Cryosite Limited ABN 86 090 919 476 Appendix 4E Full year report Twelve months ended 30 June 2010 (‘current period’) And the twelve months ended 30 June 2009 (‘previous corresponding period’)

Results for announcement to the market

			$A'000
2.1 Revenue from ordinary activities:	Down	2.9% to	6,140
2.2 Profit from ordinary activities after tax attributable	Down	36.4% to	5
to members:
2.3 Net profit for the period attributable to members:	Down	36.4% to	5

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

3. NTA backing	Current period	Previous corresponding Period
Net tangible asset backing perordinary security	9.3 cents	9.3 cents

4. Details of controlled entities.

4.1 Control gained over entities having material effect

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

Cryosite Limited

ABN 86 090 919 476

Appendix 4E Full year report

Twelve months ended 30 June 2010 (‘current period’) And the twelve months ended 30 June 2009 (‘previous corresponding period’) continued

4.2 Control lost over entities having material effect

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

Date from which control was lost

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

N/A $-

5. Details of dividends:

No dividends have been declared or proposed.

6. Details of dividend reinvestment plans:

7. Details of associate and joint ventures:

8. Foreign entities:

9. Details of audit dispute or audit qualification:

N/A N/A N/A N/A

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

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

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

CRYOSITE LIMITED

ABN 86 090 919 476

Annual Report

for the year ended 30 June 2010

CRYOSITE LIMITED – ANNUAL REPORT

TABLE OFCON	TENTS
		PAGE
Corporate information		2
Directors’ report		3
Auditor’s independence declaration		15
Corporate governance statement		16
Directors’ declaration		19
Statement of comprehensive income		20
Statement of financial position		21
Statement of cash flow		22
Statement of changes in equity		23
Notes to the financial statements
1	Corporate Information	24
2	Summary of Significant Accounting Policies	24
3	Significant Accounting Judgements, Estimates and assumptions	31
4	Segment Information	33
5	Other Revenue and Income	34
6	Expenses	34
7	Income Tax	35
8	Earnings Per Share	37
9	Dividends paid and Proposed	37
10	Cash and Cash Equivalents	38
11	Cash Flow Statement Reconciliation	38
12	Current Assets - Trade and Other Receivables	49
13	Current Assets – Inventories	41
14	Current Assets – Prepayments	41
15	Non-Current - Trade and Other Receivables	41
16	Non-Current Assets – Investments in Subsidiaries	41
17	Non-Current Assets - Plant and Equipment	42
18	Non-Current Assets - Intangible Assets	43
19	Current Liabilities - Trade and other payables	43
20	Current Liabilities – Unearned Income	44
21	Non-Current Liabilities - Unearned Income	44
22	Non-Current Liabilities – Provisions	45
23	Contributed Equity	45
24	Accumulated Losses and Reserves	46
25	Commitments and Contingencies	46
26	Events After Balance Date	47
27	Auditors’ Remuneration	48
28	Related Party Disclosures	48
29	Shared-Based Payments Expense	49
30	Superannuation	52
31	Key Management Personnel	52
32	Financial Instruments	54
Independent Audit Rep	ort	60

Independent Audit Report

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

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

Duncan Dovico Chartered Accountants Level 12, 90 Arthur Street NORTH SYDNEY NSW 2060 Telephone: +61 2 9922 1166

INTERNET ADDRESS

www.cryosite.com

CRYOSITE LIMITED – ANNUAL REPORT

Directors’ Report

Your directors submit their report for the year ended 30 June 2010.

DIRECTORS

The following people held the office of director during the year

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

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

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.

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.

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

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

were:
Director	Ordinary shares	Options over ordinary shares
Theodore Onisforou	4,021,504	-
Gordon Milliken	1,288,415	-
Graeme Moore	-	300,000

EARNINGS PER SHARE

Basic earnings per share 0.01 cents (2009: 0.02 cents) Diluted earnings per share 0.01 cents (2009: 0.02 cents)

DIVIDENDS

There were no dividends declared or paid during the course of the financial year and no dividend is recommended (2009: 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 company provides a number of highly specialised biologistics-based services that are grouped into two reporting segments:

Biological Services, and
Warehousing & Distribution Services.

