Annual Report 2018 Annual Report

Patient needs inspire us…

Annual Report 2018 …and our vision that all patients around the world have access to evidence-based treatment for the chronic conditions and co-occurring disorders of addiction.

Patient needs inspire us…

Our people, culture, expertise and insight, coupled with our innovative technology and stakeholder relationships, uniquely position us to help address patients’ unmet needs around the world.

2018 Highlights $1,005m $292m $275m Net revenue Operating profit Net income (-8% vs. 2017: $1,093m) (+51% vs. 2017: $193m) (2017: $58m) 53% $332m $272m US average market share Adjusted Operating Profit* Adjusted Net Income* (vs. 2017: 57%) (-18% vs. 2017: $403m) (+1% vs. 2017: $270m) 894,256 38c 37c US unique patients Earnings per share Adjusted earnings per share* received SUBOXONE® Film (2017: 8c) (nil vs. 2017: 37c) (vs. 2017: 874,481) * excluding exceptional items (further details on page 25)

Key pipeline highlights Contents

Strategic report Governance $91m* 4 Chair’s statement 36 Chair’s governance statement R&D investment 6 Patient journeys 38 Board of Directors (+2% vs. 2017: $89m) * includes exceptional costs of $24m 10 Business Model 40 Executive Committee 12 Chief Executive Officer’s 42 Corporate Governance Report statement 62 Directors’ Remuneration Report One 16 Research and Development 78 Directors’ Report US FDA approval 18 Managing our business responsibly Financial statements 21 Non-financial information 83 Statement of Directors’ Six statement Responsibilities Peer-reviewed publications 22 Financial review 85 Independent Auditor’s Report 26 Legal proceedings 95 Financial Statements 29 Risk management 131 Information for shareholders 28 35 Viability statement Peer-reviewed conference abstracts

2 www.indivior.com We have always understood that access to medication-assisted treatment and counseling is critical to ensure that patients struggling with substance use disorder get the medical care they deserve and need, just like the care provided to patients with other chronic diseases.

With this understanding, we further expand upon our Vision, Mission and Purpose by distilling some of the insights gained from our longstanding journey supporting patients along their path to recovery.

Patients are individuals, and different patients may have different needs. Understanding these needs is critical to supporting patients along their journey to recovery. Stigma, cravings and instability can impact a patient’s chances of recovery. Ultimately, Indivior believes that patients want, need, and deserve reprieve from the cycle of addiction, including: ‹‹ caring and trusted relationships ‹‹ reprieve from constant preoccupation of illicit drug use ‹‹ a means to recover meaning and purpose to life

Indivior works together with addiction thought leaders and stakeholders to expand access to evidence-based treatments, enhance scientific understanding of the disease, and pioneer innovation to drive better patient outcomes.

“Substance use disorder (SUD) is a brain disorder, a chronic disease, which hijacks the brain and can leave patients trapped and suffering. Evidence-based treatment and counseling can help patients find a path to regaining a purposeful and meaningful life.”

Dr. Walter Ling Dr. Ling is a highly recognized thought leader in the treatment of opioid addiction. Professor and Founding Director He has been a continuous grantee researcher of the National Institute on Drug Abuse Integrated Substance Abuse Programs (NIDA) in the US since its inception, and he conducted many of the early, landmark clinical University of California, trials of buprenorphine that provided data for its approval by the U.S. Food and Drug Los Angeles (UCLA) Administration (FDA). Dr. Ling consults with Indivior worldwide. Chair’s statement

“We are committed to helping patients by pioneering innovative and accessible treatments for addiction and its co-occurring disorders.”

At Indivior, we have been on a impacted. As a result, the Group’s net longstanding journey devoted to revenue declined over the prior year transforming addiction from a global and our share price also reflected this human crisis to a recognized and performance. treated chronic disease. The Board, Executive Committee and every The Executive Committee, supported employee are dedicated to realizing by the Board, moved swiftly to our Vision and making it a reality. implement its enterprise contingency We believe that all patients around planning with the goal of ensuring the the world should have access to business remains viable and able to evidence-based treatment for the deliver for patients, and that we can chronic conditions and co-occurring continue to drive value growth. Howard Pien disorders of addiction. Chair While we experienced setbacks, As the global addiction crisis we also made progress toward our continues to grow, we are inspired Vision. In addition to launching by the needs of patients, even amid SUBLOCADE in the US market, the turbulent times for the Group. In Group received its first international 2018, while we made some advances, approval for SUBLOCADE from Health we also experienced several Canada. We remain confident that difficulties including setbacks to the SUBLOCADE will help address Group’s intellectual property related treatment gaps for OUD and we to SUBOXONE® (buprenorphine continue to target $1 billion-plus and naloxone) Sublingual Film of peak annual net revenue from (CIII), which created additional SUBLOCADE. material uncertainty in an already competitive environment. The The Group also received a U.S. February 2018 launch of SUBLOCADE™ Food and Drug Administration (FDA) (buprenorphine extended-release) injection for subcutaneous use (CIII) was impacted, in part, by “As the global reimbursement complexity within the US payor system as the first long- addiction crisis acting injectable (LAI) treatment for opioid use disorder (OUD). Additional continues to grow, barriers to launch acceleration also included the length of the we are inspired prescription journey (time to treat) and, given the entirely new treatment by the needs of paradigm, slower than anticipated Health Care Provider (HCP) trial and patients, even treatment adoption. These barriers are being steadily identified and amid turbulent addressed, however, SUBLOCADE net revenue development was negatively times.”

4 www.indivior.com Strategic report approval for PERSERIS™ (risperidone) With the need to conserve cash in for Extended-Release Injectable “At Indivior, we the face of generic buprenorphine/ Suspension for the treatment of naloxone film entry into the US schizophrenia in adults. PERSERIS have been on market, and the need to fuel our marks an important milestone in future growth drivers (SUBLOCADE the diversification and expansion a longstanding and PERSERIS), we did not make any of our business and commitment direct returns to shareholders. While to patients. Serving patients with journey devoted we continually evaluate Indivior’s schizophrenia is well-aligned with capital allocation priorities, given our Vision; a recent systematic to transforming anticipated ongoing pressure to review and meta-analysis revealed the business, it is unlikely that that the prevalence of any addiction any cash will be directly returned substance use disorder in to shareholders in the near- or treatment-seeking patients from a global medium- term. diagnosed with schizophrenia or first-episode psychosis was 42%.1 human crisis to Changes to the Board a recognized and Yvonne Greenstreet, Non-Executive Despite the challenges faced by Director and Chair of the Science & the business, the Group made the treated chronic Policy Committee, has advised that strategic decision to prudently invest she will step down from the Board in the US market launch of PERSERIS. disease.” and will not seek re-election at the We maintain a peak annual net Annual General Meeting to be held revenue goal for PERSERIS of $200 the profitable long-term growth in May 2019. There are no current to $300 million. we anticipate from SUBLOCADE plans to recruit a successor to and PERSERIS. Dr. Greenstreet and the Nomination You may read more about & Governance Committee will keep SUBLOCADE and PERSERIS in our In relation to the various litigation the composition of the Board and Chief Executive Officer’s statement and investigational matters, the its Committees under close review. on page 12. Group carries a provision for On behalf of the Board, I would like investigative and antitrust litigation to thank Yvonne for her significant Risks, challenges and matters of $438m. Substantially contribution to Indivior. uncertainties all of the provision relates to the As we look ahead, the financial U.S. Department of Justice (DOJ) Outlook impact of generic buprenorphine/ investigation. The Group is in We have aligned the Group to naloxone film entry into the US advanced discussions with the DOJ manage the business challenges market in early 2019 will place the about a possible resolution to its ahead, building in part upon actions Group under further substantial investigations, although it cannot initiated in 2018 and early 2019. top- and bottom-line financial predict with any certainty whether, Looking ahead, we will continue pressure until more progress is when, or at what cost it will reach to develop our business to create achieved with SUBLOCADE and an ultimate resolution. The Board is sustainable long-term value for PERSERIS. highly engaged in these discussions shareholders and wider stakeholders. and has been throughout the process. Addiction remains one of the greatest The Group was prepared for this We continue to cooperate fully with public health crises of our time through contingency planning and the various parties and are hopeful and we are committed to helping actions initiated in 2018 and early for resolution in a timely manner. patients by pioneering innovative and 2019 to streamline the organization accessible treatments for addiction and further reduce costs. These Share price performance and its co-occurring disorders. contingency actions also included and dividend the February 2019 launch by Indivior Finally, I would like to thank all Indivior shares ended the year down of an authorized generic version of my colleagues at Indivior for their 72%, compared with a 15% decline SUBOXONE® (buprenorphine and significant contribution during a for the FTSE 250 Index of which the naloxone) Sublingual Film (CIII) difficult year, and their steadfast Company is a member; this reflects in the US. These preparations will commitment to our shared culture the significant business challenges assist us in remaining compliant and Vision. the Group has faced throughout 2018. with our borrowing covenants and position the Group to leverage Howard Pien Chair

1. Sansone, Randy, Substance Use Disorders and Borderline Personality – Common Bedfellows, 2011 (v1.0) – Page 1, Abstract, Paragraph 1 (p.1) Santucci K, Psychiatric Disease and Drug Abuse, COP 2012 (v1.0) – Page 2, Background, Paragraph 2 (p.2) Santucci K, Psychiatric Disease and Drug Abuse, COP 2012 (v1.0) – Page 2, Background, Paragraph 1 (p.2).

Indivior Annual Report 2018 5 A patient’s journey Ashlynn, US

At Indivior, we believe patient voices are vital in helping to shed light on the opioid epidemic and destigmatize the disease of addiction and other mental health disorders. They also highlight the importance of a full treatment program and provide hope to others. Every patient journey is different, and Ashlynn’s story is uniquely her own.

Ashlynn began treatment for anxiety treatment regimens. She struggled “I hope people will and depression at age 12, although but stuck with it. Each day sober was learn that we are she recalls these feelings at an even a small victory. Working with her younger age without knowing what counselor, she learned about another not just a number. they were. Throughout middle and buprenorphine medication option. At high school, she was treated for these first, she found the treatment painful We can be working mental health disorders, but nothing but since then she has worked with next to you. We seemed to help. Struggling with her healthcare provider to minimize depression as a college freshman, the discomfort and is now in her can be anyone in Ashlynn left university and was ninth month of treatment. She also admitted into a psychiatric ward. attends Narcotics Anonymous and your life.” Leaving treatment, vulnerable and other counseling programs to help still struggling, she snorted her first maintain her treatment protocol Ashlynn prescription opioid analgesic. This and deal with her past. Patient, US led to heroin and a seven-year spiral into opioid addiction, rehabilitation, Now 24, Ashlynn says she is able outpatient and inpatient programs, to focus on other aspects of her and abusive relationships. life, like her family and her full-time job. She is also currently enrolled Ashlynn found herself living in an in a community college working abandoned building, which she toward a certification in addiction pinpoints as the worst experience counseling. Ashlynn hopes to pursue of her addiction. She recalls, ‘I was so a master’s degree and become a scared that I would die, and nobody licensed Professional Counselor would know that I did not want this so that she can help others. life. I knew I needed to change.’ In September 2018, Ashlynn * Ashlynn received compensation from Indivior Ashlynn’s journey to recovery began celebrated being sober for one year. for sharing her story with small steps through various

6 www.indivior.com A patient’s journey Nathalie, US Strategic report Addiction not only impacts patients’ lives, but can also devastate families and relationships, and deprive people of the everyday activities so easily taken for granted. Nathalie’s patient journey to recovery is the story of reuniting with her three children after many years apart, rebuilding her relationships with loved ones and working to create a new life that brings her meaning and joy.

Through all of this, Nathalie’s relationship with her partner of more than eleven years was a constant in her life. He stood by her side, supporting her, forgiving her and trying to help her regain her life and overcome her addiction. She describes ‘putting him through hell’ and it was only when he ended up in hospital for health reasons, and Nathalie was facing the prospect of jail time and being away from him, that she ‘hit rock- bottom.’ Nathalie had tried various medication-assisted treatment options in the past, but she had At 40 years old, Nathalie struggled not changed her ‘people, places “I am embracing with her addiction for over 20 and things.’ She realized that in having my children years before beginning her journey order to truly embrace her recovery to recovery. journey, she would need to make back. They are drastic changes. Already enrolled Nathalie describes growing up in an in a study for a new medication- proud of me, they area where ‘drugs were everywhere.’ assisted treatment option, she was accept me, they She started experimenting with able to join the Drug Court program alcohol and marijuana at age 14 which provided the structure trust me, and we and rapidly progressed to heroin, and psychosocial supports she eventually dropping out of school needed to be successful in the are a family again.” and leaving home. Homeless, she treatment program. describes living between ‘drug Nathalie houses’ and in cars, spending time in Now, after more than 15 years, Patient, US jail and making several unsuccessful Nathalie has all three of her children attempts at treatment. Although she back in her life. She is in school remained sober during each of her to earn her High School diploma, pregnancies, Nathalie lost custody has her driver’s license back and is of her three children when they were driving for the first time since she was very young. a teenager. She is proud of her ‘first real job’ working as a peer counselor She recalls, “I damaged everything at a local community center helping I touched back then. I struggled and patients with Hepatitis C who are fought with my addiction from Day undergoing treatment. She is also One. I used drugs as a way to cope looking forward to getting married to with my life; I used drugs as a way to her long- time partner. numb my feelings. It caused me to do * Nathalie received compensation from Indivior things that I am not proud of. I felt Nathalie has been sober since for sharing her story so alone.” December 2016.

Indivior Annual Report 2018 7 A patient’s journey Miss T, US

Schizophrenia is a chronic and complex medical condition that can affect how a person thinks, feels and behaves. Symptoms include delusions, hallucinations, confused thoughts and speech and difficulty concentrating and remembering things. More than half of all people with schizophrenia have anosognosia or a lack of insight – this symptom makes them unaware they have the illness and complicates treatment. Schizophrenia is typically diagnosed during late adolescence or early adulthood. Miss T was diagnosed in her late teens and we share her story to help raise awareness and understanding of the life-changing and profound personal and family impact of this disease.

By her account, Miss T had a bright She wasn’t convinced doctors had of the group home family. Miss T childhood. Educated at good schools, accurately identified her problems. describes the home and its staff, she was an accomplished ballet As prescribed by her healthcare whose goal is to enable each resident student and a competitive diver. She provider, she would maintain her to have the best quality of life, as graduated with high honors and was treatment regimen. However, as soon “excellent.” She is grateful they are accepted to a prestigious university as she started feeling better, she able to help her navigate life’s daily where she hoped to study law. “I did stopped her medication and would challenges including helping her very, very well until I got my illness,” then find herself back in hospital. remember to take her medicine. she says. The stigma attached to her illness It was through the home that Miss T Just a few months into her first made things even worse. She recalls met a psychiatrist and was enrolled semester at university, she began many people looking down at her, not in a study for a monthly treatment for feeling as though something was taking her seriously, and misjudging schizophrenia. She said the monthly ‘wrong’ with her. She was hearing her. The illness and stigma took away regimen was helpful for her as she voices and seeing things that were all her confidence. sometimes has trouble remembering not there. She withdrew from to take, or if she has taken, her university, and helped by her family, “If you’re high functioning, it’s hard daily medication. pursued treatment which resulted to accept there’s anything wrong in admission to a hospital. with you,” Miss T says. It was only Mostly, Miss T feels people suffering after staying on treatment that she from mental illness need care and “It was like the world was began to understand “there is really understanding from others. She crashing around me all the time,” something wrong with me.” said she is fortunate to have a Miss T recalls. “I wasn’t really nephew who visits her and helps her focusing. People would talk to She was last hospitalized in 2012, feel better about her illness. “His you and it would go in one ear after the stress of losing her parents way of treating me is that ‘you’re and out the other. I couldn’t coupled with a terrible storm that special’,” she explained. “’So, you’re function correctly.” shut off the heat in her apartment paranoid schizophrenic. Everybody’s triggered a nervous breakdown. got something’.” Her diagnosis of paranoid After leaving hospital, she moved schizophrenia in her late teens to a state-licensed personal care forever changed her life. Like many home. She is described by the patients with schizophrenia, Miss T home administrator as “very high * Miss T received compensation from Indivior for had difficulty accepting her illness. functioning” and a loved member sharing her story.

8 www.indivior.com Strategic report

“You should never let your illness take over what you want to do because you could be the person that makes a difference in someone’s life.”

Miss T Patient, US

Indivior Annual Report 2018 9 Business model

Patient needs inspire us

Our people, culture, expertise and insight, coupled with our innovative technology and stakeholder relationships, uniquely position us to help address patients’ unmet needs around the world.

Indivior Our assets

Our Purpose Highly skilled and knowledgeable people is to pioneer Indivior has an able workforce and management team with a life- transforming treatment. deep understanding of patient needs and a strong commitment to improving patient lives. Our Vision that all patients around the world Culture have access to evidence-based Based on a clearly-defined set of Guiding Principles, Indivior’s treatment for the chronic conditions culture is a key competitive advantage enabling Indivior to drive and co-occurring disorders strategic business growth and create social value. of addiction. Product portfolio Our Mission Indivior’s product portfolio is focused on helping meet patient is to be the global leader who is a needs in addiction and schizophrenia. pioneer in developing innovative prescription treatments for Intellectual property addicted patients. Indivior has a unique portfolio of licenses and patents which provide a platform for the creation of long-term value.

Financial capital Indivior employs disciplined asset allocation with a focus on retaining a robust capital base to ensure flexibility in addressing legal matters, agility in managing unknown market impacts, and the ability to pursue growth opportunities.

$91m* Invested in R&D * includes exceptional costs of $24m 44 28 See page 13 for our Countries where we have Peer-reviewed Guiding Principles a global presence conference abstracts

10 www.indivior.com Strategic report

How we generate value Indivior advocates to increase global understanding and awareness, destigmatize the disease and expand The global addiction crisis has treatment access. provided an opportunity for the Group to significantly expand the market for buprenorphine medication-assisted treatments, which is increasingly recognized Advocacy as an effective and evidence-based treatment for OUD. By leveraging our capabilities, we are also now serving patients with schizophrenia Stakeholder which is a well-aligned adjacency for engagement our business. Strong and enduring relationships with key Stakeholder engagement stakeholders For more than 20 years, Indivior has worked together with policymakers, medical societies, patient advocacy Sales and Research and groups, healthcare providers, marketing Patient development payers and other stakeholders. Carefully managed World-class treatment These relationships provide Indivior compliance and adherence needs to good practice innovation with critical insights to develop and enhance its patient-focused business approach.

Research and development Manufacturing Our aim is to advance treatment Producer of high quality innovation by developing new medicines patient-focused treatments, including enabling the Group to expand the scope of treatment it provides to help Gu s idi lue address the co-occurring disorders ng P e va rincipl nd cor of addiction. es a

Manufacturing Our aim is to improve the lives of patients through an uninterrupted Meeting patient needs supply of high-quality products. Leveraging its deep understanding of patient needs, Indivior is committed Sales and marketing to addressing the global addiction crisis by expanding the availability of its patient-focused treatments, including treatment access, while also leveraging Our aim is to deliver high-quality its scientific expertise to develop novel treatment. products and accurate information, and maintain strong and credible relationships with customers and key stakeholders.

Indivior Annual Report 2018 11 Chief Executive Officer’s statement

“Moving forward, our primary focus is to achieve commercial success in the US growth market and leverage our established leadership position. We believe Indivior is appropriately positioned to make progress toward meeting patient needs in addiction and its co-occurring disorders.”

In the face of these immediate ‹‹ Developing and fortifying the challenges, however, we made business: While broader mergers progress against the strategic and acquisition activity, other priorities set for the Group by than early stage asset licensing, the Board and the Executive is currently on hold, Indivior used Committee, with the understanding a portion of its cash balance to that building upon them positions voluntarily prepay $235 million of Indivior to generate long-term outstanding term loan principal to shareholder value: significantly improve the overall financial flexibility and the ‹‹ Building the resilience of our resilience of the Group. franchise: Positioned the business Emerging from a turbulent 2018, we Shaun Thaxter to deliver new net revenue from believe Indivior is positioned for Chief Executive Officer SUBLOCADE and PERSERIS™ in continued progress toward meeting the US while seeking to maintain patient needs in addiction and 2018 marks one of the most cash flow from SUBOXONE® Film’s challenging periods for our business schizophrenia. Neither our Vision nor share of the US buprenorphine our strategy for realizing our Vision at Indivior. The well-understood risk medication-assisted treatment of generic buprenorphine/naloxone has changed. With this in mind, let us market; with generic manufacturer consider progress made against these sublingual film competition in our film entry in the US, in February largest market created additional strategic priorities and the intended 2019, launched an authorized path forward: material uncertainty in an already generic version of SUBOXONE® competitive environment. This Film in the US. development, and the slower than Our innovative growth products expected launch trajectory of ‹‹ Developing our innovative pipeline: SUBLOCADE™ (moderate-to- SUBLOCADE™, is reflected in our Launched SUBLOCADE in the US severe opioid use disorder) lower net revenue (-8%) and adjusted and established a new specialty Our long-term growth and net income, which was essentially infrastructure; achieved marketing profitability will largely be driven unchanged compared with 2017. approval of PERSERIS for the by SUBLOCADE. With this pioneering treatment of schizophrenia by US technology, our goal is to produce 2018 net revenue by geography FDA and made it available in 2018; better patient outcomes and help identified and licensed early stage drive a paradigm shift in the large pre-clinical pipeline assets that and growing market for the treatment have the potential to address the of OUD in the US. SUBLOCADE unmet needs of patients across delivers consistent buprenorphine substance use disorders (SUD). plasma levels over the treatment ‹‹ Expanding global treatment: period resulting in an occupancy of $1,005m Achieved marketing approval of greater than 70% of the mu opioid SUBLOCADE by Health Canada and receptors. SUBLOCADE may also successfully submitted regulatory be a useful alternative for patients filings for SUBLOCADE in Australia, that have difficulty adhering to a New Zealand, and Europe; achieved daily medication treatment. The United States marketing approval for SUBOXONE® U.S. FDA and others have indicated est of orld Sublingual Tablets in China. that sustained-release injectable depots of buprenorphine can provide

12 www.indivior.com Strategic report effective treatment of OUD that may SUBLOCADE, to grow. Our confidence market. As such, our immediate goal be less subject to misuse, abuse is supported by the positive is to educate HCPs, patients and or accidental exposure compared anecdotal feedback we continue to caregivers on the characteristics of with self-administered formulations receive from patients and HCPs. PERSERIS and ensure there are no such as transmucosal tablets significant barriers to access. and films.1, 2 PERSERIS™ (schizophrenia) Following the July 2018 marketing SUBOXONE® Film Early in the SUBLOCADE launch, approval by the US FDA, PERSERIS has Despite continued competition from we recognized that we had launched in the US for the treatment manufacturers of generic SUBOXONE® underestimated the level of of schizophrenia in adults. PERSERIS Tablets and the market impact of reimbursement complexity for this leverages our proprietary ATRIGEL® Dr. Reddy’s Laboratories Ltd.’s (DRL) new treatment option in the addiction delivery system to provide sustained initial generic buprenorphine/ disease space. This complexity, plasma levels of risperidone – still naloxone sublingual film launch, coupled with the length of the the most prescribed anti-psychotic we maintained cash flow from prescription journey (time to treat) medicine in the US – over the SUBOXONE® Film’s share of the and slower than anticipated HCP trial monthly dosing interval after US buprenorphine medication- and treatment adoption, resulted in subcutaneous administration. Clinical assisted treatment market (BMAT) net revenues coming in below our trials of PERSERIS were designed for and a leading position in the US with expectations for 2018. We worked the product to be initiated with no an average market share of 53% tirelessly throughout the year to loading doses with the potential for (2017: 57%). identify and break down obstacles improved compliance inherent in for SUBLOCADE patients and HCPs LAI technologies. In February 2019, upon confirmation and saw steady improvement in of the launch of generic payer approval rates and treatment With PERSERIS, we offer a long-acting buprenorphine/naloxone dispense rates. Although initially treatment for schizophrenia which we sublingual film products, Indivior frustrating, the new specialty believe also creates an opportunity launched an authorized generic infrastructure we have established to serve patients in a well-aligned of SUBOXONE® Film. for SUBLOCADE is a competitive adjacency that provides Indivior advantage that we anticipate realizing diversification in its portfolio. Maintaining our disciplined in the coming years as familiarity of capital allocation the expected benefits of this new The US demand for LAIs is projected In 2018, we continued to maintain treatment paradigm grows among to continue at strong double-digit a sufficient level of cash to fortify patients and HCPs alike. rates and this remains an Indivior against additional generic underpenetrated segment in manufacturer competition and legal Our primary focus moving forward the fast-growing market for proceedings and ended the year is to leverage our established anti-psychotics. While we are a with cash of $924 million. We also leadership position in OUD treatment new market entrant to this disease voluntarily prepaid $235 million of to help drive commercial success space/category, in contrast with our outstanding loan principal during in the US growth market. Over the initial experience with SUBLOCADE, the year to bring our outstanding medium to long-term, we expect where we had to establish much of debt level below $250 million. recognition of the potential benefits the specialty infrastructure, LAIs are offered by LAI technologies, such as frequently used in the anti-psychotic

Our Guiding Principles “While it is easy to live our Guiding Principles Focus on patient needs Seek the wisdom during the good times, to drive decisions of the team it is a true test to Believe that people’s remain committed Care enough actions are well to coach to these principles when intended times are difficult. I am Demonstrate See it, own it, particularly proud of honesty and integrity make it happen at all times our patient-focused culture which continues 1. Nikolaj Kunøe, Joshua D Lee, Opioid addiction: long-acting formulations for a long-term disorder – www.thelancet.com Published Online February 18, 2019 http://dx.doi.org/10.1016/S0140-6736(18)32428-0. to inspire all that we do.” 2. Opioid Use Disorder: Developing Depot Buprenorphine Products for Treatment Guidance for Industry prepared by the Division of Anesthesia, Analgesia, and Addiction Products in the Center for Drug Evaluation and Research at the Food and Drug Administration Published February 2019 https://www.fda.gov/Drugs/ GuidanceComplianceRegulatoryInformation/Guidances/default.htm. Indivior Annual Report 2018 13 Chief Executive Officer’s statement continued

2018 Year at-a-glance

Strategic Progress priorities in 2018

Building the ‹‹ Launched SUBLOCADE™ in Q1 and contributed net revenue of $12 million in resilience of FY 2018 ‹‹ Established new specialty infrastructure for SUBLOCADE; achieved 83% payer our franchise coverage; key performance indicators (KPIs) showed steady improvement through FY 2018 ‹‹ Positioned the business to deliver new net revenue from SUBLOCADE and PERSERIS™ while maintaining leading BMAT share and cash flow from SUBOXONE® Film, despite continued competition from manufacturers of generic SUBOXONE® Tablets average market share was 53% (2017: 57%) ‹‹ Expanded treatment capacity to a record number of physicians and other qualified treatment providers in the US, ending the year at approximately 61,500 HCPs – a 27% increase

Developing ‹‹ Continued progress on Health Economics and Outcomes Research (HEOR) and Lifecycle Evidence Generation & Optimization (LEGO) studies supporting our innovative SUBLOCADE; findings expected to be shared in key publications and conferences pipeline throughout FY 2019 ‹‹ Received approval of PERSERIS from the US FDA for treatment of adults with schizophrenia in the US; treatment made available late November 2018 ‹‹ Realized a $37 million gain in FY 2018 from the exclusive out-licensing of patents related to nasal naloxone ‹‹ Identified and licensed early stage pre-clinical pipeline assets that have the potential to address the unmet needs of patients across SUD

Expanding ‹‹ Achieved SUBLOCADE market approval in Canada global ‹‹ Successful SUBLOCADE filings in Australia, Israel, New Zealand, and Europe treatment ‹‹ Received approval for SUBOXONE® Sublingual tablets by the Chinese National Medical Products Administration (NMPA) for the treatment of OUD and announced an agreement to divest the rights to SUBOXONE® Tablets in China ‹‹ Maintained SUBOXONE® Tablet’s leading share of BMAT market in Europe, Indivior’s largest market outside the US

Developing ‹‹ Broader mergers and acquisition activity, other than early stage licensing, and fortifying is currently on hold the business ‹‹ Voluntarily prepaid $235 million bringing the term loan principal to $243 million ‹‹ Exited 2018 with a cash balance of $924 million; in order to maintain a strong cash balance to fund the commercial success of SUBLOCADE and PERSERIS while remaining within our debt covenants ‹‹ Undertook initiatives to reduce operating expenses, including headcount reductions, research and development (R&D) reprioritization and other committed savings ‹‹ Prepared to launch an authorized generic version of SUBOXONE® Film in the US as part of contingency planning

14 www.indivior.com Strategic report These preparations will assist Asserting Indivior’s Conclusion Indivior, even with market entry of intellectual property One of the great characteristics of generic film products, to fund the Indivior continues to assert its Indivior is that we always make the best commercial success of SUBLOCADE intellectual property rights protecting of circumstances, however challenging, and PERSERIS and remain within our SUBOXONE® Film. We continue to including those precipitated by events debt covenants. await the outcome of the appeal of beyond our control. Our commitment the non-infringement judgments to making progress toward our Vision, Streamlining the organization related to US Patent Nos. 8,603,514 together with the decisive actions we We have streamlined Indivior’s and 8,017,150, which will be heard in have taken, will help ensure we remain organization in response to H1 2019, as well as ongoing litigation a strong and durable company. anticipated near-term revenue against DRL, Alvogen, and Teva in the pressures that are expected to District of New Jersey, and against ‹‹ We have put in place the arise with the launch of generic Actavis in the District of Delaware, foundational elements for alternatives to SUBOXONE® Film asserting the more recent Orange profitable growth. The most in the US. We were very thoughtful Book-listed patents, including US important driver is SUBLOCADE, in the choices we made to ensure Patent No. 9,931,305. Please refer to but with the launch of PERSERIS that we maintained the capabilities page 26 for further information on for the treatment of schizophrenia necessary to support the commercial legal proceedings. we are gaining diversification success of SUBLOCADE and PERSERIS. and additional potential Partially with savings achieved from Given our year-end cash position of revenue growth. a substantially reduced cost base, we $924 million and the savings achieved ‹‹ We have streamlined the were able to make PERSERIS available as a result of our organizational organization to respond to in the US and begin to advance realignment, Indivior is positioned pressures we face with generic toward our goal of diversifying to withstand the material and rapid film competition in the US market. Indivior’s revenue base. market share loss that our SUBOXONE® The result is a significantly reduced Film is likely to experience now that cost base that we can leverage The streamlining actions we generic film manufacturers have as expected net revenue growth undertook impacted Indivior’s global entered the market. We will also seek from SUBLOCADE and PERSERIS workforce. While there is no good way redress and damages from any “at- materializes. In February 2019, we to implement changes such as these, risk” launch, following success in any launched an authorized generic we were able to move through the outstanding cases. version of SUBOXONE® Film in process as sensitively and efficiently the US to capture share of the as could be expected. I am extremely Our patient-focused culture generic segment. proud of the professionalism Delivering on patient needs and dignity demonstrated by our continues to inspire us at Indivior. ‹‹ Our US market remains strong, colleagues who were impacted by We are encouraged that around with good growth expected, and these actions and departed from the world OUD is being increasingly we are maintaining our strong the business. While it is easy to live recognized as a treatable medical patient advocacy to expand OUD our Guiding Principles during the disease, and not a moral failing. Our treatment access globally. good times, it is a true test to remain collective passion to help patients ‹‹ Patient needs continue to inspire committed to these principles when suffering from stigmatized and us at Indivior. This remains the times are difficult. socially marginalized diseases will core of everything we do, along be a key strength as we work to bring with ensuring we drive Indivior’s Strengthening our PERSERIS to adult patients. long-term success ethically commitment to compliance and responsibly. In 2018, we sustained our long-term In 2018, we were able to support a commitment to compliance. We series of regulatory and legislative Of course, none of our progress or the were pleased to welcome Cindy developments in the US intended treatment we offer patients would be Cetani to the newly created Executive to improve treatment access for possible without the hard work of our Committee leadership position patients and allow HCPs to care for employees. The passion and dedication of Chief Integrity and Compliance more patients when they decide to they demonstrate each day is truly Officer. Cindy brings more than 30 seek help. We expect to see ongoing inspirational. I would like to take this years of experience in driving a expansion in the OUD treatment opportunity to thank all my colleagues culture of learning and integrity, and market as awareness, attention, and for their unwavering commitment to compliance program vision. Cindy addiction disease normalization our Vision and to our patients. joins us from Novartis, where she grows, and more patients are able to held roles of increasing responsibility access treatment. Yours sincerely, over the past 15 years and was most recently Head of Compliance Shaun Thaxter Operations, Group Integrity Chief Executive Officer and Compliance. Indivior Annual Report 2018 15 Research and development

“We believe that integrated clinical development programs actively engage patients and their communities, and will progressively break down barriers and misconceptions about substance use disorders and their treatment.”

One of our core guiding principles, The FDA approval of SUBLOCADE™ in focus on patient needs to drive November 2017 and the approval of decisions, incentivizes our Research SUBLOCADE in Canada in November and Development (R&D). Our aim is to 2018 were the most recent steps advance treatment innovation in the in a long commitment to better face of the growing global addiction understand how to address the needs crisis. We do this by focusing on of patients suffering from OUD. Our continuity of care, monitoring patient pivotal Phase 3 data demonstrating progress in the short-, medium- and the clinical efficacy, safety and long-term, and understanding better tolerability of SUBLOCADE were the underlying causes of relapse. recently published in The Lancet.5 In 2018 Indivior also initiated Christian Heidbreder Despite availability of medications the planning and execution of Chief Scientific Officer to treat OUD, data derived from the post-marketing and lifecycle 2012-2013 National Epidemiologic management strategies along Survey on Alcohol and Related five main pillars: Conditions – III (NESARC-III) showed only 30% of those with lifetime 1. Post-marketing requirement non-medical prescription OUD have (PMR) studies: These studies aim ever received treatment.1 For those to understand better the patient receiving treatment, comorbidities populations that may benefit (e.g. alcohol use disorder, non-opioid from a higher maintenance dosing drug use disorder, schizophrenia, regimen of SUBLOCADE and to and/or bipolar disorder and explore how SUBLOCADE can be chronic pain) and high rates of safely initiated without a period of non-adherence have been associated sublingual buprenorphine titration. with increased odds of relapse and higher total healthcare costs.2, 3, 4 2. Post-marketing commitment (PMC) studies: These analyses compare the safety and efficacy of SUBLOCADE given monthly vs. SUBLOCADE given at a longer inter-dose interval. They also aim to evaluate the transition of patients with long-term stability on a transmucosal buprenorphine dose to a monthly dose of SUBLOCADE.

1. Saha TD et al. Nonmedical Prescription Opioid Use and DSM-5 Nonmedical Prescription Opioid Use Disorder in the United States. J Clin Psychiatry 2016; 77:772-80. 28.92 (2.07). 2. Tkacz J et al. Compliance with buprenorphine medication-assisted treatment and relapse to opioid use. Am J Addict 2012; 21:55-62. 3. Ronquest NA et al. Relationship between buprenorphine adherence and relapse, health care utilization and costs in privately and publicly insured patients with opioid use disorder. Subst. Abuse Rehabil. 2018; 9:1-20. 4. Compliance with Buprenorphine Medicated-Assisted Treatment and Relapse to Opioid Use (v1.0) – Anchor 1 (p.6). 5. Haight BR, Learned SM, Laffont CM, Fudala PJ, Zhao Y, Garofalo AS, Greenwald MK, Nadipelli VR, Ling W, Heidbreder C (2019) Efficacy and safety of a monthly buprenorphine depot injection for opioid use disorder: a multicentre, randomised, double-blind, placebo-controlled trial. The Lancet, 393(10173):778-790. https://doi.org/10.1016/S0140-6736(18)32259-1. 16 www.indivior.com Strategic report 3. Lifecycle evidence generation Addressing co-occurring and optimization (LEGO) studies: disorders of addiction “Focusing on These studies aim to: Epidemiological and clinical studies the importance ‹‹ demonstrate that craving have shown that substance use can potentially be used as disorders are highly comorbid of continuity of an endpoint to predict illicit with psychiatric disorders. care, monitoring opioid use; These disorders include anxiety, depression, bipolar disorder, patient progress ‹‹ study the effects of initiating attention-deficit hyperactivity SUBLOCADE treatment in disorder, borderline personality in the short-, emergency rooms to prevent disorder, antisocial personality medium- and repeated opioid overdoses and disorder, and schizophrenia.7 A recent potentially change standards of systematic review and meta-analysis long-term, providing care; and revealed that the prevalence of any ‹‹ investigate if high plasma substance use disorder in treatment- evidence-based concentrations of buprenorphine seeking patients diagnosed with training to similar to those delivered by schizophrenia or first-episode SUBLOCADE may reduce the psychosis was 42%.8 health-care effects of respiratory depression produced by fentanyl, which has In July 2018, Indivior received providers, and been increasingly and directly FDA approval for PERSERIS™, the understanding related to drug overdose deaths first once-monthly subcutaneous in the US. risperidone-containing long-acting better the injectable for the treatment of 4. Patient-reported outcomes schizophrenia in adults in the US. underlying causes research and health economics: Following FDA approval, we initiated of relapse are Indivior has invested a substantial the planning and execution of post- amount of time and effort into the marketing and lifecycle management the hallmarks of integration of patient-reported strategies in support of PERSERIS. outcome measures as part of our mission and its clinical development plans. A holistic approach to vision in addiction For example, we have launched addiction medicine Remission from Chronic Opioid Beyond the development medicine.” Use: Studying Environmental and of treatments for OUD and Socioeconomic Factors on Recovery schizophrenia, Indivior is (also known as the RECOVER Study), pioneering therapies to address which is collecting up to 24-month the unmet needs of patients longitudinal data encompassing struggling with SUD. To that end, demographics, drug use, drug we are investigating innovative treatment, family relationships, approaches that selectively target quality of life, mental and physical the γ-aminobutyric acid type B 9 health, healthcare utilization, crime, (GABAB) receptor , the orexin-1 housing, employment, and urine receptor10, and the dopamine D3 drug screening.6 receptor11 in partnership with Arbor Pharmaceuticals, Addex Therapeutics 5. Regulatory filings outside the US: (Addex), C4X Discovery, and Aptuit. Filings were made in Australia Plans are being implemented to (May 2018), Israel (July 2018), New accelerate our backup program (new Zealand (September 2018), and lead identification and optimization) Europe (November 2018). in partnership with Addex.

6. Ling W et al. Remission from Chronic Opioid Use – Studying Environmental and Socio-economic Factors on Recovery (RECOVER): study design and participant characteristics. Contemporary Clinical Trials, 2019; 76:93-103. Remission from Chronic Opioid Use: Studying Environmental and Socioeconomic Factors on Recovery (v1.0) – Table 3: Schedule of Assessments (p.23). 7. Sansone, Randy, Substance Use Disorders and Borderline Personality – Common Bedfellows, 2011 (v1.0) – Page 1, Abstract, Paragraph 1 (p.1) Santucci K, Psychiatric Disease and Drug Abuse, COP 2012 (v1.0) – Page 2, Background, Paragraph 2 (p.2) Santucci K, Psychiatric Disease and Drug Abuse, COP 2012 (v1.0) – Page 2, Background, Paragraph 1 (p.2). 8. Hunt GE et al. Prevalence of comorbid substance use in schizophrenia spectrum disorders in community and clinical settings, 1990-2017: Systematic review and meta-analysis. Drug Alcohol Depend. 2018; 191:234-258. 9. Padgett CL et al. Methamphetamine-evoked depression of GABA(B) receptor signaling in GABA neurons of the VTA. Neuron 2012; 73:978–989. 10. Perrey DA & Zhang Y. Therapeutics development for addiction: Orexin-1 receptor antagonists. Brain Res. Epub Aug 24, 2018. 11. Heidbreder C. Rationale in support of the use of selective dopamine D₃ receptor antagonists for the pharmacotherapeutic management of substance use disorders. Naunyn Schmiedebergs Arch Pharmacol. 2013; 386(2):167-176. Indivior Annual Report 2018 17 Managing our business responsibly

The Group’s approach to managing the business responsibly drives the delivery of its mission, vision, strategy, risk management, governance, management systems and performance monitoring.

We seek to continuously improve 1. Environment, climate change by the substance use disorder of our standard operating procedures, and health and safety family members, with the aim of management systems and The Group’s main impacts are linked breaking the intergenerational cycle performance indicators. to our fine chemical plant in Hull. of addiction. Our facilities have an excellent track This section provides an overview of record and recorded no material Our grant supports the strengthening, Indivior’s framework which addresses environmental (e.g. spills, emissions growth, and expansion of addiction six key areas of its business: to air) or health and safety incidents prevention resources, sites during 2018. and services. 1. Environment, climate change and health and safety Emissions Indivior also supports Camp Mariposa 2. Communities through its employee volunteering Type Tonnes of CO2e programs including collecting and 3. Patient safety and product quality Scope 1 473 donating hygiene supplies and duffle 4. Business conduct Scope 2 location-based 2301 bags, contributing direct volunteer 5. People Scope 2 market-based 2599 hours, and collecting funds for 6. Advocacy and stakeholder Scope 3 157 camp supplies for Camp Mariposa’s engagement 12 locations. Total emissions Reporting, investor dialogue location-based 2932 3. Patient safety and and ratings Total emissions product quality market-based 3230 The Group is in regular dialogue Patient safety and product quality are with its investors about its approach Per tonne of production embedded in the Group’s culture and to responsible business. We also location-based 583 patient-focused business model, and participate in several related Per tonne of production are fundamental to the integrity of research exercises conducted by market-based 642 our global brands and businesses. organizations such as CDP, FTSE Per full time employee 1 Through a robust pharmacovigilance Russell, VigeoEIRIS and MSCI. location-based 3.2 process, we monitor the safety of the The Group has been a member of Per full time employee Group’s marketed and investigational the FTSE4Good index series since it market-based 3.5 products in a comprehensive and became independent and recently thorough manner. This includes a Risk received a comparably high ESG 2. Communities Evaluation and Mitigation Strategies rating in comparison to several of its Camp Mariposa (REMS) program to mitigate the risks 2 of accidental overdose, misuse and significantly larger peers from MSCI. In September 2016, Indivior entered abuse for SUBOXONE® Film and to into an agreement with the Eluna mitigate the risk of serious harm Network (formerly the Moyer or death that could result from Foundation) to provide a three-year intravenous self-administration for grant to support Camp Mariposa, SUBLOCADE™ in the US. Globally, Risk Eluna’s addiction prevention Management Plans (RMPs) are being and mentoring program. Camp put in place to minimize risks outside Mariposa serves youth impacted the US.

1. Information about FTSE4Good membership verified by email from FTSE Russell on July 6, 2018. 2. Information about MSCI ratings verified in ESG ratings report received from MSCI dated September 24, 2018. 18 www.indivior.com Strategic report The Group is committed to a Health and Human Services, and 5. People culture of innovation and quality the appropriate industry codes of The Group has a variety of defined as maintaining patient ethics, including those published employment policies that create trust, empowering our workforce by the Pharmaceutical Research a framework to ensure that it is and partnering with regulators to and Manufacturers of America an employer of choice and that drive excellence. (PhRMA); Association of the British it provides a fair, equitable and Pharmaceutical Industry; and by conducive working environment Patient Help Foundation Medicines Australia. free from discrimination and In 2018, the Indivior Patient Help harassment. The Group views its Foundation provided SUBOXONE® In 2018, the Group continued to employees as fundamental to its Film product valued at $16.7m enhance its Integrity and Compliance long-term success and strives to through its patient assistance program through the implementation provide a working environment in program in the US. Since 2010, the of the following (among other key line with this ambition. It conducts a Foundation has provided medication deliverables): variety of communications, training access to an average of 5,000 and development programs to qualified patients per year. ‹‹ undertaking a comprehensive achieve this aim and to ensure that review of key internal processes, employees conduct their activities 4. Business conduct including implementation of in line with the Group’s Guiding appropriate enhancements; The Group requires compliance Principles. These include: with laws, regulations, and industry ‹‹ conducting ‘distributor country’ codes of conduct at all times via compliance training and supported ‹‹ culture champions program; established policies and procedures. multiple distributor audits; ‹‹ regular performance reviews; and Its comprehensive compliance ‹‹ developing and disseminating an ‹‹ local town hall program includes a focused Integrity enterprise-wide quarterly Integrity communications events. and Compliance department, with and Compliance newsletter to our Chief Integrity and Compliance drive awareness and best practice As of December 31, 2018, Indivior Officer as a member of the Executive throughout the organization; employed 915 people worldwide Committee. The Integrity and (2017: 1,023). The distribution of Compliance department helps ‹‹ adopting gamification as an these people by function and assure that the Group’s operations approach to reinforce the field- location is shown on page 20. are conducted in line with all legal based sales team’s knowledge of and regulatory requirements, and compliance with policies; and guidance from the Office of Inspector ‹‹ appointing the Executive General for the U.S. Department of Committee to serve as the Indivior Compliance Committee.

Compliance leadership As Chief Integrity and Compliance Joining Indivior in October 2018, Cindy Officer, Cindy Cetani will continue more than 30 years of experience in to leverage the Group’s strong driving a culture of learning, integrity commitment to compliance and and compliance program vision. its culture of integrity. Reporting Cindy joined Indivior from Novartis, to the Chief Executive Officer, where she held roles of increasing Cindy will focus on compliance responsibility over the past 15 program strategy, governance and years and was most recently Head sustainability, related strategic of Compliance Operations, Group and integrated communications, Integrity & Compliance. workforce continuing education and development, and ongoing risk awareness and management to help assure compliance with relevant laws, regulations and industry codes of conduct.

