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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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FORM 20-F

|       |  |                                                                                    
|------ |  | -----------------------------------------------------------------------------------
|o      |  | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES        
|       |  | EXCHANGE ACT OF 1934                                                               
|- OR 
|x      |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT       
|       |  | OF 1934 for the fiscal year ended March 31, 2003                                   
|- OR 
|o      |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE       
|       |  | ACT OF 1934 for the transition period from
__________________ to __________________

Commission File Number: 082-03895

PROTHERICS PLC

(Exact name of Registrant as specified in its charter)


Not Applicable
(Translation of Registrants name into English)

England and Wales
(Jurisdiction of incorporation or organization)

The Heath Business & Technical Park, Runcorn, Cheshire, WA7 4QF England

(Address of principal executive office)

Securities registered or to be registered pursuant to Section 12(b) of the Act: None

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Ordinary Shares of 2 Pence Each
(Title of Class)



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Securities
for which there is a reporting obligation pursuant to
Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the
Registrants classes of capital or

common stock as of the close of the period covered by this Annual
Report:188,232,913 ordinary shares of 2p each as of March 31, 2003



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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:

|  |  |     |  |   |  |   
|- |  | --- |  | - |  | --
|x |  | Yes |  | o |  | No

Indicate by check mark which financial statement item the Registrant has elected to follow:

|  |  |         |  |   |  |        
|- |  | ------- |  | - |  | -------
|x |  | Item 17 |  | o |  | Item 18



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TABLE OF CONTENTS



|                                                 |                                                                                       |  |  |  |  |  |  | 
|------------------------------------------------ | ------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|INTRODUCTION                                    
|GLOSSARY                                        
|PART I                                          
|                                                 | ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                        
|                                                 | ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE                                      
|                                                 | ITEM 3. KEY INFORMATION                                                              
|                                                 | ITEM 4. INFORMATION ON THE COMPANY                                                   
|                                                 | ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                 
|                                                 | ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   
|                                                 | ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            
|                                                 | ITEM 8. FINANCIAL INFORMATION                                                        
|                                                 | ITEM 9. LISTING                                                                      
|                                                 | ITEM 10. ADDITIONAL INFORMATION                                                      
|                                                 | ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                  
|                                                 | ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                      
|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                                                     
|                                                 | ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT                                           
|                                                 | ITEM 16B. CODE OF ETHICS                                                             
|                                                 | ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES                                     
|PART III                                        
|                                                 | ITEM 17. FINANCIAL STATEMENTS                                                        
|                                                 | ITEM 18. FINANCIAL STATEMENTS                                                        
|                                                 | ITEM 19. EXHIBITS                                                                    
|SIGNATURES                                      
|EX-4.7 AMENDMENT NO. 3 TO DISTRIBUTION AGREEMENT
|EX-4.11 SUPPLY AGREEMENT 10/21/02               
|EX-4.12 MANUFACTURING AGREEMENT 03/19/03        
|EX-4.27 LETTER OF APPOINTMENT                   
|EX-4.28  CHIMAERON LIMITED AGREEMENT 4/1/00     
|EX-4.29 ANTHONY ATKINSON AMENDMENT 04/04/00     
|EX-4.30 ANTHONY ATKINSON AMENDMENT 02/22/01     
|EX-4.31 ANTHONY ATKINSON AMENDMENT 12/01/01     
|EX-4.32 LETTER OF APPOINTMENT 02/21/01          
|EX-8.1 LIST OF SUBSIDIARIES                     
|EX-31.1 SECTION 302 CEO CERTIFICATION           
|EX-31.2 SECTION 302 CFO CERTIFICATION           
|EX-32.1 SECTION 906 CERTIFICATIONS              



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TABLE OF CONTENTS

|             |  |                                                                              |  |      |    | 
|------------ |  | ---------------------------------------------------------------------------- |  | ---- | -- | 
|             |  |                                                                              |  | Page
|             |  |                                                                              |  |     
|INTRODUCTION |  |                                                                              |  |      | 1  | 
|GLOSSARY     |  |                                                                              |  |      | 2  | 
|PART I       |  |                                                                              |  |      | 5  | 
|ITEM 1.      |  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                        |  |      | 5  | 
|ITEM 2.      |  | OFFER STATISTICS AND EXPECTED TIMETABLE                                      |  |      | 5  | 
|ITEM 3.      |  | KEY INFORMATION                                                              |  |      | 5  | 
|ITEM 4.      |  | INFORMATION ON THE COMPANY                                                   |  |      | 11 | 
|ITEM 5.      |  | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                 |  |      | 35 | 
|ITEM 6.      |  | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   |  |      | 44 | 
|ITEM 7.      |  | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            |  |      | 51 | 
|ITEM 8.      |  | FINANCIAL INFORMATION                                                        |  |      | 52 | 
|ITEM 9.      |  | LISTING                                                                      |  |      | 52 | 
|ITEM 10.     |  | ADDITIONAL INFORMATION                                                       |  |      | 53 | 
|ITEM 11.     |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   |  |      | 66 | 
|ITEM 12.     |  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       |  |      | 67 | 
|PART II      |  |                                                                              |  |      | 68 | 
|ITEM 13.     |  | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              |  |      | 68 | 
|ITEM 14.     |  | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
AND USE OF PROCEEDS |  |      | 68 | 
|ITEM 15.     |  | CONTROLS AND PROCEDURES                                                      |  |      | 68 | 
|ITEM 16A.    |  | AUDIT COMMITTEE FINANCIAL EXPERT                                             |  |      | 68 | 
|ITEM 16B.    |  | CODE OF ETHICS                                                               |  |      | 68 | 
|ITEM 16C.    |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                       |  |      | 68 | 
|PART III     |  |                                                                              |  |      | 69 | 
|ITEM 17.     |  | FINANCIAL STATEMENTS                                                         |  |      | 69 | 
|ITEM 18.     |  | FINANCIAL STATEMENTS                                                         |  |      | 69 | 
|ITEM 19.     |  | EXHIBITS                                                                     |  |      | 69 | 

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INTRODUCTION

Protherics PLC (the Company) is a public limited company incorporated
under the laws of England and Wales (registered number 2459087). The Company
was incorporated in January 1990 under the name Powerfirst Public Limited
Company and changed its corporate name to Proteus International PLC (Proteus)
in 1990. In September 1999, a wholly-owned subsidiary of Proteus merged with
and into Therapeutic Antibodies Inc., a Delaware corporation (Therapeutic
Antibodies). After the merger, the Company changed its name to Protherics
PLC. On May 2, 2003, the Company announced that it had reached agreement on
the terms of a recommended offer for Enact Pharma PLC (Enact), the OFEX
traded biopharmaceutical company and this offer was declared wholly
unconditional on June 18, 2003. The Companys address is The Heath Business &
Technical Park, Runcorn, Cheshire, WA7 4QF, England.

Certain statements contained in this report may not be based on historical
facts and are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. In particular, certain statements included
herein under Item 3. Key Information and Item 5. Operating and Financial
Review and Prospects, including without limitation, those concerning the
Companys strategy and competitive strengths, the Companys expectations and
plans, the Companys collaborative revenues, research and development and
general and administrative expenses, contain certain forward-looking statements
concerning the Companys operations, performance and financial condition. Such
statements may generally, but not always, be identified by their use of words
such as anticipates, expects, or believes. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, no assurance can be given that such expectations will prove in
hindsight correct. Many important factors could cause actual results to differ
materially from such expectations including, among others, those set forth in
Item 3. Key InformationRisk Factors and Item 4. Information on the
CompanyGovernment Regulation (collectively, the Risk Factors). All
subsequent written and oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified by the Risk
Factors. Other relevant risks may be detailed from time to time in the
Companys press releases and filings with the Securities and Exchange
Commission. We undertake no obligation to update these forward-looking
statements to reflect events or circumstances that occur after the date of this
report.

The scientific and technical terms and abbreviations used in this report
are defined in the Glossary beginning on page 2.





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GLOSSARY

The discussion herein regarding the Companys product candidates and
technologies includes certain scientific and technical terms and abbreviations.
These terms include:

|                                 |  |                                                                                                                                                                      
|-------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|affinity                         |  | the strength of the binding between an antibody and its antigen or
epitope                                                                                           
|                                 |  |                                                                                                                                                                      
|angiotensin                      |  | the term used to describe a family of peptide hormones that are
involved in the control of blood pressure and body fluid levels                                      
|                                 |  |                                                                                                                                                                      
|angiotensin converting enzyme    |  | an enzyme that forms the peptide angiotensin II                                                                                                                      
|                                 |  |                                                                                                                                                                      
|antibody                         |  | substance produced by cells of the immune system which bind to parts
of other substances in a highly specific way to neutralize their
effect                         
|                                 |  |                                                                                                                                                                      
|antiserum(a)                     |  | serum from an animal which has been injected with an immunogen                                                                                                       
|                                 |  |                                                                                                                                                                      
|assay                            |  | a quantitative or qualitative process used to measure or detect a
particular substance                                                                               
|                                 |  |                                                                                                                                                                      
|bovine spongiform encephalopathy |  | the abnormal prion protein disease of the brain in cattle                                                                                                            
|                                 |  |                                                                                                                                                                      
|cis-platin                       |  | a platinum metal-based organic anti-cancer drug                                                                                                                      
|                                 |  |                                                                                                                                                                      
|clinical 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)
|                                 |  |                                                                                                                                                                      
|cytokine                         |  | a cellular messenger, typically of the immune system                                                                                                                 
|                                 |  |                                                                                                                                                                      
|cytotoxic                        |  | a molecule or drug that is toxic to cells                                                                                                                            
|                                 |  |                                                                                                                                                                      
|diagnostic test                  |  | an assay used for the diagnosis of disease typically carried out on
body fluids or tissues                                                                           
|                                 |  |                                                                                                                                                                      
|encephalopathies                 |  | diseases of the brain which interfere with its normal functioning                                                                                                    
|                                 |  |                                                                                                                                                                      
|endogenous enzyme                |  | an enzyme that naturally occurs in cells or tissues                                                                                                                  
|                                 |  |                                                                                                                                                                      
|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 antibody                                                                                                
|                                 |  |                                                                                                                                                                      
|fab fragment                     |  | the fragment produced by cleavage of an antibody with a proteolytic
enzyme that binds to the antibody target molecule (antigen)                                      
|                                 |  |                                                                                                                                                                      
|fragment                         |  | part of an antibody molecule which can be split from the whole
molecule and which still retains biological activity                                                  
|                                 |  |                                                                                                                                                                      
|GnRH                             |  | gonadotrophin releasing hormone, the boss hormone that controls
sexual development and function in both males and females                                          
|                                 |  |                                                                                                                                                                      
|high blood pressure              |  | blood pressure that is above medically defined limits and which is
associated with increased risks of stroke and heart disease                                       

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|                              |  |                                                                                                                                                                                                                                                               
|----------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|immune system                 |  | the cells and structures in the body that are capable of producing
antibodies and other components of the immune response                                                                                                                                     
|                              |  |                                                                                                                                                                                                                                                               
|immunogen                     |  | any substance which can elicit the formation of specific antibodies                                                                                                                                                                                           
|                              |  |                                                                                                                                                                                                                                                               
|immunotherapeutics            |  | 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)                                                                                                                                                                                     
|                              |  |                                                                                                                                                                                                                                                               
|intrinsic over-expression     |  | the expression (production) in the cell of any molecule at higher
levels than normal                                                                                                                                                                          
|                              |  |                                                                                                                                                                                                                                                               
|metalloorganic                |  | a carbon containing synthetic chemical compound that contains a
metal group as part of its intrinsic biochemical action                                                                                                                                       
|                              |  |                                                                                                                                                                                                                                                               
|metastasis                    |  | the spread of a tumor from the organ of origin to a distant site                                                                                                                                                                                              
|                              |  |                                                                                                                                                                                                                                                               
|molecular target              |  | the substance (e.g., an enzyme) at which drug discovery efforts are
directed                                                                                                                                                                                  
|                              |  |                                                                                                                                                                                                                                                               
|monoclonal antibody           |  | an antibody directed to a single epitope on the target molecule                                                                                                                                                                                               
|                              |  |                                                                                                                                                                                                                                                               
|monospecific antivenins       |  | antisera prepared to the venom of a single species of snake                                                                                                                                                                                                   
|                              |  |                                                                                                                                                                                                                                                               
|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 supply
|                              |  |                                                                                                                                                                                                                                                               
|nephropathy                   |  | disease of the kidney                                                                                                                                                                                                                                         
|                              |  |                                                                                                                                                                                                                                                               
|non-ionic surfactant          |  | microscopic globular structures with a fluid center surrounded by
layers of fatty materials which can entrap vaccine antigens                                                                                                                                 
|                              |  |                                                                                                                                                                                                                                                               
|oncology                      |  | the study of cancer                                                                                                                                                                                                                                           
|                              |  |                                                                                                                                                                                                                                                               
|orphan 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 conditions                                          
|                              |  |                                                                                                                                                                                                                                                               
|PCT                           |  | Patent Cooperation Treaty (Washington, 1970), as amended, and the
regulations and administrative instructions thereunder                                                                                                                                      
|                              |  |                                                                                                                                                                                                                                                               
|phase I clinical study/trial  |  | the assessment of the safety of a biologically active substance in
volunteers                                                                                                                                                                                 
|                              |  |                                                                                                                                                                                                                                                               
|phase II clinical study/trial |  | the assessment in patients of a drug to determine dose range and
preliminary efficacy                                                                                                                                                                         
|                              |  |                                                                                                                                                                                                                                                               
|polyclonal antibody           |  | a population of antibodies directed to multiple epitopes on the
target molecule                                                                                                                                                                               
|                              |  |                                                                                                                                                                                                                                                               
|post-mortem tests             |  | testing of animals after death (e.g., from samples taken in the
slaughterhouse)                                                                                                                                                                               

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|                                          |  |                                                                                                                                                                                                                                                                                     
|----------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|pre-clinical development                  |  | the research and development stage immediately prior to clinical
trials, which usually lasts 12-18 months                                                                                                                                                                           
|                                          |  |                                                                                                                                                                                                                                                                                     
|prion 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
diseases                                                                   
|                                          |  |                                                                                                                                                                                                                                                                                     
|prodrug                                   |  | an inert chemical which can be activated within the body to an
active drug                                                                                                                                                                                                          
|                                          |  |                                                                                                                                                                                                                                                                                     
|proof 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 drug                                                                                                                                                               
|                                          |  |                                                                                                                                                                                                                                                                                     
|purification 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                                                                                                                                                                                                                                               
|                                          |  |                                                                                                                                                                                                                                                                                     
|sepsis syndrome                           |  | 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 failure
|                                          |  |                                                                                                                                                                                                                                                                                     
|serum                                     |  | the component of blood excluding the red and white blood cells and
fibrinogen                                                                                                                                                                                                       
|                                          |  |                                                                                                                                                                                                                                                                                     
|sex steroid hormones                      |  | hormones that induce maleness (testosterone) or femaleness (estrogen
and progesterone)                                                                                                                                                                                              
|                                          |  |                                                                                                                                                                                                                                                                                     
|specificity                               |  | the degree to which an antibody binds to antigens other than that to
which it is primarily directed                                                                                                                                                                                 
|                                          |  |                                                                                                                                                                                                                                                                                     
|synthesis                                 |  | the route of manufacture                                                                                                                                                                                                                                                            
|                                          |  |                                                                                                                                                                                                                                                                                     
|titanocene compound                       |  | a stable titanium metal-based organic compound                                                                                                                                                                                                                                      
|                                          |  |                                                                                                                                                                                                                                                                                     
|titres                                    |  | a measurement of the amount of antibody present in a serum sample
based on dilution of the serum                                                                                                                                                                                    
|                                          |  |                                                                                                                                                                                                                                                                                     
|therapeutic                               |  | A 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 countries                                                                                                                                                                 
|                                          |  |                                                                                                                                                                                                                                                                                     
|TNFα                                      |  | tumor necrosis factor alpha, a cytokine, involved in the bodys
inflammatory process                                                                                                                                                                                                
|                                          |  |                                                                                                                                                                                                                                                                                     
|transmissible spongiform encephalopathy   |  | a degenerative condition of the nervous system believed to be caused
by the accumulation of an abnormal form of the prion protein                                                                                                                                                   
|                                          |  |                                                                                                                                                                                                                                                                                     
|vaccine                                   |  | a formulation used to stimulate an immune response                                                                                                                                                                                                                                  
|                                          |  |                                                                                                                                                                                                                                                                                     
|VEGF                                      |  | vascular endothelial growth factor, a protein which is involved in
the formation of new blood vessels                                                                                                                                                                               

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PART I




ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.




ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.




ITEM 3. KEY INFORMATION

Selected Financial Data

The Consolidated Financial Statements have been prepared in accordance
with U.K. generally accepted accounting principles (GAAP), which differs in
certain respects from U.S. GAAP. For a discussion of the material adjustments
to net loss and shareholders funds that would have been required in applying
the significant differences between U.K. GAAP and U.S. GAAP, see Note 27 of the
Notes to the Consolidated Financial Statements included herein.

The data set forth below should be read in conjunction with the
Consolidated Financial Statements and the Notes thereto included herein.

|                                                             |  |                                                           |         |      |  |      |         |      |  |      |         |    |  |  |         |    |  |  |         |   
|------------------------------------------------------------ |  | --------------------------------------------------------- | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- | -- |  |  | ------- | -- |  |  | ------- | --
|                                                             |  | Year Ended March 31,                                     
|                                                             |  |                                                          
|                                                             |  | 2003                                                      |         | 2002 |  | 2001 |         | 2000 |  | 1999
|                                                             |  |                                                           |         |      |  |      |         |      |  |     
|                                                             |  | (in thousands of pounds, except share and per share data)
|Consolidated Profit & Loss Account Information:              |  |                                                           |         |      |  |      |         |      |  |      |         |    |  |  |         |    |  |  |         |   
|U.K. GAAP                                                    |  |                                                           |         |      |  |      |         |      |  |      |         |    |  |  |         |    |  |  |         |   
|Turnover                                                     |  |                                                           | 11,270  |      |  |      | 7,924   |      |  |      | 4,186   |    |  |  | 1,598   |    |  |  | 2,847   |   
|Operating loss                                               |  |                                                           | (604    | )    |  |      | (2,102  | )    |  |      | (6,543  | )  |  |  | (13,624 | )  |  |  | (12,868 | ) 
|Net (loss)/profit                                            |  |                                                           | (238    | )    |  |      | 2,867   |      |  |      | (6,206  | )  |  |  | (15,454 | )  |  |  | (13,017 | ) 
|Net (loss)/profit per ordinary share                         |  |                                                           | (0.13   | p)   |  |      | 1.61    | p    |  |      | (3.80   | p) |  |  | (10.50  | p) |  |  | (9.89   | p)
|U.S. GAAP                                                    |  |                                                           |         |      |  |      |         |      |  |      |         |    |  |  |         |    |  |  |         |   
|Turnover                                                     |  |                                                           | 12,515  |      |  |      | 7,416   |      |  |      | 2,255   |    |  |  | 1,598   |    |  |  | 2,847   |   
|(Loss)/profit from operations                                |  |                                                           | (1,255  | )    |  |      | 2,832   |      |  |      | (5,934  | )  |  |  | (15,274 | )  |  |  | (12,785 | ) 
|Net (loss)/profit                                            |  |                                                           | (889    | )    |  |      | 2,769   |      |  |      | (5,597  | )  |  |  | (15,196 | )  |  |  | (12,934 | ) 
|Net (loss)/profit per ordinary share (basic)                 |  |                                                           | (0. 47  | p)   |  |      | 1.55    | p    |  |      | (3.42   | p) |  |  | (10.33  | p) |  |  | (9.82   | p)
|Consolidated Balance Sheet Data:                             |  |                                                           |         |      |  |      |         |      |  |      |         |    |  |  |         |    |  |  |         |   
|U.K. GAAP                                                    |  |                                                           |         |      |  |      |         |      |  |      |         |    |  |  |         |    |  |  |         |   
|Total assets (fixed assets plus current assets)              |  |                                                           | 19,525  |      |  |      | 17,430  |      |  |      | 11,696  |    |  |  | 10,314  |    |  |  | 19,145  |   
|Net assets                                                   |  |                                                           | 10,338  |      |  |      | 10,141  |      |  |      | 3,971   |    |  |  | 5,001   |    |  |  | 11,874  |   
|Long-term obligations                                        |  |                                                           | 717     |      |  |      | 1,106   |      |  |      | 3,600   |    |  |  | 1,152   |    |  |  | 3,623   |   
|Shareholders funds                                          |  |                                                           | 10,338  |      |  |      | 10,141  |      |  |      | 3,971   |    |  |  | 5,001   |    |  |  | 11,874  |   
|Number of equity shares outstanding (in
thousands of shares) |  |                                                           | 188,233 |      |  |      | 188,233 |      |  |      | 174,269 |    |  |  | 157,866 |    |  |  | 73,998  |   
|U.S. GAAP                                                    |  |                                                           |         |      |  |      |         |      |  |      |         |    |  |  |         |    |  |  |         |   
|Total assets (fixed assets plus current assets)              |  |                                                           | 20,198  |      |  |      | 20,024  |      |  |      | 13,855  |    |  |  | 9,933   |    |  |  | 18,491  |   
|Shareholders funds                                          |  |                                                           | 9,817   |      |  |      | 10,271  |      |  |      | 4,199   |    |  |  | 4,620   |    |  |  | 11,220  |   

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Under U.K. GAAP, the fiscal 2002 operating loss excludes the £5,032,000
net gain recognized upon disposal of the computer-aided molecular design (CAMD)
division, whereas under U.S. GAAP, the net gain from operations in fiscal 2002
includes a U.S. GAAP profit of £5,404,000 after giving effect to proceeds from
the disposal of CAMD.

Currencies And Exchange Rates

The Company publishes its consolidated financial statements in sterling.
In this Annual Report, references to sterling or £ are to U.K. currency and
references to U.S. dollars or $ are to U.S. currency. Solely for
informational purposes, this Annual Report contains translations of certain
sterling amounts into or from U.S. dollars at a specified rate. These
translations should not be construed as representations that the sterling
amounts actually represent such U.S. dollar amounts or could be converted into
or from U.S. dollars at the rate indicated or at any other rate. Unless
otherwise stated herein, the translations of sterling into or from U.S. dollars
have been made at £1.00 to $1.5790, the Noon Buying Rate on March 31, 2003.

The following tables set forth, for the periods and dates indicated,
certain information concerning the Noon Buying Rate for sterling expressed in
U.S. dollars per £1.00. The period average data set forth below is the average
of the Noon Buying Rate on the last day of each full month during the period.
On August 29, 2003, the Noon Buying Rate was £1.00 to $1.5773.

|                 |  |      |        |     |  |   |        | 
|---------------- |  | ---- | ------ | --- |  | - | ------ | 
|2003 Month Ended |  | High |        | Low
|                 |  |      |        |    
|March 31         |  | $    | 1.6129 |     |  | $ | 1.5624 | 
|April 30         |  |      | 1.6000 |     |  |   | 1.5500 | 
|May 30           |  |      | 1.6484 |     |  |   | 1.5930 | 
|June 30          |  |      | 1.6840 |     |  |   | 1.6278 | 
|July 31          |  |      | 1.6718 |     |  |   | 1.5867 | 
|August 29        |  |      | 1.6170 |     |  |   | 1.5728 | 

|                     |  |         |        | 
|-------------------- |  | ------- | ------ | 
|Year ended March 31, |  | Average
|                     |  |        
|1999                 |  | $       | 1.6526 | 
|2000                 |  |         | 1.6085 | 
|2001                 |  |         | 1.4737 | 
|2002                 |  |         | 1.4317 | 
|2003                 |  |         | 1.5541 | 

Risk Factors

In addition to the other information contained in this Annual Report, the
following factors should be carefully considered in evaluating the Company and
its business. If any of the following risks actually occur, the Companys
business, financial condition or results of future operations could be
materially adversely affected.

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, on terms that dilute shareholders interests.

The Company will require significant revenue from product sales,
collaborative and licensing arrangements and strategic alliances to fund its
ongoing operations. If the Company is unsuccessful in generating this revenue
or this revenue is insufficient to fund proposed projects, then the Company
will require additional financing. Additional financing may not be available
to the Company on favorable terms or at all. If the Company has insufficient
funds or is unable to raise additional funds, it may be required to delay,
reduce or cease certain of its programs and may be unable to continue its
operations at its current level, if at all.

6



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Future financings may result in the substantial dilution of shareholders
interests and may result in future investors being granted rights superior to
those of existing shareholders. For a discussion of the Companys liquidity,
see Item 5. Operating and Financial Review and Prospects.

If the Company fails to obtain adequate intellectual property rights for its
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.

The Companys success will depend, in large part, on its ability to obtain
and maintain patent or other proprietary protection for its technologies,
products and processes. If the Company is not able to obtain patent protection
for certain of its products or to secure patents that are sufficiently broad in
their scope, competitors may be able to take advantage of the Companys
research and development efforts. Legal standards relating to the validity of
patents covering pharmaceutical or biotechnological inventions and the scope of
claims made under such patents are still developing. There is no consistent
policy regarding the breadth of claims allowed in biotechnology patents. The
patent position of a biotechnology company is highly uncertain and involves
complex legal and factual questions.

There can be no assurance that competitors will not develop substantially
equivalent techniques or otherwise gain access to the Companys technologies.
The Company may have to initiate litigation to enforce its patent and license
rights. If the Companys competitors file patent applications that claim
technology also claimed by it, the Company may have to participate in
interference or opposition proceedings to determine the priority of invention.
An adverse outcome could subject the Company to significant liabilities to
third parties and require it to cease using technology owned by, or to license
disputed rights from, third parties.

The Companys success also depends on its ability to operate without
infringing the proprietary rights of third parties with respect to products
that facilitate the Companys ability to develop and exploit its own products.
If infringement occurs, the Company may have to develop an alternative
technology or reach an agreement for the license of the necessary rights from
the third party. Should this be necessary, the Company cannot assure that it
can obtain or develop those technologies or obtain those licenses, and as a
result, may be unable to develop and market its product candidate.

The cost to the Company of any litigation or proceeding relating to
intellectual property rights, even if resolved in the Companys favor, could be
substantial. Some of the Companys competitors may be able to sustain the
costs of litigation more effectively than it because of their substantially
greater resources.

The Company may not be able to generate sufficient revenues from product sales
to fund operations.

The Companys product launches to date have not generated sufficient
revenues to cover all of the Companys costs and may not do so in the future.
In addition to the products launched, the Company has a variety of product
candidates in various stages of development and will need to undertake
substantial additional research and development and pre-clinical and clinical
testing of the Companys product candidates. These efforts may not result in
the development of any further commercially successful products, in which case
the Company may not be able to generate sufficient revenues to fund operations
as currently budgeted, or may be required to scale back operations or specific
projects.

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The Company may fail to successfully develop a product candidate for many
reasons, including:



| |  |  | 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; and
|
| |  |  | a product does not gain market acceptance.                                                

The Company has a history of operating losses and may never become profitable.

To date, the Company has not been profitable at an operating level over a
full financial year. The Company may continue to incur operating losses and
may never be profitable.

For the fiscal years ended March 31, 2003, 2002, and 2001, the Company had
U.K. GAAP (losses)/profits on ordinary activities after taxation of
approximately (£238,000), £2,867,000 and (£6,206,000) respectively, although
the profit recorded in fiscal year ended March 31, 2002 included a profit
generated on disposal of the computer-aided molecular design (CAMD) division of
£5,032,000. The underlying losses result principally from costs associated
with the manufacture of pharmaceutical products, and the research, development
and clinical testing activities of product candidates. The Companys
profitability will depend on its ability to generate revenues from existing
product sales and product candidates that are currently under development and
to enter into new partnerships for the licensing of its product candidates
while maintaining existing partnerships.

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.

One of the Companys primary focuses is on the research and development of
new pharmaceutical products, and therefore, it will be dependent on its
existing alliances and new alliances with third parties to provide development,
manufacturing, marketing and sales capabilities. The Companys ability to
obtain new agreements will depend, in part, on the success of its clinical
trials. Collaborators and licensees have significant discretion over the
resources they devote to these efforts. The Companys success, therefore, will
depend on whether these third parties perform their responsibilities and devote
sufficient resources to collaborations with the Company. The Company cannot
guarantee that:



| |  |  | 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.                

In addition, there can be no assurance that the Companys collaborators
and licensees will not pursue alternative technologies either on their own or
in collaboration with others, including the Companys competitors.

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If the livestock from which the Company obtains antisera develop diseases, the
Company may be unable to meet its current or future antibody requirements.

The Company currently supplies all of the antisera required for the
production of its polyclonal antibody products from its own flocks of sheep in
South Australia and Tasmania. The Company takes stringent precautions to
minimize the risk of animal diseases, including scrapie, which could affect its
sheep or the safety of its products. All of the sheep used by the Company to
produce its antisera are located in Australia, which the office of the
Australian Chief Veterinary Officer has acknowledged as being scrapie free.
However, animal diseases, including scrapie, could affect the Companys flocks
and therefore its ability to produce antisera.

In the future, the Company may contract with third parties for the supply
of antisera. The Company will use its best efforts to obtain antisera from
suppliers who certify that their livestock is disease free. However, animal
diseases could affect the livestock of third party suppliers and therefore
adversely affect the Companys ability to obtain antisera.

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.

The Company requires supplies of certain raw materials, such as crotalid
snake venom and digoxin, for use in the development and manufacture of its
products and product candidates. Although the Company has no reason to believe
that its suppliers will be unable to procure adequate supplies of such raw
material on a timely basis, disruptions in supplies, including delays due to
the inability of the Companys suppliers, or the Company to procure raw
materials would have a material adverse effect on the Companys business. The
Company also relies on third party contractors to provide critical services
such as the filling and freeze-drying of product into vials. Problems at
contractors facilities in the recent past have caused delays and disruptions
in supplies of the Companys marketed products, and despite efforts to dual
supply critical suppliers and service providers, there can be no assurance the
Company will not experience similar delays in the future.

Regulatory requirements for pharmaceutical products tend to make the
substitution of suppliers and contractors costly and time-consuming. The
unavailability of adequate commercial quantities, the inability to develop
alternative sources, a reduction or interruption in supply or contracted
services, or a significant increase in the price of materials or services could
have a material adverse effect on the Companys ability to manufacture and
market its products or to fill orders from its distributors, which in turn
would have an adverse impact on the Companys cash flows.

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.

Production of the Companys products involves a highly complex
manufacturing process. The Company, in conjunction with the FDA and other
regulatory authorities, applies very stringent quality controls to this
manufacturing process. If any step in the production and manufacturing process
fails the stringent quality control tests, there could be delays in sales of
the Companys products. This could have a material adverse effect on the
Companys business.

Regulation by government agencies imposes significant costs and restrictions on
the Companys business activities.

The production and sale of pharmaceutical products is highly regulated.
The Companys ability and the ability of its partners to secure regulatory
approval for the Companys products and to continue to satisfy regulatory
requirements will determine its future success. The Company may not receive
required regulatory approvals for its products or receive approvals in a timely
manner. In particular, the U.S. Food and Drug Administration and comparable
agencies in foreign countries, including the European

9



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Medicines Evaluation Agency and the Medicines Control Agency in the U.K.,
must approve human immunotherapeutic and preventive products before they are
marketed. This approval process can involve lengthy and detailed laboratory
and clinical testing, sampling activities and other costly and time-consuming
procedures. While the time required to obtain approval varies, it can take
several years. Delays in obtaining or the failure to obtain regulatory
approvals or the restriction, suspension or revocation of regulatory approvals
could adversely affect the marketing of products and the Companys ability to
receive product revenues or royalties. The Company cannot guarantee that it
will be able to obtain the necessary approvals for clinical testing or for the
manufacturing and marketing of any products that it may develop.

The Company is also subject to ongoing regulatory review. Discovery of
previously unknown problems with a product, manufacturer or facility or other
violations of regulatory requirements may result in fines, suspensions of
regulatory approvals, product recalls and criminal prosecution. For further
discussion of regulations and potential penalties, see Item 4. Information on
the CompanyGovernment Regulation.

Announcements, developments and/or regulatory changes in the biotechnology
sector may cause the Companys share price to fluctuate.

The market price of the Companys ordinary shares may be affected by
announcements from or about other companies in the biotechnology sector.
Factors that could cause the Companys stock price to fluctuate in the future
may include:



| |  |  | 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 products,
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.

The pharmaceutical industry is highly competitive. The Company competes
with pharmaceutical companies in the United States, the United Kingdom, Europe
and elsewhere for both its existing products and those currently under
development. Many of these companies have research, development, marketing,
financial and personnel resources greater than the Companys. Competitors may
develop and receive regulatory approval for a marketable product before the
Company does. Competitors may also develop a product that is more effective or
less costly to manufacture than the Companys products or product candidates,
rendering the Companys products or product candidates obsolete. The Company
anticipates that it will face increased competition in the future as new
companies enter its markets and alternative drugs and technologies become
available.

10



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Third-party reimbursement and health care cost containment initiatives may
constrain the Companys future revenues.

The Companys ability to market successfully any product it may develop
will depend in part on the level of reimbursement that government health
administration authorities, private health coverage insurers and other
organizations provide for the cost of the Companys products and related
treatments. The Company may not be able to sell the Companys products
profitably if reimbursement is unavailable or limited in scope. Increasingly,
third-party payors are attempting to contain health care costs in ways that are
likely to impact the Companys development of products, including:



| |  |  | challenging the prices charged for health care products;                                                                                                            
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | 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.

The testing, marketing and sale of the Companys products involve
significant product liability risks. The Company may be held liable for
damages for product failures or adverse reactions resulting from the use of the
Companys products. Although the Company maintains product liability coverage,
this insurance may not provide adequate coverage against all product liability
claims. Furthermore, in the future, the Company may not be able to obtain
insurance on acceptable terms against product liability and other operational
risks such as property damage and business interruption, and any insurance the
Company does obtain may not provide adequate coverage against any asserted
claims or other losses.




ITEM 4. INFORMATION ON THE COMPANY

History and Development of the Company

Originally founded in 1987, Protherics is a biopharmaceutical company
engaged in the development, manufacture and sale of pharmaceutical products
largely for the treatment of human diseases. The Company is the result of the
September 1999 merger of Proteus International PLC and Therapeutic Antibodies
Inc. The Companys ordinary shares are listed on the London Stock Exchange
(LSE:PTI.L).

Proteus was originally founded in 1987 and was incorporated in England and
Wales under the Companies Act 1985 on January 12, 1990, as a public company
limited by shares. Proteus was engaged in the business of research for the
discovery of novel drugs using two technologies: immunotherapeutic vaccines
and computer-aided molecular design (CAMD).

Therapeutic Antibodies was incorporated in Delaware in 1984, with its
headquarters in Nashville, Tennessee, and operations in the United States, the
United Kingdom and Australia. Therapeutic Antibodies was engaged in the
business of developing and producing polyclonal antibody products for the
treatment of human disease and life-threatening conditions.

On September 15, 1999, a wholly-owned subsidiary of Proteus merged with
and into Therapeutic Antibodies. After the merger, Proteus changed its name to
Protherics PLC.

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In July 2001, the Company sold its CAMD operations and certain rights to
products in research to Tularik, Inc., a drug discovery company headquartered
in San Francisco, California, USA. The Companys CAMD technology consisted of
its proprietary Prometheus virtual screening software and its VA Linux hardware
system.

On June 18, 2003, the Company acquired Enact Pharma PLC (Enact), the
OFEX traded biopharmaceutical company, when its recommended offer was declared
wholly unconditional. Enact has provided the Company with both a potential
high margin late stage product and earlier stage research projects, some of
which can potentially be out-licensed within two years, for the treatment of
cancer and related areas.

The Companys address is The Heath Business & Technical Park, Runcorn,
Cheshire, WA7 4QF England. Its telephone number is 011-44-1928-518-000. The
Companys address in the U.S. is 5214 Maryland Way, Suite 405, Brentwood,
Tennessee 37027. Its U.S. telephone number is (615) 327-1027.

Business Overview

Following the successful divestiture of the Companys computer-aided
molecular design business in July 2001, Protherics core technology is now
focused on immunotherapeutics and oncology. Immunotherapeutics encompasses the
use of antibodies to combat the effects of disease or poisoning. This can be
done either actively through vaccines or passively by administration of
pre-formed antibodies.

Therapeutic vaccines are an example of active immunotherapy. Unlike
traditional vaccines, which stimulate the bodys immune system to produce
antibodies against a potential external infection, therapeutic vaccines involve
immunizing a patient so as to cause the immune system to produce antibodies
against an internal disease-causing substance, thereby treating the patients
existing condition. In comparison to other therapeutic approaches, this
potentially has significant benefits, such as specificity of action, avoidance
of side effects and long duration of action between booster doses.

Passive immunotherapeutics include the immediate use of previously
produced antibodies in the treatment of acute-poisoning situations, such as
envenomation or drug overdose. There are two general classes of antibodies for
use as immunotherapeutic agents. The first is polyclonal antibodies, which
contain a variety of antibodies directed to different sites, known as epitopes,
on the target molecule. The second type, monoclonal antibodies, consists of a
population of identical antibodies all directed to a single epitope.
Protherics technology is based on the former, which may have advantages over
monoclonal antibodies in these acute-poisoning situations.

Protherics has four launched products generating revenues and several
products in various stages of development.

The acquisition of Enact on June 18, 2003 has provided the Company with a
broader research and development pipeline and cutting edge technology platforms
with one product in the process of registration and two products with the
potential to enter clinical trials. These products are targeted at the
treatment of cancer. The most advanced is a compound which can reduce some of
the toxic effects of a drug widely used in cancer therapy, while the other two
products can potentially be used in the treatment of cancers which are
resistant to currently available drugs.

Operations

The Company has research and development laboratories in Runcorn and
Porton Down in the UK, good manufacturing practice compliant manufacturing
facilities in Wales and Australia, and administrative, clinical development and
regulatory affairs facilities in Runcorn and Nashville, Tennessee, USA. The
Company also maintains a small administrative office in London.

12



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Corporate Partnerships, Collaborations and Joint Ventures

Historically, the Company has entered into licensing and collaborative
agreements with pharmaceutical companies and other entities with established
distribution capabilities to market their products. See Item 10. Additional
Information  Material Contracts.

Products

The following table lists the Companys products currently in production or
under development:

|                                                       |  |                                                                  |  |                                                                                            |  |                                                                          |  |                                                                  
|------------------------------------------------------ |  | ---------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------ |  | -----------------------------------------------------------------
|                                                       |  |                                                                  |  |                                                                                            |  |                                                                          |  | Next Significant                                                 
|Product                                                |  | Principal uses                                                   |  | Status                                                                                     |  | License/ Partner                                                         |  | Milestone(3)                                                     
|                                                       |  |                                                                  |  |                                                                                            |  |                                                                          |  |                                                                  
|Products Commercially Available                        |  |                                                                  |  |                                                                                            |  |                                                                         
|                                                       |  |                                                                  |  |                                                                                            |  |                                                                          |  |                                                                  
|CroFab®                                                |  | Crotalid
(rattlesnake)
envenomation 
United States              |  | FDA marketing
approval received
2000; U.S.
marketing and
distribution
commenced early
2001 |  | Altana (US)                                                              |  | Expansion of sales
throughout U.S.
market                        
|                                                       |  |                                                                  |  |                                                                                            |  |                                                                          |  |                                                                  
|DigiFab                                               |  | Reversal of digoxin
toxicity                                     |  | FDA marketing
approval received
2001; U.S.
marketing and
distribution
commenced early
2002 |  | Altana (US)
Swedish Orphan
(Scandinavia)
FH Faulding
(Australia/SE Asia) |  | Expansion of sales
throughout U.S.
market and Europe             
|                                                       |  |                                                                  |  |                                                                                            |  |                                                                          |  |                                                                  
|ViperaTAb®                                             |  | Vipera berus
(Common adder
snake) envenomation
 Northern Europe |  | On market on named
patient basis                                                           |  | Swedish Orphan
(Scandinavia)                                             |  | Expansion of sales
to European Union                             
|                                                       |  |                                                                  |  |                                                                                            |  |                                                                          |  |                                                                  
|Bovine Spongiform
Encephalopathy (BSE)
Diagnostic Test |  | Detection of BSE in
carcasses                                    |  | Launched                                                                                   |  | Enfer Scientific                                                         |  | Expand sales
throughout European
Union                           
|                                                       |  |                                                                  |  |                                                                                            |  |                                                                          |  |                                                                  
|Products in Development                                |  |                                                                  |  |                                                                                            |  |                                                                          |  |                                                                  
|                                                       |  |                                                                  |  |                                                                                            |  |                                                                          |  |                                                                  
|Angiotensin Vaccine                                    |  | Hypertension                                                     |  | Phase II(2)                                                                                |  |                                                                         |  | Program of
formulation trials.
Results expected
3rd quarter, 2004
|                                                       |  |                                                                  |  |                                                                                            |  |                                                                          |  |                                                                  
|GnRH Human Vaccine                                     |  | Prostate cancer                                                  |  | Phase II(2)                                                                                |  |                                                                         |  | Company appraising
further development                           
|                                                       |  |                                                                  |  |                                                                                            |  |                                                                          |  |                                                                  
|CytoFab (formerly
CytoTAb®)                           |  | Treatment of sepsis                                              |  | Phase IIb                                                                                  |  | To be determined                                                         |  | Agreement with
strategic partner                                 
|                                                       |  |                                                                  |  |                                                                                            |  |                                                                          |  |                                                                  
|GnRH Animal Vaccine                                    |  | Animal castration                                                |  | Phase II(3)                                                                                |  | Janssen Animal
Health                                                    |  | Continued
development under
review                               
|                                                       |  |                                                                  |  |                                                                                            |  |                                                                          |  |                                                                  
|CroVet antivenin                                      |  | Rattlesnake
envenomations in
animals                             |  | Evaluating
opportunities for
commercialization                                             |  | To be determined                                                         |  | Application for
approval to be
submitted to USDA                 
|                                                       |  |                                                                  |  |                                                                                            |  |                                                                          |  |                                                                  
|Voraxaze                                              |  | Methotrexate
toxicity                                            |  | Orphan drug
designation in E.U.
and U.S                                                    |  |                                                                         |  | Named patient sales
expected fiscal
2004                         
|                                                       |  |                                                                  |  |                                                                                            |  |                                                                          |  |                                                                  
|NQO2                                                   |  | Liver and
colorectal cancer                                      |  | Pre-clinical testing                                                                       |  |                                                                         |  | Phase I/II clinical
trial planned 2004                           
|                                                       |  |                                                                  |  |                                                                                            |  |                                                                          |  |                                                                  
|Anti-metastasis (VEGF)
immunotherapeutic               |  | Cancer therapy                                                   |  | Pre-clinical testing                                                                       |  |                                                                         |  | Phase I/II clinical
trial, planned 2004                          

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|                     |  |                |  |          |  |                  |  |                     
|-------------------- |  | -------------- |  | -------- |  | ---------------- |  | --------------------
|                     |  |                |  |          |  |                  |  | Next Significant    
|Product              |  | Principal uses |  | Status   |  | License/ Partner |  | Milestone(3)        
|                     |  |                |  |          |  |                  |  |                     
|Products in Research |  |                |  |          |  |                  |  |                     
|                     |  |                |  |          |  |                  |  |                     
|Anti-nephropathy     |  |                |  |          |  |                  |  |                     
|immunotherapeutic    |  | Kidney failure |  | Research |  |                 |  | Proof of concept    
|                     |  |                |  |          |  |                  |  |                     
|Metalloorganic       |  | Ovarian Cancer |  | Research |  |                 |  | Pre-clinical testing



|(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) |  | To date all clinical trials have been conducted in the UK.                                                                                                                                                              
|   
|(3) |  | Equivalent stage of development for animal health products                                                                                                                                                              

Products Commercially Available

CroFab®is the Companys antibody product for treatment of envenomations
from North American crotalids (for example, rattlesnakes). The Company
received regulatory approval by the U.S. Food and Drug Administration (the
FDA) in October 2000, and launched the product in the U.S. prior to the
spring 2001 snakebite season. The product is being distributed by Fougera, a
division of Altana Inc. It is the first new entry into the crotalid antivenin
market in over 50 years. CroFab®is indicated for the management of patients
with minimal or moderate envenomation and is intended for treating bites early
in the course of poisoning to prevent them from developing into more severe
cases. The competing product in the United States, which was introduced over 50
years ago, is based on horse serum, although it is believed the manufacturer is
in the process of discontinuing production for the U.S. market. A manufacturer
of another horse serum product that does not have regulatory approval in the
U.S. exists in Mexico.

DigiFabis an antibody product for the treatment of digoxin overdose.
Digoxin is a widely prescribed drug for the treatment of cardiac conditions.
It has a narrow therapeutic range which can cause life-threatening toxicity.
In August 2001, the Company received FDA approval for marketing DigiFab in the
United States, the primary source of demand for the product, and Fougera, a
division of Altana Inc. began distribution of the product in the U.S. in
February 2002. There is one similar product on the U.S. market, and the Company
is looking to increase its share of the market by active marketing.

ViperaTAb®is produced and sold by the Company to treat bites from the
European Vipera berus(common adder) snake. This product is currently being
sold on a named patient basis in Sweden, Norway, Finland and Denmark under an
agreement with Swedish Orphan AB. The Company also supplies ViperaTAb® to the
U.S. Department of Defense. The Company intends to broaden product sales in
Europe, and will pursue the approval process when resources permit.

BSE Diagnostic Test. There is a significant public concern in Europe and
North America with respect to bovine spongiform encephalopathy (BSE 
commonly known as mad cow disease). The Company has licensed its
intellectual property in transmissible spongiform encephalopathy (TSE)
diagnosis to Enfer Scientific Limited (Enfer) for application in the
worldwide development and marketing of a test to determine whether beef
carcasses are infected by BSE. Enfer markets the test in Ireland and has
entered into a marketing agreement with Abbott Laboratories to market the test
in other territories, initially focusing on the European market.

