Liquidity & Capital Resources

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

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

In September 2009, Sinclair issued convertible unsecured loan notes worth approximately £2.3m to a leading institutional investor. A first series of £1.0m of the notes were issued immediately with the final £1.3m drawn down in early October.

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

On 29 October, the Board also announced that it had entered into a new debt facility of £9.0m to be used to part fund the acquisition. As a consequence, the firm placing and open offer will be scaled back to £18.0m.

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