Preliminary results

Sinclair IS Pharma plc

Preliminary results for the year ended 30 June 2014

18 September 2014, Sinclair IS Pharma plc (AIM: SPH.L), ("Sinclair IS" or the "Company") the international speciality pharma company, announces its preliminary results for the year ended 30 June 2014.

FINANCIAL HIGHLIGHTS

· Revenue increased by 15% to £63.6m(2013: £55.4m)

· Like for like1 revenue growth of 4%

· Adjusted EBITDA2 growth of 39% to £10.0m (2013: £7.2m)

· Operating loss falls by 89% to £1.8m(2013: £15.3m)

· Loss per share falls to 1.2p(2013: 4.1p)

· Net Debt at year end of £40.2m, 2.8x EBITDA on a pro forma basis including acquisitions3

OPERATING HIGHLIGHTS

· Acquisitions of Obvieline Laboratories SA, AQTIS Medical BV and Silhouette-Lift SL rapidly integrated to create a market-leading aesthetics portfolio

· Dermatology 81% of revenues. International 40% of revenues

· Flammacerium® awarded US orphan drug status

Chris Spooner, Sinclair's CEO commented:

"Three game-changing acquisitions during FY14 have transformed Sinclair. With approximately half its revenue derived from aesthetics and International, Sinclair is recognised both as a leader in facial rejuvenation and a presence in emerging dermatology markets. We expect revenue and profitability to accelerate this year driven by demand for our innovative products and supplemented by new product registrations and the potential to consolidate recently acquired distribution agreements".

1 Like-for-like (LFL) revenues exclude product disposals, one-off licence fee income and currency fluctuations.

2 Adjusted EBITDA defined as earnings before interest, tax, depreciation, amortisation, share based payments, exceptional items and loss from discontinued operations.

3 Pro forma EBITDA reflects a full year contribution for Obvieline Laboratories SA, AQTIS Medical BV and Silhouette Lift SL as if they were acquired on 1 July 2014.

- Ends -

For further information please contact:

Sinclair IS Pharma plc Tel: +44 (0) 20 7467 6920

Chris Spooner

Alan Olby

Peel Hunt LLP Tel: +44 (0) 20 7418 8900

James Steel

Clare Terlouw

Sinclair's management team will discuss the Company's results at a presentation for analysts today at 9.30am which will be held at the offices of Peel Hunt LLP, Moor House, 120 London Wall, London EC2Y 5ET.

Notes to Editors:

About Sinclair IS Pharma plc- see www.sinclairispharma.com

Sinclair IS Pharma is an international specialty pharmaceutical company centred on Dermatology, in particular - Aesthetics, Wound care, and Skin care. The Group has a direct sales and marketing presence in the top five European markets and a rapidly growing International division concentrated on key Emerging Markets through long term multi-product, multi-country, sales, marketing and distribution deals with key strategic partners.

"Safe Harbor" Statement under the US Private Securities Litigation Reform Act of 1995: Some or all of the statements in this document that relate to future plans, expectations, events, performances and the like are forward-looking statements, as defined in the US Private Securities Litigation Reform Act of 1995. Actual results of events could differ materially from those described in the forward-looking statements due to a variety of factors.

CHAIRMAN'S STATEMENT

Your Company again delivered a result in line with Board and City expectations, albeit with a slightly greater than expected second half weighting, with sales up by 15% to £63.6m and adjusted EBITDA up by 39% to £10.0m. This was achieved despite currency headwinds and the hesitant post economic crisis recovery within our core European markets which restricted like for like growth to 4%.

We continue to pursue the core elements of a strategy outlined upon the arrival of Chris Spooner as Chief Executive Officer four years ago:

(1) to focus the business on commercialising fewer, larger assets and developing single brand names globally, whilst reducing the number of non-core products

(2) to push aggressively into emerging markets with global partners who can provide muscle to help us achieve rapid growth

(3) to reduce spend on general overheads and in-house product development and to increase expenditure on commercialising and developing our global brands, supported by line extensions, to increase the breadth and penetration of these brands

(4) to drive profits from the operating leverage provided by our high quality sales platform by increasing sales volumes and identifying compatible product acquisitions and licensing opportunities

The consistent prioritisation of these strategic goals has resulted in steadily increasing profitability in recent years. In particular, improving operating leverage has resulted in a strong increase in our adjusted EBITDA margin, up to 16% from 13% last year and 11% in 2011/12. We expect to continue to improve margins in the current year and beyond. The fixed costs of a high quality, fully integrated pan European sales force are significant, but as major new products are added to the platform a significant part of the incremental gross margin falls to the bottom line. In 2013/14 the most important contributor to our improved EBITDA margin was the first full year of Sculptra®.

During the year the Board reviewed a number of opportunities to exploit our platform further. We concluded that the fastest growing part of our business is aesthetics, where we came into the last financial year with a capable well trained sales force but lacking critical mass in product offering. Aesthetics is a higher growth segment than our traditional derma markets and minimally invasive, medicinal quality aesthetics is a natural adjunct to our existing high quality derma franchise.

We decided during the year to seize this opportunity and we were delighted to be able to persuade the owners and management of three very exciting and innovative aesthetics companies that Sinclair's distribution platform would provide the most effective and dynamic way for their products rapidly to reach a global market.

In January 2014 we completed the acquisition of Obvieline Laboratories SAS (Perfectha®); followed in March 2014 by AQTIS Medical BV (Ellansé™); and in May 2014 by Silhouette-Lift SL. Three differentiated, fast growing aesthetics companies which now give us the ability to create a unique and compelling patient lifecycle approach to non-invasive facial rejuvenation. The majority of dermal filler procedures in our key territories involve the use of hyaluronic acid (HA) gel, and as a differentiated biphasic HA the Perfectha® range addresses this demand. Ellansé™ (resorbable PCL microspheres) is a unique next-generation collagen stimulator and Silhouette® is the only cone-on-suture lift/volumiser in the industry.