Indivior Annual Report 2018 19 Managing our business responsibly continued

Territories Our gender diversity figures for the purposes of s414C(8)(c) of the Companies Number Act 2006 are as follows:

United States of America 573 At December 31, 2018 Total Women Men Australasia 27 Directors of Indivior PLC 11 4 36% 7 64% China 6 Senior managers* 59 18 30% 41 70% Europe, Middle East, Africa All employees 915 497 54% 418 46% and Canada 309 * Includes members of the Executive Committee who are not Directors of Indivior PLC and all subsidiary company directors Employment function Number understanding of the Group’s of the Group before the US House activities, strategy, products and of Representatives Energy and Commercial 429 plans and to further develop the Commerce Subcommittee on Health Compliance 9 relationship between the Group’s hearing on ‘Combating the Opioid Corporate affairs and senior management team and Crisis: Helping Communities Balance communications 7 its employees. Enforcement and Patient Safety’. Finance 76 This hearing helped establish the All the events were attended and policies ultimately included in H.R.6. Human Resources 23 led by members of the Group’s ‘‘New innovations are expanding Information Technology 41 Executive Committee, including the medication-assisted treatment Legal and governance 14 Chief Executive Officer, and were options,” the Chief Medical Officer video conferenced to enable the stated during her testimony. Medical 86 participation of staff located at “Government policies impacting Research and development 133 different sites. these treatments must adapt to Supply 97 ensure patients have access to all International Women evidence-based treatment options.”1 Culture champions in Leadership Enacted on October 24, 2018, this The Group’s culture champions are The Group’s international women in leadership program is called IWiL law includes multiple, comprehensive a network of nearly 50 employees initiatives to improve access to from around the world who act as and its mission is to help support diversity in leadership. The program treatment for patients suffering ambassadors and create opportunities from substance use disorders.2 for greater engagement and sharing is conducted within each territory of best practices. Champions are and consists of a variety of events, activities and communications The Chief Medical Officer also tasked with proposing ideas and participated in the US State implementing activities to drive a initiatives. During 2018, these activities included: Government Affairs Council Leaders positive culture, in collaboration Policy Conference on Innovations with Human Resources, managers ‹‹ networking events at Group sites; in Healthcare panel entitled and leaders. ‘Revolutionary Treatments for ‹‹ access to training videos and Society’ in 2018. At the conference, To reinforce its culture and Guiding a business skills library; she underscored the importance Principles, in 2018 the Group ‹‹ mentoring activities; and of understanding the patient implemented an on-line training journey and giving patients and ‹‹ development of volunteering program to supplement the live their healthcare providers access opportunities. classroom training. Employees are to the full range of evidence- now expected to complete both based therapies. modules to understand and quickly 6. Advocacy and stakeholder engagement begin exemplifying our values and In 2018, Indivior also supported a Guiding Principles. In 2018, Indivior continued range of non-governmental agencies engaging with stakeholders and and campaigns around the world Town hall events advocating for patients to help to help destigmatize and raise During the year, the Group held stimulate and accelerate changes awareness of the disease of addiction several town hall events across to public policy. In the US, Indivior and other mental health disorders. our global regions and functions, supported the passage of H.R.6, Indivior also supported efforts to including several global Skype the SUPPORT for Patients and develop resources for patients, broadcast meetings. These Communities Act. Indivior’s Chief families and communities. events serve as two-way dialogue Medical Officer testified on behalf opportunities to improve employee

1. https://docs.house.gov/meetings/IF/IF14/20180228/106915/HHRG-115-IF14-Wstate-SubbiahP-20180228.pdf. 2. https://www.congress.gov/bill/115th-congress/house-bill/6/all-info?r=l. 20 www.indivior.com Non-financial information statement Strategic report The Group is committed to where further relevant information, Business model transparency concerning its other than that disclosed within An explanation of the Group’s corporate responsibility impacts and this report can be accessed. In business model can be found on opportunities, the disclosure of other particular, the Group provides the pages 10 and 11 of this annual report. non-financial information where it is responsibility section of its website relevant to shareholders and other (www.indivior.com) for this purpose, Description of principal risks, key stakeholders, and to complying participates in the annual disclosure and impact of business activity with the reporting requirements of environmental and climate change contained in sections 414CA and information to CDP (www.cdp.net), A description of the principal risks 414CB of the Companies Act 2006. and regularly enters into dialogue and potential adverse impacts with investors and investor research relating to this aspect of the business The table and other information organizations (including MSCI and can be found on pages 29 to 34 of this below are provided to assist readers FTSE Russell) about this aspect of annual report. We have included a of this report to understand the its activities. table below which cross-references Group’s approach, policies, and this information in detail. performance. It also aims to highlight

Other reporting Policies and statements of approach, Risks, risk management and Non-financial performance requirements due diligence and outcomes additional information information Environment ‹‹ Environmental policy Environmental impacts p18 Greenhouse gas and climate emission information p18 change Social ‹‹ Health and safety policy Reporting and investor dialogue p18 Investor ESG ratings information p18 matters ‹‹ Flexible working policy Health and safety impacts p18 Health and safety data p18 ‹‹ Data protection policy Integration of advocacy, patient needs and stakeholder engagement Indivior Patient Health ‹‹ Healthcare professionals into the business model p11 Foundation p19 interaction policy Patient focused culture p15 Employee data p19-20 ‹‹ Healthcare business ethics policy Community investment in Camp Mariposa (Eluna Network) p18 ‹‹ Share dealing policy and code Patient safety and product quality p18 ‹‹ Field medical personnel policy Human Resources p19-20 ‹‹ Records and information Business operations risk management policy information p31 ‹‹ Advocacy and public policy People information p80 Human ‹‹ Diversity and inclusion policy International Women in Leadership Employee gender program p20 diversity figures p20 rights ‹‹ Modern Slavery Statement Advocacy activities p20 Business ‹‹ Anti-bribery policy Business conduct Political donations p81 and compliance p19 conduct ‹‹ Whistleblowing policy Legal proceedings p26-28 Regulatory and safety risk information p31 Supply chain risk information p33 Legal and intellectual property risk information p33 Compliance risk information p34 Whistleblowing system p55

A summary of the Group’s policies in these areas are The Group also has a Code of Conduct which addresses available within the responsibility sections of the Group’s many of the stated policy areas and is available for website (www.indivior.com). There is also a link to the download from the corporate governance section of the Group’s UK Modern Slavery Act 2015 statement at the foot Group’s website. of the home page. Indivior Annual Report 2018 21 Financial review

% ∆ % ∆ ‹‹ The Group continued in advanced Period to December 31st FY 2018 FY 2017 Actual Constant (as reported) $m $m FX FX discussions with the DOJ about a possible resolution to its Net revenue 1,005 1,093 -8 -9 investigations. See Note 20 and Operating profit 292 193 +51 +48 Note 22 for further details on Net income 275 58 * * provisions and legal proceedings. EPS (cents per share) 38 8 * * * Not meaningful Operating highlights ‹‹ Net revenue of $1,005m, a decrease of 8% versus prior year (-9% at et evenue 1 Adusted et ncome constant exchange). US market , growth was more than offset by US SUBOXONE® Film share loss, , targeted rebating and mix impact from growth in government channels (Medicaid). , ‹‹ Operating profit was $292m (2017: US ollars m US ollars m $193m). On an adjusted basis, 1. excluding exceptional items operating profit was $332m, a (further details on page 25) decrease of 18% (Adj. 2017: $403m). Lower net revenue and higher as alance et as SUBLOCADE and PERSERIS launch investments were partially offset by impacts from operating expense reductions. ‹‹ Net income was $275m (2017: $58m). On an adjusted basis, 2018 net income was $272m +1% (Adj. 2017: US ollars m US ollars m $270m). Lower adjusted operating profit was more than offset by Key operating developments ‹‹ Indivior has been preparing for this lower net financing costs and ‹‹ US SUBOXONE® Film market share eventuality and has implemented effective tax rate. averaged and exited 2018 at 53% certain key elements of its ‹‹ Cash balance at year-end of (2017 avg: 57%; 2017 exit: 56%). contingency plan in light of these $924m (+$61m). Net cash of $681m expected generic launches. ‹‹ Following February 19, 2019 orders (+$305m). Voluntary prepayments from the U.S. District Court for the ‹‹ SUBLOCADE™ net revenues were of $235m on the term loan were District of New Jersey, Dr. Reddy’s $12m. made in the period; $243m remains outstanding. Laboratories (DRL) and Alvogen ‹‹ PERSERIS™ was made available in Pine Brook, Inc. (Alvogen) are no the US in late November 2018. It ‹‹ Indivior implemented key elements longer prevented from selling, launched commercially during the of its contingency plan to help offering to sell, or importing week of February 25, 2019, with a offset the substantial and material their generic buprenorphine/ field force of 50 representatives. near-term impact to net revenue naloxone sublingual film products. that is expected to result from ‹‹ Termination of Arbaclofen Placarbil On February 20, 2019, Indivior the “at-risk” launch of generic and ADDEX lead compound due announced that it had launched versions of SUBOXONE® Film. to challenges in their Phase 1 and an authorized generic version The overriding objectives of the pre-clinical studies, respectively, of SUBOXONE® (buprenorphine contingency plan are to provide reducing their probability of and naloxone) Sublingual Film for the commercial success of success below hurdle rates for (CIII) in the US. It is possible that SUBLOCADE and PERSERIS, while further investment. This decision other generic manufacturers ensuring a minimum cash balance does not change our reason to may also launch generic of $250m to remain in compliance believe in the molecular target versions of SUBOXONE® Film with the Group’s debt covenants. (GABA receptor) and plans are following Indivior’s launch of this B being put in place to accelerate authorized generic. our new lead identification and optimization in partnership with ADDEX.

22 www.indivior.com Strategic report Key actions included: initiatives are supporting greater ROW net revenue decreased 1% ‹‹ reducing outstanding principal on treatment capacity for those in at actual exchange rates (3% at the Term Loan by an additional most need and are likely to be constant exchange rates) to $215m $235m in the year to $243m; manifested in continued growth (2017: $216m). Continued growth in in lower-priced government Australasia and Canada were more ‹‹ cash conservation measures channels, such as Medicaid. than offset by impacts in certain resulting in 2018 ending cash European markets from ongoing balance of $924m; As the leader and innovator in the austerity measures. ‹‹ initiatives to reduce structural OUD category, Indivior has launched operating expenses, including its new monthly buprenorphine Gross margin was 87% (2017: 90%). headcount reductions, R&D depot SUBLOCADE. The decrease versus the prior year reprioritization and other primarily reflects lower net revenue committed savings; and Financial performance driven by higher rebate rates and unfavorable mix and the impact of ‹‹ preparing the launch of Total group net revenue in 2018 contingency planning for the “at-risk” an authorized generic of decreased 8% to $1,005m (2017: launch of a generic buprenorphine/ SUBOXONE® Film upon $1,093m) at actual exchange naloxone sublingual film product. confirmation of the launch of rates (-9% at constant exchange generic buprenorphine/naloxone rates). Volume improvement from Selling, general and administrative sublingual film products. The underlying market expansion in the expenses (SG&A) expenses as launch is expected to capture US and net revenue contribution from reported were $494m (2017: $707m). share of the generic segment SUBLOCADE (2018: $12m) were more These included net exceptional and generate an amount of net than offset by the combined impacts costs of $16m. The exceptional revenue in the range of tens of unfavorable mix from the increase costs comprised $13m related to of US$ millions. in government channels (Medicaid) in the US, targeted rebating to maintain restructuring and $40m related primarily to potential redress for Operating review formulary access and a decline in SUBOXONE® Film market share. ongoing intellectual property related US marketing update litigation, partially offset by a $37m In 2018, market volume for US net revenue decreased 10% to gain from the out-licensing of the buprenorphine products continued $790m (2017: $877m), volume benefits intranasal naloxone opioid overdose to grow at low-teen percentage rates, from underlying market growth were patents. The prior year included in line with Indivior’s expectations. more than offset by the combined exceptional items of $210m for an This volume growth was driven impacts of unfavorable mix from the increased legal provision related to by benefits from legislation and continued disproportionate growth the DOJ investigative and antitrust regulatory changes that have in government channels (Medicaid), litigation matters and the legal increased federal and state funding targeted rebating to maintain settlement of the Amneal antitrust to expand OUD treatment, as well as formulary access and the decline in matter, partially offset by the release from broader general awareness of SUBOXONE® Film market share as a of a legacy litigation reserve. the opioid epidemic. result of competitive pricing pressure from generic buprenorphine/ On an adjusted basis, SG&A expenses Indivior supports the swift actions the naloxone tablet providers. decreased 4% to $478m (Adj. 2017: US government has taken to combat Improved SUBOXONE® Film pricing $497m). The decrease in the year the opioid epidemic, including the was more than offset by tactical largely reflects benefits from cost recent enactment of the SUPPORT rebating activity in connection with savings actions partially offset by the for Patients and Communities Act of formulary access. planned investments for launching 2018, which expands access to BMAT. SUBLOCADE and PERSERIS. These regulatory and legislative

Indivior Annual Report 2018 23 Financial review continued

Reported 2018 R&D expenses were Tax expense was $3m, or a rate Balance Sheet & Cash flow $91m (2017: $89m). The increase was of 1% (2017 tax charge: $79m; 58% Cash and cash equivalents at the end primarily driven by the impairment rate). Tax expenses in the year of the year were $924m, an increase of the Arbaclofen Placarbil and ADDEX included one-time items related to of $61m versus 2017 of $863m. lead compounds in development, development credits for SUBLOCADE Borrowings, net of issuance costs, which have been classified as of $34m, including $1m interest. were $241m at the end of the year exceptional items. Excluding 2017 tax expenses assumed non- (2017: $482m), primarily reflecting the exceptionals, R&D expenses deductibility for tax purposes of impact of the voluntary prepayments decreased by 25% to $67m (Adj. the exceptional legal provisions of $235m of outstanding term loan 2017: $89m). The decrease primarily and included $9m related to the principal in the year. As a result, net reflects lower clinical activity and release of provisions for unresolved cash stood at $681m at year end the reprioritization of R&D activities tax matters, partially offset by the (2017: $376), a $305m improvement primarily to support SUBLOCADE impact of the re-measurement of in the year. Health Economics and Outcomes certain deferred tax assets. Excluding Research (HEOR) and post-marketing exceptional items in 2018 pre-tax Net working capital (inventory study commitments. income and taxation of $46m (2017: plus trade and other receivables, $91m), the adjusted rate was 15% less trade and other payables) Operating profit was $292m (2017: (Adj. 2017: 25%). The decrease in the was negative $356m at year end, $193m). Exceptional costs of $40m adjusted rate was due to changes an increase of $21m from negative and $210m were included in the 2018 in the geographic mix of earnings, $335m since the end of 2017, primarily and 2017 results, respectively. with increased earnings in the UK driven by an increase in sales under the reduced rate for Patent returns and rebates in the US within On an adjusted basis, operating profit Box, along with a reduction in the payables, partially offset by increased was $332m (33% margin), an 18% US corporate income tax rate from inventories due in part to the launch decrease versus $403m (37% margin) 35% to 21%. of SUBLOCADE. in 2017. The decrease reflects lower net revenue, launch investments for Net income was $275m (2017: Cash generated from operations SUBLOCADE and PERSERIS, partly $58m) as reported. Excluding in 2018 was $327m (2017: $369m), a offset by a reduction in operating exceptional costs, 2018 net income decrease of $42m. The reduction in expenses (SG&A and R&D) from was broadly unchanged at $272m cash generated versus the prior year cost savings initiatives. (Adj. 2017: $270m). The current and was primarily due to higher operating prior year included a net amount profit more than offset by a lower EBITDA (operating profit plus of $3m and $212m of exceptional increase in legal provisions versus depreciation and amortization) was items, respectively. the prior year, net of other working $308m (2017: $206m). Excluding $40m capital changes. and $210m of exceptional items in Basic EPS was 38 cents (2017: 8 cents) the current and prior year results, and 37 cents on a diluted basis Net cash inflow from operating respectively, 2018 adjusted EBITDA (2017: 8 cents). On an adjusted basis, activities was $303m (2017: $295m), was $348m (Adj. 2017: $416m). excluding the effect of exceptional an increase of $8m reflecting lower items, 2018 basic EPS was 37 cents cash from operations more than Net finance expense was $14m (2017: 37 cents) and diluted EPS was offset by lower net interest payments (2017: $56m). The reduction in each 36 cents (2017: 36 cents). of $8m vs. $36m in the prior year period reflects lower interest and and reduced tax payments of $16m amortization of financing costs vs. $33m in 2017. associated with the replacement of the Group’s term loan borrowing facility in December 2017 and the voluntary repayments of $235m of the principal balance in the year, and higher interest income.

24 www.indivior.com Strategic report Cash outflow from investing activities Adjusted Results was $4m (2017: $43m), reflecting The Board of Directors, and Executive upfront payments for licensing Committee use adjusted results and arrangements with ADDEX and C4X, measures to give greater insight to capitalized development costs, and the financial results of the Group and ongoing investments in facilities, the way it is managed. They believe mostly offset by proceeds received the use of the adjusted measures from the disposal of the nasal such as adjusted operating profit, naloxone intangible asset. adjusted net income and adjusted earnings per share provide additional Cash outflow from financing activities useful information on underlying increased to $237m vs. $84m in 2017, trends to shareholders. The tables primarily reflecting the impact of the below show the list of adjustments voluntary prepayments of $235m of between the reported and adjusted the outstanding Term Loan balance in operating profit, net income, and the year. earnings per share for both 2018 and 2017. Further details of each adjustment is available in Note 5 of the notes to the Group’s financial statements on page 105.

Reconciliation of operating profit to adjusted operating profit

2018 2017 $m $m Operating profit 292 193 Exceptional selling, general and administrative expenses 16 210 Exceptional research and development expenses 24 – Adjusted operating profit 332 403

Reconciliation of net income to adjusted net income

2018 2017 $m $m Net Income 275 58 Exceptional selling, general and administrative expenses 16 210 Exceptional research and development expenses 24 – Exceptional financing costs – 14 Exceptional tax items (43) (12) Adjusted net income 272 270

Reconciliation of earnings per share to adjusted earnings per share

2018 2017 cents cents Earnings per share 38 8 Exceptional selling, general and administrative expenses 2 29 Exceptional research and development expenses 3 – Exceptional financing costs – 2 Exceptional tax items (6) (2) Adjusted earnings per share 37 37 Weighted average number of shares (thousands) 727,148 721,126

Indivior Annual Report 2018 25 Legal proceedings

Litigation/Investigative matters interactions with a non-profit third- and Amneal has dismissed its claims The Group carries a provision for party organization. On November against the Group with prejudice. The investigative and antitrust litigation 16, 2016, Indivior was served with a other antitrust cases are pending in matters of $438m. Substantially subpoena for records from the State federal court in the Eastern District of all of the provision relates to the of California Department of Insurance Pennsylvania. Pre-trial proceedings U.S. Department of Justice (DOJ) under its civil California insurance were coordinated. The fact discovery investigation. The Group is in code authority. The subpoena period has closed; expert discovery advanced discussions with the DOJ requests documents related to and briefing on class certification about a possible resolution to its SUBOXONE® Film, SUBOXONE® issues is ongoing. investigations, although it cannot Tablet, and SUBUTEX Tablet. predict with any certainty whether, The State has served additional Estate of John Bradley Allen when, or at what cost it will reach an deposition subpoenas on Indivior in On December 27, 2016, the Estate ultimate resolution. 2017 and served a subpoena in 2018 of John Bradley Allen filed a civil requesting documents relating to complaint against Indivior, among U.S. Department of the bioavailability/bioequivalency other parties, in the Northern District Justice Investigation of SUBOXONE® Film, manufacturing of New York seeking relief under records for the product and its A US federal criminal grand jury Connecticut’s products liability components, and the potential to investigation of Indivior initiated in and unfair trade practices statutes develop dependency on SUBOXONE® December 2013 is continuing, and for damages allegedly caused Film. The Group is fully cooperating includes marketing and promotion by SUBOXONE®. This lawsuit was in these civil investigations. practices, pediatric safety claims, and dismissed without prejudice on over prescribing of medication by August 9, 2018. FTC investigation and certain physicians. The US Attorney’s Office for the Western District of Antitrust Litigation Opioid Class Action Litigation Virginia has served a number of The US Federal Trade Commission’s In February 2019, Indivior PLC, subpoenas relating to SUBOXONE® investigation remains pending. along with other manufacturers of Film, SUBOXONE® Tablet, SUBUTEX® Litigation regarding privilege claims opioid products, was named in the Tablet, buprenorphine and our has now been resolved. Indivior has national civil opioid class action competitors, among other issues. produced certain documents that it litigation brought by state and local The Group has responded to the had previously withheld as privileged; governments, alleging misleading subpoenas and has otherwise other such documents have not marketing messages. This complaint cooperated fully with the Department been produced. was filed by several Kentucky public and prosecutors and will continue health agencies in the class action to do so. The Group is in advanced Civil antitrust claims have been consolidated in the federal district discussions with the Department of filed by (a) a putative class of court for the Northern District of Ohio Justice about a possible resolution direct purchasers, (b) a putative on February 6, 2019. On February to its investigation. However, it is class of end payor purchasers, 21, 2019, Indivior was voluntarily not possible to predict with any (c) Amneal Pharmaceuticals LLC dismissed with prejudice from certainty the potential impact of (Amneal), a manufacturer of generic the lawsuit. this investigation on the Group or buprenorphine/naloxone tablets, and to quantify the ultimate cost of (d) a group of states, now numbering a resolution. 41, and the District of Columbia. Each set of plaintiffs filed generally State Subpoenas similar claims alleging, among other things, that Indivior violated On October 12, 2016, Indivior was US federal and/or state antitrust served with a subpoena for records and consumer protection laws in from the State of Connecticut attempting to delay generic entry of Office of the Attorney General alternatives to SUBOXONE® tablets. under its Connecticut civil false Plaintiffs further allege that Indivior claims act authority. The subpoena unlawfully acted to lower the market requests documents related to the share of these products. The Group Group’s marketing and promotion has settled the dispute with Amneal, of SUBOXONE® products and its

26 www.indivior.com Strategic report Intellectual property TRO, preventing DRL from continuing its forthcoming petition for certiorari related matters to sell or offer to sell its generic seeking to overturn the CAFC’s PI ANDA Litigation product. Indivior was required to vacatur. On February 19, 2019, the post an $18 million surety bond to Supreme Court of the United States Actavis is currently enjoined from cover DRL’s damages in the event denied Indivior’s motion to stay launching a generic buprenorphine/ of an Indivior loss of its patent case issuance of the CAFC’s mandate naloxone film product until April against DRL. On June 28, 2018, the vacating the PI granted against DRL. 2024 based on a June 3, 2016 ruling court heard oral argument in support The CAFC subsequently issued the by the United States District Court of Indivior’s motion for a PI against mandate vacating the PI granted for the District of Delaware finding DRL and, at the conclusion of this against DRL. The U.S. District Court the asserted claims of the ’514 hearing, extended the TRO for an for the District of New Jersey then Patent valid and infringed. Actavis additional 14 days in order to rule on confirmed the PI against DRL had has appealed this ruling. On October the PI motion and required Indivior to been vacated. 24, 2017, Actavis received tentative post another $18 million surety bond. approval from FDA for at least its On July 13, 2018, the District Court DRL is therefore are no longer 8mg/2mg generic product under its issued its ruling granting Indivior a prevented from selling, offering Abbreviated New Drug Application PI against DRL. On July 18, 2018, the to sell, or importing their generic (ANDA) No. 204383 and on November District Court ordered Indivior to buprenorphine/naloxone sublingual 15, 2017, it received tentative approval post a surety bond for $72 million film products. DRL has re-launched for its 12mg/3mg generic product (that total figure being inclusive of its generic product, and any sales under ANDA No. 207087. Litigation the $36 million surety bond already in the U.S. are on an “at-risk” basis, against Actavis is also pending in posted) in connection with the PI. subject to the outcome of the CAFC the District of Delaware on Indivior’s DRL appealed to the United States appeal of the judgments related to more recently listed Orange Book Court of Appeals for the Federal U.S. Patent No. 8,603,514, (and U.S. Patents: US Patent Nos. 9,687,454 Circuit (CAFC) on the same day. On 8,017,150 in the case of DRL), as well (the ‘454 Patent), and 9,931,305 November 20, 2018, the CAFC issued as ongoing litigation in the District of (the ‘305 Patent). a decision vacating the PI against New Jersey asserting Orange Book- DRL. Indivior filed a timely petition listed U.S. Patent Nos. 9,931,305 and On August 31, 2017, the United for rehearing and rehearing en banc 9,687,454. States District Court for the District on December 20, 2018. The CAFC of Delaware found that asserted denied the petition on February 4, On February 12, 2019, the CAFC claims of US Patent No. 8,017,150 2019. On February 5, 2019, Indivior granted Indivior’s request to (the ’150 Patent), US Patent No. filed an emergency motion to stay expedite the appeal of the non- 8,900,497 (the ’497 Patent), and the the issuance of mandate pending infringement judgment in the ‘514 ’514 Patent are valid but not infringed the resolution of the appeal of the patent case to the extent it will be by DRL. Indivior has appealed this District of Delaware decision with placed on the next available oral ruling. Litigation against DRL is respect to the ‘514 patent, and argument calendar. currently pending in the District pending Indivior’s forthcoming of New Jersey on the ‘454 and ‘305 petition for a writ of certiorari to the On November 13, 2018, DRL filed patents. DRL received final FDA Supreme Court of the United States two separate petitions for inter approval for all four strengths in the PI matter. The CAFC denied partes review of the ‘454 Patent with of its generic buprenorphine/ that motion on February 11, 2019, and the USPTO. Indivior’s preliminary naloxone film product on June 14, Indivior filed a second emergency responses are due March 6, 2019 and 2018, and immediately launched its motion to stay the mandate pending March 7, 2019. generic buprenorphine/naloxone resolution of its forthcoming film product “at-risk.” On June 15, application for an administrative stay Teva filed a 505(b)(2) New Drug 2018, Indivior filed a motion with to the Supreme Court of the United Application (NDA) for a 16mg/4mg the United States District Court for States. The CAFC denied that motion strength of buprenorphine/naloxone the District of New Jersey seeking a and ordered issuance of the mandate film (CASSIPA™). Indivior, Aquestive Temporary Restraining Order (TRO) on February 19, 2019. Indivior filed an Pharmaceuticals (formerly known as and Preliminary Injunction (PI) application to the Supreme Court of MonoSol Rx) and Teva agreed that pending the outcome of a trial on the United States requesting a stay infringement by Teva’s 16mg/4mg the merits of the ’305 Patent. The of the mandate pending resolution of dosage strength would be governed court granted Indivior a two-week by the infringement ruling as to

Indivior Annual Report 2018 27 Legal proceedings continued

Dr. Reddy’s 8mg/2mg dosage strength Alvogen is enjoined from the use, Rhodes Pharmaceuticals that was the subject of the trial in offer to sell, or sale within the United November 2016. Accordingly, the non- Sates, or importation into the United On December 23, 2016, Rhodes infringement ruling in the Dr. Reddy’s States, of its generic buprenorphine Pharmaceuticals filed a complaint case means that the Teva 16mg/4mg and naloxone sublingual film product against Indivior in the United States dosage strength has been found not unless and until the CAFC issues a District Court for the District of to infringe. Indivior has appealed this mandate vacating the PI against DRL. Delaware, alleging that Indivior’s November 2016 ruling. Litigation is Alvogen has launched its generic sale of SUBOXONE® Film in the US ongoing against Teva in the District product, and any sales in the US are infringes one or more claims of US of New Jersey on the ‘454 patent on an “at-risk” basis, subject to the Patent No. 9,370,512 (the ‘512 Patent). and ‘305 patent. Teva received final outcome of the appeal of the non- The asserted patent, which was approval from the FDA for CASSIPA on infringement judgment related the issued in June 2016, claims priority to September 7, 2018, and has agreed ‘514 patent, as well as the ongoing an application filed in August 2007. to be bound by the decision in the litigation against Alvogen in the DRL PI case. Now that the mandate District of New Jersey. On February On March 16, 2018, Indivior filed a has issued in the DRL PI case, Teva is 12, 2019, the CAFC granted Indivior’s petition for inter partes review (IPR) no longer prevented from launching request to expedite the appeal of the with the United States Patent and CASSIPA. Any sales of CASSIPA in the non-infringement judgment in the Trademark Office (USPTO) asserting US would be on an “at-risk” basis, ‘514 patent case to the extent it will that all claims of the ‘512 Patent subject to the outcome of the appeal be placed on the next available oral are invalid. of the non-infringement judgment argument calendar. related to the ‘514 patent, as well as On October 4, 2018, the USPTO the ongoing litigation against Teva By a Court order dated August 22, declined to institute an IPR on the and DRL in the District of New Jersey. 2016, Indivior’s SUBOXONE® Film challenged claims of the ’512 patent. patent litigation against Sandoz Trial against Alvogen in the lawsuit was dismissed without prejudice involving the ’514 and ’497 Patents because Sandoz is no longer pursuing for SUBOXONE® Film took place Paragraph IV certifications for its in September 2017. The trial was proposed generic formulations of limited to the issue of infringement SUBOXONE® Film. because Alvogen did not challenge the validity of either patent. On March On September 25, 2017, Indivior 22, 2018, the United States District settled its SUBOXONE® Film patent Court for the District of Delaware litigation against Mylan, the terms issued its ruling finding both patents of which are confidential. Mylan not infringed by Alvogen. Indivior received final FDA approval for has appealed this ruling. Litigation its generic version of the 8mg against Alvogen is also pending in buprenorphine/naloxone film the United States District Court for product on June 14, 2018. the District of New Jersey on the ‘454 Patent and the ‘305 Patent. On May 11, 2018, Indivior settled its On January 22, 2019, Indivior filed a SUBOXONE® Film patent litigation motion for a temporary restraining against Par. Under the terms of the order (“TRO”) and preliminary settlement agreement, Par can launch injunction in the District of New its generic buprenorphine/naloxone Jersey, requesting that the Court film product on January 1, 2023, or restrain the launch of Alvogen’s earlier under certain circumstances. generic buprenorphine/naloxone Other terms of the settlement film product until a trial on the merits agreement are confidential. So far as of the ‘305 patent. Alvogen received Indivior is aware, FDA to date has not approval for its generic product granted tentative or final approval on January 24, 2019. The same day, for Par’s generic buprenorphine/ the District of New Jersey granted a naloxone film product. TRO until February 7, 2019, with a PI hearing scheduled for that day. On January 31, 2019, Indivior and Alvogen entered into an agreement whereby

28 www.indivior.com Risk management Strategic report How Indivior reviews and manages its risk

Board of Executive Directors Committee

Business Unit and Internal Corporate Functional Audit Leadership Team

Risk Mitigation

Information Integrity and Technology (IT) Compliance Department Department

Risk Business Continuity Management Committee Team

Our Board of Directors Our Integrity and Our Information determines the Group’s risk appetite, Compliance Department Technology (IT) Department carries out a robust assessment develops and implements develops and maintains processes of the Group’s emerging risks and an effective compliance and controls to protect Indivior’s provides governance of Indivior’s management program electronic data and assets principal risks Our Risk Management Team Our Business Unit and Our Executive Committee coordinates the risk Corporate Functional leadership monitors and reviews the management program executes day-to-day risk principal risks. Oversees the management activities and manages risk management program Our Business risk mitigation actions within their Continuity Committee respective functions or areas Our Internal Audit Team reviews and monitors business provides independent assurance continuity activities of the effectiveness of governance, risks and controls

Indivior Annual Report 2018 29 Risk management continued

Principal risks and risk management

The Board of Directors has carried out Risk management The Executive Committee establishes a robust assessment to ensure that To maintain our position as the the risk agenda for the reporting the principal risks, including those leading pharmaceutical company and ongoing management of risks that would threaten the Group’s focused primarily on the treatment and for the stewardship of the business model, future performance, of addiction, we recognize that we risk management approach. The solvency or liquidity, are effectively must understand the risks we face; Executive Committee assesses, on a managed and/or mitigated to help those inherent in our strategy and quarterly basis, changes to the key ensure the Group remains viable. operations, and those presented risks impacting the Group, including While the Group aims to identify by external conditions. We take a new and emerging risks and impacts and manage such risks, no risk systematic and robust approach to Indivior’s principal risks. management strategy can provide to identify and monitor those absolute assurance against loss. risks and continuously adjust our Risk control assurance processes, controls and monitoring The Directors have overall The table overleaf provides insight activities accordingly. responsibility for the Group’s into the principal risks, outlining why risk management framework. effective management of these risks Our approach The Directors review the Group’s is important, how we manage them, Our systematic risk management principal risks and emerging risks how the risks relate to the Group’s approach is designed to identify with a focus on key risk areas. The strategic priorities, and which risks risks that would threaten the Group’s Board’s Committees regularly review are rising, falling or have remained business model, future performance, risks relevant to their area of focus; static during the past 12 months. solvency or liquidity. Effective risk this includes, but is not limited to, Additional risks, not listed here, that management is fundamental to risks relating to legal, financial and the Group cannot presently predict our ability to meet our operational compliance matters. Assurance on or does not believe to be equally and strategic objectives. The governance, risks and controls is significant, may also materially competitive market in which we provided by internal management and adversely affect the Group’s operate has industry-specific risks, information, internal audits, external revenues, financial condition and particularly those relating to new audits and Board oversight. There is results of operations. The principal product development, intellectual also an externally supported web- risks and uncertainties are not listed property enforcement and legal based and confidential employee in order of significance. proceedings, and compliance with reporting system in place (EthicsLine). laws and regulations. This requires that business risks are effectively In addition to the principal risks assessed, appropriately measured discussed below, the Group is and addressed through mitigation facing heightened viability risks plans. Our overall risk management that could have an impact on the approach is to foster and embed Group’s ability to achieve its near- a culture of risk management that term financial forecasts (refer to is responsive, forward-looking, our viability statement on page 35). consistent and accountable. Those risks are being closely and actively monitored by the Board and management.

30 www.indivior.com Strategic report Business operations The Group’s operations rely on complex processes and systems, strategic partnerships, as well as specially-qualified and high-performing personnel to develop, manufacture and sell our products. Failure to continuously maintain operational processes and systems as well as to recruit and/or retain qualified personnel could adversely impact products’ availability and patient health, and ultimately the Group’s operational financial performance. Additionally, an ever-evolving regulatory, political and technological landscape requires that we have the right priorities, capabilities and structures in place to execute successfully on our business strategy and adapt to this changing environment. An example of this evolving landscape is Brexit (decision for the UK to leave the EU), which creates uncertainties and impacts various areas of the Group, including Operations, Regulatory, Supply Chain, and Quality.

Change from 2017 Increased operational challenges due to Brexit disruptions and staff reductions linked to the optimization of the base business Link to strategic priorities Building the resilience of our franchise and expanding global treatment

Examples of risks: Management actions ‹‹ Failure to retain and recruit qualified ‹‹ Talent management programs are in place, including talent review and workforce and key talent retention programs, with focus on identifying key roles and successors ‹‹ Process disruptions due to staff ‹‹ Programs to reinforce the culture, centered around passion and reductions commitment to support the patient journey, are in place ‹‹ Failure of information technology ‹‹ Knowledge transfer and transition plans are being developed (IT) systems, including from cyber ‹‹ IT policies, processes, systems and disaster recovery plans supporting security incidents (e.g. Malware overall business continuity are in place and Ransomware), and data ‹‹ Strategy and processes to secure systems and protect data are in place privacy breach ‹‹ Business standards, product quality, patient safety related policies and ‹‹ Disruptions in our operations due training are in place to Brexit ‹‹ A Brexit steering committee monitors the evolving impact of Brexit and facilitates appropriate business planning

Product pipeline, regulatory and safety The development and approval of the Group’s products is an inherently risky and lengthy process requiring significant financial, research and development resources, and strategic partnerships. Complex regulations with strict and high safety standards govern the development, manufacturing and distribution of our products. In addition, strong competition exists for strategic collaboration, licensing arrangements and acquisition targets. Patient safety depends on our ability to perform robust safety assessment and interpretation to ensure that appropriate decisions are made regarding the benefit/risk profiles of our products. Deviations from these quality and safety practices can impact patient safety and market access, which can have a material effect on the Group’s performance and prospects.

Change from 2017 No change Link to strategic priorities Developing our innovative pipeline, building the resilience of our franchise and expanding global treatment

Examples of risks: Management actions ‹‹ Failure to advance the development, ‹‹ Product development, business development and international growth and/or obtain regulatory approval, strategies are in place of pipeline products ‹‹ Due diligence, market valuation, and economic and financial modeling ‹‹ Failure to achieve expected market are in place acceptance ‹‹ Ongoing monitoring of CROs’ performance and clinical practices is ‹‹ Performance failure of our Clinical in place Research Organization (CRO) ‹‹ Ongoing Quality and Safety monitoring and auditing programs are in place partners ‹‹ Strategies to defend against and pursue appropriate resolution of ‹‹ Potential liability and/or additional product liability claims are in place expenses associated with ongoing ‹‹ Rigorous pharmacovigilance processes for ongoing evaluation of data regulatory obligations and oversight collected from multiple sources related to patient safety are in place, ‹‹ Unexpected changes to the benefit/ including Risk Evaluation and Mitigation Strategy (REMS) programs in risk profiles of our products the US and Risk Management Plans (RMP) outside the US.

Indivior Annual Report 2018 31 Risk management continued

Commercialization Successful commercialization of our products is a critical factor for the Group’s sustained growth and robust financial position. Launch of new product involves substantial investment in marketing, market access and sales activities, product stocks, and other investments. Generic and brand competition, pricing pressures, private and government reimbursement schemes and systems, negotiations with payors, erosion and/or infringement of intellectual property (IP) rights, political and socioeconomic factors and HCP/patient adoption and adherence, if different than anticipated, can significantly impact the Group’s performance and position.

Change from 2017 Increased generic competition/threats and performance of SUBLOCADE™ in 2018 (Refer to the Chief Executive Officer’s statement on pages 12 to 15 or the Finance Review section on pages 22 to 25) Link to strategic priorities Building the resilience of our franchise, expanding global treatment, and developing and fortifying the business

Examples of risks: Management actions ‹‹ Unexpected changes to government ‹‹ Including health economic factors in the development of new products and/or commercial reimbursement ‹‹ Managing prices within acceptable ranges levels and pricing pressures ‹‹ Enhanced investments to educate and facilitate patients’ access and ‹‹ Slower than expected ramp up and reimbursement working with key stakeholders adoption of the new SUBLOCADE™ ‹‹ Emphasizing value of products and health economics tailored to distribution platform and payor commercial and government payors through market access activities approval process impacting HCP and patient adoption ‹‹ Patient platforms supporting provider location, reimbursement support, and co-pay assistance for non-government patients are in place ‹‹ Launch or marketing of competing branded and generic products ‹‹ Ongoing training and development for field-based employees are in place ‹‹ HCP and patient adoption of the new treatment paradigm for ‹‹ Active monitoring of “at risk” generic launches and activation of related SUBLOCADE™ and PERSERIS™ contingency plans ‹‹ International growth, pipeline development, and business development strategies are in place

Economic and financial The nature of the pharmaceutical business is inherently risky and uncertain, and requires that we make significant financial investments to develop and support the success of our product portfolio. External financing is a key factor in sustaining our financial position and expanding our business growth. Our ability to realize value on those investments is often dependent on regulatory approvals, market acceptance, strategic partnerships, competition and legal developments. As a global business, we are also subject to political, economic and capital markets changes. External financing is a key factor in sustaining our financial position and expanding our business growth.

Change from 2017 Financial pressure due to increased generic competition and performance of SUBLOCADE™ (Refer to the Finance Review section on pages 22 to 25) Link to strategic priorities Developing our innovative pipeline, building the resilience of our franchise, expanding global treatment, and developing and fortifying the business

Examples of risks: Management actions ‹‹ Concentration of revenues ‹‹ Strategies supporting expansion opportunities and diversification geographically and/or by product are in place ‹‹ Inability to raise capital or execute ‹‹ Regular appraisals of debt and capital market conditions with advisors product and business developments and counterparties are in place and alliance opportunities ‹‹ Realignment of cost and finance structures, and active expense ‹‹ Failure to meet financial obligations management are in place and performance ‹‹ Ongoing monitoring of financial performance and compliance with ‹‹ Inability to identify and realize financial covenants potential business development ‹‹ Internal and external resources in place to identify potential targets opportunities and ensure rigorous due diligence of acquisitions and/or new product initiatives

32 www.indivior.com Strategic report Supply chain The manufacturing and supply of our products are highly complex and rely on a combination of internal manufacturing capabilities and third parties for the timely supply of our finished drug and combination drug products. The Group has a single source of supply for buprenorphine, an active product ingredient (API) in the Group’s products, and uses contract manufacturing organizations (CMOs) to manufacture, package and distribute our products. The manufacturing of non-sterile pharmaceutical and sterile filled pharma/combination drug products is subject to stringent global regulatory quality and safety standards, including Good Manufacturing Practice (GMP). Delays or interruptions our supply chain, and/or product quality failures could significantly disrupt patient access, adversely impact the Group’s financial performance; lead to product recalls, and/or potential regulatory actions against the Group, along with reputational damage.

Change from 2017 No change Link to strategic priorities Building the resilience of our franchise, and expanding global treatment

Examples of risks: Management actions ‹‹ Inability to supply compliant ‹‹ Business continuity, disaster recovery, and emergency response plans finished products in a continuous across the supply chain network are in place and timely manner ‹‹ Contingency plans and management of safety stocks are in place ‹‹ Single source of API and reliance on ‹‹ Comprehensive product quality and control processes and manufacturing critical CMOs performance monitoring across the supply chain network are in place ‹‹ Ongoing monitoring of stock levels and implementation of insurance coverage

Legal and intellectual property Our pharmaceutical operations, which include controlled substances, are subject to a wide range of laws and regulations from various governmental and non-governmental bodies. Perceived noncompliance with these applicable laws and regulations may result in investigations or proceedings leading the Group to become subject to civil or criminal sanctions and/or pay fines and/or damages, as well as reputational damage.

Intellectual Property (IP) rights protecting our products may be challenged by external parties, including generic manufacturers. Although we have developed robust patent protection for our products, we are exposed to the risk that courts may decide that our IP rights are invalid and/or that third parties do not infringe our asserted IP rights.

Unfavorable outcome from government investigations and/or resolutions from legal proceedings, expiry and/or loss of IP rights could have a material adverse impact on the Group’s prospects, results of operations and financial condition.

As previously disclosed in the Prospectus dated November 17, 2014, Indivior has indemnification obligations in favor of Reckitt Benckiser (RB) (page 43). Some of these indemnities are unlimited in terms of amount and duration and amounts potentially payable by the Indivior Group pursuant to such indemnity obligations could be significant and could have a material adverse effect on the Indivior Group’s business, financial condition and/or operating results. Requests for indemnification may be subject to legal challenge.

Indivior Annual Report 2018 33 Risk management continued

Change from 2017 Material business impact of “at-risk” generic launches (Refer to the Legal proceedings section on pages 26 to 28 and Chair and Chief Executive Officer statements on pages 4 to 5 and 12 to 15 respectively) Link to strategic priorities Building the resilience of our franchise

Examples of risks: Management actions ‹‹ Legal proceedings related to ‹‹ Quality, patient safety, monitoring and compliance are embedded in product liability claims, antitrust, the Group’s processes and culture government enforcement and/or ‹‹ Cooperation with government authorities in connection with ongoing private litigation associated with investigations, utilizing internal and external counsel the manufacturing, marketing and ‹‹ Insurance coverage and monitoring of legal proceedings are in place distribution of our products ‹‹ Ongoing active review, management and enforcement of our product ‹‹ Government investigations of the patents, marketing exclusivity and other IP rights are in place Group’s business activities ‹‹ Strategies to defend against infringement claims and pursue ‹‹ Infringement of IP rights of enforcement of product patents and other IP rights are in place third-parties ‹‹ Geographic expansion and product diversification strategies are ‹‹ Inability to obtain, maintain in place and protect patents and other proprietary rights

Compliance Our Group operates on a global basis and the pharmaceutical industry is both highly competitive and regulated. Complying with all applicable laws and regulations, including engaging in commercial activities that are consistent with legal and industry standards, and our Group’s Code of Conduct are core to the Group’s mission, culture and practices. Failure to comply with applicable laws and regulations may subject the Group to civil, criminal and administrative liability, including the imposition of substantial monetary penalties, fines, damages and restructuring the Group’s operations through the imposition of compliance or integrity obligations, and have a potential adverse impact on the Group’s prospects, reputation, results of operations and financial condition.

Change from 2017 No change Link to strategic priorities Building the resilience of our franchise, and expanding global treatment

Examples of risks: Management actions ‹‹ Failure to act in an ethical manner ‹‹ Ongoing evolution of our compliance program and compliance aligned with our Code of Conduct capabilities in place ‹‹ Non-compliance with ‹‹ All employees are required to perform annual training and certify anti-corruption, healthcare, data compliance with our Code of Conduct privacy, or local laws and regulations ‹‹ Compliance policies and processes, and related mandatory employee ‹‹ Failure to comply with payment and training programs are in place reporting obligations under the US ‹‹ Confidential independent reporting process for employees to report and foreign government programs concerns is in place ‹‹ Inability to respond adequately to ‹‹ Increased oversight and monitoring of controls and procedures in changes in laws and regulations emerging markets are in place ‹‹ Government investigations of the ‹‹ Ongoing monitoring of controls over government pricing and reporting Group’s business activities in place ‹‹ Compliance risk assessment and monitoring of key risks are in place ‹‹ Continuous review and assessment of developments in the law, applicable industry standards, and business practices ‹‹ Cooperating with the authorities on ongoing investigations, using external counsel

34 www.indivior.com Viability statement Strategic report The Group’s viability is dependent and approves the budget for the and address the reasonably possible upon execution of our business upcoming year as well as the long- financial implications of legal strategy, with a focus on: term strategic plan, which includes proceeding risks. challenging key assumptions and risk ‹‹ expansion of HCP and patient mitigation plans included therein. Other risks identified in the adoption of SUBLOCADE™; principal risks table on pages 31 to ‹‹ the US launch of PERSERIS™; In accordance with the UK Corporate 34 were also considered, but the Governance Code, the Directors above financial risks and operating ‹‹ optimization of the base business; have assessed the viability of the considerations were considered and Group. In determining a time period the most immediate and significant ‹‹ management of our risk related to to assess the viability of the Group, that could prevent the Group from legal proceedings and response the Directors considered the Group’s delivering on its strategy. A number strategy. strategic plan, business cycle, of other aspects of the principal risks potential impacts of new product – because of their nature or potential The Board has evaluated the Group’s launches, generic challenges, ongoing impact – could also threaten the risk profile through the lens of the legal proceedings, cost reduction Group’s viability in its current form, if challenges faced in 2018, including actions and liquidity. Considering the they were to occur. the material uncertainty that may newly launched portfolio products cast significant doubt on the Group’s and the term loan expiration date, The results of this stress testing ability to continue as a going the Directors believe a period to showed the Group would be able concern, as discussed in Note 2 to 2022 factors in the risks in these to withstand the impact of these the Financial Statements. Further, the activities. This assessment period scenarios occurring over the period elevated risk resulting from slower provides a reasonable basis for the of the viability assessment. The than expected SUBLOCADE adoption financial impact of these significant Group will be required to use its in addition to the loss of SUBOXONE® developments to be fully considered. cash reserves and may need to Film exclusivity in the US have Accordingly, a four-year period of make further cuts to its operating exposed the Group to heightened assessment is deemed appropriate. costs and planned strategic viability risks. Considering these risks, investments. Depending upon the structural changes have been made, Although the strategic plan reflects ultimate realization under the including significant early retirement the Directors’ best estimate of the different scenarios, the actions that of debt and cost reduction actions, future prospects of the business, management would need to take as the Group streamlines its focus on they have also “stress tested” the will vary to ensure ongoing viability the two newly-approved products. plan under various scenarios. The of the Group. Once these are established, Indivior scenarios, which encompass a wide will once again seek to expand with spectrum of potential outcomes, Possible scenarios may occur where new treatments in the addiction and reflect the impact from the loss of the uptake of both SUBLOCADE and behavioral health disease spaces. exclusivity for SUBOXONE® in the US, PERSERIS falls significantly below and contemplate limited uptake of expectations and the outcome of legal The prospects of the Group are PERSERIS in the US, are designed to proceedings or timing of payments for evaluated throughout the year explore the resilience of the Group legal proceedings is materially worse as part of the strategic planning to the potential impact of significant than planned, in which circumstances process. This process is led by the risks set out on pages 30 to 34. These the Group’s viability may be impacted Chief Executive Officer through the scenarios represent ‘severe but during the assessment period. In the Executive Committee and involves plausible’ circumstances the Group early portion of the viability period, all relevant functions such as could experience. The scenarios the Directors’ control over certain R&D, supply, commercial, medical, tested included: matters, such as legal proceeding legal, compliance and finance. response strategy, helps to mitigate Development of the strategic ‹‹ underperformance in the expected risk to the Group’s viability. However, plan includes a deep dive into the market acceptance of SUBLOCADE over the full viability period, the principal risks and contemplated over the viability period, and Directors’ ability to influence the actions to manage and mitigate ‹‹ unfavorable outcome of legal outcome of such matters may be those risks. proceedings. more limited.

The output of the strategic plan is a Having considered these risk factors Based on their assessment of set of objectives, an analysis of key along with other principal risks set prospects and viability above, the risks that could prevent the plan out on pages 30 to 34, the Directors Directors confirm their reasonable being delivered, and a financial have assessed the Group’s ability to expectation that the Group will forecast covering the following comply with the financial covenant continue in operation and meet its year. Within the Group’s extended in the Group’s debt facility, maintain liabilities as they fall due over the four- strategic horizon, financial forecasts sufficient liquidity to fund its year period ending December 31, 2022. are also prepared. The Board reviews operations, pay off the debt in 2022, Indivior Annual Report 2018 35 Chair’s governance statement

Strong and robust corporate governance delivering accountability

“Good governance is an essential part of our ethos underpinning the delivery of our vision for the benefit of colleagues, shareholders and stakeholders.”

