Preliminary Results

Clinigen Group plc

Preliminary Results for the year ended 30 June 2013

Burton-on-Trent, UK - 25 September 2013 - Clinigen Group plc ('Clinigen' or the 'Group') (AIM: CLIN), the global specialty pharmaceuticals business, has today published its preliminary results for the 12 months ended 30 June 2013.

Financial highlights

- Group revenue up by 49% to £122.6m (FY12: £82.1m) driven by strong organic growth across all three operational businesses

o Clinigen CTS full year sales up 49% to £87.8m and full year gross profit up 13% to £11.4m

o Clinigen GAP revenue grew more than six-fold to £10.5m; full year gross profit was up more than five-fold to £3.9m

o Clinigen SP full year sales of £24.3m (+12%) and full year gross profit of £19.8m (+8%)

- Underlying EBITDA increased by 30% to £22.4m (FY12: £17.3m)

- Underlying pre-tax profit increased by 29% to £20.4m (FY12: £15.8m) and reported pre-tax profits increased by 42% to £14.5m (FY12: £10.3m)

- Underlying earnings per share up 38% to 18.5 pence (FY12: 13.4 pence) and reported earnings per share 15.1 pence (FY12: 13.2 pence)

- Cash generation continues to be strong; cash and cash equivalents at 30 June 2013 were £11.3m, up from £5.2m at 30 June 2012

- Final dividend of 2.0 pence per share proposed, bringing the total dividend to 2.6 pence per share

Business highlights

- Clinical Trial Supply ("CTS")

o Sales performance driven by sizable anti-viral studies and increased activity in the US

o In June, extension of exclusive EU supply agreement with Accord Healthcare

- Global Access Programs ("GAP")

o Awarded Sanofi's Campath and Astellas' MDV3100 early access programs

o In July, BTG awarded a third access program to Clinigen and, in September, Eisai selected Clinigen to manage an access program in Germany

- Specialty Pharmaceuticals ("SP")

o Foscavir® sales volume continued to grow, with further expansion into the US and new indications in Europe

o Exclusive commercialization agreement in EU for Antibacterial, VIBATIV®

o Acquisition of oncology support therapy, Cardioxane® for US$33m

Peter George, Chief Executive Officer, said:

"We have over-delivered on our commitments made at the time of the IPO last September. In turn, the listing on AIM has lived up to our expectations. It has provided a stronger platform from which to drive our organic growth, both in the UK and internationally, as well as giving us additional financial flexibility to support our acquisition plans and the acceleration of our international growth strategy. The IPO has also enabled greater investment in the infrastructure and recruitment of additional high quality people to the business.

"Our ambition for the next financial year is to maintain this momentum across all three operating businesses; principally organic growth for CTS and GAP, and through further acquisition of products for SP. Geographically, we are focusing our attention on the US, Latin America and Asia.

"With a sound financial base, an increasing international footprint, as well as the recent organizational changes, we have the right foundations to continue the scale-up of the business and maintain our growth."

-Ends-

A group analyst briefing will be held at 09:30am GMT on Wednesday, 25 September 2013 at the Group's London offices at 1 King Street, London EC2V 8AU. Analysts who wish to participate should contact [email protected] to register.

An audio replay file will be made available shortly afterwards via the Company's website:

www.clinigengroup.com.

-Ends-

For further information, please contact:

About Clinigen Group

The Clinigen Group is a specialty global pharmaceutical company headquartered in the UK, with offices in the US and Japan. Listed at The London Stock Exchange AIM, the Group has three operating businesses; Specialty Pharmaceuticals (Clinigen SP), Clinical Trials Supply (Clinigen CTS), and Global Access Programs (Clinigen GAP). Clinigen SP focuses on acquiring and in licensing specialist, hospital only medicines worldwide and commercializing them within niche markets. Clinigen CTS sources commercial medical products for use in clinical studies, including comparator drugs, adjuvant drugs and rescue therapies. Clinigen GAP specializes in the consultancy, development, management and implementation of programs, providing global access for patients and their clinicians to drugs not available in their markets. For more information, please visit www.clinigengroup.com.

