Epistem Holdings Plc Annual Report 2012
Diversity
Innovation 
Progress  
Growth
Epistem Holdings Plc  
Annual Report 2012 I am pleased to report major progress in a number of the Company’s 
core development programmes and the acceleration of investment in 
our first diagnostic product in the results for the year ended 30 June 
2012. I am also pleased to report the recent completion of the first high 
value commercial contract for our Genedrive
™
 platform with Becton 
Dickinson. This agreement coupled with the earlier reported Xcelris 
Laboratories agreement signals the beginning of a new and exciting 
phase of revenue growth for Epistem and its investors.
David Evans 
Non-executive Chairman 
 1
Strength
Total sales of £5.6m driven 
by a solid performance by 
Contract Research Services 
with strong and emerging 
growth in our Personalised 
Medicine division.
 2
Technology
High investment in our leading 
technologies to accelerate 
their advancement over the 
reporting period with particular 
emphasis on the Genedrive
™
 
platform and continued 
investment in Novel Therapies 
lead discovery programme.
3
Financial
A placing of shares during the 
period underpinned a financial 
strengthening of the Company 
with increased cash reserves.
4
Investor
Clear investor communication 
of the Company’s strategy and 
performance remains a key 
element of our success. 
Company Overview
Highlights
Total sales of £5.6m driven by a solid performance  
by Contract Research Services and strong growth  
in our Personalised Medicine division.
More than 100% year on year growth in the  
Personalised Medicine division revenues on back  
of collaborations with GSK, Sanofi-Aventis and  
emerging Genedrive
™
 sales.
EU registration and preparations for launch of first 
major molecular diagnostic product (Genedrive
™
).
Recent announcement of major international 
distribution agreement with Becton Dickinson in 
Tuberculosis for ROW territories and initial US$1.0m 
milestone payment received post the year end.
Announcement of Xcelris Laboratories (Indian and 
Indian Sub Continent) distribution agreement for 
Tuberculosis using Genedrive
™
.
Development and expansion of pre-clinical service 
offering in leukaemia imaging and rheumatoid arthritis.
Ongoing investment in Novel Therapies  
lead programme. 
£2.7m cash placing completed in December 2011 
resulting in strengthened cash balance of £4.7m  
at 30 June 2012. 01
Epistem Holdings Plc
Annual Report 2012
The Contract Research Services 
division provides pre-clinical  
efficacy testing, advanced 
immunohistochemistry services  
and cell biology expertise in the  
areas of oncology, oncology 
supportive care (mucositis), 
inflammatory bowel disease  
and dermatology.
The Novel Therapies division is 
discovering the body’s own key 
regulators of epithelial stem cells  
and tissues. Based on our highly 
sensitive molecular techniques  
and core cell biology expertise,  
we discover and develop our  
own novel drug agents.
Our Personalised Medicine 
Biomarkers division provides highly 
sensitive molecular measures of 
biological processes that improve 
precision in drug development  
and disease treatment. The group 
provides a broad technology  
offering to discover, develop and 
translate biomarkers for clinical  
drug development.
Our Personalised Medicine 
Diagnostics division is changing  
the way healthcare and personalised 
medicine are delivered. Our innovative 
Genedrive
™ 
platform is preparing  
for initial product sales in infectious 
disease in 2013.
Company Overview
02 Contract Research Services
04  Personalised Medicine: Biomarkers
06  Personalised Medicine: Diagnostics 
08 Novel Therapies
Business Review
10 Our Business and Strategy
12 Highlights 2012
14 Non-executive Chairman’s Statement
16 Chief Executive’s Review
Governance
20 Board of Directors 
22 Directors’ Report
25 Directors’ Remuneration Report
28 Corporate Governance Report
29 Independent Auditor’s Report
Financials
30  Consolidated Statement of 
Comprehensive Income
31  Consolidated Statement of  
Changes in Equity
32  Consolidated Balance Sheet
33  Consolidated Statement of  
Cash Flows
34  Notes to the Financial Statements
51 Company Balance Sheet
52  Company Statement of  
Changes in Equity
53 Company Statement of Cash Flows
54  Notes to the Company  
Financial Statements
Our Divisions
PAGE 02
PAGE 04
PAGE 06
PAGE 08
For more information visit:
www.epistem.co.uk 02
Epistem Holdings Plc
Annual Report 2012
Solid 
progress
Contract Research Services
Company Overview
Mucositis antibiotic 
improvements  
Major expansion in 
radiation capability 
New Rheumatoid 
Arthritis competence 03
Epistem Holdings Plc
Annual Report 2012
The Contract Research Services division 
provides pre-clinical efficacy testing, advanced 
immunohistochemistry services and cell biology 
expertise in the areas of oncology, oncology 
supportive care (mucositis), inflammatory bowel 
disease and dermatology.
Despite challenging market 
conditions, Contract Research 
Services delivered a 27% operating 
margin on sales of £2.9m. 
Investment in research  
and development
The division continues to expand 
and strengthen its investment in 
new model development. During the 
year, model development continued 
with the advance of our rheumatoid 
arthritis models, which we anticipate 
launching in the next financial 
period. Our oncology model 
portfolio has also been extended 
with the introduction of our imaging 
capabilities, especially in leukaemia, 
along with further investment in our 
inflammatory bowel disease models.
Biodefence
The division continued to develop  
its collaboration with the US 
National Institutes of Health 
biodefence programme and our 
status as ‘Subject Matter Experts’ 
(SME) in radiation treatment.  
The programme yielded a  
notable advance in the treatment  
of mucositis, (the debilitating 
condition caused by chemotherapy 
and radiation treatment) with the 
recognised pre-clinical efficacy 
evidence of low cost antibiotic 
treatments. The collaboration is 
anticipated to develop further in the 
coming financial period buoyed by 
our investment in new equipment 
and facilities. During the year the 
division took delivery of a new GLP 
compliant state of the art irradiation 
system and also received funding 
from the US biodefence consortium 
for a new image analysis system. 
Outlook
The increased investment in new 
models is expected to strengthen 
the growth prospects of our 
Pre-clinical Research Services.  
We continue to invest in building  
key customer relationships as well 
as strengthening the expertise of 
our scientific base.
27%
operating margin 04
Epistem Holdings Plc
Annual Report 2012
Strong  
annual
growth
Personalised Medicine: Biomarkers
Company Overview
Significant growth 
underpinned by 
Sanofi and GSK 
collaborations 
New biomarkers 
discovered for 
selected drug 
pathways 
Expansion of laser 
capture microscopy 
expertise 05
Epistem Holdings Plc
Annual Report 2012
Our Biomarker division provides highly sensitive 
molecular measures of biological processes that 
improve the precision with which we guide drug 
development and disease treatment.
The Biomarker division delivered  
a significant step up in sales growth 
(+109%) over the year, as it developed 
its collaboration with Sanofi-Aventis 
and announced a new collaboration 
with GSK in fibrosis. 
Companion Biomarkers  
for drug development
The division’s core competencies  
in translational medicine support 
the full drug development cycle 
from discovery through to 
commercialisation. The division  
is GCLP compliant and delivers  
its services using its proprietary  
and highly sensitive gene 
expression platform, RNA-Amp
™
 
