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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF
1934
  OR 
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 for
the fiscal year ended March 31, 2006
  OR 
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 for the transition period from

to
  OR 
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Date of event requiring this shell company report
 Commission File Number: 000-51463
 PROTHERICS PLC
  Not Applicable
 England and Wales
 The Heath Business & Technical Park, Runcorn, Cheshire, WA7 4QX England
  
 None
  Ordinary Shares of 2 Pence Each
 American Depositary Shares, as evidenced by American Depositary Receipts, each representing ten (10) Ordinary
Shares
 None
 
 259,287,068 ordinary shares of 2p each as of March 31, 2006
 o þ
 þ o
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
 þ o
 o þ




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##### 



TABLE OF CONTENTS
 PageCAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS
    
    
    1GLOSSARY OF SCIENTIFIC AND TECHNICAL TERMS
    
    
    1PART IITEM 1.
    
    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
    
    
    5ITEM 2.
    
    OFFER STATISTICS AND EXPECTED TIMETABLE
    
    
    5ITEM 3.
    
    KEY INFORMATION
    
    
    5ITEM 4.
    
    INFORMATION ON THE COMPANY
    
    
    13ITEM 4A.
    
    UNRESOLVED STAFF COMMENTS
    
    
    36ITEM 5.
    
    OPERATING AND FINANCIAL REVIEW AND PROSPECTS
    
    
    36ITEM 6.
    
    DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
    
    
    48ITEM 7.
    
    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
    
    
    63ITEM 8.
    
    FINANCIAL INFORMATION
    
    
    64ITEM 9.
    
    THE OFFER AND LISTING
    
    
    64ITEM 10.
    
    ADDITIONAL INFORMATION
    
    
    65ITEM 11.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    78ITEM 12.
    
    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
    
    
    80PART IIITEM 13.
    
    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
    
    
    81ITEM 14.
    
    MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
    
    
    81ITEM 15.
    
    CONTROLS AND PROCEDURES
    
    
    81ITEM 16A.
    
    AUDIT COMMITTEE FINANCIAL EXPERT
    
    
    81ITEM 16B.
    
    CODE OF ETHICS
    
    
    81ITEM 16C.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    82ITEM 16D.
    
    EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES
    
    
    82ITEM 16E.
    
    PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
    
    
    82PART IIIITEM 17
    
    FINANCIAL STATEMENTS
    
    
    83ITEM 18.
    
    FINANCIAL STATEMENTS
    
    
    83ITEM 19.
    
    EXHIBITS
    
    
    83Ex-1.1  Articles of Association of Protherics PLCEx-4.11  Patent and Know-how Licence AgreementEx-4.12  Asset Sale and Purchase AgreementEx-4.13  Instrument constituting Unsecured Convertible Loan NotesEx-4.18  Protherics PLC 2005 Long-Term Incentive PlanEx-4.19  Protherics PLC Performance Share PlanEx-4.20  Protherics PLC 2005 Deferred Bonus PlanEx-21  U.S. Sub-plan to Protherics PLC 2005 Deferred Bonus PlanEx-4.22  Protherics PLC 2005 Executive Share Option PlanEx-4.33  Letter of Appointment dated July 21, 2005, between Protherics PLC and Bryan G. MortonEx-8.1  List of SubsidiariesEx-31.1  Section 302 Certification of the CEOEx-31.2  Section 302 Certification of the CFOEx-32.1  Section 906 Certification of the CEO & CFO




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CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS




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GLOSSARY OF SCIENTIFIC AND TECHNICAL TERMS
  adjuvant
    
    a pharmacological agent added to a drug to increase or aid its effectaffinity
    
    the strength of the binding between an antibody and its antigen or
epitopeangiotensin
    
    the term used to describe a family of peptide hormones that are
involved in the control of blood pressure and body fluid levelsantibody
    
    substance produced by cells of the immune system which bind to parts
of other substances in a highly specific way to neutralize their
effectantiserum(a)
    
    serum from an animal which has been injected with an immunogenassay
    
    a quantitative or qualitative process used to measure or detect a
particular substanceBLA
    
    U.S. Biological License Applicationbovine spongiform encephalopathy
    
    the abnormal prion protein disease of the brain in cattleCP
    
    the centralized procedure for registering pharmaceutical products in
order to obtain marketing authorization, for which there is a single
application, evaluation and authorization within the E.U.CHMP
    
    European Committee for Medicinal Products for Human Useclinical development
    
    the stage of pharmaceutical research and development in which
potential drugs are studied in human clinical trials (or in the
target species for animal health drugs)CMSs
    
    the Concerned Member States, nominated by the applicant, to whom the
approval decision for marketing approval is circulated by the RMS
under the MRPcytokine
    
    a cellular messenger, typically of the immune systemcytotoxic
    
    a molecule or drug that is toxic to cellsdiagnostic test
    
    an assay used for the diagnosis of disease typically carried out on
body fluids or tissuesDP
    
    the decentralized procedure method of registering pharmaceutical
products in order to obtain marketing authorization, intended for
products that have not yet received authorization in any E.U.
countryEMEA
    
    European Medicines Agency, formerly the European Agency for the
Evaluation of Medicinal Productsencephalopathies
    
    diseases of the brain which interfere with its normal functioning




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enzymes
    
    proteins that promote changes in other molecules (e.g., in other
proteins, sugars or fatty substances)epitope
    
    the part or parts of the target molecule which react with an antibodyfab fragment
    
    the fragment produced by cleavage of an antibody with a proteolytic
enzyme that binds to the antibody target molecule (antigen)FDA
    
    U.S. Food and Drug Administrationfragment
    
    part of an antibody molecule which can be split from the whole
molecule and which still retains biological activitygood manufacturing practice
    
    measures needed to ensure that drug substance will be consistently
produced and controlled to appropriate quality standards as required
by any marketing authorisation.high blood pressure
    
    blood pressure that is above medically defined limits and which is
associated with increased risks of stroke and heart diseaseimmune system
    
    the cells and structures in the body that are capable of producing
antibodies and other components of the immune responseimmunogen
    
    any substance which can elicit the formation of specific antibodiesimmunotherapeutics
    
    medicines that act on or through the immune system (e.g., vaccines)inhibitor
    
    a substance that blocks the action of another substance (e.g., an
enzyme)in vitro
    
    experimental biological processes made to occur in isolation from
the whole organismMAA
    
    Marketing Authorisation Applicationmetalloorganic
    
    a carbon containing synthetic chemical compound that contains a
metal group as part of its intrinsic biochemical actionmetastasis
    
    the spread of a tumor from the organ of origin to a distant siteMHRA
    
    Medicines and Healthcare Products Regulatory Agencymolecular target
    
    the substance (e.g., an enzyme) at which drug discovery efforts are
directedmonoclonal antibody
    
    an antibody directed to a single epitope on the target moleculemonospecific antivenins
    
    antisera prepared to the venom of a single species of snakeMRP
    
    the mutual recognition procedure for registering pharmaceutical
products in order to obtain marketing authorization, which involves
submission of a marketing authorization application to one national
regulatory authority, with secondary approval from other E.U. member
states subsequent to the approval of the first application
 2




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named patient basis
    
    this refers to a form of limited regulatory approval for certain
drugs used in the treatment of human injuries or conditions for
which no satisfactory therapies exist, or for which other drugs are
unavailable, cause adverse effects or are in short supplyNCI
    
    National Cancer InstituteNICE
    
    National Institute for Clinical Effectivenessnon-ionic surfactant
    
    microscopic globular structures with a fluid center surrounded by
layers of fatty materials which can entrap vaccine antigensoncology
    
    the study of cancerorphan drug status
    
    status granted by the FDA which provides certain development,
registration and marketing incentives, for development of treatments
of small (fewer than 200,000 per annum in the United States)
incidence conditionsPCT
    
    Patent Cooperation Treaty (Washington, 1970), as amended, and the
regulations and administrative instructions thereunderphase 1 clinical study/trial
    
    the assessment of the safety of a biologically active substance or
assessment of the safety and pharmacokinetics of a small molecule in
subjectsphase 2 clinical study/trial
    
    the assessment in patients of a drug to determine dose range and
preliminary efficacyphase 3 clinical study/trial
    
    the assessment of the efficacy and safety of a drug, usually in
comparison with a marketed product or a placebo, in the patient
population for which it is intendedpolyclonal antibody
    
    a population of antibodies directed to multiple epitopes on the
target moleculepost-mortem tests
    
    testing of animals after death (e.g., from samples taken in the
slaughterhouse)pre-clinical development
    
    the research and development stage immediately prior to clinical
trials, which usually lasts 12-18 monthsprion protein
    
    the protein that assumes an abnormal structure in bovine spongiform
encephalopathy and related diseases and which is believed to be
capable of transmitting bovine spongiform encephalopathy and related
diseasesprodrug
    
    an inert chemical which can be activated within the body to an
active drugproof of concept and optimization studies
    
    studies in animals to demonstrate the (expected) action of the drug
and to define the most effective form of the drugpurification of polyclonal antibodies
    
    the process of removal of extraneous foreign proteins, viruses and
other biological materials associated with manufacturing of product®
    
    means a trademark has been registered in the United States Patent
and Trademark Office
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RMS
    
    the Reference Member State to whom the initial application for
marketing authorization is submitted under the MRPsepsis
    
    the name given to a spectrum of disorders caused by the bodys
exaggerated response to infection or injury. The defining
characteristics are inflammation, abnormal vital signs and failure
of one or more major organ systems. The condition may progress to
multiple organ failureserum
    
    the component of blood excluding the red and white blood cells and
fibrinogenspecificity
    
    the degree to which an antibody binds to antigens other than that to
which it is primarily directedtherapeutic
    
    pharmaceutical product targeted to treat a specific disease
    
    means that a trademark is being registered or an application for a
trademark is being made in one or more countriesTNFa
    
    tumor necrosis factor alpha, a cytokine, involved in the bodys
inflammatory processtransmissible spongiform encephalopathy
    
    a degenerative condition of the nervous system believed to be caused
by the accumulation of an abnormal form of the prion proteinvaccine
    
    a formulation used to stimulate an immune response
 4




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PART I
 
 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
  
 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
  
 ITEM 3. KEY INFORMATION
 Selected Financial Data
   IFRS Financial Record
 Year Ended March 31,2006
    
    2005£000
    
    £000Consolidated Income Statement Information:Revenue
    
    
    17,709
    
    
    
    18,839Operating (loss)/profit
    
    
    (9,533
    )
    
    
    (1,658
    )Net (loss)/profit
    
    
    (9,488
    )
    
    
    (1,781
    )Net (loss)/profit per ordinary share (basic and fully diluted)
    
    
    (3.8p
    )
    
    
    (0.8p
    )Consolidated Balance Sheet Data:Total assets (fixed assets plus current assets)
    
    
    60,136
    
    
    
    41,352Net assets
    
    
    26,352
    
    
    
    25,969Long-term obligations
    
    
    16,988
    
    
    
    5,896Shareholders funds
    
    
    26,352
    
    
    
    25,969Number of equity shares outstanding (in thousands of shares)
    
    
    259,287
    
    
    
    242,204
 5




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U.S. GAAP Financial Record
  Year Ended March 31,2006
    
    2005
    
    2004
    
    2003
    
    2002£000
    
    £000
    
    £000
    
    £000
    
    £000(in thousands of pounds, except share and per share data)Consolidated Income Statement
Information:Revenue
    
    
    13,970
    
    
    
    13,119
    
    
    
    16,913
    
    
    
    12,515
    
    
    
    7,416(Loss)/profit from operations
    
    
    (12,586
    )
    
    
    (7,269
    )
    
    
    (10,875
    )
    
    
    (1,255
    )
    
    
    2,832Net (loss)/profit
    
    
    (12,511
    )
    
    
    (7,392
    )
    
    
    (10,855
    )
    
    
    (889
    )
    
    
    2,769Net (loss)/profit per ordinary
share (basic and diluted)
    
    
    (5.1p
    )
    
    
    (3.3p
    )
    
    
    (5.3p
    )
    
    
    (0.5p
    )
    
    
    1.6pNet (loss)/profit per
ADS(1) (basic and
diluted)
    
    
    (50.7p
    )
    
    
    (33.0p
    )
    
    
    (52.6p
    )
    
    
    (4.7p
    )
    
    
    15.5pConsolidated Balance Sheet Data:Total assets
    
    
    53,750
    
    
    
    34,772
    
    
    
    27,430
    
    
    
    20,198
    
    
    
    20,024Long-term obligations
    
    
    17,146
    
    
    
    5,896
    
    
    
    9,449
    
    
    
    717
    
    
    
    1,106Shareholders funds (net assets)
    
    
    5,454
    
    
    
    8,591
    
    
    
    2,877
    
    
    
    9,817
    
    
    
    10,271
 
 (1)
    
    Each ADS represents ten ordinary shares.  Revenue Recognition when Right of Return Exists ® ®
 Accounting for stock issued to employees
  6




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Year Ended March 31,2006
    
    2005£000
    
    £000Net (loss) under IFRS
    
    
    (9,488
    )
    
    
    (1,781
    )U.S. GAAP reconciling adjustments:Revenue recognition
    
    
    (3,117
    )
    
    
    (4,593
    )Stock compensation plans
    
    
    292
    
    
    
    (352
    )Derivative instruments and hedging activities
    
    
    
    
    
    
    (626
    )6% Unsecured convertible loan notes
    
    
    28
    
    
    
    Other
    
    
    (226
    )
    
    
    (40
    )Net (loss) under U.S. GAAP
    
    
    (12,511
    )
    
    
    (7,392
    )
 Currencies And Exchange Rates
   2006 Month Ended
    
    High
    
    LowJanuary 31
    
    $
    1.7885
    
    
    $
    1.7404February 28
    
    
    1.7807
    
    
    
    1.7343March 31
    
    
    1.7567
    
    
    
    1.7256April 30
    
    
    1.8220
    
    
    
    1.7389May 31
    
    
    1.8911
    
    
    
    1.8286June 30
    
    
    1.8817
    
    
    
    1.8108
 Year ended March 31,
    
    Average2002
    
    $
    1.43172003
    
    
    1.55412004
    
    
    1.69262005
    
    
    1.84592006
    
    
    1.7863
 7




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Risk Factors
  If the Company is unable to generate sufficient revenues from operations, it will require
additional financing. This financing may not be available at all or, if available, may be on terms
that dilute shareholders interests.
   If the Company fails to obtain adequate intellectual property rights for its products and product
candidates, competitors may be able to take advantage of the Companys research and development
efforts. The Company may also be subject to claims of intellectual property infringement by third
parties.
     8




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Products in the Companys development pipeline may fail to generate sufficient revenues to fund
operations.
   
    
    a product candidate fails in pre-clinical studies;
    
    a potential product is not shown to be safe and effective in clinical trials;
    
    the Company fails to obtain regulatory approval for the product;
    
    the Company fails to produce a product in commercial quantities at an acceptable cost; or
    
    a product does not gain market acceptance.
 Exchange rate fluctuations may adversely affect the Companys results of operations and financial
position.
   The Company has a history of operating losses and may not be profitable on a sustainable basis.
 ®
 9




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If the Company is unable to maintain existing or enter into new collaborative arrangements, its
ability to develop and market product candidates will suffer and it may be unable to sustain its
business.
  
    
    it will be able to establish additional collaborative arrangements or license agreements;
    
    any collaborative arrangement or agreement will be on favorable terms;
    
    any existing or future collaborative arrangement or agreement will result in a
successful product and/or generate sufficient revenue; or
    
    the Companys collaborative partners will satisfactorily perform their obligations
under the collaborative arrangements.
  If the livestock from which the Company obtains antisera or the snakes from which the Company
obtains venom, develop diseases, the Company may be unable to meet its current or future production
requirements.
  ®
  If the Company is not able to obtain adequate quantities of raw materials from its existing
suppliers or services from external contractors, the Company may not be able to access alternative
sources of supply or services within a reasonable amount of time or at commercially reasonable
rates.
 10




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a
  If the Company is unable to comply with stringent regulatory quality controls, there may be delays
in the production and manufacture of the Companys products.
  Regulation by government agencies imposes significant costs and restrictions on the Companys
business activities.
   11




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Announcements, developments and/or regulatory changes in the biotechnology sector may cause the
Companys share price to fluctuate.
  
    
    announcements by other biotechnology companies of clinical trial results and other
product developments;
    
    adverse developments in the protection of intellectual property or other legal matters;
    
    announcements in the scientific and research community;
    
    changes in treatment recommendations or guidelines by private health organizations
or science foundations;
    
    regulatory changes that affect the Companys products; and
    
    changes in third-party reimbursement policies or in medical practices.
 The Companys competitors may have greater resources for developing product, and, as a result, may
be able to develop products that are superior to, or less costly to manufacture than, the Companys
products or product candidates or launch competing products before it does.
  Third-party reimbursement and health care cost containment initiatives may constrain the Companys
future revenues.
  
    
    challenging the prices charged for health care products;
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
    
    limiting both coverage and the amount of reimbursement for new therapeutic products;
    
    denying or limiting coverage for products that are approved by the regulatory
agencies but are considered experimental or investigational by third-party payors; and
    
    refusing to provide coverage when an approved product is used in a way that has not
received regulatory marketing approval.
 The Company faces product liability and other operational risks and may not be able to obtain
adequate insurance.
  
 ITEM 4. INFORMATION ON THE COMPANY
 History and Development of the Company
       13




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®
  Business Overview
     ®
 ® ®
 14




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Operations
  Corporate Partnerships, Collaborations and Joint Ventures
  15




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Products
  Distribution Partner
    
    Next SignificantProduct
    
    Principal uses
    
    Status
    
    / Licensee
    
    Milestone(1)Products Commercially AvailableCroFab ®
(Crotalidae
Polyvalent Immune Fab
(Ovine))
    
    Minimal to moderate
Crotalid
(rattlesnake)
envenomation
    
    Launched (U.S.)Sold on named
patient basis
within E.U.
    
    Altana (U.S.)
Swedish Orphan
(Scandinavia and
Baltic Countries)
    
    Increased marketing
efforts in the
Southeastern
section of the U.S.DigiFab ®(Digoxin Immune Fab
(Ovine))
    
    Treatment of
life-threatening
digoxin toxicity or
overdose
    
    Launched (U.S.)U.K. marketing
authorization
application
submitted August
2004
    
    Altana (U.S.)
Beacon
Pharmaceuticals
(Europe excluding
Scandinavia and
Germany)
Mayne Pharma
(Australia/SE Asia)
    
    European marketing
approval expected
2007(2)Voraxaze
    
    Methotrexate
toxicity
    
    Orphan Drug
designation in E.U.
and U.S. Sold on
named patient basis
within E.U. and
supplied on
compassionate use
basis in the U.S.
    
    IDIS (European
named patient
sales)
NCI (U.S.
compassionate use
distribution)
    
    Regulatory
submission to
European
authorities made in
July 2005 with
submission to the
FDA planned for the
second half of
2006(3).
Approval
expected in 2007.ViperaTAb
    
    Vipera berus
(common adder
snake) envenomation
Northern Europe
    
    Sold on a named
patient basis
    
    Swedish Orphan
(Scandinavia and
Baltic countries)
    
    Enfer TSE Kit
    
    Detection of Bovine
Spongiform
Encephalopathy
(BSE) in carcasses
    
    Out-licensed and
generating revenues
    
    Licensed to Enfer
Scientific Limited
and Abbott
Laboratories, via
Enfer
    
    Products in DevelopmentCytoFab ®
    
    Treatment of severe
sepsis
    
    Process scale-up
ongoing to provide
product for phase 3
study to be
conducted by
partner.
    
