Final Results

Quantum Pharma Plc ('Quantum' or 'the Group')

Final audited results for the year ended 31 January 2017 ('the year')

3 May 2017

For immediate release

Financial highlights

· Revenue increased by 28% to £88.8m (2016: £69.2m).

· Gross profit remained flat at £25.9m (2016: £25.9m).

· Adjusted EBITDA1 of £10.1m (2016: £12.5m) with profitability run-rate increasing.

· Statutory operating loss of £9.8m (2016: £7.5m profit) resulting from the decisive and one-off actions highlighted in the January trading update to simplify and focus the business.

· Net debt1 reduced by almost half to £13.0m (2016: £24.6m).

Key developments

· Transition to a more focused and simplified business strategy led by a new Board.

· Group repositioned with a leaner operating structure and balance sheet aligned to simplified strategy.

· Secured renewal of long-term exclusive contracts to supply unlicensed medicines to three of the largest wholesale and pharmacy chains in the UK.

· Successfully launched a number of new products during the year and post year-end, including key unlicensed-to-licensed ('UL2L') product Glycopyrronium Bromide Oral Solution.

· Simplified product portfolio performing well and refocused pipeline progressing to plan.

· Successful placing in November 2016, raising £15.0m (before expenses) to significantly reduce net debt.

· Closure of loss-making business NuPharm Laboratories Limited ('NuPharm').

Ian Johnson, Non-executive Chairman of Quantum, said: "This year's results draw a line under the past performance of the Group. They mark the transition to a more focused and simplified business led by a new Board, and demonstrate real progress in executing our strategy. The Board is confident in the future prospects of the Group and we look forward to reporting on further strategic progress as we move forward."

Chris Rigg, CEO of Quantum, said: "I am very pleased with the progress we have made to date. We have driven a step change in the profitability of the Niche Pharmaceuticals division in the second half by focusing on launching and commercialising products where we have a competitive advantage. In addition, the Group has cemented its position as the UK's market-leading specials business by renewing exclusive contracts with three of the four main wholesale and pharmacy chains in the UK. Operating costs across the Group have been reduced and our net debt position at the year-end was lower than expected at £13.0m. We exited the financial year with a much improved profitability run-rate that is supportive of market expectations for the current financial year and we are well-placed to deliver future growth by focusing on our core Niche and Specials businesses."

An analyst briefing will be held at 09:30am today, at the offices of Buchanan, 107 Cheapside, London, EC2V 6DN. A copy of the final results presentation given by Chris Rigg (Chief Executive Officer) and Gerard Murray (Chief Financial Officer) will be released later this morning on Wednesday 3 May 2017 on the Group's website http://ir.quantumpharmagroup.com/content/investor/presentations.asp.

Notes to editors

Quantum Pharma Plc is a service-led, niche pharmaceutical developer, manufacturer and supplier to the retail pharmacy, pharmaceutical wholesale, hospital and homecare markets. Quantum Pharma Plc operates through three divisions - Specials, Niche Pharmaceuticals and Medication Adherence - offering a portfolio of innovative and complementary products and services.

For further information, please visit www.quantumpharmagroup.com.

As a result of rounding throughout this announcement it is possible that tables may not cast and change percentages may not calculate precisely.

Chief Executive's review

I am pleased to report that the Group has made excellent progress in implementing its more focused and simplified strategy and that our performance in the second half of the year was very encouraging. The impact of the actions taken to confront the challenges we have faced leave the Group with a clean balance sheet and a leaner operating structure on which we intend to build and grow. The Group's profitability run-rate has been materially improved and we are now well-placed to take advantage of existing and future opportunities within our core businesses.

The Specials division ('Specials') remains profitable and cash generative, providing a strong platform for our development programme that is predominantly focused on unlicensed-to-licensed ('UL2L') products. The trading performance of the Niche Pharmaceuticals division ('Niche') has been transformed by the successful launch of a number of products during the year and post year-end, including our largest product to date Glycopyrronium Bromide Oral Solution 1mg/5ml ('Glyco'), and the elimination of on-going losses, unnecessary costs and marginal activities. In addition, the drive to grow our network of commercial partnerships is showing clear signs of progress. Our focus on the two core pillars of Specials and Niche will continue to drive performance improvement.

The long-term fit of the Medication Adherence ('MA') division within the Group, particularly given its low gross margin contribution, is under review.

