Final Results

BTG plc: Final Results

Strong financial performance and operating progress

London, UK, 21 May 2012: BTG plc (LSE: BGC), the specialist healthcare company, today announces its final results for the year ended 31 March 2012.

Financial highlights

━ Revenue increased by 77% to £197.0m (10/11: £111.4m)

━ Operating profit before acquisition adjustments and reorganisation costs of £54.0m (10/11: £1.7m); operating profit after acquisition adjustments and reorganisation costs of £19.9m (10/11: loss of £13.8m)

━ Profit before tax of £23.0m (10/11: loss of £10.8m)

━ Cash and equivalents, together with cash on fixed term deposits, of £111.9m at 31 March 2012(£73.9m at 31 March 2011)

Operating highlights

━ Specialty Pharmaceuticals

━ Strong performance from CroFab® (crotalidae polyvalent immune fab (ovine)) and DigiFab® (digoxin immune fab (ovine)) following the first full year of direct sales in the US

━ Voraxaze® (glucarpidase) approved and launched in the US

━ Announced today: EU named patient supply rights acquired from Wellstat to uridine triacetate, an investigational antidote to 5-FU toxicity, supplementing the US rights acquired in July 2011; BTG retains the option to acquire the EU commercial rights upon EU approval

━ Interventional Medicine

━ Positive results reported from two US pivotal Phase III trials of Varisolve® (polidocanol endovenous microfoam (PEM)); aiming for US regulatory submission at the end of 2012

━ Commenced direct sales of LC Bead™ in the US on 1 January 2012

━ Licensing & Biotechnology

━ Significant post-patent-expiry royalties from Pfizer on BeneFIX® (Factor IX)

━ First royalties from Johnson & Johnson on Zytiga® (abiraterone acetate)

Louise Makin, BTG's Chief Executive Officer, commented: "We have delivered a strong performance and demonstrated significant financial and operating progress. We expanded our US commercial operations and are now selling all of our Specialty Pharmaceuticals and Interventional Medicine products directly in the US. Following the positive Phase III trial results, we are aiming to submit our Varisolve® new drug application in the US at the end of 2012. With strong cash generation and significant pipeline opportunities, we are well placed to continue implementing our growth strategy."

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About BTG

BTG is an international specialist healthcare company that is developing and commercialising products targeting critical care, cancer and other disorders. The company has diversified revenues from sales of its own marketed products and from royalties on partnered products, and is seeking to acquire new programmes and products to develop and market to specialist physicians.

Chairman's statement

In this, my first statement to shareholders as Chairman, I am pleased to report that BTG is in a strong position and is delivering on its strategy and its objectives. We have made significant progress on a number of fronts over the last year and are at an exciting time in our development. We approach the future with confidence.

The Group's strategy of selling its own specialist products is working. In Specialty Pharmaceuticals, a strong performance from CroFab® and DigiFab® has been supplemented by cost-recovery and named patient sales of Voraxaze®, which was approved by the FDA in January 2012 and launched nationally in the US at the end of April 2012. Similarly, the creation of a dedicated sales function in Interventional Medicine has enabled us to bring in-house the US sales responsibility for our beads business.

Our Licensing & Biotechnology revenues benefited from significant post-patent-expiry royalties from Pfizer on BeneFIX® and first royalties from Johnson & Johnson on Zytiga®, which has had a strong start.

Product development has also progressed well during the year. In addition to the Voraxaze® approval, we have announced positive Phase III results on PEM, a potential treatment for varicose veins, and we continue to progress our bead chemoembolisation studies.

As we look to the future, our focus remains on our clearly articulated and deliverable strategy and objectives. We will also continue to be guided by our core values, which are embedded throughout the Group, and which we believe contribute to the generation of shareholder value.

We are well placed to become increasingly cash-generative over the medium term, driven by the transition to direct sales in the US, the US approval of Voraxaze®, underlying double-digit growth in our Interventional Medicine business and a continuing strong royalty stream from our Licensing & Biotechnology business.

The cash we generate is available to continue development of PEM and our bead products and to invest in acquiring or in-licensing new products and late-stage programmes. The Board believes that reinvesting shareholder funds in this way will generate most value over the longer term, and it does not recommend payment of a dividend.

BTG has made strong progress over the past year, and I look forward to working with my Board colleagues and our wider team to continue to develop BTG into a leading specialist healthcare business.

Garry WattsChairman

OPERATING REVIEW

BTG has three business segments: Specialty Pharmaceuticals, Interventional Medicine and Licensing & Biotechnology. Each already generates revenues from marketed products or royalties and has ongoing development programmes which, if successful, would lead to new revenue streams. Our Specialty Pharmaceuticals and Interventional Medicine businesses have opportunities for further growth through acquisition, development and geographic expansion activities.

Specialty Pharmaceuticals

The Acute Care sales team performed strongly, delivering 117% growth in revenues from CroFab®, DigiFab® and Voraxaze®. This resulted principally from the transition to direct sales in the US and was further enhanced by increased end market volumes and price growth. The benefits of selling directly were also reflected in a substantial increase in profit contribution.

The reported revenues from Voraxaze® result from its availability under a treatment investigational new drug (IND) in the US and from named patient sales elsewhere. A key achievement during the year was the US approval of Voraxaze® in January 2012 following a priority review by the FDA. This product addresses a real unmet need: there is no other approved treatment for life-threatening high-dose methotrexate toxicity due to impaired renal function. Around half the patients who experience toxicity with high-dose methotrexate are children.

We estimate the US peak sales potential for Voraxaze® to be approximately $15m per annum, on the basis of commercial pricing rather than cost-recovery. Although modest, this unique product delivers a good margin and exemplifies our strategy of leveraging the investment we have made in creating a US commercial infrastructure. It will be sold by the existing Acute Care team so requires only modest incremental sales and marketing expenditure.

