Acambis: Interim Results for the Six Months Ended June 30, 2001

CAMBRIDGE, UK, Sept. 20, 2001 (PRIMEZONE) -- Acambis plc ("Acambis") (LSE:ACM) (Nasdaq:ACAM), announces its interim results for the six months ended June 30, 2001.

 Significant progress with R&D projects:
 -- Successful Phase II challenge trial of ChimeriVax-JE vaccine
    (see separate news release)
 -- Phase II dose-ranging study of ChimeriVax-JE initiated, with
    results expected by end 2001
 -- ChimeriVax-West Nile vaccine candidate identified; animal health
    opportunity being explored (see additional separate news release)
 -- 3,000 subject safety trials of Arilvax(r) successfully completed;
    BLA submission expected around the middle of 2002
 -- Exploratory trial of C. difficile active vaccine underway
 -- $1.3m grants for vaccine programs against travelers' diarrhea
    caused by ETEC and Campylobacter bacteria
 -- Phase I trial of ChimeriVax-Dengue scheduled for early 2002
 -- Phase I trial of smallpox vaccine to begin in early 2002
 -- Reactivation of Canton manufacturing facility on track
 -- Second installment of Baxter subscription made - 3.5m pounds;
    further 14m pounds still to come
 -- Cash and liquid resources of 19.7m pounds at June 30, 2001

Dr John Brown, Chief Executive Officer of Acambis, said:

"Our product pipeline has made significant progress this year and a further three IND applications are planned for submission before the end of the year. Major efforts are underway on the smallpox vaccine anti-bioterrorism project for the US Government and the reactivation of our manufacturing facility at Canton, both of which are progressing as planned."

An analyst meeting will take place at 9.30 a.m. at the offices of Financial Dynamics, Holborn Gate, 26 Southampton Buildings, London WC2. Please call Mo Noonan on +44 (0) 20 7831 3113 for further details.

Notes to editors:

Acambis is a biopharmaceutical company discovering, developing and manufacturing vaccines to prevent and treat infectious diseases. It has operations in Cambridge, UK, and in Cambridge and Canton, Massachusetts, USA. It has a broad portfolio of vaccine product candidates undergoing clinical trials and technology platforms that provide the basis for further vaccine product candidates. This, and other news releases relating to Acambis, can be found on the Company's website at

This news release contains forward-looking statements that involve risks and uncertainties, including the timing and results of clinical trials and other product development and commercialization risks, the risks of satisfying the regulatory approval process in a timely manner, the need for and the availability of additional capital, and other risks detailed in the Company's filings with the Securities and Exchange Commission. These forward-looking statements are based on estimates and assumptions made by the management of Acambis and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results or experience could differ materially from the forward-looking statements.


The period has seen excellent progress in the development and integration of the three elements of our business: our product pipeline, the major smallpox vaccine contract for the US Government, and our biological manufacturing capability. The evolution of Acambis into a fully integrated vaccine development company brings tangible benefits through both the synergies between our core activities and the greater control we now have over the progression of our products from discovery to registration.

Research and development

The research and development of viral and bacterial vaccines remains our central focus and we have continued to make good progress with the 11 products in our pipeline. Since the start of the year, we have successfully completed a Phase I/II trial and a Phase II challenge trial of ChimeriVax-JE, which validated our ChimeriVax technology, and have initiated a Phase II dose-ranging study of the vaccine. We have also successfully completed a 3,000-subject safety trial of Arilvax(r). A new research program has been instigated to develop a vaccine to prevent diarrheal disease caused by Campylobacter bacteria, assisted by a grant from the US Department of Defense. We expect that we will shortly be submitting an Investigational New Drug (IND) application to the US Food and Drug Administration (FDA) to conduct Phase I clinical trial of our ChimeriVax-Dengue vaccine.

