UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 20-F/A
(Amendment No. 1)
________________________
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
-OR-
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 for the fiscal year ended December 31, 2005
-OR-
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED) for the transition period from _____ to ______
Commission File Number: 000-30126
________________________
ACAMBIS PLC
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant's name into English)
England and Wales
(Jurisdiction of incorporation or organization)
Peterhouse Technology Park, 100 Fulbourn Road, Cambridge, CB1 9PT England
(Address of principal executive office)
________________________
Securities registered or to be registered pursuant to Section 12(b) of the
Act: None
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Ordinary Shares of 10 pence each
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act:
None
________________________
Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report.
Ordinary Shares: 107,351,407 as of December 31, 2005
________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes No X
If this report is an annual or transition report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934. Yes No X
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer Accelerated Filer X Non-Accelerated Filer
Indicate by check mark which financial statement item the registrant has
elected to follow: Item 17 X Item 18
If this is an annual report, indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X
Enclosure: Annual Report on Form 20-F/A
EXPLANATORY NOTE
This Annual Report on Form 20-F/A ("Form 20-F/A") is being filed by
Acambis plc (the "Company" or the "Registrant") as Amendment No. 1 to the
Registrant's Annual Report on Form 20-F for the fiscal year ended December 31,
2005 ("Form 20-F"). This Form 20-F/A is filed with the Securities and Exchange
Commission (the "Commission") solely for the purpose of including additional
disclosures in Items 15 and 17 regarding the Company's Controls and Procedures
and Financial Statements, respectively.
This Form 20-F/A does not otherwise amend, restate, change or update
the disclosures set forth in the Form 20-F as originally filed on June 28,
2006, and does not reflect events occurring after the original filing of the
Form 20-F.
Item 15. Controls and procedures.
A Disclosure controls and procedures
The Board has applied principle C.2 of the Combined Code by establishing a
process for identifying, evaluating and managing the significant risks the Group
faces. This process has been in place since the start of 2000 and is in
accordance with Internal Control: Guidance for Directors on the Combined Code
published in September 1999. The Board is responsible for the Group's overall
system of controls and procedures and for reviewing its effectiveness. Such a
system manages rather than eliminates the risk of failure to achieve business
objectives.
The Board regularly reviews the risks to which the business is exposed and the
controls in place to mitigate those risks. It delegates the operational
management of the business risk process to the Executive Directors, including
the Chief Executive Officer and the Chief Financial Officer, who in turn have
put in place a specific working group comprising senior management from
different areas of the business to carry out reviews on a periodic basis. From
2005, the Operations Committee, which comprises senior operational managers,
reports to the Executive Committee, and which has oversight of the day-to-day
operational activities of Acambis, has been responsible for managing the risk
reviews.
In conjunction with the reviews described above, the Chief Executive Officer and
Chief Financial Officer evaluated the effectiveness of the design and operation
of the Company's disclosure controls and procedures as of December 31, 2005.
Based upon that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the design and operation of these disclosure controls and
procedures were effective as of December 31, 2005. The controls and procedures
referred to in our evaluation and conclusion of effectiveness also constitute
"disclosure controls and procedures" as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act).
B Management's annual report on internal control over financial reporting
In compliance with provision C.2.1 of the Combined Code, the Board reviews the
effectiveness of the Group's system of internal control. The Board's monitoring
covers all material controls, including financial, operational and compliance
controls and risk management. It is based, principally, on reviewing reports
from management to consider whether significant risks are identified, evaluated,
managed and controlled and whether any significant weaknesses are promptly
remedied or indicate a need for more extensive monitoring. The Board has also
performed a specific assessment for the purpose of this Annual Report on form
20-F considering all significant aspects of internal control arising during the
year. The Audit Committee assists the Board in discharging its review
responsibilities.
The Combined Code was republished in July 2003 and restated in July 2005 by the
Financial Reporting Council and incorporated the previous code (as published
in 1998 by the Hampel Committee) and related guidance that had been issued
since that date: the Turnbull Guidance on Internal Control; the Smith
Guidance On Audit Committees; and various items of good practice guidance from
the Higgs Report. The code has been applicable for reporting years
beginning on or after November 1, 2003 and, therefore, was adopted by Acambis
from its 2004 financial year, which began on January 1, 2004. The overriding
principle of the Combined Code is that companies must comply with it or explain
why they have not. The following section highlights the areas where Acambis
previously did not comply with the code and notes the progress made to address
those areas:
_______________________________________________________________________
CODE PROVISION PROGRESS MADE SINCE PUBLICATION OF
THE 2004 FORM 20-F
_______________________________________________________________________
B REMUNERATION A disclosure is made in the
B.2.1 A statement on whether Corporate Governance Statement in
remuneration consultants have any the 'Remuneration Committee'
other connection with the Company section. A statement has been
should be available on the Acambis available on the Acambis website
website. since early 2005.
_______________________________________________________________________
C ACCOUNTABILITY AND AUDIT In November 2004, the Audit
C.3.4 Arrangements should be in Committee approved a whistleblowing
place for the reporting and policy. The procedure was developed
management of concerns raised by during 2005 and rolled out to the
staff about possible financial or Group in early 2006.
other improprieties.
_______________________________________________________________________
The information contained within this Item 15B is voluntarily provided, on the
principle of providing substantially similar disclosure to our UK and US
security-holders. This disclosure is not a report of management on our internal
control over financial reporting as defined in Exchange Act Rules 13a-15(f) and
15d-15(f).
C Not applicable
D Changes in internal control over financial reporting
During the period covered by this Annual Report on Form 20-F, there were no
changes in the Group's internal control over financial reporting identified in
connection with management's evaluation of such control that materially
affected, or are reasonably likely to materially affect, the Group's internal
control over financial reporting.
Item 17. Financial Statements.
DIRECTORS' RESPONSIBILITIES
Company law requires the Directors to prepare financial statements for
each financial year that give a true and fair view of the state of affairs of
the Group and of the profit or loss of the Group for that period.
FINANCIAL STATEMENTS, INCLUDING ADOPTION OF GOING CONCERN BASIS
After making enquiries, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
foreseeable future. For this reason, they continue to adopt the going concern
basis in preparing the financial statements.
In preparing the financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgments and estimates that are reasonable and prudent;
- state whether applicable accounting standards have been followed, subject to
any material departure disclosed and explained in the financial statements;
and
- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group will continue in business.
The Directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
Group and enable them to ensure that the financial statements comply with the
Companies Act 1985. They are also responsible for safeguarding the assets of the
Group and, hence, for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the Group's
website. Uncertainty regarding legal requirements is compounded, as information
published on the Internet is accessible in many countries with different legal
requirements relating to the preparation and dissemination of financial
statements.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND THE SHAREHOLDERS OF ACAMBIS PLC
In our opinion, the accompanying consolidated balance sheets, and the related
consolidated income statements, the consolidated statement of recognized income
and expenses and consolidated cash flow statements present fairly, in all
material respects, the financial position of Acambis plc and its subsidiaries at
31 December 2005 and 2004, and the results of their operations and their cash
flows for each of the two years in the period ended 31 December 2005, in
conformity with International Financial Reporting Standards as adopted by the
European Union. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
International Financial Reporting Standards as adopted by the European Union
vary in certain significant respects from accounting principles generally
accepted in the United States of America. Information relating to the nature and
effect of such differences is presented in Note 28 to the consolidated financial
statements.
PricewaterhouseCoopers LLP
Cambridge, England
June 26, 2006
CONSOLIDATED INCOME STATEMENT FOR THE YEARS ENDED DECEMBER 31
2005 2004
Notes GBPm GBPm
___________________________________________________________________________
Revenue 2 40.9 85.5
Cost of sales (27.6) (35.0)
___________________________________________________________________________
Gross profit 13.3 50.5
Research and development costs (34.1) (29.3)
Sales and marketing costs (2.6) (2.8)
Administration costs (including costs
relating to Canton plant impairment and
restructuring costs) 3 (7.7) (5.5)
Other operating income - settlement of Canton
agreement 3 - 10.2
Other operating income - fair value of shares
received for grant of license 3 0.4 -
___________________________________________________________________________
Operating (loss)/profit 4 (30.7) 23.1
Finance income 3 4.0 4.8
___________________________________________________________________________
Finance costs 3 (1.0) (0.9)
(Loss)/profit on ordinary activities before
taxation (27.7) 27.0
Taxation - UK 5 (1.7) (3.7)
Taxation - overseas 5 2.4 (3.6)
___________________________________________________________________________
(Loss)/profit on ordinary activities after
taxation attributable to shareholders (27.0) 19.7
___________________________________________________________________________
Basic (loss)/earnings per ordinary share (in
pence) 6 (25.2)p 18.5p
Diluted (loss)/earnings per ordinary share
(in pence) 6 (25.2)p 18.1p
___________________________________________________________________________
A statement of changes in equity is given in note 23.
The accompanying notes are an integral part of this consolidated income
statement.
All amounts in 2005 and 2004 arise from continuing operations.
CONSOLIDATED STATEMENT OF RECOGNIZED INCOME AND EXPENSES FOR THE YEARS ENDED
DECEMBER 31
2005 2004
GBPm GBPm
_______________________________________________________________________
Retained (loss)/profit for the year (27.0) 19.7
Gain/(loss) on foreign currency exchange 1.6 (2.5)
Revaluation of available-for-sale investment (net
of deferred tax) 0.1 -
Total (expense)/income recognized for the year (25.3) 17.2
_______________________________________________________________________
CONSOLIDATED BALANCE SHEET AT DECEMBER 31
2005 2004
Notes GBPm GBPm
____________________________________________________________________________
Assets
Non-current assets
Goodwill 7 14.9 15.4
Other intangible assets 8 4.2 4.1
Property, plant and equipment 9 19.8 18.5
Deferred tax asset 5 0.3 -
Financial assets: available-for-sale investment 11 0.6 -
Other non-current assets 12 - 2.5
____________________________________________________________________________
39.8 40.5
____________________________________________________________________________
Current assets
Inventory 13 3.6 6.0
Current tax assets 1.3 1.9
Trade and other receivables 14 20.6 13.7
Financial assets: derivative financial instruments 15 0.1 -
Liquid investments 15 18.8 20.8
Cash and cash equivalents 16 49.2 81.0
____________________________________________________________________________
93.6 123.4
____________________________________________________________________________
Liabilities
Current liabilities
Financial liabilities:
- short-term borrowings 17 (4.0) (3.6)
- short-term financial liabilities 17 (7.2) (3.1)
- derivative financial instruments 15 - (0.1)
Trade and other payables 18 (16.1) (8.3)
Accruals and deferred income (14.1) (27.9)
Income tax payable (3.1) (4.6)
Provisions 19 (2.3) -
____________________________________________________________________________
(46.8) (47.6)
____________________________________________________________________________
Net current assets 46.8 75.8
____________________________________________________________________________
Non-current liabilities
Investment in Joint Venture 20 (0.3) (0.3)
Long-term financial liabilities 17 (1.6) (6.3)
Other non-current liabilities 21 - (0.5)
Deferred tax liabilities 5 (1.7) (1.7)
____________________________________________________________________________
(3.6) (8.8)
____________________________________________________________________________
Net assets 83.0 107.5
____________________________________________________________________________
Shareholders' equity
____________________________________________________________________________
Share capital 22 10.7 10.7
Share premium 23 98.0 97.8
Other reserves 23 (0.9) (2.5)
Retained earnings 23 (24.8) 1.5
____________________________________________________________________________
Total shareholders' equity 83.0 107.5
____________________________________________________________________________
The financial statements were approved by the Board of Directors on May 9, 2006
and were authorized for issue on its behalf by David Lawrence, Chief Financial
Officer.
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEARS ENDED DECEMBER 31
2005 2004
Notes GBPm GBPm
_____________________________________________________________________________
Operating activities
(Loss)/profit on ordinary activities before tax (27.7) 27.0
Depreciation and amortization 5.3 6.3
Increase in working capital (2.8) (51.1)
Other non-cash movements (0.7) 2.6
Net finance costs (3.0) (3.9)
Taxes paid (0.4) (1.6)
_____________________________________________________________________________
Cash flows from operating activities (29.3) (20.7)
_____________________________________________________________________________
Investing activities
Purchase of business operations (1.7) (0.8)
Disposal of investments - 0.7
Purchase of intangibles (0.4) -
Purchase of property, plant and equipment (3.7) (3.4)
_____________________________________________________________________________
Cash flows used in investing activities (5.8) (3.5)
_____________________________________________________________________________
Financing activities
Interest element of finance lease payments (0.6) (0.7)
Interest paid (0.2) (0.1)
Interest received 3.8 4.4
Proceeds from issues of shares 0.2 1.9
Purchase of own shares 23 (0.2) -
Capital element of finance lease payments (3.3) (2.5)
Purchase of liquid investments (34.8) (62.6)
Sale of liquid investments 36.8 59.6
_____________________________________________________________________________
Cash flows from financing activities 1.7 -
_____________________________________________________________________________
Decrease in cash and cash equivalents (33.4) (24.2)
Net foreign exchange difference 1.6 (2.2)
Cash and cash equivalents at January 1, 16 81.0 107.4
_____________________________________________________________________________
Cash and cash equivalents at December 31, 17 49.2 81.0
_____________________________________________________________________________
Notes to the Group financial statements
1 ACCOUNTING POLICIES
BASIS OF PREPARATION
The consolidated financial statements of Acambis plc have been prepared in
accordance with IFRS and International Financial Reporting Interpretations
Committee interpretations that have been adopted for use in the European Union
and with those parts of the Companies Act 1985 applicable to companies reporting
under IFRS. In the context of Acambis plc's consolidated financial statements,
there is no difference between IFRS as adopted by the European Union and IFRS as
published by the IASB. The consolidated financial statements have been prepared
on a historical cost basis as modified by the revaluation of available-for-sale
investments, except for derivative financial instruments which have been
measured at fair value. The consolidated financial statements are presented in
pounds sterling and all values are rounded to one decimal point of the nearest
million (GBPm) except where otherwise indicated.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and of revenues and expenses during the reporting period. Although
these estimates are based on Management's best knowledge of the amount, event or
action, actual results may ultimately differ from those estimates.
CHANGE IN ACCOUNTING POLICY
The consolidated financial statements of Acambis plc have been prepared, for the
first time, in accordance with IFRS. The effect of adoption of IFRS is described
in note 27 of these financial statements. A summary of the more important Group
accounting policies is set out below. These accounting policies have been
consistently applied in the preparation of these financial statements.
TRANSITIONAL PROVISIONS
The rules for first-time adopters of IFRS are set out in IFRS1 'First time
adoption of IFRS', which allows certain transitional provisions. Acambis has
applied the exemption granted by IFRS1 to goodwill acquired before August 2003.
The value of goodwill relating to the acquisition of Acambis Inc. in 1999 is
frozen as at January 1, 2004, whilst that relating to the acquisition of BPC in
August 2003 has been restated in accordance with IFRS3 'Business combinations'.
BASIS OF CONSOLIDATION
The Group financial statements include and consolidate the financial statements
of Acambis plc and each of its subsidiary undertakings. Acquisitions made by the
Group are accounted for under the acquisition method of accounting and the Group
financial statements include the results of such subsidiaries from the relevant
date of acquisition. Intra-Group transactions and profits are eliminated fully
on consolidation.
