out principles of good 
corporate governance for listed companies and requires listed companies to disclose in their annual report how 
they have applied the principles and complied with the detailed provisions set out. The Company’s formal compliance
statement (on page 34) will relate to compliance with the version of the Code (pre-“Higgs”) that applies to the Company
for the financial period ending 31 December 2003: however, this report also includes some early reporting against the
new Code published by the Financial Reporting Council on 23 July 2003 (“the New Code”). 
The principles set out in the Combined Code cover four areas: the Board, Directors’ remuneration, accountability and
audit and relations with shareholders. With the exception of Directors’ remuneration (which is dealt with separately in
the remuneration report) the following section sets out how the Board has applied such principles.
The Board 
The Board of the Company is responsible for the Group’s system of corporate governance. The Board currently
comprises 11 Directors: an executive Chairman, Dr P J Fellner; a Chief Executive Officer, Mr S J Sturge; three other
Executive Directors and six Non-Executive Directors. The role of Non-Executive Directors is to ensure that independent
judgement is brought to Board deliberations and decisions. The Non-Executive Directors possess a wide range of skills
and experience, relevant to the development of the Company, which complement those of the Executive Directors. 
All Non-Executive Directors are considered by the Board to be independent. Mr G M Kennedy, the Deputy Chairman, 
is currently the Company’s Senior Independent Director; Mr K J Merrifield was Senior Independent Director until 
1 September 2003. 
The Chairman was also Chairman of Celltech Group plc throughout the financial period.
All Directors are required to retire and submit themselves for re-election at the first Annual General Meeting after
appointment and at least every three years. Subject to their re-election and Companies Act provisions, the Non-
Executive Directors are appointed for specified terms. 
The Board has agreed procedures for Directors to follow if they believe they require independent professional advice in
the furtherance of their duties and these procedures allow the Directors to take such advice at the Company’s expense.
In addition, all the Directors have direct access to the impartial advice and services of the Company Secretary. The
Company Secretary is accountable to the Board through the Chairman on governance matters. It is the responsibility 
of the Company Secretary to ensure that Board procedures are followed and all rules and regulations are complied 
with. Under the direction of the Chairman, the Company Secretary’s responsibilities include facilitating induction and
professional development, and ensuring the smooth flow of information within the Board and its committees, and
between Non-Executive Directors and senior management. Removal of the Company Secretary is a matter which is
specifically reserved for the Board’s consideration. Any new Director receives a comprehensive, formal and tailored
induction into the Company’s operations. Appropriate training is provided to new Directors and is also available to 
other Directors as required. 
The terms of reference of the Chairman and Chief Executive Officer have been agreed with the Board and, in
accordance with best practice, their roles remain separate. These terms of reference were reviewed in light of the
Chairman assuming executive responsibilities on 23 April 2003, and were revised in January 2004. 
As part of its leadership and control of the Company, the Board has agreed a list of items that are specifically reserved
for its consideration. This list was revised in January 2004. These include business strategy, financing arrangements,
material acquisitions and divestments, approval of the annual budget, major capital expenditure projects, risk
management, treasury policies and establishing and monitoring internal controls. At each meeting, the Board reviews
strategy and progress of the Group towards its objectives, particularly in respect of research and development projects,
and monitors financial progress against budget.
The Board meets on a regular basis approximately every two months, with additional meetings when circumstances 
and urgent business dictate. In the financial period under review, five meetings of the full Board were held and six 
of a Board committee established in connection with the merger of British Biotech plc and Vernalis Group plc to form
Vernalis plc. There has been full attendance by directors at each of these five full Board meetings. All Directors receive
an agenda and board papers in advance of meetings so that they can make an effective contribution at the meeting. 
In addition, regular informal contact is maintained with Non-Executive Directors. The Board makes full use of appropriate
technology as a means of updating and informing all its members.  While the Board retains overall responsibility for, and control of, the Company, day-to-day management of the business
is conducted by the Executive Directors. Review of the Group’s principal projects is the responsibility of the Management
Team (MT), which meets every week and comprises the Executive Directors and certain senior employees.
Board committees
In accordance with best practice, the Company has established Audit, Nominations and Corporate Governance, and
Remuneration Committees with written terms of reference for each that deal with their authorities and duties. The Board
has also established an independent Safety Review Board.
Audit Committee The Audit Committee is made up entirely of Non-Executive Directors. During the financial period it was
chaired by Mr Kent with Mr Williams, Mr Merrifield (until 18 September 2003), Ms Ferguson, Mr Kennedy and Dr Read
(all from 18 September 2003) as its other members. Ms Ferguson succeeded Mr Kent as Chair as from 21 January
2004. The Audit Committee is responsible for reviewing the Group’s annual accounts and interim reports prior to 
their submission for approval to the full Board. This committee also monitors the Group’s accounting policies, internal
financial control systems and financial reporting procedures. The Audit Committee provides a forum through which 
the Group’s external auditors report to the Board and meets at least once a year with the auditors in the absence of
executive management. In addition, the Audit Committee monitors the scope and results of the audit, the independence
and objectivity of the auditors and their performance, confirms their re-appointment, agrees the level of audit fees, and
monitors the provision of non-audit services provided by the auditors. The Audit Committee held five meetings during the
period under review. Mr Williams was unable to attend two of these meetings but save for that all members attended all
five meetings. 
Nominations and Corporate Governance Committee The Nominations and Corporate Governance Committee was
chaired by Mr Merrifield until 18 September 2003 and thereafter has been chaired by Mr Kennedy (who also became 
a member from that date). The other current members are Dr Fellner, Mr Sturge (from 18 September 2003) and 
Dr Read (from 18 September 2003). Mr Williams was a member during the financial period until 18 September 2003.
The Committee is responsible to the full Board for determining the qualities and experience required of the Company’s
Executive and Non-Executive Directors and for identifying suitable candidates. In appropriate cases, recruitment
consultants assist in the process. The Committee is also responsible for succession planning and for reviewing, 
and making recommendations in relation to, the Company’s corporate governance procedures. The Nominations 
and Corporate Governance Committee met once during the period under review and all members attended.
Remuneration Committee The Remuneration Committee is made up entirely of independent Non-Executive Directors 
and is chaired by Mr Merrifield with Mr Williams, Mr Kent and Mr Kennedy (from 18 September 2003) and Dr Read
(from 18 September 2003) as its other members. The Remuneration Committee determines the terms of service 
and remuneration of the Executive Directors and senior employees. It also determines overall remuneration policy 
for all other employees and targets for performance-related pay schemes operated by the Company. The Remuneration
Committee held four meetings during the period under review and all members attended all the meetings. 
Safety Review Board The Safety Review Board provides an independent technical review and monitoring of the development
programmes of the Company to ensure that appropriate risk-benefit analysis is carried out for clinical testing and trials. 
Accountability and audit
The Board is responsible for the preparation of financial statements that present a balanced assessment of the Group’s
financial position and prospects. This responsibility is administered primarily by the Audit Committee, the terms of
reference for which are referred to above. 
Internal controls
The Board is ultimately responsible for establishing and monitoring internal control systems throughout the Group 
and reviewing their effectiveness. It recognises that rigorous systems of internal control are critical to the Group’s
achievement of its business objectives, that those systems are designed to manage rather than eliminate risk and 
that they can only provide reasonable and not absolute assurance against material misstatement or loss. 
An ongoing process for identifying, evaluating and managing the significant risks faced by the Group has been 
in place for the financial period under review and up to the date of approval of the annual report and accounts. 
The Audit Committee’s terms of reference include the review of the Group’s internal financial control systems and 
the Nominations and Corporate Governance Committee carries out reviews of the non-financial control systems. 
Both of these committees are required to report and make recommendations to the Board on their respective areas. 
Communication and reporting The Group’s strategy and business objectives are communicated to all levels of the
organisation. The Executive Directors hold regular all-employee meetings to exchange information with staff. 
31
Vernalis 
Annual report and accounts 2003 32
Vernalis 
Annual report and accounts 2003
Corporate governance continued
Risk identification and evaluation The Group actively identifies, evaluates and manages the risks inherent in the
business. Since 18 December 2003 this work has been primarily carried out by a special Risk Committee, chaired 
by the Company Secretary, and with senior representatives from all functions. Each of the Group’s major projects is 
run on a day-to-day basis by the relevant project manager. The Risk Committee reports to the MT, which comprises the
Executive Directors and senior employees, meets once a week and is responsible for review and approval of all major
decisions relating to development projects, research programmes and potential product and technology acquisitions.
The Board is responsible for the overall strategy, framework and priorities for the Group and approving major decisions
on recommendations from the MT. In addition, the Board takes advice from the Safety Review Board and other external
scientific experts.
Review of internal controls The Group’s internal controls are regularly reviewed as part of the risk management
process. The Board conducted a formal review of internal controls in July 2003. The Directors consider that given the
size of the Group’s operations at this time it is inappropriate to appoint an internal audit function.
Information Board members and members of the other committees and groups which discuss risk issues are provided
with timely and detailed briefings on relevant matters. 
Human resources The Group endeavours to appoint employees with suitable skills, knowledge and experience. 
The Group has a range of policies which are aimed at retaining and incentivising key staff. Objectives are set for
departments and employees that are derived from the Group’s business objectives. The Group has a clear and 
well-understood organisational structure and each employee knows his or her line of accountability. 
Regulatory framework Documented quality procedures are in place to ensure the maintenance of regulatory
compliance. These are subject to periodic review to ensure current standards of quality compliance are maintained. 
A quality group monitors compliance of contractors to Good Laboratory Practice (GLP), Good Clinical Practice (GCP) 
and Good Manufacturing Practice (GMP) through the implementation of a compliance programme for relevant in-house
and contracted-out activities. A pharmacovigilance contractor is responsible for monitoring and reporting adverse 
events in support of the Group’s marketed product and development programmes. These are managed in accordance
with formally documented procedures which comply with current regulatory requirements. 
Announcements All major announcements are approved by the Chairman, the Executive Directors and a panel of senior
executive management and then circulated to the Board prior to issue. The Group also has internal and external checks
to guard against unauthorised release of information.
Operational reviews The Group has procedures that are designed to ensure that key documents, decision points and
investment decisions are reviewed by the right people. Decision points include each significant clinical development decision.
Financial The effectiveness of the Group’s internal financial control systems has been reviewed and reported on to the
Board by the Audit Committee. A comprehensive budgeting system allows managers to submit detailed budgets, which
are reviewed and amended by Executive Directors prior to submission to the Board for approval. At the mid-year, a
forecast is prepared in the same level of detail as the budget. Actual results against budget and forecast, highlighting
variances, are prepared for managers and the Board. Due to the nature of its operations and its size, the Group does
not have an internal audit function. 
Insurance The Group has reviewed its portfolio of insurance policies with its insurance broker to ensure that the policies
are appropriate to the Group’s activities and exposures. 
Shareholder relations 
Following its recent change of accounting reference date to 31 December, the Company will report formally to
shareholders twice a year, in February (preliminary announcement of annual results) and August (interim statement).
The annual report will now usually be mailed to shareholders in April/May. Separate announcements of all material
events are made as necessary. 
The Company’s website (www.vernalis.com) provides an overview of the business including its strategy, products and
objectives. All Group announcements are available on the website and new announcements are published without delay.
The terms of reference of each of the Board’s three committees and other important corporate governance documents
are displayed on the Company’s website. Additionally, the Group’s Corporate Communications department and Finance
Director provide a focal point for shareholders’ enquiries and dialogue throughout the year.
