Half Yearly Report

Press Release 7 August 2013

Cyprotex PLC

("Cyprotex" or "the Company")

Interim Results 2013

Strong first half performance delivers record profits

Cyprotex PLC (AIM: CRX), a specialist ADME-Tox Contract Research Organisation (CRO), today reports its interim results for the half year to 30 June 2013.

Financial Highlights

·; Revenues up 22.3% to £4.55m (H1 2012: £3.72m)

- Revenues in Europe including UK up 33.7%

- Revenues in North America up 15%

- Reliance on any one individual large customer remains low at 12.6% of revenues

·; Robust EBITDA of £703,000 (H1 2012: £89,000)

·; Operating Profit of £317,000 (H1 2012: loss £189,000)

·; Cash generated from operations at £588,000 (H1 2012: Cash used in operations £103,000)

Operational Highlights

·; Very strong sales growth in UK, Europe and North America

·; 78 new customer contracts signed (H1 2012: 88)

- 35 and 43 new customers for Macclesfield and Watertown operations respectively

- Three new strategic customers (i.e. where expected 12 month revenues are in excess of £250,000)

·; 18 month collaborative research project in the area of predictive toxicology with Pfizer, announced in October 2012, is proceeding well

·; US Environmental Protection Agency (EPA) contract of up to $10m over 5 years to support Phase 2 of the ToxCast programme

·; Partnering deals with Sigma® Life Science, InSphero AG and Sirius Analytical Instruments Limited continue to make excellent progress

·; New service offerings have rapidly attracted high value customers:

- Upgraded CellCiphr® high content screen for determination of hepatotoxicity has gained significant traction with customers

- eCiphrCardio, our new cardiotoxicology assay, was launched in February

·; Significant investment in workhorse instrumentation. Continued investment is essential to keep Cyprotex at the forefront of automated liquid handling and analytical technologies:

- Upgraded mass spectrometry facility. A further two Waters Xevo® TQ mass spectrometers added in the period following the four in 2012 at a combined total cost of £994,000

- A second new robotic screening platform (TECAN Freedom EVO 200)

·; Highly successful symposium held in Tokyo, Japan which has been followed by a targeted marketing and sales campaign

Post-Period Update

·; Launch of a new Neurotoxicity assay, eCiphrNeuro, to evaluate neuronal activity of new drug candidates

·; Significant institutional investor interest in the Company with Oryx International (27.3%), Henderson Global (6.95%), as new major investors

·; Christopher Mills joined the Board of Cyprotex as Non-Executive Director.He is a director and investment manager of Oryx International Growth Fund

·; £7 million in cash is being raised by way of an Open Offer and Placing of Loan Notes in the Company, fully underwritten by Harwood Capital LLP, to facilitate further investment in the US and assist with acquisitions

Steve Harris, Chairman of Cyprotex PLC, said:

"2013 has seen the most promising trading start to the financial year in the Company's history. The success has come from all geographical territories and from all parts of our technical service offering. It is particularly pleasing to note that our investments in improving our high content toxicity assay CellCiphr® and in our new cardiotoxicity assay e-CiphrCardio have been rewarded with excellent uptake. Additionally, we have secured two notable new deals in the last 12 months with a 5 year contract with the EPA worth up to $10m for supporting the ToxCast programme and the 18 month Research Collaboration agreement with Pfizer proceeding well. The Board remains confident of achieving market expectations for revenues and operating profits for the full year, prior to any potential impact from the EPA contract.

We also welcome our new investors and thank them for their commitment, through which we hope to maximise future opportunities and accelerate the growth of the Company."

