CRYOSITE LIMITED

Annual Report 2009

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LIMITED ABN 86 090 919 476

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Corporate Directory

Directors

Theodore Onisforou (Non-Executive Chairman) Gordon Milliken (Managing Director) Graeme Moore (Executive Director)

Company Secretary

Bryan Dulhunty

Registered Office

9 Sirius Road Lane Cove, New South Wales, 2066 Telephone: +61 2 9420 1400 Facsimile: +61 2 9420 1414

13A Ferndell Street South Granville, New South Wales, 2142 Telephone: +61 2 8865 2000 Facsimile: +61 2 8865 2090 E-Mail: [email protected] Internet: www.cryosite.com

Share Register

Link Market Services Limited Level 8, 580 George Street Sydney New South Wales 2000 Telephone: +61 2 8280 7111

Bankers

Australia and New Zealand Banking Group Limited Martin Place Sydney New South Wales 2000

Auditors

Ernst & Young 680 George Street Sydney New South Wales 2000 Telephone: +61 2 9248 555 Facsimile: +61 2 9248 5959

ABN 86 090 919 476

Annual Report

for the year ended 30 June 2009

CRYOSITE LIMITED – ANNUAL REPORT

Table	of Contents
		Page
Corporate	Information	2
Directors’	Report	3
Auditor’s Independence Declaration		13
Corporate	Governance Statement	14
Directors’	Declaration	17
Income Statement		18
Balance Sheet		19
Cash Flow	Statement	20
Statement	of Changes in Equity	21
Notes to the Financial Statements
1	Corporate Information	22
2	Summary of Significant Accounting Policies	22
3	Significant Accounting Judgements, Estimates and assumptions	31
4	Segment Information	33
5	Other Revenue and Income	33
6	Expenses	33
7	Income Tax	34
8	Earnings Per Share	36
9	Dividends paid and Proposed	36
10	Cash and Cash Equivalents	37
11	Cash Flow Statement Reconciliation	37
12	Current Assets - Trade and Other Receivables	38
13	Current Assets – Inventories	40
14	Current Assets – Prepayments	40
15	Non-Current - Trade and Other Receivables	40
16	Non-Current Assets – Investments in Subsidiaries	40
17	Non-Current Assets - Plant and Equipment	41
18	Non-Current Assets - Intangible Assets	42
19	Current Liabilities - Trade and other payables	42
20	Current Liabilities – Unearned Income	43
21	Non-Current Liabilities - Unearned Income	43
22	Non-Current Liabilities – Provisions	44
23	Contributed Equity	44
24	Accumulated Losses and Reserves	45
25	Commitments and Contingencies	45
26	Events After Balance Date	46
27	Auditors’ Remuneration	46
28	Related Party Disclosures	47
29	Shared-Based Payments Expense	47
30	Key Management Personnel	50
31	Financial Instruments	53
Independent Audit Report		60
ASX Additional Shareholder Information		62

CRYOSITE LIMITED – ANNUAL REPORT

Corporate Information

ABN 86 090 919 476

DIRECTORS

Theodore Onisforou (Non-Executive Chairman) Gordon Milliken (Managing Director) Graeme Moore (Executive Director)

COMPANY SECRETARY

Bryan Dulhunty

REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS

9 Sirius Road Lane Cove NSW 2066 Telephone: +61 2 9420 1400 Fax: +61 2 94201414 13A Ferndell Street South Granville NSW 2142 Telephone: +61 2 8865 2000 Fax: +61 2 8865 2090 Email: [email protected]

SHARE REGISTER

Link Market Services Limited Level 8, 580 George Street Sydney NSW, 2000 Telephone: +61 2 8260 7111

AUDITORS

Ernst & Young 680 George Street Sydney NSW, 2000 Telephone: +61 2 9248 5555

INTERNET ADDRESS

www.cryosite.com

CRYOSITE LIMITED – ANNUAL REPORT

Directors’ Report

Your directors submit their report for the year ended 30 June 2009.

DIRECTORS

The following people held the office of director during the year

Theodore Onisforou (Chairman)

Gordon Milliken (Managing Director) Graeme Moore (Executive Director – Appointed 22 September 2008) Catherine Brenner (Non Executive Director resigned 29[th] October 2008 Professor Ron Penny (Non Executive Director resigned 2nd[h] March 2009

Names, qualifications, experience and special responsibilities

Theodore Onisforou, BCom, LLB – Non-Executive Chairman

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. Mr Onisforou was reappointed as Chairman on 4 March 2008.

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.

Graeme Moore, B.App.Sc (Biomed), MHA (Appointed 22 September 2008)

Graeme Moore is the Quality and Regulatory Affairs Manager and Chief Operating Officer. 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. Mr Moore has no listed directorships other than Cryosite Limited.

Catherine Brenner, BEc LLB, MBA - Non-Executive Director (Resigned 29 October 2008)

Ms Brenner is a non-executive director of Coca Cola Amatil Limited, Centennial Coal Company Limited and the Australian Brandenburg Orchestra. She has previously been a non-executive director of Trafalgar Corporate Group Limited. Ms Brenner was a Managing Director in ABN AMRO’s Investment Banking business. Prior to becoming an investment banker Ms Brenner was a corporate lawyer. She is also a Member of the Takeovers Panel. Ms Brenner was appointed to the Board in September 2006.

Professor Ronald Penny, AO, DSc, MD, FRACP, FRCPA – Non-Executive Director (Resigned 2 March 2009)

Professor Penny served as an Honorary Consultant at several Sydney hospitals and on the Editorial Board of six international medical and scientific journals. He was the Chairman of the NSW Government's Justice Health Board until December 2007. He is Senior Medical Advisor to the NSW Department of Health and is Medical Director of Good Health Solutions, a workplace health management company. In March 2008, he was appointed a Commissioner on the National Health and Hospital Reform Commission. Professor Penny was previously a director of Probiomics Limited. Professor Penny was appointed to the board of Cryosite in December 1999

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

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 relevant interests of the directors in the shares and options of Cryosite Limited were:

Director	Ordinary shares	Options over ordinary shares
Theodore Onisforou	3,751,337	-
Gordon Milliken	1,048,418	312,500
Graeme Moore	-	300,000

EARNINGS PER SHARE

Basic earnings per share 0.02 cents (2008: 1.0 cents) Diluted earnings per share 0.02 cents (2008: 1.0 cents)

DIVIDENDS

There were no dividends declared or paid during the course of the financial year and no dividend is recommended (2008: 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.

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 23 full-time equivalent employees as at 30 June 2009 (2008: 19 employees).

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

OPERATING RESULTS FOR THE YEAR

The Directors would like to report to shareholders on the results of a very important year for Cryosite. The reported profit after tax was $7,249 (2008: $447,059), however, if you adjust the current year profit for one-off costs (impairment loss on software $307,530 and relocations costs $533,111 profits from continuing operations would have been $847,890, a 90% increase from the prior year.

Similarly, cash flow was strong.

Cash flow from continuing operations grew strongly during the year. While cash flow from operations of $709k is down from the previous year’s cash flow of $888k, the previous year’s cash flow included a one-off cash inflow of $600k from the equine flu vaccination program.

This high operational cash flow allowed the company to fund its expansion plans without the need to resort to borrowings. During the year the company spent $1.4m on capital development. This was funded by cash inflow ($700k) and by drawing down on the cash reserves ($700k). Cash on hand at 30 June 2009 stood at a healthy $1.3m.

The main focus of our activities during the year was the development and commissioning of our new facility in South Granville. The facility is intended to cater for our growth plans for at least the next five years and represents the high level of confidence by the Board and the management team in the business model the company has developed and implemented. The Granville facility has a total floor area of approximately 2,000m[2 ] which is divided into separate areas comprising two clean-room standard laboratories for cord blood processing, approximately 900 m[2] clinical trials storage and operations space and 600 m[2] of biorepository storage space for freezers and liquid nitrogen storage equipment. The total office and administration area is 500 m[2] .

The physical development and fit-out of the site has been completed and a successful audit of the facility by the Therapeutic Goods Administration has been completed. The next step is to finalise a detailed relocation plan for the TGA and our clients. We anticipate that we will commence relocation in early September and that it will be completed by the end of December. The relocation is a major logistics undertaking, especially the safe transfer of approximately 7,000 cord blood samples as well as the large number and range of other biological samples and investigational drugs.

Although the site represents a significant investment for the company, we believe that it is a logical strategic investment and will provide a platform for the next phase in Cryosite’s development. The sustained growth in clinical trials logistics in particular has resulted in the Lane Cove site being somewhat of a limitation to growth in all of our services. With the imminent relocation, this barrier has been lifted and we are already planning to reinvigorate our corporate image by preparing new marketing material that will help us take maximum advantage from the investment. Once we have completed the relocation and smooth out the operations we will be in a good position to take advantage of being able to continue to attract the world’s biggest and most important drug development companies as clients as well as expand into new areas such as commercial drug logistics and high-value laboratory reagents.

REVIEW OF OPERATIONS

The cord blood service continued to operate satisfactorily, however, the total number of contracts was disappointing. We believe there are several factors which have caused this outcome. The decision to store a baby’s cord blood does represent a discretionary expense and so it is highly likely that the general feeling of unease in the community with the global financial uncertainty is certain to affect a parent’s decision to go to the expense of saving a child’s cord blood. We also believe that the Commonwealth Government’s change in the method of payment of the Baby Bonus had a negative impact. From 1 January 2009, the Bonus is paid in 26 fortnightly installments instead of as a single, lump sum payment made within three months of the baby’s birth. We also believe that the total Australian market for private cord blood storage remains at around 1% of total births of 270,000; Cryosite has maintained its relative share of the Australian market at about 45%.

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

We continue to be encouraged by the performance of the clinical trials logistics service. As highlighted in previous reports, the clinical trials service has played an integral part in our strategy of moving the company in the direction of an integrated high-end biologistics service provider. We have reached the point where the service now provides enough critical mass to help smooth out the ups and downs with any of our other services. It also helps spread the high cost of operating in a highly regulated environment.