REVENUE
Group revenue comprises the value of sales from products and income (excluding
VAT and taxes, trade discounts and intra-Group transactions) derived from
contract research fees and license fees receivable from third parties in the
normal course of business. Revenue from product sales is recognized when the
risks and rewards of ownership have been transferred to the customer, and when
the other conditions within paragraph 14 of IAS18 have been met. Where the Group
is required to undertake R&D activities and the fee is creditable against
services provided by the Group, that revenue is deferred and recognized over the
period over which the services are performed. Contract research fees are
recognized in the accounting period in which the related work is carried out.
Milestones receivable are recognized when they fall contractually due.
Profit is recognized on long-term contracts when the final outcome can be
assessed with reasonable certainty by including turnover and related costs
within the income statement as contract activity progresses. Turnover is
recognized according to the extent of performance under the contract. In
determining the degree of contractual performance, reference is made to the
costs incurred in relation to the total estimated expected costs. In determining
the degree of contractual performance, reference is made to the costs incurred
in relation to the total estimated expected costs as costs incurred are a fair
reflection of the services performed to date.
The smallpox vaccine contract with the CDC, awarded to Acambis in November 2001,
is a fixed-fee arrangement requiring the delivery of products as well as a
concurrent R&D program. The two transactions are linked in such a way that the
commercial effect cannot be understood without reference to the series of
transactions as a whole. In accordance with IAS18, this arrangement has
therefore been treated as a single long-term contract whose elements have not
been accounted for separately.
Turnover and profits are recognized according to the extent of performance under
the contract, as described above. Manufacturing costs in respect of this
contract are deemed to be incurred when the risks and rewards of ownership have
been transferred, as described above; R&D costs are recognized as incurred.
COST OF SALES
The Group has classified manufacturing costs and costs that are directly
attributable to funded research and vaccine manufacture as cost of sales.
RESEARCH AND DEVELOPMENT COSTS
Research costs are expensed as incurred. Internally generated expenditure
arising from development (or from the development phase of an internal project)
is capitalized if, and only if, it satisfies all of six specified criteria in
IAS38 'Intangible assets'. It is management's opinion that it is not possible to
satisfy the requirement to demonstrate the technical feasibility of a project,
and that it will generate probable future economic benefits, until final
submission for regulatory approval has been obtained.
SHARE-BASED PAYMENT TRANSACTIONS
Employees (including Directors) of the Group may receive some remuneration in
the form of share-based payment transactions, whereby employees render services
in exchange for shares or rights over shares (equity-settled transactions).
The cost of equity-settled transactions with employees is measured by reference
to the fair value at the date at which they are granted. Fair value is
determined in conjunction with an external valuer, using a binomial option
pricing model for the SAYE Scheme and the ESPP. The fair value of awards made
under the 1996 Acambis Share Option Scheme (the 1996 Plan), the 1999 Acambis
Share Option Plan (the 1999 Plan) and the LTIP is measured using a binomial
option pricing model adjusted to reflect the TSR market-based performance
condition. For all options and awards with a TSR market-based performance
condition the pricing model used follows similar principles to the Monte Carlo
approach to value the award and takes into account the fact that TSR vesting and
share price performance are not independent.
The cost of equity-settled transactions is recognized, together with a
corresponding increase in equity, over the year in which the performance
conditions are fulfilled, ending on the date on which the relevant employees
become fully entitled to the award (vesting date). The cumulative expense
recognized for equity-settled transactions at each reporting date until the
vesting date reflects the extent to which the vesting period has expired and the
number of awards that, in the opinion of the Directors, will ultimately vest.
The cost is allocated to R&D costs, sales and marketing costs and administration
costs on the basis of headcount.
No expense is recognized for awards that do not ultimately vest, except for
awards where vesting is conditional upon a market condition. These are treated
as vesting, irrespective of whether or not the market condition is satisfied,
provided that all other performance conditions are satisfied.
The dilutive effect of outstanding options is reflected as additional share
dilution in the computation of earnings per share. The Group has an employee
share incentive plan and an employee share trust for the granting of
non-transferable options to executives and senior employees. Shares in the Group
held by the employee share trust are treated as treasury shares and presented in
the balance sheet as a deduction from equity.
The Group has taken advantage of the transitional provisions of IFRS2 'Share
based payments' in respect of equity-settled awards and has applied IFRS2 only
to equity-settled awards granted after 7 November 2002 that had not vested on
December 31, 2004.
TAXATION
The tax expense represents the sum of the tax currently payable and deferred
tax, including UK corporation tax and foreign tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred income tax is provided, using the liability method, on all temporary
differences at the balance sheet date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax assets and liabilities are recognized for all deductible
temporary differences, carry-forward of unused tax losses, to the extent that it
is probable that taxable profit will be available against which the deductible
temporary differences, carry-forward of unused tax losses can be utilized:
- except where the deferred income tax asset or liability relating to the
deductible temporary difference arises from the initial recognition of an
asset or liability in a transaction that is not a business combination and,
at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; and
- in respect of deductible temporary differences associated with investments
in subsidiaries, associates and interests in joint ventures, deferred tax
assets or liabilities are only recognized to the extent that it is probable
that the temporary differences will reverse in the foreseeable future and
taxable profit will be available against which the temporary difference can
be utilized.
In the UK and the US, the Group is entitled to a tax deduction for the amount
treated as compensation on exercise of certain employee share options under each
jurisdiction's tax rules. As explained under 'Share-based payment transactions'
above, a compensation expense is recorded in the Group's income statement over
the period from the grant date to the vesting date of the relevant options. As
there is a temporary difference between the accounting and tax bases, a deferred
tax asset is recorded. The deferred tax asset arising is calculated by comparing
the estimated amount of tax deduction to be obtained in the future (based on the
Acambis plc share price at the balance sheet date) with the cumulative amount of
the compensation expense recorded in the income statement. If the amount of
estimated future tax deduction exceeds the cumulative amount of the remuneration
expense at the statutory tax rate, the excess is recorded directly in equity,
against the profit and loss reserve.
No compensation charge is recorded in respect of options granted before 7
November 2002 or in respect of those options which have been exercised or have
lapsed before December 31, 2004. Nevertheless, tax deductions have arisen and
will continue to arise on these options.
The tax effects arising in relation to these options are recorded directly in
equity, against the profit and loss reserve.
The carrying amount of deferred income tax assets is reviewed at each balance
sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the deferred
income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that
apply to the period when the asset is realized or the liability is settled,
based on tax rates (and tax laws) that have been enacted or substantively
enacted at the balance sheet date. Income tax relating to items recognized
directly in equity is recognized in equity and not in the income statement.
GOODWILL
Goodwill on acquisition is initially measured at cost, being the excess of the
cost of the business combination over the acquirer's interest in the net fair
value of the identifiable assets, liabilities and contingent liabilities. The
fair value of the consideration is determined by applying appropriate discounts
to contingent and deferred consideration, to the level where the Group considers
those liabilities will be payable. Where the consideration for the acquisition
of a business includes non-interest bearing cash payments due after more than
one year, the liability is recorded at its present value, after applying a
discount rate that approximates to that which a lender would typically require
for a similar transaction, and taking into account the risk/likelihood of the
payment being made.
Where revisions are made to the expected amounts of contingent consideration
payable as a result of changes to estimates, such changes are accounted for at
the date of the change in estimate.
Following initial recognition, goodwill is not amortized but is measured at cost
less any accumulated impairment losses. Goodwill is reviewed for impairment
annually or more frequently if events or changes in circumstances indicate that
the carrying value may be impaired.
INTANGIBLE ASSETS
Separately identifiable intangible assets acquired are capitalized at cost and
those acquired from a business acquisition are capitalized at fair value as at
the date of acquisition. Following initial recognition, the cost model is
applied. The useful lives of these intangible assets are assessed to be either
finite or indefinite. Where amortization is charged on assets with finite lives,
this expense is taken to the income statement. In the case of assets acquired
relating to BPC this is through the 'Cost of sales' line item.
Intangible assets are tested for impairment when a trigger event occurs. Useful
lives are also examined on an annual basis and adjustments, where applicable,
are made on a prospective basis. Useful lives are as follows: Distribution
contract - 88 months Software assets - 3 years R&D technology - Variable,
depending on technology
JOINT VENTURE UNDERTAKINGS
Investments in joint ventures are carried in the balance sheet at cost as
adjusted by post acquisition changes in the Group's share of the net assets of
the joint ventures, less any impairment in the value of the individual
investments. The Group's share of net profits and losses of joint ventures is
included in the income statement net of interest and tax.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost less accumulated depreciation
and any impairment in value. Land is not depreciated. Depreciation is calculated
on a straight-line basis over the estimated useful life of the asset as follows:
_______________________________________________________________________________
Freehold buildings 39 years
Leasehold buildings 15 years or term of lease if shorter
Laboratory and manufacturing equipment 4 to 7 years
Office equipment 3 to 5 years
_______________________________________________________________________________
The carrying values of property, plant and equipment are reviewed for impairment
when events or changes in circumstances indicate the carrying value may not be
recoverable. If any such indication exists and where the carrying values exceed
the estimated recoverable amount, the assets or cash-generating units are
written down to their recoverable amount. The recoverable amount of property,
plant and equipment is the greater of net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, the
recoverable amount is determined for the cash-generating unit to which the asset
belongs. Impairment losses are recognized in the income statement.
An item of property, plant and equipment is de-recognized upon disposal or when
no future economic benefits are expected to arise from the continued use of the
asset. Any gain or loss arising on de-recognition of the asset (calculated as
the difference between the net disposal proceeds and the carrying amount of the
item) is included in the income statement in the year the item is derecognized.
The Group does not capitalize interest charges on loans to fund the purchase of
tangible fixed assets.
INVESTMENTS
Investments in subsidiaries are shown at cost less any provision for impairment.
Available-for-sale investments are recorded at fair value. Unrealized holding
gains and any temporary unrealized holding losses after the initial recognition
are reflected through reserves, net of related taxes. Impairment losses and
realized gains and losses are reported in the income statement.
RECOVERABLE AMOUNT OF NON-CURRENT ASSETS
At each reporting date, the Group assesses whether there is any indication that
an asset may be impaired. Where an indicator of impairment exists, the Group
makes a formal estimate of recoverable amount. Where the carrying amount of an
asset exceeds its recoverable amount the asset is considered impaired and is
written down to its recoverable amount. Recoverable amount is the higher of an
asset's or cash-generating unit's fair value less costs to sell and its value in
use and is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from other assets or
groups of assets.
INVENTORIES, EXCLUDING LONG-TERM CONTRACTS
Inventories are valued at the lower of cost and net realizable value. Costs
incurred in bringing each product to its present location and condition are
accounted for as follows:
________________________________________________________________________________
Raw materials purchase cost on a first-in,
first-out basis
________________________________________________________________________________
Finished goods and work in progress cost of direct materials and labor
and a proportion of manufacturing
overheads based on normal
operating capacity but excluding
borrowing costs.
________________________________________________________________________________
Net realizable value is the estimated selling price in the ordinary course of
business, less estimated costs of completion and the estimated costs necessary
to make the sale.
The Group assesses at each reporting date whether there is an indication that
inventory may be impaired, or if the estimate of the net realisable value of the
inventory is lower than the carrying value. Inventory is valued at the lower of
its cost and its net realisable value, and any write down is recognised in the
income statement.
FINANCIAL INSTRUMENTS
From time to time, the Group uses derivative financial instruments in the form
of sterling and foreign currency contracts to hedge its risks associated with
foreign currency fluctuations and those in the form of yield-enhancing deposits
to maximize interest rates. Such derivative financial instruments are stated at
fair value with movements in fair value recorded in the income statement. The
fair value of forward exchange contracts is calculated by reference to current
forward exchange rates for contracts with similar maturity profiles.
The Group makes certain deposits in foreign currencies for fixed terms (dual
currency deposits) which, at the option of the bank, mature in that foreign
currency or are converted to another currency at a pre-agreed exchange rate. The
Group considers that such arrangements contain an embedded derivative element,
which is separated from the host contract and accounted for as a derivative
financial instrument under IAS39 'Recognition and measurement of financial
instruments'. This is initially stated in the balance sheet at cost. After
initial recognition, it is measured at fair value with movements in fair value
recorded in the income statement.
A gain or loss arising from a change in the fair value of a financial asset or
financial liability classified as at fair value through the profit or loss is
recognized in the income statements.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash at bank and in hand and short-term
deposits with an original maturity of three months or less.
BORROWING COSTS
Borrowing costs are recognized as an expense when incurred.
ACCOUNTING FOR DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
Derivatives are initially accounted and measured at fair value on the date a
derivative contract is entered into and subsequently measured at fair value. The
gain or loss on re-measurement is taken to the income statement except where the
derivative is a designated cash-flow hedging instrument. The accounting
treatment of derivatives classified as hedges depends on their designation,
which occurs on the date on which a commitment to the derivative contract is
made.
The Group designates derivatives as:
- A hedge of the fair value of an asset or liability (fair value hedge);
- A hedge of the income/cost of a highly probable forecasted transaction or
commitment (cash flow hedge); or
- A hedge of a net investment in a foreign entity.
In order to qualify for hedge accounting, the Group is required to document in
advance the relationship between the item being hedged and the hedging
instrument. The Group is also required to document and demonstrate an assessment
of the relationship between the hedged item and the hedging instrument, which
shows that the hedge will be highly effective on an ongoing basis.
This effectiveness testing is re-performed at each period end to ensure that the
hedge remains highly effective. Gains or losses on fair value hedges that are
regarded as highly effective are recorded in the income statement with the gain
or loss on the hedged item attributable to the hedged risk.
Gains or losses on cash flow hedges that are regarded as highly effective are
recognized in equity. Where the forecast transaction results in a financial
asset or liability only gains or losses previously recognized in equity are
reclassified to profit or loss in the same period as the asset or liability
affects profit or loss. Where the forecasted transaction or commitment results
in a non-financial asset or liability, any gains or losses previously deferred
in equity are included in the cost of the related asset or liability. If the
forecasted transaction or commitment results in future income or expenditure,
gains or losses deferred in equity are transferred to the income statement in
the same period as the underlying income or expenditure. The ineffective
portions of the gain or loss on the hedging instrument are recognized in profit
or loss. For the portion of hedges deemed ineffective or transactions that do
not qualify for hedge accounting under IAS39, any change in assets or
liabilities is recognized immediately in the income statement. Where a hedge no
longer meets the effectiveness criteria, any gains or losses deferred in equity
are only transferred to the income statement when the committed or forecasted
transaction is recognized in the income statement. However, where an entity
applied cash flow hedge accounting for a forecasted or committed transaction
that is no longer expected to occur, then the cumulative gain or loss that has
been recorded in equity is transferred to the income statement. When a hedging
instrument expires or is sold, any cumulative gain or loss existing in equity at
the time remains in equity and is recognized when the forecast transaction is
ultimately recognized in the income statement.
LEASES
Finance leases, which transfer to the Group the risks and benefits incidental to
ownership of the leased item, are capitalized at the inception of the lease at
the fair value of the leased property or, if lower, at the present value of the
minimum lease payments. Lease payments are apportioned between the finance
charges and reduction of the lease liability so as to achieve a constant rate of
interest on the remaining balance of the liability. Finance charges are charged
directly against income.
Where the Group enters into transactions which meet the criteria for a sale and
finance leaseback, the difference between the sale price of the asset and its
previous carrying value is deferred and amortized over the lease term.
Capitalized leased assets are depreciated over the shorter of the estimated
useful life of the asset or the lease term. Leases where the lessor retains the
risks and benefits of ownership of the asset are classified as operating leases.
