Sinclair Pharma plc Godalming Business Centre Woolsack Way, Godalming Surrey GU7 1XW United Kingdom

Tel +44 (0) 1483 410 600 Fax +44 (0) 1483 410 620 email: info@sinclairpharma.com

www.sinclairpharma.com

An international specialtypharma company

Sinclair Pharma plcAnnual Reportand Accounts 2009

Sinclair P

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eport and Accounts 2009

Sinclair Pharma plc is an international specialty pharmaceutical company providing solutions to treat dermatological, oral care and gynaecological diseases through advanced surface technology and innovative delivery systems. It has a growing sales and marketing operation that is already present in France, Italy and Spain and a complementary marketing partner network that spans more than 90 countries.

Contents

02 Facts and Figures04 Our Key Products06 Vision and Strategy07 Chairman’s Statement08 Case Study – Global Operations10 Business Review – Operational12 Case Study – Global Partnerships15 Business Review – Financial16 Case Study – Pipeline19 Board of Directors20 Senior Management21 Directors’ Report25 Statement of Directors’ Responsibilities26 Corporate Governance Report31 Directors’ Remuneration Report38 Independent Auditors’ Report39 Consolidated Income Statement40 Balance Sheets41 Statements of Changes in Shareholders’ Equity42 Cash Flow Statements43 Notes to the Financial Statements65 Corporate Advisors

•Wefocusonthenichetherapeutic areas of dermatology, oral health and gynaecology

•Weextractfullvaluefromeachofour brands by a combination of sales through our own country operations and international operations consisting of our extensive network of marketing partners to rapidly bring the products to market

•Weutiliseandcombineacquiredtechnologies and intellectual property to create new product concepts, adding to the product pipeline

Who we are What we do

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Restructured business to increase commercial focus and financial control

•Goaltodeliversustainableprofitabilityfrom recurring revenue

•Establishedaleanstructureandreduced costs from non-core business functions

•AppointedChristopheFoucherasChiefOperatingOfficer,responsiblefor all commercial, supply-chain and manufacturing operations

Consolidated own sales and marketing activities in our Country Operations in France, Italy and Spain

•AppointednewCountryOperationsDirectors

•LaunchedkeyproductsincludingSebclair and Papulex

Financial Highlights 2009 2008

EBITDAprofitbeforeexceptionalitems £2.3m £1.3m Total revenue £30.4m £30.3m Grossprofit £20.7m £19.4m Operational loss before exceptional items £0.3m £0.8m

Operational Highlights

Continued expansion through marketing partner network

•Signed65newdistributionagreementscovering 27 products in 47 markets

•44launchesofsevenproductsin22 countries

•Focusedonexpansioninkeyterritoriesincluding emerging markets

Maximising existing technologies through R&D and strategic licensing in/out activities

Employees worldwide plus contract sales force

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Marketing partnerships

Facts and Figures

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Countries in our marketing partner network

1 Algeria 2 Argentina 3 Australia 4 Austria 5 Bahrain 6 Belarus 7 Belgium 8 Benin 9 Bosnia & Herzegovina 10 Brazil 11 Bulgaria 12 Burkina Faso 13 Cameroon 14 Canada 15 Central African Republic 16 Chad 17 Chile 18 China 19 Colombia 20 Congo 21 Costa Rica 22 Cyprus 23 Czech Republic 24 Denmark 25 Djibouti 26 Dominican Republic 27 Ecuador 28 Egypt 29 El Salvador 30 Finland 31 France 32 Gabon 33 Germany 34 Ghana 35 Greece 36 Guatemala 37 Honduras 38 Hungary 39 India 40 Indonesia 41 Iran 42 Iraq 43 Ireland 44 Israel 45 Italy 46 Ivory Coast 47 Jordan

48 Kazakhstan 49 Kuwait 50 Lebanon 51 Libya 52 Lithuania 53 Luzembourg 54 Malaysia 55 Mauritania 56 Mauritius 57 Mexico 58 Morocco 59 Netherlands 60 Nicaragua 61 Niger 62 Norway 63 Oman 64 Pakistan 65 Panama 66 Peru 67 Poland 68 Portugal 69 Qatar 70 Romania 71 Russia 72 Saudi Arabia 73 Senegal 74 Singapore 75 Slovakia 76 Slovenia 77 South Africa 78 South Korea 79 Spain 80 Sudan 81 Sweden 82 Switzerland 83 Syria 84 Togo 85 Tunisia 86 Turkey 87 UK 88 Ukraine 89 United Arab Emirates 90 Uruguay 91 USA 92 Venezuela 93 Vietnam 94 Yemen

Countries Sinclair has launched in Countries Sincalir has deals in place

New product registrations in 2009

Two new product registrations were achieved in the EU, for Decapinol Perio vials and DermaChronic foam.

Decapinol Perio System Decapinol Perio vials and Decapinol Perio Applicator comprise the Decapinol Perio System.

Decapinol Perio System is an innovative system for professional use only, indicated for the treatment of periodontitis following ablation of supragingival calculus and/or courettage with manual instruments or ultrasound.

Decapinol Perio vials contain Delmopinol, which forms a cationic barrier that reduces surface tension, preventing microbial adhesion and colonisation on the surface of the teeth and gums, thus hampering the adherence of bacteria to areas treated instrumentally and significantlyslowingtheformationofnew plaque without altering the oral bacterial flora.

DermaChronic foam The DermaChronic range is indicated for people with sensitive skin or people with skin conditions such as xerosis, atopic dermatitis, psoriasis and eczema. The DermaChronic foam line extension is registered as a Medical Device IIa in the EU and can be sold without a prescription.

Product registrations

38EU 28 US 10

Total 38

Launches: •SpainMay 2009•AlgeriaFebruary 2009•IranMay 2009•TunisiaOctober 2009

2010 Milestones: •Plannedlaunchesin:India,

Russia, Israel, and Saudi Arabia.

Launches: •Italy October 2008•Spain January 2009•Portugal October 2008•TurkeyMarch 2009•Poland May 2009

2010 Milestones: •USlaunchofSebclaircream

through Dr Reddy’s in July 2009

•PlannedlaunchesinUSA,Bulgaria,Hungary, Czech Republic, Slovakia,andLithuania

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Dermatology

Sinclairprovidesspecificsolutionstodermatologistsand pharmacists for patients suffering from skin damage and skin injuries through its own operations in France, Italy and Spain and through its international network of marketing partners. It aims to do this by delivering higher value products with special attributes based on its surface

Product name Description Progress

Papulex •Dermo-cosmeticrange,consistingoffiveproducts,indicatedforthemanagement of acne-prone skin.

•Containstheactiveingredientnicotinamide (4%), chosen for its efficacyinpreventingandtreatinginflammation.

Sebclair •Non-steroidalrangeofthreeproducts, available as a cream, shampoo and scalp fluid, indicated for the management of seborrhoeic dermatitis.

Approved •EU/Other

territories

Available in •10countries

Approved •EU/US

Available in •6countries

Our Key Products

Launches: •Lebanon February 2009

2010 Milestones:•PlannedlaunchinEgypt

Bio-Taches •FormspartoftheDermaOmniumrange, acquired by Sinclair in FY 2008.

•Rangeofproductsindicatedforthe prevention and treatment of hyperpigmentations.

•Productrangecomprisesofanemulsion, a peel-off mask and two sun care products.

Approved •EU/Other territories

Available in •13countries

Launches: •Poland May 2009•Israel June 2009•South Korea August 2008

2010 Milestones:•PlannedlaunchesinIndia,

the Netherlands, Belgium, Czech Republic, Slovakia, Bulgaria,andLithuania

Atopiclair •Non-steroidalrangecontainingtwo products indicated for the symptomatic treatment of atopic dermatitis, including the relief and management of the most common signs and symptoms such as itching, burning and pain.

Approved •EU/US/Other

territories

Available in •14countries

treatment technologies and innovative delivery systems (foams, kits and sprays), treating major skin conditions such as acne, eczema, fungal conditions and addressing family dermatology and personal care needs. Core products in our Dermatology portfolio include Papulex, Sebclair, Bio-Taches, Atopiclair, Oxyplastine and DermaChronic.

Launches:•Italy October 2008•Israel October 2008•Slovakia October 2008

2010 Milestones•USlaunchofDecapinol

through Orapharma (division of Johnson&Johnson) on schedule for early 2010

•OtherplannedlaunchesinIndiaand Portugal

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Oral health

Sinclair provides oral care solutions for mouth and gum diseases to specialists and pharmacists, marketed through its international network of partners. The oral care portfolio consists of two main product ranges, Decapinol and Aloclair.

Product name Description Progress

Decapinol •Innovativerangeoftreatmentsthathelps treat gingivitis and prevent periodontitis.

