BTG Regulatory News (BTG)

BTG plc: Final Results

London, UK, 25 May 2011: BTG plc (LSE: BGC), the specialist healthcare company, today announces its final results for the year ended 31 March 2011.

Financial highlights

━ Revenue increased by 13.1% to £111.4m (09/10: £98.5m)

━ Recurring revenue from royalties and marketed products increased by 8% to £95.5m (09/10: £88.4m)

━ Includes £6.0m revenues from Biocompatibles from 27 January 2011 to 31 March 2011

━ Operating profit of £1.7m (09/10: £10.8m) before acquisition adjustments and reorganisation costs of £15.5m (09/10: £8.7m). Loss from operations after acquisition adjustments and reorganisation costs of £13.8m (09/10: operating profit of £2.1m)

━ Profit after tax of £9.2m (09/10: £11.3m)

━ Deferred tax asset recognised following corporate restructuring in the US

━ Cash and equivalents, together with cash on fixed term deposits, of £73.9m at 31 March 2011 (cash and cash equivalents of £82.6m at 1 April 2010)

━ Actions taken to deliver £3m synergies from Biocompatibles acquisition

Operating highlights

━ Biocompatibles acquisition completed and integration progressing well

━ BTG to market LC Bead™ directly in the US from 2012

━ Three US Phase III trials of Varisolve® initiated and progressing well

━ Recruitment complete in one, on track in the other two

━ Acute care sales force established in the US

━ Commenced direct sales of CroFab® and DigiFab® on 1 October 2010

━ ZYTIGA™ (abiraterone acetate) approved in the US

━ AZD9773 global Phase IIb study initiated by AstraZeneca in October 2010.

Louise Makin, BTG's chief executive officer, commented: "We have delivered a solid financial performance during a year in which we made substantial investments to drive growth in the business. Integration of the Biocompatibles business is going well, recruitment is on track in all three Phase III studies of Varisolve® and our US acute care sales force is at full strength for the main season for CroFab® sales. We have made the decision to take over direct sales of the LC Bead™ in the US from 2012, which will deliver revenue and margin growth. We continue to invest in our pipeline and commercial operations with confidence that we are building a sustainably profitable specialist healthcare business."

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About BTG

BTG is an international specialist healthcare company that is developing and commercialising products targeting critical care, cancer and other disorders. The company is seeking to acquire new products to develop and market to specialist physicians, and is building a sustainable business financed by revenues from sales of its own marketed products and from royalties and milestone payments on partnered products.

Chairman's statement

I am pleased to report a year of significant progress, in which we started selling our own acute care products in the US and expanded our range of marketed products through the acquisition of Biocompatibles International plc. The financial results for the year reflect the achievement of key strategic objectives as we have continued to deliver on our growth strategy.

Revenue of £111.4m (09/10: £98.5m) generated a gross profit of £77.3m (09/10: £65.7m). The loss before tax of £10.8m (09/10: profit of £9.1m) includes acquisition adjustments and reorganisation costs of £15.5m (09/10: £8.7m) and reflects the costs of the accelerated transition of marketing rights to CroFab® (crotalidae polyvalent immune fab (ovine)) and DigiFab® (digoxin immune fab (ovine)) from Nycomed US Inc. back to BTG. A tax credit following the reorganisation of our US businesses resulted in a profit after tax of £9.2m (09/10: £11.3m). Cash and cash equivalents, together with cash on fixed term deposits, were £73.9m at 31 March 2011 (cash and cash equivalents of £82.6m at 1 April 2010).

We achieved the key operating goals we set for the year. Our first direct sales force, the acute care team, started selling CroFab® and DigiFab® in the US on 1 October 2010. This enables us to retain the full value of these products. We initiated three Phase III trials of our experimental treatment for varicose veins, Varisolve® (polidocanol endovenous microfoam (PEM)), between September and November 2010. Patient recruitment is complete in one and on track in the other two. We believe Varisolve® has the potential to generate $250m-$500m per annum in sales in the US reimbursed sector. We expanded our range of marketed products and our development pipeline in line with our strategy through the acquisition of Biocompatibles in January 2011, adding a new growth component to BTG.

The Biocompatibles business is proving to be an excellent fit for BTG. Its products are used by specialists who can be served by a small sales force. Sales of the embolisation and drug-eluting bead products grew at approximately twice the market rate between 2007 and 2009 and provide significant opportunities for further growth. We intend to market the embolisation beads directly in the US from 2012, leveraging our existing commercial infrastructure. The beads also give us access to important Asian markets, with reimbursement awaited in Korea and Taiwan and registration progressing in Japan and China. We have also gained access to early stage programmes in the CellMed subsidiary that provide partnering opportunities. Integration of Biocompatibles is proceeding well and we have taken all the actions necessary to achieve the targeted £3m annualised synergies by the end of the 2011/12 financial year.

Value creation continued in our partnered pipeline, with AstraZeneca initiating a global Phase IIb study of AZD9773 (CytoFab™) in severe sepsis patients, and ZYTIGA™ (abiraterone acetate) being approved in the US as a treatment for men with advanced prostate cancer.

Having established direct sales operations in the US and expanded our product offering, we can look forward to increasing revenue, gross profit and cash generation to fuel further growth of our business. To drive growth we will continue to invest in pipeline programmes including Varisolve®, we will enhance our US commercial operations in preparation for commencing direct sales of the LC Bead™ and we will seek to acquire new products to expand our product portfolio and pipeline. I am confident that the investments we are making will be reflected in the future performance and value of the Group.

Dr John Brown

Chairman

Operating review

Following the acquisition of Biocompatibles, BTG has three areas of focus: specialty pharmaceuticals, interventional medicine and licensing & biotechnology. Each area already generates revenues from marketed products or royalties, has ongoing development programmes which, if successful, would lead to new revenue streams, and has opportunities for further growth through acquisition, development and geographic expansion activities.

Specialty pharmaceuticals

Our acute care sales force launched on 1 October 2010 with 10 representatives and grew to 19 representatives in February 2011 in preparation for the main March to October sales season for CroFab® in the US. We are pleased with progress to date and encouraged by our initial engagement with customers and their responses to new initiatives. With DigiFab®, we are optimising geographical sales coverage in the US and seeking to improve awareness amongst physicians of the signs of digoxin toxicity which, due to its relatively rarity, may not be immediately recognisable. We have received regulatory approvals in Canada and Switzerland, are progressing a regulatory application in the UK and intend to seek additional approvals elsewhere.

