CRYOSITE LIMITED — Annual Report 2007

Aug 29, 2007

Cryosite Limited ABN 86 090 919 476 Appendix 4E

Full year report Twelve months ended 30 June 2007 (‘current period’) And the twelve months ended 30 June 2006 (‘previous corresponding period’)

Results for announcement to the market

				$A'000
2.1 Revenue from ordinary activities:	Up	15.7%	to	4,902
2.2 Profit from ordinary activities after tax attributable
to members:	Up	810.2%	to	923
2.3 Net profit for the period attributable to members:	Up	810.2%	to	923

Dividends (distributions)		Amount per security	Franked amount per security
2.4 Dividends		-¢	-¢
Previous corresponding period		-¢	-¢
2.5 Record date for determining entitlements to the dividend: (in the case of a trust, distribution) (see item 15.2)	N/A no dividends have been declared or paid.

3. NTA backing	Current period	Previous corresponding Period
Net tangible asset backing per ordinarysecurity	7.3 cents	5.9 cents

4. Details of controlled entities.

4.1 Control gained over entities having material effect

Name of entity (or group of entities) No entities have been acquired during the period Date from which control was gained N/A Profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) for the whole of the previous corresponding period $-

Cryosite Limited ABN 86 090 919 476 Appendix 4E

Full year report

Twelve months ended 30 June 2007 (‘current period’)

And the twelve months ended 30 June 2006 (‘previous corresponding period’) continued

4.2 Control lost over entities having material effect

Name of entity (or group of entities) No entities were disposed of during the period

Date from which control was lost

Contribution to consolidated profit (loss) from ordinary activities and extraordinary items from sale of interest leading to loss of control

N/A $-

5. Details of dividends:

No dividends have been declared or proposed.

1. Details of dividend reinvestment plans:

N/A

1. Details of associate and joint ventures

N/A

1. Foreign entities:

N/A

1. Details of audit dispute or audit qualification:

N/A

1. Other significant information: Refer to the attached audited full year financial report

2. Commentary on results for the period: Refer to the attached Directors’ Report included in the full year financial report

3. Audited accounts: The report is based on the attached full year financial report which has been audited.

CRYOSITE LIMITED

ABN 86 090 919 476

Financial Report

for the year ended 30 June 2007

CRYOSITE LIMITED – FINANCIAL REPORT

Table of Contents

		Page
Directors’	Report	2
Auditor’s Independence Declaration		12
Corporate	Governance Statement	13
Directors’	Declaration	15
Income Statement		16
Balance Sheet		17
Cash Flow	Statement	18
Statement	of Changes in Equity	19
Notes to the Financial Statements
1	Corporate Information	20
2	Summary of Significant Accounting Policies	20
3	Segment Information	28
4	Other Revenues and Expenses	28
5	Income Tax	29
6	Earnings Per Share	31
7	Dividends paid and Proposed	32
8	Cash and Cash Equivalents	32
9	Trade and Other Receivables (Current)	33
10	Inventories (Current)	34
11	Prepayments	34
12	Trade and Other Receivables (Non-current)	34
13	Investments (Non-current)	34
14	Plant and Equipment	35
15	Intangible Assets	36
16	Employee Benefits	36
17	Trade and other payables (Current)	40
18	Unearned Income (Current)	40
19	Unearned Income (Non-current)	41
20	Provisions (Non-current)	41
21	Contributed Capital and Reserves	41
22	Commitments and Contingencies	42
23	Events After Balance Date	43
24	Auditors’ Remuneration	43
25	Related Party Disclosures	43
26	Key Management Personnel	44
27	Financial Instruments	45
Independent Audit Report		48
ASX Additional Shareholder Information		50

1

CRYOSITE LIMITED – FINANCIAL REPORT

Directors’ Report

Your directors submit their report for the year ended 30 June 2007.

DIRECTORS

The names and details of the company’s directors in office during the financial year and until the date of this report are as follows. Directors were in office for the entire year and until the date of this report except for Dr Peter French who resigned as a director on 4 September 2006 and Catherine Brenner who was appointed on 28 September 2006.

Names, qualifications, experience and special responsibilities

Richard Grellman, AM, FCA - Non-Executive Chairman

Mr Grellman is Chairman of the Motor Accidents Authority of NSW, the Lifetime Care and Support Authority of NSW, President and Chairman of the Board of Mission Australia, Chairman of Trafalgar Corporate Group Limited and The Association of Surfing Professionals (International) Limited. In addition, he is a NonExecutive Director of AMP Limited and Atlas Group Holdings Limited. Mr Grellman was appointed to the Board in November 2002.

Catherine Brenner, BEc LLB, MBA - Non-Executive Director

Ms Brenner is a non-executive director of Centennial Coal Company Limited and Trafalgar Corporate Group Limited and the Australian Brandenburg Orchestra. Ms Brenner who was a Managing Director at ABN AMRO Rothschild’s, part of the ABN AMRO Investment Banking business has experience in both corporate advisory and equity capital markets, including takeovers, capital raisings, trade sales and privatisations. Prior to becoming an investment banker Ms Brenner was a corporate lawyer and she is a Member of the Takeovers Panel. Ms Brenner was appointed to the Board in September 2006.

Theodore Onisforou, BCom, LLB – Non-Executive Director

Mr Onisforou has extensive commercial experience initially as a tax accountant with Peat, Marwick Mitchell, as a lawyer with Allen Allen and Hemsley and then as a Barrister at Law. He was Investment Manager at Consolidated Press Holdings and currently is a full time professional investor. He has completed a Masters Degree in Agricultural Science at Sydney University. Mr Onisforou is not a director of any other listed public company. Mr Onisforou joined the Board in March 2000 and was Chairman from May 2001 until December 2002.

Professor Ronald Penny, AO, DSc, MD, FRACP, FRCPA – Non-Executive Director

Professor Penny served as an Honorary Consultant at several Sydney Hospitals and serves on the Editorial Board of six international medical and scientific journals. He is currently the Chairman of the NSW Government's Justice Health Board. Recently he resigned after 33 years as Director of the Centre for Immunology at St Vincents Hospital to accept the positions of Senior Medical Advisor to the NSW Department of Health and is Medical Director of Good Health Solutions, a workplace health management company. Professor Penny is also a director of Probiomics Limited. Professor Penny was appointed to the board of Cryosite in December 1999.

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CRYOSITE LIMITED – FINANCIAL REPORT

continued Directors’ Report

Gordon Milliken, Dip. Med. Tech. Grad. Dip. Ops. Mgt - Managing Director

Mr Milliken has extensive experience in a variety of positions in the commercial medical and veterinary technology fields. Mr Milliken is one of the founding members of Cryosite and has been instrumental in setting up the operational core of the company. He has been involved with the company on a full-time basis since it was established in 1999, and assumed the position of Managing Director in February 2002. Mr Milliken has a Diploma of Medical Technology and a Graduate Diploma in Operations Management. Mr Milliken has no listed directorships other than Cryosite Limited. Mr Milliken was appointed to the board of Cryosite in March 2002.

COMPANY SECRETARY

Bryan Dulhunty, BEc, CA

Company Secretarial Services for Cryosite Limited are provided by CoSA Pty Limited, an independent Company Secretarial firm specialising in the biotechnology industry.

Mr Dulhunty founded CoSA Pty Limited in 2001 after extensive experience in a major international accounting firm and both large and small publicly listed entities. Mr. Dulhunty is both a director and company secretary of a number of listed and unlisted biotechnology companies.

Interests in the shares and options of the company and related bodies corporate

As at the date of this report the interests of the directors in the shares and options of Cryosite Limited were:

Director	Ordinary shares	Options over ordinary shares
Richard Grellman	98,214	500,000
Catherine Brenner	-	-
Theodore Onisforou	3,751,337	-
Professor Ronald Penny	883,371	-
Gordon Milliken	1,048,418	312,500

EARNINGS PER SHARE

Basic earnings per share 2.0 cents (2006: 0.2 cents) Diluted earnings per share 1.9 cents (2006: 0.2 cents)

DIVIDENDS

There were no dividends declared or paid during the course of the financial year and no dividend is recommended (2006: Nil).

CORPORATE INFORMATION

Corporate structure

Cryosite Limited is a company limited by shares that is incorporated and domiciled in Australia. Cryosite Limited is the ultimate parent company. Cryosite Limited has prepared a consolidated financial report which incorporates Cryosite Distribution Pty Limited, a company incorporated and domiciled in Australia that it controlled during the financial year.

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CRYOSITE LIMITED – FINANCIAL REPORT

continued Directors’ Report

Nature of operations and principal activities

The principal activities during the year of entities within the consolidated entity were:

• Private collection and storage of umbilical cord blood stem cells;

• Distribution of temperature-critical biological products;

• Clinical Trial Logistics Services; and

• Biorepository Management Services.

Employees

The consolidated entity has 20 full-time equivalent employees as at 30 June 2007 (2006:17 employees).

OPERATING RESULTS FOR THE YEAR

The Directors are pleased to report to shareholders that the company has continued the trend that resulted in last year’s maiden profit by recording both record sales and record profit. Profit for the year was $922,744 (2006: $101,374) an increase of 810%. The company remained cash flow positive, increasing cash and cash equivalents to $1,581,522 (2006: $1,301,877).

Total revenue increased to $4,902,325 an increase of 15.7% (2006: $4,253,321). Revenue for the prior year (2006) included $627,407 resulting from a change in accounting estimates in relation to the treatment of prepaid cord blood services.