•Rangeconsistsofarinse,toothpaste containing fluoride, spray, gel and perio applicator and vials.

•Approvalwasgrantedfortheperio applicator and vials in the EU during the last year.

Approved •EU/US

Available in •7countries

AloclairLaunches:•Mexico July 2008•Finland February 2009•Indonesia August 2008•Greece March 2009•Norway September 2008•Cyprus March 2009•South Korea September 2008•SouthAfricaJune 2009•Argentina December 2008•Czech Republic June 2009•Sweden February 2009•Slovakia June 2009•Denmark February 2009•Jordan June 2009Aloclair Plus launches:•Spain November 2008

2010 Milestones:•GlobalrolloutofAloclairPlusrange.

Aloclair and Aloclair Plus

•Rangeofproductsindicatedto relieve the pain caused by aphthous mouth ulcers and other minor oral lesions.

•Aloclairisavailableasarinse,gel and spray.

Approved •EU/US/Other territories

Available in •29countries

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Sinclair is a specialty pharma company providing solutions to treat dermatological, oral care and gynecological diseases through advanced surface technology and innovative delivery systems.

•Goaltodeliversustainableprofitabilityfrom recurring revenue

•Sinclairfocusesondermatology,andintends to exploit the value of other in-house technologies and assets, notably Decapinol and Delmopinol, OB-GYN and silver nanotechnology

•Sinclair’splanistobuildEuropeancritical mass in the dermatology arena with a view to becoming an in-licensing agent of choice

•Withthebackingofhigh-profilenewinvestors, Sinclair seeks to create shareholder value through the addition of product acquisitions and selected M&A targets in order to sweat the assets of its core specialty pharma business

•Reducecomplexityandimproveprofitabilitybymarketingfewer,strategic products

Our Vision Our Strategy

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Sinclair has delivered its second year of EBITDAprofit.Whilethepastyearhasnot been without its challenges, we have responded to these by adapting our business to meet them head on.

Second year of EBITDA profit

The past 12 months have presented the global economy with some of the toughest challenges of recent times. The effects have been far reaching with no sector or geography left untouched. The life sciences, and especially pharmaceutical, industries have also felt the effects of the downturn with many wholesalers reducing the extent of their stocking to minimise their overall risk.

Against this backdrop Sinclair has delivered its second year ofEBITDAprofit.Whilethepastyearhasnotbeenwithout its challenges, we have responded to these by adapting our business to meet them head on.

The global outlook remains unclear but we share with you today solid results that underline Sinclair’s potential. These results are testament to the continued hard work of Sinclair’s employees and management team and their dedication in helping Sinclair work towards achieving its goals. A new commercialisation strategy

Sinclair has always prided itself on its ability to develop high quality products for the treatment of a range of dermatological and oral treatments. Having established an extensive portfolio of products, our focus now is on fully realising the value of these products.

During the past year we have embarked upon an aggressive commercialisation strategy and have restructured our business to maximise the potential in our portfolio. At the same time we have created a new role – Chief Operating Officer–andpromotedChristopheFouchertothisposition,following his success in developing the Sinclair business in France. Under Christophe we have united the business development team and operating companies to form a single division with a common objective.

Following the acquisition of the remaining minority interest in Spain, Sinclair now has 100% owned operations in France, Italy and Spain. The depth of management expertise in these territories has been reinforced by the appointment of new Country Operations Directors.

Sinclair’s own operations are complemented by an extensive network of marketing and distribution partners around the world. Sinclair continues to increase its global footprint by building on existing strong relationships and by increasing the level of marketing support it gives to its partners, implementing a new objective of increasing product sell out, and ultimately generating more predictable income in relation to orders and re-orders.

In combination these proactive and decisive steps make meconfidentthatournewapproachequipsuswiththe tools to progress our growth strategy. Employees

Without the continued commitment and hard work of Sinclair’s employees the results we disclose today would nothavebeenpossible.Ledbyastrongmanagementteam,Sinclair’s employees are one of the greatest assets of the business. On behalf of the Board and shareholders I would like to thank them, and Sinclair’s management, for their hard work. Outlook

The implementation of a clearly focussed commercialisation strategyunderpinnedbyanagileandefficientbusinessstructure means we are well positioned to drive product revenues,withoutsacrificingmargins.Webelieveourbusinesspresentsseveralsignificantopportunitiesforongoing growth and our short-term goal remains to achieve sustainableprofitabilitybasedonrecurringproductrevenues.The Board continues to believe that the commercial success of Decapinol in US will be one of the key drivers fortheGroupandremainconfidentinSinclair’sabilitytodeliverlong-termprofitability.

We look forward to the year ahead with optimism as we continue our journey to becoming a world class specialty pharma company, with innovative products that meet the needs of the patient.

Grahame Cook ACA Chairman

Chairman’s Statement

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This year saw the implementation of a new commercial strategy which will enable Sinclair to optimise the core business, clearly focus on its long term goals and fully realise the value of our product portfolio.

Highlights 2009

• Restructured business to increase commercial focus and financialcontrol

• FormationofasingledivisionSinclairGlobalOperations integrating the business development and operating companies

• Consolidatedownsalesandmarketingactivitiesinthe Country Operations in France, Italy and Spain

• AppointednewCountryOperationsDirectorsinorder to reinforce the depth of management expertise in these territories

• FocusonstrategicbrandssuchasDecapinol,Aloclair, Fazol, Papulex, Oxyplastine and Sebclair

Christophe Foucher ChiefOperatingOfficer

Mr Foucher is responsible for all commercial, supply chain and manufacturing activities in the Group.

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1 Papulex is one of the core products in our Dermatology portfolio indicated for acne prone skin

2 Sebclair is one of the core products in our Dermatology portfolio, indicated for the management of seborrhoeic dermatitis

3 Sinclairprovidesspecificsolutionstodermatologists and pharmacists for patients suffering from skin damage and skin injuries

4 Sinclair provides oral care solutions for mouth and gum diseases to specialists and pharmacists, marketed through its international network of partners. The oral care portfolio consists of two main product ranges, Decapinol and Aloclair

5 The business development and operating teams were integrated to form a single division Sinclair Global Operations with a common objective

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Sinclair has a strong and growing portfolio of products, both on the market and in development, and an extensive network of sales and marketing partners; the Group is now focused on the commercialisation of our products.

We have restructured and streamlined the business. Christophe Foucher has been appointed as Chief Operating Officerwithresponsibilityforallcommercialandsupplychainactivities in the Group. With 14 years of experience, he is implementing the commercial strategy designed to enable Sinclair to optimise the core business and achieve its long term goals. This restructuring includes the integration of the business development and operating companies to form a single division Sinclair Global Operations with a common objective.

Sinclair has purchased the outstanding 49.95% of LaboratoriosNovoPharmaS.L.,tocreateSinclairPharmaceutical España. Sinclair now has 100% owned operations in France, Italy and Spain and the depth of management expertise in these territories has been reinforced by the appointment of new Country Operations Directors. Sinclair has also streamlined its operations in the UK and, as a result of the regulatory changes in the market, has closed its UK sales operation, now distributing its UK products solely through marketing partners. Financial control has been increased by the appointment ofafinancialcontrollerdedicatedtothecommercialandmanufacturing operations.

Sales and Marketing

Sinclair Global Operations

The newly formed Sinclair Global Operations, headed up by COO Christophe Foucher, is divided into:

• CountryOperations(formerlyoperatingcompanies)

• InternationalOperations(formerlybusinessdevelopment)

The principal focus of the restructured organisation is on improving execution, leverage, responsibility and accountability across the company. In addition the appointmentofJean-LouisLamandéasfinancialcontrollerforSinclairGlobalOperationsincreasestheleveloffinancialinput into the decision-making process.

Country Operations

During the full year 2009, Country Operations contributed £12.4m to total revenues.

France The French operation continues to spearhead the changes within the organisation and has established the working model for Country Operations. During the period we appointed Celine Genty as Country Operations Director and we reinforced the marketing team to support our activity in the pharmacy channel.

In the dermatology channel we continue to leverage the strength of the existing French brands and the medical sales reps teams now have full coverage of 3,200 dermatologists.

In the pharmacy channel we successfully introduced a sell-out team to support the pharmacy team and increase sell-out at points of sale. This process of building real partnerships with pharmacies will be fully achieved in FY 2010 through the creation of a dedicated trainer-sales

Michael Flynn ChiefExecutiveOfficer

Despite the challenging economic environment, we are pleased to report our second successive year ofprofitabilityattheEBITDAlevel.Revenues for the year ended 30 June 2009 were £30.4 million, impacted by wholesaler de-stocking, particularly in the second half. However, a combination of greater revenues from licensing fees and strong cost control resulted in an EBITDA of £2.3m before exceptional items.