Biological Services

Biological Services incorporate the activities of the private cord blood service, adult stem cell storage and general biorepository management.

Warehousing & Distribution Services

Distribution Services includes the clinical trials logistics service and the other distribution based services including the importation and distribution of the products of the American Type Culture Collection and laboratory diagnostics products.

Employees

The consolidated entity has 27 full-time equivalent employees as at 30 June 2010 (2009: 23 employees).

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

OPERATING RESULTS FOR THE YEAR

The Directors have pleasure in reporting to shareholders the results for the last year’s operations. Profit for the year was $4,612 (2009: $7,249). The profit from continuing operations was $12,787 (2009: loss of $207,505) before the recognition of Income tax expense of $8,175 (2009: Benefit of $214,754).

The continued good performance from operations was reflected in the operating cash flow inflow figure of $977,657 which was 37.7% higher than 2009 ($709,858). There were no significant one-off contributions to the cash flow result. The net capital expenditure for year was $259,383, which was a considerable reduction from the record amount of $1,358,345 reported last year. The cash reserves at year end were a healthy $2,045,065.

The current year trading results continued to be affected by the additional costs for rents and outgoings incurred due to running two facilities during this transition phase. Costs were also incurred in the relocation of personnel, plant and equipment and customer stocks. Further costs were also incurred in the make good costs at Lane Cove to restore the facility to the landlord’s specifications. The total impact on the current year trading for these costs was $320,385 (2009: $533,111). As the relocation process is now completed no further costs will be incurred. Cryosite therefore looks forward with confidence to improved results in the 2010/2011 financial year.

As we commented on in last year’s report, the continuing healthy cash flow earned from the operations has been critical to the planning, development and commissioning of the new South Granville site without diluting shareholder value through either borrowings or capital raisings. The final cash reserve of over 2 million dollars provides a very welcome buffer that allows the company to be in a position of being able to purchase the right equipment and services to support the growth potential resulting from the additional space and efficiencies afforded by the improved premises.

REVIEW OF OPERATIONS

It is without any reservation that we consider the last year to be the most challenging and significant one for Cryosite since the company was established. In last year’s report we provided an update on the development of the premises in South Granville and our expectations for how our business would be able to take advantage of the new, larger and higher quality facilities. It is therefore, with considerable pleasure and with a great sense of relief that we are able to confirm that the fit-out was completed to our high level of design and the relocation accomplished without incident.

Unsurprisingly for such a complex operation, the relocation timetable that was outlined last year commencing in September and finishing by the end of December stretched to late February. We then completed the make-good on the Lane Cove premises and finally stopped paying rent in April 2010.

Although the relocation was very carefully planned, the sheer size and scope of the operation meant that to be successful and not put any client’s product at risk the plan had to be followed meticulously by all staff and contractors. It is with great pride that I can attest to the first-rate effort by all involved.

The cord blood laboratory was the first of the operational functions to be moved and as this is a seven-day-aweek operation, we needed to finish at Lane Cove on a Sunday and commence processing first thing on Monday morning. This was achieved without any problems. The next major task was the relocation of all of the drugs associated with over 200 clinical trials. The products had to be moved whilst maintaining a variety of critical temperature ranges. To complete the move, we ceased shipping any drugs for a four day period, including over the weekend, and were able to recommence routine shipments the next Monday. No products were misplaced or damaged during the move.

Whilst these major relocations were being undertaken, a separate operation was running in the background that involved the relocation of over 8,000 cord blood samples stored in liquid nitrogen tanks plus 28 ultra-low temperature freezers. Once again, this was carried out without incident, loss or damage.

