mayne pharma annual report 2012

7/28/2019 Mayne Pharma Annual Report 2012

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annual REpoRt 2012

taRgEting thEglobal market


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2

Me prm Aa Rpr 2012

MaynE phaRMas international ootprint

MAyne PhARMAs inteRnAtionAl footPRint

pd D (d a)

astRix Br (Kre), akbr prm (sr lk)

DoRyx Wrer Cc (usa)

ERyC tev (uK), per (Cd), Med (swede, nrw)

KaDian/Kapanol abb (Cd), gsK (Rw e. uK, ired, J & usa)

MagnoplasM


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3

ContEnts

Business oveRview

Me prm gce 4

2012 Cm h& ucm Mee

5

Crm leer 6

Ce Eecve ocer Revew 8

Fc smmr 10

Reerc & Deveme 12

suBaCap 13

Meme tem 16

finAnciAl RePoRt

Drecr Rer 19

Remer Rer 23

adr ideedece Decr 28

Crre gverce seme 29

Cded seme

Cmreeve icme 35

Cded seme Fc p 36

Cded seme C Fw 37

Cded seme Ce E 38

ne e CdedFc seme 39

Drecr Decr 72

ideede adr Rer 73

asx add irm 75

HeaD oice anDmanuacturing acility

32 cre c sbr, sar 12,000m mcr

ce w FDa d tga rv.

a rdc cc :

c.2.5 b ce/be

100 e bk rdc

16 m d d crem

corporateregistereDoice

Mebre,Vcr


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4

Mayne Pharma Annual Report 2012

mayne pHarma at a glanCE

Me prm gr lmed (Meprm) asx-ed ecrmcec cm deved mcre rrer d eercrdc, wc drbe drec rr drb rer d rvde crc mcr ervce.

Me prm r were e dr dever

ec rm F h Fd & C d rebe rdeve rdc w -mrke e reer us$500 m bed 2011 iMs he d.

Me prm ere rm 32 cre c ced sbr, s ar wc rved b eFDa d tga. te dr deveme d mcrer re red b rme 160 w20 rm d c ce dedced edeveme ew rdc.

MAyne PhARMAs oPeRAtions

Develop anD manuacture proprietary anD generic proDucts

using oral Drug Delivery tecHnologies

- d

m pha

rh dd

c

y12 salesrevenue

a$30.7 a$9.8 na a$11.4

keyproDucts

Dr

Kd /K

Erc

ar

suBaCap

Dr

ar

Erc

Mm

suBaCap

Eeded reee (ER) ce

ER ere be

ld

Crem

keyterritories

us

ar

Cd

Kre

J

Ere u

ar us - Deveme eerc drrer cmemded reeerdc

g Deveme suBaCap

a (crcmcrervce)

g (crcdeveme ervce)

thRee coRe gRowth dRiveRs:

capitalise on worlDclass oral DrugDelivery platorm

prrer rdc e. suBaCap

geerc re us mrke c

leverage o maynebranD anD proDuctportolio

Dmec-brded r

ier -cec rdcr

partnering servicesto global pHarma

Cbrve deveme wb rm

Crc mcr


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5


2012 CoMpanyHigHligHts

october 2011Deb d dw

January 2012tga rv r e rer dmcre ar d Meprm-brded r be-e

ebruary 2012new CEo d M Drecr,sc Rcrd, ed

marcH 2012i rce cmmercr drer cmeed

may 2012suBaCap rec revew cmeed

June 2012new R&D rjec cmmeced

June 2012suBaCap rvbe e uK

June 2012Revee 10% $51.9 m,EBitDa 81% $14.3 m dnpat 265% $6.2 m

upCoMingmilestones1H y13Rer w r suBaCap e us be cred w us Fdd Dr admr (FDa) mee

2H y13a r mrke rv

suBaCap

w e terec gdadmr (tga)

y13Rer rv suBaCap Ere

1H y14F ER ce rdc we us FDa

ongoingame drb rerr suBaCap d er e

rdc


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cHairmans lEttER

i Je 2012, e Cm w eed ce e uK Medce dhecre Rer aec (MhRa), eReerece Member se r r Ererer rcedre, d revered rev dec suBaCap d dved e suBaCap Mrke arac (Maa) w rvbe euK. t w c e e MhRacrmed rer cc wrkw rered r e c.

te Cm w rck eek rv r suBaCap e uK, germ,s d swede dr e crrec er.

te Cm cmeed revew reerc d deveme rrmcm e eec w ewrjec re eerc evece e us cme mded-reeer dr w cmbed e us$1.4 b (iMs he).

g rwrd, e ke c rrw re suBaCap Ere rv

d cmmerc, rresuBaCap wrd e us der jrdc, dever kemee r R&D rjec, -ceew rdc ar d brder er drb ewrk re rdc.

o be e Brd, i wd ke k r dedced emee r erer ver e er d cmmme r rec . i wd ke recrd r rec r e cedr r reder.

a kw, m ew Brd member d

i re mjr reder bed we re ver cmmed devermrved re d rw rederwe. Me prm re e r wrd-c deveme dmcr c, r rrerrdc r d ee d r ked wrkrce ve e eere cmmerce r rdc er.

Rer Crbe, aoch

Der Few sreder,

o be e Me prmBrd d Meme, i meed ree e 2012 rer.

Dr e er, e be ced mece crcmce w de

e rer rv suBaCap

Ere d e c eerc Drrdc e ued se. Dee ,e Cm med rer drevee d mr rw cr re e be. te mrved rbd c fw w drve b e errercre derke 2011, ecede d mrke r rrerrdc d mre eecve wrk cmeme. or r c fw ebede Cm becme deb ree dr eer d cree r c bce b 100% $11.6 m.

a db kw, we ed Mrsc Rcrd Ce Eecve ocer rece Dr Rer a dr e er.i wd ke k Rer r c crb e Cm vere er.

sc jed e Cm adedeedrer sbr Febrr 2012d br we rmceceerece e Cm v wrked e us, Ere d a. sc rve rck recrd cmmerc ewrdc, be deveme, mererd c d e d mrke.sc be creer e sbr

c ver 24 er d e ee 18 er w F h Fd & C dMe prm lmed mer re,cm e prede,gb Cmmerc oer, reber 600 d $600 m e.

Fw sc me, e Cmderk revew e suBaCaprrm eve e cmmerce e rdc r rercc d rer veme. terevew, wc cded c mrkereerc cmmed Ere d eus, crmed c w ve

e cc d cmce bee suBaCap ver cve rce.

...ouR stRong Cash FloWEnaBlED thE CoMpany toBECoME DEBt FREE DuRingthE yEaR...

Rer Crbe ao / ch


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thE CoMpany also CoMplEtED a REViEW oF itsREsEaRCh anD DEVElopMEnt pRogRaM CulMinating

in thE sElECtion oF tWo nEW pRoJECts taRgEtinggEnERiC EquiValEnCE to Existing us CoMplEx

MoDiFiED RElEasE oRal DRugs With CoMBinED annualsalEs oF us$1.4 Billion (iMs hEalth).

overvew ed ced mcrc ced s, sha.

160mp

12,000m2maar pa

FDA & TGAappra

te c rdc cc :

2.5 billionap/ab

100 tonnesb pr

16 million q &ram


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cHie executive oicers REViEW

i ere ree eCe Eecve ocer Revewr e r me v rejed be i be mcreer ver 24 er .

hv e 15 er wrk eued se d Ere er-reced rmcec cme, iw red be ered e r ed Me prm d rer ar r ed deedeec rmcec cm w r wrd-c rdc, eed ece.

finAnciAl suMMARy

Dr e c er, e Cmdevered d rw e, erd c fw. se revee rew 10% $51.9 m, EBitDa rew 81% $14.3 m, rered e r er rew 265% $6.2 m d e erc creed 228% $13.4 m.

te mrved re w drve b drevee rw cr re ebe. Mr ve mrved rme rr er w e errercre, derke 2011 drveecece d decree ereee.

doRyx

te Cm me Dr e us ve redced ce e c eerc rdc M 2012 b Mprmcec ic. (M). Dee

, iMs he d w recrvme r Dr 150m be d bWrer Cc, e Cm mrked drb rer, re w c eerc b crve d ve e rme 35% ce eer eerc cme d bedcr Je, J d a. over erd Wrer Cc ve meder Dr e rce dcmer crd.

Dr e Fy13 re eeced bec bew Fy12 e de em e eerc c d deck

e ee e w e ewder demd re. nrm eeced e 2h Fy13 ew der demd re.

suBAcAP

We re eed rer crre bee mde w ecmmerc suBaCap Ere:

te suBaCap Mrke arac rvbe e uK d rer cc wrk rered.

te Cm recved eDecered prcedre s,germ d swede d rck rcme e rv rce drFy13.

