Half Yearly Report

Press Release

6 September 2012

Cyprotex PLC

("Cyprotex" or "the Company")

Interim Results 2012

Strategic expansion in leading edge technologies

Cyprotex PLC (LSE: CRX), the specialist preclinical contract research organisation (CRO), today reports its interim results for the half year to 30 June 2012.

Financial Highlights

·; Revenues up 5.1% to £3.72m (H1 2011: £3.54m)

·; Revenues in Europe including UK up 21.6%

·; Reliance on any one individual large customer remains low at 13% of revenues

·; EBITDA of £89,000 (H1 2011: £261,000)

·; Operating loss of £189,000 (H1 2011: profit £23,000).

·; Cash used in operations at £142,000 (H1 2011: generated £101,000)

Operational Highlights

·; Very strong sales growth in UK and Rest of Europe (+22% over H1 2011)

·; 88 new customer contracts signed (H1 2011: 74). 44 new customers each for Macclesfield and Watertown operations

·; Three new strategic customers (i.e. each with expected 12 month revenues in excess of £250,000)

·; Expansion of US operations to double previous footprint completed

·; New customers and new offerings to meaningfully impact revenues in H2 2012

·; Significant investment in workhorse instrumentation. Continuing investment is essential to keep Cyprotex at the forefront of analytical technologies

o New upgraded mass spectrometers (two in the period and three in the last 12 months at a total cost of £471,000)

o Investment in a new robotic screening platform (TECAN EVO 200) complete

·; Strategic deal announced with Sirius Analytical Instruments Limited to co-market physical chemistry services

Post-Period Update

·; Today, Cyprotex announces the promotion of Dr. Clive Dilworth to CSO. Dr. Katya Tsaioun has decided to step down as CSO and from the Board after two years in post

·; The Company also recognises excellence in its staff by announcing the promotion of Dr. Bodo Spori to Executive Director of Sales, Mr. Jon Gilbert to Executive Director US Operations and Dr. Laura Hinton to Director of Scientific Operations UK

·; Strategic deal announced today:

o Deal with InSphero AG to co-market their proprietary 3D InsightTM liver microtissue technologies

·; New upgraded and improved high content toxicology technology, CellCiphrTM Premier, to be launched in September 2012

·; Imminent launch of modified cell transporter assays based on licensed proprietary technology

Steve Harris, Chairman of Cyprotex PLC, said:

"2012 has so far seen an excellent improvement in revenues and quality of business in Europe and the Rest of the World offset somewhat by the Company's performance in the US, mainly due to delays in completing a high content toxicology deal in the period. That said, sales of our established and new ADME assays have significantly improved over the corresponding period by 17% highlighting the businesses underlying strength. We expect revenues from the signing of several high content toxicology deals will be registered in the second half of the year and that combined with continued growth of our product offerings, as exemplified by the deals announced today, will accentuate our traditional bias towards generating revenues and profitability in that period. The Board remains confident of achieving market expectations for revenues and profits for the full year."

For further information:

Notes to Editors:

Cyprotex PLC

Cyprotex is the world's largest contract research organisation (CRO) specialising in the analysis of the Absorption, Distribution, Metabolism, Excretion, and Toxicity (ADME Tox) properties of potential drugs, cosmetics, and agrochemicals and has worked with more than 700 partners ranging from small biotechs to large pharma companies. It is the only company in the world with in-house in vitro (test tube) and in silico (computer modelling) ADME Tox capabilities and 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 and predictive modelling using PBPK and QSAR techniques, including Cloe® PK for in vivo PK prediction. For more information see www.cyprotex.com.

Established in 1999, the company is based in Macclesfield, near Manchester in the UK, and Watertown, Boston in the US and is listed on the AIM market of the London Stock Exchange (CRX).

