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Quadrant Healthcare (QTH)

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Thursday 28 September, 2000

Quadrant Healthcare

Interim Results

Quadrant Healthcare PLC
28 September 2000

                            QUADRANT HEALTHCARE PLC
              Interim Results for the period ending 30 June 2000


During the first half of 2000 Quadrant has made significant progress on its
in-house pulmonary initiatives and on the projects within its joint venture
companies, and has realised value from its non-pulmonary assets by signing
licensing deals with Baxter Healthcare and Becton Dickinson amongst others.

Clinical trials of products incorporating Quadrant's pulmonary delivery
technology are scheduled to commence during the next six months and further
licensing deals are anticipated. Quadrant ended the period with a net cash
position of £15.9 million.


Turnover for the period was £2.1m and comprised £1.7m (1999: Nil) of work
invoiced to QDose Limited, our joint venture with MicroDose Technologies Inc.,
and £0.4m (1999: £0.1m) of revenue generated through third party agreements.
Operating expenses were broadly in line with last year resulting in an
operating loss of £3.2m (1999: £5.3m).  Research and development costs have
increased to £4.3m (1999: £3.8m) due to an increased investment in pre-
clinical trials.  Other operating expenses have reduced to £1.0m (1999: £1.7m)
because the 2000 results reflect the cost base after restructuring of the
group with a reduced headcount in the administration and commercial areas.

The loss after tax for the six months ended 30 June 2000 of £4.4m (1999:
£4.9m) includes the share of operating losses relating to QDose of £1.1m
(1999: Nil) and net interest payable of £0.1m (1999: net interest receivable

Cash and short term deposits amounted to £15.9m as at 30 June 2000 compared to
£19.0m as at 31 December 1999.

Research & Development Projects

QDose - Rapid Acting Insulin via the Lung

Having formed QDose, the pulmonary joint venture with MicroDose Technologies
Inc., in late 1999, a supply of recombinant insulin for initial clinical
trials has been secured and discussions on full scale commercial supply have
commenced. Initial formulation development work has been completed and
confirmed excellent stability over a 12 month period in an ongoing stability

We have confirmed the initial observation of improved bioavailability, in an
animal model, with one of our novel pulmonary formulations and have completed
a preliminary toxicological programme in support of a first in man study
scheduled for the year-end.

Within the joint venture, work has progressed on the supply of blisters for
use in the MicroDose device and work continues to refine the device's
functional requirement specification and prototype production.

During the period, the directors of QDose have commenced discussions with a
number of potential commercial partners for the fast acting insulin project.
However we do not anticipate finalising a commercial collaboration until after
the first in man data becomes available in 2001.

Sustained Release Formulations for the Lung

Considerable progress has been made towards understanding the desired
attributes of the carbohydrate derivatives as matrix forming materials in
controlled release preparations. Several novel formulation techniques have
been identified which potentially enable the incorporation of peptides and
proteins into these and other hydrophobic matrices. A variety of formulations
of insulin utilising controlled release matrices have been made and are
undergoing animal testing.

Pulmonary Collaboration

Although the work in the QDose joint venture is principally aimed at rapid
acting inhaled insulin, we consider the basis of the formulation work carried
out to date to be relevant to the development of a pulmonary delivery platform

By means of emphasising this, we can confirm that the R&D team have
successfully completed the first phase of a feasibility programme aimed at
achieving systemic delivery following pulmonary administration of a major
pharmaceutical company's novel peptide.  The resulting data are being assessed
with a view to moving to the next phase of development. In light of this,
discussions are underway to agree terms for the next phase of development.


Collaborative work has continued with GlaxoWellcome plc ('Glaxo') relating to
the application of certain of Quadrant's controlled release technology to the
pulmonary delivery of steroids and beta agonists for the treatment of lung
disease. This has lead to the toxicological assessment of a promising
formulation of fluticasone which is scheduled to proceed to a pharmacokinetic
study in man.

The renegotiation of the pulmonary licence with Glaxo was completed in June.
The alteration to the existing agreement was made in the light of Glaxo's
desire to collaborate with an additional drug delivery company in this field
although the financial terms of the licence agreement have not been changed. A
milestone payment has been received during this year and Quadrant stands to
receive royalties on sales of commercial products incorporating Quadrant's
technology and further milestone payments.

