-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LEzOmvRNRZyeOBzzSuWYYfm2o6r/WUY5tsaGbjCqgWLeJzNYznwIS1IYJ25ZDYKM sfa3LpkZpM4ZjdNMcJ4bZQ== 0000950103-05-002304.txt : 20051109 0000950103-05-002304.hdr.sgml : 20051109 20051109121141 ACCESSION NUMBER: 0000950103-05-002304 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050930 FILED AS OF DATE: 20051109 DATE AS OF CHANGE: 20051109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHIRE PHARMACEUTICALS GROUP PLC CENTRAL INDEX KEY: 0000936402 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-29630 FILM NUMBER: 051188646 BUSINESS ADDRESS: STREET 1: HAMPSHIRE INTL BUSINESS PARK STREET 2: CHINEHAM BASINGSTOKE CITY: HAMPSHIRE ENGLAND RG STATE: X0 BUSINESS PHONE: 1264333455 MAIL ADDRESS: STREET 1: HAMPSHIRE INTL BUSINESS PARK STREET 2: CHINEHAM BASINGSTOKE CITY: HAMPSHIRE ENGLAND RG STATE: X0 10-Q 1 nov0205_shire10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period ended September 30, 2005

Commission File Number: 0-29630

SHIRE PHARMACEUTICALS GROUP PLC
(Exact name of registrant as specified in its charter)

England and Wales	98-0359573
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Hampshire International Business Park, Chineham,	+44 1256 894 000
Basingstoke, Hampshire, England, RG24 8EP	(Registrant’s telephone number, including area code)
(Address of principal executive offices and zip code)

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

Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes [X] No [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

As of October 31, 2005, the number of outstanding ordinary shares of the Registrant was 494,828,582.

THE “SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Statements included herein that are not historical facts are forward-looking statements. Such forward-looking statements involve a number of risks and uncertainties and are subject to change at any time. In the event such risks or uncertainties materialize, Shire's results could be materially affected. The risks and uncertainties include, but are not limited to, risks associated with: the inherent uncertainty of pharmaceutical research, product development, manufacturing and commercialization; the impact of competitive products, including, but not limited to, the impact of those on Shire's Attention Deficit and Hyperactivity Disorder (ADHD) franchise; patents, including, but not limited to, legal challenges relating to Shire's ADHD franchise; government regulation and approval, including, but not limited to, the expected product approval dates of DAYTRANA (MTS) (ADHD), SPD503 (ADHD), SPD465 (ADHD), MESAVANCE (SPD476) (ulcerative colitis), I2S (iduronate-2-sulfatase) (Hunter syndrome), and NRP104 (ADHD), including its scheduling classification by the Drug Enforcement Administration in the United States; Shire’s ability to benefit from its acquisition of Transkaryotic Therapies, Inc.; Shire's ability to secure new products for commercialization and/or development; and other risks and uncertainties detailed from time to time in Shire's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year to December 31, 2004.

The following are trademarks of Shire Pharmaceuticals Group plc or its subsidiaries, which are the subject of trademark registrations in certain countries.

ADDERALL XR^®(mixed salts of a single-entity amphetamine product)

ADDERALL^®(mixed salts of a single-entity amphetamine product)

AGRYLIN^®(anagrelide hydrochloride)

CALCICHEW^®(range (calcium carbonate with or without vitamin D3))

CARBATROL^®(carbamazepine)

COLAZIDE^®(balsalazide)

EQUETRO™ (carbamazepine)

FOSRENOL^®(lanthanum carbonate)

MESAVANCE™ (mesalazine)

REMINYL^®(galantamine hydrobromide) (UK and Republic of Ireland)

REMINYL XL^®(galantamine hydrobromide) (UK and Republic of Ireland)

REPLAGAL^®(agalsidase alfa)

SOLARAZE^®(3%, gel diclofenac sodium (3%w/w))

XAGRID^®(anagrelide hydrochloride)

The following are trademarks of third parties referred to in this filing.

3TC^®(trademark of GlaxoSmithKline (GSK))

AMARYL^®(glimepiride) (trademark of Sanofi-Aventis)

DYNEPO^®(epoetin delta) (trademark of Aventis Pharma Holdings GmbH)

DAYTRANA^®(methylphenidate transdermal system) (trademark of Noven Pharmaceuticals Inc. (Noven))*

PENTASA^®(trademark of Ferring AS)

RAZADYNE™ (galantamine hydrobromide) (trademark of Johnson & Johnson)

RAZADYNE ER™ (galantamine hydrobromide) (trademark of Johnson & Johnson)

REMINYL^®(galantamine hydrobromide) (trademark of Johnson & Johnson, excluding UK and Republic of Ireland)

REMINYL XL^®(galantamine hydrobromide) (trademark of Johnson & Johnson, excluding UK and Republic of Ireland)

ZEFFIX^®(trademark of GSK)

* Previously referred to as MTS.

SHIRE PHARMACEUTICALS GROUP PLC
Form 10-Q for the three months to September 30, 2005
Table of contents

	Page
PART I FINANCIAL INFORMATION	4

ITEM 1. FINANCIAL STATEMENTS
Consolidated balance sheets at September 30, 2005 and December 31, 2004	4
Consolidated statements of operations for the three months and nine months to September 30, 2005 and	6
September 30, 2004
Consolidated statements of changes in shareholders’ equity for the nine months to September 30, 2005	8
Consolidated statements of comprehensive income for the three months and nine months to September	9
30, 2005 and September 30, 2004
Consolidated statements of cash flows for the nine months to September 30, 2005 and September 30,	10
2004
Notes to the condensed consolidated financial statements	12
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS	41
OF OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	59
ITEM 4. CONTROLS AND PROCEDURES	59

PART II OTHER INFORMATION	61

ITEM 1. LEGAL PROCEEDINGS	61
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	66
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	66
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	66
ITEM 5. OTHER INFORMATION	66
ITEM 6. EXHIBITS	67

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

SHIRE PHARMACEUTICALS GROUP PLC
UNAUDITED CONSOLIDATED BALANCE SHEETS



		September 30,	December 31,
		2005	2004
	Notes	$’000	$’000

ASSETS
Current assets:
Cash and cash equivalents		549,820	1,111,477
Restricted cash		30,085	21,627
Short-term investments		22,380	324,411
Accounts receivable, net	(6)	282,262	222,546
Inventories, net	(7)	145,694	41,230
Deferred tax asset		35,607	70,387
Prepaid expenses and other current assets	(8)	81,159	137,271

Total current assets		1,147,007	1,928,949

Investments		47,205	63,267
Property, plant and equipment, net	(9)	218,108	131,351
Goodwill, net	(10)	381,747	235,396
Other intangible assets, net	(11)	749,375	309,297
Deferred tax asset		49,782	7,724
Other non-current assets		42,955	38,895


Total assets		2,636,179	2,714,879

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Loan facility		-	43,162
Accounts payable and accrued expenses	(12)	374,941	311,231
Outstanding TKT shareholders	(2)	434,876	-
Other current liabilities	(13)	53,583	77,558

Total current liabilities		863,400	431,951

Long-term debt, excluding current installments	(14)	116	116
Other long-term liabilities	(15)	45,062	32,159


Total liabilities		908,578	464,226

Commitments and contingencies	(16)

SHIRE PHARMACEUTICALS GROUP PLC
UNAUDITED CONSOLIDATED BALANCE SHEETS (continued)

	September 30,		December 31,
	2005		2004
	$’000		$’000

Shareholders’ equity:
Ordinary shares of 5p par value: 800,000,000 shares
authorized; and 494,192,907 (2004: 484,916,034) shares
issued and outstanding	40,803		40,064
Exchangeable shares: 2,363,000 (2004: 4,226,476) shares
issued and outstanding	109,377		195,830
Treasury stock	(144	)	(264	)
Additional paid-in capital	1,191,233		1,072,407
Accumulated other comprehensive income	91,653		131,939
Retained earnings	294,679		810,677


Total shareholders’ equity	1,727,601		2,250,653


Total liabilities and shareholders’ equity	2,636,179		2,714,879

The accompanying notes are an integral part of these unaudited consolidated financial statements.

SHIRE PHARMACEUTICALS GROUP PLC
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

		3 months to		3 months to		9 months to		9 months to
		September 30,		September 30,		September 30,		September 30,
		2005		2004		2005		2004
	Notes	$’000		$’000		$’000		$’000

Revenues:
Product sales		309,150		283,723		930,149		803,597
Royalties		60,186		56,199		181,073		170,001
Licensing and development		4,586		2,820		11,169		10,217
Other revenues		2,155		2,167		11,975		5,654


Total revenues		376,077		344,909		1,134,366		989,469

Costs and expenses:
Cost of product sales		60,081		38,933		135,359		100,010
Research and development		74,311		57,759		251,300		143,760
Selling, general and administrative		171,332		119,646		516,095		370,704
Intangible asset impairment		-		5,456		3,000		5,456
Reorganization costs	(4a)	6,457		10,061		9,335		32,041
Integration costs	(3)	3,520		-		3,520		-
In-process R&D write-off	(2e)	673,000		-		673,000		-


Total operating expenses		988,701		231,855		1,591,609		651,971

Operating (loss)/income		(612,624	)	113,054		(457,243	)	337,498
Interest income		6,876		5,697		27,868		14,101
Interest expense		(3,519	)	(8,032	)	(4,718	)	(12,259	)
Other income/(expense), net		3,202		(4,859	)	3,938		4,403


Total other income/(expense), net		6,559		(7,194	)	27,088		6,245

(Loss)/income from continuing
operations before income taxes and
equity in (loss)/earnings of equity
method investees		(606,065	)	105,860		(430,155	)	343,743
Income taxes		(18,609	)	(29,960	)	(61,707	)	(97,188	)
Equity in (loss)/earnings of equity
method investees		(569	)	1,140		150		3,358

(Loss)/income from continuing
operations		(625,243	)	77,040		(491,712	)	249,913
Loss from discontinued operations	(4b)	-		-		-		(20,135	)
Gain/(loss) on disposition of
discontinued operations	(4b)	1,049		-		4,174		(44,157	)


Net (loss)/income		(624,194	)	77,040		(487,538	)	185,621

SHIRE PHARMACEUTICALS GROUP PLC
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (continued)

		3 months to		3 months to	9 months to		9 months to
		September 30,		September 30,	September 30,		September 30,
	Notes	2005		2004	2005		2004

Earnings per share – basic
(Loss)/income from continuing
operations		(124.9c	)	15.5c	(98.4c	)	50.4c

Loss from discontinued operations		-		-	-		(4.1c	)
Gain/(loss) on disposition on
discontinued operations		0.2c		-	0.8c		(8.9c	)


		(124.7c	)	15.5c	(97.6c	)	37.4c

Earnings per share – diluted
(Loss)/income from continuing
operations		(124.9c	)	15.3c	(98.4c	)	49.2c
Loss from discontinued operations		-		-	-		(3.9c	)
Gain/(loss) on disposition on
discontinued operations		0.2c		-	0.8	c	(8.6c	)


		(124.7c	)	15.3c	(97.6c	)	36.7c

Weighted average number of shares:
Basic	(17)	500,542,616		496,474,005	499,741,042		496,090,191
Diluted	(17)	500,542,616		509,777,052	499,741,042		515,070,302

The accompanying notes are an integral part of these unaudited consolidated financial statements.

SHIRE PHARMACEUTICALS GROUP PLC
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

										Accumu-
					Exchange					lated
		Ordinary			-able					other				Total
		Shares	Exchange-		Shares				Additional	compre-				share-
	Ordinary	No. of	able		No. of		Treasury		paid-in	hensive		Retained		holders’
	Shares	Shares	Shares		Shares		stock		capital	income		earnings		equity
	$’000	000’s	$’000		000’s		$’000		$’000	$’000		$’000		$’000

As at January 1,
2005	40,064	484,916	195,830		4,226		(264	)	1,072,407	131,939		810,677		2,250,653

Net loss for the
period	-	-	-		-		-		-	-		(487,538	)	(487,538	)

Foreign currency
translation	-	-	-		-		-		-	(32,480	)	-		(32,480	)

Exchange of
exchangeable
shares	398	5,591	(86,453	)	(1,863	)	-		86,055	-		-		-

Options
exercised	341	3,686	-		-		-		30,106	-		-		30,447

Stock option
compensation	-	-	-		-		-		187	-		-		187

Tax benefit
associated with
exercise of stock
options	-	-	-		-		-		2,478	-		-		2,478

Re-issuance of
treasury stock	-	-	-		-		120		-	-		-		120

Realized gain on
available-for-sale
securities	-	-	-		-		-		-	(3,473	)	-		(3,473	)

Unrealized
holding losses
on available-for-
sale securities	-	-	-		-		-		-	(4,333	)	-		(4,333	)

Dividends	-	-	-		-		-		-	-		(28,460	)	(28,460	)


As at
September 30,
2005	40,803	494,193	109,377		2,363		(144	)	1,191,233	91,653		294,679		1,727,601

The accompanying notes are an integral part of these unaudited consolidated financial statements.

One Shire exchangeable share can be exchanged for either three Shire ordinary shares or one Shire ADS.

SHIRE PHARMACEUTICALS GROUP PLC
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	3 months to		3 months to	9 months to		9 months to
	September 30,		September 30,	September 30,		September 30,
	2005		2004	2005		2004
	$’000		$’000	$’000		$’000

Net (loss)/income	(624,194	)	77,040	(487,538	)	185,621

Other comprehensive income/(loss):
Foreign currency translation adjustments	5,949		12,973	(32,480	)	4,525
Realized gain on available-for-sale securities	(3,473	)	-	(3,473	)	(20,880	)
Unrealized holding gain/(loss) on available-for-
sale securities, net of tax	4,573		2,695	(4,333	)	16,142


Comprehensive (loss)/income	(617,145	)	92,708	(527,824	)	185,408

The components of accumulated other comprehensive income as at September 30, 2005 and December 31, 2004 are as follows:

	September 30,	December 31,
	2005	2004
	$’000	$’000

Foreign currency translation adjustments	85,742	118,222
Unrealized holding gain on available-for-sale securities	5,911	13,717

Accumulated other comprehensive income	91,653	131,939

There are no material tax effects related to the items included above.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

SHIRE PHARMACEUTICALS GROUP PLC
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	9 months to		9 months to
	September 30,		September 30,
	2005		2004
	$’000		$’000

CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)/income from continuing operations	(491,712	)	249,913
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization:
Cost of product sales	2,682		1,965
SG&A	44,085		40,474
Stock option compensation	187		165
In-process R&D write-off	673,000		-
Write-down of long-term assets	11,005		19,392
Gain on sale of long-term assets	(3,866	)	(14,472	)
Dissenting shareholders interest	2,435		-
Movement in deferred taxes	34,307		(23,610	)
Equity in earnings of equity method investees	(150	)	(3,358	)
Changes in operating assets and liabilities, net of acquisitions:
Increase in accounts receivable	(33,893	)	(49,261	)
Increase in provision for sales deductions	14,424		39,551
Increase in inventory	(1,273	)	(2,864	)
(Increase)/decrease in prepayments and other current assets	(24,403	)	2,199
(Increase)/decrease in other assets	(779	)	2,023
Increase in accounts and notes payable and other liabilities	5,700		47,322
Decrease in deferred revenue	(10,531	)	(288	)
Cash flows used in discontinued operations	(362	)	(25,613	)

Net cash provided by operating activities	220,856		283,538

CASH FLOWS FROM INVESTING ACTIVITIES:
Movement in short-term investments	351,246		21,039
Movements in restricted cash	(285	)	15,573
Purchase of subsidiary undertaking, net of cash and cash equivalents	(1,099,650	)	-
Expenses of acquisitions	(24,112	)	-
Purchase of long-term investments	(7,678	)	(5,720	)
Purchase of property, plant and equipment	(57,638	)	(24,840	)
Purchase of intangible assets	(20,064	)	(12,385	)
Proceeds from sale of long-term investments	10,135		26,733
Proceeds from sale of property, plant and equipment	108		444
Proceeds from assets held for resale	-		11,289
Dividends received from investments	8,483		5,245
Loans made to ID Biomedical Corporation (IDB)	(43,162	)	(23,820	)
Repayment of loan made to IDB	1,049		-
Proceeds from IDB subscription receipts	60,000		-
Deferred proceeds from sale of the vaccines business	32,236		30,000
Cash flows from discontinued operations	-		(12,715	)

Net cash (used in)/provided by investing activities	(789,332	)	30,843

The assets acquired with the purchase of Transkaryotic Therapies, Inc. (TKT) included: cash and cash equivalents ($56.8 million), restricted cash ($8.2 million) and short-term investments ($46.8 million).

SHIRE PHARMACEUTICALS GROUP PLC
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

	9 months to		9 months to
	September 30,		September 30,
	2005		2004
	$’000		$’000

CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of 2% convertible loan notes	-		(370,109	)
Repayment of long-term debt and capital leases	-		(171	)
Proceeds from exercise of options	30,447		7,531
Proceeds from issue of common stock, net	-		611
Tax benefit of stock option compensation, charged directly to reserves	2,478		-
Payment of dividend	(19,057	)	-
Cash flows used in discontinued operations	-		-


Net cash provided by/(used in) financing activities	13,868		(362,138	)


Effect of foreign exchange rate changes on cash and cash	(7,049	)	2,295
Discontinued operations	-		(10	)

Net decrease in cash and cash equivalents	(561,657	)	(45,472	)
Cash and cash equivalents at beginning of period	1,111,477		1,063,362


Cash and cash equivalents at end of period	549,820		1,017,890

The accompanying notes are an integral part of these unaudited consolidated financial statements.

SHIRE PHARMACEUTICALS GROUP PLC
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

(a) Basis of Presentation

These interim financial statements of Shire Pharmaceuticals Group plc and its subsidiaries (Shire or the Company) and other financial information included in this Form 10-Q, are unaudited. They have been prepared in accordance with generally accepted accounting principles in the United States of America (US GAAP) and Securities and Exchange Commission (SEC) regulations for interim reporting.

The December 31, 2004 balance sheet was derived from audited financial statements but does not include all disclosures required by US GAAP. However, the Company believes that the disclosures are adequate to make the information presented not misleading.

These interim financial statements should be read in conjunction with the following filings at the SEC:

consolidated financial statements and accompanying notes included in Shire’s Annual Report on Form 10-K for the year to December 31, 2004;
consolidated financial statements and accompanying notes included in TKT’s Annual Report on Form 10-K and Form 10-K/A for the year to December 31, 2004;
unaudited consolidated financial statements and accompanying notes included in Shire's Quarterly Reports on Form 10-Q for the periods to March 31, 2005 and June 30, 2005; and
unaudited pro forma condensed combined financial statements and accompanying notes as at and for the period to March 31, 2005 and for the year to December 31, 2004 included in Shire’s Form 8K/A, dated September 26, 2005.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted from these interim financial statements. However, these interim financial statements include all adjustments, which are, in the opinion of management, necessary to fairly state the results of the interim periods. Interim results are not necessarily indicative of results to be expected for the full year.

(b) Use of estimates in interim financial statements

The preparation of interim financial statements, in conformity with US GAAP and Securities and Exchange Commission regulations for interim reporting, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are primarily made in relation to provisions for sales deductions, valuation of intangible assets and fixed asset investments, contingent liabilities, the valuation of tax assets and liabilities, the valuation of in-process R+D and inventory acquired with TKT and the amount payable to those TKT shareholders who have asserted appraisal rights in relation to Shire’s acquisition of TKT which completed on July 27, 2005.

(c) Employee stock plans

The Company accounts for its stock options using the intrinsic-value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB No. 25). Accordingly, compensation cost of stock options is measured as the excess, if any, of the quoted market price of Shire’s stock at the measurement date over the option exercise price and is charged to operations over the vesting period. For plans where the measurement date occurs after the grant date, referred to as variable plans, compensation cost is re-measured on the basis of the current market value of Shire stock at the end of each reporting period. Shire recognizes compensation expense for variable plans with performance conditions if achievement of those conditions becomes probable. As required by Statement of Financial Accounting Standard (SFAS) No. 123, “Accounting for Stock Based on Compensation” (SFAS No. 123), the Company has included in these financial statements the required pro forma disclosures as if the fair-value method of accounting had been applied.

At September 30, 2005, the Company had six stock-based employee compensation plans, which are described more fully in the Company’s 2004 Form 10-K.

The following table illustrates the effect on net (loss)/income and (loss)/earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation.

	3 months to		3 months to		9 months to		9 months to
	September 30,		September 30,		September 30,		September 30,
	2005		2004		2005		2004
	$’000		$’000		$’000		$’000

Net (loss)/income, as reported	(624,194	)	77,040		(487,538	)	185,621
Add:
Stock-based employee compensation charge
included in reported net income, net of related
tax effects	91		67		187		165
Deduct:
Total stock-based employee compensation
expense determined under fair value based
method for all awards	(6,578	)	(7,075	)	(18,136	)	(25,665	)


Pro forma net (loss)/income	(630,681	)	70,032		(505,487	)	160,121


(Loss)/earnings per share
Basic – as reported	(124.7c	)	15.5c		(97.6c	)	37.4c
Diluted – as reported	(124.7c	)	15.3c		(97.6c	)	36.7c
Basic – pro forma	(126.0c	)	14.1c		(101.1c	)	32.3c

Diluted – pro forma	(126.0c	)	14.1c		(101.1c	)	31.9c

(d) Accounting pronouncements adopted during the period

EITF 05-06

In June 2005 the Emerging Issues Task Force (EITF) reached consensus on Issue 05-6, "Determining the Amortization Period for Leasehold Improvements Purchased after Lease Inception or Acquired in a Business Combination" (EITF 05-6). EITF 05-6 requires leasehold improvements acquired in a business combination to be amortized over the shorter of the useful life of the assets or a term that includes required lease periods and renewals deemed to be reasonably assured at the date of acquisition. Additionally, EITF 05-6 requires improvements placed in service significantly after and not contemplated at or near the beginning of the lease term to be amortized over the shorter of the useful life of the assets or a term that includes required lease periods and renewals deemed to be reasonably assured at the date the leasehold improvements are purchased. EITF 05-6 is effective immediately. The adoption of EITF 05-6 has had no material impact on the Company's consolidated financial position, results of operations or cash flows.

SFAS 153

In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 153, "Exchanges of Non-monetary Assets - an amendment of APB Opinion No. 29" (SFAS No. 153), which amends APB Opinion No. 29, "Accounting for Non-monetary Transactions" to eliminate the exception for non-monetary exchanges of similar productive assets and replaces it with a general exception for exchanges of non-monetary assets that do not have commercial substance. SFAS No. 153 is effective for non-monetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of SFAS No. 153 has had no material impact on the Company's consolidated financial position, results of operations or cash flows.

(e) New accounting pronouncements to be adopted in future periods

EITF 03-01

In March 2004, the EITF reached a consensus on Issue 03-01, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments” (EITF 03-01). EITF 03-01 is applicable to (a) debt and equity securities within the scope of SFAS No. 115, (b) debt and equity securities within the scope of SFAS No. 124 and those held by an investor that reports a performance indicator, and (c) equity securities not within the scope of SFAS No. 115 and not accounted for under the Accounting Principles Board Opinion 18's equity method (e.g. cost method investments). EITF 03-01 provides a step model to determine whether an investment is impaired and if an impairment is other-than-temporary. In addition, it requires that investors provide certain disclosures for cost method investments and, if applicable, other information related specifically to cost method investments, such as the aggregate carrying amount of cost method investments, the aggregate amount of cost method investments that the investor did not evaluate for impairment because an impairment indicator was not present, and the situations under which the fair value of a cost

method investment is not estimated. The disclosures relating to cost method investments should not be aggregated with other types of investments. The effective date for the prospective application of the EITF 03-01 impairment model to all current and future investments has been delayed by the FASB Issues FASB Staff Position (FSP) EITF 03-01-1. The disclosure requirements are effective for annual periods for fiscal years ending after June 15, 2004. The Company does not expect the adoption of EITF 03-01 to have a material impact on its consolidated financial position, results of operations or cash flows.

SFAS 123R

In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (SFAS No. 123R). SFAS No.123R replaces SFAS No. 123 and supersedes APB No. 25. SFAS No. 123R requires that the cost resulting from all share-based payment transactions be recognized in the financial statements at fair value and that excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid. SFAS No. 123R is effective for the Company from January 1, 2006. SFAS No. 123R requires public companies to account for share-based payments using the modified-prospective method and permits public companies also to account for share based payments using the modified-retrospective method. Under the modified-prospective method, from the effective date, compensation cost is recognized based on the requirements of SFAS No. 123R for all new share-based awards and based on the requirements of SFAS No. 123 for all awards granted prior to the effective date of SFAS No. 123R that remain unvested on the effective date. The modified-retrospective method permits companies to restate, based on the amounts previously recognized under SFAS No. 123 for pro forma disclosure purposes, either all prior periods presented or prior interim periods in the year of adoption. The SFAS No. 123 pro forma disclosures given in Note 1(c) above show the impact of the Company adopting the modified-retrospective method in prior periods. On adoption of SFAS No. 123R, the Company will adopt the modified-retrospective method.

FSP SFAS 123(R)-2

In October 2005, the FASB issued a staff position FSP SFAS No. 123(R)-2, “Practical Accommodation of Grant Date as Defined in FASB Statement No. 123(R)” (FSP SFAS No. 123(R)-2). FSP SFAS No. 123(R)-2 is in response to recent enquiries from constituents to provide guidance on the application of grant date as defined in SFAS No. 123R. One of the criteria in defining the grant date in SFAS No. 123(R) is a mutual understanding by the employer and the employee of the key terms and conditions of a share-based payment award. Practice has developed such that the grant date of an award is generally the date the award is approved in accordance with an entity’s corporate governance provisions, so long as the approved grant is communicated to employees within a relatively short period of time from the date of approval. For many companies, the number and geographic dispersion of employees receiving share-based awards limit the ability to communicate with each employee immediately after the awards have been approved by the Board of Directors. As a practical accommodation, a mutual understanding of the key terms and conditions of an award to an individual employee shall be presumed to exist at the date the award is approved if the award is a unilateral grant and the key terms and conditions of the award are expected to be communicated to an individual recipient within a relatively short time period from the date of approval. FSP SFAS No. 123(R)-2 is effective for the Company from January 1, 2006. The Company does not expect the adoption of FSP SFAS No. 123(R)-2 to have a material impact on its consolidated financial position, results of operations or cash flows.

SFAS 151

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs - an amendment of ARB No. 43, Chapter 4" (SFAS No. 151). SFAS No. 151 clarifies that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current-period charges and requires the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. SFAS No. 151 is effective for fiscal years beginning after June 15, 2005. The Company does not expect the adoption of SFAS No. 151 to have a material impact on its consolidated financial position, results of operations or cash flows.

SFAS 154

In May 2005, SFAS No. 154, “Accounting Changes and Error Corrections - replacement of APB Opinion No. 20 and FASB Statement No. 3,” (SFAS No. 154) was issued. SFAS No. 154 changes the accounting for and reporting of a change in accounting principle by requiring retrospective application to prior periods’ financial statements of changes in accounting principle unless impracticable. SFAS No. 154 is effective for accounting changes made in fiscal years beginning after December 15, 2005. The adoption of SFAS No. 154 will have no impact on historical results; rather the impact depends upon future changes to accounting principles.

2. Business combinations: TKT acquisition

On July 27, 2005 Shire completed its acquisition of TKT in an all-cash transaction. The acquisition was effected by merging a wholly owned subsidiary of Shire with and into TKT (the “Merger”), with TKT continuing as the surviving corporation. As consideration, Shire paid to TKT’s stockholders $37 in cash for each share of TKT common stock outstanding at the time of the acquisition, less any applicable withholding taxes.

In connection with the acquisition, as at September 30, 2005, the holders of approximately 11.7 million shares of TKT common stock had submitted written demands for appraisal of their shares and, as a result, elected not to accept the $37 per share merger consideration. To the extent that these demands were validly asserted in accordance with the applicable requirements of Delaware law and these holders perfect their rights thereunder, such holders will be entitled to receive the fair value of their shares as determined by the Delaware Court of Chancery. The determination of fair value of the TKT shares will be made excluding any element of value arising from the transaction, such as cost savings or business synergies. The Delaware Court of Chancery may ascribe a valuation to the shares that is greater than, less than or equal to $37 per share and may award interest on the amount determined in the appraisal process. Shire has recognised a liability in respect of the fair value of those TKT shareholders who have asserted appraisal rights based on

$37 per share. If the court ascribes a different valuation to $37 this will result in an adjustment to goodwill. In addition, the Company has recorded a provision for interest, based on the $37 per share amount, of $2.5 million for the period to September 30, 2005, which has been charged to the income statement.

For accounting purposes, the acquisition of TKT has been accounted for as a purchase business combination in accordance with SFAS 141, “Business Combinations” (SFAS No. 141). Under the purchase method of accounting, the assets acquired and the liabilities assumed from TKT are recorded at the date of acquisition at their respective fair values. Financial statements and reported results of operations of Shire issued after completion of the acquisition will reflect these values, with the results of TKT included from July 27, 2005 in the statement of operations.

The following is an estimate of the purchase price for TKT, as at July 27, 2005:

		$’000

Common stock
Number of shares of TKT common stock – non-dissenting	24,444,126
Price per TKT share ($)	37.00	904,432

Number of shares of TKT common stock – dissenting	11,714,150
Price per TKT share ($)	37.00	433,424


Total number of shares of TKT common stock outstanding as at July 27, 2005	36,158,276	1,337,856

Stock options
Cash cost of settling TKT stock options		83,392

Convertible notes
Nominal value of convertible loan notes as at July 27, 2005 (in $000s)	85,000
Conversion ratio into TKT common stock	18.49
Total shares payable upon conversion	4,597,080
Price per TKT share ($)	37.00

Cost of settling convertible notes		170,092

Direct costs of acquisition		35,106


Total estimated purchase price		1,626,446

The estimated purchase price stated above has been allocated on a preliminary basis according to Shire’s estimate of the fair value of assets acquired and liabilities assumed. The fair values of certain pre-acquisition contingencies, in particular those relating to the Purported Class Action Shareholder Suit and the Shareholder Derivative Suit (see Part II, Item 1 of this Form 10-Q for further details) are yet to be determined. Shire currently does not have sufficient information to measure the contingencies.

The fair values of assets acquired and liabilities assumed will be determined as soon as possible and, in any event, no later than one year from the acquisition date if such fair values can be measured in this time frame. To the extent that estimates need to be adjusted, Shire will do so in future periods in accordance with SFAS 141.

The purchase price was allocated as follows:

		Book value	Adjustments		Fair value
	Notes	$’000	$’000		$’000

ASSETS
Current assets:
Cash and cash equivalents		56,814	-		56,814
Restricted cash		8,173	-		8,173
Short-term investments		46,896	-		46,896
Accounts receivable, net		28,361	-		28,361
Inventories	(a)	12,890	88,879		101,769
Prepaid expenses and other current assets		7,997	-		7,997

Total current assets		161,131	88,879		250,010

Property, plant and equipment, net		57,297	-		57,297
Goodwill		39,038	(39,038	)	-
- on TKT acquisition	(c)	-	164,041		164,041
Other intangible assets, net	(d)	20,210	460,790		481,000
In process R&D	(e)	-	673,000		673,000
Deferred tax asset	(b)	-	74,761		74,761
Other non-current assets		3,281	-		3,281


Total assets		280,957	1,422,433		1,703,390

LIABILITIES
Current liabilities:
Accounts payable and accrued expenses	(f)	35,365	437		35,802
Deferred tax liability	(b)	-	32,885		32,885
Other current liabilities		6,451	-		6,451


Total current liabilities		41,816	33,322		75,138


Other long-term liabilities		1,806	-		1,806



Total liabilities		43,622	33,322		76,944

Estimated fair value of identifiable assets		237,335	1,389,111		1,626,446
acquired and liabilities assumed

(a) Inventory

Components of the increase in fair value for acquired inventory are as follows:

		Fair value
	Book value	adjustment	Fair value
	$’000	$’000	$’000

Finished goods	3,377	66,814	70,191
Work-in-process	7,027	22,065	29,092

Raw materials	2,486	-	2,486


	12,890	88,879	101,769

(b) Deferred taxes

The estimated tax effects of the acquisition, including TKT trading losses and the effect of the fair value adjustments for inventory and other intangible assets are as follows:

	$’000

Deferred tax asset on TKT losses carried forward (net of valuation allowance of
$49.7 million) – long-term	245,253
Deferred tax liability on other intangible assets – long-term	(170,492	)

Deferred tax asset, net	74,761
Deferred tax liability on inventory - current	(32,885	)

Deferred tax, net	41,876

(c) Goodwill

In accordance with the requirements of SFAS No. 142, “Goodwill and Other Intangible Assets” (SFAS No. 142), the goodwill associated with the TKT acquisition will not be amortized. Goodwill resulting from this acquisition has been allocated to the Pharmaceutical Products segment.

(d) Other intangible assets

The acquired identifiable intangible assets are attributable to the following categories:

		Fair value
	Book value	adjustment	Fair value	Asset life
	$’000	$’000	$’000	years

Intellectual property ⁽¹⁾	-	335,000	335,000	14 to 20
Customer relationships⁽²⁾	14,909	104,091	119,000	15
Other (finite-lived assets)	5,301	21,699	27,000	7


	20,210	460,790	481,000

(1)	Relates to REPLAGAL (excluding US and Japan) and DYNEPO (for the treatment of anemia associated with kidney disease)

(2)	Relates to REPLAGAL (excluding US and Japan)

Acquired identifiable intangible assets have been allocated to the Pharmaceutical Products reporting segment.