Business Review – Operational

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rep team visiting key customers. This organisation will be replicated in Italy and in Spain in the coming years.

There has also been an enhanced focus on direct sales to pharmacies with OTC promotions of Oxyplastine and Ephydrol. As a result, we have seen direct sales increase by 8% year on year.

Sinclair Pharma France contributed £9.8m to group revenues during the year.

Italy Attheendofthelastfinancialyearthebusinesswasrestructured to focus on the therapeutic areas of acne, dry and sensitive skin and seborrhoeic dermatitis. In addition, the sales force has been reorganised to use agents rather than sales representatives providing greater flexibility and enabling improved coverage and targeting.

During the year, Italy saw the successful launch of Sebclair Shampoo, Sebclair Scalp Fluid, and new formula DermaChronic.

In Italy, we appointed Paolo Prioglio as Country Operations Director, reinforcing the marketing and increasing team the expertise in the business.

Sinclair Srl contributed £2.0m to group revenues.

Spain Sinclair reinforced its presence in Spain through the acquisitionoftheremainingsharesinLaboratoriosNovoPharmaS.L.Thismovewasstrengthenedwiththe appointment of Santiago Calavia Torres as Country Operations Director of Dermatology and renaming the entity Sinclair Pharmaceutical España. Spain has seen the successful launch of Sebclair and Papulex.

Sinclair Pharmaceutical España contributed £0.2m to group revenues during the period.

UK DuringthefirsthalfoftheyeartheUKbusinesswasrestructured to focus on specialty dermatology sales. In December 2008 Sinclair increased its sales presence through a co-promotion collaboration with York Pharma. However as a result of the regulatory changes in the market, and as part of the organisational restructure, Sinclair closed its UK sales operation in June 2009, but continues to sell products through marketing partners.

Sinclair Pharma UK contributed £0.4m to group revenues during the period.

International Operations

International Operations incorporates Sinclair’s extensive network of marketing and distribution partners. This currently extends to deals in 94 countries and product sales in 59 countries. The network leverages the experience and local knowledge of our partners to extend the commercial reach of our product portfolio.

Sinclair continues to increase its global footprint and 2009 saw the continued geographical expansion of Sinclair’s product distribution with product sales of £9.6m. This was a result of 45 launches in 22 markets covering seven product ranges by the marketing partner network. Sinclair is also increasing the level of marketing support it gives to its partners, implementing a new objective of increasing product sell out, and ultimately generating more predictable income in relation to orders and re-orders.

As part of the reorganisation, International Operations are focusing on the USA, Germany, Israel, Poland and Algeria and limits its geographical expansion to key strategic markets such as South Korea, Russia, India, Turkey and Greece.

LicensingRevenues During the year Sinclair recognised licence fees and milestones of £7.4m (2008: £4.8m).

The major components of this are:

• theagreementwithGracewayforthesaleofUS distribution rights to Atopiclair cream and lotion for £2.1m

• thenon-cashlicensingagreementwithBMGPharmafor the licence of Sinclair’s gynaecological portfolio which contributed £3.3m

• thenon-cashlicensingagreementwithJB2SAfora licence of Sinclair’s onychomycosis kit, which contributed £0.9m.

Sinclair also received several smaller licence fees including: £0.2m from a major animal health company to enable the company to evaluate the use of Delmopinol to treat or prevent periodontal disease in companion animals and £0.2m from OraPharma following validation of the Italian manufacturing site to be used for the production of Decapinol Rinse for the US.

During the period we also signed 65 new distribution agreements covering 27 products in 47 markets. By extending the commercial presence of our product portfolio on a global basis, we continue to make available to patientseffectivesolutionsforspecificdermatologicalandoral health needs.

Research and development

The organisational restructuring has led to the establishment of the R&D and operations steering committee which has representatives from the R&D, regulatory affairs teams and the Global operations teams. The committee evaluates opportunities arising from internal R&D activities as well as potential in-licensing and co-development prospects.

R&D is focused on the development of new products and supporting existing products – particularly through creating line extensions. Innovative delivery systems and the use of advanced surface technology are our areas of focus within the dermatology area.

Pipeline Development

We have continued to advance our pipeline and expand its future potential through the signing of two product development and commercialisation deals with BMG Pharma, a privately-owned US-based company. BMG will be developing and registering a number of gynaecology products from Sinclair’s pipeline. Sinclair has in-licensed a range of skin anti-infection products based on patented silver nanotechnology from BMG. These innovative deals present Sinclairwithsignificantpipelinedevelopmentopportunitiesand new product assets. We also acquired proprietary organic zinc technology which may be combined with other technologies or used alone, and a hydrogen peroxide delivery system which can be used as an antibacterial in wound healing treatments.

There are 56 products and line extension projects in the current R&D pipeline covering dermatology and gynaecology, many of which we believe have the potential to deliver substantial revenues.

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Paul Phull Executive Vice President International Operations

Mr Phull has overall responsibility for International Operations, working to develop sales of Sinclair’s brands globally via existing partners and identifying opportunities for collaboration with new partners.

Sinclair continues to grow its global footprint by building on existing strong relationships and by increasing the level of marketing support it gives to its partners,allowingforgreaterefficiencywithin the supply chain. International Operations incorporates Sinclair’s extensive network of marketing and distribution partners. This currently extends to 94 countries and product sales in 59 countries. The network leverages the experience and local knowledge of our partners to extend the commercial reach of our product portfolio.

As part of the new strategy, International Operations is focusing on geographical expansion in key markets such as South Korea, Russia, India, Turkey and Greece.

Highlights 2009

• Newstructureimplemented

• Focusongeographicalexpansioninkeyemergingmarkets – Increasing the level of marketing support to our partners – Help increase product sell out, and ultimately generating more predictable income in relation to orders and re-orders

• Continuedexpansionthroughpartnernetwork – 65 new marketing agreements for 27 products in 47 markets – 44 launches, 7 products covering 22 markets

Global Partnerships

Our offices

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Paris, France

Milan, Italy

Madrid, Spain

Our pres

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1 Global reach

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1 Global Reach: Sinclair’s extensive network of marketing and distribution partners extends to 94 countries and product sales in 58 countries

2 Training: The International Operations team has increased the level of marketing support to our partners which includes comprehensive training on the products

3 India: This year saw the training of the Wockhardt marketing team on the Decapinol, Aloclair, Papulex and Atopiclair product ranges, following last year’s distribution agreement

4 LatinAmerica:SinclairreinforceditspresenceinLatinAmericathrougha new distribution agreement with Sunstar Americas for Aloclair gel, and a further nine distribution agreements for Atopiclair, Sebclair and Xclair

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RegulatoryAffairs

DuringFY2009weachievedfivenewproductregistrationsin the EU. These registrations were the approval of the Decapinol Perio system for the management of gum pockets in periodontal disease, T-Go for symptomatic relief during teething, Sinlice to treat head lice, Herpclair to reduce the symptoms of herpes simplex, and DermaChronic foam for the treatment of sensitive skin or chronic skin conditions such as atopic dermatitis, xerosis, psoriasis and eczema.

Clinical Data

Supporting clinical and experimental data are of critical importanceindemonstratingtheefficacyandmechanismsofactions of our products and can also be a source of competitive advantage providing us with distinct product claims.

During the year, results of 18 proof of concept studies were accepted for publication, whilst four were published in peer reviewed journals, including:

• AtopiclairCream:Treatmentofpruritusinmildto moderate atopic dermatitis with a topical non steroidal agent.VeraldiS,LunardonL,SchianchiR;TheJournal of Drugs in Dermatology and two studies evaluating the emollient DermaChronic Cream and Cleanser and our acne product Papulex Cream Oil Free.

In addition ten clinical abstracts were presented at the 17th Congress of the European Academy of Dermatology and Venereology (EADV) during September 2008 in Paris.

Intellectual Property

Sinclair’s approach to product pipeline development combines the sourcing and developing of novel technologies externally with newly acquired and existing technologies to create new product concepts. In order to maximise the commercialbenefitsarisingfromtheinnovativeadvantagesinherent in our products, Sinclair invests in the development of strong intellectual property for all of its new products. Currently 35 Sinclair products enjoy patent protection.

Strategic Brand Management

A new graphic identity has been designed and chartered to build and manage Sinclair’s brand awareness throughout the world. These common guidelines include 6-language packaging for the dermatology and oral care portfolio enabling one reference to be sent across different countries. These new packagings will reinforce coherence amongst our prescription and pharmacy ranges, without confusing patients, prescribers and distributors, and will ensure a strong visual impact on pharmacies’ shelves, therefore increasing sell-out. Sinclair’s new graphic charter should also decrease the number of SKUs, allowing the manufacturing team to order bigger quantities of components andfinishedproductsandthusimproveCOGs.Oneexamplecould be the Papulex range for which we used to stock 25 different SKUs and are currently moving to only 8.

