CRYOSITE LIMITED — AGM Information 2015

Nov 9, 2015

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ASX RELEASE 10th November 2015

Chairman’s Address to Shareholders at the Annual Meeting of Members held on th 10.30am Tuesday 10 November 2015

Good morning ladies and gentlemen and welcome to the 2015 Annual General Meeting of shareholders of Cryosite Limited. My name is Christina Boyce, Chairman of Cryosite for this meeting. My first job this morning is to welcome you to this Annual General Meeting of Cryosite.

I would like to introduce my fellow director and the executive management team, Graeme Moore (Executive Director) and Mark Marshall (CFO). Also in attendance is Bryan Dulhunty our Company Secretary. Unfortunately, the Chairman of the Company Andrew Kroger is not able to attend the meeting this morning.

This morning I will provide you with a review of the company’s results for last year, highlighting the areas of most interest, and give you an insight into where the Board and management team believe the company is heading.

As you will be aware, the 2015 financial year saw a change to the executive management team, with the appointment of and subsequent resignation of the Chief Executive Officer, Joseph Saad. Notwithstanding this, the senior and experienced management team remains in place. Furthermore, the Company has secured the services of several exceptionally qualified and experienced staff in key mid-management operational positions, to continue facilitating the company’s long term strategic direction.

Now I would like to move onto a review of last year’s key financial indicators:

SALES:

The total sales revenue for the year was $9,594,375 an increase of 4.6% on last year’s figure ($9,171,014).

PROFIT:

The profit for the year after income tax was $455,170. This compares with $505,602 in 2014. The financial performance during the financial year reflected the company’s continued investment in its long term growth strategy, involving new development activities in both the biological services and warehousing and distribution segments and an investment in senior management and sales and marketing capability, including one-off costs associated with employment of the then new CEO.

During the year, Cryosite’s existing Warehouse and Distribution Services segment continued to deliver growth as a result of new contracts and the Biological Services saw the successful launch of new service offerings in Cord Tissue. This largely offset a decline in revenue of approximately $280,000 as a result of discontinuation of a distribution contract.

DIVIDEND:

A final unfranked dividend for the year ended 30 June 2014 of 1.0 cents per ordinary share was declared and paid during the financial year. An interim unfranked dividend of 0.5 cents per ordinary share in respect of the 2015 financial year was declared and paid during the financial year. The total

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dividends declared and paid were $702,894 (2014: $700,693). We will continue to assess our financial position and pay out dividends as the board feels is appropriate.

CASH:

Cash on hand at 30 June 2015 was $4,167,303 (2014: $6,252,193). The Company generated a positive $1,416,902 operating cash flow and maintains a healthy cash balance though the decrease in the overall cash position compared to the prior year is inclusive of the dividend payment referred to earlier and a $2,342,978 return of capital to shareholders. Cash at 30 September 2015 was $4,019,645.

CRYOSITE OPERATIONS

Cryosite provides a number of services that are aggregated into two market segments:

1. Biological Services, and

2. Warehousing and Distribution

Biological Services includes the private cord blood and tissue banking service, adult stem cell storage, bioarchive & biorepository services and contract GMP manufacturing service.

Warehousing and Distribution Services includes the clinical trials logistics and commercial drug distribution services.

I would like to take some time now to focus on particular areas of interest.

The successful commercalisation of Umbilical Cord Tissue Storage.

The Company recorded its first cord tissue storage revenue during August 2014. Notwithstanding the successful launch of this product, the year has seen increased competition and discounting within the cord banking sector and Cryosite has once again needed to invest in additional sales and marketing capacity to maintain its 2014 sales. In this regard, the Company has increased focus and investment in our digital capabilities and marketing initiatives.

While these factors led to an overall reduction in the combined cord blood and tissue operating profit relative to last year, the investments made extend the service offerings we can provide or potentially provide in the rapidly expanding stem cell sector.

Contract GMP Manufacturing Services

During 2013, Cryosite entered into an agreement with a regenerative medicine company to develop methods to cryopreserve adipose derived stem cells for OE and other indications. During the 2014 year, this investment in R&D and advanced GMP cell processing capability now allows Cryosite to provide routine contract manufacturing, storage and distribution services which have, during the 2015 financial year, made a pleasing contribution to revenue and operating profit, and this is expected to be maintained during 2016.

Specialised Clinical Trials and Commercial Drug Distribution services

Cryosite’s expertise in cold, frozen and cryogenic storage and distribution has enabled it to successfully support clients' changing needs for management of biologic based drugs, and, importantly, to provide an expanded range of value added services, including complex protocol development and process qualification, which are particularly applicable to the global growth in cold chain biologic based drugs.

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While the number of individual clinical trials under management has increased, it is the ability to meet clients' demands to support highly customised trials of increasing complexity that has enabled Clinical Trials operations to maintain their contribution to segment revenue in 2015.

During 2015 Cryosite realised significant new revenue and operating profits from several new global clients requiring those highly specialized clinical trials management services

BUSINESS GROWTH AND OUTLOOK

While traditional operations within the Biological and Warehousing & Distribution Service segments will be subject to an increasingly competitive business environment during 2016, both segments are expected to provide incremental organic growth due to the increasingly specialised value added service offerings Cryosite can deliver.

The past year has seen Cryosite identify and implement new business operations in both market segments.

The Biological Services segment now provides cord tissue MSC banking to parents, and specialised contract GMP manufacturing and associated consultancy services to therapeutic and regenerative medicine companies involved in the development and commercialisation of proprietary technologies.

The Warehousing and Distribution segment now provides specialised commercial drug distribution, and has commenced protocol development for cryogenic and GMO investigational products for a large international client.

The Company believes the current course of building marketing capabilities as well as investing further into building stronger relationships with professional stakeholders is essential in the short term to grow the business, and see the 2016 financial year as one of consolidation of this platform. There are a number of risks and opportunities that continue to face the business moving forward but at this stage we envisage some growth in our Cord Blood and Tissue business.

Leveraging Cryosite’s unique combination of Biorepository, Clinical Trials Logistics and TGA licensed stem cell manufacturing services to create specialised service offerings for existing as well as new clients, offers the promise of an exciting future for the Company. The initial successes reported in commercial drug distribution and contract GMP manufacturing, are early indicators of the Company’s ability to adapt and succeed in both market segments.

SHAREHOLDER SUPPORT

The Board and Management are grateful for the continuing support and interest in the company by the shareholders. We remain confident that the company is well positioned to take advantage of both the growth in research and biotechnology activity in Australia, and the increased need for outsourcing of specialised bio logistics capabilities by organisations involved in clinical trials and commercial drug distribution in Australia and New Zealand.

Christina Boyce Chairman

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