Over the past year there has been sustained takeover and merger activity in the pharmaceutical industry. We expect that this will continue as pharmaceutical and biotechnology companies seek ways to expand their drug development pipelines and at the same time rein in the high costs associated with getting drugs, especially a potential blockbuster, to market. Many figures are bandied about as to the cost of this, but the figure of around US$1 billion is not disputed. Cryosite is in an ideal position to continue to benefit from this activity as the outsourcing of non-core activities such as the logistics of investigational drug supply is now a widely accepted practice with both large and small companies.

We have continued to add to our portfolio of blue-chip clients and the list includes major pharmaceutical companies such as Pfizer, Bristol-Myers Squibb, Boehringer Ingelheim Schering-Plough and Janssen-Cilag. Leading Australian contract research organisations such as Novotech and Trident are also important sources of revenue as clients. An increasingly important growth area for the service is in providing local depot services for several large international clinical trial service providers. We currently work with Fisher Clinical Services, Aptuit and Catalent. With the outsourcing trend increasing, the bigger companies are signing very large, worldwide logistics agreements; Cryosite is able to be a part of those agreements by being the local partner in very large and valuable projects.

We maintain the agreement with Animal Health Australia to provide consultancy and logistics services to support the Commonwealth Government Emergency Animal Disease Preparedness Program. Although there has been no renewed activity in relation to the equine influenza outbreak, we continue to hold vaccine supplies in case any renewed vaccination is needed.

BUSINESS GROWTH AND OUTLOOK

Obviously our main focus for the time being is the successful relocation from Lane Cove to Granville. Whilst this is being done, we will also be working to reinvigorate our marketing strategy so as to take advantage of the new facility. As we have mentioned previously, the Lane Cove site was adequate for our needs when the company was established. At that time, the company’s principal activity was in providing biorepository services However, as the strategy was revised, and a more ambitious plan to create an integrated biologistics service was developed, the shortcomings of the site became evident. This was initially true for the cord blood service and the regulatory requirement to operate to the TGA code of Good Manufacturing Practice. With the rapid success of the clinical trials logistics services, the lack of space and the general “low-tech” appearance of the building was also a matter that needed to be remedied.

Over the last few months we have had the opportunity of having many existing and prospective clients inspect the Granville site and the response was universal praise for the design, level of equipment and for the underpinning systems, such as storage options, environmental control, monitoring and security. We are confident that the site will offer an invaluable competitive edge for all of the services, especially clinical trial logistics.

The cord blood market in Australia is likely to remain fairly consistent; however, our primary marketing priority at the moment is the revamp of our website and the complementary hard copy information and promotional material. This will focus on highlighting the advantages of choosing Cryosite over the competitors. The new facility has two state-of-the art laboratories that have been designed, constructed and equipped to a standard that our competitors cannot match. We believe that if we are able to convey to our prospective clients a total commitment to quality they will choose Cryosite over our competitors who are essentially marketing organisations that subcontract all the processing, testing and storage to a third party hospital laboratory.

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

We are excited about the opportunities that will arise out of our new facility and have already initiated a wide ranging plan to capitalise on the new look and feel of the company that will flow from the much improved physical image that we convey to clients.

Finally, the Directors would like thank all of our loyal shareholders for their past support and to assure them that the Board and management of the company will continue to build a truly world-class company.

SHARE OPTIONS

As at the date of this report, there were 1,070,000 unissued ordinary shares under options (1,070,000 at the reporting date). Refer to the remuneration report for further details of the options outstanding. Option holders do not have any right, by virtue of the option, to participate in any share issue of the company or any related body corporate.

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, the Office of the Gene Technology Regulator OGTR), as well as the quality system requirements of many of its customers. The company has implemented a company-wide quality management system to ensure that we meet or exceed the requirements of all these interests.

There have been no significant known breaches of the consolidated entity’s licence conditions or any regulations to which it is subject to. The company, to the best of its knowledge, is not subject to any specific environmental regulations.

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 licenses 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.

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

Our exclusive distribution agreement with the ATCC is due for renewal in January 2010 and the failure to renew the agreement or any breach of the agreement by Cryosite resulting in termination of the agreement would result in significant 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.

In addition to the above, the Directors and certain Officers of the Company have entered into a Deed of Indemnity and Access confirming the Company’s obligation to maintain an adequate Director and Officer liability policy and confirming the individual Directors’ and Officers’ right to access board papers and other Company documents. In return, the individual Director and Officer has agreed to allow the Company to conduct the case for the defence should the event arise.

The Company has not otherwise, during or since the end of the financial year, indemnified or agreed to indemnify an Officer or Auditor of the Company or of any related body corporate against a liability incurred as such an Officer or Auditor.

REMUNERATION REPORT

This remuneration report outlines the director and executive remuneration arrangements of the Company and the Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report, key management personnel (KMP) of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company, and includes the five executives in the Parent and the Group receiving the highest remuneration.

This has been audited by Ernst & Young and is included within the scope of the audit report on page 60.

Remuneration philosophy

The Company recognises the importance of structuring remuneration 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 remuneration expense.

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

Non-Executive Directors

Total remuneration 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 remuneration paid to non-executive directors is $350,000 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.

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

Executive directors and other key management personnel are employed on rolling contracts. The company may terminate the executives employment agreement by providing 3 months notice written notice or by providing payment in lieu for the notice period based on the fixed component of the executive’s remuneration. Any options that have vested or that will vest during the notice period will be forfeited. The company may terminate the contract without notice if serious misconduct has occurred. Where termination with cause occurs the executive is only entitled to that portion of remuneration that is fixed, and only up to the date of termination. On termination with cause any options that have vested will be forfeited. Executive directors and other key management personnel may resign by giving 3 months written notice.

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.

Key Management Personnel

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

Theodore Onisforou Chairman (Non-executive) Gordon Milliken Managing Director Graeme Moore Executive Director – Appointed 22 September 2008 Chief Operating Officer a and Quality Manager Catherine Brenner Director (Non-executive) – Resigned 29 October 2008 Prof. Ronald Penny Director (Non-executive) – Resigned 2 March 2009 Philip Alger Chief Financial Officer

Due to the relatively small number of employees, apart from Gordon Milliken, Graeme Moore and Philip Alger 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

	Short term benefits Post employ- ment benefits Other long term benefits Share- based payments Total Salary & Fees Other cash benefits Super- annuation Long service leave Options $ $ $ $ $ $
Year ended 30 June 2009 Non-executive Directors Theodore Onisforou Catherine Brenner (i) Prof Ronald Penny (i) Sub-total: non-executive directors Executive directors Gordon Milliken Graeme Moore (ii) Other key management personnel Philip Alger Sub-total executive KMP	75,000 - 6,750 - - 81,750 15,000 - 1,350 - (12,733) 3,617 30,000 - 2,700 - - 32,700
	120,000 - 10,800 - (12,733) 118,067
	91,495 22,000 56,505 1,921 - 171,921 117,398 27,600 13,050 - 14,251 172,299 40,753 - 72,066 9,533 10,455 132,807
	249,646 49,600 141,621 11,454 24,706 477,027
	369,646 49,600 152,421 11,454 11,973 595,094

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

Directors’ Report	continued
Year ended 30 June 2008 Non-executive Directors Theodore Onisforou Richard Grellman (i) Catherine Brenner Prof Ronald Penny Sub-total non-executive directors Executive directors Gordon Milliken Other key management personnel Graeme Moore Philip Alger Sub-total executive KMP Total	Short term benefits Post employ- ment benefits Other long term benefits Share- based payments Total Salary & Fees Other cash benefits Super- annuation Long service leave Options $ $ $ $ $ $
	45,000 - 4,050 - - 49,050 40 - 54,460 - - 54,500 45,000 - 4,050 - 12,733 61,783 45,000 - 4,050 - - 49,050
	135,040 - 66,610 - 12,733 214,383
	94,495 19,000 56,505 1,432 - 171,432 128,331 - 11,550 - 12,733 152,614 28,883 - 79,609 - 9,338 117,830
	251,709 19,000 147,664 1,432 22,071 441,876
	386,749 19,000 214,274 1,432 34,804 656,259

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

(i) Where directors resigned or were appointed during the year payments shown above are for the period served as a director.

(ii) The amount is for the full year.

OPTIONS GRANTED AS PART OF REMUNERATION FOR THE YEAR ENDED 30 JUNE 2009

There were no options granted during the year (2008: 820,000).

OPTION HOLDINGS OF KEY MANAGEMENT PERSONNEL

	Gordon Milliken Graeme Moore Catherine Brenner Philip Alger Total No. No. No No.* No.
Balance held at 1 July 2008 Options forfeited on resignation Balance held at 30 June 2009	312,500 300,000 300,000 220,000 1,132,500 - - (300,000) - (300,000) - - - - -
	312,500 300,000 - 220,000 832,500

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

OPTIONS VESTED OF KEY MANAGEMENT PERSONNEL

	Gordon Milliken Graeme Moore Catherine Brenner Philip Alger Total No. No. No. No. No.
Balance vested at 1 July 2008 312,500 - - - 312,500 Options vested 1 December 2008 - 100,000 - 73,333 173,333 Balance vested at 30 June 2009 312,500 100,000 - 73,333 485,833 Not exercisable - - - - - Exercisable 312,500 100,000 - 73,333 485,833 * Options issued under the employee share scheme.	312,500 - - - 312,500 - 100,000 - 73,333 173,333
	312,500 100,000 - 73,333 485,833
	- - - - -
	312,500 100,000 - 73,333 485,833

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.

SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL

Shares held in Cryosite Limited	Balance 1 July 2008 Granted as remuneration On exercise of options On market purchases Balance 30 June 2009 Ord. Ord. Ord. Ord. Ord.
Theodore Onisforou Gordon Milliken Graeme Moore Philip Alger Total	3,751,337 - - - 3,751,337 1,048,418 - - - 1,048,415 - - - - - - - - - -
	4,799,755 - - - 4,799,755

Shareholdings of directors who resigned have been excluded from the above table.

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

Loans to key management personnel

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

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

DIRECTORS’ MEETINGS

During the financial year, 8 meetings of directors were held. Attendances were as follows:

Directors	Directors Meetings	Directors Meetings
	Eligible to attend	Attended
Theodore Onisforou	8	8
Gordon Milliken	8	8
Graeme Moore (Appointed 22 September 2008)	5	5
Catherine Brenner (Resigned 29 October 2008)	4	4
Prof. Ronald Penny (Resigned 2 March 2009)	6	2

AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES

The directors have received the auditors’ independence declaration which is included on Page 13 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 27 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.