For further information:

About Cyprotex PLC

Cyprotex is based in Macclesfield, near Manchester in the UK, and Watertown, MA in the US and is listed on the AIM market of the London Stock Exchange (CRX). The company was established in 1999 and works with more than 700 partners ranging from small biotech's to large pharma companies. Cyprotex acquired Apredica and the assets of Cellumen Inc. in August 2010 and the combined business provides support for a wide range of experimental and computational ADME-Tox and PK services, extending from early drug discovery through to IND submission. The company's core capabilities include high quality in vitro ADME screening services, mechanistic toxicology and high content toxicology screening services, including our proprietary CellCiphr® toxicity prediction technology, and predictive modelling using PBPK and QSAR techniques, including Cloe® PK for in vivo PK prediction. For more information, see www.cyprotex.com.

Chairman and Chief Executive Officer's Statement

Cyprotex has had a strong start to the year, with a 22.3% increase in total sales over the corresponding period last year. Revenue growth was strong in both mainland Europe, up 33.7% and North America, up 15%. Our customer base continues to grow, with high demand for both our traditional and newer ADME-Tox assays and we have been pleased to see a significant number of multi assay deals which improves our laboratory efficiency and therefore our operational gearing. We have continued to see uptake of our new toxicology services outside of the drug and agrochemical sectors, with our broadening customer base now including the cosmetics and tobacco industries.

The Company won its largest potential deal so far with the EPA (Environmental Protection Agency) in the USA (http://www.epa.gov/ncct/toxcast/) with a contract award of up to $10m over 5 years. We anticipate commencing this contract toward the end of 2013. In 2012, we also announced a collaborative research programme with Pfizer in the area of predictive toxicology which is progressing well.

We have continued our business strategy of forming strategic alliances with service based businesses where there is a good opportunity to grow revenues by co-marketing, offering combined service packages or in-licencing technologies to sell. Our existing relationships with Sygnature Discovery Limited (in the UK), Solvo Biotechnologiai ZRT (in Hungary), Sirius Analytical Instruments Limited (in the UK), InSphero AG (in Switzerland) and Sigma® Life Science (in the USA) are growing and continue to prosper. We will look to add further new strategic relationships in the second half of 2013.

We expect sales growth to accelerate in the second half of the year as our widening portfolio of ADME and toxicity assays and newly signed customer strategic deals take effect.

During the first half of 2013, we have made continued investment, mainly on the Macclesfield site, in terms of capital equipment. Such investments are critical if we are to remain at the forefront of fast, accurate chemical and metabolite analysis in the ADME Tox service industry.

We have upgraded our mass spectrometer analysis platform with the purchase of two further Waters Xevo® TQ Mass spectrometers. These additional systems have increased Cyprotex's analytical capabilities (at the Macclesfield site) to seven state-of-the-art, identical LC-MS/MS platforms capable of supporting the Company's ADMET assays that require LC-MS/MS as an end-point detection. In addition, these platforms have not only allowed us to increase productivity through faster cycle times and higher sample cassetting, but also facilitate the support of customer work requiring much lower levels of detection which was not achievable on previous historical LC-MS/MS systems.

We have also supplemented our robotic sample handling capabilities through the acquisition of a second Tecan EVO Freedom. Having completed commissioning and validation, this equipment became commercially operational as of mid-July 2013. This industry standard liquid handling platform has allowed the Company to continue to support standard assays as well as increase the flexibility to support customised assays and focused research.

In 2012, we acquired an Axion Biosystems Maestro microelectrode array instrument which measures the beat rate and other electrophysiological parameters of stem cell derived cardiomyocytes, providing Cyprotex a novel entry into cardiotoxicity. On 14 February 2013, we launched an important new assay marketed as eCiphrCardio. We consider eCiphrCardio to be superior to other in vitro cardiotoxicity assays on the market and despite only a short period since launch has attracted much interest from the pharmaceutical community.

We have financed much of these investments over the last eighteen months through lease funding arrangements.

