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                                                                    Exhibit 99.1

Our Vision

Our vision is to create, develop and commercialise the best antibody drugs in
the world. By seizing opportunities to grow the product pipeline using our
pharmaceutical expertise and that of our collaborators, we will not only build
in but also retain a great deal of the value of producing world-class antibody
therapeutics.

Chairman's Statement  Peter Garland

I am pleased to report that CAT has made further progress in the year,
consolidating the Company's position as a world leader in the development of
human monoclonal antibodies as therapeutics. Using CAT's technologies, the
Company and its partners are continuing to build value by creating and
developing a growing pipeline of new antibody drugs.

CAT secured seven new alliances this year, many with leading companies, and the
Company is becoming highly respected by both major pharmaceutical companies and
emerging technology companies thus widening the choice of potential alliance
partners. This year, CAT secured alliances with Elan, Immunex (two), Randox,
Weston Medical, Zyomyx and Xerion and, since year end, with Merck & Co., Inc.

Our collaborations with Elan and Immunex are particularly significant because
these give us the opportunity for greater investment throughout the drug
development process, allowing us to gain access to more potential revenue.
Together with our alliance signed last year with Genzyme, we now have three
agreements in which we have the opportunity to build greater value by sharing
the costs and risks of developing antibody drugs and, in turn, sharing any
revenues that result. The collaboration with Merck & Co., Inc is also of note
since it is our first initiative in infectious diseases, where CAT's technology
is being used in the research and development of products specific to a key
target involved in HIV-mediated disease.

We are pleased to report that with six CAT-derived human monoclonal antibody
products making good progress in clinical trials, CAT maintains its leading
position. Encouraging two-year Phase I/IIa trial results for CAT-152 as a
potential treatment to prevent post-operative scarring after glaucoma surgery
have led to the initiation of a European Phase II/III trial for this indication.
This year CAT-152 was awarded European Orphan Drug status which brings the
prospect of reduced regulatory fees, grants, protocol assistance and, if
approved, ten years' market exclusivity in the EU.

With Genzyme, we have initiated a Phase I/II clinical study to evaluate CAT-192
as a possible treatment for patients with diffuse scleroderma. Finally, the move
of CAT-213 from pre-clinical to clinical studies and the recent approval for a
Phase I/IIa trial in patients with allergic rhinitis further demonstrates the
expansion in our pipeline of clinical candidates.

In June of this year trading in CAT ADRs commenced on the US NASDAQ exchange.
This allows US shareholders the opportunity to trade on a local market and
provides us with greater commercial and financial visibility in the US. During

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the year, we also continued to build and defend our patent estate covering both
technologies and product candidates. Our efforts were rewarded with the granting
of a number of US, Japanese and European patents including the pivotal Winter II
and Winter/Lerner/Huse patents in the US.

The first phase of our relocation to Granta Park in Great Abington, South
Cambridgeshire, UK, was completed in the summer. The next phase of building work
is progressing and we are on schedule to consolidate our operations at Granta
Park by the end of 2002. The new facilities will provide an efficient and modern
working environment, and enable us to house all our current staff on one site
and provide an environment in which we can continue to attract the best new
talent.

With a view to ensuring that CAT has access to manufacturing capacity for both
ongoing programmes and future projects, CAT announced in November 2001 that it
has signed a long term agreement with Lonza for the manufacture and supply of
clinical grade antibody drugs for up to five years.

Board and senior management

Since its formation in 1990 Cambridge Antibody Technology has grown to be one of
the world's leading antibody companies, led by David Chiswell, CAT's founder.
CAT is now positioning itself for transition to a profitable biopharmaceutical
company based on the discovery and development of therapeutic antibody products.

Against this background the Board and David Chiswell have been considering the
needs of CAT in terms of future leadership and feel that this is the right time
to effect orderly management succession at the top of the Company. Accordingly,
we have initiated the process of recruiting a new CEO to succeed David Chiswell
in due course. He remains CAT's CEO until a suitable replacement is identified
and he will continue to lead the Company as he has done for the last five years.

David's contribution to CAT's success has been immense and the Company has been
privileged to have had the benefit of his unique blend of skills over the last
11 years. David is staying with CAT through this transitional period, enabling
us to put in place an orderly succession and giving us the opportunity to
identify the best candidate for this key and challenging position.

In further recognition of the challenges ahead, it is CAT's intention that its
Board will be strengthened in the coming months by the appointment of further
Non-Executive Directors with skills and experience relevant to the Company's
increasing focus on drug discovery and development.

We would like to thank everyone who has contributed to CAT's success this year -
our staff, the Board, the scientific advisory board and other expert advisors,
our partners and our shareholders, and we look forward to another rewarding year
in 2002.

Peter Garland
Chairman
26 November 2001


          A chart, entitled "Collaborators, Past & Present" depicting
                            the following information

- Technology licenses entered into with Eli Lilly, Genentech and Pfizer before
  2000, Immunex during 2000 and Xerion during 2001.

- Research collaborations entered into with Astra Zeneca and ZymoGenetics prior
  to 2000, Oxford GlycoSciences and Zyomyx during 2000 and Weston Medical and
  Randox during 2001.

- Product Development Agreements entered into with Abbott, Genetics Institute,
  Human Genome Sciences, Pharmacia and Wyeth-Ayerst prior to 2000, Genzyme and
  Human Genome Sciences during 2000 and Immunex and Merck & Co. during 2001.

  A chart entitled "Clinical Development Pipeline" depicting the following
  information:

  Product-candidate CAT-152 targets TGF(beta)2 and is a candidate for the
  prevention of scarring following glaucoma surgery.  It is in Phase II/III
  clinical trials.

  Product-candidate CAT-213 targets Eotaxin1 and is a candidate to treat
  Allergic rhinitis.  It is in Phase I/II clinical trials.

  Product-candidate CAT-192 targets TGF(beta)1 and is a candidate to treat
  systemic sclerosis.  Its development is being co-funded by Genzyme.  It is in
  Phase I/II clinical trials.

  Product-candidate D2E7 (adalimumab) targets TNF (alpha) and is a candidate to
  treat Rheumatoid Arthritis.  Its development is being funded by Abbott.  It is
  in Phase III clinical trials.

  Product-candidate J695 targets IL12 and is a candidate to treat Autoimmune
  diseases.  Its development is being funded by Abbott/Genetics Institute.  It
  is in Phase II clinical trials.

  Product-candidate LymphoStat-B(TM) targets BLgS and is a candidate to treat
  Systemic Lupus Erythematosus.  Its development is being funded by Human Genome
  Sciences.  It is in Phase I clinical trials.

  In addition, there are 12 antibodies within CAT's Antibody Discovery and
  Development programme.

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Review of the Year

This year CAT strengthened its therapeutic pipeline, both through its own
development activities and by working collaboratively with others. The Company
has entered into a number of significant drug discovery and technology alliances
and, by establishing partnerships in which CAT retains greater participation in
the drug development process, has demonstrated its intention to retain greater
value. CAT's innovative platform technologies, including integrated automation
and custom-developed software, ensure that the Company is positioned to take
advantage of interesting opportunities and to offer the pharmaceutical industry
a rich source of potential antibody therapeutic candidates and drug discovery
tools.

Company expertise

Antibodies are an increasingly significant class of drugs. CAT uses a similar
high throughput screening (HTS) approach in its antibody drug discovery and
development processes to that used by the major pharmaceutical companies for new
chemical entity (NCE) discovery. The Company's phage display system has created
comprehensive human monoclonal antibody libraries that contain more than 100
billion different antibodies (over ten million times the size of an average
small molecule library). By using automated HTS with these libraries, CAT
rapidly isolates and optimises lead antibodies for use as potential
therapeutics. Since these are human antibodies, they offer superior safety and
tolerability.

Partnerships and alliances

With the signing of seven new agreements during the year, CAT continued to
capitalise on the increasing interest shown by the pharmaceutical industry in
developing antibodies as drugs.

This year, CAT strengthened its commitment to its own human monoclonal antibody
development programme by entering into alliances with Elan (January 2001) and
Immunex (May 2001). CAT and Elan are working together to produce novel
antibody-based therapeutics for certain human neurological diseases. Immunex and
CAT are co-developing human monoclonal antibodies for autoimmune and
inflammatory disorders, for which Immunex has contributed two proprietary
targets.

In both agreements, CAT is providing its display technologies and HTS
capabilities to identify human antibodies and is optimising any lead antibodies
isolated. CAT will work closely with Elan and Immunex on pre-clinical
evaluation, with the collaborator taking primary responsibility for clinical
trials and product commercialisation. CAT has the opportunity through equal
sharing of product development costs to receive an equal share of any profits
generated by product sales. These two collaborations, in conjunction with last
year's active drug co-development alliance with Genzyme, demonstrate CAT's
intent to retain greater value from developing antibody drugs.

Since the year end, in October 2001, CAT entered into its first product
development initiative in infectious disease with Merck & Co., Inc. The
five-year collaboration allows Merck access to CAT's phage antibody libraries
for the research and development of products specific for a key target involved
in disease mediated by HIV. Under the agreement, Merck obtains exclusive rights
to prophylactic and therapeutic products developed. In turn, CAT has received a
technology access fee and will receive milestone

<PAGE>

payments and royalty revenue from the sale of any human monoclonal antibodies
and non-antibody products validated using CAT's technology.

During the year, CAT extracted value from its antibody phage display technology
in other areas of the drug discovery process by signing licensing agreements
with Immunex (December 2000) and Xerion (June 2001). Immunex can use CAT's
libraries for validation of disease-associated targets, while Xerion is
utilising it in conjunction with its integrated functional proteomics technology
platform for the broader applications of target discovery and target validation.
Both companies committed to CAT a licence fee for the use of the library.
Immunex also received options to exclusive licences for up to eight therapeutic
antibody products, which could provide CAT with milestone and royalty payments
on any future product sales.

The other three alliances CAT entered into this year are research
collaborations, which have potential to build novel capabilities. With Randox
and Zyomyx CAT is investigating protein biochip technologies, an exciting new
area in which CAT's antibodies could become a critical component. The third
collaboration, with Weston Medical, is to evaluate its Intraject needle-free
drug delivery system.

The functional genomics programme under CAT's collaboration with Wyeth-Ayerst
has been completed and, accordingly, the committed payments from Wyeth-Ayerst to
CAT have reduced. However, this has been supplemented to some extent by
additional work on antibody development programmes and the agreement has been
extended to a fourth year.

These new alliances described above highlight CAT's ability to seize and develop
commercial opportunities both in and out of the therapeutic antibody field,
while still remaining committed to its main goal of building an outstanding
human therapeutic antibody pipeline delivering significant value to CAT.

Clinical development pipeline - CAT-funded

There has been very good progress during 2001 in CAT's own product pipeline,
with one product candidate moving from pre-clinical studies into clinical
trials, and the other starting its next phase of clinical trials.

CAT-152 (lerdelimumab), a human anti-TGFb2 monoclonal antibody being developed
by CAT as a treatment to prevent post-operative scarring in patients undergoing
surgery for glaucoma, made good progress in trials this year. Clinical data on
CAT-152 were accepted and presented at a number of major ophthalmology
conferences, including the Association for Research in Vision and Ophthalmology
(ARVO), the American Academy of Ophthalmology (AAO) and the European Glaucoma
Society. This, in conjunction with the recent acceptance for publication of a
scientific paper in one of the leading medical journals, Ophthalmology, is
testament to the promise of CAT-152 being well received by internationally
renowned, independent ophthalmic experts.

Results of a 56 patient Phase II trial presented at the AAO in November 2001
showed that patients treated with CAT-152 experienced lower intraocular pressure
(IOP) six months after combined glaucoma and cataract surgery
(phakotrabeculectomy). Also, at the annual ARVO meeting in May 2001, follow-up
results of a 24 patient Phase I/IIa clinical trial suggested that two years post
surgery for glaucoma (primary trabeculectomy) and treatment with CAT-152,

<PAGE>

patients continued to experience significantly lower intraocular pressure. Both
sets of results indicate that CAT-152 can produce clinically relevant
anti-scarring activity and, as a result, reduce the risk of progressive visual
field loss.

Based on these promising early clinical results, CAT is recruiting around 350
patients in six European countries for a Phase II/III trial to test CAT-152 in
conjunction with primary trabeculectomy. This European trial is ready to
commence and further trials in the US and Europe are being considered for the
first half of 2002.

During the year CAT-152 was awarded European Orphan Drug status. Among the
benefits for CAT are reduced regulatory fees for CAT-152, grants, protocol
assistance and, if approved, ten years' market exclusivity in the EU. CAT
estimates up to 250,000 operations per year for glaucoma in the US and Western
Europe could benefit from CAT-152 treatment.

CAT-213 is a human anti-eotaxin monoclonal antibody which neutralises eotaxin1
and inhibits the major stimulus that attracts a type of white blood cell known
as eosinophils into tissues. CAT-213 may have clinical applications in the
treatment of severe allergic disorders. Allergies of all forms of severity are
estimated to affect approximately 20% of the population of the Western world.
Results from pre-clinical testing were presented at the American Thoracic
Society meeting in May 2001. Based on these results, the Company carried out a
Phase I clinical trial to assess CAT-213's safety, tolerability and
pharmacokinetics that was successfully completed. Following this, the UK
Medicines Control Agency recently gave regulatory approval for a Phase I/IIa
trial of CAT-213 in patients with allergic rhinitis. Enrolment into the trial is
underway.

Clinical development pipeline - co-funded

CAT-192 is a human anti-TGFb1 monoclonal antibody being developed as a potential
treatment for a range of scarring and fibrotic conditions including scleroderma.
CAT's partner for CAT-192, Genzyme, has begun enrolling patients for a Phase
I/II clinical trial to evaluate CAT-192 as a potential therapy for diffuse
systemic sclerosis, a chronic, life-threatening form of scleroderma affecting an
estimated 300,000 people worldwide.

Clinical development pipeline - collaborator-funded

In addition to those programmes in which CAT is actively involved and providing
funds, CAT has a number of collaborations where the partner is responsible for
pre-clinical and clinical development and CAT receives milestones and royalties
on product sales. During the year there have been further advances in these
programmes, with one antibody candidate receiving approval to start a Phase I
clinical trial - the sixth CAT-derived antibody to enter trials.

D2E7 (adalimumab), the human monoclonal antibody that neutralises TNFa being
developed by Abbott, made good progress as a potential treatment for rheumatoid
arthritis. Encouraging Phase II trial data were presented at the November 2001
American College of Rheumatology (ACR) meeting and at the European League
Against Rheumatology (EULAR) meeting in June 2001.

<PAGE>

Rheumatoid arthritis is a condition which currently affects an estimated one
million patients in the US and Europe, many of whom could potentially benefit
from D2E7 treatment. Abbott has now completed its Phase III clinical trials of
D2E7, with over 2,000 patients treated worldwide with D2E7 and more than 2,800
patient years of treatment exposure documented. Abbott is on schedule to file
for a Biologics License Application (BLA) in the US by the second quarter of
2002 and Europe shortly thereafter. It expects to launch the product in 2003.

In addition to its clinical trials in rheumatoid arthritis, Abbott anticipates
starting Phase II clinical trials of D2E7 in Crohn's disease in 2002.

Also being developed in conjunction with Abbott and Genetics Institute, J695, a
human anti-IL12 monoclonal antibody that could potentially be used to treat
autoimmune diseases including rheumatoid arthritis, Crohn's disease, multiple
sclerosis and sepsis, continues to make progress in Phase II clinical trials.

CAT completed its work on a programme with Human Genome Sciences, Inc. (HGSI)
developing antibodies raised against B-Lymphocyte Stimulator (BLyS), a protein
which may have a central role in several autoimmune and neoplastic disorders.
HGSI completed pre-clinical studies on candidate antibodies and has received
approval to take one anti-BLyS antibody, LymphoStat-BTM, into a Phase I clinical
trial to determine its safety and pharmacology in patients with systemic lupus
erythematosus. LymphoStat-BTM is believed to be the first antibody to a
genomics-derived target to enter trials.

Research stage antibodies

There are 12 projects currently within CAT's antibody discovery and development
programme, of which approximately four may enter pre-clinical development during
the next financial year. It is anticipated that this number of projects will
increase slightly during 2002. Approximately one third of these projects are
CAT-funded or co-funded, with the remaining two thirds coming from
collaborator-funded programmes. These programmes include an anti-TGFb antibody
(with Genzyme), anti-IL18 (with Abbott), and anti-CD30 L and anti-IL18R
accessory protein (both with Immunex).

This year, CAT delivered to its partner Wyeth-Ayerst a candidate human
monoclonal antibody specific to amyloid-b, a molecular target implicated in
Alzheimer's disease. The candidate is currently being evaluated at Wyeth-Ayerst.
In addition, a number of promising therapeutic antibody product candidates have
been identified and are currently in development at Wyeth-Ayerst.

With Pharmacia, good progress has been made on a number of antibody drug
discovery programmes in the field of cancer. There has been a modest level of
increase in activity at CAT in these programmes over the last six months; a
research milestone was recently achieved on one programme and further progress
is anticipated.

In its collaboration with HGSI substantial progress has been made towards the
identification of additional novel antibody drugs to genomics targets across
multiple disease areas and further developments are anticipated during the next
financial year. In July, CAT gained access to HGSI's proprietary genomics
database, giving CAT access to

<PAGE>

selected HGSI antigens. Research has commenced on identifying suitable
candidates for development into potential antibody drugs. Importantly CAT has
rights to develop six such products on its own and up to 18 equally with HGSI,
providing CAT with the opportunity to broaden its pipeline of CAT-funded and
co-funded products.

Research has already commenced in the collaboration between CAT and Merck & Co.,
Inc. In the partnership with Elan two drug discovery programmes have already
started, and in the partnership with Immunex, it is anticipated that two drug
discovery programmes will start in early 2002.

Intellectual property

CAT has a strong patent estate, which it protects through timely patent filing
and rigorous, appropriate legal defence. An extensive portfolio of approximately
30 patent families (300 patents) is evidence of CAT's world-leading position in
phage display technology. The Company's key patents are grouped into three
families: Winter II covers production of expression libraries of antibody genes;
McCafferty protects CAT's phage display method used to obtain specific
antibodies from these libraries; and Griffiths covers antibodies that recognise
human `self' antigens isolated from CAT's libraries.

During the year, in the US there were four Winter/Lerner/Huse patents granted as
well as a separate Winter II patent (following the earlier settlement of an
interference proceeding between CAT, The Scripps Research Institute and
Stratagene over the Winter II and Winter/Huse/Lerner patents in 1999). CAT now
has worldwide commercial rights to all five of these patents.

In addition, another patent in the McCafferty patent family was granted. It has
claims relating to the display of functional protein binding domains derived
from natural repertoires of nucleic acids, where each phage contains a phagemid
genome. Dependent claims include the display of antibodies, and of scFv or Fab
antibody fragments. Also, CAT inventors are listed on two US patents which were
granted in the year relating to D2E7 owned by Abbott Labs.

Also during the year, CAT obtained Japanese patents on ribosome display
(Kawasaki) and phage display (McCafferty). In Europe, patents were granted on
diabodies, chemisynthetic libraries, anti-CEA antibodies and anti-TGFb1
antibodies. CAT's previously granted European patent on antibodies binding to
TGFb2 (including CAT-152) was not opposed.

In Europe, CAT's patent infringement action against MorphoSys relating to the
European Winter II and McCafferty patents in Munich is currently stayed pending
the outcome of appeal proceedings at the European Patent Office. Both patents
were upheld by the Opposition Division, there is an appeal pending on Winter II
and it is anticipated that there will also be an appeal on the McCafferty
patent.

In the US, the litigation bought by MorphoSys against CAT relating to the
Griffiths patent was the subject of a trial in Washington DC in April 2001.
MorphoSys asked the court to revoke the Griffiths patent claiming it was invalid
on a number of grounds. They also asked for a declaration that they did not
infringe the patent. CAT counter-claimed

<PAGE>

that MorphoSys did infringe the patent. After the trial, the jury was unable to
agree on a decision apart from finding that CAT was entitled to the priority
dates of its British patent applications. The Judge subsequently ruled in favour
of CAT denying MorphoSys' claims that the patent was invalid on the grounds of
anticipation, written description, indefiniteness and enablement. The Judge also
ruled that the issue of whether the patent was invalid on the ground that it was
obvious could only be decided by a jury and therefore would be retried before a
new jury. The Judge took the preliminary view that MorphoSys should prevail on
the issue of infringement, but asked for further briefing on this point. This
has been provided and CAT is currently awaiting his decision.

MorphoSys' action (which is similar to the Griffiths matter) against CAT in
respect of the parent US McCafferty patent is expected to be subject of a jury
trial in February 2003. Also during the year, CAT commenced an action claiming
MorphoSys infringed the Winter II patent and two of the Winter/Lerner/Huse
patents.

Whatever the outcome of this current litigation, CAT believes that its ability
to operate its own technology will not be materially and adversely affected.

Building for drug development

CAT continues to invest in its people, its technology and its processes. In
particular, the drug discovery team has increased in size by 35% during the year
and the pre-clinical team numbered 50 at year end. With many new recruits coming
from biotechnology and major pharmaceutical companies, this has added to the
expertise and experience of the Group.

During the year, CAT has refined its proprietary ribosome display system. This
technology, which allows rapid construction of larger compound libraries than
those made by phage display, is now being used as a complementary tool for lead
antibody isolation and optimisation in CAT's drug discovery process.

In addition, CAT has continued to automate its in-house discovery processes by
refining and integrating a number of systems. These include a powerful and
effective informatics capability that links the control of CAT's laboratory
automation together to form a `drug discovery factory' capable of massive
parallel processing and which can be controlled remotely.

To capitalise on the vast amounts of information generated by its automated
systems, CAT continued in 2001 to strengthen its CONT1NUITYTM, data management
and bioinformatics software solutions. The effectiveness of this software is
continually being assessed with in-house drug discovery programmes and is
currently providing effective and timely reporting of results as well as
analysis of complex proprietary data.

The Company also continues to establish reciprocal partnerships for creating
analytical tools to measure protein structure and activity. To this end, in
December 2000, CAT formed a research collaboration with Zyomyx to develop
high-density protein biochips based on parallel antibody microarrays. This was
followed in April 2001 by an agreement with Randox to evaluate the use of CAT's
antibodies for diagnostic biochip products.

<PAGE>

CAT now has three active protein biochip collaborations (the other being with
Oxford GlycoSciences) and it anticipates these alliances could produce
capabilities in which CAT's antibodies will be a critical component. These
capabilities may be used in a variety of ways including drug development and
disease diagnosis.

At the drug delivery end of the drug development process, CAT signed an
agreement in March 2001 with Weston Medical to assess the suitability of
delivering CAT's antibodies through a needle-free system. The collaboration
could potentially overcome one of the main perceived drawbacks to receiving
monoclonal antibody therapy and may be particularly welcomed by patients who
need regular injections; for example those suffering with chronic inflammatory
conditions.