Smallpox Vaccine Contract

We are applying our world-leading experience with live vaccines to develop a smallpox vaccine as an anti-bioterrorism measure under a contract with the US Centers for Disease Control and Prevention ("CDC"). A major effort is underway on this contract, with around one-fifth of our research and development staff currently committed to the project, all of which is fully funded by the CDC. We plan to submit an IND to the FDA for Phase I clinical trials of the vaccine shortly.


Our manufacturing capability is of increasing strategic importance to the Company. We not only have an agreement to manufacture vaccine components for Baxter but can also use it for our internal vaccine projects. Moreover, we are discussing with the CDC arrangements for bulk manufacture of the smallpox vaccine to be handled at our manufacturing facility at Canton, Massachusetts. We continue to direct significant efforts and resources towards the reactivation of the facility, making the required capital investment and rapidly building up the staff and infrastructure. Once completed in the middle of 2002, we will have a modern biologicals production facility capable of meeting today's exacting FDA and EMEA standards.

Research and Development Update


A Phase III efficacy trial of the live, attenuated yellow fever vaccine, Arilvax(r), was completed in 2000 and we are now compiling additional data required by the FDA to support the Biologicals License Application (BLA).

A 3,000-subject, open-label safety study conducted in the UK has been successfully completed. The trial aimed to determine the incidence of adverse events within 30 days of vaccination with Arilvax(r) in travelers aged nine months and above. Full statistical analysis is ongoing, but no vaccine-related serious adverse events were recorded from this large trial.

The final component of the BLA package will include data from a pediatric trial, for which preparations are well underway. The number of subjects required by the FDA in this trial has increased to 1,050. The trial is designed to determine the safety, tolerability and efficacy of Arilvax(r) in children aged from 9 months to 10 years. Arilvax is manufactured by Evans Vaccines Limited (a subsidiary of PowderJect plc) and the upgrade of its facility at Speke has now been completed. We expect supplies of Arilvax to be available for use in our pediatric trial in the coming weeks. We currently estimate that submission of the BLA will take place around the middle of 2002.


Japanese encephalitis ("JE") is a life-threatening disease caused by a mosquito-borne virus that occurs throughout Asia and in parts of Australia. Three billion people live in the regions where JE is endemic and some 14 million people travel to these regions every year from major developed countries such as the US, Canada and Western Europe.

In February, we announced positive results from a Phase I/II trial of our ChimeriVax-JE vaccine. Since then, a Phase II trial has been successfully completed in which subjects previously vaccinated with ChimeriVax-JE were "challenged" with a JE antigen in the form of a licensed JE vaccine. The Phase II challenge trial successfully demonstrated that ChimeriVax-JE induces an immune response with long-term memory and a rapid rise in protective antibodies on exposure to JE virus.

A second Phase II study has also started. This 99-person trial is designed to establish the optimum dose and schedule of ChimeriVax-JE and to obtain additional safety and immunogenicity data on the vaccine. Results from this second Phase II trials are expected around the end of the year.

ChimeriVax-JE is the lead product developed using our proprietary ChimeriVax technology that is also being applied to the development of vaccines against dengue fever and West Nile virus.


Dengue fever is a mosquito-borne disease that affects an estimated 100 million people a year. It is a difficult disease to combat as there are four dengue virus serotypes - DEN 1, 2, 3 and 4 - that are immunologically related. Infection with one of the four viruses does not provide immunity against the other three. No vaccine currently exists, and a successful vaccine will need to protect against each of the four dengue virus serotypes.

We were the first company to construct chimeric vaccines against all four serotypes, and successfully to administer these together as a tetravalent (four-component) vaccine which, in pre-clinical models, was seen to be safe and to induce high levels of neutralizing antibodies against the four serotypes.

The clinical development plan involves an initial Phase I safety study to be performed with a monovalent (single-component) chimeric vaccine, DEN-2. We anticipate filing the IND for this trial in the fourth quarter of 2001. Pending a successful outcome of the trial, this would then be followed by clinical trials of the tetravalent vaccine.

Exclusive worldwide rights to our ChimeriVax-Dengue project are licensed to our partner, Aventis Pasteur, who is fully funding the project.