All three acquired companies have now been integrated into the global operations of Sinclair. They contributed an aggregate of nearly £6.0 million of sales in their respective post acquisition periods and we expect them to be significant profit contributors in the coming year. Ellansé™ and Perfectha® use a distributor-only model with 90% of sales in emerging markets; we expect to capture higher margins on higher sales using our direct sales forces in Europe.

We believe in a 'mixed' dermatology model; in our view, Sinclair's heritage and pharmaceutical standards in medicinal dermatology have been a key success factor in quickly creating a trusted reputation in a less-regulated aesthetics industry. Commercially however, a higher proportion of aesthetics sales have buoyed Sinclair's move into higher growth, non-reimbursable products where we and our distribution partners can be price-setters with beneficial effects on our gross margin.

We paid particular care to the structuring and financing of these transactions to limit dilution and manage risk. We raised £59.5 million of debt through a new 5 year debt facility and £20.0 million of equity during the year in order to finance the acquisitions. Sinclair ended the year with net debt of £40.2 million - a multiple of 2.8x pro-forma EBITDA, and below expectations set at the time of the placing. A significant part of the consideration for each acquisition will only be paid upon the achievement of specific milestones. This will make the majority of stage payments self-financing and means that each acquisition has been earnings accretive from the date of acquisition.

The Company's move to focus our portfolio has continued with the disposals of Effederm, Xclair, Salinum and SST. Subsequently, Cryogesic has been sold for £1.1m and further disposals are anticipated in FY15. We also remain alert for partnering and co-marketing opportunities, increasingly with fewer, larger partners and we are in particular, currently focusing on developing an appropriate strategy for the US, where opportunities for a number of our products are significant. We have today announced the appointment to the Board of Jeff Thompson as a non-executive director who has many years' experience of US dermatology markets gained through his time at Stiefel Laboratories, Inc. where he was Chief Operating Officer at the time it was acquired by GlaxoSmithKline plc for $2.9 billion.

Your company is now better placed than at any time in its history to increase revenues and profits substantially and we are confident about the current year. We have made three highly promising acquisitions during the year and now have six global brands with significant potential. We remain in the early stages of a comprehensive multi-country, multi-product strategy which we believe will deliver significant value for shareholders. I would like to thank shareholders for their continued support.

Grahame Cook

Chairman

STRATEGIC REVIEW

Sinclair generated £10.0m adjusted EBITDA* for FY14 on sales of £63.6m. Like-for-like (LFL) revenues (excluding product disposals, one-off license income and currency fluctuations) grew by 4.4% with strong H2 LFL growth of 13.1% after the 7.5% LFL decline in H1. EBITDA was at the upper end of expectations after a strong performance in Aesthetics further helped by better than expected initial contributions from the three aesthetic brands, Perfectha®, Ellansé™ and Silhouette® all acquired during the second half.

The creation of a highly differentiated, fast growing aesthetics portfolio enabled Sinclair to make important strategic and operational advances during the year, and aesthetics in FY14 represented one third of Group revenues. The rapid expansion of the Group's aesthetic business in high volume growth markets and the ability to set price continues to drive operating margins with 73% of revenues in the year from private pay products (2013: 62%). This combined with Sinclair's fully integrated pan European structure resulted in increased operating leverage and a fifth successive increase in EBITDA margin** to 16% during the financial year.

AESTHETICS AND ACQUISITIONS

Sinclair's aesthetics strategy is centred on facial rejuvenation through collagen stimulation products which have amongst the highest growth rates in the dermal filler sector and so far account for around 10% of procedures in Sinclair's key markets. HA fillers currently dominate the market and the acquisition of the Perfectha® range of HA fillers in January 2014 was the first of three significant new brands added to Sinclair's aesthetic portfolio in FY14, providing critical mass for the Group in aesthetics. Perfectha® contributed revenues of £3.9m in the second half, compared with £2.4m for H2 FY13 pre-acquisition and was ahead of management expectations.

Ellansé™ and Silhouette®, both next-generation collagen stimulators, complement Sculptra® and strongly enhance Sinclair's competitive position in the global aesthetics market. Ellansé™, which provides immediate volumisation, and Silhouette® a unique patented product giving an instant facelift have continued their recent rapid growth in emerging markets, particularly Asia, with Ellansé™ contributing £1.3m to Group revenues in its first three months and Silhouette® £0.8m since it was acquired in May. Sculptra® made good progress during the year with LFL sales growth of 11% as a result of the extensive doctor training programme which continued throughout the year.

The integration of Perfectha®, Ellansé™ and Silhouette® was completed quickly and necessitated a number of organisational changes to reflect the increasing scale of the Group's activities. In addition improvements have already been made to optimise manufacturing processes and reduce costs. Both Perfectha® and Ellansé™ distribution has been taken in-house across Europe together with Silhouette® in the UK. Silhouette Russian rights are expected to be acquired in Q4 2014 in-line with initial guidance. Multiple new hires across Sinclair's pan European sales force preceded intensive pre-launch technical sales training on the new brands.

Sinclair has created a very significant commercial opportunity in aesthetics, in particular its dominant position in the future of facial rejuvenation through collagen stimulation, and as a result it is the focus of the Group's marketing resource. The Board has ambitions to create direct affiliates in leading aesthetic markets, notably Korea, the US and potentially Brazil. Contractual rights in Korea will likely facilitate such a move during FY15, while the timing of any US move will be dictated by regulatory timelines.

* Adjusted EBITDA defined as earnings before interest, tax, depreciation, amortisation, share based payments, exceptional items and loss from discontinued operations. Hereafter always referenced as EBITDA.

** EBITDA Margin defined as the ratio of Adjusted EBITDA to revenue.

The Group continues its policy of focusing its portfolio on a smaller number of dermatology brands. Disposals of Effederm and Xclair were made during the year for aggregate consideration of £1.0m, in excess of a 2x sales multiple.