Our partner, Wellstat Therapeutics Corporation, continues to make good progress with the development of uridine triacetate, an investigational antidote to toxicity associated with 5-fluorouracil, a common chemotherapeutic. Wellstat anticipates submitting a US regulatory application during the second half of 2013. If approved, uridine triacetate would be sold by our Acute Care sales team. In May 2012, we also acquired rights to distribute uridine triacetate on a named patient supply basis in Europe for an upfront payment of $3.0m, together with an option to market uridine triacetate following EU regulatory approval, under pre-agreed financial terms including a multi-million dollar exercise fee and transfer pricing payments based on manufacturing costs and a significant percentage of net sales.

Our strategy within Specialty Pharmaceuticals is to expand our portfolio of marketed products and late-stage programmes through in-licensing and acquisition. We have a growing antidote franchise and are looking for similar products that are used in emergency situations in hospitals and in other specialist centres. We are also exploring opportunities to expand our portfolio with products used by other specialist physicians within and outside the hospital setting.

Interventional Medicine

We estimate, based on our analysis of public information, that the global annual aggregate sales of loco-regional treatments for liver tumours grew from $87m at the end of 2008 to $193m at the end of 2011, with our market share growing from 20% to 27% during that period. We anticipate continued double-digit overall market growth through 2020, driven by expanding the approved uses of the products, geographic expansion and product innovation.

Our strategy to expand this business is to: sell directly in the US; expand geographically through working with partners; invest in clinical studies to expand the indicated uses of our products; develop line extensions; and acquire additional products used by interventional radiologists, clinical oncologists and oncology surgeons.

During the second half of 2011 we set up our second field force, an Interventional Medicine team of 24 Account Managers and Medical Science Liaisons. As planned, the Account Managers assumed direct control of selling LC Bead™ in the US from January 2012, following expiry of the distribution contract with AngioDynamics, Inc.

The transition has gone well. We expect the financial benefits of selling directly to start this financial year. Less immediately obvious, but equally important, are the benefits of being able to get close to our customers. This helps us fully understand their needs and the pressures that they face, so that we can respond in terms of our product and service offering.

In Japan, where we are partnered with Eisai, the regulatory application for DC Bead® is being reviewed by the Japanese regulatory authorities. In China, our partner SciClone completed a 40-person study and is engaging with the Chinese regulator about the further steps required in order for them to accept a submission for review. In South Korea, qualified reimbursement was achieved and in Taiwan we are awaiting reimbursement approval.

Later this year we expect first results from the PARAGON exploratory studies, in which DC Bead® loaded with irinotecan is being investigated as a treatment for metastatic colorectal cancer (mCRC). These include PARAGON II, which is evaluating the safety and efficacy of the irinotecan bead used prior to surgical resection of metastatic liver tumours. A second study (PARAGON Louisville) is evaluating the effectiveness of chemoembolisation with LC Bead™ loaded with irinotecan, both with and without systemic chemotherapy, in the treatment of unresectable liver metastases in patients with colorectal cancer.

We plan to initiate a formal Phase II study in mCRC, the design of which will be informed by these exploratory studies. We are also exploring other indications such as metastatic ocular cancer and cholangiocarcinoma, orphan indications which may not require extensive studies to gain marketing approvals.

At present, when DC Bead® is loaded with a chemotherapeutic, this is done in the pharmacy at the hospital where the procedure is to take place. We are developing the PRECISION Bead® and PARAGON Bead®, which are pre-loaded with drug and, if approved, would be a significant step forward for interventional medicine.

In January and April 2012, we reported positive results from VANISH-1 and VANISH-2, our two US pivotal Phase III trials of PEM, which are designed to support its approval as a comprehensive treatment to reduce the symptoms and improve the appearance of varicose veins. The primary endpoint was a reduction in symptoms, as measured by a novel patient-reported outcomes tool. Improvement in appearance, the secondary endpoint, was measured using novel patient and physician tools. PEM achieved all the study endpoints with a high degree of statistical significance. In a smaller study, VV017, patients were treated first with heat ablation of the great saphenous vein followed by PEM for the remaining visible varicosities. Statistical significance was reached for one of two co-primary endpoints, the blinded independent panel review of photographs, but not for the patient-reported measure.

We are completing manufacturing and chemistry manufacturing and controls (CMC) activities and preparing our regulatory application, which we aim to submit at the end of 2012. If approved, we intend to market PEM ourselves in the US reimbursed sector. We estimate the global peak sales potential of PEM to be up to $500m per annum.

Licensing & Biotechnology

This part of our business derives from BTG's history as an IP commercialisation organisation. It comprises licensed assets together with assets acquired with Protherics and Biocompatibles that we do not intend to take to market ourselves but which may have value to partners. We have retained the required IP and other commercial skills to commercialise these assets, as those skills remain core to our on-going business activities.

Although not an active area of focus in terms of new opportunities, our Licensing & Biotechnology segment is expected to continue to provide a solid financial underpin for BTG for many years to come. While some licensed assets will cease to deliver revenues following patent expiries, others are starting to generate new revenue streams and have the potential to deliver royalties beyond 2020.

Following patent expiry in March 2011, revenues from BeneFIX®, for several years our largest individual royalty contributor, are expected to end during our 2012/13 year.

A new revenue stream emerged during the 2011/12 year with the US and EU approvals of Zytiga®, marketed by the Janssen Pharmaceutical Companies of Johnson & Johnson. This was approved to treat men with castration resistant prostate cancer (CRPC) who have previously received docataxel. The approvals resulted in two milestone payments and our first royalties.