Acquired identifiable intangible assets represent the value associated with developed technology to which the Company has all associated rights. These rights can include the right to develop, use, market, sell and/or offer for sale the technical processes, intellectual property and institutional understanding (including the way in which compounds react in body, an understanding of the mechanisms of action which allow the compound to work and the knowledge related to

the associated clinical and marketing studies performed for these compounds) that were acquired as part of the transaction with respect to products and/or processes that have been developed.

The fair value of all of the identifiable intangible assets has been determined using an income approach on a project-by-project basis. This method starts with a forecast of all of the expected future net cash flows either generated or saved as a result of ownership of the intellectual property, the customer relationships and the other intangible assets. These cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams.

The forecast of future cash flows requires various assumptions to be made, including:

revenue that is reasonably likely to result from the sale of products including the estimated number of units to be sold, estimated selling prices, estimated market penetration and estimated market share and year-over-year growth rates over the product life cycles;
royalty or licence fees saved by owning the intellectual property associated with the products;
cost of sales for the products using historical data, industry data or other sources of market data;
sales and marketing expense using historical data, industry data or other sources of market data;
general and administrative expenses;
research and development expenses; and
the estimated life of the products.

The valuations are based on the information that is currently available and the expectations and assumptions that have been deemed reasonable by the Company’s management. No assurance can be given, however, that the underlying assumptions or events associated with such assets will occur as projected. For these reasons, among others, the actual results may vary from the projected results.

(e) In-process R&D

As required by FASB Interpretation No. 4, "Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase Method" (FIN 4), the portion of the purchase price allocated to in-process R&D of $673 million will be immediately expensed.

A project-by-project valuation using the guidance in SFAS 141 and the American Institute of Certified Public Accountants (AICPA) Practice Aid "Assets Acquired in a Business Combination to Be Used In Research and Development Activities: A Focus on Software, Electronic Devices and Pharmaceutical Industries" has been performed by independent valuation specialists to determine the fair value of research and development projects of TKT which were in-process, but not yet completed.

The fair value was determined using the income approach on a project-by-project basis. This method starts with a forecast of the expected future net cash flows. These cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the project's stage of completion and other risk factors. These other risk factors can include the nature of the product, the scientific data associated with the technology, the current patent situation and market competition.

The forecast of future cash flows required various assumptions to be made including:

revenue that is likely to result from specific in-process R&D projects, including estimated number of units to be sold, estimated selling prices, estimated market penetration and estimated market share and year-over-year growth rates over the product life cycles;
cost of sales related to the potential products using historical data, industry data or other sources of market data;
sales and marketing expense using historical data, industry data or other market data;
general and administrative expenses; and
research and development expenses.

In addition the Company considered:

the project’s stage of completion;
the costs incurred to date;
the projected costs to complete;
the contribution, if any, of the acquired identifiable intangible assets;
the projected launch date of the potential product; and
the estimated life of the potential product.

To the extent that the in-process R&D project is expected to utilize the acquired identified intangible assets, the value of the in-process R&D project has been reduced to reflect this utilization. The acquired identified intangible assets include the technical processes, intellectual property, and institutional understanding with respect to products and processes that have been completed and that may aid in the development of future products or processes.

(f) Accounts payable and accrued expenses

Included in “Accounts payable and accrued expenses” are the following fair value adjustments:

(i) Restructuring costs

An estimate of restructuring costs that impact goodwill, pursuant to EITF Issue No. 95-3, “Recognition of Liabilities in Connection with Purchase Business Combinations” (EITF 95-3). Such costs total approximately $2.0 million and are associated with the involuntary termination of 15 TKT employees all of whom had left the company by September 30, 2005. As at September 30, 2005, $1.7 million had been paid and $0.3 million was outstanding; and

(ii) Deferred revenue

A fair value adjustment of $1.6 million in respect of a deferred revenue stream relating to pre-acquisition activities of TKT.

The following unaudited pro forma financial information presents the combined results of the operations of Shire and TKT as if the acquisition had occurred as at the beginning of the periods presented. The unaudited pro forma financial information is not necessarily indicative of what the consolidated results of operations actually would have been had the acquisition been completed at the dates indicated. In addition, the unaudited pro forma financial information does not purport to project the future results of operations of the combined Company.

	3 months to	3 months to	9 months to	9 months to
	September 30,	September 30,	September 30,	September 30,
	2005	2004	2005	2004
	$’000	$’000	$’000	$’000

Revenues	384,167	364,467	1,187,925	1,044,628
Income before extraordinary items and
cumulative effect of change in accounting
principles	52,527	55,314	114,945	123,729
Net income	52,527	55,314	114,945	123,729


Per share amounts:
Net income per common share - basic	10.5c	11.1c	23.0c	24.9c
Net income per common share - diluted	10.4c	10.9c	22.8c	24.7c

The unaudited pro forma financial information above reflects the following pro forma adjustments applied using the principles of Article 11 of Regulation S-X under the Securities Exchange Act of 1934:

(i) Elimination of historical amortization expense recorded by legacy TKT for definite-lived intangible assets;

(ii) Elimination of interest expense recorded by legacy TKT on convertible loan notes;

(iii) An adjustment to increase interest expense by $1.3 million and $8.8 million in the three months and nine months to September 30, 2005, and $1.6 million and $4.7 million in the three months and nine months to September 30, 2004, to reflect the interest payable to dissenting shareholders.

(iv) An adjustment to decrease interest income by $2.7 million and $18.6 million in the three months and nine months to September 30, 2005, and $4.2 million and $12.5 million in the three months and nine months to September 30, 2004, to reflect the cash consideration paid to TKT shareholders, option holders and convertible note holders; and

(v) Revised amortization expense based on the estimated fair value of identifiable intangible assets from the purchase price allocation, which are being amortized over their estimated useful lives over a range of 7 to 20 years, of approximately $5.9 million and $17.6 million in the three months and nine months to September 30, 2005, respectively and $5.9 million and $17.6 million in the three months and nine months to September 30, 2004, respectively.

In addition, the unaudited pro forma financial information above excludes the following material, non-recurring purchase accounting adjustments in the three months and nine months to September 30, 2005 as follows:

an in-process R&D charge of $673 million;
a $17.2 million charge relating to the use or sale of purchased inventory that was written up to fair value reported in cost of product sales; and
a $7.6 million credit relating to the current deferred tax liability with regard to the purchased inventory charge in cost of product sales above.

3. Integration costs

In connection with the acquisition of TKT, which completed on July 27, 2005, Shire management approved and initiated plans to restructure the operations of the enlarged Company to eliminate duplicate facilities and reduce costs.

Integration costs represent incremental costs incurred by the Company directly related to the absorption of the TKT business into the Company, including expenditures for consulting and systems integration. The charges have been presented as integration costs in the statement of operations and are accounted for solely within the Pharmaceutical Products reporting segment.

Integration costs expensed in the three and nine months to September 30, 2005 were:

	Costs recorded in	Paid in 3 and 9
	3 and 9 months to	months to
	September 30,	September 30,		Closing
	2005	2005		liability
	$’000	$’000		$’000

Retention payments for key employees	2,751	(562	)	2,189
Other	769	(769	)	-


	3,520	(1,331	)	2,189

4. Reorganizations

(a) North American site consolidation

As previously disclosed, the Company began a consolidation of its North American sites in 2004, with the aim of decreasing the number of sites from 16 to 4, including the opening of a new US headquarters office in Wayne, Pennsylvania. The Company recorded reorganization costs of $48.5 million in 2004, (of which $32.0 million was in the nine months to September 30, 2004), and $9.4 million in the nine months to September 30, 2005. Following the closure of the Newport site in July 2005, the site consolidation is now complete and no further reorganization costs are expected to be incurred.

The primary costs associated with the site consolidation include:

severance costs relating to 137 employees;
retention payments to key employees;
relocation costs relating to 85 employees who relocated to Wayne, Pennsylvania;
costs of duplicate facilities (including lease exit costs); and
other incremental costs associated with the site closures, such as legal and consultancy costs, the write down of property, plant and equipment and information technology costs.

In the 21 months to September 30, 2005, all 137 employees had left the Company. The cost of the employee severance has been ratably recognized over the period from the communication date to the termination date. In addition, all 85 of those employees who had agreed to relocate have relocated. The cost of relocation was recorded in the financial statements as it was incurred.

The following table presents the costs of the reorganization recorded to date and the total estimated costs of the reorganization.

	9 months to	12 months to	21 months to	Total
	September 30,	December 31,	September 30,	estimated
	2005	2004	2005	costs
	$m	$m	$m	$m

Employee severance	1.6	20.0	21.6	21.6
Relocation costs	-	13.8	13.8	13.8
Write-off of property, plant and equipment	-	1.2	1.2	1.2
Consultancy costs	0.5	2.9	3.4	3.4
Duplicate facilities	7.2	5.1	12.3	12.3
Information technology costs	-	2.1	2.1	2.1
Other costs	0.1	3.4	3.5	3.5

	9.4	48.5	57.9	57.9

These charges have been reflected within reorganization costs in the statement of operations and are accounted for solely within the Pharmaceutical Products reporting segment.

	3 months to	3 months to	9 months to	9 months to
	September 30,	September 30,	September 30,	September 30,
	2005	2004	2005	2004
	$m	$m	$m	$m

Employee severance	-	2.6	1.6	12.5
Relocation costs	-	3.6	-	11.5
Duplicate facilities	6.5	-	7.2	-
Other costs	-	3.9	0.6	8.0

	6.5	10.1	9.4	32.0

As noted above, certain of the costs associated with the reorganization will be paid in subsequent periods, a portion of which are reflected as accrued expenses and other non-current liabilities. The following provides a reconciliation of the liability to date:

		Costs recorded	Utilization
	Opening	in 3 months to	in 3 months to		Closing
	liability	September 30, 2005	September 30, 2005		liability
	$m	$m	$m		$m

Employee severance	1.2	-	(1.2	)	-
Relocation costs	1.3	-	(0.2	)	1.1
Duplicate facilities	2.0	6.5	(0.4	)	8.1

	4.5	6.5	(1.8	)	9.2

Current liabilities	3.9	2.2	(1.8	)	4.3
Other long-term liabilities	0.6	4.3	-		4.9

	4.5	6.5	(1.8	)	9.2

The relocation costs are expected to be paid in 2005. The duplicate facilities costs will be paid for over the remaining life of the relevant leases, which all expire on or before October 31, 2012.

(b) Disposal of the vaccines business

On September 9, 2004 the Company completed the disposal of its vaccines business to ID Biomedical Corporation (IDB). The total consideration for the sale was $120 million comprising $30 million of cash received at completion, $30

million of cash held in escrow and due on the first anniversary of completion and $60 million received at completion in the form of 4,931,864 subscription receipts of IDB. If, prior to January 10, 2005, IDB were to raise up to $60 million from equity related issuances, then it was required under the terms of the sale agreement to redeem the subscription receipts from Shire for $60 million. Accordingly, following the completion of such a fund raising on January 7, 2005, IDB redeemed the subscription receipts from Shire for $60 million in cash. On the first anniversary of completion, Shire received the $30 million of cash held in escrow.

As part of the transaction, Shire entered into an agreement to provide IDB with a loan facility of up to $100 million, which can be drawn down over the four years following completion. As at September 30, 2005 IDB had drawn down the entire $100 million loan. This facility can be used by IDB to fund the development of injectable flu and pipeline products within the vaccines business acquired from Shire. Drawings under the loan facility are segregated into two components:

(i) Drawings for injectable flu development with a minimum drawing of $30 million. Such drawings under the loan facility are repayable out of income generated by IDB on future non-Canadian injectable flu products, subject to minimum annual repayments in respect of the first $30 million of the drawing, to be made between 2007 and 2017; and

(ii) Drawings for pipeline development from the balance of the $100 million loan facility of up to $70 million. Such drawings will be repayable out of income generated by IDB on future pipeline products and have no fixed repayment schedule.

The combined drawings of the two components of the loan facility cannot exceed $100 million. As at September 30, 2005, IDB had drawn down $100.0 million, $70.6 million for injectable flu development and $29.4 million for pipeline development. As at September 30, 2005 $1.0 million of the pipeline development loan has been repaid. This part repayment of the pipeline loan was in compliance with the terms of the loan agreement requiring IDB to make such payment in the event IDB sold and leased back any property acquired from Shire as part of the sale of the vaccines business. Under the terms of the loan facility amounts repaid may not be redrawn by IDB.

The transaction gave rise to an overall loss on disposition of the vaccines business of $40.0 million, recorded as a loss on disposition at completion in 2004 of $44.2 million and a subsequent provision release of $4.2 million being recognized during the nine months to September 30, 2005. This net loss on disposal of $40.0 million comprises a gain on disposal of net assets of $30.0 million together with a provision for a loss of $70 million out of the $100 million loan facility available to IDB. This provision was made on the basis that those loan repayments based solely on future sales of flu and pipeline products in development provided no certainty of recovery.

5. Short-term investments

In July 2005, the Company liquidated short-term investments to provide funds for the acquisition of TKT. At September 30, 2005, the Company had short-term investments of $22.4 million (December 31, 2004: $324.4 million).

6. Accounts receivable, net

Trade receivables at September 30, 2005 of $282.3 million (December 31, 2004: $222.5 million), are stated net of a provision for doubtful accounts and discounts of $9.8 million (December 2004: $4.3 million).

Provision for doubtful debts and discounts:

	2005		2004
	$’000		$’000

As at January 1,	4,264		7,853
Provision charged to operations	38,511		28,307
Provision released to operations	-		(3,395	)
Provision utilization	(33,001	)	(27,473	)


As at September 30,	9,774		5,292

7. Inventories, net
	September 30,		December 31,
	2005		2004
	$’000		$’000

Finished goods	82,330		22,349
Work-in-process	47,372		11,831
Raw materials	15,992		7,050

	145,694		41,230


The Company acquired $101.8 million of inventory at fair value as part of the acquisition of TKT (see note 2).

8. Prepaid expenses and other current assets
	September 30,		December 31,
	2005		2004
	$’000		$’000

Prepaid expenses	34,174		31,401
Income tax receivable	14,147		-
Value added taxes receivable	9,344		2,533
Supplemental Executive Retirement Plan (SERP) investment	1,784		1,784
Other current assets	21,710		11,553
Subscription receipts (see note 4b)	-		60,000
Cash held in escrow (see note 4b)	-		30,000


	81,159		137,271



9. Property, plant and equipment, net
	September 30,		December 31,
	2005		2004
	$’000		$’000

Land and buildings	142,262		80,631
Office furniture, fittings and equipment	100,966		67,301
Warehouse, laboratory and manufacturing equipment	42,853		34,823

	286,081		182,755

Less: Accumulated depreciation	(67,973	)	(51,404	)


	218,108		131,351


The Company acquired $57.3 million of property, plant and equipment at fair value as part of the acquisition of TKT (see note 2).

10. Goodwill, net
	September 30,		December 31,
	2005		2004
	$’000		$’000

Goodwill arising on businesses acquired	429,497		296,607
Less: Accumulated amortization	(47,750	)	(61,211	)

	381,747		235,396

The Company recognized $164 million as goodwill on acquisition of TKT (see note 2), in accordance with SFAS No. 141. This goodwill is recorded in the Pharmaceutical Product segment.


11. Other intangible assets, net
	September 30,		December 31,
	2005		2004
	$’000		$’000

Intellectual property rights acquired	982,985		543,969
Less: Accumulated amortization	(233,610	)	(234,672	)

	749,375		309,297

The useful economic lives of all intangible assets that continue to be amortized under SFAS No. 142 have been assessed. Management estimates that the annual amortization charges in respect of intangible fixed assets held at September 30, 2005 will be approximately $88 million for each of the five years to September 30, 2010. Estimated amortization expense can be affected by various factors including future acquisitions, disposals of product rights and the technological advancement and regulatory approval of competitor products.

The Company acquired $481 million of other identifiable intangible assets at fair value, as part of the acquisition of TKT (see note 2). The weighted average amortization of these assets is 16.8 years. These assets relate to intellectual property ($335 million), customer relationships ($119 million) and other finite-lived assets ($27 million).

12. Accounts payable and accrued expenses

	September 30,	December 31,
	2005	2004
	$’000	$’000

Trade accounts payable	29,055	35,008
Accrued rebates - Medicaid	82,611	84,758
Accrued rebates – Managed care	19,848	14,667
Sales return reserve	30,529	22,530
Accrued bonuses	33,559	23,171
Accrued coupons	10,297	15,869
Research and development accruals	16,899	10,924
Marketing accrual	26,802	26,095
Deferred revenue	13,501	14,472
Reorganization accrual (see note 4)	4,334	1,936
TKT acquisition costs accrual	11,334	-
Other accrued expenses	96,172	61,801

	374,941	311,231

13. Other current liabilities

	September 30,	December 31,
	2005	2004
	$’000	$’000

Income taxes payable	-	12,597
Dividends payable	9,191	-
Deferred payments	-	18,980
SERP	1,904	1,904

Other accrued liabilities	42,488	44,077


	53,583	77,558

14. Long-term debt, excluding current installments

(i) Convertibles notes due 2011
The $0.1 million debt relates to the outstanding guaranteed convertible loan notes due 2011, which were issued by a wholly owned subsidiary of Shire in August 2001.

(ii) Multicurrency Revolving Facilities Agreement
In connection with the acquisition of TKT, Shire and certain members of the Shire Group entered into a Multicurrency Revolving Facilities Agreement (the “Facilities Agreement”) with ABN AMRO Bank N.V., Barclays Bank plc, Citigroup Global Markets Limited, HSBC Bank plc and The Royal Bank of Scotland plc (the “Lenders”) on June 15, 2005. The Facilities Agreement comprises two credit facilities: (i) a multicurrency three year revolving loan facility in an aggregate amount of $500 million (“Facility A”) and (ii) a 364 day revolving loan facility in an aggregate amount of $300 million (“Facility B” and together with Facility A, the “Facilities”). Shire has agreed to act as guarantor for any of its subsidiaries that borrow under the Facilities Agreement.

Facility A may be used for general corporate purposes, including financing the purchase price and other costs with respect to the acquisition of TKT (including refinancing TKT’s existing indebtedness). Facility B may be used only for financing certain milestone payments due under the agreement between Shire, and inter alia, New River Pharmaceuticals Inc. (New River), dated January 31, 2005.

Facility A terminates on June 15, 2008 and Facility B terminates on June 14, 2006. At Shire’s request, the Lenders may agree to successive annual extensions of Facility B, but not beyond the maturity date of Facility A. Alternatively, Shire has the right to draw Facility B or convert existing loans under Facility B into a term loan with the same maturity date as Facility A.

The availability of loans under each of the Facilities is subject to customary conditions, including the absence of any defaults thereunder and the accuracy (in all material respects) of Shire’s representations and warranties contained therein.

The Facilities include representations and warranties, covenants and events of default, including requirements that Shire’s ratio of Net Debt to EBITDA (as defined in the Facilities Agreement) not exceed 3.0 to 1 and that the ratio of EBITDA to Net Interest be not less than 4.0 to 1, both in respect of the most recently ended fiscal year, and limitations on the creation of liens, disposal of assets, incurrence of indebtedness, making of loans and giving of guarantees.

Interest on loans under the Facilities will be payable on the last day of each interest period, which period may be one, two, three or six months at the election of Shire (or as otherwise agreed with the Lenders). The interest rate on each loan for each interest period is the percentage rate per annum which is the aggregate of the applicable margin (ranging from 0.35 to 0.65 per cent per annum, depending on the ratio of Net Debt to EBITDA), LIBOR, and mandatory cost, if any (as calculated in accordance with Schedule 5 of the Facilities Agreement). Shire shall also pay fees equal to 35 per cent per annum of the applicable margin on available commitments under Facility A for the availability period applicable to Facility A and 20 per cent per annum of the applicable margin on available commitments under Facility B for the availability period applicable to Facility B in respect of the period prior to January 1, 2007, and 30 per cent per annum of the applicable margin thereafter. Interest on overdue amounts under the Facilities will accrue at a rate, which is one percent higher than the rates otherwise applicable to the loans under the Facilities.

Upon a change of control of Shire or upon the occurrence of an event of default and the expiration of any applicable cure period, the total commitments under the Facilities may be cancelled, all or part of the loans, together with accrued interest and all other amounts accrued or outstanding may be immediately due and payable and all or part of the loans may become payable on demand. Events of default under the Facilities include: (i) non-payment of any amounts due under the Facilities, (ii) failure to satisfy any financial covenants, (iii) material misrepresentation in any of the finance documents, (iv) failure to pay, or certain other defaults under, other financial indebtedness, (v) certain insolvency events or proceedings, (vi) material adverse changes in the business, operations, assets or financial condition of the group, (vii) certain ERISA breaches which would have a material adverse effect, (viii) change of control of a subsidiary of Shire that is a party to the Facilities Agreement, or (ix) if it becomes illegal for Shire or any of its subsidiaries that are parties to the Facility Agreement to perform their obligations or they repudiate the Facilities Agreement or any Finance Document (as defined in the Facilities Agreement). The Facilities Agreement is governed by English law.

As at September 30, 2005, the Company had not drawn-down on these facilities.

As at September 30, 2005 all of TKT Inc.’s 1.25% 2011 Convertible Notes had been converted and redeemed.

15. Other long-term liabilities

	September 30, 2005 $’000	December 31, 2004 $’000

SERP	4,331	3,591
Long-term bonuses	3,210	4,425
Deferred revenue	7,220	9,074
Insurance provisions	11,422	9,274
Lease improvement allowance	6,065	-
Onerous lease provision	4,967	1,500
Reorganization accrual	4,866	2,488
Other accrued liabilities	2,981	1,807

	45,062	32,159

16. Commitments and contingencies
(a) Leases

Future minimum lease payments presented below include principal lease payments and other fixed executory fees under lease arrangements as at September 30, 2005:

		Operating leases $’000

2005		3,059
2006		14,458
2007		24,561
2008		23,996
2009		20,518
2010		18,856
Thereafter		54,710

		160,158

(i) Operating leases
The Company leases facilities, motor vehicles and certain equipment under operating leases expiring through 2016. Lease and rental expense included in selling, general and administrative expenses in the accompanying statements of operations amounted to $17.6 million for the nine months to September 30, 2005 (2004: $10.0 million).

During the nine months to September 30, 2004, Shire Inc., a wholly owned subsidiary of Shire, signed two eleven year operating leases on properties in Wayne, Pennsylvania expiring through 2016. Shire US, Inc., another wholly owned subsidiary, acts as guarantor in respect of these leases. The future minimum lease payments under the lease agreements are $57.6 million in aggregate.

(ii) Restricted cash in respect of leases
As at September 30, 2005 the Company had $5.4 million of restricted cash held as collateral for certain equipment leases (December 31, 2004: $5.3 million).

(b) Letters of credit and guarantees
As at September 30, 2005, the Company had the following letters of credit:

(i) an irrevocable standby letter of credit with Barclays Bank plc, in the amount of $15.0 million, providing security on the recoverability of insurance claims. The Company has restricted cash of $15.0 million, as required by this letter of credit; and

(ii) an irrevocable standby letter of credit with Bank of America in the amount of $7.8 million, providing security on the payment of lease obligations. The Company has restricted cash of $7.8 million, as required by this letter of credit.

(c) Commitments

(i) Interests in companies and partnerships
The Company has undertaken to subscribe for interests in companies and partnerships for amounts totaling $24.5 million (December 31, 2004: $22.2 million) of which $8.3 million is committed to be paid in 2005 and a further $3.2 million could be payable in 2005, depending on the timing of capital calls.

(ii) Manufacturing facilities
The Company has committed to the expansion and modification of its two manufacturing facilities at Owings Mills, Maryland and Cambridge, Massachusetts to facilitate the production and packaging of additional strategic products. The Company has committed to spend a further $2.0 million by the end of 2005 and $1.6 million in 2006, and has an additional commitment of $1.9 million for the design and construction of a technology center at Owings Mills, which is expected to be incurred in 2005.

(iii) Wayne, Pennsylvania fit out
The Company is in the process of fitting out its new US headquarters at Wayne, Pennsylvania. At September 30, 2005 the Company had an outstanding commitment of $1.5 million, which is expected to be incurred in 2005.

(iv) Basingstoke, UK expansion
The Company is in the process of expanding its UK headquarters at Basingstoke, UK. As at September 30, 2005, the Company had an outstanding commitment of $4.9 million, which is expected to be incurred throughout 2005 and into 2006.

(v) NRP104
In connection with the Company’s collaboration with New River to commercialize NRP104, the Company has an obligation to make certain payments on the achievement of the following milestones: $50 million upon the US Food and Drug Administration’s (FDA’s) acceptance of filing of the New Drug Application (NDA); up to $300 million following the first commercial sale of the product, depending on the characteristics of the approved product labelling; $100 million as a sales bonus on achieving a significant sales target; and $5 million following the first commercial sale in certain specified EU markets. An upfront payment of $50 million was expensed as an R&D cost during the first quarter of 2005. Regulatory submission is currently expected to be in the last quarter of 2005.

(vi) DAYTRANA (MTS)
In connection with the Company’s purchase of DAYTRANA (MTS) in 2003, Shire has an obligation to make certain payments on the achievement of the following milestones: $50 million upon regulatory approval of the product, which will be capitalized and amortized over its useful economic life; and up to $75 million, linked to future sales performance. Regulatory approval is currently expected to be in the last quarter of 2005.

(vii) FOSRENOL patent rights
In connection with the Company’s purchase of the global patents for FOSRENOL, Shire now owns the FOSRENOL patents in the US and throughout the world (excluding Europe and Japan) and has agreed to pay AnorMED Inc. $6 million when FOSRENOL is approved in certain European countries for the assignment of the European patents and $6 million upon receipt of regulatory approval in Japan for the Japanese patents.

(viii) Other R&D commitments
As at September 30, 2005, the Company had commitments of $14.5 million on achievement of specified milestones of which $1.4 million is committed to be paid in 2005 and $8.1 million is expected to be paid in 2006.

(ix) TKT shareholders seeking appraisal rights
As at September 30, 2005, the holders of approximately 11.7 million shares of TKT common stock had submitted written demands for appraisal of their shares. For further information see Item 1 of Part II of this Form 10-Q. As at September 30, 2005 the Company included a liability of $433 million based on the merger consideration of $37 per share for the 11.7 million shares outstanding at that time. On October 10, 2005, at the request of one of the petitioners to tender 365,000 shares at the merger price of $37 per share, TKT filed a motion to dismiss the petitioner's demand. On October 12, 2005, the Delaware Court of Chancery granted this motion, and the petitioner tendered the shares at the merger consideration of $37 per share. Therefore, as at October 31, 2005, the holders of approximately 11.3 million shares of TKT common stock maintain their written demands for appraisal of their shares and have elected not to accept the $37 merger consideration. Until such time as the appraisal process is complete the Company is unable to determine the extent of its liability. For every $1 increase/decrease in the merger consideration applicable to those TKT shareholders who have asserted appraisal rights, the total estimated purchase price would increase/decrease by approximately $11.3 million.

(x) Clinical testing
As at September 30, 2005, the Company had committed to pay approximately $13.0 million to contract vendors for administering and executing clinical trials. The timing of payments is not reasonably certain as payments are dependent upon actual services performed by the organizations as determined by patient enrollment levels and related activities. However, the Company expects to pay for these commitments throughout 2005 and into 2006 as ongoing trials are completed.

(xi) Contract manufacturing
As at September 30, 2005, the Company had committed to pay approximately $16.8 million in respect of contract manufacturing over the next 12 months.

(d) Legal proceedings

(i) General
The Company accounts for litigation losses in accordance with SFAS No. 5, "Accounting for Contingencies" (SFAS No. 5). Under SFAS No. 5, loss contingency provisions are recorded for probable losses when management is able to reasonably estimate the loss. Where the estimated loss lies within a range and no particular amount within that range is a better estimate than any other amount, the minimum amount is recorded. In other cases management's best estimate of the loss is recorded. These estimates are developed substantially before the ultimate loss is known and the estimates are refined in each accounting period in light of additional information becoming known. In instances where the Company is unable to develop a reasonable estimate of loss, no litigation loss is recorded at that time. As information becomes known a loss provision is set up when a reasonable estimate can be made. The estimates are reviewed quarterly and the estimates are changed when expectations are revised. Any outcome upon settlement that deviates from the Company’s estimate may result in an additional expense in a future accounting period.

(ii) Specific
There are various legal proceedings brought by and against Shire that are discussed in Shire’s Annual Report on Form 10-K for the year to December 31, 2004. Material updates to the proceedings discussed in Shire’s Annual Report on Form 10-K are described below. On July 27, 2005, Shire completed its acquisition of TKT. In addition to the disclosures in Shire’s Annual Report on Form 10-K for the year to December 31, 2004 (as updated in Shire’s subsequent filings with the SEC), there are various legal proceedings brought by and against TKT which are described below. There is no assurance that the enlarged Group will be successful in any of these proceedings and if it is not, there may be a material impact on the enlarged Group’s results and financial position.

ADDERALL XR

Patents, damages in the event that Barr should engage in such commercialization, and its attorneys’ fees and costs. On September 27, 2004 Barr filed an amended Answer, Affirmative Defense and Counterclaim in which Barr added the following counterclaims: invalidity of the ‘819 patent, non-infringement of the ‘300 Patent and unenforceability of the ‘819 and ‘300 Patents due to inequitable conduct. Shire has asserted affirmative defenses, alleging, among other things, that Barr has waived its right to assert the counterclaims set forth in its September 27, 2004 amended answers. Under the Court’s schedule summary judgment motions were to be filed and fully briefed by October 14, 2005. Neither Shire nor Barr filed summary judgment motions. Trial in this action is scheduled for January 2006.

On October 19, 2005 Shire brought another lawsuit against Barr in the Southern District of New York alleging infringement of recently issued U.S. Patent No. 6,913,768 (the ‘768 patent). The Company is seeking injunctions to prevent Barr from infringing the ‘768 patent, damages in the event that Barr should commercialize its ANDA products, attorneys’ fees and costs.

(ii) Impax Laboratories, Inc.
In November 2003, Shire was notified that Impax Laboratories, Inc. (Impax) had submitted an ANDA under the Hatch-Waxman Act seeking permission to market its generic version of the 30mg strength of ADDERALL XR (Impax’s ANDA product) prior to the expiration date of the ‘819 and ‘300 Patents. In December 2003, Shire Laboratories filed suit against Impax for infringement of the ‘819 and ‘300 Patents. The Company is seeking a ruling that Impax’s ANDA product infringes the ‘819 and ‘300 Patents and that its ANDA should not be approved before the expiration date of the ‘819 and ‘300 Patents. The Company is also seeking injunctions to prevent Impax from commercializing its ANDA product before the expiration of the ‘819 and ‘300 Patents, damages in the event that Impax should engage in such commercialization, and its attorneys’ fees and costs. Impax’s affirmative defenses include non-infringement and invalidity of both the ‘819 and ‘300 Patents.

In December 2004, Shire received an additional notification from Impax advising of the filing of an amendment to its ANDA for a generic version of the 5mg, 10mg, 15mg, 20mg and 25mg strengths of ADDERALL XR in addition to the 30mg strength, the subject of Impax’s initial ANDA. In January 2005, Shire Laboratories filed suit against Impax for infringement of the ‘819 and ‘300 Patents. The Company is seeking a ruling that Impax’s amended ANDA infringes the ‘819 and ‘300 patents and should not be approved before the expiration dates of the ‘819 and ‘300 Patents. The Company is also seeking an injunction to prevent Impax from commercializing its amended ANDA products before the expiration of the ‘819 and ‘300 Patents, damages in the event that Impax should engage in such commercialization, as well as its attorneys’ fees and costs. Impax’s affirmative defenses include non-infringement, invalidity and unenforceability of both the ‘819 and ‘300 Patents. Impax is also requesting that costs be assessed against the Company.

The Delaware District Court had set an October 11, 2005 trial date for the first Impax case. Following a scheduling conference with the same Court in the second case, a consolidated February 23, 2006 trial date has now been set for both cases. Impax has also filed for summary judgment of noninfringement with respect to the ‘819 and ‘300 patents. The Delaware District Court has not yet ruled on Impax’s motion.

As part of the October 19, 2005 lawsuit against Barr, Shire also brought suit in the Southern District of New York against Impax for infringing the ‘768 patent. The Company is seeking injunctions to prevent Impax from infringing the ‘768 patent, damages in the event that Impax should commercialize its ANDA products, attorneys’ fees and costs.

(iii) Colony Pharmaceuticals Inc.
In December 2004, Shire was notified that Colony Pharmaceuticals, Inc. (Colony) had submitted an ANDA under the Hatch-Waxman Act seeking permission to market its generic versions of the 5mg, 10mg, 15mg, 20mg, 25mg and 30mg strengths of ADDERALL XR prior to the expiration date of the Company’s ‘819 and ‘300 Patents. Shire has chosen not to sue Colony.