Forward-looking statement

This announcement contains certain projections and other forward-looking statements with respect to the financial condition, results of operations, businesses and prospects of Clinigen Group plc ("Clinigen"). These statements are based on current expectations and involve risk and uncertainty because they relate to events and depend upon circumstances that 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. 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. Recipients are cautioned not to place undue reliance on any forward-looking statements contained herein. Clinigen undertakes no obligation to update or revise (publicly or otherwise) any forward-looking statement, whether as a result of new information, future events or other circumstances.

CEO's report

Overview

Clinigen has had a strong year of growth, delivering on commitments made at the IPO. In turn, listing on AIM has lived up to our expectations, giving us a strong platform from which to develop the Group, both in the UK and internationally. Through the IPO, we were able to raise additional funding to support our acquisition plans and accelerate our international growth strategy. We have also further invested in the infrastructure and recruited additional high quality people.

In the financial year 2013 ('FY13'), the three operational businesses grew organically, principally through extending the customer footprint, global pricing and reach. These strong results demonstrate the successful delivery on this strategy. By taking advantage of our global capabilities and unique skill in delivering our medicines into both licensed and unlicensed territories, we aim to continue this organic growth strategy going forward. In parallel, the Group's strategy is to add to its portfolio of medicines in the Specialty Pharmaceuticals business through acquisition and in-licensing. This aim has been achieved for FY13 with the addition of two products: the acquisition of Cardioxane from Novartis and the in-license of Vibativ into Europe from Theravance.

Although we spent considerable time preparing for the IPO in the first half of the financial year, the Group's operational management remained focused on business and delivered a 49% increase in sales to £122.6m (2012: £82.1m) and 30% increase in underlying EBITDA to £22.4m (2012:£17.3m) with all three operating businesses contributing strong organic growth. Underlying pre-tax profit increased by 29% to £20.4m (2012: £15.8m).

Total gross profit increased by 21% to £35.1m (2012 £29.0m) as a result of the growth in all three operating businesses. The newly acquired Cardioxane contributed £0.6m to revenue and gross profit, which were the same because Novartis continued to sell and distribute the product, under a transitional agreement, with only profit attributable to Clinigen. Product sales with associated costs will be recognised by Clinigen as and when Clinigen takes over management of the supply chain in each territory.

Administration costs were £20.5m including non-underlying costs of £5.9m, which mainly related to IPO costs and share based payments. Excluding non-underlying items, administration costs of £14.6m (2012: £13.0m) grew by 13% in order to support the strong organic growth of the operating businesses.

Reported pre-tax profit of £14.5m is 42% up on the prior year (2012: £10.3m). The Board proposes to pay a final dividend of 2.0p per share.

Current trading and outlook

We believe that Clinigen has overachieved on its commitments made at IPO; sales and profits are ahead of market forecast, with organic growth contributions from all three operating businesses.

Clinigen CTS is expected to remain the main revenue generator in FY14, with a continued focus on global growth and margins. Clinigen GAP's full year sales were expected to grow in FY13 and delivered more than six times growth on a like-for-like basis. For Clinigen GAP, new business has started very promisingly and we expect further significant growth into 2014. In Clinigen SP, we expect steady growth to continue from Foscavir sales, but the focus for FY14 is the successful transition and integration of the two new products, Vibativ and Cardioxane, and increasing their contribution to the business. In Clinigen SP we continue to pursue further acquisitions that could add value to our portfolio.

The Group has made an encouraging start to the current financial year, with revenues in the two months ended 31 August 2013 in line with expectations. In the coming twelve months we expect to see continued organic growth in line with our previously expressed expectations.

Operational overview

Clinigen CTS

Clinigen CTS is our largest contributor to sales, and in FY13, it generated sales of £87.8m (2012: £58.8m) and a gross profit of £11.4m (2012: £10.0m).