OPERATIONS

Sinclair's aesthetic portfolio now provides the core products for our operations. The Board and executive management continue to monitor performance on a regional basis with segments split into Country Operations (consisting of the Group's direct sales capability in the top 5 EU markets) and International Operations where the Group sells through local distributors.

Country Operations - Revenue £38.0m (2013: £34.9m)

A major improvement in LFL sales over the previous year in France and the UK, which together account for 60% of Western European revenues, was due to the growing importance of Sinclair's distinctive aesthetics portfolio. Aesthetics revenues grew over 80% in FY14 with the acquisitions during the year of Perfectha®, Ellansé™ and Silhouette®, and represented 30% of Country Operations revenues. Problems with a distributor in Spain were solved and continued weakness in non-core products in Germany both masked the effect of the continued growth of Sculptra® and encouraging launches of the acquired aesthetic brands.

France - Revenue £12.9m (2013: £12.3m)

The move to focus the Group's marketing and sales strategy on aesthetics resulted in a 3% LFL sales improvement in France during the period against an 8% decline the previous year and despite the lacklustre French economy. Launches of Perfectha® and Ellansé™ took place in H2 and it is intended to bring sales of Silhouette® in-house during H1 FY15.

The build-out of a new 6 strong hospital sales team concentrating on Kelo-cote® and New-Fill® resulted in growth rates of 22% and 10% respectively. 25,000 patients in France have facial lipoatrophy associated with HIV and to date 2,000 have been treated with New-Fill®. The recent publication in BMC Infectious Diseases of a study involving over 4,000 individuals which confirmed the improvement in quality of life from the use of New-Fill® in HIV positive patientsadds credibility to the decision to directly promote. Sculptra® continued to make progress with sales increasing 15% in the period and has been well represented at key industry events including the 12th Anti-Ageing Medicine World Congress in Monaco alongside Perfectha®.

UK - Revenue £10.0m (2013: £8.6m)

UK operations returned to growth in FY14 (+5%LFL) with Sculptra® increasing sales by 13%LFL. The UK sales force was significantly improved by the addition of 6 experienced specialist aesthetic salespeople. Full adoption of the Keogh report guidelines on doctor training generated 107 Sculptra®training workshops around the UK in the period. Sculptra® will continue to be actively marketed alongside the three new aesthetic brands in FY15.

Perfectha® was successfully launched in March 2014 initially targeting larger HA filler users in major clinics, with excellent feedback on range and ease of use from aesthetic doctors. Ellansé™ and Silhouette® were brought in-house from their existing distributors and re-launched just prior to the end of the financial year.

Variquel® (+50%LFL) recovered from the threat of generic competition in the previous year and the launch of a pre-mixed solution led to a successful tender outcome with similar opportunities in FY15.

Germany - Revenue £5.3m (2013: £4.7m)

Sculptra® sales reached £1.0m (+23%LFL) after a successful programme of training workshops for aesthetic doctors and dermatologists in the major German cities. Both sales and marketing teams were further improved with the addition of a number of key hires from major competitors. As a result both Perfectha® and Ellansé™ were brought in-house and successfully launched prior to year end. Silhouette® sales will continue to be managed by its established distributor in the immediate future.

Sculptra® success was offset by continued weakness in non-core products, mainly Haemopressin

(-12%LFL) due to ongoing price pressures in the German market.

Italy - Revenue £5.1m (2013: £4.5m)

Italy grew strongly in FY14 with sales of Kelo-cote®, Sculptra® and Atopiclair® all ahead of expectations. The Group's co-marketing deal for Atopiclair® with Menarini resulted in sales of over £0.4m in the first 9 months post launch. Additionally, Menarini will co-market Kelo-cote® from this autumn and it is anticipated that its growth rate will accelerate as a result of Menarini's significant Italian presence.

Silhouette® is notably successful in Italy and marketed by Technolux. Going forward, Sinclair has elected to use Technolux to market the full Sinclair aesthetics portfolio in this territory.

Spain - Revenue £4.7m (2012: £4.8m)

Partnered OTC sales of Kelo-cote®, Flammazine® and Bio-Taches® were significantly below budget. This necessitated a change of distributor and strategy during the year with Flamma Spray® particularly hard hit.

The disappointment in OTC revenues masked a strong performance from Sculptra® where sales grew by 9%LFL to £1.5m following 75 training workshops held across Spain during the financial year. Both Perfectha® and Ellansé™ are recognised brands in Spain and responded well to launches by Sinclair's 7 strong in-house sales team.

International Operations - Revenue £25.6m (2013: £20.5m)

In 2011 Sinclair announced a target for International Operations to make up 40% of Group revenues, against 28% at that time. This target was met in 2014 and reflects the success of the Group's strategy particularly in emerging markets. Aesthetics accounted for over 40% of International sales in FY14 and this share is set to increase markedly over the next financial year as a result of the recent acquisitions.

APAC - Revenue £10.3m (2013: £6.4m)

Revenues from the APAC region grew 70% in H2 FY14 more than offsetting a 19% decline in H1. This was principally due to the resolution of various short term factors affecting the Kelo franchise and in particular Glyderm® (Kelo-stretch®). Glyderm® sales for the full year were up 80%LFL to over £2.0m benefiting from launches in Singapore, Philippines and Vietnam. Kelo-cote® sales made a good start in Japan after launch and ConBio its Chinese distributor increased marketing resource post negotiations to raise prices in China. Against a backdrop of strong dermatology growth, Atopiclair® (+44%LFL) and Papulex® (+39%LFL)continued to gain market share across the region.

Japan and Korea represent the Asia region's second and third largest facial injectables market (by number of procedures), and Sinclair's unique aesthetic portfolio is well placed to compete within these dynamic markets. Sinclair has recently strengthened its APAC management team based in Singapore, building on the successful relationship with Menarini in medicinal dermatology and extending it to several new distributors for Perfectha®, Ellansé™ and Silhouette® including Daewoong Pharmaceuticals in South Korea.

Intercontinental - Revenue £15.3m (2013: £14.1m)

Intercontinental combines Middle East, Turkey, Africa with Americas, Northern Europe and CEE.