(iv) Teva Pharmaceuticals USA, Inc.
In February 2005, Shire was notified that Teva Pharmaceuticals, Inc. (Teva) had submitted an ANDA under the Hatch-Waxman Act seeking permission to market its generic versions of the 10mg and 30mg strengths of ADDERALL XR prior to the expiration date of the Company’s ‘819 and ‘300 Patents. In June 2005, Shire was notified that Teva had amended its ANDA to seek permission to market additional strengths of 5mg, 15mg and 20mg of ADDERALL XR prior to the expiration of the '819 and '300 Patents. Shire has chosen not to sue Teva.

None of Barr, Impax, Colony or Teva may launch their generic versions of ADDERALL XR before they receive final FDA approval of their respective ANDAs. In respect of Barr’s and Impax’s ANDAs, the lawsuits triggered stays of final FDA approval of up to 30 months from the date of the Company’s receipt of, respectively, Barr’s and Impax’s notice letters. Even if Barr and/or Impax receive tentative FDA approval of their ANDAs, neither of them can lawfully launch their generic versions of ADDERALL XR before the earlier of the expiration of the respective stays (Barr - February 2006; Impax - May 2006 in the case of the 30mg strength and June 2007 in the case of the 5mg, 10mg,15mg, 20mg and 25mg strengths) or a district court decision in its favor. In the event that the Company does not prevail in the Barr suit, Barr could be in a position to market its ANDA products upon FDA final approval of its ANDA. In the event the Company does not prevail in the Impax suit, Impax could be in a position to market its ANDA product upon FDA final approval of its ANDA and upon expiry of any exclusivity that Barr may hold. The FDA may grant 180 days of generic market exclusivity to the “first to file”.

Neither Colony nor Teva may market their ANDA products until FDA final approval of their ANDAs and upon the expiration of the first to file’s exclusivity rights.

The Hatch-Waxman exclusivity period for ADDERALL XR expired on April 11, 2005.

CARBATROL

In August 2003 the Company was notified that Nostrum Pharmaceuticals, Inc. (Nostrum) had submitted an ANDA under the Hatch-Waxman Act seeking permission to market its generic version of the 300mg strength of CARBATROL (Nostrum’s ANDA product) prior to the expiration date of the Company’s US patents for CARBATROL, US patent No. 5,912,013 (the ‘013 Patent) and US patent No. 5,326,570 (the ‘570 Patent). The notification alleges that the ‘013 and ‘570 Patents are not infringed by Nostrum’s ANDA product. On September 18, 2003 Shire Laboratories filed suit against Nostrum in the United States District Court for the District of New Jersey alleging infringement of these two patents by Nostrum’s ANDA and ANDA product. The Company was seeking a ruling that Nostrum’s ANDA infringes the ‘013 and ‘570 Patents and should not be approved before the expiration date of the ‘013 and ‘570 Patents. The Company was also seeking an injunction to prevent Nostrum from commercializing its ANDA product before the expiration of the ‘013 and ‘570 Patents, damages in the event that Nostrum should engage in such commercialization, as well as its attorneys’ fees and costs. On January 23, 2004 the Company amended the complaint to delete the allegations with respect to the ‘013 Patent while maintaining the suit with respect to the ‘570 Patent. By way of counterclaims Nostrum is seeking a declaration that the ‘570 and ‘013 Patents are not infringed by Nostrum’s ANDA product. Nostrum also was seeking actual and punitive damages for alleged abuse of process by Shire. On July 12, 2004 the Court dismissed Nostrum’s abuse of process counterclaim for failure to state a claim upon which relief can be granted. On December 10, 2004 Nostrum filed a summary judgment motion seeking a declaration of non-infringement of the ‘570 Patent. Shire’s opposition to this motion was filed on January 14, 2005. Summary judgment arguments were presented to the Court on July 15, 2005. At the conclusion of the hearing the Court denied Nostrum's motion for summary judgment. Expert discovery will now continue and is scheduled to be completed by December 31, 2005. No trial date has been set.

Nostrum may not launch a generic version of CARBATROL before it receives final approval of its ANDA from the FDA. The lawsuit triggered a stay of FDA approval of up to 30 months from Shire’s receipt of Nostrum’s notice letter. Even if Nostrum receives tentative approval from the FDA for its ANDA, it cannot lawfully launch its generic version before the earlier of the expiration of the stay (February 2006) or a district court decision in its favor. In the event that the Company does not prevail, then Nostrum could be in a position to market its 300mg extended-release carbamazepine product upon FDA final approval of its ANDA.

TKT
On July 27, 2005, the Company completed its acquisition of TKT. There are various legal proceedings brought by and against TKT which are described below.

GA-GCB

In January 2005, Genzyme Corporation (Genzyme) filed suit against TKT in the District Court of Tel-Aviv-Jaffa, Israel, claiming that TKT's Phase 1/2 clinical trial in Israel evaluating GA-GCB for the treatment of Gaucher disease infringes one or more claims of Israeli Patent No. 100,715. In addition, Genzyme filed a motion for preliminary injunction, including a request for an ex parte hearing and relief on the merits, to immediately seize and destroy all GA-GCB being used to treat patients and to prevent TKT from submitting data generated from the clinical trial to regulatory agencies. In March 2005 the District Court refused to grant Genzyme's motion for a preliminary injunction. No trial date has been set.

DYNEPO

In April 1997, Amgen Inc. (Amgen) commenced a patent infringement action against TKT and Sanofi-Aventis in the United States District Court of Massachusetts. In January 2001, the United States District Court of Massachusetts concluded that DYNEPO infringed eight of the 18 claims of five patents that Amgen had asserted. Amgen did not seek and was not awarded monetary damages. This decision was subsequently appealed to the United States Court of Appeals for the Federal Circuit.

In January 2003, the United States Court of Appeals for the Federal Circuit issued a decision affirming in part and reversing in part the decision of the United States District Court of Massachusetts, remanded the action to the United States District Court of Massachusetts for further proceedings and instructed the United States District Court of Massachusetts to reconsider the validity of Amgen's patents in the light of potentially invalidating prior art.

In October 2004, the United States District Court of Massachusetts issued a decision on the remanded issues, finding that certain claims related to four patents held by Amgen are infringed by TKT and Sanofi-Aventis. In December 2004, TKT and Sanofi-Aventis filed a notice of appeal of the decision of the United States District Court of Massachusetts to the United States Court of Appeals for the Federal Circuit. TKT and Sanofi-Aventis filed an appeal brief in April 2005.

If TKT and Sanofi-Aventis are not successful in the DYNEPO litigation at the appellate level, TKT and Sanofi-Aventis would be precluded from making, using and selling DYNEPO in the United States until the expiration of the relevant patents. TKT is required to reimburse Sanofi-Aventis, which controls the litigation and is paying the litigation expenses, for 50% of the expenses incurred in connection with the litigation from and after March 26, 2004. Sanofi-Aventis is entitled to deduct up to 50% of any royalties that Sanofi-Aventis may otherwise owe to TKT with respect to the sale of DYNEPO until Sanofi-Aventis has recouped the full amount of TKT's share of the litigation expenses. TKT has the right to control any other litigation that might arise outside of the United States and is responsible for all litigation expenses incurred in connection with such litigation from and after March 26, 2004.

Gene Activation

In 1996, Applied Research Systems Holding N.V., a wholly-owned subsidiary of Serono S.A. (Serono) and Cell Genesys became involved in a patent interference involving Serono's US Patent No. 5,272,071 (the "071 patent"), which purportedly covers certain methods of gene activation. In June 2004, the Board of Patent Appeals and Interferences of the US Patent and Trademark Office (PTO) held that both Serono and Cell Genesys were entitled to certain claims in their respective patent and patent application, and Serono and Cell Genesys each appealed the decision of the interference to the US District Court of Massachusetts and the US District Court of the District of Columbia, respectively. TKT was not a party to this interference.

In August 2004, Serono served TKT with an amended complaint in the appeal of the PTO decision that was filed in the US District Court of Massachusetts. The amended complaint alleges that TKT infringes Serono's '071 patent. In August 2005, the US District Court of Massachusetts severed and stayed the infringement action pending resolution of the interference claim at the District Court level.

Appraisal Rights

In connection with Shire’s merger with TKT, as at September 30, 2005, the holders of approximately 11.7 million shares of TKT common stock submitted written demands for appraisal of their shares and, as a result, elected not to accept the $37 per share merger consideration. On October 10, 2005, at the request of one of the petitioners to tender 365,000 shares at the merger price of $37 per share, TKT filed a motion to dismiss the petitioner’s demand. On October 12, 2005, the Delaware Court of Chancery granted this motion, and the petitioner tendered the shares at the merger consideration of $37 per share. Therefore, as at October 28, 2005, the holders of approximately 11.3 million shares of TKT common stock maintain their written demands for appraisal of their shares and have elected not to accept the $37 merger consideration. To the extent that the remaining demands were validly asserted in accordance with the applicable requirements of Delaware law and these holders perfect their rights thereunder, such holders will be entitled to receive the fair value of their shares as determined by the Delaware Court of Chancery. The determination of fair value of the TKT shares will be made excluding any element of value arising from the transaction, such as cost savings or business synergies. The Delaware Court of Chancery may ascribe a valuation to the shares that is greater than, less than or equal to $37 per share and may award interest on the amount determined in the appraisal process.

Total consideration, including amounts payable in respect of stock options and convertible securities, is approximately $1.6 billion at the merger price of $37 per share. This could change if Shire is required to pay a different amount of consideration in respect of the approximately 11.3 million shares for which holders have exercised appraisal rights. Until such time as the appraisal process is complete the Company is unable to determine the extent of its liability.

Purported Class Action Shareholder Suit

In January and February 2003, various parties filed purported class action lawsuits against TKT and Richard Selden, TKT's former Chief Executive Officer, in the United States District Court for the District of Massachusetts. The complaints generally allege securities fraud during the period from January 2001 through January 2003. Each of the complaints asserts claims under Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 promulgated thereunder, and Section 20(a) of the Exchange Act, and alleges that TKT and its officers made false and misleading

statements and failed to disclose material information concerning the status and progress for obtaining United States marketing approval of TKT's REPLAGAL product to treat Fabry disease during that period.

In March 2003, various plaintiffs filed motions to consolidate, to appoint lead plaintiff, and to approve plaintiffs' selections of lead plaintiffs' counsel. In April 2003, various plaintiffs filed a Joint Stipulation and Proposed Order of Lead Plaintiff Applicants to Consolidate Actions, to Appoint Lead Plaintiffs and to Approve Lead Plaintiffs' Selection of Lead Counsel, Executive Committee and Liaison Counsel. In April 2003, the Court endorsed the Proposed Order, thereby consolidating the various matters under one matter: In re Transkaryotic Therapies, Inc., Securities Litigation, C.A. No. 03-10165-RWZ.

In July 2003, the plaintiffs filed a Consolidated and Amended Class Action Complaint (the "Amended Complaint") against TKT; Dr Selden; Daniel Geffken, TKT's former Chief Financial Officer; Walter Gilbert, Jonathan S. Leff, Rodman W. Moorhead, III, and Wayne P. Yetter, members of TKT's board of directors; William R. Miller and James E. Thomas, former members of TKT's board of directors; and SG Cowen Securities Corporation, Deutsche Bank Securities Inc., Pacific Growth Equities, Inc. and Leerink Swann & Company, underwriters of TKT's common stock in prior public offerings.

The Amended Complaint alleges securities fraud during the period from January 4, 2001 through January 10, 2003. The Amended Complaint alleges that the defendants made false and misleading statements and failed to disclose material information concerning the status and progress for obtaining United States marketing approval of REPLAGAL during that period. The Amended Complaint asserts claims against Dr. Selden and TKT under Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder; and against Dr. Selden under Section 20(a) of the Exchange Act. The Amended Complaint also asserts claims based on TKT's public offerings of June 29, 2001, December 18, 2001 and December 26, 2001 against each of the defendants under Section 11 of the Securities Act of 1933 and against Dr. Selden under Section 15 of the Securities Act; and against SG Cowen Securities Corporation, Deutsche Bank Securities, Pacific Growth Equities, Inc., and Leerink Swann & Company under Section 12(a)(2) of the Securities Act. The plaintiffs seek equitable and monetary relief, an unspecified amount of damages, with interest, and attorneys' fees and costs.

In September 2003, TKT filed a motion to dismiss the Amended Complaint. A hearing of the motion occurred in December 2003. In May 2004, the United States District Court for the District of Massachusetts issued a Memorandum of Decision and Order denying in part and granting in part TKT's motion to dismiss the purported class action lawsuit. In the Memorandum, the Court found several allegations against TKT arose out of forward-looking statements protected by the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 (PSLRA). The Court dismissed those statements as falling within the PSLRA's safe harbor provisions. The Court also dismissed claims based on the public offerings of June 29, 2001 and December 18, 2001 because no plaintiff had standing to bring such claims. The Court allowed all other allegations to remain.

In June 2004, TKT submitted an unopposed motion seeking clarification from the Court that the Memorandum dismissed claims based on the first two offerings as to all defendants. The Court granted the motion. In July 2004, the plaintiffs voluntarily dismissed all claims based on the third offering because no plaintiff had standing to bring such claims.

The plaintiffs subsequently filed a motion seeking permission to notify certain TKT investors of the dismissal of the claims based on the offerings, and to inform those investors of their opportunity to intervene in the lawsuit. TKT filed an opposition to this motion in July 2004. A hearing on this motion was held in September 2004. The Court denied this motion. TKT filed an answer to the Amended Complaint in July 2004. The plaintiffs then filed a motion for class certification in July 2004. TKT filed an opposition to this motion in March 2005, and the plaintiffs filed a reply in April 2005. A hearing on class certification was held in April 2005. Following that hearing, TKT filed a supplemental brief in opposition to the motion for class certification and the plaintiffs filed a supplemental brief in support of the motion. The court has not yet ruled on this motion.

On September 14, 2005, the plaintiffs filed a Notice of Related Case Pursuant to Local Rule 40.1(G), in which they appeared to seek reassignment of a matter filed on September 1, 2005, entitled Securities and Exchange Commission v. Richard B. Selden, Civil Action No. 05-11805-NMG (D. Mass.) (the SEC Action), to the Court considering this matter. On September 15, 2005, the defendants filed a response to the notice, opposing reassignment of the SEC Action. On October 7, 2005, the plaintiffs filed a memorandum in response to the defendants' response.

Shareholder Derivative Suit

TKT's board of directors: James E. Thomas and William Miller; and against TKT as nominal defendant, in Middlesex Superior Court in the Commonwealth of Massachusetts, Civil Action No. 03-1669. On May 29, 2003, the parties moved to transfer venue to the Business Litigation Session in Suffolk Superior Court in the Commonwealth of Massachusetts. The parties' motion was allowed, and in June 2003 the matter was accepted into the Business Litigation Session as Civil Action No. 03-02630-BLS.

The complaint alleges that the individual defendants breached fiduciary duties owed to TKT and its shareholders by disseminating materially false and misleading statements to the market and causing or allowing TKT to conduct its business in an unsafe, imprudent and unlawful manner. The complaint purports to assert derivative claims against the individual defendants for breach of fiduciary duty, and to assert a claim for contribution and indemnification on behalf of TKT for any liability TKT incurs as a result of the individual defendants' alleged misconduct. The complaint seeks declaratory, equitable and monetary relief, an unspecified amount of damages, with interest, and attorneys' fees and costs.

In August 2003, the plaintiff filed its Verified Amended Derivative Complaint (the "Amended Derivative Complaint"). The Amended Derivative Complaint alleges that the individual defendants breached fiduciary duties owed to TKT and its stockholders by causing TKT to issue materially false and misleading statements to the public, by signing TKT's Annual Reports on Form 10-K for the years 2000 and 2001 and by signing a registration statement. The Amended Derivative Complaint also alleges that defendant Dr. Selden sold TKT's stock while in possession of material non-public information. The plaintiff seeks declaratory, equitable and monetary relief, an unspecified amount of damages, with interest, and attorneys' fees and costs.

In September 2003, TKT filed a motion to dismiss the Amended Derivative Complaint. A hearing of the motion was held in January 2004. In May 2004, the Court granted TKT's motion to dismiss. In June 2004, the plaintiff filed a Notice of Appeal appealing the dismissal of the Amended Derivative Complaint to the Massachusetts Court of Appeals. There have been no further developments with respect to this action.

SEC Investigation

In May 2003, TKT received a copy of a formal order of investigation by the Securities and Exchange Commission. The order of investigation relates to TKT's disclosures and public filings with regard to REPLAGAL and the status of the approval process of the FDA for REPLAGAL, as well as transactions in TKT's securities.

In July 2004, TKT and Dr. Selden, its former Chief Executive Officer, received "Wells" notices from the staff of the SEC, in connection with the SEC investigation. The Wells notices state that the SEC staff has preliminarily determined to recommend that the Commission bring a civil action for possible violations of the federal securities laws. In September 2005, the Commission filed a suit against Dr. Selden and is seeking an injunction disgorgement, civil penalties and an order barring Dr. Selden from serving as an officer or director of a public company. Also in September 2005, the SEC staff informed the Company that it is no longer recommending any enforcement action against TKT.

17. Earnings per share

The following table reconciles income from continuing operations and the weighted average ordinary shares outstanding for basic and diluted earnings per share for the periods presented:

	3 months to September 30, 2005 $’000		3 months to September 30, 2004 $’000	9 months to September 30, 2005 $’000		9 months to September 30, 2004 $’000

Numerator for basic earnings per share	(624,194	)	77,040	(487,538	)	185,621
Interest charged on convertible debt, net of
tax	-		766	-		3,432

Numerator for diluted earnings per share	(624,194	)	77,806	(487,538	)	189,053

Weighted average number of shares:	No. of shares		No. of shares	No. of shares		No. of shares

Basic	500,542,616		496,474,005	499,741,042		496,090,191
Effect of dilutive shares:
Stock options	-		2,474,699	-		3,086,390
Warrants	-		-	-		55,579
Convertible debt	-		10,828,348	-		15,838,142

Diluted	500,542,616		509,777,052	499,741,042		515,070,302

For the three and nine months ended September 30, 2005, the share options, warrants and convertible debt not included in the calculation of the diluted weighted average number of shares, because the Company made a net loss during the calculation period, are shown below:

For the three and nine months ended September 30, 2004, the share options, warrants and convertible debt not included in the calculation of the diluted weighted average number of shares, because the exercise prices exceeded the Company’s average share price during the calculation period, are shown below:

	3 months to September 30, 2005 No. of shares	3 months to September 30, 2004 No. of shares	9 months to September 30, 2005 No. of shares	9 months to September 30, 2004 No. of shares

Stock options	23,092,439	18,866,415	20,278,370	17,567,632
Warrants	1,346,407	1,346,407	1,346,407	-
Convertible debt	5,756	-	5,756	-

	24,444,602	20,212,822	21,630,533	17,567,632

18. Segmental reporting

SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information” (SFAS No. 131) establishes standards for reporting information about operating segments and related disclosures, products and services, geographic areas and major customers. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker in deciding how to allocate resources and in assessing performance.

Shire’s internal management reporting structures show two segments, Pharmaceutical Products and Royalties. The Pharmaceutical Products segment comprises four therapeutic areas, central nervous system (CNS), gastro-intestinal (GI), human genetic therapies (HGT) and general products (GP) and all products have been aggregated for reporting purposes within this segment.

The Company evaluates performance based on revenue and operating income. The Company does not have inter-segment transactions. Prior period amounts have been reclassified to conform to the new, current period presentation.

The Pharmaceutical Products segment represents the Company’s commercial operations and costs in respect of products currently promoted and sold together with costs of developing projects for future commercialization. The Royalties segment represents royalties earned from the out-licensing of products to third parties. These projects have been developed and commercialized by the third party and royalties are being received on the sale of the commercialized product. ‘All Other’ has been included in the table below in order to reconcile the segments to the total consolidated figures. Costs have not been allocated to Royalties below as the magnitude of the costs incurred in respect of managing this segment is small and the internal reporting consequently does not allocate costs to this segment. Assets that are directly attributable to the Royalty segment have been separately disclosed from the Pharmaceutical Products reportable segment.

3 months to September 30, 2005	Pharmaceutical Products $’000		Royalties $’000	Segment Sub-total $’000		All Other $’000	Total $’000

Product sales	309,150		-	309,150		-	309,150
Royalties	-		60,186	60,186		-	60,186
Licensing and development	-		-	-		4,586	4,586
Other revenues	-		-	-		2,155	2,155

Total revenues	309,150		60,186	369,336		6,741	376,077

Cost of product sales	60,081		-	60,081		-	60,081
Research and development	72,956		-	72,956		1,355	74,311
Selling, general and administrative	154,912		-	154,912		-	154,912
Depreciation and amortization ⁽¹⁾	16,420		-	16,420		-	16,420
Reorganization costs	6,457		-	6,457		-	6,457
Integration costs	3,520		-	3,520		-	3,520
In-process R&D write-off	673,000		-	673,000		-	673,000

Total operating expenses	987,346		-	987,346		1,355	988,701

Operating (loss)/income	(678,196	)	60,186	(618,010	)	5,386	(612,624	)

Total assets	2,577,420		58,759	2,636,179		-	2,636,179
Long lived assets	1,489,172		-	1,489,172		-	1,489,172
Capital expenditure on long lived assets	13,723		-	13,723		-	13,723

⁽¹⁾ Depreciation from manufacturing plants ($1.0 million) is included in cost of product sales.

3 months to September 30, 2004	Pharmaceutical Products $’000		Royalties $’000	Segment Sub-total $’000		All Other $’000	Total $’000

Product sales	283,723		-	283,723		-	283,723
Royalties	-		56,199	56,199		-	56,199
Licensing and development	-		-	-		2,820	2,820
Other revenues	-		-	-		2,167	2,167

Total revenues	283,723		56,199	339,922		4,987	344,909

Cost of product sales	38,933		-	38,933		-	38,933
Research and development	56,999		-	56,999		760	57,759
Selling, general and administrative	104,755		-	104,755		-	104,755
Depreciation and amortization ⁽¹⁾	14,891		-	14,891		-	14,891
Intangible asset impairment	5,456		-	5,456		-	5,456
Reorganization costs	10,061		-	10,061		-	10,061

Total operating expenses	231,095		-	231,095		760	231,855

Operating income	52,628		56,199	108,827		4,227	113,054

Total assets from continuing operations	2,518,596		46,691	2,565,287		-	2,565,287
Long lived assets	783,467		-	783,467		-	783,467
Capital expenditure on long lived assets	11,470		-	11,470		-	11,470


(1) Depreciation from manufacturing plants ($0.7 million) is included in cost of product sales.

9 months to September 30, 2005	Pharmaceutical			Segment
	Products		Royalties	Sub-total		All Other	Total
	$’000		$’000	$’000		$’000	$’000

Product sales	930,149		-	930,149		-	930,149
Royalties	-		181,073	181,073		-	181,073
Licensing and development	-		-	-		11,169	11,169
Other revenues	-		-	-		11,975	11,975

Total revenues	930,149		181,073	1,111,222		23,144	1,134,366

Cost of product sales	135,359		-	135,359		-	135,359
Research and development	246,928		-	246,928		4,372	251,300
Selling, general and administrative	465,960		-	465,960		-	465,960
Depreciation and amortization ⁽¹⁾	50,135		-	50,135		-	50,135
Intangible asset impairment	3,000		-	3,000		-	3,000
Reorganization costs	9,335		-	9,335		-	9,335
Integration costs	3,520		-	3,520		-	3,520
In-process R&D write-off	673,000		-	673,000		-	673,000

Total operating expenses	1,587,237		-	1,587,237		4,372	1,591,609

Operating (loss)/ income	(657,088	)	181,073	(476,015	)	18,772	(457,243	)

Total assets from continuing operations	2,577,420		58,759	2,636,179		-	2,636,179
Long lived assets	1,489,172		-	1,489,172		-	1,489,172
Capital expenditure on long lived assets	85,380		-	85,380		-	85,380

(1) Included in depreciation and amortization is the write-down of property, plant and equipment of $5.9 million. Depreciation from manufacturing plants ($2.7 million) is included in cost of product sales.

9 months to September 30, 2004	Pharmaceutical Products $’000	Royalties $’000	Segment Sub-total $’000	All Other $’000	Total $’000

Product sales	803,597	-	803,597	-	803,597
Royalties	-	170,001	170,001	-	170,001
Licensing and development	-	-	-	10,217	10,217
Other revenues	-	-	-	5,654	5,654

Total revenues	803,597	170,001	973,598	15,871	989,469

Cost of product sales	100,010	-	100,010	-	100,010
Research and development	141,223	-	141,223	2,537	143,760
Selling, general and administrative	330,230	-	330,230	-	330,230
Depreciation and amortization ⁽¹⁾	40,474	-	40,474	-	40,474
Intangible asset impairment	5,456	-	5,456	-	5,456
Reorganization costs	32,041	-	32,041	-	32,041

Total operating expenses	649,434	-	649,434	2,537	651,971

Operating income	154,163	170,001	324,164	13,334	337,498

Total assets from continuing operations	2,518,596	46,691	2,565,287	-	2,565,287
Long lived assets	783,467	-	783,467	-	783,467
Capital expenditure on long lived assets	42,945	-	42,945	-	42,945

(1) Included in depreciation and amortization are the write-downs of property, plant and equipment of $1.2 million. Depreciation from manufacturing plants ($2.0 million) is included in cost of product sales.

Supplemental information
To improve comparability between periods for investors, the previous reporting format has also been used to report the current period to September 30, 2005 together with the previously reported segmental analysis for the periods to September 30, 2004. Whilst there is no requirement to include this disclosure under SFAS No. 131 as the new internal reporting format has been used for the current and historic period, management believes that during 2005, it may be useful to include the previously reported segmental analysis for comparative purposes. This internal management-reporting format is no longer used as the basis for making decisions within the business.

3 months to September 30, 2005	US $’000	International $’000	Corporate $’000	R&D $’000		TKT $’000		Total $’000

Product sales	240,377	52,817	-	-		15,956		309,150
Royalties	103	1,883	58,200	-		-		60,186
Licensing and development	3,937	649	-	-		-		4,586
Other revenues	607	1,333	-	-		215		2,155

Total revenues	245,024	56,682	58,200	-		16,171		376,077

Cost of product sales	34,316	6,381	-	-		19,384		60,081
Research and development	-	-	-	60,114		14,197		74,311
Selling, general and administrative	100,503	24,925	22,521	-		6,963		154,912
Depreciation and amortization ⁽¹⁾	4,358	2,020	3,531	-		6,511		16,420
Reorganization costs	6,457	-	-	-		-		6,457
Integration costs	203	-	464	-		2,853		3,520
In-process R&D write-off	-	-	-	-		673,000		673,000

Total operating expenses	145,837	33,326	26,516	60,114		722,908		988,701

Operating income/(loss)	99,187	23,356	31,684	(60,114	)	(706,737	)	(612,624	)

Total assets from continuing	793,073	281,743	707,236	59,376		794,751		2,636,179
operations
Long lived assets	268,315	121,114	692,918	39,472		367,353		1,489,172
Capital expenditure on long lived
assets	11,170	406	1,281	-		866		13,723

(1) Depreciation from manufacturing plants ($1.0 million) is included in cost of product sales in the US segment. Depreciation and amortization relating to R&D assets are included in the US and International segments.

3 months to September 30, 2004	US $’000	International $’000	Corporate $’000	R&D $’000		Total $’000

Product sales	237,112	46,611	-	-		283,723
Royalties	-	2,287	53,912	-		56,199
Licensing and development	2,163	657	-	-		2,820
Other revenues	1,198	969	-	-		2,167

Total revenues	240,473	50,524	53,912	-		344,909

Cost of product sales	22,274	16,659	-	-		38,933
Research and development	-	-	-	57,759		57,759
Selling, general and administrative	69,397	18,947	16,411	-		104,755
Depreciation and amortization ⁽¹⁾	9,988	3,331	1,572	-		14,891
Intangible asset impairment	1,508	3,948	-	-		5,456
Reorganization costs	6,501	276	1,183	2,101		10,061

Total operating expenses	109,668	43,161	19,166	59,860		231,855

Operating income/(loss)	130,805	7,363	34,746	(59,860	)	113,054

Total assets from continuing operations	975,842	439,272	1,092,833	57,340		2,565,287
Long-lived assets	255,944	241,735	242,333	43,455		783,467
Capital expenditure on long lived assets	6,550	385	4,158	377		11,470

(1) Depreciation from manufacturing plants ($0.7 million) is included in cost of product sales in the US segment. Depreciation and amortization relating to R&D assets are included in the US and International segments.

9 months to September 30, 2005	US $’000	International $’000	Corporate $’000	R&D $’000		TKT $’000		Total $’000

Product sales	765,297	148,896	-	-		15,956		930,149
Royalties	637	6,405	174,031	-		-		181,073
Licensing and development	9,481	1,688	-	-		-		11,169
Other revenues	4,643	7,117	-	-		215		11,975

Total revenues	780,058	164,106	174,031	-		16,171		1,134,366

Cost of product sales	80,649	35,326	-	-		19,384		135,359
Research and development	-	-	-	237,103		14,197		251,300
Selling, general and administrative	317,465	83,856	57,676	-		6,963		465,960
Depreciation and amortization ⁽¹⁾	25,705	7,266	10,653	-		6,511		50,135
Intangible asset impairment	3,000	-	-	-		-		3,000
Reorganization costs	8,685	-	307	343		-		9,335
Integration costs	203	-	464	-		2,853		3,520
In-process R&D write-off	-	-	-	-		673,000		673,000

Total operating expenses	435,707	126,448	69,100	237,446		722,908		1,591,609

Operating income/(loss)	344,351	37,658	104,931	(237,446	)	(706,737	)	(457,243	)

Total assets from continuing	793,073	281,743	707,236	59,376		794,751		2,636,179
operations
Long-lived assets	268,315	121,114	692,918	39,472		367,353		1,489,172
Capital expenditure on long lived
assets	48,901	1,456	34,157	-		866		85,380

(1) Included in depreciation and amortization are the write-downs of property, plant and equipment of $5.9 million included in the US segment. Depreciation from manufacturing plants ($2.7 million) is included in cost of product sales in the US segment. Depreciation and amortization relating to R&D assets are included in the US and International segments.

9 months to September 30, 2004	US $’000	International $’000	Corporate $’000	R&D $’000		Total $’000

Product sales	670,412	133,185	-	-		803,597
Royalties	-	7,922	162,079	-		170,001
Licensing and development	8,442	1,775	-	-		10,217
Other revenues	2,637	3,017	-	-		5,654

Total revenues	681,491	145,899	162,079	-		989,469

Cost of product sales	64,135	35,875	-	-		100,010
Research and development	-	-	-	143,760		143,760
Selling, general and administrative	214,013	68,752	47,465	-		330,230
Depreciation and amortization ⁽¹⁾	27,097	8,741	4,636	-		40,474
Intangible asset impairment	1,508	3,948	-	-		5,456
Reorganization costs	18,925	2,972	4,083	6,061		32,041
Total operating expenses	325,678	120,288	56,184	149,821		651,971

Operating income/(loss)	355,813	25,611	105,895	(149,821	)	337,498

Total assets from continuing operations	975,842	439,272	1,092,833	57,340		2,565,287
Long-lived assets	255,944	241,735	242,333	43,455		783,467
Capital expenditure on long lived assets	13,428	2,542	25,509	1,466		42,945

(1) Included in depreciation and amortization are the write-downs of property, plant and equipment of $1.6 million ($0.5 million in the Corporate segment and $1.1 million in the US segment). Depreciation from manufacturing plants ($2.0 million) is included in cost of product sales in the US segment. Depreciation and amortization relating to R&D assets are included in the US and International segments.

19. Related parties

In April 2005, Shire BioChem Inc. (BioChem) contributed cash of $4.1 million (CAN$ 5 million) to ViroChem Pharma Inc. in return for an additional equity interest. Dr Bellini, a non-executive director of BioChem had an indirect substantial interest in a company which is a co-investor of ViroChem Pharma Inc.

In October 2005, the Company sub-leased its office premises in Newport to Xanodyne Pharmaceuticals Inc. Dr James Cavanaugh, the non-executive Chairman of the Company, is the Chairman of Xanodyne Pharmaceuticals Inc.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the Company’s unaudited consolidated financial statements and related notes appearing elsewhere in this report.

Overview

Shire’s strategic goal is to become the leading specialty pharmaceutical company that focuses on meeting the needs of the specialist physician. Shire focuses its business on central nervous system (CNS), gastrointestinal (GI), general products (GP) and human genetic therapies (HGT) - all being areas in which Shire has a commercial presence. The structure is sufficiently flexible to allow Shire to target new therapeutic areas to the extent opportunities arise through acquisitions. Shire believes that a carefully selected portfolio of products with a strategically aligned and relatively small-scale sales force will deliver strong results.

Shire’s focused strategy is to develop and market products for specialty physicians. This approach aims to deliver increased returns and lower risks. Shire’s in-licensing and merger and acquisition efforts are focused on products in niche markets with strong intellectual property protection either in the US or Europe.

The acquisition of TKT on July 27, 2005 added the HGT business to Shire and Shire views this business as complementary to and consistent with Shire's stated strategy of meeting the needs of the specialist physician.

Significant events in the three months to September 30, 2005

Transkaryotic Therapies, Inc.

On July 27, 2005, Shire completed its acquisition of TKT. As consideration, Shire paid to TKT’s stockholders $37 in cash for each share of TKT common stock outstanding at the time of the acquisition.