alongside new pharmacogenomic 
developments using our Genedrive
™
 
(DNA) amplification platform. 
Pathway direct
During the year, the division 
enhanced its proprietary biomarker 
database, Pathway Direct. The 
Pathway Direct database contains 
oncology based gene expression 
data from clinical and pre-clinical 
studies. The pathways of focus 
remain the key cancer mutational 
areas including EGFR, Notch, c-Met, 
PI3 Kinase and Wnt pathways.
Oncology markers
With the increasing trend towards 
personalised medicine, the division 
has been successful in developing 
its own proprietary methods to 
identify key mutational oncology 
targets such as KRAS, JAK2 
and EGFR in cancerous tissue. 
The identification of these target 
mutations enables patients to be 
stratified for their own ‘personalised’ 
course of therapeutic treatment. 
Alongside these markers, we are 
beginning to develop a suite of new 
pharmacogenomic tests using 
our Genedrive
™
 platform, primarily 
in the disease area of oncology.
 109 %
sales growth 06
Epistem Holdings Plc
Annual Report 2012
Case Study
Gaining 
regulatory 
approval in India
According to the World 
Health Organisation, in 
2010 globally there were 
8.8 million incident cases 
of TB. India accounted 
for approximately 25% 
of the global TB burden 
with approximately 30 
million TB diagnostic tests 
undertaken per annum. 
Annually over US$1 billion 
is spent worldwide on TB 
diagnostics, a figure over 
twice as large as the current 
market for TB drugs.
We are currently progressing 
the clinical assessment of 
our initial TB test with the 
Indian regulatory authorities.
Personalised Medicine: Diagnostics
Company Overview 07
Epistem Holdings Plc
Annual Report 2012
New product registration
During the year, the Company 
successfully registered its 
Genedrive
™
 platform (CE mark) and 
its first diagnostic tuberculosis (TB) 
assay (CE-IVD). These registrations 
will enable the Company to 
commence a new phase of product 
led revenue growth. Molecular 
(DNA) analysis remains the gold 
standard for disease diagnostic 
testing globally and the novelty of 
Genedrive
™
 lies in its ability to bring 
molecular analysis to a near patient 
setting at low cost and with industry 
leading ‘speed to result’.
New relationships
During the year the Company 
announced global supply and 
distribution collaborations in TB  
with Becton Dickinson in the US 
and Xcelris Laboratories in India. 
These collaborations include 
escalating volume requirements 
with each contract capable of 
delivering revenues to Epistem  
in excess of US$20m-US$30m  
over the next 3-5 years.
Tuberculosis
TB is a highly damaging  
infectious disease. The World 
Health Organisation (WHO) has 
identified tuberculosis as a “Global 
health issue” and ranks it in their 
high priority disease areas for 
improved world health diagnosis 
and treatment. Over the coming 
years we will work closely with the 
WHO to gain accreditation for our 
initial TB test. The major strategy 
to tackle this disease remains 
early diagnosis and drug treatment 
to interrupt TB transmission. 
Test menu development
Beyond our initial TB development 
in infectious disease we are now 
beginning to broaden our range  
of infectious disease tests in the 
areas of malaria, dengue, HIV, 
HCV and sexually transmitted 
diseases. 
Government agencies
Alongside infectious diseases, 
we are working closely with the 
US Government on a number  
of programmes to identify 
bio-threats and infectious 
diseases in military settings. 
Genedrive
™
 is a novel, disruptive and highly sensitive molecular 
diagnostic tool with the capability of providing near patient 
testing at low cost with rapid results across a broad spectrum  
of disease areas. 
1. 2. 3. 4. 08
Epistem Holdings Plc
Annual Report 2012
Driving 
innovation
Novel Therapies
Company Overview
Major investment  
in lead validation 
Advanced protein 
synthesis programme 
Extensive 
development of  
in vitro diagnostic 
tools 09
Epistem Holdings Plc
Annual Report 2012
The Novel Therapies division is discovering the 
body’s own key regulators of epithelial stem 
cells and tissues. Based on our highly sensitive 
molecular techniques and core cell biology 
expertise, we discover and develop our own 
novel drug agents.
Epistem scientists have 
comprehensively profiled gene 
expression patterns in epithelial 
tissue to identify key regulators  
of proliferation, differentiation, 
apoptosis and self-renewal. These 
key regulators are responsible for 
restoring damaged tissue and for 
maintaining life-long tissue renewal.
Investment in technology
During the period, the division 
focused on protein synthesis of  
its prioritised leads and we are  
now beginning to enter the early 
stages of pre-clinical efficacy 
testing. At the conclusion of this 
process, we shall be better able  
to demonstrate the technical and 
commercial strength of our leads.
Partnerships
The division’s commercial  
strategy includes working with 
collaborative partners based around 
licensing, milestones and royalties, 
commensurate with pre-clinical  
and clinical drug development. 
During the year our body of 
pre-clinical development data 
continued to progress and we 
maintained close contact with  
the leading big pharma groups  
to evaluate our drug discovery  
and development opportunities.
Outlook
The division will continue to 
progress its identification and 
understanding of the body’s key 
regulators. The timing of future 
collaboration agreements remains 
difficult to predict but we remain 
confident in our development 
programme and the prospect of 
future licences and funding support.
3 leads
in early stage pre-clinical development 10
Epistem Holdings Plc
Annual Report 2012
RNA Amp
™
 and Pathway Direct
™
Genedrive
™
Discovery Area of Income Field Division
Contract  
Research 
Services
Novel  
Therapies
Personalised  
Medicine
Pre-clinical Phase 1 Phase 3 Market
Infectious Disease
Pharmacogenomics
Biosurveillance
Phase 2
Partnering  
and licensing
Fee for service, 
partnering, 
licensing, 
product sales
Inflammatory 
bowel disease, 
dermatology, 
oncology, 
mucositis
Discovery hits/leads  
and early stage 
development
Pre-clinical, 
clinical and
market 
programmes
Fee for service
Our strengthening business model is based on sustaining future 
growth. Epistem has an unrivalled knowledge of the behaviour of 
epithelial tissue which together with our proprietary amplification 
technologies for use in pharmacogenomics and molecular 
diagnostics will further strengthen our position in personalised 
medicine and disease diagnostics.
Matthew H Walls
Chief Executive Officer
Our Business and Strategy
Business Review 11
Epistem Holdings Plc
Annual Report 2012
Integrated business model
Epistem’s independent divisions 
bring together a strong and 
complementary portfolio of business 
units rarely seen in a biotechnology 
business model. Our strategy is 
focused on the scientific, technical 
and financial growth of each of  
our independent divisions with the 
potential for significant financial gain 
driven by our investment in leading 
technologies targeted at delivering 
healthcare advances in core areas 
of unmet medical need.
Partnering programme
We work closely with our 
collaborative partners and major 
customer groups to build on  
and nurture greater collaborative 
development in conjunction with  
our partners. As our business 
changes we expect our partners  
to change and evolve too, but we 
remain committed to developing 
and enhancing our scientific 
relationships to unlock the potential 
of our technologies and further 
develop the growth of our Company.
Internationally respected 
technology and expertise
Our investments in technology  
and expertise are targeted at 
meeting aspirations of the market 
leading international companies  
in our industry. Our investment  
in technology remains a key 
mainstay underpinning the  
growth of all our divisions.
The company’s leading industry 
presence in epithelial stem cells, 
personalised medicine and disease 
diagnostics will be developed  
by on-going investment in our  
core technologies of cell and 
molecular biology.
Product focus
The arrival of our first diagnostic 
product Genedrive
™
 within the 
company portfolio brings a fresh 
dimension to the company’s profile 
and business model. Genedrive’s
™
 
reach across multiple aspects of the 
healthcare industry is anticipated  
to provide a new growth driver in 
our integrated business model  
as well as complementing our  
more established technology  
and service offerings.
Strategic goals delivery
The launch of Genedrive
™
  
will bring a new outlook to  
our business, based on its 
innovative and globally leading 
technology, cost advantage,  
quality and technical reliability.  
The enhancement and recruitment 
of new scientists and operational 
teams with recognised expertise 
will be an on-going feature of  
our business in order to enable  
the Company to achieve its  
growth potential.
Financial
The Company will continue to  
pursue its goal of establishing 
sustainable and growing income 
streams whilst increasing the 
potential for substantial financial 
growth from its invested 
technologies.
Investor
A pattern of firm delivery in the 
realisation of our plans offers an 
increasingly attractive investment 
opportunity for both our existing 
and new investors. The potential 
for substantial and growing  
income streams from our 
diagnostics offering continues to 
flag Epistem as a listed company 
with significant upside potential. 12
Epistem Holdings Plc
Annual Report 2012
2012 2012 2012 2012 2011 2011 2011 2011
£5.6m
£2.9m
£2.7m
£NIL
£5.8m
£3.0m
£1.6m £1.6m
Epistem reports accelerated investment  
in its diagnostic platform, Genedrive
™
,  
and the completion of its first high value 
commercial contracts. The 2011/12 year also 
saw continued investment and technical 
advance in Epistem’s core programmes in 
Novel Therapies, Biomarkers and Contract 
Research Services.
Highlights 2012
Business Review
Overall steady year on year  
sales delivery with improved  
UK performance.
US – 68%
EU/ROW – 19%
UK – 13%
Contract Research Services delivered 
marginally reduced sales set against  
a difficult international trading climate. 
The divisions collaboration with the  
US NIH continues to strengthen.
Personalised Medicine sales grew 
significantly over the year (up by a 
robust 109% on last year) which offset 
the reduced novel therapies income.
Group Revenues Contract Research Services Revenues Personalised Medicine and
Novel Therapies Revenue
Personalised  
Medicine Revenue
Novel Therapies 
Revenue  13
Epistem Holdings Plc
Annual Report 2012
2012
2012 2012
2011
2011 2011
£(0.2)m
£4.7m
£2.3m
£0.4m
£3.6m
£2.3m
2012 2011
£2.3m £2.3m
£1.9m
£1.1m
2012 2011
Genedrive
™
  
molecular diagnostic
Genedrive
™
 gearing up for initial 
sales with new collaboration 
contracts signed
£0.2m
loss after tax
£5.6m
turnover
After tax, discovery, development  
and admin costs exceeded net 
contribution from sales by £0.2m.
Investment in the Company’s 
intellectual property assets increased 
during the period.
Cash reserves strengthened,  
including the completion of  
the £2.7m cash placing.
Investment in our core discovery 
programme remained strong.  
Central business overheads  
remained steady at £1.3m.
Results After T ax
Intangible Asset Investment
Cash Reserves Discovery, Development and Admin Costs 14
Epistem Holdings Plc
Annual Report 2012
I am pleased to report major progress in a 
number of the Company’s core development 
programmes and the acceleration of 
investment in our first diagnostic product in 
the results for the year ended 30 June 2012. 
I am also pleased to report the  
recent completion of the first high 
value commercial contract for our 
Genedrive
™
 platform with Becton 
Dickinson. This agreement coupled 
with the earlier reported Xcelris 
Laboratories agreement signals  
the beginning of a new and  
exciting phase of revenue growth 
for Epistem and its investors.
Whilst market and trading 
conditions remain volatile across 
the healthcare sector, Epistem 
continues to differentiate itself 
through its diversified business 
model and advancing technologies 
whilst delivering increasing  
investor returns. 
Results 
Further details of the results for  
the period are covered in the Chief 
Executive Officer’s review, but 
financially the year to 30 June 2012 
saw the Company deliver revenues 
of £5.6m (2011: £5.8m). Based on 
this trading performance and the 
high levels of investment made in  
our Novel Therapies and Diagnostics 
(Genedrive
™
) programmes, the 
Company moved from a prior year 
profit to reporting an after tax loss of 
£0.2m (2011: £0.4m profit after tax). 
Following the successful completion 
of the £2.7m cash placing in 
December 2011, cash reserves at 
the end of the period were £4.7m 
(2011: £3.6m). 
During the year the Company 
continued to make progress  
across each of its three divisions  
as outlined below: 
•	 Following significant revenue 
growth over the past few years, 
Contract Research Services 
revenues were steady in the  
year at £2.9m (2011: £3.0m).  
We continue to develop and 
extend our high margin service 
offerings alongside our 
cornerstone US government 
biodefence contract. 
 With market uncertainties 
persisting, the division continues 
to build on and extend its core 
scientific strengths to provide a 
solid platform for future growth. 
•	 Personalised Medicine revenue 
growth increased significantly  
up to £2.7m (2011: £1.1m), more 
than double last year’s revenue, 
largely driven by the Sanofi-
Aventis oncology and GSK 
fibrosis biomarker collaborations.  
The Personalised Medicine 
reported revenues for the year 
also included initial Genedrive
™
 
unit sales (development) of £0.4m 
(2011: £0.0m).
•	 The progress of our Genedrive
™
 
molecular diagnostic device, the 
recent EU regulatory approval 
and the announcement of major 
collaborations with Becton 
Dickinson (outside India and the 
Indian Sub Continent) and Xcelris 
Laboratories (India and Indian 
Sub Continent) in Tuberculosis 
marks the beginning of Epistem’s 
Non-executive Chairman’s Statement
David Evans
Business Review 15
Epistem Holdings Plc
Annual Report 2012
first product related revenues and 
heralds a radical change in ‘Point 
of Care’ diagnostics healthcare. 
The Board believes Genedrive
™
  