A focused and simplified strategy

Following the conclusion of a strategic review performed during the year, we have refocused and simplified the business to:

· Closely align our business model to the UK prescribing hierarchy by moving products from an unlicensed-to-licensed status.

· Maintain market-leading position in the specials market whilst we progress the development and licensing of products in our pipeline where we have a competitive advantage.

· Invest in our UL2L development programme to license key unlicensed specials so that we can protect and grow our market share and secure economies of scale.

· Broaden our network of commercial partnerships to secure multiple routes to market for our product portfolio.

UL2L prioritisation

Prioritising our UL2L product developments delivered through Niche, emphasising those products where we can be first to market, is a key part of our strategy. This type of development plays to our strengths, with less time and investment needed to penetrate the market and achieve scale.

Having simplified the product portfolio to prioritise development of the Group's top specials licensing opportunities, it currently comprises 57 products. 19 of these products have been launched or out-licensed in the UK, with 12 having been commercialised post-simplification. The overall performance of these products since simplification has been very good, with the benefits of portfolio rationalisation evident. A further 3 products have been licensed in the UK and are in the process of being commercialised. There are an additional 35 products in various phases of development, of which 25 are UL2L developments. All developments are currently progressing to timetable. Going forward we will provide updates with respect to our licensed product portfolio as part of our interim and final results communications.

In order to release investment capacity to support UL2L prioritisation we have cancelled all development programmes where we cannot identify a commercial partnership and do not believe we can commercialise the opportunity ourselves. As a consequence, £7.2m of balance sheet investment in these products has been impaired, which is a key constituent of the reported statutory operating loss.

Broadening our commercial partnerships

Our non-UL2L portfolio is comprised of niche generic products where, although we will not have first-mover advantage and significant sales and marketing capability will likely be required to market them, we believe there remains a market opportunity.

Past experience tells us that taking share from incumbent competitors can be very challenging without an existing sales and marketing capability, and that converting these non-UL2L opportunities takes time and significant investment unless there is an established market presence.

We have therefore taken steps to commercialise selected non-UL2L products in our portfolio by partnering with other businesses that have more experience of taking generic products to market, which will help us to commercialise these developments to their fullest potential and accelerate our access to revenues through revenue-sharing agreements. We are progressing partnerships to support this strategy.

International opportunities

Our product pipeline holds significant value potential. In the UK market, the Group is well-established due to its existing infrastructure and commercial relationships built through our market-leading Specials division. We also have extensive experience and understanding of the UK's development and regulatory approval process as governed by the MHRA through the activities of our Niche division. Our strategic position in the UK is therefore strong.

We are currently seeking to realise the potential of our product portfolio beyond the UK and extend our reach into other geographies by broadening our network of international commercial partnerships. These partnerships will seek to emphasise both export and localised manufacture together with distribution opportunities to secure market access without the need to establish our own local presence.

Consolidating our position in the specials market

Our Specials division continues to perform robustly and reliably, and is cash generative. This resilient performance is particularly encouraging given the increasing competitiveness and regulatory pressure within the specials market. We have cemented our market-leading position by agreeing new long-term exclusive supply contracts with three of the largest UK wholesale and pharmacy chains, being AAH Pharmaceuticals Limited, Bestway Panacea Healthcare Limited, trading as Well Pharmacy, and Phoenix Healthcare Distribution Limited. Quantum Pharmaceutical Limited, a business within the Specials division, is the UK market leader in the supply of unlicensed medicines and around 89% of its volumes are under exclusive contracts.

Our attention is now turning to driving operational efficiencies and improvements in the Specials division to underpin profitability and provide us with the commercial agility necessary to react to market dynamics.

NuPharm closure

Following a period of sustained trading losses, the Board took the decision in October 2016 to commence consultation on the closure of NuPharm. Trading ceased at NuPharm in January 2017 in line with our stated intention and it was placed into administration on 26 April 2017 following an orderly closure process.

The total loss incurred on the closure of NuPharm is £13.7m, which reflects trading losses and closure costs of £1.7m, and £12.0m of written down balance sheet investment. This loss is shown as a discontinued operation in the consolidated income statement as NuPharm's activities as a contract manufacturer are considered to be a separate major line of business. The cash impact of NuPharm's trading losses and closure costs during the year was £2.4m.