The total cash consideration for the acquisition of TKT is expected to be approximately $1.6 billion, subject to change as may be required by the appraisal rights process. As at September 30, 2005 shareholders owning approximately 24.4 million TKT shares had accepted the offer and during the period $903 million had been paid to them, $83.4 million was paid in connection with TKT stock options and $170.1 million in connection with convertible notes, outstanding at the date of acquisition.

See note 2 to the unaudited consolidated financial statements in this Form 10-Q for further information on the acquisition.

ADDERALL XR

FDA approval of the adolescent indication for ADDERALL XR was received during July.

ADDERALL XR in Canada

On August 24, 2005, Shire announced that Health Canada would reinstate the marketing authorization of ADDERALL XR in Canada effective August 26, 2005. This reinstatement followed the acceptance by Health Canada of the recommendations from the New Drug Committee (NDC), which was appointed by Health Canada at Shire’s request to review the suspension in Canada of ADDERALL XR. The NDC, comprised of three highly qualified, independent experts in the fields of pediatric cardiology, pediatric development and behavioral problems, and pharmacoepidemiology, examined the scientific evidence made available to them by both Shire and Health Canada. The NDC recommended that Health Canada reinstate ADDERALL XR’s marketing authorization.

REMINYL

The National Institute for Health and Clinical Excellence in England and Wales (NICE) is reviewing all existing approved products for the symptomatic treatment of mild to moderate Alzheimer's disease in England and Wales, which includes a proposal to no longer reimburse these products under the National Health Service (NHS) when used by new patients. NICE’s final recommendation was expected to be published in June 2005. However, on July 18, 2005, NICE announced that it had delayed its decision and asked the pharmaceutical companies that market drugs to treat Alzheimer's disease to identify sub-groups of patients who may get benefit from the treatments. Shire and the other concerned pharmaceutical companies are in on-going discussions with NICE.

North American site consolidation

Shire has completed its North American site consolidation, which commenced in 2004. The remaining costs of $6.5 million were incurred in the three months to September 30, 2005, when Shire closed its Newport site. See note 4 to the unaudited consolidated financial statements in this Form 10-Q for further information.

Recent developments

ADDERALL XR

(i) Patent litigation
Shire continues to defend its Intellectual Property. In October 2005, Shire announced that it has filed a lawsuit against Barr and Impax with respect to US patent No. 6,913,768 (‘768). Shire believes that both Barr’s and Impax’s generic ADDERALL XR products infringe the ‘768 patent claims. The case was filed in the Southern District of New York. The earlier filed cases against Barr and Impax involving the ‘819 and ‘300 patents are scheduled to go to trial in January 2006 and on February 23, 2006 respectively. There will be no 30 month stay associated with the filing of the ‘768 patent case. The ‘768 patent is directed to pharmaceutical compositions comprising a once-a-day sustained release formulation of at least one amphetamine salt for the treatment of ADHD. Impax has filed for summary judgment in respect to non-infringement of the ‘819 and ‘300 patents in the district court of Delaware. The Court has not yet ruled on Impax’s motion. The schedule in the Barr case provided that summary judgement motions were to be filed and fully briefed by October 14, 2005. Neither Shire nor Barr filed summary judgement motions. Trial in the Barr case is scheduled for January 2006.

Litigation proceedings relating to the Company’s ADDERALL XR patents are in progress. For further information see ITEM 1 of Part II of this Form 10-Q: Legal Proceedings. Any decrease in the sales of ADDERALL XR could significantly reduce revenues and earnings.

(ii) Citizen petition
During October 2005, Shire filed a Citizen Petition with the FDA requesting that the FDA require more rigorous bioequivalence testing or additional clinical testing for generic or follow-on drug products that reference ADDERALL XR, before they can be approved. Shire believes that these requested criteria will ensure that generic formulations of ADDERALL XR or follow-on drug products will be clinically effective and safe. The FDA has six months to respond to Shire’s petition, however it does not preclude the FDA from granting approval or tentative approval to generic or follow-on product referencing ADDERALL XR during that time.

Research and development

Shire focuses its resources on projects within its core therapeutic areas in development, which Shire believes are at lower risk.

Products in pre-launch at September 30, 2005

DYNEPO: DYNEPO was approved in the EU in March 2002 and is indicated in "treatment of anemia in patients with chronic renal failure. It may be used in patients on dialysis and patients not under dialysis". Shire expects to commence a staged launch in Europe of the product in the second half of 2006. DYNEPO is being evaluated in a controlled Phase 3 (P3) trial for anemia associated with cancer chemotherapy.

Products in registration at September 30, 2005

DAYTRANA (MTS): On October 27, 2005 Shire announced that the amended New Drug Application (NDA) will be reviewed by the FDA’s Psychopharmacologic Drugs Advisory Committee at their scheduled open session on December 2, 2005. The NDA amendment has been assigned a Prescription Drug User Fee Act date of December 28, 2005.

In addition to FDA approval, an application must be made to the US Drug Enforcement Administration (DEA) for procurement quotas in order to obtain access to methylphenidate. Pursuant to recent legislation, the DEA cannot establish procurement quotas following FDA approval of a NDA for a controlled substance (including methylphenidate) until after the DEA reviews and provides public comment on the labeling, promotion, risk management plan and other documents associated with the product. Any delay by the DEA in establishing Shire's procurement quotas for methylphenidate could delay the launch of DAYTRANA (MTS).

Products in late stage development as at September 30, 2005

MESAVANCE (SPD476) for ulcerative colitis, which is in P3 development. During the three months to September 30, 2005, activities to support the first regulatory filing (anticipated in late 2005) continued;
NRP104 for ADHD (P3). Shire is working with New River to support their activities leading to regulatory submission, which New River has stated it expects to make in the fourth quarter of 2005;
SPD503 for ADHD (P3). The FDA filing is anticipated in the first half of 2006;

SPD465 for ADHD (P3). During the three months to September 30, 2005, encouraging data was received from the first pivotal P3 study. The FDA filing is anticipated in the first half of 2006; and
I2S for Hunter Syndrome (P3). Shire expects to file for regulatory approval for I2S in both the US and Europe in the fourth quarter of 2005.

Products in early stage development as at September 30, 2005

SPD483 for the treatment of ADHD entered Phase I (P1) / Phase 2 (P2) development with plans to transition into P3 during 2006; and
GA-GCB for Gaucher disease (P1/P2). In April 2004, a clinical trial to evaluate the safety and clinical activity of GA-GCB was initiated. Results from this study will be announced in the second half of 2005 and, assuming favourable results, Shire intends to commence a P3 pivotal clinical trial in 2006.

Results of operations for the three months to September 30, 2005 and 2004

Overview

On July 27, 2005, Shire completed the acquisition of TKT. This acquisition added the HGT business to Shire. The results for the three months to September 30, 2005 include the results of TKT from the date of acquisition.

Total revenues

The following table provides an analysis of the Company’s total revenues by source:

	3 months to	3 months to
	September 30,	September 30,
	2005	2004	change
	$’000	$’000	%

Product sales	309,150	283,723	+9
Royalties	60,186	56,199	+7
Licensing and development	4,586	2,820	+63
Other	2,155	2,167	-

Total	376,077	344,909	+9

Product sales

For the three months to September 30, 2005 product sales increased 9% to $309.2 million (2004: $283.7 million) and represented 82% of total revenues (2004: 82%).

The following table provides an analysis of the Company’s key product sales:

	3 months to	3 months to	Product	US
	September 30,	September 30,	sales	prescription
	2005	2004	growth	growth
	$’000	$’000	%	%

CNS
ADDERALL XR	165,863	140,051	+18	+11
ADDERALL	9,571	11,736	-18	n/a
CARBATROL	16,129	11,225	+44	-12

GI
PENTASA	36,568	33,025	+11	+6
COLAZIDE	2,288	2,126	+8	n/a

GP
AGRYLIN and XAGRID
North America (US & Canada)	4,783	40,993	-88	-71
RoW	11,978	8,728	+37	n/a
FOSRENOL	9,722	-	n/a	n/a
CALCICHEW	10,124	9,550	+6	n/a
SOLARAZE	3,343	2,444	+37	n/a
REMINYL/REMINYL XL	2,327	2,609	-11	n/a

HGT
REPLAGAL*	15,956	-	n/a	n/a

OTHERS	20,498	21,236	-3	n/a

	309,150	283,723	+9

* This represents REPLAGAL sales for the two month period since acquisition.

The following discussion includes references to prescription and market share data for the Company’s key products. The source of this data is IMS Health, September 2005. IMS Health is a leading global provider of business intelligence for the pharmaceutical and healthcare industries.

ADDERALL XR

US prescriptions for ADDERALL XR for the three months to September 30, 2005 were up 11%. ADDERALL XR enhanced its leading market position with a 1% increase in US market share, in a market that grew 4% overall compared to the same period in 2004.

ADDERALL XR had a 25% share of the total US ADHD market in September 2005 and strengthened its position as the leading brand in the US ADHD market.

Product sales growth was higher than prescription growth for the quarter due mainly to the impact of price increases in December 2004 and August 2005 and lower sales deductions.

FDA approval of the adolescent indication for ADDERALL XR was received during July 2005.

On August 24, 2005, Shire announced that Health Canada would reinstate the marketing authorization of ADDERALL XR in Canada effective August 26, 2005. This reinstatement follows the acceptance by Health Canada of the recommendations from the NDC, which was appointed by Health Canada at Shire’s request to review the suspension in Canada of ADDERALL XR. The NDC, comprised of three highly qualified, independent experts in the fields of pediatric cardiology, pediatric development and behavioral problems, and pharmacoepidemiology, examined the scientific evidence made available to them by both Shire and Health Canada. The NDC recommended that Health Canada reinstate ADDERALL XR.

During October 2005, Shire filed a Citizen Petition with the FDA requesting that the FDA require more rigorous bioequivalence testing or additional clinical testing for generic or follow-on drug products that reference ADDERALL XR, before they can be approved. Shire believes that these requested criteria will ensure that generic formulations of ADDERALL XR or follow-on drug products will be clinically effective and safe. The FDA has six months to respond to Shire’s petition, however it does not preclude the FDA from granting approval or tentative approval to generic or follow-on products referencing ADDERALL XR during that time.

Shire continues to defend its intellectual property. In October 2005, Shire announced that it has filed a lawsuit against Barr and Impax with respect to US patent No. 6,913,768 (‘768). Shire believes that both Barr’s and Impax’s generic ADDERALL XR products infringe the ‘768 patent claims. The case was filed in the Southern District of New York. The earlier filed cases against Barr and Impax involving the ‘819 and ‘300 patents are scheduled to go to trial in January 2006 and on February 23, 2006 respectively. There will be no 30 month stay associated with the filing of the ‘768 patent case. The ‘768 patent is directed to pharmaceutical compositions comprising a once-a-day sustained release formulation of at least one amphetamine salt for the treatment of ADHD. Impax has filed for summary judgment in respect to non-infringement of the ‘819 and ‘300 patents in the district court of Delaware. The Court has not yet ruled on Impax’s motion. The schedule in the Barr case provided that summary judgement motions were to be filed and fully briefed by October 14, 2005. Neither Shire nor Barr filed any summary judgement motions. Trial in the Barr case is scheduled for January 2006.

For further information about the litigation proceedings relating to the Company‘s ADDERALL XR patents see ITEM 1 of Part II of this Form 10-Q: Legal Proceedings. Any decrease in the sales of ADDERALL XR could significantly reduce revenues and earnings.

CARBATROL

US prescriptions for the three months to September 30, 2005 were down 12%, compared to the same period in 2004. This was due primarily to supply constraints and a 6% decrease in the total US carbamazepine prescription market. The supply constraints have now been resolved.

Product sales for the three months to September 30, 2005 were up 44%, compared to the same period in 2004. The difference between sales growth and the lower level of prescriptions is due to a December 2004 price increase and lower sales deductions in comparison to the high levels in the same period in 2004.

CARBATROL had a 43% share of the total US extended release carbamazepine prescription market in September 2005 (September 2004: 45%).

Patent litigation proceedings with Nostrum relating to CARBATROL are in progress. On July 18, 2005, the United States Federal District Court in Trenton, New Jersey denied Nostrum’s motion for summary judgment. Consequently, the lawsuit between Shire and Nostrum will continue to move toward trial. No trial date has been set by the Court. For further information see ITEM 1 of Part II of this Form 10-Q: Legal Proceedings.

PENTASA

US prescriptions for the three months to September 30, 2005 were up 6%, compared to the same period in 2004. The increase was due to the success of the co-promotional agreement with Solvay Pharmaceuticals, Inc. and the impact of the 500mg dosage form launched in the third quarter of 2004, in conjunction with a 2% increase in the total US oral mesalamine prescription market.

Product sales for the three months to September 30, 2005 were up 11%, compared to the same period in 2004. The difference between sales growth and prescription growth is due to the impact of the September 2004 price increase.

PENTASA had an 18% share of the total US oral mesalamine prescription market in September 2005 (September 2004: 17%).

AGRYLIN and XAGRID

AGRYLIN/XAGRID sales worldwide for the three months to September 30, 2005 were $16.8 million, down 66% compared to the same period in 2004 (Q3 2004: $49.7 million).

As expected, North American sales were down 88% due to the impact of generic versions of AGRYLIN being approved in the US market in April 2005.

Rest of the World sales (all sales outside North America) were up 37%, due to the successful launch of XAGRID in the UK, Germany and France in the first quarter of 2005. In accordance with current orphan drug legislation in the EU, XAGRID will have up to 10 years of marketing exclusivity in the EU.

FOSRENOL

US prescriptions for the three months to September 30, 2005 were up 19%, to 43,000 prescriptions, compared to the previous quarter (Q2 2005: 36,000). FOSRENOL was launched in the US in January 2005.

Product sales for the three months to September 30, 2005 were $9.7 million (Q2 2005: $9.9 million). The difference between sales and prescription growth is due to pipeline inventories declining from a comparatively high level of stocking in the prior quarter after the initial launch of FOSRENOL in the first quarter.

FOSRENOL had an 8% share of the total US phosphate binding market in September 2005.

Shire continues its discussions relating to FOSRENOL with regulatory authorities across Europe and other regions. Launches are anticipated to begin in Europe shortly, subject to obtaining national approvals and concluding pricing and reimbursement negotiations.

REPLAGAL

REPLAGAL was acquired by Shire as part of the TKT acquisition, which completed on July 27, 2005. Product sales for the period since acquisition were $16 million. The majority of REPLAGAL sales are in Europe.

Royalties

Royalty revenue increased 7% to $60.2 million for the three months to September 30, 2005 (2004: $56.2 million) and represented 16% of total revenues (2004: 16%). The following table provides an analysis of Shire’s royalty income:

	3 months to	3 months to
	September 30,	September 30,
	2005	2004	change
	$’000	$’000	%

3TC	39,599	37,871	+5
ZEFFIX	7,731	7,034	+10
Others	12,856	11,294	+14

Total	60,186	56,199	+7

3TC

Royalties from sales of 3TC for the three months to September 30, 2005 were $39.6 million, an increase of 5% compared to the three months to September 30, 2004 ($37.9 million). This was due to the continued growth in the nucleoside analogue market for HIV and the positive impact of foreign exchange movements.

Shire receives royalties from GSK on worldwide 3TC sales. GSK’s worldwide sales of 3TC for the three months to September 30, 2005 were $301 million (2004: $291 million).

ZEFFIX

Royalties from sales of ZEFFIX for the three months to September 30, 2005 were $7.7 million, an increase of 10% compared to the three months to September 30, 2004 ($7.0 million), due to strong growth in the Japanese market.

Shire receives royalties from GSK on worldwide ZEFFIX sales. GSK’s worldwide sales of ZEFFIX for the three months to September 30, 2005 were $67 million (2004: $61 million).

Other

Other royalties are primarily in respect of REMINYL and REMINYL XL (now marketed as RAZADYNE and RAZADYNE ER in the US), a product marketed worldwide by Janssen, with the exception of the United Kingdom and the Republic of Ireland where Shire acquired the exclusive marketing rights from May 2004.

On April 11, 2005, Ortho-McNeil Neurologics Inc. (Janssen’s US affiliate company) announced that REMINYL would be marketed in the US under the new product name of RAZADYNE. Ortho-McNeil Neurologics Inc. worked closely with the FDA on a name change following dispensing errors in the US, between REMINYL and the Type 2 diabetes mellitus drug known as AMARYL. REMINYL continues to be marketed outside the US under its original name. Shire is only aware of one similar dispensing error outside the US.

Sales of the REMINYL/RAZADYNE range, for the symptomatic treatment of mild to moderately severe dementia of the Alzheimer’s type, are growing well in the Alzheimer’s market.

Shire and Janssen’s affiliate, Johnson & Johnson Pharmaceutical Research & Development, LLC, are in ongoing discussions with the European regulatory authorities in relation to their assessment of the data for REMINYL from investigational studies in mild cognitive impairment. Labeling changes have now been agreed.

Shire has submitted its response to the preliminary Appraisal Consultation Document issued by the National Institute for Clinical Excellence in England and Wales (NICE). This preliminary appraisal recommends that all existing approved products for the symptomatic treatment of mild to moderate Alzheimer's disease in England and Wales are no longer reimbursable by the National Health Service when used by new patients. NICE’s final recommendation was expected to be published in June 2005. However, on July 18, 2005 NICE announced that it had delayed its decision and asked the pharmaceutical companies that market drugs to treat Alzheimer's disease to identify sub-groups of patients who may benefit from the treatments.

Cost of product sales

For the three months to September 30, 2005 the cost of product sales amounted to 19% of product sales (2004: 14%). The decrease in gross margin is primarily driven by the addition of REPLAGAL to Shire’s product portfolio following the acquisition of TKT. REPLAGAL’s cost of product sales relates entirely to acquired inventories and is therefore based on the fair value of that acquired inventory. In accordance with US GAAP acquired finished goods have been valued at 97% of the expected sales price of REPLAGAL and so virtually no margin will be reflected for REPLAGAL sales until acquired finished goods have been sold (anticipated Q3 2006). For the three months to September 30, 2005 the REPLAGAL cost of product sales includes a $17.2 million adjustment in respect of the acquired inventory, of which $15.1 million related to sales of acquired finished goods and $2.1 million was a write off of damaged work in progress. The fair value adjustment decreased gross margin by 5%.

Research and development (R&D)

R&D expenditure increased from $57.8 million in the three months to September 30, 2004 to $74.3 million in the three months to September 30, 2005. Expressed as a percentage of total revenues, R&D expenditure was 20% for the three months to September 30, 2005 (2004: 17%). The increase in R&D expenditure is primarily the result of adding two significant projects following the acquisition of TKT. Such projects represented 3% of R&D expenditure as a percentage of revenues. Shire’s pipeline is now well advanced with seven projects in late stage development or registration.

Selling, general and administrative

Total SG&A costs increased from $119.6 million in the three months to September 30, 2004 to $171.3 million in the three months to September 30, 2005, an increase of 43%. As a percentage of product sales, SG&A expenses were 55% (2004: 42%).

3 months to September 30,	2005	2004	Change
	$M	$M	%

Sales costs	45.8	35.8	+28
Marketing costs	58.7	43.1	+36
Other SG&A costs	50.4	25.8	+95

	154.9	104.8	+48
Depreciation and amortization¹	16.4	14.8	+11

Total SG&A costs	171.3	119.6	+43

1. Excludes depreciation from manufacturing plants of $1.0 million (2004: $0.7 million) which is included in cost of product sales.

Sales, marketing and other SG&A costs increased from $104.8 million in the three months to September 30, 2004 to $154.9 million in the three months to September 30, 2005 an increase of 48%. As a percentage of product sales, these expenses were 50% (2004: 37%).

This increase was expected with additional costs in the three months to September 30, 2005 attributable to four product launches during 2005, incremental costs in 2005 associated with the FOSRENOL and EQUETRO sales forces, $7.0 million of SG&A costs associated with TKT and $4.5 million relating to the set up of the new listed holding company for the Shire group.

The depreciation charge for the three months to September 30, 2005 was $4.6 million (2004: $5.3 million). Amortization charges, including the amortization on acquired products, were $11.8 million for the three months to September 30, 2005 (2004: $9.5 million).

Reorganization costs

During the three months to September 30, 2005 Shire incurred costs of $6.5 million (2004: $10.1 million) following the closure of the Newport, Kentucky site in July 2005. Following this closure, the site consolidation is now complete and no further reorganization costs are expected to be incurred. During the three months to September 30, 2004 the reorganization costs related to employee severance ($2.6 million), relocation ($3.6 million) and other costs associated with the reorganization ($3.9 million).

Integration costs

For the three months to September 30, 2005, the Company incurred $3.5 million of costs associated with the integration of the TKT business into the Group. This primarily related to retention payments for key staff.

In-process R&D

During the three months to September 30, 2005, as required under US GAAP (business combination accounting), Shire wrote off the portion of the TKT purchase price allocated to in-process R&D of $673.0 million. This amount represents the fair value of those intangible assets acquired as part of the TKT acquisition which have not been approved by the FDA or other regulatory authorities. See note 2 to the unaudited consolidated financial statements in this Form 10-Q for further information.

Interest income and expense

For the three months to September 30, 2005 the Company received interest income of $6.9 million (2004: $5.7 million). This increase in interest income is due to higher interest rates on our US cash deposits partially offset by the interest foregone by Shire on the net payments of $1.1 billion made to date in respect of the acquisition of TKT.

For the three months to September 30, 2005 the Company incurred interest expense of $3.5 million. This expense includes a $2.5 million provision in respect of interest, which may arise as a result of the court appraisal process on amounts due to shareholders who have requested appraisal of the acquisition consideration payable for their shares.

The charge in Q3 2004 of $8.0 million included the write-off of deferred issuance costs capitalized at the time of Shire’s convertible loan notes issue in 2001. These costs were being amortized over the life of the notes but were written off following the redemption of $370.1 million of loan notes in Q3 2004.

Other income/(expense), net

For the three months to September 30, 2005 other income totaled $3.2 million (2004: expense of $4.9 million). During the three months to September 30, 2005 other income was primarily attributable to the income generated from the sale of certain portfolio investments. During the three months to September 30, 2004 other expense was primarily attributable to the write down of certain portfolio investments.

Taxation

In respect of the three month period to September 30, 2005, the tax charge was calculated using the expected effective rate for the period of 28% and was adjusted for the effect of the non-deductible write-off of in-process R&D, resulting in an effective tax rate for the quarter of -3% (2004: 28%).

At September 30, 2005 net deferred tax assets of $85.4 million were recognized (December 31, 2004: $78.1 million).

Equity in earnings of equity method investees

Losses of $0.6 million were recorded for the three months to September 30, 2005 (2004 earnings of: $1.1 million) being the earnings of $1.2 million from the 50% share of the antiviral commercialization partnership with GSK in Canada (2004: $1.1 million), offset by the share of losses in the GeneChem and EGS Healthcare Funds of $1.8 million (2004: $nil).

Discontinued operations

During the three months to September 30, 2005 $1.0 million of the pipeline loan to IDB was repaid. The pipeline loan had been fully provided for in 2004 at the time of the sale of the vaccines business to IDB. This part repayment of the pipeline loan was in compliance with the terms of the loan agreement requiring IDB to make such payment in the event IDB sold and leased back any property acquired from Shire as part of the sale of the vaccines business.

Results of operations for the nine months to September 30, 2005 and 2004

Overview

Total revenues

The following table provides an analysis of the Company’s total revenues by source:

	9 months to	9 months to
	September 30,	September 30,
	2005	2004	change
	$’000	$’000	%

Product sales	930,149	803,597	+16
Royalties	181,073	170,001	+7
Licensing and development	11,169	10,217	+9
Other	11,975	5,654	+112

Total	1,134,366	989,469	+15

Product sales

For the nine months to September 30, 2005, product sales increased 16% to $930.1 million (2004: $803.6 million) and represented 82% of total revenues (2004: 81%). The following table provides an analysis of the Company’s key product sales:

	9 months to	9 months to	Product	US
	September 30,	September 30,	sales	prescription
	2005	2004	growth	growth
	$’000	$’000	%	%

CNS
ADDERALL XR	516,823	422,997	+22	+14
ADDERALL	31,033	22,411	+38	n/a
CARBATROL	54,823	38,873	+41	-5

GI
PENTASA	93,777	86,705	+8	+7
COLAZIDE	6,520	5,944	+10	n/a

GP
AGRYLIN AND XAGRID
North America (US & Canada)	41,950	96,840	-57	-35
RoW	36,428	25,155	+45	n/a
FOSRENOL	24,484	-	n/a	n/a
CALCICHEW	28,353	27,525	+3	n/a
SOLARAZE	8,776	6,214	+41	n/a
REMINYL/RAZADYNEREMINYL XL	9,384	7,983	+17	n/a

HGT
REPLAGAL	15,956	-	n/a	n/a

OTHERS	61,842	62,950	n/a	n/a

	930,149	803,597	+16

ADDERALL XR

US prescriptions for ADDERALL XR for the nine months to September 30, 2005 were up 14%. ADDERALL XR enhanced its leading market position with a 1% increase in US market share, in a market that grew 6% overall compared to the same period in 2004.

ADDERALL XR had a 25% share of the total US ADHD market in September 2005 and strengthened its position as the leading brand in the US ADHD market.

Product sales growth was higher than prescription growth for the nine months to September 30, 2005, due mainly to the impact of price increases in December 2004 and August 2005 and lower sales deductions.

ADDERALL XR’s pediatric marketing exclusivity in the US under the Hatch-Waxman regulations expired on April 11, 2005.

FDA approval of the adolescent indication for ADDERALL XR was received during July.

On August 24, 2005, Shire announced that Health Canada would reinstate the marketing authorization of ADDERALL XR in Canada effective August 26, 2005. This reinstatement follows the acceptance by Health Canada of the recommendations from the New Drug Committee (NDC), which was appointed by Health Canada at Shire’s request to review the suspension in Canada of ADDERALL XR. The NDC, comprised of three highly qualified, independent experts in the fields of pediatric cardiology, pediatric development and behavioral problems, and pharmacoepidemiology, examined the scientific evidence made available to them by both Shire and Health Canada. The NDC recommended that Health Canada reinstate ADDERALL XR.

Shire continues to defend its Intellectual Property. In October 2005, Shire announced that it has filed a lawsuit against Barr and Impax with respect to US patent No. 6,913,768 (‘768). Shire believes that both Barr’s and Impax’s generic ADDERALL XR products infringe the ‘768 patent claims. The case was filed in the Southern District of New York. The earlier filed cases against Barr and Impax involving the ‘819 and ‘300 patents are scheduled to go to trial in January 2006 and February 23, 2006 respectively. There will be no 30 month stay associated with the filing of the ‘768 patent case. The ‘768 patent is directed to pharmaceutical compositions comprising a once-a-day sustained release formulation of at least one amphetamine salt for the treatment of ADHD. Impax has filed for summary judgment in respect to non-infringement of the ‘819 and ‘300 patents in the district court of Delaware. The Court has not yet ruled on Impax’s motion. The schedule in the Barr case provided that summary judgement motions were to be filed and fully briefed by October 14, 2005. Neither Shire nor Barr filed summary judgement motions. Trial in the Barr case is scheduled for January 2006.

CARBATROL

US prescriptions for the nine months to September 30, 2005 were down 5%, compared to the same period in 2004. This was due primarily to supply constraints and a 4% decrease in the total US extended release carbamazepine prescription market. The supply constraints have now been resolved.

Product sales for the nine months to September 30, 2005 were up 41%, compared to the same period in 2004. The difference between sales growth and the lower level of prescriptions is due to a December 2004 price increase and lower sales deductions in comparison to the high levels in the same period in 2004.

CARBATROL had a 43% share of the total US extended release carbamazepine prescription market in September 2005 (September 2004: 45%).

Patent litigation proceedings with Nostrum Pharmaceuticals, Inc. (Nostrum) relating to CARBATROL are in progress. On July 18, 2005, the United States Federal District Court in Trenton, New Jersey denied Nostrum’s motion for summary judgment. Consequently, the lawsuit between Shire and Nostrum will continue to move

toward trial. No trial date has been set by the Court. For further information see ITEM 1 of Part II of this Form 10-Q: Legal Proceedings.

PENTASA

US prescriptions for the nine months to September 30, 2005 were up 7%, compared to the same period in 2004. The increase was due to the success of the co-promotional agreement with Solvay Pharmaceuticals Inc. and the impact of the 500mg dosage form launched in the third quarter of 2004, in conjunction with a 2% increase in the total US oral mesalamine prescription market.

Product sales for the nine months to September 30, 2005 were up 8%, compared to the same period in 2004. The difference between sales growth and prescription growth is due to the impact of the September 2004 price increase. PENTASA had an 18% share of the total US oral mesalamine prescription market in September 2005 (September 2004: 17%).

AGRYLIN and XAGRID

AGRYLIN/XAGRID sales worldwide for the nine months to September 30, 2005 were $78.4 million, down 36% compared to the same period in 2004 (2004: $122.0 million).

As expected North American sales were down 57% due to the impact of generic versions of AGRYLIN being approved in the US market in April 2005.

Rest of the World sales (all sales outside North America) were up 45%, primarily due to the successful launch of XAGRID in the UK, Germany and France in the first quarter of 2005. In accordance with current orphan drug legislation in the EU, XAGRID will have up to 10 years of marketing exclusivity in the EU.

FOSRENOL

US prescriptions for the nine months to September 30, 2005 were 97,000. FOSRENOL was launched in the US in January 2005.

Product sales for the nine months to September 30, 2005 were $24.5 million.

FOSRENOL had an 8% share of the total US phosphate binding market in September 2005.

REPLAGAL

REPLAGAL was acquired by Shire as part of the TKT acquisition, which completed on July 27, 2005. Product sales for the period since acquisition were $16.0 million. The majority of REPLAGAL sales are in Europe.

Royalties

Royalty revenue increased 7% to $181.1 million for the nine months to September 30, 2005 (2004: $170.0 million) and represented 16% of total revenues (2004: 17%). The following table provides an analysis of Shire’s royalty income:

	9 months to	9 months to
	September 30,	September 30,
	2005	2004	Change
	$’000	$’000	%

3TC	119,467	115,673	+3
ZEFFIX	21,969	20,174	+9
Others	39,637	34,154	+16

Total	181,073	170,001	+7

3TC

Royalties from 3TC for the nine months to September 30, 2005 were $119.5 million, an increase of 3% compared to the nine months to September 30, 2004 ($115.7 million). This was due to the continued growth in the nucleoside analogue market for HIV and the positive impact of foreign exchange movements.

Shire receives royalties from GSK on worldwide sales of 3TC. GSK’s worldwide sales of 3TC for the nine months to September 30, 2005 were $907 million, an increase of 3% compared to the nine months to September 30, 2004 ($879 million).

ZEFFIX

Royalties from ZEFFIX for the nine months to September 30, 2005 were $22.0 million, an increase of 9% compared to the nine months to September 30, 2004 ($20.2 million). This was due to strong growth in the Japanese market and the positive impact of foreign exchange movements.

Shire receives ZEFFIX royalties from GSK on worldwide sales. GSK’s worldwide sales of ZEFFIX for the nine months to September 30, 2005 were $191 million, an increase of 8% compared to the nine months to September 30, 2004 (2004: $177 million).

Other

Sales of the REMINYL/RAZADYNE range, for the symptomatic treatment of mild to moderately severe dementia of the Alzheimer’s type, are growing well in the Alzheimer’s market.

the pharmaceutical companies that market drugs to treat Alzheimer's disease to identify sub-groups of patients who may benefit from the treatments.

Cost of product sales

For the nine months to September 30, 2005, the cost of product sales amounted to 15% of product sales (2004: 12%). The decrease in gross margin is primarily driven by the addition of REPLAGAL to Shire’s product portfolio following the acquisition of TKT. REPLAGAL’s cost of product sales relates entirely to acquired inventories and is therefore based on the fair value of that acquired inventory. In accordance with US GAAP, acquired finished goods have been valued at 97% of the expected sales price of REPLAGAL and so virtually no margin will be reflected for REPLAGAL sales until acquired finished goods have been sold (anticipated Q3 2006). For the nine months to September 30, 2005 the REPLAGAL cost of product sales includes a $17.2 million adjustment in respect of the acquired inventory, of which $15.1 million related to sales of acquired finished goods and $2.1 million was a write off of damaged work in progress. The fair value adjustment decreased gross margin by 2%.

Research and development (R&D)

R&D expenditure increased from $143.8 million in the nine months to September 30, 2004 to $251.3 million in the nine months to September 30, 2005. Expressed as a percentage of total revenues, R&D expenditure was 22% for the nine months to September 30, 2005 (2004: 15%). This increase was primarily due to:

	•	an initial payment to New River of $50 million in respect on NRP104, which has been expensed in accordance with the Company’s accounting policy.

	•	the addition of two significant projects following the acquisition of TKT.

The New River payment and the TKT projects, represented 6% of R&D expenditure expressed as a percentage of revenues.

Shire’s pipeline is now well advanced with seven projects in late stage development or registration.

Selling, general and administrative

Total SG&A costs increased from $370.7 million in the nine months to September 30, 2004 to $516.1 million in the nine months to September 30, 2005, an increase of 39%. As a percentage of product sales, SG&A expenses were 55% (2004: 46%).