During FY13 Clinigen CTS continued its expansion: activity with US customers was up 58% to £58m (2012: £37m), customer numbers continue to grow in total, up from 52 in FY12 to 72 in FY13, and those generating over £1m in sales grew from 12 in FY12 to 17 in FY13. In total in FY13, Clinigen CTS had 1,100 requests to supply clinical trials, sourcing 578 medicines for 72 different customers. Clinigen CTS also extended its exclusive supply agreements with both AstraZeneca and Accord, and remains focused on achieving market leader status.

A recent independent market review has shown the clinical trial comparator drugs market is estimated to be US$1.5-2.0 billion annually and it is predicted to grow at an estimated growth rate of 8% per annum by volume over the next three years. It is also predicted to become more specialised and complex with increased demand for expensive, hard to source large molecule products and with supplier companies requiring greater expertise for handling and transportation, particularly cold chain. Stricter traceability and control through the supply chain, single approval for products in Europe and regulations to reduce the threat of counterfeiting are expected to further favour specialist suppliers, like Clinigen.

In light of the market size and development and the key drivers supporting that, the Clinigen CTS operational business recently reviewed its five year strategy and whilst it is aiming for market leader status, it intends to achieve this through global organic growth, targeting the top 50 pharma companies which incur significant Clinigen CTS spend. We will focus on demonstrating Clinigen's value-added specialist services and their advantage over in-house or wholesaler options. New services are being considered to keep the value proposition differentiated.

Clinigen GAP

Clinigen GAP was targeted to deliver significant organic growth, and having achieved better than six-fold revenue growth over the prior year is now becoming a significant part of the Group's sales and gross profit. In FY13, GAP had sales of £10.5m (2012: £1.6m) and a gross profit of £3.9m (2012: £0.7m).

GAP has managed a number of large access programs during FY13, the largest of which were Astellas' Enzalutamide early access program and Sanofi's Campath withdrawal program. Clinigen was proud to be rewarded by one of these customers with an award for excellence. In addition BTG's extended access programs for Voraxaze and DigiFab have been added to in 2014 with the addition of a third program for Uridine Triacetate as well as new programs from Astellas starting in FY14.

FY13 was the first year with no lower value, non-exclusive UK-only supply business included in the figures. We transitioned out of this work in FY12 but it still accounted for 29,000 unit shipments last year. The GAP business now focusses on the exclusive supply of medicines through Global Access Programs which accounted for only 2,000 units shipped in FY12 but 31,000 in FY13. This revised strategy has driven the significant revenue growth for the year. 

Clinigen is one of a few specialist service providers in this new market. During the recent strategic review it became clear that to date little data exists to support overall market size, as a result Clinigen has commissioned an independent market review, the report of which is expected by Q2 FY14.

As with Clinigen CTS, the aim is to become the market leader in this sector and again, organic growth is the preferred route. There are different customer targets across product and portfolio lifecycles for the early and mature access programs with the non-launch market programs giving a large and as yet relatively untapped customer group. However, GAP has a healthy pipeline and expanding customer base, and Clinigen expects significant growth to continue through FY14. 2014 will also see the launch of Cliniport, Clinigen's on-line management support tool for GAP customers which will enable scalability in this business.

Clinigen SP

Clinigen SP's performance in FY13 was predominantly the result of sales of the anti-viral treatment Foscavir. Our new products, Cardioxane and Vibativ, as expected, made minimal impact during this financial year; we expect them to start to contribute more in 2014. In FY13 SP had sales of £24.3m (2012: £21.7m) and gross profit of £19.8m (2012: £18.3m). Cardioxane contributed £0.6m to both sales and GP, the balance was associated with Foscavir.

Foscavir

Foscavir continues to demonstrate volume growth. This has been driven by our strategy to develop a second indication for the drug for use by bone marrow transplant patients and to expand into new markets. We have been granted this new indication in Japan and some European markets which have helped to increase patient exposure and have ensured pricing is competitive across all markets.

