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<div style="font-size:12pt"><p>2. Summary of Significant Accounting Policies<br /><br />(a) Basis of preparation<br /><br />The accompanying consolidated financial statements include the accounts of Shire plc, all of its subsidiary undertakings and the Income Access Share trust, after elimination of inter-company accounts and transactions. Noncontrolling interests in the equity and earnings or losses of a consolidated subsidiary are reflected in “Noncontrolling interest in subsidiaries” in the Company’s consolidated balance sheet and consolidated statement of operations. Noncontrolling interest adjusts the Company’s consolidated results of operations to present the net income or loss attributable to the Company exclusive of the earnings or losses attributable to the noncontrolling interest.<br /><br />(b) Use of estimates in consolidated financial statements<br /><br />The preparation of consolidated financial statements, in conformity with accounting principles generally accepted in the United States (“US GAAP”) and Securities and Exchange Commission (“SEC”) regulations, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are primarily made in relation to the valuation of intangible assets, the valuation of equity investments, sales deductions, income taxes and provisions for litigation.<br /><br />(c) Revenue recognition<br /><br />The Company recognizes revenue when:<br /><br />• there is persuasive evidence of an agreement or arrangement;<br />• delivery of products has occurred or services have been rendered;<br />• the seller’s price to the buyer is fixed or determinable; and<br />• collectability is reasonably assured.<br /><br />Where applicable, all revenues are stated net of value added and similar taxes, and trade discounts. No revenue is recognized for consideration, the value or receipt of which is dependent on future events or future performance.<br />The Company’s principal revenue streams and their respective accounting treatments are discussed below:<br /><br />Product sales<br /><br />Revenue for the sale of products is recognized upon shipment to customers or at the time of delivery to the customer depending on the terms of sale. Provisions for rebates, product returns and discounts to customers are provided for as reductions to revenue in the same period as the related sales are recorded. The Company monitors and tracks the amount of sales deductions based on historical experience to estimate the reduction to revenues.<br /><br />Royalty income<br /><br />Royalty income relating to licensed technology is recognized when the licensee sells the underlying product, with the amount of royalty income recorded based on sales information received from the relevant licensee. The Company estimates sales amounts and related royalty income based on the historical product information for any period that the information is not available from the relevant licensee.<br /><br />Licensing revenues<br /><br />Other revenue includes revenues derived from product out-licensing agreements. These arrangements typically consist of an initial upfront payment on inception of the license and subsequent milestone payments dependent on achieving certain clinical and sales milestones.<br /><br />Initial license fees received in connection with product out-licensing agreements, even where such fees are non-refundable and not creditable against future royalty payments, are deferred and recognized over the period in which the Company has continuing substantive performance obligations.<br /><br />Milestone payments which are non-refundable, non creditable and contingent on achieving certain clinical milestones are recognized as revenues either on achievement of such milestones if the milestones are considered substantive or over the period the Company has continuing substantive performance obligations, if the milestones are not considered substantive. If milestone payments are creditable against future royalty payments, the milestones are deferred and released over the period in which the royalties are anticipated to be paid.<br /><br />(d) Sales deductions <br /><br />(i) Rebates<br />Rebates primarily consist of statutory rebates to state Medicaid agencies and contractual rebates with health-maintenance organizations. These rebates are based on price differentials between a base price and the selling price. As a result, rebates generally increase as a percentage of the selling price over the life of the product (as prices increase). Provisions for rebates are recorded as reductions to revenue in the same period as the related sales are recorded, with the amount of the rebate based on the Company’s best estimate if any uncertainty exists over the unit rebate amount, and with estimates of future utilization derived from historical trends.<br /><br />(ii) Returns<br />The Company estimates the proportion of recorded revenue that will result in a return, based on historical trends and when applicable, specific factors affecting certain products at the balance sheet date. The accrual is recorded as a reduction to revenue in the same period as the related sales are recorded. <br /><br />(iii) Coupons <br />The Company uses coupons as a form of sales incentive. An accrual is established based on the Company's expectation of the level of coupon redemption, using historical trends. The accrual is recorded as a reduction to revenue in the same period as the related sales are recorded or the date the coupon is offered, if later than the date the related sales are recorded.<br /><br />(iv) Discounts<br />The Company offers cash discounts to customers for the early payment of receivables. Those discounts are recorded as reductions to revenue and accounts receivable in the same period that the related sale is recorded.