Manufacturing and Logistics

The supply chain and logistics team’s role is to enable Sinclair’s products to be validated and commercialised successfully either in-house or in contract manufacturing facilities. Sinclair manufactures around two-thirds of its products through contract manufacturers and a third of its products in-house through its Clery facility in France. In FY 2009 approximately 11 million product units were manufactured. An increasingly automated process is being implemented across the supply chain in order to optimise manufacturing which will ultimately help make Sinclair a leaner business.

Post balance sheet events

Purchase of Flammazine and Flammacerium from Solvay Pharmaceuticals

On 12 October the Company announced that it has agreed to acquire the worldwide commercial rights for Flammazine and Flammacerium from Solvay Pharmaceuticals for a total consideration of e17.5m. The acquisition will be funded via a combination of debt and equity raised from new and existing investors. Subject to shareholder approval the acquisition is expected to complete at the end of November 2009.

Proposed fundraising

TofinancetheacquisitiontheCompanyhasannouncedanequityfundraisingofupto£25.0mthroughafirmplacingand open offer (together the “Fundraising”). The Fundraising, which is being done at 32p per share, has been fully underwritten by irrevocable placing letters.

The Company also announced on 29 October that it has entered into a new debt facility of up to £9.0m which it intendstousetofinancetheproposedacquisition,andprovide working capital, and a further £3.0m to be used to replace an existing facility. As a consequence, the Fundraising will be scaled back to £18.0m.

DirectorsandAdvisors

Board and Management changes In November 2008, Steve Harris stepped down as Non-Executive Chairman. Grahame Cook, previously the Senior Independent Director, was appointed as Non-Executive Chairman, and Penny Freer took on the role of Senior Independent Director.

During the year and following the appointment of Christophe FoucherasChiefOperatingOfficer(COO)andhissubsequentsuccess in restructuring the business, I am pleased to announce that he will be joining the Board at the forthcoming AGM. In addition we further bolstered Sinclair’s team with the appointment of Dr Ross Macdonald as Vice President of BusinessDevelopmentforNorthAmerica&SouthPacific.

Finally, following nine years as CEO of Sinclair Pharma, I will be retiring at the next AGM, at which point Chris Spooner will take on the role of CEO. It has been a pleasure working with the talented and dedicated team at Sinclair during a transformational period in the Company’s history andIfeelconfidentthatthenewmanagementteamwilltakeSinclair forward through the next stage of its growth.

Dr Michael Flynn ChiefExecutiveOfficer

Business Review – Operational continued

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Highlights

Sinclairrecordeditssecondprofitablefullyearatthe EBITDA level. EBITDA before exceptional items was £2.3m (2008: £1.3m) with basic loss per share after exceptional items of 3.9p (2008: earnings per share of 3.8p).

Revenues, which were affected by wholesaler destocking, increased by 0.4% to £30.4m (2008: £30.3m), gross profitincreasedby6%to£20.7m(2008:£19.4m)andthe operating loss for the year, before exceptional items, reduced to £0.3m (2008: £0.8m).

The 80% increase in EBITDA prior to exceptional items was achieved through a strong contribution from licensing fees, combined with tight cost control.

Revenue

Total revenue for the year increased marginally by 0.4% to £30.4m (2008: £30.3m), reflecting the challenges presented by the economic climate which led to wholesalers reducing their stock holdings as a result of cash constraints. This resulted in a one off reduction in sales during the year and going forward smaller, more frequent orders for Sinclair. Revenues generated from licensing fees, including non-cash licensing agreements, more than off-set the effects of de-stocking, leading to the small increase in overall revenue.

Product revenue for the year was £22.0m (2008: £24.8m). A further £1.0m was contributed by royalty payments (2008: £0.7m). Revenue of £7.4m was also generated by licence fee and milestone payments (2008: £4.8m).

Direct sales through country operations

Sinclair’s own sales and marketing operations in France, Italy, Spain and the UK, generated revenue of £12.4m, a decrease of 10% year on year (2008: £13.7m), £1.1m of this decrease being a result of ceasing promotion activities to dispensing doctors in the UK in July 2008.

A breakdown of the contribution from Sinclair’s own sales and marketing operations for the period are FY 2009 FY 2008 £m £m

France 9.8 9.0 Italy 2.0 2.6 UK 0.4 1.5 Spain 0.2 0.6*

Total 12.4 13.7

* FY2008figureincludesrevenueof£0.3mfromCSPortugal,Sinclair’sjointventurepartner in Portugal. CS Portugal, which was previously jointly controlled, has been deconsolidated from the Group results since 1 July 2008 as the Group no longer has effective management control of this associate.

Revenue through international operations

Revenue generated for the year from our marketing partners was £18.0m, an increase of 8% year on year (2008: £16.5m). A breakdown is summarised below: FY 2009 FY 2008 £m £m

Product sales 9.6 11.0 Royalties 1.0 0.7 Licencefeesandmilestones 7.4 4.8

Total 18.0 16.5

During the year Sinclair recognised licence fees and milestones of £7.4m (2008: £4.8m). The major components of this are the agreement with Graceway for the sales of US distributionrightstoAtopiclairCreamandLotionfor£2.1m,the non-cash licensing agreements with BMG Pharma for the licence of Sinclair’s gynaecological portfolio (£3.3m) and with JB2 SA for the licence to Sinclair’s onychomycosis kit (£0.9m). Additional smaller components include £0.2m from a major animal health company to enable the company to evaluate the use of Decapinol to treat or prevent periodontal disease in companion animals and £0.2m from Orapharma following validation of the Italian manufacturing site.

Non-cash licensing agreements contributed £4.2m to both revenueandprofitintheyear(2008:£1.2m).

Revenue Analysis

Following the challenges of the current economic environment we have seen the impact on our business of wholesalers reducing their stockholdings as a result of cash constraints. This resulted in a one off reduction in sales during the year and followed by smaller, more frequent orders for Sinclair.

Despite overall product revenue increasing by only 0.4%, the Top 10 products (revenue and royalties excluding licence fees) have seen an increase of 21% year on year with eight out of ten products in the Top 10 experiencing growth. The relative position of the key products remained the same and we continue to have eight products that contributed more than £1m annual product revenue. This has been led by continued growth of Aloclair and Fazol and the gathering momentum of Sebclair and international partnerships in Maghreb with the Papulex range and Oxyplastine.

However the B.lift and B.derm dermocosmetic products and Claro are no longer in this year’s Top 10 products, which have significantlyimpactedrevenuethisyear.Thiswasadirectconsequence of substantial sales made into the market in June 2008 that were not repeated in 2009 due to slow sell out.

Business Review – Financial

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Highlights 2009

• Our current pipeline has 56 products and 12 stand-by products encompassing Dermatology, Oral Health and Gynaecology

• DealwithBMGPharmatodevelopSinclair’sexisting gynaecological technology and create range of products

• Deal with major animal health company to evaluate the use of Delmopinol to treat or prevent periodontal disease in companion animals

• In-licensingofarangeofskinanti-infectionproducts based on patented silver nanotechnology

• Acquisitionofproprietaryorganiczinctechnologywhichmay be combined with other technologies or used alone and a hydrogen peroxide delivery system which can be used as an antibacterial in wound healing treatments

Marco Mastrodonato Executive Vice-President

Mr Mastrodonato is responsible for the Business Development, LicensingandProductsDevelopment Division of the Group.

We are focused on the development of new products and supporting existing products, particularly through creating line extensions, focusing on innovative delivery systems and the use of advanced surface technology.

We have continued to advance our pipeline and expand its future potential by maximising existing technologies through R&D and also via strategic in-licensing and out-licensing activities. This approach will present us with significantpipelinedevelopmentopportunities and new product asset as demonstrated by the addition of gynaecology as new therapeutic area following the out licensing deal with BMG Pharma and the licensing in of nano-silver technology. We also acquired proprietary organic zinc technology which may be combined with other technologies or used alone and a hydrogen peroxide delivery system which can be used as an antibacterial in wound healing treatments.

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1 Dermatology continues to be a focus area for the business

2 The use of advanced surface technology is a key area of focus

3 Sinclair has extended its patented technologies into the new therapeuticfieldofGynaecology

4 Sinclair received a licence fee from a major animal health company to enable it to evaluate the use of Delmopinol to treat or prevent periodontal disease in companion animals

5 R&D is focused on the development of new products and supporting existing products

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Total Operating Expenses

Total operating expenses for the Group excluding exceptional items were £21.0m, a 4% increase on the prior year (2008: £20.2m). This increase was driven by Sterling’s weakness which added £1.6m to expenses compared to the prior year. On a constant exchange rate basis, total operating expenses fell by £0.2m in the year, reflecting the initial impact of the restructuring activities undertaken in the year.