Annual General Meeting The principal forum for discussion with shareholders is the Annual General Meeting (AGM). At the
meeting, in addition to the statutory business, the Board has a policy of holding business presentations to ensure that an
up-to-date picture of the Group’s activities is given, following which the Board is available for questions from shareholders. In accordance with the Combined Code recommendations, the Company counts all proxy votes, and on each resolution
which is voted on a show of hands the Company indicates the level of proxies lodged and number of proxy votes for and
against such resolution and the number of abstentions. A separate resolution is proposed for each substantive issue
and the Chairs of the Audit, Remuneration, and Nominations and Corporate Governance Committees attend to answer
questions. Arrangements are also made for other Non-Executive Directors’ attendance. The Company seeks to send the
notice of the AGM and related papers to shareholders at least 20 working days before the meeting. 
Corporate social responsibility 
The Board is committed to running the Company in accordance with best practice in corporate governance. This
commitment includes recognition of the Board’s responsibility to shareholders to assess all risks that may affect the
Group’s value, including those related to social, ethical and environmental issues. Beyond shareholders, the Board also
acknowledges its duty to ensure the Group conducts its activities responsibly and with proper regard for its other
stakeholders and for society at large. 
By the nature of its work, the Group has an extensive range of established procedures that enable it formally to manage
the risks associated with drug discovery and development. As mentioned above, laboratory research and clinical
development activities are comprehensively monitored and documented according to regulatory standards, and the
Group conducts its activities in line with applicable laws and regulations. More detailed information on risk management
is presented elsewhere in this report.
It is the Board’s intention to consider wider issues of corporate social responsibility on a regular basis. These issues
will include, but not be limited to, compliance with existing and proposed legislation and regulatory standards; health,
safety and the environment; employee relations and development; supplier relationships and community involvement. 
Going concern
Vernalis is a research and development based pharmaceutical business which expects to incur further losses until
revenues from royalty income and milestone receipts exceed expenditure on the product portfolio. As a result, the
Directors believe that the Group is likely to need additional sources of finance in due course. The Directors have
prepared projections which confirm that, excluding the effects of the transaction set out below, the Group expects 
to have sufficient cash resources for the foreseeable future. By their nature, the projections are inherently subject 
to some uncertainty, particularly in respect of revenues.
Vernalis has reacquired the North American rights for frovatriptan from Elan for a total of US$50 million, payable 
in instalments over the period to 31 December 2005. Vernalis will also purchase certain inventory from Elan 
at an expected approximate cost of US$5 million payable no later than 31 December 2004.
As a result of this transaction, Vernalis has exchanged its royalty income and potential milestone payments for
enhanced cash flows arising from the full sales of frovatriptan in North America and is seeking a new commercialisation
partner or partners for frovatriptan which may include upfront and milestone payments. However, in order to meet its
obligations to Elan, the Directors believe that the Group does not have sufficient cash resources for the foreseeable
future, and therefore Vernalis will require additional funds during the next 12 months, in particular to meet the payment
of US$20 million which Vernalis is required to make to Elan on 31 December 2004. The Directors believe such funding 
can be obtained through the completion of an additional equity fundraising or through securing a pharmaceutical partner
for frovatriptan. Accordingly, the Directors have prepared the financial information on a going concern basis. As a result
of the transaction, the auditors’ report on the financial statements for the eight months ended 31 December 2003
contains reference to the fundamental uncertainty regarding going concern.
Compliance statement
The Directors are satisfied that the Group has complied with the Combined Code provisions appended to the Listing
Rules throughout the financial period to 31 December 2003. During the current financial year the Board will continue
with its review of the New Code that applies to reporting years commencing on or after 1 November 2003. The Company
is considering any changes that it will need to make to its governance structure to implement the New Code. It is
intended that the Company’s next corporate governance report will refer to the Company’s compliance with the New
Code and include the additional disclosures required by the New Code. 
BioIndustry Association Code of Best Practice
The Company has adopted and operates in compliance with the BioIndustry Association (BIA) Code of Best Practice. 
The BIA Code consists of eight broad principles of best practice which are specific to the management of biotechnology
companies. These cover: Board composition; its access to information and external advice; the establishment of
procedures for handling unpublished, price-sensitive information; public announcements regarding products and the
regulatory process; the effect of announcements on patients; and the use of technical terms in announcements.
33
Vernalis 
Annual report and accounts 2003 34
Vernalis 
Annual report and accounts 2003
Statement of Directors’ responsibilities
The Directors are required by the Companies Act 1985 to prepare financial statements, for each financial year, which
give a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year and 
of the profit or loss of the Group for the financial year.
The Directors confirm that in preparing the financial statements the Company and the Group have used appropriate
accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates, and 
that all accounting standards which they consider to be applicable have been followed subject to any explanations 
and material departures disclosed in the notes to the financial statements.
The Directors have responsibility for ensuring that the Company and the Group keep proper accounting records which
disclose, with reasonable accuracy at any time, the financial position of the Company and Group, and which enable
them to ensure that the financial statements comply with the Companies Act 1985. The Directors have responsibility 
for taking such steps as are reasonably open to them to safeguard the assets of the Company and the Group and 
to prevent and detect fraud and other irregularities. 
The Directors are responsible for the maintenance and integrity of the Group’s website, and acknowledge that
information published on the internet is accessible in countries with different legal requirements relating to the
preparation and dissemination of financial statements. We have audited the financial statements which comprise the consolidated profit and loss account, balance sheets,
cash flow statement and related notes which have been prepared under the historical cost convention and the
accounting policies set out in the statement of principal accounting policies. We have also audited the disclosures
required by Part 3 of Schedule 7A to the Companies Act 1985 contained in the Directors’ remuneration report 
(“the auditable part”).
Respective responsibilities of Directors and auditors
The Directors’ responsibilities for preparing the annual report and the financial statements in accordance with
applicable United Kingdom law and accounting standards are set out in the statement of Directors’ responsibilities. 
The Directors are also responsible for preparing the Directors’ remuneration report.
Our responsibility is to audit the financial statements and the auditable part of the Directors’ remuneration report 
in accordance with relevant legal and regulatory requirements and United Kingdom Auditing Standards issued by the
Auditing Practices Board. This report, including the opinion, has been prepared for and only for the Company’s members
as a body in accordance with Section 235 of the Companies Act 1985 and for no other purpose. We do not, in giving
this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown
or into whose hands it may come save where expressly agreed by our prior consent in writing.
We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial
statements and the auditable part of the Directors’ remuneration report have been properly prepared in accordance 
with the Companies Act 1985. We also report to you if, in our opinion, the Directors’ report is not consistent with the
financial statements, if the Company has not kept proper accounting records, if we have not received all the information
and explanations we require for our audit, or if information specified by law regarding Directors’ remuneration and
transactions is not disclosed.
We read the other information contained in the annual report and consider the implications for our report if we become
aware of any apparent misstatements or material inconsistencies with the financial statements. The other information
comprises only the Chairman’s statement, business review, financial review, report of the Directors, unaudited parts 
of the Directors’ remuneration report and the US accounting policies and financial statements.
We review whether the corporate governance statement reflects the Company’s compliance with the seven provisions 
of the Combined Code specified for our review by the Listing Rules of the Financial Services Authority, and we report 
if it does not. We are not required to consider whether the Board’s statements on internal control cover all risks and
controls, or to form an opinion on the effectiveness of the Company’s or Group’s corporate governance procedures 
or its risk and control procedures.
Basis of audit opinion
We conducted our audit in accordance with auditing standards issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the
auditable part of the Directors’ remuneration report. It also includes an assessment of the significant estimates and
judgements made by the Directors in the preparation of the financial statements, and of whether the accounting policies
are appropriate to the Company’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered
necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements
and the auditable part of the Directors’ remuneration report are free from material misstatement, whether caused by
fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation 
of information in the financial statements.
Fundamental uncertainty – going concern
In forming our opinion, we have considered the adequacy of the disclosures made in the financial statements concerning
the basis of preparation. The financial statements have been prepared on a going concern basis and, as described in
note 1, the validity of this depends on obtaining future funding. The financial statements do not include any adjustments
that would result from a failure to obtain further funding. Details of the circumstances relating to this fundamental
uncertainty are described in note 1. In view of the significance of this fundamental uncertainty we consider it should 
be drawn to your attention but our opinion is not qualified in this respect.
Opinion
In our opinion:
● the financial statements give a true and fair view of the state of affairs of the Company and the Group at 
31 December 2003 and of the loss and cash flows of the Group for the period then ended;
● the financial statements have been properly prepared in accordance with the Companies Act 1985; and
● those parts of the Directors’ remuneration report required by Part 3 of Schedule 7A to the Companies Act 1985
have been properly prepared in accordance with the Companies Act 1985.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
London, 13 May 2004
35
Vernalis 
Annual report and accounts 2003
Independent auditors’ report to the members of Vernalis plc 36
Vernalis 
Annual report and accounts 2003
Consolidated profit and loss account
For the eight-month period ended 31 December 2003
Acquisition Merged 
Total Group Eight months business 
Eight months ended Eight months 
ended 31 December ended 
31 December 2003 31 December Year ended 
2003 (note 4) 2003 30 April 2003 
Notes £000 £000 £000 £000
Turnover 2 8,631 117 8,514 9,143
Cost of sales (228) – (228) (418)
Gross profit 8,403 117 8,286 8,725
Research and development expenditure (26,890) (9,058) (17,832) (30,512)
Administrative expenses 4 (10,901) (3,135) (7,766) (14,276)
Other operating expenses – –– (186)
Operating loss 4 (29,388) (12,076) (17,312) (36,249)
Provision for loss on disposal of fixed assets 11 (2,988) – (2,988) –
Merger transaction expenses 5 (5,396) – (5,396) –
Loss on ordinary activities before interest and taxation (37,772) (12,076) (25,696) (36,249)
Interest receivable and similar income 6 2,314 3,542
Amounts written off investments 12 (862) (799)
Interest payable and similar charges 7 (544) (739)
Loss on ordinary activities before taxation (36,864) (34,245)
Tax credit on loss on ordinary activities 8 2,645 3,659
Loss for the period (34,219) (30,586)
Loss per share (basic and diluted) 9 (24.9)p (43.1)p
There is no difference between the loss on ordinary activities before taxation and the loss for the financial periods
stated above, and their historical cost equivalents.
There are no recognised gains and losses other than the losses above, and therefore no separate statement of total
recognised gains and losses has been presented.
The notes on pages 39 to 57 form part of these financial statements. Group Company
31 December 30 April 31 December 30 April
2003 2003 2003 2003
Notes £000 £000 £000 £000
Fixed assets
Intangible assets 10 22,925 28,687 – –
Tangible assets 11 7,508 11,564 – –
Investments 12 83 1,107 20,427 30,803
30,516 41,358 20,427 30,803
Current assets
Stock – finished goods 49 57 – –
Debtors 13 10,991 11,984 541 586
Short-term deposits and investments 24 22,329 48,115 11,338 27,724
Cash 1,885 339 1 86
35,254 60,495 11,880 28,396
Current liabilities
Creditors: amounts falling due within one year 14 (19,773) (20,987) (447) (197)
Net current assets 15,481 39,508 11,433 28,199
Total assets less current liabilities 45,997 80,866 31,860 59,002
Creditors: amounts falling due after more than one year
6.5% convertible loan 2007 16 – (7,000) – –
Other creditors 15 (8,119) (17,773) – –
(8,119) (24,773) – –
Provisions for liabilities and charges 17 (4,089) (2,517) – –
Net assets 33,789 53,576 31,860 59,002
Capital and reserves
Share capital 19 38,813 36,895 38,813 35,045
Share premium account 20 298,226 298,252 298,226 298,252
Merger reserve 20 101,985 89,445 – –
Other reserves 20 50,776 50,776 20,026 20,026
Profit and loss account 20 (456,011) (421,792) (325,205) (294,321)
Total shareholders’ funds 20 33,789 53,576 31,860 59,002
Analysis of shareholders’ funds
Equity 20 2,082 21,869 153 27,295
Non-equity 20 31,707 31,707 31,707 31,707
33,789 53,576 31,860 59,002
Approved by the Board of Directors
Tony Weir
Finance Director
13 May 2004
The notes on pages 39 to 57 form part of these financial statements.
