MAYNE PHARMA GROUP LIMITED

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Manager, Company Announcements ASX Limited Level 4 20 Bridge Street SYDNEY NSW 2000

21 August 2012

Via E-Lodgement

Dear Sir/Madam

Mayne Pharma Group Preliminary Final Report and accompanying announcement

Please find attached the Appendix 4E Preliminary Final Report relating to the results for the year ended 30 June 2012.

This announcement comprises the information required by ASX Listing Rule 4.3A.

Yours faithfully, Mayne Pharma Group Limited

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Mark Cansdale

Chief Financial Officer and Company Secretary

Mayne Pharma Group Limited ACN | 115 832 963 a | Level 9, 470 Collins St, Melbourne, VIC, 3000 t | +61 3 8614 7777 f | +61 3 9614 7022 | www.maynepharma.com

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ABN 76 115 832 963

APPENDIX 4E PRELIMINARY FINAL REPORT

FOR THE YEAR ENDED 30 JUNE 2012

Mayne Pharma Group Limited Appendix 4E Preliminary final report Year ended 30 June 2012

RESULTS FOR ANNOUNCEMENT TO THE MARKET

	% Change	Current period 2012 $’000	Previous corresponding period 2011 $’000
Revenue from ordinary activities	Up 5 %	52,546	50,101
Profit from ordinary activities before income tax expense	NM1	7,751	(1,504)
Profit from ordinary activities after income tax expense	Up 266 %	6,153	1,679
Net profit attributable to members	Up 266 %	6,153	1,679

	Current period 2012	Previous corresponding period 2011
Net tangible asset backing per ordinary share	17.4 cents	10.5 cents
Net asset backing per ordinary share	20.1 cents	15.9 cents

Basic earnings per share Diluted earnings per share	4.05 cents 4.02 cents	1.12 cents 1.10 cents
Special dividend in respect of the period ended 30 December 2010 per share	-	1.0 cent

The Board has not declared a final dividend in relation to the year ended 30 June 2012.

All dividends were fully franked at the corporate income tax rate (2010: 30%). No dividend reinvestment plan has operated for any dividends paid.

NM – not measurable

Mayne Pharma Group Limited Appendix 4E Preliminary final report Year ended 30 June 2012

COMMENTARY ON OPERATING PERFORMANCE

The consolidated entity‟s net profit attributable to members of the Company for the year ended 30 June 2012 was $6,153,000 (year ended 30 June 2011: $1,679,000).

Review of operations

Mayne Pharma Australia (MPA)

Mayne Pharma Australia (MPA) manufactures, markets and distributes proprietary and generic products in the Australian market. The products in the MPA portfolio include Doryx®, Astrix®, Eryc®, Magnoplasm® and Mayne-Pharma branded generic products (doxycycline, aspirin and erythromycin). Sales were $9,837,000 for FY12, up 5.6% on the prior comparable period (pcp) driven by the sale of increased volumes of Astrix® capsules. A new pricing programme was implemented in the last quarter of FY12 for key products, which had a positive impact on margins.

Mayne Pharma Global (MP Global)

MP Global manufactures and out-licences proprietary pharmaceuticals to international marketing and distribution partners including Warner Chilcott, Pfizer, Abbott Laboratories, GlaxoSmithKline and Boryung and provides contract manufacturing services. In FY12, sales revenue was $42,067,000, up 11.5% on pcp reflecting solid growth across the portfolio including proprietary pharmaceuticals (Doryx®, Astrix®, Eryc®) and contract manufacturing.

Out-licensed sales were $30,645,000, up 13.0% on pcp. Expanded marketing efforts by Boryung for Astrix® low-dose aspirin capsules in Korea drove sales up $545,000 or 17.9% to $3,597,000. In Europe, Teva Pharmaceutical Industries and Meda AB, the marketing and distribution partners for Eryc® drove European sales up $529,000 or 94.3% to $1,092,000.

Doryx®

Sales of US Doryx® were up 10.7% to $20,450,000 on pcp. This was a strong result notwithstanding a 6% increase in the average AUD/USD rate settled in FY12 versus pcp and a reduction in manufacturing volumes following the launch of a generic Doryx® 150mg tablet late in the period.

In September 2011, a dual-scored formulation of Doryx® 150mg tablet was approved by the US Food and Drug Administration (FDA) and launched by Warner Chilcott. In May 2012, Mylan Pharmaceuticals Inc. (Mylan) launched a single-scored generic version of the Doryx® 150mg tablet following a US District Court decision that its generic product did not infringe the Doryx® „161 patent.