Fw $1.8 m ceedre, e rce r drer bee ed e sbr e c rdc wEre rv.

te Cm cmmeced rce ecre mrke d drb rerr suBaCap d dcw b re d errmcec r.

i e ued se, e Cm

cmeed e FDa sec prcaeme rce r e de pe iii cc r cmc (ec) d ceded mee we FDa nvember 2012 dc erme reeed e MhRa (wcm vd e eed r pe iii rcmee) d e ew rm rce w re mre eremc ec.

stRAtegy

or be mde ced dverr er be cmemer

wARneR chilcott doRyx 150Mg tABlet weekly PRescRiPtion voluMes

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

6a

pr

13a

pr

20a

pr

27a

pr

4M

y

11M

y

18M

y

25M

y

1J

un

8J

un

15J

un

22J

un

29J

un

6Jul

13Jul

20Jul

27Jul

3a

ug

10a

ug

17a

ug

24a

ug

tR (t precr) nR (new recr)

sr: Brker Reerc

imrved re weredrve b d reveerw cr re e be.

$51.9 million a r, ara 10%.

81%ra eBitdA $14.3 m

265%r pr ara $6.2 m.

228%ra praa $13.4 m.


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DuRing thE FinanCial yEaR,thE CoMpany DEliVEREDsoliD gRoWth in salEs,EaRnings anD Cash FloW.

sc Rcrd / ceo

rdc, ece d mrkeeme.

te be ke rec rre re:

ce r wrd-c drdever rm;

evere e Me prm brd drdc r; d

rv rer ervce brm.

WoRlD Class DRug DEliVERyplatFoRM

Me prm e dr deverem mrve e errmce dr b eer cr er reee e bd r ec er br e bd rem.

suBaCap e r suBa ec mrve e bvb rce.suBaCap mrved rmredce er- d r-e vrbd rvde mre redcbe ccree eb redc cve dr

dever erec bd eve.

te Cm ke e ce ed e reerc ddeveme rrm w w mded-reee, r eerc rdc derdeveme, re e uedse. tee mece re b ed ve med cme de ecme e rm.

MaynE phaRMa BRanDanD pRoDuCt poRtFolio

te Cm ced rw r e rdc. t wbe ceved r mrved dmece d mrke cv d reed-ce ce ec rdc re ar mrke d -ce e rdc ew ermrke. te Cm e rdcre mrkeed 10 cre d dmer re re crre beered ed e mrke rb e rrer rdc r.

Cre ce e dmec r webe e be ve rer rw e d mrke cb drverevee d mr rw.

paRtnERing sERViCEsto gloBal phaRMa

te Cm ced rvd re crc ervce rmcecd bec cme cr rdr dever em, ee rdc dmcrec d d d crem.

Crc mcr ervce reered mber b d dmec

cme. te be ccereeed mre 50% crrecrc mcr vme r rerree er dr e erd d eCm deved dd rerce re d rw ce be we er cbrve rmcecdeveme ervce.

chAnges to theMAnAgeMent teAM

tere were mber ce ercre d cm e memeem dr e er:

peer treve jed e Cm n se d Mrke Drecr M er. peer jed rm FreeKb d mre 25 ereerece e d mrke. he wrev e Vp Cmmerc oer hr / Me prm.

se lk w rmed prdcDeveme Drecr d reber e deveme e grR&D rrm. se bee w eCm r 24 er d e everer wrk w prec e usdr me.

i mmr, i beeve e Cm c de e cm 12 md i m eced b e rw re e Cm crre r dever rb d rw reder ve.

sc Rcrdch e of


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5+1

4+37

inancial suMMaRy

MAyne PhARMA AustRAliA

Me prm ar (Mpa)mcre, drbe d mrkerrer d eerc rdc ear mrke. se were $9.8 mr Fy12, $0.5 m r 5.6% err cmrbe erd (c). te rdc e Mpa r cde Dr, ar,Erc, Mm d Me prm-brded eerc rdc (dcce,

r d errmc). te Meprm-brded rdc rereerme 50% Mpa e. a ewrc rrm w memeed e rer e c er r kerdc, wc v ve mc mr.

te Cm receved mrke rvrm e terec gd admrr ar d Me prm-brdedr be be mcred sbr. te ew be re wvded dr e erd d e rsbr-mcred r be

were ed e mrke J 2012.Mpa revew ever re -cece ew rdc crre vbe ar, c eerc jecbed ce rrer eme.

MP gloBAl

Mp gb mcre d -cece rrer rmcec er mrke d drbrer cd Wrer Cc, per,abb lbrre, gsmKed Br d rvde crcmcr ervce. i Fy12, e

revee w $42.1 m, $4.4 mr 11.5% c refec d rwcr e r cd rrerrmcec (Dr, ar d Erc)d crc mcr revee.

out-liCEnsED salEs

i Fy12, -ceed e were$30.6 m, $3.5 m r 13.0% c. a mjr errre wed rrw cd e us, Kre, Cd dEre. Ecd e Dr eus, e were 17.8% $10.2 m.Eded mrke er b Br

(Kre) r ar w-de rce drve e $0.5 m r17.9%. i Ere, tev prmcecidre d Med aB, e mrke d

chAnnel sAles

RegionAl sAles

out-liCEnCED

DiRECt / Mpa

ContRaCt ManuFaCtuRing

h

out-liCEnCED +13.0%

out-liCEnCED(ExCl. DoRyx)

+17.8%

DiRECt (Mpa) +5.6%

ContRaCt

ManuFaCtuRing

+9.0%

austRalia

usa

KoREa

othER

h

austRalia +6.9%

usa +10.7%

KoREa +17.9%

othER +28.5%

59%

46%

22%

8%7%

19%

39%

drb rer r Erc drve e $0.5 m r 94.3% $1.1 m.

se Dr Wrer Cc (us) were 10.7% c $20.5 m. t w r re wd 6% cree e vere auD/usD re eed Fy12ver c d redc mcrvme w e c eercDr 150m be e e erd.

i seember 2011, d-credrm Dr 150m bew rved b e FDa d cedb Wrer Cc. i M 2012, Mced e-cred eerc ver e Dr 150m be w us Drc Cr dec eercver dd re e Dr 161e.

ContRaCt ManuFaCtuRingsERViCEs

se revee rm crc ervce w$11.4 m $0.9 m r 9.0% c.t w drve b rw ew rdce rdced b cmer. a mjrcrc w reeed r rerree er dr e ecd . teCm ce re ew crcmcr re cree cc d mrvemcr vered recvere.

ReseARch And develoPMent

Reerc d deveme cmedecreed b $2.4 m e erd $0.3 m e rr erd cdeddeveme cv ew rm Dr. g rwrd, e er

R&D rerce w be ced edeveme ew ee rdc re gr.

gRoss MARgin

Mcr r mr (e, rmr ecd e mc oerrevee) ercee e reveemrved er er: Fy12: 43.5%,Fy11: 42.9%.

exPenses

Reerc d deveme eee

decreed b $2.0 m dr e erd $4.0 m re redced ccd deveme wrk Dr dsuBaCap.


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te decree er eee $0.8 m refec redced e reece e e crre erd.

te mjr e rercre dreddc c e crre erdrefec e erm me mde e rmer CEo. te c e rrerd were crred we rercrrrm w derke e sbrrdc e mrve ecece d

cree cc .

te redc ce c Fy12 $0.3 m de e ere eeebe wer e usD w red.

amr e be e were reced e c Me prm ier p ld (Mpi)med $3.8 m r e erdcmred $6.1 m e reverd. te be e re mred dm ve b deverer mr cre e ererer e e e ve.

te re-bed me eee $0.3 m reree e c ed e CEo d CFo dr e erd e re ed emee dere Cm -eem re .

a cre bee reced r emrme e cmer rebe e re e Cmre w Wrer Cc.te cre $0.2 m refec djme e Cm -ermrec r Dr w e c e eerc Dr.

eARn-out liABilityte crr ve e er- b decreed b $5.7 m $9.3 m re :

cree $1.0 m reced -c ere cre;

decree $3.9 m de ce e r ve e er- bver e er w e reeme e der m ed ecc; d

me $2.9 m Febrr2012 reree e me r e2011 cedr er.

tAx

te cded r ed e $0.2 m 30 Je 2012

finAnciAl suMMARy

notes 30-Jun-12 30-Jun-11 cHange on pcp

$m $m $m %

s d f

se revee 51.9 47.0 4.9 10.4

gr mr 22.6 20.1 2.5 12.4

oer cme 0.6 3.1 (2.5) (80.6)

EBitDa - der 11.5 9.2 2.3 25.0

adjme 1 2.8 (1.3) 4.1 m

EBitDa 14.3 7.9 6.4 81.0

Derec / amr (5.6) (7.9) 2.3 (29.1)

pBit 8.7 - 8.7 m

ne iere 2 (0.9) (1.5) 0.6 (40.0)

icme (eee) / bee (1.6) 3.2 (4.8) 150.0

npat 6.1 1.7 4.5 264.7

b h

C 11.6 5.8 5.8 100.0

iver & recevbe 11.1 12.1 (8.3)

pp&E 22.2 21.5 0.7 3.2ibe 4.2 8.2 (4.0) (48.8)

t e 53.9 53.7 0.2 0.4

iere-ber deb - 2.3 (2.3) (100.0)

oer c be 9.3 15.1 (5.8) (38.4)

t be 23.3 29.5 (6.2) (21.0)

E 30.6 24.2 6.4 26.4

r

EBitDa mr - der (%) 1 22.2 19.6 +259b

Eps (ce) 4.1 1.1 272.7%

Deb / e (%) - 8.8

n f : 1. adjme Fy12 cde $3.9 m decree reredr de ce e r ve e er- b w e reeme eder m ed e cc, e rercre d reddc c $0.9m wc cde e me e rmer CEo d $0.2 m mrme bee. 2. icde -c ere eee, reree e cre r e wd edc e er-.

re reced Deerred t ae.le rme $3.1 m vebee e e be cme e gr dr e erd.

cAsh flow

ne er c eered dr e

erd w $13.4 m, 227.6%. C d 30 Je 2012 w $11.6 m,reree cree $5.8 mrm 30 Je 2011. nbe c fwdr e erd cded:

$2.9 m erme hr;

$2.3 m reme reree us$10 m c ; d

$2.5 m c eedre re ew rce r drer (re rdc suBaCap), d erbe mcr eme cd

r be re rered r erer e mcr er be -e.