is poised to bring about a 
breakthrough in rapid, high 
sensitivity and low cost molecular 
(DNA) diagnostic testing ‘near to 
the patient’ across a broad range 
of disease areas. 
•	 Novel Therapies’s drug 
development programme 
continues to advance. Following 
the completion of the funded 
research phase of the Novartis 
collaboration in 2011, we have 
invested in the development of our 
emerging leads with the division 
reporting nil revenues for the year 
(2011: £1.6m). Collaborative 
discussions are being progressed 
with potential partners in the 
areas of Regenerative Medicine 
and Oncology. The timings of 
license opportunities and future 
development funding remains 
difficult to predict accurately. 
•	 Based on the ongoing investment 
in our Novel Therapies and 
Genedrive
™
 programmes, the 
Company now reports a loss for 
the year of £0.2m (2011: £0.4m 
profit for the year) and loss per 
share of 2.9p (2011: 4.9p earnings 
per share).
Outlook
Epistem continues to build on its 
scientific and technical heritage  
as it transforms into a diverse, 
technology leading personalised 
medicine group with the near term 
growth in product revenues which 
are now underpinned by our first 
significant and long term commercial 
contracts with world class partners. 
Against a backdrop of market 
uncertainty, Epistem remains vigilant, 
whilst increasingly positive about  
its future growth potential.
Despite the challenging market 
conditions, each division continues 
to strengthen its technology and 
expertise. The Personalised Medicine 
division has seen a significant 
improvement in Biomarker growth 
over the past year, which together 
with our rapidly advancing molecular 
diagnostic platform Genedrive
™
  
is expected to deliver accelerated 
revenue growth across the division in 
future years. The Contract Research 
Services division continues to build 
an international profile and reputation 
for its proprietary service models  
and enhance its relationship with  
the NIH under our US biodefence 
contract (3 years remaining of this  
5 year contract). We anticipate a 
return to modest growth from this 
division in the current financial year. 
The Novel Therapies funded element 
of the drug discovery collaboration 
with Novartis was completed in 2011 
and we continue to maintain our 
investment in the development of  
our identified hits/leads. Whilst the 
timing of license and development 
opportunities remains difficult  
to judge, we remain optimistic  
about the strength of our hit/lead 
programme. We are in discussions 
with a number of other collaborative 
partners in relation to the 
development of our regenerative 
medicine and oncology hits/lead 
portfolio. 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. 
Alongside continued strengthening 
of our divisional units and the 
commercial advance of our 
Genedrive
™
 molecular diagnostic 
product, we expect to see the 
Company significantly strengthen  
its financial performance over the 
coming year. 
I would like to thank the CEO for his 
support and leadership, 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 on-going 
support has provided a stable 
platform for our continued growth. 
On behalf of the Board, I would  
also like to offer our thoughts  
and condolences to the family  
of Professor Chris Potten who  
died recently. Chris was a world-
renowned scientist who pioneered 
stem cell research in Manchester 
and was regarded as one of  
the world’s most influential figures  
in his field. In 2000, he co-founded 
Epistem and we look forward to 
maintaining and developing the 
legacy that Chris created. 
David Evans 
Non-executive Chairman
16 October 2012 16
Epistem Holdings Plc
Annual Report 2012
The financial results for the Group presented 
in this announcement reflect the Group’s 
trading for the year to 30 June 2012 and for 
the comparative period to 30 June 2011.
Building
momentum
Chief Executive’s Review
Matthew H Walls
Business Review
Headline progress over the year 
and subsequently included:
•	 Total sales of £5.6m driven by a 
solid performance by Contract 
Research Services and strong 
growth in our Personalised 
Medicine division.
•	 More than 100% year on year 
growth in the Personalised 
Medicine division revenues on 
back of collaborations with GSK, 
Sanofi-Aventis and emerging 
Genedrive
™
 sales.
•	 EU registration and preparations 
for launch of first major molecular 
diagnostic product (Genedrive
™
).
•	 Recent announcement of  
major international distribution 
agreement with Becton Dickinson 
in Tuberculosis for ROW territories 
and initial US$1.0m milestone 
payment received post the  
year end.
•	 Announcement of Xcelris 
Laboratories (Indian and Indian 
Sub Continent) distribution 
agreement for Tuberculosis  
using Genedrive
™
.
•	 Development and expansion  
of pre-clinical service offering  
in leukaemia imaging and 
rheumatoid arthritis.
•	 Ongoing investment in Novel 
Therapies lead programme. 
•	 £2.7m cash placing completed  
in December 2011 resulting  
in strengthened cash balance  
of £4.7m at 30 June 2012. 
Integrated business model
The establishment of our 
independent divisions has  
created a strong portfolio of 
business units rarely seen in a 
biotechnology business model. 
Epistem provides a financially 
robust business, whilst offering  
the potential for significant financial 
upside from the development of  
our Personalised Medicine, Novel 
Therapies and Contract Research 
Services divisions. We continue to 
enhance and exploit our integrated 
core competence in epithelial cell 
biology and molecular (personalised) 
medicine, whilst retaining a high 
degree of commercial independence 
across each division. 
Financial review
The Company reports a turnover  
of £5.6m (2011: £5.8m) for the year 
ended 30 June 2012. Revenues 
were underpinned by the Contract 
Research Services division, which 
delivered sales of £2.9m (2011: 
£3.0m). The Personalised Medicine 
division saw sales increase to 
£2.7m (2011: £1.1m), with the  
Novel Therapies division reporting  
no sales over the period, £0.0m 
(2011: £1.6m). 
Consolidated territory revenues 
were split US 68% (2011: 68%),  
EU/ROW 19% (2011: 27%) and UK 
13% (2011: 5%). Flat year on year 
Contract Research Services sales  17
Epistem Holdings Plc
Annual Report 2012
delivered a slightly reduced year- 
on-year operating profit of £0.8m 
(2011 £1.0m). Operating profits  
were further bolstered by growth in 
Personalised Medicine sales, which 
saw the division deliver a step up in 
its operating profit to £0.4m (2011: 
£0.1m) over the year. With Novel 
Therapies investment in its lead 
development reporting an operating 
loss of £0.8m (2011: operating profit 
£0.6m) and central administration 
costs largely unchanged over the 
year at £1.3m (2011: £1.3m) this 
gave rise to an overall group 
operating loss for the year of 
(£0.8m) (2011: operating profit 
£0.4m). 
With the benefit of a £0.5m deferred 
tax credit, the Group reported loss 
after tax for the year was £0.2m 
(2011: profit £0.4m) with year end 
headcount in the Company at 63 
(2011: 55).
Cash balances following the 
completion of the £2.7m cash 
placing in December 2011 were 
£4.7m (2011: £3.6m). 
Reported loss per share was 2.9p 
(2011: Earnings per share 4.9p). 
Clear investor communication  
of the Company’s strategy and 
performance remains a key  
element of our success and we will 
continue to advance our investor 
communications as we embark 
upon the next phase of growth. 
The Company’s annual audit will  
be completed in October 2012 by 
HW Chartered Accountants and 
their audit report will be included  
in the annual accounts which  
are expected to be distributed  
to shareholders shortly.
Operating review
Contract Research Services
Contract Research Services 
delivered a marginally reduced 
year-on-year revenue performance, 
whilst producing a respectable 27% 
operating margin (£0.8m operating 
profit). Although market and industry 
conditions remain challenging, we 
continue to deliver a high margin, 
niche, pre-clinical service offering 
across our core disease areas of 
oncology, mucositis, inflammatory 
bowel disease and dermatology. 
Over the period, we continued to 
develop and extend our specialist 
service offering in the area of 
oncology (new imaging models)  
and advanced inflammation 
(rheumatoid arthritis) models.
As part of our ongoing collaboration 
with the US National Institutes of 
Health’s biodefence programme,  
we continue to expand our role  
as ‘Subject Matter Experts’ (SME)  
in radiation treatment and have 
recently taken receipt of a new GLP 
compliant state of the art irradiation 
and image analysis system funded 
by the US biodefence consortium. 
The US government remains 
committed to targeting treatment  
of radiation sickness following a 
nuclear incident/event. 
The new financial year promises  
to build on last year with the advent 
of new product developments  
in oncology (imaging), hair 
immunohistochemistry and 
advanced inflammation models 
from which we anticipate a return  
to modest growth.
Personalised  
Medicine Biomarker
Over the year, the Biomarker division 
enjoyed a strong uplift in revenue 
performance to £2.3m (2011: £1.1m) 
driven by the first full year of the 
Sanofi-Aventis collaboration  
and the commencement of the 
recently announced GSK fibrosis 
collaboration. Both collaborations 
utilise Epistem’s proprietary RNA 
amplification technology and 
oncology bioinformatics to provide 
biomarker discovery and translational 
support across the Sanofi-Aventis 
oncology drug development and 
GSK fibrosis drug discovery 
programmes. The Biomarker division 
works with major pharmaceutical 
and biotech business groups by 
providing a suite of pre-clinical and 
clinical pharmacodynamic models  
to measure the effect of a drug on 
targeted tissue (gene activated 
pathways). With the advance of the 
pharmaceutical industry focus on 
‘personalised medicine’ we have  
also linked the development of  
our Genedrive
™
 platform to our  18
Epistem Holdings Plc
Annual Report 2012
Biomarker group to help identify key 
mutational oncology targets such as 
KRAS, JAK2 and EGFR in cancerous 
tissue. The identification of these 
target mutations will enable patients 
to be ‘stratified’ for the correct 
course of ‘personalised’ therapeutic 
treatment. Over the coming year we 
will also accelerate our developments 
in circulating (blood) tumour cells by 
developing Genedrive
™
 for use as  
a highly sensitive screening tool to 
identify the presence of mutation 
targets in blood. 
Diagnostics
Following our first EU product 
registration for the Genedrive
™
  