Howard Pien Chair of the Board

Dear Shareholder, Culture and governance On behalf of the Board, I am The Indivior Guiding Principles pleased to present the Corporate (the values we respect) and our Governance Report for the year Code of Conduct (the behaviors we ended December 31, 2018. As Chair of expect) underpin everything that we the Board, my role is to manage the do and the type of organization we Board and to ensure that it operates want to be. Everyone who works for effectively. This year has seen and with us is required to comply continued focus on the Group’s with these. The Board, Executive corporate governance arrangements, Committee and our management ensuring that we have strong and understand that how we work is as robust corporate governance at the important as what we achieve. Our heart of everything we do. culture and values are not only The Board continues to adhere to championed by the Board and the the principles of integrity, respect, Executive Committee but permeate transparency and openness. Board throughout our organization. members are expected to lead by Activities during the year example and exemplify the highest During 2018, the Board formally met standards of propriety, diligence on five occasions and held a further and accountability. 17 ad hoc meetings, which were primarily held by conference telephone. The ad hoc meetings dealt with matters covering the ongoing DOJ investigation, antitrust litigation matters, litigation regarding Orange Book-listed patents and the possibility of a

36 www.indivior.com Governance 37 37 37 Indivior Annual Report 2018 Looking ahead standards the highest Maintaining integral is governance corporate of to the delivery of our vision. Your remainsBoard focused ensuring on stakeholders and shareholders our will benefitfrom the strong which is present ethos governance throughout the Group. Pien Howard ofChairBoardthe March 1, 2019 by the Financial Reporting Council (the ‘Code’), sets sets ‘Code’), (the Council Reporting Financial the by ally in the EMEA EMEA the in ally 2018 and will apply for the financial year ending year for the financial ending 2018 and will apply anges to prepare for compliance with the new Code. Code. new the with compliance for prepare to anges As the UK Government continues continues Government UK the As uncertainty negotiations, Brexit its remainsas to the extent towhich the affectedin be businesswill our longerterm. To prepare for all eventualities, we formed a Brexit met which Committee Steering regularly throughout the year and has led the Group in preparing to satisfy the new regulatory especi environment, region, and to mitigate any risk. set is Brexit to reference Further onout page 31. Board effectiveness of cycle annual of its As part the undertook Board business, an evaluation to consider the performanceof the Board, each Directors,the of andBoard’s the The committees. principal report was prepared by Lintstock and detailed several areas for consideration, as outlined on page 48. The Board will and committees areas on these attention focus duringthe coming year. The overall performanceBoardthe andof its rated, positively was committees especially given the challenges facingthe business. December 31, 2019. The Board has undertaken an assessment of its readiness to comply with and report against against report and with comply to readiness its of assessment an undertaken has Board The 2019. 31, December ch certain adopt to begun we have and Code, 2018 the out standards of good practice in relation to Board leadership and effectiveness, remuneration, accountability accountability remuneration, and effectiveness, leadership Board to relation in good practice of standards out shareholders. with relations and Throughout the Code. of Principles Main the applied has Board the how describes to 82 42 on pages report The Code. the of provisions the with complied has Company the report, this of date the to and year financial the ofcopy CodeA the isavailable website from FRC the www.frc.org.uk. in waspublished Code Governance UK new Corporate A UK Code Corporate Governance 2016 April in The published Code, UK Corporate Governance

launch of a generic buprenorphine/ launch generic a buprenorphine/ of product. film naloxone governance strengthen further To business, the within oversight and we made two strategic appointments during the year. The Internal Audit andRisk Management functions Vice a and new combined were Audit Internal of Head President, and Risk Management was the created also We appointed. newroleChiefof Integrity and is an which Officer, Compliance role. Committee Executive subsidiary our of strengthening The of area another was governance focusduring year.Ledthe the by Company Secretary, further process including enhancements and monitoring initiatives were also We Group-wide. introduced provider, service a new appointed Eversheds Sutherland (International) ongoing the with assist to LLP, requirements for administrative manyof the Group’s overseas subsidiary companies, and training a bespoke developed programfor subsidiary directors, whichincluded a focus subsidiaryon duties. directors’ and governance be to continue will Thisprogram enhanced during 2019.

Board of Directors

Howard Pien Shaun Thaxter Mark Crossley Chair Chief Executive Officer Chief Financial Officer Appointed to the Board Appointed to the Board Appointed to the Board November 4, 2014 November 4, 2014 February 21, 2017 Skills and experience Skills and experience Skills and experience ‹ Howard has more than 30 years of pharmaceutical and ‹ Shaun has more than 25 years of pharmaceutical and ‹ Mark has a wealth of financial and pharmaceutical biotechnology industry experience and brings strong prescription products industry experience. He is industry experience and knowledge and decisive leadership to the Board responsible for executing Indivior’s strategy and leading ‹ Indivior Chief Strategy Officer ‹ Vanda Pharmaceuticals, Inc.: Non-Executive Chairman the management team ‹ Reckitt Benckiser Pharmaceuticals Inc.: (2010-2016) ‹ Appointed CEO of Indivior at time of Reckitt Benckiser Global Finance Director ‹ GlaxoSmithKline: various executive positions Pharmaceuticals demerger ‹ Procter and Gamble: Associate Director Corporate (1991-2003) ‹ Institute of Directors (IoD): Chartered Director Portfolio Finance ‹ Chiron, Corp: President and CEO (2003-2006) and later and Fellow ‹ Procter and Gamble: Associate Director Female Beauty Chairman of the Board (2004-2006) ‹ National Association of Corporate Directors (NACD): Strategy and Business Planning ‹ Medarex Inc.: CEO and President (2007-2009) Board Leadership Fellow ‹ National Association of Corporate Directors (NACD): ‹ Abbott Laboratories and Merck & Co.: Product Manager, ‹ Reckitt Benckiser Pharmaceuticals, Inc.: President Board Leadership Fellow Business Unit Director, cardiovasculars, anti-infectives ‹ Reckitt Benckiser: Global Category Manager (1986-1991) Other appointments Other appointments None ‹ Juno Therapeutics: Non-executive Chairman (2014-2018) None Other appointments ‹ Idera Pharmaceuticals, Inc.: Director ‹ Sapience Therapeutics: Chairman

Daniel Tassé Yvonne Greenstreet MBChB A. Thomas McLellan PhD Senior Independent Director Non-Executive Director Non-Executive Director Appointed to the Board Appointed to the Board Appointed to the Board November 4, 2014 November 4, 2014 November 4, 2014 Skills and experience Skills and experience Skills and experience ‹ Daniel has a strong track record of leading global ‹ More than 20 years of pharmaceutical ‹ Tom’s extensive experience in the field of addictions organizations with more than 35 years of industry experience spans more than 35 years as a career researcher in the pharmaceutical and financial industry experience. ‹ Experienced in medicines development, medical affairs treatment and policy-making around substance use and He is an effective Senior Independent Director and business development abuse. This enables him to contribute valuable insight with a balanced understanding of the concerns ‹ Pfizer Inc.: SVP Medicines Development (2010-2013) and perspective to his work on Indivior’s Science & of major shareholders Policy Committee ‹ GlaxoSmithKline: various executive positions ‹ ‹ Ikaria Holdings, Inc.: CEO and President (2008-2015), (1992-2010) Published more than 450 articles and chapters on Chairman (2009-2015) addiction research ‹ Moelis & Company: Independent Director (2014-2018) ‹ Baxter International: General Manager of ‹ Treatment Research Institute (TRI): Co-founder, CEO Pharmaceuticals and Technologies Business Unit Other appointments and Chairman until September 1, 2016 ‹ GlaxoSmithKline: various senior management positions ‹ Alnylam: Chief Operating Officer ‹ White House Office of National Drug Control Policy including President and Regional Director for ‹ Pacira Pharmaceuticals, Inc.: Director (2009-2011): Deputy Director Australasia (2001-2004) Other appointments Other appointments ‹ Recover Together, Inc.: Director ‹ DBV Technologies SA.: CEO ‹ Serves on several editorial boards of scientific journals ‹ Bellerophon Therapeutics: Director ‹ HLS Therapeutics Inc.: Director ‹ REGENXBIO Inc.: Director

3838 www.indivior.com Governance 39 39

Chartered Secretaries and Indivior Annual Report 2018

TE Connectivity Ltd: Board Board Director Connectivity Ltd: TE More than 15 years of experience as a Chartered Secretary Dan possesses more than 30 years of pharmaceutical of 30 years than possesses more Dan and executive management including experience, dealing experience extensive executive with and an is He matters. active remuneration knowledgeable Chair of the Remuneration Committee and provides valuable perspective to the work of the Nomination & Governance Committee Disclosure Committee Committee Disclosure Committee Compliance Fellow of theFellow Institute of of CharteredAdministrators, Governance Professional GlaxoSmithKline: advisor to three CEOs and various executive positions (1981-2012) Kingfisher plc: Company Secretary (2012-2015) (2012-2015) Company plc: Secretary Kingfisher Computer Sciences Corporation: Advisory Board (2013-2015)Member Senior Company Secretarial positions at Burberry Group plc and ICAP plc RiseSmart: Advisory Board Member Board Advisory (2012-2016) RiseSmart: Rutgers MemberRutgers Trustees: of University Board (2013-2017) ppointed Company Secretary ppointed to the Board

Other appointments None Other appointments ‹ Kathryn Hudson Company Secretary A June 15, 2015 Skills and experience ‹ Daniel J. Phelan Non-Executive Director A 2014 November 4, Skills and experience ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹

r company experience,company Lorna s Directo Limited: g ital Holdin p Science & Policy Committee Committee & Policy Science Nomination Committee Committee Nomination Liz is a financial and risk expert with significant audit experience UK gained both US in risk and listed and organizations. Her financial skills and knowledge are valuable to the work of the Audit Committee in particular (1996-2011) positions executive senior various The Hartford: Boston Private Financial Holdings: Non-Executive Director With more than 25 years of executive 25 years of search, than more With consulting board assessment and management experience, and UK listed CapitalCVC Partners: Senior Advisor provides strong leadershipprovides on governance matters succession planning including Audit, Risk Compensation and Nomination Committee experience member Board SE2: Manchester Square Partners: Senior Advisor Advisor Senior Partners: Square Manchester Conducts board effectiveness reviews for FTSE for effectiveness reviews 100 Conducts board companies Legal & General: Non-Executive Director (2013-2016) Trustees, of Board Science Center: Connecticut Vice Chair Royal Horticultural Society: Trustee Spencer Stuart: Partner (1989-2008); led the private equity practice across Europe and the legal search practice globally Computer Sciences Corporation (2016-2017) Axis Ca National OperaStudio: Trustee BC Partners: Senior Advisor (2008-2016) (2008-2016) Advisor Senior Partners: BC Future Academies: Director (2014-2017) Future

ppointed to the Board ppointed to the Board

A September 1, 2016 Skills and experience ‹ Other appointments ‹ Lizabeth Zlatkus Non-Executive Director Lorna Parker Non-Executive Director A 2014 November 4, Skills and experience ‹ Other appointments ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹

ident and Chief Executive Audit Committee Committee Remuneration Chair

Aprea Therapeutics AB: Pres Officer Chris’s significant pharmaceutical and financial pharmaceutical financial significant and Chris’s experience gainedindustry more than over 20 years Chair strong companies of in US him a listed make the Audit Committee, able to challenge incisively to approach and performance financial the Group’s management risk EIP Inc; Non-ExecutiveEIP Inc; Director Tatjana combines substantial knowledge and and knowledge combines substantial Tatjana sector with more the pharmaceutical of understanding experience both UK brings legal and of 20 years than company US and listed expertise to Board discussions Integra LifeSciences Holdings Corporation: Director Corporation: Holdings LifeSciences Integra Novira Therapeutics, Inc.: CEO (2014-2015) Inc.: Therapeutics, Novira The National Youth Orchestra of Great Britain: Trustee Shire plc:Shire General Counsel Company and Secretary, Executive Committee Member (2001-2015) Sapience Therapeutics:Sapience Director Omthera Pharmaceuticals, Inc.: CFO, EVP Inc.: Pharmaceuticals, (2011-2013) Omthera AstraZeneca plc: various positions including Assistant General Counsel (1995-2001) NRG Energy, Inc.: CFO, EVP (2010-2011)CFO, Inc.: Energy, NRG Slaughter and May: Lawyer (1988-1994) Medarex Inc.: CFO, SVP (2000-2009) (2000-2009) SVP CFO, Inc.: Medarex Merrill Lynch & Co.: MD, Debt Capital Markets (1992-2000) Capital (1992-2000) Debt Markets & Co.: MD, Merrill Lynch ppointed to the Board ppointed to the Board

Other appointments ‹ Skills and experience ‹ Chris Schade Non-Executive Director A 2014 November 4, Other appointments ‹ A 2017 1, February Skills and experience ‹ Tatjana May Non-Executive Director

Committee Membership Key Membership Committee ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ Our Board of Directors continued

Executive Committee

Shaun Thaxter Mark Crossley Debby Betz Chief Executive Officer Chief Financial Officer Chief Corporate Affairs and Professional experience and qualifications Professional experience and qualifications Communications Officer See biography on page 38 See biography on page 38 Professional experience and qualifications Key previous roles Key previous roles ‹ 25+ years See biography on page 38 See biography on page 38 Key previous roles ‹ Reckitt Benckiser Pharmaceuticals Inc.: Director of Marketing (North America) and Director of Commercial Development and Strategic Planning (North America) ‹ Purdue Pharma and Stuart Pharmaceuticals: Various sales and marketing leadership roles including District Sales Manager

Cindy Cetani Jon Fogle Christian Heidbreder Chief Integrity and Chief Human Resources Officer Chief Scientific Officer Compliance Officer Professional experience and qualifications Professional experience and qualifications Professional experience and qualifications ‹ 20+ years ‹ 25+ years’ leadership in neurosciences ‹ 30+ years ‹ Senior certified professional in human resources ‹ 350+ publications Key previous roles ‹ Affiliate Professor, Dept. Pharmacology and Toxicology, Key previous roles Virginia Commonwealth University School of Medicine ‹ Novartis Pharmaceuticals Corp: Chief Compliance ‹ Reckitt Benckiser Pharmaceuticals Inc.: Global Human Officer and Head of Compliance Operations, Group Resources Director Key previous roles Integrity & Compliance ‹ Reckitt Benckiser Pharmaceuticals Inc.: Human ‹ Reckitt Benckiser Pharmaceuticals Inc.: Global R&D ‹ Pharmacia: Director of Operations, Managed Markets Resources Director for the US Director ‹ Capmark Finance (formerly GMAC Commercial ‹ Altria: Client Services’ Health Sciences Mortgage): Senior Vice President of Human Resources, ‹ GlaxoSmithKline: Center of Excellence for Drug North America Discovery in Psychiatry ‹ SmithKline Beecham: Neuroscience Department

40 www.indivior.com Governance 41 41

als Inc.: Global Supply Indivior Annual Report 2018

25+ years PharmaceuticReckitt Benckiser Director (heading customer logistics, service, demand manufacturing) and planning Reckitt Benckiser Pharmaceuticals Inc.: Inc.: Pharmaceuticals Supply Services Reckitt Benckiser Director then Global Supply Services Director Reckitt Benckiser: SupplyReckitt Benckiser: Services Director, Central Europe Reckitt Benckiser: Industrial Customer Service Manager Industrial Reckitt Benckiser: Colgate-Palmolive GbmH: various roles

Ponni Subbiah was a member of the Executive Executive the of member a was Ponni Subbiah down from the and stood 2018 throughout Committee February 2019 in Committee Supply Officer Officer Supply Frank Stier and Manufacturing Chief Professional experience and qualifications ‹ Key previous roles ‹ ‹ ‹ ‹ ‹

20+ years20+ Pharmaceuticals Inc.: Reckitt Benckiser President, North America Reckitt Benckiser: General Manager Portugal General Manager Reckitt Benckiser: Reckitt Benckiser: Marketing Director Reckitt Benckiser: UK Healthcare Reckitt Benckiser: Two Global Category roles and a and a Two roles Category Global Reckitt Benckiser: positions Management General of number

Richard Simkin Chief Commercial and Officer Strategy Professional experience and qualifications ‹ Key previous roles ‹ ‹ ‹ ‹

Disclosure Committee Committee Disclosure Committee Compliance

15+ years Inc.: Pharmaceuticals VP General Reckitt Benckiser Counsel Admitted to practice Admitted to practice in New law New JerseyYork, and Virginia (Corporate Counsel) Counsel (Healthcare), Senior LLC: Benckiser Reckitt rights marketing to (ex-US) global the acquire helping to buprenorphine National Association of Corporate Directors Directors Corporate Association of National Governance Fellow Bayer AG and Berlex Laboratories, Inc.: Corporate Counsel avier Rodriguez Rodriguez avier

Key previous roles ‹ Professional experience and qualifications ‹ J

Committee Membership Key Membership Committee Chief Legal Officer ‹ ‹ ‹ ‹ Corporate Governance Report

Corporate governance

The Board is responsible for ensuring there is a robust and transparent governance framework in place.

We have a clear division of responsibilities between the Board and our various Committees; each role is clearly defined and is distinct from one another.

Indivior Board

Audit Committee Nomination & Remuneration Science & Policy Oversight of financial Governance Committee Committee reporting, audit and risk Committee Oversight of the link of Oversight of pipeline Oversight of Board reward to strategy research and composition, succession development and public planning, governance and policy strategy corporate compliance Principal Board Committees

Executive Committee Disclosure Committee Compliance Committee Oversight of the implementation of Oversight of disclosure and (new structure established in January 2019) the Group’s strategic plan reporting requirements and the Oversight of the Group’s compliance identification of inside information program

Executive Executive Committees

Board committees The Board has four principal committees, to which it has delegated certain responsibilities. These are the: Audit, Nomination & Governance, Remuneration and Science & Policy committees. Each committee operates under its own clearly defined Terms of Reference, available at www.indivior.com. More information about the roles, composition and work of the principal committees can be found in the Introduction to Board Committees on pages 50 to 77. The Chair of each principal committee reports on the activities of the committee at the following Board meeting. Copies of all papers and the minutes of meetings of the principal committees are available to all Directors. Executive committees In addition to the principal committees, the Group has three executive committees: Executive Committee The Executive Committee is chaired by the Chief Executive Officer. The Committee comprises key functional leaders from the business and its purpose is to assist the Chief Executive Officer in discharging his duties. The Executive Committee meets monthly. Biographical details of the members of the Executive Committee are on pages 40 to 41. Disclosure Committee The Disclosure Committee is chaired by the Chief Financial Officer. It comprises the Chief Financial Officer, the Chief Commercial and Strategy Officer, the Chief Legal Officer, the Chief Scientific Officer and the Company Secretary. The Committee meets as necessary and oversees the disclosure of information in accordance with the EU Market Abuse Regulation and the FCA’s Disclosure Guidance and Transparency Rules. The Disclosure Committee receives input and advice from relevant individuals and advisors as required. These include the Group’s brokers and external legal counsel. Compliance Committee An Executive Compliance Committee was established in January 2019, replacing the existing management compliance committee (which has been reorganized as the Compliance Administration Council, which now reports to the Compliance Committee). The Compliance Committee comprises all members of the Executive Committee and is chaired by the Chief Integrity and Compliance Officer. The Compliance Committee meets monthly and is responsible for overseeing compliance with applicable laws, rules and regulations related to Indivior’s business operations excluding compliance with securities regulations and financial reporting requirements.

42 www.indivior.com Governance 43 43 Indivior Annual Report 2018 Chair and Chief Executive and Chair Officer Executive Chief of division a is formal There Chair, the between responsibilities Howard Pien, and Chief Executive Officer, Shaun Thaxter, which is set Chief and Chair The writing. in out to together work Officer Executive set the Board’s agenda. The leads Board and Chair the is overall its ensuring for responsible high promotes He effectiveness. standards of governance corporate constructive fosters and probity and the Executive between relations Directors,and Non-Executive and the tone setting for is responsible andculture in the boardroom. Throughoutyear,the Chair the with worked closely the Senior the and Director Independent Non-Executive Directors. A part of for reserved is meeting Board each the and of the Chair a meeting Non-Executive Directors, without present. management executive is Officer Executive Chief The day-to-day the for responsible business, ofthe leadership including leading and monitoring theperformance ofsenior management.He isresponsible of performance the for Board the to the business against agreed strategy this in supported He is plans. and Committee. Executive the by role Senior Independent Director is Tassé Daniel the Senior a as He acts Director. Independent and Chair the for board sounding between can act as an intermediary Chair the and Directors other the the leads also required.He when other Non-Executive Directors in the annualperformance evaluation of Chair. the the Group’s annual budget and and budget annual Group’s the plans; corporate theGroup’s annual, half-yearly quarterlyand reports;financial the Annual Report and Accounts and the reports included therein; thedividend policy; all Board appointments or removals, remuneration termination and arrangements payments; of chairship and membership and Board and committees the senior for planning succession management; majorcapital projects, or divestments; acquisitions or significant in, increase any of the terms the in, variation borrowingfacilities of the Company; projects expenditure capital approved of scope the the outside annualandplans;budgets treasury and risk management policies; and and removalappointment of the Company Secretary.

‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ delegated Board The has day-to-day the for responsibility the to business the of management Executive Officer. Chief Boardcomposition composition Board’s the of Details areset out on pages 38 to39 which of details biographical contain Directors The Directors. the of each have a valuable combination of scientific, business, and skills pharmaceutical and disease be to continue which experience Group.the to relevant the Group’s strategic aims and and aims strategic Group’s the material including objectives, litigation strategy, and review of performanceagainst those aims objectives;and

The Board Board The responsible is collectively long- the for shareholders the to It Company. the of success term and leadership strategic provides of Group’s the oversight effective operations,either directly or principal its of work the through ultimate has Board The committees. good ensuring for responsibility governance throughout Indivior. matters of a schedule has Board The that are reserved to it for approval. in updated last was schedule The 2017,November and is available to website on view Group’s the www.indivior.com. of responsibilities and Roles Board the Board The responsible is collectively forthe long-term success of the value delivering for and Company to shareholders. The Board’s primary further and support to is focus theGroup’s purpose of pioneering for treatments life-transforming patients suffering from addiction co-occurrences. its and throughout regularly met Board The it Chair, the by Led year. the reviews the strategy, approves financial and operational performance,risk management and capital Group’s the appetite, by proposed plans and structure managementto implementagreed The that Board ensures strategy. to available are resources sufficient set. the objectives meet for responsible is Board The approval of: ‹

Corporate Governance Report continued

He provides an alternative point of Information and support any significant contract with the contact for shareholders on matters All Directors have direct access to Company or any of its subsidiaries that would not be appropriate for the advice and services of the during the year. them to discuss or resolve via the Company Secretary. Directors may External directorships Chair, Chief Executive Officer or Chief also obtain independent The Nomination & Governance Financial Officer. professional advice as required at Committee has approved a formal Non-Executive Directors the Company’s expense. policy in respect of external The Non-Executive Directors bring Non-Executive Director appointments for Executive an independent perspective to Independence Directors and members of the Board discussion. The Company has The Board monitors the Executive Committee. Executive benefited from the broad range of independence of the Non-Executive Directors may hold one non- skills and experience which the Non- Directors for the purposes of executive appointment, subject to Executive Directors provide from the Code. the approval of the Nomination & different businesses and fields, Governance Committee. Members of At its meeting in February 2019, the including finance, academic, the Executive Committee may hold Board considered the independence scientific, private equity and one non-executive appointment of each of the Non-Executive pharmaceutical sectors. subject to the approval of the Directors (other than the Chair, Executive Committee. Throughout the year they have who was deemed independent constructively challenged and by the Board at the date of his The Nomination & Governance developed the Group’s strategy, appointment) against the criteria Committee considers the other scrutinized the performance of specified in the Code, and commitments of the Chair of the management, agreed goals and determined that all remain Board and Non-Executive Directors. objectives, and monitored the independent of management and The Committee considers if any Group’s risk profile and reporting free from any relationship that potential conflict of interest is of performance. could interfere with their judgment. likely to arise as a result of the appointment. The Committee Company Secretary Conflicts of interest also considers the likely time The Company Secretary, Kathryn Processes exist for actual or commitment required from the Hudson, acts as Secretary to the potential conflicts of interest to be Directors’ other commitments and Board and the Remuneration and reviewed and disclosed and to make if this is likely to interfere with their Nomination & Governance sure Directors do not participate in ability to discharge their duties Committees. any decisions where they may have effectively (and having regard to a conflict or potential conflict. She supports the Chair and the ‘overboarding’ guidelines). The The Nomination & Governance Board in the execution of their Committee reports to the Board on Committee considers the other duties. She advises the Chair, its review and recommends if any significant commitments or external Chief Executive Officer and senior action is necessary. management on regulatory and interests of potential appointees governance matters. The Deputy as part of the selection process and During the year, the Committee Company Secretary (a suitably discloses them to the Board when reviewed the other commitments qualified member of the Company recommending an appointment. of the Chair and Non-Executive Directors. In particular, the Secretarial team) acts as Secretary Non-Executive Directors are Committee considered Daniel to the Audit and Science & required to inform the Board of any Tassé’s appointment as Chief Policy Committees. subsequent changes to such Executive Officer of DBV Technologies commitments, which must be pre- Biographical details of the Company SA in November 2018, and noted that cleared with the Chair if material. Secretary are on page 39. he has a transition plan to reduce The Company’s procedures for his other commitments during dealing with Directors’ conflicts the course of 2019. Following the of interest continued to operate Committee’s review, the Board effectively during the year. No has reviewed Mr Tassé’s other Director had a material interest or commitments and is satisfied that

44 www.indivior.com Governance 45 45 Indivior Annual Report 2018 Group and at senior leadership leadership and at senior Group in levels the organization (Executive Committeeand direct reports), where there is 36% representation. female Board, its Committees and our our and Committees its Board, workforce, reflects our beliefs and values. Supporting and our of diversity the promoting priority important an is people have we and Group the for an on developing focused values all that culture inclusive of their regardless employees age, disability, gender, race, sexualorientation or other We characteristics. protected targeted through this achieve offrom sourcing people diverse backgrounds and culturesand on creating focus ongoing an allows our that an environment talented people to prosper. Our Board and Executive are up of made Committee individuals from a broad, diverse strong includes this background; 36% comprising diversity gender women on 22%the Board and on the Executive Committee. This is consistent across the Diversity and Inclusion Diversity At Indivior, wevalue our believe and culture distinctive sustainable of source a is key it We advantage. competitive and diversity inclusion believe enables sense in its broadest continuous innovation, and quality, of improvement and efficiency speed increased of needs various the meeting in our patients, customersand stakeholders. Our Diversity and Inclusion to which the Policy, applies

hair irectors xecutive onxecutive irectors Male emale The Board may appoint any any appoint may Board The employment any to hold Director revoke may and office executive or appointment. such any terminate or ordinary by may, Shareholders a as a person appoint resolution, Director any remove or Director the of their before expiration period of office. Induction and training A bespoke training and induction each new is for designed program with them to help provide Director of the understanding a broad and regulatory and business governance matters. The Company induction the Secretary facilitates monitors and Directors of new ongoing training needsand arranges scheduled be to updates for as required. arranges Secretary The Company for sessions training additional as Board and committees the appropriate, which during 2018 training included refresher on directors’ duties, corporate and developments governance reporting regulatory developments. ive Directors n-Executive Directors’ n-Executive he devotes sufficient to time sufficient he devotes duties. his discharge effectively Chair of the commitment Time and Non-Execut for of the appointment The letters Directors and Chair Non-Executive commitment time the expected state Chair The roles. their fulfill to and Non-Executive Directorsare sufficient to set aside expected The meetings. to prepare for time all Directors that satisfied is Board sufficient time devote to continue todischarge their duties effectively. re-appointment and Appointment of Directors and rigorous a is formal, There for the procedure transparent The Directors. of new appointment Board may appoint an individual as or a vacancy to fill either a Director as an additional member of the new for The process Board. is led the by appointments Nomination & Governance a makes which Committee, to Board. the recommendation 2018 UK Corporate Governance The Code recommends that all Directors subjectannual to be should shareholders. by re-appointment exception (with the All Directors Greenstreet) will Yvonne of Dr. at the re-appointment for stand Meeting General Annual forthcoming to held on be May 8, 2019 (the ‘2019 AGM’). The No and service appointment of terms contracts will be made available for inspection bythe shareholders at the out setting Letters 2019 AGM. Non- each of appointment of terms Executive Director are also available inspection at the for Company’s Registered Office.

Corporate Governance Report continued

Board and committee attendance Directors are expected to attend each Board meeting and all meetings of the committees of which they are a member, save for in exceptional circumstances. To maximize attendance, scheduled meetings are arranged in advance to help Directors avoid clashes with other commitments. If a Director is unable to attend a meeting, they are provided with the briefing materials before the meeting and can discuss any agenda item with the Chair of the Board, Chief Executive Officer or relevant Committee Chair. Board and committee meetings are held in the UK and the US. The table below gives details of Directors’ attendance at Board and Committee meetings held during the year.

Nomination & Governance Remuneration Science & Policy Board Audit Committee Committee Committee Committee Scheduled Ad hoc Scheduled Ad hoc Scheduled Scheduled Ad hoc Scheduled Chair Howard Pien 5/5 17/17 – – – – – Executive Directors Shaun Thaxter 5/5 17/17 – – – – – Mark Crossley 5/5 17/17 – – – – – Non-Executive Directors Yvonne Greenstreet 5/5 12/17 5/5 2/3 – – – 5/5 Tom McLellan 5/5 16/17 – 5/5 – – 5/5 Tatjana May 5/5 17/17 – 5/5 5/5 2/2 - Lorna Parker 5/5 13/17 – 5/5 5/5 2/2 – Dan Phelan 5/5 17/17 – 5/5 5/5 2/2 – Chris Schade 5/5 15/17 5/5 3/3 – – – 5/5 Daniel Tassé 5/5 14/17 5/5 3/3 – 5/5 2/2 – Lizabeth Zlatkus 5/5 17/17 5/5 3/3 – – – 5/5

Many of the ad hoc meetings were called at very short notice to ensure that the Board were kept apprised of developments in respect of the various litigation and investigational matters. Due to the need for the Board to convene often at very short notice, some Directors were not always able to attend all meetings. When Directors are unable to attend meetings, they receive briefing papers and have the opportunity to provide comments to the Chair ahead of the meeting.

46 www.indivior.com Governance 47 47 ’s intellectual property ties of their respective Committee in theUS throughout year. the As TM Indivior Annual Report 2018 and approved the voluntary prepaymentof $150m of Board agreedrecommend to there-appointment of UK charity DrugFAM from Elizabeth Burton-Phillips hout the process and remained so during year. the during so remained and the process hout ncial performance againstexpectations and external in the US and agreed to invest strategically in the the in strategically invest to agreed and US the in the operationalbusinesseachthe performance at of TM force and in research and development activities. s peers and the areas of focus for 2018. ers of the ExecutiveCommittee. ideda report on the activitiestheof Committee at the following onsibility resp corporate Group’s performance. the outlining The Board ans andperformance of SUBLOCADE rectors to discharge their duties effectively. Details of the principal matters matters the of principal Details their duties effectively. discharge rectors to arrangements for the Board and memb brokers. the Group’s from presentations it versus performance Group’s the reviewed MBE, Founder andChair of the charity. related to SUBOXONE®(buprenorphine and naloxone) Sublingual Film (CIII)and antitrustlitigation matters. Board The resolution. a such reach will it cost what at or when, whether, certainty any with predict cannot has been highly engaged in thesediscussions throug The Group continues to cooperate fully with hopefulall partieis s and thesebe resolved. matters will soon debt in September and $85m of debt in November 2018. 2018. November in debt of $85m and September in debt Board meeting. Auditor. External the as LLP PricewaterhouseCoopers Report and results announcements. at the following Board meeting. revisions under the new 2018 UK Corporate Governance Code. address these. The Board carefully reviewed the fina guidance, and approvedchanges to thesebased onmanagement’s estimates. slower thanexpected ramp up and adoption of SUBLOCADEand thepotential ‘at risk’launchgeneric a of rival. These included workin the reductions the launch to diversify the Group’s future revenue streams. in China. interest scheduled meeting. September 2018. scheduled meeting. the business encountered slower than expected ramp up and adoption rates, the Board sought further detailregarding underlyingthe issuesaffecting the launch andthe actions that management weretaking to Alongside the Nomination & Governance Committee, considered the Group’s succession planning planning succession Group’s the considered Committee, Governance & Nomination the Alongside The Board was kept abreast of the views of shareholders during the yearmanagementby and The Board received a presentation BoardThe received presentationa about work the of Group relating to the matters litigation the on updated regularly was Board The The Group is in discussions with the DOJ about a possible resolution to its investigations, although it The Board kept the Group’s capital base under review The Chair of the Audit Committee prov On the recommendationAuditthe Committee, of the BoardDuring reviewed the year, the andapproved theGroup’sprincipal inclusion in the Annual risks for 57. to 50 pages on found be can 2018 in Committee Audit the of work the regarding information Further the CommitThe Chairstees of theeach of provided report a on the activi CompanyThe Secretary provided update an the on corporate governance developmentsand,particular,in The Board reviewed and approved the 2017 Annual Report and Notice of Annual General Meeting. The BoardThe considered and approved the contingency plans prepared management by addressto the BoardThe reviewed the launch plans for PERSERIS BoardThe undertookreview a of strategic opportunities, whichincluded the decisionto divest theGroup’s each at business the of performance financial the on update an provided Officer Financial Chief The BoardThe reviewed andapproved theFY 2017preliminary announcement and the 2018 half-year results. BoardThe reviewed andagreed thechanges in outlook andguidance announced in July and The Chief ExecutiveOfficer provided an update on BoardThe reviewed the launch pl

‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹

udit and risk

Litigation matters Government investigation Investor relations Corporate responsibility Governance and compliance A Financial performance Financial performance Operational performance Activities during the year year the during Activities met that it considers Board The ad 17 hoc meetings. and meetings scheduled five held the Board the year, During Di the enable to frequently sufficiently table. the in following are shown year the during discussed Board effectiveness Corporate Governance Report continued

Board effectiveness review ‹ culture – devoting time to review also presented financial and In accordance with the Code, the the Group’s culture, particularly operational results, together with Board undertook a review of the following the organizational future strategy, at the Company’s effectiveness of its performance changes that have been made; and AGM in May 2018. and of its committees and individual ‹ Board materials – a continued The quarterly financial results Directors during the year. The focus on developing Board announcements are accompanied Review was internally facilitated materials that are clear and by a conference call with the Chief by the Chair of the Nomination & concise. Executive Officer, Chief Financial Governance Committee, supported Officer and other executives for by the Company Secretary. The The Board plans to address these investors and analysts – such calls Review comprised a survey matters in the coming year. are also live webcast. Members of completed by each of the Directors The Non-Executive Directors, led the investment community are and the Company Secretary. by the Senior Independent invited to engage management with The survey focused on a number Director, carried out the review questions during the question and of key areas, including board of the performance of the Chair of answer period. composition, dynamics and the Board. During the year, the Chief Executive expertise, meeting management The last externally facilitated Board Officer, Chief Financial Officer and support, strategic oversight, effectiveness review was carried out and the Vice President, Investor risk management and succession in 2017 by Oliver Ziehn of Lintstock. Relations met regularly with the planning. The Board intends to comply with Company’s major shareholders and The responses to the survey were the provisions of the Code regarding financial analysts to discuss matters collated and a report was prepared performance evaluation and to relating to the Group’s business by Lintstock. The report was conduct its next externally strategy and current performance. circulated to the Directors and facilitated review in 2020. When required to do so, the Chair was considered by the Board at and Non-Executive Directors may its meeting in November 2018. Engagement with shareholders attend meetings with major shareholders. The overall performance of the The Board recognizes the Board and its committees was importance of regular, effective and Executive management also positively rated, particularly in constructive communications with presented at and attended the context of the challenges facing its shareholders. The principal various healthcare sector investor the business. In particular, the opportunity for shareholders to conferences for the purposes of composition and broad expertise engage with the Board face-to-face meeting investors. Over the course of the Board was highly rated. is at the Company’s AGM. of the year, management held smaller group meetings with The review highlighted a number of The Group announces its financial investing institutions in the US areas of focus for 2019, including: results on a quarterly basis, and these are released to the London and UK. The Non-Executive Directors ‹ succession planning – the need Stock Exchange via an authorized regularly receive presentations and to continue to focus on succession Regulatory Information Service, updates from the Chief Executive planning arrangements for the and subsequently published on the Officer, Chief Financial Officer Board and senior management; Group’s website. Half and full-year and the Vice President, Investor ‹ stakeholder engagement – results are accompanied by a Relations, covering discussions gaining a greater understanding presentation by the Chief Executive with the Company’s institutional of the views of key stakeholders Officer, Chief Financial Officer and shareholders and are informed of including employees, patients and other executives for investors, which any issues or concerns raised during physicians; is live webcast and archived on the those discussions. Shareholders’ Group’s website. Members of the and analysts’ briefings are circulated investment community are invited to to all Non-Executive Directors. This engage management with questions process enhances Non-Executive during the question and answer Directors’ understanding of the period. The Chief Executive Officer views of shareholders and enables

48 www.indivior.com Governance 49 49 49 all shareholders shareholders all Indivior Annual Report 2018 Annual General Meeting Meeting General Annual provides AGM The questions to put an opportunity with to the Board of Directors and to vote out in the set resolutions on the are resolutions All of Meeting. Notice one with of poll, on way by voted results The held. share each for vote of arethe announced poll theto LondonStock Exchange and website Indivior’s on published the AGM. of the end after shortly Further disclosures further the fulfilling Information disclosure requirements contained Schedule 2006, Act Companies the in of7 Largethe and Medium-sized (Accounts Groups and Companies 2008 Regulations Reports) and Rules Listing FCA’s the and and Guidance Disclosure and TransparencysetRules outis Directors’ the of 78 page on Report which are incorporated Corporate this into reference by Report. Governance The Audit Committee Committee The Audit formal makes Committee The arrangements transparent and forconsidering howfinancial control internal and reporting principles are applied, and for and appropriate an maintaining with the relationship transparent Auditor, External independent PricewaterhouseCoopers LLP. of activities and role the of Details out on pages are set Committee the 50 to 57. Board accountability accountability Board the for The Board is responsible integrityofGroup’s the financial its recognizes and statements, responsibilityto present a fair, understandable and balanced assessment of the Group’s position prospects.and The Board has assessed, together all Committee, Audit the with information available in considering theoverall drafting of the Group’s the and process statements financial and compiled were they which by reviewed. In doing so, the Board ensured that adequate time was dedicateddraftingto the process so linkagesthat consistenciesand were Drafts tested. and through worked received were knowledgeableby executivesand senior management notdirectly involved in the year-end that recognizes Board The process. interim to extends responsibility this otherand inside information, information required to be to statutory in relation presented regulators. to reports and requests, relation In requirements, these to Statement the to ismade reference Directors’of Responsibilities for statements, financial the preparing 84. and 83 on pages out set the Boardthe judgeto what future action would assist further investors’ understanding of the Group’s objectives.

Corporate Governance Report continued

Introduction to Board Committees

Audit Committee Committee composition ‹ the role of internal and external During the year and as at the date auditing and risk management; of this Report, the Committee ‹ matters that may influence the comprises four independent presentation of accounts and key Non-Executive Directors: figures; and ‹ Chris Schade (Chair) ‹ the regulatory framework for the ‹ Yvonne Greenstreet Group’s business. ‹ Daniel Tassé The Committee has unrestricted ‹ Lizabeth Zlatkus access to Group documents, information, employees, and the Governance External Auditor. The Committee The Committee comprises a may also take independent minimum of three members, all professional advice on any matters of whom are independent Non- covered by its Terms of Reference Executive Directors. Two members at the Group’s expense. The constitute a quorum and the Committee’s Terms of Reference Committee met eight times “On behalf of the Board, can be viewed on the Investors during the year of which five were section of the Group’s website I am pleased to present scheduled meetings and three ad www.indivior.com. the Audit Committee hoc. The agendas were linked to events in the Group’s financial Throughout the year, the Committee Report for the calendar. Details of attendance invited the Chief Financial Officer, Group Financial Controller, Vice financial year ended at Committee meetings are on page 46. President, Head of Internal Audit December 31, 2018.” and Risk Management, Vice The Committee as a whole has the President, Internal Audit and the necessary competence relevant to Audit Partner and other the sector in which it operates. The representatives from the External Committee has determined that Auditor to attend meetings of the Chris Schade and Lizabeth Zlatkus Committee, although it reserves the have recent and relevant financial right to meet without any of these experience and competence in individuals. For part of each accountancy or auditing. All meeting, the Committee will meet Committee members are financially separately with representatives literate and have an understanding from the External Auditor and Vice of the following areas: President, Head of Internal Audit ‹ the principles of, and and Risk Management without any developments in, financial other persons present. reporting, including the applicable The Committee Chair reports the accounting standards and outcome of each Committee meeting statements of recommended to the Board, and copies of the practice; minutes of each Committee meeting ‹ key aspects of the Group’s are circulated to all Directors. operations including corporate The Committee’s effectiveness was policies and the Group’s internal reviewed during the year as part of control environment; the Board’s annual performance evaluation. A description of the evaluation is set out on page 48.

50 www.indivior.com Governance 51 51 Indivior Annual Report 2018 to review and monitor the External the External monitor and review to Auditor’s objectivity and agree independence, the scope of work, and their negotiate agree assess the audit, for the paid fees process audit of the effectiveness to relation in policy the agree and theprovision of non-audit services. updates from the External Auditor Auditor External the from updates on the delivery focusing of the Audit Plan, financial reporting, and judgments accounting internal the on observations control environment financial haveencountered they which during their work. summary reports of instances of of instances of reports summary whistleblowing, together with management actions; and progress against plan and results results and plan against progress activities, Audit’s Internal of and Audit Internal including internal on reports management controlscovering financial, and operational, compliance, informationtechnology matters, of and the implementation managementactions to address weaknesses; control identified scheduled finance updates on updates finance scheduled including reporting, financial and reporting significant matters; accounting

‹ ‹ ‹ ‹ Activities during the year year the during Activities work annual an has Committee The items standing includes which plan in considers, the Committee that addition to any specific matters attention. Committee’s the requiring Aspart of the annual work plan, the Committee receives and considers, amongst other itemsof business: ‹ to assist the Board in relation to assist Board in relation the to the of assessment Board’s the the Group facing risks principal prospectsthe and Groupof the disclosures of purposes the for in required the Annual Report Accounts.and the of effectiveness the review to Group’sinternal financial controls, including the policies and overall internal assessing for processes effectiveness and control financial by taken action corrective of management. tomonitor the Group’s policies, proceduresand controls for preventingbribery, money Group’s the and laundering whistleblowing. for arrangements to monitor and review the Group’s of the effectiveness the in function Audit Internal contextGroup’sthe of overall controls and risks governance, and framework; to consider and review the remit theof Internal Audit function, ensuring it has adequate resources and all necessary access it to to enable information to effectively. function its perform oversee to the relationship and the the Group between the advise Auditor, External Auditor External the how Board integrity the to contributed has ofthe Group’s financial reporting to the to report and process, the Board whether it considers out put be should contract audit to conforming thereby tender, to or requirements for the tendering rotation of the audit services contract; and

‹ financial controls Internal ‹ fraud and Whistleblowing ‹ Audit Internal ‹ ‹ Auditor External ‹ tomonitor the integrity of the Group’s financial reporting, including all formal announcements relating to compliance and results financial standards; auditing with the of Board the inform to outcome of the Group’s external audit and explain how it of integrity the to contributed financial reporting; for strategy the Group’s review to themanagement of key financial has Group the ensure to and risks accounting appropriate followed appropriate and made policies and judgments; and estimates tochallenge, where necessary, the any changes and of, consistency to, accounting and treasury the whether has Group policies; accounting appropriate followed appropriate and made policies the judgments; and estimates clarity and completenessof disclosures, significant the from resulting adjustments external audit, the going concern the viability assumption, with compliance and statement standards. auditing of the the review content to and Accounts and Report Annual Boardwhether, on advisethe taken as a whole, it is fair, and understandable and balanced the information provides to shareholders for necessary Group’sassessthe position and and business performance, strategy; and

Role and responsibilities responsibilities Role and the of responsibilities and role The include: Committee reporting Financial ‹ ‹ ‹ ‹ reporting Narrative ‹

Corporate Governance Report continued

Significant judgments The following areas of focus in relation to the Group’s Annual Report and other accounting areas requiring management judgment were considered and discussed with both management and the External Auditor: Areas of focus Action taken/conclusion Viability statement ‹ When assessing the prospects and challenges facing the Group resulting from lower net revenue and slightly higher adjusted net income compared to the prior year, the Committee considered scenarios that could impact future financial projections and the ability of the Group to remain viable. ‹ The Committee debated with management the dependencies on which the viability statement was reliant, which included, amongst other items, the future growth of SUBLOCADE™ and PERSERIS™, legal and financial risks associated with the ongoing U.S. Department of Justice Investigation and the disruption to the Group’s base business, in the US, caused by generic entrants into the market. The Committee reviewed management’s business plan for the optimization of the base business and cash forecasts, and the possible use of cash reserves over the length of the viability period. The Committee also probed management’s judgment regarding short- and long-term provisioning, and the sensitivity analysis initiated by management assessing the impact of generic entrants into the market. ‹ The Committee reiterated that a four-year period was an appropriate timeframe over which to make the viability statement and reflected the best estimate of the future prospects of the business. ‹ Based on the Committee’s assessment of the Group’s prospects, management’s approach to the challenges facing the business, including appropriate and detailed financial disclosures in the Annual Report referencing these challenges to viability, the Committee confirms that it has a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the next four years. Further information on the Group’s principal risks including the viability statement are detailed on pages 29 to 35. Going concern ‹ Uncertainties relating to the ongoing litigation, the U.S. Department of Justice Investigation, revenue outlook for SUBLOCADE™ and PERSERIS™, and generic entrants into the market have been of importance to the Committee throughout the year and has further highlighted the importance of the Committee’s evaluation as to whether the Group remains a going concern when preparing the financial statements. ‹ The Committee explored with management its litigation strategy and the possibility of cash outflows after the going concern period, and cash forecasting scenarios. The Committee also challenged management on the adequacy of provisioning for ongoing litigation matters. To assist, management provided detailed financial planning analysis for consideration by the Committee, detailing significant steps to reduce the cost base of the business in order to manage effectively the Group’s capital structure to ensure sufficient liquidity over possible near-term litigation and trading outcomes. ‹ As a consequence of the need to protect and reduce the cost base of the business, management implemented restructuring and cost saving initiatives, which included a Group-wide redundancy program, to partially offset the financial impact of recent adverse US market developments. Further information regarding the cost saving initiatives are on page 15. ‹ Following the implementation of the cost-saving initiatives, the strength of management’s plans for managing the day-to-day operations of the business and planned cash management, the Committee was able to confirm that following the going concern basis of accounting in the financial statements continues to be appropriate.