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REsEaRCh & Development

Me prm 30-errck recrd v dcce deve ewr dr dever em rb eerc d rrerc cd:

dr deed-reee rrm dcce ed rece, cer bcer ec r -mr.

Ar deed-reee w-der ed re crdvcrdee.

er deed-reee errmced e reme bcerec.

kaa /kapa ed-reeer mre ed e meme crc .

dam rr e-reeedeerc eve Crdem ER ed re ere.

Dr e er, e Cm cmeed revew e reerc d devemerrm. te revew cded eem e 400 e usmece (b e) de cdder ee rdc. te revew deed rdc cdde wus$11 b e1. te ter 1cdde ee ed e be r wc w rjec were eeced rdeveme dd suBaCap.

te rjec eeced were bed ecrer :

me mrke;

b evere Me prmecc k e;

mm cc, e d rer rkd c;

us re mrke; d

e eece rcve ree dre mrke.

te w rjec eeced r devemere b aB-red eerc cmemded-reee r dr w erede. te Cm w eek r erdc e us v abbreved newDr ac (anDa).

te r rrm eeded-reeece ed e reme d reed r 2013 w v bd. t rrm w rerecbr w rd-r drdever cm. te ecd rrm

cuRRent tieR 1 PRoduct cAndidAte Pool

pd id

sz 1

us$mk

unDERDEVElopMEnt

subacap F ec 500Me e

2020

er p 270 Ered

er here 1,100 Ered

iDEntiFiEDpRoJECts(us anDa)

d

adere/cre

1,000 2017

er grc ref 640 Ered

c aemer 600 2015

c srke redc 450 2017

c Cr / iBs 390 2015

er overcve bdder 250 2016

er here 250 Ered

er aDhD 140 2020

er pcm /aDhD 110 Ered

er here 60 Ered

total 5,760

eeded-reee -ereveee---be rm w de eeced 2014. te cmbed remrke r r ee w rjec us$1.4 b1.

o veme R&D rme 12% e Fy13 w r e cmmerc e rdc ee.

1. iMs he (e-weer) us e Mat Dec 2011, ece suBaCap wc e b(e-weer) e Mat Dec 2011 rce.


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13


subacap

suBaCap mrved rm rce, rdced re ec. suBaCap dbe ebvb d c redced vrb cmred err.

te ke bee suBaCap ver e rr rm re ed bew:

ConVEntionalitRaConazolE

subacapaDvantage patiEnt BEnEFit

100m ce 50 Eme rk er brberrec e e bd eve

M be ke mc

ad dd d

C be ke rerde d

Ee d, d mrved cmce

lre w-evrb (reer 50%)

rdd h- ( h 30%)

imrve medc reb dcree dcr d e cdece cce cme

Rere cdrc evrmer m br

a d H

C be ke b crdrc e de k medc creerc h cd r m br

lre ce e 0 s z 1 Eer ww

a re ee bee e uK MhRa red cer dereed be cve rce. te MhRa wre cc ed:

te suBaCap rm der cder demreddve ver e reerece, c wer er- d r-dvdvrb, e rced d eec d erere mre redcb d.

tee beed bee d r suBaCap k c re erce mrke w c.

Cm-red mrke reerc demre c ere recrbsuBaCap.

whAt PhysiciAns AResAying ABout suBAcAP

M e e k er e, i mred ere beer br

iec dee ec

i eem ke drdc. le d beer. i wd e dc were i crree rce

Fm pc

smer e, derc d d,

ve e ereer k wer de

gp

Cmce m bemrved w merce. i rece ked ce d e re reb. oe m e cd ww .

gp


14/78

14


suBAcAP

suBAcAP MARket PotentiAl

irce e e brde ecrm - dr e mrke d c beed re b:

erc ec e k d (e. cmc)

emc ec e mjr r (e. m, er, bmcd cdd).

APPRoved fungAl indicAtions in the us

H a oh cdd c

irce

Fce

pce

Vrce

terbe

ue rce dc bee rerced de e r br err rm.

suBaCap mrved rm eeced rw erce mrke d ke re rm er - dr.

us itRAconAzole sAles ($)

supERFiCial

systEMiC

6+64%

36%

itRAconAzole sAlesBy countRy

Japan

EuRopE

usa

China

KoREa

othER

sr: iMs he 2011

2+828%

17%

27%

7%

8% 13%

ta mar = us$530 m


15/78

15


suBAcAP PAthwAy to MARket

thE CoMpany is CuRREntlyREFining thE pRoposEDus REgulatoRy pathWay.a MEEting With thE FDa

has BEEn sChEDulED FoRnoVEMBER 2012.

unitED statEs

suBaCap wed ivenew Dr (inD) c rm eDv Derm d Deprdc d e Dv a-iecveprdc e FDa.

te Cm crre re e

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16/78


16

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17/78


17

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18/78


18

finAnciAl RePoRt

Drecr Rer 19

Remer Rer 23

adr ideedece Decr 28

Crre gverce seme 29

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Cded seme Fc p 36

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ideede adr Rer 73

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ContEnts

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19/78

19

DIRECTORS REPORT

The Directors of Mayne Pharma Group Limited (Company) present their report together with the financial report of the Company and itscontrolled entities (collectively the Group or Consolidated Entity) for the year ended 30 J une 2012 and the Auditors Report thereon.The information set out below is to be read in conjunction with the Remuneration Report set out on pages 23 to 27 which forms part ofthis Directors Report.

DIRECTORS

The Directors of the Company during the financial year and up to the date of this report are:

Mr Roger Corbett AO (Chairman)

Mr Scott Richards (Chief Executive Officer) - appointed 13 February 2012

Hon Ron Best

Mr Bruce Mathieson

Mr Ian Scholes

Dr Roger Aston (former Chief Executive Officer) - resigned 15 February 2012

Particulars of the Directors qualifications, other listed company directorships, experience and special responsibilities are detailed onpages 20 and 21 of the Annual Report. Particulars of the qualifications and experience of the Company Secretary are detailed on page 21of the Annual Report.

DIRECTORS MEETINGS

The number of Directors meetings (including meetings of committees of directors) and number of meetings attended by each of thedirectors of the Company during the 2012 financial year are:

BOARD AUDIT COMMITTEE NOMINATIONCOMMITTEE

REMUNERATIONCOMMITTEE

HELD1 ATTENDED2 HELD1 ATTENDED2 HELD1 ATTENDED2 HELD1 ATTENDED2

Mr R Corbett 16 16 - - 3 3 2 2

Mr S Richards 7 7 - - - - - -

Hon R Best 16 15 4 3 3 3 - -

Mr B Mathieson 16 13 4 2 3 3 2 2

Mr I Scholes 16 15 4 4 - - 2 2

Dr R Aston 9 7 - - 3 - - -

1. This column shows the number of meetings held during the period the Director was a member of the Board or Committee.2. This column shows the number of meetings attended.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

In the opinion of the Directors, there were no changes that significantly affected the state of affairs of the Company during the financialyear.

PRINCIPAL ACTIVITIES

The Company is a specialist pharmaceutical company that develops and manufactures proprietary and generic products which it

distributes directly or through distribution partners and also provides contract manufacturing services.

In the opinion of the Directors, there were no significant changes in the nature of the activities of the Group during the course of the yearended 30 June 2012 that are not otherwise disclosed in this Annual Report.

Disclosure of information relating to developments in the business strategies and prospects for the Consolidated Entity for future financialyears, which would not, in the opinion of the Directors, be unreasonably prejudicial to the Consolidated Entity, is contained in theBusiness Overview.

REVIEW AND RESULTS OF OPERATIONS

A review of the operations of the Consolidated Entity during the 2012 financial year and of the results of those operations and financialposition of the Consolidated Entity is contained in the Business Overview and elsewhere in the Annual Report. These sections of theAnnual Report are incorporated by reference into and form part of this Directors Report.


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20 Mayne PharmaAnnual Report 2012

DIVIDENDS

The Directors have not declared an interim or final dividend for the 2012 financial year.

EVENTS SUBSEQUENT TO REPORTING DATE

In J uly, 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 thatconstrains 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 contractualrights with Warner Chilcott and current legal advice received by the Company. In September 2012, the US Court of Appeals for theFederal Circuit dismissed Warner Chilcott and Mayne Pharmas appeal against the non-infringement determinations on the Doryx

161

Patent.

