MEMPHASYS LIMITED. — Interim / Quarterly Report 2012

Feb 28, 2012

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FOR IMMEDIATE RELEASE

NuSep announces Half Year Profit

Sydney, Australia 29[th] February 2012 - NuSep (ASX: NSP) is pleased to report to the market that it has achieved a net profit of $25,147 for the half year to 31[st] December 2011. This is compared to a net loss of $538,330 for the same period in 2010.

31 December 2011 summary-

Sales Total Revenue Net Profit

Total Assets Net Assets

$1,070,245 up 102% to prior year $1,846,448 up 42% to prior year $25, 147 up 2,241% to prior year $13,940,733 up 32% $11,421,893 up 63%

The reported net profit of $25,147 on an EBITDA basis translates to a profit of $389,886 for the half year to 31[st] December 2011. This result was achieved in spite of the negative foreign exchange movement against the US$ impacting on US sales.

Dr Hari Nair, NuSep’s Managing Director added, “This result is a significant improvement to the prior year and the company is also looking at launching a number of new products during the year including the release of an enhanced ProteoIQ”.

Mr John Manusu, NuSep’s Executive Chairman added, “The Company is in the process of finalising funding for the PrIME Biologics operations in Singapore”.

See the attached appendix 4D and financial reports.

For more information please contact:

Contact: Tom Rowe Company Secretary +61 2 8415 7300 tom.rowe@nusep.com

About NuSep

NuSep (ASX: NSP) is a publicly listed life sciences company that sells products into the global BioSeparations market. NuSep recently acquired BioInquire which developed the ProteoIQ software enabling NuSep to offer a total Proteomics solution from Fraction to Function . The company has offices in both Sydney Australia and Atlanta, USA.

Postal Address P.O. Box 823 Lane Cove NSW 1595

Contact Details Email info@nusep.com Telephone +61 2 8415 7300 Web www.nusep.com Facsimile +61 2 8415 7399 ABN 33 120 047 556

NuSep Holdings Ltd 324 Burns Bay Rd Lane Cove NSW 2066

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With a 30 year heritage in biological separations, NuSep has forged a world class reputation for its innovative yet simple biological separation techniques including the world’s first IVF sperm separation device. In short NuSep has redefined the BioSeparations market through innovation and simplification.

NuSep’s world renowned research team has developed an extensive portfolio of patented products. In all, NuSep currently manufactures, distributes and sells 55 products to customers in the USA, Europe, Asia and Australia.

NuSep Products:

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• Gels – NuSep manufactures and sells precast gels including the innovative nUView Gels, which can be visualised 2 minutes after use.

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• Separation Instruments – NuSep has developed two unique biological separation instruments. The ProteomeSep was released in 2009 and can separate biological samples into 8 fractions for use in the proteomic market. The SpermSep separates sperm for fertility treatments such as IVF.

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• Proteomics Software – NuSep offers the unique ProteoIQ software for the analysis of complex mass spec samples. This software is also designed to identify bio markers.

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• Biological Products – NuSep supplies research grade biological products manufactured using its unique separation technologies. These products include human IgG and Albumin .

For more information about NuSep please visit the company’s website www.NuSep.com

About PrIME Biologics Pte Ltd

PrIME Biologics is a Singapore based biotech company that has developed a disposable procedure for the processing of plasma proteins. PrIME Biologics is currently a wholly owned subsidiary of NuSep Holdings Limited (ASX: NSP). PrIME Biologics process is based on the Pr eparative I solation by M embrane E lectrophoresis (PrIME) technology developed by NuSep. PrIME provides disposable modular processing that is ‘electronically’ driven membrane fractionation.

The PrIME process increases product yields to over 90% relative to the existing process 50% while increasing product safety. Further, PrIME Biologics process can produce multiple plasma products in hours compared to days, which is required by the current manufacturers.

The initial application for the PrIME process will be the Currently Unprocessable Plasma which represents approximately 50% of all the plasma collected in many countries.