Operating lease payments are recognized as an expense in the income statement on
a straight-line basis over the lease term.
PROVISIONS
Provisions are recognized when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that costs will be
required to be incurred to settle the obligation and a reliable estimate can be
made of the amount of the obligation. Legal fees associated with litigation
arising as a result of circumstances in existence at the balance sheet date are
provided for based on management's best estimate of costs to be incurred.
FOREIGN CURRENCY AND TRANSLATION
Transactions denominated in foreign currencies are recorded in the functional
currency of the Group entity at actual exchange rates as at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies
are translated at the rates ruling at the balance sheet date. All differences
are taken to the income statement except where financing of a foreign subsidiary
through long-term loans and deferred trading balances is intended to be as
permanent as equity, such loans and inter-Company balances are treated as part
of the net investment and, as such, any exchange differences arising are dealt
with as adjustments to reserves.
Assets and liabilities of overseas subsidiary and joint venture undertakings are
translated into sterling at rates of exchange ruling at the balance sheet date.
The results and cash flows of overseas subsidiary and joint venture undertakings
are translated into sterling using average rates of exchange. Exchange
adjustments arising when the opening net assets and the profits for the year
retained by overseas subsidiary and joint venture undertakings are translated
into sterling are taken directly to equity. On disposal of a foreign entity,
accumulated exchange differences are recognized in the income statement as a
component of the gain or loss on disposal.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the acquiring company and are
recorded at the exchange rate at the date of the transaction. The Group has
taken advantage of the provisions under IFRS1, and does not have to apply this
to acquisitions made before August 2003.
ESOP TRUST
Acambis plc recognizes the assets and liabilities of the ESOP trust in its own
accounts and shares held by the trust are recorded at cost as a deduction in
arriving at shareholders' funds until such time as the shares vest
unconditionally to employees. The trust is a separately administered trust,
funded by loans from Acambis plc, whose assets comprise shares in Acambis plc.
FUTURE PRONOUNCEMENTS
At the date of approval of these financial statements the following standards
and interpretations which have not been applied in these financial statements
were in issue but not yet effective:
- an amendment to IAS21 'The effects of changes in foreign exchange rates' in
respect of an entity's investment in foreign operations;
- an amendment to IAS1 'Presentation of financial statements' requiring new
disclosures about entities' management of their capital resources;
- amendments to IAS39 and IFRS4 'Insurance contracts' which clarify whether
financial guarantees fall within the scope of IAS39 or IFRS4 and stipulate
the measurement method to be applied to such guarantees;
- an amendment to IAS39 to permit hedge accounting for certain forecast
intra-Group transactions; and
- a new accounting standard, IFRS7 'Financial instruments: Disclosures'. This
standard replaces IAS30 'Disclosures in the financial statements of banks and
similar institutions' and the disclosure requirements in IAS32 'Financial
instruments: disclosure and presentation' and locates in one place all
disclosures relating to financial instruments. The new requirements
incorporate many of IAS32's disclosures as well as additional qualitative and
quantitative disclosures on the risks arising from financial instruments.
The Directors believe the adoption of these standards and interpretations in the
future periods will have no material impact on the financial statements when
they come into effect for periods after January 1, 2006.
2 SEGMENTAL INFORMATION
The Group's primary reporting format is business segments and its secondary
format is geographic segments. At December 2005, the Group is organized on a
worldwide basis in one business segment of vaccines, and into two geographical
areas of Europe and North America. Transfer prices between segments are set on
an arm's length basis in a manner similar to transactions with third parties.
The Group's geographical segments are determined by location of operations.
GEOGRAPHICAL SEGMENT
The following table presents revenue and certain asset and capital expenditure
information regarding the Group's geographic segments.
Europe North America Total Group
_______________________________________________________________________________
2005 2004 2005 2004 2005 2004
GBPm GBPm GBPm GBPm GBPm GBPm
_______________________________________________________________________________
Revenue:
Sales to external 1.8 8.5 39.1 77.0 40.9 85.5
customers
Other segment
information:
Total assets 79.3 104.0 54.1 59.9 133.4 163.9
_______________________________________________________________________________
Total assets 79.3 104.0 54.1 59.9 133.4 163.9
_______________________________________________________________________________
Capital additions:
Tangible fixed assets - - 5.2 3.1 5.2 3.1
Intangible assets - - 0.6 0.2 0.6 0.2
_______________________________________________________________________________
3 INCOME AND EXPENSES
i) OTHER INCOME
In May 2005, the Group sold information and rights of a previous R&D project in
exchange for shares, valued at GBP0.4m at the time. The shares are held on the
balance sheet as a financial asset (see note11). In May 2004, the Group reached
a c. GBP10.6m ($19m) agreement with Baxter to terminate the Canton manufacturing
agreement under which Baxter was to place manufacturing orders at Acambis'
Canton facility. The first GBP5.1m ($9m) was received in May 2004 and the second
installment of GBP2.6m ($5m) was received in January 2005. The third and final
installment of GBP2.9m ($5m) was received in January 2006. The Group discounted
future cash receipts and, as a result, recorded other operating income of
GBP10.2m in 2004. In 2005 GBP0.2m (2004 - GBP0.2m) was recorded within finance
income (see (iii) below), reflecting the staged payment nature of the agreement.
ii) ADMINISTRATION COSTS
2005 2004
GBPm GBPm
________________________________________________________________________
Administration costs 7.7 2.9
Canton plant impairment - 1.9
Restructuring costs - 0.7
________________________________________________________________________
Total administration costs 7.7 5.5
________________________________________________________________________
iii) FINANCE INCOME
2005 2004
GBPm GBPm
________________________________________________________________________
Unwinding of discounts in relation to deferred debtors 0.2 0.2
Interest receivable 3.8 4.6
________________________________________________________________________
Total finance income 4.0 4.8
________________________________________________________________________
iv) FINANCE COSTS
2005 2004
GBPm GBPm
________________________________________________________________________
On bank overdrafts 0.2 0.1
Interest element of finance leases 0.6 0.7
Unwinding of discounts in relation to contingent and
deferred consideration 0.2 0.1
________________________________________________________________________
Total finance costs 1.0 0.9
________________________________________________________________________
v) STAFF COSTS
2005 2004
GBPm GBPm
________________________________________________________________________
Wages and salaries 14.4 14.5
Social security costs 1.1 1.4
Other pension and 401k costs 0.4 0.4
Cost of share-based payments 0.8 0.7
________________________________________________________________________
Total employee benefits 16.7 17.0
________________________________________________________________________
During 2004, a third-party company to which the Group provided administrative
services paid a share of the Group's administrative costs, including GBP0.2m for
staff costs. This arrangement ceased in 2004 and these costs are included in the
comparative figures shown above only.
The average monthly number of employees during the year (including Executive
Directors) was:
UK US 2005 2004
Number Number Number Number
_________________________________________________________________________
Research and development 8 93 101 118
Sales and marketing 3 19 22 19
Manufacturing - 90 90 87
Administration 19 43 62 65
_________________________________________________________________________
30 245 275 289
_________________________________________________________________________
At December 31, 2005, the Group had 285 employees (2004 - 270).
4 OPERATING (LOSS)/PROFIT
The following items are included in operating (loss)/profit:
2005 2004
GBPm GBPm
______________________________________________________________
Depreciation of fixed assets:
- owned 3.1 2.7
- held under finance leases 1.9 1.9
Cost of share-based payments (note 24) 0.8 0.7
Amounts paid to the Group's Auditors (see
below) 0.5 0.5
Operating lease charges for plant and
equipment 0.1 0.1
Operating lease charges for property 2.2 1.8
Loss on disposal of fixed assets 0.1 0.1
Repairs and maintenance costs for property,
plant and equipment 0.5 0.4
Exchange (loss)/gain on foreign currency
borrowings (0.4) 0.3
Cost of inventories recognized as expenses 3.0 17.9
Amortization of intangibles in cost of
sales 0.7 0.7
Amortization of intangibles in operating
expenses 0.2 0.1
______________________________________________________________
During the year the Group obtained the following services from the Group's
Auditors:
2005 2004
GBPm GBPm
______________________________________________________________
Audit services:
- statutory audit 0.2 0.1
- related regulatory reporting 0.1 0.1
Tax services:
- compliance services 0.1 0.1
- advisory services 0.1 0.2
______________________________________________________________
0.5 0.5
______________________________________________________________
5 INCOME TAX
Tax is charged on profits made in the country where each Group company is based.
Major components of income tax expense for the year are as follows:
Analysis of (credit)/charge in the 2005 2004
consolidated income statement GBPm GBPm
______________________________________________________________
Current income tax (0.3) 4.2
Deferred taxation (0.4) 3.1
______________________________________________________________
Income tax (benefit)/expense in the
consolidated income statement (0.7) 7.3
______________________________________________________________
Tax on items charged to equity
______________________________________________________________
Current income tax credit on employee share
schemes - (1.2)
Deferred tax on revaluation of
available-for-sale investment 0.1 -
______________________________________________________________
Income tax expense/(benefit) reported in
equity 0.1 (1.2)
______________________________________________________________
A reconciliation of income tax expense applicable to accounting profit before
tax at the statutory income tax rate to total taxation for the Group is as
follows:
2005 2004
GBPm GBPm
______________________________________________________________
(Loss)/profit before tax (27.7) 27.0
At the standard rate of corporation tax in
the UK of 30% (2004 - 30%) (8.3) 8.1
Effects of:
Utilization of tax losses (2.9) (3.6)
Losses carried forward 13.7 -
Expenses not deductible for tax purposes 0.2 (1.1)
Adjustments in respect of foreign tax rates (3.5) 0.2
Other timing differences (0.5) 3.7
Adjustments to tax in respect of prior period 0.6 -
______________________________________________________________
Total taxation (0.7) 7.3
______________________________________________________________
Movements in the deferred tax account are as follows:
Deferred tax Deferred tax
asset liability
2005 2004 2005 2004
GBPm GBPm GBPm GBPm
_______________________________________________________________________________
At January 1, - 2.1 (1.7) (1.8)
Accelerated capital allowances 0.3 - - (2.7)
Short-term timing differences - - - 2.6
Exchange differences - - 0.2 0.2
Available-for-sale investment - - (0.2) -
Tax losses - (2.1) - -
_______________________________________________________________________________
At December 31, 0.3 - (1.7) (1.7)
_______________________________________________________________________________
No deferred tax is recognized on the un-remitted earnings of overseas
subsidiaries and joint ventures. The Directors have determined that, as earnings
are continually reinvested by the Group, undistributed earnings of the
subsidiaries and joint ventures will not be distributed in the foreseeable
future.
Deferred tax assets and liabilities are only offset where there is a legally
enforceable right of offset and there is an intention to settle the balances
net. No balances have been offset in the current or previous years.
UNRECOGNIZED DEFERRED TAX ASSETS/(LIABILITIES)
2005 2004
GBPm GBPm
______________________________________________________________
Tax losses 7.9 0.6
R&D tax credit 0.7 -
Short-term timing differences (0.6) -
Other 0.4 -
______________________________________________________________
At December 31, 8.4 0.6
______________________________________________________________
Deferred tax assets have not been recognized in respect of tax losses because
there is uncertainty in the probability that they will be recoverable in the
foreseeable future.
6 EARNINGS PER ORDINARY SHARE (BASIC AND FULLY DILUTED)
Basic EPS is calculated by dividing the earnings attributable to ordinary
shareholders by the weighted average number of ordinary shares in issue during
the year, excluding those held in the employee share trust (see note 23), which
are treated as cancelled until the shares vest unconditionally with the
employees.
For fully diluted EPS, the weighted average number of ordinary shares in issue
is adjusted to assume conversion of dilutive potential ordinary shares.
The Group's potentially dilutive securities consist of share options and
performance shares.
For basic and diluted EPS, the weighted average numbers of shares used in the
calculations are set out below:
2005 2004
_______________________________________________________________________________
Weighted Weighted
average average
Earnings number Earnings number
GBPm of shares GBPm of shares
_______________________________________________________________________________
Basic EPS
(Loss)/earnings attributable to
ordinary shareholders (27.0) 107,211,367 19.7 106,300,080
Effect of dilutive securities:
Options - - - 2,349,309
_______________________________________________________________________________
Adjusted (loss)/earnings (27.0) 107,211,367 19.7 108,649,389
_______________________________________________________________________________
2005 2004
______________________________________________________________
Per Per
share share
amount amount
pence pence
______________________________________________________________
Basic EPS
(Loss)/earnings attributable to
ordinary shareholders (25.2) 18.5
Effect of dilutive securities:
Options - (0.4)
______________________________________________________________
Diluted EPS (25.2) 18.1
______________________________________________________________
7 GOODWILL
Cost GPBm
At January 1, 2005 21.0
Adjustment to contingent consideration (0.8)
Exchange movement 0.3
_________________________________________________________________________
At December 31, 2005 20.5
Amortisation at January 1, and December 31, 2005 5.6
_________________________________________________________________________
Net book value at December 31, 2005 14.9
Net book value at December 31, 2004 15.4
_________________________________________________________________________
Goodwill arose when Acambis Inc. was acquired in 1999 and when BPC was acquired
in August 2003.
In 2003, the Group acquired BPC for $6.5m (GBP4.0m) cash, $2.0m (c. GBP1.1m) of
deferred consideration and $3.2m (c. GBP1.8m) of contingent consideration.
During 2005, deferred consideration of $1.6m (GBP0.9m) (2004 - $0.6m (GBP0.3m))
and contingent consideration of $1.5m (GBP0.8m) (2004 - $0.9m (GBP0.5m)) was
paid. During 2005, the conditions for the payment of the remainder of the
contingent consideration were not met and $1.3m (GBP0.7m) (2004 - GBPnil) was
deducted from the purchase price.
IMPAIRMENT TESTING OF GOODWILL
Goodwill acquired through business combinations has been allocated to the
business as a whole. Acambis operates as a global business and does not have
cash-generating units at a level lower than the Group as a whole.
During the year, the goodwill has been tested for impairment in accordance with
IAS36 'Impairment of assets'. The recoverable value, which is the higher of the
Group's net selling price and its value in use, has been calculated based on the
market capitalization of the Group. No impairment charges were made.