<br /><br />(v) Wholesaler chargebacks<br />The Company has contractual agreements whereby it supplies certain products to third parties at predetermined prices. Wholesalers acting as intermediaries in these transactions are reimbursed by the Company if the predetermined prices are less than the prices paid by the wholesaler to the Company. Accruals for wholesaler chargebacks, which are based on historical trends, are recorded as reductions to revenue in the same period as the related sales are recorded.<br /><br />(e) Collaborative arrangements<br /><br />The Company enters into collaborative arrangements to develop and commercialize drug candidates. These collaborative arrangements often require up-front, milestone, royalty or profit share payments, or a combination of these, with payments often contingent upon the success of the related development and commercialization efforts. Collaboration agreements entered into by Shire may also include expense reimbursements or other such payments to the collaborative partner.<br /><br />Shire reports costs incurred and revenue generated from transactions with third parties as well as payments between parties to collaborative arrangements either on a gross or net basis, depending on the characteristics of the collaborative relationship.<br /><br />(f) Cost of product sales<br /><br />Cost of product sales includes the cost of purchasing finished product for sale, the cost of raw materials and manufacturing for those products that are manufactured by the Company, shipping and handling costs, depreciation and amortization of intangible assets in respect of favorable manufacturing contracts. Royalties payable on products to which the Company does not own the rights are also included in Cost of product sales.<br /><br />(g) Leased assets<br /><br />The costs of operating leases are charged to operations on a straight-line basis over the lease term, even if rental payments are not made on such a basis.<br /><br />Assets acquired under capital leases are included in the consolidated balance sheet as property, plant and equipment and are depreciated over the shorter of the period of the lease or their useful lives. The capital elements of future lease payments are recorded as liabilities, while the interest element is charged to operations over the period of the lease to produce a level yield on the balance of the capital lease obligation.<br /><br />(h) Advertising expense<br /><br />The Company expenses the cost of advertising as incurred. Advertising costs amounted to $81.3 million, $134.5 million and $92.3 million for the years to December 31, 2009, 2008 and 2007 respectively were included within Selling, general and administrative expenses.<br /><br />(i) Research and development (“R&D”) expense<br /><br />R&D costs are expensed as incurred. Upfront and milestone payments made to third parties for in-licensed products that have not yet received marketing approval and for which no alternative future use has been identified are also expensed as incurred.<br /><br />Milestone payments made to third parties subsequent to regulatory approval are capitalized as intangible assets, and amortized over the remaining useful life of the related product.<br /><br />(j) Valuation and impairment of long-lived assets other than goodwill and investments<br /><br />The Company evaluates the carrying value of long-lived assets other than goodwill and investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of the relevant assets may not be recoverable. When such a determination is made, management’s estimate of undiscounted cash flows to be generated by the use and ultimate disposition of these assets is compared to the carrying value of the assets to determine whether the carrying value is recoverable. If the carrying value is deemed not to be recoverable, the amount of the impairment recognized in the consolidated financial statements is determined by estimating the fair value of the assets and recording a loss for the amount by which the carrying value exceeds the estimated fair value. This fair value is usually determined based on estimated discounted cash flows.<br /><br />(k) Finance costs of debt<br /><br />Finance costs relating to debt issued are recorded as a deferred cost and amortized to the consolidated statement of operations over the period to the earliest redemption date of the debt, using the effective interest rate method. On extinguishment of the related debt, any unamortized deferred financing costs are written off and charged to interest expense in the consolidated statement of operations.<br /><br />(l) Foreign currency<br /><br />Monetary assets and liabilities in foreign currencies are translated into the functional currency of the relevant subsidiaries at the rate of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into the relevant functional currency at the rate of exchange ruling at the date of the transaction. Transaction gains and losses, other than those related to current and deferred tax assets and liabilities, are recognized in arriving at income/(loss) from continuing operations before income taxes, equity in (losses)/earnings of equity method investees and discontinued operations. Transaction gains and losses arising on foreign currency denominated current and deferred tax assets and liabilities are included within income taxes in the consolidated statement of operations.