Summary and outlook

I am very pleased with the progress we have made to date. We have driven a step change in the profitability of the Niche Pharmaceuticals division in the second half by focusing on launching and commercialising products where we have a competitive advantage. In addition, the Group has cemented its position as the UK's market-leading specials business by renewing exclusive contracts with three of the four main wholesale and pharmacy chains in the UK. Operating costs across the Group have been reduced and our net debt position at the year-end was lower than expected at £13.0m. We exited the financial year with a much improved profitability run-rate that is supportive of market expectations for the current financial year and we are well-placed to deliver future growth by focusing on our core Niche and Specials businesses.

Divisional Review

Niche Pharmaceuticals division ('Niche')

The financial year ended 31 January 2017 has been a pivotal year for the Niche division following the launch of a number of new products, the most significant of which has been Glycopyrronium Bromide Oral Solution 1mg/5ml ('Glyco'), and substantial operational changes to focus and simplify the business in line with our strategy.

Revenue grew 35% during the year to £5.8m (2016: £4.3m), driven primarily by the contribution from Glyco following its launch in August 2016. Adjusted EBITDA contracted by 33% to £1.4m (2016: £2.1m) with Glyco's trading contribution offset by a reduction in out-licensing income of £0.5m and an increased operating cost base that has now been addressed.

The adjusted EBITDA monthly run-rate of Colonis, the commercialisation arm of the Niche division, has been transformed during the second half of the year. During the first half of the year Colonis had invested ahead of meaningful sales activity to support the launch of a number of products in the portfolio where we needed engagement with healthcare professionals.

Following the decision to prioritise UL2L developments a number of underperforming product lines were discontinued, including the Mucodis range and Ergocalciferol 50,000 IU. This decision has allowed the division to focus investment on what it believes are the right products and stop on-going investment in the discontinued products, yielding significant savings. Colonis therefore exited the year with a positive monthly adjusted EBITDA run-rate, underpinned by strong contributions from Glyco alongside a number of other launched products, and a lower cost base.

In addition to Glyco, we launched several other products during the second half of the year and just after the year-end, which are delivering in line with management expectations. These include:

· Aviticol™ and Colecalciferol capsules (licensed for the treatment and prevention of Vitamin D deficiency) in an 800 IU strength in July 2016 and 1000 IU strength in August 2016;

· Metformin Oral Solution (licensed for the treatment of type 2 diabetes) in 500mg/5ml, 850mg/5ml and 1000mg/5ml strengths in December 2016;

· Folic Acid 1mg/1ml Oral Solution (licensed for the treatment of folate deficiency) and Acetylcysteine Sachets 200mg (licensed as a mucolytic) during February and March post year-end; and

· Levothyroxine Oral Solution (indicated for hyperthyroidism) in 25mcg/5ml, 50mcg/5ml and 100mcg/5ml strengths launched in April 2017.

Lamda, the product development and licensing arm of the Niche division, delivered another good performance. The development pipeline is now fully integrated at Lamda, absorbing around 60% of Lamda's total development capacity this year. The business has also continued to generate strong development, supply and royalty revenue from a range of third-party projects.

Specials division ('Specials')

The Specials division delivered another solid performance during the year, generating 89% of the Group's adjusted EBITDA before Group costs. The division provides a strong platform for our product development and licensing activities, as well as valuable insights into trends within the specials market that we use to inform our new product development decisions.

Revenue increased by 7% to £57.6m (2016: £53.6m) and adjusted EBITDA contracted by 6% to £10.1m (2016: £10.7m). Sales order volumes in Quantum Pharmaceutical Limited ('QPL') increased by 6%, supported by volumes gained as a result of the acquisition of 281 Sainsbury's stores by Lloyds Pharmacy in September. This was partly offset by the impact of our licensing of Glyco in August 2016, which cannibalised some existing specials sales.

The drive to secure efficiency savings across the NHS continues to create pricing pressures and changes to prescribing trends in favour of more cost-effective medicines. We are seeing this most notably through a gradual shift towards prescription of tariff medicines in place of clinically equivalent but sometimes more expensive non-tariff alternatives. This has been a feature of the industry for a number of years and we are continuing to manage this dynamic through a variety of initiatives, including margin improvement through the manufacture of more products in-house as opposed to external sourcing.