    AstraZeneca
    
    Manufacture of
material for phase
3 trial. Phase 3
trial estimated to
commence 2007.Prolarix (formerly NQO2)
    
    Cancer therapy
    
    Phase 1 trial
    
    
    
    Phase 1 trial
results expected
2007Angiotensin Vaccine
    
    Hypertension
    
    Process development
and manufacture of
adjuvant and
vaccine for phase
2a clinical study
to commence
following
acquisition of
rights to adjuvant
    
    
    
    Phase 2a clinical
trial to commence
in 2007.
 16




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(1)
    
    Each of the dates of next significant milestones represents the Board of Protherics
expectations based on progress to date. There can be no assurance, however, that any of these
dates or milestones will be achieved.(2)
    
    See discussion of DigiFab
® marketing approvals below.(3)
    
    See discussion of Voraxaze marketing approvals below. Products Commercially Available
 CroFab ® ® ®
 ®
 DigiFab ® ® ®
 ViperaTAb  (Vipera berus) 
 Voraxaze 2
  17




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Enfer TSE Assay (BSE Diagnostic Test)
 Products in Development or Research
 CytoFab ® ® ® a ®
 ®
 ®
 Prolarix TM
 18




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TM
    Angiotensin Vaccine
     19




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Principal Markets
  2006
    
    2005£000
    
    £000United Kingdom
    
    
    1,202
    
    
    
    622Rest of Europe
    
    
    554
    
    
    
    932North America
    
    
    15,893
    
    
    
    17,229Rest of the World
    
    
    60
    
    
    
    5617,709
    
    
    
    18,839
  Competition
   Seasonality
 ® ®
 Sources and Availability of Supplies, Consumables and Raw Materials
 ® ® ® ®
 Intellectual Property, Patents and Trademarks
  20




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
    
    Voraxaze -The Company has filed patent applications around certain
researched and previously unpublished aspects of Voraxaze , with the first
filing in February 2004, a PCT filing in February 2005, and a further PCT filing in
August 2005;
    
    Transmissible Spongiform Encephalopathies  The Company has been granted patents for
its transmissible spongiform encephalopathy diagnostic technology in the U.S., Europe
(European Patent Office), South Africa, Australia and New Zealand. These patents will
expire between 2012 and 2015. The European patent was granted in 1999 and is currently
undergoing opposition. Patent applications are pending in the U.S., Canada and Japan,
claiming a priority date of December 3, 1991. The first U.S. divisional patent was
granted on April 30, 2002. A further application to cover new variant Creutzfeldt-Jacob
Disease was filed in January 2004 and PCT, Argentine and Malaysian applications were
filed in January 2005;
    
    Angiotensin vaccine  The Company has pending patent applications for angiotensin
peptide analogues and vaccine uses in Canada, Japan, the U.S., and Argentina, all
claiming a priority date of June 24, 1997. The New Zealand, Australian and European
(the parent application) patents have now been granted. A divisional patent
application is pending in Europe;
    
    Anti-TNFa antibodies  The Company has been granted U.K., U.S., Canadian,
Japanese, European (European Patent Office, EPO), New Zealand and Australian patents
for use of Fab fragments of anti-TNFa antibodies in medicine, particularly for
the use in the treatment of sepsis. The European patent is being maintained in France,
Germany, Italy and Spain. The majority of these patents expire in 2014, although the
U.S. patent is due to expire in 2018;
    
    Mixed monospecific polyclonal antivenins  The Company has been granted European,
United Kingdom, Australian, Japanese and Russian Federation patents on the use of mixed
monospecific polyclonal antivenins. These patents are projected to expire on April 24,
2012, other than the Australian patent, which is expected to expire on April 24, 2008.
The Company is pursuing a U.S. patent application for the antivenins
through an appeals process;
    
    Prolarix(formerly NQO2)  The Company has filed patent applications in
Europe (EPO), U.S., Japan, Canada, U.K, and Hong Kong around using NQO2 to activate
prodrugs in the presence of an added co-factor. The priority date for filing is June
1997 and the filing date is June 15, 1998; the expected expiry date for any patents is
June 15, 2018. Patents have been granted in the U.K., the U.S., Hong Kong and the EPO.
Divisional applications are pending in the U.S. and at the EPO;
 21




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##### Table of Contents




    
    CoVaccine HT adjuvant  In June 2006, the Company acquired the patent applications
and trademarks associated with CoVaccine HT adjuvant from CoVaccine B.V. The patent
family extends to Europe, Australia, Canada, China, Japan and the U.S. The effective
date of filing of the PCT application is November 30, 2000, and this application claims
priority from an earlier European application, filed on November 30, 1999.
 Third Party Patent Rights
 a ® a ® ® a
 a a a a a ®
 a a a a a a a
 ® ®
  22




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##### Table of Contents



Trademarks
  
    
    CroFab® in the U.S.;
    
    CytoFab® in the United Kingdom, Europe and the U.S.;
    
    CytoTAb in the United Kingdom;
    
    DigiFab® in the U.S. and Europe;
    
    DigiTAb in the United Kingdom;
    
    ViperaTAb in the United Kingdom; and
    
    Voraxaze in Europe.
  
    
    Voraxaze in the U.S.; and
    
    Prolarix in the U.S., Europe and Japan.
 ® ® ®
 GOVERNMENT REGULATION
 General
    23




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##### Table of Contents




    
    the lack of necessary results/data required by regulatory authorities;
    
    the changing or adding of regulation; or
    
    new scientific standards or other scientific developments arising during the
application process.
    (a)
    
    the regulatory climate within the E.U., including the influence of the
International Conference on Harmonization, and the approach of the European Medicines
Agency, as well as(b)
    
    the position of the national regulatory authorities.
  Price Regulation
   United States Regulation
 Regulatory Authorities
 24




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##### Table of Contents



FDA Regulation
  (a)
    
    pre-clinical laboratory testing;(b)
    
    submission to the FDA of an investigational new drug application which must
become effective before human clinical trials may be commenced;(c)
    
    adequate and well-controlled human clinical trials to establish the safety and
efficacy of the drug;(d)
    
    submission of a new drug application to the FDA; and(e)
    
    FDA approval of the new drug application prior to any commercial sale or
shipment of the drug.
 Good Practice Standards
 
    
    Good Laboratory Practice, applied to studies performed during pre-clinical
developments to identify the compounds behavior and toxicity in animals;
    
    Good Clinical Practice, intended to ensure the quality and integrity of clinical
data and to protect the rights and safety of human subjects in clinical trials; and
    
    Good Manufacturing Practice, intended to ensure the quality of drugs by setting
minimum standards for all drug manufacturing facilities. Such standards have been
developed by the FDA and by the United States National Committee for Clinical
Laboratory Standards. Violation of these regulations can lead to invalidation of the
relevant studies.
  Clinical Testing
 25




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##### Table of Contents



Approval Procedures and Criteria 
 
    
    proof of safety and efficacy;
    
    demonstration of adequate controls in the manufacturing process; and
    
    conformity with requirements for labeling. Efficacy must usually be demonstrated by
two well-controlled clinical trials carried out in accordance with FDA regulations.
  
    
    the quality of the submission;
    
    the potential contribution of the compound in improving the treatment of the target
disease; and
    
    the workload at the FDA.
   26




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##### Table of Contents



Orphan Drug Status ®
 Accelerated Approval
 Acceptance of Foreign Clinical Data
 Non-Patent Market Exclusivity
  Post Approval
 Manufacturing Controls
 27




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##### Table of Contents



Advertising and Promotion
 Noncompliance
 Product Liability
 Medicare and Medicaid
  (a)
    
    the Omnibus Budget Reconciliation Act of 1993, commonly known as Stark II,
which prohibits certain referrals of Medicare patients by a physician to an entity if
the physician or a member of such physicians immediate family has a financial
relationship with the entity, defined broadly to include any type of compensation
arrangement or ownership interest; and(b)
    
    the federal False Claims Act which imposes civil and criminal liability on
individuals or entities that submit false or fraudulent claims for payment to the
government.
 Generic Substitution Statutes/Statutorily Required Rebates
 28




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##### Table of Contents



European Union Regulation
  Pre-clinical Research  
 Clinical Research 
 Obtaining a Marketing Authorization  
 Registration Systems  
 29




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##### Table of Contents



Criteria Assessed in Obtaining a Marketing Authorization 
 30




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##### Table of Contents




    
    physico-chemical, biological or microbiological tests (establishing the quality of
the products),
    
    pharmacological and toxicological tests (establishing the safety of the product), and
    
    clinical trials (studies in humans establishing efficacy and safety).
        Marketing Authorizations for Orphan Drugs 
 
    
    the target disease condition has a prevalence of no more than 5 persons per
10,000 ;
    
    either the product offers potential significant benefit over existing treatment
for the condition or there are no treatments for the condition .
  
    
    a reduced registration fee;
 31




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##### Table of Contents




    
    use of the centralized registration procedure; and
    
    10 years exclusivity on the market.
 Maintenance of Marketing Authorizations 
   
    
    if the grant no longer satisfies safety, quality or efficacy standards;
    
    for reasons relating to and omissions in the product dossier; and
    
    for particulars or failures in relation to product manufacture.
  Manufacturing 
 32




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##### Table of Contents




    
    product supplies being interrupted;
    
    recall; or
    
    plant closure pending elimination of defects.
  Wholesaling 
 Pricing 
 Supplementary Protection Certificates 
 Abridged Applications  Market Exclusivity 
   
    
    a full data package compiled by the competitor;
    
    reference to published literature; or
 33




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##### Table of Contents




    
    with the consent of the owner of the original data, cross reference to the data held
on file by the regulatory authorities.
  The Companys Product Candidates  
  Regulation of Veterinary Products 
 Regulation in Other Countries
   34




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##### Table of Contents



Organizational Structure
  Direct Holdings
    
    % Held
    
    Status
    
    Country of IncorporationProtherics Medicines Development Limited
    
    100
    
    trading
    
    England and WalesProtherics Inc.
    
    100
    
    trading
    
    U.S.A. (Delaware)Enact Pharma Limited
    
    100
    
    trading
    
    England and WalesProteus Biotechnology Limited
    
    100
    
    dormant
    
    England and WalesGenethics Limited
    
    76
    
    dormant
    
    England and WalesIndirect HoldingsProtherics UK Limited
    
    100
    
    trading
    
    England and WalesProtherics Australasia pty Limited
    
    100
    
    trading
    
    AustraliaProtherics Utah Inc.
    
    100
    
    trading
    
    U.S.A. (Delaware)Protherics Services pty Limited
    
    100
    
    dormant
    
    AustraliaKymed GB Limited
    
    100
    
    dormant
    
    England and WalesEnzacta R&D Limited
    
    99.8
    
    dormant
    
    England and WalesDeMontford Biopharma Limited
    
    100
    
    dormant
    
    England and WalesEnzacta Limited
    
    99.8
    
    dormant
    
    England and WalesTAb (Wales) Limited
    
    100
    
    dormant
    
    England and WalesTAb (London) Limited
    
    100
    
    dormant
    
    England and WalesPolyclonal Antibodies Limited
    
    100
    
    dormant
    
    England and Wales
 Property, Plants and Equipment
     35




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##### Table of Contents



ITEM 4A. UNRESOLVED STAFF COMMENTS
  
 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
  A. Operating Results
 Year Ended March 31, 2006 Compared to Year Ended March 31, 2005.
 ® ®
 ®
 ®
     36




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##### Table of Contents



® ® ®
 ®
   ®
    B. Liquidity and Capital Resources
 ® ® ®
 37




---



##### Table of Contents



® ®
  ®
  ®
 ®
  ®
 38




---



##### Table of Contents



TM ® ®
   C. Research and Development, Patents and Licenses, etc.
   D. Trend Information
 ®
 ® ® ® ®
 ® ® ®
 39




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##### Table of Contents



®
  ®
 ® ® ®
  E. Off-Balance Sheet Arrangements
  40




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##### Table of Contents



F. Contractual Obligations and Commercial Commitments
  Payments due by periodLess than
    
    
    Between 1
    
    
    Between 3
    
    
    Over 5Total
    
    
    1 year
    
    
    and 3 years
    
    
    and 5 years
    
    
    years£000
    
    
    £000
    
    
    £000
    
    
    £000
    
    
    £000Long-Term Debt
    
    
    2,727
    
    
    
    37
    
    
    
    60
    
    
    
    2,630
    
    
    
    Capital Lease Obligations
    
    
    1,839
    
    
    
    623
    
    
    
    982
    
    
    
    234
    
    
    
    Operating Leases
    
    
    1,102
    
    
    
    447
    
    
    
    550
    
    
    
    66
    
    
    
    39Unconditional purchase
obligations
    
    
    1,348
    
    
    
    1,348
    
    
    
    
    
    
    
    
    
    
    
    
  Transition to International Financial Reporting Standards
   
    
    Presentation  IAS 1, Presentation of Financial StatementsThe presentation format of IFRS is different from U.K. GAAP.
    
    Employee option and performance share plans  IFRS 2, Share-based PaymentsAll transactions within the scope of IFRS 2 are valued based on the fair value of the
option or award at grant date and expensed to the income statement over the vesting
period of the plans.
    
    Goodwill arising on acquisitions  IFRS 3, Business CombinationsIFRS 3 requires that goodwill arising upon acquisition of businesses is not amortized
but is subject to impairment reviews. The Company applied the exemption not to restate
business combinations prior to the date of transition, and as a result, amortization
previously charged under U.K. GAAP was reversed from April 1, 2004 onwards.
    
    Financial instruments  IAS 32, Financial Instruments: Disclosure and Presentation
and IAS 39, Financial Instruments: Recognition and MeasurementIAS 39 determines that the instruments held to hedge the Companys U.S. dollar
receivables are required to be valued at each period end, with the movement in the fair
value being reflected as an income or expense for the period, since these instruments
do not qualify for
 41




---



##### Table of Contents



hedge accounting in accordance with IFRS. In addition, the Company
was unable to recognize the effect of the hedging instruments within turnover as was allowed under
U.K. GAAP. The Company elected to adopt IAS 39 from April 1, 2005. Therefore the
comparative financial information in respect of financial instruments is presented in
accordance with U.K. GAAP.
    
    Convertible loan notes  IAS 39, Financial Instruments: Recognition and
MeasurementThe 6% unsecured convertible loan notes are defined as compound financial instruments
under IAS 39 and therefore, the instrument is required to be split between its equity
and debt components upon issue. In subsequent periods, the finance charge of the
Company will be increased to reflect the perceived discount on issue of the debt
instrument. The Company elected to adopt IAS 32 and IAS 39 from April 1, 2005.
Therefore the comparative financial information in respect of financial instruments is
presented in accordance with U.K. GAAP.
    
    Capitalized interest  IAS 23, Borrowing costsIAS 23 provides the option of capitalizing or expensing borrowing cost incurred on
assets in the course of construction and indicates that the option chosen should be
adopted consistently. The Company has adopted a policy to expense such costs as
incurred and as a result, all interest capitalized under U.K. GAAP was expensed.
    
    Hedging instruments  IAS 21, The Effects of Changes in Foreign Exchange RatesIAS 21 determines that the balance sheet of a foreign operation should be translated at
the closing exchange rate of the foreign operations functional currency. Prior to the
adoption of IAS 32 and IAS 39, on April 1, 2005, the Company used forward foreign
exchange contracts to hedge against specific U.S. dollar denominated assets and such
assets were retranslated at the hedged rate. Compliance with IAS 21 has required the
effects of the hedging instrument, being the difference between the closing and hedged
rate of exchange for these items, to be carried separately as a financial asset on the
balance sheets of March 31, 2004 and March 31, 2005.
  Material Differences between IFRS and U.S. GAAP
  
    
    Under U.S. GAAP, specific criteria are required to be met regarding sales made with
the right of replacement. If these criteria are not satisfied, revenue related to
these sales is required to be deferred until that replacement privilege lapses or when
historical data exists in enough sufficiency to estimate returns. The effect of these
adjustments for the fiscal years 2006 and 2005 is shown below.
    
    Under U.S. GAAP, as permitted by statement of Financial Accounting Standard No. 123,
Accounting for Stock-based Compensation the Company applies Accounting Principles
Board Opinion No. 25 (APB 25), Accounting for Stock Issued to Employees. Under APB
25, compensation expense resulting from awards under variable plans is measured as the
difference between the quoted market price of the underlying shares at the date when
the number of shares of stock are known (the date the performance conditions are
satisfied) and
 42




---



##### Table of Contents



the exercise price; the cost is recognized over the period the employee
performs related services. Since the ultimate compensation cost is unknown until the
performance conditions are satisfied, estimates of compensation cost are recorded
before the measurement date based on the quoted market price of the underlying stock at period end dates where it is
probable that the performance conditions will be attained.The nature of the conditions attached to the stock option awards mean that management
cannot make a reasonable estimate of the number of shares that will be eventually issued
because the company cannot control the achievement of the conditions. As a consequence,
the compensation expense for the stock awards is recorded only when the target is
achieved based on the difference between the exercise price and the market value on that
date.IFRS mandates, for options granted after November 7, 2002 and unvested as of January 1,
2005, that the Company use a mathematical model on the date of grant to estimate the
fair value when the option vests, with this fair value being recognized over the period
the employee performs related services. Charges are not recognized on options issued
prior to that date unless the exercise price is below the market value of the underlying
share at the date of grant, in which case this difference would be recognized
immediately.This difference in accounting treatments has led to a charge under U.S. GAAP in the
fiscal year ended March 31, 2006 of £292,000 lower than that reported under IFRS for the
same period, whereas the charge reported under U.S. GAAP at March 31, 2005, is £352,000
higher than that reported under IFRS for the same period.
    
    Financial Accounting Standard No. 133, Accounting for Derivative Instruments and
Hedging Activities (FAS 133), was issued in June 1998. This standard, which was
effective for fiscal years beginning after January 1, 2001, requires all derivatives to
be recognized in the balance sheet as either assets or liabilities and measured at fair
value. The Company has not designated any of its derivative instruments as qualifying
hedge instruments under FAS 133 and accordingly, the Company records changes in the
fair value of its derivative instruments (gains and losses) in its earnings during the
period of change. Under IFRS, for fiscal years up to March 31, 2005, the Company was
not required to account for these instruments at fair value but was required to adopt
this treatment for the year ended March 31, 2006. The effects of recording the fair
value of the derivative instruments on the balance sheet under U.S. GAAP for fiscal
year ended March 31, 2005, and corresponding effects on earnings for the fiscal years
ended March 31, 2005 is illustrated in the table below.
    
    Under U.S. GAAP, in-process research and development acquired with Enact is
separately identified and a fair market value determined at the date of acquisition.
This cost is subsequently expensed in the fiscal year. The remaining goodwill as
determined by U.S. GAAP is not amortized but is subject to annual impairment review.
Under the transitional arrangements within IFRS, the in-process research and
development forms part of the goodwill and was subject to an annual impairment review.
The effect of these adjustments in the fiscal years 2006 and 2005 are shown below.
    
    Under U.S. GAAP, the 6% unsecured convertible loan note is considered to be debt
whereas, under IFRS, an equity component is established. This has the effect of
reducing the net assets of the Company and also affects the annual finance charge from
this instrument. The effect of this adjustment in respect of fiscal years 2006 and 2005
are shown below.
 43




---



##### Table of Contents



Year Ended March 31,2006
    
    
    2005£000
    
    
    £000Net (loss) / profit of Company under IFRS
    
    
    (9,488
    )
    
    
    (1,781
    )U.S. GAAP reconciling adjustments:Revenue recognition
    
    
    (3,117
    )
    
    
    (4,593
    )Stock compensation plans
    
    
    292
    
    
    
    (352
    )Derivative instruments and hedging activities
    
    
    
    
    
    
    (626
    )6% Unsecured convertible loan notes
    
    
    28
    
    
    
    Other miscellaneous differences between IFRS and U.S. GAAP
    
    
    (226
    )
    
    
    (40
    )Net (loss) under U.S. GAAP
    
    
    (12,511
    )
    
    
    (7,392
    )
  Year Ended March 31,2006
    
    
    2005£000
    
    
    £000Equity Shareholders funds under IFRS
    
    
    26,352
    
    
    
    25,969Adjustments:Revenue recognition
    
    
    (11,948
    )
    
    
    (8,831
    )Acquisition of Enact
    
    
    (9,199
    )
    
    
    (9,199
    )Stock compensation plans
    
    
    405
    
    
    
    105Derivative instruments and hedging activities
    
    
    
    
    
    
    3956% Unsecured convertible loan notes
    
    
    (158
    )
    
    
    Other miscellaneous differences between IFRS and U.S. GAAP
    
    
    2
    
    
    
    152Equity Shareholders funds under U.S. GAAP
    
    
    5,454
    
    
    
    8,591
  Net Operating Loss Carryforwards
  Recently Issued Accounting Pronouncements
 Share Based Payment Accounting for Stock Based Compensation Accounting for Stock Issued to Employees
 44




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##### Table of Contents



Amendment to Rule 4- 01(a) of Regulation S-X regarding the compliance date for Statement of Financial
Accounting Standards No, 123 (Revised 2004), Share Based Payment
 Inventory Costs  an amendment of ARB No. 43,
Chapter 4
 Exchanges of Non-monetary Assetsan amendment of APB Opinion No. 29 Accounting for Non-monetary Transactions
 Accounting for Certain
Hybrid Financial Instruments Application of
Statement 133 to Beneficial Interests in Securitized Financial Assets
 Accounting for
Uncertainty in Income Taxes
 45




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##### Table of Contents



Determining the Amortization Period for Leasehold Improvements Purchased after Lease Inception or
Acquired in a Business Combination
 The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments
 Application of Critical Accounting Policies
  Revenue
 46




---



##### Table of Contents




    
    Products revenue is partly recognized upon the shipment of products to the
distributor, the significant risks and rewards having been transferred to the
distributor, with further amounts being recognized in accordance with the
contractual terms upon shipment to the end user.
    
    Non-refundable up-front payments received by the Company are deferred and
recognized over the period of the earnings process.
    
    Royalty income is generated by sales of products incorporating the Companys
proprietary technology. Royalty revenues are recognized once the amounts due can be
reliably estimated based on the sale of underlying products and collectibility is
assured. Where there is insufficient historical data on sales and returns to
fulfill these requirements, for example in the case of a new product, the royalty
revenue will not be recognized until the Company can reliably estimate the
underlying sales.
 Revenue
 ® Revenue Recognition When Right of Return Exists ®
  Deferred tax
   47




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##### Table of Contents



Goodwill
  Research and development expenditure
  Research and development inventories
 
 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 Directors and Senior Management
  Name
    
    Age
    
    Position within the CompanyExecutive DirectorsAndrew John Heath, M.D., Ph.D.
    