With a view to ensuring the supply of clinical grade antibodies in the future,
CAT and Lonza announced in November 2001 that they have signed a long term
agreement for Lonza to manufacture and supply clinical grade antibody drugs to
CAT for up to five years. The agreement, which is effective immediately, builds
on the existing close relationship between the companies and will guarantee that
CAT has access to manufacturing capacity for both ongoing programmes and future
projects.

Significant corporate milestones

In June 2001, CAT listed American Depository Receipts (ADRs) on the US NASDAQ
exchange, helping to raise CAT's visibility in the US, both in the commercial
and financial arenas, and supporting CAT's significant US investor base by
enabling trading on a local market.

Also this year, CAT successfully completed the first phase of its relocation to
new enhanced facilities at Granta Park, ten miles from the Company's existing
location. In May 2001, the Medical and Pre-Clinical Departments occupied the
Franklin Building, consisting of 20,500 sq ft of new offices and laboratories.
The relocation project is progressing well with the remaining CAT employees
expected to move to a 66,000 sq ft building, also at Granta Park, by the end of
next year, enabling the Company to consolidate its operations on one site.

CAT made certain management changes during the year. These gave specific
responsibility for focused units covering technology development and antibody
drug development. Kevin Johnson, previously CAT's Research Director, has taken
on the role of Chief Technology Officer and now heads the Company's Technology
Department, and Alex Duncan, previously Head of Antibody Engineering, has taken
on the role of Vice President Drug Discovery.

Financial Review

The following review is based on the Group's consolidated financial statements
which are prepared under UK generally acceptable accounting principles (`GAAP').
Those financial statements for prior periods have been restated to reflect the
Group's revised accounting policy for revenue recognition as described below and
as detailed in notes 1 and 3 to the financial statements. Comparative figures in
this review have been restated

<PAGE>

where appropriate. A summary of the significant differences between UK and US
GAAP is given in note 27 of the financial statements.

Results of operations Years ended 30 September 2001, 2000 and 1999

Revenues increased to (Pounds)7.1 million in the 2001 financial year from
(Pounds)7.0 million in the 2000 financial year and (Pounds)2.2 million in the
1999 financial year.

As a result of CAT's reliance on collaboration arrangements, CAT's revenue
profile has historically fluctuated from period to period, because the majority
of revenue to date has been in the form of licence fees and milestone payments.
The Group has now changed its accounting policy for revenue recognition, the
principal impact of which is that licence fees, which were previously recognised
as income when received, will be deferred and recognised over the term of the
licence. Revenues recognised in prior periods have been restated and therefore
the receipt of a licence fee will be a less significant factor in revenue
volatility. CAT anticipates that over time and with the revised policy on
revenue recognition, the profile of revenues is likely to become more regular as
the number of collaborations increases and ultimately as royalty income from
product sales is realised.

The increase in revenue from the 2000 financial year to the 2001 financial year
resulted from an increase in licence revenues recognised and contract research
fees offset by a decrease in milestone payments. CAT received a non-recurring
licence fee in the 2001 financial year pursuant to CAT's collaborative
arrangement with Immunex and in the 2000 financial year pursuant to
collaborative arrangements with HGSI and for the grant of a product licence for
amyloid b to Wyeth-Ayerst. These revenues will be recognised over the term of
the licence granted. Revenues recognised from licence fees increased from
(Pounds)0.7 million for the 2000 financial year to (Pounds)1.6 million for the
2001 financial year, reflecting revenues recognised from the new licence fees
received in the 2001 financial year in addition to licence fees recognised in
both periods which were received in the 2000 and prior financial years. CAT
recognised (Pounds)0.1 million of milestone and other revenues in the 2001
financial year compared to (Pounds)1.8 million in the 2000 financial year.
Milestone payments are typically earned based on achievements in research and
product development and may not be comparable from period to period.

In the 2000 financial year the Group received a milestone payment from Knoll
(now part of Abbott) following the entry of D2E7 into phase III clinical trials,
and a milestone pursuant to its arrangement with AstraZeneca. CAT recognised
(Pounds)5.4 million of revenues from contract research fees in the 2001
financial year compared to (Pounds)4.5 million in the 2000 financial year. The
increase resulted from increased activity or a first full year of activity from
the Group's collaborative arrangements with Pharmacia and HGSI, offset by a
reduction in activity with Wyeth-Ayerst following the completion of the
functional genomics element of that arrangement.

The increase in revenue from the 1999 financial year to the 2000 financial year
resulted from increases in licence fees, milestone payments and contract
research fees under CAT's collaborative arrangements. CAT received non-recurring
licence fees in the 2000 financial year pursuant to arrangements with HGSI and
Wyeth-Ayerst. There were no such receipts in the 1999 financial year. These
revenues will be recognised over the term

<PAGE>

of the licence granted. Revenues recognised from licence fees increased from
(Pounds)0.4 million in the 1999 financial year to (Pounds)0.7 million in the
2000 financial year, reflecting revenues recognised from the new licence fees
received in the 2000 financial year in addition to licence fees recognised in
both periods which were received in prior periods. CAT recognised (Pounds)1.8
million of milestone and other revenues in the 2000 financial year, compared
with (Pounds)1.1 million in the 1999 financial year. The increase primarily
resulted from CAT's receipt of a milestone payment from Knoll. CAT recognised
(Pounds)4.5 million of revenues from contact research fees in the 2000 financial
year compared with (Pounds)0.7 million in the 1999 financial year. The increase
resulted from the commencement of work under CAT's collaboration arrangements
with HGSI and Pharmacia and an increase in fees received pursuant to CAT's
collaboration with Wyeth-Ayerst.

CAT's direct costs are typically fees payable as a percentage of its revenues.
Substantially all of the direct costs reported in these financial statements are
Drug Royalty Corporation's share of revenues. In future periods, when CAT
receives royalties on product sales under its various licences and collaboration
agreements, direct costs will also include royalties payable to Medical Research
Council and other licensors.

Operating expenses for the 2001 financial year were (Pounds)27.8 million
compared with (Pounds)20.6 million in the 2000 financial year and (Pounds)16.3
million in the 1999 financial year, reflecting the increasing scale and
complexity of CAT's activities.

Staff numbers rose over the 2001 financial year from 180 to 247 (the average
over the year was 224). There was a credit during the 2001 financial year of
(Pounds)0.2 million for employer's National Insurance payable on the exercise of
certain options granted in December 1999, compared with a charge of (Pounds)0.5
million in the 2000 financial year. The charge for the cost of shares to be
allocated under employee share schemes was (Pounds)0.6 million in the 2001
financial year compared with (Pounds)0.5 million in the 2000 financial year and
(Pounds)0.2 million in the 1999 financial year.

Research and development expenses increased to (Pounds)21.4 million in the 2001
financial year from (Pounds)15.7 million in the 2000 financial year and
(Pounds)13.6 million in the 1999 financial year. The increases reflect an
increase in the scale of CAT's activities, research and development staff
numbers increasing from 122 at the beginning of the 1999 financial year to 212
at the end of the 2001 financial year, and increased expenditures for laboratory
and general supplies. The increase also reflects a commitment to CAT's product
development activities and the resulting expenditures with external suppliers on
pilot manufacture and clinical trials. Research and development expenditures in
the 2000 financial year were also affected by payments of (Pounds)1.1 million
for access to intellectual property, primarily to The Burnham Institute and
Integra Life Sciences, Stratagene and The Whittier Institute for Diabetes and
Endocrinology. Similar payments totalled (Pounds)0.6 million in the 1999
financial year.

General and administrative expenses increased to (Pounds)6.4 million in the 2001
financial year from (Pounds)4.8 million in the 2000 financial year and
(Pounds)2.7 million in the 1999 financial year. These expenses include fees
relating to patent litigation of (Pounds)2.0 million in the 2001 financial year
compared to (Pounds)1.7 million in the 2000 financial year, and to (Pounds)0.3
million in

<PAGE>

the 1999 financial year. The remaining increases in the 2000 and 2001 financial
years were primarily caused by costs associated with increased personnel, larger
facilities and more complex operations.

Total depreciation expenses increased from (Pounds)1.6 million in the 1999
financial year to (Pounds)1.8 million in the 2000 financial year and to
(Pounds)2.1 million in the 2001 financial year. This reflected a substantial
investment in fixed assets in recent years, particularly Cambridge House in
Melbourn, the freehold of which was purchased during the 1999 financial year,
and the fitting out and equipping of the Franklin Building at Granta Park, Great
Abington during the 2001 financial year. Amortisation expenses amounted to
(Pounds)0.4 million in each of the 1999, 2000 and 2001 financial years
reflecting the amortisation of the Aptein patents.

Net interest income increased to (Pounds)9.3 million in the 2001 financial year
from (Pounds)5.6 million in the 2000 financial year and (Pounds)1.8 million in
the 1999 financial year. Average balances of investments in liquid resources
decreased during the 1999 financial year as cash was consumed by operating
activities. In the 2000 and 2001 financial years, cash and investments in liquid
resources increased due to ordinary share issues in connection with strategic
collaborations in December 1999, April 2000 and October 2000 and a share
offering in April 2000. These resulted in increased interest income during those
periods. Except for immaterial amounts of interest paid under car leases, CAT
has not expended any interest for borrowed money in any of the periods.

Liquidity and capital resources

During the 2001, 2000 and 1999 financial years, CAT's net cash used by operating
activities was (Pounds)19.2 million, (Pounds)3.6 million and (Pounds)11.2
million respectively, in each case resulting principally from operating losses,
offset by depreciation and amortisation. In the 2000 financial year, operating
losses were also offset by increases in deferred income resulting from income
received during that year which will be recognised as turnover in future
periods.

CAT made capital expenditures of (Pounds)3.8 million, (Pounds)1.0 million and
(Pounds)2.7 million in the 2001, 2000 and 1999 financial years, respectively.
CAT's capital expenditures are primarily for laboratory equipment, laboratory
facilities and related information technology equipment. CAT also invests in
office and administrative facilities. The decrease in capital expenditures from
the 1999 financial year to the 2000 financial year primarily resulted from the
final stages of the refurbishment, fitting out and equipping of 23,000 sq ft of
additional specialist laboratory and office facilities at Cambridge House which
took place during the 1999 financial year, including the purchase of the
freehold. The increase in capital expenditures from the 2000 financial year to
the 2001 financial year primarily resulted from the fitting out and equipping of
20,000 sq ft of specialist laboratory and office facilities at the Franklin
Building.

CAT's net cash inflow from financing activities during the 2001, 2000 and 1999
financial years was (Pounds)15.4 million, (Pounds)132.3 million and (Pounds)0.5
million respectively, in each case primarily resulting from the issue of
ordinary shares. During the 2001 financial year,

<PAGE>

CAT completed one significant financing transaction: in October 2000, CAT issued
307,982 ordinary shares to Genzyme for US$20 million (or approximately
(Pounds)13.4 million net of expenses) in connection with a strategic
collaboration.

As at 30 September 2001, CAT had net current assets of (Pounds)153.4 million.
CAT does not currently borrow to finance its operations. CAT's creditors at the
end of the 2001 financial year included a total of (Pounds)11.0 million of
deferred income, representing non-refundable income received which will be
recognised in future periods. The corresponding amount in the 2000 financial
year was (Pounds)11.4 million.

CAT has incurred net losses of (Pounds)11.8 million, (Pounds)8.3 million and
(Pounds)12.4 million in each of the 2001, 2000 and 1999 financial years
respectively. As at 30 September 2001 CAT had an accumulated loss of
(Pounds)56.0 million. CAT's losses have resulted principally from costs incurred
in performing research and development on human monoclonal antibody product
candidates, and from general and administration costs associated with CAT's
operations.

CAT expects to incur additional losses for a number of future years as a result
of its expenditures on research and product development. This will result in
substantial losses and cash outflows for several years. CAT may be required to
expend substantial funds if unforeseen difficulties arise in the course of
completing required additional development of product candidates or other
aspects of its business.

As at 30 September 2001, CAT had cash and marketable securities of approximately
(Pounds)156.8 million. CAT has invested funds that are surplus to its
requirements in interest bearing marketable securities.

Financial outlook for 2002

Recurring revenues, representing contract research revenues and income from
licensing arrangements entered into in this and prior periods, are expected to
be in the range of (Pounds)6 to (Pounds)7 million for the 2002 financial year.
Additional revenues may arise from technical and clinical milestone payments and
any further licensing arrangements.

A further significant increase in operating costs is expected over the level in
the second half of the 2001 financial year. This reflects in particular
additional spending on clinical trials and further increases in staff and
infrastructure costs. Staff numbers are expected to increase to approximately
300 during the 2002 financial year.

Capital expenditure over the year is expected to be above last year's level, in
particular because of the anticipated spend on CAT's further new facilities at
Granta Park. Total expenditure is expected to be of the order of (Pounds)10
million.

It is anticipated that CAT's net cash burn rate for the current year, taking
account of expected revenues, will be in the range (Pounds)2.5 to (Pounds)3.0
million per month.

Future reporting

The Group will, with effect from the 2002 financial year, report financial
results and issue a review of operations on a quarterly basis. The reports for
the first and third

<PAGE>

quarters will be made available as a press release and through CAT's web site.
For the half year the Group will continue its customary practice of additionally
posting a printed statement to all shareholders.

Board of Directors

Professor Peter Garland
MA MB PhD FRSE CBE (67)
Non-Executive Chairman
Appointed to the Board of CAT in 1990, Peter Garland became Chairman in
September 1995. Peter was CEO of the Institute of Cancer Research until 1999
where he subsequently completed his Leverhulme Emeritus Fellowship. During his
career he held a number of senior academic and industrial posts including
Professor of Biochemistry at the University of Dundee, Principle Scientist and
Head of Biosciences at Unilever Research Colworth Laboratory and Director of
Research at Amersham International plc. In 1999, he was awarded the CBE for his
services to cancer research and biotechnology.

David Chiswell BSc PhD (48)
Chief Executive Officer
A founder of CAT, David Chiswell has been responsible for the operational
management of CAT from its inception. David joined the Board in December 1995
and took on the role of CEO in 1996. Prior to this, he spent nine years at
Amersham International plc where his main responsibilities included product
development and research management. His research experience was gained at the
Medical Research Council (MRC) Institute of Virology, Glasgow, the Department of
Immunology and Microbiology, UCLA, California and the Department of Tumour
Virology, Imperial Cancer Research Fund (ICRF), London. David has recently been
elected to serve on the Board of the Biotechnology Industry Organization's
`Emerging Companies Section' Governing Body for 2001-2002.

Kevin Johnson BSc PhD FRSA (41)
Chief Technology Officer
Having joined CAT in 1990, Kevin Johnson was appointed to the Board in July
1997. In 2000, Kevin became Chief Technology Officer responsible for
exploitation and development of CAT's technology platforms. Previously, he held
positions in the Company as Research Director, Vice President Research and Head
of Research. Prior to 1990, he was a fellow of the University of Melbourne,
Australia and a John Lucas Walker Senior Student at the University of Cambridge,
where he originally gained his PhD.

John Aston MA ACA (47)
Finance Director
John Aston joined the Board as Finance Director in September 1996 and
subsequently saw CAT through a successful flotation in March 1997. Previously,
John was a Director in corporate finance with J Henry Schroder & Co Ltd. He
qualified as a chartered accountant with Price Waterhouse and also worked at the
British Technology Group.

David Glover
MA MB BChir MRCP FFPM (49)
Medical Director
David Glover joined the Company in June 1994 as Vice President Medical
Development and was promoted to the Board in July 1997. Since 1984, David has
gained ten years' experience as a Medical Director at Schering Plough Ltd and as
a clinical research physician and then Director of Medical Affairs at Merck
Sharp and Dohme Ltd. He has broad expertise in drug development, regulatory
affairs, clinical research and medical

<PAGE>

marketing. Prior to 1984, he held a series of hospital positions in general
medicine and cardiology including a clinical research fellowship at the
University of Birmingham. In September 2001, David was co-opted onto the Board
of Management of the ABPI (Association of the British Pharmaceutical Industry).

Professor Uwe Bicker MD PhD (56)
Non-Executive Director .
Uwe Bicker joined the Board of CAT in February 1999. Uwe is the Chairman of Dade
Behring Holdings Inc and a board member of Aventis Research & Technologies AG.
He is also Chairman of the Advisory Board of Scil Technology Holdings and a
member of the Board of Philipps University, Germany. Previously, he was a member
of the executive board of Boehringer Mannheim (now Roche), a member of the
executive board of Behringwerke AG and a member of the executive board of
HoechstMarionRoussell. He is a qualified physician, holds doctorates in medicine
and chemistry, and is a professor at the Medical School of the University of
Heidelberg, Germany.

James Foght PhD MS BS (65)
Non-Executive Director .
James Foght has been on the Board of CAT since 1996. Jim is currently Managing
Director of Vector Securities International LLC. He was President and co-founder
of Vector Securities International Inc, which was acquired by Prudential
Insurance Company, US in 1999. He has considerable experience of the
pharmaceutical and diagnostic industries having spent 23 years with El du Pont
de Nemours, France in management and research, then latterly as Managing
Director of DuPont, UK. He also serves on the Board of Directors of Avocet
Medical Inc.

Paul Nicholson MB BS FFPM (64)
Non-Executive Director .
Paul Nicholson was appointed to the Board of CAT in February 1999. Paul is a
qualified physician, with extensive experience of the pharmaceutical industry.
Most recently he was Senior Vice President of Worldwide Development at
SmithKline Beecham, a post from which he retired at the end of 1998. Prior to
this, he held senior positions at Monsanto, Hoechst and Sterling Winthrop. He
serves as Board Director for a number of bioscience companies.

Professor Sir Aaron Klug
OM PRS ScD HonFRCP HonFRCPath
Nobel Laureate (1982) (75)
Non-Executive Director
Sir Aaron Klug has been on the Board of CAT since the Company was founded in
1990. Prior to his retirement in 1996, Sir Aaron was Honorary Professor of
Molecular Biology at the University of Cambridge and Director of the MRC
Laboratory of Molecular Biology also in Cambridge. He continues to lead an MRC
research group on the regulation of gene expression. He is a Foreign Associate
of the US Academy of National Science and a past President of the Royal Society.

John Stocker
AO MB BS BMedSc PhD FRACP (56)
Non-Executive Director
John Stocker was appointed to the Board of CAT in March 1995. John is Chairman
of the Sigma Company Ltd and a director of Telstra Corporation Ltd, Nufarm Ltd
and Circadian Technologies Pty Ltd, all of which are listed on the Australian
Stock Exchange. He was formerly Chief Scientist of Australia, Chief Executive of
CSIRO Australia and Director

<PAGE>

of Pharmaceutical Research at Hoffmann-La Roche and Co in Basel. He is also
Chairman of CAT's Scientific Advisory Board.

Senior Executives

Daily management of the group is the responsibility of the Executive Group,
comprising the executive directors and the following members of the senior
management team:

Jason Avery BSc
Senior Vice-President Business Alliances
Jason Avery joined CAT in September 1996. Prior to this, Jason was with Ernst &
Young in Palo Alto, California, where he advised and assisted companies with
corporate finance and business development. He had previously also established
and developed Ernst & Young's UK Life Sciences Corporate Finance and Advisory
practice.

Nigel Burns BSc PhD
Senior Vice President Pre-Clinical
Development
Nigel Burns joined CAT in October 1997. Previously, Nigel was with British
Biotech where he headed the Process Technology Division and played a significant
role in developing their biotechnology-based products. Prior to this, he held
scholarships at the Central Drug Research Institute, Lucknow, India and at the
Californian Institute of Technology.

Diane Mellett LLB JD
General Counsel
Diane Mellett joined CAT in October 1997. Prior to this, Diane was with a US law
firm, Sonnenschein. Diane previously qualified as a solicitor in London in 1986
before moving to Sonnenschein in Chicago and then later returned to become a
founding member of their UK office. She is also qualified as a US attorney
admitted to the Illinois Bar.

Alex Duncan BSc PhD
Vice President Drug Discovery
Alex Duncan has been with CAT since 1994. Prior to his appointment as Vice
President Drug Discovery, Alex held the position of Head of Antibody
Engineering. Before joining CAT, he was a Research Fellow at the University of
California and, prior to that, a Lucille P Markey Visiting Fellow also at the
University of California. In addition, he is an MRC graduate from the Laboratory
of Molecular Biology in Cambridge.

Scientific Advisory Board

During the year, members of the Scientific Advisory Board were:

Dr John Stocker
AO MB BS BMedSc PhD FRACP
Chairman of the Scientific Advisory Board and Non-Executive Director of CAT.

Dr David Clough BSc PhD
Director of Research, Roche Discovery Welwyn.

<PAGE>

Professor Jon Cohen
FRCP FRCPath FRCPE
Professor of Infectious Diseases, Imperial College School of Medicine,
Hammersmith Hospital, London.

Professor Douglas Fearon MD FRCP
Wellcome Trust Professor of Medicine, University of Cambridge.

Professor Sir Aaron Klug
OM PRS ScD HonFRCP
HonFRCPath Nobel Laureate (1982)
Non-Executive Director of CAT

Dr Cesar Milstein
CH FRS HonFRCPath
Nobel Laureate (1984)
Formerly Deputy Director of the Laboratory of Molecular Biology, Cambridge.

Dr Michael Neuberger FRS
Senior staff member of the Laboratory of Molecular Biology, Cambridge.

Dr Hugh Pelham FRS
Head of Cell Biology at the Laboratory of Molecular Biology, Cambridge

Professor Sir Keith Peters
FRS FRCP FRCPath
Regius Professor of Physic, University of Cambridge

<PAGE>

Directors' Report

The Directors present their Annual Report on the affairs of the Group, together
with the financial statements and auditors' report, for the year ended 30
September 2001.

Principal activity

The principal activity of the Group continues to be research, development and
exploitation of products in the field of molecular engineering. A review of
current operations and expected future developments is given on pages 1 to 19.

Results and dividends

The Group's retained loss for the year amounted to (Pounds)11,771,000 (2000, as
restated - loss (Pounds)8,289,000, 1999, as restated - loss (Pounds)12,365,000)
and will be transferred to the profit and loss reserve. The Directors do not
recommend the payment of a dividend.

As the Group is involved in the early stages of developing biopharmaceutical
products, it is unlikely that dividends will be paid for a number of years.

Supplier payment policy

The Group's policy is to settle terms of payment with suppliers when agreeing
the terms of each transaction, ensure that suppliers are made aware of the terms
of payment and abide by the terms of payment. The Group's trade creditors at the
year end were equivalent to 12 days of purchases (2000 - 32), based on an
average over the year.

Directors

The Directors, all of whom served throughout the year, are as follows:

Executive         Non-Executive
J C Aston         U Bicker
D J Chiswell      J L Foght
D R Glover        P B Garland
K S Johnson       Sir Aaron Klug
                  P A Nicholson
                  J W Stocker

Details of Directors' interests in, and options over, the share capital of the
Company and a description of the share schemes operated by the Company are given
in the Remuneration Report on pages 25 to 28.