8 OTHER INTANGIBLE ASSETS
Distribution Software R&D
contract assets technology Total
GBPm GBPm GBPm GBPm
_______________________________________________________________________________
Cost
At January 1, 2005 4.7 0.6 - 5.3
Additions - 0.2 0.4 0.6
Exchange movement 0.5 - - 0.5
_______________________________________________________________________________
At December 31, 2005 5.2 0.8 0.4 6.4
_______________________________________________________________________________
Amortization
At January 1, 2005 0.9 0.3 - 1.2
Charge for year 0.7 0.2 - 0.9
Exchange movement 0.1 - - 0.1
_______________________________________________________________________________
At December 31, 2005 1.7 0.5 - 2.2
Net book value at December 31,
2005 3.5 0.3 0.4 4.2
_______________________________________________________________________________
At January 1, 2004 5.0 0.4 - 5.4
Additions - 0.2 - 0.2
Exchange movement (0.3) - - (0.3)
_______________________________________________________________________________
At December 31, 2004 4.7 0.6 - 5.3
_______________________________________________________________________________
Amortization
At January 1, 2004 0.2 0.2 - 0.4
Charge for year 0.7 0.1 - 0.8
_______________________________________________________________________________
At December 31, 2004 0.9 0.3 - 1.2
_______________________________________________________________________________
Net book value at December 31,
2004 3.8 0.3 - 4.1
_______________________________________________________________________________
9 PROPERTY, PLANT AND EQUIPMENT
Manufacturing
Freehold Short and
land and leasehold laboratory Office
buildings improvements equipment equipment Total
_______________________________________________________________________________
GBPm GBPm GBPm GBPm GBPm
_______________________________________________________________________________
Cost
January 1, 2005 0.6 20.4 6.8 2.6 30.4
Additions - 3.6 0.9 0.7 5.2
Disposals - - - (0.3) (0.3)
Exchange movement - 2.5 1.3 0.4 4.2
_______________________________________________________________________________
At December 31, 2005 0.6 26.5 9.0 3.4 39.5
_______________________________________________________________________________
Depreciation
At January 1, 2005 - 8.6 2.0 1.3 11.9
Charge for year - 3.1 1.2 0.7 5.0
Impairment - 0.9 - - 0.9
Disposals - - - (0.2) (0.2)
Exchange movement - 1.1 0.7 0.3 2.1
_______________________________________________________________________________
At December 31, 2005 - 13.7 3.9 2.1 19.7
_______________________________________________________________________________
Net book value
_______________________________________________________________________________
At December 31, 2005 0.6 12.8 5.1 1.3 19.8
_______________________________________________________________________________
Net book value of assets
held under finance leases
included above:
At January 1, 2005 - 4.8 0.8 - 5.6
_______________________________________________________________________________
At December 31, 2005 - 3.5 0.7 - 4.2
_______________________________________________________________________________
Manufacturing
Freehold Short and
land and leasehold laboratory Office
buildings improvements equipment equipment Total
_______________________________________________________________________________
GBPm GBPm GBPm GBPm GBPm
_______________________________________________________________________________
Cost
January 1, 2004 0.6 20.3 8.4 2.1 31.4
Additions - 1.5 0.9 0.7 3.1
Disposals - (0.2) (1.8) - (2.0)
Exchange movement - (1.2) (0.7) (0.2) (2.1)
_______________________________________________________________________________
At December 31, 2004 0.6 20.4 6.8 2.6 30.4
_______________________________________________________________________________
Depreciation
At January 1, 2004 - 5.2 2.0 0.7 7.9
Charge for year - 2.5 1.4 0.7 4.6
Impairment - 1.8 0.1 - 1.9
Disposals - (0.3) (1.2) - (1.5)
Exchange movement - (0.6) (0.3) (0.1) (1.0)
_______________________________________________________________________________
At December 31, 2004 - 8.6 2.0 1.3 11.9
_______________________________________________________________________________
Net book value
At January 1, 2004 0.6 15.1 6.4 1.4 23.5
At December 2004 0.6 11.8 4.8 1.3 18.5
_______________________________________________________________________________
10 SUBSIDIARIES AND JOINT VENTURES
The consolidated financial statements include the financial statements of
Acambis plc and the following subsidiaries:
Country of Parent
Company name Main business incorporation company % owned
__________________________________________________________________________________________________________
Acambis Research Limited Corporate administration and England and Wales Acambis plc 100
sales
Acambis Inc. R&D, sales and manufacturing US Acambis plc 100
Berna Products Corporation Sales, marketing and distribution US Acambis Inc. 100
Smallpox Biosecurity Limited Marketing England and Wales Acambis plc 100
JOINT VENTURE
As described in note 20, the Group has an interest in a Joint Venture. Since May
1999, Acambis has performed a pre-agreed work program on behalf of the Joint
Venture. Costs incurred by the Group on behalf of the Joint Venture and
corresponding turnover received from the Joint Venture have been included in the
Group's financial statements.
11 FINANCIAL ASSETS: AVAILABLE-FOR-SALE INVESTMENTS
2005 2004
GBPm GBPm
_________________________________________________________________________
At January 1, - -
Additions 0.4 -
Revaluation surplus transfer to equity (note 23) 0.2 -
_________________________________________________________________________
At December 31, 0.6 -
_________________________________________________________________________
In May 2005, the Group sold information and rights of a previous R&D project to
Cambridge Biostability Limited, an unquoted UK company, in exchange for
1,425,200 shares. The investment represents less than a 20% shareholding in that
company.
12 OTHER NON-CURRENT ASSETS
2005 2004
GBPm GBPm
_________________________________________________________________________
Prepayments and accrued income - 0.1
Settlement of Canton agreement - 2.4
_________________________________________________________________________
- 2.5
_________________________________________________________________________
The discounted interest rate used to value the Canton settlement receivable was
8.0%.
13 INVENTORY
2005 2004
GBPm GBPm
_________________________________________________________________________
Raw materials 0.4 0.4
Work in progress 0.5 2.7
Finished goods 2.7 2.9
_________________________________________________________________________
3.6 6.0
_________________________________________________________________________
Inventory is stated net of a provision of GBP2.5m (2004 - GBP3.6m).The amount of
inventory write-down recognized as an expense in 2005 was GBP1.8m
(2004-GBP4.7m). This expense is included in the cost of sales line.
14 TRADE AND OTHER RECEIVABLES
2005 2004
GBPm GBPm
_________________________________________________________________________
Trade receivables 12.4 8.2
Other receivables 0.5 0.7
Prepayments and accrued income 4.8 2.2
Settlement of Canton agreement 2.9 2.6
_________________________________________________________________________
20.6 13.7
_________________________________________________________________________
Trade receivables are non-interest-bearing and are generally on terms of 30 to
60 days. There was a provision against trade receivables of GBP0.1m at December
31, 2005 (2004 - GBPnil).
15 FINANCIAL INSTRUMENTS
The Group's financial instruments comprise primarily cash and liquid resources,
a finance lease facility, an overdraft facility, foreign currency contracts,
short- and long-term debtors receivable under the Canton settlement and various
items, such as trade debtors and trade creditors, which arise directly from its
operations. The main purpose of these financial instruments is to provide
working capital for the Group's operations.
The main risks arising from the Group's activities and involving the use of
financial instruments are foreign currency risk, interest rate risk and
liquidity risk. The Board reviews and agrees the Group's objectives and policies
for managing each of these risks. Details of the Group's objectives and
policies, both during the year and since the year-end, are set out below, along
with numerical disclosures for each category of financial instrument. Except
where indicated, these disclosures are indicative of the situation throughout
the year.
FOREIGN CURRENCY RISK
The Group has subsidiaries that operate and trade in the US, with revenues,
expenses and financing denominated principally in US dollars. Through these
overseas operations, the Group is subject to foreign exchange risk, including
the risk of fluctuations in the Group's net investment in, and reported profits
from, foreign subsidiaries when translated into sterling. In addition, the UK
trading subsidiary enters into contracts in a variety of foreign currencies.
The Group had overall surplus cash funds throughout the year but had to
determine in which currency to hold cash available for working capital and
surplus funds. This was done with reference to anticipated future expenditure
patterns and relative returns on funds held in different currencies. The Group's
current policy is to hold surplus funds in sterling over the long term, which
currently achieves a higher interest rate return whilst mitigating the risk of
fluctuations in the Group's net assets, when reported in sterling.
From time to time, the Group makes use of forward contracts in order to reduce
uncertainty over the sterling value of anticipated US dollar receipts, thereby
reducing uncertainty over the level of the Group's profits when reported in
sterling. Typically, in 2005 the Group took out forward contracts for known
significant foreign currency transactions only. There were no forward contracts
outstanding at the year-end.
During the year, the Group also used dual currency deposits for both euro and US
dollar deposits, allowing an enhanced interest rate to be earned, which may, at
maturity, be converted into sterling or dollars at the banks' discretion, at a
rate previously agreed. The Group had no dual currency deposits outstanding at
the year-end.
Where Group companies have monetary assets and liabilities denominated in
currencies other than their functional currency, these balances are translated
into that subsidiary's functional currency. With the exception of gains and
losses on those inter-Company balances that are considered to be 'as permanent
as equity' and recorded in reserves, foreign exchange gains and losses arising
are recorded immediately in the income statement. These amounts include
sterling-denominated cash balances held in the US, US dollar- and
euro-denominated balances held by the Company and a US dollar-denominated
overdraft facility held by a UK subsidiary. In addition, the Group has other
current assets and liabilities denominated in foreign currencies, which the
Board does not consider to be significant.
LIQUIDITY RISK
The Board monitors the level of cash and liquid resources on a regular basis,
and management monitors the level on a daily basis, to ensure that the Group has
sufficient liquid funds to enable it to meet its commitments as they fall due.
This is achieved through the production and review of cash forecasts, including
sensitivity analyses. Approximately 60% of the Group's cash and liquid resources
are managed on a discretionary basis by a third party within strict parameters
that have been set by the Board. The remainder is invested in managed funds or
invested in bank deposits within the parameters set by the Board. These
parameters include the requirement that the institutions used must have a
minimum rating of Aa2 long-term or P-1 short-term, and a maximum investment with
any one counter-party of GBP20m.
INTEREST RATE RISK
The Group finances its operations predominantly through cash and liquid
resources generated through operating activities, from the issuance of equity
shares, through finance leases and through an overdraft facility. It is the
Group's policy to invest surplus cash on deposit or in money market funds
managed by professional money managers. The performance of the investments is
reviewed by management on a regular basis to ensure that competitive rates of
return are being achieved, subject to the Board's requirement relating to the
accessibility of funds and standing of financial institutions used. The Board
reviews regularly the financing facilities available to the Group to ensure
competitive rates of interest are being obtained. During the year, the Group
invested in a cash deposit which accrues interest dependent on the sterling
LIBOR rate. This deposit of GBP10.0m was outstanding at the year-end and was
valued at GBP10.0m (2004 - deposit GBP5.8m, valued at GBP5.7m).
The following table sets out the carrying value by maturity, for each financial
instrument that is exposed to interest rate risk.
2005 Within One-two
one year years Total
GBPm GBPm GBPm
________________________________________________________________________
Floating rate:
Cash 11.0 - 11.0
________________________________________________________________________
Fixed rate:
Short-term deposits 38.2 - 38.2
Liquid investments 8.8 10.0 18.8
Obligations under finance leases (7.1) - (7.1)
________________________________________________________________________
2004 Within One-two
one year years Total
GBPm GBPm GBPm
________________________________________________________________________
Floating rate
Cash 30.2 - 30.2
________________________________________________________________________
Fixed rate
Cash 0.7 - 0.7
Short-term deposits 50.1 - 50.1
Liquid investments 20.8 - 20.8
Obligations under finance leases (3.1) (6.3) (9.4)
________________________________________________________________________
The Group's main customer is the US Government and therefore it assesses the
credit risk as low. There are no other significant concentrations of credit
risk.
FAIR VALUES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
There is no material difference between the book values and fair values of the
Group's financial assets and liabilities as at December 31, 2005. Fair values
have been calculated by discounting cash flows at prevailing interest rates.
2005 2004
GBPm GBPm
___________________________________________________________________
Assets:
Foreign currency contracts 0.1 -
___________________________________________________________________
Liabilities:
Foreign currency contracts - (0.1)
___________________________________________________________________
In accordance with IAS39, the Group has reviewed all contracts for embedded
derivatives that are required to be separately accounted for if they do not meet
certain requirements set out in the standard. This derivative is fair valued
based on discounted future cash flows with gains and losses passing through the
income statement as hedge accounting is not available.
The Group has an embedded derivative deposit which accrues interest dependent on
UK LIBOR (the London interbank offered rate).
During the year, the Group also used dual currency deposits for both euro and US
dollar deposits, allowing an enhanced interest rate to be earned, which may, at
maturity, be converted into sterling or dollars at the banks' discretion, at a
rate previously agreed. The Group had no dual currency deposits outstanding at
the year-end (2004 - none).
From time to time, the Group makes use of forward contracts in order to reduce
uncertainty over the sterling value of anticipated US dollar receipts, thereby
reducing uncertainty over the level of the Group's profits when reported in
sterling. Typically, in 2005 the Group took out forward contracts for known
significant foreign currency only. The Group had no forward contracts
outstanding at the year-end (2004 - a forward contract to sell dollars and buy
sterling outstanding at the year-end).
16 CASH AND CASH EQUIVALENTS
2005 2004
GBPm GBPm
______________________________________________________________________
Cash 11.0 30.9
Short-term deposits 38.2 50.1
______________________________________________________________________
49.2 81.0
______________________________________________________________________
The weighted average interest rate received in the year was 3.9% for cash at
bank. Short-term deposits are made for varying periods of between one day and
three months, (the weighted average maturity being 14 days) and have earned
interest at 4.7%.
The Group had cash and liquid resources of GBP68.0m at December 31, 2005 (2004 -
GBP101.8m). Of this amount, deposits with an original maturity of more than
three months of GBP18.8m (2004 - GBP20.8m) have been classified as liquid
investments. The majority of these resources are invested in managed funds or on
bank deposit, denominated in sterling, US dollars and euros. Approximately 16%
of the Group's cash and liquid resources is available for use with a day's
notice (2004 - 30%), with the remainder being invested on deposits of up to 18
months. The Group had GBP0.7m of restricted cash on deposit at the year-end
(2004 - GBP0.4m).
17 FINANCIAL LIABILITIES
2005 2004
GBPm GBPm
_________________________________________________________________________
Current:
Short-term borrowings 4.0 3.6
_________________________________________________________________________
Short-term financial liabilities - obligations under
finance leases 7.1 3.1
_________________________________________________________________________
Other financial liabilities 0.1 -
_________________________________________________________________________
Derivative financial liabilities - 0.1
_________________________________________________________________________
11.2 6.8
_________________________________________________________________________
Non-current:
Other financial liabilities 1.6 6.3
_________________________________________________________________________
SHORT-TERM BORROWINGS
Under the terms of the agreement between Acambis and Evans Vaccines Limited (a
subsidiary of Chiron Corporation, which has been acquired by Novartis AG) given
certain conditions the obligation under the bank overdraft facility of GBP4.0m
(2004 - GBP3.6m) for part of the costs incurred on the ARILVAX project may be
repayable within one year. The facility is underwritten by Chiron. Chiron has
granted to Acambis 100% of the marketing rights to ARILVAX in the US, whilst
retaining an option to buy back 50% of the profits from the US sales in return
for refunding to Acambis the costs that Acambis has incurred on the ARILVAX
program. The overdraft facility was fully utilized at December 31, 2005 (2004 -
fully utilized) and was renewed in January 2006 for a further year.
During the year, an exchange loss of GBP0.4m (2004 - gain of GBP0.3m) was
recorded in the income statement, resulting from the revaluation of this US
dollar-denominated facility.
OBLIGATIONS UNDER FINANCE LEASES
The Group has a $40m (c. GBP21m) finance lease facility. This was arranged
through Baxter and was approved by shareholders in December 2001. In 2001, the
Group drew down $18.6m (GBP14.0m) and has made no further draw-downs from the
facility. The repayment schedule for the lease financing required that interest
only was repaid in 2003 and capital and interest are repayable over 2004 to
2006. The Group had an option to repurchase all of the facility's assets in
December 2003, and on each anniversary thereafter, for the capital balance
outstanding at that time, plus any accrued but unpaid interest due at the time,
and a make-whole payment (discounted to present value) equal to the projected
future interest stream payable to the end of the lease term.
In December 2001, the Group committed to a finance lease, repayable within five
years, relating to the purchase and sale-and-leaseback of capital assets within
the manufacturing plant.