9 months to September 30,	2005	2004	Change
	$M	$M	%

Sales costs	136.6	109.2	+25
Marketing costs	189.5	138.1	+37
Other SG&A costs	139.9	82.9	+69

Total SG&A costs	466.0	330.2	+41
Depreciation and amortization ¹	50.1	40.5	+24

Total SG&A costs	516.1	370.7	+39

1. Excludes depreciation from manufacturing plants of $2.7 million (2004: $2.0 million) which is included in cost of product sales.

Sales, marketing and other SG&A costs in the nine months to September 30, 2005 increased 41% to $466.0 million (2004: $330.2 million).

This increase was expected with additional costs in the nine months to September 30, 2005 attributable to four product launches during 2005, incremental costs in 2005 associated with the FOSRENOL and EQUETRO sales forces, $7.0 million of SG&A costs associated with TKT and $4.5 million relating to the set up of the new listed holding company for the Shire group.

The depreciation charge for the nine months to September 30, 2005 was $20.2 million (2004: $11.8 million), which includes a write-down of property, plant and equipment of $6.6 million. Amortization charges were $29.9 million for the nine months to September 30, 2005 (2004: $28.7 million).

Intangible asset impairment

The intangible asset impairment charge for the nine months to September 30, 2005 was $3.0 million (2004: 5.5 million). The impairment charge arose as a result of the economic value and strategic worth of the product concerned being less than its carrying value.

Reorganization costs

During the nine months to September 30, 2005, Shire incurred costs of $9.3 million (2004: $32.0 million) following the closure of the Newport, Kentucky site in July 2005 and final employee severance costs. Following this closure, the site consolidation is now complete and no further reorganization costs are expected to be incurred.

During the nine months to September 30, 2004, Shire incurred costs related to employee severance ($12.5 million), relocation costs ($11.5 million) and other costs associated with the reorganization ($8.0 million).

Integration costs

For the nine months to September 30, 2005, the Company incurred $3.5 million of costs associated with the integration of the TKT business into the Group (2004: nil). This primarily related to retention payments for key staff.

In-process R&D

During the nine months to September 30, 2005, as required by FIN 4, Shire wrote off the portion of the TKT purchase price allocated to in-process R&D of $673.0 million. This amount represents the fair value of those intangible assets acquired as part of the TKT acquisition which have not been approved, by the FDA or other regulatory authorities. See note 2 to the unaudited consolidated financial statements in this Form 10-Q for further information.

Interest income and expense

For the nine months to September 30, 2005, Shire received interest income of $27.9 million (2004: $14.1 million). This increase in interest income is due to higher interest rates on the Company’s US cash deposits partially offset by the interest foregone by Shire on the net payments of $1.1 billion made to date in respect of the acquisition of TKT.

For the nine months to September 30, 2005, Shire had interest expense of $4.7 million, of which $1.0 million related to costs of a bridging loan to finance the TKT transaction, and $2.5 million in respect of a provision for interest, which may arise as a result of the court appraisal process on amounts due to shareholders who have requested appraisal of the acquisition consideration payable for their shares.

For the nine months to September 30, 2004, Shire had interest expense of $12.3 million. This expense related to Shire’s convertible loan notes issued in 2001. In addition to the interest payable on the loan notes of $4.3 million, there was an $8.0 million write-off of deferred issuance costs capitalized at the time of the convertible loan notes issue. These costs were being amortized over the life of the notes but were written-off following the redemption of $370.1 million of loan notes in the third quarter of 2004.

Other income, net

For the nine months to September 30, 2005, other income totaled $3.9 million (2004: $4.4 million). During the nine months to September 30, 2005 and September 30, 2004, other income was primarily attributable to income from the sale of certain portfolio investments.

Taxation

In respect of the nine month period to September 30, 2005, the tax charge was calculated using the expected effective rate for the period of 25% and was adjusted for the effect of the non-deductible write-off of in-process R&D, resulting in an effective tax rate for the period of -14% (2004: 28%).

At September 30, 2005, net deferred tax assets of $85.4 million were recognized (December 31, 2004; $78.1 million).

Equity in earnings/(losses) of equity method investees

Earnings of $0.2 million were recorded for the nine months to September 30, 2005 (2004: $3.4 million), being earnings of $3.9 million, representing a 50% share of earnings from the antiviral commercialization partnership with GSK in Canada (2004: $3.4 million), offset by the share of losses in the GeneChem and EGS Healthcare Funds of $3.7 million (2004: $nil).

Discontinued operations

During the nine months to September 30, 2005, gains on disposition of discontinued operations totalled $4.2 million. In July, 2005, $1.0 million of the pipeline loan to IDB was repaid. The pipeline loan had been fully provided for in 2004 at the time of the sale of the vaccines business to IDB. This part repayment of the pipeline loan was in compliance with the terms of the loan agreement requiring IDB to make such payment in the event IDB sold and leased back any property acquired from Shire as part of the sale of the vaccines business. In addition, a $3.1 million adjustment, arising from the finalization of the working capital agreement with IDB recorded in 2004 as part of the sale of the vaccines business to IDB, was released.

Liquidity and capital resources

General
The Company’s funding requirements depend on a number of factors, including its development programs; corporate, business and product acquisitions; the level of resources required for the expansion of marketing capabilities as the product base expands; increases in accounts receivable and inventory which may arise as sales levels increase; competitive and technological developments; the timing and cost of obtaining required regulatory approvals for new products; the timing of tax payments and the continuing cash generated from sales of Shire’s key products.

An important part of Shire’s business strategy is to protect its products and technologies through the use of patents, proprietary technologies and trademarks, to the extent available. The Company intends to defend its intellectual property, and as a result may need cash for funding litigation expenses incurred.

The Company ordinarily finances its activities through cash generated from operating activities, private and public offerings of equity and debt securities and the proceeds of asset or investment disposals.

In connection with the acquisition of TKT, Shire entered into a Multicurrency Revolving Facilities Agreement (the “Facilities Agreement”) with ABN AMRO Bank N.V., Barclays Bank plc, Citigroup Global Markets Limited, HSBC Bank plc and The Royal Bank of Scotland plc (the “Lenders”) on June 15, 2005. The Facilities Agreement includes two credit facilities: (i) a multicurrency three year revolving loan facility in an aggregate amount of $500 million (“Facility A”) and (ii) a 364 day revolving loan facility in an aggregate amount of $300 million (“Facility B” and together with Facility A, the “Facilities”). See note 14 to the unaudited consolidated financial statements in this Form 10-Q.

Shire anticipates that its operating cash flow together with available cash, cash equivalents and short-term investments and the above mentioned debt facility will be sufficient to meet its anticipated future operating expenses, the cost of acquiring TKT, capital expenditures and debt service and lease obligations as they become due over the next twelve months.

If the Company decides to seek to acquire other businesses, it expects to fund these acquisitions from existing cash resources, the debt facility discussed above and possibly through new borrowings and the issue of new equity if necessary.

Sources and uses of cash
The following table provides an analysis of the Company’s gross and net cash funds, including restricted cash, as at September 30, 2005 and December 31, 2004:

	September 30,		December 31,
	2005		2004
	$’000		$’000

Cash and cash equivalents	549,820		1,111,477
Restricted cash	30,085		21,627
Short term investments	22,380		324,411

Gross cash funds, including restricted cash	602,285		1,457,515
Total debt	(116	)	(116	)

Net cash funds, including restricted cash	602,169		1,457,399

Cash flow activity
Net cash provided by operating activities for the nine months to September 30, 2005 was $220.9 million compared to $283.5 million for the nine months to September 30, 2004. The reduction in cash generation is primarily due to the $50 million upfront payment to New River and the timing of working capital payments.

Net cash used in investing activities was $789.3 million in the nine months to September 30, 2005. Decreases in short-term investments of $351.2 million along with proceeds of $60.0 million from the redemption by IDB of its subscription receipts and the receipt from IDB of additional proceeds from the sale of the vaccines business of $32.2 million, offset cash paid on the purchase of TKT (net of cash and cash equivalents) of $1,099.7 million, loans made to IDB of $43.2 million, capital expenditure on property, plant and equipment of $57.6 million and intangible assets of $20.1 million. Capital expenditure on property, plant and equipment included $22.8 million leasehold building improvements, $9.8 million on computer equipment and $3.1 million on furniture and fittings for the new Shire US headquarters at Wayne, Pennsylvania, $6.2 million on software purchases at the Basingstoke Head Office, $9.7 million of factory construction work and $2.4 million of plant equipment for Shire US Manufacturing Inc. in the US. Capital expenditure on intangible assets included the final payment of the acquisition of the exclusive commercialization rights to REMINYL in the UK and Republic of Ireland.

Net cash provided by investing activities was $30.8 million in the nine months to September 30, 2004. Decreases in short-term investments and restricted cash of $36.6 million, along with proceeds of $38.5 million from the sale of long-term assets and an initial $30 million received from IDB for the sale of the vaccines business, were offset by loans made to IDB of $23.8 million, capital expenditure on property, plant and equipment of $24.8 million and intangible assets of $12.4 million. Capital expenditure on property, plant and equipment included $8.9 million on the manufacturing facility in Owing Mills and $8.4 million on computer software. Capital expenditure on intangible assets included the initial payment for the acquisition for the exclusive commercialization rights to REMINYL in the UK and Republic of Ireland.

Net cash provided by financing activities was $13.9 million for the nine months to September 30, 2005. This was primarily due to inflows of $30.4 million from the exercise of employee stock options being offset by the dividend payment of $19.1 million in respect of the six months to December 31, 2004. Net cash used in financing activities was $362.1 million for the nine months to September 30, 2004 primarily due to the redemption of the 2% convertible loan notes of $370.1 million, offset by proceeds from the exercise of employee stock options of $7.5 million.

The total cash consideration for the acquisition of TKT is expected to be approximately $1.6 billion, subject to change as may be required by the appraisal rights process (see below). As at September 30, 2005 shareholders owning approximately 24.4 million TKT shares had accepted the offer and $903 million had been paid to them, $83.4 million was paid in connection with TKT stock options and $170.1 million in connection with convertible notes, outstanding at the date of acquisition. Following the exercise of appraisal rights by shareholders owning the 11.7 million shares, the remaining $433 million will be paid subject to the appraisal process outlined in Item 1 of Part II of this Form 10-Q.

As a result of the acquisition of TKT, cash balances have been significantly reduced and interest receivable will decrease accordingly.

Obligations and commitments
Contractual obligations

At September 30, 2005 the Company’s contractual obligations had altered from those disclosed in the Table of Contractual Obligations in the Company’s 2004 Form 10-K and Form 10-Q for the three months to June 30, 2005 as follows:

Interests in companies and partnerships

The Company has undertaken to subscribe for interests in companies and partnerships for amounts totaling $24.5 million (December 31, 2004: $22.2 million) of which $8.3 million is committed to be paid in 2005 and a further $3.2 million could be payable in 2005, depending on the timing of capital calls.

Manufacturing facilities

The Company has committed to the expansion and modification of its two manufacturing facilities at Owings Mills, Maryland and Cambridge, Massachusetts to facilitate the production and packaging of additional strategic products. The Company has committed to spend a further $2.0 million by the end of 2005 and $1.6 million in 2006, and has an additional commitment of $1.9 million for the design and construction of a technology center at Owings Mills, which is expected to be incurred in 2005.

Wayne, Pennsylvania fit out

The Company is in the process of fitting out its new US headquarters at Wayne, Pennsylvania. At September 30, 2005 the Company had an outstanding commitment of $1.5 million, which is expected to be incurred in 2005.

Basingstoke, UK expansion

The Company is in the process of expanding its UK headquarters at Basingstoke, UK. As at September 30, 2005, the Company had an outstanding commitment of $4.9 million, which is expected to be incurred throughout 2005 and into 2006.

IDB

As part of the sale of the vaccines business on September 9, 2004, Shire entered into an agreement to provide IDB with a loan facility of up to $100 million, which can be drawn down over the four years following completion. As at September 30, 2005 IDB had drawn down the full $100 million under the facility.

Other

The Company has assumed that other long-term liabilities, which comprise primarily insurance provisions ($11.4 million), SERP liabilities ($4.3 million) and long-term bonuses ($3.2 million), are due before 2008.

In addition to contractual obligations referred to above the Company has certain milestones and other commitments. The most significant are as follows:

NRP104

In connection with the Company’s collaboration with New River to commercialize NRP104, the Company has an obligation to make certain payments on the achievement of the following milestones: $50 million upon the FDA’s acceptance of filing of the NDA; up to $300 million following the first commercial sale of the product, depending on the characteristics of the approved product labelling; $100 million as a sales bonus on achieving a significant sales target; and $5 million following the first commercial sale in certain specified EU markets. An upfront payment of $50 million was expensed as an R&D cost during the first quarter of 2005. Regulatory submission is currently expected in the last quarter of 2005.

DAYTRANA (MTS)

In connection with the Company’s purchase of DAYTRANA (MTS) in 2003, Shire has an obligation to make certain payments on the achievement of the following milestones: $50 million upon regulatory approval of the product, which will be capitalized and amortized over its useful economic life; and up to $75 million, linked to future sales performance. Regulatory approval is currently expected in the last quarter of 2005.

FOSRENOL patent rights

In connection with the Company’s purchase of the global patents for FOSRENOL, Shire now owns the FOSRENOL patents in the US and throughout the world (excluding Europe and Japan) and has agreed to pay AnorMED Inc. $6 million when FOSRENOL is approved in certain European countries for the assignment of the European patents and $6 million upon receipt of regulatory approval in Japan for the Japanese patents.

Other R&D commitments

As at September 30, 2005, the Company had commitments of $14.5 million on achievement of specified milestones of which $1.4 million is committed to be paid in 2005 and $8.1 million is expected to be paid in 2006.

Clinical testing

As at September 30, 2005, the Company had committed to pay approximately $13.0 million to contract vendors for administering and executing clinical trials. The timing of payments is not reasonably certain as payments are dependent

upon actual services performed by the organizations as determined by patient enrollment levels and related activities. However, the Company expects to pay for these commitments throughout 2005 and into 2006 as ongoing trials are completed.

Contract manufacturing

As at September 30, 2005, the Company had committed to pay approximately $16.8 million in respect of contract manufacturing over the next 12 months.

TKT acquisition
Appraisal rights

In connection with the acquisition, as at September 30, 2005, the holders of approximately 11.7 million shares of TKT common stock had submitted written demands for appraisal of their shares and, as a result, elected not to accept the $37 per share merger consideration. On October 10, 2005, at the request of one of the petitioners to tender 365,000 shares at the merger price of $37 per share, TKT filed a motion to dismiss the petitioner’s demand. On October 12, 2005, the Delaware Court of Chancery granted this motion, and the petitioner tendered the shares at the merger consideration of $37 per share. Therefore, as at October 28, 2005, the holders of approximately 11.3 million shares of TKT common stock maintain their written demands for appraisal of their shares and have elected not to accept the $37 per share merger consideration. To the extent that these demands were validly asserted in accordance with the applicable requirements of Delaware law and these holders perfect their rights thereunder, such holders will be entitled to receive the fair value of their shares as determined by the Delaware Court of Chancery. The determination of fair value of the TKT shares will be made excluding any element of value arising from the transaction, such as cost savings or business synergies. The Delaware Court of Chancery may ascribe a valuation to the shares that is greater than, less than or equal to $37 per share and may award interest on the amount determined in the appraisal process.

Total consideration, including amounts payable in respect of stock options and convertible securities, is approximately $1.6 billion at the consideration price of $37 per share. This could change if Shire is required to pay a different amount of consideration in respect of approximately 11.3 million shares for which holders have exercised appraisal rights. The consideration paid by Shire to TKT shareholders who did not exercise appraisal rights was funded from Shire’s existing cash resources. For every $1 increase/decrease in the merger consideration applicable to those TKT shareholders who have asserted appraisal rights, the total estimated purchase price would increase/decrease by approximately $11.3 million.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes in the Group’s interest rate or market risk of investments exposure since December 31, 2004. The acquisition of TKT has increased the Group’s exposure to foreign exchange market risk due to an increase in the amount of non US Dollar net assets and earnings. This is being managed in line with the Company’s existing treasury policies. Item 7A of the Group’s Annual Report on Form 10-K for the year ended December 31, 2004 contains a detailed discussion of the Group’s market risk exposure in relation to interest rate market risk and foreign exchange market risk.

ITEM 4. Controls and Procedures

As of September 30, 2005, the Company, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, had performed an evaluation of the effectiveness of the Company’s disclosure controls and procedures. The Company’s management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which by their nature can provide only reasonable assurance regarding management’s control objectives. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective at the reasonable level of assurance for gathering, analyzing and disclosing the information the Company is required to disclose in the reports it files under the Securities Exchange Act of 1934, within the time periods specified in the SEC’s rules and forms.

There has been no change in the Company’s internal control over financial reporting that occurred during the period covered by this quarterly report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

During the period covered by this quarterly report, the Company concluded the acquisition of Transkaryotic Therapies, Inc. or TKT. Significant material weaknesses in TKT’s internal control over financial reporting were identified with respect to its sales and marketing subsidiary, TKT Europe A.B. (formerly TKT Europe-5S A.B.), or TKT Europe, as at December 31, 2004 as described in TKT’s Annual Report on Form 10-K for 2004. These material weaknesses at TKT Europe included both entity-control weaknesses, and weaknesses in process, transaction and application controls as defined in the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. As a result of these material weaknesses in TKT Europe’s internal control over financial reporting, TKT’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that, as at December 31, 2004, TKT’s internal control over financial reporting was not effective. An initial review of these material weaknesses has been undertaken and the Company is progressing remediation activities. Testing of the internal control over financial reporting at TKT Europe is currently scheduled for the final quarter of 2005 in connection with Management's assessment of the effectiveness of the Company's internal control over financial reporting.

Although Shire is continuing to assess the impact of the acquisition and integration of TKT on the internal control over financial reporting of the enlarged group, Management does not believe that the material weaknesses identified at TKT Europe are likely to be material to the Shire group as a whole.

PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS

There are various legal proceedings brought by and against Shire that are discussed in Shire’s Annual Report on Form 10-K for the year to December 31, 2004. Material updates to the proceedings discussed in Shire’s Annual Report on Form 10-K are described below. On July 27, 2005, Shire completed its acquisition of TKT. In addition to the disclosures in Shire’s Annual Report on Form 10-K for the year to December 31, 2004 (as updated in Shire’s subsequent filings with the SEC), there are various legal proceedings brought by and against TKT which are described below. There is no assurance that the enlarged Group will be successful in any of these proceedings and if it is not, there may be a material impact on the enlarged Group’s results and financial position.

ADDERALL XR

(i) Barr Laboratories, Inc.
Shire’s extended release "once daily" version of ADDERALL, ADDERALL XR is covered by US patent No. 6,322,819 (the ‘819 Patent) and US patent No. 6,605,300 (the ‘300 Patent). In January 2003 the Company was notified that Barr had submitted an Abbreviated New Drug Application (ANDA) under the Hatch-Waxman Act seeking permission to market its generic versions of the 5mg, 10mg, 15mg, 20mg, 25mg and 30mg strengths of ADDERALL XR (Barr’s ANDA products) prior to the expiration date of the Company’s ‘819 Patent, and alleging that the ‘819 Patent is not infringed by Barr's ANDA products. In August 2003 Shire was notified that Barr also was seeking permission to market its ANDA products prior to the expiration date of the ‘300 Patent and alleging that the ‘300 Patent is invalid. Shire Laboratories Inc (Shire Laboratories) filed suit against Barr for infringement of the ‘819 Patent in February 2003 and for infringement of the ‘300 Patent in September 2003. The schedules for the lawsuits against Barr with respect to the ‘819 and ‘300 Patents were consolidated in December 2003 and a trial date is scheduled for January 2006. The Company is seeking a ruling that Barr’s ANDA and ANDA products infringe the ‘819 and ‘300 Patents and its ANDA should not be approved before the expiration date of the patents. The Company is also seeking injunctions to prevent Barr from commercializing its ANDA products before the expiration of the ‘819 and ‘300 Patents, damages in the event that Barr should engage in such commercialization, and its attorneys’ fees and costs. On September 27, 2004 Barr filed an amended Answer, Affirmative Defense and Counterclaim in which Barr added the following counterclaims: invalidity of the ‘819 patent, non-infringement of the ‘300 Patent and unenforceability of the ‘819 and ‘300 Patents due to inequitable conduct. Shire has asserted affirmative defenses, alleging, among other things, that Barr has waived its right to assert the counterclaims set forth in its September 27, 2004 amended answers. Under the Court’s schedule summary judgment motions were to be filed and fully briefed by October 14, 2005. Neither Shire nor Barr filed summary judgment motions. Trial in this action is scheduled for January 2006.

(ii) Impax Laboratories, Inc.
In November 2003, Shire was notified that Impax had submitted an ANDA under the Hatch-Waxman Act seeking permission to market its generic version of the 30mg strength of ADDERALL XR (Impax’s ANDA product) prior to the expiration date of the ‘819 and ‘300 Patents. In December 2003, Shire Laboratories filed suit against Impax for infringement of the ‘819 and ‘300 Patents. The Company is seeking a ruling that Impax’s ANDA product infringes the ‘819 and ‘300 Patents and that its ANDA should not be approved before the expiration date of the ‘819 and ‘300 Patents. The Company is also seeking injunctions to prevent Impax from commercializing its ANDA product before the expiration of the ‘819 and ‘300 Patents, damages in the event that Impax should engage in such commercialization, and its attorneys’ fees and costs. Impax’s affirmative defenses include non-infringement and invalidity of both the ‘819 and ‘300 Patents.

(iii) Colony Pharmaceuticals Inc.
In December 2004, Shire was notified that Colony had submitted an ANDA under the Hatch-Waxman Act seeking permission to market its generic versions of the 5mg, 10mg, 15mg, 20mg, 25mg and 30mg strengths of ADDERALL XR prior to the expiration date of the Company’s ‘819 and ‘300 Patents. Shire has chosen not to sue Colony.

(iv) Teva Pharmaceuticals USA, Inc.
In February 2005, Shire was notified that Teva had submitted an ANDA under the Hatch-Waxman Act seeking permission to market its generic versions of the 10mg and 30mg strengths of ADDERALL XR prior to the expiration date of the Company’s ‘819 and ‘300 Patents. In June 2005, Shire was notified that Teva had amended its ANDA to seek permission to market additional strengths of 5mg, 15mg and 20mg of ADDERALL XR prior to the expiration of the '819 and '300 Patents. Shire has chosen not to sue Teva.

Neither Colony nor Teva may market their ANDA products until FDA final approval of their ANDAs and upon the expiration of the first to file’s exclusivity rights.

The Hatch-Waxman exclusivity period for ADDERALL XR expired on April 11, 2005.

CARBATROL

In August 2003 the Company was notified that Nostrum had submitted an ANDA under the Hatch-Waxman Act seeking permission to market its generic version of the 300mg strength of CARBATROL (Nostrum’s ANDA product) prior to the expiration date of the Company’s US patents for CARBATROL, US patent No. 5,912,013 (the ‘013 Patent) and US patent No. 5,326,570 (the ‘570 Patent). The notification alleges that the ‘013 and ‘570 Patents are not infringed by Nostrum’s ANDA product. On September 18, 2003 Shire Laboratories filed suit against Nostrum in the United States District Court for the District of New Jersey alleging infringement of these two patents by Nostrum’s ANDA and ANDA product. The Company was seeking a ruling that Nostrum’s ANDA infringes the ‘013 and ‘570 Patents and should not be approved before the expiration date of the ‘013 and ‘570 Patents. The Company was also seeking an injunction to prevent Nostrum from commercializing its ANDA product before the expiration of the ‘013 and ‘570 Patents, damages in the event that Nostrum should engage in such commercialization, as well as its attorneys’ fees and costs. On January 23, 2004 the Company amended the complaint to delete the allegations with respect to the ‘013 Patent while maintaining the suit with respect to the ‘570 Patent. By way of counterclaims Nostrum is seeking a declaration that the ‘570 and ‘013 Patents are not infringed by Nostrum’s ANDA product. Nostrum also was seeking actual and punitive damages for alleged abuse of process by Shire. On July 12, 2004 the Court dismissed Nostrum’s abuse of process counterclaim for failure to state a claim upon which relief can be granted. On December 10, 2004 Nostrum filed a summary judgment motion seeking a declaration of non-infringement of the ‘570 Patent. Shire’s opposition to this motion was filed on January 14, 2005. Summary judgment arguments were presented to the Court on July 15, 2005. At the conclusion of the hearing the Court denied Nostrum's motion for summary judgment. Expert discovery will now continue and is scheduled to be completed by December 31, 2005. No trial date has been set.

does not prevail, then Nostrum could be in a position to market its 300mg extended-release carbamazepine product upon FDA final approval of its ANDA.

TKT
On July 27, 2005, the Company completed its acquisition of TKT. In addition to the above, there are various legal proceedings brought by and against TKT which are described below.

GA-GCB

In January 2005, Genzyme filed suit against TKT in the District Court of Tel-Aviv-Jaffa, Israel, claiming that TKT's Phase 1/2 clinical trial in Israel evaluating GA-GCB for the treatment of Gaucher disease infringes one or more claims of Israeli Patent No. 100,715. In addition, Genzyme filed a motion for preliminary injunction, including a request for an ex parte hearing and relief on the merits, to immediately seize and destroy all GA-GCB being used to treat patients and to prevent TKT from submitting data generated from the clinical trial to regulatory agencies. In March 2005 the District Court refused to grant Genzyme's motion for a preliminary injunction. No trial date has been set.

DYNEPO

In April 1997, Amgen commenced a patent infringement action against TKT and Sanofi-Aventis in the United States District Court of Massachusetts. In January 2001, the United States District Court of Massachusetts concluded that DYNEPO infringed eight of the 18 claims of five patents that Amgen had asserted. Amgen did not seek and was not awarded monetary damages. This decision was subsequently appealed to the United States Court of Appeals for the Federal Circuit.

Gene Activation

In 1996, Applied Research Systems Holding N.V., a wholly-owned subsidiary of Serono S.A. (Serono) and Cell Genesys became involved in a patent interference involving Serono's US Patent No. 5272071 (the "071 patent"), which purportedly covers certain methods of gene activation. In June 2004, the Board of Patent Appeals and Interferences of the US Patent and Trademark Office (PTO) held that both Serono and Cell Genesys were entitled to certain claims in their respective patent and patent application, and Serono and Cell Genesys each appealed the decision of the interference to the US District Court of Massachusetts and the US District Court of the District of Columbia, respectively. TKT was not a party to this interference.

Appraisal Rights

$37 per share merger consideration. On October 10, 2005, at the request of one of the petitioners to tender 365,000 shares at the merger price of $37 per share, TKT filed a motion to dismiss the petitioner’s demand. On October 12, 2005, the Delaware Court of Chancery granted this motion, and the petitioner tendered the shares at the merger consideration of $37 per share. Therefore, as at October 28, 2005, the holders of approximately 11.3 million shares of TKT common stock maintain their written demands for appraisal of their shares and have elected not to accept the $37 merger consideration. To the extent that the remaining demands were validly asserted in accordance with the applicable requirements of Delaware law and these holders perfect their rights thereunder, such holders will be entitled to receive the fair value of their shares as determined by the Delaware Court of Chancery. The determination of fair value of the TKT shares will be made excluding any element of value arising from the transaction, such as cost savings or business synergies. The Delaware Court of Chancery may ascribe a valuation to the shares that is greater than, less than or equal to $37 per share and may award interest on the amount determined in the appraisal process.

Purported Class Action Shareholder Suit

Shareholder Derivative Suit

In April 2003, South Shore Gastrointerology UA 6/6/1980 FBO Harold Jacob, and Nancy R. Jacob Ttee filed a Shareholder Derivative Complaint against Dr. Selden; against the following members of TKT's board of directors: Jonathan S. Leff, Walter Gilbert, Wayne P. Yetter, Rodman W. Moorhead, III; against the following former members of TKT's board of directors: James E. Thomas and William Miller; and against TKT as nominal defendant, in Middlesex Superior Court in the Commonwealth of Massachusetts, Civil Action No. 03-1669. On May 29, 2003, the parties moved to transfer venue to the Business Litigation Session in Suffolk Superior Court in the Commonwealth of Massachusetts. The parties' motion was allowed, and in June 2003 the matter was accepted into the Business Litigation Session as Civil Action No. 03-02630-BLS.

In September 2003, TKT filed a motion to dismiss the Amended Derivative Complaint. A hearing of the motion was held in January 2004. In May 2004, the Court granted TKT's motion to dismiss. In June 2004, the plaintiff filed a Notice of Appeal appealing the dismissal of the Amended Derivative Complaint to the Massachusetts Court of Appeals.There have been no further developments with respect to this action.

SEC Investigation

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

An Extraordinary General Meeting of Shareholders was held on July 27, 2005.

The meeting considered an ordinary resolution to approve the transaction whereby a wholly-owned subsidiary of Shire Pharmaceuticals Group plc will merge with and into Transkaryotic Therapies, Inc. and pursuant to which Shire Pharmaceuticals Group plc will become the owner of record of all the outstanding capital stock of Transkaryotic Therapies, Inc. (the “Acquisition”) upon the terms and conditions of the Acquisition summarised in the Circular to Shareholders of the Company dated 27th June, 2005, with any amendments, modifications, variations or revisions thereto which are not of a material nature and that the directors of the Company (or any duly authorised committee thereof) be authorized to do all such things and execute all such agreements and make such arrangements as may seem to them necessary, expedient or appropriate to give effect to the Acquisition.

The resolution was approved on a show of hands at the meeting. Had the resolution been put to a poll, the proxy votes that would have been voted at the meeting are described below:

For	Against	Abstentions
383,713,047	747,228	73,178

ITEM 5. OTHER INFORMATION
None.

ITEM 6.EXHIBITS

(a)	Exhibits

2.1	Agreement and Plan of Merger by and among Shire Pharmaceuticals Group plc, Transkaryotic Therapies, Inc. and Sparta Acquisition Corporation, dated as of April 21, 2005. ⁽¹⁾

3.1	Articles of Association of Shire Pharmaceuticals Group plc as amended by special resolution on October 28, 2005.

10.1	Multicurrency Revolving Facilities Agreement by and among Shire Pharmaceuticals Group plc, ABN AMRO Bank N.V., Barclays Bank plc., Citicorp USA, Inc., HSBC Bank plc and The Royal Bank of Scotland plc, dated as of June 15, 2005. ⁽²⁾

10.2	Exclusive License Agreement between Shire Pharmaceuticals Group plc and Transkaryotic Therapies, Inc., dated as of April 21, 2005. ⁽³⁾

31.1	Certification of Matthew Emmens pursuant to Rule 13a – 14 under The Exchange Act.

31.2	Certification of Angus Russell pursuant to Rule 13a – 14 under The Exchange Act.

32.1	Certification of Matthew Emmens and Angus Russell pursuant to Section 906 of the Sarbanes – Oxley Act of 2002.

(1) Incorporated by reference to Exhibit 99.02 to Shire’s Form 8-K filed on April 25, 2005.
(2) Incorporated by reference to Exhibit 10.01 to Shire’s Form 10-Q filed on August 5, 2005.
(3) Incorporated by reference to Exhibit 99.03 to Shire’s Form 8-K filed on April 25, 2005.

SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		SHIRE PHARMACEUTICALS GROUP PLC
		(Registrant)
Date:
November 9, 2005		/s/ Matthew Emmens
	By:	Matthew Emmens
		Chief Executive Officer
Date:
November 9, 2005		/s/ Angus Russell
	By:	Angus Russell
		Chief Financial Officer

EX-3.1 2 ex-0301.htm

Exhibit 3.1

Company No. 2883758

THE COMPANIES ACTS 1985 AND 1989

PUBLIC COMPANY LIMITED BY SHARES

ARTICLES OF ASSOCIATION

SHIRE PHARMACEUTICALS GROUP PLC

as adopted by special resolution passed on 7th July, 2000
and amended by special resolution passed on 28th October, 2005

PRELIMINARY

1.	Interpretation

(A)	In the articles:

	“Act” means, unless the context otherwise requires, the Companies Act 1985, including any statutory modification or re-enactment for the time being in force;

	“Acts” means the Companies Acts 1985 and 1989 and all statutes and subordinate legislation for the time being in force concerning companies so far as they apply to the Company;

	“articles” means these articles of association as amended from time to time;

	“auditors” means the auditors of the Company;

	“board” means the board of directors of the Company or the directors present or deemed to be present at a duly convened meeting of the directors at which a quorum is present;

	“business day” means a day (not being a Saturday or Sunday) on which clearing banks are open for business in London;

“clear days” means, in relation to a period of notice, that period excluding the day when the notice is given or deemed to be given and the day for which it is given or on which it is to take effect;

“company” includes any body corporate (not being a corporation sole) or association of persons, whether or not a company within the meaning of the Act;

“director” means, unless the context otherwise requires, a director of the Company;

“dividend” includes bonus;

“entitled by transmission” means, in relation to a share, entitled as a consequence of the death or bankruptcy of a member or of another event giving rise to a transmission of entitlement by operation of law;

“executed” includes, in relation to a document, execution under hand or under seal or by another method permitted by law;

“holder” means, in relation to a share, the member whose name is entered in the register as the holder of that share;

“London Stock Exchange” means the London Stock Exchange Limited;

“member” means, unless the context otherwise requires, a member of the Company;

“office” means the registered office of the Company;

“paid”, “paid up” and “paid-up” include credited as paid or paid up;

“recognised person” means a recognised clearing house or a nominee of a recognised clearing house or of a recognised investment exchange which is designated for the purposes of section 185(4) of the Act;

“register” means, unless the context otherwise requires, the register of members kept pursuant to section 352 of the Act;

“Regulations” means The Uncertificated Securities Regulations 1995 as amended from time to time and any provisions of or under the Acts which supplement or replace such Regulations;

“seal” means, unless the context otherwise requires, the common seal of the Company or any official or securities seal that the Company may have or may be permitted to have under the Acts;

“secretary” means the secretary of the Company and includes any assistant or deputy secretary and a person appointed by the board to perform the duties of the secretary;

	“uncertificated share” means a share of a class which is for the time being a participating class title to which is recorded on the register as being held in uncertificated form;

(B)	Words and expressions contained in these articles which are not defined in paragraph (A) have, unless the contrary is indicated, the same meaning as in the Act, but excluding any statutory modification to the Act not in force at the date of adoption of these articles.