Substantial shareholdings

On 26 November 2001 the Company had been notified, in accordance with Section
198 to 208 of the Companies Act 1985, of the following interests of 3% or more
in the ordinary share capital of the Company:

<PAGE>

                                                       Percentage    Percentage
                                                        of issued     of issued
                                Number       Number         share         share
                             of shares    of shares       capital       capital
                            26.11.2001   27.11.2000    26.11.2001    27.11.2000
FMR Corp., Fidelity
International Ltd and
Edward Johnson(i)            3,874,817    2,187,503         10.93           6.3
Human Genome
Sciences Inc.                1,670,000    1,670,000          4.71           4.8
Oracle Partners L.P.(i)      1,246,445    1,369,945          3.52           3.9
Capital Group Inc.(i)        1,065,004         (ii)          3.00          (ii)
Janus Capital
Corporation(i)                   (iii)    2,771,637         (iii)           7.9
Searle Belgium SA/NV             (iii)    1,870,837         (iii)           5.3

(i) Includes interests of associated funds or funds managed.
(ii) No interest notified.
(iii) No longer a notifiable interest.

US shareholdings

To the best of the Directors' knowledge US shareholders hold approximately 29%
of the issued share capital of the Company.

Employees

The Group places considerable value on the involvement of its employees and
continues to keep them informed on matters affecting them as employees and on
the various factors affecting CAT's performance. This is achieved through both
formal and informal meetings. All employees are eligible for the grant of
options and, after a qualifying period of service, participation in the
All-Employee Share Ownership Plan. Details of these arrangements are given in
the Remuneration Report.

CAT is committed to providing equal opportunities. It is CAT's policy to treat
all applicants for employment and all employees in the same way regardless of
their sex, marital status, race, colour, nationality, ethnic or national origin,
age, sexual orientation, disabilities or any other form of discrimination. The
policy applies at all times and influences the way colleagues, clients,
suppliers and business contacts are treated. The policy impacts on recruitment
and selection, training and development, career opportunities, terms and
conditions of employment, remuneration and reward, and underpins all other
employment policies and procedures.

<PAGE>

Health, safety and environmental issues (`HSE')

The Group is committed to upholding the highest standards of health and safety
and environmental protection for the benefit of its employees, the public at
large and the environment. Good HSE performance is considered essential for
CAT's continued business success and underpins every aspect of the Company's
decision making processes.

CAT aims to eliminate accidents and occupational related ill-health by
comprehensively managing risk, reducing hazards and providing appropriate
instruction and training.

CAT has a written environmental policy, and in collaboration with it's
professional advisers, is constantly seeking to reduce the environmental impact
of its activities to a minimum.

Charitable donations

During the year the Group made charitable donations of (Pounds)935 (2000 -
(Pounds)466, 1999 - (Pounds)850). There were no political contributions (2000
and 1999 - none).

Litigation

A full report on the litigation in which the Group is currently involved is
given in note 26 to the Financial Statements.

Annual General Meeting

Notice of the Annual General Meeting and explanatory notes on the proposed
resolutions are given in a separate notice to shareholders.

Auditors

The Directors will place a resolution before the Annual General Meeting to
reappoint Arthur Andersen as auditors for the forthcoming year.

By order of the Board

Diane Mellett
Secretary
26 November 2001

<PAGE>

Remuneration Report

The Board presents its annual report on the remuneration policies and practice
of the Group.

Although the Remuneration Committee is delegated the responsibility of dealing
with executive remuneration, its recommendations are presented to the full Board
for approval. However, no Executive Director votes on any aspect of executive
remuneration.

The members of the Remuneration Committee are P A Nicholson (Chairman), U Bicker
and J L Foght.

Best practice

The Group has complied during the year with Section 1B `Directors' Remuneration'
of the provisions of the Combined Code and with Schedules A and B to the
Combined Code.

Executive Directors

Objective The objective is to develop remuneration packages which enable the
Group to attract and retain Executive Directors of the necessary calibre to run
the Company successfully. Such packages include incentives designed to motivate
individuals to perform at the highest level and to advance the interests of the
shareholders both in the short and longer term by the achievement of the
strategic objectives of the Group.

Remuneration policy

Basic salary To date salaries have been reviewed annually with effect from 1
October. Henceforward the review will take place with effect from 1 January and
for the current financial year only an interim review to reflect the effects of
wage and price inflation will take place on 1 July. In determining the
appropriate salary the Committee considers the abilities and experience of the
individual, and the requirement to attract, retain and motivate persons of the
required quality whilst avoiding paying more than is necessary for that purpose.
The Committee also gives consideration to independent comparator information for
companies in the same and similar industry sectors, taking account of relative
performance.

The Committee also has regard to pay and conditions for all employees,
particularly when considering salary increases.

Performance-related remuneration Executive Directors are eligible for
performance-related remuneration based on the attainment of specific performance
criteria which are established annually at the commencement of the financial
year. The criteria are divided between corporate and individual objectives
(except for the Chief Executive whose objectives are solely corporate). The
criteria are intended to be stretching and are structured to encourage and
reward high levels of achievement consistent with the interests of shareholders.
Performance-related remuneration was payable to a maximum of 45% of basic
salary.

<PAGE>

Benefits These principally comprised the provision of a car allowance and
private medical insurance which is payable or reimbursed to a maximum of
(Pounds)924 per annum. For the current and future financial years, the car
allowance has been subsumed into basic salary.

Options These may be granted if considered appropriate. During the year the
Executive Directors did not receive any options. Any exercise of options is
subject to the attainment of an objective performance criterion.

Pensions The Group contributes 10% of basic salary to a personal pension scheme
(which are defined contribution arrangements) in the name of each Director.
Directors may at their discretion make additional contributions up to limits
defined by the Inland Revenue.

Non-Executive Directors

Fees payable to Non-Executive Directors are determined by the Board. However,
individual Non-Executive Directors do not determine their own fees.
Non-Executive Directors have the option of taking part of their remuneration in
Company shares. The Chairman's fees increased from (Pounds)40,000 to
(Pounds)50,000 on 1 April 2001, giving a total for the year of (Pounds)45,000,
of which (Pounds)11,250 may be taken in shares. The fees of the other
Non-Executive Directors increased from (Pounds)20,000 to (Pounds)22,000 on the
same date, giving a total for the year of (Pounds)21,000, of which (Pounds)5,250
may be taken in shares. All Non-Executive Directors have committed to take their
maximum entitlement of shares. The shares are issued at the average market price
for the three days following the announcement of final results for the year.
During the period J W Stocker received additional Directors' fees of
(Pounds)12,000 for his services as Chairman of the Scientific Advisory Board.
Sir Aaron Klug received additional consultancy fees of (Pounds)5,000 for his
services as a member of the Scientific Advisory Board.

As at 1 October 2000 J W Stocker held options to subscribe for shares in the
Company which have subsequently been exercised. The options were granted when
the Group was privately owned. The Board did not consider that the holding of
the options affected his independence. None of the Company's Non-Executive
Directors participate in the Group's current share option schemes.

Notice periods

The service contracts are terminable by either party with a notice period of one
year for Executive Directors and six months for Non-Executive Directors.

In addition, Directors appointed by the Board must present themselves for
re-election at the first General Meeting following their appointment and all
Directors must submit themselves for re-election at least once every three
years.

<PAGE>

Directors' emoluments
The emoluments of the Directors who served during the year were as follows:

<TABLE>
<CAPTION>
                                                    Performance-                                Pension          Pension
                             Fees/basic     Taxable      related        Total        Total contributions   contributions
                                 salary    benefits remuneration         2001         2000          2001            2000
                           (Pounds)'000 (Pounds)'000(Pounds)'000 (Pounds)'000 (Pounds)'000  (Pounds)'000    (Pounds)'000
<S>                        <C>          <C>          <C>         <C>          <C>           <C>             <C>
Executive Directors
J C Aston                         130.0         11.9        41.2        183.1        159.7          13.0            11.5
D J Chiswell                      195.0         11.9        58.4        265.3        221.6          19.5            15.5
D R Glover                        130.0         11.9        40.0        181.9        156.0          13.0            11.5
K S Johnson                       130.0         11.9        37.1        179.0        159.3          13.0            11.5
Non-Executive Directors
U Bicker                           21.0            -           -         21.0         20.0             -               -
J L Foght                          21.0            -           -         21.0         20.0             -               -
P B Garland                        45.0          0.4           -         45.4         40.5             -               -
Sir Aaron Klug                     21.0          0.1           -         21.1         20.0             -               -
P A Nicholson                      21.0          2.2           -         23.2         20.2             -               -
J W Stocker                        33.0            -           -         33.0         32.0             -               -
Aggregate emoluments              747.0         50.3       176.7        974.0                       58.5
2000 total                        652.0         48.0       149.3                     849.3                          50.0
</TABLE>

Share participation schemes

Objectives The Board believes that share participation schemes are an important
element in attracting, rewarding and motivating the Group's employees at all
levels and aligning their interests with those of the shareholders. All
employees of the Group participate in the Company Share Option Plan and all are
eligible to join the All-Employee Share Ownership Plan (after an initial period
of service). The Staff Share Scheme, which was replaced by the All-Employee
Share Ownership Plan has been discontinued.

Old share option schemes Cambridge Antibody Technology Limited ('CAT Limited')
previously operated two unapproved share option schemes and one Inland Revenue
approved share option scheme. Options granted under the unapproved schemes
included options to consultants and Non-Executive Directors. These schemes were
closed prior to flotation. Options under these schemes have either been
exchanged for equivalent options over the shares of the Company or the option
holders have entered into share exchange option agreements whereby shares
allotted in CAT Limited on exercise are immediately exchanged for shares in the
Company.

The tabulation of options in this report and in the notes to the financial
statements reflect the effective numbers and exercise prices of options over
shares in the Company. Certain options were granted in one scheme in parallel
with options in a different scheme under arrangements whereby the exercise of
options in one scheme would cause a corresponding number of options to lapse in
the other scheme. The effect of these linked options is to provide a choice of
two alternative schemes under which options can be exercised. Where relevant,
pairs of linked options are counted as a single option.

<PAGE>

Directors' share options

<TABLE>
<CAPTION>
                                                                 At 30
                            At 1 October                     September  Exercise    Earliest      Latest
                                   2000   Granted Exercised       2001     price        date        date
Director                         Number    Number    Number     Number  (Pounds) exercisable exercisable
<S>                     <C>     <C>       <C>     <C>        <C>        <C>      <C>         <C>
J C Aston                (i)    125,000         -  (10,000)    115,000      3.00      4/9/99      3/9/06
                        (ii)      9,000         -        -       9,000      5.00    19/12/00    18/12/04
                        (ii)      9,964         -        -       9,964      2.42    27/11/01    26/11/05
                        (ii)     55,019         -        -      55,019      2.87     3/12/02     2/12/06
D J Chiswell                    150,000         -        -     150,000      3.00    16/12/99    15/12/03
                        (ii)     16,116         -        -      16,116      2.42    27/11/01    26/11/05
                        (ii)     74,155         -        -      74,155      2.87     3/12/02     2/12/06
D R Glover               (i)      5,000         -   (5,000)          -      1.28     24/4/98     27/4/05
                                 25,000         -  (25,000)          -      3.00      4/9/99      3/9/06
                        (ii)     15,000         -        -      15,000      5.00    19/12/00    18/12/04
                        (ii)     29,964         -        -      29,964      2.42    27/11/01    26/11/05
                        (ii)     55,019         -        -      55,019      2.87     3/12/02     2/12/06
K S Johnson              (i)     15,758         -  (15,758)          -      3.00      4/9/99      3/9/06
                        (ii)     15,000         -        -      15,000      5.00    19/12/00    18/12/04
                        (ii)     28,324         -        -      28,324      2.42    27/11/01    26/11/05
                        (ii)     55,019         -        -      55,019      2.87     3/12/02     2/12/06
J W Stocker                      75,000         -  (75,000)          -      1.28     28/4/98     27/4/05
                                758,338         - (130,758)    627,580
</TABLE>

Notes
(i) Includes linked options.
(ii) These options are exercisable subject to the condition that the
proportionate increase in the closing price of shares in the Company over a
specified period must exceed the proportionate increase in the total return for
the FTSE All Share Index. The specified period begins on the date of grant and
ends between the third and fourth anniversary of the date of grant.

Company Share Option Plan In 1997 the Company established the Company Share
Option Plan (`CSOP') which consists of two parts. The CSOP part A is Inland
Revenue approved and the CSOP Part B is unapproved. All employees of the Group,
including Executive Directors, are eligible for the grant of options under these
schemes. Options granted under part A are subject to limits set by the Inland
Revenue and the balance is granted under part B. The total of shares under
option to each participant is subject to limits and the exercise of options is
subject to the attainment of an objective performance criterion determined by
the Remuneration Committee.

Under the current CSOP rules individuals may be granted options over shares with
a value of up to four times annual remuneration (which would include any cash
bonuses) in any rolling ten year period. This limit was set in 1997 reflecting
prevailing market practice and the requirements of guidelines set by
institutional investors. The Board desires that the Group's remuneration
arrangements keep pace with developments in the Group and the marketplace, and
reflect guidelines currently set by institutional investors. Accordingly, it is
now proposed to amend the rules of the CSOP to replace the existing limit with a
new limit such that in any one year options can be granted over shares with a
maximum value of up to two times annual salary.

<PAGE>

If this change to the rules of the CSOP is adopted then the Remuneration
Committee intends to introduce in addition to the existing performance condition
another more demanding performance condition for option grants in excess of 1.5
times annual salary. For such grants the number of options which become
exercisable will be determined on a linear sliding scale based on the extent to
which the Total Shareholder Return (TSR) for CAT exceeds the percentage increase
in the TSR for the FTSE All Share Index over a three year period, by an amount
of between 0% and 33%. For example, if CAT's TSR in the relevant period exceeds
the TSR for the FTSE All Share Index by 33% all the options in excess of 1.5
times salary will become exercisable. Conversely if the TSR in the relevant
period does not exceed the FTSE All Share Index no options in excess of 1.5
times salary will become exercisable. The number of options that will become
exercisable for performance between the two points will be determined by a
linear sliding scale. The proposed change to the CSOP will be set out and
explained in a separate resolution and will be subject to shareholder approval
at the forthcoming AGM.

                                                     Market price       Gain on
                                            Date of   on exercise      exercise
Exercise of options                        exercise      (Pounds)  (Pounds)'000
J C Aston                                   8/12/00         34.62         316.2
D R Glover                                  21/2/01         32.00         878.6
K S Johnson                                 21/2/01         32.00         457.0
J W Stocker                                 8/12/00         34.62       2,500.5

The closing market price of the ordinary shares in the Company at 30 September
2001 was (Pounds)13.90 and the range during the year was (Pounds)8.70 to
(Pounds)43.88.

All-Employee Share Ownership Plan The Company has established an Inland Revenue
approved All-Employee Share Ownership Plan (`AESOP') which complies with the
Finance Act 2000. All of CAT's employees and Executive Directors employed on 1
April in the relevant financial year are eligible to participate. The AESOP has
three elements: free shares, partnership shares and matching shares. Free shares
can be appropriated to employees up to a maximum market value of (Pounds)3,000
per employee per year. The shares are offered on similar terms to all eligible
employees and may include a performance related element. Partnership shares may
be purchased by employees out of their pre-tax salary up to (Pounds)1,500 (or
10% of salary if lower) per year. Where employees purchase partnership shares
they can be awarded additional free shares on a matching basis. The current
ratio for partnership to matching shares is 1:1. Under the Scheme rules however,
the Directors have the discretion to change this ratio as and when they see fit.
The free shares and matching shares will be forfeited if the employee leaves the
Group within 12 months of the date of grant.

On 8 December 2000 90 free shares were allocated to each of 147 eligible
employees including Executive Directors.

<PAGE>

Highest paid Director

J W Stocker was the highest paid Director. His aggregate remuneration comprised
a notional gain on exercise of share options of (Pounds)2,500,500 and other
emoluments of (Pounds)33,000, giving a total of (Pounds)2,533,500 (2000 - K S
Johnson (Pounds)2,410,500, including a gain of (Pounds)2,251,200).

The notional gain is calculated using the market price on the date of exercise
and does not allow for any subsequent price fluctuations.

Directors' shareholdings

The Directors who held office during the year had the following beneficial
interests in the shares of the Company at 30 September 2001:

                                                Ordinary      Ordinary
                                                  shares        shares
                                                    2001          2000
                                                  Number        Number
J C Aston                                         12,579         2,489
D J Chiswell                                     476,217       476,127
D R Glover                                        10,417         9,327
K S Johnson                                       63,717        63,627
U Bicker                                           2,151         1,988
J L Foght                                          2,811             -
P B Garland                                       41,166        49,506
Sir Aaron Klug                                    28,220        28,057
P A Nicholson                                      4,434         4,271
J W Stocker                                       78,292         3,129

The interests have remained unchanged since the year end.

By order of the Board

Diane Mellett
Secretary
26 November 2001

<PAGE>

Corporate Governance

The Combined Code

The Board is committed to the highest standards of corporate governance and is
accountable to shareholders for the good governance of the affairs of the Group.
In accordance with the Combined Code on Principles of Good Governance and Code
of Best Practice (`the Combined Code') the Board must report to shareholders:

.. how the principles of good governance set out in the Combined Code are
applied; and

.. that the Group complies with the best practice provisions set out in the
Combined Code, or where it does not, provide an explanation.

The Board of Directors

The Board of Directors currently consists of four Executive Directors and six
independent Non-Executive Directors. Their biographies are set out on pages 20
and 21. The Board meets formally six times a year and there is frequent contact
between meetings as is required to further the Group's business. The Board's
duties are to (inter alia):

.. determine and monitor group strategy (business, commercial and scientific) and
its implementation;

.. maintain and review a sound system of internal control to safeguard
shareholders' investments and the Group's assets;

.. consider and approve annual and interim financial statements, including the
associated review of the position and prospects of the Group;

.. approve and monitor progress against annual budgets and working capital
forecasts; and

.. consider and approve major projects or other commitments of resources and any
substantial transactions.

The roles of Chairman and Chief Executive Officer are respectively to run the
Board and to take executive responsibility for running the Group's business.
Accordingly these offices are separate.

All Directors bring independent judgement to bear on matters of strategy,
resources, performance and standards of conduct and appropriate training is made
available to Directors to assist them in the discharge of their duties as
required. To enable them to fulfil their duties all Directors receive detailed
monthly reports on the current and prospective activities of the Group and have
full and timely access to any other relevant information they may require.

All Directors also have direct access to the services and advice of the Company
Secretary who is responsible for ensuring that relevant procedures, rules and
regulations are complied with. The appointment and removal of the Company
Secretary is determined by the Board as a whole. Non-Executive Directors may, at
the Group's expense, seek independent legal advice on any matter relating to the
discharge of their duties.

<PAGE>

Although all Directors are equally accountable legally, the Non-Executive
Directors have a particular responsibility to ensure that actions proposed by
the Executive Directors are critically examined and thoroughly discussed. The
Non-Executive Directors therefore fulfil a vital role in corporate
accountability. The Board considers that all of the Non-Executive Directors are
independent of management and free from any business or other relationship which
could materially interfere with the exercise of independent judgement.

P A Nicholson is the Senior Independent Non-Executive Director, other than the
Chairman, to whom any relevant concerns may be addressed.

The remits and memberships of all Board Committees are set out below.

The Audit Committee

The Audit Committee consists of three Non-Executive Directors, currently J L
Foght (Chairman), U Bicker and P A Nicholson. The Committee meets as appropriate
(but not less than twice a year) to:

.. monitor and make recommendations on the relationship with the external
auditors including the nature and scope of the audit and any matters arising;

.. review the annual report and interim financial statements before submission to
the Board, including a consideration of the accounting policies adopted and any
significant areas of judgement;

.. monitor compliance with statutory and Financial Services Authority
requirements for financial reporting; and

.. monitor the system of internal control maintained by the Group to safeguard
shareholders' investments and the Group's assets.

Provision is made for the Committee to meet at least once a year with the
external auditors in the absence of the Group's executive management.

The Audit Committee will also give periodic consideration to the establishment
of an internal audit function. Given the nature and scale of the activities of
the Group, such a function is not currently considered necessary.

The Remuneration Committee

The Remuneration Committee consists of three Non-Executive Directors, currently
P A Nicholson (Chairman), U Bicker and J L Foght. The Committee meets when
required (as determined by its members) to:

.. make recommendations to the Board on the framework of executive remuneration
in accordance with current best practice;

.. determine the remuneration of the Group's Executive Directors on behalf of the
 Board;

.. maintain an overview of the policy in relation to the remuneration and
conditions of service of other senior staff; and

.. determine policy and practice in relation to equity participation schemes.

<PAGE>

The remuneration of the Non-Executive Directors is determined by the Board as a
whole. No Director votes on his own remuneration. The Committee submits an
annual report to the Board which in turn reports to the shareholders. The
Remuneration Report is included on pages 25 to 28 and includes further
explanation as to how relevant principles of the Combined Code are applied and
the extent to which relevant provisions are complied with.

The Nominations Committee

The Nominations Committee assesses candidates of suitable knowledge, experience
and calibre for consideration by the Board as potential Directors of the Company
and meets as and when circumstances dictate. Currently the Committee consists of
P B Garland (Chairman), D J Chiswell, J C Aston and P A Nicholson although any
Director is entitled to attend meetings. Candidates are considered by the full
Board before appointment.

The Scientific Advisory Board

The role of the Scientific Advisory Board is to assist the Group with the
assessment of its existing and potential technologies and research and
development programmes and to provide scientific advice to executive management
and the Board. The composition of the Scientific Advisory Board, which includes
two Non-Executive Directors, is given on page 22.

The Executive Group

Operational decision making is delegated to the Executive Group, which is a
committee consisting of the Executive Directors and the senior executives whose
biographies appear on page 22.

Internal control

The Board of Directors is responsible for identifying, evaluating and managing
the significant risks faced by the Group. The Board is also responsible for
ensuring that the Group maintains a sound system of internal controls to address
those risks and, therefore, to safeguard shareholders' investments and the
Group's assets.

The Board has established a formal and continuous process for identifying and
evaluating the significant risks faced by the Group. Identification and
evaluation of risks is an integral part of the Board's business planning
process. The Board regularly reviews the effectiveness of the process of risk
identification and evaluation.

The Board continuously reviews the effectiveness of the Group's system of
internal controls to manage risk. Monitoring internal controls includes scrutiny
of reports prepared by management and in-depth review and follow up of any
weaknesses identified. As part of this process the Audit Committee considers and
reports to the Board on any matters arising from the work undertaken by the
external auditors and undertakes a periodic review to consider the need to
establish an internal audit function.

In addition, the Board has undertaken a specific review to evaluate the
effectiveness of the process of identifying and evaluating the effectiveness of
internal controls to support

<PAGE>

a statement of compliance. The review covered all controls including financial,
operational and risk management controls and risk management.

There are inherent limitations in any system of internal control. Internal
controls can only manage and not eliminate the risk of a failure to achieve
business objectives or of other losses. Internal controls can therefore provide
only reasonable, and not absolute, assurance against material misstatement or
loss.

A summary of some of the key risks which are inherent in the Group's business is
given on pages 63 to 65.