Elan Joint Venture

Work has progressed on two projects within the Quoral Joint Venture between
Quadrant and Elan. Each project is aimed at developing a novel delivery
platform. The first project is specifically aimed at improving the absorption
of peptides and proteins following oral administration, whilst the second
project is focused on facilitating immunisation following oral administration
of an immunogen. Several formulations have been made and animal testing is
expected to commence shortly.


As part of Quadrant's continued focus on pulmonary drug delivery, a number of
non-pulmonary patents have been assigned and licence agreements executed to
ensure that value is obtained whilst limiting research and development
activities in these areas.  In addition to the specific transactions detailed
below, Quadrant is in discussions with a number of other companies relating to
the out-licensing of various technologies.

During July we were able to announce that the non-exclusive licence agreement
signed with a subsidiary of Baxter Healthcare, Inc. ('Baxter') earlier in the
year for the stabilisation of Factor VIII was renegotiated so that Baxter has
now been granted exclusive and non-exclusive rights. US$1 million has been
received under this agreement so far this year.  Quadrant stands to receive
further milestone payments in excess of US$2 million together with royalties
on sales if a product reaches the market and Quadrant's patent applications
proceed to grant.  Baxter will fund and perform all work required to develop,
register and market the product.

Becton Dickinson and Company ('BD') has held a licence for Quadrant's
stabilisation technology for a number of years and has successfully
incorporated this technology in its BD ProbeTec ET System for the in vitro
diagnosis of certain infectious diseases.  BD has more recently been granted
an option over further rights to Quadrant's technology to enable it to explore
the potential of its system for diagnosis of cancer and genetic disorders.
The expansion of the use of the BD ProbeTec ET System could result in an
increase in the royalties currently being received by Quadrant in addition to
further licence fees and milestone payments.

In September we concluded a licence agreement with Upperton Limited relating
to the diagnostic imaging applications of the technology acquired as part of
our acquisition of Andaris and in a separate transaction divested three
diagnostic imaging patents to Acuson Corporation, a leading manufacturer and
service provider of diagnostic medical ultrasound systems.

Following the decision to out-licence Synthocytes, the artificial platelet
product, the first in man tolerability study was closed in February due to
slow patient recruitment. A technology transfer programme has been identified
and discussions are underway with potential partners. Similarly a technology
transfer programme has been identified for Fibrocaps, the fibrin sealant
product, and discussions with a potential partner are underway.

Intellectual Property

Quadrant is focused upon the commercialisation of its technology base in the
pulmonary delivery sector. As a consequence the company seeks to maximise its
intellectual property rights in this sector and intends to defend its position
vigorously with respect to the ongoing dispute with Inhale Therapeutic Systems
Inc. Quadrant remains confident of a successful outcome in the action
scheduled to be heard in the Patents Court of the UK High Court in 2001.

Board & Management

Earlier this month we announced the resignation of Richard Lyman, non
executive director and former chairman of the Board. Richard has been
instrumental in re-financing, re-shaping and re-vitalising Quadrant since he
joined the company in 1992. On behalf of the Board, management, staff and
shareholders I would like to thank him for his support over the years.

Your Board is confident that the value within Quadrant can be realised over
time and I would like to thank shareholders for their continued support.

Alistair Stokes


Quadrant Healthcare plc                          Tel: 0115 974 7474
Iain Ross, Chief Executive
Raj Uppal, Finance Director

Financial Dynamics                               Tel: 0207 831 3113
David Yates / Sophie Pender-Cudlip

Quadrant Healthcare plc
Consolidated Profit and Loss Account
For the six months ended 30 June 2000

                                        Six months    Six months          Year
                                             ended         ended         ended
                                           30 June       30 June   31 December
                                              2000          1999          1999
                                 Notes (Unaudited)   (Unaudited)     (Audited)
                                             £'000         £'000         £'000
Turnover                             2       2,109           111         1,586
Research and development                                                      
costs                                3     (4,200)       (3,755)       (7,912)
Research and development                                                      
costs - exceptional item             3           -             -       (8,940)
Other operating expenses                                                      
(net)                                      (1,107)       (1,681)       (3,168)
                                           _______       _______       _______
Operating loss                             (3,198)       (5,325)      (18,434)
Share of associate's                                                          
operating loss                             (1,083)             -             -
Costs of a fundamental                                                        
restructuring of                                                              
continuing operations                3           -         (208)         (370)
Investment income                              517           640         1,233
Interest payable and                                                          
similar charges                      4       (655)          (43)          (80)
                                           _______       _______       _______
Loss on ordinary                                                              
activities before and                                                         
after taxation                             (4,419)       (4,936)      (17,651)
Minority interest                              100             -         1,310
                                           _______       _______       _______
Loss for the financial                                                        
period                                     (4,319)       (4,936)      (16,341)
                                           _______      ________       _______
Accumulated deficit at                                                        
beginning of period                       (33,153)      (16,812)      (16,812)
                                           _______       _______       _______
Accumulated deficit at                                                        
end of period                             (37,472)      (21,748)      (33,153)
                                           _______       _______      ________
Loss per ordinary share,                                                      
basic and fully diluted                                                       
(pence)                              5       (6.2)         (7.6)        (24.4)

