Annual Financial Report

FOR IMMEDIATE RELEASE

11 April 2013

Skyepharma PLC - Annual Report and Accounts 2012

In accordance with the Listing Rules, copies of the following documents have been submitted to the National Storage Mechanism:

·; Annual Report and Accounts 2012

·; Notice of Annual General Meeting

·; Form of Proxy

These documents will shortly be available for inspection at the National Storage Mechanism at http://www.morningstar.co.uk/uk/NSM

The Annual Report and Accounts and Notice of Annual General Meeting are also available on the Company website at www.skyepharma.com.

The Annual General Meeting will be held at 10.30 a.m. on Thursday 9 May 2013 at the offices of FTI Consulting, Holborn Gate, 26 Southampton Buildings, London, WC2A 1PB.

In accordance with DTR 6.3.5, this announcement contains information in the attached Appendix of the principal risk factors, a responsibility statement and details of related party transactions which has been extracted in full unedited text from the Annual Report and Accounts 2012. Where page numbers and note numbers are mentioned in the Appendix these refer to page numbers and notes to the financial statements in the Annual Report and Accounts 2012. A condensed set of financial statements were appended to Skyepharma PLC's preliminary results announcement issued on 21 March 2013.

For further information please contact:

Skyepharma PLC

Peter Grant, Chief Executive Officer +44 207 881 0524

N+1 Singer

Shaun Dobson/Jennifer Wyllie +44 207 496 3000

FTI Consulting

Julia Phillips/Susan Stuart +44 207 831 3113

About Skyepharma PLC

Skyepharma combines proven scientific expertise with validated proprietary drug delivery technologies to develop innovative oral and inhalation pharmaceutical products. The Group receives revenues from 13 marketed products in the areas of inhalation, oral, topical and injectable drug delivery as well as generating income from the development of further products and technology licenses. The products developed by the Group are marketed throughout the world by big pharma as well as speciality pharmaceutical companies. For more information, visit www.skyepharma.com

APPENDIX

UNEDITED EXRACT FROM ANNUAL REPORT AND ACCOUNTS 2012

Principal risks and uncertainties

Pharmaceutical development is inherently expensive and risky as the development cycle for new products is long and uncertain and the regulatory environment is complex and subject to change. In common with all businesses in the sector, the Group is exposed to a range of risks, some of which are not wholly within its control or capable of complete mitigation or protection through insurance. Accordingly, stakeholders and prospective stakeholders should be aware that investment in Skyepharma involves a high degree of risk.

The Board has established a continuous process for identifying, evaluating and managing the significant risks the Group faces. The Board regularly reviews the process and a detailed review of risk was undertaken by the Audit Committee during 2012. The Board has identified the following principal risks which could have a material impact on the Group's long-term performance and could cause actual results to differ materially from the expected and historical results.

Risks that flutiform® may not achieve commercial success

flutiform® is a key product and the Group believes that successful commercialisation by the partners will lead to significant cash inflows for the Group. As announced on 3 July 2012, the EC adopted a decision in favour of granting of marketing authorisations for flutiform® which covers the 21 member states in the decentralised procedure. Since then, approvals have been granted in 18 countries and flutiform® was launched in eight countries. Despite this significant progress there can be no assurance that flutiform® will be commercially successful as this will depend on a range of commercial factors including the competitive environment following launch.

There can be no absolute certainty that flutiform® will successfully complete development in additional territories, meet regulatory authority requirements or be approved and launched in a timely manner in any other territory. Even when approved and launched, there can be no assurance that it will be commercially successful, as this will depend on a range of commercial factors including pricing approval and the competitive environment following launch. The success of flutiform® is also dependent on the successful completion of further manufacturing scale-up and process validation and the ability to produce sufficient product to meet commercial requirements at an economic cost. In addition, significant adverse financial effects could arise if the Group were to be unable to source key raw materials and components in compliance with the regulatory requirements to maintain continuity of supply. Further, any failure by the Group to be able to ensure that contracts with suppliers and customers have back to back terms could lead to operational and financial risks. In order to mitigate these risks, the Management is involved on a day-to-day basis in ensuring that the Group is able to provide all necessary support to the development and supply process and participates fully and pro-

actively in regular meetings with its suppliers, sub-contractors and licensees in ensuring that appropriate steps are being taken to prepare for the launch and meet continuing demands of the product in other territories.

Risks that cash balances and net cash inflows may be insufficient to pay off long-term debt obligations

The Group has obligations under its various financing agreements to make scheduled interest payments and capital repayments which, if not met, could result in default under those agreements. The successful commercialisation of flutiform®, following its launch in Germany and the UK and the launch of flutiform® in other markets in Europe is pivotal to the value and cash generative potential of the Group. The risks involved in this are noted above. The ability of the Group to service its medium and long-term debt is therefore dependent on commercial success of flutiform® as well as revenue generation from other launched products. The Group regularly monitors its cash forecast, as well as reviewing, at least annually, the longer-term plans and prospects for repaying long-term debt. As a result of such reviews, potential actions are identified well ahead of the relevant repayment dates so that debt could be renegotiated or refinanced if necessary.

Risks that manufacturing, research and development operations and related royalty revenues may be disrupted

Any significant and lengthy disruption to the Group's or third party research and development and manufacturing operations, or that of its suppliers, could result in a substantial loss of manufacturing and related royalty revenues. The Group has insurance, subject to certain deductibles, against the usual insurable risks such as fire and other perils, but it is not possible to insure all risks and not all insurable risks can be fully insured on an economically feasible basis, such as supplier failures, product recall, industrial action, regulatory sanctions, lack of capacity in manufacturing facilities and negligent manufacturing issues. For example, a significant failure to maintain manufacturing facilities in compliance with required regulatory standards, which are frequently being amended and updated, could result in sanctions by regulators which could require the cessation of manufacture until deficiencies are rectified. To mitigate this, the Group maintains a comprehensive system of quality assurance, including regular inspections and reviews of its facilities and those of key suppliers. Group and third party supplier facilities are also inspected by regulatory authorities in order to maintain their approved status. In preparation for such audits, external specialist consultants may be used to provide preparatory audits and similar support and any recommendations arising from such audits are acted upon where appropriate. Any issues arising are the subject of monthly reporting through the management structure and, where appropriate, to the Board.

Disruption could also arise due to dependency on single sources of supply for certain of the Group's products or the failure to plan the supply of raw materials to meet manufacturing demand. Disruption and significant costs could also arise if Aenova terminated its lease of the Lyon Manufacturing Business.

In addition, defects in or lack of supply of components and raw materials supplied and used in the manufacture of the Group's products could give rise to obligations and liabilities and adversely affect the Group. The Group identifies key suppliers in relation to its business and where possible, alternative sources of supply are sought although often this is neither possible nor economically feasible. Suppliers are subject to a quality audit, a requirement of regulatory authorities, to ensure that the manufacturing processes are in compliance. In addition, insurance is taken out to help mitigate the consequences of defects in products/raw materials and disruption of supplies and, where possible, contracts are negotiated to include appropriate provisions for replacement of defective goods.

Risks that competition, technological change or lack of innovation may damage prospects for the business

The Group has a number of pipeline developments and revenue generating products which are at various stages of their effective commercial lives and, as such, the Group is not dependent on any one product for the majority of its current revenues. With respect to future revenues, please see the risks relating to flutiform ® above. The successful development, commercial success and life of regulated pharmaceutical products depends upon a range of factors, such as having adequate product innovation and development strategies, how successfully products are marketed, the overall competitive environment, the effectiveness of patent protection and constraints on healthcare spending.

In particular, competition, technological change or lack of innovation may render the Group's products or technologies uncompetitive or obsolete and the time frames involved could be relatively short. For example, where generic products are successful in entering the market this can have a very significant impact on both pricing and market share of existing marketed products, and often heralds a rapid end to the commercial life of the existing product. ANDA filings in the United States such as those on Uroxatral®, Requip® XL™, Sular® and Solaraze® highlight the risks of potential generic entry.

In order to protect its future prospects, the Group files for and prosecutes patents and creates other forms of intellectual property to protect its assets and, where appropriate and in conjunction with its collaboration partners, takes steps to enforce these rights. In addition, steps are undertaken both internally and through external service providers to identify the filing and progress of third party rights that may be of interest to and/or have adverse effects on the Group's activities so that these can be taken into account and action can be initiated where appropriate. Revenues derived from royalties or other sales related payments in respect of licensed intellectual property may be adversely impacted for a number of reasons. These include amongst other things, patent expiry, scope of granted patents not extending to cover relevant products or processes, patent applications failing to proceed to grant and/or granted patents being held invalid and formulations or processes changing to fall outside the scope of licensed intellectual property.

Risks arising from inability to control or influence commercialisation of products and the income streams related to them

The Group collaborates with partners in developing their products. Once the development work is complete and the third parties have obtained approval and launched their products (which may contain a formulation inside a third party device), the Group may be entitled to royalties and/or milestone payments on net sales of these products. In many cases, the Group has no influence over the scale-up, validation, manufacture, sales and marketing and distribution, or knowledge of marketing efforts or plans, or control over the income stream that is derived from these products. This can lead to the unpredictable cessation of part of the Group's royalty streams, for example where a product is discontinued without consultation or prior warning by the third party. The Group tries to mitigate the risk of unexpected shortfalls through regular dialogue with third party partners and legal requirements on third party partners.

Risks that external capital requirements under local law cannot be complied with

Certain of the Group's subsidiaries are subject to capital maintenance requirements under local laws. If these requirements were to be breached, and the over-indebtedness is not covered by the value of assets on a going concern or liquidation basis, steps would need to be taken to rectify such over-indebtedness. If this was not achieved in a timely manner, insolvency proceedings may have to be initiated and these could trigger defaults under the Group's financial obligations including the Bonds. If flutiform® were not commercially successful following launch this could lead to a capital maintenance issue in one or more subsidiaries.