Key features of the internal control system that operated throughout the period
covered by the financial statements are as follows:

The composition of the Board and of senior management is aimed at providing an
appropriate range of knowledge, skill and experience in scientific, medical and
commercial matters. The Group has developed and continues to adapt and improve
its organisational structure which includes clearly established responsibilities
and lines of accountability. The management of the Group actively promotes the
values of integrity and professionalism and the maintenance of high ethical
standards. Key risk areas are reviewed regularly by executive management and the
Board.

The Group prepares detailed operating plans, budgets and working capital
projections annually based on an evaluation of Group strategy. Detailed reports
covering all material areas of operations are prepared monthly which include an
analysis of variances to plan. The Board monitors the activities of the Group at
a strategic level through the reports on current activities and plans. Executive
management regularly monitor financial and operational performance in detail and
take any necessary corrective action.

Detailed policies and procedures have been established covering all significant
areas. They feature documented approval subject to limits of authority. Any
major expenditure or commitment of resources must be approved by the Board.
Certain areas of the Groups' activities are subject to specific regulations,
particularly those relating to pre-clinical and clinical development and
testing. As compliance with such regulations is critical to the Group's success,
specific resources is devoted to ensuring such regulations are adhered to and to
addressing any matters arising from regulatory examinations.

The Group's liquid resources are managed on a discretionary basis by a third
party. Funds are placed with a variety of deposit-taking institutions and
invested in money market instruments. The third party operates within strict
limits set by the Board as to maturity and credit exposure to any single
institution. Further detail is given in note 16 of the financial statements.

The Audit Committee reviews the operation and effectiveness of this framework on
a regular basis.

<PAGE>

Communication with shareholders

The Board attaches a high priority to effective communication with shareholders.
The Annual Report and half year Interim Report are sent to all shareholders. The
Company meets regularly with institutional shareholders and there is an
opportunity for individual shareholders to question the Chairman at the AGM.
Shareholders may also contact the Communications team at any time during the
year. Contact details are provided on page 72. In addition, the Company has
established a website (www.cambridgeantibody.com) to provide additional
background information and access to news releases issued by the Group.

At the forthcoming AGM, resolutions will be proposed to bring the Articles of
Association in line with recent legislative changes in order that shareholders
will be able to cast proxy votes and receive shareholder information (such as
the Annual Report and Accounts and the Notice of General Meetings)
electronically via the internet if they elect to do so.

Statement of compliance

Having considered the provisions of the Combined Code, the Board believes that
the Company's practices for the year complied with the best practice provisions
of Section 1 the Combined Code except that P B Garland (who is up for
re-election at the next Annual General Meeting of the Company) has not been
re-elected since 1997. It is the intention of the Company that all the Directors
should be re-elected at regular intervals and at least every three years.

P B Garland and Sir Aaron Klug have both served on the Board for longer than
nine years. The Board is of the view however that both these Directors are able
to bring a high level of scientific and commercial expertise as well as a
substantial degree of credibility and professionalism to the Group and are
therefore satisfied that the Non-executive Directors exercise independent
judgement and are independent of management.

Compliance with the BioIndustry Association (BIA) Code of Best Practice

The BIA, of which CAT is a member, adopted a code of best practice on 20 October
1999 (the BIA Code). The BIA Code includes principles and provisions relating to
corporate governance matters, access to external advice, confidentiality,
dealings in a company's shares and standards of public announcements. It is
intended to operate by reference to the particular circumstances of bio science
companies in support of the Combined Code, Principles of Good Governance and
Code of Best Practice (the Turnbull Report). Throughout the financial year the
Company has complied with the relevant provisions of the BIA Code.

Code of Practice for the Pharmaceutical Industry

The Association of the British Pharmaceutical Industry, of which CAT is a
member, publish a Code of Practice. As a Group, efforts are made to comply with
the provisions of this Code.

<PAGE>

Financial statements, including adoption of going concern basis

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 Group and of the profit or loss of the Group for that period.

After making enquiries, the Directors have a reasonable expectation that the
Company and the Group have adequate resources to continue in operational
existence for the foreseeable future. For this reason, they continue to adopt
the going concern basis in preparing the financial statements.

In preparing the financial statements, the Directors are required to: select
suitable accounting policies and then apply them consistently; make judgements
and estimates that are reasonable and prudent; and state whether applicable
accounting standards have been followed, subject to any material departures
disclosed and explained in the financial statements.

Other matters

The Directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Company and Group and 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 Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.

<PAGE>

Independent Auditors' Report
To the shareholders of Cambridge Antibody Technology Group plc
We have audited the financial statements of Cambridge Antibody Technology Group
plc for each of the years ended 30 September 2001, 2000 and 1999 which comprise
the Profit and Loss Account, the Balance Sheet, the Cash Flow Statement, the
Statement of Total Recognised Gains and Losses and the related notes numbered 1
to 27. These financial statements have been prepared under the accounting
policies set out therein.

Respective responsibilities of Directors and auditors
The Directors' responsibilities for preparing the Annual Report and the
financial statements in accordance with applicable law and United Kingdom
accounting standards are set out in the Statement of Directors'
Responsibilities. Our responsibility is to audit the financial statements in
accordance with relevant legal and regulatory requirements, United Kingdom
Auditing Standards 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 Directors' Report is not
consistent with the financial statements, if the Company has not kept proper
accounting records, if we have not received all the information and explanations
we require for our audit, or if information specified by law or the Listing
Rules regarding Directors' remuneration and transactions with the Company and
other members of the Group is not disclosed.

We review whether the Corporate Governance Statements reflect the Company's
compliance with the seven provisions of the Combined Code specified for our
review by the Listing Rules, and we report if they do not. We are not required
to consider whether the Board's statements on internal control cover all risks
and controls, or form an opinion on the effectiveness of the Group's corporate
governance procedures or its risk and control procedures.

We read the other information contained in the Annual Report, including the
Corporate Governance Statements, and consider whether it is consistent with the
audited financial statements. This other information comprises the information
set out on the contents page on the inside front cover of this document. We
consider the implications for our report if we become aware of any apparent
misstatements or material inconsistencies with the financial statements. Our
responsibilities do not extend to any other information.

Basis of opinion
We conducted our audit in accordance with United Kingdom Auditing Standards
issued by the Auditing Practices Board, and United States generally accepted
auditing standards. 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 circumstances of the Company and of
the Group, consistently applied and adequately disclosed.

<PAGE>

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.

Opinion
In our opinion, the financial statements (a) give a true and fair view of the
state of affairs of the Company and of the Group as at 30 September 2001 and of
the Group's loss for the year then ended and have been properly prepared in
accordance with the Companies Act 1985; (b) present fairly in all material
respects, the consolidated financial position of the Group at 30 September 2001
and 2000 and the consolidated results of operations and cash flows for each of
the three years in the period ended 30 September 2001, in conformity with
generally accepted accounting principles in the United Kingdom.

Reconciliation to US GAAP
Accounting practices used by the Group in preparing the accompanying financial
statements conform with generally accepted accounting principles in the United
Kingdom, but do not conform with accounting principles generally accepted in the
United States. A description of these differences and a reconciliation of
consolidated net loss and shareholders' equity to United States generally
accepted accounting principles is set forth in note 27.

Arthur Andersen
Chartered Accountants and Registered Auditors
Betjeman House
104 Hills Road
Cambridge CB2 1LH
UK
26 November 2001

<PAGE>

Consolidated Profit and Loss Account

<TABLE>
<CAPTION>
                                                                                   2000          1999
                                                                               restated      restated
                                                                     2001  (see note 3)  (see note 3)
For the year ended 30 September 2001                  Notes  (Pounds)'000  (Pounds)'000  (Pounds)'000
<S>                                                   <C>    <C>           <C>           <C>
Turnover                                                  2         7,121         7,018         2,165
Direct costs                                                         (351)         (381)          (81)
Gross profit                                                        6,770         6,637         2,084
Research and development expenses                                 (21,393)      (15,728)      (13,574)
General and administration expenses                                (6,443)       (4,842)       (2,684)
Operating loss                                                    (21,066)      (13,933)      (14,174)
Interest receivable (net)                                 5         9,295         5,644         1,810
Loss on ordinary activities before taxation               4       (11,771)       (8,289)      (12,364)
Taxation on loss on ordinary activities                   7             -             -            (1)
Loss for the financial year                                       (11,771)       (8,289)      (12,365)
Loss per share - basic and fully diluted (pence)          8          33.3p         27.5p         50.9p
</TABLE>

The losses for all years arise from continuing operations.

Consolidated Statement of Total Recognised Gains and Losses

<TABLE>
<CAPTION>
                                                                     2001          2000          1999
For the year ended 30 September 2001                         (Pounds)'000  (Pounds)'000  (Pounds)'000
<S>                                                          <C>           <C>           <C>
Loss for the financial year                                       (11,771)       (5,161)      (12,731)
Loss on foreign exchange translation                                    1            (7)           (1)
Total recognised losses relating to the year                      (11,770)       (5,168)      (12,732)
Prior year adjustment (as explained in note 3)                     (6,594)
Total recognised losses since last Annual Report
and financial statements                                          (18,364)
</TABLE>

The accompanying notes are an integral part of this consolidated profit and loss
account and consolidated statement of total recognised gains and losses.

<PAGE>

Consolidated Balance Sheet

<TABLE>
<CAPTION>
                                                                                        2000 restated
                                                                            2001       (see  note 3)
At 30 September 2001                                  Notes         (Pounds)'000         (Pounds)'000
<S>                                                   <C>           <C>                <C>
Fixed assets
Intangible assets                                         9                4,075                4,448
Tangible fixed assets                                    10                6,642                5,008
                                                                          10,717                9,456
Current assets
Debtors                                                  12                4,940                3,452
Investment in liquid resources                           13              156,228              156,502
Cash at bank and in hand                                                     585                   26
                                                                         161,753              159,980
Creditors
Amounts falling due within one year                      14               (8,335)              (9,627)
Net current assets                                                       153,418              150,353
Total assets less current liabilities                                    164,135              159,809
Creditors
Amounts falling due after more than one year             15               (8,085)              (7,369)
Net assets                                                               156,050              152,440

Capital and reserves
Called-up share capital                                  17                3,546                3,477
Share premium account                                    17              195,017              179,706
Other reserve                                            18               13,451               13,451
Profit and loss account                                  18              (55,964)             (44,194)
Shareholders' funds - all equity                         19              156,050              152,440
</TABLE>

The accompanying notes are an integral part of this consolidated balance sheet.

<PAGE>

Company Balance Sheet

<TABLE>
<CAPTION>
                                                                            2001                 2000
At 30 September 2001                                  Notes         (Pounds)'000         (Pounds)'000
<S>                                                   <C>            <C>                  <C>
Fixed assets
Investments                                              11              101,456                6,456
Current assets
Debtors                                                  12                2,922               31,731
Investment in liquid resources                           13              155,303              154,962
Cash at bank and in hand                                                       2                    6
                                                                         158,227              186,699

Creditors
Amounts falling due within one year                      14              (43,395)                 (85)
Net current assets                                                       114,832              186,614
Total assets less current liabilities                                    216,288              193,070
Net assets                                                               216,288              193,070

Capital and reserves
Called-up share capital                                  17                3,546                3,477
Share premium account                                    17              195,017              179,706
Profit and loss account                                  18               17,725                9,887
Shareholders' funds - all equity                                         216,288              193,070
</TABLE>

The accompanying notes are an integral part of this Company balance sheet.
Signed on behalf of the Board

John Aston
Director
26 November 2001


Consolidated Cash Flow Statement

<TABLE>
<CAPTION>
                                                                     2001          2000          1999
For the year ended 30 September 2001                  Notes  (Pounds)'000  (Pounds)'000  (Pounds)'000
<S>                                                   <C>    <C>           <C>           <C>
Net cash outflow from operating activities               20       (19,150)       (3,609)      (11,188)
Returns on investments and servicing of finance          21         8,322         4,245         2,100
Taxation                                                 21             -             -            (1)
Capital expenditure and financial investment             21        (3,481)         (974)       (2,672)
Net cash outflow before management of liquid
resources and financing                                           (14,309)         (338)      (11,761)
Management of liquid resources                           21           274      (133,729)        12,051
Financing                                                21        15,380       132,293           535
Increase/(decrease) in cash                              22         1,345        (1,774)          825
</TABLE>

The accompanying notes are an integral part of this consolidated cash flow
statement.

<PAGE>

Notes to the Financial Statements

1 Accounting policies
A summary of the principal accounting policies is set out below. These have all
been applied consistently throughout the periods covered by this report with the
exception of the policy for revenue recognition which is now as explained below
and the impact of this change is explained in note 3.

Basis of accounting The financial statements have been prepared under the
historical cost convention and in accordance with applicable United Kingdom
accounting standards.

Basis of consolidation The Group financial statements consolidate the financial
statements of Cambridge Antibody Technology Group plc and its subsidiary
undertakings, drawn up to 30 September each year.

The acquisition of Cambridge Antibody Technology Limited ('CAT Limited'), by way
of share for share exchange on 20 December 1996 was accounted for as a group
reconstruction in accordance with Financial Reporting Standard Number 6.
Consequently, consolidated financial information is presented as if the Company
has always owned CAT Limited. Otherwise, the results of subsidiaries acquired
are consolidated for the periods from the date on which control passed. Such
acquisitions are accounted for under the acquisition method.

The profit for the financial year dealt with in the financial statements of
Cambridge Antibody Technology Group plc was (Pounds)7,838,000 (2000 -
(Pounds)4,454,000). As provided by S.230 of the Companies Act 1985, no company
only profit and loss account is presented in respect of Cambridge Antibody
Technology Group plc.

Goodwill Goodwill, representing the excess of fair value of the consideration
given over the fair value of the identifiable assets and liabilities acquired,
is capitalised as an asset on the balance sheet. It is amortised over its useful
economic life, subject to reviews for impairment where necessary. Goodwill
previously written off directly against reserves remains so eliminated.

Turnover Turnover principally consists of income received in the normal course
of business from license fees, technical milestones, clinical milestones, fees
for research and development services, payments for purchased rights, and
royalties. These are stated net of trade discounts, VAT and other sales related
taxes.

A description of the various elements of turnover and their accounting policies
is given below. In accordance with emerging best practice the Group's accounting
policy for some elements of turnover has been revised, and where relevant those
revisions are also described.

Licence fees In previous years non-refundable licence fees were recognised when
received. Under the revised policy, licence fees are deferred and recognised
over the period of the licence term or the period of the associated research and
development

<PAGE>

agreement (where relevant). In circumstances where no such defined period
exists, the licence fee is deferred and recognised over the period to expiration
of the relevant patents licenced. Under both the previous and revised accounting
policy for licence fees where a proportion of the fee is creditable against
research and development services to be provided in the future that proportion
of the amount received is deferred and recognised over the period during which
the services are rendered. The impact of adopting the revised policy on current
results and figures reported in prior periods is disclosed in note 3.

Technical milestones During certain research and development programs the Group
receives non-refundable milestone payments when it achieves certain defined
technical criteria. In previous years non-refundable technical milestones were
recognised when received. The revised policy is that such milestones are
recognised based on the percentage of completion of the relevant research and
development program subject to the total revenue recognised being limited to the
aggregate amount of milestone payments received. The percentage completion is
determined by reference to effort in hours incurred compared to total estimated
effort for the program. The impact of adopting the revised policy on current
results and figures reported in prior periods is disclosed in note 3.

Clinical milestones The Group receives non-refundable clinical development
milestones when a licensee or corporate partner achieves key stages in clinical
trials which they are conducting with a view to the ultimate commercialisation
of a product derived using the Group's proprietary technology. Such milestones
are recognised when received except that if such milestones are creditable
against future royalty payments a relevant amount will be deferred and released
as the related royalty payments are received.

Research and development services The Group provides research and development
services to certain corporate collaborators, usually in the form of a defined
number of the Group's employees working under the direction of the collaborator
to further the collaborator's research and development effort. Such contracts
are made on the basis of Full Time Equivalent ('FTE') employees and are charged
at a specified rate per FTE. Revenues from FTE services are recognised as the
services are rendered.

Purchased rights Under an agreement with Drug Royalty Corporation ('DRC') the
Group received a payment of (Pounds)1.5 million in 1994 in return for rights to
a percentage of revenues (and certain other payments) received by the Group over
a period terminating in 2009. The Group's accounting policy was to credit the
payment to income when received. The revised policy is that the payment be
deferred and recognised ratably over the period for which rights were purchased.
The impact of adopting this revised policy on current results and figures
reported in prior years is disclosed in note 3.

Royalties Royalty income is generated by sales of products incorporating the
Group's proprietary technology and is recognised when received. The Group has
yet to receive any significant royalty payments.

<PAGE>

Government grants Grants of a revenue nature are credited to the profit and loss
account as the related expenditure is incurred.

Taxation Current tax, including UK corporation tax and foreign tax, is provided
at amounts expected to be paid (or recovered) using the tax rates and laws that
have been enacted or substantially enacted by the balance sheet date.

Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right to
pay less tax in the future have occurred at the balance sheet date. Timing
differences are differences between the Group's taxable profits and its results
as stated in the financial statements that arise from the inclusion of gains and
losses in tax assessments in periods different from those in which they are
recognised in the financial statements.

A net deferred tax asset is regarded as recoverable and therefore recognised
only when, on the basis of all available evidence, it can be regarded as more
likely than not that there will be suitable taxable profits from which the
future reversal of the underlying timing differences can be deducted.

Deferred tax is not recognised when fixed assets are revalued unless by the
balance sheet date there is a binding agreement to sell the revalued assets and
the gain or loss expected to arise on sale has been recognised in the financial
statements. Neither is deferred tax recognised when fixed assets are sold and it
is more likely than not that the taxable gain will be rolled over, being charged
to tax only if and when the replacement assets are sold.

Deferred tax is recognised in respect of the retained earnings of overseas
subsidiaries and associates only to the extent that, at the balance sheet date,
dividends have been accrued as receivable or a binding agreement to distribute
past earnings in future has been entered into by the subsidiary or associate.

Deferred tax is measured at the average tax rates that are expected to apply in
the periods in which the timing differences are expected to reverse, based on
tax rates and laws that have been enacted or substantively enacted by the
balance sheet date. Deferred tax is measured on a non-discounted basis.

Research and development Research and development expenditure is written off as
incurred.

Collaboration arrangements The Group has entered into certain collaboration
arrangements whereby the parties agree to work jointly on research and
development of potential therapeutic products. Under such arrangements the
parties agree which elements of research and development each will perform.
These arrangements do not include the creation of any separate entity to conduct
the activities nor any separate and distinct assets or liabilities. The parties
agree that the combined cost of all relevant activities will be borne by the
parties in a particular proportion and that net revenues derived from sales of
any resulting product will be shared similarly. The sharing of costs will result
in

<PAGE>

balancing payments between the parties and such payments receivable or payable
will be respectively added to or deducted from research and development costs in
the profit and loss account. Any amounts receivable or payable at a period end
are included in the balance sheet under debtors or creditors.

Pension costs The Group operates a group personal pension plan which is a
defined contribution scheme. The amount charged to the profit and loss account
in respect of pension costs is the Group's contributions payable in the year.
Differences between contributions payable in the year and contributions actually
paid are shown as either accruals or prepayments in the balance sheet.

Intangible assets Purchased intangible assets (excluding research and
development costs and goodwill) are capitalised as assets on the balance sheet
at fair value on acquisition and amortised over their useful economic lives,
subject to reviews for impairment where necessary. This applies to intangibles
purchased separately from a business and also to intangibles acquired as part of
the acquisition of a business, if their value can be measured reliably on
initial recognition. The Group's purchased intangible assets comprise certain
patents which are being written off over their term to expiry which is between
12 and 16 years from the date of acquisition. When reviewing these assets for
impairment the Directors have considered future cash flows arising.

1 Accounting policies continued
Tangible fixed assets Tangible fixed assets are stated at cost, net of
depreciation and any provision for impairment. Depreciation is provided on all
tangible fixed assets other than freehold land on a straight-line basis at rates
calculated to write off the cost, less estimated residual value, of each asset
over its expected useful life as follows:

Freehold buildings: over 12 years.
Motor vehicles: 33 1/2% per annum.
Office and laboratory equipment: 25% per annum.
Fixtures and fittings: over five years (or the remaining lease term if less).

Investments Fixed asset investments are shown at cost less provision for
impairment.

Liquid resources Liquid resources comprise negotiable securities and term
deposits and are shown at cost with accrued interest included in debtors. Where
relevant a provision is made such that cost plus accrued interest does not
exceed market value.

Foreign currency Transactions in foreign currencies are recorded at the rate of
exchange at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are reported at the
rates of exchange prevailing at that date. Any gain or loss arising from a
change in exchange rates subsequent to the date of the transaction is included
as an exchange gain or loss in the profit and loss account.

<PAGE>

The results of overseas operations and their balance sheets are translated at
the rates ruling at the balance sheet date. Exchange differences arising on
translation of the opening net assets and results of overseas operations are
dealt with through reserves.

Leases Assets held under finance leases, which confer rights and obligations
similar to those attached to owned assets, are capitalised as tangible fixed
assets and are depreciated over the shorter of the lease terms and their useful
lives. The capital elements of future lease obligations are recorded as
liabilities, while the interest elements are charged to the profit and loss
account over the period of the leases to produce a constant rate of charge on
the balance of capital repayments outstanding. Hire purchase transactions are
dealt with similarly, except that assets are depreciated over their useful
lives.

Rentals under operating leases are charged on a straight-line basis over the
lease term even if payments are made on another basis.

2 Turnover and loss on ordinary activities before taxation
Turnover and loss on ordinary activities before taxation relate solely to the
principal activity and are attributable to the continuing operations of the
Group substantially all of which take place in the United Kingdom.

Turnover principally consists of licence fees, milestone payments and fees for
research and development services provided under corporate agreements.

                                                  2000 restated  1999 restated
                                            2001   (see note 3)   (see note 3)
                                    (Pounds)'000   (Pounds)'000   (Pounds)'000
Total turnover                             9,421          7,018          2,165
Less: intra-group eliminations            (2,300)             -              -
Consolidated turnover                      7,121          7,018          2,165

Consolidated turnover was generated from customers in the following geographical
areas:

                                                  2000 restated    1999 restated
                                            2001   (see note 3)     (see note 3)
                                    (Pounds)'000   (Pounds)'000     (Pounds)'000
United Kingdom                                 -            316               80
Europe                                        53          1,104              831
United States of America                   6,969          5,598            1,126
Rest of World                                 99              -              128
                                           7,121          7,018            2,165

Net assets of (Pounds)643,000 (excluding creditors eliminated on consolidation
of (Pounds)2,387,000) (2000 - (Pounds)16,000, excluding creditors eliminated on
consolidation of (Pounds)87,000) and total assets of (Pounds)643,000 (2000 -
(Pounds)16,000) are held in the United States of America.

<PAGE>

3 Prior year adjustment

As discussed in note 1 the Group policy for recognising turnover was changed
during the year in accordance with emerging best practice. The Directors
consider that the revised policy provides a fairer presentation of the results
and financial position of the Group because under the revised policy, where a
contractual performance is incomplete despite the Group having received
non-refundable payments, revenue is only recognised to the extent that the Group
has performed its obligations and such performance has resulted in benefits
accruing to the customer.