Customer Relationships

Business development activities around our standard and new ADME and toxicology assays underpin the excellent mainland Europe and North America performance during the period. Our second half revenues are expected to be bolstered by the commencement of the delayed EPA ToxCast contract worth up to $10m over 5 years and continuation of the Pfizer research collaboration contract. We have signed an impressive 78 new customers worldwide and three of these are at strategic customer level. We have grown many of our existing strategic customers to greater revenue levels, particularly in Europe, whilst continuing to hold our reliance on our largest customer under 13% of total revenues.

Following the success of our educational guides entitled 'DDI regulatory guidance - an easy to follow guide' and our popular 'Everything you needed to know about ADME but were too afraid to ask', we have extended the range to include a new booklet called 'Mechanisms of Drug Induced Toxicity' which was launched in July 2013 with many hundreds of requests to date.

In April 2013, we held a symposium at the British Embassy in Tokyo, Japan, attended by over 50 delegates. We followed up this highly successful event with a sales and marketing tour of the region and we anticipate growing our presence in the Far East, particularly in Japan and South Korea, in the future.

Financial Performance

Revenues are 22.3% higher than the comparable period last year mainly driven by an excellent sales performance in both the UK, mainland Europe and in North America. Our Macclesfield site revenues have increased by 32.8% and our Watertown site revenues, whilst slightly down by 5.9%, are expected to rise in the second half of the year with the anticipated commencement of the EPA contract late in 2013.

Pleasingly, the Company reports record interim profitability, with operating profits for the first half of 2013 of £317,000, an increase of £505,000 over the comparative six months. Reflecting this robust trading performance, underlying EBITDA is strong at £703,000 against £89,000 for the comparative period in 2012.

As we planned and stated last year, we have invested substantially in further enhancing our analytical and liquid handling capabilities in the UK with the purchase of two Waters Xevo® TQ Mass spectrometers, to make a suite of seven instruments and the purchase in July 2013 of a second new robotic liquid handler. The total cost of fixed asset additions in the first half amounted to £476,000 (H1 2012: £780,000). Upgrading our equipment does bring additional depreciation charges to the income statement and as a consequence the depreciation charge is up £101,000 at £304,000, some 50% higher than the comparative figure. These significant additions to UK equipment noted above have been financed at the 90% level by way of leasing arrangements over a three or five year term, thus preserving our cash balances.

The Company's cash balances stood at £1,104,000 at the period end, significantly up from the £591,000 at the comparable half year. In H1 2013, we have generated £588,000 of cash from operations (H1 2012: utilised £103,000). Operating at this level Company is able to satisfy readily its financing requirements which were £236,000 in the six months to 30 June 2013 (H1 2012: £257,000). We expect to capitalise on this excellent performance in the second half of the year as we should see a further increase of net cash inflows into the business.

One of the most recent significant changes in the Company has been the change and expansion of our institutional investor base. The new investors, Oryx International Growth Fund Limited, Henderson Global Investors, now own 27.30%, 6.95%, respectively or 34.25% in total.

Investors holding greater than 5% of the ordinary share capital of the Company as at 7 August 2013 are set out in the table below:

We are grateful to IPGL, until recently our largest shareholder, in particular Mr Chris Clothier and Mr Matt Wreford, for their help and support in developing the Cyprotex success story over the last five years.

With the support of our new investors, we can continue to grow Cyprotex, both through investment in new technology, particularly in our Watertown site, and through selective acquisitions to enhance our customer service offering.

We strongly believe there are major opportunities to significantly grow our business. Such opportunities arise primarily, but not exclusively, from the pharmaceutical industry. As we have alluded to on a number of occasions, there is a continuing drive to reduce costs in drug development. This includes outsourcing ever-increasing elements of this process and also assessing the likelihood of ADME-Tox issues as early, and thus as cheaply, as possible in the process. Both of these factors bode well for the growth of Cyprotex's business. Many of these opportunities for growth are in the US and to capture them will require additional investment in our US facilities to replicate both the high throughput analytical capabilities and advanced automated workflows attained presently in the UK giving significant increased operational capacity. US operations would then match the range, standards and performance of the very successful facilities we have in the UK.