We have signed an agreement with Glenveigh Pharmaceuticals, LLC whereby rights to develop DigiFab® for preeclampsia revert back to Glenveigh in return for undisclosed milestone and royalty payments to BTG. Glenveigh will be responsible for development and commercialisation and BTG will supply clinical trial materials and, subject to further agreement, commercial scale supplies.

Interventional medicine

Biocompatibles' embolisation beads and drug-eluting beads and BrachySciences' brachytherapy products are medical devices that are used to address the needs of patients with cancer of the liver and prostate respectively. The products are sold in the US, the EU and in other territories, and they are in registration studies or pending reimbursement in a number of important Asian markets.

We currently sell BeadBlock™ directly in the US and plan to sell LC Bead™ directly following expiry of the current distribution agreement with AngioDynamics, Inc. on 31 December 2011. To this end, we are recruiting 21 additional medical science liaisons (MSLs) and account managers, who will join the existing small team and will be supported by the same commercial infrastructure that supports our acute care team.

Many interventional radiologists are treating varicose veins and it is becoming increasingly clear that this physician group could be important to the future adoption of Varisolve®. As we interact with these physicians in connection with the bead products, we are gaining invaluable experience that we believe will be of benefit for the future marketing of Varisolve® if it is approved in the US.

Licensing and biotechnology

We generated £60.1m (09/10: £54.1m) in recurring royalties from our licensing activities. Although future revenues on BeneFIX®, the largest contributor in 2010/11, will cease following sale of inventory existing when the final licensed patents expired in February and March 2011, we anticipate new contributors. These include ZYTIGA™ (abiraterone acetate), which was approved in the US in April 2011 as a treatment for men with advanced prostate cancer who have previously been treated with docataxel chemotherapy.

Development and commercialisation activities continue to be important to BTG. In our current development pipeline are a number of programmes that we intend to partner once they have completed their current studies if the data are supportive, including BGC20-0134 (Pleneva™), which is currently in a Phase IIa study for relapsing-remitting multiple sclerosis. With Biocompatibles we acquired CellMed, a research and development company in Germany that has a number of early stage programmes based on its CellBeads technology. We are currently exploring options to develop the CellBeads programmes to the point where we can partner them to realise both immediate and future value.

Progress in our development pipeline during the year was as follows.

Voraxaze® (glucarpidase): we expect to submit the final components of the rolling BLA in the US around mid-2011. This is to seek approval as a treatment for the rapid and sustained reduction of toxic methotrexate levels due to impaired renal function.

Varisolve® PEM: three Phase III trials were initiated in the US during September to November 2010, two (VANISH-1 and VANISH-2) intended to support a US regulatory application for approval as a single agent to treat the symptoms and appearance of varicose veins in people with incompetence of the great saphenous vein (GSV), and the third (VV017) to support an application for use following heat ablation of the GSV to treat vein segments not treated by the ablation procedure. Recruitment in all three is on track: VV017 has completed recruitment of all 105 patients, VANISH-2 has recruited 220 patients (96% of target) and VANISH-1 has recruited 62 patients (25% of target). As treatments complete in VV017 a number of sites immediately begin recruiting for VANISH-1, increasing the overall number of sites in this study. All studies are expected to be completed by the end of 2011, with data in H1 2012, a US regulatory submission in H2 2012 and potential approval in H2 2013.

DC Bead™, HCC (SPACE): in collaboration with Bayer this study of patients with hepatocellular carcinoma (HCC) is exploring the use of sorafenib in combination with transarterial chemoembolisation (TACE) using the DC Bead™ compared with DC Bead™ alone. Recruitment is complete and the study results are expected in H1 2012.

DC Bead™, HCC (bridge to transplant): two investigator-led Phase II studies are currently recruiting patients, a multicentre study in Germany and single centre study in New Zealand.

DC Bead™, HCC (downstage to resection): a single centre investigator-led Phase II is currently recruiting patients in the USA.

DC Bead™, mCRC (PARAGON): four investigator-led Phase II studies are recruiting patients covering all stages of metastatic colorectal cancer: neoadjuvant, first line, second line and refractory. The neoadjuvant study is a single arm, multicentre study in patients with resectable liver metastases from colorectal cancer; the first line study is a randomised multicentre study with concomitant systemic oxaliplatin, fluorouracil and leucovorin chemotherapy with anti-angiogenic therapy; the second line study is a randomised multicentre study of DC Beads with irinotecan and systemic cetuximab vs systemic irinotecan and cetuximab in patients with refractory KRAS wild type tumours; and the refractory study is a single arm study in patients with liver dominant disease.

BGC20-0134 (Pleneva™): recruitment of 166 patients was completed in January 2011 into this Phase IIa study of BGC20-0134, an oral compound under development as a potential treatment for relapsing-remitting multiple sclerosis. The primary outcome at the end of a six month double blind treatment period is the number of new lesions in the brain detected by MRI scanning during the treatment period. Data relating to the primary outcome are anticipated in H2 2011; additional data will be generated in a six month open label study extension.

Recent progress in key partnered programmes has been as follows.

ZYTIGA™ (abiraterone acetate): in September 2010 a Phase III trial of abiraterone acetate plus prednisone in patients with advanced metastatic prostate cancer was unblinded after an interim analysis demonstrated a statistically significant improvement in overall survival and an acceptable safety profile. Regulatory applications were submitted in the US and EU in December 2010, and US approval was received in April 2011. Abiraterone acetate is licensed to Cougar Biotechnology, which was acquired by Johnson & Johnson in 2009.

Alemtuzumab: five-year data from a completed Phase II study in multiple sclerosis patients were published in April 2011, showing that nearly two-thirds of alemtuzumab-treated patients remained free of clinically active disease for up to four years after receiving their last course of treatment of the investigational drug. Initial results from two pivotal Phase III trials are expected in the third and fourth quarters of 2011, leading to anticipated regulatory submissions in early 2012.

AZD9773 (CytoFab™): a global Phase IIb study to compare the efficacy and safety of AZD9773 with placebo in adult patients with severe sepsis and/or septic shock receiving best supportive care was initiated in October 2010 and continues to recruit patients. Results are anticipated in H1 2012. AZD9773 is licensed to AstraZeneca.

Otelixizumab: this monoclonal antibody failed to meet the primary endpoint in a Phase III study in type 1 diabetes. A Phase II study in rheumatoid arthritis is ongoing. Otelixizumab is licensed to Tolerx, Inc./GlaxoSmithKline.