Importantly, a second Phase III trial in men who had not yet received chemotherapy was unblinded after an interim analysis in March 2012 because of clear evidence of clinical benefits in men receiving Zytiga® compared with those receiving placebo. Johnson & Johnson intends to start submitting regulatory applications to extend the approved uses of Zytiga® into this chemo-naïve patient population. If approved, this could significantly expand the number of patients who may benefit from treatment with this product.

In April 2012, Sanofi presented positive Phase III data and indicated it would submit US and EU regulatory applications for the approval of alemtuzumab as a treatment for relapsing-remitting multiple sclerosis during the second quarter of 2012. The application is expected to receive priority review in the US. If approved, this would result in another new revenue stream for BTG.

AstraZeneca's Phase IIb study of AZD9773 completed recruitment of around 300 patients with severe sepsis in March 2012. Top-line data are anticipated in the second half of 2012, together with a decision by AstraZeneca on whether to progress into Phase III development.

After disappointing data from a Phase IIa study in patients with relapsing-remitting multiple sclerosis, we discontinued development of BGC20-0134 and ceased commercial activities.

We are continuing to explore options for partnerships with CellMed, our German subsidiary acquired with Biocompatibles. CellMed has a number of early-stage programmes and platform technologies that are not in our core focus areas but may be of interest to other companies.

FINANCIAL REVIEW

This has been another transformative year for BTG operationally and the step-change in the financial results reflect this. Revenue has grown by 77% to £197.0m as a result of direct selling CroFab® and DigiFab®, the acquisition of Biocompatibles in January 2011 and a strong performance from the Group's royalty revenue streams. Gross margin, at 71%, is slightly ahead of prior year, generating gross profit of £140.7m in the period, £63.4m higher than in the prior year.

Operating profit of £19.9m compares to an operating loss of £13.8m in the prior year. Operating profit before acquisition adjustments and reorganisation costs has grown from £1.7m in the prior year to £54.0m.

The Group generated £38.0m of cash, resulting in cash and deposits of £111.9m at 31 March 2012(31 March 2011: £73.9m).

Specialty Pharmaceuticals

Revenue of £76.7m is more than twice the prior year comparative of £35.4m. This reflects the impact of the first full year of BTG direct sales of CroFab® and DigiFab® in the US. In the prior year, these products were sold through a distributor for the first six months of the financial year, with BTG direct sales effective from 1 October 2010. Underlying sales volumes into the end market have also shown growth over the prior year.

Gross margin at 76% (10/11: 75%) is in line with expectations for this operating segment, generating £58.0m gross profit (10/11: £26.6m). After deducting selling, general and administrative (SG&A) expenses of £18.6m (10/11: £15.8m) this segment generated a profit contribution of £39.4m (10/11: £10.8m) reflecting a 51% operating margin (10/11: 31%).

Interventional Medicine

The Interventional Medicine segment represents the portfolio of beads and brachytherapy products acquired with Biocompatibles. The acquisition of Biocompatibles was completed at the end of January 2011, meaning that the year ended 31 March 2012 was the first full year of ownership. The prior year comparative figures for Interventional Medicine include only two months of post-acquisition trading from this business.

Revenue of £28.7m (10/11: £5.6m) generated gross profit of £20.1m (10/11: £2.7m), representing a gross margin of 70% (10/11: 48%). Cost of sales includes the final release of a fair value uplift adjustment to inventory recognised upon acquisition of £2.1m (10/11: £1.7m). Excluding this adjustment, gross margin is 77% (10/11: 79%).

SG&A of £13.3m (10/11: £2.5m) includes some set-up costs and around half a year of direct sales force costs in relation to the sale of LC Bead™ in the US. The full run-rate of sales force costs will be reflected in the results of the current financial year.

Overall profit contribution margin from this operating segment was 24% (31% excluding fair value acquisition adjustments) and our expectation is that a full year benefit of direct sales in the US should see this increase in the current financial year.

Licensing & Biotechnology

The Licensing & Biotechnology segment includes revenues from BTG's licensed portfolio of intellectual property as well as income from the acquired Biocompatibles business.

Revenue of £91.6m is £21.2m ahead of last year. Revenue consists of recurring royalties of £79.2m (10/11: £60.3m), milestones and one-offs of £11.1m (10/11: £9.9m) and sales of CellMed products of £1.3m (10/11: £0.2m).

The principal contributors to recurring royalties are: BeneFIX® at £29.4m (10/11: £28.7m), the two-part hip cup at £13.0m (10/11: £12.4m) and, for the first time this financial year, Zytiga® which contributed £18.6m (10/11: nil).

The final Factor IX patent expired in March 2011 and BTG continues to receive royalties on sales of inventory held by Pfizer at the patent expiry date. Further receipts in 2012/13 are yet to be confirmed by Pfizer, but BTG expects that it has now received the majority of royalties due.

The approval of Zytiga® triggered two milestone payments. Other contributors within milestones include the continued release of AZD9773 deferred income and the final release of deferred income in relation to the GLP-1 licence that was terminated by AstraZeneca in May. In the prior year, the main contributors to milestones were a patent settlement over the MLC technology, the release of deferred income on AZD9773 and a milestone on submission of the US regulatory application for Zytiga®.

The gross margin of 68% (10/11: 68%) reflects the mix of licences contributing to revenue, as each of the royalty streams has its own onward obligation to the original inventors. This is expected to reduce in the current financial year as income from the BeneFIX® patents falls away.

SG&A includes the overheads specific to the management of the royalty business but also most centrally managed support functions and corporate costs. This has shown an increase of £1.6m to £17.0m in the period, principally reflecting the addition of the CellMed business.

Overall, this segment generated a profit contribution of £45.6m (10/11: £32.6m), reflecting a contribution margin of 50% (10/11: 46%).