As part of a program to address the political, commercial and health
issues, a European Union validation study has undertaken a review of a number
of alternative BSE detection tests, of which four companies tests were
accepted for detailed evaluation. In June 1999, the European Union announced
the results of this evaluation. The evaluation showed that three of the four
tests selected for the study were 100 percent accurate in detecting BSE in
samples from known affected animals. Enfers test was one of these tests and
proved to be the fastest. In June 2003, the European Commission qualified two
further tests. Currently all beef carcasses from animals over 30 months old
are required to be tested.

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Products in Development

Angiotensin Vaccine. Angiotensin II is a peptide hormone which plays an
important role in the control of blood pressure (by raising blood pressure in
response to a fall in pressure). It is formed from a slightly larger peptide,
angiotensin I, by the action of an enzyme, the angiotensin converting enzyme
(ACE). Drugs that prevent the action of this enzyme (ACE inhibitors) were
discovered in the late 1970s and have become market leaders in the treatment of
high blood pressure and heart failure. More recently, drugs that block the
action of angiotensin II have been developed and marketed and these appear to
be as effective as ACE inhibitors in those indications. A number of treatments
exist for the control of high blood pressure, including those that target
angiotensin. However, these treatments require the patient to take tablets on
a daily basis, and the failure to do so is one of the major reasons for the
poor control of blood pressure.

In August 1996, the Company began its angiotensin immunotherapeutic
project for the treatment of high blood pressure. During 1997, the Company
completed pre-clinical proof of concept and optimization studies for a vaccine
to trigger the production of antibodies targeting angiotensin II and selected a
formulation for progression into clinical trials. In May 2000, the Company
announced that its angiotensin vaccine had demonstrated its ability to raise
anti-angiotensin antibodies in a Phase I study in humans, and in November 2000,
the Company announced that the vaccine had lowered blood pressure in normal
human volunteers on a salt-restricted diet. These results provided encouraging
indications that the product is capable of blocking the blood pressure raising
effects of angiotensin II.

The angiotensin immunotherapeutic has now completed a small preliminary
Phase IIa clinical trial in the U.K. in patients with mild/moderate
hypertension. The vaccine demonstrated antibody titres and effects on fluid
retention control. The angiotensin immunotherapeutic is now undergoing further
human formulation studies prior to a full scale proof of concept study, which
is expected in late 2004.

The following factors could make the angiotensin immunotherapeutic a
unique treatment if successfully developed:



| |  |  | long duration of action  the product is expected to be
effective for several months between doses;                                                                                                  
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | improved patient compliance  the drug will be administered
by injection under medical supervision, thereby avoiding the need
for the patient to take the medication daily;                          
|
| |  |  | smooth onset of action  there should be a gradual reduction
in blood pressure over a period of weeks, which is particularly
important in elderly patients; and                                      
|
| |  |  | sustained effect  as the drug will produce a long-term
antibody response, it should provide improved control across the day
and night, avoiding peaks and troughs in drug effect and blood
pressure.

Voraxaze.Prior to its acquisition in June 2003 by the Company, Enact
had inlicensed and successfully developed its lead compound Voraxaze
(Carboxypeptidase G2), which is used as a rescue therapy for methotrexate
toxicity. Methotrexate is an established drug in cancer therapy with a known
toxicity profile. In particular, it can cause kidney damage in a small number
of cases. Support therapy, such as the use of Leucovorin is regularly used to
counteract general methotrexate toxicity, but these measures are ineffective in
some cases and do not quickly remove the remaining methotrexate from the body.
Voraxaze is a recombinantly produced enzyme which rapidly breaks down
methotrexate, thus removing the potential for further kidney damage.

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Voraxaze is already used on a compassionate basis through the National
Cancer Institute in the US. Voraxaze was granted orphan drug status in the
European Union in February 2003 and in the US in August 2003. Initial sales,
on a named patient basis, are anticipated in fiscal year 2004 with a full
commercial US launch at the end of fiscal year 2005 and a European launch in
fiscal year 2006.

NQO2.NQO2 (NAD(P)H quinine oxidoreductase 2) is an endogenous enzyme
found naturally and at high levels in certain tumor types, most notably
hepatoma (liver) tumors and hepatic metastases from colorectal tumors. As
there are no effective treatments for these tumors, current survival after
diagnosis is typically only weeks to months.

Through the acquisition of Enact in June 2003, the Company has acquired a
potential cancer therapy that utilizes the intrinsic over-expression of NQO2.
NQO2 can activate the prodrug (inactive form of the drug) CB1954, to its potent
cytotoxic form  over a thousand-fold more potent that the parent prodrug.
Furthermore, the activation of NQO2, and subsequent conversion of CB1954 to the
active cytotoxic agent, requires the addition of a synthetic co-factor,
EP-0152R. As the activation of the prodrug CB1954 occurs relatively
selectively in the tumor and not in normal healthy cells, the therapy should
confer the specificity lacking from mainsteam chemotherapy treatments.

A patent protecting the Companys technology has already been granted in
the UK and is under examination in other territories.

A Phase I trial with CB1954 alone has confirmed the safety profile of the
prodrug in the absence of the co-factor EP-0152R. Preliminary pre-clinical
development has shown a satisfactory profile and final ethics committee
approval is being sought for a Phase I/II clinical trial of the combination
therapy to be conducted under the auspices of Cancer Research UK. The primary
endpoint of this trial will be to establish safety and tolerability, while the
secondary endpoint will be to document any anti-tumor activity in patients.

CroVetis an antibody product for the treatment of envenomations from
North American crotalids in animals. It is estimated that veterinarians treat
close to 10,000 cases of snake envenomations each year with antivenin. The
only antivenin currently on the market is a product introduced over 50 years
ago and is based on horse serum. The Company has recently completed a
veterinary trial using CroVet in dogs and is evaluating opportunities for
commercialization of this product.

GnRH Human Vaccine. GnRH is a hormone that controls sexual development
and function in both males and females, including the secretion of male and
female sex steroid hormones. Suppression of GnRH activity has been shown to be
of benefit in a number of diseases, including prostate cancer and
pre-menopausal breast cancer. The Company has developed an immunotherapeutic
vaccine which has undergone clinical trials and is designed to stimulate
production of antibodies that block GnRH.

Under a license agreement with the Company, ML Laboratories PLC (ML)
conducted a dose ranging Phase IIa clinical trial in prostate cancer which
indicated that a higher dose of the vaccine would be required. ML informed the
Company that they did not intend to continue development of this product and
the license agreement was subsequently terminated. The Company is reviewing
the possibility of using recent improvements in its vaccine technology to test
a more potent vaccine in this indication.

CytoFab(formerly CytoTAb®) is a product designed to neutralize the
effects of tumor necrosis factor alpha
(TNFa). The bodys inflammatory
response to trauma, certain infections and disorders often involves the release
of high levels of cytokines, such as TNFa, which themselves may have serious or
even life-threatening effects. Initial clinical tests have demonstrated that
CytoFabeffectively neutralizes TNFa, which indicates it could be useful for
treating or preventing a number of disease states. Research and development
for CytoFabis currently focused on sepsis syndrome, where the Companys
clinical trials have shown the most promise.

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In June 1998, the Company terminated its Phase IIb trial in sepsis early,
having recruited 81 out of 300 patients required for this study. This trial
was terminated because the Company believed at that time that the commercial
risk posed to it was too great. However, data from the 81 patients enrolled in
the Phase IIb trial coordinated by Vanderbilt University shows that CytoFab
demonstrated a statistically significant reduction in two of the primary
clinical endpoints being studied: the amount of time patients remained in the
intensive care unit and the amount of time patients required assisted
ventilation. The Company is now seeking a collaborative partner to enable
further clinical evaluation of CytoFabfor this indication.

Anti-Metastasis Immunotherapeutic.The Company is researching and
developing a vaccine to inhibit the action of Vascular Endothelial Growth
Factor (VEGF), a protein which is involved in angiogenesis  the development
and spread of new blood vessels. Angiogenesis has been implicated as an
important factor in the spread and growth of secondary cancers, as these
require a blood supply to develop. By inhibiting angiogenesis, the development
of these secondary cancers may be impaired. The Company has tested several
formulations of the VEGF vaccine in a preclinical animal model of melanoma
tumor spread. Inhibition of tumor cell colony formation was observed with
several formulations.

The Company has filed a priority patent application in the UK, and a
Patent Cooperation Treaty (PCT) filing worldwide in June 2003. Studies to
enable the product to enter clinical trials are proceeding with trials
projected to commence in 2004.

Anti-Nephropathy Immunotherapeutic Vaccine. The Company is researching a
vaccine designed to remove a polypeptide involved in kidney disease. The
project is in the research phase with studies designed to elicit formal proof
of concept planned for 2003.

Metalloorganics.Through the acquisition of Enact, the Company has
acquired water soluble titanocene derivatives which, in vitro show high
activity against cis-platin resistant ovarian cell lines. The project is in the
research phase with pre-clinical studies planned for the first quarter of 2004.

GnRH Animal Vaccine. The GnRH hormone has the same structure and overall
function in humans and animals, and therefore, the same approach to block its
effects is applicable to both human and animal applications. In animal health
and husbandry, the potential applications encompass fertility and behavior
control and improvement in meat quality.

The Company entered into a licensing agreement with Janssen Pharmaceutica
BV (Janssen) to develop a GnRH Animal Vaccine. Janssen has evaluated the
GnRH Animal Vaccine across a range of target species. The development program
has demonstrated proof of concept in cats; however, Janssen has decided that it
will not continue development of this product on commercial grounds. The
Company is considering other possible development opportunities.

17



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Principal Markets

The Group operates in the United Kingdom, the United States and Australia,
and its revenues are currently attributable to its core technology of
immunotherapeutics and also royalties from diagnostic testing for bovine
spongiform encephalopathy. The table below shows a breakdown of revenues by
geographical market for each of the last three fiscal years.

|                  |  |       |        |       |  |       |       |  |  |  |       | 
|----------------- |  | ----- | ------ | ----- |  | ----- | ----- |  |  |  | ----- | 
|                  |  | 2003  |        | 2002  |  | 2001 
|                  |  |       |        |       |  |      
|                  |  | £000 |        | £000 |  | £000
|United Kingdom    |  |       | 54     |       |  |       | 70    |  |  |  | 170   | 
|Rest of Europe    |  |       | 1,503  |       |  |       | 2,005 |  |  |  | 664   | 
|North America     |  |       | 9,669  |       |  |       | 5,675 |  |  |  | 3,328 | 
|Rest of the World |  |       | 44     |       |  |       | 174   |  |  |  | 24    | 
|                  |  |       |        |       |  |       |       |  |  |  |       | 
|                  |  |       | 11,270 |       |  |       | 7,924 |  |  |  | 4,186 | 

All diagnostic test revenues are included within the Rest of Europe
category and amounted to £1,331,000, £1,476,000 and £366,000 in the years ended
March 31, 2003, 2002 and 2001, respectively.

Competition

The pharmaceutical industry is highly competitive, as evidenced by the
range of existing drug therapies. The Company competes with established
pharmaceutical companies as well as biopharmaceutical companies acting
independently or in collaboration with established pharmaceutical companies.
In addition, public and private academic and research institutions and certain
governmental agencies also compete with the Company in the research and
development of therapeutic products and in recruiting qualified scientific
personnel.

Competition among products will be determined by, among other things,
efficacy, safety, convenience, reliability, price, geographical location and
patent position.

Seasonality

In the U.S., demand for snakebite antivenins peaks during the spring and
summer months. Hospitals and clinics typically place orders in the first 3
months of the year in anticipation of the biting season and for the following
6 months which constitute the season. Orders for
CroFab® rattlesnake antivenin
product are usually highest during these months.

Sources and Availability of Supplies, Consumables and Raw Materials

The Company currently supplies all of the antisera used in the manufacture
of its products from its own flocks of sheep. In addition, the Company relies
on certain outside suppliers of key raw materials and consumables.
Specifically, the Company purchases a significant proportion of crotalid snake
venom for use in the manufacture of its CroFab®product, Digoxin for the
manufacture of its DigiFab product and purification columns used in the
manufacture of both CroFab®and
DigiFab. Certain supplies, consumables and
raw materials are purchased from single sources. See Item 3. Key Information
- Risk Factors.

Intellectual Property, Patents and Trademarks

The Companys policy is to protect and defend the intellectual property
associated with its technology and products, principally through patent
protection. The Company also believes that sufficient steps have been taken to
ensure that trade secrets, such as animal husbandry techniques,

18



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manufacturing techniques for conjugate vaccines, recombinant proteins and
processes for the large-scale production of polyclonal antibodies, are
protected.

The Company has optimized the production and purification of polyclonal
antibodies and has developed extensive proprietary knowledge in this area,
combining scientific, veterinary and large-volume processing skills. The
Company has been granted patents and has applied for additional patents in the
United States, Europe and other relevant jurisdictions covering several aspects
of its process techniques. However, the Company is now in the process of
reviewing all process patent applications and granted process patents in order
to determine whether any should be allowed to lapse, as they do not encompass
the current processes used by the Company.

The Company holds the following patents and patent applications:



| |  |  | 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
opposed by four companies. The opposition is now entering the
appeals stage. Patent applications are pending in the U.S., Canada
and Japan, claiming a priority date of December 3, 1991.
Additionally, the first grant of a U.S. divisional patent has been
received;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | GnRH vaccines  the Company has been granted patents for GnRH
analogues and their use in vaccines in the U.S., U.K., Canada, New
Zealand and Australia, claiming a priority date of June 5, 1987;                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  |  | Angiotensin vaccine  The Company has pending patent
applications for angiotensin peptide analogues and vaccine uses in
the U.K., Canada, Japan, the U.S., Europe (European Patent Office)
and Argentina, all claiming a priority date of June 24, 1997. The
Company has recently been notified that the New Zealand patent has
been accepted and the Australian patent has been granted.                                                                                                                                                                                                                        
|
| |  |  | VEGF (Vascular Endothelial Growth Factor) vaccine  The
Company has filed a priority patent application in the UK, and a PCT
filing in June 2003 for a vaccine to inhibit the action of VEGF, a
protein which is involved in the formation of new blood vessels
during cancer spread (metastasis).                                                                                                                                                                                                                                                                                                               
|
| |  |  | Non-Ionic Surfactant Vesicles (therapeutic)  The Company has
been granted a patent for use of non-ionic surfactant vesicles in
the treatment of inflammatory and other human diseases in South
Africa. The Company has submitted a patent application in the U.K.
claiming a priority date of August 2, 1995, and a patent cooperation
treaty patent application on September 1, 1996. The Company has
decided not to proceed further with these applications after
reviewing the commercial viability of the technology;                                                                                       
|
| |  |  | Anti-TNFα antibodies - The Company has been granted U.K.,
U.S., Canadian, Japanese, European, New Zealand and Australian
patents for use of Fab fragments of anti-TNFα antibodies in
medicine, particularly for the use in the treatment of sepsis. 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 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. Applications are being pursued in the U.S. and
Japan;                                                                                                                                                                                                              

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| |  |  | Poisoning with tricyclic
antidepressants - The Company has
been granted a U.S. patent in respect to an antidote for poisoning
with tricyclic antidepressants. This patent is expected to expire
on October 26, 2010. At the time of filing the United States patent
application in respect of an antidote to poisoning with tricyclic
antidepressants, United States patent applications remained
confidential and were only published if a patent was granted. In
contrast, non-United States patent applications are generally
published approximately eighteen months after filing, even if they
do not proceed to grant. In order to ensure the protection of
know-how, no patent applications were filed outside the United
States in respect of an antidote to poisoning with tricyclic
antidepressants.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | NQO2 - The Company has filed patent applications in Europe
(European Patent Office, 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
patent has been granted in the UK and Hong Kong and is proceeding in
the other territories.                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  |  | Voraxaze
- Through the acquisition of Enact, the Company has
acquired one patent covering aspects of Voraxaze. The priority date
for this patent is March 28, 1983. The Company is in the process of
filing new patents around other researched and unpublished aspects
of Voraxaze.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  |  | Metalloorganics - The Company, through the acquisition of
Enact, has acquired exclusive options on applications for two
families of patents, including one granted in South Africa, covering
both the synthesis and the use of water-soluble titanocene
compounds. The priority dates for these patents are December 1999
and July 2002 respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                         

Third Party Patent Rights

Rockefeller University has a European patent which could be construed to
cover use of anti-TNFα antibodies. If valid, this European patent could be
used to attempt to limit the Companys freedom to use anti-TNFα antibodies and,
therefore, the Companys ability to market CytoFab (formerly CytoTAb®) in
certain European countries. The Company successfully filed an opposition to
this European patent, and following an oral hearing before the Opposition
Division of the EPO, the patent was revoked in its entirety.

Rockefeller University filed an appeal against the decision. The effect
of an appeal is to suspend the decision to revoke the patent. Rockefeller
University has subsequently withdrawn their appeal.

Rockefeller University also holds patent rights related to this European
patent (and related to an earlier Rockefeller University European Patent which
was irrevocably revoked by the EPO upon opposition by the Company) in the U.S.,
Canada, Australia and Japan. The Board believes that due to the precise nature
of most of these patent rights in Australia and the U.S., commercial
exploitation of CytoFab in these territories will not infringe any valid
claims of these patents. The Company is aware of U.S. patents granted to
Rockefeller University in October 2001 and July 2002 relating to a neutralizing
antibody to a mediator substance which, if valid, could be used to restrict the
Companys development of anti-TNFα products, including
CytoFab in the U.S.
The Company has an opinion from their U.S. patent attorney that
CytoFab does
not infringe the claims of these patents. The Company has specific patents in
the U.S. and other territories covering the use of Fab fragments of anti-TNFα
antibodies, as summarized above.

The Company is aware of two U.S. patents granted in August 1997 and August
1998 in the name of Genentech, Inc. (Genentech) that cover anti-TNFα
antibodies. One patent relates to a TNFα antagonist comprising an antibody
that neutralizes cytotoxic activity of human TNFα. There are also claims to
Fab fragments of a variable region of the antibody. The second patent relates
to a method of treatment of graft versus host reaction that comprises
administering to a patient a therapeutically effective

20



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dose of a TNFα antagonist. If valid, these patents could be used to
restrict the Companys development of anti-TNFα products, including CytoFab,
in the U.S. and other territories in which equivalent rights exist. However,
the Company has obtained opinion from a U.S. patent attorney that the claims of
the former patent are invalid over the prior art, and that it is arguable that
the claims of the latter are similarly invalid.

The Company has identified a series of patents (e.g. European and
Australian) that correspond to the Genentech anti-TNFα antibody patents, and a
Dainippon European patent relating to human recombinant TNFα. These patents,
contain claims to certain forms of recombinant human TNFα and consequently they
could, if valid, be used to restrict the Companys use of recombinant human
TNFα (in the form claimed by the patents) to produce anti-TNFα antibodies in
the territories in which the patent is maintained. The Company will take steps
to ensure that its supplier of TNFα is appropriately licensed under the
patents, failing which, it will consider its alternative options, such as
contesting the validity of the patents.

Additional patents and applications are in existence, which could limit
the commercialization of CytoFab. These include patents, or patent
applications, in the names of Peptide Technology, Centocor, Kennedy Institute,
Abbott (formerly Knoll) and Unisearch. The Company has taken advice from its
patent agents, and the progress of the patent applications is being monitored.
The Directors believe that, overall, these patents and applications will not
inhibit the use of CytoFabin the treatment of sepsis.

Professor Sean B. Carroll created a family of patents relating to purified
polyvalent antivenins and methods of purifying antivenins using immuno affinity
techniques, which, if valid, could be used to attempt to limit exploitation of
the Companys antivenin products. Professor Carroll assigned all rights in the
patents to Ophidian Pharmaceuticals, Inc. who subsequently assigned all rights
in the patents to Promega Corporation (Promega).

On December 31, 2001, the Company entered into an agreement with Promega
to obtain an exclusive world-wide license to utilize these patents, and should
the Company satisfy the written royalty payment terms in the three years from
signing of the agreement, these patent rights will be assigned to the Company.

Trademarks

The Company has registered or has applied for registration of the following active trademarks:



| |  |  | CroFab, DigiFab, CytoFab and Voraxaze in the U.S.
| | - |  | -----------------------------------------------------
|
| |  |  | CytoFab in the United Kingdom.                      
|
| |  |  | CytoFab, DigiFab and Voraxaze in Europe.          

The Companys European application for the trademark Voraxaze has been
rejected by the European Agency for the Evaluation of Medical Products. The
Company has submitted an appeal and is also considering alternative trademark
options.

The Company is the owner of the registered trademarks CroFab®, CytoTAb®,
DigiTab®, and ViperaTAb® in the U.S. and/or the U.K. and various other
jurisdictions.

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GOVERNMENT REGULATION

General

Regulation by government authorities in the U.S., Europe and other
countries in which the Company operates is a significant consideration in the
development, production, marketing, labeling and reimbursement of their
products and in the continuation of their research and development activities.

In the U.S., Europe and most other countries, in order to market and sell
biological products, drugs, medical devices and diagnostic products, there is a
requirement to obtain and to maintain an approval for a product from the
appropriate regulatory authority, referred to as a marketing authorization.
The Company is also subject to various laws, regulations, policies, guidelines
and recommendations relating to such matters as safe working conditions,
laboratory and manufacturing practices, the experimental use of animals and the
protection of the environment. Furthermore, there has been a general trend
towards greater regulation of the pharmaceutical industry and its products.

The submission of a marketing authorization application to a regulatory
authority does not guarantee that an authorization will be granted. Regulatory
authorities require substantial data in connection with marketing authorization
applications, resulting in a lengthy approval process. The time taken to obtain
such approval varies depending upon the countries concerned and the nature of
the product, but can take from a few months to several years and can involve
substantial expenditure. This may be due to:



| |  |  | 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 product development process.

Furthermore, regulatory authorities of different countries may impose
differing requirements and may refuse to grant, or may require additional data
before granting an approval, even though the product may have been approved by
the regulatory authority of another country. Even if approval is obtained,
failure to comply with present or future regulatory requirements, or the
emergence of new information reflecting adversely upon the safety or
effectiveness of the approved drug, can lead the regulatory authority to
suspend, vary or withdraw its approval to market the product.

In the U.S., the principal regulatory agency is the FDA. Nearly all other
countries have similar national regulatory authorities. The Company may have
to satisfy different requirements from the FDA, European regulatory authorities
and other national regulatory authorities. There is an ongoing initiative, the
International Conference on Harmonization (ICH), among representatives from
Japan, the United States and the European Union, to limit regulatory
differences where possible. Considerable progress has been made through the
ICH process, resulting in the issuance of a wide range of agreed pre-clinical
and clinical guidelines.

In Europe, the Company must take into consideration:



| | (a) |  | the regulatory climate within the European Union, including
the influence of the International Conference on Harmonization, and
the approach of the European Agency for the Evaluation of Medicinal
Products and its expert advisory committee, the European Committee
for Proprietary Medicinal Products, as well as
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | the position of the national regulatory authorities.                                                                                                                                                                                                                                                                 

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Recognizing global regulatory differences, wherever practical, the Company
intends to design pre-clinical and clinical protocols which should generate
sufficient data of a quality that will be acceptable to support applications
for the same product in each country where it is intended to be marketed.

Price Regulation

In some countries it is necessary to obtain approval for the price to be
charged for a medicinal product or device. This is true in a number of European
Union member states. In the United Kingdom, the launch price of pharmaceuticals
is set by the manufacturer but is subject to the constraints of the
Pharmaceutical Price Regulation System which controls the profitability of a
companys business with the United Kingdoms National Health Service.

Governments may also influence the product price through the control of
national healthcare systems and also organizations which may bear the cost of
supply of such products. In the United States, government-funded or private
medical care plans can influence prices, and there are a variety of indirect
controls.

United States Regulation

Regulatory Authorities- The production and marketing of the Companys
products and its research and development activities are subject to regulation
by federal and state governmental authorities in the United States. Although
most states maintain one or more agencies with power to regulate products, they
commonly defer to the federal agencies discussed below in matters relating to
the development, production, marketing, labeling and reimbursement of products.

FDA Regulation- Biological products, drugs, medical devices and
diagnostic products are subject to rigorous review by the FDA. The Federal
Food, Drug and Cosmetic Act, the Public Health Service Act and other federal
statutes and regulations govern or influence the testing, manufacture, safety,
efficacy, labeling, storage, record keeping, approval, advertising and
promotion of such products. Product development and approval within this
regulatory framework takes a number of years, involves the expenditure of
substantial resources and is commercially risky. Many products ultimately do
not reach the market because of toxicity or lack of effectiveness as
demonstrated by required testing. Total development time for successful
compounds often exceeds 10 years. However, under the provisions of recent
legislation, the FDA has committed to reduce the review time for applications.
Although the agency has achieved some reductions, especially for high-priority
medicines, the review process remains lengthy and complex. There has been
little or no reduction in the testing required before applications are
submitted, which consumes most of the time spent in developing new medicines
for the United States market. In addition, there can be no assurance that this
regulatory framework will not change or that additional regulations will not
arise at any stage of product development that may affect approval, delay an
application, or require additional expenditures.

The steps required before a pharmaceutical product may be marketed in the
United States include:



| | (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                                                                                       

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| | (e) |  | FDA approval of the new drug application prior to any

commercial sale or shipment of the drug.
| | --- |  | -----------------------------------------------------------------------------------------------

Good Practice Standards- Various standards are applied either by law or
custom to the activities of pharmaceutical companies. These include
principally:



| |  |  | 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.

The Company has used consulting firms in the United Kingdom and in the
United States for advice on compliance with existing regulations and
guidelines.

Clinical Testing- Clinical testing of new compounds in humans is designed
to establish both safety and efficacy in treating a particular disease or
condition. These studies are usually conducted in three phases of testing. The
clinical trial process may take from two to six years or more to complete.

Phase I trials are normally conducted in a small number of healthy human
subjects or patients with the specific condition targeted. Their purpose is to
provide a preliminary evaluation of the product candidates safety, toxicity
and behavior when administered to humans.

In Phase II trials, the product candidate is assessed for its short-term
safety and preliminary efficacy in a limited number of patients with the
targeted disease or disorder. The appropriate dose ranges and regimens for
Phase III are also determined during this phase.

Phase III trials involve a comprehensive evaluation of safety, efficacy
and toxicity that might not have been evident in smaller studies. The trials
are carried out, typically on a multi-center basis, on a sufficient number of
patients to obtain statistically significant results. All adverse reactions are
investigated in detail, and special features of the product candidate are
explored.

Clinical trials for existing and future products seek to develop safety
data as well as efficacy data and will require substantial time and significant
funding. There is no assurance that clinical trials related to these products
will be completed successfully within any specified time period, if at all.
Furthermore, the FDA may suspend clinical trials at any time if it believes
that the subjects participating in such trials are being exposed to
unacceptable health risks.

If the drug is considered by the FDA and by prospective users to provide
an important benefit in the treatment of a serious disease, the applicant may
be faced with demands from patient groups, sometimes endorsed by the FDA, for
release of the drug for treatment during the investigative stage. The supply of
such treatment is termed treatment use. Supplying drugs on this basis can
involve significant expense and resource demands for the sponsor of the drug,
which must administer the pre-approval release program. This may, in some
situations, interfere with the ability to complete controlled clinical trials
of the drug.

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Approval
Procedures and Criteria- The FDA generally applies the same
requirements for approval of all products:



| |  |  | 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 FDA has discretion to determine whether the data submitted is adequate
for approval. The time taken for this approval process is based on:



| |  |  | 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.                                                                        

There can be no assurance that any new drug will successfully proceed
through this approval process or that it will be approved in any specific
period of time.

During its review, the FDA may ask for additional test data. If the FDA
approves the product, it may require post-marketing testing, including
potentially expensive post-market surveillance studies, known as Phase IV
testing. This phase further assesses the products therapeutic value and
provides additional information about the safety and efficacy of the product
across a broader patient base. In addition, the FDA can impose restrictions on
the use of the drug that may be difficult and expensive to administer.

Orphan
Drug Status- The Orphan Drug Act of 1983 encourages manufacturers to seek
approval of products intended to treat rare diseases and
conditions with a prevalence of fewer than
200,000 patients in the United States or for which there is no
reasonable expectation of recovering the development costs for the
product. For products that receive orphan drug designation by the
FDA, the Orphan Drug Act provides tax credits for clinical research, FDA
assistance with protocol design, eligibility for FDA grants to fund
clinical studies and a period of seven years of marketing
exclusivity for the product following FDA marketing approval. The
Companys crotalid antivenin, CroFab®,
received marketing approval by the FDA under the orphan drug program,
and its methotrexate
therapeutic, Voraxaze, for which the Company is
seeking marketing approval, recently received orphan drug designation by the FDA.

Accelerated Approval- The FDA may accelerate approval of medicines that
offer a significant improvement in the treatment of fatal or life-threatening
conditions, or conditions for which there is no alternative therapy. In certain
cases, the FDA may permit Phase II and Phase III studies to be compressed into
a single study. It is unusual for the FDA to base an approval on such
compressed studies, and although the Companys Voraxaze product approval will
be considered on this basis. there can be no assurance that such combined
testing would be considered acceptable for any of its other products.

Acceptance of Foreign Clinical Data- The FDA will accept reports of
foreign clinical trials if they meet requirements for good clinical practice
and are relevant to United States medical practice. It is, however, uncommon
for the agency to approve a product without some evidence from clinical trials
conducted in the United States, and most sponsors carry out at least one
pivotal trial there. Studies conducted outside the United States are subject to
special audits by FDA inspectors and may be rejected if United States
requirements for record-keeping, protection of human subjects and other matters
relating to good clinical practice are not met.

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Non-Patent Market Exclusivity- Under United States law, there are two
forms of non-patent market exclusivity. First, the law prohibits approval of
abbreviated new drug applications or literature-based applications for copies
of innovative products for a period of five years after the approval of a new
chemical entity, and three years after the approval of a new indication or
dosage form for which substantial clinical trials were required.

Second, the law provides for a seven-year period of protection for orphan
drugs (see above). During this period, the FDA is precluded, subject to complex
exceptions, from approving any application for the same drug, even if it is
based on original data. These provisions apply to all drugs, including
antibiotics and biological products.

Post Approval- After regulatory approval is obtained, products are
subject to continual review. Manufacturing, labeling and promotional activities
are continually regulated by the FDA and equivalent regulatory agencies of
other countries, and the manufacturer also reports certain adverse events
involving its drugs to these agencies. Previously unidentified adverse events
or an increased frequency of adverse events that occur post-approval could
result in labeling modifications of approved products, which could adversely
affect future marketing of a drug. Finally, approvals may be withdrawn if
compliance with regulatory standards is not maintained or if problems occur
following initial marketing.

Manufacturing Controls- Certain manufacturers and suppliers are required
by the Federal Food, Drug and Cosmetic Act and by FDA regulations to follow
Good Manufacturing Practice requirements and are subject to routine inspections
by the FDA and certain state and foreign regulatory agencies for compliance
with Good Manufacturing Practice and other applicable regulations. Upon routine
inspection of these facilities, there can be no assurance that the FDA and
other regulatory agencies will find the manufacturing process or facilities to
be in compliance with Good Manufacturing Practice and other regulations.
Failure to achieve satisfactory Good Manufacturing Practice compliance as
confirmed by routine inspections could have a material adverse effect on a
companys ability to continue to manufacture and distribute its products in the
United States, and in the most serious case, could result in the issuance of a
regulatory warning letter or seizure or recall of products, injunction and/or
civil fines or closure of a companys manufacturing facility until Good
Manufacturing Practice compliance is achieved.

Advertising and Promotion- The FDA regulates advertising and promotion of
prescription drugs. Promotion for unapproved uses is prohibited, and
sponsorship of medical symposia and publications is restricted. Financial
incentives to prescribers are regulated under federal and state criminal laws,
as well as codes of practice for the medical professions.

Noncompliance- Failure to comply with the applicable regulatory
requirements can, among other things, result in fines, suspensions of
regulatory approvals, product recalls, operating restrictions and criminal
prosecution. In addition, the marketing and manufacturing of pharmaceutical
products is subject to continuing FDA and other regulatory review, and later
discovery of previously unknown problems with a product, manufacturer or
facility may result in the FDA and other regulatory agencies requiring further
clinical research or restrictions on the product or the manufacturer, including
withdrawal of the product from the market.

Product Liability- Companies that market products in the United States
are subject to suit in state and federal courts for personal injuries caused by
these items. The risk of product liability litigation is significantly greater
in the United States than in most European jurisdictions, and damage awards can
be substantial. FDA approval is not a defense to liability, but failure to
comply with FDA requirements may constitute evidence of negligence.

Medicare and Medicaid- The Medicare program, a federal program that
provides defined health benefits for the aged and disabled, may be an indirect
source of revenue for products. Further, the Medicaid program, a joint federal
and state program that provides defined health benefits to certain financially
needy individuals, may also provide a source of revenue for products. Any
restrictions on

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reimbursement, coverage or eligibility under the Medicare or Medicaid
program could adversely affect the revenue generated by a product.

To the extent a company participates in the Medicare and Medicaid
programs, it will be subject to extensive federal and state regulation,
including



| | (a) |  | the Medicare and Medicaid fraud and abuse laws which prohibit
the offering or payment of any bribe, kickback, rebate or other
remuneration in return for the referral or recommendation of
patients for items and services covered by federal health care
programs;                                                                                                         
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | 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
|
| | (c) |  | 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- Many states
have enacted generic substitution statutes which permit, and in some cases
require, the substitution of a different manufacturers version of a product
than the one prescribed. In addition, many states require pharmaceutical
companies to rebate a portion of their revenues from products sold to Medicaid
beneficiaries back to the states concerned.

European Union Regulation

Pharmaceutical companies operating in the European Union are subject to
regulatory controls governing the development, manufacture, labeling, supply
and marketing of their products. Traditionally, regulation in this sector took
the form of national legislation and self regulation through codes of practice.
However, national legislation in the area increasingly reflects initiatives at
the European Community level, normally in the form of Directives and
regulations. There is a broad range of European Community legislation
governing all aspects of activities related to medicinal products. This
legislation is supplemented by numerous guidelines (which provide guidance on
existing European directives relating to safety, quality and efficacy), that
are not legally binding in most cases. However, failure to comply with, or a
departure from, the guidelines requires justification and may, for example,
raise issues as to the adequacy of data submitted in support of an application
to market a product. In November 2001, many of the stand-alone Directives
regulating medicinal products were brought together and codified in a single
Directive (Directive 2001/83/EC on the Community Code relating to medicinal
products for human use).

Pre-clinical
Research- European legislation (Directive 2001/83/EC)
imposes certain specific requirements for pre-clinical testing of a product
where the data generated will be used for an application for a product
marketing authorization in the European Union. Basic provisions in legislation
are expanded upon by a broad range of guidance documents issued by the European
Committee for Proprietary Medicinal Products, which, while not usually
incorporated into the legislation, are extremely important for companies to
follow when products are under development. Deviation by companies from such
guidance, particularly where they are specific to product groups, would
generally require a strong justification upon application for a marketing
authorization. Directive 86/609/EEC establishes pre-clinical research standards
to be met by research institutions engaged in animal research. These provisions
are enforced through registration and inspection. Additionally, Directive
87/18/EEC on good laboratory practice establishes high standards of practice
and associated legislation for laboratories, with compliance again monitored
through a system of inspection.

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Clinical Research- European legislation also stipulates requirements for
conducting research in human beings where the data is intended to be utilized
in a marketing authorization application (Directive 2001/83/EC). The European
Committee for Proprietary Medicinal Products has issued a number of guidance
documents. In particular, these include guidelines on good clinical practice,
which adopt the texts developed by the International Conference for
Harmonization. These guidelines became effective in January 1997 and take
account of European Committee for Proprietary Medicinal Products guidelines on
good clinical practice previously adopted in 1990. In addition, some general
legislation, such as the Data Protection Directive (95/46/EC), is also relevant
to the conduct of clinical research. Aside from these provisions, however, the
conduct of research in the European Union was not until recently subject to
specific European Union legislation. As a result, the national laws and
practices of member states still govern research conducted within the local
jurisdiction. The variation in these laws and practices limits the extent to
which the conduct of research projects can be streamlined across multiple sites
throughout the European Union. Consequently, in April 2001 the European
Commission enacted Directive 2001/20/EC on the approximation of the laws,
regulations and administrative provisions of the member states relating to the
implementation of good clinical practice in the conduct of clinical trials on
medicinal products for human use. The Directive requires member states to
implement laws, regulations and administrative provisions to comply with its
terms by May 1, 2004 with consequent effects on regulation and practice within
member states. Whereas the Directives aim is to harmonize regulation by member
states, until it is implemented, the conduct of research and the results
produced will be regulated at the European Union level only through the
requirements for the submission of application dossiers. Failure to satisfy
these requirements, which include adherence to good clinical practice, may lead
to a rejection of an application for a marketing authorization.

Obtaining a Marketing Authorization- No pharmaceutical product may be
marketed in the European Union without a marketing authorization. The UK
Medicines Act 1968 governs applications for marketing authorization for human
use in the United Kingdom. The Medicines Act implements in the United Kingdom
detailed European Union Directives on the licensing of pharmaceutical products.
Each time new legislation is introduced at the European level, it is
implemented in the United Kingdom pursuant to the Medicines Act. As a result,
the core rules in force in the United Kingdom are the same as those in force in
other states within the European Union. In addition, individual countries
within the European Union may implement some additional national legislation
relating to, for example, specific labeling requirements or in areas where
there is no existing European Union Directive.

Registration Systems- Three principal systems exist in the European
Union for registering pharmaceutical products: the national system, the mutual
recognition system and the centralized system.

The national system involves the submission of a marketing authorization
application to one member state of the European Union. When a company wishes
to apply for marketing authorizations in more than one European Union state,
the mutual recognition system or the centralized system described below must be
used.

The mutual recognition system involves a marketing authorization
application initially directed to one national regulatory authority. As soon
as one member state has given approval for marketing, this decision is
circulated to other member states nominated by the applicant. There is a
specified timetable for this procedure which includes an arbitration process
for resolving disputes and for arriving at a final decision, which is
administered by the European Committee for Proprietary Medicinal Products.
Such decision is legally binding both on the applicant and on the European
Union member states involved. The arbitration process may significantly
lengthen the time from initial application to approval in all nominated member
states. The result of such process may impose limitations not just on the
marketing authorization applied for, but also on marketing authorizations
obtained prior to the arbitration process.

The centralized system is a process for which there is a single
application, a single evaluation and a single authorization for medicinal
products. This system applies only to certain types of applications (it is
compulsory for certain biotechnology products and optional for certain other
products, including new

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chemical entities not previously authorized in the European Union,
medicinal products administered by significantly innovative and novel delivery
systems and significant new indications for existing products). The process is
administered by the European Agency for the Evaluation of Medicinal Products
(described below). A marketing authorization granted pursuant to the
centralized procedure is recognized in all European Union member states. As
with the mutual recognition system, a specific timetable is specified for
evaluation of the application, including allowances for appeals.

The European Agency for the Evaluation of Medicinal Products was
established by Council Regulation EEC No. 2309/93 of July 1993 with effect from
January 1, 1995. The EMEA is responsible for co-ordinating the evaluation and
supervision of medicinal products for both human and veterinary use across the
European Union. On the basis of the EMEAs opinion, the European Commission
authorizes the marketing of a product approved by the centralized system and
arbitrates between member states of the European Union on other medicinal
products submitted under the mutual recognition system. The EMEA comprises a
management board, three committees of scientific experts responsible for
preparing the EMEAs opinion (one for medicinal products for human use, one for
medicinal products for veterinary use, and one for the designation of orphan
drugs for rare diseases), an executive director and a permanent secretariat.

Criteria Assessed in Obtaining a Marketing Authorization-European
Directive 2001/83/EC sets out the basic principles for the regulation of
marketing of medicinal products within the European Union. The criteria for
the grant of a marketing authorization are quality, safety and efficacy. In
order to demonstrate these criteria, a wide range of information and data are
required to be submitted to the relevant regulatory authority. While the exact
requirements as to the analytical, pharmacotoxiocological and clinical
standards and protocols in respect of testing medicinal products to be
submitted have recently been revised by European Directive 2003/63/EC, which
member states must implement by October 31, 2003, any application for a
marketing authorization must be accompanied by, among other things, the results
of:



| |  |  | physio-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).                           

The quality of the product is determined by laboratory studies and tests.
These verify both the chemical constitution and stability of the product as
well as the manufacturing processes used.

The safety of the product is initially determined by studies to show
matters such as toxicity, the effect on reproductive potential, adverse effects
on genes, whether the product has the ability to cause cancer, how the product
is distributed within the body, how quickly the body eliminates the product and
the products interaction with other body chemicals.

The efficacy and safety of the product are derived from clinical trials
with volunteers and patients. Clinical trials are generally classified into
Phases I through IV, although there are not always distinct divisions between
each phase.

Phase I clinical trials are normally conducted in healthy human
volunteers. The purpose of the trial is to obtain a preliminary evaluation of
a products safety, its pharmacokinetic profile and its biological effect on
humans.

Phase II clinical trials assess the product for its short-term safety and
preliminary efficacy in a limited number of patients. Later Phase II trials
may be comparative (e.g. comparing the product with a placebo). The
appropriate dose ranges and regiments for Phase III (safety and efficacy)
trials are also determined during this phase.

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Phase III clinical trials are a comprehensive evaluation of safety and
efficacy of the product based upon larger patient groups. The pattern and
profile of the more frequent adverse reactions are investigated in detail and
special features of the product are explored.

Phase IV clinical trials are studies performed after a marketing
authorization has been granted. They are designed to monitor drug use in the
normal patient population. These studies are usually larger in scale and focus
on efficacy in clinical practice and side effects.

Marketing Authorizations for
 Orphan Drugs- In April 2002 the European
Commission introduced Regulations regarding orphan drugs. The main requirements
for qualification are:



| |  |  | 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.

An application for orphan drug status may be made at any time up to
submission of the marketing application. The benefits to successful applicants
include:



| |  |  | a reduced registration fee;                       
| | - |  | --------------------------------------------------
|
| |  |  | use of the centralized registration procedure; and
|
| |  |  | 10 years exclusivity on the market                

Maintenance of Marketing
Authorizations- A marketing authorization
application may be submitted when appropriate data is available. The
submission of an application to a regulatory authority does not guarantee that
a license to market the product will be granted by that regulatory authority.
Furthermore, each regulatory authority may impose its own requirements and may
refuse to grant or may require additional data before an approval, even though
the relevant product may have been approved by authorities in other countries.
The time taken to obtain approvals in individual countries varies, but can take
from a few months to several years from the date of applications. The trend
over the years has been towards greater regulation. Marketing authorizations
are granted subject to certain generally applicable conditions and may also be
subject to product specific restrictions determined by regulatory authorities.

When an authorization is granted and a product is brought to market, there
are numerous obligations imposed upon the marketing authorization holder by the
pharmaceutical legislation. These include the obligation to ensure that the
product keeps pace with the state of scientific and technical knowledge, in
particular, in terms of its manufacture and control. This means applying to
vary the marketing authorization when the changes in the state of the art and
relevant circumstances warrant its updating and amendment. Additionally,
requirements for pharmacovigilance and the reporting of adverse reactions to
products are central to the legislation. Within the European Union,
advertising, and the production of labeling and patient information leaflets,
are specifically regulated by directives, with local codes of conduct and
practice, in some cases, providing additional controls on corporate activity.
The provisions of the legislation require significant staff and expertise which
may be provided in-house and/or by external service. Examples of such staffing
requirements include the need for pharmacovigilance and an information services
individual within the company responsible for compliance.

The regulatory authorities have the power to suspend, revoke or vary a
marketing authorization:



| |  |  | if the grant no longer satisfies safety, quality or efficacy standards;
| | - |  | -----------------------------------------------------------------------
|
| |  |  | for reasons relating to and omissions in the product dossier; and      

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| |  |  | for particulars or failures in relation to product manufacture.
| | - |  | ---------------------------------------------------------------

The requirements for the performance of comprehensive pharmacovigilance
marketed products are designed for companies and regulators to detect product
safety concerns and to take appropriate action in the interests of public
health. The harmonization and streamlining of compulsory action and decision
making on such matters in the European Union through the European Committee for
Proprietary Medicinal Products means that, increasingly, a concern arising in
one member state in relation to a product marketed in several states will be
examined at the European Union level and the outcome of the examination will
affect the product and its authorization across all member states in which it
is sold and supplied.

Manufacturing- Manufacturing conducted within the European Union must
meet good manufacturing practice requirements (Directive 91/356/EEC).
Legislation (Directive 2001/83/EC) imposes precise obligations upon
manufacturers, in particular with regard to control, batch testing and release
of products in the European market and the qualifications for the personnel
authorized to undertake such activities (the Qualified Person). Inspections of
manufacturing site facilities and procedures are regularly undertaken, both by
local inspectors and by inspectors from other countries in which the product is
to be sold. Failing an inspection may result in:



| |  |  | product supplies being interrupted;          
| | - |  | ---------------------------------------------
|
| |  |  | recall; or                                   
|
| |  |  | plant closure pending elimination of defects.

The legislation requires clear, contractual documentation regarding how
manufacturing services are provided by one company to another when aspects of
the manufacturing process are subcontracted to others by the marketing
authorization holder and/or manufacturer.

Wholesaling- Wholesale distribution in the European Union is governed by
what was Directive 92/25/EEC, now part of Directive 2001/83/EC, and
accompanying Good Distribution Practice Guidelines. Wholesalers must meet
minimum requirements in terms of staff, facilities and procedure in order to
obtain and retain authorization.

Pricing- In a number of member states, it is not possible to market a
product until pricing negotiations with the responsible government authorities
have been concluded. Authorization by the regulatory authorities does not
guarantee the negotiation of a satisfactory price or of reimbursement terms
under national public health systems for the products concerned. In the United
Kingdom, new or existing products which already have a marketing authorization
may be referred by the Department of Health to the National Institute for
Clinical Excellence for a clinical and cost-effectiveness appraisal. Adverse
findings (if any) in consequent NICE Guidance can mean that the target products
will not be routinely prescribed on the National Health Service, that is, at
public expense.