37
Vernalis 
Annual report and accounts 2003
Balance sheets
As at 31 December 2003 38
Vernalis 
Annual report and accounts 2003
Consolidated cash flow statement
For the eight-month period ended 31 December 2003
Eight months
ended
31 December Year ended 
2003 30 April 2003
Notes £000 £000
Reconciliation of operating loss to operating cash flows
Operating loss (29,388) (36,249)
Depreciation 1,575 2,197
Amortisation of intangible fixed assets 3,985 3,373
Amortisation of investment in own shares – 55
Credit for deferred shares awarded – (611)
Adjustment for exchange gain – (29)
Other loss/(profit) on disposal of tangible fixed assets 4 171 (38)
Loss on disposal of intangible fixed assets 1,777 –
Tangible fixed assets written off 4 – 16
Decrease/(increase) in debtors 578 (3,143)
Decrease in creditors (4,133) (3,273)
Increase in provisions 1,572 915
(Decrease)/increase in deferred income (4,838) 396
Decrease/(increase) in stock 8 (57)
Merger transaction expenses paid (5,396) –
Net cash outflow from operating activities (34,089) (36,448)
Cash flow statement
Net cash outflow from operating activities (34,089) (36,448)
Returns on investments and servicing of finance 21 659 1,952
Taxation 2,783 3,169
Capital expenditure 22 (16) (4,299)
Cash utilised by operations (30,663) (35,626)
Acquisitions – purchase of subsidiary undertakings 5 – 1,967
Management of liquid resources 24 25,786 27,443
Financing 23 6,478 6,215
Increase/decrease in cash in the period 1,601 (1)
Reconciliation of net cash flow to movement in net funds
Increase/(decrease) in cash in the period 1,601 (1)
Cash outflow from decrease/(inflow from increase) in debt and lease financing 7,955 (6,291)
Cash inflow from movement in liquid resources (25,786) (27,443)
Exchange adjustment (55) 29
Finance leases acquired with subsidiary – (1,269)
Liquid resources acquired with subsidiary – 12,903
Movement in net funds in the period (16,285) (22,072)
Net funds at start of the period 38,258 60,330
Net funds at end of the period 24 21,973 38,258
The notes on pages 39 to 57 form part of these financial statements. 1  Principal accounting policies
The financial statements have been prepared under the historical cost convention, and in accordance with applicable
Accounting Standards in the United Kingdom. A summary of the principal Group accounting policies, which have been
applied consistently, is set out below.
Vernalis is a research and development based pharmaceutical business which expects to incur further losses until
revenues from royalty income and milestone receipts exceed expenditure on the product portfolio. As a result, the
Directors believe that the Group is likely to need additional sources of finance in due course. The Directors have
prepared projections which confirm that, excluding the effects of the transaction set out below, the Group expects 
to have sufficient cash resources for the foreseeable future. By their nature, the projections are inherently subject 
to some uncertainty, particularly in respect of revenues.
Vernalis has reacquired the North American rights for frovatriptan from Elan for a total of US$50 million, payable 
in instalments over the period to 31 December 2005. Vernalis will also purchase certain inventory from Elan at 
an expected approximate cost of US$5 million payable no later than 31 December 2004.
As a result of this transaction, Vernalis has exchanged its royalty income and potential milestone payments for
enhanced cash flows arising from the full sales of frovatriptan in North America and is seeking a new commercialisation
partner or partners for frovatriptan which may include upfront and milestone payments. However, in order to meet its
obligations to Elan, the Directors believe that the Group does not have sufficient cash resources for the foreseeable
future, and therefore Vernalis will require additional funds during the next 12 months, in particular to meet the payment
of US$20 million which Vernalis is required to make to Elan on 31 December 2004. The Directors believe such funding 
can be obtained through the completion of an additional equity fundraising or through securing a pharmaceutical partner
for frovatriptan. Accordingly, the Directors have prepared the financial information on a going concern basis. As a result
of the transaction, the auditors’ report on the financial statements for the eight months ended 31 December 2003
contains reference to the fundamental uncertainty regarding going concern.
Basis of consolidation The consolidated financial statements of the Group include the accounts of Vernalis plc 
(formerly British Biotech plc) (the “Company”) and all its subsidiary undertakings (together, the “Group”), made up 
to 31 December 2003. Intercompany transactions are eliminated on consolidation and the consolidated accounts 
reflect external transactions only.
The identifiable assets and liabilities of subsidiary undertakings accounted for under acquisition accounting principles
are included in the consolidated balance sheet at their fair values at the date of acquisition. The results and cash 
flows of such subsidiaries are brought into the Group accounts only from the date of acquisition. As permitted by FRS 3
(Reporting Financial Performance), the acquisition of RiboTargets Holdings plc, which took place seven days before the
end of the previous financial period end on 23 April 2003, has been presented separately as if it was an acquisition in
the current period. 
The merger basis of accounting, as set out in FRS 6 (Acquisitions and Mergers), has been adopted by the Group in
respect of the merger of Vernalis Group plc and the Company. Under merger accounting principles, the results, assets
and liabilities and cash flows of Vernalis Group plc and the Company have been combined from the beginning of the
period in which the merger took place. The consolidated profit and loss account, balance sheet and cash flow
comparatives are stated on the combined basis, and adjustments have been made as required to achieve consistency
of accounting policies. The merger became effective on 1 September 2003, following which the Company changed its
name to Vernalis plc. Prior to the merger the Company and Vernalis Group plc had accounting reference dates of 30
April and 31 December respectively. These statutory accounts are for the eight-month period ended 31 December 2003,
with comparative amounts for the year ended 30 April 2003. Further details relating to the merger of the Company and
Vernalis Group plc are given in note 5.
Company profit and loss account In accordance with the provisions of Section 230 of the Companies Act 1985, 
no separate profit and loss account has been presented for the Company. 
Turnover Turnover, which excludes value added tax, represents the value of goods and services supplied. 
Non-refundable access fees, options fees and milestone payments received for participation by a third party in
commercialisation of a compound are recognised when they become contractually binding provided there are no related
commitments of the Group. Where there are related commitments, revenue is recognised on a percentage of completion
basis in line with the actual levels of expenditure incurred in fulfilling these commitments. All other licence income and
contract research fees are recognised over the accounting period to which the relevant services relate. Product sales
are recognised on despatch to the customer. Revenues derived from grants received are recognised in line with the
related expenditure. Royalty income is recognised in relation to sales to which the royalty relates.
39
Vernalis 
Annual report and accounts 2003
Notes to the financial statements
For the eight-month period ended 31 December 2003 40
Vernalis 
Annual report and accounts 2003
Notes to the financial statements continued
For the eight-month period ended 31 December 2003
1  Principal accounting policies continued
Research and development Research and development expenditure is written off as incurred, except where assets 
are acquired or constructed in order to provide facilities for research and development over a number of years. 
These assets are capitalised and depreciated over their useful lives. Expenditure relating to clinical trials is accrued 
on a percentage of completion basis with reference to fee estimates with third parties.
Joint arrangements The Group has certain contractual research agreements with other participants. These joint activities
do not create an entity carrying on a trade or business of its own and, as such, each is accounted for as a joint
arrangement that is not an entity. That is, the Group accounts for its own assets, liabilities and cash flows measured 
in accordance with the terms of the agreement governing the arrangement. 
Goodwill Goodwill arising from the purchase of subsidiary undertakings represents the excess of the value of the
purchase consideration over the fair value of the underlying net assets acquired. The goodwill arising is capitalised 
and amortised in equal instalments over its estimated useful economic life. Provision is made for any impairment 
in value if events or changes in circumstances indicate that the carrying value may not be recoverable in full. 
Goodwill in respect of the acquisition of RiboTargets and Cerebrus Pharmaceuticals Limited is being amortised over
three years and five years respectively.
Goodwill previously written off to reserves has not been reinstated on the balance sheet as permitted by FRS 10.
Other intangible assets Other intangible assets, which principally comprise payments made to third parties to acquire
licences to develop their intellectual property, are amortised on a straight line basis over their estimated useful
economic life. Provision is made for any impairment in value if events or changes in circumstances indicate that the
carrying value may not be recoverable in full.
Tangible fixed assets Tangible fixed assets are stated at historic cost less depreciation, with the exception of freehold
land and assets in the course of construction that are not depreciated. Historic cost comprises the purchase price
together with any incidental costs of acquisition. Depreciation is calculated to write off the cost, less residual value, 
of tangible fixed assets in equal annual instalments over their estimated useful lives as follows:
Freehold buildings 50 years
Buildings – internal works 5 to 50 years
Leasehold buildings Period of lease
Plant and machinery 2 to 5 years
Fixtures and fittings 3 to 10 years
The profit arising on the sale of owned assets that are subsequently leased back under an operating lease is recognised 
at the time of disposal.
Finance and operating leases Costs in respect of operating leases are charged to the profit and loss account on 
a straight line basis over the terms of the leases. Leasing agreements which transfer to the Company substantially 
all the benefits and risks of ownership of an asset are treated as if the asset had been purchased outright. The assets
are included in fixed assets and the capital element of the leasing commitments is shown as obligations under finance
leases. The lease rentals are treated as consisting of both a capital and an interest element. The capital element 
is applied to reduce the outstanding obligations under the leasing commitments and the interest element is charged
against profit in proportion to the reducing capital element outstanding. Assets held under finance leases are
depreciated over the shorter of the relevant lease term and the useful economic life of the equivalent owned assets.
Fixed asset investments Investments in subsidiary and other undertakings are carried at cost less any impairment
provision. Such investments are subject to review, and any impairment is charged to the profit and loss account.
Impairments in listed undertakings are determined having regard to the evolution of the market price of shares.
Impairments in unlisted investments are determined using Directors’ estimates of changes in the underlying investment
and market movements. 
Current asset investments Current asset investments are stated at the lower of cost and net realisable value at the
balance sheet date.
Stock Stocks are carried at the lower of cost and net realisable value. Deferred taxation Provision is made for deferred tax liabilities and assets, using full provision accounting, otherwise
known as the incremental liability method, when an event has taken place by the balance sheet date which gives rise 
to an increased or reduced tax liability in the future in accordance with FRS 19. Deferred tax is measured at the average
tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax
rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax assets are only
recognised to the extent that it is considered probable that they will be recoverable. Deferred tax is measured on a non-
discounted basis.
Pension costs The Group operates several defined contribution pension schemes. The assets of the schemes are 
held separately from those of the Group in independently administered funds. In addition, the Group makes defined
contributions to employees’ approved personal pension plans. Pension contributions are charged to the profit and loss
account in the period in which the costs are incurred. The Group does not offer any other post-retirement benefits. 
Foreign currencies Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the
transaction date. Assets and liabilities in foreign currencies are retranslated into sterling at the rate of exchange ruling
at the balance sheet date. Differences arising due to exchange rate fluctuations are taken to the profit and loss account
in the period in which they arise.
The financial statements of overseas subsidiaries are translated using the net investment method; the amounts in the
balance sheet are translated at the closing rate and the amounts in the profit and loss account are translated at an
average rate. Exchange differences arising on translation are taken directly to reserves.
Employee benefits The charge for the shares awarded under the Deferred Share Bonus Scheme is recognised in the
consolidated profit and loss account as the difference between the market value of the shares at the date of grant 
and any consideration to be received on the exercise of the deferred shares. The charge is based on estimates of 
staff turnover and share price growth and is accrued in the profit and loss account reserve.
Shares held for the continuing benefit of the Group’s business under employee share ownership plan (ESOP)
arrangements are included in the financial statements of the Group, in accordance with generally accepted accounting
practices, and are classified as fixed assets and carried at cost less provision for impairment in value. Where the
shares are conditionally gifted or put under option to employees at below their book value, the difference between 
book value and residual value (nil in the case of a gift, or the option price) is charged as an operating cost on a straight
line basis over a period ending on the date that the gift become unconditional or the option can be exercised. If the
performance criteria are not met, then the title of the shares will not pass.