Research and development

Expenditure on research and development increased to £39.7m (10/11: £32.1m). This increase principally reflects a full year of investment in the Biocompatibles R&D portfolio. The other major components of expenditure in the period were the PEM US Phase III trials and associated CMC and product development expenditures, the Voraxaze® BLA submission and associated work streams, the BGC20-0134 Phase IIa study and continued work in support of AZD9773.

Operating profit

The Group achieved an operating profit of £54.0m (10/11: £1.7m), reflecting additional profit contributions from the three operating segments offset by the increased investment in R&D. Foreign exchange gains of £2.6m were recorded in the year compared to losses of £2.0m in the prior year. An impairment charge of £3.0m has also been taken against the tangible fixed assets associated with the Novabel® product.

Costs of £34.1m (10/11: £15.5m) were recorded in the period, including amortisation and impairment of acquired intangible assets of £30.7m (10/11: £10.0m). Impairment charges totalling £12.4m (10/11: nil) are included in the total £30.7m (10/11: £10.0m). These were taken against the Group's carrying values of GLP-1 and Novabel® - two assets acquired with Biocompatibles.

In the prior year, acquisition and reorganisation costs of £3.8m were incurred in relation to the acquisition of Biocompatibles.

Net financial income

Net financial income of £3.1m (10/11: £3.0m) includes the write-back of two financial liabilities in the period. A loan of £2.8m from Merz in relation to Novabel® manufacturing fixed assets has been written back as the directors have no current expectation of repaying it, based on an agreement termination letter received from Merz. Also included within net financial income is £1.1m in relation to the Contingent Value Note issued to certain Biocompatibles shareholders upon acquisition. This is included in the acquisition adjustments and reorganisation costs column. The termination by AstraZeneca of their interest in the GLP-1 asset means that the directors have no current expectation of this amount being paid. The mark-to-market of foreign exchange forward contracts has resulted in a loss of £1.5m (10/11: profit of £2.7m) being recorded in the period.

Profit before tax

Group PBT has increased to £23.0m from a loss of £10.8m in the prior year. The principal drivers of this increase are the improved operating performance of the business segments offset by increased investment in R&D and asset impairments.

Tax

A tax charge of £8.4m has been included in the accounts (10/11: £20.0m credit). This reflects an effective tax rate of 37%. Current tax is £3.9m (10/11: £1.6m). Deferred tax is £4.5m (10/11: credit of £21.6m). The prior year's figure includes a one-off credit of £18.6m in relation to the recognition of a deferred tax asset in the US following a corporate restructuring that provided us with increased certainty over the future utilisation of these losses. The utilisation of the losses results in a deferred tax charge in each year that they are utilised.

Earnings per share

Basic earnings per share was 4.5p (10/11: 3.4p) on profit after tax of £14.6m (10/11: £9.2m). Adjusting for acquisition adjustments, restructuring costs and the one-off deferred tax credit recognised in the prior year, basic underlying EPS increased by 10.4p to 11.4p.

Balance sheet

Non-current assets have reduced from £358.9m at 31 March 2011 to £331.5m at 31 March 2012. The principal movements are amortisation, impairments and depreciation of £38.1m, and additions of £10.5m, including £5.4m in respect of distribution rights to Wellstat's uridine triacetate development asset of which £0.7m is contingent consideration.

The Group's defined benefit pension fund liability, as measured under IAS19 - Employee Benefits, has reduced from a liability of £2.0m at 31 March 2011 to a liability of £0.1m at 31 March 2012. The principal movements are total contributions by the Company of £5.2m offset by actuarial losses of £2.9m and an income statement charge of £0.4m. The actuarial deficit at 31 March 2010, the date of the last formal valuation and measured in accordance with guidelines set by the Pensions Regulator, was £13.9m.

Current assets have increased by £44.7m since 31 March 2011 to £174.3m at 31 March 2012. The principal movements relate to cash and deposits (increase of £38.0m) and an increase in receivables of £7.4m reflecting accrued royalties on Zytiga® and direct sales of Bead products for which there was no prior year comparative.

Current and non-current liabilities, at £99.6m are broadly in line with the position as at 31 March 2011. The principal movements relate to an increase of £4.5m in deferred tax liability following utilisation of losses recognised as a deferred tax asset, a net increase of £3.1m in trade and other payables offset by reductions in provisions of £1.2m, borrowings of £2.9m and pension liability of £1.9m.

Cash flow

The Group's cash and deposits have increased by £38.0m from £73.9m at 31 March 2011 to £111.9m at 31 March 2012.

Operating profit of £19.9m (10/11: operating loss of £13.8m) has generated £48.3m of operating cash flow (10/11: operating cash outflow of £10.7m). Non-cash charges for depreciation, amortisation, impairments and share-based payments of £40.7m (10/11: £25.9m) have been offset by contributions to the Group's defined benefit pension fund of £4.8m (10/11: £3.3m) and an increase in working capital of £7.5m (10/11: £17.1m). The increase in working capital is a result of a number of factors. We have taken the decision as part of our risk management strategy to build Specialty Pharmaceutical inventory; new royalty accruals in relation to Zytiga® increase receivables and direct selling of LC Bead™ in the US results in an increase in receivables as we retain 100% of revenue whereas the balance at 31 March 2011 was only that due from our distributor.

The Group's investing activities include the purchase of US commercial rights to Wellstat's uridine triacetate for an initial payment of US$7.5m and capital expenditure around the Group's manufacturing sites of £3.7m. Capital expenditure includes initial work at the Farnham site, to which we have transferred PEM development and CMC activities.

Tax payments of £1.1m have been made, principally in the UK, as profits in this jurisdiction have arisen in statutory entities with insufficient tax losses.

Overall, the Group ends the year in a very strong financial position, with £111.9m of cash and deposits.