Supplementary
 Protection Certificates- The time taken to research and
develop medicinal products reduces the marketing time provided by a product
patent, and therefore, can reduce the period available to the developer to
recoup investment through sales. In 1992, the European Union introduced
Regulation 1768/92 concerning the creation of a supplementary protection
certificate for authorized products. While this regulation does not extend the
patent, it does confer rights of a similar nature for the product after the
patent has expired. The period during which the certificates are effective
depends on calculations based upon the date of the application for the patent
and the grant of the first European Economic Area marketing authorization for
the product, with a maximum limit of five years. The basis for calculating the
date of the first European Economic Area marketing authorization for a product
is the subject of litigation currently pending in the European Court of Justice
(which concerns the question of

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whether a Swiss authorization, recognized in Liechtenstein, should be
considered as the first authorization in the EEA).

Abridged
Applications - Market Exclusivity- In cases where the patent
and supplementary protection certificate have expired or are not available,
medicinal products can benefit from European Union provisions which are
commonly described as the rules of market exclusivity, but which in fact
govern the making of abridged applications for marketing authorizations.

Under European Union law, a third party is effectively prevented for a
period of between six and ten years from authorization, or in some cases, until
expiration of the patent, if sooner, from relying upon data submitted in
support of a prior full application by the originator, except in certain
defined and limited circumstances.

The period is fixed at ten years for two types of products:



| |  |  | those derived from biotechnological processes specified in
Part A of the Annex to Regulation 2309/93 for which the centralized
procedure is compulsory; and                                                                        
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | high-technology products, viewed by the competent
regulatory authorities as representing significant innovation and
falling within Part B of the Annex, for which the option to use the
centralized procedure has been exercised.

Member states may elect to extend the period of protection from six to ten
years for all products. A number of member states have done so. They may also
elect not to apply for an extension beyond the date of expiration of the patent
covering the medicinal product.

The rules do not, however, prevent a competitor from making a marketing
authorization application accompanied by:



| |  |  | a full data package compiled by the competitor;                                                                            
| | - |  | ---------------------------------------------------------------------------------------------------------------------------
|
| |  |  | reference to published literature; or                                                                                      
|
| |  |  | with the consent of the owner of the original data, cross
reference to the data held on file by the regulatory authorities.

The rules are only intended to limit the circumstances in which a
marketing authorization may be granted without submission of a full data
package, in order to protect the interests of the originator of the filed data
who undertook and resourced the original research necessary to support an
application to market. The rules are unclear in some respects and their
interpretation is subject to variation and dispute. Divergent views are taken
by regulatory authorities on the availability of protection, for example, where
new data is generated for a variation to an existing product involving
substantial investment by the originator. These issues are the subject of at
least three pending cases before the European Court of Justice.

The
Companys Product Candidates- Several, if not all, of the human
therapeutic products currently being developed by the Company will fall within
the ambit of Regulation 2309/93 (centralized authorization). All products
developed by means of recombinant DNA technology or the controlled expression
of gender coding for biologically active proteins in prokaryotes and eukaryotes
including transformed mammalian cells or hybridoma and monoclonal antibody
method, known as List A products, are subject to compulsory centralized
authorization for the purposes of marketing within the European Union. In any
remaining cases, there may be an option as to the approval process followed.
Products falling within List B of the regulation, which can generally be
summarized as products constituting significant innovation, based upon
radioisotopes or of significant therapeutic interest, may be

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pursued centrally or through mutual recognition. Ten years marketing
exclusivity will apply across all member states where centralized procedures
are applied.

During the development phases of the products, all clinical research
programs must be conducted according to local and European Union requirements
in order to ensure the acceptability of the data generated for European Union
regulatory purposes. In the U.K., and rarely in the European Union, Phase I
clinical studies, where there is no anticipated benefit to the volunteers
arising out of their participation, do not require regulatory clearance.
Nevertheless, ethical approval is required for good clinical practice
compliance. Furthermore, the status of studies involving the first
administration of a product where the trial subjects are patients, may be
subject to regulatory clearance depending upon the objectives of the study as
set out in the study protocol. The requirement in this area will change when
the Clinical Trials Directive is implemented.

Regulation
of Veterinary Products- A very similar regulatory system
applies in Europe with regard to veterinary medicinal products. In particular,
hi-technology and biotechnology products are also subject to centralized review
and registration under Regulation 2309/93 above. The regulatory system to which
these products may be subject also promulgates laws and guidelines with regard
to appropriate testing which will be used in food production. As is the case
with human pharmaceutical products, no unauthorized veterinary product may be
marketed in the European Community, subject, in the case of veterinary
products, to somewhat more limited exceptions than apply in relation to human
pharmaceuticals.

Regulation
in Other Countries- In general, regulation is similar in
countries outside the United States and Europe, with the approval system
regulated by specific agencies in each geographic area. However, approval by
one agency does not ensure approval in other countries.

In Australia, successful marketing of a therapeutic substance may be
dependent on receiving marketing approval from the Therapeutic Goods
Administration and also on obtaining Commonwealth Government subsidy for use of
the product via either the Pharmaceutical Benefit Scheme or the Special Access
Scheme. Applications for listing on either of these Schemes requires additional
information, in particular economic analysis data, and approval for this second
step may lag behind obtaining marketing approval. The Australian Government is
able to exercise considerable power over price control through this process.

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Organizational Structure

Protherics PLC acts as the holding company of a group consisting of its
directly and indirectly held subsidiaries. Protherics PLC has the following
principal subsidiaries:

|                                    |  |        |     |        |  |                          |  |                  
|----------------------------------- |  | ------ | --- | ------ |  | ------------------------ |  | -----------------
|                                    |  | % Held |     | Status |  | Country of Incorporation
|                                    |  |        |     |        |  |                         
|Direct Holdings                     |  |        |     |        |  |                          |  |                  
|Protherics Molecular Design Limited |  |        | 100 |        |  | trading                  |  | England and Wales
|Protherics Inc.                     |  |        | 100 |        |  | trading                  |  | USA (Delaware)   
|Enact Pharma PLC                    |  |        | 100 |        |  | trading                  |  | England and Wales
|Proteus Biotechnology Limited       |  |        | 100 |        |  | dormant                  |  | England and Wales
|Genethics Limited                   |  |        | 76  |        |  | dormant                  |  | England and Wales
|Protherics Utah Inc.                |  |        | 100 |        |  | trading                  |  | USA (Delaware)   
|Indirect Holdings                   |  |        |     |        |  |                          |  |                  
|Protherics UK Limited               |  |        | 100 |        |  | trading                  |  | England and Wales
|Protherics Australasia pty Limited  |  |        | 100 |        |  | trading                  |  | Australia        
|Kymed GB Limited                    |  |        | 100 |        |  | trading                  |  | England and Wales
|Enzacta R&D Limited                 |  |        | 99  | .8     |  | trading                  |  | England and Wales
|DeMontford Biopharma Limited        |  |        | 100 |        |  | trading                  |  | England and Wales
|Enzacta Limited                     |  |        | 99  | .8     |  | dormant                  |  | England and Wales
|TAb (Wales) Limited                 |  |        | 100 |        |  | dormant                  |  | England and Wales
|TAb (London) Limited                |  |        | 100 |        |  | dormant                  |  | England and Wales
|Polyclonal Antibodies Limited       |  |        | 100 |        |  | dormant                  |  | England and Wales

Property, Plants and Equipment

The Company leases its corporate headquarters, 3,011 sq. ft. of lab and
office space at The Heath Business & Technical Park, Runcorn, Cheshire WA7 4QF
from SOG Limited. This lease commenced on October 1, 2001, for an initial
period of one year and may be renewed annually at the option of the Company. In
addition, the Company leases a corporate office at 2 Burgon Street, London EC4V
5DR. This lease commenced on November 27, 2001, and is for an initial period of
2 years. The Company intends to relocate the Burgon Street office to new
leased premises at 3 Creed Court, 5 Ludgate Hill, London EC4M 7AA in October
2003.

The Company also leases a 4,280 sq. ft. corporate office at 5214 Maryland
Way, Suite 405, Brentwood, Tennessee 37027. The lease commenced on November 1,
2001 and will continue through January 31, 2005. In addition, the Company
leases 5,307 sq.ft. of laboratory and office space at 615 Arapeen Drive, Suite
105, Salt Lake City, Utah 84108. The lease commenced June 1, 2003, and will
continue through May 31, 2006.

Protherics UK Limited, a subsidiary of the Company, owns and operates
production offices, quality control laboratories and a manufacturing facility,
covering approximately 200 acres, located near Ceredigion, Wales.

Protherics Australasia Pty Limited, a subsidiary of the Company, produces
antisera at its facilities leased from the Turretfield Research Centre at
Rosedale, near Adelaide, South Australia, where the Company has constructed
offices, a cleanroom and a bleeding shed. The lease of the Turretfield Research
Centre property will expire on July 31, 2005, with an option to extend the
term. The South Australian Minister for Primary Industries (the Minister)
holds a security interest on the buildings and equipment of Protherics
Australasia Pty Limited in connection with notes payable in the principal
amount of A$1,287,000. Repayment is in equal annual installments with the
final installment due in August 2007. The interest rate is variable at the
discretion of the Minister and is payable annually.

The majority of the Companys sheep flock are located at Martindale, South
Australia, where the Company had an agreement with Martindale Holdings pty
Limited which expired on May 31, 2003, for the grazing rights for 2,500 to
5,000 sheep. The Company is currently negotiating a replacement

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agreement which would provide grazing rights for 6,000 to 8,000 sheep for
a period up to May 31, 2008, terminable with twelve months notice, with the
option to extend for two further five year periods.

The Company has outsourced a portion of its sheep flock management to
Selborne Biological Services Limited, which currently has 3,200 of the
Companys flock at Selbornes property in Tasmania. The geographical
separation of the Companys sheep flock is expected to provide enhanced
protection against possible disease and give a dual source of antisera.

Enact Pharma PLC, a subsidiary of the Company, leases 3,000 sq.ft. of
laboratory and office space at Building 115, Porton Down Science Park,
Salisbury, Wiltshire, SP4 OJQ from Tetricus Limited. This lease originally
commenced on April 1, 2000 for an initial period of 3 years and may be renewed
at the option of the Company. The Company is in the process of extending this
lease.

All of the Companys laboratories, production facilities and farms are
suitably equipped for their intended purposes.




ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis of the financial condition and
results of operations of the Company should be read in conjunction with the
financial statements and notes thereto.

General

On September 15, 1999, Therapeutic Antibodies merged with a wholly-owned
subsidiary of Proteus, and Proteus was renamed Protherics PLC. The merger was
accounted for as a pooling of interest, and accordingly, the Companys
consolidated financial statements have been restated for all periods presented.
The Company reports its financial results on a March 31 fiscal year end basis,
whereas Therapeutic Antibodies reported its financial results on a calendar
year basis. For purposes of pooling of interests accounting, Therapeutic
Antibodies calendar year-end was conformed to the Companys March 31 year-end
for fiscal year 2000.

On July 12, 2001, the Company completed the sale of its Computer-Aided
Molecular Design division (CAMD) to Tularik, Inc. The operating results for
this division were included in the Companys results for the period up to the
date of disposal.

On June 18, 2003, the Companys offer for Enact Pharma PLC, was declared
wholly unconditional. Since this transaction occurred after March 31, 2003,
the fiscal year covered in this report, the businesses acquired have not been
included in the operating results reported.

Operating Results

Year Ended March 31, 2003 Compared to Year Ended March 31, 2002

Total revenues for the fiscal year 2003 increased by £3,346,000 or 42% to
£11,270,000 from £7,924,000 for fiscal year 2002, despite fiscal 2002 including
revenues of £963,000 from the CAMD division sold during that year, as the
Company continued to develop the markets for its two key products, CroFab®and
DigiFab. CroFab®contributed sales of £8,520,000, up 73% from fiscal year
2002, whereas DigiFab generated sales of £1,194,000 compared to £102,000 in
the two months following its launch in fiscal year 2002. There was a small
reduction in revenues generated from ViperaTab® from £346,000 to £211,000 due
to high stocks being carried forward by customers following the strong sales
reported in fiscal year 2002.

Royalty income from Enfer Scientific relating to the BSE testing reduced
by £199,000 to £1,277,000 with increasing revenues from Europe being more than
off-set by reductions in the Irish

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market. It is currently anticipated that while the trend of this revenue
stream between the Irish and European markets will continue into 2004, total
BSE testing revenue will not be significantly affected. Other revenues
amounted to £68,000 as compared to £100,000 in fiscal year 2002.

Despite an 84% increase in product revenues from £5,385,000 in fiscal year
2002 to £9,925,000 in fiscal year 2003, operating costs in that period rose
just 18% from £10,026,000 to £11,874,000. This resulted in a 71% reduction in
operating loss to £604,000 for fiscal year 2003 from £2,102,000 for fiscal year
2002. The overall decrease is the result of a growth in overall revenues and a
drive to reduce manufacturing costs of sales, most notably CroFab®.

Cost of sales increased 27% to £5,920,000 for fiscal year 2003 from
£4,649,000 for fiscal year 2002. The growth in cost of sales is significantly
less than the growth in product revenues. The most notable causes of this
relate to CroFab®. This is due to the high levels of fixed costs associated
with the manufacturing process and continued improvements in yields and
increased efficiencies. In addition, DigiFab is a significantly higher margin
product than CroFab®and therefore cost of sales as a proportion of revenues
should fall if sales of this product continue to develop as expected.

It is anticipated that the unit cost of CroFab®will continue to fall as a
program to increase yields and efficiencies is undertaken. DigiFab is
anticipated to make an increased contribution to the Companys results in
fiscal 2004.

In fiscal year 2003, total research and development expenses increased by
£708,000 or 80% to £1,591,000 from £883,000 for the fiscal year 2002. Included
within the expenses for fiscal year 2002 is £588,000 relating to costs incurred
by the CAMD division prior to its disposal in July 2001 and therefore the
increase in research and development expenses for the continuing business was
£1,296,000. The fiscal year 2002 benefited from an exceptional credit of
£674,000 as DigiFab inventory produced prior to product approval by the FDA
was recognized. Up to the date of approval of a product, all inventory
produced is expensed within research and development expenses. On approval,
all inventory associated with the product is capitalized into inventory and
later expensed into cost of goods as the product is sold. The balance of the
increase arose due to the costs associated with the Phase II clinical trials on
the Companys Angiotensin Vaccine product along with increased spending to
develop improvements and efficiencies to the production processes used to
manufacture the Companys products.

Administration expenses for fiscal year 2003 decreased by £131,000 or 3%
to £4,363,000 from £4,494,000 for the fiscal year 2002 primarily as a result of
the disposition of the CAMD division in July 2001. Excluding CAMD, the
administration expenses for the continuing business have increased by £181,000,
although this includes a one-time payment of £375,000 made to buy back the
rights for a second tranche of unsecured convertible debentures of up to
£6,500,000 since this financing was considered inappropriate for the Companys
current circumstances. The balance of the movement in continuing
administrative expenses is attributable to continued effort by management to
reduce operating expenses.

The profit on sale of discontinued items in fiscal year 2002 is a result
of the sale of the CAMD division in July 2001. There were no dispositions of
assets during fiscal year 2003.

Interest income for fiscal year 2003 decreased 28% to £100,000 due to a
combination of lower cash and short term investment balances held by the
Company during the year and reductions in interest rates.

Interest expense for fiscal year 2003 decreased 53% to £95,000. This
arose as a result of the conversion of the remaining unsecured convertible
debentures during fiscal year 2002 for which a charge of £104,000 had been
recognized and, therefore, no similar charge was recognized during fiscal year
2003.

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The tax credit of £361,000 recognized in fiscal year 2003 arose from two
sources. The first was a £170,000 surrender of tax losses for cash following
the incurrence of qualifying UK research and development expenditure. No
similar credit could be claimed for the fiscal year 2002 due to the profits
arising from the sale of the CAMD division. The second source represents a
deferred tax asset recognized on part of the trading losses incurred in
Australia since the directors are of the opinion, based on recent and forecast
trading, that the level of profits in Australia in the forthcoming years should
lead to a realization of this asset.

The Companys net loss for the 2003 fiscal year was £238,000 compared to a
net profit of £2,867,000 for fiscal year 2002. Excluding the profit on the sale
of the CAMD division, and the small operating profit on this discontinued
operation, the fiscal year 2002 produced a loss of £2,228,000.

As a
result of a review of reprocessed product communicated to the
Company by the FDA in August 2003, the Company has written off certain
inventory subsequent to the publication of its results for the 2003 fiscal
year. The write-off of this inventory, valued at £537,000 at March 31, 2003,
will be reflected in the Companys Annual Report for the year to
March 31, 2004 as required by generally accepted accounting principles in
the U.K. See Note 26 to the Companys Financial Statements beginning on page
F-1 of this Report.

Year Ended March 31, 2002 Compared to Year Ended March 31, 2001

The Companys total revenues for the fiscal year 2002 increased by
£3,738,000 or 89% to £7,924,000 from £4,186,000 for fiscal year 2001. The
predominant driving force of this growth was the inclusion of CroFab®sales for
a full 12 month period amounting to £4,937,000, whereas in fiscal year 2001,
CroFab®contributed sales of £2,159,000 from its launch in November 2000 to
March 31, 2001 in addition to a milestone payment of £516,000. Other product
sales, primarily ViperaTAb® and DigiFab, increased only slightly over sales
for fiscal year 2001.

Royalty income from testing for Bovine Spongiform Encephalopathy from
Enfer Scientific increased by 303% during fiscal year 2002 to £1,476,000.
Revenues attributable to the CAMD divisions operations were £963,000 in 2002
as compared to £648,000 in fiscal year 2001.

Despite the increased production to satisfy the market demand for CroFab®,
the Companys operating costs decreased by 7% to £10,026,000 from £10,729,000
during the 2002 fiscal year. The decrease in operating expenses of £703,000
combined with the £3,738,000 increase in revenues noted above produced a 68%
decrease in operating loss to £2,102,000 for fiscal year 2002 from £6,543,000
for fiscal year 2001. The overall decrease was the result of a growth in
CroFab®and royalty revenues and the reduction in the overhead cost base
arising from the disposal of CAMD in July 2001.

Cost of sales increased by £619,000 to £4,649,000 for fiscal year 2002
from £4,030,000 for fiscal year 2001 following the large increases in CroFab®
sales. The growth in cost of sales was significantly less than the growth in
CroFab®revenues due to the high level of fixed cost associated with the
manufacturing process and significantly improved yields and efficiencies
compared with the prior years. The cost of sales in fiscal year 2001 included
material manufactured in fiscal years 2000 and 2001 where low levels of
manufacturing activity arose prior to product approval, and therefore, unit
costs were high relative to the sales recorded in that year.

In fiscal year 2002, total research and development expenses decreased by
£1,063,000 or 55% to £883,000 from £1,946,000 for the fiscal year 2001. The
major factor in this reduction was the disposal of the CAMD division in July
2001, which produced a research and development cost reduction from fiscal year
2001 of £1,701,000. This reduction was affected by the timing of FDA approval
of the Companys CroFab®and DigiFab products. Up to the date of approval of a
product, all inventory produced was expensed within research and development
expenses. On approval, all inventory associated with the product is capitalized
into inventory and later expensed into cost of goods as the products are sold.
The

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research and development expenses in fiscal year 2001 included a credit of
£1,285,000 arising from the recognition of pre-approval CroFab®inventory
written off in the prior years following the receipt of FDA approval in October
2000. The Company recognized a similar credit in fiscal year 2002 of £674,000
associated with the approval of DigiFab in August 2001.

Administration expenses for the fiscal year 2002 decreased by £259,000 or
5% to £4,494,000 from £4,753,000 for the fiscal year 2001. The main factor in
the reduction was the disposal of the CAMD division in July 2001, which reduced
administrative expenses by £493,000 over fiscal year 2001. In addition to
general inflationary rises, foreign currency losses increased from £1,000 in
fiscal year 2001 to £47,000 in fiscal year 2002. These gains and losses are the
result of fluctuations in the exchange rates of the currencies in which the
Company conducts its business.

The sale of the CAMD division in July 2001 generated a one-time net gain
of £5,032,000 in fiscal year 2002. This profit represented the market value of
the 400,000 shares in Tularik, Inc. received as consideration for the business
on the date issued, less the book value of assets and liabilities transferred
and costs directly incurred in the transaction.

Interest income for the fiscal year 2002 decreased 29% to £139,000 due to
the lower cash and short term investments held by the Company during the
majority of fiscal year 2001.

Interest expense for fiscal year 2002 decreased by 44% to £202,000 from
£359,000 as a result of the conversion of the balance of the 4% debentures
originally issued in May 2000, therefore converting debt to equity, and the
repayment of the 6% loan notes at the start of fiscal year 2002.

The tax credit of £500,000 recognized in fiscal year 2001 arose due to a
change in tax legislation on research and development expenditure in the UK,
which now allows the surrender of tax losses for cash when qualifying research
and development expenditure is incurred. No credit could be claimed for the
fiscal year 2002 due to the profits arising from the sale of the CAMD division.
It is anticipated that the profits arising in fiscal year 2002 will be wholly
relievable by available tax losses and reliefs.

The Companys net profit for the 2002 fiscal year was £2,867,000 compared
to a net loss of £6,206,000 for fiscal year 2001.

Differences between UK GAAP and US GAAP

The Companys net (loss)/profit for the 2003, 2002 and 2001 fiscal years
as reported under UK GAAP amounted to (£238,000), £2,867,000 and (£6,206,000),
respectively. The Companys net (loss)/profit under US GAAP for the same years
would have been (£889,000), £2,769,000 and (£5,597,000), respectively. The
contributors to these differences were as follows:



| |  |  | Certain costs related to the development of software which
were capitalized under UK GAAP would not meet the criteria for
capitalization under US GAAP. This adjustment had the effect of
increasing the net profit/decreasing the net loss in 2003, 2002 and
2001 under US GAAP by nil, £370,000 and £11,000 respectively.                                                                                                                                                                        
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Under US 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.
This difference had the effect of increasing the net loss of the
Company by £1,119,000 in the fiscal year 2003 (fiscal year 2002 
reducing the net profit of the Company by £443,000, fiscal year 2001
 decreasing the net loss by £598,000).

Financial Accounting Standard No. 133, Accounting for Derivative
Instruments and Hedging Activities 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

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and measured at fair value. As a
result of adopting FAS No. 133, there was a
one-time, unrealized loss of £84,000 (net of tax) to equity shareholders funds
under U.S. GAAP as a cumulative-effect-type change in accounting principle to
recognize the fair value of derivative instruments held at April 1, 2001.
During the year ending March 31, 2002, the £84,000 was reclassified to current
earnings, which had the same effect as settlement of the instruments under U.K.
GAAP. 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 in current earnings.
For the years ended March 31, 2002 and March 31, 2003, there is a difference
between U.S. GAAP and U.K. GAAP to record the fair value of the derivative
instruments on the balance sheet at March 31, 2002 and March 31, 2003,
resulting in a decrease in profit of £25,000 and increase in profit of £468,000
respectively.

Under UK GAAP, the Companys shareholders funds on March 2003 and 2002
amounted to £10,338,000 and £10,141,000, while under US GAAP the balances would
have been £9,817,000 and £10,271,000, respectively. The primary contributors
to these differences were the deferral of revenues with right of replacement,
which (decreased)/increased shareholders funds by £(964,000) and £155,000 in
2003 and 2002, respectively; and the recognition of unrealized gains/(losses)
on forward foreign exchange contracts of £443,000 and (£25,000) in 2003 and
2002.

Liquidity and Capital Resources

The Company has devoted its efforts and resources to drug discovery and
development programs. Capital resources have been used for the establishment
and expansion of production facilities, for product research and development
activities, for clinical testing and to meet the Companys overall increased
working capital requirements. Future capital requirements will depend on
numerous factors, including revenues generated from the sale of CroFab® and
DigiFab, the progress of the Companys research programs and clinical trials,
the development of regulatory submissions, the commercial viability of the
Companys products, the ability to attract collaborative partners with sales,
distribution and marketing capabilities, and the terms of any new licensing
arrangements.

At March 31, 2003, the Company had cash and cash equivalents totaling
£2,756,000. The Companys net cash used in operating activities during the
fiscal year 2003 totaled £1,723,000, representing an increase of 5% from fiscal
year 2002 primarily due to the reduction in the operating loss being mitigated
by an increase in working capital as the Company continued to expand the market
for its CroFab® and DigiFab products. Capital expenditures increased 124% to
£1,862,000 in fiscal year 2003 from £829,000 in fiscal year 2002. Capital
expenditures included plant and machinery and computer software and hardware.
Capital expenditures of £2,857,000 are budgeted for fiscal year 2004. These
expenditures are for process improvement, research and development and scale-up
of the Companys facilities to increase commercial production capacity and will
be contingent upon availability of funding, although the Company has secured an
external leasing facility with which £1,312,000 of the planned capital
expenditure can be financed. In addition the Company has secured grant funding
from the Welsh National Assembly of which it is anticipated £600,000 will be
available during fiscal year 2004, and up to £200,000 in fiscal
2005. The Company also has an overdraft facility with Barclays Bank
PLC of up to £2,000,000, which expires on June 30, 2004. No amounts have been drawn under this facility.

Funds for operating and capital requirements historically have been
provided by the sale of equity and debt and from collaboration agreements and
other financing arrangements. On May 31, 2000, the Company received £5,207,000
net of expenses from the issue of £5,447,000 aggregate principal amount of
unsecured convertible debentures. Holders of the debentures had the option of
subscribing for a further amount of up to £6,500,000 in the aggregate at any
time before May 23, 2003, although this option was repurchased by the Company
for £375,000 on November 25, 2002. The debentures carried interest at the rate
of 4% per annum and together with accrued interest, were automatically
converted into ordinary shares at the end of a 3 year period, if not redeemed
or converted earlier. At March 31, 2003, the entire principal amount of the
debenture and accrued interest had been converted into 22,423,753 ordinary
shares.

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In May 2003, the Company made an offer for Enact Pharma PLC and on this
offer becoming wholly unconditional on June 18, 2003, the Company issued
unsecured convertible loan notes to those Enact shareholders who had accepted
the offer with additional loan notes being issued with subsequent acceptances.
By September 2003, the Company had acquired the entire issued share capital of
Enact and thereby issued loan notes totaling £7,196,000. The loan notes carry
interest at the rate of 6% per annum, payable twice annually in arrears. If not
previously repaid, converted or repurchased, the loan notes will be repaid at
par at the end of a 7-year period. The loan notes are convertible at the
earlier of December 19, 2004, at 25p per ordinary share or such date that the
Company has received FDA marketing approval for Voraxaze but in any event no
earlier than June 19, 2004. The terms of the loan notes permit the Company to
repurchase the loan notes at any time by tender (available to all holders
alike) or by privately negotiated transactions with individual holders at any
price.

In parallel with the offer made to acquire Enact, the Company raised an
additional £2,351,000 net of anticipated expenses through a fully underwritten
Cash Placing and Open Offer of new ordinary shares which was used to provide
additional working capital for the enlarged Company and repay indebtedness of
the acquired company.

Management estimates that these cash resources, together with anticipated
revenues from product sales and expected royalty payments will be sufficient to
fund operations for at least the next twelve months. The principal source of
liquidity in this period will be the anticipated revenues. Managements
estimate of product sales are based primarily on orders for CroFab® and
DigiFab currently received under its U.S. distribution agreement, which
provides for orders to be made 12 months in advance of shipment. The Companys
ability to fully supply orders will depend, in part, on its ability to increase
manufacturing capacity, the ability of its third party contractors to fill and
ship orders on a timely basis, and may be subject to other market and operating
risks described herein under Item 3. Key Information  Risk Factors.

The Companys financial instruments comprise borrowings, some cash and
liquid resources, forward foreign currency contracts and various items, such as
trade receivables and trade payables that arise directly from its operations.

It is, and has been throughout the period under review, the Companys
policy that no speculative trading in derivative financial instruments shall be
undertaken. Gains and losses from movements in foreign currencies were
significant in the fiscal year 2003, although these were largely mitigated by
forward foreign exchange contracts entered into by the Company. There remains
potential for significant impact on the results of the Company from exchange
rate movements over the longer term. This arises from the main markets for the
Companys approved products being in the U.S. and therefore priced in U.S.
Dollars, while manufacturing costs are incurred in British Pounds Sterling and
Australian Dollars. For further discussion, see Item 11. Quantitative and
Qualitative Disclosures about Market Risk.

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Contractual Obligations and Commercial Commitments

The Companys debt and lease payment commitments at March 31, 2003 are
illustrated below.

|                                   |  |       |     |        |  |             |     |             |  |           |     |        |  |  |     |  |  |  |    | 
|---------------------------------- |  | ----- | --- | ------ |  | ----------- | --- | ----------- |  | --------- | --- | ------ |  |  | --- |  |  |  | -- | 
|                                   |  |       |     |        |  | Less than   |     | Between 1   |  | Between 2 |     | Over 5
|                                   |  | Total |     | 1 year |  | and 2 years |     | and 5 years |  | years    
|                                   |  |       |     |        |  |             |     |             |  |          
|                                   |  | £000 |     | £000  |  | £000       |     | £000       |  | £000    
|                                   |  |       |     |        |  |             |     |             |  |          
|Long Term Debt                     |  |       | 913 |        |  |             | 376 |             |  |           | 351 |        |  |  | 156 |  |  |  | 30 | 
|Capital Lease Obligations          |  |       | 255 |        |  |             | 75  |             |  |           | 77  |        |  |  | 103 |  |  |  |   | 
|Operating Leases                   |  |       | 247 |        |  |             | 164 |             |  |           | 64  |        |  |  | 19  |  |  |  | 1  | 
|Unconditional purchase
obligations |  |       | 356 |        |  |             | 356 |             |  |           |    |        |  |  |    |  |  |  |   | 

Net Operating Loss Carryforwards

The tax credits in the fiscal years 2003 and 2001 have risen as a result
of research and development expenditure claimed under the Finance Act 2000. In
addition, a deferred tax asset of £191,000 in respect of the operating losses
incurred in Australia has been recognized in fiscal year 2003 since it is the
directors opinion based upon recent and forecast trading, that the level of
profits in Australia in the forthcoming years will lead to the realization of
this asset. At March 31, 2003, the Company had tax losses, subject to the
agreement of the Taxation Authorities, of approximately £70 million (2002: £68
million) available for offset against future taxable profits of the same trade.
Of these losses, approximately £34 million (2002: £45 million) relates to net
operating losses of Protherics Inc., the use of which is restricted to $1.5
million (£0.9 million) per year.

Recently Issued Accounting Pronouncements

In April 2002, the Financial Accounting Standards Board (FASB) issued
Statements of Financial Accounting Standards (SFAS) No.145. This standard
will require gains and losses from extinguishment of debt to be classified as
extraordinary items only if they meet certain criteria. Any gain or loss on
extinguishment will be recorded in the most appropriate line item to which it
relates within net income before extraordinary items. SFAS 145 is effective for
fiscal years beginning after May 15, 2002. However, certain sections are
effective for transactions occurring after May 15, 2002. Management does not
believe the adoption of this standard will have a material impact on the
Companys results of operations and financial position.

In July 2002, the FASB issued FAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities (FAS 146). This standard will
require companies to recognize costs associated with exit or disposal
activities when they are incurred rather than at the date of a commitment to
an exit or disposal plan. The standard replaces the existing guidance provided
by EITF Issue No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring). This standard will be effective for the
Company for the year ending March 31, 2004. The requirements of FAS 146 would
apply to future disposal activities.

In April 2003 the FASB issued SFAS No 149 Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This Statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under SFAS
no. 133, Accounting for

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Derivative Instruments and Hedging Activities. Management does not
believe the adoption of this standard will have a material impact on the
Companys results of operations and financial position.

In May 2003 the FASB issued SFAS 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity (SFAS 150).
SFAS 150 improves the accounting for certain financial instruments that, under
previous guidance, issuers could account for as equity, and requires that these
instruments be classified as liabilities in statements of financial position.
SFAS 150 is effective prospectively for contracts entered into or modified
after May 31, 2003 and is otherwise effective at the beginning of the first
interim period beginning after June 15, 2003. SFAS 150 shall be implemented by
reporting the cumulative effect of a change in an accounting principle for
financial instruments created before the issuance date of the statement and
still existing at the beginning of the interim period of adoption. Management
does not believe the adoption of this standard will have a material impact on
the Companys results of operations and financial position.

In November 2002, the FASB issued Interpretation No. 45 (FIN 45),
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN 45 expands on the
accounting guidance of other SFASs FIN 45 elaborates on the existing
disclosure requirements for most guarantees, including loan guarantees such as
standby letters of credit. It also clarifies that at the time a company issues
a guarantee, it must recognize an initial liability for the fair value, or
market value, of the obligations it assumes under that guarantee and must
disclose that information in its annual financial statements. FIN 45 will be
implemented on a prospective basis to guarantees issued or modified after
December 31, 2002. The disclosure requirements in this Interpretation are
effective for financial statements of periods ending after December 15, 2002.
Management does not believe the adoption of this standard will have a material
impact on the Companys results of operations and financial position.

In November 2002, the Financial Accounting Standards Board issued Emerging
Issues Task Force issue No. 00-21, Revenue Arrangements with Multiple
Deliverables (EITF 00-21). EITF 00-21 addresses certain aspects of the
accounting by a company for arrangements under which it will perform multiple
revenue-generating activities. EITF 00-21 addresses when and how an arrangement
involving multiple deliverables should be divided into separate units of
accounting. EITF 00-21 provides guidance with respect to the effect of certain
customer rights due to company nonperformance on the recognition of revenue
allocated to delivered units of accounting. EITF 00-21 also addresses the
impact on the measurement and/or allocation of arrangement consideration of
customer cancellation provisions and consideration that varies as a result of
future actions of the customer or the company. Finally, EITF 00-21 provides
guidance with respect to the recognition of the cost of certain deliverables
that are excluded from the revenue accounting for an arrangement. The
provisions of EITF 00-21 will apply to revenue arrangements entered into in
fiscal years beginning after June 15, 2003. Management does not believe the
adoption of this standard will have a material impact on the Companys results
of operations and financial position.

Application of Critical Accounting Policies

Critical accounting policies applied by the Company under U.K. GAAP are:

Turnover
- Turnover represents amounts receivable in respect of the sale
of goods and services, license agreements and intellectual property to
customers during the year, net of trade discounts given and value added tax.
Turnover is partly recognized upon the shipment of products to the distributor
with further amounts being recognized in accordance with the contractual terms
upon the shipment to the end user. Certain medical products sold by the Company
can be returned should they remain unused by their expiry date and provision is
made for these items. Turnover is stated net of these provisions. All other
income is recognized on a receivable basis.

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Certain sales of the Companys CroFab® and DigiFab products include a
right of replacement or return. Under US GAAP, FASB 48 Revenue Recognition
when Right of Return Exists indicates that an absence of historical experience
with similar types of sales of similar products may impair the ability to make
a reasonable estimate of returns. Because CroFab® and DigiFab are both
relatively new products, there is an absence of historical experience for these
sales, and therefore all revenue related to sales that include a right of
replacement has been deferred under US GAAP until the replacement or return
privilege expires.

Deferred
taxation -Deferred tax is provided in full on timing differences
which result in an obligation at the balance sheet date to pay more tax, or a
right to pay less tax, at a future date, at rates expected to apply when they
crystallize based on current tax rates and law. Timing differences arise from
the inclusion of income and expenditure in taxation computations in periods
different from those in which they are included in financial statements.
Deferred tax is not provided on unremitted earnings of subsidiaries and
associates where there is no commitment to remit these earnings. Deferred tax
assets are recognized to the extent that it is regarded as more likely than not
they will be recovered. Deferred tax assets and liabilities are not discounted.

The Companys opinion is that the trading projections do not satisfy the
definition of the relevant U.K. Accounting Standards to enable it to recognize
deferred tax assets for both its UK and US operations at March 31, 2003. In the
event that trading projection would satisfy the definition of the relevant U.K.
Accounting Standards, these assets could be recognized and credited to income
in the period such determination was made.

Research
and development stocks - Research and development stocks are
fully provided for in the profit and loss account for the year in which they
are purchased or manufactured, and are reinstated as appropriate in the year in
which the related products are brought into commercial use.

Research and Development, Patents and Licenses, etc.

For a discussion of the Companys research and development activities, see
Item 4. Information on the CompanyProducts and Intellectual Property,
Patents and Trademarks.

The Companys research and development expenditure for the fiscal years
ended 2003, 2002 and 2001 was £1,591,000, £883,000 and £1,946,000,
respectively.

Trend Information

Following FDA approval of CroFab®, the Companys rattlesnake antivenin, in
October 2000, the Company launched CroFab® sales in fiscal year 2001. Revenues
from sales of CroFab® were included in the full 12 months of results for fiscal
years 2002 and 2003. Although U.S. demand for CroFab® during fiscal years 2002
and 2003 exceeded the Companys forecasts, unexpected production delays at the
Companys third party supplier of filling and freeze-drying services at the end
of fiscal year 2002 prevented the Company from fully supplying purchase orders
during the year. In fiscal year 2003, CroFab®, due to be released at the end
of the fiscal year, was released at the beginning of fiscal year 2004.
DigiFab was approved by the FDA in August 2001 with revenues commencing in
February 2002 and therefore fiscal year 2003 includes a full 12 months results
for DigiFab. It is anticipated that the Company will increase its DigiFab
revenues during fiscal year 2004 as a result of forecast demand.

Advance orders of CroFab® and DigiFab for fiscal year 2004 remain strong.
The Company will seek to increase production of both products during fiscal
year 2004 to meet forecast demand, although its ability to do so will depend,
to a great extent, on the Companys ability to rapidly increase its
manufacturing capacity and the ability of its filling and freeze-drying
contractor to meet scheduled shipment dates.

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The Company anticipates a significant increase in research and development
expenditures during fiscal 2004 in order to advance its products in development
and to seek regulatory approval for Voraxaze. Research and development
expenditures would be funded by, and dependent on, anticipated increased
product revenues during fiscal 2004.

In addition, the acquisition of Enact in June 2003 will lead to increased
interest expense relating to the unsecured convertible loan notes issued to
Enact shareholders and to a significant amortization charge on the goodwill
created by the acquisition.




ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Directors and Senior Management

The following table sets forth information as of August 29, 2003 about the
directors and executive officers of the Company.

|                                                |  |     |  |                                      
|----------------------------------------------- |  | --- |  | -------------------------------------
|Name                                            |  | Age |  | Position within the Company          
|                                                |  |     |  |                                      
|Executive                                       |  |     |  |                                      
|Andrew John Heath, M.D., Ph.D.                  |  | 55  |  | Chief Executive Officer and Director 
|Barrington Marshall Riley, BA, FCA              |  | 54  |  | Finance Director and Director        
|James Campbell Christie, BSc, MBA               |  | 45  |  | Operations Director and Director     
|Anthony Atkinson, BSc., Ph.D, FIIB, FIoN        |  | 58  |  | Chief Scientific Officer and Director
|Non-Executive                                   |  |     |  |                                      
|Stuart Michael Wallis, FCA, ATII(1)(2)(3)       |  | 57  |  | Chairman                             
|David Whitnall Gration, FRPharmS(1)(2)(3)       |  | 64  |  | Deputy Chairman                      
|Michael Richard Brock Gatenby, MA, FCA(1)(2)(3) |  | 58  |  | Director                             
|Martin Shallenberger Brown(1)(2)(3)             |  | 65  |  | Director                             
|Michael John Peagram, MA, DPhil, MBA            |  | 60  |  | Director                             



---

|(1) |  | Member of Nomination Committee. 
|--- |  | --------------------------------
|   
|(2) |  | Member of Remuneration Committee
|   
|(3) |  | Member of Audit Committee       

Andrew John Heath, M.D., Ph.D.is the Chief Executive Officer of the
Company. Dr. Heath holds a science degree from the University of London and an
M.D. from Swedens Gothenburg University. He has considerable experience in
the pharmaceutical industry with Glaxo Inc. and Astra USA, Inc. From 1993
until 1996, he was responsible for more than 500 sales and marketing
professionals for Astra U.S. as Vice President Marketing and Sales. In that
post, he had profit and loss responsibility for Astra United States
pharmaceutical portfolio. He served as Chief Executive Officer at AeroGen,
Inc., a privately held drug delivery company, from 1996 until 1998. Dr. Heath
joined Therapeutic Antibodies as a director, Vice Chairman of the Board and
Chief Executive Officer in March 1998 and became Chief Executive Officer of the
Company when Therapeutic Antibodies merged with the Company in September 1999.

Barrington Marshall Riley, B.A., F.C.A. is Finance Director for the
Company. Mr. Riley was previously a divisional finance and administration
manager and the company secretary of the U.K. operations of FMC Corporation,
the Chicago-based group. Mr. Riley joined the Company in April 1995 and was
appointed to the Board of the Company in July 1995.

James Campbell Christie, B.Sc., M.B.A.is Operations Director for the
Company. He has management responsibility for process development,
manufacturing quality assurance and information technology at the Companys
Australian operations and its manufacturing facility in Wales. Mr. Christie
joined the Board of the Company in September 1999, having previously held the
position of Senior Vice President - Research and Development Administration of
Therapeutic Antibodies. From 1995 to 1998,
Mr. Christie was Director of Operations at Centocor BV, a subsidiary of
Centocor Inc., a United States

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biopharmaceutical company. He has extensive
experience in taking products from research and development stages to market
and has particular knowledge in the production of biological pharmaceutical
products.

Anthony Atkinson, BSc., Ph.D, FIIB, FIoN is Chief Scientific Officer of
the Company. Dr. Atkinson joined the Board in June 2003 following the
Companys acquisition of Enact for which he had been Chief Executive Officer.
Dr. Atkinson was previously a main board consultant to Biogen, Schering Plough
and Dupont de Nemours.

Stuart Michael Wallis, F.C.A., A.T.I.I.serves as Chairman of the Company.
He was previously the Chief Executive Officer of Fisons plc and is currently
Chairman of Hay Hall Group Limited, Trident Components Group Limited and
ElekSen Limited and is a Director of Euramax International Inc. He became
Chairman of Therapeutic Antibodies in September 1998 and became Chairman of the
Company when Therapeutic Antibodies merged with the Company in September 1999.

David Whitnall Gration, F.R.Pharm.Sis the Deputy Chairman of the Company.
Mr. Gration was Executive Chairman of the Company from August 1996 to
September 1999, when he stepped down to a non-executive position. He is also
the executive chairman of SRS Technology Group PLC and a non-executive director
of Avicenna plc. He has over thirty years experience in the pharmaceutical
industry, having held senior positions at The Boots Company PLC, Wyeth
Laboratories Ltd and Celltech Group Plc.

Michael Richard Brock Gatenby, M.A., A.C.A.was previously Vice-Chairman
of Charterhouse Bank and holds non-executive directorships in Johnson Service
Group PLC, Povair PLC and SRS Technology Group PLC. Mr. Gatenby joined the
board of the Company in May 1997.

Martin Shallenberger Brownwas formerly Vice-Chairman of the parent
company of Jack Daniels Distillery, Brown-Forman Corporation. He served as
Chairman and Chief Executive of Therapeutic Antibodies from 1987 to 1998. Mr.
Brown joined the board of the Company in September 1999.

Michael John Peagram MA, DPhil, MBAis Deputy Chairman of Yule Catto and
Co PLC and was previously Chairman of CRC Group PLC and non-executive Chairman
of Enact Pharma PLC. Dr. Peagram joined the board of the Company in June 2003
following the Companys acquisition of Enact Pharma PLC.

Arthur Rushton, formerly an executive director of the Company, resigned on
October 25, 2002, due to continuing ill health.

There are no family relationships among the directors. There are no
arrangements or understandings with major shareholders, customers or suppliers
or others pursuant to which any person was selected to serve as a director or
senior manager.

Compensation

For information relating to compensation, stock options and pension
benefits, see Note 5 of the Notes to the Consolidated Financial Statements
included herein at Item 17. The Company operates a cash bonus scheme for
executive directors based on the performance of each director, having regard to
key business issues. The Remuneration Committee oversees the bonus scheme and
has discretion to make additional payments if circumstances justify them.
Bonuses are not pensionable.

Board Practices

The Board currently has four executive directors and four non-executive
directors. Although non-executive directors are not appointed for specific
terms, the Companys Articles of Association require directors to stand for
re-election at least every three years.

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Executive Directors of Protherics - The following executive Directors of
Protherics have entered into service contracts with the Company, the details of
which are as follows:

|              |  |                  |  |               |         |             |         |                        |  |           |  |  |  |  |  | 
|------------- |  | ---------------- |  | ------------- | ------- | ----------- | ------- | ---------------------- |  | --------- |  |  |  |  |  | 
|              |  | Date of          |  |               |         |             |         | Notice period due from
|Director      |  | Agreement        |  | Annual salary |         | the Company |         | the Director          
|              |  |                  |  |               |         |             |         |                       
|A. Heath      |  | November 6, 2001 |  | £             | 105,420 |             |         | 12 months              |  | 12 months
|              |  |                  |  |               |         | US $        | 108,000 |                        |  |           |  |  |  |  |  | 
|B.M. Riley    |  | July 13, 1995    |  | £             | 115,000 |             |         | 12 months              |  | 6 months 
|J.C. Christie |  | October 1, 1998  |  | £             | 112,000 |             |         | 12 months              |  | 6 months 

Upon serving or receiving notice, the Company has the right at its
discretion to pay salary in lieu of notice. There are no other provisions for
compensation payable upon early termination of the service contracts. The
executive directors of Protherics are also entitled to the following benefits:
private medical insurance for themselves and their immediate families, long
term disability insurance, and payment of professional memberships and
subscriptions. In addition, the Group makes contributions to a defined
contribution pension scheme of 10 percent of salary in the case of Messrs.
Riley and Christie. In the case of Dr. Heath, the Group made pension
contributions of 10 percent of his UK salary plus an additional £34,580 per
annum, in addition to a maximum of $16,200 of his US salary. Messrs. Riley and
Christie have elected to take a cash alternative to the fully expensed
automobile to which their contract entitles them. The Group also has a bonus
scheme under which the remuneration committee may award the executive directors
of Protherics bonuses of up to 25 percent of salary. Termination of the
contracts requires six months notice by the employee and twelve months notice
by the Company, with the exception of Dr. Heath, where the notice periods are
twelve months from either party.