OTHER FINANCIAL LIABILITIES
In May 2005, the Group purchased a fill/finish facility for c.GBP1.8m ($3m)
upfront and a further c. GBP2.6m ($4.5m) in equal installments between 2006 and
2017. The balance relating to the discounted value of future payments is GBP1.7m
at December 31, 2005 (2004 - GBPnil). GBP0.1m is included in 'current other
financial liabilities' (2004 - GBPnil), and GBP1.6m in 'non-current other
financial liabilities' (2004 - GBPnil).
18 CURRENT LIABILITIES
TRADE AND OTHER PAYABLES
2005 2004
GBPm GBPm
________________________________________________________________________
Trade payables 16.0 5.8
Other taxation and social security 0.1 0.1
Other payables - 0.7
Deferred and contingent consideration - 1.7
________________________________________________________________________
16.1 8.3
________________________________________________________________________
19 PROVISIONS
In August 2005 BN filed legal actions against Acambis in the US in relation to
IP on its MVA smallpox vaccine. A further suit was filed in Austria in February
2006. BN alleges use of trade secrets, misappropriation and patent infringement.
Acambis strongly believes these allegations are without foundation and is
vigorously defending its position. A current provision of GBP2.3m (2004 -
GBPnil) has been recognized in relation to future legal costs relating to the
MVA litigation
20 INVESTMENT IN JOINT VENTURE
The Group has a 50% interest in the Pasteur Merieux-OraVax joint venture whose
principal business is to develop, manufacture, market and sell immunotherapeutic
and preventative vaccines against H. pylori infection in humans. The Joint
Venture represents collaboration between two partnerships, Merieux-OraVax SNC
and OraVax-Merieux Co., incorporated in Delaware, US. These partnerships were
formed in March 1995 between the companies now known as Acambis Inc. and sanofi
pasteur. The Joint Venture trades under the name of Pasteur Merieux-OraVax and
its accounting year-end is December 31, The R&D budgets of the two partnerships
are established by joint committees in which each of the parties has an equal
participation and role. The parties pay approximately equal shares of the agreed
budgets. The Joint Venture is being wound down.
The following information is given in respect of the Group's share of the Joint
Venture:
2005 2004
GBPm GBPm
_____________________________________________________________________________
Loss before tax - -
Current assets 0.7 0.6
Liabilities due within one year (1.0) (0.9)
_____________________________________________________________________________
(0.3) (0.3)
_____________________________________________________________________________
Due to the nature of this Joint Venture as collaboration between two partners,
the following table provides an alternative analysis of the amounts shown above:
2005 2004
GBPm GBPm
_____________________________________________________________________________
Share of cumulative amounts invested by the partners 17.0 15.2
Share of cumulative losses incurred by the Joint Venture (17.3) (15.5)
_____________________________________________________________________________
(0.3) (0.3)
_____________________________________________________________________________
21 OTHER NON-CURRENT LIABILITIES
2005 2004
GBPm GBPm
_____________________________________________________________________________
Deferred and contingent consideration - 0.5
_____________________________________________________________________________
22 CALLED-UP SHARE CAPITAL
2005 2004
Number GBPm Number GBPm
______________________________________________________
Authorized shares of 10p each
AT JANUARY 1, AND DECEMBER 31, 140,000,000 14.0 140,000,000 14.0
Allotted, called-up and fully paid ordinary shares of
10p each
At January 1, 107,219,329 10.7 105,637,848 10.6
Exercise of share options 132,078 - 1,581,481 0.1
_______________________________________________________________________________________________________________
At December 31, 107,351,407 10.7 107,219,329 10.7
_______________________________________________________________________________________________________________
All shares have equal voting rights.
As described in note 23, Acambis Employees Trustees Limited holds 84,972 shares,
which will be used to satisfy awards made under the LTIP. Consideration received
in 2005 through the exercise of share options amounted to GBP0.2m (2004 -
GBP1.9m).
23 STATEMENT OF CHANGES IN EQUITY
Share Share premium Retained Other
capital account earnings reserves Total
GBPm GBPm GBPm GBPm GBPm
_______________________________________________________________________________________________________________
At January 1, 2005 10.7 97.8 1.5 (2.5) 107.5
Gain on foreign currency exchange - - - 1.6 1.6
_______________________________________________________________________________________________________________
Total income and expense recognized directly in equity - - - 1.6 1.6
Loss for the year - - (27.0) - (27.0)
_______________________________________________________________________________________________________________
Total income and expense recognized - - (27.0) 1.6 (25.4)
Issue of new shares - 0.2 - - 0.2
Purchase of treasury shares - - (0.2) - (0.2)
Revaluation of available-for-sale investment (net of - - 0.1 - 0.1
deferred tax)
Credit in respect of employee share schemes - - 0.8 - 0.8
_______________________________________________________________________________________________________________
At December 31, 2005 10.7 98.0 (24.8) (0.9) 83.0
_______________________________________________________________________________________________________________
Share Share premium Retained Other
capital account earnings reserves Total
GBPm GBPm GBPm GBPm GBPm
_______________________________________________________________________________________________________________
At January 1, 2004 10.6 96.0 (20.1) - 86.5
Loss on foreign currency exchange - - - (2.5) (2.5)
Deferred tax on share options - - 1.2 - 1.2
_______________________________________________________________________________________________________________
Total income and expense recognized directly in equity - - 1.2 (2.5) (1.3)
Profit for the year - - 19.7 - 19.7
_______________________________________________________________________________________________________________
Total income and expense recognized - - 20.9 (2.5) 18.4
Issue of new shares 0.1 1.8 - - 1.9
Credit in respect of employee share schemes - - 0.7 - 0.7
_______________________________________________________________________________________________________________
At December 31, 2004 10.7 97.8 1.5 (2.5) 107.5
_______________________________________________________________________________________________________________
The amount shown in 'other reserves' relates to foreign currency translation.
At December 31, 2005, Acambis Employees' Trustees Limited held 84,972 (2004 -
62,190) ordinary shares in Acambis plc with a total nominal value of GBP0.01m
(2004 - GBP0.01m). The cost of these shares of GBP0.2m (2004 - GBP0.1m) is shown
as a deduction to retained earnings. The total market value of these shares at
December 31, 2005 is GBP0.2m (2004 - GBP0.2m). All shares held by the Trust have
been allocated to long-term incentive awards and a charge has been made in
respect of all of these awards. All costs relating to the administration of the
Trust are included within the accounts of Acambis plc as they arise.
24 SHARE-BASED PAYMENTS
SUMMARY OF SHARE SCHEMES IN OPERATION DURING THE YEAR
Acambis had the following share-based payment schemes in operation during the
year.
1996 AND 1999 SCHEMES
The 1996 Scheme and the 1999 Plan involve the grant of market-value share
options to participants. The options are subject to a market-based performance
condition (Acambis' TSR performance against a comparator group). The options
granted have a maximum contractual life of 10 years with the exception of the 15
October 2005 and 28 October 2003 options granted to employees which have a
maximum contractual life of four years. For all options granted after January 1,
2004 (to employees or Directors) performance is measured over three years and
there is no retesting of the performance condition. Further information
regarding the operation of the scheme can be found in the remuneration report.
LTIP
The LTIP involves the grant of nil-cost share options to participants. The
options are subject to a market-based performance condition (Acambis' TSR
performance against a comparator group). The options granted have a maximum
contractual life of three years and six months. For all options granted under
the LTIP performance is measured over three years and there is no retesting of
the performance condition. Further information regarding the operation of the
scheme can be found in the remuneration report.
SAYE SCHEME
The SAYE Scheme is based on a three-year monthly savings contract and eligible
employees are granted share options with an exercise price of up to 20% below
the share price when the invitation is issued. The options granted have a
maximum contractual life of three years and six months. Vesting of the options
is not subject to the achievement of a performance target.
ESPP
The ESPP is based on a two-year monthly savings contract and eligible employees
are granted share options with an exercise price of up to a 15% discount to the
share price at the time of invitation. The options granted have a maximum
contractual life of two years and three months. Vesting of the options is not
subject to the achievement of a performance target.
Options outstanding under all schemes are as follows:
January 1, December 31,
2005 Granted Exercised Lapsed 2005
_________________________________________________________________________________________________________________
Scheme '000 '000 '000 '000 '000
1996 233 36 (10) (59) 200
1999 3,173 806 (104) (342) 3,533
SAYE 105 38 (12) (50) 81
ESPP 85 50 - (60) 75
1990 US(1) 121 - - (107) 14
1995 US(2) 155 - - (28) 127
_________________________________________________________________________________________________________________
Total 3,872 930 (126) (646) 4,030
_________________________________________________________________________________________________________________
January 1, December 31,
2004 Granted Exercised Lapsed 2004
_________________________________________________________________________________________________________________
Scheme '000 '000 '000 '000 '000
1995 5 - (5 - -
1996 318 70 (113) (42) 233
1999 3,925 864 (1,277) (339) 3,173
SAYE 192 24 (105) (6) 105
ESPP 79 20 - (14) 85
1990 US(1) 167 - (46) - 121
1995 US(2) 190 - (35) - 155
_________________________________________________________________________________________________________________
Total 4,876 978 (1,581) (401) 3,872
_________________________________________________________________________________________________________________
NOTES
1 The OraVax 1990 Stock Incentive Plan
2 The OraVax 1995 Stock Incentive Plan
The following table shows outstanding options, divided into ranges to help
assess the number and timing of additional shares that may be issued and the
cash that may be received upon exercise of those options.
Weighted average Period exercisable in Number
Year of grant exercise price normal circumstances outstanding
_________________________________________________________________________________________________________________
1996 $26.02 1999-2006 30,547
1996 GBP1.70 1999-2006 17,685
1997 $4.89 2000-2007 105,443
1999 $1.68 2002-2009 5,090
1999 GBP0.36 2002-2009 85,434
2000 GBP0.92 2003-2006 250,000
2000 GBP0.96 2003-2010 3,600
2001 GBP1.25 2004-2006 208,000
2001 GBP3.33 2004-2006 19,520
2001 GBP1.38 2004-2011 258,201
2002 GBP2.46 2005-2006 237,152
2002 GBP1.80 2005-2006 16,065
2002 GBP2.62 2005-2012 363,419
2003 GBP3.26 2006-2007 265,716
2003 GBP2.74 2006-2007 8,346
2003 GBP3.00 2006-2013 359,265
2004 GBP2.65 2006 24,798
2004 GBP2.81 2007-2008 377,340
2004 GBP2.36 2007-2008 17,896
2004 GBP2.91 2007-2014 462,949
Weighted average Period exercisable in Number
Year of grant exercise price normal circumstances outstanding
_________________________________________________________________________________________________________________
2005 GBP1.87 2007 50,652
2005 GBP2.46 2008-2009 344,440
2005 GBP2.01 2008-2009 38,414
2005 GBP2.34 2008-2015 479,895
_________________________________________________________________________________________________________________
Total 4,029,867
_________________________________________________________________________________________________________________
The weighted average share price of the 1,419,620 options exercisable at
December 31, 2005 was GBP2.70.
Whilst they have no present intention of utilizing such authority, at the AGM to
be held on 23 June 2006 the Directors will seek authority from the shareholders
to allot shares up to an aggregate nominal value of GBP3,264,670 (32,646,703
ordinary shares of 10p each), being the un-issued ordinary shares of Acambis plc
at 21 April 2006. Currently, the Directors have authority to allot shares up to
an aggregate nominal value of GBP3,276,481.
The Group operates an HM Revenue and Customs-approved SAYE scheme in the UK and
an ESPP scheme in the US.
CHARGE IN THE INCOME STATEMENT
In accordance with the transitional provisions of IFRS2, Acambis has recognized
an expense in respect of all grants under these plans made after 7 November 2002
which remained unvested at December 31, 2004. Acambis recognized a total expense
of GBP0.8m in 2005 (2004 - GBP0.7m) in accordance with IFRS2.
FINANCIAL DETAILS OF SHARE OPTIONS
Options were exercised on a regular basis during the year. The average share
price during 2005 was GBP2.35. The weighted average fair values for grants made
in the year are as noted in the table below. Grants made to employees and
Directors under the 1996 and 1999 Plans are shown separately since different
inputs have been used for these grants.
2005 2004
Weighted average fair value
GBP GBP
________________________________________________________________________________
1996 Plan (Employee grants) 0.83 1.12
1996 Plan (Director grants) N/A 1.36
1999 Plan (Employee grants) 0.68 1.03
1999 Plan (Director grants) 0.84 1.19
LTIP 1.41 2.37
ESPP 0.62 1.36
SAYE 0.88 1.16
________________________________________________________________________________
The assumptions used in the calculation of the fair values in the above table
are:
* Expected volatility was based on the historical volatility of the Acambis plc
share price:
- over the three years prior to the grant date for employee grants under
the 1996 and 1999 Plan and all grants under the SAYE Scheme and LTIP;
- over the four years prior to the grant date for Director grants under
the 1996 and 1999 Plan; and
- over the two years prior to the grant date for all grants under the ESPP.
* A zero dividend yield assumption has been used in the calculation of these
fair values.
1996 PLAN, 1999 PLAN AND LTIP
The fair value of shares awarded under the 1996 Plan and 1999 Plan is calculated
using a binomial option pricing model adjusted to reflect the TSR market-based
performance condition. The awards were calculated using the following
assumptions:
1996 PLAN (EMPLOYEE GRANTS)
2005 2004
________________________________________________________________________________
Weighted average share price (GBP) 2.58 3.00
Weighted average exercise price (GBP) 2.58 2.93
Weighted average volatility (%) 41.4 51.1
Weighted average correlation (%) 5.0 14.8
Weighted average expected life (years) 3.5 3.5
Weighted average risk-free interest rate (%) 4.6 4.7
________________________________________________________________________________
1996 PLAN (DIRECTOR GRANTS)
2005 2004
________________________________________________________________________________
Weighted average share price (GBP) N/A 3.46
Weighted average exercise price (GBP) N/A 3.46
Weighted average volatility (%) N/A 53.6
Weighted average correlation (%) N/A 14.3
Weighted average expected life (years) N/A 4.00
________________________________________________________________________________
Weighted average risk-free interest rate (%) N/A 4.6
________________________________________________________________________________
1999 PLAN (EMPLOYEE GRANTS)
2005 2004
________________________________________________________________________________
Weighted average share price (GBP) 2.41 2.85
Weighted average exercise price (GBP) 2.41 2.84
Weighted average volatility (%) 36.9 50.2
Weighted average correlation (%) 4.3 14.9
Weighted average expected life (years) 3.1 3.5
Weighted average risk-free interest rate (%) 4.3 4.7
________________________________________________________________________________
1999 PLAN (DIRECTOR GRANTS)
2005 2004
________________________________________________________________________________
Weighted average share price (GBP) 2.34 3.05
Weighted average exercise price (GBP) 2.34 3.04
Weighted average volatility (%) 47.9 52.0
Weighted average correlation (%) 4.5 14.5
Weighted average expected life (years) 4.0 3.7
Weighted average risk-free interest rate (%) 4.3 4.7
________________________________________________________________________________
LTIP
2005 2004
________________________________________________________________________________
Weighted average share price (GBP) 2.19 3.46
Weighted average exercise price (GBP) - -
Weighted average volatility (%) 40.8 53.3
Weighted average correlation (%) 5.0 15.0
Weighted average expected life (years) 3.0 3.0
Weighted average risk-free interest rate (%) 4.3 4.5
________________________________________________________________________________
The 1996 Plan, 1999 Plan and the LTIP have a TSR market-based performance
condition, such that the Acambis plc TSR over the performance period will be
compared with the TSR of the comparator companies on the date of grant. The
maximum number of shares would vest if Acambis were ranked in the upper quartile
of the comparator group, being prorated down to a 30% vesting at a ranking of
the median. No shares vest if Acambis' ranking falls below the median. The fair
value of options under the 1996 Plan, 1999 Plan and LTIP has been adjusted to
take into account this market-based performance condition using a pricing model
based on expectations about volatility and the correlation of share price
returns in the group of comparator companies and which incorporates into the
valuation the interdependency between share price performance and TSR vesting.