Signed in accordance with a resolution of the directors.

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Gordon Milliken Managing Director

Date: 31 August 2009

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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 2009, 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.

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Ernst & Young

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Gamini Martinus Partner Date: 31 August 2009

Liability limited by a scheme approved under Professional Standards Legislation.

CRYOSITE LIMITED – ANNUAL REPORT

Corporate Governance Statement

Corporate Governance is the system by which the Company is directed and managed.

Within this framework:

The board of directors is accountable to shareholders for the performance of the Company;
The Company’s goals to achieve milestones are set and promulgated;
The risks of the business are identified and managed; and
The Company’s established values and principles underpin the way in which it undertakes its operations.

The Company has in place an entrenched and well developed governance culture which has its foundations in the ethical values that the board, management and staff bring to the Company and their commitment to positioning the Company as leader in its field.

This statement is organised under headings based on the Australian Securities Exchange (ASX) Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations dated August 2007.

Many of the policies set out below are currently being formalised in a written format and are in the process of being put on the company’s website.

The Company should and has policies and procedures to ensure that the following objectives are achieved:

1 Lay solid foundations for management and oversight

The Company should recognise and publish the respective roles and responsibilities of board and management:

The Company has:

formalised and disclosed the functions reserved for the board and those delegated to management including a copy of the Board Charter being available on the web site; and
disclosed the process of performance evaluation of senior executives. The Board undertakes an annual process of assessing the performance of senior executives. However, due to the reorganisation of the board during the year this assessment was not carried out this year

2 Structure the board to add value

Have a board of an effective composition, size and commitment to adequately discharge its responsibilities and duties:

A majority of the Board should be independent directors. The Company does not currently have any independent directors as recommended by the ASX Corporate Governance Council guidelines. The Board believes that due to the current development stage and size of the Company the interest of shareholders are best served by a small Board;

The Chairman, Mr. Theodore Onisforou is deemed not to be independent as he was one of the founding directors of the Company as well as the size of his relevant shareholding in the company Mr. Gordon Milliken (Managing Director) and Mr. Graeme Moore (Executive Director) are deemed not to be independent due to their executive roles. In addition Mr. Gordon Milliken was a founding director of the Company.

CRYOSITE LIMITED – ANNUAL REPORT

Corporate Governance Statement

2 Structure the board to add value

The Chairman should be independent. The Company does not have an independent chairman as recommended by the ASX Corporate Governance Council guidelines. The Company considers that the non independent role of the Chairman is appropriate due to the wealth of financial experience he brings to the Company combined with the fact he is independent from the executive directors;
The roles of chairman and chief executive officer should not be exercised by the same individual. The Board Charter requires the chairman and the chief executive officer to be different individuals;
• The Board should establish a nomination committee: due to the Board size and structure the Company has not established Nomination, Remunerations or Risk Assessment Committees. The directors believe performance of the sub-committees duties are more effectively dealt with by the main board; and
The process for evaluation the performance of the board, its committee and individual directors should be disclosed. The Board undertakes an annual process of assessing both the performance of the board and the audit committee, as well as the individual performance of directors. No assessment was made by the board in the current year due to the change in composition of the Board.

3. Promote ethical and responsible decision-making

The Company should actively promote ethical and responsible decision-making.

The Company has:

Established and disclosed a code of conduct, or a summary thereof, setting out in particular the practices necessary to maintain confidence in the Company’s integrity and show the responsibility and accountability of individuals for reporting and investigating reports of unethical practices;
• Establish a policy concerning trading in company securities by directors, officers and employees.

A copy of the Company’s Code of Conduct and share trading policy is available on the Company’s website.

4. Safeguard integrity in financial reporting

The Company should have a structure to independently verify and safeguard the integrity of the Company’s financial reporting.

The Company should establish an audit committee. It is recommended that this committee consists of only non-executive directors, a majority of independent directors, an independent chairman who is not chairman of the board and at least three members. Due to the structure of the Board it is not possible for the Company to comply with these recommendations. However the auditors do meet independently with the Chairman to discus financial issues that may be influenced by the executive directors.

5. Make timely and balanced disclosure

The Company should promote timely and balanced disclosure of all material matters concerning the company.

The Company has established written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance and disclose those policies or a summary of those policies.

CRYOSITE LIMITED – ANNUAL REPORT

Corporate Governance Statement

5. Make timely and balanced disclosure continued

The Company has a Continuous Disclosure and Shareholder Communications Policy to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance. A copy of the Policy is available on the Company’s website.

6. Respect the rights of shareholders

The Company should respect the rights of shareholders and facilitate the effective exercise of those rights.

The Company has a communication policy to promote effective communication with shareholders and encourage their participation at general meetings. A copy of the Policy is available on the Company’s website.

7. Recognise and manage risk

The Company should establish a sound system of risk oversight and management and internal control.

The Company has established:

effective polices for risk oversight. The Company’s Risk Management Statement which provides an oversight of the Company’s risk profile and management strategies is available on the Company’s website;
a policy requiring management to design and implement the risk management and internal control system to manage the company’s material business risks and report to it on the effective management of those risks. A copy of this is available on the Company’s website. The board requires a statement in writing from the chief executive officer and chief financial officer attesting to the risk management and internal control system and also requires assurance from the chief executive officer and the chief financial officer that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects.

8. Remunerate fairly and responsibly

The Company should ensure the level and composition of remuneration is sufficient and reasonable and that its relationship to corporate and individual performance is defined.

The Company should establish a Remuneration and Nomination committee The Company has not established these committees as recommended by the ASX Corporate Governance Council guidelines. The Board believes that due to the current development stage and size of the Company these matters are best handled by the Board itself; and
The Company’s policy is to reward executives with a combination of fixed remuneration and equity incentives, structured to drive improvements in shareholder value. Non executive directors receive no incentive cash payments other than their fixed fee.

It should be noted that at the time of signing of this report the company’s web site is in the process of being updated for its corporate governance polices.

CRYOSITE LIMITED – ANNUAL 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 statements, notes 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 2009 and of their performance for the year ended on that date; and
- (ii) complying with Accounting Standards and Corporations Regulations 2001; and
(b) 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 2009.

On behalf of the Board

==> picture [187 x 39] intentionally omitted <==

Gordon Milliken Managing Director

Date: 31 August 2009

CRYOSITE LIMITED – ANNUAL REPORT

Income Statement

FOR THE YEAR ENDED 30 JUNE 2009 Notes	Consolidated 2009 2008 $ $	Parent 2009 2008 $ $
Rendering of services Finance revenue 5 Dividend received from wholly- owned subsidiary Revenues Expenses 6 Finance costs Costs of providing services Marketing expenses Occupancy expenses Administration expenses (Loss)Profit from continuing operations before income tax Income tax benefit 7 (Loss)Profit from continuing operations after income tax Net (Loss)Profit attributable to members of the parent Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the company Basic earnings per share 8 Diluted earnings per share 8	6,158,392 6,467,582 162,393 217,848 - -	3,266,473 4,036,900 162,393 217,848 1,300,000 1,100,000
	6,320,785 6,685,430 (12,189) (8,401) (3,174,199) (3,281,486) (217,818) (427,815) (732,359) (603,386) (2,391,725) (1,917,283)	4,728,866 5,354,748 (12,189) (8,401) (2,222,481) (2,497,820) (173,079) (385,650) (732,359) (603,110) (2,386,529) (1,910,675)
	(207,505) 447,059 214,754 -	(797,771) (50,908) 781,834 479,390
	7,249 447,059	(15,937) 428,482
	7,249 447,059	(15,937) 428,482
	Cents Cents 0.02 1.0 0.02 1.0

CRYOSITE LIMITED – ANNUAL REPORT

Balance Sheet

AS AT 30 JUNE 2009 Notes	Consolidated 2009 2008 $ $	Parent 2009 2008 $ $
ASSETS Current Assets Cash and cash equivalents 10 Trade and other receivables 12 Inventories 13 Prepayments 14 Total Current Assets Non-current Assets Trade and other receivables 15 Investments in subsidiaries 16 Deferred tax asset 7 Plant and equipment 17 Intangible assets 18 Total Non-current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables 19 Unearned income 20 Total Current Liabilities Non-current Liabilities Unearned income 21 Deferred tax liability 7 Provisions 22 Total Non-current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 23 Share option reserves 24 Accumulated losses 24 TOTAL EQUITY	1,326,791 1,975,278 1,403,175 1,677,770 53,358 48,955 247,171 127,805	1,326,791 1,975,278 1,197,157 1,360,319 49,397 45,023 232,981 120,305
	3,030,495 3,829,808	2,806,326 3,500,925
	1,550,920 1,655,650 - - 763,422 547,480 2,009,719 937,027 - 278,553	1,550,920 1,655,650 20 20 763,422 547,480 2,008,382 935,222 - 278,553
	4,324,061 3,418,710	4,322,744 3,416,925
	7,354,556 7,248,518	7,129,070 6,917,850
	1,207,373 1,133,388 285,968 276,969	1,040,974 839,908 283,268 274,269
	1,493,341 1,410,357	1,324,242 1,114,177
	1,459,989 1,473,223 1,188 - 59,728 43,850	1,453,464 1,464,223 - - 59,728 43,850
	1,520,905 1,517,073	1,513,192 1,508,073
	3,014,246 2,927,430	2,837,434 2,622,250
	4,340,310 4,321,088	4,291,636 4,295,600
	8,138,766 8,138,766 226,962 214,989 (4,025,418) (4,032,667)	8,138,766 8,138,766 226,962 214,989 (4,074,092) (4,058,155)
	4,340,310 4,321,088	4,291,636 4,295,600