52 www.indivior.com Governance 53 53 Indivior Annual Report 2018 y prepayments, and reviewed and y prepayments, ments would be in the best interests of the ments would interests be best in the ical nature of each with both management management with both of each ical nature of making voluntary prepayments of debt debt of prepayments voluntary making of Group. Prevailing financialmarket conditions on and the disruption of generic entrants entrants generic of disruption the and on e plus the risks associated with a debt a debt with associated risks the plus e ttee provided direction on undertaking the the undertaking on direction provided ttee for the Committee, as noted above in sections above in sections as the noted Committee, for ictions. The Committee challenged management management challenged Committee The ictions. ct on the Group of recent US tax reform. reform. tax US recent of Group the on ct loan facilities, the Committee received received Committee the loan facilities, impacted by impacted voluntar making The Committee concluded that management oversight and judgment of the Group’s tax Group’s the of judgment and oversight management that concluded Committee The Given that certain judgments and in judgments are and disclosures certain the Annual Report judgmental, that Given highly the application their and policies accounting Group’s the that itself satisfied has Committee The The Group’s worldwide operations are significantly integrated and involve a number of The Committee judged that such voluntaryprepay such judged that Committee The Whenapplying the Group’s accounting policies, management must makea number TheCommittee has challenged management on keyjudgments and estimations covering Following amendment to the Group’s term term Group’s the to amendment Following and cash Group’s the which to extent the management with discussed Committee The reviewed theappropriateness of management’s tax strategy, policy and principles for treatment tax the on management challenged also Committee The risks. tax managing regarding orphan drug status plus the impa for rate tax effective resulting the items, exceptional of impact the excluding Accordingly, yearthe December2018,ended 31, was(2017:15% 25%). strategy, tax Group’s the with accordance in is and appropriate be to continued matters www.indivior.com/corporate-governance/tax-strategy. at viewed be can which relating to the viability statement and going concern. concern. and going statement viability to the relating Committeehas reviewed management’s inputsinto their analysis and development of the judgmentsand disclosures,discussedand critthe and the Group’s External Auditor. the both with satisfied also is Committee The appropriate. are management by and made judgments the including management, by performed analysis of appropriateness disclosures. and the related used estimates authoritiesjurisdvariousin tax by decisions ontheir estimates of financial exposurefaced by the Groupin managing its tax affairs and paydown program were explored. Commi the management, assist to and, Group voluntarydebt paydown program. Subsequently, totala $235mof in voluntary prepayments were made debt of year.during the and estimates standard, accounting applicable of application the on key judgments of to considered factors on based are estimates and judgments These assumptions. be relevant. The litigation. ongoing to relating provisions and rebating tactical recognition, revenue anduncertaintyongoing outcomethe of litigati into the US market are also key sensitivities presentations from management on the option option the on management from presentations facilities. loan term the with accordance in liquidity position would be the for positions forecasting cash and treasury by the Committe considered were and timings

‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹

udgments and udgments Taxation Critical accounting j Areas of focus Prepayment of external debt Action taken/conclusion

disclosures, and key disclosures, and key sources of estimation Corporate Governance Report continued

Monitoring the integrity of ‹ Internal Audit’s staffing and Internal financial control and reported financial information resources; risk management Ensuring the integrity of the ‹ Internal Audit’s plans and its The Committee acknowledges its financial statements and associated achievements of planned activity; responsibilities to assist the Board announcements is a fundamental to fulfill its responsibilities for the ‹ the results of key audits and other responsibility of the Committee and, Group’s risk management and significant findings, the adequacy during the year, the Committee internal control systems, including of management’s response and reviewed the Group’s Annual Report, the adequacy and effectiveness of the timeliness of their resolution; and interim financial statements. the control environment, controls Each review considered: ‹ the nature and extent of non-audit over financial reporting and the activity performed by Internal ‹ the accounting principles, policies Group’s compliance with the Code. Audit; and and practices adopted in the All business areas of the Group Group’s financial statements, any ‹ changes since the last annual prepare annual operating plans proposed changes to them and assessment of the significant risks and budgets. These are regularly the adequacy of their disclosure; and the Group’s ability to respond reviewed and updated as necessary to changes in its business and the ‹ the description of performance to throughout the year. Performance external environment. ensure it was fair, balanced and against budget is monitored understandable; centrally at operational level, and is The annual review of the Internal discussed at Committee and Board ‹ accounting issues or areas Audit function was conducted during meetings. The cash position of the of complexity, the actions, the year with the assistance of Group is monitored daily by the estimates and judgments of Lintstock, an independent external Treasury function. management in relation to evaluation consultancy. The review Clear guidelines are in place for financial reporting, and the included input from members of the capital expenditure and investment assumptions underlying the going Committee, Executive Committee, decisions. These include budget concern and viability statements; the External Auditor and senior preparation, appraisal and review members of key departments from ‹ any significant adjustments to procedures, and delegated within the Group. Accordingly, it was financial reporting arising from the authority levels. external audit; concluded that the Internal Audit function remained effective and Effective controls ensure that the ‹ tax contingencies, compliance with continued to meet the needs of Group’s exposure to avoidable risk statutory tax obligations and the the Group. is minimized, and the Committee is Group’s tax policy; and cognizant of the material controls Throughout the year, the Committee ‹ litigation and contingent liabilities within the Group, including, amongst continued to receive regular updates affecting the Group. other things, that proper accounting on the work carried out by the records are maintained, financial Internal Audit function. Internal Audit information used within all business The Committee is required to During the year, a new Vice areas is reliable and up-to-date, and assist the Board in fulfilling its President, Head of Internal the financial reporting processes responsibilities regarding the Audit and Risk Management, comply with relevant regulatory adequacy of resourcing and the was appointed. Following the reporting requirements. appointment, the Committee planning of the Internal Audit The Group has in place internal considered a draft Risk Assessment function of the Group to ensure controls and risk management and Audit Plan for 2019, which was they are appropriate for the systems in relation to the Group’s subsequently approved by the Group’s needs. To fulfill its duties, financial reporting processes for Committee in January 2019. the Committee considered: preparation of consolidated ‹ Internal Audit’s reporting lines and accounts. These systems include its access to the Committee and policies and procedures that relate all Board members; to the maintenance of records which accurately and fairly reflect

54 www.indivior.com Governance 55 55 Indivior Annual Report 2018 On November 30, 2018, the the 2018, 30, November On Financial the of Committee Conduct requested (CC) Council Reporting that the Group assist them in their reporting relevant of review requirements with the associated financial and Report Annual Group’s 2017. 31, December to statements and Committee the via Group, The the with engaged management, information all and provided CC requested.On review, the Group disclosure additional made has Report Annual this in enhancements the and statements, financial and that note to pleased is Committee their that confirmed have CC the relating enquiries the review to wereclosed. Auditor External PricewaterhouseCoopers LLP (PwC) as the Group’s appointed were in on Auditor demerger External last were and 2014, December shareholders by re-appointed at the AGM in May 2018. the oversees Committee The the External work undertaken by for responsible is and Auditor, implementation development, the and monitoring of policies and the of use the on procedures non-audit for Auditor External with accordance in services Whistleblowing Whistleblowing policy whistleblowing Group’s The an arrangements for contains service independent external provider to receive, in confidence, risk on accounting, complaints auditing control, internal issues, for matters related and issues as the Committee to reporting The Committee appropriate. reviewedregularly reports provided by the external service provider, and therefrom. arising actions the Council Reporting Financial review of2017 Annual Report the date of approval of the 2018 2018 the of approval of date the Accounts. and Report Annual Significant failings or or failings Significant weaknesses The that confirms no Committee or failings weaknesses significant and, during year the identified were therefore, no remedial actions required. were Misstatements the to reported Management not were they that Committee immaterial or material any of aware made. intentionally misstatements to reported Auditor External The misstatements the Committee the theyhad found during their work the and, due consideration, after management with agreed Committee not were misstatements these that adjustments no that and material required. were Reviewing the effectiveness of of effectiveness the Reviewing internal control throughout to above, referred As the through Board, the year the by and assisted Committee reviews function, Audit Internal the control of internal the effectiveness and The of risk. the management into reports function Audit Internal authority has and Committee the toreview any relevant part of the Group or its business and has a that reviews of schedule planned risks. Group’s with the coincide additionIn tofinancial and the Committee reports, business has reviewed medium- and longer- on reports plans, strategic term keyoperational issues, tax, treasury,risk management, legal reports, and Committee matters External and Internal including Auditors’ reports. the External Auditor’s reports to to reports Auditor’s External the Committee; the key on Audit Internal from reports in any deficiencies and areas audit covering environment control the internal financial control, operational and risk management; and IT to approach Group’s the and security; cyber theGroup’s whistleblowing policy with compliance and the ongoing reviewing including policy the reportsprovided by the external actions any and provider service arisingtherefrom.

transactions, provide reasonable reasonable provide transactions, transactions assurancethat are the to permit asnecessary recorded statements, financial of preparation of requirethe Group representatives reported their that certify to fair and a true gives information the of affairs of state of the view the for results its and business reconcile and review and period, reported data. Additionally, the Committeehas reviewed plans on key operational issues, risk management,and Internaland reports. Auditors’ External areto designed Control processes the rather than eliminate, manage, and unprotected being assets of risk unauthorized their guard against to failure the in culminating use, achieve business objectives. Internal provide only will controls reasonable and not total assurance misstatement material against loss.or Committee the duties, its fulfill To reviewed: ‹ ‹ ‹ ‹ Accordingly, confirms the Committee there is a process for identifying, evaluating and managing risks faced operational the and Group the by appropriate of the effectiveness been in have all of which controls, placethroughout yearthe andtoup

Corporate Governance Report continued

professional and regulatory The Financial Reporting Council’s ‹ recommendations made by the requirements. These policies are Audit Quality Review team (AQR) External Auditor to the Committee kept under review to ensure that the routinely monitors the quality of the and the adequacy of Group benefits, in a cost-effective audit work of certain UK audit firms management’s response; manner, from the cumulative through inspections of sample ‹ recent and historical performance knowledge and experience of the audits and related procedures of of the External Auditor in relation External Auditor while ensuring that individual audit firms. During the to the Group’s audits including the External Auditor maintains the year, the AQR selected to review the the quality and probity of necessary degree of independence audit of the Group’s December 31, communication with the and objectivity. During the year, the 2017 financial statements. On Committee; Committee continued to meet with conclusion of the inspection, the the External Auditor following Committee is pleased to note that ‹ the appropriateness of fees Committee meetings, without the AQR were satisfied that no relative to both efficiency and members of management being matters arose during the inspection audit quality; present, and reviewed key issues. which required action. Additionally, ‹ the External Auditor’s The Committee has formally the AQR report noted that in one independence policies and reviewed the independence of the particular area of the audit they processes for maintaining its External Auditor, which has provided considered the work of the External independence; a letter confirming that it believes it Auditor to be of a high standard. ‹ the length of tenure as the Group’s remained independent throughout Auditor effectiveness External Auditor and its depth of the year, within the meaning of the To assess the effectiveness of the understanding of the Group’s regulations on this matter and in External Auditor and fulfill its business, operations and systems, accordance with its professional responsibilities for oversight of and accounting policies and standards. the external audit process, the practices; To fulfill its responsibilities to Committee reviewed: ‹ the capability, expertise and ensure the independence of the ‹ the fulfillment by the External efficiency in handling the breadth External Auditor, the Committee Auditor of the agreed Audit Plan and complexity of the Group’s has reviewed: and variations from it; operations worldwide; and ‹ a report from the External Auditor ‹ reports highlighting the major ‹ the demonstration of professional describing arrangements to issues that arose during the integrity and objectivity to rotate identify, report and manage any course of the audit and their and select a lead Audit Partner conflict of interest, and policies resolution; and other key engagement and procedures for maintaining ‹ a report from the Audit Partner partners at least every five years independence and monitoring at each Committee meeting; or as otherwise required by compliance with relevant applicable law or regulation. requirements; and ‹ the terms, areas of responsibility, associated duties and scope of the ‹ the extent of non-audit services To further assist the Committee in audit as set out in the engagement assessing the effectiveness of the provided by the External Auditor; letter with the External Auditor; and External Auditor, the Committee ‹ the overall Audit Plan and fee undertook their annual assessment ‹ the External Audit team is led by proposal; of the External Auditor via a Sarah Quinn (Audit Partner) who ‹ key accounting and audit survey completed by key internal was appointed following the stakeholders. The analysis of the retirement of the previous Audit judgments and how the External Auditor applied constructive results of the survey was undertaken Partner at the conclusion of the by Lintstock and the results were 2016 Year-End Audit. challenge and professional skepticism when dealing with discussed with the Committee management; and the External Auditor at the Committee meeting held in November 2018.

56 www.indivior.com Governance 57 57 Indivior Annual Report 2018 Auditor was best placed to perform perform to placed best was Auditor these services. services, non-audit providing In the considered Committee the the of independence ongoing satisfied were and Auditor External of the the independence that not was Auditor External providing in compromised these services. re-appointment Auditor External recommended has Committee The PwC the Board to be that proposed shareholders by re-appointment for at the AGM in Auditor as External the May2019. The Group has no current plans. retendering Compliance with CMA OrderCompliance with CMA duringthe that confirms Group The period under review, it has complied of The Statutory with provisions the Audit Services Largefor Companies (Mandatory Use Investigation Market ofCompetitive Tender Processes Committee Audit and OrderResponsibilities) 2014. ChrisSchade of Audit Committee the Chair March 1, 2019 itself that there is no effect on their their on effect no is there that itself independence. Non-audit services under in keeping The Committee, reviewthe nature and level of non- the by undertaken audit services that, recognizes Auditor, External nature the circumstances, certain in theof advice required may make it moretimely and cost-effective to who Auditor, the External appoint alreadyunderstandinghasa good business.the of policy Group’s the year, the During more describe to updated been has precisely,services prohibitedunder rules Council Reporting Financial for the and Committee the request services. all non-audit approve to will consider Committee The othernon-audit services when it Group the of interests best the in is they do so, to can provided be jeopardizing without undertaken the of independence the Auditor. External TheGroup’s policy on non-audit fees states that, onan annual basis, normally not should fees non-audit of of 70% be in Group’s the excess auditaudit-related externaland services billed over the last years. three paid fees related Audit and Audit year the for Auditor External the to were 31, 2018, December ended provided are details Further $2.2m. financial the to 6 Note in statements. and non-audit audit-related All services were approved in advance Audit-related Committee. the by quarterly for primarily were services services audit and reviews topertaining potential a listing in theUS whilst non-audit services in 2017 related to advisoryfor services potentialfinancing alternatives. The Participants in the survey were survey in the Participants drawn from individuals who have External with the contact significant Auditorthroughout the year the of members included and from members as well as Committee, the Finance, Treasury, Internal Audit management. plus teams, Legal and on a returned were replies All basis. confidential to continues Committee The the appointment annually review taking Auditor, External the of the Auditor’s account into independence effectiveness, and Audit Partner rotation, and to the a recommendation makes Board accordingly. external the open to decision Any taken be would tender to audit of the recommendation on the has tender no date, To Committee. no are there and conducted, been restrict that obligations contractual of choice current Group’s the Auditor. External responsibilities details the Further on the regarding Committee the of Auditor of the External engagement and the supply of non-audit services the in Committee’s be can found Terms of Reference. independence Auditor External place in policy formal a has Indivior of the independence safeguard to Committee The Auditor. External the keep Officer Financial Chief the and of and objectivity independence the review. under Auditor External the on placed is reliance Additionally, internal Auditor’s External the independence controls as detailed issued Letter in Independence their in the year. the to Company the reviewed has Committee The nature and level of non-audit External the by undertaken services Auditor during the year to satisfy

Corporate Governance Report continued

Nomination & Committee composition ‹ overseeing succession plans for Governance Committee At December 31, 2018, the Committee the Board, its Committees and for comprised four independent Non- senior management positions and Executive Directors: ensuring that these support the development of a diverse pipeline ‹ Lorna Parker (Chair) for succession. ‹ Tatjana May ‹ Thomas McLellan Corporate governance and compliance ‹ Daniel J. Phelan ‹ keeping the Group’s corporate Meetings governance arrangements under The Committee met five times in review and monitoring external 2018. Details of attendance at corporate governance Committee meetings are detailed on developments; page 46. ‹ reviewing and evaluating any At the invitation of the Committee, conflicts of interest notified by the Chair of the Board, the Chief Directors, and recommending authorizations or other measures “On behalf of the Board Executive Officer, the Chief Legal Officer, the Chief Human Resources to the Board; and I am pleased to present Officer, the Chief Integrity and ‹ overseeing the Group’s corporate the Nomination & Compliance Officer and the Vice compliance program. Governance President Corporate Compliance and the Company Secretary attended The Committee has delegated Committee Report for meetings of the Committee. authority from the Board, which is the financial year ended The Committee holds a private set out in its Terms of Reference and available to view on the Company’s December 31, 2018.” session at each meeting without members of the executive website www.indivior.com. management team being present. The Committee is supported by the The Chair of the Committee reports Company Secretary. The Committee on the activities of the Committee has authority to appoint search at the following Board meeting, consultants and other advisors at and copies of the minutes of its discretion. Committee meetings are circulated Activities during the year to all Directors. During the year, the Committee Role and responsibilities considered, amongst other items, The role and responsibilities of the the following matters: Committee falls into two key areas: Succession planning Board composition & succession The Committee reviewed the planning arrangements succession planning arrangements ‹ reviewing the size, composition, in place for the Board and members diversity and balance of skills of of the Executive Committee. In the Board and its Committees; particular, given that the majority of the Non-Executive Directors were ‹ overseeing the recruitment appointed in 2014 (at demerger), the process for Directors and making Committee recognises that there recommendations to the Board needs to be a clear plan in place for regarding new appointments; and their orderly succession.

58 www.indivior.com Governance 59 59 Indivior Annual Report 2018 staffing and resourcing of the of resourcing and staffing Compliance and Integrity Department. developments to policies and to policies developments process enhancements supported and advisors; external by a review of the results of the of the results a review third-party its of audit Group’s distributors; reports received via the Group’s Group’s the via received reports hotline reporting confidential (Ethicsline); compliance investigations; investigations; compliance field monitoring activities; activities; monitoring field detailsof training and employee education activities;

InOctober 2018, Cindy Cetani joined the Group in the newly Integrity of Chief role created is Cindy Officer; Compliance and also a member of the Executive This executive Committee. enhanced further appointment the strengthened and to commitment Group’s compliance. corporate a private held Committee The of Compliance with the Head session members without meeting each at management executive the of present. team Parker Lorna & Nomination of the Chair Committee Governance March 1, 2019 ‹ ‹ ‹ ‹ ‹ ‹ Corporate compliance compliance Corporate Committee the meeting, each At considered an update on the Group’s Corporate Compliance Program. reports These included matters: following the on updates ‹ the enhancements to policies policies to enhancements the proceduresand hadbeen that that ensure to implemented reasonable procedures are in of facilitation the prevent to place taxevasion; on behalf of the Board, reviewed approvedand Group’sthe UK and Statement; Slavery Modern reviewed theGroup’s policies in sexual harassment. to relation

Corporate governance governance Corporate Committee the year, the During of developments abreast was kept the by governance corporate in Company Secretary. This included UK Corporate new the of review a will apply which Code, Governance financial the for Company the to yearDecemberended 31,2019. The also reviewed a Committee number of key areas of corporate including: governance ‹ ‹ ‹ conflicts and independence Director of interest the Committee the year, During commitments other the considered of the Chair and Non-Executive likely were these if and Directors conflict potential a to rise give to Committee The interest. of alsoreviewed the likelytime the from required commitment and appointments other Directors’ with interfere to likely were these if theirability todischarge their duties (and having regard to ‘overboarding’ provided Committee The guidelines). Board. the to review its on report a the considered Board The recommendations Committee’s andconsidered thateach of the Non-Executive Directorsremained dedicated and independent their to discharge time sufficient dutieseffectively. nce evaluation.nce The Committee has developed developed has Committee The planformal a addressto the ofrefreshment the and Board itsCommittees, which takes into skills. and diversity tenure, account review Board effectiveness the considered Committee The review the regarding approach of of the Board, the effectiveness the individual and Committees its of the The Chair Directors. the by supported Committee, developed Secretary, Company the approach for 2018, which was undertaken by way of a survey. performance Committee’s The reviewedthe of as part Board’s was annualperforma the regarding information Further review in 2018 effectiveness be can on found 48.page Culture the reviewed Committee The the Group’s from feedback engagement and culture survey made progress the considered and against prior years. The Committee good that note to pleased was progresshad madebeen and that levels engagement and participation werehigh. Diversity and The reviewed Committee updatedGroup’sthe Diversity and and the Policy Diversity Inclusion for inclusion in the Statement Report. Annual is While to the Group not required as gap matters pay gender on report in than 250 employees it fewer has the reviewed Committee the UK, the and employees UK its of analysis gap was smaller the pay that noted than the national averages.

Corporate Governance Report continued

Science & Committee composition ‹ to assess the decision-making Policy Committee During the year and as at the date processes for R&D projects and of this Report, the Committee programs, and to review comprises four independent Non- benchmarking against industry Executive Directors: and scientific best practice, where appropriate; and ‹ Yvonne Greenstreet (Chair) ‹ to review relevant and important ‹ Thomas McLellan bioethical issues and assist in the ‹ Chris Schade formulation of, and agreement on ‹ Lizabeth Zlatkus behalf of the Board, appropriate policies in relation to such issues. Meetings The Committee met five times in The Committee has delegated 2018. Details of attendance at authority from the Board, which is Committee meetings are detailed set out in its Terms of Reference and on page 46. available to view on the Group’s At the invitation of the Chair of the website www.indivior.com. “On behalf of the Board, Committee, the Chief Scientific The Committee is supported by the Officer, Chief Medical Officer, Chief Deputy Company Secretary. The I am pleased to present Officer, Corporate Affairs and Committee has authority to appoint the Science & Policy Communications and VP, consultants and other advisors at its Committee Report for Government Affairs attended discretion. meetings of the Committee. The Committee holds a private the financial year ended Role and responsibilities session at each meeting without members of the executive December 31, 2018.” The role and responsibilities of the management team being present. Committee include: The Chair of the Committee reports ‹ to provide assurance to the on the activities of the Committee to Board regarding the quality, the Board, and copies of the minutes competitiveness and integrity of Committee meetings are of the Group’s research and circulated to all Directors. development (R&D) activities; ‹ to review the scientific technology and R&D capabilities deployed within the business;

60 www.indivior.com Governance 61 61 Indivior Annual Report 2018 reviewed of regulatory progress reviewed and outside the US; filings Group’s the on briefings received with policy strategies public state and federal the on emphasis landscape in the US.

‹ ‹ Yvonne Greenstreet Policy & Science the of Chair Committee March 1, 2019 monitored and reviewed the the reviewed and monitored Once- RBP-7000 of progress MonthlyRisperidone-Containing Subcutaneous Long-Acting U.S. obtained which Injectable, Administration Drug and Food approval on July 27, 2018,and the under available made trademarkPERSERIS™; the reviewed and monitored progressand development the of and pipeline product Company’s development asset stage early use substance for opportunities disorder; the of the effectiveness reviewed part as year the during Committee Board’sthe of annual performance evaluation; the on presentations received report to a submission Group’s for Institute the by commissioned Review Economic and Clinical Report Evidence Final The (ICER). 3, issuedICER onby was December 2018; followingofapprovalFDA SUBLOCADE in November 2017, the throughout Committee, the and reviewed monitored year, theplanning and execution of lifecycle and post-marketing managementstrategies associated with SUBLOCADE. out set is information Further on pages 16 to 17;

Activities during the year year the during Activities the Committee the year, During considered, among other items, the followingmatters: ‹ ‹ ‹ ‹ ‹

Directors’ remuneration report

Annual Remuneration Statement

Dear Shareholders, My colleagues and I on the guidelines. This results in a Committee hope that you find remuneration structure that is the report clear, transparent and different in some respects to a informative, and that we can count typical UK-listed or US-listed on your continued support. package, but one that the Committee The Directors’ Remuneration Report considers to be appropriate to be on pages 62 to 77 will be subject to able to retain and incentivize our an advisory vote at the Annual strong management team. General Meeting (‘AGM’) in 2019. All The Committee believes its overall payments to Directors during 2018 approach on remuneration were made in accordance with the continues to be aligned with the Remuneration Policy. Group’s strategic objectives and Our current Remuneration Policy shareholder interests. was approved by 94.3% of Summary of key decisions shareholders at the AGM in 2018, and The bullet points below set out I would like to thank shareholders a summary of the key decisions “On behalf of the Board, for their continuing support. and outcomes in relation to 2018 I am pleased to No changes are proposed to our remuneration and the approach present the Directors’ Remuneration Policy this year and for 2019 remuneration for the a summary of our Policy has been Executive Directors: Remuneration Report for included at the end of this report. ‹ 2018 Annual Incentive Plan (‘AIP’), the financial year ended Context for remuneration at the formulaic outturn resulted in December 31, 2018.” Indivior some bonus outturn, negative Our remuneration philosophy discretion was applied to reduce is focused on aligning the bonus amounts to zero; incentivization of our senior ‹ 2016-2018 Long-Term Incentive executives with our strategic Plan (‘LTIP’) awards, performance priorities. assessment resulted in 0% vesting; Indivior will continue to apply ‹ 2019 AIP, measures are focused on a remuneration philosophy that SUBLOCADETM revenue, PERSERISTM is simple, focused on delivering revenue and cash management; exceptional performance and ‹ 2019-2021 LTIP awards, a reduction aligned with shareholders’ interests. in the maximum opportunity from Our remuneration structure is 500% to 325% for 2019 awards only designed to reflect that the majority (a 35% reduction); and of our revenues are from our US operations and the significant ‹ 2019-2021 LTIP awards, measures majority of our management team are focused on shareholder are based in the US. We therefore returns. compete for talent against global The above was considered against pharmaceutical companies, a background of UK market-leading predominantly based in the US, shareholding requirements, the 2018 whose pay model is very different reduction in LTIP policy maximum to typical UK market practice. and the introduction of bonus We have designed our remuneration deferral provisions. structure to be carefully balanced, The following sections describe the as Indivior is a UK-listed company business performance context and operating within UK best practice subsequent decisions and outcomes and corporate governance in more detail.

62 www.indivior.com Governance 63 63 Indivior Annual Report 2018 2019-2021LTIP awards 500% of LTIP Ordinarily, of base salary would be made to Executive of in respect Directors period. performance 2019-2021 the carefully Committee the However, consideredquantum forthese awards,particularly contextthe in the in decline material the of The in 2018. share price Company’s was it that concluded Committee appropriate to reduce the size of awards granted underthe LTIP by 35%for 2019 only. The Executive will receive therefore Directors LTIP awards with a reduced maximumvalue of 325% of salary. were Directors Again, the Executive of the supportive Committee’s fully a that agreed and decision reduction the 2019for awards was appropriate. entirely considered also Committee The theLTIP performance metrics in The context. current business the would it that concluded Committee the to adjust be appropriate the that and determined measures awards will be subject to relative the of constituents the versus TSR trusts investment 250 excluding FTSE the versus TSR relative and 1500 of the S&P constituents Pharmaceutical and Biotech Index; The weighting. with equal each relative that considers Committee it is as metric a relevant remains TSR directly aligned of with the interests relative The use of two shareholders. groups isTSR intended comparator a is Indivior that the fact balance to also but company, listed 250 FTSE recognizesthat Indivior operates sector, where a within specialized themajority of its peers are listed in the US. Again, given the Board’s to reduce decision strategic and research in investment 2019, 31, December the year ended the of year final the was 2018 three-year performance period. The awards were subject to relative (‘TSR’) Return Shareholder Total the of the FTSE versus constituents excluding250 investment trusts TSR relative weighting); (one-third the of the S&P versus constituents Biotech and Pharmaceutical 1500 weighting); (one-third a and Index measure product and pipeline key Group The did weighting). (one-third notachieve threshold performance performance of the respect in measures and consequently there was 0% of awards these vesting and full. in lapsed they Base salary a received The Executive Directors 3% of effective increase salary base January 1, 2019. The Committee carefully considered the increases tobase salary concludedand that that given appropriate were these the average with aligned were they workforce. wider the for increase AIP 2019 strategic Board’s the of a result As decisionreduceto investment in activities development and research to reduce the in the short-term base, cost operational Group’s the considered Committee the performancemeasures setto be for the 2019 AIP. the that The concluded Committee on focused be should measures AIP between split performance, financial net revenues for SUBLOCADE and PERSERISand cash management; the has measure product and pipeline In the 2019 AIP. removed from been line with our renewed Policy, 75% of anybonus deliveredwillamount be into deferred be will 25% and cash in years. of two a period for shares Implementation of for Policy Remuneration Executive Directorsin 2019 2018 remuneration outcomes outcomes remuneration 2018 The following the section outlines the AIP and 2018 the for outcomes 2016-2018 LTIP awards. AIP 2018 the of performance financial The 2018 was disappointing in Group andconsequently the Group did not and revenue net the threshold meet AIP. the under targets income net good make to continued Group The its of advancement the in progress which product targets, and pipeline 24 in of the achievement resulted ofouta maximum 30 points, and of 27% of outturn the an overall maximumannual bonus on a formulaicbasis. However,in lightof financialthe shareholder and the performance the year, over experience it considered Committee the appropriate to exercise its discretion to override the formulaic outturn and reduce bonus amounts for the Executive zero. to Directors The fully were Directors Executive supportive of this decision and of bonus level any that agreed inappropriate been have would and performance contextof the in 2018. during returns shareholder 2016-2018LTIP For LTIP awards granted in 2016 which were scheduled to vest in 2018 business performance performance 2018 business for year a challenging was 2018 a faced business The Indivior. number of challenges to its to relating property intellectual with coupled Film, SUBOXONE® the launch to relating obstacles SUBLOCADE.of Furthermore, management and Committee the the shareholder recognised the year. over experience Remuneration outcomes and decisions appropriately reflected thesechallenges.

Directors’ remuneration report continued

development activities in the All-employee plans short term to reduce the Group’s The Group operates a Sharesave operational cost base, the pipeline plan in the UK and an Employee and product measure has been Stock Purchase Plan in the US. removed from the 2019-2021 The Sharesave plan is open to all LTIP measures. UK employees, and Employee As with the LTIP awards granted in Stock Purchase is open to all 2018, the awards granted to the US employees (except those Executive Directors in 2019 will be who participate in the LTIP). subject to an additional two-year The Committee was pleased to holding period following the end of note good participation rates in the three-year performance period. these plans. Shareholding requirements Shareholder engagement Our executive shareholding We continue to value the feedback requirements are significantly provided by our shareholders and higher than UK market practice. have maintained an open dialogue At December 31, 2018, the Chief with our major shareholders during Executive Officer held shares with the year. a value equivalent to 380% of salary 2019 AGM and the Chief Financial Officer held We hope you will agree that we have shares with a value of 115% of salary. taken a fair and responsible The Committee noted that the Chief approach to executive pay and hope Executive Officer had previously to receive your support for the exceeded the shareholding Directors’ Remuneration Report at requirement of 500% of salary, but our AGM in May 2019. that the value of his holding had reduced below the requirement as Daniel J. Phelan a result of the decline in Indivior’s Chair of the Remuneration share price in 2018. Committee Other matters considered March 1, 2019 by the Committee Corporate governance developments The Committee noted with interest corporate governance developments during the year. In particular, the updated 2018 UK Corporate Governance Code introduced a number of requirements for accounting periods beginning on or after January 1, 2019. We are very mindful of these developments and will report to shareholders in our 2019 Annual Report on Remuneration on our approach and policies under the new requirements.

64 www.indivior.com Governance 65 65 terms and conditions of of conditions and terms including the employment, Executive service Directors’ agreements; in the Group’s participation Annual and Long-Term Incentive and Plans; and Annual the for targets the Incentive Plans. Long-Term

Indivior Annual Report 2018 – – – Adviceprovided to the Remuneration Committee as appointed were LLP Deloitte upon advisors the Committee to following 2014, December in listing a review undertaken in advance LLP is a member Deloitte of listing. theof Remuneration Consultants Group and, as voluntarilysuch, operatesunder the code of conduct in relation to executive UK. the in consulting remuneration the to provided advice for Fees charged year, the for Committee £109.0k. were basis, spent a on time other also LLP provided Deloitte services and tax-related employee the the year. to during Group WillisTowers Watson also provided benchmarking with Committee the information during the year and fees Towers Willis $92.7k. were this for benefits provided also Watson in the US support during consulting year. the the that satisfied is The Committee and LLP Deloitte by provided advice WillisTowers Watson is objective independent. and

remuneration policies, including including policies, remuneration Annual and Long-Term Incentive Plans; individual remuneration and arrangements; compensation including individual benefits, arrangements; pension

sets reviews regularly and the Group’s overall remuneration strategy; the Remuneration determines Policyfor senior management; and in respect of the Executive of the members Directors, the and Committee Executive reviews sets, Secretary, Company approves:and – – –

and Benefitsand Director)and Kathryn Secretary) (Company Hudson provided and meetings attended Members Committee. the to advice person any and Committee the of not do meetings its attending or in discussion any participate remuneration. own their on decision the with meets Committee The at each advisors the Committee to management without meeting present. The of Chair reports the Committee at Committee the of activities the on and meeting, Board following the Committee of minutes the of copies meetings are circulated to all Directors. responsibilities and Role the assist to is role Committee’s The its in fulfilling Board of Directors ensuring by responsibility oversight Policy Remuneration the that and fairly reward practices and corporate to linked are responsibly; performance;and take account of thegenerally accepted principles of and of, On behalf governance. good Board, the by, approval to subject primarily: Committee the ‹ ‹ ‹ in 2018 Meetings Meetings attended attended Date Committee Committee appointed to the Nov 4, 2014 7/7

Meetings Meetings Committee, the of invitation the At Chief the Board, the of Chair the (Chief Fogle Jon Officer, Executive Diego Officer), Resources Human CastroAlbano (Global Compensation Tatjana May May Tatjana Lorna Parker 2017 1, Feb Daniel Tassé Nov 4, 2014 7/7 Nov 1, 2017 7/7 7/7 Daniel J. Phelan(Chair) The Remuneration Committee Committee Remuneration The the 2018, 31, December of As comprised Committee Remuneration four Non-Executive Directors, all of whom are considered to be for ofthe independent purposes the on served who Code. members The were: the year during Committee the The our following outlines report framework, remuneration how theRemuneration Policy was and how in 2018, the implemented the apply to intends Committee Policy in 2019. This Annual Report the with together Remuneration, on Statement Remuneration Annual of the the Committee, Chair from will an advisory be submitted to vote at the 2019 AGM. shareholder Report Remuneration Directors’ This accordance in prepared been has with of the the provisions 8 Schedule and 2006 Act Companies Medium-sized and Large the of (Accounts Groups and Companies is and 2008, Regulation Reports) and of with the requirements compliant 2016 the UK Corporate Governance Listing UK the and ‘Code’) (the Code the and Rules Listing Authority’s and Guidance Disclosure TransparencyRules. on remuneration report Annual Directors’ remuneration report continued

Activities during the year ‹ undertook an analysis of the 2018 Contents The principal matters considered by UK Corporate Governance Code the Committee during the year were, and identified those areas which Annual Report on Remuneration as follows: would require further review and 65 The Remuneration Committee changes in approach and policies ‹ reviewed and agreed the outturn 67 Single total figure of in 2019; and in respect of the AIP for the 2017 remuneration for financial year; ‹ reviewed the fees paid to the Chair Executive Directors ‹ considered and agreed the of the Board. 67 Incentive outcomes for the year outturn in respect of the LTIP Since the end of the financial year, ended December 31, 2018 awards granted in 2015; the Committee has considered the 69 Scheme interests awarded ‹ confirmed the measures and following matters: during the financial year targets for the 2018 AIP and ‹ reviewed the outturn in respect of 70 Executive Directors’ 2018-2020 LTIP awards; the AIP for the 2018 financial year shareholding and share ‹ reviewed and approved the 2017 and exercised its discretion to interests override the formulaic outturn and Annual Report on Remuneration 71 Outstanding awards under the reduce bonus amounts for the and agreed to put it to LTIP Executive Directors to zero; shareholders for an advisory vote; 71 Payments to past Directors ‹ considered the outturn in respect ‹ following consultation with 71 Payments for loss of office shareholders and advisors, of the LTIP awards granted in 71 External appointments developed a number of changes to 2016, noting that the Group did not the Group’s Remuneration Policy achieve threshold performance in 71 Service agreements respect of the performance and proposed these to 72 Review of past performance shareholders for a binding vote; measures, and consequently there was 0% vesting of these awards 73 Dilution limits ‹ reviewed the remuneration and they lapsed in full; 73 Implementation of Executive arrangements for the Executive ‹ reviewed and agreed the Director Remuneration Policy Directors, members of the for 2019 Executive Committee and the measures and targets for the 75 Single total figure of Company Secretary, taking into 2019 AIP; remuneration for the Chair and account external benchmarking ‹ reviewed and agreed the Non-Executive Directors analysis; measures and targets for the 75 Implementation of ‹ reviewed the progress of the 2019-2021 LTIP awards. The Committee considered the Non-Executive Director Executive Directors and members Remuneration Policy for 2019 of the Executive Committee quantum of the awards in the against their shareholding context of the material decline 76 Letters of appointment requirements; in the Company’s share price and 76 Summary of voting outcomes at concluded that it was appropriate the 2018 AGM ‹ reviewed and approved the rules to reduce the size of awards 77 Summary Remuneration Policy of the Indivior Deferred Bonus granted under the LTIP by 35% Plan; for 2019 only; and ‹ reviewed and amended the rules ‹ reviewed and approved this 2018 of the Indivior Long-Term Annual Report on Remuneration Incentive Plan to extend the malus and agreed to put it to and clawback provisions to shareholders for an advisory vote. include serious reputational damage (in line with the approved Remuneration Policy);

66 www.indivior.com Governance

67 67 67 2017 0% 0% 9,215.7 2,446.8 11,662.5 Outturn as a % of maximum Total $’000 2018 550.8 1,560.4 1,009.6

of $6,858.9k on the $m $1.3895)). He also received estimated value of the 275 d in the 2017 Annual Report Annual d in the 2017

shown for2017 arethe from 2 uivalent to 94.5% of base 2017 1,005 utions to a non-qualified plan to non-qualified a utions 19.7 Achieved Achieved 147.7 167.4 e e Officer was 200% of base $’000 2018 spect of the net revenue and and revenue of net the spect 23.4 175.3 152.0 Pension benefits Pension Indivior Annual Report 2018 5 6 $m 380 2017 1,396 Maximum 7,013.7 1,555.0 8,568.7 during the vestingduring period. The LTIP $’000 2018 0.0 0.0 0.0 4 $m 317 2017 Target Target 1,163 rtunity for the Chief Executiv for the Chief rtunity 437.8 1,215.9 1,653.7 against the targets set in re in set targets the against mance,12.5% ofthe maximum bonus would be paid, for AIP re equally weighted between net revenue, net income and revenue,income net net between weighted reequally $’000 ormance significantly above both internal and external external and above both internal significantly ormance 2018 0.0 0.0 0.0 ine basis between threshold and target, and between target target between and target, and threshold between basis ine Performance targets targets Performance Executive Directors for the financial year ended ended year financial the for Directors Executive vidends that would have accrued AIP in respect of the financial year ended December 31, 2017, eq uary 26, 2018, and the value of the award was previously disclose previously was of the award value the and 2018, uary 26, US$ using the GBP/US$ exchange onrate the vesting (GB£1:USdate the financial year ended December 31, 2017. 31, December ended year financial the $m

1 2017 285 21.3 85.2 63.9 1,047 Threshold $’000 2018 33.0 93.0 60.0 Taxable benefits 2017 Annual Report on Remuneration. 2017 33% 33% 774.5 412.9 1,187.4

$’000 2018 Base salary salary Base 797.7 494.4 1,292.1

3 Taxable benefits consistTaxable life benefits primarily of disability insurance. healthcare, and and cash. Mark Crossley was appointedExecutive an Director on February 21, 2017. Hisbasesalary, taxable benefits andpension benefits date of his appointment to December 31, 2017. Pension benefits in the year comprised profit-sharing contributions into the US qualified 401(K) plan, 401(K) matching, contrib salary for year.salary the entire financial LTIPThe award granted to Shaun Thaxter in 2015 vested on March 12, 2018. The award vested at 73.5% of maximum and had a value vesting date (based on 1,219,432 shares at 404.8p converted to Mark Mark Crossley received a total cash bonus of $437.8k under the award was was previously disclosed in the award The LTIP award granted to Mark Crossley in 2015 vested on Febr a cash payment of $154.9k, being the amount equivalent to the di on Remuneration.

Measure Weighting

Net revenue Net income Incentive outcomes for the year ended December 31, 2018 (audited) (audited) 2018 31, December ended year the for outcomes Incentive AIP 2018 Inline with the Remuneration Policy, the maximum AIP oppo MarkCrossley 1. Shaun Thaxter Single total figure of remuneration for Executive Directors (audited) (audited) Directors Executive for remuneration of figure total Single the of remuneration the out sets The below table for figures comparative and 2018, 31, December

Total 2. salary and 120% of base salary for Financialthe Chief Officer. the for plan business the of context the in targets performance stretching set Committee the year, the of start the At we These and year account forecasts. taking external of key pipeline and product measures. For threshold perfor threshold For measures. product and pipeline key targetperformance, 50% ofthe maximum bonus opportunity would be paid, and100% of the maximum bonus perf exceptional of delivery the for paid be only would andmaximum. Thetable below provides an overview of theperformance expectations. The outturn is calculated on a straight-l a on calculated outturnis The expectations. measures. income net 3. 4. 5. 6. Directors’ remuneration report continued

In respect of the key pipeline and product measure, four milestones were set across various segments of the business, with a number of points allocated for each milestone. For threshold performance, one point needed to be achieved, for target performance, 15 points needed to be achieved and for maximum performance, 30 points needed to be achieved. The table below illustrates the performance against each of these milestones:

Date Points Points Milestone Project Target date achieved allocated awarded SUBLOCADETM Post-Marketing Completion of all five nonclinical Post-Marketing Q4 2018 Q4 2018 Requirement & Commitment Requirement Studies Studies Submission of draft protocol to the US FDA to comply Q2 2018 Q2 2018 with two clinical Post-Marketing Requirement Studies Submission of data analysis assessments to the US FDA Q2 2018 Q2 2018 to comply with Post-Marketing Commitment Studies 10 10 SUBLOCADE Life Cycle Evidence Buprenorphine-Fentanyl blockade study Q2 2018 Q2 2018 Generation (LEGO) Studies SUBLOCADE in Emergency Room study Q3 2018 Missed 50 Pipeline – Early Stage Asset Arbaclofen Placarbil Q2 2018 Missed Development ADX71441 Q2 2018 Q1 2018 C4X2356 Q3 2018 Q2 2018 Development of strategy and completion of evaluation Q2 2018 Q2 2018 of drug repurposing/repositioning opportunities 54 Publication & Conferences Five peer-reviewed publications in well-regarded journals Q4 2018 Q4 2018 Obtain approval and present pivotal phase 3 clinical data Q4 2018 Q4 2018 in support of SUBLOCADE and RBP-7000 in 10 high-impact international conferences 10 10 Total 30 24

On a formulaic basis, this resulted in 80% outturn in respect of the key pipeline and product measure (27% of the maximum annual bonus).

The Committee considered the outturn in the context of the financial performance of the Group in 2018 and the shareholder experience and considered it appropriate to exercise its discretion to override the formulaic outturn and reduce bonus amounts for the Executive Directors to zero.

Outturn as a Measure Weighting Achievement % of maximum Net revenue 33% 0% 0% Net income 33% 0% 0% Key pipeline and product measure 33% 80% 27% Total outturn (on a formulaic basis) 27% Actual outturn (following Committee discretion) 0%

Deferred Bonus Plan Following the approval of the Remuneration Policy at the AGM in 2018, a Deferred Bonus Plan was introduced, which requires 25% of the outturn under the AIP to be compulsorily deferred into conditional shares. The deferred conditional share awards vest after two years subject to continued employment as well as malus provisions. As the outturn of the AIP for 2018 was zero, there will be no bonus deferral in respect of the 2018 financial year.

68 www.indivior.com Governance 69 69 0% 0% 0% 0% Normal Outturn as a Outturn as a release date % of maximum % of maximum 0%

date and the $m . Conditional awards sing the GB£/US$ exchange exchange GB£/US$ the sing 33% 33% 33% Normal Weighting Weighting Achieved Achieved vesting date date vesting subject to relative TSR did to relative subject low in median peer both $m Indivior Annual Report 2018 mber 31, 2018; 12.5% of the 31, 2018; 12.5% of mber the Maximum period Performance a value of 500% of base salary $m Target Target e date of converted and to US$ the award u

1 y, the portions of the award the of portions the y, $m g ranked upper quartile or above. Awards vest on a $’000 and Indivior was Indivior rankedand be ars and will then be subject to a further two-year holding holding two-year further a to subject be then will and ars nues generated in 2018. The schedule below shows the in 2018. The schedule generated nues peline and The the product measure. to related milestone % of the maximum award would have vested for achieving and reviewed and reviewed the outturn of awards the conditional Threshold uary 2016. The vesting of these awards was conditional nue in 2018 did not reach threshold, the portionthe of the threshold, reach 2018not did in nue Face value om January 1, 2016 to Dece Chief Executive Officer and Financial Executive on Chief Chief Officer Officer Crossley received awards with Crossley received dends payable on the number of vested shares between the award the between shares vested of number the on payable dends of award 100% 70 100 130 12 price at date Closing share Performance r the LTIP for the Executive Directors. Directors. the Executive for LTIP r the lculated using the closing share lculated price the closing using on th at maximum maximum at under award award under No. of shares of No. net revenue Date of award TM include the right to receive an amount equal in value to any divi The face value of the awards have been ca rate on December 31, 2018 (GB£1:US$1.2746). Shaun Thaxter and Mark release date.

period before shares are released. 1. March 9, 2018. The awards will normally vest after three ye three after vest normally will awards The 2018. 9, March Shaun Thaxter Mar 9, 2018Mark Crossley Mar 9, 2018 729,617 452,209 402.0p 402.0p 3,738 2018 Jan – 2020Dec 2,317 2018 Jan – 2020Dec Mar 9, 2021 Mar 9, 2021 Mar 9, 2023 Mar 9, 2023 Scheme interests awarded during the financial year (audited) (audited) year financial the during awarded interests Scheme LTIP the LTIP to under the granted awards were Conditional Key pipeline and product measure measure product and pipeline Key trusts investment excluding 250 FTSE the of constituents the vs. TSR Relative Measure RelativeTSR was assessed over the three-year period fr net revenue milestone targets set by the Committee: 12.5 set by targets the Committee: milestone revenue net threshold revenues, 50% for target revenues and 100% of the maximum award would have vested for achieving net reve US As net SUBLOCADE of $130m. in excess revenues vest. not did measure product and pipeline key the to subject award SUBLOCADE US TSR measures Milestone Weighting Key pipeline and product measureKey pipeline and product pi key the of respect in milestone one set Committee The LTIP considered has Committee the year, the of end the Since Febr in LTIP the under Directors Executive the to granted measures. performance following the of achievement the and employment continued upon approvalsuccessful of SUBLOCADE in the US and reve net maximumaward would have vested for Indivior being ranked median in comparison to the respective peer group, wouldmaximumthe ofhave 100%award bein for vested and quartile. upper and median between basis straight-line 2018, 31, December on ended period performance TSR The accordingl and, threshold reach therefore did not and groups not vest. This has resulted in zero outturn unde Relative TSR vs. the constituents of the S&P 1500 Pharmaceutical and Biotech Index Index Biotech and 1500 Pharmaceutical S&P the of constituents the vs. TSR Relative Total outturn Directors’ remuneration report continued

The vesting of these awards is subject to the achievement of the following performance measures.

Measure Weighting Relative TSR vs. the constituents of the FTSE 250 excluding investment trusts 33% Relative TSR vs. the constituents of the S&P 1500 Pharmaceutical and Biotech Index 33% Key pipeline and product measure 33%

Relative TSR performance against each of the comparator groups will be measured over three financial years.

Following the reduction of the annual maximum opportunity for the Chief Executive Officer from 600% to 500% of salary in 2018, threshold vesting for the Chief Executive Officer only was increased from 12.5% to 15% of the maximum award for Indivior being ranked median in comparison to the peer group, and 100% of the maximum award will vest for Indivior being ranked at the upper quartile or above. For the Chief Financial Offer, 12.5% of the maximum award will vest for Indivior being ranked median in comparison to the peer group, and 100% of the maximum award will vest for Indivior being ranked at the upper quartile or above. The awards will vest on a straight-line basis between median and upper quartile, with none of the award vesting if Indivior is ranked below median. The Committee considers that these measures balance the fact that Indivior is a FTSE 250 listed company but also recognizes that Indivior operates within a specialized sector where the majority of its peers are listed in the US. The key pipeline and product measure relates to the delivery of the pipeline and advancement of our product portfolio. The actual targets have not been disclosed prospectively as the Committee believes that these details are commercially sensitive. We will disclose the actual targets and the level of performance achieved against them in 2021, following the completion of the performance period in December 2020, at which point the targets will no longer be considered commercially sensitive. Executive Directors’ shareholding and share interests (audited) In line with Indivior’s Remuneration Policy, Executive Directors are required to build a shareholding with a value equivalent to 500% of base salary. They have five years from the date of demerger or the date of appointment, whichever is later, in which to reach this shareholding requirement. Members of the Executive Committee are expected to build a shareholding of 150% of base salary within the same time frames. The table below shows the shareholding of each of the Executive Directors (together with interests held by their connected persons) and a summary of outstanding awards as at the date of this report. Shaun Thaxter had previously achieved the shareholding requirement, but has fallen below the requirement as a result of the decline in share price in 2018.