unit (CE mark) and Tuberculosis 
assay (CE-IVD) and the recent 
announcements of the Becton 
Dickinson and Xcelris Laboratories 
collaborations in Tuberculosis,  
we now believe we are at the 
beginning of a new phase of 
product led revenue growth for 
Epistem. Both these commercial 
collaborations (supply and 
distribution arrangements in 
Tuberculosis) include escalating 
annual volume requirements for 
units and assays with our partners, 
with each contract capable of 
delivering revenues to Epistem  
in excess of US$20-30m per  
annum over the next 3-5 years. 
Tuberculosis represents a 
significant revenue prospect  
and initial opportunity for our 
Genedrive
™
 platform, lending itself 
to use both inside and outside  
the laboratory setting and hence 
enabling ‘near patient’ testing or 
testing in remote field locations.  
The Genedrive
™
 platform is 
expected to be capable of testing  
a wide range of infectious diseases 
with new tests under development 
including malaria, dengue, HIV, HCV 
and a range of sexually transmitted 
diseases. We expect to supply and 
distribute these high volume tests 
through a channel partner strategy. 
We are receiving strong interest  
and demand for the use and 
development of Genedrive
™
  
and we will be working closely  
with the World Health Organisation 
and other high profile Healthcare 
Foundations including both the 
Gates and Clinton Foundations  
to ensure that we position our 
Tuberculosis test to best diagnostic 
and therapeutic effect in the global 
market. Over the coming months  
we will be publishing our first  
clinical data on our Tuberculosis 
test and how this compares with 
other tests in the market and 
anticipate launching our first 
regulated product into the US$1bn 
Tuberculosis diagnostics market 
early in 2013. 
Alongside healthcare applications, 
we have also seen significant 
interest in the use of Genedrive
™
  
for biosurveillance and forensics 
targets. We are working closely with 
the US government on a number of 
programmes to identify biothreats 
and infectious diseases in military 
settings. A good example of this  
is the recent completion of the  
US Government contract with the 
Defence Threat Reduction Agency 
for next generation ‘remote settings’ 
diagnostics. This will provide 
Epistem with up to US$2.0m  
in staged funding over the next  
24 months. We anticipate further 
growth in the US Department of 
Defence areas over the coming 
year. In the UK, we continue to 
progress the National Police 
Improvements Agency (NPIA) 
programme to enable crime scene 
testing for DNA fingerprinting. 
Genedrive
™
 is a novel, disruptive 
and highly sensitive molecular 
diagnostic tool with the capability  
of targeting a near patient, low cost 
and rapid turnaround diagnosis 
(~30-60mins including sample 
preparation) across a broad 
spectrum of bacterial, viral, fungal 
and somatic mutational disease 
areas. We expect to see molecular 
diagnostics begin to dominate  
the next generation of diagnostic 
testing and to change the speed, 
accuracy and workflows in near 
patient ‘Point of Care’ diagnostic 
assessment. Over the coming year, 
we intend to accelerate our product 
developments through increased 
investment in our manpower 
resource and expertise, enhance 
our manufacturing and regulatory 
control and further develop our 
channel partner distribution strategy. 
The increased growth in 
Personalised Medicine revenues 
enabled the division to lift its 
operating profit over the year.  
We anticipate further growth in our 
portfolio of personalised medicine 
technologies driven by increasing 
medical focus for effective patient 
treatment, tighter regulatory 
requirements and the growing 
industry need for rapid, low cost 
and sensitive molecular diagnostic 
tools. Our proprietary technologies 
are well positioned to capitalise  
on this market growth.
Novel Therapies
The Novel Therapies collaboration 
with Novartis completed its funding 
phase in 2011 and we have continued 
to invest in the development of  
our prioritised novel hits/leads over 
the past year. With the Novartis 
collaboration expected to complete  
in 2013, we retain intellectual property 
rights over our collaborative leads 
and continue to progress discussions 
with Novartis and other groups 
around the development of our  
Novel Therapies lead programme. 
The timing of a license opportunity 
and/or funding support remains 
difficult to judge although we remain 
confident in our development 
programme and the prospect of 
future licenses and funding support. 
Chief Executive’s Review (continued)
Business Review 19
Epistem Holdings Plc
Annual Report 2012
Following protein synthesis of our 
prioritised hits/leads, we are now 
beginning to enter the early stages 
of pre-clinical efficacy testing.  
Over the coming months we will 
better establish our leads’ effect  
on the cell biology and signalling 
pathways which regulate the  
cell/stem cells in the areas of 
regenerative medicine and 
oncology. We are also considering 
small molecule partnerships to 
establish a portfolio of agents  
which regulate signalling pathways 
and cell biology. 
We will evaluate our other drug 
discovery and development 
opportunities with major industry 
players to identify new lead 
developments and to expand  
our discovery and early stage 
development platform. 
Current trading and outlook
We continue to develop a rich 
portfolio of technology and business 
opportunities to enable us to grow 
and invest in our future growth.  
We are continuing to build and 
strengthen our internal expertise 
across our core divisional 
programmes and this careful 
preparation is expected to deliver 
growth over the coming year.  
Our traditional business model of 
services and technology licensing 
continues to evolve with the advent 
of our new product revenues.  
We believe that the new product 
launches will continue to de-risk  
our business model and allow us 
to strengthen our trading position 
and increase the confidence of our 
future revenue forecasts. 
We continue to staff our 
management team with world class, 
innovative individuals who fit with 
the culture and dynamism of the 
Company. We also expect to build 
on our corporate and board strength 
and supplement our scientific 
advisory board and advisory 
committees as appropriate to reflect 
the changing nature of our business.
Our shareholder interest and 
support remains strong and we will 
ensure that our ongoing investor 
communications continue to nurture 
this relationship. 
We anticipate a strengthening 
operational and financial position  
for the year ahead based on our 
expectation of revenue growth  
and our overall growth plans. We 
remain selective in considering 
complementary technology, 
acquisitions and in-licensing,  
with few opportunities thus far 
meeting our high expectations. 
We remain 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 help and support over the past 
year. I would also like to thank our 
investors for their continued support 
and interest in our technology and 
the Company as a whole. 
On behalf of the all the Board, 
management and staff at Epistem,  
I would also like to send our 
condolences to the family of 
Professor Chris Potten who died  
in August. Chris was a world-
renowned scientist who pioneered 
stem cell research in Manchester, 
UK. Chris led a team of researchers 
at the Paterson Institute at The 
Christie Hospital Manchester for 
more than 30 years. He was 
regarded as one of the world’s  
most influential figures in his field 
and developed research which  
is now central to many areas of 
cancer therapy. He published 
around 400 scientific papers and  
11 books – ensuring a reference 
legacy that will be used for many 
years to come. In 2000, he co-
founded Epistem with Cath Booth 
and his team. Chris will be sadly 
missed, but we look forward to 
maintaining and developing the 
legacy that Chris created.
Matthew H Walls
Chief Executive Officer
16 October 2012 20
Epistem Holdings Plc
Annual Report 2012
1. David Evans (52) | 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: EKF Diagnostics plc, Omega Diagnostics Group plc and 
Scancell Holdings Plc.
Board of Directors
Governance
2. Matthew Walls (48) | 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. He holds  
a non-executive post at the REPIN Group and Riyada Oxford Investments Limited and  
is a chartered accountant and a member of CIMA.
3. John Rylands (58) | Finance Director
John originally joined Epistem as an investor and Non-executive Director, and in 2005,  
he took over his current role. John provided corporate finance advice to private 
companies before joining Epistem. Prior to 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. (53) | Managing Director, Novel Therapies
Jeffrey joined Epistem in 2005 in his current role. Prior to joining Epistem he had been 
at Phylogix Inc., 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 identifying the potential commercial application of these factors. 
He holds a Ph.D. from George Washington University. 21
Epistem Holdings Plc
Annual Report 2012
5. Catherine Booth, Ph.D. (47) | 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.
6. Robert Nolan, Ph.D. (69) | 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. He is also a Non-executive Director of 
Phico Therapeutics Ltd.
7. Roger Lloyd, Ph.D. (64) | Non-executive Director
Roger joined the Board as a Non-executive Director on 1 July 2007. Trained as a 
biochemist, Roger has 36 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 United States 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. He operates as a Board 
Adviser in the Biotech sector. 22
Epistem Holdings Plc
Annual Report 2012
Governance
Directors’ Report
For the year ended 30 June 2012
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 2012. 
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 and diagnostic 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 Review on the inside front cover to page 13 of this report.  
The Group operates a US business development office in Boston, MA, trading through its wholly owned subsidiary Epistem Inc.
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 Review and Highlights on the inside front cover to page 19 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 30 to 55 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:
30 June  
2012
1 July  
2011
David Evans 80,645 80,645
Chris Potten (died 3 August 2012) 519,320 519,320
Catherine Booth 983,884 982,732
Gerard Brady (resigned 4 August 2011) 79,084 2,732
Roger Lloyd – –
Jeffrey Moore 16,209 15,057
Robert Nolan 5,065 8,065
John Rylands 193,782 192,630
Matthew Walls 9,529 8,377
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 
shares 
Percentage  
holding
Blackrock funds 872,552 10%
Calculus Capital funds 759,877 9%
Helium Special Situations Fund 592,500 7%
Henderson Investment Management funds 464,896 5%
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 
64 (2011: 86) based on the average monthly amount invoiced by suppliers during the year. 23
Epistem Holdings Plc
Annual Report 2012
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.
Company law requires the Directors to prepare financial statements for each financial year. Under that law The Directors have prepared 
the Group 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;
•	 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 2 to 19 report on the factors 
which are key to the on-going 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 18 to the financial statements. The Directors regularly assess and 
monitor the business risks faced by the Group. Risk is an inherent feature of business and set out below are some key risks, together 
with associated mitigating factors. This list does not purport to be exhaustive.
Development risk
The Group undertakes significant activity with the aim of launching new products, therapies and services. There can be no  
guarantee that the development activity will enable the programmes to meet the technical and intellectual property hurdles required  
for a commercial launch to be undertaken. The Group seeks to mitigate this risk by ensuring that development programmes are planned 
and undertaken by staff with the requisite skills. The Group monitors industry trends and customer needs to ensure that its development 
targets remain relevant.
Regulatory risk
There can be no guarantee that the Group’s products or services will be able to obtain or maintain the necessary approval for the  
orderly conduct of its business. Approvals can require evaluation of data relating to safety, quality and efficacy standards. The Group 
seeks to mitigate regulatory risk by conducting its operations within recognised quality assurance standards and by undergoing  
external assessment.
Management and employees
The Group’s future success is dependent on its management team and staff. There is an on-going risk that staff will leave to join 
competitor companies. The Group seeks to mitigate this risk by establishing effective management organisation and leading staff 
incentive schemes.
Economic risk
The Group’s programmes are targeted to meet the commercial requirements of its clients. In the current economic climate, clients’ plans 
may be subject to changes which may adversely affect the financial performance of the Group. The Group seeks to mitigate this risk by 
operating a diversified business model across various technologies and territories. 24
Epistem Holdings Plc
Annual Report 2012
Governance
Directors’ Report (continued)
For the year ended 30 June 2012
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
30 October 2012 25
Epistem Holdings Plc
Annual Report 2012
Directors’ Remuneration Report
For the year ended 30 June 2012
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 497 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 audited and unaudited 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 
and fees 
£
 