<br /><br />The results of operations for subsidiaries, whose functional currency is not the US dollar, are translated into the US dollar at the average rates of exchange during the period, with the subsidiaries’ balance sheets translated at the rates ruling at the balance sheet date. The cumulative effect of exchange rate movements is included in a separate component of Other comprehensive income.<br /><br />Foreign currency exchange transaction gains and losses included in consolidated net income/(loss) in the years to December 31, 2009, 2008 and 2007 amounted to a $2.3 million gain, $4.6 million gain and $4.4 million gain, respectively.<br /><br />(m) Income taxes<br /><br />Uncertain tax positions are recognized in the consolidated financial statements for positions which are considered more likely than not of being sustained based on the technical merits of the position on audit by the tax authorities. The measurement of the tax benefit recognized in the consolidated financial statements is based upon the largest amount of tax benefit that, in management’s judgement, is greater than 50% likely of being realized based on a cumulative probability assessment of the possible outcomes. The Company recognizes interest relating to unrecognized tax benefits and penalties within income taxes.<br /><br />Deferred tax assets and liabilities are recognized for differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the tax bases of assets and liabilities that will result in future taxable or deductible amounts. The deferred tax assets and liabilities are measured using the enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. <br /><br />Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.<br /><br />(n) Earnings per share<br /><br />Basic earnings per share is based upon net income/(loss) attributable to Shire plc divided by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is based upon net income/(loss) attributable to Shire plc adjusted for the impact of interest expense on convertible debt on an “if-converted” basis (where dilutive) divided by the weighted average number of ordinary share equivalents outstanding during the period, adjusted for the effect of all dilutive potential ordinary shares that were outstanding during the year. Such potentially dilutive shares are excluded when the effect would be to increase earnings per share or reduce a loss per share. <br /><br />(o) Share-based compensation<br /><br />Share-based compensation represents the cost of share-based awards granted to employees. The Company measures share-based compensation cost for awards classified as equity at the grant date, based on the estimated fair value of the award, and recognizes the cost as an expense on a straight-line basis (net of estimated forfeitures) over the employee requisite service period. Predominantly all of the Company’s awards have service and/or performance conditions and the fair values of these awards are estimated using a Black-Scholes valuation model. <br /><br />The share based compensation expense is recorded in Cost of product sales, R&D, and SG&A in the consolidated statement of operations based on the employees’ respective functions.<br /><br />The Company records deferred tax assets for awards that result in deductions on the Company’s income tax returns, based on the amount of compensation cost recognized and the Company’s statutory tax rate in the jurisdiction in which it will receive a deduction. Differences between the deferred tax assets recognized for financial reporting purposes and the actual tax deduction reported on the Company’s income tax return are recorded in additional paid-in capital (if the tax deduction exceeds the deferred tax asset) or in the consolidated statement of operations (if the deferred tax asset exceeds the tax deduction and no additional paid-in capital exists from previous awards).<br /><br />The Company’s share-based employee compensation plans are described more fully in Note 31.<br /><br />(p) Cash and cash equivalents<br /><br />Cash and cash equivalents are defined as short-term highly liquid investments with original maturities of ninety days or less. <br /><br />(q) Financial instruments - derivatives <br /><br />The Company uses derivative financial instruments to manage its exposure to foreign exchange risk associated with third party transactions and intercompany financing. These instruments consist of swap and forward foreign exchange contracts. The Company does not apply hedge accounting for these instruments and accordingly charges in the fair value of these instruments are recognized in the consolidated statement of operations. The fair values of these instruments are included on the balance sheet in Current assets/liabilities and the cash flows relating to these instruments are presented within net cash provided by operating activities in the consolidated statement of cash flows.<br /><br />(r) Inventories<br /><br />Inventories are stated at the lower of cost (including manufacturing overheads, where appropriate) or market. Cost incurred in bringing each product to its present location and condition is based on purchase costs calculated on a first-in, first-out basis, including transportation costs.<br /><br />Inventories include costs relating to both marketed products and certain products prior to regulatory approval. Inventories are capitalized prior to regulatory approval if the Company considers that it is probable that the US Food and Drug Administration (“FDA”) or another regulatory body will grant commercial and manufacturing approval for the relevant product, and it is probable that the value of capitalized inventories will be recovered through commercial sale.<br /><br />Inventories are written down for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those anticipated, inventory adjustments may be required. <br /><br />(s) Assets held-for-sale<br /><br />An asset is classified as held-for-sale when, amongst other things, the Company has committed to a plan of disposition, the asset is available for immediate sale, and the plan is not expected to change significantly. Assets held-for-sale are carried at the lower of their carrying amount or fair value less cost to sell.<br /><br />Assets acquired in a business combination that will be sold rather than held and used are classified as held-for sale at the date of acquisition when it is probable that the Company will dispose of the assets within one year. Newly acquired assets held-for-sale are carried at their fair value less cost to sell at the acquisition date. The Company does not record depreciation or amortization on assets classified as held-for-sale.<br /><br />(t) Investments<br /><br />The Company has certain investments in pharmaceutical and biotechnology companies.<br /><br />Investments are accounted for using the equity method of accounting if the investment gives the Company the ability to exercise significant influence, but not control over, the investee. Significant influence is generally deemed to exist if the Company has an ownership interest in the voting stock of the investee between 20% and 50%, although other factors such as representation on the investee’s Board of Directors and the nature of commercial arrangements, are considered in determining whether the equity method of accounting is appropriate. Under the equity method of accounting, the Company records its investments in equity-method investees in the consolidated balance sheet under Investments and its share of the investees’ earnings or losses together with other-than-temporary impairments in value under equity in (losses)/earnings of equity method investees in the consolidated statement of operations.<br /><br />All other equity investments, which consist of investments for which the Company does not have the ability to exercise significant influence, are accounted for under the cost method or at fair value. Investments in private companies are carried at cost, less provisions for other-than-temporary impairment in value. For public companies that have readily determinable fair values, the Company classifies its equity investments as available-for-sale and, accordingly, records these investments at their fair values with unrealized holding gains and losses included in the consolidated statement of comprehensive income/(loss), net of any related tax effect. Realized gains and losses, and declines in value of available-for-sale securities judged to be other-than-temporary, are included in Other income/(expense), net (see Note 28). The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included as interest income.<br /><br />(u) Property, plant and equipment<br /><br />Property, plant and equipment is shown at cost reduced for impairment losses, less accumulated depreciation. The cost of significant assets includes capitalized interest incurred during the construction period. Depreciation is provided on a straight-line basis at rates calculated to write off the cost less estimated residual value of each asset over its estimated useful life as follows:<br /><br />Buildings 15 to 50 years<br />Office furniture, fittings and equipment 3 to 10 years<br />Warehouse, laboratory and manufacturing equipment 3 to 10 years<br /><br />The cost of land is not depreciated. Assets under the course of construction are not depreciated until the relevant assets are available and ready for their intended use.<br /><br />Expenditures for maintenance and repairs are charged to the consolidated statement of operations as incurred. The costs of major renewals and improvements are capitalized. At the time property, plant and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the asset and accumulated depreciation accounts. The profit or loss on such disposition is reflected in operating income/(expense).<br /><br />(v) Goodwill and other intangible assets<br /><br />(i) Goodwill<br />In business combinations completed subsequent to January 1, 2009, goodwill represents the excess of the fair value of the consideration given and the fair value of any noncontrolling interest in the acquiree over the fair value of the identifiable assets and liabilities acquired. For business combinations completed prior to January 1, 2009 goodwill represents the excess of the fair value of the consideration given over the fair value of the identifiable assets and liabilities acquired.<br /><br />Goodwill is not amortized to operations, but instead is reviewed for impairment, at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Events or changes in circumstances which could trigger an impairment review include: significant underperformance of a reporting unit relative to expected historical or projected future operating results; significant changes in the manner of the Company's use of acquired assets or the strategy for the overall business; and significant negative industry trends.<br /><br />Goodwill is reviewed for impairment by comparing the carrying value of each reporting unit's net assets (including allocated goodwill) to the fair value of the reporting unit. If the reporting unit's carrying amount is greater than its fair value, a second step is performed whereby the portion of the reporting unit’s fair value that relates to the reporting unit's goodwill is compared to the carrying value of the reporting unit’s goodwill. The Company recognizes a goodwill impairment charge for the amount by which the carrying value of goodwill exceeds the fair value. The Company has determined that there are no impairment losses in respect of goodwill for any of the reporting periods covered by these consolidated financial statements.