Sinclair Pharma Regulatory News (SPH)

Pre-Close Trading Update

20% growth in revenue to £45.3 million

 Strong performance across all key brands

Return to EBITDA profit anticipated

London, 15 January 2018 Sinclair Pharma plc (AIM:SPH.L) ("Sinclair" or the "Group"), the international aesthetics company, announces an unaudited trading update for the twelve months ended 31 December 2017.

Sales for the period were £45.3 million, (£43.2 million at constant currency) compared to sales of £37.8 million for the same period in 2016, representing headline growth of 20% or 14% at constant currency. As expected sales in the second half of 2017 were over 25% higher than sales in the first half of the year at £25.2 million. As previously guided, the Group expects to deliver a modest EBITDA profit for the year as a whole. Continued investment to support the launch of Silhouette InstaLift™ in the US via distributor ThermiGen resulted in an adjusted EBITDA loss for the US business of approximately £1.0 million.

Profitability throughout the business built during the year; in particular the restructuring of the European operations started to bear fruit, culminating in notably strong fourth quarters in Europe as well as Brazil. Management took the decision to take advantage of the strength in the ex US business to reduce sales of Silhouette and Ellansé® to distibutors in the Middle East and South Korea ahead of creating its own affiliates/joint ventures in these territories. This decision held back 2017 revenues although Q4 still achieved 17% reported growth. The Group is set up for strong growth in 2018; Sinclair's Korean affiliate is already operational and a joint venture in the Middle East is anticipated during H1 2018.

Silhouette Soft® sales reached £15.7 million in the period, compared with £14.0 million in 2016, representing growth of 12%. This reflects a strong performance across many markets, especially South Korea, Spain and Brazil. In the UK, in-market sales growth accelerated to approximately 30% in Q4 following a successful World Experts Meeting in Barcelona and supported by a new sales team. As expected, the CE-Mark for Silhouette Soft® was re-issued in Q4 2017.

Silhouette Instalift™, launched by Sinclair's distributor ThermiGen in the US in August 2016 recorded sales to Sinclair in 2017 of £5.2 million, in-line with the minimum purchase obligations under the distribution agreement and compared with £1.3 million for 2016 achieved during the period from launch in August 2016. Doctor training remains strong and product survey data from patients and doctors continues to be very positive. However, the re-order rates in the period were disappointing and the Group is evaluating a number of options to improve performance.

Ellansé® delivered revenues of £9.6 million compared to £8.1 million in the prior year representing growth of 18% (10% at constant currency). This reflected strong growth in many markets, especially Spain, Mexico, and Iran. Ellansé® growth is both broad based and strong as physician and patient endorsement of the product continues to grow, although the headline Group growth rate was reduced by a flat £1.8 million performance in South Korea, the product's largest market. Management remains excited about the growth prospects for Ellansé® and in particular the forthcoming launch in Brazil, which is expected in H1 2018, following regulatory approval anticipated to be granted during Q1 2018. A return to growth in 2018 under the new South Korea affiliate is also anticipated.

Perfectha® revenues were £9.4 million against £8.1 million in 2016, growth of 16% (10% at constant currency). Strong demand by distributors in South Korea, Iran and Mexico were the main contributors to this performance. In October, Perfectha® was successfully relaunched in Brazil by Sinclair's local affiliate having been reregistered by Sinclair following the cessation of third-party distributor rights early in 2017.

Sculptra revenues were £5.4 million compared with £6.3 million in the prior year, a fall of 14% but a strong increase over H1 2017 sales of £2.0 million. The strong second half performance reflects a bounce back following destocking by wholesalers seen in the first half of the year, helped by a better-than-expected second half performance.

Refine®. The California wildfires in autumn 2017 caused smoke damage to the manufacturing facility in Santa Rosa. As a consequence, budgeted 2017 sales of £0.4 million were not achieved. Manufacturing is expected to re-commence in Q1 2018 and the US launch is planned for later in 2018.

H2 revenue momentum and profitability. The key 2017 trend was the acceleration of revenue growth through the year despite the destocking of distributors in the Middle East and South Korea towards the end of the period. H1 2017 reported revenue growth over H1 2016 was 16% compared to 23% for the corresponding H2 period. In H1 2017, the Group reported an adjusted EBITDA loss of £1.7 million. In H2 2017, the combination of revenue growth and operational gearing resulted in the Group trading profitably and, as expected, this is expected to deliver a modest adjusted EBITDA profit for the full year. The Board expects that the combination of operational leverage and the benefit of prior year cost savings has generated marginal 2017 adjusted EBITDA in excess of 80%.

The Board is delighted to announce the appointment of Kamal Abbasi as head of the Middle East and Asia Pacific regions. Kamal was previously head of Galderma's Asia business and is a qualified doctor. In addition the Group has recruited several senior commercial professionals as it builds sales momentum in its worldwide business. These appointments are a reflection of Sinclair's growing reputation in the industry and confidence in the Group's strategy and product portfolio.

Net debt at 31 December 2017 was £3.2 million. The Group has access to undrawn working capital facilities of up to £5.0 million.

Chris Spooner, CEO, commented: "Revenue growth in excess of 80% over the last two years will, as expected, return the Group to adjusted EBITDA profitability in 2017. Momentum in the business in the final quarter of 2017 was strong and whilst the re-order rate for US Silhouette Instalift™ is disappointing we are looking at a number of options to address this. The Board and I remain confident that 2018 will be another year of substantial revenue growth which will deliver further operating leverage."

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About Sinclair Pharma plc - www.sinclairpharma.com 

Sinclair Pharma plc is an international company operating in the fast growth, high gross margin, global aesthetics market. Sinclair has built a strong portfolio of differentiated, complementary aesthetics technologies, which are experiencing significant growth, targeting unmet clinical needs for effective, high quality, longer duration, natural looking and minimally-invasive treatments. Sinclair is planning entry to multiple new geographic markets and line extension launches over the next few years. The Group has an established sales and marketing presence in the leading EU markets and Brazil, and a network of international distributors including ThermiGen in the US.

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