CRYOSITE LIMITED – ANNUAL REPORT

Cash Flow Statement

FOR THE YEAR ENDED 30 JUNE 2009 Notes	Consolidated Parent 2009 2008 2009 2008 $ $ $ $
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers inclusive of GST Payments to suppliers and employees Interest received Interest paid Net cash flows from operating activities 11 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of plant and equipment 17 Purchase of intangibles 18 Net cash flows (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Net cash flows (used in) financing activities Net (decrease)increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 10	6,807,346 6,981,173 6,807,346 6,981,173 (6,252,951) (6,308,885) (6,252,951) (6,308,885) 167,652 224,381 167,652 224,381 (12,189) (8,401) (12,189) (8,401)
	709,858 888,268 709,858 888,268
	(1,329,368) (434,004) (1,329,368) (434,004) (28,977) (60,508) (28,977) (60,508)
	(1,358,345) (494,512) (1,358,345) (494,512)
	- - - -
	- - - -
	(648,487) 393,756 (648,487) 393,756 1,975,278 1,581,522 1,975,278 1,581,522
	1,326,791 1,975,278 1,326,791 1,975,278

CRYOSITE LIMITED – ANNUAL REPORT

Statement of Changes in Equity

FOR THE YEAR ENDED 30 JUNE 2009

FOR THE YEAR ENDED 30 JUNE 2009
Note	Attributable to equity holders of theparent
	Contributed capital Accumulated losses $ $	Share options reserves Total equity $ $
CONSOLIDATED At 30 June 2007 Write back provision for GST on IPO Profit for the year Amortisation of share based payments At 30 June 2008 Profit for the year Amortisation of share based payments At 30 June 2009 PARENT At 30 June 2007 Write back provision for GST on IPO Profit for the year Amortisation of shared based payments At 30 June 2008 (Loss) for the year Amortisation of share based payments At 30 June 2009	8,035,506 (4,479,726) 103,260 - - 447,059 - -	180,185 3,735,965 - 103,260 - 447,059 34,804 34,804
	8,138,766 (4,032,667) - 7,249 - -	214,989 4,321,088 - 7,249 11,973 11,973
	8,138,766 (4,025,418)	226,962 4,340,310
	8,035,506 (4,486,637) 103,260 - - 428,482 - -	180,185 3,729,054 - 103,260 - 428,482 34,804 34,804
	8,138,766 (4,058,155) - (15,937) - -	214,989 4,295,600 - (15,937) 11,973 11,973
	8,138,766 (4,074,092)	226,962 4,291,636

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2009

1 CORPORATE INFORMATION

The financial report of Cryosite Limited for the year ended 30 June 2009 was authorised for issue in accordance with a resolution of the directors on 31 August 2009.

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 the Directors’ Report.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 and other authoritative pronouncements of the Australian Accounting Standards Board.

The financial report has been prepared on a historical cost basis, except when otherwise stated.

(a) Compliance with IFRS

The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

(b) New accounting standards and interpretations

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 2009. The Group has not yet determined the impact of these new standards on the financial statements.

(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’).

Subsidiaries are all those entities over which the group has the power to govern the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether a group controls another entity.

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.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(c) Basis of consolidation (continued)

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.

Investments in subsidiaries held by Cryosite Limited are accounted for at cost in the separate financial statements of the parent entity, less any impairment charges.

(d) 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.

(e) Plant and equipment

Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of the plant & equipment as a replacement only if it is eligible for capitalisation. All other repairs and maintenance are recognised in profit and loss as incurred.

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

Major depreciation rates are:	2009	2008
- Leasehold improvements:	Lease term	Lease term
Plant and equipment:
- Fixtures and fittings	5 – 10 years	5 – 10 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

The assets’ residual values, useful lives and amortisation methods are reviewed and adjusted if appropriate. An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(f) Segment reporting

A business segment is a distinguishable component of the entity that is engaged in providing products or services that are subject to risks and returns that are different to those of other operating business segments. Management has assessed the reportable business segments under AASB 114 Segment Reporting and have determined that on adoption of AASB 8 segment Reporting (applicable from 1 January 2009) additional operating segments will most likely not be reported. A geographical segment is a distinguishable component of the entity that is engaged in providing products or services within a particular environment and is subject to risks and returns that are different than those of segments operating in other economic environments.

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

(g) Borrowing costs

Borrowing costs are recognised as an expense when incurred. Cryosite Limited does not currently hold qualifying assets, but, if it did, the borrowing costs directly associated with this asset would be capitalised (including any other associated costs directly attributable to the borrowing and temporary investment income earned on the borrowing).

(h) Intangible assets

Acquired separately

Intangible assets acquired separately are initially measured at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is recognised in profit or loss in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful life and tested for impairment whenever there is an indication that the tangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for prospectively by changing the amortisation period or method, as appropriate, which is a change in accounting estimate. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset.

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash generating unit level. The useful life of an intangible asset with an indefinite life is reviewed each reporting period to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for as a change in accounting estimate and is thus accounted for on a prospective basis.

Research and development costs

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

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

(h) Intangible assets continued

Research and development costs continued

Research costs are expensed as incurred.

An intangible asset arising from the development expenditure on a project is recognised only when the group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible asset during its development. 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 an intangible asset arising from development expenditure is reviewed for impairment annually when the asset is not available for use or more frequently when an indicator of impairment arises during the reporting period.

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

	Development Costs
Useful life	Finite – 3-5 years
Method used	Straight line
Internally developed / Acquired	Internally developed
Impairment test / Recoverable amount	Amortisation method reviewed at each financial year-
testing	end; Reviewed annually for indicator of impairment

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognised in profit or loss when the asset is derecognised.

(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.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

(i) Recoverable amount of assets continued

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 initially at fair value less an allowance for impairment.

Collectability of trade receivables is reviewed on an ongoing basis and individual debts that are known to be uncollectible are written off when identified. An impairment provision is recognised when there is objective evidence that the group may not be able to collect the receivable.

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% (2008: 17.5%).

(l) Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank, in hand and short-term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

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 and other payables are carried at amortised costs and due to their short term nature they are not discounted. They 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. The amounts are unsecured and are usually paid within 30 days of recognition.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

n) Employee leave benefits

Wages, salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefits and annual 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. Expenses for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. Unused sick leave on termination of employment is forfeited.

Long service leave

The liability for long service leave is recognised and measured as 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.

(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’).

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

(p) Share-based payment transactions continued

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 charges 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.

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. Operating lease incentives are recognised as a liability when received and subsequently reduced by allocating lease payments between rental expense and reduction of the liability.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

(r) Revenue

Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent that it is probable that the economic benefits will flow to the Group 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 20 and 21).
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
Dividends: revenue is recognised when the Company’s right to receive the payment is established.

(s) Income tax and Other taxes

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

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:

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; or

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

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.

Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it has become probable that future tax profit will allow the deferred tax asset to be recovered.

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.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

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

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.

(t) 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.

(u) Share options reserve

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

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

(v) Earnings per share

Basic EPS is calculated as net profit attributable to members of the parent, 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 of the parent, 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 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not readily apparent from the source. Actual results may differ from these estimates under different assumptions and conditions.

Management has identified the following critical accounting polices for which significant judgements, estimates and assumptions are made. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods.

Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements .

(i) Significant accounting judgements

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;

Recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences as management considers that it is probable that future profits will be available to utilise those temporary differences.

Impairment of non-financial assets

The group assesses impairment of all assets at each reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment. If an impairment trigger exists the recoverable amount of the asset is determined.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

3 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

Capitalised development costs

Development costs are only capitalised by the Group when it can be demonstrated that the technical feasibility of completing the intangible asset is valid so that the asset will be available for sale or use.

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.

Taxation

The group’s accounting policy for taxation requires management’s judgement as to the types of arrangements considered to be a tax on income in contrast to an operating cost. Judgement is also required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised in the balance sheet. Deferred tax assets, including those arising from unrecouped tax losses, capital losses and temporary differences, are recognised only where it is considered more likely than not that they will be recovered, which is dependant on the generation of sufficient future taxable profits.

Assumptions about the generation of future taxable profits and repatriation of retained earnings depend on management’s estimates of future cash flows. Judgements are also required about the application of income tax legislation. These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact on the amount of deferred tax liabilities recognised on the balance sheet and the amount of other tax losses and temporary differences not yet recognised. In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to the income statement.

(ii) Significant accounting estimates and assumptions

Share based payment transactions

The group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using a binomial model. The accounting estimates and assumptions relating to equity-settled share based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact on expenses and equity.

Estimated useful lives of assets

The estimation of the useful lives of assets has been based on historical experience as well as manufacturers’ warranties. In addition, the condition of assets is assessed at least once per year and considered against the remaining useful life. Adjustments to useful lives are made when considered necessary.

Make good provisions

Once the company has fully completed construction of the Granville site and the site is operational a review will be made to determine the present value of anticipated costs of future restoration that may be required of leased premises. Any such provision will include future cost estimates associated with dismantling, closure, decontamination and permanent storage of historical residues. The calculation of any provision requires assumptions such as application of environmental legislation, plant closure dates, available technologies and engineering cost estimates. These uncertainties may result in future actual expenditure differing from amounts provided. Any provision recognised is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to the estimated future costs are recognised in the balance sheet by adjusting both the expense or asset and provision.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

4 SEGMENT INFORMATION

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

5 OTHER REVENUE AND INCOME	Consolidated Parent 2009 2008 2009 2008 $ $ $ $
Finance revenue Bank and STMM interest 6 EXPENSES (a) Finance costs Insurance premium funding (b) Lease payments Lease payments-operating leases 6(e) (c) Employee benefits expense Wages and salaries Superannuation costs Share-based payments expense (d) Depreciation and amortisation Depreciation – plant & equipment 17 Impairment of plant & equipment 17 Amortisation – Leasehold Improvement 17 Amortisation of software development 18 Impairment amortisation of software development 18 (e) Relocation expenses Impairment depreciation (included above) 17(i) Additional rent (included above) 6(b) Additional occupancy costs	162,393 217,848 162,393 217,848
	12,189 8,401 12,189 8,401
	740,663 475,286 740,663 475,286
	1,458,598 1,492,484 1,458,598 1,492,484 240,652 324,830 240,652 324,830 11,973 34,804 11,973 34,804
	1,711,223 1,852,118 1,711,223 1,852,118
	189,589 177,776 189,121 177,308 67,087 135,600 67,087 135,600 - 685 - 685 - 130,381 - 130,381 307,530 - 307,530 -
	564,206 444,442 563,738 443,974
	67,087 135,600 67,087 135,600 399,991 197,649 399,991 197,649 66,033 20,679 66,033 20,679
	533,111 353,928 533,111 353,928