A renewed focus on sales and marketing increased these costs by 1.5%, in addition to the impact of Sterling’s weakness on costs. Other administrative expenses decreased by £0.3m after the impact of currency movements as a result of the restructuring efforts. This was in spite of an increase in amortisation of £0.3m (at constant exchange rates), demonstrating our resolute commitment to growing the business while keeping costs under tight control.

Operating Loss

Sinclair recorded an operating loss for the year of £0.3m (2008: £0.8m) before exceptional items.

Exceptional Items

During the year there were some exceptional items recorded which were outside the normal trading activities of the company:

• Foreignexchangegainsof£1.7mwererecordedintheyearon the translation of an intra-group loan balance as a result of Sterling weakening against the Euro during the year

• Restructuringcostsof£1.4mincludeseverancecostsand costs relating to the restructuring of the sales forces in Italy, France, and the closure of the UK sales operations during the year

• Exceptionalacquisitionrelatedcostswereincurredinrelation to a strategic acquisition opportunity during the summer of 2008. These discussions were put on hold as a result of the market volatility in the autumn of 2008. Costs of £0.6m were incurred to that point

• Animpairmentprovisionof£0.9mhasbeenmadeagainstthe value of the product rights for Spiromix, as a result of manufacturing delays which have resulted in the product not being available for sale in Italy during the year

• Aprovisionof£1.2mhasbeenmadeduringtheyearforadebt due from a distributor.

Taxation

There is a £0.4m (2008: £1.8m) tax credit reported for the year as a result of the increase in deferred tax assets recognised.

Financing Costs

Financing costs of £1.4m including exceptional items, were incurred as result of the Group’s increased level of net debt (2008: £1.1m). This includes £0.6m interest on debt and £0.3m foreign exchange loss resulting from the translation of Euro debt.

An exceptional cost of £0.3m was also incurred in relation to professional fees associated with the negotiation of a financingagreementwhichfailedtocometofruitionduetounfavourable terms.

Liquidity & Capital Resources

Sinclair had cash balances of £0.1m (2008: £1.1m) at 30 June 2009. Net cash outflow during the year was £1.3m (2008: £3.3m), which included cash used in operating activities of £0.5m (2008: £3.7m) and cash used in investing activitiesof£2.8m(2008:£4.2m).Cashinflowfromfinancingwas £2.0m (2008: £4.6m) which includes £1.0m, net of expenses, from an institutional placing of new shares in December 2008.

In May 2009, Sinclair entered into a £10m equity line of credit with a three year duration with GEM Global Yield Fund Limited.Sinclairwillcontrolthetimingandmaximumamountof any draw down under this credit line and is not obliged to draw on the funds on offer. To date none of this facility has been utilised.

In September 2009, Sinclair issued convertible unsecured loan notes worth approximately £2.3m to a leading institutionalinvestor.Afirstseriesof£1.0mofthenoteswereissuedimmediatelywiththefinal£1.3mdrawndowninearlyOctober.

On 12 October 2009, the Board announced the acquisition of two major revenue-generating products from Solvay Pharmaceuticals for a total consideration of €17.5 million, andanassociatedfirmplacingandopenoffertoraiseupto£25.0million.Thefirmplacingandopenofferisunderwritten by certain irrevocable placing letters from certain shareholders and institutional investors, subject to standard underwriting conditions and on the basis that the proposed acquisition is approved by shareholders at the EGM. Approval requires a 75% majority of those who vote. The Board has consulted with major shareholders and has received comfort in respect of their support for the proposed acquisition and fundraising.

On 29 October, the Board also announced that it had entered into a new debt facility of £9.0m to be used to part fund the acquisition.Asaconsequence,thefirmplacingandopenoffer will be scaled back to £18.0m.

Loss/earnings per share

Sinclair recorded a basic loss per share of 3.9p (2008: earnings per share of 3.8p).

Additions to intangible assets

Additions to intangible assets were £6.7m resulting from the addition of the silver nanotechnology to the skincare portfolio (£3.9m), the in-licensing of zinc technology (£1.4m) and the hydrogen peroxide technology (£1.0m), all of which are non-cash transactions procured through strategic product swaps, as well as some other smaller additions. These additions resulted in an increased amortisation charge of £2.1m (2008: £1.5m).

Jerry Randall ACA

ChiefFinancialOfficer

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Board of Directors

1 Grahame Cook Non-Executive Chairman

Mr Cook joined the Board in 2004. He has over 18 years’ experience in investment banking, advising on a wide number of mergers & acquisitions and capital market transactions in the US and Europe. HewasGlobalCEOofWestLBPanmure, where he joined in 1999, Managing Director of Capital Markets and on the Global Investment Banking Committee at UBS. He has advised on a number of transactions in the pharmaceuticals and biotechnology sectors across Europe and the US, including private equity investments, IPOs and secondary offerings. Mr Cook was a founder memberoftheLSE’sTechMARKAdvisory Committee, and holds anMA,doublefirst,fromOxfordUniversity. He is currently a Non-Executive Director of Antisoma plc. 3 Jerry Randall ChiefFinancialOfficer

Mr Randall became Chief Financial OfficeroftheCompanyinAugust2000 when he completed the management buy-in with Dr Flynn. Before joining Sinclair Pharma, Mr Randall worked in corporate finance,settingupandrunningtheBristolofficeofGambitCorporateFinance. Prior to that, Mr Randall had been involved in two other buy-ins and acted as advisor to both private and quoted companies between 1993 and 2000, in both the capacity as nominated advisor and in practice with KPMG. During this period, Mr Randall was involved in a number of flotations and transactions ontheOfficialList,UnlistedSecurities Market and the Alternative Investment Market, as well as raising privateequity.Mr.Randallqualifiedas a chartered accountant with KPMG in 1990. Mr Randall is also a Non-Executive Director of Silence Therapeutics plc. 5 Jean-Charles Tschudin Non-Executive Director

Mr Tschudin joined the Board in November 2007. He has extensive experience in the pharmaceutical industry at a senior executive level on three continents and was recently President and Chief Operating OfficerofYamanouchiEurope,the largest Japanese company in Europe (now Astellas). He has also held senior positions at Johnson & Johnson, Schering-Plough, Syntex and Cardinal Health. Mr Tschudin is currently Non-Executive Director of SkyePharma plc, is a Chartered Director and he also consults for the pharma industry.

2 Michael Flynn ChiefExecutiveOfficer

Dr Flynn became Chief Executive OfficerofSinclairPharmainAugust2000 following a management buy-in ofSinclairPharmaceuticalsLimited,which he led. Between 1998 and 2000, Dr Flynn privately acquired the rights to a portfolio of products, which he brought to the Group. From June to November 1998, Dr Flynn was acting Chief Executive OfficerofCortecsGroupplcwherehe held the position of President between 1992 and June 1998 and of Director between 1986 and 1992. Between 1976 and 1986, he was Medical Director and President of TechnologyInternationalLimited,a contract research organisation that Dr Flynn co-founded. Prior to 1976, Dr Flynn had worked as Senior Medical Advisor to Crookes LaboratoriesLimited,establishedDupharLimitedintheUKandspentapproximatelyfiveyearsintheClinical Research Department of Philips Duphar in Holland. Dr Flynn has spent over 30 years in the pharmaceutical industry and has served on the Board of Directors of approximately 30 private companies involved in the healthcare sector. Dr Flynn was elected a fellow by Distinction of the Faculty of Pharmaceutical Medicine of the Royal College of Physicians in 2001 andqualifiedasaphysicianfromKingsCollegeHospital,London.As noted in the Chief Executive’s Review, Dr Flynn will be retiring at the next AGM. 4 Penny Freer Senior Independent Director

Ms Freer joined the Board in January 2006. She has over 20 years experience in investment banking advising companies on a wide variety of issues including their interaction with the capital markets. From 2000, Ms Freer was Head of Equities forRobertW.BairdinLondon,previously she was responsible for CreditLyonnaisSecurities’smalland mid cap equities activities. In 2004 she co-founded Capital Markets Group, an FSA authorised corporate advisory and investor relations business. She is currently a Non-Executive Director of Empresaria Group plc.

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Senior Management

1 Christophe Foucher ChiefOperatingOfficer

Mr Foucher was appointed Chief OperatingOfficerinMay2009andisresponsible for all commercial supply chain and manufacturing activities in the Group. Prior to this he held the positions of General Manager for Sinclair Pharma France and Southern Europe Director, in charge of operations in Italy and Spain. Mr Foucher has 14 years experience in the pharmaceutical industry at senior level in Europe, Africa and Asia. Mr Foucher has a doctorate degree in Pharmacy, an INSEAD diploma in Finance and an MBA from IAE. He is fluent in English, French and Italian. 3 Alan Olby Finance Director and Company Secretary

Mr Olby has responsibility for the financeoperationsacrosstheGroup,includingfinancialreporting,financingandtaxplanning. Mr Olby joined Sinclair in September 2005 having gained experience in the biotech sector working at Xenova Group plc and KS Biomedixplc.Hequalifiedasachartered accountant in 1996 and subsequently worked in corporate financeatDeloitte,supportingpublicand private companies with due diligence, working capital reviews and stock exchange transactions. 5 Mike Killeen Executive Vice President,

North America

Mr Killeen joined following the acquisition of Propharma Srl in May 2001. At Propharma Srl, Mr Killeen held the position of Vice President of Sales and Marketing for the US andPacificRim.PriortojoiningPropharma Srl, Mr Killeen was Director of Sales and Marketing at CarringtonLaboratoriesInc.,priortowhich he was Director of Business Development at Horizon Medical Inc.

2 Paul Phull Executive Vice-President –

International Operations

Mr Phull has overall responsibility for Sinclair’s International operations, working to develop sales of Sinclair’s brands globally via existing partners and identifying opportunities for collaboration with new partners. Mr Phull is an experienced executive in international pharmaceutical commercialisation, having worked in sales, marketing and business development in the healthcare industry for over 20 years. 4 Marco Mastrodonato Executive Vice-President

Mr Mastrodonato has headed up the Business Development, LicensingandProductsDevelopmentDivision of Sinclair Pharma since the acquisition of Propharma Srl by the Company in May 2001. In 2004 with the acquisition of Euroderm Spa, the operating company in Italy (now Sinclair Srl), Mr Mastrodonato was nominated Chairman of the Board for the local Italian subsidiary which is responsible for detailing the Sinclair Dermatology products in the Italian Market. Mr Mastrodonato founded Propharma Srl in 1999 and invented Gelclair®, Aloclair®, Xclair®, Atopiclair®, Sebclair®, Dermachronic®, Sinlice, Decapinol® Perioapplicator, Decapinol® Gel and Decapinol® Toothpaste. Between 1996 and 1998 Mr Mastrodonato worked as a consultant for Carrington LaboratoriesInc,aUSresearch-based bio-pharmaceutical company, licensing and exporting products from the US to Europe. Prior to 1998, Mr Mastrodonato founded Protema Spa, an Italian agro-chemical company. Between 1989 and 1996 he founded the European Operation of an international clinical research organisation, AAI Pharma Inc. and between 1987 and 1989 he worked for the independent company OEMF Spa, publishers of the pharmaceutical directory, Informatore Farmaceutico. 6 Steve Redman LegalDirector

Steve Redman joined Sinclair as itsfirstin-houseLegalDirectorinJuly 2007, from his previous role at Schering Health Care. He is a barrister and brings to the Sinclair Group more than 20 years experience as senior legalcounselinthefinancialservices,insurance and pharmaceutical sectors. During this time he has supported the business growth of these employers by providing authoritative and practical advice in a wide variety of legal areas that includes multi-national transactions, commercial contracts, licencing, intellectual property, completion, corporate, EU law as well as regulatory compliance.

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Directors’ Report

TheDirectorspresenttheirannualreportontheaffairsoftheGroup,togetherwiththeauditedfinancialstatementsfortheyear ended 30 June 2009.

Principal Activities

Sinclair Pharma plc is an international specialty pharmaceutical company. Its sales and marketing operations are already present in France, Italy, and Spain, and a complementary marketing partner network spans 94 countries.

Business Review

The Group is required to produce a business review complying with the requirements of the Companies Act 2006. In addition to the principal risks and uncertainties and key performance indicators laid out below, there can be found further information about the business, its strategy, structure, products and the markets in which it competes, and future developments within pages 1 to 18 of this report.

Principal risks and uncertainties Sinclair Pharma plc is a business that depends on product revenues through its own sales and marketing operations and marketing partners, a successful pipeline to build future revenues, other business development activities to generate future revenues,andgoodmanagementofthefinancesoftheGroup.Themainrisksassociatedwiththesefactorsareoutlinedbelow.Informationonfinancialriskmanagementissetoutinnote3tothefinancialstatements.

Risk associated with commercialised success of products The Group’s revenues are, and will be, principally from sales of its products. There can be no assurance that current product revenues can be maintained or increased in the future. Product sales may be affected by adverse market conditions or other factors including: pricing pressures from governments or other authorities, competition from other products,thewithdrawalofaproductbecauseofaregulatoryorotherreason,orthefinancialorcommercialfailureofa marketing partner. Manufacturing of the majority of Sinclair products is outsourced and supply may be interrupted or products may be recalled should safety or other issues arise.

Competition and intellectual property risk The position of Sinclair’s products in the market is dependent on its ability to obtain and maintain patent and/or trademark protection for its products, preserve its trade secrets, defend and enforce its rights against infringement and operate without infringing the proprietary or intellectual property rights of third parties. The validity and enforceability of patents and/or trademarks may involve complex legal and factual issues resulting in uncertainty as to the extent of the protection provided. The Group’s intellectual property may become invalid or expire before or during commercialisation of the product.

Risk associated with pipeline products Sinclair is currently seeking and will seek in the future, regulatory approval for its pipeline products. Approval of these productswithinthetargettimeframeoratanytimeisarisk,astheCompanycannotguaranteethesafety,efficacyandregulatory pathway of these products. Once approved, the commercial success of pipeline products cannot be guaranteed andthereturnsontheproductmaynotbesufficienttocoverthecostsincurredthroughitsdevelopment.TheGroupmaychoosetohaltdevelopmentofcertainpipelineproductsinadversefinancialconditions.

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Key performance indicators TheGroupmeasuresitsperformanceaccordingtoawiderangeofkeyperformanceindicators(‘KPIs’).ThemainfinancialKPI’s at a group level are as follows:

KPI: 2009 2008 Definition,methodofcalculationandanalysis

EBITDA £2.3m Before exceptional items

£1.3m Before exceptional items

EBITDA is total earnings of the Group before interest income and expenses, tax charges and credits, depreciation and amortisation charges.

The goal of the Company is to become a sustainably profitablespecialtypharmaceuticalcompany.2009isoursecondprofitableyear,with80%EBITDAgrowthon2008.

Revenues and revenue growth

International operations

Country operations

£18.0m

£12.4m

£16.5m

£13.7m

Revenue growth is the percentage movement in revenue from the prior year.

International operations grew by 9% in the year, helped by a £2.6m increase in licence fee income.

Country operations revenue declined by 10% in the year due to a restructuring in the UK (£1.1m fall) and a poor performance in Italy.

Gross margin 68.1% 64.2% Grossmarginistheratioofgrossprofitafteralldirectcoststo total revenue.

Sinclair aims to achieve an overall gross margin for the Group in excess of 65%. The 2009 margin improved through higher proportion of licence fees.

Results,EarningsandDividends Thelossforthefinancialyearwas£3,621,000(2008:profitof£3,338,000).TheDirectorsdonotrecommendadividend(2008: £nil).

Going concern TheDirectorsaresatisfied,aftermakingappropriateenquiriesandfurthertotheannouncementon12Octoberofthefirmplacingandopenoffer,thattheGrouphasadequateresourcestocontinueinbusinessfortheforeseeablefutureand accordingly considers that it is appropriate to adopt the going concern basis in preparing the Financial Statements (refer note 2).

Directors The Directors of the Company who served during the year were:

Mr RS Harris Non-Executive Chairman (resigned 8 December 2008)Mr G Cook Non-Executive ChairmanDrMJFlynn ChiefExecutiveOfficerMrJAPRandall ChiefFinancialOfficerMs PA Freer Senior Independent DirectorMr J-C Tschudin Non-Executive Director

Biographies of the current Directors are detailed on pages 19 to 20. Ms Freer retires by rotation, and will be available for reappointment at the AGM. Details of the resolution to reappoint her will be contained in the AGM notice.

Dr Flynn has announced that he will be retiring at the forthcoming AGM and he will therefore step down from the board followingtheAGM.TheBoardhaveannouncedtheappointmentofMrChristopherSpoonerasChiefExecutiveOfficertoreplace Dr Flynn following his retirement.

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Directors’ Interests The interests of the Directors in the Group’s share capital at the date of this report, at 30 June 2009 and at the start of the year were as follows:

Holding of Ordinary Shares of 1p at: Date of this report 30 June 2009 30 June 2008

Dr MJ Flynn 11,801,130 11,801,130 10,062,000 Mr JAP Randall 1,187,500 1,187,500 787,500 Mr G Cook 600,000 600,000 100,000 Ms P Freer 100,000 100,000 25,000 Mr J-C Tschudin 442,391 442,391 225,000

Dr MJ Flynn’s holding includes 2,410,000 shares held by his wife (2008: 2,410,000).

