stem cell sciences plc  
meditrina building 260
babraham research campus
cambridge  cb22 3at
united kingdom 
telephone 44 01223 499160 
fax 44 01223 499178
wwwstemcellsciencescom
incorporated and registered in england and wales reg no 5455929
stem cell sciences plc annual report 2007
focused on the 
commercialisation of 
stem cell technologies
focused on the 
commercialisation of 
stem cell technologies
stem cell sciences plc  
annual report 2007 stem cell sciences scs is an international research 
and development company focusing on the commercial 
application of stem cell biology technologies for  
drug discovery and regenerative medicine research  
stem cell sciences is now focusing on building  
revenues through the sale of products collaborative 
research and licensing deals with international 
biotechnology and pharmaceutical companies
we are focused on  
delivering value today 
from stem cell biology
scs llc usa
california usa
scs australia 
pty ltd
melbourne australia
cambridge uk
scs plc uk
stem cell sciences has a substantial portfolio of patents 
and patent applications in both adult and embryonic 
stem cell fields the company has been active in the 
stem cell research field since 1994 principally focused 
on technologies to grow differentiate and purify adult 
and embryonic stem cells these include technologies to 
permit the generation of highly purified stem cells and their 
differentiated progeny specialised tissue cell types for 
use in genetic pharmacological and toxicological screens 
moreover these technologies may be able to provide pure 
populations of appropriate cell types for transplantation 
therapies in the future
we are headquartered in the united kingdom and have 
operations in the usa and australia our shares are listed 
on the australian stock exchange asx stc and traded 
on the london aim market aim stem
scs plc uk
alastair riddell chief executive officer
registered address
meditrina building 260
babraham research campus
cambridge  cb22 3at
united kingdom
phone 44 01223 499160   
fax 44 01223 499178
scs llc usa
george murphy jr 
vice president business development
phone 1 415 495 7341  
fax 1 415 495 7345
scs australia pty ltd
david newton general manager
registered address
2nd floor building 75 strip
monash university 
wellington road
clayton victoria  3800 
australia  
phone 61 03 9905 0600  
fax 61 03 9905 0611 contents
 1  highlights of the year  
 2  chairman’s statement  
 4  chief executive’s review  
 6  financial review  
 8  board of directors
 10  corporate social responsibility 
 11  directors’ report
 13  statement of directors’ responsibilities
 14  independent auditors’ report
 1 5 consolidated balance sheet
 16 company balance sheet
 17 consolidated income statement
 18 consolidated statement of  
changes in equity
 19 company statement of changes in equity
 20 consolidated cash flow statement
 21 company cash flow statement
 22 notes to the financial statements
 43  frequently asked questions
 46  defining the science
 48  glossary
50  secretary and advisers
highlights of the year
major licensing deal with merck  co inc for the use of novel mouse •	
neural stem cell technology for research use providing scs a signing  
fee and milestone payments 
signing of a diabetes contract research agreement with a major •	
biopharmaceutical company to validate its suite of cell processing 
technologies for the scaled automated production of human embryonic 
stem cells hes and demonstrate the bulk production of cells relevant for 
diabetes research at the scs cambridge production facility 
launch of hescgro animal componentfree medium for human embryonic •	
stem cell hes research by millipore corporation under royalty paying licence 
from scs  
successful oversubscribed secondary listing on the australian stock •	
exchange raising au124 million £494 million in april 
securing eu funding for neuroscreen a programme that aims to discover •	
new cns disease drug candidates a total grant of €24 million over  
three years approximately €042 million to scs 
licensingin of several new technologies including •	
  