Bonus 
£
 
Pension 
£
2012  
Total 
£
2011  
Total 
£
Executive
Catherine Booth 99,137 10,000 29,431 138,568 148,254
Gerard Brady (resigned 4 August, 2011) 1,600 – – 1,600 89,766
Jeffrey Moore 125,000 5,000 – 130,000 125,000
John Rylands 125,000 15,000 – 140,000 130,000
Matthew Walls 200,000 100,000 – 300,000 270,000
Non-executive
David Evans 35,000 – – 35,000 35,000
Chris Potten (died 3 August, 2012) 13,964 – – 13,964 24,475
Roger Lloyd 24,000 – – 24,000 24,000
Robert Nolan 24,000 – – 24,000 24,000
647,701 130,000 29,431 807,132 870,495 26
Epistem Holdings Plc
Annual Report 2012
Governance
Directors’ share options
Details of the options for directors who served during the year are as follows:
As at  
1 July  
2011
Exercised/ 
Lapsed
Options 
granted
As at  
30 June  
2012
Exercise 
price
Earliest 
exercise date Expiry date
Executive
Catherine Booth 
(2)
15,528 – – 15,528 £1.20 Exit 09/01/2016
Gerard Brady 
(2)
 (resigned 4 August, 2011) 88,800 88,800 – – £0.50 Exit 06/01/2012
Gerard Brady 
(2)
 (resigned 4 August, 2011) 3,200 – – 3,200 £0.75 Exit 30/03/2013
Gerard Brady 
(2)
 (resigned 4 August, 2011) 2,200 – – 2,200 £0.75 Exit 06/04/2013
Gerard Brady 
(2)
 (resigned 4 August, 2011) 1,800 – – 1,800 £0.75 Exit 20/07/2014
Gerard Brady 
(2)
 (resigned 4 August, 2011) 24,224 – – 24,224 £1.20 Exit 24/11/2015
Gerard Brady 
(2)
 (resigned 4 August, 2011) 12,653 – – 12,653 £1.67 Exit 27/07/2017
Gerard Brady 
(4)
 (resigned 4 August, 2011) 57,727 – – 57,727 £1.60 15/10/2010 15/10/2017
Jeffrey Moore 
(3)
83,333 29,000 – 54,333 £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
Matthew Walls 
(7)
254,631 – – 254,631 £3.73 30/09/2013 29/03/2021
Matthew Walls 
(7)
5,369 – – 5,369 £3.60 30/09/2013 10/05/2021
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)
 (died 3 August, 2012) 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 were satisfied in 2010.
6. EMI stand-alone scheme, with performance criteria as detailed in (5) above.
7.  2007 Epistem Share Option Scheme, with performance criteria which allow the options to vest when the Remuneration Committee 
determine that the Company has achieved a compound annual growth in EBITDA of at least 15% for the three year period 
commencing 01 July 2010.
8.  Gain on exercise of Directors’ share options. Jeffrey Moore exercised options over 29,000 shares. The gain of market price over 
exercise price was £66,700. In 2011, no Directors’ share options were exercised.
Directors’ Remuneration Report (continued)
For the year ended 30 June 2012 27
Epistem Holdings Plc
Annual Report 2012
Share Investment Plan 
The details of the Epistem Share Investment Plan are outlined in Note 19 (b) to the accounts. The Directors’ interests in the shares of the 
Company include shares acquired under the Share Investment Plan as follows:
Partnership 
shares  
No
Cost of 
matching 
shares  
£
Total 
matching 
shares  
No
Total SIP 
shares  
30 June  
2012  
No
SIP shares  
30 June  
2011  
No
Catherine Booth 1,295 10,000 2,589 3,884 2,732
Gerard Brady (resigned 4 August, 2011) 1,295 10,000 2,589 3,884 2,732
Jeffrey Moore 1,295 10,000 2,589 3,884 2,732
John Rylands 1,295 10,000 2,589 3,884 2,732
Matthew Walls 1,295 10,000 2,589 3,884 2,732
Approved by the Board
D E Evans
Non-executive Chairman
30 October 2012 28
Epistem Holdings Plc
Annual Report 2012
Governance
Corporate Governance Report
For the year ended 30 June 2012
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 Nomination 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 Nomination Committee. The membership of these 
committees and attendance at meetings is as follows:
Audit  
Committee
Remuneration  
Committee
Nominations 
Committee
David Evans (Non-executive Chairman) 3 3 1
Robert Nolan (Non-executive Director) 3 3 1
Roger Lloyd (Non-executive Director), Remuneration/Nominations Committees only – 3 1
Remuneration Committee
The Remuneration Committee reviews 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 are set by the Board. 
The Remuneration Committee also approves the issue of share options under schemes approved by the Board.
None of the Committee members 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 met three times during the year.
Nomination Committee
The Nomination 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 sub-contractors. 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 12 months.
The Group is committed to maintaining high standards in implementing appropriate health, safety and environmental protection policies. 
Waste materials are recycled where possible, and hazardous waste is catalogued and handled by licensed specialist disposal companies. 29
Epistem Holdings Plc
Annual Report 2012
Independent Auditor’s Report  
to the Members of Epistem Holdings Plc
Year ended 30 June 2012
We have audited the group and parent company financial statements (the ‘Financial Statements) of Epistem Holdings Plc for the year 
ended 30 June 2012 which comprise the consolidated statement of comprehensive income, the consolidated and parent company 
balance sheets, the consolidated and parent company statement of cash flows, the consolidated 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. 
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 auditor’s 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 and express 
an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those 
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; the reasonableness of significant accounting estimates made by the directors;  
and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the  
Annual Report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent  
material misstatements or inconsistencies we consider the implications for our report.
Opinion on 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 2012,  
and of the group’s loss for the year then ended;
•	 the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; and
•	 the financial statements have been prepared in accordance with the requirements of Companies Act 2006.
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 matters where the Companies Act 2006 requires us 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 of directors’ remuneration specified by law are not made; or
•	 we have not received all the information and explanations we required for our audit.
Carol Graham FCA 
(Senior Statutory Auditor)
For and on behalf of
HW, Chartered Accountants and Statutory Auditor
Bridge House, 157 Ashley Road  
Hale, Altrincham
Cheshire WA14 2UT
30 October 2012 30
Epistem Holdings Plc
Annual Report 2012
Financials
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2012
Notes
2012  
£’000
2011  
£’000
Revenue 2 5,560 5,752
Contract costs (4,112) (3,072)
Discovery and development costs (996) (979)
General administrative costs (1,287) (1,316)
Operating (loss)/profit 3 (835) 385
Finance income 6 109 18
Finance costs 6 – (46) 
(Loss)/profit on ordinary activities before taxation (726) 357
Taxation on ordinary activities 7 482 28
Total Comprehensive Income for the financial year (244) 385
(Loss)/earnings per share (pence)
– Basic 9 (2.9)p 4.9p
– Diluted 9 (2.9)p 4.3p
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. 31
Epistem Holdings Plc
Annual Report 2012
Consolidated Statement of Changes in Equity
For the year ended 30 June 2012
Share  
capital  
£’000
Share 
premium 
account 
£’000
Employee 
share 
incentive 
plan reserve 
£’000
Share  
options 
reserve  
£’000
Reverse 
acquisitions 
reserve  
£’000
Retained 
earnings 
£’000
Total  
£’000
Balance at 1 July 2010 119 11,206 (43) 633 (2,484) (3,647) 5,784
Purchase of own shares (SIP) – – (45) – – – (45)
Recognition of equity-settled  
share-based payments
– – – 58 – – 58
Total comprehensive income for the year – – – – – 385 385
At 30 June 2011 119 11,206 (88) 691 (2,484) (3,262) 6,182
Balance at 1 July 2011 119 11,206 (88) 691 (2,484) (3,262) 6,182
Allotment of ordinary shares 12 2,765 – – – – 2,777
Share issue costs – (60) – – – – (60)
Purchase of own shares (SIP) – – (48) – – – (48)
Exercise of options 2 96 – (14) – – 84
Lapse of options – – – (1) – 1 –
Recognition of equity-settled  
share-based payments
– – – 171 – – 171
Total comprehensive income for the year – – – – – (244) (244)
At 30 June 2012 133 14,007 (136) 847 (2,484) (3,505) 8,862 32
Epistem Holdings Plc
Annual Report 2012
Financials
Consolidated Balance Sheet
As at 30 June 2012
Notes
2012  
£’000
2011  
£’000
Non-current assets
Intangible assets 10 2,189 1,075
Plant and equipment 11 573 567
Deferred taxation 12 1,002 520
3,764 2,162
Current assets
Trade and other receivables 13 1,978 1,910
Tax receivables 41 117
Cash and cash equivalents 14 4,684 3,620
6,703 5,647
Liabilities
Current liabilities
Deferred Income 15 198 75
Trade and other payables 16 1,407 1,447
1,605 1,522
Net current assets 5,098 4,125
Total assets less current liabilities 8,862 6,287
Non-current liabilities
Liabilities payable 1 – 5 years – (105)
Net assets 8,862 6,182
Capital and reserves
Called-up equity share capital 21 133 119
Share premium account 22 14,007 11,206
Employee share incentive plan reserve 22 (136) (88)
Share options reserve 22 847 691
Reverse acquisition reserve 22 (2,484) (2,484)
Retained earnings 22 (3,505) (3,262)
Total shareholders’ equity 8,862 6,182
These financial statements were approved by the Directors and authorised for issue on 30 October 2012 and are signed on their behalf by:
D E Evans    H J J Rylands
Non-executive Chairman  Finance Director
Epistem Holdings Plc
Company number: 06108621 33
Epistem Holdings Plc
Annual Report 2012
Consolidated Statement of Cash Flows
For the year ended 30 June 2012
2012  
£’000
2011  
£’000
Cash flows from operating activities
Operating (loss)/profit for the year (835) 385
Depreciation, amortisation and impairment 193 194
Share-based payment expense 171 58
Operating (loss)/profit before changes in working capital and provisions (471) 637
(Increase) in trade and other receivables (68) (899)
Increase/(decrease) in deferred income 123 (899)
(Decrease)/increase in trade and other payables (40) 433
Net cash (outflow) from operations (456) (728)
Finance income 109 18
Finance costs – (46)
Tax received 76 75
185 47
Net cash (outflow) from operating activities (271) (681)
Cash flows from investing activities 
Acquisition of fixed assets (1,313) (1,093)
Net cash outflow from investing activities (1,313) (1,093)
Cash flows from financing activities
Proceeds from issue of share capital 2,861 –
Expenses of share issue (60) –
Purchase of own shares (48) (45)
Movement in borrowings (105) 68
Net cash inflow from financing activities 2,648 23
Net increase/(decrease) in cash equivalents 1,064 (1,751)
Cash and cash equivalents at beginning of year 3,620 5,371
Cash and cash equivalents at end of year 4,684 3,620
Analysis of net funds
Cash at bank and in hand 4,684 3,620
Net funds 4,684 3,620 34
Epistem Holdings Plc
Annual Report 2012
Financials
Notes to the Financial Statements
For the year ended 30 June 2012
1. Significant accounting policies
Basis of accounting
The consolidated 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 consolidated 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 consolidated 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 and 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, and inform 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 the related transaction at the end of the reporting period.
(b) Collaboration and licensing revenue
Contractually agreed upfront payments and similar non-refundable payments in respect of collaboration or licence agreements which 
are not directly related to on-going 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 on-going research activity is recognised as the research activity is undertaken, in accordance with the contract. 35
Epistem Holdings Plc
Annual Report 2012
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.
Research and development
Research expenditure is written off as it is incurred. Development expenditure is written off as it incurred up to the point of technical and 
commercial validation. Thereafter, costs are carried forward as intangible assets, subject to having met the following criteria – technical 
feasibility, intention and ability to sell the product or model and the availability of resources to complete the development. All intangible 
assets are subject to impairment review and amortisation in each financial reporting period. In assessing value in use, the estimated 
future cash flows are discounted to their net present values using a pre-tax discount rate that reflects current market assessments  
of the time value of money and the risks specific to that asset.
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:
Acquired intellectual property – the shorter of 5% straight line basis or their estimated useful life
Developed intellectual property – the shorter of 10% straight line basis or their estimated useful life
Patents – over the shorter of 17 years or 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 and machinery – 25% reducing balance basis
Fixtures and fittings – 25% reducing balance basis
Equipment – 25% reducing balance basis
Finance lease agreements
Assets held under finance lease agreements are capitalised and disclosed under tangible fixed assets at their fair value. 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 18.
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 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. 36
Epistem Holdings Plc
Annual Report 2012
Financials
Notes to the Financial Statements (continued)
For the year ended 30 June 2012
1. Significant accounting policies (continued)
Share-based payments (continued)
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.
The issuance by the Company of share options to employees of its subsidiaries 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 a HMR&C qualifying Share Incentive Plan. Under the scheme, the Company will 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. 37
Epistem Holdings Plc
Annual Report 2012
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 to fall from the manner in which the asset or liability is recovered or settled.
Parent company assets
The assets of the parent Company are subject to impairment review in each financial period.
New standards and interpretations not applied
The International Accounting Standards Board (‘IASB’) and IFIRC have issued the following standards and interpretations with an 
effective date for financial years beginning on or after 1 July 2012:
IAS 1 (revised) Presentation of financial statements
IAS 19 (revised) Employee benefits
IAS 32 (revised) Financial instruments: presentation
IFRS 7 (revised) Financial instruments set-off of assets and liabilities
IFRS 9 (revised) Financial instruments classification and measurement
IFRS 10  Consolidated financial statements
IFRS 11  Joint arrangements
IFRS 12  Disclosure of interests in other entities
IFRS 13  Fair value measurement
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. 38
Epistem Holdings Plc
Annual Report 2012
Financials
2. Segment information
For internal reporting, the Group is organised into three operating divisions – Contract Research Services, Personalised Medicine and 
Novel Therapies. Contract Research Services provides pre-clinical testing services. Personalised Medicine specialises in molecular 
measures of biological effect and point of care molecular diagnostic testing. Novel Therapies is discovering key regulators of epithelial 
stem cells.
The results of the operating divisions of the Company are detailed below.
Business segments
Contract 
Research 
Services 
£’000
Personalised 
Medicine 
£’000
Novel 
Therapies 
£’000
Unallocated 
£’000
Total  
£’000
Twelve months ended 30 June 2012
Revenue 2,895 2,665 – – 5,560
Segment trading result 856 503 (700) (1,130) (471)
Less depreciation and amortisation (68) (48) (52) (25) (193)
Less equity-settled share-based payments) (6) (31) (2) (132) (171)
Operating profit/(loss) 782 424 (754) (1,287) (835) 
Twelve months ended 30 June 2011
Revenue 3,002 1,130 1,620 – 5,752
Segment trading result 1,029 148 716 (1,256) 637
Less depreciation and amortisation (55) (38) (74) (27) (194)
Less equity-settled share-based payments (7) (17) (1) (33) (58)
Operating profit/(loss) 967 93 641 (1,316) 385
Twelve months ended 30 June 2012
Segment assets 1,352 2,598 505 6,012 10,467
Segment capital expenditure 343 763 171 36 1,313
Twelve months ended 30 June 2011
Segment assets 1,244 1,678 492 4,395 7,809
Segment capital expenditure 117 859 92 25 1,093
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:
2012 
£’000
2011 
£’000
United Kingdom 720 273
Europe 977 1,452
United States of America 3,778 3,901
Asia 85 126
5,560 5,752
Revenues from customers accounting for more than 10% of turnover are detailed below:
(a)  £1,674k revenue was derived from international pharmaceutical company, Sanofi-Aventis, with revenue included within Contract 
Research Services and Personalised Medicine (2011: £454k);
(b)  £17k revenue was derived from international pharmaceutical company, Novartis, with revenue included in Personalised Medicine 
(2011: £1,610k);
(c)  £922k revenue was derived from the University of Maryland on behalf of the US Government with revenue included within Contract 
Research Services (2011: £645k);
(d)  £266k revenue was derived from international pharmaceutical company, Merck KGaA with revenue included within Contract 
Research Services (2011: £770k).
Notes to the Financial Statements (continued)
For the year ended 30 June 2012 39
Epistem Holdings Plc
Annual Report 2012
3. Operating (loss)/profit
The Group operating profit is stated after charging:
2012  
£’000
2011  
£’000
Discovery and development expenditure 996 979
Amortisation of intangible assets 8 8
Depreciation of owned tangible fixed assets 185 186
Auditors’ remuneration
– as auditors 23 23
– for other services – –
Operating lease costs – property rent 189 189
4. Particulars of employees
The average number of staff employed by the Group during the financial year amounted to:
2012  
No
2011  
No
Contract services 41 34
Research and development 12 9
Administrative 9 7
62 50
The aggregate employee costs (including Directors) were:
2012  
£’000
2011  
£’000
Wages and salaries 2,708 2,490
Social security costs 286 256
Equity settled share-based payments 171 58
Pension payments 65 53
3,230 2,857
5. Directors’ remuneration (key management)
Group
2012  
£’000
2011  
£’000
Remuneration 778 841
Pension contribution 29 29
Equity-settled share-based payments 131 32
938 902
Full details of the Directors’ remuneration and Directors’ options are contained in the Directors’ Remuneration Report.  40
Epistem Holdings Plc
Annual Report 2012
Financials
6. Finance income and costs
     