CM-3: A development and option agreement relating to CM-3, a GLP-1 analogue being developed by CellMed for use in type 2 diabetes and other indications was terminated by AstraZeneca in May 2011.

Financial review

The financial results reflect the achievement of our strategic priorities for the year. These were the accelerated transition of marketing rights for CroFab® and DigiFab® from Nycomed back to BTG, the initiation of three US Phase III trials to support regulatory approval of Varisolve® and the expansion of our marketed products and pipeline, which was effected through the acquisition of Biocompatibles.

Revenue

Reported revenue increased by 13.1% to £111.4m (09/10: £98.5m). Total royalty income of £70.0m (09/10: £64.2m) included recurring royalties of £60.1m (09/10: £54.1m) and milestones/one-off income of £9.9m (09/10: £10.1m). Key contributors to recurring royalties were BeneFIX® at £28.7m (09/10: £26.6m), the two-part hip cup at £12.4m (09/10: £10.8m), the MRC humanisation IP at £6.3m (09/10: £5.1m) and Campath® at £5.2m (09/10: £4.5m).

Marketed product revenues were slightly higher than in the prior year at £35.4m (09/10: £34.3m). CroFab® revenues were £25.0m (09/10: £24.2m), DigiFab® revenues were £6.7m (09/10: £5.4m) and Voraxaze™ generated £3.7m (09/10: £3.4m) in cost recovery in the US and named patient sales elsewhere.

The main contributors to milestones/one-off income of £9.9m were a settlement with Samsung over the MLC technology, the release of deferred income on AZD9773 (CytoFab™) and a milestone on submission of the US regulatory application for ZYTIGA™ (abiraterone acetate).

Revenues from Biocompatibles for the two months following its acquisition were £6.0m, of which £5.3m were recurring revenues from product sales.

Around 85% of revenues are denominated in US dollars. There was a positive impact on reported revenues of £2.1m owing to movements in the US $.

Gross profit

Gross profit increased to £77.3m (09/10: £65.7m) and the gross margin was 69.4% (09/10: 66.7%). The components of gross profit are royalties, including recurring royalties and milestones/one-off income, marketed products and Biocompatibles revenues.

Revenue sharing on recurring royalties was £16.9m (09/10: £16.1m), giving a gross margin of 71.9% (09/10: 70.2%). The increase in margin reflected a higher proportion of income from licence agreements that had a lower revenue share. The revenue share on milestones/one-off income was £5.4m (09/10: £1.5m), giving a gross margin of 45.5% (09/10: 85%) and reflecting higher sharing obligations on the MLC settlement.

The cost of sales relating to marketed products was £8.8m (09/10: £15.2m), delivering a gross margin of 75.1% (09/10: 55.7%). The increase reflects a reduced cost of sales being recorded as there were fewer product shipments to Nycomed in the run-up to the transition of rights to CroFab® and DigiFab®, a positive impact from exchange rate variances and the benefits of the transition to direct sales on 1 October 2010. The gross margin on acute care product sales is anticipated to reduce during the year and to stabilise at around 70%.

The gross profit on Biocompatibles revenues was £3.0m (09/10: nil), a 50% gross margin. The £3m cost of sales included a charge of £1.7m relating to a reversal of the fair value uplift on inventory acquired at the time of the acquisition, the remaining £2.1m of which is expected to be fully released in H1 2011/12. The gross margin excluding the £1.7m charge was 78.3%.

Operating expenses

Operating expenses increased to £55.3m (09/10: £38.4m). These expenses include the amortisation of the payment of £9.6m to Nycomed to accelerate the transition of CroFab® and DigiFab® marketing rights to BTG, which resulted in an increased gross profit on marketed products and ensured a smooth transition of the marketing rights.

Included within operating costs is a charge of £10.0m (09/10: £9.1m) relating to amortisation of acquired intangibles, of which £1.8m related to the Biocompatibles acquisition in January 2011 and the remainder to the Protherics acquisition in December 2008.

SG&A expenses were £33.7m (09/10: £25.3m), the majority of the increase relating to the establishment of our acute care sales force and supporting infrastructure, with underlying G&A costs in line with the previous year. Biocompatibles' operating costs were £2.6m (09/10: nil). Transaction and reorganisation costs associated with the Biocompatibles acquisition were £3.8m (09/10: nil).

Increased research and development investment of £32.1m (09/10: £27.0m) resulted from the decision to fund the Varisolve® Phase III programme, with three trials initiated during the year, and progress made with Voraxaze™, which is moving towards a BLA filing.

Approximately 85% of Group revenues are denominated in US dollars and we have a policy to hedge 80%-90% of surplus US $ cash flows for the forthcoming 12 months. Settlement of forward contracts and other US $-denominated transactions resulted in losses of £2.0m (09/10: losses of £4.0m). Unrealised foreign exchange gains and losses are recognised at year end on the mark to market of forward contracts. At 31 March 2011, mark-to-market adjustments resulted in a gain of £2.7m (09/10: gain of £6.5m), which is reflected in the net financial income.

Operating loss

Before acquisition adjustments and reorganisation costs we made an operating profit of £1.7m (09/10: £10.8m). Including acquisition adjustments and reorganisation costs of £15.5m (09/10: £8.7m), our operating loss was £13.8m (09/10: operating profit of £2.1m).

Financial income

The net financial income was £3.1m (09/10: £7.1m) and included interest on cash held of £0.4m (09/10: £0.6m) and a fair value gain of £2.7m (09/10: £6.5m) on marking to market our forward contracts to sell US dollars.

Profit after tax

Profit after tax was £9.2m (09/10: £11.3m). During the year we completed a corporate restructuring of our US businesses. The restructuring has provided us with increased certainty over the future utilisation of certain of our US tax losses. This is reflected in a credit to the income statement of £18.6m as we have recognised a deferred tax asset in respect of these losses. In line with accounting standards, this deferred tax asset has been offset against the associated US deferred tax liability on the Group's balance sheet. Other deferred tax movements in the year reflect the movement in tax losses and timing differences. A current tax charge of £0.2m has been made in the US in addition to withholding tax on licence income.