ESPP AND SAYE GRANTS
The fair value of options granted under the ESPP and SAYE scheme are calculated
using a binomial option pricing model with the following assumptions:
ESPP
2005 2004
________________________________________________________________________________
Weighted average share price (GBP) 2.17 3.44
Weighted average exercise price (GBP) 1.87 2.65
Weighted average volatility (%) 32.4 44.8
Expected life (years) 2.0 2.0
Weighted average risk-free interest rate (%) 4.4 5.0
________________________________________________________________________________
2005 2004
________________________________________________________________________________
Weighted average share price (GBP) 2.39 3.51
Weighted average exercise price (GBP) 2.01 2.74
Weighted average volatility (%) 34.7 55.2
Expected life (years) 3.3 3.3
Risk-free interest rate (%) 4.3 4.9
________________________________________________________________________________
FAIR VALUE OF OPTIONS GRANTED IN 2003
The charge under IFRS2 for the current period includes a charge for options
granted under the above schemes during the year ended December 31, 2003 and the
year ended December 31, 2002 with the following weighted average grant date fair
values:
2003 2002
GBP GBP
________________________________________________________________________________
1996 Plan (Employee grants) 1.25 1.11
1996 Plan (Director grants) N/A N/A
1999 Plan (Employee grants) 1.23 1.13
1999 Plan (Director grants) 1.33 N/A
LTIP 2.24 N/A
ESPP 1.66 N/A
SAYE 1.78 N/A
________________________________________________________________________________
The fair values for the 2003 grants were calculated using the binomial model
(adjusted for the TSR performance condition where relevant).
1996 Plan 1996 Plan 1999 Plan 1999 Plan
(Employee (Director (Employee (Director
grants) grants) grants) grants) LTIP ESPP SAYE
____________________________________________________________________
Weighted average share price (GBP) 3.34 N/A 3.21 2.94 3.23 3.72 3.51
Weighted average exercise price (GBP) 3.34 N/A 3.17 2.94 - 3.08 2.74
Weighted average volatility (%) 55.0 N/A 55.8 63.7 55.2 59.2 55.2
Weighted average expected life 3.2 N/A 3.3 4.0 3.0 2.0 3.3
(years)
Weighted average risk-free
interest rate (%) 4.5 N/A 4.4 4.4 3.8 3.4 4.9
__________________________________________________________________________________________________________
The fair values for the 2002 grants were calculated using the binomial model
(adjusted for the TSR performance condition where relevant).
1996 Plan 1996 Plan 1999 Plan 1999 Plan
(Employee (Director (Employee (Director
grants) grants) grants) grants) LTIP ESPP SAYE
_______________________________________________________________________
Weighted average share price (GBP) 2.47 N/A 2.52 N/A N/A N/A N/A
Weighted average exercise price (GBP) 2.47 N/A 2.52 N/A N/A N/A N/A
Weighted average volatility (%) 66.8 N/A 66.7 N/A N/A N/A N/A
Weighted average expected life (years) 3.5 N/A 3.5 N/A N/A N/A N/A
Weighted average risk-free
interest rate (%) 4.3 N/A 4.4 N/A N/A N/A N/A
__________________________________________________________________________________________________________
For the options granted under the 1996 Plan and 1999 Plan prior to January 1,
2004 where the TSR condition is retested at the end of year four (if not met at
the end of year three) and/or at the end of year five (if not met at the end of
year four), a three years and six months vesting period has been used to
approximate the impact of the retesting condition on the fair value. This
retesting condition applies to a limited number of option grants and does not
apply to new option grants.
25 FINANCIAL COMMITMENTS
i) LEASE COMMITMENTS
The minimum lease payments under operating leases are as follows:
Land and
buildings Plant and machinery
______________________________________
2005 2004 2005 2004
GBPm GBPm GBPm GBPm
__________________________________________________________________________________________________________
Total commitments under operating lease:
Due within one year 2.3 1.7 0.1 0.1
Due within one to five years 9.6 3.1 0.2 0.1
Due beyond five years 8.2 7.7 - -
__________________________________________________________________________________________________________
20.1 12.5 0.3 0.2
__________________________________________________________________________________________________________
In March 2000, the Group entered into a sub-lease with Medivir UK Limited with
respect to a part of the facility at Peterhouse Technology Park in the UK. In
December 2003, this sub-lease was amended, such that 45% of the facility was
rented to Medivir until November 2004. During 2004, Medivir contributed GBP0.2m
in operating lease rentals relating to land and buildings (2005 - GBPnil).
ii) CAPITAL COMMITMENTS
At the end of the year, capital commitments contracted but not provided for were
GBP0.1m (2004 - GBP0.2m).
iii) PENSION ARRANGEMENTS
The Group provides pension benefits to all full-time employees on a defined
contribution basis. Employees may operate private personal pension schemes. The
normal age of retirement for UK staff is 65 years. In the US, the Group offers a
'401k Savings and Retirement Plan' for all employees, including Executive
Directors. The Group pension cost (including 401k costs) for the year was
GBP0.4m (2004 - GBP0.4m). At the year-end, the Group owed GBP0.2m (2004 -
GBP0.2m) to the pension schemes. This amount is shown in the balance sheet under
'accruals and deferred income'.
26 RELATED PARTY TRANSACTIONS
For the year ended December 31, 2005, the Group has included turnover of GBPnil
(2004 - GBP0.1m) in respect of costs incurred in performing services for the
Joint Venture and a loss of GBPnil (2004 - GBP0.1m) within its Group financial
statements. At December 31, 2005, the amounts the Group owed to the Joint
Venture amounted to GBP0.4m (2004 - GBP0.3m).
Amounts owed by the Joint Venture to the Group at December 31, 2005 were GBP0.3m
(2004 - GBP0.3m).
DIRECTORS' REMUNERATION, INTERESTS AND TRANSACTIONS
Full disclosure of Directors' remuneration, interests and transactions is given
in that part of the remuneration report that is required to be audited.
Aggregate gains made by Directors on the exercise of share options were GBP0.1m
(2004 - GBP1.8m).
KEY MANAGEMENT COMPENSATION
The remuneration received by key management personnel, including the Directors,
is as follows:
2005 2004
GBPm GBPm
________________________________________________________________________________
Salaries and short-term employee benefits 1.6 1.5
Post-employment benefits 0.1 0.1
Other long-term benefits - -
Termination benefits - 0.2
Share-based payments 0.3 0.2
________________________________________________________________________________
2.0 2.0
________________________________________________________________________________
Key management personnel are those persons having authority and responsibility
for planning, directing and controlling the activities of the Group, directly or
indirectly, including all Executive and Non-executive Directors. The number of
key management personnel whose remuneration is included above is 11 (2004 - 12).
DIRECTORS' INTERESTS
No Director or key management personnel had any disclosable related party
transactions with the Group during the year.
27 RECONCILIATION OF EQUITY AND PROFIT UNDER UK GAAP TO IFRS
With effect from January 1, 2005, Acambis has prepared consolidated financial
statements under IFRS. The comparative information for the year to December 31,
2004 that was previously reported under UK GAAP has been restated in accordance
with IFRS. In order to understand the impact of transition to IFRS, this note
provides reconciliations of certain information previously presented under UK
GAAP to the amounts restated in accordance with IFRS.
EXPLANATORY NOTES
The notes below explain the impact that the adoption of IFRS has had on the
Group's consolidated results.
i) IFRS1 'FIRST TIME ADOPTION OF IFRS'
The Group has taken advantage of the following exemptions available under IFRS1:
* To apply IFRS3 'Business combinations' from August 2003;
* To treat all at cumulative translation differences on overseas subsidiaries
as zero at the date of transition to IFRS; and
* Not to apply IFRS2 'Share based payments' to awards made before 7 November
2002, and that had not vested at December 31, 2004.
ii) IFRS3 'BUSINESS COMBINATIONS'
Under UK GAAP, the excess of consideration over the fair value of net assets
acquired was recognized as goodwill, and amortized over its useful economic
life. Under IFRS, intangible assets acquired in a business combination are
recognized at their fair value subject to meeting the definition of an
intangible asset as set out in IAS38 'Intangible assets'. The residual goodwill
is not subject to amortization, and is tested annually for impairment along with
any other indefinite life assets in accordance with IAS36 'Impairment of
assets'. Intangible assets acquired in a business combination are tested for
impairment when there are indicators that the asset is impaired.
The adoption of IFRS3 has had the following impact:
* Amortization of goodwill for Acambis Inc. ceases from January 2004;
* Amortization of goodwill for BPC ceases from August 2003; and
* The application of IFRS to the BPC acquisition in 2003 has resulted in the
creation of an intangible asset and associated deferred tax liability and a
reduction in the carrying amount of goodwill.
iii) IFRS2 'SHARE-BASED PAYMENTS'
Acambis offers share options to employees as an employment benefit. Under UK
GAAP, no accounting charge is made for share options issued at market value.
Under IFRS, a fair value must be calculated and recognized as an expense over
the vesting period, with a corresponding increase in equity. Deferred tax is
recognized on share options where there is a temporary timing difference, which
arises when the accounting book value and the tax book value of the options
differ.
The charge previously made relating to UITF 17 (Revised 2003) 'Employee Share
Schemes' has been reversed, as it is replaced by the IFRS2 charge. Deferred tax
is calculated based on the expected tax deduction on exercise of the options
compared to the accounting charge on grant of the option. Acambis has not
provided for any increase in a deferred tax asset. Under IFRS, income tax
relating to items recognized directly in equity is recognized in equity and not
in the income statement, resulting in a movement between the tax charge under UK
GAAP and equity under IFRS.
iv) IAS38 'INTANGIBLE ASSETS'
IAS38 has had the following impact:
* Capitalized software has been reclassified from 'property plant and
equipment' to 'intangible assets'; and
* Certain intangible assets acquired in a business are recognized at their
value as described in explanatory note (ii).
IAS38 also requires capitalization of development costs incurred on an
individual project if, and only if, specific criteria are met. Previously under
UK GAAP, this was an alternative treatment. Management has reviewed these
criteria and it is our opinion that it is not possible to satisfy the
requirement to demonstrate the technical feasibility of a project, and that it
will generate probable future economic benefits, until final submission for
regulatory approval has been obtained. Therefore, the Group has not capitalized
any internally generated development costs to date.
v) IAS12 'INCOME TAX'
Under IFRS deferred tax is recognized on taxable temporary differences arising
between the tax base and the accounting base of balance sheet items. The scope
of IAS12 is wider than the corresponding UK GAAP standards, and means that
deferred tax is recognized on certain temporary differences that would not have
given rise to deferred tax under UK GAAP. For Acambis, the main differences on
adoption of IFRS arise in relation to intangible assets acquired in a business
combination and share-based payments.
vi) IAS17 'LEASES'
Under IAS17, the presentation of the Canton finance lease facility differs from
that under UK GAAP. Under IFRS the asset is restated to the net present value of
the minimum lease payments, with a corresponding entry recorded as a lease
creditor. This is unwound over the period of the lease.
vii) IAS21 'THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES'
Cumulative exchange differences arising on the retranslation of the Group's
overseas subsidiaries are reported as a separate component of equity under IFRS.
There is no impact on the balance at transition as Acambis has taken advantage
of the exemption available under IFRS1, as described above.
viii) IAS7 'CASH FLOW STATEMENT'
The following differences have arisen between the consolidated cash flow
statement presented under UK GAAP, and the consolidated statement of cash flows
prepared under IFRS:
* Reclassification of certain liquid investments as cash and cash equivalents;
and
* Reduction in the amounts disclosed as 'purchases of liquid investments' and
'sale of liquid investments'. The adoption of IFRS had no material impact on
the underlying cash flows of the Group.
ix) IAS39 'RECOGNITION AND MEASUREMENT OF FINANCIAL INSTRUMENTS'
Under IFRS, derivative financial instruments are recorded at fair value, which
has resulted in a net decrease in assets of GBP0.1m at January 1, 2005.
