Epistem Plc
48 Grafton Street
Manchester M13 9XX 
United Kingdom
T +44 (0)161 606 7258
F +44 (0)161 606 7348
www.epistem.co.uk
Controlling life-long tissue renewal
Epistem Holdings Plc 
Annual Report and Accounts 2010
Divisional development  
and core company strength
Epistem Holdings Plc  Annual Report and Accounts 2010 Printed on Revive 50:50 Gloss.
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Directors, Secretary and Advisers
Directors
David Evans
Matthew Walls
Chris Potten
Catherine Booth
Gerard Brady
Roger Lloyd
Jeffrey Moore
Robert Nolan
John Rylands
Company Secretary
John Rylands
Registered Office
48 Grafton Street
Manchester M13 9XX
United Kingdom
Registrars
Neville Registrars Limited
18 Laurel Lane
Halesowen B63 3DA
Nominated Adviser and Broker
KBC Peel Hunt Limited
111 Old Broad Street
London EC2N 1PH
Legal Advisers
McGrigors LLP
Princes Exchange
1 Earl Grey Street
Edinburgh EH3 9AQ
Auditors
HW Chartered Accountants
Bridge House
157 Ashley Road
Hale
Altrincham
Cheshire WA14 2UT
Principal Banker
Natwest Commercial Banking
1 Spinningfields Square
Deansgate
Manchester M3 3AP
Business Overview
Introductory Highlights  IFC
What We Do  2
Epistem: Contract Research Services  4
Epistem: Personalised Medicine  6
Epistem: Novel Therapies  8
Our Business and Strategy  10
Review of the Year
Strength in Depth     12
Chairman’ s Statement  14
Chief Executive’ s Review  16
Governance
Board of Directors   20
Directors’ Report  22
Directors’ Remuneration Report  24
Corporate Governance Report  26
Independent Auditors’ Report  27
Accounts
Consolidated Statement of Comprehensive Income  29
Consolidated Statement of Changes in Equity  30
Consolidated Balance Sheet  31
Consolidated Statement of Cash Flows  32
Notes to the Financial Statements  33
Company Balance Sheet  48
Company Statement of Changes in Equity  49
Company Statement of Cash Flows  50
Notes to the Company Financial Statements  51
Directors, Secretary and Advisers   IBC
Year of profit
Revenue growth year-on-year
Cash balance (£million)
2nd
45%
5.4m
Cover and IFC photography by Hubert Sieverding Business Overview
Epistem Holdings Plc Annual Report 2010 1  
Welcome
Epistem is a biotechnology and 
personalised medicine company 
commercialising its expertise in 
epithelial stem cells in the areas of 
oncology, gastrointestinal disease, 
dermatology and ageing
Every person develops from one cell – the fertilised egg. In the early stages of development,  
stem cells differentiate and become committed to generating a specific tissue or organ.  
Adult stem cells remain capable of regenerating tissue in our organs throughout our lives.
As we get older, the ability of stem cells to regenerate new cellular tissue diminishes, leading  
to tissue ageing and disease.
Epistem is focused on understanding how cells function and are controlled, so that we can 
identify new drug therapies to address the major diseases of oncology, gastrointestinal disease, 
dermatology and ageing.
Epistem also identifies patient specific gene biomarkers, gene mutations and disease pathogens 
as part of its Personalised Medicine development. 
2010 marks the 10 year anniversary of the formation of the Company.
Highlights
Year-on-year revenue growth up 45% •	
All divisional revenues increased over the year •	
Formation of a new Personalised Medicine division •	
Development of Genedrive •	
TM
 ‘Point of Care’ mobile 
molecular diagnostic device
Growth in profit and increased Earnings Per Share •	
Strengthened cash balance with continuing strong •	
trading outlook
10 year anniversary of company formation •	 2 Epistem Holdings Plc Annual Report 2010
   
What We Do
Scientific research services, 
personalised medicine and 
innovative therapeutics
 Contract Research Services (page 4)
4
Contract Research Services provide specialised preclinical efficacy 
services primarily for drug development companies on a ‘fee for 
service’ basis. The division is growing strongly, is cash generative  
and profitable. Our Contract Research Services division has a well 
established record of providing a specialist range of testing services  
to major pharmaceutical and biotechnology companies globally.
We assist client companies with preclinical development of their drug 
therapies to treat epithelial diseases including:
Cancer •	
Cancer supportive care (Mucositis) •	
Inflammatory bowel disease •	
UV-induced skin damage •	
Wound healing •	
Skin and hair disorders •	
Life-long  
Tissue Renewal 
Explained
Epithelial stem cells
Epithelial stem cells are rare cells which represent the ‘building  
blocks’ of tissue growth and renewal. Stem cells are essential for 
tissue repair, since they are responsible for replacement of all cells.
Expertise
Epistem is applying its know-how and expertise to identify genes  
and proteins responsible for controlling cell production to develop 
drugs to treat cancer and other epithelial diseases.
Vision
Epistem’s vision is to exploit its leading stem cell technology  
to identify Novel Therapeutics and advance its next generation 
developments in personalised medicine. Business Overview
Epistem Holdings Plc Annual Report 2010 3  
 Personalised Medicine (page 6) Novel Therapies (page 8)
6 8
 Biomarkers
Epistem has developed a range of innovative technologies allowing 
highly sensitive analysis of small numbers of cells. These technologies 
are used by pharmaceutical companies to measure drug-induced 
gene expression changes, primarily in the area of oncology. Our 
biomarker libraries assist in identifying changes in gene expression 
that result from treatment with an oncology drug. We work closely 
with top-tier pharmaceutical groups to better understand drug-
induced gene expression changes in a subject during treatment.    
 Diagnostics 
We have expanded our technology reach into diagnostics with the 
development of Genedrive
TM
, a ‘point of care’ molecular diagnostic 
device. Genedrive
TM
 is targeted at providing a ‘near patient’ diagnosis  
in less than 30 minutes. Rapid, sensitive and accurate testing offers  
to revolutionise the field of medical diagnosis by enabling viral, 
pathogen and gene mutation diagnosis to be made readily available  
at minimal cost.   
Epistem is discovering key regulators (proteins and peptides) of 
epithelial cells and developing therapeutics to control cell production, 
initially targeting the areas of oncology and inflammatory bowel 
disease. With over 80% of adult cancers arising from epithelial tissue, 
we believe that applying our understanding of epithelial stem cells  
and cell production will identify new targets and pathways for  
drug development. 
Our Novel Therapies division continues to develop the regenerative 
medicine collaboration with Novartis and is identifying the key regulators 
of stem cells and epithelial cell production. The collaboration is now 
beginning to yield initial hits/leads. The division’s primary focus is to 
discover new drug leads across major epithelial diseases and expand 
its technology and intellectual property portfolio alongside other 
collaborative opportunities. Turnover
£2.5m Business Overview
Epistem Holdings Plc Annual Report 2010 5  
£2.5m
£2.3m 2009
2010
Case Study: US National Institutes of Health
Epistem’s Contract Research Services division  
provides scientific expertise and preclinical research 
models to the NIH’s research programme on Medical 
Countermeasures Against Radiological and Nuclear 
Threats (MCART). 
Contract Research Services turnover
Increased demand for oncology, mucositis and IHC •	
service offerings 
 Growth in US National Institutes of Health bio-defence •	
programme 
Strengthening recognition of science base •	
Operating profit increased 28% year on year •	
Highlights
The Contract Research Services division provides preclinical 
efficacy testing services in the areas of oncology, oncology 
supportive care (mucositis), inflammatory bowel disease and 
dermatology. The division saw continued growth and a broadening 
of its customer base over the year.  
The raised profile of the division and growing awareness of our 
technical expertise continued to build demand for our specialised 
drug efficacy and ‘mechanism of action’ models. Whilst revenue 
growth over the year was modest at 10%, the overall quality of 
business was significantly better with operating margin up  
28% year on year, based on an improved mix of high margin  
service business. 
Strengthening partnerships 
Over the year the division grew its average contract value, increased 
the size of its customer base and enhanced its service offering. The 
division is focused on developing key client relationships with large 
pharmaceutical groups to generate a solid foundation for growth in 
the current economic climate. 
Biodefence
Our collaboration with the US National Institutes of Health (NIH) 
continues to expand around the testing and efficacy of agents  
under the MCART (Medical Counter measures Against Radiological 
Threats) programme designed to address exposure to radiation or 
nuclear attack. Through the expanding scope of the collaboration 
we anticipate that our relationship with the US NIH and NIAID 
(National Institute of Allergy and Infectious Diseases) will develop 
further over the coming year. 
Immunohistochemistry
During the year the division launched a new hair immunohistochemistry 
(IHC) model. Our contract research services group has seen a 
significant growth in interest in this area. Immunohistochemistry  
is widely used to understand the distribution and localisation of 
differentially expressed proteins in biological tissue.
Outlook
A strengthened service offering, coupled with increased expertise 
across each disease area, has ensured that the division is well 
positioned for the year ahead. We will continue to nurture our key 
customer relationships, together with extending into selected territories 
through new business development and distributor opportunities. 
Through increasing recognition of our core cell biology expertise and 
the planned expansion of our service offerings, we anticipate that the 
division will continue to deliver sustainable growth over the coming year.   
Divisional 
development and 
strengthened 
operating margin
Contract Research Services + 19%
Year-on-year sales growth Business Overview
Epistem Holdings Plc Annual Report 2010 7  
Personalised Medicine
Globally leading 
biomarker and 
diagnostic technology
Highlights
Good Clinical Laboratory Practice (GCLP) accreditation •	
status
Launch of proprietary GenetRx •	
TM
 brand
 Unfolding biomarker technology across top-tier •	
pharmaceutical groups
Development of Genedrive •	
TM
£0.7m
£0.8m 2010
2009
Personalised Medicine turnover
 Genedrive
TM
 (Point-of-Care molecular diagnostic device) 
Molecular diagnostic testing is making headway into decentralised 
settings such as hospitals, clinics and smaller labs. Molecular 
diagnostic tests are being developed to provide rapid test results with 
decentralised labs and ‘near patient’ settings viewed as the emerging 
and growing market. The Point-of-Care (POC) market for tests in 
infectious disease is particularly broad and captures: hospital 
emergency rooms, GP/physician offices, community health centres 
and health outreach programmes, such as sexually transmitted 
disease (STD) and HIV clinics.
Trends show that hospital testing is expected to decrease as POC  
tests becomes the preferred choice of diagnostic testing ‘near patient’ 
and in the community. The main objective is to keep patients out of 
hospitals and to reduce the need to go to hospitals and to diagnose 
patients in shorter timeframes to improve the quality of care. In addition, 
rapid result generation is sought so that appropriate treatment can be 
implemented without delay, leading to an improved clinical and 
economic outcome.
Outlook
Epistem is unveiling Genedrive
TM
, a ‘first to market’ proprietary  
and disruptive technology positioned to provide a new paradigm in 
Personalised Medicine and point-of-care diagnostics. It builds on our 
biomarker technology and existing assay expertise to provide a novel 
simple to use and cost effective platform that will diagnose a range of 
bacterial infections, pathogens and SNP gene mutations in less than 
30 minutes. We anticipate formally launching Genedrive
TM
 in 2011. 
 Biomarkers
Biomarkers provide measures of biological processes that can 
improve the precision with which we can guide drug development 
and disease treatment. Epistem’s GenetRx
TM
 technology measures 
drug-induced changes in gene expression for drug development.
Following the creation of the division last year, the newly formed 
group has continued to advance its technology with top tier 
pharmaceutical partners and has extended its proprietary offering  
to both tissue and blood biomarkers alongside its hair biomarker 
position. The biomarker division is currently collaborating with  
a number of major pharmaceutical groups including Novartis, 
Astrazeneca and Johnson and Johnson.   
Year-on-year revenues improved 19%, but this masked the 
significant development underway to prepare the division for growth 
in the coming year. With GCLP accreditation status now approved, 
we have extended our business presence in the US through the set 
up of our US office to provide a closer relationship with our key 
pharmaceutical and biotechnology partners.  
The biomarker division has developed a library of oncology pathway 
markers through its bioinformatic dataset Pathway Direct
TM
. This 
dataset and our novel application technologies will be used to 
provide partner access to specific drug biomarkers in oncology 
signal pathways.
    