The company signed a lease over commercial premises at South Granville in Sydney in November 2007, and will relocate to these premises during the next financial period. The impact on the current financial period is shown above.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

7 INCOME TAX

	Consolidated	Consolidated		Parent
	2009	2008	2009	2008
	$	$	$	$
(a) Income tax expense
The major components of income tax are:
Income statement
Current income expense/benefit	(123,171)	-	442,721	-
Utilisation of unrecognised losses	123,171	-	123,171	479,390
Recognition/derecognition of
temporary differences	50,068	-	50,068	-
Origination/reversal of temporary
differences	164,686	-	165,874	-
Income tax benefit reported in the
income statement	214,754	-	781,834	479,390

(b) Numerical reconciliation between aggregate tax benefit(expense) recognised in the income statement and tax benefit(expense) calculated per the statutory income tax rate

A reconciliation between tax benefit(expense) and the product of accounting profit before income tax multiplied by the Group’s applicable income tax rate follows:

Accounting (loss)profit before tax from continuing operations At the statutory income tax rate of 30% (2008: 30%) Share-based payments (equity settled) Other items (net) Intercompany dividends Recognition of previously unrecorded losses against current year taxable income Recognition/derecognition of temporary differences Income tax benefit	(207,505) 447,059 (797,771) (50,908)
	62,252 (134,118) 239,332 15,272 (3,592) (10,441) (3,592) (10,441) (17,145) (23) (17,145) (23) - - 390,000 330,000 123,171 144,582 123,171 144,582 50,068 - 50,068 -
	214,754 - 781,834 479,390

The group was in a tax paying position this year and utilised a portion of its tax losses in the current year. The group is comfortable that they will be in a tax paying position in the future based on one off costs incurred during the year (refer directors’ report).

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

7 INCOME TAX continued

		Balance sheet	Balance sheet	Balance sheet	Balance sheet
		Consolidated			Parent
		2009	2008	2009	2008
		$	$	$	$
(c) Recognised deferred tax assets and liabilities
	Deferred income tax at 30 June relates to the following:
Deferred income tax assets
Post-employment benefits		69,317	39,421	69,317	39,421
Provision for tax and audit fees		9,900	9,575	9,900	9,575
Provision for doubtful debts		79,500	-	79,500	-
Impairment and depreciation of plant
& equipment for book purposes		49,899	25,463	49,899	25,463
Impairment amortisation of	intangibles
for book purposes		123,203	31,893	123,203	31,893
Amortisation of Section 40-880
uniform capital allowances		535	1,070	535	1,070
Depreciation of fixed assets	expensed
in prior years		6,971	7,511	6,971	7,511
Losses available for offset against
future taxable income		438,916	438,916	438,916	438,916
Deferred income tax liabilities
Accelerated depreciation of	plant &
equipment for tax purposes		(1,188)	-	-	-
Consumables		(14,819)	(6,367)	(14,819)	(6,367)
Net deferred tax asset		762,234	547,480	763,422	547,480
Comprised of :
Deferred tax asset		763,422	547,480	763,422	547,480
Deferred tax liability		(1,188)	-	-	-
		762,234	547,480	763,422	547,480

There is a temporary difference of $485,636 (2008:$166,893) for which no deferred tax asset is recognised on the balance sheet as deferred income tax assets have only been recognised to the extent that it is probable that taxable profit will be available.

(d) Tax losses

The Group has tax losses arising in Australia of $4,413,975 (2008: $4,824,548) that are available for offset against future taxable profits of the company. The deferred income tax asset of $1,324,193 (2008: $1,447,364) arising from these losses has been brought to account to the extent of $438,916 (2008: $438,916) at reporting date, as realisation of the remaining benefit is not regarded as probable.

As at 30 June 2009, the Group has unrecognised tax losses of $2,950,922 (2008: Loss of $3,361,495) and an unrecognised deferred tax asset of $885,277 (2008: $1,008,448).

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

7 INCOME TAX continued

Tax consolidation

Effective from 1 July 2002, Cryosite Limited and its 100% owned subsidiary formed a tax consolidated group. 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 whollyowned 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 $565,892 (2008: $479,390) was recognised as tax consolidation contributions during the financial year as below:

	Parent 2009 2008 $ $
Total reduction in tax payable of Cryosite Limited Total increase to intercompany assets of Cryosite Limited	(565,892) (479,390) 565,892 479,390

8 EARNINGS PER SHARE

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

	Consolidated Consolidated 2009 2008 $ $
Net profit attributable to ordinary equity holders of the parent	7,249 447,059
	No of shares. No of shares.
Weighted average number of ordinary shares for basic earnings per share	46,639,563 46,639,563

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

9 DIVIDENDS PAID OR PROPOSED ON ORDINARY SHARES

No dividends have been provided for or paid (2008: Nil).

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

10 CASH AND CASH EQUIVALENTS

	Consolidated Parent 2009 2008 2009 2008 $ $ $ $
Cash at bank and in hand Short-term deposits	355,821 309,906 355,821 309,906 970,970 1,665,372 970,970 1,665,372
	1,326,791 1,975,278 1,326,791 1,975,278

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 three 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 $1,326,791 (2008: $1,975,278).

Reconciliation of cash

For purposes of the Cash Flow Statement, cash and cash equivalents as at 30 June 2009 and the prior year 2008 are as shown above.

11 CASH FLOW STATEMENT RECONCILIATION

	Consolidated	Consolidated	Parent	Parent
	2009	2008	2009	2008
	$	$	$	$
Reconciliation of the net profit after
tax to the net cash flows from
operations
Net profit(loss)	7,249	447,059	(15,937)	428,482
*Adjustments for non-cash items*
Depreciation and amortisation of
non-current assets	189,589	308,842	189,121	308,374
Impairment of non-current assets	374,617	135,600	374,617	135,600
Share based payments expense	11,973	34,804	11,973	34,804
Increase in allowance for
impairment loss on trade receivables	264,999	-	264,999	-
Increase in employee benefits – LSL	15,878	12,759	15,878	12,759
Dividend received from wholly-
owned subsidiary	-	-	(1,300,000)	(1,100,000)

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

11 CASH FLOW RECONCILLIATION continued

	Consolidated Parent 2009 2008 2009 2008 $ $ $ $
*Changes in assets and liabilities* (Increase)decrease in trade and other receivables 114,326 (446,526) 1,302,893 822,406 (Increase) in inventory (4,403) (20,726) (4,374) (23,799) Decrease(Increase) in other assets (119,366) 60,225 (112,676) 60,725 (Increase) in deferred tax asset (214,754) - (215,942) - Increase in trade and other creditors 46,104 261,014 171,685 125,400 Increase in unearned income (5,735) 53,579 (1,760) 41,879 Increase in employee benefits – annual leave 29,381 41,638 29,381 41,638 Net cash flow from operating activities 709,858 888,268 709,858 888,268 12 CURRENT ASSETS - TRADE AND OTHER RECEIVABLES Consolidated Parent 2009 2008 2009 2008 $ $ $ $	114,326 (446,526) 1,302,893 822,406 (4,403) (20,726) (4,374) (23,799) (119,366) 60,225 (112,676) 60,725 (214,754) - (215,942) - 46,104 261,014 171,685 125,400 (5,735) 53,579 (1,760) 41,879 29,381 41,638 29,381 41,638
	709,858 888,268 709,858 888,268
Trade receivables Allowance for impairment loss (a) Other receivables Related party Carrying amount of trade and other receivables	1,529,002 1,467,844 749,908 761,411 (264,999) - (264,999) -
	1,264,003 1,467,844 484,909 761,411 139,172 209,926 118,149 134,900 - - 594,099 464,008
	1,403,175 1,677,770 1,197,157 1,360,319

(a) Allowance for impairment loss

Trade receivables are non-interest bearing. 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. A provision for impairment loss is recognised when there is objective evidence that an individual trade receivable is impaired. An impairment loss of $264,999 (2008: Nil) has been recognised by the Group in the current year. These amounts have been included in the administration expense item. No individual amount within the impairment allowance is material.

Movements in the provision for impairment loss were as follows:

	Consolidated Parent 2009 2008 2009 2008 $ $ $ $
At the beginning of the period Charge for the year At the end of the period	- - - - 264,999 - 264,999 -
	264,999 - 264,999 -

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

12 CURRENT ASSETS - TRADE AND OTHER RECEIVABLES continued

(b) Analysis of trade receivables

At 30 June, the ageing analysis of trade receivables is as follows:

	Total Not yet due 0-30 Days 31-60 Days 61-90 Days +91 Days +91 Days PDNI PDNI CI* *$ $ $ $ $ $ $
2009 Current Non-Current Total Consolidated Current Non-Current Total Parent 2008 Current Non-Current Total Consolidated Current Non-Current Total Parent	1,529,002 291,411 369,708 229,947 235,880 137,056 264,999 1,369,130 1,369,130 - - - - - 2,898,132 1,660,541 369,708 229,947 235,880 137,056 264,999
	749,908 201,411 103,444 45,184 15,474 29,395 264,999 1,369,130 1,369,130 - - - - - 2,119,038 1,660,541 103,444 45,184 15,474 29,395 264,999
	1,467,844 167,087 489,104 436,223 99,471 275,959 - 1,473,860 1,473,860 - - - - - 2,941,704 1,640,947 489,104 436,223 99,471 275,959 -
	761,411 167,087 184,023 159,070 50,420 200,811 - 1,473,860 1,473,860 - - - - - 2,235,271 1,640,947 184,023 159,070 50,420 200,811 -

Past due not impaired (“PDNI”) ** Past due considered impaired

Receivables past due but not considered impaired have been reviewed and it is believed that payment will be received in full.

Other balances within trade and other receivables do not contain impaired assets and are not past due. It is expected that these other balances will be received when due

(c) Related party receivables

Related party receivables are interest free and not considered past due or impaired .