Contract manufacturing

Sales revenue from contract services was $11,422,000, up 9.0% on pcp driven by growth in new product lines introduced by customers. A major contract was renegotiated for a further three years during the second half.

Research and development

Research and development income decreased by $2,411,000 in the period to $306,000 as the prior period included development activity on new formulations of Doryx®. Going forward, the internal R&D resources will be focussed on the development of new pipeline products for the Group.

Mayne Pharma Group Limited Appendix 4E Preliminary final report Year ended 30 June 2012

Gross margin

Manufacturing gross margin (ie gross margin excluding the impact of “Other revenue”) as a percentage of sales revenue improved slightly year on year: FY12: 43.5%, FY11: 42.9%.

Expenses

Research and development expenses decreased by $1,956,000 during the period to $4,018,000 as a result of reduced clinical and development work on Doryx® and SUBACAP® as the development work has been completed.

The decrease in other expenses of $799,000 reflects reduced net foreign exchange losses in the current period.

The majority of the restructure and redundancy costs in the current period reflect the termination payment made to the former CEO. The costs in the prior period were incurred when a restructuring program was undertaken at the Salisbury production site to improve efficiencies and increase capacity utilisation.

The reduction in finance costs in FY12 of $313,000 is due to the interest expense being lower as the USD loan was repaid.

Amortisation of the intangible assets that were recognised on the acquisition of Mayne Pharma International Pty Ltd (MPI) amounted to $3,836,000 for the period compared to $6,098,000 in the previous period. The intangible assets are amortised on a diminishing value basis that delivers higher amortisation charges in the earlier years of the assets‟ useful lives.

The share-based payments expense of $272,000 represents the cost of options issued to the CEO and CFO during the year and the shares issued to employees under the Company‟s tax exempt share plan.

A charge has been recognised for the Impairment of the customer relationships intangible asset in relation to the Company‟s relationship with Warner Chilcott. The charge of $181,000 reflects an adjustment for the Company‟s long-term forecasts for Doryx® following the launch of the generic to Doryx®.

Earn-out liability

The carrying value of the earn-out liability has decreased by $5,732,000 to $9,331,000 as a result of:

an increase of $1,006,000 recognised as a notional non-cash interest charge;
a decrease of $3,856,000 due to a change in the fair value of the earn-out liability over the year following the reassessment of the underlying assumptions used in the calculation; and
a payment of $2,881,000 in February 2012 representing the instalment for the 2011 calendar year.

Tax

The consolidated tax group has unutilised tax losses of $226,000 as at 30 June 2012 that are recognised as a Deferred Tax Asset. Losses of approximately $3,148,000 have been offset against the taxable income of the Group during the period.

Mayne Pharma Group Limited Appendix 4E Preliminary final report Year ended 30 June 2012

Cash flow

Net operating cash generated during the period was $13,387,000, up 227.6%. Cash on hand at 30 June 2012 was $11,596,000, representing an increase of $5,789,000 from 30 June 2011. During the period, the following key payments were made:

$2,881,000 in earn-out payments to Hospira for the acquisition of MPI,
$2,315,000 in loan repayments to retire the US$10m loan facility in full, and
$2,547,000 in capital expenditure for a new itraconazole spray dryer (for the production of SUBACAP®) and other tablet manufacturing equipment including an aspirin tablet press required for the transfer of the manufacturing of the aspirin tablets in-house.

Dividend

The Directors have not declared a dividend in the year ending 30 June 2012.

SUBSEQUENT EVENTS

Doryx® litigation

In July 2012, Warner Chilcott and Mayne Pharma filed an appeal against the non-fringement determinations on the Doryx® „161 Patent in the US Court of Appeals for the Federal Circuit. Furthermore, the Company together with Warner Chilcott received notification of four anti-trust lawsuits from Mylan, Rochester Drug Co-operative, Meijer Inc. and American Sales Company LLC, alleging that Warner Chilcott and Mayne Pharma have engaged in conduct that constrains generic competition for Doryx®. At the date of this report, no certainty exists as to the outcome of these actions, however Mayne Pharma does not foresee incurring any material financial liabilities in relation to these actions based on pre-existing contractual rights with Warner Chilcott and current legal advice received by the Company.

ROUNDING

The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (unless otherwise stated) under the option available to the Company under ASIC Class Order 98/0100. The Company is an entity to which the Class Order applies.