There are no recognised gains or losses in any period other than the loss for
that period.

All amounts relate to continuing activities.

The accompanying notes form an integral part of this consolidated financial

Quadrant Healthcare plc
Consolidated Balance Sheet
As at 30 June 2000

                                        Six months    Six months          Year
                                             ended         ended         ended
                                           30 June       30 June   31 December
                                              2000          1999          1999
                                 Notes (Unaudited)   (Unaudited)     (Audited)
                                             £'000         £'000         £'000
Fixed assets                                                                  
Intangible assets                            6,531         7,312         6,921
Tangible assets                              1,522         2,082         1,784
Investments                                  1,289             -         1,878
                                        __________    __________    __________
                                             9,342         9,394        10,583
                                        __________    __________    __________
Current assets                                                                
Debtors                                      1,444           871           741
Investments                          6      15,272        15,372        18,201
Cash at bank and in hand                       590         3,716           858
                                        __________    __________    __________
                                            17,306        19,959        19,800
Creditors: Amounts falling                                                    
due within one year                        (1,874)       (2,328)       (2,209)
                                        __________    __________    __________
Net current assets                          15,432        17,631        17,591
                                        __________    __________    __________
Total assets less current                                                     
liabilities                                 24,774        27,025        28,174
Creditors: Amounts falling                                                    
due after more than one year
Convertible debt                           (8,320)             -       (7,685)
Other creditors                               (28)         (196)         (106)
                                        __________    __________    __________
                                           (8,348)         (196)       (7,791)
                                        __________    __________    __________
Provisions for liabilities                                                    
and charges                          7       (459)             -             -
                                        __________    __________    __________
Net assets                                  15,967        26,829        20,383
                                           _______       _______       _______
Capital and reserves                                                          
Called-up share capital                      6,973         6,468         6,970
Share premium account                       33,935        29,435        33,935
Other reserves                              12,674        12,674        12,674
Profit and loss account                   (37,472)      (21,748)      (33,153)
                                        __________    __________    __________
Equity shareholders' funds           8      16,110        26,829        20,426
Minority interest                            (143)             -          (43)
                                        __________    __________    __________
Total capital employed                      15,967        26,829        20,383
                                           _______       _______       _______

The accompanying notes form an integral part of this consolidated balance

Quadrant Healthcare plc
Consolidated Cash Flow Statement
For the six months ended 30 June 2000

                                        Six months   Six months           Year
                                             ended        ended          ended
                                           30 June      30 June    31 December
                                              2000         1999           1999
                                 Notes (Unaudited)  (Unaudited)      (Audited)
                                             £'000        £'000          £'000
Net cash outflow from                                                         
operating activities                 9     (3,216)      (6,199)       (17,974)
                                           _______      _______        _______
Returns on investments                                                        
and servicing of finance
Interest received                              595          886          1,344
Interest paid                                 (72)         (22)            (8)
Interest element of                                                           
finance lease rentals                         (15)         (21)           (44)
                                           _______      _______        _______
Net cash inflow from returns                                                  
on investments and servicing                                                  
of finance                                     508          843          1,292
                                           _______      _______        _______
Capital expenditure and                                                       
financial investments
Purchase of tangible fixed                                                    
assets                                        (96)        (374)          (508)
Sale of tangible fixed                                                        
assets                                           1            1              9
Purchase of fixed asset                                                       
investments                                      -            -        (1,253)
                                           _______      _______        _______
Net cash outflow from                                                         
investing activities                          (95)        (373)        (1,752)
                                           _______      _______        _______
Costs associated with                                                         
purchase of subsidiary                                                        
undertaking                                   (90)        (254)          (255)
Purchase of interest in                                                       
joint venture                                    -            -          (625)
                                           _______      _______        _______
Net cash outflow from                                                         
acquisitions                                  (90)        (254)          (880)
                                        __________   __________     __________
Cash outflow before                                                           
management of liquid                                                          
resources and financing                    (2,893)      (5,983)       (19,314)
                                           _______      _______        _______
Management of liquid resources                                                
Cash withdrawn from                                                           
money market deposits                                                         
(net)                                        2,930        8,750          5,920
                                           _______      _______        _______
Net cash inflow from                                                          
management of liquid                                                          
resources                                    2,930        8,750          5,920
                                        __________   __________     __________