Chairman's Statement

In the first half of 2012 our total sales grew by 5.1% over the corresponding period last year. However, strong revenue growth in the UK (+ 12%), Rest of Europe (+ 30%) and Rest of World (+ 140%) was offset by a significant reduction in US revenues (- 12%), mainly as a result of a delay in the completion of a major high content toxicology screening contract. Our customer base continues to grow especially on the back of demand for both our traditional and newer ADME assays. We have also seen 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.

We expect sales growth to accelerate in the second half of the year as our base line ADME business and newly signed deals take effect. Trading in July and August has been strong and we expect this to continue for the remainder of the year. We normally experience greater revenues and profits in the second half of the year and this year will see a greater disparity for the reasons described above.

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 relationships with Sygnature Discovery Limited (in the UK) and Solvo Biotechnologiai ZRT (in Hungary) continue to prosper and we have added several new strategic relationships to these. Earlier this year, we announced a strategic deal with Sirius Analytical (in the UK) to offer high throughput physicochemical property services to our customers to support larger contracts and broaden our existing portfolio of ADME-Tox services and this is already contributing significantly to our revenues albeit with an impact of reducing reported gross margins.

The strategic deal announced today is with InSphero AG (Switzerland), which will enable us to offer ADME Tox services based on proprietary scaffold free 3D InSightTM liver microtissue technologies. This joint service offering will allow us to provide our customers with advanced cellular models of drug-induced toxicity in the liver.

The Company is also shortly to launch a number of modified cell transporter assays based on licensed proprietary technology.

The first half of 2012 has seen significant investment in the business on both sites. Our expansion of our Watertown facilities, including capital expenditure and equipment purchases, is complete and we have doubled our available floor space to 762 square meters (8,200 square feet). We have completely upgraded our mass spectrometer analysis platform with the purchase of two Waters Xevo TQ Mass spectrometers with a further two planned for installation in October. We have also invested in a new robotic screening platform, Tecan EVO200, which will allow us to support the increased demand for customised ADME assays. These investments in analytical and robotic handling equipment totalled £622,000 in the first half with a further £250,000 earmarked for the remainder of the year. Such investments are essential to maintaining the competiveness of our business as customers demand improvements in the sensitivity and accuracy of the data we generate. We also anticipate further investments in improved quality assurance systems and new toxicity assays in the remainder of the year. We have financed much of this investment through lease funding arrangements.

We also announce today some changes to our management team. Dr. Katya Tsaioun has stepped down as Chief Scientific Officer (CSO) and from the Board after two years in post following the acquisition of Apredica and the Watertown site. I am grateful to Katya for all her hard work and scientific input to the business and wish her well in the future. The role of CSO has been filled by Dr. Clive Dilworth, who was formerly our Director of Scientific Operations UK. Clive has performed admirably in taking on additional responsibilities in the business and I congratulate him on this well deserved promotion. Dr. Laura Hinton has been promoted to the role of Director of Scientific Operations UK. Mr. Jon Gilbert has been promoted to Executive Director of US Operations to reflect his increased responsibilities in the US at the Watertown site. Dr. Bodo Spori has been promoted to Executive Sales Director following his outstanding performance in generating substantially increased revenues in the UK, Europe and ROW territories.

Customer Relationships

Business development activities around our standard and new ADME and toxicology assays underpin the excellent ex-US performance during the period. Our performance in the US was below our expectations, principally because of a delay to work on a major High Content Toxicity (HCT) programme we expected to commence in the period. That said, we have signed 88 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 at 13% of total revenues with our next largest customer at half that value.

In response to customer requests and the release this year of both the US FDA Draft Guidance for Industry - Drug Interaction Studies and the European Medicines Agency Guideline on the investigation of Drug Interactions, we launched during the period several new assays which, not only broaden our ADME-Tox portfolio, but also allow us to develop customised, bespoke assays based upon customer requirements. By popular request from our customers we have published an updated, easy to follow 'Drug-Drug Interaction (DDI) Regulatory Guidance' booklet summarising both the guidance documents.