    
    58
    
    
    Chief Executive Officer and DirectorBarrington Marshall Riley, BA, FCA
    
    
    57
    
    
    Finance Director and DirectorJames Campbell Christie, BSc., MBA
    
    
    48
    
    
    Operations Director and DirectorNon-Executive DirectorsStuart Michael Wallis, FCA, CTA(1)(2)
    
    
    60
    
    
    ChairmanGarry Watts, FCA(1)(2)(3)
    
    
    48
    
    
    DirectorJohn Robert Brown, Ph.D, MBA(1)(2)(3)
    
    
    51
    
    
    DirectorBryan Geoffrey Morton, BSc., MBA(1)(2)(3)
    
    
    50
    
    
    DirectorExecutive OfficersSaul Komisar, MBA, BS, CCM
    
    
    37
    
    
    President, Protherics Inc.Ian Scoular, Ph.D, BSc, DMS
    
    
    56
    
    
    Director of Business DevelopmentSally Waterman, Ph.D, BSc, DMS
    
    
    48
    
    
    Director of Research & DevelopmentNick Staples, Ph.D, BSc
    
    
    36
    
    
    Director of Corporate Affairs
 48




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##### Table of Contents



(1)
    
    Member of Nomination Committee.(2)
    
    Member of Remuneration Committee(3)
    
    Member of Audit Committee Executive Directors
 Andrew John Heath, M.D., Ph.D.
 Barrington Marshall Riley, B.A., F.C.A
 James Campbell Christie, B.Sc., M.B.A.
 Non-Executive Directors
 Stuart Michael Wallis, F.C.A., C.T.A..
 Garry Watts, FCA
 John Robert Brown, Ph.D, MBA
 Bryan Geoffrey Morton, B.Sc, MBA
 49




---



##### Table of Contents



Executive Officers
 Saul Komisar, MBA, BS, CCM
 Ian Scoular, Ph.D, BSc, DMS
 Sally Waterman, Ph.D, BSc, DMS
 Nick Staples Ph.D, BSc
  Board Practices
  Compliance with NASDAQ Marketplace Rules
  50




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##### Table of Contents




    
    Rule 4350(f) requires that the quorum for any meeting of stockholders must not
be less than 33 1/3% of the outstanding shares of a companys common voting stock.
At June 30, 2006, the Companys Articles of Association provide that not less than
three shareholders present in person or by proxy and entitled to vote shall
constitute a quorum for the transacting of business at any general meeting of
shareholders although this requirement has subsequently been reduced to two
shareholders. This quorum requirement is consistent with customary practice in
the United Kingdom and is not prohibited by the laws of England and Wales.
    
    Rule 4350(c) requires that nominees to a companys board of directors be
selected, or recommended for the boards selection, either by a majority of the
companys independent directors or by a nominations committee comprised solely of
independent directors. Nominees for Protherics board of directors are selected
by its Nomination Committee, which is comprised of five directors, four of whom are
non-executive directors meeting NASDAQs definition of independent director.
The fifth member of the committee is the Companys Chief Executive Officer, who is not considered
independent. As comprised, however, the Nomination Committee complies with the
Listing Rules of the UK Financial Services Authority (the Listing Rules) and the
laws of England and Wales.
    
    Rule 4350(i) requires that issuers obtain shareholder approval before a stock
option or purchase plan is established or materially amended or other equity
compensation arrangement is made pursuant to which stock may be acquired by
officers, directors, employees or consultants of the issuer, subject to certain
exceptions. The Company seeks shareholder approval for the adoption or amendment of
stock plans or stock purchase plans only as required by the Articles of Association
of the Company, the Listing Rules and the laws of England and Wales. Subject to
the exceptions permitted in the Listing Rules, this involves seeking shareholder
approval to any such plan that falls into either of the following categories (as
defined in the Listing Rules):
 a)
    
    an employees share scheme, if the scheme involves or may
involve the issue of new shares or the transfer of treasury shares; andb)
    
    a long-term incentive scheme in which one or more directors of
the Company is eligible to participate and to material amendments of that
scheme to the extent required by the schemes rules. In this context, it should
be noted that the provisions of the rules relating to whether amendments to the
scheme rules must be approved by shareholders must themselves be drafted to
ensure compliance with the Listing Rules.
 Compensation
  
    
    Basic salaries and benefits in kind
    
    Share option plans
    
    Long Term Incentive Plan (the LTIP)
    
    Annual Incentive and Deferred Bonus Plan (the DBP)
 51




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##### Table of Contents




    
    Pensions
   
    
    Basic salaries and benefits in kind
   
    
    Share option plans
      
    
    Long Term Incentive Plan (the LTIP)
  52




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##### Table of Contents




    
    Annual incentive and Deferred Bonus Plan (the DBP)
  
    
    Pensions
   Executive Directors of Protherics
 Date of

    
    
    
    Notice period due fromDirector
    
    Agreement
    
    Annual salary
    
    the Company
    
    the DirectorA. Heath
    
    November 6, 2001
    
    £115,396
    
    12 months
    
    12 monthsU.S. $113,000B.M. Riley
    
    July 13, 1995
    
    £130,000
    
    12 months
    
    6 monthsJ.C. Christie
    
    September 21, 2000
    
    £140,000
    
    12 months
    
    6 months
   Non-executive Directors of Protherics
 53




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##### Table of Contents



Audit Committee
 Remuneration Committee
 Nomination Committee.
 Employees
  2006
    
    2005
    
    2004U.K.
    
    U.S.
    
    Australia
    
    U.K.
    
    U.S.
    
    Australia
    
    U.K.
    
    U.S.
    
    AustraliaManagement
    
    
    30
    
    
    
    2
    
    
    
    4
    
    
    
    27
    
    
    
    2
    
    
    
    5
    
    
    
    27
    
    
    
    1
    
    
    
    4Administration
    
    
    28
    
    
    
    5
    
    
    
    3
    
    
    
    19
    
    
    
    3
    
    
    
    2
    
    
    
    18
    
    
    
    3
    
    
    
    3Research and production
    
    
    106
    
    
    
    7
    
    
    
    29
    
    
    
    103
    
    
    
    8
    
    
    
    42
    
    
    
    113
    
    
    
    6
    
    
    
    44Total
    
    
    164
    
    
    
    14
    
    
    
    36
    
    
    
    149
    
    
    
    13
    
    
    
    49
    
    
    
    158
    
    
    
    10
    
    
    
    51
  54




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##### Table of Contents



Share Ownership
  Ordinary
    
    
    
    
    
    6% ConvertibleName
    
    shares owned
    
    Percentage
    
    Loan Notes (£)S.M. Wallis
    
    
    503,724
    
    
    
    0.21
    %
    
    
    60,606A.J. Heath
    
    
    346,498
    
    
    
    0.14
    %
    
    
    24,242B.M. Riley
    
    
    30,019
    
    
    
    0.01
    %
    
    
    15,151J.C. Christie
    
    
    28,343
    
    
    
    0.01
    %
    
    
    G. Watts
    
    
    
    
    
    
    
    
    
    
    J.R. Brown
    
    
    20,000
    
    
    
    0.01
    %
    
    
    B.G. Morton
    
    
    
    
    
    
    
    
    
    
    
  55




---



##### Table of Contents



Share Options and Warrants Granted in Protherics PLC
   
    
    2005 Executive Share Option Plan (the ESOP).
   
    
    2005 Long-term Incentive Plan (the LTIP)
   56




---



##### Table of Contents



Protherics PLC TSR relative to comparator group
    
    % of total award vestingUpper decile
    
    
    100
    %Upper quartile
    
    
    80
    %Median
    
    
    30
    %Below median
    
    Nil
    
    
    2005 Deferred Bonus Plan (the DBP)
     
    
    Savings-related Share Option Plan
  57




---



##### Table of Contents




    
    Other plans and grants
     58




---



##### Table of Contents



59




---



##### Table of Contents



At April 1,
    
    
    
    
    
    
    
    
    
    Cancelled
    
    At June 30,
    
    ExerciseDate exercisable
    
    2005
    
    Granted
    
    Exercised
    
    Or expired
    
    2006
    
    price (p)Individual unapproved22 Dec 2002 to 21 Dec 2009
    
    
    600,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    600,000
    
    
    
    39.009 July 2002 to 8 July 2010
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,000
    
    
    
    40.009 July 2002 to 8 July 2010
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    25.009 July 2002 to 31 May 2007
    
    
    3,850
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,850
    
    
    
    U.S.$  6.001 Mar 2004 to 1 Jan 2006
    
    
    70,000
    
    
    
    
    
    
    
    70,000
    
    
    
    
    
    
    
    
    
    
    
    58.508 Oct 2004 to 1 Jan 2006
    
    
    100,000
    
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    23.2521 Dec 2007 to 20 Jun 2009
    
    
    
    
    
    
    40,000
    
    
    
    
    
    
    
    
    
    
    
    40,000
    
    
    
    86.0021 Jun 2008 to 20 Jun 2010
    
    
    
    
    
    
    40,000
    
    
    
    
    
    
    
    
    
    
    
    40,000
    
    
    
    86.00Approved scheme25 July 1998 to 24 July 2005
    
    
    52,955
    
    
    
    
    
    
    
    
    
    
    
    52,955
    
    
    
    
    
    
    
    68.8328 Jan 2003 to 27 Jan 2010
    
    
    59,712
    
    
    
    
    
    
    
    11,163
    
    
    
    
    
    
    
    48,549
    
    
    
    37.5028 Feb 2004 to 27 Feb 2011
    
    
    328,000
    
    
    
    
    
    
    
    19,625
    
    
    
    20,375
    
    
    
    288,000
    
    
    
    43.5019 Feb 2009 to 15 Feb 2016
    
    
    
    
    
    
    25,401
    
    
    
    
    
    
    
    
    
    
    
    25,401
    
    
    
    93.50Unapproved scheme22 June 2001 to 21 June 2008
    
    
    275,000
    
    
    
    
    
    
    
    120,000
    
    
    
    
    
    
    
    155,000
    
    
    
    46.0023 Dec 2001 to 22 Dec 2005
    
    
    5,305
    
    
    
    
    
    
    
    5,305
    
    
    
    
    
    
    
    
    
    
    
    45.0022 Dec 2002 to 21 Dec 2009
    
    
    525,000
    
    
    
    
    
    
    
    40,000
    
    
    
    
    
    
    
    485,000
    
    
    
    39.0027 Jan 2003 to 26 Jan 2010
    
    
    87,909
    
    
    
    
    
    
    
    
    
    
    
    812
    
    
    
    87,097
    
    
    
    37.502 Aug 2003 to 1 Aug 2010
    
    
    2,908
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,908
    
    
    
    28.5022 Feb 2004 to 21 Feb 2011
    
    
    1,370,000
    
    
    
    
    
    
    
    225,000
    
    
    
    
    
    
    
    1,145,000
    
    
    
    43.5016 Jan 2005 to 15 Jan 2012
    
    
    2,293,000
    
    
    
    
    
    
    
    106,000
    
    
    
    10,000
    
    
    
    2,177,000
    
    
    
    39.509 July 2005 to 8 July 2012
    
    
    500,000
    
    
    
    
    
    
    
    150,000
    
    
    
    
    
    
    
    350,000
    
    
    
    25.0014 Jan 2006 to 13 Jan 2013
    
    
    100,000
    
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    21.0020 Jun 2006 to 19 Jun 2013
    
    
    1,110,000
    
    
    
    
    
    
    
    210,000
    
    
    
    
    
    
    
    900,000
    
    
    
    23.2524 Jun 2006 to 23 Jun 2013
    
    
    30,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,000
    
    
    
    23.001 Mar 2007 to 28 Feb 2014
    
    
    1,170,000
    
    
    
    
    
    
    
    220,000
    
    
    
    50,000
    
    
    
    900,000
    
    
    
    58.501 Mar 2009 to 28 Feb 2014
    
    
    325,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    325,000
    
    
    
    58.5027 Sep 2009 to 26 Sep 2014
    
    
    310,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    310,000
    
    
    
    49.5028 Feb 2008 to 27 Feb 2015*(1)
    
    
    741,669
    
    
    
    
    
    
    
    
    
    
    
    25,194
    
    
    
    716,475
    
    
    
    2.0019 Jul 2008 to 18 Jul 2015*(2)
    
    
    
    
    
    
    113,785
    
    
    
    
    
    
    
    
    
    
    
    113,785
    
    
    
    2.007 Sep 2008 to 6 Sep 2015
    
    
    
    
    
    
    115,000
    
    
    
    
    
    
    
    
    
    
    
    115,000
    
    
    
    60.5021 Dec 2008 to 20 Dec 2015*(3)
    
    
    
    
    
    
    775,887
    
    
    
    
    
    
    
    12,222
    
    
    
    763,665
    
    
    
    2.0021 Dec 2008 to 20 Dec 2015
    
    
    
    
    
    
    85,000
    
    
    
    
    
    
    
    
    
    
    
    85,000
    
    
    
    78.5012 Jun 2009 to 11 Jun 2016*(4)
    
    
    
    
    
    
    953,820
    
    
    
    
    
    
    
    
    
    
    
    953,820
    
    
    
    2.0012 Jun 2009 to 11 Jun 2016
    
    
    
    
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    10,000
    
    
    
    86.00Deferred bonus plan12 Jun 2008 to 11 Jun 2016+
    
    
    
    
    
    
    109,806
    
    
    
    
    
    
    
    
    
    
    
    109,806
    
    
    
    2.00Savings related options1 Apr 2005 to 31 Oct 2005
    
    
    96,300
    
    
    
    
    
    
    
    83,700
    
    
    
    12,600
    
    
    
    
    
    
    
    37.501 Feb 2009 to 31 Jul 2009
    
    
    
    
    
    
    270,118
    
    
    
    
    
    
    
    1,150
    
    
    
    268,968
    
    
    
    65.001 Feb 2011 to 31 Jul 2011
    
    
    
    
    
    
    401,738
    
    
    
    
    
    
    
    
    
    
    
    401,738
    
    
    
    65.00Protherics PLC option plan for ex-Therapeutic Antibodies employees27 Jan 2000 to 29 June 2008
    
    
    162,238
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    162,238
    
    
    
    175.0 to 312.010,358,846
    
    
    
    2,940,555
    
    
    
    1,460,793
    
    
    
    185,308
    
    
    
    11,653,300
 *
    
    Options issued or conditional shares awarded under the Long Term Incentive Plan
approved by the shareholders on January 27, 2005. The price of a share at the date of grant was
(1) 54.75p, (2) 57.00p, (3) 78.50p, and (4) 85.00p. 60




---



##### Table of Contents



+
    
    Options issued or conditional shares awarded under the Deferred Bonus Plan approved by the
shareholders on January 27, 2005. The price of a share at the date of grant was 85.00p.  Options Granted to Therapeutic Antibodies former employees and consultants
  61




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##### Table of Contents



Share Options held by Directors of Protherics PLC
  At April 1,
    
    
    
    
    
    
    
    
    
    
    
    
    
    At June 30,
    
    Exercise
    
    Exercisable2005
    
    Granted
    
    Exercised
    
    Cancelled
    
    2006
    
    Price (p)
    
    From
    
    ToApproved optionsB M Riley
    
    
    52,955
    
    
    
    
    
    
    
    
    
    
    
    52,955
    
    
    
    
    
    
    
    68.83
    
    
    25 Jul 1998
    
    24 Jul 2005Unapproved optionsD W Gration***
    
    
    90,000
    
    
    
    
    
    
    
    90,000
    (4)
    
    
    
    
    
    
    
    
    
    
    46.00
    
    
    22 Jun 2001
    
    21 Jun 2008B M Riley
    
    
    65,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65,000
    
    
    
    46.00
    
    
    22 Jun 2001
    
    21 Jun 2008B M Riley
    
    
    50,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    39.00
    
    
    22 Dec 2002
    
    21 Dec 2009B M Riley
    
    
    120,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,000
    
    
    
    43.50
    
    
    22 Feb 2004
    
    21 Feb 2011B M Riley
    
    
    350,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    350,000
    
    
    
    39.50
    
    
    16 Jan 2005
    
    15 Jan 2012B M Riley
    
    
    200,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000
    
    
    
    23.25
    
    
    20 Jun 2006
    
    19 Jun 2013B M Riley
    
    
    225,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    225,000
    
    
    
    58.50
    
    
    1 Mar 2007
    
    28 Feb 2014B M Riley*(1)
    
    
    132,420
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    132,420
    
    
    
    2.00
    
    
    28 Feb 2008
    
    27 Feb 2015B M Riley*(2)
    
    
    
    
    
    
    92,357
    
    
    
    
    
    
    
    
    
    
    
    92,357
    
    
    
    2.00
    
    
    21 Dec 2008
    
    20 Dec 2015B M Riley*(3)
    
    
    
    
    
    
    102,128
    
    
    
    
    
    
    
    
    
    
    
    102,128
    
    
    
    2.00
    
    
    12 Jun 2009
    
    11 Jun 2016A Atkinson
    
    
    100,000
    
    
    
    
    
    
    
    100,000
    **(4)
    
    
    
    
    
    
    
    
    
    
    23.25
    
    
    20 Jun 2006
    
    19 Jun 2013A Atkinson
    
    
    135,000
    
    
    
    
    
    
    
    135,000
    **(4)
    
    
    
    
    
    
    
    
    
    
    58.50
    
    
    1 Mar 2007
    
    28 Feb 2014J C Christie
    
    
    250,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    39.00
    
    
    22 Dec 2002
    
    21 Dec 2009J C Christie
    
    
    80,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80,000
    
    
    
    43.50
    
    
    22 Feb 2004
    
    21 Feb 2011J C Christie
    
    
    250,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    39.50
    
    
    16 Jan 2005
    
    15 Jan 2012J C Christie
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    23.25
    
    
    20 Jun 2006
    
    19 Jun 2013J C Christie
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,000
    
    
    
    58.50
    
    
    1 Mar 2007
    
    28 Feb 2014J C Christie*(1)
    
    
    111,416
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    111,416
    
    
    
    2.00
    
    
    28 Feb 2008
    
    27 Feb 2015J C Christie*(2)
    
    
    
    
    
    
    77,707
    
    
    
    
    
    
    
    
    
    
    
    77,707
    
    
    
    2.00
    
    
    21 Dec 2008
    
    20 Dec 2015J C Christie*(3
    
    
    
    
    
    
    101,547
    
    
    
    
    
    
    
    
    
    
    
    101,547
    
    
    
    2.00
    
    
    12 Jun 2009
    
    11 Jun 2016A J Heath
    
    
    116,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    116,300
    
    
    
    175.00
    
    
    27 Jan 2000
    
    29 Jun 2008A J Heath
    
    
    500,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500,000
    
    
    
    43.50
    
    
    22 Feb 2004
    
    21 Feb 2011A J Heath
    
    
    1,000,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000
    
    
    
    39.50
    
    
    16 Jan 2005
    
    15 Jan 2012A J Heath
    
    
    300,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300,000
    
    
    
    23.25
    
    
    20 Jun 2006
    
    19 Jun 2013A J Heath
    
    
    325,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    325,000
    
    
    
    58.50
    
    
    1 Mar 2009
    
    28 Feb 2014A J Heath*(1)
    
    
    221,233
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    221,233
    
    
    
    2.00
    
    
    28 Feb 2008
    
    27 Feb 2015A J Heath*(2)
    
    
    
    
    
    
    157,556
    
    
    
    
    
    
    
    
    
    
    
    157,556
    
    
    
    2.00
    
    
    21 Dec 2008
    
    20 Dec 2015A J Heath*(3
    
    
    
    
    
    
    186,507
    
    
    
    
    
    
    
    
    
    
    
    186,507
    
    
    
    2.00
    
    
    12 Jun 2009
    
    11 Jun 2016Savings related optionsJ C Christie
    
    
    27,000
    
    
    
    
    
    
    
    27,000
    (5)
    
    
    
    
    
    
    
    
    
    
    37.50
    
    
    1 Apr 2005
    
    31 Oct 2005J C Christie
    
    
    
    
    
    
    14,384
    
    
    
    
    
    
    
    
    
    
    
    14,384
    
    
    
    65.00
    
    
    1 Feb 2009
    
    31 Jul 2009IndividualA J Heath
    
    
    600,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    600,000
    
    
    
    39.00
    
    
    22 Dec 2002
    
    21 Dec 20095,551,324
    
    
    
    732,186
    
    
    
    352,000
    
    
    
    52,955
    
    
    
    5,878,555
 *
    
    Unapproved options granted under the Long Term Incentive Plan. The market price of a
share at date of grant was (1)54.75p, (2)78.50p, and
(3)85.0p.**
    
    Following the resignation of A. Atkinson from the Board on April 19, 2005, under the
rules of the Unnapproved Share Option Plan, the Remuneration Committee determined that his
options would be exercisable during the period to December 31, 2005.***
    
    D.W. Gration resigned from the Board on July 20, 2005. 62




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##### Table of Contents



(4) (5)
   
 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 Major Shareholders
  2006% of# of
    
    issuedShareholder
    
    shares
    
    sharesMorley Fund Management
    
    
    29,158,262
    
    
    
    11.20AXA Framlington Asset Management
    
    
    27,438,413
    
    
    
    10.54Invesco Perpetual
    
    
    17,425,792
    
    
    
    6.69Insight Investment
    
    
    17,062,610
    
    
    
    6.56
    Related Party Transactions
  63




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##### Table of Contents



Interests of Experts and Counsel
  
 ITEM 8. FINANCIAL INFORMATION
 Consolidated Statements and Other Financial Information
  Legal Proceedings
  Dividend Policy
  
 ITEM 9. LISTING
    64




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##### Table of Contents



Ordinary Shares
    
    American Depositary Shares(1)Financial Year Ended March 31,
    
    High
    
    Low
    
    High
    
    Low£
    
    £
    
    $
    
    $2002
    
    
    0.408
    
    
    
    0.2052003
    
    
    0.345
    
    
    
    0.1422004
    
    
    0.618
    
    
    
    0.1652005First Quarter
    
    
    0.562
    
    
    
    0.470Second Quarter
    
    
    0.562
    
    
    