The Company takes advantage of the exemption under UITF 17 in respect of SAYE schemes.
Financial instruments The Group does not enter into derivative financial instruments and has no financial liabilities
other than finance leases, loans and trade creditors. Financial assets and liabilities are recognised and cease to be
recognised on the basis of when the related legal title or obligations pass to or from the Group. Financial assets and
liabilities are shown at the lower of cost to the Group and fair value, as determined by reference to the market value 
of the asset or liability.
Related party transactions In accordance with FRS 8 (Related Party Disclosures), the Company discloses details 
of material transactions between the reporting entity and related parties. However, transactions between the Company
and other Group companies have not been disclosed, in accordance with the exemption in FRS 8 paragraph 3(a).
41
Vernalis 
Annual report and accounts 2003 42
Vernalis 
Annual report and accounts 2003
Notes to the financial statements continued
For the eight-month period ended 31 December 2003
2  Segmental and geographical analyses
The Group operates one primary business, being the research and development of pharmaceutical products for a range
of medical disorders. Turnover, loss on ordinary activities before taxation and net assets are wholly attributable to this
activity and originate exclusively in the United Kingdom. 
a) A geographical analysis of turnover by destination according to the country of registration of the fee-paying parties 
is as follows:
Eight months
ended Year ended 
31 December 30 April 
2003 2003
£000 £000
United Kingdom 49 90
North America 2,937 420
Europe 5,645 8,633
8,631 9,143
b) The Group derives turnover from a variety of revenue streams including out-licensing agreements and sales of product. 
A split of turnover by type is as follows:
Eight months
ended Year ended 
31 December 30 April 
2003 2003
£000 £000
Pharmaceutical research and development
Product sales 487 716
Royalties 2,105 1,381
Collaborative agreements 6,039 7,046
8,631 9,143
3  Employees and Directors
The average number of persons, including Executive Directors, employed by the Group during the period was as follows:
Eight months
ended Year ended 
31 December 30 April 
2003 2003
£000 £000
Research, development and operations 163 174
Administration 48 43
211 217
At 31 December 2003, the Group employed a total of 156 permanent staff (30 April 2003: 281).
Staff costs in respect of these employees were:
Eight months
ended Year ended 
31 December 30 April 
2003 2003
£000 £000
Wages and salaries 8,299 12,059
Social security costs 846 1,271
Pension costs 716 806
9,861 14,136
In respect of Directors’ remuneration, the Company has taken advantage of the permission in paragraph 1(6) of
Schedule 6 to the Companies Act 1985 to omit aggregate information that is capable of being ascertained from 
the detailed disclosures in the report of the Remuneration Committee on pages 22 to 29 which form part of these
financial statements. 4  Group operating loss
Group operating loss is stated after charging/(crediting):
Eight months
ended Year ended 
31 December 30 April 
2003 2003
£000 £000
Operating lease rentals:
– land and buildings 1,495 1,133
– plant, machinery and vehicles 48 72
Depreciation charge for the period:
– tangible owned fixed assets 1,183 2,184
– tangible fixed assets held under finance leases 392 13
Amortisation charge for the period:
– goodwill 3,031 1,851
– other intangible assets 954 1,522
Loss on disposal of intangible assets 1,777 –
Restructuring costs (see below) 2,269 1,627
Terminated deal costs (see below) – 1,454
Tangible fixed asset write-offs – 16
(Profit)/loss on disposal of fixed assets (excluding exceptional profit) 171 (38)
Net exchange differences on foreign currency borrowings less deposits – –
Auditors’ remuneration: 
– audit fees (Company: £25,000 (2003: £24,000)) 193 134
– other services (see below) 314 431
Restructuring costs: this represents restructuring costs incurred in relation to the acquisition of RiboTargets and merger
with Vernalis Group plc, and relates principally to redundancy costs.
Terminated deal costs: this represents costs incurred in relation to the terminated merger discussions with 
MorphoSys A.G. and relates principally to legal and professional fees.
Auditors’ remuneration: “other services” relates to fees of £165,000 (April 2003: £173,000) for proposed and
completed acquisitions and to other fees of £149,000 (April 2003: £258,000) that have been paid in relation to
taxation advice on collaborative agreements and services on Securities and Exchange Commission filings. In addition,
fees of £225,000 (April 2003: £340,000) were paid in respect of the fundraising by Vernalis Group plc in May 2003;
and in respect of the acquisition of RiboTargets by British Biotech plc in April 2003. There were no fees paid in respect
of management consultancy services.
Administrative expenses:
Merged 
Total Group Acquisition business
Eight months Eight months Eight months
ended ended ended Year ended 
31 December 31 December 31 December 30 April 
2003 2003 2003 2003
£000 £000 £000 £000
Other 5,601 1,297 4,304 9,344
Terminated deal costs – –– 1,454
Restructuring costs 2,269 – 2,269 1,627
Amortisation of goodwill 3,031 1,838 1,193 1,851
Total administrative expenses 10,901 3,135 7,766 14,276
Acquisition of RiboTargets Holdings plc: as permitted by FRS 3 (Reporting Financial Performance), the acquisition of
RiboTargets Holdings plc, which took place seven days before the end of the previous financial period end on 23 April
2003, has been presented separately as if it was an acquisition in the current period.
43
Vernalis 
Annual report and accounts 2003 44
Vernalis 
Annual report and accounts 2003
Notes to the financial statements continued
For the eight-month period ended 31 December 2003
5  Merger accounting
On 1 September 2003 (the merger date) the Company and Vernalis Group plc merged. The terms agreed for 
the proposed merger, reflecting the relative stock market valuation of the two companies in the months preceding 
the announcement of the merger, were that the Company would issue 0.861 of its own 5 pence “New” Ordinary shares
in consideration for each 10 pence Ordinary share in Vernalis Group plc. Between the merger date and 4 November
2003 the Company issued 75,375,103 5 pence “New” Ordinary shares at par in exchange for 87,543,674 10 pence
Ordinary shares in Vernalis Group plc. Subsequent to the merger date on 1 October 2003 British Biotech plc changed
its name to Vernalis plc.
Accounting for the merger Reflecting the intentions and the respective sizes of the merging parties, the combination 
of the Company and Vernalis Group plc has been treated as a merger at 1 September 2003, and accordingly these
financial statements have been prepared using merger accounting principles as set out in the Companies Act 1985 
and FRS 6. Under merger accounting, the shares issued by the Company in consideration for the shares in Vernalis
Group plc are recorded at nominal value and no share premium arises. Similarly, the shares acquired are recorded 
in the Company balance sheet as a fixed asset investment at the nominal value of the shares issued in consideration.
In the consolidated accounts of the Group, the results, assets and liabilities and cash flows of Vernalis Group plc and
the Company are combined at the amounts at which they were previously recorded, subject to adjustments to achieve
consistency of accounting policies. The consolidated profit and loss account, balance sheet and cash flow comparatives
are also stated on a combined basis. 
The consolidated profit and loss accounts used below show the impact of the merger for the period from 1 May 2003 
to 31 August 2003, the nearest practical date to the effective date of the merger. The consolidated balance sheets 
are stated as at 31 August 2003.
The following information is set out below: 
a) The nature and the amount of the accounting adjustments made to align the two companies’ accounting policies; 
b) the principal components of the profit and loss account for the current period and prior year; and c) the aggregated
net assets at 31 August 2003, the nearest practical date to the merger. 
a) Alignment of accounting policies 
No adjustments have been required to the Vernalis plc financial information to reflect different accounting policies. 
b) Analysis of consolidated profit and loss account 
i) Eight months ended 31 December 2003 
British Vernalis 
Biotech plc Group plc Vernalis plc Vernalis plc
Four months Four months Four months Eight months 
ended ended ended ended 
31 August 31 August 31 December 31 December 
2003 2003 2003 2003 
£000 £000 £000 £000
Turnover 243 3,444 4,944 8,631
Operating loss (11,319) (4,862) (13,207) (29,388)
Provision for loss on disposal of fixed assets (2,538) – (450) (2,988)
Merger transaction expenses (5,396) – – (5,396)
Loss on ordinary activities before interest and taxation (19,253) (4,862) (13,657) (37,772)
Net interest receivable and similar income/charges 379 (168) 697 908
Loss on ordinary activities before taxation (18,874) (5,030) (12,960) (36,864)
Tax on loss on ordinary activities 1,060 396 1,189 2,645
Loss on ordinary activities after taxation (17,814) (4,634) (11,771) (34,219)
Merger transaction expenses relate only to the costs of the merger between British Biotech plc and Vernalis Group plc. 5  Merger accounting continued
ii) Year ended 30 April 2003 
British Vernalis 
Biotech plc Group plc Total 
Year ended Year ended Year ended 
30 April  30 April 30 April
2003 2003  2003 
£000 £000 £000
Turnover 1,078 8,065 9,143
Operating loss (19,862) (16,387) (36,249)
Loss on ordinary activities before interest and taxation (19,862) (16,387) (36,249)
Net interest receivable and similar income/charges 636 1,368 2,004
Loss on ordinary activities before taxation (19,226) (15,019) (34,245)
Tax on loss on ordinary activities 1,738 1,921 3,659
Loss on ordinary activities after taxation (17,488) (13,098) (30,586)
c) Aggregated net assets of Vernalis Group plc and British Biotech plc at the time of the merger 
31 August 
2003
£000
Book value of net assets of British Biotech plc at 31 August 2003 40,302 
Book value of net assets of Vernalis Group plc at 31 August 2003 5,282 
Total net assets at 31 August 2003 45,584 
No adjustments arose out of the alignment of accounting policies at the time of the merger. 
6  Interest receivable and similar income
Eight months
ended Year ended 
31 December 30 April 
2003 2003
£000 £000
Bank interest 1,136 2,129
Exchange gains on other creditors (see note 15) 1,178 1,413
2,314 3,542
7  Interest payable and similar charges
Eight months
ended Year ended 
31 December 30 April 
2003 2003
£000 £000
Loans repayable wholly or partly after five years 142 217
Loans repayable wholly or partly within five years 293 439
Finance leases 109 81
Bank overdraft – 2
544 739
45
Vernalis 
Annual report and accounts 2003 46
Vernalis 
Annual report and accounts 2003
Notes to the financial statements continued
For the eight-month period ended 31 December 2003
8  Tax credit on loss on ordinary activities
Eight months
ended Year ended 
31 December 30 April 
2003 2003
£000 £000
Research and development tax credits 2,645 3,659
2,645 3,659
Eight months
ended Year ended 
31 December 30 April 
2003 2003
£000 £000
Factors affecting the tax charge for the period
Loss before tax at 30 per cent (11,058) (10,274)
Expenses not deductible for tax purposes 752 1,328
Goodwill on Consolidation 909 555
Deferred tax asset not recognised 6,120 4,133
Research and development tax credit received at 24 per cent of losses 
compared with 30 per cent tax rate 632 1,039
Under-provision in respect of prior year tax credit – (440)
(2,645) (3,659)
No liability to UK corporation tax arose during the year. The Group had losses, as computed for taxation purposes, 
of approximately £413 million at 31 December 2003 (30 April 2003: £412 million) available to be carried forward 
to future periods. 
In accordance with the provisions of the Finance Act 2000 in respect of research and development allowances, 
the Group is entitled to claim tax credits for certain research and development expenditure. The amount included 
in the financial statements in respect of the period ended 31 December 2003 of £2,645,000 (year ended 30 April
2003: £3,659,000) represents the tax credit receivable by the Group. 9  Loss per ordinary share
Eight months
ended Year ended 
31 December 30 April 
2003 2003
£000 £000
Attributable loss (£000) (34,219) (30,586)
Weighted average number of shares in issue (000) 137,219 71,010
Loss per share (basic and diluted) (24.9)p (43.1)p
All potential ordinary shares, including options and deferred shares, are anti-dilutive.