Mayne Pharma Group Limited Appendix 4E Preliminary final report Year ended 30 June 2012

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 30 June 2012

Revenues from continuing operations Sale of goods Royalties revenue Other revenue Total revenue Cost of sales Gross profit Other income Other expenses Research and development expenses Distribution expenses Marketing expenses Regulatory affairs expenses Share-based payments Amortisation expense Administrative expenses Finance costs Fair value movement in earn-out liability Restructure & redundancy costs Impairment of customer relationship intangible asset Inventory write down Profit before income tax Income tax (expense)/benefit Net profit for the period Other comprehensive income Total comprehensive income for the period	Current Period Previous Corresponding Period 2012 2011 $’000 $’000 50,436 45,700 1,468 1,333 642 3,068
	52,546 50,101 (29,342) (26,861)
	23,204 23,240
	15 - - (799) (4,018) (5,974) (600) (614) (675) (709) (872) (641) (272) - (3,836) (6,098) (6,985) (6,771) (28) (341) 2,850 (677) (851) (1,005) (181) - - (1,115)
	7,751 (1,504) (1,598) 3,183
	6,153 1,679
	- -
	6,153 1,679

Mayne Pharma Group Limited Appendix 4E Preliminary final report Year ended 30 June 2012

CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 June 2012

Current assets Cash and cash equivalents Trade and other receivables Inventories Income tax receivable Other current assets Total current assets Non-current assets Property, plant and equipment Deferred tax assets Intangible assets and goodwill Total non-current assets Total assets Current liabilities Trade and other payables Interest-bearing loans and borrowings Income tax payable Other financial liabilities Provisions Total current liabilities Non-current liabilities Other financial liabilities Deferred tax liabilities Provisions Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Accumulated losses Total equity	Current Period Previous Corresponding Period 30 June 2012 30 June 2011 $’000 $’000 11,596 5,807 3,821 5,697 7,244 6,423 - 630 594 281
	23,255 18,838
	22,224 21,457 4,260 5,199 4,194 8,183
	30,678 34,839
	53,933 53,677
	4,234 3,848 - 2,339 1,456 - 2,782 5,837 3,832 2,915
	12,304 14,939
	6,549 9,283 3,730 4,478 750 803
	11,029 14,564
	23,333 29,503
	30,600 24,174
	32,016 31,870 1,087 960 (2,503) (8,656)
	30,600 24,174

Mayne Pharma Group Limited Appendix 4E Preliminary final report Year ended 30 June 2012

CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 30 June 2012

Cash flows from operating activities Cash receipts from customers Cash payments for R&D expenditure Cash payments to suppliers and employees Interest received Interest paid Tax received / (paid) Net cash flows from operating activities Cash flows from investing activities Payments for property, plant and equipment Payments for acquisition of operating licenses Net cash flows used in investing activities Cash flows from financing activities Proceeds from issue of shares Repayment of borrowings Payment of earn-out liability instalment Payment of dividend Net cash flows used in financing activities Net increase /(decrease) in cash held Cash and cash equivalents at the beginning of the period Effect of foreign exchange changes on cash held in foreign currencies Cash and cash equivalents at the end of the period	Current Period Previous Corresponding Period 2012 2011 $’000 $’000 56,464 52,441 (4,018) (6,482) (40,009) (39,000) 181 264 (8) (220) 777 (2,917)
	13,387 4,086
	(2,547) (2,063) - (41)
	(2,547) (2,104)
	- 1,467 (2,315) (5,057) (2,881) (6,556) - (4,521)
	(5,196) (14,667)
	5,644 (12,685) 5,807 19,709 145 (1,217)
	11,596 5,807

Mayne Pharma Group Limited Appendix 4E Preliminary final report Year ended 30 June 2012

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 30 June 2012

Balance at 1 July 2011 Profit for the year Other comprehensive income Total comprehensive income Transactions with owners in capacity as owners Shares issued Share-based payments Dividends paid Balance at 30 June 2012 Balance at 1 July 2010 Profit for the year Other comprehensive income Total comprehensive income Transactions with owners in capacity as owners Shares issued Share options exercised Dividends paid Balance at 30 June 2011	Contributed equity Share- based payments reserve Accumulated losses $’000 $’000 $’000 31,870 960 (8,656) - - 6,153 - - -	Total $’000 24,174 6,153 -
	- - 6,153 146 - - - 127 - - - -	6,153 146 127 -
	32,016 1,087 (2,503)	30,600
	29,649 1,714 (5,814) - - 1,679 - - -	25,549 1,679 -
	- - 1,679 1,467 - - 754 (754) - - - (4,521)	1,679 1,467 - (4,521)
	31,870 960 (8,656)	24,174

Mayne Pharma Group Limited Appendix 4E Preliminary final report Year ended 30 June 2012

1. BASIS OF PREPARATION

This preliminary final report has been prepared in accordance with ASX Listing Rule 4.3A and the disclosure requirements of ASX Appendix 4E.