RECONCILIATION OF PROFIT FOR YEAR ENDED DECEMBER 31, 2004
________________________________________________________________________________________________________
UK GAAP Adjustment IFRS
Note GBPm GBPm GBPm
________________________________________________________________________________________________________
Revenue (ii) 85.5 - 85.5
Cost of sales (34.3) (0.7) (35.0)
________________________________________________________________________________________________________
Gross profit 51.2 (0.7) 50.5
Research and development costs (iii) (28.9) (0.4) (29.3)
Sales and marketing costs (iii) (2.7) (0.1) (2.8)
Administration costs including costs relating to Canton (i),
plant impairment and restructuring costs (ii),
(iii) (7.7) 2.2 (5.5)
Other operating income - settlement of Canton agreement 10.2 - 10.2
________________________________________________________________________________________________________
Operating profit 22.1 1.0 23.1
Non-operating income 0.2 (0.2) -
Finance income 4.8 - 4.8
Finance costs (0.9) - (0.9)
________________________________________________________________________________________________________
Profit before tax 26.2 0.8 27.0
Taxation (v) (6.4) (0.9) (7.3)
________________________________________________________________________________________________________
Profit for the year attributable to shareholders 19.8 (0.1) 19.7
________________________________________________________________________________________________________
Earnings per ordinary share (basic) 18.6p (0.1)p 18.5p
Earnings per ordinary share (fully diluted) 18.2p (0.1)p 18.1p
RECONCILIATION OF EQUITY DECEMBER 31, 2004
________________________________________________________________________________________________________
UK GAAP Adjustment IFRS
Note GBPm GBPm GBPm
________________________________________________________________________________________________________
Assets
Non-current assets
Goodwill (ii) 16.0 (0.6) 15.4
Other intangible assets (ii), - 4.1 4.1
(iv)
Property, plant and equipment (iv), 17.5 1.0 18.5
(vi)
Other non-current assets 2.5 - 2.5
________________________________________________________________________________________________________
36.0 4.5 40.5
Current assets
Inventory 6.0 - 6.0
Trade and other receivables 13.7 - 13.7
Current tax assets 1.9 - 1.9
Liquid investments (viii) 70.9 (50.1) 20.8
Cash and cash equivalents (viii) 30.9 50.1 81.0
________________________________________________________________________________________________________
123.4 - 123.4
Liabilities
Current liabilities
Interest-bearing loans and borrowings (6.7) - (6.7)
Trade and other payables (8.3) - (8.3)
Accruals and deferred income (vi) (26.6) (1.3) (27.9)
Derivative financial instruments (ix) - (0.1) (0.1)
Income tax payable (4.6) - (4.6)
(46.2) (1.4) (47.6)
________________________________________________________________________________________________________
Net current assets 77.2 (1.4) 75.8
Non-current liabilities
Investment in Joint Venture (0.3) - (0.3)
Long-term financial liabilities (6.3) - (6.3)
Other non-current liabilities (0.5) - (0.5)
Deferred income tax liabilities (ii) (0.1) (1.6) (1.7)
(7.2) (1.6) (8.8)
________________________________________________________________________________________________________
Net assets 106.0 1.5 107.5
________________________________________________________________________________________________________
Shareholders' equity
Share capital 10.7 - 10.7
Share premium 97.8 - 97.8
Other reserves (vii) - (2.5) (2.5)
Retained earnings (2.5) 4.0 1.5
________________________________________________________________________________________________________
Total shareholders' equity 106.0 1.5 107.5
________________________________________________________________________________________________________
RECONCILIATION OF EQUITY AT 1 JANUARY 2004
________________________________________________________________________________________________________
UK GAAP Adjustment IFRS
Note GBPm GBPm GBPm
________________________________________________________________________________________________________
Assets
Non-current assets
Goodwill (ii) 18.4 (2.9) 15.5
Other intangible assets (ii), 0.8 4.9 5.7
(iv)
Property, plant and equipment (iv), 21.0 2.6 23.6
(vi)
Deferred tax assets 2.1 - 2.1
Other non-current assets 0.1 - 0.1
________________________________________________________________________________________________________
42.4 4.6 47.0
Current assets
Inventory 18.2 - 18.2
Trade and other receivables 10.2 - 10.2
Liquid investments (viii) 62.0 (44.2) 17.8
Cash and cash equivalents (viii) 63.2 44.2 107.4
________________________________________________________________________________________________________
153.6 - 153.6
Liabilities
Current liabilities
Trade and other payables (15.4) - (15.4)
Interest-bearing loans and borrowings (6.9) - (6.9)
Accruals and deferred income (vi) (74.3) (1.4) (75.7)
Income tax payable (0.3) - (0.3)
(96.9) (1.4) (98.3)
________________________________________________________________________________________________________
Net current assets 56.7 (1.4) 55.3
Non-current liabilities
Investment in Joint Venture (0.3) - (0.3)
Long-term financial liabilities (9.6) - (9.6)
Accruals and deferred income (vi) (0.1) (1.4) (1.5)
Other non-current liabilities (2.6) - (2.6)
Deferred income tax liabilities (ii) - (1.8) (1.8)
(12.6) (3.2) (15.8)
________________________________________________________________________________________________________
Net assets 86.5 - 86.5
________________________________________________________________________________________________________
Shareholders' equity
Share capital 10.6 - 10.6
Share premium 96.0 - 96.0
Retained earnings (20.1) - (20.1)
Total shareholders' equity 86.5 - 86.5
________________________________________________________________________________________________________
28 RECONCILIATION TO US ACCOUNTING PRINCIPLES
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN IFRS FOLLOWED BY THE GROUP AND US
GAAP
The Group's financial statements have been prepared under IFRS, which differs in
certain significant respects from US GAAP. The principal differences between the
Group's accounting policies under IFRS and US GAAP are set out below. As noted
in Note 1 of the financial statements, the consolidated financial statements of
Acambis have been prepared, for the first time, in accordance with IFRS.
a) MULTIPLE-ELEMENT ARRANGEMENTS
The $428m ACAM2000 contract awarded in November 2001 consists of two principal
components: to manufacture 155 million doses of smallpox vaccine; and to take
the vaccine through clinical trials to FDA licensure.
Under IFRS, this contract has been accounted for as a single-element
arrangement. As detailed in note 1 of the financial statements, turnover and
profits are recognized according to the extent of performance under the
contract, based on the proportion of costs incurred to date divided by the total
estimated costs to complete. All research and development costs are expensed as
incurred and manufacturing costs are held on the balance sheet as inventory
until relevant criteria for revenue recognition are met.
Under US GAAP, the Group treats this contract as a multiple-element arrangement,
resulting in a different allocation of revenue compared to the IFRS treatment.
The two primary elements of the contract (the manufacturing and the development
portions) each are separable deliverables which have value to the CDC on a
standalone basis and have fair values which are objectively and reliably
determinable. In addition, each of the deliverables is accounted for under SAB
104, not under a percentage to complete model.
For purposes of US GAAP, the Group has determined the fair value of the
development and manufacturing portions of the contract and has allocated the
total contract value to the development and manufacturing using the relative
fair value method as prescribed by Emerging Issues Task Force (EITF) Issue No.
00-21, 'Accounting for Revenue Arrangements with Multiple Deliverables'.
The development portion of the contract consists of the completion of Phase I/II
clinical trials, completion of Phase III clinical trials, completion and
submission of a Biologics License Application with the FDA and post FDA approval
activities. The manufacturing portion consists of the manufacture and delivery
of smallpox vaccine to the CDC.
The fair values were determined using the US regulations and guidance applicable
to government contracts utilizing specifically the contracting regulations
stipulated in the Federal Acquisition Regulation (FAR), together with the
evidence provided by the Group's ACAM1000 contract. After determining the fair
value of the two elements of the contract, as noted above, the Group allocated
the arrangement consideration to the separate units of accounting using the
relative fair value method. $152m of the ACAM2000 contract was allocated to the
research and development element and $276m allocated to the manufacturing
element.
The table below shows total revenue recognized relating to each major class
under the $428m contract in 2005 and 2004:
Year ended Dec 31
2005 2004
GBPm GBPm
________________________________________________________________________________
Development 20.3 21.6
Manufacturing - 33.7
________________________________________________________________________________
Total revenue under US GAAP for the contract 20.3 55.3
________________________________________________________________________________
Under US GAAP, with respect to the development work, revenue is recognized under
the proportional performance method as services are provided under the contract.
The development work has been further broken down into three distinct phases
consisting of:
o four phase I/II clinical trials;
o two phase III clinical trials; and
o submitting IND and obtaining FDA approval.
The development revenue was allocated to these three distinct phases using the
relative fair value method using the same methodology to determine fair value
that was applied to the development services as a whole as noted above. The
Group determined this was necessary because the level of effort was not
consistent throughout each of these phases. Therefore, after allocating the
revenue to each of these phases, such revenue was recognized on a straight-line
basis over the expected performance period of each phase. Relevant cost of
revenue is recorded on an accrual basis as actual costs are incurred; this
contrasts with the IFRS treatment, where revenues are recognized as costs are
incurred, using the principles of long-term contract accounting.
Manufacturing costs were held on the balance sheet as 'inventory' until the
relevant criteria for revenue recognition are met. The Group recognized revenue
on the manufacturing portion of the contract as smallpox vaccine was delivered
to the CDC. Thus, manufacturing revenue and costs were recognized in the income
statement on the transfer of the risks and rewards of ownership, typically
through delivery of product to the customer's premises, assuming all other
revenue recognition criteria were met at this time.
Costs associated with expected re-labeling to be undertaken in the future were
being accrued as smallpox vaccine was delivered to the CDC. Costs and revenue
associated with providing storage or vaccine disposal services are only included
when, and if, it is deemed probable that such services will be performed.
b) INVENTORY SUBJECT TO DEFERRED REVENUE ARRANGEMENTS
In the case of inventory subject to deferred revenue arrangements, the criteria
specified for determining whether the risks and rewards of ownership have
transferred differ between IFRS and US GAAP. At December 31, 2004, a proportion
of revenue relating to certain batches of smallpox vaccine were required to be
recognized under IFRS the relevant recognition criteria having been met. US GAAP
stipulates additional criteria, including that all components of the vaccine
have been delivered. As at December 31, 2004 certain batches did not meet this
criterion, with the result that the costs and revenues were not recognizable in
the year ended December 31, 2004 under US GAAP. Accordingly, the cost of
inventory of GBP0.3m which was expensed under IFRS remained capitalized as
inventory under US GAAP at December 31, 2004, and related revenue of GBP0.5m was
not recognized under US GAAP at December 31, 2004.
During 2005 the batches met the additional criteria, in that all components of
the vaccine were delivered. Therefore the GBP0.3m was expensed from inventory to
cost of revenue and the related revenue of GBP0.5m was recognized.
c) LICENSE FEES
Under IFRS certain license fees were recognized when paid, where such payments
were not refundable. Under US GAAP the Group follows SAB104, 'Revenue
Recognition in Financial Statements', and where such license fees are not
refundable and are not credited against associated R&D activities, these fees
are considered inseparable from the associated R&D effort. As such, those
license fees are deferred and recognized over the period of the license term or
over the period of the R&D agreement. Deferred revenues relating to research
programs terminated during this period are released to revenue on termination of
the program.
Year ended Dec 31
2005 2004
GBPm GBPm
________________________________________________________________________________
Revenue recognized under IFRS 40.9 85.5
Multiple-element arrangements 7.5 17.5
Deferred revenue arrangements 0.5 (0.5)
License fees 0.9 -
________________________________________________________________________________
Revenue recognized under US GAAP 49.8 102.5
________________________________________________________________________________
d) TAX
i) EFFECTS OF REVENUE ADJUSTMENTS
As the majority of the profit in relation to the development portion of the
$428m ACAM2000 contract is recorded in the Group's UK operations, any timing
difference on the recognition of profit gives rise to a temporary difference at
the UK tax rate of 30%.
As the profit in relation to the manufacturing portion of the $428m ACAM2000
contract and any profit that is associated with 'deferred inventory
arrangements' and license fees are recorded in the US operations, any timing
difference on the recognition of profit gives rise to a temporary difference at
the marginal US tax rate of 41%. These temporary differences are included within
'net tax effect of US GAAP adjustments' in the reconciliations of net profit and
shareholders' equity. A valuation allowance may be recorded against deferred tax
assets arising from operating loss carry forwards in accordance with the
criteria described under 'Deferred Tax' below.
ii) TAX ON EMPLOYEE SHARE OPTIONS
The Group is entitled to a tax deduction for the amount treated as compensation
under US and UK tax rules for certain employee share options.
The deduction arises on exercise of the option, while any compensation expense
is recorded over the vesting period of the option.
Under US GAAP, the tax benefit arising on Incentive Stock Options in the US (and
on options with similar characteristics granted outside the US) is recorded, in
equity, in the period in which the option is exercised and the tax benefit
arises. In respect of non-qualifying options in the US (and on options with
similar characteristics granted outside the US) deferred tax assets are
calculated by multiplying the compensation expense recorded in respect of these
options by the prevailing tax rate in the relevant tax jurisdiction. Valuation
allowances are recorded against such deferred tax assets unless utilization of
the assets against future taxable profits is more likely than not, as assessed
in accordance with the criteria in SFAS 109. Where, on exercise of the relevant
option, the tax benefit obtained exceeds the deferred tax asset in relation to
the relevant options, the excess is recorded in additional paid-in capital.
Where the tax benefit is less than the deferred tax asset, the write-down of the
deferred tax asset is recorded against additional paid-in capital to the extent
of previous excesstaxbenefits recorded in this account, with any remainder
recorded in the income statement.
Under IFRS the deferred tax asset arising is calculated by comparing the
estimated amount of tax deduction to be obtained in the future (based on Acambis
plc share price at the balance sheet date) with the cumulative amount of
compensation expense recorded in the income statement. If the amount of
estimated future tax deduction exceeds the cumulative amount of the remuneration
expense at the statutory rate, the excess is recorded directly in equity,
against the profit and loss reserve. Deferred tax assets are recognised only if
the utilisation of the assets against future taxable profits is more likely than
not.
e) COMPENSATION COSTS UNDER VARIABLE PLAN ACCOUNTING FOR SHARE OPTIONS AND SAYE
PLAN DISCOUNT Acambis has granted share options to employees that will vest upon
the attainment of certain targets.
Under IFRS, the cost of these equity-settled transactions with employees is
measured by reference to the fair value at the date of grant. The fair value is
determined using a binomial option pricing model, as described in note 1 of the
financial statements. Under US GAAP, APB Opinion No. 25, 'Accounting for Stock
Issued to Employees' (APB25), the Group is required to follow variable plan
accounting for these grants and measure compensation expense as the difference
between the exercise price and the fair market value of the related share under
option during each accounting period over the vesting period of the options.
Increases in fair market value of the share result in a charge to operations and
decreases in the fair market value of the share result in a credit to
operations, limited to the cumulative amount previously expensed. Under US GAAP,
in accounting for new offers made under the SAYE plan since January 24, 2002,
Acambis follows the requirements of pronouncement EITF 00-23 'Issues relating to
the Accounting for Stock Compensation under APB25 and FIN44' (Financial
Accounting Standards Board Interpretation Number (FIN) 44, 'Accounting for
Certain Transactions Involving Stock Compensation', (FIN44)). The compensation
charge under US GAAP in respect of such plans is calculated using one of the two
following methods:
1) Under normal circumstances, where the plan qualifies as a fixed plan, the
compensation charge is the difference between the market price of the
shares at the date of grant and the exercise price of the option and is
recorded on a straight-line basis over the vesting period.
2) Where a SAYE scheme is offered at a lower price than a previous scheme,
variable accounting commences for all existing higher priced awards when
the offer is made. For those awards that are retained by the employees
because the new lower-priced offer is declined, variable accounting
continues until the awards are exercised, are forfeited, or expire
unexercised. New awards are accounted for as variable to the extent that
previous higher priced options are cancelled.
The table shows the (credit)/charge made to the group income statement under US
GAAP.
Year ended Dec 31
2005 2004
GBPm GBPm
________________________________________________________________________________
(Credited)/charged to the Group income statement (0.4) 0.6
________________________________________________________________________________
f) PURCHASE PRICE ACCOUNTING, GOODWILL AND INTANGIBLES
Under both IFRS and US GAAP, goodwill is the amount by which the fair value of
the purchase consideration exceeds the fair value of assets acquired. As
explained in note 27 of the financial statements, on adoption of IFRS in 2005,
the Group took advantage of IFRS 1 and has applied IFRS 3 to business
combinations from August 2003, freezing the existing UK GAAP goodwill balances
at their January 1, 2004 levels for acquisitions before that date.
i) ACQUISITION OF ACAMBIS INC.
During 1999, Acambis acquired Acambis Inc. Under superseded UK GAAP, in-process
R&D did not meet the criteria for recognition as a separate intangible asset
and, thus, such amounts were subsumed within goodwill. As permitted under IFRS
transition rules, Acambis elected not to restate goodwill for acquisitions prior
to August 2003. Therefore the IFRS goodwill relating to Acambis Inc. has not
been restated and is based on the UK GAAP value of the goodwill at 1 January
2004, and is deemed a sterling denominated asset. Under US GAAP at the date of
acquisition, in accordance with APB Opinion No. 16, 'Business Combinations', and
No. 17, 'Intangible Assets', in-process R&D is separately identified and
analyzed to determine the fair market value at the date of acquisition.
In-process R&D is identified in accordance with the definition within Statement
of Financial Accounting Standard (SFAS) No.2, 'Accounting for Research and
Development Costs'. Following identification of qualifying R&D projects within
Acambis Inc, their value was determined by estimating the costs to develop the
purchased in-process R&D into commercially viable products, estimating the
resulting net cash flows from the projects and discounting the net cash flows to
their present value.
As a result of the valuation of in-process R&D under US GAAP, the fair value of
assets acquired is different from that calculated under IFRS, resulting in
differing values of goodwill. Under US GAAP, in-process R&D is written off to
the income statement when incurred.
ii) ACQUISITION OF BERNA PRODUCTS CORPORATION (BPC)
In August 2003, Acambis acquired BPC, a sales, promotion and distribution
organization based in Miami, US and Toronto, Canada in order to enhance the
marketing function of the Group.