<br /><br />(ii) Other intangible assets<br />Other intangible assets principally comprise intellectual property rights for products with a defined revenue stream, and for business combinations completed subsequent to January 1, 2009 also include acquired IPR&D. Intellectual property rights for currently marketed products are recorded at cost and amortized over the estimated useful life of the related product, which ranges from 5 to 35 years (weighted average 18 years). IPR&D acquired through a business combination which completed subsequent to January 1, 2009 is capitalized as an indefinite lived intangible asset until the completion or abandonment of the associated research and development efforts. Once the research and development efforts are completed the useful life of the relevant assets will be determined, and the IPR&D asset amortized over this useful economic life. <br /><br />The following factors are considered in estimating the useful lives of Other intangible assets:<br /><br /></p><ul><li>expected use of the asset;<br /></li><li>regulatory, legal or contractual provisions, including the regulatory approval and review process, patent issues and actions by government agencies;<br /></li><li>the effects of obsolescence, changes in demand, competing products and other economic factors, including the stability of the market, known technological advances, development of competing drugs that are more effective clinically or economically; <br /></li><li>actions of competitors, suppliers, regulatory agencies or others that may eliminate current competitive advantages; and<br /></li><li>historical experience of renewing or extending similar arrangements.<br /></li></ul><p><br />When a number of factors apply to an intangible asset, these factors are considered in combination when determining the appropriate useful life for the relevant asset.<br /><br />(w) Non-monetary transactions <br /><br />The Company enters into certain non-monetary transactions that involve either the granting of a license over the Company’s patents or the disposal of an asset or group of assets in exchange for a non–monetary asset, usually equity. The Company accounts for these transactions at fair value if the Company is able to determine the fair value within reasonable limits. To the extent the Company concludes that it is unable to determine the fair value of a transaction, that transaction is accounted for at the recorded amounts of the assets exchanged. Management is required to exercise its judgment in determining whether or not the fair value of the asset received or given up can be determined.<br /><br />(x) Reclassifications<br /><br />In the years ended December 31, 2008 and 2007 costs of $32.3 million and $31.8 million respectively, predominantly relating to certain Medical affairs costs related to promotional and marketing activities, have been reclassified from Research and development costs to Selling, general and administrative costs to more appropriately reflect the nature of the expenditure incurred.<br /><br />(y) New accounting pronouncements<br /><br />Adopted during the period<br /><br />The Financial Accounting Standards Board (“FASB”) Accounting Standards CodificationTM (the “Codification”) <br /><br />On July 1, 2009 the FASB established the Codification as the single source of authoritative US GAAP recognized by the FASB to be applied by nongovernmental entities. The Codification is effective prospectively from July 1, 2009 and has superseded all existing non-SEC accounting and reporting standards. From July 1, 2009 the FASB has issued new guidance in the form of Accounting Standards Updates (“Updates”). The Codification did not impact the Company’s financial position or results of operations.<br /><br />Subsequent Events<br /><br />On April 1, 2009 the Company adopted new guidance issued by the FASB on subsequent events. This guidance establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Specifically, this guidance provides: the period after the balance sheet date during which management should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements; and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The guidance is effective prospectively from April 1, 2009. The adoption of the guidance did not impact the Company’s consolidated financial position, results of operations or cash flows. The Company has evaluated subsequent events to the date when the financial statements were issued on February 26, 2010.<br /><br />Disclosures about Derivative Instruments and Hedging Activities <br /><br />On January 1, 2009 the Company adopted new guidance issued by the FASB on disclosures about derivative instruments and hedging activities. This guidance requires enhanced disclosures about an entity’s derivative instruments and hedging activities, and these disclosures are included within Note 21.<br /><br />Noncontrolling Interests in Consolidated Financial Statements <br /><br />On January 1, 2009 the Company adopted new guidance issued by the FASB on noncontrolling interests in consolidated financial statements. This guidance establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this guidance requires the recognition of a noncontrolling interest (formally known as a minority interest) as equity in the consolidated financial statements, separate from the parent's equity. In addition, the amount of net income or losses attributable to noncontrolling interests is required to be included in consolidated net income on the face of the income statement. This guidance also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interest. As a consequence of the adoption of this guidance, the balance of noncontrolling interests has been reclassified within equity and net income attributable to Shire plc shareholders has been shown separately from that attributable to noncontrolling interests in the consolidated statements of operations and the consolidated statement of changes in equity. The adoption of this guidance has not had an impact on the Company’s consolidated cash flows.