10  Intangible fixed assets
Licence 
fees and Other
Goodwill patents intangibles Total 
£000 £000 £000 £000
Group
Cost
At 1 May 2003 17,223 2,607 17,177 37,007
Disposals – (2,607) – (2,607)
At 31 December 2003 17,223 – 17,177 34,400
Aggregate amortisation
At 1 May 2003 6,178 830 1,312 8,320
Charge for the period 3,031 – 954 3,985
Disposals – (830) – (830)
At 31 December 2003 9,209 – 2,266 11,475
Net book value at 31 December 2003 8,014 – 14,911 22,925
Net book value at 30 April 2003 11,045 1,777 15,865 28,687
Goodwill arises on the acquisitions of RiboTargets and Cerebrus and is being amortised over three years and five years
respectively, based on the Directors’ estimate of its useful economic life. 
Licence fees and patents represent payments made to third parties in order to acquire licences to develop their
intellectual property. The accounting policy for such assets is set out in note 1. Disposals in the period relate to the
termination of collaboration agreements with Immunogen and Methylgene following the portfolio review, for nil
consideration received.
Other intangibles represent the capitalisation of payments conditionally due to GlaxoSmithKline (GSK) to buy out
royalties due to GSK on sales of frovatriptan. These are being amortised on a straight-line basis from the date of launch
of frovatriptan in June 2002 to the end of the patent life in 2014, which is considered by the Directors to be the useful
life of the asset.
Company The Company has no intangible fixed assets.
47
Vernalis 
Annual report and accounts 2003 48
Vernalis 
Annual report and accounts 2003
Notes to the financial statements continued
For the eight-month period ended 31 December 2003
11  Tangible fixed assets
Freehold Short 
land and leasehold Assets held Plant and Fixtures and 
buildings buildings for resale(i) machinery fittings Total
£000 £000 £000 £000 £000 £000
Group
Cost
At 1 May 2003 9,165 3,272 – 12,483 1,629 26,549
Additions – 535 – 131 14 680
Reclassifications (9,165) – 10,937 (950) (822) –
Disposals – (3) – (3,559) (1) (3,563)
At 31 December 2003 – 3,804 10,937 8,105 820 23,666
Depreciation
At 1 May 2003 2,612 1,824 – 9,270 1,279 14,985
Charge for the period 236 210 – 1,023 106 1,575
Provision for loss on disposal – – 2,988 – – 2,988
Disposals – – – (3,390) – (3,390)
Reclassifications (2,848) – 3,882 (342) (692) –
At 31 December 2003 – 2,034 6,870 6,561 693 16,158
Net book value at 31 December 2003 – 1,770 4,067 1,544 127 7,508
Net book value at 30 April 2003 6,553 1,448 – 3,213 350 11,564
i) Relates to the proposed sale of the Oxford Site.
The net book value of plant and machinery includes £674,000 (30 April 2003: £1,066,000) in respect of assets 
held under finance leases. The depreciation charge for the year was £392,000 (30 April 2003: £13,000). Capital
commitments at 31 December 2003 were as follows:
31 December 30 April 
2003 2003
£000 £000
Group
Contracted for but not provided – 102
Company The Company had no fixed assets or capital commitments. 
12  Investments
Quoted Unquoted
companies companies Total
£000 £000 £000
Group
Cost
At 1 May 2003 1,623 1,406 3,029
Disposals (974) (1,406) (2,380)
At 31 December 2003 649 – 649
Provisions
At 1 May 2003 1,444 478 1,922
Write down during the period 26 – 26
Disposals (904) (478) (1,382)
At 31 December 2003 566 – 566
Net book value at 31 December 2003 83 – 83
Net book value at 30 April 2003 179 928 1,107 12  Investments continued
Amounts written off investments were as follows:
Eight months to Year to
31 December 30 April
2003 2003
£000 £000
Loss on disposal 929 –
Profit on disposal (93) –
Charge for the period 26 799
862 799
Shares in Loans to 
subsidiary subsidiary 
undertakings undertakings Total
£000 £000 £000
Company
Cost
At 1 May 2003 25,395 296,167 321,562
Additions 3,769 11,945 15,714
At 31 December 2003 29,164 308,112 337,276
Provisions
At 1 May 2003 – (290,759) (290,759)
Write down during the period (12,661) (13,429) (26,090)
At 31 December 2003 (12,661) (304,188) (316,849)
Net book value at 31 December 2003 16,503 3,924 20,427
Net book value at 30 April 2003 25,395 5,408 30,803
Group At 31 December 2003 the Group held investments in the following companies:
Country of incorporation 
Name of company Listed stock exchange Nature of business and operation
BresaGen Ltd Australian Stock Exchange, Nasdaq Pharmaceuticals Australia
Genesoft Pharmaceuticals Inc. Unlisted Pharmaceuticals USA
During the year, provision has been made for the permanent diminution in value of listed and unlisted investments by
reference to the Group’s accounting policy. 
On 2 February 2004 the shareholders of Genesoft Pharmaceuticals Inc. approved its merger with Oscient
Pharmaceuticals Corp. (formerly Genome Therapeutics Corp.), a Nasdaq quoted company. As a result of the merger, 
the Group’s holding in Genesoft has been exchanged for 424,118 shares in Oscient. Of these, 93,141 shares will
remain in Escrow and will not be made available to the Company for up to 18 months. These shares are held at 
nil book value at 31 December 2003.
Company The Company has written down its investment in subsidiary undertakings to their net asset value. This has
resulted in the carrying value of the Company’s subsidiaries being reduced by £26,090,000.
At 31 December 2003, the Company had the following wholly-owned principal operating subsidiary undertakings:
Country of incorporation 
Subsidiary undertaking Nature of business and operation
Vernalis (R&D) Limited (formerly British Biotech 
Pharmaceuticals Limited) Research and development England and Wales
British Biotech Services Limited Management services England and Wales
RiboTargets Holdings Limited Holding company England and Wales
Vernalis (Cambridge) Limited* (formerly 
RiboTargets Limited) Research and development England and Wales
Vernalis Group Limited Holding company England and Wales
Vernalis Development Limited* (formerly Vernalis Limited) Research and development England and Wales
Vernalis Research Limited* Research and development England and Wales
* Held by a subsidiary undertaking.
49
Vernalis 
Annual report and accounts 2003 50
Vernalis 
Annual report and accounts 2003
Notes to the financial statements continued
For the eight-month period ended 31 December 2003
13  Debtors
Group Company
31 December 30 April 31 December 30 April 
2003 2003 2003 2003
£000 £000 £000 £000
Trade debtors 1,133 843 – –
Interest receivable 136 414 136 405
Amounts due from subsidiary undertakings – – 382 167
Research and development tax credits 5,804 5,942 – –
Other debtors 2,079 2,571 23 –
Prepayments and accrued income 1,839 2,214 – 14
10,991 11,984 541 586
14  Creditors: amounts falling due within one year
Group Company
31 December 30 April 31 December 30 April 
2003 2003 2003 2003
Notes £000 £000 £000 £000
Interest payable – 211 –
Secured loan 25 270 270 – –
Trade creditors 2,538 4,692 114 –
Amounts due to subsidiary undertakings – – 93 –
Obligations under finance leases 738 1,027 – –
Taxation and social security payable 458 628 58 30
Other creditors 15 5,774 3,179 28 –
Accruals 5,352 6,688 154 167
Deferred income 4,643 4,292 – –
19,773 20,987 447 197
At 31 December 2001 the Group had a loan of £6.9 million ($10 million) from Elan Corporation, the Group’s North
American licensee for frovatriptan. The obligation to pay this loan and accrued interest was waived during April 2002 
in conjunction with a reduction in the rate of royalties due and a commitment by the Group to undertake certain 
Phase IIIb trials.
Deferred income of £5,942,000 (April 2003: £7,932,000) included above and in creditors falling due after more than
one year relates to the deferral of revenues arising from the loan waiver noted above and a milestone payment from
Elan. These revenues are being deferred and recognised by reference to expenditure being incurred to complete certain
Phase IIIb trials on frovatriptan which the Group has agreed with Elan to undertake (see note 29 concerning the
re-acquisition of rights to frovatriptan after the year end).
15  Creditors: amounts falling due after more than one year – other creditors
31 December 30 April 
2003 2003
£000 £000
Group
Loans and other borrowings
Secured loan (see note 25) 1,215 1,350
Obligations under finance leases 18 549
1,233 1,899
Deferred income 1,299 6,488
Other creditors 5,587 9,386
8,119 17,773
Loans and other borrowings included above are repayable as follows:
Over one and under two years 288 819
Over two and under five years 945 810
Beyond five years, by instalments – 270
1,233 1,899 15  Creditors: amounts falling due after more than one year – other creditors continued
Other creditors primarily relates to payments conditionally due to GlaxoSmithKline (GSK) under the agreement of
December 2000 to buy out royalties due to GSK on sales of frovatriptan. The Group is committed to making four annual
payments of $5 million dollars, the first having been made in September 2002, and the following three due on each
anniversary of the first payment. A fifth payment of $5 million is due in 2006 if cumulative global sales of frovatriptan
exceed $300 million on that date, or 90 days after cumulative global sales exceed $300 million. After discussion 
with GSK, the payment due in September 2003 has been deferred, with $2.5 million payable in March 2004 and 
$2.5 million payable in September 2004. As a result, creditors due within one year includes $10 million in respect 
of GSK. The full liability for $20 million (£11,172,000) has been recognised as the Directors believe it is probable 
that cumulative global sales will exceed $300 million. During the period ended 31 December 2003 exchange gains 
of £1,178,000 (year ended 30 April 2003: gain of £1,413,000 million) were recognised in the profit and loss 
account in relation to this liability.
Company The Company has no creditors falling due after more than one year.
16  Creditors: amounts falling due after more than one year – 6.5 per cent convertible loan 2007
31 December 30 April 
2003 2003
£000 £000
Group
Convertible 6.5 per cent loan – 7,000
The loan at 30 April 2003 of £7 million related to a convertible loan facility with Roche that was entered into coincident
with a strategic agreement to research and develop new drugs for the treatment of depression in May 2002. Interest
was paid bi-annually at 6.5 per cent and the loan was originally fully repayable on 13 May 2007, or convertible at any
time at the option of the holder. Following the merger of Vernalis Group plc with the Company the loan, plus accrued
interest, was repaid in full in November 2003.
Company The Company has no convertible loan stock.
17  Provisions for liabilities and charges
Restructuring Vacant lease Dilapidation 
provision provision provision Total
£000 £000 £000 £000
Group
At 1 May 2003 915 412 1,190 2,517
Charge for the period 2,269 1,642 500 4,411
Utilised during the period (2,467) (122) (250) (2,839)
At 31 December 2003 717 1,932 1,440 4,089
The restructuring provision at 1 May 2003 represented costs incurred in relation to the acquisition of RiboTargets 
on 23 April 2003 and related to redundancy costs. The provision at 31 December 2003 relates to redundancy costs
incurred as part of the Group’s ongoing restructuring following the acquisition of RiboTargets and the merger of 
the Company and Vernalis Group plc on 1 September 2003 and is expected to be utilised in 2004.
Where leasehold properties become vacant the Group provides for all costs, net of anticipated income, to the end 
of the lease or the anticipated date of the disposal or sublease. This provision is expected to be utilised over the 
life of the related leases to 2014.
The dilapidation provision relates principally to costs associated with the Group’s obligation to reinstate leased buildings
to their original state. The provision is expected to be utilised on vacation of the properties by 2014. The charge in the
year has been capitalised to Fixed Assets and is being depreciated over the life of the lease.
Company The Company has no provisions for liabilities and charges. 