Outlook 
We anticipate a further strengthening in the growth of our biomarker 
business division over the coming year underpinned by the extension 
of our key collaborative relationships now unfolding in broader clinical 
phase studies. We continue to search for a suitable partner to help 
bolster our international coverage and growth ambition.
Case Study: GCLP Accreditation
The Biomarker division conducts gene expression 
analysis to support clinical drug development programs 
within pharmaceutical and biotechnology organisations, 
with an increasing focus on providing valuable biomarker 
information that can be used in drug development.  £2.4m
Turnover Business Overview
Epistem Holdings Plc Annual Report 2010 9  
Novel Therapies
Continued progress 
towards new drug 
targets 
Highlights
Progress towards new drug targets •	
Discovering and developing leads targeting cancer •	
(oncology) and gastrointestinal disease
Building intellectual property in identified regulators  •	
of epithelial cells
£1.0m
£2.4m 2010
2009
Novel Therapies turnover
Partnerships
Based on our programme of discovery and early stage development, 
interest continues to build around our core biology and molecular 
pathway understanding. We have extended our in-house expertise  
in signalling pathway bioinformatics and protein production to firmly 
establish our internal discovery position. We continue to evaluate 
other drug discovery opportunities with major industry players and 
have recently commenced an internal small molecule programme  
to identify our own proprietary leads for cell receptor regulation.
Outlook
We continue to build our understanding of the body’s key regulators 
and we remain focused on identifying novel drug agents. We look 
forward to continued progress under our Novartis collaboration and  
to advancing other partnerships from our emerging hits/lead pipeline.
The Novel Therapies division is discovering the body’s own key 
regulators of epithelial stem cells and tissues. The body’s own key 
(protein) regulators are largely unknown because of the difficulties in 
accessing and evaluating their effect in epithelial tissue. These key 
regulators are responsible for restoring damaged tissue and for 
maintaining ‘life-long tissue renewal’ throughout our lives.
The division is primarily focused on identifying the key regulators  
of cells in the disease areas of cancer (based on 80% of cancer 
originating from epithelial tissue), gastrointestinal disease, wound 
healing and ageing.
Novartis collaboration
The discovery and development collaboration with Swiss based 
Novartis AG continued to progress over the year with the Novel 
Therapies division reporting its first full year revenue of £2.4m.  
This collaboration revenue includes £1.4m ammortisation of  
upfront income. New drug targets are continuing to emerge,  
with the division positioning itself to create a pipeline of early  
stage development targets. The discovery programme has  
been constructed to identify and map regulators which control  
the activity of cells and stem cells. Once regulators are identified,  
our development ‘route map’ enables each hit to be characterised 
for activity with a view to prioritising leads for further development. 
This carefully constructed process is driving a comprehensive 
understanding of cell inhibition, proliferation and self renewal,  
which alongside signalling pathways and identified regulators will 
allow us to better understand tissue control. The accounts for the 
year do not include any license income and the timings of license 
opportunities for targets and future development funding with 
Novartis remain difficult to accurately predict.
Case Study: Novartis
At the first anniversary of the collaboration, we are 
pleased with progress towards advancing our first 
therapeutic hits/leads. 10 Epistem Holdings Plc Annual Report 2010
   
Our Business and Strategy
A strengthening business model 
based on sustaining future growth
Epistem has an unrivalled knowledge of epithelial tissue 
behaviour and an extensive array of stem cell assays, 
which is increasingly a key consideration in the 
development of new epithelial drugs.
Epistem has also developed an innovative library of 
oncology biomarkers which coupled with our advance  
into disease diagnostics will build a leading position in 
personalised medicine.
Future Strategy
Specialised efficacy testing in
Oncology •	
Mucositis •	
Preclinical Phase 1 Phase 3 Market Phase 2
Biomarkers Diagnostics
Fee for service, partnering, 
licensing and product sales
Partnering and  
licensing programmes
Discovery
Discovery hits/leads and  
early stage development
Preclinical, clinical and  
market programmes
Fee for service
Contract 
Research Services
Novel Therapies
Personalised Medicine
Inflammatory bowel disease •	
Dermatology •	 Business Overview
Epistem Holdings Plc Annual Report 2010 1 1  
Combined business model
Epistem’s combined business model has now yielded a profitable  
and growing business across each of our three business divisions. 
The Contract Research Services business has established robust 
relationships with pharmaceutical and biotechnology leaders 
worldwide and these relationships and our wide-ranging stem cell 
services have provided the basis for partnering strategies for our 
emerging Novel Therapies and Personalised Medicine businesses.
Partnering programme
We continue to work closely with our partners and customers  
to build strong business relationships based on leading scientific 
discovery and development. In addition to our first major collaboration 
with Novartis, we are now nurturing other relationships to advance  
our emerging hits/leads. 
Licensing opportunities
The strength of our discovery platform underpinning the Company’s 
Novel Therapies division continues to grow and this is partly reflected 
in the number of potential drug candidates which the Company has 
now identified. These candidates are undergoing development to 
drive Epistem’s emerging drug development pipeline. 
Epistem’s new Personalised Medicine division expands on last  
year’s newly formed Biomarker division to advance a new ‘Point  
of Care’ diagnostic device. We will continue to maintain our strong 
intellectual property position in this area and develop our deepening 
understanding of drug effect biomarkers and disease diagnosis.  
Strategic Goals:
Growth: 
We expect to deliver sustained revenue growth and increased 
visibility and awareness of the Company and its achievements  
over the forthcoming year. 
Technical: 
We will continue to exploit our core stem cell expertise and  
build industry recognition around our stem cell science and gene 
expression technology. We will advance new product developments, 
Personalised Medicine partnerships and therapeutic leads  
to underpin our continued commercial success.
Financial: 
Continued revenue growth over the coming year is anticipated  
with accelerated commercial delivery across all of our divisions.  
Our combined business model will continue to strengthen and our 
portfolio will enable us to accelerate investment across the Group 
and consider acquisition opportunities where appropriate. 
Investor: 
Continued development across each of our business divisions  
offers an increasingly attractive investment opportunity for both our 
existing and new investors. The impressive revenue growth across 
each of our divisions alongside increasing forecast revenues and 
growing profitability demarks Epistem as an exciting growth stock 
with significant potential upside. 12 Epistem Holdings Plc Annual Report 2010
   
Strength in Depth
Epistem continues to expand its 
technology offering, to maintain a 
high rate of growth and profitability
The 2009/10 financial year saw Epistem continue its rapid 
growth with year-on-year sales up 45%. 
Highlights
Year-on-year sales up 45% to £5.7m •	
All divisional revenues increased over the year •	
Contract Research Services operating profit up 28% •	
Expansion of Biomarker division to form new  •	
Personalised Medicine division
Group operating profit up at £0.3m from a loss of £(0.7)m •	
Strengthened cash balance with improved  •	
trading outlook Review of the Year
Epistem Holdings Plc Annual Report 2010 1 3  
Market dynamics
International market conditions remained challenging during the 
year with the healthcare sector continuing to pursue merger and 
ongoing rationalisation. The Company has continued its strategy  
of focusing on bringing new globally leading technology to market 
whilst driving organic growth and cash generation.
£4.0m
£2.2m
£2.3m
£(0.7)m
£1.7m
£3.7m
£5.7m
£2.7m
£2.5m
£0.4m
£3.2m
£5.4m
2010
2010
2010
2010
2010
2010
2009
2009
2009
2009
2009
2009
Group revenues
Discovery, development  
and admin cost
Contract Research Services revenues
Profit before tax
Personalised Medicine and 
Novel Therapies revenue
Cash reserves
Against a challenging economic  
background, Epistem’s year-on-year 
consolidated revenues increased 45% to 
£5.7m. Each division recorded increased 
revenues over the previous year. Territory 
revenues were split US 79%, EU 14%  
and UK 7%. 
Investment in our Novel Therapies drug 
discovery and development programme 
accounted for £1.4m of the 2010 reported 
figure with the remaining £1.3m cost  
relating to central business overheads  
and administrative operating costs. 
The CRS division reports sales of £2.5m,  
a 10% increase over the previous year.  
The division saw increased demand for its 
oncology and mucositis service offerings 
along with expansion in the US NIH 
biodefence contract. 
Profit before tax for the period was 
underpinned by a £1.1m profit improvement  
from a loss of £(0.7)m to £0.4m. 
Strong growth driven primarily by the 
Novartis collaboration together with 
Biomarker revenues helped sales rise 
significantly over the year.
Cash reserves were strengthened over the 
year by the successful placing of shares in 
November 2009.
2010
£5.7 m
2010
£2.7 m
2010
£2.5m
2010
£0.4m
2010
£3.2m
2010
£5.4m 14 Epistem Holdings Plc Annual Report 2010
   
Chairman’s Statement
Dear Shareholder, 
I am delighted to report significant growth and ongoing improvement 
in Epistem’s results for the year ended 30 June 2010. 
Whilst market and trading conditions have remained volatile, the 
Company continues to invest in and strengthen its foundations  
and enjoyed a further exceptional year in difficult times.
Results 
Further details of the results for the period are covered in the Chief 
Executive Officer’s review, but operationally and financially the year  
to 30 June 2010 saw the Company increase revenues by 45% to 
£5.7m (2009: £4.0m) with a Group profit on ordinary activities before 
taxation of £0.4m (2009: Loss £0.7m). Based on this improved trading 
performance the Company generated an after tax profit of £0.3m 
(2009: £0.1m). Cash reserves at the end of the period were £5.4m 
(2009: £3.7m). 
David Evans  
Non-executive 
Chairman Review of the Year
Epistem Holdings Plc Annual Report 2010 1 5  
‘ Strengthening 
foundations in 
preparation for 
continued growth’
During the year the Company continued to make significant progress 
across each of its divisions: 
Contract Research Services revenues grew by 10% to £2.5m •	
(2009: £2.3m). The extension of our service offerings and 
continued expansion of our US government bio-defence contract 
enabled the division to deliver a solid performance over the year. 
With market uncertainties still persisting, the division continues  
to build on its core scientific strengths to provide a firm platform  
for future growth. 
Biomarker revenue growth was marginally increased over the year •	
at £0.8m (2009: £0.7m), though this masked the significant effort 
underway to position the division for future growth. As part of our 
growth strategy to continue to develop this arm of the business 
whether through the addition of new technologies or through 
M&A, we are today announcing the creation of our Personalised 
Medicine division which expands on our Biomarker technology to 
provide a newly created ‘Point Of Care’ offering and the unveiling 
of our ‘on the spot’ molecular diagnostic platform Genedrive
TM
.   
The Novel Therapies division research and development •	
collaboration with Swiss based Novartis AG continued to develop 
over the year with the division reporting its first full year revenue of 
£2.4m (2009: £1.0m). New drug targets are continuing to emerge, 
with the Novel Therapies division positioning itself to create a 
pipeline of early stage development targets. The timings of license 
opportunities and future development funding though remains 
difficult to accurately predict. 
Strengthened investor relations continue to advance the visibility  •	
of the Company, with the £2.9m placing in November 2009 
bringing several new institutional investors to the share register. 
The Company now reports its second year of profits and a growth •	
in its earnings per share to 3.8p (2009: 1.1p).
Outlook
Epistem continues to build on its scientific and technical strengths  
as it transforms into a diverse, technology leading, and profitable 
biotechnology and personalised medicine group underpinned by 
strong revenue growth. Against a backdrop of market uncertainty, 
Epistem remains vigilant, with the outlook for the expanding group 
increasingly positive. 
Despite the tough market conditions, each divisional business is 
establishing itself for growth in its chosen segment. The Contract 
Research Services division buoyed by the expansion and anticipated 
extension of the US biodefence contract is expected to perform well 
over the coming year, with the newly formed Personalised Medicine 
division and its disruptive biomarker and diagnostic technologies 
providing further support for Epistem’s future growth. The Novel 
Therapies drug discovery collaboration with Novartis is nearing 
completion of its first phase, with the emergence of a newly formed 
group of identified hits/leads. Whilst the timing of license and 
development opportunities remains difficult to judge, we remain 
optimistic about the growing strength of our hit/lead programme. 
Epistem continues to refine its discovery and development technology 
to position itself as a world leader in therapeutic discovery in the field 
of epithelial stem cell regulation. With the profile and visibility of each 
of our business divisions increasing, we expect to see the Company 
advance quickly over the coming year. 
I would like to thank the Chief Executive Officer for his leadership  
and navigation of the Company during these difficult times. I would 
also like to thank the Board and our employees for their effort and 
commitment in driving Epistem’s progress over the past year, as well 
as our investors whose valued support has provided a stable platform 
for our continued growth. 
David Evans 
Non-executive Chairman
5 October 2010 16 Epistem Holdings Plc Annual Report 2010
   