•	 	 r oc k 	  r h o  a s s o c ia t e d 	 k i na s e  	 i nhi bit or s 	 t o 	 bl o c k 	 c e l l 	 d e a t h 	 du r i n g	
transfer and scaleup from the institute of physical and chemical 
r e s e a r c h 	 o f 	 t h e 	 r i k e n 	 c e n t r e 	 f or 	 d e v e l opm e n t a l 	 b i o l o g y 	  k ob e  	 j a p a n  
	 •	 	 n o v e l	h u m a n	m u s c l e	c e l l s	f r o m	th e	s a n	r a f f a e l e	s c i e n ti fi c	i n s ti tu t e	
milan italy for drug discovery and toxicology applications 
granting of a broad us patent covering all methods of purifying any type  •	
of mammalian stem cell adult and embryonic via any introduced gene 
a p p o i n tm e n t	o f	s e a s o n e d	c e o 	d r	a l a s t a i r	r i d d e l l 	i n	n o v e m b e r  •	
initiation of restructuring programme starting with the divestment of shares in •	
s cs 	 k k 	 righ ts 	 t o 	 commer cialise 	 all 	 t e chnology 	 pr e viously 	 lice nsed 	 t o 	 s cs 	
k k 	 ha v e 	 be e n 	 r e tur ned  	 a lso 	 lice nsed 	 their 	 neural 	 st e m 	 ns  	 ce ll 	 t e chnolog y  	
for both research and stem cell based therapies on a global basis
 turnover £06 million 2006 £07 million
	 g r o s s	p r o fi t	£ 0  5	m i l l i o n	 2 0 0 6 	£ 0  6	m i l l i o n 
	 ne t	l o s s	£ 3  5	m i l l i o n	 2 0 0 6 	£ 2  7	m i l l i o n 
 loss per share of 116p 2006 122p
  cash balance of £36 million at  
3 1	d e ce m b e r	2 0 0 7	 2 0 0 6 	£ 2  5	m i l l i o n 
financial highlights
stem cell sciences plc
annual report and accounts 2007 1 action and decisiveness are 
appropriate descriptors of  
stem cell sciences scs  
today we are in the midst of 
implementing steps focused 
on strengthening the company 
for both short and longterm 
shareholder value  
the performance of the company  
on our respective aim and asx stock 
markets has been disappointing and 
we are focused and committed to 
improving our commercial execution 
and operational performance and 
achieving improved shareholder 
value that is the commitment we 
have to you our valued investors
action and decisiveness are 
appropriate descriptors of  
stem cell sciences scs  
today we are in the midst of 
implementing steps focused 
on strengthening the company 
for both short and longterm 
shareholder value  
the performance of the company  
on our respective aim and asx stock 
markets has been disappointing and 
we are focused and committed to 
improving our commercial execution 
and operational performance and 
achieving improved shareholder 
value that is the commitment we 
have to you our valued investors
chairman’s statement
scs is focused 
and committed to 
improving shareholder 
value delivering value 
to our customers 
and providing an 
exciting opportunity 
for employees to 
develop their careers
david a dodd
chairman
2 5	f e b r u a r y	2 0 0 8
stem cell sciences plc
annual report and accounts 2007 2 this year as you already may know we have taken decisive actions 
to reshape our company for growth and value development we have 
sharpened our focus and as you read this year’s annual report  
i believe you will share our optimism and enthusiasm regarding the  
future performance and success of stem cell sciences 
d u r i n g	2 0 0 7 	t h e	b o a r d	c o n d u c t e d	a	s t r a t e g i c	r e v i e w	o f	t h e	c o m p a n y	
to determine how best to proceed in a more commercially orientated 
m a n n e r 	t h i s	r e s u l t e d	i n	t h e	a p p o i n t m e n t	o f	d r	a l a s t a i r	r i d d e l l	a s	c e o	
a n d	e x e c u t i v e	d i r e c t o r 	a n d	t h e	t r a n s i t i o n	o f	d r	p e t e r	m o u n t f o r d	i n t o	 
a position where his technical expertise can be successfully leveraged  
d r 	 r i d d e l l 	 h a s 	 e x t e n s i v e 	 e x p e r i e n c e 	 i n 	 b u i l d i n g 	 a n d 	 r u n n i n g 	 b i o t e c h n o l o g y	
c o m p a n i e s 	f o l l o w i n g	a	c o m p l e t e	r e v i e w	o f	o p e r a t i o n s	d r	r i d d e l l	a n d	
t h e	b o a r d	i m p l e m e n t e d	a	c o m p r e h e n s i v e	r e s t r u c t u r i n g	p r o g r a m m e	t h a t	
was announced recently we believe that these measures provide secure 
foundations for the future success of scs
d u r i n g	2 0 0 7 	s c s	c o n t i n u e d	t o	b u i l d	a n d	i n v e s t	i n	o u r	s t e m	c e l l	
technological leadership in particular we continued our core strategy 
of identifying new and emerging science that can be leveraged into 
both current and future commercial stem cell product offerings a key 
a c h i e v e m e n t	i n	t h i s	a r e a	w a s	t h e	l i c e n s i n g	o f	r o c k	 r h o  a s s o c i a t e d	
k i n a s e 	i n h i b i t o r s	f r o m	t h e	r i k e n	c e n t r e	i n	j a p a n 	t h e s e	c o m p o u n d s	
when added to stem cell media increase the robustness of cells allowing 
the largescale automated production needed for industrial research  
and clinical applications an important step forward scs now holds  
a worldwide licence for the use of this technology
our commercial development was recognised in 2007 reflected in 
agreements with merck  co for use of our mouse neural stem ns cell 
technology for research use and a large pharma partner in the diabetes 
fi e l d 	t h e	c e l l s	a n d	t e c h n o l o g y	f o r	t h e s e	c o l l a b o r a t i o n s	o r i g i n a t e	f r o m	
our new state of the art automated production facility in cambridge that 
w a s	o p e n e d	i n	d e c e m b e r	2 0 0 6 	s u c h	p r o g r e s s	i n	t h i s	n e w	p a r t	o f	o u r	
o p e r a t i o n	p r ov i d e s	c o n fi d e n c e	o f	f u t u r e	s u c c e s s	i n	t h i s	a r e a 	s c s	a l s o	
s e c u r e d	a n	i n n ov a t i v e	c o l l a b o r a t i o n	w i t h	t h e	m y e l i n	r e p a i r	f o u n d a t i o n 	
which will hopefully lead to new advances in cns research particularly  
in multiple sclerosis
a major event for the company during 2007 was our successful stock 
exchange listing in australia asx stc the support received by the 
investment community there has been highly satisfying and appreciated 
we believe one of our most important tasks is not just to ensure a strong 
current performance but at the same time to create the conditions for 
longterm success last year we took a major stride in that direction in the 
interest of the company our employees and of course our shareholders 
i n	c l o s i n g 	i	w o u l d	l i k e	t o	t h a n k	yo u	o n	b e h a l f	o f	t h e	b o a r d	f o r	yo u r	 
t r u s t	a n d	yo u r	s u p p o r t 	i	w o u l d	a l s o	l i k e	t o	t h a n k	j e r e m y	s c u d a m o r e 	 
a	f e l l o w	b o a r d	m e m b e r	f o r	h i s	d e d i c a t i o n	a n d	s e r v i c e	a s	a	n o n  ex e c u t i v e	
d i r e c t o r	t o	s c s 	j e r e m y	r e t i r e d	f r o m	t h e	b o a r d	i n	j a n u a r y	2 0 0 8 
a s	a	b o a r d 	w e	a r e	f o c u s e d	a n d	c o m m i t t e d	t o	e n s u r i n g	i m p r ov e m e n t	
in the value of your investment delivering value to our customers and 
providing an exciting opportunity for employees to develop their careers 
it is an honour to be a part of the many new and exciting developments 
u n d e r	w ay	a t	s t e m	c e l l	s c i e n c e s 	i	a n d	t h e	o t h e r	m e m b e r s	o f	t h e	b o a r d	
appreciate your continued support and look forward to updating you on 
our continued progress and results 
thank you
stem cell sciences plc
annual report and accounts 2007 3 i was appointed by the board 
at the end of november to 
guide the company through 
a turnaround in performance 
i conducted my review in 
november and december and 
made recommendations for 
significant changes in the 
structure and organisation of the 
company which were accepted  
i have also engaged the new 
management team in compiling 
a 	 b u s i n e s s 	 p l a n 	 f o r 	 2 0 0 8 	 a n d	
2009 that will see the company’s 
growth and development to a 
more sustainable commercially 
orientated and exciting future 
i was appointed by the board 
at the end of november to 
guide the company through 
a turnaround in performance 
i conducted my review in 
november and december and 
made recommendations for 
significant changes in the 
structure and organisation of the 
company which were accepted  
i have also engaged the new 
management team in compiling 
a business plan for 2008 and 
2009 that will see the company’s 
growth and development to a 
more sustainable commercially 
orientated and exciting future 
principal objectives 
for the year ahead 
are to increase 
revenues reduce costs 
generate shareholder 
c o n fid e n c e	 a nd	
s ig ni fi c a n t l y	 i nc r e a se	
shareholder value 
chief executive’s review
dr alastair j riddell
ceo
25 february 2008
stem cell sciences plc
annual report and accounts 2007 4 the principal objectives for the company this year are to increase 
r e v e n u e s	r e d u c e	c o s t s	g e n e r a t e	s h a r e h o l d e r	c o n fi d e n c e	a n d	
s i g n i fi c a n t l y	i n c r e a s e	s h a r e h o l d e r	v a l u e 
i n 	 o rd e r 	 t o 	 i m p rov e 	 o p e r ati o n a l 	 e f fi c i e n c y 	 a n d 	 re d u c e 	 c o s ts 	 i 	 d e c i d e d 	 t o 	
c o n c e ntr at e 	 o u r 	 a d m i n i s tr ati o n 	 a n d 	 u k 	 re s e a rc h 	 i n 	 c a m b r i d g e  	 w e 	 m ov e	
i nt o 	 n ew 	 p re m i s e s 	 a d j a c e nt 	 t o 	 o u r 	 ex i s ti n g 	 s i t e 	 o n 	 b a b r a h a m 	 r e s e a rc h	
campus in march subsequent to the year end we announced that we 
are closing the edinburgh facility melbourne continues as a research 
centre of excellence several senior positions have also been made 
redundant and we move forward with a simpler more cost effective 
s t r u c t u r e 	 t h e 	 c o s t 	 s av i n g s 	 f r o m 	 t h e s e 	 c h a n g e s 	 a r e 	 s i g n i fi c a n t 	 a n d 	 
w i l l 	 b e n e fi t 	 t h e 	 i n c o m e 	 s t a t e m e n t 	 o v e r 	 t h e 	 n e x t 	 t w o 	 y e a r s 	 b y 	 m o r e	 
than £1 million
the revenue generating areas for growth fall into three categories  
and demonstrate the company’s focus on the use of stem cells in 
d r u g 	 d i s c o v e r y 	 a n d 	 i n 	 d ev e l o p i n g 	 th e 	 e x c i t i n g 	 n e w 	 fi e l d 	 o f 	 re g e n e r a t i v e	
medicine we intend to make full use of the company’s expertise and 
intellectual property built up over the last 14 years in this endeavour  
o u r	fi r s t	o b j e c t i v e	i s	t o	s e c u r e	a t	l e a s t	o n e	m a j o r	p h a r m a c e u t i c a l	 
research collaboration this year this is likely to be in assisting the  
partner in its search for small molecules that may play a role in assisting 
cell regeneration and in developing cell based therapies for the future  
our second objective is to pursue the value existing in our extensive  
a n d 	 f u n d a m e n t a l 	 i n t e l l e c tu a l 	 p r o p e r t y 	 i n 	 th e 	 s t e m 	 c e l l 	 fi e l d  	 w e 	 a re	 
already identifying companies and institutions using our technology 
without the freedom to operate under a licence and will be seeking 
licences from them our third objective is to realise the strategic value  
of our specialist stem cell media business this will most probably be  
with a company specialising in the manufacture distribution and sales  
of such material we intend to retain a carried interest in this business  
and will continue to develop new media for the partner
in research the company has some potentially valuable early work in 
genetically engineered rats taking place in melbourne and in the exciting 
fi e ld 	 o f 	 t h e 	 re pr o g ra m ming 	 o f 	 adult 	 c e lls 	 int o 	 st e m 	 c e lls 	 o b v i at ing 	 the 	 ne e d 	
f o r 	 t h e 	 u s e 	 o f 	 e m b r y o n i c 	 c e l l s 	 i n 	 r e g e n e r a t i v e 	 m e d i c i n e  	 d e d i c a t e d 	 t e a m s	
have clear sets of objectives in these areas
2 0 0 7 	 w a s 	 a 	 c h a l l e n g i n g 	 y e a r 	 f o r 	 t h e 	 c o m p a n y 	 b u t 	 i 	 a m 	 c o n fi d e n t 	 t h a t	
the actions i have already taken and the plans for the next two years 
will set the company on a more secure and productive path we aim 
to be in the vanguard of this exciting area of discovery that has the 
potential to revolutionise the medical treatment of major diseases for 
which current therapies are problematic or nonexistent our deal with a 
m a j o r	p h a r m a c e u t i c a l	c o m p a n y	a n n o u n c e d	i n	d e c e m b e r	w i l l	a s s i s t	t h a t	
company in its search for new treatments for diabetes and our recently 
a n n o u n c e d	c o l l a b o r a t i o n	w i t h	t h e	m y e l i n	r e p a i r	f o u n d a t i o n	c o u l d	p av e	
the way for new treatments for multiple sclerosis 
f i n a l l y  	 i t 	 i s 	 i m p o r t a n t 	 f o r 	 o u r 	 i n v e s t o r s 	 a n d 	 c o l l a b o r a t o r s 	 t o 	 k n o w 	 th a t	 
all of our cells are derived from fully informed and consented donors 
th e s e 	 c e l l s 	 w e re 	 o b t a i n e d 	 w i th 	 n o 	 fi n a n c i a l 	 i n d u c e m e n t 	 a n d 	 w i th	
p e r m i s s i o n 	 s p e c i fi c a l l y 	 f o r 	 r e s e a r c h 	 a n d 	 c o m m e r c i a l i s a t i o n 	 p u r p o s e s 	
we will continue to maintain the highest ethical stance in this sensitive 
area of medical research
stem cell sciences plc
annual report and accounts 2007 5 as required by the aim rules 
these are the company’s 
first financial statements 
prepared under international 
financial reporting standards 
ifrss the main effect of the 
transition to ifrss has been to 
capitalise certain development 
expenditure which under 
uk gaap was expensed as 
it was incurred d e t ai l s 	 o f 	 t h e	
a c c o u n t i n g 	 p o l i c i e s 	 u n d e r 	 i f r s s 	 a n d	
the effect of transition are included in 
t h e 	 fi na n c ia l	 i n f or m a t i o n 	 oppo s it e 
as required by the aim rules 
these are the company’s 
first financial statements 
prepared under international 
financial reporting standards 
ifrss the main effect of the 
transition to ifrss has been to 
capitalise certain development 
expenditure which under 
uk gaap was expensed as 
it was incurred details of the 
accounting policies under ifrss and 
the effect of transition are included in 
the financial information opposite
in february 2008 
we announced a 
comprehensive 
restructuring 
programme designed 
t o 	 i m p r o v e 	 fi n a n c i a l 	
operational and 
growth performance 
financial review
stem cell sciences plc
annual report and accounts 2007 6 results of operations
t h e	c o m p a n y	r e p o r t e d	r e v e n u e s	o f	£ 5 9 3  0 0 0	 2 0 0 6 	£ 7 4 2  0 0 0 	 
f o r	t h e	y e a r	e n d e d	3 1	d e c e m b e r	2 0 0 7 	t h i s	c o m p r i s e d	o f	£ 4 1 5  0 0 0	
2006 £464000 from licences £91000 2006 £19000 from project 
d e l i v e r a b l e s	a n d	£ 8 8  0 0 0	 2 0 0 6 	£ 2 5 9  0 0 0 	f r o m	p r o d u c t	s a l e s 	 
t h e	d i s a p p o i n t i n g	2 0 	d e c r e a s e	r e s u l t e d	i n	t h e	s i g n i fi c a n t	o p e r a t i o n a l	
and strategic changes being effected to improve revenue generation  
as mentioned in both the chairman and ceo reports
a l t h o u g h	g r o s s	p r o fi t	m a r g i n s	i n c r e a s e d	t o	8 2 	f r o m	7 9 	i n	2 0 0 6 	
a b s o l u t e	g r o s s	p r o fi t	d e c r e a s e d	b y	1 7 	t o	£ 4 8 5  0 0 0	 2 0 0 6 	£ 5 8 5  0 0 0  	
o t h e r	o p e r a t i n g	i n c o m e	o f	£ 2 5 8  0 0 0	 2 0 0 6 	£ 3 6 7  0 0 0 	r e p r e s e n t s	g r a n t	
i n c o m e	f r o m	t h e	u k	a n d	eu r o p e a n	r e s e a r c h	c o n s o r t i a 	t h e	r e s u l t	o f	
running the cambridge facilities which were expanded late in 2006  
for a full year led to a 19 increase in administration expenses to  
£ 2  9 8 m	a n d	a	2 7 	i n c r e a s e	i n	r e s e a r c h	a n d	d e v e l o p m e n t	t o	£ 1  3 4 m 	 
these increases resulted in a 21 increase in operating costs to  
£432m the consolidation of facilities and streamlining of operations  
a r e	d e s i g n e d	t o	r e d u c e	t h e s e	c o s t s	i n	2 0 0 8 	
noncurrent assets
capital expenditure on property plant and equipment for the year 
w a s	£ 3 4  0 0 0 	w h i c h	t o g e t h e r	w i t h	a	d e p r e c i a t i o n	c h a r g e	o f	£ 1 7 8  0 0 0	
and foreign exchange movements of £4000 resulted in a balance of 
£ 5 1 6  0 0 0	 2 0 0 6 	6 5 6  0 0 0 	a s	a t	3 1	d e c e m b e r	2 0 0 7 	
trade receivables and payables
t r a d e	r e c e i v a b l e s	i n c r e a s e d	t o	£ 1 6 1  0 0 0	 2 0 0 6 	£ 7 8  0 0 0 	a s	a	r e s u l t	o f	
a yearend sales invoice which has subsequently been received in full 
t r a d e	p ay a b l e s	d e c r e a s e d	t o	£ 2 0 9  0 0 0	 2 0 0 6 	£ 5 2 4  0 0 0  	
cash resources
c a s h	t o t a l l i n g	£ 3  6 m	 2 0 0 6 	£ 2 5 m 	w a s	a b s o r b e d	b y	o p e r a t i o n s	
during the year £44 m net of expenses was raised in april on an 
oversubscribed fund raising on the australian stock exchange net cash 
f u n d s	a t	t h e	e n d	o f	t h e	y e a r	w e r e	£ 3  6 m	 2 0 0 6 	£ 2 5 m  	c a s h	b a l a n c e s	
h e l d	a r e	i n v e s t e d	i n	i n t e r e s t	b e a r i n g	a c c o u n t s 	t h e	d i r e c t o r s	b e l i e v e	
t h a t	t h e	c u r r e n t	c a s h	r e s o u r c e s	f o r e c a s t	o p e r a t i o n s	f o r	2 0 0 8	a n d	s t e m	
c e l l	s c i e n c e s	a c c e s s	t o	c a p i t a l	m a r k e t s	w i l l	b e	s u f fi c i e n t	t o	e n a b l e	t h e	
group to remain as a going concern however as set out in the basis of 
preparation note there are uncertainties relating to the group’s ability to 
continue as a going concern and the auditors have drawn attention to 
these in their audit report
i n	f e b r u a r y	2 0 0 8 	w e	a n n o u n c e d	a	c o m p r e h e n s i v e	r e s t r u c t u r i n g	
p r o g r a m m e 	d e s i g n e d	t o	i m p r ov e	fi n a n c i a l 	o p e r a t i o n a l	a n d	g r o w t h	
performance 
key performance indicators
o u r	k e y	fi n a n c i a l	p e r f o r m a n c e	i n d i c a t o r s	a r e	t o	i n c r e a s e	r e v e n u e s	
p r o fi t a b l y	w h i l e	c l o s e l y	m o n i t o r i n g	a n d	m a n a g i n g	o u r	w o r k i n g	c a p i t a l	
requirements
t h e	b o a r d	h o l d s	m o n t h l y	m e e t i n g s	t o	r e v i e w	a n d	m o n i t o r	b o t h	b u s i n e s s	
a n d	t h e	p r o g r e s s	o f	t h e	a b ov e	fi n a n c i a l	p e r f o r m a n c e	i n d i c a t o r s 
revenue growth
revenue is measured against monthly forecasts and budgets  
revenue decreased by 20 against 2006 
n e w	r e v e n u e	a g r e e m e n t s	a r e	r e v i e w e d	f o r	p r o fi t a b i l i t y	b e f o r e	
acceptance revenue contracts are also monitored to ensure that  
they can be delivered on time and within budget 
working capital requirements
cash balances and cash flow forecasts are reviewed against cash  
flow budgets 
expenditure controls
actual expenditure authorised by senior managers or directors and is 
monitored against a monthly budget and forecast 2007 expenditure 
w a s	i n	l i n e	w i t h	ex p e c t a t i o n s 	a l l	s i g n i fi c a n t	c a p i t a l	ex p e n d i t u r e	a n d	
i n v e s t m e n t	i s	a l s o	a p p r ov e d	b y	t h e	b o a r d 
nonfinancial indicators include
r d	p r o j e c t	p r o g r e s s	w h i c h	i s	m e a s u r e d	a g a i n s t	p r e s c r i b e d	
development targets the progress of key project milestones are 
reviewed to ensure timely delivery is possible existing systems and 
processes are reviewed to ensure they are rigorous and appropriate 
to the changing needs of the business and to ensure corporate 
governance
stem cell sciences plc
annual report and accounts 2007 7 board of directors
1 mr david a dodd
nonexecutive chairman
m r 	 d o d d 	 w a s 	 a p p o i n t e d 	 n o n  e x e c u t i v e 	 c h a i r m a n 	 o f 	 s t e m 	 c e l l 	 s c i e n c e s	
p l c 	 i n 	 j a n u a r y 	 2 0 0 7  	 h i s 	 ex p e r i e n c e 	 i n c l u d e s 	 s i g n i fi c a nt 	 m a n a g e m e nt 	 a n d 	
corporate development experience in the life sciences industry prior to 
j o i n i n g 	 th e 	 s t e m 	 c e l l 	 s c i e n c e s  	 h e 	 w a s 	 p re s i d e n t  	 c h i e f 	 e x e c u t i v e 	 o f fi c e r	
a n d 	 d i re c t o r 	 o f 	 n a s d a q 	 q u o t e d 	 s e r o l o g i c a l s 	 c o r p o r a t i o n 	 u n t i l 	 i t 	 w a s	
a c q u i re d 	 b y 	 m i l l i p o re 	 c o r p o r a t i o n 	 o n 	 1 4 	 j u l y 	 2 0 0 6  	 d u r i n g 	 m r 	 d o d d ’ s 	 s i x	
years of leadership the value of serologicals corporation increased from 
 8 5 	 m i l l i o n 	 t o 	  1  4 	 b i l l i o n  	 e s t a b l i s h i n g 	 i n d u s tr y 	 l e a d e r s h i p 	 p o s i ti o n s 	 i n	
several highgrowth markets 
f r o m	a u g u s t	1 9 9 5	u n t i l	j u n e	2 0 0 0 	d av i d	s e r v e d	a s	p r e s i d e n t	a n d	 
c h i e f	e x e c u t i v e	o f fi c e r	o f	s o l v ay	p h a r m a c e u t i c a l s	i n c 	a n d	a s	a	m e m b e r	
o f 	 t h e 	 m a n a g e m e n t 	 b o a r d 	 f o r 	 t h e 	 p h a r m a c e u t i c a l 	 s e c t o r 	 f o r 	 s o l v ay 	 s a 	
h e 	 w a s 	 a l s o 	 c h a i r m a n 	 o f 	 t h e 	 b o a r d 	 o f 	 u n i m e d 	 p h a r m a c e u t i c a l s 	 i n c 	 
a subsidiary of solvay pharmaceuticals prior to joining solvay  
he served in a number of management and executive positions with 
m a j o r 	 l i f e 	 s c i e n c e 	 c o r p o r a t i o n s  	 i n c l u d i n g 	 w y e t h  	 b r i s t o l  m y e r s 	 s q u i b b 	
a n d 	 a b b o t t 	 l a b o r a t o r i e s  	 d a v i d 	 w a s 	 a w a r d e d 	 t h e 	 2 0 0 5 	 g b p 	 b i o m e d i c a l	
industry growth award for his efforts in promoting georgia’s life sciences 
i n d u s t r y 	i n	a d d i t i o n 	h e	r e c e i v e d	t h e	2 0 0 5	o g l e t h o r p e	a w a r d	f r o m	t h e	
a t l a n t a	c h a p t e r	o f	t h e	b r i t i s h	a m e r i c a n	b u s i n e s s	g r o u p 	i n	r e c o g n i t i o n	 
of his ongoing leadership in fostering business relationships between  
t h e	u s a	a n d	t h e	u n i t e d	k i n g d o m 	
d av i d	i s	a l s o	c u r r e n t l y	s e r v i n g	o n	t h e	b o a r d	o f	d i r e c t o r s	o f	s t h e n o	
corporation a private life sciences instrument company as nonexecutive
d i r e c t o r  	 a s 	 c h a i r m a n 	 o f 	 t h e 	 b o a r d 	 o f 	 t h e 	 a m e r i c a n 	 f o u n d a t i o n 	 f o r 	 s u i c i d e	
p r e v e n t i o n 	a n d 	a s	i m m e d i a t e	p a s t  c h a i r 	t h e	g e o r g i a	b i o m e d i c a l	
partnership the biotechnology trade association in the state of georgia 
h e	h o l d s	a	b a c h e l o r	o f	s c i e n c e	a n d	m a s t e r	o f	s c i e n c e	f r o m	g e o r g i a	
s t a t e	u n i v e r s i t y	a n d	c o m p l e t e d	t h e	h a r v a r d	b u s i n e s s	s c h o o l	a d v a n c e d	
m a n a g e m e n t	p r o g r a m 	d av i d	w a s	a p p o i n t e d	p r e s i d e n t 	c e o	a n d	
c h a i r m a n	o f	b i o r e l i a n c e	c o r p o r a t i o n	o n	3	d e c e m b e r	2 0 0 7 
2 dr mike dexter
senior independent nonexecutive director 