Financial Performance

Revenues are 5.1% higher than the comparable period last year mainly driven by an excellent sales performance in Europe and the UK. Our Macclesfield site revenues have increased by 20%. This favourable increase set against the current uncertain market backdrop is a very creditable performance. This contrasts with a reduction in revenues at our Watertown site, which decreased by 21% for reasons discussed earlier.

While the Company recorded its first operational loss since 2007, a loss of £189,000 (H1 2011: profit £23,000), this was primarily a consequence of additional investment in facilities and people at our US facility coupled with a delay to the start of High Content Toxicology contracts. We took the view that in the longer term this investment in the US in infrastructure and resource is necessary to adequately serve the US market, the largest global market for our services. We have taken additional steps to control the cost base at Watertown until anticipated work flows are achieved and these will remain in place until larger contracts are signed.

As customer expectations in service and quality increase, we aim to match or exceed them. Consequently, we have invested substantially in further enhancing our analytical and handling capabilities in the UK with the purchase of two Xevo mass spectrometers, a full upgrade to the Liquid Chromatography capabilities of all our UK analytical equipment and the purchase of a robotic liquid handler. The total cost of fixed asset additions in the first half amounted to £780,000 (H1 2011: £132,000), leading to an increased depreciation charge of £32,000. The 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. The Company is committed to purchase a further two Xevo mass spectrometers in the remainder of the year and has agreed terms so that these purchases will also be funded over five years under leasing arrangements, preserving our cash balances.

The Company's cash balances stood at £591,000 at the period end, slightly up from the £535,000 at the comparable half year. In H1 2012, we have used £142,000 of cash in operations (H1 2011: generated £101,000). However, historically we see cash inflows in the second half of the year and in H2 2011, for instance, we saw the Company generate over £900,000 from operations and we anticipate that this trend will continue into H2 2012.

Outlook

We are seeing significant growth in the quality of revenues and number of customers in the UK, Europe and ROW despite the continuing financial concerns in these territories.

The growth of charity and Government backed Research and Development (R&D) enterprises has increased noticeably over the last year and we are gaining revenues from these largely virtual organisations that depend on the outsourcing model to function. The increasing acceptance of in vitro toxicology assays to predict drug-induced liver injury (DILI) and cardiotoxicity by our customers in place of in vivo studies has led to growth in the number of clients using these services. We are hopeful that we will see continued growth, especially of larger contracts for such services in the second half of the year.

We continue to gain larger strategic contracts for our ADME services particularly in Europe. 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.

In summary, we anticipate trading in the second half of the year to be very strong based on our order book and July and August revenues. Historically, we have typically seen a 45% : 55% seasonal split to our sales when comparing the first to the second half of the year. We are confident that we will recover any lost ground we have seen in the US and the Board believes the Company is on track to meet market expectations for revenues and profits for the full year.

Steve Harris

Chairman

6 September 2012

Consolidated interim income statement

six months to 30 June 2012

Consolidated interim statement of comprehensive income

six months to 30 June 2012

Consolidated interim statement of financial position

at 30 June 2012

Consolidated interim statement of changes in equity

six months to 30 June 2012

Consolidated statement of cash flows

six months to 30 June 2012

Notes to the Interim condensed consolidated financial statements

six months to 30 June 2012

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 address 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 6 September 2012.

The financial information for the year ended 31 December 2011 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 2011 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 2012. 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 consolidated financial statements of the Group for the year ended 31 December 2011.

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 thereof, 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 financial statements for the year ended 31 December 2011, except for the adoption of new standards and interpretations as of 1 January 2012, noted below:

IAS 1 Financial Statement Presentation - Presentation of Items of Other Comprehensive Income

·; The amendments to IAS 1 change the Grouping of items presented in OCI. Items that could be reclassified (or 'recycled') to profit or loss at a future point in time (for example, upon derecognition or settlement) would be presented separately from items that will never be reclassified.