Group
2012  
£’000
2011  
£’000
Finance income
– interest receivable 15 18
– foreign exchange surpluses 94 –
109 18
Finance costs
– finance leases – (4)
– foreign exchange losses – (42)
– (46)
7. Taxation on ordinary activities
(a) Recognised in the income statement
Group
2012  
£’000
2011  
£’000
Current tax:
UK corporation tax on (loss)/profit for the period – –
Adjustment relating to a previous period – (44) 
Total current tax – (44)
Deferred tax:
Impact of tax rate change on brought forward deferred tax balances 91 39
Prior year tax losses now recognised (196) (22)
Current year tax losses (860) 16
Current year capital allowances in excess of depreciation 224 (2)
Revenue recognition of items prior to amortisation 216 –
In respect of current year share options charges 43 (15)
Total deferred tax (482) 16
Total tax (credit) for the year (482) (28)
Notes to the Financial Statements (continued)
For the year ended 30 June 2012 41
Epistem Holdings Plc
Annual Report 2012
(b) Reconciliation of the total tax charge
Group
2012  
£’000
2011  
£’000
(Loss)/profit before taxation (726) 357
Tax using the UK corporation tax rate of 24% (2011: 27.5%) (174) 98
Effect of difference in tax rate 91 39
Revenue recognition of items prior to amortisation 216 –
Item not deductible/chargeable for tax purposes 38 4
Adjustments in respect of research and development tax credits (457) (105)
Adjustment relating to a previous year (196) (64)
Total tax in income statement (482) (28)
At 30 June 2012, the change in the corporation tax rate to 24% had been substantially enacted and therefore the deferred taxation 
assets included within these results have been calculated using a UK corporation tax rate of 24%.
The Group had losses, as computed for tax purposes, of approximately £6,577k (2011: £1,770k) 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 2012 is £nil (2011: £nil).
8. Profit attributable to members of the parent company
The profit dealt with in the accounts of the parent company was £14k (2011: £18k).
9. (Loss)/earnings per share
The basic profit/(loss) 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.
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 and also the weighted average Matching 
Shares held by the Epistem SIP which are not yet vested. 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’.
Group
2012  
£’000
2011  
£’000
(Loss)/profit for the year after taxation (244) 385
Group
2012  
No
2011  
No
Weighted average number of ordinary shares in issue 8,471,693 7,933,983
Dilutive ordinary shares from options and warrants in issue 996,381 1,038,774
Dilutive weighted average number of ordinary shares 9,468,074 8,972,757
(Loss)/earnings per share
– basic (2.9)p 4.9p
– diluted (2.9)p 4.3p 42
Epistem Holdings Plc
Annual Report 2012
Financials
10. Intangible assets
Group
Patents  
£’000
Acquired 
intellectual 
property 
£’000
Developed 
intellectual 
property 
£’000
Total  
£’000
Cost
At 1 July 2011 199 287 627 1,113
Additions 170 – 952 1,122
At 30 June 2012 369 287 1,579 2,235
Amortisation
At 1 July 2011 4 34 – 38
Charge for the year 4 4 – 8
At 30 June 2012 8 38 – 46
Net book value
At 30 June 2011 195 253 627 1,075
At 30 June 2012 361 249 1,579 2,189 
Cost
At July 2010 88 77 – 165
Additions 111 210 627 948
At 30 June 2011 199 287 627 1,113
Amortisation
At 1 July 2010 – 30 – 30
Charge for the year 4 4 – 8
At 30 June 2011 4 34 – 38
Net book value
At 30 June 2010 88 47 – 135
At 30 June 2011 195 253 627 1,075
During the year to 30 June 2012, the cost of the Company’s Patents assessed as not being available for economic use amounted to 
£322k (2011: £156k).
Notes to the Financial Statements (continued)
For the year ended 30 June 2012 43
Epistem Holdings Plc
Annual Report 2012
11. Plant and equipment
Group
Lab 
equipment 
£’000
Fixtures  
and fittings  
£’000
Other 
equipment 
£’000
Total  
£’000
Cost
At 1 July 2011 1,274 30 163 1,467
Additions 154 1 36 191
At 30 June 2012 1,428 31 199 1,658
Depreciation
At 1 July 2011 783 20 97 900
Charge for the year 160 4 21 185
At 30 June 2012 943 24 118 1,085
Net book value
At 30 June 2011 491 10 66 567
At 30 June 2012 485 7 81 573
Group
Lab 
equipment 
£’000
Fixtures  
and fittings  
£’000
Other 
equipment 
£’000
Total  
£’000
Cost
At 1 July 2010 1,154 30 138 1,322
Additions 120 – 25 145
At 30 June 2011 1,274 30 163 1,467
Depreciation
At 1 July 2010 625 16 73 714
Charge for the year 158 4 24 186
At 30 June 2011 783 20 97 900
Net book value
At 30 June 2010 529 14 65 608
At 30 June 2011 491 10 66 567
12. Deferred taxation
Recognised 
Group
2012  
£’000
2011  
£’000
Tax losses carried forward 1,578 460
Excess of tax allowances over depreciation (478) (114)
Excess of revenue recognition over amortisation (216) –
Share-based payment transactions 118 173
Other timing differences – 1
1,002 520
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 £2,942k (2011: £3,018k).  44
Epistem Holdings Plc
Annual Report 2012
Financials
13. Trade and other receivables
Group
2012  
£’000
2011  
£’000
Trade receivables 1,188 1,119
Accrued income 565 540
Other receivables 146 151
Prepayments 79 100
1,978 1,910
Analysis of trade receivables
2012  
£’000
2011  
£’000
Neither impaired nor past due 892 779 
Past due but not impaired 296 340
Trade receivable 1,188 1,119
Aging 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:
2012  
£’000
2011  
£’000
Not later than one month 107 78
Later than one month but not later than three months 132 152
Later than three but not later than six months 57 110
      