(d) Fair value and credit risk

Due to the nature of these receivables, their carrying value is assumed to approximate their fair value. The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security, nor is it the Group’s policy to transfer (on-sell) receivables to special purpose entities.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

13 CURRENT ASSETS – INVENTORIES

	Consolidated Parent 2009 2008 2009 2008 $ $ $ $
Consumables at cost Total inventories at cost	53,358 48,955 49,397 45,023
	53,358 48,955 49,397 45,023

14 CURRENT ASSETS – PREPAYMENTS

Prepayments	247,171	127,805	232,981	120,305
15 NON-CURRENT ASSETS - TRADE AND OTHER		RECEIVABLES
Trade receivables	1,369,130	1,473,860	1,369,130	1,473,860
Security deposits	181,790	181,790	181,790	181,790
Carrying amount of non-current
trade and other receivables	1,550,920	1,655,650	1,550,920	1,655,650
Trade receivables
Trade receivables due under
term payment plans	1,369,130	1,473,860	1,369,130	1,473,860

Non-current trade receivables are not considered impaired.

The maximum exposure to credit risk at the time of reporting is the carrying value of the receivables. No collateral is held as security.

16 NON-CURRENT ASSETS - INVESTMENTS IN SUBSIDIARIES

	Consolidated Parent 2009 2008 2009 2008 $ $ $ $
Investments at cost Investment in controlled entity Name – Cryosite Distribution Pty Limited	- - 20 20
	Equity interest held by the consolidated entity Investment 2009 2008 2009 2008 % % $ $
Country of incorporation – Australia	100 100 20 20

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

17 NON-CURRENT ASSETS - PLANT AND EQUIPMENT

(a) Reconciliation of carrying amounts of plant and equipment at the beginning and end of the period

	Consolidated Parent 2009 2008 2009 2008 $ $ $ $
Leasehold Improvements At the beginning of the period net of accumulated depreciation Depreciation expense At the end of the period net of accumulated depreciation Plant and equipment owned At the beginning of the period net of accumulated depreciation and impairment Additions Impairment (i) Depreciation expense At 30 June 2009 net of accumulated depreciation expense At the end of the period net of accumulated depreciation and impairment At cost Accumulated depreciation Accumulated depreciation and impairment Net carrying amount	- 685 - 685 - (685) - (685)
	- - - -
	937,027 816,399 935,222 814,126 1,329,368 434,004 1,329,368 434,004 (67,087) (135,600) (67,087) (135,600) (189,589) (177,776) (189,121) (177,308)
	2,009,719 937,027 2,008,382 935,222
	2,009,719 937,027 2,008,382 935,222
	3,623,279 2,092,894 3,618,549 2,088,164 (1,410,873) (1,020,267) (1,407,480) (1,017,342) (202,687) (135,600) (202,687) (135,600)
	2,009,719 937,027 2,008,382 935,222

(i) Where it is anticipated that plant and equipment will not be relocated to the Granville site depreciation has been accelerated to write off those assets prior to relocation. The remaining items of plant and equipment are not considered to be impaired.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

18 NON-CURRENT ASSETS - INTANGIBLE ASSETS

(a) Reconciliation of carrying amounts at the beginning and the end of the period

	Consolidated Parent 2009 2008 2009 2008 $ $ $ $
Software development At the beginning of the period net of accumulated amortisation Additions Impairment amortisation expense (i) At the end of the period net of accumulated amortisation	278,553 348,426 278,553 348,426 28,977 60,508 28,977 60,508 (307,530) (130,381) (307,530) (130,381)
	- 278,553 - 278,553

(i) With the current focus on the commissioning of the South Granville site, ongoing development of the Cryobyte LS software has been temporarily suspended. As a result the board has decided to fully amortise all costs associated with the project in the current year.

At cost Accumulated amortisation Impairment amortisation Net carrying amount	1,020,533 991,556 1,020,533 991,556 (713,003) (713,003) (713,003) (713,003) (307,530) - (307,530) -
	- 278,553 - 278,553

19 CURRENT LIABILITIES - TRADE AND OTHER PAYABLES

	Consolidated Parent 2009 2008 2009 2008 $ $ $ $
Trade payables Other payables Annual leave Total payables	459,288 476,443 363,270 300,067 576,754 514,995 506,373 397,891 171,331 141,950 171,331 141,950
	1,207,373 1,133,388 1,040,974 839,908

Fair value

Trade payables are non-interest bearing and are normally settled on 30 to 90 day terms. Therefore their carrying value is assumed to be their fair value.

Other payables are non-interest bearing and are on ranging from 30 days to 12 months Terms. Their carrying value is assumed to be fair value.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

19 CURRENT LIABILITIES - TRADE AND OTHER PAYABLES (CONTINUED)

At 30 June, the ageing analysis of trade payables is as follows:

	Total 0-30 Days 31-60 Days $ $ $	61-90 Days +91 Days $ $
2009 Consolidated Parent 2008 Consolidated Parent	459,288 239,328 80,493 363,270 170,478 55,340	777 138,690 - 137,452
	476,443 317,320 148,497 300,067 192,180 98,470	1,288 9,338 100 9,317

Other balances within trade and other payables are not past due. It is expected that these other balances will be paid.

20 CURRENT LIABILITIES - UNEARNED INCOME

	Consolidated Parent 2009 2008 2009 2008 $ $ $ $
Unearned service revenue	285,968 276,969 283,268 274,269

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

21 NON-CURRENT LIABILITIES - UNEARNED INCOME

	Consolidated Parent 2009 2008 2009 2008 $ $ $ $
Unearned service revenue	1,459,989 1,473,223 1,453,464 1,464,223

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

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

22 NON-CURRENT LIABILITIES - PROVISIONS

	Consolidated Parent 2009 2008 2009 2008 $ $ $ $	Consolidated Parent 2009 2008 2009 2008 $ $ $ $
Long service leave (a) Movements in provisions Long service leave Balance at beginning of the period Arising during the year Balance at end of the period	59,728	43,850 59,728 43,850
	43,850 15,878	31,091 43,850 31,091 12,759 15,878 12,759
	59,728	43,850 59,728 43,850

(b) Nature and timing of long service leave provision

For the relevant accounting policy and the significant estimations and assumptions applied in the measurement of this provision refer to Note 3.

23 CONTRIBUTED EQUITY

23 CONTRIBUTED EQUITY
	Consolidated 2009 2008 $ $	Parent 2009 2008 $ $
Ordinary shares Movement in ordinary shares on issue	8,138,766 8,138,766	8,138,766 8,138,766
	2009 Shares No. $	2008 Shares No. $
Beginning of the financial year Add : Provision for GST written back 23(a) End of the financial year	46,639,563 8,138,766 - - 46,639,563 8,138,766	46,639,563 8,035,506 - 103,260
		46,639,563 8,138,766

(a) Provision for GST

A provision of $111,000 was made in 2004 to cover GST incurred on the IPO in May 2002 which may have been incorrectly claimed as an input tax credit. A ruling has now been issued by the Australian Taxation Office that no adjustment is required. The provision less expenses incurred has been written back to equity in the previous financial period.

(b) Terms and condition of contributed equity

Ordinary shares

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

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

24 ACCUMULATED LOSSES AND RESERVES

(a) Movements in accumulated losses

	Consolidated 2009 2008 $ $	Parent 2009 2008 $ $
Balance at the beginning of the period Net profit (loss) for the period Balance at the end of the period b) Other reserves Share options reserve Movements in share options reserve Balance at the beginning of the period Value of compensation benefit during the period Balance at the end of the period	(4,032,667) (4,479,726) 7,249 447,059	(4,058,155) (4,486,637) (15,937) 428,482
	(4,025,418) (4,032,667)	(4,074,092) (4,058,155)
	226,962 214,989	226,962 214,989
	214,989 180,185 11,793 34,804	214,989 180,185 11,973 34,804
	226,962 214,989	226,962 214,989

The purpose of the share options reserve is to record the value of share-based payments provided to employees as pert of their remuneration. Refer to Note 29 for further details of these plans.

25 COMMITMENTS AND CONTINGENCIES

(a) Operating lease commitments – Group as lessee

Commercial property

On 1 November 2007, the company entered into an 8 year lease over a commercial property at South Granville in Sydney.

The current lease on the commercial property at Lane Cove in Sydney matured on 25 July 2009. The company has secured an agreement with the landlord to renew the lease for another 6 months with provision for early termination with no penalty.

Future minimum rentals payable under commercial property leases as at 30 June 2009 are as follows:

	Consolidated Parent 2009 2008 2009 2008 $ $ $ $
Within one year After one year but not more than five years After five years	445,836 516,696 445,836 516,696 1,254,043 1,452,344 1,254,043 1,452,344 465,242 840,868 465,242 840,868
	2,165,121 2,809,908 2,165,121 2,809,908

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

25 COMMITMENTS AND CONTINGENCIES continued

(a) Operating lease commitments – Group as lessee continued

Plant and equipment

The Group currently has a number of operating leases on items of plant and equipment used in day to day operations of the business.

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 2009 are as follows:

	Consolidated Parent 2009 2008 2009 2008 $ $ $ $
Within one year After one year but not more than five years	170,768 122,712 170,768 122,712 305,053 268,170 305,053 268,170
	475,821 390,882 475,821 390,882

(b) Plant and equipment commitments

There are no capital expenditure commitments at reporting date.

(c) Contingent Liabilities

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

26 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 2009 and the date of this report which had or may have had a significant effect on the company.

27 AUDITOR’S REMUNERATION

The auditor of Cryosite Limited is Ernst & Young	Consolidated Parent 2009 2008 2009 2008 $ $ $ $
Amounts received or due and receivable by Ernst & Young (Australia) for: - Audit or review of the financial report of the entity and any other entity in the consolidated group - Other services in relation to the entity and any other entity in the consolidated group for Research and development grants	62,395 64,371 62,395 64,371 - 6,120 - 6,120
	62,395 70,491 62,395 70,491

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

28 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 16.

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 7.

Cryosite Limited has received a dividend from Cryosite Distribution Pty Limited for $1,300,000 (2008: $1,100,000).