Quadrant Healthcare plc
Consolidated Cash Flow Statement Cont.
For the six months ended 30 June 2000

                                        Six months   Six months          Year
                                             ended        ended         ended
                                           30 June      30 June   31 December
                                              2000         1999          1999
                                 Notes (Unaudited)  (Unaudited)     (Audited)
                                             £'000        £'000         £'000
Issue of ordinary share                                                      
capital (net of expenses)                        3            -         5,001
Issue of ordinary share                                                      
capital to minority interest                     -            -         1,267
Repayment of unsecured loan                      -            -         (100)
Repayment of secured loan                    (200)            -         (260)
Issue of convertible                                                         
unsecured loan note                              -            -         7,506
Capital element of                                                           
finance lease rentals                        (108)        (108)         (219)
                                           _______      _______       _______
Net cash (outflow) inflow                                                    
from financing                               (305)        (108)        13,195
                                           _______      _______       _______
Net cash inflow from                                                         
management of liquid                                                         
resources and financing                      2,625        8,642        19,115
                                           _______      _______       _______
Decrease (increase) in cash                                                  
in the period                                (268)        2,659         (199)
                                           _______      _______       _______

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

Quadrant Healthcare plc
Notes to the financial information

1    Basis of preparation

The interim financial information covers the period ended 30 June 2000 and was
approved by the directors on 27 September 2000.  The interim financial
information has been prepared on the basis of the accounting policies set out
in the Group's statutory financial statements for the year ended 31 December

The comparative consolidated profit and loss statement for the period ended 30
June 1999 has been restated so that £315,000 of patent prosecution and renewal
costs are shown within research and development costs rather than other
operating expenses.

The comparative figures for the year ended 31 December 1999 do not constitute
full financial statements within the meaning of Section 240(5) of the
Companies Act 1985.  Full financial statements for that period, which received
an unqualified audit report, have been delivered to the Registrar of

Copies of the interim results for the six months to 30 June 2000 are being
sent to all shareholders.  Further copies of the interim results and copies of
the full financial statements for the year ended 31 December 1999 can be
obtained by writing to the Company Secretary at Quadrant Healthcare plc, 1
Mere Way, Ruddington, Nottingham NG11 6JS.

2    Turnover

Geographical analysis of Group turnover by location of customer was as

                                     Six months     Six months            Year
                                          ended          ended           ended
                                        30 June        30 June     31 December
                                           2000           1999            1999
                                    (Unaudited)    (Unaudited)       (Audited)
                                          £'000          £'000           £'000
USA                                         139              2              44
UK                                        1,843             73             223
Rest of Europe                              127             34              34
Rest of World                                 -              2           1,285
                                        _______        _______         _______
                                          2,109            111           1,586
                                        _______        _______         _______

Turnover includes £1,693,000 generated from sales to QDose Limited, a joint
venture company.

3    Exceptional items

The following exceptional item is included within research and development

                                     Six months     Six months            Year
                                          ended          ended           ended
                                        30 June        30 June     31 December
                                           2000           1999            1999
                                    (Unaudited)    (Unaudited)       (Audited)
                                          £'000          £'000           £'000
Provision for associate's debtor            610              -               -
                                        _______        _______          ______

QDose Limited is a joint venture owned by Quadrant and a nominee of MicroDose
Technologies Inc.  At 30 June 2000 QDose had net liabilities and relies on the
two participants for funding therefore the directors of Quadrant Healthcare
plc have taken the view that it is prudent to provide for part of the debt
owed by QDose Limited.

The costs of a one-off patent licence acquisition in 1999 are shown as a
research and development exceptional item reported before operating loss in
the consolidated profit and loss account.

The costs of a fundamental restructuring of continuing operations in 1999 are
shown as an exceptional item reported after operating loss in the consolidated
profit and loss account.  These costs include re-organisation, redundancy and
relocation of staff and the closure of the Group's site in Cambridge, as part
of the integration of the acquisition into the Group.