The preliminary final report has been prepared in accordance with Australian Accounting Standards, including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

The preliminary final report covers the consolidated group of Mayne Pharma Group Limited and its controlled entities (economic entity). Mayne Pharma Group Limited is a listed public company, incorporated and domiciled in Australia.

The preliminary final report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the annual financial report.

It is recommended that the preliminary final report be read in conjunction with the annual report for the year ended 30 June 2011 and considered together with any public announcements made by Mayne Pharma Group Limited during the reporting period in accordance with the continuous disclosure obligations of the ASX Listing Rules.

Reporting basis and conventions

The preliminary final report has been prepared on an accruals basis and is based on historical costs.

2. DIVIDENDS

Amount per security

	Amount per security	Franked amount per security at % tax	Amount per security of foreign source dividend
Final dividend: Current year Previous year	Nil Nil	N/A N/A	Nil Nil
Interim/special dividend: Current year Previous year	Nil 1.0 cent	N/A 100%	N/A Nil

Mayne Pharma Group Limited Appendix 4E Preliminary final report Year ended 30 June 2012

2. DIVIDENDS (cont)

Total dividend per security (interim plus final)

Ordinary securities Preference securities . CONSOLIDATED RETAINED PROFITS Accumulated losses at the beginning of the period Net profit attributable to members Dividends paid Accumulated losses at the end of the period	Current Period 2012	Previous Corresponding Period 2011
	N/A N/A	1.0 cent N/A
	Current Period 2012 $’000 (8,656) 6,153 -	Previous Corresponding Period 2011 $’000 (5,814) 1,678 (4,521) (8,656)
	(2,503)

3. CONSOLIDATED RETAINED PROFITS

4. SEGMENT INFORMATION

The Group has identified its operating segments based on the internal reports that are reviewed and used by the key management personnel (the chief operating decision makers) in assessing performance and in determining the allocation of resources.

The operating segments are identified by management based on the nature of revenue flows and responsibility for those revenues. Discrete financial information about each of these operating segments is reported to the key management personnel on at least a monthly basis. The segments identified in this report are different from previous reports where data was presented for two segments on an entity basis, namely Mayne Pharma International (MPI) and Mayne Pharma Group (MPG). This change in reportable segments has arisen as the newly appointed CEO and key management personnel have changed the way they manage and review the business‟ operations.

The consolidated entity operates in two operating segments, being Mayne Pharma Australia (MPA) and Mayne Pharma Global (MP Global).

MPA revenues and gross profit are derived from the manufacturing, distribution and marketing of proprietary and generic products within Australia.

MP Global revenues and gross profit are derived from the manufacturing and out-licensing of proprietary pharmaceutical products to international marketing and distribution partners and provision of contract manufacturing services to third party customers within Australia.

Mayne Pharma Group Limited Appendix 4E Preliminary final report Year ended 30 June 2012

4. SEGMENT INFORMATION (cont)

Year ended 30 Mayne	Mayne	Total	Eliminations	Total
June 2012 Pharma	Pharma	Segments	and
$’000 Australia	Global		adjustments
Sale of goods and
services 9,837	40,599	50,436	-	50,436
Royalty income -	1,468	1,468	-	1,468
R&D income -	-	-	306	306
Other -	-	-	336	336
Total revenue 9,837	42,067	51,904	642	52,546
Gross profit 3,088	19,474	22,562	642	23,204
				$’000
Gross profit per segment report				22,562
Plus: R&D income				306
Interest received on funds				181
Administrative buildingrental				155
Gross Profit per Statement of Comprehensive Income				23,204
Reconciliation between Gross Profit and Profit after		income tax
				$’000
Gross profit per segment analysis				23,204
Other income				15
Research and development expenses				(4,018)
Distribution expenses				(600)
Marketing expenses				(675)
Regulatory affairs expenses				(872)
Share-based payments				(272)
Amortisation expense				(3,836)
Administrative expenses				(6,985)
Finance costs				(28)
Fair value movement in earn-out liability				2,850
Restructure and redundancy costs				(851)
Impairment ofcustomer relationshipintangible asset				(181)
Profit before income tax				7,751
Income tax(expense)				(1,598)
Profit after income tax per Statement of Comprehensive Income				6,153