LIKELY DEVELOPMENTS

Likely developments in the operations of the Consolidated Entity and the expected results of those operations are covered generally inthe Business Overview. The Business Overview is incorporated by reference into, and forms part of this Directors Report.

Further information as to likely developments in the operations of the Consolidated Entity and the expected results of those operations insubsequent financial periods has not been included in this report because disclosure would be likely to result in unreasonable prejudice tothe Consolidated Entity.

DIRECTORS EXPERIENCE AND SPECIAL RESPONSIBILITIES

MR ROGER CORBETT AO, BCom, FAIM, FRMIAChairmanAppointed 17 November 2010

Mr Corbett joined the Board of Mayne Pharma Group Limited in November 2010 and was appointed Chairman in J anuary 2011. MrCorbett has been involved in the retail industry for more than 40 years. In 1984, Mr Corbett joined the board of David J ones Australia as aDirector of Operations and in 1990 was appointed to the board of Woolworths Limited and to the position of Managing Director of BigW. In1999, Mr Corbett was appointed Chief Executive Officer of Woolworths Limited, from which he retired in 2006. Mr Corbett is currently theChairman of Fairfax Media Limited, one of Australias largest diversified media companies, a director of the Reserve Bank of Australia, adirector of Wal-Mart Stores and Chairman of PrimeAg Australia Limited.

In addition to being Chairman, Mr Corbett was appointed to the Remuneration Committee as Chairman effective 21 J uly 2011 and is amember of the Nomination Committee.

MR SCOTT RICHARDSExecutive Director and Chief Executive OfficerAppointed 13 February 2012

Mr Richards has more than 24 years experience in the pharmaceutical industry and has worked in Europe, the US and Asia. Prior tojoining Mayne Pharma, he was President, European Operations Intas Pharmaceutical Limited. Mr Richards was also Executive VicePresident at Actavis Group responsible for the Hospital Business Operations worldwide and spent 18 years with Mayne Pharma Limitedand F H Faulding & Co Limited in various roles including President, EMEA (Europe, Middle East and Africa) and President, GlobalCommercial Operations where he was responsible for US$600m in sales and over 600 employees. Mr Richards experience spans salesand marketing, regulatory / medical affairs, supply chain, business development / M&A, finance / IT, intellectual property andmanufacturing.

HON RON BESTNon-Executive DirectorAppointed 26 J uly 2006

The Hon Ron Best is a highly respected former member of the Victorian Parliament (1988 to 2002), having held a number of seniorpositions in the National Party of Australia (Victoria) including Parliamentary Secretary, Shadow Minister for Housing and Spokesman forHealth, Housing, Racing, Sport and Recreation. Mr Best has also been a member of various Parliamentary Committees including thePublic Accounts and Estimates Committee, the Environmental and Natural Resources Committee and a Board Member of the VictorianHealth Promotion Foundation. Prior to his political career, Mr Best was the owner of a successful food distribution business and GeneralManager of the Glacier Food Group. Mr Best is a consultant to PFD Food Services Pty Ltd, one of Australias largest privately-owned foodservice companies.

Mr Best is Chairman of the Nomination Committee and a member of the Audit Committee.

MR BRUCE MATHIESONNon-Executive DirectorAppointed 16 February 2007

Mr Mathieson is currently a Director and Chief Executive Officer of Australian Leisure and Hospitality Group Pty Limited, a joint venturebetween Woolworths Limited and the Mathieson Family. The ALH Group owns approximately 280 hotels and 450 retail outlets acrossAustralia, and employs more than 13,000 staff. Mr Mathieson has operated in the hotel, leisure and hospitality industry since 1974 and isa well-respected member of the Australian business community. He has previously served as a Director of the Carlton Football Club. Heis trained as an engineer, and brings management and transactional experience from across a number of industries to the Board.


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21

Mr Mathieson was Chairman of the Remuneration Committee until 21 J uly 2011 following the appointment of Mr Corbett to that role, butMr Mathieson remained a member of the Remuneration Committee and is also a member of the Audit and Nomination Committees.

MR IAN SCHOLES BCom, CANon-Executive DirectorAppointed 17 October 2007

Mr Scholes has extensive financial and corporate advisory experience, both in Australia and internationally. Mr Scholes has held seniorroles within Merrill Lynch Australia, most recently as Vice Chairman of Investment Banking. Previously Mr Scholes held the position ofExecutive General Manager at National Australia Bank Limited, running the corporate and institutional banking division. Mr Scholes iscurrently a Partner and Chief Executive Officer of Chord Capital Pty Ltd, a Director of SDI Limited and has previously held positions onthe Board of St Vincents Health and as Chairman of the St Vincents Foundation.

Mr Scholes is Chairman of the Audit Committee and a member of the Remuneration Committee.

COMPANY SECRETARY

Mr Mark Cansdale, BEc, CA was appointed as Chief Financial Officer and Company Secretary of the Company on 27 J anuary 2011. MrCansdale is a Chartered Accountant and Company Secretary with more than 20 years experience in the accounting and financeprofession. Mr Cansdale has extensive experience in the areas of business development, mergers and acquisitions, corporate strategy,tax, financial planning and analysis, risk management, treasury and investor relations.

DIRECTORS INTERESTS IN SHARE CAPITAL AND OPTIONS

The relevant interest of each Director in the share capital and options of the Company as at the date of this report is as follows:

FULLY PAID ORDINARYSHARES

NUMBER OF OPTIONSOVER ORDINARY SHARES

Mr R Corbett 1,676,319 -

Mr S Richards - 7,500,000

Hon R Best 957,244 350,000

Mr B Mathieson 13,411,622 350,000

Mr I Scholes 311,622 600,000

UNISSUED SHARES UNDER OPTION

As at the date of this Directors Report there were 12,200,000 unissued ordinary shares under option (12,200,000 at the reporting date).Details of these options are as follows:

DATE OPTIONS GRANTED EXPIRY DATE EXERCISE PRICE NUMBER UNDER OPTION

30 November 2007 30 November 2012 $0.60 250,000

29 October 2009 31 December 2012 $0.27 2,950,000

25 J uly 2011 27 J anuary 2016 $0.35 1,500,000

13 February 2012 13 February 2019 $0.345 7,500,000

Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company.

SHARE OPTIONS GRANTED

1,500,000 options over ordinary shares were granted to Mr Mark Cansdale on 25 J uly 2011.

7,500,000 options over ordinary shares were granted to Mr Scott Richards on 13 February 2012.

Further details of options granted are contained in Note 26 of the financial statements.

SHARES ISSUED AS A RESULT OF THE EXERCISE OF OPTIONS

During the financial year no options were exercised to acquire fully-paid ordinary shares in Mayne Pharma Group Limited.


22/78


NON-AUDIT SERVICES

The Companys auditor, Ernst & Young Australia, provided the following non-audit services. The Directors are satisfied that the provisionof non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. Thenature and scope of each type of non-audit service provided means that auditor independence was not compromised.

Ernst & Young received or are due to receive the following amounts for the provision of non-audit services:

2012$

2011$

Taxation services 61,460 125,910

Accounting advice 42,500 28,750

Total 103,960 154,660

INDEMNIFICATION AND INSURANCE OF OFFICERS

During the financial year, the Company maintained an insurance policy which indemnifies the Directors and Officers of Mayne PharmaGroup Limited in respect of any liability incurred in connection with the performance of their duties as Directors or Officers of theCompany, other than for matters involving a wilful breach of duty or a contravention of sections 182 or 183 of the Corporations Act 2001as permitted by section 199B of the Corporations Act 2001. The Companys insurers have prohibited disclosure of the amount of thepremium payable and the level of indemnification under the insurance contract.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Companys operations are subject to various environmental laws and regulations. These environmental laws and regulations controlthe use of land, the erection of buildings and structures on land, the emission of substances to water, land and atmosphere, the emissionof noise and odours, the treatment and disposal of waste, and the investigation and remediation of soil and groundwater contamination.

The Company has procedures in place designed to ensure compliance with all environmental regulatory requirements. In particular, it hasdeveloped an environmental management system to enable identification and assessment of environmental hazards which arise from itsactivities. This management system provides processes for effectively managing environmental risks by applying sound practices for theprevention of pollution and disposal and minimisation of waste.

The Company reports to the National Pollutant Inventory every year its land, air and water emissions together with gas and electricityusage. The Company has recycling initiatives in place for paper/cardboard, soft plastics, metals, wood, metal, plastic drums, oil andpolystyrene.

The Directors are not aware of any material breaches of environmental regulations by the Group.

ROUNDING

The amounts contained in this report and in the financial report have been rounded to the nearest thousand dollars (where rounding isapplicable and where noted ($000)) under the option available to the Company under ASIC CO 98/0100. The Company is an entity towhich the Class Order applies.

AUDITORS INDEPENDENCE DECLARATION

The Auditors independence declaration has been received from the Auditor and is included on page 28 of this report.


23/78

23

REMUNERATION REPORT (AUDITED)

This report outlines the remuneration arrangements in place for the key management personnel (KMP) and includes all Directors andExecutives of Mayne Pharma Group Limited. Executives are those directly accountable for the operational management and strategicdirection of the Company.