ChimeriVax-West Nile

West Nile virus, a close relative of JE virus, arrived in New York in 1999. Since then, it has spread south to Florida and as far west as Illinois, and has been detected in 21 US states. In these states, more than 30 million people fall within the demographic group most at risk from the disease - those aged 55 or over.

We announced today that, following pre-clinical studies to test its safety, immunogenicity and protection, we have selected a vaccine candidate.

Our program to develop a West Nile vaccine using our ChimeriVax technology is being supported with a $3m grant from the US National Institutes of Health, which is expected to cover the research and development costs up to the point of initial human trials, planned for 2002.

There is also a significant animal health product opportunity as horses are highly susceptible to West Nile virus. In a proof-of-principle study, horses vaccinated with ChimeriVax-West Nile were shown to be successfully protected when challenged with West Nile virus. We are progressing discussions on the commercialization of this product with several animal health companies.


In September 2000, we were awarded an anti-bioterrorism contract by the US CDC to develop a new smallpox vaccine and to create and maintain a stockpile of 40 million doses. A major effort has been underway at Acambis to develop the new vaccine and significant progress has been made in the short period since the award of the contract, resulting in the expected submission of an IND application to the FDA before the end of 2001 to conduct the first clinical trial of our new smallpox vaccine.

Discussions also continue with the CDC on arrangements for Acambis to be responsible for full-scale bulk manufacture of the smallpox vaccine at our Canton manufacturing facility. These discussions are expected to be finalized before the end of 2001, potentially resulting in Acambis manufacturing vaccine supplies from the first half of 2002.

All of the staff employed on the R&D phase of the smallpox project are fully funded by the CDC on a cost-plus fixed fee basis.


Typhoid fever is caused by Salmonella typhi bacteria and occurs, principally, in South and East Asia, Africa and South America. An estimated 16 million cases occur each year, of which approximately 600,000 result in fatality.

In March, we announced an agreement with Berna Biotech (previously Swiss Serum and Vaccine Institute Berne) involving our HolaVax-Typhoid vaccine. This collaboration is proceeding well. The technology transfer has been completed and Berna is currently engaged in process development in preparation for a bridging study that will be conducted during 2002.


Enterotoxigenic E. coli ("ETEC") is the major cause of travelers' diarrhea. We are developing an oral, live, attenuated vaccine based on five strains of ETEC. In a Phase I trial of one component of the vaccine, we identified the appropriate attenuating mutations to give a safe and immunogenic vaccine. A proof-of-principle challenge study of this vaccine strain will be started around the end of 2001.

Good progress has been made in applying the same attenuation strategy to several other ETEC strains that are most commonly associated with disease. The final vaccine, comprising five strains, will then be formulated for clinical trials.

H. pylori

Found throughout the world, H. pylori is probably the most common chronic infection of humans, affecting at least 50% of the world's population. It is known to cause gastric ulcers and is implicated as a cause of stomach cancer.

We are continuing to conduct trials on a variety of vaccine candidates to prevent or treat infection with H. pylori bacteria. This project is structured as a 50:50 joint venture with Aventis Pasteur, although we are reviewing alternative funding structures.

C. difficile

Clostridium difficile is an antibiotic-resistant bacterium to which hospital patients and the elderly are particularly vulnerable. We are exploring two types of vaccine to prevent and/or treat C. difficile associated diarrhea.

The first approach is our passive vaccine. This is developed by inactivating C. difficile toxins to create a toxoid vaccine that is then injected into professional plasma donors. The antibodies generated are collected from the plasma donors in the form of hyperimmune globulin and purified to create the passive vaccine. A trial in which plasma donors will be vaccinated in order to generate hyperimmune globulin is scheduled to commence around the end of this year. In May, we were issued with a broad patent in the US covering this passive immunization strategy.