FY13 saw direct in-market sales of Foscavir of circa 270,000 units. In most cases like-for-like comparisons for prior year are misleading, as the largest market, the US, changed from unlicensed supply to a licensed distribution market. Prior year also included only five months of Japanese sales and many markets were transitioned from AstraZeneca control to Clinigen over the twelve months. However, excluding the US unit sales, on a like-for-like basis, sales showed a 3.9% increase H2 on H1, which is in line with trends in stem cell transplantation. The two largest markets for Foscavir, the US and Japan, accounted for 50% of units supplied and the top ten markets accounted for 90% of units supplied in FY13, with the top five accounting for 75%.

In our view, the big opportunities for Foscavir growth have now been realised, however, Clinigen will still pursue further ongoing opportunities and the strategy to exploit specific areas of growth potential has been developed. Clinigen continues to secure and protect the supply for Foscavir and will bring a second active ingredient manufacturer online in FY14.

Cardioxane and Vibativ

The acquisition and in-license of two new products, Cardioxane, an oncology toxicity treatment, and Vibativ, an antibiotic for MRSA, has extended the products' portfolio. Clinigen SP's strategy is to continue to build the pipeline and plans to secure further deals in FY14.

The two new products strengthen the portfolio in other ways too. Cardioxane, used for the prevention of chronic cumulative Cardiotoxicity caused by Doxorubicin or Epirubicin predominantly in breast cancer patients, has a strong footprint in South and Latin America and South Korea. Supplying the product into these territories significantly strengthens our presence in these markets for our other products. Cardioxane also enhances Clinigen's oncology portfolio and fits our revitalization criteria. We are confident that there are a number of opportunities for its growth.

Vibativ, for the treatment of adults with hospital-acquired pneumonia, known or suspected to be caused by MRSA, is a medium to long-term growth product for Clinigen. It is patent-protected until 2026 in Europe and it is a market entry product as it has yet to be sold in Europe where Clinigen holds the rights. Clinigen has transferred the European Marketing Authorization and is in the process of reactivating the EU license. Vibativ strengthens Clinigen's anti-infective portfolio and complements Foscavir which treats one of the viral causes of hospital acquired pneumonia. We do not expect European product to be available for supply until Q3 FY14; however, US product became available in September 2013. As a result, Clinigen will run its own access program making US product available until EU product is manufactured; something that no other Specialty Pharma company could do.

Strategy and scalability for the future

To support our growth, the facilities in Burton have been increased and this project will complete by the end of Q2 FY14. The business has also recently made organizational changes to support its growth and ensure operational scalability. A new operational management structure will support synergies within business development to better exploit new opportunities.

Shaun Chilton, Chief Operating Officer, has been appointed a Group director and joined the Board to strengthen the operational presence. Shaun has been instrumental in leading a recent strategic review of the operational businesses which sets our expectations for the next five years. The strategy supports our ambition for Clinigen CTS and Clinigen GAP to become the market leaders in their fields, through enhancing their global capabilities and service offerings. In Clinigen SP we are aiming to add another 5-7 products over the next 3-5 years; products which we believe can be revitalized back to growth.

FY14 will also see the roll-out of Clinigen's new enterprise resource planning (ERP) software. This project is expected to complete in time for FY15 implementation.  

It is the Board's ambition to achieve continued organic and acquisitional growth in the Group's global businesses and to deliver continued growth in our earnings profile. The Group has maintained strong growth levels through a highly focussed approach in closing objectives through our identified key performance indicators (KPI's). These KPIs are designed to achieve the key financial, management, product and services goals as well as monitoring capital projects. The KPI's are reviewed monthly by both the Operational and main Boards.

The key element that drives Clinigen's operating businesses forward is its people and I am very proud of all of our staff. This year once again, their expertise, energy and enthusiasm have turned our plans into reality and this set of results is testament to their hard work. My sincere thanks go to all our employees across the Group.

Financial Review

Revenue

Clinigen continues to show strong growth recording revenues of £122.6m, an increase of 49% (2012: £82.1m). This is the result of strong organic growth in all three operating businesses.

Profit

Total gross profit increased by 21% to £35.1m (2012: £29.0m) as result of growth in all three operating businesses. The newly acquired (25 March 2013) Cardioxane contributed £0.6m to revenue and GP.