Number of shares owned outright Conditional awards held Options held Unvested and subject Shareholding Shareholding to performance requirement at December At December 31, At December 31, conditions and Vested but (% of base 31, 2018 (% of Date by which shareholding 2018 2017 continued employment not exercised1 salary) base salary)2 requirement to be achieved Shaun Thaxter 1,509,334 841,798 1,761,905 921,461 500% 380% December 2019 Mark Crossley 283,372 125,528 985,376 210,619 500% 115% February 2022 1. The options over 921,461 and 210,619 shares, held by Shaun Thaxter and Mark Crossley, at an option price of 111.0p per share vested on May 11, 2016, and are scheduled to lapse on December 28, 2024. 2. In line with Indivior’s Executive Shareholding Guidelines adopted in February 2019, the Executive Directors shareholdings as a % of base salary have been calculated based on shares owned outright valued using the three-month average share price to December 31, 2018 (156.0p) and the US/UK exchange rate over the same period (£1:US$1.2869). 3. There have been no changes in the interests of the directors in the shares of Indivior PLC between December 31, 2018, and the date of this report.

70 www.indivior.com Governance

1 71 71 71 Expiry of current term Expiry of current These were options dividual performance conditions are conditions performance Indivior Annual Report 2018 12 months12 Rollingcontract 12 months Rolling contract Dec Dec 2019 Feb 24, 2020 Feb 24, 2022 Performance period Performance period date Normal vesting Normal release date an 2017 – Dec 2019 Feb 24, 2020 Feb 24, 2022 Jan 2017 – J Jan 2018 Jan – 2020Dec Mar 9, 2021 Mar 9, 2023 Jan 2018 2018 Jan 2020– Dec Mar 9, 2021 Mar 9, 2023 heduled toheduled onvest February 19, 2019, was subject to the from Company from Company from in Notice period 12 months12 12 months nce conditions set and consequently the award lapsed. awardlapsed. the consequently and set conditions nce Committee, Executive Directors are able to accept an an accept to able are Directors Executive Committee, the approved Remuneration Policy and were reported in reported were and Policy Remuneration the approved ExecutiveDirectors to subject t out the contract between the Executive Director and the and Director Executive the between contract the out t dhave accrued during the vesting period.The estimated on March 12, 2018. The award vested at 73.5% ofat73.5% maximum award 2018.12, The Marchvested on rket value options over 921,461 and 210,619 shares respectively. 111p per share and are scheduled to lapse on December 28, 2024. 2024. 28, on December lapse to scheduled are and share per 111p measured over the three-year period from 2016 to 2018. The Group did not not did 2018.Group The to 2016 from period three-year the over measured award at maximum No. of shares under a two-year post-vesting holding period. re granted under the LTIP. under re granted February 21, 201721,February November 4,November 2014 Date of award Date of appointment Notice period Feb 24,Feb 2017 1,032,288 Feb 24, 2017 533,167

Awards granted under the LTIP granted Awards are subject to ShaunThaxter and unexercised Mark Crossley holdbut ma vested granted in December 2014 (on demerger) at an option price of

mpany and can retain the fees paid for these services. services. these for paid fees the retain can and mpany Co the outside board corporate a to appointment external appointments. external any hold not do Officer Financial Chief and Officer Executive Chief The CrossleyMark Shaun Thaxter Service agreements agreements Service se agreements that service have The Executive Directors Subject to the approval of the Nomination & Governance Governance & Nomination the of approval the to Subject and had a value of $4,369.0k on the vesting date (based on 776,761 shares at 404.8p converted to US$ using the using to US$ converted 404.8p at shares 776,761 on (based date vesting the on $4,369.0k of a value had and $98.5k, of payment cash a received also Claiborne Mr (GB£1:US$1.3895)). date vesting the on rate exchange GBP/US$ woul that to the dividends amount the equivalent being of office loss for Payments office. of loss for payments no were There appointments External Company. Payments to past Directors Directors to past Payments His 2018. 31, January until an employee remained and 2017, 7, on March a Director as down stepped Claiborne Cary arrangements remuneration wereon leaving in line with the2017 Annual Reporton Remuneration. grantedawardto LTIP Claiborne2015Mr The vested in Remuneration. on Report Annual 2017 the in disclosed previously was award of the value scgrantedaward 2016was to which Claiborne Mr in LTIP The achievementof performance conditions performa the of respect in performance threshold achieve 1.

Shaun Thaxter Mar 9, 2018 729,617 Outstanding awards under the LTIP the LTIP under awards Outstanding Details of conditional awards over shares granted to the shownbelow. These awards we 2. Mark Mark Crossley Mar 9, 2018 452,209 Directors’ remuneration report continued

Review of past performance Historical TSR performance The graph below shows the TSR of the Company and the UK FTSE 250 Index over the period from admission on December 23, 2014 to December 31, 2018. The Index was selected on the basis that the Company was a member of the FTSE 250 Index in the UK during that period. Value of a hypothetical holding of £100 invested from admission to December 31, 2018.

alue rebased alue

TS Indivior

Historical Chief Executive Officer pay The historical total remuneration for the role of the Chief Executive Officer for the period from January 1, 2014 to December 31, 2018, is set out in the table below. Historical data is not provided prior to 2014, as the Group was a division of Reckitt Benckiser Group (‘RB’). Shaun Thaxter was the Chief Executive Officer throughout the period.

AIP LTIP Single figure of total (outturn as a (outturn as a Year remuneration ($’000) % of maximum) % of maximum) 2018 1,009.6 0.0% 0.0% 2017 9,215.7 78.5% 73.5% 2016 5,024.8 94.5% 100% 2015 4,317.9 94.5% 93.3% 2014 1,968.1 100%1 n/a 1. Indivior was a division of RB for the majority of 2014 and Shaun Thaxter participated in the RB annual bonus plan in that year. The maximum bonus payable to Shaun Thaxter under that plan was 214% of base salary. Shaun Thaxter was paid the maximum bonus in 2014.

Percentage change in Chief Executive Officer remuneration The following table illustrates the change in Chief Executive Officer base salary, taxable benefits and annual bonus between 2017 and 2018, compared with the average percentage change for the rest of the US employee population; the majority of the Group’s employees are based in the US.

Chief Executive Officer Other employees (% change 2017–18) (% change 2017–18) Base salary 3% 3% Taxable benefits -6% 2% Annual bonus (AIP) -100% -64%

72 www.indivior.com Governance 73 73 % % change change increase increase – n/a $m 89 -25% 2017 2018 2018 225 -5% 797.7 3% 494.4 3%

e future. As at January 1, – $m $m 67 2019 2018 214 821.6 509.2 Indivior Annual Report 2018 As at January 1, 1, at January As

2 year. For further information, refer to Note 5. fficer will receive pension will receive Officer Executive Chief The 2019. r ployee benefit trust). Indivior’s share plans state that the the that state plans share Indivior’s trust). benefit ployee e practice for similar roles in the Company’s remuneration remuneration in the Company’s roles similar for e practice from January 1, 2019. The base salaries of the Executive od. The Committee has reviewed reviewed the of shares number od. The has Committee t by the granting be of awardsbreached in 2019. excludes exceptional items charged during the

1 In line with the Dividend Policy approved the by Board in 2016, the Company does not intend to dividendspay for the foreseeabl Research and development expenses

Directors as at January 1, 2019 and January 1, 2018, are set out below. set out are below. 2018, 1, January and 2019 1, at January as Directors elected on 401(K) matching Company any plus salary, of 17.5% of allowances) cash equivalent (or contributions Sharing Profit Inc. the Indivior into directed pay of of 4% contributions of up is profit-sharing This made deferrals. salary base annual of 17.5% the and contributions these between balance outstanding any with plan, 401(K) and paidin cash and/or deferredthe compensation account. of 4% of contributions profit-sharing of contributions pension receive will Crossley, Mark Officer, Financial Chief The elected on 75% of match Company any plus plan, 401(K) and Sharing Profit Inc. Indivior the into directed pay deferrals up to 4.5% of pay. The Indivior Inc. Profit Sharingand 401(K) plan is governed by the plan limits, as set by the Internal Revenue Services (IRS). pension. benefit defined a to entitlement prospective a have not do Directors Executive The Pension benefits benefits Pension fo arrangements pension the to made been have changes No peer group. The Executive Directors receiveda 3% salary increase, in line with the average merit increase provided and the with in both US UK effect workforce the wider to Shaun Thaxter MarkCrossley Base salary $’000 $’000 salary Base Implementation of Executive Director Remuneration Policy for 2019 Base salary Base salaries are reviewed taking into account competitiv Dilution limits limits Dilution or shares of treasury the transfer shares, newly-issued by be satisfied can awards that provide plans share Indivior’s held in an and in the em market (purchased shares existing 1. Total employee pay pay employee Total distributions Shareholder Relative importance of spend on pay pay on spend of importance Relative and research and distributions shareholder with compared pay employee total shows table following The 2018 anddevelopment expenses for 2017. aggregatenumber of shares that may be issued tosatisfy awards made under those plans must not exceed 10% of peri any 10-year in capital share issued Company’s the to award would limits subject these to no ensure that

Research and development expenses (excluding and items) exceptional development expenses (excluding Research 2. Directors’ remuneration report continued

AIP 2019 No changes have been made to the opportunity under the AIP for 2019. The Chief Executive Officer and Chief Financial Officer will have a maximum bonus opportunity of 200% and 120% of base salary, respectively. As a result of the strategic decision to reduce investment in certain research and development activities in the short term in order to reduce the Group’s operational cost base, the Committee considered the performance measures for the 2019 AIP and concluded that they would be based on three financial metrics. In line with our Policy, 75% of any bonus amount will be delivered in cash and 25% will be deferred into shares for a period of two years. Bonuses for 2019 will be based on the following measures and weightings:

Measure Weighting SUBLOCADETM net revenue 40% Cash management 40% PERSERISTM net revenue 20%

As an additional underpin, if the Group violates its debt covenants, no award will be paid in respect of the cash management portion of the annual bonus. We have not disclosed the actual performance targets for 2019, as we consider them to be commercially sensitive. However, we commit to disclosing the performance targets retrospectively in next year’s Annual Report on Remuneration. LTIP Following consultation with shareholders in 2018, the maximum opportunity under the LTIP for the Chief Executive Officer was reduced from 600% to 500% of base salary for awards granted from 2018 onwards. The Committee carefully considered the quantum of awards to be granted in 2019 in the context of the material decline in the Company’s share price in 2018. The Committee concluded that it was appropriate to reduce the quantum of all LTIP awards to be granted in 2019 by 35%; the Executive Directors will therefore receive awards with a reduced maximum opportunity of 325% of base salary (162.5% at target). The awards will be subject to a three-year performance period and an additional two-year post-vesting holding period. The Committee also considered the LTIP performance metrics in the current business context and concluded it would be appropriate to adjust the measures and has therefore determined that awards granted in 2019 will be subject to relative TSR versus the constituents of the FTSE 250 excluding investment trusts; and relative TSR versus the constituents of the S&P 1500 Pharmaceutical and Biotech Index; each with equal weighting.

Measure Weighting Rationale for metric Relative TSR vs. FTSE 250 50% Provides alignment with shareholders through the relative (excluding investment trusts) outperformance of other UK listed companies. Relative TSR vs. S&P 1500 50% Provides alignment with shareholders through the relative Pharmaceutical and Biotech Index outperformance of direct sector peers who are subject to similar market influences.

Following the reduction of the annual maximum opportunity for the Chief Executive Officer in 2018, threshold vesting for the Chief Executive Officer only was increased from 12.5% to 15% of the maximum award for Indivior being ranked median in comparison to the peer group, and 100% of the maximum award will vest for Indivior being ranked at upper quartile or above. For the Chief Financial Offer, 12.5% of the maximum award will vest for Indivior being ranked median in comparison to the peer group, and 100% of the maximum award will vest for Indivior being ranked at upper quartile or above. Awards will vest on a straight-line basis between median and upper quartile, with none of the awards vesting if Indivior is ranked below median.

74 www.indivior.com Governance 1 75 % 75 ‘000 2017 £85.0 increase increase $137.1 $122.7 $122.7 $122.7 £68.8 $108.3 $108.3 $396.9 ‘000 2018 $’000 14.414.414.414.4 – – – – 79.4 – 28.928.928.928.9 – 28.9 – – – – Fees at Fees at 396.9 – £75.0 £85.0 $137.1 $122.7 $122.7 $122.7 $108.3 $108.3 $396.9 to December 31, 2017. January 1, 2018

utive Directorsfor theyear $’000 14.4 14.4 14.4 14.4 79.4 28.9 28.9 28.9 28.9 28.9 Fees at 396.9 Indivior Annual Report 2018 January 1, 2019 2019 1, January £’000 £’000 10.0 10.0 10.0 10.0 55.0 20.0 20.0 20.0 20.0 20.0 Fees at Fees at 275.0 a biennial basis and were previously previously were and basis biennial a January 1,2018 January £’000 10.0 10.0 10.0 10.0 55.0 20.0 20.0 20.0 20.0 20.0 Fees at 275.0 rectors are not eligible to participate in the Company’s Company’s in the participate to eligible not are rectors d are intended to stay at that level until the next review next the until level that at stay to areintended d by the Chair and the the Non-Exec and by Chair January 1, 2019 ere was no increase. The fees were reviewed again in The reviewed were fees was increase. ere no a UK and US basis. Details of these fees are set out in the in out are set fees of these Details basis. and US a UK

utive Directors who are resident in the UK and US are paid in UK pounds pounds UK in paid are US and UK the in resident are who Directors utive Executive Directors are reviewed on reviewed are Directors Executive Company on February 1, 2017. The fee for shown 2017 from is the date of appointment Tatjana May was appointed Directora appointed of the May was Tatjana

ended December 31, 2018. The Chair and the Non-Executive Di the Non-Executive and 31, 2018. The Chair December ended annual bonus, long-term incentive or pension schemes. Tatjana May May Tatjana Schade Chris Tassé Daniel Lizabeth Zlatkus Lorna Parker Memberof Remuneration Committee Committee Policy & Science of Member Committee & Governance of Nomination Member

Chair Chair Non-ExecutiveDirector in Novemberin 2020. Non-Exec the and Chair the to paid Fees into amounts UK to translate used been has rate exchange a fixed 2016, Since respectively. and US dollars sterling on both time, that at fees setting effectively dollars, US Chair and Non-Executive Directors’ fees Directors’ and fees Chair Non-Executive Non- and Chair the to paid fees The 1. Implementation Non-Executive of Director Remuneration Policyfor2019 reviewed by the Board in November 2016, after which th November 2018 in line with the normal cycle, again after which there was no increase. Fees have therefore stayed at 2014, an in since the December same date of listing level the tablebelow. Yvonne Greenstreet Greenstreet Yvonne A. Thomas McLellan Howard Pien Single total figure of remuneration for the Chair and Non-Executive Directors (audited) (audited) Directors Non-Executive and Chair the for remuneration of figure total Single The table below sets out the total remuneration received

Chair of Audit Committee Committee Audit of Chair Committee of Remuneration Chair Committee Policy & Science of Chair Committee Governance & Nomination of Chair Committee Audit of Member Daniel J. Daniel Phelan Senior Independent Director Directors’ remuneration report continued

Chair and Non-Executive Directors’ shareholding (audited) The following table shows the shareholdings of each of the Chair and Non-Executive Directors (together with the interests of their connected persons) as at December 31, 2018. The Chair and Non-Executive Directors are expected to acquire an interest in Indivior shares over the course of their appointment.

Total number of shares held at Total number of shares held at December 31, 2018 December 31, 2017 Howard Pien 46,219 46,219 Yvonne Greenstreet 6,017 6,017 Tatjana May – – A. Thomas McLellan 7,546 7,546 Lorna Parker 6,079 6,079 Daniel J. Phelan 10,318 10,318 Chris Schade 5,911 5,911 Daniel Tassé 12,996 12,996 Lizabeth Zlatkus 696 696 1. There have been no changes in the interests of the Directors in the shares of Indivior PLC between December 31, 2018 and the date of this report.

Letters of appointment The terms of service of the Chair and the Non-Executive Directors are contained in letters of appointment. In accordance with the Code, the Chair and Non-Executive Directors are appointed subject to re-appointment by shareholders at the Company’s next AGM following their appointment and re-appointment at each subsequent AGM. The Chair and Non-Executive Directors are not entitled to receive compensation for loss of office. The table below sets out the dates of appointment of the Chair and the Non-Executive Directors and the expiry of their current terms.

Length of service at Date of appointment Expiry of current term December 31, 2018 in years Notice period Howard Pien November 4, 2014 November 3, 2020 4 1 month Yvonne Greenstreet November 4, 2014 November 3, 2020 4 1 month Tatjana May February 1, 2017 January 31, 2020 1 1 month A. Thomas McLellan November 4, 2014 November 3, 2020 4 1 month Lorna Parker November 4, 2014 November 3, 2020 4 1 month Daniel J. Phelan November 4, 2014 November 3, 2020 4 1 month Chris Schade November 4, 2014 November 3, 2020 4 1 month Daniel Tassé November 4, 2014 November 3, 2020 4 1 month Lizabeth Zlatkus September 1, 2016 August 31, 2019 2 1 month

Summary of voting outcomes at the 2018 AGM At the AGM held on May 16, 2018, votes cast by proxy and at the meeting in respect of Directors’ Remuneration were as follows:

Votes Votes for Votes Votes against Votes withheld Resolution for (%) against (%) (abstentions) Approve the Directors’ Remuneration Report 567,518,604 94.9% 30,581,743 5.1% 62,455 Approval of the Remuneration Policy 563,892,577 94.3% 34,156,066 5.7% 113,809

76 www.indivior.com Governance 77 77 is to the Group over a performance period appropriateand targets are Indivior Annual Report 2018 the associated cost associated the was approved by shareholders at at the shareholders by was approved Policy can be found in the Directors’ Directors’ the in found be can Policy cycle to ensure they remain the terms of the LTIPthe terms of the or if theCommittee reasonably ans offered by Groupthe on the same basis as is offered es es LTIPon awards vestthat up to the end post- the of performance targetsmeasured Committee determines the extent whichto these have crease normally being applied with effect from January 1 e deferral period, deferred share awards may be reduced or nal share awards, nil cost options or market-value share share market-value or options cost nil awards, share nal in the event performance is impacted byunforeseen changes are proposed for 2019. It is intended that the that intended is It 2019. for areproposed changes For awardsFor with a three-yearperformance period, this holdingperiod will lly with reference to market data and and data market lly to with reference theformulaic bonus outcomesboth upwards anddownwards (including to the formulaic LTIP outcomes to improvethe alignment of pay with value on the Company’s website www.indivior.com. www.indivior.com. website on the Company’s oup’s remuneration peer group. summary of the Remuneration Policy that Policy Remuneration the of summary the competitive practice in theGr the scoperesponsibility and position. of the individual performance. salary increases awarded across the Group as a whole.

of of at least three years. Awards granted to Executive Directors from 2016 onwards aresubject to an additional holding performancefollowing the period. period calculated using expected an value methodology. award each before reviewed are conditions performance The optionswhich vest subjectthe achievement to of stretching be two years.normally annua reviewed is opportunity LTIP The Executive Directors may participate in all-employee share pl to the Group’s other eligible employees. been achieved. Bonusespaid are afterend of the the performance 75%the year. annual of bonus is delivered in cashand25%is years. th two During into of shares period deferred for a canceled in certain circumstances. Dividendequivalents may be paidin cash or additional shares on deferred share awards up to theend of the deferral period, whererelevant. The Committee has discretion to adjust ensureperformance, alignment zero) to with e.g. pay of control. management of outside circumstances Awards under the LTIP may consist of grants of conditio with accordance in be amended may and stretching suitably satisfy. to easier materially not are conditions performance amended the that provided appropriate, it considers Dividend equivalents may be paid in cash or additional shar relevant. where period, holding vesting The Committee has discretion to adjust creation for shareholders to ensure the outcome is a fair reflection of the performance of the Group. Executive Directorsmay receive contributionsintodefined a contribution scheme, a cash allowance,benefits pension form the in profit-sharingof contributionsinto theUS qualified 401(K)plan, Group matching 401(K) on elected deferrals, or a combinationthereof. Executive Directors may receive various market-competitive benefits, which may include: a company car (or cash equivalent), travel allowance, private medical and dental insurance, travel accident policy, disability and life assurance. Where appropriate, other benefits may be provided to take account of individual circumstances, such as but not support. education and allowance housing expenses, relocation allowances, expatriate to: limited The Company provides Directors’ andOfficers’ liability insurance, and an indemnityextentthe to permitted law.by Performance assessed is annual an on basis with measuresand targets Committee the setby at start the the of year.Atperformanceperformance the end of the the year, Base salaries are normally reviewed annually, with any in year.each of: account take levels/increases salary Base ‹ ‹ ‹ ‹ ll-employee nnual nnual share plans Incentive Plan March 1, 2019 Daniel J. Phelan Phelan J. Daniel Committee Remuneration the of Chair Remuneration Report in the 2017 Annual Report A Long-Term Incentive Plan (LTIP) of three years i.e. until 2021. The full The 2021. until will remain Policy i.e. years effective three of for a period A AGM on May 16, 2018 and became effective on that date. No Pension benefits Benefits Base salary Summary Policy table – Executive Directors Directors Executive – table Policy Summary Element Remuneration Operation This section of the report sets out a sets of the report section This Policy Remuneration Summary Directors’ Report

Directors’ Report

The Directors present their Both the Directors’ Report and the No Director held a material interest Annual Report together with the Strategic Report have been drawn at any time during the year in any audited consolidated financial up and presented in accordance derivative or financial instrument statements for the year ended with, and in reliance upon, relating to the Company’s shares. December 31, 2018. applicable English company law. The liabilities of the Directors in Powers of Directors Corporate Governance connection with those reports shall The Directors are responsible for Statement be subject to the limitations and managing the business of the The Directors’ Report forms part restrictions provided by such law. Company and may exercise all the of the management report as powers of the Company, subject to required under DTR 4.1.8R. The Results and dividends the provisions of relevant statutes, Strategic Report on pages 4 to 35 The consolidated income statement to any directions given by special includes forward-looking statements is on page 95. Profit for the financial resolution and the Articles of indicating important events year attributable to equity Association. Powers relating to the affecting the Group, future likely shareholders amounted to £275m. issuing of shares are also included developments and the Group’s In line with the dividend policy in the Articles of Association and business model and strategy. The approved by the Board, the Directors such authorities are renewed by Corporate Governance Report on do not recommend payment of a shareholders at the AGM each year, pages 36 to 77 is incorporated into dividend in respect of the financial see page 79. the Directors’ Report by reference. year ended December 31, 2018. The Appointment and replacement The following information fulfilling Directors are of the view that the of Directors the further disclosure requirements dividend policy remains appropriate The Company’s Articles of contained in the Companies Act for the Group in light of its current Association give the Directors power 2006, Schedule 7 of the Large and financial position, strategy and to appoint and replace Directors. Medium-Sized Companies and prospects and the continuing Under the Terms of Reference of Groups (Accounts and Reports) uncertainties faced. These the Nomination & Governance Regulations 2008 and the FCA’s uncertainties include ongoing Committee, any appointment Listing Rules and Disclosure litigation, the ongoing government will be recommended by that Guidance and Transparency Rules investigation and the need to Committee for approval by the (DTRs) have been included establish more diverse revenue Board of Directors. elsewhere within the Annual Report streams in light of generic entry The Articles of Association require and are incorporated into the into the market. Directors to retire and submit Directors’ Report by reference: Directors and their interests themselves for re-appointment at Disclosure Location The Directors of the Company who the first Annual General Meeting Future business Strategic Report (pages served during the financial year (‘AGM’) following appointment, and developments and 16 to 17) ended December 31, 2018 and up to R&D activities all Directors who have held office at the date of signing the financial the date of the two preceding AGMs. Financial risk Strategic Report statements appear on pages 38 to management (pages 29 to 34) Notwithstanding these provisions 39. Yvonne Greenstreet will step Greenhouse gas Strategic Report of the Articles of Association, in emissions (page 18) down as a Director prior to the 2019 compliance with the UK Corporate Annual General (‘2019 AGM’) and will Directors’ (pages 83 to 84) Governance Code and in line with Responsibilities not seek re-election. Details of previous years, all Directors wishing Statement Directors’ interests in the Company’s to continue in office will offer ordinary shares, including any themselves for re-appointment by interest in share awards and long- the shareholders at the 2019 AGM. term incentive plans, are set out in Details of unexpired terms of the Directors’ Remuneration Report Directors’ service contracts are set on pages 62 to 77. out in the Directors’ Remuneration Report on page 76.

7882 www.indivior.com Governance 79 83 5.22% 5.30% 8.02% 31, 2018 2018 31, 15.04% 18.03% (% of total total of (% At December At December voting rights) rights) voting 2019 5.22% 5.30% 8.02% 17.31% 17.31% 15.98% 15.98% ll be asked toasked ll be structurebut will (% of total At March 1, voting rights) Indivior Annual Report 2018 Substantial shareholdings shareholdings Substantial the and 2018 31, December at As Company the Report, of this date 5 Rule under notified been had and Guidance Disclosure the of TransparencyRules of the following major interestsin the votingrights Company: the of capital the in shareholder Name of Life Standard Aberdeen Capital Scopia Management Shares held in the Indivior PLC Trust Benefit Employee PLC Indivior the of trustee The Trust Benefit (‘EBT’) has Employee held shares any vote to not agreed If meeting. general any at EBT the by any offer is made to shareholders to will trustee the shares their acquire to accept or reject not obliged be shares any of respect in offer the to subject time that at are which Old Mutual Global Investors (UK) Limited Artemis Investment Investment Artemis Management of ordinaryof shares, being 10% of the issued approximately sharecapital. As atDecember 31, authority this of extent full the 2018 in unutilized. force and remained annually is renewable The authority and shareholders wi approve an equivalent resolution at 2019 AGM. the The it desirable consider Directors for these general authorizations tobe available inorder to maintain an capital efficient shares the Company’s purchase only in is it believe they if market the in shareholders of interests best the generally. Prudential Prudential that certain restrictionscertainthat may from by laws be imposed to time time to pursuant and regulations; and Regulation, Abuse Market EU the employees certain and Directors require clearanceto deal in the securities. Company’s noperson holds securities in special carry which Company the control to regard with rights voting Company The Company. the of is not aware of any agreements securities of holders between on restrictions in result may that on or securities of transfer the voting rights.

‹ ‹ Sponsored a has Company The Level 1 American Depository Receipt (‘ADR’)program in US.the Authority to purchase purchase to Authority shares own At the 2018 AGM,shareholders for the a resolution approved its of purchases make to Company sharesown to maximuma number Authority to allot shares shares allot to Authority Directors the AGM, 2019 the At the renew to shareholders ask will authority last granted to them at the up a to shares allot AGM to 2018 maximumof an amount equivalent shares of issue in two-thirds the to offered be must one-third which (of renewed The issue). rights of way by the until apply will authority 2020 of AGM. the conclusion resolutions special separate Two AGM 2019 the at proposed be will allot to Directors the authorize to for Company the in shares equity pre- the to regard without cash, of the emption provisions These 2006. Act Companies authorities are also renewable annually. The authoritiessought institutional with line in are guidance. shareholder and traded on the on traded and Details of the Company’s share Company’s the of Details capitaland the rights attached to out set are shares Company’s the in Note7 on page 129. of class one has Company The ordinary carries share which no rightsto fixed income. Each share carries the right to one vote at Company. the of meetings general The ordinary areshares listed on the Official List Shares Share capital LondonStock Exchange. Asof Company the 2018, 31, December had 728,441,653 shares ordinary in issue. The Company does not hold anyshares Treasury.in The rights and obligations attached shares ordinary the Company’s to setare out in theArticles of Association. There are no restrictions on the voting rights to the Company’s ordinary attaching shares or the transfer of securities case the in except, Company the in securities: of transfers of The Articles of Association may be of resolution special by amended shareholders. the Articles of Association Director indemnities and cover insurance Company’s the with accordance In Articlesof Association and tothe the law, by permitted extent Directorshave been granted an in the Company from indemnity a as incurred liability of respect addition, In office. their of result Directors’ maintained Company the Officers’and liability insurance the Neither the year. throughout provide the insurance nor indemnity is Director a that event the in cover dishonestly to have acted found fraudulently. or

Directors’ Report continued

subsisting awards, but will have create a workplace that has an open Group. Information relevant to the regard to the interests of the award atmosphere of trust, honesty employees is provided to them and, holders and will have power to and respect. Harassment or where appropriate, to employee consult them to obtain their views discrimination of any kind based trade union representatives. on the offer. Subject to the above, on race, color, religion, gender, age, The Group supports the wider the trustee may take action with national origin, citizenship, mental fundamental human rights of its respect to the offer it thinks fair. or physical disabilities, sexual employees worldwide, as well as orientation, veteran status, or any those of its customers and suppliers. Principal risks and other similarly protected status is uncertainties not tolerated. This principle applies Further information regarding our The principal risks and uncertainties to all aspects of employment from people can be found on pages 19 facing the Group have been recruitment and promotion, through to 20. reviewed by the Directors and are to termination and all other terms Significant agreements – detailed on pages 30 to 34, where and conditions of employment. It change of control information is also provided on the is Group policy not to discriminate There are a number of agreements performance of the Directors in on the basis of any unlawful that take effect, alter or terminate actively managing those risks. criteria, and its practices include upon a change of control of the the prohibition on the use of child Greenhouse gas emissions Company following a takeover, such or forced labor. Employment as commercial contracts, bank Disclosures concerning the Group’s policies are fair and equitable agreements, property lease greenhouse gas emissions are and consistent with the skills and arrangements and employee share contained within the managing our abilities of the employee and the plans. None of these are deemed business responsibly section of the needs of the business. Strategic Report, on page 18, to be significant in terms of their and form part of the Directors’ The Group is committed to offering potential impact on the business of Report disclosures. equal opportunities in recruitment, the Group as a whole. training, career development and There are no significant agreements People promotion to all people, including between the Company and its During the year under review, the those with disabilities, having regard Directors or employees providing Group employed an average of for their particular aptitudes and for compensation for loss of office 1,024 people worldwide (2017: 1,012). abilities. As a matter of policy, full or employment that occurs because The Group’s business priority is and fair consideration is given to of a takeover bid, except that to safeguard the well-being, applicants with disabilities and provisions of the Company’s share development and safety of its every effort is made to give plans may cause options and awards workforce. It also wants its employees who become disabled granted under such plans to vest on workforce to have opportunities while employed by the Group an a takeover. to grow and progress as part of an opportunity for retraining and for enjoyable career. continuation in employment. It is There is no information that the Company would be required to The Group is an inclusive and equal Group policy that the training, career disclose about persons with whom opportunity employer that relies development and promotion of it has contractual or other on Human Resources specialists disabled persons should, as far as arrangements which are essential throughout its worldwide locations possible, be the same as that of to the business of the Company. to ensure compliance with all other employees. Employees and applicable laws governing their representatives are briefed and The Directors acknowledge that employment practices and to advise consulted on all relevant matters on there are other significant on all Human Resources policies and a regular basis in order to take their stakeholders, in addition to practices, including for example views into account with regard to shareholders, who provide valuable recruitment and selection, training decision-making and to achieve feedback and help shape the and development, promotion and a common awareness of all the Company’s overall approach retirement. Group policies seek to financial and economic factors to governance. affecting the performance of the

8084 www.indivior.com Governance 81 85 Indivior Annual Report 2018 Pukang Biotechnology Co.,Ltd. potential total for (Pukang) consideration of up to $122.5m certain achieving on based is The agreement milestones. subject to various closing anticipated and is conditions to close in Q4 2019. the Group the year, During announced its intention to to program a implement and Group the streamline costs. certain reduce This resulted in a further more of in headcount reduction than 120 employees in Q1 2019. the effect to costs Incremental an as reflected be will savings exceptional cost in Q1 2019.

Viabilitystatement the assessed have The Directors prospects of the Group over a 31, to December period four-year 35.page on out set as 2022, the account taken into This has risk aims, strategic model, business and risks principal and appetite, with the along Group’s uncertainties, currentfinancial position. Based on have Directors the assessment, this a reasonable expectation that the operation in continue will Group theyas liabilities itsfall meet and dueover the four-year period under can statement The viability review. 35. page on found be Disclaimer The of this Annual Report purpose andAccounts tois provide the of members to information and Report Annual The Company. for, prepared been have Accounts the of members the for, only and other no and a as body Company, Company,The persons. Directors its or agents and advisors employees, or assume accept do not person other any to responsibility ‹ Following February 19, 2019 ordersfrom the U.S. District of New Jersey, the District for Court (DRL) Laboratories Reddy’s Dr. AlvogenBrook,and Inc. Pine (Alvogen) are no longer prevented from selling, offering generic their importing or sell, to buprenorphine/naloxone sublingualfilm products. On February 20, 2019, Indivior launched it that had announced an authorized generic version of and (buprenorphine SUBOXONE® (CIII) Film Sublingual naloxone) in the U.S. It is possible that othergeneric manufacturers may of versions generic also launch following Film SUBOXONE® this of launch Indivior’s authorized generic. a definitive reached Indivior 4, 2019)agreement (February to related rights divest to Tablets SUBOXONE® Sublingual (SaiBoSong™) in thePeople’s Republicof toChina Zhejiang

the Audit Committee to determine determine to Committee Audit the proposed be will remuneration, their AGM. forthcoming the at ‹ ‹ Disclosures required under required Disclosures Listing Rule 9.8.4 There are no disclosures required to 9.8.4. Rule be made under Listing UK plans incentive long-term of Details the in Directors’ be can found Remuneration Report on pages 62 to 77. Post-balancesheet events Financial risk management management risk Financial of use Group’s the of Details with together instruments, financial information on the Company’s risk objectives,policies and exposure to and flow cash liquidity, credit, price, rate risks, can be in found interest Note 16. so far as he/she is aware, there there aware, is he/she as far so information relevant audit no is External Company’s the which of and unaware; is Auditor all taken has Director each he/she that steps reasonable oughtto have takenas a Director to make himself/herself aware of and information audit relevant any Company’s the that establish to that of aware is Auditor External information.

ExternalAuditor PricewaterhouseCoopers LLP agreed to have re-appointed be the of Auditor External the as their for Resolutions Company. authorize to and re-appointment, Disclosure of information to ExternalAuditor Each of the who persons are this when time the at Directors Directors’ Report is approved confirmsthat: ‹ ‹ audit relevant purposes, these For information means information External by the Company’s needed in Auditor connection with the on theirof report pages preparation 85 and 94. Branches TheGroup has branches in Finland, had Group The Sweden. and Norway 2018 Greeceduringthe in branch a formally which year, financial deregistered on January 10, 2019. Political donations donations Political Therewere no political donations, Act Companies the in defined as 2006,during 2018(2017: nil). The do subsidiaries US Company’s make ‘political donations’ as these but law, UK under defined donationsare not subject to that law. Donations by US subsidiaries US$500,000. exceed not will

Directors’ Report continued

to whom this document is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed. The Annual Report and Accounts contains certain forward-looking statements with respect to the operations, performance and financial condition of the Group. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of this Annual Report and Accounts and the Company undertakes no obligation to update these forward- looking statements. Nothing in this Annual Report and Accounts should be construed as a profit forecast. Annual General Meeting (‘AGM’) The AGM will be held at 11am (UK Time) on Wednesday, May 8, 2019 at the offices of Addleshaw Goddard LLP, Milton Gate, 60 Chiswell Street, London EC1Y 4AG. A full description of the business to be conducted at the meeting is set out in the Notice of AGM, available from the Company’s website www.indivior.com. Strategic Report The Strategic Report set out on pages 4 to 35 was approved by the Board on March 1, 2019. By Order of the Board Kathryn Hudson Company Secretary of Indivior PLC

103-105 Bath Road Slough, Berkshire, SL1 3UH Company registration number: 9237894 March 1, 2019

8286 www.indivior.com Governance 83 85 Indivior Annual Report 2018 the Directors' Report includes a includes Report Directors' the reviewfair of the development the business of and performance and Group the of position the and a with together Company, Parent description of the principal risks face. they that uncertainties and the Group financial statements, statements, financial Group the in been prepared which have accordance with IFRSs as adopted bythe European Union,give a assets, the of view fair and true liabilities,financial position and and of Group; the profit the Parent Company financial financial Company Parent the been have which statements, with accordance in prepared United Kingdom Generally AcceptedAccounting Practice Accounting Kingdom (United Standards, comprising FRS 101 Framework”, Disclosure “Reduced and applicable law), give a true andfair view ofthe assets, liabilities,financial position and loss of the Company;

‹ ‹ Directors'confirmations TheDirectors consider that the taken Accounts, and Report Annual as a whole, is fair, balanced and provides and understandable for necessary information the shareholders to assess the Group position Company’s Parent and model business performance, and and strategy. Each of the Directors, whose names the in listed are functions and Accounts, and Report Annual their of best the to that, confirm knowledge: ‹ make judgements and accounting accounting judgements and make estimates that are reasonable and prudent; and the prepare statements financial unless basis concern going the on that presume to inappropriate is it theGroup and Parent Company business. in continue will

‹ ‹ responsible also are Directors The for safeguarding the assets of the and Company Parent and Group hence steps reasonable for taking detection and prevention the for irregularities. other and of fraud for responsible are Directors The keeping adequate accounting show to sufficient are that records Parent and Group the explain and and disclose transactions Company's any at accuracy reasonable with of the position the time financial and Company Parent and Group the that ensure to them enable and the statements financial Report Remuneration Directors’ Act the Companies with comply regardsthe and,as Group 2006 of Article 4 statements, financial Regulation. IAS the and law applicable Under are Directors the regulations, a preparing for responsible also Directors’ Report, Report, Strategic Report and Remuneration Directors’ Statement Governance Corporate and law that with complies that regulations. those for responsible are Directors The and integrity maintenance the website. Company’s Parent the of Legislationin the United Kingdom and preparation the governing dissemination of financial from differ may statements jurisdictions. in other legislation

select suitableselect accounting policies consistently; them apply then and IFRSs applicable whether state the European by as adopted the for followed been have Union and statements financial Group United KingdomAccounting Standards, comprising FRS 101, the for followed been have statements, financial Company departures material to any subject the in explained and disclosed statements; financial

‹ Company lawCompany requires the Directors for statements financial prepare to eachfinancial year. Underthat law, the prepared have Directors the statementsin financial Group with International accordance Standards Reporting Financial (‘IFRSs’)byas adopted Europeanthe Union,and the Parent Company accordance in statements financial Unitedwith Kingdom Generally AcceptedAccounting Practice Accounting Kingdom (United Standards, comprising FRS 101 Framework”, Disclosure “Reduced company Under law). applicable and approve not must Directors the law, the financial statements unless they give a true they that satisfied are of affairs of state the of view fair and theGroup and ParentCompany and and Group the of loss or profit the of In period. that for Company Parent statements, financial the preparing to: required are Directors the ‹

The Directors are preparingresponsible for the Annual Report, the Directors’ Remuneration Report and the financial statements in accordance and law applicable with regulation. in respect of the financial statements Statement of directors' responsibilities Statement of directors' responsibilities in respect of the financial statements continued

Disclosure of information could impact the Group and Parent to auditors Company’s ability to operate. The A Directors’ statement in relation Directors have taken significant to disclosure of relevant audit steps to reduce the cost base of the information can be found in the business and manage its capital Directors’ Report on pages 78 to 82. structure and believe the Group has sufficient liquidity to continue as Going concern a going concern for at least the The Group’s business model, next twelve months. However, a strategy, and viability assessment combination of the risks may require are set out in the Strategic Report additional measures such as further on pages 4 to 35, along with the cost savings or a change to the principal risks that could threaten litigation strategy. the Group’s business model, future Although the above factors performance, solvency or liquidity indicate the existence of material and the Group’s risk management uncertainty which may cast strategy. The Group’s financial significant doubt about the Group’s position, cash flows, liquidity ability to continue as a going position and financial assets and concern, the Directors have a liabilities are discussed in the notes reasonable expectation that the to the Group financial statements, Group and Parent Company have along with the Group’s objectives, adequate resources to continue policies and processes for managing in operational existence through its financial risks, and the Group’s the period ending June 2020. exposure to liquidity risk and Accordingly, the Directors continue capital risk. to adopt the going concern basis The Directors have given the for accounting in preparing these going concern assessment due financial statements. The viability consideration and have concluded statement is on page 35. that it is appropriate to prepare the This statement is made to fulfill the Group financial statements on a requirements of Provision C.1.3 of going concern basis. The Directors the UK Corporate Governance Code. have considered the Group’s strategic plan, in particular with By Order of the Board reference to the period through Kathryn Hudson June 2020. As disclosed in Note 22 of Company Secretary of Indivior PLC the Group Financial Statements, the Directors have considered the 103-105 Bath Road impact of the DOJ, FTC and antitrust Slough, Berkshire, SL1 3UH litigations. The final settlement Company Registration amount may be materially higher number: 9237894 than the $438m provision recorded at December 31, 2018, or require March 1, 2019 payment over a shorter period. This, together with higher than expected loss of revenue following the 'at-risk' launch of generic buprenorphine/naloxone sublingual film products, or failure for new products to meet expectations,

8486 www.indivior.com Financial statements l 85 ure ing ing

9 and9 nts Statements”) give a true t, the Consolidated statement Consolidated the t, the Consolidated balance sheet balance Consolidated the t amount for all all outstand the of for amount t y all of which relatesof which the to all y K)”)applicableand law. Our l describes Statements that Indivior Annual Report 2018 85 Indivior Annual Report 2018 Disclosure Framework”, and ent of changes in changes of ent equity the Parent and Justice and the and Justice FederalTrade by the FRC’s Ethical Standardby not were non-audit services to the Group or the or Group the to services non-audit ent and appropriateprovide to and basis ent a for the Financial Statements, which includewhich Statements, Financial a the the Parent the FinancialCompany Statements, tments that would result if the Group and and result Group the if would that tments at 31 December 2018 and of the Group’s profit the of profit December and Group’s 2018 31 at listed public interest entities, and interestand public entities, have we listed Statements (the “Financial(the Statements sublingualfilm productsthe and riskpotential of fail cal requirements that are relevant to our audit of the Financia the of audit our to are that relevant requirements cal the requirements of the Companies Act 2006 Act Companies of the and, as requirements the regards not modified, we draw your attention to Notes 2, 20 and 22 and 20 2, Notes to attention your draw we modified, not epared in accordanceepared United with Generally Kingdom Accepted y toy recover amountsowed subsidiaryby undertakings and the modified, we disclosureconsidered the have of modified, adequacy the rds on Auditingon rds (UK)(“ISAs (U the Consolidated income statemen income Consolidated the ’s and ParentGroup’s the about significant doubt abilitCompany’s y Annual Report, which comprise: comprise: Annual Report, which provision of $438m,of substantiall provision comprising comprising 101FRS “Reduced of the Parent Companythe of Financia ns. The final aggregate settlemen aggregate final The ns. ationsof Department by the ision and/or may require payment over a shorter period than than a period shorter over payment may and/or require ision e Departmente and of Justice Federal Trade and Commission sh flow statement, the Consolidatedthe statement, flow sh statem properly prepared in accordance with International Financial Reporting Standards Standards Reporting with Financial International accordance in prepared properly and ParentCompany Financial in shares in subsidiary undertakings. undertakings. subsidiary in shares in declare that non-audit services prohibited services non-audit that declare r the and the notes year then ended; to erate, which willwhich erate, affected theby adversely be significant revenuein 201 in decline neric buprenorphine/naloxone e Financial Statements, we have provided provided no have we Statements, Financial e audit evidence we have obtained is obtained have suffici we audit evidence ncial Statements do not include the adjus Statementsncial include not do e Group Financial Statements to Note 1 Financial and Group e

ticle 4 of the IAS Regulation. Regulation. the of 4 ticle IAS es the es FRC’s Standard,Ethical as applicable to continue as a going concern. going as a continue e andGroup’s of Parent the Company’s affairs as Outcome of legal proceedings venue growth expectations.growth venue the the Union; European IndiviorPLC’s Group Financial Statements and and fair of view th of state the the Group Financial Statements, Ar Statements, Financial Group the and cash flows cash ended; then and year the for have been Statements Financial Group the (“IFRSs”)as adoptedby Parent Companythe Financial prproperly been have Statements applicable law); and Statements Financial the been preparedhave in with accordance Accounting Practice (United Kingdom Accounting Standards, Accounting Kingdom (United Practice Accounting

matters referred to may be materially higher than this prov this than higher materially be may to referred matters anticipated. currently description of thedescription accounting significant policies. Committee. Audit the to consistentis opinion reporting Our our with potential settlement of the Department of Justice investigatio Justice of Department the of settlement potential Company statement of changes in equity fo Company statement of changes in equity Company. Parent the or the to Group provided Noteth in to 6 disclosed those than Other of comprehensive income, the Consolidated ca Consolidated the income, comprehensive of 2018. December 31 2018 to January 1 from period the in Company Parent section of our report. We believe that the that believe We report. our of section responsibilities under ISAs(UK) furtherare describedin the Auditors’ responsibilities for the auditof the Financial Stateme opinion. our Independence the with ethi accordance in Group the of independent remained We investig ongoing the of outcome uncertain the describe that a carries Group The litigation. antitrust as well as Commission Material uncertainty relating to going concern – Group and Parent Company opinion our In forming on the Financial Statements, which is not In opinion our In forming Financial Group the on which is Statements, Note 1 Financialand Statements Group the of Note 2 in made Emphasis of matter – GroupEmphasis – We conducted our audit in accordance with International Standa with International accordance in audit our conducted We includ which UK, the in Statements fulfilledour other ethical responsibilitiesaccordancein requirements. these with belief, we and knowledge our of best the To Basis for opinion Basis for opinion In our opinion: opinion: our In ‹ Report on theReport on audit of the Financial Statements Opinion Independent Auditors’report to members the of Indivior PLC We have audited the Financial Statements, included within thewithin the Financial have audited We included Statements, the and Parent at sheet as balance Company 2018; December 31 ‹ ‹ ‹ the uncertain outcome of the ongoing investigations by th by investigations ongoing the of outcome uncertain the litigation. antitrust op to ability Group’s the impact could This beyond following the ‘at-risk’ launch of ge launchof ‘at-risk’ the following beyond CompanyParent unablewere to to continue as a going concern.going as a continue to Fina The for new products to meet re meet to products new for Company’s abilit Parent the impact also could matters above The investmentsCompany’s Parent the of value th to 2 Note in out set conditions, These uncertaintymaterial cast a may of which the existence indicate Independent Auditors’ report to the members of Indivior PLC continued

Explanation of material uncertainty The Directors have taken significant steps to reduce the cost base of the business and manage its capital structure and believe the Group has sufficient liquidity, influence over near-term legal proceedings and the ability to carry out further measures that may be necessary for the Group and Parent Company to continue as a going concern for at least the next 12 months. However, a combination of the above risks may require additional measures such as further cost savings or a change to the legal strategy. As a result of the expected significant decline in revenue in 2019 and the extent of its potential impact, the Directors are prepared to take the further steps noted, as also described in Note 2 to the Group Financial Statements and Note 1 to the Parent Company Financial Statements. The Directors believe that they are able to carry out the necessary additional measures and that the Group and Parent Company can continue as a going concern for the foreseeable future. Accordingly, the Directors continue to adopt the going concern basis for accounting in preparing these Financial Statements. However, given the risks associated with the matters outlined above, the Directors have drawn attention to this in disclosing a material uncertainty relating to going concern in the basis of preparation to the Financial Statements.

What audit procedures we performed In concluding there is a material uncertainty, our audit procedures assessed the impact of a final aggregate settlement amount for all of the outstanding legal proceedings that is materially higher than the current provision; higher than expected loss of revenue following the ‘at-risk’ launch of generic buprenorphine/naloxone sublingual film products; and the failure for new products to meet revenue growth expectations. In assessing the impact of the above scenarios, which are referred to in Note 2 to the Group Financial Statements and Note 1 to the Parent Company Financial Statements, we performed the following procedures on the Directors’ assessment that the Group and Parent Company will continue as a going concern: ‹ agreed the underlying cash flow projections to management approved forecasts, assessed how these forecasts are compiled, and assessed the accuracy of management’s forecasts by reviewing third-party data for the SUBOXONE® Film, SUBLOCADE™ and PERSERIS™ revenue streams with the assistance of our valuations experts; ‹ evaluated the assumptions regarding the impact of revenue decline of SUBOXONE® Film by reference to the historical impact of other generic launches on the revenues of a branded product; ‹ assessed the basis of the actions implemented to reduce the Group’s cost base by agreeing them to detailed workings, agreeing, where appropriate, to actions already undertaken, discussing the assumptions used with management, assessing the reductions against underlying calculations and whether those further reductions identified were feasible given our understanding of the business model and operating expenses; ‹ assessed the impact of either increased lump sum payments or a different payment pattern as a result of the settlement of the legal proceedings, combined with lower SUBOXONE® Film, SUBLOCADE and PERSERIS revenue and a higher level of damages required to be paid to generic competition than currently provided against the debt covenants in place as explained in Note 18; ‹ assessed whether the downside model prepared by management appropriately considered the risks facing the business as identified in the principal risk section on pages 29 to 34; and ‹ checked the mathematical accuracy of the spreadsheet used to model future financial performance and determined whether the minimum cash balance requirements will be met.