Earnings per share

Earnings per share were 3.4p (09/10: 4.4p). The reduction reflects lower levels of overall profit and an increase in the number of shares in issue following the acquisition of Biocompatibles. Adjusting for acquisition adjustments, restructuring costs and the one-off deferred tax credit recognised in the year on US tax losses, the Group's underlying EPS reduced to 1.0p (09/10: 6.9p), reflecting the increased investment in Varisolve® and the acute care sales force and lower mark-to-market adjustments on foreign exchange forward contracts in the year.

Non-current assets

Non-current assets increased from £197.9m to £358.9m, the majority of the increase being the addition of goodwill and intangible assets acquired with Biocompatibles. The net book value of the Group's property, plant and equipment increased by £14.2m to £24.8m following the purchase of land in Australia and the Biocompatibles acquisition.

Current assets, current and non-current liabilities

Inventory increased by £10.4m to £20.0m as a result of us holding finished goods of CroFab® and DigiFab® in the US that would previously have been shipped to Nycomed and higher work in progress held at the year end following a planned temporary shutdown at our fill and freeze-dry supplier. In addition, the balance includes a fair value uplift of £3.8m relating to the acquisition of which £1.7m has been reversed during the year as product has been sold. Trade and other receivables increased from £20.4m to £32.7m as a result of the acquisition and the switch to direct sales of CroFab® and DigiFab®.

With Biocompatibles we acquired £10.2m of cash on fixed term deposit, and there was a net inflow of cash and cash equivalents of £10.8m.

Current liabilities increased from £43.4m to £52.3m. Trade and other payables increased from £40.8m to £49.8m and accounted for the majority of the increase.

Non-current liabilities decreased from £52.4m to £43.9m. The net deferred tax liability reduced from £33.4m to £30.7m. The key movements in the year were the recognition of a deferred tax liability of £21.0m on the acquisition of Biocompatibles offset by the recognition of a deferred tax asset of £18.6m in relation to US losses. Other movements in the liability represent the net movement on losses and foreign exchange differences on US $-denominated balances.

Cash

Net cash and cash equivalents decreased from £82.6m to £63.7m. An additional £10.2m cash is held in fixed-term deposits until December 2011.

Cash flows

The Group's cash reduced by £18.9m in a year of significant investment and operating progress. Total investments were £21.3m (09/10: £2.7m) in tangible and intangible assets, the principal components of which are the reacquired rights from Nycomed (£9.7m) and the purchase of land in Australia that is integral to our supply chain for £8.3m. The acquisition of Biocompatibles resulted in a net cash inflow of £10.8m after accounting for payments to Biocompatibles shareholders and directly associated transaction costs. The transition to direct sales of our acute care products has been the most significant contributor to a net cash outflow from working capital movements over the year. Inventory levels are £5.4m higher as explained above, receivables are £6.7m higher due to significant sales in the month of March and payables are £5.0m lower due mainly to the unwind of deferred income previously received on shipments of our acute care products to Nycomed. Overall, the net cash outflow from operating activities, including the working capital effects, was £12.0m (09/10: £5.8m inflow).

Outlook

We have made excellent progress over the past year with our key strategic objectives. We set up our sales force in the US, agreed the accelerated transition back to BTG of marketing rights to CroFab® and DigiFab®, invested in Varisolve® and purchased the land in Australia to secure our supply chain. We were able to make these investments from a fundamentally strong financial position.

Looking ahead, we will receive the full benefits of selling CroFab® and DigiFab® this year, with significant growth in sales revenues. We also look forward to a new, potentially significant, royalty stream from ZYTIGA™ (abiraterone acetate), a treatment for advanced prostate cancer that was approved in April 2011 in the US, which will partially offset the loss of royalty revenues from BeneFIX® following patent expiry.

On 13 May 2011 we announced that AstraZeneca had terminated the development and option agreement relating to CM-3, under development by CellMed for type 2 diabetes and other indications. As a result, we will incur a non-cash accounting charge of approximately £8m in the current financial year.

We will continue to invest in a number of areas including the Varisolve® Phase III trials and clinical studies exploring additional uses of the implantable oncology bead products. Our sales and marketing costs will increase as we prepare to commence direct sales of the LC Bead™ in the US from 2012. We are already recruiting 21 additional medical science liaisons (MSLs) and account managers, who will join the existing small interventional medicine team.

In parallel with these investing activities we are focused on efficiency. We are confident of realising the £3m cost synergies from the Biocompatibles acquisition in the year to March 2012, and we are looking for further opportunities improve efficiency across our operations.

We are pleased with the progress we have made in what has been a transformational year. We now have the product portfolio, commercial capabilities, opportunities and financial resources to deliver sustainable profitability in the medium term.

1. Basis of preparation

In accordance with EU law (IAS Regulation EC 1606/2002), the preliminary results have been prepared in accordance with International Financial Reporting Standards (''IFRS'') adopted for use in the EU as at 31 March 2010 (''adopted IFRS''), International Financial Reporting Interpretations Committee (''IFRIC'') interpretations and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The preliminary statements have been prepared in accordance with the Group's accounting policies approved by the Board.

Details of principal business risks and uncertainties can be found in note 11.

The comparative figures for the financial year ended 31 March 2011 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditor and delivered to the registrar of companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The annual report and accounts for the year ended 31 March 2011 will be posted to shareholders on 20 June 2011. The results for 2011 were approved by the Board of directors on 24 May 2011 and are audited. The Annual General Meeting will take place on 20 July 2011.

Interim and preliminary announcements notified to the London Stock Exchange are available on the internet at www.btgplc.com.

Accounting standards adopted in the year

The following accounting standards have been adopted in the year:

IFRS3 revised - Business Combinations

The adoption of IFRS3 revised has resulted in £3.0m of transaction costs being recognised through the Group's Consolidated Income Statement in relation to the acquisition of Biocompatibles International PLC as detailed in note 8. The costs were incurred with professional advisers directly in relation to the acquisition and reduce basic and diluted earnings per share by 1.1p.

IAS41 - Biological Assets

As part of the acquisition of land in Australia on which the group manages sheep, a breeding flock of sheep was purchased. These have been accounted for in accordance with IAS 41 and are held at fair value. At 31 March 2011 the carrying value of this breeding flock was £0.3m. As in previous periods the group continues to account for its production flock of sheep within property, plant and equipment in accordance with IAS 16.