    0.467Third Quarter
    
    
    0.537
    
    
    
    0.480Fourth Quarter
    
    
    0.658
    
    
    
    0.4802006First Quarter
    
    
    0.593
    
    
    
    0.465Second Quarter
    
    
    0.608
    
    
    
    0.530
    
    
    
    10.10
    (2)
    
    
    10.03
    (2)Third Quarter
    
    
    0.865
    
    
    
    0.450
    
    
    
    15.45
    
    
    
    8.50Fourth Quarter
    
    
    0.998
    
    
    
    0.830
    
    
    
    18.99
    
    
    
    12.702007First Quarter
    
    
    0.925
    
    
    
    0.783
    
    
    
    16.99
    
    
    
    15.15Calendar Year 2006Most Recent Six MonthsJanuary
    
    
    0.998
    
    
    
    0.830
    
    
    
    18.99
    
    
    
    12.70February
    
    
    0.943
    
    
    
    0.850
    
    
    
    18.02
    
    
    
    14.50March
    
    
    0.930
    
    
    
    0.853
    
    
    
    16.13
    
    
    
    15.04April
    
    
    0.925
    
    
    
    0.858
    
    
    
    16.99
    
    
    
    15.16May
    
    
    0.875
    
    
    
    0.798
    
    
    
    16.95
    
    
    
    15.77June
    
    
    0.885
    
    
    
    0.783
    
    
    
    16.63
    
    
    
    15.14
 
 (1)
    
    Each American Depositary Share represents 10 ordinary shares.(2)
    
    Period covers from September 28, 2005, the date trading of the American
Depositary Shares on NASDAQ commenced, to quarter end, September 30, 2005. 
 ITEM 10. ADDITIONAL INFORMATION
 Memorandum and Articles of Association
 Objects and Purposes
   65




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##### Table of Contents



Voting Rights
    (a)
    
    any calls or other moneys due and payable in respect of these shares remain unpaid; or(b)
    
    he or any person appearing to be interested in shares held by
him has been duly served with a direction notice under section 212 of the
Companies Act concerning the disclosure of interests in voting shares, and has
failed to supply the Company with the information required by the notice or has
supplied information which is false or misleading in a material respect.
  Dividends and other payments
      66




---



##### Table of Contents



Return of Capital
  Variation of Rights
  Transfers
      Directors of Protherics
  67




---



##### Table of Contents



(a)
    
    the giving of any guarantee, security or indemnity to him in
respect of money lent or obligations incurred by him or by any other person at
the request of or for the benefit of the Company or any of its subsidiary
undertakings;(b)
    
    the giving of any guarantee, security or indemnity to a third
party in respect of a debt or obligation of the Company or any of its
subsidiary undertakings for which he himself has assumed responsibility in
whole or in part under a guarantee or indemnity or by the giving of security;(c)
    
    any proposal concerning an offer of any shares, debentures or
other securities of or by the Company or any of its subsidiary undertakings for
subscription or purchase in which offer he is or may be entitled to participate
as a holder of securities or in the underwriting or sub-underwriting of which
he is to participate;(d)
    
    any contract, arrangement, transaction or other proposal
concerning any other body corporate in which he is interested, directly or
indirectly and whether as an officer or shareholder or otherwise howsoever
provided that he is not the holder of or beneficially interested in one per
cent or more of any class of the equity share capital of such body corporate
(or of a third body corporate through which his interest is derived) or of the
voting rights available to members of the relevant body corporate (any such
interest being deemed for these purposes to be a material interest in all
circumstances);(e)
    
    any contract, arrangement, transaction or other proposal
concerning the adoption, modification or operation of a superannuation fund,
retirement benefit scheme under which he may benefit and which either relates
to both employees and Directors of the Company, or which has been approved by,
or is subject to and conditional upon approval by the Board of Inland Revenue
for taxation purposes and does not accord to any Director as such any privilege
or advantage not accorded to the employees to which such scheme or fund
relates;(f)
    
    any contract, arrangement, transaction or proposal concerning
the adoption, modification or operation of any scheme enabling employees of the
Company or any of its subsidiary undertakings to acquire shares or any
arrangement for the benefit of employees of the Company or any of the
subsidiaries under which the Director benefits in a similar manner to
employees; and(g)
    
    any contract, arrangement, transaction or other proposal
concerning any insurance which the Company is empowered to purchase and/or
maintain for, or for the benefit of, any Director, Auditors or other officer of
the Company or any of its subsidiary undertakings, or for persons who include
Directors.
   68




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##### Table of Contents



Borrowing powers
   (a)
    
    the nominal issued and paid up capital of the Company; and(b)
    
    the amounts standing to the credit of the consolidated reserves
of the Group whether distributable or undistributable and including (without
limitation) share premium amount, capital redemption reserve and profit and
loss account all as shown in a consolidation of the then latest audited balance
sheet of the Group but after:
 (A)
    
    making such adjustments as may be appropriate
in respect of any variation in the issued and paid up share capital the
share premium account and the capital redemption reserve fund of the
Company or merger reserve since the date of its latest audited
consolidated balance sheet and any shares whose issue has been
underwritten, but which have
 69




---



##### Table of Contents



not yet been issued shall be deemed to have been paid up to the
extent that the underwriters or other persons are liable therefore;(B)
    
    excluding therefrom (i) any sums set aside for
future taxation; (ii) amounts attributable to outside shareholders in
subsidiary undertakings and adding back an amount equal to amounts
charged in respect of any deferred tax liabilities and any deficit
relating to pensions and other post retirement/employment benefits or
any asset or liability which has been revalued; and deducting from
reserves amounts credited in respect of any deferred tax assets and any
surpluses relating to pensions and other post retirement/employment
benefits or any asset or liability which has been revalued;(C)
    
    deducting therefrom (i) an amount equal to any
distribution by the Company or any subsidiary undertaking out of
profits earned prior to the date of its latest audited balance sheet
and which have been declared, recommended or made since that date
except so far as provided for in such balance sheet, (ii) goodwill and
other intangible assets and (iii) any debit balances on profit and loss
account; and(D)
    
    making such adjustments (if any) as the
Auditors may consider appropriate.
 Alteration of Capital
     Liability to further capital calls by the Company
  70




---



##### Table of Contents



Discrimination against shareholders as a result of such shareholder owning a substantial
number of shares
    Annual and Extraordinary General Meetings
      Limitations on the Right to Own Securities
   71




---



##### Table of Contents



Changes in Control of the Company
  Disclosure of Shareholder Ownership
  Material Contracts
  AstraZeneca UK Limited
 ®
 ® ®
  CoVaccine BV
  72




---



##### Table of Contents



Enfer Scientific
    Altana, Inc.
 ® ® ® ®
 Swedish Orphan AB
 ® ®
 Mayne Pharmaceuticals (formerly F.H. Faulding & Co. Limited)
 ®
 73




---



##### Table of Contents



®
 Chesapeake Biological Laboratories Inc
 ® ®
 Scientific Collaborations
  Exchange Controls
  Taxation
   74




---



##### Table of Contents



United States Federal Income Tax Consequences to U.S. Holders
 Taxation of Dividends
    75




---



##### Table of Contents



Taxation of Capital Gains
  Information Reporting and Backup Withholding
  
    
    when required, demonstrates this fact or provides a taxpayer identification number;
    
    certifies as to no loss of exemption from backup withholding; and
    
    otherwise complies with the backup withholding rules.
  The foregoing discussion assumes that the Company is not currently, and will not in the future
become, a passive foreign investment company for U.S. federal income tax purposes. If the
Company were classified as a passive foreign investment company, the U.S. federal income tax
consequences to you
 76




---



##### Table of Contents



with respect to the ordinary shares and ADSs would be significantly different than that
described above and you generally would be subject to increased U.S. federal income tax liabilities
and possibly interest charges, as described below.
 Passive Foreign Investment Company Rules
   You should consult your own tax advisors prior to the purchase of ordinary shares or ADSs and
from time to time concerning the status of the Company as a PFIC and the consequences of making an
election as described above. Neither the Company nor its advisors have a duty or will undertake to
inform you that the Company is a PFIC or of changes in circumstances that would cause the Company
to become a PFIC.
 United Kingdom Tax Consequences to U.S. Holders
 Taxation of Dividends
  77




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##### Table of Contents



Taxation of Capital Gains
  Stamp Duty and Stamp Duty Reserve Tax
   Documents on Display
  
 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Financial instruments
   78




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Foreign currency risk
     Interest rate risk
   79




---



##### Table of Contents



Amounts falling due:Between
    
    
    Between
    
    
    Between
    
    
    BetweenWithin
    
    
    1 and 2
    
    
    2 and 3
    
    
    3 and 4
    
    
    4 and 5
    
    
    Over 51 year
    
    
    years
    
    
    years
    
    
    years
    
    
    years
    
    
    years
    
    
    Total£000
    
    
    £000
    
    
    £000
    
    
    £000
    
    
    £000
    
    
    £000
    
    
    £0002006Floating rate:Cash at hand and in bank
    
    
    934
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    934Fixed rate:Short term bank deposits
    
    
    24,504
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,504Bank overdrafts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Borrowings
    
    
    (37
    )
    
    
    (25
    )
    
    
    (3
    )
    
    
    (194
    )
    
    
    
    
    
    
    
    
    
    
    (259
    )6% Convertible unsecured loan
notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,469
    )
    
    
    
    
    
    
    (2,469
    )Obligations under finance lease
    
    
    (623
    )
    
    
    (592
    )
    
    
    (390
    )
    
    
    (146
    )
    
    
    (88
    )
    
    
    
    
    
    
    (1,839
    )
 Liquidity risk
  Fair values of financial assets and financial liabilities
   
 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
  80




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##### Table of Contents



PART II
 
 ITEM 13.
    
    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
  
 ITEM 14.
    
    MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE
OF PROCEEDS
  
 ITEM 15.
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  
 ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
  
 ITEM 16B. CODE OF ETHICS
   
    
    the Chairman of the Company, Mr. Wallis, and Mr. Gration, who was not considered to be
an independent non-executive due to options held which were granted while he held an
executive
 81




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##### Table of Contents



role in the Company, were both members of the Audit Committee for part of the
year since it was considered that both individuals brought significant relevant experience
to the Audit Committee. In accordance with the Smith guidance, Mr. Wallis resigned as a
member of the Audit Committee on May 26, 2005 while Mr. Gration stepped down from the Board
and its committees in July 2005;
    
    the terms of reference of the Remuneration and Nominations Committees were not adopted
until May 26, 2005, and have since been posted on the Companys website, together with the
revised Audit Committee terms of reference.
 
 ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  2006
    
    
    2005£000
    
    
    £000Audit fees
    
    
    101
    
    
    
    101Audit related fees
    
    
    36
    
    
    
    30Tax fees
    
    
    117
    
    
    
    52All other fees
    
    
    
    
    
    
    80254
    
    
    
    263
 Audit Fees
  Audit Related Fees
  Tax Fees
  All Other Fees
   
 ITEM 16D.
    
    EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES
  
 ITEM 16E.
    
    PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS
  82




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##### Table of Contents



PART III
 
 ITEM 17. FINANCIAL STATEMENTS
  
 ITEM 18. FINANCIAL STATEMENTS
  
 ITEM 19. EXHIBITS
   PageAuditors Report
    
    F-1Income Statements for the years ended
March 31, 2005 and 2006
    
    F-2Statements of Recognised Income & Expense
March 31, 2005 and 2006
    
    F-2Balance Sheets at March 31, 2005 and March 31, 2006
    
    F-3Cash Flow Statements for the years ended
March 31, 2005 and 2006
    
    F-4Notes to Financial Statements
    
    F-5
    ExhibitNumber
    
    Exhibit Title1.1
    
    Articles of Association of Protherics PLC, as amended on July 18, 2006 *1.2
    
    Memorandum of Association of Protherics PLC (5)2.1
    
    Instrument constituting 6 per cent. Unsecured Convertible Loan Notes 2010 (2)
 83




---



##### Table of Contents



ExhibitNumber
    
    Exhibit Title4.1
    
    Patent and Know-how Licence Agreement, dated April 2, 2001, between Protherics
Molecular Design Limited and Enfer Technology Limited (4)4.2
    
    Distribution Agreement, dated October 11, 1997, between Therapeutic Antibodies Inc. and
Altana, Inc. (6)4.3
    
    First Amendment to the Distribution Agreement, dated October 25, 1999, between Altana,
Inc. and Protherics (5)4.4
    
    Amendment No. 1 to Distribution Agreement, dated September 12, 2000, between Altana,
Inc. and Protherics (5) (+)4.5
    
    Amendment No. 3 to Distribution Agreement, dated February 2002, between Altana Inc. and
Protherics (3)4.6
    
    First Amended and Restated Product Agreement, dated March 31, 2000, between Swedish
Orphan AB and Protherics Inc. (5)4.7
    
    First Amendment of Registration and Distribution Agreement, dated August 31, 1995,
amended on March 14, 1996, between Therapeutic Antibodies Inc. and F.H. Faulding & Co.
Limited (7)4.8
    
    Contract Manufacturing Agreement, dated as of November 17, 1998, between Therapeutic
Antibodies Inc. and F.H. Faulding & Co. Limited (4)4.9
    
    Manufacturing Agreement, dated March 19, 2003, between Protherics UK Limited and
Chesapeake Biological Laboratories Inc (3)4.10
    
    Memorandum of Lease, dated August 1, 1995, between Minister for Primary Industries, as
Lessor, and TAb Australasia Pty. Limited, as Lessee (10)4.11
    
    Patent and Know-how Licence Agreement, dated December 7, 2005, between Protherics Inc.,
Protherics UK Limited and AstraZeneca Ireland Operations (a branch in Ireland of
AstraZeneca UK Limited) * (+)4.12
    
    Asset Sale and Purchase Agreement, dated June 6, 2006, between CoVaccine B.V.,
Protherics Molecular Design Limited and Protherics PLC * (+)4.13
    
    Instrument constituting Unsecured Convertible Loan Notes 2026 *4.14
    
    Proteus Approved Executive Share Option Scheme (6)4.15
    
    Proteus Unapproved Share Option Scheme (6)4.16
    
    Proteus Savings-Related Share Option Scheme (6)4.17
    
    Option Deed, dated December 22, 1999, between Protherics PLC and Andrew J. Heath (5)4.18
    
    Protherics PLC 2005 Long-Term Incentive Plan *4.19
    
    Protherics PLC Performance Share Plan *4.20
    
    Protherics PLC 2005 Deferred Bonus Plan *
 84




---



##### Table of Contents



ExhibitNumber
    
    Exhibit Title4.21
    
    U.S. Sub-plan to Protherics PLC 2005 Deferred Bonus Plan *4.22
    
    Protherics PLC 2005 Executive Share Option Plan *4.23
    
    The Protherics PLC Company Share Option Plan for Therapeutic Antibodies Inc. Employees
adopted on January 27, 2000 (5)4.24
    
    Employment Agreement, dated November 13, 2001, between Protherics Inc. and Andrew J.
Heath (4)4.25
    
    Employment Agreement, dated November 13, 2001, between Protherics PLC and Andrew J.
Heath (4)4.26
    
    Employment Agreement, dated July 13, 1995, between Protherics PLC and Barry M. Riley (4)4.27
    
    Employment Agreement, dated July 13, 1995, between Protherics PLC and James C. Christie
(4)4.28
    
    Letter Agreement, dated September 1, 1998, between Therapeutic Antibodies (UK) Limited
and Stuart M. Wallis (9)4.29
    
    Consultancy Agreement, dated August 21, 1998, between Therapeutic Antibodies (UK)
Limited and Stuart M. Wallis (9)4.30
    
    Consultancy Agreement, dated September 1, 1998, between Therapeutic Antibodies (UK)
Limited and Stuart M. Wallis (9)4.31
    
    Letter of Appointment dated January 19, 2004, between Protherics PLC and Garry Watts (2)4.32
    
    Letter of Appointment dated February 23, 2004, between Protherics PLC and John R. Brown
(2)4.33
    
    Letter of Appointment dated July 21, 2005, between Protherics PLC and Bryan G. Morton *8.1
    
    List of Subsidiaries*11.1
    
    Code of Ethics (1)31.1
    
    Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as
amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*31.2
    
    Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as
amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*32.1
    
    Certifications pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as
amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002*
 
 *
    
    Filed herewith(+)
    
    Portions of this exhibit have been omitted pursuant to a request for confidential treatment
and have been filed separately with the Commission. 85




---



##### Table of Contents



(1)
    
    Incorporated by reference to exhibits filed with the Companys Annual Report on Form 20-F,
filed on September 30, 2005.(2)
    
    Incorporated by reference to exhibits filed with the Companys Annual Report on Form 20-F,
filed on September 30, 2004.(3)
    
    Incorporated by reference to exhibits filed with the Companys Annual Report on Form 20-F,
filed on September 27, 2003.(4)
    
    Incorporated by reference to exhibits filed with the Companys Annual Report on Form 20-F,
filed on September 27, 2002.(5)
    
    Incorporated by reference to exhibits filed with the Companys Annual Report on Form 20-F,
filed on September 27, 2001.(6)
    
    Incorporated by reference to exhibits filed with the Companys Registration Statement on Form
F-4, filed on August 16, 1999, File No. 333-85347.(7)
    
    Incorporated by reference to exhibits filed with the Quarterly Report on Form 10-Q/A, filed
by Therapeutic Antibodies Inc. on October 16, 1996, File No. 000-25978.(8)
    
    Incorporated by reference to exhibits filed with the Annual Report on Form 10-K, filed by
Therapeutic Antibodies Inc. on March 31, 1998, File No. 000-25978.(9)
    
    Incorporated by reference to exhibits filed with the Annual Report on Form 10-K filed by
Therapeutic Antibodies Inc. on March 31, 1999, File No. 000-25978.(10)
    
    Incorporated by reference to exhibits filed by Therapeutic Antibodies Inc. with its Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 1995, File No. 0-25978. 86




---



##### Table of Contents



SIGNATURES
  July 25, 2006
    PROTHERICS PLCBy:
    /s/  Barrington M. RileyBarrington M. RileyFinance Director




---



##### Table of Contents



Report of the Independent Registered Public Accounting Firm
 To the Board of Directors and Shareholders of Protherics PLC
    London, United Kingdom
25 July 2006
 F - 1




---



##### Table of Contents



Income Statements
 2006
    
    
    2005Notes
    
    
    £000
    
    
    £000Revenue
    
    
    4
    
    
    
    17,709
    
    
    
    18,839Cost of salesCost of sales excluding
exceptional closedown costs
    
    
    
    
    
    
    (9,930
    )
    
    
    (8,744
    )Exceptional closedown costs
    
    
    6
    
    
    
    (1,362
    )
    
    
    Total cost of sales
    
    
    
    
    
    
    (11,292
    )
    
    
    (8,744
    )Gross profit
    
    
    
    
    
    
    6,417
    
    
    
    10,095Administrative expensesResearch and development
    
    
    
    
    
    
    (6,747
    )
    
    
    (4,575
    )General & administrative
    
    
    
    
    
    
    (9,203
    )
    
    
    (7,178
    )Total administrative expenses
    
    
    
    
    
    
    (15,950
    )
    
    
    (11,753
    )Operating loss
    
    
    6
    
    
    
    (9,533
    )
    
    
    (1,658
    )Finance income
    
    
    8
    
    
    
    401
    
    
    
    236Finance costs
    
    
    9
    
    
    
    (431
    )
    
    
    (655
    )Loss before tax
    
    
    
    
    
    
    (9,563
    )
    
    
    (2,077
    )Tax
    
    
    10
    
    
    
    75
    
    
    
    296Loss for the year
    
    
    25
    
    
    
    (9,488
    )
    
    
    (1,781
    )
 Pence
    
    
    PenceBasic and diluted loss per share
    
    
    11
    
    
    
    (3.8
    )
    
    
    (0.8
    )
  
 Statements of Recognised Income & Expense
  2006
    
    
    2005£000
    
    
    £000Exchange differences on translation of foreign
operations
    
    
    
    
    
    
    (158
    )
    
    
    (33
    )Net expense recognised directly in equity
    
    
    
    
    
    
    (158
    )
    
    
    (33
    )Loss for the year
    
    
    
    
    
    
    (9,488
    )
    
    
    (1,781
    )Total recognised expense for the year
    
    
    
    
    
    
    (9,646
    )
    
    
    (1,814
    )Adjustments arising on first time adoption of IAS 32
and IAS 39
    
    
    25
    
    
    
    211
    
    
    
    Total losses recognised since last financial statements
    
    
    
    
    
    
    (9,435
    )
    
    
    (1,814
    )
   F - 2




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##### Table of Contents



Balance Sheets
  2006
    
    
    2005Notes
    
    
    £000
    
    
    £000Non-current assetsGoodwill
    
    
    12
    
    
    
    9,199
    
    
    
    9,199Intangible assets
    
    
    13
    
    
    
    1,060
    
    
    
    1,081Property, plant and equipment
    
    
    14
    
    
    
    8,109
    
    
    
    6,999Deferred tax asset
    
    
    10
    
    
    
    206
    
    
    
    43218,574
    
    
    
    17,711Current assetsInventories
    
    
    15
    
    
    
    10,887
    
    
    
    12,752Financial assets
    
    
    22
    
    
    
    
    
    
    
    75Tax receivables
    
    
    
    
    
    
    717
    
    
    
    344Trade and other receivables
    
    
    16
    
    
    
    4,520
    
    
    
    3,200Cash and cash equivalents
    
    
    17
    
    
    