QPL was also successful in retaining all major key accounts during the year, including securing a five-year exclusive supply relationship with our largest customer, AAH Pharmaceuticals Limited, which supplies over 1,800 Lloyds Pharmacy stores and 8,000 independents across the UK. Post the year-end we entered into long-term exclusive supply agreements with Bestway Panacea Healthcare Limited, trading as Well Pharmacy, and Phoenix Healthcare Distribution Limited, who supply Rowlands pharmacies, for two and three years respectively. Securing these agreements mean we supply three out of the four largest national pharmacy chains in the UK on an exclusive basis, satisfying all of their unlicensed medicine and special obtain demand. Around 89% of our specials and special obtains sales volumes in QPL are sourced from customers with whom we have an exclusive supply relationship, providing us with good visibility over our future revenue potential.

UL Medicines, which primarily serves the hospitals sector, exited the year strongly following a softer first half. The business continues to consolidate its position as one of the leading suppliers of unlicensed imported medicines to the NHS. Following the result of the EU referendum in June 2016, the business has faced challenges relating to the impact of Sterling weakness on the cost of imported lines, however underlying hospital volumes are growing and the business has benefited from temporary supply opportunities following shortages of licensed products.

Medication Adherence division ('MA')

The MA division comprises Biodose Services, a homecare dispensary and delivery business, and Protomed, which provides medication management services through Biodose, its innovative multi-dose tray system. Divisional revenue increased by 125% to £25.4m (2016: £11.3m), driven by Biodose Services, which secured a number of new homecare contracts and saw continued growth in the Stork Fertility Service ('Stork'). The division delivered an adjusted EBITDA loss in the year of £0.2m (2016: £0.4m profit) overall, however the division was generating monthly profits as it exited the year.

The significant revenue base in the MA division is due to Biodose Services and the inherent characteristics of its homecare business model. The business model requires high-value medicines to be dispensed and delivered to patients at home, which results in high levels of revenue and costs and a low gross margin profile.

Trading in Protomed has been steady as the number of patients benefiting from the multi-dose tray system has remained similar to last year. The business has historically sought to commercialise Biodose Connect™, which is an extension of the multi-dose tray system. It allows carers and clinicians to remotely monitor a patient's adherence to their medication regime. It has become clear that Biodose Connect™ will require substantial further investment to establish it in the domiciliary care market, which is no longer a core area of focus for the Group.

Following our decision to focus our efforts on our core Specials and Niche businesses, we have commenced a strategic review of the MA division to conclude on its long-term fit within the Group.

Chris Rigg

Chief Executive Officer

2 May 2017

Chief Financial Officer's review

The cumulative financial impact of the Group's transition over the past financial year saw significant benefits to the underlying profitability run rate although this resulted in substantial non-recurring and non-operational charges arising from discontinued operations, impairment of product developments and costs incurred in implementing the simplified strategy. Underlying these results is a core Specials business model that is profitable and cash generative and a product development programme that is focused on the Group's unlicensed-to-licensed ('UL2L') strategy.

All figures in this section refer to continuing operations unless otherwise stated.

Group performance

The Group performance is summarised in the following measures:

· Revenue increased by 28% to £88.8m (2016: £69.2m)

· Gross profit remained flat at £25.9m (2016: £25.9m)

· Gross margin declined to 29.2% (2016: 37.4%)

· Adjusted EBITDA declined to £10.1m (2016: £12.5m)

· Loss before tax of £10.9m (2016: £6.7m profit)

· Capitalised development expenditure of £4.0m was incurred (2016: £6.4m)

· Net debt reduced by almost half to £13.0m (2016: £24.6m)

Revenue

Group revenue grew by 28% to £88.8m (2016: £69.2m), primarily as a result of the revenue growth delivered in the Medication Adherence ('MA') division of £14.1m, representing 72% of the Group's total revenue increase of £19.6m. The balance of the Group's revenue growth of £5.5m was represented by the Specials division (£4.0m) and the Niche Pharmaceuticals division (£1.5m).

The Specials division delivered a strong performance during the year. It operates in a challenging market that is subject to regulated pricing across some of the division's product range. Despite these challenges, however, unlicensed medicines and special obtains volumes grew by 6% and demand for bespoke, aseptically-prepared specials also drove growth.