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

Another significant task associated with the move was the scheduling of facility audits both by regulatory authorities, including the Therapeutic Goods Administration, the Australian Quarantine Inspection Service, and by current and prospective clients. In total between September 2009 and March 2010, we had participated in over 40 separate audits. We were pleased that all audits resulted in successful outcomes.

Another feature of the results was that in spite of the major distractions and additional demands on both personnel and financial resources, both the biological services and distribution services operations continued to perform smoothly and helped contribute to the results. The disappointing drop off in new cord blood clients that was noted in last year’s report that seemed to be linked to the instability in world financial markets and the corresponding drop off in consumer confidence did, fortunately, gradually correct itself from the start of this year so that we are back to the level that we experienced previously. In particular, we have recorded very good numbers for the last few months. Both the adult stem cell and biorepository operations are working smoothly and making valuable contributions to the overall company performance.

The additional capacity that is available to house the ever increasing number of mechanical freezers and liquid nitrogen tanks needed to support the cord blood and biorepository services has meant that we are able to function much more efficiently. The biorepository area has been pre-configured with all of the necessary services, including, power, alarm and monitoring points so all new equipment can be installed quickly without the need for specialist assistance. This has significantly reduced both the time and cost of commissioning new equipment to both regulatory standards and client expectations.

In summary, we were very pleased with the performance of the operations during the year, especially in light of the major disruption to the routine operations caused by the development of the new facility and the tasks associated with the complete relocation of the operations.

BUSINESS GROWTH AND OUTLOOK

As was noted in previous reports, the Lane Cove premises had presented significant constraints to our ability to expand the operations in general and for the distribution services in particular. The limitations were not restricted to the physical size and general “low-tech” appearance of the premises, but also included the marketing impacts that resulted in the premises not displaying the desired image of the company. We were also conscious of the potential for future changes in regulatory requirements for our cord blood processing laboratories. Therefore, we took the opportunity to design and construct two laboratories that could meet the highest likely standards that might be mandated.

The outlook for the cord blood service for the short term is not likely to undergo any significant change. Although there are no reliable statistics on the total size of the private cord blood market, our best estimate is that the market is still between 1.0% and 1.5% of births. This compares unfavourably with the USA market at around 3.0% to 5.0% and some Asian countries where figures around 10% are reported. However, there are a number of potential areas of research which, if successful, would almost certainly help increase the level of interest in Australia. Two areas of particular interest are the continuing work on the use of autologous cord blood to treat cerebral palsy and its use in treating newborns with hypoxia. The lack of published clinical trial data and the current restrictive regulatory environment makes the potential to expand the use of cord blood into the directed or so called ”family banking” is still a medium to long-term likelihood in Australia.

The other area that has new opportunities to expand as a result of the new premises is in the distribution services with particular opportunities in clinical trials. Over the last two years we have been quite subdued in our ability to attract major new clients because of the physical constraints of the premises. This has now changed and we have already been able to win a competitive tender from Amgen, the world’s largest biotechnology company. Amgen has added to our valuable list of clients that includes such leading pharmaceutical companies as Pfizer, Bristol Myer Squibb, Schering-Plough, Janssen Cilag, Boehringer-Ingleheim and over 30 other clients that have helped Cryosite reach a milestone of managing the investigational drug management for over 300 clinical trial protocols.

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

As part of our marketing strategy to highlight features of the new facility and the diverse range of services that Cryosite can provide to the pharmaceutical industry we were the exclusive Gold sponsor of the annual ARCS Scientific meeting in Sydney. This meeting is an annual event and offers a unique opportunity to interact with the decision makers in the clinical trial market. Cryosite has been a Bronze sponsor for a number of years and the decision to become the Gold sponsor has already proven to be very rewarding with an increase in interest from prospective new clients and reinvigorated interest from existing ones.