4    Interest payable

                                     Six months     Six months            Year
                                          ended          ended           ended
                                        30 June        30 June     31 December
                                           2000           1999            1999
                                    (Unaudited)    (Unaudited)       (Audited)
                                          £'000          £'000           £'000
Finance lease interest                       15             20              44
Other loan interest                         197             23             205
Exchange loss (gain) on                                                       
foreign currency borrowings                                                   
less deposits (net)                         443              -           (169)
                                     __________     __________      __________
                                            655             43              80
                                        _______        _______         _______

5    Loss per ordinary share

                                     Six months     Six months            Year
                                          ended          ended           ended
                                        30 June        30 June     31 December
                                           2000           1999            1999
                                    (Unaudited)    (Unaudited)       (Audited)
Loss per share is based on:                                                   
Loss for the financial period        £4,319,000     £4,936,000     £16,341,000
Weighted average number                                                       
of equity shares in issue            69,729,111     64,682,957      67,058,162

The Directors do not recommend the payment of a dividend.

In accordance with Financial Reporting Standard No. 14 'Earnings per share',
no potential ordinary shares have been included in the calculation of fully
diluted earnings per share because they would not increase the net loss per

6    Current asset investments

Current asset investments represent short term sterling money market deposits
with durations of between seven days and six months.

7    Provisions for liabilities and charges

Provisions for liabilities and charges represent the Group's share of the net
liabilities of the associate joint venture, QDose Limited. The joint venture
had no turnover during the period.

                                     Six months     Six months           Year
                                          ended          ended          ended
                                        30 June        30 June    31 December
                                           2000           1999           1999
                                    (Unaudited)    (Unaudited)      (Audited)
                                          £'000          £'000          £'000
Share of gross assets                       162              -              -
Share of gross liabilities                (621)              -              -
                                     __________     __________     __________
Net carrying value                        (459)              -              -
                                        _______        _______        _______

8    Reconciliation of movement in shareholders' funds

                                     Six months     Six months           Year
                                          ended          ended          ended
                                        30 June        30 June    31 December
                                           2000           1999           1999
                                    (Unaudited)    (Unaudited)      (Audited)
                                          £'000          £'000          £'000
Loss for the financial                                                       
period                                  (4,319)        (4,936)       (16,341)
New share capital subscribed                  3              -          5,002
                                        _______        _______        _______
Net reduction in                                                             
shareholders' funds                     (4,316)        (4,936)       (11,339)
Opening shareholders' funds              20,426         31,765         31,765
                                        _______        _______        _______
Closing shareholders' funds              16,110         26,829         20,426
                                        _______        _______        _______

9    Reconciliation of operating loss to cash outflows

                                     Six months     Six months           Year
                                          ended          ended          ended
                                        30 June        30 June    31 December
                                           2000           1999           1999
                                    (Unaudited)    (Unaudited)      (Audited)
                                          £'000          £'000          £'000
Operating loss                          (3,198)        (5,325)       (18,434)
Depreciation charge                         364            440            860
Amortisation of goodwill                    390            390            781
Loss on disposal of                                                          
tangible fixed assets                         -             12              8
Exchange (gain) loss on                                                      
foreign currency borrowings                                                  
less deposits (net)                        (35)              -            169
(Increase) decrease in debtors            (781)          (128)            137
(Decrease) increase in                                                       
creditors                                    44        (1,140)          (822)
Cash impact of a                                                             
fundamental restructuring                     -          (448)          (673)
                                        _______        _______        _______
Net cash outflow from                   (3,216)        (6,199)       (17,974)
operating activities
                                        _______        _______        _______



We have been instructed by the company to review the financial information set
out on pages 5 to 12 and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.

Directors' responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors.  The directors
are responsible for preparing the interim report in accordance with the
Listing Rules of the Financial Services Authority and applicable accounting
standards.  The Listing Rules require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes,
and the reasons for them, are disclosed.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin
1999/4 issued in the United Kingdom by the Auditing Practices Board and with
our profession's ethical guidance.  A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed.  A review excludes audit
procedures such as tests of controls and verification of assets, liabilities
and transactions.  It is substantially less in scope than an audit performed
in accordance with Auditing Standards and therefore provides a lower level of
assurance than an audit.  Accordingly we do not express an audit opinion on
the financial information.

Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2000.

Arthur Andersen
Chartered Accountants

Betjeman House
104 Hills Road

28 September 2000


a d v e r t i s e m e n t