Administration costs of £20.5m (2012: £18.5m) included non-underlying costs of £5.9m (2012: £5.5m), being IPO related costs of £4.0m (2012: £nil), non-recurring share based payment charges of £1.9m (2012: £4.6m), and ongoing share based payment charges of £0.4m (2012: £nil), offset by a provision release of £0.4m (2012: provision made of £0.9m). Excluding non-underlying items administration costs of £14.6m (2012: £13.0m) grew by 13%, reflecting the strong organic growth of the operating businesses.

Underlying EBITDA increased by 30% to £22.4m (2012: £17.3m) and underlying pre-tax profit increased by 29% to £20.4m (2012: £15.8m). Reported pre-tax profit of £14.5m is 42% up on the prior year (2012: £10.3m).

Taxation

The tax charge for the year of £3.2m is based on prevailing UK and US effective tax rates. This charge is calculated as £5.2m on underlying profits offset by a credit of £2.0m in respect of non-underlying costs. Allowable UK corporation tax ("CT") deductions arose from the exercise, pre-IPO, of two equity-settled share based remuneration schemes. This generates a combination of CT repayable and a reduction in CT payable in current and future years of £10m.

Earnings

Underlying earnings per share, excluding share based payments, one off non-underlying costs arising as a result of the IPO and based on the number of shares in issue post IPO, is 18.5p (2012: 13.4p). The reported earnings per share is 15.1p (2012: 13.2p).

Dividend

The Directors have adopted a progressive dividend policy in line with their stated intentions at the time of the IPO. The Directors also indicated at IPO that the Company's interim and final dividend payments were expected to be split approximately one-third to two-thirds respectively. In view of the strong trading which continued throughout this year the Directors are pleased to propose a final dividend for this year greater than two thirds, of 2.0p per share which when added to the interim dividend of 0.6p paid on 28 March 2013, will make a total dividend for the year of 2.6p per share.

The final dividend shall, subject to approval at the Company's AGM on 29 October 2013, be payable on 1 November 2013 to all shareholders on the register at 11 October 2013.

Cash flow

Cash generation continues to be strong with net cash from operating activities of £18.8m covering the cash requirement for product acquisition/in-licencing in the period.

Cash and cash equivalents at 30 June 2013 were £11.3m, up from £5.2m at 30 June 2012, which combined with a net bank facility of £13.0m provides funding for future acquisitions. Loans from the pre-IPO principal shareholder (£1.6m) were paid down in full and Clinigen is debt free at the period end. The working capital model continues to be self-funding.

The cash increase in the period of £6.1m is generated by cash from operations of £19.6m, net proceeds from share issue of £8.7m, offset by loan repayments of £1.6m, dividends of £0.5m, tax and interest payments of £1.4m and investing activities of £18.7m.

Investor relations

We believe it is important to have open communication and be transparent with shareholders. To this end we have met with institutional shareholders at least once during the financial year and will continue with this strategy going forward. However, I welcome feedback from shareholders on our communication style. In addition, the company has introduced a Share Save Scheme to encourage employee participation and drive good business behaviors, to date 70% of employees have taken part.

Consolidated statement of comprehensive income for the year ended 30 June 2013

All amounts relate to continuing operations.

[1] The earnings per share for FY12 have been restated using the number of shares including, retrospectively, the bonus issue of shares on 20 August 2012 and subdivision of shares on 29 August 2012. Details are provided in note 6 to the financial statements.

Consolidated statement of financial position as at 30 June 2013

Consolidated statement of cash flows as at 30 June 2013

Consolidated statement of changes in equity as at 30 June 2013

Notes forming part of the consolidated financial statements for the year ended 30 June 2013

1 Basis of preparation

The financial information set out in the announcement does not constitute the Group's statutory accounts for the year ended 30 June 2013 or 30 June 2012. The auditors reported on those accounts; their report was (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain statements under section 498 (2) or (3) of the Companies Act 2006. The statutory accounts for the year ended 30 June 2013 have not yet been delivered to the Registrar of Companies. The statutory accounts for the year ended 30 June 2012 were delivered to the Registrar of Companies.