SUMMARY AND OUTLOOK

This has been another successful year for BTG. Operational progress has continued at pace, with the first full year of direct CroFab® and DigiFab® sales generating increases in end-market volumes; the launch of our second direct sales force on 1 January 2012 for the LC Bead™ in the US; the approval from the FDA of Voraxaze® and positive results from the PEM Phase III clinical trials.

Biocompatibles has been successfully integrated and we have met our cost savings and earnings enhancement commitments in the first full year of acquisition.

Looking ahead, the Specialty Pharmaceuticals operating segment is expected to see benefits from the commercial launch of Voraxaze® in the current financial year as we look to leverage the existing infrastructure to support this potentially life-saving product.

The Interventional Medicine business will benefit from the first full year of direct sales of LC Bead™ in the US.

Within the Licensing & Biotechnology portfolio, the commercial launch of Zytiga® is expected to result in a significant new royalty stream that will partially replace the BeneFIX® income stream from which BTG has benefited over the past 15 years.

Overall, we anticipate that revenue for the year ended 31 March 2013 will be in the range £180m to £190m.

Investments in our R&D portfolio will continue at a similar level, focusing on the development of PEM and studies designed to explore additional uses for our bead products.

BTG has entered the new financial year in a strong position, confident of continuing to deliver further profitable growth in the medium term.

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CASH FLOWS

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Notes

1. Basis of preparation

In accordance with EU law (IAS Regulation EC 1606/2002), the final results have been prepared in accordance with International Financial Reporting Standards (''IFRS'') adopted for use in the EU as at 31 March 2012 (''adopted IFRS''), International Financial Reporting Interpretations Committee (''IFRIC'') interpretations and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The final statements have been prepared in accordance with the Group's accounting policies approved by the Board.

Details of principal business risks and uncertainties can be found in note 8.

BTG's 2012 Annual Report will be posted to shareholders on 15 June 2012. The financial information set out herein does not constitute the Group's statutory accounts for the year ended 31 March 2012 but is derived from those accounts and the accompanying directors' report. Statutory accounts for 2012 will be delivered to the Registrar of Companies following the Company's Annual General Meeting which will be held at 2pm on 17 July 2012. The auditors have reported on those accounts; their report was unqualified and did not contain statements under Section 495 (4)(b) of the Companies Act 2006.

The comparative figures for the year ended 31 March 2011 are not the Group's statutory accounts for the financial year but are derived from those accounts which have been reported on by the Group's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain statements under Section 495 (4)(b) of the Companies Act 2006.

Interim and preliminary announcements notified to the London Stock Exchange are available on the internet at www.btgplc.com.

No accounting standards adopted in the year have had a significant effect on the financial statements. Other amendments and standards have been adopted, but have had no significant effect on the reported results or financial position of the Group.

The Group does not consider that any of the other standards or interpretations issued but as yet not effective will have a significant impact on the financial statements.

After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Accounts.

This conclusion has been reached having considered the effect of liquidity risk on the Group's ability to operate effectively. Currently, liquidity risk is not considered a significant business risk to the Group given its level of net cash and cash flow projections. The Group does not currently require significant levels of debt financing to operate its business. The key liquidity risks faced by the Group are considered to be the failure of banks where funds are deposited and the failure of key licensees, distribution partners, wholesalers or insurers.

In addition to the liquidity risks considered above, the Directors have also considered the following factors when reaching the conclusion to continue to adopt the going concern basis:

━ The Group's principal licensees are global industry leaders in their respective fields and the Group's royalty-generating intellectual property consists of a broad portfolio of both licensees and industries;

━ The Group's marketed products are life-saving in nature, providing some protection against an uncertain economic outlook; and

━ The Group remains in a cash generative position for the year with cash, cash equivalents and held to maturity financial assets totalling £111.9m as at 31 March 2012.

The Consolidated Income Statement includes a separate column to disclose significant acquisition adjustments and reorganisation costs arising on corporate acquisitions. Adjustments relate to the acquisitions of:

━ Biocompatibles International plc in January 2011; and

━ Protherics PLC in December 2008.

 The costs relate to the following:

━ The release of the fair value uplift of inventory acquired;

━ Amortisation and impairment arising on intangible assets acquired;

━ Transaction costs incurred with professional advisers in relation to the completion of the acquisition;

━ Reorganisation costs comprising acquisition related redundancy programmes, property costs, and asset impairments; and

━ Fair value adjustments to contingent consideration on corporate acquisitions.

2. Operating segments

Following the acquisition of Biocompatibles International plc in January 2011, subsequent integration activities have resulted in a change to the Group's reportable segments, effective from 1 April 2011. The Group has aligned behind three reportable segments, being Specialty Pharmaceuticals, Interventional Medicine and Licensing & Biotechnology.

In assessing performance and making resource allocation decisions, the Leadership Team (which is BTG's chief operating decision-making body) reviews Contribution by segment. Contribution is defined as being gross profit less directly attributable SG&A. The Licensing & Biotechnology operating segment includes SG&A relating to the Group's centrally managed support functions and corporate overheads. This reflects the management structure and stewardship of the business. No allocation of central overheads is made across the Specialty Pharmaceuticals or Interventional Medicine operating segments. Research and development continues to be managed on a global basis, with investment decisions being made by the Leadership Team as a whole. It is not managed by reference to the Group's operating segments, though each programme within the pipeline would ultimately provide revenues for one of the operating segments if successful.

There are no inter-segment transactions that are required to be eliminated on consolidation.

Prior period comparative numbers are presented in accordance with the new segmental reporting.

*2012 includes a £2.1m (10/11: £1.7m) release of the fair value uplift of inventory purchased on the acquisition of Biocompatibles International plc in January 2011 within the Interventional Medicine segment representing the reversal of a fair value uplift of inventory purchased on acquisition recognised through the income statement when the product was sold.