Dr. Atkinson became an executive director of the Company following the
Enact acquisition in June 2003. For his services to Enact, Dr. Atkinson
received total remuneration of £90,000 per year paid as salary and as a
consultancy fee to Chimaeron Limited, a company in which Dr. Atkinson has an
interest. This agreement is still in effect, however, the Company anticipates
entering into a new service agreement with Dr. Atkinson in the near future.

Except as set out above, there are no existing or proposed service
contracts between the executive directors and any member of the Group.

There are no provisions within the directors service contracts that
provide for any benefit to accrue to any executive director upon termination of
employment, except that salary may be paid in lieu of notice.

Non-executive Directors of Protherics- Under an appointment letter dated
September 13, 1999, as amended by the letter dated October 31, 2001, Mr.
Gration received director fees of £26,000 during the year ended March 31, 2003.
The Company provides life insurance and permanent health insurance. The
appointment is terminable with 12 months notice by either party.

Pursuant to a consultancy agreement dated September 1, 1998, Mr. Wallis
received £60,000 during the year ended March 31, 2003. The agreement is
terminable by 12 months notice from either party. In addition, Mr. Wallis
received £10,000 during the year for his services as Chairman of the Board
under a letter of agreement dated September 1, 1998. The letter agreement is
terminable by either party on 12 months notice. The Group has also provided a
fully expensed automobile to Mr. Wallis.

Mr. Gatenby has a letter of appointment dated June 25, 1997 which is
terminable by either party on 6 month notice. There are no existing or
proposed service contracts or letters of appointment between Mr. Brown and the
Company. Mr. Brown and Mr. Gatenby received $21,150 and £21,000 in fees,
respectively, during the year ended March 31, 2003. Mr. Brown rented office
space at the Companys Nashville premises at a market rental of $16,527 for the
12 months ended March 31, 2003.

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Dr. Peagram, formerly the non-executive chairman of Enact, was appointed
to the Companys board in June 2003. For his services to Enact, Dr. Peagram
was entitled to directors fees of £24,000. The Company anticipates entering
into a new agreement with Dr. Peagram in the near future.

Audit Committee. The Audit Committee is comprised of Messrs. Wallis,
Gration, Gatenby and Brown. The Audit Committee monitors the adequacy of the
Groups internal controls, reviews accounting policies and financial reporting
and discusses with the auditors the proposed audit program and the results of
the audit of the Groups financial statements. The Audit Committee is chaired
by Mr. Gatenby.

Remuneration Committee. The Remuneration Committee is comprised of
Messrs. Wallis, Gration, Gatenby and Brown. The Remuneration Committee meets
at least once a year to review the Groups policy on directors remuneration.
The Remuneration Committee evaluates the performance of the executive directors
and other senior employees and advises the board regarding their annual
remuneration package. The Remuneration Committee is chaired by Mr. Gration.

Employees

The number of persons, including directors, employed by the Group as of
March 31, 2003, broken down by activity and geographic location is shown below.

|                        |  |      |     |      |  |           |   |  |  |  |    | 
|----------------------- |  | ---- | --- | ---- |  | --------- | - |  |  |  | -- | 
|                        |  | U.K. |     | U.S. |  | Australia
|                        |  |      |     |      |  |          
|Management              |  |      | 21  |      |  |           | 1 |  |  |  | 3  | 
|Administration          |  |      | 10  |      |  |           | 3 |  |  |  | 2  | 
|Research and production |  |      | 92  |      |  |           | 2 |  |  |  | 39 | 
|                        |  |      |     |      |  |           |   |  |  |  |    | 
|Total                   |  |      | 123 |      |  |           | 6 |  |  |  | 44 | 

As of August 29, 2003, the Company had 213 full-time employees, including
28 management, 26 administrative and 159 research and production personnel.

Briefing and consultative procedures exist throughout the Company to keep
employees informed on general business issues and other matters of concern.
The Company has a policy of offering share options to all eligible employees,
subject to availability under the option plan rules. None of the Companys
U.S. employees are subject to a collective bargaining agreement, and the
Company has never experienced a work stoppage.

The Company has made every effort to ensure that the principal members of
its management and research team are suitably incentivized, but the retention
of such staff cannot be guaranteed, and the loss of their services could
materially adversely affect the ability of the Company to achieve its planned
development objectives.

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Share Ownership

The following table sets forth, for each person who served as a director
or senior executive of the Company during the most recent fiscal year, their
interest in the ordinary shares of the Company (including the interests of
their immediate families and persons connected with them) and the percentage of
the Companys outstanding share capital represented by such ownership interests
as of August 29, 2003.

|               |  |              |           |            |  |  |       |  
|-------------- |  | ------------ | --------- | ---------- |  |  | ----- | -
|               |  | Ordinary     |           |            |  | 
|Name           |  | shares owned |           | Percentage
|               |  |              |           |           
|M.S. Brown     |  |              | 3,167,317 |            |  |  | 1.530 | %
|S.M. Wallis    |  |              | 457,931   |            |  |  | 0.221 |  
|A.J. Heath     |  |              | 314,999   |            |  |  | 0.152 |  
|D.W. Gration   |  |              | 42,941    |            |  |  | 0.021 |  
|M.R.B. Gatenby |  |              | 27,999    |            |  |  | 0.014 |  
|B.M. Riley     |  |              | 15,554    |            |  |  | 0.008 |  
|J.C. Christie  |  |              | 1,221     |            |  |  | 0.001 |  
|A. Atkinson    |  |              |          |            |  |  |      |  
|M.J. Peagram   |  |              |          |            |  |  |      |  

Mr. Brown and Dr. Heath held warrants to subscribe for 29,075 and 14,538
ordinary shares, respectively, at $2.07 per share. The warrants expired on
June 15, 2003.

As of August 29, 2003, Dr. Atkinson and Dr. Peagram held £682,162 and
£297,157, respectively, of the Companys 6% Unsecured Convertible Loan Notes at
nominal value. The loan notes are convertible into ordinary shares at 25p per
ordinary share from December 19, 2004, or from June 19, 2004 if the Company has
received FDA marketing approval for Voraxaze.

The Company operates an approved share option scheme, an unapproved share
option scheme and an approved savings related share option scheme for executive
directors and employees to motivate those individuals through equity
participation in the Company. A separate option scheme was set up for the
benefit of certain former Therapeutic Antibodies employees at the time of the
1999 merger.

The Company has also granted individual unapproved options.

The schemes are overseen by the Remuneration Committee which determines
the terms under which eligible individuals may be invited to participate.

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The table below sets forth the details of the Companys outstanding share
options as of August 29, 2003.

|                                                                   |  |             |           |         |  |           |           |            |  |      |   |           |  |               |         |          |  |  |           |  |  |       |        | 
|------------------------------------------------------------------ |  | ----------- | --------- | ------- |  | --------- | --------- | ---------- |  | ---- | - | --------- |  | ------------- | ------- | -------- |  |  | --------- |  |  | ----- | ------ | 
|                                                                   |  | At April 1, |           |         |  |           |           |            |  |      |   | Cancelled |  | At August 29, |         | Exercise
|Date exercisable                                                   |  | 2002        |           | Granted |  | Exercised |           | Or expired |  | 2003 |   | price (p)
|                                                                   |  |             |           |         |  |           |           |            |  |      |   |          
|Individual unapproved                                              |  |             |           |         |  |           |           |            |  |      |   |           |  |               |         |          |  |  |           |  |  |       |        | 
|22 Dec 2002 to 21 Dec 2009                                         |  |             | 600,000   |         |  |           |          |            |  |      |  |           |  |               |        |          |  |  | 600,000   |  |  |       | 39.00  | 
|9 July 2002 to 8 July 2010                                         |  |             |          |         |  |           | 25,000    |            |  |      |  |           |  |               |        |          |  |  | 25,000    |  |  |       | 40.00  | 
|9 July 2002 to 8 July 2010                                         |  |             |          |         |  |           | 15,000    |            |  |      |  |           |  |               |        |          |  |  | 15,000    |  |  |       | 25.00  | 
|9 July 2002 to 31 May 2007                                         |  |             |          |         |  |           | 3,850     |            |  |      |  |           |  |               |        |          |  |  | 3,850     |  |  | US$   | 6.00   | 
|Approved scheme                                                    |  |             |           |         |  |           |           |            |  |      |   |           |  |               |         |          |  |  |           |  |  |       |        | 
|21 July 1997 to 20 July 2004                                       |  |             | 23,535    |         |  |           |          |            |  |      |  |           |  |               |        |          |  |  | 23,535    |  |  |       | 154.66 | 
|25 July 1998 to 24 July 2005                                       |  |             | 52,955    |         |  |           |          |            |  |      |  |           |  |               |        |          |  |  | 52,955    |  |  |       | 68.83  | 
|28 Jan 2003 to 27 Jan 2010                                         |  |             | 72,838    |         |  |           |          |            |  |      |  |           |  |               | 8,363   |          |  |  | 64,475    |  |  |       | 37.50  | 
|28 Feb 2004 to 27 Feb 2011                                         |  |             | 384,000   |         |  |           |          |            |  |      |  |           |  |               | 43,000  |          |  |  | 343,000   |  |  |       | 43.50  | 
|Unapproved scheme                                                  |  |             |           |         |  |           |           |            |  |      |   |           |  |               |         |          |  |  |           |  |  |       |        | 
|23 Jan 2001 to 22 Jan 2004                                         |  |             | 297,646   |         |  |           |          |            |  |      |  |           |  |               |        |          |  |  | 297,646   |  |  |       | 41.66  | 
|20 Jan 2001 to 19 Jan 2004                                         |  |             | 6,751     |         |  |           |          |            |  |      |  |           |  |               |        |          |  |  | 6,751     |  |  |       | 76.84  | 
|22 June 2001 to 21 June 2008                                       |  |             | 275,000   |         |  |           |          |            |  |      |  |           |  |               |        |          |  |  | 275,000   |  |  |       | 46.00  | 
|23 Dec 2001 to 22 Dec 2005                                         |  |             | 10,305    |         |  |           |          |            |  |      |  |           |  |               |        |          |  |  | 10,305    |  |  |       | 45.00  | 
|22 Dec 2002 to 21 Dec 2009                                         |  |             | 565,000   |         |  |           |          |            |  |      |  |           |  |               | 25,000  |          |  |  | 540,000   |  |  |       | 39.00  | 
|27 Jan 2003 to 26 Jan 2010                                         |  |             | 89,419    |         |  |           |          |            |  |      |  |           |  |               | 1,510   |          |  |  | 87,909    |  |  |       | 37.50  | 
|2 Aug 2003 to 1 Aug 2010                                           |  |             | 2,908     |         |  |           |          |            |  |      |  |           |  |               |        |          |  |  | 2,908     |  |  |       | 28.50  | 
|22 Feb 2004 to 21 Feb 2011                                         |  |             | 1,530,000 |         |  |           |           |            |  |      |  |           |  |               | 100,000 |          |  |  | 1,430,000 |  |  |       | 43.50  | 
|16 Jan 2005 to 15 Jan 2012                                         |  |             | 2,399,000 |         |  |           |          |            |  |      |  |           |  |               | 30,000  |          |  |  | 2,369,000 |  |  |       | 39.50  | 
|9 July 2005 to 8 July 2012                                         |  |             |          |         |  |           | 500,000   |            |  |      |  |           |  |               |        |          |  |  | 500,000   |  |  |       | 25.00  | 
|14 Jan 2006 to 13 Jan 2013                                         |  |             |          |         |  |           | 100,000   |            |  |      |  |           |  |               |        |          |  |  | 100,000   |  |  |       | 21.00  | 
|20 Jun 2006 to 19 Jun 2013                                         |  |             |          |         |  |           | 1,250,000 |            |  |      |  |           |  |               |        |          |  |  | 1,250,000 |  |  |       | 23.25  | 
|24 Jun 2006 to 23 Jun 2013                                         |  |             |          |         |  |           | 30,000    |            |  |      |  |           |  |               |        |          |  |  | 30,000    |  |  |       | 23.00  | 
|Savings related options                                            |  |             |           |         |  |           |           |            |  |      |   |           |  |               |         |          |  |  |           |  |  |       |        | 
|1 Oct 2003 to 31 Mar 2004                                          |  |             | 47,260    |         |  |           |          |            |  |      |  |           |  |               |        |          |  |  | 47,260    |  |  |       | 36.50  | 
|1 Apr 2003 to 31 Oct 2003                                          |  |             | 80,592    |         |  |           |          |            |  |      |   |           |  |               | 5,166   |          |  |  | 75,426    |  |  |       | 37.50  | 
|1 Apr 2005 to 31 Oct 2005                                          |  |             | 114,300   |         |  |           |          |            |  |      |  |           |  |               | 18,000  |          |  |  | 96,300    |  |  |       | 37.50  | 
|Protherics PLC option plan for
ex-Therapeutic Antibodies employees |  |             |           |         |  |           |           |            |  |      |   |           |  |               |         |          |  |  |           |  |  | 156.0 | to    
|27 Jan 2000 to 29 June 2008                                        |  |             | 166,222   |         |  |           |          |            |  |      |  |           |  |               |        |          |  |  | 166,222   |  |  |       | 417.0  | 
|                                                                   |  |             |           |         |  |           |           |            |  |      |   |           |  |               |         |          |  |  |           |  |  |       |        | 
|                                                                   |  |             | 6,717,731 |         |  |           | 1,923,850 |            |  |      |  |           |  |               | 229,039 |          |  |  | 8,412,542 |  |  |       |        | 
|                                                                   |  |             |           |         |  |           |           |            |  |      |   |           |  |               |         |          |  |  |           |  |  |       |        | 

At March 31, 2003, there were unexercised warrants for 887,008 (2002:
887,008; 2001: 887,008) ordinary shares. These warrants expire between June
15, 2003, and November 9, 2003, and are exercisable at prices between $0.45 and
$2.14 per share.

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Therapeutic Antibodies former employees and consultants

In addition, options over up to 577,714 ordinary shares (2001: 707,970;
2000: 1,183,170) previously held under the Therapeutic Antibodies 1990 Stock
Option Plan are held by former employees and consultants of Therapeutic
Antibodies Inc. Option prices range from $3.00 to $6.99 per share and may be
exercised at various dates until December 15, 2006.

Details of share options granted to directors are set forth in the table below
as of August 29, 2003.

|                                 |  |             |           |         |  |           |         |           |  |          |   |           |  |      |   |           |  |          |           |             |  |     |        |  |  |             |  |             |  |  |  | 
|-------------------------------- |  | ----------- | --------- | ------- |  | --------- | ------- | --------- |  | -------- | - | --------- |  | ---- | - | --------- |  | -------- | --------- | ----------- |  | --- | ------ |  |  | ----------- |  | ----------- |  |  |  | 
|                                 |  | At April 1, |           |         |  |           |         |           |  |          |   |           |  |      |   | At August |  | Exercise |           | Exercisable
|                                 |  | 2002        |           | Granted |  | Exercised |         | Cancelled |  | 29, 2003 |   | Price (p) |  | From |   | To       
|                                 |  |             |           |         |  |           |         |           |  |          |   |           |  |      |   |          
|Approved options                 |  |             |           |         |  |           |         |           |  |          |   |           |  |      |   |           |  |          |           |             |  |     |        |  |  |             |  |             |  |  |  | 
|B M Riley                        |  |             | 52,955    |         |  |           |        |           |  |          |  |           |  |      |  |           |  |          | 52,955    |             |  |     | 68.83  |  |  | 25 Jul 1998 |  | 24 Jul 2005
|Unapproved options               |  |             |           |         |  |           |         |           |  |          |   |           |  |      |   |           |  |          |           |             |  |     |        |  |  |             |  |             |  |  |  | 
|A Atkinson                       |  |             |          |         |  |           | 100,000 |           |  |          |  |           |  |      |  |           |  |          | 100,000   |             |  |     | 23.25  |  |  | 20 Jun 2006 |  | 19 Jun 2013
|D W Gration                      |  |             | 129,620   |         |  |           |        |           |  |          |  |           |  |      |  |           |  |          | 129,620   |             |  |     | 41.66  |  |  | 23 Jan 2001 |  | 22 Jan 2004
|D W Gration                      |  |             | 90,000    |         |  |           |        |           |  |          |  |           |  |      |  |           |  |          | 90,000    |             |  |     | 46.00  |  |  | 22 Jun 2001 |  | 21 Jun 2008
|B M Riley                        |  |             | 72,011    |         |  |           |        |           |  |          |  |           |  |      |  |           |  |          | 72,011    |             |  |     | 41.66  |  |  | 23 Jan 2001 |  | 22 Jan 2004
|B M Riley                        |  |             | 65,000    |         |  |           |        |           |  |          |  |           |  |      |  |           |  |          | 65,000    |             |  |     | 46.00  |  |  | 22 Jun 2001 |  | 21 Jun 2008
|B M Riley                        |  |             | 50,000    |         |  |           |        |           |  |          |  |           |  |      |  |           |  |          | 50,000    |             |  |     | 39.00  |  |  | 22 Dec 2002 |  | 21 Dec 2009
|B M Riley                        |  |             | 120,000   |         |  |           |        |           |  |          |  |           |  |      |  |           |  |          | 120,000   |             |  |     | 43.50  |  |  | 22 Feb 2004 |  | 21 Feb 2011
|B M Riley                        |  |             | 350,000   |         |  |           |        |           |  |          |  |           |  |      |  |           |  |          | 350,000   |             |  |     | 39.50  |  |  | 16 Jan 2005 |  | 15 Jan 2012
|B M Riley                        |  |             |          |         |  |           | 200,000 |           |  |          |  |           |  |      |  |           |  |          | 200,000   |             |  |     | 23.25  |  |  | 20 Jun 2006 |  | 19 Jun 2013
|J C Christie                     |  |             | 250,000   |         |  |           |        |           |  |          |  |           |  |      |  |           |  |          | 250,000   |             |  |     | 39.00  |  |  | 22 Dec 2002 |  | 21 Dec 2009
|J C Christie                     |  |             | 80,000    |         |  |           |        |           |  |          |  |           |  |      |  |           |  |          | 80,000    |             |  |     | 43.50  |  |  | 22 Feb 2004 |  | 21 Feb 2011
|J C Christie                     |  |             | 250,000   |         |  |           |        |           |  |          |  |           |  |      |  |           |  |          | 250,000   |             |  |     | 39.50  |  |  | 16 Jan 2005 |  | 15 Jan 2012
|J C Christie                     |  |             |          |         |  |           | 100,000 |           |  |          |  |           |  |      |  |           |  |          | 100,000   |             |  |     | 23.25  |  |  | 20 Jun 2006 |  | 19 Jun 2013
|A J Heath                        |  |             | 116,300   |         |  |           |        |           |  |          |  |           |  |      |  |           |  |          | 116,300   |             |  |     | 175.00 |  |  | 27 Jan 2000 |  | 29 Jun 2008
|A J Heath                        |  |             | 500,000   |         |  |           |        |           |  |          |  |           |  |      |  |           |  |          | 500,000   |             |  |     | 43.50  |  |  | 22 Feb 2004 |  | 21 Feb 2011
|A J Heath                        |  |             | 1,000,000 |         |  |           |        |           |  |          |  |           |  |      |  |           |  |          | 1,000,000 |             |  |     | 39.50  |  |  | 16 Jan 2005 |  | 15 Jan 2012
|A J Heath                        |  |             |          |         |  |           | 300,000 |           |  |          |  |           |  |      |  |           |  |          | 300,000   |             |  |     | 23.25  |  |  | 20 Jun 2006 |  | 19 Jun 2013
|Savings related options          |  |             |           |         |  |           |         |           |  |          |   |           |  |      |  |           |  |          |           |             |  |     |        |  |  |             |  |             |  |  |  | 
|J C Christie                     |  |             | 27,000    |         |  |           |        |           |  |          |  |           |  |      |  |           |  |          | 27,000    |             |  |     | 37.50  |  |  | 1 Apr 2005  |  | 31 Oct 2005
|Individual                       |  |             |           |         |  |           |         |           |  |          |   |           |  |      |   |           |  |          |           |             |  |     |        |  |  |             |  |             |  |  |  | 
|A J Heath                        |  |             | 600,000   |         |  |           |        |           |  |          |  |           |  |      |  |           |  |          | 600,000   |             |  |     | 39.00  |  |  | 22 Dec 2002 |  | 21 Dec 2009
|Therapeutic antibodies
1990 Plan |  |             |           |         |  |           |         |           |  |          |   |           |  |      |   |           |  |          |           |             |  |     |        |  |  |             |  |             | 
|M S Brown                        |  |             | 46,520    |         |  |           |        |           |  |          |  |           |  |      |  |           |  |          | 46,520    |             |  | US$ | 3.86   |  |  | 1 Oct 1994  |  | 30 Sep 2004
|M S Brown                        |  |             | 104,670   |         |  |           |        |           |  |          |  |           |  |      |  |           |  |          | 104,670   |             |  | US$ | 5.15   |  |  | 26 Apr 1996 |  | 25 Apr 2006
|                                 |  |             |           |         |  |           |         |           |  |          |   |           |  |      |   |           |  |          |           |             |  |     |        |  |  |             |  |             |  | 
|                                 |  |             | 3,904,076 |         |  |           | 700,000 |           |  |          |  |           |  |      |  |           |  |          | 4,604,076 |             |  |     |        |  |  |             |  |             |  |  |  | 
|                                 |  |             |           |         |  |           |         |           |  |          |   |           |  |      |   |           |  |          |           |             |  |     |        |  |  |             |  |             |  | 

The performance criteria for Dr. Heaths individual option are similar to
those of the Unapproved Share Option Scheme. In particular, the option may
generally be exercised only between the third and tenth anniversaries of the
date of grant, and on the date of exercise, the share price must have
outperformed the average of the FTSE Pharmaceuticals Index in any preceding
three year period. An adjustment may be made to the number of shares under
option or the exercise price in the case of a variation in share capital,
subject to confirmation by the Auditors that it is in their opinion fair and
reasonable. The option lapses if Dr. Heath leaves the Company voluntarily, and
must be exercised within three months if his employment ceases by reason of
injury, disability, sickness or redundancy. The agreement confers no
pensionable benefits. No amendment may be made to the benefit of Dr. Heath
except with the prior approval of the Company in General Meeting except for
minor amendments to benefit the administration of the agreement or to obtain or
maintain favorable tax, exchange control or regulatory treatment for Dr. Heath
or any Group Member.

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In addition, Mr. Brown continues to hold options over 151,190 ordinary
shares previously held under the Therapeutic Antibodies 1990 Stock Option Plan.
Options over 46,250 ordinary shares have an exercise price of $3.86 and are
exercisable between October 1, 1994, and October 1, 2004. Options over 104,670
ordinary shares have an exercise price of $5.15 and are exercisable between
April 26, 1996, and April 26, 2006.

Mr. Gatenby does not hold options for the Companys ordinary shares.

The price of the Companys ordinary shares to which the options relate was
19.25p at March 31, 2003, and fluctuated between 14.25p and 34.5p during the
year.




ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Major Shareholders

The table below shows all holders who, to the Companys knowledge, own,
directly or indirectly, 3% or more of the Companys ordinary shares, as of
September 17, 2001, August 30, 2002, and August 29, 2003, each being the most
recent practicable date before reporting for the last three fiscal years.

|                                              |  |        |            |        |  |        |      |        |  |        |            |        |  |  |      |  |  |      |            |  |  |  |      | 
|--------------------------------------------- |  | ------ | ---------- | ------ |  | ------ | ---- | ------ |  | ------ | ---------- | ------ |  |  | ---- |  |  | ---- | ---------- |  |  |  | ---- | 
|                                              |  | 2001   |            | 2002   |  | 2003  
|                                              |  |        |            |        |  |       
|                                              |  |        |            |        |  | % of   |      |        |  |        |            | % of   |  |  |      |  |  | % of
|                                              |  | # of   |            | issued |  | # of   |      | issued |  | # of   |            | issued
|Shareholder                                   |  | shares |            | shares |  | shares |      | shares |  | shares |            | shares
|                                              |  |        |            |        |  |        |      |        |  |        |            |       
|Nomura International plc                      |  |        | 6,592,978  |        |  |        | 3.78 |        |  |        | *          |        |  |  | *    |  |  |      |            |  |  |  |      | 
|M & G Asset Management                        |  |        | 13,920,761 |        |  |        | 7.99 |        |  |        | 10,747,635 |        |  |  | 5.71 |  |  |      | 13,289,501 |  |  |  | 6.42 | 
|Jupiter Asset Management                      |  |        | 9,862,666  |        |  |        | 5.66 |        |  |        | 8,860,166  |        |  |  | 4.71 |  |  |      | *          |  |  |  | *    | 
|Morley Fund Management                        |  |        | 8,125,291  |        |  |        | 4.66 |        |  |        | 10,750,000 |        |  |  | 5.71 |  |  |      | 13,592,075 |  |  |  | 6.57 | 
|Victory Capital LP                            |  |        | 5,500,000  |        |  |        | 3.16 |        |  |        | *          |        |  |  | *    |  |  |      | *          |  |  |  | *    | 
|Baring Asset Management                       |  |        | 5,250,000  |        |  |        | 3.01 |        |  |        | *          |        |  |  | *    |  |  |      | *          |  |  |  | *    | 
|Bradshaw Asset Management
Ltd                 |  |        | *          |        |  |        | *    |        |  |        | 9,750,200  |        |  |  | 5.18 |  |  |      | 8,610,040  |  |  |  | 4.16 | 
|Artemis (formerly ABN Ambro
Asset Management) |  |        | *          |        |  |        | *    |        |  |        | 7,436,619  |        |  |  | 3.95 |  |  |      | 6,273,750  |  |  |  | 3.03 | 
|Deutsche Asset Management                     |  |        | *          |        |  |        | *    |        |  |        | 6,535,833  |        |  |  | 3.47 |  |  |      | *          |  |  |  | *    | 
|Framlington Asset Management                  |  |        | *          |        |  |        | *    |        |  |        | *          |        |  |  | *    |  |  |      | 13,591,500 |  |  |  | 6.56 | 
|Gartmore Investment
Management                |  |        | *          |        |  |        | *    |        |  |        | *          |        |  |  | *    |  |  |      | 6,842,941  |  |  |  | 3.31 | 



---

|* |  | Holder of less than 3% of the Companys ordinary shares.
|- |  | --------------------------------------------------------

All of the Companys major shareholders have the same voting rights.

At August 29, 2003 approximately 13,483,307 ordinary shares were held of
record by approximately 356 holders with registered addresses in the U.S.,
representing approximately 6.51% of the currently outstanding ordinary shares.

To the Companys knowledge, it is not directly or indirectly owned or
controlled by another corporation, by any foreign government, or by any other
natural or legal person, nor are there any arrangements, the operation of which
could result in a change in control of the Company.

Related Party Transactions

In connection with its acquisition of Enact in June 2003, the Company
assumed the Consultancy Service Agreement, dated April 1, 2002, between Enact
and Chimaeron Limited, a company in which Dr. Atkinson has an interest. The
agreement provides for the engagement of Dr. Atkinson as a consultant and for
his services as Scientific Director. Dr. Atkinson received £90,000 annually
pursuant to this

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agreement. Upon the acquisition of Enact, the Company agreed not to
terminate the consulting agreement before June 2004 and only upon 12 months
notice by either party. The Company is in the process of negotiating a new
service contract with Dr. Atkinson which will contain terms substantially
similar to the service contracts with other executive directors of the Company.

Interests of Experts and Counsel

Not applicable.




ITEM 8. FINANCIAL INFORMATION

Consolidated Statements and Other Financial Information

Reference is made to Item 19 for a list of all financial statements filed
as part of this Annual Report.

Legal Proceedings

From time to time, the Company must engage in formal opposition
proceedings to protect its proprietary rights and to challenge patent claims of
third parties. See Item 4. Information on the Company - Intellectual Property,
Patents and Trademarks.

Dividend Policy

To date, the Company has not paid dividends on its ordinary shares. The
Company intends to retain any future earnings to finance the expansion of its
business and has no present intention to pay cash dividends. The declaration
and payment of future dividends will be determined by the Companys board of
directors in light of conditions existing in the future and are expected to
depend upon earnings, financial condition, capital requirements and other
relevant factors not presently determinable.




ITEM 9. LISTING

The principal trading market for the Companys ordinary shares is the
London Stock Exchange (LSE) under the symbol PTI.L. The Companys ordinary
shares were admitted to the Official List of the LSE in December 1996. The
Companys ordinary shares are not traded on any stock exchange or quoted on any
automated quotation system in the United States.

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The following table sets for the for the periods indicated, the high and
low closing mid-market prices as reported in the Daily Official List for the
ordinary shares as reported by the LSE.

|                               |                |      |       |       |   |  |       |       | 
|------------------------------ | -------------- | ---- | ----- | ----- | - |  | ----- | ----- | 
|Financial Year Ended March 31, |                | High |       | Low  
|                               |                |      |       |      
|                               |                |      | £     |       | £
|1998                           |                |      | 0.834 |       |   |  | 0.333 |      
|1999                           |                |      | 0.865 |       |   |  | 0.320 |      
|2000                           |                |      | 0.535 |       |   |  | 0.320 |      
|2001                           |                |      | 0.448 |       |   |  | 0.280 |      
|2002                           |                |      |       |       |   |  |       |      
|                               | First Quarter  |      |       | 0.340 |   |  |       | 0.285 | 
|                               | Second Quarter |      |       | 0.290 |   |  |       | 0.200 | 
|                               | Third Quarter  |      |       | 0.378 |   |  |       | 0.205 | 
|                               | Fourth Quarter |      |       | 0.408 |   |  |       | 0.345 | 
|2003                           |                |      |       |       |   |  |       |      
|                               | First Quarter  |      |       | 0.345 |   |  |       | 0.255 | 
|                               | Second Quarter |      |       | 0.254 |   |  |       | 0.144 | 
|                               | Third Quarter  |      |       | 0.244 |   |  |       | 0.142 | 
|                               | Fourth Quarter |      |       | 0.214 |   |  |       | 0.182 | 
|2004                           |                |      |       |       |   |  |       |      
|                               | First Quarter  |      |       | 0.238 |   |  |       | 0.165 | 
|Calendar Year 2002             |                |      |       |       |   |  |       |      
|Most Recent Six Months         |                |      |       |       |   |  |       |      
|                               | March          |      |       | 0.204 |   |  |       | 0.189 | 
|                               | April          |      |       | 0.191 |   |  |       | 0.174 | 
|                               | May            |      |       | 0.185 |   |  |       | 0.165 | 
|                               | June           |      |       | 0.238 |   |  |       | 0.178 | 
|                               | July           |      |       | 0.300 |   |  |       | 0.220 | 
|                               | August         |      |       | 0.433 |   |  |       | 0.288 | 




ITEM 10. ADDITIONAL INFORMATION

Memorandum and Articles of Association

Objects and Purposes

The Company was originally founded in 1987 and was incorporated in England
and Wales under the Companies Act 1985 (as amended) (the Companies Act) on
January 12, 1990, as a public company limited by shares with the registered
number 2459087. The Memorandum of Association of the Company provides that the
Companys principal object is to carry on the business of a holding company.
The objects of the Company are set out in full in clause 4 of the Memorandum of
Association which is available for inspection at The Heath Business & Technical
Park, Runcorn, Cheshire, WA7 4QF.

The Articles of Association of the Company (the Articles) contain
provisions, inter alia, to the following effect:

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Voting Rights

Subject to any special terms as to voting upon which any shares may have
been issued, every shareholder present in person shall upon a show of hands
have one vote, and on a poll, every shareholder shall have one vote for every
share of which he is a holder. On a poll, votes may be given either personally
or by proxy. A shareholder in respect of whom an order has been made by any
court or official having jurisdiction in matters concerning mental disorder or
incapacity to manage ones affairs may vote,
whether on a show of hands or on a poll, by his receiver or curator bonis
and such receiver or curator bonis may, on a poll, vote by proxy.

In the case of joint holders of a share, the vote of the senior who
tenders a vote, whether in person or by proxy, shall be accepted to the
exclusion of the votes of the other joint holders; and seniority shall be
determined by the orders in which the names of the holders stand in the
register of shareholders of the Company.

No shareholder shall, unless otherwise determined by the Directors, be
entitled to be present and vote, either in person or by proxy, at any general
meeting or upon any poll in respect of any shares held by him if:

| |  |     |  |                                                                                                                                                                                                                                                                                                                                                                                
| |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | (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.

The instrument appointing a proxy and accompanying documentation if
necessary, shall be deposited at the registered office not less than 48 hours
before the meeting.

Dividends and other payments

Holders of ordinary shares are entitled to the profits of the Company
available for distribution and resolved to be distributed in accordance with
the Companies Act, although no interest shall be payable on such distribution.
The profits which the Company may determine to distribute in respect of any
financial year shall be distributed rateably among the holders of the ordinary
shares according to the amounts paid up on the ordinary shares held by them
respectively, unless otherwise provided by the terms of issue. Dividends may be
satisfied wholly or partly by the distribution of assets.

The Board, if authorized by an ordinary resolution of the Company, may
offer the holders of ordinary shares the right to elect to receive new ordinary
shares, credited as fully paid, instead of cash for all or part of the dividend
specified by that ordinary resolution.

The Board may from time to time declare an interim dividend.

The Board may deduct from any dividend payable to the holder of ordinary
shares all such sums as may be due from such holder to the Company on account
of calls or otherwise in relation to such ordinary shares.

The Company may make use of all dividends unclaimed after one year until
so claimed. A dividend unclaimed for 12 years from the date when it became due
for payment will be forfeited and revert to the Company.

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Return of Capital

In a winding-up, a liquidator must distribute any surplus after payment to
all creditors to the holders of ordinary shares pro rata to their holdings of
shares.

Variation of Rights

All or any of the rights attached to any class of shares of the Company
for the time being in issue may be varied or abrogated either with the consent
in writing of the holders of not less than three quarters in nominal value of
the issued shares of that class, or the sanction of an extraordinary resolution
passed at a separate general meeting of the holders of the issued shares of
that class, but not otherwise. The provisions of the Articles of Association
relating to general meetings apply to every such separate meeting, save that
the necessary quorum shall be two persons present holding or representing by
proxy at least one third in nominal value of the issued shares of that class.

Transfers

The instrument of transfer of a share shall be in the usual form or such
other form as shall be approved by the Directors of Protherics and shall be
signed by or on behalf of the transferor, and if the share is not fully paid,
by the transferee. The transferor shall be deemed to remain the holder of the
share until the name of the transferee is entered in the register in respect
thereof.

The Directors may decline to recognize any instrument of transfer of a
share which is not fully paid, provided that where any shares which are not
fully paid are admitted to the Official List of the Listing Authority, the
discretion shall not be exercised in such a way as to prevent open and proper
dealings in those shares. The Articles of Association do not contain any
restriction on the free transferability of fully paid shares provided that the
instrument of transfer is in favor of not more than four transferees, is in
respect of only one class of shares, and is not in respect of shares in respect
of which the Company has a lien. Every instrument of transfer must be left at
the registered office of the Company or at such other place as determined by
the Directors, accompanied by the certificate for those shares and evidence as
reasonably required by the Directors to prove the title of the transferor and
due execution.

The registration of transfers may be suspended at such times and for such
period as the Directors may from time to time determine.

No fee shall be charged for the registration of any instrument of transfer
or other document relating to or affecting the title to any share. Any
instrument of transfer which is registered may be retained by the Company, but
any instrument of transfer which the Directors refuse to register shall be
returned to the person lodging it when notice of the refusal is given.

Directors of Protherics

Except as provided in this paragraph, a Director shall not vote, or be
counted in the quorum in relation to, any resolution of the Board or of a
committee of the Board concerning any matter in which he has to his knowledge,
directly or indirectly, a material interest (other than his interest in shares
or debentures or other securities of the Company). If he shall do so, his vote
shall not be counted.

A Director shall (in the absence of some other material interest that is
indicated below) be entitled to vote (and be counted in the quorum) in respect
of any resolution concerning any of the following matters, namely:

| |  |     |  |                                                                                                                                                                                       
| |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | (a) |  | the giving of any security or indemnity to him in
respect of money lent or obligations incurred by him at the
request of or for the benefit of the Company or any of its
subsidiaries;

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| |  |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | (b) |  | the giving of any security or indemnity to a
third party in respect of a debt or obligation of the Company
or any of its subsidiaries 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 for any shares,
debentures or other securities of or by the Company or any of
its subsidiaries for subscription or purchase in which offer
he is or is to be interested as a participant in the
underwriting or sub-underwriting thereof;                                                                                                                                                                                                                                                                                                                       
| |  |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | (d) |  | any contract, arrangement, transaction or other
proposal concerning any other company 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 company
(or of a third company through which such interest is derived)
or of the voting rights available to members of the relevant
company (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 relates to both employees and
Directors of the Company or any of its subsidiaries, and which
either has been approved by, or is subject to and conditional
upon approval by, the Board of Inland Revenue for taxation
purposes or 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
subsidiaries to acquire shares under which the Director
benefits in a similar manner as the employees, and which does
not accord to him as such any privilege or advantage not
accorded to the employees to whom the contract relates; and                                                                                                                                                                                   
| |  |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | (g) |  | any contract, arrangement, transaction or
proposal concerning any insurance which the Company is
empowered to purchase and/or maintain for, or for the benefit
of, any Directors or for persons who include Directors.                                                                                                                                                                                                                                                                                                                                                                           

A Director shall not vote or be counted in the quorum on any resolution
concerning his own appointment as the holder of any office or place of profit
with the Company or any company in which the Company is interested including
fixing or varying the terms of his appointment or the termination thereof.

Each of the Directors shall be paid a fee for his services at a rate
determined by the Board from time to time provided that the aggregate of such
fees (excluding any amounts payable under any other provision of the Articles)
shall not exceed £200,000 per annum or such higher amount as the Company, by
ordinary resolution, may determine from time to time. Such fee shall be deemed
to accrue from day to day. This article does not apply to executive Directors.

The Directors may be paid all reasonable traveling, hotel and other
expenses incurred by them in performing their duties as Directors including all
such expenses incurred in connection with attendance at meetings of the Board
or any committee of the Directors or general meetings or if in the opinion of
the Directors it is desirable to make special journeys or perform special
services.

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A Director appointed to an executive office may be paid such remuneration
in such manner as the Board may decide.

The Board may make provision for the payment of pension or life assurance
benefits for any Director or former Director who holds or has held any
executive office or employment with the Company or a subsidiary of it, and for
any member of his family or any of his dependants.

No person shall be disqualified from being appointed a Director, and no
Director shall be required to vacate that office, by reason only of the fact
that he has attained the age of 70 years or any other age, nor shall it be
necessary by reason of his age to give special notice under the Companies Act
of any resolution. Where the Board convenes any general meeting of the Company
at which (to the knowledge of the Board) a Director will be proposed for
appointment or re-appointment who will have attained the age of 70 years or
more at the date for which the meeting is convened, the Board shall give notice
of his age in years in the notice convening the meeting or in any document
accompanying the notice, but the accidental omission to do so shall not
invalidate any proceedings, or any appointment or re-appointment of that
Director, at that meeting.

Each Director shall retire from office at the third annual general meeting
after the annual general meeting at which they were last elected, but they may
stand for reelection at the meeting at which they retire. A separate vote must
be held on each Director standing for reelection.

Borrowing powers

The Directors may exercise all the powers of the Company to borrow money
and to mortgage or charge all or any part of its undertaking, property and
uncalled capital, and to issue debentures and other securities.

The Directors shall restrict the borrowings of the Company and exercise
all voting and other rights or powers of control exercisable by the Company in
relation to its subsidiary undertaking (if any), so as to secure (as regards
subsidiary undertakings, so far as by such exercise they can secure) that the
aggregate amount from time to time owing by the Group (being the Company and
all subsidiaries) in respect of all monies borrowed, exclusive of moneys
borrowed by the Company or any of its subsidiaries from any other of such
companies shall not at any time, without the previous sanction of an ordinary
resolution of the Company, exceed an amount equal to three times the aggregate
of:

| |  |     |  |                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | (a) |  | the nominal issued and paid up capital of the
Company;                                                                                                                                                                                                                                                                                                                                               
| |  |     |  |                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | (b) |  | the amounts standing to the credit of the
consolidated reserves of the Company and its subsidiaries
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 sheets of the
Company and each of its subsidiary companies 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 since
the date of its latest audited balance sheet;
| |  |     |  |                                                                                                                                                                                                                                                       
| |  | (B) |  | excluding therefrom (i) any sums set
aside for future taxation, (ii) amounts attributable to
outside shareholders in subsidiaries.                                                                                                                    
| |  |     |  |                                                                                                                                                                                                                                                       
| |  | (C) |  | deducting therefrom (i) an amount
equal to any distribution by the Company out of profits
earned prior to the date of its latest audited balance
sheet and which have been declared, recommended or made                                              

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| |  |  |  |                                                                                                                                                                        
| |  |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  |  | 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.

Alteration of Capital

The Company may, from time to time, by ordinary resolution increase its
share capital by the creation of new shares, such increase to be of such
aggregate amount and to be divided into shares of respective amounts as the
resolution may prescribe. All new shares will be subject to the same provisions
as if they had been part of the original capital, subject to any privileges or
conditions attached to them.

The Company may by ordinary resolution consolidate its shares or subdivide
its shares into shares of smaller amount and may by such resolution determine
that, as between the holders of the shares resulting from such subdivision, one
or more of such shares shall have some preferred or other advantage as regards
dividends, capital, voting or otherwise.

The Company may from time to time, by special resolution, reduce its share
capital, any capital redemption reserve fund and any share premium account in
any manner authorized by law. The Company may also by ordinary resolution
cancel any shares not taken or agreed to be taken by any person and diminish
the amount of its share capital by the nominal value of the shares so
cancelled.

The Company may purchase its own shares in any manner authorized by law.

Liability to further capital calls by the Company

The Company may issue shares that are not fully paid up and can make
different arrangements between the shareholders as to the amount of calls to be
paid and the time of payment of such calls. Subject to the terms of allotment
thereof, the Directors can call up for all or part of the monies unpaid on the
shares as they think fit. A minimum of fourteen days notice must be given to
the shareholder stating the amount to be paid, to whom payment must be made and
the time and place at which payment must be made. The Company does not
currently have any shares in issue that are not fully paid up.



| |  | Discrimination against shareholders as a result of such shareholder
owning a substantial number of shares
| |  | ---------------------------------------------------------------------------------------------------------

The City Code on Takeovers and Mergers (the City Code) applies to offers
for all public companies considered by the Panel on Takeover and Mergers (the
Panel) to be resident in the United Kingdom, the Channel Islands or the Isle
of Man.

The City Code regulates the conduct, structure and timetable of UK
takeovers and has the principal aim to ensure fair and equal treatment of the
shareholders in relation to takeover and mergers. The City Code is
non-statutory, but its rules are regarded as binding by all those who operate
in the London takeover market.

The City Code comprises general principles that are essentially statements
of good standards of commercial behavior and a series of rules expanding on
them and regulating particular areas of takeover activity that often have the
effect of delaying or defining a change in control of the company.

Under the City Code, if any person acquires shares which results in that
person (and any persons acting in concert with him, as defined in the City
Code) holding shares carrying 30 percent or more of the voting rights of the
Company, that person shall be compelled to offer to acquire the remainder of
the share capital of the Company at a cash price of not less than the highest
price paid by the offeror or persons acting in concert with it during the
preceding 12 months.

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Annual and Extraordinary General Meetings

Extraordinary general meetings are either convened by the Directors
whenever they think fit or on written request of members holding at least 10%
of the Companys shares.

An annual general meeting must be held by the Company once a year.

General meetings are called by a minimum of 21 clear days notice when a
special resolution is proposed to be passed and by a minimum of a 14 clear days
notice when only ordinary resolutions are proposed. Ordinary Resolutions must
be passed by a simple majority of those members who (being entitled to do so)
vote at the general meeting, and special resolutions must be passed by a
majority of not less than 75% of the members who (being entitled to do so) vote
at the general meeting. The annual general meeting must be convened on a
minimum of 21 clear days notice.

The notice must specify the place, day and hour of the meeting and the
general nature of any special business to be discussed.

To be held valid, a quorum of not less than three shareholders present in
person or by proxy and entitled to vote must be present at each general
meeting.

Limitations on the Right to Own Securities

Fully paid shares are issued free from all liens and from any restriction
on the right of transfer except any restriction imposed by failure to comply
with a notice issued under section 212 of the UK Companies Act 1985, by which a
public company can, by notice in writing, require a shareholder to confirm his
present and past shareholding in the share capital of the Company or give
particulars of his identity and the extent of his interest and of any other
person interested in the same shares as the case may be.

Any shareholder who has failed to comply with a section 212 notice is not
entitled to be present and vote at general meetings.

Changes in Control of the Company

The Rules Governing Substantial Acquisitions of shares are published with
the City Code and provide, broadly, that a person may not in any period of
seven days acquire shares or rights over shares carrying 10 percent or more of
the voting rights in a company if the total of his shares after the acquisition
would carry between 15 percent and 30 percent of the total voting rights in a
company.

In addition the City Code prescribes a timetable for takeover offers. An
offer document must be posted within 28 days of the announcement of a firm
intention to make an offer, and an offer must initially be open for at least 21
days following the date on which the offer document is posted (the Posting
Date). The City Code provides that the 60th day after the Posting Date is the
final day for an offer to become or be declared unconditional as to
acceptances, and the 81st day is the last day for fulfillment of all other
conditions if the offer is declared unconditional as to acceptances on day 60.
If these timings are not met, the offer will lapse.

Disclosure of Shareholder Ownership

Under the UK Companies Act 1985, where there is a change in the interest
of a person in the Companys share capital from below 3 percent to 3 percent or
more, or vice versa, that person must notify the Company of that change within
2 days following the day on which the change occurred. Any change in ownership
above 3 percent beyond an integral percentage, must also be notified within
that 2 day period. For these purposes interest is widely defined and
includes interests by way of contract or
options, but does not include interests by way, for example, of an
authorized unit trust. The Listing Rules
59Table of Contents

of the UK Listing Authority require
the Company to announce the receipt of any of the aforementioned notifications
by the end of the business day following receipt of the notification by the
Company.