    25,438
    
    
    
    7,27041,562
    
    
    
    23,641Total assets
    
    
    
    
    
    
    60,136
    
    
    
    41,352Current liabilitiesTrade and other payables
    
    
    18
    
    
    
    15,722
    
    
    
    8,551Current tax liabilities
    
    
    
    
    
    
    278
    
    
    
    209Financial liabilitiesObligations under finance leases
    
    
    21
    
    
    
    623
    
    
    
    534Bank overdrafts and loans
    
    
    19
    
    
    
    37
    
    
    
    193Derivative instruments
    
    
    22
    
    
    
    136
    
    
    
    16,796
    
    
    
    9,487Non-current liabilitiesTrade and other payables
    
    
    18
    
    
    
    13,081
    
    
    
    638Financial liabilitiesBorrowings
    
    
    19
    
    
    
    222
    
    
    
    250Convertible loan notes
    
    
    20
    
    
    
    2,469
    
    
    
    3,762Obligations under finance leases
    
    
    21
    
    
    
    1,216
    
    
    
    1,24616,988
    
    
    
    5,896Total liabilities
    
    
    
    
    
    
    33,784
    
    
    
    15,383Net assets
    
    
    
    
    
    
    26,352
    
    
    
    25,969Shareholders equityShare capital
    
    
    23
    
    
    
    5,186
    
    
    
    4,844Share premium account
    
    
    24
    
    
    
    86,770
    
    
    
    77,868Merger reserve
    
    
    25
    
    
    
    51,163
    
    
    
    51,163Equity reserve
    
    
    25
    
    
    
    263
    
    
    
    Cumulative translation reserve
    
    
    25
    
    
    
    (191
    )
    
    
    (33
    )Retained earnings
    
    
    25
    
    
    
    (116,839
    )
    
    
    (107,873
    )Total equity
    
    
    
    
    
    
    26,352
    
    
    
    25,969
  B M Riley  Director
  F - 3




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##### Table of Contents



Cash Flow Statements
  2006
    
    
    2005Notes
    
    
    £000
    
    
    £000Cash flows from operating activitiesCash inflow / (outflow) from operations
    
    
    31
    
    
    
    12,609
    
    
    
    (3,054
    )Income tax paid
    
    
    
    
    
    
    (50
    )
    
    
    (79
    )Income tax received
    
    
    
    
    
    
    5
    
    
    
    332Net cash inflow / (outflow) from operating activities
    
    
    
    
    
    
    12,564
    
    
    
    (2,801
    )Investing activitiesInterest received
    
    
    
    
    
    
    401
    
    
    
    236Proceeds on disposal of property, plant and equipment
    
    
    
    
    
    
    52
    
    
    
    35Purchases of property, plant and equipment
    
    
    
    
    
    
    (1,989
    )
    
    
    (1,001
    )Purchases of other intangible non-current assets
    
    
    
    
    
    
    
    
    
    
    (191
    )Capital grants received
    
    
    
    
    
    
    250
    
    
    
    10Net cash (used in) / from investing activities
    
    
    
    
    
    
    (1,286
    )
    
    
    (911
    )Financing activitiesInterest paid
    
    
    
    
    
    
    (257
    )
    
    
    (494
    )Interest paid on finance leases
    
    
    
    
    
    
    (133
    )
    
    
    (131
    )Repayment of borrowings
    
    
    
    
    
    
    (171
    )
    
    
    (336
    )Repayments of finance leases
    
    
    
    
    
    
    (582
    )
    
    
    (490
    )Issue of shares
    
    
    
    
    
    
    8,049
    
    
    
    9,161Net cash from financing activities
    
    
    
    
    
    
    6,906
    
    
    
    7,710Net increase in cash and cash equivalents
    
    
    
    
    
    
    18,184
    
    
    
    3,998Cash and cash equivalents at the beginning of year
    
    
    
    
    
    
    7,242
    
    
    
    3,253Effect of foreign exchange rate changes
    
    
    
    
    
    
    12
    
    
    
    (9
    )Cash and cash equivalents at the end of year
    
    
    17
    
    
    
    25,438
    
    
    
    7,242
  F - 4




---



##### Table of Contents



1 General Information
    
    
    IFRS 7, Financial Instruments: Disclosures; and the related amendment to IAS 1,
Presentation of Financial Statements on Capital Disclosures.
    
    IFRIC 4, Determining Whether an Arrangement Contains a Lease.
  2 Accounting Policies
  Adoption of International Financial Reporting Standards (IFRS)
     First-time adoption of IFRS
   
    
    Business Combinations  IFRS 3, Business CombinationsThe Company has elected not to restate business combinations recognised before the date of
transition.
 F - 5




---



##### Table of Contents




    
    Financial Instruments  IAS 32, Financial Instruments: Disclosure and Presentation and
IAS 39, Financial Instruments: Recognition and MeasurementThe Company has elected to adopt IAS 32 and IAS 39 from 1 April 2005. Therefore the
comparative financial information in respect of financial instruments is presented in
accordance with UK GAAP.
    
    Share-Based Payments  IFRS 2, Share-Based PaymentsThe Company has elected to apply IFRS 2 to all share-based awards and options granted post
7 November 2002 that had not vested by 1 January 2005.
    
    Previously accumulated translation differences have been set to zero as at 1 April
2004.
  Basis of accounting
   Basis of consolidation
     Segment reporting
  F - 6




---



##### Table of Contents



Foreign currency translation
    Revenue recognition
   
    
    ProductsRevenue is partly recognised upon the shipment of products to the distributor, the
significant risks and rewards having been transferred to the distributor, with further
amounts being recognised in accordance with the contractual terms upon shipment to the end
user.
    
    Upfront paymentsNon-refundable upfront payments are deferred and recognised over the period of the earnings
process (see note 3).
    
    Outlicensed product royaltiesRoyalty income is generated by sales of products incorporating the Companys proprietary
technology. Royalty revenues are recognised once the amounts due can be reliably estimated
based on the sale of underlying products and collectibility is assured. Where there is
insufficient historical data on sales and returns to fulfil these requirements, for example
in the case of a new product, the royalty revenue will not be recognised until the Company
can reliably estimate the underlying sales.
 Research and development expenditure
   Exceptional items
  Intangible fixed assets  Goodwill
  F - 7




---



##### Table of Contents



Intangible fixed assets  Other
  Property, plant and equipment
    Buildings and improvements
    
    5% to 10% per yearPlant and machinery
    
    10% to 15% per yearComputer equipment and software
    
    20% to 33% per yearFixtures, fittings and motor vehicles
    
    20% to 25% per year
    Impairment of tangible and intangible assets
     F - 8




---



##### Table of Contents



Inventories
  Taxation
       Leases
    F - 9




---



##### Table of Contents



Grants
   Pensions
  Share-based payments
    Convertible loan notes
     Trade receivables
  Trade payables
  Derivative financial instruments
  F - 10




---



##### Table of Contents



Cash and cash equivalents
  Financial guarantees
    Financial risk management
  
    
    Foreign exchange riskA significant element of the Companys revenue is denominated in US dollars whilst much of
its cost base in the provision of these products is denominated in Sterling. The Company
enters into cash flow hedges in the form of foreign exchange contracts and similar
derivatives which typically extend for 12 months and cover 70 to 100% of anticipated
requirements.
    
    Credit riskA significant element of the Companys revenue is generated from sales to one customer in
the US. Management are constantly in communication with this customer and monitor both
sales and payments from this customer to minimise the credit risk exposure.
    
    Liquidity riskThe Company maintains a mixture of short and medium term deposits that are designed to
ensure the Company has sufficient available funds for operations and planned expansions.
 F - 11




---



##### Table of Contents



3 Critical Accounting Judgement
  4 Revenue
  2006
    
    
    2005£000
    
    
    £000Sale of products
    
    
    16,221
    
    
    
    17,945Revenue in respect of product development
    
    
    976
    
    
    
    Other
    
    
    72
    
    
    
    18217,269
    
    
    
    18,127Outlicensed product royalties
    
    
    440
    
    
    
    71217,709
    
    
    
    18,839Finance income
    
    
    401
    
    
    
    23618,110
    
    
    
    19,075
 5 Segmental Reporting
   F - 12




---



##### Table of Contents



Business segments
 2006
    
    
    
    
    
    
    
    
    
    
    2005Sale
    
    
    
    
    
    
    
    
    
    
    Salemanufacture and
    
    
    
    
    
    
    
    
    
    
    manufacture anddevelopment of
    
    
    Outlicensed
    
    
    
    
    
    
    development of
    
    
    Outlicensedpharmaceutical
    
    
    product
    
    
    
    
    
    
    pharmaceutical
    
    
    productproducts
    
    
    royalties
    
    
    Total
    
    
    products
    
    
    royalties
    
    
    Total£000
    
    
    £000
    
    
    £000
    
    
    £000
    
    
    £000
    
    
    £000Continuing operationsRevenue
    
    
    17,269
    
    
    
    440
    
    
    
    17,709
    
    
    
    18,127
    
    
    
    712
    
    
    
    18,839Segment result
    
    
    (9,961
    )
    
    
    428
    
    
    
    (9,533
    )
    
    
    (2,345
    )
    
    
    687
    
    
    
    (1,658
    )Finance income
    
    
    
    
    
    
    
    
    
    
    401
    
    
    
    
    
    
    
    
    
    
    
    236Finance costs
    
    
    
    
    
    
    
    
    
    
    (431
    )
    
    
    
    
    
    
    
    
    
    
    (655
    )Loss before tax
    
    
    
    
    
    
    
    
    
    
    (9,563
    )
    
    
    
    
    
    
    
    
    
    
    (2,077
    )Tax
    
    
    
    
    
    
    
    
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    296Loss for the year
attributable to
equity shareholders
    
    
    
    
    
    
    
    
    
    
    (9,488
    )
    
    
    
    
    
    
    
    
    
    
    (1,781
    )Segment assets
    
    
    34,566
    
    
    
    132
    
    
    
    34,698
    
    
    
    33,878
    
    
    
    204
    
    
    
    34,082Unallocated assets
    
    
    
    
    
    
    
    
    
    
    25,438
    
    
    
    
    
    
    
    
    
    
    
    7,27060,136
    
    
    
    
    
    
    
    
    
    
    
    41,352Segment liabilities
    
    
    (33,709
    )
    
    
    (75
    )
    
    
    (33,784
    )
    
    
    (15,121
    )
    
    
    (262
    )
    
    
    (15,383
    )Other segment itemsCapital expenditure
    
    
    2,629
    
    
    
    
    
    
    
    2,629
    
    
    
    1,937
    
    
    
    
    
    
    
    1,937Depreciation (note
14)
    
    
    1,391
    
    
    
    
    
    
    
    1,391
    
    
    
    1,464
    
    
    
    
    
    
    
    1,464Amortisation of
Intangible assets (note 13)
    
    
    114
    
    
    
    
    
    
    
    114
    
    
    
    111
    
    
    
    
    
    
    
    111Other non-cash
expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Geographical segments
   Revenue
    
    
    Segment assets
    
    
    Capital expenditure2006
    
    
    2005
    
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Continuing operations:
    
    £000
    
    
    £000
    
    
    £000
    
    
    £000
    
    
    £000
    
    
    £000United Kingdom
    
    
    1,562
    
    
    
    1,322
    
    
    
    27,905
    
    
    
    24,998
    
    
    
    2,194
    
    
    
    973United States
    
    
    16,087
    
    
    
    17,466
    
    
    
    (5,015
    )
    
    
    (3,198
    )
    
    
    17
    
    
    
    652Australia
    
    
    60
    
    
    
    51
    
    
    
    3,462
    
    
    
    4,169
    
    
    
    418
    
    
    
    31217,709
    
    
    
    18,839
    
    
    
    26,352
    
    
    
    25,969
    
    
    
    2,629
    
    
    
    1,937
 F - 13




---



##### Table of Contents



6 Operating Loss
  2006
    
    
    2005£'000
    
    
    £'000Net foreign exchange losses / (gains)
    
    
    454
    
    
    
    (128
    )Research and development expenditure
    
    
    6,747
    
    
    
    4,575InventoriesCost of inventories recognised as expense
    
    
    11,193
    
    
    
    8,732Depreciation of property, plant and equipmentOwned assets
    
    
    1,154
    
    
    
    1,294Assets owned under finance leases
    
    
    237
    
    
    
    170Amortisation of purchased intangible fixed assets
    
    
    114
    
    
    
    111Staff costs (see note 7)
    
    
    8,127
    
    
    
    7,454Auditors remunerationAudit
    
    
    77
    
    
    
    71Other services
    
    
    177
    
    
    
    192Operating leases  rentals payable:Plant & equipment
    
    
    25
    
    
    
    24Other
    
    
    463
    
    
    
    547Loss on disposal of tangible fixed assets
    
    
    108
    
    
    
    162Repairs and maintenance expenditure on property, plant &
equipment
    
    
    595
    
    
    
    406Amortisation of government grants
    
    
    (78
    )
    
    
    (48
    )Government grants towards training costs
    
    
    (11
    )
    
    
    (3
    )Exceptional closedown costs (within cost of sales) (1)
    
    
    1,362
    
    
    
    
 
 (1)
    
    During the year ended 31 March 2006, the Company completed a major upgrade and
expansion of its manufacturing facility in Wales. During this phase of the work, the facility was
shutdown for a substantial part of the year incurring £1,362,000 of expenditure which, under normal
circumstances would have been absorbed into stock manufactured during the year. These costs had no
effect on the tax credit for the period.  2006
    
    
    2005£000
    
    
    %
    
    
    £000
    
    
    %Services as auditorsStatutory accounts
    
    
    77
    
    
    
    30.3
    
    
    
    71
    
    
    
    27.0US regulatory
    
    
    24
    
    
    
    9.5
    
    
    
    30
    
    
    
    11.4101
    
    
    
    39.8
    
    
    
    101
    
    
    
    38.4Further assurance servicesTax compliance
    
    
    56
    
    
    
    22.0
    
    
    
    42
    
    
    
    16.0Other
    
    
    15
    
    
    
    5.9
    
    
    
    10
    
    
    
    3.871
    
    
    
    27.9
    
    
    
    52
    
    
    
    19.8Tax advisory services
    
    
    61
    
    
    
    24.0
    
    
    
    10
    
    
    
    3.8Other non-audit servicesAccounting advisory services
    
    
    21
    
    
    
    8.3
    
    
    
    20
    
    
    
    7.6Accounting and taxation reviews
    
    
    
    
    
    
    
    
    
    
    80
    
    
    
    30.421
    
    
    
    8.3
    
    
    
    100
    
    
    
    38.0254
    
    
    
    100.0
    
    
    
    263
    
    
    
    100.0
 F - 14




---



##### Table of Contents



7 Staff Costs
  2006
    
    
    2005Number
    
    
    NumberManagement
    
    
    35
    
    
    
    34Administration
    
    
    27
    
    
    
    25Research and production
    
    
    135
    
    
    
    153197
    
    
    
    212Their total
remuneration was:£000
    
    
    
    £000Salaries
    
    
    6,849
    
    
    
    6,298Social security costs
    
    
    649
    
    
    
    553Pension costs
    
    
    629
    
    
    
    6038,127
    
    
    
    7,454
    Key management compensation
 2006
    
    
    2005£000
    
    
    £000Salaries and short-term employee benefits
    
    
    1,577
    
    
    
    1,375Post employment benefits
    
    
    256
    
    
    
    196Compensation for loss of office
    
    
    50
    
    
    
    71,883
    
    
    
    1,578
   F - 15




---



##### Table of Contents



Aggregate Directors emoluments
 2006
    
    
    2005£000
    
    
    £000Aggregate emoluments:Salaries and short-term employee benefits
    
    
    942
    
    
    
    865Post employment benefits
    
    
    202
    
    
    
    149Compensation for loss of office
    
    
    50
    
    
    
    71,194
    
    
    
    1,021
  CompensationFees/basic
    
    
    for loss of
    
    
    Benefits in
    
    
    Annual
    
    
    2006
    
    
    2005Name of director
    
    salary
    
    
    office
    
    
    kind
    
    
    bonuses
    
    
    Total
    
    
    Total£000
    
    
    £000
    
    
    £000
    
    
    £000
    
    
    £000
    
    
    £000ExecutiveJ C Christie
    
    
    140
    
    
    
    
    
    
    
    1
    
    
    
    69
    
    
    
    210
    
    
    
    160A J Heath
    
    
    179
    
    
    
    
    
    
    
    2
    
    
    
    153
    
    
    
    334
    
    
    
    251B M Riley
    
    
    130
    
    
    
    
    
    
    
    1
    
    
    
    70
    
    
    
    201
    
    
    
    175Non-executiveA Atkinson
    
    
    8
    
    
    
    39
    
    
    
    
    
    
    
    
    
    
    
    47
    
    
    
    103J R Brown
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    21M S Brown
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7D W Gration
    
    
    9
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    28B G Morton
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    M Peagram
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    S M Wallis
    
    
    70
    
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    103
    
    
    
    103G Watts
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    24613
    
    
    
    50
    
    
    
    37
    
    
    
    292
    
    
    
    992
    
    
    
    872
      F - 16




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##### Table of Contents



Directors Pension Entitlements
  2006
    
    
    2005£000
    
    
    £000J C Christie
    
    
    14
    
    
    
    12A J Heath
    
    
    142
    
    
    
    107B M Riley
    
    
    46
    
    
    
    30202
    
    
    
    149
 Directors Share Options
  F - 17




---



##### Table of Contents



At 31At 1 April
    
    
    
    
    
    
    
    
    
    
    Cancelled
    
    
    March
    
    
    Exercise
    
    
    Exercisable2005
    
    
    Granted
    
    
    Exercised
    
    
    or expired
    
    
    2006
    
    
    price
    
    
    from
    
    
    toApproved optionsB M Riley
    
    
    52,955
    
    
    
    
    
    
    
    
    
    
    
    52,955
    
    
    
    
    
    
    
    68.83
    
    
    25 Jul 1998
    
    24 Jul 2005Unapproved optionsD W Gration
    
    
    90,000
    
    
    
    
    
    
    
    90,000
    (3)
    
    
    
    
    
    
    
    
    
    
    46.00
    
    
    22 Jun 2001
    
    21 Jun 2008B M Riley
    
    
    65,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65,000
    
    
    
    46.00
    
    
    22 Jun 2001
    
    21 Jun 2008B M Riley
    
    
    50,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    39.00
    
    
    22 Dec 2002
    
    21 Dec 2009B M Riley
    
    
    120,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,000
    
    
    
    43.50
    
    
    22 Feb 2004
    
    21 Feb 2011B M Riley
    
    
    350,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    350,000
    
    
    
    39.50
    
    
    16 Jan 2005
    
    15 Jan 2012B M Riley
    
    
    200,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000
    
    
    
    23.25
    
    
    20 Jun 2006
    
    19 Jun 2013B M Riley
    
    
    225,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    225,000
    
    
    
    58.50
    
    
    1 Mar 2007
    
    28 Feb 2014B M Riley*(1)
    
    
    132,420
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    132,420
    
    
    
    2.00
    
    
    28 Feb 2008
    
    27 Feb 2015B M Riley*(2)
    
    
    
    
    
    
    92,357
    
    
    
    
    
    
    
    
    
    
    
    92,357
    
    
    
    2.00
    
    
    21 Dec 2008
    
    20 Dec 2015A Atkinson
    
    
    100,000
    
    
    
    
    
    
    
    100,000
    **(3)
    
    
    
    
    
    
    
    
    
    
    23.25
    
    
    20 Jun 2006
    
    19 Jun 2013A Atkinson
    
    
    135,000
    
    
    
    
    
    
    
    135,000
    **(3)
    
    
    
    
    
    
    
    
    
    
    58.50
    
    
    1 Mar 2007
    
    28 Feb 2014J C Christie
    
    
    250,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    39.00
    
    
    22 Dec 2002
    
    21 Dec 2009J C Christie
    
    
    80,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80,000
    
    
    
    43.50
    
    
    22 Feb 2004
    
    21 Feb 2011J C Christie
    
    
    250,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    39.50
    
    
    16 Jan 2005
    
    15 Jan 2012J C Christie
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    23.25
    
    
    20 Jun 2006
    
    19 Jun 2013J C Christie
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,000
    
    
    
    58.50
    
    
    1 Mar 2007
    
    28 Feb 2014J C Christie*(1)
    
    
    111,416
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    111,416
    
    
    
    2.00
    
    
    28 Feb 2008
    
    27 Feb 2015J C Christie*(2)
    
    
    
    
    
    
    77,707
    
    
    
    
    
    
    
    
    
    
    
    77,707
    
    
    
    2.00
    
    
    21 Dec 2008
    
    20 Dec 2015A J Heath
    
    
    116,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    116,300
    
    
    
    175.00
    
    
    27 Jan 2000
    
    29 Jun 2008A J Heath
    
    
    500,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500,000
    
    
    
    43.50
    
    
    22 Feb 2004
    
    21 Feb 2011A J Heath
    
    
    1,000,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000
    
    
    
    39.50
    
    
    16 Jan 2005
    
    15 Jan 2012A J Heath
    
    
    300,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300,000
    
    
    
    23.25
    
    
    20 Jun 2006
    
    19 Jun 2013A J Heath
    
    
    325,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    325,000
    
    
    
    58.50
    
    
    1 Mar 2009
    
    28 Feb 2014A J Heath*(1)
    
    
    221,233
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    221,233
    
    
    