The effects of the change in this accounting policy are summarised below:

<TABLE>
<CAPTION>
                                                                  2001                 2000              1999
                                                          (Pounds)'000         (Pounds)'000      (Pounds)'000
<S>                                                       <C>                  <C>               <C>
Profit and loss account
Turnover:
Revised accounting policy                                        7,121                7,018             2,165
Previous accounting policy                                       9,595               10,146             1,799
(Increase)/decrease in loss for the
financial year                                                  (2,474)              (3,128)              366
Balance sheet
Creditors:
Amounts falling due within one year -
deferred income                                                 (1,564)              (1,200)             (655)
Amounts falling due after more than
one year - deferred income                                      (7,504)              (5,394)           (2,811)
Decrease in net assets                                          (9,068)              (6,594)           (3,466)
</TABLE>

4 Loss on ordinary activities before taxation

<TABLE>
<CAPTION>
                                                                  2001                 2000              1999
                                                          (Pounds)'000         (Pounds)'000      (Pounds)'000
<S>                                                       <C>                  <C>               <C>
The loss on ordinary activities before taxation is stated after charging
(crediting):
Depreciation and amounts written off
tangible fixed assets:
- owned                                                          2,146                1,808             1,621
- held under hire purchase contracts                                 -                    -                 6
Amortisation of patents                                            373                  374               389
Auditors' remuneration - audit                                      42                   27                25
                       - other                                     149                  219                35
Foreign exchange (gain)/loss                                       (56)                (123)                7
Government grants                                                    -                    -                (2)
Operating lease rentals:
- plant and machinery                                                3                    3                 1
- other operating leases                                           721                  290               275
Allocations under equity participation
schemes                                                            416                  459               203
</TABLE>


<PAGE>

5 Interest receivable (net)

<TABLE>
<CAPTION>
                                                                  2001                 2000              1999
                                                          (Pounds)'000         (Pounds)'000      (Pounds)'000
<S>                                                       <C>                  <C>               <C>
Interest receivable                                              9,295                5,644             1,812
Interest payable on hire purchase contracts                          -                    -                (2)
                                                                 9,295                5,644             1,810
</TABLE>

6 Staff costs

The average monthly number of persons (including Executive Directors) employed
by the Group during the year was:

<TABLE>
<CAPTION>
                                                                  2001                 2000              1999
<S>                                                       <C>                  <C>               <C>
Management and administration                                       32                   22                20
Research and development                                           192                  139               130
                                                                   224                  161               150

                                                          (Pounds)'000         (Pounds)'000      (Pounds)'000
Their aggregate remuneration comprised:
Wages and salaries                                               7,268                5,233             4,565
Social security costs - (credit)/charge
provided on unapproved options                                    (194)                 523                 -
                      - on wages and salaries                      740                  527               460
Other pension costs                                                641                  432               373
                                                                 8,455                6,715             5,398
</TABLE>

The Group has made a provision for employer's National Insurance payable on
certain options granted under the CSOP Part `B' scheme in December 1999. The
liability will not crystallise until the options are exercised (they are
exercisable from December 2002) and the ultimate liability will be determined by
the difference between the exercise price paid by the employee and the market
price on exercise and on the then prevailing rate for employer's contributions.

The options are exercisable subject to the condition that the proportionate
increase in the closing price of shares in the Company over a specified period
must exceed the proportionate increase in the total return on the FTSE All Share
Index. The specified period begins on the date of grant and ends between the
third and fourth anniversary of the date of grant.

The provision is being made systematically by reference to the market value of
the shares at the balance sheet dates over the period from the date of grant to
the end of the performance period, and from that date to the date of actual
exercise the provision will be adjusted by reference to changes in market value.
For this purpose the performance period is assumed to be of minimum duration.

<PAGE>

The provision and corresponding charges to the profit and loss account will be
affected by: the elapse of performance periods; the remaining number and option
price of shares under option; and, the market value of the shares.

The market price of shares at the year end was (Pounds)13.90. If that price and
the relevant number of shares under option remained unchanged, the charge for a
further year would amount to (Pounds)179,000. If the market value of the shares
were to increase by 10% over that at the year end, the charge would increase by
(Pounds)64,000.

7 Taxation

                                2001                 2000                 1999
                        (Pounds)'000         (Pounds)'000         (Pounds)'000
Overseas taxation                  -                    -                    1

At 30 September 2001 the Group had tax losses of approximately (Pounds)60
million (2000 - (Pounds)36 million, 1999 - (Pounds)31 million) available for
relief against future taxable profits. Due to the availability of tax losses
there is no provision for deferred taxation. A deferred tax asset amounting to
(Pounds)17 million representing such losses has not been recognised.

8 Loss per share

Potentially dilutive issuable shares are only included in the calculation of
fully diluted earnings per share if their issue would decrease net profit per
share or increase net loss per share. Since the Group has reported losses, its
basic and fully diluted loss per share are therefore equal.

Loss per ordinary share (basic and fully diluted) is based on the loss for the
financial year of (Pounds)11,771,000 (2000, as restated - (Pounds)8,289,000,
1999, as restated - (Pounds)12,365,000) and a weighted average number of
ordinary shares of 35,313,260 (2000 - 30,179,818, 1999 - 24,314,191).

9 Intangible assets

                                                                       Patents
Group                                                             (Pounds)'000
Cost:
At 1 October 2000 and at 30 September 2001                               5,265
Depreciation:
At 1 October 2000                                                          817
Charge for the year                                                        373
At 30 September 2001                                                     1,190
Net book value:
At 30 September 2001                                                     4,075
At 30 September 2000                                                     4,448
The Company has no intangible assets.


<PAGE>

10 Tangible fixed assets

<TABLE>
<CAPTION>
                                         Freehold
                                         land and   Fixtures and    Laboratory       Office         Motor
                                        buildings       fittings     equipment    equipment      vehicles        Total
Group                                (Pounds)'000   (Pounds)'000  (Pounds)'000 (Pounds)'000  (Pounds)'000 (Pounds)'000
<S>                                  <C>            <C>           <C>          <C>           <C>          <C>
Cost:
At 1 October 2000                             788          3,001         6,157          657             6        10,609
Additions                                       -          1,428         2,004          339            14         3,785
Disposals                                      (3)             -            (2)           -             -            (5)
At 30 September 2001                          785          4,429         8,159          996            20        14,389
Depreciation:
At 1 October 2000                              90          1,473         3,624          412             2         5,601
Charge for the year                            49            565         1,375          154             3         2,146
Eliminated in respect of disposals              -              -             -            -             -             -
At 30 September 2001                          139          2,038         4,999          566             5         7,747
Net book value:
At 30 September 2001                          646          2,391         3,160          430            15         6,642
At 30 September 2000                          698          1,528         2,533          245             4         5,008
The Company has no tangible fixed assets.
</TABLE>

11 Fixed asset investments
                                                                         Company
                                                                      Subsidiary
                                                                    undertakings
                                                                    (Pounds)'000
Cost and net book value
At 1 October 2000                                                          6,456
Additions - CAT Limited(i)                                                95,000
At 30 September 2001                                                     101,456

(i) During the year, the Company subscribed for additional new ordinary shares
in Cambridge Antibody Technology Limited to provide that company with working
capital.

The subsidiary undertakings of the Company, all of which are consolidated, are
as follows:


<TABLE>
<CAPTION>
                              Country of incorporation                    Principal           Percentage of
                                         and operation                     activity    ordinary shares held
<S>                           <C>                        <C>                           <C>
Cambridge Antibody Technology Limited          England     Research and development                    100%
CAT Group Employees' Trustees Limited          England   Share scheme trust company                    100%
Optein Inc. (trading as Aptein Inc.)               USA     Research and development                    100%
Denzyme ApS                                    Denmark     Research and development                 100%(i)
</TABLE>

(i) Held by CAT Limited.

<PAGE>

12 Debtors

<TABLE>
<CAPTION>
                                                      Group         Group       Company       Company
                                                       2001          2000          2001          2000
                                               (Pounds)'000  (Pounds)'000  (Pounds)'000  (Pounds)'000
<S>                                            <C>           <C>           <C>           <C>
Due within one year:
Trade debtors                                           732           970             -             -
Due from subsidiary undertakings                          -             -            88        29,947
Other debtors                                           386           363           143             3
Prepayments and accrued income                        3,822         2,119         2,691         1,781
                                                      4,940         3,452         2,922        31,731
</TABLE>

13 Investment in liquid resources

<TABLE>
<CAPTION>
                                                      Group         Group       Company       Company
                                                       2001          2000          2001          2000
                                               (Pounds)'000  (Pounds)'000  (Pounds)'000  (Pounds)'000
<S>                                            <C>           <C>           <C>           <C>
Negotiable securities:
Floating rate note                                   14,285             -        14,285             -
Certificates of deposit                             128,498       132,295       128,498       132,295
Term deposits                                        13,445        24,207        12,520        22,667
                                                    156,228       156,502       155,303       154,962
</TABLE>

The Group holds cash which is surplus to current requirements, but which will be
required to finance future operations, in sterling in interest bearing
marketable securities as described in note 16.

14 Creditors

<TABLE>
<CAPTION>
                                                                    Group
                                                                     2000
                                                      Group      restated       Company       Company
                                                       2001  (see note 3)          2001          2000
                                               (Pounds)'000  (Pounds)'000  (Pounds)'000  (Pounds)'000
<S>                                            <C>          <C>            <C>           <C>
Amounts falling due within one year:
Bank overdraft                                          163           949             -             -
Trade creditors                                         727         1,035             -             -
Amounts owed to subsidiary undertakings                   -             -        43,350             -
Taxation and social security                              -           669             -             -
Other creditors                                         534             2             -             -
Accruals                                              3,953         2,924            45            85
Deferred income                                       2,958         4,048             -             -
                                                      8,335         9,627        43,395            85
</TABLE>

The bank overdraft comprises payments to suppliers and other third parties which
are in the course of presentation.

<PAGE>

15 Creditors

                                                                           Group
                                                                            2000
                                                             Group      restated
                                                              2001  (see note 3)
                                                      (Pounds)'000  (Pounds)'000
Amounts falling due after more than one year:
Deferred income                                              8,085         7,369


16 Financial instruments
The financial instruments of the Group comprise cash, liquid resources and
debtors and creditors arising in the normal course of business. Other than the
investing activities referred to in note 13 the Group does not trade in
financial instruments or derivatives. The Group's liquid resources are managed
on a discretionary basis by a third party. The mandate under which the fund
managers operate includes the following criteria:

.. Investments only in freely negotiable instruments or deposit with specified
banks and building societies.
.. For the whole fund, limits on the maximum exposure to counterparties with
particular minimum credit ratings, which ratings have been set deliberately
high.
.. For investments in particular classes of instrument, minimum credit
ratings (which are tighter than for the fund as a whole) or an agreed
counterparty list.
.. For the whole fund, a maturity profile which is tailored to the Group's
expected cash requirements (as investments are generally held to maturity).
.. No currency exposure or short positions.

These criteria are set by the Board and are reviewed when deemed necessary. The
principal purpose of the Group's liquid resources is for future funding and
hence their safeguarding is considered to be a greater priority than the actual
return made on the investments. The criteria for fund management reflect this.
The Audit Committee review the return made on the Group's funds against
benchmark market returns half yearly. The majority of the Group's investments
are short term investments and hence exposure to interest rate changes has been
minimal. Realisation of losses from interest rate movements is unlikely as
investments are held to maturity. Declines in interest rates over time will,
however, reduce the Group's interest income.

The results of the Group have not, to date, been materially impacted by exchange
rate fluctuations. However, a significant proportion of current and future
income is likely to be receivable in United States Dollars which may give rise
to transactional currency exposures due to fluctuations in the exchange rate
between United States Dollars and Sterling, which is the Group's functional
currency.

<PAGE>

16 Financial instruments continued

Where possible, the Group seeks to match United States Dollar income with United
States Dollar expenditure. To date the Group has not hedged any transactional
currency exposure but will keep such exposures under review and where prudent
and appropriate may enter into such transactions in future.

<TABLE>
<CAPTION>
                                                                              Financial
                                                                            liabilities
                                                 Fixed rate Floating rate      on which
                                                  financial     financial   no interest
                                                  assets(i)    assets(ii)       is paid         Total
Financial assets and liabilities               (Pounds)'000  (Pounds)'000  (Pounds)'000  (Pounds)'000
At 30 September 2001
<S>                                            <C>           <C>           <C>           <C>
Sterling assets/(liabilities)                         8,498       147,731        (1,346)      154,883
United States Dollar assets                               -         1,760             -         1,760
Other assets                                              -             7             -             7
Book value                                            8,498       149,498        (1,346)      156,650
Fair value                                            8,966       151,943        (1,346)      159,563
</TABLE>

(i)  Interest rates determined for more than one year.
(ii) Interest rates determined at least once a year.

<TABLE>
<CAPTION>
                                                                              Financial
                                                      Fixed      Floating   liabilities
                                                       rate          rate   on which no
                                                  financial     financial      interest
                                                  assets(i)    assets(ii)       is paid         Total
Financial assets and liabilities               (Pounds)'000  (Pounds)'000  (Pounds)'000  (Pounds)'000
At 30 September 2000
<S>                                            <C>           <C>           <C>           <C>
Sterling assets/(liabilities)                        17,597       138,911        (1,418)      155,090
United States Dollar assets                               -           485             -           485
Other assets                                              -             4             -             4
Book value                                           17,597       139,400        (1,418)      155,579
Fair value                                           17,526       141,131        (1,418)      157,239
</TABLE>

(i)  Interest rates determined for more than one year.
(ii) Interest rates determined at least once a year.

The weighted average return on the fixed rate financial assets was 6.1% (2000 -
6.4%), which was fixed over a weighted average term of 1.5 years (2000 - 1.4
years). The returns achieved on fixed and floating rate financial assets are
determined by money market rates prevailing at the date a transaction is entered
into.

In this disclosure financial assets comprise liquid resources and cash at bank
and in hand. Short-term debtors and creditors have been excluded. The financial
liabilities on which no interest is paid comprise payments to third parties in
the course of presentation. These are payable on demand. The Directors do not
consider the deferred income balances to be

<PAGE>

financial liabilities where monies received are non-refundable. Fair value of
marketable securities is determined by reference to market value.

16 Financial instruments continued

Currency exposures At the year end the Group's individual operations had the
following net monetary assets and liabilities in currencies other than their
functional currency.

<TABLE>
<CAPTION>
                                                        USD      Sterling         Other         Total
                                               (Pounds)'000   Pounds)'000  (Pounds)'000  (Pounds)'000
<S>                                            <C>            <C>          <C>            <C>
At 30 September 2001
Functional currency: Sterling                            30             -            (2)           28
                     United States Dollar                 -           (88)            -           (88)
                                                         30           (88)           (2)          (60)
At 30 September 2000
Functional currency: Sterling                           313             -            13           326
                     United States Dollar                 -           (87)            -           (87)
                                                        313           (87)           13           239
</TABLE>

Transactions in such monetary assets and liabilities give rise to currency gains
and losses in the profit and loss account.

17 Called-up share capital and share premium

<TABLE>
<CAPTION>
                                                                                   2001          2000
Authorised                                                                 (Pounds)'000  (Pounds)'000
<S>                                                                        <C>           <C>
50,000,000 (2000 - 50,000,000) ordinary shares
of 10p each - equity                                                              5,000         5,000
</TABLE>

During the year the Directors exercised their powers to allot ordinary shares as
shown in the table below.

<TABLE>
<CAPTION>
                                               10p ordinary               Issued                Share
                                                     shares        share capital              premium
Allotted, called-up and fully paid - equity          Number         (Pounds)'000         (Pounds)'000
<S>                                            <C>                 <C>                    <C>
At 1 October 2000                                34,770,438                3,477              179,706
Issued to the All-Employee
Share Ownership Plan                                 13,230                    1                  436
Exercise of options                                 363,073                   36                1,332
In lieu of fees(i)                                    1,142                    1                   35
Adjustment to fundraising expenses                        -                    -                   15
To Genzyme Corporation as part of a
corporate agreement in
October 2000(ii)(iii)                               307,982                   31               13,493
At 30 September 2001                             35,455,865                3,546              195,017
</TABLE>

(i)    All Non-Executive Directors elected to take part of their fees in shares.
(ii)   Net of expenses.
(iii)  Shares were issued at a price of (Pounds)44.59 per share, being a 15%
premium to the average share price for the 20 days prior to 27 September 2000.

<PAGE>

At 30 September 2001 options had been granted over ordinary shares of the
Company. Options also exist over shares in CAT Limited which are matched with
share exchange option agreements whereby shares allotted in CAT Limited on
exercise are immediately exchanged for shares in the Company. The tabulation of
options below reflects the effective numbers and exercise prices of options over
shares in the Company.

Certain options were granted in one scheme in parallel with options in a
different scheme under arrangements whereby the exercise of options in one
scheme would cause a corresponding number of options to lapse in the other
scheme. Where relevant, pairs of linked options are counted as a single option.

17 Called-up share capital and share premium continued
At 30 September 2001 share options and other rights were as follows:

<TABLE>
<CAPTION>
                                                                                                          Maximum
                                                                                                           number

Options to Directors, consultants and employees                                                         1,500,983
Contractual options                                                                                        16,995
Total                                                                                                   1,517,978

                                Exercise      Earliest date        Latest date
                                   price        exercisable        exercisable            Notes            Number
<S>                         <C>           <C>                <C>                      <C>               <C>
Old schemes                 (Pounds)1.28  15 September 1996  14 September 2003              (i)            20,350
                            (Pounds)1.28      28 April 1998      27 April 2005              (i)            25,000
                                 US$4.80      19 April 2001      19 April 2006                             75,000
                            (Pounds)3.00   4 September 1999   3 September 2006              (i)           132,929
                            (Pounds)3.00   16 December 1999   15 December 2003                            150,000

CSOP                        (Pounds)5.00      24 March 2000      23 March 2004             (ii)            43,670
                            (Pounds)5.00      24 March 2000      23 March 2007             (ii)            47,830
                            (Pounds)5.58        2 June 2000        1 June 2004             (ii)             3,584
                            (Pounds)5.58        2 June 2000        1 June 2007             (ii)             5,376
                            (Pounds)5.00   18 December 2000   18 December 2004             (ii)            69,800
                            (Pounds)5.00   19 December 2000   18 December 2007             (ii)            42,500
                            (Pounds)5.00       25 June 2001       24 June 2008             (ii)            47,500
                            (Pounds)5.00   27 November 2001   26 November 2008            (iii)            17,500
                            (Pounds)2.42   27 November 2001   26 November 2005            (iii)           172,078
                            (Pounds)2.42   27 November 2001   26 November 2008            (iii)            61,486
                            (Pounds)2.10        28 May 2002        27 May 2009            (iii)             5,625
                            (Pounds)2.87    3 December 2002    2 December 2006            (iii)           411,189
                            (Pounds)2.87    3 December 2002    2 December 2009            (iii)            70,421
                           (Pounds)23.03        26 May 2003        25 May 2010            (iii)             3,264

CSOP - granted in year     (Pounds)30.54    1 December 2003   30 November 2007            (iii)            62,204
                           (Pounds)30.54    1 December 2003   30 November 2010            (iii)            20,260
                           (Pounds)25.66        25 May 2004        24 May 2008            (iii)             1,458
                           (Pounds)25.66        25 May 2004        24 May 2011            (iii)             8,488
                           (Pounds)21.62       18 June 2004       17 June 2011            (iii)             3,471
                                                                                                        1,500,983
</TABLE>

(i)    Includes linked options.
(ii)   These options were subject to the condition as stated in note 3 below.
During the year this condition was satisfied.
(iii)  These options are exercisable subject to the condition that the
proportionate increase in the closing price of shares in the Company over a
specified period must exceed the increase in the total return for the FTSE All
Share Index. The specified period begins on the date of grant and ends between
the third and fourth anniversary of the date of grant.

Certain consultancy agreements contain the right to subscribe, subject to
conditions, for up to 16,995 shares at (Pounds)3 per share.

<PAGE>

18 Profit and loss account and other reserve

<TABLE>
<CAPTION>
                                                             Group             Group           Company
                                                            Profit             Other            Profit
                                                          and loss           reserve          and loss
                                                      (Pounds)'000      (Pounds)'000      (Pounds)'000
<S>                                                   <C>               <C>               <C>
At 30 September 2000 as previously stated                  (37,600)           13,451             9,887
Prior year adjustment                                       (6,594)                -                 -
At 1 October 2000 as restated                              (44,194)           13,451             9,887
Retained (loss)/profit for the year                        (11,771)                -             7,838
Foreign exchange translation                                     1                 -                 -
At 30 September 2001                                       (55,964)           13,451            17,725
</TABLE>

The other reserve represents the share premium account of CAT Limited and arises
on consolidation from the application of merger accounting principles to the
acquisition of that company.

The cumulative amount of goodwill written off against the Group's reserves is
(Pounds)229,000 (2000 - (Pounds)229,000).