(C)	Where an ordinary resolution of the Company is expressed to be required for any purpose, a special or extraordinary resolution is also effective for that purpose, and where an extraordinary resolution is expressed to be required for any purpose, a special resolution is also effective for that purpose.

(D)	The headings in the articles do not affect the interpretation of the articles.

2.	Table A not to apply

	No regulations contained in any statute or subordinate legislation, including the regulations contained in Table A in the schedule to the Companies (Tables A to F) Regulations 1985 (as amended), apply as the regulations or articles of association of the Company.

SHARE CAPITAL

3.	Authorised capital

	The authorised share capital of the Company at the date of adoption of these articles is £20,000,000 divided into 400,000,000 ordinary shares of 5p each.

4.	Allotment

(A)	Subject to the Acts and relevant authority of the Company in general meeting required by the Acts, the board has general and unconditional authority to allot (with or without conferring rights of renunciation), grant options over, offer or otherwise deal with or dispose of unissued shares (whether forming part of the original or any increased capital), or rights to subscribe for or convert any security into shares, to such persons, at such times and on such terms and conditions as the board may decide but no share may be issued at a discount.

(B)	The board may at any time after the allotment of a share but before a person has been entered in the register as the holder of the share recognise a renunciation of the share by the allottee in favour of another person and may grant to an allottee a right to effect a renunciation on the terms and conditions the board thinks fit.

5.	Power to attach rights

	Subject to the Acts and to the rights attached to existing shares, new shares may be allotted or issued with or have attached to them such special rights or restrictions as the

	Company may by ordinary resolution decide, or, if no resolution is passed, as the board may decide.

6.	Redeemable shares

	Subject to the Acts and to the rights attached to existing shares, shares may be issued on terms that they are to be redeemed or, at the option of the Company or the holder, are liable to be redeemed.

7.	Variation of rights

(A)	Subject to the Acts, the rights attached to a class of shares may be varied, whether or not the Company is being wound up, (i) in such manner (if any) as may be provided by those rights, or (ii) in the absence of provision, either with the consent in writing of the holders of at least three-fourths of the nominal amount of the issued shares of that class or with the sanction of an extraordinary resolution passed at a separate meeting of the holders of the issued shares of that class validly held in accordance with the articles, but not otherwise.

(B)	The rights attached to a class of shares are not, unless otherwise expressly provided in the rights attaching to those shares, deemed to be varied by the creation or issue of further shares ranking pari passu with or subsequent to them or by the purchase or redemption by the Company of its own shares in accordance with the Acts and article 39.

8.	Commission

	The Company may exercise all powers conferred or permitted by the Acts of paying commission or brokerage. Subject to the Acts, commission or brokerage may be satisfied by the payment of cash or the allotment of fully- or partly-paid shares or the grant of an option to call for an allotment of shares or by any combination of these methods.

9.	Trusts not recognised

	Except as ordered by a court of competent jurisdiction or as required by law, the Company shall not recognise a person as holding a share on trust and is not bound by or otherwise compelled to recognise (even if it has notice of it) an equitable, contingent, future, partial or other claim to or interest in a share other than an absolute right in the holder to the whole of the share.

UNCERTIFICATED SHARES

10.	Uncertificated Shares

(A)	Pursuant and subject to the Regulations, the board may permit title to shares of any class to be evidenced otherwise than by a certificate and title to shares of such a class to be transferred by means of a relevant system and may make arrangements for a

	class of shares (if all shares of that class are in all respects identical) to become a participating class. Title to shares of a particular class may only be evidenced otherwise than by a certificate where that class of shares is for the time being participating class. The board may also, subject to compliance with the Regulations and the rules of any relevant system, determine at any time that title to any class of shares may from a date specified by the board no longer be evidenced otherwise than by a certificate or that title to such a class shall cease to be transferred by means of any particular relevant system. For the avoidance of doubt, shares which are uncertificated shares shall not be treated as forming a class which is separate from certificated shares with the same rights.

(B)	In relation to a class of shares which is, for the time being, a participating class and for so long as it remains a participating class, no provision of these articles shall apply or have effect to the extent that it is inconsistent in any respect with:-

	(i)	the holding of shares of that class in uncertificated form;

	(ii)	the transfer of title to shares of that class by means of a relevant system; and

	(iii)	any provision of the Regulations.

(C)	Shares of a class which is for the time being a participating class may be changed from uncertificated to certificated form, and from certificated to uncertificated form, in accordance with and subject as provided in the Regulations and the rules of any relevant system.

(D)	Unless the board otherwise determines or the Regulations or the rules of the relevant system concerned otherwise require, any shares issued or created out of or in respect of any uncertificated shares shall be uncertificated shares and any shares issued or created out of or in respect of any certificated shares shall be certificated shares.

SHARE CERTIFICATES

11.	Right to certificate

(A)	Subject to the provisions of the Regulations, the rules of any relevant system, the Acts and the requirements of the London Stock Exchange, a person (except a recognised person in respect of whom the Company is not required by law to complete and have ready for delivery a certificate) on becoming the holder of a share is entitled, unless the terms of issue of the shares provide otherwise, without charge, to one certificate for all the shares of a class registered in his name or, in the case of shares of more than one class being registered in his name, to a separate certificate for each class of shares.

(B)	Where a member (other than a recognised person) transfers part of his shares comprised in a certificate he is entitled, without charge, to one certificate for the balance of shares retained by him.

(C)	The Company is not bound to issue more than one certificate for shares held jointly by two or more persons and delivery of a certificate to one joint holder is sufficient delivery to all joint holders.

(D)	A certificate shall specify the number and class and the distinguishing numbers (if any) of the shares in respect of which it is issued and the amount paid up on the shares. It shall be issued under a seal, which may be affixed to or printed on it, or in such other manner as the board may approve, having regard to the terms of issue and the requirements of the London Stock Exchange.

12.	Replacement certificates

(A)	Where a member holds two or more certificates for shares of one class, the board may at his request, on surrender of the original certificates and without charge, cancel the certificates and issue a single replacement certificate.

(B)	At the request of a member, the board may cancel a certificate and issue two or more in its place (representing shares in such proportions as the member may specify), on surrender of the original certificate and on payment of such reasonable sum as the board may decide.

(C)	Where a certificate is worn out, defaced, lost or destroyed, the board may cancel it and issue a replacement certificate on such terms as to provision of evidence and indemnity (with or without security) and to payment of any exceptional out-of-pocket expenses incurred by the Company in the investigation of that evidence and the preparation of that indemnity and security as the board may decide, and on surrender of the original certificate (where it is worn out or defaced).

LIEN

13.	Company’s lien on shares not fully paid

(A)	The Company has a first and paramount lien on every share (other than a fully-paid share) registered in the name of a member (whether solely or jointly with another person) for an amount payable in respect of the share, whether the due date for payment has arrived or not. The lien applies to all dividends from time to time declared or other amounts payable in respect of the share.

(B)	The board may either generally or in a particular case declare a share to be wholly or partly exempt from the provisions of this article. Unless otherwise agreed with the transferee, the registration of a transfer of a share operates as a waiver of the Company’s lien (if any) on that share.

14.	Enforcement of lien by sale

(A)	For the purpose of enforcing the lien, the board may sell shares subject to the lien in such manner as it may decide, if the due date for payment of the relevant amounts has arrived and payment is not made within 14 clear days after the service of a notice in

	writing (stating, and demanding payment of, the amounts and giving notice of the intention to sell in default of payment) on the member concerned (or to a person entitled by transmission to the shares).

(B)	To give effect to a sale, the board may authorise a person to execute an instrument of transfer of shares in the name and on behalf of the holder of or the person entitled by transmission to the shares to the purchaser or his nominee. The purchaser is not bound to see to the application of the purchase money and the title of the transferee is not affected by an irregularity in or invalidity of the proceedings connected with the sale.


15.	Application of proceeds of sale

	The net proceeds of a sale effected under article 14, after payment of the costs of the sale, shall be applied by the Company in or towards satisfaction of the amount in respect of which the lien exists. Any residue shall (on surrender to the Company for cancellation of the certificate for the shares sold, or the provision of an indemnity (with or without security) as to any lost or destroyed certificate required by the board and subject to a like lien for amounts not presently payable as existed on the shares before the sale) be paid to the member or a person entitled by transmission to the shares immediately before the sale.

CALLS ON SHARES

16.	Calls

	Subject to the terms of issue, the board may make calls on members in respect of amounts unpaid on the shares or a class of shares held by them respectively (whether in respect of nominal value or a premium) and not payable on a date fixed by or in accordance with the terms of issue. Each member shall (on receiving at least 14 clear days’ notice specifying when and where payment is to be made) pay to the Company the amount called as required by the notice. A call may be made payable by instalments and may, at any time before receipt by the Company of an amount due, be revoked or postponed in whole or in part as the board may decide. A call is deemed made at the time when the resolution of the board authorising it is passed. A person on whom a call is made remains liable to pay the amount called despite the subsequent transfer of the share in respect of which the call is made. The joint holders of a share are jointly and severally liable for payment of a call in respect of that share.

17.	Power to differentiate

	The board may make arrangements on the allotment or issue of shares for a difference between the allottees or holders in the amounts and times of payment of a call on their shares.

18.	Interest on calls

	If the whole of the amount called is not paid on or before the date fixed for payment, the person by whom it is payable shall pay interest on the unpaid amount at such rate as

	may be fixed by the terms of allotment of the share or, if no rate is fixed, at such rate (not exceeding, without the sanction of the Company given by ordinary resolution, 20 per cent. per annum) as the board may decide, from and including the date fixed for payment until but excluding the date of actual payment and all costs, charges and expenses incurred by the Company by reason of the non-payment. The board may waive payment of the interest in whole or in part.

19.	Payment in advance

	The board may, if it thinks fit, receive from a member all or part of the amounts uncalled and unpaid on shares held by him. A payment in advance of calls extinguishes to the extent of the payment the liability of the member on the shares in respect of which it is made. The Company may pay interest on the amount paid in advance, or on so much of it as from time to time exceeds the amount called on the shares in respect of which the payment in advance has been made, at such rate (not exceeding, without the sanction of the Company given by ordinary resolution, 20 per cent. per annum) as the board may decide.

20.	Amounts due on allotment treated as calls

	An amount which becomes payable in respect of a share on allotment or on a date fixed pursuant to the terms of allotment (whether in respect of nominal value or a premium) or as an instalment of a call is deemed to be a call. In case of non-payment, the provisions of the articles as to payment of interest and costs, charges and expenses, forfeiture or otherwise apply as if that amount had become payable by virtue of a call.

FORFEITURE

21.	Notice if call not paid

	If a member fails to pay the whole of a call or an instalment of a call on or before the date fixed for payment, the board may serve notice on the member or on a person entitled by transmission to the share in respect of which the call was made demanding payment, on a date not less than 14 clear days from the date of the notice, of the amount of the call outstanding and any interest that may have accrued on it and all costs, charges and expenses incurred by the Company by reason of the non-payment. The notice shall state (i) the place where payment is to be made, and (ii) that if the notice is not complied with the share in respect of which the call was made will be liable to be forfeited.

22.	Forfeiture for non-compliance

	If the notice referred to in article 21 is not complied with, a share in respect of which it is given may, at any time before payment required by the notice has been made, be forfeited by a resolution of the board. The forfeiture includes all dividends declared or other amounts payable in respect of the forfeited share and not paid before the forfeiture.

23.	Notice after forfeiture

	When a share has been forfeited, the Company shall serve notice of the forfeiture on the person who was before forfeiture the holder of the share or the person entitled by transmission to the share but no forfeiture is invalidated by an omission to give notice. An entry of the fact and date of forfeiture shall be made in the register.

24.	Disposal of forfeited shares

(A)	Until cancelled in accordance with the Acts, a forfeited share and all rights attaching to it are deemed to be the property of the Company and may be sold, re-allotted or otherwise disposed of either to the person who was before the forfeiture the holder or to another person, on such terms and in such manner as the board may decide. Where for this purpose a forfeited share is to be transferred, the board may authorise a person to execute an instrument of transfer of the share to the transferee. The Company may receive the consideration (if any) for the share on its disposal and may register the transferee as the holder of the share.

(B)	The board may before a forfeited share has been cancelled, sold, re-allotted or otherwise disposed of annul the forfeiture on such conditions as it thinks fit.

(C)	A statutory declaration by a director or the secretary that a share has been forfeited on the date stated in the declaration is conclusive evidence of the facts stated in the declaration against all persons claiming to be entitled to the share. The declaration (subject if necessary to the execution of an instrument of transfer) constitutes good title to the share and the person to whom the share is disposed of is not bound to see to the application of the consideration (if any). His title to the share is not affected by an irregularity in or invalidity of the proceedings connected with the forfeiture or disposal.

25.	Arrears to be paid notwithstanding forfeiture

	A person whose share has been forfeited ceases on forfeiture to be a member in respect of it and shall surrender to the Company for cancellation the certificate for the forfeited shares or shares. He remains liable to pay, and shall immediately pay to the Company, all calls, interest, costs, charges and expenses owing in respect of the share at the time of forfeiture, with interest, from the time of forfeiture until payment, at such rate as may be fixed by the terms of allotment of the share or, if no rate is fixed, at the rate (not exceeding, without the sanction of the Company given by ordinary resolution, 20 per cent. per annum) as the board may decide. The board may if it thinks fit enforce payment without allowance for the value of the share at the time of forfeiture or for consideration received on disposal.

26.	Surrender

	The board may accept the surrender of a share liable to be forfeited and in that case references in the articles to forfeiture include surrender.

UNTRACED SHAREHOLDERS

27.	Power of sale

(A)	The Company is entitled to sell the certificated share of a member or of a person entitled by transmission if:

	(i)	during a period of not less than 12 years before the date of publication of the advertisements referred to in paragraph (A)(iii) (or, if published on two different dates, the first date) (the “relevant period”) the Company has paid at least three cash dividends (whether interim or final) in respect of the share;

	(ii)	throughout the relevant period no cheque, warrant or money order sent by the Company by post in a pre-paid envelope addressed to the holder of the share, or to the person entitled by transmission to the share in accordance with article 123(B) at his address on the register or other last known address given by the member or other person, has been presented to the paying bank, no payment made by the Company by any other means permitted by article 123(B) has been claimed or accepted and no communication has been received by the Company from the member or person entitled by transmission (in his capacity as member or person entitled by transmission);

	(iii)	on or after expiry of the relevant period the Company has given notice of its intention to sell the share by advertisement in a national newspaper and in a newspaper circulating in the area of the address referred to in paragraph (A)(ii);

	(iv)	the Company has not, so far as the board is aware, during a further period of three months after the date of the advertisements referred to in paragraph (A)(iii) (or the later advertisement if the advertisements are published on different dates) and before the exercise of the power of sale received a communication from the member or person entitled by transmission (in his capacity as member or person entitled by transmission); and

	(v)	the Company has first given notice in writing to the London Stock Exchange of its intention to sell the share.

(B)	In addition to the power of sale conferred by paragraph (A), if during the relevant period or a further period ending on the date when all the requirements of paragraphs (A)(i) to (v) have been satisfied an additional share has been issued in right of that held at the beginning of, or previously so issued during, those periods and all the requirements of paragraphs (A)(i) to (v) have been satisfied in respect of the additional share, the Company is entitled to sell the additional share.

(C)	To give effect to a sale pursuant to paragraphs (A) or (B), the board may authorise a person to execute an instrument of transfer of the share in the name and on behalf of the holder of, or the person entitled by transmission to, the share to the purchaser or his nominee. The purchaser is not bound to see to the application of the purchase money

	and the title of the transferee is not affected by an irregularity or invalidity in the proceedings connected with the sale of the share.

28.	Application of proceeds of sale

	The Company shall account to the member or other person entitled by transmission to the share for the net proceeds of sale by carrying all amounts received on sale to a separate account. The Company is deemed to be a debtor and not a trustee in respect of those amounts for the member or other person. Amounts carried to the separate account may either be employed in the business of the Company or invested as the board may think fit. No interest is payable on those amounts and the Company is not required to account for money earned on them.

TRANSFER OF SHARES

29.	Transfer

	Subject to such of the restrictions of these articles as may be applicable:-

	(i)	any member may transfer all or any of his uncertificated shares by means of a relevant system in such manner provided for, and subject as provided in the Regulations and the rules of any relevant system, and accordingly no provision of these articles shall apply in respect of an uncertificated share to the extent that it requires or contemplates the effecting of a transfer by an instrument in writing or the production of a certificate for the share to be transferred; and

	(ii)	any member may transfer all or any of his certificated shares by an instrument of transfer in any usual form or in any other form which the board may approve. The instrument shall be executed by or on behalf of the transferor and (in the case of a transfer of a share which is not fully paid) by or on behalf of the transferee. The transferor is deemed to remain the holder of the share until the name of the transferee is entered in the register in respect of it.

30.	Right to refuse registration

(A)	Subject to article 68 and the requirements of the London Stock Exchange, the board may, in its absolute discretion and without giving a reason, refuse to register the transfer of a certificated share or renunciation of a renounceable letter of allotment unless all of the following conditions are satisfied:

	(i)	it is in respect of a share which is fully paid;

	(ii)	it is in respect of a share on which the Company has no lien;

	(iii)	it is in respect of only one class of shares;

	(iv)	it is in favour of a single transferee or renouncee or not more than four joint transferees or renouncees;

	(v)	it is duly stamped (if required); and

	(vi)	it is delivered for registration to the office or such other place as the board may decide, accompanied by the certificate for the shares to which it relates (except in the case of a transfer by a recognised person where a certificate has not been issued, or in the case of a renunciation) and such other evidence as the board may reasonably require to prove the title of the transferor or person renouncing and the due execution by him of the transfer or renunciation or, if the transfer or renunciation is executed by some other person on his behalf, the authority of that person to do so.

(B)	The board may only decline to register a transfer of an uncertificated share in the circumstances set out in the Regulations, and where, in the case of a transfer to joint holders, the number of joint holders to whom the uncertificated share is to be transferred exceeds four.

(C)	If the board refuses to register the of a share it shall, within two months after the date on which the transfer was lodged with the Company or, in the case of uncertificated shares, within two months after the date on which the relevant Operator-instruction is received, send notice of the refusal to the transferee. An instrument of which the board refuses to register shall (except in the case of suspected fraud) be returned to the person depositing it. All instruments of transfer which are registered may, subject to article 140, be retained by the Company.

31.	Fees on registration

	No fee may be charged by the Company for registering the transfer of a share or the renunciation of a renounceable letter of allotment or other document relating to or affecting the title to a share or the right to transfer it or for making any other entry in the register.

32.	Suspension of registration and closing of register

	Subject to the Acts and the requirements of the London Stock Exchange, the registration of transfers may be suspended at such times and for such period (not exceeding 30 days in any year) as the board may decide and either generally or in respect of a particular class of shares.

TRANSMISSION OF SHARES

33.	On death

(A)

The Company may recognise only the personal representatives of a deceased member as having title to a share held by that member alone or to which he alone was entitled. In the case of a share held jointly by more than one person, the Company may recognise only the survivor or survivors as being entitled to it.

(B)	Nothing in the articles releases the estate of a deceased member from liability in respect of a share which has been solely or jointly held by him.

34.	Election of person entitled by transmission

(A)	A person becoming entitled by transmission to a share may, on production of any evidence the board may require, elect either to be registered as a member or to have a person nominated by him registered as a member.

(B)	If he elects to be registered himself, he shall give notice to the Company to that effect. If he elects to have another person registered, he shall transfer title to the share to that person. All the provisions of the articles relating to the transfer of shares apply to the notice or transfer (as the case may be) as if it were a transfer by the member and his death, bankruptcy or other event giving rise to a transmission of entitlement had not occurred.

(C)	The board may give notice requiring a person to make the election referred to in article 34(A). If that notice is not complied with within 60 days, the board may withhold payment of all dividends and other amounts payable in respect of the share until notice of election has been made.

35.	Rights on transmission

	Where a person becomes entitled by transmission to a share, the rights of the holder in relation to that share cease. The person entitled by transmission may, however, give a good discharge for dividends and other amounts payable in respect of the share and, subject to articles 34 and 123, has the rights to which he would be entitled if he were the holder of the share. The person entitled by transmission is not, however, before he is registered as the holder of the share, entitled in respect of it to receive notice of or exercise rights conferred by membership in relation to meetings of the Company or a separate meeting of the holders of a class of shares.

ALTERATION OF SHARE CAPITAL

36.	Increase, consolidation, sub-division and cancellation

	The Company may, by ordinary resolution:

	(i)	increase its share capital by a sum to be divided into shares of an amount prescribed by the resolution;

	(ii)	consolidate and divide all or any of its share capital into shares of a larger amount than its existing shares;

	(iii)	subject to the Acts, sub-divide all or any of its shares into shares of a smaller amount and may by the resolution decide that the shares resulting from the sub-division have amongst themselves a preference or other advantage or be subject to a restriction; and

	(iv)	cancel shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by a person and diminish the amount of its share capital by the amount of the shares so cancelled.

37.	Fractions

	If, as the result of consolidation and division or sub-division of shares, members become entitled to fractions of a share, the board may on behalf of the members deal with the fractions as it thinks fit. In particular, the board may:

	(i)	sell fractions of a share to a person (including, subject to the Acts, to the Company) for the best price reasonably obtainable and distribute the net proceeds of sale in due proportion amongst the persons entitled (except that if the amount due to a person is less than £3, or such other sum as the board may decide, the sum may be retained for the benefit of the Company). To give effect to a sale the board may authorise a person to transfer title to shares to the purchaser or his nominee and may cause the name of the purchaser or his nominee to be entered in the register as the holder of the shares. The purchaser is not bound to see to the application of the purchase money and the title of the transferee to the shares is not affected by an irregularity or invalidity in the proceedings connected with the sale; or

	(ii)	subject to the Acts, issue to a member credited as fully paid by way of capitalisation the minimum number of shares required to round up his holding of shares to a number which, following consolidation and division or sub-division, leaves a whole number of shares (such issue being deemed to have been effected immediately before consolidation or sub-division, as the case may be).

		The amount required to pay up those shares may be capitalised as the board thinks fit out of amounts standing to the credit of reserves (including a share premium account, capital redemption reserve and profit and loss account), whether or not available for distribution, and applied in paying up in full the appropriate number of shares. A resolution of the board capitalising part of the reserves has the same effect as if the capitalisation had been declared by ordinary resolution of the Company pursuant to article 130. In relation to the capitalisation the board may exercise all the powers conferred on it by article 130 without an ordinary resolution of the Company.

38.	Reduction of capital

	Subject to the Acts and to the rights attached to existing shares, the Company may, by special resolution, reduce its share capital, capital redemption reserve and, share premium account in any way.

39.	Purchase of own shares

	Subject to the Acts, the Company may purchase shares of any class (including redeemable shares) in its own capital in any way. If at the date proposed for approval of the proposed purchase there are in issue shares of a class entitling the holders to

convert into equity share capital of another class, no purchase may take place unless it has been sanctioned by an extraordinary resolution passed at a separate meeting (or meetings if there are two or more classes) of the holders of that class of convertible shares, unless there are provisions in the relevant trust deed or terms of issue permitting the Company to purchase its own equity share capital.

GENERAL MEETINGS

40.	Annual general meeting

	The Company shall hold annual general meetings, which shall be convened by the board, in accordance with the Acts.

41.	Extraordinary general meeting

	All general meetings of the Company other than annual general meetings are called extraordinary general meetings.

42.	Convening of extraordinary general meetings

	The board may convene an extraordinary general meeting whenever it thinks fit. The board must convene an extraordinary general meeting immediately on receipt of a requisition from members in accordance with the Acts and in default a meeting may be convened by requisitionists as provided in the Acts. At a meeting convened on a requisition or by requisitionists no business may be transacted except that stated by the requisition or proposed by the board. An extraordinary general meeting may also be convened in accordance with article 93.

43.	Length and form of notice

(A)	An annual general meeting and an extraordinary general meeting called for the passing of a special resolution shall be called by not less than 21 clear days’ notice. All other extraordinary general meetings shall be called by not less than 14 clear days’ notice.

(B)	Subject to the Acts and although called by shorter notice than that specified in paragraph (A), a general meeting is deemed to have been duly called if it is so agreed:

	(i)	in the case of an annual general meeting, by all the members entitled to attend and vote at the meeting; and

	(ii)	in the case of another meeting, by a majority in number of the members having a right to attend and vote at the meeting, being a majority together holding not less than 95 per cent. in nominal value of the shares giving that right.

(C)	The notice of meeting shall specify:

(i)

whether the meeting is an annual general meeting or an extraordinary general meeting;

	(ii)	the place, the date and the time of the meeting;

	(iii)	the general nature of the business to be transacted;

	(iv)	if the meeting is convened to consider a special or an extraordinary resolution, the intention to propose the resolution as such; and

	(v)	with reasonable prominence, that a member entitled to attend and vote may appoint one or more proxies to attend and, on a poll, vote instead of him and that a proxy need not also be a member.

(D)	The notice of meeting shall be given to the members (other than any who, under the provisions of the articles or the terms of issue of shares, are not entitled to receive notice), to the directors and to the auditors.

44.	Omission to send notice

	The accidental omission to send a notice of meeting or, in cases where it is sent out with the notice, an instrument of proxy to, or the non-receipt of either by, a person entitled to receive it does not invalidate the proceedings at a general meeting.

45.	Postponement of General Meetings

	If the board, in its absolute discretion, considers that it is impractical or unreasonable for any reason to hold a general meeting on the date or at the time or place specified in the notice calling the general meeting, it may postpone the general meeting to another date, time and/or place. The board shall take reasonable steps to ensure that notice of the date, time and place of the postponed meeting is given to any member trying to attend the meeting at the original time and place. Notice of the date, time and place of the postponed meeting shall, if practicable, also be placed in at least two national newspapers in the United Kingdom. Notice of the business to be transacted at such postponed meeting shall not be required. If a meeting is rearranged in this way, proxy forms will be valid if they are delivered as required by these articles not less than forty eight hours before the time appointed for holding the postponed meeting.

PROCEEDINGS AT GENERAL MEETINGS

46.	Quorum

(A)	No business may be transacted at a general meeting unless a quorum is present. The absence of a quorum does not prevent the appointment of a chairman in accordance with the articles, which is not treated as part of the business of the meeting.

(B)	The quorum for a general meeting is for all purposes two members present in person or by proxy and entitled to vote.

47.	Procedure if quorum not present

(A)	If a quorum is not present within thirty minutes from the time fixed for the start of the meeting, the meeting, if convened by or on the requisition of members, is dissolved. In any other case it stands adjourned to such time (being not less than 14 days nor more than 28 days later) and place as the chairman (or, in default, the board) decides.

(B)	At an adjourned meeting the quorum is two members present in person or by proxy and entitled to vote. If a quorum is not present within five minutes from the time fixed for the start of the adjourned meeting, the adjourned meeting is dissolved.

(C)	The Company shall give not less than seven clear days’ notice of any meeting adjourned for the lack of a quorum and the notice shall state the quorum requirement.

48.	Chairman

	The chairman (if any) of the board or, in his absence, the deputy chairman (if any) shall preside as chairman at a general meeting. If there is no chairman or deputy chairman, or if at a meeting neither is present within five minutes after the time fixed for the start of the meeting, or neither is willing to act, the directors present shall select one of their number to be chairman. If only one director is present and willing to act, he shall be chairman. In default, the members present in person and entitled to vote shall choose one of their number to be chairman.

49.	Director’s right to attend and speak

	A director is entitled to attend and speak at a general meeting and at a separate meeting of the holders of a class of shares or debentures whether or not he is a member. The chairman may invite any person to attend and speak at a general meeting where he considers that this will assist in the deliberations of the meeting.

50.	Power to adjourn

(A)	The chairman may, with the consent of a meeting at which a quorum is present (and shall, if so directed by the meeting) adjourn a meeting from time to time and from place to place or for an indefinite period.

(B)	Without prejudice to any other power which he may have under the provisions of the articles or at common law, the chairman may, without the consent of the meeting, interrupt or adjourn a meeting from time to time and from place to place or for an indefinite period if he decides that it has become necessary to do so in order to (i) secure the proper and orderly conduct of the meeting, or (ii) give all persons entitled to do so a reasonable opportunity of speaking and voting at the meeting, or (iii) ensure that the business of the meeting is properly disposed of.

51.	Notice of adjourned meeting

	Without prejudice to article 47(C), whenever a meeting is adjourned for 28 days or more or for an indefinite period, at least seven clear days’ notice specifying the place, date and time of the adjourned meeting and the general nature of the business to be transacted shall be given to the members (other than any who, under the provisions of the articles or the terms of issue of the shares, are not entitled to receive notice), the directors and the auditors. Except in these circumstances, and subject to article 47(C), it is not necessary to give notice of an adjourned meeting or of the business to be transacted at the adjourned meeting.

52.	Business at adjourned meeting

	No business may be transacted at an adjourned meeting other than the business which might properly have been transacted at the meeting from which the adjournment took place.

53.	Accommodation of members at meeting

	If it appears to the chairman that the meeting place specified in the notice convening the meeting is inadequate to accommodate all members entitled and wishing to attend, the meeting is duly constituted and its proceedings valid if the chairman is satisfied that adequate facilities are available to ensure that a member who is unable to be accommodated is able to (i) participate in the business for which the meeting has been convened, and (ii) hear and see all persons present who speak (whether by the use of microphones, loudspeakers, audio-visual communications equipment or otherwise), whether in the meeting place or elsewhere, and (iii) be heard and seen by all other persons present in the same way.

54.	Security

	The board may make any arrangement and impose any restriction it considers appropriate to ensure the security of a meeting including, without limitation, the searching of a person attending the meeting and the restriction of the items of personal property that may be taken into the meeting place. The board is entitled to refuse entry to a meeting a person who refuses to comply with these arrangements or restrictions.

VOTING

55.	Method of voting

(A)	At a general meeting, a resolution put to the vote of the meeting is decided by a show of hands unless (before or on the declaration of the result of the show of hands) a poll is duly demanded.

(B)	Subject to the Acts, a poll may be demanded on any question by:

(i)

the chairman of the meeting;

	(ii)	not less than five members present in person or by proxy and entitled to vote;

	(iii)	a member or members present in person or by proxy representing in aggregate not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or

	(iv)	a member or members present in person or by proxy holding shares conferring a right to vote at the meeting, being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

	A demand by a proxy is deemed to be a demand by the member appointing the proxy.

(C)	Unless a poll is demanded and the demand is not withdrawn, a declaration by the chairman that the resolution has been carried, or carried by a particular majority, or lost or not carried by a particular majority, and an entry to that effect in the book containing the minutes of proceedings, is conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution.

56.	Procedure on a poll

(A)	If a poll is properly demanded, it shall be taken in such manner as the chairman directs. He may appoint scrutineers, who need not be members, and may fix a time and place for declaring the result of the poll. The result of the poll is deemed to he the resolution of the meeting at which the poll is demanded.

(B)	A poll demanded on the election of a chairman or on any question of adjournment shall be taken at the meeting and without adjournment. A poll demanded on another question shall be taken at such time and place as the chairman decides, either at once or after an interval or adjournment (but not more than 30 clear days after the date of the demand).

(C)	No notice need be given of a poll not taken immediately if the time and place at which it is to be taken are announced at the meeting at which it is demanded. In any other case at least seven clear days’ notice shall be given specifying the time and place at which the poll is to be taken.

(D)	The demand for a poll may be withdrawn but only with the consent of the chairman. A demand withdrawn in this way validates the result of a show of hands declared before the demand was made. In the case of a poll demanded before the declaration of the result of a show of hands, the meeting shall continue as if the demand had not been made.

(E)	The demand for a poll (other than on the election of the chairman or on a question of adjournment) does not prevent the meeting continuing for the transaction of business other than the question on which a poll has been demanded.

(F)	On a poll, votes may be given in person or by proxy and a member entitled to more than one vote need not, if he votes, use all his votes or cast all the votes he uses in the same way.

57.	Votes of members

(A)	Subject to special terms as to voting on which shares have been issued, or a suspension or abrogation of voting rights pursuant to the articles, at a general meeting every member present in person has on a show of hands one vote and every member present in person or by proxy has on a poll one vote for every ordinary share of which he is the holder.

(B)	In the case of joint holders of a share, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and seniority is determined by the order in which the names of the holders stand in the register.