The Niche division licensed and launched Glycopyrronium Bromide Oral Solution 1mg/5ml ('Glyco') in the UK in August 2016, its first UL2L product with meaningful volume. Following the licensing of Glyco, other specials manufacturers of the medicine in the UK were required to cease supplying the market, making the Group the only licensed supplier at launch. The launch of Glyco is the main driver behind the Niche division's revenue growth of 35%, albeit this growth is on a low base.

The MA division exited the care home sector in the prior financial year to focus on pursuing alternative dispensing contract opportunities in the homecare sector. This revised strategy has been implemented successfully resulting in a number of important contracts with large pharmaceutical companies and NHS Trusts being secured during the financial year. The characteristic of this business is that the revenue recognised relates to the value of the medicines being dispensed, which generates a high level of revenue in this division and low levels of gross profit.

Gross profit

Despite the increase in Group revenue, gross profit was unchanged at £25.9m (2016: £25.9m) leading to a reduced gross profit margin of 29.2% (2016: 37.4%). This reduction is the result of the divisional revenue mix changing year-on-year and, in particular, the increase in lower margin homecare contracts in the MA division. The gross profit margin in the core Specials business remained stable.

Adjusted EBITDA

Adjusted EBITDA declined to £10.1m (2016: £12.5m) after adjusting for; depreciation, amortisation and impairments of £12.9m (2016: £1.6m); non-recurring or non-operational items totalling £6.2m(2016: £3.3m); share based payments of £0.8m (2016: £0.1m); and excluding a loss on discontinued operations of £13.7m (2016: £0.3m). The contraction in adjusted EBITDA was evenly spread across all of the Group's divisions. Notable drivers include a year-on-year reduction in out-licensing revenue, an increased operating cost base in the first half and underperformance in certain areas of the business during a period of substantive change. Management actions taken during the second half of the financial year, particularly in the Niche division, have successfully addressed a number of these underperformance issues.

Non-recurring or non-operational items include a charge of £2.0m (2016: £1.5m) of deferred consideration for the Lamda acquisition, £1.1m (2016: £nil) for Board restructuring and a £2.7m loss(2016: £nil) relating to the Niche reorganisation and discontinuation of products where management do not believe the Group has a strategic market advantage.

Discontinued operation

In July 2015 the Group acquired NuPharm Laboratories Limited ('NuPharm'), a small-scale batch-made specials manufacturer, which was intended to provide the Group with an internal capability to batch manufacture both unlicensed and licensed medicines. At the time of acquisition NuPharm was under MHRA manufacturing restrictions. Following acquisition the Group encountered further operational issues that needed to be addressed. Despite additional investment by the Group and the dedication of management time since its acquisition, NuPharm suffered trading losses.

The Board concluded that it would take unacceptable additional investment, further cash losses and management time to address the operational issues and that NuPharm was not capable of becoming earnings-enhancing. Consequently the Board took the decision to proceed with a closure plan for NuPharm and trading ceased in January 2017. Following an orderly closure process NuPharm was placed into administration on 26 April 2017. NuPharm's results are included along with the impairment of its associated intangible assets and closure costs within the loss from discontinued operations of £13.7m (2016: £0.3m) shown in the consolidated income statement as it represents a separate major line of business.

(Loss) profit before tax

The Group incurred a loss for the year of £22.8m (2016: £5.6m profit) comprising losses from discontinued operations of £13.7m (2016: £0.3m) and from continuing operations of £9.1m (2016: £5.9m profit). The statutory loss from continuing operations includes a number of non-recurring and non-operational costs associated with the transition to a more focused and simplified strategy that have been explained in the adjusted EBITDA section above.

(Loss) earnings per share - continuing operations

The table bridges the movement in (loss) earnings per share year-on-year, showing the value of the movement that is attributable to the change in earnings and the value that is due to a change in the number of ordinary shares in issue.

Operating cash flow

The Group generated net cash inflows from continuing operating activities of £6.1m (2016: £7.9m) from a loss after tax for the year of £9.1m (2016: £5.9m profit). The loss after tax from continuing operations includes non-cash charges relating to depreciation, amortisation and impairment of £12.9m (2016: £1.6m). These non-cash charges explain why the Group's net cash inflows from operating activities in the current year are only £1.8m lower than the prior year. The other contributing factor is the improved working capital controls that have been implemented during the year. Net cash inflows from working capital during the year were £2.6m compared to £0.7m net outflows in 2016.