Other accounting standards adopted in the year

The following amendments and standards have also been adopted, but have had no significant effect on the reported results or financial position of the Group:

━ IFRS 1 (Revised) - simplification of the structure of IFRS 1 without making any technical changes

━ Amendments to IFRS 2 - Group Cash-Settled Share-based Payments Transactions

━ IAS27 - this requires the effects of all transactions with non-controlling interests where there is no change in control to be recorded in equity

━ IFRIC18 - clarification of the accounting for arrangements where an item of property, plant and equipment provided by the customer, is used to provide an ongoing service

━ IAS 38 Intangible Assets - additional consequential amendments arising from revised IFRS 3

━ Improvements to IFRS - various standards amended.

Accounting standards issued but not yet effective

The Group does not consider that any of the other standards or interpretations issued but as yet not effective will have a significant impact on the financial statements.

Accounting policies adopted as a result of the acquisition of Biocompatibles International plc

As a result of the acquisition of Biocompatibles International plc, the Group has adopted additional accounting policies in relation to areas that were not previously relevant to the Group:

━ Held to maturity financial assets

━ Revenues received in relation to development programmes

━ Borrowings

Going concern basis

After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Accounts.

This conclusion has been reached having considered the effect of liquidity risk on the Group's ability to operate effectively. Currently, liquidity risk is not considered a significant business risk to the Group given its level of net cash and cashflow projections. The Group does not currently require significant levels of debt financing to operate its business. The key liquidity risks faced by the Group are considered to be the failure of banks where funds are deposited and the failure of key licensees or insurers.

In addition to the liquidity risks considered above, the Directors have also considered the following factors when reaching the conclusion to continue to adopt the going concern basis:

━ The Group's principal licensees are global industry leaders in their respective fields and the Group's royalty-generating intellectual property consists of a broad portfolio of both licensees and industries;

━ The Group's Marketed Products are life-saving in nature, providing some protection against an uncertain economic outlook; and

━ The purchase of Biocompatibles International plc in January 2011 resulted in a net cash inflow of £10.8m (after acquisition costs) plus held to maturity financial assets of £10.2m and a further diversification of market and development risk for the Group as a whole.

Acquisition adjustments and reorganisation costs

The Consolidated Income Statement includes a separate column to disclose significant acquisition adjustments and reorganisation costs arising on corporate acquisitions. Adjustments relate to the acquisitions of:

━ Biocompatibles International plc in January 2011; and

━ Protherics PLC in December 2008.

The costs relate to the following:

━ The release of the fair value uplift of inventory acquired;

━ Amortisation arising on intangible assets acquired;

━ Transaction costs incurred with professional advisers in relation to the completion of the acquisition

━ Reorganisation costs comprising acquisition related redundancy programmes, property costs, and asset impairments.

2. Operating segments

The Group's operating segments, as identified and reported in line with the requirements of IFRS8, have been updated during the course of the year to reflect the acquisition of Biocompatibles International plc in January 2011. There are no inter-segment transactions that are required to be eliminated on consolidation.

Period through to the acquisition of Biocompatibles

All significant decisions are made by the Leadership Team (which is BTG's chief operating decision-making body as defined by IFRS8), with implementation of that decision on a group-wide basis then being the responsibility of each member of the team or of cross-functional global teams where appropriate. The sales, manufacturing, business development, research and development and support functions are managed and operate on a global basis and are not dedicated to individual product, marketing or therapy areas.

In assessing performance and making resource allocation decisions, the Leadership Team reviews Gross Profit by segment, reflecting the two distinct routes available to it in realising commercial value from its assets. All other financial information, including assets, is presented on a consolidated basis for the Group as a whole, substantially in the form of, and on the same basis as, the Group's IFRS financial statements. Gross Profit is generated from Marketed Products, such as CroFab™ and DigiFab™, or from Royalty arrangements such as Factor IX, Campath® and Two-Part Hip-Cup. Royalty revenues are receivable on a broad portfolio of underlying intellectual property rights, covering amongst other things pharmaceutical products, medical devices and electronic components.

Research and development is an essential upstream activity of the Group, without which there could be no Royalty or Marketed Product revenues. Research and development activities are managed on a consolidated, group-wide basis and are not managed by reference to the Group's operating segments.

Effect of acquisition of Biocompatibles

The Group completed the acquisition of Biocompatibles International plc (note 8) on 27 January 2011. The Group's consolidated results for the financial year ended 31 March 2011 therefore contain approximately two months of trading in respect of Biocompatibles.

As a result of this acquisition, representatives from the Biocompatibles business joined the Group's chief operating decision maker (the Leadership Team). The proximity of the acquisition to the year end, however, meant that existing operating segments were not changed. Financial performance of the Biocompatibles business in the period since acquisition has been monitored by the Leadership Team on a stand-alone basis. Resource decisions have, to date, also been made having regard to the Biocompatibles business as a standalone entity; though the full Leadership Team is involved in the decision-making process.

The Biocompatibles business has therefore been identified and disclosed as a separate operating segment. Acquisition and reorganisation costs are not allocated to specific operating segments.

As the Group continues its integration of the recent Biocompatibles acquisition the management structure and reporting of results within the company may change in the future to be more closely aligned to the three focus areas, being 'Specialty Pharmaceuticals', 'Interventional Medicine' and 'Licensing and Biotechnology'. No decision has yet been made or implemented.

* 2010 includes a £0.3m adjustment within Marketed Products representing the reversal of a fair value uplift of inventory purchased on acquisition of Protherics PLC recognised through the income statement when the product was sold.

Geographical revenue analysis

Geographical analysis of revenue, based on the geographical location of customers:

Major customers

Products that utilise the Group's Intellectual Property Rights are sold by licensees. Royalty income is derived from over 70 licences. Two licences individually generated royalty income in excess of 10% of Group revenue, being £28.7m and £12.4m respectively (2010: one licence generated £26.6m).

The Group's marketed products are sold both directly and also through several distribution agreements in the USA, Europe and Asia Pacific. One distribution agreement individually generated income in excess of 10% of Group revenue, being £12.4m (2010: one distribution agreement generated £27.9m).

3. Acquisition and Reorganisation costs

The group considers "acquisition and reorganisation costs" to include transaction costs of completing the acquisition (in line with IFRS3 revised) and those costs resulting directly from decisions to rationalise both operating sites and business operations. Transaction costs of £3.0m (2010: nil) have been expensed in relation to the acquisition of Biocompatibles International plc. A further £1.1m has been debited directly to Merger Reserve.