51
Vernalis 
Annual report and accounts 2003 52
Vernalis 
Annual report and accounts 2003
Notes to the financial statements continued
For the eight-month period ended 31 December 2003
18  Deferred taxation
31 December 30 April 
2003 2003
£000 £000
Group
Tax effect of timing differences
Losses (123,773) (123,461)
Excess of tax allowances over depreciation (2,074) (32)
Tax losses (125,847) (123,493)
There was no potential liability to deferred tax at 31 December 2003 or 30 April 2003.
Given the uncertainty of the recoverability of the Group’s tax losses carried forward, no deferred tax asset in respect 
of the further available tax losses is recognised. Note 8 gives details of the tax losses available to be carried forward
by the Group.
Company The Company had no actual or potential deferred taxation liability or asset at 31 December 2003 
(30 April 2003: nil). 
19  Share capital
Allotted, Allotted, 
Authorised called-up and fully paid Authorised called-up and fully paid
Group Company
Number Number Number Group Company
of shares of shares of shares £000 £000 £000
At 1 May 2003
Equity capital
British Biotech plc 
Ordinary shares of 5 pence each 285,858,083 66,751,780 66,751,780 14,293 3,338 3,338
Vernalis Group plc equivalent
1
37,020,645 – – 1,850 –
285,858,083 103,772,425 66,751,780 14,293 5,188 3,338
Non-equity capital
Deferred shares of 95 pence each 33,375,891 33,375,891 33,375,891 31,707 31,707 31,707
Total share capital at 1 May 2003 319,233,974 137,148,316 100,127,671 46,000 36,895 35,045
Allotments
Equity capital
Vernalis Group plc equivalent
1 
(note 5) 38,354,458 – 1,918 –
Merger with Vernalis Group plc
2
– 75,375,103 – 3,768
Total allotments for the period 
ended 31 December 2003 38,354,458 75,375,103 1,918 3,768
At 31 December 2003
Equity capital
Ordinary shares of 5 pence each 285,858,083 142,126,883 142,126,883 14,293 7,106 7,106
Non-equity capital
Deferred shares of 95 pence each 33,375,891 33,375,891 33,375,891 31,707 31,707 31,707
Total share capital 
at 31 December 2003 319,233,974 175,502,774 175,502,774 46,000 38,813 38,813
1 The Vernalis Group plc equivalent number of shares represents 0.861 times the number of Vernalis Group plc shares that were in issue at the start of the period and that 
were allotted during the period prior to the merger with British Biotech plc.
2 Between 1 September and 4 November 2003 the Company issued 75,375,103 new ordinary 5 pence shares with a nominal value of £3,768,755 to Vernalis Group plc
shareholders in consideration for their shares in Vernalis Group plc under the terms of the merger, which was approved by shareholders on 1 September 2003. 
Details of the Company’s options in issue are shown on pages 28 and 29.
Rights and restrictions attaching to the Ordinary shares
The rights and restrictions attaching to the Ordinary shares are set out in the Articles of Association.  19  Share capital continued
Rights and restrictions attaching to the Deferred shares
Income The Deferred shares carry no rights to participate in the profits of the Company. 
Capital On a return of capital in a winding-up or dissolution (but not otherwise) the holders of the Deferred shares shall
be entitled to participate in the distribution of the assets of the Company pari passu with the holders of the Ordinary
shares but only in respect of any excess of those assets above £1,000,000,000,000. The holders of the Deferred
shares shall not be entitled to any further right of participation in the assets of the Company. 
Attendance and voting at general meetings The holders of the Deferred shares are not entitled, in their capacity as
holders of such shares, to receive notice of any general meeting of the Company or to attend, speak or vote at any 
such meeting. 
Form The Deferred shares shall not be listed on any stock exchange nor shall any share certificates be issued in
respect of such shares. The Deferred shares shall not be transferable, save as referred to below or with the written
consent of the Directors. 
Class rights The Company may from time to time create, allot and issue further shares, whether ranking pari passu 
with or in priority to the Deferred shares, and on such creation, allotment or issue any such further shares (whether 
or not ranking in any respect in priority to the Deferred shares) shall be treated as being in accordance with the rights
attaching to the Deferred shares and shall not involve a variation of such rights for any purpose. A reduction by the
Company of the capital paid up on the Deferred shares shall be in accordance with the rights attaching to the Deferred
shares and shall not involve a variation of such rights for any purpose and the Company shall be authorised at any time
to reduce its capital (subject to and in accordance with the Companies Act) and without obtaining the consent of the
holders of the Deferred shares. 
20  Reconciliation of movements in shareholders’ funds 
Eight months
ended Year ended 
31 December 30 April
Share Share Merger Other Profit and 2003 2003 
capital premium reserve reserves loss account Total Total
£000 £000 £000 £000 £000 £000 £000
Group
British Biotech plc at 1 May 2003 35,045 298,252 – 30,034 (305,215) 58,116 –
Vernalis Group plc at 1 May 2003 4,300 86,995 – 20,742 (116,577) (4,540) –
Merger reserve arising on the merger 
of British Biotech plc and Vernalis Group plc (2,450) (86,995) 89,445 – – – –
At 1 May 36,895 298,252 89,445 50,776 (421,792) 53,576 62,806
Loss for the period – – – – (34,219) (34,219) (30,090)
Allotment of shares 1,918 –––– 1,918 1
(Credit)/debit for bonus scheme 
share options awarded – –––– – (611)
Issue of shares in respect 
of acquisition of RiboTargets – –––– – 21,695
Expense on issue of shares – (26) – – – (26) (363)
Adjustment to merger reserve – – 12,540 – – 12,540 138
At 31 December 38,813 298,226 101,985 50,776 (456,011) 33,789 53,576
Company
At 1 May 2003 35,045 298,252 – 20,026 (294,321) 59,002 55,522
Loss for the period – – – – (30,884) (30,884) (17,627)
Allotment of shares 3,768 –––– 3,768 1
(Credit)/debit for bonus scheme 
share options awarded – –––– – (226)
Issue of shares in respect of acquisition 21,695
Expense on issue of shares – (26) – – – (26) (363)
At 31 December 38,813 298,226 – 20,026 (325,205) 31,860 59,002
The share premium account is a non-distributable reserve.
53
Vernalis 
Annual report and accounts 2003 54
Vernalis 
Annual report and accounts 2003
Notes to the financial statements continued
For the eight-month period ended 31 December 2003
20  Reconciliation of movements in shareholders’ funds continued
The other reserves arise as a result of the application of merger relief taken in respect of the issue of shares on the
acquisition of subsidiaries of the Group, including RiboTargets, Cerebrus Pharmaceuticals, Vanguard Medica and British
Biotech Pharmaceuticals.
The merger reserve arises as a difference on consolidation under merger accounting principles and is solely in respect
of the merger of the Company and Vernalis Group plc in the period. The reserve represents the difference between the
nominal value of shares issued by the Company in consideration for Vernalis Group plc shares and the nominal value
and share premium of Vernalis Group plc shares at the date of the merger.
The loss attributable to shareholders which is dealt with in the accounts of the Company was £30,884,000 (year to 
30 April 2003: loss of £17,627,000). In accordance with Section 230 (4) of the Companies Act 1985 there is no
requirement to publish a profit and loss account for the Company. In the Group, the cumulative amount of goodwill
written off against reserves is £91,000 (year to 30 April 2003: £91,000).
Total shareholders’ funds consist of equity interests of £2,082,000 and non-equity interests of £31,707,000.
Non-equity interests consist of 33,375,889 Deferred shares of 95 pence. The Deferred shares carry no voting rights
and no rights to participate in the profits of the Company. On a return of capital in a winding-up or dissolution (but 
not otherwise) the holders are entitled to a distribution in excess of assets distributed above £1,000,000,000,000.
Further details of the rights of the Deferred shares are given in note 19. 
21  Returns on investments and servicing of finance
Eight months Year ended
ended 30 April  
31 December 2003
2003 (as restated)
£000 £000
Interest received 1,414 2,480
Interest paid, including interest element of finance lease payments (755) (528)
Net cash inflow from returns on investments and servicing of finance 659 1,952
22  Capital expenditure
Eight months
ended Year ended 
31 December 30 April 
2003 2003
£000 £000
Purchase of tangible fixed assets (180) (1,310)
Sale of tangible fixed assets 2 238
Sale of investments 162 –
Purchase of intangible fixed assets – (3,227)
Net cash outflow from capital expenditure (16) (4,299)
23  Financing
Eight months
ended Year ended 
31 December 30 April 
2003 2003
£000 £000
Issue of Vernalis Group plc shares (i) 15,960 139
Share issue costs (i) (1,527) (216)
Debt due within one year: Repayment of secured loan (135) (270)
Repayment of 6.5 per cent convertible loan (7,000) 7,000
Capital element of finance lease payments (820) (438)
Net cash inflow from financing 6,478 6,215
i) In May 2003 Vernalis Group plc raised £14.4 million net of expenses through a Placing and Open Offer. 24  Analysis of changes in net funds
At
At ExchangeOther 31 December 
1 May 2003 Cash flow movement movements 2003
£000 £000 £000 £000 £000
Cash 339 1,601 (55) – 1,885
Short-term deposits and investments 48,115 (25,786) – – 22,329
48,454 (24,185) (55) – 24,214
Secured loan due within one year (270) 135 – (135) (270)
Secured loan due after one year (1,350) – – 135 (1,215)
Convertible 6.5 per cent loan (7,000) 7,000 – – –
Finance leases (1,576) 820 – – (756)
38,258 (16,230) (55) – 21,973
Short-term deposits and short-term investments are aggregated on the balance sheet. Cash flows from short-term
deposits and short-term investments are reported in the cash flow statement under the heading “Management of liquid
resources”. Short-term deposits have a maturity period of more than 24 hours but less than 12 months. They are
repayable on demand subject, in some instances, to the payment of certain expenses. Short-term investments are
investments in a money market managed fund that is repayable within 48 hours.
25  Financial instruments related disclosure
The Group’s financial instruments comprise cash, liquid resources, finance leases, loans and various debtors and
creditors, such as trade debtors and trade and other creditors, that arise directly from its operations. The Group does
not enter into derivative transactions. In addition, it is, and has been throughout the period under review, the Group’s
policy that no trading in financial instruments shall be undertaken except in accordance with strict and prudent
investment criteria, principally that funds are actively managed by reputable independent fund managers and
investments are only made in low risk funds with fixed rates of return.
The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk and foreign currency
risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. These
policies have remained unchanged throughout the period under review, and since the year end.
Interest rate risk The Group finances its operations through reserves of cash and liquid resources. The funds are held 
in sterling and US dollar managed funds. The funds are actively managed by reputable independent fund managers to
provide the highest rate of return with a neutral risk profile.
Liquidity risk The Board’s policy is to ensure that sufficient funds are held on a short-term basis in order to meet
operational needs without the use of an overdraft facility.
Foreign currency risk The Group’s functional currency is sterling. The Group has transactional currency exposures. 
Such exposures arise from sales or purchases in currencies other than the Group’s functional currency, which include
royalty and milestone receipts in US dollars from Elan Corporation, the Group’s North American licensee for frovatriptan,
royalty and product sale receipts in euros from Menarini, the Group’s European licensee for frovatriptan and payments
in US dollars to various clinical research organisations in respect of ongoing trials. In addition, the Group has currency
exposures to balances in currencies other than the Group’s functional currency. The only significant balance relates to
the US dollar other creditor balance due to GSK (see note 15). The Group considers selectively hedging against specific
significant currency exposures where the dates of future payments or receipts in foreign currency are known. There were
no hedging transactions in place at 31 December 2003 or 30 April 2003. Following the year end, the amount due to
GSK of $7.5 million in September 2003 was hedged.
All the Group’s debtors and creditors falling due within one year (other than the bank overdraft and secured loan) have
been excluded from the disclosures below either due to the exclusion of short-term items or because they do not meet
the definition of a financial liability.