d r 	 d ex t e r 	 h e ld 	 t h e 	 pos it io n 	 o f 	 c h a ir m a n 	 o f 	 s t e m 	 c e ll 	 scie nc e s 	 f r om 	 2 0 03	
t o 	 2 0 0 6  	 d r 	 d e x t e r 	 s p e n t 	 t h e 	 fi v e 	 y e a r s 	 p r i o r 	 t o 	 j o i n i n g 	 s t e m 	 c e l l 	 s c i e n c e s	
a s 	 d ire ct o r 	  c hief 	 e x e cu t i v e 	 o f fic e r 	 o f 	 t h e 	 w e llc o m e 	 t r u st  	 m a naging 	 a n 	
organisation of over 600 staff and a charitable investment fund investing 
approximately £600 million per annum into biomedical research 
d ur i n g 	 h i s 	 t i m e 	 a t 	 t he 	 w e l l c om e 	 t r us t  	 mi k e 	 o v e r s a w 	 one 	 o f 	 t he 	 bi gg e s t	
advances in biomedical research when it was announced that the human 
genome had been sequenced – giving scientists a detailed map of the 
b o d y ’ s 	 ma k e  up 	 f or 	 t he 	 fi r s t 	 t i m e  	 p r i or 	 t o 	 j oi n i n g 	 t he 	 w e l l c om e 	 t r us t 	 he	
w as 	 dir ect or 	 o f 	 resear ch 	 a t 	 t he 	 p a t erson 	 inst it ut e 	 f or 	 cancer 	 resear ch 	
christie hospital nhs trust manchester he is a fellow of the royal 
society london was appointed professor of experimental oncology at 
t he 	 un i v e r sit y 	 o f 	 m a n c he s t e r 	 a n d 	 i s 	 a n 	 h on or a r y 	 f e l l o w 	 o f 	 t he 	 r o y a l 	 c ol le g e	
of physicians and a founding fellow of the academy of medical sciences 
mike is currently chairman of the international centre for life newcastle 
a n d 	 th e 	 c o c k c r o f t 	 i n s t i tu t e 	 f o r 	 a c c e l e r a t o r 	 s c i e n c e s 	 i n 	 d a re s b u r y 	
c h e s h i re  	 h e 	 w a s 	 p rev i o u s l y 	 a 	 d i re c t o r 	 o f 	 c a t a l y s t 	 b i o m e d i c a 	 l t d  	 th e	
translational business arm of the wellcome trust mike has over 360 
p u b l i c ati o n s 	 o n 	 h i s 	 s c i e nti fi c 	 w o r k
1 
3
5
2 
4
6
stem cell sciences plc
annual report and accounts 2007 8 3 dr alastair riddell
chief executive officer
dr riddell was appointed chief executive officer of stem cell sciences  
in november 2007 as a longstanding bioentrepreneur with more than  
24 years experience in the industry alastair has spent considerable  
time at board level building companies raising money and negotiating 
corporate deals from 2006 to 2007 he held the position of nonexecutive 
chairman at surface therapeutics prior to its sale to serentis in 
september 2007 from 2005 he was chief executive officer of paradigm 
therapeutics where he achieved a successful trade sale to takeda 
pharmaceutical corporation in march 2007 prior to paradigm alastair 
was chief executive officer of pharmagene for seven years during which 
time he successfully listed the company on the main market of the london 
stock exchange 
he has also held senior positions with celltech centocor and amersham 
international in clinical development before moving to sales and marketing 
he began his professional career as a medical doctor with six years 
experience in a variety of hospital specialties and in general practice 
alastair is an active board member of the bia a position he has held  
from 2000 to 2006 and recently reelected to serve for the 2008 term  
in november 2007 he joined the board of sareum holdings plc as  
nonexecutive director
4 dr peter mountford
chief technology officer 
dr mountford took over the role of chief technology officer after stepping 
down as chief executive officer of stem cell sciences in november 2007 
subsequent to the year end we announced that dr mountford would 
be stepping down from his executive role but remain with the company 
as a nonexecutive director and consultant specifically to evaluate new 
strategic growth opportunities
a cofounder of stem cell sciences peter was appointed chief executive 
officer in 1999 he has been instrumental in the development and 
globalisation of stem cell sciences he has a phd in cellular and 
molecular biology university of melbourne and completed a  
postdoctoral research fellowship sponsored by the royal society 
london with professor austin smith at the university of edinburgh 
peter is currently a director of all the companies within stem cell 
sciences as well as of the private company secure sciences pty ltd
5 mr les h webb
nonexecutive director
mr webb was appointed a director of stem cell sciences in 2003  
les practised as a solicitor of the supreme courts of victoria and the 
high court of australia 19761986 in 1986 he was admitted to the bar 
in new south wales and victoria and has continued his practice as  
a barrister as well as establishing itv consulting pty limited a corporate 
advisory and investment consulting business he is also chairman of 
stem cell sciences australia
he is also a nonexecutive director of pharmaceutical company generic 
health limited and health insurance company iselect les previously sat 
on the board of the asx listed gradipore ltd now life therapeutics
6 mr harry karelis
nonexecutive director
mr karelis was appointed a director of stem cell sciences in 2003 
harry is also the founder and managing director of titan bioventures 
management pty ltd titan is the investment manager of biotech capital 
ltd one of the largest life science focused private equity funds in australia
harry is currently director of several private and public life science 
companies including phylogica ltd continence control systems pty ltd 
xrt ltd gateway capital ltd and biotech capital ltd he has previously 
sat on the boards of clinical cell culture ltd biocomm services pty ltd 
and pacific knowledge systems pty ltd
stem cell sciences plc
annual report and accounts 2007 9 stem cell sciences is exploring the therapeutic potential of different  
stem cell types including both adult and embryonic stem cells  
and recognises and abides by jurisdictional laws and regulations 
governing the derivation and use of stem cells in research and  
clinical applications
there is much public debate on the use of embryonic versus adult stem 
cells we believe that it is not yet clear which stem cell type will be of most 
value in certain therapeutic indications and that both must be pursued in 
order to deliver the most effective and safest medical outcomes
while it is clear that different individuals institutions and governments 
have differing and justifiable concerns regarding stem cells and stem cell 
technology stem cell sciences most strongly agrees that all aspects 
of human medicine be regulated and governed by the appropriate 
government authority we therefore conduct ourselves accordingly
  scs believes the use of embryos and tissue should be minimised  •	
by facilitating open access for all qualified researchers to established 
cell lines and supports this approach by the unencumbered provision 
of its human es cell lines to national stem cell banks in australia and 
the united kingdom
  scs believes it is important to facilitate realistic and open debate •	
about the progress and the potential of stem cells in human medicine 
so as to balance hope and reality for patients where scs holds a 
duty of care
  scs actively participates in local educational forums to help our •	
community understand what we do and why we do it
  scs believes stem cell based drug screening and development  •	
can dramatically reduce the need for animal testing and is  
pleased to support this opportunity by working closely with  
the pharmaceutical industry
  scs is appropriately licensed by all governing bodies in all territories •	
where it undertakes stem cell research
corporate social responsibility
stem cell sciences is committed 
to working in an ethical manner
to help alleviate human suffering 
due to injury or disease
stem cell sciences plc
annual report and accounts 2007 10 directors’ report
the directors present their annual report and the audited financial statements for the year ended 31 december 2007
principal activities and business review
the principal activities of the group continue to be the development commercialisation and application of stem cells and stem cell technologies  
in biopharmaceutical research and cell based therapies
a detailed review of the results for the year and future developments in the business is provided within the chairman’s statement and the  
chief executive’s review which form part of this annual report
principal risks and uncertainties
the principal risks and uncertainties affecting the business include the following
cash resources the group’s projected cash resources are dependent on future sales licence agreements and partnering arrangements as well  
as product sales the group is involved in the research development and commercialisation of stem cells and stem cell technology at this stage  
of its development it has limited revenues arising from licensing arrangements contract research and product sales and its costs exceed its revenue 
the group will continue to absorb cash until its products are commercialised 
the group’s current cash resources are forecast by the directors as being sufficient to enable it to continue to trade for the foreseeable future  
however the projections include revenues which are not certain and which significantly exceed those received in previous years the directors are 
currently in the process of talking with prospective licensing partners and other customers and have a reasonable expectation that these discussions will 
be successful if the revenue remains consistent with previous years the directors forecast that the group’s cash resources will be used by march 2009 
foreign currency exchange the group monitors short and mediumterm exchange rates the presentational currency of the group is british 
pounds the underlying currencies in which the group’s revenues and costs are denominated are primarily us dollars and british pounds but also 
australian dollars and euros the fact that the group has a proportion of its revenues and costs denominated in a number of currencies can create 
and has created gains or losses arising from foreign exchange transactions although there is currently no existing policy in relation to hedging against 
currency fluctuations the rates are closely monitored
the effect of legislation or other regulatory activities the group proactively monitors forthcoming and current legislation regularly
new product project and technology risk the group develops new technologies and introduces new products all new technologies and 
products involve inherent business risk in terms of abortive expenditure reputational risk and potentially customer claims and onerous contracts 
such risks may materially impact the group
protection of intellectual property all appropriate measures are taken to protect the group’s intellectual property rights and to minimise the risk  
of infringement by third parties
research and development the group continues to invest in research and development to maintain technological advantage of its products and 
technology platform
competitive risk the group operates in highly competitive and innovative markets product and technological innovations by competitors could 
adversely affect the group the geographical diversity of operations and academic collaborations reduces the possible effect of action by any single 
competitor the group invests directly in research and development in order to sustain competitive advantage
please refer to the financial review for details of our key performance indicators
proposed dividend
the directors do not recommend the payment of a dividend
supplier payment policy
it is the group’s policy to settle debts with its creditors on a timely basis taking in to consideration the terms and conditions offered by each supplier 
as at 31 december 2007 the number of days purchases in creditors averaged 41 2006 43 days 
directors 
the directors who held office at the end of the year were as follows
dr a riddell appointed 20 november 2007
p s mountford
h ilyine
d a dodd
t m dexter
l webb
h karelis
j p scudamore resigned 31 january 2008
stem cell sciences plc
annual report and accounts 2007 11 corporate governance
companies that have securities traded on the alternative investment market aim are not required to comply with the disclosure requirements of the 
combined code however the board is committed to maintaining high standards of corporate governance and whilst not fully complying has taken 
steps to comply with the combined code in so far as it can given the size of the company and the nature of its operations
the company has adopted and operates a share dealing code for directors and senior employees on substantially the same terms as the model 
code appended to chapter 16 of the listing rules of the ukla the board has established an audit committee a remuneration committee and 
nomination committee 
the audit committee is headed by harry karelis and comprises all the nonexecutive directors apart from david a dodd who has a standing 
invitation to attend any meeting it meets twice a year and is responsible for monitoring the quality of internal controls ensuring that the financial 
performance of the company is properly measured and reported on meeting with the auditors and reviewing reports from the auditors relating  
to accounting and internal controls it meets with the external auditors at least once a year
the remuneration committee is headed by mike dexter and also includes the other nonexecutive directors it reviews the performance  
of executive directors and sets the scale and structure of their remuneration and the basis of their service agreements with due regard for the 
interests of shareholders 
the remuneration committee also makes recommendations to the directors concerning the allocation of share options to employees no director  
is permitted to participate in discussions or decisions concerning his own remuneration
the nomination committee is headed by les webb and also includes the other nonexecutive directors and peter mountford as executive director 
the committee meets at least twice a year to consider the size structure and composition of the board and retirements and appointments of 
additional and replacement directors and to make appropriate recommendations to the board
political and charitable contributions
the group made no political contributions or donations to uk charities during the year
qualifying third party indemnity
certain directors benefited from qualifying third party indemnity provisions in place during the year and at the date of this report
substantial shareholdings
at the date of this report the company had been notified under section 198 of the companies act 1985 of the following notifiable holdings of the 
company’s ordinary shares
     shares 
secure sciences pty ltd    2728598 814
forest nominees ltd    2674239 798
jp morgan nominees australia ltd    1800000 537
hsbc global custody nominee uk ltd    1270000 379
disclosure of information to auditors
the directors who held office at the date of the approval of this directors’ report confirm that so far as they are each aware there is no relevant audit 
information of which the company’s auditors are unaware each director has taken all the steps that he ought to have taken as a director to make 
himself aware of any relevant audit information and to establish that the company’s auditors are aware of that information
auditors
in accordance with section 384 of the companies act 1985 a resolution for the reappointment of kpmg audit plc as auditors of the company is  
to be proposed at the forthcoming annual general meeting 
by order of the board
giorgio reggiani  30 farringdon street
secretary london
 ec4a 4hj
 25 february 2008
directors’ report
continued
stem cell sciences plc
annual report and accounts 2007 12 statement of directors’ responsibilities
in respect of the directors’ report and the financial statements
the directors are responsible for preparing the directors’ report and the financial statements in accordance with applicable law and regulations
company law requires the directors to prepare group and parent company financial statements for each financial year as required by the aim  
rules of the london stock exchange they are required to prepare the group financial statements in accordance with ifrss as adopted by the  
eu and applicable laws and have elected to prepare the parent company financial statements on the same basis
the group and parent company financial statements are required by law and ifrss as adopted by the eu to present fairly the financial position of  
the group and the parent company and the performance for that period the companies act 1985 provides in relation to such financial statements 
that references in the relevant part of that act to financial statements giving a true and fair view are references to their achieving a fair presentation
in preparing each of the group and parent company financial statements the directors are required to
 select suitable accounting policies and then apply them consistently •	
 make judgements and estimates that are reasonable and prudent •	
 state whether they have been prepared in accordance with ifrss as adopted by the eu and •	
 prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent company will •	
continue in business
the directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the 
parent company and enable them to ensure that its financial statements comply with the companies act 1985 they have a general responsibility  
for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect 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 uk governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions
stem cell sciences plc
annual report and accounts 2007 13 independent auditors’ report
to the members of stem cell sciences plc
we have audited the group and parent company financial statements ‘the financial statements’ of stem cell sciences plc for the year ended  
31 december 2007which comprise the consolidated income statement the consolidated and parent company balance sheets the consolidated 
and parent company cash flow statements the consolidated and parent company statements of changes in equity and the related notes  
these financial statements have been prepared under the accounting policies set out therein this report is made solely to the company’s members 
as a body in accordance with section 235 of the companies act 1985 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
the directors’ responsibilities for preparing the annual report and the consolidated financial statements in accordance with applicable law and 
international financial reporting standards ifrss as adopted by the eu are set out in the statement of directors’ responsibilities on page 13
our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and international standards on 
auditing uk and ireland we report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in 
accordance with the companies act 1985 we also report to you whether in our opinion the information given in the directors’ report is consistent 
with the financial statements the information given in the directors’ report includes that specific information presented in the financial review that  
is cross referred from the business review section of the directors’ report
in addition we report to you if in our opinion the company has not kept proper accounting records if we have not received all the information and 
explanations we require for our audit or if information specified by law regarding directors’ remuneration and other transactions is not disclosed
we read the other information contained in the annual report and consider whether it is consistent with the audited financial statements  
we consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial 
statements our responsibilities do not extend to any other information 
basis of audit opinion 
we conducted our audit in accordance with international standards on auditing uk and ireland issued by the auditing practices board an audit 
includes examination on a test basis of evidence relevant to the amounts and disclosures in the financial statements it also includes an assessment of 
the significant estimates and judgements made by the directors in the preparation of the financial statements and of whether the accounting policies are 
appropriate to the group’s and company’s circumstances consistently applied and adequately disclosed we planned and performed our audit so as to 
obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance 
that the financial statements are free from material misstatement whether caused by fraud or other irregularity or error in forming our opinion we also 
evaluated the overall adequacy of the presentation of information in the financial statements 
opinion
in our opinion 
 the group financial statements give a true and fair view in accordance with ifrss as adopted by the eu of the state of the group’s affairs as  •	
at 31 december 2007 and of its loss for the year then ended 
 the parent company financial statements give a true and fair view in accordance with ifrss as adopted by the eu as applied in accordance with •	
the provisions of the companies act 1985 of the state of the parent company’s affairs as at 31 december 2007
 have been properly prepared in accordance with the companies act 1985 and •	
 the information given in the directors’ report is consistent with the financial statements •	
emphasis of matter – going concern and capitalised development expenditure 
in forming our opinion on the financial statements which is not qualified we have considered the adequacy of the disclosures made in note 2 to 
the financial statements concerning the group’s ability to continue as a going concern which is significantly dependent upon the group concluding 
commercial agreements with a view to generating cash inflows in line with projections as the preparation of the financial statements on the going 
concern basis and recoverability of capitalised development expenditure assumes the successful generation of revenues which is not yet certain 
this indicates the existence of a material uncertainty which may cast significant doubt on the group’s ability to continue as a going concern  
the financial statements do not include the adjustments that would result if the group was unable to continue as a going concern and recover  
its assets 
kpmg audit plc
chartered accountants 
registered auditor
saltire court
20 castle terrace
edinburgh
eh1 2eg
25 february 2008
stem cell sciences plc
annual report and accounts 2007 14 consolidated balance sheet
as at 31 december 2007
    2007 2006
   notes £’000 £’000
assets
noncurrent assets
property plant and equipment   11 516 656
intangible assets   12 290 221
investment in equity accounted investees   13 – 284
total noncurrent assets    806 1161
current assets   
trade and other receivables   14 333 584
current tax assets    133 62
cash and cash equivalents    3607 2463
total current assets    4073 3109
   
total assets    4879 4270
   
liabilities
noncurrent liabilities   
deferred income   15 77 1 1 1
   
current liabilities
trade and other payables   16 669 1099
deferred income   15 148 43
total current liabilities    817 1142
   
total liabilities    894 1253
   
net assets    3985 3017
   
equi ty   
share capital   17 335 223
share premium    6536 2297
capital redemption reserve    10928 10928
foreign exchange reserve    110 1 19
merger reserve    1248 1248
retained deficit    12456 9064
total equity attributable to equity holders of the company    3985 3017
these financial statements were approved by the board of directors and authorised for issue on 25 february 2008 and are signed on its behalf by
dr aj riddell
director
stem cell sciences plc
annual report and accounts 2007 15 company balance sheet
as at 31 december 2007
    2007 2006
   notes £’000 £’000
assets
noncurrent assets
investments   13 – –
current assets
trade and other receivables   14 63 1 10
cash and cash equivalents    3350 2203
total current assets    3413 2313
   
total assets    3413 2313
   
liabilities
current liabilities
trade and other payables   16 154 415
   
total liabilities    154 415
   
net assets    3259 1898
   
equi ty   
share capital   17 335 223
share premium    6536 2297
capital redemption reserve    10928 10928
retained deficit    14540 1 1550
   
total equity attributable to equity holders of the company    3259 1898
these financial statements were approved by the board of directors and authorised for issue on 25 february 2008 and are signed on its behalf by
dr aj riddell
director
stem cell sciences plc
annual report and accounts 2007 16 consolidated income statement
for the year ended 31 december 2007
    2007 2006
   notes £’000 £’000
revenue   4 593 742
cost of sales    108 157
gross profit    485 585
   
other income    258 367
administrative expenses    2980 2505
research and development expenses    1335 1055
loss from operating activities   5 3572 2608
   
finance income    230 178
finance expenses    4 –
net finance income   8 226 178
   
share of loss of equity accounted investee    294 468
gain on dilution of equity accounted associate    – 126
   
loss before income tax    3640 2772
   
income tax credit   9 133 62
   
loss for the year attributable to equity holders of the company    3507 2710
   
   
loss per share   
basic   10 116p 122p
diluted   10 116p 122p
   
stem cell sciences plc
annual report and accounts 2007 17 consolidated statement of changes in equity
for the year ended 31 december 2007
 attributable to equity holders of the company
   capital foreign
 share share redemption exchange  merger retained total
 capital  premium  reserve  reserve  reserve  deficit  equity
group £’000 £’000 £’000 £’000 £’000 £’000 £’000
balance at 1 january 2006 11151 2297 – – 1248 6484 5716
       
total income and expense recognised directly  
in equity being exchange differences arising on  
translation of overseas operations – – – 119 – – 119
loss for the period – – – – – 2710 2710
total recognised income and expense for the period – – – 119 – 2710 2829
share based payments – – – – – 130 130
capital reconstruction 10928 – 10928 – – – –
balance at 31 december 2006 223 2297 10928 119 1248 9064 3017
       
total income and expense recognised directly  
in equity being exchange differences arising on  
translation of overseas operations – – – 9 – – 9
loss for the period – – – – – 3507 3507
total recognised income and expense for the period – – – 9 – 3507 3498
share based payments – – – – – 115 115
issue of share capital 112 4239 – – – – 4351
balance at 31 december 2007 335 6536 10928 110 1248 12456 3985
stem cell sciences plc
annual report and accounts 2007 18 company statement of changes in equity
for the year ended 31 december 2007
 attributable to equity holders of the company
   capital
 share share redemption retained total
 capital  premium  reserve  deficit  equity
company £’000 £’000 £’000 £’000 £’000
balance at 1 january 2006 11151 2297 – 7837 5611
loss for the period being total recognised  
income and expense for the period – – – 3782 3782
share based payments – – – 69 69
capital reconstruction 10928 – 10928 – –
balance at 31 december 2006 223 2297 10928 11550 1898
     
loss for the period being total recognised  
income and expense for the period – – – 3061 3061
share based payments – – – 71 71 
issue of share capital 112 4239 – – 4351
balance at 31 december 2007 335 6536 10928 14540 3259
stem cell sciences plc
annual report and accounts 2007 19 consolidated cash flow statement
for the year ended 31 december 2007
    2007 2006
    £’000 £’000
   
cash flows from operating activities   
loss for the year    3507 2710
adjustments for   
depreciation    178 91
amortisation    39 20
capitalised development costs    108 162
deferred income released    123 18
amounts provided against investment    – –
finance income    230 178
finance expense    4 –
share of loss of equity accounted investee    294 468
gain on dilution of equity accounted investee    – 126
effect of changes in foreign exchange rates    10 –
equity settled share based payment transactions    115 130
income tax income    133 62
     3481 2547
decreaseincrease in trade and other receivables    277 633
decreaseincrease in trade and other payables    430 612
     3634 2568
interest paid    4 –
income taxes received    62 121
net cash used in operating activities    3576 2447
   
cash flows from investing activities   
interest received    204 152
acquisition of plant and equipment    34 636
grant income received    194 172
net cash fromused in investing activities    364 312
   
cash flows from financing activities   
proceeds from issue of share capital    4351 –
net cash from financing activities    4351 –
   
net increasedecrease in cash and cash equivalents    1139 2759
   
cash and cash equivalents at start of year    2463 5227
effect of foreign exchange rate changes    5 5
cash and cash equivalents at end of year    3607 2463
stem cell sciences plc
annual report and accounts 2007 20 company cash flow statement
for the year ended 31 december 2007
    2007 2006
    £’000 £’000
   
cash flows from operating activities   
loss for the year    3061 3782
adjustments for     
amounts provided against investment    – 710
finance income    221 162
equity settled share based payment transactions    71 69
     3211 3165
decreaseincrease in trade and other receivables    21 43
decreaseincrease in trade and other payables    261 349
     240 306
     
net cash used in operating activities    3451 2859
     
cash flows from investing activities     
interest received    247 162
net cash fromused in investing activities    247 162
     
cash flows from financing activities     
proceeds from issue of share capital    4351 –
net cash from financing activities    4351 –
     
net increasedecrease in cash and cash equivalents    1147 2697
     
cash and cash equivalents at start of year    2203 4900
cash and cash equivalents at end of year    3350 2203
stem cell sciences plc
annual report and accounts 2007 21 notes to the financial statements
1 reporting entity 
stem cell sciences plc the ‘company’ is a company domiciled in the united kingdom the consolidated financial statements of the company  
for the year ended 31 december 2007 comprise the company and its subsidiaries together referred to as the ‘group’ and the group’s interest  
in associates 
the parent company financial statements present information about the company as a separate entity and not about its group
the financial statements were authorised for issue by the directors on 25 february 2008 
2 basis of preparation
statement of compliance
both the parent company financial statements and the group financial statements have been prepared and approved by the directors in accordance 
with international financial reporting standards as adopted by the eu ‘adopted ifrss’ on publishing the parent company financial statements here 
together with the group financial statements the company is taking advantage of the exemption in s230 of the companies act 1985 not to present its 
individual income statement and related notes that form a part of these approved financial statements these are the first financial statements of the 
group and the company prepared in accordance with adopted ifrss and ifrs 1 has been applied an explanation of how the transition to ifrs has 
affected the reported financial position financial performance and cash flows of the group and the company is provided in note 24 this note includes 
reconciliations of equity and profit or loss for comparative periods reported under uk gaap to those reported for those periods under adopted ifrss 
the company has elected not to restate business combinations prior to the date of transition to adopted ifrss and cumulative translation differences  
for all foreign operations have been set to zero at 1 january 2006 
going concern
the financial statements are prepared on a going concern basis which the directors believe to be appropriate for the following reasons
the group is involved in the research development and commercialisation of stem cells and stem cell technology at this stage of its development 
it has limited revenues arising from licensing arrangements contract research and product sales and its costs exceed its revenue the group will 
continue to absorb cash until its products are commercialised 
the group’s current cash resources are forecast by the directors as being sufficient to enable it to continue to trade for the foreseeable future  
however the projections include revenues which are not certain and which significantly exceed those received in previous years the directors are 
currently in the process of talking with prospective licensing partners and other customers and have a reasonable expectation that these discussions will 
be successful if the revenue remains consistent with previous years the directors forecast that the group’s cash resources will be used by march 2009 
while there can be no certainty that the forecast revenues will be generated the directors are of the opinion that taking into account existing cash 
resources available to the group sufficient revenue will be generated to enable the group to continue to trade for at least twelve months from the 
date of approval of these financial statements if the revenue generation is later than anticipated the directors would take appropriate steps to reduce 
the level of cash outflow
however as noted there can be no certainty in relation to these matters which may cast significant doubt on the group’s ability to continue as a 
going concern and doubt over the recoverability of capitalised development expenditure the group may therefore be unable to continue realising 
its assets and discharging its liabilities in the normal course of business but the financial statements do not include any adjustments that would result 
from the going concern basis of preparation being inappropriate 
basis of measurement
the financial statements are prepared on the historical cost basis
functional and presentational currency
the financial statements are presented in british pounds rounded to the nearest thousand 
u se of estimates and judgements
the preparation of financial statements which comply with the provisions of adopted ifrs requires management to make judgements estimates and 
assumptions that affect the application of policies and reported amounts of assets and liabilities as well as income and expenses the estimates and 
associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances  
the results of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources actual results may 
differ from these estimates
stem cell sciences plc
annual report and accounts 2007 22 the 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 if the revision affects only that period or in the period of the revision and future periods if the revision affects both 
current and future periods
in particular information about significant areas of uncertainty and critical judgements in applying accounting policies that have the most significant 
effect on the financial statements is included in note 12 on intangible assets
the accounting policies set out below have been applied consistently by all group entities to all periods presented in these consolidated financial 
statements and in preparing an opening ifrs balance sheet at 1 january 2006 for the purposes of the transition to adopted ifrss
3 significant accounting policies
basis of consolidation
subsidiaries
subsidiaries are entities controlled by the group control exists when the group has the power to govern the financial and operating policies of an 
entity to obtain benefits from its activities the financial statements of subsidiaries are included in the consolidated financial statements from the date 
that control commences until the date that control ceases
investments in subsidiary undertakings in the company are stated at cost less any permanent impairment
associates equity accounted investees
associates are those entities in which the group has significant influence but not control over the financial and operating policies the consolidated 
financial statements include the group’s share of the total recognised income and expense of associates on an equity accounted basis from the 
date that significant influence commences until the date that significant influence ceases when the group’s share of losses exceeds its interest in 
an associate the group’s carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the group has 
incurred legal or constructive obligations or made payments on behalf of an associate
intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup transactions are eliminated in preparing 
the consolidated financial statements unrealised losses are eliminated in the same way as unrealised gains but only to the extent that there is no 
evidence of impairment
revenue
revenue represents amounts receivable from product sales collaborative research agreements and licence fees net of sales related taxes
revenue is recognised when there is evidence of an agreement delivery of the product has occurred and the selling price is determined no revenue 
is recognised if there are significant uncertainties regarding recovery of the consideration due associated costs or the possible return of products
a product sales are recognised as revenue when the significant risks and rewards of ownership have been transferred to the buyer
b fees for collaborative research are deferred and recognised over the period of the agreement
c revenue is recognised immediately in respect of licensed technology once all significant performance obligations have been met
segmental reporting
a business segment is a group of assets and operations that provide a product or service and that are subject to risks and returns that are different 
from other business segments a geographic segment is a group of assets and operations that provide a product or service within a particular 
economic environment and that are subject to risks and returns that are different from segments operating in different economic environments
foreign currencies
transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction monetary assets and liabilities 
denominated in foreign currencies at the balance sheet date are translated using the rate of exchange ruling at that date foreign exchange gains  
and losses on translation are included in the income statement
nonmonetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated at the rate at the date of  
the transaction 
the assets and liabilities of overseas subsidiary operations are translated at the closing exchange rates the income and expenses of foreign operations 
are translated to british pounds at average exchange rates for the period to approximate to the exchange rates at the dates of the transactions 
stem cell sciences plc
annual report and accounts 2007 23 notes to the financial statements
continued
3 significant accounting policies continued
foreign exchange differences arising on retranslations are recognised directly in a separate component of equity since 1 january 2006 the group’s 
date of transition to ifrss such differences have been recognised in the foreign exchange reserve when a foreign operation is disposed of in part  
or in full the relevant amount of the foreign exchange reserve is transferred to profit or loss the group has taken advantage of the relief available in 
ifrs 1 to deem the cumulative translation differences for all foreign operations to be zero at the date of transition to adopted ifrss 1 january 2006
property plant and equipment
property plant and equipment are stated at cost less accumulated depreciation and any impairment loss cost includes expenditure that is directly 
attributable to the acquisition of the asset
depreciation is charged to the income statement to write off the cost of property plant and equipment over the estimated useful lives of each part  
of plant and equipment as follows
plant and equipment 25 – 40
  
the gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying 
amount of the asset and is recognised in the income statement
intangible assets
research and development
expenditure on research activities undertaken with the prospect of gaining new scientific or technical knowledge and understanding is recognised  
in the income statement when incurred
development activities involve a plan or design for the production of new or substantially improved products and processes an internally generated 
intangible asset arising from the group’s development expenditure is recognised only if all of the following conditions are met
an asset is created that can be identified such as new processes •	
there is an intention to complete and use the intangible asset •	
it is probable that the asset created will generate future economic benefits •	
the development cost of the asset can be measured reliably •	
the product or process is technically and commercially feasible and •	
sufficient resources are available to complete the development and to either sell or use the asset •	
development costs recognised as intangible assets are amortised over their expected useful lives
where no internally generated intangible asset can be recognised development expenditure is recognised as an expense in the period in which it  
is incurred 
research and development costs include personnel charges in respect of persons working wholly or exclusively on process or product development
leases
operating lease rentals are charged to the income statement on a straight line basis over the period of the lease
grants
grants relating to expenditure on research and development are recognised in the income statement on a basis consistent with the research and 
development expenditure policy capital based grants are included within liabilities and credited to the income statement over the estimated useful 
lives of the assets to which they relate 
employee benefits
defined contribution plans
obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred
share based payment transactions
the share option programme allows group employees to acquire shares of the company the fair value of options granted after 7 november 
2002 and those not yet vested at 1 january 2006 is recognised as an employee expense with a corresponding increase in equity the fair value 
is measured at the date of grant and spread over the period during which the employees become unconditionally entitled to options the amount 
recognised as an expense is adjusted to reflect the actual number of share options that vest except where variations are due only to share prices  
not achieving the threshold for vesting 
stem cell sciences plc
annual report and accounts 2007 24 the proceeds received net of any directly attributable expenses are credited to share capital and share premium when the options are exercised
income tax
the tax expense comprises current and deferred tax 
 
the tax currently payable is based on taxable profit for the year the group’s liability for current tax is calculated by using tax rates that have been 
enacted or substantively enacted by the balance sheet date income tax credits relate to credits receivable for research and development  
expenditure incurred
deferred tax is calculated using the balance sheet liability method providing for temporary differences between the carrying amounts of assets and 
liabilities for financial reporting purposes and the amounts used for taxation purposes the amount of deferred tax provided is based on the expected 
manner of realisation or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the balance 
sheet date
   
a deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be 
utilised deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised 
earnings per share
basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary 
shares in issue during the year
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
financial instruments
the group’s financial instruments comprise cash cash equivalents and various items such as trade receivables and trade payables that arise directly 
from its operations the main purpose of these financial instruments is to finance the group’s operations the group does not enter into derivative 
transactions for speculative purposes 
cash and cash equivalents
cash and cash equivalents comprise cash in hand and at bank
trade and other receivables
trade and other receivables are initially recognised at their fair value and then stated at amortised cost
trade and other payables
trade and other payables are initially recognised at their fair value and then stated at amortised cost
impairment
the carrying amounts of the group’s assets other than financial assets and deferred tax assets are reviewed at each balance sheet date to 
determine whether there is any indication of impairment if any such indication exists the asset’s recoverable amount is estimated
an impairment loss is recognised whenever the carrying amount of an asset or its cashgenerating unit exceeds its recoverable amount impairment 
losses are recognised in the income statement
calculation of recoverable amount
the recoverable amount of the group’s receivables carried at amortised cost is calculated as the present value of estimated future cash flows 
discounted at the original effective interest rate ie the effective interest rate computed at initial recognition of these financial assets  
receivables with a short duration are not discounted
the recoverable amount of other assets is the greater of their net selling price and value in use in assessing value in use the estimated future cash 
flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the 
risks specific to the asset for an asset that does not generate largely independent cash inflows the recoverable amount is determined for the  
cashgenerating unit to which the asset belongs
reversals of impairment
an impairment loss in respect of a receivable carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related 
objectively to an event occurring after the impairment loss was recognised
stem cell sciences plc
annual report and accounts 2007 25 notes to the financial statements
continued
3 significant accounting policies continued
in respect of other assets an impairment loss is reversed when there is an indication that the impairment loss may no longer exist and there has been 
a change in the estimates used to determine the recoverable amount
an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been 
determined net of depreciation or amortisation if no impairment loss had been recognised
adoption of international financial reporting standards
interpretations of existing standards and new standards that are not yet effective and have not been adopted early by the group are listed below
a number of new standards amendments to standards and interpretations are not yet effective for the year ended 31 december 2007 and have not 
been applied in preparing these financial statements those which may have a significant effect on the financial statements are
ifrs 8 •	 operating segments endorsed which becomes mandatory for the group’s 2009 financial statements will require the disclosure of 
segment information based on the internal reports regularly reviewed by the group’s chief operating decision maker in order to assess each 
segment’s performance and to allocate resources to segments
4 segmental information
the group comprises the following main business segments
 •	 sc proven supplies growth formulations and other reagents for cell based research
 sc services •	 provides custom engineering and supplies cells for research drug discovery and development
 •	 sc licensing provides access to proprietary stem cell technologies 
any revenue overheads assets or liabilities that cannot be directly allocated to these segments is reported under ‘unallocated’
primary reporting segment – business segments
   external revenue   segment result
  2007 2006 2007 2006
  £’000 £’000 £’000 £’000
sc proven   88 259 204 65
sc services  91 19 508 271
sc licensing  415 464 417 464
   593 742 295 128
    
unallocated corporate expenses    3277 2610
net finance income    226 178
share of loss of equity accounted investee    294 468
income tax credit    133 62
loss for year    3507 2710
 depreciation  intangible
 and capital  assets segment segment
 amortisation additions additions  assets liabilities 
 £’000 £’000 £’000 £’000 £’000
sc proven 48 – 108 357 199
sc services 156 11 – 325 199
sc licensing     
unallocated corporate items 13 23 – 4196 496
total group 217 34 108 4878 894
stem cell sciences plc
annual report and accounts 2007 26  year ended 31 december 2006
 depreciation  intangible
 and capital  assets segment investment segment
 amortisation additions additions  assets in associate liabilities
 £’000 £’000 £’000 £’000 £’000 £’000
sc proven 54 – 162 246 – 231
sc services 10 634 – 564 – 231
sc licensing      
unallocated corporate items 47 2 – 3460 284 791
total group 111 636 162 4270 284 1253
secondary reporting segment – geographical
 revenue assets capital expenditure
 2007 2006 2007 2006 2007 2006
 £’000 £’000 £’000 £’000 £’000 £’000
australia 430 652 254 357 23 2
uk 163 90 878 808 11 634
unallocated – – 3747 3105 – –
      
  593 742 4879 4270 34 636
unallocated corporate items include those certain assets and liabilities that are not specifically allocated to business segments as these assets and 
liabilities are utilised managed and reported centrally across all business segments consequently it is not possible to provide a meaningful allocation 
of the unallocated corporate assets and liabilities for each business segment as this cannot be done on a reasonable basis
all segments are continuing operations there are no other noncash expenses
5 operating expenses 
the loss from operating activities has been arrived at after chargingcrediting
    2007 2006
    £’000 £’000
  
grant income    258 367
depreciation    178 91
amortisation    39 20
auditors’ remuneration
audit of these financial statements    29 28
amounts receivable by auditors and their associates in respect of
 audit of subsidiaries’ financial statements pursuant to legislation    18 16
 other services relating to taxation    10 13
 other assurance services    28 15
amounts paid to the company’s auditors and their associates in respect of services to the company other than the audit of the company’s financial 
statements have not been disclosed as the information is required instead to be disclosed on a consolidated basis
stem cell sciences plc
annual report and accounts 2007 27 notes to the financial statements
continued
6 personnel expenses 
the average monthly number of employees including executive directors during the year analysed by category was as follows
   group  company
  2007 2006 2007 2006
  number number number number
research and development  24 25 – –
management and administration  10 6 9 9
 
   34 31 9 9
the aggregate remuneration for the above persons comprised
   group  company
  2007 2006 2007 2006
  £’000 £’000 £’000 £’000
wages and salaries  1736 1360 760 606
social security costs  162 125 80 48
other pension costs   136 93 58 41
equity settled share based transactions  115 130 71 69
   2149 1708 969 764
7 directors’ remuneration 
    2007 2006
    £’000 £’000
directors’ emoluments    616 504
company contributions to defined contribution pension schemes    27 27
     643 531
equity settled share based transactions    57 49
the aggregate of emoluments of the highest paid director was £216000 2006 £229000 company pension contributions amounting to £15000 
2006 £15000 were made on his behalf retirement benefits are accruing to two directors 2006 two under the company’s money purchase scheme 
8 net finance income
    2007 2006
    £’000 £’000
bank interest receivable 230 178
bank interest payable 4 –
net finance income 226 178
stem cell sciences plc
annual report and accounts 2007 28 9 income tax
    2007 2006 
    £’000 £’000
recognised in the income statement 
current tax  
overseas taxation credit 133 62
the income tax credit for the year and previous year relates to overseas credits received relating to research and development expenditure 
the income tax credit for the year can be reconciled to the loss in the income statement as follows
    2007 2006
    £’000 £’000
loss before tax    3640 2772
  
income tax at the domestic income tax rate 30 2006 30  1092 832
  
effects of  
expenses not deductible for tax purposes 15 98
movement in unrecognised deferred tax asset 955 609
share option charge 34 39
equity accounted losses 88 124
intangible assets 40 80
nontaxable income – 38
research and development credit    133 62
total tax credit 133 62
at the balance sheet date the group has unused tax losses of £120 million 2006 £96 million which may be carried forward for utilisation against 
taxable profits in future years the availability of certain of these losses to be offset against future profits is dependent on future suitable profits being 
generated and the appropriate tax authority clearances being granted £56 million of the losses arise in australia where there is some uncertainty over 
their future availability due to the requirement to obtain tax authority clearances and £19 million of the losses are in relation to excess management 
expenses in the parent company which may only be utilised against future suitable profits
the group has not recognised a deferred tax asset in relation to these tax losses the asset will be recognised in future periods when its recovery 
against appropriate taxable profits is considered to be more likely than not
10 loss per share
basic and diluted loss per share 
the calculation of basic loss per share at 31 december 2007 was based on the loss attributable to ordinary shareholders of £3507000  
2006 £2710000 and a weighted average number of ordinary shares outstanding during the year ended 31 december 2007 of 30351000  
2006 22301000 calculated as follows
    2007 2006
    £’000 £’000
  
issued ordinary shares at 1 january 22301 22301
effect of shares issued in april 2007 8050 –
weighted average number of ordinary shares at 31 december 30351 22301
the loss attributable to ordinary shares and the number of ordinary shares for the purpose of calculating the diluted earnings per share are identical 
to those used for basic earnings per share the exercise of share options would have the effect of reducing the loss per share and consequently is 
not taken into account in the calculation for diluted loss per share
at 31 december 2007 there were 2736200 2006 1833788 options outstanding with an average exercise price of £047 2006 £050 which are 
not included in the calculation of diluted earnings per share because they are antidilutive at those dates
stem cell sciences plc
annual report and accounts 2007 29 notes to the financial statements
continued
11 property plant and equipment 
     plant and
     equipment
group     £’000
cost  
at 1 january 2006  255
additions  636
effect of movements in foreign exchange  9
at 31 december 2006  882
  
additions  34
effect of movements in foreign exchange  13
at 31 december 2007  929
  
depreciation  
at 1 january 2006  140
effect of movements in foreign exchange  5
charge for year  91
at 31 december 2006  226
  
effect of movements in foreign exchange  9
charge for year  178
at 31 december 2007  413
  
  
carrying amounts  
at 31 december 2007     516
  
at 31 december 2006     656
  
at 1 january 2006     115
stem cell sciences plc
annual report and accounts 2007 30 12 intangible assets 
  development
     costs
group     £’000
cost  
at 1 january 2006  84
additions  162
at 31 december 2006  246
  