19 Reconciliation of movements in Group shareholders' funds

<TABLE>
<CAPTION>
                                                                                2001              2000
                                                                        (Pounds)'000      (Pounds)'000
<S>                                                                     <C>               <C>
Loss for the financial year                                                  (11,771)           (5,161)
Other recognised gains and losses relating to the year                             1                (7)
                                                                             (11,770)           (5,168)
New shares issued                                                             15,380           132,302
Net increase in shareholders' funds                                            3,610           127,134
Opening shareholders' funds as previously stated                             159,034            31,900
Prior year adjustment                                                         (6,594)                -
Opening shareholders' funds as restated                                      152,440            31,900
Closing shareholders' funds                                                  156,050           159,034
</TABLE>

20 Reconciliation of operating loss to operating cash flows

<TABLE>
<CAPTION>
                                                                       2000 restated     1999 restated
                                                              2001      (see note 3)      (see note 3)
                                                      (Pounds)'000      (Pounds)'000      (Pounds)'000
<S>                                                   <C>              <C>               <C>
Operating loss                                             (21,066)          (13,933)          (14,174)
Depreciation charge                                          2,146             1,808             1,627
Amortisation of patents                                        373               374               389
Loss/(profit) on disposal of fixed assets                        1                (5)                -
(Increase)/decrease in debtors                                (515)           (1,159)              264
(Decrease)/increase in creditors                               (89)            9,306               706
Net cash outflow from operating activities                 (19,150)           (3,609)          (11,188)
</TABLE>

<PAGE>

21 Analysis of cash flows

<TABLE>
<CAPTION>
                                                               2001             2000              1999
                                                       (pounds)'000     (pounds)'000      (pounds)'000
<S>                                                    <C>              <C>               <C>
Returns on investments and servicing of finance
Interest received                                            8,322            4,245             2,102
Interest paid                                                    -                -                (2)
Net cash inflow                                              8,322            4,245             2,100
Taxation
Overseas taxation paid                                           -                -                (1)
Net cash outflow                                                 -                -                (1)
Capital expenditure and financial investment
Purchase of tangible fixed assets                           (3,485)          (1,018)           (2,672)
Sale of tangible fixed assets                                    4               44                 -
Net cash outflow                                            (3,481)            (974)           (2,672)
Management of liquid resources
Decrease/(increase) in term deposits                        10,762          (23,980)            2,062
Net (purchase)/sale of securities                          (10,488)        (109,749)            9,989
Net cash inflow/(outflow)                                      274         (133,729)           12,051
Financing
Issue of ordinary share capital                             15,380          132,302               539
Capital elements of finance lease rental payments                -               (9)               (4)
Net cash inflow                                             15,380          132,293               535
Liquid resources comprise current asset investments in negotiable securities and cash deposits.
</TABLE>

22 Analysis and reconciliation of net funds

<TABLE>
<CAPTION>
                                        1 October                          Exchange      30 September
                                             2000        Cash flow         movement              2001
                                     (pounds)'000     (pounds)'000     (pounds)'000      (pounds)'000
<S>                                  <C>              <C>              <C>               <C>
Cash at bank                                   26              559                -               585
Overdrafts                                   (949)             786                -              (163)
                                                             1,345

Liquid resources                          156,502             (274)               -           156,228
Net funds                                 155,579            1,071                -           156,650

                                                              2001             2000              1999
                                                      (pounds)'000     (pounds)'000      (pounds)'000
Increase/(decrease) in cash in the year                      1,345           (1,774)              825
(Decrease)/increase in liquid resources                       (274)         133,729           (12,051)
Decrease in lease financing                                      -                9                 4
Change in net funds resulting from cash flows                1,071          131,964           (11,222)
Exchange movement                                                -                2                 4
Movement in net funds in year                                1,071          131,966           (11,218)
Net funds at 1 October 2000                                155,579           23,613            34,831
Net funds at 30 September 2001                             156,650          155,579            23,613
</TABLE>

<PAGE>

23 Financial commitments
Capital commitments of the Group were as follows:

                                                          Group            Group
                                                           2001             2000
                                                    (pounds)'000    (pounds)'000
Contracted but not provided for                             827              167
Annual commitments of the Group under operating leases are as follows:

<TABLE>
<CAPTION>
                                         Land and            Other         Land and             Other
                                        buildings                         buildings
                                             2001             2001             2000              2000
                                     (pounds)'000      (pounds)000     (pounds)'000      (pounds)'000
<S>                                  <C>               <C>             <C>               <C>
Expiry date:
- within one year                               -                2                -                 -
- between two and five years                    -                1                -                 3
- after five years                            836                -              275                 -
</TABLE>

The Group has agreed to lease one further building in South Cambridgeshire which
is currently being constructed to provide future accommodation. This will
comprise approximately 66,000 square feet of office and laboratory space.

The Company had no capital or operating lease commitments

24 Pension arrangements
The Group operates a group personal pension plan. Group contributions payable
for the year to 30 September 2001 were (pounds)641,000 (2000 - (pounds)432,000).

25 Related party transactions
During the 2000 financial year CAT Limited paid a fee of US$1.3 million to
Prudential Vector Healthcare Group (`Prudential Vector') under an arrangement
whereby Prudential Vector agreed to provide certain financial advisory services.
The arrangement was subsequently terminated although Prudential Vector were, in
certain circumstances, entitled to a further fee in respect of further
transactions entered into by CAT Limited in the period up to February 2001. No
such further transactions or payments have taken place.

J L Foght was a managing director of Prudential Vector at the time the
arrangement was entered into and the payment made and is a Non-Executive
Director of the Company.

The Board of Directors has determined that this transaction does not interfere
with Dr Foght's exercise of independent judgement and accordingly has determined
that it is in the best interests of the Company that he continue to serve on the
Audit Committee.

In accordance with Financial Reporting Standard Number 8 - Related Party
Disclosures, the Group does not disclose transactions or balances between group
entities which are wholly eliminated on consolidation.

<PAGE>

26 Litigation
In Europe, CAT's patent infringement action against MorphoSys relating to the
European Winter II and McCafferty patents in Munich is currently stayed pending
the outcome of appeal proceedings at the European Patent Office. Both patents
were upheld by the Opposition Division, there is an appeal pending on Winter II
and it is anticipated that there will also be an appeal on the McCafferty
patent.

In 2000 Crucell issued writs against the Medical Research Council (MRC), Scripps
and Stratagene in a Dutch national court, seeking a declaration that the Winter
II patent was invalid or that Crucell did not infringe the claims of the patent.
A separate writ against MRC sought a similar declaration in respect of the
McCafferty patent. Pursuant to its agreements with the defendants, CAT is
responsible for the defence of these proceedings. The Court has declined
jurisdiction for Crucell's non infringement claims and assumed jurisdiction only
on the invalidity claims (any decision will only cover Holland). The court's
ruling to decline jurisdiction in the Winter II case is currently under appeal
by Crucell.

In the US, the litigation bought by MorphoSys in 1999 against CAT relating to
the Griffiths patent was the subject of a trial in Washington DC in April 2001.
MorphoSys asked the court to revoke the Griffiths patent claiming it was invalid
on a number of grounds. They also asked for a declaration that they did not
infringe the patent. CAT counter-claimed that MorphoSys did infringe the patent.
After the trial, the jury was unable to agree on a decision apart from finding
that CAT was entitled to the priority dates of its British patent applications.
The Judge subsequently ruled in favour of CAT denying MorphoSys' claims that the
patent was invalid on the grounds of anticipation, written description,
indefiniteness and enablement. The Judge also ruled that the issue of whether
the patent was invalid on the ground that it was obvious it could only be
decided by a jury and therefore would be retried before a new jury. The Judge
took the preliminary view that MorphoSys should prevail on the issue of
infringement, but asked for further briefing on this point. This has been
provided and CAT is currently awaiting his decision. MorphoSys has commenced a
similar action against CAT in respect of the parent US McCafferty patent. A
trial date is currently set for February 2003.

During the year there were four Winter/Lerner/Huse patents granted as well as a
separate Winter II patent (following the earlier settlement of an interference
proceeding between CAT, The Scripps Research Institute and Stratagene over the
Winter II and Winter Huse/Lerner patents in 1999. Cat now has worldwide
commercial rights to all five of these patents. CAT commenced an action against
MorphoSys in respect of the Winter II patent and separately also against
MorphoSys in respect of two of the Winter I Lerner/Huse patents. The
Winter/Lerner/Huse action is proceeding in Washington DC and CAT is awaiting a
determination as to the location for the Winter II action.

CAT intends to defend these proceedings vigorously and does not believe that
there is merit in these claims. Whatever the outcome of the above litigation
activity, CAT believes that its ability to operate its own technology will not
be materially and adversely affected.

<PAGE>

As previously reported, following certain share issues by Cambridge Antibody
Technology Limited, Continental Venture Capital Limited ('CVC') issued
proceedings in the State of New York claiming that it is entitled to
anti-dilution shares (equivalent to 25,790 ordinary shares of 10p). If CVC
succeeds then the Directors would be obliged to issue anti-dilution shares to
all similarly situated participants (approximately 763,000 ordinary shares of
10p). Both parties issued cross motions for summary judgement which were denied
in May 2000. There has been no change in the status of these proceedings during
the year and the Directors continue to believe, on the basis of legal advice
they have received, that the proceedings have no merit.

27 Reconciliation to US GAAP
Summary of Significant Differences Between UK GAAP Followed by the Group and US
GAAP The Group's consolidated financial statements have been prepared under UK
GAAP, which differ in certain respects from US GAAP. The principal differences
between the Group's accounting policies and disclosures under UK GAAP and US
GAAP are set out below.

Reconciliation of net loss from UK GAAP to US GAAP

<TABLE>
<CAPTION>
                                                                      2000 restated      1999 restated
                                                              2001     (see note 3)       (see note 3)
                                                      (Pounds)'000     (Pounds)'000       (Pounds)'000
<S>                                                   <C>             <C>                <C>
Net loss as reported under UK GAAP                        (11,771)          (8,289)           (12,365)
Adjustments for:
Compensation costs under variable plan
accounting for stock options                  (a)          (7,804)          (8,223)                 -
Acquisition of Aptein Inc.                    (b)             (16)             (16)               152
Revenue recognition                           (c)             422              111                  -
Accounting for National Insurance
on share options                              (d)            (194)             523                  -
Reclassification of share issue expenses      (e)            (202)          (1,237)                 -
Net loss as reported under US GAAP                        (19,565)         (17,131)           (12,213)
Reconciliation of shareholders' equity from
UK GAAP to US GAAP
<CAPTION>

                                                                      2000 restated      1999 restated
                                                              2001     (see note 3)       (see note 3)
                                                      (Pounds)'000     (Pounds)'000       (Pounds)'000
<S>                                                   <C>             <C>                <C>
Shareholders' equity as reported under UK GAAP             156,050          152,440             28,434
Acquisition of Aptein Inc.                                     143              159                175
Revenue recognition                                         (2,797)          (1,768)                 -
Accounting for National Insurance on stock options             329              523                  -
Shareholders' equity as reported under US GAAP             153,725          151,354             28,609
</TABLE>


<PAGE>

Reconciliation of movement in shareholders' equity under US GAAP

<TABLE>
<CAPTION>
                                                                     Share                                      Total
                                                        Share      premium         Other   Accumulated  shareholders'
                                     Number of        capital      account       reserve          loss         equity
                                        shares  (Pounds)'000  (Pounds)'000  (Pounds)'000  (Pounds)'000   (Pounds)'000
<S>                                 <C>         <C>           <C>           <C>           <C>            <C>
Balance, 30 September 2000          34,770,438         3,477       187,274        13,492      (52,889)       151,354
Shares issued                          685,427            69        14,062             -            -         14,131
Compensation costs for
stock options                                -             -         7,804             -            -          7,804
Foreign exchange translation                 -             -             -             -            1              1
Net loss for the year under US GAAP          -             -             -             -      (19,565)       (19,565)
Balance, 30 September 2001          35,455,865         3,546       209,140        13,492      (72,453)       153,725
</TABLE>

(a) Compensation costs under variable plan accounting for stock options. CAT
has granted stock options to employees that will vest upon the attainment of
certain targets. Under UK GAAP, there is no accounting for the cost of these
grants after the initial grant date. Under US GAAP, Accounting Principles Board
(`APB') Opinion 25, Accounting for Stock Issued to Employees, the Company is
required to follow variable plan accounting for these grants. The nature of
conditions attached to the stock options awards mean that management cannot make
a reasonable estimate of the number of shares that will be eventually issued
because the Company cannot control the achievements of the conditions. As a
consequence, the compensation expense for the stock awards is only recorded when
and only when the target is achieved, based on the difference between the
exercise price and market value at that date. The targets were first achieved in
the year ended 30 September 2000.

There is no tax effect related to the adjustments in respect of stock options.

(b) Accounting for the acquisition of Aptein Inc. The Company acquired Aptein
Inc. (`Aptein') for consideration payable partly on completion, the remainder
being deferred, payable subject to the achievement of certain conditions. Aptein
was acquired for its patent portfolio, which comprised its only material asset.
The value of purchase consideration therefore had a corresponding impact on the
fair value ascribed to the patents, which are shown in the balance sheet as an
intangible asset.

Under UK GAAP, in accordance with Financial Reporting Standard Number 7, the
fair value of the deferred consideration was recognised immediately and the fair
value of the contingent consideration which was payable by the issue of shares
in the Company was reported as part of shareholders' funds as `shares to be
issued'. Any difference between the initial estimate of the contingent
consideration and the actual amount was recorded as an adjustment to the
purchase price when made with a corresponding adjustment to the value of the
intangible asset.

Under US GAAP, Accounting Principles Board (APB) Opinion 16, `Accounting for
Business Combinations', contingent consideration is not recorded until such time
as the contingency is resolved and the recorded value of the intangible was
therefore corresponding lower until the conditions were met. Amortisation
charges under US

<PAGE>

GAAP were therefore lower than those under UK GAAP prior to the conditions being
met and will in consequence be higher thereafter.

(c) Revenue recognition. The nature of the Group's principal revenue streams and
the Group's accounting policy for revenue recognition under UK GAAP are as
detailed in note 1. That accounting policy was changed during the year and
figures disclosed under UK GAAP for prior periods have been restated
accordingly. The impact of this change on current and prior periods has been
detailed in note 3. For US GAAP purposes, the Company has retrospectively
adopted, for all periods, Staff Accounting Bulletin 101 (`SAB101'), `Revenue
Recognition in Financial Statements', which was issued by the Securities and
Exchange Commission (`SEC') in December 1999.

The treatment of revenues under US GAAP is now equivalent to that under UK GAAP
except as follows:

Under US GAAP, where licensing arrangements are accompanied by an equity
subscription agreement, the series of transactions have been accounted for as a
multiple elements arrangement. Accordingly the aggregate consideration has been
allocated to the two elements of the arrangement as follows. The fair value of
the equity subscription is calculated as being the aggregate number of shares
issued at the average of the opening and closing share prices on the date of
issue. Any deficit or premium arising from the aggregate value of the share
subscription over the fair value of the shares is recorded as an adjustment to
licence revenues. No such reallocation is made under UK GAAP.

During the years ended 30 September 2001 and 2000 licence revenues under US GAAP
were therefore respectively (pounds)422,000 and (pounds)111,000 higher. For the
year ended 30 September 1999 license revenues under UK and US GAAP were the
same.

(d) Accounting for National Insurance on share options. Under UK GAAP the
Company has accounted for a potential liability to National Insurance on
employee share options. The provision is being made systematically by reference
to the market value of shares at the balance sheet dates over the period from
the date of grant to the end of the relevant performance period and from that
date to the date of actual exercise the provision will be adjusted by reference
to changes in market value. The provision at 30 September 2001 was
(pounds)329,000 and the net credit for the year then ended amounted to
(pounds)194,000.

Under US GAAP, Emerging Issues Task Force (`EITF') Issue 00-16 'Recognition and
Measurement of Employer Payroll Taxes on Employee Stock-Based Compensation', no
liability to National Insurance is recognised until such time as the share
option is exercised since this is when the liability crystallises.

(e) Share issue expense. Under the agreement with Drug Royalty Corporation
(`DRC') the Group received an amount of (pounds)1.5 million in 1994 in exchange
for rights to a percentage of the cash receivable in respect of certain revenues
and certain equity issues where these equity issues form part of a commercial
collaboration. Under UK GAAP amounts paid to DRC as a result of an equity
subscription are accounted for as a share issue expense since they are
considered to be directly related to the share issue.

<PAGE>

Under US GAAP these amounts are not considered to be a share issue cost since
DRC are not providing any services in connection with the equity issue.
Accordingly, such amounts are charged to the profit and loss account for the
year under US GAAP.

(f) Foreign currency translation. Under UK GAAP, the results of overseas
subsidiaries are translated at the closing exchange rate. Under US GAAP, the
average exchange rate for the year is used. There are no material adjustments
arising as a result of this difference.

(g) Taxation. Under UK GAAP, deferred taxation is recorded using the partial
liability method on all timing differences to the extent that it is considered
probable that the liabilities will crystallise in the foreseeable future. Net
deferred tax assets are not recognised unless their recovery is assured beyond
reasonable doubt.

Under US GAAP, deferred tax is recognised in full in respect of temporary
differences between the reported carrying amount of an asset or liability and
its corresponding tax basis. Deferred tax assets are also recognised in full
subject to a valuation allowance to reduce the amount of such assets to that
which is more likely than not to be realised.

As at 30 September 2001, 2000 and 1999, CAT has approximately (Pounds)60
million, (Pounds)36 million and (Pounds)31 million respectively of cumulative
tax losses. These losses represent a deferred tax asset for accounting purposes.
In accordance with both UK GAAP and US GAAP, no asset has been recognised in
respect of these tax losses due to the uncertainty as to whether these losses
can be offset against future profits.

No tax effect has been recognised in the reconciliation of net loss from UK GAAP
to US GAAP in respect of the differences arising in respect of those items, as
the timing differences arising are offset in full by the unrecognised tax losses
carried forward.

(h) Loss per share under US GAAP. Under US GAAP, the Group would compute loss
per share under Statement of Financial Accounting Standards ('SFAS') No. 128,
Earnings per Share. Under SFAS No. 128, basic net loss per ordinary share is
computed using the weighted average number of shares of common stock outstanding
during the period. Diluted net loss per ordinary share for CAT is the same as
basic net loss per ordinary share as the effects of the Company's potential
ordinary share equivalents are antidilutive. Under UK GAAP, the basis of
calculation is the same. However, since different net losses are produced under
US GAAP and UK GAAP the net loss per share under US GAAP is presented below:

<TABLE>
<CAPTION>
                                                                     2001          2000          1999
<S>                                                            <C>           <C>           <C>
Basic and diluted net loss per ordinary share (pence)                55.4          56.8          50.9
Shares used in computing net loss per ordinary
share (number)                                                 35,313,260    30,179,818    24,314,191
Antidilutive securities, not included above (number)            1,077,800     1,548,764       138,455
</TABLE>

<PAGE>

Antidilutive securities represent stock options outstanding which have not been
included in the calculation of loss per ordinary share as the impact of
including such shares in the calculation of loss per share would be
antidilutive.

Consolidated statement of cash flows The consolidated statement of cash flows
prepared under UK GAAP presents substantially the same information as that
required under US GAAP by SFAS No. 95 Statement of Cash Flows. These standards
differ however with regard to classification of items within the statements and
the definition of cash and cash equivalents.

Under UK GAAP, cash comprises only cash in hand and deposits repayable on
demand. Deposits are repayable on demand if they can be withdrawn at any time
without notice and without penalty or if a maturity or period of notice of not
more than 24 hours or one working day has been agreed. Under US GAAP, cash
equivalents are short-term highly liquid investments, generally with original
maturities of three months or less, that are readily convertible to known
amounts of cash and present insignificant risk of changes in value because of
changes in interest rates.

Under UK GAAP, cash flows are presented separately for operating activities,
returns on investments and servicing of finance, taxation, capital expenditure
and financial investment, management of liquid resources and financing
activities. US GAAP requires only three categories of cash flow activity to be
reported: operating, investing and financing. Cash flows from taxation and
returns on investments and servicing of finance under UK GAAP would, with the
exception of dividends paid, be shown under operating activities under US GAAP.
The payment of dividends and the payment to acquire own shares (treasury stock)
would be included as a financing activity under US GAAP. Management of liquid
resources under UK GAAP would be included as cash and cash equivalents under US
GAAP to the extent that the amount involved have a maturity of less than three
months are convertible into known amounts of cash. Summary statements of cash
flow presented under US GAAP are given below:

<TABLE>
<CAPTION>
                                                                  2001             2000          1999
                                                          (Pounds)'000     (Pounds)'000  (Pounds)'000
<S>                                                       <C>              <C>           <C>
Net cash used in operating activities                          (10,828)             636        (9,089)
Net cash (used in)/provided by investing activities            (21,735)         (32,725)        4,890
Net cash provided by financing activities                       15,380          132,293           535
Effects of exchange rate changes on cash and cash equivalents        -                2             4
Decrease in cash and cash equivalents                          (17,183)         100,206        (3,660)
Beginning cash and cash equivalents                            107,782            7,576        11,236
Ending cash and cash equivalents                                90,599          107,782         7,576
</TABLE>

Accounting for share-based compensation As permitted under SFAS 123, Accounting
for Stock-Based Compensation, in accounting for options granted under its share
option schemes the Group has adopted the disclosure provisions of SFAS 123, but
opted to remain under the expense recognition provisions of APB Opinion No 25,
Accounting for Stock Issued to Employees. Accordingly, for the years ended 30
September 1999, 2000 and 2001, compensation expenses of (Pounds)nil,
(Pounds)8,223,000 and (Pounds)7,804,000 were recognised for options granted


<PAGE>

under these schemes. Had compensation expense for options granted under these
schemes been determined based on fair value at the grant dates in accordance
with SFAS 123, the Company's charge to income for the years ending 30 September
1999, 2000 and 2001 would have been (Pounds)729,000, (Pounds)814,000 and
(Pounds)1,064,000 respectively. In calculating these amounts, the fair value of
the options has been amortised over their respective vesting periods. Net loss
and loss per share under US GAAP would therefore have been reduced to the pro
forma amounts shown below:

<TABLE>
<CAPTION>
                                                              2001             2000              1999
                                                      (Pounds)'000     (Pounds)'000      (Pounds)'000
<S>                                                   <C>              <C>               <C>
Pro forma net loss                                        (12,825)          (9,722)          (12,942)
Pro forma loss per share (basic and fully diluted)           36.3p            32.2p             53.2p
</TABLE>

The weighted average fair value of options was estimated using the Black-Scholes
stock option pricing model using the following weighted average assumptions:


<TABLE>
<CAPTION>
                                                     Annual standard       Risk-free          Expected
Year ending                     Dividend yielddeviation (volatility)   interest rate        life Years
<S>                             <C>                                    <C>                  <C>
30 September 2001                           0%                   75%             5.3%              5.5
30 September 2000                           0%                   75%             6.1%              5.5
30 September 1999                           0%                   75%             4.8%              5.5
</TABLE>

For the purposes of the following tabulations, Weighted Average Exercise Price
is abbreviated to 'WAEP', Weighted Average Fair Value to 'WAFV' and Weighted
Average Remaining Contractual Life to `WARCL'.

The movement in options outstanding during the three years ended 30 September
1999, 2000 and 2001, is summarised in the following table:

<TABLE>
<CAPTION>
                                           2001                        2000                      1999
                                           WAEP                        WAEP                      WAEP
                           Number       (Pounds)       Number       (Pounds)       Number     (Pounds)
<S>                        <C>          <C>            <C>          <C>            <C>          <C>
Outstanding at
1 October 2000          1,796,647          3.34     2,223,506          3.29     2,950,437        2.88
Granted during the year    95,881         29.71       489,776          3.00       274,289        2.58
Exercised during
the year                 (362,673)         3.74      (836,010)         2.97      (525,000)       0.23
Forfeited during
the year                  (11,877)         2.61       (30,625)         4.10       (69,220)       5.06
Expired during the year         -             -       (50,000)         3.16      (407,000)       3.53
Outstanding at
30 September 2001       1,517,978          4.92     1,796,647          3.34     2,223,506        3.29
Exercisable at
30 September 2001         663,539          3.69       703,912          3.12     1,143,302        2.52
</TABLE>

<PAGE>

The following table summarises the value of options granted during the years
ending 30 September 2001, 2000 and 1999:

<TABLE>
<CAPTION>
                                             WAFV      WAEP       WAFV      WAEP       WAFV      WAEP
Exercise price relative to market price   (Pounds)  (Pounds)   (Pounds)  (Pounds)   (Pounds)  (Pounds)
<S>                                       <C>       <C>        <C>       <C>        <C>       <C>
Equals                                          -         -          -         -          -         -
Exceeds                                     17.12     25.66          -         -       1.32      5.00
Is less than                                21.34     30.18       2.10      3.00       1.66      2.41
Total                                       20.91     29.71       2.10      3.00       1.64      2.58
</TABLE>

The following tables summarise information about the stock options outstanding
at 30 September 2001, 2000 and 1999.