4. Tax

An analysis of the tax credit for the year, all relating to current operations, is as follows:

A reconciliation of the Group's deferred tax liability is set out below:

The Group recognised an additional deferred tax asset of £18.6m in relation to brought forward US tax losses during the year ended 31 March 2011. In accordance with IAS12, this asset has been set off against the Group's aggregate US deferred tax liability. The asset was recognised following the completion of a tax-free reorganisation of certain of the Group's US taxable entities on 31 March 2011. As a result of this, when performing its annual assessment of the probability of utilising such losses, management concluded that there was now sufficient certainty over the future utilisation of the losses to recognise a deferred tax asset.

5. Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

The basic and diluted earnings per share from underlying earnings is based on the following data:

Adjustments to profit are shown after taking into account the tax effect of such adjustments on the results as shown in the Consolidated Income Statement as follows:

━ No tax adjustment is required on the fair value of acquired inventory

━ The release of deferred tax liability of £3.4m (2010: £1.4m) has been deducted from the amortisation and impairment of acquired intangible assets of £10.0m (2010: £9.1m)

━ A reorganisation cost of £3.8m in the Consolidated Income Statement has not been adjusted for tax as there is no expectation of the costs being deductible for tax in this financial year. In the year ended 31 March 2010, £0.9m of tax effect of reorganisation costs has been adjusted on the basis that the tax charge would have been £0.9m higher had it not been for deductions available against reorganisation costs paid in that financial year

━ An adjustment has been made for the one-off deferred tax credit recognised as a result of the completion of a tax-free reorganisation in the year

6. Goodwill and intangibles

Goodwill of £59.2m relates to the acquisitions of Biocompatibles International plc (note 8), £28.9m (2010: nil) and Protherics plc, £30.3m (2010: £30.3m).

The table below summarises the Group's Intangible Assets:

Developed technology

Developed technology relates to both the antidote assets acquired in Protherics PLC comprising principally of the rights to CroFab™ and DigiFab™ and the bead assets acquired in Biocompatibles International plc, principally of the rights to the DC/LC Beads.

Contractual relationships

Contractual relationships relates to contracts acquired in Protherics PLC and Biocompatibles International plc.

Repurchase of contractual rights

On 27 August BTG signed an agreement with Nycomed US Inc. concerning the accelerated transition to BTG on 1 October 2010 of marketing rights to CroFabTM and DigiFabTM. Under the terms of the agreement BTG purchased the exclusive rights to sell the products for which a consideration of £9.7m was paid in October 2010. The purchase price was capitalised and amortised over the 6 month period ending 31 March 2011 representing the length of the exclusive period.

7. Defined benefit pension fund liability

The liability recognised on the Group's balance sheet in accordance with IAS19 - Employee benefits in relation to the BTG Pension Fund is £2.0m (2010: £9.2m). The decrease in the liability since 31 March 2010 relates principally to cash contributions made by the company of £4.0m, an actuarial gain of £3.9m offset by a cost of £0.7m recognised in the income statement. The net actuarial gain principally arises as a result of a reduction in the expected inflation rate and an update to mortality assumptions offset by actuarial losses arising on experience adjustments applied to the defined benefit obligation.

8. Acquisition of Biocompatibles International plc

On 27 January 2011, the Company acquired 100% of the issued share capital of Biocompatibles International plc (subsequently re-registered as Biocompatibles International Ltd), a listed UK Group. Biocompatibles International Ltd is the parent company of the Biocompatibles Group, a leading international medical technology company in the field of drug device combination products. The acquisition provides an excellent opportunity to combine Biocompatibles' fast growing specialist products with BTG's existing commercial infrastructure. The enhanced resources of the Enlarged Group will allow accelerated investment in Biocompatibles' products and development pipeline. This transaction has been accounted for by the purchase method of accounting.

The acquisition was settled by the issuance of 68,723,244 new BTG plc ordinary share of 10 pence each plus either 10 pence in cash for each Biocompatibles share or a Contingent Value Note.

Equity settled consideration

The fair value of equity settled consideration was £167.7m, based on the share price of £2.44 in existence at the time of the acquisition.

Cash consideration

Shareholders owning 30,349,200 Biocompatibles shares (73.9% of all Biocompatibles shares acquired) opted to receive 10p in cash per share, resulting in a cash payment of £3.0m.

Contingent Value Note ("CVN")

As an alternative to 10 pence cash consideration, Biocompatibles shareholders could elect to receive an entitlement to a contingent right to payment of the Sterling equivalent of €0.56 per Biocompatibles Share in cash by participating in the value that may potentially be achieved from part of Biocompatibles' programme to develop the GLP-1 Compound which it has partnered with AstraZeneca. Shareholders owning 10,722,465 Biocompatibles shares (26.1% of all Biocompatibles shares acquired) opted to receive the CVN. The CVN will be paid in full if, prior to 31 December 2012, either:

━ AstraZeneca exercises an option to license the GLP-1 compound on agreed terms; or

━ BTG, otherwise than on the agreed terms of the option, enters into any other licence, sale or other disposal or other arrangement with similar effect with AstraZeneca with respect to the rights of the GLP-1 compound

The liability will be paid in full or not at all. The fair value of each CVN has been assessed at acquisition date as being 10 pence per Biocompatibles share, based on probability adjusted net present value calculations of AstraZeneca exercising its option to licence the GLP-1 compound. This fair value is also supported by the alternative offer to shareholders of 10 pence in cash. The fair value of the CVN is £1.1m.

Subsequent to the year end the company received notification from AstraZeneca of its termination of the option agreement (note 9). The carrying value of the CVN will be adjusted accordingly during the financial year ended 31 March 2012.

Net assets acquired

Details of the net assets of acquired arising from the acquisition of Biocompatibles International plc are set out in the table below:

*Total costs relating to the acquisition were £4.1m, of which £3.6m had been paid by 31 March 2011. The remainder was settled in April 2011. Of the total costs of £4.1m, £3.0m have been included in 'Acquisition and reorganisation costs' in the Consolidated Income Statement and £1.1m have been debited to Merger Reserve.

The goodwill arising on acquisition resulted from assets which could not be recognised separately including early stage pipeline products and a highly skilled workforce. The fair value adjustments are considered final.

The main elements of the significant fair value adjustments are described below:

━ Intangible assets in respect of the marketed products, in-process research and development and contractual relationships in accordance with IFRS 3 Revised - Business Combinations

━ Revaluation of inventory reflecting profit accrued up to the stage of production at the time of the transaction

━ Deferred tax liabilities in relation to the acquired intangible assets over and above £21.2m of deferred tax assets in recognition of acquired accumulated tax losses

9. Post Balance Sheet Event

On 13 May 2011 the Group announced that they had been informed by AstraZeneca that AstraZeneca had terminated the development and option agreement relating to CM-3, a GLP-1 analogue being developed by BTG's CellMed subsidiary for use in type 2 diabetes and other indications.