Discontinued operations incurred net cash outflows from operating activities of £2.2m (2016: £0.9m).

Investment

During the year the Group's capitalised development expenditure was £4.0m (2016: £6.4m) with development activities now focused on a clearly defined set of products aligned with the Group's strategy. At the same time all of the Group's development projects with the exception of one have been transferred from a portfolio of third-party contracted development organisations to Lamda to improve efficiency of execution and measurement of progress.

Net debt and banking facilities

Net debt was better than expected, reducing by 47% to £13.0m (2016: £24.6m), and comprised borrowings net of unamortised loan issue costs of £20.9m (2016: £28.8m) and cash and cash equivalents of £7.9m (2016: £4.2m). This was mainly due to the successful completion of a £15.0m (before expenses) equity fundraise in November 2016 and tighter working capital management across the year.

During the prior year, the Group agreed new banking facilities with RBS and Lloyds that increased overall debt facilities to £35.0m comprising a £25.0m term loan plus £10.0m revolving credit facility, which was undrawn at the year-end.

Dividend

The Board has decided not to declare a dividend in respect of the current financial year (2016: 1.5 pence per share).

Gerard Murray

Chief Financial Officer

2 May 2017

Appendix I - Non-GAAP measures

Consolidated Income Statement

for year ended 31 January 2017

Consolidated Statement of Comprehensive Income

for year ended 31 January 2017

Consolidated Balance Sheet

at 31 January 2017

Consolidated Balance Sheet (continued)

at 31 January 2017

These financial statements were approved by the Board of Directors on 2 May 2017 and were signed on its behalf by:

G T Murray

Director

Company registered number: 9269818

Consolidated Statement of Changes in Equity

Consolidated Statement of Changes in Equity (continued)

Consolidated Cash Flow Statement

for year ended 31 January 2017

Notes

1 Basis of preparation and status of financial information

The financial information set out above has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards as adopted by the EU (Adopted IFRSs).

The financial information set out above does not constitute the Group's statutory accounts for the years ended 31 January 2017 or 2016. Statutory accounts for 2016 have been delivered to the Registrar of Companies, and those for 2017 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report (iii) did not contain a statement under s498 (2) or (3) of the Companies Act 2006.

These results were approved by the Board of Directors on 2 May 2017.

2 Segmental reporting

The following analysis by segment is presented in accordance with IFRS 8 on the basis of those segments whose operating results are regularly reviewed by the Board (the Chief Operating Decision Maker as defined by IFRS 8) to assess performance and make strategic decisions about allocation of resources.

The sectors distinguished as operating segments are Specials, Niche Pharmaceuticals and Medication Adherence. A short description of these sectors is as follows:

· Specials - Manufacture, source and supply special medicines to pharmacies, pharmaceutical wholesalers, hospitals (NHS and private) and other specials suppliers throughout the UK and overseas.

· Niche Pharmaceuticals (Niche) - develop and supply niche pharmaceuticals, provide development and regulatory services and out-license products and dossiers to third parties in the UK and overseas.

· Medication Adherence (MA) - provide products and services designed to enhance adherence to medication regimes.

These operating segments have separate management teams and offer different products and services and are considered as reportable segments. The segment results, as reported to the Board, are calculated under the principles of IFRS. Performance is measured on the basis of Adjusted EBITDA which comprises the segment result before non-cash items (amortisation, depreciation and share based payments) and other items that are excluded when the Board assess performance. A reconciliation between Adjusted EBITDA and profit (loss) before tax is included in the tables below:

The results shown below are from continuing operations only.

31 January 2017

Unallocated net assets include cash and cash equivalents (£1.6m), trade and other payables (£1.1m), bank term loans (£21.0m) and net intra-group loan receivables (£53.4m).

31 January 2016

Unallocated net assets includes trade and other payables (£0.4m), bank term loan (£28.8m) and net intra-group loan receivables (£40.1m).

In both years revenue is generated almost entirely in the UK. In the year ended 31 January 2017 one (2016: one) customer accounted for 23% (2016: 24%) of Group revenue.

3 Discontinued operations

The Group's discontinued operation, NuPharm Laboratories Limited, made a loss of £13.7m (2016: £0.3m) after tax during the year. These losses have been classified as discontinued in the current year, with prior year restatement, as NuPharm Laboratories Limited represents a separate major line of business.

4 Earnings per share