<TABLE>
<CAPTION>
                                                                                    Exercisable as at
                              Outstanding as at 30 September 2001                   30 September 2001
Range of exercise prices                     WAEP            WARCL                               WAEP
(Pounds)                  Number          (Pounds)           years           Number           (Pounds)
<S>                    <C>                <C>                <C>            <C>               <C>
0 - 0.99                       -                -                -                                  -
1 - 2.99                 766,149             2.63             5.26           45,350              1.28
3 - 4.99                 374,924             3.03             4.21          357,929              3.03
5 - 10                   277,760             5.02             4.84          260,260              5.02
21 - 31                   99,145            29.49             7.29                -                 -
Total                  1,517,978             4.92             3.95          663,539              3.69

<CAPTION>
                                                                                    Exercisable as at
                              Outstanding as at 30 September 2000                   30 September 2000
Range of exercise prices                     WAEP            WARCL                               WAEP
(Pounds)                  Number          (Pounds)           years           Number           (Pounds)
<S>                    <C>                <C>                <C>            <C>               <C>
0 - 0.99                       -                -                -                -                 -
1 - 2.99                 870,470             2.49             6.10          137,794              1.31
3 - 4.99                 434,253             3.03             5.31          417,258              3.03
5 - 10                   488,660             5.01             5.88          148,860              5.03
21 - 31                    3,264            23.03             9.65                -                 -
Total                  1,796,647             3.34             5.76          703,912              3.12

<CAPTION>
                                                                                    Exercisable as at
                              Outstanding as at 30 September 1999                   30 September 1999
Range of exercise prices                     WAEP            WARCL                               WAEP
(Pounds)                  Number          (Pounds)           years           Number           (Pounds)
<S>                    <C>                <C>                <C>            <C>               <C>
0 - 0.99                       -                -                -                -                 -
1 - 2.99                 729,561             1.97             5.69          472,772              1.74
3 - 4.99                 837,525             3.06             6.24          670,530              3.08
5 - 10                   656,420             5.03             6.71                -                 -
21 - 31                        -                -                -                -                 -
Total                  2,223,506             3.29             6.06        1,143,302              2.52
</TABLE>

<PAGE>

Deferred tax A reconciliation of the provision for income taxes with the amount
computed by applying the statutory income tax rate (30% for 1999 and 2000 and
30.2% for 2001) to loss before taxation is as follows:

<TABLE>
<CAPTION>
                                                          2001              2000             1999
                                                       Pounds)'000     (Pounds)'000      (Pounds)'000
<S>                                                    <C>              <C>               <C>
Income tax expense computed
at statutory income tax rate                                (3,555)          (1,548)           (3,819)
Tax effect of prior year adjustment                         (1,978)               -                 -
Permanent differences                                       (1,400)            (549)               12
Other                                                          196             (164)              109
Change in valuation allowance                                6,737            2,261             3,698
Provision for income taxes                                       -                -                 -
</TABLE>

Net deferred taxes are analysed as follows:

<TABLE>
<CAPTION>
                                                           2001             2000             1999
                                                      (Pounds)'000     (Pounds)'000      (Pounds)'000
<S>                                                   <C>              <C>               <C>
Deferred tax assets:
Losses carried forward                                      18,126           11,130             9,492
Excess of book value over tax value
of fixed assets                                                335              599                 -
Other short term timing differences                              -                -                 5
                                                            18,461           11,729             9,497
Valuation allowance                                        (18,461)         (11,724)           (9,463)
Net deferred tax asset                                           -                5                34
Deferred tax liabilities:
Other short term timing differences                              -               (5)                -
Excess of tax value over book value of fixed assets              -                -               (34)
Net deferred taxes                                               -                -                 -
</TABLE>

As at 30 September 2001 the Group had approximately (Pounds)60 million of tax
losses available to carry forward indefinitely against future trading profits in
the UK.

Recently issued accounting pronouncements In 2001, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards ('SFAS')
No.141, Business Combinations and SFAS No.142, Goodwill and Other Intangible
Assets. SFAS No.141 requires the use of the purchase method of accounting for
all business combinations initiated after 30 June 2001. SFAS No.141 requires
intangible assets to be recognised if they arise from contractual or legal
rights or are 'separable', i.e., it is feasible that they may be sold,
transferred, licensed, rented, exchanged or pledged. As a result, it is likely
that more intangible assets will be recognised under SFAS No.141 than its
predecessor, APB Opinion No.16, although in some instances previously recognised
intangibles will be subsumed into goodwill.

Under SFAS No.142, goodwill will no longer be amortised on a straight line basis
over its estimated useful life, but will be tested for impairment on an annual
basis and

<PAGE>

whenever indicators of impairment arise. The goodwill impairment test, which is
based on fair value, is to be performed on a reporting unit level. A reporting
unit is defined as a SFAS No.131 operating segment or one level lower. Goodwill
will no longer be allocated to other long-lived assets for impairment testing
under SFAS No.121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of. Additionally, goodwill on equity method
investments will no longer be amortised; however, it will continue to be tested
for impairment in accordance with Accounting Principles Board Opinion No.18, The
Equity Method of Accounting for Investments in Common Stock. Under SFAS No.142
intangible assets with indefinite lives will not be amortised. Instead they will
be carried at the lower of cost or market value and tested for impairment at
least annually. All other recognised intangible assets will continue to be
amortised over their estimated useful lives.

SFAS No.142 is effective for fiscal years beginning after 15 December 2001
although goodwill on business combinations consummated after 1 July 2001 will
not be amortised.

The adoption of SFAS No.141 and No.142 is not expected to have any material
impact upon the Group's results.

On 7 December 2000 the ASB issued FRS 19 'Deferred Taxation'. FRS 19 requires
full provisioning for deferred tax. The Company currently has significant losses
brought forward available for offset against future taxable profits which will
thus reduce any deferred tax liability. As such, the adoption of this standard
is not expected to materially affect the reported results of the Company.

28 Further information (unaudited)

Material contracts

A key element of CAT's strategy is to exploit its technology platforms in
partnership with other companies. CAT has been successful in attracting partners
and continues to seek further collaborations.

CAT's own product development activity focuses on the 'value-adding' stages from
identification of potential antibody targets through to clinical demonstration
of effectiveness for an antibody-based drug. In general, CAT will seek partners
for further clinical trials of product candidates, in gaining marketing approval
of product candidates and for subsequent marketing of products. If a product
based on CAT's technology is developed solely by CAT's collaborative partner,
CAT will generally receive long term revenue in the form of milestone payments
and royalties should the product be marketed. CAT will typically receive
royalties until the later of (1) the expiration of the last of CAT's patents
upon which the product is based or (2) at least ten years after the first
commercial sale of the product. Where CAT is responsible for product
development, either on its own or with a partner, it can expect to receive a
higher share of the revenues derived from the product.

CAT has made significant progress in its development efforts through its
collaborations, as described below.

<PAGE>

Genzyme. In September 2000, through its subsidiary Aptein, Inc., CAT entered
into a strategic alliance with Genzyme to develop and commercialise human
monoclonal antibodies directed against the Transforming Growth Factor Beta
protein (TGFb). Under the agreement, Genzyme has received an exclusive worldwide
licence to CAT's human antibodies targeted against TGFb for all uses except in
the eye. CAT and Genzyme plan to focus initially on developing a human
monoclonal antibody-based treatment for diffuse systemic sclerosis. Other
potential clinical indications of anti-TGFb treatment include post-surgical
scarring, fibrosis of all major organs such as the lungs, liver and kidneys and
certain forms of cancer.

The parties will jointly fund the research, development and commercialisation
activities and will share profits resulting from the sale of commercialised
products. Genzyme will manage the clinical and regulatory development of any
products developed by the collaboration, and will also be responsible for
worldwide marketing and sales. CAT will be responsible for antibody optimisation
and will co-develop antibodies with Genzyme. Additionally, Genzyme has received
a non-exclusive worldwide licence for non-antibody antagonists of TGFb in
exchange for milestones and royalties. CAT may receive fixed milestone payments
with respect to non-antibody products conditional upon the occurrence of certain
events. No such milestones have been received to date.

Either party may terminate the alliance at any time upon one year's notice after
the earlier of (1) the date that Genzyme receives final marketing approval for
the first collaboration product and (2) 31 December 2006. CAT may terminate the
alliance upon six months' notice if Genzyme has not filed a biologics licence
application for a collaboration product on or before 30 September 2010. If the
alliance is terminated as described above, the continuing party has the ability
to produce and market products developed in the collaboration after termination,
subject to the payment of a payout amount.

In connection with this collaboration, in October 2000, CAT issued 307,942 of
its ordinary shares to Genzyme for US$20 million. The shares were valued at a
15% premium to CAT's average share price over the 20 days preceding the date of
the agreement.

Pharmacia. In December 1999, CAT entered into a strategic alliance with
Pharmacia for the development of human monoclonal antibody-based therapeutic
drugs, focusing particularly on the field of cancer.

CAT and Pharmacia are both committing technology, intellectual property and
expertise to the alliance. Pharmacia is supplying target proteins, and both
companies are performing collaborative research to demonstrate and validate
their disease association.

CAT is isolating human monoclonal antibodies directed to the targets. Over the
initial three year term of the research collaboration CAT will receive research
funding.

Subject to CAT's obligations existing at the time of exercise, Pharmacia may
obtain exclusive licences to produce and market products against selected
targets in return for

<PAGE>

which CAT will be entitled to receive technical performance and clinical
development milestones (which together amount to up to US$15 million per
product) and a royalty on product sales.

CAT has also granted Pharmacia multi-site options to license CAT's library
technology for use in-house.

Pharmacia has the option to extend the research collaboration for additional
one-year periods on similar terms. CAT may terminate the collaboration after
four years. If the agreement is terminated, Pharmacia would remain obligated to
pay royalties on product sales.

CAT has recognised (Pounds)3.3 million in revenues under UK GAAP pursuant to
this arrangement from inception to the end of the 2001 financial year.

Human Genome Sciences, Inc ('HGSI'). In August 1999, CAT entered into a
collaborative agreement with HGSI for up to three target human proteins
identified by HGSI. HGSI may obtain exclusive licences to produce and sell
products directed to these targets.

CAT will be entitled to receive contract research funding, milestone payments
and royalties.

In March 2000, CAT and HGSI expanded their arrangement by entering into a ten
year collaboration agreement. The 1999 arrangement was not terminated as a
result of this agreement. HGSI and CAT will collaborate to develop and sell
therapeutic antibody products. CAT may access selected gene sequence and
biological information derived by HGSI and has the right to select up to 24
antigens proprietary to HGSI for pre-clinical development. CAT has an option to
obtain an exclusive licence to develop six such products on its own. CAT is
obligated to pay HGSI clinical development milestones and royalty payments on
such products. HGSI has the option to share clinical development costs and to
share the profits equally with CAT on up to 18 such products.

Subject to CAT's obligations at the time of exercise, the agreement gives HGSI
the right to obtain exclusive licences to develop and sell human antibodies
against selected targets for therapeutic and diagnostic purposes. HGSI will pay
CAT licence fees, milestone payments and royalties. HGSI also has rights to use
CAT's antibody technology for the use and sale of research tools incorporating
antibodies. CAT will receive a proportion of revenues on any such sales. HGSI
has paid an initial licensing fee to CAT, which includes consideration for
research support at CAT for a period of three years to develop human antibody
products.

In addition to royalties on sales of products, CAT may receive milestone
payments of up to between US$8 million and US$10 million for each therapeutic
product developed pursuant to the arrangement.

<PAGE>

CAT has recognised (Pounds)3.2 million in revenues under UK GAAP (as restated)
pursuant to these arrangements from inception to the end of the 2001 financial
year.

Wyeth-Ayerst. In March 1999, CAT entered into a strategic alliance with
Wyeth-Ayerst. Under the agreement, CAT is receiving contract research funding as
well as possible library option payments, product licence fees, milestones and
royalties. The term of the contract research arrangement was initially three
years but has now been extended to four years. Wyeth-Ayerst may terminate the
contract research arrangement at any time upon 60 days' notice to CAT.

Wyeth-Ayerst and CAT are also collaborating for three years to validate and
develop a portfolio of antibody product candidates directed at proprietary
Wyeth-Ayerst targets. The companies will share equally the initial target and
product validation costs. After this stage, each company has the opportunity to
select candidates from this portfolio for further development and obtain a
licence to commercialise these products. For products developed by Wyeth-Ayerst,
CAT may receive milestone fees and royalties on product sales. For those
products developed by CAT, CAT may pay Wyeth-Ayerst licence fees, royalties on
product sales and clinical milestone payments. Wyeth-Ayerst has limited rights
to partner products developed by CAT after those products complete Phase II
clinical trials. CAT has also granted Wyeth-Ayerst multi-site options to license
CAT's antibody library technology with associated product development options.

In September 2000 CAT granted Wyeth-Ayerst an exclusive product licence to
develop human monoclonal antibody products specific for the amyloid b peptide.

In addition to royalties CAT may receive licence fees and milestone payments of
up to US$7 million for each therapeutic product developed and marketed by
Wyeth-Ayerst pursuant to this arrangement.

CAT has recognised (Pounds)5.3 million in revenues under UK GAAP (as restated)
pursuant to this arrangement from inception to the end of the 2001 financial
year.

Abbott. CAT's collaborative program with Knoll AG (now part of Abbott) commenced
in 1993. Under the programme Knoll may select up to six target antigens against
which CAT will develop antibodies. Knoll has the right to obtain an exclusive
licence to produce and sell products against these antigens. CAT, in conjunction
with Knoll, has isolated and optimised human monoclonal antibodies against the
first two targets selected by Knoll, which are now in clinical trials (D2E7 and
J695). A third target, Interleukin 18, is in the research phase. CAT receives a
licence fee at the time Knoll obtains an exclusive licence, milestones based on
product development events, clinical trial progression and regulatory approvals
and royalties on product sales. In addition to royalties, CAT may receive
payments of up to between (Pounds)5 million and (Pounds)5.6 million in licence
fees and milestones for each product developed pursuant to this arrangement.

CAT has recognised (Pounds)1.8 million in revenues under UK GAAP pursuant to
these arrangements during the three years ended 30 September 2001.

<PAGE>

Elan. In January 2001 CAT entered into an alliance with Elan under which the
companies will jointly discover and develop antibody-based therapeutics targeted
at a variety of neurological diseases and disorders. Under the terms of the four
year agreement, the two companies will fund all research and development jointly
and share commercialisation profits equally. CAT will have primary
responsibility for the discovery and optimisation of human antibodies against
multiple targets identified by Elan. Elan will evaluate clinical antibody
candidates in pre-clinical models, manage clinical and regulatory development
and will be responsible for global commercialisation. Either party may terminate
the agreement for convenience on 60 days' notice, subject to a royalty and
milestone payment payable to the terminating party dependent on the stage of
development achieved.

Significant licence agreements. CAT initially developed its platform technology
in conjunction with Medical Research Council ('MRC'). CAT's rights in respect of
this technology are governed by a licence agreement of January 1997 with MRC.
Under this agreement, CAT receives exploitation rights to key underlying
intellectual property and know-how relating to the production and screening of
phage antibody display libraries. CAT has exclusive rights, subject to certain
rights retained by MRC, to exploit the technology for the development of
therapeutic, diagnostic or prophylactic entities arising from gene sequencing
data, including:

.. to identify, develop, manufacture and commercially exploit antibodies for
human use;

.. to provide antibody isolation services on behalf of customers; and

.. to use the molecules isolated by the technology for use in the manufacture
of pharmaceutical products or intermediaries.

CAT pays MRC royalties of 3% of the net invoice price on the sale by CAT of
products made using the patent rights and technology licensed under this
agreement. Where CAT's sub-licencees sell such products, CAT is obligated to pay
MRC between 1% and 2.3% of the net invoice price, calculated in accordance with
a specified formula. The royalty obligations of CAT may be reduced under certain
circumstances.

CAT's licence with MRC includes the Winter II, McCafferty and Griffiths patent
families. CAT also has a non-exclusive licence from Dyax Corporation ('Dyax')
for rights under certain Dyax patents relating to phage display. CAT will pay
royalties to Dyax on the sale of products made using relevant technology.

CAT has licensed intellectual property relating to the use of certain inhibitors
of TGFb (for prevention of fibrosis) from the Burnham Institute and Integra Life
Sciences Corporation ('Burnham and Integra'). CAT's licence is exclusive,
royalty bearing and worldwide and allows CAT to make, use and sell certain
products which incorporate the intellectual property; it also provides for CAT
to pay to Burnham and Integra a proportion of any up front, milestone or similar
payments received in relation to the intellectual property.

<PAGE>

The use of CAT-152 and CAT-192 for the prevention and treatment of fibrosis fall
within the terms of this licence from Burnham and Integra.

Agreement with Drug Royalty Corporation. CAT entered into an agreement with Drug
Royalty Corporation of Canada ('DRC') in 1994. This agreement concerns the
purchase by DRC for (Pounds)1.5 million of rights to a percentage of the cash
receivable by CAT in respect of revenues from contracts and products and, in the
case of contracts or commercial transactions concerning products where a
corporate partner subscribes for share capital or instruments convertible into
share capital ('equity'), the value of that equity. For these purposes, however,
equity value cannot exceed 30% of the maximum monetary value to CAT of the
transaction. DRC's rights, as described above, continue until 13 November 2009
although the percentage of cash receivable to which DRC is entitled reduces over
time. Until 30 September 2004, DRC is entitled to 3.5%, declining to 2.5% until
13 November 2009.

Facilities

CAT currently occupies two facilities in the village of Melbourn, South
Cambridgeshire, totalling 46,000 sq ft of office and laboratory space. Beech
House has 23,000 sq ft and is held under a lease which expires in 2010.
Cambridge House, which comprises the remaining 23,000 sq ft is owned by CAT.

During the 2001 financial year CAT's Pre-Clinical and Medical departments
occupied the Franklin building at Granta Park in South Cambridgeshire, a new
20,000 sq ft building. That lease will expire in 2016 and is subject to CAT's
right to terminate the lease early in certain circumstances.

CAT has also agreed to lease a further building at Granta Park in South
Cambridgeshire which is now under construction, to provide future accommodation.
This will comprise approximately 66,000 sq ft of office and laboratory space.
CAT also has an option to lease additional space. These new facilities will be
tailored to CAT's specific requirements and will involve substantial capital
expenditures in fitting out and equipping them.

The Company

The Company was incorporated and registered under the laws of England and Wales
on 5 August 1996, under the name Intercede 1186 Limited as a private company
limited by shares. The Company changed its name from Intercede 1186 Limited to
Cambridge Antibody Technology Group Limited on 22 August 1996 and was
re-registered as a public limited company under the name Cambridge Antibody
Technology Group plc on 20 December 1996.

A summary description of the process and requirements for appointment, age,
retirement and removal of Directors of the Company and of the material rights
and obligations of holders of ordinary shares in the Company both as set out in
the Company's

<PAGE>

Memorandum and Articles of Association and a description of relevant provisions
of English law were set out in the Company's Form 20-F registration statement
filed with the Securities and Exchange Commission in June 2001.

Forward-Looking Statements

This document includes forward-looking statements. All statements other than
statements of historical facts included in this document, including any
statements preceded by, followed by or that include the words 'targets,'
'plans,' 'believes,' 'expects,' 'aims,' 'intends,' 'will,' 'may,' 'anticipates'
or similar expressions or the negative thereof, are forward-looking statements.
Forward-looking statements include statements relating to the following:

.. future capital expenditures, expenses, revenues, economic performance,
financial condition, dividend policy, losses and future prospects;
.. future performance in clinical trials of the product candidates that were
developed using CAT's technology;
.. the ability of CAT and its collaborators to commercialise products;
.. business and management strategies and the expansion and growth of CAT's
operations;
.. the effects of government regulation on CAT's business;
.. expansion and other development trends of CAT's current and future customers
and its industry; and
.. acquisitions, including the timing, nature, availability, location and
significance of those acquisitions.

These forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of CAT, or industry results, to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. These forward-looking statements are based on
numerous assumptions regarding CAT's present and future business strategies and
the environment in which CAT will operate in the future. Certain factors that
could cause CAT's actual results, performance or achievements to differ
materially from those in the forward-looking statements are described in the
following Risk Factors.

Risk Factors

There are substantial risks and uncertainties inherent in the Group's business.
The following factors could cause the Group's activities and results of
operation to differ materially from planned activities and expected results or
cause results to differ materially from those reported for prior periods.

Marketing of products. To date no human therapeutic product developed by or
incorporating CAT technology has been marketed. CAT expects that substantially
all of its revenues for the near future will result from contract research
payments, licence fees and milestone payments. CAT does not expect to earn
significant royalties from product sales in the near future.

<PAGE>

Intellectual property. CAT tries to protect its proprietary position by filing
patent applications related to its technology, inventions and improvements that
are important to the development of its business. CAT owns or co-owns patents,
and has applied for patents, covering its core technology. The patent position
of biopharmaceutical companies involves complex legal and factual questions and
therefore, enforceability cannot be predicted with certainty. Patents issued,
may be challenged, invalidated or circumvented. Thus, any patents that CAT owns
or licenses from third parties may not provide sufficient protection against
competitors.

The biotechnology and pharmaceutical industries have been characterised by
extensive litigation regarding patents and other intellectual property rights.
CAT's strategy includes vigorously enforcing its intellectual property rights,
including its patents. CAT is currently involved in litigation involving its key
patents. This litigation includes suits to invalidate certain of CAT's key
patents. Such proceedings are costly and time-consuming to pursue and their
outcome is uncertain. If CAT is denied patent rights or if CAT receives an
adverse judgement in litigation involving its patents, other companies may use
similar technology to develop and market products, which may deprive CAT of the
competitive advantages provided by its technology.

Collaborations. CAT's strategy depends on entering into arrangements with
collaborators and licencees. CAT currently does not plan to develop significant
manufacturing, marketing or sales capabilities and will rely heavily on
collaborators for these functions. Collaborations are necessary in order for CAT
to access proprietary disease targets against which to generate drug products,
access skills and information that it does not possess, fund its research and
development activities, pre-clinical testing, clinical trials and manufacturing
of product candidates, seek and obtain regulatory approvals for product
candidates and successfully market and sell existing and future product
candidates.

CAT's success, therefore, may therefore depend on the ability and efforts of
outside parties in performing their responsibilities. Many of these
collaborative arrangements give the partner the exclusive right to market and
sell certain products developed in the collaboration. These collaborators will
have significant discretion over the resources they devote to these efforts.
CAT's ability to earn revenues, including royalties based on products sales and
certain milestones, depends on these efforts.

CAT faces and will continue to face intense competition from other companies for
establishing collaborative arrangements with pharmaceutical and biotechnology
companies, for establishing relationships with academic and research
institutions and for licences to proprietary technology. If CAT is unable to
establish further collaborative arrangements or if CAT's collaborative partners
do not adequately perform under existing collaborative arrangements, CAT's
product development activities and CAT's ability to earn revenues from products
based on CAT's technology may be harmed.