Cryosite has developed a unique business model in Australia by establishing a number of services that can be promoted to separate market segments, but which are all serviced by a single operational platform. This model has given Cryosite the capability of expanding the scope and range of services without incurring the full set-up cost that would be required if they were all treated as separate units. The range of potential customers for the services include private individuals for the cord blood service, private and public research organisations, biotechnology companies and the drug development interests of the pharmaceutical industry.

The cord blood service continued to make a very significant contribution to the results. Whilst there are now three other companies in Australia offering a cord blood service, Cryosite still remains the only private organisation possessing its own processing and long-term storage facilities. Cryosite is also the only company that holds a Therapeutic Goods Administration licence that includes unrestricted rights to release, for therapeutic use, all of the samples being stored.

During the year Cryosite has continued to refine its marketing strategy for the cord blood service and have strengthened the number of locally-based customer service representatives in all major capitals. Each state representative is an experienced midwife which has proven to be a very effective way of marketing the service to both prospective parents, obstetricians and other healthcare professionals. Cryosite has continued to promote the service via media that targets expectant parents including pregnancy magazines, hospital give-away bags and baby shows. We will continue to evaluate and where necessary refine our marketing approach.

Although reliable figures are not readily available, the estimate is that the current total uptake of private cord blood collections in Australia is now between 1% and 2%. We estimate that Cryosite now has at least 50% of that market, and are confident that the market will continue to enjoy reasonable growth rates. We also believe that Cryosite will continue to maintain its market leader status.

The success of the Clinical Trial Logistics Services business is a powerful example of the value of utilising a single operational platform to develop a new income generating service quickly and effectively. The operational experience coupled with Cryosite’s commitment to develop a world-class Quality Management System to underpin its business commitment allowed the Clinical Trial Logistics Services to become a significant part of

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CRYOSITE LIMITED – FINANCIAL REPORT

continued Directors’ Report

our current business with the potential to continue doing so into the future. Last year we reported an increase in the number of individual clients from 17 to 25. This financial year we increased the number of clients to over 40 and have over 180 individual trials under management. Our predication that there would be a disproportional increase in the higher value trials that require cold-chain management has also proven to be true as we are experiencing exceptional growth in that service.

During the year the company embarked on a plan to reposition the archival storage service to have more appeal to prospective customers involved in the establishing and maintenance of large collections of bioresource materials. The new Biorepository Management Service now integrates the traditional archival storage and the new version of our proprietary software, Cryobyte® LS. Last year we flagged a potential alliance with a large liquid nitrogen tank manufacturer and distributor. It is pleasing to confirm that an agreement was signed during the year with Chart Inc. for the exclusive distribution of Cryobyte® LS in all world markets. Chart have over 50% of the world market in the type of laboratory liquid nitrogen storage tanks that are used by the majority of our target market both in Australia and the rest of the world. Cryosite is in the final stages of preparing the documentation that will allow Cryobyte® LS to be presented as an integrated hardware and software product that can be sold into the emerging regulated environment. We believe that Cryobyte® LS is a unique product in its own right that will make a make a valuable contribution to profits in the coming years as well as developing a relationship with Chart that will further enhance that potential.

Cryosite is also pleased to report that during the year the Australian Patent Office awarded Cryobyte® LS a patent. We are awaiting the outcome of the ICP patent application in the USA and expect to have a decision within the next few months.

The agreement with Animal Health Australia (AHA) to provide technical support as part of the Emergency Animal Disease Preparedness Programme is continuing. The Vaccine Logistic Master Plan for the management of vaccines supplies has been completed and we are now proceeding with the development of specific plans for a number of individual vaccines. Cryosite will also be responsible for maintaining a state of readiness to accept and manage vaccine supplies at short notice as well as working with AHA and Local Disease Control centres to ensure that appropriate vaccine handling procedures are followed enabling vaccines to be distributed and used without any undue delay.

The company is into the third year of a five year exclusive distribution agreement with the American Type Culture Collection. A major achievement this year was the development of an in-house designed customer service software application that will streamline the processing of customer requests and reduce lead-times for fulfilling orders.

BUSINESS GROWTH AND OUTLOOK

Cryosite established the first private cord blood stem cell collection and storage service in Australia. Cryosite was also the first and remains the only such service to have a Therapeutic Goods Administration licence for the collection, transport, processing and long-term storage of the cord blood. This provides Cryosite with a valuable marketing advantage over its competitors who continue to operate by sub-contracting all parts of the process except marketing. According to our estimates, the take up of private cord blood storage in Australia is now between 1 to 2% of all births. This, coupled with the combined effects of a steadily increasing birth rate and the higher proportion of the population with private medical insurance should ensure that Cryosite will continue to record significant growth in cord blood numbers.

As well as the increase in cord blood numbers, Cryosite is also pursuing a number of efficiencies in processing of samples. Laboratory processing of cord blood samples has until recently been a relatively expensive manual operation. Cryosite is currently engaged in the evaluation and validation of a semi-automated system that will result in reduced processing and associated infrastructure costs with no reduction in the quality of the final product. We will continue to explore opportunities to make our marketing strategy more effective and to improve processing efficiencies so as to maintain our position as Australia’s premier private cord blood service.

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CRYOSITE LIMITED – FINANCIAL REPORT

continued Directors’ Report

Clinical Trial Logistics Services once again demonstrated sustained growth in both the number of clients and total number of trials under management. The integration of the company’s single operational platform and the sophisticated Quality Management System is a strong marketing advantage that has allowed Cryosite to continue to attract leading pharmaceutical and biotechnology companies from around the world. We are confident that the rate of growth that we have experienced over the last two years will continue well into the future and will play a major part in underpinning future success.

As well as distribution of clinical trial drugs, we are currently in discussions with a major pharmaceutical company for the distribution of a drug that will shortly be released for retail sale. If successful this will be the first time that we have carried over the management of a drug from clinical trials to distribution on a commercial scale. This has been a long-term objective in building up Clinical Trial Logistics Services and presents an exciting opportunity for us to expand our revenue generation with minimal capital outlay.

The repositioning of the archival storage service as the Biorepository Management Service will be a major focus for the company during the next few years. The benefits of our alliance with Chart will allow Cryosite to enter new markets in both the established hubs for research and the developing Asian and Indian markets. Chart has a well established distributor network in these regions and have already reported a high level of interest in our products and services.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There were no significant changes in the state of affairs of the consolidated entity during the year.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

There were no significant events after the balance date that will have a material effect on the operations of the consolidated entity.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

The Board is confident that, subject to any unforeseen circumstances, the benefits of its common infrastructure and operations systems to support the business units will allow it to increase revenue, improve margins and overall financial performance of the Company during the next financial year.

REGULATORY ENVIRONMENT

The company provides a range of services that require compliance to a variety of regulatory and statutory bodies, such as the Therapeutic Goods Administration (TGA), the National Association of Testing Authorities (NATA), the Australian Quarantine Inspection Service (AQIS) and the NSW Department of Health, as well as the Quality System requirements of customers. The company has concentrated a significant amount of its resources in instituting and managing a Quality System to meet these needs.

During the year, Cryosite was subject to a number of audits, including a comprehensive scheduled audit by the Therapeutic Goods Administration. In all cases, outcomes of the audits were very satisfactory and continue to evidence our quality systems thereby providing a high degree of confidence in our services to our commercial clients and individual cord blood customers

The company, to the best of its knowledge, is not subject to any specific environmental regulations.

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CRYOSITE LIMITED – FINANCIAL REPORT

continued Directors’ Report

BUSINESS RISKS

There is a great deal of research activity being undertaken in the stem cell area, both embryonic and adult. It is possible that research may uncover new therapies to supersede the current established uses of cord blood stem cells thus affecting the number of parents who might consider private cord blood storage.

Most of the services that Cryosite provide to generate income require some form of statutory licensing or compliance authority. The failure by Cryosite to attain and maintain such licences and approvals would have a significant negative effect on the company’s ability to continue to provide such services and to maintain its viability. As referred to in other parts of this report, Cryosite is committed to obviating risks in this area by the implementation and maintenance of a company-wide Quality Management System.

Our exclusive distribution agreement with the ATCC is an important source of income for the company and any breach of the agreement by Cryosite could result in termination of the agreement with a resulting loss of income.

INSURANCE OF DIRECTORS AND OFFICERS

During the financial year, the Company has paid a premium in respect of a contract, insuring all the Directors and Officers against liability, except wilful breach of duty, of a nature that is required to be disclosed under section 300 (8) of the Corporations Act 2001. In accordance with commercial practice, further details of the nature of the liabilities insured against and the amount of the premium have not been disclosed.

REMUNERATION REPORT

This report confirms the policy and approach adopted by the company in relation to compensation of key management personnel.

Compensation philosophy

The company recognises the importance of structuring compensation packages of its key management personnel so as to attract and retain people with the qualifications, skills and experience to help the company achieve the required objectives. However, the company understands that whilst it is still in the development phase of its growth, a prudent position must be observed in the total compensation expense.

A fixed compensation package is determined by the Board for the Managing Director. Any additional compensation is determined by the Board as deemed appropriate.

Non-Executive Directors

Total compensation paid to non-executive directors is determined by the Board from time to time for presentation to and resolution by shareholders at the Annual General Meeting. The current maximum aggregate compensation paid to non-executive directors is $200,000 per year.

The directors are paid a set amount per year and apart from reimbursement of expenses incurred on the company’s behalf, are not eligible for any additional payments.

Due to the size of the company, a Remuneration Committee has not been established. The company does compare remuneration paid to key management personnel with other similar companies to ensure consistency.