KEY MANAGEMENT PERSONNEL DETAILS

The Directors of Mayne Pharma Group Limited during the financial year were:

Mr Roger Corbett AO Chairman Mr Scott Richards Executive Director and Chief Executive Officer (appointed 13 February 2012) Hon Ron Best Non-Executive Director Mr Bruce Mathieson Non-Executive Director Mr Ian Scholes Non-Executive Director Dr Roger Aston Executive Director and Chief Executive Officer (resigned 15 February 2012)

Other key management personnel consisted of:

Mr Mark Cansdale Chief Financial Officer and Company Secretary Mr Vince Caretti General Manager, Operations Mr Peter Truelove National Sales & Marketing Director (appointed 21 May 2012) Dr Angelo Morella General Manager, Research and Innovation (ceased employment 6 March 2012)

REMUNERATION POLICY

The Board of Directors is responsible for determining and reviewing compensation arrangements for the Directors, other members of theKMP and the balance of the senior management team. The Board will assess the appropriateness of the nature and amount ofemoluments of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective ofensuring maximum stakeholder benefit from the retention of a high quality Board and executive team. Such officers are paid their baseemolument in cash only. The Companys remuneration strategy has been developed over time with specialist advice from externalremuneration consultants (Egan Associates Pty Ltd) where appropriate. Egan Associates Pty Ltd provided advice free from undueinfluence by members of the KMP to whom the recommendations may relate.

To assist in achieving this objective, the Board will link the nature and amount of Executive Directors and Officers emoluments to theCompanys financial and operational performance. Given the nature of the industry in which the Company operates and the position it isin regarding the on-going development of new products, the review of performance can give regards to elements such as the scientificprogress and commercialisation of the Companys projects, results of trials, progress with the development of relationships with sales andmarketing partners, research institutions, and other collaborations.

Remuneration paid to the Companys Directors and executives is also determined with reference to the market level of remuneration forother listed development, pharmaceutical and manufacturing companies in Australia. This assessment is undertaken with reference topublished information provided by various executive search firms operating in the sector.

Remuneration Report approval at t he FY11 Annual General Meeting

The FY11 remuneration report received positive shareholder support at the FY11 AGM with a vote of 93% in favour.

Fixed remuneration

Executive directors and executive officers

Fixed remuneration consists of a base remuneration package, which may include salary, consulting fees and employer contributions tosuperannuation funds.

Fixed remuneration levels for executive directors and executive officers are reviewed annually by the Board through a process thatconsiders the employees personal development, achievement of key performance objectives for the year, industry benchmarks whereverpossible and CPI data.

Key performance indicators (KPIs) are individually tailored for the Chief Executive Officer by the Board and the other executive membersof the key management personnel by the Chief Executive Officer, and reflect an assessment of how that employee can fulfil theirparticular responsibilities in a way that best contributes to Group performance and shareholder wealth in that year.

Non-executive directors

Total remuneration for non-executive directors is determined by resolution of shareholders. The maximum available aggregate cashremuneration approved for non-executive directors at the 2010 Annual General Meeting is $500,000. Non-executive directors do notreceive retirement benefits other than a superannuation guarantee contribution required by government regulation, which is currently 9%of their fees, except where a non-executive director elects to have their directors fees paid as contributions to a superannuation fund.

Non-executive directors may provide specific consulting advice to the Group upon direction from the Board. Remuneration for this work ismade at market rates. No such consulting advice was provided to the Company during the year.


24/78


Performance-linked remuneration

Key management personnel may receive short-term incentives in the form of bonuses and/or share options based on achievement ofspecific goals related to performance against individual KPIs and to the performance of the Group as a whole as determined by theDirectors based on a range of factors. These factors can include traditional financial considerations such as financial operatingperformance, deals concluded, increases in the market capitalisation of the Company and successful capital raisings and also industry-specific factors relating to the advancement of the Companys research and development activities and intellectual property portfolio,operational performance, collaborations and relationships with scientific institutions, third parties and internal employees. Thesemeasures were chosen as they represent the key drivers for the short-term success of the business and provide a framework fordelivering long-term value. Refer to the Employment Contracts section of this report for further information.

Options over ordinary shares may be awarded to the Chief Executive Officer under the Chief Executive Officer share option plan (CEOSOP) subject to various vesting conditions and under the Employee Share Option Plan to other executives with various vesting conditionssuch as the individuals performance against milestones, the level of involvement in achieving corporate milestones and goals, including,but not limited to, growth in earnings per share. The CEO SOP was structured with advice from Egan Associates Pty Ltd.

Non-executive directors may also participate in the Companys Employee Share Option Plan, given the Companys size and stage ofdevelopment and the necessity to attract the highest calibre of professionals to the role, whilst maintaining the Companys cash reserves.

Hedging of equity awards

The Company prohibits KMP from entering into arrangements to protect the value of unvested equity awards. The prohibition includesentering into contracts to hedge their exposure to options awarded as part of their remuneration package.

ELEMENTS OF KEY MANAGEMENT PERSONNEL REMUNERATION

Remuneration packages may contain the following key elements:

Short-term benefit salary/fees, annual leave, bonuses and other benefits such as novated lease payments; Post-employment benefits superannuation, and Share-based payments share options granted under the Employee Share Option Plan as disclosed in Note 26 to the

financial statements; Long-term benefits.

The following table discloses key management personnel remuneration during the year ended 30 J une 2012:

SHORT-TERM BENEFITS

POST-

EMPLOYM

ENT

BENEFITS

LONG-

TERM

BENEFI

TS

SHARE-

BASED

PAYME

NTS

TERMINA

TION

PAYMEN

TS

DIRECTORSFEES

$

SALARY

$

BONUS1

$

OTHERBENEFITS2

$

SUPER-ANNUATION

$

OTHER3

$

OPTIONS &TESP4

$ $

TOTAL

$

PROPORTIONRELATED TO

PERFORMANCE

%

Non-Executive Directors

Mr R Corbett 110,000 - - - 9,900 - - - 119,900 -

Hon R Best 23,162 - - - 53,138 - - - 76,300 -

Mr B Mathieson 70,000 - - - 6,300 - - - 76,300 -

Mr I Scholes 70,000 - - - 6,300 - - - 76,300 -

Mr S Richards5

- 150,396 - 10,133 6,047 - 69,473 - 236,049 29.4

Dr R Aston6

- 349,281 - 14,256 29,400 - - 580,875 973,812 -

Total Directors 273,162 499,677 - 24,389 111,085 - 69,473 580,875 1,558,661

Other key management personnel

Mr M Cansdale9

- 289,966 69,488 39,225 15,775 1,725 57,893 - 474,072 26.7

Mr V Caretti - 176,122 28,614 444 26,248 6,587 1,000 - 239,015 12.0

Mr P Truelove7

- 23,513 - - 1,948 - - - 25,461 -

Dr A Morella8

- 110,053 - - 17,044 3,132 1,000 195,918 327,147 -

Total other KMP - 599,654 98,102 39,669 61,015 11,444 59,893 195,918 1,065,695

Total 273,162 1,099,331 98,102 64,058 172,100 11,444 129,366 776,793 2,624,356

1. Bonuses are accrued when specified personal and/or corporate parameters are met.2. Other benefits include car lease payments, and rental allowances.3. Other long-term benefits represent accruals for long service leave entitlements that may arise should the relevant key management personnel meet the

eligibility requirements in the future.

4. 2,564 shares valued at $1000 issued under the Mayne Pharma Group Ltd Tax Exempt Share Plan (TESP ), trading restricted until 18 October 2014,entitlement stays at cessation of employment.

5. Mr Richards commenced employment on 13 February 20126. Dr R Aston ceased employment 15 February 20127. Mr P Truelove commenced employment on 21 May 20128. Dr A Morella ceased employment on 6 March 20129. Mr M Cansdale bonus provision will be accounted for as 80% in cash and 20% in shares


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25

The following table discloses key management personnel remuneration during the year ended 30 J une 2011:

SHORT-TERM BENEFITS

POST-EMPLOYMENT

BENEFITSLONG-TERM

BENEFITS

SHARE-BASED

PAYMENTSTERMINATION

PAYMENTS

DIRECTORSFEES

$

SALARY

$

BONUS1

$

OTHER

BENEFITS2

$

SUPER-ANNUATION

$

OTHER3

$

OPTIONS

$ $

TOTAL

$

PROPORTIONRELATED TO

PERFORMANCE

%

Non-Executive Directors

Mr R Corbett 59,800 - - - 5,382 - - - 65,182 -

Hon R Best - - - - 59,950 - - - 59,950 -

Mr B Mathieson 55,000 - - - 4,950 - - - 59,950 -

Mr I Scholes 55,000 - - - 4,950 - - - 59,950 -

Executive Directors

Dr R Aston - 568,800 - 21,384 49,780 21,162 - - 661,126 -

Mr C Bottomley - 18,854 - - 5,519 - - - 24,373 -

Total Directors 169,800 587,654 - 21,384 130,531 21,162 - - 930,531

Other key management personnel

Mr M Cansdale - 127,650 40,875 6,458 10,012 - - - 184,995 24.1

Mr V Caretti - 161,235 - - 27,591 17,242 - - 206,068 -Dr A Morella - 146,369 - - 19,541 12,881 - - 178,791 -

Mr A Finlay4

- 134,466 - 32,200 18,952 - - - 185,618 -

Ms G Greentree5 - 225,000 - - 27,000 - - 92,308 344,308 -

Mr P Schembri6 - 152,003 - - 17,543 11,235 - 99,138 279,919 -

Total other KMP - 946,723 40,875 38,658 120,639 41,358 - 191,446 1,379,699

Total 169,800 1,534,377 40,875 60,042 251,170 62,520 - 191,446 2,310,230

1. Bonuses are accrued when specified personal and/or corporate parameters are met.2. Other benefits includes car lease payments, rental and travel allowances.3. Other long-term benefits represent accruals for long service leave entitlements that may arise should the relevant key management personnel meet the

eligibility requirements in the future.4. Mr Finlay ceased employment with the Group effective 27 J anuary 2011.5. Ms Greentree ceased employment with the Group effective 31 March 2011.