14. Cash and cash equivalents
Group
2012  
£’000
2011  
£’000
Cash at bank and in hand 73 82
Short-term bank deposits 4,611 3,538
4,684 3,620
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:
Group
2012  
£’000
2011  
£’000
Amounts to be recognised within 1 year 198 75
Notes to the Financial Statements (continued)
For the year ended 30 June 2012 45
Epistem Holdings Plc
Annual Report 2012
16. Trade and other payables
Group
2012  
£’000
2011  
£’000
Trade payables 609 772
Accruals 587 472
Other payables 211 203
1,407 1,447
17. Share-based payments
(a) Share options outstanding at 30 June 2012
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
Award
Number  
of awards
Exercise 
price
Period within which  
options are exercisable
Fair value  
per  
option
Fair value  
£
EMI – Approved 7,200 £0.75 31 Mar 2003 to 30 Mar 2013 £0.28p 2,016
EMI – Approved 6,600 £0.75 07 Apr 2003 to 06 Apr 2013 £0.28p 1,848
EMI – Approved 9,400 £0.75 21 Jul 2004 to 20 Jul 2014 £0.27p 2,538
Share Warrants (Note 22) 198,554 £1.61 18 Mar 2005 to 17 Mar 2015 £0.56p 111,389
EMI – Unapproved 78,000 £1.29 31 Mar 2005 to 30 Mar 2015 £0.45p 35,022
EMI – Approved 29,024 £1.20 25 Nov 2005 to 24 Nov 2015 £0.43p 12,480
EMI – Unapproved 472,153 £1.20 10 Jan 2006 to 09 Jan 2016 £0.43p 201,137
EMI – Approved 168,722 £1.20 10 Jan 2006 to 09 Jan 2016 £0.43p 72,550
EMI – Approved 9,400 £1.20 29 Sept 2006 to 28 Sept 2016 £0.43p 3,910
EMI – Approved 80,644 £1.24 28 Mar 2007 to 27 Mar 2017 £0.43p 34,354
EMI – Unapproved 177,653 £1.24 28 Mar 2007 to 27 Mar 2017 £0.43p 75,680
EMI – Approved 25,903 £1.67 27 Jul 2007 to 26 Jul 2017 £0.39p 10,076
EMI – Unapproved 57,727 £1.60 15 Oct 2007 to 14 Oct 2017 £0.36p 20,782
2007 Epistem Share Option Scheme 71,918 £1.53 03 Mar 2011 to 02 Mar 2018 £0.36p 25,890
2007 Epistem Share Option Scheme 65,050 £1.77 31 Jul 2011 to 30 Jul 2018 £0.37p 24,068
2007 Epistem Share Option Scheme 41,700 £4.03 02 Dec 2013 to 01 Dec 2020 £1.64p 68,388
2007 Epistem Share Option Scheme 30,000 £3.60 09 May 2014 to 10 May 2021 £1.46p 43,800
2007 Epistem Share Option Scheme 254,631 £3.73 30 Sept 2013 to 29 Mar 2021 £1.51p 384,492
2007 Epistem Share Option Scheme 5,369 £3.60 30 Sept 2013 to 10 May 2021 £1.51p 8,107
2007 Epistem Share Option Scheme 18,450 £3.60 10 Feb 2014 to 10 Feb 2022 £1.46p 26,937 46
Epistem Holdings Plc
Annual Report 2012
Financials
17. 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.
Award Grant date
Expected  
term  
(Note a)
Expected  
dividend  
yield  
(Note b)
Expected  
volatility  
%  
(Note c)
Risk  
% rate  
(Note d)
Performance 
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 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 Note (f)
EMI – Unapproved 28 Mar 2007 5 years 0 60 5.25 Note (f)
EMI – Approved 27 Jul 2007 5 years 0 45 5.50 None
EMI – Approved 09 Oct 2007 5 years 0 45 5.75 Note (g)
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)
2007 Epistem Share Option Scheme 01 Dec 2010 5 years 0 50 0.50 Note (h)
2007 Epistem Share Option Scheme 29 Mar 2011 5 years 0 50 0.50 Note (i)
2007 Epistem Share Option Scheme 10 May 2011 5 years 0 50 0.50 Note (h)
2007 Epistem Share Option Scheme 18 Mar 2012 5 years 0 50 0.50 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)  Prior to 2011, the expected volatility was estimated by the Directors after inspection of the financial statements of comparable 
businesses in the same business sector as the Group. Thereafter, the expected volatility has been calculated by reference to the 
historic share price of the Company;
(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 performance conditions for these options to vest were satisfied in 2010;
(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.
(i)  These options may be exercised when the Remuneration Committee determine that the Company has achieved a compound annual 
growth in EBITDA of at least 15% for the three year period commencing 01 July 2010.
Notes to the Financial Statements (continued)
For the year ended 30 June 2012 47
Epistem Holdings Plc
Annual Report 2012
The number of options and their weighted average exercise prices are as follows:
Number
Weighted average  
exercise price
Weighted average remaining 
contracted life – Years
Group 2012 2011 2012 2011 2012 2011
Outstanding as at 1 July 1,918,548 1,586,498 £1.41 £1.28 – –
Granted during the year 18,450 332,050 £3.60 £3,75 – –
Exercised during the year (123,400) – £0.69 – – –
Lapsed during the year (5,500) – £1.06 – – –
Outstanding as at 30 June 1,808,098 1,918,548 £1.78 £1.41 4.83 5.50
Options exercisable at 30 June 1,341,030 1,190,483 £1.31 £1.24 3.80 4.40
The weighted average share price at the exercise dates was £3.53 (2011: no options were exercised).
(b) Share Investment Plan
The Company operates the Epistem Share Investment Plan, SIP, which is open to Directors and employees in accordance with Inland 
Revenue 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. 
2012 2011
Partnership shares held at 30 June 18,092 11,522
Matching Shares held at 30 June 36,181 22,841
Unamortised cost of Matching shares 
(Comprising Employee SIP reserve) £136,000 £88,000 
18. Financial risk management objectives and policies
The Group holds or issues financial instruments in order to achieve two main objectives, being:
(a) to finance its operations;
(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. 48
Epistem Holdings Plc
Annual Report 2012
Financials
18. Financial risk management objectives and policies (continued)
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.
 