    2.00
    
    
    28 Feb 2008
    
    27 Feb 2015A J Heath*(2)
    
    
    
    
    
    
    157,556
    
    
    
    
    
    
    
    
    
    
    
    157,556
    
    
    
    2.00
    
    
    21 Dec 2008
    
    20 Dec 2015Savings-related optionsJ C Christie
    
    
    27,000
    
    
    
    
    
    
    
    27,000
    (4)
    
    
    
    
    
    
    
    
    
    
    37.50
    
    
    1 Apr 2005
    
    31 Oct 2005J C Christie
    
    
    
    
    
    
    14,384
    
    
    
    
    
    
    
    
    
    
    
    14,384
    
    
    
    65.00
    
    
    1 Feb 2009
    
    31 Jul 2009IndividualA J Heath
    
    
    600,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    600,000
    
    
    
    39.00
    
    
    22 Dec 2002
    
    21 Dec 20095,551,324
    
    
    
    342,004
    
    
    
    352,000
    
    
    
    52,955
    
    
    
    5,488,373
 *
    
    Options issued under the LTIP approved by the shareholders on 27 January 2005. The market
price of a share at the date of grant was (1) 57.00p and (2) 78.50p.**
    
    Following the resignation of A Atkinson from the Board on 19 April 2005, under the rules of the
Unapproved Share Option Plan, the Remuneration Committee determined that his options would be
exercisable during the period to 31 December 2005.
   D W Gration
    
    £
    31,500A Atkinson
    
    £
    88,125J C Christie
    
    £
    3,240
  F - 18




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##### Table of Contents



Transactions with directors
   8 Finance Income
 2006
    
    
    2005£000
    
    
    £000Bank interest and interest on deposits
    
    
    401
    
    
    
    236
 9 Finance Costs
 2006
    
    
    2005£000
    
    
    £000Interest payable on finance lease and hire purchase borrowings
    
    
    133
    
    
    
    131Interest payable on bank borrowings
    
    
    22
    
    
    
    24Interest payable on 6% convertible unsecured loan notes
    
    
    193
    
    
    
    381Amortisation of 6% convertible unsecured loan notes
    
    
    57
    
    
    
    81Notes payable to South Australian Minister for Primary Industries
    
    
    7
    
    
    
    17Other
    
    
    19
    
    
    
    21431
    
    
    
    655
 F - 19




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##### Table of Contents



10 Tax
  2006
    
    
    2005£000
    
    
    £000Current taxUK Corporation tax credit for the current year
    
    
    325
    
    
    
    290Adjustment in respect of prior years
UK Corporation tax
    
    
    
    
    
    
    15325
    
    
    
    305Foreign tax
    
    
    (3
    )
    
    
    (9
    )Total current taxation
    
    
    322
    
    
    
    296Deferred taxationReduction in estimate of recoverable deferred tax asset
    
    
    (247
    )
    
    
    75
    
    
    
    296
    2006
    
    
    2005£000
    
    
    £000Loss before tax
    
    
    (9,563
    )
    
    
    (2,077
    )Profit on ordinary activities multiplied by rate of corporation tax in
the UK of 30% (2005: 30%)
    
    
    (2,869
    )
    
    
    (623
    )Adjustments in respect of foreign tax rates
    
    
    386
    
    
    
    Timing differences between capital allowances and depreciation
    
    
    509
    
    
    
    254Other timing differences
    
    
    4,041
    
    
    
    Other expenditure not deductible for tax purposes
    
    
    (302
    )
    
    
    193Additional tax credit for research and development expenditure incurred
    
    
    (349
    )
    
    
    (333
    )Lower rate of tax on research and development credits surrendered
    
    
    284
    
    
    
    263Addition to / (utilisation of) losses carried forward
    
    
    (1,775
    )
    
    
    (35
    )Adjustments to tax in respect of prior years
    
    
    
    
    
    
    (15
    )Total taxation
    
    
    (75
    )
    
    
    (296
    )
  F - 20




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##### Table of Contents



2006
    
    
    2005£000
    
    
    £000Deferred tax asset recognised at 1 April
    
    
    432
    
    
    
    444Income statement charge
    
    
    (247
    )
    
    
    Exchange differences
    
    
    21
    
    
    
    (12
    )Deferred tax asset recognised at 31 March
    
    
    206
    
    
    
    432
    Deferred tax asset
    
    Tax losses
    
    
    Total£000
    
    
    £000At 1 April 2005
    
    
    432
    
    
    
    432Credited to the income statement
    
    
    (247
    )
    
    
    (247
    )Exchange differences
    
    
    21
    
    
    
    21At 31 March 2006
    
    
    206
    
    
    
    206
    11 Loss per Share
  F - 21




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##### Table of Contents



12 Goodwill
 £000CostAt 1 April 2004, 1 April 2005 and 31 March 2006
    
    
    9,199Accumulated impairment lossesAt 1 April 2004, 1 April 2005 and 31 March 2006
    
    
    Carrying amount31 March 2006
    
    
    9,19931 March 2005
    
    
    9,199
   F - 22




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##### Table of Contents



13 Other Intangible Assets
 Patentsand
    
    
    Othertrademarks
    
    
    intangibles
    
    
    Total£000
    
    
    £000
    
    
    £000CostAt 1 April 2004
    
    
    879
    
    
    
    
    
    
    
    879Acquisitions
    
    
    
    
    
    
    580
    
    
    
    580Exchange differences
    
    
    (21
    )
    
    
    (15
    )
    
    
    (36
    )At 1 April 2005
    
    
    858
    
    
    
    565
    
    
    
    1,423Acquisitions
    
    
    
    
    
    
    
    
    
    
    Exchange differences
    
    
    76
    
    
    
    50
    
    
    
    126At 31 March 2006
    
    
    934
    
    
    
    615
    
    
    
    1,549AmortisationAt 1 April 2004
    
    
    240
    
    
    
    
    
    
    
    240Charge for the year
    
    
    111
    
    
    
    
    
    
    
    111Exchange differences
    
    
    (9
    )
    
    
    
    
    
    
    (9
    )At 1 April 2005
    
    
    342
    
    
    
    
    
    
    
    342Charge for the year
    
    
    114
    
    
    
    
    
    
    
    114Exchange differences
    
    
    33
    
    
    
    
    
    
    
    33At 31 March 2006
    
    
    489
    
    
    
    
    
    
    
    489Net book value31 March 2006
    
    
    445
    
    
    
    615
    
    
    
    1,06031 March 2005
    
    
    516
    
    
    
    565
    
    
    
    1,081
  F - 23




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##### Table of Contents



14 Property, Plant and Equipment
 Furniture,Land &
    
    
    Plant &
    
    
    fixtures &buildings
    
    
    machinery
    
    
    equipment
    
    
    Total£000
    
    
    £000
    
    
    £000
    
    
    £000CostAt 1 April 2004
    
    
    4,825
    
    
    
    7,503
    
    
    
    2,343
    
    
    
    14,671Additions
    
    
    522
    
    
    
    543
    
    
    
    292
    
    
    
    1,357Disposals
    
    
    
    
    
    
    (161
    )
    
    
    (178
    )
    
    
    (339
    )Exchange differences
    
    
    (16
    )
    
    
    (24
    )
    
    
    (22
    )
    
    
    (62
    )At 1 April 2005
    
    
    5,331
    
    
    
    7,861
    
    
    
    2,435
    
    
    
    15,627Reclassification
    
    
    
    
    
    
    21
    
    
    
    (21
    )
    
    
    Additions
    
    
    111
    
    
    
    2,218
    
    
    
    300
    
    
    
    2,629Disposals
    
    
    (44
    )
    
    
    (328
    )
    
    
    (484
    )
    
    
    (856
    )Exchange differences
    
    
    11
    
    
    
    8
    
    
    
    28
    
    
    
    47At 31 March 2006
    
    
    5,409
    
    
    
    9,780
    
    
    
    2,258
    
    
    
    17,447DepreciationAt 1 April 2004
    
    
    2,653
    
    
    
    3,551
    
    
    
    1,075
    
    
    
    7,279Charge for the year
    
    
    359
    
    
    
    777
    
    
    
    328
    
    
    
    1,464Disposals
    
    
    
    
    
    
    (14
    )
    
    
    (88
    )
    
    
    (102
    )Exchange differences
    
    
    (4
    )
    
    
    (2
    )
    
    
    (7
    )
    
    
    (13
    )At 1 April 2005
    
    
    3,008
    
    
    
    4,312
    
    
    
    1,308
    
    
    
    8,628Reclassification
    
    
    
    
    
    
    92
    
    
    
    (92
    )
    
    
    Charge for the year
    
    
    390
    
    
    
    652
    
    
    
    349
    
    
    
    1,391Disposals
    
    
    (44
    )
    
    
    (261
    )
    
    
    (391
    )
    
    
    (696
    )Exchange differences
    
    
    
    
    
    
    5
    
    
    
    10
    
    
    
    15At 31 March 2006
    
    
    3,354
    
    
    
    4,800
    
    
    
    1,184
    
    
    
    9,338Net book value31 March 2006
    
    
    2,055
    
    
    
    4,980
    
    
    
    1,074
    
    
    
    8,10931 March 2005
    
    
    2,323
    
    
    
    3,549
    
    
    
    1,127
    
    
    
    6,999
 2006
    
    
    2005£000
    
    
    £000Land & buildings comprise:Freehold
    
    
    1,318
    
    
    
    1,521Short leasehold
    
    
    737
    
    
    
    8022,055
    
    
    
    2,323
   F - 24




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##### Table of Contents



15 Inventories
 2006
    
    
    2005£000
    
    
    £000Raw materials and consumables
    
    
    1,455
    
    
    
    1,488Work in progress
    
    
    9,382
    
    
    
    11,152Finished goods
    
    
    50
    
    
    
    11210,887
    
    
    
    12,752
 16 Trade and Other Receivables
 2006
    
    
    2005£000
    
    
    £000Amounts falling due within one year:Trade receivables
    
    
    2,926
    
    
    
    2,289Less: Provision for impairment of receivables
    
    
    
    
    
    
    Trade receivables  net
    
    
    2,926
    
    
    
    2,289Other receivables
    
    
    845
    
    
    
    304Prepayments and accrued income
    
    
    749
    
    
    
    6074,520
    
    
    
    3,200
 ® ®
 17 Cash and Cash Equivalents
 2006
    
    
    2005£000
    
    
    £000Cash at bank and in hand
    
    
    934
    
    
    
    879Short term bank deposits
    
    
    24,504
    
    
    
    6,39125,438
    
    
    
    7,270Bank overdrafts (note 20)
    
    
    
    
    
    
    (28
    )25,438
    
    
    
    7,242
  F - 25




---



##### Table of Contents



18 Trade and Other Payables
 2006
    
    
    2005£000
    
    
    £000Current liabilities:Trade payables
    
    
    5,227
    
    
    
    2,675Other payables
    
    
    673
    
    
    
    642Accruals
    
    
    2,223
    
    
    
    2,193Deferred income
    
    
    7,599
    
    
    
    3,04115,722
    
    
    
    8,551Non-current
liabilities:Deferred income
    
    
    13,081
    
    
    
    638
   2006
    
    
    2005£000
    
    
    £000Deferred income  falling due in less than one year
    
    
    111
    
    
    
    63Deferred income  falling due after more than one year
    
    
    762
    
    
    
    638873
    
    
    
    701
   19 Borrowings
 2006
    
    
    2005£000
    
    
    £000Bank overdrafts
    
    
    
    
    
    
    28Bank loansSecured
    
    
    201
    
    
    
    211201
    
    
    
    239Notes payable to South Australian Minister for Primary Industries
    
    
    58
    
    
    
    204259
    
    
    
    443The borrowings are repayable as follows:On demand or within one year
    
    
    37
    
    
    
    193In the second year
    
    
    25
    
    
    
    56In the third to fifth years inclusive
    
    
    197
    
    
    
    162After five years
    
    
    
    
    
    
    32259
    
    
    
    443Amounts due for settlement within one year
    
    
    37
    
    
    
    193Amounts due for settlement after one year
    
    
    222
    
    
    
    250259
    
    
    
    443
 F - 26




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##### Table of Contents



Analysis of borrowings by currency:
 AustralianSterling
    
    
    US dollars
    
    
    dollars
    
    
    Total£000
    
    
    £000
    
    
    £000
    
    
    £000At 31 March 2006Bank loans
    
    
    32
    
    
    
    169
    
    
    
    
    
    
    
    201Note payable to South Australian Minister for Primary Industries
    
    
    
    
    
    
    
    
    
    
    58
    
    
    
    5832
    
    
    
    169
    
    
    
    58
    
    
    
    259At 31 March 2005Bank overdrafts
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    28Bank loans
    
    
    53
    
    
    
    158
    
    
    
    
    
    
    
    211Note payable to South Australian Minister for Primary Industries
    
    
    
    
    
    
    
    
    
    
    204
    
    
    
    20453
    
    
    
    158
    
    
    
    232
    
    
    
    443
  2006
    
    
    2005%
    
    
    %Bank overdrafts
    
    
    
    
    
    
    11.0Sterling bank loans
    
    
    8.0
    
    
    
    8.0US dollar bank loans
    
    
    5.6
    
    
    
    5.6Notes payable to South Australian Minister for Primary Industries
    
    
    6.5
    
    
    
    8.7
  2006
    
    
    2005£000
    
    
    £000Bank overdrafts
    
    
    
    
    
    
    29Sterling bank loans
    
    
    34
    
    
    
    53US dollar bank loans
    
    
    155
    
    
    
    152Notes payable to South Australian Minister for Primary Industries
    
    
    51
    
    
    
    193240
    
    
    
    427
   
    
    Bank overdrafts are repayable on demand. The overdrafts at 31 March 2005 were unsecured.
    
    The Companys Sterling loan was obtained upon the acquisition of Enact Pharma PLC in
June 2003. The loan was taken out by Enact Pharma PLC in June 2002. Repayments commenced
in March 2003 and will continue until August 2007. The loan is secured over the assets of
that company and its immediate subsidiaries. The loan carries a fixed interest rate of 8%
per annum.
    
    The Companys US dollar denominated loan was taken out in August 2004. Repayments
commenced in September 2004 and will continue until August 2009, when substantially all of
the principal received on inception will become repayable. The loan is secured by a
charge over certain of the Companys assets and carries an interest rate of 5.625%.
    
    The notes payable to the South Australian Minister for Primary Industries (the
Minister) are secured on buildings and equipment of Protherics Australasia Pty Limited.
Repayment is in equal annual instalments, with the final instalment due in August 2007.
The interest rate is variable at the
 F - 27




---



##### Table of Contents



discretion of the Minister and is payable annually. The rate is currently in line with
market interest rates.
 20 6% Convertible Unsecured Loan Notes
    £000Nominal value of convertible loan notes issued
    
    
    7,196Equity component at date of issue
    
    
    (711
    )Liability component at date of issue
    
    
    6,485
 2006
    
    
    2005£000
    
    
    £000Liability component at 1 April
    
    
    3,762
    
    
    
    7,050Adoption of IAS 32 and IAS 39
    
    
    (282
    )
    
    
    3,480
    
    
    
    7,050Interest charged
    
    
    57
    
    
    
    81Liability converted to equity
    
    
    (1,068
    )
    
    
    (3,369
    )Liability component at 31 March
    
    
    2,469
    
    
    
    3,762
  F - 28




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##### Table of Contents



21 Obligations under Finance Leases
 Present value ofMinimum lease
    
    
    minimum leasepayments
    
    
    payments2006
    
    
    2005
    
    
    2006
    
    
    2005£000
    
    
    £000
    
    
    £000
    
    
    £000Amounts payable under finance leases:Within one year
    
    
    733
    
    
    
    641
    
    
    
    623
    
    
    
    534In the second to fifth years inclusive
    
    
    1,392
    
    
    
    1,425
    
    
    
    1,216
    
    
    
    1,2462,125
    
    
    
    2,066
    
    
    
    1,839
    
    
    
    1,780Less: future finance charges
    
    
    (286
    )
    
    
    (286
    )Present value of lease obligations
    
    
    1,839
    
    
    
    1,780
    
    
    
    1,839
    
    
    
    1,780Less: Amounts due for settlement within
one year (shown within current
liabilities)
    
    
    
    
    
    
    
    
    
    
    (623
    )
    
    
    (534
    )Amount due for settlement after one year
    
    
    
    
    
    
    
    
    
    
    1,216
    
    
    
    1,246
    2006
    
    
    2005£000
    
    
    £000Sterling
    
    
    1,754
    
    
    
    1,631Australian dollars
    
    
    85
    
    
    
    1491,839
    
    
    
    1,780
  22 Derivative Financial Instruments
   F - 29




---



##### Table of Contents



2006
    
    
    2005£000
    
    
    £000Contracts with positive fair values:Forward foreign exchange contracts
    
    
    
    
    
    
    75Total financial assets
    
    
    
    
    
    
    75Contracts with negative fair values:Foreign exchange options
    
    
    136
    
    
    
    Derivative instrument liabilities
    
    
    136
    
    
    
    
   23 Share Capital
 2006
    
    
    2005No. Shares
    
    
    £000
    
    
    No. Shares
    
    
    £000AuthorisedOrdinary shares of 2p each
    
    
    350,000,000
    
    
    
    7,000
    
    
    
    317,100,000
    
    
    
    6,342Allotted, called-up and fully paid
Ordinary shares of 2p eachAt 1 April
    
    
    242,204,390
    
    
    
    4,844
    
    
    
    207,750,086
    
    
    
    4,155Allotted under share option schemes
    
    
    1,441,097
    
    
    
    29
    
    
    
    123,835
    
    
    
    2Cash placing and open offer
    
    
    
    
    
    
    
    
    
    
    20,773,088
    
    
    
    415Issued to AztraZeneca UK Limited under
CytoFab® outlicense agreement
    
    
    10,990,621
    
    
    
    220
    
    
    
    
    
    
    
    Settlement to former employees
    
    
    
    
    
    
    
    
    
    
    81,205
    
    
    
    2Conversion of 6% unsecured convertible loan notes
    
    
    4,650,960
    
    
    
    93
    
    
    
    13,476,176
    
    
    
    270At 31 March
    
    
    259,287,068
    
    
    
    5,186
    
    
    
    242,204,390
    
    
    
    4,844
 F - 30




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##### Table of Contents



Share warrants
  Share options
  At 31At 1 April
    
    
    
    
    
    
    
    
    
    
    Cancelled
    
    
    March
    
    
    Exercise2005
    
    
    Granted
    
    
    Exercised
    
    
    or expired
    
    
    2006
    
    
    price (p)Date exercisableIndividual unapproved22 Dec 2002 to 21 Dec 2009
    
    
    600,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    600,000
    
    
    
    39.009 July 2002 to 8 July 2010
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,000
    
    
    
    40.009 July 2002 to 8 July 2010
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    25.009 July 2002 to 31 May 2007
    
    
    3,850
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,850
    
    
    
    US$6.001 Mar 2004 to 1 Jan 2006
    
    
    70,000
    
    
    
    
    
    
    
    70,000
    
    
    
    
    
    
    
    
    
    
    
    58.508 Oct 2004 to 1 Jan 2006
    
    
    100,000
    
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    23.25Approved25 July 1998 to 24 July 2005
    
    
    52,955
    
    
    
    
    
    
    
    
    
    
    
    52,955
    
    
    
    
    
    
    
    68.8328 Jan 2003 to 27 Jan 2010
    
    
    59,712
    
    
    
    
    
    
    
    10,467
    
    
    
    
    
    
    
    49,245
    
    
    
    37.5028 Feb 2004 to 27 Feb 2011
    
    
    328,000
    
    
    
    
    
    
    
    15,625
    
    
    
    20,375
    
    
    
    292,000
    
    
    
    43.5016 Feb 2009 to 15 Feb 2016
    
    
    
    
    
    
    25,401
    
    
    
    
    
    
    
    
    
    
    
    25,401
    
    
    
    93.50Unapproved22 June 2001 to 21 June 2008
    
    
    275,000
    
    
    
    
    
    
    
    105,000
    
    
    
    
    
    
    
    170,000
    
    
    
    46.0023 Dec 2001 to 22 Dec 2005
    
    
    5,305
    
    
    
    
    
    
    
    5,305
    
    
    
    
    
    
    
    
    
    
    
    45.0022 Dec 2002 to 21 Dec 2009
    
    
    525,000
    
    
    
    
    
    
    
    40,000
    
    
    
    
    
    
    
    485,000
    
    
    
    39.0027 Jan 2003 to 26 Jan 2010
    
    
    87,909
    
    
    
    
    
    
    
    
    
    
    
    812
    
    
    
    87,097
    
    
    
    37.502 Aug 2003 to 1 Aug 2010
    
    
    2,908
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,908
    
    
    
    28.5022 Feb 2004 to 21 Feb 2011
    
    
    1,370,000
    
    
    
    
    
    
    
    225,000
    
    
    
    
    
    
    
    1,145,000
    
    
    
    43.5016 Jan 2005 to 15 Jan 2012
    
    
    2,293,000
    
    
    
    
    
    
    
    106,000
    
    
    
    10,000
    
    
    
    2,177,000
    
    
    
    39.509 July 2005 to 8 July 2012
    
    
    500,000
    
    
    
    
    
    
    
    150,000
    
    
    
    
    
    
    
    350,000
    
    
    
    25.0014 Jan 2006 to 13 Jan 2013
    
    
    100,000
    
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    21.0020 Jun 2006 to 19 Jun 2013
    
    
    1,110,000
    
    
    
    
    
    
    
    210,000
    
    
    
    
    
    
    
    900,000
    
    
    
    23.2524 Jun 2006 to 23 Jun 2013
    
    
    30,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,000
    
    
    
    23.001 Mar 2007 to 28 Feb 2014
    
    
    1,170,000
    
    
    
    
    
    
    
    220,000
    
    
    
    50,000
    
    
    
    900,000
    
    
    
    58.501 Mar 2009 to 28 Feb 2014
    
    
    325,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    325,000
    
    
    
    58.5027 Sep 2007 to 26 Sep 2014
    
    
    310,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    310,000
    
    
    
    49.5028 Feb 2008 to 27 Feb 2015*(1)
    
    
    741,669
    
    
    
    
    
    
    
    
    
    
    
    25,194
    
    
    
    716,475
    
    
    
    2.0019 Jul 2008 to 18 Jul 2015*(2)
    
    
    
    
    
    
    113,785
    
    
    
    
    
    
    
    
    
    
    
    113,785
    
    
    
    2.007 Sep 2008 to 6 Sep 2015
    
    
    
    
    
    
    115,000
    
    
    
    
    
    
    
    
    
    
    
    115,000
    
    
    
    60.5021 Dec 2008 to 20 Dec 2015*(3)
    
    
    
    
    
    
    775,887
    
    
    
    
    
    
    
    12,222
    
    
    
    763,665
    
    
    
    2.0021 Dec 2008 to 20 Dec 2015
    
    
    
    
    
    
    85,000
    
    
    
    
    
    
    
    
    
    
    
    85,000
    
    
    
    78.50Savings related options1 Apr 2005 to 31 Oct 2005
    
    
    96,300
    
    
    
    
    
    
    
    83,700
    
    
    
    12,600
    
    
    
    
    
    
    
    37.501 Jan 2009 to 30 Jun 2009
    
    
    
    
    
    
    270,118
    
    
    
    
    
    
    
    
    
    
    
    270,118
    
    
    
    65.001 Jan 2011 to 30 Jun 2011
    
    
    
    
    
    
    401,738
    
    
    
    
    
    
    
    
    
    
    
    401,738
    
    
    
    65.00Protherics PLC option plan for Therapeutic
Antibodies Inc. employees27 Jan 2000 to 29 June 2008
    
    
    162,238
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    162,238
    
    
    
    175.0 to 312.010,358,846
    
    
    
    1,786,929
    
    
    
    1,441,097
    
    
    
    184,158
    
    
    
    10,520,520
 F - 31




---



##### Table of Contents



Therapeutic Antibodies former employees and consultants
  24 Share Premium Account
 2006
    
    
    2005£000
    
    
    £000At 1 April
    
    
    77,868
    
    
    
    66,027Adoption of IAS 32 and IAS 39
    
    
    13
    
    
    
    77,881
    
    
    
    66,027Premium arising on issue of equity sharesAllotted under share option schemes
    
    
    520
    
    
    
    49Cash placing and open offer
    
    
    
    
    
    
    9,556Issued to AztraZeneca UK Limited under CytoFab® outlicense agreement
    
    
    7,280
    
    
    
    Settlement to former employees
    
    
    
    
    
    
    37Conversion of 6% unsecured convertible loan notes
    
    
    1,089
    
    
    
    3,100Expenses on issue of equity shares
    
    
    
    
    
    
    (901
    )At 31 March
    
    
    86,770
    
    
    
    77,868
 25 Statement of Changes in Equity
 CumulativeShare
    
    
    Share
    
    
    Merger
    
    
    Equity
    
    
    translation
    
    
    Retainedcapital
    
    
    premium
    
    
    reserve
    
    
    reserve
    
    
    reserve
    
    
    earnings
    
    
    Total£000
    
    
    £000
    
    
    £000
    
    
    £000
    
    
    £000
    
    
    £000
    
    
    £000Balance at 1 April 2004
    
    
    4,155
    
    
    
    66,027
    
    
    
    51,163
    
    
    
    
    
    
    
    
    
    
    
    (106,329
    )
    
    
    15,016Currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33
    )
    
    
    
    
    
    
    (33
    )Net expense recognised directly in equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33
    )
    
    
    
    
    
    
    (33
    )Loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,781
    )
    
    
    (1,781
    )Total recognised loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33
    )
    
    
    (1,781
    )
    
    
    (1,814
    )New share capital subscribed
    
    
    419
    
    
    
    9,642
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,061Conversion of convertible loan notes
    
    
    270
    
    
    
    3,100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,370Expenses on issue of equity shares
    
    
    
    
    
    
    (901
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (901
    )Employee share option scheme:value of services provided
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    237
    
    
    
    237Balance at 31 March 2005
    
    
    4,844
    
    
    
    77,868
    
    
    
    51,163
    
    
    
    
    
    
    
    (33
    )
    
    
    (107,873
    )
    
    
    25,969Adoption of IAS 32 and IAS 39
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    378
    
    
    
    
    
    
    
    211
    
    
    
    602Balance at 1 April 2005
    
    
    4,844
    
    
    
    77,881
    
    
    
    51,163
    
    
    
    378
    
    
    
    (33
    )
    
    
    (107,662
    )
    
    
    26,571Currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (158
    )
    
    
    
    
    
    
    (158
    )Net expense recognised directly in equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (158
    )
    
    
    
    
    
    
    (158
    )Loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,488
    )
    
    
    (9,488
    )Total recognised loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (158
    )
    
    
    (9,488
    )
    
    
    (9,646
    )New share capital subscribed
    
    
    249
    
    
    
    7,800
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,049Conversion of convertible loan notes
    
    
    93
    
    
    
    1,089
    
    
    
    
    
    
    
    (115
    )
    
    
    
    
    
    
    
    
    
    
    1,067Employee share option scheme:value of services provided
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    311
    
    
    
    311Balance at 31 March 2006
    
    
    5,186
    
    
    
    86,770
    
    
    
    51,163
    
    
    
    263
    
    
    
    (191
    )
    
    
    (116,839
    )
    
    
    26,352
 F - 32




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##### Table of Contents



26 Operating Lease Commitments
 2006
    
    
    2005£000
    
    
    £000Minimum lease payments under operating leases
recognised in income for the year
    
    
    488
    
    
    
    571
  2006
    
    
    
    
    
    
    2005Vehicles,
    
    
    
    
    
    
    Vehicles,plant and
    
    
    
    
    
    
    plant andProperty
    
    
    equipment
    
    
    Property
    
    
    Equipment£000
    
    
    £000
    
    
    £000
    
    
    £000Within one year
    
    
    431
    
    
    
    16
    
    
    
    462
    
    
    
    10In the second to fifth years inclusive
    
    
    600
    
    
    
    16
    
    
    
    995
    
    
    
    8After five years
    
    
    39
    
    
    
    
    
    
    
    48
    
    
    
    1,070
    
    
    
    32
    
    
    
    1,505
    
    
    
    18
  27 Capital and Other Financial Commitments
 2006
    
    
    2005£000
    
    
    £000Contracts placed for future capital expenditure
not provided in the financial statements
    
    
    1,348
    
    
    
    534
 28 Share-Based Payments
    F - 33




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##### Table of Contents



F - 34




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##### Table of Contents



Awards under the share option plans
 Grant date
    
    14 Jan
    
    
    20 Jun
    
    
    24 Jun
    
    
    1 Mar
    
    
    1 Mar
    
    
    27 Sep
    
    
    7 Sep
    
    
    21 Dec
    
    
    16 Feb2003
    
    
    2003
    
    
    2003
    
    
    2004
    
    
    2004
    
    
    2004
    
    
    2005
    
    
    2005
    
    
    2006Share price at
grant date (p)
    
    
    21.00
    
    
    
    23.25
    
    
    
    23.00
    
    
    
    58.50
    
    
    
    58.50
    
    
    
    49.50
    
    
    
    60.50
    
    
    
    78.50
    
    
    
    93.50Exercise
price (p)
    
    
    21.00
    
    
    
    23.25
    
    
    
    23.00
    
    
    
    58.50
    
    
    
    58.50
    
    
    
    49.50
    
    
    
    60.50
    
    
    
    78.50
    
    
    
    93.50Number of
employees
    
    
    1
    
    
    
    10
    
    
    
    2
    
    
    
    15
    
    
    
    1
    
    
    
    3
    
    
    
    2
    
    
    
    5
    
    
    
    1Shares under option
    
    
    100,000
    
    
    
    1,250,000
    
    
    
    30,000
    
    
    
    1,240,000
    
    
    
    325,000
    
    
    
    310,000
    
    
    
    115,000
    
    
    
    85,000
    
    
    
    25,401Fair value (p)
    
    
    9.02
    
    
    
    9.45
    
    
    
    9.45
    
    
    
    25.57
    
    
    
    33.77
    
    
    
    19.31
    
    
    
    19.98
    
    
    
    31.38
    
    
    
    36.13Dividends yield
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vesting period
(years)
    
    
    3
    
    
    
    3
    
    
    
    3
    
    
    
    3
    
    
    
    5
    
    
    
    3
    
    
    
    3
    
    
    
    3
    
    
    
    3Expected volatility
    
    
    48.9
    %
    
    
    46.2
    %
    
    
    46.2
    %
    
    
    47.0
    %
    
    
    47.0
    %
    
    
    45.3
    %
    
    
    38.5
    %
    
    
    41.0
    %
    
    
    41.2
    %Option life (years)
    
    
    10
    
    
    
    10
    
    
    
    10
    
    
    
    10
    
    
    
    10
    
    
    
    10
    
    
    
    10
    
    
    
    10
    
    
    
    10Expected life
(years)
    
    
    5
    
    
    
    5
    
    
    
    5
    
    
    
    5
    
    
    
    5
    
    
    
    5
    
    
    
    5
    
    
    
    5
    
    
    
    5Risk free rate
    
    
    4.21
    %
    
    
    3.75
    %
    
    
    3.75
    %
    
    
    4.64
    %
    
    
    4.64
    %
    
    
    4.74
    %
    
    
    4.12
    %
    
    
    4.68
    %
    
    
    4.68
    %Performance criteria
    
    
    (1
    )
    
    
    (1
    )
    
    
    (1
    )
    
    
    (2
    )
    
    
    (3
    )
    
    
    (2
    )
    
    
    (4
    )
    
    
    (4
    )
    
    
    (4
    )
 Other awards
 Grant date
    
    28 Feb
    
    
    19 Jul
    
    
    21 Dec
    
    
    11 Jan
    
    
    11 Jan2005
    
    
    2005
    
    
    2005
    
    
    2006
    
    
    2006LTIP
    
    
    LTIP
    
    
    LTIP
    
    
    Share-save
    
    
    Share-saveShare price at grant date (p)
    
    
    54.75
    
    
    
    57.00
    
    
    
    78.50
    
    
    
    86.00
    
    
    
    86.00Exercise price (p)
    
    
    2.00
    
    
    
    2.00
    
    
    
    2.00
    
    
    
    65.00
    
    
    
    65.00Number of employees
    
    
    22
    
    
    
    2
    
    
    
    16
    
    
    
    38
    
    
    
    35Shares under option
    
    
    741,669
    
    
    
    113,785
    
    
    
    775,887
    
    
    
    270,118
    
    
    
    401,738Fair value (p)
    
    
    33.71
    
    
    
    38.22
    
    
    
    60.86
    
    
    
    37.20
    
    
    
    44.09Vesting period (years)
    
    
    3
    
    
    
    3
    
    
    
    3
    
    
    
    3
    
    
    
    5Dividend yield
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expected volatility
    
    
    41.8
    %
    
    
    39.0
    %
    
    
    41.0
    %
    
    
    41.2
    %
    
    
    40.9
    %Option life (years)
    
    
    10
    
    
    
    10
    
    
    
    10
    
    
    
    10
    
    
    
    10Expected life (years)
    
    
    5
    
    
    
    5
    
    
    
    5
    
    
    
    3
    
    
    
    5Risk free rate
    
    
    4.68
    %
    
    
    4.18
    %
    
    
    4.68
    %
    
    
    4.10
    %
    
    
    4.10
    %Performance criteria
    
    
    (4
    )
    
    
    (4
    )
    
    
    (4
    )
    
    None
    
    
    None
 
 (1)
    
    To vest, the Companys share price is required to outperform the average price of
shares in the FTSE All Share Pharmaceutical and Biotech Index in any three year period
commencing on or after the date of grant of the option.(2)
    
    Performance will be measured once only after three years from the date of grant of
the option. If the total shareholder return of the Company reaches the median of the FTSE
All Share Pharmaceutical and Biotech Index, one third of the shares under option become
exercisable, rising on a sliding scale such that all the shares under option become
exercisable if the Companys performance is at or above the upper quartile. The
Remuneration Committee must also be satisfied that there has been an improvement in the
Companys underlying financial performance over the period.(3)
    
    As (2) except that performance measured after five years.(4)
    
    Provided the Remuneration Committee is satisfied that the Company has achieved sound
underlying performance, awards will vest based on the Companys Total Shareholder Return
(TSR). Performance will be measured after three years from grant by measuring the TSR of
the Company against a comparator group consisting of the primary listed components of the
FTSE All Share Pharmaceutical and Biotech Index but excluding those companies in the FTSE
100 (currently Alliance Unichem Plc, Astra Zeneca PLC, GlaxoSmithKline PLC and Shire
plc). TSR will F - 35




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##### Table of Contents



normally be averaged across a period of three months before the date of the reward and
three months before the date on which the performance period ends, although the Committee
may determine that a different averaging period is appropriate and properly reflective of
management performance but in any event this will not be more than six months or less than
one month. No award will vest if the Companys TSR is below the median of the comparator
group, 30% will vest if the Companys TSR is at the median position, 80% if the Companys
TSR is at the upper quartile and 100% if at the upper decile. Awards will vest on a sliding
scale between each step.   2006
    
    
    
    
    
    
    2005Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    Averageoption
    
    
    
    
    
    
    optionprice
    
    
    
    
    
    
    priceNumber
    
    
    pence
    
    
    Number
    
    
    penceOutstanding at 1 April
    
    
    10,866,664
    
    
    
    60.96
    
    
    
    10,245,846
    
    
    
    71.37Granted
    
    
    1,786,929
    
    
    
    34.30
    
    
    
    1,221,669
    
    
    
    19.03Exercised
    
    
    (1,441,097
    )
    
    
    38.05
    
    
    
    (123,835
    )
    
    
    41.48Cancelled or expired
    
    
    (300,047
    )
    
    
    137.01
    
    
    
    (477,016
    )
    
    
    182.39Outstanding at 31 March
    
    
    10,912,449
    
    
    
    57.53
    
    
    
    10,866,664
    
    
    
    60.96Exercisable at 31 March
    
    
    5,956,267
    
    
    
    76.64
    
    
    
    6,483,695
    
    
    
    79.18
 2006
    
    
    2005Weighted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    Weighted average
    
    
    average
    
    
    
    
    
    
    Weighted averageRange of
    
    option
    
    
    Number
    
    
    remaining life
    
    
    option
    
    
    
    
    
    
    remaining lifeexercise
    
    price
    
    
    of
    
    
    Expected
    
    
    Contractual
    
    
    price
    
    
    Number of
    
    
    Expected
    
    
    Contractualprices
    
    pence
    
    
    shares
    
    
    Years
    
    
    Years
    
    
    pence
    
    
    shares
    
    
    Years
    
    
    YearsBelow 20p
    
    
    2.0
    
    
    
    1,593,925
    
    
    
    4.3
    
    
    
    9.3
    
    
    
    2.0
    
    
    
    741,669
    
    
    
    4.9
    
    
    
    9.920p  40p
    
    
    35.0
    
    
    
    4,696,250
    
    
    
    0.9
    
    
    
    5.6
    
    
    
    34.0
    
    
    
    5,519,829
    
    
    
    1.7
    
    
    
    6.540p  60p
    
    
    50.0
    
    
    
    3,167,000
    
    
    
    1.5
    
    
    
    6.3
    
    
    
    50.1
    
    
    
    3,933,546
    
    
    
    2.3
    
    
    
    7.060p  80p
    
    
    65.5
    
    
    
    871,856
    
    
    
    4.1
    
    
    
    5.6
    
    
    
    68.8
    
    
    
    52,955
    
    
    
    
    
    
    
    0.380p  100p
    
    
    93.5
    
    
    
    25,401
    
    
    
    4.9
    
    
    
    9.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Above 100p
    
    
    434.7
    
    
    
    558,017
    
    
    
    
    
    
    
    0.7
    
    
    
    441.0
    
    
    
    618,665
    
    
    
    
    
    
    
    1.6
  29 Retirement Benefit Schemes
  F - 36




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##### Table of Contents



30
    
    Notes to the Consolidated Cash Flow Statements
  2006
    
    
    2005£000
    
    
    £000Operating loss
    
    
    (9,533
    )
    
    
    (1,658
    )Adjustments for:Change in fair value of derivatives
    
    
    531
    
    
    
    248Deferred grant income
    
    
    (78
    )
    
    
    (48
    )Non cash expenses / (revenues)
    
    
    
    
    
    
    (110
    )Share-based payment costs
    
    
    311
    
    
    
    237Depreciation of property, plant and equipment
    
    
    1,391
    
    
    
    1,464Amortisation of intangible fixed assets
    
    
    114
    
    
    
    111Loss on disposal of property, plant and equipment
    
    
    108
    
    
    
    162Operating cash flows before movements in working capital
    
    
    (7,156
    )
    
    
    406Decrease / (increase) in inventories
    
    
    1,903
    
    
    
    (3,032
    )(Increase) / decrease in receivables
    
    
    (1,135
    )
    
    
    44Increase / (decrease) in payables
    
    
    18,997
    
    
    
    (472
    )Net cash inflow / (outflow) from operating activities
    
    
    12,609
    
    
    
    (3,054
    )
    31
    
    Related Party Transactions
   F - 37




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##### Table of Contents



32
    
    Explanation of Transition to IFRS
  Differences between IFRS and UK GAAP impacting on Protherics PLC
  
    
    Presentation  IAS 1, Presentation of Financial StatementsThe presentation format of IFRS is different from UK GAAP.
    
    Employee option and performance share schemes  IFRS 2, Share-based PaymentsAll transactions within the scope of IFRS 2 are valued based on the fair value of the
option or award at grant date and expensed to the income statement over the vesting period
of the scheme.
    
    Goodwill arising on acquisitions  IFRS 3, Business CombinationsIFRS 3 requires that goodwill arising upon acquisition of businesses is not amortised but
is subject to impairment reviews. As indicated in note 2, the Company has applied the
exemption not to restate business combinations prior to the date of transition, and as a
result, amortisation previously charged under U.K. GAAP has been reversed from 1 April 2004
onwards.
    
    Financial instruments  IAS 32, Financial Instruments: Disclosure and Presentation and
IAS 39, Financial Instruments: Recognition and MeasurementIAS 39 determines that the instruments held to hedge the Companys US dollar receivables
are required to be valued at each period end, with the movement in the fair value being
reflected as an income or expense for the period, since these instruments do not qualify
for hedge accounting in accordance with IFRS. As indicated in note 2, the Comany has
elected to adopt IAS 39 from 1 April 2005. Therefore the comparative financial information
in respect of financial instruments is presented in accordance with UK GAAP.
    
    Convertible loan notes  IAS 39, Financial Instruments: Recognition and MeasurementThe 6% unsecured convertible loan notes are defined as compound financial instruments under
IAS 39 and therefore, the instrument is required to be split between its equity and debt
components upon issue. In subsequent periods, the finance charge of the Company will be
increased to reflect the perceived discount on issue of the debt instrument. As indicated
in note 2, the Company has elected to adopt IAS 32 and IAS 39 from 1 April 2005. Therefore
the comparative financial information in respect of financial instruments is presented in
accordance with UK GAAP.
    
    Capitalised interest  IAS 23, Borrowing costsIAS 23 provides the option of capitalising or expensing borrowing cost incurred on assets
in the course of construction and the option chosen should be adopted consistently. The
Company has adopted a policy to expense such costs as incurred and as a result, all
interest capitalised under U.K. GAAP has been expensed.
    