As part of BTG's acquisition of Biocompatibles in January 2011, 487 Biocompatibles shareholders elected to receive in aggregate 10,722,465 Contingent Value Notes (CVNs) providing a right to a payment of the Sterling equivalent of €0.56 per Biocompatibles share if AstraZeneca exercised its option to enter a licence agreement relating to CM-3 on the pre-agreed terms. As a result of AstraZeneca's decision to terminate the development and option agreement, it is highly unlikely that any payment will be made in relation to the CVNs. The payment obligation would only now arise if BTG enters into another form of licence, sale or other disposal of the GLP-1 asset to AstraZeneca prior to 31 December 2012. In light of AstraZeneca's decision to terminate the development and option agreement, the BTG Board does not believe that there is any realistic possibility that this will occur.

At 31 March 2011 the carrying value of the intangible asset associated with the GLP-1 asset was £8.8m. In addition, the Group had recognised a liability of £1.1m in relation to the CVN. Accordingly, in its Consolidated Income Statement for the year ended 31 March 2012, the Group will recognise an impairment charge of £8.8m and will derecognise the £1.1m liability in respect of the CVN.

10. Related parties

Giles Kerr, a non-executive director of BTG plc is also the Director of Finance for Oxford University and a director of its wholly owned subsidiary Isis Innovations Ltd. Wholly owned subsidiaries of BTG plc have pre-existing licence agreements with Oxford University and Isis Innovations under which they are obliged to pay royalties on amounts received from commercialising certain Intellectual Property. Payments made by BTG to Oxford University and Isis Innovations Ltd under the relevant licence agreements were £1.8m during the year ended 31 March 2011. There were no amounts still outstanding and payable by BTG under these agreements as at 31 March 2011.

Melanie Lee, a non-executive director of BTG plc is also Chairman of Cancer Research Technology Ltd. Wholly owned subsidiaries of BTG plc have pre-existing licence agreements with Cancer Research Technology Ltd under which they are obliged to pay royalties on amounts received from commercialising certain Intellectual Property. Payments made by BTG to Cancer Research Technology Ltd under the relevant licence agreements were £0.1m during the year ended 31 March 2011. There were no amounts still outstanding and payable by BTG under these agreements as at 31 March 2011.

Dr Peter Geigle, although not considered key management personnel is a director of CellMed AG. Dr. Geigle is also an executive board member of Geigle Verwaltungs GmbH, a company that leases the premises to CellMed AG. The rental cost for the two months since acquisition was £0.1m. This arrangement is on an arms length basis at a commercial rate. There are no amounts outstanding as at 31 March 2011 under this agreement.

11. Principal risks and uncertainties

BTG's performance and prospects may be affected by risks and uncertainties relating to its business and to the environment in which it operates.

The Group's internal controls include a risk management process to identify key risks and, where possible, manage the risks through its systems and processes and by implementing specific mitigation strategies.

The most significant risks identified in an annual update of the Group's risk register that could materially affect the Group's ability to achieve its financial and operating objectives are summarised in this section. Other risks are unknown or deemed immaterial.

Interruption of product supply

BTG relies on third-party contractors for the supply of key materials and services, such as filling and freeze-drying of end products. These processes carry risks of failure and loss of product. Problems at contractors' facilities may lead to delays and disruptions in supplies. Some materials and services may be available from one source only and regulatory requirements make substitution costly and time-consuming. BTG's polyclonal antibody products rely on serum produced from our sheep flocks in Australia, which could be subject to disease outbreaks. BTG relies on its single site in Wales for supply of manufactured antibody products and a single site in Farnham for the manufactured bead products, with the consequent possibilities for disruption to supplies.

Controls and mitigating actions:

Rigorous monitoring of suppliers; dual sourcing implemented wherever possible; inventories monitored through sales and operational planning process and production changes implemented where needed to ensure continued product supply; regular checks made on sheep flock health; disaster recovery plans in place.

Patent validity, patent infringement litigation and changes in patent laws

In common with all patents, BTG's patents can be subject to challenge at any time. Challenges can relate to the validity of patents or to alleged infringement of others' intellectual property, which might result in litigation costs and/or loss of earnings or liabilities or other payment obligations to third parties. BTG might be obliged to sue third parties for their infringement of its patents. Failure by BTG to maintain or renew key patents might lead to losses of earnings and liability to suit from both the licensee and licensor. BTG may not be able to secure the necessary intellectual property rights in relation to products in development, limiting the potential to generate value from these products. Changes in patent laws and regulations in territories where BTG conducts its business that make it more difficult or time-consuming to prosecute patents, or which reduce the exclusivity period for granted patents, could adversely impact the Group's financial performance. BTG's patent portfolio is currently subject to several challenges.

Controls and mitigating actions:

Dedicated internal resource supplemented by external expertise monitors patent portfolio and third-party patent applications; processes in place to automate patent renewals; internal controls established to avoid disclosure of patentable material prior to filing patent applications.

Patent expiry, product supply, safety or compliance issues, or competition may reduce current revenues

BTG's key current royalty-generating products are expected to continue to provide royalty revenues until their patents or licence agreements expire. Any unforeseen patent loss, supply, safety or compliance issues with these products could result in premature cessation of the revenues.

BTG also earns revenues from sales of its acute care products CroFab® and DigiFab® and the interventional medicine bead products. CroFab® is patent protected as are certain of the bead products but DigiFab® has no patent protection. CroFab® and DigiFab® are protected by significant know-how and complex manufacturing processes and BTG expects revenues for these two products to continue regardless of patent protection. However, future competition for these products cannot be ruled out and competing products could materially adversely impact BTG's financial results. BTG's bead products are subject to competition.

Controls and mitigating actions:

New royalty streams may emerge from our licensing activities. For example, ZYTIGA (abiraterone acetate) was approved as a treatment for men with advanced prostate cancer in April 2011 and BTG will earn a royalty on all sales; additional future royalty streams would result if alemtuzumab is approved to treat multiple sclerosis and CytoFab™ if approved to treat severe sepsis. BTG acquired Biocompatibles International plc in January 2011 and acquired a portfolio of marketed products, providing another revenue stream and reducing the reliance on revenues from the acute care products. Mitigations with respect to the bead products include product development, geographic expansion and the conduct of clinical studies to expand bead product labels.