A Phase I/II trial of the toxoid vaccine showed that it was safe, well-tolerated and highly immunogenic at all of the dose levels studied. The magnitude of the response was such that we are now evaluating a second approach using the toxoid vaccine as an active vaccine to protect "at risk" populations. We are currently conducting an exploratory trial with the active vaccine. The initial phase of this trial, in which the vaccine was tested on young, healthy adults in comparison with a placebo to confirm its safety profile, has been successfully completed. The next phase will test the vaccine's safety and tolerability in elderly subjects, both healthy and infirm, and in a group of adults who have a history of recurrent C. difficile associated diarrhea.


In July, we were awarded two grants totaling $1.3m by the US Department of Defense's Dual Use Science & Technology program, one for our ETEC program and one for a program to develop a vaccine against Campylobacter, which is the second most common bacterial cause of travelers' diarrhea after ETEC. The Campylobacter vaccine will be based on our proprietary HolaVax platform, using a live, attenuated Salmonella typhi vector to present a protective antigen from Campylobacter. Alternative approaches in which the same antigen is presented in an injectable formulation are also being explored.

Reactivation of Manufacturing Plant

The project to reactivate our manufacturing facility at Canton is on schedule. The process to bring the existing equipment and infrastructure up to today's high standards, after several years of inactivity, has largely been completed. The process of purchasing and validating the new equipment required, as well as building out the unfinished space in the facility, is underway.

Commissioning of the facility is expected to begin around the end of 2001, at which point revenues from Baxter to Acambis will commence under the terms of the agreement entered into in September 2000.

The facility is being specifically designed to be capable of bulk production of both viral and bacterial vaccines. Completion of the facility is anticipated to be in stages, with the viral bulk production suites ready in the first quarter of 2002, followed by the bacterial bulk production suites later in the year.

Assuming successful conclusion of the discussions with the CDC, the first vaccine supplies to be manufactured at Canton are expected to be of smallpox in the first half of 2002. The first bacterial product for Baxter would follow in the second half of 2002. It is anticipated that there will also be capacity in the facility to produce several of our own products.

Finance Review

The financial results for the six months ended June 30, 2001 are presented below. The comparative figures for 2000 include a loss of 0.7m pounds for the three-month period up to March 31, 2000 relating to the Mimetrix business that was sold in the first half of 2000.

Turnover for the period was 3.1m pounds (2000 - 2.9m pounds), primarily comprising income and research and development ("R&D") contract fees from ongoing collaborations, principally those with Aventis Pasteur and the CDC. The marginal increase over 2000 reflects 1.9m pounds additional revenue receivable under the contract with the CDC, which commenced in September 2000. This has been offset by lower income received under the H. pylori joint venture, and income no longer being received from Aventis Pasteur in 2001 under the Japanese encephalitis program, to which Acambis regained the rights at the end of 2000. Turnover is expected to be slightly higher in the second half of 2001, as activity on the CDC contract continues to increase.

R&D costs remained constant at 6.5m pounds (2000 - 6.5m pounds). Increased operating costs of around 1.5m pounds relating to the reactivation of the Canton manufacturing facility have been offset in part by grant income being received under the West Nile and ETEC programs and lower expenditure in relation to Arilvax, (0.7m pounds(2000 - 1.9m pounds). In addition, the comparable figure for the first half of 2000 included losses of 0.7m pounds relating to the Mimetrix business that was sold.

The Group's share of the costs on the H. pylori joint venture with Aventis Pasteur reduced to 0.2m pounds for the period (2000 - 1.2m ounds). The reduction is attributable to the lower level of internal resources required as the project continues through the clinical trial phase. Future alternative funding structures for the project continue to be explored.

Administrative costs increased marginally in the period to 0.9m pounds (2000 - 0.7m pounds) primarily as a result of the reactivation of the facility at Canton. Interest receivable remained constant at 0.5m pounds (2000 - 0.5m pounds) as a result of similar average levels of cash during the first six months of both 2000 and 2001. Interest payable, relating entirely to the Arilvax (overdraft facility, was 0.1m pounds (2000 - 0.1m pounds). During 2001 an exchange loss of 0.3m pounds (2000 - 0.2m pounds) arose as a result of the revaluation of this US dollar-denominated facility.