The condensed consolidated preliminary results have been prepared on a going concern basis, based on the Directors' opinion, after making reasonable enquiries, that the Group has adequate resources to continue in operational existence for the foreseeable future.

2 Critical accounting estimates and judgements

The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Impairment of goodwill

The Group tests annually whether goodwill has suffered any impairment, in accordance with the Group's accounting policy. The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the choice of a discount rate in order to calculate the present value of the cash flows. Actual outcomes may vary. More information including carrying values is included in note 7.

(b) Carrying value of intangible assets

The carrying value of intangible assets is at cost unless the asset is impaired. Annual impairment reviews are undertaken at the end of the financial year or more frequently if events or changes in circumstances indicate a potential impairment. Trademarks and licenses are not traded in an active market hence the fair value of the asset is determined using discounted cash flows which involves the Group using judgment and assumptions.

(c) Share based payment charge

In relation to equity-settled share based remuneration schemes, employee services received, and the corresponding increase in equity, are measured by reference to the fair value of the equity instruments at the date of grant. The fair value of share options is estimated by using valuation models, such as Black-Scholes, on the date of grant based on certain assumptions.

(d) Deferred taxation

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised. The future taxable profits are based on forecasts and thus actual may vary.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the deferred tax liabilities or assets are settled or recovered. A change in rate would change these calculations.

The deferred tax asset recognised on share options, not yet exercised, is calculated based on the market price of the shares at the end of the reporting period. The market price at the exercise date would be expected to be different, hence the actual asset recognisable at exercise is likely to differ to the one recognised at the reporting date.

3 Segment information

The Group has three main reportable segments, being the Group's operating businesses:

· Clinical Trials Supply ("Clinigen CTS") sources commercial medical products for use in clinical studies, including comparator drugs, adjuvant drugs and rescue therapies. This operating business accounts for the largest proportion of the Group's revenue, generating 71% (2012: 72%) of its external revenues.

· Specialty Pharmaceuticals ("Clinigen SP") manufactures and distributes its own and in-licensed specialist, hospital-only medicines worldwide and contributed 20% (2012: 26%) of the Group's external revenues.

· Global Access Programs ("Clinigen GAP") specialises in the consultancy, development, management and implementation of global access programs for biotechnology and pharmaceutical companies. It is the smallest of the Group's three operating businesses contributing 9% (2012: 2%) of the Group's external revenues.

Factors that management used to identify the Group's reportable segments

The Group's reportable segments are strategic operating business units that provide different products and service offerings into different market environments. They are managed separately because each operational business focuses on different customer groups in relation to their product or service offering.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Board of Directors including the Chief Executive Officer and the Chief Financial Officer.

Measurement of operating segment profit or loss, assets and liabilities

The Group evaluates performance of the operational segments on the basis of gross profit or loss from operations.

4 Non-underlying items

The non-underlying items relate to the following:

Details of the share based payment charge of £2,323k (2012: £4,618k) are in note 11. Social security costs of £488K (2012: £nil) relates to share options that were exercised in the period in respect of unapproved share option schemes.

Non-equity IPO costs of £3,481K (2012: £nil) are also disclosed as non-underlying administrative costs.

PAYE and national insurance payable in respect of payments made to the Remuneration Trust was provided for during the previous year. During FY13, the amount payable was agreed with HMRC. This resulted in a release of £383k to the statement of comprehensive income.

The deferred tax credit relates to the share based payment charge and related tax loss created at exercise and the allowable non-underlying costs incurred in the year.

5 Income tax

The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the UK applied to profit for the year as follows:

The standard rate of corporation tax in the UK changed from 26% to 24% with effect from 1 April 2012.

In addition to the change above, legislation to reduce the main rate of corporation tax from 24% to 23% from 1 April 2013 was substantively enacted at the balance sheet date and so the deferred tax balance has been calculated at 23%.