Mayne Pharma Group Limited Appendix 4E Preliminary final report Year ended 30 June 2012

4. SEGMENT INFORMATION (cont)

Year ended 30 Mayne	Mayne	Total	Eliminations	Total
June 2011 Pharma	Pharma	Segments	and
$’000 Australia	Global		adjustments
Sale of goods and
services 9,316	36,384	45,700	-	45,700
Royalty income -	1,333	1,333	-	1,333
R&D income -	-	-	2,655	2,655
Other -	-	-	413	413
Total revenue 9,316	37,717	47,033	3,068	50,101
Gross profit 2,754	17,418	20,172	3,068	23,240
				$’000
Gross profit per segment report				20,172
Plus: R&D income				2,655
Interest received on funds				264
Administrative buildingrental				149
Gross Profit per Statement of Comprehensive Income				23,240
Reconciliation between Gross Profit and Profit after income tax
				$’000
Gross profit per segment analysis				23,240
Research and development expenses				(5,974)
Distribution expenses				(614)
Marketing expenses				(709)
Regulatory affairs expenses				(641)
Amortisation expense				(6,098)
Administrative expenses				(6,771)
Finance costs				(341)
Fair value movement in earn-out liability				(677)
Restructure and redundancy costs				(1,005)
Other expenses (foreign exchange)				(799)
Inventorywrite down				(1,115)
Loss before income tax				(1,504)
Income taxbenefit				3,183
Profit after income tax per Statement of Comprehensive Income				1,679

Mayne Pharma Group Limited Appendix 4E Preliminary final report Year ended 30 June 2012

5. EARNINGS PER SHARE (EPS)

	Economic entity	Economic entity
		Previous
	Current	Corresponding
	Period	Period
	2012	2011
	‘000	‘000
Net profit	$6,153	$1,679
Earnings used to calculate basic and diluted EPS	$6,153	$1,679
Weighted average number of ordinary shares
outstanding during the year used in the calculation	152,041	150,385
of basic EPS
Weighted average number of options on issue
outstanding net of lapses	848	2,840
Weighted average number of ordinary shares
outstanding during the year used in calculation of	152,889	152,255
diluted EPS

6. INCOME TAX

The prima facie tax on profit from ordinary activities before income tax is reconciled to the income tax benefit as follows:

Accounting profit/(loss) before income tax Prima facie tax (expense)/benefit at 30% Effect of R&D tax concession Adjustment relating to earn-out liability Overprovision for tax in respect of prior years Deferred tax assets not previously brought to account – losses Tax effect of amounts which are not deductible Restatement of deferred tax balances upon entry into tax consolidation Share-based payments Income tax (expense)/benefit	Current Period 2012 $‘000 Previous Corresponding Period 2011 $‘000 7,751 (1,504)
	(2,325) 451 289 440 855 217 31 461 - 979 (3) (2) (363) 637 (82) -
	(1,598) 3,183

Accounting profit/(loss) before income tax
Prima facie tax (expense)/benefit at 30%
Effect of R&D tax concession
Adjustment relating to earn-out liability
Overprovision for tax in respect of prior years
Deferred tax assets not previously brought to
account – losses
Tax effect of amounts which are not deductible
Restatement of deferred tax balances upon
entry into tax consolidation
Share-based payments
Income tax (expense)/benefit

Current Period
2012
$‘000
Previous
Corresponding
Period
2011
$‘000
7,751
(1,504)

(2,325)
451
289
440
855
217
31
461
-
979
(3)
(2)
(363)
637
(82)
-

(1,598)
3,183

Mayne Pharma Group Limited Appendix 4E Preliminary final report Year ended 30 June 2012

7. CONTINGENT LIABILITIES

Doryx® litigation

8. COMPLIANCE STATEMENT

This report is based on accounts that are in the process of being audited.

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............................................................... 21 August 2012 Mark Cansdale, Company Secretary

AI assistant

MAYNE PHARMA GROUP LIMITED Annual Report 2012

65396_rns_2012-08-20_844d2552-ba30-4569-8d95-d6dcf70497b4.pdf

Mayne Pharma Group Preliminary Final Report and accompanying announcement