7

CRYOSITE LIMITED – FINANCIAL REPORT

continued Directors’ Report

Key Management Personnel

Details of the nature and amount of each element of compensation for key management personnel of the company receiving the highest compensation for the financial year are as follows:-

Richard Grellman Chairman (Non-executive) Catherine Brenner Director (Non-executive) Appointed 28 September 2006 Theodore Onisforou Director (Non-executive) Prof Ronald Penny Director (Non-executive) Gordon Milliken Managing Director Dr Peter French Director (Non-executive) Resigned 4 September 2006

Except as noted above for Dr Peter French and Catherine Brenner, key management personnel held their positions for the whole of the financial year. Due to the relatively small number of employees, apart from the Managing Director, there are no other executives having authority and responsibility for planning, directing and controlling the activities of the entity either directly or indirectly.

Compensation for Key Management Personnel (Audited)

	Short term benefits Post employ- ment benefits Other long term benefits Termin- ation benefits Share- based payments Total Salary & Fees Other cash benefits Super- annuation Options $ $ $ $ $ $ $
30 June 2007 Richard Grellman Catherine Brenner Dr Peter French Theodore Onisforou Prof Ronald Penny Gordon Milliken Total compensation 30 June 2006 Richard Grellman Dr Peter French Theodore Onisforou Prof Ronald Penny Gordon Milliken Total Compensation	3,856 - 63,569 - - - 67,425 28,616 - 2,625 - - - 31,241 3,058 - 275 - - - 3,333 31,674 - 3,532 - - - 35,206 31,674 - 3,532 - - - 35,206 79,587 19,069 55,162 - - - 153,818
	178,465 19,069 128,695 - - - 326,229
	45,871 - 4,129 - - 14,184 64,184 18,349 1,651 - 20,000 18,349 - 1,651 - - - 20,000 18,349 - 1,651 - - - 20,000 64,678 19,000 53,821 - - 5,628 143,127
	165,596 19,000 62,903 - - 19,812 267,311

Information included in the above tables has been audited.

No performance based cash remuneration payments were made to Directors during the year.

8

CRYOSITE LIMITED – FINANCIAL REPORT

continued Directors’ Report

Options granted as part of compensation for the year ended 30 June 2007 (Audited)

There were no options granted during the year (2006: Nil).

Option holdings of key management personnel (Audited)

	Richard	Catherine	Theodore	Prof. Ronald	Gordon
	Grellman	Brenner	Onisforou	Penny	Milliken	Total
	No.	No.	No.	No.	No.*	No.
Balance held at
1 July 2006	500,000	-	-	-	312,500	812,500
Balance held at
30 June 2007	500,000	-	-	-	312,500	812,500

Options Vested of key management personnel (Audited)

	Richard Grellman Catherine Brenner Theodore Onisforou Prof. Ronald Penny Gordon Milliken Total No. No. No. No. No.* No.
Balance vested at 1 July 2006 Vested during the year Balance vested at 30 June 2007 Not exercisable Exercisable	500,000 - - - 250,000 750,000 - - - - 62,500 62,500
	500,000 - - - 312,500 812,500
	- - - - - -
	500,000 - - - 312,500 812,500

• Options issued under the employee share scheme.

Shareholdings of key management personnel (Audited)

Shares held in Cryosite Limited	Balance 1 July 2006 Granted as remuneration On exercise of options On market purchases Balance 30 June 2007 Ord. Ord. Ord. Ord. Ord.
Richard Grellman Catherine Brenner Theodore Onisforou Prof. Ronald Penny Gordon Milliken Total	98,214 - - - 98,214 - - - - - 3,497,386 - - 253,951 3,751,337 883,371 - - - 883,371 1,034,918 - - 13,500 1,048,418
	5,513,889 - - 267,451 5,781,340

Dr Peter French resigned on 4 September 2006. Shares held by Dr French at 30 June 2006 have been removed from the above table.

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CRYOSITE LIMITED – FINANCIAL REPORT

continued Directors’ Report

Loans to key management personnel (Audited)

There were no loans to key management personnel at the beginning of the year, at any time during the year, or at the end of the year.

Other transactions and balances with key management personnel (Audited)

There were no other transactions during year with key management personnel or with any key management personnel related entities.

Other personnel - Names, qualifications, experience and responsibilities

As Cryosite continues to grow it has built up a team of qualified professionals to support the Managing Director in carrying out his duties and contributing to the continued growth of the company. Details of other personnel are:

Graeme Moore, B.App.Sc (Biomed), MHA

Graeme Moore is the Quality and Regulatory Affairs Manager. Graeme joined Cryosite in July 2005 after a decade with the Australian Red Cross Blood Service. Graeme has over 20 years experience in biomedical science, manufacture of therapeutic goods, quality management and regulatory affairs. Graeme brings expertise in the regulation and manufacture of cellular therapies and process re-engineering to the company. Graeme is also responsible for ensuring that Cryosite’s systems retain the capacity to meet client’s needs in a constantly changing technological and regulatory environment.

Dr Róisín Deane, B.Sc, PhD

Dr Deane holds the position of Marketing Manager. Dr Deane completed her PhD in Dublin, Ireland in 1993 and worked as a research scientist in Ireland, Germany and Australia before moving to the commercial side of medical science. With a successful sales background in molecular biology and diagnostics, Roisin was appointed to the position of Marketing Manager in 2000. In 2001 Roisin successfully managed the establishment of Cryosite’s private cord blood service in addition to the broad marketing responsibilities. With the cord blood service now firmly established, Roisin is now focussed on the sales and marketing across all of the company’s services. Dr Deane commenced with the company in July 2000.

Philip Alger,CPA, FCIS

Philip Alger is the Group Financial Controller responsible for accounting, finance and taxation. Philip has spent many years working for major Australian public companies and prior to joining Cryosite spent 17 years as the Group Financial Controller for Brambles Australia Limited. Philip commenced with the company in July 2003.

DIRECTORS’ MEETINGS

During the financial year, 6 meetings of directors were held. Attendances were as follows:

Directors	Directors Meetings	Directors Meetings
	Eligible to attend	Attended
Richard Grellman	6	6
Catherine Brenner	5	5
Theodore Onisforou	6	5
Prof. Ronald Penny	6	2
Gordon Milliken	6	6
Dr Peter French	1	-

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CRYOSITE LIMITED – FINANCIAL REPORT

continued Directors’ Report

AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES

The directors have received the auditors’ independence declaration which is included on Page 12 of this report

No director of Cryosite is currently or was formerly a partner of Ernst & Young.

Non-audit services were provided by the entity’s auditor, Ernst & Young during the financial year. Details of the services provided are disclosed in Note 24 of the Financial Statements. The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act. The nature and scope of each type of non-audit service provided means that auditor independence was not compromised.

CORPORATE GOVERNANCE

In recognising the need for the highest standards of corporate behaviour and accountability, the directors support the principles of corporate governance. The company’s corporate governance statement is included on Pages 13 to 14 of this annual report.

Signed in accordance with a resolution of the directors.

Richard Grellman Chairman

Date: 29 August 2007

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CRYOSITE LIMITED AND ITS CONTROLLED ENTITY

Auditor’s Independence Declaration

Auditor’s Independence Declaration to the Directors of Cryosite Limited

In relation to our audit of the financial report of Cryosite Limited for the financial year ended 30 June 2007, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

Ernst & Young

Ian Campbell Partner Sydney 29 August 2007

12 Liability limited by a scheme approved under Professional Standards Legislation.

CRYOSITE LIMITED – FINANCIAL REPORT

Corporate Governance Statement

The Board is committed to achieving and demonstrating the highest standards of corporate governance. The Board guides and monitors the Company’s activities on behalf of shareholders. In developing policies and setting standards the Board considers the ASX Corporate Governance Council Corporate Governance Principles and Recommendations. This Council however states that these recommendations are not prescriptions, they are guidelines. If a Company considers that a recommendation is inappropriate to its particular circumstances it has the flexibility not to adopt the recommendation providing it explains why it has not adopted the recommendations.

There are a number of recommendations that the directors have chosen not to adopt and the reasons for not adopting those recommendations are set out below:

Board Role and Composition

• Independence of Board members: The composition of the Board is regularly reviewed to ensure that is has the requisite skills for the Company’s stage of development. The structure of the Board is driven by the need to assemble a group of people with integrity who have the experience and skills needed to govern the business and whose mix of personalities auger well for collaboration and the ability to reach decisions while having a variety of views. This means while the Board does not have a majority of independent directors as recommended by the ASX Corporate Governance Council guidelines, the structure does enable the Company to focus appropriate management skills on all issues facing the Company as efficiently as possible.

The Board has determined that the Chairman, Mr. Richard Grellman AM and Ms. Catherine Brenner are independent directors.

Mr. Gordon Milliken (Managing Director) is deemed not to be independent due to his executive role. In addition, Mr. Gordon Milliken and Professor Ron Penny AO are founding directors of the Company and the board has therefore deemed that this may be perceived to create a non-independent relationship. The remaining director, Mr. Theodore Onisforou is also deemed not to be independent due his relevant interest in the company.

• Sub-Committees: Due to the Board size and structure the Company has not established Nomination, Remunerations, Risk Assessment or Audit Committees. The directors believe performance of these sub-committees duties are more effectively dealt with by the main board

• Risk identification: The Board recognizes it is ultimately responsible for risk identification. The Managing Director is directly responsible for identifying and monitoring risk and notifying the board. The major risk areas for the Company and how they are managed are:

• 1) Regulatory and TGA Compliance. The Board has employed a specialist in this field. The Board at each meeting reviews and discusses headline compliance issues and keeps abreast of the changing regulatory and TGA environments.

• 2) Financial Management risk: The Board reviews and discusses detailed financial accounts monthly and meets directly with the auditors during the year to discuss the financial accounts.