(C)	A member in respect of whom an order has been made by a court or official having jurisdiction (whether in the United Kingdom or elsewhere) that he is or may be suffering from mental disorder or is otherwise incapable of running his affairs may vote, whether on a show of hands or on a poll, by his guardian, receiver, curator bonis or other person authorised for that purpose and appointed by the court. A guardian, receiver, curator bonis or other person may, on a poll, vote by proxy if evidence (to the satisfaction of the board) of the authority of the person claiming to exercise the right to vote is deposited at the office (or at another place specified in accordance with the articles for the deposit of instruments of proxy) within the time limits prescribed by the articles for the deposit of instruments of proxy for use at the meeting, adjourned meeting or poll at which the right to vote is to be exercised.

58.	Casting vote

	In the case of an equality of votes the chairman has, on a show of hands and on a poll, a casting vote in addition to a vote to which he is entitled as a member.

59.	Restriction on voting rights for unpaid calls etc.

	Unless the board otherwise decides, no member is entitled in respect of a share held by him to be present or to vote, either in person or by proxy, at a general meeting or at a separate meeting of the holders of class of shares or on a poll, or to exercise other rights conferred by membership in relation to a meeting or poll, if a call or other amount due and payable in respect of the share is unpaid. This restriction ceases on payment of the amount outstanding and all costs, charges and expenses incurred by the Company by reason of the non-payment.

60.	Voting by proxy

(A)	An instrument appointing a proxy shall be in writing in any usual form (or in another form approved by the board) executed by the appointor or his duly constituted attorney or, if

	the appointor is a company, under its seal or under the hand of its duly authorised officer or attorney or other person authorised to sign.

(B)	An instrument of proxy is deemed (unless the contrary is stated in it) to confer authority to demand or join in demanding a poll and to vote on a resolution or amendment of a resolution put to, or other business which may properly come before, the meeting or meetings for which it is given, as the proxy thinks fit.

(C)	A proxy need not be a member.

(D)	A member may appoint more than one proxy to attend on the same occasion. When two or more valid but differing instruments of proxy are delivered for the same share for use at the same meeting, the one which is last validly delivered (regardless of its date or the date of its execution) shall be treated as replacing and revoking the other or others as regards that share.

(E)	Deposit of an instrument of proxy does not prevent a member attending and voting in person at the meeting or an adjournment of the meeting or on a poll.

(F)	An instrument of proxy is (unless the contrary is stated in it) valid for an adjournment of the meeting as well as for the meeting or meetings to which it relates. An instrument of proxy is valid for 12 months from the date of execution.

(G)	Subject to the Acts and the requirements of the London Stock Exchange, the Company may send an instrument of proxy to all or none of the persons entitled to receive notice of and to vote at a meeting. If sent the instrument shall provide for two-way voting (without prejudice to a right to abstain) on all resolutions set out in the notice of meeting.

61.	Deposit of proxy

	An instrument of proxy, and (if required by the board) a power of attorney or other authority under which it is executed or a copy of it notarially certified or certified in some other way approved by the board, shall be:

	(i)	deposited at the office, or another place in the United Kingdom specified in the notice convening the meeting or in an instrument of proxy or other accompanying document sent by the Company in relation to the meeting, not less than 48 hours before the time for holding the meeting or adjourned meeting or the taking of a poll at which the person named in the instrument proposes to vote;

	(ii)	in the case of a meeting adjourned for less than 28 days but more than 48 hours or in the case of a poll taken more than 48 hours after it is demanded, deposited as required by paragraph (i) not less than 24 hours before the time appointed for the holding of the adjourned meeting or the taking of the poll; or

	(iii)	in the case of a meeting adjourned for less than 48 hours or in the case of a poll not taken immediately but taken not more than 48 hours after it was demanded,

delivered at the adjourned meeting or at the meeting at which the poll was demanded to the chairman or to the secretary or to a director.

	An instrument of proxy not deposited or delivered in accordance with this article is invalid.

62.	When votes by proxy valid though authority revoked

	A vote given or poll demanded by a proxy or authorised representative of a company is valid despite termination of his authority unless notice of termination is received by the Company at the office (or other place specified for depositing the instrument of proxy) at least one hour before the time for holding the meeting or adjourned meeting at which the vote is given or (in the case of a poll taken otherwise than at or on the same day as the meeting or adjourned meeting) the time appointed for the taking of the poll at which the vote is cast.

CORPORATE REPRESENTATIVE

63.

A company which is a member may, by resolution of its directors or other governing body, authorise a person to act as its representative at a meeting or at a separate meeting of the holders of a class of shares (the “representative”). The representative is entitled to exercise on behalf of the company (in respect of that part of the company’s holding of shares to which the authorisation relates) those powers that the company could exercise if it were an individual member. The company is for the purposes of the articles deemed to be present in person at a meeting if the representative is present. All references to attendance and voting in person shall be construed accordingly. A director, the secretary or other person authorised for the purpose by the secretary may require the representative to produce a certified copy of the resolution of authorisation before permitting him to exercise his powers.

OBJECTIONS TO AND ERROR IN VOTING

64.

No objection may be made to the qualification of a voter or to the counting of, or failure to count, a vote, except at the meeting or adjourned meeting at which the vote objected to is tendered or at which the error occurs. An objection properly made shall be referred to the chairman and only invalidates the result of the voting if, in the opinion of the chairman, it is of sufficient magnitude to affect the decision of the meeting. The decision of the chairman is conclusive and binding on all concerned.

AMENDMENTS TO RESOLUTIONS

65.

No amendment to a resolution duly proposed as a special or extraordinary resolution may be considered or voted on, other than an amendment to correct a patent error. No amendment to a resolution duly proposed as an ordinary resolution may be considered or voted on, other than an amendment to correct a patent error, unless either (i) at least 48 hours before the time appointed for holding the meeting or adjourned meeting at which the ordinary resolution is to be considered, notice of the terms of the amendment and intention to move it has been lodged at the office; or (ii) the chairman in his absolute

discretion decides that the amendment may be considered or voted on. If an amendment proposed to a resolution under consideration is ruled out of order by the chairman the proceedings on the substantive resolution are not invalidated by an error in his ruling.

MEMBERS’ WRITTEN RESOLUTIONS

66.

A resolution in writing executed by or on behalf of each member who would have been entitled to vote upon it if it had been proposed at a general meeting at which he was present is as effective as if it had been passed at a general meeting duly convened and held. The resolution in writing may consist of several instruments in the same form each duly executed by or on behalf of one or more members. If the resolution in writing is described as a special resolution or as an extraordinary resolution, it has effect accordingly.

CLASS MEETINGS

67.	A separate meeting for the holders of a class of shares shall be convened and conducted as nearly as possible in the same way as an extraordinary general meeting, except that:

	(i)	no member, other than a director, is entitled to notice of it or to attend unless he is a holder of shares of that class;

	(ii)	no vote may be given except in respect of a share of that class;

	(iii)	the quorum at the meeting is two persons present in person holding or representing by proxy at least one-third in nominal value of the issued shares of that class;

	(iv)	the quorum at an adjourned meeting is two persons holding shares of that class who are present in person or by proxy; and

	(v)	a poll may he demanded in writing by a member present in person or by proxy and entitled to vote at the meeting and on a poll each member has one vote for every share of that class of which he is the holder.

FAILURE TO DISCLOSE INTERESTS IN SHARES

68.

(A)

Where notice is served by the Company under section 212 of the Act (a “section 212 notice”) on a member, or another person appearing to be interested in shares held by that member, and the member or other person has failed in relation to any shares (the “default shares”, which expression includes any shares issued after the date of the section 212 notice in right of those shares) to give the Company the information required within the prescribed period from the date of service of the section 212 notice, the following sanctions apply, unless the board otherwise decides:

	(i)	the member is not entitled in respect of the default shares to be present or to vote (either in person or by proxy) at a general meeting or at a separate meeting of the holders of a class of shares or on a poll, or to exercise other rights conferred by membership in relation to the meeting or poll; and

	(ii)	where the default shares represent at least 0.25 per cent. in nominal value of the issued shares of their class:

		(a)	a dividend (or any part of a dividend) or other amount payable in respect of the default shares shall be withheld by the Company, which has no obligation to pay interest on it, and the member is not entitled to elect, pursuant to article 129, to receive shares instead of a dividend; and

		(b)	subject to the requirements of the Regulations, no transfer of any of the default shares shall be registered unless the transfer is an excepted transfer or:

			(1)	the member is not himself in default in supplying the information required; and

			(2)	the member proves to the satisfaction of the board that no person in default in supplying the information required is interested in any of the shares the subject of the transfer.

(B)	The sanctions under paragraph (A) cease to apply seven days after the earlier of:

	(i)	receipt by the Company of notice of an excepted transfer, but only in relation to the shares transferred; and

	(ii)	receipt by the Company, in a form satisfactory to the board, of all the information required by the section 212 notice.

(C)	Where, on the basis of information obtained from a member in respect of a share held by him, the Company issues a section 212 notice to another person, it shall at the same time send a copy of the section 212 notice to the member, but the accidental omission to do so, or the non-receipt by the member of the copy, does not invalidate or otherwise affect the application of paragraph (A).

(D)	For the purposes of this article 68:

	(i)	a person, other than the member holding a share, is treated as appearing to be interested in that share if the member has informed the Company that the person is or may be interested, or if the Company (after taking account of information obtained from the member or, pursuant to a section 212 notice, from anyone else) knows or has reasonable cause to believe that the person is or may be so interested;

	(ii)	“interested” is construed as it is for the purpose of section 212 of the Act;

	(iii)	(reference to a person having failed to give the Company the information required by a section 212 notice, or being in default in supplying such information, includes (a) reference to his having failed or refused to give all or any part of it, and (b) reference to his having given information which he knows to be false in a material particular or having recklessly given information which is false in a material particular;

	(iv)	the “prescribed period” means 14 days;

	(v)	an “excepted transfer” means, in relation to shares held by a member:

		(a)	a transfer pursuant to acceptance of a takeover offer for the Company (within the meaning of section 428(1) of the Act); or

		(b)	a transfer in consequence of a sale made through a recognised investment exchange (as defined in the Financial Services Act 1986) or another stock exchange outside the United Kingdom on which shares in the capital of the Company are normally traded; or

		(c)	a transfer which is shown to the satisfaction of the board to be made in consequence of a sale of the whole of the beneficial interest in the shares to a person who is unconnected with the member and with any other person appearing to be interested in the shares.

(E)	The provisions of this article are in addition and without prejudice to the provisions of the Acts.

APPOINTMENT, RETIREMENT AND REMOVAL OF DIRECTORS

69.	Number of directors

	Unless and until otherwise decided by the Company by ordinary resolution the number of directors is not subject to a maximum but must not be less than two.

70.	Power of the Company to appoint directors

	Subject to the articles, the Company may by ordinary resolution appoint a person who is willing to act to be a director, either to fill a vacancy or as an addition to the board, but the total number of directors may not exceed a maximum number fixed in accordance with the articles.

71.	Power of the board to appoint directors

	Without prejudice to the power of the Company to appoint a person to be a director pursuant to the articles, the board may appoint a person who is willing to act as a director, either to fill a vacancy or as an addition to the board, but the total number of directors may not exceed a maximum number fixed in accordance with the articles. A director appointed in this way may hold office only until the dissolution of the next annual

	general meeting after his appointment unless he is reappointed during the meeting. He is not required, and is not taken into account in determining the number of directors who are, to retire by rotation at the meeting.

72.	Appointment of executive directors

	Subject to the Acts, the board or any committee authorised by the board may appoint one or more of its body to hold employment or executive office (including that of managing director) with the Company for such term (subject to the Acts) and on any other conditions the board or any committee authorised by the board thinks fit. The board or any committee authorised by the board may revoke or terminate an appointment, without prejudice to a claim for damages for breach of contract.

73.	Eligibility of new directors

(A)	No person other than a director retiring (by rotation or otherwise) may be appointed or reappointed a director at a general meeting unless:

	(i)	he is recommended by the board; or

	(ii)	not less than seven nor more than 42 days before the date fixed for the meeting, notice has been given to the Company by a member (other than the person to be proposed) qualified to vote at the meeting of the intention to propose that person for appointment or reappointment. The notice shall (a) state the particulars which would, if the proposed director were appointed or reappointed, be required to be included in the Company’s register of directors, (b) be accompanied by notice given by the proposed director of his willingness to be appointed or reappointed, and (c) be lodged at the office.

(B)	A director need not be a member.

74.	Voting on resolution for appointment

	A resolution for the appointment of two or more persons as directors by a single resolution is void unless an ordinary resolution that the resolution for appointment is proposed in this way has first been agreed to by the meeting without a vote being given against it.

75.	Retirement by rotation

	At each annual general meeting a minimum of one-third of the directors shall retire from office or, if their number is not three or a multiple of three, the minimum number to retire shall be the number nearest to but not exceeding one-third. If there are fewer than three directors, one shall retire from office.

76.	Identity of directors to retire

	The directors to retire by rotation on each occasion shall be those of the directors who held office at the time of the two preceding annual general meetings and who did not retire by rotation at either of them. If the number of directors so retiring is less than the minimum number required by these articles to retire by rotation, additional directors up to that number shall also retire. The additional directors to retire by rotation at an annual general meeting are those directors who have been longest in office since their last appointment or reappointment. As between two or more who have been in office an equal length of time, the director to retire shall, in default of agreement between them, be determined by lot. The directors to retire on each occasion (both as to number and identity) shall be determined on the basis of the composition of the board at the start of business on the date of the notice convening the annual general meeting, disregarding a change in the number or identity of the directors after that time but before the close of the meeting.

77.	Position of retiring director

	A director who retires at an annual general meeting (whether by rotation or otherwise) may, if willing to act, be reappointed. If he is not reappointed or deemed reappointed, he may retain office until the meeting appoints someone in his place or, if it does not do so, until the end of the meeting.

78.	Deemed reappointment

	At a general meeting at which a director retires by rotation the Company may fill the vacancy and, if it does not do so, the retiring director is, if willing, deemed reappointed unless it is expressly resolved not to fill the vacancy or a resolution for the reappointment of the director is put to the meeting and lost.

79.	No retirement on account of age

	No person is incapable of being appointed a director by reason of his having reached the age of 70 or another age. Special notice is not required in connection with the appointment or the approval of the appointment of such person. No director is required to vacate his office because he has reached the age of 70 or another age and section 293 of the Act does not apply to the Company. Where a general meeting is convened at which, to the knowledge of the board, a director is to be proposed for appointment or reappointment who is at the date of the meeting 70 or more, the board shall give notice of his age in the notice convening the meeting or in a document accompanying the notice, but the accidental omission to do so does not invalidate proceedings or an appointment or reappointment of that director at that meeting.

80.	Removal by ordinary resolution

	In addition to any power of removal conferred by the Acts, the Company may by ordinary resolution remove a director before the expiration of his period of office (without prejudice to a claim for damages for breach of contract) and may (subject to the articles)

	by ordinary resolution appoint another person who is willing to act to be a director in his place. A person appointed in this way is treated, for the purposes of determining the time at which he or another director is to retire, as if he had become a director on the date on which the person in whose place he is appointed was last appointed or reappointed a director.

81.	Vacation of office by director

(A)	Without prejudice to the provisions for retirement (by rotation or otherwise) contained in the articles, the office of a director is vacated if:

	(i)	he resigns by notice delivered to the secretary at the office or tendered at a board meeting;

	(ii)	he ceases to be a director by virtue of a provision of the Acts, is removed from office pursuant to the articles or becomes prohibited by law from being a director;

	(iii)	he becomes bankrupt, has an interim receiving order made against him, makes an arrangement or compounds with his creditors generally or applies to the court for an interim order under section 253 of the Insolvency Act 1986 in connection with a voluntary arrangement under that Act;

	(iv)	an order is made by a court of competent jurisdiction on the ground (however formulated) of mental disorder for his detention or for the appointment of a guardian, receiver, curator bonis or other person to exercise powers with respect to his affairs or he is admitted to hospital in pursuance of an application for admission for treatment under the Mental Health Act 1983 or, in Scotland, under the Mental Health (Scotland) Act 1984 and the board resolves that his office be vacated;

	(v)	both he and his alternate director appointed pursuant to the provisions of the articles (if any) are absent, without the permission of the board, from board meetings for six consecutive months and the board resolves that his office be vacated; or

	(vi)	he is removed from office by notice addressed to him at his last-known address and signed by all his co-directors (without prejudice to a claim for damages for breach of contract).

(B)	A resolution of the board declaring a director to have vacated office under the terms of this article is conclusive as to the fact and grounds of vacation stated in the resolution.

ALTERNATE DIRECTORS

82.	Appointment

(A)	A director (other than an alternate director) may by notice delivered to the secretary at the office, or in any other manner approved by the board, appoint as his alternate director:

	(i)	another director, or

	(ii)	another person approved by the board and willing to act.

	No appointment of an alternate director who is not already a director is effective until his consent to act as a director in the form prescribed by the Acts has been received at the office.

(B)	An alternate director need not be a member and is not counted in reckoning the number of directors for the purpose of article 69.

83.	Revocation of appointment

	A director may by notice delivered to the secretary at the office revoke the appointment of his alternate director and, subject to the provisions of article 82, appoint another person in his place. If a director ceases to hold the office of director or if he dies, the appointment of his alternate director automatically ceases. If a director retires but is reappointed at the meeting at which his retirement takes effect, a valid appointment of an alternate director which was in force immediately before his retirement continues to operate after his reappointment as if he has not retired. The appointment of an alternate director ceases on the happening of an event which, if he were a director otherwise appointed, would cause him to vacate office.

84.	Participation in board meetings

	An alternate director is, if he gives the Company an address in the United Kingdom at which notices may be served on him, entitled to receive notice of all meetings of the board and all committees of the board of which his appointor is a member and, in the absence from those meetings of his appointor, to attend and vote at the meetings and to exercise all the powers, rights, duties and authorities of his appointor. A director acting as alternate director has a separate vote at meetings of the board and committees of the board for each director for whom he acts as alternate director but he counts as only one for the purpose of determining whether a quorum is present.

85.	Responsibility

	A person acting as an alternate director is an officer of the Company, is alone responsible to the Company for his acts and defaults, and is not deemed to be the agent of his appointor.

REMUNERATION, EXPENSES AND PENSIONS

86.	Directors’ fees

	Unless otherwise decided by the Company by ordinary resolution, the Company shall pay to the directors (but not alternate directors) for their services as directors such amount of aggregate fees as the board decides (not exceeding £500,000 per annum or such larger amount as the Company may by ordinary resolution decide). The aggregate fees shall be divided among the directors in such proportions as the board decides or, if no decision is made, equally. A fee payable to a directors pursuant to this article is distinct from any salary, remuneration or other amount payable to him pursuant to other provisions of the articles and accrues from day to day.

87.	Additional remuneration

	A director who, at the request of the board, goes or resides abroad, makes a special journey or performs a special service on behalf of the Company may be paid such reasonable additional remuneration (whether by way of salary, percentage of profits or otherwise) and expenses as the board may decide.

88.	Expenses

	A director is entitled to be repaid all reasonable travelling, hotel and other expenses properly incurred by him in the performance of his duties as director, including expenses incurred in attending meetings of the board or of committees of the board or general meetings or separate meetings of the holders of a class of shares or debentures.

89.	Remuneration and expenses of alternate directors

	An alternate director is not entitled to a fee from the Company for his services as an alternate director. The fee payable to an alternate director is payable out of the fee payable to his appointor and consists of such portion (if any) of the fee as he agrees with his appointor. The Company shall, however, repay to an alternate director expenses incurred by him in the performance of his duties if the Company would have been required to repay the expenses to him under article 88 had he been a director.

90.	Directors’ pensions and other benefits

(A)

The board may exercise all the powers of the Company to provide pensions or other retirement or superannuation benefits and to provide death or disability benefits or other allowances or gratuities (by insurance or otherwise) for a person who is or has at any time been a director of (i) the Company, or (ii) a company which is or was a subsidiary undertaking of the Company, or (iii) a company which is or was allied to or associated with the Company or a subsidiary undertaking of the Company, or (iv) a predecessor in business of the Company or of a subsidiary undertaking of the Company (and for any member of his family, including a spouse or former spouse, or a person who is or was dependent on him). For this purpose the board may establish, maintain, subscribe and

	contribute to any scheme, trust or fund and pay premiums. The board may arrange for this to be done by the Company alone or in conjunction with another person.

(B)	A director or former director is entitled to receive and retain for his own benefit a pension or other benefit provided under paragraph (A) and is not obliged to account for it to the Company.

91.	Remuneration of executive director

	The salary or other remuneration of a director appointed to hold employment or executive office in accordance with the articles may be a fixed sum of money, or wholly or in part governed by business done or profits made, or as otherwise decided by the board, and may be in addition to or instead of a fee payable to him for his services as director pursuant to the articles.

POWERS AND DUTIES OF THE BOARD

92.	Powers of the board

	Subject to the Acts, the memorandum of association of the Company and the articles and to directions given by special resolution of the Company, the business of the Company is managed by the board which may exercise all the powers of the Company whether relating to the management of the business or not. No alteration of the memorandum of association or of the articles and no direction given by the Company invalidate a prior act of the board which would have been valid if the alteration had not been made or the direction had not been given. The provisions of the articles giving specific powers to the board do not limit the general powers given by this article.

93.	Powers of directors being less than minimum required number

	If the number of directors is less than the minimum prescribed by the articles or decided by the Company by ordinary resolution, the remaining director or directors may act only for the purposes of appointing an additional director or directors to make up that minimum or convening a general meeting of the Company for the purpose of making such appointment. If no director or directors is or are able or willing to act, two members may convene a general meeting for the purpose of appointing directors. An additional director appointed in this way holds office (subject to the articles) only until the dissolution of the next annual general meeting after his appointment unless he is reappointed during the meeting.

94.	Powers of executive directors

	The board may delegate to a director holding executive office (including a managing director) any of its powers, authorities and discretions for such time and on such terms and conditions as it thinks fit. In particular, the board may grant the power to sub-delegate, and may retain or exclude the right of the board to exercise the delegated powers, authorities or discretions collaterally with the director. The board may at any time revoke the delegation or alter its terms and conditions.

95.	Delegation to committees

	The board may delegate any of its powers, authorities and discretions for such time and on such terms and conditions as it thinks fit to a committee consisting of one or more directors and (if thought fit) one or more other persons. In particular, the board may grant the power to sub-delegate, and may retain or exclude the right of the board to exercise the delegated powers, authorities or discretions collaterally with the committee. The board may at any time revoke the delegation or alter its terms and conditions or discharge the committee in whole or in part. Where a provision of the articles refers to the exercise of a power, authority or discretion by the board and that power, authority or discretion has been delegated by the board to a committee, the provision shall be construed as permitting the exercise of the power, authority or discretion by the committee.

96.	Local management

	The board may establish local or divisional boards or agencies for managing the affairs of the Company in a specified locality, either in the United Kingdom or elsewhere, and may appoint persons to be members of a local or divisional board or agency, and may fix their remuneration. The board may delegate to a local or divisional board or agency any of its powers, authorities and discretions for such time and on such terms and conditions as it thinks fit. In particular, the board may grant the power to sub-delegate, may retain or exclude the right of the board to exercise the delegated powers, authorities or discretions collaterally with the local or divisional board or agency and may authorise the members of a local or divisional board or agency (or any of them) to fill a vacancy or to act despite a vacancy. The board may at any time revoke or alter the terms and conditions of the appointment or delegation. Subject to terms and conditions imposed by the board, the proceedings of a local or divisional board or agency with two or more members are governed by those articles that regulate the proceedings of the board, so far as applicable.

97.	Power of attorney

	The board may by power of attorney or otherwise appoint a person to be the agent of the Company and may delegate to that person any of its powers, authorities and discretions for such purposes, for such time and on such terms and conditions (including as to remuneration) as it thinks fit. In particular, the board may grant the power to sub-delegate and may retain or exclude the right of the board to exercise the delegated powers, authorities or discretions collaterally with the agent. The board may at any time revoke or alter the terms and conditions of the appointment or delegation.

98.	Associate directors

	The board may appoint a person (not being a director) to an office or employment having a designation or title including the word “director” or attach to an existing office or employment that designation or title and may terminate the appointment or use of that designation or title. The inclusion of the word “director” in the designation or title of an

	office or employment does not imply that the person is, or is deemed to be, or is empowered to act as, a director for any of the purposes of the Acts or the articles.

99.	Exercise of voting powers

	Subject to article 102, the board may exercise or cause to be exercised the voting powers conferred by shares in the capital of another company held or owned by the Company, or a power of appointment to be exercised by the Company, in any manner it thinks fit (including the exercise of the voting power or power of appointment in favour of the appointment of a director as an officer or employee of that company or in favour of the payment of remuneration to the officers or employees of that company).

100.	Provision for employees

	The board may exercise the powers conferred on the Company by the Acts to make provision for the benefit of a person employed or formerly employed by the Company or any of its subsidiary undertakings (or any member of his family, including a spouse or former spouse, or any person who is or was dependent on him) in connection with the cessation or the transfer to a person of the whole or part of the undertaking of the Company or the subsidiary undertaking.

101.	Registers

	Subject to the Acts, the board may exercise the powers conferred on the Company with regard to the keeping of an overseas, local or other register and may make and vary regulations as it think fit concerning the keeping of a register.

102.	Borrowing powers

(A)	Subject to the following provisions of this article, the board may exercise all the powers of the Company to borrow money and to mortgage or charge all or part of the undertaking, property and assets (present or future) and uncalled capital of the Company and, subject to the Acts, to issue debentures and other securities, whether outright or as collateral security for a debt, liability or obligation of the Company or of a third party.

(B)	The board shall restrict the borrowings of the Company and shall exercise all voting and other rights or powers of control exercisable by the Company in relation to its subsidiary undertakings so as to ensure (as regards subsidiary undertakings, to the extent possible) that the aggregate principal amount outstanding in respect of moneys borrowed by the group does not at any time without the previous sanction of an ordinary resolution of the Company exceed a sum equal to US$400,000,000.

(C)	In this article:

	(i)	“group” means:

(a)

the Company;

		(b)	all undertakings which are included in the consolidated group accounts in which the relevant balance sheet is comprised and which would be so included if group accounts were prepared at the relevant time (and if that time were the end of the Company’s financial year); and

		(c)	all undertakings which are not included in the consolidated group accounts in which the relevant balance sheet is comprised but which would be so included if group accounts were prepared at the relevant time (and if that time were the end of the Company’s financial year);

	(ii)	“group undertaking” means the Company or another undertaking in the group; and

	(iii)	“moneys borrowed” means all moneys borrowed including, without limitation:

		(a)	the nominal amount of and the amount of any premium paid in respect of any allotted share capital (not being equity share capital) of a group undertaking other than the Company not beneficially owned, directly or indirectly, by another group undertaking;

		(b)	any amount raised by acceptance under an acceptance credit facility;

		(c)	any amount raised under a note purchase facility;

		(d)	the amount of any liability in respect of a lease or hire purchase contract which would, in accordance with generally accepted accounting standards in the United Kingdom, be treated as a finance or capital lease;

		(e)	the amount of any liability in respect of a purchase price for assets or services the payment of which is deferred for a period of more than 90 days; and

		(f)	any amount raised under another transaction (including, without limitation, a forward sale or purchase agreement) having the commercial effect of a borrowing;

		but excluding:

		(g)	borrowings by one group undertaking from another, including the principal amount of any loan capital (whether secured or unsecured) and the nominal amount of any allotted or issued share capital (not being equity share capital) of a group undertaking beneficially owned, directly or indirectly, by another group undertaking;

		(h)	borrowings for the purpose of financing a contract to the extent that the price receivable under the contract is guaranteed or insured by the

			Export Credits Guarantee Department of the Department of Trade and Industry or by another person fulfilling a similar function;

		(i)	borrowings for the purpose of, and applied within six mouths of being made in, repaying the whole or part of borrowings that constitute moneys borrowed for the purposes of this article, pending their application for that purpose within that period; and

		and in calculating moneys borrowed for the purposes of this article, there shall be deducted:

		(j)	an amount equal to the aggregate of:

			(I)	all cash in hand and cash deposits repayable on demand with any bank or financial institution (not itself a group undertaking); and

			(II)	investments which are readily convertible into known amounts of cash with notice of 48 hours or less;

			in each case beneficially owned, directly or indirectly, by a group undertaking and whether denominated in sterling or in a currency other than sterling.

(D)	When the amount of moneys borrowed to be taken into account for the purposes of this article on a particular day is being calculated, moneys denominated or repayable in a currency other than sterling shall be converted for the purpose of calculating the sterling equivalent either:

	(i)	at the rate of exchange specified in a forward purchase contract, currency option, back-to-back loan, swap or other arrangement taken out or entered into to reduce the risk associated with fluctuations in rates of exchange in respect of repayment of those moneys (a “hedging agreement”); or

	(ii)	if those moneys were borrowed on or before the date of the relevant balance sheet and repayment of those moneys has not been covered by a hedging agreement, at the more favourable to the Company of:

		(a)	the rate of exchange used for the conversion of that currency in the relevant balance sheet, or

		(b)	the middle-market rate of exchange quoted by Barclays Bank PLC at the close of business in London on the business day immediately preceding the day on which the calculation falls to be made; or

(iii)

if those moneys were borrowed after the date of the relevant balance sheet and repayment of those moneys has not been covered by a hedging agreement, at the more favourable to the Company of:

		(a)	the middle-market rate of exchange quoted by Barclays Bank PLC at the close of business in London on the date of the relevant balance sheet, or

		(b)	the middle-market rate of exchange quoted by Barclays Bank PLC at the close of business in London on the business day immediately preceding the day on which the calculation falls to be made.

(E)	When calculating moneys borrowed for the purposes of this article, where a group undertaking has issued equity share capital that is not owned, directly or indirectly, by a group undertaking (“external capital”):

	(a)	the relevant percentage of any borrowings from that group undertaking by another group undertaking shall not be excluded pursuant to paragraph (C)(iii)(g);

	(b)	the relevant percentage of any borrowings made by that group undertaking that constitute moneys borrowed for the purposes of this article shall be deducted; and

	(c)	the relevant percentage of any items falling within clause (C)(iii)(j) beneficially owned, directly or indirectly, by that group undertaking shall not be deducted;

	and for the purpose of this paragraph “relevant percentage” means a percentage equal to the percentage that the external capital forms of the whole of the issued equity share capital of that group undertaking.

(F)	A report of the auditors as to the aggregate amount of moneys borrowed for the purposes of this article is conclusive and binding on all concerned. Nevertheless the board may at any time act in reliance on a bona fide estimate of the amount of the aggregate amount of moneys borrowed. If in consequence the limit on moneys borrowed set out in this article is inadvertently exceeded, the amount of moneys borrowed equal to the excess may be disregarded for 90 days after the date on which by reason of a determination of the auditors or otherwise the board becomes aware that this situation has or may have arisen.

(G)	No debt incurred or security given in respect of moneys borrowed in excess of the limit imposed by this article is invalid or ineffectual except where express notice that the limit has been or will be exceeded has been given to the lender or recipient of the security at the time when the debt is incurred or security given. No lender or other person dealing with the Company is concerned to see or enquire whether the limit is observed.

103.	Register of charges

	The Company shall keep a register of charges in accordance with the Acts and the fee to be paid by a person other than a creditor or member for each inspection of the register of charges is the maximum sum prescribed by the Acts or, failing which, decided by the board.

DIRECTORS’ INTERESTS

104.

(A)	Subject to the Acts and paragraph (B), a director, notwithstanding his office:

	(i)	may enter into or otherwise be interested in a contract, arrangement, transaction or proposal with the Company or in which the Company is otherwise interested either in connection with his tenure of an office or place of profit or as seller, buyer or otherwise;

	(ii)	may hold another office or place of profit with the Company (except that of auditor or auditor of a subsidiary of the Company) in conjunction with the office of director and may act by himself or through his firm in a professional capacity to the Company, and in that case on such terms as to remuneration and otherwise as the board may decide either in addition to or instead of remuneration provided for by another article;

	(iii)	may be a director or other officer of, or employed by, or a party to a contract, transaction, arrangement or proposal with or otherwise interested in, a company promoted by the Company or in which the Company is otherwise interested or as regards which the Company has a power of appointment; and

	(iv)	is not liable to account to the Company for a profit, remuneration or other benefit realised by such office, employment, contract, arrangement, transaction or proposal and no such contract, arrangement, transaction or proposal is avoided on the grounds of any such interest or benefit.

(B)

A director who, to his knowledge, is in any way (directly or indirectly) interested in a contract, arrangement, transaction or proposal with the Company shall declare the nature of his interest at the meeting of the board at which the question of entering into the contract, arrangement, transaction or proposal is first considered, if he knows his interest then exists or, in any other case, at the first meeting of the board after he knows that he is or has become interested. For the purposes of this article:

	(i)	a general notice given to the board by a director that he is to be regarded as having an interest (of the nature and extent specified in the notice) in a contract, transaction, arrangement or proposal in which a specified person or class of persons is interested is a sufficient disclosure under this article in relation to that contract, transaction, arrangement or proposal; and

	(ii)	an interest of which a director has no knowledge and of which it is unreasonable to expect him to have knowledge is not treated as his interest.