29 SHARE-BASED PAYMENTS EXPENSE

(a) Recognised share based payment expenses

The expense recognised for employee services received during the year is shown in the table below:

	Consolidated Parent 2009 2008 2009 2008 $ $ $ $
Expense arising from equity-settled share-based payment transactions Write back expense for current and prior year arising from equity-settled share-based payment transactions on resignation of Catherine Brenner	24,706 34,804 24,706 34,804 (12,733) - (12,733)a -
	11,973 34,804 11,973 34,804

The share-based payment plans are described below. There have been no cancellations or modifications to any of the plans during 2009 and 2008.

(b) Employee share option plan

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:

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

29 SHARE-BASED PAYMENTS EXPENSE

(b) Employee share option plan

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 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. Options issued after this date under the ESOP have different vesting terms – refer table on page 14

(c) Summary of options granted under the ESOP

The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, share options issued during the year:

	2009 2008 Options No. WAEP $ Options No. WAEP $
Balance at beginning of period Options granted during the period Graeme Moore Christine Brenner Philip Alger Balance at end of the period Exercisable at end of the period Gordon Milliken Graeme Moore Philip Alger Sub-total key management personnel Other employees	1,370,000 550,000 - - 300,000 $0.30 (300,000) - 300,000 $0.30 - - 220,000 $0.30
	1,070,000 1,370,000
	312,500 $0.40 312,500 $0.40 100,000 $0.20 - - 73,333 $0.20 - -
	485,833 312,500 237,500 $0.40 237,500 $0.40
	723,333 $0.35 550,000 $0.40

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

29 SHARE-BASED PAYMENTS EXPENSE CONTINUED

Share based option payments:

Parties to option agreement Graeme Moore Philip Alger	Parties to option agreement Graeme Moore Philip Alger	Parties to option agreement Catherine Brenner	Parties to option agreement R Grellman – Chairman (Resigned 4 March 2008)
Rights Granted and grant date Share options granted 1 December 2007 Graeme Moore 300,000 PhilipAlger 220,000		Rights Granted and grant date 300,000 Share options granted 1 December 2007	Rights Granted and grant date 500,000 Share options granted on 27 November 2002
Option exercise price One third at $0.20 per share One third at $0.30 per share One third at$0.40per share		Option exercise price One third at $0.20 per share One third at $0.30 per share One third at$0.40per share	Option exercise price Fixed at $0.40 per share
Vesting period One third on 1 December 2008 One third on 1 December 2009 One third on 1 December 2010 Options must be exercised no later than 30 October 2012.		Vesting period One third on 1 December 2008 One third on 1 December 2009 One third on 1 December 2010 Options must be exercised no later than 30October 2012.	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.
Vesting requirements Options granted under ESOP as part of remuneration package. Options will lapse on cessation of employment with the company.		Vesting requirements Options granted as part of remuneration package as executive director. Options will lapse on cessation of employment with the company.	Vesting requirements Options granted as part of remuneration package as chairman.
Weighted average fair value per option at grant date $0.11 $0.11			$0.21
Expense for the year		Expense for the year	Expense for the year
Graeme Moore Philip Alger Total	$14,251 $10,455 $24,706	($12,733)	$-
Prior year’s expense taken to account $22,071 $12,733			$-
Value of options forfeited Value of options forfeited $ - $34,000 Balance at the end of the financial year not yet expensed			Value of options forfeited $-
Graeme Moore Philip Alger Total	$7,016 $5,140 $12,156	$-	$-

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

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 the previous 12 months. The expected volatility used was 79% with an interest-free risk rate of 6.70%. The market share price at date of grant was 19 cents.	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 the previous 12 months. The expected volatility used was 79% with an interest-free risk rate of 6.70%. The market share price at date of grant was 19 cents.	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 the previous 12 months. The expected volatility used was 70.8% with an interest-free risk rate of 5.05%. The market share price at date of grant was$0.38.

(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.

30 KEY MANAGEMENT PERSONNEL

(a) Key management personnel

Non-executive directors
Theodore Onisforou	Chairman (Non-executive)
Catherine Brenner	Director (Non-executive) – Resigned 29 October 2008
Prof Ronald Penny	Director (Non-executive) – Resigned 2 March 2009
Key management personnel
Gordon Milliken	Managing Director
Graeme Moore	Executive Director – Appointed 22 September 2008
Philip Alger	Chief Financial Officer

Key management personnel held their positions for the whole of the financial year other than as stated above.

Due to the relatively small number of employees, there are only 3 key management personnel having authority and responsibility for planning, directing and controlling the activities of the entity either directly or indirectly.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

30 KEY MANAGEMENT PERSONNEL continued

(b) Compensation for key management personnel

	Consolidated Parent 2009 2008 2009 2008 $ $ $ $
Non-executive directors Short-term employee benefits Post-employment benefits Other long-term benefits Share-based payment Sub-total non-executive directors	120,000 135,040 120,000 135,040 10,800 66,610 10,800 66,610 - - - - (12,733) 12,733 (12,733) 12,733
	118,067 214,383 118,067 214,383
Key management personnel Short-term employee benefits Post-employment benefits Other long-term benefits Share-based payment Sub-total key management personnel Total compensation	299,246 270,709 299,246 270,709 141,621 147,664 141,621 147,664 11,454 1,432 11,454 1,432 24,706 22,071 24,706 22,071
	477,027 441,876 477,027 441,876
	595,094 656,259 595,094 656,259

(c) Shareholdings of key management personnel

Shares held in Cryosite Limited 30 June 2009	Balance at beginning of period Granted as remuneration On exercise of options On market purchases Balance 30 June 2009 Ord. Ord. Ord. Ord. Ord.
Theodore Onisforou 3,751,337 - - - 3,751,337 Gordon Milliken 1,048,418 - - - 1,048,418 Graeme Moore - - - - - Philip Alger - - - - - Total 4,799,755 - - - 4,799,755 Shareholdings of directors who resigned during the year have not been included in the above table. Shares held in Cryosite Limited Balance at beginning of period Granted as remuneration On exercise of options On market purchases Balance 30 June 2008 30 June 2008 Ord. Ord. Ord. Ord. Ord.	3,751,337 - - - 3,751,337 1,048,418 - - - 1,048,418 - - - - - - - - - -
	4,799,755 - - - 4,799,755
Theodore Onisforou Gordon Milliken Prof. Ron Penny Graeme Moore Philip Alger Total	3,751,337 - - - 3,751,337 1,048,418 - - - 1,048,418 883,731 - - - 883,731 - - - - - - - - - -
	5,683,486 - - - 5,683,486

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

30 KEY MANAGEMENT PERSONNEL continued

(d) Option holdings of key management personnel (Consolidated)

	Theodore	Gordon	Graeme	Catherine	Philip
	Onisforou	Milliken	Moore	Brenner	Alger	Total
30June2009	No.	No.*	No.*	No.	No.*	No.
Balance held at 1 July 2008	-	312,500	300,000	300,000	220,000	1,132,500
Options forfeited on
resignation	-	-	-	(300,000)	-	(300,000)
Balance held at 30 June 2009	-	312,500	300,000	-	220,000	832,500
* Options issued under the employee share scheme
	Theodore	Gordon	Graeme	Catherine	Philip	Richard
	Onisforou	Milliken	Moore	Brenner	Alger	Grellman	Total
30 June 2008	No.	No. *	No. *	No.	No.*	No.	No.
Balance held at 1 July2007	-	312,500	-	-	-	500,000	812,500
Options still held but no
longer included as employee
resignation from the company	-	-	-	-	-	(500,000)	(500,000)
Options granted during the
year	-	-	300,000	300,000	220,000	-	(300,000)
Balance held at 30 June 2008	-	312,500	300,000	300,000	220,000	-	1,132,500

Options issued under the employee share scheme

(e) Options Vested of key management personnel

	Theodore Onisforou Gordon Milliken Graeme Moore Catherine Brenner Philip Alger Total No. No. No. No. No*. No.
Balance vested at 1 July 2008 Options vested 1 December 2008 Balance vested at 30 June 2009 Not exercisable Exercisable 30 June 2009	- 312,500 - - - 312,500 - - 100,000 - 73,333 173,333
	- 312,500 100,000 - 73,333 485,833
	- - - - - -
	- 312,500 100,000 - 73,333 485,833

Options issued under the employee share scheme.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

30 KEY MANAGEMENT PERSONNEL continued

	Theodore Onisforou Gordon Milliken Graeme Moore Catherine Brenner Philip Alger Richard Grellman Total No. No. No. No. No*. No. No.
Balance vested at 1 July2007	- 312,500 - - - 500,000 812,500
Options still held but no longer included as employee resignation from the company Balance vested at 30 June 2008 Exercisable	- - - - - (500,000) (500,000)
	- 312,500 - - - - 312,500
	- 312,500 - - - - 312,500

31 FINANCIAL INSTRUMENTS

The Group’s principal financial liabilities comprise of trade payables. The Group has various financial assets such as trade receivables, cash and short-term deposits, which arise directly from its operations.

The Group does not enter into any derivative transactions. The main risks arising from the Group’s financial instruments are cash flow interest rate risk and credit risk. The Board of Directors reviews and monitors each of these risks.