NuSep Holdings Ltd Half Year Report 31 December 2011

Appendix 4D

Half year report

Name of entity
NuSep Holdings Ltd
ABN 33 120 047 556	Financial half year ended:
33 120 047 556	31 DECEMBER 2011

For announcement to the market

For announcement to the market	For announcement to the market	For announcement to the market	For announcement to the market
$A'000
Sales Up 102% to 1,070 Total Revenues Up 42% to 1,846 Profit from ordinary activities after tax attributable to members Up 2,241% to 25 Net loss for the period attributable to members Up 2,241% to 25
Dividends (distributions)		Amount per security	Franked amount per security
Final dividend		Nil	Nil
Previous corresponding period		Nil	Nil
Record date for determining entitlements to the dividend, Brief explanation of any of the figures reported above: Refer attached press release and notes to the accounts.	N/A

NTA backing	31 December 2011	31 December 2010
Net tangible asset backing per ordinary security	2.4 cents	1.7 cents

31 December 2011 Appendix 4D

NuSep Holdings Ltd and its Controlled Entities ABN 33 120 047 556

Interim Financial Report for the half-year ended 31 December 2011

NuSep Holdings Ltd and its Controlled Entities Financial report 31 December 2011

Contents
Directors’ Report	3
Consolidated Statement of Comprehensive Income	4
Statement of Financial Position	5
Consolidated Statement of Changes in Equity	6
Consolidated Cash Flow Statement	7
Notes to the Consolidated Financial Statements	8 – 14
Directors’ Declaration	15
Auditor’s Independence Declaration	16
Independent Review Report to the Members	17 - 19

2

NuSep Holdings Ltd and its Controlled Entities

Directors’ Report

The Directors submit their report for the consolidated entity consisting of NuSep Holdings Ltd and its controlled entities for the half-year ended 31 December 2011.

Directors

Unless indicated otherwise, the following persons were Directors of NuSep Holdings Ltd during the whole of the half-year and until the date of this report:

John Manusu (Executive Chairman) Dr Hari Nair (Managing Director) Iain Howard Sorrell (Non-executive Director) William Spee (Non-executive Director)

The following persons were Directors of NuSep Holdings Ltd from the 10th of October 2011 and until the date of this report unless indicated otherwise:

David Roffe (Non-executive Director) Ward Wescott (Non-executive Director) John O'Connor (Non-executive Director) (resigned 19 February 2012)

REVIEW OF OPERATIONS

For the half-year to 31 December 2011, the company has reported a total income of $1,846,448 which is a 42% improvement with respect to the same period in the previous financial year. The company reported a net profit of $25,147 for the period. As at 31 December 2011 the consolidated entity had net current assets of $1,040,588. The company raised $1.9m under the SPO in August 2011. Further to this share issue, a shareholder exercised 12.5m 15¢ share options in November 2011. The company has only received $50,000 of the $1,893,404 receivable for this share issue as at the date of this report, however the directors expect the funds will be received by 31 March 2012. Refer to note 1 (c) for additional information in respect of the options exercised.

AUDITOR’S INDEPENDENCE DECLARATION

The lead auditor’s independence declaration under section 307C of the Corporations Act 2001 is set out on page 16 for the half-year ended 31 December 2011.

This report is signed in accordance with a resolution of the Board of Directors.

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John Manusu Chairman

Sydney 29 February 2012

3

NuSep Holdings Ltd and its Controlled Entities

Consolidated Statement of Comprehensive Income For the half-year ended 31 December 2011

	CONSOLIDATED Half-year December 2011 $	CONSOLIDATED Half-year December 2010 $
Continuing operations Revenue Cost of sales Gross profit Other income Government grant Interest Marketing expenses General and administration expenses Finance cost expenses Profit/(loss) before income tax Income tax expense Profit/(loss) after tax from continuing operations Net Profit/(loss) for the period Net profit/(loss) attributable to members of parent Other comprehensive income/(expense) Exchange translation difference Other comprehensive income/(expense) from continuing operations for the period Total comprehensive income/(loss) for the period Earnings per share – Basic earnings/(loss)per share – Diluted earnings/(loss)per share	1,070,245 (532,736) 537,509 769,087 7,116 (466,508) (803,389) (18,668) 25,147 - 25,147 25,147 25,147 (11,329) (11,329) 13,818 Cents 0.03 0.03	528,550 (414,201)
		114,349 751,063 22,559 (514,269) (910,712) (1,320)
		(538,330) -
		(538,330)
		(538,330)
		(538,330)
		(21,554)
		(21,554)
		(559,884)
		Cents (0.88) (0.88)