<br /><br />Business Combinations <br /><br />On January 1, 2009 the Company adopted new guidance issued by the FASB on business combinations. The guidance significantly changed the accounting for business combinations. Under the guidance, an acquiring entity is required to recognize all the assets acquired, liabilities assumed and noncontrolling interests in a transaction at the acquisition date fair value with limited exceptions. The guidance also amended the accounting treatment for certain specific items including: the expensing of acquisition costs; the capitalization of in-process research and development; recording of contingent consideration at fair value with subsequent changes in fair value being generally reflected in earnings; and the introduction of a substantial number of new disclosure requirements. The guidance has been applied to those business combinations completed in the year to December 31, 2009.<br /><br />Determining whether an Instrument (or Embedded Feature) is indexed to an Entity's Own Stock<br /><br />On January 1, 2009 the Company adopted new guidance issued by the Emerging Issues Task Force (“EITF”) on determining whether an instrument (or embedded feature) is indexed to an entity's own stock. The guidance provides a new method to be applied in determining whether a financial instrument or an embedded feature is indexed to an issuer's own stock. The adoption of the guidance did not impact the Company’s consolidated financial position, results of operations or cash flows.<br /><br />Accounting for Collaborative Arrangements<br /><br />On January 1, 2009 the Company adopted new guidance issued by the EITF on accounting for collaborative arrangements. This guidance defines collaborative arrangements and establishes reporting requirements for transactions between participants in a collaborative arrangement and between participants in the arrangement and third parties. The adoption of this guidance did not have an impact on the Company’s consolidated financial position, results of operations or cash flows. The disclosures required by this guidance have been included in Note 23. <br /><br />Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)<br /><br />On January 1, 2009 the Company adopted new guidance issued by the FASB on accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement). This guidance clarified that convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) do not fall within the scope of the existing guidance on accounting for convertible debt and debt issued with stock purchase warrants. It requires issuers of such instruments to separately account for the liability and equity components of those instruments by allocating the proceeds from issuance of the instrument between the liability component and the embedded conversion option (i.e., the equity component). The adoption of this guidance did not have an impact on the Company’s consolidated financial position, results of operations or cash flows.<br /><br />Fair Value Measurements<br /><br />On January 1, 2009 the Company adopted new guidance on non-recurring fair value measurements for non-financial assets and non-financial liabilities. The guidance has been applied to the fair value measurement of non-financial assets and non-financial liabilities in the year to December 31, 2009.<br /><br />Determination of the Useful Life of Intangible Assets<br /><br />On January 1, 2009 the Company adopted new guidance issued by the FASB on the determination of the useful life of intangible assets. This guidance amended the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset. The adoption of the guidance did not have an impact on the Company’s consolidated financial position, results of operations or cash flows.<br /><br />To be adopted in future periods<br /><br />Revenue Recognition in Multiple Deliverable Revenue Arrangements <br /><br />In September 2009, the FASB issued an Update to the guidance on revenue recognition in multiple deliverable revenue arrangements. The Update amends the existing guidance on allocating consideration received between the elements in a multiple-deliverable arrangement. The Update establishes a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor specific objective evidence (“VSOE”) if available, third party evidence if VSOE is not available, or estimated selling price if neither VSOE or third party evidence is available. It replaces the term fair value in the revenue allocation with selling price to clarify that the allocation of revenue is based on entity specific assumptions rather then the assumptions of a market place participant. The Update will eliminate the residual method of allocation and requires that arrangement consideration be allocated using the relative selling price method. It will also significantly expand the disclosures related to a vendor’s multiple-deliverable revenue arrangements. The Update will be effective prospectively for revenue arrangements entered into or materially modified for fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company is currently evaluating the impact of adopting this Update.