Chief Executive’s Review
Dear Shareholder,
Against the backdrop of changing times and economic uncertainty, 
Epistem continues to make excellent progress in building itself  
into a globally recognised Drug Discovery and Personalised  
Medicine company.  
The financial results for the Group presented in this announcement 
reflect the results for the Group’s sole trading subsidiary for the year  
to 30 June 2010 and for the comparative period to 30 June 2009. 
Headline progress over the year included:
Year-on-year net sales up 45%. •	
The Company reports its second year of profit growth  •	
and an increase in earnings per share.
Novel Therapies sales increased to £2.4m, £1.4m increase  •	
over the previous year.
 Biomarker sales increased 19% year-on-year and now forms  •	
part of the newly created Personalised Medicine division. 
Development of our new Genedrive •	
TM
 ‘Point of Care’ mobile 
molecular diagnostic device.
 Contract Research sales increased by 10% over the previous year. •	
 A strengthened cash balance of £5.4m and improved trading outlook. •	
Matthew Walls 
Chief Executive 
Officer Review of the Year
Epistem Holdings Plc Annual Report 2010 1 7  
Integrated business model
The Company continues to progress its integrated business  
model, with each division targeting revenue growth and profitability. 
The establishment of independent divisions has created a strong 
portfolio of growing and profitable business units rarely seen in a 
biotechnology business model. Epistem provides a financially robust 
business, whilst offering the potential of significant financial upside 
from our Novel Therapies, Personalised Medicine and Contract 
Research Services divisions. We continue to enhance and exploit our 
integrated core competence in epithelial cell biology, whilst retaining 
commercial independence across each of our divisions. 
Financial review
The Company reports a turnover of £5.7m (2009: £4.0m) for the  
year ended 30 June 2010. Revenues were underpinned by the 
Contract Research Services division, which delivered sales of £2.5m 
(2009: £2.3m) a 10% year-on-year growth. The Biomarker division 
(now forming part of the Personalised Medicine division) saw sales 
marginally increased to £0.8m (2009: £0.7m), with the Novel Therapies 
division reporting increased sales of £2.4m (2009: £1.0m). 
Consolidated territory revenues were split US 79% (63%), EU 14% 
(19%) and UK 7% (18%), the US territory figures continue to be 
strengthened by our US government and Novartis collaborations  
and represents a major growth market for the Company. 
Sales growth in Contract Research Services delivered a 28% increase 
in operating profit of that division, with operating profit up to £0.7m 
(2009: £0.6m). Increased Biomarker sales were partly offset by 
growing investment in our Biomarker and Diagnostics developments 
and the set up of our new US Biomarker operations to record a small 
loss for the year. Novel Therapies reported a significant increase in 
operating profit of £1.0m (2009: Loss £0.2m) driven by a full year’s 
funding of £1.0m from the Novartis collaboration and £1.4m revenue 
recognition from the up-front payment which is being spread over  
the length of the contract. Central administration costs increased by 
£0.2m to £1.3m (2009: £1.1m) primarily due to increased staff costs 
and professional fees. 
The Groups reported profit for the year was £0.3m (2009: £0.1m)  
with headcount in the company now at 51 (2008: 45).
Cash reserves at the end of the year were £5.4m (2008: £3.7m) 
benefiting from improved trading and funding from the November 
2009 £2.9m placing. 
Earnings per share increased to 3.8p per share (2009: 1.1p). 
Clear investor communication of the Company’s strategy and 
performance remains a key element of our success and we will 
continue to strengthen communications as we embark upon  
our next phase of growth. 
The Company’s annual audit was completed in October 2010 by  
HW Chartered Accountants, and their audit report is included  
in the annual accounts.
‘ Divisional growth 
and globally  
leading technology’
2000 2002 2004 2005 2007
Company formation
Company sets up 
Contract Research 
Services group.
Drug discovery
Commencement of 
research into epithelial 
stem cell regulators.
New disease models
Company announces new 
models in inflammatory 
bowel disease.
Fundraising
Epistem closes  
£2.0m fundraising.
LSE: AIM Admission
Successful IPO and AIM 
Admission April 2007 . 18 Epistem Holdings Plc Annual Report 2010
   
Chief Executive’s Review (continued)
‘Building shareholder value by providing a high 
margin, diverse and rapidly growing portfolio 
of world class technologies’
2008 2010
Biomarker
Epistem creates new 
Biomarker division.
March
10 year anniversary.
Discovery collaboration
Epistem enters research 
and development 
collaboration with  
Novartis AG.
July
Epistem reports  
2nd year of  
profitable growth.
Placing
Epistem completes  
£2.9m share placing.
2009
Operating review
Contract Research Services
Over the financial year, Contract Research Services delivered a 10% 
year-on-year growth in revenue. Whilst market conditions remained 
challenging, our specialist preclinical services continued to expand  
and develop its business mainly with the larger pharmaceutical/ 
Biotechnology groups. 
Revenue increases were seen in our major US and EU markets, with 
the UK territory now representing the smallest territory in terms of 
revenue generation. Interestingly, only 4 years ago, the UK had been 
our major market. Our mucositis and inflammatory bowel disease 
models showed the greatest gain over the year supported by our new 
assays and technical developments. Our new client relationships and 
aggregate contract values also continued their trend of year-on-year 
increase over the year. 
 
The US National Institutes of Health’s biodefence programme continues 
to make good progress and continues to expand marking a significant 
milestone in our tests for agents which may treat radiation sickness 
following a nuclear incident. We enjoy a business relationship with the 
US biodefence group which is based on many years of close working 
and we expect this to continue over the forthcoming years. 
A solid start to the new financial year and our focus on specialist testing 
of preclinical drug compounds in our core disease areas continues to 
provide an attractive business model from which we anticipate further 
growth over the coming year.
Personalised Medicine 
Following last year’s formation of the Biomarker division, we have  
now expanded our Diagnostic assay developments alongside our 
Biomarker technology to create a new ‘Personalised Medicine’ 
division. The oncology Biomarker business saw continued revenue 
growth over the year and the set up of the new US Biomarker office. 
We anticipate that US business expansion will continue to underpin 
our business development with the division poised to accelerate  
its revenue generation over the coming year. Our hair biomarker 
continues to engage with a growing customer base and provides  
a powerful measure of drug-induced gene expression for use in 
pre-clinical and clinical studies. Use of our technology to identify drug 
induced oncology genes (oncogenes) in molecular pathways is driven 
by the regulatory authority requirements to show that developmental 
drugs are effectively targeting these oncogenes. Our highly sensitive 
amplification technology, RNA-Amp
TM
 which underpins our Biomarker 
technology has also recently been launched in a simple  
to use kit form. 
We are also unveiling our new Genedrive
TM
 ‘Point Of Care’ (POC) 
molecular diagnostic device for ‘on the spot’ patient diagnosis. 
Genedrive
TM
 is a unique, mobile and proprietary electronic device 
which targets a rapid molecular diagnostic assessment (sub 30 mins) 
for use in clinics, hospitals, surgeries as well as lending itself to  
OTC opportunities. The device is expected to have other marketing 
opportunities in veterinary, food and industrial use. We expect the 
device to bring a new ‘standard of care’ to the rapid diagnosis of 
pathogens and other molecular diseases.    
Whilst technical and development risks may still arise around each  
of our platforms, over time these continue to reduce. Validation of  
the new Genedrive
TM
 system is now underway, with beta site clinical 
testing expected to start towards the end of this year with the launch 
of the device anticipated in the first half of next year. 
The Personalised Medicine market is forecast to grow considerably 
over the next few years driven by effective patient treatment, 
increasing regulatory requirements and patient specific drug 
development and our platform technologies are well positioned  
to capitalise on this market growth.
  Review of the Year
Epistem Holdings Plc Annual Report 2010 1 9  
Novel Therapies
The Novel Therapies collaboration with Novartis is now in its second 
year and we are seeing the emergence of the first hits/leads from  
the Regenerative Medicine programme. Whilst these hits/leads  
are still at the discovery stage, the core cell biology and signalling 
pathways which regulate the cell/stem cell are becoming clearer and 
better understood as we identify which genes and pathways regulate 
specific characteristics of the cell. Our relationship with Novartis 
remains strong and we will be advancing each of our hit/leads under 
the collaboration over the coming year as we move into the next 
phase of development. Despite our confidence in the collaboration 
programme, the timing of potential licenses and future funding 
remains difficult to judge with accuracy. With the first phase of the 
discovery collaboration now nearing completion, discussions around 
the second phase of hit/lead development and future licensing/ 
funding will continue into next year. 
Aside from the Novartis collaboration, we have also commenced  
a focused small molecule programme to establish our own proprietary 
agents which regulate the signalling pathways and biology of the  
cell. This will allow us to develop our own drug leads and reinforce  
our lead position in the regulation of epithelial cells and stem cells, 
focused in the disease areas of regenerative medicine and oncology.  
We will continue to evaluate our other drug discovery and development 
opportunities with the major industry players over the forthcoming 
year to identify new lead developments and to expand our discovery 
and early stage development platform. 
Current trading and outlook
Epistem continues to diversify its portfolio of business opportunities 
and strengthen its technology whilst maintaining profitable and 
sustainable growth. The past year has seen further strong operational 
and financial development across each of our divisions with each 
division developing its own independent strategy for growth. 
Trading in the first three months of the new financial year continues 
strong with revenues 15% ahead of the comparative period last year. 
The next phase of Epistem growth will continue to strengthen and 
build on each of our divisional operations. We continue to supplement 
our management team with world class, innovative individuals who  
fit with the culture and dynamism of the Company. We will also build 
on our corporate and board strength and supplement our scientific 
advisory board and advisory committees as appropriate.
Our shareholder interest and support remains strong and we will 
ensure that our ongoing investor communications continue to grow 
this relationship. 
A strengthening operational and financial position confirms our  
belief that the year ahead will continue to generate substantial 
increases in our forecast revenues and growth ambitions. We remain 
selective in considering complementary technology, acquisitions  
and in-licensing, with few opportunities thus far meeting our high 
expectations. We continue to remain vigilant in our outlook in these 
uncertain times. 
Our ambition remains firmly fixed on building shareholder value  
by providing a high margin, diverse and rapidly growing portfolio  
of world class technologies. 
I would like to thank the Board, management and employees for their 
outstanding performance over the past year. I would also like to thank 
our investors for their continued close support and interest in our 
exciting and rapidly growing Company. 
Matthew H Walls
Chief Executive Officer
5 October 2010 20 Epistem Holdings Plc Annual Report 2010
   
Board of Directors Governance
Epistem Holdings Plc Annual Report 2010 2 1  
1. David Evans (50)
Non-executive Chairman
David joined Epistem as a Non-executive Director in June 2005  
and became Executive Chairman in March 2006 until the flotation  
in April 2007 , when he reverted to a non-executive position. David,  
a qualified accountant, has many years’ experience both as an 
executive and as a non-executive of publicly listed diagnostic and  
life science companies. In addition to his chairmanship of Epistem,  
he is currently Non-executive Chairman of the following AIM listed 
companies: Immunodiagnostic System Holdings plc, Omega 
Diagnostics Group plc and Scancell Holdings Plc.
2. Matthew Walls (46)
Chief Executive Officer
Matthew joined Epistem in February 2007 as Chief Executive Officer.
He is an experienced CEO, most recently with Oxford Biosignals
Limited, where he led the strategic collaboration with Rolls-Royce Plc
and Covance Inc. Matthew spent the early part of his career with ICI
Plc, progressing through to AstraZeneca Plc prior to its plant crop
biotechnology group merger with Novartis to form Syngenta Plc.
Matthew has led the growth of several technology and biotechnology
companies as CEO, including Internexus Limited and Zylepsis Limited.
He holds a non-executive post at Continum Limited and Riyada
Oxford Investments Limited and is a chartered accountant and a
member of CIMA.
3. John Rylands (55)
Financial Director
John originally joined Epistem as an investor and Non-executive 
Director, and in 2005 took over his current role. John provided 
corporate finance advice to private companies before joining Epistem. 
Until 1999 he was an investor in and consultant to the SDS group of 
companies. John holds a degree in Economics and Accountancy 
from Manchester University and is a member of ICAEW.
4. Jeffrey Moore, Ph.D. (51)
Managing Director, Novel Therapies
Jeffrey joined Epistem in 2005 in his current role. Prior to joining  
Epistem he had been at Phylogix, a US biotechnology company which 
he founded in 1998. Jeffrey has held two postdoctoral fellowships, at 
DNAX Research Institute of Molecular and Cellular Biology Inc and the 
Walter and Eliza Hall Institute of Medical Research, following which he 
joined Imclone Systems Inc. Throughout his career, Jeffrey has kept a 
strong interest in stem cell regulation and in identifying the potential 
commercial application of these factors. He holds a Ph.D. from  
George Washington University.
5. Prof. Chris Potten (69)
Chief Scientific Adviser
Chris is a co-founder of Epistem and the Company capitalises on  
the results of the research that was produced by him and his team at 
the Paterson Institute over the past three decades. Chris acts as Chief 
Scientific Adviser to the Company, although he does not participate in 
the day-to-day management of the Company. Chris retains a strong 
interest in the progress and success of the Company and prior to 
Epistem’s AIM listing was its biggest individual shareholder.
6. Catherine Booth, Ph.D. (45)
Managing Director, Contract Research Services
Catherine is a co-founder of Epistem and prior to starting Epistem, 
she worked for ten years with Prof. Chris Potten at the Paterson 
Institute. Whilst at the Paterson Institute, she developed many 
pre-clinical assays. This knowledge is at the core of the Epistem 
Contract Research Service. Catherine received her Ph.D. from 
Emmanuel College, University of Cambridge.
7. Gerard Brady, Ph.D. (54)
Research Director
Gerard joined Epistem shortly after its inception from Manchester 
University, where he was a lecturer, and was previously a Zeneca 
Fellow. He brought with him important technological expertise gained 
through working on blood stem cells. Of particular importance to 
Epistem, is his expertise in single cell gene analysis, which enables  
the examination of rare cells such as stem cells. Gerard previously 
held scientific positions in Canada and at EMBL, Heidelberg.
8. Robert Nolan, Ph.D. (67)
Non-executive Director
Robert has been a Non-executive Director of the Company since 
2004. He brings with him a wealth of expertise in partnering and 
licensing negotiations with both small biotechnology and large 
pharmaceutical companies. Prior to his retirement he was Director, 
Global Licensing, at AstraZeneca Plc. He is also a Non-executive 
Director of Phico Therapeutics Ltd.
9. Roger Lloyd, Ph.D. (62)
Non-executive Director
Trained as a biochemist, Roger has almost 35 years’ experience in  
the healthcare and biotechnology sector, particularly in the areas of 
strategic planning and business development. International business 
management with ICI Plc and AstraZeneca Plc included living and 
working in the US and Germany, and having territorial responsibilities 
for Europe, Japan, Korea, Mexico and the Middle East. As Executive 
Director of Global Licensing at AstraZeneca, he personally completed 
24 transactions, including strategic alliances with Abgenix and CAT, 
and acquisitions of KuDOS Pharmaceuticals and CAT. He operates  
as a Board Adviser in the biotech sector. 22 Epistem Holdings Plc Annual Report 2010
   
For the year ended 30 June 2010
The Directors present their report for Epistem Holdings Plc (the Company) and its subsidiaries (together Epistem or the Group) for the year ended 
30 June 2010. 
Principal activities and review of the business
The principal activity of the Group during the year was the provision of services to the biotechnology and pharmaceutical industries, covering 
pre-clinical testing and gene biomarker services and the development of novel therapeutics for partner companies. The trading activities of the 
Group are currently principally undertaken in the subsidiary undertaking, Epistem Limited, and a detailed overview of these activities is outlined  
in the Business Overview on the inside front cover to page 11 of this report. During the year, the Group established a US business development 
office in Boston, MA, trading through its wholly owned subsidiary Epistem Inc., incorporated during the year.
A review of the business during the year which summarises overall progress, research and development and Key Performance Indicators, as 
well as risks and developments is detailed in the Business Overview and Review of the Year on the inside front cover of this report.
Results and dividends
The trading results for the year and the Group’s financial position at the end of the financial year are shown in the Financial Statements on pages 
29–51 of this report.
The Directors do not recommend payment of a final dividend.
Going concern
After due consideration, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence 
for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts.
Directors and their interests in shares
The Directors of the Company who held office throughout the year, unless otherwise stated, and their interests in the share capital of the 
Company, including family and pension scheme trust interests, were as follows:
        1 July  30 June 
        2009 2010
David Evans        80,645 80,645
Chris Potten        919,320 519,320
Catherine Booth        980,419 981,538
Gerard Brady        419 1,538
Roger Lloyd        – –
Jeffrey Moore        14,919 16,038
Robert Nolan        8,065 8,065
John Rylands        190,317 191,436
Matthew Walls        6,064 7,183
Significant shareholdings
In addition to the Directors’ holdings, the Company has been advised of the following interests of over 3% of the issued ordinary shares:
        Ordinary  Percentage  
        shares holding
Managed by Calculus Capital Ltd        947,707 11.9%
Helium Special Situations Fund        807,500 10.2%
Gartmore Investments Limited        605,000 7.6%
Generali Finances        400,000 5.0%
Northwest Business Investment Scheme        294,780 3.7%
Policy on payments to suppliers
It is the policy of the Company in respect of all of its suppliers, where reasonably practicable, to settle the terms of payment with those suppliers 
when agreeing the terms of each transaction, to ensure that those suppliers are made aware of the terms of payment, and to abide by those 
terms. The Group has complied with this policy during the year. The average number of creditor days for the Group was 83 (2009: 66) based on 
the average daily amount invoiced by suppliers during the year.
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report and the Financial Statements in accordance 
with applicable law and regulations.
Directors’ Report Governance
Epistem Holdings Plc Annual Report 2010 2 3  
Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors have prepared  
the Financial Statements in accordance with International Reporting Standards (IFRSs) as adopted by the European Union.
In preparing those Financial Statements, the Directors are required to:
select suitable accounting policies and then apply them consistently; •	
make suitable judgements and estimates that are reasonable and prudent; •	
state that the Financial Statements comply with IFRSs as adopted by the European Union, subject to any material departures being •	
adequately disclosed and explained; and
prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business. •	
The Directors confirm that they have complied with the above requirements in preparing the Financial Statements.
The 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 Group and enable them to ensure that the Financial Statements 
comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group 
and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. 
Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other 
jurisdictions.
Principal risks
The Board meets regularly to review operations and to discuss risk areas. The Review of the Year on pages 12–19 reports on the factors  
which are key to the ongoing development of the Company. The Corporate Governance Report contains details of the Group’s system of  
internal control. Details of the financial risks are disclosed in Note 19 to the Financial Statements.
Provision of information to auditors
The Directors who were members of the Board at the time of approving the Directors’ Report are listed on pages 20 and 21. Having made 
enquiries of fellow Directors and of the Group’s auditors, each of these Directors confirms that:
to the best of each Director’s knowledge and belief, there is no information (that is information needed by the Group’s auditors in connection •	
with preparing their report) of which the Group’s auditors are unaware; and
each Director has taken all the steps that a Director might reasonably be expected to be taken to be aware of relevant audit information and •	
to establish that the Group’s auditors are aware of that information.
Approved by the Board
H J J Rylands
Company Secretary
5 October 2010 24 Epistem Holdings Plc Annual Report 2010
   
For the year ended 30 June 2010
Directors’ Remuneration Report
Introduction
This report has been prepared in accordance with the requirements of Schedule 2 Pt1 to the Companies Act 2006 (the Schedule) and also 
meets the relevant requirements of the Listing Rules of the Financial Services Authority and describes how the Board has applied the Principles 
of Good Governance relating to Directors’ Remuneration. In accordance with Section 439 of the Companies Act 2006 (the Act), a resolution to 
approve the report will be proposed at the Annual General Meeting of the Company at which the Financial Statements are to be approved.
Section 495 of the Act requires the auditors to report to the Company’s members on the ‘auditable part’ of the Directors’ Remuneration Report 
and to state whether, in their opinion, that part of the report has been properly prepared in accordance with Part 3 of the Schedule. This report 
has therefore been divided into separate sections for unaudited and audited information.
Unaudited information
Remuneration policy
Executive remuneration packages are prudently designed to attract, motivate and retain Directors of the necessary calibre and to reward them 
for enhancing value to shareholders. The performance measurement of the Executive Directors and key members of senior management and 
the determination of their annual remuneration package is undertaken by the Remuneration Committee. The remuneration of the Non-executive 
Directors is determined by the Board within limits set out in the Articles of Association. 
Executive Directors are entitled to accept appointments outside the Company providing the Board’s permission is sought.
Non-executive Directors’ terms of engagement
The Non-executive Directors have specific terms of engagement. Their remuneration is determined by the Board. In the event that a  
Non-executive undertakes additional assignments for the Company, the Non-executive’s fee will be agreed by the Company in respect  
of each assignment.
Audited information
Aggregate Directors’ remuneration
     Salary   2010 2009 
     & fees Bonus Pension Total Total 
     £ £ £ £ £
Executive   
Catherine Booth     118,644 15,000 7,169 140,813 133,667
Gerard Brady     115,000 – – 115,000 121,667
Jeffrey Moore     125,000 15,000 – 140,000 147,667
John Rylands     115,000 15,000 – 130.000 121,667
Matthew Walls     200,000 100,000 – 300,000 300,000
 
Non-executive
David Evans     34,992 – – 34,992 25,000
Chris Potten     43,943 – – 43,943 64,029
Roger Lloyd     24,000 – – 24,000 24,000
Robert Nolan     24,000 – – 24,000 24,000
      800,579 145,000 7,169 952,748 961,697 Governance
Epistem Holdings Plc Annual Report 2010 2 5  
Directors’ share options
Details of the options for Directors who served during the year are as follows:
  As at  As at   Earliest 
  1 July  Options 30 June Exercise  exercise  Expiry 
  2009 granted 2010 price  date  date
Executive
Catherine Booth 
(2)
  15,528 – 15,528 £1.20  Exit  09/01/2016
Gerard Brady 
(2)
  88,800 – 88,800 £0.50  Exit  06/01/2012
Gerard Brady 
(2)
  3,200 – 3,200 £0.75  Exit  30/03/2013
Gerard Brady 
(2)
  2,200 – 2,200 £0.75  Exit  06/04/2013
Gerard Brady 
(2)
  1,800 – 1,800 £0.75  Exit  20/07/2014
Gerard Brady 
(2)
  24,224 – 24,224 £1.20  Exit  24/11/2015
Gerard Brady 
(2)
  12,653 – 12,653 £1.67  Exit  27/07/2017
Gerard Brady 
(4)
  57,727 – 57,727 £1.60  15/10/2010  15/10/2017
Jeffrey Moore 
(3)
  83,333 – 83,333 £1.20  04/04/2007  09/01/2016
Jeffrey Moore 
(1)
  100,000 – 100,000 £1.20  04/04/2007  09/01/2016
Jeffrey Moore 
(1)
  83,333 – 83,333 £1.20  01/09/2007  09/01/2016
Jeffrey Moore 
(1)
  83,333 – 83,333 £1.20  01/09/2008  09/01/2016
John Rylands 
(3)
  83,333 – 83,333 £1.20  04/04/2007  09/01/2016
John Rylands 
(1)
  127,847 – 127,847 £1.20  04/04/2007  09/01/2016
Matthew Walls 
(5)
  177,653 – 177,653 £1.24  31/10/2010  27/03/2017
Matthew Walls 
(6)
  80,644 – 80,644 £1.24  31/10/2010  27/03/2017
Non-executive
David Evans
 (1)
  62,112 – 62,112 £1.20  04/04/2007  09/01/2016
Robert Nolan 
(1)
  78,000 – 78,000 £1.29  31/05/2005  30/03/2015
Robert Nolan 
(1)
  15,528 – 15,528 £1.20  10/01/2006  09/01/2016
Chris Potten 
(2)
  15,528 – 15,528 £1.20  Exit  09/01/2016
1. Unapproved stand-alone agreement, no performance criteria.
2. EMI Company scheme, no performance criteria.
3. EMI stand-alone scheme, no performance criteria.
4.  EMI and Unapproved stand-alone scheme, with performance criteria which require the Board to determine whether certain identified technical developments have  
been completed.
5.  EMI and Unapproved stand-alone scheme, with performance criteria which allow the options to vest (i) when the audited accounts for the year ended 30 June 2010 
become available and (ii) when the earnings per share of the financial year are a positive figure.
6. EMI stand-alone scheme, with performance criteria as detailed in (5) above.
Share Investment Plan 
The details of the Epistem Share Investment Plan are outlined in Note 18(b) to the accounts. The Directors’ interests in the shares of the 
Company include shares acquired under the Share Investment Plan as follows:
      Cost of Total Total Total 
     Partnership matching  matching SIP shares SIP shares 
     shares shares shares 30 June 2010 30 June 2009 
     No. £ No. No. No.
Catherine Booth     512 2,991 1,026 1,538 419
Gerard Brady     512 2,991 1,026 1,538 419
Jeffrey Moore     512 2,991 1,026 1,538 419
John Rylands     512 2,991 1,026 1,538 419
Matthew Walls     512 2,991 1,026 1,538 419
Approved by the Board
D Evans
Non-executive Chairman
5 October 2010 26 Epistem Holdings Plc Annual Report 2010
   
For the year ended 30 June 2010
Corporate Governance Report
The Group is subject to the continuing requirements of the AIM Rules and is committed to adhering to corporate governance standards 
appropriate for a company of its size. The Group follows the Quoted Companies Alliance guidelines and has Remuneration, Audit and 
Nominations committees with written terms of reference and a schedule of matters reserved for the Board, which generally meets each month.
The Board has established an Audit Committee, a Remuneration Committee and a Nominations Committee. The membership of these 
committees and attendance at meetings is as follows:
       Audit Remuneration Nominations 
       Committee Committee Committee
David Evans (Non-executive Chairman)       3 3 1
Robert Nolan (Non-executive Director)       3 3 1
Roger Lloyd (Non-executive Director), Remuneration and Nominations Committees only   N/A 3 1
Remuneration Committee
The Remuneration Committee will review the scale and structure of the Executive Directors’ and senior management’s remuneration and  
the terms of their service contracts. The remuneration and terms of appointment of the Non-executive Directors will be set by the Board.  
The Remuneration Committee will also approve the issue of share options under schemes approved by the Board.
None of the Committee have any personal financial interest (other than as shareholders), conflicts of interest arising from cross-directorships,  
or day-to-day involvement in the running of the business. No Director plays a part in any discussion about his or her own remuneration.
Audit Committee
The Audit Committee has responsibility for receiving accounts and reviewing reports from the management and the Company’s auditors, relating 
to Annual and Interim Accounts and the accounting and internal controls in place throughout the Group. At this stage of the Group’s size and 
development, the Committee has decided that an internal audit function is not required as the Group’s internal controls system in place is 
appropriate for its size. The Audit Committee has met three times during the year.
Nominations Committee
The Nominations Committee has responsibility for reviewing the size, structure and composition of the Board, as well as retirements and 
appointments of replacement and additional Directors, and for making appropriate recommendations to the Board.
Relations with shareholders
The Group recognises the importance of communicating with its shareholders to ensure that its strategy and performance is understood and 
that it remains accountable to shareholders. The Board as a whole is responsible for ensuring that a satisfactory dialogue with shareholders 
takes place, while the Chairman and Chief Executive ensure that the views of the shareholders are communicated to the Board as a whole.  
The Board ensures that the Group’s strategic plans have been carefully reviewed in terms of their ability to deliver long-term shareholder value. 
Internal controls
The Board acknowledges its responsibility for establishing and maintaining the Group’s system of internal controls and will continue to ensure 
that management keeps these processes under regular review and improves them where appropriate. The system of internal controls is 
designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can provide only reasonable and not absolute 
assurance against material misstatement or loss. 
Social, environmental and ethical matters
The Board recognises the growing awareness of social, environmental and ethical matters and it endeavours to take into account the interests  
of the Group’s stakeholders, including its investors, employees, suppliers and business partners, when operating the business.
Employment
At a subsidiary level the individual company has established policies which address key corporate objectives in the management of employee 
relations, communications and employee involvement, training and personal development and equal opportunities.
Health, safety and environmental issues
The Board recognises its legal responsibilities to ensure the well-being, safety and welfare of its employees and to maintain a safe and healthy 
working environment for them and for its visitors and subcontractors. Health and Safety is on the agenda for regularly scheduled Board meetings.
By their nature, the Group’s regular operations are judged to have a low environmental impact and are not expected to give rise to any significant 
inherent environmental risks over the next twelve months.
The Group is committed to maintaining high standards in implementing appropriate health, safety and environmental protection policies.  
The Group has an excellent health and safety record. Waste materials are recycled where appropriate, and hazardous waste is catalogued  
and handled by licensed specialist disposal companies. Governance
Epistem Holdings Plc Annual Report 2010 27  
Independent Auditors’ Report to the Members of Epistem Holdings Plc
We have audited the group and parent company Financial Statements (the Financial Statements) of Epistem Holdings Plc for the year ended  
30 June 2010 which comprise the group income statement, the group and parent company balance sheets, the group and parent company 
cash flow statements, the group and parent company statements of changes in equity and the related notes. The financial reporting framework 
that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs), as adopted by the European 
Union and, as regards the parent company’s Financial Statements, as applied in accordance with the provisions of the Companies Act 2006. 
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.  
Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in  
an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone  
other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and Auditors
As explained more fully in the  Statement of Directors’ responsibilities set out in the Directors’ Report 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). These standards require us to comply 
with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
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. This 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; and
 the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the Financial Statements. •	
Opinion on the Financial Statements
In our opinion:
the Financial Statements give a true and fair view of the state of the group’s and the parent company’s affairs as at 30 June 2010,  •	
and of the group’s profit for the year then ended;
the group Financial Statements have been properly prepared in accordance with IFRSs as adopted by the European Union; •	
the parent company Financial Statements have been properly prepared in accordance with the IFRSs as adopted by the European Union •	
and as applied in accordance with the requirements of the Companies Act 2006; and
the Financial Statements have been prepared in accordance with the requirements of Companies Act 2006 and as regards the group •	
Financial Statements, Article 4 of the IAS regulation.
 
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and •	
the information given in the Directors’ Report for the financial year for which the Financial Statements are prepared is consistent with the •	
Financial Statements.
Matters on which we are required to report by exception
We 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:
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
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 
certain disclosures or directors’ remuneration specified by law are not made; or •	
we have not received all the information and explanations we required for our audit. •	
For the year ended 30 June 2010 28 Epistem Holdings Plc Annual Report 2010
   
(continued)
Independent Auditors’ Report to the Members of Epistem Holdings Plc
Under the Listing Rules we are required to review:
the Directors’ statement, set out in the Directors’ Report, in relation to going concern; and •	
the part of the Corporate Governance Statement relating to the company’s compliance with the nine provisions of the June 2008 Combined •	
Code specified for our review.
Carol Graham FCA 
(Senior Statutory Auditor)
For and on behalf of:
HW
Chartered Accountants & Statutory Auditors
Bridge House  
157 Ashley Road  
Hale
Altrincham
Cheshire
WA14 2UT
25 October 2010 Accounts
Epistem Holdings Plc Annual Report 2010 2 9  
Consolidated Statement of Comprehensive Income
        2010 2009 
      Notes   £’000 £’000
Revenue      2  5,740 3,968
Contract costs        (2,697) (2,424)
Discovery and development costs        (1,433) (1,131)
General administrative costs        (1,298) (1,114)
Operating profit/(loss)      3  312 (701)
Finance income      6  40 41
Finance costs      6  (2) (9)
Profit/(loss) on ordinary activities before taxation      350 (669)
     
Taxation on ordinary activities      7  (60) 752
Total comprehensive income for the financial year      290 83
Earnings per share (pence)      
– Basic      9  3.8p 1.1p
– Diluted      9     3.3p   1.0p
All of the activities of the Group are classed as continuing.
The Company has taken advantage of section 408 of the Companies Act 2006 not to publish its own income statement.
For the year ended 30 June 2010 30 Epistem Holdings Plc Annual Report 2010
   
For the year ended 30 June 2010
Consolidated Statement of Changes in Equity
     Employee 
   Equity Share share Share Reverse   
   share premium incentive options acquisitions Retained Total 
   capital account plan reserve reserve reserve earnings equity 
   £’000 £’000 £’000 £’000 £’000 £’000 £’000
Balance at 1 July 2008   108 8,437 – 547 (2,484) (4,026) 2,582
    
Allotment of ordinary shares   – 24 – – – – 24
Exercise of options   – 6 – (6) – – –
Lapse of options   – –  –  (6) – 6 –
Recognition of equity-settled share-based payments  – – – 71 – – 71
Total comprehensive income for the year   – – – – – 83 83
At 30 June 2009   108 8,467 – 606 (2,484) (3,937) 2,760
Balance at 1 July 2009   108 8,467 – 606 (2,484) (3,937) 2,760
Allotment of ordinary shares   11 2,873 – – – – 2,884
Share issue costs   – (135) – – – – (135)
Purchase of own shares (SIP)   – – (43) – – – (43)
Exercise of options   – 1 – (1) – – –
Recognition of equity-settled share-based payments  – – – 28 – – 28
Total comprehensive income for the year   – – – – – 290 290
At 30 June 2010   119 11,206 (43) 633 (2,484) (3,647) 5,784 Accounts
Epistem Holdings Plc Annual Report 2010 3 1  
Consolidated Balance Sheet
        2010 2009 
      Notes   £’000 £’000
Non-current assets
Intangible assets       10  135  139
Plant and equipment      11  608 465
Deferred taxation      12  536 594
         1,279  1,198
Current assets
Trade and other receivables      13  1,011 820
Tax receivables        150 150
Cash and cash equivalents       14  5,371 3,748
         6,532 4,718
Liabilities     
Current liabilities     
Deferred income      15  974 1,380
Trade and other payables      16  1,014 721
Obligations under finance leases      17  37  46
Corporation taxation        2 –
Bank overdrafts and loans        –  52
         2,027 2,199
Net current assets        4,505 2,519
Total assets less current liabilities        5,784 3,717
Non-current liabilities      
Deferred income      15  – (920)
Obligations under finance leases      17  – (37)
Net assets        5,784 2,760
Capital and reserves      
Called-up equity share capital       22  119 108
Share premium account      23  11,206 8,467
Employee share incentive plan reserve      23  (43) –
Share options reserve      23  633 606
Reverse acquisition reserve      23  (2,484) (2,484)
Retained earnings      23  (3,647) (3,937)
Total shareholders’ equity        5,784 2,760
These Financial Statements were approved by the Directors and authorised for issue on 5 October 2010 and are signed on their behalf by:
D Evans      H J J Rylands
Non-executive Chairman    Company Secretary
As at 30 June 2010 32 Epistem Holdings Plc Annual Report 2010
   
For the year ended 30 June 2010
Consolidated Statement of Cash Flows
        2010 2009 
         £’000 £’000
Cash flows from operating activities
Operating profit/(loss) for the year        312 (701)
Depreciation, amortisation and impairment       169 131
Share-based payment expense        28 71
Operating profit/(loss) before changes in working capital and provisions    509 (499)
(Increase) in trade and other receivables        (191) (383)
(Decrease)/increase in deferred income        (1,326) 2,300
Increase in trade and other payables        293 293
Net cash (outflow)/inflow from operations       (715) 1,711
Interest received        40 41
Tax received        – 183
         40 224
Net cash (outflow)/inflow from operating activities      (675) 1,935
Cash flows from investing activities 
Acquisition of fixed assets        (308) (328)
Net cash outflow from investing activities       (308) (328)
Cash flows from financing activities
Proceeds from issue of share capital        2,884 24
Expenses of share issue        (135) –
Purchase of own shares        (43) –
Repayment of borrowings        (48) (53)
Net cash inflow/(outflow) from financing activities      2,658 (29)
Net increase in cash equivalents        1,675  1,578
Cash and cash equivalents at beginning of year       3,696 2,118
Cash and cash equivalents at end of year       5,371 3,696
Analysis of net funds
Cash at bank and in hand        5,371 3,748
Bank overdrafts        – (52)
Net funds        5,371 3,696 Accounts
Epistem Holdings Plc Annual Report 2010 3 3  
Notes to the Financial Statements
1. Significant accounting policies
Basis of accounting
The Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the 
European Union and therefore comply with Article 4 of the EU IAS Regulation, International Financial Reporting Interpretations Committee (IFRIC) 
interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
Epistem Holdings Plc is a company incorporated in the UK.
The Financial Statements consolidate those of the Company and its subsidiaries (together referred to as the Group). They are presented in 
pounds sterling and all values are rounded to the nearest one thousand (£k) except where otherwise indicated.
The Financial Statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as 
adopted by the EU. 
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods represented in these consolidated 
Financial Statements.
The preparation of the Financial Statements requires management to make judgements, estimates and assumptions that affect the application  
of accounting policies and the reported amounts of assets, liabilities, duration of contracts, income, expenses and taxation. 
Determining the value of Deferred income and expenditure requires an assessment of the duration of the contract to which the Deferred •	
income and expenditure relates which informs decisions as to when to recognise revenue and whether to carry forward costs.
Determining the value of Intangible assets requires a judgement about the extent to which the relevant asset will be brought into economic •	
use by the Company. The filing of a patent will generally lead to a judgement that the cost of filing the patent will have future economic use. 
Research and development expenditure will generally be expensed unless associated income can be identified.
Determining the value of the deferred tax asset requires an estimation of future taxable profits against which the accumulated tax losses may •	
be utilised.
Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to 
accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and 
operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable 
or convertible are taken into account. The Financial Statements of subsidiaries are included in the consolidated Financial Statements from the 
date that control commences until the date that control ceases. Transactions between Group companies are eliminated on consolidation.
On 16 March 2007 , Epistem Holdings Plc merged with Epistem Limited, and on that date the shareholders of Epistem Limited exchanged their 
shares for equivalent shares in Epistem Holdings Plc. As Epistem Holdings Plc was newly incorporated at the time of the transaction under the 
terms of IFRS 3 Business Combinations, this transaction has been accounted for as a reverse acquisition, on the basis that the shareholders of 
Epistem Limited gained a controlling interest in the Group. The Financial Statements therefore represent a continuation of the Financial 
Statements of Epistem Limited.
Revenue
Revenue is measured at the fair value of the consideration received or receivable and net of discounts and sales-related taxes.
Revenue recognition
a. Contract revenue
Contract revenue is recognised by reference to the stage of completion of its related transaction at the end of the reporting period.
b. Collaboration and licensing revenue
Contractually agreed up-front payments and similar non-refundable payments in respect of collaboration or licence agreements which are  
not directly related to ongoing research activity are recorded as deferred income and recognised as revenue over the anticipated duration  
of the agreement. Where the anticipated duration of the agreement is modified, the period over which revenue is recognised is also modified.
Non-refundable milestone and other payments that are linked to the achievement of significant and substantive technological or regulatory 
hurdles in the research and development process are recognised as revenue upon the achievement of the specified milestone. 
Income which is related to ongoing research activity is recognised as the research activity is undertaken, in accordance with the contract.
For the year ended 30 June 2010 34 Epistem Holdings Plc Annual Report 2010
   
(continued)
Notes to the Financial Statements
1. Significant accounting policies (continued)
Segment reporting
A segment is a group of assets, liabilities and operations engaged in providing products or services that are subject to risks and returns that are 
different from those of other parts of the business. The Group’s primary format for segment reporting is based on business segments.
Research and development
Research and development expenditure is written off in the year in which it is incurred, unless associated income has been identified.
Intangible assets
Intangible assets are stated at cost less accumulated amortisation and any accumulated impairment losses. Amortisation is calculated so as to 
write off the cost of an intangible asset, less its estimated residual value, over the useful economic life of that asset, as follows:
Intellectual property – 5% straight line basis
Patents – over their estimated useful lives on a straight line basis
No amortisation is charged on those assets which are not yet available for use.
Plant and equipment
Plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is calculated so as 
to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows:
Plant & machinery – 25% reducing balance basis
Fixtures & fittings – 25% reducing balance basis
Equipment – 25% reducing balance basis
Finance lease agreements
Assets held under finance lease agreements are capitalised and disclosed as Plant and equipment. The capital element of the future payments 
is treated as a liability and the interest is charged to the consolidated income account so as to produce a constant periodic rate of interest on the 
remaining balance of the liability.
Operating lease agreements
Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against 
profits over the period of the lease.
Foreign currencies
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities 
denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. Non-monetary items carried at fair 
value and denominated in foreign currencies are retranslated at the rates prevailing on the date when fair value is determined. The foreign 
currency risks relating to assets and liabilities are detailed in Note 19.
Exchange differences arising on the settlement of monetary items and on the retranslation of monetary items are taken to the income account. 
Exchange differences arising on non-monetary items, carried at fair value, are included in the income account, except for such non-monetary 
items in respect of which gains and losses are recorded in equity.
Share-based payments
The Group issues equity-settled and cash-settled share-based payments to certain employees (including Directors). Equity-settled share-based 
payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments 
is expensed on a straight line basis over the vesting period, together with a corresponding increase in equity, based upon the Group’s estimate 
of the shares that will eventually vest.
Fair value is measured using the Black-Scholes pricing model. The expected life used in the model has been adjusted, based on management’s 
best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
Where the terms of an equity-settled transaction are modified, as a minimum an expense is recognised as if the terms had not been modified.  
In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date  
of modification.
Where an equity-settled transaction is cancelled, it is treated as if it had vested on the date of the cancellation, and any expense not yet 
recognised for the transaction is recognised immediately. However, if a new transaction is substituted for the cancelled transaction, and 
designated as a replacement transaction on the date that it is granted, the cancelled and new transactions are treated as if they were a 
modification of the original transaction, as described in the previous paragraph. Accounts
Epistem Holdings Plc Annual Report 2010 3 5  
The issuance by the Company of share options to employees of its subsidiary represents additional capital contributions and the fair value of 
such options and awards is therefore recognised as an increase in the Company’s investment in Group undertakings with a corresponding 
increase in total equity shareholders’ funds.
Share Incentive Plan
The Company operates an HMR&C qualifying Share Incentive Plan. Under the scheme, the Company may contribute Matching shares to 
employees who elect to invest in Epistem shares under the scheme. 
The Matching shares have vesting conditions, which require participants to remain employed with the Company and retain their investment in 
Epistem shares for at least three years. The cost of the Matching shares is expensed as and when the vesting conditions have been satisfied.
Pension contributions
Contributions to personal pension plans of employees on a defined contributions basis are charged to the income statement in the year in which 
they are payable.
Financial instruments
Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as either financial assets, 
financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the Company after 
deducting all of its liabilities. 
Trade and other receivables
Trade and other debtors are recognised and carried forward at invoiced amounts less provisions for any doubtful debts. Bad debts are written 
off when identified.
Cash and cash equivalents
Cash and cash equivalents are included in the balance sheet at cost. Cash and cash equivalents comprise cash at bank and in hand and 
short-term deposits with an original maturity of three months or less.
Interest-bearing loans and borrowings
All loans and borrowings are recognised initially at cost, which is the fair value of the consideration received, net of issue costs associated with 
the borrowing.
After initial recognition, interest-bearing loans and borrowings are measured at amortised cost using the effective interest method. Gains or 
losses are recognised in the consolidated income account when liabilities are derecognised or impaired, as well as through the amortisation 
process.
Investments
Investments in subsidiaries are stated at cost less any provisions for impairment. An impairment is recognised when the recoverable amount of 
the investment is less than the carrying amount.
Taxation
Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted, or substantially 
enacted, by the balance sheet date.
Deferred tax is recognised in respect of all temporary differences identified at the balance sheet date, except to the extent that the deferred tax 
arises from the initial recognition of goodwill (if amortisation of goodwill is not deductible for tax purposes) or the initial recognition of an asset or 
liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting profit nor taxable profit 
and loss. Temporary differences are differences between the carrying amount of the Group’s assets and liabilities and their tax base.
Deferred tax liabilities may be offset against deferred tax assets within the same taxable entity. Any remaining deferred tax asset is recognised 
only when, on the basis of all available evidence, it can be regarded as probable that there will be suitable taxation profits, within the same 
jurisdiction, in the foreseeable future against which the deductible temporary difference can be utilised.
Deferred tax is provided on temporary differences arising in subsidiaries, jointly controlled entities and associates, except where the timing of 
reversal of the temporary difference will not reverse in the foreseeable future. Deferred tax is measured at the average tax rates that are expected 
to apply in the periods in which the asset is realised or liability settled, based on tax rates and laws that have been enacted or substantially 
enacted by the balance sheet date. Measurement of deferred tax liabilities and assets reflects the tax consequence expected from the manner  
in which the asset or liability is recovered or settled. 36 Epistem Holdings Plc Annual Report 2010
   
(continued)
Notes to the Financial Statements
1. Significant accounting policies (continued)
New standards and interpretations not applied
The International Accounting Standards Board (IASB) and IFRIC have issued the following standards and interpretations with an effective date for 
financial years beginning on or after 1 January 2010:
IFRS 3 (revised) Business combinations
IFRS 7 (revised) Statement of cash flows arising from 2009 Annual Improvements
IAS 1 (revised) Presentation of Financial Statements, comprehensive revision
IAS 7 (revised) Statement of cash flows, arising from 2009 Annual Improvements
IAS 32 (revised) Puttable financial instruments 
IAS 36 (revised) Impairment of assets, arising from 2009 Annual Improvements
IAS 38 (revised) Intangible assets, arising from 2009 Annual Improvements
IFRIC 15 Agreements for construction of real estate
The Directors do not anticipate that the adoption of these standards and interpretations will have a material effect on the Group’s Financial 
Statements in the period of initial application.
2. Segment information
The Group’s primary reporting format is business segments and the secondary format is geographical segments.
Business segments
     Contract  
     Research Personalised Novel  
     Services Medicine Therapies Unallocated  Total 
     £’000 £’000 £’000 £’000 £’000
Twelve months ended 30 June 2010      
Revenue     2,519 800 2,421 – 5,740
Segment trading result      759 (51) 1,067 (1,265) 510
– less depreciation and amortisation     (31) (36) (80) (22) (169)
– less equity-settled share-based payments    (6) (12) – (11) (29)
Operating profit/(loss)      722 (99) 987 (1,298) 312
Twelve months ended 30 June 2009
Revenue     2,295 670 1,003 – 3,968
Segment trading result      607 51 (103) (1,054) (499)
– less depreciation and amortisation     (37) (24) (53) (17) (131)
– less equity-settled share-based payments    (7) (19) (2) (43) (71)
Operating profit/(loss)     563 8 (158) (1,114) (701)
    
Twelve months ended 30 June 2010
Segment assets     739 218 736 6,118 7,811
Segment capital expenditure     60 17 192 39 308
    
Twelve months ended 30 June 2009  
Segment assets     521 – 423 2,218 3,162
Segment capital expenditure     24 – 38 25 86 Accounts
Epistem Holdings Plc Annual Report 2010 3 7  
Geographical segments
The Group’s operations are located in the United Kingdom. The following table provides an analysis of the Group’s revenue by  
geographical market:
        2010 2009 
        £’000 £’000
United Kingdom        412 687
Europe        782 762
United States of America        4,524 2,508
Asia        22 11
         5,740 3,968
Revenues from customers accounting for more than 10% of turnover are detailed below: 
(a)  £2,880k revenue, of which £1,380k represents recognition of deferred income, was derived from international pharmaceutical company, 
Novartis, with revenue included in all divisions (2009: £1,222k). No milestone or licensing revenue was receivable in the year (2009: £nil); and
(b)  £692k revenue was derived from the University of Maryland on behalf of the US Government with revenue included within Contract 
Research Services (2009: £514k).
3. Operating profit/(loss)
The Group operating profit/(loss) is stated after charging:
        2010 2009 
        £’000 £’000
Discovery and development expenditure        1,433 1,131
Amortisation        4 4
Depreciation of owned fixed assets        143 80
Depreciation of assets held under finance lease agreements      22 47
Auditors’ remuneration
– as auditors        23 20
– for other services        – 5
Operating lease costs – property rent        173 153
4. Particulars of employees
The average number of staff employed by the Group during the financial year amounted to:
        2010 2009 
        No. No.
Contract services        29 28
Research and development        12 9
Administrative         6 5
         47 42
 
The aggregate payroll costs of the above were:
        2010 2009 
        £’000 £’000
Wages and salaries         2,144 2,022
Social security costs        250 218
Equity-settled share-based payments        28 71
Pension payments        13 –
         2,435 2,311 38 Epistem Holdings Plc Annual Report 2010
   
(continued)
Notes to the Financial Statements
5. Directors’ remuneration
        2010 2009 
        £’000 £’000
Remuneration        946 961
Pension contribution        7 –
Equity-settled share-based payments        11  53
         964 1,014
Full details of the Directors’ remuneration and Directors’ options are contained in the Directors’ Remuneration Report.
6. Finance income and costs
        2010 2009 
        £’000 £’000
Finance income
– interest receivable        8 41
– differences in foreign exchange        32 –
Total finance income        40 41
         
Finance costs (finance leases)        (2) (9)
7. Taxation on ordinary activities
(a) Recognised in the income statement
        2010 2009 
        £’000 £’000
Current tax
Research and development tax credits        – (150)
UK corporation tax on profits for the period       2 –
Adjustment relating to a previous period         – (8)
Total current tax              2 (158)   
 
Deferred tax
Prior year tax losses now recognised        (8) (423)
Current year tax losses        20 (74)
Prior year capital allowances in excess of depreciation now recognised     – 26
Current year capital allowances in excess of depreciation      52 49
In respect of prior year share options charges now recognised       –  (153)
In respect of current year share options charges        (6) (19)
Total deferred tax         58 (594)
Total tax charge/(credit) for the year        60 (752) Accounts
Epistem Holdings Plc Annual Report 2010 3 9  
(b) Reconciliation of the total tax charge
        2010 2009 
        £’000 £’000
Profit/(loss) before taxation        350 (669)
Tax using the UK corporation tax rate of 28% (2009: 28%)      98 (187)
Expenditure not deductible for tax purposes       5 2
Transfers from previously unrecognised deferred tax       0 (550)
Adjustments in respect of research and development tax credits      (35) (9)
Adjustment relating to a previous year        (8) (8)
Total tax in income statement        60 (752)
The Group had losses, as computed for tax purposes, of approximately £1,749k (2009: £1,764k) available to carry forward to future periods.
In accordance with the provisions of the Finance Act 2000 in respect of research and development allowances, the Group is entitled to claim  
tax credits for certain research and development expenditure. The amount included in the Financial Statements in respect of the year ended  
30 June 2010 is £nil (2009: £150k).
8. Profit attributable to members of the parent company
The profit dealt with in the accounts of the parent company was £6k (2009: £34k).
9. Earnings per share
The basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders for the year by the weighted average 
number of ordinary shares in issue during the year less the weighted average number of Matching Shares held by the Epistem SIP which are not 
yet vested.
The diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of 
all dilutive potential ordinary shares in relation to share options and share warrants. The number of share options has been adjusted to take into 
account the issue price and the fair value, consistent with IAS 33 Earnings per share.
        2010 2009 
        £’000 £’000
Profit/(loss) for the year after taxation       290 83
        2010 2009 
        No. No.
Weighted average number of ordinary shares in issue       7,649,732 7,201,928
Dilutive ordinary shares from options and warrants in issue      1,075,938 739,372
Dilutive weighted average number of ordinary shares      8,725,670 7,941,300
Earnings per share
– basic         3.8p 1.1p
– diluted        3.3p 1.0p 40 Epistem Holdings Plc Annual Report 2010
   
(continued)
Notes to the Financial Statements
10. Intangible assets
        Intellectual  
       Patents property  Total 
       £’000 £’000 £’000
Cost
At 1 July 2009       88 77 165
Additions       – – –
At 30 June 2010       88 77 165
Amortisation
At 1 July 2009       – 26 26
Charge for the year         4 4
At 30 June 2010       – 30 30
Net book value
At 30 June 2009       88 51 139
At 30 June 2010       88 47 135
Cost
At 1 July 2008       – 77 77
Additions       88 – 88
At 30 June 2009       88 77 165
Amortisation
At 1 July 2008       – 22 22
Charge for the year        – 4 4
At 30 June 2009       – 26 26
Net book value
At 30 June 2008       – 55 55
At 30 June 2009       88 51 139
During the year to 30 June 2010, the cost of the Company’s Patents assessed as not having been brought into economic use amounted to £88k 
(2009: £88k).
11. Plant and equipment
      Lab Fixtures Other 
      equipment & fittings equipment Total 
      £’000 £’000 £’000 £’000
Cost   
At 1 July 2009       885 19 110  1,014
Additions       269 11 28 308
At 30 June 2010      1,154 30 138 1,322
Depreciation
At 1 July 2009       482 12 55 549
Charge for the year       143 4 18 165
At 30 June 2010      625 16 73 714
Net book value
At 30 June 2009      403 7 55 465
At 30 June 2010      529 14 65 608 Accounts
Epistem Holdings Plc Annual Report 2010 4 1  
      Lab Fixtures Other 
      equipment & fittings equipment Total 
      £’000 £’000 £’000 £’000
Cost
At 1 July 2008      684 19 71 774
Additions       201 – 39 240
At 30 June 2009      885 19 110 1,014
Depreciation
At 1 July 2008       372 9 41 422
Charge for the year       110 3 14 127
At 30 June 2009      482 12 55 549
Net book value
At 30 June 2008      312 10 30 352
At 30 June 2009      403 7 55 465
Obligations under finance leases
Included within the net book value of lab equipment is £67k (2009: £89k) relating to assets held under finance lease agreements.  
The depreciation charged to the Financial Statements in the year in respect of such assets amounted to £22k (2009: £30k).
Capital commitments
        2010 2009 
        £’000 £’000
Contracted but not provided for in the Financial Statements      – 120
12. Deferred taxation
Recognised
        2010 2009 
        £’000 £’000
Tax losses carried forward        490  497
Excess of tax allowances over depreciation       (124) (75)
Share-based payment transactions        170 172
         536 594
Deferred tax assets are recognised to the extent that the Directors, having reviewed expectations of future profitability, consider it is probable that 
there will be sufficient profit available against which the deferred tax asset may be utilised. 
The Group did not recognise deferred tax assets in respect of share-based payment transactions of £2,963k  (2009: £2,765k). 
13. Trade and other receivables
        2010 2009 
        £’000 £’000
Trade receivables        662 474
Other receivables        114  71
Prepayments        46 106
Accrued income        189 169
         1,011 820 42 Epistem Holdings Plc Annual Report 2010
   
(continued)
Notes to the Financial Statements
13. Trade and other receivables (continued)
Analysis of trade receivables
        2010 2009 
        £’000 £’000
Neither impaired nor past due         611 461
Past due but not impaired        51 13
Trade receivables        662 474
Ageing of past due but not impaired trade receivables
There is no other class of financial assets that is past due but not impaired except for trade receivables. The Group’s credit period generally 
ranges up to 60 days. The age analysis of the trade receivables have been considered from the date of the invoice and, net of allowances that 
are past due, is given below:
        2010 2009 
        £’000 £’000
Not later than one month         15 –
Later than one month but not later than three months       36 13
      
14. Cash and cash equivalents
        2010 2009 
        £’000 £’000
Cash at bank and in hand        371  484
Short-term bank deposits        5,000 3,264
         5,371 3,748
Cash and cash equivalents comprise current accounts held by the Group with immediate access and short-term bank deposits with a maturity 
of three months or less. Market rates of interest are earned on such deposits. The credit risk on such funds is limited because the counter parties 
are banks with high credit ratings assigned by international credit rating agencies.
15. Deferred income
The items recorded as Deferred income are to be recognised over future periods as follows:
        2010 2009 
        £’000 £’000
Amounts to be recognised within one year       974 1,380
Amounts to be recognised within two to five years       – 920
         974 2,300
16. Trade and other payables
        2010 2009 
        £’000 £’000
Trade payables        457 349
Other payables        213 147
Accruals        344 225
         1,014 721 Accounts
Epistem Holdings Plc Annual Report 2010 4 3  
17. Obligations under finance leases
Future commitments under finance lease agreements are as follows:
        2010 2009 
        £’000 £’000
Due within one year        41 49
Due within two to five years        – 40
         41 89
– less future finance charges        (4) (6)
Present value of finance lease obligations       37 83
Current obligations        37 46
Non-current obligations        – 37
Obligations under finance leases        37 83
18. Share-based payments
(a) Share options outstanding at 30 June 2010
Prior to 28 November 2007 , the Company operated a number of HMR&C approved and unapproved share option schemes for employees 
(including Directors). The original options were granted by Epistem Limited but, following the acquisition by Epistem Holdings Plc, these were 
released in exchange for equivalent options over the ordinary shares of Epistem Holdings Plc. On 28 November 2007 the Company established 
the 2007 Epistem Share Option Scheme.
Share options
                Number of Exercise     Period within which Fair value Fair value 
Award               awards price    options are exercisable per option £
EMI – Approved  88,800   £0.50  07 Jan 2002 to 06 Jan 2012  See note below
EMI – Approved   11,200  £0.75  31 Mar 2003 to 30 Mar 2013  28.2p 3,158
EMI – Approved  9,000 £0.75  07 Apr 2003 to 06 Apr 2013 28.2p 2,538
EMI – Approved  10,200 £0.75  21 Jul 2004 to 20 Jul 2014 26.6p 2,713
Share Warrants (Note 22)  198,554 £1.61  18 Mar 2005 to 17 Mar 2015 56.1p 111,389
EMI – Unapproved  78,000 £1.29  31 Mar 2005 to 30 Mar 2015 44.9p 35,022
EMI – Approved  31,824 £1.20  25 Nov 2005 to 24 Nov 2015 42.6p 13,557
EMI – Unapproved  472,153 £1.20  10 Jan 2006 to 09 Jan 2016 42.6p 201,137
EMI – Approved  197,722 £1.20  10 Jan 2006 to 09 Jan 2016 42.6p 84,230
EMI – Approved  9,400 £1.20  29 Sept 2006 to 28 Sept 2016  41.6p 3,910
EMI – Approved  80,644 £1.24  28 Mar 2007 to 27 Mar 2017 42.6p 34,354
EMI – Unapproved  177,653 £1.24   28 Mar 2007 to 27 Mar 2017 42.6p 75,680
EMI – Approved  25,903 £1.67   27 Jul 2007 to 26 Jul 2017 38.9p 10,076
EMI – Unapproved  57,727 £1.60  15 Oct 2007 to 14 Oct 2017 36.0p 20,782
2007 Epistem Share Option Scheme  71,918 £1.53  03 Mar 2011 to 02 Mar 2018 36.0p 25,890
2007 Epistem Share Option Scheme     65,800 £1.77 31 Jul 2011 to 30 Jul 2018  37.0p 24,346 44 Epistem Holdings Plc Annual Report 2010
   
(continued)
Notes to the Financial Statements
18. Share-based payments (continued)
Option valuations
The options were valued using the Black-Scholes option-pricing model. Where appropriate, performance conditions were included in the fair 
value calculations. The fair value per option granted and the assumptions used in the calculations are in the table below. The Group’s effective 
date for IFRS 2 (Share-based payments) implementation is 1 July 2006 and the IFRS has been applied to all options granted after 7 November 
2002 which have not been vested by this effective date.
      Expected 
      dividend Expected     
     Expected yield volatility Risk  
     term % % free rate Performance 
Award               Grant date (Note a) (Note b) (Note c) (Note d) condition
EMI – Approved    31 Mar 2003 5 years 0 60 3.75 None
EMI – Approved    07 Apr 2003 5 years 0 60 3.75 None
EMI – Approved    21 Jul 2004 5 years 0 60 4.50 None
Share Warrants    18 Mar 2005 5 years 0 60 4.75 None
EMI – Unapproved    31 Mar 2005 5 years 0 60 4.75 None
EMI – Approved    25 Nov 2005 5 years 0 60 4.50 None
EMI – Unapproved    10 Jan 2006 5 years 0 60 4.50 See Note (e)
EMI – Approved    10 Jan 2006 5 years 0 60 4.50 None
EMI – Approved    29 Sept 2006 5 years 0 60 4.50 None
EMI – Approved    28 Mar 2007 5 years 0 60   5.25  See Note (f)
EMI – Unapproved    28 Mar 2007 5 years 0 60 5.25  See Note (f)
EMI – Approved    27 Jul 2007 5 years 0 45 5.50 None
EMI – Unapproved    15 Oct 2007 5 years 0 45 5.75 Note (g)
2007 Epistem Share Option Scheme    03 Mar 2008 5 years 0 45 5.25 Note (h)
2007 Epistem Share Option Scheme    31 Jul 2008 5 years 0 40 5.00 Note (h)
(a)  The expected term used in the model is five years and is based upon the Directors’ best estimates for the effects of exercise restrictions and 
behavioural considerations;
(b)  The dividend yield of 0% reflects the absence of a history of paying dividends and a clear dividend policy at the relevant grant dates;
(c)  The expected volatility at the date of grant was estimated by the Directors after inspection of the Financial Statements of comparable 
businesses in the same business sector as the Group;
(d)  The risk free rate used is based upon the prevailing UK bank base rate at the date of the grant;
(e)  These options vest on dates dependant on anniversaries of commencing employment with the Group which commenced 1 September 
2005 with the final tranche vesting on 1 September 2008;
(f)  The main conditions for these options to vest are the later of (i) when the audited accounts for the year ended 30 June 2010 become available 
and (ii) when the earnings per share of the financial year are a positive figure;
(g) These options are subject to performance criteria which are appropriate to the option holders’ role within the Company and which are 
assessed by the Remuneration Committee.
(h) These options may be exercised following the third anniversary of grant and are subject to performance criteria which are appropriate to the 
option holders’ role within the Company and which are assessed by the Remuneration Committee.
The number of options and their weighted average exercise prices are as follows:
   Weighted average  
  Weighted average remaining contracted 
 Number exercise price life – years
Group     2010 2009 2010 2009 2010 2009
    
Outstanding as at 1 July    1,590,148 1,583,298 £1.28  £1.26  
Granted during the year    – 68,050 – £1.77  
Exercised during the year    (2,900) (19,200) £1.21 £1.27  
Lapsed during the year    (750) (42,000) £1.76 £1.53  
Outstanding as at 30 June    1,586,498 1,590,148 £1.28 £1.28 5.62 6.62
Options exercisable at 30 June     1,190,483 1,193,383 £1.24 £1.24 5.11 6.11
The weighted average share price at the exercise dates was £3.23 (2009: £2.57). Accounts
Epistem Holdings Plc Annual Report 2010 4 5  
(b) Share Investment Plan
During the year, the Company introduced the Epistem Share Investment Plan, SIP, which is open to Directors and employees in accordance  
with HMR&C approved rules. Under the terms of the SIP, Directors and employees may invest up to £125 per month to be invested in ordinary 
shares (Partnership Shares) in the Company at the prevailing market price. At the same time as each monthly subscription, a maximum of two 
Matching Shares for each Partnership Share will be acquired on behalf of the SIP’s participants. Both the Partnership and the Matching Shares 
are purchased on behalf of the scheme’s participants by Epistem SIP Trustee Limited, a wholly owned subsidiary of the Company. Participants, 
who must be employed by the Company, may withdraw their Matching Shares once their associated Partnership Shares have been held for 
three years. The cost of the Matching Shares is expensed as and when this vesting condition is met. 
        2010 2009
Capital SIP Shares
Partnership Shares held at 30 June        5,852 N/A
Matching Shares held at 30 June        11,694 N/A
Unamortised cost of Matching Shares (comprising Employee SIP reserve)     £43k  –
19. Financial risk management objectives and policies
The Group holds or issues financial instruments in order to achieve three main objectives, being:
(a) to finance its operations; and
(b)  to manage its exposure to interest and currency risks arising from its operations and from its sources of finance.
In addition, various financial instruments (e.g. trade receivables, trade payables, accruals and prepayments) arise directly from the Group’s and 
the Company’s operations.
Transactions in financial instruments result in the Group assuming or transferring to another party one or more of the financial risks  
described below.
Interest rate risk
The Group currently finances its operations through reserves of cash and liquid resources and does not have a borrowing requirement. Surplus 
cash at bank is placed on deposits at variable rates. The Board monitors the financial markets and the Group’s own requirements to ensure that 
the policies are exercised in the Group’s best interests.
The following table demonstrates the sensitivity to a possible change in interest rates on the Group’s profit before tax through the impact of 
floating rate cash balances.
         Effect on loss 
        Decrease in before tax 
        the basis and equity 
        points £’000 
2010
Cash and cash equivalents        25 5
2009
Cash and cash equivalents        25 5 
An increase in 25 basis points would have a similar opposite effect.
Credit risk
The Group monitors credit risk closely and considers that its current policies of credit checks meet its objectives of managing exposure  
to credit risk.
The Group has no significant concentrations of credit risk. Amounts shown in the balance sheet best represent the maximum credit risk 
exposure in the event that other parties fail to perform their obligations under financial instruments.
Liquidity risk
The Board’s policy aims to ensure that sufficient funds are held on a short-term basis in order to meet operational needs. 46 Epistem Holdings Plc Annual Report 2010
   
(continued)
Notes to the Financial Statements
19. Financial risk management objectives and policies (continued)
Currency risk
The Group’s functional currency is sterling. The exposure to currency risk relates to licence income and those short-term trade receivables  
which are not invoiced in sterling. There are no significant costs incurred that involve payments in foreign currency.
The Group has no forward contracts at the year end (2009: nil) to manage foreign currency risk.
Balances which are denominated in US dollars are detailed below:
        2010 2009 
        £’000 £’000
Trade and other receivables        325  121
Cash and cash equivalents        340 479
         665 600
The following table demonstrates the sensitivity to a possible change in currency rates on the Group’s loss before tax through the impact of 
sterling weakening against the US dollar.
         Effect on loss 
        Decrease in before tax 
        the currency and equity 
        rate £’000 
2010
Trade and other receivables        5% 16
Cash and cash equivalents        5% 17 
2009
Trade and other receivables        5% 6
Cash and cash equivalents        5% 24 
An increase in currency rate of 5% would have a similar opposite effect.
  
Fair values of financial assets and liabilities
There is no material difference between the book value and the fair value of the Group’s financial assets or liabilities.
20. Commitments under operating leases
At 30 June 2010 the Group had annual commitments under non-cancellable operating leases as set out below.
   Land and buildings
         2010 2009 
        £’000 £’000
Operating leases which expire      
Within one year        148 143
The operating leases are in respect of the company’s office and laboratories which are held under short-term leases.
21. Related party transactions
At the balance sheet date, the amounts owed to the following Directors, Prof. C Potten and D Evans were £3k and £8k respectively  
(2009: £7k and £3k). The transactions during the year with these related parties relate entirely to Directors’ remuneration for the year  
and the amounts for each are detailed in the Directors’ Remuneration Report. 
  Accounts
Epistem Holdings Plc Annual Report 2010 4 7  
22. Share capital
On 25 November 2009, the Company adopted new Articles of Association which removed the requirement for the shareholders to proscribe a 
level of Authorised share capital. Prior to 25 November 2009, the Authorised share capital had been set at 10,000,000 shares (£150k.)
Allotted and called up share capital:
       2010 2010  2009 2009 
      No. £’000 No. £’000
At 1 July       7,211,083 108 7,191,883 108
Private placing       720,000 10 – –
Exercise of options       2,900 1 19,200  –
Ordinary shares of £0.015 each      7,933,983 119 7,211,083 108
On 16 March 2007 , the Company entered into a warrant instrument in respect of the subscription for up to 198,554 ordinary shares of £0.015 
each in Epistem Holdings Plc. This warrant instrument replaced a previous warrant instrument created by Epistem Limited on 18 March 2005. 
Each warrant confers the right to subscribe for one ordinary share at a subscription price of £1.61 per ordinary share. The subscription rights 
under the warrants may be exercised up to 21 September 2015.
23. Reserves
     Share Employee  Share Reverse  
     premium  share incentive  options acquisition Retained 
     account plan reserve  reserve reserve  earnings 
     £’000 £’000 £’000 £’000 £’000
Balance as at 1 July 2008     8,437 – 547 (2,484) (4,026)
Total Comprehensive Income for the year     –  – – 83
Allotment of ordinary shares      24  – – –
Exercise of options     6  (6)
Lapse of options       (6) – 6
Recognition of equity-settled share-based payments in the year    –  71 – –
Balance at 30 June 2009     8,467 – 606 (2,484) (3,937)
Balance as at 1 July 2009     8,467 – 606 (2,484) (3,937)
Total Comprehensive Income for the year     – – – – 290
Allotment of ordinary shares     2,873  – – –
Share issue costs     (135) – – – –
Unamortised cost of Matching Shares     – (43) – – –
Exercise of options     1  (1) – –
Recognition of equity-settled share-based payments in the year   – – 28 – –
Balance at 30 June 2010     11,206  (43) 633 (2,484) (3,647) 
The reverse acquisition reserve arises as a difference on consolidation under merger accounting principles and is solely in respect of the merger 
of the Company and Epistem Limited.
The employee share incentive plan reserve represents 11,694 shares in Epistem Holdings Plc (2009: nil shares) all of which are held by Epistem 
SIP Trustee Limited. These shares are listed on the Alternative Investment Market and their market value at 30 June 2010 was £38k (2009: £nil). 
The nominal value held at 30 June 2010 was £175 (2009: £nil). 48 Epistem Holdings Plc Annual Report 2010
   
As at 30 June 2010
Company Balance Sheet
        2010 2009 
      Notes   £’000 £’000
Non-current assets
Investments      a  5,663 5,635
   
Current assets 
Amounts receivable from Group undertakings       1,492 735
Cash and cash equivalents      b  5,001 3,001
         6,493 3,736
Current liabilities
Trade and other payables        (2) –
Net current assets        6,491 3,736
Total assets less current liabilities        12,154 9,371
Capital and reserves
Called-up equity share capital       22  119 108
Share premium account      23  11,206 8,467
Share options reserve      23  633 606
Retained earnings        196 190
Total shareholders’ equity        12,154 9,371
These Financial Statements were approved by the Directors and authorised for issue on 5 October 2010 and are signed on their behalf by:
D Evans     H Rylands
Non-executive Chairman   Company Secretary Accounts
Epistem Holdings Plc Annual Report 2010 4 9  
Company Statement of Changes in Equity
      Share Share  
     Share premium options Retained Total 
     capital account reserve earnings equity 
     £’000 £’000 £’000 £’000 £’000
At 1 July 2008     108 8,437 547 150 9,242
Allotment of ordinary shares     –  24 – – 24
Recognition of equity settled share-based payments    – – 71 – 71
Exercise of options     – 6 (6) – –
Lapse of options      – – (6) 6 –
Profit for the year     – – – 34 34
At 30 June 2009     108 8,467 606 190 9,371
Balance at 1 July 2009     108 8,467 606 190 9,371
Allotment of ordinary shares     11 2,873 – – 2,884
Share issue costs     – (135) – – (135)
Recognition of equity settled share-based payments    – – 28 – 28
Exercise of options     – 1 (1) – –
Profit for the year     – –  6 6
At 30 June 2010     119 11,206 633 196 12,154
For the year ended 30 June 2010 50 Epistem Holdings Plc Annual Report 2010
   
For the year ended 30 June 2010
Company Statement of Cash Flows
        2010 2009 
         £’000 £’000
    
Cash flows from operating activities
Profit for the year        – –
Operating profit before changes in working capital and provisions     – –
(Increase)/decrease in trade and other receivables       (757) 961
Increase in trade and other payables        – (19)
Cash (outflow)/inflow from operations       (757) 942
Interest received        8 34
Tax (paid)/received        – –
         8 34
Net cash outflow from operating activities       (749) 976
Cash flows from financing activities
Proceeds from issue of share capital        2,884 24
Expenses of share issue        (135) –
Net cash inflow from financing activities       2,749 24
Net increase in cash equivalents        2,000 1,000
Cash and cash equivalents at beginning of year       3,001 2,001
Cash and cash equivalents at end of year       5,001 3,001
Analysis of net funds
Cash at bank and in hand        5,001 3,001
Bank overdrafts        – –
Net funds        5,001 3,001 Accounts
Epistem Holdings Plc Annual Report 2010 5 1  
Notes to the Company Financial Statements
a. Investments
The Company is the holding company of the Group. 
The Company owns 100% of the issued share capital of Epistem Limited and Epistem SIP Trustees Limited, companies both registered in 
England and Wales. The issued share capital is fully paid and is included in the consolidated Financial Statements of the Group. The principal 
activity of Epistem Limited is the provision of services to the biotechnology and pharmaceutical industries. The principal activity of Epistem SIP 
Trustees Limited is to act as trustee to the Epistem Share Incentive Plan. On 29th August 2009 Epistem Holdings Plc subscribed for 100%  
of the share capital of Epistem Inc., a company that was incorporated in United States of America. The principal activity of Epistem Inc. is the 
provision of services to the biotechnology and pharmaceutical industries.
         Investment in  
         subsidiary  
         £’000
Cost 
At 1 July 2009         5,635
Additions         28
At 30 June 2010         5,663
Net book value      
At 30 June 2009         5,635
At 30 June 2010         5,663
         Investment in  
         subsidiaries  
         £’000
Cost      
At 1 July 2008         5,564
Additions         71
At 30 June 2009         5,635
Net book value      
At 30 June 2008         5,564
At 30 June 2009         5,635
Additions in the year ended 30 June 2010 comprised the fair value of the share options issued to employees of the subsidiary undertaking during 
the year of £28k. Additions in the year ended 30 June 2009 comprised the fair value of the share options issued to employees of the subsidiary 
undertaking during the year of £71k. Full details of the share options issued are set out in Note 18 to the consolidated Financial Statements.
b. Cash and cash equivalents
        2010 2009 
Company        £’000 £’000
Cash at bank and in hand        1  1
Short-term bank deposits        5,000 3,000
         5,001 3,001
Cash and cash equivalents comprise current accounts held by the Group with immediate access and short-term bank deposits with a maturity 
of three months or less. Market rates of interest are earned on such deposits. The credit risk on such funds is limited because the counter parties 
are banks with high credit ratings assigned by international credit rating agencies.
c. Related party transactions
During the course of the year, Epistem SIP Trustee acquired 11,694 (2009: nil) shares in Epistem Holdings Plc on behalf of the Epistem Share 
Investment Plan at a cost of £43k (2009: nil).
For the year ended 30 June 2010 52 Epistem Holdings Plc Annual Report 2010
   
Notes Printed on Revive 50:50 Gloss.
Revive 50:50 Gloss is an FSC-recognised paper, produced from  
well-managed forests, and recycled wood or fibre. This publication  
was printed with vegetable oil-based inks by an FSC-recognised 
printer that holds an ISO 14001 certification.
Directors, Secretary and Advisers
Directors
David Evans
Matthew Walls
Chris Potten
Catherine Booth
Gerard Brady
Roger Lloyd
Jeffrey Moore
Robert Nolan
John Rylands
Company Secretary
John Rylands
Registered Office
48 Grafton Street
Manchester M13 9XX
United Kingdom
Registrars
Neville Registrars Limited
18 Laurel Lane
Halesowen B63 3DA
Nominated Adviser and Broker
KBC Peel Hunt Limited
111 Old Broad Street
London EC2N 1PH
Legal Advisers
McGrigors LLP
Princes Exchange
1 Earl Grey Street
Edinburgh EH3 9AQ
Auditors
HW Chartered Accountants
Bridge House
157 Ashley Road
Hale
Altrincham
Cheshire WA14 2UT
Principal Banker
Natwest Commercial Banking
1 Spinningfields Square
Deansgate
Manchester M3 3AP
Business Overview
Introductory Highlights  IFC
What We Do  2
Epistem: Contract Research Services  4
Epistem: Personalised Medicine  6
Epistem: Novel Therapies  8
Our Business and Strategy  10
Review of the Year
Strength in Depth     12
Chairman’ s Statement  14
Chief Executive’ s Review  16
Governance
Board of Directors   20
Directors’ Report  22
Directors’ Remuneration Report  24
Corporate Governance Report  26
Independent Auditors’ Report  27
Accounts
Consolidated Statement of Comprehensive Income  29
Consolidated Statement of Changes in Equity  30
Consolidated Balance Sheet  31
Consolidated Statement of Cash Flows  32
Notes to the Financial Statements  33
Company Balance Sheet  48
Company Statement of Changes in Equity  49
Company Statement of Cash Flows  50
Notes to the Company Financial Statements  51
Directors, Secretary and Advisers   IBC
Year of profit
Revenue growth year-on-year
Cash balance (£million)
2nd
45%
5.4m
Cover and IFC photography by Hubert Sieverding Epistem Plc
48 Grafton Street
Manchester M13 9XX 
United Kingdom
T +44 (0)161 606 7258
F +44 (0)161 606 7348
www.epistem.co.uk
Controlling life-long tissue renewal
Epistem Holdings Plc 
Annual Report and Accounts 2010
Divisional development  
and core company strength
Epistem Holdings Plc  Annual Report and Accounts 2010