6. Mr Schembri ceased employment with the Group effective 6 June 2011.

VALUE OF OPTIONS ISSUED TO KEY MANAGEMENT PERSONNEL

The following table discloses the options granted, exercised and lapsed during the year:

OPTIONSGRANTED

OPTIONSEXERCISED OPTIONS LAPSED

VALUE AT GRANTDATE

$

INTRINSICVALUE AT

EXERCISE DATE$

NUMBERVALUE AT TIME OF

LAPSE$

TOTAL VALUEOF OPTIONS

GRANTED,EXERCISED

AND LAPSED$

VALUE OF OPTIONSINCLUDED IN

REMUNERATIONFOR THE YEAR

$

30 June 2012

Mr R Corbett - - - - - -

Mr S Richards3 940,0003 - - - 940,000 69,473

Hon R Best - - - - - -

Mr B Mathieson1

- - 250,000 - - -

Mr I Scholes - - - - - -

Mr M Cansdale4

152,9944

- - - 152,994 56,893

Mr V Caretti - - - - - -

Dr R Aston2

- - 625,000 - - -

Mr P Truelove - - - - - -

Dr A Morella - - - - - -

Total 1,092,994 - 875,000 - 1,092,994 126,366

1. Options with an exercise price of $0.60 that lapsed when the share price was $0.29 and therefore the intrinsic value was nil.

2. Options with an exercise price of $0.60 that lapsed when the share price was $0.29 and therefore the intrinsic value was nil.

3. Percentage of remuneration for the year that consists of options was 29.4%

4. Percentage of remuneration for the year that consists of options was 25.2%


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OPTIONSGRANTED

OPTIONSEXERCISED OPTIONS LAPSED

VALUE AT GRANTDATE

$

INTRINSICVALUE AT

EXERCISE DATE$

NUMBERVALUE AT TIME OF

LAPSE$

TOTAL VALUEOF OPTIONS

GRANTED,EXERCISED

AND LAPSED$

VALUE OF OPTIONSINCLUDED IN

REMUNERATIONFOR THE YEAR

$

30 June 2011

Mr R Corbett - - - - - -

Dr R Aston1

- 126,000 25,000 - 126,000 -

Hon R Best - 77,500 - - 77,500 -

Mr B Mathieson - - - - - -

Mr I Scholes - - - - - -

Mr C Bottomley - 249,500 - - 249,500 -

Mr M Cansdale - - - - - -

Mr V Caretti - - - - - -

Dr A Morella - - - - - -

Mr A Finlay - 625,500 - - 625,500 -

Ms G Greentree - - - - - -

Mr P Schembri - - - - - -

Total - 1,078,500 25,000 - 1,078,500 -

1.

Options with an exercise price of $0.60 that lapsed when the share price was $0.56 and therefore the intrinsic value was nil.

There were no alterations to the terms and conditions of options awarded as remuneration since their award date.

OPTIONS GRANTED SUBSEQUENT TO BALANCE DATE

No options were granted subsequent to Balance Date.

SHARES ISSUED ON EXERCISE OF OPTIONS BY KMP

SHARES ISSUED

NUMBER

PAID PER SHARE

$

UNPAID PER SHARE

$

30 June 2012

No shares issued in 2012 N/A N/A N/A

30 June 2011

Hon R Best 250,000 0.60 -

Mr C Bottomley 750,000 0.60 -

Mr C Bottomley 400,000 0.27 -

Mr A Finlay 1,400,000 0.27 -

Mr A Finlay 250,000 0.60 -

Total 3,050,000

EMPLOYMENT CONTRACTS

The Company has entered into standard employment agreements with all key management personnel. The agreements provide for fixedremuneration and short-term incentives (STI) based on achievement of Group and/or personal targets. The short-term incentives aregenerally cash-based, Mr Cansdales remuneration comprises a fixed component of $340,000 per annum plus STI entitlement which issplit between cash and restricted shares (80%/20%). Any restricted shares issued will have dividend and voting rights attached but will beheld in escrow for three years, and will be forfeited if Mr Cansdales employment is terminated.

The agreements provide for an indefinite period of appointment, and may be terminated by either party at three to six months notice.

The CEOs Executive Service Agreement provides for fixed remuneration of $400,000 per annum, short-term incentive and a long-termincentive and was structured with advice from Egan Associates Pty Ltd. Shareholder approval was received via an Extraordinary GeneralMeeting on 27 J anuary 2012 for the long-term incentive. Mr Richards will be eligible for a discretionary short-term incentive of up to 20%of his total remuneration package (comprising base salary plus superannuation contributions). The payment of any STI will be determinedby the Board in its sole and absolute discretion, having regard to Mr Richards performance against the KPIs set by the Board. The long-

term incentive is in the form of options over ordinary shares. Shareholders approved the issue of 7,500,000 options to Mr Richards withan exercise price of $0.345 and will vest in tranches subject to the achievement of service conditions and share price hurdles rangingfrom $1.00 to $2.50. Mr Richards Executive Service agreement provides for a mutual 12-month notice period. Please refer to note 26 forfurther information relating to options for Mr Richards.


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28/78



29/78

29

CORPORATE GOVERNANCE STATEMENT

The Board of Directors of Mayne Pharma Group Limited is responsible for the corporate governance of the Group and is committed toapplying the ASX Corporate Governance Council Corporate Governance Principles and Recommendations (ASX Principles) wherepracticable. The Board guides and monitors the business and affairs of the Group on behalf of the shareholders. It is a requirement of theBoard that the Company maintains high standards of ethics and integrity at all times.

The ASX Principles are an important regulatory guide for listed companies reporting on their corporate governance practices. Under ASXListing Rule 4.10.3, listed companies must disclose the extent to which they have followed the ASX Principles, and if any of the

recommendations have not been followed then the Company must explain why not. The Board believes that the Companys policies andpractices comply in all substantial respects with the ASX Principles.

CORPORATE GOVERNANCE WEBSITE

Important information relating to the Companys corporate governance policies and practices are set out on the Companys website atwww.maynepharma.com. The following documents are available on this website:

Board Charter; Audit Committee, Remuneration Committee and Nomination Committee Charters; Code of Conduct; Communications Policy; Continuous Disclosure Policy, and Securities Trading Policy.

The corporate governance section of Mayne Pharmas website was first made available from 27 J une 2007 and the documents referredto above were available from that date. The Company will continue to update its policies and practices to reflect developing corporategovernance requirements and practices.

ROLE AND RESPONSIBILITY OF THE BOARD

The Boards duties

As the Board acts on behalf of and is accountable to the shareholders, the Board seeks to identify the expectations of the shareholders,as well as other regulatory and ethical expectations and obligations and strives to meet those expectations. In addition, the Board isresponsible for identifying areas of significant business risk and ensuring arrangements are in place to adequately manage those risks.

The role of the Board is to oversee and guide the management of the Group with the aim of protecting and enhancing the interests of itsshareholders and taking into account the interests of other stakeholders including employees and the wider community.

The Board has adopted a formal Charter that clearly establishes the relationship between the Board and management and describes theirfunctions and responsibilities. The Charter was last reviewed on 31 August 2011. The Board Charter has been posted on the corporategovernance section of the Companys website.

The Board is responsible for setting the strategic direction of the Group, establishing goals for management and monitoring theachievement of those goals. The Chief Executive Officer is responsible to the Board for the day-to-day management of the Group. TheBoard ensures that the Chief Executive Officer is appropriately qualified and experienced to discharge his responsibilities and hasprocedures in place to assess the performance of the Chief Executive Officer.

Code of Conduct

Directors of the Company are also subject to Mayne Pharmas Code of Conduct (see further discussion below in the Conduct and Ethicssection). The Code of Conduct is considered by the Board to be an effective way to guide the behaviour of all directors and employeesand demonstrates the Companys commitment to ethical and compliant practices.

BOARD COMPOSITION

The composition of the Board is determined in accordance with the following principles and guidelines:

the Board should comprise at least three directors; the Board should comprise directors with an appropriate range of qualifications and expertise; and the Board shall meet regularly and follow meeting guidelines set down to ensure all directors are made aware of, and have

available all necessary information, to participate in an informed discussion of all agenda items.