Aesthetics accounted for over 40% of Intercontinental sales in FY14 in spite of partial contributions from Perfectha®, Ellansé™ and Silhouette®. Perfectha® made a strong initial contribution in the MENA region and both Perfectha® and Ellansé™ made a good start in Russia in Q4 FY14. Kelo-cote® performed well in H2 as Saudi Arabian revenues recovered from changes in the regulatory framework in H1 and CEE sales topped £0.5m for the first time. Political difficulties in Venezuela delayed the import license renewal for Kelo-cote® and it is not currently anticipated that this will be restored.

Sinclair's agreement with Menarini to market Aloclair Plus® in Russia and the CIS started well with sales of £0.5m (+45%). Farmapiel, the Group's new partner in Mexico successfully launched a number of products in April 2014 including Kelo-cote®, Atopiclair® and Sebclair®.

DEVELOPMENT

Sinclair's development strategy is to focus on line extensions and the geographical development of its existing brands. The acquisitions of Ellansé™ and Silhouette® during the year provide significant scope in the US. Silhouette-Lift® is already approved in the US and it is hoped that Silhouette-Instalift® will be approved relatively quickly via a 510K submission to the FDA made in July 2014. US clinical trials for Ellansé™ are expected to commence in 2015, whilst in Europe Ellansé™ and Perfectha® lidocaine formulations are timetabled for submission in Q2 2015.

Flammacerium® was granted orphan drug designation in March 2014 by the US FDA for the treatment of patients with severe dermal burns. Sinclair is optimistic to receive US approval in an accelerated timeframe as a result of the large body of existing clinical data. US approval would be expected to provide material upside to Sinclair's earnings in future.

Atlean® is a combined collagen stimulator and HA filler for the treatment of the lower face and was acquired from GSK during the period. It has been off-market for around 2 years and re-registration is slated for Q2 2015.

The development of Aloclair Ultra®, potentially the first twice per day mouth ulcer treatment is complete, with launch targeted for Q2 2015.

OUTLOOK

Operational objectives for this year are focused on revenue and profit delivery. In Europe, the build-out of dedicated aesthetic sales and marketing operations is complete alongside the introduction of new sales force incentive schemes and intensive physician training programmes. Aesthetic brands are expected to make up over 50% of Sinclair's revenues in FY15 with significant growth anticipated in all regions. Sinclair has enjoyed a strong start to FY15 with a step-up in growth and profitability driven by both the acquired brands and operating leverage.

FINANCIAL REVIEW

Acquisitions contributed in part to the Group's financial performance for the year but will make a more significant contribution to the future results of Sinclair. In FY14 the Group continued its recent trend of increasing revenues and EBITDA margin with a very strong second half performance. EBITDA margin for the year improved further to 16% (13% in FY13) with the benefit of a full year contribution from Sculptra, continued growth in International Operations and initial contributions from Obvieline, AQTIS and Silhouette®.

Revenue

Revenues grew by 14.8% to £63.6m with a full year contribution from Sculptra and a strong initial contribution from Perfectha® (Obvieline, £3.9m six months), AQTIS (£1.3m three months) and Silhouette® (£0.8m under two months). Revenues were adversely affected by the strength of Sterling in the final quarter of the year, and on a constant currency basis, revenues for the year would have been £64.4m, £0.8m higher than reported.

Gross profit

Gross profits (excluding fair value adjustments on acquired inventory) increased 6.3% to £35.9m (2013: £33.8m) with a gross margin of 56.5% for the full year compared with 61.0% for 2013. The sharp decline in gross margin for the year is a result of product mix, but is expected to be a temporary dip predominantly caused by strong sales of lower margin Kelostretch and Atopiclair which grew by a combined 42% to £5.0m. A sharp gross margin recovery is expected in FY15 with the share of aesthetic products expected to exceed 50% (FY14 33%) combined with increased margin share revenues for Kelostretch and Atopiclair.

Operating expenses

Selling, marketing, and distribution costs declined by 1.7% to £15.0m (2013: £15.3m) due to foreign exchange impacts. Underlying spend in constant currency terms increased by 3% as the Group supported the build-out of the aesthetics commercial infrastructure including the re-launch of Sculptra.

Administrative expenses before exceptional items, of £19.3m (2013: £17.1m) increased due to a £2.6m increase in non-cash charges for depreciation, amortisation and share based payments.

Exceptional items

Exceptional operating charges of £3.4m (2013: £16.8m) have been recorded in the year net of profits on disposal. The key components of exceptional items are:

· Acquisition costs of £2.6m include legal and professional fees relating to the three acquisitions which were completed during the year.

· Restructuring and integration costs of £1.6m include post-acquisition restructuring and manufacturing write-offs, and other restructuring actions undertaken in the year.

· A £0.6m profit on disposal was recognised on the sale of Effederm in France.

· Impairment charges of £0.4m against intangible assets. Development of the Terbinafine Spray project was ceased during the year resulting in a write down of the licence fees paid to access the technology.

· £0.8m reversal of impairment charges recorded against the Cryogesic trademark in the prior year following the agreement to dispose of these assets for a total consideration of £1.1m.

Finance costs

Finance costs increased to £2.6m from £1.6m. Within this charge, cash interest costs on borrowings increased to £2.0m from £0.7m reflecting the increased borrowings taken on over the second half of the year to finance acquisitions. Finance charges also include a £1.9m non-cash charge for the discount unwind on deferred consideration liabilities, offset by a £1.9m foreign exchange gain arising from the retranslation of US Dollar and Euro denominated borrowings. Finance costs also include the write off of arrangement costs of £0.6m arising on the early settlement of the facilities with Clydesdale Bank plc.

Taxation

A tax credit of £0.3m (2013: credit of £1.1m) has been recorded for the year. This consists of current corporation tax charges of £0.5m (2013: £0.4m) and net deferred tax credits of £0.8m (2013: credit of £1.5m). Within deferred tax, a £0.1m (2013: £0.5m) charge arises on the utilisation of brought forward losses resulting in a reduction in deferred tax assets, offset by a deferred tax credit of £1.0m (2013: £2.4m) linked to the amortisation/impairment of intangible assets acquired through business combinations.