Analysis of revenue, based on the geographical location of customers and the source of revenue is provided below:

Geographical analysis

Revenue from major products and services

Products that utilise the Group's Intellectual Property Rights are sold by licensees. Royalty income is derived from over 70 licences. Two licences individually generated royalty income in excess of 10% of Group revenue, being £29.4m and £24.4m respectively (10/11: Two licences generated £28.7m and £12.4m respectively).

The Group's marketed products are sold both directly and through several distribution agreements in the USA, Europe and Asia Pacific. Two wholesalers individually generated income in excess of 10% of Group revenue, being £22.3m and £21.9m respectively (10/11: One distribution agreement generated £12.4m).

3. Tax

An analysis of the tax charge/(credit) for the year, all relating to current operations, is as follows:

UK corporation tax is calculated at 26% (10/11: 28%) of the estimated taxable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

The deferred tax liability of £35.2m (10/11: £30.7m) represents the net position after taking into account the offset of deferred tax assets against deferred tax liabilities in each jurisdiction. Deferred tax liabilities of £72.7m arise on intangible assets recognised at fair value on acquisitions and £0.4m on accelerated capital allowances. Deferred tax assets relate to brought forward trading losses. The table below summarises the gross and net position at each Balance Sheet date:

In the prior year the Group recognised an additional deferred tax asset of £18.6m in relation to brought forward US tax losses. In accordance with IAS12, this asset was set off against the Group's aggregate US deferred tax liability. The asset was recognised following the completion of a tax-free reorganisation of certain of the Group's US taxable entities on 31 March 2011. As a result of this, when performing its annual assessment of the probability of utilising such losses, management concluded that there was sufficient certainty over the future utilisation of the losses to recognise a deferred tax asset.

4. Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

The basic and diluted earnings per share from underlying earnings is based on the following data:

Adjustments to profit are shown after taking into account the tax effect of such adjustments on the results as shown in the Consolidated Income Statement as follows:

1. No tax adjustment is required on the fair value of acquired inventory

2. The release of deferred tax liability of £11.4m (10/11: £3.4m) has been deducted from the amortisation and impairment of acquired intangible assets of £30.7m (10/11: £10.0m) as shown in the Consolidated Income Statement

3. In the year ended 31 March 2012, £0.1m of tax effect of reorganisation costs has been adjusted on the basis that the tax charge would have been £0.1m higher had it not been for deductions available against reorganisation costs paid in the financial year. In the year ended 31 March 2011 a reorganisation cost of £3.8m in the Consolidated Income Statement was not been adjusted for tax as there was no expectation of the costs being deductible for tax in that financial year

4. An adjustment was made for the deferred tax credit recognised as a result of the completion of a tax-free reorganisation in the prior year and subsequent review of such items in the current year.

5. Intangible assets

The table below summarises the Group's Intangible Assets:

Developed technology relates to both the antidote assets acquired in Protherics PLC comprising principally of the rights to CroFab® and DigiFab® and the bead assets acquired in Biocompatibles International plc comprising principally of the rights to the DC Bead® and LC Bead™.

Contractual relationships relates to the contracts acquired in Protherics PLC and Biocompatibles International plc.

On 6 July 2011 BTG signed an agreement with Wellstat Therapeutics Corporation to acquire the US commercial rights to product candidate uridine triacetate. BTG paid Wellstat an upfront fee of $7.5 million and will make milestone payments upon NDA acceptance and approval and inventory purchase payments based on manufacturing costs and a significant percentage of net sales.

On 27 August 2010 BTG signed an agreement with Nycomed US Inc. concerning the accelerated transition to BTG on 1 October 2010 of marketing rights to CroFab® and DigiFab®. Under the terms of the agreement BTG purchased the exclusive rights to sell the products for which a consideration of £9.7m was paid in October 2010. The purchase price was capitalised and amortised over the 6 month period ending 31 March 2011 representing the length of the exclusive period.

Impairment charges have been made within the acquisition adjustments and reorganisation costs column against two acquired intangible assets in the period:

━ On 13 May 2011 the Group announced that they had been informed by AstraZeneca that AstraZeneca had terminated the development and option agreement relating to CM-3, a GLP-1 analogue being developed by BTG's CellMed subsidiary for use in type 2 diabetes and other indications. The carrying value of the intangible asset associated with the GLP-1 asset was £8.8m which has been fully impaired in the year and is included withinin-process research and development.

━ A further £3.6m impairment charge has been made in the period against the Group's carrying value of the Novabel® intangible asset and is included within developed technologies. The product has been withdrawn from the market since June 2010 and Merz has terminated the supply agreement with the Group.

In addition the withdrawal of Novabel® has resulted in an impairment charge of £3.0m being made against tangible fixed assets that would have been used exclusively for production of Novabel®. This adjustment has not been reflected in acquisition adjustments and reorganisation costs column. The Group has derecognised a £2.8m loan from Merz as there is no obligation for this to be repaid. The loan was received to fund the purchase of tangible assets for use in the manufacture of Novabel® and was repayable out of revenues. This has been recognised within Financial Income in the Consolidated Income Statement but not in the acquisition adjustments and reorganisation costs column.

6. Defined benefit pension liability

The Group's defined benefit pension fund liability, as measured under IAS19 - Employee Benefits, has reduced from a liability of £2.0m at 31 March 2011 to a liability of £0.1m at 31 March 2012. The principal movements are total contributions by the company of £5.2m offset by actuarial losses of £2.9m and an income statement charge of £0.4m. The actuarial deficit at 31 March 2010, the date of the last formal valuation and measured in accordance with guidelines set by the Pensions Regulator, was £13.9m.