• 3) General risk: The Board has established policies to identify other risks facing the Company and developed responses to be put into action should any of these risks eventuate.

The performance of each director/executive is reviewed annually. Performance is reviewed annually independently of the particular director. The Chairman reviews and discusses that executive performance with that executive. The Board did carry out an informal performance review subsequent to the Board changes that were implemented during the year. The skills, experience and expertise relevant to the position of each director are detailed in full in the Directors’ Report.

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CRYOSITE LIMITED – FINANCIAL REPORT

continued Corporate Governance Statement

All directors have the right to seek independent professional advice at the Company’s expense in the furtherance of their duties as directors. Written approval must be obtained from the Chairman prior to incurring any expense on behalf of the Company.

Chief Executive Officer and Chief Financial Officer Signoff:

The Managing Director and Group Financial Controller have provided a sign off to the Board that states:

1) Cryosite’s financial report presents a true and fair view, of the Company’s financial position and operational results in accordance with relevant Accounting Standards. These statements are made based on a sound system of risk management and internal compliance which implements the policies of the Board; and

2) Cryosite’s risk management, internal compliance and control systems operated efficiently and effectively during the year

Trading policy:

The Company’s policy regarding directors and employees trading in its securities is set by the Board. The policy restricts directors and employees from acting on material information until it has been released to the market and adequate time has been given for this to be reflected in the securities price. The detailed policy is set out below.

Directors and employees are permitted to trade in company shares for a 30-day period, after a 24-hour period, following the release of the Annual and Half-year reports and the release of any price sensitive information. Employees may not trade in shares of the company whilst in possession of price sensitive information (Price sensitive information is information that a reasonable person would expect to have a material effect on the price of the Company’s securities.) and/or if trading for short term gain. As a matter of courtesy, Directors who intend to trade in Company shares should advise the Chairman of their intentions prior to initiating the transaction.

Other information:

Further information relating to the company’s corporate governance practices and policies has been made available on the company’s website (www.cryosite.com).

14

CRYOSITE LIMITED – FINANCIAL REPORT

Directors’ Declaration

In accordance with a resolution of the directors of Cryosite Limited, I state that:

• (1) In the opinion of the directors:

• (a) the financial report and the additional disclosures included in the directors’ report designated as audited, of the company and of the consolidated entity are in accordance with the Corporations Act 2001, including:

  • (i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2007 and of their performance for the year ended on that date; and

  • (ii) complying with Accounting Standards and Corporations Regulations 2001; and

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

• (2) This declaration has been made after receiving the declarations required to be made to directors in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2007.

On behalf of the Board

Richard Grellman Chairman

Date: 29 August 2007

15

CRYOSITE LIMITED – FINANCIAL REPORT

Income Statement

FOR THE YEAR ENDED 30 JUNE 2007 Notes	Consolidated 2007 2006 $ $	Parent 2007 2006 $ $
Revenues Rendering of services Finance income 4 Research & Development grants Dividend received from wholly- owned subsidiary Revenues Expenses Finance costs 4 Costs of providing services Marketing expenses Occupancy expenses Administration expenses Profit(Loss) from operations before tax Income tax benefit 5 Profit(Loss) after tax from operations Net Profit(loss) attributable to equity holders of the parent Earnings per share (cents per share) Basic profit for the year 6 Diluted profit for the year 6	4,722,572 4,097,100 179,753 109,765 - 46,456 - -	2,942,615 2,649,823 179,753 109,765 - 46,456 300,000 900,000
	4,902,325 4,253,321 (8,305) (9,495) (2,326,832) (2,111,693) (421,029) (189,970) (246,213) (242,898) (1,524,682) (1,597,891)	3,422,368 3,706,044 (8,305) (9,495) (1,745,944) (1,514,457) (379,296) (171,201) (244,724) (242,450) (1,518,273) (1,581,943)
		(474,174) 186,498 892,311 244,533
	375,264 101,374 547,480 -
	922,744 101,374	418,137 431,031
	922,744 101,374	418,137 431,031
	2.0 0.2 1.9 0.2

16

CRYOSITE LIMITED – FINANCIAL REPORT

Balance Sheet

AS AT 30 JUNE 2007 Notes	Consolidated 2007 2006 $ $	Parent 2007 2006 $ $
ASSETS Current Assets Cash and cash equivalents 8 Trade and other receivables 9 Inventories 10 Prepayments 11 Total Current Assets Non-current Assets Trade and other receivables 12 Investments 13 Deferred income tax asset 5 Plant and equipment 14 Intangible assets 15 Total Non-current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables 17 Unearned income 18 Total Current Liabilities Non-current Liabilities Unearned income 19 Provisions 20 Total Non-current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed capital 21 Share option reserves 21 Accumulated losses TOTAL EQUITY	1,581,522 1,301,877 1,334,577 1,072,558 28,229 27,115 188,030 138,248	1,581,522 1,301,877 1,186,058 1,455,084 21,224 20,466 181,030 127,518
	3,132,358 2,539,798	2,969,834 2,904,945
	1,552,318 1,636,854 - - 547,480 - 817,084 886,708 348,426 50,484	1,552,318 1,636,854 20 20 547,480 - 814,811 883,967 348,426 50,484
	3,265,308 2,574,046	3,263,055 2,571,325
	6,397,666 5,113,844	6,232,889 5,476,270
	933,997 639,855 260,487 91,417	776,131 504,585 260,487 91,417
	1,194,484 731,272	1,036,618 596,002
	1,436,126 1,546,599 31,091 22,683	1,436,126 1,546,599 31,091 22,683
		1,467,217 1,569,282
	1,467,217 1,569,282
	2,661,701 2,300,554	2,503,835 2,165,284
		3,729,054 3,310,986
	3,735,965 2,813,290
	8,035,506 8,035,575 180,185 180,185 (4,479,726) (5,402,470)	8,035,506 8,035,575 180,185 180,185 (4,486,637) (4,904,774)
	3,735,965 2,813,290	3,729,054 3,310,986

17

CRYOSITE LIMITED – FINANCIAL REPORT

Cash Flow Statement

FOR THE YEAR ENDED 30 JUNE 2007 Notes	Consolidated Parent 2007 2006 2007 2006 $ $ $ $
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Finance income Borrowing costs Net cash flows from(used in) operating activities 8 CASH FLOWS FROM INVESTING ACTIVITIES Payments for purchase of plant and equipment Payments for purchase of intangible assets Net cash flows (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from share issues Share issue costs Net cash flows from(used in) financing activities Net increase(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 8	5,180,061 3,795,728 5,180,061 3,795,728 (4,644,426) (4,093,024) (4,644,426) (4,093,024) 170,321 103,767 170,321 103,767 (8,305) (9,495) (8,305) (9,495)
	697,651 (203,024) 697,651 (203,024)
	(99,892) (55,886) (99,892) (55,886) (318,045) (7,500) (318,045) (7,500)
	(417,937) (63,386) (417,937) (63,386)
	- 228,775 - 228,775 (69) (8,915) (69) (8,915)
	(69) 219,860 (69) 219,860
	279,645 (46,550) 279,645 (46,550) 1,301,877 1,348,427 1,301,877 1,348,427
	1,581,522 1,301,877 1,581,522 1,301,877

18

CRYOSITE LIMITED – FINANCIAL REPORT

Statement of Changes in Equity

FOR THE YEAR ENDED 30 JUNE 2007

FOR THE YEAR ENDED 30 JUNE 2007
	Attributable to equityholders of theparent
	Contributed capital Accumulated losses $ $	Share options reserves Total equity $ $
CONSOLIDATED At 1 July 2005 Profit for the year Amortisation of share based payments Issue of share capital At 30 June 2006 Profit for the year Share issue costs At 30 June 2007 PARENT At 1 July 2005 Profit for the year Amortisation of share based payments Issue of share capital At 30 June 2006 Profit for the year Share issue costs At 30 June 2007	7,815,715 (5,503,844) - 101,374 - - 219,860 -	166,001 2,477,872 - 101,374 14,184 14,184 - 219,860
	8,035,575 (5,402,470) - 922,744 (69) -	180,185 2,813,290 - 922,744 - (69)
	8,035,506 (4,479,726)	180,185 3,735,965
	7,815,715 (5,335,805) - 431,031 - - 219,860 -	166,001 2,645,911 - 431,031 14,184 14,184 - 219,860
	8,035,575 (4,904,774) - 418,137 (69) -	180,185 3,310,986 - 418,137 - (69)
	8,035,506 (4,486,637)	180,185 3,729,054

19

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2007

1 CORPORATE INFORMATION

The financial report of Cryosite Limited for the year ended 30 June 2007 was authorised for issue in accordance with a resolution of the directors on 29 August 2007.

Cryosite Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange.

The nature of the operations and principal activities of the Group are described in Note 3.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of accounting

The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, and Australian Accounting Standards.

The financial report has been prepared on a historical cost basis.

(b) Statement of compliance

The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (“AIFRS”). The financial report also complies with International Financial Reporting Standards (IFRS).

Except for the amendments to AASB 101 Presentation of Financial Statements and AASB 2007-4 Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments, which the Group has early adopted, Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Group for the annual reporting period ending 30 June 2007. These are not expected to have a material impact on the Group’s financial report in subsequent reporting periods.

(c) Basis of consolidation

The consolidated financial statements comprise the financial statements of Cryosite Limited and its subsidiary as at 30 June each year (‘the Group’).

The financial statements of the subsidiary are prepared for the same reporting year as the parent company, using consistent accounting policies.

Adjustments are made to bring into line any dissimilar accounting policies that may exist.

All inter-company balances and transactions have been eliminated in full.

Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.

20

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(d) Significant accounting judgements, estimates and assumptions

The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period is;

Unearned income

Calculation of unearned income and related revenue recognition in relation to long term contracts requires the group to make an estimate of the costs of providing services in the future.

(e) Foreign currency translation

Both the functional and presentation currency of Cryosite Limited and its Australian subsidiary is Australian dollars (A$).

Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date.

(f) Plant and equipment

Plant and equipment is stated at cost less accumulated depreciation and any impairment in value.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:

Major depreciation rates are:	2007	2006
Leasehold improvements:	Lease term	Lease term
Plant and equipment:
- Fixtures and fittings	10 – 20 years	10 – 20 years
- Information technology	2.5 – 5 years	2.5 – 5 years
- Warehouse equipment	10 years	10 years
- Office furniture & equipment	6 – 8 years	6 – 8 years
Plant & equipment under lease	5 years	5 years

Impairment

The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.

For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount.

The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

21

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(f) Plant and equipment continued

An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the year the item is derecognised.

(g) Borrowing costs

Borrowing costs are recognised as an expense by applying the effective interest rate method.

(h) Intangible assets

Acquired separately

Intangible assets acquired separately are capitalised at cost. Following initial recognition, the cost model is applied to the class of intangible assets. The useful lives of these intangible assets are assessed to be either finite or indefinite.

Where amortisation is charged on assets with finite lives, this expense is taken to the income statement through the ‘administrative expenses’ line item.

Intangible assets, excluding development costs, created within the business are not capitalised and expenditure is charged against profits in the year in which the expenditure is incurred.

Intangible assets are tested for impairment where an indicator of impairment exists and in the case of indefinite lived intangibles annually, either individually or at the cash generating unit level. Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis.

Research and development costs

Research and development costs incurred relate to Cryobyte® an inventory and environmental monitoring system.

Development expenditure incurred on an individual project is carried forward when its future recoverability can be reasonably regarded as assured. Research costs are written off as incurred.

Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less accumulated amortisation and accumulated impairment losses. Any expenditure carried forward is amortised over the period of expected future sales from the related project.

The carrying value of development costs is reviewed for impairment when an indicator of impairment arises during the reporting year indicating that the carrying value may not be recoverable.

22

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(h) Intangible assets continued

A Summary of the policies applied to the Group’s intangible assets is as follows:

Development Costs Useful life Finite – 5 years Method used Straight line Internally developed / Acquired Internally developed Impairment test / Recoverable amount Amortisation method reviewed at each financial yeartesting end; Reviewed annually for indicator of impairment

(i) Recoverable amount of assets

At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator to impairment exists, the Group makes a formal estimate of the recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.

Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

(j) Inventories

Inventories consist of consumables used in the provision of services. Inventories are valued at the lower of cost and net realisable value. Cost is determined by actual purchase price. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

(k) Trade and other receivables

Trade receivables (Current), which generally have 30 day terms, are recognised and carried at original invoice amount less a provision for any uncollectible amounts.

Trade receivables (Non-current), which generally have terms in excess of 12 months, are carried at their net present value. The expected net cash flows have been discounted to their present value using a market determined risk adjusted discount rate of 17.5% (2006: 17.5%).

An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written-off when identified

23

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(l) Cash and cash equivalents

Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.

For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

(m) Trade and other payables

Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services.

(n) Employee leave benefits

Wages, salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.

Long service leave

The liability for long service leave is recognised in the accruals for employee benefits and measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

(o) Provisions

Provisions are recognised when the Group has a present obligation (legal, or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.

If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

24

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(p) Share-based payment transactions

The group provides benefits to employees (including directors) of the Group in the form of share based payment transactions, whereby the employees render services in exchange for rights over shares (‘equity-settled transactions’) under the Employee Share Option Plan (ESOP) or individually negotiated share based payment arrangements.

The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined using a binomial model.

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Cryosite Limited (‘market conditions’).

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting date’).

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of directors of the Group, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it was granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

(q) Leases

Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments.

Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance chargers are charged directly against income.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.

25

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(q) Leases continued

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as the lease income.

Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term.

Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

(r) Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

Revenue from the archival storage of biological samples is recognised over the period that storage occurs.

Revenue from the rendering of non-storage services, such as collection or distribution of biological samples, is recognised upon the delivery of the service to the customers.

• -Revenue where services are provided in advance of payment under a long term contract are recognised at net present value with the balance outstanding taken to receivables. A corresponding amount is recognised as unearned income in the Balance Sheet (Refer Note 18).

• Interest revenue is recognised on a proportional basis taking into consideration the interest rates applicable to the financial assets.

(s) Income tax

Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences:

• Except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that the taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised:

26

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(s) Income tax continued

• Except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.

(t) Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

• where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivables and payables are stated with the amount of GST included the net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(u) Contributed equity

Contributed capital bears no special terms or conditions affecting income or capital entitlements of the shareholders. Ordinary share capital is recognised at the fair value of the consideration received by the company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

27

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(v) Share options reserve

The share options reserve captures the equity component of the company’s equity settled transactions of the share based payments schemes.

(w) Earnings per share

Basic EPS is calculated as net profit attributable to members, adjusted to exclude costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted EPS is calculated as net profit attributable to members, adjusted for:

• Costs of servicing equity (other than dividends) and preference share dividends;

• The after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and

• Other non-discretionary changes in revenues or expenses during the year that would result from the dilution of potential ordinary shares;

• Divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

3 SEGMENT INFORMATION

The company operates in one business segment, being biological services, and one geographic segment, being Australia.

4 OTHER REVENUES AND EXPENSES

	Consolidated Parent 2007 2006 2007 2006 $ $ $ $
(a) Finance incomes Bank interest (b) Finance expenses Other loans (c) Depreciation and amortisation Depreciation Amortisation – Leasehold Improvement Amortisation of software development	179,753 109,765 179,753 109,765
	(8,305) (9,495) (8,305) (9,495)
	166,619 167,384 166,151 166,916 2,896 32,032 2,896 32,032 20,103 122,320 20,103 122,320

28

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

4 OTHER REVENUES AND EXPENSES CONTINUED

	Consolidated Parent 2007 2006 2007 2006 $ $ $ $
(d) Lease payments Minimum lease payments-operating leases (e) Employee benefits expense Wages and salaries Workers compensation costs Superannuation costs Expense of share based payments	223,487 161,177 223,487 161,177 1,189,158 1,062,254 1,189,158 1,062,254 - 4,952 - 4,952 302,368 143,443 302,368 143,443 - 14,184 - 14,184
	1,491,526 1,224,833 1,491,526 1,224,833

5 INCOME TAX

A reconciliation of income tax expense applicable to accounting profit(loss) before income tax at the statutory income tax rate to income tax expense at the Group’s effective income tax rate for the years ended 30 June 2007 and 2006 is as follows:

	Consolidated Parent 2007 2006 2007 2006 $ $ $ $
Accounting profit(loss) before tax At the statutory income tax rate of 30% (2006: 30%) Options expense Capital Raising cost deductions Other items (net) Rebateable dividends Utilisation of deferred tax losses against current year taxable income(loss) Recognition of deferred income tax asset Tax (Benefit) at effective income tax rate of 30%, (2006: 0%)	375,264 101,374 (474,174) 186,498
	112,579 30,412 (142,252) 55,949 - 4,255 - 4,255 (22,815) (78,369) (22,815) (78,369) (278) 8,141 (278) 8,071 - (90,000) (270,000) (99,315) 35,561 (99,315) 35,561 (537,651) - (537,651) -
	(547,480) - (892,311) (244,533)

29

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

5 INCOME TAX CONTINUED

	Balance sheet 2007 2006 $ $	Income statement 2007 2006 $ $
Deferred income tax Deferred income tax at 30 June relates to the following: CONSOLIDATED Deferred income tax assets Post-employment benefits Provision for tax and audit fees Accelerated amortisation of leasehold improvements for book purposes Amortisation of Section 40-880 uniform capital allowances Depreciation of fixed assets expensed in prior years Accelerated amortisation of intangibles for tax purposes Consumables Losses available for offset against future taxable income Gross deferred income tax assets Deferred income tax benefit PARENT Deferred income tax assets Post-employment benefits Provision for tax and audit fees Accelerated amortisation of leasehold improvements for book purposes Amortisation of Section 40-880 uniform capital allowances Depreciation of fixed assets expensed in prior years Accelerated amortisation of intangibles for tax purposes Consumables Losses available for offset against future taxable income Gross deferred income tax assets Deferred income tax benefit	39,421 - 9,575 - 50,876 - 12,469 - 8,052 - (5,463) - (6,367) - 438,917 -	39,421 - 9,575 - 50,876 - 12,469 - 8,052 - (5,463) - (6,367) - 438,917 -
	547,480 -
	39,421 - 9,575 - 50,876 - 12,469 - 8,052 - (5,463) - (6,367) - 438,917 -	547,480 -
		39,421 - 9,575 - 50,876 - 12,469 - 8,052 - (5,463) - (6,367) - 438,917 -
	547,480 -
		547,480 -

The Group has tax losses arising in Australia of $5,135,893 (2006: $5,466,944) that are available for offset against future taxable profits of the company. The deferred income tax asset of $1,540,769 (2006: $1,640,083) arising from these losses has been brought to account to the extent of $438,917 at reporting date, as realisation of the remaining benefit is not regarded as probable. The Group also has a deferred tax asset of $108,564 (2006:Deferred tax liability ($17,005)) which has now been brought to account.

30

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

5 INCOME TAX CONTINUED

Tax consolidation

Effective from 1 July 2002, Cryosite Limited and its 100% owned subsidiary formed a tax consolidated group. The accounting policy in relation to this legislation is set out in Note 2. On formation of the tax consolidated group, the entities in the tax consolidated group agreed to enter into a tax sharing agreement which will, in the opinion of the directors, limit the joint and several liability of the wholly-owned entities in the case of default by the head entity Cryosite Limited.

The entities have also agreed to enter into a tax funding agreement under which the wholly-owned entities fully compensate Cryosite Limited for any current tax payable assumed and are compensated by Cryosite Limited for any current tax loss, deferred tax assets and tax credits that are transferred to Cryosite Limited under the tax consolidation legislation. The tax consolidated current tax liability or current year tax loss and other deferred tax assets are required to be allocated to the members of the tax consolidated group in accordance with UIG 1052. The group uses a group allocation method for this purpose where the allocated current tax payable, current tax loss, deferred tax assets and other tax credits for each member of the tax consolidated group is determined as if the company is a stand-alone taxpayer but modified as necessary to recognise membership of a tax consolidated group. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ financial statements which is determined having regard to membership of the tax consolidated group. The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year .The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. The funding amounts are recognised as current inter company receivables or payables.

In Cryosite Limited, the following amount was recognised as tax consolidation contributions during the financial year $344,831 (2006: $244,533).

6 EARNINGS PER SHARE

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year (adjusted for the effects of dilutive options)

The following reflects the income and share data used in the total operations basic and diluted earnings per share computations:

31

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

6 EARNINGS PER SHARE CONTINUED

	Consolidated 2007 $	Consolidated 2006 $
Net profit attributable to equity holders of the parent	922,744	101,374
	No of shares.	No of shares.
Weighted average number of ordinary shares for basic earnings per share Effect of dilution : Share options Adjusted weighted average number of ordinary shares for diluted earnings per share	46,639,563 1,280,412	45,415,108
		1,100,808
	47,919,975
		46,515,916

There have been no other transactions involving ordinary shares or potential ordinary shares since the reporting date and before completion of these financial statements.

7 DIVIDENDS PAID OR PROPOSED ON ORDINARY SHARES

No dividends have been provided for or paid (2006:Nil).

8 CASH AND CASH EQUIVALENTS

	Consolidated Parent 2007 2006 2007 2006 $ $ $ $
Cash at bank and in hand Short-term deposits	330,496 201,877 330,496 201,877 1,251,026 1,100,000 1,251,026 1,100,000
	1,581,522 1,301,877 1,581,522 1,301,877

Cash at bank and on hand earns interest at floating rates based on daily bank deposit rates.

Short-term deposits are made for varying periods of between one day and six months depending on the immediate cash requirements of the group, and earn interest at the respective short-term deposit rates.

The fair value of cash and cash equivalents for the consolidated group and parent entity is $1,581,522 (2006: $1,301,877).

Reconciliation of cash

For purposes of the Cash Flow Statement, cash and cash equivalents as at 30 June 2007 and the prior year 2006 are as shown above.

32

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

8 CASH AND CASH EQUIVALENTS CONTINUED

Reconciliation of cash continued

	Consolidated	Consolidated	Parent
	2007	2006	2007	2006
	$	$	$	$
Reconciliation of the net Profit(loss)
after tax to the net cash flows from
operations
Net profit(loss)	922,744	101,374	418,137	431,031
Non-cash Items
Depreciation and amortisation of
non-current assets	189,618	321,736	189,150	321,268
Options expense	-	14,184	-	14,184
Dividend received from wholly-
owned subsidiary	-	-	(300,000)	(900,000)
Changes in assets and liabilities
(Increase)decrease in trade and other
receivables	(168,051)	(346,643)	626,967	(582,471)
(Increase)decrease in inventory	(1,114)	(3,288)	(758)	3,362
(Increase) in other assets	(59,214)	(49,044)	(62,944)	(43,750)
(Increase) in deferred tax asset	(547,480)	-	(547,480)	-
Increase in trade and other creditors	268,770	84,200	282,201	878,895
(Decrease)Increase in unearned
income	58,597	(369,060)	58,597	(369,060)
Increase in employee benefits	33,781	43,517	33,781	43,517
Net cash flow from(used) in
operating activities	697,651	(203,024)	697,651	(203,024)
9 TRADE AND OTHER RECEIVABLES (CURRENT)
Trade receivables	1,083,494	768,744	679,027	543,927
Other receivables	251,083	303,814	232,798	290,464
Related party – tax related	-	-	274,233	620,693
	1,334,577	1,072,558	1,186,058	1,455,084
Trade receivables:
Trade receivables - 30 day terms	636,111	551,218	231,644	326,401
Trade receivables - term payment
plans	447,383	217,526	447,383	217,526
Total trade receivables	1,083,494	768,744	679,027	543,927

33

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

9 TRADE AND OTHER RECEIVABLES (CURRENT) CONTINUED

Term payment plans are offered to customers under cord blood collection contracts. Customers have an option of payment in full, over 3 months, or annually.

Other receivables: Other receivables are non-interest bearing.

	Consolidated Parent 2007 2006 2007 2006 $ $ $ $
10 INVENTORIES (CURRENT) Raw materials and stores at cost 28,229 27,115 21,224 20,466 Total inventories at cost 28,229 27,115 21,224 20,466 11 PREPAYMENTS Prepayments 188,030 138,248 181,030 127,518 12 TRADE AND OTHER RECEIVABLES (NON-CURRENT)	28,229 27,115 21,224 20,466
	28,229 27,115 21,224 20,466
	188,030 138,248 181,030 127,518

Trade receivables 1,552,318 1,636,854 1,552,318 1,636,854 1,552,318 1,636,854 1,552,318 1,636,854 Trade receivables Trade receivables due under term payment plans 1,552,318 1,636,854 1,552,318 1,636,854 Other receivables are non- interest bearing. 13 INVESTMENTS (NON-CURRENT) Investments at cost - - 20 20 Investment in controlled entity Equity interest held by the consolidated entity Investment Name - Cryosite Distribution Pty Limited 2007 2006 2007 2006 % % $ $	1,552,318 1,636,854 1,552,318 1,636,854
	1,552,318 1,636,854 1,552,318 1,636,854
	1,552,318 1,636,854 1,552,318 1,636,854
	Equity interest held by the consolidated entity Investment 2007 2006 2007 2006 % % $ $
Country of incorporation – Australia	100 100 20 20

34

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

13 INVESTMENTS (NON-CURRENT) CONTINUED

Cryosite Distribution Pty Limited is not listed on any public exchange and therefore there is no published quotation price for the fair value of this investment.

	Consolidated Parent 2007 2006 2007 2006 $ $ $ $
14 PLANT AND EQUIPMENT Leasehold improvements At cost Accumulated amortisation Plant and equipment owned At cost Accumulated depreciation Total Plant and Equipment Reconciliations of the carrying amounts of property, plant and equipment at the beginning and end of the current financial year. Leasehold Improvements Carrying amount at beginning Amortisation expense Plant and equipment owned Carrying amount at beginning Additions Depreciation expense	201,017 201,017 201,017 201,017 (200,332) (197,436) (200,332) (197,436)
	685 3,581 685 3,581
	1,658,888 1,558,997 1,654,158 1,554,267 (842,489) (675,870) (840,032) (673,881)
	816,399 883,127 814,126 880,386
	817,084 886,708 814,811 883,967
	3,581 35,613 3,581 35,613 (2,896) (32,032) (2,896) (32,032)
	685 3,581 685 3,581
	883,127 994,626 880,386 991,417 99,891 55,885 99,891 55,885 (166,619) (167,384) (166,151) (166,916)
	816,399 883,127 814,126 880,386

35

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

15 INTANGIBLE ASSETS

	Consolidated Parent 2007 2006 2007 2006 $ $ $ $
Software development At cost Accumulated amortisation Software development Carrying amount at beginning Additions Amortisation expense	931,048 613,003 931,048 613,003 (582,622) (562,519) (582,622) (562,519)
	348,426 50,484 348,426 50,484
	50,484 165,304 50,484 165,304 318,045 7,500 318,045 7,500 (20,103) (122,320) (20,103) (122,320)
	348,426 50,484 348,426 50,484

Software development costs are capitalised at cost. This intangible asset has been assessed as having a finite life and is amortised using the straight line method over a period of five years.

AASB 136 Impairment of assets states that where there is an impairment indicator then the asset should be impairment tested. The intangible asset’s fair value less costs to sell is higher than its carrying amount. The fair value less costs to sell has been calculated based on offers received by other entities who are interested in licensing the software.

16 EMPLOYEE BENEFITS

(a) Share based payments

Share Options Options over ordinary shares:

Employee share scheme

At the end of the year there were 550,000 (2006: 550,000) un-issued ordinary shares in respect of which options were outstanding under the employee share scheme.

	2007 2006 Number of options Exercise price Number of options Exerciseprice
Balance at beginning of year Balance at end of year Exercisable at end of year	550,000 - 550,000 -
	550,000 - 550,000 -
	550,000 40 cents 440,000 40 cents

36

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

16 EMPLOYEE BENEFITS CONTINUED

(a) Share based payments continued

Terms and conditions of options issued under employee share scheme details

On 18 February 2002, Cryosite established an Employee Share Option Plan (“the Plan”). The Plan is designed to assist in the retention and motivation of employees and directors of the Company.

The terms and conditions of the Plan are as follows:

Options may be granted under the Plan to an employee or director of the Company or any of its subsidiaries, or to a person who renders services to the Company, or to any of its subsidiaries and is eligible to be a participant in the Plan under the terms of the Income Tax Assessment Act 1936 and Income Tax Assessment Act 1997 and by any instrument issued by ASIC and applicable to the Company (“eligible participant”).

The Cryosite Board will determine the number of share options granted to each eligible participant.

The total number of share options granted under the Plan will be limited to 5% of the total number of issued shares at the time the offer or grant of options is made.

Options will be issued for no consideration.

The Board will determine the Option Exercise Price after considering the volume weighted average of the prices at which shares were traded on ASX during the one month period before the date of the offer.

Options will expire at the end of eight years from the option grant date or if the participant ceases to be an employee or director of, or render services to, the Company or any of its Subsidiaries for any reason whatsoever.

The exercise price of each initial option issued under the Plan was the retail offer price included in the prospectus (40 cents) for the Initial Public Offering.

For the initial options granted to employees and the Executive Director under the Plan, 20% will become exercisable after the first anniversary of listing on ASX and an additional 20% will become exercisable each anniversary of listing thereafter. The Company was listed on the ASX on 9 May 2002.

37

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

16 EMPLOYEE BENEFITS continued

(a) Share based payments continued

Share based option payments

At the end of the year there were 525,000 (2006: 675,000) unissued ordinary shares in respect of which options were outstanding, issued for the provision of services.

	2007 2006 Options No. Exercise price $ Expense for year $ Options No. Exercise Price $ Expense for year $
Balance at beginning of year Options expiring during the year - Granted to R Grellman (Chairman) on appointment as non-executive director Balance at end of year Exercisable at end of year R Grellman M Hale	675,000 - 825,000 - (150,000) - (150,000) - - - 14,184
	525,000 - 675,000 14,184
	500,000 0.40 500,000 0.40 25,000 0.40 175,000 0.40

38

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

16 EMPLOYEE BENEFITS CONTINUED

(a) Share based payments continued

Share based option payments

Parties to option agreement	R Grellman – Chairman	M Hale – Advertising and Marketing Consultant
Rights Granted and grant date	500,000 Share options granted on 27 November 2002	450,000 Share options granted on 1 July02
Option exerciseprice	Fixed at 40 centsper share	Fixed at 40 centsper share
Vesting period	165,000 on 27 November 2003 165,000 on 27 November 2004 170,000 on 27 November 2005 Options must be exercised no later than 5years from vestingdate.	Options vest at the rate of 12,500 per month from grant date. Options will be exercisable within 3 years of vesting in multiples of 10,000
Vesting requirements	No vesting conditions apply, options granted as part of remuneration package as chairman.	Options vest on continued supply of marketing consulting services to the company. The contract for supply of marketing services was cancelled by M Hale, effective 31 August 2004. The Options not vesting by that date were forfeited.
Weighted average fair value per option atgrant date	$0.21	$0.04
Expense for theyear	$-	$-
Prioryear’s expense taken to account	$14,184	$-
Value of options forfeited	$-	$48,125
Balance at the end of the financial year notyet expensed	$-	$-
Parties to option agreement	R Grellman – Chairman	M Hale – Advertising and Marketing Consultant
Calculation of fair value of option	Valuation was made using the binomial method in accordance with the requirements of accounting standards. Calculations were based on the expected contractual life of the options using the average weekly historical share price of the company over theprevious 12 months.	Valuation was made using the binomial method in accordance with the requirements of accounting standards. Calculations were based on the expected contractual life of the options using the average weekly historical share price of the company over theprevious 12 months.
	The expected volatility used was 0.708 with an interest-free risk rate of 5.05%. The market share price at date of grant was 38 cents.	The expected volatility used was 0.708 with an interest-free risk rate of 5.05%. The market share price at date of grant was 64 cents.

39

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

16 EMPLOYEE BENEFITS CONTINUED

(b) Superannuation

The Group contributes the equivalent of 9% of employees’ wages to their superannuation fund of choice as required by Australian law. Employees may also elect to make salary sacrifice to their nominated superannuation fund.

17 TRADE AND OTHER RECEIVABLES (CURRENT)

	Consolidated Parent 2007 2006 2007 2006 $ $ $ $
Trade payables Other payables Annual leave accrued Related party payables: Controlled entity Total payables	440,373 392,915 326,324 258,426 393,312 172,001 349,495 135,193 100,312 74,939 100,312 74,939
	933,997 639,855 776,131 468,558
	- - - 36,027
	933,997 639,855 776,131 504,585

Trade payables are non-interest bearing and are normally settled on 30-day terms.

Other payables are non-interest bearing and are on ranging from 30 days to 12 months Terms.

Australian dollar equivalents of amounts payable in United States dollars not effectively hedged are $48,341 (2006: $50,816).

The net of GST payable and GST receivable is remitted to the appropriate tax authority on a quarterly basis.

	Consolidated		Parent
	2007	2006	2007	2006
	$	$	$	$
18 UNEARNED INCOME (CURRENT)
Unearned service revenue	260,487	91,417	260,487	91,417

Represents revenue received in advance for services to be rendered under long-term storage contracts.

40

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

19 UNEARNED INCOME (NON-CURRENT)

	Consolidated Parent 2007 2006 2007 2006 $ $ $ $
Unearned service revenue	1,436,126 1,546,599 1,436,126 1,546,599

The carrying amount of unearned income has been reduced in the current financial year by $Nil (2006:$627,407) as a result of a change in accounting estimates.

20 PROVISIONS (NON-CURRENT)

Employee benefits – long service leave Employee benefits - long service leave Balance at beginning of year Arising during the year Balance at end of year	31,091 22,683 31,091 22,683
	22,863 - 22,863 - 8,228 22,863 8,228 22,863
	31,091 22,683 31,091 22,683

21 CONTRIBUTED CAPITAL AND RESERVES

Ordinary shares Contributed and fully paid Movement in ordinary shares on issue	8,035,506 8,035,575 8,035,506 8,035,575 2007 2006 Shares No. $ Shares No. $
Beginning of the financial year Shares issued on 31 March 2006 under a share placement plan at 14 cents per share Less: issue costs on share placement plan End of the financial year	46,639,563 8,035,575 45,005,456 7,815,715 - - 1,634,107 228,775 - (69) - (8,915) 46,639,563 8,035,506 46,639,563 8,035,575

Terms and condition of contributed equity

Ordinary shares

Ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.

Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the company.

41

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

21 CONTRIBUTED CAPITAL AND RESERVES CONTINUED

	Consolidated Parent 2007 2006 2007 2006 $ $ $ $
Other Reserves Share options reserve Movements in share options reserve Balance at the beginning of year Value of compensation benefit during the year Balance at end of year	180,185 180,185 180,185 180,185
	180,185 166,001 180,185 166,001 - 14,184 - 14,184
	180,185 180,185 180,185 180,185

The purpose of the share options reserve is to record the equity component of the equity based compensation schemes referred to in Note 16.

22 COMMITMENTS AND CONTINGENCIES

Operating lease commitments – Group as lessee

The Group has renewed the lease on its commercial property at Lane Cove in Sydney for 12 months until 25 July 2008.

During the financial year the Group also entered into operating leases on certain new items of plant and equipment.

These leases have an average life of 5 years with renewal terms included in the contracts. Renewals are at the option of the specific entity that holds the lease.

There are no restrictions placed upon the lessee by entering into these leases.

Future minimum rentals payable under non-cancellable operating leases as at 30 June 2007 are as follows:

	Consolidated Parent 2007 2006 2007 2006 $ $ $ $
Within one year After one year but not more than five years	201,780 195,600 201,780 195,600 155,667 200,031 155,667 200,031
	357,447 395,631 357,447 395,631

42

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

22 COMMITMENTS AND CONTINGENCIES CONTINUED

Capital Commitments

There are no capital commitments contracted for at reporting date.

Contingent Liabilities

The Group is not aware of any contingent liabilities at reporting date.

23 EVENTS AFTER THE BALANCE SHEET DATE

The directors are unaware of any event or transaction that has occurred between the balance date of 30 June 2007 and the date of this report which had, or may have had a significant effect on the company.

24 AUDITOR’S REMUNERATION

	Consolidated Parent 2007 2006 2007 2006 $ $ $ $
Amounts received or due and receivable by Ernst & Young Australia for: - an audit or review of the financial report of the entity and any other entity in the consolidated entity - Taxation compliance services	74,030 58,000 74,030 58,000 658 4,217 658 4,217
	74,688 62,217 74,688 62,217

25 RELATED PARTY DISCLOSURES

The consolidated financial statements include the financial statements of Cryosite Limited and its wholly owned subsidiary Cryosite Distribution Pty Limited. For details refer to Note 13.

Cryosite Limited is the ultimate parent entity.

Cryosite Distribution Pty Limited, neither has a bank account nor does it hold any cash in its own right. All receipts and payments for this entity are made by Cryosite Limited, with the amounts charged against an intercompany loan account. No interest is payable on this balance and no amounts are due and payable.

Cryosite Limited and Cryosite Distribution Pty Limited are part of a tax consolidation group and will enter into a tax funding agreement. Under this agreement, payments are to be made for tax losses transferred between entities in the group. Refer to Note 5.

There are no other transactions between the parent and its subsidiary (2006: Nil).

43

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

26 KEY MANAGEMENT PERSONNEL

The company has applied the exemption under Corporations Amendments Regulation 2006 which exempts listed companies from providing remuneration disclosures in relation to their key management personnel in their annual financial reports by Accounting Standard AASB 124 Related Party Disclosures. These remuneration disclosures are provided in the Remuneration Report on Page 8 of the Directors’ Report designated as audited.

Key management personnel are:-

Richard Grellman Chairman (Non-executive) Catherine Brenner Director (Non-executive) Appointed 28 September 2006 Dr Peter French Director (Non-executive) Resigned 4 September 2006 Theodore Onisforou Director (Non-executive) Prof Ronald Penny Director (Non-executive) Gordon Milliken Managing Director

Key management personnel held their positions for the whole of the financial year. Dr Peter French resigned as a director on 4 September 2006 and Catherine Brenner was appointed on 28 September 2006.

Due to the relatively small number of employees, apart from the Managing Director, there are no other executives having authority and responsibility for planning, directing and controlling the activities of the entity either directly or indirectly.

Shareholdings of key management personnel

Shares held in Cryosite Limited	Balance 1 July 2006 Granted as remuneration On exercise of options On market purchases Balance 30 June 2007 Ord. Ord. Ord. Ord. Ord.
Richard Grellman Catherine Brenner Theodore Onisforou Prof. Ronald Penny Gordon Milliken Total	98,214 - - - 98,214 - - - - - 3,497,386 - - 253,951 3,751,337 883,371 - - - 883,371 1,034,918 - - 13,500 1,048,418
	5,513,889 - - 267,451 5,781,340

Dr Peter French resigned as a director during the year as stated above. Shares held by him at 30 June 2006 have been removed from the above table.

44

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

27 FINANCIAL INSTRUMENTS

(a) Interest rate risk

Interest rate risk represents the risk that a financial instrument's value will fluctuate as a result of changes in market interest rates. The consolidated entity's exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets is set out below:

2007 CONSOLIDATED Notes Weighted average effective interest rate %	Floating interest rate $ Non interest bearing $ Total $ 1,251,026 - 1,251,026 330,496 - 330,496 62,080 1,272,497 1,334,577 - 1,552,318 1,552,318 1,643,602 2,824,815 4,468,417 - 993,997 993,977 Floating interest rate $ Non interest bearing $ Total $
Financial assets Interest bearing deposits – maturing at various dates during year ending 30 June 2008 8 5.8 Cash and cash equivalents 8 2.0 Net current receivables – maturing at various dates during year ending 30 June 2008 9 4.5 Net non-current receivables 12 - Financial liabilities Trade creditors and accruals – maturing at various dates during the year ending 30 June 2008. 17 - 2006 CONSOLIDATED Notes Weighted average effective interest rate %
Financial assets Interest bearing deposits – maturing at various dates during year ending 30 June 2007 8 5.2 Cash and cash equivalents 8 2.0 Net current receivables – maturing at various dates during year ending 30 June 2007 9 4.5 Net non-current receivables 12 - Financial liabilities Trade creditors and accruals – maturing at various dates during the year ending 30 June 2007. 17 -	1,100,000 - 1,100,000 201,877 - 201,877 60,342 1,012,216 1,072,558 - 1,636,854 1,636,854
	1,362,219 2,649,070 4,011,289
	- 639,855 639,855

45

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

27 FINANCIAL INSTRUMENTS CONTINUED

2007 PARENT Notes Weighted average effective interest rate %	Floating interest rate $ Non interest bearing $ Total $
Financial assets Interest bearing deposits – maturing at various dates during year ending 30 June 2008 8 5.8 Cash and cash equivalents 8 2.0 Net current receivables – maturing at various dates during year ending 30 June 2008 9 4.5 Net non-current receivables 12 - Financial liabilities Trade creditors and accruals – maturing at various dates during the year ending 30 June 2008. 17 - 2006 PARENT Notes Weighted average effective interest rate %	1,251,026 - 1,251,026 330,496 - 330,496 62,080 1,123,978 1,186,058 - 1,552,318 1,552,318
	1,643,602 2,676,296 4,319,898
	- 776,131 776,131
	Floating interest rate $ Non interest bearing $ Total $
Financial assets Interest bearing deposits – maturing at various dates during year ending 30 June 2007 8 6.00 Cash and cash equivalents 8 2.00 Net current receivables – maturing at various dates during year ending 30 June 2007 9 4.5 Net non-current receivables 12 - Financial liabilities Trade creditors and accruals – maturing at various dates during the year ending 30 June 2006. 17 -	1,100,000 - 1,100,000 201,877 - 201,877 60,342 1,394,742 1,455,084 - 1,636,854 1,636,854
	1,362,219 3,031,596 4,393,815
	- 504,585 504,58

46

CRYOSITE LIMITED – FINANCIAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2007

27 FINANCIAL INSTRUMENTS CONTINUED

(b) Credit risk exposures

Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.

Credit risk

The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures.

In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents, the Group’s exposure to credit risk arises from default of the counter party, with maximum exposure equal to the carrying amount of these instruments.

Since the Group trades only with recognised credit worthy parties, there is no requirement for collateral.

Financial instruments

The credit risk on financial assets, which would have been recognised on the Balance Sheet, is the carrying amount, net of any related provisions, as disclosed in the Balance Sheet and notes to the financial statements.

(c) Net fair values

All financial assets and liabilities have been disclosed in the financial statements and notes thereto at their carrying value, which approximates their net fair values.

(d) Financial risk policy

The Board of Directors is responsible for assessing financial risks, related controls and other financial risk management strategies. The Company deploys its assets and liabilities so as to manage risk at commercially appropriate levels, bearing in mind the constraints imposed by the consolidated entity’s size, results and other financial circumstances. The Company aims to balance opportunities to improve profitability against related risks of losses of assets or the incurrence of additional liabilities.

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Independent Audit Report

We have audited the accompanying financial report of Cryosite Limited and the entities it controlled during the year ended 30 June 2007, which comprises the balance sheet as at 30 June 2007, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration.

The company has disclosed information as required by paragraphs Aus 25.4 to Aus 25.7.2 of Accounting Standard 124 Related Party Disclosures (“remuneration disclosures”), under the heading “Remuneration Report” on pages 7 to 9 of the directors’ report, as permitted by Corporations Regulation 2M.6.04.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with the Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 2(b), the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards. The directors are also responsible for the remuneration disclosures contained in the directors’ report.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement and that the remuneration disclosures comply with Accounting Standard AASB 124 Related Party Disclosures.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Liability limited by a scheme approved under 48 Professional Standards Legislation.

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Independence

In conducting our audit we have met the independence requirements of the Corporations Act 2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the directors’ report. In addition to our audit of the financial report and the remuneration disclosures, we were engaged to undertake the services disclosed in the notes to the financial statements. The provision of these services has not impaired our independence.

Auditor’s Opinion

In our opinion:

1. the financial report of Cryosite Limited is in accordance with:

2. (a) the Corporations Act 2001, including:

   • (i) giving a true and fair view of the financial position of Cryosite Limited and the consolidated entity at 30 June 2007 and of their performance for the year ended on that date; and

   • (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations); and

3. (b) other mandatory financial reporting requirements in Australia.

4. the financial report also complies with International Financial Reporting Standards as disclosed in Note 2(b).

5. the remuneration disclosures that are contained on pages 7 to 10 of the directors’ report comply with Accounting Standard AASB 124 Related Party Disclosures.

Ernst & Young

Ian Campbell Partner Sydney

29 August 2007

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CRYOSITE LIMITED – FINANCIAL REPORT

ASX Additional Shareholder Information

Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 27 August 2007.

Twenty largest shareholders

The names of the twenty largest holders of quoted shares are:

	Listed ordinary shares Number of shares %of ordinaryshares
Strategic Pooled Development Ltd Merrill Lynch (Australia) Nominees Pty Ltd Bell Potter Nominees Ltd Fitel Nominees Limited Angus Property & Development Pty Ltd SHR Pty Limited All State Secretariat Ltd Sentra Investments Pty Ltd Lost Ark Nominees Pty Ltd Naron Nominees Pty Ltd All-States Finance Pty Ltd Mr Gordon Milliken Mrs Erica Margaret Strong Mr Alistair David Strong HFA Administration Pty Limited Peter Seward Anadyomene Pty Ltd Stephen Roberts Laydon Pty Limited Plastic Tooling Manufacturing Pty Ltd Total	8,312,229 17.82 6,805,132 14.59 3,766,463 8.08 2,300,300 4.93 2,071,370 4.44 1,980,610 4.25 1,454,584 3.12 1,254,827 2.69 1,068,538 2.29 839,416 1.80 723,815 1.55 694,213 1.49 600,000 1.29 500,000 1.07 455,625 0.98 434,764 0.93 400,000 0.86 389,994 0.84 377,500 0.81 377,492 0.81
	34,806,872 74.64

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CRYOSITE LIMITED – FINANCIAL REPORT

ASX Additional Shareholder Information (Continued)

DISTRIBUTION OF EQUITY SECURITIES

Number of shareholders by size of holding.

	Ordinary Shares Number of Holders Number of Shares
1 1,000 1,001 5,000 5,001 10,000 10,001 100,000 100,001 and over Total	24 14,062 244 1,000,306 74 581,662 163 5,500,681 50 39,542,852
	555 46,639,563

Substantial shareholders

The names of any substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are:

		Relevant interest	Relevant interest
	2007		2006
		% of		% of
		issued		issued
Shareholder	No. of shares	capital	No. of shares	capital
Strategic Pooled
Development Limited	10,292,839	22.07	8,827,542	18.93
Theodore Onisforou	3,751,337	8.04	3,497,386	7.50
Robmar Investments Pty
Limited (Bell Potter
Nominees Limited)	3,065,515	6.57	2,136,564	4.58

Voting Rights

All ordinary shares carry one vote per share without restriction.

Number of shareholders holding less than a marketable parcel

The number of shareholders holding less than a marketable parcel of 3,449 shares is 93 and they hold 160,910 shares.

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