The goodwill arising during 1999 as part of the Acambis Inc. acquisition continues to be written off to the consolidated profit and loss account over a 15-year period. The resulting charge for the period was 0.6m pounds (2000 - 0.6m pounds).

During the first six months of 2001 the Group recorded an exceptional loss of 0.4m pounds (2000 - 0 pounds) in relation to the revaluation of the investment held in Medivir AB, which the Group acquired on the sale of the Mimetrix activities. At June 30, 2001 the book value of the investment had reduced to 0.4m pounds from 0.8m pounds at December 31, 2000.

The net loss for the period was 5.5m pounds (2000 - 5.5m pounds). Income and expenditure were both at similar levels during through the first six months of both 2000 and 2001.

Capital expenditure for the period increased to 0.9m pounds (2000 - 0.1m pounds). The increase is due to the investment being made to re-activate the Canton manufacturing facility. The expenditure to date has been financed from the Group's own cash resources. The Group is in advanced discussions to put in place lease financing arrangements for these expenditures already incurred and the remaining expenditure to bring the facility up to full manufacturing capacity. The expenditure is budgeted at around $18m in total, to be incurred over the remainder of 2001 and the first half of 2002.

Cash and liquid resources at June 30, 2001 amounted to 19.7m pounds, a decrease of 1.4m pounds since December 31, 2000. The Group received 3.5m pounds from Baxter in June 2001 in respect of the second installment of its equity subscription, increasing Baxter's shareholding in Acambis to 12.7%. Excluding the proceeds of the subscription, the cash utilization for the first six months of 2001 was 4.9m pounds (2000 - 3.8m pounds). The increase in cash utilization over 2000 was principally as a result of the capital expenditure on the reactivation of the Canton facility from our own cash resources. Commissioning of the Canton facility is expected to take place around the end of 2001, at which point revenues from Baxter to Acambis would commence.

The balance on the Arilvax (overdraft facility amounted to 5.0m pounds at June 30, 2001 (2000 - 4.4m pounds), being the $7m maximum available to be drawn from the facility. At December 31, 2000, the balance of this facility was 4.7m pounds. The increase of 0.3m pounds to June 30, 2001 is as a direct result of exchange differences arising on the revaluation of the US dollar facility.

                          INTERIM REPORT 2001
                 for the six months ended June 30, 2001
 Consolidated Profit and Loss Account
                          Six months       Six months        Year
                            ended            ended           ended
                       June 30, 2001     June 30, 2000   Dec. 31, 2000
                         (unaudited)      (unaudited)       audited)
                         (pound)'000      (pound)'000     (pound)'000
 Turnover                       3,055            2,887         6,264
 Research and
  development costs            (6,539)          (6,537)      (12,712)
  Administrative costs           (858)            (719)       (1,745)
 Amortization of
  goodwill                       (602)            (602)       (1,204)
                              -------          -------       -------
 Operating expenses            (7,999)          (7,858)      (15,661)
                              -------          -------       -------
  Operating loss               (4,944)          (4,971)       (9,397)
 Share of loss of
  joint venture                  (238)          (1,223)       (2,138)
                              -------          -------       -------
 Total operating loss
  before exceptional
 (Group and joint venture)     (5,182)          (6,194)      (11,535)
 Exceptional items:
   Profit on disposal of
    fixed asset investment          -                -           221
   Profit on sale of
     operations                     -              414           414
   Amounts written off
    fixed asset investment       (423)               -          (670)
                              -------          -------       -------
 Loss on ordinary activities
  before finance charges
                               (5,605)          (5,780)      (11,570)
                              -------          -------       -------
  Interest receivable             505              518           983
 Interest payable and
  similar charges                (136)             (52)         (216)
 Exchange loss on
  foreign currency
   borrowings                    (293)            (216)         (271)
                              -------          -------       -------
 Loss on ordinary activities
  before and after taxation
  (being retained loss
    for the period)            (5,529)          (5,530)      (11,074)
                              =======          =======       =======
 Loss per ordinary share,
  basic and fully diluted
   (note 2)                      (6.2)p           (7.0)p       (13.9)p
 Consolidated Statement of Total Recognized Gains and Losses
                         Six months       Six months         Year
                           ended            ended            ended
                       June 30, 2001     June 30, 2000   Dec. 31, 2000
                        (unaudited)      (unaudited)       (audited)
                        (pound)'000      (pound)'000      (pound)'000
 Loss for the period        (5,529)          (5,530)        (11,074)
 Loss on foreign
  currency translation      (1,007)            (696)           (817)
                           =======          =======         =======
 Total recognized gains
  and losses for
   the period               (6,536)         (6,226)         (11,891)
                           =======         =======          =======