additions  108
at 31 december 2007  354
  
amortisation  
at 1 january 2006  5
charge for year  20
at 31 december 2006  25
  
charge for year  39
at 31 december 2007  64
  
carrying amounts  
at 31 december 2007  290
  
at 31 december 2006     221
  
at 1 january 2006     79
the amortisation charge is recognised in the research and development line item in the income statement
the directors consider the costs incurred on each project when determining the point at which they should commence and cease to capitalise 
development costs costs are capitalised when either an agreement has been reached with a partner to develop a specific project which will earn  
the group royalties once a product is in production or when there is an identified market that will result in the group generating future revenues for  
a product costs cease to be capitalised when the products are commercially produced and the group is generating revenues
amortisation periods are considered separately for development costs capitalised on individual projects amortisation periods in relation to current 
capitalised development costs range from five to ten years depending on the anticipated life of the products
stem cell sciences plc
annual report and accounts 2007 31 notes to the financial statements
continued
13 investments
group – investment in associate
    2007 2006
    £’000 £’000
cost  
at 1 january  498 528
effect of movements in foreign exchange 10 30
disposal 508 –
at 31 december – 498
  
share of postacquisition reserves  
at 1 january  214 182
unrealised gain on dilution of investments – 126
share of retained loss for the year 294 468
effect of movements in foreign exchange – 54
disposal 508 –
  – 214
carrying amount
at 31 december – 284
  
at 1 january 284 710
the investment in associate at 31 december 2006 related to an interest in stem cell sciences kk a company incorporated in japan the investment 
was sold during october 2007 the group’s share of loss in its equity accounted for investee for the year was £294000 2006 £468000 summary 
financial information for stem cell sciences kk not adjusted for the percentage ownership held by the group 
    2007 2006
    £’000 £’000
total assets – 1478
total liabilities – 288
equity – 1190
revenue 131 226
loss for the period  1225 1950
company – investment in subsidiaries
    2007 2006
    £’000 £’000
cost  
at 1 january and 31 december 7657 7 657
  
provisions  
at 1 january  7657 6947
provided during the year – 710
at 31 december 7657 7657
  
carrying amount  
at 31 december – –
  
at 1 january    – 710
stem cell sciences plc
annual report and accounts 2007 32 14 trade and other receivables
  group  company
  2007 2006 2007 2006
  £’000 £’000 £’000 £’000
trade receivables  161 78 – 51
other receivables  63 118 18 46
amounts due from subsidiary  – – 30 –
prepayments and accrued income  109 388 15 13
   333 584 63 110
15 deferred income
the group has been awarded a grant by the uk government the grant was conditional on the installation of certain plant and equipment and the 
ongoing use of said plant and equipment the plant and equipment is now installed and in operation and the grant recognised as deferred income  
is being amortised over the useful life of the equipment
16 trade and other payables
  group  company
  2007 2006 2007 2006
  £’000 £’000 £’000 £’000
trade payables  209 524 49 134
other payables  208 204 – –
amounts due to subsidiary  – – – 69
accruals and deferred income  252 371 105 212
 
   669 1099 154 415
17 share capital and reserves
share capital
  2007 2007 2006 2006
  number £’000 number £’000
issued ordinary shares of £001 each
at 1 january  22301195 223 22301194 223
issued for cash  11214954 112 1 –
at 31 december  33516149 335 22301195 223
all issued shares are fully paid on 13 april 2007 the company issued 11214954 shares for a consideration of £4251000 net of issue expenses of 
£03 million which have been charged directly to equity
at 31 december 2007 the authorised share capital comprised 50000049 ordinary shares of £001 each at 31 december 2006 the authorised share 
capital comprised 50000000 ordinary shares of £001 each and 27000000 deferred shares of £049 each on 23 may 2007 27000000 deferred 
shares of £049 each were subdivided and reclassified into 40 ordinary shares of £001 each
stem cell sciences plc
annual report and accounts 2007 33 notes to the financial statements
continued
17 share capital and reserves continued
foreign exchange reserve 
the foreign exchange reserve comprises all foreign exchange differences arising from the translation of the financial statements of the overseas 
subsidiary since the transition date to adopted ifrs the group has elected not to restate business combinations prior to the date of transition  
to adopted ifrs and cumulative translation differences for all foreign operations have been set to zero at 1 january 2006 
merger reserve
the merger reserve arose when the company was admitted to aim in 2005 and merger accounting which was permitted under applicable accounting 
standards at that time was adopted as this was before the date of transition to ifrs advantage has been taken of the provisions of ifrs 1 which allow 
this business combination not to be restated
capital redemption reserve
the capital redemption reserve arose through a capital reconstruction that took place during 2006 on 1 november 2006 a resolution was passed to 
subdivide each of the issued and unissued ordinary shares of £050 each in the capital of the company to one ordinary share of £001 each and one 
deferred share of £049 on 9 november 2006 the company issued one ordinary share for £046 in connection with a capital reorganisation of the 
company and used part of the proceeds received from that issue to buy back all the deferred shares which were in issue following the buyback  
of the deferred shares by the company all of the deferred shares were cancelled
18 share based payments
equity settled share option plans 
in previous years the group has established a number of share option schemes that entitle directors senior management and other employees to 
purchase shares in the company grants have been made of share options in the period from 2005 to date during 2007 share options were granted 
to directors senior management and employees as part of a longterm incentive scheme and further options were granted under existing schemes  
in accordance with these share option schemes options are exercisable at the market price of the shares at the date of grant
the terms and conditions of the grants outstanding at 31 december 2007 were as follows
  u napproved  emi u napproved 
arrangement emi scheme scheme scheme
   
nature of arrangement grant of share options grant of share options grant of share options
date of grant 24 june 2005 24 june 2005 24 june 2005
number of instruments granted 677263 487800 560725
exercise price £050 £050 £050
share price  £065 £065 £065
contractual life in years 7 4 7
vesting conditions immediate and graded  immediate and graded  immediate and graded
 vesting over 3 years vesting over 2 years vesting over 2 years
settlement shares shares shares
expected volatility 40 40 40
expected option life at date of grant years 6 4 6
risk free interest rate 463 463 463
expected dividend dividend yield 0 0 0
fair value per granted instrument determined at grant date £031 £024 – £028 £026 – £031
valuation method black – scholes black – scholes black – scholes
stem cell sciences plc
annual report and accounts 2007 34   share option    
arrangement emi scheme agreement emi scheme
   
nature of arrangement grant of share options grant of share options grant of share options
date of grant 19 june 2007 24 september 2007 24 september 2007
number of instruments granted 400000 174864 331075
exercise price £042 £042 £042
share price  £042 £035 £035
contractual life in years 4 4 4
vesting conditions graded vesting graded vesting graded vesting
 over 3 years over 4 years over 4 years
settlement shares shares shares
expected volatility 405 402 402
expected option life at date of grant years 7 7 7
risk free interest rate 600 630 630
expected dividend dividend yield 0 0 0
fair value per granted instrument determined at grant date £017 – £025 £011 – £016 £016
valuation method black – scholes black – scholes black – scholes
 
arrangement emi retention scheme emi retention scheme
  
nature of arrangement  grant of share options grant of share options
date of grant  18 december 2007 18 december 2007
number of instruments granted  100000 162500
exercise price  £050 £029
share price   £029 £029
contractual life in years  4 4
vesting conditions  graded vesting  graded vesting
  over 4 years over 4 years
settlement  shares shares
expected volatility  396 396
expected option life at date of grant years  7 7
risk free interest rate  599 599
expected dividend dividend yield  0 0
fair value per granted instrument determined at grant date  £010 £014 – £015
valuation method  black – scholes black – scholes
expected volatility was determined by calculating the historical volatility of the group’s share price since july 2005 when it was listed on aim  
the expected life used in the model has been adjusted based on management’s best estimate for the effects of nontransferability exercise 
restrictions and behavioural considerations
stem cell sciences plc
annual report and accounts 2007 35 notes to the financial statements
continued
18 share based payments continued
the number and weighted average exercise price of share options is as follows
 2007 2006
   weighted  weighted 
   average  average
   exercise  exercise
group  options price £ options price £
outstanding at 1 january  1833788 050 1797700 £050
granted during the year 1168259 041 108000 £057
forfeited during the year 66847 050 71912 £050
replaced during the year 174000 054 – –
expired during the year 25000 050 – –
outstanding at 31 december 2736200 047 1833788 £050
    
exercisable at 31 december  1772383 046 1326868 £050
the options outstanding at 31 december 2007 have an exercise price in the range of £029 to £050 and a weighted average contractual life of  
seven years
the group recognised total expenses of £115000 2006 £130000 relating to equity settled share based payment transactions in employee expenses
 2007 2006
   weighted  weighted 
   average  average
   exercise  exercise
company  options price £ options price £
outstanding at 1 january  1109455 051 1001455 050
granted during the year 919000 041 108000 057
forfeited during the year 174000 054 – –
expired during the year 25000 050 – –
outstanding at 31 december 1829455 046 1109455 051
    
exercisable at 31 december  1174856 047 811256 £050
the options outstanding at 31 december 2007 have an exercise price in the range of £029 to £050 and a weighted average contractual life of  
seven years
the company recognised total expenses of £71000 2006 £69000 relating to equity settled share based payment transactions in employee expenses
19 financial instruments
the group’s and the company’s financial instruments consist of cash and cash equivalents together with trade receivables and trade payables  
which arise directly from their operations the main purpose of these financial instruments is to finance the group’s and the company’s operations 
during the years ended 31 december 2007 and 2006 neither the group or the company used derivative instruments to hedge exposure to foreign 
exchange and interest rate risks arising from operational financing and investment activities the group and the company do not hold or issue 
derivative financial instruments for trading purposes
exposure to market risks which include currency and interest rate risk and credit risks arises in the normal course of the group’s and the  
company’s business
credit risk
management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis credit evaluations are performed on all 
customers requiring credit over a certain amount 
stem cell sciences plc
annual report and accounts 2007 36 counterparties for cash deposits are limited to financial institutions which have a high credit rating 
at the balance sheet date there were no significant concentrations of credit risk the maximum exposure to credit risk is represented by the carrying 
amount of each financial asset in the balance sheet as follows 
   group company
  2007 2006 2007 2006
  £’000 £’000 £’000 £’000
trade and other receivables  224 258 18 97
cash and cash equivalents  3607 2463 3350 2203
   3831 2721 3368 2300
all trade receivables were current at the year end there are no impairment allowances made against trade receivables in the group in the company 
amounts owed by subsidiaries of £5060000 have been fully impaired in previous years and are carried at a recoverable amount of £nil 
currency risk
the group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than british pounds the currencies 
giving rise to this risk are primarily australian dollars and us dollars
foreign exchange risk arises from transactions assets and liabilities and net investments in foreign operations the group does not use foreign 
exchange contracts to hedge its currency risk
the majority of the group’s revenues are denominated in us dollars the group’s operating costs are denominated in british pounds australian 
dollars and us dollars
   
in respect of monetary assets and liabilities held in currencies other than british pounds the group ensures that the net exposure is kept to an 
acceptable level by buying or selling foreign currencies at spot rates where necessary to address shortterm imbalances
the group has investments in foreign operations whose net assets are exposed to currency translation risk this currency exposure arises from 
the net assets of the group’s foreign operations denominated in australian dollars there is currently no requirement for borrowings therefore this 
exposure is not managed through borrowings denominated in australian dollars 
sensitivity analysis
a 5 strengthening of the british pound against the australian dollar and the us dollar at 31 december 2007 would have an immaterial impact on the 
group and company’s loss for the year
financial risk 
financial assets and financial liabilities by currency are set out below
  group company
  2007 2006 2007 2006
  £’000 £’000 £’000 £’000
    
british pounds trade and other receivables  41 146 1 77
us dollar trade and other receivables 103 – – –
australian dollar trade and other receivables 31 35 – –
british pounds cash and cash equivalents 4 2206 1 2188
australian dollar cash and cash equivalents 3409 212 3343 –
us dollar cash and cash equivalents 5 44 – 15
euro cash and cash equivalents 189 – 6 –
british pounds trade and other payables 571 1046 153 346
australian dollar trade and other payables 141 170 – –
  3070 1427 3198 1934
stem cell sciences plc
annual report and accounts 2007 37 notes to the financial statements
continued
19 financial instruments continued
the following significant exchange rates applied during the year
  average rate year end rate
  2007 2006 2007 2006
  £ £ £ £
    
british pound to australian dollar  2385 2446 2280 2483
interest rate risk
profile
the interest rate profile of the interestbearing financial instruments was
   group company
  2007 2006 2007 2006
  £’000 £’000 £’000 £’000
variable rate instruments
cash and cash equivalents  3607 2463 3350 2203
cash flow sensitivity analysis for variable rate instruments
an increase of one percentage point in interest rates would have an immaterial impact on the group’s profit before tax for the year ended  
31 december 2007
liquidity risk
neither the group nor the company has any financial liabilities
fair values
the fair values together with the carrying amounts shown in the balance sheet are as follows
  carrying fair carrying fair
  amount value amount value
  2007 2007 2006 2006
group  £’000 £’000 £’000 £’000
    
trade and other receivables  223 223 196 196
cash and cash equivalents  3607 3607 2463 2463
trade and other payables  669 669 1099 1099
   3161 3161 1560 1560
  carrying fair carrying fair
  amount value amount value
  2007 2007 2006 2006
company  £’000 £’000 £’000 £’000
    
trade and other receivables  48 48 84 84
cash and cash equivalents  3350 3350 2203 2203
trade and other payables  154 154 415 415
   3244 3244 1872 1872
the basis for determining fair values of the financial assets and liabilities disclosed in the table above is as follows
trade and other receivablespayables
the fair values of trade and other receivables and payables are estimated as the present value of future cash flows discounted at the market rate of 
interest at the balance sheet date as all are receivablepayable in less than one year the fair value is considered to equate to the carrying value
stem cell sciences plc
annual report and accounts 2007 38 capital management
the board’s policy is to maintain a capital base so as to maintain investor creditor and market confidence and to sustain future development of the 
business the board of directors monitors the levels of cash expenditure on all its research development and other activities the board seeks to 
ensure that there is adequate funding in place to allow the business to continue these activities with a view to developing additional revenue streams 
in future there are no externally imposed capital requirements on the company or its subsidiaries there have been no changes in the group’s 
approach to capital management during the year
20 operating leases 
leases as lessee 
total noncancellable operating lease rentals are payable as follows
    2007 2006
    £’000 £’000
less than one year    2851 2536
between one and five years    246676 239133
     249527 241669
the group leases its premises in the uk australia and the us under operating leases the uk edinburgh property lease is renewed annually  
the uk cambridge lease runs until 2011 with a break clause in 2009 the us lease runs until 2009 the property lease in australia runs for three 
years however there is a break clause in 2008 which allows the cessation of the lease at 31 december 2008
21 capital commitments 
at 31 december 2007 the group had no capital commitments 2006 no capital commitments the company had no capital commitments as  
at 31 december 2007 and 2006
22 related parties 
identity of related parties
the company hashad a related party relationship with its subsidiaries its associate see note 23 and with its directors
transactions with key management personnel
key management personnel are defined as the directors of the company and their remuneration is disclosed in note 7 to the financial statements
other related party transactions
during the year ended 31 december 2007 the company provided management services to its subsidiaries totalling £729000 2006 £914000  
no dividends were received from the subsidiaries in either year 
during the year ended 31 december 2007 the group sold products to its associate totalling £nil 2006 £185000 and received £nil 2006 £11000 
in respect of joint research activities carried out no amounts were due to or from the associate at 31 december 2007 and £8000 was owed to the 
group by the associate at 31 december 2006
during the year ended 31 december 2007 the group received consulting services amounting to £51000 2006 £16000 from itv consulting  
a company in which les webb a director of stem cells sciences plc is also a director
sale of products to related parties were made at the group’s usual list prices purchases were made at market price
the amounts outstanding are unsecured and will be settled in cash no guarantees have been given or received 
stem cell sciences plc
annual report and accounts 2007 39 notes to the financial statements
continued
23 group entities
 place of
 incorporation interest   principle
 and operation 2007 2006  activity
    
stem cells sciences uk limited scotland 100 100  scientific research
stem cell sciences holdings limited scotland 100 100  holding company
stem cells sciences aus pty ltd australia 100 100  scientific research
stem cell sciences kk japan – 2485  scientific research
24 explanation of transition to ifrs
this is the first year that the company has presented its financial statements under ifrs the following disclosures are required in the year of transition 
the last financial statements under uk gaap were for the year ended 31 december 2006 and the date of transition to ifrs was therefore 1 january 2006
reconciliation of consolidated income statement for year end 31 december 2006 
     restated 
   u k gaap ias 38 under ifrs
   £’000 £’000 £’000
revenue   742 – 742
cost of sales   157 – 157
gross profit   585 – 585
   
research and development   1197 142 1055
administrative expenses   2505 – 2505
other income   367 – 367
   
operating loss   2750 142 2608
net finance costs   178 – 178
share of results of associate   468 – 468
gain on dilution of equity accounted associate   – 126 126
loss before tax   3040 268 2772
taxation   62 – 62
loss for period   2978 268 2710
under uk gaap accounting policies research and development expenditure was charged to profit and loss account when incurred under ias 38 
intangible assets the group capitalises development expenditure that meets the criteria set out in the standard the group’s accounting policy in 
respect of research and development expenditure is set out in note 3 to these financial statements
under ifrs the gain on dilution of investment in an equity accounted associate is recognised in the income statement under uk gaap this dilution 
was dealt with as an adjustment to reserves
stem cell sciences plc
annual report and accounts 2007 40 24 explanation of transition to ifrs continued
reconciliation of equity as at 31 december 2006
    total effect restated
 u k ias 38 ifrs 1 of transition under
 gaap a b to ifrs ifrs
 £’000 £’000 £’000 £’000 £’000
      
noncurrent assets     
property plant and equipment 656 – – – 656
intangible assets – 221 – 221 221
investments accounted for using the equity method 284 – – – 284
  940 221 – 221 1161
current assets
trade and other receivables 584 – – – 584
current tax assets 62 – – – 62
cash and cash equivalents 2463 – – – 2463
  3109 – – – 3109
      
total assets 4049 221 – 221 4270
      
noncurrent liabilities
deferred income 111 – – – 111
current liabilities
trade and other payables 1099 – – – 1099
deferred income 43 – – – 43
total liabilities 1253 – – – 1253
net assets 2796 221 – 221 3017
capital and reserves 
share capital 223 – – – 223
share premium account 2297 – – – 2297
capital redemption reserve 10928 – – – 10928
foreign exchange reserve 144 – 25 25 119
merger reserve 1248 – – – 1248
retained earnings 9260 221 25 196 9064
total equity attributable to ordinary shareholders 2796 221 – 221 3017
stem cell sciences plc
annual report and accounts 2007 41 notes to the financial statements
continued
24 explanation of transition to ifrs continued
reconciliation of equity as at 1 january 2006
    total effect restated
 u k ias 38 ifrs 1 of transition under
 gaap a b to ifrs ifrs
 £’000 £’000 £’000 £’000 £’000
noncurrent assets
property plant and equipment 115 – – – 115
intangible assets – 79 – 79 79
investments accounted for using the equity method 710 – – – 710
 825 79 – 79 904
current assets
trade and other receivables 322 – – – 322
cash and cash equivalents 5227 – – – 5227
  5549 – – – 5549
total assets 6374 79 – 79 6453
noncurrent liabilities
trade and other payables – – – – –
current liabilities
trade and other payables 737 – – – 737
total liabilities 737 – – – 737
     
net assets 5637 79 – 79 5716
capital and reserves 
share capital 11151 – – – 11151
share premium account 2297 – – – 2297
foreign exchange reserve 25 – 25 25 –
merger reserve 1248 – – – 1248
accumulated profits 6538 79 25 54 6484
total equity attributable to ordinary shareholders 5637 79 – 79 5716
notes to the reconciliations of equity
a ias 38 intangible assets has resulted in the group capitalising development expenditure that meets the criteria set out in the standard  
the group’s accounting policy in respect of research and development expenditure is set out in note 3 to these financial statements
b the group has taken advantage of the exemption under ifrs 1 – first time adoption of international financial reporting standards to  
reset cumulative translation differences at the date of transition to zero
the transition to ifrs has not resulted in any changes to the company’s balance sheet at 1 january or 31 december 2006
a separate cash flow reconciliation has not been provided in the notes as all information relevant to understanding the cash flow statement has  
been included on the face of the statement transition to ifrs has resulted in the company disclosing a cash flow statement for the first time
stem cell sciences plc
annual report and accounts 2007 42 frequently asked questions
what are stem cells
stem cells are special cells with a unique growth characteristic  
they can make identical copies of themselves as well as grow into more 
specialised cell types for example blood stem cells found in the bone 
marrow can generate both red blood cells that can carry oxygen and 
white blood cells that can fight infection blood stem cells in the body 
continue the supply of blood cells for the life of a person
are there different types of stem cells
there are many different types of stem cells stem cells can be broadly 
divided into different types depending on where they are found
for example tissue stem cells are present in many tissues such as  
skin and liver tissue stem cells isolated from adult tissue are technically 
known as somatic stem cells but can broadly be considered as tissue  
or adult stem cells in contrast stem cells isolated from embryos are 
called embryonic stem cells
do all adult tissues have stem cells
stem cells do not reside in all tissues tissues that can repair themselves 
such as skin have abundant tissue specific stem cells however some 
tissues which are difficult to selfrepair such as heart muscle have very 
few stem cells
what is so special about embryonic stem cells
past scientific evidence has suggested that some adult stem cells  
such as nerve and blood stem cells may also have the ability to grow 
into other cell types while this would be an exciting prospect if it 
occurred on a regular basis this interpretation is not supported by  
recent scientific findings the growth and availability of the starting  
stem cell would still be a limiting factor 
where do embryonic stem cells come from
embryonic stem cells can be isolated from sevendayold embryos 
embryos at this stage are microscopic in size smaller than the fullstop 
at the end of this sentence and consist of a ball of approximately one 
hundred cells at this stage the embryo has only two types of cells  
those that make the animal or person and those which will make the 
tissues which connect the foetus to the mother 
human embryonic stem cells have been isolated from ivf embryos  
that have been donated by patients at the end of their treatment  
socalled ‘spare’ ivf embryos or created from donated eggs and 
sperm specifically for embryonic stem cell isolation
what are cord stem cells
cord stem cells are a type of blood stem cell that can be isolated  
in significant numbers from the placenta and umbilical cord of a  
newborn baby 
cord stem cells have been successfully collected and stored as frozen 
cells and then some years later used as a source of the baby’s own 
blood stem cells for transplantation
stem cells are special 
cells with a unique 
growth characteristic  
they can make identical 
copies of themselves as 
well as grow into more 
specialised cell types 
stem cell sciences plc
annual report and accounts 2007 43 frequently asked questions
continued
what are foetal stem cells
foetal stem cells are isolated from foetuses aborted during early 
pregnancy many different types of tissuespecific stem cells can be 
isolated from foetal tissue including some tissue stem cells that cannot 
be found in the adult
stem cells very similar to embryonic stem cells called embryonic germ 
cells have also been collected from foetal mouse tissue though the 
ability to establish equivalent human cell lines has not been proven
why are stem cells of such importance in medicine
many researchers believe that stem cells may revolutionise human 
medicine through their ability to make new cells to replace a patient’s 
diseased or damaged cells
the most promising use of stem cells may be to treat patients where  
the disease condition results from a loss of cells and the patient is 
unable to repair or replace the poorly functioning cells on its own 
currently incurable diseases such as diabetes parkinson’s disease 
spinal cord injury heart attack stroke and traumatic brain injury could 
all be treated by transferring new cells generated from stem cells  
to the patient
a very important benefit of stem cell therapy is that it is expected to 
provide cures for example transplanted insulinproducing cells will 
continue to produce insulin for the life of a diabetic
are stem cells currently being used to treat patients
the best example of stem cell based therapy is the transplantation  
of bone marrow stem cells for patients with leukaemia and other blood 
disorders another example of stem cell based therapy is the use of  
skin biopsies that are expanded in the laboratory to treat patients  
with severe burns
for technical reasons by far the majority if not all of cell therapies 
require or will dramatically benefit from growing stem cells in the 
laboratory before use the full promise of stem cell based therapy  
is yet to be realised as tissue stem cells cannot yet be grown well  
in the laboratory and the options available with human embryonic  
stem cells will need a great deal of further research and development 
which stem cells are most promising and why
to be useful in patient treatment stem cells need to be grown in the 
laboratory into specific cell types 
while stem cells isolated from foetal tissue umbilical cord blood and 
adult tissue may be used for cell therapy only embryonic stem cells  
can be grown in significant quantities in the laboratory and retain the 
ability to develop into any cell in the body other types of stem cells  
are restricted in the types of cells they can produce and are difficult  
to grow in the laboratory 
it is only through extensive research that the most effective means  
of providing cells for treatment will be identified
what are the limitations of using embryonic  
stem cells
several obstacles need to be overcome before embryonic stem  
cell based therapy is a realistic treatment option for patients
as embryonic stem cells have the potential to grow into any cell type in 
the body it must be ensured that the purified populations of specialised 
cells for patient therapy no longer contain any nonspecialised embryonic 
stem cells nonspecialised embryonic stem cells carry the risk of tumour 
formation following transplantation as they may continue to grow when 
implanted into the body
the possibility of tissue rejection must also be addressed like all 
transplantation procedures cells generated from embryonic stem  
cells will need to be tissuematched so that the patient will not reject  
the transplanted cells transplant recipients would most probably also 
require longterm antirejection treatments that contribute undesirable 
side effects 
one alternative might be to establish banks of embryonic stem cells 
however the number of embryonic stem cell lines required in order  
to provide meaningful benefit would be very large
another possibility is to use cloning techniques to create an embryo from 
a patient’s own cell and use this embryo to isolate embryonic stem cells 
embryonic stem cells isolated this way would share the same genetic 
makeup as the patient and therefore problems of donor matching and 
rejection would be avoided
further research will be required to address these limitations and  
to identify which option will provide the best clinical outcome
stem cell sciences plc
annual report and accounts 2007 44 what are some of the ethical issues related to 
embryonic stem cells and human embryo research
the principal objection to the use of embryonic stem cells is that a 
human embryo must be destroyed 
despite the possibility that stem cells isolated from embryos could offer 
enormous potential for improving the quality of life for people suffering 
from incurable diseases opponents of human embryo research claim  
no benefit can justify the destruction of an embryo 
while most people would agree that embryos are potential human 
beings and therefore entitled to be treated with respect many also 
believe that human embryos are not entitled to the full rights normally 
bestowed upon an actual person one example of this difference is 
evident in law in australia and other countries where abortion is legal
while it is true that all embryos have the potential to develop into a new 
person reproductive biology is very inefficient and not every embryo  
that is created will develop into an actual person
to date most human embryonic stem cell lines have been generated 
from donated ivf embryos in order to treat infertility more embryos than 
may be required are often created at the completion of their treatment 
ivf patients can either donate the ‘surplus’ embryos to another couple 
donate the embryos to research or discard the embryos 
every year around the world hundreds of ivf embryos no longer 
required by the patients are discarded most people view the destruction 
of these ‘surplus’ embryos negatively and many would rather see some 
form of beneficial outcome the use of embryos for embryonic stem cell 
isolation and the potential treatment of patients with incurable diseases is 
one potential use
a second objection revolves around the issue of creation of embryos for 
research recently human embryos have been created from donated 
eggs and sperm specifically for the isolation of embryonic stem cells 
this strategy is widely considered as ethically questionable as it involves 
the generation of a new genetically individual embryo purely for potential 
benefit to others it has also been suggested that cloning techniques could 
be used to create embryos for embryonic stem cell isolation 
this socalled therapeutic cloning approach does not require the 
creation of a new genetically distinct embryo by eggsperm fusion 
but rather produces embryonic cells that are copies of the patient 
this would ensure that the patient will not reject cells following 
transplantation 
yet another possibility is that animal eggs instead of human eggs  
could be used in therapeutic cloning this option is now regarded by 
most researchers as being technically unsound and a possible risk to  
the patient 
opponents view research as equivalent to destruction or death of the 
embryo even though cells isolated from such an embryo may have  
lifesaving potential for a patient
the ethical issues surrounding the use of human embryos are of significant 
concern and interest in modern society these issues need to be thoroughly 
and openly reviewed with wide community participation before defining 
legislation is enacted
how are different countries regulating human  
embryo research
human embryo research is viewed and regulated differently in different 
countries and even differently between states and territories within 
a country this ranges from progressive wellregulated legislation in 
the united kingdom to approved guidelines in japan and complete 
prohibition in germany
stem cell sciences plc
annual report and accounts 2007 45 defining the science
what are stem cells
stem cells are undifferentiated unspecialised cells which can divide 
to make copies of themselves or differentiate change to become 
specialised cells of the body such as muscle cells nerve cells or  
blood cells
there are two basic types of stem cells embryonic stem es cells  
and tissuespecific also called adult or somatic stem cells 
es cells derived from a preimplantation embryo can grow and 
differentiate into all specialised cell types found in the body and due 
to this ability are referred to as ‘pluripotent’ tissuespecific stem 
cells sourced from body tissue have a more restricted potential and 
can usually only differentiate into their own or related cell type and 
are referred to as ‘multipotent’ in the body these cells facilitate the 
replacement or repair of diseased or damaged cells in organs such  
as the gut skin brain or pancreas
embryonic stem cells
tissue specific stem cells
neural stem cells
adult stem cells
neurons
oligodendrocytes
astrocytes
myocytes
osteocytes
adipocytes
stem cell sciences 
through the 
development of its 
cell culture systems 
and technologies 
has established 
methodologies to 
produce safe robust and 
reproducible stem cells
stem cell sciences plc
annual report and accounts 2007 46 benefits of stem cells
stem cells are an important biological resource for the advancement 
of human medicine because they can potentially be grown in large 
quantities and yet still produce highly specialised cell types found in the 
body – in essence an unlimited laboratory grown supply of virtually any 
cell type stem cells can provide an important benefit to humans via 
gene and drug discovery
 testing the function of the large number of genes generated from  •	
the human genome project
 testing millions of potential new drugs in a ‘human environment’ •	
 reducing the need for animal testing •	
 studying disease onset and progression disease modelling •	
cell therapy
replacing diseased or damaged cells in patient tissues •	
correcting genetic disorders when combined with gene therapy •	
the stem cell challenge
the greatest challenge facing the application of stem cells in drug 
discovery and cell therapy is the limited quality and quantity of cells that 
are available for research today our objective is to achieve safe robust 
reproducible stem cell production in the laboratory on a large scale  
by utilising knowledge of those molecules and processes that control  
the growth and differentiation of normal stem cells in the body
today human and animal cells are already being applied in drug 
discovery but the cells currently in use are typically either laboratory 
grown cancerlike cells or tissuespecific cells isolated from human 
or animal donor tissues the use of cancerlike cells does not form an 
attractive template on which to test novel drugs unlike stem cells  
they are not ‘normal’ cells and are thought to be unrepresentative of the 
context in which the drug will act unless for cancer the utilisation of 
donor tissuespecific cells although representative is proving restrictive 
due to limitations in supply and variation between cell batches sourced 
from different donors only embryonic stem es cells and a few types  
of tissuespecific stem cells currently demonstrate robust stable growth 
in the laboratory
stem cell sciences through the development of its cell culture systems 
and technologies has established a methodology to solve this problem 
and produce safe robust and reproducible stem cells this is achieved 
via the development of proprietary stem cell culture growth media 
liquid stem cell culture growth formulations for optimal growth and 
differentiation of stem cells in contrast to current industry standards  
the company’s medium are serumfree and promote robust stem cell 
growth in the absence of ‘feeder’ cells helper cells added to cultures 
to promote stem cell growth via production of poorly defined growth 
factors the elimination of animal serum and feeder cells known sources  
of undesirable agents affecting stem cell performance and safety  
will provide scientists with a significant advantage in the future 
production of stem cells for clinical use
stem cells v tissue cells – the difference
stem cells 
unspecialised cells found in small numbers in either  •	
embryos or tissues 
can grow indefinitely in culture •	
primary source of all new cells in the body needed to replace •	
old diseased or injured cells throughout life
can provide an unlimited laboratory grown supply of specialised •	
tissue cells
 