(C)

Except as provided in this article, a director may not vote on a resolution of the board or of a committee of the board concerning a contract, arrangement, transaction or proposal to which the Company is or is to be a party and in which he has an interest which is, to his knowledge, a material interest (otherwise than by virtue of his interest in shares or

	debentures or other securities of or otherwise in or through the Company), but this prohibition does not apply to a resolution concerning any of the following matters:

	(i)	the giving of a guarantee, security or indemnity in respect of money lent or obligations incurred by him or any other person at the request of or for the benefit of the Company or any of its subsidiary undertakings;

	(ii)	the giving of a guarantee, security or indemnity in respect of a debt or obligation of the Company or any of its subsidiary undertakings for which he himself has assumed responsibility in whole or in part, either alone or jointly with others, under a guarantee or indemnity or by the giving of security;

	(iii)	a contract, arrangement, transaction or proposal concerning an offer of shares, debentures or other securities of the Company or any of its subsidiary undertakings for subscription or purchase, in which offer he is or may he entitled to participate as a holder of securities or in the underwriting or sub-underwriting of which he is to participate;

	(iv)	a contract, arrangement, transaction or proposal to which the Company is or is to be a party concerning another company (including a subsidiary undertaking of the Company) in which he is interested (directly or indirectly) whether as an officer, shareholder, creditor or otherwise (a “relevant company’), if he does not to his knowledge hold an interest in shares (as that term is used in sections 198 to 211 of the Act) representing one per cent. or more of either any class of the equity share capital of, or the voting rights in, the relevant company;

	(v)	a contract, arrangement, transaction or proposal for the benefit of the employees of the Company or any of its subsidiary undertakings which does not award him a privilege or benefit not generally awarded to the employees to whom it relates;

	(vi)	a contract, arrangement, transaction or proposal concerning the adoption, modification or operation of a pension, superannuation or similar scheme or retirement, death, or disability benefit scheme, or personal pension plan or employee’s share scheme under which he may benefit and which has been approved by or is conditional on approval by the Inland Revenue for taxation purposes;

	(vii)	a contract, arrangement, transaction or proposal concerning the purchase or maintenance of any insurance policy under which he may benefit.

(D)

A director may not vote or be counted in the quorum on a resolution of the board or committee of the board concerning his own appointment (including fixing or varying the terms of his appointment or its termination) as the holder of an office or place of profit with the Company or any company in which the Company is interested. Where proposals are under consideration concerning the appointment (including fixing or varying the terms of appointment or its termination) of two or more directors to offices or places of profit with the Company or a company in which the Company is interested,

	such proposals shall be divided and a separate resolution considered in relation to each director. In such case each of the directors concerned (if not otherwise debarred from voting under this article) is entitled to vote (and be counted in the quorum) in respect of each resolution except that concerning his own appointment.

(E)	If a question arises at a meeting as to the materiality of a director’s interest (other than the interest of the chairman of the meeting) or as to the entitlement of a director (other than the chairman) to vote or be counted in a quorum and the question is not resolved by his voluntarily agreeing to abstain from voting or being counted in the quorum, the question shall be referred to the chairman and his ruling in relation to the director concerned is conclusive and binding on all concerned.

(F)	If a question arises at a meeting as to the materiality of the interest of the chairman of the meeting or as to the entitlement of the chairman to vote or be counted in a quorum and the question is not resolved by his voluntarily agreeing to abstain from voting or being counted in the quorum, the question shall be decided by resolution of the directors or committee members present at the meeting (excluding the chairman) whose majority vote is conclusive and binding on all concerned.

(G)	For the purposes of this article, the interest of a person who is for the purposes of the Acts connected with (within the meaning of section 346 of the Act) a director is treated as the interest of the director and, in relation to an alternate director, the interest of his appointor is treated as the interest of the alternate director in addition to an interest which the alternate director otherwise has. This article applies to an alternate director as if he were a director otherwise appointed.

PROCEEDINGS OF DIRECTORS AND COMMITTEES

105.	Board meetings

	Subject to the articles, the board may meet for the despatch of business, adjourn and otherwise regulate its proceedings as it thinks fit.

106.	Notice of board meetings

	A director may, and the secretary at the request of a director shall, summon a board meeting at any time. Notice of a board meeting is deemed to he duly given to a director if it is given to him personally or by word of mouth or sent in writing to him at his last- known address or another address given by him to the Company for that purpose. A director may waive the requirement that notice be given to him of a board meeting, either prospectively or retrospectively. A director absent or intending to be absent from the United Kingdom may request that notices of board meetings during his absence be sent in writing to him at an address given by him to the Company for that purpose. If no request is made it is not necessary to give notice of a board meeting to a director who is absent from the United Kingdom.

107.	Quorum

	The quorum necessary for the transaction of business may be decided by the board and until otherwise decided is two directors present in person or by alternate director. A duly convened meeting of the board at which a quorum is present is competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the board.

108.	Chairman of board

	The board may appoint one of its body as chairman to preside at every board meeting at which he is present and one or more deputy chairmen and decide the period for which he is or they are to hold office (and may at any time remove him or them from office). If no chairman or deputy chairman is elected, or if at a meeting neither the chairman nor a deputy chairman is present within five minutes of the time fixed for the start of the meeting, the directors and alternate directors (in the absence of their appointors) present shall choose one of their number to be chairman. If two or more deputy chairmen are present, the senior of them shall act as chairman, seniority being determined by length of office since their last appointment or reappointment. As between two or more who have held office for an equal length of time, the deputy chairman to act as chairman shall be decided by those directors and alternate directors (in the absence of their appointors) present. A chairman or deputy chairman may hold executive office or employment with the Company.

109.	Voting

	Questions arising at a meeting of the board are determined by a majority of votes. In case of an equality of votes the chairman has a second or casting vote.

110.	Participation by telephone

	A director or his alternate director may participate in a meeting of the board or a committee of the board through the medium of conference telephone or similar form of communication equipment if all persons participating in the meeting are able to hear and speak to each other throughout the meeting. A person participating in this way is deemed to be present in person at the meeting and is counted in a quorum and entitled to vote. Subject to the Acts, all business transacted in this way by the board or a committee of the board is for the purposes of the articles deemed to be validly and effectively transacted at a meeting of the board or a committee of the board although fewer than two directors or alternate directors are physically present at the same place. The meeting is deemed to take place where the largest group of those participating is assembled or, if there is no such group, where the chairman of the meeting then is.

111.	Resolution in writing

	A resolution in writing executed by all directors for the time being entitled to receive notice of a board meeting and not being less than a quorum or by all members of a committee of the board is as valid and effective for all purposes as a resolution passed

	at a meeting of the board (or committee, as the case may be). The resolution in writing may consist of several documents in the same form each executed by one or more of the directors or members of the relevant committee. The resolution in writing need not be signed by an alternate director if it is signed by his appointor and a resolution signed by an alternate director need not be signed by his appointor.

112.	Proceedings of committees

(A)	Proceedings of committees of the board shall be conducted in accordance with regulations prescribed by the board (if any). Subject to those regulations and article 112(B), proceedings shall be conducted in accordance with applicable provisions of the articles regulating the proceedings of the board.

(B)	Where the board resolves to delegate any of its powers, authorities and discretions to a committee and that resolution states that the committee shall consist of any one or more unnamed directors, it is not necessary to give notice of a meeting of that committee to directors other than the director or directors who form the committee.

113.	Minutes of proceedings

(A)	The board shall cause minutes to be made in books kept for the purpose of:

	(i)	all appointments of officers and committees made by the board and of any remuneration fixed by the board or a committee of the board; and

	(ii)	the names of directors present at every meeting of the board, committees of the board, the Company or the holders of a class of shares or debentures, and all orders, resolutions and proceedings of such meetings.

(B)	If purporting to be signed by the chairman of the meeting at which the proceedings were held or by the chairman of the next succeeding meeting, minutes are receivable as prima facie evidence of the matters stated in them.

114.	Validity of proceedings of board or committee

	All acts done by a meeting of the board, or of a committee of the board, or by a person acting as a director, alternate director or member of a committee are, notwithstanding that it is afterwards discovered that there was a defect in the appointment of a person or persons acting, or that they or any of them were or was disqualified from holding office or not entitled to vote, or had in any way vacated their or his office, as valid as if every such person had been duly appointed, and was duly qualified and had continued to be a director, alternate director or member of a committee and entitled to vote.

SECRETARY AND AUTHENTICATION OF DOCUMENTS

115.	Secretary

(A)	Subject to the Acts, the board shall appoint a secretary or joint secretaries and may appoint one or more persons to be an assistant or deputy secretary on such terms and conditions (including remuneration) as it (or a committee authorised by it) thinks fit. The board may remove a person appointed pursuant to this article from office and appoint another or others in his place.

(B)	Any provision of the Acts or of the articles requiring or authorising a thing to be done by or to a director and the secretary is not satisfied by its being done by or to the same person acting both as director and as, or in the place of, the secretary.

116.	Authentication of documents

	A director or the secretary or another person appointed by the board for the purpose may authenticate documents affecting the constitution of the Company (including the memorandum of association and the articles) and resolutions passed by the Company or holders of a class of shares or the board or a committee of the board and books, records, documents and accounts relating to the business of the Company, and to certify copies or extracts as true copies or extracts.

SEALS

117.	Safe custody

	The board shall provide for the safe custody of every seal.

118.	Application of seals

	A seal may be used only by the authority of a resolution of the board or of a committee of the board. The board may decide who will sign an instrument to which a seal is affixed (or, in the case of a share certificate, on which the seal may be printed) either generally or in relation to a particular instrument or type of instrument. The board may also decide, either generally or in a particular case, that a signature may be dispensed with or affixed by mechanical means. Unless otherwise decided by the board:

	(i)	share certificates and certificates issued in respect of debentures or other securities (subject to the provisions of the relevant instrument) need not be signed or, if signed, a signature may be applied by mechanical or other means or may be printed; and

	(ii)	every other instrument to which a seal is affixed shall be signed by one director and by the secretary or a second director.

119.	Official seal for use abroad

	The Company may exercise the powers conferred by the Acts with regard to having an official seal for use abroad, and those powers shall be vested in the board.

DIVIDENDS AND OTHER PAYMENTS

120.	Declaration of dividends

	Subject to the Acts and the articles, the Company may by ordinary resolution declare a dividend to be paid to the members according to their respective rights and interests, but no dividend may exceed the amount recommended by the board.

121.	Interim dividends

	Subject to the Acts, the board may declare and pay such interim dividends (including a dividend payable at a fixed rate) as appear to it to be justified by the profits of the Company available for distribution. If the share capital is divided into different classes, the board may pay interim dividends on shares which rank after shares conferring preferred rights with regard to dividend as well as on shares with preferred rights, unless at the time of payment a preferential dividend is in arrear. If the board acts in good faith, it does not incur any liability to the holders of shares conferring preferred rights for a loss they may suffer by the lawful payment of an interim dividend on shares ranking after those with preferred rights.

122.	Entitlement to dividends

	Except as otherwise provided by the rights attached to shares, a dividend shall be declared and paid according to the amounts paid up on the shares in respect of which the dividend is declared and paid, but no amount paid up on a share in advance of a call may be treated for the purpose of this article as paid up on the share. Dividends shall be apportioned and paid proportionately to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid. Dividends may be declared or paid in any currency. The board may agree with any member that dividends which may at any time or from time to time be declared or become due on his shares in one currency shall be paid or satisfied in another, and may agree the basis of conversion to be applied and how and when the amount to be paid in the other currency shall be calculated and paid and for the company or any other person to bear any costs involved.

123.	Method of payment

(A)

The Company may pay any dividend, interest or other amount payable in respect of a share (i) in cash; (ii) by cheque, any warrant or money order made payable to or to the order of the person entitled to the payment (and may, at the Company’s option, be crossed “account payee” where appropriate); (iii) by a bank or other funds transfer system to an account designated in writing by the person entitled to the payment; or (iv) by such other method including, in respect of uncertificated shares, by means of the

	facilities and requirements of a relevant system, as the person entitled to the payment may in writing direct.

(B)	The Company may send a cheque, warrant or money order by post (i) in the case of a sole holder, to his registered address, or (ii) in the case of joint holders, to the registered address of the person whose name stands first in the register, or (iii) in the case of a person or persons entitled by transmission to a share, as if it were a notice given in accordance with article 138, or (iv) in any case, to a person and address that the person or persons entitled to the payment may in writing direct.

(C)	Where a share is held jointly or two or more persons are jointly entitled by transmission to a share, (i) the Company may pay any dividend, interest or other amount payable in respect of that share to any one joint holder, or any one person entitled by transmission to the share, and in either case that holder or person may give an effective receipt for the payment; and (ii) for any of the purposes of this article 123, the Company may rely in relation to a share on the written direction or designation of any one joint holder of the share, or any one person entitled by transmission to the share.

(D)	Every cheque, warrant or money order sent by post is sent at the risk of the person entitled to the payment. If payment is made by bank or other funds transfer, or by another method at the direction of the person entitled to payment, the Company is not responsible for amounts lost or delayed in the course of transfer or in carrying out those directions.

(E)	Without prejudice to article 68, the board may withhold payment of a dividend (or part of a dividend) payable to a person entitled by transmission to a share until he has provided any evidence of his right that the board may reasonably require.

124.	Dividends not to bear interest

	No dividend or other amount payable by the Company in respect of a share bears interest as against the Company unless otherwise provided by the rights attached to the share.

125.	Calls or debts may be deducted from dividends etc.

	The board may deduct from a dividend or other amounts payable to a person in respect of a share amounts due from him to the Company on account of a call or otherwise in relation to a share.

126.	Unclaimed dividends etc.

	Any unclaimed dividend, interest or other amount payable by the Company in respect of a share may be invested or otherwise made use of by the board for the benefit of the Company until claimed. A dividend unclaimed for a period of 12 years from the date it was declared or became due for payment is forfeited and ceases to remain owing by the Company. The payment of an unclaimed dividend, interest or other amount payable by

	the Company in respect of a share into a separate account does not constitute the Company a trustee in respect of it.

127.	Uncashed dividends

	If, in respect of a dividend or other amount payable in respect of a share, on any one occasion:

	(i)	a cheque, warrant or money order is returned undelivered or left uncashed, or

	(ii)	a transfer made by a bank or other funds transfer system is not accepted,

	and reasonable enquiries have faded to establish another address or account of the person entitled to the payment, the Company is not obliged to send or transfer a dividend or other amount payable in respect of that share to that person until he notifies the Company of an address or account to be used for that purpose. If the cheque, warrant or money order is returned undelivered or left uncashed or transfer not accepted on two consecutive occasions, the Company may exercise this power without making any such enquiries.

128.	Payment of dividends in specie

	Without prejudice to article 68, the board may, with the prior authority of an ordinary resolution of the Company, direct that payment of a dividend may be satisfied wholly or in part by the distribution of specific assets and in particular of paid-up shares or debentures of another company. Where a difficulty arises in connection with the distribution, the board may settle it as it thinks fit and in particular may issue fractional certificates (or ignore fractions), may fix the value for distribution of the specific assets (or any part of them), may decide that a cash payment be made to a member on the basis of the value so fixed, in order to secure equality of distribution, and may vest assets in trustees on trust for the persons entitled to the dividend as may seem expedient to the board.

129.	Payment of scrip dividends

(A)	Subject to the Acts, but without prejudice to article 68, the board may, with the prior authority of an ordinary resolution of the Company, allot to those holders of a particular class of shares who have elected to receive them further shares of that class or ordinary shares, in either case credited as fully paid, (“new shares”) instead of cash in respect of all or part of a dividend or dividends specified by the resolution, subject to any exclusions, restrictions or other arrangements the board may in its absolute discretion deem necessary or expedient to deal with legal or practical problems under the laws of, or the requirements of a recognised regulatory body or a stock exchange in, any territory.

(B)	Where a resolution under article 129(A) is to be proposed at a general meeting and the resolution relates in whole or in part to a dividend to be declared at that meeting, then the resolution declaring the dividend is deemed to take effect at the end of that meeting.

(C)	A resolution under article 129(A) may relate to a particular dividend or to all or any dividends declared or paid within a specified period, but that period may not end later than the beginning of the fifth annual general meeting following the date of the meeting at which the resolution is passed.

(D)	The board shall determine the basis of allotment of new shares so that, as nearly as may be considered convenient without involving rounding up of fractions, the value of the new shares (including a fractional entitlement) to be allotted (calculated by reference to the average quotation, or the nominal value of the new shares, if greater) equals (disregarding an associated tax credit) the amount of the dividend which would otherwise have been received by the holder (the “relevant dividend”). For this purpose the “average quotation” of each of the new shares is the average of the middle-market quotations for a fully-paid share of the Company of that class derived from the Daily Official List of the London Stock Exchange on the business day on which the relevant class of shares is first quoted “ex” the relevant dividend (or such other date as the board may deem appropriate to take account of any subsequent issue of shares by the Company) and the four subsequent business days or shall be as determined by or in accordance with the resolution under article 129(A).

(E)	The board may make any provision it considers appropriate in relation to an allotment made or to be made pursuant to this article (whether before or after the passing of the resolution under article 129(A)), including but not limited to:

	(i)	the giving of notice to holders of the right of election offered to them;

	(ii)	the provision of forms of election (whether in respect of a particular dividend or dividends generally);

	(iii)	determination of the procedure for making and revoking elections which, for the avoidance of doubt, may include an election by means of a relevant system;

	(iv)	the place at which, and the latest time by which, forms of election and other relevant documents must be lodged in order to be effective; and

	(v)	the disregarding or rounding up or down or carrying forward of fractional entitlements, in whole or in part, or the accrual of the benefit of fractional entitlements to the Company (rather than to the holders concerned).

(F)

The dividend (or that part of the dividend in respect of which a right of election has been offered) is not declared or payable on shares in respect of which an election has been duly made (the “elected shares”); instead new shares are allotted to the holders of the elected shares on the basis of allotment calculated as in paragraph (D). For that purpose, the board may resolve to capitalise out of amounts standing to the credit of reserves (including a share premium account, capital redemption reserve and profit and loss account), whether or not available for distribution, a sum equal to the aggregate nominal amount of the new shares to be allotted and apply it in paying up in full the appropriate number of new shares for allotment and distribution to the holders of the elected shares. A resolution of the board capitalising part of the reserves has the same

	effect as if the capitalisation had been declared by ordinary resolution of the Company pursuant to article 130. In relation to the capitalisation the board may exercise all the powers conferred on it by article 130 without an ordinary resolution of the Company.

(G)	The new shares rank pari passu in all respects with each other and with the fully-paid shares of the same class in issue on the record date for the dividend in respect of which the right of election has been offered, but they will not rank for a dividend or other distribution or entitlement which has been declared or paid by reference to that record date.

(H)	Unless the board otherwise determines, or unless the Regulations and/or the rules of the relevant system concerned otherwise require, the new ordinary share or shares which a member has elected to receive instead of cash in respect of the whole (or some part) of the specified dividend declared or paid in respect of his elected ordinary shares shall be in uncertificated form (in respect of the member’s elected ordinary shares which were in uncertificated form on the date of the member’s election) and in certificated form (in respect of the member’s elected ordinary shares which were in certificated form on the date of the member’s election);

(I)	The board may also from time to time establish or vary a procedure for election mandates, which, for the avoidance of doubt, may include an election by means of a relevant system, under which a holder of ordinary shares may elect in respect of future rights of election offered to that holder under this article until the election mandate is revoked in accordance with the procedure.

CAPITALISATION OF PROFITS

130.	Subject to the Acts, the board may, with the authority of an ordinary resolution of the Company:

	(i)	resolve to capitalise an amount standing to the credit of reserves (including a share premium account, capital redemption reserve and profit and loss account), whether or not available for distribution;

	(ii)	appropriate the sum resolved to be capitalised to the members in proportion to the nominal amount of ordinary shares (whether or not fully paid) held by them respectively and apply that sum on their behalf in or towards:

		(a)	paying up the amounts (if any) for the time being unpaid on shares held by them respectively, or

		(b)	paying up in full unissued shares or debentures of a nominal amount equal to that sum,

		and allot the shares or debentures, credited as fully paid, to the members (or as they may direct) in those proportions, or partly in one way and partly in the other, but the share premium account, the capital redemption reserve and profits which are not available for distribution may, for the purposes of this article, only be

		applied in paying up unissued shares to be allotted to members credited as fully paid;

	(iii)	make any arrangements it thinks fit to resolve a difficulty arising in the distribution of a capitalised reserve and in particular, where shares or debentures become distributable in fractions, the board may deal with the fractions as it thinks fit, including issuing fractional certificates, disregarding fractions or selling shares or debentures representing the fractions to a person for the best price reasonably obtainable and distributing the net proceeds of the sale in due proportion amongst the members (except that if the amount due to a member is less than £3, or such other sum as the board may decide, the sum may be retained for the benefit of the Company);

	(iv)	authorise a person to enter (on behalf of all the members concerned) an agreement with the Company providing for either:

		(a)	the allotment to the members respectively, credited as fully paid, of shares or debentures to which they may be entitled on the capitalisation, or

		(b)	the payment by the Company on behalf of the members (by the application of their respective proportions of the reserves resolved to be capitalised) of the amounts or part of the amounts remaining unpaid on their existing shares,

		an agreement made under the authority being effective and binding on all those members; and

	(v)	generally do all acts and things required to give effect to the resolution.

RECORD DATES

131.

Notwithstanding any other provision of the articles, but subject to the Acts and rights attached to shares, the Company or the board may fix any date as the record date for a dividend, distribution, allotment or issue. The record date may be on or at any time before or after a date on which the dividend, distribution, allotment or issue is declared, made or paid.

ACCOUNTS

132.	Inspection of accounts

(A)	The board shall ensure that accounting records are kept in accordance with the Acts.

(B)	The accounting records shall be kept at the office or, subject to the Acts, at another place decided by the board and shall be available during business hours for the inspection of the directors and other officers. No member (other than a director or other

	officer) has the right to inspect an accounting record or other document except if a right is conferred by the Acts or he is authorised by the board.

133.	Accounts to be sent to members etc.

(A)	In respect of each financial year, a copy of the Company’s annual accounts, directors’ report and auditors’ report on those accounts shall be sent by post or delivered to:

	(i)	every member (whether or not entitled to receive notices of general meetings),

	(ii)	every holder of debentures (whether or not entitled to receive notices of general meetings), and

	(iii)	every other person who is entitled to receive notices of general meetings,

	not less than 21 clear days before the date of the meeting at which copies of those documents are to be laid in accordance with the Acts. This article does not require copies of the documents to which it applies to be sent or delivered to:

		(a)	a member or holder of debentures of whose address the Company is unaware, or

		(b)	more than one of the joint holders of shares or debentures.

(B)

Where permitted by the Acts, a summary financial statement derived from the Company’s annual accounts and the directors’ report in the form and containing the information prescribed by the Acts may be sent or delivered to a person in place of the documents required to be sent or delivered by article 133(A).

NOTICES

134.	Notices to be in writing

	A notice to be given to or by a person pursuant to the articles shall be in writing except that a notice convening a meeting of the board or of a committee of the board need not be in writing.

135.	Service of notices and other documents on members

(A)	A notice or other document may be given to a member by the Company either personally or by sending it by post in a pre-paid envelope addressed to the member at his registered address, or by leaving it at that address (or at another address notified for the purpose) in an envelope addressed to the member, or by means of a relevant system or by any other means authorised in writing by the member concerned.

(B)	In the case of joint holders of a share, a notice or other document shall be given to whichever of them is named first in the register in respect of the joint holding and notice given in this way is sufficient notice to all joint holders.

(C)

If a member (or, in the case of joint holders, the person first named in the register) has a registered address outside the United Kingdom but has notified the Company of an address in the United Kingdom at which notices or other documents may be given to him, he is entitled to have notices given to him at that address, but otherwise no such member or person is entitled to receive a notice or other document from the Company.

136.	Notice by advertisement

	If by reason of the suspension or curtailment of postal services in the United Kingdom the Company is unable effectively to convene a general meeting by notices sent by post, the board may, in its absolute discretion and as an alternative to any other method of service permitted by the articles, resolve to convene a general meeting by a notice advertised in at least one United Kingdom national newspaper. In this case the Company shall send confirmatory copies of the notice by post if at least seven clear days before the meeting the posting of notices to addresses throughout the United Kingdom again becomes practicable.

137.	Evidence of service

(A)	A notice or other document addressed to a member at his registered address or address for service in the United Kingdom is, if sent by post, deemed to be given within 24 hours if pre-paid as first class post and within 48 hours if pre-paid as second class post after it has been posted, and in proving service it is sufficient to prove that the envelope containing the notice or document was properly addressed, pre-paid and posted.

(B)	A notice or document not sent by post but left at a registered address or address for service in the United Kingdom is deemed to be given on the day it is left.

(C)	Where notice is given by newspaper advertisements, the notice is deemed to be given to all members and other persons entitled to receive it at noon on the day when the advertisements appear or, if they appear on different days, at noon on the last of the days when the advertisements appear.

(D)	Any notice served or delivered by the Company by means of a relevant system shall be deemed to have been served or delivered when the Company or any sponsoring system-participant acting on its behalf sends the issue-instruction relating to the notice.

(E)	Any notice or document served or delivered by the Company by any other means authorised in writing by the member concerned shall be deemed to have been served when the Company has carried out the action it has been authorised to take for that purpose.

(F)	A member present in person or by proxy at a meeting or of the holders of a class of shares is deemed to have received due notice of the meeting and, where required, of the purposes for which it was called.

138.	Notice binding on transferees etc.

	A person who becomes entitled to a share by transmission, transfer or otherwise is bound by a notice in respect of that share (other than a notice served by the Company under section 212 of the Act) which, before his name is entered in the register, has been properly served on a person from whom he derives his title.

139.	Notice in case of entitlement by transmission

	Where a person is entitled by transmission to a share, the Company may give a notice or other document to that person as if he were the holder of a share by addressing it to him by name or by the title of representative of the deceased or trustee of the bankrupt member (or by similar designation) at an address in the United Kingdom supplied for that purpose by the person claiming to be entitled by transmission. Until an address has been supplied, a notice or other document may be given in any manner in which it might have been given if the death or bankruptcy or other event had not occurred. The giving of notice in accordance with this article is sufficient notice to all other persons interested in the share.

DESTRUCTION OF DOCUMENTS

140.

(A)	The Company may destroy:

	(i)	a share certificate which has been cancelled at any time after one year from the date of cancellation;

	(ii)	a mandate for the payment of dividends or other amounts or a variation or cancellation of a mandate or a notification of change of name or address at any time after two years from the date the mandate, variation, cancellation or notification was recorded by the Company;

	(iii)	an instrument of transfer of shares (including a document constituting the renunciation of an allotment of shares) or Operator-instruction for the transfer of shares which has been registered at any time after six years from the date of registration; and

	(iv)	any other document on the basis of which any entry in the register is made at any time after six years from the date an entry in the register was first made in respect of it.

(B)

It is presumed conclusively in favour of the Company that every share certificate destroyed was a valid certificate validly cancelled, that every instrument of transfer or Operator-instruction destroyed was a valid and effective instrument or instruction duly and properly registered and that every other document destroyed was a valid and effective document in accordance with the recorded particulars in the books or records of the Company, but:

	(i)	the provisions of this article apply only to the destruction of a document in good faith and without express notice to the Company that the preservation of the document is relevant to a claim;

	(ii)	nothing contained in this article imposes on the Company liability in respect of the destruction of a document earlier than provided for in this article or in any case where the conditions of this article are not fulfilled; and

	(iii)	references in this article to the destruction of a document include reference to its disposal in any manner.

WINDING UP

141.

On a voluntary winding up of the Company, the liquidator may, on obtaining any sanction required by law, divide among the members in kind the whole or any part of the assets of the Company, whether or not the assets consist of property of one kind or of different kinds. For this purpose, the liquidator may set the value he deems fair on a class or classes of property, and may determine on the basis of that valuation and in accordance with the then existing rights of members how the division is to be carried out between members or classes of members. The liquidator may not, however, distribute to a member without his consent, any asset to which there is attached a liability or potential liability for the owner.

INDEMNITY

142.

(A)

Subject to the Acts, but without prejudice to an indemnity to which he may otherwise be entitled, every person who is or was a director, alternate director or secretary of the Company shall be indemnified out of the assets of the Company against all costs, charges, losses and liabilities incurred by him in the proper execution of his duties or the proper exercise of his powers, authorities and discretions including (without prejudice to the generality of the foregoing) a liability incurred:

	(a)	defending proceedings (whether civil or criminal) in which judgment is given in his favour or in which he is acquitted, or which are otherwise disposed of without a finding or admission of material breach of duty on his part, or

	(b)	in connection with any application in which relief is granted to him by the court from liability for negligence, default, breach of duty or breach of trust in relation to the affairs of the Company.

(B)	The board may exercise all the powers of the Company to purchase and maintain insurance for the benefit of a person who is or was:

(a)

a director, alternate director, secretary or auditor of the Company or of a company which is or was a subsidiary undertaking of the Company or in which the Company has or had an interest (whether direct or indirect); or

	(b)	trustee of a retirement benefits scheme or other trust in which a person referred to in article 142(B)(a) is or has been interested,

	indemnifying him against liability for negligence, default, breach of duty or breach of trust or other liability which may lawfully be insured against by the Company.

SHARES NOT OTHERWISE SUBJECT TO THE SCHEME

143.

(A)	In this article, the “Scheme” means the Scheme of Arrangement dated 26th September, 2005 proposed between the Company and its members subject to that scheme of arrangement, in its original form or with or subject to any modification, addition or condition approved or imposed by the Court.

(B)	Notwithstanding any other provision of the articles, if the Company issues any ordinary share after the time at which this article becomes effective and prior to the confirmation by the Court of the reduction of capital provided for under the Scheme, such shares shall be allotted and issued subject to the terms of the Scheme and the holders of such shares shall be bound by the Scheme accordingly.

(C)	If any ordinary shares are issued to any person (a “new member”) (other than to Shire plc or its nominee(s)) at or after confirmation by the Court of the reduction of capital provided for under the Scheme they will, provided that the Scheme has become effective and that Shire plc is a member of the Company, be immediately transferred to Shire plc (and/or its nominee(s)) in consideration of and conditional upon the issue to the new member of the same number of ordinary shares in Shire plc.

(D)	The ordinary shares in Shire plc issued pursuant to paragraph (C) of this article shall be credited as fully paid and shall rank pari passu in all respects with all other ordinary shares in Shire plc of the same class in issue at the time (other than as regards any dividend or other distribution payable, or return of capital made, by reference to a record time preceding the date of exchange) and be subject to the Memorandum and Articles of Association of Shire plc.

(E)	The number of ordinary shares in Shire plc to be allotted and issued under paragraph (C) of this article may be adjusted by the board following any variation in the share capital of either the Company or Shire plc or such other event as the board considers fair and reasonable on such adjusted terms as the board may determine provided that no such adjustment may be made unless the auditors have confirmed in writing to the board that, in their opinion, such adjustment is fair and reasonable.

(F)	To give effect to any transfer required by this article, the Company may appoint any person to execute and deliver as transferor a form or instructions of transfer on behalf of the new member in favour of Shire plc and/or its nominee(s) and to agree for and on behalf of the new member to become a member of Shire plc. Pending the registration of Shire plc as the holder of any shares in the Company, Shire plc shall be empowered to appoint a person to act as attorney on behalf of the new member in accordance with

	such directions as Shire plc may give in relation to any dealings with or disposal of such shares (or any interest therein), exercising any rights attached thereto or receiving any distribution or other benefit accruing or payable in respect thereof and, if a person is so appointed to act as attorney, the new member shall not be entitled to exercise any rights attaching thereto except:

	(i)	to the extent that the person appointed to act as attorney fails to act in accordance with the directions of Shire plc; and

	(ii)	in accordance with the directions of Shire plc.

EX-31.1 3 shire-10q_ex3101.htm

EXHIBIT 31.1

CERTIFICATION OF MATTHEW EMMENS PURSUANT TO
RULE 13A-14 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
FORM 10-Q FOR THE QUARTER ENDED
SEPTEMBER 30, 2005 OF
SHIRE PHARMACEUTICALS GROUP PLC

I, Matthew Emmens, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Shire Pharmaceuticals Group plc;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d to 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d to 15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 9, 2005		/s/ Matthew Emmens

		Matthew Emmens
		Chief Executive Officer

EX-31.2 4 shire-10q_ex3102.htm

EXHIBIT 31.2

CERTIFICATION OF ANGUS RUSSELL PURSUANT TO
RULE 13A-14 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
FORM 10-Q FOR THE QUARTER ENDED
SEPTEMBER 30, 2005 OF
SHIRE PHARMACEUTICALS GROUP PLC

I, Angus Russell certify, that:

1. I have reviewed this quarterly report on Form 10-Q of Shire Pharmaceuticals Group plc;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 9, 2005		/s/ Angus Russell

		Angus Russell
		Chief Financial Officer

EX-32.1 5 shire-10q_ex3201.htm

EXHIBIT 32.1

The certification set forth below is being submitted in connection with the Quarterly Report on Form 10-Q of Shire Pharmaceuticals Group plc for the quarter ended September 30, 2005 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.

Matthew Emmens, the Chief Executive Officer and Angus Russell, the Chief Financial Officer of Shire Pharmaceuticals Group plc, each certifies that, to the best of his knowledge:

1.	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Shire Pharmaceuticals Group plc.

Date: November 9, 2005

/s/ Matthew Emmens

Matthew Emmens

Chief Executive Officer

/s/ Angus Russell

Angus Russell

Chief Financial Officer

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