                          INTERIM REPORT 2001
                 for the six months ended June 30, 2001
 Consolidated Balance Sheet
                          As of              As of            As of
                      June 30, 2001      June 30, 2000    Dec 31, 2000
                       (unaudited)        (unaudited)       (audited)
                       (pound)'000        (pound)'000      (pound)'000
 Fixed assets
 Goodwill                    15,448            16,652         16,049
 Tangible assets              4,676             3,321          3,185
 Investments                  1,832             3,124          2,256
                            -------           -------        -------
                             21,956            23,097         21,490
 Current assets
 Debtors: amounts
  receivable within
   one year                   2,865             1,046          3,628
 Debtors: amounts
  receivable after
   one year                   6,860                 -          6,546
 Liquid resources            17,622            14,751         19,938
 Cash                         2,088               990          1,179
                            -------           -------        -------
                             29,435            16,787         31,291
 Creditors: amounts
  falling due within
   one year                 (11,305)           (7,846)       (10,054)
                            -------           -------        -------
 Net current assets          18,130             8,941         21,237
                            -------           -------        -------
 Total assets less
  current liabilities        40,086            32,038         42,727
 Creditors: amounts
  falling due after
   one year                  (6,860)                -         (6,546)
 Provisions for
  liabilities and
   charges Investment
    in joint ventures:
 - share of assets              833               812            768
 - share of liabilities        (883)             (978)          (810)
                            -------           -------        -------
                                (50)             (166)           (42)
                            =======           =======        =======
 Net assets                  33,176            31,872         36,139
                            =======           =======        =======
 Capital and reserves
 Called-up share capital      9,232             7,892           8,868
 Share premium account       79,985            67,820          76,776
 Profit and loss account    (56,041)          (43,840)        (49,505)
                            =======           =======         =======
 Shareholders' funds -
  all equity                 33,176            31,872          36,139
                            =======           =======         =======