Failure to comply with regulations may result in prosecutions

The pharmaceutical industry is highly regulated and the Group must comply with a broad range of regulations relating to the development, approval, manufacturing and marketing of its products. This is particularly true in the US, from which the Group derives most of its revenues and where the Group has established its own sales and marketing operations. Regulatory regimes are complex and dynamic, and alterations to the regulations may result in delays in product development or in the products becoming non-approvable. Ensuring compliance with such regulations necessitates allocation of significant financial and operating resources.

Failure to comply with relevant rules, laws and regulations may result in criminal and civil proceedings against the Group and/or its officers. Significant breaches could result in large financial penalties, which could materially adversely impact the Group's financial performance and prospects. Moreover, failure by BTG or a BTG partner company to comply with regulations may result in a product being withdrawn from market with a subsequent loss of revenues.

Controls and mitigating actions:

A Code of Conduct has been provided to all employees supported by compliance systems to ensure sales and marketing and other activities comply with regulations in the US and other territories. Training is provided for all staff on the Code of Conduct and applicable policies. Standard operating procedures are in place to ensure compliance with good clinical and manufacturing practice, monitored through quality control systems.

Product liability and other risks may not be capable of being adequately insured

The manufacturing, testing, marketing and sale of BTG's products involve significant product liability and business interruption risks. As the developer, manufacturer and seller of certain products, BTG may be held liable for death or personal injury to persons receiving the products during the development phase or after the product is approved.

Controls and mitigating actions:

BTG maintains product liability insurance and operates quality systems relating to the manufacture of its products and a pharmacovigilance system to monitor safety events arising with respect to products sold.

Inability to access new products and programmes may limit future growth

Other than through the CellMed subsidiary acquired with Biocompatibles, BTG does not conduct fundamental research to generate its own development programmes but instead seeks to acquire new products and late-stage development programmes from other organisations. There is significant competition from other companies who may have greater financial resources and sales and marketing reach than BTG. BTG may not be able to acquire suitable products and programmes, which will materially adversely impact the Group's financial future performance and growth prospects.

Controls and mitigating actions:

Dedicated product acquisition team in place; strategy is to focus on niche opportunities that leverage BTG's US commercial operations and may be a better fit with BTG than with other organisations.

The success of development activities is uncertain

BTG may not be able to access the later-stage development opportunities it seeks. The development of medical products is inherently uncertain and the timelines and costs to approval may vary significantly from budget or expectation. The product may not demonstrate the expected efficacy or safety benefits and may not be approved by the regulatory bodies, such as the US Food and Drug Administration. Manufacturing difficulties or patent litigation may cause programmes to be delayed or halted. Failure of a late-stage programme such as Varisolve® PEM or AZD9773 would materially adversely impact the Group's financial prospects.

Controls and mitigating actions:

Experienced development team in place; focus is on acquiring later-stage programmes that have already demonstrated proof of concept and potentially have lower-risk development pathways; development programmes monitored to identify risks and challenges and recommend mitigating and corrective actions. Certain products are licensed to larger companies who may have greater resources to support product development.

Competition may erode revenues

The Group operates in competitive markets. The products on which BTG currently earns revenues, or from which it anticipates earning revenues once on the market, face competition from other products that are already approved or in development. Competing products may have superior efficacy and side effect profiles, cost less to produce or be offered at a lower price than BTG's products; such competition could materially adversely impact Group revenues.

Controls and mitigating actions:

BTG focuses on niche opportunities addressing specialist markets where there is limited competition and high barriers to entry; CroFab® has no current competitor and BTG estimates DigiFab® has about 80% market share; both products are complex to manufacture. BTG differentiates the embolisation and drug-eluting bead products from competitors by supporting clinical studies to generate safety and efficacy data.

Pricing and reimbursement pressures are increasing

There is increasing pressure on healthcare budgets causing payers to demand increasing treatment and economic benefits before agreeing to reimburse product suppliers at all or at appropriate prices. In March 2010, healthcare reform legislation was adopted in the US, requiring manufacturers to increase the rebates or discounts they give on products reimbursed or paid for by public payers including Medicaid and Medicare. The purpose of the reform is to increase healthcare coverage in the US population and to manage treatment of chronic conditions efficiently and cost effectively. Management of acute conditions is generally not affected. BTG's acute care and implantable oncology products treat serious medical conditions conditions and the impact of healthcare reform on current Group revenues is not expected to be material to the Group's financial position. If BTG acquires products in future that are more impacted by healthcare reforms, revenue expectations could be lower. Failure of a product to qualify for government or health-insurance reimbursement or the failure to achieve an appropriate sales price could adversely impact the group's financial performance.

Controls and mitigating actions:

BTG focuses on niche products that address serious unmet needs; early on in a product's development the Group conducts pricing and reimbursement studies; the assessments of potential new products will include an assessment of healthcare reforms on pricing and reimbursement.

Currency and treasury effects can adversely impact results

Many of BTG's revenues and receipts are denominated in US dollars and movements in foreign exchange rates could adversely impact results.

Controls and mitigating actions:

BTG actively manages its exchange risks where feasible, using short-term hedging transactions guided by market expectations and economic forecasts to seek to match actual receipts and payments over a rolling 12 month period to those forecast. This policy can result in both exchange gains and losses but provides a level of certainty over cash receipts.

Statement of Directors' responsibilities pursuant to Disclosure and Transparency Rules

Each of the Directors, whose names and functions are listed below, confirms that, to the best of his or her knowledge:

━ The financial statements, which have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole.

━ The business review includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

24 May 2011

Cautionary note regarding forward looking statements

This results announcement contains certain forward-looking statements with respect to BTG's business, performance and prospects. Statements and other information included in this report that are not historical facts are forward-looking statements. Words such as 'expects', 'anticipates', 'intends', 'plans', 'believes', 'seeks', 'estimates' and 'potential', variations of these words and similar expressions are intended to identify forward-looking statements. These statements are based on current expectations and involve risk and uncertainty because they relate to events and depend upon circumstances which may or may not occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Current principal risks and uncertainties are described above. Any of the assumptions underlying these forward-looking statements could prove inaccurate or incorrect and therefore any results contemplated in the forward-looking statements may not actually be achieved. BTG undertakes no obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise.