Focused on 
development
Phytopharm plc
Annual Report and Accounts 2010
Phytopharm plc
Lakeview House
2 Lakeview Court
Ermine Business Park
Huntingdon
Cambridgeshire
PE29 6UA
United Kingdom
Tel: +44 (0)1480 437697
Fax: +44 (0)1480 417090
Email: info@phytopharm.com
Phytopharm plc Annual Report and Accounts 2010
_1_PHY_ar10_cover_[LP.SH].indd   1 26/01/2011   08:52:27 Phytopharm (LSE:PYM) is a development 
stage pharmaceutical company 
developing novel treatments targeting 
diseases with high unmet need. Our 
lead series of compounds has the 
potential to be a new class of therapy 
for neurodegenerative diseases.
Phytopharm has evolved its approach of developing 
products extracted from natural botanical sources to 
investigating single chemical entities. We will deliver 
key development milestones in the next two years. 
Phytopharm works as a virtual company and utilises a 
network of scientific and clinical experts to help guide 
our development projects.
Our objective is to develop products aimed at major markets 
to key value inflection points before seeking late‑stage development 
and commercial partners.
Visit us online
Our corporate website provides  
comprehensive information about our 
business including the latest news and 
investor information.
www.phytopharm.com
Registered office
Lakeview House 
2 Lakeview Court 
Ermine Business Park 
Huntingdon 
Cambridgeshire 
PE29 6UA
Phytopharm plc is a company registered in England and Wales, 
which is listed on the London Stock Exchange (symbol: PYM).
Company Secretary
Mrs Zoe McGowan
Company number
03131723
Registrars
Equiniti Registrars Limited
The Causeway 
Worthing 
BN99 6DA
Brokers
Peel Hunt LLP
111 Old Broad Street 
London 
EC2N 1PH
Independent auditors
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors 
Abacus House 
Castle Park 
Cambridge 
CB3 0AN
Solicitors
White & Case
5 Old Broad Street 
London 
EC2N 1DW
Financial public relations
FD
Holborn Gate 
26 Southampton Buildings 
London 
WC2A 1PB
Financial advisors
N M Rothschild & Sons Limited
New Court 
St Swithins Lane 
London 
EC4P 4DU
Shareholder information
Phytopharm’s commitment to environmental issues is reflected in this 
Annual Report and Accounts which has been printed on Revive 100, 
a recycled paper stock containing 100% recovered waste.
Ì
_1_PHY_ar10_cover_[LP.SH].indd   2 26/01/2011   08:52:29 Phytopharm plc 01 Annual Report and Accounts 2010
Business highlights
Operational
Ì  Recruitment of patients with Parkinson’s disease into 
the multi-national Cogane™ Phase II dose ranging study 
(CONFIDENT-PD) commenced in November 2010 
Ì  Positive headline results reported from a preclinical 
efficacy study of Cogane™ in the gold standard, 
preclinical model of Parkinson’s disease
Ì  Completion of a Phase IB safety, tolerability and 
pharmacokinetic clinical study of Cogane™ in healthy 
volunteers and Parkinson’s disease patients 
Ì  Initiation of development programme evaluating the 
potential of Cogane™ and Myogane™ in glaucoma
Ì  Cooperation agreement signed with the Council 
for Scientific and Industrial Research (“CSIR”), 
South Africa, who will fund the future development 
and commercialisation of Hoodia gordonii (“Hoodia”) 
as an appetite suppressant
Ì  Appointment of Tim Sharpington as Chief Executive Officer
Ì  Appointment of Roger Hickling as Research and 
Development Director 
Financial
Ì  £24.09 million (net of expenses) raised in December 2009 
through a Placing and Open Offer
Ì  Loss after tax of £3.80 million (FY 2009: £3.91 million)
Ì  Cash and money market investments of £23.61 million 
(FY 2009: £3.91 million)
Business overview
 IFC Who we are
 01  Business highlights
 02  Strategy and portfolio
Business review
 04  Chairman’s review 
 05  Chief Executive’s review
 08  Business review
 13  Financial review
Corporate governance
 16  Board of Directors
 17  Directors’ report
 23  Remuneration report
 29  Corporate governance
 34  Statement of Directors’ responsibilities
 35   Independent auditors’ report
Financial statements
 37   Consolidated statement 
of comprehensive income
 38   Consolidated and Company 
balance sheets
 39   Consolidated statement of changes 
in equity
 40  Company statement of changes 
in equity 
 41  Consolidated and Company 
cash flow statements
 42 Notes to the financial statements
 IBC Shareholder information
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FINANCIAL STATEMENTS
_1_PHY_ar10_front_[LP.SH].indd   1 26/01/2011   08:52:39 Phytopharm plc 02 Annual Report and Accounts 2010
Strategy and portfolio
Clinical development
Cogane
TM 
is currently being evaluated 
in a 400 patient multi-national Phase II, 
randomised, double blind, placebo 
controlled, dose ranging study 
(CONFIDENT-PD). The study is comparing 
the safety, tolerability and efficacy of three 
doses of Cogane
TM
 and placebo when 
administered for 28 weeks to untreated 
patients with early stage Parkinson’s disease. 
Parkinson’s disease is a movement disorder 
characterised by muscle rigidity, tremor 
and a slowing of physical movement 
(bradykinesia) and, in extreme cases, a loss 
of physical movement (akinesia). The primary 
symptoms are the result of altered signalling 
of an area of the brain, the striatum, 
responsible for the control of movement. 
Parkinson’s disease
Focused on neurodegeneration 
and inflammatory disease
Our products are single chemical entities 
with novel mechanisms of action protected 
by strong patent families.
Phytopharm has an exciting product pipeline with the 
potential to make a significant impact in the treatment 
of diseases that have limited therapeutic options.
Portfolio at a glance
Key development areas
Phytopharm has evolved its strategic direction of 
developing products extracted from natural botanical 
sources to investigating single chemical entities. Our 
products are sourced from our own research projects 
or are based on licensed products and technologies. 
_1_PHY_ar10_front_[LP.SH].indd   2 26/01/2011   08:52:40 Phytopharm plc 03 Annual Report and Accounts 2010
ALS P61 Legacy products
Glaucoma
Glaucoma is a multifactoral, progressive 
optic neuropathy that is characterised 
by a loss of retinal ganglion cells (“RGCs”) 
beyond typical age related baseline loss.
Published preclinical studies have shown 
that both BDNF and GDNF can protect 
RGCs both in vitro and in vivo.
Phytopica®
Phytopica® is a natural, three plant 
marketed product for canine skin health 
that provides a novel three in one 
approach to help maintain a normal 
healthy immune system, support normal 
white cell function and provide antioxidant 
benefits. Discussions are ongoing with 
potential partners regarding the future 
commercialisation of Phytopica.
ALS, also known as Lou Gehrig’s disease, 
is the most prevalent form of motor neurone 
disease which generally strikes people 
between 40 and 60 years of age. It is 
characterised by progressive loss of both 
lower (spinal cord and brain stem) and upper 
(cerebral cortex) motor neurones, which leads 
to severe muscle weakness and wasting, 
followed by paralysis and death, generally 
caused by respiratory failure.
The P61 programme was established by 
Phytopharm to investigate the known 
pharmacological properties of curcumin 
and gingerol. A medicinal chemistry 
programme has produced a series of 
synthetic new chemical entities (“NCEs”) 
with a range of attractive pharmacological 
properties. As with other compounds in 
the Phytopharm portfolio, this series has 
its origins based around compounds 
extracted from a plant source, but is 
now entirely synthetic in nature. 
Hoodia
The CSIR, one of the leading research and 
development, technology and innovation 
institutions in Africa, is now responsible 
for the further development and 
commercialisation of Hoodia for the 
management of obesity. 
Phytopharm will receive a share of future 
commercialisation income.
Other products
For more, visit us online
www.phytopharm.com
 
Phytopharm’s lead products, Cogane™ and Myogane™, 
are structurally related, small-molecule, chemical entities 
and members of the Sapogenin class of compounds. 
They are orally bioavailable neurotrophic factor inducers 
that readily cross the blood-brain barrier. Both compounds 
have demonstrated neuroprotective effects in a range 
of preclinical models.
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FINANCIAL STATEMENTS
_1_PHY_ar10_front_[LP.SH].indd   3 26/01/2011   08:52:40 Phytopharm plc 04 Annual Report and Accounts 2010
Mr Alistair Taylor Non-Executive Chairman
Chairman’s review
2010 was a year which saw some significant 
changes in Phytopharm’s business and outlook. 
The business is now focused solely on the 
development of its pharmaceutical pipeline. 
In December 2009 the Company completed 
an equity financing of £24.09 million net 
of expenses. This financing will allow the 
Company to make significant progress in 
the development of its product pipeline. 
This was followed by the appointment 
of a new management team headed by 
CEO Tim Sharpington and Research and 
Development Director Roger Hickling. Both 
Tim and Roger bring significant pharmaceutical 
and biotech industry experience. Having taken 
the decision to focus on our pharmaceutical 
products, the Company has curtailed 
expenditure on its functional food products 
and has subsequently restructured the 
business, reducing internal head count and 
costs. Phytopharm now operates as a virtual 
biotech company. With a strong financial 
position and a product pipeline reaching key 
development milestones in the next two years, 
Phytopharm is well placed to deliver value to 
shareholders in the coming period.
Mr A Taylor
Non-Executive Chairman
“ In December 2009 the 
Company completed an equity 
financing of £24.09 million 
net of expenses. This 
financing will allow the 
Company to make significant 
progress in the development 
of its product pipeline.”
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FINANCIAL STATEMENTS
Phytopharm plc 05 Annual Report and Accounts 2010
Chief Executive’s review
I was delighted to join Phytopharm in July 2010. 
The Company has an exciting product pipeline 
with the potential to make a significant impact 
in the treatment of diseases that presently 
have limited therapeutic options. Since joining 
I have been working with the Board and the 
Phytopharm team to put in place the plans to 
turn that potential into reality. We now have a 
number of programmes underway which will 
deliver key development milestones in the next 
two years. If results from these studies 
continue to be positive, the Company will be in 
a good position to further exploit and increase 
the value of our products in partnership with 
larger pharmaceutical companies and generate 
value for shareholders.
Good progress has been made with our lead 
programme, Cogane™, in Parkinson’s disease. 
In 2009 the Company received data from a 
key non-clinical study which underlined the 
product’s potential and has generated much 
interest and excitement amongst leading 
scientists, neurologists and patient groups in 
the Parkinson’s disease community. If this result 
is replicated in clinical trials, it will provide a 
major breakthrough in the treatment of this 
condition. Since then we have completed 
a Phase I safety study in healthy volunteers 
and patients and have initiated a large, dose 
ranging Phase II study in patients with early 
stage Parkinson’s disease. The study is being 
conducted at leading neurology centres in 
North America and Europe. We are making a 
significant investment into this study to ensure 
that Cogane™ is evaluated against study 
endpoints which fulfil regulatory obligations 
as well as demonstrating medically and 
commercially meaningful results. This study 
will take two years to complete, with results 
due by the end of 2012. If successful, it will 
allow the project to be rapidly progressed 
into registration studies either by 
Phytopharm or in partnership with 
a larger pharmaceutical company.
Cogane™, and its structurally related compound 
Myogane™, have demonstrated neuroprotective 
and neurorestorative properties in a range of 
cell types and industry-standard in vivo models. 
Mr Tim Sharpington Chief Executive Officer
In summary
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“  Over the past year we have 
re-focused the business onto 
the development of our 
pharmaceutical pipeline.”
_1_PHY_ar10_front_[LP.SH].indd   5 26/01/2011   08:52:41 Phytopharm plc 06 Annual Report and Accounts 2010
Chief Executive’s review continued
This leads us to believe that these compounds 
have potential utility in a number of 
neurodegenerative conditions in addition to 
Parkinson’s disease. We have recently initiated 
studies in glaucoma, a degenerative eye 
condition and amyotrophic lateral sclerosis, the 
most common form of motor neurone disease. 
Both programmes will evaluate the efficacy 
of our products in key in vivo models of these 
conditions. As both Cogane™ and Myogane™ 
have completed required preclinical safety 
studies and clinical Phase I clinical safety 
studies, rapid progression to clinical Phase II 
efficacy studies in these indications will be 
possible if the preclinical results are positive. 
Neurodegeneration is an attractive target 
for pharmaceutical treatment and many 
approaches to tackling this process, which 
is fundamental to many diseases, are being 
developed, including gene therapy and stem 
cell therapy. The fact that Cogane™ and 
Myogane™ are small molecule therapies, 
suitable for once-daily oral dosing with the 
potential to induce the production of innate 
neurotrophic factors, makes them particularly 
attractive. Small molecule treatments have 
a well described regulatory development 
pathway and are relatively simple to produce 
and administer, producing attractive 
therapeutic and commercial options.
In addition to Cogane™ and Myogane™, we 
have re-activated a programme investigating 
a new class of compounds called P61. These 
early stage compounds have anti-inflammatory, 
anti-remodelling, anti-spasmodic and TRPv-1 
modulating activities. This range of activities 
point to potential utility in a number of 
inflammatory therapeutic categories, including 
respiratory diseases, dermatological conditions, 
gastro-intestinal disorders and pain. We will 
further evaluate these compounds over the 
coming year.
Over the past year we have re-focused 
the business onto the development of our 
pharmaceutical pipeline. Following the receipt 
of the promising results generated from 
Cogane™ and the subsequent fundraising, 
an evaluation of the Group’s assets concluded 
that there was a higher chance of generating 
“ We now have a number of programmes 
underway which will deliver key development 
milestones in the next two years.”
value for shareholders by investing all of our 
resources in our pharmaceutical assets. As a 
result, we have curtailed all expenditure of 
Phytopharm’s functional food products. With 
regard to Hoodia our weight loss food product 
previously licensed to Pfizer Inc and unilever, we 
have entered into a cooperation agreement with 
the CSIR. This is the South African Government 
sponsored body from whom Phytopharm 
originally licensed the patents supporting 
Hoodia development. The CSIR will evaluate 
the data generated by Phytopharm and its 
partners with an aim to further developing 
and commercialising weight loss products 
based on Hoodia. In return for transferring our 
intellectual property and know-how relating to 
Hoodia, Phytopharm will receive a share of any 
future commercial milestones and royalty on 
sales. Our canine atopic dermatitis product, 
Phytopica, has been promoted by Intervet/
Schering Plough Animal Health over the last 
few years. Sales have been disappointing and 
the agreement with Intervet/Schering Plough 
terminated at the end of December 2010. 
We are in discussions with other potential 
commercial partners for this product. 
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Phytopharm plc 07 Annual Report and Accounts 2010
The building blocks are therefore in place 
to make significant progress over the coming 
period. Phytopharm has a three year cash 
runway and we will invest in our product pipeline 
to deliver key development milestones during 
this period. If successful, we are confident that 
our products will have demonstrated their 
potential to make a major impact, medically 
and commercially, in a number of therapeutic 
indications. We will continue to keep you 
informed of our progress. Finally I would like 
to thank our shareholders for their continued 
support of Phytopharm.
Mr T Sharpington 
Chief Executive Officer
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Significant progress in product pipeline development
A large dose ranging Phase II study in 
patients with early stage Parkinson’s disease 
has been initiated.
“ Cogane
TM
 and Myogane
TM
 have 
potential utility in a number of 
neurodegenerative diseases in 
addition to Parkinson’s disease.”
We are not planning to invest further in these 
functional food products and as a result we 
have downsized the Company and therefore 
a number of staff who had been working 
on these programmes have left us. We thank 
them for their help and support. The resulting 
savings will allow further investment in our 
pharmaceutical products.
When looking at the wider pharmaceutical 
industry environment we believe that there 
are good prospects if our assets continue to 
demonstrate encouraging results. Most major 
pharmaceutical companies are facing erosion 
of their product sales associated with patent 
expiries. Most are committed to replenishing 
their product pipeline by a mixture of in-house 
development and licensing/acquisition of 
products with proven efficacy.
v isit our investor centre
www.phytopharm.co.uk/
investors
_1_PHY_ar10_front_[LP.SH].indd   7 26/01/2011   08:52:42 Phytopharm plc 08 Annual Report and Accounts 2010
in Parkinson’s disease patients, as well as securing 
approval from regulatory authorities allowing the 
commencement of our multi-national Phase II 
CONFIDENT-PD clinical study. 
Recruitment of patients with Parkinson’s disease 
into this study commenced in November 2010. 
The study is being conducted in leading 
movement disorder centres in North America and 
Europe. The Company anticipates that results from 
the study will be available by the end of 2012.
During the year, the Board was delighted to 
welcome Tim Sharpington as Chief Executive 
Officer and Roger Hickling as Research and 
Development Director. These appointments 
strengthen our ability to drive our research and 
development programmes forward following 
our successful fundraising activities.
We have continued to limit expenditure 
to our two legacy programmes, Hoodia 
and Phytopica®. We have been able to enter 
into a cooperation agreement with the CSIR 
for the future development of the Hoodia 
programme and we are progressing discussions 
on a number of opportunities for Phytopica®. 
Our pipeline has been sourced from our own 
research activities and from licensing activities, 
particularly from leading research institutions 
in China with whom the Company has 
long-standing relationships.
Our objective is to develop products aimed at 
major markets with high unmet medical need 
to key value inflection points before seeking 
late-stage development and commercial 
partners as appropriate. We will consider 
retaining certain rights to products targeting 
orphan indications.
Overview
In December 2009, Phytopharm successfully 
completed a Placing and Open Offer securing 
significant investment of £24.09 million net of 
expenses, providing a robust balance sheet to 
progress our promising pharmaceutical pipeline.
Following the equity fundraising, we have 
progressed our strategy of focusing on our 
pharmaceutical programmes, specifically on the 
development of Cogane™ for Parkinson’s disease. 
During the year, we reported promising results 
with Cogane™ in a preclinical model and in a 
safety, tolerability and pharmacokinetic study 
Strategy
Phytopharm is a development stage 
pharmaceutical Company developing novel 
treatments targeting diseases with high levels 
of unmet need. Our lead series of compounds, 
the Sapogenins (including Cogane™ and 
Myogane™), has the potential to be a new class 
of therapy for neurodegenerative diseases 
including Parkinson’s disease, motor neurone 
disease and glaucoma.
Phytopharm’s strategic direction has evolved 
from developing products extracted from 
natural botanical sources to investigating 
single chemical entities. 
Phytopharm operates as a virtual company. 
We utilise a network of scientific and clinical 
experts to help guide our development 
projects with our experienced pharmaceutical 
managers overseeing operations.
Our commercially focused development 
projects have the potential to produce 
significant treatment advances in our target 
areas of neurodegeneration and inflammatory 
disease. Our products are single chemical 
entities with novel mechanisms of action 
protected by strong patent families. 
Business review
Development projects with the potential 
to produce significant treatment advances 
in our target areas of neurodegeneration 
and inflammation
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Phytopharm plc 09 Annual Report and Accounts 2010
Pharmaceutical programmes
The Sapogenins
Phytopharm’s lead products, Cogane™ and 
Myogane™, are structurally related, small 
molecule, chemical entities and members 
of the Sapogenin class of compounds. They are 
orally bioavailable neurotrophic factor inducers 
that readily cross the blood-brain barrier. Both 
compounds have demonstrated neuroprotective 
effects in a range of preclinical models. 
Specifically, Cogane™ and Myogane™ have been 
shown to induce and modulate the production 
of neurotrophic factors. 
Both compounds have completed long term 
toxicology studies, have been formulated as 
once daily, orally administered therapies and 
have completed Phase I studies demonstrating 
good bioavailability and safety profiles.
Cogane™ is being studied in a Phase II trial of 
early stage Parkinson’s disease and in preclinical 
models of amyotrophic lateral sclerosis (“ALS”, 
also known as Lou Gehrig’s disease). It has also 
been evaluated for safety and tolerability in 
patients with Alzheimer’s disease.
Additionally, Cogane™ and Myogane™ 
are being assessed in preclinical models of 
glaucoma, a neurodegenerative disease of the 
eye, and, if results are encouraging, have the 
potential to be progressed rapidly into clinical 
proof of concept studies.
The neuroprotective and neurotrophic actions 
of Cogane™ suggest potential beneficial effects 
in other orphan neurodegenerative diseases.
Neurodegeneration
Neurodegeneration is the umbrella term for 
the progressive loss of structure, function or 
death of neurones. Many neurodegenerative 
diseases including Parkinson’s disease, ALS, 
glaucoma and Alzheimer’s disease occur as 
a result of neurodegenerative processes that 
exhibit many similarities suggesting that these 
diseases are related on a sub-cellular level. 
Because of the similarities in neurodegeneration 
across this range of diseases, there is hope that 
therapeutic advances, such as Cogane™ and 
Myogane™, could be beneficial in more than 
one of these diseases.
Cogane™ in Parkinson’s disease 
Parkinson’s disease is a movement disorder 
characterised by muscle rigidity, tremor and 
a slowing of physical movement (bradykinesia) 
and, in extreme cases, a loss of physical 
movement (akinesia). The primary symptoms 
are the result of altered signalling of an area 
of the brain, the striatum, responsible for 
the control of movement. This is caused by 
degeneration of dopaminergic neurones 
between the substantia nigra and the striatum 
parts of the brain, leading to insufficient 
formation and action of dopamine. Parkinson’s 
disease is therefore termed a neurodegenerative 
disease. The disease is slow in onset and the 
appearance of symptoms reflects the gradual 
loss of dopaminergic neurones.
The prevalence of Parkinson’s disease is 
estimated at being 0.3% in the whole 
population in industrialised countries, rising to 
1% in those over 60 years of age and to 4% 
of the population over 80. The market size for 
Parkinson’s disease was $3.2 billion in 2009 and 
is forecast to grow to $4.6 billion by 2012.
_1_PHY_ar10_front_[LP.SH].indd   9 26/01/2011   08:52:42 Phytopharm plc 10 Annual Report and Accounts 2010
Business review continued
We have also shown in preclinical models that 
administration of Cogane™ in conjunction with 
L-dopa (the standard treatment for Parkinson’s 
disease) resulted in improved control of 
symptoms compared to those treated with 
L-dopa alone. These data continue to support 
the development of Cogane™ as an exciting 
new and potentially disease-modifying therapy 
for Parkinson’s disease. 
In addition to its effects in preclinical models 
of Parkinson’s disease, Cogane™ has shown 
efficacy in preclinical models of cognitive 
impairment and so may have utility in treating 
the non-motor symptoms of Parkinson’s disease. 
Clinical
Four Phase I studies have evaluated Cogane™ 
in healthy adults and Parkinson’s disease patients 
for up to 28 days. In these studies, daily, oral 
administration of Cogane™ was well tolerated 
with a good overall safety profile. In a recently 
completed Phase Ib safety, tolerability and 
pharmacokinetic clinical study in both healthy 
volunteers and Parkinson’s disease patients, 
Cogane™ was shown to be safe and generally 
well tolerated over the 28 day study period. 
Pharmaceutical programmes
continued
Mode of action
Glial derived neurotrophic factor (“GDNF”) and 
brain derived neurotrophic factor (“BDNF”) 
have been shown to be effective in re-growing 
damaged nerves. Since they are proteins, they 
cannot be given orally (in tablet or liquid form) 
because they are degraded in the stomach 
and intestine, and also do not readily cross the 
blood-brain barrier. GDNF and BDNF can work 
only when injected into, or when produced 
inside the brain. Direct injection of GDNF into 
the area of the brain involved in Parkinson’s 
disease has shown evidence of being clinically 
effective in restoring the control of movement 
but requires highly complex and difficult 
surgical procedures. Cogane™ has the 
potential to overcome many of the difficulties 
associated with GDNF administration. 
In preclinical models, Cogane™ stimulated the 
release of GDNF and BDNF in the brain and 
increased neurite outgrowth. When administered 
orally in several different preclinical models of 
Parkinson’s disease, Cogane™ reversed the 
decrease of neurotrophic factors and reversed 
the loss of dopaminergic neurones in the 
striatum, the area of the brain most affected 
in Parkinson’s disease. 
Progress to date
We have made significant progress 
demonstrating that, in preclinical models 
of Parkinson’s disease, Cogane™ reverses the 
damage to dopamine-containing neurones 
and elevates GDNF and BDNF in the area 
of the brain involved in Parkinson’s disease. 
In a recently completed preclinical study, 
oral administration of Cogane™ over 18 weeks 
significantly reduced parkinsonian disability 
by 43% in the gold standard preclinical model 
of Parkinson’s disease research (MPTP-induced 
Parkinson’s disease model), which will be 
clinically highly relevant if repeated in 
Parkinson’s disease patients. Encouragingly, 
in this study a statistically significant reduction 
in parkinsonian symptoms was reached after 
nine weeks of administration with Cogane™. 
The magnitude of the effect increased over 
the subsequent nine weeks of administration 
and was still increasing at the end of the study 
(week 18). Data from this study suggests that 
the mechanism underlying these effects 
is considerably more complex than originally 
envisaged. This study was supported by the 
Michael J Fox Foundation and further work 
in this area is ongoing.
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Phytopharm plc 11 Annual Report and Accounts 2010
It is estimated that over 30,000 patients 
are diagnosed with ALS in the seven major 
markets. ALS is classified as an orphan 
disease and, as such, offers the potential 
for expedited development.
Progress to date
In preclinical studies, Cogane™ protects spinal 
motor neurones from glutamate-induced 
neuronal damage, increases neurite outgrowth 
and has also been shown to increase lifespan 
and improve muscle strength and coordination 
in several different models of ALS. With the 
support of the Motor Neurone Disease 
Association, a leading uK charity, we are 
undertaking work in additional preclinical 
models of ALS. If positive, these studies will 
facilitate rapid progression to clinical trials.
As noted in the Parkinson’s disease section, 
Cogane™ has been evaluated in a number 
of Phase I studies and shown to be generally 
safe, well tolerated and orally bioavailable.
Glaucoma
Glaucoma is a multifactoral, progressive optic 
neuropathy that is characterised by a loss of 
retinal ganglion cells (“RGCs”) beyond typical 
age related baseline loss.
Importantly at day 28, plasma levels of Cogane™ 
in Parkinson’s disease patients reached levels 
associated with efficacy in the preclinical 
efficacy study. 
Cogane™ is currently being evaluated in a 
400 patient multi-national Phase II, randomised, 
double blind, placebo controlled, dose ranging 
study (CONFIDENT-PD). The study is comparing 
the safety, tolerability and efficacy of three 
doses of Cogane™ and placebo when 
administered for 28 weeks to untreated 
patients with early stage Parkinson’s disease. 
Cogane™ in motor neurone 
disease/ALS 
ALS, also known as Lou Gehrig’s disease, is the 
most prevalent form of motor neurone disease 
which generally strikes people between 40 
and 60 years of age. It is characterised by 
progressive loss of both lower (spinal cord and 
brain stem) and upper (cerebral cortex) motor 
neurones, which leads to severe muscle weakness 
and wasting, followed by paralysis and death, 
generally caused by respiratory failure. There is 
an urgent need for the development of new 
approaches to this devastating condition. 
Glaucoma is the second most common cause 
of worldwide blindness (after cataracts) with 
approximately 60 million sufferers worldwide. 
This figure is expected to rise to 80 million by 2020. 
In the uSA, the prevalence of primary open-angle 
glaucoma, the most common form of glaucoma, 
in people over 40 years of age is 1.86%.
Elevated intraocular pressure (“IOP”) is an 
important risk factor for glaucoma and has 
remained a clinical focus for several years, 
however, 20–30% of patients with glaucoma 
have a normal IOP. Additionally, there are 
people who have raised IOP who do not 
develop glaucoma. Even in patients treated 
with IOP-lowering therapies the annual 
progression rate of the disease is 
~
10%. 
Therefore, drugs that treat the underlying 
neuropathy are needed. 
Published preclinical studies have shown that 
both BDNF and GDNF can protect RGCs both 
in vitro and in vivo. Furthermore, co-application 
of BDNF and GDNF provided a better level of 
protection than either factor used individually. 
As Cogane™ and Myogane™ stimulate the 
release of BDNF and GDNF, they are potential 
treatments for glaucoma.
Cogane
TM
 and Myogane
TM
, our lead neurodegenerative products
Structurally related, small molecule, chemical entities 
and members of the Sapogenin class of compounds.
Ì   Induce and modulate the production 
of neurotrophic factors
Ì   Completed long term 
toxicology studies
Ì   Demonstrated good bioavailability 
and safety profile
_1_PHY_ar10_front_[LP.SH].indd   11 26/01/2011   08:52:42 Phytopharm plc 12 Annual Report and Accounts 2010
Business review continued
“ Our objective is to develop products aimed at major 
markets with high unmet medical need to key value 
inflection points before seeking late-stage development 
and commercial partners as appropriate.”
Legacy products 
Hoodia programme
The CSIR, one of the leading research and 
development, technology and innovation 
institutions in Africa, is now responsible for the 
further development and commercialisation 
of Hoodia for the management of obesity. 
The CSIR will collaborate with national and 
regional stakeholders, and has the full support 
of the South African San Council for future 
developments. Phytopharm is committed 
to support this development effort through 
the contribution of supporting intellectual 
property and the transfer of technical 
know-how. In return, Phytopharm will receive 
a share of future commercialisation income.
Phytopica®
Phytopica® is a natural, three plant marketed 
product for canine skin health that provides 
a novel three in one approach to help maintain 
a normal healthy immune system, support 
normal white cell function and provide 
antioxidant benefits. Intervet/Schering Plough 
Animal Health will continue to market Phytopica® 
until 31 December 2010. Discussions are ongoing 
with potential partners regarding the future 
commercialisation of Phytopica.
Pharmaceutical programmes
continued
Alzheimer’s disease
Cogane™ and Myogane™ protect cortical 
neurones from glutamate and ß-amyloid 
induced neuronal damage and increase neurite 
outgrowth in vitro. Cogane™ and Myogane™ 
also increase the density of muscarinic 
receptors both in vitro and in vivo. In vivo, 
Cogane™ and Myogane™ improve cognition 
in the aged rat and ß-amyloid/ibotenic acid 
rat model of Alzheimer’s disease.
The safety, tolerability and pharmacokinetics 
of orally administered Cogane™ in patients 
with Alzheimer’s disease has previously been 
assessed in a twelve week study. Cogane™ was 
generally well tolerated in this patient group. 
Further work may be undertaken in this area 
if additional resources become available.
P61 Programme
The P61 programme was established by 
Phytopharm to investigate the known 
pharmacological properties of curcumin and 
gingerol. A medicinal chemistry programme 
has produced a series of synthetic new 
chemical entities (“NCEs”) with a range 
of attractive pharmacological properties. 
As with other compounds in the Phytopharm 
portfolio, this series has its origins based 
around compounds extracted from a plant 
source, but is now entirely synthetic in nature. 
The chemical series contains molecules which 
exhibit the following activities:
Ì Anti-inflammatory 
Ì Anti-spasmodic
Ì Anti-remodelling 
Ì TRPv1 modulatory activity
These activities have potential utility in a 
number of inflammatory indications including 
chronic obstructive pulmonary disease, asthma, 
atopic dermatitis, psoriasis, gastrointestinal 
inflammatory conditions and pain.
We are conducting preclinical studies on 
this series of compounds with a view to 
establishing one or more compounds for 
progression into development.
_1_PHY_ar10_front_[LP.SH].indd   12 26/01/2011   08:52:42 Bu SINESS Ov ERv IEW
Bu SINESS REv IEW
CORPORATE GOv ERNANCE
FINANCIAL STATEMENTS
Phytopharm plc 13 Annual Report and Accounts 2010
Building shareholder value
The fundraising in December 2009 has provided the resources to progress 
the development of our pharmaceutical programmes.
Financial review
Income statement
The revenue from continuing operations for 
the year of £0.70 million (2009: £0.87 million) 
was principally generated from our residual 
functional food programmes.
under certain collaboration agreements, 
funding was provided for development 
activities and certain of our employees. 
The majority of these activities are now 
completed resulting in revenue for the year 
of £0.51 million (2009: £0.57 million).
Sales of Phytopica® continue to be disappointing 
and during the year we agreed with Intervet/
Schering Plough to terminate our agreement 
for the product and we are exploring further 
opportunities for the product. Revenue from 
Intervet/Schering Plough during the year 
amounted to £0.06 million. Sales of Phytopica® 
during the year amounted to £0.01 million 
(2009: £0.14 million). 
We continued to reduce our inventory of raw 
materials during the year realising revenue 
of £0.12 million (2009: £0.16 million). 
Other income during the year represents 
funding from the Michael J Fox Foundation 
for preclinical development work on Cogane™ 
completed during the year.
The financial performance for the year ended 
30 September 2010 reflects the Group’s 
ongoing pharmaceutical development and 
residual functional food activities.
Cash flow
The Company ended the year with £23.61 million 
of cash and money market investments. The 
£24.09 million (net of expenses) fundraising 
approved by shareholders in December 2009 
strengthened our balance sheet significantly 
and has provided the resources to progress the 
development of our pharmaceutical programmes.
The net cash used in operating activities 
for the year ended 30 September 2010 was 
£4.44 million, an increase from £3.40 million 
in the prior year, reflecting the Group’s 
continuing focus on the development of its 
lead programme, Cogane™, in Parkinson’s 
disease. The Group’s focus remains on building 
shareholder value by effective progression 
of its innovative pharmaceutical programmes. 
We expect our net cash outflow to increase 
in 2011 to continue the development of our 
pharmaceutical programmes, primarily 
Cogane™ in a Phase II proof of concept and 
dose range finding clinical study. We also 
intend to maintain our strong links with disease 
specific charities which may result in additional 
charitable funding being available.
Cost of sales for the year amounted to 
£0.09 million (2009: £0.19 million) and 
comprised the costs of the inventories sold 
during the period, the costs of the raw 
materials and the manufacture of Phytopica®.
Research and development costs for the 
year amounted to £4.01 million compared to 
£3.91 million in the previous year reflecting the 
focus on progressing Cogane™ into the next 
stage of development following the successful 
fundraising during the year. 
Our administrative costs before exceptional 
items remained constant at £1.12 million for 
the year (2009: £1.12 million). Administrative 
costs for the year were also £1.12 million 
(2009: £1.39 million). Exceptional costs of 
£0.41 million were recognised in the year ended 
30 September 2009 in respect of former 
executive directors and restructuring costs.
Our overall operating loss before tax was 
£4.50 million compared to £4.38 million 
for the previous year.
Our interest received increased to £0.29 million 
compared to £0.18 million for the year ended 
30 September 2009 due to increased cash 
balances following the fundraising activities 
during the year. 
_1_PHY_ar10_front_[LP.SH].indd   13 26/01/2011   08:52:43 Phytopharm plc 14 Annual Report and Accounts 2010
Financial review continued
Income statement continued
The tax credit of £0.41 million (2009: £0.29 million) 
represents amounts that are expected to be 
received under current legislation on research 
and development tax credits. The increase for 
the year is due to increased expenditure on the 
unfunded development activities primarily 
in relation to the Cogane™ programme. 
Balance sheet
Non-current assets representing property, plant 
and equipment and intangible assets decreased 
from £0.20 million at 30 September 2009 to 
£0.11 million at 30 September 2010. Property, 
plant and equipment amounted to £0.11 million 
at 30 September 2010 (2009: £0.10 million).
Intangible assets represent patent and 
know-how licences acquired externally that 
have been recognised as an asset at cost. 
At each balance sheet date we review the 
carrying amount of our intangible assets to 
determine whether there are any indications 
that these assets have suffered an impairment 
loss. Following a review at 31 March 2010, 
an impairment charge of £0.10 million was 
recorded to write down to £nil the carrying 
value of the intangible assets (2009: £0.10 million). 
These assets were fully impaired as a result 
of our strategic focus on specific chemical 
entities as pharmaceutical products.
Current assets comprise inventories, trade 
and other receivables, tax receivable, money 
market investments and cash and cash 
equivalents which increased from £4.68 million 
at 30 September 2009 to £24.50 million at 
30 September 2010.
Money market investments together with cash 
and cash equivalents at 30 September 2010 
increased by £19.70 million due to the equity 
fundraising completed during the year offset 
by cash outflows from operating and investing 
activities. Money market investments represent 
fixed-rate, short-term deposits placed with a 
range of banks at fixed terms with a maturity 
date of more than three months. Cash and 
cash equivalents are invested for a period 
of 90 days or less. 
During the year we have completed the sale 
of all our existing inventory of raw materials. 
In addition, we have written off our inventory 
of work in progress to the value of £0.13 million 
(2009: £nil) resulting in a carrying value of £nil 
(2009: £0.13 million), due to the disappointing 
sales of Phytopica® and the termination of our 
agreement with Intervet/Schering Plough. 
Current tax receivable has increased from 
£0.29 million at 30 September 2009 to 
£0.41 million at 30 September 2010 due 
to increased expenditure on our qualifying 
pharmaceutical programmes.
Current liabilities decreased to £1.13 million 
at 30 September 2010 (2009: £1.75 million) 
principally due to the recognition as revenue 
of previously deferred revenue during the year.
The increase in ordinary shares and share 
premium reflects the equity fundraising 
completed in December 2009.
“ The financial performance for the year ended 
30 September 2010 reflects the Group’s ongoing 
pharmaceutical development and residual functional 
food activities.”
_1_PHY_ar10_front_[LP.SH].indd   14 26/01/2011   08:52:43 Bu SINESS Ov ERv IEW
Bu SINESS REv IEW
CORPORATE GOv ERNANCE
FINANCIAL STATEMENTS
Phytopharm plc 15 Annual Report and Accounts 2010
Outlook
In line with our virtual operational structure, 
we continue to outsource the majority of our 
operations to specialist external organisations 
enabling us to operate with a low headcount 
and minimal infrastructure. This lean 
operational structure confers substantial cost 
and technical benefits as the nature and range 
of our activities change as our programmes 
progress through the various stages of 
development. Efficiency and cost control 
continue to be a key focus. 
Forward looking statements
Certain information included in these statements 
is forward looking and involves risk and 
uncertainties that could cause results to differ 
materially from those expressed or implied 
by the forward looking statements. 
Forward looking statements include, without 
limitation, projections relating to results of 
operations and financial conditions, market 
estimates, the Company’s plans and objectives 
for future operations, including future revenues, 
financial plans and expected expenditures and 
divestments. All forward looking statements 
in this report are based on information known 
to the Company on the date of this release. 
The Company undertakes no obligation to 
publicly update or revise any forward looking 
statement, whether as a result of new 
information, future events or otherwise.
It is not reasonably possible to itemise all 
of the many factors and specific events that 
could cause the Company’s forward looking 
statements to be incorrect or that could 
otherwise have a material adverse effect 
on the future operations or results of 
the Company.
“  Outsourcing our operations to specialist 
external organisations enables us to 
operate with a low headcount and 
minimal infrastructure.”
_1_PHY_ar10_front_[LP.SH].indd   15 26/01/2011   08:52:43 Phytopharm plc 16 Annual Report and Accounts 2010
Board of Directors
Mr Alistair Taylor
Non-Executive Chairman
Mr Taylor is formerly Executive Chairman of uK listed Lombard 
Medical Technologies plc and has over 46 years’ experience 
in the healthcare industry; 11 years in pharmaceuticals and over 
35 years in medical devices. He was Chief Executive Officer of 
Biocompatibles International plc from 1994 to 1998 and during this 
period the Company progressed from a technology-based start up 
company, through flotation to a FTSE 250 company. Prior to this, 
Mr Taylor was Chief Executive Officer of Schneider Inc, a Swiss 
interventional cardiology/radiology device company and during 
this time the Company’s turnover grew to $100 million. Schneider 
was subsequently sold by Pfizer Inc., its parent, for over $2 billion. 
Mr Taylor’s early career included the Chief Accountant role 
at Beecham Pharmaceuticals. He is also Chairman of 
Starbridge Systems Limited and Nightingale-EOS Limited.
Mr Tim Sharpington
Chief Executive Officer
Mr Sharpington has nearly 20 years’ experience in the life sciences 
sector with various biotechnology and pharmaceutical service 
companies in Europe and the uSA. He has broad experience across 
drug development, in-licensing, mergers and acquisitions as well as 
fundraisings. In 2002, Mr Sharpington was appointed as Development 
Director at Arakis Ltd, a uK based inflammatory and CNS focused 
company where he led the development of four projects from concept 
to Phase II, participated in the licensing of its lead product to Novartis 
and also had a pivotal role in the successful sale of Arakis to Sosei in 
2005 for £107 million. After leaving Arakis Mr Sharpington founded and 
became Chief Executive Officer of Serentis Limited in 2006 where he 
led a £15 million venture capital fundraising and the development of 
two dermatology products to Phase II. 
Mr Roger Hickling
Research and Development Director
Mr Hickling has a BSc in chemistry from Kings College, university of 
London and over 30 years’ experience in pharmaceutical research and 
development. This includes management of development portfolios 
and projects from preclinical through to Phase Iv covering a range of 
disease areas. In addition, Mr Hickling has extensive experience in 
international regulatory affairs, including clinical trials and marketing 
applications. Between 1976 and 1998 Mr Hickling worked at SmithKline 
Beecham where he oversaw both in-house and partnered early stage 
neuroscience development projects. Mr Hickling held a variety of 
positions at several pharmaceutical companies between 1998 and 2009 
including Alizyme Therapeutics plc. He was appointed to the Board of 
Alizyme Therapeutics as Research and Development Director in 2006 
with responsibility for research and development strategy development, 
all research and development operations and staff.
Mr Alexander (Sandy) Morrison
Non-Executive Director
Mr Morrison has a BSc (Hons) in applied chemistry (Strathclyde) and 
has over 20 years’ experience in general and international management, 
global supply chain management and research and development. 
He was Chief Executive Officer of Lipton Ltd, the global tea sourcing 
organisation for unilever with operations in six countries from, 2000 to 
2006. During Mr Morrison’s period as CEO, substantial operational and 
financial improvements were made to the unilever global tea supply 
chain and he also played a significant part in addressing issues in the 
international tea trade. In the immediate years prior to 2000, Mr Morrison 
had senior international food and beverage roles for unilever outside 
the uK, in the supply chain and in research and development, both 
at the Rotterdam head office and in the unilever food and beverage 
subsidiary in Australia.
Dr Peter Blower
Non-Executive Director
Dr Blower has over 40 years’ experience in medicinal research and 
development with a strong background in the field of neuroscience. 
He joined Beecham Research Laboratories in 1969 and rose to the 
position of Director of New Neuroscience products at SmithKline 
Beecham in 1996 before leaving in 2000 to form his own consultancy 
company. He has been elected to Fellowship of the Royal Society of 
Medicine and the Institute of Biology and has authored over seventy 
scientific publications. He has a M.I.Biol from the Institute of Biology 
(1972), a PhD in pharmacology from the university of Aston (1977) 
and a DSc from the university of East London (1997).
_1_PHY_ar10_front_[LP.SH].indd   16 26/01/2011   08:52:43 Phytopharm plc Annual Report and Accounts 2010
Business Ove Rv iew
Business Review
CORPORAte G Ov eRn An Ce
Fin An CiAl s t Ate ments
Directors’ report
for the year ended 30 september 2010
17
t he Directors of Phytopharm plc (“Phytopharm”) (registered in england and w ales: 03131723) present their report together with the financial 
statements and auditors’ report for the year ended 30 september 2010.
t he Corporate Governance statement (on pages 29 to 33) forms part of the Directors’ Report.
Principal activities
Phytopharm is a development stage pharmaceutical company developing novel treatments targeting diseases with high levels of unmet need.
Review of the business and future developments
t he Group is required to set out in this Directors’ Report a fair review of the business of the Group and a description of the principal risks and 
uncertainties facing the Group (known as a “Business Review”). t he Business Review is required to set out a balanced and comprehensive analysis 
of the development and performance of the Group’s business during the year ended 30 september 2010 and of the position of the Group at the 
end of that financial year. t he information that fulfils the requirements of the Business Review, in addition to that set out below, can be found on 
pages 8 to 12.
t he Directors are satisfied with the progress made across the product portfolio and with the year end position.
Key performance indicators
t he principal key performance indicators (“KPi’s”) of the Group are the progress of the Group’s development programmes through preclinical and 
clinical development, in particular its lead programme Cogane™, whilst tightly controlling its cost base. w hile these KPi’s demonstrate relevant 
factors by reference to which the development, performance and position of the Group can be measured effectively, it is the nature of Phytopharm’s 
business and the biopharmaceutical industry in general, that these KPi’s are not readily or meaningfully comparable on a year-on-year basis.
Principal risks and uncertainties
t he nature of pharmaceutical development is such that there are significant inherent risks due to the long and complex development process. 
Below are those principal risks and uncertainties that the Board considers could have a material impact on the Group’s operational results, financial 
condition and prospects. t hese risks are not in any particular order of priority and there may be other risks that are either currently unknown or 
not considered material which could have a similar impact on the Group’s business in the future.
t he Board reviews each area of the business at least annually to identify material risks and the controls in place to manage these risks. t his comprehensive 
review is undertaken as part of the review of internal controls as set out on page 32.
industry risk
in common with other research and development stage businesses, Phytopharm’s business risks relate principally to the success of its development 
programmes and to the need to fund its operations through these. t he progress of the development programmes therefore represents the best 
indicator of the Group’s performance and a full review of the programmes is given in the Business Review on pages 8 to 12. 
Financial risk
t he Group expects to continue to make losses until it is able to increase its revenues sufficiently. Additional funds such as charitable income, 
collaboration deals and/or further financing may be required to allow further scope for product development. t he availability and timing of such 
additional external funds represent a material uncertainty, although the Group currently has sufficient funds to finance its operational activities for 
at least the next twelve months.
Clinical and regulatory risk
successful commercialisation of the Group’s products is likely to depend on successful progress through clinical studies and registration. 
Development of product candidates involves a lengthy and complex process, and products may not meet the necessary requirements in terms 
of toxicity, efficacy or safety, or the relevant regulators may not agree with the results of the Group’s research and may require further testing 
or withhold approval altogether.
_2_PHY_ar10_Middle_[LP.SH].indd   1 26/01/2011   08:52:00 Phytopharm plc 18 Annual Report and Accounts 2010
Directors’ report continued
for the year ended 30 september 2010
Principal risks and uncertainties continued
Competition risk
t he Group’s success depends on acceptance of the Group’s products by the markets, including physicians and third party payers, and consequently 
the Group’s progress may be adversely affected if it is unable to achieve market acceptance of its products. Factors which may affect the rate and 
level of market acceptance of any of the Group’s products include the existence or entry on to the market of superior competing products or 
therapies and the price of the Group’s products compared to competing products.
intellectual property risk
t he Group’s success depends in part on its ability to obtain and maintain protection for its intellectual and proprietary information, so that it can 
stop others from making, using or selling its inventions or proprietary rights. t he Group’s patent applications may not be granted and its existing 
patent rights may be successfully challenged and revoked.
Counterparty risk
t he Group relies on third party organisations to conduct its clinical trials and to manufacture its products. if the relationship with, or performance 
of, any of these partners is adversely affected, the Group’s results or operations may be adversely impacted.
t he Group also derives revenue or financial support from its collaborators and expects to derive additional support from partnering with certain 
charitable organisations. if these relationships are adversely affected, or if the products involved fail to continue to make satisfactory progress, 
the Group’s results or operations may be adversely impacted.
Post balance sheet events
see note 26.
Results and dividends
t he Group’s results for the year ended 30 september 2010 are presented on page 37. t he Group’s net loss after taxation was £3,801,514 
(2009: £3,910,688). t he Group is not yet in a position to pay a dividend and the loss for the year has been added to the accumulated losses 
in reserves.
Research and development activities
t he Group continues to develop pharmaceutical products, as described in the Business Review.
Directors
t he Directors of the Company, all of whom have been Directors for the whole of the year and up to the date of signing the financial statements, 
except as noted below, are as follows:
executive Directors
mr t sharpington – Chief executive Officer (appointed 6 July 2010) 
mr R i Hickling – Research and Development Director (appointed 15 January 2010)
non-executive Directors
mr A H taylor – non-executive Chairman  
mr A D morrison – Acting Chief executive Officer from 14 november 2008 until 6 July 2010 
Dr P R Blower – senior independent Director
Biographical details of the Directors are shown on page 16.
t here were no contracts of significance with the Company or any of its subsidiaries existing during or at the end of the financial year in which 
a Director of the Company was materially interested.
t he interests of Directors in the shares and share options of the Company at 30 september 2010 are disclosed in the Remuneration Report of the 
Board of Directors on pages 23 to 28.
_2_PHY_ar10_Middle_[LP.SH].indd   2 26/01/2011   08:52:00 19 Phytopharm plc Annual Report and Accounts 2010
Business Ove Rv iew
Business Review
CORPORAte G Ov eRn An Ce
Fin An CiAl s t Ate ments
Directors continued
Re-election
At the 2011 Annual General meeting (“AGm”), in accordance with the Company’s Articles of Association and the provisions of the uK Corporate 
Governance Code, mr A H taylor and mr A D morrison will retire. Being eligible, and with the Board’s recommendation, they will offer themselves 
for re-election. mr t s harpington, being appointed to the Board during the year will offer himself for re-election.
mr A H taylor, Dr P R Blower and mr A D morrison, as non-executive Directors, have letters of appointment which provides for three months’ notice 
from either party.
t he service contracts of the executive Directors and the letters of appointment for the non-executive Directors’ are available for inspection at the 
registered office of the Company and will be available at the 2011 AGm as specified in the notice of meeting.
in accordance with section 992 of the Companies Act 2006, the Directors disclose that the rules regarding the appointment and replacement 
of Directors are contained in the Company’s Articles of Association, which may be amended with shareholder approval in accordance with relevant 
legislation. t he powers of the Directors are contained in the Company’s Articles of Association. t he Articles give the Directors powers, subject to 
relevant legislation, to authorise the issue and buy back of the Company’s shares by the Company, subject to authority being given to the Directors 
by shareholders in general meeting. no authority to buy back the Company’s Ordinary shares has been sought.
Directors’ interests
Details of the Directors’ interests in the ordinary share capital of the Company, as required to be disclosed in accordance with the Disclosure and 
transparency Rules, are given in the Remuneration Report. During the financial year under review, as part of the Placing and Open offer approved 
by shareholders in December 2009, the Directors took up the following ordinary shares under their entitlement as follows:
mr A H taylor 150,000 ordinary shares 
mr A D morrison 150,000 ordinary shares 
Dr P R Blower 75,000 ordinary shares
t here were no other changes in the Directors’ shareholdings between 30 september 2010 and the date of this report.
Directors’ and officers’ liability insurance
t he Group has in place for the whole of the year, and at the date of signing the financial statements, qualifying third party indemnity insurance 
for all Directors and officers.
Structure of the Company’s capital
t he Company’s share capital traded on the l ondon stock exchange comprises a single class of ordinary shares of one pence each, each carrying 
one voting right and all ranking equally with each other. At 30 september 2010, 346,677,433 shares were allotted and fully paid. see note 24 
for details of movements in the Company’s share capital during the year.
Details of employee share option schemes are set out in note 25 to the financial statements. Participants in employee share option schemes have 
no voting or other rights in respect of the shares subject to their awards until the options are exercised, at which time the shares rank pari passu 
in all respects with shares already in issue.
t here are no restrictions on the transfer of securities in the Group.
Authority to issue shares
each year at the AGm, the Directors seek authority to allot shares. t he authority, when granted, lasts until 30 march 2011 or until the conclusion of 
the next AGm if sooner. At the last AGm held on 30 march 2010, shareholders authorised the Directors to allot relevant securities up to an aggregate 
nominal value of £1,155,591.44 representing one-third of the issued share capital and to further allot equity securities up to a nominal value of 
£346,677.43 (being 10 per cent. of the issued share capital). At the 2011 AGm similar authorities will be sought from shareholders.
_2_PHY_ar10_Middle_[LP.SH].indd   3 26/01/2011   08:52:00 Phytopharm plc 20 Annual Report and Accounts 2010
Directors’ report continued
for the year ended 30 september 2010
Substantial shareholdings
At 21 December 2010 the Directors are aware of the following holdings representing 3%, or more, of the voting rights of the issued share capital 
of the Company in accordance with the Disclosure and transparency Rules of the Financial services Authority (“FsA”):
name of shareholder having a material interest          % holding
invesco Perpetual Group         56.40 
Gartmore investment l imited         7 .31
t he shares held by invesco Perpetual Group (“invesco”) are held in invesco’s capacity as an institutional investor and an investment channel for 
others and not on their own behalf. A significant number of the shares are held by open ended investment companies together with other shares 
held in investment portfolios managed by invesco as nominee/bare trustee.
On 3 December 2009, invesco and the Company entered into a relationship agreement under which invesco has undertaken to ensure that whilst 
it holds an interest in the shares of the Company in excess of 30 per cent. it will exercise its voting rights insofar that it is able to do so that:
(a) t he Company is capable of carrying on its business independently of invesco;
(b) All transactions, agreements and arrangements with any member of the Group and invesco are conducted on an arm’s length basis; and
(c)  Any dealing or dispute between invesco and any member of the Group is dealt with by a committee comprising only of independent Directors.
Purchase of own shares
Purchases in shares of Phytopharm plc relate to the Phytopharm share incentive Plan whereby the Company issued one “matching share” for 
every one “Partnership share” purchased by the employee. All shares are held by the scheme trustees until the shares vest unconditionally with 
the employee.
During the year ended 30 september 2010, the Group purchased 39,296 ordinary shares of one pence (2009: 52,330) at a total cost of £3,885 
(2009: £3,361).
Significant agreements
t he Group is not party to any significant agreement which would take effect, alter or terminate upon a change of control of the Company. 
t he Group has licences granted to it from shanghai Jiao tong university (formerly shanghai second medical university) and the Beijing institute 
of Radiation medicine. in addition, the Group has entered into a cooperation agreement with the CsiR in south Africa.
Payment of creditors
t he Company does not follow a specific payment code but has a policy to pay its suppliers in accordance with the specific terms agreed with each 
supplier. t he number of days’ purchases outstanding at 30 september 2010 for the Company was 44 days (2009: 25 days).
Charitable and political donations
t he Group made no charitable donations during the year (2009: £nil) and no political donations during the year (2009: £nil).
Corporate social responsibility
t he Board recognises the importance of social, ethical and environmental matters and it endeavours to take into account the interests of the 
Group’s stakeholders, including its investors, employees and suppliers, when operating the business.
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Corporate social responsibility continued
social
t he Group places considerable value on attracting and retaining its employees and seeks to keep them informed on the Group’s business strategy 
and objectives to assist them in working towards these goals. t his is achieved through formal and informal meetings where employees have the 
opportunity to ask questions as well as receive information.
employee training and development requirements are assessed as part of the performance appraisal process. Additional training is undertaken 
as required to provide staff with continuous professional development.
t he Group is committed to health and safety and has well developed health and safety policies and procedures to safeguard all of its employees, 
partners, contractors and visitors. t he Board is aware of its legal and moral obligations for health and safety at work and is committed to 
preventing accidents and minimising occupational ill health.
t he Group operates an equal opportunities policy. Full consideration is given to all job applicants, irrespective of gender, age, marital status, disability, 
sexual orientation, race, colour, religion, political belief, ethnic or national origin or any other conditions not relevant to the performance of the 
role, who can demonstrate that they have the necessary skills and abilities.
t he Board of Directors is committed to continuing communication and involvement with all the Group’s employees.
ethical
t he Group operates within a strict regulatory environment in the pharmaceutical industry and conducts its clinical development activities in 
accordance with internationally recognised regulatory and quality standards. A code of business conduct and ethics is in place to promote fair, 
honest and ethical conduct by all employees in their relationships with stakeholders.
t he Group endeavours to appoint employees with appropriate skills, experience and knowledge for the roles they undertake. t he Group has a 
range of polices which are aimed at retaining and incentivising key staff. employees have clear objectives based on the Group’s business objectives.
environment
t he Group recognises that protecting the environment is a primary corporate responsibility and that environmental matters are not just the 
responsibility of the Board of Directors, but also an area in which each employee, sub-contractor and supplier has a contribution to make.
t he Group therefore encourages all employees, partners and contractors to operate in an environmentally responsible manner. w here appropriate 
these requirements have been incorporated into the Group’s standard operating procedures and the environmental performance of contractors is 
reviewed as part of the audit process. it is the Group’s policy to undertake reasonable measures to assess the environmental impact of its operations, 
processes and products. w aste is minimised with paper and packaging recycled and confidential waste is shredded and recycled. w here possible 
other materials, including glass and plastics, are recycled. t he Group aims to continuously improve environmental performance and compliance 
within these areas.
Financial risk management
t he Group’s policies in relation to financial risk management in respect of financial instruments are detailed in note 22 to the financial statements. 
Annual General Meeting
t he notice convening and giving details of the 2011 AGm of the Company will be mailed to shareholders.
Corporate governance
t he Company’s statement on corporate governance can be found in the Corporate Governance Report on pages 29 to 33 of these financial 
statements. t he Corporate Governance Report forms part of this Directors’ Report and is incorporated into it by cross-reference.
_2_PHY_ar10_Middle_[LP.SH].indd   5 26/01/2011   08:52:01 Phytopharm plc 22 Annual Report and Accounts 2010
Audit information
in the case of each of the persons who are Directors of the Company at the date when this report is approved:
Ì  so far as each of the Directors is aware, there is no relevant audit information (as defined in the Companies Act 2006) of which the Company’s 
auditors are unaware; and
Ì  each of the Directors has taken all steps that he ought to have taken as a Director to make himself aware of any relevant audit information and 
to establish that the Company’s auditors are aware of that information.
t his confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.
Going concern
As at 30 september 2010, the Group had cash resources (being cash and cash equivalents and money market investments) of £23,608,171.
After making enquiries and taking into account of management’s estimate of future expenditure the Directors have a reasonable expectation that 
the Group will have adequate financial resources to continue in operation for the foreseeable future.
Independent auditors
A resolution to reappoint PricewaterhouseCoopers ll P as auditors to the Company will be proposed at the next AGm.
Mr T Sharpington
Chief executive Officer
21 December 2010
Directors’ report continued
for the year ended 30 september 2010
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Remuneration report
t his report complies with the uK Corporate Governance Code (formerly ‘Combined Code (2008)’) and sets out the Group’s remuneration policy 
and details of Directors’ remuneration. A resolution to approve this report will be proposed to shareholders at the AGm in 2011.
t he regulations require the auditors to report to the Company’s members on certain parts of the Directors’ Remuneration Report and to state 
whether in their opinion those parts of the report have been properly prepared in accordance with the Companies Act (as amended by the 
Regulations). t he report has therefore been divided into separate sections for audited and unaudited information.
Unaudited information 
Remuneration Committee
t he Remuneration Committee (“the Committee”) is comprised exclusively of independent non-executive Directors. t he Directors who have 
served on the Remuneration Committee during the year are as follows:
Dr P R Blower (Chairman)  
mr A H taylor 
mr A D morrison temporarily stepped down as a member of the Remuneration Committee on 14 november 2008 whilst Acting Chief executive 
Officer and returned to serve as a member of the Remuneration Committee with effect from 6 July 2010.
t he Remuneration Committee decides the remuneration policy that applies to executive Directors and all of the Group’s employees including 
other senior management. t his comprises the setting of salaries for the executive Directors, the setting of salary scales for other employees, 
approving the format and range of all performance related arrangements (both annual and long term equity incentive arrangements) and 
determining the extent to which the elements of variable pay vest. in determining remuneration, consideration will be given to reward levels 
throughout the organisation as well as in the external employment market. t he Remuneration Committee aims to reward all employees fairly 
based on their role, their performance and salary levels in the wider market.
t he executive Directors are invited to attend the Remuneration Committee meetings to make recommendations on compensation levels for employees.
During the year ended 30 september 2010, the Remuneration Committee met four times and there was full attendance at each meeting. 
Remuneration of non-executive Directors
t he non-executive Directors each receive a fee for their services, which is agreed by the Board following recommendation by the Committee 
in respect of the Chairman and by the Chairman in respect of the other non-executive Directors with the assistance of independent information 
regarding the level of fees within the sector, where necessary, concerning comparable organisations and appointments.
neither the Chairman nor the other non-executive Directors receive any pension or other benefits from the Group.
Remuneration policy for executive Directors
t he Group’s remuneration policy for executive Directors is to:
Ì  have regard to the Directors’ experience and the nature and complexity of their work, and regard to Directors’ remuneration in comparable 
companies, in order to pay a competitive salary, including a performance related cash bonus that attracts and retains management of the 
highest quality; 
Ì  link individual remuneration packages to the Group’s long-term performance through the award of share options via the Phytopharm share 
Option Plan 2007 and the Phytopharm l ong term incentive Plan 2007; and
Ì provide post retirement benefits through the Group’s pension schemes.
Consistent with the above policy, compensation awarded to executive Directors comprises four main performance and non-performance related elements:
Ì basic salary and bonuses;
Ì benefits;
Ì share options and performance share awards (awarded by reference to annual performance); and
Ì pension arrangements.
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Remuneration report continued
Unaudited information continued
Remuneration policy for executive Directors continued
During the year under review mr A D morrison continued as Acting Chief executive Officer until 6 July 2010 and his remuneration during this period 
comprised a basic salary payable according to the number of days he had been acting in his capacity as Acting Chief executive Officer.
Basic salary
t he Committee sets the annual salaries for executive Directors, having regard to personal performance and responsibilities of each Director and 
their expected future contribution. 
Performance related bonuses
t he Group may make bonus payments depending upon the overall performance of the Company. 
incentive schemes
t he Group operates incentive schemes to assist in attracting and retaining high calibre employees and to focus the performance of key 
management on creating long-term shareholder value. t he awards to individuals are linked to the performance targets of the Group and the 
individual. t he Group’s targets and those for executive Directors are approved by the Board.
share option schemes
t he total number of unissued Ordinary shares in the capital of the Company which may be placed under option on any day under the Phytopharm 
share option schemes may not exceed, when added to the aggregate number of shares that have been or may be issued pursuant to rights granted 
for the past ten years, 10 per cent. of the issued ordinary share capital of the Company immediately prior to that day.
share options are granted under the Phytopharm share Option Plan 2007 and the Phytopharm save As You earn Plan 2007, which are open to all 
employees. t he Phytopharm share Option Plan 2007 complies with the tax favoured enterprise management incentive l egislation. w here possible 
the Company will grant tax advantaged options. t he Remuneration Committee determines the level of awards. to provide maximum flexibility, the 
Committee has discretion to make awards up to an annual 400% of salary individual limit although the Committee would only envisage making an 
award at such a level in very exceptional circumstances. Performance share awards will normally vest three years after the date of grant subject to 
continued employment and the extent to which a performance target has been satisfied. 
t he vesting of a share option under the above schemes will depend on total shareholder return (“t sR”) performance conditions being met. 
t he Company’s ts R will be compared to that of the companies making up the Ft se smallCap index at or within three months of the vesting date. 
no option or award can be exercised for below median performance.
t he Committee considers ts R to be the most appropriate method of measuring performance at this stage of the Group’s development where 
income streams have not stabilised and the Group has not yet made a profit. t he Committee seeks independent verification of the ts R conditions 
before confirming that a share option has vested.
t he Phytopharm save As You earn Plan 2007 is an HmRC approved scheme and the first offer was made to employees and executive Directors on 
13 August 2007 and vests on 30 september 2010. Details of the executive Directors’ interests in this plan are specified in the table on page 28.
During 2010, shareholders approved the 2010 Directors’ Reward Plan to enable the Group to recognise the input of the non-executive Directors 
to the success of the Group in the previous twelve months. Options granted under the plan will vest at the end of three years and no performance 
conditions will apply. As a condition of exercise, Directors will be required to enter into an agreement under which they agree not to dispose of 
any shares acquired on exercise for a period of at least one year from the date of exercise.
l ong-term incentives
t he Group operates the Phytopharm l ong term incentive Plan 2007 under which performance share awards can be made to selected senior 
managers of the Group and its subsidiaries. t he Committee determines the level of awards to provide maximum flexibility. t he Committee has 
discretion to make awards up to an annual 400% of salary individual limit although the Committee would only envisage making an award at such 
a level in very exceptional circumstances. Performance share awards will normally vest three years after the date of grant subject to continued 
employment and the extent to which a performance target has been satisfied. 
t he Committee’s policy is that the same ts R performance condition as described above for share options will apply to the vesting of performance 
share awards. t his is for the same reasons as given above. t he relevant distinction is that the grant of share options depends on annual performance 
whereas it is envisaged that performance share awards will be granted each period in order to ensure that there is a continual and material long 
term incentive element to the executive Directors’ remuneration packages.
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Unaudited information continued
Remuneration policy for executive Directors continued
share purchase scheme
t he Group also operates an HmRC approved share incentive Plan which is open to all employees who may purchase Partnership shares up to the 
value of £125 each month and are awarded one matching share for each Partnership share purchased. t he shares are held in trust for a minimum 
of three years and are not subject to performance criteria. Details of the executive Directors’ interests in this plan are specified in the table on page 28.
Pensions
t he executive Directors have money purchase pension schemes to which the Group contributed 12.5% of basic salary.
Fees retained for non-executive directorships in other companies
t he Committee recognises that executive Directors may be invited to take up non-executive directorships and that these can broaden the 
experience and knowledge of the Director, from which the Group would benefit. Accordingly, subject to Board approval, they may accept 
non-executive appointments, as long as they are not likely to lead to a conflict of interest. t hey are also allowed to retain any fees paid under such 
appointments. mr t sharpington serves as a non-executive director of Clinical Force l imited for which he does not receive a fee.
Performance graph
t he following shows the Company’s performance, measured by ts R compared with the performance of the Ft se smallCap index also measured 
by ts R. ts R looks at the value at 30 september 2010 of £100 invested in the Company on 1 september 2005 compared with the value of £100 
invested in the Ft se smallCap index over the same period. t his index has been selected for this comparison because, in the opinion of the 
Directors, it is the most appropriate index against which the total shareholder return of the Company should be measured.
t he graph looks at the value, by 30 september 2010, of £100 invested in Phytopharm on 31 August 2005 compared with the value of £100 invested 
in the Ft se smallCap index. t he other points plotted are the values at intervening financial year ends.
executive Directors’ contracts
it is the Group’s policy that executive Directors have contracts with an indefinite term but which provide for a maximum period of six months’ notice 
to be served by the Company or by the Director. 
t he appointment of mr A D morrison as Acting Chief executive Officer was made on 14 november 2008. t his appointment was made on a consultancy 
basis and provides for a maximum of one month’s notice to be served by the Company or by mr A D morrison. Following the appointment of the 
Chief executive Officer, mr A D morrison has returned to his position as non-executive Director.
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_2_PHY_ar10_Middle_[LP.SH].indd   9 26/01/2011   08:52:02 Phytopharm plc 26 Annual Report and Accounts 2010
Unaudited information continued
non-executive Directors’ letters of appointment
t he terms of service for non-executive Directors are specified in letters of appointment. Currently appointments are for a period of twelve 
months, which may be renewed, and are summarised in the table below:
          Date of  notice 
          appointment  period
mr A H taylor         1 July 2010  3 months
mr A D morrison         1 June 2010  3 months
Dr P R Blower         31 July 2010  3 months
in addition, one third of all Directors are required under the Articles of Association to resign and offer themselves for re-election at each annual 
general meeting.
Directors’ interests in shares 
t he interests of the Directors in the shares of the Company at 30 september 2010 and 30 september 2009, or at the date of appointment if later, were:
           Ordinary shares of 1 pence
           2010 2009
mr t sharpington          — —
mr R i Hickling          — —
mr A H taylor          330,043 180,043
mr A D morrison          246,544 96,544
Dr P R Blower          193,682 1 18,682
All Directors’ interests are beneficially held.
Apart from the interests disclosed above, no Directors had any interest in the year in the share capital of the Company or other Group companies. 
t here have been no changes in the Directors’ interests in the share capital of the Group since the year end.
Remuneration report continued
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Audited information
Directors’ detailed emoluments and compensation
Details of individual Directors’ emoluments for the year are as follows:
        2010   2009
       Performance Monetary Total  total 
      Salary related value excluding Pension excluding Pension 
      and fees bonus of benefits pensions contributions pensions contributions 
      £ £ £ £ £ £ £
Executive
mr t sharpington (i)  43,266 — — 43,266  5,089 —  —
mr R i Hickling (ii)  81,846 — — 81,846  7,408 — —
mr A D morrison (iii)  116,000 10,000 2,031 128,031 — 103,896 — 
Dr D D Rees (iv)  — — — — — 25,081 3,669
mr P J morgan (v) — — — — — 18,164 2,703
  241,112 10,000 2,031  253,143 12,497 147,141  6,372
Non-Executive
mr A H taylor  38,906 — — 38,906 —  37 ,500  —
mr A D morrison  28,531 — — 28,531 — 27,748 —
Dr P R Blower 28,531 — 494 29,025 — 28,107 —
 95,968 — 494  96,462  —  93,355 — 
Total   337,080 10,000 2,525 349,605  12,497  240,496  6,372 
(i) From 6 July 2010
(ii) From 15 January 2010
(iii) to 6 July 2010
(iv) From 1 October 2008 to 12 november 2008
(v) From 1 October 2008 to 12 november 2008
no Directors waived emoluments in the financial year ended 30 september 2010 (2009: £nil).
t here were no gains made by individual Directors from the exercise of share options for the year ended 30 september 2010 (2009: £nil).
Details of the individual Directors’ emoluments for the year ended 30 september 2009 have been adjusted by £33,000 to reflect the 
Remuneration Committee’s decision not to award any bonus payments in respect of the year ended 30 september 2008.
On 12 november 2008, the Company received notices of resignation as Directors of the Company with immediate effect and their subsequent 
termination of employment from Dr D D Rees and mr P J morgan. subsequently Dr D D Rees and mr P J morgan were awarded payments in respect 
of their contractual notice periods and certain post termination payments. t he cost to the Group for Dr D D Rees was £135,985 and mr P J morgan 
was £169,613. neither of these amounts are included in the table presented above.
t he executive Directors may receive certain benefits in kind. t he benefits provided to Dr D D Rees were the provision of a fully expensed company 
car, life insurance and private medical insurance. t he benefits provided to mr P J morgan were the provision of a car allowance and life assurance. 
t he benefit provided to mr A D morrison is the reimbursement of travel costs from home to work.
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Audited information continued
Directors’ interest in share options
Details of options over shares of the Company held by Directors, all of which have been granted at no cost to the Directors, are set out below:
 number of options 
    At  Granted At    Date from   
    1 October during 30 September  exercise  which  expiry 
    2009 the year 2010 note* price  exercisable  date
mr t sharpington — 3,466,774  3,466,774  1 £0.0763 20 July 2013 20 July 2020
    — 3,466,774  3,466,774
mr R i Hickling — 1,733,387  1,733,387  1 £0.0763 20 July 2013 20 July 2020
    — 1,733,387  1,733,387
mr A H taylor — 350,000  350,000 3 £0.1 125 30 march 2013 30 march 2018
mr A D morison — 256,667  256,667  3 £0.1 125 30 march 2013 30 march 2018
Dr P R Blower —   256,667  256,667  3 £0.1 125 30 march 2013 30 march 2018
Total —  6,063,495  6,063,495 
* Further details of the terms of the share option schemes are contained in note 25 to the financial statements under the note reference in the above table.
Directors’ interests in long term incentive plans
t here are no awards in issue under the long term incentive plan.
t he market price of the Company’s shares at the end of the financial year was 8.43 pence (2009: 5.13 pence) and the range of market prices 
during the year was between 26.75 pence and 5 pence.
Approval
t his report was approved by the Board of Directors and signed on its behalf by:
Dr P R Blower
Chairman of the Remuneration Committee
21 December 2010
Remuneration report continued
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The UK Corporate Governance Code
t he Directors are accountable to shareholders for the good corporate governance of the Group and seek to uphold and report on compliance 
with current best practice in corporate governance.
see page 34 for the statement of Directors’ Responsibilities in respect of the Annual Report, the Directors’ Remuneration Report and the 
financial statements.
Compliance statement
t he Directors are satisfied that, unless disclosed otherwise within this report, the Group has complied throughout the year with the best practice 
provisions set out in section 1 of the uK Corporate Governance Code in effect for the financial year to 30 september 2010. t his report together 
with the Remuneration Report sets out the manner in which the Group has applied the main principles contained in the uK Corporate Governance 
Code. A copy of the uK Corporate Governance Code is available at the FRC’s website: www.frc.org.
t he principles set out in the uK Corporate Governance Code cover four areas: the Board, Directors’ remuneration, accountability and audit 
and relations with shareholders. w ith the exception of Directors’ remuneration (which is dealt with separately in the Remuneration Report) the 
following section sets out how the Board has applied such principles.
Board 
t he Board is chaired by mr A H taylor and met for regular business seven times during the year under review. All meetings were attended by 
all the Directors appointed at the time of the meeting. in addition, further meetings are held when circumstances and urgent business dictate.
t he Board has agreed a schedule of items that are specifically reserved for its consideration, which is reviewed on an annual basis. t his schedule 
includes business strategy, financing arrangements, material acquisitions and divestments, approval of budgets, major capital expenditure projects, 
risk management, treasury policies, and establishing and monitoring internal controls. t he Board is responsible for the overall direction and strategy 
of the Group and for securing the optimum performance from Group assets. At each meeting, the Board reviews strategy and progress of the 
Group towards its objectives, particularly in respect of research and development projects, and monitors financial progress against budget.
t he Group’s policy is that the Board of Directors would normally consist of two executive and three independent non-executive Directors. 
Dr P R Blower is the senior non-executive Director. At the 2010 AGm shareholders approved the 2010 Directors’ Reward Plan together with the 
grant of share options to mr A H taylor, mr A D morrison and Dr P R Blower. t he grant of options to the non-executive Directors of the Company 
reflected their input to the success of the Company during 2009 and the Board considers that due to the one off nature of the option grant 
together with no performance conditions being attached to the options, there is no impact on the independence of the non-executive Directors.  
t he value of the options granted was equal to their 2010 annual Director’s fee.
Biographies of the Directors are set out on page 16. Details of the Directors’ shareholdings are shown on page 26.
All Directors are required to retire and submit themselves for re-election at the first AGm after appointment and, thereafter, at least every three 
years. subject to their re-election and Companies Act provisions, the non-executive Directors are appointed for specified terms. see page 26.
t here is clear separation of the roles of Chairman and Chief executive Officer on terms which have been agreed and set out in writing by the 
Board and which are reviewed on an annual basis. t he Chairman is responsible for overseeing the running of the Board, encouraging all Directors 
to participate fully in discussions with the aim of reaching a consensus and ensuring that the non-executive Directors are properly briefed on 
matters. t he Chief executive Officer has responsibility for implementing the Board’s strategy and managing day to day business activities of the 
Group with the executive Directors and senior managers. t he Company secretary, through the Chairman, is responsible for advising the Board 
on all governance matters.
t he Board has agreed procedures to allow individual Directors to seek independent professional advice at the Company’s expense for the 
furtherance of their duties and all Directors have access to the services of the Company secretary. t he Company secretary is accountable to the 
Board through the Chairman on governance matters. it is the responsibility of the Company secretary to ensure that Board procedures are followed 
and all rules and regulations are complied with. newly appointed Directors receive a comprehensive, formal and tailored introduction to the Group’s 
business as well as information on their responsibilities and roles as a Director of the Company.
Corporate governance
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Board performance and appraisal
t he Board is mindful of the requirement to undertake annual evaluation of its performance and that of its committees and individual Directors. 
All Directors have conducted a self assessment of the performance of the Board during the year by reference to an evaluation checklist provided 
by the Group’s external auditors. t he results were compiled and analysed by the Company secretary. Areas for improvement identified by the 
assessment will be addressed accordingly.
Board Committees
in accordance with best practice, the Company has established Audit, Remuneration and nominations Committees with written terms of reference 
for each that deal with their authorities and duties. t he full terms of reference of all the Committees have been published on the Company’s website.
Audit Committee
t he Audit Committee comprises the independent non-executive Directors, Dr P R Blower and mr A H taylor, who the Board considers has 
recent and relevant financial experience, and is chaired by Dr P R Blower. t he Audit Committee met two times during the year under review, 
with the Group’s external auditors and executive Directors attending where appropriate. All meetings were fully attended. During the year ended 
30 september 2009, mr A D morrison temporarily stepped down as a member of the Audit Committee whilst fulfilling the role of Acting Chief 
executive Officer until 6 July 2010. mr A D morrison has now returned to his role as a non-executive Director and it is intended that he will revert 
to a member of the Audit Committee following the publication of the 2010 Annual Report.
During the year, the Audit Committee did not consist of at least two independent non-executive Directors other than the non-executive Chairman 
as required under section C.3.1 of the uK Corporate Governance Code.
t he Audit Committee assists the Board in ensuring that the Group’s published financial statements give a true and fair view and in securing reliable 
internal financial information for decision making. t he Audit Committee reviews the findings of the external auditors and reviews key accounting 
policies and judgements. t he Audit Committee is also responsible for monitoring the effectiveness of the external audit process and the independence of 
the external auditors, recommending audit fee proposals to the Board and considering the scale and nature of non-audit work. non-audit services 
provided by the external auditors are discussed to ensure the Audit Committee is satisfied regarding the objectivity and independence of the 
external audit, including any relevant safeguards. Any material non-audit fees are approved by the Audit Committee before being committed. 
t he Audit Committee assesses annually the qualification, expertise and resources, and independence of the external auditors and the 
effectiveness of the audit process. t he assessment covers all aspects of the audit service provided by the audit firm.
t he Audit Committee reviews the Group’s Protected Disclosure (“w histleblowing”) policy and procedure on an annual basis to ensure that 
adequate arrangements are in place by which members of staff may, in confidence, raise concerns about possible improprieties in matters of 
financial reporting or other areas. t he Audit Committee considers that appropriate arrangements are in place for the proportionate and 
independent investigation of such matters and for appropriate follow up action. 
t he Audit Committee conducted a self-assessment of its performance during the year by reference to an evaluation checklist provided by the 
Group’s external auditors. t he results were compiled and analysed by the Company secretary. Areas for improvement identified by the assessment 
will be addressed accordingly. 
t he terms of reference of the Audit Committee include the following responsibilities:
Ì  to monitor the integrity of the Group’s financial statements;
Ì  to review annually the need for an internal audit function;
Ì  to review the effectiveness of the Group’s internal control and risk management systems; and
Ì  to consider and make recommendations to the Board regarding the appointment of the Group’s external auditors.
Remuneration Committee
t he Remuneration Committee comprises the independent non-executive Directors Dr P R Blower and mr A H taylor and is chaired by Dr P R Blower. 
t he Remuneration Committee met four times during the year under review. All meetings were attended by all members. During the year ended 
30 september 2009, mr A D morrison temporarily stepped down as a member of the Remuneration Committee whilst fulfilling the role of Acting 
Chief executive Officer until 6 July 2010. mr A D morrison has now returned to his role as a non-executive Director and member of the 
Remuneration Committee.
Corporate governance continued
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Fin An CiAl s t Ate ments
Board Committees continued
Remuneration Committee continued
t he Remuneration Committee is responsible for making recommendations to the Board on remuneration policy for all members of staff and 
executive Directors. t he policy recommendations include setting salary scales, and approving the format and range of incentive payments and 
share option grants to all staff. Remuneration of non-executive Directors is under the control of the Chairman and the executive members of 
the Board. 
t he Remuneration Committee conducted a self-assessment of its performance during the year by reference to an evaluation checklist provided by 
the Group’s external auditors. t he results were compiled and analysed by the Company secretary. Areas for improvement identified by the assessment 
will be addressed accordingly. 
t he terms of reference of the Remuneration Committee include the following responsibilities:
Ì  to determine and agree with the Board the framework and policy for the remuneration of the executive Directors and other members of the 
executive team;
Ì  to determine targets for any performance related pay scheme;
Ì  to approve overall remuneration structure; and
Ì  to review employee benefit structures.
t he Remuneration Report, which includes details of the Group’s remuneration policy, is set out on pages 23 to 28.
nomination Committee
t he nomination Committee comprises Dr P R Blower and mr A H taylor and is chaired by Dr P R Blower. t he nomination Committee met twice 
during the year under review and the meeting was attended by all members. During the year ended 30 september 2009, mr A D morrison 
temporarily stepped down as a member of the nomination Committee whilst fulfilling the role of Acting Chief executive Officer until 6 July 2010. 
mr A D morrison has now returned to his role as a non-executive Director and member of the nomination Committee. 
t he nomination Committee is responsible to the Board for determining the qualities and experience required of the Company’s executive and 
non-executive Directors and for identifying suitable candidates. in appropriate cases, recruitment consultants assist in the process. t he nomination 
Committee is also responsible for succession planning.
t he terms of reference of the nomination Committee include the following responsibilities:
Ì  to identify and nominate candidates to fill Board positions as they arise;
Ì  to prepare a description of the role and capabilities required for a particular appointment; and
Ì  to give full consideration to succession planning.
Shareholder relations
t he Group is committed to maintaining good relations with its institutional and private shareholders and reports formally to shareholders four 
times a year through the provision of interim results (around April) and annual results (around november) and, as required under the Disclosure 
and transparency Rules, releases interim management statements around February and August. in addition, the Group keeps shareholders informed 
of significant events for the Group during the year by issuing press releases which are immediately made available on the Group’s website 
(www.phytopharm.com). t he Group’s website also provides an overview of the business including its strategy, products and objectives. 
t he Group also maintains communication by making presentations during the year to institutional shareholders on request and to all shareholders 
through the Group’s website. t his contains information on all of the Group’s products and all financial reports and press releases issued by the 
Group. Details of the current share price and historic share price performance are also included.
t he Board is kept up to date at its regular meetings with the views of shareholders and analysts by the Chairman and Chief executive Officer.
_2_PHY_ar10_Middle_[LP.SH].indd   15 26/01/2011   08:52:03 Phytopharm plc 32 Annual Report and Accounts 2010
Annual General Meeting
t he principal forum for discussion with shareholders is the AGm and their participation is encouraged. t he Group endeavours to provide formal 
notification together with an explanation of each proposed resolution and to send these to shareholders at least twenty working days in advance 
of the meeting.
At the AGm the Board provides a summary of the year’s events after which all the Directors are available to answer questions from shareholders. 
in accordance with the uK Corporate Governance Code recommendations, the Company counts all proxy votes. On each resolution which is voted 
on a show of hands, the Company indicates the level of proxies lodged, the number of proxy votes for and against each resolution and the number 
of abstentions. t he Chairs of the Audit, Remuneration and nomination Committees attend to answer questions.
Announcements
All major announcements are approved by the Board prior to issue. t he Group also has internal procedures to guard against unauthorised release 
of information.
Internal control
t he Board acknowledges that it is responsible for the Group’s system of internal control and reviews its effectiveness at least annually and the 
Board confirms that this process has been in place up to the date of the approval of the financial statements. However, the Board acknowledges 
that such a system can only provide reasonable and not absolute assurance against material misstatement or loss, as it is designed to manage 
rather than eliminate the risk of failure to achieve business objectives.
t he key procedures that the Board has established are designed to provide effective internal controls within the Group and comply with the 
internal Control Guidance for Directors on the uK Corporate Governance Code (turnbull Guidance 2005) issued by the Financial Reporting Council. 
t here is an ongoing process for identifying, evaluating and managing significant risks faced by the Group and the effectiveness of all the Group’s 
internal controls in effect during the year has been reviewed by the Board. t his process has been in place throughout the year under review. 
t he Board confirms that the necessary steps have been taken to rectify any significant failings or weaknesses identified through this process.
t he Group has a quality assurance function, but it does not have a formal internal audit function which is considered appropriate by the Audit 
Committee given the size of the Group. t he executive Directors’ active involvement in the activities of the Group allows the Board to continually 
monitor and assess significant business, operational, financial, compliance and other risks and to review the effectiveness of internal control. t he 
executive Directors provide regular management reports covering inter alia research and development activities, shareholder relations, financial 
management and commercial activities.
t he Group’s key internal control procedures include the following:
Control environment
t he Group’s control environment is the responsibility of the Group’s Directors and managers at all levels. t he Group’s organisational structure has 
clear lines of reporting and responsibility. Regular research and development programme reviews are held to review progress against plans for each 
programme. t he information from these meetings is reported on a regular basis to a management group comprising the executive Directors and 
key senior managers to compare progress against plans for the business as a whole. Overall control of the business rests with the Board of Directors.
Risk identification and evaluation
Regular assessments of ongoing risks facing the business are undertaken as part of the operational reviews and regular management group 
meetings in the key areas such as management of working capital, compliance, legal and operational issues.
Operational controls
Quality 
investigational medicinal products are manufactured on behalf of Phytopharm and are produced in accordance with Good manufacturing Practice 
(“GmP”) to ensure that the products are manufactured consistently to the appropriate quality standards. 
non-clinical studies 
Key non-clinical studies to determine the safety and efficacy of new products are conducted in accordance with Good l aboratory Practice (“Gl P”) 
at contractors who operate under those regulations. each contractor is audited to assess compliance with Gl P prior to initiation of studies.
Corporate governance continued
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Internal control continued
Operational controls continued
Clinical studies 
All clinical studies carried out by the Group are in accordance with Good Clinical Practice (“GCP”). t his ensures that the health and well being of the 
subjects is carefully monitored during the study and that the data gathered is complete and reliable. All studies are audited for compliance under 
the management of Phytopharm’s quality assurance group. 
Financial controls
Financial reporting and consolidation
Budgets and long term forecasts are normally prepared twice a year to allow management to monitor the key business and financial risks. Further, 
more frequent, forecasts are prepared if circumstances require. t he budgets are reviewed and approved by the Board prior to adoption by the 
Group. Consolidated management accounts are prepared on a monthly basis and performance against budget is analysed in detail and reported 
on monthly and reviewed regularly by the Board.
t he integrity of the Group’s public financial reporting process is supported by a number of processes and steps to provide assurance over the 
completeness and accuracy of the content, including:
Ì review by executive Directors;
Ì review and recommendation by the Audit Committee; and
Ì  review and approval by the Board.
Control procedures 
t he Group has established detailed policies, and accounting and administrative procedures are in place covering all significant areas and key 
systems. t hese include formal authorisation procedures for the transfer of funds, capital expenditure and recruitment. Any commitment of 
expenditure requires documentary approval which is subject to prescribed limits of authority. Any major expenditure or commitment including 
the appointment of senior members of staff requires Board approval.
Compliance
t he Group has established policies and standard operating procedures (“sOP’s”) that provide instruction on all aspects of the operation of the 
business. t hese sOPs are designed to ensure compliance with the quality management requirements of the Group and external regulations where 
appropriate. All sOPs are reviewed on a regular basis and updated where necessary.
Insurance
t he Group has reviewed its portfolio of insurance policies with its insurance broker to ensure that the policies are appropriate to the Group’s activities.
Takeover directive
Disclosures relating to the takeover Directive are included in the Directors’ Report on pages 17 to 22.
Announcements
All announcements are approved by the Board of Directors prior to issue. t he Group also has internal and external checks to guard against 
unauthorised release of information.
On behalf of the Board
Mr A H Taylor
non-executive Chairman
21 December 2010
_2_PHY_ar10_Middle_[LP.SH].indd   17 26/01/2011   08:52:03 Phytopharm plc 34 Annual Report and Accounts 2010
t he Directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report and the financial statements in accordance 
with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. under that law the Directors have elected to prepare 
the Group and parent company financial statements in accordance with international Financial Reporting standards (“iFRss”) as adopted by the 
european union (“eu”). under company law the Directors must not approve the financial statements unless they are satisfied that they give a true 
and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. in preparing these financial 
statements, the Directors are required to:
Ì  select suitable accounting policies and then apply them consistently;
Ì  make judgements and accounting estimates that are reasonable and prudent; and
Ì  state whether applicable iFRss as adopted by the eu have been followed, subject to any material departures disclosed and explained in the 
financial statements.
t he Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and 
disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial 
statements and the Directors’ Remuneration Report comply with the Companies Act 2006 and, as regards the group financial statements, Article 
4 of the iAs Regulation. t hey are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable 
steps for the prevention and detection of fraud and other irregularities.
t he Directors are responsible for the maintenance and integrity of the Company’s website. l egislation in the united Kingdom governing the 
preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 
each of the Directors, whose names and functions are listed in the Board of Directors on page 16, confirm that, to the best of their knowledge:
Ì  the Group financial statements, which have been prepared in accordance with iFRss as adopted by the eu, give a true and fair view of the 
assets, liabilities, financial position and loss of the Group; and
Ì  the information contained in the Directors’ Report and the Business Review includes a fair review of the development and performance of the 
business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.
On behalf of the Board
Mrs Z McGowan
Company secretary
21 December 2010
Statement of Directors’ responsibilities
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w e have audited the financial statements of Phytopharm plc for the year ended 30 september 2010 which comprise the Consolidated statement 
of Comprehensive income, the Consolidated and Company Balance sheets, the Consolidated and Company statements of Changes in equity, the 
Consolidated and Company Cash Flow statements and the related notes. t he financial reporting framework that has been applied in their preparation 
is applicable law and international Financial Reporting standards (“iFRss”) as adopted by the eu and, as regards the parent company financial 
statements, as applied in accordance with the provisions of the Companies Act 2006.
Respective responsibilities of directors and auditors 
As explained more fully in the statement of Directors’ Responsibilities set out on page 34, the Directors are responsible for the preparation of the 
financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance 
with applicable law and international standards on Auditing (uK and ireland). t hose standards require us to comply with the Auditing Practices 
Board’s ethical standards for Auditors. 
t his report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 
of the Companies Act 2006 and for no other purpose. w e 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.
Scope of the audit of the financial statements 
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that 
the financial statements are free from material misstatement, whether caused by fraud or error. t his includes an assessment of: whether the 
accounting policies are appropriate to the Group’s and the parent Company’s circumstances and have been consistently applied and adequately 
disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements.
Opinion on financial statements 
in our opinion: 
Ì  the financial statements give a true and fair view of the state of the Group’s and of the parent company’s affairs as at 30 september 2010 and 
of the Group’s loss and Group’s and parent company’s cash flows for the year then ended;
Ì  the Group financial statements have been properly prepared in accordance with iFRss as adopted by the eu;
Ì  the parent company financial statements have been properly prepared in accordance with iFRss as adopted by the european union and as 
applied in accordance with the provisions of the Companies Act 2006; and
Ì  the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group 
financial statements, Article 4 of the lAs Regulation. 
Opinion on other matters prescribed by the Companies Act 2006 
in our opinion: 
Ì  the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and
Ì  the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the 
financial statements.
Independent auditors’ report
to the members of Phytopharm plc
_2_PHY_ar10_Middle_[LP.SH].indd   19 26/01/2011   08:52:03 Phytopharm plc 36 Annual Report and Accounts 2010
Matters on which we are required to report by exception 
w e have nothing to report in respect of the following: 
under the Companies Act 2006 we are required to report to you if, in our opinion: 
Ì  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 
Ì  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; or 
Ì  certain disclosures of Directors’ remuneration specified by law are not made; or 
Ì  we have not received all the information and explanations we require for our audit; or
Ì  a corporate governance statement has not been prepared by the parent Company. 
under the l isting Rules we are required to review: 
Ì  the Directors’ statement, set out on page 22, in relation to going concern; and
Ì  the parts of the Corporate Governance statement relating to the Company’s compliance with the nine provisions of the uK Corporate 
Governance Code specified for our review.
Simon Ormiston (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers ll P
Chartered Accountants and statutory Auditors
Cambridge
21 December 2010
Independent auditors’ report continued
to the members of Phytopharm plc
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       2010  2009 
     n ote  £  £
Revenue      2  696,854   867,426
Cost of sales       (87,447)  (186,761)
Gross profit       609,407   680,665 
Other income     2   17,120   245,196 
Operating expenses     3  (5,129,037)  (5,306,748)
Before exceptional items        (5,129,037)   (4,900,531)
exceptional items     4  —    (406,217)
Operating loss       (4,502,510)  (4,380,887)
Finance income     7  289,825   176,034 
Loss before taxation     8  (4,212,685)  (4,204,853)
taxation     9   411,171   294,165 
Loss and total comprehensive income for the year    (3,801,514) (3,910,688)
Basic and diluted loss per ordinary share (pence)     1 1  (1.3)  (4.1)
t he notes on pages 42 to 64 form part of these financial statements.
All revenues and expenses shown above were generated from continuing operations. All of the loss is attributable to the owners of the parent.
Consolidated statement of comprehensive income
for the year ended 30 september 2010
_2_PHY_ar10_Middle_[LP.SH].indd   21 26/01/2011   08:52:03 Phytopharm plc 38 Annual Report and Accounts 2010
  Group  Company
   2010  2009  2010  2009 
 note  £  £  £  £
Assets
Property, plant and equipment 12  112,904  102,366  —  —
intangible assets 13  —  99,400  —  —
investments 14  —  —  1,501,603  1,445,661
Amounts due from subsidiary  
undertaking 15  —  —  16,471,326  12,291,586
Non-current assets   112,904  201,766  17,972,929  13,737,247
inventories 16  —  249,474  —  —
trade and other receivables 17  480,974  228,019  209,794  22,054
Current tax receivable 9  411,171  294,855  —  —
money market investments 18  22,500,000  —  22,500,000  —
Cash and cash equivalents 19  1,108,171  3,910,1 17  484,469  3,683,802
Current assets  24,500,316  4,682,465  23,194,263  3,705,856
Total assets  24,613,220  4,884,231 41,167,192 17,443,103
Liabilities and equity 
trade and other payables 20  1,134,915  1,746,820  76,961  70,159
Current liabilities   1,134,915  1,746,820  76,961  70,159
Equity attributable to owners  
of the parent
Ordinary shares 24  3,466,774  945,484  3,466,774  945,484
share premium   77,278,113  55,709,052  76,782,706  55,213,645
merger reserve   (204,211)  (204,21 1)  —  —
Accumulated loss (57,062,371)  (53,312,914)  (39,159,249)  (38,786,185)
Total equity   23,478,305  3,137,41 1  41,090,231  17,372,944
Total liabilities and equity  24,613,220  4,884,231 41,167,192 17,443,103
t he notes on pages 42 to 64 form part of these financial statements.
t he financial statements comprising the Consolidated statement of Comprehensive income, the Consolidated and Company Balance sheets, 
the Consolidated and Company statements of Changes in equity, the Consolidated and Company Cash Flow statements and the related notes, 
were approved by the Board of Directors and were signed on its behalf by:
Mr T Sharpington Phytopharm plc
Chief executive Officer Registered number: 3131723
21 December 2010
Consolidated and Company balance sheets
at 30 september 2010
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  Ordinary    share    merger   Accumulated 
 shares    premium    reserve   losses  total 
Group £  £  £  £  £
Balance at 1 October 2008 945,484    55,671,139   (204,211)  (49,251,097)   7,161,315 
Comprehensive income
l oss attributable to owners  
of the parent  —    —    —   (3,910,688)  (3,910,688)
  —    —    —   (3,910,688)  (3,910,688)
Transactions with owners:
Recovery of share issue costs  —    37 ,913    —    —    37,913 
Purchase of shares in Phytopharm plc  —   —    —   (3,361)  (3,361)
Debit in respect of share options —    —    —   (147,768)  (147,768)
Transactions with owners  —    37,913    —   (151,129)  (113,216)
Balance at 30 September 2009  945,484   55,709,052   (204,211)  (53,312,914)   3,137,411 
Balance at 1 October 2009  945,484    55,709,052   (204,21 1)  (53,312,914)   3,137,411 
Comprehensive income
l oss attributable to owners  
of the parent  —    —    —   (3,801,514)    (3,801,514) 
  —    —    —   (3,801,514)    (3,801,514)
Transactions with owners:
issue of ordinary shares  2,521,290    21,569,061    —    —    24,090,351 
Purchase of shares in Phytopharm plc  —    —    —   (3,885)  (3,885)
Credit in respect of share options  —    —    —    55,942    55,942 
Transactions with owners 2,521,290    21,569,061    —    52,057    24,142,408
Balance at 30 September 2010  3,466,774  77,278,113   (204,211) (57,062,371) 23,478,305 
t he notes on pages 42 to 64 form part of these financial statements.
Consolidated statement of changes in equity
for the year ended 30 september 2010
_2_PHY_ar10_Middle_[LP.SH].indd   23 26/01/2011   08:52:03 Phytopharm plc 40 Annual Report and Accounts 2010
    Ordinary    share   Accumulated 
   shares    premium   losses  total 
Company   £  £  £  £
Balance at 1 October 2008   945,484    55,175,732  (38,233,346)   17,887,870
Comprehensive income
l oss for the year    —    —    (405,071)  (405,071)
    —    —    (405,071)  (405,071)
Transactions with owners:
Recovery of share issue costs    —    37 ,913   —    37,913 
Debit in respect of share options   —    —   (147,768)  (147,768)
Transactions with owners    —    37,913   (147,768)  (109,855)
Balance at 30 September 2009   945,484   55,213,645  (38,786,185)   17,372,944 
Balance at 1 October 2009    945,484    55,213,645   (38,786,185)   17,372,944 
Comprehensive income
l oss attributable to owners  
of the parent    —    —    (429,006)    (429,006) 
    —    —     (429,006)    (429,006) 
Transactions with owners:
issue of ordinary shares    2,521,290    21,569,061    —    24,090,351 
Credit in respect of share options    —    —     55,942   55,942 
Transactions with owners   2,521,290   21,569,061   55,942   24,146,293 
Balance at 30 September 2010  3,466,774   76,782,706  (39,159,249)  41,090,231
t he notes on pages 42 to 64 form part of these financial statements.
Company statement of changes in equity
for the year ended 30 september 2010
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Consolidated and Company cash flow statements
for the year ended 30 september 2010
  Group  Company
   2010  2009  2010  2009 
   £  £  £  £
Cash flows from operating activities
Operating loss   (4,502,510)   (4,380,887)   (718,335)   (575,515)
Depreciation    67,198    100,975    —    — 
impairment of intangible asset   99,400    —    —   — 
(Gain)/loss on disposal of property, plant  
and equipment   (4,108)   8,740    —    — 
share option charge/(credit)   55,942    (147,768)   —    — 
   (4,284,078)   (4,418,940)   (718,335)   (575,515)
Changes in working capital
(increase)/decrease in trade and other receivables (90,254)   255,856    (25,307)   162,573 
(Decrease)/increase in trade and other payables   (611,905)   413,234    6,802    (60,485)
Decrease in inventories   249,474    150,757    —    — 
Cash used in operations   (4,736,763)   (3,599,093)   (736,840)   (473,427)
taxation received    294,855    199,418    —    — 
Net cash used in operating activities   (4,441,908)   (3,399,675)   (736,840)   (473,427)
Cash flows from investing activities 
Purchase of property, plant and equipment   (85,128)   (42,261)   —    — 
sale of property, plant and equipment    11,500    34,400    —    — 
investment in shares of Phytopharm plc   (3,885)   (3,361)   —  —
interest received    127,124   176,034    126,896    170,443 
l oan to subsidiary undertaking    —    —    (4,179,740)   (2,288,077)
Net cash generated from/(used in) investing activities 49,611    164,812    (4,052,844)   (2,117,634)
Cash flows from financing activities       
issue of shares   25,212,904    —    25,212,904    — 
share issue costs   (1,122,553)   —    (1,122,553)   — 
share issue costs recovered   —    37,913    —    37,913 
movement in money market investments   (22,500,000)   5,500,000  (22,500,000)   5,500,000 
Net cash generated from financing activities 1,590,351    5,537,913    1,590,351    5,537,913 
Movements in cash and cash equivalents in the year (2,801,946)   2,303,050    (3,199,333)   2,946,852 
Cash and cash equivalents at the beginning of the year 3,910,117    1,607,067    3,683,802    736,950 
Cash and cash eq uivalents at the end of the year 1,108,171    3,910,117    484,469    3,683,802 
money market investments at the end of the year 22,500,000    —    22,500,000    — 
Total cash, cash equivalents and  
money market investments   23,608,171    3,910,117    22,984,469   3,683,802 
t he notes on pages 42 to 64 form part of these financial statements.
_1_PHY_ar10_Back_[LP.SH].indd   1 26/01/2011   08:52:10 Phytopharm plc 42 Annual Report and Accounts 2010
Notes to the financial statements
for the year ended 30 september 2010
1 Accounting policies and basis of preparation
Phytopharm plc is a public limited company incorporated in england and w ales and domiciled in the uK with a listing on the l ondon stock 
exchange. t he address of its registered office is l akeview House, 2 l akeview Court, ermine Business Park, Huntingdon, Cambridgeshire Pe29 6uA.
t he principal accounting policies adopted in the preparation of these financial statements are set out below. t hese policies have been consistently 
applied to both years presented, unless otherwise stated. 
Basis of preparation
t hese financial statements have been prepared in accordance with international Financial Reporting standards (“iFRss”) as adopted by the eu, 
iFRiC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under iFRs. t he financial statements have 
been prepared on a historical cost basis.
Going concern
At 30 september 2010, the Group had cash resources (being cash and cash equivalents and money market investments) of £23,608,171.
After making enquiries and taking into account management’s estimate of future expenditure, the Directors have a reasonable expectation that 
the Group will have adequate financial resources to continue in operation for the foreseeable future.
Basis of consolidation
t he acquisition by the Company’s subsidiary, Phytotech l imited (formerly Phytopharm l imited), of Phytodevelopments l imited on 21 march 1996 
has been accounted for as a merger in the consolidated financial statements and all transactions between the two companies have been eliminated.
On 3 April 1996 the Group structure was reorganised and a new holding company established by way of a share exchange. t his has been 
accounted for as a merger in the consolidated accounts, and all transactions within the Group have been eliminated.
t here has been no change to the basis set out as a result of the implementation of iFRs, as permitted by iFRs1, ‘First time adoption of international 
Financial Reporting standards’.
Accounting developments
a) t he following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 October 2009.
iFRs 8, ‘Operating segments’ (effective 1 January 2009). iFRs 8 replaces iAs 14, ‘segment reporting’. it requires a ‘management approach’ under 
which segment information is presented on the same basis as that used for internal reporting purposes. management considers that there is only 
one reportable segment: research and development programmes, including pharmaceutical products and residual functional foods.
iAs 1 (revised), ‘Presentation of financial statements’ (effective 1 January 2009). t he revised standard prohibits the presentation of items of income 
and expenses (that is ‘non-owner changes in equity’) in the statement of changes in equity, requiring ‘non-owner changes in equity’ to be 
presented separately from owner changes in equity. All ‘non-owner changes in equity’ are required to be shown in a performance statement. 
entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income 
statement and statement of comprehensive income). t he Group has presented a statement of comprehensive income prepared under the revised 
disclosure requirements. 
iFRs 2 (amendment), ‘share-based payment’ (effective 1 January 2009). t he revised standard deals with vesting conditions and cancellations. 
it clarifies that vesting conditions are either service or performance conditions only. Other features of a share-based payment would need to be 
included in the grant date fair value calculation for transactions with employees and others providing similar services; they would not impact the 
number of awards expected to vest or valuation thereof subsequent to grant date. Prior to the adoption of the amendment to iFRs 2, any 
cancellations made by employees under the Group’s save As You earn Plan resulted in the reversal of all charges to date. t he amendment requires 
that cancellations are treated as accelerated vestings and all remaining charges are immediately recognised in the income statement with the 
credit recognised in equity. t here have been no cancellations of options under the save As You earn Plan and therefore there is currently no 
impact of the amendment to this standard.
_1_PHY_ar10_Back_[LP.SH].indd   2 26/01/2011   08:52:10 43 Phytopharm plc Annual Report and Accounts 2010
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1 Accounting policies and basis of preparation continued
Accounting developments continued
iFRs 7 (amendment), ‘Financial instruments – Disclosures’ (effective 1 January 2009). t he amendment increases the disclosure requirements about 
fair value measurement and reinforces existing principles for disclosure about liquidity risk. t he amendment introduces a three-level hierarchy for 
fair value measurement disclosure and requires some specific quantitative disclosures for financial instruments in the lowest level in the hierarchy. 
in addition, the amendment clarifies and enhances existing requirements for the disclosure of liquidity risk primarily requiring a separate liquidity 
risk analysis for derivative and non-derivative financial liabilities. see note 22 for further details.
t he amendment has not had a significant impact on the disclosures about fair value measurement as the Group does not have any derivative 
financial instruments.
iAs 23 (revised), ‘Borrowing costs’ (effective 1 January 2009). A result of the joint short-term convergence project with the FAsB, this new standard 
requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of 
the cost of that asset. t he option of immediately expensing those borrowing costs has been removed. t his is currently not relevant to the Group.
iFRs 3 (revised), ‘Business combinations’ (effective 1 July 2009). t he revision to this standard changes accounting for business combinations. w hile 
the acquisition method is still applied, there are significant changes to the treatment of contingent payments, transaction costs and the 
calculation of goodwill. t his is currently not relevant to the Group.
iAs 27 (revised), ‘Consolidated and separate financial statements’ (effective 1 July 2009). t his revises the accounting for transactions with 
non-controlling interests. t his is not relevant to the Group as it does not have any non-controlling interests.
Amendment to iFRs 1, ‘First time adoption of iFRs’ and iAs 27, ‘Consolidated and separate financial statements’ (effective 1 July 2009). t his allows 
first-time adopters to use a deemed cost of either fair value or the carrying amount under previous accounting practice to measure the initial cost 
of investment in subsidiaries, jointly controlled entities and associates in the separate financial statements. t he amendment also removed the 
definition of the cost method from iAs 27 and replaced it with a requirement to present dividends as income in the separate financial statements 
of the investor. t his is currently not relevant to the Group.
Amendment to iAs 32, ‘Financial instruments: Presentation’, and iAs 1, ‘Presentation of financial statements’ (effective 1 January 2009). t his 
amendment requires entities to classify the following types of financial instruments as equity, provided they have particular features and meet 
specific conditions:
Ì Puttable financial instruments; and
Ì  instruments, or components of instruments, that impose on the entity an obligation to deliver to another party a pro rata share of the net 
assets of the entity only on liquidation. 
t his is not relevant to the Group.
iAs 39 (amendment), ‘Financial instruments; Recognition and measurement on eligible hedged items’ (effective 1 July 2009). t he amendment 
makes two significant changes. it prohibits designating inflation as a hedgable component of a fixed rate debt. it also prohibits including time 
value in the one-sided hedged risk when designating options as hedges. t his does not currently impact the Group. 
iFRiC 15, ‘Agreements for construction of real estates’ (effective 1 January 2009 but eu-endorsed from 1 January 2010). t he interpretation clarifies 
which standard (iAs 18 or iAs 11) should be applied to particular transactions and is likely to mean that iAs 18 will be applied to a wider range of 
transactions. t his is currently not relevant to the Group.
_1_PHY_ar10_Back_[LP.SH].indd   3 26/01/2011   08:52:10 Phytopharm plc 44 Annual Report and Accounts 2010
Notes to the financial statements continued
for the year ended 30 september 2010
1 Accounting policies and basis of preparation continued
Accounting developments continued
iFRiC 16, ‘Hedges of a net investment in a foreign operation’ (effective 1 October 2008 but eu-endorsed for use from 1 July 2009). t his 
interpretation clarifies certain areas in respect of net investment hedging. t his is currently not relevant to the Group.
iFRiC 17, ‘Distributions of non-cash assets to owners’ (effective 1 July 2009). t his interpretation clarifies how an entity should measure distributions 
of assets, other than cash, when it pays dividends to its owners. t he interpretation states that; 1) a dividend payable should be recognised when 
appropriately authorised; 2) it should be measured at the fair value of the net assets to be distributed; and 3) the difference between the fair value of 
the dividend paid and the carrying amount of the net assets distributed should be recognised in profit or loss. t his is currently not relevant to the Group.
(b) Forthcoming accounting standards
t he following standards and amendments to existing standards have been published and are mandatory for the Group’s accounting periods 
beginning on or after 1 October 2010:
iFRiC 18, ‘transfer of assets from customers’ (effective 1 July 2009 but eu-endorsed for use from 31 October 2009);
Annual improvements 2009 (effective 1 January 2010);
Amendment to iFRs 1, ‘First time adoption’ on additional exemptions (effective 1 January 2010);
Amendment to iFRs 2, ‘share-based payments’ on group cash-settled transactions (effective 1 January 2010);
Amendment to iAs 32, ‘Financial instruments: Presentation’ on classification of rights issues (effective 1 February 2010);
Amendment to iFRs 1, ‘First time adoption’ on ‘Financial instrument disclosures’ (effective 1 July 2010);
iFRiC 19, ‘extinguishing financial liabilities with equity instruments’ (effective 1 July 2010);
Amendment to iAs 24, ‘Related party disclosures’ (effective 1 January 2011);
Annual improvements 2010 (effective 1 January 2011, although not yet eu-endorsed);
Amendment to iFRiC 14, ‘Prepayments of minimum funding requirement’ (effective 1 January 2011);
Amendments to iFRs 7, ‘Financial instruments: Disclosures’ on derecognition (effective 1 July 2011, although not yet eu-endorsed); and
iFRs 9, ‘Financial instruments’ on ‘classification and measurement’ (effective 1 January 2013, although not yet eu-endorsed).
t he Directors do not anticipate that the adoption of these standards will have a significant impact on the financial statements of the Group when 
they come into effect for periods commencing on or after 1 October 2010.
Critical accounting judgements
t he preparation of the consolidated financial statements requires the Directors to make judgements, estimates and assumptions that affect the 
application of policies and reported amounts of assets and liabilities, income and expenses. t he main accounting judgements relate to the 
determination of the carrying value of investments in subsidiaries and the share option charge and the underlying assumptions. t he Directors have 
assessed the carrying value of the investments and the inputs to the share option charge calculation and there is not considered to be a 
reasonable change to a metric that would result in a material adjustment to the carrying value of the investments or the share option charge.
t he estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under 
the circumstances, the results of which form the basis of making judgements about carrying value of assets and liabilities that are not readily 
apparent from other sources. Actual results may differ from these estimates. t he estimates and underlying assumptions are reviewed on an 
ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year, 
or in the year of revision and future years if the revision affects both current and future years.
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1 Accounting policies and basis of preparation continued
Revenue
Revenue, which excludes value added tax, represents the invoiced value of goods and services supplied, net of certain promotional activity. 
Revenue from sales of products is recognised when the risks and rewards of ownership pass to the customer and is stated net of value added tax.
Amounts received or receivable in respect of research and development contracts, collaborative research agreements, licence fees or milestone 
payments are recognised as revenue when the licence rights are granted or the specific conditions stipulated in the agreements have been 
satisfied and provided that there are no future obligations. t hese amounts are shown gross of any withholding tax. 
Other income
Other income, which excludes value added tax, represents amounts received or receivable from charitable organisations.
Cost of sales and operating expenses
Cost of sales comprises the proportion of milestone and royalty income earned by the Group and due to third parties under licence agreements 
and the direct cost of goods sold, including distribution costs. 
Research and development expenditure
All research and development costs, whether funded by third parties under licence and development agreements or not, are included within 
operating expenses and classified as research and development costs.
All on-going development expenditure is currently expensed in the year in which it is incurred. Due to the regulatory and other uncertainties 
inherent in the development of the Group’s products, the criteria for development costs to be recognised as an asset, as prescribed by iAs 38 
‘intangible assets’, are not met until the product has been submitted for regulatory approval, such approval has been received, and it is probable 
that future economic benefits will flow to the Group. t he Group does not currently have any such internal development costs that qualify for 
capitalisation as intangible assets.
exceptional items
exceptional items represent significant items of income or expense which due to their nature or the expected infrequency of the events giving rise 
to them, are presented separately on the face of the income statement to give a better understanding to shareholders of the elements of financial 
performance during the year. t his disclosure will facilitate comparison with prior years and enable the reader to better assess trends in financial performance.
share-based payments
t he Group makes equity-settled share-based payments to its employees and Directors. equity-settled share-based payments are measured at fair 
value at the date of grant and are expensed on a straight line basis over the vesting period of the award. At each balance sheet date, the Group 
revises its estimate of the number of options that are expected to become exercisable. t he share-based payment charge/(credit) is allocated to 
research and development expenses and administrative expenses on the basis of staff numbers, with a corresponding adjustment to equity.
employee benefits
All employee benefit costs, notably holiday pay and contributions to Group or personal defined contribution plans, are charged to the income 
statement on an accruals basis. t he Group operates a defined contribution pension scheme. t he assets of this scheme are held separately from 
those of the Group in independently administered funds. t he Group does not offer any other post retirement benefits.
Operating leases
Costs in respect of operating leases are charged to the income statement on a straight line basis over the lease term. 
_1_PHY_ar10_Back_[LP.SH].indd   5 26/01/2011   08:52:10 Phytopharm plc 46 Annual Report and Accounts 2010
Notes to the financial statements continued
for the year ended 30 september 2010
1 Accounting policies and basis of preparation continued
Property, plant and equipment
Property, plant and equipment are stated at historic purchase cost less accumulated depreciation. t he cost of property, plant and equipment is its 
purchase cost, together with any incidental expenses of acquisition. Depreciation is calculated so as to write off the cost of property, plant and 
equipment, less its estimated residual value, on a straight line basis over the expected useful economic lives of the assets concerned.
t he principal rates used for this purpose are:
Plant and machinery 20% 
Computer equipment 33% 
Fixtures and fittings 20% 
motor vehicles 25%
l easehold improvements are depreciated over the shorter of the lease term and the asset’s useful economic life. 
t he assets’ residual values and useful lives are reviewed, and adjusted if necessary at each balance sheet date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within the operating loss.
intangible assets
intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost 
less any accumulated amortisation and any accumulated impairment losses. At each balance sheet date the Group reviews the carrying amount of 
its intangible assets to determine whether there is any indication that these assets have suffered an impairment loss.
impairment of assets
non-current assets are reviewed for impairment both annually and when there is an indication that an asset may be impaired (when events or 
changes in circumstances indicate that carrying value may not be recoverable). An impairment loss is recognised in the income statement for the 
amount by which the asset’s carrying value exceeds its recoverable amount. t he recoverable amount is the higher of an asset’s fair value less cost 
to sell and value in use.
investments in subsidiary
investments in subsidiary undertakings are carried at cost less any impairment provision. such investments are subject to an annual review, and 
any impairment is charged to the income statement. t he fair value of the options granted after 7 november 2002 by Phytopharm plc to the 
employees of Phytotech l imited which had not vested by 1 september 2005 is also included in the value of the investment.
inventory
inventory, including raw materials, work in progress and finished goods is stated on a first in first out basis at the lower of cost and net realisable 
value. Cost represents direct materials and, where applicable, production overheads. w here necessary, provision is made for obsolete, slow-moving 
or defective inventory.
trade and other receivables
trade receivables are non-interest bearing and are initially stated at their fair value, as reduced by appropriate allowances for estimated 
irrecoverable amounts.
money market investments
money market investments have fixed maturities that the Group’s management has the positive intention to hold to maturity. t hese investments 
include short-term investments with an original maturity date of more than three months.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, bank deposits repayable on demand and other short-term highly liquid investments with original 
maturities at inception of 90 days or less.
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1 Accounting policies and basis of preparation continued
Foreign currency translation
items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment 
in which the entity operates (“the functional currency”). t he consolidated financial statements are presented in sterling (“£”), which is the 
Company’s functional and presentation currency.
transactions denominated in foreign currencies are translated into sterling, being the functional currency of the Group, at actual rates of exchange 
ruling at the date of transaction. monetary assets and liabilities expressed in foreign currencies are translated into sterling at rates of exchange 
ruling at the end of the financial year. All foreign currency exchange differences are taken to the income statement in the year in which they arise.
Current tax
Current tax represents uK tax recoverable and is provided at amounts expected to be recovered using the tax rates and laws that have been 
enacted at the balance sheet date.
Deferred taxation
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities 
and their carrying amounts in the consolidated financial statements in accordance with iAs 12, ‘income taxes’. Deferred tax is not accounted for 
if it arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction 
affects neither the accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or 
substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred 
income tax liability is settled. A deferred tax asset is recognised only to the extent that it is probable that sufficient taxable profit will be available 
in future years to utilise the temporary difference.
trade and other payables
trade payables are non-interest bearing and are initially stated at their fair value and subsequently held at amortised cost.
Ordinary shares and share premium
equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
employee share trust
t he Company recognises the assets and liabilities of the trust in its own accounts and shares held by the trust are recorded at cost as a deduction 
at arriving at shareholders’ funds until such time as the shares vest unconditionally to employees. t he trust is a separately administered trust, 
funded by contributions from employees and Phytotech l imited, whose assets comprise shares in the Company.
segmental information
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. t he chief operating 
decision maker has been identified as the executive Directors.
Company income statement
in accordance with the provisions of section 408 of the Companies Act 2006, no separate income statement has been presented for the 
Company. t he results of the Company are also prepared under iFRs.
_1_PHY_ar10_Back_[LP.SH].indd   7 26/01/2011   08:52:10 Phytopharm plc 48 Annual Report and Accounts 2010
Notes to the financial statements continued
for the year ended 30 september 2010
2 Business and geographical segments
t he Group’s development and other functions operating across all the Group’s research programmes, are managed centrally and are reported 
internally as a single business. t his also applies to the Group’s marketed products. t he chief operating decision maker has been identified as the 
executive Directors of Phytopharm plc. t he executive Directors review the Group’s internal reporting in order to assess performance and allocate 
resources. management has determined the operating segment based on these reports. Accordingly, the Directors consider that there is only one 
reporting segment.
Revenue by final destination of the sale is as follows:
           2010 2009 
           £ £
Revenue
europe            566,717 607,489 
united Kingdom          — 136,506 
Asia           130,137  118,935 
south Africa          — 4,496 
           696,854  867,426 
Other income           
us A
(i)
           17,120  245,196 
           713,974  1,1 12,622 
(i) Represents grant income recognised
All non-current assets are located in the united Kingdom (2009: all).
t he Group has revenue exceeding 10% from more than one customer:
           2010 2009 
           £ £
Customer A          506,717  575,299 
Customer B          116,611  80,997 
Customer C          17,120  245,196 
Customer D          60,000  135,606 
3 Operating expenses
           2010 2009 
           £ £
Research and development         4,013,486  3,913,876 
Administrative expenses         1,115,551  1,392,872 
            5,129,037  5,306,748 
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4 Exceptional items
exceptional items represent significant items of income or expense which, due to their nature or the expected infrequency of the events giving 
rise to them, are presented separately on the face of the income statement to assist the reader of the financial statements. t here were no 
exceptional items in the year ended 30 september 2010. 
exceptional items in the year ended 30 september 2009 comprised the restructuring costs following the Group’s business strategy review of 
£100,619 together with the costs of the contractual notice periods and certain post termination payments for the former Chief executive Officer 
of £135,985 and the former Chief Financial Officer of £169,613. t hese exceptional items comprised £130,992 of research and development costs 
and £275,225 of administrative expenses. t here was no tax effect of these items.
5 Directors’ emoluments
           2010 2009 
           £ £
Aggregate emoluments         349,605  240,496 
Contributions to money purchase pension schemes       12,497  6,372 
           362,102  246,868 
t here were no gains made by individual Directors from the exercise of share options for the year ended 30 september 2010 (2009: nil).
Detailed disclosures of Directors’ individual remuneration and share options are given in the Remuneration Report on pages 23 to 28.
two of the executive Directors (2009: two) had retirement benefits accruing to them from money purchase pension schemes in respect 
of qualifying services.
6 Employee information
t he average monthly number of persons (including executive Directors) employed during the year was:
           2010 2009 
           Number number
Administration          5  6 
Research and development         15  21 
           20   27 
           2010 2009 
           £ £
Staff costs (for the above persons):
w ages and salaries          1,126,653  1,209,052 
social security costs          100,810  92,759 
Other pension costs           54,973  54,409 
share option charge/(credit)         55,942 (147,768)
           1,338,378  1,208,452 
_1_PHY_ar10_Back_[LP.SH].indd   9 26/01/2011   08:52:10 Phytopharm plc 50 Annual Report and Accounts 2010
Notes to the financial statements continued
for the year ended 30 september 2010
6 Employee information continued
Key management compensation
           2010 2009 
           £ £
short-term employee benefits         689,968  713,467 
Post employment benefits         25,173  16,764 
share-based payments          33,345  (563,580)
           748,486  166,651 
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the 
Group, directly or indirectly, including all executive Directors and non-executive Directors. t he number of management personnel whose 
remuneration is included above is 6 (2009: 5).
included within wages and salaries is an amount of £71,840 (2009: £73,040) paid in consultancy costs for the services of the interim Chief Operating Officer, 
Keith t homson, paid to t homson Business Consultancy l imited, of which Keith t homson is a director. in the year ended 30 september 2009, 
a further £150,250 was paid to a third party consultancy company in respect of the services of the interim Chief Operating Officer.
t he Company has no employees (2009: none).
7 Finance income
interest receivable represents interest from cash and cash equivalents and money market deposits.
           2010 2009 
           £ £
Cash and cash equivalents         93,678  69,795 
money market investments         196,147  106,239 
           289,825  176,034 
8 Loss before taxation
           2010 2009 
           £ £
l oss before taxation is stated after charging/(crediting):
Depreciation charge for the year:
 Owned property, plant and equipment         67,198 100,975 
(Gain)/loss on disposal of property, plant and equipment       (4,108)  8,740 
impairment charge for intangible asset         99,400  —
Fees payable to the Company’s auditors for the audit of the parent company
and consolidated financial statements         27,000  26,000 
Fees payable for other services supplied pursuant to legislation      10,000  9,800 
Fees payable for the audit of the Company’s subsidiaries pursuant to legislation     6,000  6,000 
tax services          25,642  8,500 
Foreign exchange loss          36,299  192,763 
Operating lease charges:
 Plant and machinery         — 89 
 Other           104,127 75,713 
in addition to the fees payable to the Company’s auditor disclosed above, £108,000 was paid to the Company’s auditor in respect of fees for other 
services supplied pursuant to legislation. t hese fees have been recorded against the share premium account.
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9 Taxation
           2010 2009 
           £ £
Current tax:
uK corporation tax
Current uK corporation tax credit on loss for the year       411,171  294,855 
Adjustment in respect of prior year         — (690)
Current uK corporation tax credit on loss for the year       411,171  294,165 
no corporation tax liability arises on the results for the year due to the loss incurred (2009: £nil). t he Company has taken advantage of the 
research and development corporation tax credits introduced in the Finance Act 2000 whereby a company may surrender corporation tax losses 
incurred on research and development expenditure for a corporation tax refund at the rate of 24.5 pence in the pound of actual spend.
t he tax on the Group’s loss before taxation differs from the theoretical amount that would arise using the weighted average tax rate applicable to 
losses of the Group as follows:
           2010 2009 
           £ £
l oss before taxation          (4,212,685) (4,204,853)
l oss before taxation multiplied by the standard rate for research and 
development tax credits at 14% (2009: 14%)        (589,776) (588,679)
effect of:    
Difference between depreciation and capital allowances       4,690   6,988
expenses not deductible for tax purposes        92 99 
effect of share option charge/(credit)        7,832  (20,688)
enhanced research and development expenditure       (176,216) (126,366)
Adjustment in respect of prior year         — 690 
Carried forward losses          342,207 433,791 
tax credit for the year          (411,171) (294,165)
see note 21 for details of the potential deferred tax assets that have not been recognised due to uncertainty as to the timing of their utilisation. 
see note 26 for details of the impact on the potential deferred tax assets of changes to the uK corporation tax system announced in the June 
2010 Budget statement.
10 Loss for the financial year
As permitted by section 408 of the Companies Act 2006 the parent company’s income statement has not been included in these financial 
statements. t he parent company’s loss for the year to 30 september 2010 was £429,006 (2009: £405,071).
11 Loss per ordinary share
Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary shares 
outstanding during the year after the deduction of the weighted average number of the ordinary shares held by the employee benefit trust during 
the year.
For diluted loss per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion for all dilutive potential 
ordinary shares. t he Company has no dilutive potential ordinary shares in issue because it is loss making.
           2010 2009
Attributable loss (£)          (3,801,514) (3,910,688)
w eighted average number of shares in issue        284,234,443  94,548,391
Basic and diluted loss per ordinary share (pence)       (1.3) (4.1)
_1_PHY_ar10_Back_[LP.SH].indd   11 26/01/2011   08:52:11 Phytopharm plc 52 Annual Report and Accounts 2010
Notes to the financial statements continued
for the year ended 30 september 2010
12 Property, plant and equipment
        l easehold  Computer  motor  Plant and  Fixtures 
       improvements   equipment  vehicles  machinery  and fittings  total  
Group       £  £  £  £  £  £
Cost
At 1 October 2009       9,184  251,355  95,000  28,838  189,687  574,064 
Additions        32,637  22,562  — 1,277  28,652  85,128 
Disposals        (9,184)  (40,660)  (33,696)  (11,066)  (88,285)  (182,891) 
At 30 September 2010      32,637  233,257  61,304  19,049  130,054  476,301
Accumulated depreciation
At 1 October 2009       5,142  188,090  82,866  25,314  170,286  471,698 
Charge for year       3,789  39,441  10,941  1,262  11,765  67,198 
Disposals        (6,920)  (39,887)  (33,696)  (9,295)  (85,701)  (175,499) 
At 30 September 2010      2,011  187,644  60,111  17,281  96,350  363,397
Net book value
At 30 September 2010      30,626  45,613  1,193  1,768  33,704  112,904 
At 30 september 2009      4,042  63,265  12,134  3,524  19,401  102,366 
        l easehold  Computer  motor  Plant and  Fixtures 
       improvements  equipment  vehicles  machinery  and fittings  total  
Group       £  £  £  £  £  £ 
Cost            
At 1 October 2008       3,363  296,694  160,677  28,271  188,368  677,373
Additions        5,821  8,704  25,850  567  1,319  42,261 
Disposals        — (54,043)  (91,527)  — —  (145,570) 
At 30 September 2009      9,184  251,355  95,000  28,838  189,687  574,064
Accumulated depreciation
At 1 October 2008       3,363  193,622  95,695  23,619  156,854  473,153
Charge for year       1,779  45,839  38,230  1,695  13,432  100,975 
Disposals       — (51,371)  (51,059) — — (102,430)
At 30 September 2009      5,142  188,090  82,866  25,314  170,286  471,698
Net book value
At 30 September 2009      4,042  63,265  12,134  3,524  19,401  102,366
At 30 september 2008      —  103,072  64,982  4,652  31,514  204,220
Company
t he Company has no property, plant and equipment (2009: £nil).
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13 Intangible assets
           2010 2009 
           £ £
Cost
At 1 October and 30 september          99,400 99,400
impairment at 1 October          — — 
Charge for the year           (99,400) — 
impairment at 30 september          (99,400) —
Net carrying value at 30 September        — 99,400 
intangible assets represent patent and know-how licences acquired externally that have been recognised as an asset at cost. At each balance sheet 
date the Group reviews the carrying amount of its intangible assets to determine whether there is any indication that these assets have suffered 
an impairment loss.
Following a review at 31 march 2010, the Group’s interim balance sheet date, an impairment charge of £99,400 was recorded in operating 
expenses to write down to £nil the carrying value of the intangible assets. t he intangible assets were impaired as a result of the Groups strategy of 
focusing on specific chemical entities as pharmaceutical products, which means that the intangible assets are no longer expected to be utilised.
Company
t he Company has no intangible assets (2009: £nil).
14 Investments
 Group  Company
         2010 2009 2010 2009 
investment in Group undertakings       £ £ £ £
At 1 September        — — 1,445,661 1,593,429 
increase/(decrease) in capital contribution relating to share-based payments   — —  55,942  (147,768)
At 30 September        — —  1,501,603 1,445,661 
t he capital contribution relating to share-based payments relates to share options granted by the Company to employees of subsidiary 
undertakings in the Group. Refer to note 25 for further details on the Group’s share option schemes.
interests in Group undertakings
 Proportion of voting rights and nominal  
 value of issued shares held by
     Country of   Description of     
name of undertaking    incorporation   shares held  Group %  Company %
Phytotech l imited england and w ales Ordinary 10 pence shares 100 100
Phytodevelopments l imited england and w ales Ordinary £1 shares 100 —
Both the above companies have been included in these financial statements and operated principally in their country of incorporation or registration.
t he principal business activities of these subsidiary undertakings are:
Ì Phytotech l imited – development of pharmaceutical products and functional foods; and
Ì Phytodevelopments l imited – dormant.
_1_PHY_ar10_Back_[LP.SH].indd   13 26/01/2011   08:52:11 Phytopharm plc 54 Annual Report and Accounts 2010
Notes to the financial statements continued
for the year ended 30 september 2010
15 Amounts due from subsidiary undertaking
 Group  Company
         2010 2009 2010 2009 
         £ £ £ £
Amounts due from subsidiary undertaking      — — 16,471,326  12,291,586 
no provision was made against the amount due to the Company from its subsidiary undertaking during the year (2009: £nil).
t here are no fixed terms in respect of amounts owed by subsidiary undertakings. t hese are non-interest bearing, unsecured and not payable on demand.
16 Inventories
 Group
           2010 2009 
           £ £
w ork in progress           —   126,292 
Raw materials and consumables          —  123,182 
            —  249,474 
in the year ended 30 september 2010, raw materials and consumables to the value of £80,778 (2009: £80,588) were recognised as an expense 
in cost of sales. t he value of raw materials and consumables was written down to net realisable value during the year as an expense of £42,403 
(2009: £462) recognised in research and development expenses within operating expenses. 
w ork in progress to the value of £126,292 has been written off during the year (2009: £nil) due to lower than expected sales of Phytopica®. 
t he expense of £126,292 has been recognised in research and development expenses within operating expenses.
no finished goods were recognised as an expense during the year (2009: £69,708).
t he Company has no inventories (2009: £nil).
17 Trade and other receivables
t he fair value of trade and other receivables are their current book values.
  Group    Company
         2010 2009 2010 2009 
         £ £ £ £
trade receivables         —   44,794  —  — 
Other receivables         59,926   11,803   7,797  (3,943)
Prepayments and accrued income        421,048   171,422   201,998   25,997 
          480,974   228,019   209,795   22,054 
As of 30 september 2010, the Group had no trade receivables. As of 30 september 2009, all trade receivables were fully performing and aged less 
than three months from their due date. t hese related to independent customers for whom there was not recent history of default.
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17 Trade and other receivables continued
t he carrying amounts of the Group’s trade receivables are denominated in the following currencies:
  Group    Company
         2010 2009 2010 2009 
         £ £ £ £
sterling          —  6,228   —  —
us dollar          —   36,280   —   — 
south African rand         —   2,286   —   — 
          —   44,794   —   — 
18 Money market investments
  Group    Company
         2010 2009 2010 2009 
         £ £ £ £
Held-to-maturity financial assets        22,500,000   —   22,500,000   — 
t hese represent fixed-rate short-term deposits placed with a range of banks at fixed terms.
19 Cash and cash equivalents
  Group    Company
         2010 2009 2010 2009 
         £ £ £ £
Cash and cash equivalents        1,108,171   3,910,117   484,469   3,683,802 
t he Company holds its excess cash and cash equivalents in a combination of fixed interest accounts and fixed term money market deposits. 
At 30 september 2010 and 30 september 2009 these did not exceed three months in duration. t he fair value of cash and cash equivalents 
approximates their carrying value.
20 Trade and other payables
t he fair value of trade and other payables approximates their current book values.
  Group    Company
         2010 2009 2010 2009 
         £ £ £ £
trade payables         354,219   203,597   36,970   14,724 
Other taxation and social security        36,364   32,160   —  —
Other payables         11,502   5,871   —   — 
Accruals and deferred income        732,830   1,505,192   39,991   55,435 
          1,134,915   1,746,820   76,961   70,159 
_1_PHY_ar10_Back_[LP.SH].indd   15 26/01/2011   08:52:11 Phytopharm plc 56 Annual Report and Accounts 2010
Notes to the financial statements continued
for the year ended 30 september 2010
21 Provisions
Deferred taxation
t he Group and Company have the potential deferred tax assets shown below, which are not recognised due to uncertainty as to the timing of their utilisation.
  Group    Company
         2010 2009 2010 2009 
         £ £ £ £
tax effect of timing differences:        
Depreciation in excess of tax allowances       329,776   332,609   7,902   8,195 
Accumulated losses         1 1,448,286   11,186,799   1,087,228   1,007,374 
          1 1,778,062   11,519,408   1,095,130   1,015,569 
A number of changes to the uK corporation tax system were announced in the June 2010 Budget statement. t he Finance Bill 2010–2011 (enacted 
in July 2010) includes legislation to reduce the main rate of corporation tax from 28% to 27% from 1 April 2011.
Consequently, potential deferred tax assets relating to temporary differences expected to reverse prior to 1 April 2011 have been measured at 
28% and potential deferred tax assets relating to temporary differences expected to reverse after 1 April 2011 have been measured at the tax 
rate of 27%, as this is the tax rate that will apply on reversal.
22 Financial instruments
t he Group’s financial instruments comprise primarily cash and liquid resources and various items such as trade receivables and trade payables, 
which arise directly from its operations. t he Group does not enter into derivative transactions.
t he Group’s ongoing objectives in using financial instruments are to maximise the returns on funds held on deposit, while investing only with 
institutions with high credit ratings, to minimise exchange rate risk where appropriate, and to generate additional cash resources through the 
issue of shares when market conditions are appropriate. in addition, the Group has from time to time conserved cash resources by entering into 
financing arrangements for the acquisition of major capital assets. 
t he balance sheet positions at 30 september 2010 and 30 september 2009 are not representative of the positions throughout the years as cash 
and short-term investments fluctuate considerably depending on when significant receipts have occurred and on the timing of share issues. 
Risk in relation to the use of financial instruments
Capital risk
t he capital structure of the Group consists of cash and cash equivalents and equity attributable to owners of the parent, comprising issued capital, 
reserves and accumulated losses. t he Group manages its capital to ensure that entities in the Group will be able to continue as a going concern 
and to ensure that the Group has sufficient capital available to meet future funding requirements. t he Group does not typically utilise debt financing.
l iquidity risk
t he Group’s policy throughout the year regarding liquidity has been to maximise the return on funds, but to minimise the associated credit and 
liquidity risk by placing funds in low risk cash deposits and short term cash deposits. t he Board monitors the level of cash and money market 
investments on a regular basis and management monitors the level on a daily basis to ensure that the Group has sufficient liquid funds to meet 
its commitments as they fall due. 
t he Group and Company holds cash deposits at call or with a maturity of up to twelve months. 
trade payables are normally payable within the terms specified by the supplier.
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22 Financial instruments continued
Risk in relation to the use of financial instruments continued
Credit risk
Other than trade receivables, the financial instruments that subject the Group to a potential credit risk comprise principally cash and money 
market investments. t he Group’s policy is to minimise the risks associated with cash and money market investments by placing these deposits with 
institutions with a recognised high rating (typically A or above) or with one of the major clearing banks. trade receivables are largely with highly 
reputable, creditworthy trading partners.
t he table below shows the rating of the financial institutions that the Group’s cash and cash equivalents and money market deposits are held with:
           2010 2009 
Group         Rating  £ £
institution A        AA   12,166,258   1,069,582 
institution B        A   11,432,498   2,831,000 
institution C        A   8,787   8,895 
            23,607,543   3,909,477 
           2010 2009 
Company         Rating  £ £
institution A        AA   11,958,260   861,630 
institution B        A   11,021,816   2,817,724 
institution C        A   4,393   4,448 
           22,984,469   3,683,802 
t he Group disclosure above does not include cash in hand amounting to £628 (2009: £640).
interest rate risk 
t he Group holds all cash, bank and held-to-maturity investments in sterling (“GBP”), euros (“euR”), united states dollar (“usD”) and south African 
rand (“ZAR”) accounts. interest rates on current accounts are floating and are based on l ondon interbank Bid Rate (“l iBiD”), while interest rates on 
term deposits are fixed for the duration of deposit. 
t he interest rate profile of the Group’s financial assets is:
  2010   2009
         Fixed Floating Fixed Floating 
Group         £ £ £ £
sterling cash at bank and in hand        —  586,183   —  3,792,782 
us dollar cash at bank and in hand        —   496,932   —   89,164 
euro cash at bank and in hand        —   24,309   —   28,171 
south African rand cash at bank and in hand       —   747   —   —
sterling money market deposits       22,500,000   —  —   — 
         22,500,000   1,108,171   —   3,910,117 
t he weighted average interest rate of the Group’s cash and cash equivalents at 30 september 2010 was 0.24% (2009: 0.92%). 
t he weighted average interest rate of the Group’s money market investments at 30 september 2010 was 1.73% (2009: 0%).
_1_PHY_ar10_Back_[LP.SH].indd   17 26/01/2011   08:52:11 Phytopharm plc 58 Annual Report and Accounts 2010
Notes to the financial statements continued
for the year ended 30 september 2010
22 Financial instruments continued
Risk in relation to the use of financial instruments continued
interest rate risk continued
  2010   2009
         Fixed Floating Fixed Floating 
Company         £ £ £ £
sterling cash at bank and in hand        —   484,469   —  3,683,802 
sterling money market deposits        22,500,000   —  —   — 
          22,500,000   484,469   —   3,683,802 
t he weighted average interest rate of the Company’s cash and cash equivalents at 30 september 2010 was 0.26% (2009: 0.97%). 
t he weighted average interest rate of the Company’s money market investments at 30 september 2010 was 1.73% (2009: 0%).
t he Group does not have any committed borrowing facilities. Consequently, there is no material exposure to interest rate risk in respect 
of financial liabilities.
Foreign currency risk
t he Company’s principal functional currency is GBP. However during 2010 and 2009, the Group had income and expenditure in us D. t he Group’s 
policy is to maintain natural hedges, where possible, by matching us D revenue with us D expenditure. t he Group also incurred minimal 
expenditure in other foreign currencies and the strengthening of GBP against those currencies is not considered to have a material impact 
on the net loss for the year. Consequently, there is no material exposure to foreign currency rate risk.
Fair value of financial assets and liabilities
t here is no material difference between the fair value and the carrying values of the financial instruments referred to above, because of the 
short maturity period of these financial instruments or their intrinsic size and risk.
Financial instruments by category
           2010 2009 
           Loans and  l oan and 
           receivables receivables 
Group           £ £
Assets as per balance sheet    
trade and other receivables excluding prepayments        229,002  56,597
money market investments          22,500,000 —
Cash and cash equivalents          1,108,171  3,910,117
            23,837,173  3,966,714
           2010 2009 
           Loans and  l oan and 
           receivables receivables 
Company           £ £
Assets as per balance sheet    
trade and other receivables excluding prepayments        176,564 (3,943)
money market investments          22,500,000  — 
Cash and cash equivalents          484,469  3,683,802 
            23,161,033  3,679,859 
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22 Financial instruments continued
Financial instruments by category continued
           2010   2009  
           Other financial  Other financial 
          liabilities   liabilities  
Group           £   £ 
Liabilities as per balance sheet    
trade and other payables excluding statutory liabilities       1,098,551 1,714,660
           2010   2009  
           Other financial  Other financial 
          liabilities   liabilities  
Company           £   £ 
Liabilities as per balance sheet    
trade and other payables excluding statutory liabilities       76,961 70,159
23 Pensions 
t he Group operates a number of defined contribution pension schemes for employees. t he assets of the schemes are held separately from those 
of the Group in independently administered funds. t he pension cost represents contributions paid and payable by the Group to the funds and 
amounted to £54,973 (2009: £54,409). t he amounts outstanding in respect of pensions are £11,705 (2009: £5,871).
24 Ordinary shares
           2010 2009 
           £ £
Issued and fully paid    
346,677,433 (2009: 94,548,391) Ordinary shares of one pence each       3,466,774   945,484 
in the year ended 30 september 2010 the Company issued 252,129,042 new Ordinary shares of one pence each for a total cash consideration 
of £24,090,351 after the expenses of issue. t he nominal value of these shares was £2,521,290.
Purchases in shares of Phytopharm plc relate to the Phytopharm share incentive Plan whereby the Company issued one “matching share” for every 
one “Partnership share” purchased by the employee. All shares are held by the scheme trustees until the shares vest unconditionally with the 
employee. During the year ended 30 september 2010 the Group purchased 39,296 Ordinary shares of one pence (2009: 52,330) at a total cost 
of £3,885 (2009: £3,361).
in the year ended 30 september 2009 no shares were issued for cash consideration. During the year ended 30 september 2009, the Company 
received reimbursement of £37,913 in respect of value Added tax on previous share issues.
_1_PHY_ar10_Back_[LP.SH].indd   19 26/01/2011   08:52:12 Phytopharm plc 60 Annual Report and Accounts 2010
Notes to the financial statements continued
for the year ended 30 september 2010
25 Options over shares of Phytopharm plc
Potential issues of ordinary shares
t he Company may grant share options to selected employees on joining the Company and any such grants are made following the preliminary 
and interim announcements together with performance related grants to all employees. Performance criteria must be satisfied before share 
options can be exercised and these are detailed below. in addition, the Company has a long-term incentive scheme and a Directors’ Reward Plan 
under which long-term share incentives may be granted to selected senior executives.
t he outstanding share scheme options and long-term incentive awards at 30 september 2010 are shown below analysed according to the 
exercise criteria:
     Number      Currently  Currently 
     outstanding exercise  Date exercisable  exercisable vested exercisable 
     2010 price note granted from to 2010 2010
Phytopharm Share Option Plan 2007       
      80,426   £0.3100  1 19/12/2007 19/12/2010 18/12/2017  —  —
      14,327   £0.2350  1 28/03/2008 28/03/201 1 27/03/2018  —   — 
      239,963   £0.2175  1 30/05/2008 30/05/201 1 29/05/2018  —   — 
      409,230   £0.0413  1 1 1/03/2009 1 1/03/2012 10/03/2019  —   — 
      1,406,750   £0.1 100  1 20/01/2010 19/01/2013 19/01/2020  —   — 
      5,200,161   £0.0763  1 21/07/2010 20/07/2013 20/07/2020  —   — 
      7,350,857        —   — 
Phytopharm Save As You Earn Plan 2007       
      125,285   £0.0613  2 22/12/2008 22/12/201 1 21/12/2012  —   — 
      125,285        —   — 
Phytopharm Directors’ Reward Plan 2010       
      863,334   £0.1 125  3 31/03/2010 30/03/2013 30/03/2015  —   — 
      863,334        —   — 
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25 Options over shares of Phytopharm plc continued
Potential issues of ordinary shares continued
     number      Currently  Currently 
     outstanding exercise  Date exercisable  exercisable vested exercisable 
     2009 price note granted from to 2009 2009
Phytopharm Share Option Plan 2007       
      52,000  £0.4450 1 03/08/2007 03/08/2010 02/08/2017  —  — 
      87 ,863  £0.3100 1 19/12/2007 19/12/2010 18/12/2017  —   — 
      14,327  £0.2350 1 28/03/2008 28/03/201 1 27/03/2018  —   — 
      27 4,621  £0.2175 1 30/05/2008 30/05/201 1 29/05/2018  —   — 
      480,145  £0.0413 1 1 1/03/2009 1 1/03/2012 10/03/2019  —   — 
      908,956        —   — 
Phytopharm Save As You Earn Plan 2007       
      27,810  £0.4825 2 12/09/2007 01/10/2010 30/09/201 1  —   — 
      125,285  £0.0613 2 22/12/2008 22/12/201 1 21/12/2012  —   — 
      1 53,095        —   — 
1  t hese options vest on the third anniversary of the date of grant and have been granted under the Phytopharm share Option Plan 2007: enterprise management 
incentive scheme. t he number of options exercisable will be determined by the Company’s ts R compared to the constituents of the Ft se smallCap index. t he 
value of options (at date of grant) will be exercisable if the Company’s ts R in the relevant ranking group is above the median.
2  t hese options are granted under a save As You earn plan approved by HmRC. t he last offer under the plan was made to all employees and executive Directors 
on 13 August 2007. t here are no performance conditions attached to the exercise of these options.
3  t hese options vest on the third anniversary of the grant date and have been granted under the Phytopharm Directors’ Reward Plan 2010. t here are no 
performance conditions attached to the exercise of these options.
Option valuations
exercise of options is subject to continued employment or being a good leaver. Options were valued using a stochastic model (also known as a 
monte Carlo model). t he fair value per option granted and the assumptions used in the calculation for options granted since 3 August 2007 are 
set out in the tables below. t he Company’s effective date for iFRs 2, ‘share-based Payments’ implementation is 1 september 2005 and the iFRs 
has been applied to all options granted after 7 november 2002 which had not vested by this effective date.
             
          Number of number of  
          shares shares Fair value per 
          outstanding outstanding option at 
Award        Grant date exercise price 2010 2009 grant date
share Option Plan 2007      03/08/2007 £0.4450   —  52,000   £0.2034 
share Option Plan 2007      19/12/2007 £0.3100   80,426   87,863  £0.1531 
share Option Plan 2007      28/03/2008 £0.2350   14,327   14,327   £0.1297 
share Option Plan 2007      30/05/2008 £0.2175   239,963   274,621   £0.1142 
share Option Plan 2007      1 1/03/2009 £0.0413   409,230   480,145   £0.0223 
share Option Plan 2007      20/01/2010 £0.1100   1,406,750   —  £0.0574 
share Option Plan 2007      21/07/2010 £0.0763   5,200,161   —   £0.0404 
save As You earn Plan 2007      12/09/2007 £0.4825   —   27,810   £0.1900 
save As You earn Plan 2007      22/12/2008 £0.0613   125,285   125,285   £0.0308 
Directors’ Reward Plan 2010      31/03/2010 £0.1125   863,334   —   £0.0666 
           8,339,476   1,062,051  
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25 Options over shares of Phytopharm plc continued
Option valuations continued
t he fair values of the original share options granted but not vested as at 30 september 2010 were calculated using the following assumptions:
         expected  expected Performance 
        expected term dividend yield Risk free rate volatility condition 
Award       Grant date (note(a)) (note(b)) (note (c)) (note (d)) (note)
share Option Plan 2007     19/12/2007 3 years 0% 4.7% 65.7% 1
share Option Plan 2007     28/03/2008 3 years 0% 4.1% 69.8% 1
share Option Plan 2007     30/05/2008 3 years 0% 4.9% 69.9% 1
share Option Plan 2007     11/03/2009 3 years 0% 2.3% 72.4% 1
share Option Plan 2007     20/01/2010 3 years 0% 3.2% 70.5% 1
share Option Plan 2007     21/07/2010 3 years 0% 2.3% 70.4% 1
save As You earn Plan 2007     22/12/2008 3 years 0% 1.9% 77.2% 2
Directors’ Reward Plan 2010     31/03/2010 3 years 0% 2.7% 73.7% 3
notes to assumptions
(a) expected term
 i)  40% of participants exercise after three years if a gain of 40% is available. if this gain is not available, these individuals hold on to their shares 
until such a gain can be made.
 ii)  25% of the remainder exercise from the third anniversary onwards using a reducing balance methodology, providing that a gain of 20% 
is available. if this gain is not available, these individuals refrain from exercising until such a gain can be made.
 iii)  15% of the total participants are “good leavers”. A good leaver is an employee who ceases to be an employee due to redundancy or other 
circumstances outside their control.
 iv)  5% of the participants exercise per annum on a reducing balance methodology, providing that the options are “in the money” (irrespective 
of the level of gain) to allow for leavers in these years. 
 v)  any remaining options are exercised at maturity providing that they are “in the money” (i.e. the share option price is less than the market 
price). Any awards that are “underwater” (i.e. the share option price is greater than the market price) therefore lapse at maturity.
 vi) all exercises are dependent on the performance condition being met.
(b) expected dividend yield
t he dividend yield of 0% reflects the absence of a history of paying dividends and a clear dividend policy statement at the relevant grant dates.
(c) Risk free interest rate
uK Gilt rates prevalent on the date of grant with a period commensurate with the term of the award.
Notes to the financial statements continued
for the year ended 30 september 2010
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25 Options over shares of Phytopharm plc continued
notes to assumptions continued
(d) expected volatility
expected volatility is the measurement of the amount by which a share price is expected to fluctuate during a period. t he expected volatility has 
been calculated using the standard approach of calculating the standard deviation of the natural logarithm of historical share price movements. 
Certain periods where there has been inactivity followed by substantial increases in price and volume have been excluded from this calculation due 
to specific events creating a volatility that would not be representative of the potential future volatility.
A reconciliation of share option scheme movements for the years ended 30 september 2010 and 30 september 2009 is set out below:
  2010   2009
          Weighted  w eighted 
          average  average 
          exercise  exercise 
         Number price number price
At 1 October         1,062,051   £0.15   4,467,500   £0.36 
Granted          7,563,495   £0.09   843,470   £0.05 
exercised          —  —  —  — 
l apsed         (286,070)  £0.21  (4,248,919)  £0.35 
At 30 september         8,339,476   £0.09   1,062,051   £0.15 
t he following tables summarise the information about the range of exercise prices for share options outstanding at 30 september 2010 and 
30 september 2009:
  2010   2009
         Weighted   w eighted 
       Weighted   average w eighted   average 
       average   remaining life average   remaining life 
       exercise Number contractual exercise number contractual 
Range of exercise prices      price of shares years price of shares years
£0.04 to £0.08      £0.07   5,734,676   9.73   £0.05   605,430   8.34 
£0.11 to £0.12       £0.11   2,270,084  8.10  —  —  — 
£0.21 to £0.24       £0.22   254,290  8.00   £0.22   288,948   9.00 
£0.31        £0.31   80,426  7.00   £0.31   87,863   8.00 
£0.44 to £0.48       — —  —   £0.46   79,810   5.91 
t he total charge for the year relating to employee share-based payment plans was £55,942 (2009: £147,768 credit) all of which related to the 
above equity based transactions. t he credit in 2009 arose due to the large number of unvested options which lapsed in the year.
Provision for employer’s national insurance on share option gains
t here is no provision for employer’s national insurance Contributions on share option gains at the year end for options granted under the 2007 
share option schemes as the liability for national insurance has been transferred to the employee. 
t here is no provision for employer’s national insurance Contributions on share option gains at the year end for options granted under the 2010 
scheme as the option price of the share options granted is greater than the market value of the shares under option.
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26 Post balance sheet events
A number of changes to the uK corporation tax system were announced in the June 2010 Budget statement. Certain of these tax changes were 
substantively enacted in the Finance Bill 2010–11 on 20 July 2010. t he impact of these changes have been reflected in the unrecognised potential 
deferred tax asset.
Certain other changes are expected to be enacted in future Finance Bills, including further reductions to the main rate of corporation tax by 1% 
per annum to 24% by 1 April 2014. t he overall effect of the further changes from 27% to 24% if these applied to the potential deferred tax asset 
balance at 30 september 2010 would be to reduce the potential deferred tax asset by £1,308,000 (being £436,000 recognised in the year ending 
30 september 2011, £436,000 recognised in the year ending 30 september 2012 and £436,000 recognised in the year ending 30 september 2013).
27 Capital commitments
t he Group had no capital commitments contracted but not provided for at 30 september 2010 (2009: £nil). t he Company had no capital 
commitments contracted but not provided for at 30 september 2010 (2009: £nil).
28 Contingent liabilities
t here were no contingent liabilities in the Group or Company at 30 september 2010 (2009: £nil).
29 Financial commitments
At 30 september 2010 there were the following commitments under non-cancellable operating leases:
           2010 2009 
           Land and l and and 
           buildings buildings 
           £ £
w ithin one year           81,224   13,650 
Between two and five years inclusive         315,185   17,063 
            396,409   30,713 
t he Group’s commitments have increased due to relocation to new premises during the year on fixed term lease arrangements.
t he Group has purchase obligations of £2,531,835 in respect of its sub-contracted research and development activities as at 30 september 2010 
(2009: £208,103). t he Company had no such commitments (2009: £nil).
Company
t he Company has no annual commitments under non-cancellable operating leases (2009: £nil).
30 Related party transactions
Group
under iAs 24, ‘Related Party Disclosures’ the Group is not required to disclose intra-group transactions which are eliminated on consolidation.
t he Directors regard Phytopharm plc as the ultimate controlling party of the Group.
Company
t he inter-company balances outstanding at 30 september 2010 and 30 september 2009 are shown on the Company balance sheet.
t he Company has been charged £412,694 (2009: £333,407) for corporate services provided by subsidiary undertakings.
t he remuneration received by key management personnel, including the Directors, is disclosed in note 6.
Notes to the financial statements continued
for the year ended 30 september 2010
_1_PHY_ar10_Back_[LP.SH].indd   24 26/01/2011   08:52:12 Phytopharm (LSE:PYM) is a development 
stage pharmaceutical company 
developing novel treatments targeting 
diseases with high unmet need. Our 
lead series of compounds has the 
potential to be a new class of therapy 
for neurodegenerative diseases.
Phytopharm has evolved its approach of developing 
products extracted from natural botanical sources to 
investigating single chemical entities. We will deliver 
key development milestones in the next two years. 
Phytopharm works as a virtual company and utilises a 
network of scientific and clinical experts to help guide 
our development projects.
Our objective is to develop products aimed at major markets 
to key value inflection points before seeking late‑stage development 
and commercial partners.
Visit us online
Our corporate website provides  
comprehensive information about our 
business including the latest news and 
investor information.
www.phytopharm.com
Registered office
Lakeview House 
2 Lakeview Court 
Ermine Business Park 
Huntingdon 
Cambridgeshire 
PE29 6UA
Phytopharm plc is a company registered in England and Wales, 
which is listed on the London Stock Exchange (symbol: PYM).
Company Secretary
Mrs Zoe McGowan
Company number
03131723
Registrars
Equiniti Registrars Limited
The Causeway 
Worthing 
BN99 6DA
Brokers
Peel Hunt LLP
111 Old Broad Street 
London 
EC2N 1PH
Independent auditors
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors 
Abacus House 
Castle Park 
Cambridge 
CB3 0AN
Solicitors
White & Case
5 Old Broad Street 
London 
EC2N 1DW
Financial public relations
FD
Holborn Gate 
26 Southampton Buildings 
London 
WC2A 1PB
Financial advisors
N M Rothschild & Sons Limited
New Court 
St Swithins Lane 
London 
EC4P 4DU
Shareholder information
Phytopharm’s commitment to environmental issues is reflected in this 
Annual Report and Accounts which has been printed on Revive 100, 
a recycled paper stock containing 100% recovered waste.
_1_PHY_ar10_cover_[LP.SH].indd   2 26/01/2011   08:52:29 Focused on 
development
Phytopharm plc
Annual Report and Accounts 2010
Phytopharm plc
Lakeview House
2 Lakeview Court
Ermine Business Park
Huntingdon
Cambridgeshire
PE29 6UA
United Kingdom
Tel: +44 (0)1480 437697
Fax: +44 (0)1480 417090
Email: info@phytopharm.com
Phytopharm plc Annual Report and Accounts 2010
_1_PHY_ar10_cover_[LP.SH].indd   1 26/01/2011   08:52:27