Our audit approach Overview ‹ Overall Group materiality: $15.9m (2017: $18.0m), based on 5% of adjusted profit before tax. ‹ Overall Parent Company materiality: $14.7m (2017: $14.7m), based on 1% of total assets.

‹ We conducted work in two key territories, being the UK and US. This included full scope audits MATERIALITY at two components and specific audit procedures over certain financial statement line items at a further four components. ‹ The components where we performed audit work, taken together with our work on central corporate functions, accounted for 94% of the Group’s revenues and 92% of the Group’s adjusted AUDIT SCOPE profit before tax.

‹ Risk of misstatement relating to ongoing legal claims and regulatory investigations and claims and the related provisions (refer to Notes 20 and 22) (Group). KEY AUDIT ‹ Significant judgements and estimates in sales rebates, discounts and returns adjustments recognised MATTERS primarily in the US business (refer to Note 2) (Group). ‹ Recoverability of assets (Group). ‹ Carrying value of investments in subsidiaries (refer to Note 2 of the Parent Company Financial Statements) (Parent Company).

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87 ct ing ing the and Annual we Report), timates, in particular in in particular in timates, atements. We also considered considered We also atements. nagement’s investigation of of investigation nagement’s ccounting estimates. The Group Group The estimates. ccounting . Audit procedures performed by by performed procedures Audit . d inventories (see related key key (see related inventories d Indivior Annual Report 2018 87 Indivior Annual Report 2018 andinternal legal counsel; ts, for example in respect example in for ts, significant of unusual account combinations, posted by by posted account combinations, unusual ents that are inherentlythat are ents uncertain. ements, the less the ements, likely would we become pportunities for fraudulent manipulation of the of manipulation fraudulent for pportunities is higher than the risk of not detecting one detecting not theof than risk higher is its significantits es accounting auditors referredto in the scopingsection of our report below, rial effect on the Financial St Financial the on effect rial se to such risksto such se their in work gal advisors, including consideration of known or suspected consideration suspected known of or including advisors, gal helpline andhelpline the results ofma ts (including, but not limited to, those of the Federal Trade Trade Federal the of those to, limited not but (including, ts t by, for example, forgery or inor example, forgery for by, t misrepresentations, tentional fied that the principal risks of non-compliance with laws laws with non-compliance of risks the that principal fied ure, and management bias in a in bias management and ure, t assets, deferred tax deferred assets, t an assets d discussion with external d discussion nancial Statements including, but not limited to, the Companies A Companies the to, limited not but including, Statements nancial d assessedFinancial the the in misstatement material of risks ed toprevent and detectirregularities, in particular its anti-bribery controls; particular any journal entries posted posted with entries any journal particular ere the Directors made subjective judgemen subjective made Directors erethe t procedures described above and the further removed non-compliance with laws laws with non-compliance the removed and above further described procedures t ansactions reflected in Financialthe Stat ng assumptions and considering future ev future considering and assumptions ng lawsand and regulation fraud; t’s auditors’ t’s workingpapers; ion. We evaluated management’s incentives and evaluated management’s We ion. o not detecting a material misstatement due to fraud fraud to due misstatement material a not detecting relation to impairment of intangible assets, other non-curren other assets, intangible of impairment to relation below); matter audit design controls management’s of Evaluation and matters; such in entries, journal and testing Identifying times. posted unusual at management or senior Assessment of matters reported on the group’s whistleblowing whistleblowing the on group’s reported of Assessment matters instances of non-compliancewith Discussions with management, internal audit and the Group’s le Group’s the audit and with internal management, Discussions Reviewingkey correspondence with regulatory authoritiesan of componen significant Review auditof internal Reading reports; in management by made judgements and assumptions Challenging

those laws and regulations that and regulations a have laws those Fi directthe on impact and2006 UK and tax US legislat and regulations related to pharmaceutical regulatory requiremen regulatory pharmaceutical to related and regulations page of (see Agency) dicines 34 the Me and European Administration Drug and Food US Commission, Based on our understanding of the Group and industry, we identi we industry, and Group the of understanding our on Based Capabilityofaudit the detecting in irregularities, includingfraud As part of designing our audit, we determined materiality an materiality audit, determined we our of part As designing Statements. In particular, In Statements. lookedwe wh at mate a have might the non-compliance which to extent considered accounting estimates that involved maki involved that estimates accounting The scope of our audit audit our of scope The and regulations tr and events the and from is regulations ofaware riskit. Also, the of resulting fromerror, as fraud may involve deliberate concealmen collusion. through or ‹ ‹ audi the in limitations inherent are There ‹ FinancialStatements (including the risk of override of controls), and determinedthat the principal risks were relatedto post included: auditors component engagementand/or team group the ‹ ‹ ‹ ‹ ‹ inappropriate entriesjournal to expenditor revenue manipulate this shared team riskengagement assessment component the with respon in procedures audit appropriate include could they that so Independent Auditors’ report to the members of Indivior PLC continued

Key audit matters Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the Financial Statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to going concern, described in the Material uncertainty relating to going concern section above, we determined the matters described below to be the key audit matters to be communicated in our report. This is not a complete list of all risks identified by our audit.

Key audit matter How our audit addressed the key audit matter Risk of misstatement relating to ongoing legal claims We discussed actual or pending legal or regulatory claims and regulatory investigations and the related provisions with the Group’s external and internal legal counsel to gain (refer to Notes 20 and 22) – Group an understanding of the status of each case. The pharmaceutical industry is a highly regulated industry. Where provisions had been booked in the Group Financial Compliance is required across the industry, however with Statements, we substantively tested the amount provided and the US representing (79%) of the Group’s revenue, the US evaluated management’s position of the likely outcome and regulatory requirements, including those of the Federal compared that to the provision by: Trade Commission and US Food and Drug Administration is ‹ reading documentation such as correspondence with considered a significant focus. The Group is engaged in a external legal counsel and Board and Committee minutes number of ongoing litigations and investigations, which may and having discussions with external and internal legal have a material impact on the Group Financial Statements. counsel; We focused on this area because the outcome of claims is ‹ evaluating independent confirmations that we received uncertain and the positions taken by the Directors are based from the Group’s external legal counsel; and on the application of material judgements and estimation. ‹ assessing management’s assumed payment structure, Accordingly, should the outcomes of the legal proceedings including evaluating the discount rate utilised. differ from those anticipated by the Directors, this could materially impact the Group’s reported profit and balance We assessed the impact that applying different payment sheet position. arrangements and discount rate assumptions would have on As referred to in Notes 2, 20 and 22, the Group carries a the provision noting immaterial variations to management’s provision of $438m in respect of the investigative and antitrust provision balance. litigation matters at 31 December 2018 (31 December 2017 – For certain ongoing regulatory investigations where no $438m). In arriving at this balance, management has applied a formal claim had been brought against the Group at payment structure and discount rate to determine the present 31 December 2018, we spoke with external legal counsel to value as reported. discuss the matters and understand the extent of their work Substantially all of the provision relates to the U.S. to determine whether it was sufficient to support their Department of Justice investigation. The Group is in advanced conclusions regarding the settlement estimate that was discussions with the Department of Justice about a possible established as a provision and to determine that there have resolution to its investigations, although it cannot predict with been no illegal acts. any certainty whether, when, or at what cost it will reach an We used our own accumulated knowledge from working ultimate resolution. Therefore, the final settlement amounts with other entities in the pharmaceutical industry operating may be materially higher than the $438m provision maintained in the US to challenge whether the Directors had omitted any or require payment over a shorter period. material relevant factors when drawing their conclusions. In addition, we considered the completeness of legal and regulatory matters through open discussions with internal legal counsel and by reading Board and Committee minutes, without identifying any other legal matters that had not already been disclosed to us. Furthermore, we obtained representations from management that there have been no illegal acts. Finally, we checked the disclosures relating to legal proceedings in the Financial Statements back to our underlying work. We found that the disclosures in Notes 20 and 22 were in accordance with the requirements of IFRSs as adopted by the European Union. We consider that the disclosures in respect of the legal and regulatory matters are of such importance that they are fundamental to understanding the Financial Statements and we therefore included reference to the disclosures in the ‘Outcome of legal proceedings’ emphasis of matter above.

88 www.indivior.com Financial statements 89 buy-inthe and tested the inputsthe tested the into with IFRSs as adopted by the by adopted as IFRSs with ls at both both at ls wholesalersand plication of IFRS 15 ‘Revenue ‘Revenue 15 of IFRS plication ment’s revenue ment’s recognition ) in the by applied Directors ountsand sales returnsunder rebaterates and forsales fferences.also We evaluated cognised in the cognised Financial the wholesaler Indivior Annual Report 2018 89 Indivior Annual Report 2018 rates includedin sales contracts and agreements with third andparties; sample a on after the year-end, invoices received rebate inbasis, order toassess Directors’the accuracy of the channel.forecast volumes by

udgement taken regarding these items. From the evidence evidence the From these items. taken regarding udgement imminent generic entry, by analysing the industry trends on on trends industry the by analysing entry, generic imminent returns following thelaunch of generics.considered We the year-endinventory holding leve salesas comparedforecast pharmacies expected the to management’s We a launch. following considered generic to be in ofreasonable light the level of assumptions utilised availableinformation the at year-end. theIn determining the of appropriateness revenue ap (including policy recognition contracts withwith Customers’ salescalculating rebates, disc is note we there requirements, regulatory and contractual discounts and salesand discounts andreturns with: them by calculations comparing ‹ ‹ accruals compared that tests back look performed We or discounts to rebates, actual periods previous in recognised returns receivedin order to test the Directors’ historical accruals. these calculating in accuracy of accruals the accuracy and assessedWe completeness the used management process the testing and understanding by amounts such comparing by balances, year-end the record to the of independently developedexpectations own our to were expectations balances. year-end independent Our received, invoices historical upon based rebate developed volumes, current for adjusted returns, andadjusted for industry experience in the face of re accruals The competition. internally our from different materially not were Statements expectations.generated assessedWe the reasonablenessmanagement’sof sales provision in light returns of j obtained we found the assumptions, methodology and and methodology assumptions, the found we obtained appropriate.to be used policies manage whether evaluated We consistentwere applied policies no noting Union, European di the of management’s standard, adoption accounting new hadwhich no impact. rebates, for sales calculation the accruals We obtained matter audit key the addressed audit our How n in 2019, we also focused on ulations, we considered there considered we ulations, s rebates, s discountssalesand ta and significant judgements judgements and ta significant ationsthisthat and riskrelated on sales to wholesale and and wholesale to sales on a patient and by and patient a notification accruals involvesaccruals of the use e for process calculating sales salesand volumes discounts lumeschannel.by Ourtesting

Key audit matter matter audit Key rebates, in sales andestimates Significantjudgements primarily recognised adjustments returns and discounts inGroup– the 23) US Note to business (refer and distributors through products sells Group the US, the In based the on is price determined selling ultimate the withhas Group the that the arrangements contractual (Medicaid, payment other or programme insurer patient’s or initial between time The scheme). equivalent Medicare is revenue the (when recognised), distributor shipment to the to product a of dispensing the therelevant insurer orpayment programme may several be price estimatean selling net the of Accordingly, months. theat necessary of is date shipment,the when revenue recognised.is a As result, revenuerecognised net the of to determination subject final is a distributors retail sales therebates, in of price form discounts sales and returns. for the process The is estimates these of size determining as regulation, and terms and contract on depends complex wellas forecastssales of vo sale the on for focused accruals returns recognised atthe year-end. areathis on focused We th as return and rebates, discounts largevolumes of data, being risk of a be to bias the calculin Inaddition, the accruals. these understatementof the given to increased ofrisk generic intrusio management’s theof assessment generics the that impact on have sales returns. could from multiple sources, which, taken which, can sources, together, multiple be from bias. or managementof manipulation risk at and subjective da of large quantities the Given calc these in compiling involved Independent Auditors’ report to the members of Indivior PLC continued

Key audit matter How our audit addressed the key audit matter Recoverability of assets (refer to Note 2) – Group Our procedures focused on management’s judgements on Intangible assets of $84m, other non-current assets of $33m, the recoverability and valuation of the intangibles, other long- deferred tax assets of $44m, and inventories of $78m are term assets, deferred tax assets and inventory assets linked accounted for at amortised cost less impairment in the Group to management revised forecasts due to generic intrusion balance sheet at 31 December 2018. These assets are tested for and any changes to expectations for the product pipeline. impairment if impairment indicators exist. For intangible assets, we considered whether the SUBLOCADE The recoverability of certain assets, including intangible and PERSERIS intangible assets were recoverable based on assets, other non-current assets, deferred tax assets and management’s revised forecasts. inventory may be impacted by the recent developments in We utilised our valuation experts to assess the accuracy the Group’s business, including: of management’s forecasts based on the market data ‹ a decline in SUBOXONE® Film revenue following the for uptake of comparable products and broker forecasts, ‘at-risk’ launch of generic buprenorphine/naloxone assessed management’s discount rate applied, and checked sublingual film product; the consistency of forecasts and accuracy of the model used. For other intangible assets related to products in ‹ the market acceptance of SUBLOCADE and PERSERIS being development, we considered the accuracy of forecasts used slower than expected; and in the impairment assessments based on management’s latest ‹ cost reduction contingency plans, including changes to product pipeline plan and consider management’s decision the product pipeline. to impair these assets by $24m to be appropriate. The recoverable amounts of these assets is estimated in order We assessed whether the inventory held at 31 December 2018 to determine the extent of the impairment loss, if any. Any relating to SUBLOCADE, PERSERIS, SUBOXONE® and SUBUTEX such impairment loss is recognised in the Income Statement. was recognised at the appropriate net realisable value and is An impairment loss was recorded at 31 December 2018 in recoverable by assessing the forecast sales and profit figures, relation to the Arbaclofen Placarbil and Addex intangible concluding that the forecasts support the inventory held at 31 assets, bringing the net book value from $24m down to nil. December 2018. No other assets were deemed to be impaired. For other non-current assets and deferred tax assets, we assessed the recoverability of these assets against management’s forecasts concluding that there was sufficient headroom or future profits to support the value held at 31 December 2018. For all of the above matters, we checked that the cash flow forecasts and assumptions used were consistent with those used in the going concern assessment detailed above. We have also assessed management’s disclosures within the Group Financial Statements and consider them to be appropriate.

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91

ed nt’s disclosuresnt’s within the ents and consider them to them consider and ents uded cash revenue,and uded profit directly included in our Group our in included directly support us in ourin us support assessment d, mainly being the significant being significant mainly the d, the tested we reasonableness , SUBLOCADE,, and PERSERIS. the US and UK component audit audit and US the component UK the Parent CompanyParent the Financial assessment of whether any oup Financial oup Financial Statements are needed for our our the on opinion for needed d Group functions. The Group Group The functions. d Group considered that the carryingthe that considered Indivior Annual Report 2018 Report 2018 Indivior Annual 91 Indivior Annual Report 2018 atement line items were line items atement perform ryand regulations. proceduresUS These the largest components of the Group being Group the of components largest the am involvementam includedcomponent also ions by PwCby ions staffthein based UK. Parent Company, the accounting processes and and Company, processes Parent accounting the calls, and bothat attendance conducted audit procedures accounted for 94% of the Group’s Group’s the of 94% for accounted procedures audit conducted indicators of impairment existe impairment of indicators year. the during decline price share a Limited, Holdings Global Indivior in investment the For with conjunction In was prepared. model flow cash discounted assessment our Group’sof the andParent Company’s ability concern, going a as continue to assumptions.key the of incl This We the rate. discount and value rates,terminal flow growth valuation our to utilised experts management’s for forecasts revenue the of accuracy the of Film SUBOXONE® products: key sensitivity analysisto our independent own performed We changes the reasonable of impact understand on the availableassumptions management’s in headroom. work, As a we of our result held the investments of are Company values Parent the by in thesupportable of context whole.a as taken Statements alsohave We assessed manageme CompanyParent financialstatem appropriate.be regarding sales chargebacksrebates, and thein discounts US our audit by concentrating our work on those parts of the Group the of parts those on work our by audit concentrating our onent in each of the US and and US the of compone each in onent identified We atements. foreconsidering the disaggregatedgroup level analytical review one reportableone The segment. Gr management’s evaluated We matter audit key the addressed audit our How our Richmond, Virginia based based Virginia Richmond, our utilised we component, US the where the component auditors’ auditors’ visits component the site where included components This provided thewe provided This evidence functions were audited by the Group engagement team. This team. engagement Group the by audited were functions ures over ures financial specific st d enough workenough d to giveto be able on opinion an Financialthe eratingbusinesses centraliseand tax, tax, net expenseborrowings, share-based finance and payments.

perienceindust pharmaceuticals the US of ions The UK. in the te engagement Group d US to give sufficient audit coverage. With coverage. audit sufficient to give US d med andUK certain on operatEuropean t, being the higher of fairof the higher being t, rmine the level, if any, of any, if the level, rmine on the continued use of the use of the on the continued yingvalue of an canasset be t present value present t future cash of ents disclosuresents corporate and tions are discounted using using an are tions discounted subsidiaries are are subsidiaries estimated into account the structure of the Group and the Group the of structure the account into rent Company balance sheet balance Company rent an impairment indicator that indicator impairment an projections, could materially materially could projections, flow projections including including flow projections Company’s financial condition whether an event whether occurred has cators exist, the exist, cators recoverable in which they operate. operate. which they in auditor working paper reviews inthe and US UK, regular conference meetings. closing where functions we corporate and components the together, Taken planned response to key audit matters was discussed, particularly responseplanned was to key audit matters discussed, certainand assetrecoverability considerat tax. before profit adjusted Group’s the of 92% and revenues net Our Group engagement team’s involvement in the audits of the the of the in audits involvement team’s engagement Group Our consolidated FinancialasStatements taken whole.a This bewas included our work over legal, intangible impairment,assets legal, over work our included conducted procedures, we audit Group centralised to addition In the audit of For there. work UK our audit and focused US we the ex and knowledge with team audit component perfor procedures supplemented by were not were that components risk and lower smaller certain Group’s the of whichcovered procedures, that make up the most significant proportions of the Financial Financial the St of proportions significant most the make up that proced size. its to Audit due audit a scope full required that UK at a furthera an at UK the in components four impairment, including the discount rates or the growth rate the rate or growth the rates discount including impairment, in assumptions flowcash the whether these cashthese whether projec flow appropriate rate. dete to assumptions the Changing used value and present test net the impairment the in affect a as affectresult Parent the wetailoredHow theaudit scope performe we that ensure to the audit our of scope tailored We asset in the business; (3) the appropriate key assumptions to assumptions key the (3) business; the appropriate in asset cash preparing applied in be operations. of and results taking whole, a as Statements flows which are estimated based based are which estimated flows required management to perform an impairment assessment. impairment an perform to management required testing, impairment of area the in required is Judgement particularlyin assessing: (1) values asset be not may related the that indicate may that recoverable;(2) whetherthe carr valueless costs toor sell the ne in order to determine the extent of the impairment loss, if loss, impairment the of extent the determine to order in impairmentsuch Any any. loss recognisedis in Income the significantGiven the Statement. share price duringdecline the year, be this to considered we theby supported recoverable amoun Key audit matter matter audit Key to (refer subsidiaries in investments of value Carrying – Statements) Financial Company Parent the of 2 Note Company Parent at for accounted $1,437mof are subsidiaries in Investments Pa the in impairment less cost at 31 December 31 at 2018. impairment if impairment for are tested Investments exist. such indi If indicators in the investments of amounts controls,and the industry singlebusinessa operates and Group thereforeactivity The has a consolidation of 37 components comprising the Group’s op Group’s the comprising components 37 of consolidation a consolidation, Financial Statem Financial consolidation, audit scope. scope. audit Independent Auditors’ report to the members of Indivior PLC continued

Materiality The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the Financial Statements as a whole. Based on our professional judgement, we determined materiality for the Financial Statements as a whole as follows:

Group Financial Statements Parent Company Financial Statements Overall materiality $15.9m (2017: $18.0m). $14.7m (2017: $14.7m). How we determined it 5% of adjusted profit before tax. 1% of total assets. Rationale for benchmark applied The Group’s principal measure of earnings Based on our professional judgement, as comprises adjusted profit before tax, which the Parent Company is a holding company adjusts statutory profit before tax for a we believe total assets is the primary number of exceptional income and measure used by the shareholders in expenditure items. Consistent with prior assessing the performance of the entity, year, we excluded these exceptional items, and is a generally accepted auditing which are non-recurring and do not impact benchmark for holding companies. continuing business performance, which is consistent with the measure of performance that the shareholders consider.

For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range of materiality allocated across components was between $3.5m and $12.5m (2017: between $5m and $17m). Certain components were audited to a local statutory audit materiality that was also less than our overall Group materiality. We agreed with the Audit Committee that we would report to them misstatements identified during our audit of the Group Financial Statements of above $0.8m (2017: $0.9m) and above $0.7m (2017: $0.7m) in respect of our audit of the Parent Company Financial Statements as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.

Going concern In accordance with ISAs (UK) we report as follows:

Reporting obligation Outcome We are required to report if we have anything material to add We have nothing material to add or to draw attention to other or draw attention to in respect of the Directors’ statement in the than the material uncertainty relating to going concern as Financial Statements about whether the Directors considered described in the section above. However, because not all future it appropriate to adopt the going concern basis of accounting events or conditions can be predicted, this statement is not a in preparing the Financial Statements and the Directors’ guarantee as to the Group’s and Parent Company’s ability to identification of any material uncertainties to the Group’s and continue as a going concern. For example, the terms on which the Parent Company’s ability to continue as a going concern the United Kingdom may withdraw from the European Union, over a period of at least 12 months from the date of approval which is currently due to occur on 29 March 2019, are not clear, of the Financial Statements. and it is difficult to evaluate all of the potential implications on the Group’s trade, customers, suppliers and the wider economy. We are required to report if the Directors’ statement relating We have nothing to report. to Going Concern in accordance with Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained in the audit.

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prepared in prepared Statements and our auditorour and Statements a whole to be whole a balancedfair, rt as to how how assessedto as have rt they t, the Companies Act 2006 (CA06) 2006 Act Companies the t, performed, weconclude that We have nothing to report base report to nothing have We bustassessment of principal the ng the Group and statement in in statement and Group the ng ents and has been has and ents Indivior Annual Report 2018 Report 2018 Indivior Annual 93 Indivior Annual Report 2018 r environment obtained in the coursethe in obtained environment r performance, solvency liquidity.or that appropriate,to be period and their the Financial Statements does does Statements Financial the not cover sures the within Statement made Viability atements or our knowledge obtained in obtained knowledge our or atements le to continue in operation and meet its meet and operation in continue to le to the extent otherwise the to stated explicitly ssessGroup’sthe Parentand Company’s ts; checking that the statementsthe that checking ts; in are the other information and, in and, the other information doing so, a material misstatement of the Financial Financial the of misstatement material a so to report certain opinions and matters and opinions report to certain so they are being managed or mitigated. mitigated. or being are they managed oceedings or timing of litigation payments payments orlitigation of timing oceedings where the uptake of both SUBLOCADE and whereand SUBLOCADE uptake of both the he “Code”); and considering whether the the whether and considering “Code”); he rtother than the Financial ally inconsistent with our knowledge of the Group and Parent the of inconsistentParent and ally knowledge Group our with aken in the course of the of course the in aken audi liancewith the Code doesnot properlydisclose departurea n on page 35on page n Annualthe of Repo If,based on the work we have be audited hasaudited be properlybeen preparedaccordance in with the business model,business future e requirede to report that fact. s substantiallys inless thanscope audit an and only consisted that they have carried out a ro a out carried have they that ment of the principal risks the principal of ment faci the audit, the information given in the Strategic Report and and Report Strategic the in given information the audit, the Group’s viability may be impacted during the assessment period. period. assessment the during viability Group’s impacted be may istentStatem Financial with the we identify an apparent material inconsistency material or an apparent material identify we tsin the Strategic Reportand Directors’ report.(CA06) ent, including any related disclosures drawing attention to to attention disclosures drawing any including ent, related terially inconsistent St terially Financial the with theyhave sodone why and considerthey 50 to 57 describing the work of the Audit Committee does not appropriately address address appropriately not does theof Committee the Audit work to50 describing 57 rmationnecessary for the members to a formation in the Annual in the formation Repo However, we draw attention to the disclo we the to attention draw However, res to referred above, have we nothing to report havingperformed a review of the e for the other information. Our opinion on opinion Our information. fore other the ablewill Group the that expectation be ab g ofg andthe Group CompanyParent thei and do not express an audit opinion or, except except or, opinion an do express audit not procedures to conclude whether conclude to procedures is there rectors’ processrectors’ supporting their statemen at describeat risksthose and explain how ncial Conduct Authority (FCA) ncial Authority al require us Conduct ingthe possible scenarios occur may that of the UKthe of Corporate Code Governance (t

(UK) unless stated).otherwise w expectations and and expectations w outcomethe where legal of pr legal requirements. (CA06) The statement given by the Directors,the by as statement given taken The Report Annual the 83,page on they consider that risks facing the Group, including those that would threaten its threaten would risks that those thefacing including Group, understandable,and and provides the info The Directors’ confirmation Report 30 the Annual of page on Directors’ The The disclosuresThe Annualin the Report th Company obtained in the course of performing our audit. audit. our performing of course the in obtained Company the Annualof section The Report pageson tous by Committee. Audit the communicated matters comp Company’s Parent the to relating statement Directors’ The fromrelevanta provisionof the Code specified, under the Listing Rules, for reviewtheby auditors. position and performance, business materiis performance, strategy and and position model

Companies Act 2006. (CA06) Directors’ Remuneration to Report the opinion, of the our part Remuneration Directors’ In We have nothinghave We to report in respectof our responsibility to report when: ‹ Other Code Provisions report thereon. thereon. report are responsibl Directors The accordingly,and, information other the we We have nothing material to add or further draw attention to regarding: regarding: to attention draw or further add to material nothing have We ‹ Directors’ reportfor theyear ended December31 is2018 cons The Directors’ assessmentof the prospects of theGroup andof the principal risks thatwould threaten the solvency or liquidity of the Group Strategic Report and Directors’ Report of course the in opinion, the undertaken on our based work In accordance withaccordance applicable ‹ period what over Group, the of prospects the In light of the knowledge and understandin and the knowledge of light In Reporting on other information in the of all comprises information other The there is a material misstatement of this other information, we ar we information, other this of misstatement material a is there Statements or a material misstatement of the other information. other the of misstatement material a or Statements misstatement, we are perform to required misstatement, ‹ ‹ thisreport, any formof assurance thereon. withconnection In of audit our tois Statements,Financial the responsibility our read whetherconsider information other the ma is misstated. If appears to be materially otherwise or the audit, of the audit, we did not identify any material misstatemen material any identify we not did audit, the of toexplanatio have also Directors’ material We the to nothing add on35page of the Annual Reportregard PERSERISfalls significantly belo statement as to whether they have a reason have they whether to as statement on these responsibilities. these on With respectto the Strategic Report and Directors’ report,we also considered whetherthe disclosures the requiredby UK been have 2006 Act Companies included. theon above undert our Based responsibilitieswork and described belowdescribed (required by ISAs ISAs(UK) and the RulesListing of Fina the Other than drawing attention to the disclosu the to attention drawing than Other out assess statement robust a carried have they that Directors’ is materially worse in planned, than materially is circumstanceswhich the Our review wa Group. the of viability longer-term the to relation any necessary qualificationsany or assumptions. liabilities as they fall they as liabilities theover their of due period assessm considering and the Di making inquiries of alignment with thealignment with provisions relevant and Parent Group the of Company and theirunderstanding environmentand are statements knowledge the with consistent Rules) (Listing the audit. in the of obtained course Independent Auditors’ report to the members of Indivior PLC continued

Responsibilities for the Financial Statements and the audit Responsibilities of the Directors for the Financial Statements As explained more fully in the Statement of Directors’ responsibilities set out on page 83, the Directors are responsible for the preparation of the Financial Statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Directors are also responsible for such internal control as they determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error. In preparing the Financial Statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements. A further description of our responsibilities for the audit of the Financial Statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this report This report, including the opinions, has been prepared for and only for the Parent Company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Other required reporting Companies Act 2006 exception reporting Under the Companies Act 2006 we are required to report to you if, in our opinion: ‹ we have not received all the information and explanations we require for our audit; or ‹ adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or ‹ certain disclosures of Directors’ remuneration specified by law are not made; or ‹ the Parent Company Financial Statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Appointment Following the recommendation of the Audit Committee, we were appointed by the Directors on 23 December 2014 to audit the Financial Statements for the year ended 31 December 2014 and subsequent financial periods. The period of total uninterrupted engagement is five years, covering the years ended 31 December 2014 to 31 December 2018.

Sarah Quinn (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 1 March 2019

94 www.indivior.com Financial statements 7 8 8 8 8 95 12 $m $m 58 58 66 (79) (14) (91) (63) 137 (42) (89) 2017 2017 193 989 403 (707) (210) (104) 1,093 – (3) 17 37 $m $m $m $m 43 38 (31) (91) (14) (18) (18) (46) (40) 877 275 257 275 332 278 2018 2018 292 (128) (494) 1,005

3 4 4 9 9 4 4 4 4 8 8 10 10 Note Note Indivior Annual Report 2018 Report 2018 Indivior Annual 95 Indivior Annual Report 2018 it orit lossin subsequent years: Net finance expensefinance Net beforeexceptional items Exceptional itemsExceptional within taxation Taxation before exceptionalitems Exceptional itemsExceptional Exceptional itemsExceptional Operating profit before exceptional profit Operating items

Operating profit profit Operating Gross profit profit Gross Total comprehensive income income Totalcomprehensive Other comprehensive income income comprehensive Other thatItems may be reclassified toprof currency translation foreign on exchange Net adjustments For the year ended December 31 31 December ended year the For income Net Consolidated statement of comprehensive income Earnings per ordinary share (cents) (cents) share ordinary per Earnings Basicearnings per share Net income income Net Profit before taxation taxation before Profit expense tax Income Financeincome Finance expense Cost ofCost sales Selling,general administrativeand expenses For the year ended December 31 31 December ended year the For revenuesNet Consolidated income statement statement income Consolidated Othercomprehensive income Diluted earningsshareper Research and and Research developmentexpenses Consolidated balance sheet

2018 2017 As at December 31 Note $m $m Assets Non-current assets Intangible assets 11 84 92 Property, plant and equipment 12 57 54 Deferred tax assets 13 44 58 Other receivables 15 33 15 218 219 Current assets Inventories 14 78 52 Trade and other receivables 15 287 278 Current tax receivable 40 32 Cash and cash equivalents 17 924 863 1,329 1,225 Total assets 1,547 1,444

Liabilities Current liabilities Borrowings 18 (4) (5) Provisions for liabilities and charges 20 (69) (143) Trade and other payables 23 (721) (665) Current tax liabilities (24) (41) (818) (854) Non-current liabilities Borrowings 18 (237) (477) Provisions for liabilities and charges 20 (424) (316) Other non-current liabilities (2) – (663) (793) Total liabilities (1,481) (1,647) Net assets/(liabilities) 66 (203)

Equity Capital and reserves Share capital 24 73 72 Share premium 24 5 2 Other reserves 25 (1,295) (1,295) Foreign currency translation reserve 25 (32) (14) Retained earnings 1,315 1,032 Total equity 66 (203)

The financial statements on pages 95 to 122 were approved by the Board of Directors on March 1, 2019 and signed on its behalf by:

Shaun Thaxter Mark Crossley Director Director

96 www.indivior.com Financial statements 97 (7) 12 $m 19 66 (18) 275 257 Total equity – 8 (7) 15 $m 275 275 1,315 earnings Retained

– – – – $m (32) (18) (18) reserve Foreign currency translation translation

– – – – – $m Indivior Annual Report 2018 Report 2018 Indivior Annual 97 Indivior Annual Report 2018 Other (1,295) reserves reserves 3 3 – 5 – – $m Share premium 1 1 – – – – 58 58 – – – – – – – –– – 8 58 2 66 – – 24 26 – – – 8 – 8 – – – 7272 2 (1,295) (14) 1,032 2 (1,295) (203) (14) 1,032 (203) 72 – (1,295)(22) 950 (295) 73 $m Share capital 13 – – – – 8 8 13 26 – 2 – 26 – 16 18 Notes Notes Total transactions recognized directly in equity Totaldirectly transactionsrecognized Othercomprehensive income Total comprehensive income income Totalcomprehensive Deferredtaxation on share-basedplans Balance at 2018 December 31, Transactionsownerswith plans Share-based Balanceat January 2018 1, income Comprehensive income Net Balanceat December 2017 31, Transactionsownerswith plans Share-based Deferredtaxation on share-basedplans Net income Net Balanceat January 2017 1, income Comprehensive Consolidated statement of changes in equity Othercomprehensive income income Totalcomprehensive in equity Totaldirectly transactionsrecognized Consolidated cash flow statement

2018 2017 For the year ended December 31 Notes $m $m Cash flows from operating activities Operating profit 292 193 Depreciation, amortization and impairment 11, 12 40 13 Gain on disposal of intangible asset (37) – Share-based payments 26 15 16 Foreign exchange impacts (12) 6 Increase in trade and other receivables (33) (59) Increase in inventories (31) (6) Increase in trade and other payables 58 5 Increase in provisions 35 201

Cash generated from operations 327 369 Interest paid (25) (41) Interest received 17 5 Transaction costs related to borrowings – (5) Taxes paid (16) (33) Net cash inflow from operating activities 303 295

Cash flows from investing activities Purchase of property, plant and equipment 12 (11) (30) Purchase of intangible assets 11 (30) (13) Proceeds from license of intangible assets 11 37 – Net cash outflow from investing activities (4) (43)

Cash flows from financing activities Proceeds from borrowings 18 – 487 Repayment of borrowings 18 (240) (573) Proceeds from issuance of ordinary shares 3 2 Net cash (outflow) from financing activities (237) (84)

Net increase in cash and cash equivalents 62 168 Cash and cash equivalents at beginning of the year 17 863 692 Exchange difference (1) 3 Cash and cash equivalents at end of the year 17 924 863

98 www.indivior.com Financial statements 99 of initially applying 15 IFRS t. The lease liability The lease reflects t. leincremental borrowing rate ct ofct initially applying 9 IFRS The adoption 15 The of adoption IFRS did ase liabilitiesin to relation e satisfied,e and the control of quires the theof quires recognition It applies to all contracts with all to contracts It applies 2018. This method requires the This2018. method requires tvalue of lease paymentswhich concept of recognising of revenue concept accounts or impairments accounts due ichthe isGroup the lessee will ases effectiveases for periodthe scope of otherof scope standards. The maining payments,lease the and ry, usually title passes usually ry, when s, there impact was no the to . . Comparativesfor 2018the ‘operating leases’under the Indivior Annual Report 2018 Report 2018 Indivior Annual 99 Indivior Annual Report 2018 exposuresand related documentation, changes the recognitioncertainof valuefair amends and changes, disclosure requirements. impairmentThe financialof assets, including trade receivables, nowis assessed using expectedan credit lossmodel. Giventhe Indivior’sof receivable nature provisions doubtful for Group’s change. this to upon the method modified retrospective applied Group The the 1, of ThisJanuary 2018. 9 on requires method IFRS adoption recognitiontheof cumulative effe tonot and earnings retained to years. prior restate There was cumulativeno effect recordedthere as was impact.no IFRS 15 Revenue from Contracts with Customers Indiviorimplemented 15 IFRS of as 1,January 2018. The new revenue for approach a principles-based establishes standard recognitionand based is theon only ar they when obligations for orgoods servicesis transferred. customers,except those in the standardreplaces 18IAS RevenueandIAS Construction11 contractsand relatedinterpretations. Group’s The net revenues are the derivedfrom sale primarily buprenorphine-basedof prescription drugs, controlwhere transferscustomersto andperformance obligations are at satisfied the delive of point customer the to on either shipmenton or of receipt goods depending on localtrading terms. changenot timingthe or of amount revenue recognized under arrangement. this the modified upon method Group The applied retrospective 1, of on January 15 adoption IFRS recognitiontheof cumulative effect tonot and earnings retained to years. prior restate There was cumulativeno effect recordedthere as was impact.no

ssued but not yet effective New accounting issued effective yet not standards but followingThe standardhas beenissued isbut noteffective:yet IFRS Leases 16 IFRS16 Leases substantially changes the financial statements theas majority of leases wh for sheet on-balance become liabilitieswith corresponding right- of-useassets on balancethe shee netthe present valuethe of re right-of-usecorrespondsasset to the lease liability,adjusted paymentsfor made before thecommencement leasedate, otherincentives and items related to the lease agreement. standardThe replaces Leases.IAS 17 Le 16 adopt IFRS Group The will the recognize Group will startingJanuary adoption, 1, 2019.On right-of-use(“ROU”) assets and le items previouslyclassified as liabilitiesand from arising AssetsLeases.17 ofprinciples IAS Lease basis. value present a on measured initially are lease a liabilitiesinclude the presennet are discounted using theapplicab ofas January1, 2019.The Group toexpects modifiedthe apply retrospectiveapproach, which re 1, January of as 16, IFRS applying initially of effect cumulative to the2019, earnings retained financialyear will not be restated. classification irements forthe t out below. Unless below. out t otherwise adopted inof the adopted preparation to the litigation strategy.As litigation the to revenue growthrevenue expectations, d prescription prescription drugs the for d consistently applied to all plicable to companies to plicable reporting d itsd subsidiaries(together, ncern. Thestatements financial ncern. ision or require payment overor requireision payment additionalmeasures such as nagement approach. It requires requires It approach. nagement e development,e manufacture r, after makingappropriate the European Union and the igning hedgeaccounting more final final settlementamount bemay ion and changes in closely with an entity’s risk ma risk entity’s an with closely and measurementand of financial assets and liabilities, newa for impairmenton based model provisions recognising creditexpected and losses al impairmentsof financialassets basedbe to on forwarda lookingmodel, changes the approachhedgingto financial Adoption of new and revised standards standards revised and new of Adoption following The new by have adopted standards IFRS been 1,2018: January from Indivior Instruments 9 Financial IFRS new introduces standard The requ 2. Basis ofpreparat Theconsolidated financial statementshave been prepared accordancein Financial with Reporting International Committee (IFRIC) IFRS and Interpretations (IFRS) Standards by adoptedas interpretations CompaniesAct 2006 (the Act) ap The operate. have to ability Directors Group’s the impact could taken significant stepsto reducecost the base of businessthe hasthe Group its manage and believe structure and capital over sufficientlitigation influencenear-term liquidity, the ability and furtheroutcomes, out carry to measures that bemay for the necessary concerngoing Group a as continue to the at for twelve next least months. However, combination a may the above risks require of furthercost savingsor a change thesuch, above indicatefactors existencethe of materiala uncertainty which may cast significant doubt about the Group’s abilitycontinue to as a going co accounting policy IFRS. under financialThe statements are presentedUS$.in Subject to the following matte enquiries, theDirectors havea reasonableexpectation that continuein to operational resources adequate Group has the existencefor at one least financialyear the from statements date.However, as disclosedin the20, Note Groupcarries a of provision substantially$438m relatingall theto Department Justiceof investigations. The shorter a period,togetherwhich, higherwith than expected generic of ‘at-risk’the launch following of revenue loss buprenorphine/naloxone sublingualfilm products,or the failurefor new meet to products the would if result notthe Group adjustments include that do wereunable to asacontinue going concern. these financial are statements se stated, thesepolicies been have presented.years higher thanprov this materially 1. General information IndiviorPLC (the “Company”) an Notes to the Financial Statements “Group”) the areengaged thin saleand buprenorphine-base of of opioidtreatment dependence (theBusiness”). “Indivior pharmaceuticals the previously was Business The Indivior out carried (RB), of the Benckiser business plc Reckitt Group subsidiaries. its and Limited Holdings Global by RBP incorporatedwas Company The in and the domiciled United 2014 on 26, the is company and holding Kingdom September the for Group. accounting policies principal The Notes to the Financial Statements continued

2. Basis of preparation and changes in The exchange rates used for the translation of currencies into accounting policy (continued) US dollars that have the most significant impact on the Group results were: In applying IFRS 16 for the first time, the Group expects to use the following practical expedients permitted by the standard: 2018 2017 ‹ The reliance on a previous assessment of whether a lease GBP year-end exchange rate 1.2746 1.3513 is onerous; GBP average exchange rate 1.3362 1.2881 ‹ The exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application; EUR year-end exchange rate 1.1451 1.2001 ‹ Application of a single discount rate to leases with EUR average exchange rate 1.1819 1.1287 similar characteristics; ‹ The use of hindsight in determining the lease term where The financial statements of subsidiaries are translated into the contract contains options to extend or terminate the US dollars on the following basis: lease; and ‹ Assets and liabilities at the year-end rate. ‹ The accounting for operating leases with a remaining lease ‹ Profit and loss account items at the average exchange rate term of less than 12 months as at January 1, 2018 as short- for the year. term leases. Exchange differences arising from translation of the The weighted average lessee’s incremental borrowing rate net investment in foreign entities are taken to equity applied to the lease liabilities on January 1, 2019 was 5.8%. (and recognized in the statement of comprehensive income) As at January 1, 2019, the Group will recognize $29m of right-of- on consolidation. use assets, $33m of lease liabilities and an adjustment to Accounting estimates and judgments beginning retained earnings of $4m. For the leases in place The Directors make a number of estimates and assumptions at January 1, 2019, the calculated impact to 2019 would be an regarding the future and make some significant judgments $8m reduction in lease expense, a $7m increase to depreciation in applying the Group’s accounting policies. of right-of-use assets and $2m increase in finance expense. Cash flow from operations is expected to increase by $6m Key estimates and assumptions due to certain lease expenses no longer being recognized These key estimates and assumptions made may affect as operating cash outflows, but this will be offset by a $7m the reported amount of assets and liabilities, disclosure of increase in cash used in financing activities due to repayments contingent assets and liabilities, and the reported amounts and interest on the principal of lease liabilities. of revenues and expenses. Although these estimates are There are no other IFRS standards or interpretations not yet based on management’s best knowledge of the amount, events effective that would be expected to have a material impact or actions, actual results may ultimately differ from those on the Group. estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized Basis of consolidation prospectively. The key estimates and assumptions used in The consolidated financial statements include the results the financial statements are set out below. of the Company and all of its subsidiaries made up to the same accounting date. Subsidiaries are those entities controlled by Provisions for returns, discounts, incentives and rebates the Group. Control exists where the Group is exposed to, or The Group offers various types of price reductions on its has the rights to variable returns from its involvement with the products. In particular, products sold in the United States are investee and has the ability to use its power over the investee covered by various programs (such as Medicare and Medicaid) to affect its returns. under which products are sold at a discount. Rebates are Inter-company transactions, balances and unrealized income granted to healthcare authorities, and under contractual and expenses on transactions between Group companies have arrangements with certain customers. Some wholesalers are been eliminated on consolidation. All subsidiaries have year- entitled to chargeback incentives based on the selling price ends which are co-terminus with the Group’s. Subsidiaries’ to the end customer, under specific contractual arrangements. accounting policies have been changed where necessary to Cash discounts may also be granted for prompt payment. ensure consistency with the policies adopted by the Group. The discounts, incentives and rebates described above are estimated on the basis of specific contractual arrangements Foreign currency translation with customers or of specific terms of the relevant regulations The financial statements of each of the Group’s entities and/or agreements applicable for transactions with healthcare are measured using the currency of the primary economic authorities, and of assumptions about the attainment of sales environment in which the entity operates (the functional targets. Several months may pass between the original estimate currency). The consolidated financial statements are presented of rebates due and when the amount is confirmed, which in US dollars, which is the Group’s presentation currency. may increase the estimation risk. Please refer to Note 3 for Foreign currency transactions are translated into the functional further details. currency using exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the remeasurement of monetary assets and liabilities denominated in foreign currencies at year-end exchange rates are recognized within SG&A in the income statement.

100 www.indivior.com Financial statements 101 ngs typically are related to typically ngs are related al property rights, compliance compliance property rights, al provisions provisions litigation for and experience. The assessment terially from the teriallyGroup’s from , and, discounting. Giventhe Indivior Annual Report 2018 Indivior Annual Report 2018 101 al outflows resulting from the realization the realization from resulting outflows al Provisions for litigation and IP related claims may arbitration litigation, Group in The involved be otheror proceedings.legal These proceedi liability product intellectu claims, tradeand practices, commercial claims andemployment and claims. discharge wrongful the areon Provisions valued theof basis Directors’ best takingestimates accountinto available information, all external advice, historicaland seriesa involve can provisions of of complex judgments futureabout events can and relyheavily on estimates and the including assumptions, settlementlitigation or strategy, timing amount, payments of inherentuncertainties related theseto estimates and actu the assumptions, thoseof could risks ma differ of details more estimates. For related IP claims, Note see 20 to consolidated the financial outstandingthe of all details more For statements. proceedings, legal see 22 Note to the Consolidated financialstatements.

ments, that thethat ments, have Directors ount of product returns on the on returns of product ount ting conditions to specific ting conditions sumptions, particularly for particularly sumptions, on to impairmentto on of assets, h contemplated h the potential discounts, incentives and rebates, rebates, and incentives discounts, ar ar assetthat to lead may whichthe underlying sales are Determining these incorporate a a these Determining incorporate ion and changes ion and changes in Critical judgments followingThe criticalthe are judg made in the made process the of accounting applying Group’s policies, the recognised on effect amounts most have significant the that thein Group’s financial statements: basiscontractualof sales terms reliableand historical data. In the2018, Group’s reliable historical data supplementedwas with whic modelling looking forward of expected from an launch generic returns product on impact buprenorphine/naloxone filmUS.the in estimatesThe are recognizedperiod the in in 2. Basis ofpreparat Group The also theestimates am accounting policy (continued) recognized,as areduction of sales revenue. impact net by returns revenue in would product A variation 3% provision for our in 3% A million. approximately $1 variation rebates impact would net revenueby million.$14 more For for returns, accruals of details Note 23see to the consolidated financial statements. Impairment of assets Group assessesnon-financialThe impairment of assets ateach reporting dateby evalua the Group and to particulGroup the the and impairment. impairmentan impairment. triggerIf exists, the recoverable comparing This involves theis of asset amount determined. higherthe of fair value lesscosts to sellor value-in-use theto of value the carrying asset. number of number keyestimates and as in more For development. details assets Products – intangible significantof estimates in relati Note 11see theto consolidated financial statements. Notes to the Financial Statements continued

3. Segment information ‹ accruals for sales returns are calculated on the basis of Operating segments are reported in a manner consistent management’s best estimate of the amount of product that with the internal reporting provided to the chief operating will ultimately be returned by customers. In countries where decision-maker. The chief operating decision-maker (CODM), product returns are possible, the Group has implemented who is responsible for allocating resources and assessing a returns policy that allows the customer to return products performance of the operating segments, has been identified within a certain period either side of the expiry date as the Chief Executive Officer (CEO). (usually three to six months before and six to twelve months after the expiry date). The accrual is estimated on the basis The Indivior Group is predominately engaged in a single of past experience of sales returns and expectations of business activity, which is the development, manufacture and future returns. sale of buprenorphine-based prescription drugs for treatment of opioid dependence. The CEO reviews net revenues to third The Group also takes account of factors such as levels of parties, operating expenses by function, and financial results inventory in its various distribution channels, product expiry on a consolidated basis for evaluating financial performance dates, information about potential discontinuation of products and allocating resources. Accordingly, the Group operates in and the entry of competing generics into the market. In each a single reportable segment. case, the accruals are subject to continuous review and adjustment as appropriate based on the most recent Accounting policy information available to management. The Group believes Revenues it has the ability to measure each of the above accruals reliably, Revenue arising from the sale of goods is presented in the using the following factors in developing its estimates: consolidated income statement under net revenues. Net ‹ the nature and patient profile of the underlying product; revenues comprise revenue from sales of pharmaceutical products, net of sales returns, customer incentives and ‹ the applicable regulations and/or the specific terms and discounts, and certain sales-based payments paid or payable conditions of contracts with governmental authorities, to the healthcare authorities. wholesalers and other customers; Net revenue is recognized when a contractual promise to ‹ historical data relating to similar contracts, in the a customer (performance obligation) has been fulfilled by case of qualitative and quantitative rebates and transferring control over pharmaceutical products to the chargeback incentives; customer, substantially all of which is with receipt of the ‹ past experience and sales growth trends; products by the customer. The amount of net revenue ‹ actual inventory levels in distribution channels, monitored recognized is based on the consideration expected in exchange by the Group using internal sales data and externally for pharmaceutical products. The Group has no contracts with provided data; more than one performance obligation. ‹ the shelf life of the Group’s products; and The Group is required to determine the transaction price in respect of each of its contracts with customers. In making such ‹ market trends including competition, pricing and demand. judgment the Group assesses the impact of any variable There may be adjustments to the accruals when the actual consideration in the contract due to returns, discounts, rebates are invoiced based on utilization information submitted incentives and rebates. These are estimated and recognized to the Group (in the case of accruals for rebates related to sales in the period in which the underlying sales are recognized targets or contractual rebates) and claims/invoices received (in as a reduction of sales revenue. the case of regulatory rebates and chargebacks). Management These amounts are calculated as follows: believes the estimates made are reasonable; however such ‹ accruals for rebates based on attainment of sales targets estimates involve judgments on aggregate future sales levels, are estimated and recorded as each of the underlying sales distribution channel mix, distributors sales performance and transactions is recognized; market competition. ‹ accruals for price reductions under government and state programs, largely in the US, are estimated on the basis of the specific terms of the relevant regulations and agreements, and recorded as the underlying sales transactions are recognized;

102 www.indivior.com Financial statements % 93 $m $m 68 62 103 161 2017 112 174 22% 23% 28% rate assets assets s cans . .