(a) Interest rate risk

The Group’s exposure to the risk of changes in market interest rates relates primarily to cash and cash deposits with floating 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:

2009 CONSOLIDATED Note Weighted average effective interest rate %	Floating interest rate $ Subject to discount rates $ Non interest bearing $ Total $
Financial assets Interest bearing deposits – maturing at various dates during year ending 30 June 2009 10 5.7 Cash and cash equivalents 10 1.3 Current receivables – maturing at various dates during year ending 30 June 2009 12 4.5 Non-current receivables 15 - Financial liabilities Trade creditors and accruals – maturing at various dates during the year ending 30 June 2009. 19	970,970 - - 970,970 355,821 - - 355,821 45,803 93,369 1,264,003 1,403,175 181,790 1,369,130 - 1,550,920
	1,554,384 1,462,499 1,264,003 4,280,886
	- - 1,207,373 1,207,373

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

31 FINANCIAL INSTRUMENTS CONTINUED

(a) Interest risk (continued)

2008 CONSOLIDATED Notes Weighted average effective interest rate %	Floating interest rate $ Subject to discount rates $ Non interest bearing $ Total $
Financial assets Interest bearing deposits – maturing at various dates during year ending 30 June 2008 10 5.8 Cash and cash equivalents 10 2.0 Current receivables – maturing at various dates during year ending 30 June 2008 12 4.5 Non-current receivables 15 - Financial liabilities Trade creditors and accruals – maturing at various dates during the year ending 30 June 2008. 19 - 2009 PARENT	1,665,372 - - 1,665,372 309,906 - - 309,906 64,114 156,630 1,457,026 1,677,770 181,790 1,473,860 - 1,655,650
	2,221,182 1,630,490 1,457,026 5,308,698
	- - 1,133,388 1,133,388

Financial assets Interest bearing deposits – maturing at various dates during year ending 30 June 2009 10 5.7 Cash and cash equivalents 10 1.3 Net current receivables – maturing at various dates during year ending 30 June 2009 12 4.5 Net non-current receivables 15 - Financial liabilities Trade creditors and accruals – maturing at various dates during the year ending 30 June 2009 19 -	970,970 - - 970,970 355,821 - - 355,821 66,839 93,369 1,036,949 1,197,157 181,790 1,369,130 - 1,550,920
	1,575,420 1,462,499 1,036,949 4,075,068
	- - 1,040,974 1,040,974

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

31 FINANCIAL INSTRUMENTS CONTINUED

(a) Interest risk (continued)

2008 PARENT Notes Weighted average effective interest rate %	Floating interest rate $ Subject to discount rates Non interest bearing $ Total $
Financial assets Interest bearing deposits – maturing at various dates during year ending 30 June 2008 10 5.8 Cash and cash equivalents 10 2.0 Net current receivables – maturing at various dates during year ending 30 June 2008 12 4.5 Net non-current receivables 15 - Financial liabilities Trade creditors and accruals – maturing at various dates during the year ending 30 June 2008. 19 -	1,665,372 - - 1,665,372 309,906 - - 309,906 64,114 156,630 1,139,575 1,360,319 181,790 1,473,860 - 1,655,650
	2,221,182 1,630,490 1,139,575 4,991,247
	- - 839,908 839,908

Interest rate sensitivity analysis

The following sensitivity analysis is based on interest rate risk exposures in existence at the balance sheet date. If interest rates had moved, as illustrated in the tables below, with all other variables held constant, post tax profit would have been affected as follows:

	Post Tax Profit Higher (Lower) 2009 2008 $ $
Consolidated Up by 2.0% Down by 1.5% Parent Up by 2.0% Down by 1.5%	57,180 75,120 (42,885) (56,340)
	57,180 75,120 (42,885) (56,340)

(b) Price risk – Equity and Commodity

The Group has no exposure to commodity and equity securities price risk.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

31 FINANCIAL INSTRUMENTS CONTINUED

(c) Credit risk

Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade and other receivables. The Group's exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. Exposure at balance date is addressed in each applicable note.

The Group trades with a number of types of customers, the main ones being:
Incorporated companies
Research institutes both private and academic
Individuals.

Incorporated companies:

The Group trades with recognised, publicly listed companies and large unlisted proprietary companies and as such collateral is not requested nor is it the Group's policy to securitise its trade and other receivables.

Research institutes both private and academic

The Group also trades with research institutes that are either publicly, privately or government owned along with recognised universities. Such customers are subject to credit search and collateral is not requested nor is it the Group's policy to securitise its trade and other receivables.

Individuals:

The Group ensures that credit card information is obtained for all individual customers.

It is the Group's policy that all customers who wish to trade on credit terms are subject to credit verification procedures including an assessment of their independent credit rating, financial position, past experience and industry reputation. Risk limits are set for each individual customer in accordance with parameters set by the board. These risk limits are regularly monitored.

There are no significant concentrations of credit risk within the Group. There are no transactions that are not denominated in the functional currency of the Group.

(d) Liquidity risk

The Group does not have a liquidity risk at balance date or at the date of this report.

Maturity analysis of financial assets and liabilities based on management’s expectation.

The risk implied from the values shown in the table below, reflects a balanced view of cash inflows and outflows. Trade payables and other financial liabilities mainly originate from investment in working capital such as inventories and trade receivables. These assets are considered in the Group’s overall liquidity risk. To monitor existing financial assets and liabilities as well as enable an effective controlling of future risks the Directors monitor the expected settlement of financial assets and liabilities.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

31 FINANCIAL INSTRUMENTS CONTINUED

(d) Liquidity risk continued

Maturity analysis of financial assets and liabilities based on management’s expectation (continued).

Year ended 30 June 2009	Less than 6 months 6-12 months 1-5 years Greater than 5 years Total $ $ $ $ $
Consolidated Financial Assets Cash and cash equivalents Trade and other receivables Consolidated Financial liabilities Trade and other payables Net maturity Year ended 30 June 2008	1,326,791 - - - 1,326,791 1,107,513 437,282 104,423 1,304,877 2,954,095
	2,434,304 437,282 104,423 1,304,877 4,280,886
	1,207,373 - - - 1,207,373
	1,207,373 - - - 1,207,373
	1,226,931 437,282 104,423 1,304,877 3,073,514
	Less than 6 months 6-12 months 1-5 years Greater than 5 years Total $ $ $ $ $
Consolidated Financial Assets Cash and cash equivalents Trade and other receivables Consolidated Financial liabilities Trade and other payables Net maturity	1,975,278 - - - 1,975,278 1,544,937 136,860 431,062 1,220,561 3,333,420
	3,520,215 136,860 431,062 1,220,561 5,308,698
	1,133,388 - - - 1,133,388
	1,133,388 - - - 1,133,388
	2,386,827 136,860 431,062 1,220,561 4,175,310

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

31 FINANCIAL INSTRUMENTS CONTINUED

(d) Liquidity risk continued

Year ended 30 June 2009	Less than 6 months 6-12 months 1-5 years Greater than 5 years Total $ $ $ $ $
Parent Financial Assets Cash and cash equivalents Trade and other receivables Parent Financial liabilities Trade and other payables Net maturity Year ended 30 June 2008	1,326,791 - - - 1,326,791 901,495 437,282 104,423 1,304,877 2,748,077
	2,228,286 437,282 104,423 1,304,877 4,074,868
	1,040,974 - - - 1,040,974
	1,040,974 - - - 1,040,974
	1,187,312 437,282 104,423 1,304,877 3,033,894
	Less than 6 months 6-12 months 1-5 years Greater than 5 years Total $ $ $ $ $
Parent Financial Assets Cash and cash equivalents Trade and other receivables Parent Financial liabilities Trade and other payables Net maturity	1,975,278 - - - 1,975,278 1,227,486 136,860 431,062 1,220,561 3,015,969
	3,202,764 136,860 431,062 1,220,561 4,991,247
	839,908 - - - 839,908
	839,908 - - - 839,908
	2,362,856 136,860 431,062 1,220,561 4,151,339

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2009

31 FINANCIAL INSTRUMENTS CONTINUED

(e) Capital management

When managing capital, the boards’ objective is to ensure the entity continues as a going concern as well as to maintain returns to shareholders. The board also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity.

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.

(f) Fair value

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.

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Independent auditor’s report to the members of Cryosite Limited

Report on the Financial Report

We have audited the accompanying financial report of Cryosite Limited, which comprises the balance sheet as at 30 June 2009, 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 of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.

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, the directors also state that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards as issued by the International Accounting Standards Board.

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.

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.

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, 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.

Liability limited by a scheme approved under Professional Standards Legislation

Auditor’s Opinion

In our opinion:

the financial report of Cryosite Limited is in accordance with 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 2009 and of their performance for the year ended on that date; and
ii complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.
the financial report also complies with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Report on the Remuneration Report

We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2009. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s Opinion

In our opinion the Remuneration Report of Cryosite Limited for the year ended 30 June 2009, complies with section 300A of the Corporations Act 2001.

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Ernst & Young

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Gamini Martinus Partner Sydney Date: 31 August 2009

CRYOSITE LIMITED – ANNUAL 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 31 July 2009.

Twenty largest shareholders

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

Listed ordinary shares
Number of shares
% of ordinary shares

Strategic Pooled Development Ltd
Merrill Lynch (Australia) Nominees Pty Ltd
Bell Potter Nominees Ltd
Fitel Nominees Limited
Angus Property & Development Pty Ltd
Daltonvale Pty Ltd
All State Secretariat Ltd
Sentra Investments Pty Ltd
Lost Ark Nominees Pty Ltd
Naron Nominees Pty Ltd
Mrs Erica Margaret Strong
All-States Finance Pty Ltd
Mr Gordon Milliken
Mr Alistair David Strong
HFA Administration Pty Limited
Peter Seward
Anadyomene Pty Ltd
Stephen Roberts
Mr Theo Onisforou
Plastic Tooling Manufacturing Pty Ltd
Total

8,312,229
17.82
6,721,132
14.41
3,943,938
8.46
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
996,813
2.14
839,416
1.80
800,000
1.72
723,815
1.55
694,213
1.49
500,000
1.07
480,000
1.03
434,764
0.93
400,000
0.86
389,994
0.84
355,795
0.76
355,492
0.76

35,009,292
75.07

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 14,062 231 947,102 67 530,753 155 5,068,549 50 40,079,097
	527 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:

CRYOSITE LIMITED – ANNUAL REPORT

ASX Additional Shareholder Information

Relevant interest

		2009		2008
	No. of	% of issued	No. of	% of issued
Shareholder	shares	capital	shares	capital
Strategic Pooled Development Limited	8,312,229	17.82	10,292,839	22.07
Theodore Onisforou	3,751,337	8.04	3,751,337	8.04
Robmar Investments Pty Limited (Bell
Potter Nominees Limited)	3,065,515	6.57	3,065,515	6.57

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 5,000 shares is 110 and they hold 236,164 shares.

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Private Cord Blood Service Clinical Trial Logistics Service Biorepository Management Service ATCC Distribution Adult Stem Cell Storage

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Cryobyte

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www.cryosite.com

AI assistant

CRYOSITE LIMITED — Annual Report 2009

64714_rns_2009-10-13_d45975b9-47b1-46a1-a0af-51a7acfe7127.pdf

Annual Report 2009

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