Decrease 
in the basis 
points
Effect on loss 
before tax 
and equity 
£’000 
2012
Cash and cash equivalents 25 5 
2011
Cash and cash equivalents 25 3 
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.
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 (2011: nil) to manage foreign currency risk.
Balances which are denominated in US Dollars are detailed below:
Group
2012  
£’000
2011  
£’000
Trade and other receivable 702 961
Cash and cash equivalent 1,694 40
2,396 1,001
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.
Decrease in 
the currency 
rate
Effect on loss 
before tax 
and equity 
£’000 
2012
Trade and other receivable 5% 35
Cash and cash equivalents 5% 85 
2011
Trade and other receivable 5% 48
Cash and cash equivalents 5% 2
      
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.
Notes to the Financial Statements (continued)
For the year ended 30 June 2012 49
Epistem Holdings Plc
Annual Report 2012
19. Commitments under operating leases
At 30 June 2012 the Group had annual commitments under non-cancellable operating leases as set out below.
Land and buildings
Group
2012  
£’000
2011  
£’000
Operating leases which expire:
Within 1 year 157 157
The operating leases are in respect of the company’s office and laboratories are held under short-term leases.
20. Related party transactions
At the balance sheet date, the amounts owed to the following Directors, Prof. C Potten, D Evans and R Nolan, were £nil, £9k and £nil 
respectively (2011: £2k, £6k and £2k.) 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. 
21. Share capital
Allotted and called up:
2012  
No
2012  
£’000
2011  
No
2011  
£’000
At 1 July 7,933,983 119 7,933,983 119
Private placing 793,398 12 – –
Exercise of options 123,400 2 – –
Ordinary shares of £0.015 each 8,850,781 133 7,933,983 119
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. 50
Epistem Holdings Plc
Annual Report 2012
Financials
22. Reserves
Employee 
share 
incentive 
plan reserve 
£’000
Share 
premium 
account 
£’000
Share  
options 
reserve  
£’000
Reverse 
acquisition 
reserve  
£’000
Retained 
earnings 
£’000
Balance as at 1 July 2010 (43) 11,206 633 (2,484) (3,647)
Profit for the year – – – – 385
Allotment of ordinary shares – – – – –
Share issue costs – – – – –
Unamortised cost of Matching Shares (45) – – – –
Exercise of options – – – – –
Recognition of equity settled share-based payments in the year – – 58 – –
Balance at 30 June 2011 (88) 11,206 691 (2,484) (3,262) 
Balance as at 1 July 2011 (88) 11,206 691 (2,484) (3,262) 
Comprehensive income for the year – – – – (244)
Allotment of ordinary shares – 2,765 – – –
Share issue costs – (60) – – –
Unamortised cost of Matching Shares (48) – – – –
Exercise of options – 96 (14) – –
Lapse of options – – (1) – 1
Recognition of equity settled share-based payments in the year – – 171 – –
Balance at 30 June 2012 (136) 14,007 847 (2,484) (3,505) 
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 35,074 shares in Epistem Holdings Plc (2011: 22,841 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 2012 was 
£140k (2011: £86k). The nominal value held at 30 June 2012 was £526 (2011: £343).
Notes to the Financial Statements (continued)
For the year ended 30 June 2012 51
Epistem Holdings Plc
Annual Report 2012
Company Balance Sheet
As at 30 June 2012
Notes
2012  
£’000
2011  
£’000
Non-current assets
Investments a 5,891 5,721
Current assets
Amounts receivable from Group undertakings and other receivables b 6,458 4,068
Cash and cash equivalents c 2,867 2,442
9,325 6,510
Current liabilities
Corporation taxation – –
Net current assets 9,325 6,510
Total assets less current liabilities 15,216 12,231
Capital and reserves
Called-up equity share capital 21 133 119
Share premium account 22 14,007 11,206
Share options reserve 847 691
Retained earnings 229 215
Total shareholders’ funds equity 15,216 12,231
These financial statements were approved by the Directors and authorised for issue on 30 October 2012 and are signed on their behalf by:
D E Evans    H J J Rylands
Non-executive Chairman  Finance Director 
30 October 2012   30 October 2012
Epistem Holdings Plc
Company number: 06108621 52
Epistem Holdings Plc
Annual Report 2012
Financials
Company Statement of Changes in Equity
For the year ended 30 June 2012
Share  
capital  
£’000
Share 
premium 
account 
£’000
Share  
options 
reserve  
£’000
Retained 
earnings 
£’000
Total  
£’000
At 1 July 2010 119 11,206 633 196 12,154
Allotment of ordinary shares – – – – –
Share issue costs – – – – –
Recognition of equity settled share-based payments – – 58 – 58
Exercise of options – – – – –
Profit for the year – – – 19 –
At 30 June 2011 119 11,206 691 215 12,231
Allotment of ordinary shares 12 2,765 – – 2,777
Share issue costs – (60) – – (60)
Recognition of equity settled share-based payments – – 171 – 171
Exercise of options 2 96 (14) – 84
Lapse of options – – (1) 1 –
Profit for the year – – – 13 13
At 30 June 2012 133 14,007 847 229 15,216 53
Epistem Holdings Plc
Annual Report 2012
Company Statement of Cash Flows
For the year ended 30 June 2012
2012  
£’000
2011  
£’000
Cash flows from operating activities
Profit for the year – –
Operating profit before changes in working capital and provisions – –
(Increase) in trade and other receivables (2,390) (2,576)
(Decrease) in trade and other payables – (2)
Cash (outflow) from operations (2,390) (2,578)
Interest received 14 19
Tax (paid)/received – –
14 19
Net cash outflow from operating activities (2,377) (2,559)
Cash flows from financing activities
Proceeds from issue of share capital 2,861 –
Expenses of share issue (60) –
Net cash inflow from financing activities 2,801 –
Net (decrease)/increase in cash equivalents 425 (2,559)
Cash and cash equivalents at beginning of year 2,442 5,001
Cash and cash equivalents at end of year 2,867 2,442
Analysis of net funds
Cash at bank and in hand 2,867 2,442
Bank overdrafts – –
Net funds 2,867 2,442 54
Epistem Holdings Plc
Annual Report 2012
Financials
Notes to the Company Financial Statements
For the year ended 30 June 2012
(a) Investments
Company
The Company is the holding company of the Group. 
The Company owns 100% of the issued share capital of Epistem Limited, Epistem SIP Trustees Limited and Visible Genomics Limited 
(companies registered in England and Wales) and Epistem Inc. incorporated in the United States of America. The principal activities of 
the subsidiary companies are:
Epistem Limited and Epistem Inc. – the provision of services to the biotechnology and pharmaceutical industries;
Epistem SIP Trustees Limited – to act as trustee to the Epistem Share Incentive Plan;
Visible Genomics Limited – a dormant company.
On 28 July, 2010, Epistem Holdings Plc acquired 100% of the share capital of Visible Genomics Limited, whose principal activity had been 
the development of diagnostic assays and equipment. The assets of Visible Genomics Limited on 27 July 2010 are summarised below:
     
£’000
Acquired intangible assets 100
Short-term liabilities (25)
Long-term liabilities (75)
– 
On 28 July 2010, the above assets and liabilities were hived into Epistem Limited and Visible Genomics Limited ceased to trade. The 
consideration payable to the vendors of Visible Genomics Limited is related to performance (an earnout) during the three year period  
to 30 June 2013 and is capped at £2.85m. The Directors have assessed the performance during the period since 28 July 2010 and have 
concluded that the criteria will not be met and, accordingly, that no consideration would be payable. However, the performance criteria 
are currently being reviewed with new criteria being considered. If agreed, these criteria are likely to be met during the current financial 
period, leading to the full amount of the earnout (£2.85m) becoming payable. The consideration may be paid either by the issue of shares 
in Epistem Holdings Plc or by the issue of loan notes.
Year ended 30 June 2012
Investment in 
subsidiaries  
£’000
Cost
At 1 July 2011 5,721
Additions 170
At 30 June 2012 5,891
Net book value
At 30 June 2011 5,721
At 30 June 2012 5,891
Year ended 30 June 2011
Investment in 
subsidiaries  
£’000
Cost
At 1 July 2010 5,663
Additions 58
At 30 June 2011 5,721
Net book value
At 30 June 2010 5,663
At 30 June 2011 5,721
Additions in the year ended 30 June 2012 comprised the fair value of the share options issued to employees of the subsidiary 
undertaking during the year of £170k (2011: £58k). Full details of the share options issued are set out in Note 18 to the consolidated 
financial statements. 55
Epistem Holdings Plc
Annual Report 2012
(b) Amounts receivable from Group undertaking and other receivables
Company
2012  
£’000
2011  
£’000
Amounts receivable from Group undertaking 6,458 4,068
6,458 4,068
(c) Cash and cash equivalents
Company
2012 
£’000
2011 
£’000
Cash at bank and in hand 89 1
Short-term bank deposits 2,778 2,441
2,867 2,442
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.
(d) Related party transactions
During the course of the year, Epistem SIP Trustee acquired 19,910 (2011: 18,169) shares in Epistem Holdings Plc on behalf of the 
Epistem Share Investment Plan at a cost of £71k (2011: £69k).
(e) Impairment review
The carrying value of Investments and Amounts Receivable are subject to an annual impairment review. In the view of the Directors,  
no impairment provision has been required during the period (2011: nil.) 56
Epistem Holdings Plc
Annual Report 2012
Financials
Notes Directors
David Evans
Matthew Walls
Catherine Booth
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
Principal Banker
Natwest Commercial Banking
1 Spinningfields Square
Deansgate
Manchester M3 3AP
Nominated Adviser & Broker
Peel Hunt LLP
Moor House 
120 London Wall
London EC2Y 5ET
Auditors
HW Chartered Accountants
Bridge House
Ashley Road
Hale
Cheshire WA14 2UT
Legal Advisers
Pinsent Masons LLP
30 Crown Place
London EC2A 4ES
Directors, Secretary and Advisers Epistem Holdings Plc Annual Report 2012
Epistem Holdings 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