The Directors present their report and the audited group accounts of Amersham plc for the year ended 31 December 2002.

Principal activities and business review
The group is engaged in the worldwide development, manufacture and sale of specialised products for research-based biotechnology supply and for the diagnosis and treatment of disease. The Chairman’s statement, Chief Executive’s review and Financial review contain further information on the business activities of the group.

Results
Sales of continuing operations were £1,618 million, including a £81 million share of joint venture sales. Exports from the United Kingdom amounted to £203 million.

The group profit and loss account appears on page 51 (PDF). Profit for the year attributable to shareholders amounted to £179 million. The Directors recommend that this be dealt with as follows:

	£m
Ordinary dividends
– Interim paid (2.65p per share)	21.3
– proposed final (5.15p per share)	36.0
	57.3
Transfer to reserves	121.4
Profit attributable to shareholders	178.7

A final dividend of 5.15p per share is recommended.

Research and development
Group policy is to invest in product innovation and process improvement at a level designed to enable it to be a market leader in the diagnostic imaging and biotechnology supply businesses in which it competes. It is also group policy to seek out new business opportunities by exploiting its skills and technological base.

Directors
The names and biographies of the present Directors are given in the Board section. Prof M Uhlén and Dr A Carr were appointed on 9 May 2002 and Mr P Loescher was appointed on 1 December 2002. Dr J M Padfield retired on 31 December 2002 and Mr R D Lapthorne will be retiring from the Board at the end of the Annual General Meeting to be held on 7 May 2003.

At the Annual General Meeting, Dr A Carr, Mr P Loescher, Prof M Uhlén, Mr G F B Kerr, Prof E Thorsby, Mr G Battersby and Professor Sir K Peters will retire by rotation and being eligible offer themselves for re-election. Board Committee membership details are given in the Board section.

Appointments to the Board are recommended by the Nomination Committee, details of which are given in the Corporate governance statement.

Directors’ interests in shares of the company
The beneficial interests of the Directors in the shares of the company at 1 January 2002 and 31 December 2002 are shown in the Remuneration report together with details of changes in the Directors’ share interests between 31 December 2002 and 26 February 2003.

No Director holds any non-beneficial interests in shares of the company.

Interest in company’s shares
During the year, the company funded the purchase of its own ordinary shares, nominal value 5p, through the Amersham Qualifying Employee Share Ownership Trust for the benefit of employees under the group’s Sharesave scheme.

Trust	Number of shares	Percentage of issued share capital %	Aggregate consideration £
Amersham Qualifying Share Ownership Trust	438,890	0.0625	2,497,284.10

Shares purchased under Amersham Qualifying Employee Share Ownership Trust will be used to satisfy the exercise of options granted under the Sharesave (SAYE) scheme, which is more fully explained in the Remuneration report.

Employee share schemes
Amersham plc operates share option schemes for senior executives throughout the group and all employees in the UK, US and Norway. Details of the shares issued and options granted under these schemes are shown in in note 25 to the accounts (PDF). The company also has long term incentive plans. Details of grants to Executive Directors are given in the Remuneration report.

Employment of disabled persons
The policy of the group is to recruit, train and provide career development opportunities to disabled persons on the same basis as other staff and to make every effort to retain and assist any individuals disabled in the course of their employment.

Employee involvement
There are extensive arrangements in the UK and in overseas subsidiary undertakings for consultation with staff on group objectives, plans and progress and on matters of general or particular interest. Regular exchanges of information with staff take place through formal consultative arrangements at corporate and local level. The employee share schemes approved by the shareholders have been successful in encouraging employee share ownership.

Political and charitable contributions
Financial contributions to charities and good causes during the reporting period in the UK amounted to £257,708. Additional contributions were made through staff time, equipment and gifts in kind. The Social Responsibility and Environment report provides information on donations to other good causes close to our facilities in Europe, Japan and America. No political donations were made.

Supplier payment policy
The group applies a policy of agreeing and clearly communicating the terms of payment as part of the commercial arrangements negotiated with suppliers and then paying according to those terms. In addition the UK-based businesses follow the guidance in the DTI publication to the ‘Better Payment Practice’. A copy of the guide can be obtained from the Department of Trade and Industry, DTI Publications, Orderline, Admail 528, London SW1W 8YT.

For UK businesses at 31 December 2002, trade creditors represented 26 days (2001 – 27 days), equivalent of aggregate amounts invoiced by suppliers during the year.

Substantial shareholdings
The company has been notified under the provisions of the Companies Act 1985 (as amended) that on 26 February 2003 the following had a material interest in 3% or more of the company’s ordinary share capital:

	Number of shares	%
Legal and General Investment	21,453,876	3.06
Folketrygdfondet	21,620,300	3.08
Lazard Asset Management	21,658,981	3.09
Fidelity Investments	23,269,146	3.31
Wellington Management Company	26,023,580	3.71
Franklin Resources Inc. and its affiliates	34,629,982	4.93

Annual General Meeting
At the Annual General Meeting to be held on 7 May 2003, in addition to the routine business of the company, a resolution will be proposed to allow the Directors to purchase Amersham plc shares. Further details are set out in the separate Chairman’s Letter and Notice of Annual General Meeting.

Post balance sheet events
On 26 February 2003 the group announced a restructuring of its discovery systems business area. The restructuring programme, which will deliver a more efficient manufacturing cost base and focus research and development on fewer sites, will result in the loss of approximately 400 jobs. The group will incur one off costs in the range of £45-50m, which are expected to result in savings running at the rate of £30-35m per annum by the end of 2004.

Auditors
Following the conversion of our auditors PricewaterhouseCoopers to a Limited Liability Partnership (LLP) from 1 January 2003, PricewaterhouseCoopers resigned on 19 February 2003 and the Directors appointed its successor, PricewaterhouseCoopers LLP, as auditors. A resolution to reappoint PricewaterhouseCoopers LLP as auditors to the company will be proposed at the Annual General Meeting.

By order of the Board
R E B Allnutt
Company Secretary
26 February 2003