Additionally the CRO industry in which the Company operates, particularly in the US and to a lesser extent in Europe, is consolidating and will continue to do so. This presents acquisition opportunities which the Company must be in a position to take.

For the reasons outlined above the Company is raising £7m million in cash, before expenses, by way of a Open Offer of Loan Notes with associated conversion rights into ordinary shares and a Placing of non-convertible Loan Notes which will be fully underwritten by Harwood Capital LLP. A circular will be issued to all shareholders very shortly with full details. A successful fundraising will put the Company in a strong position to realise these opportunities both now and as and when they arise in the future.

Outlook

We have been delighted to see significant growth in the quality of revenues and number of customers in mainland Europe and the North America territories. We have also been pleased to see that all our standard offerings (high throughput and customised ADME and toxicology) have grown indicating that the market for ADMET services has recovered from its recent softness and that the Cyprotex offerings are being more widely appreciated by our customers. Our worldwide business development and sales staff have all performed admirably so far this year.

We continue to gain larger strategic contracts for our ADME and Toxicity services in both Europe and North America. We expect this trend to continue as large and medium pharma companies outsource these assays as part of their budget reductions and R&D restructuring.

As Cyprotex evolves, our newly bolstered investor profile will provide a platform to generate growth through investment in technology and innovation. Their commitment will enable us to maximise future opportunities and accelerate the growth of the Company.

In summary, the Board believes the Company is on track to meet market expectations for revenues and operating profits for the full year, prior to any potential impact from the EPA contract.

7 August 2013

Consolidated interim income statement

six months to 30 June 2013

Consolidated interim statement of comprehensive income

six months to 30 June 2013

Consolidated interim statement of financial position

at 30 June 2013

Consolidated interim statement of changes in equity

six months to 30 June 2013

Consolidated interim statement of cash flows

six months to 30 June 2013

Notes to the interim condensed consolidated financial statements

six months to 30 June 2013

1. Nature of operations and general information

Cyprotex PLC ('Cyprotex') and subsidiaries' (together 'the Group') principal activity is the provision of in vitro and in silico ADMET/PK (Absorption, Distribution, Metabolism, Excretion, Toxicity, and Pharmacokinetic) information to the pharmaceutical industry. Cyprotex's vision is to provide, in partnership with our customers in drug discovery and development, the highest quality, fastest turnaround and most cost effective ADMET and pharmacokinetic data to those customers.

Cyprotex PLC is the Group's ultimate parent company. It is incorporated and domiciled in Great Britain. The address of Cyprotex PLC's registered office is 100 Barbirolli Square, Manchester M2 3AB. The addresses of its principal places of business are 15 Beech Lane, Macclesfield, Cheshire, United Kingdom, SK10 2DR and 313 Pleasant Street, Watertown, Massachusetts, MA02472 USA. It trades through its wholly owned subsidiaries, Cyprotex Discovery Limited based in Macclesfield in the UK and Apredica LLC in Watertown in the USA. Cyprotex PLC's shares are listed on the Alternative Investment Market of the London Stock Exchange.

Cyprotex's interim condensed consolidated financial statements ('the interim financial statements') are presented in Pounds Sterling (£), which is also the functional currency of the parent company. These interim financial statements have been approved for issue by the Board of Directors on 7 August 2013.

The financial information for the year ended 31 December 2012 set out in these interim financial statements does not constitute statutory accounts as defined in section 245 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2012 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain statements under section 498(2) or section 498(3) of the Companies Act 2006.

2. Basis of preparation, going concern and accounting policies

Basis of preparation

These interim financial statements are for the six months to 30 June 2013. They have been prepared in accordance with IAS 34, Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the annual consolidated financial statements of the Group for the year ended 31 December 2012.

Going concern

The Directors have reviewed the budget, financial forecast including cash flow forecasts and other relevant information. They believe that the Group has adequate resources to continue in operation for the foreseeable future.