IAS 12 Income Taxes - Recovery of Underlying Assets

·; The amendment clarified the determination of deferred tax on investment property measured at fair value. The amendment introduces a rebuttable presumption that deferred tax on investment property measured using the fair value model in IAS 40 should be determined on the basis that its carrying amount will be recovered through sale. Furthermore, it introduces the requirement that deferred tax on non-depreciable assets that are measured using the revaluation model in IAS 16 always be measured on a sale basis of the asset.

IFRS 7 Financial Instruments: Disclosures - Enhanced Derecognition Disclosure Requirements

·; The amendment requires additional disclosure about financial assets that have been transferred but not derecognised to enable the user of the Group's financial statements to understand the relationship with those assets that have not been derecognised and their associated liabilities. In addition, the amendment requires disclosures about continuing involvement in derecognised assets to enable the user to evaluate the nature of, and risks associated with, the entity's continuing involvement in those derecognised assets.

Adoption of these revised standards and interpretations did not have any effect on the Group's condensed consolidated interim financial statements.

New standards and interpretations not applied

Standards issued but not yet effective up to the date of issuance of the Group's condensed consolidated interim financial statements are listed below. This listing of standards and interpretations issued are those that the Group reasonably expects to have an impact on disclosures, financial position or performance when applied at a future date. The Group intends to adopt these standards when they become effective.

IAS 19 Employee Benefits (Amendment)

·; The IASB has issued numerous amendments to IAS 19. These range from fundamental changes such as removing the corridor mechanism and the concept of expected returns on plan assets to simple clarifications and re-wording. The amendment becomes effective for annual periods beginning on or after 1 January 2013.

IAS 27 Separate Financial Statements (as revised in 2011)

·; As a consequence of the new IFRS 10 and IFRS 12, what remains of IAS 27 is limited to accounting for subsidiaries, jointly controlled entities, and associates in separate financial statements. The amendment becomes effective for annual periods beginning on or after 1 January 2013.

IAS 28 Investments in Associates and Joint Ventures (as revised in 2011)

·; As a consequence of the new IFRS 11 and IFRS 12, IAS 28 has been renamed IAS 28 Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. The amendment becomes effective for annual periods beginning on or after 1 January 2013.

IFRS 9 Financial Instruments: Classification and Measurement

·; IFRS 9 as issued reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. The standard is effective for annual periods beginning on or after 1 January 2013. In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Group's financial assets, but will potentially have no impact on classification and measurements of financial liabilities. The Group will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture.

IFRS 10 Consolidated Financial Statements

·; IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also includes the issues raised in SIC-12 Consolidation - Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgement to determine which entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in IAS 27. This standard becomes effective for annual periods beginning on or after 1 January 2013.

IFRS 11 Joint Arrangements

·; 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 must be accounted for using the equity method. This standard becomes effective for annual periods beginning on or after 1 January 2013.

IFRS 12 Disclosure of Involvement with Other Entities

·; IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures relate to an entity's interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required. This standard becomes effective for annual periods beginning on or after 1 January 2013.

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. This standard becomes effective for annual periods beginning on or after 1 January 2013.

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 2012, revenues represented 47.0% of the annual level of revenues in the year ended 31 December 2011.

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. (Loss)/earnings per share

The calculation of the basic (loss)/earnings per share is based on the (loss)/earnings 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 2012 no shares were issued. Shares issued and authorised may be summarised as follows:

The authorised share capital of the Company was increased by 100,000,000 ordinary shares of 0.1p each to 300,000,000 on 14 July 2008. The Company has only one class of shares.

7. Additions and disposals of property, plant and equipment

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

8. Taxation

At 30 June 2012, the Group has tax losses and tax deductibles of approximately £7.3 million that are available for offset against future profits arising from the same trade.

9. Intangible fixed assets

The following tables show the movement on intangible fixed assets:

Additions in the period to 30 June 2011 and year to 31 December 2011 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.