Non-current % $m $m $m $m 877 216 215 2018 790 22% 25% 24% 1,093 1,005 sale of goods lyif the following in Julyin 2018. Net revenue from TM consistintangibleof assets, Indivior Annual Report 2018 Indivior Annual Report 2018 103 generated intangibles recognized originates and non-currentassets, net es is recognizedis es on probable that the createdasset willgene . The Group commenced capitalisation and capitalisationand commenced Group The . TM less followingthe criteria aremet: amount toamount 10% or morethe of Group’s revenues as follows (in ect (or intangible asset) so that the related product will be be will thatso intangible asset) product (or ect the related approval certain assets.for All internal developmentexpendi ture e the e originates.sale The following table represents revenue nsolidatedincome statement thein whichin year incurredis it generally the earliestthe generally point at whichdevelopment internal cost expensedincurred. as Internally its developmentis able to be reliablymeasured. asset or development project and use oruse assetand or sell it; project development nerate probable neratefutureprobable benefits; economic ising from the Group’s the isingGroup’s from development activiti lopment costs in relation to PERSERIS to in costs lopment relation sedtheassessing when point at whichisit the year in whichisit incurred,un countriesbased theon the country where sale intangible asset orintangibleasset to sell it; following receiptof regulatory appr ovalin November 2017 and PERSERIS TM set created created set generatewill future benefits;economic and availablefor sale;or use completethereto intention an is intangiblethe it must bemust it to technically the feasible complete developmentproj theGroup has the abilityto use the in way the whichthe intangible assetwill ge identified; be can that created is asset an is it probablethat the as the theof cost development can asset measured be reliably. the availabilitythe technical, adequate of financial otherand sourcescomplete to re the developmentuseto and or the sell asset;intangible and attributable expenditure theto intangibleasset during

Total

incurred prior to filing for regulatory approval is therefore is therefore approval for regulatory to filing prior incurred Research and development and development Research expenditure internalon Research activitiesis theto charged co ‹ 4. Operating costsandexpenses Accounting policies CustomerA CustomerB Development isexpenditure writtenin off ‹ ‹ ‹ are met: conditions ‹ ‹ capitalized,be however judgmentis exerci economic future benefits, which not may untilbe final regulatory include softwareand technology and deve Customer Customer Significant customers include Revenues significant amounts from derived customers that ‹ GroupThe has determined that filing for regulatoryapproval is United States United Restof World Included in 2018 US revenue is $12m of SUBLOCADE net revenues (2017: nil). Forthe ended year 31,December 2017 percentagestotalof net revenue): ‹ ‹ capitalizedAmounts over areamortized the useful lifethe of product. developed internally generated ar An intangible asset United States States United World of Rest 3. Segment information (continued) Segment3. information Revenues theon based areattributed country countries to wher continuing attributedoperations from to Total of accumulated depreciation and this amortization, and country. by Non-current for assets purpose depreciation accumulated of CustomerC amortisation of amortisation SUBLOCADE For theFor year 2018 31, Decemberended property,plant equipment, and otherand receivables. Notes to the Financial Statements continued

4. Operating costs and expenses (continued) Expenses Expenses are recognized in respect of goods and services received when supplied in accordance with contractual terms. Provision is made when an obligation exists for a future liability in respect of a past event and where the amount of the obligation can be reliably estimated. Marketing and promotional expenses are charged to the income statement as incurred.

Exceptional Items Where significant expenses or income that do not reflect the Group’s ongoing operations are incurred during the year, these items are disclosed as exceptional items in the income statement. Examples of such items could include restructuring and other expenses relating to the integration of an acquired business and related expenses for the reconfiguration of the Group’s activities and/or capital structure, impairment of current and non-current assets, certain costs arising as a result of material and non- recurring regulatory and litigation matters, and certain tax related matters. The table below sets out selected operating costs and expenses information.

2018 2017 Notes $m $m Research & development expenses1 (91) (89) Marketing, selling and general expenses2 (205) (163) Administrative expenses3 (271) (525) Depreciation and amortization 11, 12 (13) (13) Operating lease rentals 19 (5) (6) (494) (707)

1. R&D expenses include $24m of impairment costs that have been classified as exceptional as outlined in the table below. 2. Distribution costs of $3m previously included in operating expenses have been classified as cost of sales to better reflect the nature of the SUBLOCADE™ costs. The prior year has not been adjusted as the total amount, which was approximately $3m, is not material. 3. Administrative expenses include exceptional costs in the current and prior year as outlined in table below. Prior year administrative expenses also included non-exceptional expenses of $36m related to prospective protection of the Group’s intellectual property and revenues. These costs were not considered exceptional in 2017 as they were not due to a litigation settlement provision, punitive or potential redress related expenses.

Exceptional items 2018 2017 $m $m Other operating income1 37 – Restructuring costs2 (13) – Legal expenses/provision3 (40) (210) Intangible impairment (R&D)4 (24) – Financing costs5 – (14) Total exceptional items before taxes (40) (224) Tax effect of exceptional items 8 3 Exceptional items within taxation6 35 9 Total exceptional items 3 (212)

1. $37m of exceptional income in 2018 relates to the proceeds received from the out-licensing of nasal naloxone opioid overdose patents which are included within SG&A. 2. Restructuring costs relate to the cost-saving initiative announced and implemented during the year to offset the financial impact of recent adverse US market developments. These consist primarily of redundancy and related costs that are expected to be utilised within one year. 3. $40m of legal expenses in the current year relate to potential redress for ongoing intellectual property related litigation with DRL and Rhodes Pharmaceuticals. $210m of legal expenses in 2017 included $197m related to increased legal provision and legal expenses for the DOJ investigation, $25m for the conclusive legal settlement with Amneal Pharmaceuticals LLC relating to anti-trust litigation, and a release of $12m for a legacy litigation reserve. 4. In 2018, R&D expenses include $24m of impairment charges related to the Arbaclofen Placarbil and lead ADDEX compounds for which development has ceased due to challenges in the Phase 1 and preclinical studies, respectively, thereby reducing their probability of success below hurdle rates for further investment. 5. In 2017, $14m of financing costs were written off due to the early debt refinancing. This was accounted for as a significant modification in accordance with IAS 39 ‘Financial Instruments: Recognition and Measurement’ based on legal release of the debt, the change in currency profile of the overall debt, and the removal and relaxation of financial covenants. 6. In 2018, there was an exceptional tax credit of $34m in relation to development credits for SUBLOCADETM claimed for prior years, finalization of the estimate of the US rate change on deferred tax assets in the US of $1m, along with tax on exceptional items of $8m. Prior year tax exceptionals of $9m related to the release of a provision for unresolved tax matters partially offset by the impact of the remeasurement of net deferred tax assets as a result of the US Tax Reform along with the tax on exceptional income.

104 www.indivior.com Financial statements 2 – – – 8

(2) 37 14 29 $m $m $m 58 1.1 105 up 0.7 (12) 2.6 2.0 0.2 0.6 2017 2017 2017 2017 193 210 210 270 403 cents cents vior 721,126 benefits. 2 3 – – – (6) 37 16 16 $m $m $m $m $m 24 24 38 1.1 2.2 2.2 0.3 0.8 (43) 272 275 332 2018 2018 2018 2018 292 cents cents 727,148

4 4 4 4 4 4 Notes Notes Notes Indivior Annual Report 2018 Indivior Annual Report 2018 105 in the provisionthe in for employee ccumulating leavesick expected to be

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All other All short-term benefits are employee settled settled within 12 months after of the end are liabilities settled.The liabilityfor leave accumu annual and Employee benefits obligations Short-term Liabilitiesfor and wages salaries,including net income. net R Groupor any of its subsidiaries were$0.8m (2016:$1.3m). Audit-relatedassurance services wereprimarily for audit services pertainingto quarterly reviewsand services pertainingto potentialUS listing. Employees 7. Accounting policies Total feescharged foraudit-related assurance servicesand other non-auditassurance services inthe year relatingto the Indi Othernon-audit assurance services A Audit ofAudit Parent Company andconsolidated financialstatements: ofAudit theGroup’s Annual Reportand financial statements Weightedaverage number of shares(thousands) remuneration Auditors’ 6. Exceptionalselling, general and administrativeexpenses Exceptionalresearch and development expenses and the way it is managed. The tables below show the list of adjustments between the reported and adjusted operating profit and profit operating adjusted and the reported below showofThe tables between adjustments theit list the way is managed. and Reconciliation of earnings per share to adjusted earnings per share: Earningsper share Exceptionalselling, general and administrativeexpenses Exceptionalresearch and development expenses Reconciliation of net income to adjusted net income: income Net Exceptionalresearch and development expenses Operatingprofit Exceptionalselling, general and administrativeexpenses 5. Adjusted results DirectorsThe andmanagement team use adjust Exceptionalfinancing costs Adjustedincome net Exceptionaltax items Adjustedearnings per share Adjusted operating profit Exceptionalfinancing costs Audit of the Group’s subsidiaries subsidiaries Group’s the of Audit Audit-related assuranceservices Audit-related Notes to the Financial Statements continued

7. Employees (continued) Post-retirement benefits other than pensions Some companies within the Group provide post-retirement medical care to their retirees. The costs of providing these benefits are accrued over the period of employment and the liability recognized in the balance sheet is calculated using the projected unit credit method and is discounted to its present value and the fair value of any related asset is deducted.

Pension commitments Some companies within the Group operate defined contribution and (funded and unfunded) defined benefit pension schemes. The cost of providing pensions to employees who are members of defined contribution schemes is charged to the income statement as contributions are made. The Group has no further payment obligations in respect of such schemes once the contributions have been paid.

2018 2017 (a) Staff costs Note $m $m The total employment costs, including Directors, were: Wages and salaries (161) (172) Social security costs (29) (28) Other pension costs (9) (9) Share-based plans 26 (15) (16) (214) (225)

Key management personnel is defined as the Board of Directors and Executive Committee. Details of the Board of Directors’ emoluments are included in the Directors’ Remuneration Report on pages 62 to 77, which forms part of the financial statements. Compensation awarded to other key management is as follows:

2018 2017 $m $m Short-term employee benefits 6 11 6 11

(b) Staff numbers The average number of people employed by the Group, including Directors, during the year was:

2018 2017 Operations 657 649 Management 231 225 Research and development 136 138 Average number of employees 1,024 1,012

8. Net finance expense Accounting policy Finance costs of borrowings are recognized in the income statement over the term of those borrowings. Finance income on cash and cash equivalents are recognized in the income statement in the period they are earned.

2018 2017 Finance income $m $m Interest income on cash and cash equivalents 17 7 Total finance income 17 7

Finance expense Interest payable on borrowings (28) (37) Amortization of finance charges (3) (12) Other finance expense* – (14) Total finance expense (31) (63) Net finance expense (14) (56) * Relates to exceptional items. More details in Note 4.

106 www.indivior.com Financial statements

1 – – 6 (1)

(3) 15 19 79 26 $m $m 107 80 (12) (15) (15) (37) (79) (61) (18) (18) 137 (30) 2017 2017 (16) 8m

the rns. also 2 3 3 – 5 – 6 4 (1) (7) (2) (3) (9) ovisions of $1 of ovisions $m $m 22 $m 53 62 (2) (31) (16) (34) (58) 278 2018 2018

uncertain tax pr tax uncertain the income statementincome except the Indivior Annual Report 2018 Indivior Annual Report 2018 107 rates enacted,rates substantivelyor enacted, from April 1, 2017. The 2017. 1, for Group’s from profits April e. Income tax is recognized in recognized is tax Income e. ionsthat company the accruedin 2017,and no furtheraccruals and isas a result finalizingof our 2017 USincome tax retu benefit related to of the related release benefit ain provisions tax expiry to ofdue statutethe of limitations rehensiveincome equity.in or directly case,this In the is tax tax payable in respect of previous years. tax in years. payable previous of respect aneffective rateof 1% (2017:58%). or directly in equity, respectively. theincome taxable forthe year, tax using ar can becan the to ar accounting reconciled profit follows: as Adjustmentsin respect ofprior years requiring a revaluation of USassetsof revaluationtax a deferred and requiring liabilities, Recognition of a tax credit for Sublocade development tax credits of $34m relating to prior years, as a result of a change a of change a result as years, prior to relating $34m of credits tax development Sublocade for credit a tax of Recognition estimate.in 2017The non-deductible provision related to certain legalprovis current A year ofrelease uncert the current in year. made were The 2017 benefit $2m being recorded. additional an in resulted closeout upon tax of IRS audits. 2018The one-time$2m non-cash benefit (2017: expense)$15m ted to therela lowering of the US income corporate tax rate to 21%, Tax atTax than UKthe other corporation tax rates rate Impact of changes in tax rates of tax changes in rates Impact Sublocade developmentclaimedcredits tax forSublocade years prior R&D taxR&D credit Adjustmentsto in carried amounts respectunresolved of matters tax Permanentdifferences Other Non-deductible provision provision Non-deductible awards Share UK Patent UK box

at the balance sheet date, and to adjustment any and the sheet at date, balance Income tax expense expense tax Income Total current tax tax Totalcurrent Totaltaxdeferred ‹ ‹ The reportedeffective tax rateof 1% (2017: 58%) wasimpacted by: ‹ year ended ended year December 2018 31, taxedare at charge tax total The the for ye Profit beforetaxation atTax the corporationUK notional 19.00%of rate tax (2017:19.25%) The standardThe corporationof rate UKthe tax in changed from 20% 19%to with effect Tax on profit profit on Tax Originationand reversalof temporary differences tax rates in Adjustmentschanges for Currenttax Adjustments years for prior tax of current 9. taxIncome expense Accounting policy tax thefor Income comprisesyear and current expens tax deferred to the extent that it to itemsrelates recognized in other comp recognizedcomprehensive other in income Currentexpectedthe payableis tax tax on Adjustments for prior year deferred tax deferred year prior for Adjustments Effectsof: Notes to the Financial Statements continued

9. Income tax expense (continued) Excluding the impact of exceptional items, the effective tax rate for the year ended December 31, 2018 was 15% (2017: 25%).

2018 2017 $m $m Income tax expense 3 79 Tax on exceptional pre-tax expense 8 44 Tax at rates other than the UK corporation tax rate – 39 Non-deductible provision – (80) Sublocade development tax credits claimed for prior years 34 – Adjustments to amounts carried in respect of unresolved tax matters (1) 24 Impact of changes in tax rates 2 (15) Income tax expense excluding exceptional items 46 91

Further details of the exceptional items can be found in Note 4. The Group believes it has made adequate provision for the liabilities likely to arise from periods which are open and not yet agreed by tax authorities. The ultimate liability for such matters may vary from the amounts provided and is dependent upon the outcome of agreements with relevant tax authorities or litigation where appropriate. In assessing these income tax uncertainties, management is required to determine the unit of account, the evaluation of the circumstances, facts and other relevant information in respect of the tax position taken together with estimates of amounts that may be required to be paid in ultimate settlement with the tax authorities. As Indivior operates in a multi-national tax environment, the nature of the uncertain tax positions is often complex and subject to change. Original estimates are always refined as additional information becomes known. Indivior reviews and measures uncertain tax positions using internal expertise, experience and judgement, together with assistance and opinions from professional advisors.

Factors affecting future tax charges As a group with worldwide operations, Indivior is subject to several factors that may affect future tax charges, principally the levels and mix of profitability in different jurisdictions, transfer pricing regulations, tax rates imposed and tax regime reforms. The enacted UK Statutory Corporation Tax rate is 19% for the year ended December 31, 2018 with a further reduction to 17% from April 1, 2020.

Other tax matters The European Commission has announced its intention to open a State Aid investigation into the UK’s controlled foreign company (“CFC”) financing exemption. At December 31, 2018, the Group has benefited from the UK controlled foreign company financing exemption by approximately $24 million; however, at present the Group believes no provision is required in respect of this matter. The United Kingdom (‘UK’) decision to withdraw from the European Union (‘EU’) may have a material effect on our taxes. The impact of the withdrawal will not be known until both the EU and the UK develop the exit plan and the related changes in tax laws are enacted. We will adjust our current and deferred income taxes when tax law changes related to the UK withdrawal are substantively enacted and/or when EU law ceases to apply in the UK.

10. Earnings per share 2018 2017 cents cents Basic earnings per share 38 8 Diluted earnings per share 37 8

Adjusted basic earnings per share 37 37 Adjusted diluted earnings per share 36 36

Basic Basic earnings per share is calculated by dividing profit (net income) for the year attributable to owners of the Company by the weighted average number of ordinary shares in issue during the year.

Diluted Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has dilutive potential ordinary shares in the form of share awards and options. The weighted average number of shares is adjusted for the number of shares granted assuming the vesting of all awards and exercise of all stock options.

2018 2017 Weighted average number of shares thousands thousands On a basic basis 727,148 721,126 Dilution for share awards and options 23,994 27,356 On a diluted basis 751,142 748,482

108 www.indivior.com Financial statements – –

10 24 30

$m $m GS. GS. 84 109 (15) (19) 335 243 262 346 Total

ble ble s s lly, lly,

sedon in-use. 1 7 – – – – – 9 37 16 22 $m $m 38 Software ed future ed economic

on of the asset starts when the of on starts asset 2 3 – – – – – (1) 24 30 $m $m 52 54 sh-generating sh-generating which to unit ve to ve made. be includeThese Indivior Annual Report 2018 with finitesubsequently lives with are Indivior Annual Report 2018 109 Marketed products obable thatexpectthe 1 – – – (4) 25 29 24 $m $m 10 35 ibleisasset tested impairmentfor annua 40 (30) et growth, discount rates, the market demand the demand rates, market discount growth, et oducts,and levelsof reimbursement for ptional items after the appropriate tax amount, Products in development the risksspecific theto asset. – – – – – – $m $m (15) (15) 219 234 234 219 pment ofpment toimpairmentare $10m insubject potential line with of impairment loss. Whereof impairment it loss. is not to possible estimate the and including approval. Amortizati approval. including and tangibletype.asset any If indicationsuch exists, the recovera ul economic lives. economic ul expense to Amortization related acquired the cathe of amount recoverable ges in expectations arise, impairment charges may be required required be may charges impairment arise, expectations in ges levantfactors. Acquired rights of er significant ha assumptions Acquired eful life of the acquired distribution rights is determined ba acquiredthe determined is distribution rights of life eful zedover usefulits economic life,which is generallyestimated velopment or marketed products are capitalized if isit capitalized products are probable or marketed velopment irment eitherannually or whenevents or changes circumstancesin scountedto its presentvalue using pre-tax a discountthat rate distribution rights

mulated amortization and accumulated impairment. amortizationaccumulated and mulated ofan asset’s or cash-generating unit’s fairvalue less to costs sellor its value- butionrights arecapitalized whenit is pr t will theto flow Group.is Probability assumed externallyacquired product all for imary market. Prior to the intang that Prior date, market. imary ofitability of acquired businesses orbusinesses pr ofitabilityacquired of tsthe of time and money of value ining regulatoryapprovals, future rateof mark gs pergs share, adjusted forthe impact exce of ngibleare assets reviewedfor impa udedin selling,general administrativeand expenses. t December 31, 2018 31, December t t December 31, 2018 31, December t ccumulatedamortization impairmentand Additions Impairmentcharge Amortization charge Amortization Exchangeadjustments Net book amount at December 31, 2018 31, December at book amount Net A A JanuaryAt 20181, A At JanuaryAt 20181, Cost Cost Paymentsmade in respectacquiredof distri 11. Intangible assets Accounting policy Intangible assets Intangibleassets are carried at lesscost accu 10. Earnings per share (continued) Adjusted earnings DirectorsThe believethat earnin reflects theassessmen market current reflects providesmore meaningfulinformation on underlying trends to shareholders in respect of earnings per share. A reconciliation netof to income adjusted net income includedis in5.Note Disposalsand asset write-offs Exchangeadjustments Transfers for the products acquired, thepr future acquired, the for products chan differ,results or actual If should products. pharmaceutical whichwould adversely impact reported results. Productsin develo indicatethe value carrying may impairedbe theon in depending theof amount is asset estimated in order to the determine extent an individualof amount recoverable asset, the estimates Group probability the inof success obta probability the success. of benefitsattributable theto asset thewillto The usflow Group. competitive, legal, other regulatory, contractual, or economic re the using overmethod their amortized straight-line defined usef Impairment of intangible assets carrying The of inta values belongs.it An amount isasset’s the recoverable higher Inassessing value-in-use, its estimated cashfuture flow is di distribution rights is incl rights distribution Payments theto related acquisition of rightsto in products de irrespectivewhether any indicationof impairmentof recognized are products CO exists. within marketed of Amor charges tization Incarrying impairment out reviews of intangibleassets, a numb it becomes availablebecomes it for use, at thepoint which assetamorti is as theas patent within the pr life product’s that economic future benefits fromassethe in including development, subsequent milestone payments toup Notes to the Financial Statements continued

11. Intangible assets (continued) Acquired Products in distribution rights development Marketed products Software Total $m $m $m $m $m Cost At January 1, 2017 219 49 – 36 304 Additions – 12 – 1 13 Transfers – (24) 24 – – Disposals and asset write-offs – – – – – Exchange adjustments 15 3 – – 18 At December 31, 2017 234 40 24 37 335 Accumulated amortization and impairment At January 1, 2017 219 – – 2 221 Amortization charge – – – 7 7 Exchange adjustments 15 – – – 15 At December 31, 2017 234 – – 9 243 Net book amount at December 31, 2017 – 40 24 28 92

Products in development Products in development are not amortized as they are not yet in use but are assessed for impairment at the end of each reporting period. During the year, impairment charges of $24m were recognised within R&D in relation to the Arbaclofen Placarbil and lead ADDEX compounds for which development has ceased due to challenges in the Phase 1 and preclinical studies, respectively, thereby reducing their probability of success below hurdle rates for further investment. Once approved in their primary market, products in development are transferred to marketed products.

Marketed products Marketed products include approved product rights which are amortised over the patent exclusivity period in the major market to which the approval relates. All products are assessed for impairment indicators at the end of each reporting period. There were no impairments recognized in the year. The Group received regulatory approval for SUBLOCADETM in November 2017 and PERSERISTM in July 2018, resulting in transfers from products in development to marketed products. Amortisation expense of $3m (2017: $0.1m) was recognised in COGS.

Software Acquired computer software licenses are capitalized at cost. These costs are amortized on a straight-line basis over a period of up to five years.

12. Property, plant and equipment Accounting policies Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and impairment, with the exception of freehold land, which is shown at cost less impairment. Cost includes expenditure that is directly attributable to the acquisition of the asset. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be reliably measured. Except for freehold land and assets under construction, the cost of property, plant and equipment is depreciated on a straight-line basis over the expected useful life of the asset. For this purpose, expected lives are determined within the following limits: ‹ freehold buildings: not more than 20 years; and ‹ plant and equipment: not more than 10 years; ‹ motor vehicles and computer equipment: not more than 4 years; ‹ leasehold improvements: up to the expected lease term.

Assets’ residual values and useful lives are reviewed, and adjusted if necessary, at each balance sheet date. Property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be appropriate. Freehold land is reviewed for impairment on an annual basis. Gains and losses on the disposal of property, plant and equipment are determined by comparing the asset’s carrying value with any sale proceeds, and are included in the income statement.

110 www.indivior.com Financial statements 3 6 6 (1) (3) 11 111 41 47 47 52 54 57 $m 30 $m $m 68 101 101 109 Total Total Total ssets ond, in taxin ely ely uture es from the from ngnor ffset 3 – 6 (1) 16 43 56 $m 61 $m $m 18 40 Plant and Plant and equipment equipment

1 2 7 40 7 7 5 3 3 3 4 37 4 9 (1) (2) 19 11 19 25 43 45 56 45 $m 38 $m $m 39 48 is not recorded if it arises arises it if isnot recorded buildings Land and and Land Land and buildings buildings Indivior Annual Report 2018 Indivior Annual Report 2018 111 have been enactedbeen have or substantiv settled. They are revalued for changes any salesthat are taxed at different rat erencesarising thebetween basestax a of thereis a legally enforceableright o to settle these neta balanceson basis. combination) thatcombination) affectsneither accounti ssetsare recognized to the extent that isit probablethat f stments in subsidiaries except where the investor is the able investor to except in where subsidiaries stments nancial statements. Deferred tax Deferredstatements. nancial theoffices and laboratoriesin Fort Collins, Colorado and Richm that the temporarythe that difference will reversenot thein foreseeabl e using taxusing (andrates laws) that any deferredinvestmentson tax subsidiaries. in when thewhen deferred tax assetliabilityor is h the temporary bethecan h differences utilized. temporary e sametax jurisdictionoffsetare where ory arises of oryelimination arises to inter-comp due ilities where thereand is to intention an of goods sold, sellinggeneral and administrative,and R&Dexpenses withinthe e balance sheet approach, on temporary diff temporary on approach, sheet balance e yin transaction a (otherthan businessa ccumulated depreciation and impairment impairment and depreciation ccumulated t December 31, 2018 2018 31, December t t December 31, 2018 31, December t impairment and depreciation ccumulated At December31, At 2017 Exchangeadjustment rates when new when tax rates ratesare substantivelyenacted. Deferred a tax taxable profit will be available against whic against available be will profit taxable Deferredon tax profit unrealised in invent assetstax current currentagainst tax liab Chargeyearforthe Additions Chargeyearfor the December31, At 2017 initial recognitionorasset an of liabilit theat enacted balance sheet and date apply Accounting policy Deferredfull,in provided is tax th using income statement.income thein Additions year primarily theto relate redevelopment of 13. Deferred tax Depreciation expense is included inexpense included is Depreciation cost Net book amount at amount book Net December 2017 31, A JanuaryAt 20171, taxable profitor taxable loss time.that at Deferred tax is determined Cost JanuaryAt 20171, Net book amount at December 31, 2018 31, December at book amount Net A A A JanuaryAt 20181, At JanuaryAt 20181, Cost 12. 12. Property, equipmentplant and (continued) Virginiaoffices. between jurisdictions. jurisdictions. between inve on differences arising temporary on provided Deferredis tax the differences timing of control temporary probable is and it future. Accordingly, future. the has Group not recorded Deferredand assets tax liabilitiesth within Exchangeadjustment Exchangeadjustment Additions and liabilitiesand their carrying amounts in the consolidated fi Notes to the Financial Statements continued

13. Deferred tax (continued) Unrealized Short-term profit in Intangible temporary Share-based inventory assets differences payments Other Total Deferred tax assets $m $m $m $m $m $m At January 1, 2017 50 7 31 11 10 109 (Charged)/Credited to the income statement (37) – (17) 2 (9) (61) Charged directly to equity – – – 8 – 8 Exchange differences – – – – 2 2 At December 31, 2017 13 7 14 21 3 58 (Charged)/Credited to the income statement 2 (7) 5 (10) 3 (7) (Charged)/Credit directly to equity – – – (7) – (7) Exchange differences (1) – – 1 – – At December 31, 2018 14 – 19 5 6 44

The Group has not recognized certain losses in the UK entities in respect of earlier periods $9m (2017:$10m tax benefit) as the likelihood of future economic benefit is not sufficiently assured. These losses have unlimited carry-forward period. To the extent that dividends remitted from overseas subsidiaries are expected to result in additional taxes, appropriate amounts have been provided for. Deferred tax is provided on temporary differences arising on investments in subsidiaries except where the investor is able to control the timing of temporary differences and it is probable that the temporary difference will not reverse in the foreseeable future. No deferred tax has been provided for unremitted earnings of Group companies overseas as these are considered permanently employed in the business of these companies. A large proportion of the Group profits are realized in the US and we expect that we can rely on the UK-US treaty provisions to ensure that any future dividends paid will not suffer any withholding tax. Post Brexit, on the assumption that the EU Parent Subsidiary exemption will cease to apply, the estimated total tax liability on unremitted earnings from EMEA is less than $0.5 million.

14. Inventories Accounting policy Raw materials, stores and consumables, work in progress and finished goods are stated at the lower of cost or net realizable value. Cost comprises materials, direct labour and an appropriate portion of overhead expenses (based on normal operating capacity) required to get the inventory to its present location and condition. Inventory valuation is determined on a first in, first out basis. Selling expenses, product amortization, and certain other overhead expenses are excluded. Net realizable value is the estimated selling price less applicable selling expenses. Write-down of inventory occurs in the general course of business. Impairments are recognized in cost of sales.

2018 2017 $m $m Raw materials, stores and consumables 31 14 Work in progress 24 19 Finished goods and goods held for resale 23 19 Total inventories, net 78 52

The cost of inventories recognized as an expense and included as cost of sales amounted to $128m (2017: $104m). This includes inventory write-offs and losses of $8m (2017: $2m). The inventory provision (reflected in the carrying amounts above) at December 31, 2018 was $30m (2017: $14m). The increase was primarily driven by provisions based on expiration dates associated with increased levels of inventory for SUBLOCADE and PERSERIS in line with the Group policy.

15. Trade and other receivables Accounting policy Trade receivables are initially recognized at their invoiced amounts less any adjustments for estimated deductions such as cash discounts. From January 1, 2018, with the adoption of IFRS 9 Financial Instruments, provisions for expected credit losses are established using an expected credit loss model (ECL). The provisions are based on a forward-looking ECL, which includes possible default events on the trade receivables over the entire holding period of the trade receivable. These provisions represent the difference between the trade receivable’s carrying amount in the consolidated balance sheet and the estimated collectible amount. Charges for doubtful trade receivables are recognized in the consolidated income statement within SG&A expenses. The recognized amounts approximate fair value. Trade receivables consist of amounts due from customers, primarily wholesalers and distributors, for whom there is no significant history of default. The credit risk of customers is assessed, taking into account their financial positions, past experiences and other relevant factors. Individual customer credit limits are imposed based on these factors. The Group is not aware of any deterioration in the credit quality of these customers and considers that the amounts are still recoverable.

112 www.indivior.com Financial statements

1 5 6 (3) (3) 11 17 17 15 23 113 p nt $m $m $m 28 2017 2017 2017 237 257 257 222 278 278 260 s s ble ble oup’s r ion of bank, 1 1 9 9 6 8 (2) (2) 13 $m $m $m $m $m 10 24 271 287 287 2018 2018 2018 263 269 269 240

ort-term Thenature. ort-term non-curre ovision areconsidered beto ivable mentioned The above. Grou Indivior Annual Report 2018 Indivior Annual Report 2018 113 onal provisions offset by receivables written offset receivables by provisions onal . They. consist including items of reclaima eir fair valuesfair eir their to sh due equivalents,borrowings, trade receivables andtrade payable monitored at Grouplevel. The Group’s financingand financial scale with control and the of ultimate the maximizing goal Gr cted to be recovered due to the nature and historical collect historical and nature to the to due be cted recovered t. Thet. themovements in gross pr ying ofvalue each ofclass rece 017: $15m) related primarily to long-term prepaidexpenses for to long-term 017:primarily related $15m) were assessed forwere impairment. The at amount of provision December nancialexposures of Group the aremanaged centrally inmanne a ceivables are in are ceivables denominated the following currencies: isalso assumed to approximateits fair value. receivables consists of increases for additi nge of countries of the nge within Group. liabilitiesinclude cash and cash Othercurrencies

Over sixmonths past due liquidity and mitigating liquidityand its operational financial and risks. Fi risk management risk activities are to centralized benefitsachieve of contract manufacturing capacity. manufacturing contract exposuremaximum The to credit risk theat is the year-end carr th to approximate assumed are payables trade and receivables trade which cost, borrowing, amortized at presented is Financial riskmanagement of the Groupis mainlyexercised and 16. Financial instruments and risk management Group’s assetsThe financial and Other non-current receivables receivables non-current Other 2018 (2 31, December at $33m of receivables other Non-current Sterling Euro As Decemberat 2018, of trade 31, receivables $2m(2017: $6m) 2018 $2mwas 31, (2017: $3m). A of portion the receivablesexpe is doesnot hold anycollateral as security. cash at borrowings, of current 17,provision in 18,out 15 Notes carrying impairment andvalue set as The less respectively. 23 Neither past duenor impaired Three six to months past due Up to three months three to Up pastdue The aging analysis of past due trade receivables as of December 31 is as follows: as follows: is 31 December of as receivables trade due of past analysis aging The Otherreceivables receivables Trade 15. Trade and other receivables (continued) assets Current Trade receivables– net Trade receivables– net Provision for Provision impairment receivablesof US dollar Less: impairmentfor Provision of receivables Prepayments receivables current Total consistentwith underlyingbusiness risks.Only those risksand flows generated theby underlying commercial operations are managed;speculative transactions areundertaken.not trade receivables. receivables. trade inmovement The the provision impaired for off unused and toback provision incomethe released statemen insignificant.other current The receivablesbalance does containnot impaired assets turnovertax and are froma broad ra re other and the trade of amounts carrying The Group’s Notes to the Financial Statements continued

16. Financial instruments and risk management (continued) Foreign exchange risk management The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. The Group’s policy is to align the foreign currency payables and receivables within its major subsidiaries in order to provide some protection against the remeasurement exposure on profits. The Group may undertake borrowings and other hedging methods in the currencies of the countries where most of its assets are located.

Liquidity risk management Liquidity risk is the risk that the Group is not able to settle or meet its obligations on time or at a reasonable price. The Group’s policy is to ensure there is sufficient funding and facilities in place to meet foreseeable liquidity requirements. The Group manages and monitors liquidity risk through regular reporting of current cash and borrowing balances and periodic review of short-, medium-, and long-term cash forecasts, while considering the maturity of its borrowing facility. At December 31, 2018, Indivior had $4m (2017: $5m) of borrowings repayable within one year and $924m (2017: $863m) of cash and cash equivalents.

Credit risk management The Group’s exposure to credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, and trade receivables. Financial institution counterparties are subject to approval under the Group’s counterparty risk policy and such approval is limited to financial institutions with a BBB rating or above. Concentration of credit risk with respect to trade receivables are limited given that the balances consist of amounts due from customers, primarily wholesalers and distributors, for whom there is no significant history of default. Outside the US, no customer accounts for more than 5% of the Group’s trade receivables balance. In the US, in line with other pharmaceutical companies, the Group sells its products through a small number of wholesalers in addition to hospitals, pharmacies, physicians and other groups. Sales to the three largest wholesalers amounted to approximately 71% of the Group sales in 2018. At December 31, 2018, the Group had trade receivables due from these three wholesalers totalling $212m (2017: $198m). The Group is exposed to a concentration of credit risk in respect of these wholesalers such that, if one or more of them encounters financial difficulty, it could materially and adversely affect the Group’s financial results. The Group’s credit risk monitoring activities relating to these wholesalers include a review of their financial information and Standard & Poor’s credit ratings, and establishment and periodic review of credit limits. However, the Group believes there is no further credit risk provision required in relation to these customers (see Note 15, ‘Trade and other receivables’). Capital risk management The Group considers capital to be net debt plus total equity. Net debt is calculated as total borrowings less cash and cash equivalents, short-term available-for-sale financial assets and financing derivative financial instruments (refer to Note 17). Total equity includes share capital, reserves and retained earnings as shown in the consolidated balance sheet.

2018 2017 Note $m $m Net cash 18 681 376 Total equity 66 (203) 747 173

The objectives for managing capital are to safeguard the Group’s ability to continue as a going concern, in order to provide returns for shareholders and benefits for other stakeholders and to maintain an efficient capital structure to optimize the cost of capital. The Group monitors net debt which at year-end amounted to net cash of $681m (2017: $376m). The Group seeks to pay down net debt using cash generated by the business to maintain an appropriate level of financial flexibility.

17. Cash and cash equivalents Accounting policy Cash and cash equivalents comprise cash in hand, current balances with banks and similar institutions and highly liquid investments with original maturities of less than three months.

2018 2017 $m $m Cash and cash equivalents 924 863 924 863

There were no bank overdrafts in the current or prior year.

114 www.indivior.com Financial statements – (5) (5) 115 42 $m $m $m $m $m 86 (12) 171 3.0 131 2017 2017 2017 2017 2017 621 376 376 663 863 ratio (477) (477) (487) any (restated) ty forty Maximum leverage – 4 (4) (4) 21 61 $m $m $m $m $m $m $m 376 2018 2018 2018 2018 2018 681 681 924 309 240 288 (237) (237) (243) ated net debt divided by Amortization e outstandinge loan balance. Indivior Annual Report 2018 Indivior Annual Report 2018 115 margin Maturity Maturity margin Nominal interest st-bearingcost,borrowings amortized with stated are at thin financethin inexpense the income statement over the year $m unconditionalan has right to defersettlement of the liabili ble on the principal amount of th amount ble on the principal luecost;less attributable transaction the cost theof loan Carrying Value USD 243(1%) Libor + 4.5% 2022 1% 2017 gross borrowings from $487m to $663m. $663m. to from $487m gross 2017 borrowings Currency initial intere recognition, borrowings and cash bankat equaltheir fair value. aftspayable due:

1 Nominal interest margin is calculated over three-month LIBOR subject to the LIBOR floor; The maximum leverage ratio is a financial covenant to maintain net secured leverage below a specified maximum (*adjusted aggreg adjusted EBITDA ratio) stands which at 3.0x; $50mA revolving credit facility; remainedwhich undrawn theat balance sheet date. Borrowings reflect the outstanding principal amount drawn, before debt issuance cost of $2m (2017: $5m). nalysis of nalysis cash net

The impact ofimpact The this change increasean was in Netrepayment ofborrowings Bankloans payable due: The prior year has been restated to include the interest paya the prior include interest to year The been has restated Later than one and less than five years years five than less and one than Later Bank loans and Bank loans overdr oneWithin year demand on or Maturity of debt The termsThe ofthe inloan effect atDecember 31,2018 are follows:as Term facilityloan Also included within the terms of the loan were: ‹ ‹ ‹ The carrying The currentof value Reconciliation of net cash/(debt) cash/(debt) net of Reconciliation cash/(debt)Net at beginningof year increaseNet cashin equivalents and cash 1. Cash and cash equivalents equivalents cash and Cash Borrowings A Non-current Non-current loan Term approximates itsapproximatesto fair Subsequentvalue. loan Term 18. Financial liabilities – borrowings Accounting policy Interest-bearingborrowings are recognized initially atfair va

Grossborrowings (including interest) Net cash/(debt) at end of year year of end at cash/(debt) Net Exchangeadjustments

Over fiveyears Current Current difference between cost and redemption value being recognizedredemption being value wi and cost between difference theof borrowings on effectivean interest basis. the Group unless liability current a as classified are Borrowings least at months 12 afterthe reporting date. Notes to the Financial Statements continued

18. Financial liabilities – borrowings (continued) Analysis of changes in liabilities from financing activities

At January 1, Exchange At December 31, 2018 Cash flows Profit and loss Reclassifications adjustments 2018 $m $m $m $m $m $m Current borrowings (5) 5 – (4) – (4) Non-current borrowings (477) 235 (3) 4 4 (237) Interest payable (1) 25 (28) – 1 (3) Total liabilities from financing activities (483) 265 (31) – 5 (244)

19. Operating lease commitments Accounting policy Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards of ownership to the Group. All other leases are classified as operating leases. Payments made under operating leases (net of incentives received from the lessor) are charged to the income statement on a straight-line basis over the term of the lease.

2017 2018 (restated) $m $m Total future minimum lease payments under non-cancellable operating leases due: Within one year 8 6 Later than one and less than five years 19 20 More than five years 12 13 39 39

We identified that the lease commitment relating to an embedded lease had not been recorded in the lease commitment note in the 2017 Annual Report and Accounts. All charges related to the lease have been accurately recorded and hence the only adjustment required is to this note. The impact of this change was to increase the total lease commitment in 2017 from $26m to $39m. The Group’s operating leases relate primarily to property, plant and equipment (administrative offices). Operating lease rentals charged to the income statement in 2018 were $5m (2017: $6m).

20. Provisions for liabilities and charges Accounting policy Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that there will be an outflow of resources to settle that obligation; and the amount can be reliably estimated. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. Provisions are reviewed regularly and amounts updated where necessary to reflect the latest assumptions. The assessment of provisions can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. Given the inherent uncertainties related to these estimates and assumptions, the actual outflows resulting from the realization of those risks could differ from the Group’s estimates.

116 www.indivior.com Financial statements

1 117 (1) 57 $m 69 l (12) (47) (22) 143 316 259

258 459 459 424 493 493 Total cial ble isk’ l er a er edress edress oras provisions d other other d remote. ultimate elates to elates

1 2 2 2 2 3 – – – – – – – – 3 3 $m Retirement Retirement benefit costs

– – – – – – – – – – – – 8 8 8 (5) 13 $m costs costs bility of than is losses more payments has shiftedhas payments the during ntially all of the provision the of provision r all ntially een current een non-current and has onscharges’ liabilitiesfor and Indivior Annual Report 2018 Indivior Annual Report 2018 117 and related costs, the majority ofcosts,whichthe majority related and Restructuring Restructuring ted the during year to offsetthe finan se ofse themanage and capita business its 1 1 – – 9 (1) 19 19 19 able estimates able benot of thecould made 35 43 36 $m 44 (17) (19) 44 d matters, d theseof $40m relatepotential to r matters ons the with DepartmentJusticeof possi a about IP related ally higher than the provision or is required to be paid ov topaid be ally theor provision is required than higher – – – – by higherthan expected loss of revenuefollowing the ‘at-r dditionalmeasures such asfurther cost savings or a change 52 $m kingfurther necessarymeasures to reduceits cost base and (12) (28) 314 124 222 256 438 438 386 438 438 anged, the classification betw disclosedNotein 20, ‘Provisi matters anycertainty whether, when, or at whatitcost will reachan what costwhat it ultimatereach will of resolution the antitrust an gation mattersgation $438m. of Substa which the Group is a party are isthewhich are outset Group party a Note in ‘Incometax expense’ 9, propertywheredisputes the possi Litigation/ investigative disputes as described in Note 22, LegalProceedings. 22, disputesdescribedas Note in

materially higher materially thethan amount provided. st-savinginitiative implemenand announced gation withDRL and Rhodes Pharmaceuticals and havebeen classified asexceptiona ken significantsteps reduceto the ba cost pments. These pments. consist primarily redundancy of x expense’x under ‘Othermatters’, tax reli naloxone sublingual the or filmproducts failure naloxone sublingual newfor productsgrowth meet to revenue totalling totalling intellectual $44m for property relate ount of theof ount provision has not ch investigation.The Groupis in advanced discussi ies and charges (continued) nagement’s bestnagement’s estimate theof timing of payments. t December 31, 2018 2018 31, December t 2018 31, December t potential range of cost required to settle legal or intellectual Descriptionsof the significant tax, legal andother disputesto separately disclosedin Note 9, ‘Incometa Released toincome statement Exchangeadjustments Utilized duringthe year and Note 22, ‘Legal Proceedings’. Proceedings’. 22, Note ‘Legal and changed to due shifta ma in eventthe In the final settlement theof amount matterDOJ is materi Exchangeadjustments Otherthan the disputes whichfor provisions have been taken as Provisions – non-current non-current – Provisions December31, At 2017 (see4).costs Note The restructuringprovision relates to the co 21. Contingent liabilities Discounting did materiallynot impact of the provisio roll-forward theas ns estimated oftiming for ongoing intellectual property related liti related property intellectual ongoing for of impact recentdevelomarket adverseUS A Provisions– current Provisions –current non-current – Provisions A Charged to incometo Charged statement Utilized the during year strategy. litigation the to Group The also provisions carries At JanuaryAt 20171, theto Charged income statement 20. Provisions for liabilit 20. Provisions period. property intellectual and legal in involved is Group The TheGroup carries aprovision forinvestigative andantitrust liti structure. combinationHowever,a theof above may risks requirea launch of genericof buprenorphine/ launch in business continue not would without ta Group the expectations, The Directorsta have cashimprove its flow. shorter period of time, and theshorterperiod and time, of is Group furtheradversely impacted At December31, At 2017 Indiviorcannot predict with anycertainty whether,when, or at matters. litigation the U.S. DepartmentU.S. the of Justice be utilized to expected is within year. one finalThe aggregateofcost these be may matters Group The believesthat ithas strong defencesin the antitrus tis activelyother and and litigations litigating these matters. resolution to itsresolutionto cannotit investigations,although predict with the am Although total resolution. Notes to the Financial Statements continued

22. Legal proceedings Litigation/Investigative matters Department of Justice Investigation A U.S. federal criminal grand jury investigation of Indivior initiated in December 2013 is continuing, and includes marketing and promotion practices, pediatric safety claims, and overprescribing of medication by certain physicians. The U.S. Attorney's Office for the Western District of Virginia has served a number of subpoenas relating to SUBOXONE® Film, SUBOXONE® Tablet, SUBUTEX® Tablet, buprenorphine and our competitors, among other issues. The Group has responded to the subpoenas and has otherwise cooperated fully with the Department and prosecutors and will continue to do so. The Group is in advanced discussions with the Department of Justice about a possible resolution to its investigation. However, it is not possible to predict with any certainty the potential impact of this investigation on the Group or to quantify the ultimate cost of a resolution.

State subpoenas On October 12, 2016, Indivior was served with a subpoena for records from the State of Connecticut Office of the Attorney General under its Connecticut civil false claims act authority. The subpoena requests documents related to the Group’s marketing and promotion of SUBOXONE® products and its interactions with a non-profit third-party organization. On November 16, 2016, Indivior was served with a subpoena for records from the State of California Department of Insurance under its civil California insurance code authority. The subpoena requests documents related to SUBOXONE® Film, SUBOXONE® Tablet, and SUBUTEX® Tablet. The State has served additional deposition subpoenas on Indivior in 2017 and served a subpoena in 2018 requesting documents relating to the bioavailability/bioequivalency of SUBOXONE® Film, manufacturing records for the product and its components, and the potential to develop dependency on SUBOXONE® Film. The Group is fully cooperating in these civil investigations.