Further rate changes have been enacted since 30 June 2013, these reduce corporation tax rates by 2% in 2014 to 21% and a further 1% in 2015 to 20%.

6 Earnings per share ("EPS")

a) EPS (restated)

EPS is calculated based on the share capital of Clinigen Group plc and the earnings of the combined Group. The number of shares used for the calculation for the year ended 30 June 2012 has been adjusted, retrospectively, to reflect the bonus issue of shares on 20 August 2012 and subdivision of shares on 29 August 2012.

Diluted EPS takes account of the weighted average number of outstanding share options being 7,511,178 (2012: 25,841,280).

The underlying basic EPS, based on the 82,555,585 shares in issue post IPO and the underlying earnings of the Group as stated in the income statement for the period is 18.5 pence (2012: 13.4 pence). The underlying diluted earnings per share based on the total number of shares in issue and granted under employee share option schemes at 30 June 2013 of 84,825,546 (2012: 82,555,585) is 18.0 pence (2012: 13.4 pence).

b) EPS (as previously reported)

EPS is calculated based on the share capital of Clinigen Group plc and the earnings of the Group.

7 Intangible assets

The goodwill is deemed to have an indefinite useful life. It is currently carried at cost and is reviewed annually for impairment.

The goodwill relates to the Clinical Trials Supply CGU; for goodwill impairment testing the valuation has been prepared on a value in use basis. Value in use is calculated as the net present value of the projected risk-adjusted post-tax cash flows plus a terminal value of the CGU. A post-tax discount rate is applied to calculate the net present value of post-tax cash flows. The discount rate is based on the Group's weighted average cost of capital.

During the year the Group acquired the trademarks and licenses of Cardioxane, a new product for the Group's portfolio and in-licensed a further product, Vibativ. The acquisition cost recognized is the purchase price plus the directly attributable costs incurred to date as a result of the acquisition of the new products.

Details relating to the discounted cash flow model used in the impairment tests are as follows:

Valuation basis Value in use

Key assumptions Sales growth 5% per annum

Profit margins 14%

Determination of assumptions Growth rates are based on management estimates and forecasts based on internal and external market information.

Margins are based on past experience and cost estimates.

Discount rate is based on weighted average cost of capital and is a pre tax rate of 10%.

Period of specific projected three years

cash flow used in forward

cash flow forecasts

Discount rate 10%

Terminal growth rate 0%

If any one of the following changes were made to the above key assumptions, the carrying amount and recoverable amount would be equal.

Sales growth A reduction from 5% to -5%

Gross profit margin A reduction from 15% to 10%

Discount rate Increase from 10% to 55%

8 Cash and cash equivalents

Due to the short term nature of cash at bank and short term deposits, and as the credit risk has been adjusted for where required, the carrying value approximates to their value.

9 Deferred tax

Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 23% (2012: 24%). The reduction in the main rate of corporation tax to 23% for financial years starting after 1 April 2013 has been applied to deferred tax balances. Since the balance sheet date the rate of corporation tax has been reduced to 21% for 2014. The change in rate will not materially impact the deferred tax asset recognised.

The movement on the deferred tax account is as shown below:

The deferred tax balance is made up as follows:

Deferred tax assets have been recognised in respect of temporary differences giving rise to deferred tax assets where the directors believe it is probable that these assets will be recovered.

Deferred tax assets have arisen due to short-term timing differences and capital allowances which lag behind the depreciation charged in the financial statements. Given the profitability of the Group, these differences are expected to reverse in the near future and therefore the asset at 30 June 2013 and at 30 June 2012 has been recognised.

10 Share capital

On 20 August 2012, a special resolution was passed to issue a bonus issue of shares on the basis of 312 'A' ordinary shares of 1p each for every 'A' ordinary share of 1p each. The bonus issue of new shares was made fully paid at par by crediting the Company's merger reserve.

On 29 August 2012, the 'A' ordinary shares were subdivided into 50,080,000 'A' ordinary shares of 0.1p each

On 25 September 2012, the following new shares were issued:

Also, on 25 September 2012, all classes of ordinary shares were designated as ordinary shares of 0.1p each and as such all shares have the same rights.