Mr JAP Randall’s holding includes 22,500 shares held by his wife (2008: 22,500).

Mr G Cook’s holding includes 100,000 shares held by his wife (2008: 100,000).

Details of the Directors’ share options, warrants and interests in shares held by the ESOT are included in the Directors’ Remuneration Report on pages 31 to 37.

Additionalinformationforshareholders Following the implementation of the EU Takeover Directive into UK law, the following description provides the required information for shareholders where not already provided elsewhere in this report.

Structure of the Company’s capital The Company’s share capital comprises a single class of 1p ordinary shares, each carrying one vote and all ranking equally with each other. At 30 June 2009, the authorised share capital was £1,250,000 comprising 125,000,000 1p ordinary shares. 103,335,448 (2008: 93,478,980) 1p ordinary shares were allotted and fully paid. There are no restrictions on the transfer of shares in the Company or on voting rights.

Authoritytoissueandbuybackshares Each year at the AGM the Directors seek authority to allot shares and buy back shares. The authorities, when granted, last for 15 months or until the conclusion of the next AGM if sooner. At the last AGM held on 8 December 2008, shareholders gave authority for the Directors to allot relevant securities up to £312,232 and to allot for cash equity securities having a nominal amount not exceeding in aggregate £93,970 (being 10% of the issued share capital). Shareholders also gave authority for the Directors to make market purchases of up to 9,396,974 shares (being 10% of the issued share capital).

Substantial Shareholdings At15October2009,theCompanyhasbeennotified(orareotherwiseaware)ofthefollowinginterestsin3%ormoreoftheordinary share capital.

Shareholding %

Dr MJ Flynn 11,801,130 11.42 Fidelity Investments 9,207,943 8.91 Mr AJ Sinclair 7,500,000 7.26 The Sinclair Pharma Plc Employee Share Trust 6,431,454 6.22 BlueCrest Capital Management 6,000,000 5.81 Paul Capital Partners 4,000,000 3.87 Societe Generale 3,650,270 3.53 Mr C Spooner 3,409,728 3.30 Banque Federative de Credit Mutuel 3,212,581 3.11 SG Private Banking 3,120,000 3.02

Significant agreements TheCompaniesAct2006requirestheCompanytodiscloseanysignificantagreementswhichtakeeffect,alterorterminateupon a change of control of the Company. The Company is not party to any such agreement.

Directors and officers liability insurance The Company has in place qualifying third party indemnity insurance for all Directors.

Health and safety The Company acknowledges that the key to successful Health & Safety management requires an effective policy, organisation and arrangements, which reflect the commitment of senior management. To sustain that commitment we will continually measure, monitor and revise where necessary an annual plan to ensure that Health and Safety standards are adequate.

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Directors’ Report continued

It is the policy of the Company to ensure, so far as is reasonably practicable, the health, safety and welfare of all the •employees working for the Company. Equally, the Company accepts a similar responsibility for the Health and Safety of other persons who may be affected by our actions. Every employee has a legal and moral obligation to see that their acts or omissions do not place other employees, members of the public or colleagues in jeopardy.

The Company regards all Health and Safety legislation as the bare minimum and expects management to achieve their •managerial targets without compromising Health and Safety.

The Company will provide, so far as is reasonably practicable, safe places and systems of work, safe plant and •machinery, safe handling of materials and substances, the provision of adequate safety equipment and ensure that appropriate information, instruction and training is given.

TheCompanywillensurethatsuitableandsufficientriskassessmentsarecompletedasrequiredbystatutorylegislation •and all recommendations implemented. When this has been undertaken all relevant employees will be provided with sufficientinformationtoenablethemtocompletetheirworkactivitysafely.

The Company will ensure continued consultation with the workforce to enable all viewpoints and recommendations to be •discussed at regular intervals.

Research and development The Group actively reviews technical development in its markets with a view of taking advantage of the available opportunities to maintain and improve its competitive position. The Group has continued to invest in the development of new pharmaceutical products during the year, details of which can be found in the Business Review on pages 10 to 18.

Payment to Suppliers ItistheGroup’spolicytoabidebythepaymenttermsagreedwithsupplierswheneveritissatisfiedthatthesupplierhasprovided goods and services in accordance with agreed terms and conditions. The Group’s creditor days outstanding at 30 June 2009 were 88 days, (2008: 77 days).

Employees Our most important asset is our employees. We are committed to developing policies that encourage all employees to achieve their greatest potential and to continue to contribute to the success of the Group. We seek to develop employees’ potential by encouraging them to attend seminars, training courses, and providing help in seeking necessary professional qualificationstofurthertheircareers.Weoperateequalopportunitiesinrecruitment,trainingandpromotionregardlessofgender, ethnic origin, nationality or disability.

Everyemployeequalifiesforourshareoptionplans.Theconditionsandrestrictionsonqualifyingemployeesaresetoutonpages 31 to 37 of the Directors Remuneration Report. This ensures that employees are able to share the success of the business as it grows and have a sense of ownership. Additionally, we have adaptable personnel policies, enabling flexible working practices.

Disabled employees It is our policy to treat applicants and employees with disabilities equally and fairly, and not to discriminate against the disabled in recruitment, training, career development and promotion.

Charitable and political donations There were no charitable or political donations during the year (2008: £nil).

Post balance sheet events Details regarding post balance sheet events can be found in note 32.

Corporate governance The Company’s statement on Corporate Governance is included in the Corporate Governance report on pages 26 to 30.

IndependentAuditors PricewaterhouseCoopersLLPhaveexpressedtheirwillingnesstocontinueinofficeasauditorsandaresolutionproposingtheir re-appointment and authorising the Directors to determine their remuneration will be proposed at the AGM.

AnnualGeneralMeeting Details of the Annual General Meeting (AGM) of the Company will be posted to shareholders in due course, including the notice convening the AGM, together with explanatory information concerning the resolutions to be proposed.

By order of the Board

Alan Olby ACA Company Secretary

30 October 2009

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Statement of Directors’ Responsibilities

TheDirectorsareresponsibleforpreparingtheAnnualReport,theDirectors’RemunerationReportandthefinancialstatements in accordance with applicable law and regulations.

CompanylawrequirestheDirectorstopreparefinancialstatementsforeachfinancialyear.UnderthatlawtheDirectorshaveelectedtopreparetheGroupandParentCompanyfinancialstatementsinaccordancewithInternationalFinancialReporting Standards (‘IFRSs’) as adopted by the European Union. Under company law the Directors must not approve the financialstatementsunlesstheyaresatisfiedthattheygiveatrueandfairviewofthestateofaffairsoftheGroupandtheCompany and of the loss of the Group for that period.

Inpreparingthosefinancialstatements,theDirectorsarerequiredto:

select suitable accounting policies and then apply them consistently; •

make judgements and estimates that are reasonable and prudent; •

state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material •departuresdisclosedandexplainedinthefinancialstatements;and

preparethefinancialstatementsonthegoingconcernbasis,unlessitisinappropriatetopresumethattheCompanyand •Group will continue in business.

TheDirectorsareresponsibleforkeepingadequateaccountingrecordsthataresufficienttoshowandexplaintheCompany’sandGroup’stransactionsanddisclosewithreasonableaccuracyatanytimethefinancialpositionoftheCompanyandtheGroupandtoenablethemtoensurethatthefinancialstatementsandtheDirectors’RemunerationReportcomplywiththeCompaniesAct2006and,asregardstheGroupfinancialstatements,Article4oftheIAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the Company’s website (www.sinclairpharma.com). LegislationintheUnitedKingdomgoverningthepreparationanddisseminationoffinancialstatementsmaydifferfromlegislation in other jurisdictions.

EachoftheDirectors,whosenamesandfunctionsarelistedintheDirectors’Reportconfirmthat,tothebestoftheirknowledge:

theGroupfinancialstatements,whichhavebeenpreparedinaccordancewithIFRSsasadoptedbytheEU,giveatrue •andfairviewoftheassets,liabilities,financialposition,andlossoftheGroup;and

the Directors’ report contained on pages 21 to 24 includes a fair review of the development and performance of the •business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

StatementastoDisclosureofInformationtoAuditors TheDirectors,inofficeatthedateofthisReport,haveeachconfirmedthat:

so far as they are aware, there is no relevant audit information of which the Company’s auditors are unaware; and •

each Director has taken all the steps that he/she ought to have taken as a Director to make himself/herself aware of any •relevant audit information and to establish that the Company’s auditors are aware of that information.

This information is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006.