55
Vernalis 
Annual report and accounts 2003 56
Vernalis 
Annual report and accounts 2003
Notes to the financial statements continued
For the eight-month period ended 31 December 2003
25  Financial instruments related disclosure continued
Interest rate risk profile The interest rate risk profile of the Group’s financial assets and liabilities is:
31 December 2003 30 April 2003 
Floating Fixed Floating Fixed 
rate rate Total rate rate Total
£000 £000 £000 £000 £000 £000
Financial liabilities
Sterling secured loan (i) – 1,485 1,485 – 1,620 1,620
Convertible loan ––– – 7,000 7,000
Finance leases (ii) – 756 756 – 1,576 1,576
– 2,241 2,241 – 10,196 10,196
Financial assets
Sterling cash at bank and in hand (v) (16) – (16) 180 – 180
Euro cash at bank and in hand 99 – 99 11 – 11
US dollar cash at bank and in hand 1,802 – 1,802 147 – 147
Sterling short-term investments (iii) (v) 10,360 – 10,360 16,491 – 16,491
Sterling short-term deposits (iv) – 11,969 11,969 4,483 27,141 31,624
US dollar investment ––– 70 – 70
Australian dollar investment 83 – 83 109 – 109
Canadian dollar investment ––– 928 – 928
12,328 11,969 24,297 22,419 27,141 49,560
The Group’s provisions and other creditors are non-interest bearing.
i) The secured loan is for a term of 20 years from 14 April, 1989, and is secured by a fixed charge over three 
of the Group’s freehold properties. Interest is fixed at 12.13 per cent per annum throughout the term. The loan 
is repayable quarterly in arrears by equal instalments. The weighted average period until maturity is six years.
ii) The finance leases were all in sterling at fixed rates of interest. The weighted average interest rate and period
remaining on liabilities at 31 December 2003 was 8.8 per cent and 1.9 years. 
iii) The floating rate short-term investments are invested in a money market managed fund with a weighted average
maturity of less than 120 days and are repayable within 48 hours.
iv) The fixed rate short-term deposits are placed with a range of banks and building societies at fixed terms ranging
between overnight and 12 months and at fixed rates ranging between 3.55 per cent and 4.12 per cent.
v) Sterling short-term investments are used to maintain a positive sterling bank balance.
Borrowing facilities The Group has no significant undrawn committed borrowing facilities at 31 December 2003.
Foreign currency exposure At 31 December 2003 the Group’s operating companies had net monetary assets of 
£1.8 million (30 April 2003: £0.1 million) denominated in US dollars, £0.1 million (30 April 2003: £0.1 million)
denominated in Australian dollars, £0.1 million (30 April 2003: £nil) denominated in euros and £nil (30 April 2003:
£0.9 million) denominated in Canadian dollars.
Fair value of financial assets and liabilities There is no significant difference between the fair value and the carrying
value of the Group’s financial assets and liabilities at 31 December 2003 and 30 April 2003, except for the secured
loan, other creditors and fixed asset investments. The fair value of the loan at £1.7 million (30 April 2003: £1.9 million)
and other creditors at £9.5 million (30 April 2003: £10.9 million) was calculated using a discounted cash flow method
as market values were unavailable. The book value of the loan at 31 December 2003 was £1.5 million (30 April 2003:
£1.6 million). The book value of other creditors was £11.4 million (April 2003: £12.6 million). The market value of the
Group’s listed investments at 31 December 2003 was £83,000 (30 April 2003: £179,000).
In February 2004, following the merger of Genesoft Pharmaceuticals Inc. with Oscient Pharmaceuticals Corp. (see note
12) the Group has a new US dollar investment to replace that held at 31 December 2003. The book value and fair value
of these shares was nil at 31 December 2003. 26  Operating lease commitments
Annual commitments for the Group under operating leases are as follows:
31 December 2003 30 April 2003 
Plant, Plant, 
Land and machinery Land and machinery
buildings and vehicles buildings and vehicles
£000 £000 £000 £000
Expiring within one year –9 319 8
Expiring in the second to fifth years –34 –68
Expiring after five years 2,251 – 2,368 –
2,251 43 2,687 76
27  Financial commitments and contingencies
The Group has commitments of up to £12.45 million (30 April 2003: £12.45 million) and US$nil (30 April 2003
US$13.25 million) which are contingent upon successful product development, registration and approval.
Company The Company has no financial commitments (April 2003: nil).
28  Legal matters
There are no legal or arbitration proceedings (including any such proceedings which are pending or threatened of which
Vernalis is aware) which may have or have had during the 12 months preceding the date of this report, a significant
effect on the financial position of Vernalis and the Group as a whole. 
29  Post balance sheet events
On 30 March 2004 the Company announced it had reached agreement with Elan to reacquire the North American rights
for frovatriptan, subject to shareholder approval. The agreement was approved by shareholder vote at an Extraordinary
General Meeting of the Company held on 13 May 2004. The deferred income (see note 14) will be offset against the
consideration payment of $50 million and the balance will be capitalised as an intangible asset and amortised over the
remaining patent life of the product.
30  Related party transaction
Following Mr Edwards’ resignation from the Board on 10 September 2003 he was paid £150,000 in respect of
consultancy provided to the Company.
57
Vernalis 
Annual report and accounts 2003 58
Vernalis 
Annual report and accounts 2003
US accounting policies and financial statements
The financial statements of the Group are prepared in accordance with UK GAAP which differs in certain respects from
US GAAP. The tables below summarise the material adjustments to the loss for the period and shareholders’ funds
which would be required if US GAAP had been applied instead of UK GAAP.
Reconciliation of loss for the period to US GAAP
Eight months to Year to 30 April 
31 December 2003
2003 (as restated)
Notes £000 £000
Loss under UK GAAP (34,219) (30,586)
Adjustments in respect of purchase accounting for Vernalis Group plc: i
Add-back pre-acquisition losses 4,634 13,098
Add-back expensed “merger” costs 3,289 –
Write-off in-process research and development capitalised (4,091) –
Expense acquired fair value less book value of inventory (64) –
Redundancy provision included in acquisition balance sheet 560 –
Amortisation in respect of pre-acquisition goodwill 596 –
Amortisation of acquired developed product (1,451) –
3,473 13,098
Adjustments in respect of purchase accounting for RiboTargets Holdings plc:
Write-off in-process research and development capitalised – (5,077)
Redundancy provision included in acquisition balance sheet – 102
Amortisation charge on reduced goodwill asset 1,837 60
Amortisation of acquired developed product (2,406) (18)
(569) (4,933)
Other US GAAP adjustments:
Payroll taxes payable on shared options ii – (107)
Permanent diminution in value of marketable securities iii 23 17
Intangible asset amortisation iv 2,253 210
Share compensation charges v – (257)
Embedded option vi (63) 63
Revenue recognition vii (179) –
Net loss under US GAAP (29,281) (22,495)
Loss per share under US GAAP (28.0)p (66.0)p
Reconciliation of shareholders’ funds to US GAAP
31 December Year to 30 April 
2003 2003
Notes £000 £000
Shareholders’ funds under UK GAAP 33,788 53,575
Adjustments in respect of purchase accounting for Vernalis Group plc: i
Impact on loss for period 3,473 13,098
Less pre-acquisition losses 116,577 103,479
Less other pre-acquisition reserves (126,496) (112,036)
Fair value of shares issued in consideration 46,302 –
Share issue costs on acquisition (1,164) –
38,692 4,541
Adjustments in respect of purchase accounting for RiboTargets Holdings plc:
Impact on loss for period (569) (4,933)
Increase in fair value of consideration – 4,005
(569) (928)
Other US GAAP adjustments: – –
Payroll taxes payable on share options ii – –
Unrealised loss on investment iii 40 17
In-process research and development iv (452) (1,777)
Share compensation charges v – –
Embedded option vi – 63
Revenue recognition vii (179) –
Shareholders’ funds under US GAAP 71,320 55,491 Summary of material differences between UK GAAP and US GAAP
i)  Purchase accounting Under UK GAAP, the merger of British Biotech plc and Vernalis Group plc was accounted for as
a “merger of equals” (pooling of interests). Under US GAAP the merger was accounted for as the acquisition of Vernalis
Group plc by British Biotech plc using “purchase accounting”. Under purchase accounting, the cost of the investment 
is calculated at the market value of the shares issued together with incidental costs, and the assets and liabilities of
the acquired entity are recorded at fair value.
Details of the book value and provisional fair value of the assets and liabilities of Vernalis Group plc as at 29 August
2003 are as set out below:
Book values Adjustments Fair values 
£000 £000 £000
Tangible fixed assets 1,104 (351) 753
Intangible fixed assets 17,627 42,924 60,551
Stock 37 64 101
Debtors 2,340 – 2,340
Cash and liquid investments 15,969 – 15,969
Creditors falling due within one year (15,310) (335) (15,645)
Creditors falling due after more than one year (16,482) 1,399 (15,083)
Provisions – (560) (560)
Net assets acquired 5,285 43,141 48,426
Satisfied by:
Shares issued and to be issued 46,302
Expenses of acquisition 2,124
Total consideration 48,426
On 29 August 2003 the Group announced the successful acquisition of Vernalis Group plc. Under the terms of the 
offer made to Vernalis Group plc shareholders, 0.861 shares in British Biotech plc have been issued in exchange for
one share held in Vernalis Group plc. Based upon a British Biotech plc average closing share price two days either 
side of the date of announcement of 3 July 2003 of 61.5 pence this valued Vernalis Group plc at £46.3 million.
In accordance with FAS 141, the acquired in-process research and development and developed technology (frovatriptan)
assets have been identified and valued. Following this valuation, the initial negative goodwill arising of £28,600,000
has been allocated on a pro-rata basis against all non-current assets such that the value of the net assets acquired 
is equal to the value of the consideration and expenses paid. The net asset values included in the US GAAP balance
sheet were £56,460,000 in respect of the developed existing product and £4,091,000 in respect of the in-process
research and development programmes. In accordance with US GAAP, the amount allocated to in-process research and
development was expensed in the eight-month period ended 31 December 2003. The developed existing product asset
is being amortised over the 12-year remaining life of the underlying patents.
An accounting policy adjustment has been made to the balance sheet values stated at 29 August in respect of 
upfront payments received and recognised as revenue, which under the Group policy have been deferred.
Stock, other creditors and market investments have been fair valued at the date of acquisition. A provision of £560,000
has been recognised at the date of acquisition in respect of redundancy payments. Intangible fixed assets acquired
comprised goodwill in respect of the acquisition by Vernalis Group plc of Cerebrus in 2001, which has not been
capitalised separately from the assets recognised on the acquisition of Vernalis Group plc by British Biotech plc. 
In addition to the £2,125,000 of acquisition expenses, share issue costs of £1,164,000 were incurred.
ii) Payroll taxes payable on share options In accordance with UITF Abstract 25, “National Insurance Contributions on
Share Options Gains”, the Group has provided for the employer’s National Insurance payable on unapproved options
granted after 5 April 1999. In accordance with US GAAP, taxation is only charged upon exercise of the option. 
iii) Permanent diminution in value of marketable securities Under UK GAAP, an investment is written down where a
permanent impairment has occurred. Under US GAAP, marketable securities are valued at market value, with temporary
diminution in value being taken to other comprehensive income and permanent diminutions taken to the statement 
of operations. The definition of permanent is more prescriptive under US GAAP. At 31 December 2003 there was an
increase in the value of securities between UK and US GAAP of £23,000. The market value of securities at 30 April
2003 resulted in an increase to the realisable value of the securities of £17,000. 