As at the date of this report, the Board comprises three non-executive independent directors, an independent non-executive Chairmanand an executive director. Details of the Directors are set out in the Directors Report.

In making recommendations to the Board regarding the appointment of directors, the Nomination Committee periodically assesses theappropriate mix of skills, experience and expertise required by the Board and assess the extent to which the required skills andexperience are represented on the Board. The committee also takes account of other factors such as diversity and cultural fit. Theidentification of a potential director may be assisted by the use of external search organisations and detailed background information inrelation to the potential candidate is provided to all directors prior to any decisions being made. Nominations for appointment are thenapproved by the Board as a whole.


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Independence of directors

The Board has reviewed the position and associations of each of the five Directors in office at the date of this report and considers thatfour of the Directors are independent. In considering whether a director is independent, the Board has regard to the independence criteriain ASX Corporate Governance Principle 2 and other facts, information and circumstances that the Board considers relevant. The Boardassesses the independence of new directors upon appointment and reviews their independence, and the independence of other directors,as appropriate.

The Board considers that Messrs Corbett, Best, Mathieson and Scholes meet the criteria in Principle 2. They have no material businessor contractual relationship with the Company, other than as a director, and no conflicts of interest that could interfere with the exercise of

independent judgement.

Mr Richards is employed in an executive capacity by the Company and so is not considered to be independent.

The Directors will continue to monitor the composition of the Board to ensure its structure remains appropriate and consistent witheffective management and good governance.

APPOINTMENT, ELECTION AND RE-ELECTION OF DIRECTORS

The Constitution of the Company requires one third of the directors, other than the Executive Director, to retire from office at each AnnualGeneral Meeting. Directors who have been appointed by the Board are required to retire from office at the next Annual General Meetingand are not taken into account in determining the number of directors to retire at that Annual General Meeting. Directors cannot holdoffice for a period in excess of three years or later than the third Annual General Meeting following their appointment without submittingthemselves for re-election. Retiring directors are eligible for re-election by shareholders.

NOMINATION AND APPOINTMENT OF NEW DIRECTORS

Recommendations of candidates for new directors are made by the Directors for consideration by the Board as a whole. If it is necessaryto appoint a new director to fill a vacancy on the Board or to complement the existing Board, a wide potential base of possible candidatesis considered. If a candidate is recommended by a director, the Board assesses that proposed new director against a range of criteriaincluding background, experience, professional skills, personal qualities, the potential for the candidates skills to augment the existingBoard and the candidates availability to commit to the Boards activities. If these criteria are met and the Board appoints the candidate asa director, that director must retire at the next Annual General Meeting of Shareholders and will be eligible for election by shareholders atthat General Meeting.

BOARD MEETINGS

The Board meets formally at least eight times each year, and from time to time meetings are convened outside the scheduled dates toconsider issues of importance. The Board met 16 times between 1 J uly 2011 and 30 J une 2012.

Directors attendance at Board meetings is detailed on page 19 of this annual report.

The agenda for meetings is prepared by the Company Secretary, in conjunction with the Chairman, Chief Executive Officer, and periodicinput from the Board. Comprehensive Board papers are distributed to directors in advance of scheduled meetings. Board meetingstypically take place at the Companys registered office in Melbourne or at the Companys head office and manufacturing facility based inSalisbury, South Australia to assist the Board in its understanding of operational issues.

PERFORMANCE REVIEW

The Chairman evaluates the performance of the Board as a whole and the individual Directors. The performance evaluation includes anexamination of the performance of the Board and individual Directors as against the Board Charter. The evaluation may establish goalsand objectives for the Board and provide any recommendations for improvement to Board performance. The Chairman undertook theperformance appraisal of the Board with respect to the financial year ended 30 J une 2012 in September 2012.

The Board aims to ensure that shareholders are informed of all information necessary to assess the performance of the Directors.Information is communicated to the shareholders through:

the annual report; the half-yearly report; the annual general meeting and other meetings to obtain shareholder approval for Board actions as appropriate; and continuous disclosure in accordance with ASX Listing Rule 3.1 and the Companys Continuous Disclosure Policy.

BOARD MEMBERS RIGHTS TO INDEPENDENT ADVICE

The Board has procedures to allow Directors, in the furtherance of their duties as directors or members of a Committee, to seekindependent professional advice at the Companys expense, subject to the prior written approval of the Chairman.


31/78

31

BOARD COMMITTEES

The Board has established the following committees to advise and support the Board in carrying out its duties:

Audit Committee; Nomination Committee; and Remuneration Committee.

Directors attendance at meetings of these committees is detailed on page 19 of this annual report.

Audi t Commit tee

It is the Boards responsibility to ensure that an effective internal control framework exists within the Company, including internal controlsto deal with both the effectiveness and efficiency of significant business processes. Effective internal controls include the safeguarding ofassets, the maintenance of proper accounting records, and the reliability of financial information.

The Board has established an Audit Committee, which operates under a Charter approved by the Board, and has delegated theresponsibility for the establishment and maintenance of a framework of internal control and ethical standards for the management of theCompany to the Audit Committee. The Charter was last reviewed and approved by the Board on 31 August 2011.

The duties and responsibilities of the Audit Committee include:

ensuring appropriate accounting policies and procedures are defined, adopted and maintained;

ensuring that the operating and management reporting procedures, and the system of internal control, are of a sufficiently highstandard to provide timely, accurate and relevant information as a sound basis for management of the Groups business;

reviewing the Financial Statements prior to their approval by the Board; reviewing the scope of work including approval of strategic and annual audit plans and effectiveness of the external audit

function;

ensuring that appropriate processes are in place to ensure compliance with all legal requirements affecting the Group; ensuring that all internal and industry codes of conduct and standards of corporate behaviour are being complied with; appointing a person(s) responsible for Internal Audit functions as specified from time to time by, and in accordance with, the

Committees Charter;

making recommendations to the Board of Directors on the appointment, reappointment or replacement (subject, if applicable, toshareholder ratification), monitoring of effectiveness, and independence of the external auditors; and

actioning any other business processes or functions which may be referred to it by the Board of Directors.

The operation and responsibilities of the Audit Committee are consistent with ASX Principle 4. The Committee met four times during thefinancial year ended 30 J une 2012.

The members of the Audit Committee at the date of this report were:

Mr I Scholes Chairman; Hon R Best; and Mr B Mathieson.

In addition to the members of the Committee, the CEO and CFO attend the Audit Committee meetings wherever possible andrepresentatives of the External Audit firm are invited to attend when appropriate.

Appo in tment of external audi tors

The Audit Committee is directly responsible for the appointment, reappointment or replacement (subject, if applicable, to shareholderratification), remuneration, monitoring of effectiveness, and independence of the external auditors, including resolution of disagreementsbetween management and the auditor regarding financial reporting.

The Committee must approve all audit and non-audit services provided by the external auditors and must not engage the externalauditors to perform any non-audit/assurance services that may impair or appear to impair the external auditors judgement orindependence in respect of the Company. The Committee may delegate the approval authority to a member of the Committee. Thedecisions of any Audit Committee member to whom the approval authority is delegated must be presented to the full Committee at itsnext scheduled meeting.

When reviewing the auditors independence, the Committee will require the rotation of the audit partner at least once every five years, inaccordance with the Corporations Act 2001. In line with this requirement, the audit partner has been rotated for the financial year ended30 J une 2012.


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Nomination Committee

The Board has established a Nomination Committee to assist the Board in selecting candidates for the position of director.

The members of the Nomination Committee at the date of this report were:

Hon R Best Chairman; Mr R Corbett; and

Mr B Mathieson.

The primary purpose of the Nomination Committee as set out in its Charter is to support and advise the Board in fulfilling theirresponsibilities to shareholders in ensuring that the Board is comprised of individuals who are best able to discharge the responsibilities ofdirectors having regard to the law and standards of governance by:

assessing the skills required on the Board, and the extent to which the required skills are represented on the Board; establishing processes for the review of the performance of individual directors and the Board as a whole; and establishing processes for the identification of suitable candidates for appointment to the Board.

The Charter was last reviewed and approved by the Board on 31 August 2011. The operation and responsibilities of the NominationCommittee are consistent with ASX Principle 2.

The Committee met three times during the financial year ended 30 J une 2012, as part of the process for the selection and appointment of

the new Managing Director and CEO.

Remuneration Committee

The Board has established a Remuneration Committee to assist the Board in ensuring that appropriate and effective remunerationpackages and policies are implemented within Mayne Pharma for the Chief Executive Officer and direct reports to the Chief ExecutiveOfficer. The Committees role also extends to the review of non-executive directors fees.

The Remuneration Committee shall comprise at least three members and the members of the Remuneration Committee at the date ofthis report were:

Mr R Corbett Chairman; Mr B Mathieson; and Mr I Scholes.