By order of the Board

Alan Olby ACA Company Secretary 30 October 2009

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Corporate Governance Report

Compliance with the Combined Code on Corporate Governance

The Board supports the ideals of the Combined Code on Corporate Governance (the “Code”), issued by the Financial Services Authority in June 2008. This statement describes how the Company applies the principles of the Code and the Company’scompliancewiththespecificprovisionsoftheCode.TheprincipalssetoutintheCodecoverfourareas:the Board, Directors’ remuneration, accountability and audit and relations with shareholders. With the exception of the Directors remuneration (which is dealt with separately in the Directors’ Remuneration Report) the following section sets out how the Board has applied such principles.

The Board considers that it has complied with provisions of the Code throughout the year ending 30 June 2009, unless otherwise indicated below.

Board and Board Committees

TheBoardofDirectors The Board of the Company is responsible for the Group’s system of corporate governance. At 30 June 2009 the Board comprisedfiveDirectors:anExecutiveChiefExecutiveOfficer,DrMJFlynn;aChiefFinancialOfficer,MrJAPRandallandthree Non-Executive Directors including the Non-Executive Chairman.

Mr G Cook is Non-Executive Chairman and Ms P Freer is the Senior Independent Director.

Details of Directors’ service contracts are given in the Directors’ Remuneration Report on page 36.

All the Directors have access to advice and services of the Company Secretary, who is responsible for ensuring that Board procedures and applicable regulations under the Company’s Articles of Association or otherwise are complied with. Each Director is entitled, if necessary, to seek independent professional advice at the Company’s expense.

BoardMeetings TheBoardofDirectorsmeetsatleastbi-monthlyandhasadefinedscheduleofmattersreservedforitsdecision.Itisresponsible for the overall Group strategy, approval of major capital expenditure projects, and consideration of major financingmattersoftheGroup.TheBoardmetsixtimesduringtheyear.AllBoardmembersattendedeachmeeting.Mr RS Harris attended both meetings prior to his resignation.

BoardCommittees TheBoardCommittees,whicharecomprisedsolelyofNon-ExecutiveDirectors,operatewithinclearlydefinedtermsofreference and report regularly to the Board. The terms of reference of the Board committee’s are available for inspection on the Company’s registered website (www.sinclairpharma.com) and at the AGM (for 15 minutes prior to the meeting and during the meeting).

AuditCommitteeandauditors The audit committee is composed entirely of independent Non-Executive Directors and is chaired by Mr G Cook and comprises Ms P Freer and Mr J-C Tschudin. The committee’s main responsibility is to review any reports from management andtheauditorsregardingthefinancialstatementsortheinternalcontrolsystemsimplementedthroughouttheGroupalongwithconsiderationofbothinterimandannualfinancialstatements.ItwillalsomakerecommendationstotheBoardon the appointment of the auditors and their audit fee. The Board considers that the members of the Audit Committee possessrecentandrelevantfinancialexperience.TheauditcommitteehasunrestrictedaccesstotheGroup’sauditors.Meetingsarealsoattended,byinvitation,totheChiefExecutive,theChiefFinancialOfficerandtheFinanceDirector.Theaudit committee met three times during the year. Each meeting was attended by all current members.

The terms of reference of the audit committee include the following responsibilities:

monitoringtheintegrityofthefinancialstatementsoftheCompany,andanyformalannouncementsrelatingtothe •Company’sfinancialreportingperformance,andreviewingfinancialreportingjudgmentscontainedinthem;

reviewingtheCompany’sinternalfinancialcontrolsandreviewingtheCompany’sinternalcontrolandriskmanagement •systems;

establishing and reviewing the Company’s ‘whistle-blowing’ arrangements; •

reviewandchallengewherenecessarytheCompany’sfinancialstatements,beforesubmissiontotheBoard; •

making recommendations to the Board, for it to be put to shareholders for their approval in the AGM, in relation to •the appointment, re-appointment and removal of the external auditor and to approve the remuneration and terms of engagement of the external auditor;

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reviewing the need for a separate internal audit function; •

reviewing and monitoring the external auditor’s independence and objectivity and the effectiveness of the audit process, •taking into consideration relevant professional and regulatory requirements;

developing and implementing policy on engagement of the external auditor to supply non-audit services, taking into •accountrelevantethicalguidanceregardingtheprovisionofnon-auditservicesbytheexternalauditfirm;

to review the consistency and application of accounting policies; •

to establish procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting •controls and auditing matters;

to meet with the external auditors at least twice each year; and •

to review any auditors management letters and management’s responses. •

TheGroup’sauditors,PricewaterhouseCoopersLLP,providenon-auditservicesinadditiontotheprovisionofauditservices.Intheyearending30June2009,non-auditservicesprovidedbyPricewaterhouseCoopersLLPcomprisedadvicewithregardtotaxation,InternationalFinancialReportingStandardscompliance,financialduediligenceandothermiscellaneousservices. Where appropriate the partner managing the provision of non-audit services is different from the partner managing audit services and as such the Board believes the auditors remain objective and independent. The Board also considers the leveloffeeschargedbyPricewaterhouseCoopersLLPisnotdisproportionateorinappropriatetothesizeofthebusinessand considers the Company therefore compliant with provision C3.2 of the Combined Code with regard to independence and objectivity.

Nomination Committee The nomination committee is chaired by Mr G Cook and comprises Ms P Freer and Mr J-C Tschudin. The committee is responsible to the full Board for determining the qualities and experience required of the Company’s Executive and Non-Executive Directors and for identifying suitable candidates. In appropriate cases, recruitment consultants assist in the process. The Committee is responsible for succession planning. Executive and Non-Executive Directors are subject to electionbyshareholdersatthefirstopportunityaftertheirappointmentandtore-electionthereafterbytheshareholdersat least every three years. The nomination committee met once during the year and the meeting was attended by all members.

The terms of reference of the nomination committee include the following responsibilities:

to review the structure, size and composition of the Board; •

to prepare a description of the role and capabilities required for a particular appointment; •

to identify and nominate candidates required for a particular appointment; and •

to satisfy itself with regard to succession planning. •

Remuneration Committee The Remuneration Committee is made up entirely of independent Non-Executive Directors and is chaired by Ms P Freer and comprised Mr G Cook, and Mr J-C Tschudin. The committee is responsible for making recommendations to the Board on remuneration policy for the Company’s Executive Directors and the terms of their service contracts, with the aim of ensuring that their remuneration, including share options and awards under the Share Schemes, is based both on their own performance and that of the Group generally. The remuneration committee will also administer and establish performance targets for the Share Schemes and approve further grants or awards under them. In addition, it will advise on the remuneration policy for the Group’s employees. The remuneration committee met twice during the year, each meeting was attended by all members.

The terms of reference of the Remuneration Committee include the following responsibilities:

to determine the framework and policy and the individual packages for the remuneration of the Executive Directors, •Chairman and members of the executive management;

to determine targets for any performance-related pay schemes; •

to approve overall remuneration policy; •

toreviewemployeebenefitstructures;and •

to produce an annual report of the Committee’s remuneration policy. •

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Corporate Governance Report continued

AppointmentstotheBoard Appointments to the Board are made on merit and against objective criteria. Care is taken to ensure that appointees have enough time to devote to the job. The Board keeps under review, and takes appropriate action, to ensure orderly succession for appointments to the Board and to senior management, so as to maintain an appropriate balance of skills and experience within the company and on the Board. The Code provisions require the formation of a Nomination Committee to lead and oversee the application of the Code principles as they relate to Board and senior management appointments.

TheBoardconsiderstheothersignificantcommitmentsofNon-ExecutiveDirectorspriortoappointment,toensurethattheyhavesufficienttimetomeetwhatisexpectedofthem,andkeepschangestothesecommitmentsunderreview.The terms and conditions of appointment of Non-Executive Directors are available for inspection at the Company’s registeredofficeduringnormalbusinesshoursandattheAGM(for15minutespriortothemeetingandduringthe meeting).

ChairmanandChiefExecutive TherolesofChairmanandExecutivemanagement,ledbytheChiefExecutiveOfficer,areseparatedandclearlydefined:

a. The Non-Executive chairman, Mr G Cook, is responsible for leadership of the Board, ensuring effectiveness in all aspects of its role, setting the Board’s agenda and conducting Board meetings, and ensuring effective communication with shareholders and the conduct of shareholders meetings; and

b. ExecutivemanagementareledbytheChiefExecutiveOfficer,DrMJFlynn,whohasbeendelegatedresponsibilitybythe Board for the day-to-day management of the Company within the control and authority framework set up by the Board. The levels of authority for management are periodically reviewed by the Board and are documented. The Chief FinancialOfficer,MrJAPRandallandDirectorsoftheSinclairPharmaceuticalsLimitedBoardassisttheChiefExecutiveOfficer,inmanagingthebusiness.

The division of responsibility between the Chairman and the Chief Executive is clearly established, set out in writing and agreed by the Board.

Boardbalanceandindependence The Board includes a balance of Executive and Non-Executive Directors such that no individual or sm