The merger and acquisition activity in the pharmaceutical industry was alive and well during the year. The most significant of these was the Pfizer takeover of Wyeth and Merck’s merger with Schering-Plough. There were also numerous takeovers of smaller biotechnology companies by a variety of larger, well established pharmaceutical companies. As one of the major costs associated with the successful development of a new drug to market is the clinical trial component, one of the obvious effects of the further concentration of the industry is the likely reduction in the number of clinical trials being conducted. When considering that the cost to bring a drug to market is counted in the 100’s of millions, the rationalisation of the number of clinical trials is an obvious area for cost savings in drug development. It is therefore an important part of the marketing strategy for Cryosite to position itself in such a way as to take advantage of such consolidations by maintaining solid relationships with a wide section of the industry in order to position ourselves as the service provider of choice for a range of biologistics services. This has proven to be a valuable strategy in the past and we have an active campaign to ensure that it continues well into the future.

Whilst it is difficult to predict the potential number of new clinical trials to be conducted in Australia, what is certain is the increasingly important role that the new generation of biopharmaceuticals will play. There has been a surge in recent years in the use of biopharmaceuticals in hard-to-treat disease areas such as rheumatology, oncology and other chronic diseases and it is predicted that biopharmaceuticals will soon account for up 50% of new drug approvals. As well as the pipeline of new trials that this will produce, there is also the potential of new trials to test the copies of these drugs as the original ones come off patent. These so called “biogenerics” differ from the more well understood generics because, being biological not chemical in nature, they may be subjected to a similar clinical trial process as the original one in order to make sure that even slight differences in their manufacture do not alter the drug’s safety or effectiveness. This is an important trend for Cryosite as we have devoted a significant amount of effort and resources to establish a reputation as the company of choice for the management of these types of drugs that require very precise cold-chain management at all times.

The ATCC distribution service performed well without enjoying any real growth. The exclusive distribution agreement for Australia and New Zealand was renewed for a further three years on similar terms as the previous agreement.

Now that we have settled in to the new site, one of major priorities is to continue to fine tune the operational procedures to capitalise on cost-saving opportunities that are offered by the more efficient design and construction. As part of this plan, we recently completed a four month project, conducted by a consultant systems analyst to conduct a comprehensive review of the warehouse operations. The review was successfully completed and as a result a large number of refinements were made to improve the efficiency of the operations.

Over the next 12 months, the second phase this initiative will be completed with the introduction of a new business management systems that will integrate the warehouse operations, KPI reporting and financial systems. The successful introduction of this system will be a major step in realising increasing returns as we continue to expand the distribution services.

COMPETITIVE ENVIRONMENT

The competitive environment has not changed dramatically since last year. As far as we can determine, the market share between all of the companies is much the same as it has been previously. Cryosite still maintains its position as the preferred cord blood service of choice by obstetricians for their patients. We have also established a revamped programme to keep the obstetricians up to date of the latest developments on the clinical applications of cord blood. This programme has been well received by the majority of obstetricians and will be developed further during the year.

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

One of the important competitive advantages that Cryosite has over its competitors is that it remains the only private cord blood service that owns and operates its own TGA licensed cord blood processing laboratory. Our consumer research has confirmed that this is an important point of difference between Cryosite and the other cord blood companies and adds to the confidence that parents have in entrusting their babies cord blood storage to the first licensed cord blood service in Australia and the only one that maintains control over all aspects of the service and does not simply act as a virtual company that outsources the service components.

The ATCC distribution service is facing increasing competition form two other sources of similar products, so we will continue to focus our marketing strategy on the well recognised reputation of the ATCC for quality and the fact that they have the largest range of products.

As we noted last year, we were very confident that we would be able to take advantage of the new opportunities that would result from the new premises and are well advanced with initiatives to capitalise on the new look and feel of the company that flows 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 520,000 unissued ordinary shares under options (1,070,000 as at 30 June 2009). 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.

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

BUSINESS RISKS

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

Most of the services that Cryosite provide to generate income require some form of statutory licensing or compliance authority. The failure by Cryosite to attain and maintain such 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.

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 Duncan Dovico 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.

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

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.