Material Contracts

The following is a summary of the Companys existing principal licensing
agreements and other collaborative arrangements:

Janssen Pharmaceutica

In April 1996, the Company entered into a licensing agreement with Janssen
Pharmaceutica NV for Janssens development of a GnRH animal vaccine across a
range of target animal species. Under the terms of the agreement, the Company
granted Janssen the rights to produce, manufacture, use, sell or otherwise deal
in products developed or produced using the Companys technical information
related to its animal vaccine. The agreement provides for milestone and
royalty payments by Janssen to the Company. Additionally, the Company is
entitled to royalties that increase based on net sales per calendar year. The
agreements term continues in effect for so long as Janssen is under an
obligation to pay royalties on the net sales of value of products commercially
exploited under the agreements which,



| |  |  | with respect to countries where there is no valid and
existing patent right, is seven years after the first product is
commercially exploited, or            
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | with respect to countries where there is a valid and existing
and patent right, for so long as that certain patent right remains
in force and/or is extended.

With respect to products for the domestic cat species, the agreement
provides for milestone payments by Janssen to the Company of up to $469,000.
With respect to products for other species, the agreement provides for
milestone payments by Janssen to the Company of up to a similar amount, subject
to further negotiation by the Company and Janssen and subject to a
determination of future sales revenue. To date, the Company has received an
initial payment of $300,000 under the agreement. No further milestone or
royalty payments have been received. £35,000 has been received for the supply
of vaccine materials. Janssen has informed the Company that it has
demonstrated proof of efficacy in domestic cats, but has been unable to achieve
the same results in dogs. Janssen has decided that it will not continue
development of this product on commercial grounds. The Company is considering
alternative avenues of commercialization.

Enfer Scientific

In April 1997, the Company and Enfer Scientific Limited entered into a
licensing agreement whereby the Company granted Enfer worldwide rights for the
development and marketing of the post-mortem tests for bovine spongiform
encephalopathy. A revised agreement was completed in November 2001. Under this
agreement, licenses and sub-licenses for non-European Union countries are
exclusive for a term of 15 years from the date of the agreement. For European
Union countries, licenses are exclusive from the date of the agreement to the
date of the last patent expiry in the European Union country or, if longer,
until 10 years from the date when the products were first put on the market in
any part of the European Union. Thereafter, licenses become non-exclusive and
automatically renewable for 2 year terms unless terminated by either party on 6
months prior notice.

The minimum amount payable in any year by the licensee is £65,000. The
Company receives 12.5% of net sales of the licensee, and 10% of the net sales
in respect of sales of product by the licensee to distributors. The licensee
has appointed Abbott Laboratories as its exclusive distributor for all
territories except Ireland.

Pursuant to a letter of agreement with the University College Dublin, the
Company is obligated to share each quarters income from Enfer. Initially, the
income was divided in two and the first half was
60Table of Contentsapplied first in repaying the
development costs, second in repaying to the Company its cost incurred in
obtaining and maintaining related patents. The remaining income was then
shared 80% to the Company and 20% to the University College Dublin. Following
the repayment of the development costs, the cost incurred in obtaining and
maintaining related patents and other costs incurred in maintaining the royalty
stream are repaid with the remaining income shared 80% to the Company and 20%
to the University College Dublin.An initial payment of £28,000 was received under the Enfer licensing
agreement. A total of £3,307,000 has been recognized as royalty income in the
period from inception of the agreement to August 29, 2003.Altana, Inc.In October 1997, the Company entered into an agreement with Altana, Inc.
which provides Altana with exclusive U.S. distribution rights for
CroFab® and
DigiFab. Under the agreement terms, the Company is entitled to receive
certain milestone, product sales and royalty payments, of which approximately
$33.9 million has been earned from inception to August 29, 2003. In February
2001 and February 2002, Altana began marketing and distributing the Companys
CroFab® and DigiFab products, respectively, under the agreement in the United
States.Swedish Orphan ABIn January 1990, the Company entered into an agreement with Swedish Orphan
AB whereby Swedish Orphan was appointed as exclusive sales representative to
market ViperaTAb® in certain territories. The agreement was subsequently
amended and restated to include CroFab® and other antivenin products, and
DigiFab. The territories are currently Sweden, Norway, Denmark, Finland and
Iceland.Mayne Pharmaceuticals (formerly F.H. Faulding & Co. Limited)In September 1995, the Company entered into an exclusive distribution
agreement with F.H. Faulding & Co. Limited. Under the agreement terms, F.H.
Faulding received the right to obtain marketing approval and to distribute
certain products then under development, including DigiFab, in Australia, New
Zealand and certain Southeast Asian countries.In November 1998, the Company entered into a contract manufacturing
agreement with F.H. Faulding for Faulding to fill and freeze dry the Companys
CroFab® product. Under the agreement, Faulding is entitled to a set fee per
batch of product filled and freeze dried and to reimbursement for development
costs incurred. Upon receipt of FDA approval in September 2000, Faulding began
filling and freeze drying CroFab® under the
agreement. Mayne Pharmaceuticals also fill and freeze dry the
Companys DigiFab and ViperaTAb® products under the agreement.Promega CorporationIn December 2001, the Company entered into a license agreement with
Promega Corporation (Promega) whereby Promega granted an exclusive worldwide
license to the Company to utilize a family of patents relating to purified
polyvalent antivenins and methods of purifying antivenins using immunoaffinity
techniques.In consideration for the granting of this license, the Company made an
initial payment of $250,000 with a further $1,250,000 payable in interest
bearing installments over the three years following the signing of the license
agreement. Upon payment of all the installments in accordance with the license
agreement, the underlying patents will be assigned to the Company.61Table of ContentsChesapeake Biological Laboratories IncIn March 2003, the Company entered into a contract manufacturing agreement
with Chesapeake Biological Laboratories Inc. to fill and freeze dry the
Companys CroFab®, DigiFab and ViperaTab® products. Under the agreement,
Chesapeake is entitled to a set fee per batch of product filled and
freeze-dried, which commenced in May 2003.Selborne Biological Services (Australia) Pty LimitedIn October 2002, the Company entered into a supply agreement with Selborne
Biological Services (Australia) Pty Limited for supply of antisera for the
production of its polyclonal antibody product. Under this agreement, Selbourne
are entitled to a set fee for each Kg of antisera produced from the sheep
provided by the Company and a set fee for costs incurred during the initial
priming period of the sheep.Scientific CollaborationsA portion of the Companys research and development and product testing
activities are carried out through affiliations and consulting arrangements in
place from time to time with clinical research organizations and scientists at
academic institutions in the United Kingdom, Scandinavia and North America.
These include arrangements in respect of pre-clinical and clinical research,
consultancy, patents, royalties and facility leases. Where appropriate, the
Company has entered into formal agreements with such third parties, which
ensure that ownership of any intellectual property rights arising out of such
arrangements vests with the Company.Exchange ControlsThere are currently no English laws, decrees or regulations that restrict
the export or import of capital, including, but not limited to, foreign
exchange controls or that affect the remittance of dividends, interest or other
payments to non-U.K. resident holders of ordinary shares.TaxationThe following is a general description of the principal United States
federal income tax consequences and certain United Kingdom tax consequences of
the ownership and disposition of ordinary shares of the Company by a U.S.
holder. This description is for general information purposes only and is based
on the tax laws of the United States (including the Internal Revenue Code of
1986, as amended, Treasury regulations promulgated thereunder, and judicial and
administrative interpretations thereof) and the United Kingdom, and the income
tax convention between the United States and the United Kingdom which came into
force on March 31, 2003 (the Income Tax Convention), all as in effect on the
date hereof and all of which are subject to change, possibly with retroactive
effect. The Income Tax Convention replaced the old income tax treaty between
the United States and the United Kingdom which had been in effect since 1980
(the Old Income Tax Convention). The tax treatment of a holder of ordinary
shares of the Company may vary depending upon his or her particular situation.
The discussion below does not address the tax treatment of holders subject to
special treatment under the U.S. federal income tax law (including, but not
limited to, U.S. expatriates, insurance companies, tax-exempt organizations,
financial institutions, persons subject to the alternative minimum tax,
securities broker-dealers, persons that have a functional currency other than
the U.S. dollar, holders who hold ordinary shares as part of hedging or
conversion transactions and holders owning, directly or indirectly, 10% or more
of the voting shares of the Company). The following summary is directed to
U.S. holders who will hold the ordinary shares as a capital asset and elect to
credit, rather than deduct, foreign income taxes against U.S. tax liability.62Table of ContentsFor purposes of this discussion, a U.S. holder is any beneficial owner
of ordinary shares that is not resident (and, in the case of an individual, not
ordinarily resident) in the United Kingdom and is (i) an individual citizen or
resident of the United States, for the purpose of the Income Tax Convention,
(ii) a corporation or other entity taxable as a corporation for U.S. federal
income tax purposes, created or organized under the laws of the United States
or any state thereof, (iii) an estate the income of which is subject to U.S.
federal income tax without regard to its source, or (iv) a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust.The discussion below does not address the effect of any U.S. state or
local tax law on a holder of ordinary shares, nor any U.S. or U.K. gift or
estate tax consequences. This summary is not intended to be, nor should it be
construed to be, legal or tax advice. Investors are urged to consult their own
tax advisors regarding the U.S. federal, state and local and the U.K. and other
tax consequences of their purchase, ownership and disposition of ordinary
shares.United States Federal Income Tax Consequences to U.S. HoldersTaxation of DividendsThe Company does not expect to pay dividends for the foreseeable future.
In the event the Company does pay a dividend, a U.S. holder receiving a
distribution on ordinary shares generally will be required to include such
distribution in gross income as a taxable dividend to the extent such
distribution is paid from the current or accumulated earnings and profits of
the Company (as determined for U.S. federal income tax purposes). Such
dividend will be treated as foreign source dividend income to the U.S. holder
for U.S. federal income tax purposes. To the extent that the Company makes
distributions in excess of its current and accumulated earnings and profits,
these distributions will be treated first as a tax-free return of capital to
each U.S. holder. This treatment will reduce the adjusted basis which each
U.S. holder has in his or her ordinary shares, but not below zero.
Distributions in excess of a U.S. holders adjusted tax basis in his or her
ordinary shares will be taxable as a capital gain, provided such shares have
been held as capital assets. This gain will be taxable as a long-term capital
gain if the ordinary shares have been held for more than one year. Dividends
paid by the Company generally will not be eligible for the dividends received
deduction otherwise available to corporate holders. See also the discussion
below entitled Passive Foreign Investment Company Rules.The amount of any distribution paid in pounds sterling will equal the U.S.
dollar value of the pounds sterling received calculated using the exchange rate
in effect on the date the dividend is received by the U.S. holder, regardless
of whether the pounds sterling are converted into U.S. dollars on this date.
If the pounds sterling received as a distribution are not converted into U.S.
dollars on the date of receipt, the recipient U.S. holder will have a basis in
the pounds sterling equal to their U.S. dollar value on the date of receipt.
Generally, any gain or loss realized on a subsequent conversion or other
disposition of the pounds sterling will be taxable as ordinary income or loss.Under recently enacted U.S. tax legislation, dividends paid to a
non-corporate U.S. holder in taxable years beginning after December 31, 2002
and before January 1, 2009 that constitute qualified dividend income generally
will be taxable to the U.S. holder at a maximum tax rate of 15% provided that
the ordinary shares are held by such U.S. holder for more than 60 days during
the 120-day period beginning 60 days before ex-dividend date and the U.S.
holder meets other holding period requirements. For this purpose, qualified
dividend income generally includes dividends received from a U.S. corporation,
as well as from a qualified foreign corporation. A qualified foreign
corporation is generally defined as (i) a foreign corporation incorporated in
a possession of the United States, (ii) a foreign corporation that is eligible
for benefits of a comprehensive income tax treaty with the United States which
the U.S. Treasury determines is satisfactory and which includes an exchange of
information program, or (iii) a foreign corporation if the stock with respect
to which such dividend is paid is readily tradable on an established securities
market in the United States. U.S. holders should consult their own
63Table of Contentstax advisors on the eligibility of any dividends paid by us as qualified
dividend income and any reduced rates of taxation.The Income Tax Convention will apply to dividend payments made on or after
May 1, 2003. However, notwithstanding the entry into force of the Income Tax
Convention, at the election by the U.S. holder, the tax treatment of such U.S.
holder may continue to be governed by the Old Income Tax Convention for a
period of 12 months from the date on which the relevant provisions of the
Income Tax Convention came into effect. Therefore, a U.S. holder may make an
election that the Old Income Tax Convention apply to any dividend payments made
to such U.S. holder on or before April 30, 2004. In the case of U.S. holders
eligible for the benefits under the Old Income Tax Convention, subject to
certain limitations, the U.K. withholding tax as determined by the Old Income
Tax Convention (i.e. an amount equal to one-ninth of the cash dividend) will be
treated as a foreign income tax that is eligible for credit against the U.S.
holders U.S. federal income tax. To qualify for such credit, eligible U.S.
holders must make an election on Form 8833 (Treaty-Based Return Position
Disclosure), which must be filed with their tax return, in addition to any
other filings that may be required. Eligible U.S. holders making this election
will be treated as having received an additional dividend equal to the gross
amount of the tax credit (unreduced by amounts withheld), and as having paid
the U.K. withholding tax due, on the date of the distribution. The rules
relating to the determination of the foreign tax credit are complex and U.S.
holders should consult their tax advisors to determine whether and to what
extent a credit would be available. Under the Income Tax Convention, there
will be no hypothetical U.K. tax withheld. Therefore, a U.S. holder will no
longer be entitled to claim a foreign tax credit in respect of any dividends
paid on or after May 1, 2003 (or May 1, 2004 in the case of a U.S. Holder who
makes an election to extend the applicability of the Old Income Tax
Convention). Each U.S. holder is urged to consult his or her tax advisor
concerning whether the U.S. holder is eligible for benefits under the Old
Income Tax Convention and the Income Tax Convention and whether, and to what
extent, a foreign tax credit will be available with respect to dividends
received from the Company.Taxation of Capital GainsIf you are a U.S. holder and you sell or dispose of the ordinary shares,
you will recognize a gain or loss for U.S. federal income tax purposes in an
amount equal to the difference between the U.S. dollar amount of cash and the
fair market value of any property you receive and your adjusted tax basis
(determined in U.S. dollars) in the ordinary shares sold or disposed of. This
gain or loss will be capital if you held the ordinary shares as a capital asset
and generally will be U.S. source income or loss. Such gain or loss will be
long-term capital gain or loss if you held the ordinary shares sold or disposed
of for more than one year. In the case of a U.S. holder who is an individual,
capital gains will generally be subject to U.S. federal income tax at
preferential rates if specified minimum holding periods are met. Under
recently enacted U.S. tax legislation, the maximum capital gains tax for
non-corporate U.S. holders is reduced from 20% to 15% for capital assets held
for over one year and sold or exchanged on or after May 6, 2003 but in taxable
years beginning before January 1, 2009. The deduction of capital losses is
subject to certain limitations. See also the discussion below entitled
Passive Foreign Investment Company Rules.Information Reporting and Backup WithholdingThe Company reports to its U.S. holders and the U.S. Internal Revenue
Service (the IRS) the amount of dividends and other proceeds paid during each
calendar year and the amount of any tax withheld. Under the backup withholding
rules, a U.S. holder may be subject to backup withholding at a current rate of
28% with respect to dividends paid unless the U.S. holder is a corporation or
is otherwise exempt and:
    
    when required, demonstrates this fact or provides a taxpayer identification number;
    
    certifies as to no loss of exemption from backup withholding; and64Table of Contents
    
    otherwise complies with the backup withholding rules.If you do not provide the Company with your correct taxpayer
identification number, you may also be subject to penalties imposed by the IRS.
Backup withholding is not an additional tax. Any amount you pay as backup
withholding will be creditable against your income tax liability.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
with respect to the ordinary shares 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 RulesU.S. holders owning shares of a passive foreign investment company
(PFIC) are subject to special U.S. federal income tax treatment with respect
to certain distributions received from the PFIC and with respect to gain from
the sale or other disposition of PFIC shares. For U.S. federal income tax
purposes, the Company will be a PFIC for any taxable year if either (i) 75% or
more of the Companys gross income in a taxable year were passive; or (ii) at
least 50% of the average percentage of the Companys assets, by value, produced
or were held for the production of passive income. For this purpose, if the
Company were to own, directly or indirectly, at least 25% by value of the stock
of another company, it would be treated for purposes of the above tests as if
it held its proportionate share of the assets, and received directly its
proportionate share of the income, of that company. Passive income generally
includes dividends, interest, royalties, rents (other than certain rents and
royalties derived in the active conduct of a trade or business), annuities, and
gains from assets which would produce income of this type.If the Company is treated as a PFIC, U.S. holders may be subject to
increased tax liability upon the disposition of the ordinary shares or upon the
receipt of certain distributions, unless such holder makes one of two
elections. Special rules would apply to direct and certain indirect U.S.
holders upon disposition of their ordinary shares, receipt of an excess
distribution, certain non-recognition transactions, or use of ordinary shares
as security for a loan. You could be subject to tax as if any gain or
distribution were ordinary income earned ratably over the period of time during
which you held the ordinary shares, including an interest charge on the
deferred tax, and other adverse tax consequences. If you were to make a timely
filed mark-to-market election with respect to the ordinary shares you owned or
were treated as having owned, at the close of your taxable year, you would
include as ordinary income in that taxable year any excess of the fair market
value of the ordinary shares as of the close of the year over your adjusted tax
basis in those shares. In turn, you would be allowed a deduction for the
taxable year in the amount of any excess of the adjusted basis of the ordinary
shares over their fair market value at the close of the taxable year, limited
to the amount of the net mark-to-market gains you previously included in your
income. If you were to make a timely qualified electing fund election, the
above-described rules generally would not apply. If a qualified electing fund
election were made, you would be currently taxable on your pro-rata share of
the Companys ordinary earnings and profits and net capital gains, regardless
of whether the income or gain was actually distributed to you.You should consult your own tax advisors prior to the purchase of ordinary
shares 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.65Table of ContentsUnited Kingdom Tax Consequences to U.S. HoldersTaxation of DividendsThe Company does not expect to pay dividends for the foreseeable future.
In the event the Company does pay a dividend, under current U.K. taxation
legislation, no tax will be withheld from dividend payments by the Company.
There is a U.K. tax credit in respect of any dividend paid by the Company at a
rate of 10% of the sum of the dividend and the tax credit on it (equivalent to
one-ninth of the cash dividend). Under the terms of the Income Tax Convention
which came into force on March 31, 2003, U.S. holders are no longer able to
recover any part of this tax credit. However, as previously discussed, the
Income Tax Convention allows U.S. holders to elect to have the provisions of
the Old Income Tax Convention apply in respect of dividends, if any, paid by
the Company on or before April 30, 2004. Under the provisions of the Old
Income Tax Convention a U.S. holder which is a U.S. corporation owning,
directly or indirectly, at least 10% of the voting stock of the Company will
generally be entitled to receive from the U.K. Inland Revenue a tax credit
refund in respect of dividends paid by the Company to such holders. The amount
of this refund will be equal to one-half of the tax credit to which an
individual resident in the United Kingdom would have been entitled had he or
she received the dividend, reduced by 5% of the sum of the amount of the
dividend and the refunded half of the tax credit due to such a corporation. The
reduction in the value of the tax credit paid to U.K. individuals to one-ninth
of the dividend paid from April 6, 1999 means that the amount of any refund
will be relatively small. Under the terms of the Old Income Tax Convention,
other U.S. holders are technically entitled to a refund calculated by reference
to the amount of the tax credit available to a U.K. individual. However, the
reduction in the value of the tax credit on dividends paid to U.K. individuals
to one-ninth of the dividend from April 6, 1999 means that in practice no
refund will be made to those holding less than 10% of the voting stock of the
Company. Each U.S. holder is urged to consult his or her tax advisor
concerning whether the U.S. holder is eligible for benefits under the Income
Tax Convention or the Old Income Tax Convention and whether, and to what
extent, a foreign tax credit will be available with respect to dividends
received from the Company.Taxation of Capital GainsA U.S. holder will not generally be liable for U.K. taxation on capital
gains realized on the disposal of such holders ordinary shares unless at the
time of the disposal such U.S. holder is a non-corporate which carries on a
trade, profession or vocation in the United Kingdom through a branch or agency
and which used, held or acquired the ordinary shares for the purposes of such
branch or agency or such U.S. holder is a corporate which carries on a trade in
the United Kingdom through a permanent establishment and which used the
ordinary shares in or for the purposes of the trade or which used, held or
acquired the ordinary shares for the purposes of such permanent establishment.Documents on DisplayIt is possible to read and copy documents referred to in this annual
report on Form 20-F that have been filed with the SEC at the SECs public
reference room located at 450 Fifth Street, NW, Washington, DC 20549. Please
call the SEC at 1(800) SEC-0330 for further information on the public reference
rooms and their copy charges. Certain documents are on display at the
Companys offices at The Heath Business & Technical Park, Runcorn, Cheshire WA7
4QF.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKThis information is provided within notes 15, 25 and 27 to the financial
statements attached as an exhibit to this filing.66Table of Contents
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIESNot applicable.67Table of Contents
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIESNone.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDSNone.
ITEM 15. CONTROLS AND PROCEDURESEvaluation of Disclosure Controls and ProceduresAs of the end of the period covered by this report, our management carried
out an evaluation with the participation of our chief executive officer and
chief financial officer, of the effectiveness of our disclosure controls and
procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)). Based on
their evaluation of such controls and procedures, our management concluded that
our disclosure controls and procedures are effective to ensure that information
required to be disclosed by our company in the reports we file under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission and that such information is accumulated and
communicated to management, including our chief executive officer and chief
financial officer, as appropriate to allow timely decisions regarding required
disclosure.Changes in Internal Control Over Financial ReportingThere have been no significant changes in our internal control over
financial reporting during the period covered by this report that have
materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERTNot applicable.
ITEM 16B. CODE OF ETHICSNot applicable.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICESNot applicable.68Table of Contents
PART III
ITEM 17. FINANCIAL STATEMENTSReference is made to Item 19 for a list of all financial statements filed as
part of this Annual Report.
ITEM 18. FINANCIAL STATEMENTSThe Company has elected to provide financial statements pursuant to Item 17.
ITEM 19. EXHIBITS(A)
    
    Financial Statements and Schedules1.
    
    Financial Statements

|                                                                                          |  |     
|----------------------------------------------------------------------------------------- |  | ----
|                                                                                          |  | Page
|                                                                                          |  |     
|Auditors Report                                                                          |  | F-1 
|Statement of Directors Responsibilities                                                  |  | F-3 
|Consolidated Profit and Loss Account for the years ended
March 31, 2001, 2002 and 2003    |  | F-4 
|Consolidated Statement of Total Recognised Gains and Losses
March 31, 2001, 2002 and 2003 |  | F-5 
|Consolidated Balance Sheet at March 31, 2002 and March 31, 2003                           |  | F-6 
|Company Balance Sheet at March 31, 2002 and March 31, 2003                                |  | F-7 
|Consolidated Cash Flow Statement for the years ended
March 31, 2001, 2002 and 2003        |  | F-8 
|Notes to Consolidated Financial Statements                                                |  | F-9 



| | 2. |  | Financial Schedules
| | -- |  | -------------------

All financial statement schedules have been omitted because they are not
required or the required information is provided in the Consolidated Financial
Statements and Notes thereto.



| | (B) |  | Exhibits
| | --- |  | --------

|        |  |                                                                                
|------- |  | -------------------------------------------------------------------------------
|Exhibit |  |                                                                                
|Number  |  | Exhibit Title                                                                  
|        |  |                                                                                
|1.1     |  | Articles of Association of Protherics PLC, as amended on September 27, 2001 (2)
|        |  |                                                                                
|1.2     |  | Memorandum of Association of Protherics PLC (2)                                
|        |  |                                                                                
|2.1     |  | Form of Convertible Debenture, dated May 30, 2000 (2)                          

69



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\

|        |  |                                                                                                                                                                                      
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                      
|Number  |  | Exhibit Title                                                                                                                                                                        
|        |  |                                                                                                                                                                                      
|4.1     |  | Licensing Agreement, dated April 16, 1996, between Proteus and Janssen
Pharmaceutica NV (3)                                                                                          
|        |  |                                                                                                                                                                                      
|4.2     |  | Patent and Know-how Licence Agreement, dated April 2, 2001, between Protherics
Molecular Design Limited and Enfer Technology Limited (1)                                             
|        |  |                                                                                                                                                                                      
|4.3     |  | Letter Agreement, dated August 13, 1996, between Proteus, University College Dublin
and Pharmapro Limited (2)                                                                        
|        |  |                                                                                                                                                                                      
|4.4     |  | Distribution Agreement, dated October 11, 1997, between Therapeutic Antibodies Inc.
and Altana, Inc. (5)                                                                             
|        |  |                                                                                                                                                                                      
|4.5     |  | First Amendment to the Distribution Agreement, dated October 25, 1999, between
Altana, Inc. and Protherics (2)                                                                       
|        |  |                                                                                                                                                                                      
|4.6     |  | Amendment No. 1 to Distribution Agreement, dated September 12, 2000, between
Altana, Inc. and Protherics (2) (+)                                                                     
|        |  |                                                                                                                                                                                      
|4.7     |  | Amendment No. 3 to Distribution Agreement, dated February 2002, between Altana
Inc. and Protherics *                                                                                 
|        |  |                                                                                                                                                                                      
|4.8     |  | First Amended and Restated Product Agreement, dated March 31, 2000, between Swedish
Orphan AB and Protherics Inc. (2)                                                                
|        |  |                                                                                                                                                                                      
|4.9     |  | 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 (4)
|        |  |                                                                                                                                                                                      
|4.10    |  | Contract Manufacturing Agreement, dated as of November 17, 1998, between
Therapeutic Antibodies Inc. and F.H. Faulding & Co. Limited (2)                                             
|        |  |                                                                                                                                                                                      
|4.11    |  | Supply Agreement, dated October 21, 2002, between Selborne Biological Services
(Australia) Pty Limited and Protherics Australasia Pty Limited *                                      
|        |  |                                                                                                                                                                                      
|4.12    |  | Manufacturing Agreement, dated March 19, 2003, between Protherics UK Limited and
Chesapeake Biological Laboratories Inc*                                                             
|        |  |                                                                                                                                                                                      
|4.13    |  | Business Purchase Agreement, dated July 12, 2001, among Protherics Molecular Design
Limited, Tularik Limited, Protherics PLC and Tularik Inc. (2)                                    
|        |  |                                                                                                                                                                                      
|4.14    |  | License Agreement, dated 31 December 2001, between Protherics UK PLC and Promega
Corporation (1) (+)                                                                                 
|        |  |                                                                                                                                                                                      
|4.15    |  | Memorandum of Lease, dated August 1, 1995, between Minister for Primary Industries,
as Lessor, and TAb Australasia Pty. Limited, as Lessee (7)                                       
|        |  |                                                                                                                                                                                      
|4.16    |  | Proteus Approved Executive Share Option Scheme (3)                                                                                                                                   
|        |  |                                                                                                                                                                                      
|4.17    |  | Proteus Unapproved Share Option Scheme (3)                                                                                                                                           
|        |  |                                                                                                                                                                                      
|4.18    |  | Proteus Savings-Related Share Option Scheme (3)                                                                                                                                      
|        |  |                                                                                                                                                                                      
|4.19    |  | Option Deed, dated December 22, 1999, between Protherics PLC and Andrew J. Heath (2)                                                                                                 

70



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##### Table of Contents



|        |  |                                                                                                                                                       
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                       
|Number  |  | Exhibit Title                                                                                                                                         
|        |  |                                                                                                                                                       
|4.20    |  | Employment Agreement, dated November 13, 2001, between Protherics Inc. and Andrew
J. Heath (1)                                                        
|        |  |                                                                                                                                                       
|4.21    |  | Employment Agreement, dated November 13, 2001, between Protherics PLC and Andrew J.
Heath (1)                                                         
|        |  |                                                                                                                                                       
|4.22    |  | Employment Agreement, dated July 13, 1995, between Protherics PLC and Barry M.
Riley (1)                                                              
|        |  |                                                                                                                                                       
|4.23    |  | Employment Agreement, dated July 13, 1995, between Protherics PLC and James C.
Christie (1)                                                           
|        |  |                                                                                                                                                       
|4.24    |  | Letter Agreement, dated September 1, 1998, between Therapeutic Antibodies (UK)
Limited and Stuart M. Wallis (6)                                       
|        |  |                                                                                                                                                       
|4.25    |  | Consultancy Agreement, dated August 21, 1998, between Therapeutic Antibodies (UK)
Limited and Stuart M. Wallis (6)                                    
|        |  |                                                                                                                                                       
|4.26    |  | Consultancy Agreement, dated September 1, 1998, between Therapeutic Antibodies (UK)
Limited and Stuart M. Wallis (6)                                  
|        |  |                                                                                                                                                       
|4.27    |  | Letter of Appointment dated April 28, 2000, between Enzacta Group PLC and Anthony
Atkinson *                                                          
|        |  |                                                                                                                                                       
|4.28    |  | Consultancy Services Agreement dated April 1, 2000, between Enzacta Group PLC and
Chimaeron Limited for the consultancy services of Anthony Atkinson *
|        |  |                                                                                                                                                       
|4.29    |  | Amendment to Agreement, dated April 4, 2000, between Enzacta Group PLC and
Chimaeron Limited for the consultancy services of Anthony Atkinson *       
|        |  |                                                                                                                                                       
|4.30    |  | Amendment to Agreement, dated February 22, 2001, between Enact Pharma PLC and
Chimaeron Limited for the consultancy services of Anthony Atkinson *    
|        |  |                                                                                                                                                       
|4.31    |  | Amendment to Agreement, dated December 1, 2001, between Enact Pharma PLC and
Chimaeron Limited for the consultancy services of Anthony Atkinson *     
|        |  |                                                                                                                                                       
|4.32    |  | Letter of Appointment dated February 21, 2001, between Enact Pharma PLC and Michael
J Peagram *                                                       
|        |  |                                                                                                                                                       
|4.33    |  | The Protherics PLC Company Share Option Plan for Therapeutic Antibodies Inc.
Employees adopted on January 27, 2000 (2)                                
|        |  |                                                                                                                                                       
|8.1     |  | List of Subsidiaries*                                                                                                                                 
|        |  |                                                                                                                                                       
|31.1    |  | Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002*                                                                              
|        |  |                                                                                                                                                       
|31.2    |  | Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002*                                                                              
|        |  |                                                                                                                                                       
|32.1    |  | Certifications pursuant to 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.                    
|   
|(1) |  | Incorporated by reference to exhibits filed with the Companys Annual
Report on Form 20-F, filed on September 27, 2002.                                            
|   
|(2) |  | Incorporated by reference to exhibits filed with the Companys Annual
Report on Form 20-F, filed on September 27, 2001.                                            
|   
|(3) |  | 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.                   
|   
|(4) |  | 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.

71



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##### Table of Contents





|(5) |  | 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.                          
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(6) |  | 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.                           
|   
|(7) |  | 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.

72



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##### Table of Contents






SIGNATURES

The Registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf.

|                   |  |                |  |                        
|------------------ |  | -------------- |  | -----------------------
|September 30, 2003 |  | PROTHERICS PLC
|                   |  |                |  |                        
|                   |  | By:            |  | /s/ Barrington M.
Riley
|                   |  |                |  |                        
|                   |  |                |  | Barrington M. Riley    
|                   |  |                |  | Finance Director       





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##### Table of Contents



Auditors report to the members of Protherics PLC

We have audited the financial statements of Protherics PLC (the Company) and
its subsidiaries (collectively the Group) as set out on pages F-4 to F-39
which comprise the consolidated profit and loss account, the consolidated
statement of total recognized gains and losses, the consolidated balance sheet,
the company balance sheet, the consolidated cash flow statement and the related
notes (referred to herein as the financial statements).

Respective responsibilities of directors and auditors

The directors responsibilities for preparing the financial statements in
accordance with applicable United Kingdom law and accounting standards are set
out in the Statement of Directors Responsibilities on page F-3. Our
responsibility is to audit the financial statements in accordance with relevant
legal and regulatory requirements, United Kingdom Auditing Standards issued by
the Auditing Practices Board and the Listing Rules of the Financial Services
Authority.

We report to you our opinion as to whether the financial statements give a true
and fair view and are properly prepared in accordance with the Companies Act
1985. We also report to you if, in our opinion, the Company has not kept
proper accounting records or if we have not received all the information and
explanations we require for our audit.

Basis of audit opinion

We conducted our audit in accordance with United Kingdom Auditing Standards
issued by the Auditing Practices Board and with auditing standards generally
accepted in the United States. An audit includes examination, on a test basis,
of evidence relevant to the amounts and disclosures in the financial
statements. It also includes an assessment of the significant estimates and
judgements made by the directors in the preparation of the financial
statements, and of whether the accounting policies are appropriate to the
Groups circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.

United Kingdom Opinion

In our opinion the financial statements give a true and fair view of the state
of affairs of the Company and the Group at 31 March 2003 and 31 March 2002 and
of the result and cash flows of the Group for the years ended 31 March 2003, 31
March 2002 and 31 March 2001 and have been properly prepared in accordance with
the Companies Act 1985.





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##### Table of Contents



United States Opinion

Accounting principles generally accepted in the United Kingdom vary in certain
significant respects from accounting principles generally accepted in the
United States. The application of the latter would have affected the
determination of consolidated net profit or loss expressed in pounds Sterling
for each of the three years in the period ended 31 March 2003 and the
determination of consolidated equity shareholders funds also expressed in
pounds Sterling at 31 March 2003 and 2002 as shown in the summary of
differences between UK and US generally accepted accounting principles set out
in Note 27 of the Notes to the Financial Statements on pages F-34 to F-39.

PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
Manchester, U.K.
18 June 2003

F-2



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##### Table of Contents



Statement of Directors Responsibilities

United Kingdom Company law requires the directors to prepare financial
statements for each financial year which give a true and fair view of the state
of affairs of the Company and of the Group and of the profit or loss of the
Group for that period. In preparing those financial statements, the directors
are required to:



| |  | select suitable accounting policies and then apply them consistently;                                                                                    
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | make judgments and estimates that are reasonable and prudent;                                                                                            
| 
| |  | state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements;
| 
| |  | prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Company will continue in
business.            

The directors are responsible for maintaining proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Company and of the Group and to enable them to ensure that the financial
statements comply with the Companies Act 1985. They are also responsible for
safeguarding the assets of the Company and of the Group and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.

The maintenance and integrity of the Protherics website are the responsibility
of the directors; the work carried out by the auditors does not involve
consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website. Legislation in
the United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.

F-3



---



##### Table of Contents



Consolidated Profit and Loss Account
for the year ended 31 March 2003

|                                                            |                                 |  |       |   |       |  |            |        |                          |  |                          |        |          |  |            |      |              |  |          |        |   |  |        |        |   |  |        |        |   |  |        |        |  
|----------------------------------------------------------- | ------------------------------- |  | ----- | - | ----- |  | ---------- | ------ | ------------------------ |  | ------------------------ | ------ | -------- |  | ---------- | ---- | ------------ |  | -------- | ------ | - |  | ------ | ------ | - |  | ------ | ------ | - |  | ------ | ------ | -
|                                                            |                                 |  |       |   |       |  | Year ended |        | Year ended 31 March 2002 |  | Year Ended 31 March 2001
|                                                            |                                 |  |       |   |       |  |            |        |                          |  |                         
|                                                            |                                 |  |       |   |       |  | 31 March   |        | Continuing               |  | Discontinued             |        | 31 March |  | Continuing |      | Discontinued |  | 31 March
|                                                            |                                 |  |       |   |       |  | 2003       |        | operations               |  | operations               |        | 2002     |  | operations |      | operations   |  | 2001    
|                                                            |                                 |  | Notes |   | £000 |  | £000      |        | £000                    |  | £000                    |        | £000    |  | £000      |      | £000       
|Turnover                                                    |                                 |  | 2     |   |       |  | 11,270     |        |                          |  | 6,961                    |        |          |  | 963        |      |              |  | 7,924    |        |   |  | 3,538  |        |   |  | 648    |        |   |  | 4,186  |       
|Cost of Sales                                               |                                 |  |       |   |       |  | (5,920     | )      |                          |  | (4,649                   | )      |          |  |           |      |              |  | (4,649   | )      |   |  | (4,030 | )      |   |  |       |        |   |  | (4,030 | )     
|                                                            |                                 |  |       |   |       |  |            |        |                          |  |                          |        |          |  |            |      |              |  |          |        |   |  |        |        |   |  |        |        |   |  |        |       
|Gross profit / (loss)                                       |                                 |  |       |   |       |  | 5,350      |        |                          |  | 2,312                    |        |          |  | 963        |      |              |  | 3,275    |        |   |  | (492   | )      |   |  | 648    |        |   |  | 156    |       
|Administration expenses                                     |                                 |  |       |   |       |  |            |        |                          |  |                          |        |          |  |            |      |              |  |          |        |   |  |        |        |   |  |        |        |   |  |        |       
|                                                            | Research & development
expenses |  |       | 3 |       |  |            | (1,591 | )                        |  |                          | (295   | )        |  |            | (588 | )            |  |          | (883   | ) |  |        | 343    |   |  |        | (2,289 | ) |  |        | (1,946 | )
|                                                            | Other administration expenses   |  |       |   |       |  |            | (4,363 | )                        |  |                          | (4,182 | )        |  |            | (312 | )            |  |          | (4,494 | ) |  |        | (3,948 | ) |  |        | (805   | ) |  |        | (4,753 | )
|                                                            |                                 |  |       |   |       |  |            |        |                          |  |                          |        |          |  |            |      |              |  |          |        |   |  |        |        |   |  |        |        |   |  |        |       
|                                                            |                                 |  |       |   |       |  | (5,954     | )      |                          |  | (4,477                   | )      |          |  | (900       | )    |              |  | (5,377   | )      |   |  | (3,605 | )      |   |  | (3,094 | )      |   |  | (6,699 | )     
|                                                            |                                 |  |       |   |       |  |            |        |                          |  |                          |        |          |  |            |      |              |  |          |        |   |  |        |        |   |  |        |        |   |  |        |       
|Operating (loss) / profit                                   |                                 |  | 2,3   |   |       |  | (604       | )      |                          |  | (2,165                   | )      |          |  | 63         |      |              |  | (2,102   | )      |   |  | (4,097 | )      |   |  | (2,446 | )      |   |  | (6,543 | )     
|Profit on sale of discontinued
operations                   |                                 |  | 24    |   |       |  |           |        |                          |  |                         |        |          |  | 5,032      |      |              |  | 5,032    |        |   |  |       |        |   |  |       |        |   |  |       |       
|                                                            |                                 |  |       |   |       |  |            |        |                          |  |                          |        |          |  |            |      |              |  |          |        |   |  |        |        |   |  |        |        |   |  |        |       
|(Loss) / profit on ordinary
activities before interest      |                                 |  |       |   |       |  | (604       | )      |                          |  | (2,165                   | )      |          |  | 5,095      |      |              |  | 2,930    |        |   |  | (4,097 | )      |   |  | (2,446 | )      |   |  | (6,543 | )     
|Interest receivable                                         |                                 |  |       |   |       |  | 100        |        |                          |  |                          |        |          |  |            |      |              |  | 139      |        |   |  |        |        |   |  |        |        |   |  | 196    |       
|Interest payable                                            |                                 |  | 6     |   |       |  | (95        | )      |                          |  |                          |        |          |  |            |      |              |  | (202     | )      |   |  |        |        |   |  |        |        |   |  | (359   | )     
|                                                            |                                 |  |       |   |       |  |            |        |                          |  |                          |        |          |  |            |      |              |  |          |        |   |  |        |        |   |  |        |        |   |  |        |       
|Loss / (Profit) on ordinary
activities before taxation      |                                 |  |       |   |       |  | (599       | )      |                          |  |                          |        |          |  |            |      |              |  | 2,867    |        |   |  |        |        |   |  |        |        |   |  | (6,706 | )     
|Taxation for the year                                       |                                 |  | 7     |   |       |  | 361        |        |                          |  |                          |        |          |  |            |      |              |  |         |        |   |  |        |        |   |  |        |        |   |  | 500    |       
|                                                            |                                 |  |       |   |       |  |            |        |                          |  |                          |        |          |  |            |      |              |  |          |        |   |  |        |        |   |  |        |        |   |  |        |       
|Loss / (Profit) on ordinary
activities after taxation       |                                 |  | 18    |   |       |  | (238       | )      |                          |  |                          |        |          |  |            |      |              |  | 2,867    |        |   |  |        |        |   |  |        |        |   |  | (6,206 | )     
|                                                            |                                 |  |       |   |       |  |            |        |                          |  |                          |        |          |  |            |      |              |  |          |        |   |  |        |        |   |  |        |        |   |  |        |       
|Basic and fully diluted (loss) /
earnings per share (pence) |                                 |  | 8     |   |       |  | (0.13      | )      |                          |  |                          |        |          |  |            |      |              |  | 1.61     |        |   |  |        |        |   |  |        |        |   |  | (3.80  | )     

The results for the year ended 31 March 2003 relate to continuing operations.

The notes on pages F-9 to F-39 form part of these financial statements.

F-4



---



##### Table of Contents



Consolidated Statement of Total Recognized Gains and Losses
for the year ended 31 March 2003

|                                                                        |  |       |      |       |  |       |       |  |  |  |        |  
|----------------------------------------------------------------------- |  | ----- | ---- | ----- |  | ----- | ----- |  |  |  | ------ | -
|                                                                        |  | 2003  |      | 2002  |  | 2001 
|                                                                        |  | £000 |      | £000 |  | £000
|                                                                        |  |       |      |       |  |      
|(Loss) / Profit for the financial year                                  |  |       | (238 | )     |  |       | 2,867 |  |  |  | (6,206 | )
|Currency translation differences on
foreign currency equity investments |  |       | 435  |       |  |       | 18    |  |  |  | (147   | )
|                                                                        |  |       |      |       |  |       |       |  |  |  |        |  
|Total recognized gains/(losses) for the
year                            |  |       | 197  |       |  |       | 2,885 |  |  |  | (6,353 | )
|                                                                        |  |       |      |       |  |       |       |  |  |  |        |  

The notes on pages F-9 to F-39 form part of these financial statements.

F-5



---



##### Table of Contents



Consolidated Balance Sheet
at 31 March 2003

|                                             |  |       |    |       |  |       |          |       |  |  |          |  
|-------------------------------------------- |  | ----- | -- | ----- |  | ----- | -------- | ----- |  |  | -------- | -
|                                             |  |       |    |       |  | 2003  |          | £2002
|                                             |  | Notes |    | £000 |  | £000
|                                             |  |       |    |       |  |      
|Fixed assets                                 |  |       |    |       |  |       |          |       |  |  |          |  
|Intangible fixed assets                      |  |       | 9  |       |  |       | 873      |       |  |  | 1,004    |  
|Tangible fixed assets                        |  |       | 10 |       |  |       | 5,351    |       |  |  | 4,264    |  
|                                             |  |       |    |       |  |       |          |       |  |  |          |  
|                                             |  |       |    |       |  |       | 6,224    |       |  |  | 5,268    |  
|                                             |  |       |    |       |  |       |          |       |  |  |          |  
|Current assets                               |  |       |    |       |  |       |          |       |  |  |          |  
|Stocks                                       |  |       | 12 |       |  |       | 7,085    |       |  |  | 3,979    |  
|Debtors                                      |  |       | 13 |       |  |       | 3,460    |       |  |  | 1,972    |  
|Cash at bank and in hand                     |  |       |    |       |  |       | 2,756    |       |  |  | 6,211    |  
|                                             |  |       |    |       |  |       |          |       |  |  |          |  
|                                             |  |       |    |       |  |       | 13,301   |       |  |  | 12,162   |  
|Creditors:                                   |  |       |    |       |  |       |          |       |  |  |          |  
|Amounts falling due within one year          |  |       | 14 |       |  |       | (8,470   | )     |  |  | (6,183   | )
|                                             |  |       |    |       |  |       |          |       |  |  |          |  
|Net current assets                           |  |       |    |       |  |       | 4,831    |       |  |  | 5,979    |  
|                                             |  |       |    |       |  |       |          |       |  |  |          |  
|Total assets less current liabilities        |  |       |    |       |  |       | 11,055   |       |  |  | 11,247   |  
|Creditors:                                   |  |       |    |       |  |       |          |       |  |  |          |  
|Amounts falling due after more than one year |  |       | 15 |       |  |       | (717     | )     |  |  | (1,106   | )
|                                             |  |       |    |       |  |       |          |       |  |  |          |  
|Net assets                                   |  |       |    |       |  |       | 10,338   |       |  |  | 10,141   |  
|                                             |  |       |    |       |  |       |          |       |  |  |          |  
|Capital and reserves                         |  |       |    |       |  |       |          |       |  |  |          |  
|Called up equity share capital               |  |       | 17 |       |  |       | 3,765    |       |  |  | 3,765    |  
|Share premium account                        |  |       | 18 |       |  |       | 63,350   |       |  |  | 63,350   |  
|Other reserves                               |  |       | 18 |       |  |       | 51,163   |       |  |  | 51,163   |  
|Profit and loss account                      |  |       | 18 |       |  |       | (107,940 | )     |  |  | (108,137 | )
|                                             |  |       |    |       |  |       |          |       |  |  |          |  
|Equity shareholders funds                   |  |       | 19 |       |  |       | 10,338   |       |  |  | 10,141   |  
|                                             |  |       |    |       |  |       |          |       |  |  |          |  

The notes on pages F-9 to F-39 form part of these financial statements.

