Statement of Accounting Policies
December 31, 1997

The financial statements have been prepared in Irish Pounds under the historical cost convention and are in accordance with generally accepted accounting principles in Ireland. The principal accounting policies adopted by the Group are as follows:

(a) Basis of Consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiary undertakings made up to the end of the financial year. Where a subsidiary undertaking is acquired during the financial year the Group financial statements include the attributable results from the date of acquisition up to the end of the financial year. All inter-company transactions and balances have been eliminated in the preparation of these consolidated financial statements.

(b) Goodwill

Goodwill arising on consolidation (representing the excess of the fair value of consideration for an acquisition over the fair value of the separable net assets acquired) is charged against reserves on acquisition.

(c) Tangible Fixed Assets

Tangible fixed assets are stated at cost less accumulated depreciation. Depreciation is provided on a straight line basis to write off the cost of the assets over their expected useful lives as follows:

(d) Intangible Assets

Patents, licences and purchased intangibles are stated at cost and are amortised over the lesser of their expected useful lives or their statutory lives which range between 3 and 20 years.

Research and development expenditure is written off as incurred.

(e) Inventories

Inventories are stated at the lower of cost and net realisable value on a first-in first-out basis. Cost includes all expenditure which has been incurred in bringing the products to their present location and condition, and includes an appropriate allocation of manufacturing overhead based on the normal level of activity. Net realisable value is the estimated selling price of inventory on hand less all further costs to completion and costs expected to be incurred in marketing, distribution and selling.

(f) Investments

The Company adopted U.S. Statement of Financial Accounting Standard (SFAS) No. 115 "Accounting for Certain Investments in Debt and Equity Securities" at December 31, 1996. The Company has classified long and short term marketable investment securities and certain investments as either held to maturity, trading or available for sale in accordance with the terms of SFAS No. 115. Realised gains and losses are determined using specific identification. Debt securities which the company has the positive intent and ability to hold to maturity are classified as held to maturity securities and reported at amortised cost.

Debt and equity securities which are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value, with realised gains and losses included in income for the period.

Debt and equity securities not classified as either held to maturity or trading securities are classified as available for sale securities and reported at fair value, with unrealised gains or losses reported in a separate component of shareholders' equity.

(g) Sales and Revenue Recognition

Sales of products are recorded as of the date of shipment. Sales represent the value of goods supplied to external customers and exclude sales taxes and discounts.

(h) Pension Costs

The Group operates a defined contribution pension scheme. Contributions to the scheme are expensed as incurred.

(i) Leases

Where tangible assets are financed by leasing agreements which give rights approximating to ownership ('finance leases'), they are treated as if they had been purchased outright at the present values of the minimum lease payments; the corresponding obligations are shown in the balance sheet as obligations under finance leases.

The present value of the minimum payments under a lease is derived by discounting those payments at the interest rate implicit in the lease, and is normally the price at which the asset could be exchanged in an arm's length transaction.

Depreciation is calculated in order to write off the amounts capitalised over the estimated useful lives of the assets by equal annual installments.

The excess of the total rentals under a lease over the amount capitalised is treated as interest, which is charged to the profit and loss account in proportion to the amount outstanding under the lease.

Leases other than finance leases are "operating leases" and the rentals thereunder are charged to the profit and loss account on a straight line basis over the periods of the leases.

(j) Government Grants

Research and development and training grants are credited to the profit and loss account in the period in which the related expenditure is incurred.

(k) Foreign Currency

The functional currency of the Company is the Irish pound.

Foreign currency transactions are translated at the rates of exchange ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. The resulting gains and losses are included in the profit and loss account.

The functional currency of the principal subsidiary undertakings is the U.S. Dollar. On consolidation the assets and liabilities of overseas subsidiary undertakings are translated into Irish Pounds using period end exchange rates and profits and losses are translated at average rates. All translation differences arising on consolidation are dealt with in reserves.

(l) Liquid Resources

Liquid resources are current asset investments which are held as readily disposable stores of value. Liquid resources include investments in equity investments and short term deposits.

(m) Expression of Financial Statements in US Dollars

The translation of the financial statements into U.S. dollars is solely for the convenience of the reader. The exchange rate used for translation was IR£1.00 = US$1.4220, the noon buying rate in New York City as certified by the Federal Reserve Bank of New York on December 31, 1997. No representation is made that the Irish pound amounts have been, could have been, or could be converted into dollars at that rate or any other rate.

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