FTC investigation and antitrust litigation The U.S. Federal Trade Commission's investigation remains pending. Litigation regarding privilege claims has now been resolved. Indivior has produced certain documents that it had previously withheld as privileged; other such documents have not been produced. Civil antitrust claims have been filed by (a) a putative class of direct purchasers, (b) a putative class of end payor purchasers, (c) Amneal Pharmaceuticals LLC (Amneal), a manufacturer of generic buprenorphine/naloxone tablets, and (d) a group of states, now numbering 41, and the District of Columbia. Each set of plaintiffs filed generally similar claims alleging, among other things, that Indivior violated U.S. federal and/or state antitrust and consumer protection laws in attempting to delay generic entry of alternatives to SUBOXONE® tablets. Plaintiffs further allege that Indivior unlawfully acted to lower the market share of these products. The Group has settled the dispute with Amneal, and Amneal has dismissed its claims against the Group with prejudice. The other antitrust cases are pending in federal court in the Eastern District of Pennsylvania. Pre-trial proceedings were coordinated. The fact discovery period has closed; expert discovery and briefing on class certification issues is ongoing.

Estate of John Bradley Allen On December 27, 2016, the Estate of John Bradley Allen filed a civil complaint against Indivior, among other parties, in the Northern District of New York seeking relief under Connecticut’s products liability and unfair trade practices statutes for damages allegedly caused by SUBOXONE®. This lawsuit was dismissed without prejudice on August 9, 2018.

Opioid Class Action Litigation In February 2019, Indivior PLC, along with other manufacturers of opioid products, was named in the national civil opioid class action litigation brought by state and local governments, alleging misleading marketing messages. This complaint was filed by several Kentucky public health agencies in the class action consolidated in the federal district court for the Northern District of Ohio on February 6, 2019. On February 21, 2019, Indivior was voluntarily dismissed with prejudice from the lawsuit.

Intellectual property related matters ANDA litigation and inter parties review Actavis is currently enjoined from launching a generic buprenorphine/naloxone film product until April 2024 based on a June 3, 2016 ruling by the United States District Court for the District of Delaware finding the asserted claims of the ’514 Patent valid and infringed. Actavis has appealed this ruling. On October 24, 2017, Actavis received tentative approval from FDA for at least its 8mg/2mg generic product under its Abbreviated New Drug Application (ANDA) No. 204383 and on November 15, 2017, it received tentative approval for its 12mg/3mg generic product under ANDA No. 207087. Litigation against Actavis is also pending in the District of Delaware on Indivior’s more recently listed Orange Book Patents: U.S. Patent Nos. 9,687,454 (the ‘454 Patent), and 9,931,305 (the ‘305 Patent). On August 31, 2017, the United States District Court for the District of Delaware found that asserted claims of U.S. Patent No. 8,017,150 (the ’150 Patent), U.S. Patent No. 8,900,497 (the ’497 Patent), and the ’514 Patent are valid but not infringed by DRL. Indivior has appealed this ruling. Litigation against DRL is currently pending in the District of New Jersey on the ‘454 and ‘305 patents. DRL received final FDA approval for all four strengths of its generic buprenorphine/naloxone film product on June 14, 2018, and immediately launched its generic buprenorphine/naloxone film product “at-risk.” On June 15, 2018, Indivior filed a motion with the United States District Court for the District of New Jersey seeking a Temporary Restraining Order (TRO) and Preliminary Injunction (PI) pending the outcome of a trial on the merits of the ’305 Patent. The court granted Indivior a two-week TRO, preventing DRL from continuing to sell or offer to sell its generic product. Indivior was required to post an $18 million surety bond to cover DRL’s damages in the event of an Indivior loss of its patent case against DRL. On June 28, 2018, the court heard oral argument in support of Indivior’s motion for a PI against DRL and, at the conclusion of this hearing, extended the TRO for an additional 14 days in order to rule on the PI motion and required Indivior to post another $18 million surety bond. On July 13, 2018, the District Court issued its ruling granting Indivior a PI against DRL. On July 18, 2018, the District Court ordered Indivior to post a surety bond for $72 million

118 www.indivior.com

Financial statements

ice 119 al as he e AFC rms rms

nt c , Par , e or g g . trict RL in RL C l bel ’s rict of rictof er val for for val 18, utcome e

512 On neric to USPTO) loxone 54. 54.

the CAFC ictof February 12,2019, ne filmne (CASSIPA™). Indivior, eby Alvogeneby is enjoinedt from e Teva 16mg/4mgTeva e dosagestrength of the United States the States United requestin of to stay the stay to mandat of issuance placein September2017. The vacatingmandate CAFC’s the th g litigation against Teva and D and Tevaagainst litigation g g g unless CASSIPA untiland the C 2018,the a issued CAFC decision lm product on Juneon product lm 2018. 14, terms of which are confidential are of which terms erturnthe CAFC’s vacatur.PI theof non-infringement judgme rmstheof settlement agreement Indivior Annual Report 2018 Indivior Annual Report 2018 119 tents not infringedtentsnot by Alvogen. e ‘514patent theto case extent wilit ted against DRL. The U.S. DRL. Court District against ted f to an application filed in August 2007. 2007. August in filed application an to Court restrainthe launch of Alvogen’sge ingen bancon December 20, 2018.The CAF dosage dosage strengththat thewas of the subject tri te has notgranted tentative or finalappro the non-infringement judgmentthe in rictof New Jersey.On United StatesDistrict Court for the Distr tentNo. 8,603,514,(and U.S. 8,017,150 in the case of DRL), vaagreed that infringement Teva’sby 16mg/4mg dosage litigation againstlitigation theMylan, er 2016 er ruling. isLitigation ongoing againstTeva in theDist nuary1, 2023, orearlier under certaincircumstances. Other te patent litigationagainst was Sandoz dismissed prejudwithout strengthof buprenorphine/naloxo onfor certiorari seekingto ov or’s motion to motion or’s ofissuance stay enteredin to agreementan wher e Dr. Reddy’s case thatmeans Reddy’s Dr. e th 14 patent,14 as well asthe ongoin of theof ‘305 patent. Alvogen approval received its for generic on to stay thestay to on mandate pending of resolution forthcomingits partes review of the ‘454 Patent with the USPTO.the Indivior’s of ‘454 with the Patent review partes d eitherof d challenge not validity the patent. On March 2022, ate vacatingthe PI against DRL. Alvogen has launchedits generi t of the United States in the PI matter. The CAFC denied that motionthat in TheCAFC matter.the the UnitedPI States denied of t the same day. On November20,day.same the On the U.S. the infringes oneclaims more or of U.S. Patent No. 9,370, applicationtheto Supreme Court gation against Par. Under the te Under Par. gation against diviorfiled anemergency motion to sell, or importing their generic buprenorphine/naloxone the United States. denied CAFC thatThe motion orderedand 22, 2019, Indivior filed a motion for a temporary restraining ord 22, temporary a restraining 2019, motion a filed for Indivior ect to the outcome of theof ectappeal outcome the to therefore enjoined launchin from Patents SUBOXONE®for Filmtook e 8mg buprenorphine/naloxonefi rting Orange Book-listedU.S. Patent Nos. 9,931,305 and 9,687,4 suedits rulingfinding paboth ionsfor its proposed generic formulationsof SUBOXONE® Film. ation intoation Unitedthe ofStates, its genericbuprenorphine na and theon claimsIPR challenged theof ’512 patent. Any salesof CASSIPAin the U.S. wouldon be an“at-risk” basis, the to subject o . So far as Indivior is aware, FDA to to da FDA aware, is Indivior as far So . ly issued the mandate vacating theissued ly mandate the gran PI d its d genericproduct, andany salesthe in U.S.are on an “at-risk” basis,subject pealof the non-infringement judgmentin th the District of New Jersey granted a TRO until February 7, 2019, with a PI hearing hearing PI a 2019,with 7, TROuntilFebruary New a granted Jersey of Districtthe strictNewof Jersey, that requesting the ed on the next available oral argument calendar. calendar. argument oral available next the on ed vior’s request to expediteto the vior’srequest appeal of h was issued in June 2016, claims priority e Districtof Delaware decisionwith respectto the ‘514patent, and pending Indivior 6 million surety bond already posted) in connection connection in posted) to withDRL appealed theth suretyalready bond PI. million 6 on against Alvogen is also pending in the the in pending also is Alvogen against on going litigation going against the in Alvogen Dist d the PI against DRL had been vacated.thebeen againstPI had DRL d d a timely petition for rehearing and rehear and rehearing for timelypetition a d the Pa U.S. to judgments related e infringemente ruling as to Dr. Reddy’s8mg/2mg agreedbe to bound theby decision inthe DRL PIcase. Teva is theof appeal of non-infringementthe judgment the to related ‘5 issue the because to Alvogen was di infringement of limited trial theUnited StatesDistrict Court forthe District of Delaware is New JerseyNew on the‘454 patent and ‘305 patent. Teva receivedfinal approvalfrom the FDAfor CASSIPAon September7, 2018 and h mandateissues a vacating theDRL. against PI theDistrict of New Jersey. Trial against Alvogen in the lawsuit involving the ’514 and ’497 this Indiviorappealed has Litigati ruling. a stay of stay a the of resolution mandate pending its petiti forthcoming February 19, the Supreme Court of the United Indivi the United States denied Court the of 19, February Supreme subsequent CAFC The DRL. against granted PI theDistrict of New Jersey then confirme offering selling, from prevented longer no are therefore is DRL sublingualfilm products. DRLhas re-launche of of outcome CAFC appeal the the related the related ‘514 wellas patent, theas on granted Indivior’s the requestexpedite to ap strength would be governed by th On February 12, 2019,the CAFC grantedIndi patent‘514 case extentthe to it will plac be November On 13, 2018, DRL filed petitions separate two inter for 2019. 7, March and 2019 6, March due are responses preliminary Teva fileda 505(b)(2) New Drug Application (NDA) for a 16mg/4mg Te as and Rx) known MonoSol Aquestive(formerly Pharmaceuticals Novemberin 2016. Accordingly, non-infringementthe in ruling th hasbeen found infringe.not to Indiviorhas appealedthis Novemb placed onthe next availableoral calendar. argument Film SUBOXONE® Indivior’s 2016, 22, August dated order Court a By is certificat IV because pursuing no Sandoz Paragraph longer SeptemberOn 25,2017, Indivior itssettled SUBOXONE® Film patent forthcoming petition for a writ of certiorari to the Supreme Cour a for certiorari writ Supreme of the to petition forthcoming 11, February on and 2019, Indivior fileda emergency moti second of Court the to Supreme stay administrative an for application 2019. 19, an filed Indivior the of issuance February on mandate as wellas ongoing litigationthe in District of JerseyNew asse JerseyNew the on ‘454 Patent the and ‘305 Patent. On January preliminary (“TRO”)injunction and the in Di denied the petition on February 4, 2019. On February 5, 2019, 2019, 5, theIn 2019. 4, petition on February denied On February on trial the a until merits filmproduct buprenorphine/naloxone on product JanuaryThe2019. 24, same day, scheduled forthat day. On January31, 2019, Indiviorand Alvogen can launchits genericbuprenorphine/naloxone film product on Ja sublingual film product unless mand the a until and issues filmunless CAFC product sublingual product,and anysales in the US are on an “at-risk” basis, subj Mylan received final FDAapproval forits genericversion of th On May11, 2018, Indiviorsettled its SUBOXONE® Filmpatent liti vacating the PI against DRL. Indivior file Indivior DRL. against the PI vacating the pending the of resolution th of appeal offeruse, to sell,saleor within Unitedthe Sates,or import of theof settlement agreement are confidential (the ‘512 Patent).(the assertedThe patent, whic Par’s genericbuprenorphine/naloxone film product. Delaware,of that Indivior’salleging SUBOXONE® of in Film sale Rhodes pharmaceuticals pharmaceuticals Rhodes On 23,December 2016, Rhodes against Pharmaceuticals filed complaint a in Indivior the United District States for the Court Dis 22. Legal (continued)proceedings figuretotal (that inclusive being theof $3 United StatesUnited Appealsof Court the for on Federal (CAFC) Circuit On March16, 2018, Indiviorfiled petitiona for inter partes review(IPR) with the United States Patentand Trademark Office ( assertingthat claims all of the ‘512Patent are invalid. On October4, 2018, the USPTO declinedto institute an Notes to the Financial Statements continued

23. Trade and other payables 2018 2017 $m $m Sales returns and rebates (510) (433) Trade payables (47) (40) Accruals and other payables (146) (178) Other tax and social security payable (15) (13) Interest payable (3) (1) (721) (665)

Sales return and rebate accruals, primarily in the US, are provided for by the Group at the point of sale in respect of the estimated rebates, discounts or allowances payable to customers. Accruals are made at the time of sale but the actual amounts paid are based on claims made some time after the initial recognition of the sale. As the amounts are estimated they may not fully reflect the final outcome and are subject to change dependent upon, amongst other things, the channel (e.g. Medicaid, Medicare, Managed Care) and product mix. The level of accrual is reviewed and adjusted in light of historical experience of actual rebates, discounts or allowances given and returns made and any changes in arrangements. Future events could cause the assumptions on which the accruals are based to change, which could affect the future results of the Group. The carrying amounts of total trade and other payables are denominated in the following currencies:

2018 2017 $m $m Sterling 62 63 US dollar 629 566 Other currencies 30 36 721 665

24. Share capital Accounting policy Incremental costs directly attributable to the issue of ordinary shares, net of any tax effects, are recognized as a deduction from equity.

Equity Issue Nominal ordinary price value Issued and fully paid shares $ $m At January 1, 2018 721,462,733 0.10 72 Allotments 6,978,920 0.10 1 At December 31, 2018 728,441,653 73

Equity Issue Nominal ordinary price value Issued and fully paid shares $ $m At January 1, 2017 720,597,566 0.10 72 Allotments 865,167 0.10 – At December 31, 2017 721,462,733 0.10 72

Allotment of ordinary shares During the year, 6,978,920 ordinary shares (2017: 865,167) were allotted to satisfy vestings/exercises under the Group’s Long-Term Incentive Plan and the US Employee Stock Purchase Plan.

25. Other Equity Nature and purpose of reserves Foreign currency translation The foreign currency translation reserve contains the accumulated foreign exchange differences from the translation of the financial statements of the Group’s foreign operations arising when the Group’s entities are consolidated.

Other reserves The other reserves balance relates to the Group formation in 2014. It represents the difference between the nominal value of the shares issued by the Company and the net investment in the Group by the former owner.

120 www.indivior.com Financial statements

s £ g 121

IP IP r e, 2.76 0.99 g fair value fair Weighted average

risk-free rat 2 % Risk-free interest rate the expected volatility based on based volatility expected the 0.12 n/a

on date, based upon a maturity 3 3 3 0.78 1.28 3 0.40 1.10 3 0.85 2.90 3 0.15 2.59 3 0.73 1.67 3 0.85 3.39 as calculated based on a lookback years years ars. From 2016 onwards, award onwards, 2016 From ars. of theof Company, to the to calculatedCompany, usin e is recognizedvestinis the e over Indivior Annual Report 2018 Indivior Annual Report 2018 121 Expected life in life in Expected owing assumptions were used in owing assumptions were

% ants of share options and theants shareof fai and options awards, e Directors) of the Group. An award under award Directors)e An the of Group. bjectachievementthe to of stretching 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Dividend yield

1 or a conditional orconditional award. a % 43 39 38 38 46 48 48 n/a nimum vesting periodvesting nimum threeof ye e expectedCompany, volatilities new awards over Indivior ordinary shares under the under LT Indivior shares ordinary over awards Indivior new Volatility et data and the associated cost et and the data associated two-thirdson Indivior’sperformance. The concluded Committee ployees and US Employee Stock Purchase Plan (ESPP) for for PurchaseStock(ESPP) Plan US Employee and ployees rket,under the awards Reckitt Benckiser2007 Long-Term Incentive models. The grant date fairvalu date Thegrant models. rmation can be found in be rmation can the found Directors’Report. Remuneration ssessedfor each Thegrant. foll

£ d based on the UK government interest rates as of the valuati ing of these awards, taking intothe account taking performance of and RB over Indivior awards, these of ing grant date grant ,marketa value option, Share price on to a further two-year post-vesting period. ese plans are not material not are plans ese for material disclosure. utiveemployeeand share plans. all For gr shares and/or share options which vest su vest which options share and/or shares troduced (including employees for Executiv nding increase nding in earnings. retained Period 2015-17 1.75 2016-18 2.92 2018-20 4.02 Performance 2015-17 1.70 2016-18 1.55 2017-19 3.43

2018-20 4.02

equal ofweighting historical volatility the and implied volatility of guideline public This companies. historical volatility w period of three years. Given the short trading history as of the valuation dates, we relied on a comparable set of guideline companies. We calculated The risk-free interest rate reflects the continuous risk-free yiel commensurate withthe performance period.

ward Grant date 2016 February 19,2016 2018 201828, November 2018-20 0.99

1. 2018 March 9,2018 2015 February 26,2015 2015 March 11,2015 A for a for of number executives. RemunerationThe considered Committee the vest the vesting period, weighted one-third on RB’s performance and that vest theof would 93.33% May Award in 2016.Further info Indivior Long-Term Incentive Plan (LTIP) in was plan incentive share-based a 2015, In LTIPthe the take can formof zero-costa option LTIPThe comprisemay performance grants Plan granted in 2012 were exchanged on a value-neutral basis for for basis value-neutral a on exchanged were 2012 in granted Plan Legacy Award – Indivior LTIP (formerly Reckitt Benckiser LTIP) LTIP) Benckiser Reckitt (formerly LTIP – Indivior Award Legacy Ma Main UK theonlisting and RB from demerging Indivior Upon Employee Plans Employee Plans 26.Share-based payments Accounting policy operates Group The three equity-settled exec valuetheat grant isdate calculated using appropriate pricing periodas expense, an with a correspo 2018 March 9,2018 2016 August2016 2, 2017 February 24,2017 2. and dividendyield. Other Employee Plans em UK for plan SAYE HMRC-approved an operates Company The US employees. The amounts recognized for th to thethe inputs models option plans, are rea pricing all For the of value fair options calculating granted. an expected-value methodology. methodology. expected-value an performance The condition is reviewedbefore each award cycle toensure it remains appropriately stretching. model. simulation Carlo Monte a using calculated are Plans Incentive Long-Term the under granted awards of values fair The of price inth stock are the model assumptions key simulation The performancetargets. LTIPThe has a performanceperiod of at least three yearsand a mi grantedtheto DirectorsExecutive are subject LTIPThe opportunity is reviewed annuallywith referenceto mark Notes to the Financial Statements continued

26. Share-based payments (continued) At the end of the year, the maximum number of shares that could be awarded under the Group’s LTIP was:

Legacy (LTIP) LTIP Total millions millions millions Outstanding at January 2017 3 19 22 Awarded – 6 6 Vested/Exercised (1) – (1) Forfeited – (1) (1) Outstanding at December 2017 2 24 26 Awarded – 6 6 Vested/Exercised – (6) (6) Forfeited – (3) (3) Outstanding at December 2018 2 21 23

Charged to income statement The expense charged to the income statement for share-based payments is as follows:

2018 2017 $m $m Granted in current year 6 6 Granted in prior years 9 10 Total share-based expense for the year 15 16

27. Related party transactions Key management compensation is disclosed in Note 7a. The subsidiaries included in the consolidated financial statements at December 31, 2018 are disclosed in Note 2 to the Parent Company financial statements.

28. Post balance sheet events Following February 19, 2019 orders from the U.S. District Court for the District of New Jersey, Dr. Reddy’s Laboratories (DRL) and Alvogen Pine Brook, Inc. (Alvogen) are no longer prevented from selling, offering to sell, or importing their generic buprenorphine/naloxone sublingual film products. On February 20, 2019, Indivior announced that it had launched an authorized generic version of SUBOXONE® (buprenorphine and naloxone) Sublingual Film (CIII) in the U.S. It is possible that other generic manufacturers may also launch generic versions of SUBOXONE® Film following Indivior’s launch of this authorized generic. Indivior reached a definitive agreement (February 4, 2019) to divest rights related to SUBOXONE® Sublingual Tablets (Sai Bo Song™) in the People’s Republic of China to Zhejiang Pukang Biotechnology Co., Ltd. (Pukang) for total potential consideration of up to $122.5m based on achieving certain milestones. The agreement is subject to various closing conditions and is anticipated to close in Q4 2019. During the year, the Group announced its intention to implement a program to streamline the Group and reduce certain costs. This resulted in a further reduction in headcount of more than 120 employees in Q1 2019. Incremental costs to effect the savings will be reflected as an exceptional cost in Q1 2019.

122 www.indivior.com Financial statements $m 123 (57) (61) 2015 228 285 346 0.31 $m 2016

$m 58 35 (79) (63) (56) (51) 137 98 2017 193 149 193 (335)(390) (274) (203)(295) (279) 0.080.05 1,093 1,0581,093 1,014 17.7% 14.1% 34.1% 57.7% 64.3% 20% Indivior Annual Report 2018 (3) $m $m 66 (14) 275 278 2018 292 0.37 (356) 1.1% 1,005 29.1%

1 Net working capital includes inventories and trade and other receivables less trade and other payables.

Tax rateTax Net working capital working Net Dilutedearnings share per (cents) Profit on ordinary activities before tax tax before activities ordinary Profit on Operatingmargin 123 www.indivior.com

1. Reportedbasis Net assets/(liabilities) assets/(liabilities) Net Balancesheet Operatingprofit finance Net (expense) Income statement operations continuing from Revenue Historical financial information Net income income Net Tax on profit on ordinary activities on profit on Tax ordinary Statistics Statistics Parent Company balance sheet

2018 2017 As at December 31 Note $m $m Fixed assets Investments 2 1,437 1,437 Deferred tax 3 5 21 Current assets Debtors 4, 5 54 26 Cash and cash equivalents 6 1 60 27 Creditors due within one year 6 33 – Net current assets 1,469 1,485 Creditors due after one year 6 – – Net assets 1,469 1,485

Equity Share capital 7 73 72 Share premium 5 2 Retained earnings 1,391 1,411 Total equity 1,469 1,485

The financial statements on pages 124 to 130 were approved by the Board of Directors on March 1, 2019 and signed on its behalf by:

Shaun Thaxter Mark Crossley Director Director

124 www.indivior.com Financial statements – (7) 19 12 $m 125 (28) (28) Total equity 1,469 – 8 (7) 15 $m 24 24 (28) (28) 1,391 earnings Retained

3 – – – 3 – 5 – $m Share premium

1 1 – – – – – 24 24 – – 8 8 – – – – – – 2 24 26 – 73 72 2 1,41172 1,485 2 1,411 1,485 72 1,363 – 1,435 $m Indivior Annual Report 2018 Indivior Annual Report 2018 125 Share capital capital 8 – 2 16 18 Notes Notes Othercomprehensive income Total comprehensive income income Totalcomprehensive Balance at 2018 December 31, Transactionsownerswith plans Share-based Comprehensive income income Comprehensive loss Net Balanceat December 2017 31, Balanceat January 2018 1, Share-based plans plans Share-based Transactionsownerswith Comprehensive income income Comprehensive income Net Balanceat January 2017 1, Parent Company statement of changes in equity Othercomprehensive income income Totalcomprehensive Deferredtaxation on share-basedplans in equity Totaldirectly transactionsrecognized Total transactions recognized directly in equity Totaldirectly transactionsrecognized Deferredtaxation on share-basedplans Notes to the Parent Company Financial Statements

The Parent Company financial statements of Indivior PLC necessary for the Group to continue as a going concern for at (the “Company”) for the year ended December 31, 2018 were least the next twelve months. However, a combination of the authorized for issue by the Board of Directors on March 1, 2019 above risks may require additional measures such as further and the balance sheet was signed on the Board’s behalf by cost savings or a change to the litigation strategy. These Shaun Thaxter and Mark Crossley. Indivior PLC is an investment conditions may impact the Parent Company’s ability to recover holding company and is a public limited company incorporated amounts owed from subsidiaries and value of the Parent and domiciled in England and Wales. The address of the Company’s fixed asset investments in shares in subsidiaries. registered office and company number are given on page 131. As such, the above factors indicate the existence of a material These financial statements were prepared in accordance uncertainty which may cast significant doubt about the Group’s with Financial Reporting Standard 101. ‘Reduced Disclosure and the Parent Company’s ability to continue as a going Framework’ (FRS 101). The financial statements are prepared concern. The financial statements do not include the under the historical cost convention, and in accordance with adjustments that would result if the Group and Parent Company the Companies Act 2006. were unable to continue as a going concern. As permitted by s408 (4) of the Companies Act 2006, no profit The Company has taken advantage of the following disclosure and loss account is presented for Indivior PLC. The results of the exemptions under FRS 101: Company are included in the consolidated financial statements a. The requirements of paragraphs 45(b) and 46 to 52 of IFRS 2 of Indivior PLC. Share-Based Payments for an ultimate parent, the share- The accounting policies which follow apply to preparation of based payment arrangement must concern its own equity the financial statements for the year ended December 31, 2018. instruments and its separate financial statements must be They have all been applied consistently throughout the year and consolidated financial statements of the Group; And in both the preceding year. The financial statements are prepared in US cases, this exemption requires that equivalent disclosures dollars and are rounded to the nearest million. are included in the consolidated financial statements of the Group in which the entity is consolidated. 2018 2017 b. The requirements of paragraphs 17 and 18 of IAS 24 GBP year-end exchange rate 1.2746 1.3513 Related-Party Disclosures to disclose information about GBP average exchange rate 1.3362 1.2881 key management personnel compensation and related party transactions entered into between two or more members of 1. Accounting policies a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member. Basis of preparation Indivior PLC (the “Company”) is the Parent Company of the c. The requirements of paragraphs 30 and 31 of IAS 8 Indivior Group. Indivior PLC is a public limited company Accounting Policies, Changes in Accounting Estimates and incorporated and domiciled in England and Wales. Errors to provide information about the impact of IFRSs that have been issued but are not yet effective. The Company and its subsidiaries (together, ‘the Group’) is engaged in the development, manufacture, and sale of d. The requirements of IAS 7 Statement of Cash Flow to prepare buprenorphine-based prescription drugs for the treatment a cash flow statement for any qualifying entity. of opioid dependence. e. The requirements of paragraphs 10(d), 10(f), 16, 38, 38A-D, The Parent Company financial statements have been prepared 40A-D, 111, 134-6 of IAS 1 Presentation of financial statements in accordance with Financial Reporting Standard 101, ‘Reduced to present: Disclosure Framework’ (FRS 101) and the Companies Act 2006 ‹ a cash flow statement; (the “Act”) for all periods presented. ‹ statement of financial position and related notes at the The Company is included in the Group financial statements beginning of the earliest comparative period whenever an of Indivior PLC, which are publicly available on the entity applies an accounting policy retrospectively, makes Company’s website. a retrospective restatement, or when it reclassifies items The financial statements are prepared on a going concern basis in its financial statements; under the historical cost convention in accordance with the ‹ an explicit statement of compliance with IFRS. Indeed, Companies Act 2006 (‘the Act’) and applicable UK accounting FRS 101 prohibits such a statement of compliance and standards. Subject to the following matter, after making an FRS 101 statement of compliance is required instead; appropriate enquiries, the Directors have a reasonable ‹ information about capital and how it is managed. expectation that the Group and Parent Company has adequate resources to continue in operational existence for at least one New standards, amendments and IFRIC interpretations year from the financial statements date. However, as disclosed IFRS 9 and IFRS 15 are new accounting standards that are in Note 20 to the Group financial statements, the Group carries a in effect from January 1, 2018 and have had no impact on provision of $438m substantially all relating to the Department the Parent Company. of Justice investigations. The final settlement amount may be materially higher than this provision or require payment over a Foreign currency translation shorter period, which, together with higher than expected loss Transactions denominated in foreign currencies are of revenue following the ‘at-risk’ launch of generic translated using exchange rates prevailing at the dates of the buprenorphine/naloxone sublingual film products, or the transactions. Foreign exchange gains and losses resulting from failure for new products to meet revenue growth expectations, the settlement of foreign currency transactions and from the could impact the Group’s ability to operate. The Directors have translation at year-end exchange rates of monetary assets and taken significant steps to reduce the cost base of the business liabilities denominated in foreign currencies are recognized and manage its capital structure and believe the Group has in the income statement, except where hedge accounting sufficient liquidity, influence over near-term litigation outcomes is applied. and the ability to carry out further measures that may be

126 www.indivior.com Indivior Annual Report 2017 126 Financial statements

127 $m 2017 al alue 1,437 1,437 icate costs e considerede $m $m 2018 1,437 1,437 orfair value less een factored in forin factored een ces ofces estimation uncertainty

factors that ar that factors the opinion thatopinion the there are no riod, or in riod, the period the of ng ng assetsof amounts and and liabilitiesand Company the for three additional years and nomin and years additional three Indivior Annual Report 2018 Indivior Annual Report 2018 127 rmined as the higher of net realizable v realizable net of higher the as rmined ounting policies: ounting ar, using a valueuse a in using based methodology ar, No revenueshave b determining determining there whether are indicatorsimpairmentof of investment.asset fixed Company’s the

The Company’s Directors are of are Directors Company’s The furtherno and judgments key sour to be be to relevant. these Actual may results estimates.from differ estimatesThe are assumptions reviewed underlying and basis. ongoing an on Revisionsto estimatesaccounting are recognised inperiodthe in whichthe is estimate revisedif the revisionaffects only that pe revision and futureperiods if the revision affects both current and future periods. followingThe the are significant judgmentsin made applying acc Company’s the ‹ have that a significantrisk of causing material a adjustmentto carrying the assetsof value withinthe next financial year. Accounting estimates and judgments judgments and estimates Accounting the In application the of accountingCompany’s policies, Directorsthe maketo required are estimatessome and carryi the about assumptions sources. other apparent from readily not are that liabilities estimatesThe associatedand are assumptions basedon historicalexperience other and isted of the of isted Board-approved budgetfor the year following ther with forecastswith ther for to up inthe impairment reviewwere revenueand relatedcash flow d out by theby out Directors d if events circumstancesin changes or ind of issued shares as theof s615 by permitted Act. accordance with'ImpairmentIAS assets'.of 36 er patentthe products. lifemarketed of e ofe the investments is supported bytheir underlying assets.net The cost ofinves tments and recoverableamount, and their is which dete balance was performedbalancewas at endthe theof ye on their on based values their exceed usein recoverable value could reversalof underlying timing e recognized e to extent the that not that there will be suitable suitable therebe will that not recover carried-forward tax carried-forward recover ainitems for taxation and t December 31 December t and value-in-use.and to sell. to impairmentSuch reviews are performedin recognizeda as resultof the impairment analysis. DirectorsThe believethat carryingthe valu determined been has referencewith the to nominal value Investments represent shares in subsidiaries. theimpairment of An investment analysis At JanuaryAt 1 A A theof review impairmentpotential of investmentan iscarrie Investmentsare stated theat lower ofcost of investments Impairment 2. Investments Accounting policy discountedon futureexpected cashflows. The assumptionskey cons projections flow cash Therate. discount the and projections toge entry, generic following erosions expected in factored which of (WACC). Averageimpairment Therewas no Capital isused the Group's Cost Weighted rate The discount in development. products Cashat bank andin hand includes cash held in bankaccounts. Cashin bankand in hand 1. Accounting policies (continued) (continued) policies Accounting 1. Taxation The tax charge/credit is based onthe result for the year and intotakes account taxation deferred timingto due differences between thetreatment of cert purposes. Deferredaccounting tax liabilitiesare provided for infull and deferredtax assets ar theofthat value the carrying investment they arethey considered recoverable. can it if recoverable considered is asset tax deferred A regardedbe as more likelythan taxable profits profits against taxable to which future the which from and losses differences can be deducted. candeducted. be differences Deferredis tax measured the at tax thatrates expectedare into apply the in periods which the timing differences are expectedto reverse,based on tax ratesand lawsthat have been substantivelyor enacted enacted by the balance sheet date. basis. on undiscounted is an tax Deferred measured expected growth rates beyondthose years ov Notes to the Parent Company Financial Statements continued

2. Investments (continued) Subsidiaries The subsidiaries as at December 31, 2018, all of which are included in the consolidated financial statements, are shown below, in accordance with s410 of the Act.

Country of Effective % incorporation of share capital or registration and held by the Name operation Registered Office Principal activity Group Indivior Global Holdings Limited England and Wales 103-105 Bath Road, Slough, Berkshire, SL1 3UH, United Kingdom Holding company Ordinary 100 RBP Global Holdings Limited England and Wales 103-105 Bath Road, Slough, Berkshire, SL1 3UH, United Kingdom Holding and Finance Ordinary 100 company Indivior Finance S.àr.l Luxembourg 1, rue de la Poudrerie, Leudelange, L – 3364, Luxembourg Finance company Ordinary 100 Indivior Finance (2014) LLC US 10710 Midlothian Turnpike, Suite 430, North Chesterfield, VA 23235, Finance company Ordinary 100 United States Indivior US Holdings Inc. US 10710 Midlothian Turnpike, Suite 430, North Chesterfield, VA 23235, Holding company Ordinary 100 United States Indivior Finance LLC US* 103-105 Bath Road, Slough, Berkshire, SL1 3UH, United Kingdom Finance company Ordinary 100 Indivior Finance (2015) S.àr.l Luxembourg 1, rue de la Poudrerie, Leudelange, L – 3364, Luxembourg Finance company Ordinary 100 Indivior Pty Ltd Australia Pod B.02, Level 3, 78 Waterloo Road, Macquarie Park NSW 2113, Operating company Ordinary 100 Australia Indivior UK Limited England and Wales 103-105 Bath Road, Slough, Berkshire, SL1 3UH, United Kingdom Operating company Ordinary 100 Indivior South Africa (Pty) Ltd South Africa Building 21 C, Woodlands Office Park, 20 Woodlands Drive, Operating company Ordinary 100 Woodmead, 2191, South Africa Indivior EU Limited England and Wales 103-105 Bath Road, Slough, Berkshire, SL1 3UH, United Kingdom Operating company Ordinary 100 Indivior Europe Limited Ireland 27 Windsor Place, Dublin 2, Ireland Dormant company Ordinary 100 Indivior France SAS France 1-5 Avenue Carnot, 91300, Massy, France Operating company Ordinary 100 Indivior Italia S.r.l Italy Corso di Porta Romana 68, 20122 Milano, Italy Operating company Ordinary 100 Indivior Deutschland GmbH Germany Hermsheimer Straße 3, 68163 Mannheim, Germany Operating company Ordinary 100 Indivior Solutions Inc. US 10710 Midlothian Turnpike, Suite 430, North Chesterfield VA 23235, Operating company Ordinary 100 United States Indivior Inc. US 10710 Midlothian Turnpike, Suite 430, North Chesterfield VA 23235, Operating company Ordinary 100 United States Indivior Ireland (Investments) Ireland 12 Merrion Square North, Dublin 2, Ireland Finance company Ordinary 100 Limited Indivior Canada Ltd Canada 333 Bay Street, Suite 2400, Toronto, Ontario, M5H 2T6, Canada Operating company Ordinary 100 Indivior España S.L.U Spain Camino de los Gamos n° 1, Edificio Negocenter, 28224 (MADRID), Operating company Ordinary 100 Pozuelo de Alarcón, Spain Indivior Nederland B.V. Netherlands Kabelweg 57, Unit 1.06.07 A, 1014BA, Amsterdam, Netherlands Operating company Ordinary 100 Indivior Portugal Unipessoal LDA. Portugal Praça Duque de Saldanha, n.º 1, Edifício Atrium Saldanha, piso 7, Operating company Ordinary 100 1050-094, Freguesia de Arroios, Concelho de Lisboa, Portugal Indivior Austria GmbH Austria Kärntner Ring 12, 3. Stock, 1010 Wien, Austria Operating company Ordinary 100 Indivior Schweiz AG Switzerland Neuhofstrasse 5A, 6340, Baar, Switzerland Operating company Ordinary 100 Indivior Hrvatska d.o.o. Croatia Savska cesta 32/13, 10000 Zagreb, Croatia Operating company Ordinary 100 Indivior Nordics ApS Denmark c/o Lundgrens Advokatpartnerselskab, Tuborg Boulevard 12, 4., Operating company Ordinary 100 2900 Hellerup, Denmark Indivior (Beijing) Pharmaceuticals China Unit 07, 19th Floor, Fortune Financial Centre, No. 5, 3rd middle East Operating company Ordinary 100 Information Consulting Co. Ltd Ring Road, Beijing, Chaoyang District, China Indivior Belgium SPRL Belgium Avenue Louise 331-333, 1050 Bruxelles, Belgium Operating company Ordinary 100 Indivior Česko S.R.O Czech Republic Pobřežní 394/12, Karlín, 186 00, Praha 8, Czech Republic Operating company Ordinary 100 Indivior Israel Ltd Israel 13 Hamiktsoot St., Modiin, 7178094, Israel Operating company Ordinary 100 Indivior Middle East FZ-LLC Dubai Healthcare Unit ED03, Second Floor, Building No. 27, Dubai Healthcare City, Dormant company Ordinary 100 City Free Zone Dubai, United Arab Emirates (UAE)

* Indivior Finance LLC is registered in the US state of Delaware but also has a UK establishment.

With the exception of Indivior Global Holdings Limited, none of the above subsidiaries is held directly by Indivior PLC.

128 www.indivior.com Financial statements 3 – – – 4 21 21 27 23 23 26 $m $m $m $m 129

2017 2017 2017 2017 6 6 1 7 – 5 5 $m $m 33 33 $m $m $m $m 53 53 54 60 2018 2018 2018 2018 lose relatedparty

auditfees givenare in Note Indivior Annual Report 2018 Indivior Annual Report 2018 Report 2018 Indivior Annual 129 e e the to notes Groupfinancial statements. losuresnot discto e repayabledemand.e on e repayabledemand.e on (2017:$0.03m). Details non-for 13 of the Group financialstatements forfurther details. d, interestd, ar and free, d, interestd, ar and free, oup. There were no other related party transactions. transactions. party other no There related oup. were Note 26Note theof the to Notes financial Group statements. emptionwithin IAS Disc 24 Party Related nagementpersonnel are givenin 7 Note to the Groupfinancial statements. ruments measured at rumentscost measured amortized ir value through ir through profitloss and value

11. Related party transactions11. Related party taken has Company The advantageof the ex 10. Auditors’ remuneration fee The charged for thestatutory auditthe of Company was $0.03m 9. Directors and employees year. theprevious or financial this of during thecompany employees were no There ofDetails the of remuneration ma key 8. Share-based payments The disclosure torelating the Company is detailed in 7. Share Capital Furtherinformation on the sharecapital of thecan Company be 24Note in found th of Amounts owedAmounts undertakings unsecure Group by/to are Amounts owed toAmounts subsidiaries owed toAmounts subsidiaries Amounts falling due after one after year: Amounts falling due 6. Creditors theof the to notes Group financial statements. Financialassets: Financialareassets debt instthat 5. Financial instruments Amounts owedAmounts undertakings unsecure Group by/to are Amounts owed subsidiaries by Amounts Corporatetax receivable Deferred tax assets all relate to share Deferredassets all awards. tax relate Note to Refer Debtors4. withindue year one Deferredassets tax 3. 3. Deferred tax assets

Financialassets measured fa at Amounts falling due within one year: one year: within due Amounts falling transactions with wholly owned subsidiaries of the of Gr owned wholly with subsidiaries transactions Notes to the Parent Company Financial Statements continued

12. Post balance sheet events Following February 19, 2019 orders from the U.S. District Court for the District of New Jersey, Dr. Reddy’s Laboratories (DRL) and Alvogen Pine Brook, Inc. (Alvogen) are no longer prevented from selling, offering to sell, or importing their generic buprenorphine/naloxone sublingual film products. On February 20, 2019, Indivior announced that it had launched an authorized generic version of SUBOXONE® (buprenorphine and naloxone) Sublingual Film (CIII) in the U.S. It is possible that other generic manufacturers may also launch generic versions of SUBOXONE® Film following Indivior’s launch of this authorized generic. Indivior reached a definitive agreement (February 4, 2019) to divest rights related to SUBOXONE® Sublingual Tablets (Sai Bo Song™) in the People’s Republic of China to Zhejiang Pukang Biotechnology Co., Ltd. (Pukang) for total potential consideration of up to $122.5m based on achieving certain milestones. The agreement is subject to various closing conditions and is anticipated to close in Q4 2019. During the year, the Group announced its intention to implement a program to streamline the Group and reduce certain costs. This resulted in a further reduction in headcount of more than 120 employees in Q1 2019. Incremental costs to effect the savings will be reflected as an exceptional cost in Q1 2019.

130 www.indivior.com Information for shareholders

Useful contacts Shareholders have the opportunity to buy J.P. Morgan Transfer Agent Service Center Registered address or sell Indivior PLC shares using a share ADR Shareholders can contact: dealing facility operated by our Registrar, Indivior PLC J.P. Morgan Chase Bank N.A. Computershare. Internet and telephone 103-105 Bath Road, Slough, Berkshire, P.O. Box 64504, St. Paul, dealing is available via the Investor SL1 3UH, UK MN 55164-0854, US Centre (www.investorcentre.co.uk): Registered in England and Wales General inquiries ‹ Internet Dealing – the fee for this (company number: 9237894) service will be 1% of the value of each In the US: +1 (800) 990 1135 Website: www.indivior.com sale or purchase of shares (subject Outside the US: +1 (651) 453 2128 to a minimum of £30). Stamp duty of Email: [email protected] Company Secretary 0.5% is also payable on all purchases. Managing your shareholding Kathryn Hudson Before you trade you will need Investor Center Email: [email protected] to register for this service. This can be done by going online at Investor Centre is Computershare’s Registrar www.computershare.trade. easy to use self-service website Computershare Investor Services PLC (www.investorcentre.co.uk), available The Pavilions, Bridgwater Road, Bristol, ‹ Telephone Dealing – the fee for this 24/7, through which Company BS13 8AE, United Kingdom service will be 1% of the value of the shareholders can do the following: transaction plus £35. Stamp duty of Website: www.investorcentre.co.uk 0.5% is also payable on all purchases. ‹ amend personal details; Telephone: +44 (0) 370 707 1820 To use the service please call ‹ view payment and tax information; +44 (0)370 703 0084 and have your ‹ register for eComms; and Annual General Meeting (‘AGM’) Shareholder Reference Number The AGM will be held on May 8, 2019 at to hand. ‹ view share balances. the offices of Addleshaw Goddard LLP, These services are available eComms Milton Gate, 60 Chiswell Street, London Monday to Friday from 8am to 4.30pm All Indivior shareholders will be sent EC1Y 4AG. The Notice of Meeting, together (UK). Please note that, due to the with information regarding the business various Company communications, regulations in the UK, Computershare are such as the Annual Report and Accounts to be conducted at the meeting and required to check that you have read and results of voting, will be available and Notice of AGM. Our Registrar, accepted the Terms & Conditions before Computershare Investor Services PLC, on the Company’s website being able to trade, which could delay www.indivior.com. is responsible for sending you these your first telephone trade. If you wish communications as well as handling Shareholders are entitled to attend and to trade quickly, we suggest visiting the any queries you may have. vote at the AGM. Shareholders who are Registrar’s website and registering online registered for eComms, and receive first at www.computershare.trade. Indivior would like to invite you to join shareholder documents electronically, the growing number of its shareholders are permitted to cast their AGM vote American Depositary Receipts who have opted to receive their electronically. In addition to having its securities listed shareholder communications via email. on the London Stock Exchange, Indivior Registering for eComms means that you Documents on display sponsors a Level 1 American Depositary will receive information by email quickly Copies of Directors’ service contracts, Receipt program in the US. These ADRs and efficiently, and helps to assist us with Articles of Association and Terms of are publicly traded on a US over-the- our commitment to the environment and Reference will be available for inspection counter market, under symbol INVVY; focus on cost control. by shareholders at the AGM. the value of one Indivior ADR corresponds to the value of five By registering you will no longer receive ordinary shares of the Company. paper copies of Annual Reports or other Dealing in Indivior securities communications that are available Ordinary shares For questions related to the Company electronically, and instead will receive The Company has ordinary shares ADR Program, please contact J.P. Morgan emails advising you when and how to admitted to the Official List of the shareholder services on the details access documents online. Shareholders Financial Conduct Authority and traded below, or visit the J.P. Morgan Depositary who receive eComms are entitled on the London Stock Exchange, a Receipts Services website at to request a hard copy of any such regulated market. Live trading data for www.adr.com. document at any time free of charge from the Company’s ordinary shares can be the Company’s Registrar, and can also J.P. Morgan Depositary Bank accessed through www.indivior.com/ revoke their consent to receive eComms share-price-center, or via the London 4 New York Plaza, Floor 12 New York, NY at any time. Stock Exchange’s website 1004, US In the US: (866) JPM-ADRS Visit www.investorcentre.co.uk/ www.londonstockexchange.com. eComms to register for the eComms service, or alternatively contact Key dates Computershare via the telephone number under ‘useful contacts’. First Quarter Financial Results Announcement May 2, 2019 Annual General Meeting May 8, 2019 Half Year Financial Results Announcement July 31, 2019 Third Quarter Financial Results Announcement October 31, 2019 Note: dates may be subject to change

131 Indivior Annual Report 2018 131 Information for shareholders continued

Shareholder analysis Analysis of shareholder bands at December 31, 2018 Range No. of Shareholders % No. of Shares % 1 – 1,000 9,402 75.51% 3,007,076 0.41% 1,001 – 5,000 2,221 17.84% 4,537,570 0.62% 5,001 – 10,000 250 2.01% 1,762,003 0.24% 10,001 – 100,000 309 2.48 9,759,032 1.34% 100,001 – 999,999,999 269 2.16 709,375,972 97.38% Total 12,451 100% 728,441,653 100%

Analysis of shareholder categories as at December 31 2018 Holdings % Shares % Individuals 10,957 87.99% 11,240,644 1.54% Bank or Nominees 905 7.27% 409,058,135 56.16% Investment Trust 16 0.13% 64,995 0.01% Insurance Company 2 0.02% 37,127 0.01% Other Company 546 4.39% 169,958,202 23.33% Pension Trust 2 0.02% 6,501 0.00% Other Corporate Body 23 0.18% 138,076,049 18.95% Total 12,451 100% 728,441,653 100%

ShareGift Indivior PLC’s demerger from Boiler Room Scams We support ShareGift, a charity share Reckitt Benckiser Group plc (‘RB’) Shareholders are advised to be donation scheme (registered charity Base cost apportionment wary of any offers of unsolicited number: 1052686). This information is provided as indicative investment advice or offers of free Through ShareGift shareholders who guidance only. Indivior can accept no company or research reports. These have only a very small number of shares, responsibility for the use that may be are typically from overseas brokers who which might be considered uneconomic made of this information. Any individual target UK shareholders offering to sell to sell, are able to donate them to charity. wishing to calculate their capital gains them what often turn out to be worthless Donated shares are aggregated and tax should consult an appropriate and or high-risk shares in US or UK securities. sold by ShareGift, the proceeds being authorized professional adviser. If you receive any unsolicited investment passed on to a wide range of UK The demerger of Indivior PLC from RB advice you should firstly obtain the name registered charities. was approved by RB’s shareholders on of the person and organization and check Please contact ShareGift with any December 11, 2014, and completed with that they are properly authorized by the queries or for further information using the admission of Indivior securities to FCA before getting involved, by visiting the details below, or visit the ShareGift the London Stock Exchange at 8.00 am www.fca. org.uk/register. website at www.sharegift.org. on December 23, 2014. Shareholders Using an unauthorized firm to buy Email: [email protected] registered on the RB share register at the or sell shares or other securities Telephone: +44 (0)20 7930 3737 Demerger Record Time of 6.00 pm on will prohibit access to the Financial Address: PO Box 72253, London, December 22, 2014 received one Indivior Ombudsman Service or Financial Services SW1P 9LQ ordinary share for each RB ordinary Compensation Scheme. share held. Dividends For the purposes of taxation of The Board, as indicated in the prospectus chargeable gains, the base cost of RB for the demerger in November 2014, shares held immediately before the considered future dividend policy in the demerger is the companies’ respective light of the Company’s current financial market values on December 23, 2014. position, strategy and prospects. Given Using the valuation methodology the uncertainties facing the Group, prescribed by section 272(3) TCGA, the including generic challenges to the market values of RB and Indivior shares intellectual property of Suboxone® Film, were as follows: the level of gross debt together with the ‹ RB: £51.975 associated covenants and the need to seek to diversify the sources of revenue ‹ Indivior: £1.325 and cash-flow, the Company does not expect to pay ordinary dividends for the foreseeable future.

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