The consideration paid for BPC includes amounts contingent on the future
performance of that organization. Under IFRS, a reasonable estimate of the fair
value of amounts expected to be payable in the future is included in the cost of
the acquisition and such amounts are re-assessed at each reporting date. The
fair value of contingent consideration payable in cash is taken to be the
estimated amount of cash payable discounted to its present value. The discount
is unwound through the income statement so that the full liability is recognized
at the time it is due to be paid. Under US GAAP, contingent consideration is
recognized when the contingency is resolved, and the consideration becomes
payable. Accordingly, contingent consideration paid in 2004 and 2005 was
recognized at that time.
iii) AMORTIZATION OF GOODWILL AND INTANGIBLES
As under US GAAP, IFRS goodwill is not systematically amortized, but is also
reviewed annually for impairment. Intangible assets acquired as part of a
business combination are amortized under US GAAP and IFRS. The annual impairment
review carried out this year did not reveal any indication of impairment.
g) CAPITALIZATION OF INTEREST
Under IFRS, Acambis' accounting policy is that interest is not capitalized. US
GAAP requires interest incurred as part of the cost of constructing fixed assets
to be capitalized and amortized over the life of the asset.
h) AVAILABLE FOR SALE INVESTMENTS
Under US GAAP, investments in available-for-sale securities are marked to market
where the market value is readily determinable and gains and losses, net of
deferred taxation, are recorded in 'Other comprehensive income'. Where an
impairment is considered to be other than temporary, the security is written
down through the income statement to a new cost basis represented by the fair
value of the security on the date the impairment was determined. Under IFRS, the
Group's accounting policy is to carry such investments at market value, with the
movement net of deferred tax recorded though the 'Statement of recognised income
and expense'. The basis for determining a readily available market value differs
between US GAAP and IFRS, such that, under US GAAP, no revaluation of the
group's unlisted investment has been recorded.
i) RESTRICTED CASH
US GAAP requires that any cash that is restricted as to its use be excluded from
cash and cash equivalents. Acambis has escrow bank accounts of GBP0.7m (2004:
GBP0.4m) that meet the restriction criteria. If Acambis reported a US GAAP
balance sheet, these would appear separately on that balance sheet.
j) DEFERRED TAX
Under IAS 12 'Income taxes' deferred tax is provided on a full liability method,
on all temporary differences at the balance sheet date between the tax bases of
assets and liabilities and their carrying amounts for financial reporting
purposes. Under US GAAP, SFAS 109 'Deferred tax' deferred tax is provided on a
full liability basis. Future tax benefits are recognized as deferred tax assets
to the extent that their realization is more likely than not as determined by
the evaluation of certain criteria.
k) IN-PROCESS R&D
Under IAS 38 'Intangible assets' it is necessary to capitalise any acquired
in-process R&D. Amortisation commences once the acquired technology is brought
into use. Un-amortised amounts are subject to impairment reviews annually and on
occurrence of a trigger event. Under US GAAP acquired in-process R&D is expensed
immediately to the income statement.
l) CAPITALIZED SOFTWARE
Under IFRS, computer software used in the group is classified as an intangible
asset. Under US GAAP, such computer software is classified as a tangible asset.
There is no impact on shareholders' equity. At the end of 2005 there was
software with a carrying value of GBP0.3m (2004 - GBP0.3m).
RECONCILIATION OF NET (LOSS)/PROFIT FROM IFRS TO US GAAP
Based on the differences detailed above, the following table shows the
reconciliation of the Group's net (loss)/profit for the past two years:
Year ended Dec 31
2005 2004
Notes GBPm GBPm
_____________________________________________________________________________________________________________
Net (loss)/profit as reported under IFRS (27.0) 19.7
Adjustments for:
Revenue recognition a,b,c 8.9 17.0
Inventory subject to deferred revenue arrangements b - 0.3
Recognition of costs previously deferred b (0.3) (9.4)
Other income relating to license fees c (0.4) -
Compensation costs under variable plan accounting for share options and e 1.2 0.1
SAYE plan discount
Purchase price accounting adjustments f 0.1 0.1
Depreciation and impairment of capitalized interest g (0.2) (0.2)
Capitalization of interest g 0.5 -
Available for sale investments h - 0.5
In-process R&D k (0.4) -
Net tax effect of US GAAP adjustments d (2.7) (4.5)
_____________________________________________________________________________________________________________
Net (loss)/profit as reported under US GAAP (20.3) 23.6
_____________________________________________________________________________________________________________
(LOSS)/PROFIT PER SHARE UNDER US GAAP
Year ended Dec 31
2005 2004
__________________________________________________________________________________________
Basic (loss)/profit per ordinary share in pence (18.9) 22.2
Shares used in computing basic (loss)/profit per ordinary share 107,211,367 106,300,080
___________________________________________________________________________________________
Diluted (loss)/profit per ordinary share in pence (18.9) 21.7
Shares used in computing diluted (loss)/profit per ordinary share 107,211,367 108,649,389
___________________________________________________________________________________________
Anti-dilutive securities 2,474,352 942,032
__________________________________________________________________________________________
OTHER COMPREHENSIVE INCOME
In addition to the net loss for the year, there is also other comprehensive
income relating to foreign currency gains, which amounted to GBP2.6m (2004 -
loss of GBP2.8m).
RECONCILIATION OF SHAREHOLDERS' EQUITY FROM IFRS TO US GAAP
As at Dec 31
2005 2004
Notes GBPm GBPm
_____________________________________________________________________________________________________________
Shareholders' equity as reported under IFRS 83.0 107.5
Revenue recognition a,b,c 3.1 (5.5)
Inventory subject to deferred revenue arrangements b - 0.3
Goodwill of Acambis Inc. f (7.6) (8.2)
Goodwill of BPC f 0.3 (1.3)
Contingent consideration f - 1.4
Capitalization of interest g 0.8 0.5
Available for sale investments h (0.2) -
In-process R&D k (0.4) -
Net tax effect of US GAAP adjustments d (0.8) 1.6
_____________________________________________________________________________________________________________
Shareholders' equity as reported under US GAAP 78.2 96.3
_____________________________________________________________________________________________________________
RECENT ACCOUNTING PRONOUNCEMENTS
US GAAP
In November 2004, the FASB issued FASB Statement No. 151 'Inventory Costs - An
Amendment of ARB No. 43, Chapter 4' ('FAS 151'). FAS 151 amends the guidance in
ARB No. 43, Chapter 4 'Inventory Pricing,' to clarify the accounting for
abnormal amounts of idle facility expense, freight, handling costs, and wasted
material (spoilage). Among other provisions, the new rule requires that items
such as idle facility expense, excessive spoilage, double freight, and
re-handling costs be recognized as current-period charges regardless of whether
they meet the criterion of 'so abnormal' as stated in ARB No. 43. Additionally,
FAS 151 requires that the allocation of fixed production overheads to the costs
of conversion be based on the normal capacity of the production facilities. FAS
151 is effective for fiscal years beginning after June 15, 2005.
The Group will adopt FAS 151 in 2006 but does not expect the adoption of the new
standard to have a material impact.
In December 2004, the FASB issued FASB Statement No. 153 'Exchanges of
Nonmonetary Assets - An Amendment of APB Opinion No. 29, Accounting for
Nonmonetary Transactions' ('FAS 153'). FAS 153 eliminates the exception from
fair value measurement for non monetary exchanges of similar productive assets
in paragraph 21(b) of APB Opinion No. 29, 'Accounting for Nonmonetary
Transactions,' and replaces it with an exception for exchanges that do not have
commercial substance. FAS 153 specifies that a non-monetary exchange has
commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. FAS 153 is effective for the
fiscal periods beginning after June 15, 2005. The Group will adopt FAS 153 in
2006 but does not expect the adoption of the new standard to have a material
impact.
In December 2004, the FASB issued FASB Statement No. 123 (revised 2004)
'Share-Based Payment' ('FAS 123(R)'), which replaces FAS No. 123 'Accounting for
Stock-Based Compensation' ('FAS 123') and supersedes APB Opinion No. 25
'Accounting for Stock Issued to Employees.' FAS 123(R) requires all share-based
payments to employees, including grants of employee stock options, to be
recognized in the financial statements based on their fair values beginning with
the first interim or annual period after June 15, 2005, with early adoption
encouraged. The pro forma disclosures previously permitted under FAS 123 no
longer will be an alternative to financial statement recognition. The Group is
currently assessing the impact of FAS 123(R).
In March 2005, the FASB issued FASB Interpretation No. 47 'Accounting for
Conditional Asset Retirement Obligations - an interpretation of FASB Statement
No. 143' ('FIN 47'). FIN 47 clarifies the timing of liability recognition for
legal obligations associated with the retirement of a tangible long-lived asset
when the timing and/or settlement are conditional on a future event. FIN 47 is
effective for the fiscal periods ending after December 15, 2005. The adoption of
FIN 47 did not have a material impact on the Group.
In May 2005, the FASB issued Statement No. 154, 'Accounting Changes and Error
Corrections - A replacement of APB Opinion No. 20 and FASB Statement No. 3'
('FAS 154'). This statement requires retrospective application to prior periods'
financial statements of changes in accounting principles unless it is
impracticable to determine either the period-specific effects or the cumulative
effect of the change. This statement applies to all voluntary changes in
accounting principles and changes required by an accounting pronouncement that
does not include specific transition provisions. FAS 154 is required to be
adopted in fiscal years beginning after December 15, 2005. FAS 154 would not
have had a material effect on the financial position, results of operations or
cash flows of the Group under US GAAP as at December 31, 2005.
In October 2005, the FASB issued FASB Staff Position (FSP) 13-1 'Accounting for
Rental Costs Incurred during a Construction Period' ('FSP 13-1'). FSP 13-1
requires rental costs associated with ground or building operating leases that
are incurred during a construction period to be recognized as rental expense and
included in income from continuing operations. FSP 13-1 is effective for the
fiscal periods beginning after December 15, 2005. The Group will adopt FSP 13-1
in 2006 but does not expect the adoption of the new standard to have a material
impact.
In January 2006 the FASB issued FASB Statement No. 155 'Accounting for Certain
Hybrid Financial Instruments - an amendment of FASB Statements No. 133 and 140'
('FAS 155'). FAS 155 provides entities with relief from having to separately
determine the fair value of an embedded derivative that would otherwise be
required to be bifurcated from its host contract. FAS 155 is effective for all
financial instruments acquired, issued or subject to a re-measurement event
occurring after the beginning of an entity's first fiscal year that begins after
September 15, 2006. The Group is currently evaluating the impact the adoption of
FAS 155 will have, but does not expect it to have a material impact.
Item 19. Exhibits
Exhibit
Number Description of Exhibit
12.1 Section 302 Certification of Gordon Cameron.
12.2 Section 302 Certification of Elizabeth Brown.
13.1 Certification of Gordon Cameron pursuant to 18 U.S.C. Section 1350,
as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.
13.2 Certification of Elizabeth Brown pursuant to 18 U.S.C. Section 1350,
as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.
15.1 Consent of PricewaterhouseCoopers LLP.
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F and that it has duly caused and authorized the undersigned to sign
this Amendment No. 1 to its annual report for its fiscal year ended December 31,
2005 on its behalf.
ACAMBIS PLC
By: /s/ Elizabeth Brown
Name: Elizabeth Brown
Title: Acting Chief Financial Officer
Date: April 3, 2007
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
12.1 Section 302 Certification of Gordon Cameron.
12.2 Section 302 Certification of Elizabeth Brown.
13.1 Certification of Gordon Cameron pursuant to 18 U.S.C. Section 1350, as
adopted by Section 906 of the Sarbanes-Oxley Act of 2002.
13.2 Certification of Elizabeth Brown pursuant to 18 U.S.C. Section 1350, as
adopted by Section 906 of the Sarbanes-Oxley Act of 2002.
15.1 Consent of PricewaterhouseCoopers LLP.
Exhibit 12.1
Certifications
I, Gordon Cameron, certify that:
1. I have reviewed this amendment to the annual report on Form 20-F of Acambis
plc;
2. Based on my knowledge, this 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
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the company as of, and for, the periods presented in this report;
4. The company'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-15(e)) for the company 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
company, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the company's disclosure controls
and procedures and presented in this 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;
and
(c) Disclosed in this report any change in the company's internal
control over financial reporting that occurred during the period
covered by the annual report that has materially affected, or is
reasonably likely to materially affect, the company's internal control
over financial reporting; and
5. The company's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
company's auditors and the audit committee of the company'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 company'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 company's
internal control over financial reporting.
Date: April 3, 2007 By: /S/ Gordon Cameron
Name: Gordon Cameron
Title: Chief Executive Officer
Exhibit 12.2
Certifications
I, Elizabeth Brown, certify that:
1. I have reviewed this amendment to the annual report on Form 20-F of Acambis
plc;
2. Based on my knowledge, this 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
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the company as of, and for, the periods presented in this report;
4. The company'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-15(e)) for the company 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
company, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which
this report is being prepared;
(b)Evaluated the effectiveness of the company's disclosure
controls and procedures and presented in this 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; and
(c)Disclosed in this report any change in the company's internal
control over financial reporting that occurred during the period
covered by the annual report that has materially affected, or is
reasonably likely to materially affect, the company's internal control
over financial reporting; and
5. The company's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
company's auditors and the audit committee of the company'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 company'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 company's
internal control over financial reporting.
Date: April 3, 2007 By: /s/ Elizabeth Brown
Name: Elizabeth Brown
Title: Acting Chief Financial Officer
Exhibit 13.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Gordon Cameron, as Chief Executive Officer of Acambis plc (the "Company"),
hereby certify, pursuant to 18 U.S.C. Ss 1350, as adopted by Section 906 of the
Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) the accompanying amendment to the Annual Report on Form 20-F for the year
ended December 31, 2005, as filed with the U.S. Securities and Exchange
Commission (the "Report"), fully complies with the requirements of Section 13(a)
or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(2) the information contained in the Annual Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
Date: April 3, 2007 By: /s/ Gordon Cameron
Name: Gordon Cameron
Title: Chief Executive Officer
A signed original of this written statement required by Section 906 has been
provided to Acambis plc and will be retained by Acambis plc and furnished to the
Securities and Exchange Commission or its staff upon request.
Exhibit 13.2
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Elizabeth Brown, as Chief Financial Officer of Acambis plc (the "Company"),
hereby certify, pursuant to 18 U.S.C. Ss 1350, as adopted by Section 906 of the
Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) the accompanying amendment to the Annual Report on Form 20-F for the year
ended December 31, 2005, as filed with the U.S. Securities and Exchange
Commission (the "Report"), fully complies with the requirements of Section 13(a)
or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(2) the information contained in the Annual Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
Date: April 3, 2007 By: /s/ Elizabeth Brown
Name: Elizabeth Brown
Title: Acting Chief Financial Officer
A signed original of this written statement required by Section 906 has been
provided to Acambis plc and will be retained by Acambis plc and furnished to the
Securities and Exchange Commission or its staff upon request.
Exhibit 15.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration
Statement on FormS-8 (No. 333-78277, No.333-100028, No.333-109577, No.333-137759
and No.333-140540) of Acambis plc of our report dated June 26, 2006 relating to
the financial statements which appear in this amendment to the Annual Report on
Form20-F for the year ended December31, 2005.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Cambridge, England
April 3, 2007
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant Peptide Therapeutics Group has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: 03 April 2007 ACAMBIS PLC
By: /s/ Lyndsay Wright
Name: Lyndsay Wright
Title: VP, Communications and IR.