HispanicBusiness

(2) Adjusted

The term "adjusted" refers to the proportional consolidation of Litha's results. Given that Litha is being accounted for on a consolidated basis, the consolidated results include amounts attributable to minority shareholders. Consequently, adjusted results have been provided to highlight Paladin's 44.54% economic interest in Litha's results.

Conference Call Notice

Paladin will host a conference call to discuss its fourth quarter results today at 10:00 a.m. EST. The dial-in number for the conference call is 1-800-736-4594 or 416-981-9000. The call will be audio-cast live and archived for 30 days at www.paladinlabs.com.

About Paladin Labs Inc.

Paladin Labs Inc., headquartered in Montreal, Canada, is a specialty pharmaceutical company focused on acquiring or in-licensing innovative pharmaceutical products for the Canadian and world markets. With this strategy, a focused national sales team and proven marketing expertise, Paladin has evolved into one of Canada's leading specialty pharmaceutical companies. Paladin's shares trade on the Toronto Stock Exchange under the symbol PLB. For more information, please visit the Company's web site at www.paladinlabs.com.

This press release may contain forward-looking statements and predictions. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. The Company considers the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared, but cautions that these assumptions regarding the future events, many of which are beyond the control of the Company and its subsidiaries, may ultimately prove to be incorrect. Factors and risks, which could cause actual results to differ materially from current expectations, are discussed in the annual report as well as in the Company's Annual Information Form for the year ended December 31, 2011. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information or future events and except as required by law. For additional information on risks and uncertainties relating to these forward-looking statements, investors should consult the Company's ongoing quarterly filings, annual report and Annual Information Form and other fillings found on SEDAR at www.sedar.com.

CONSOLIDATED BALANCE SHEETS(In thousands of Canadian dollars)As at                                   December 31, 2012  December 31, 2011                                                        $                  $----------------------------------------------------------------------------ASSETS                                        (unaudited)       (audited(3))CurrentCash and cash equivalents                         118,744             72,115Marketable securities                             146,258            166,894Trade and other receivables                        38,587             20,208Inventories                                        37,441             13,327Income tax receivable                               5,479                718Other current assets                                1,661              1,476----------------------------------------------------------------------------Total current assets                              348,170            274,738Investment in associates                              626             20,850Interest in a joint venture                        30,476                  -Loans receivable from a joint venture              11,661                  -Financial assets                                    4,561              9,311Investment tax credits recoverable                 24,840             24,674Deferred income tax assets                         25,402             40,613Property, plant and equipment                       9,754                162Intangible assets                                 112,851             27,565Goodwill                                           36,176                  -----------------------------------------------------------------------------Total assets                                      604,517            397,913--------------------------------------------------------------------------------------------------------------------------------------------------------LIABILITIES AND EQUITYCurrentBank overdraft                                      7,044                  -Payables, accruals and provisions                  50,165             38,849Finance lease liability                               796                984Deferred revenue                                    2,734              2,999Income tax payable                                 24,140             22,205Other balances payable                              2,000              2,306Long-term liabilities                               5,804                  -----------------------------------------------------------------------------Total current liabilities                          92,683             67,343Finance lease liability                             6,843              5,745Deferred revenue                                    1,734              2,099Deferred tax liability                             24,415                  -Long-term liabilities                              28,327                  -----------------------------------------------------------------------------Total liabilities                                 154,002             75,187--------------------------------------------------------------------------------------------------------------------------------------------------------EquityShare capital                                     172,282            166,681Other paid-in capital                               7,039              5,144Other capital reserves                             (4,076)               553Retained earnings                                 208,461            150,348----------------------------------------------------------------------------Attributable to shareholders of the Company                                          383,706            322,726Non-controlling interests                          66,809                  -----------------------------------------------------------------------------Total equity                                      450,515            322,726----------------------------------------------------------------------------Total liabilities and equity                      604,517            397,913--------------------------------------------------------------------------------------------------------------------------------------------------------CONSOLIDATED INCOME STATEMENTS(In thousands of Canadian dollars except for share and per share amounts)                               Three months ended       Twelve months ended                                      December 31               December 31                                2012         2011         2012         2011                                   $            $            $            $----------------------------------------------------------------------------                         (unaudited)  (unaudited)  (unaudited) (audited(3))  Revenues                    67,608       37,083      210,200      141,466  Cost of sales               28,388       11,543       76,810       39,294----------------------------------------------------------------------------  Gross income                39,220       25,540      133,390      102,172----------------------------------------------------------------------------  Expenses (income)  Selling, general and   administrative             15,508        9,049       49,013       31,983  Research and   development                 1,813        3,628        7,794        9,773  Interest income             (2,123)      (1,089)      (5,460)      (7,296)----------------------------------------------------------------------------  Earnings before under-   noted items                24,022       13,952       82,043       67,712----------------------------------------------------------------------------  Amortization of   intangible assets           5,565        6,168       16,132       22,028  Depreciation of   property, plant and   equipment                     445           19          703          136  Other finance expense   (income)                      314          (70)       1,164       (8,687)  Other income                    71            -       (3,035)         (97)  Foreign exchange loss        1,089          284        1,211           80  Interest expense             1,225           18        2,181           18  Share of net loss from   a joint venture               (46)           -          725            -  Share of net income   from associates               (19)        (660)        (999)      (1,756)----------------------------------------------------------------------------  Income before income   tax and under-noted   items                      15,378        8,193       63,961       55,990----------------------------------------------------------------------------  Purchase gain on   business combination            -      (17,070)           -      (17,070)  Gain on revaluation of   equity investment               -            -      (12,294)           -  Restructuring,   shutdown and other   costs                           -        8,795            -        8,795----------------------------------------------------------------------------  Income before income   tax                        15,378       16,468       76,255       64,265  Provision for income   taxes                       3,958          696       17,900       14,114----------------------------------------------------------------------------  Net income for the   year                       11,420       15,772       58,355       50,151----------------------------------------------------------------------------  Attributable to:  Shareholders of the   Company                    12,834       15,772       59,906       50,151  Non-controlling   interests                  (1,414)           -       (1,551)           -----------------------------------------------------------------------------Attributable to shareholdersBasic earnings per share        0.63         0.78         2.94         2.51Diluted earnings per share                          0.61         0.76         2.86         2.43Weighted average number of shares outstandingBasic                     20,402,565   20,232,947   20,347,805   19,970,658Diluted                   20,963,327   20,849,408   20,946,178   20,659,276----------------------------------------------------------------------------CONSOLIDATED STATEMENTS OF CASH FLOWSPeriods ended December         Three months ended       Twelve months ended 31                             December 31, 2012         December 31, 2012(In thousands of Canadian dollars)              2012         2011         2012         2011                                   $            $            $            $----------------------------------------------------------------------------                         (unaudited)  (unaudited)  (unaudited) (audited(3))Operating activitiesNet income for the year       11,420       15,772       58,355       50,151Adjustments reconciling net income to operating cash flows  Amortization of   intangible assets           5,565        6,168       16,132       22,028  Deferred tax                 4,276       (1,144)      15,845        2,577  Share-based   compensation expense          966          438        3,216        1,946  Other finance expense   (income)                      318          (69)       1,164       (8,687)  Unrealized foreign   exchange loss (gain)        1,467          825        1,143           (7)  Gain on revaluation of   equity investment               -            -      (12,294)           -  Other income                    (3)           -       (2,838)           -  Depreciation of   property, plant and   equipment                     460           22          726          187  Share of net income   from associates               (19)        (660)        (999)      (1,756)  Share of net loss from   a joint venture               (46)           -          725            -  Purchase gain on   business combination            -      (17,070)           -      (17,070)  Restructuring,   shutdown and other   costs                           -        3,946            -        3,946----------------------------------------------------------------------------                              24,404        8,228       81,175       53,315----------------------------------------------------------------------------Net change in non-cash balances relating to operations                   (1,407)       3,913      (11,572)      14,798----------------------------------------------------------------------------Cash inflow from operating activities         22,997       12,141       69,603       68,113----------------------------------------------------------------------------Investing activitiesDisposals and maturities of marketable securities                   47,474       27,020      187,575       78,373Dividends from an associate                         -        1,980        3,319        2,871Proceeds from disposal of financial assets           5,785       13,109        6,620      102,119Proceeds from disposal of intangible assets            749            -        1,466            -Proceeds from disposal of property, plant and equipment                       180            -          220            -Acquisition of subsidiaries, net of cash acquired                    (2)      (1,109)     (42,358)      (1,109)Purchases of marketable securities                  (46,636)     (50,561)    (167,615)    (201,618)Purchases of financial assets                            -       (1,000)      (4,000)     (89,873)Payment of other balances payable                  -            -         (995)        (250)Purchases of property, plant and equipment            (926)          (9)      (1,453)         (78)Additions to intangible assets                       (1,004)           -       (1,111)      (7,617)Investment in an associate                         -            -            -       (2,936)----------------------------------------------------------------------------Net cash inflow (outflow) from investing activities          5,620      (10,570)     (18,332)    (120,118)----------------------------------------------------------------------------Financing activitiesCommon shares issued for cash, net of issue costs of $nil (2011: $1,643)                         127          880        1,478       41,918Increase in bank overdraft                       634            -        1,353            -Repurchase of shares               -         (259)      (2,278)        (580)Settlement of finance lease liability                   -            -       (3,366)           -Repayment of long-term liabilities                  (1,230)     (13,241)      (1,766)     (13,241)Payment of obligation under finance lease               -         (167)        (500)        (167)----------------------------------------------------------------------------Net cash (outflow) inflow from financing activities                     (469)     (12,787)      (5,079)      27,930----------------------------------------------------------------------------Foreign exchange gain (loss) on cash and cash equivalents                      12            -          437         (105)Increase (decrease) in cash and cash equivalents during the period                       28,160      (11,216)      46,629      (24,180)Cash and cash equivalents, beginning of period                    90,584       83,331       72,115       96,295----------------------------------------------------------------------------Cash, cash equivalents, end of period               118,744       72,115      118,744       72,115--------------------------------------------------------------------------------------------------------------------------------------------------------Paladin cash and cash equivalents                 113,229       72,115Paladin marketable securities                  146,258      166,894----------------------------------------------------------------------------Paladin cash, cash equivalents and marketable securities       259,487      239,009----------------------------------------------------------------------------Litha cash and cash equivalents                   5,515            -Litha bank overdraft          (7,044)           -----------------------------------------------------------------------------Litha cash and cash equivalents and bank overdraft                    (1,529)           -----------------------------------------------------------------------------Cash, cash equivalents and marketable securities net of bank overdraft                   257,958      239,009----------------------------------------------------------------------------   Reconciliation of the adjusted(2) consolidated results from operations                                                                 Adjusted(2)                                         Consolidated           consolidatedThree months ended                       results from     Litha results from December 31, 2012    Paladin Litha 100%   operations    44.54%   operations                            $          $            $         $            $----------------------------------------------------------------------------Revenues               40,509     27,099       67,608    12,070       52,579Cost of sales          12,023     16,365       28,388     7,289       19,312----------------------------------------------------------------------------Gross Income           28,486     10,734       39,220     4,781       33,267EBITDA(1)              21,833      2,189       24,022       975       22,808Net income (loss) before income taxes                 18,742     (3,364)      15,378    (1,498)      17,244Net Income (loss)      13,973     (2,553)      11,420    (1,137)      12,836Net Income (loss) attributable to shareholders          13,973     (1,139)      12,834    (1,139)      12,834----------------------------------------------------------------------------Twelve months ended                                              Adjusted(2) December 31, 2012                       Consolidated           consolidated                                         results from     Litha results from                      Paladin  Litha 100%  operations     44.54%  operations                            $          $            $         $            $----------------------------------------------------------------------------Revenues              153,873     56,327      210,200    25,088      178,961Cost of sales          44,112     32,698       76,810    14,564       58,676----------------------------------------------------------------------------Gross Income          109,761     23,629      133,390    10,524      120,285EBITDA(1)              76,521      5,522       82,043     2,459       78,980Net income (loss) before income taxes                 79,479     (3,224)      76,255    (1,436)      78,043Net Income (loss)      61,065     (2,710)      58,355    (1,207)      59,858Net Income (loss) attributable to shareholders          61,065     (1,159)      59,906    (1,159)      59,906----------------------------------------------------------------------------