Earnings per share

Adjusted basic EPS of increased by 28.6% to 0.9p from 0.7p in 2013. Basic loss per share reduced to 1.2p (2013: loss 4.1p) as a result of significantly reduced exceptional charges. Adjusted basic EPS is calculated after adjusting for exceptional items, losses from discontinued operations, amortisation of acquired intangibles and related deferred tax credits.

Cash flow and net debt

A £4.4m cash outflow from operations (FY13 inflow of £2.6m) was caused by £2.9m final cash closure costs associated with the Group's former Cléry manufacturing facility, which ceased production in June 2013. These costs have now all been met with no impact on future cash flows anticipated. Cash flow from continuing activities was £4.9m lower than in 2013 as a result of increases in working capital and exceptional acquisition and restructuring costs.

In January 2014, the Group entered into a new senior secured debt facility agreement with Hayfin Capital Management Group ("Hayfin") in order to finance the acquisition of Obvieline SAS. As part of this re-financing, the Group's existing debt with Clydesdale Bank plc was repaid in full. The new debt facility was subsequently extended on two occasions as part of the acquisitions of AQTIS and Silhouette®. Total drawings under the facility amounted to £59.5m with £11.9m used to settle outstanding debt and the balance used to fund acquisition payments and associated costs of acquisition. The Group also raised £20.0m in new equity during the year in order to part fund the acquisition of Silhouette® with remaining proceeds retained to fund future milestones relating to regulatory approvals for Silhouette®.

At 30 June 2014, cash and cash equivalents were £17.5m (2013: £5.1m) with net debt of £40.2m (2013: net debt of £6.9m). On a pro forma basis (including EBITDA from acquisitions for the full year) this equates to 2.8x EBITDA, below projections of 3.1x at the time of the Silhouette® acquisition.

Balance sheet

Non-current assets

Non-current assets increased significantly to £246.9m at 30 June 2014 (2013: £126.2m) as a result of the acquisitions of Obvieline, AQTIS and Silhouette®. The acquisitions have resulted in gross additions to goodwill of £69.0m which are offset by foreign exchange adjustments of £5.1m and disposals of £0.1m leaving a net increase in goodwill of £63.8m. Additions to intangible assets, primarily resulting from the acquisitions were £67.1m. These have been offset by amortisation and impairment charges of £5.8m, exchange adjustments of £3.8m, transfers to assets held for sale and disposals of £1.1m leaving a net increase in intangibles of £56.4m.

Current assets

Both inventories and trade and other receivables have increased as a result of acquisitions and underlying growth in the year. Inventories increased to £7.6m (2013: £4.8m) and trade and other receivables increased to £29.5m (2013: £19.9m). Assets held for sale represent the Cryogesic assets which were sold immediately post year end on 1 July 2014 for £1.1m.

Total Liabilities

Non-current liabilities have increased to £141.9m from £21.5m last year, as a result of acquisitions in the year. Non-current borrowings increased by £44.8m to £53.3m, being the non-current portion of the Hayfin debt facility, less capitalised costs associated with entering into the facility. Deferred consideration payable (other financial liabilities) of £58.0m (2013: £1.5m) represents the discounted present value of future milestones and royalties payable in relation to the acquisitions of Obvieline, AQTIS and Silhouette®. Deferred tax liabilities have increased to £27.0m (2013: £10.9m) as a direct result of the acquisitions. These deferred tax liabilities are linked to the fair value of intangible assets recognised at acquisition and will be amortised to the income statement to offset the amortisation charge against intangible assets over the life of the related intangibles.

Current liabilities also increased to £42.9m (2013: £24.0m) primarily as a result of acquisitions with an increase in deferred consideration of £14.1m over June 2013. Total deferred consideration (other financial liabilities) expected to be settled within one year of £14.6m (2013: £0.5m) is mainly linked to regulatory milestones for Silhouette®.

Unaudited Consolidated Income Statement

For the year ended 30 June 2014

Unaudited Consolidated Statement of Comprehensive Income

For the year ended 30 June 2014

Unaudited Consolidated Balance Sheet

At 30 June 2014

Unaudited Consolidated Statement of Changes in Shareholders' Equity

For the year ended 30 June 2014

Unaudited Consolidated Cash Flow Statement

For the year ended 30 June 2014

1. Basis of preparation

The preliminary financial information has been prepared in accordance with International Financial Reporting Standards ('IFRS') and International Financial Reporting Standards Interpretations Committee ('IFRS IC') interpretations as adopted for use in the European Union and with Companies Act 2006 applicable to Companies reporting under IFRS. In preparing this financial information management has used the principal accounting policies as set out in the Group's annual financial statements for the year ended 30 June 2013 and which will be used in preparing the financial statements for the year ended 30 June 2014. There have been no changes to the accounting policies during the year, except as described below:

The following new standards and amendments to standards are mandatory for the first time for the financial year ending 30 June 2014 and have been applied by the Group, but have had no impact.

· IAS 19, 'Employee benefits' (effective Annual periods beginning on or after 1 January 2013)

· IFRS 9, 'Financial Instruments', on 'Classification and measurement' of financial assets and liabilities.

The preliminary financial information has not been audited and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The financial information for the year ended 30 June 2013 has been extracted from the Group's financial statements for the year ended 30 June 2013. The auditors' report on the financial statements for the year ended 30 June 2013 was unqualified and did not contain statements under either section 498 (2) or section 498 (3) of the Companies Act 2006. The financial statements for the year ended 30 June 2013 have been delivered to the Registrar of Companies.

The Group's forecasts, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current debt facilities and to meet the required covenant measures. After making enquiries, and considering the covenants on the Group's debt, the Directors have a reasonable expectation that the Group has adequate resources to continue in operation for the foreseeable future. As a result, they continue to adopt the going concern basis in preparing the preliminary financial information.

This preliminary financial information was approved by the Board of Sinclair IS Pharma plc on 18 September 2014.

2. Segmental information

The chief operating decision maker has been identified as the executive management team. This team reviews the Group's internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports.

The executive management team considers the business as being organised into the following reportable operating segments; Country Operations (including the Group's operations in France, UK, Italy, Germany and Spain) where the Group has its proprietary sales infrastructure, and International Operations where the Group sells through a local distributor. Research and development, technology licensing income and costs, intellectual property and corporate costs are included under the 'other' heading.

The executive management team assesses the performance of the operating segments based on a measure of adjusted earnings before interest, tax, depreciation, amortisation, exceptional items and share based payments (Adjusted EBITDA).

Unaudited 2014

Audited 2013

The revenue analysis above is stated net of inter-company sales.

Other includes fixed administrative expenses which cannot be allocated to a specific revenue generating segment.

A reconciliation of total adjusted EBITDA to total operating loss is provided as follows:

3. Exceptional items - operating expenses

Exceptional items represent significant items of income and expense which due to their nature, size or the expected infrequency of the events giving rise to them, are presented separately on the face of the income statement to give a better understanding to shareholders of the elements of financial performance in the year, so as to facilitate comparison with prior periods and to better assess trends in financial performance.

Acquisition costs of £2,558,000 (2013: £74,000) include legal and professional expenses incurred in relation to the acquisitions of Obvieline Laboratories SAS, AQTIS Holdings BV, and Silhouette Lift SL during the year and other business development projects.

Restructuring and integration costs of £1,632,000 (2013: £2,197,000) include post acquisition restructuring costs and manufacturing write offs incurred as a result of integrating the activities of acquired businesses into the Group, and other restructuring actions undertaken in the year; and in 2013 also included settlements paid to distributors in order to return certain product rights and resolve legacy contract disputes.

Impairment charges of £426,000 (2013: £15,151,000) include an impairment to the rights to the Terbinafine spray asset following the decision to halt further development work on this product and return the rights to the licensor. In 2013 impairment charges of £15,151,000 included £11,474,000 impairment to the product rights and £3,677,000 impairments to goodwill as a result of declining sales volumes and a reduction in average selling prices affecting the Variquel and Cryogesic products.

An impairment reversal of £820,000 has been recognised in the current year as a result of an agreement reached to dispose of the Cryogesic assets for total consideration of £1,100,000. The sale completed post period on 1 July 2014 and as a result the Cryogesic assets have been treated as an asset held for sale at 30 June 2014.

Exceptional cost of sales of £171,000 (2013: £158,000) represent the pass through of the fair value uplift applied, at acquisition, to the carrying value of the inventories acquired with the acquisition of Silhouette SL and Obvieline Laboratories SAS (2013 Advanced Bio Technologies Inc.). The fair value uplift was expensed as the inventory was sold to the market.

Profits on disposal of £600,000 were generated from the disposal of Effederm by the Group to Labaratoires Bailleul SA for a total consideration of €1,010,000 (£854,000) in November 2013. In 2013, £827,000 was generated from the disposal of Fazol G by the Group to Laboratories Majorelle for a total consideration of €1,150,000 (£990,000) in March 2013. The profit on disposal is the consideration net of the carrying value of the asset disposed and associated legal costs incurred.

4. Discontinued operations

On 30 June 2013 the Group closed its manufacturing facility at Cléry in France and has fully outsourced its manufacturing arrangements. The Directors expect to make significant cost savings through the outsourcing of these manufacturing arrangements to its manufacturing partners.

A loss for the year of £1,208,000 (2013: £1,515,000) has been recognised as the costs of discontinued operations.

A single amount is shown on the face of the income statement comprising the post-tax result of discontinued operations. The income and expenses of these operations are reported separately from the operations of the group. Revenue from discontinued operations represents intra group revenue of the Cléry site up to the point that stock from Clery operations was exhausted, determined using third party rates for the products manufactured during the year. The table below provides further detail.

The cash outflow from discontinued operations is disclosed in note 15. There are no discontinued cash flows arising from investing or financing activities.

5. Finance income and costs

Net foreign exchange gains of £1,921,000 include £1,710,000 of exchange gains arising from the difference in the Sterling: Euro and the Sterling: US Dollar exchange rates at the drawdown date of the Hayfin facilities and the end of the year.

In December 2012 the Group replaced its existing loan facilities with a new term loan facility with Clydesdale bank and direct issue costs relating to the previous facility of £415,000 were written off.

On 3 January 2014 the Group entered into a new term loan facility with Hayfin capital management LLP and consequently the Clydesdale borrowing was repaid in full, and £604,000 of loan fees relating to the arrangement of this facility were written off.

6. Taxation

The deferred tax credit on exceptional items includes the amortisation of deferred tax liabilities arising from the impairment of intangible assets and the transfer of assets to assets held for resale (note 3).

7. Loss per share

Basic loss per share has been calculated by dividing the loss for the year, by the weighted average number of shares in existence for the year. The loss and weighted average number of shares for the purpose of calculating the diluted loss per share are identical to those used for the basic loss per share at 30 June 2014, as the exercise of share options and warrants would have the effect of reducing the loss per share and therefore is not dilutive.

Adjusted Earnings per Share

Adjusted earnings per share has been calculated by adding back exceptional charges, discontinued activities in the year and amortisation of acquired product rights to the loss for the year, together with related deferred tax movements resulting in an adjusted profit for the year.

A reconciliation of adjusted profit is as follows:

8. Goodwill

Additions in 2014 comprise the excess consideration paid over the fair value of assets acquired on the purchase of Obvieline Laboratories SA, Aqtis Medical BV, and Silhouette SL.

Exchange adjustments arise as a result of the impact of the difference in the Sterling: Euro exchange rate, and the Sterling : US Dollar exchange rate, at the beginning of the year or the date of acquisition and at end of the year on balances recorded in Euros and US Dollars.