11 Share based payment

The company operated seven equity-settled share based remuneration schemes: three UK tax authority approved scheme; a US scheme; and three unapproved schemes. Four of the schemes are for executive directors and certain senior management. The other three schemes are for all employees within the relevant country.

Under the Enterprise Management Incentive Scheme, options vested if the following conditions were satisfied:

· employees work greater than 25 hours per week; or

· an exercise event is triggered by either a sale of the company's shares or assets, or a listing, or the exercise date of 30 June 2014 is reached.

In the event of a withdrawal from listing or sale, the exercise event was deemed to have occurred.

Options under the Enterprise Management Incentive Scheme vested, and were exercised, during the period.

The options under one of the unapproved share option plans vested and exercised during the period. The options vesting were subject to the following conditions:

· individual employed at occurrence of an exercise event;

· an exercise event is triggered by the earlier of a sale, transfer, assignment or disposition of the share capital of the company giving rise to a change of control of the company, or a listing, or the reclassification of shares in accordance with Article 21 of the Articles of Association; and

· within six months of the grant date, an AIM admission document or prospectus is approved for issue in connection with a listing and the corresponding placing price, if achieved, would result in the company having an aggregate market capitalization immediately following such listing or admission equal to or in excess of £125m or within six months of the grant date, a sale would represent a net present value (at the time of completion) on the company equal to or in excess of £125m.

Under the unapproved Long Term Incentive Plan, options vest if the total shareholder return growth is greater than 25% over a three year period ending on 24 September 2015. If the individual leaves earlier than the earliest vesting date, they may, if certain conditions are met, be still entitled to a proportion of the shares.

The Chairman was granted an option, during the year, under an unapproved scheme. The option vests at the earliest of a change in control or 18 September 2015. If the Chairman ceases to be a director of any group company, the option may be exercised for a period of twelve months from the date he ceases to be a director. If the option remains unexercised for a period of ten years from the date of grant the option expires.

The Sharesave Plan is an HMRC approved scheme for all employees of the Group and directors, who are required to work for at least 25 hours per week. Options are exercisable at a price equal to the average opening price as published in the Financial Times on the date of invitation and the two dealing days preceding the date of invitation, less 20%. The vesting period is three years. If options remain unexercised after a period of six months from the vesting date the options expire. If monthly contributions are not made for more than six months over the three year period, the options lapse.

The Group operates a Company Share Option Plan for certain employees who have invested in shares of the Company. The scheme grants share options to employees, matching the shares acquired by the employee. The options vest after three years if the employee still holds the shares acquired prior to the grant date or exercises their options through the Sharesave Plan. The approved Company Share Option Plan is only available to UK employees hence, a US share scheme was put in place with the same conditions as the UK scheme.

Details of the share options outstanding during the year are as follows:

Of the total number of options outstanding at 30 June 2013, none had vested.

The weighted average share price (at the date of exercise) of options exercised during the period was 164p (2012: £nil).

The exercise price of options outstanding at 30 June 2013 ranged between £nil and £2.98 and their weighted average contractual life was three years. None of these were exercisable at 30 June 2013.

The weighted average fair value of each option granted during the year was 54.7p (2012: 23.7p - adjusted for bonus issue and subdivision of shares for comparable basis).

The following information is relevant in the determination of the fair value of options granted during the period under the equity-settled share based remuneration schemes operated by the Group. The Black-Scholes pricing model is used for all schemes except for the Long Term Incentive Plan and the Chairman's Award, where a Stochastic valuation model is used.

Expected volatility was determined by calculating the historical volatility of the Company's share price over the period since the company listed.

The share based remuneration expense comprises equity-settled schemes of £2,323K (2012: £4,618K).

The Group did not enter into any share based payment transactions with parties other than employees during the current or previous year.

12 Contingent liabilities

The marketing authorisation for Vibativ has commitments for post marketing authorisation studies which current estimates predict to be in the region of £2.4m. The Group had no contingent liabilities at 30 June 2012.