Accounting policies -

New standards, interpretations and amendments adopted by the Group

The accounting policies adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2012, except for the adoption of new standards and interpretations effective as of 1 January 2013.

The nature and the impact of each new standard/amendment are described below:

IAS 1 Presentation of Items of Other Comprehensive Income - Amendments to IAS 1

The amendments to IAS 1 introduce a grouping of items presented in other comprehensive income (OCI). Items that could be reclassified (or recycled) to profit or loss at a future point in time (e.g., net gain on hedge of net investment, exchange differences on translation of foreign operations, net movement on cash flow hedges and net loss or gain on available-for-sale financial assets) now have to be presented separately from items that will never be reclassified (e.g., actuarial gains and losses on defined benefit plans and revaluation of land and buildings).

The amendment did not have an impact on the interim financial statements for the Group.

IAS 1 Clarification of the requirement for comparative information (Amendment)

The amendment to IAS 1 clarifies the difference between voluntary additional comparative information and the minimum required comparative information. An entity must include comparative information in the related notes to the financial statements when it voluntarily provides comparative information beyond the minimum required comparative period.

The amendment did not have an impact on the interim financial statements for the Group.

IAS 32 Tax effects of distributions to holders of equity instruments (Amendment)

The amendment to IAS 32 Financial Instruments: Presentation clarifies that income taxes arising from distributions to equity holders are accounted for in accordance with IAS 12 Income Taxes. The amendment removes existing income tax requirements from IAS 32 and requires entities to apply the requirements in IAS 12 to any income tax arising from distributions to equity holders.

The amendment did not have an impact on the interim financial statements for the Group.

IAS 34 Interim financial reporting and segment information for total assets and liabilities (Amendment)

The amendment clarifies the requirements in IAS 34 relating to segment information for total assets and liabilities for each reportable segment to enhance consistency with the requirements in IFRS 8 Operating Segments. Total assets and liabilities for a reportable segment need to be disclosed only when the amounts are regularly provided to the chief operating decision maker and there has been a material change in the total amount disclosed in the entity's previous annual consolidated financial statements for that reportable segment.

The amendment did not have an impact on the interim financial statements for the Group.

IAS 19 Employee Benefits (Revised 2011) (IAS 19R)

IAS 19R includes a number of amendments to the accounting for defined benefit plans, including actuarial gains and losses that are now recognised in other comprehensive income (OCI) and permanently excluded from profit and loss; expected returns on plan assets that are no longer recognised in profit or loss, instead, there is a requirement to recognise interest on the net defined benefit liability (asset) in profit or loss, calculated using the discount rate used to measure the defined benefit obligation, and; unvested past service costs are now recognised in profit or loss at the earlier of when the amendment occurs or when the related restructuring or termination costs are recognised. Other amendments include new disclosures, such as, quantitative sensitivity disclosures.

The amendment did not have an impact on the interim financial statements for the Group.

IFRS 7 Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities Amendments to IFRS 7

The amendment requires an entity to disclose information about rights to set-off financial instruments and related arrangements (e.g., collateral agreements). The disclosures would provide users with information that is useful in evaluating the effect of netting arrangements on an entity's financial position. The new disclosures are required for all recognised financial instruments that are set off in accordance with IAS 32. The disclosures also apply to recognised financial instruments that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether the financial instruments are set off in accordance with IAS 32.

The amendment did not have an impact on the interim financial statements for the Group.

IFRS 10 Consolidated Financial Statements and IAS 27 Separate Financial Statements

IFRS 10 establishes a single control model that applies to all entities including special purpose entities. IFRS 10 replaces the parts of previously existing IAS 27 Consolidated and Separate Financial Statements that dealt with consolidated financial statements and SIC-12 Consolidation - Special Purpose Entities. IFRS 10 changes the definition of control such that an investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. To meet the definition of control in IFRS 10, all three criteria must be met, including: (a) an investor has power over an investee; (b) the investor has exposure, or rights, to variable returns from its involvement with the investee; and (c) the investor has the ability to use its power over the investee to affect the amount of the investor's returns.