Cash generating units ('CGU's) are deemed to be groups of trademarks acquired with individual trading entities.

Goodwill has been allocated to the following CGUs:

Goodwill is not amortised but tested annually for impairment or more frequently if there are indications that it may be impaired. Value in use calculations have been utilised to calculate recoverable amount. Value in use is calculated as the net present value of the projected post tax cash flows of each cash generating unit, discounted at 11.5% (2013: 10.5%), the Group's estimated post tax weighted average cost of capital. The same discount rate is applied to each cash generating unit because the group is centrally funded.

The cash flows, which have been approved by the Board, have been projected over five years for all cash generating units, representing the Director's best estimate of future product revenues and margins. Growth rate assumptions have been applied at an individual product and market levels and range from 0% for non-core products to 50% for certain key strategic products.

Long-term growth rate assumptions beyond year five are 2% (2013 2.0%) for all other CGUs, other than Sinclair UK, 0%, which consists mainly of non-core and un-promoted hospital products. These growth rates are consistent with forecasts used in industry reports.

The carrying value of the International Operations CGU has been reduced by £95,000 following the disposal of certain product rights which contributed to this CGU.

In 2013 Directors reassessed the forecast sales and the gross margins of the Sinclair UK CGU. The Sinclair UK CGU was reduced to its recoverable amount and goodwill was reduced to £4,930,000 through the recognition of an exceptional impairment loss against goodwill of £3,677,000.

In 2014 the impact of new entrants into the market has not reduced sales as significantly as expected. As a consequence of this, the recoverable value of the Sinclair UK CGU now exceeds the carrying value by £4.3m.

The recoverable amount of the Sinclair UK CGU is sensitive to a reduction in the sales forecast. A reduction in sales of 30% would be required to reduce the recoverable value of the Sinclair UK CGU below its carrying value. The directors do not believe that such a reduction in sales is reasonably possible at this current time.

Whilst forecasts are sensitive to growth rates for specific products and territories, the Directors believe that any reasonably possible change in the key assumptions on which the recoverable amounts are based for all CGUs would not cause the carrying amount to exceed their recoverable amount.

9. Intangible Assets

Additions in the year include £3,605,000 payable for the purchase of the direct distribution rights for Silhouette in the UK.

Additions arising on business combinations are recognised based on the fair value of the identifiable intangible assets acquired which primarily relate to the product rights and trademarks covering the acquired products. The amounts recognised are £31,936,000 relating to the acquisition of Silhouette Lift SL, £17,619,000 for Aqtis Medical BV, and £12,551,000 for the acquisition of Laboratoire Obvieline SAS as set out further in note 16.

Exchange adjustments arise as a result of the impact of the difference in the Sterling: Euro exchange rate, and the Sterling : US Dollar exchange rate, at the beginning of the year or the date of acquisition and at end of the year on balances recorded in Euros and US Dollars.

10. Trade and other receivables

11. Trade and other payables

12. Provisions

Total provisions comprise legal provisions of £92,000 (2013: £111,000) and other provisions of £86,000 (2013: £nil). In 2013 there was a restructuring provision of £1,269,000, all of which has been utilised in the year following the closure of the Clery manufacturing site. Provisions released during the year also includes £12,000 (2013: £327,000) legal provision released following the settlement of other commercial disputes arising from normal trade.

On 3 January 2014 the Group entered into a new term loan facility with Hayfin Capital Management LLP ('Hayfin') and consequently the Group's existing loan facility with Clydesdale Bank was repaid in full. Drawings under the Hayfin facility amount to £59.5m and were used to fund the acquisition of Obvieline Laboratories SA, Aqtis Medical BV, and Silhouette Lift SL, repay existing borrowings, and to meet borrowing issuing expenses and the costs of acquisition . This includes drawdown denominated in £ of £8.6m, Euros of €38.5m (£32.1m) and $31.3m (£18.8m).

Direct issue costs of £3.2m have been offset against the gross liability and are being amortised over the life of the facility.

Foreign exchange gains of £1.7m arising from the difference in the Sterling: Euro and the Sterling: US Dollar exchange rates at the drawdown date of the Hayfin facilities and the end of the year have been posted to net finance expenses.

The total available facility of £62.5m includes a revolving facility of £3.0m and a borrowing facility of up to £59.5m and expires on January 3 2019.

Interest is initially charged at libor + 8.0% but will reduce to libor + 5.0% when the ratio of debt to ebitda drops below 2.0. Interest payments are scheduled every quarter.Capital repayments, equivalent to 50% of the amount by which cashflows after debt service exceeds £0.5m, will be paid within 130 days following the end of each financial year. A final settlement payment will be made at the expiry of the facility.

Drawings under the facility are secured by a debenture over all the Group's assets.

Included within other financial liabilities is deferred and contingent consideration arising from business combinations completed in the year. This represents the Director's estimate of the fair value of the assumed contractual minimum liabilities following business combinations discounted to their present value.

The items of deferred and contingent consideration relating to the acquisitions of Laboratories Obvieline SA, Aqtis Medical BV, and Silhouette Lift SL are described in note 16.

Deferred consideration payable to the previous owner of SEPI AG (a Swiss subsidiary acquired by IS Pharma in April 2008) which are payable to the original developers of Haemopressin in annual instalments until March 2017 representing royalties payable on future net revenue from Haemopressin. In 2013 this represented the total deferred consideration, in 2014 £451,000 is current, and £1,035,000 is non-current.

15. Cash flows from operating activities including discontinued operations

Discontinued activities

16. Business combinations

Obvieline Laboratories SA

The Company acquired 100% of the issued share capital of Obvieline Labarotatories SA, on 3 January 2014 from Pharmavital SA. In April 2014, the Group also completed the acquisition of distribution rights to Perfectha in Russia, Brazil and certain other territories from Pharmavital SA. Obvieline Laboratories SA owns the worldwide rights to PerfecthaTM ,a range of hyaluronic acid based dermal fillers.