59
Vernalis 
Annual report and accounts 2003 60
Vernalis 
Annual report and accounts 2003
US accounting policies and financial statements continued
Summary of material differences between UK GAAP and US GAAP continued
iv) In-process research and development Under UK GAAP, certain payments to acquire licences to products are
capitalised as intangible fixed assets under FRS 10. Under US GAAP these payments are written off as in-process
research and development in so far as these products are to be used in research and development activities and 
have no future alternative use. 
v) Share compensation charges Under UK GAAP, the cost of providing share options with performance criteria is
recognised over the period of the performance criteria using as measurement date the date of issue. Under US GAAP,
the measurement date remains open until it is known how many options will be available. 
vi) Embedded option Under US GAAP, FAS 133, as amended, requires that all derivative financial instruments including
embedded derivative financial instruments be fair valued while any change in that fair value is taken to the profit and
loss account. 
vii) Revenue recognition In previous years under UK GAAP, revenue related to non-refundable up-front fees and non-
refundable fees received in connection with the achievement of “milestones” in an effort to obtain regulatory approval
of new drugs is recognised upon receipt provided there are no related commitments of the Group. Under US GAAP
non-refundable up-front fees are deferred and recognised as revenue over the estimated period of the project and 
fees earned for the achievement of substantive milestones are recognised when the milestone is achieved and the
payment is due and payable.
US GAAP financial statements
Consolidated statement of operations
Eight months 
ended Year ended
31 December 30 April
2003 2003
£000 £000
Revenues:
Product sales and royalties 2,022 –
Collaborative agreements 2,987 1,078 
Total revenues 5,009 1,078
Costs and expenses:
Cost of sales (179) –
Research and development (22,084) (14,292)
Selling, general and administrative (5,497) (6,658)
Acquired in-process research and development (4,091) (5,077)
Amortisation of intangibles (2,739) –
Total costs and expenses (34,590) (26,027)
Loss from operations (29,581) (24,949)
Other income/(expense):
Investment income 1,941 1,435
Realised (loss)/gain on marketable securities, net (40) 80
Amounts written off investments (862) (799)
Gain on sale of property (2,988) –
Net loss before income taxes (31,530) (24,233)
Research and development tax credit 2,249 1,738
Net loss attributable to shareholders (29,281) (22,495)
Amounts per common share:
Net loss attributable to common shareholders, basic and diluted (28.0)p (66.0)p
Weighted average shares, basic and diluted 104,439 34,107 Consolidated balance sheet
As at As at
31 December 30 April
2003 2003
£000 £000
Assets
Current assets:
Cash and cash equivalents 24,254 24,868
Marketable securities – 19,138
Inventory 49 –
Prepaid expenses and other current assets 10,991 7,105
Total current assets 35,294 51,111
Property and equipment, net 7,062 11,258
Other assets 83 –
Goodwill 4,620 4,875
Intangible assets, net 56,780 2,406
Total assets 103,839 69,650
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable 9,129 2,205
Accrued expenses 9,441 6,217
Current portion of deferred revenue 4,822 550
Current portion of capital lease obligations 738 770
Current proportion of long-term debt 270 270
Total current liabilities 24,400 10,012
Deferred revenue, net of current portion 1,299 2,298
Capital lease obligations net of current portion 18 499
Long-term debt, net of current portion 6,802 1,350
Shareholders’ equity:
Common stock, 5 pence per value 42,577 35,045
Additional paid-in capital 369,978 332,400
Deferred compensation 1,802 1,802
Accumulated deficit (343,023) (313,742)
Accumulated other comprehensive income (14) (14)
Total stockholders’ equity 71,320 55,491
Total liabilities and stockholders’ equity 103,839 69,650
61
Vernalis 
Annual report and accounts 2003 62
Vernalis 
Annual report and accounts 2003
US accounting policies and financial statements continued
Consolidated statement of cash flows
Eight months
ended Year ended
31 December 30 April
2003 2003
£000 £000
Cash flows from operating activities:
Net loss (29,281) (22,495)
Adjustments to reconcile net loss to cash used in operating activities:
Acquired in-process research and development 4,758 –
Depreciation and amortisation 3,723 1,374
Realised (gain on marketable securities) – (29)
Stock compensation expense – 2,889
Other non-cash expenses 1,948 775
Changes in operating assets and liabilities:
Inventory 8 –
Prepaid expenses and other current assets 1,624 42
Accounts payable and accrued expenses (10,770) (2,307)
Deferred revenue 1,299 –
Net cash used in operating activities (26,691) (19,751)
Cash flows from investing activities:
Proceeds from sales and maturities of marketable securities 22,985 39,798
Purchase of property and equipment (16) (775)
Net cash used in RiboTargets acquisition – 1,967
Net cash used in Vernalis acquisition 10,573 –
Net cash provided by investing activities 33,542 40,990
Cash flows from financing activities:
Repayment of principal of long-term debt obligations (7,000) (665)
Principal payments on capital leases (410) (180)
Net cash provided by financing activities (7,410) (845)
Increase/(decrease) in cash and cash equivalents (559) 20,394
Equity adjustment from foreign currency translation (55) 29
Cash and cash equivalents, beginning of period 24,868 4,445
Cash and cash equivalents, end of period 24,254 24,868 Year to Year to Year to Year to Eight months to
30 April 30 April 30 April 30 April 31 December
2000 2001 2002 2003 2003
£000 £000 £000 £000 £000
Turnover
Continuing operations 7,560 4,616 14,766 9,140 8,514
Acquisitions – – – 3 117
7,560 4,616 14,766 9,143 8,631
Operating loss
Continuing operations (47,655) (57,292) (34,954) (35,590) (17,312)
Acquisitions – – – (659) (12,076)
(47,655) (57,292) (34,954) (36,249) (29,388)
Profit/(provision for loss) on disposal of fixed assets 246 557 2,505 – (2,988)
Merger transaction expenses –––– (5,396)
Amount written off investments – (799) (324) (799) (862)
Net interest 6,432 4,199 2,783 2,803 1,770
Loss before tax (40,977) (53,335) (29,990) (34,245) (36,864)
Research and development expenditure 43,605 50,408 38,152 30,512 26,890
Assets employed
Fixed assets 39,441 24,193 35,997 41,358 30,516
Cash and short-term deposits and investments 104,655 83,022 62,982 48,454 24,214
Other net current liabilities (814) (7,754) (34,131) (8,946) (8,733)
Creditors due after more than one year (3,802) (9,559) (1,683) (24,773) (8,119)
Provisions for liabilities and charges (300) (350) (250) (2,517) (4,089)
Net assets 139,180 89,552 62,915 53,576 33,789
Capital employed
Share capital 35,158 35,157 35,225 36,895 38,813
Share premium account 298,613 298,420 298,615 298,252 298,226
Other reserves 116,153 120,054 120,054 140,221 152,761
Profit and loss account (310,744) (364,079) (390,979) (421,792) (456,011)
Shareholders’ funds 139,180 89,552 62,915 53,576 33,789
* Represents four years to 30 April 2003 and the eight-month period to 31 December 2003.
63
Vernalis 
Annual report and accounts 2003
Five-year* summary 64
Vernalis 
Annual report and accounts 2003
Shareholder information
Analysis of ordinary shareholdings at 30 April 2004
Number of shareholders: 23,537
Percentage 
Percentage Number of of ordinary 
Number of of total ordinary share 
shareholders holders shares capital
Shareholding range
1 – 1,000 21,822 93.14 3,570,831 2.51
1,001 – 5,000 1,149 4.88 2,503,698 1.76
5,001 – 50,000 326 1.39 4,886,396 3.44
50,001 – 500,000 99 0.42 18,061,548 12.71
500,000 – 1,000,000 17 0.07 11,994,624 8.44
1,000,000 and over 24 0.10 101,109,786 71.4
Classification of shareholders
Nominee companies (including banks and bank nominees) 1,063 4.52 111,754,717 78.63
Individuals (including deceased accounts) 22,297 94.73 8,651,090 6.08
Limited companies 121 0.51 4,359,892 3.07
Insurance companies 5 0.02 477,216 0.34
Investment trusts 13 0.06 1,084,000 0.76
Pension funds 6 0.02 1,856 0.00
Other institutions 32 0.14 15,798,112 11.12
Registrar
Administrative enquiries regarding shareholdings in Vernalis plc on such matters as a change of address or lost 
share certificates should be made to Capita IRG plc. American Depository Receipt (ADR) holders should contact 
The Bank of New York. Correspondence should clearly state the name and address of the shareholder and refer 
to Vernalis plc. 
Amalgamation of shareholdings
If a shareholder receives more than one copy of the report and accounts, it may indicate multiple accounts in the
shareholder’s name are appearing on the share register. Shareholders can write to Capita IRG plc at the address
opposite stating the accounts concerned and giving instructions on how they should be amalgamated.
Financial calendar
Annual General Meeting: Thursday 24 June 2004
Interim results 2004: August 2004
Preliminary results 2004: February 2005
Share price information
Vernalis shares are listed on the London Stock Exchange under the symbol VER. The latest share price information is
available on the Cityline Service operated by the Financial Times: telephone 0906 8432619 (calls from within the UK
are charged at 60p per minute).
Annual General Meeting
The Company’s 2004 Annual General Meeting of shareholders will take place on Thursday 24 June 2004 at
Ironmongers’ Hall, Shaftesbury Place, Aldersgate Street, Barbican, London EC2Y 8AA. ADR holders may instruct 
The Bank of New York as to how the ordinary shares represented by their ADRs should be voted by completing and
returning the voting card provided by The Bank of New York in accordance with the instructions given. 
Information for US investors
The Company’s shares, in the form of American Depository Shares (ADSs) and as evidenced by ADRs, are listed in the
USA on the Nasdaq National Market System. The ADRs are issued by The Bank of New York. Each ADR is equivalent 
to two ordinary shares and trades under the symbol VNLS The Group prepares an annual report on Form 20-F which 
is filed with the Securities and Exchange Commission.
The Group prepares its UK financial statements in accordance with generally accepted accounting principles (GAAP) 
in the UK. UK GAAP differs in certain respects from US GAAP and a reconciliation between UK and US GAAP is included
in the Form 20-F and in this document.  Vernalis plc
Oakdene Court
613 Reading Road
Winnersh
Berkshire RG41 5UA
Tel +44 (0)118 977 3133
Fax +44 (0)118 989 9300
Registered number 2304992
Information about the Company may be found 
on the internet at www.vernalis.com
Registrar and transfer office
Capita IRG plc
Bourne House
34 Beckenham Road
Beckenham BR3 4TU
Tel 0870 1623100
Fax +44 (0)20 8639 2342
Email ssd@capita-irg.com
www.capita-irg.com
Registered auditors
PricewaterhouseCoopers LLP
1 Embankment Place
London WC2N 6RH
Tel +44 (0)20 7583 5000
Fax +44 (0)20 7822 4652
www.pwc.com
ADR depositary bank
The Bank of New York
Investor Relations
PO Box 11258
Church Street Station
New York, NY 10286-1258
Tel +1 610 312 5315
(or toll-free on 1 888 BNY ADRS for US callers)
Email shareownersvcs@bankofny.com
www.adrbny.com
www.stock.bankofny.com
Stockbroker
Cazenove & Co Ltd
20 Moorgate
London EC2R 6DA
Tel +44 (0)20 7588 2828
Fax +44 (0)20 7155 9000
www.cazenove.com
Financial adviser
JP Morgan
10 Aldermanbury 
London EC2V 7RF
Tel +44 (0)20 7742 4000
Solicitors
Allen & Overy LLP
One New Change
London EC4M 9QQ
Tel +44 (0)20 7330 3000
Public relations
Brunswick Group
16 Lincoln’s Inn Fields
London WC2A 3ED
Tel +44 (0)20 7404 5959
Addresses and advisers
Designed and produced by C&FD. Printed in England by St Ives Westerham Press ISO 14001. Vernalis plc 
Oakdene Court
613 Reading Road
Winnersh
Berkshire, RG41 5UA
www.vernalis.com
Vernalis plc Annual report and accounts 2003