The duties and responsibilities of the Remuneration Committee are set out in its Charter which was last reviewed and approved by theBoard on 31 August 2011. The key duties and responsibilities are:

to review and recommend to the Board, remuneration policies and packages for the Chief Executive Officer, executive directorsand direct reports to the Chief Executive Officer;

to recommend to the Board any changes in remuneration policy including superannuation, other benefits and remunerationstructure for executives and which is likely to have a material impact on the Company;

to review and recommend to the Board proposals for employee and non-executive director equity plans; to review and recommend to the Board proposals for short- and long-term incentive programs for executives; to review and recommend to the Board any changes to non-executive directors fees; to ensure there is a proper performance management process in place throughout the organisation and that it is operating

effectively;

to be informed of:- current trends in executive remuneration and associated incentive initiatives;

- legislative issues associated with executive remuneration programs.

The Committee met twice during the financial year ended 30 J une 2012.

Remuneration for directors and executives

A brief discussion on the Companys remuneration policies in respect of directors and executives is set out on pages 23 to 24 of thisannual report. Detailed disclosure of the remuneration paid to the Companys directors and executives is set out on pages 24 to 26.


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33

INTEGRITY IN FINANCIAL REPORTING

Consistent with ASX Principle 7.3, the Companys financial report preparation and approval process for the financial year ended 30 June2012 involved both the Chief Executive Officer and the Chief Financial Officer providing detailed representations to the Board covering:

compliance with the Companys accounting policies and relevant accounting standards; the accuracy of the financial statements and that they provide a true and fair view; integrity and objectivity of the financial statements; and effectiveness of the system of internal control.

RISK IDENTIFICATION AND MANAGEMENT

The Board accepts that taking and managing risk is central to building shareholder value and the Board is responsible for the Groups riskmanagement strategy. Management is responsible for implementing the Boards strategy and for developing policies and procedures toassist the Board to identify, manage and mitigate the risks across the Groups operations.

The Company employs executives and retains consultants each with the requisite experience and qualifications to enable the Board tomanage the risks to the Company. The Board has delegated the oversight of the Groups risk management processes and procedures tothe Audit Committee.

The Groups identification and management of business risks is set out in a Risk Management Framework. The Framework, based onAS/NZS ISO 31000:2009 was reviewed by Management during the year. This process included a complete review of the risks faced bythe Group and resulted in the development of a new Risk Register. The Register captures all of the risks that Management consider arefaced by the Group; the likelihood, consequence and potential impact if the risk were to eventuate and the residual risk faced by theGroup given the existence of appropriate controls.

The risks faced by the Company are diverse and vary significantly in terms of the likelihood of the event occurring and the consequenceof such an event. Each specific risk is allocated to a member of the Executive Team and managed through day-to-day operations andcompliance with a comprehensive set of Standard Operating Procedures.

The register is updated by the Executive Team as required, and at least quarterly, and reviewed by the Audit Committee every sixmonths. Following the most recent review of the register, Management and the Board believe that the Companys management of thematerial risks faced by the Company is effective. A summary of the revised Risk Management Framework has not yet been disclosed inaccordance with ASX Principle 7.1 as the Board has not yet approved its release.

SECURITIES TRADING BY DIRECTORS AND EMPLOYEES

The Company approved a Securities Trading Policy on 19 April 2011. The policy summarises the law relating to insider trading and setsout the policy of the Company on directors, officers, employees and consultants dealing in securities of the Company.

The policy is reviewed regularly and a summary of the Securities Trading Policy can be accessed on the corporate governance section ofthe Companys website at www.maynepharma.com. This policy is provided to all directors and employees and compliance with it isreviewed on an ongoing basis in accordance with the Companys risk management systems.

CONTINUOUS DISCLOSURE

The Company has established policies and procedures in order to comply with its continuous and periodic disclosure requirements underthe Corporations Act 2001 (Commonwealth) and the ASX Listing Rules. The Board has adopted a formal Continuous Disclosure Policy, asummary of which is available from the corporate governance section of the Companys website at www.maynepharma.com. TheContinuous Disclosure Policy was last reviewed by the Board on 13 September 2011.

The Company Secretary has primary responsibility for the disclosure of material information to ASIC and ASX and maintains a procedural

methodology for disclosure, as well as for record keeping.

The Companys Continuous Disclosure Policy requires all management to notify the Chief Executive Officer, or the Company Secretary inhis absence, of any potentially material information as soon as practicable. The Policy also sets out what renders information material.

The Board reviews the Companys compliance with this policy on an ongoing basis and will update it from time to time, if necessary.

SHAREHOLDER COMMUNICATIONS

The Boards formal policy on communicating with shareholders, its Communications Policy, is available from the corporate governancesection of the Companys website and supplements the Companys Continuous Disclosure Policy.

The aim of the Communications Policy is to make known Mayne Pharmas methods for disclosure to shareholders and the general public.The Policy details the steps between disclosure to ASIC and ASX and communication to shareholders, with the Companys website

playing an important role in Mayne Pharmas communications strategy.

The Board reviews this policy and compliance with it on an ongoing basis. The policy was last reviewed on 13 September 2011.


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CONDUCT AND ETHICS

The Mayne Pharma Code of Conduct was last revised on 31 August 2011. The Code covers a broad range of issues and refers to thosepractices necessary to maintain confidence in the Companys integrity, including procedures in relation to:

compliance with the law; business and financial records; occupational health and safety; conduct within and outside the workplace; confidentiality and use of information; conflict of interest; equal opportunity; whistle-blowing; and bribery and corruption.

The Code directs individuals to report any contraventions of the Code to their superior or the Chief Executive Officer.

DIVERSITY

The Board of Mayne Pharma recognises that a diverse and inclusive workforce is not only good for our employees but also good forbusiness. Diversity enables Mayne Pharma to attract and retain talented people, create more innovative solutions, and be more flexible

and responsive to our customers and shareholders needs. The Board approved a new diversity policy on 21 August 2012.

This diversity policy provides a framework that helps Mayne Pharma to achieve the following:

access to the broadest pool of available talent; a welcoming workforce culture that embraces diversity at all levels; recruitment practices that ensure a fair and equitable selection process at all levels and where candidates are assessed on the

basis of skills and capabilities; improved employee motivation and engagement; enhanced teamwork and innovative solutions.

The Board has approved a set of measurable objectives concerning strategies and programs for pursuing diversity and will report onprogress against the set measurable objectives on an annual basis in the Annual Report. The Board has set objectives to promote moreflexible working arrangements and to improve gender diversity across the Company.

Below is a summary of the gender composition of the organisation:

% MALE % FEMALE

Company 64 36

Senior Executives 89 11

Board 100 0


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35

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2012

CONSOLIDATED

NOTE

2012

$0002011$000

Continuing operations

Sale of goods 50,436 45,700Royalties revenue 1,468 1,333

Other revenue 4 642 3,068

Revenue 52,546 50,101

Cost of sales (29,342) (26,861)

Gross pro fit 23,204 23,240

Other expenses 6 - (799)

Research and development expenses (4,018) (5,974)

Distribution expenses (613) (614)

Marketing expenses (675) (709)

Regulatory affairs expenses (872) (641)

Share-based payments (272) -Amortisation expenses (3,808) (6,098)

Administration expenses (6,985) (6,771)

Finance costs 6 (28) (341)

Fair value movement in earn-out liability 5 2,850 (677)

Restructure and redundancy costs (851) (1,005)

Impairment of customer relationship intangible asset (181) -

Inventory write down - (1,115)

Profit / (loss) before income tax 7,751 (1,504)

Income tax (expense) / benefit 8 (1,598) 3,183

Net profi t from conti nuing operations after incom e tax 6,153 1,679

Other comprehensive income for the period, net of tax - -

Total comprehensive income for the period attributable to owners ofthe parent 6,153 1,679

Earnings per share:

Basic 9 4.05 cents 1.12 cents

Diluted 9 4.02 cents 1.10 cents

The Consolidated Statement of Comprehensive Income is to be read in conjunction with the accompanying notes to the financialstatements.


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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2012

CONSOLIDATED

NOTE

2012

$0002011$000

Current assets

Cash and cash equivalents 23 11,596 5,807

Trade and other receivables 15 3,821 5,697

Inventories 11 7,244 6,423

Income tax receivable - 630

Other current assets 12 594 281

Total current assets 23,255 18,838

Non-current assets

Property, plant and equipment 13 22,224 21,457

Deferred tax assets 8 4,260 5,199

Intangible assets and goodwill 14 4,194 8,183

Total non-cur rent assets 30,678 34,839

Total assets 53,933 53,677

Current liabilities

Trade and other payables 15 4,234 3,848

Interest-bearing loans and borrowings 16 - 2,339

Income tax payable 1,456 -

Other financial liabilities 17 2,782 5,837

Provisions 18 3,832 2,915

Total current liabil ities 12,304 14,939

Non-current liabilitiesOther financial liabilities 17 6,549 9,283

Deferred tax liabilities 8 3,730 4,478

Provisions 18 750 803

Total non-cur rent liabil ities 11,029 14,564

Total liabil iti es 23,333 29,503

Net assets 30,600 24,174

Equity

Contributed equity 19 32,016 31,870

Reserves 20 1,087 960

Accumulated losses 21 (2,503) (8,656)Total equi ty 30,600 24,174

The Consolidated Statement of Financial Position is to be read in conjunction with the accompanying notes to the financial statements.


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37

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 30 June 2012

CONSOLIDATED

NOTE

2012

$0002011$000

Cash flows from operating activities

Cash recei

mayne pharma annual report 2012

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