Approved by the Board on 18 June 2003
and signed on its behalf by

Barrington M. RileyFinance Director

F-6



---



##### Table of Contents



Company Balance Sheet
at 31 March 2003

|                                       |  |       |    |       |  |       |         |       |  |  |        |  
|-------------------------------------- |  | ----- | -- | ----- |  | ----- | ------- | ----- |  |  | ------ | -
|                                       |  |       |    |       |  | 2003  |         | £2002
|                                       |  | Notes |    | £000 |  | £000
|                                       |  |       |    |       |  |      
|Fixed Assets                           |  |       |    |       |  |       |         |       |  |  |        |  
|Tangible fixed assets                  |  |       | 10 |       |  |       | 69      |       |  |  | 74     |  
|Investments in subsidiary undertakings |  |       | 11 |       |  |       | 66,920  |       |  |  | 62,361 |  
|                                       |  |       |    |       |  |       |         |       |  |  |        |  
|                                       |  |       |    |       |  |       | 66,989  |       |  |  | 62,435 |  
|                                       |  |       |    |       |  |       |         |       |  |  |        |  
|Current assets                         |  |       |    |       |  |       |         |       |  |  |        |  
|Debtors                                |  |       | 13 |       |  |       | 6,530   |       |  |  | 312    |  
|Cash at bank and in hand               |  |       |    |       |  |       |        |       |  |  | 5      |  
|                                       |  |       |    |       |  |       |         |       |  |  |        |  
|                                       |  |       |    |       |  |       | 6,530   |       |  |  | 317    |  
|Creditors:                             |  |       |    |       |  |       |         |       |  |  |        |  
|Amounts falling due within one year    |  |       | 14 |       |  |       | (12,800 | )     |  |  | (549   | )
|                                       |  |       |    |       |  |       |         |       |  |  |        |  
|Net current (liabilities)              |  |       |    |       |  |       | (6,270  | )     |  |  | (232   | )
|                                       |  |       |    |       |  |       |         |       |  |  |        |  
|Net assets                             |  |       |    |       |  |       | 60,719  |       |  |  | 62,203 |  
|                                       |  |       |    |       |  |       |         |       |  |  |        |  
|Capital and reserves                   |  |       |    |       |  |       |         |       |  |  |        |  
|Called up equity share capital         |  |       | 17 |       |  |       | 3,765   |       |  |  | 3,765  |  
|Share premium account                  |  |       | 18 |       |  |       | 63,350  |       |  |  | 63,350 |  
|Profit and loss account                |  |       | 18 |       |  |       | (6,396  | )     |  |  | (4,912 | )
|                                       |  |       |    |       |  |       |         |       |  |  |        |  
|Equity shareholders funds             |  |       |    |       |  |       | 60,719  |       |  |  | 62,203 |  
|                                       |  |       |    |       |  |       |         |       |  |  |        |  

The notes on pages F-9 to F-39 form part of these financial statements.

Approved by the Board on 18 June 2003
and signed on its behalf by

Barrington M. RileyFinance Director

F-7



---



##### Table of Contents



Consolidated Cash Flow Statement
For the year ended 31 March 2003

|                                                                               |  |       |    |       |  |          |        |          |  |          |        |   |  |  |        |  
|------------------------------------------------------------------------------ |  | ----- | -- | ----- |  | -------- | ------ | -------- |  | -------- | ------ | - |  |  | ------ | -
|                                                                               |  |       |    |       |  | 31 March |        | 31 March |  | 31 March
|                                                                               |  |       |    |       |  | 2003     |        | 2002     |  | 2001    
|                                                                               |  | Notes |    | £000 |  | £000    |        | £000   
|                                                                               |  |       |    |       |  |          |        |         
|Net cash outflow from operating activities                                     |  |       | 22 | (i)   |  |          | (1,723 | )        |  |          | (1,635 | ) |  |  | (5,988 | )
|Returns on investments and servicing of finance                                |  |       |    |       |  |          |        |          |  |          |        |   |  |  |        |  
|Interest received                                                              |  |       |    |       |  |          | 100    |          |  |          | 139    |   |  |  | 209    |  
|Finance lease interest paid                                                    |  |       |    |       |  |          | (12    | )        |  |          | (15    | ) |  |  | (28    | )
|Other interest paid                                                            |  |       |    |       |  |          | (83    | )        |  |          | (99    | ) |  |  | (205   | )
|                                                                               |  |       |    |       |  |          |        |          |  |          |        |   |  |  |        |  
|Net cash inflow/(outflow) from returns on
investments and servicing of finance |  |       |    |       |  |          | 5      |          |  |          | 25     |   |  |  | (24    | )
|                                                                               |  |       |    |       |  |          |        |          |  |          |        |   |  |  |        |  
|Taxation                                                                       |  |       |    |       |  |          |        |          |  |          |        |   |  |  |        |  
|UK Corporation tax received                                                    |  |       |    |       |  |          | 582    |          |  |          |       |   |  |  |       |  
|                                                                               |  |       |    |       |  |          |        |          |  |          |        |   |  |  |        |  
|Net cash inflow from taxation                                                  |  |       |    |       |  |          | 582    |          |  |          |       |   |  |  |       |  
|Capital expenditure and financial investment                                   |  |       |    |       |  |          |        |          |  |          |        |   |  |  |        |  
|Payments to acquire tangible fixed assets                                      |  |       |    |       |  |          | (1,862 | )        |  |          | (657   | ) |  |  | (699   | )
|Payments to acquire intangible fixed assets                                    |  |       |    |       |  |          |       |          |  |          | (172   | ) |  |  |       |  
|Proceeds from sale of tangible fixed assets                                    |  |       |    |       |  |          | 22     |          |  |          | 37     |   |  |  | 12     |  
|                                                                               |  |       |    |       |  |          |        |          |  |          |        |   |  |  |        |  
|Net cash outflow from capital expenditure and
financial investment             |  |       |    |       |  |          | (1,840 | )        |  |          | (792   | ) |  |  | (687   | )
|                                                                               |  |       |    |       |  |          |        |          |  |          |        |   |  |  |        |  
|Acquisitions and disposals                                                     |  |       |    |       |  |          |        |          |  |          |        |   |  |  |        |  
|Sale of business                                                               |  |       | 24 |       |  |          |       |          |  |          | 5,823  |   |  |  |       |  
|                                                                               |  |       |    |       |  |          |        |          |  |          |        |   |  |  |        |  
|Net cash inflow from acquisitions and disposals                                |  |       |    |       |  |          |       |          |  |          | 5,823  |   |  |  |       |  
|                                                                               |  |       |    |       |  |          |        |          |  |          |        |   |  |  |        |  
|Net cash (outflow)/inflow before management of
liquid resources and financing  |  |       |    |       |  |          | (2,976 | )        |  |          | 3,421  |   |  |  | (6,699 | )
|Management of liquid resources                                                 |  |       |    |       |  |          |        |          |  |          |        |   |  |  |        |  
|Cash withdrawn from money market deposits                                      |  |       | 22 | (iii) |  |          |       |          |  |          | 1,686  |   |  |  | 1,604  |  
|                                                                               |  |       |    |       |  |          |        |          |  |          |        |   |  |  |        |  
|Net cash inflow from management of liquid
resources                            |  |       |    |       |  |          |       |          |  |          | 1,686  |   |  |  | 1,604  |  
|                                                                               |  |       |    |       |  |          |        |          |  |          |        |   |  |  |        |  
|Financing                                                                      |  |       |    |       |  |          |        |          |  |          |        |   |  |  |        |  
|Issue of share capital, net                                                    |  |       |    |       |  |          |       |          |  |          | (2     | ) |  |  | 3,031  |  
|Loans taken out                                                                |  |       | 22 | (iii) |  |          |       |          |  |          |       |   |  |  | 5,207  |  
|Repayment of loans                                                             |  |       | 22 | (iii) |  |          | (484   | )        |  |          | (345   | ) |  |  | (2,060 | )
|Repayment of finance leases and hire purchase
agreements                       |  |       | 22 | (iii) |  |          | (51    | )        |  |          | (75    | ) |  |  | (274   | )
|                                                                               |  |       |    |       |  |          |        |          |  |          |        |   |  |  |        |  
|Net cash (outflow)/inflow from financing                                       |  |       |    |       |  |          | (535   | )        |  |          | (422   | ) |  |  | 5,904  |  
|                                                                               |  |       |    |       |  |          |        |          |  |          |        |   |  |  |        |  
|(Decrease)/increase in cash during the year                                    |  |       | 22 | (iii) |  |          | (3,511 | )        |  |          | 4,685  |   |  |  | 809    |  
|                                                                               |  |       |    |       |  |          |        |          |  |          |        |   |  |  |        |  

The notes on pages F-9 to F-39 form part of these financial statements.

F-8



---



##### Table of Contents



Notes to the Financial Statements
for the year ended 31 March 2003



|1. |  | Accounting Policies
|-- |  | -------------------

Basis of accounting:

The financial statements are prepared under the historical cost convention and
in accordance with applicable United Kingdom accounting standards on a basis
consistent with prior years.

Basis of consolidation:

The consolidated financial statements incorporate the financial statements of
the company and all its subsidiaries.

Acquisitions and disposals:

On the acquisition of a business, fair values are attributed to the Groups
share of net separable assets. Where the cost of acquisition exceeds the fair
values attributable to such net assets, the difference is treated as purchased
goodwill. Prior to the adoption of Financial Reporting Standard 10, Goodwill
and Intangible Assets, goodwill was written off to reserves and has not
subsequently been reinstated. Any future goodwill arising will be capitalized
on the balance sheet in the year of acquisition and amortized over its
estimated useful life.

The profit or loss on the disposal of a previously acquired business includes
the attributable amount of any purchased goodwill relating to that business not
previously charged through the profit and loss account.

The results and cash flows relating to a business are included in the
consolidated profit and loss account and consolidated cash flow statement from
the date of acquisition or up to the date of disposal.

Turnover:

Turnover represents amounts receivable in respect of the sale of goods and
services, license agreements and intellectual property to customers during the
year, net of trade discounts given and value added tax. Turnover is partly
recognized upon the shipment of products to the distributor with further
amounts being recognized in accordance with the contractual terms upon the
shipment to the end user. Certain medical products sold by the Group can be
returned should they remain unused by their expiry date and provision is made
for these items. Turnover is stated net of these provisions. All other income
is recognized on a receivable basis.

Research and development expenditure:

Research and development expenditure, including patents developed and
registered by the Group, is written off to the profit and loss account in the
year in which it is incurred.

Intangible fixed assets:

Patents acquired, including associated acquisition costs, are accounted for at
cost on acquisition and are amortized in equal annual amounts over their
estimated useful economic lives (8 years).

Tangible Fixed Assets:

Cost of tangible fixed assets includes the original purchase price of the asset
and the costs attributable to bringing the asset to its working condition for
its intended use.

Depreciation of tangible fixed assets is provided to write off the cost over
their estimated useful lives. The annual rates used are as follows:

F-9



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##### Table of Contents



| |  |                                       |  |                         
| |  | ------------------------------------- |  | ------------------------
| |  | Buildings and improvements            |  | 5% to 10% straight line 
| |  |                                       |  |                         
| |  | Plant                                 |  | 10% to 15% straight line
| |  |                                       |  |                         
| |  | Computer equipment and software       |  | 20% to 33% straight line
| |  |                                       |  |                         
| |  | Fixtures, fittings and motor vehicles |  | 20% to 25% straight line
| |  |                                       |  |                         
| |  | Land is not depreciated.              |  |                         

Gross interest costs relating to major tangible fixed assets under construction
are included in the cost of such assets and are depreciated as part of the
total cost. Rates of capitalization depend on whether a specific loan has been
taken out (when the actual interest rate and interest paid are used) or whether
the construction has been financed by general borrowings (when a weighted
average rate is calculated on all non-specific borrowings).

Computer software:

Costs incurred in developing the Groups PROMETHEUS software were capitalized
as a fixed asset up to the point of disposal during the year to 31 March 2002.

Investments:

Investments held as fixed assets are stated at cost less provision for any
impairment in value.

Stocks:

Stocks are valued at the lower of cost and net realisable value. Cost
comprises materials, direct labour and a share of production overheads
appropriate to the relevant stage of production. Net realisable value is
determined at the balance sheet date on commercially saleable products based on
estimated selling price less all further costs to completion and all relevant
marketing, selling and distribution costs. Research and development stocks are
fully provided for in the profit and loss account for the year, and are
reinstated as appropriate if the related products are brought into commercial
use.

Deferred taxation:

Deferred tax is provided in full on timing differences which result in an
obligation at the balance sheet date to pay more tax, or a right to pay less
tax, at a future date, at rates expected to apply when they crystallise based
on current tax rates and law. Timing differences arise from the inclusion of
income and expenditure in taxation computations in periods different from those
in which they are included in financial statements. Deferred tax is not
provided on unremitted earnings of subsidiaries and associates where there is
no commitment to remit these earnings. Deferred tax assets are recognized to
the extent that it is regarded as more likely than not they will be recovered.
Deferred tax assets and liabilities are not discounted.

Foreign currencies:

Assets and liabilities of subsidiaries in foreign currencies are translated
into sterling at rates of exchange ruling at the end of the financial year and
the results of foreign subsidiaries are translated at average rates of exchange
for the year. Differences on exchange arising from the retranslation of the
opening net investment in subsidiary companies, and from the translation of the
profits and losses of those companies at average rates, are taken to reserves
and are reported in the statement of total recognized gains and losses.

F-10



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##### Table of Contents



The principal exchange rates used for translation of foreign currencies were as
follows:

|                  |  |         |       |          |  |         |       |          |  |         |       |          |  |  |       |  |  |  |       |  |  |  |       | 
|----------------- |  | ------- | ----- | -------- |  | ------- | ----- | -------- |  | ------- | ----- | -------- |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|                  |  | 2003    |       | 2002     |  | 2001   
|                  |  | Average |       | Year End |  | Average |       | Year End |  | Average |       | Year End
|                  |  |         |       |          |  |         |       |          |  |         |       |         
|US Dollar         |  |         | 1.545 |          |  |         | 1.580 |          |  |         | 1.432 |          |  |  | 1.426 |  |  |  | 1.445 |  |  |  | 1.416 | 
|Australian Dollar |  |         | 2.748 |          |  |         | 2.619 |          |  |         | 2.785 |          |  |  | 2.672 |  |  |  | 2.705 |  |  |  | 2.917 | 

Assets, liabilities, revenues and costs expressed in foreign currencies are
translated into sterling at rates of exchange ruling on the date on which
transactions occurred, except for monetary assets and liabilities which are
translated at the rate ruling at the balance sheet date. Differences arising
on the translation of such items are dealt with in the profit and loss account
with the exception of differences arising upon translation of balances which
are considered to be as permanent as equity which are taken to reserves.

Leasing:

Assets acquired under finance leases are capitalized at their fair value on the
inception of the lease. Depreciation on leased assets is calculated to write
off this amount on a straight line basis over the shorter of the lease term and
the useful life of the assets. Rentals payable are apportioned between the
finance charge and a reduction of the outstanding obligation for future amounts
payable so that the charge for each accounting period is a constant percentage
of the remaining balance of the capital sum outstanding.

Rentals payable under operating leases are charged on a straight line basis
over the term of the lease.

Grants:

Grants are taken to deferred income and are released to the profit and loss
account in appropriate installments relating to the type and nature of
expenditure they are intended to fund.

Pensions:

The Group operates a defined contribution pension scheme for all members of
staff who wish to participate. The funds of the scheme are administered by
trustees and are independent of the Groups finances. The Groups
contributions are charged against profits on an accruals basis, in the period
to which they relate.

Financial instruments:

The Group uses derivative instruments in the form of forward foreign exchange
contracts to reduce exposure to foreign exchange risks. Gains or losses
arising on these contracts are deferred and recognized in the profit and loss
account only when the hedged transaction has itself been reflected in the
Groups accounts.

The Group excludes all short-term debtors and creditors from its derivatives
and financial instrument disclosures (other than those on currency risk
relating to monetary assets and liabilities).

Loans are recorded at their net proceeds upon issue. Costs of issue are
amortized over the period of the instrument.

F-11



---



##### Table of Contents





|2. |  | Segmental Information
|-- |  | ---------------------

The turnover, net assets/(liabilities) and profit/(loss) on ordinary activities
are attributable to the principal activity of the Group, that being the
development, manufacture and sale of pharmaceutical products and potential
drugs for use in the treatment of human diseases. The Group operates in the
United Kingdom, United States of America and Australia and its turnover,
operating loss and net assets by geographical origin are as follows:

|               |  |          |        |          |  |       |        |          |  |          |        |         |  |          |       |          |  |          |        |         |  |  |        |  |  |       |       |  |  |  |       |  |  |  |        | 
|-------------- |  | -------- | ------ | -------- |  | ----- | ------ | -------- |  | -------- | ------ | ------- |  | -------- | ----- | -------- |  | -------- | ------ | ------- |  |  | ------ |  |  | ----- | ----- |  |  |  | ----- |  |  |  | ------ | 
|               |  | 2003     |        | 2002     |  | 2001 
|               |  |          |        |          |  |      
|               |  |          |        |          |  | Inter |        |          |  |          |        |         |  |          |       | Inter    |  |          |        |         |  |  |        |  |  | Inter |       |  |  | 
|               |  | External |        | segment  |  |       |        |          |  | External |        | segment |  |          |       |          |  | External |        | segment |  |  |        | 
|               |  | turnover |        | turnover |  | Total |        | turnover |  | turnover |        | Total   |  | turnover |       | turnover |  | Total   
|               |  |          |        |          |  |       |        |          |  |          |        |         |  |          |       |          |  |         
|               |  | £000    |        | £000    |  | £000 |        | £000    |  | £000    |        | £000   |  | £000    |       | £000    |  | £000   
|United Kingdom |  |          | 1,301  |          |  |       | 9,165  |          |  |          | 10,466 |         |  |          | 2,501 |          |  |          | 8,732  |         |  |  | 11,233 |  |  |       | 1,104 |  |  |  | 6,469 |  |  |  | 7,573  | 
|United States  |  |          | 9,926  |          |  |       |       |          |  |          | 9,926  |         |  |          | 5,386 |          |  |          |       |         |  |  | 5,386  |  |  |       | 3,062 |  |  |  |      |  |  |  | 3,062  | 
|Australia      |  |          | 43     |          |  |       | 2,328  |          |  |          | 2,371  |         |  |          | 37    |          |  |          | 1,834  |         |  |  | 1,871  |  |  |       | 20    |  |  |  | 1,281 |  |  |  | 1,301  | 
|               |  |          |        |          |  |       |        |          |  |          |        |         |  |          |       |          |  |          |        |         |  |  |        |  |  |       |       |  |  |  |       |  |  |  |        | 
|               |  |          | 11,270 |          |  |       | 11,493 |          |  |          | 22,763 |         |  |          | 7,924 |          |  |          | 10,566 |         |  |  | 18,490 |  |  |       | 4,186 |  |  |  | 7,750 |  |  |  | 11,936 | 
|               |  |          |        |          |  |       |        |          |  |          |        |         |  |          |       |          |  |          |        |         |  |  |        |  |  |       |       |  |  |  |       |  |  |  |        | 

|               |  |                         |      |       |  |       |        |   |  |  |        |  
|-------------- |  | ----------------------- | ---- | ----- |  | ----- | ------ | - |  |  | ------ | -
|               |  | Operating (loss)/profit
|               |  |                        
|               |  | 2003                    |      | 2002  |  | 2001 
|               |  |                         |      |       |  |      
|               |  | £000                   |      | £000 |  | £000
|United Kingdom |  |                         | (905 | )     |  |       | 2,926  |   |  |  | (2,951 | )
|United States  |  |                         | (64  | )     |  |       | (5,363 | ) |  |  | (3,436 | )
|Australia      |  |                         | 365  |       |  |       | 335    |   |  |  | (156   | )
|               |  |                         |      |       |  |       |        |   |  |  |        |  
|               |  |                         | (604 | )     |  |       | (2,102 | ) |  |  | (6,543 | )
|               |  |                         |      |       |  |       |        |   |  |  |        |  

All the discontinued operations originated in the United Kingdom. The
discontinued elements of external and inter segment turnover were £nil (2002:
£963,000, 2001: £648,000) and £nil (2002: £nil, 2001: £nil).

The operating assets by geographical origin are as follows:

|               |  |           |        |            |  |               |       |           |  |            |        |               |  |  |        |   |  |  |       |   |  |  |        |  
|-------------- |  | --------- | ------ | ---------- |  | ------------- | ----- | --------- |  | ---------- | ------ | ------------- |  |  | ------ | - |  |  | ----- | - |  |  | ------ | -
|               |  | 2003      |        | 2002      
|               |  |           |        |           
|               |  | Net       |        |            |  |               |       |           |  |            |        | Net           |  |  |        |   |  |  |       |  
|               |  | operating |        | Net cash / |  | Net assets/   |       | operating |  | Net cash / |        | Net assets/  
|               |  | assets    |        | (debt)     |  | (liabilities) |       | assets    |  | (debt)     |        | (liabilities)
|               |  |           |        |            |  |               |       |           |  |            |        |              
|               |  | £000     |        | £000      |  | £000         |       | £000     |  | £000      |        | £000        
|United Kingdom |  |           | 11,935 |            |  |               | 1,777 |           |  |            | 13,712 |               |  |  | 8,918  |   |  |  | 5,272 |   |  |  | 14,190 |  
|United States  |  |           | (5,743 | )          |  |               | (184  | )         |  |            | (5,927 | )             |  |  | (4,195 | ) |  |  | (206  | ) |  |  | (4,401 | )
|Australia      |  |           | 2,558  |            |  |               | (5    | )         |  |            | 2,553  |               |  |  | 744    |   |  |  | (392  | ) |  |  | 352    |  
|               |  |           |        |            |  |               |       |           |  |            |        |               |  |  |        |   |  |  |       |   |  |  |        |  
|               |  |           | 8,750  |            |  |               | 1,588 |           |  |            | 10,338 |               |  |  | 5,467  |   |  |  | 4,674 |   |  |  | 10,141 |  
|               |  |           |        |            |  |               |       |           |  |            |        |               |  |  |        |   |  |  |       |   |  |  |        |  

F-12



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##### Table of Contents



An analysis of turnover by geographical destination is as follows:

|               |  |            |        |              |  |       |   |            |  |            |        |              |  |            |       |            |  |            |     |              |  |  |       |  |  |  |       |  |  |  |     |  |  |  |       | 
|-------------- |  | ---------- | ------ | ------------ |  | ----- | - | ---------- |  | ---------- | ------ | ------------ |  | ---------- | ----- | ---------- |  | ---------- | --- | ------------ |  |  | ----- |  |  |  | ----- |  |  |  | --- |  |  |  | ----- | 
|               |  | 2003       |        | 2002         |  | 2001 
|               |  |            |        |              |  |      
|               |  | Continuing |        | Discontinued |  |       |   |            |  | Continuing |        | Discontinued |  |            |       |            |  | Continuing |     | Discontinued |  |  |       | 
|               |  | operations |        | operations   |  | Total |   | operations |  | operations |        | Total        |  | operations |       | operations |  | Total     
|               |  |            |        |              |  |       |   |            |  |            |        |              |  |            |       |            |  |           
|               |  | £000      |        | £000        |  | £000 |   | £000      |  | £000      |        | £000        |  | £000      |       | £000      |  | £000     
|United Kingdom |  |            | 54     |              |  |       |  |            |  |            | 54     |              |  |            | 69    |            |  |            | 1   |              |  |  | 70    |  |  |  | 92    |  |  |  | 78  |  |  |  | 170   | 
|Rest of Europe |  |            | 1,503  |              |  |       |  |            |  |            | 1,503  |              |  |            | 1,933 |            |  |            | 72  |              |  |  | 2,005 |  |  |  | 615   |  |  |  | 49  |  |  |  | 664   | 
|North America  |  |            | 9,669  |              |  |       |  |            |  |            | 9,669  |              |  |            | 4,786 |            |  |            | 889 |              |  |  | 5,675 |  |  |  | 2,811 |  |  |  | 517 |  |  |  | 3,328 | 
|Rest of World  |  |            | 44     |              |  |       |  |            |  |            | 44     |              |  |            | 173   |            |  |            | 1   |              |  |  | 174   |  |  |  | 20    |  |  |  | 4   |  |  |  | 24    | 
|               |  |            |        |              |  |       |   |            |  |            |        |              |  |            |       |            |  |            |     |              |  |  |       |  |  |  |       |  |  |  |     |  |  |  |       | 
|               |  |            | 11,270 |              |  |       |  |            |  |            | 11,270 |              |  |            | 6,961 |            |  |            | 963 |              |  |  | 7,924 |  |  |  | 3,538 |  |  |  | 648 |  |  |  | 4,186 | 
|               |  |            |        |              |  |       |   |            |  |            |        |              |  |            |       |            |  |            |     |              |  |  |       |  |  |  |       |  |  |  |     |  |  |  |       | 

An analysis of (loss)/profit on ordinary activities before taxation has not
been presented as the directors consider the analysis of operating loss to be
more meaningful. A reconciliation of operating loss and (loss)/profit on
ordinary activities before taxation is given in the consolidated profit and
loss account.



|3. |  | Operating Loss
|-- |  | --------------

The operating loss is stated after charging/(crediting):

|                                                   |                |  |       |     |       |  |       |     |  |  |       |    | 
|-------------------------------------------------- | -------------- |  | ----- | --- | ----- |  | ----- | --- |  |  | ----- | -- | 
|                                                   |                |  | 2003  |     | 2002  |  | 2001 
|                                                   |                |  | £000 |     | £000 |  | £000
|                                                   |                |  |       |     |       |  |      
|Depreciation  owned assets                        |                |  | 882   |     |       |  | 868   |     |  |  | 1,135 |   
|Depreciation  leased assets                       |                |  | 15    |     |       |  | 64    |     |  |  | 163   |   
|Amortization  intangible assets                   |                |  | 128   |     |       |  | 26    |     |  |  |      |   
|Auditors remuneration:                            |                |  |       |     |       |  |       |     |  |  |       |   
|                                                   | Audit          |  |       | 65  |       |  |       | 70  |  |  |       | 58 | 
|                                                   | Other Services |  |       | 165 |       |  |       | 160 |  |  |       | 97 | 
|Operating leases  hire of plant and equipment     |                |  | 46    |     |       |  | 58    |     |  |  | 50    |   
|Operating leases  other                           |                |  | 437   |     |       |  | 405   |     |  |  | 399   |   
|(Profit)/Loss on disposal of tangible fixed assets |                |  | (2    | )   |       |  | 16    |     |  |  | 55    |   
|Release of deferred grant income                   |                |  | (101  | )   |       |  | (55   | )   |  |  | (55   | ) 
|Staff costs (see note 4)                           |                |  | 5,004 |     |       |  | 4,542 |     |  |  | 5,005 |   

The audit fee relating to the parent company amounted to £13,000 (2002:
£12,000: 2001: £11,000).

In the year ended 31 March 2002, research and development costs relating to
continuing operations are stated after an exceptional credit of £674,000
(2001: £1,285,000) arising from the reinstatement of stock fully provided for
in the prior year, following FDA approval of DigiFab in August 2001 and
CroFab® (the Groups rattlesnake antivenin) in October 2000. Cost of sales in
the year ended 31 March 2002 includes the cost of the reinstated stock which
has been sold in that year.

F-13



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##### Table of Contents



A more detailed analysis of auditors remuneration on a worldwide basis is
provided below:

|                           |  |       |     |      |  |       |       |   |  |       |     |   |  |  |       |  |  |  |     |  |  |  |       | 
|-------------------------- |  | ----- | --- | ---- |  | ----- | ----- | - |  | ----- | --- | - |  |  | ----- |  |  |  | --- |  |  |  | ----- | 
|                           |  | 2003  |     | 2002 |  | 2001 
|                           |  | £000 |     | %    |  | £000 |       | % |  | £000 |     | %
|Services as auditors       |  |       |     |      |  |       |       |   |  |       |     |   |  |  |       |  |  |  |     |  |  |  |       | 
|- Statutory accounts       |  |       | 65  |      |  |       | 28.3  |   |  |       | 70  |   |  |  | 30.4  |  |  |  | 58  |  |  |  | 37.4  | 
|- US regulatory            |  |       | 20  |      |  |       | 8.7   |   |  |       | 20  |   |  |  | 8.7   |  |  |  | 20  |  |  |  | 12.9  | 
|                           |  |       |     |      |  |       |       |   |  |       |     |   |  |  |       |  |  |  |     |  |  |  |       | 
|                           |  |       | 85  |      |  |       | 37.0  |   |  |       | 90  |   |  |  | 39.1  |  |  |  | 78  |  |  |  | 50.3  | 
|                           |  |       |     |      |  |       |       |   |  |       |     |   |  |  |       |  |  |  |     |  |  |  |       | 
|Further assurance services |  |       |     |      |  |       |       |   |  |       |     |   |  |  |       |  |  |  |     |  |  |  |       | 
|- Tax compliance           |  |       | 23  |      |  |       | 10.0  |   |  |       | 18  |   |  |  | 7.8   |  |  |  | 15  |  |  |  | 9.7   | 
|- Other                    |  |       | 18  |      |  |       | 7.8   |   |  |       | 83  |   |  |  | 36.1  |  |  |  | 8   |  |  |  | 5.2   | 
|                           |  |       |     |      |  |       |       |   |  |       |     |   |  |  |       |  |  |  |     |  |  |  |       | 
|                           |  |       | 41  |      |  |       | 17.8  |   |  |       | 101 |   |  |  | 43.9  |  |  |  | 23  |  |  |  | 14.9  | 
|                           |  |       |     |      |  |       |       |   |  |       |     |   |  |  |       |  |  |  |     |  |  |  |       | 
|Tax advisory services      |  |       | 94  |      |  |       | 40.9  |   |  |       | 39  |   |  |  | 17.0  |  |  |  | 40  |  |  |  | 25.8  | 
|                           |  |       |     |      |  |       |       |   |  |       |     |   |  |  |       |  |  |  |     |  |  |  |       | 
|Other non-audit services   |  |       |     |      |  |       |       |   |  |       |     |   |  |  |       |  |  |  |     |  |  |  |       | 
|- Consulting services      |  |       | 10  |      |  |       | 4.3   |   |  |       |    |   |  |  |      |  |  |  | 14  |  |  |  | 9.0   | 
|                           |  |       |     |      |  |       |       |   |  |       |     |   |  |  |       |  |  |  |     |  |  |  |       | 
|                           |  |       | 230 |      |  |       | 100.0 |   |  |       | 230 |   |  |  | 100.0 |  |  |  | 155 |  |  |  | 100.0 | 
|                           |  |       |     |      |  |       |       |   |  |       |     |   |  |  |       |  |  |  |     |  |  |  |       | 



|4. |  | Staff Costs
|-- |  | -----------

The average number of persons, including directors, employed by the Group
during the year was:

|               |  |        |     |        |  |            |     |  |  |      |     | 
|-------------- |  | ------ | --- | ------ |  | ---------- | --- |  |  | ---- | --- | 
|               |  |        |     |        |  |            |     |  |  | 2001
|               |  | 2003   |     | 2002   |  | (Restated)
|               |  | Number |     | Number |  | Number    
|               |  |        |     |        |  |           
|Management     |  |        | 25  |        |  |            | 20  |  |  |      | 17  | 
|Administration |  |        | 15  |        |  |            | 15  |  |  |      | 10  | 
|Research       |  |        | 133 |        |  |            | 109 |  |  |      | 129 | 
|               |  |        |     |        |  |            |     |  |  |      |     | 
|Total          |  |        | 173 |        |  |            | 144 |  |  |      | 156 | 
|               |  |        |     |        |  |            |     |  |  |      |     | 

The employee numbers for the year ended 31 March 2001 have been restated for
the reclassification of 9 employees previously included within administration
now included as management.

Their total remuneration was:

|                      |  |       |       |       |  |       |       |  |  |  |       | 
|--------------------- |  | ----- | ----- | ----- |  | ----- | ----- |  |  |  | ----- | 
|                      |  | 2003  |       | 2002  |  | 2001 
|                      |  | £000 |       | £000 |  | £000
|                      |  |       |       |       |  |      
|Salaries              |  |       | 4,343 |       |  |       | 3,955 |  |  |  | 4,298 | 
|Social security costs |  |       | 327   |       |  |       | 331   |  |  |  | 392   | 
|Pension costs         |  |       | 334   |       |  |       | 256   |  |  |  | 315   | 
|                      |  |       |       |       |  |       |       |  |  |  |       | 
|Total                 |  |       | 5,004 |       |  |       | 4,542 |  |  |  | 5,005 | 
|                      |  |       |       |       |  |       |       |  |  |  |       | 

Pension contributions of £5,000 (2002: £3,000; 2001: £30,000) were included in
accruals at year end.

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##### Table of Contents





|5. |  | Directors Remuneration and Interests in Shares and Share Options
|-- |  | -----------------------------------------------------------------
|  
|A. |  | Aggregate Directors Remuneration                                

The total amounts for directors remuneration were as follows:

|                                     |  |       |     |       |  |       |     |  |  |  |     | 
|------------------------------------ |  | ----- | --- | ----- |  | ----- | --- |  |  |  | --- | 
|                                     |  | 2003  |     | 2002  |  | 2001 
|                                     |  | £000 |     | £000 |  | £000
|                                     |  |       |     |       |  |      
|Emoluments                           |  |       | 711 |       |  |       | 776 |  |  |  | 827 | 
|Money purchase pension contributions |  |       | 89  |       |  |       | 47  |  |  |  | 58  | 
|                                     |  |       |     |       |  |       |     |  |  |  |     | 
|                                     |  |       | 800 |       |  |       | 823 |  |  |  | 885 | 
|                                     |  |       |     |       |  |       |     |  |  |  |     | 



|B. |  | Directors Emoluments
|-- |  | ---------------------

|              |  |        |     |       |  |             |    |        |  |       |    |       |  |       |     |  |  |  |     |  |  |  |     | 
|------------- |  | ------ | --- | ----- |  | ----------- | -- | ------ |  | ----- | -- | ----- |  | ----- | --- |  |  |  | --- |  |  |  | --- | 
|              |  |        |     |       |  | Benefits in |    | Annual |  | Total |    | Total |  | Total
|              |  | Salary |     | kind  |  | Bonus       |    | 2003   |  | 2002  |    | 2001 
|Executive     |  | £000   |     | £000 |  | £000       |    | £000  |  | £000 |    | £000
|              |  |        |     |       |  |             |    |        |  |       |    |      
|J C Christie  |  |        | 112 |       |  |             | 1  |        |  |       | 17 |       |  |       | 130 |  |  |  | 120 |  |  |  | 102 | 
|A J Heath     |  |        | 175 |       |  |             | 1  |        |  |       | 36 |       |  |       | 212 |  |  |  | 211 |  |  |  | 190 | 
|J A Miller    |  |        |    |       |  |             |   |        |  |       |   |       |  |       |    |  |  |  | 40  |  |  |  | 129 | 
|B M Riley     |  |        | 115 |       |  |             | 1  |        |  |       | 20 |       |  |       | 136 |  |  |  | 115 |  |  |  | 94  | 
|A Rushton     |  |        | 62  |       |  |             | 8  |        |  |       |   |       |  |       | 70  |  |  |  | 124 |  |  |  | 128 | 
|Non-Executive |  |        |     |       |  |             |    |        |  |       |    |       |  |       |     |  |  |  |     |  |  |  |     | 
|E E Anggard   |  |        |    |       |  |             |   |        |  |       |   |       |  |       |    |  |  |  |    |  |  |  | 12  | 
|M S Brown     |  |        | 14  |       |  |             |   |        |  |       |   |       |  |       | 14  |  |  |  | 15  |  |  |  | 15  | 
|T Chard       |  |        |    |       |  |             |   |        |  |       |   |       |  |       |    |  |  |  |    |  |  |  | 5   | 
|J E Everitt   |  |        |    |       |  |             |   |        |  |       |   |       |  |       |    |  |  |  |    |  |  |  | 11  | 
|M R B Gatenby |  |        | 21  |       |  |             |   |        |  |       |   |       |  |       | 21  |  |  |  | 21  |  |  |  | 16  | 
|D W Gration   |  |        | 26  |       |  |             |   |        |  |       |   |       |  |       | 26  |  |  |  | 47  |  |  |  | 55  | 
|S M Wallis    |  |        | 70  |       |  |             | 32 |        |  |       |   |       |  |       | 102 |  |  |  | 83  |  |  |  | 70  | 
|              |  |        |     |       |  |             |    |        |  |       |    |       |  |       |     |  |  |  |     |  |  |  |     | 
|              |  |        | 595 |       |  |             | 43 |        |  |       | 73 |       |  |       | 711 |  |  |  | 776 |  |  |  | 827 | 
|              |  |        |     |       |  |             |    |        |  |       |    |       |  |       |     |  |  |  |     |  |  |  |     | 

E E Anggard, T Chard and J E Everitt resigned as directors of the Company on 22
December 2000, and A Rushton resigned as a director of the company on 25
October 2002.

The fees in respect of S M Wallis and J E Everitt includes figures of £60,000
(2002:£60,000; 2001: £60,000) and £nil (2002£nil; 2001: £11,000) respectively
paid to their management companies.

Retirement benefits are accruing to
four directors (2002: four; 2001: five)
under the Groups defined contribution pension scheme.

M S Brown rents office space at the Groups Nashville premises at a market
rental of $16,527 per annum (2002: $14,015; 2001: $13,200).

F-15



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##### Table of Contents





|C. |  | Directors Pension Entitlements
|-- |  | ------------------------------

Four directors were members of Money Purchase Schemes (2002: four, 2001: five).
Contributions made by the Company in respect of such directors were as
follows:



|             |  |       |    |       |  |       |    |  |  |  |    | 
|------------ |  | ----- | -- | ----- |  | ----- | -- |  |  |  | -- | 
|             |  | 2003  |    | 2002  |  | 2001 
|             |  | £000 |    | £000 |  | £000
|             |  |       |    |       |  |      
|J C Christie |  |       | 11 |       |  |       | 10 |  |  |  | 9  | 
|A J Heath    |  |       | 61 |       |  |       | 17 |  |  |  | 4  | 
|J A Miller   |  |       |   |       |  |       |   |  |  |  | 27 | 
|B M Riley    |  |       | 12 |       |  |       | 9  |  |  |  | 7  | 
|A Rushton    |  |       | 5  |       |  |       | 11 |  |  |  | 11 | 
|             |  |       |    |       |  |       |    |  |  |  |    | 
|             |  |       | 89 |       |  |       | 47 |  |  |  | 58 | 
|             |  |       |    |       |  |       |    |  |  |  |    | 



|D. |  | Interests in Ordinary Shares
|-- |  | ----------------------------

The directors interests in the ordinary shares of the Company at 31 March 2003
were as follows:

|              |  |          |           |          |  |          |           |  |  |  |           | 
|------------- |  | -------- | --------- | -------- |  | -------- | --------- |  |  |  | --------- | 
|              |  | 31 March |           | 31 March |  | 31 March
|              |  | 2003     |           | 2002     |  | 2001    
|              |  |          |           |          |  |         
|M S Brown     |  |          | 3,167,317 |          |  |          | 3,555,100 |  |  |  | 4,052,144 | 
|S M Wallis    |  |          | 436,125   |          |  |          | 436,125   |  |  |  | 436,125   | 
|A J Heath     |  |          | 300,000   |          |  |          | 300,000   |  |  |  | 288,691   | 
|D W Gration   |  |          | 40,897    |          |  |          | 40,897    |  |  |  | 40,897    | 
|M R B Gatenby |  |          | 26,666    |          |  |          | 26,666    |  |  |  | 26,666    | 
|B M Riley     |  |          | 14,814    |          |  |          | 14,814    |  |  |  | 14,814    | 
|J C Christie  |  |          | 1,163     |          |  |          | 1,163     |  |  |  | 1,163     | 
|A Rushton     |  |          |          |          |  |          | 3,000     |  |  |  |          | 
|              |  |          |           |          |  |          |           |  |  |  |           | 
|              |  |          | 3,986,982 |          |  |          | 4,377,765 |  |  |  | 4,860,500 | 
|              |  |          |           |          |  |          |           |  |  |  |           | 

All directors interests in ordinary shares are beneficial, with the exception
of 758,223 ordinary shares (2002: 758,223; 2001: 758,223) held by M S Brown.

As at the date of this report, there were no changes to the directors
interests in ordinary shares. No directors had any interests in the
convertible debentures.

M S Brown and A J Heath held warrants to subscribe for 29,075 (2002: 29,075;
2001: 29,075) and 14,538 (2002: 14,538; 2001: 14,538) ordinary shares
respectively, at $2.07 per share. The warrants expired on 15 June 2003.

F-16



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##### Table of Contents





|E. |  | Share Options
|-- |  | -------------

Aggregate emoluments do not include any amounts for the value of options to
acquire ordinary shares in the Company granted to or held by the directors.
None of the directors exercised any options during the current or prior year.