<br /><br />Amendments to the Accounting and Disclosure Requirements for the Consolidation of Variable Interest Entities<br /><br />In June 2009 the FASB issued a revision to the existing guidance on the consolidation of variable interest entities. This guidance changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity’s purpose and design and the reporting entity’s ability to direct the activities of the other entity that most significantly impact the other entity’s economic performance. The guidance will also require a reporting entity to provide additional disclosures about its involvement with variable interest entities and any significant changes in risk exposure due to such involvement. The guidance is effective for financial statements issued for fiscal years and interim periods within those fiscal years beginning after November 15, 2009. Early adoption is not permitted. The Company does not expect there to be an impact of adopting this guidance on the Company’s consolidated financial position, results of operations or cash flows.<br /><br />Accounting for Transfers of Financial Assets<br /><br />In June 2009 the FASB issued new guidance on the accounting for transfers of financial assets. This guidance will require more information about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transferred financial assets. It eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures. The guidance is effective for financial statements issued for fiscal years and interim periods within those fiscal years beginning after November 15, 2009. Early adoption is not permitted. The Company does not expect there to be an impact of adopting this guidance on the Company’s consolidated financial position, results of operations or cash flows. <br /><br />(z) Scheme of arrangement<br /><br />Shire Limited (now known as Shire plc) was incorporated under the laws of Jersey (Channel Islands) on January 28, 2008, is a public company limited by shares, and is tax resident in the Republic of Ireland. On May 23, 2008 Shire Limited became the holding company of the former holding company of the Shire Group (“Old Shire”), now called Shire Biopharmaceutical Holdings, pursuant to a scheme of arrangement approved by the High Court of Justice in England and Wales and the shareholders of Old Shire (the “Scheme”). Prior to May 23, 2008 Shire Limited had not commenced trading or made any profits or trading losses. On October 1, 2008 Shire Limited changed its name to Shire plc following the approval of the change of name by shareholders at the Company’s Annual General Meeting.<br /><br />Pursuant to the Scheme, ordinary shares, each having a nominal value of £0.05 of Old Shire (“Shire Ordinary Shares”) were exchanged for ordinary shares, each having a nominal value of £0.05, of Shire plc (“Shire plc Ordinary Shares”), on a one for one basis.<br /><br />Shire plc Ordinary Shares carry substantially the same rights as did the Shire Ordinary Shares. The Scheme did not involve any payment for the Shire plc Ordinary Shares. Immediately after the Scheme became effective, Shire plc had the same Board of Directors, management and corporate governance arrangements as Old Shire had immediately prior thereto. The consolidated assets and liabilities of Shire plc immediately after the effective time of the Scheme of Arrangement were substantially the same as the consolidated assets and liabilities of Old Shire immediately prior thereto. <br /><br />The Shire Ordinary Shares underlying the Shire American Depositary Shares (the “Shire ADSs”), each representing three Shire Ordinary Shares, participated in the Scheme like all other Shire Ordinary Shares. Upon the Scheme of Arrangement becoming effective, the Shire ADSs remained outstanding but became Shire plc ADS’s, each representing three Shire plc Ordinary Shares. The Scheme of Arrangement did not involve any payment for the Shire plc ADSs.<br /><br />The corporate restructuring has been accounted for as a reorganization of entities under common control. Accordingly, the historical consolidated financial statements prior to the reorganization are labeled as those of Shire plc, but continue to represent the operations of Old Shire. <br /><br />Earnings per share were unaffected by the reorganization.<br /><br />(aa) Statutory accounts<br /><br />The consolidated financial statements as at December 31, 2009 and 2008, and for each of the three years in the period to December 31, 2009 do not comprise statutory accounts within the meaning of Section 240 of the UK Companies Act 1985 or Article 104 of the Companies (Jersey) Law 1991.<br /><br />Statutory accounts prepared in accordance with International Financial Reporting Standards, as adopted for use in the European Union (“EU”) for the year ended December 31, 2007 have been delivered to the Registrar of Companies for England and Wales. The auditors’ reports on those accounts were unqualified.<br /><br />Statutory accounts of Shire, consisting of the solus accounts of Shire plc for the period to December 31, 2008 prepared under UK GAAP and in compliance with Jersey law have delivered to the Registrar of Companies for Jersey. The consolidated accounts of the Company for the year ended December 31, 2008 prepared in accordance with US GAAP, in fulfillment of the Company’s UKLA annual reporting requirements were filed with the UKLA. The auditor’s reports on these accounts were unqualified.<br /><br />Statutory accounts of Shire, consisting of the solus accounts of Shire plc for the year to December 31, 2009 prepared under UK GAAP and in compliance with Jersey law will be delivered to the Registrar of Companies in Jersey in 2010. The Company further expects to file the consolidated accounts of the Company, prepared in accordance with US GAAP, in fulfillment of the Company’s UKLA annual reporting requirements with the UKLA in 2010. </p></div>
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