7. Related parties

Giles Kerr, a non-executive director of BTG plc is also the Director of Finance for Oxford University and a director of its wholly owned subsidiary, Isis Innovations Ltd. Wholly owned subsidiaries of BTG plc have pre-existing licence agreements with Oxford University and Isis Innovations under which they are obliged to pay royalties on amounts received from commercialising certain Intellectual Property. Payments made by BTG to Oxford University and Isis Innovations Ltd under the relevant licence agreements were £0.8m during the year ended 31 March 2012. There were no amounts still outstanding and payable by BTG under these agreements as at 31 March 2012.

8. Principal risks and uncertainties

Our performance and prospects may be affected by risks and uncertainties relating to our business and operating environment. Our internal controls include a risk management process to identify key risks and, where possible, manage the risks through systems and processes and by implementing specific mitigation strategies. The most significant risks identified in an annual update of the Group's risk register that could materially affect the Group's ability to achieve its financial and operating objectives are summarised in this section. Other risks are unknown or deemed less material.

BTG relies on third-party contractors for the supply of many key materials and services, such as filling and freeze-drying of end products. These processes carry risks of failure and loss of product. Problems at contractors' facilities may lead to delays and disruptions in supplies. Some materials and services may be available from one source only and regulatory requirements make substitution costly, time-consuming or commercially unviable. BTG's polyclonal antibody products rely on serum produced from our sheep flocks in Australia, which could be subject to disease outbreaks or fire. BTG relies on its single site in Wales for supply of manufactured antibody product, with the consequent possibilities for disruption to supplies.

BTG manufactures its own bead and brachytherapy products at single sites in Farnham, UK, and Oxford, CT, USA, respectively, with the consequent possibilities for disruption to supplies. BTG plans to undertake the manufacture of PEM at its Farnham site, requiring the establishment of new manufacturing facilities to meet the requirements of Good Manufacturing Practice. This site will require regulatory approval and a licence to support the commercialisation of PEM. Any delay in establishing this facility or obtaining the necessary manufacturing licences may result in a delay in the approval of PEM reducing future earning potential. The continuity of potential PEM revenues will also be subject to single source risk.

Controls and mitigating actions:

Rigorous monitoring of suppliers; dual sourcing implemented wherever practicable; inventories maintained and monitored through sales and operational planning process and production changes implemented where needed to ensure continued product supply; rigorous quality control procedures in place; regular checks made on sheep flock health; disaster recovery plans under regular review.

BTG can be subject to challenge at any time. Challenges can relate to the validity of BTG's patents or to alleged infringement by BTG of others' intellectual property rights, which might result in litigation costs and/or loss of earnings. BTG might be obliged to sue third parties for their infringement of its patents in order to protect revenue streams. Failure by BTG to maintain or renew key patents might lead to losses of earnings and liability to suit from any licensee or licensor. BTG may not be able to secure the necessary intellectual property rights in relation to products in development, limiting the potential to generate value from these products. Changes in patent laws and other intellectual property regulations in territories where BTG conducts its business that make it more difficult or time-consuming to prosecute patents, or which reduce the term of granted patents or periods of market exclusivity protection, could adversely impact the Group's financial performance. BTG's patent portfolio is currently subject to several challenges.

Controls and mitigating actions:

Dedicated internal resource supplemented by external expertise monitors patent portfolios and third-party patent applications and intellectual property rights; development and implementation filing; defence and enforcement IP strategies; robust processes in place to automate patent renewals; internal controls established to avoid disclosure of patentable material prior to filing patent applications.

BTG's key current royalty-generating products are expected to continue to provide royalty revenues until their patents or licence agreements expire. Any unforeseen patent loss, supply, safety or compliance issues with these products could result in premature cessation of the revenues.

BTG earns revenues from sales of its acute care products CroFab®, DigiFab® and Voraxaze®. CroFab® is patent protected but DigiFab® and Voraxaze® have no patent protection; CroFab® and DigiFab® are protected by significant know-how and complex manufacturing processes and BTG expects revenues to continue regardless of patent protection. However, future competition cannot be ruled out and competing products could materially adversely impact BTG's financial results. Instituto Bioclon have announced the completion of a Phase III trial of a potential competitor product to CroFab®.

BTG also earns revenues from sales of its bead and brachytherapy products, all of which are subject to competition. While these medical devices benefit from patent protection certain patents are subject to challenge.

Controls and mitigating actions:

New royalty streams may emerge. For example, regulatory of approval in the US and elsewhere of Zytiga® as a treatment for men with advanced prostate cancer has resulted in new revenues during 2011/12; additional future royalty streams would result if alemtuzumab is approved to treat multiple sclerosis and from AZD9773 if approved to treat severe sepsis. BTG acquired US commercial rights to uridine triacetate from Wellstat Therapeutics Corporation in July 2011 and EU named patient supply rights in May 2012, which may lead to a new revenue stream if approved. Mitigations with respect to the bead products include product development, geographic expansion, appropriate IP lifecycle management and the conduct of clinical studies to expand their indicated uses and sales.

The pharmaceutical industry is highly regulated and the Group must comply with a broad range of regulations relating to the development, approval, manufacturing and marketing of its products. This is particularly true in the US, from which the Group derives most of its revenues and where the Group has established its own sales and marketing operations. Specific requirements relating to quality assurance apply to the Group's manufacture of products, particularly in the pharmaceutical area. Regulatory regimes are complex and dynamic, and alterations to the regulations may result in delays in product development, approval or withdrawal. Ensuring compliance with such regulations necessitates allocation of significant financial and operating resources.

Failure to comply with certain rules, laws and regulations may result in criminal and civil proceedings against the Group. Significant breaches could result in large financial penalties, which could materially adversely impact the Group's financial performance and prospects. Moreover, failure by BTG or a BTG partner company to comply with regulations may result in a product being withdrawn from market with a subsequent loss of revenues.