In order to mitigate this risk, the Group is pro-actively managing the progress of flutiform®. In addition to this, regular reviews take place of the impairment head room and contingency plans if a recapitalisation were needed.

Risk arising from current difficult global economic conditions and inadequacy of financial resources

The Board has given careful consideration to the potential impact of the economic outlook on its business activities. It recognises that, in times of economic uncertainty, development budgets will be under pressure and sources of funding may be difficult to obtain and this can affect current business and future growth opportunities. A number of steps have been taken in the last few years to reduce the Group's cost base and improve efficiency to ameliorate this risk.

The Group is exposed to the effects of exchange rate fluctuations and the Group aims to maintain natural hedges to ameliorate the effects of these. Actual and potential exposures are regularly reviewed and professional advice is taken in considering hedging strategies. The key focus is to ensure that the Group is not exposed to significant cash effects from foreign exchange movements. The Group's results and balance sheet carrying values may be materially affected by exchange translation effects.

The Board regularly reviews the Group's dependency on key suppliers and customers, who may themselves be exposed to exchange rate fluctuations or other uncertainties, for existing products and continues to monitor the financial strength and integrity of its business partners. See also the next section on risks arising from the Eurozone uncertainties. As regards the financing of the business, the Directors have prepared cash flow forecasts for the period to 31 December 2014. The Board regularly monitors its cash forecasts, as well as reviewing, at least annually, the longer term plans and prospects for repaying long-term debt.

Risks arising from the Eurozone uncertainties and their impact on transactions and funding

The Eurozone uncertainties and their potential impact on the Group could affect cash flows and balances, and viability of counterparties. Analysis of these risks has been carried out taking into account the currencies of royalty flows, the location of the banks holding Group funds and of the Group's counterparties. Although the Group's primary operations are outside the Eurozone - in Switzerland and the UK - some counterparties are in the Eurozone and a significant part of the Group's revenues is derived from sales in the Eurozone or is denominated in Euro.

Eurozone uncertainties could affect the continuity of important suppliers and customers and competitiveness of the Group through the strengthening of the Swiss Franc, and fluctuations in Euro exchange rates could affect the natural currency hedging which the Group deploys.

Eurozone uncertainties could also impact the Group's ability to refinance (if required) its medium and long-term debt due to market uncertainty. The Group has taken action to limit risk by ensuring that funds are kept with highly rated institutions based outside the Eurozone. However it is impossible to predict the outcome of the uncertainties and the extent of counterparty risk and it is possible that Eurozone uncertainties could have a significant adverse impact on the Group. The Group continues to regularly monitor these risks.

Risks that the Group fails to retain key personnel or attract new personnel

The Group relies upon a number of key executives and employees and its ability to retain and attract other qualified management, scientific, technical, marketing and support personnel. Competition for such personnel is intense, and there can be no assurance that the Group will be able to continue to attract and retain such

personnel. The loss of the services of any of the Group's key executives or employees could materially adversely affect its business.

Other risks

Although the above items represent the principal risks which the Board considers are specific to Skyepharma, many general industry and sector risks and more remote risks could also result in material adverse effects on the business and its future prospects. Some of these risks are mitigated by insurance which the Group maintains in line with normal industry practice. Other risks are managed by regular reviews and reporting, taking appropriate professional advice in a timely manner, careful assessment of potential new developments involving technical and commercial appraisals, and monitoring industry trends.

Directors' Responsibility Statement

In accordance with the FSA's Disclosure and Transparency Rules, the Directors listed on pages 32 and 33 confirm, to the best of their knowledge, that:

1. The financial statements have been prepared in accordance with IFRS as adopted by the European Union and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and Company and the undertakings included in the consolidation taken as a whole; and

2. The management report, which is incorporated into the Report of the Directors, includes a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties faced by the Group.

RELATED PARTIES

Group

Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.

Refer to Note 10: Staff costs and Directors' emoluments for disclosures in respect of key management personnel of the Group.

Company

The Company has issued share options to employees of subsidiary undertakings and in accordance with IFRS 2 made no charge during the year ended 31 December 2012 (2011: £0.1million).

The Company has charged £1.0 million (2011: £1.0million) to its subsidiary undertakings and the Company was charged £0.1 million (2011: £0.1 million) by its subsidiary undertakings for corporate services provided.

The Company has intercompany loans and accounts with its subsidiary undertakings, details can be found in Note 20: Shares in and loans to Group undertakings, Note 22: Trade and other receivables and Note 25: Trade and other payables. All current intercompany balances are settled on a monthly basis, including any interest charged on non-current intercompany balances.

Refer to Note 10: Staff costs and Directors' emoluments for disclosures in respect of key management personnel of the Company.