Details of share options granted to directors are as follows:

|                                 |  |            |            |         |  |           |   |            |  |      |   |           |  |             |           |          |  |             |           |  |  |     |        |  |  |              |  |              |  |  |  | 
|-------------------------------- |  | ---------- | ---------- | ------- |  | --------- | - | ---------- |  | ---- | - | --------- |  | ----------- | --------- | -------- |  | ----------- | --------- |  |  | --- | ------ |  |  | ------------ |  | ------------ |  |  |  | 
|                                 |  | At 1 April |            |         |  |           |   |            |  |      |   | Cancelled |  | At 31 March |           | Exercise |  | Exercisable
|                                 |  | 2002       |            | Granted |  | Exercised |   | or expired |  | 2003 |   | price (p) |  | from        |           | to      
|                                 |  |            |            |         |  |           |   |            |  |      |   |           |  |             |           |         
|Approved options                 |  |            |            |         |  |           |   |            |  |      |   |           |  |             |           |          |  |             |           |  |  |     |        |  |  |              |  |              |  |  |  | 
|A Rushton                        |  |            | 23,535     |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 23,535    |  |  |     | 154.66 |  |  | 21 Jul 1997  |  | 20 July 2004
|B M Riley                        |  |            | 52,955     |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 52,955    |  |  |     | 68.83  |  |  | 25 Jul 1998  |  | 24 July 2005
|Unapproved options               |  |            |            |         |  |           |   |            |  |      |   |           |  |             |           |          |  |             |           |  |  |     |        |  |  |              |  |              |  |  |  | 
|D W Gration                      |  |            | 87,110     |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 87,110    |  |  |     | 57.40  |  |  | 20 Aug 1999  |  | 19 Aug 2003 
|D W Gration                      |  |            | 129,620    |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 129,620   |  |  |     | 41.66  |  |  | 23 Jan 2001  |  | 22 Jan 2004 
|D W Gration                      |  |            | 90,000     |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 90,000    |  |  |     | 46.00  |  |  | 22 Jun 2001  |  | 21 Jun 2008 
|B M Riley                        |  |            | 78,011     |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 78,011    |  |  |     | 66.66  |  |  | 19 Jul 1999  |  | 18 Jul 2003 
|B M Riley                        |  |            | 72,011     |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 72,011    |  |  |     | 41.66  |  |  | 23 Jan 2001  |  | 22 Jan 2004 
|B M Riley                        |  |            | 65,000     |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 65,000    |  |  |     | 46.00  |  |  | 22 Jun 2001  |  | 21 Jun 2008 
|B M Riley                        |  |            | 50,000     |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 50,000    |  |  |     | 39.00  |  |  | 22 Dec 2002  |  | 21 Dec 2009 
|B M Riley                        |  |            | 120,000    |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 120,000   |  |  |     | 43.50  |  |  | 22 Feb 2004  |  | 21 Feb 2011 
|B M Riley                        |  |            | 350,000    |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 350,000   |  |  |     | 39.50  |  |  | 16 Jan 2005  |  | 15 Jan 2012 
|A Rushton                        |  |            | 111,947    |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 111,947   |  |  |     | 66.66  |  |  | 19 Jul 1999  |  | 18 Jul 2003 
|A Rushton                        |  |            | 96,015     |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 96,015    |  |  |     | 41.66  |  |  | 23 Jan 2001  |  | 22 Jan 2004 
|A Rushton                        |  |            | 90,000     |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 90,000    |  |  |     | 46.00  |  |  | 22 Jun 2001  |  | 21 Jun 2008 
|A Rushton                        |  |            | 100,000    |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 100,000   |  |  |     | 39.00  |  |  | 22 Dec 2002  |  | 21 Dec 2009 
|A Rushton                        |  |            | 80,000     |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 80,000    |  |  |     | 43.50  |  |  | 22 Feb 2004  |  | 21 Feb 2011 
|J C Christie                     |  |            | 250,000    |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 250,000   |  |  |     | 39.00  |  |  | 22 Dec 2002  |  | 21 Dec 2009 
|J C Christie                     |  |            | 80,000     |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 80,000    |  |  |     | 43.50  |  |  | 22 Feb 2004  |  | 21 Feb 2011 
|J C Christie                     |  |            | 250,000    |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 250,000   |  |  |     | 39.50  |  |  | 16 Jan 2005  |  | 15 Jan 2012 
|A J Heath                        |  |            | 116,300    |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 116,300   |  |  |     | 175.00 |  |  | 27 Jan 2000  |  | 29 Jun 2008 
|A J Heath                        |  |            | 500,000    |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 500,000   |  |  |     | 43.50  |  |  | 22 Feb 2004  |  | 21 Feb 2011 
|A J Heath                        |  |            | 1,000,000  |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 1,000,000 |  |  |     | 39.50  |  |  | 16 Jan 2005  |  | 15 Jan 2012 
|Savings-related
options          |  |            |            |         |  |           |   |            |  |      |   |           |  |             |           |          |  |             |           |  |  |     |       
|J C Christie                     |  |            | 27,000     |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 27,000    |  |  |     | 37.50  |  |  | 1 Apr 2005   |  | 31 Oct 2005 
|Individual                       |  |            |            |         |  |           |   |            |  |      |   |           |  |             |           |          |  |             |           |  |  |     |        |  |  |              |  |              |  |  |  | 
|A J Heath                        |  |            | 600,000    |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 600,000   |  |  |     | 39.00  |  |  | 22 Dec 2002  |  | 21 Dec 2009 
|S M Wallis                       |  |            | 6,054,338  |         |  |           |  |            |  |      |  |           |  |             | 6,054,338 |          |  |             |          |  |  |     | 39.50  |  |  | 31 Dec 2001  |  | 31 Mar 2003 
|Therapeutic
Antibodies 1990
Plan |  |            |            |         |  |           |   |            |  |      |   |           |  |             |           |          |  |             |           |  |  |     |       
|M S Brown                        |  |            | 46,520     |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 46,520    |  |  | US$ | 3.86   |  |  | 1 Oct   1994 |  | 30 Sept 2004
|M S Brown                        |  |            | 104,670    |         |  |           |  |            |  |      |  |           |  |             |          |          |  |             | 104,670   |  |  | US$ | 5.15   |  |  | 26 Apr 1996  |  | 25 Apr 2006 
|                                 |  |            |            |         |  |           |   |            |  |      |   |           |  |             |           |          |  |             |           |  |  |     |        |  |  |              |  |             
|                                 |  |            | 10,625,032 |         |  |           |  |            |  |      |  |           |  |             | 6,054,338 |          |  |             | 4,570,694 |  |  |     |        |  |  |              |  |              |  |  |  | 
|                                 |  |            |            |         |  |           |   |            |  |      |   |           |  |             |           |          |  |             |           |  |  |     |        |  |  |              |  |             

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##### Table of Contents



|                                 |  |            |           |         |  |           |           |            |  |      |   |           |  |             |         |          |  |             |            |  |  |     |        |  |  |             |  |              |  |  |  | 
|-------------------------------- |  | ---------- | --------- | ------- |  | --------- | --------- | ---------- |  | ---- | - | --------- |  | ----------- | ------- | -------- |  | ----------- | ---------- |  |  | --- | ------ |  |  | ----------- |  | ------------ |  |  |  | 
|                                 |  | At 1 April |           |         |  |           |           |            |  |      |   | Cancelled |  | At 31 March |         | Exercise |  | Exercisable
|                                 |  | 2001       |           | Granted |  | Exercised |           | or expired |  | 2002 |   | price (p) |  | from        |         | to      
|                                 |  |            |           |         |  |           |           |            |  |      |   |           |  |             |         |         
|Approved options                 |  |            |           |         |  |           |           |            |  |      |   |           |  |             |         |          |  |             |            |  |  |     |        |  |  |             |  |              |  |  |  | 
|B M Riley                        |  |            | 52,955    |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 52,955     |  |  |     | 68.83  |  |  | 25 Jul 1998 |  | 24 Jul 2005 
|A Rushton                        |  |            | 23,535    |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 23,535     |  |  |     | 154.66 |  |  | 21 Jul 1997 |  | 20 Jul 2004 
|Unapproved options               |  |            |           |         |  |           |           |            |  |      |   |           |  |             |         |          |  |             |            |  |  |     |       
|D W Gration                      |  |            | 87,110    |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 87,110     |  |  |     | 57.40  |  |  | 20 Aug 1999 |  | 19 Aug 2003 
|D W Gration                      |  |            | 129,620   |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 129,620    |  |  |     | 41.66  |  |  | 23 Jan 2001 |  | 22 Jan 2004 
|D W Gration                      |  |            | 90,000    |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 90,000     |  |  |     | 46.00  |  |  | 22 Jun 2001 |  | 21 Jun 2008 
|J A Miller                       |  |            | 117,017   |         |  |           |          |            |  |      |  |           |  |             | 117,017 |          |  |             |           |  |  |     | 66.66  |  |  | 19 Jul 1999 |  | 18 Jul 2003 
|J A Miller                       |  |            | 108,016   |         |  |           |          |            |  |      |  |           |  |             | 108,016 |          |  |             |           |  |  |     | 41.66  |  |  | 23 Jan 2001 |  | 22 Jan 2004 
|J A Miller                       |  |            | 90,000    |         |  |           |          |            |  |      |  |           |  |             | 90,000  |          |  |             |           |  |  |     | 46.00  |  |  | 22 Jun 2001 |  | 21 Jun 2008 
|J A Miller                       |  |            | 100,000   |         |  |           |          |            |  |      |  |           |  |             | 100,000 |          |  |             |           |  |  |     | 39.00  |  |  | 22 Dec 2002 |  | 21 Dec 2009 
|J A Miller                       |  |            | 80,000    |         |  |           |          |            |  |      |  |           |  |             | 80,000  |          |  |             |           |  |  |     | 43.50  |  |  | 22 Feb 2004 |  | 21 Feb 2011 
|B M Riley                        |  |            | 78,011    |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 78,011     |  |  |     | 66.66  |  |  | 19 Jul 1999 |  | 18 Jul 2003 
|B M Riley                        |  |            | 72,011    |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 72,011     |  |  |     | 41.66  |  |  | 23 Jan 2001 |  | 22 Jan 2004 
|B M Riley                        |  |            | 65,000    |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 65,000     |  |  |     | 46.00  |  |  | 22 Jun 2001 |  | 21 Jun 2008 
|B M Riley                        |  |            | 50,000    |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 50,000     |  |  |     | 39.00  |  |  | 22 Dec 2002 |  | 21 Dec 2009 
|B M Riley                        |  |            | 120,000   |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 120,000    |  |  |     | 43.50  |  |  | 22 Feb 2004 |  | 21 Feb 2011 
|B M Riley                        |  |            |          |         |  |           | 350,000   |            |  |      |  |           |  |             |        |          |  |             | 350,000    |  |  |     | 39.50  |  |  | 16 Jan 2005 |  | 15 Jan 2012 
|A Rushton                        |  |            | 111,947   |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 111,947    |  |  |     | 66.66  |  |  | 19 Jul 1999 |  | 18 Jul 2003 
|A Rushton                        |  |            | 96,015    |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 96,015     |  |  |     | 41.66  |  |  | 23 Jan 2001 |  | 22 Jan 2004 
|A Rushton                        |  |            | 90,000    |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 90,000     |  |  |     | 46.00  |  |  | 22 Jun 2001 |  | 21 Jun 2008 
|A Rushton                        |  |            | 100,000   |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 100,000    |  |  |     | 39.00  |  |  | 22 Dec 2002 |  | 21 Dec 2009 
|A Rushton                        |  |            | 80,000    |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 80,000     |  |  |     | 43.50  |  |  | 22 Feb 2004 |  | 21 Feb 2011 
|J C Christie                     |  |            | 250,000   |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 250,000    |  |  |     | 39.00  |  |  | 22 Dec 2002 |  | 21 Dec 2009 
|J C Christie                     |  |            | 80,000    |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 80,000     |  |  |     | 43.50  |  |  | 22 Feb 2004 |  | 21 Feb 2011 
|J C Christie                     |  |            |          |         |  |           | 250,000   |            |  |      |  |           |  |             |        |          |  |             | 250,000    |  |  |     | 39.50  |  |  | 16 Jan 2005 |  | 15 Jan 2012 
|A J Heath                        |  |            | 116,300   |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 116,300    |  |  |     | 175.00 |  |  | 27 Jan 2000 |  | 29 Jun 2008 
|A J Heath                        |  |            | 500,000   |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 500,000    |  |  |     | 43.50  |  |  | 22 Feb 2004 |  | 21 Feb 2011 
|A J Heath                        |  |            |          |         |  |           | 1,000,000 |            |  |      |  |           |  |             |        |          |  |             | 1,000,000  |  |  |     | 39.50  |  |  | 16 Jan 2005 |  | 15 Jan 2012 
|Savings related options          |  |            |           |         |  |           |           |            |  |      |   |           |  |             |         |          |  |             |            |  |  |     |        |  |  |             |  |             
|J A Miller                       |  |            | 26,712    |         |  |           |          |            |  |      |  |           |  |             | 26,712  |          |  |             |           |  |  |     | 36.50  |  |  | 1 Oct 2001  |  | 31 Mar 2002 
|B M Riley                        |  |            | 26,712    |         |  |           |          |            |  |      |  |           |  |             | 26,712  |          |  |             |           |  |  |     | 36.50  |  |  | 1 Oct 2001  |  | 31 Mar 2002 
|J C Christie                     |  |            | 27,000    |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 27,000     |  |  |     | 37.50  |  |  | 1 Apr 2005  |  | 31 Oct 2005 
|Individual                       |  |            |           |         |  |           |           |            |  |      |   |           |  |             |         |          |  |             |            |  |  |     |        |  |  |             |  |              |  |  |  | 
|A J Heath                        |  |            | 600,000   |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 600,000    |  |  |     | 39.00  |  |  | 22 Dec 2002 |  | 21 Dec 2009 
|S M Wallis                       |  |            | 6,054,338 |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 6,054,338  |  |  |     | 39.50  |  |  | 31 Dec 2001 |  | 31 Mar 2003 
|Therapeutic Antibodies
1990 Plan |  |            |           |         |  |           |           |            |  |      |   |           |  |             |         |          |  |             |            |  |  |     |       
|M S Brown                        |  |            | 46,520    |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 46,520     |  |  | US$ | 3.86   |  |  | 1 Oct 1994  |  | 30 Sept 2004
|M S Brown                        |  |            | 104,670   |         |  |           |          |            |  |      |  |           |  |             |        |          |  |             | 104,670    |  |  | US$ | 5.15   |  |  | 26 Apr 1996 |  | 25 Apr 2006 
|                                 |  |            |           |         |  |           |           |            |  |      |   |           |  |             |         |          |  |             |            |  |  |     |        |  |  |             |  |              | 
|                                 |  |            | 9,573,489 |         |  |           | 1,600,000 |            |  |      |  |           |  |             | 548,457 |          |  |             | 10,625,032 |  |  |     |        |  |  |             |  |              |  |  |  | 
|                                 |  |            |           |         |  |           |           |            |  |      |   |           |  |             |         |          |  |             |            |  |  |     |        |  |  |             |  |              | 

There have been no variations to the terms and conditions or performance
criteria for share options during the financial year.

Under both the approved and unapproved share option schemes, options granted
after December 1999 may be exercised on any date between three and ten years
from the date of the grant of the option subject to the Companys share price
outperforming the average price of shares in the FT Pharmaceutical Index in any
three year period commencing on or after the date of grant of the option. Prior
to December 1999, the approved scheme required real growth in earnings per
share over three years and the unapproved scheme had performance criteria
relating to the successful completion of agreements generating turnover. There
are no performance criteria under the approved savings option scheme.

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Under his individual option, S M Wallis would have become entitled to
subscribe for the maximum number of shares only if the growth in the market
capitalization of the Company when compared with the growth in market
capitalization of the companies constituting the FTSE Smallcap Index between
September 1999 and exercise of the option ranked in the top quartile. S M
Wallis would have received nothing if the Company was in the median position or
below, but his entitlement would have increased on a straightline basis between
the median position and the position representing the 25th percentile.

The performance criteria for A J Heaths individual option are similar to those
of the Unapproved Share Option Scheme. In particular, the option may generally
be exercised only between the third and tenth anniversaries of the date of
grant, and on the date of exercise, the share price must have outperformed the
average of the FTSE Pharmaceuticals Index in any preceding three year period.
An adjustment may be made to the number of shares under option or the exercise
price in the case of a variation in share capital, subject to confirmation by
the Auditors that it is in their opinion fair and reasonable. The option
lapses if A J Heath leaves the Company voluntarily, and must be exercised
within three months if his employment ceases by reason of injury, disability,
sickness or redundancy. The agreement confers no pensionable benefits. No
amendment may be made to the benefit of A J Heath except with the prior
approval of the Company in General Meeting except for minor amendments to
benefit the administration of the agreement or to obtain or maintain favorable
tax, exchange control or regulatory treatment for A J Heath or any Group
Member.

There are no performance criteria for the options held by M S Brown under the
Therapeutic Antibodies employees 1990 plan.

The market price of the Companys ordinary shares to which the options relate
was 19.25p at 31 March 2003 and fluctuated between 14.25p and 34.5p during the
year.



|6. |  | Interest Payable
|-- |  | ----------------

|                                                                  |  |       |    |       |  |       |     |  |  |  |     | 
|----------------------------------------------------------------- |  | ----- | -- | ----- |  | ----- | --- |  |  |  | --- | 
|                                                                  |  | 2003  |    | 2002  |  | 2001 
|                                                                  |  | £000 |    | £000 |  | £000
|                                                                  |  |       |    |       |  |      
|Finance lease and hire purchase agreements                        |  |       | 12 |       |  |       | 15  |  |  |  | 28  | 
|Bank loans and overdrafts                                         |  |       | 3  |       |  |       | 2   |  |  |  | 36  | 
|4% convertible debentures                                         |  |       |   |       |  |       | 104 |  |  |  | 141 | 
|Notes payable to South Australian Minister for Primary Industries |  |       | 39 |       |  |       | 42  |  |  |  | 51  | 
|6% convertible loan notes                                         |  |       |   |       |  |       |    |  |  |  | 60  | 
|Other                                                             |  |       | 41 |       |  |       | 39  |  |  |  | 43  | 
|                                                                  |  |       |    |       |  |       |     |  |  |  |     | 
|                                                                  |  |       | 95 |       |  |       | 202 |  |  |  | 359 | 
|                                                                  |  |       |    |       |  |       |     |  |  |  |     | 



|7. |  | Taxation
|-- |  | --------

|                                               |  |       |      |       |  |       |   |  |  |  |      |  
|---------------------------------------------- |  | ----- | ---- | ----- |  | ----- | - |  |  |  | ---- | -
|                                               |  | 2003  |      | 2002  |  | 2001 
|                                               |  | £000 |      | £000 |  | £000
|                                               |  |       |      |       |  |      
|Current taxation                               |  |       |      |       |  |       |   |  |  |  |      |  
|UK Corporation tax for the current year        |  |       | (170 | )     |  |       |  |  |  |  | (500 | )
|Deferred taxation                              |  |       |      |       |  |       |   |  |  |  |      |  
|Origination and reversal of timing differences |  |       | (191 | )     |  |       |  |  |  |  |     |  
|                                               |  |       |      |       |  |       |   |  |  |  |      |  
|                                               |  |       | (361 | )     |  |       |  |  |  |  | (500 | )
|                                               |  |       |      |       |  |       |   |  |  |  |      |  

The tax credit arising in the year was as a result of research and development
expenditure claimed under the Finance Act 2000 (2001: same). No corporation
tax charge arose in 2002 due to the utilization of losses brought forward from
previous years.

The weighted average standard rate of current tax for the year based on the
average rate of corporation tax to the group is 31.4% (2002: 31.7%, 2001:
33.3%). The actual charge for the current and previous year differs from the
standard rate for the reasons set out in the following reconciliation:

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|                                                                        |  |       |      |       |  |       |       |   |  |  |        |  
|----------------------------------------------------------------------- |  | ----- | ---- | ----- |  | ----- | ----- | - |  |  | ------ | -
|                                                                        |  | 2003  |      | 2002  |  | 2001 
|                                                                        |  | £000 |      | £000 |  | £000
|                                                                        |  |       |      |       |  |      
|(Loss)/Profit on ordinary activities before tax                         |  |       | (599 | )     |  |       | 2,867 |   |  |  | (6,706 | )
|Tax on (loss)/profit on ordinary activities at standard rate            |  |       | (188 | )     |  |       | 908   |   |  |  | (2,233 | )
|Factors affecting charge for the period                                 |  |       |      |       |  |       |       |   |  |  |        |  
|Capital allowances for year (in excess of)/less than depreciation       |  |       | (39  | )     |  |       | (35   | ) |  |  | 21     |  
|Other timing differences                                                |  |       | (419 | )     |  |       | (73   | ) |  |  | 316    |  
|Other expenses/(income) not deductible for tax purposes                 |  |       | 17   |       |  |       | (340  | ) |  |  | (230   | )
|Additional tax credit for research and development expenditure
incurred |  |       | (128 | )     |  |       | (111  | ) |  |  | (404   | )
|Lower rate of tax on research and development credits surrendered       |  |       | 13   |       |  |       |      |   |  |  | 47     |  
|Addition to/(utilization of) to losses carried forward                  |  |       | 574  |       |  |       | (349  | ) |  |  | 1,983  |  
|                                                                        |  |       |      |       |  |       |       |   |  |  |        |  
|Total actual amount of current tax                                      |  |       | (170 | )     |  |       |      |   |  |  | (500   | )
|                                                                        |  |       |      |       |  |       |       |   |  |  |        |  

A deferred tax asset of £191,000 has been recognized at 31 March 2003 (2002:
nil, 2001: nil). This asset, which relates to trading losses incurred in
Australia, has been recognized in the financial statements following the
development of the Groups products during the past year and the directors are
of the opinion, based on recent and forecast trading, that the level of profits
in Australia in the forthcoming years will lead to the realization of this
asset.

The deferred tax asset recognized is set out in the following reconciliation.

|                                        |  |       |     | 
|--------------------------------------- |  | ----- | --- | 
|                                        |  | £000
|                                        |  |      
|At 1 April 2002                         |  |       |    | 
|Credited to the profit and loss account |  |       | 191 | 
|                                        |  |       |     | 
|At 31 March 2003                        |  |       | 191 | 
|                                        |  |       |     | 

In addition to the losses on which a deferred tax asset has been recognized,
the Group has additional taxable losses in Australia and other territories in
which it operates which arose as a result of the research and development
incurred during the start-up of the Groups activities. These losses are
available for offset against future taxable profits in these territories. A
deferred tax asset has not been recognized in respect of these losses and other
timing differences since the Group does not anticipate generating sufficient
taxable profits to utilize these losses within the immediate future and
consequently the timing of the recoverability of the deferred tax asset is
uncertain. The total amount of deferred tax assets not recognized, measured at
a weighted average standard rate of 31.4%, is approximately £22 million (2002:
approximately £22 million at 31.7%; 2001: approximately £32 million at 33.3%).

At 31 March 2003 the Group had tax losses, subject to the agreement of the
Taxation Authorities, of approximately £70 million (2002: £68 million; 2001:
£91 million) available for offset against future taxable profits of the same
trade. Of these losses, approximately £34 million (2002: £45 million; 2001:
£42 million) relates to Protherics Inc., the use of which is restricted to
US$1.5 million per year.



|8. |  | (Loss)/earnings per Share
|-- |  | -------------------------

Basic and fully diluted (loss)/earnings per share are based on attributable
losses of £238,000 (2002: profits of £2,867,000; 2001: losses of £6,206,000)
and a weighted average number of shares in issue during the year of 188,232,913
(2002: 178,119,748; 2001: 163,478,279).

Share options, warrants and the convertible debentures are at present
anti-dilutive.

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|9. |  | Intangible Fixed Assets
|-- |  | -----------------------

|                    |  |         |       |  
|------------------- |  | ------- | ----- | -
|                    |  | Patents
|                    |  | £000  
|Group               |  |         |       |  
|Cost                |  |         |       |  
|At 1 April 2002     |  |         | 1,030 |  
|Translation         |  |         | (4    | )
|                    |  |         |       |  
|At 31 March 2003    |  |         | 1,026 |  
|                    |  |         |       |  
|Amortization        |  |         |       |  
|At 1 April 2002     |  |         | 26    |  
|Charge for the year |  |         | 128   |  
|Translation         |  |         | (1    | )
|                    |  |         |       |  
|At 31 March 2003    |  |         | 153   |  
|                    |  |         |       |  
|Net Book Value      |  |         |       |  
|31 March 2003       |  |         | 873   |  
|                    |  |         |       |  
|31 March 2002       |  |         | 1,004 |  
|                    |  |         |       |  



|10. |  | Tangible Fixed Assets
|--- |  | ---------------------

|                    |  |           |       |           |  |                     |       |       |  |  |       |   |  |  |        |  
|------------------- |  | --------- | ----- | --------- |  | ------------------- | ----- | ----- |  |  | ----- | - |  |  | ------ | -
|                    |  | Land &    |       | Plant &   |  | Furniture, fixtures |       |      
|                    |  | buildings |       | machinery |  | & equipment         |       | Total
|                    |  | £000     |       | £000     |  | £000               |       | £000
|Group               |  |           |       |           |  |                     |       |       |  |  |       |   |  |  |        |  
|Cost                |  |           |       |           |  |                     |       |       |  |  |       |   |  |  |        |  
|At 1 April 2002     |  |           | 4,411 |           |  |                     | 3,969 |       |  |  | 1,584 |   |  |  | 9,964  |  
|Additions           |  |           | 216   |           |  |                     | 1,442 |       |  |  | 293   |   |  |  | 1,951  |  
|Disposals           |  |           |      |           |  |                     | (23   | )     |  |  | (39   | ) |  |  | (62    | )
|Translation         |  |           | 23    |           |  |                     | 42    |       |  |  | 4     |   |  |  | 69     |  
|                    |  |           |       |           |  |                     |       |       |  |  |       |   |  |  |        |  
|At 31 March 2003    |  |           | 4,650 |           |  |                     | 5,430 |       |  |  | 1,842 |   |  |  | 11,922 |  
|                    |  |           |       |           |  |                     |       |       |  |  |       |   |  |  |        |  
|Depreciation        |  |           |       |           |  |                     |       |       |  |  |       |   |  |  |        |  
|At 1 April 2002     |  |           | 2,301 |           |  |                     | 2,613 |       |  |  | 786   |   |  |  | 5,700  |  
|Charge for the year |  |           | 340   |           |  |                     | 398   |       |  |  | 159   |   |  |  | 897    |  
|Disposals           |  |           |      |           |  |                     |      |       |  |  | (42   | ) |  |  | (42    | )
|Translation         |  |           | 9     |           |  |                     | 12    |       |  |  | (5    | ) |  |  | 16     |  
|                    |  |           |       |           |  |                     |       |       |  |  |       |   |  |  |        |  
|At 31 March 2003    |  |           | 2,650 |           |  |                     | 3,023 |       |  |  | 898   |   |  |  | 6,571  |  
|                    |  |           |       |           |  |                     |       |       |  |  |       |   |  |  |        |  
|Net Book Value      |  |           |       |           |  |                     |       |       |  |  |       |   |  |  |        |  
|31 March 2003       |  |           | 2,000 |           |  |                     | 2,407 |       |  |  | 944   |   |  |  | 5,351  |  
|                    |  |           |       |           |  |                     |       |       |  |  |       |   |  |  |        |  
|31 March 2002       |  |           | 2,110 |           |  |                     | 1,356 |       |  |  | 798   |   |  |  | 4,264  |  
|                    |  |           |       |           |  |                     |       |       |  |  |       |   |  |  |        |  

|                             |                 |  |       |       |      |  |       |       | 
|---------------------------- | --------------- |  | ----- | ----- | ---- |  | ----- | ----- | 
|                             |                 |  | 2003  |       | 2002
|                             |                 |  | £000  |       | £000
|                             |                 |  |       |       |     
|Land and buildings comprise: |                 |  |       |       |      |  |       |      
|                             | Freehold        |  |       | 1,313 |      |  |       | 1,453 | 
|                             | Short leasehold |  |       | 687   |      |  |       | 657   | 
|                             |                 |  |       |       |      |  |       |       | 
|                             |                 |  | 2,000 |       |      |  | 2,110 |      
|                             |                 |  |       |       |      |  |       |      

Plant and machinery includes cost of £381,000 (2002: £nil) in respect of assets
in the course of construction.

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The net book value of tangible fixed assets includes £302,000 (2002: £227,000)
in respect of assets held under finance lease and hire purchase agreements.
Depreciation for the year on those assets was £15,000 (2002: £64,000).

The net book value of tangible fixed assets include capitalized interest of
£114,000 (2002: £158,000). No interest was capitalized in the year and
depreciation for the year amounted to £44,000 (2002: £46,000).

|                    |  |           |    |           |  |       |    |  |  |  |     | 
|------------------- |  | --------- | -- | --------- |  | ----- | -- |  |  |  | --- | 
|                    |  | Land &    |    | Plant and |  |       |    | 
|                    |  | buildings |    | machinery |  | Total
|                    |  | £000     |    | £000     |  | £000
|                    |  |           |    |           |  |      
|Company             |  |           |    |           |  |       |    |  |  |  |     | 
|Cost                |  |           |    |           |  |       |    |  |  |  |     | 
|At 1 April 2002     |  |           | 42 |           |  |       | 78 |  |  |  | 120 | 
|Additions           |  |           |   |           |  |       | 6  |  |  |  | 6   | 
|                    |  |           |    |           |  |       |    |  |  |  |     | 
|At 31 March 2003    |  |           | 42 |           |  |       | 84 |  |  |  | 126 | 
|                    |  |           |    |           |  |       |    |  |  |  |     | 
|Depreciation        |  |           |    |           |  |       |    |  |  |  |     | 
|At 1 April 2002     |  |           | 42 |           |  |       | 4  |  |  |  | 46  | 
|Charge for the year |  |           |   |           |  |       | 11 |  |  |  | 11  | 
|                    |  |           |    |           |  |       |    |  |  |  |     | 
|At 31 March 2003    |  |           | 42 |           |  |       | 15 |  |  |  | 57  | 
|                    |  |           |    |           |  |       |    |  |  |  |     | 
|Net Book Value      |  |           |    |           |  |       |    |  |  |  |     | 
|31 March 2003       |  |           |   |           |  |       | 69 |  |  |  | 69  | 
|                    |  |           |    |           |  |       |    |  |  |  |     | 
|31 March 2002       |  |           |   |           |  |       | 74 |  |  |  | 74  | 
|                    |  |           |    |           |  |       |    |  |  |  |     | 



|11. |  | Investments in Subsidiary Undertakings
|--- |  | --------------------------------------

|                                             |  |        |       |       |  |           |        |   |  |  |        |  
|-------------------------------------------- |  | ------ | ----- | ----- |  | --------- | ------ | - |  |  | ------ | -
|                                             |  |        |       |       |  | Long term |        |   |  | 
|                                             |  | Shares |       | loans |  | Total    
|                                             |  | £000  |       | £000 |  | £000    
|Company                                      |  |        |       |       |  |           |        |   |  |  |        |  
|Cost                                         |  |        |       |       |  |           |        |   |  |  |        |  
|At 1 April 2002                              |  |        | 1,652 |       |  |           | 60,957 |   |  |  | 62,609 |  
|Net amounts advanced during the year         |  |        |      |       |  |           | 4,559  |   |  |  | 4,559  |  
|                                             |  |        |       |       |  |           |        |   |  |  |        |  
|At 31 March 2003                             |  |        | 1,652 |       |  |           | 65,516 |   |  |  | 67,168 |  
|                                             |  |        |       |       |  |           |        |   |  |  |        |  
|Provision at 31 March 2003 and 31 March 2002 |  |        | (119  | )     |  |           | (129   | ) |  |  | (248   | )
|                                             |  |        |       |       |  |           |        |   |  |  |        |  
|Net Book Value                               |  |        |       |       |  |           |        |   |  |  |        |  
|31 March 2003                                |  |        | 1,533 |       |  |           | 65,387 |   |  |  | 66,920 |  
|                                             |  |        |       |       |  |           |        |   |  |  |        |  
|31 March 2002                                |  |        | 1,533 |       |  |           | 60,828 |   |  |  | 62,361 |  
|                                             |  |        |       |       |  |           |        |   |  |  |        |  

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##### Table of Contents



Details of subsidiary undertakings, all of which are registered in England and
Wales, unless noted, are as follows:

|                                                       |  |        |  |                                       
|------------------------------------------------------ |  | ------ |  | --------------------------------------
|                                                       |  | % held |  | Status                                
|                                                       |  |        |  |                                       
|Direct holdings                                        |  |        |  |                                       
|Protherics Molecular Design Limited                    |  | 100    |  | trading                               
|Protherics Inc. (formerly Therapeutic Antibodies Inc.) |  | 100    |  | trading (incorporated in Delaware USA)
|Proteus Biotechnology Limited                          |  | 100    |  | dormant                               
|Genethics Limited                                      |  | 76     |  | dormant                               
|Indirect holdings                                      |  |        |  |                                       
|Protherics UK Limited                                  |  | 100    |  | trading                               
|Protherics Australasia Pty Limited                     |  | 100    |  | trading (incorporated in Australia)   
|TAb (Wales) Limited                                    |  | 100    |  | dormant                               
|TAb (London) Limited                                   |  | 100    |  | dormant                               
|Polyclonal Antibodies Limited                          |  | 100    |  | dormant                               

All of the trading subsidiaries are engaged in the development, manufacture and
sale of pharmaceutical products and potential drugs for use in the treatment of
human diseases.



|12. |  | Stocks
|--- |  | ------

|                              |  |       |       |       |  |  |       | 
|----------------------------- |  | ----- | ----- | ----- |  |  | ----- | 
|                              |  | Group
|                              |  | 2003  |       | 2002 
|                              |  | £000 |       | £000
|                              |  |       |       |      
|Raw materials and consumables |  |       | 1,027 |       |  |  | 589   | 
|Work in progress              |  |       | 6,034 |       |  |  | 3,152 | 
|Finished goods                |  |       | 24    |       |  |  | 238   | 
|                              |  |       |       |       |  |  |       | 
|                              |  |       | 7,085 |       |  |  | 3,979 | 
|                              |  |       |       |       |  |  |       | 



|13. |  | Debtors  amounts falling due within one year
|--- |  | ---------------------------------------------

|                                   |  |       |       |         |  |       |       |       |  |  |       |  |  |  |     | 
|---------------------------------- |  | ----- | ----- | ------- |  | ----- | ----- | ----- |  |  | ----- |  |  |  | --- | 
|                                   |  | Group |       | Company
|                                   |  | 2003  |       | 2002    |  | 2003  |       | 2002 
|                                   |  | £000 |       | £000   |  | £000 |       | £000
|                                   |  |       |       |         |  |       |       |      
|Trade debtors                      |  |       | 2,531 |         |  |       | 762   |       |  |  |      |  |  |  |    | 
|Amounts owed by Group undertakings |  |       |      |         |  |       |      |       |  |  | 6,447 |  |  |  | 216 | 
|Other debtors                      |  |       | 215   |         |  |       | 279   |       |  |  |      |  |  |  | 24  | 
|Taxation recoverable               |  |       | 88    |         |  |       | 500   |       |  |  |      |  |  |  |    | 
|Deferred taxation                  |  |       | 191   |         |  |       |      |       |  |  |      |  |  |  |    | 
|Prepayments and accrued income     |  |       | 435   |         |  |       | 431   |       |  |  | 83    |  |  |  | 72  | 
|                                   |  |       |       |         |  |       |       |       |  |  |       |  |  |  |     | 
|                                   |  |       | 3,460 |         |  |       | 1,972 |       |  |  | 6,530 |  |  |  | 312 | 
|                                   |  |       |       |         |  |       |       |       |  |  |       |  |  |  |     | 

F-23



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##### Table of Contents





|14. |  | Creditors  amounts falling due within one year
|--- |  | -----------------------------------------------

|                                                                           |  |       |       |         |  |       |       |       |  |  |        |  |  |  |     | 
|-------------------------------------------------------------------------- |  | ----- | ----- | ------- |  | ----- | ----- | ----- |  |  | ------ |  |  |  | --- | 
|                                                                           |  | Group |       | Company
|                                                                           |  | 2003  |       | 2002    |  | 2003  |       | 2002 
|                                                                           |  | £000 |       | £000   |  | £000 |       | £000
|                                                                           |  |       |       |         |  |       |       |      
|Bank loans and overdrafts                                                  |  |       |      |         |  |       |      |       |  |  | 7      |  |  |  |    | 
|Notes payable to South Australia Minister for
Primary Industries (Note 15) |  |       | 110   |         |  |       | 99    |       |  |  |       |  |  |  |    | 
|Other loans                                                                |  |       | 266   |         |  |       | 282   |       |  |  |       |  |  |  |    | 
|Obligations under finance lease and hire
purchase agreements (note 15)     |  |       | 75    |         |  |       | 50    |       |  |  |       |  |  |  |    | 
|Trade creditors                                                            |  |       | 1,649 |         |  |       | 715   |       |  |  | 313    |  |  |  | 270 | 
|Amounts owed to Group undertakings                                         |  |       |      |         |  |       |      |       |  |  | 12,160 |  |  |  | 77  | 
|Other taxation and social security                                         |  |       | 97    |         |  |       | 88    |       |  |  | 104    |  |  |  | 10  | 
|Other creditors                                                            |  |       | 494   |         |  |       | 47    |       |  |  | 2      |  |  |  | 1   | 
|Accruals                                                                   |  |       | 1,050 |         |  |       | 1,487 |       |  |  | 214    |  |  |  | 191 | 
|Deferred income                                                            |  |       | 4,729 |         |  |       | 3,415 |       |  |  |       |  |  |  |    | 
|                                                                           |  |       |       |         |  |       |       |       |  |  |        |  |  |  |     | 
|                                                                           |  |       | 8,470 |         |  |       | 6,183 |       |  |  | 12,800 |  |  |  | 549 | 
|                                                                           |  |       |       |         |  |       |       |       |  |  |        |  |  |  |     | 



|15. |  | Creditors - amounts falling due after more than one year
|--- |  | --------------------------------------------------------

|                                                             |                                                                   |  |       |     |       |  |       |     | 
|------------------------------------------------------------ | ----------------------------------------------------------------- |  | ----- | --- | ----- |  | ----- | --- | 
|                                                             |                                                                   |  | Group
|                                                             |                                                                   |  | 2003  |     | 2002 
|                                                             |                                                                   |  | £000 |     | £000
|                                                             |                                                                   |  |       |     |      
|Loans:                                                       |                                                                   |  |       |     |       |  |       |    
|                                                             | Notes payable to South Australian Minister for Primary Industries |  |       | 306 |       |  |       | 382 | 
|                                                             | Other                                                             |  |       | 231 |       |  |       | 557 | 
|                                                             |                                                                   |  |       |     |       |  |       |    
|                                                             |                                                                   |  | 537   |     |       |  | 939   |    
|Obligations under finance lease and hire purchase agreements |                                                                   |  | 180   |     |       |  | 167   |    
|                                                             |                                                                   |  |       |     |       |  |       |    
|                                                             |                                                                   |  | 717   |     |       |  | 1,106 |    
|                                                             |                                                                   |  |       |     |       |  |       |    
|Repayment of loans:                                          |                                                                   |  |       |     |       |  |       |    
|                                                             | In one year or less, or on demand                                 |  |       | 376 |       |  |       | 381 | 
|                                                             | In more than one year, but not more than two years                |  |       | 351 |       |  |       | 404 | 
|                                                             | In more than two years, but not more than five years              |  |       | 156 |       |  |       | 505 | 
|                                                             | In more than five years                                           |  |       | 30  |       |  |       | 30  | 
|                                                             |                                                                   |  |       |     |       |  |       |    
|                                                             |                                                                   |  | 913   |     |       |  | 1,320 |    
|                                                             |                                                                   |  |       |     |       |  |       |    

F-24



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##### Table of Contents



Obligations under finance lease and hire purchase agreement bear interest at
normal commercial rates and fall due as follows:

|                         |  |       |     |       |  |  |     | 
|------------------------ |  | ----- | --- | ----- |  |  | --- | 
|                         |  | Group
|                         |  | 2003  |     | 2002 
|                         |  | £000 |     | £000
|                         |  |       |     |      
|Less than one year       |  |       | 75  |       |  |  | 50  | 
|Within one to two years  |  |       | 77  |       |  |  | 45  | 
|Within two to five years |  |       | 103 |       |  |  | 122 | 
|                         |  |       |     |       |  |  |     | 
|                         |  |       | 255 |       |  |  | 217 | 
|                         |  |       |     |       |  |  |     | 

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 installments, with the final installment
due in August 2007. The interest rate is variable at the discretion of the
Minister and is payable annually.

The other loans are secured upon the patent shown in the consolidated balance
sheet and are repayable by monthly installments, the final being due in January
2005. The interest rate is variable and reset quarterly based upon the lower of
7% and the Prime lending rate in the United States.



|16. |  | Deferred Taxation
|--- |  | -----------------

A provision for deferred taxation is not required and there is no potential
liability for deferred taxation (2002: £nil).



|17. |  | Share Capital
|--- |  | -------------

|                                   |  |                   |             |                   |  |       |       |       |  |  |             |  |  |  |       | 
|---------------------------------- |  | ----------------- | ----------- | ----------------- |  | ----- | ----- | ----- |  |  | ----------- |  |  |  | ----- | 
|                                   |  | Group and company |             | Group and company
|                                   |  | 2003              |             | 2002             
|                                   |  | No. Shares        |             | £000             |  | £000 |       | £000
|                                   |  |                   |             |                   |  |       |       |      
|Authorized                        
|Ordinary shares of 2p each         |  |                   | 300,000,000 |                   |  |       | 6,000 |       |  |  | 295,000,000 |  |  |  | 5,900 | 
|                                   |  |                   |             |                   |  |       |       |       |  |  |             |  |  |  |       | 
|Allotted, called-up and fully paid
|Ordinary shares of 2p each         |  |                   | 188,232,913 |                   |  |       | 3,765 |       |  |  | 188,232,913 |  |  |  | 3,765 | 
|                                   |  |                   |             |                   |  |       |       |       |  |  |             |  |  |  |       | 

At 31 March 2003 there were unexercised warrants for 887,008 (2002: 887,008)
ordinary shares. Those warrants expire between 15 June 2003 and 9 November
2003 and are exercisable at prices between $0.45 and $2.14 per share.

F-25



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##### Table of Contents



Details of outstanding share options are as follows:

|                                                                |  |            |           |         |  |           |         |            |  |      |   |           |  |             |         |          |  |  |           |  |  |         |                | 
|--------------------------------------------------------------- |  | ---------- | --------- | ------- |  | --------- | ------- | ---------- |  | ---- | - | --------- |  | ----------- | ------- | -------- |  |  | --------- |  |  | ------- | -------------- | 
|                                                                |  | At 1 April |           |         |  |           |         |            |  |      |   | Cancelled |  | At 31 March |         | Exercise
|                                                                |  | 2002       |           | Granted |  | Exercised |         | or expired |  | 2003 |   | price (p)
|                                                                |  |            |           |         |  |           |         |            |  |      |   |          
|Date exercisable                                                |  |            |           |         |  |           |         |            |  |      |   |           |  |             |         |          |  |  |           |  |  |         |                | 
|Individual unapproved                                           |  |            |           |         |  |           |         |            |  |      |   |           |  |             |         |          |  |  |           |  |  |         |                | 
|22 Dec 2002 to 21 Dec 2009                                      |  |            | 600,000   |         |  |           |        |            |  |      |  |           |  |             |        |          |  |  | 600,000   |  |  |         | 39.00          | 
|9 July 2002 to 8 July 2010                                      |  |            |          |         |  |           | 25,000  |            |  |      |  |           |  |             |        |          |  |  | 25,000    |  |  |         | 40.00          | 
|9 July 2002 to 8 July 2010                                      |  |            |          |         |  |           | 15,000  |            |  |      |  |           |  |             |        |          |  |  | 15,000    |  |  |         | 25.00          | 
|9 July 2002 to 31 May 2007                                      |  |            |          |         |  |           | 3,850   |            |  |      |  |           |  |             |        |          |  |  | 3,850     |  |  | US$6.00 |               
|Approved scheme                                                 |  |            |           |         |  |           |         |            |  |      |   |           |  |             |         |          |  |  |           |  |  |         |                | 
|21 July 1997 to 20 July 2004                                    |  |            | 23,535    |         |  |           |        |            |  |      |  |           |  |             |        |          |  |  | 23,535    |  |  |         | 154.66         | 
|25 July 1998 to 24 July 2005                                    |  |            | 52,955    |         |  |           |        |            |  |      |  |           |  |             |        |          |  |  | 52,955    |  |  |         | 68.83          | 
|28 Jan 2003 to 27 Jan 2010                                      |  |            | 72,838    |         |  |           |        |            |  |      |  |           |  |             | 8,363   |          |  |  | 64,475    |  |  |         | 37.50          | 
|28 Feb 2004 to 27 Feb 2011                                      |  |            | 384,000   |         |  |           |        |            |  |      |  |           |  |             | 41,000  |          |  |  | 343,000   |  |  |         | 43.50          | 
|Unapproved scheme                                               |  |            |           |         |  |           |         |            |  |      |   |           |  |             |         |          |  |  |           |  |  |         |                | 
|19 July 1999 to 18 July 2003                                    |  |            | 248,250   |         |  |           |        |            |  |      |  |           |  |             |        |          |  |  | 248,250   |  |  |         | 66.66          | 
|20 Aug 1999 to 19 Aug 2003                                      |  |            | 87,110    |         |  |           |        |            |  |      |  |           |  |             |        |          |  |  | 87,110    |  |  |         | 57.40          | 
|23 Jan 2001 to 22 Jan 2004                                      |  |            | 297,646   |         |  |           |        |            |  |      |  |           |  |             |        |          |  |  | 297,646   |  |  |         | 41.66          | 
|20 Jan 2001 to 19 Jan 2004                                      |  |            | 6,751     |         |  |           |        |            |  |      |  |           |  |             |        |          |  |  | 6,751     |  |  |         | 76.84          | 
|22 June 2001 to 21 June 2008                                    |  |            | 275,000   |         |  |           |        |            |  |      |  |           |  |             |        |          |  |  | 275,000   |  |  |         | 46.00          | 
|23 Dec 2001 to 22 Dec 2005                                      |  |            | 10,305    |         |  |           |        |            |  |      |  |           |  |             |        |          |  |  | 10,305    |  |  |         | 45.00          | 
|22 Dec 2002 to 21 Dec 2009                                      |  |            | 565,000   |         |  |           |        |            |  |      |  |           |  |             | 25,000  |          |  |  | 540,000   |  |  |         | 39.00          | 
|27 Jan 2003 to 26 Jan 2010                                      |  |            | 89,419    |         |  |           |        |            |  |      |  |           |  |             | 1,510   |          |  |  | 87,909    |  |  |         | 37.50          | 
|2 Aug 2003 to 1 Aug 2010                                        |  |            | 2,908     |         |  |           |        |            |  |      |   |           |  |             |        |          |  |  | 2,908     |  |  |         | 28.50          | 
|22 Feb 2004 to 21 Feb 2011                                      |  |            | 1,530,000 |         |  |           |        |            |  |      |  |           |  |             | 100,000 |          |  |  | 1,430,000 |  |  |         | 43.50          | 
|16 Jan 2005 to 15 Jan 2012                                      |  |            | 2,399,000 |         |  |           |        |            |  |      |  |           |  |             | 30,000  |          |  |  | 2,369,000 |  |  |         | 39.50          | 
|9 July 2005 to 8 July 2012                                      |  |            |          |         |  |           | 500,000 |            |  |      |  |           |  |             |        |          |  |  | 500,000   |  |  |         | 25.00          | 
|14 Jan 2006 to 13 Jan 2013                                      |  |            |          |         |  |           | 100,000 |            |  |      |  |           |  |             |        |          |  |  | 100,000   |  |  |         | 21.00          | 
|Savings related options                                         |  |            |           |         |  |           |         |            |  |      |   |           |  |             |         |          |  |  |           |  |  |         |                | 
|1 Oct 2003 to 31 Mar 2004                                       |  |            | 47,260    |         |  |           |        |            |  |      |  |           |  |             |        |          |  |  | 47,260    |  |  |         | 36.50          | 
|1 Apr 2003 to 31 Oct 2003                                       |  |            | 80,592    |         |  |           |        |            |  |      |  |           |  |             | 5,166   |          |  |  | 75,426    |  |  |         | 37.50          | 
|1 Apr 2005 to 31 Oct 2005                                       |  |            | 114,300   |         |  |           |        |            |  |      |  |           |  |             | 18,000  |          |  |  | 96,300    |  |  |         | 37.50          | 
|Protherics PLC option plan
for Therapeutic Antibodies
employees |  |            |           |         |  |           |         |            |  |      |   |           |  |             |         |          |  |  |           |  |  |         |                | 
|27 Jan 2000 to 29 June 2008                                     |  |            | 166,222   |         |  |           |        |            |  |      |  |           |  |             |        |          |  |  | 166,222   |  |  |         | 156.0 to 417.0 | 
|                                                                |  |            |           |         |  |           |         |            |  |      |   |           |  |             |         |          |  |  |           |  |  |         |                | 
|                                                                |  |            | 7,053,091 |         |  |           | 643,850 |            |  |      |  |           |  |             | 229,039 |          |  |  | 7,467,902 |  |  |         |                | 
|                                                                |  |            |           |         |  |           |         |            |  |      |   |           |  |             |         |          |  |  |           |  |  |         |                | 

F-26



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##### Table of Contents



|                                                                |  |            |           |         |  |           |           |            |  |      |   |           |  |             |           |          |  |  |           |  |  |                |        | 
|--------------------------------------------------------------- |  | ---------- | --------- | ------- |  | --------- | --------- | ---------- |  | ---- | - | --------- |  | ----------- | --------- | -------- |  |  | --------- |  |  | -------------- | ------ | 
|                                                                |  | At 1 April |           |         |  |           |           |            |  |      |   | Cancelled |  | At 31 March |           | Exercise
|Date exercisable                                                |  | 2001       |           | Granted |  | Exercised |           | Or expired |  | 2002 |   | price (p)
|                                                                |  |            |           |         |  |           |           |            |  |      |   |          
|Individual unapproved                                           |  |            |           |         |  |           |           |            |  |      |   |           |  |             |           |          |  |  |           |  |  |                |        | 
|22 Dec 2002 to 21 Dec 2009                                      |  |            | 600,000   |         |  |           |          |            |  |      |  |           |  |             |          |          |  |  | 600,000   |  |  |                | 39.00  | 
|Approved scheme                                                 |  |            |           |         |  |           |           |            |  |      |   |           |  |             |           |          |  |  |           |  |  |                |        | 
|21 July 1997 to 20 July 2004                                    |  |            | 47,070    |         |  |           |          |            |  |      |  |           |  |             | 23,535    |          |  |  | 23,535    |  |  |                | 154.66 | 
|25 July 1998 to 24 July 2005                                    |  |            | 52,955    |         |  |           |          |            |  |      |  |           |  |             |          |          |  |  | 52,955    |  |  |                | 68.83  | 
|28 Jan 2003 to 27 Jan 2010                                      |  |            | 135,816   |         |  |           |          |            |  |      |  |           |  |             | 62,978    |          |  |  | 72,838    |  |  |                | 37.50  | 
|28 Feb 2004 to 27 Feb 2011                                      |  |            | 470,624   |         |  |           |          |            |  |      |  |           |  |             | 86,624    |          |  |  | 384,000   |  |  |                | 43.50  | 
|Unapproved scheme                                               |  |            |           |         |  |           |           |            |  |      |   |           |  |             |           |          |  |  |           |  |  |                |        | 
|19 July 1999 to 18 July 2003                                    |  |            | 625,906   |         |  |           |          |            |  |      |  |           |  |             | 377,656   |          |  |  | 248,250   |  |  |                | 66.66  | 
|20 Aug 1999 to 19 Aug 2003                                      |  |            | 87,110    |         |  |           |          |            |  |      |  |           |  |             |          |          |  |  | 87,110    |  |  |                | 57.40  | 
|23 Jan 2001 to 22 Jan 2004                                      |  |            | 521,184   |         |  |           |          |            |  |      |  |           |  |             | 223,538   |          |  |  | 297,646   |  |  |                | 41.66  | 
|24 July 2000 to 23 July 2004                                    |  |            | 55,573    |         |  |           |          |            |  |      |  |           |  |             | 55,573    |          |  |  |          |  |  |                | 42.12  | 
|20 Jan 2001 to 19 Jan 2004                                      |  |            | 6,751     |         |  |           |          |            |  |      |  |           |  |             |          |          |  |  | 6,751     |  |  |                | 76.84  | 
|22 June 2001 to 21 June 2008                                    |  |            | 466,573   |         |  |           |          |            |  |      |  |           |  |             | 191,573   |          |  |  | 275,000   |  |  |                | 46.00  | 
|23 Dec 2001 to 22 Dec 2005                                      |  |            | 30,930    |         |  |           |          |            |  |      |  |           |  |             | 20,625    |          |  |  | 10,305    |  |  |                | 45.00  | 
|22 Dec 2002 to 21 Dec 2009                                      |  |            | 770,000   |         |  |           |          |            |  |      |  |           |  |             | 205,000   |          |  |  | 565,000   |  |  |                | 39.00  | 
|27 Jan 2003 to 26 Jan 2010                                      |  |            | 96,046    |         |  |           |          |            |  |      |  |           |  |             | 6,627     |          |  |  | 89,419    |  |  |                | 37.50  | 
|2 Aug 2003 to 1 Aug 2010                                        |  |            | 2,908     |         |  |           |          |            |  |      |  |           |  |             |          |          |  |  | 2,908     |  |  |                | 28.50  | 
|22 Feb 2004 to 21 Feb 2011                                      |  |            | 1,815,000 |         |  |           |          |            |  |      |  |           |  |             | 285,000   |          |  |  | 1,530,000 |  |  |                | 43.50  | 
|16 Jan 2005 to 15 Jan 2012                                      |  |            |          |         |  |           | 2,399,000 |            |  |      |  |           |  |             |          |          |  |  | 2,399,000 |  |  |                | 39.50  | 
|Savings related options                                         |  |            |           |         |  |           |           |            |  |      |   |           |  |             |           |          |  |  |           |  |  |                |        | 
|1 Oct 2001 to 31 Mar 2002                                       |  |            | 222,238   |         |  |           |          |            |  |      |  |           |  |             | 222,238   |          |  |  |          |  |  |                | 36.50  | 
|1 Oct 2003 to 31 Mar 2004                                       |  |            | 103,026   |         |  |           |          |            |  |      |  |           |  |             | 55,766    |          |  |  | 47,260    |  |  |                | 36.50  | 
|1 Apr 2003 to 31 Oct 2003                                       |  |            | 113,656   |         |  |           |          |            |  |      |  |           |  |             | 33,064    |          |  |  | 80,592    |  |  |                | 37.50  | 
|1 Apr 2005 to 31 Oct 2005                                       |  |            | 123,300   |         |  |           |          |            |  |      |  |           |  |             | 9,000     |          |  |  | 114,300   |  |  |                | 37.50  | 
|Protherics PLC option plan
for Therapeutic Antibodies
employees |  |            |           |         |  |           |           |            |  |      |   |           |  |             |           |          |  |  |           |  |  |                |       
|27 Jan 2000 to 29 June 2008                                     |  |            | 167,966   |         |  |           |          |            |  |      |  |           |  |             | 1,744     |          |  |  | 166,222   |  |  | 156.0 to 417.0 |       
|                                                                |  |            |           |         |  |           |           |            |  |      |   |           |  |             |           |          |  |  |           |  |  |                |       
|                                                                |  |            | 6,514,632 |         |  |           | 2,399,000 |            |  |      |  |           |  |             | 1,860,541 |          |  |  | 7,053,091 |  |  |                |        | 
|                                                                |  |            |           |         |  |           |           |            |  |      |   |           |  |             |           |          |  |  |           |  |  |                |       

Therapeutic Antibodies former employees and consultants

In addition to the above, options over up to 577,714 shares (2002 577,714;
2001: 707,970) previously held under the Therapeutic Antibodies 1990 Plan may
be granted upon request by Therapeutic Antibodies former employees and
consultants under the terms of the Merger Agreement dated 20 May 1999. Option
prices range from $3.00 to $6.99 per share and may be exercised at various
dates from 17 March 1992 to 15 Dec 2006.

S Wallis and M Brown Options

In addition to the above, S Wallis had an arrangement granting an option on up
to 6,054,338 ordinary shares at 39.5p per share which expired unexercised on 31
March 2003. M Brown holds options over 46,520 ordinary shares at $3.86 per
share and 104,670 ordinary shares at $5.15 per share under the Therapeutic
Antibodies 1990 plan. Full details have been provided in note 5.

F-27



---



##### Table of Contents





|18. |  | Reserves
|--- |  | --------

|                             |  |                   |        |              |  |                         |        |         |  |  |          |   |  |  |        |  
|---------------------------- |  | ----------------- | ------ | ------------ |  | ----------------------- | ------ | ------- |  |  | -------- | - |  |  | ------ | -
|                             |  | Group and Company |        | Group Merger |  | Profit and Loss account
|                             |  | Share Premium     |        | Reserve      |  | Group                   |        | Company
|                             |  | £000             |        | £000        |  | £000                   |        | £000  
|                             |  |                   |        |              |  |                         |        |        
|At 31 March 2002             |  |                   | 63,350 |              |  |                         | 51,163 |         |  |  | (108,137 | ) |  |  | (4,912 | )
|Exchange movement            |  |                   |       |              |  |                         |       |         |  |  | 435      |   |  |  |       |  
|Retained (loss) for the year |  |                   |       |              |  |                         |       |         |  |  | (238     | ) |  |  | (1,484 | )
|                             |  |                   |        |              |  |                         |        |         |  |  |          |   |  |  |        |  
|At 31 March 2003             |  |                   | 63,350 |              |  |                         | 51,163 |         |  |  | (107,940 | ) |  |  | (6,396 | )
|                             |  |                   |        |              |  |                         |        |         |  |  |          |   |  |  |        |  

Goodwill on acquisition written off in prior periods amounts to £1,909,000. In
accordance with section 230 (1-4) of the Companies Act 1985, a separate profit
and loss account for the Company is not presented. Of the retained loss for
the year of the Group, £1,484,000 has been dealt with in the accounts of the
Company.



|19. |  | Reconciliation of Movement in Equity Shareholders Funds
|--- |  | --------------------------------------------------------

|                                                                        |  |       |        |       |  |  |        | 
|----------------------------------------------------------------------- |  | ----- | ------ | ----- |  |  | ------ | 
|                                                                        |  | Group
|                                                                        |  | 2003  |        | 2002 
|                                                                        |  | £000 |        | £000
|                                                                        |  |       |        |      
|(Loss)/Profit for the financial year                                    |  |       | (238   | )     |  |  | 2,867  | 
|Currency translation differences on foreign
currency equity investments |  |       | 435    |       |  |  | 18     | 
|Issue of shares                                                         |  |       |       |       |  |  | 3,285  | 
|                                                                        |  |       |        |       |  |  |        | 
|Net increase/(decrease) in shareholders funds                          |  |       | 197    |       |  |  | 6,170  | 
|Opening shareholders funds                                             |  |       | 10,141 |       |  |  | 3,971  | 
|                                                                        |  |       |        |       |  |  |        | 
|Closing shareholders funds                                             |  |       | 10,338 |       |  |  | 10,141 | 
|                                                                        |  |       |        |       |  |  |        | 



|20. |  | Capital Commitments
|--- |  | -------------------

At the year end the Group had capital commitments of £356,000 (2002: £518,000)
authorized but not provided for.



|21. |  | Financial Commitments
|--- |  | ---------------------

At 31 March 2003 the Group had the following annual commitments in respect of
operating leases which expire:

|                         |  |          |     |       |  |       |     |       |  |  |    |  |  |  |    | 
|------------------------ |  | -------- | --- | ----- |  | ----- | --- | ----- |  |  | -- |  |  |  | -- | 
|                         |  | Property |     | Other
|                         |  | 2003     |     | 2002  |  | 2003  |     | 2002 
|                         |  | £000    |     | £000 |  | £000 |     | £000
|                         |  |          |     |       |  |       |     |      
|Within one year          |  |          | 83  |       |  |       | 37  |       |  |  | 9  |  |  |  | 17 | 
|Within two to five years |  |          | 51  |       |  |       | 309 |       |  |  | 20 |  |  |  | 14 | 
|                         |  |          |     |       |  |       |     |       |  |  |    |  |  |  |    | 
|                         |  |          | 134 |       |  |       | 346 |       |  |  | 29 |  |  |  | 31 | 
|                         |  |          |     |       |  |       |     |       |  |  |    |  |  |  |    | 

F-28



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##### Table of Contents





|22. |  | Notes to the Consolidated Cash Flow Statement                       
|--- |  | --------------------------------------------------------------------
|   
|(i) |  | Reconciliation of operating loss to net cash outflow from operations

|                                                   |  |          |        |          |  |          |        |   |  |  |        |  
|-------------------------------------------------- |  | -------- | ------ | -------- |  | -------- | ------ | - |  |  | ------ | -
|                                                   |  | 31 March |        | 31 March |  | 31 March
|                                                   |  | 2003     |        | 2002     |  | 2001    
|                                                   |  | £000    |        | £000    |  | £000   
|                                                   |  |          |        |          |  |         
|Operating loss                                     |  |          | (604   | )        |  |          | (2,102 | ) |  |  | (6,543 | )
|Depreciation and amortization                      |  |          | 1,025  |          |  |          | 958    |   |  |  | 1,298  |  
|(Profit)/loss on disposal of tangible fixed assets |  |          | (2     | )        |  |          | 16     |   |  |  | 55     |  
|Deferred grant income                              |  |          | (101   | )        |  |          | (55    | ) |  |  | (55    | )
|Grant received                                     |  |          | 122    |          |  |          |       |   |  |  |       |  
|Increase in stocks                                 |  |          | (3,092 | )        |  |          | (2,295 | ) |  |  | (1,626 | )
|Increase in debtors                                |  |          | (1,677 | )        |  |          | (388   | ) |  |  | (631   | )
|Increase in creditors                              |  |          | 2,606  |          |  |          | 2,264  |   |  |  | 1,468  |  
|(Profit) on sale of current asset investments      |  |          |       |          |  |          | (33    | ) |  |  |       |  
|Share capital issued in lieu of fees               |  |          |       |          |  |          |       |   |  |  | 46     |  
|                                                   |  |          |        |          |  |          |        |   |  |  |        |  
|Net cash outflow from operating activities         |  |          | (1,723 | )        |  |          | (1,635 | ) |  |  | (5,988 | )
|                                                   |  |          |        |          |  |          |        |   |  |  |        |  



|(ii) |  | Reconciliation of net cash flow to movement in net debt.
|---- |  | --------------------------------------------------------

|                                                           |  |          |        |          |  |          |        |   |  |  |        |  
|---------------------------------------------------------- |  | -------- | ------ | -------- |  | -------- | ------ | - |  |  | ------ | -
|                                                           |  | 31 March |        | 31 March |  | 31 March
|                                                           |  | 2003     |        | 2002     |  | 2001    
|                                                           |  | £000    |        | £000    |  | £000   
|                                                           |  |          |        |          |  |         
|(Decrease)/increase in cash                                |  |          | (3,511 | )        |  |          | 4,685  |   |  |  | 809    |  
|Cash (inflow) from management of liquid resources          |  |          |       |          |  |          | (1,686 | ) |  |  | (1,604 | )
|Cash outflow/(inflow) from financing                       |  |          | 535    |          |  |          | 420    |   |  |  | (2,873 | )
|                                                           |  |          |        |          |  |          |        |   |  |  |        |  
|(Decrease)/increase in net funds resulting from cash flows |  |          | (2,976 | )        |  |          | 3,419  |   |  |  | (3,668 | )
|Conversion of loan notes into shares                       |  |          |       |          |  |          | 3,034  |   |  |  | 2,173  |  
|New loans in respect of patents purchased                  |  |          |       |          |  |          | (858   | ) |  |  |       |  
|New finance lease and hire purchase agreements             |  |          | (89    | )        |  |          | (302   | ) |  |  | (120   | )
|Finance leases disposed of with business                   |  |          |       |          |  |          | 256    |   |  |  |       |  
|Foreign exchange differences                               |  |          | (21    | )        |  |          | 31     |   |  |  | (86    | )
|                                                           |  |          |        |          |  |          |        |   |  |  |        |  
|(Decrease)/increase in net funds in the year               |  |          | (3,086 | )        |  |          | 5,580  |   |  |  | (1,701 | )
|Net funds/(debt) brought forward                           |  |          | 4,674  |          |  |          | (906   | ) |  |  | 795    |  
|                                                           |  |          |        |          |  |          |        |   |  |  |        |  
|Net funds/(debt) carried forward                           |  |          | 1,588  |          |  |          | 4,674  |   |  |  | (906   | )
|                                                           |  |          |        |          |  |          |        |   |  |  |        |  



|(iii) |  | Analysis of net funds/(debt)
|----- |  | ----------------------------

|                                                             |  |       |       |           |  |         |        |             |  |          |     |         |  |       |     |   |  |  |       |  
|------------------------------------------------------------ |  | ----- | ----- | --------- |  | ------- | ------ | ----------- |  | -------- | --- | ------- |  | ----- | --- | - |  |  | ----- | -
|                                                             |  | At 1  |       |           |  |         |        |             |  |          |     | Foreign |  | At 31
|                                                             |  | April |       |           |  |         |        | Non-cash    |  | Exchange |     | March  
|                                                             |  | 2002  |       | Cash flow |  | Changes |        | Differences |  | 2003    
|                                                             |  | £000 |       | £000     |  | £000   |        | £000       |  | £000   
|                                                             |  |       |       |           |  |         |        |             |  |         
|Cash at bank and in hand                                     |  |       | 6,211 |           |  |         | (3,511 | )           |  |          |    |         |  |       | 56  |   |  |  | 2,756 |  
|                                                             |  |       |       |           |  |         |        |             |  |          |     |         |  |       |     |   |  |  |       |  
|                                                             |  |       | 6,211 |           |  |         | (3,511 | )           |  |          |    |         |  |       | 56  |   |  |  | 2,756 |  
|Loans  amounts falling
due in less than one
year            |  |       | (381  | )         |  |         | 30     |             |  |          |    |         |  |       | (25 | ) |  |  | (376  | )
|Loans  amounts falling
due in more than one
year            |  |       | (939  | )         |  |         | 454    |             |  |          |    |         |  |       | (52 | ) |  |  | (537  | )
|Obligations under
finance lease and hire
purchase agreements |  |       | (217  | )         |  |         | 51     |             |  |          | (89 | )       |  |       |    |   |  |  | (255  | )
|                                                             |  |       |       |           |  |         |        |             |  |          |     |         |  |       |     |   |  |  |       |  
|                                                             |  |       | 4,674 |           |  |         | (2,976 | )           |  |          | (89 | )       |  |       | (21 | ) |  |  | 1,588 |  
|                                                             |  |       |       |           |  |         |        |             |  |          |     |         |  |       |     |   |  |  |       |  

F-29



---



##### Table of Contents



Cash at bank and in hand represent cash and deposits held at financial
institutions that can be accessed with notice not exceeding 24 hours.

Non-cash changes to finance leases and hire purchase agreements relate to new
agreements entered into during the year.



|23. |  | Contingent Liabilities
|--- |  | ----------------------

The Company has guaranteed certain operating lease, finance lease and hire
purchase agreements entered into by subsidiary companies.



|24. |  | Sale of business
|--- |  | ----------------

On 12 July 2001 the Group sold its computer aided molecular design division
(CAMD) to Tularik for 400,000 shares. Tularik is listed in the USA on NASDAQ.
These shares were subsequently sold to finance working capital requirements.
The cash effects of the disposal are shown below.

|                                                                    |  |       |       |  
|------------------------------------------------------------------- |  | ----- | ----- | -
|                                                                    |  | £000
|                                                                    |  |      
|Tangible fixed assets                                               |  |       | 1,014 |  
|Loans and finance leases                                            |  |       | (256  | )
|                                                                    |  |       |       |  
|                                                                    |  |       | 758   |  
|Profit on disposal                                                  |  |       | 5,032 |  
|                                                                    |  |       |       |  
|Valuation of net consideration received on date of disposal of CAMD |  |       | 5,790 |  
|                                                                    |  |       |       |  
|Satisfied by:                                                       |  |       |       |  
|Shares in Tularik Inc.                                              |  |       | 6,292 |  
|Cash sale costs                                                     |  |       | (502  | )
|                                                                    |  |       |       |  
|                                                                    |  |       | 5,790 |  
|Profit on subsequent disposal of shares                             |  |       | 33    |  
|                                                                    |  |       |       |  
|Cash received on disposal of shares                                 |  |       | 5,823 |  
|                                                                    |  |       |       |  

It is anticipated that the profit generated on the sale will be wholly relieved
by available tax losses and reliefs.

F-30



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##### Table of Contents





|25. |  | Financial Instruments
|--- |  | ---------------------

The Groups financial instruments comprise borrowings, some cash and liquid
resources, forward foreign currency contracts and various items, such as trade
debtors and trade creditors, that arise directly from its operations.

It is, and has been throughout the period under review, the Groups policy that
no speculative trading in derivative financial instruments shall be undertaken.

Interest Rate Risk

The Group finances its operations through a mixture of equity and borrowings.
Its ability to borrow is restricted by the nature of its activities. Whether
to borrow on fixed or floating rate terms is one of several components of any
decision to borrow on particular terms. Additional considerations include the
level of interest rates proposed, the maturity profile and potential conversion
rights.

As such the Group does not have a policy in relation to interest rates in
isolation. However, by holding a mix of fixed and floating rate financial
liabilities, the Group seeks to mitigate partially against increased interest
rates whilst maintaining a degree of flexibility to benefit from decreasing
rates of interest.

Liquidity Risk

The Groups principal policy in managing liquidity risk is to align the
maturity profile of its anticipated net revenue stream with that of its
financial assets and liabilities taking into account the commercial risk
inherent in its product portfolio.

At 31 March 2003, the Group held net cash balances of £2.8 million. Of this
amount, £1.2 million was invested in overnight money market deposits so as to
maximize returns received.

Foreign Currency Risk

The Group makes use of forward foreign currency contracts to fix a proportion
of its expected US dollar sales into Sterling. The Group has overseas
subsidiaries in the USA and Australia whose revenues, expenses, assets and
liabilities are denominated in US dollars and Australian dollars respectively.
In order to protect the Groups sterling balance sheet from movements in
exchange rates, Group companies have borrowed funds in their local currency.

The company has decided to opt to exclude short term trade debtors and
creditors from the following analyses (other than the currency exposure
disclosures) as allowed under FRS 13.

F-31



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##### Table of Contents



Financial assets

Financial assets comprise cash balances and money market deposits which attract
variable rates which are based on market rates in each country. An analysis of
financial assets by currency is as follows:

|                             |                   |  |          |       |          |  |       |       | 
|---------------------------- | ----------------- |  | -------- | ----- | -------- |  | ----- | ----- | 
|                             |                   |  | 31 March |       | 31 March
|                             |                   |  | 2003     |       | 2002    
|                             |                   |  | £000    |       | £000   
|                             |                   |  |          |       |         
|Financial assets by currency |                   |  |          |       |          |  |       |      
|                             | Sterling          |  |          | 2,005 |          |  |       | 5,484 | 
|                             | US Dollar         |  |          | 313   |          |  |       | 603   | 
|                             | Australian Dollar |  |          | 438   |          |  |       | 124   | 
|                             |                   |  |          |       |          |  |       |      
|                             |                   |  | 2,756    |       |          |  | 6,211 |      
|                             |                   |  |          |       |          |  |       |      

All financial assets mature within one year, or on demand.

Borrowing Facilities

The Group had an undrawn committed facility of £2,000,000 available at 31 March
2003 (2002: £nil). The facility at 31 March 2003 was secured by a mortgage on
the Groups property in Wales and a floating charge over the assets of the
Group. The facility expired on 31 May 2003.

Financial Liabilities

The Group held the following financial liabilities at 31 March 2003.

|         |                   |  |            |     |               |  |             |      |               |  |             |     |          |  |              |     |  |  |    |    |  |  |       |     | 
|-------- | ----------------- |  | ---------- | --- | ------------- |  | ----------- | ---- | ------------- |  | ----------- | --- | -------- |  | ------------ | --- |  |  | -- | -- |  |  | ----- | --- | 
|         |                   |  | Fixed rate |     | Fixed rate    |  |             |      |               |  |             |     |          |  | Non interest |     |  |  |   
|         |                   |  | weighted   |     | weighted      |  | Fixed rate  |      | Floating rate |  | bearing     |     | 31 March
|         |                   |  | average    |     | average       |  | financial   |      | financial     |  | financial   |     | 2003    
|         |                   |  | period     |     | interest rate |  | liabilities |      | liabilities   |  | liabilities |     | Total   
|         |                   |  | years      |     | %             |  | £000       |      | £000         |  | £000       |     | £000   
|         |                   |  |            |     |               |  |             |      |               |  |             |     |         
|Currency |                   |  |            |     |               |  |             |      |               |  |             |     |          |  |              |     |  |  |    |    |  |  |       |    
|         | Sterling          |  |            | 4.8 |               |  |             | 10.8 |               |  |             | 229 |          |  |              |    |  |  |    |   |  |  |       | 229 | 
|         | US Dollar         |  |            |    |               |  |             |     |               |  |             |    |          |  |              | 497 |  |  |    |   |  |  |       | 497 | 
|         | Australian Dollar |  |            | 2.0 |               |  |             | 7.3  |               |  |             | 26  |          |  |              | 385 |  |  |    | 31 |  |  |       | 442 | 
|         |                   |  |            |     |               |  |             |      |               |  |             |     |          |  |              |     |  |  |    |    |  |  |       |    
|Total    |                   |  | 4.6        |     |               |  | 10.4        |      |               |  | 255         |     |          |  | 882          |     |  |  | 31 |    |  |  | 1,168 |    
|         |                   |  |            |     |               |  |             |      |               |  |             |     |          |  |              |     |  |  |    |    |  |  |       |    

The Group held the following financial liabilities at 31 March 2002.

|         |                   |  |            |     |               |  |             |      |               |  |             |     |          |  |              |     |  |  |    |    |  |  |       |     | 
|-------- | ----------------- |  | ---------- | --- | ------------- |  | ----------- | ---- | ------------- |  | ----------- | --- | -------- |  | ------------ | --- |  |  | -- | -- |  |  | ----- | --- | 
|         |                   |  | Fixed rate |     | Fixed rate    |  |             |      |               |  |             |     |          |  | Non interest |     |  |  |   
|         |                   |  | weighted   |     | weighted      |  | Fixed rate  |      | Floating rate |  | bearing     |     | 31 March
|         |                   |  | average    |     | average       |  | financial   |      | financial     |  | financial   |     | 2002    
|         |                   |  | period     |     | interest rate |  | liabilities |      | liabilities   |  | liabilities |     | Total   
|         |                   |  | years      |     | %             |  | £000       |      | £000         |  | £000       |     | £000   
|         |                   |  |            |     |               |  |             |      |               |  |             |     |         
|Currency |                   |  |            |     |               |  |             |      |               |  |             |     |          |  |              |     |  |  |    |    |  |  |       |    
|         | Sterling          |  |            | 5.0 |               |  |             | 11.3 |               |  |             | 212 |          |  |              |    |  |  |    |   |  |  |       | 212 | 
|         | US Dollar         |  |            |    |               |  |             |     |               |  |             |    |          |  |              | 808 |  |  |    |   |  |  |       | 808 | 
|         | Australian Dollar |  |            | 1.0 |               |  |             | 8.3  |               |  |             | 5   |          |  |              | 482 |  |  |    | 30 |  |  |       | 517 | 
|         |                   |  |            |     |               |  |             |      |               |  |             |     |          |  |              |     |  |  |    |    |  |  |       |    
|Total    |                   |  | 4.9        |     |               |  | 11.2        |      |               |  | 217         |     |          |  | 1,290        |     |  |  | 30 |    |  |  | 1,537 |    
|         |                   |  |            |     |               |  |             |      |               |  |             |     |          |  |              |     |  |  |    |    |  |  |       |    

F-32



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##### Table of Contents



A maturity profile of financial liabilities, which include loan notes and
obligations under finance leases and hire purchase obligations is presented in
note 15.

Floating rate borrowings are based on interbank rates in each country.

Fair Value of Financial Assets and Financial Liabilities

The book value and the fair value of money market deposits equate due to their
short-term nature. The fair value of forward foreign currency contracts, based
on closing exchange rates at the year end, was an asset of £484,000, compared
to a book value of £41,000 (2002: liability of £25,000, compared to a book
value of £nil). The fair value of all other items has been calculated by
discounting expected future cash flows at prevailing interest rates, and is not
materially different from their book value.

Currency profile

The main functional currencies of the group are sterling, the US dollar and the
Australian dollar. The following analysis of net monetary assets and
liabilities shows the Groups currency exposures after the effects of forward
contracts used to manage currency exposure. The amounts show the transactional
(or non structural) exposures that give rise to the net currency gains and
losses recognized in the profit and loss account. Such exposures comprise the
monetary assets and monetary liabilities of the group that are not denominated
in the operating (or functional) currency of the operating unit involved.

|                    |                   |  |               |        |             |  |             |        |             |  |       |       |  |  |     |     |   |  |        |        |  
|------------------- | ----------------- |  | ------------- | ------ | ----------- |  | ----------- | ------ | ----------- |  | ----- | ----- |  |  | --- | --- | - |  | ------ | ------ | -
|                    |                   |  | 31 March 2003
|                    |                   |  |               |        |             |  | Australian  |        |             |  |       |       |  |  |     |     |   |  |       
|                    |                   |  | Sterling      |        | Dollar      |  | US Dollar   |        | Euro        |  |       |       | 
|                    |                   |  | denominated   |        | denominated |  | denominated |        | denominated |  | Total
|                    |                   |  | £000         |        | £000       |  | £000       |        | £000       |  | £000
|                    |                   |  |               |        |             |  |             |        |             |  |      
|Functional Currency |                   |  |               |        |             |  |             |        |             |  |       |       |  |  |     |     |   |  |        |       
|                    | Sterling          |  |               |       |             |  |             | (4,681 | )           |  |       | 2,327 |  |  |     | (53 | ) |  |        | (2,407 | )
|                    | Australian Dollar |  |               |       |             |  |             |       |             |  |       |      |  |  |     |    |   |  |        |       |  
|                    | US Dollar         |  |               | (3,057 | )           |  |             |       |             |  |       |      |  |  |     |    |   |  |        | (3,057 | )
|                    |                   |  |               |        |             |  |             |        |             |  |       |       |  |  |     |     |   |  |        |       
|Total               |                   |  | (3,057        | )      |             |  | (4,681      | )      |             |  | 2,327 |       |  |  | (53 | )   |   |  | (5,464 | )     
|                    |                   |  |               |        |             |  |             |        |             |  |       |       |  |  |     |     |   |  |        |       

|                    |                   |  |               |        |             |  |             |      |             |  |       |       |  |  |   |   |  |  |        |        |  
|------------------- | ----------------- |  | ------------- | ------ | ----------- |  | ----------- | ---- | ----------- |  | ----- | ----- |  |  | - | - |  |  | ------ | ------ | -
|                    |                   |  | 31 March 2002
|                    |                   |  |               |        |             |  | Australian  |      |             |  |       |       |  |  |   |   |  |  |       
|                    |                   |  | Sterling      |        | Dollar      |  | US Dollar   |      | Euro        |  |       |       | 
|                    |                   |  | denominated   |        | denominated |  | denominated |      | denominated |  | Total
|                    |                   |  | £000         |        | £000       |  | £000       |      | £000       |  | £000
|                    |                   |  |               |        |             |  |             |      |             |  |      
|Functional Currency |                   |  |               |        |             |  |             |      |             |  |       |       |  |  |   |   |  |  |        |       
|                    | Sterling          |  |               |       |             |  |             | (270 | )           |  |       | 4,193 |  |  |   |  |  |  |        | 3,923  |  
|                    | Australian Dollar |  |               | (3,013 | )           |  |             |     |             |  |       |      |  |  |   |  |  |  |        | (3,013 | )
|                    | US Dollar         |  |               | (2,935 | )           |  |             |     |             |  |       |      |  |  |   |  |  |  |        | (2,935 | )
|                    |                   |  |               |        |             |  |             |      |             |  |       |       |  |  |   |   |  |  |        |       
|Total               |                   |  | (5,948        | )      |             |  | (270        | )    |             |  | 4,193 |       |  |  |  |   |  |  | (2,025 | )     
|                    |                   |  |               |        |             |  |             |      |             |  |       |       |  |  |   |   |  |  |        |       

Hedging

The Group makes use of forward foreign currency contracts to fix a proportion
of its expected US dollar sales into Sterling. At 31 March 2003, there were
unrecognized profits of £443,000 (2002: unrecognized losses of £25,000). As in
the prior year, these forward foreign currency contracts are due to expire
within 12 months of the balance sheet date.

F-33



---



##### Table of Contents





|26. |  | Important Events Occurring After The End Of The Year
|--- |  | ----------------------------------------------------

On 2 May 2003, the Company announced that it had reached agreement on the terms
of a recommended offer for Enact Pharma plc (Enact), the OFEX traded
biopharmaceutical company and this offer was declared unconditional as to
acceptances on 29 May 2003. The consideration for this offer was the issue of
£17.05 of Protherics convertible loan notes and the distribution of 5.93 New
Opportunities Investment Trust shares currently held by Enact for every 100
Enact shares, valuing the existing share capital of Enact at approximately £7.9
million.

In parallel with the offer, the Company announced a fully underwritten Cash
Placing and Open Offer to raise £3 million, the proceeds of which will be used
to provide additional working capital for the enlarged Group.

The remainder of this note does not form part of the audited statements.

The offer for Enact was declared wholly unconditional on 18 June 2003.

The Companys Annual Report for the year ended 31 March 2003 was approved by
its board of directors on 18 June 2003. Subsequently, as a result of a review by the FDA of
reprocessed product communicated to the Company in August 2003, the Company has written off certain inventory. Had the information been
available prior to approval and publication of the Companys 2003 results, the
realizable value of inventory at 31 March 2003 would have been lower by
£537,000 and the loss for the year
then ended would have increased by a corresponding amount.



|27. |  | Differences between U.K. and U.S. generally accepted accounting principles
|--- |  | --------------------------------------------------------------------------

The consolidated financial statements have been prepared in accordance with
U.K. GAAP which differ in certain significant respects from U.S. GAAP. The
main differences between U.K. GAAP and U.S. GAAP that affect the Groups
consolidated loss and net assets are set out below.



|(a) |  | Computer software
|--- |  | -----------------

The Group has capitalized costs incurred in developing its Prometheus software
for internal use. A significant proportion of these costs relate to internal
costs incurred during the development period. U.S. GAAP requires such costs to
be expensed and, consequently, the costs capitalized under U.K. GAAP have been
written off to conform with U.S. GAAP.



|(b) |  | Goodwill
|--- |  | --------

Under U.K. GAAP, it is the Companys policy that goodwill arising on
acquisitions during accounting periods ending on or after December 23, 1998 is
capitalized in the balance sheet and amortized over its estimated useful
economic life limited to a period of 20 years or less. Goodwill arising from
acquisitions consummated in accounting periods ended before December 23, 1998
was charged against reserves in the year of acquisition. On a subsequent
disposal or an indication of impairment in respect of the acquired asset or
entity, the effect of any associated goodwill was eliminated from reserves and
then charged against the profit and loss account.

Under U.S. GAAP, goodwill is capitalized in the balance sheet and is
subsequently amortized over its estimated useful economic life not exceeding 40
years.

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For purposes of restating shareholders equity in accordance with U.S. GAAP,
goodwill has been reclassified as an asset less amortization based upon the
useful economic life of 10 years on a straight line basis.

Goodwill under U.S. GAAP is stated at cost less amortization as follows:

|                         |  |       |        |       |  |       |        |   |  |  |        |  
|------------------------ |  | ----- | ------ | ----- |  | ----- | ------ | - |  |  | ------ | -
|                         |  | 2003  |        | 2002  |  | 2001 
|                         |  | £000 |        | £000 |  | £000
|                         |  |       |        |       |  |      
|Cost                     |  |       | 1,909  |       |  |       | 1,909  |   |  |  | 1,909  |  
|Accumulated Amortization |  |       | (1,909 | )     |  |       | (1,909 | ) |  |  | (1,909 | )
|                         |  |       |        |       |  |       |        |   |  |  |        |  
|Net book value           |  |       |       |       |  |       |       |   |  |  |       |  
|                         |  |       |        |       |  |       |        |   |  |  |        |  



|(c) |  | Stock compensation plans
|--- |  | ------------------------

As required under U.K. GAAP, Urgent Issues Task Force Abstract 17 (UITF17)
the expense of share options granted to employees is recognized in the Groups
financial statements when the share options have been granted. Such grants
give rise to the compensation expense measured by reference to the fair value
of shares only on the date of grant, and at no subsequent date for variable
plans. Under U.S. GAAP, as permitted by statement of Financial Accounting
Standard No. 123, Accounting for Stock-based Compensation, the Group 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 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. Under U.S. GAAP, no expense has been recognized
in the two years ended 31 March 2003 since the market value was below the
exercise price of these options.



|(d) |  | Revenue Recognition
|--- |  | -------------------

Certain sales of the Companys
CroFab® and DigiFab products include a right of replacement or return. Under
U.S. GAAP, FASB 48 Revenue Recognition when Right of Return Exists indicates
that an absence of historical experience with similar types of sales of similar
products may impair the ability to make a reasonable estimate of returns.
Because CroFab® and DigiFab are both relatively new products, there is an
absence of historical experience for these sales, and therefore all revenue
related to sales that include a right of replacement must be deferred under U.
S. GAAP until the replacement or return privilege expires. In addition to the
net effect on net profit/(loss) and shareholders equity for fiscal 2003 and
2002, under US GAAP the following balances would be restated to the figures
shown below:

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|                   |  |            |        |            |  |  |       | 
|------------------ |  | ---------- | ------ | ---------- |  |  | ----- | 
|                   |  | US GAAP   
|                   |  | Year ended |        | Year ended
|                   |  | 31 March   |        | 31 March  
|                   |  | 2003       |        | 2002      
|                   |  | £000      |        | £000     
|                   |  |            |        |           
|Revenues           |  |            | 12,515 |            |  |  | 7,416 | 
|Cost of goods sold |  |            | 8,284  |            |  |  | 4,584 | 
|Inventory          |  |            | 7,315  |            |  |  | 6,573 | 
|Deferred Income    |  |            | 5,923  |            |  |  | 5,854 | 



|(e) |  | Accounting for Derivative Instruments and Hedging Activities.
|--- |  | -------------------------------------------------------------

Financial Accounting Standard No. 133, Accounting for Derivative Instruments
and Hedging Activities was issued in June 1998. This standard, which was
effective for fiscal years beginning after 1 January 2001, requires all
derivatives to be recognized in the balance sheet as either assets or
liabilities and measured at fair value. As a result of adopting FAS No.133,
there was a one-time, unrealized loss of £84,000 (net of tax) to equity
shareholders funds under U.S. GAAP as a cumulative-effect-type change in
accounting principle to recognize the fair value of derivative instruments held
at April 1, 2001. During the year ending March 31, 2002, the £84,000 was
reclassified to current earnings, which had the same effect as settlement of
the instruments under U.K. GAAP. 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 in current earnings. For the years ended March 31, 2002 and March
31, 2003 there is a difference between U.S. GAAP and U.K. GAAP to record the
fair value of the derivative instruments on the balance sheet at March 31, 2002
and March 31, 2003 resulting in a decrease in profit of £25,000 and increase in
profit of £418,000 respectively.



|(f) |  | Approximate effect on net (loss)/profit of differences between U.K. GAAP
and U.S. GAAP
|--- |  | --------------------------------------------------------------------------------------

|                                         |                                               |  |            |        |            |  |            |      |   |  |        |     | 
|---------------------------------------- | --------------------------------------------- |  | ---------- | ------ | ---------- |  | ---------- | ---- | - |  | ------ | --- | 
|                                         |                                               |  | Year ended |        | Year ended |  | Year ended
|                                         |                                               |  | 31 March   |        | 31 March   |  | 31 March  
|                                         |                                               |  | 2003       |        | 2002       |  | 2001      
|                                         |                                               |  | £000      |        | £000      |  | £000     
|Net (loss)/profit of Group under UK GAAP |                                               |  | (238       | )      |            |  | 2,867      |      |   |  | (6,206 | )  
|Adjustments:                             |                                               |  |            |        |            |  |            |      |   |  |        |    
|                                         | Computer Software                             |  |            |       |            |  |            | 370  |   |  |        | 11  | 
|                                         | Revenue recognition                           |  |            | (1,119 | )          |  |            | (443 | ) |  |        | 598 | 
|                                         | Derivative instruments and hedging activities |  |            | 468    |            |  |            | (25  | ) |  |        |    | 
|                                         |                                               |  |            |        |            |  |            |      |   |  |        |    
|Net (loss)/profit under US GAAP          |                                               |  | (889       | )      |            |  | 2,769      |      |   |  | (5,597 | )  
|                                         |                                               |  |            |        |            |  |            |      |   |  |        |    

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|(g) |  | Approximate effect on equity shareholders funds of differences between
U.K. GAAP and U.S. GAAP
|--- |  | -----------------------------------------------------------------------------------------------

|                                         |                                               |  |            |      |            |  |            |     |   |  |       |      |  
|---------------------------------------- | --------------------------------------------- |  | ---------- | ---- | ---------- |  | ---------- | --- | - |  | ----- | ---- | -
|                                         |                                               |  | Year ended |      | Year ended |  | Year ended
|                                         |                                               |  | 31 March   |      | 31 March   |  | 31 March  
|                                         |                                               |  | 2003       |      | 2002       |  | 2001      
|                                         |                                               |  | £000      |      | £000      |  | £000     
|Equity Shareholders funds under UK GAAP |                                               |  | 10,338     |      |            |  | 10,141     |     |   |  | 3,971 |     
|Adjustments:                             |                                               |  |            |      |            |  |            |     |   |  |       |     
|                                         | Computer Software                             |  |            |     |            |  |            |    |   |  |       | (370 | )
|                                         | Revenue recognition                           |  |            | (964 | )          |  |            | 155 |   |  |       | 598  |  
|                                         | Derivative instruments and hedging activities |  |            | 443  |            |  |            | (25 | ) |  |       |     |  
|                                         |                                               |  |            |      |            |  |            |     |   |  |       |     
|Equity Shareholders funds under US GAAP |                                               |  | 9,817      |      |            |  | 10,271     |     |   |  | 4,199 |     
|                                         |                                               |  |            |      |            |  |            |     |   |  |       |     



|(h) |  | Consolidated cash flow statements
|--- |  | ---------------------------------

The Groups consolidated financial statements include Consolidated Statements
of Cash Flows in accordance with U.K. Financial Reporting Standard 1 (Revised
1996) - Cash Flow Statements (FRS 1 (Revised)). The statement prepared
under FRS 1 (Revised) presents substantially the same information as that
required under U.S. Statement of Financial Accounting Standard No. 95 (SFAS
95), except that FRS 1 (Revised) reflects changes in cash (cash in hand and
deposits repayable on demand less any bank loans or bank overdrafts repayable
on demand), whereas SFAS 95 reflects changes in the total of cash and cash
equivalents.

Under FRS 1 (Revised) cash flows are presented separately for (i) operating
activities: (ii) returns on investments and servicing of finance; (iii)
taxation; (iv) capital expenditure and financial investment (and acquisitions
and disposals); (v) management of liquid resources; and (vi) financing
activities. SFAS 95 only requires presentation of cash flows from operating,
investing and financing activities.

Cash flows under FRS1 (Revised) in respect of interest received, interest paid
(net of that capitalized), interest on finance leases and taxation would be
included within operating activities under SFAS 95. Under SFAS 95 all
short-term borrowings are included in financing activities.

The following statements summarize the statement of cash flows for the Group as
if they had been presented in accordance with U.S. GAAP and include the
adjustments which reconcile cash and cash equivalents under U.S. GAAP to cash
reported under U.K. GAAP.

|                                                                   |  |          |        |          |  |          |        |   |  |  |        |  
|------------------------------------------------------------------ |  | -------- | ------ | -------- |  | -------- | ------ | - |  |  | ------ | -
|                                                                   |  | Year     |        | Year     |  | Year    
|                                                                   |  | ended 31 |        | ended 31 |  | ended 31
|                                                                   |  | March    |        | March    |  | March   
|                                                                   |  | 2003     |        | 2002     |  | 2001    
|                                                                   |  | £000    |        | £000    |  | £000   
|                                                                   |  |          |        |          |  |         
|Net cash outflow from operating activities                         |  |          | (1,080 | )        |  |          | (1,602 | ) |  |  | (5,960 | )
|Net cash flows of investing activities                             |  |          | (1,840 | )        |  |          | 5,031  |   |  |  | (554   | )
|Net cash flows of financing activities                             |  |          | (535   | )        |  |          | (422   | ) |  |  | 5,904  |  
|                                                                   |  |          |        |          |  |          |        |   |  |  |        |  
|Net (decrease)/increase in cash and cash equivalents under US GAAP |  |          | (3,455 | )        |  |          | 3,007  |   |  |  | (610   | )
|Cash and cash equivalents under US GAAP at beginning of year       |  |          | 6,211  |          |  |          | 3,204  |   |  |  | 3,814  |  
|                                                                   |  |          |        |          |  |          |        |   |  |  |        |  
|Cash and cash equivalents under US GAAP at end of year             |  |          | 2,756  |          |  |          | 6,211  |   |  |  | 3,204  |  
|Short term cash deposits                                           |  |          |       |          |  |          |       |   |  |  |       |  
|Restricted cash balances                                           |  |          |       |          |  |          |       |   |  |  |       |  
|                                                                   |  |          |        |          |  |          |        |   |  |  |        |  
|Cash and bank balances under UK GAAP at end of year                |  |          | 2,756  |          |  |          | 6,211  |   |  |  | 3,204  |  
|                                                                   |  |          |        |          |  |          |        |   |  |  |        |  



|(i) |  | Recently issued accounting pronouncements
|--- |  | -----------------------------------------

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In April 2002 SFAS 145, Rescission of FASB Statements no. 4, 44 and 64,
Amendment of FASB Statement no. 13 and Technical Corrections was issued. The
statement updates, clarifies and simplifies existing accounting standards
related to the presentation of gains and losses from certain extinguishments of
debt, the accounting for certain intangible assets and the accounting for
certain sale-leaseback transactions. Significant provisions of this statement
applicable to the Company are effective for our 2004 fiscal year. Management
does not believe the adoption of this standard will have a material impact on
the Companys results of operations and financial position.

In July 2002, the FASB issued FAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities (FAS 146). This standard will require
companies to recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of a commitment to an exit or
disposal plan. The standard replaces the existing guidance provided by EITF
Issue No. 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring). This standard will be effective for the Company for the
year ending March 31, 2004. The requirements of FAS 146 would apply to future
disposal activities.

In April 2003 the FASB issued SFAS No 149 Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This Statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under SFAS
no. 133, Accounting for Derivative Instruments and Hedging Activities.
Management does not believe the adoption of this standard will have a material
impact on the Companys results of operations and financial position.

In May 2003 the FASB issued SFAS 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity (SFAS 150).
SFAS 150 improves the accounting for certain financial instruments that, under
previous guidance, issuers could account for as equity, and requires that these
instruments be classified as liabilities in statements of financial position.
SFAS 150 is effective prospectively for contracts entered into or modified
after May 31, 2003 and is otherwise effective at the beginning of the first
interim period beginning after June 15, 2003. SFAS 150 shall be implemented by
reporting the cumulative effect of a change in an accounting principle for
financial instruments created before the issuance date of the statement and
still existing at the beginning of the interim period of adoption. Management
does not believe the adoption of this standard will have a material impact on
the Companys results of operations and financial position.

In November 2002, the FASB issued Interpretation No. 45 (FIN 45), Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. FIN 45 expands on the accounting
guidance of other SFASs FIN 45 elaborates on the existing disclosure
requirements for most guarantees, including loan guarantees such as standby
letters of credit. It also clarifies that at the time a company issues a
guarantee, it must recognize an initial liability for the fair value, or market
value, of the obligations it assumes under that guarantee and must disclose
that information in its annual financial statements. FIN 45 will be implemented
on a prospective basis to guarantees issued or modified after December 31,
2002. The disclosure requirements in this Interpretation are effective for
financial statements of periods ending after December 15, 2002. Management
does not believe the adoption of this standard will have a material impact on
the Companys results of operations and financial position.

In November 2002, the Financial Accounting Standards Board issued Emerging
Issues Task Force issue No. 00-21, Revenue Arrangements with Multiple
Deliverables (EITF 00-21). EITF 00-21 addresses certain aspects of the
accounting by a company for arrangements under which it will perform multiple
revenue-generating activities. EITF 00-21 addresses when and how an arrangement
involving multiple deliverables should be divided into separate units of
accounting. EITF 00-21 provides guidance with respect to the effect of certain
customer rights due to company nonperformance on the recognition of

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revenue allocated to delivered units of accounting. EITF 00-21 also addresses
the impact on the measurement and/or allocation of arrangement consideration of
customer cancellation provisions and consideration that varies as a result of
future actions of the customer or the company. Finally, EITF 00-21 provides
guidance with respect to the recognition of the cost of certain deliverables
that are excluded from the revenue accounting for an arrangement. The
provisions of EITF 00-21 will apply to revenue arrangements entered into in
fiscal years beginning after June 15, 2003. Management does not believe the
adoption of this standard will have a material impact on the Companys results
of operations and financial position.

F-39