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

4

NuSep Holdings Ltd and its Controlled Entities

Statement of Financial Position As at 31 December 2011

Notes	CONSOLIDATED As at 31 December 2011 $	CONSOLIDATED As at 30 June 2011 $
CURRENT ASSETS Cash and cash equivalents Trade and other receivables 4 Inventories Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Financial assets Property, plant and equipment Intangible assets 6 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Short-term provisions Other liabilities TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Other liabilities Long-term provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 3 Reserves Retained losses TOTAL EQUITY	41,686 2,811,357 585,950 37,181 3,476,174 300,000 1,384,124 8,780,435 10,464,559 13,940,733 2,096,618 210,540 128,428 2,435,586 - 83,254 83,254 2,518,840 11,421,893 26,304,145 1,091,203 (15,973,455) 11,421,893	29,009 825,720 426,740 34,343
		1,315,812
		300,000 1,564,390 7,391,062
		9,255,452
		10,571,264
		2,914,916 217,351 -
		3,132,267
		377,286 66,628
		443,914
		3,576,181
		6,995,083
		21,891,153 1,102,532 (15,998,602)
		6,995,083

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

5

NuSep Holdings Ltd and its Controlled Entities

Consolidated Statement of Changes in Equity For the half-year ended 31 December 2011

Consolidated Group Balance at 30 June 2011 Profit for the period Currency translation difference Total comprehensive income for the period Issue of share capital Transaction costs on share issue Cost of share based payment Balance 31 December 2011	Issued Capital Foreign currency translation Reserve Share options Reserve Financial Assets Reserve Accumulated Losses Total Equity $ $ $ $ $ $ 21,891,153 103,352 235,617 763,563 (15,998,602) 6,995,083 - - - - 25,147 25,147 - (11,329) - - - (11,329)
	- (11,329) - - 25,147 13,818 4,658,959 - - - - 4,658,959 (245,967) - - - - (245,967) - - - - - -
	26,304,145 92,023 235,617 763,563 (15,973,455) 11,421,893

Consolidated Group Balance at 30 June 2010 Loss for the period Currency translation difference Total comprehensive income for the period Issue of share capital Transaction costs on share issue Shares buy-back Revaluation of Investment Balance 31 December 2010	Issued Capital Foreign currency translation Reserve Share options Reserve Financial Assets Reserve Accumulated Losses Total Equity $ $ $ $ $ $ 21,359,095 12,268 235,617 913,563 (9,677,505) 12,843,038 (538,330) (538,330) (21,554) (21,554)
	(21,554) (538,330) (559,884) 1,890,458 1,890,458 (55,688) (55,688) (20,898) (20,898) (150,000) (150,000)
	23,172,967 (9,286) 235,617 763,563 (10,215,835) 13,947,026

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

6

NuSep Holdings Ltd and its Controlled Entities

Consolidated Cash Flow Statement For the half-year ended 31 December 2011

	CONSOLIDATED Half-year 31 December 2011 $	CONSOLIDATED Half-year 31 December 2010 $
Cash flows from operating activities Receipts from customers Payments to suppliers and employees Government grants Interest received Finance costs Net cash flows used in operating activities Cash flows from investing activities Purchase of property, plant and equipment Purchase of other non-current assets Redemption of term deposit Net cash flows used in investing activities Cash flows from financing activities Proceeds from issue of shares Share issue costs Shares buy-back Proceeds from borrowings Repayment of borrowings Net cash flows provided by financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of the half-year	908,179 (2,133,371) 749,684 7,117 (17,020) (485,411) (17,210) (1,532,893) - (1,550,103) 2,275,231 (245,967) (466) 124,493 (105,100) 2,048,191 12,677 29,009 41,686	1,160,620 (2,384,507) 1,079,257 19,684 (1,320)
		(126,266)
		(494,914) (653,084) (31,510)
		(1,179,508)
		1,962,461 (55,688) (5,790) - -
		1,900,983
		595,209 1,200,641
		1,795,850

The above consolidated cash flow statement should be read in conjunction with the accompanying notes.

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NuSep Holdings Ltd and its Controlled Entities Notes to Financial statements For the half-year ended 31 December 2011

1. Basis of preparation

The half-year consolidated financial statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standard AASB 134: Interim Financial Reporting. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards.

This interim financial report is intended to provide users with an update on the latest annual financial statements of NuSep Holdings Ltd and its controlled entities (the Group). As such, it does not contain information that represents relatively insignificant changes occurring during the half-year within the Group. It is therefore recommended that this financial report be read in conjunction with the annual financial statements of the Group for the year ended 30 June 2011, together with any public announcements made during the half-year.

The same accounting policies and methods of computation have been followed in this interim report as were applied in the most recent annual financial statements except for the adoption of the following new and revised Accounting Standards.

Accounting Policies

a) Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by NuSep Holdings Ltd as at 31 December 2011 and the results of all controlled entities for the period then ended. NuSep Holdings Ltd and its controlled entities together are referred to in this financial report as the Group.

A controlled entity is any entity over which NuSep Holdings Ltd has the power to govern the financial and operating policies so as to obtain benefits from its activities. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are considered.

All inter-company balances and transactions between entities in the consolidated group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.

b) Going Concern

The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business.

As disclosed in the financial statements, the company made a net profit of $25,147 for the half year to 31 December 2011 and had net cash outflows from operating activities of $485,411, net cash outflows from investing activities of $1,550,103 and net cash inflow from financing activities of $2,048,191 for the half year ended 31 December 2011. As at that date the consolidated entity had net current assets of $1,040,588. The ability of the company and consolidated entity to continue as going concerns is dependent on a combination of a number of factors the most significant of which is the ability of the company to recover the $1,893,404 unpaid share capital and/or to raise additional capital in the following 12 months and/or the ability of the company to achieve its projected cash collections for the 2012 financial year. These factors indicate significant uncertainty as to whether the company and consolidated entity will continue as going concerns and therefore whether they will realise their assets and extinguish their liabilities in the normal course of business and at the amounts stated in the financial report.

8

NuSep Holdings Ltd and its Controlled Entities Notes to Financial statements For the half-year ended 31 December 2011

The Directors believe that there are reasonable grounds to believe that the company and consolidated entity will be able to continue as going concerns, after consideration of the following factors:

• The company has raised $4.8m as proceeds from issue of shares since 1 July 2010 including $2.3m raised during the half year to 31 December 2011.

• A shareholder exercised 12,622,691 15¢ share options in November 2011. As disclosed in the directors’ report and Note 1 (c), $1,843,404 is yet to be received for the issue of these shares. The directors expect the funds will be received by 31 March 2012.

• $1m Singapore Economic Development Board loan facility.

• Management has reviewed the company and consolidated entity’s cashflow requirements and has satisfied themselves that there are adequate resources in place to meet the planned operational and development activities for at least 12 months following the date of this report.

Accordingly, the Directors believe that the company and consolidated entity will be able to continue as going concerns and that it is appropriate to adopt the going concern basis in the preparation of the financial report.

The financial report does not include any adjustments relating to the amounts or classification of recorded assets or liabilities that might be necessary if the company and consolidated entity do not continue as going concerns.

c) Critical Accounting Estimates and Judgements

The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group.

Key Estimates

Impairment of Intangible Assets

The group assesses impairment at each reporting date by evaluating conditions and events specific to the group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions.

With respect to cashflow projections for Intangible Assets, growth rates of 30-40% have been factored into valuation models for the next five years on the basis of management’s expectations around the Group’s continued ability to capture market share from competitors and open new markets for its products. Impairment testing was carried out for the 30 June 2011 financial year end resulting in impairment losses of $6,055,873. Actual results to December 2011 are lower than those used in those projections in the impairment testing at 30 June 2011. The directors have not considered it necessary to change their projections or assumptions used, and no further impairment testing was undertaken for the half-year ended 31 December 2011.

Recoverability of Other Receivables

On 25 November 2011 a shareholder exercised 12,622,691 15¢ share options expiring on 31 March 2011. On the date of exercise the shareholder provided a copy of a cheque payable to the company for USD$1,701,403.65 to settle this transaction. The shareholder Mr Goh was to hand deliver the original cheque to the company on 30 November 2011.

On 30 November 2011 the company did not receive the cheque payment and commenced negotiating with Mr Goh for the payment of the debt. The company has a promissory note for the outstanding debt of $1,843,404. The promissory note is due on 31 March 2012. At the date of this report $50,000 of this debt had been paid. The Directors expect settlement of the debt by 31

9

NuSep Holdings Ltd and its Controlled Entities Notes to Financial statements For the half-year ended 31 December 2011

March 2012 and if not settled will commence recovery proceedings. At 31 December 2011 this is reflected as other receivables in the Statement of Financial Position.

As stated in the company’s 30 June 2011 financial statements, a claim has been filed against NxGen Pharmaceuticals Pty Limited under the terms of the Implementation Deed dated 28 November 2008 for the costs related to the NxGen acquisition by NuSep. Management continues to rely on expert advice as to the ability of the recovery of this claim.

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NuSep Holdings Ltd and its Controlled Entities Notes to Financial statements For the half-year ended 31 December 2011

2. Operating Segments

Segment performance

Half-year ended 31 December 2011 Revenue from sales or services Revenue from outside the operating activities Total Segment Revenue Total Segment Profit/(Loss) Half-year ended 31 December 2010 Revenue from sales or services Revenue from outside the operating activities Total Segment Revenue Total Segment Profit/(Loss)	Consumable products Separations Software Consolidated $ $ $ $
	1,248,914 367,070 223,348 1,839,332 7,116 - - 7,116
	1,256,030 367,070 223,348 1,846,448
	29,819 184,142 (188,814) 25,147
	Consumable products Separations Software Consolidated $ $ $ $
	578,844 496,947 203,822 1,279,613 22,559 - - 22,559
	601,403 496,947 203,822 1,302,172
	(556,360) 199,524 (181,944) (538,330)

Segment assets Opening balance 30 June 2011 Additions Closing balance 31 December 2011	Consumable products Separations Software Consolidated $ $ $ $ 4,045,345 3,280,626 3,245,293 10,571,264 1,558,104 1,553,349 258,016 3,369,469
	5,603,449 4,833,975 3,503,309 13,940,733

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NuSep Holdings Ltd and its Controlled Entities Notes to Financial statements For the half-year ended 31 December 2011

3. Issued Capital

(a) Share Capital Ordinary Shares – fully paid	Half-year 31 December 2011 Full-year 30 June 2011 Half-year 31 December 2011 Full-year 30 June 2011 Shares Shares $ $ 107,900,062 73,051,172 26,304,145 21,891,153

• (b) Movements in ordinary share capital of the company during the period were as follows:

Balance at 1 July Share issue under share placement/ offer Share issue BioInquire Share buyback Share issue in lieu of fees Options exercised (i) Conversion convertible notes Less - transaction costs arising on share issues Balance at 31 December	31 December 2011 30 June 2011 $ $ 21,891,153 19,765,176 2,247,127 1,905,458 116,846 375,100 - (20,898) 25,676 - 1,894,310 - 375,000 -
	26,550,112 22,024,836
	(245,967) (133,683)
	26,304,145 21,891,153

• (i) As reflected in Note 1 (c), and note 4 below, the share issue price of $1,893,404 had not been received as at 31 December 2011, and only $50,000 has been received subsequent to year end.

Balance at 1 July Share issue under share placement/ offer Share issue BioInquire Share buyback Share issue 24 Jan 2011 Share issue in lieu of fees Options exercised Conversion convertible notes Balance at 31 December	31 December 2011 30 June 2011 Number of Shares Number of Shares 73,051,172 57,780,720 20,471,267 8,972,513 508,024 1,631,024 - (94,990) (2,694,392) 4,761,905 186,368 - 12,627,623 - 3,750,000 -
	107,900,062 73,051,172

12

NuSep Holdings Ltd and its Controlled Entities Notes to Financial statements For the half-year ended 31 December 2011

4. Current Assets - Trade Receivables

Trade receivables Other receivables	31 December 2011 30 June 2011 $ $ 266,397 109,812 2,544,960 715,908
	2,811,357 825,720

Included in other receivables is $1,893,404 that relates to 12,622,691 shares issued at 15¢ in November 2011. $50,000 of this debt was received subsequent to year end. Refer to note 1 (c) for additional information in this regard.

5. Research & Development Expenses

Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably. Development costs have a finite life and are amortised on a systematic basis matched to the future economic benefits over the useful life of the project.

6. Non-Current Assets – Intangible Assets

Internally developed and acquired through acquisition - at cost Internally developed in the period Impairment charges Less: accumulated amortisation Total intangible assets	31 December 2011 30 June 2011 13,949,583 12,800,623 1,532,892 1,148,960 (6,055,873) (6,055,873) (646,167) (502,648)
	8,780,435 7,391,062

Reconciliations

Reconciliations of the carrying amounts of intangible assets at the beginning and end of the current financial year are set out below.

30 June 2011 Carrying amount at 1 July 2010 Internally developed at cost Impairment charges Amortisation expense Carrying amount at 30 June 2011 31 December 2011 Carrying amount at 1 July 2011 Internally developed Amortisation expense Carrying amount at 31 December 2011	$ 12,324,820 1,624,763 (6,055,873) (502,648)
	7,391,062
	$ 7,391,062 1,532,892 (143,519)
	8,780,435

Intangible assets have finite useful lives. Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately. The following useful life is being used in the calculation of amortisation:

• Internally developed capitalised development - 20 years; and

13

NuSep Holdings Ltd and its Controlled Entities Notes to Financial statements For the half-year ended 31 December 2011

• Capitalised licenses acquired through business combination - 20 years.

7. Events Subsequent to Reporting Date

Subsequent to the end of 31 December 2011, no matter or circumstance has arisen that has significantly affected, or may significantly affect:

• (a) The consolidated entity’s operations in future financial years, or

• (b) The results of those operations in future financial years, or

• (c) The consolidated entity’s state of affairs in future financial years.

8. Contingent Liabilities

There has been no change in contingent liabilities since the last annual reporting date.

14

NuSep Holdings Ltd and its Controlled Entities Notes to Financial statements For the half-year ended 31 December 2011

Directors’ Declaration

The directors of the company declare that:

1. The financial statements and notes, as set out on pages 4 to 14 are in accordance with the Corporations Act 2001, including:

2. (a) complying with Accounting Standard AASB 134 Interim Financial Reporting; and

3. (b) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2011 and of its performance for the half-year ended on that date.

4. In the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

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John Manusu Chairman

Sydney 29 February 2012

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RSM Bird Cameron Partners Level 12, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001 T +61 2 9233 8933 F +61 2 9233 8521

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the review of the financial report of NuSep Holdings Ltd for the half year ended 31 December 2011, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

• (i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• (ii) any applicable code of professional conduct in relation to the review.

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RSM BIRD CAMERON PARTNERS

Chartered Accountants

G N SHERWOOD Partner

Sydney, NSW Dated: 29 February 2012

RSM Bird Cameron Partners is an independent member firm of RSM International, an affiliation of independent accounting and consulting firms. RSM International is the name given to a network of independent accounting and consulting firms each of which practices in its own right. RSM International does not exist in any jurisdiction as a separate legal entity.

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Liability limited by a Major Offices in: scheme approved Perth, Sydney, Melbourne, under Professional Adelaide and Canberra Standards Legislation ABN 36 965 185 036

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RSM Bird Cameron Partners Level 12, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001 T +61 2 9233 8933 F +61 2 9233 8521

INDEPENDENT AUDITOR’S REVIEW REPORT

TO THE MEMBERS OF

NUSEP HOLDINGS LTD

Report on the Half-Year Financial Report

We were engaged to review the accompanying half-year financial report of NuSep Holdings Ltd which comprises the statement of financial position as at 31 December 2011, the statement of comprehensive income, statement of changes in equity and cash flow statement for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the half-year end or from time to time during the half-year.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on conducting the review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity. Because of the matters described in the Bases for Disclaimer of Conclusion paragraphs, however, we were not able to obtain sufficient appropriate evidence to provide a basis for a review conclusion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of NuSep Holdings Ltd, would be in the same terms if given to the directors as at the time of this auditor's review report .

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RSM Bird Cameron Partners is an independent member firm of RSM International, an affiliation of independent accounting and consulting firms. RSM International is the name given to a network of independent accounting and consulting firms each of which practices in its own right. RSM International does not exist in any jurisdiction as a separate legal entity.

Liability limited by a Major Offices in: scheme approved Perth, Sydney, Melbourne, under Professional Adelaide and Canberra Standards Legislation ABN 36 965 185 036

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Bases for Disclaimer of Conclusion

Intangible Assets

Included in Note 6, Intangible Assets, in the Statement of Financial Position are finite-life intangible assets carried at amortised cost of $7,885,945. The economic performance of these assets to date has been worse than expected. Under these conditions, which are an indicator of impairment, AASB 136 Impairment of Assets requires impairment testing to be performed, to determine whether any impairment loss has been incurred. The ability of the consolidated entity to successfully develop these assets and realise their value is contingent on future events, the outcome of which, at the date of this report, cannot presently be determined. These contingencies indicate the existence of a material uncertainty, which may cast significant doubt about the consolidated entity’s ability to realise the value of these assets. An impairment test has not been performed by management, which is a departure from Australian Accounting Standards.

Also included in Note 6, Intangible Assets in the Statement of Financial Position are $894,490 of capitalised development costs in respect of finite life intangible assets for Prime Biologics Pte Limited incorporated in Singapore. Included in these capitalised costs is material expenditure that does not meet the definition development costs under AASB138 Intangible Assets and, accordingly should have been recognised as an expense in the statement of comprehensive income in the period under review. Management has not provided satisfactory explanations in respect of all of the capitalised expenditure, nor has it quantified the value of the capitalised costs that should have been expensed.

As a result of these factors we were unable to obtain sufficient appropriate review evidence to support the carrying value of a total $8,780,435 reflected as an intangible asset at 31 December 2011. Had we been able to complete our review in respect of the intangible assets, matters might have come to our attention indicating that adjustments might be necessary to these amounts to the half-year financial report.

Recoverability of Other Receivables

We draw attention to Note 1(c), Note 4, and Note 6 in the financial report, which indicate that other receivables includes $1,893,404 in respect of 12,622,691 shares that were issued at $0.15¢ on 25 November 2011, the payment for which was still outstanding as at 31 December 2011, and remains substantially outstanding at the date of this report which may indicate significant uncertainty as to the recoverability of this asset Further information in respect of this transaction, and managements judgement in this regard is provided in note 1 (c) of the half-year report.

Significant Uncertainty Regarding Going Concern

We draw attention to Note 1(a) in the financial report, which indicates that the consolidated entity made a net profit of $25,147 for the half year to 31 December 2011 and had net cash outflows from operating activities of $485,411, net cash outflows from investing activities of $1,550,103 and net cash inflow from financing activities of $2,048,191 for the half year ended 31 December 2011. As at that date the consolidated entity had net current assets of $1,040,588. The ability of the consolidated entity to continue as a going concern is dependent on a combination of a number of factors the most significant of which is the ability of the consolidated entity to recover the $1,893,404 unpaid share capital and/or to raise additional capital in the following 12 months and/or the ability of the consolidated entity to achieve its projected cash collections for the 2012 financial year.

These conditions, along with other matters as set forth in Note 1(a), indicate the existence of a material uncertainty which may cast significant doubt about the consolidated entity’s ability to continue as a going concern and therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business.

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RSM Bird Cameron Partners

Level 12, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001 T +61 2 9233 8933 F +61 2 9233 8521

Disclaimer of Conclusion

Because of the significance of the matters described in the Bases for Disclaimer of Conclusion paragraphs, we have not been able to obtain sufficient appropriate evidence to provide a basis for a review conclusion. Accordingly, we do not express a conclusion as whether anything has come to our attention that causes us to believe that the half-year financial report of NuSep Holdings Ltd is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2011 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

RSM BIRD CAMERON PARTNERS

Chartered Accountants

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RSM BIRD CAMERON PARTNERS

Chartered Accountants

G N SHERWOOD

Partner

Sydney, NSW Dated: 29 February 2012

Liability limited by a Major Offices in: scheme approved Perth, Sydney, Melbourne, under Professional Adelaide and Canberra Standards Legislation ABN 36 965 185 036

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RSM Bird Cameron Partners is an independent member firm of RSM International, an affiliation of independent accounting and consulting firms. RSM International is the name given to a network of independent accounting and consulting firms each of which practices in its own right. RSM International does not exist in any jurisdiction as a separate legal entity.

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Corporate Directory

NuSep Holdings Ltd ABN 33 120 047 556

Directors

John Manusu Dr Hari Nair Iain Howard Sorrell William Spee David Roffe Ward Wescott

(Executive Chairman) (Managing Director) (Non-executive Director) (Non-executive Director) (Non-executive Director) (Non-executive Director)

Company Secretary Tom Rowe

Registered Office

324 Burns Bay Road Lane Cove, NSW 2066 Australia

Tel: 61 2 8415 7300 Fax: 61 2 8415 7399 Email: info@nusep.com Website: www.nusep.com

Share Registry

Boardroom Limited Level 7, 207 Kent Street Sydney, NSW 2000

Auditors

RSM Bird Cameron Partners Level 12, 60 Castlereagh Street Sydney, NSW 2000

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