As a result of the acquisition, the Group expects to increase its presence in the global aesthetics market. The goodwill of £16,028,000 arising from the acquisition is attributable to the acquired customer base and economies of scale expected from selling Perfectha directly through the Group's direct sales forces in Europe. None of the goodwill recognised is expected to be deductible for tax purposes.

Details of the consideration paid, the provisional fair value of assets acquired and liabilities assumed, and goodwill arising are as follows:

Deferred consideration of €2.0 million is payable on 31 March 2015.

The contingent consideration comprises a sales milestone of €2.0 million payable when sales of Perfectha reach €17.0 million on a trailing twelve month basis, a milestone of €6.5 million on the regulatory approval of the Perfectha Lidocaine line extension in Europe and royalties of up to €1.8 million on sales of future line extensions. These amounts are expected to be settled as follows:

16. Business combinations continued

The potential undiscounted amount of all future payments that the Group could be required to make ranges from €2.0 million to €12.3 million.

The fair value of the contingent consideration arrangement of £6.4 million was estimated by applying the income approach.The fair value estimates are based on a discount rate of 11.5%, assumed future growth in the Perfectha trade, and regulatory approval for the use of Lidocaine in 2015 to 2016.

Acquisition related costs of £711,000 have been charged to exceptional administrative expenses in the income statement for the year ended 30 June 2014.

Obvieline Laboratories SA contributed £3.9m revenue and a profit of £0.8m to the Group's loss for the year from the date of acquisition to 30 June 2014.

If Obvieline Laboratories SA had been acquired on 1 July 2013 additional revenue of £2.9m and a profit before tax of £1.2m would have been included in the consolidated accounts.

Aqtis Medical BV

The Company acquired 100% of the issued share capital of Aqtis Medical BV, on 25 March 2014. Aqtis Medical BV owns the worldwide rights to Ellansétm, range of collagen stimulating dermal fillers.

As a result of the acquisition, the Group expects to increase its presence in the global aesthetic market. The goodwill of £17,809,000 arising from the acquisition is attributable to the acquired customer base and economies of scale expected from selling Ellansé directly through the Group's direct sales forces in Europe and globally alongside the Group's existing aesthetic portfolio.

Details of the consideration paid, the provisional fair value of assets acquired and liabilities assumed, and goodwill arising are as follows:

16. Business combinations continued

The contingent consideration comprises sales milestones of €8.0m and €12.0m when sales of Ellansé reach €15m and €25m on a trailing twelve month basis, two milestones of €5.0m each when regulatory approval for two Ellansé products is achieved in the USA, and a royalty on sales in the USA which is capped by an earn out call option and which is not expected to exceed €8.1m. These amounts are expected to be settled as follows:

The potential undiscounted amount of all the future payments that the Group could be acquired to make is estimated to be up to €38.1m.

The fair value of the contingent consideration of £17.7m was estimated by applying the income approach. The fair value estimates are based on a discount rate of 11.5%, assumed future growth in the Ellansé trade, and based on obtaining the regulatory approval for the USA in 2018 and 2019.

Acquisition related costs of £659,000 have been charged to exceptional administrative expenses in the income statement for the year ended 30 June 2014.

Aqtis contributed £1.3m revenue and a loss of £0.3m to the Group's loss for the year from the date of acquisition to 30 June 2014.

If Aqtis Medical BV had been acquired on 1 July 2013 additional revenue of £3.6m and a profit before tax of £0.5m would have been included in the consolidated accounts.

16. Business combinations continued

Silhouette Lift SL

The Company acquired a controlling interest in Silhouette Lift SL on 2 May 2014. Silhouette SL owns the worldwide rights to Silhouette Lift and Silhouette Soft, a range of collagen stimulating cones on threads complimentary to the Group's aesthetic portfolio.

The acquisition is made in two steps with 65% of the shares purchased on 2 May 2014 and the remaining shares will transfer at a fixed price in January 2015. The payment for the remaining shares was also made on 2 May into an escrow account pending their transfer to the Group. These remaining shares do not carry voting rights and will not earn a dividend in the period from acquisition until transfer. Consequently the acquisition has been treated as a full business combination and there is no remaining minority interest.

As a result of the acquisition, the Group expects to increase its presence in the global aesthetic market. The goodwill of £35,167,000 arising from the acquisition is attributable to the acquired customer base and economies of scale expected from selling Silhouette directly through the Group's direct sales forces in Europe and globally alongside the Group's existing aesthetic portfolio.

Details of the consideration paid, the provisional fair value of assets acquired and liabilities assumed, and goodwill arising are as follows:

Deferred consideration of €1,665,000 is payable on 12 January 2015.

Contingent consideration comprises

· sales milestones of $15.0m when sales outside USA reach $14.0m in any twelve month trailing period,

· sales milestones of $2.5, $7.5m and $15.0m when USA sales reach $12.0m, $18.0m, and $30.0m in any twelve month trailing period,

· a royalty earned on sales which capped by an earn out call option and which is not expected to exceed $42.8m,

· and regulatory milestones totalling $23.0m which are payable when approval for the Silhouette Soft product is achieved in certain key markets including the USA.

16. Business combinations continued

These amounts are expected to be settled as follows:

The minimum undiscounted future payment is €1.7m and the potential undiscounted amount of all further future payments that the Group could be required to make is up to $105.8m

The fair value of the contingent consideration of £44.2m was estimated by applying the income approach. The fair value estimates are based on a discount rate of 11.5%, assumed future growth in the Silhouette trade, and regulatory approval for Silhouette Soft in the USA in 2016.

Acquisition related costs of £1,222,000 have been charged to exceptional administrative expenses in the income statement for the year ended 30 June 2014.

Silhouette Lift contributed £0.8m revenue and a loss of £0.8m to the Group's loss for the year from the date of acquisition to 30 June 2014.

If Silhouette Lift SL had been acquired on 1 July 2013 additional revenue of £2.9m and a loss before tax of £2.6m would have been included in the consolidated accounts.