                          INTERIM REPORT 2001
                 for the six months ended June 30, 2001
 Consolidated Cash Flow Statement
                          Six months       Six months         Year
                            ended            ended           ended
                        June 30, 2001    June 30, 2000   Dec. 31, 2000
                          (unaudited)     (unaudited)      (audited)
                          (pound)'000     (pound)'000     (pound)'000
 Operating loss                (4,944)          (4,971)        (9,397)
 Depreciation and
  amortization                  1,024            1,107          2,132
 Increase in working
  capital                        (778)          (1,351)        (1,951)
 Other non-cash items             113              (87)             9
                              -------          -------        -------
 Net cash outflow from
  operating activities         (4,585)          (5,302)        (9,207)
 Returns on investments
  and servicing of finance
 Interest received               815               523            852
 Interest paid                   (84)              (50)          (207)
 Interest element of
  finance lease rentals            -                (4)            (5)
                             -------           -------        -------
                                 731               469            640
 Capital expenditure and
  financial investment
 Purchase of tangible
  fixed assets                  (925)              (86)          (363)
 Sale of tangible
  fixed assets                     -                 -              7
 Funds advanced to
  joint venture                 (238)           (1,276)        (2,332)
 Proceeds from sale
  of trade investments             -                 -            221
                             -------           -------        -------
                              (1,163)           (1,362)        (2,467)
 Acquisitions and disposals
 Disposal costs associated
  with sale of business            -              (243)          (243)
                             -------           -------         -------
                                   -              (243)          (243)
                             -------           -------         -------
 Cash outflow before
  management of liquid
   resources and
    financing                 (5,017)           (6,438)       (11,277)
 Management of liquid
  resources                    2,355             3,195         (1,894)
 Net proceeds from issue
  of new shares
 - Baxter subscription         3,477                 -          9,458
 - Other                          96               416            890
 Overdraft facility                -             2,261          2,502
 Exercise of options over
  shares held by ESOP              -                43             43
 Capital element of
  finance lease payments         (13)              (74)           (73)
                             -------           -------        -------
                               3,560             2,646         12,820
                             =======           =======        =======
 Increase/(decrease) in
  cash for the period             898             (597)          (351)
                             =======           =======        =======
 Reconciliation of Net Cash Flow to Movement in Net Funds
                           Six months       Six months         Year
                             ended            ended           ended
                       June 30, 2001     June 31, 2000   Dec. 31, 2000
                         (unaudited)       (unaudited)      (audited)
                         (pound)'000       (pound)'000     (pound)'000
  in cash                       898              (597)           (351)
  in liquid resources        (2,355)           (3,195)          1,894
                            -------           -------         -------
 (Decrease)/increase in
  cash and liquid
   resources                 (1,457)           (3,792)          1,543
 Net cash outflow from
  lease financing                13                45              29
 Net increase in overdraft
  facility                        -            (2,261)         (2,502)
 Exchange adjustments          (241)              (97)            (59)
                            -------           -------         -------
 Movement in net funds       (1,685)           (6,105)           (989)
 Net funds at beginning
  of period                  16,418            17,407          17,407
                            =======           =======         =======
 Net funds at end
 of period                  14,733            11,302           16,418
                            =======           =======         =======
                          INTERIM REPORT 2001
                 for the six months ended 30 June 2001
 Reconciliation of Movements in Group Shareholders' Funds
                           Six months       Six months        Year
                             ended            ended           ended
                         June 30, 2001    June 30, 2000  Dec. 31, 2000
                          (unaudited)      (unaudited)     (audited)
                          (pound)'000       pound)'000    (pound)'000
 Retained loss for the period   (5,529)         (5,530)       (11,074)
 Loss on foreign currency
  translation                   (1,007)           (696)          (817)
 New share capital
  subscribed                     3,573             416          10,348
                              -------          -------         -------
 Net decrease in
  shareholders' funds           (2,963)         (5,810)        (1,543)
 Opening shareholders'
  funds                         36,139          37,682          37,682
                              =======          =======         =======
 Closing shareholders'
  funds                         33,176          31,872          36,139
                              =======          =======         =======


1. Basis of preparation

The financial information for the six months ended June 30, 2001 is unaudited and has been prepared in accordance with the accounting policies set out in the Annual Report for the year ended December 31, 2000. The financial information for the six months ended June 30, 2000 is also unaudited. The financial information relating to the year ended December 31, 2000 does not constitute full accounts within the meaning of Section 240 of the Companies Act 1985. This has been extracted from the full report for that year which has been filed with the Registrar of Companies. The report of the auditors on these accounts was unqualified. The Board approved the financial statements for the year ended December 31, 2000 on April 27, 2001.

2. Loss per ordinary share

The loss per ordinary share for the six months ended 30 June 2001 is based on a Group loss of (pound)5.5m (June 2000 - (pound)5.5m; December 2000 - (pound)11.1m) and has been calculated on the weighted average of 89,390,729 (June 2000 - 78,649,706; December 2000 - 79,638,484) ordinary shares in issue and ranking for dividend during the period.


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