IFRS 10 had no impact on the consolidation of investments held by the Group.

IFRS 11 Joint Arrangements and IAS 28 Investment in Associates and Joint Ventures

IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities - Non-monetary Contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture under IFRS 11 must be accounted for using the equity method.

IFRS 11 had no impact on the Group.

IFRS 12 Disclosure of Interests in Other Entities

IFRS 12 sets out the requirements for disclosures relating to an entity's interests in subsidiaries, joint arrangements, associates and structured entities.

None of these disclosure requirements are applicable for interim financial statements, unless significant events and transactions in the interim period requires that they are provided. Accordingly, the Group has not made such disclosures.

IFRS 13 Fair Value Measurement

IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted.

The application of IFRS 13 has not materially impacted the fair value measurements carried out by the Group. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these interim financial statements.

3. Seasonal fluctuations

Historically revenues are strongest in the second half of the year. Revenues slow following the Christmas and New Year holidays, and again during the summer holidays, particularly from European clients.

* excluding acquisition

The provision of ADMET services is subject to seasonal fluctuations, historically with peak demand in the second half of each year. For the six months ended 30 June 2013, revenues represented 54.6% of the annual level of revenues in the year ended 31 December 2012.

4. Segmental information

The Group has a single operating and reporting segment, that of providing in vitro and in silico ADMET/PK (Absorption, Distribution, Metabolism, Excretion, Toxicity, and Pharmacokinetic) information to the pharmaceutical and biotechnology industries. The revenue and operating profit or loss for the periods are derived from the Group's single operating and reportable segment. This has been determined by reference to the information that the Chief Operating Decision Maker receives about the Group.

The Group gives a geographic analysis of revenue by destination. Key markets for the Group are identified as North America, Mainland Europe and the United Kingdom.

5. Profit/(loss) per share

The calculation of the basic earnings/(loss) per share is based on the earnings/(loss) attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period.

The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post tax effect of dividends and/or interest, on the assumed conversion of all dilutive options and other dilutive potential ordinary shares.

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.

Where a loss is reported for a period the weighted average number of ordinary shares in issue, for the purpose of calculating diluted earnings per share, is the same as that used for the basic earnings per share calculation. This is because outstanding share options would have the effect of reducing the loss per ordinary share and would therefore not be dilutive.

6. Share issues

During the period to 30 June 2013, 653,084 ordinary shares were issued pursuant to the exercise of options by employees at values ranging between 1.13 pence and 4.25 pence. The share issues yielded £8,256 in cash and increased equity by £8,256. The weighted average share price at the date of exercise was 1.264 pence. Shares issued and authorised may be summarised as follows:

The Company has only one class of shares.

7. Taxation

At 30 June 2013, the Group has tax losses and tax deductibles of approximately £6.5 million that are available for offset against future profits arising from the same trade.

8. Additions and disposals of property, plant and equipment

The following tables show the significant additions and disposals of property, plant and equipment:

9. Intangible fixed assets

The following tables show the movement on intangible fixed assets:

Additions in the year to 31 December 2012 relate to development work associated with CellCiphrTM technology.

10. Contingent consideration

On 4 August 2010 prior to the acquisition of Apredica, LLC by Cyprotex PLC; Apredica, LLC acquired certain assets and the trade of Cellumen, Inc under an asset purchase agreement. Under the terms of that agreement Apredica, LLC agreed to pay a contingent payment based on future sales revenues using the CellCiphrTM technology acquired for a period up to four years at a rate of between 10% and 20%.

These potential payments have been classified as contingent consideration and the provision below represents an estimate of potential payments that may fall due under that agreement.