Pre-clinical testing and clinical trials. Before obtaining regulatory approvals
for the commercial sale of any products, CAT or its licensees or partners must
demonstrate

<PAGE>

through pre-clinical testing and clinical trials that its human antibody-based
therapeutic products are safe and effective for use in humans. Conducting
clinical trials is a lengthy and expensive process. Moreover, CAT's success will
continue to be subject to, the pre-clinical testing and clinical trials over
certain product candidates conducted by its licensees and collaborative partners
over which CAT has no control. Historically, the results from pre-clinical
testing and early clinical trials have often not been predictive of results
obtained in later clinical trials. In addition, regulatory delays or rejections
may be encountered as a result of many factors, including changes in regulatory
policy during the period of product development. Regulatory delays or rejection
of product candidates based on CAT's technology will harm CAT's ability to earn
revenues from such product candidates.

Regulation. The pre-clinical and clinical evaluation, manufacture and marketing
of product candidates are all subject to regulation administered and enforced by
governmental regulatory agencies. Many countries, including member states of the
European Union and the United States, impose extensive data requirements and
have very high standards of technical appraisal. Accordingly, pre-clinical
testing and clinical research of medicinal products can be a very lengthy and
costly process. The manufacture of drugs is also subject to specific
authorisation and to the regular inspection of premises, staff and procedures by
regulatory authorities.

Manufacture. CAT and its collaborators often rely on third parties to
manufacture product candidates for clinical trial and marketing purposes.
Suitable manufacturers that are able to produce products on a timely and
competitive basis on acceptable terms may not be available. Manufacturing runs
of products may fail for technical or other reasons which may delay CAT from
conducting clinical trials or from supplying products for commercial purposes.

Competition. The biotechnology and pharmaceutical industries are highly
competitive and subject to significant and rapid technological change. CAT is
aware of several pharmaceutical and biotechnology companies that are actively
engaged in research and development in areas related to antibody therapy. These
companies have begun clinical trials of antibody products or have successfully
commercialised antibody products and may succeed in marketing products before
CAT does. Many of these companies are addressing the same diseases and disease
indications as CAT or CAT's collaborative partners. Also, CAT competes with
companies that offer antibody generation services.

Any product candidate that CAT successfully develops may compete with existing
therapies that have long histories of safe and effective use. Competition may
also arise from other drug development technologies and methods of preventing or
reducing the incidence of disease, new small molecules or other classes of
therapeutic agents.

Developments by competitors may render CAT's product candidates or technologies
obsolete or uncompetitive and CAT's collaborative partners may pursue other
technologies. These competitors, either alone or with their collaborative
partners, may succeed in developing technologies or products that are more
effective than CAT's. If

<PAGE>

they do, then products based on CAT's technology may become obsolete or become
uncompetitive and CAT will fail to earn expected revenue.

Product liability. As a designer and producer of drug products, CAT is exposed
to potential product liability risks which are inherent in the research and
development, pre-clinical study, clinical trials, manufacturing, marketing and
use of these products. Consumers, healthcare producers or persons selling
products based on CAT's technology may be able to bring claims against CAT based
on the use of CAT's products in clinical trials and the sale of products based
on CAT's technology.

Key personnel. CAT depends significantly on its management and scientific
personnel. The loss of the services of any key employee, could cause harm to
CAT's business. CAT's strategy depends on hiring additional key scientific and
management personnel. CAT faces significant competition in the hiring and
retention of key employees.

History of losses. To date CAT has recorded significant losses as a result of
the costs incurred in the research and development of potential products. CAT
expects to incur further substantial losses for the foreseeable future as
research and development activities continue. CAT may not be able to generate
meaningful revenue or achieve or sustain profitability. If CAT is unable to do
so, it may be required to seek additional financing in the future. Additional
financing may not be available on acceptable terms or at all.

This is not intended to be a complete and exhaustive analysis of all such risks
and therefore other factors could also have a material adverse impact.

Taxation

United Kingdom tax considerations The following is a brief description of the
material UK tax consequences of the acquisition, ownership and disposition of
shares, including ADRs. The summary is of a general nature and does not address
all of the tax consequences that may be relevant to you in light of your
particular situation. You should consult your own tax advisors as to the
particular tax consequences to you under UK., US federal, state and local and
other foreign laws, of the acquisition, ownership and disposition of shares or
ADRs.

Taxation of dividends and distributions Under current UK taxation legislation,
no tax will be withheld from cash dividend payments by CAT.

US holders of shares or ADRs will not receive any payment from the UK Inland
Revenue in respect of any tax credit on dividends paid by CAT. This is because
the income tax treaty provides for a notional UK withholding tax, at the rate of
15%, which exceeds the tax credit of 10% to which an individual resident in the
United Kingdom would have been entitled had he received the dividend.

You should consult your own tax advisors as to whether any tax credit or the
notional UK withholding tax under the income tax treaty will be considered to
have been paid with respect to dividends.

<PAGE>

United Kingdom taxation of capital gains US holders of shares or ADRs who are
not resident or ordinarily resident in the United Kingdom will not be liable for
UK tax on capital gains realised on the disposal of a share or ADR unless, at
the time of the disposal, such holder carries on a trade, including a profession
or vocation, in the United Kingdom through a branch or agency and such share or
ADR is, or has been, held or acquired for the purposes of such trade or branch
or agency.

A holder of shares or ADRs who is an individual and who has on or after March
17, 1998 ceased to be resident or ordinarily resident for tax purposes in the
United Kingdom and continues not to be resident or ordinarily resident in the
United Kingdom for a period of less than five years and who disposes of shares
or ADRs during that period may also be liable to UK tax on capital gains,
notwithstanding that he or she is not resident or ordinarily resident in the
United Kingdom at the time of the disposal.

Neither the surrender of ADRs in exchange for the deposited ordinary shares
represented by the surrendered ADRs nor the deposit of ordinary shares for ADRs
representing the ordinary shares will be a taxable event for the purposes of UK
income and corporation tax or UK capital gains tax. Accordingly, US holders will
not realise any gain or loss on surrendering ADRs or depositing shares.

United Kingdom inheritance tax Subject to the discussion of the estate tax
treaty in the next paragraph, shares or ADRs beneficially owned by an individual
will be subject to UK inheritance tax on the death of the individual or, in some
circumstances, if the shares or ADRs are the subject of a gift, including a
transfer at less than full market value, by such individual. Inheritance tax is
not generally chargeable on gifts to individuals or to some types of settlement
made more than seven years before the death of the donor. Special rules apply to
shares or ADRs held in a settlement.

A share or ADR held by an individual whose domicile is determined to be the
United States for purposes of the estate tax treaty, and who is not a national
of the United Kingdom, will not be subject to UK inheritance tax on the
individual's death or on a lifetime transfer of the share or ADR except where
the share or ADR:

.. is part of the business property of a UK permanent establishment of an
enterprise, or

.. pertains to a UK fixed base of an individual used for the performance of
independent personal services.

The estate tax treaty generally provides a credit against US federal tax
liability for the amount of any tax paid in the United Kingdom in a case where
the share or ADR is subject both to UK inheritance tax and to US federal estate
or gift tax.

United Kingdom stamp duty and Stamp Duty Reserve Tax (`SDRT') UK stamp duty or
SDRT will, subject to specific exceptions, be payable at the rate of 1.5%
rounded up to the nearest (Pounds)5 of the amount of the consideration paid for
the shares in registered form which are issued or transferred:

<PAGE>

.. to, or to a nominee or agent for, a person whose business is or includes the
provision of clearance services or

.. to, or to a nominee or agent for, a person whose business is or includes
issuing depositary receipts. This would include issues or transfers of shares in
registered form to the Custodian for deposits under the ADR deposit agreement.
In circumstances where stamp duty is not payable on the transfer of shares in
registered form to the Custodian at the rate of 1.5%, such as where there is no
chargeable instrument, SDRT will be payable to bring the charge up to 1.5% in
total.

No UK stamp duty will be payable on the acquisition of any ADR or on any
subsequent transfer of an ADR, provided that the instrument of transfer and any
subsequent instrument of transfer is executed and remains at all times outside
the United Kingdom. In any other case, the transfer of, or agreement to
transfer, an ADR or beneficial ownership of an ADR could, depending on all the
circumstances of the transfer, give rise to a charge to ad valorem stamp duty.
The current rate of ad valorem stamp duty is 0.5% of the value of the
consideration (rounded up to the nearest (Pounds)5) (a transfer in contemplation
of sale being stampable by reference to the value of the property transferred).
Interest will be charged on duty that is not paid within 30 days of execution of
a transfer of securities subject to stamp duty, wherever execution takes place.
Interest paid will not be allowable as a deduction in computing profits and
losses for UK tax purposes. Penalties will also apply to documents submitted for
stamping more than 30 days after the document was executed where the document
was executed in the United Kingdom. For documents executed outside the UK,
penalties will apply to documents not submitted for stamping within 30 days
after they are first brought into the UK An agreement to transfer an ADR or
beneficial ownership of an ADR will not give rise to SDRT.

Subject to some exceptions, a transfer on sale of shares in registered form will
attract ad valorem UK stamp duty at the rate of 0.5% of the amount or value of
the consideration for the transfer rounded up to the nearest (Pounds)5.
Generally ad valorem stamp duty applies neither to gifts nor on a transfer from
a nominee to the beneficial owner, although in cases of transfers where no ad
valorem stamp duty arises, a fixed UK stamp duty of (Pounds)5 will generally be
payable. SDRT at a rate of 0.5% of the amount or value of the consideration for
the transfer may be payable on an unconditional agreement to transfer shares.
If, within six years of the date of the agreement, an instrument transferring
the shares is executed and stamped, any SDRT paid will be repayable or, if the
SDRT has not been paid, the liability to pay such tax, but not necessarily
interest and penalties, will be cancelled. SDRT is chargeable whether the
agreement is made or effected in the United Kingdom or elsewhere and whether or
not any party is resident or situated in any part of the United Kingdom.

Paperless transfers of shares within the UK CREST system are generally liable to
SDRT, rather than stamp duty, at a rate of 0.5% of the amount or value of the
consideration payable. CREST is obliged to collect SDRT on relevant transactions
settled within the CREST system. Deposits of shares into CREST will not
generally be subject to SDRT, unless the transfer into CREST is made for
consideration.

<PAGE>

Market for CAT's Ordinary Shares
CAT's ordinary shares began trading publicly on what was then the Official List
of London Stock Exchange Limited on 25 March 1997, under the symbol 'CAT'. CAT's
ADRs (each of which represents a single ordinary share) commenced trading on the
NASDAQ National Market on 11 June 2001. The following table lists information on
the price range of CAT's ordinary shares and ADRs. It is based on reported
closing prices for CAT's ordinary shares on the Official List of London Stock
Exchange and closing prices for CAT's ADRs as reported by NASDAQ.

<TABLE>
<CAPTION>
                                        high              Low               High               Low
                                         US$              US$           (Pounds)          (Pounds)
<S>                                     <C>               <C>           <C>               <C>
Financial year 1998
First quarter                                                             4.70              3.55
Second quarter                                                            4.18              3.50
Third quarter                                                             3.54              2.45
Fourth quarter                                                            2.50              1.42
Financial year 1999
First quarter                                                             2.50              1.30
Second quarter                                                            2.50              1.89
Third quarter                                                             2.46              1.92
Fourth quarter                                                            2.25              1.67
Financial year 2000
First quarter                                                            49.00              5.85
Second quarter                                                           29.25             18.25
Third quarter                                                            30.25             18.25
Fourth quarter                                                           41.50             29.00
Financial year 2001
First quarter                                                            43.88             26.05
Second quarter                                                           35.50             13.38
Third quarter                                                            26.65             15.38
Fourth quarter                                                           21.69              8.70
May 2001                                                                 26.55             19.13
June 2001                              35.97            29.20            26.28             20.35
July 2001                              31.44            23.75            21.69             16.50
August 2001                            24.90            21.25            16.79             14.84
September 2001                         21.90            13.10            15.15              8.70
October 2001                           30.50            19.80            20.00             13.80
</TABLE>

On 23 November 2001, the closing price on the Daily Official List of London
Stock Exchange Limited for CAT's ordinary shares was (Pounds)18.75.

Exchange Rate Information
The table below sets forth, for the periods and dates indicated, information
concerning the noon buying rates in New York City for pounds sterling expressed
in US dollars per (Pounds)1.00. Fluctuations in the exchange rate between the
pound sterling and the US dollar will affect, among other things, the US dollar
equivalent of the pound sterling price of

<PAGE>

CAT's shares on the Daily Official List of the London Stock Exchange plc and the
market price of CAT's American Depositary Shares on the NASDAQ National Market.
Averages represent the average of the noon buying rates in New York City on the
last day of each full month during the period.

Year ended 30 September       High        Low       Average      Period end
1997                        1.7123     1.5623        1.6407          1.6117
1998                        1.7068     1.6114        1.6623          1.6995
1999                        1.7222     1.5515        1.6258          1.6457
2000                        1.6765     1.4005        1.5528          1.4787
2001                        1.5045     1.3730        1.4410          1.4691

The following table sets forth the high and low noon buying rate for pounds
sterling expressed in US dollars per (Pounds)1.00 for each of the previous six
months. On 23 November 2001, the exchange rate was $1.4095 to (Pounds)1.00.

                                                     High               Low
May 2001                                           1.4400            1.4103
June 2001                                          1.4190            1.3730
July 2001                                          1.4290            1.3995
August 2001                                        1.4577            1.4135
September 2001                                     1.4745            1.4444
October 2001                                       1.4795            1.4214

Selected Financial Data

The following table presents selected historical consolidated financial
information for CAT as of, and for the years ended, 30 September 2001, 2000,
1999, 1998 and 1997. References in this document to `CAT's financial year' are
to CAT's financial year ended September 30 of the appropriate year. The
historical financial data are derived from the audited financial statements of
CAT which are prepared in pounds sterling and in accordance with UK Generally
Acceptable Accounting Principles (`GAAP').

There are material differences between UK GAAP and US GAAP. Some items indicated
in the table have been reconciled to US GAAP in accordance with the
reconciliation procedures described in note 27 to the audited financial
statements contained elsewhere in this document.

<TABLE>
<CAPTION>
                                                2000             1999             1998              1997
                            2001            restated         restated         restated          restated
Income statement       (Pounds)'000     (Pounds)'000     (Pounds)'000     (Pounds)'000      (Pounds)'000
<S>                    <C>              <C>              <C>              <C>               <C>
UK GAAP
Turnover                   7,121            7,018            2,165            1,275             1,594
Gross profit               6,770            6,637            2,084            1,214             1,543
Research and
development
expenses                  21,393           15,728           13,574            9,125             6,693
Exceptional costs(i)           -                -                -                -             2,967
</TABLE>

<PAGE>

<TABLE>
<S>                   <C>              <C>              <C>              <C>               <C>
General and
administration
expenses                   6,443            4,832            2,684            2,078             1,576
Operating loss           (21,066)         (13,933)         (14,174)          (9,989)           (9,693)
Net loss on
ordinary activities
before taxation          (11,771)          (8,289)         (12,364)          (7,030)           (7,895)
Taxation on
loss on
ordinary activities            -                -               (1)              (4)                -
Net loss                 (11,771)          (8,289)         (12,365)          (7,034)           (7,895)
Net loss
per share
(basic and
diluted)(ii)
(pence)                   (33.3p)          (27.5p)          (50.9p)          (31.3p)           (45.3p)
US GAAP
Turnover                   7,543            7,129            2,165            1,275             1,594
Operating loss           (28,860)         (22,775)         (14,022)          (9,966)           (9,721)
Net loss                 (19,565)         (17,131)         (12,213)          (7,011)           (8,152)
Basic and
diluted net
loss per share            (55.4p)          (56.8p)          (50.2p)          (31.2p)           (46.8p)
Balance sheet
UK GAAP
Cash and
investments in
liquid resources         156,813          156,528           23,622           34,844            44,593
Total assets             172,470          169,436           35,175           45,661            47,467
Current liabilities       (8,335)          (9,627)          (3,929)          (2,718)           (2,276)
Long term
liabilities               (8,085)          (7,369)          (2,812)          (3,317)           (3,307)
Net assets               156,050          152,440           20,434           39,600            41,884
Shareholders'
funds - all
equity                   156,050          152,440           28,434           39,626            41,884
Number of
ordinary shares
outstanding           35,455,865       34,770,438       25,281,365       23,492,584        22,154,751
US GAAP
Cash and
investments in
liquid resources         156,813          156,528           23,622           34,844            44,593
Total assets             172,613          169,595           35,350           44,034            47,467
Current liabilities       (8,428)          (9,294)          (3,929)          (2,718)           (2,276)
</TABLE>

<PAGE>

<TABLE>
<S>                  <C>                <C>             <C>             <C>                 <C>
Long term
liabilities              (10,460)          (8,947)          (2,812)          (3,317)           (3,307)
Net assets               153,725          151,354           28,609           37,999            41,884
Shareholders'
funds - all equity       153,725          151,354           28,609           37,999            41,884
</TABLE>

(i)  In the year ended 30 September 1997, the cost of acquiring intellectual
property rights from the Medical Research Council was recorded as an expense
through the profit and loss account in accordance with CAT's accounting
policies.
(ii) Under UK GAAP, potentially dilutive issuable shares are only
included in the calculation of fully diluted earnings per share if their issue
would decrease net profit per share or increase net loss per share. Since the
Group has reported losses, its basic and fully diluted loss per share are
therefore equal.

Cross reference to Form 20-F

This cross reference to Form 20-F is provided to assist those who are more
familiar with the contents and layout of an Annual Report on Form 20-F.

The information in this document that is referred to in the following table
shall be deemed to be filed with the Securities and Exchange Commission for all
purposes.

<TABLE>
<S>                                                            <C>          <C>
                                                                               Edgar
Form 20-F item:                                                    Page        Page
1 Identity of Directors and advisers
Directors and senior management                                   20-22       14-16
Advisers                                                             71          81
Auditors                                                             71          81

2 Offer statistics and expected timetable                           n/a         n/a

3 Key information
Selected financial data                                              69          77
Risk factors                                                      63-65       70-73

4 Information on the Company
History and development of the Company                         1-15, 62     1-9, 69
Business overview                                                  1-15         1-9
Organisational structure (note 11)                                   44          46
Property, plant and equipment (note 10)                          43, 62      46, 69

5 Operating and financial review and prospects
Operating results                                                 16-18        9-12
Liquidity and capital resources                                   18-19       12-13
Research and development, patents and licences, etc.               5-15         4-9
Trend information                                                 16-19        9-13
</TABLE>

<PAGE>

<TABLE>
<S>                                                        <C>                        <C>
6  Directors, senior management and employees
Board of Directors                                                       20-21            14-16
Compensation - Remuneration Report                                       25-28            21-26
Board practices - Corporate governance                                   29-32            27-32
Directors' report                                                        23-24            18-20
Employees - Staff costs (note 6)                                            42            44-45
Share ownership                                            22-23, 25-28, 47-48         24-26,51

7  Major shareholders and related party transactions
Major shareholders                                                          23               19
Related party transactions (note 25)                                        52               54

8  Financial information
(See item 18 below)                                                See item 18

9  Nature of the trading market                                             68               76

10 Additional information
UK tax consequences of owning Cambridge Antibody
Technology Group plc shares                                              65-66            73-75
Material contracts                                                       53-62            64-69
Memorandum and Articles of Association                                      62               70
Documents on display                                                 see below

11 Quantitative and qualitative disclosure about market risk
Financial instruments (note 16)                                          45-47            48-50

12 Description of securities other than equity securities                  n/a

13 Defaults, dividends and delinquencies                                   n/a

14 Material modifications to the rights of
security holders and use of proceeds                                       n/a

15 Reserved item                                                           n/a

16 Reserved item                                                           n/a

17 Financial statements

18 Financial statements
Directors' responsibilities                                                 32               33
Auditors' report                                                            33               34
Consolidated profit and loss account                                        34               35
Consolidated statement of total recognised gains and losses                 34               35
Consolidated balance sheet                                                  35               36
</TABLE>

<PAGE>

Company balance sheet                                               36       37
Consolidated cash flow statement                                    37       37
Reconciliation of net cash flow to movement in net funds            51       51
Notes to consolidated financial statements                       38-68    38-79

19 Exhibits                                                                 n/a

The exhibits to the form 20-F are available for review at CAT's registered
office. In addition they have been filed through the EDGAR filing system at the
Securities and Exchange Commission and may be accessed at www.sec.gov.
                                                          -----------

Corporate Advisors

Joint financial advisors and brokers

Cazenove & Co.
12 Tokenhouse Yard
London EC2R 7AN, UK

Deutsche Bank AG London
Winchester House
1 Great Winchester Street
London EC2N 2DB, UK

Solicitors

CMS Cameron McKenna
Mitre House
160 Aldersgate Street
London EC1A 4DD, UK

Patent Attorneys

Mewburn Ellis
122 Cambridge Science Park
Milton Road
Cambridge CB4 4GG, UK

Auditors

Arthur Andersen
Betjeman House
104 Hills Road
Cambridge CB2 1LH, UK

Bankers

Barclays Bank Plc
Cambridge Business Centre
PO Box 326
Cambridge CB4 3UT, UK

<PAGE>

Shareholder Information

The share price is obtainable from the following:

Financial Times, Daily Telegraph, The Independent, Cambridge Evening News.

London Stock Exchange

mnemonic CAT

NASDAQ

mnemonic CATG

Announcements

First quarter - late February
Interim - late May
Third quarter - late August
Final - late November

Shareholders

There are approximately 2,100 registered shareholders.

Company Secretary and registered office

Diane Mellett LLB JD
Cambridge Antibody Technology Group plc
The Science Park
Melbourn
Cambridgeshire SG8 6JJ, UK

Registered number 3234033

Registrars

Computershare Investor Services PLC
PO Box 82
The Pavilions
Bridgwater Road
Bristol BS99 7NH, UK
Tel 0870 702 0000

US Depositary

Bank of New York
620 Avenue of the Americas
Sixth Floor
New York, NY10011, US
Tel 1 888 BNYADRS

Investor relations

Information on CAT is available online via the internet at
www.cambridgeantibody.com

Security analysts and investment professionals should direct their enquiries in
the first instance to:

<PAGE>

UK/Europe

Corporate Communications
Cambridge Antibody Technology Group plc
The Science Park
Melbourn
Cambridgeshire SG8 6JJ, UK

US
The Trout Group LLC
740 Broadway, Suite 903
New York, NY10003, US

PFIC Annual Information Statement
Cambridge Antibody Technology Group plc
The following information applies to United States shareholders only. For the
year ended 30 September 2001, we believe that the Company was not a Passive
Foreign Investment Corporation (`PFIC') as defined by Section 1297 of the United
States Code. This conclusion is a factual determination that is made annually
and therefore may be subject to change in the future. As the Company was at one
time a PFIC we provide the following information.

Fiscal year ended 30 September 2001

1 This information is being provided pursuant to Section 1.1295-1T of the United
States Treasury Regulations.

2 This PFIC Annual Information Statement applies to the financial year of the
Company beginning 1 October 2000 and ending 30 September 2001.

3 The Company had negative ordinary earnings and no net capital gain for the
taxable year indicated above.

4 During the year no actual or deemed distributions were made.

5 The Company has given the information set forth in paragraphs 1-4 above to
enable the shareholder to establish that the Company's ordinary earnings and net
capital gain are computed in accordance with US income tax principles and to
determine the shareholders' pro rata share thereof.