    Hedging instruments  IAS 21, The Effects of Changes in Foreign Exchange RatesIAS 21 determines that the balance sheet of a foreign operation should be translated at the
closing exchange rate of the foreign operations functional currency. Prior to the adoption
of IAS 32 and IAS 39, on 1 April 2005, the Company used forward foreign exchange contracts
to hedge against specific US dollar denominated assets and such assets were retranslated at
the hedged rate. Compliance with IAS 21 has required the effects of the hedging instrument,
being the difference between the closing and hedged rate of exchange for these items, to be
carried separately as a financial asset on the balance sheets of 31 March 2004 and 31 March
2005.
 F - 38




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##### Table of Contents



Reconciliation of UK GAAP balance sheet to IFRS balance sheet as at 1 April 2004
 Effect ofUK GAAP in
    
    
    transition toNotes
    
    
    IFRS format
    
    
    IFRS
    
    
    IFRS£000
    
    
    £000
    
    
    £000Non-current assetsGoodwill
    
    
    
    
    
    
    9,199
    
    
    
    
    
    
    
    9,199Other intangible assets
    
    
    
    
    
    
    639
    
    
    
    
    
    
    
    639Property, plant and equipment
    
    
    (a
    )
    
    
    7,473
    
    
    
    (81
    )
    
    
    7,392Deferred tax asset
    
    
    
    
    
    
    444
    
    
    
    
    
    
    
    44417,755
    
    
    
    (81
    )
    
    
    17,674Current assetsInventories
    
    
    
    
    
    
    9,745
    
    
    
    
    
    
    
    9,745Financial assets
    
    
    (b
    )
    
    
    
    
    
    
    323
    
    
    
    323Tax receivables
    
    
    
    
    
    
    307
    
    
    
    
    
    
    
    307Trade and other receivables
    
    
    (c
    )
    
    
    3,432
    
    
    
    (269
    )
    
    
    3,163Cash and cash equivalents
    
    
    (d
    )
    
    
    3,307
    
    
    
    (54
    )
    
    
    3,25316,791
    
    
    
    
    
    
    
    16,791Total assets
    
    
    
    
    
    
    34,546
    
    
    
    (81
    )
    
    
    34,465Current liabilitiesTrade and other payables
    
    
    (e
    )
    
    
    8,721
    
    
    
    196
    
    
    
    8,917Current tax liabilities
    
    
    
    
    
    
    127
    
    
    
    
    
    
    
    127Financial liabilitiesObligations under finance leases
    
    
    
    
    
    
    456
    
    
    
    
    
    
    
    456Bank overdrafts, loans and other borrowings
    
    
    
    
    
    
    500
    
    
    
    
    
    
    
    5009,804
    
    
    
    196
    
    
    
    10,000Non-current liabilitiesFinancial liabilitiesBorrowings
    
    
    
    
    
    
    262
    
    
    
    
    
    
    
    262Convertible loan notes
    
    
    
    
    
    
    7,050
    
    
    
    
    
    
    
    7,050Obligations under finance leases
    
    
    
    
    
    
    1,459
    
    
    
    
    
    
    
    1,459Other non-current liabilities
    
    
    
    
    
    
    678
    
    
    
    
    
    
    
    6789,449
    
    
    
    
    
    
    
    9,449Total liabilities
    
    
    
    
    
    
    19,253
    
    
    
    196
    
    
    
    19,449Net assets
    
    
    
    
    
    
    15,293
    
    
    
    (277
    )
    
    
    15,016EquityShare capital
    
    
    
    
    
    
    4,155
    
    
    
    
    
    
    
    4,155Share premium account
    
    
    
    
    
    
    66,027
    
    
    
    
    
    
    
    66,027Merger reserve
    
    
    
    
    
    
    51,163
    
    
    
    
    
    
    
    51,163Equity reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cumulative translation reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Retained earnings
    
    
    
    
    
    
    (106,052
    )
    
    
    (277
    )
    
    
    (106,329
    )Total equity
    
    
    
    
    
    
    15,293
    
    
    
    (277
    )
    
    
    15,016
 F - 39




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##### Table of Contents



Reconciliation of UK GAAP balance sheet to the IFRS balance sheet at 31 March 2005
 Effect ofUK GAAP in
    
    
    transition toNotes
    
    
    IFRS format
    
    
    IFRS
    
    
    IFRS£000
    
    
    £000
    
    
    £000Non-current assetsGoodwill
    
    
    (j
    )
    
    
    8,201
    
    
    
    998
    
    
    
    9,199Other intangible assets
    
    
    
    
    
    
    1,081
    
    
    
    
    
    
    
    1,081Property, plant and equipment
    
    
    (a
    )
    
    
    7,034
    
    
    
    (35
    )
    
    
    6,999Deferred tax asset
    
    
    
    
    
    
    432
    
    
    
    
    
    
    
    43216,748
    
    
    
    963
    
    
    
    17,711Current assetsInventories
    
    
    
    
    
    
    12,752
    
    
    
    
    
    
    
    12,752Financial assets
    
    
    (b
    )
    
    
    
    
    
    
    75
    
    
    
    75Tax receivables
    
    
    
    
    
    
    344
    
    
    
    
    
    
    
    344Trade and other receivables
    
    
    (c
    )
    
    
    3,270
    
    
    
    (70
    )
    
    
    3,200Cash and cash equivalents
    
    
    (d
    )
    
    
    7,275
    
    
    
    (5
    )
    
    
    7,27023,641
    
    
    
    
    
    
    
    23,641Total assets
    
    
    
    
    
    
    40,389
    
    
    
    963
    
    
    
    41,352Current liabilitiesTrade and other payables
    
    
    (e
    )
    
    
    8,329
    
    
    
    222
    
    
    
    8,551Current tax liabilities
    
    
    
    
    
    
    209
    
    
    
    
    
    
    
    209Financial liabilitiesObligations under finance leases
    
    
    
    
    
    
    534
    
    
    
    
    
    
    
    534Bank overdrafts, loans and other borrowings
    
    
    
    
    
    
    193
    
    
    
    
    
    
    
    1939,265
    
    
    
    222
    
    
    
    9,487Non-current liabilitiesTrade and other payables
    
    
    
    
    
    
    638
    
    
    
    
    
    
    
    638Financial liabilitiesBorrowings
    
    
    
    
    
    
    250
    
    
    
    
    
    
    
    250Convertible loan notes
    
    
    
    
    
    
    3,762
    
    
    
    
    
    
    
    3,762Obligations under finance leases
    
    
    
    
    
    
    1,246
    
    
    
    
    
    
    
    1,2465,896
    
    
    
    
    
    
    
    5,896Total liabilities
    
    
    
    
    
    
    15,161
    
    
    
    222
    
    
    
    15,383Net assets
    
    
    
    
    
    
    25,228
    
    
    
    741
    
    
    
    25,969EquityShare capital
    
    
    
    
    
    
    4,844
    
    
    
    
    
    
    
    4,844Share premium account
    
    
    
    
    
    
    77,868
    
    
    
    
    
    
    
    77,868Merger reserve
    
    
    
    
    
    
    51,163
    
    
    
    
    
    
    
    51,163Equity reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cumulative translation reserve
    
    
    (f
    )
    
    
    
    
    
    
    (33
    )
    
    
    (33
    )Retained earnings
    
    
    
    
    
    
    (108,647
    )
    
    
    774
    
    
    
    (107,873
    )Total equity
    
    
    
    
    
    
    25,228
    
    
    
    741
    
    
    
    25,969
 F - 40




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##### Table of Contents



Reconciliation of the UK GAAP profit and loss account to the IFRS income statement for the year
ended 31 March 2005
 Effect ofUK GAAP in
    
    
    transition toIFRS format
    
    
    IFRS
    
    
    IFRSNotes
    
    
    £000
    
    
    £000
    
    
    £000Revenue
    
    
    
    
    
    
    18,839
    
    
    
    
    
    
    
    18,839Cost of sales
    
    
    (g
    )
    
    
    (8,801
    )
    
    
    57
    
    
    
    (8,744
    )Gross profit
    
    
    
    
    
    
    10,038
    
    
    
    57
    
    
    
    10,095Administrative expensesResearch and development
    
    
    (h
    )
    
    
    (4,533
    )
    
    
    (42
    )
    
    
    (4,575
    )General & administrative
    
    
    (i
    )
    
    
    (7,969
    )
    
    
    791
    
    
    
    (7,178
    )Total administrative expenses
    
    
    
    
    
    
    (12,502
    )
    
    
    749
    
    
    
    (11,753
    )Operating (loss) / profit
    
    
    
    
    
    
    (2,464
    )
    
    
    806
    
    
    
    (1,658
    )Finance costs
    
    
    
    
    
    
    (419
    )
    
    
    
    
    
    
    (419
    )(Loss) / profit before tax
    
    
    
    
    
    
    (2,883
    )
    
    
    806
    
    
    
    (2,077
    )Tax
    
    
    
    
    
    
    296
    
    
    
    
    
    
    
    296(Loss) / profit for the year
    
    
    
    
    
    
    (2,587
    )
    
    
    806
    
    
    
    (1,781
    )
 (a)
    
    Property, plant and equipment
 31 March
    
    
    31 March2004
    
    
    2005£000
    
    
    £000IAS 23  Borrowing costs
    
    
    (81
    )
    
    
    (35
    )Total decrease in property, plant and equipment
    
    
    (81
    )
    
    
    (35
    )
 (b)
    
    Financial assets
 31 March
    
    
    31 March2004
    
    
    2005£000
    
    
    £000IAS 21  The effects of changes in foreign exchange rates
    
    
    323
    
    
    
    75Total increase in financial assets
    
    
    323
    
    
    
    75
 (c)
    
    Trade and other receivables
 31 March
    
    
    31 March2004
    
    
    2005£000
    
    
    £000IAS 21  The effects of changes in foreign exchange rates
    
    
    (269
    )
    
    
    (70
    )Total (decrease) in trade and other receivables
    
    
    (269
    )
    
    
    (70
    )
 F - 41




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##### Table of Contents



(d)
    
    Cash and cash equivalents
 31 March
    
    
    31 March2004
    
    
    2005£000
    
    
    £000IAS 21  The effects of changes in foreign exchange rates
    
    
    (54
    )
    
    
    (5
    )Total decrease in cash and cash equivalents
    
    
    (54
    )
    
    
    (5
    )
 (e)
    
    Trade and other payables
 31 March
    
    
    31 March2004
    
    
    2005£000
    
    
    £000IFRS 2  Share-based payments
    
    
    85
    
    
    
    105Other
    
    
    111
    
    
    
    117Total increase in trade and other payables
    
    
    196
    
    
    
    222
 (f)
    
    Cumulative translation reserve
 31 March
    
    
    31 March2004
    
    
    2005£000
    
    
    £000Cumulative translation reserve
    
    
    
    
    
    
    (33
    )
 (g)
    
    Cost of sales
 Year ended31 March2005£000IFRS 2  Share-based payments
    
    
    (2
    )IAS 23  Borrowing costs
    
    
    44Other
    
    
    15Total decrease in cost of sales
    
    
    57
 (h)
    
    Research and development
 Year ended31 March2005£000IFRS 2  Share-based payments
    
    
    (41
    )Other
    
    
    (1
    )Total increase in research and development
    
    
    (42
    )
 (i)
    
    General & administrative
 Year ended31 March2005£000IFRS 2  Share-based payments
    
    
    (189
    )IAS 23  Borrowing costs
    
    
    3IFRS 3  Business combinations
    
    
    998Other
    
    
    (21
    )Total decrease in general & administrative
    
    
    791
 F - 42




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##### Table of Contents



(j)
    
    Goodwill
 31 March
    
    
    31 March2004
    
    
    2005£000
    
    
    £000IFRS 3  Business combinations
    
    
    
    
    
    
    998Total increase in goodwill
    
    
    
    
    
    
    998
 F - 43




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##### Table of Contents



Reconciliation of UK GAAP and IFRS cash flows for the year ended 31 March 2005
 UK GAAP aspreviously
    
    
    
    
    
    
    IFRSreported
    
    
    Adjustment
    
    
    as restated£000
    
    
    £000
    
    
    £000Cash flows from operating activitiesCash generated from operations
    
    
    (3,103
    )
    
    
    49
    
    
    
    (3,054
    )Income tax paid
    
    
    (79
    )
    
    
    
    
    
    
    (79
    )Income tax received
    
    
    332
    
    
    
    
    
    
    
    332Net cash (used in) / from operating activities
    
    
    (2,850
    )
    
    
    49
    
    
    
    (2,801
    )Investing activitiesInterest received
    
    
    236
    
    
    
    
    
    
    
    236Proceeds on disposal of property, plant and equipment
    
    
    35
    
    
    
    
    
    
    
    35Purchases of property, plant and equipment
    
    
    (1,001
    )
    
    
    
    
    
    
    (1,001
    )Purchases of other intangible non-current assets
    
    
    (191
    )
    
    
    
    
    
    
    (191
    )Capital grants received
    
    
    10
    
    
    
    
    
    
    
    10Net cash used in investing activities
    
    
    (911
    )
    
    
    
    
    
    
    (911
    )Financing activitiesInterest paid
    
    
    (494
    )
    
    
    
    
    
    
    (494
    )Interest paid on finance leases
    
    
    (131
    )
    
    
    
    
    
    
    (131
    )Repayment of borrowings
    
    
    (336
    )
    
    
    
    
    
    
    (336
    )Repayments of finance leases
    
    
    (490
    )
    
    
    
    
    
    
    (490
    )Issue of shares
    
    
    9,161
    
    
    
    
    
    
    
    9,161Net cash from financing activities
    
    
    7,710
    
    
    
    
    
    
    
    7,710Net increase in cash and cash equivalents
    
    
    3,949
    
    
    
    49
    
    
    
    3,998Cash and cash equivalents at the beginning of year
    
    
    3,307
    
    
    
    (54
    )
    
    
    3,253Effect of foreign exchange rate changes
    
    
    (9
    )
    
    
    
    
    
    
    (9
    )Cash and cash equivalents at the end of year
    
    
    7,247
    
    
    
    (5
    )
    
    
    7,242Operating (loss) / profit
    
    
    (2,464
    )
    
    
    806
    
    
    
    (1,658
    )Adjustments for:Change in fair value of derivatives
    
    
    
    
    
    
    248
    
    
    
    248Deferred grant income
    
    
    (48
    )
    
    
    
    
    
    
    (48
    )Non-cash revenues
    
    
    (110
    )
    
    
    
    
    
    
    (110
    )Share-based payment costs
    
    
    
    
    
    
    237
    
    
    
    237Depreciation of property, plant and equipment
    
    
    1,510
    
    
    
    (46
    )
    
    
    1,464Amortisation of intangible fixed assets
    
    
    1,109
    
    
    
    (998
    )
    
    
    111Loss on disposal of property, plant and equipment
    
    
    162
    
    
    
    
    
    
    
    162Operating cash flows before movements in working
capital
    
    
    159
    
    
    
    247
    
    
    
    406Increase in inventories
    
    
    (3,032
    )
    
    
    
    
    
    
    (3,032
    )Decrease / (increase) in receivables
    
    
    267
    
    
    
    (223
    )
    
    
    44(Decrease) / increase in payables
    
    
    (497
    )
    
    
    25
    
    
    
    (472
    )Net cash flows (used in) / from operating activities
    
    
    (3,103
    )
    
    
    49
    
    
    
    (3,054
    )
   F - 44




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##### Table of Contents



Reconciliation of the Company IFRS balance sheets at 1 April 2005
  Effect ofIFRS
    
    
    adoption of
    
    
    IFRS31 March
    
    
    AS 32 and
    
    
    1 April2005
    
    
    IAS 39
    
    
    2005£000
    
    
    £000
    
    
    £000Non-current assetsGoodwill
    
    
    9,199
    
    
    
    
    
    
    
    9,199Other intangible assets
    
    
    1,081
    
    
    
    
    
    
    
    1,081Property, plant and equipment
    
    
    6,999
    
    
    
    
    
    
    
    6,999Deferred tax asset
    
    
    432
    
    
    
    
    
    
    
    43217,711
    
    
    
    
    
    
    
    17,711Current assetsInventories
    
    
    12,752
    
    
    
    
    
    
    
    12,752Financial assets
    
    
    75
    
    
    
    320
    
    
    
    395Tax receivables
    
    
    344
    
    
    
    
    
    
    
    344Trade and other receivables
    
    
    3,200
    
    
    
    
    
    
    
    3,200Cash and cash equivalents
    
    
    7,270
    
    
    
    
    
    
    
    7,27023,641
    
    
    
    320
    
    
    
    23,961Total assets
    
    
    41,352
    
    
    
    320
    
    
    
    41,672Current liabilitiesTrade and other payables
    
    
    8,551
    
    
    
    
    
    
    
    8,551Current tax liabilities
    
    
    209
    
    
    
    
    
    
    
    209Financial liabilitiesObligations under finance leases
    
    
    534
    
    
    
    
    
    
    
    534Bank overdrafts, loans and other borrowings
    
    
    193
    
    
    
    
    
    
    
    1939,487
    
    
    
    
    
    
    
    9,487Non-current liabilitiesFinancial liabilitiesBorrowings
    
    
    250
    
    
    
    
    
    
    
    250Convertible loan notes
    
    
    3,762
    
    
    
    (282
    )
    
    
    3,480Obligations under finance leases
    
    
    1,246
    
    
    
    
    
    
    
    1,246Other non-current liabilities
    
    
    638
    
    
    
    
    
    
    
    6385,896
    
    
    
    (282
    )
    
    
    5,614Total liabilities
    
    
    15,383
    
    
    
    (282
    )
    
    
    15,101Net assets
    
    
    25,969
    
    
    
    602
    
    
    
    26,571EquityShare capital
    
    
    4,844
    
    
    
    
    
    
    
    4,844Share premium account
    
    
    77,868
    
    
    
    13
    
    
    
    77,881Merger reserve
    
    
    51,163
    
    
    
    
    
    
    
    51,163Equity reserve
    
    
    
    
    
    
    378
    
    
    
    378Cumulative translation reserve
    
    
    (33
    )
    
    
    
    
    
    
    (33
    )Retained earnings
    
    
    (107,873
    )
    
    
    211
    
    
    
    (107,662
    )Total equity
    
    
    25,969
    
    
    
    602
    
    
    
    26,571
 F - 45




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##### Table of Contents



ShareFinancial
    
    
    Convertible
    
    
    premium
    
    
    Equity
    
    
    Retainedassets
    
    
    loan notes
    
    
    account
    
    
    reserve
    
    
    earnings£000
    
    
    £000
    
    
    £000
    
    
    £000
    
    
    £000IFRS at 31 March 2005
    
    
    75
    
    
    
    3,762
    
    
    
    77,868
    
    
    
    
    
    
    
    (107,873
    )Recognition at fair value of
previously derecognised
receivables
    
    
    320
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    320Compound financial instruments
    
    
    
    
    
    
    (282
    )
    
    
    13
    
    
    
    378
    
    
    
    (109
    )IFRS at 1 April 2005
    
    
    395
    
    
    
    3,480
    
    
    
    77,881
    
    
    
    378
    
    
    
    (107,662
    )
 33
    
    Differences between IFRS and U.S. Generally Accepted Accounting Principles
  (a)
    
    Acquisitions occurring in fiscal years ended 31 March 1998 or prior.
  (b)
    
    Acquisition of Enact Pharma PLC
   F - 46




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##### Table of Contents



(c)
    
    Stock compensation plans
     (d)
    
    Revenue recognition
 ® ®
 ® ®
  F - 47




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##### Table of Contents



(e)
    
    Accounting for derivative instruments and hedging activities.
     (f)
    
    Compound financial instruments
   F - 48




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##### Table of Contents



(g)
    
    Other miscellaneous differences between IFRS and U.S. GAAP
  (h)
    
    Effect on net loss of differences between IFRS and U.S. GAAP
 Year Ended March 31,2006
    
    
    2005£000
    
    
    £000Net (loss) under IFRS
    
    
    
    
    
    
    (9,488
    )
    
    
    (1,781
    )U.S. GAAP reconciling adjustments:Revenue recognition
    
    
    (d
    )
    
    
    (3,117
    )
    
    
    (4,593
    )Stock compensation plans
    
    
    (c
    )
    
    
    292
    
    
    
    (352
    )Derivative instruments and hedging activities
    
    
    (e
    )
    
    
    
    
    
    
    (626
    )6% Unsecured convertible loan notes
    
    
    (f
    )
    
    
    28
    
    
    
    Other miscellaneous differences between IFRS and U.S. GAAP
    
    
    (g
    )
    
    
    (226
    )
    
    
    (40
    )Net (loss) under U.S. GAAP
    
    
    
    
    
    
    (12,511
    )
    
    
    (7,392
    )Net (loss) per ordinary share (basic and diluted)
    
    
    
    
    
    
    (5.1p
    )
    
    
    (3.3p
    )
 (i)
    
    Effect on equity shareholders funds of differences between IFRS and U.S. GAAP
 Year Ended March 31,2006
    
    
    2005£000
    
    
    £000Equity Shareholders funds under IFRS
    
    
    
    
    
    
    26,352
    
    
    
    25,969Adjustments:Revenue recognition
    
    
    (d
    )
    
    
    (11,948
    )
    
    
    (8,831
    )Acquisition of Enact
    
    
    (b
    )
    
    
    (9,199
    )
    
    
    (9,199
    )Stock compensation plans
    
    
    (c
    )
    
    
    405
    
    
    
    105Derivative instruments and hedging activities
    
    
    (e
    )
    
    
    
    
    
    
    3956% Unsecured convertible loan notes
    
    
    (f
    )
    
    
    (158
    )
    
    
    Other miscellaneous differences between IFRS and U.S. GAAP
    
    
    (g
    )
    
    
    2
    
    
    
    152Equity Shareholders funds under US GAAP
    
    
    
    
    
    
    5,454
    
    
    
    8,591
 (j)
    
    Recently issued accounting pronouncements
 Share Based Payment Accounting for Stock Based Compensation Accounting for Stock Issued to Employees Amendment to Rule 4- 01(a) of Regulation S-X regarding the compliance date for Statement of
Financial Accounting Standards No, 123 (Revised 2004), Share Based Payment
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##### Table of Contents



Inventory Costs  an amendment of ARB No. 43,
Chapter 4
 Exchanges of Non-monetary Assetsan amendment of APB Opinion No. 29 Accounting for Non-monetary Transactions
 for Certain
Hybrid Financial Instruments Application of
Statement 133 to Beneficial Interests in Securitized Financial Assets
 Accounting for
Uncertainty in Income Taxes
 F - 50




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##### Table of Contents



Determining the Amortization Period for Leasehold Improvements Purchased after Lease Inception or
Acquired in a Business Combination
 The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments
 34
    
    Post Balance Sheet Events
  ® ®
 F - 51