specialised tissue cells
specialised cells isolated from organstissues eg nerve cells •	
muscle cells
very limited ability to grow in culture •	
limited or no ability to generate or replace dying cells in the body •	
limited by the quantity of cells originally isolated from a donor tissue •	
and cannot be expanded in the laboratory
cellbased  
therapies
drug  
discovery
stem cell sciences plc
annual report and accounts 2007 47 astrocytes 
one of the large neuroglia cells of neural tissues
cell 
the smallest structural unit of an organism that is capable of independent 
functioning consisting of one or more nuclei cytoplasm and various 
organelles all surrounded by a semi permeable cell membrane
cell therapy 
treatment in which stem cells of a specific cell type required to repair 
damaged or depleted adult cell populations or tissues are introduced  
or transplanted into a patient
clinical 
involving medical treatment practice observation or diagnosis
differentiate 
the process whereby a stem cell acquires the features of a specialised 
cell such as a heart liver or muscle cell
embryo 
in humans the developing organism from the time of fertilisation until the 
end of the eighth week of gestation when it becomes known as a foetus
embryonic stem cells or es cells 
pluripotent stem cells derived from the preimplantation threetofive 
day old embryo that have the potential to become any specialised cell 
type found in the body
gene 
the basic inheritable structural unit from which each specific protein 
produced by the body is derived
gene expression 
the conversion of genetic information encoded in a gene into either 
messenger rna mrna transfer rna trna or ribosomal rna rrna 
through a process called transcription transcription precedes translation 
of rna into protein
genetic engineering 
scientific alteration of the structure of genetic material in a living organism 
it involves the production and use of recombinant dna and has been 
employed to create bacteria that synthesise insulin and other human 
proteins and to change specific genes in cells and animals
growth factor 
a substance that affects the growth of a cell or an organism
multipotent 
stem cells can produce multiple cell types for example red and white 
blood cells but not all cell types
nervous system 
the system of cells tissues and organs that regulate the body’s responses 
to internal and external stimuli in vertebrates it consists of the brain  
spinal cord nerves ganglia and parts of the receptor and effector organs
neural 
of or relating to a nerve or the nervous system
neural cells
mature specialised cells of the nervous system including neurons 
astrocytes and oligodendrocytes
neural stem cell or ns cell 
a stem cell found in adult neural tissue that can replicate itself or give rise 
to mature cells of the brain neurons astrocytes and oligodendrocytes
neurons 
nerve cells the structural and functional unit of the nervous system  
a neuron consists of a cell body and its processes an axon and one  
or more dendrites neurons function by the initiation and conduction  
of impulses and transmit impulses to other neurons or cells by releasing 
neurotransmitters at synapses
ns technology 
also referred to as neural stem cell technology methods and tools  
to derive and grow selfrenewing neural stem cells obtained to date  
from mouse rat and human tissue
oligodendrocytes 
a cell that provides insulation to nerve cells by forming a myelin sheath 
around axons
parkinson’s disease 
a progressive nervous disease occurring most often after the age of 50 
associated with the destruction of brain cells that produce dopamine  
and characterised by muscular tremor slowing of movement partial 
facial paralysis peculiarity of gait and posture and weakness  
also called paralysis agitans shaking palsy
phase i 
the first safety test of a potential therapeutic in humans usually conducted 
in healthy volunteers
phase ii
early clinical pharmacology efficacy and safety trials conducted on 
a limited number of patients they include doseranging studies to 
establish an appropriate range of doses
phase iii 
major efficacy and safety trials in large numbers of patients in  
multiple centres
pluripotent 
ability of a single stem cell to develop into all different cell types of  
the body
preclinical 
prior to testing in humans
glossary
stem cell sciences plc
annual report and accounts 2007 48 reprogramming 
resetting the developmental clock of a nucleus for example resetting 
the developmental state of an adult differentiated cell nucleus so that it 
can carry out the genetic program of an early embryonic cell nucleus 
making all the proteins required for embryonic development
spinal cord 
the thick whitish cord of nerve tissue that extends from the medulla 
oblongata down through the spinal column and from which the spinal 
nerves branch off to various parts of the body
spinal cord injury 
damage in the spinal cord called myelopathy which can result in 
paraplegia or quadriplegia depending on the level of the damage  
within the spinal cord
stem cells 
unspecialised human or animal cells which can replicate themselves 
andor give rise to mature specialised cells eg blood cells
stem cell selection 
part of the group’s selection technology methods and tools for 
obtaining pure populations of stem cells and protected by the patent 
family as set out under paragraph 42 of the patent agent’s report in 
part iv of this document
tissue 
an aggregation of morphologically similar cells and associated 
intercellular matter acting together to perform one or more specific 
functions in the body 
tissuespecific stem cell
also known as adult or somatic stem cell an undifferentiated cell found 
in a differentiated tissue that can renew itself and with certain limitations 
differentiate to yield all the specialised cell types of the tissue from which 
it originated
u ndifferentiated
not having changed to become a specialised cell type
stem cell sciences plc
annual report and accounts 2007 49 secretary and advisers
secretary and registered office the company secretary
 stem cell sciences plc
 meditrina building 260
 babraham research campus
 cambridge
 cb22 3at
nominated adviser and broker collins stewart limited
 9th floor
 88 wood street
 london
 ec2v 7qr
auditors kpmg audit plc
 saltire court
 20 castle terrace
 edinburgh
 eh1 2eg
solicitors mcgrigors
 princes exchange
 1 earl grey street
 edinburgh
 eh9 3jq
registrars u k computershare investor services plc
 p0 box 859
 the pavilions
 bridgwater road
 bristol
 bs99 1xz
registrars australia computershare investor services pty ltd
 yarra falls
 452 johnston street
 abbotsford
 melbourne
 vic 3067
 australia
stem cell sciences plc
annual report and accounts 2007 50 notes
stem cell sciences plc
annual report and accounts 2007 51 notes
stem cell sciences plc
annual report and accounts 2007 52 stem cell sciences scs is an international research 
and development company focusing on the commercial 
application of stem cell biology technologies for  
drug discovery and regenerative medicine research  
stem cell sciences is now focusing on building  
revenues through the sale of products collaborative 
research and licensing deals with international 
biotechnology and pharmaceutical companies
we are focused on  
delivering value today 
from stem cell biology
scs llc usa
california usa
scs australia 
pty ltd
melbourne australia
cambridge uk
scs plc uk
stem cell sciences has a substantial portfolio of patents 
and patent applications in both adult and embryonic 
stem cell fields the company has been active in the 
stem cell research field since 1994 principally focused 
on technologies to grow differentiate and purify adult 
and embryonic stem cells these include technologies to 
permit the generation of highly purified stem cells and their 
differentiated progeny specialised tissue cell types for 
use in genetic pharmacological and toxicological screens 
moreover these technologies may be able to provide pure 
populations of appropriate cell types for transplantation 
therapies in the future
we are headquartered in the united kingdom and have 
operations in the usa and australia our shares are listed 
on the australian stock exchange asx stc and traded 
on the london aim market aim stem
scs plc uk
alastair riddell chief executive officer
registered address
meditrina building 260
babraham research campus
cambridge  cb22 3at
united kingdom
phone 44 01223 499160   
fax 44 01223 499178
scs llc usa
george murphy jr 
vice president business development
phone 1 415 495 7341  
fax 1 415 495 7345
scs australia pty ltd
david newton general manager
registered address
2nd floor building 75 strip
monash university 
wellington road
clayton victoria  3800 
australia  
phone 61 03 9905 0600  
fax 61 03 9905 0611 stem cell sciences plc  
meditrina building 260
babraham research campus
cambridge  cb22 3at
united kingdom 
telephone 44 01223 499160 
fax 44 01223 499178
wwwstemcellsciencescom
incorporated and registered in england and wales reg no 5455929
stem cell sciences plc annual report 2007
focused on the 
commercialisation of 
stem cell technologies
focused on the 
commercialisation of 
stem cell technologies
stem cell sciences plc  
annual report 2007


Summary:
 contents
 1  highlights of the year  
 2  chairman’s statement  
 4  chief executive’s review  
 6  financial review  
 8  board of directors
 10  corporate social responsibility 
 11  directors’ report
 13  statement of directors’ responsibilities
 14  independent auditors’ report
 1 5 consolidated balance sheet
 16 company balance sheet
 17 consolidated income statement
 18 consolidated statement of  
changes in equity
 19 company statement of changes in equity
 20 consolidated cash flow statement
 21 company cash flow statement
 22 notes to the financial statements
 43  frequently asked questions
 46  defining the science
 48  glossary
50  secretary and advisers
highlights of the year
major licensing deal with merck  co inc for the use of novel mouse •	
neural stem cell technology for research use providing scs a signing  
fee and milestone payments 
signing of a diabetes contract research agreement with a major •	
biopharmaceutical company to validate its suite of cell processing 
technologies for the scaled automated production of human embryonic 
stem cells hes and demonstrate the bulk production of cells relevant for 
diabetes research at the scs cambridge production facility 
launch of hescgro animal componentfree medium for human embryonic •	
stem cell hes research by millipore corporation under royalty paying licence 
from scs  
successful oversubscribed secondary listing on the australian stock •	
exchange raising au124 million £494 million in april 
securing eu funding for neuroscreen a programme that aims to discover •	
new cns disease drug candidates a total grant of €24 million over  
three years approximately €042 million to scs 
licensingin of several new technologies including •	
  
•	 	 r oc k 	  r h o  a s s o c ia t e d 	 k i na s e  	 i nhi bit or s 	 t o 	 bl o c k 	 c e l l 	 d e a t h 	 du r i n g	
transfer and scaleup from the institute of physical and chemical 
r e s e a r c h 	 o f 	 t h e 	 r i k e n 	 c e n t r e 	 f or 	 d e v e l opm e n t a l 	 b i o l o g y 	  k ob e  	 j a p a n  
	 •	 	 n o v e l	h u m a n	m u s c l e	c e l l s	f r o m	th e	s a n	r a f f a e l e	s c i e n ti fi c	i n s ti tu t e	
milan italy for drug discovery and toxicology applications 
granting of a broad us patent covering all methods of purifying any type  •	
of mammalian stem cell adult and embryonic via any introduced gene 
a p p o i n tm e n t	o f	s e a s o n e d	c e o 	d r	a l a s t a i r	r i d d e l l 	i n	n o v e m b e r  •	
initiation of restructuring programme starting with the divestment of shares in •	
s cs 	 k k 	 righ ts 	 t o 	 commer cialise 	 all 	 t e chnology 	 pr e viously 	 lice nsed 	 t o 	 s cs 	
k k 	 ha v e 	 be e n 	 r e tur ned  	 a lso 	 lice nsed 	 their 	 neural 	 st e m 	 ns  	 ce ll 	 t e chnolog y  	
for both research and stem cell based therapies on a global basis
 turnover £06 million 2006 £07 million
	 g r o s s	p r o fi t	£ 0  5	m i l l i o n	 2 0 0 6 	£ 0  6	m i l l i o n 
	 ne t	l o s s	£ 3  5	m i l l i o n	 2 0 0 6 	£ 2  7	m i l l i o n 
 loss per share of 116p 2006 122p
  cash balance of £36 million at  
3 1	d e ce m b e r	2 0 0 7	 2 0 0 6 	£ 2  5	m i l l i o n 
financial highlights
stem cell sciences plc
annual report and accounts 2007 1