Controls and mitigating actions:

A Code of Conduct has been provided to all employees supported by a mandatory training programme; robust compliance systems are in place to ensure sales and marketing activities comply with regulations in the US and other territories; standard operating procedures are in place to ensure compliance with good clinical and manufacturing practice, monitored through quality control systems. Internal expertise is maintained to manage these risks.

The manufacturing, testing, marketing and sale of BTG's products involve significant product liability and business interruption risks. As the developer, manufacturer and/or seller of certain products, BTG may be held liable for death or personal injury to persons receiving the products during the development phase or after the product is approved.

Controls and mitigating actions:

BTG maintains product liability insurance and operates quality systems relating to the manufacture of its products and a pharmacovigilance system to monitor safety events arising with respect to products sold. It may not be commercially viable to adequately insure occurrence of other key risks.

BTG does not conduct fundamental research to generate its own development programmes but instead seeks to acquire new products and late-stage development programmes from other organisations. There is significant competition from other companies also seeking to acquire new products and programmes who may have greater financial resources and sales and marketing reach than BTG. BTG may not be able to acquire suitable products and programmes, which will materially adversely impact the Group's financial future performance and growth prospects.

Controls and mitigating actions:

Dedicated product acquisition team in place; strategy is to focus on niche opportunities that leverage BTG's US commercial operations and may be a better fit with BTG than with other organisations. Development teams working to develop follow on products from existing technology platforms such as embolisation beads.

The development of medical products is inherently uncertain and the timelines and costs to approval may vary significantly from budget or expectation. The product may not demonstrate the expected safety or efficacy benefits and may not be approved by regulatory bodies, such as the US Food and Drug Administration. Manufacturing difficulties or patent litigation may cause programmes to be delayed or halted. Failure of a late-stage programme such as PEM would materially adversely impact the Group's financial prospects. Regulatory approval requirements may change, resulting in further uncertainty.

Controls and mitigating actions:

Experienced development team in place; focus is on acquiring late-stage programmes that have already demonstrated proof of concept and potentially have lower-risk development pathways; development programmes monitored to identify risks and challenges and recommend mitigating and corrective actions. Certain products are licensed to other companies who may have greater resources to support product development. Regulatory team in place, consultation undertaken with applicable regulatory authorities.

The Group operates in competitive markets. The products on which BTG currently earns revenues, or from which it anticipates earning revenues once on the market, face competition from other products that are already approved or in development. Competing products may have superior efficacy and side effect profiles, cost less to produce or be offered at a lower price than BTG's products; such competition could materially adversely impact Group revenues.

Controls and mitigating actions:

BTG focuses on niche opportunities addressing specialist markets where there is limited competition and high barriers to entry; CroFab® and DigiFab® have no current competitors; both products are complex to manufacture. We differentiate the embolisation and drug-eluting bead products from competitors by supporting a range of clinical studies to generate safety and efficacy data and to expand their indicated uses.

There is increasing pressure on healthcare budgets causing payers to demand increasing treatment and economic benefits before agreeing to reimburse product suppliers at all or at appropriate prices. In March 2010, healthcare reform legislation was adopted in the US, requiring manufacturers to increase the rebates or discounts they give on products reimbursed or paid for by public payers including Medicaid and Medicare. The purpose of the reform is to increase healthcare coverage in the US population and to manage treatment of chronic conditions efficiently and cost effectively. Management of acute conditions is generally not affected. BTG's acute care and implantable oncology products treat serious medical conditions and the impact of healthcare reform on current Group revenues is not expected to be material to the Group's financial position. Approval and commencement of sales in the US of PEM, a potential treatment for varicose veins, may result in the Group increasing the discounts or rebates given on its other reimbursed products in the US. If BTG acquires products in future that are more impacted by healthcare reforms or if the reforms continue in ways not currently anticipated, revenue expectations could be lower. Failure of a product to qualify for government or health-insurance reimbursement or the failure to achieve an appropriate sales price could adversely impact the Group's financial performance. Future healthcare reforms may become more onerous and may have a negative impact on Group revenues.

Controls and mitigating actions:

BTG focuses primarily on niche products that address serious unmet needs; early on in a product's development, the Group conducts pricing and reimbursement studies; the assessments of potential new products will include an assessment of healthcare reforms on pricing and reimbursement.

Many of BTG's revenues and receipts are denominated in US dollars and movements in foreign exchange rates could adversely impact results.

Controls and mitigating actions:

BTG actively manages its exchange risks where feasible, using short-term hedging transactions guided by market expectations and economic forecasts to seek to match actual receipts and payments over a rolling 12 month period to those forecast. This policy can result in both exchange gains and losses but provides a level of certainty over cash receipts.

Statement of Directors' responsibilities pursuant to disclosure and transparency rules

Each of the Directors, whose names and functions are listed below, confirms that, to the best of his or her knowledge:

━ The financial statements, which have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole.

━ The business review includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

Dr Louise Makin Chief Executive Officer

Rolf Soderstrom Chief Financial Officer

18 May 2012

Cautionary note regarding forward-looking statements

This results announcement contains certain forward-looking statements with respect to BTG's business, performance and prospects. Statements and other information included in this report that are not historical facts are forward-looking statements. Words such as 'expects', 'anticipates', 'intends', 'plans', 'believes', 'seeks', 'estimates' and 'potential', variations of these words and similar expressions are intended to identify forward-looking statements. These statements are based on current expectations and involve risk and uncertainty because they relate to events and depend upon circumstances which may or may not occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Current principal risks and uncertainties are described above. Any of the assumptions underlying these forward-looking statements could prove inaccurate or incorrect and therefore any results contemplated in the forward-looking statements may not actually be achieved. BTG undertakes no obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise.