ENVIRONMENTAL STATEMENT

Since the initial strategic review, the Company has committed to meeting its Corporate Social Responsibility in respect of the Environment and has gained recognition for this via the Green Dragon Level 5 award and SGS/UKAS ISO14001 accreditation. In October 2006 Penn was honoured to receive the Wales Award for Environmental Management Systems and Sustainability Reporting for business (over 50 employees) and the Blaenau Gwent Council Environment Award for Business. The EMS is an integrated system and method of working - with many cross-references to Health and Safety, Quality and GMP requirements. Environmental strategy is an established part of the business planning and budgeting process. We will further develop this strategy to ensure the impacts of our business processes on the Environment are controlled and managed as we continue to grow.

Comparisons based on activity and data monitored January to December 2005 and January to December 2006;

• 27% reduction in non-hazardous waste to landfill
• 2% reduction in water usage
• 0.5% reduction in total Co2 emissions
• 94% increase in recycling of wood, metal and plastics
• Improved management of energy usage relative to business growth
• Improved management of waste and investment in improved storage
• Increased employee involvement including re-use and re-cycling goals
• Skill development/increased awareness of Environmental issues

Related key business activity for the same period;

• Internal strategic review and re-organisation
• Business activity +16.5%
• Headcount increase +2%
• Increase in total hours worked

Further monitoring and review activities were also carried out;

• Confirmed continued compliance with Packaging Waste Obligations
• Compliance with WEE Regulations Implementation including SOP, segregation, supplier audit
• Improved inspection reports/actions implemented via utilisation of additional trained inspectors
• Implementation of COSHH improvement project – agreed plan in place, electronic system developed for MSDS centralised data storage.
• Update substance register – reviewed and updated, linked to MSDS system
Carbon Emissions (kgs) January 2006 – December 2006;

Targets and objectives (summary) 2007:

A brief outline of 2007 targets and objectives appear below;

T01/07 Continue to improve energy efficiency via energy plan and review of water systems.
T02/07 Monitor gas/electricity usage and implement improvement plan with
RUMM support
T03/07 Maintain/increase awareness of and involvement in Environmental issues and ensure responsibilities identified and measured
T04/07 Reduce waste to landfill -5%
T05/07 Complete implementation of COSHH improvement project

SUMMARY STATEMENT;

Penn Pharmaceutical Services Ltd continues to focus on managing the development of the ‘Green Dragon’ Award and ISO14001 compliance. In achieving its progress to date, it has worked closely with Arena Network, The Carbon Trust, Blaenau Gwent County Borough Council and the Environment Agency. Penn publishes its Environmental Policy statement on its website and copies are freely available to stakeholders. In line with our Corporate Social Responsibility strategy we are involved with a variety of projects including WAG, Go Wales, Kb4b, Dells, WQC and IWI programme. Corporate presentations highlight our Environmental responsibilities and activities. (See also Penn website for policy statement, responsibilities). In addition to the Green Dragon Award Level 5 and ISO14001 (SGS/UKAS) Penn has achieved the following over the past 3 years; Queen’s Award for Enterprise (International Trade) 2003, Sunday Times Tech Track 100 2003, Deloitte Fast 50 Award for 4 yrs running and IIP (Investors in People) 2003 and 2006.

Peter George
Chief Executive Officer

January 2007