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 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

	Post employ- ment benefits Other long term benefits Short term benefits Salary & Fees Other cash benefits Super- annuation Long service leave $ $ $ $	Post employ- ment benefits Other long term benefits Short term benefits Salary & Fees Other cash benefits Super- annuation Long service leave $ $ $ $	Share- based payments Options $
Year ended 30 June 2010 Non-executive Directors Theodore Onisforou Sub-total: non-executive directors Executive directors Gordon Milliken Graeme Moore Other key management personnel Philip Alger Sub-total executive KMP Total	75,000 - 6,750	-	- 81,750
	75,000 - 6,750	-	- 81,750
	113,762 19,000 49,971 127,060 27,600 13,921 75,092 - 49,996	4,612 - 2,379	- 187,345 5,634 174,215 4,131 131,598
	315,914 46,600 113,888	6,991	9,765 493,158
	390,914 46,600 120,638	6,991	9,765 574,908

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

Directors’ Report	continued
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 Total	Short term benefits Salary & Fees Other cash benefits $ $	Post employ- ment benefits Other long term benefits Super- annuation Long service leave $ $		Share- based payments Options $	Total $
	75,000 - 15,000 - 30,000 -	6,750 1,350 2,700	- - -	- (12,733) -	81,750 3,617 32,700
	120,000 -	10,800	-	(12,733)	118,067
	91,495 22,000 117,398 27,600 40,753 -	56,505 13,050 72,066	1,921 - 9,533	- 14,251 10,455	171,921 172,299 132,807
	249,646 49,600	141,621	11,454	24,706	477,027
	369,646 49,600	152,421	11,454	11,973	595,094

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 2010

There were no options granted during the year (2009: Nil).

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 2009 Options expiring during the period Balance held at 30 June 2010	312,500 300,000 - 220,000 832,500 (312,500) - - - (312,500)
	- 300,000 - 220,000 520,000

Options issued under the employee share scheme.

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

	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

Options issued under the employee share scheme.

OPTIONS VESTED OF KEY MANAGEMENT PERSONNEL

	Gordon	Graeme	Philip
	Milliken	Moore	Alger		Total
	No. *	No. *	No. *		No.
Balance vested at 1 July 2009	312,500	100,000	73,333		485,833
Options vested 1 December 2009	-	100,000	73,333		173,333
Options expired 1 May 2010	(312,500)	-		-	(312,500)
Balance vested at 30 June 2010	-	200,000	146,666		346,666
Not exercisable	-	-		-	-
Exercisable	-	200,000	146,666		346,666
* Options issued under the employee	share scheme.
	Gordon	Graeme Catherine		Philip
	Milliken	Moore Brenner		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.

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.

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

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 2009 Granted as remuneration On exercise of options On market purchases Balance 30 June 2010 Ord. Ord. Ord. Ord. Ord.
Theodore Onisforou 3,751,337 - - 270,167 4,021,504 Gordon Milliken 1,048,415 - - 240,000 1,288,415 Graeme Moore - - - - - Philip Alger - - - - - Total 4,799,752 - - 510,167 5,309,919 Shareholdings of directors who resigned have been excluded from the above table. 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.	3,751,337 - - 270,167 4,021,504 1,048,415 - - 240,000 1,288,415 - - - - - - - - - -
	4,799,752 - - 510,167 5,309,919
Theodore Onisforou Gordon Milliken Graeme Moore Philip Alger Total	3,751,337 - - - 3,751,337 1,048,415 - - - 1,048,415 - - - - - - - - - -
	4,799,752 - - - 4,799,752

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

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.

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

DIRECTORS’ MEETINGS

During the financial year, 5 meetings of directors were held. Attendances were as follows:

Directors	Directors Meetings Eligible to attend Directors Meetings Attended
Theodore Onisforou Gordon Milliken Graeme Moore	5 5 5 5 5 5

PROCEEDING ON BEHALF OF THE COMPANY

No person has applied to the Court under section 237 of the Corporate Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party, for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.

No proceeding have been brought or intervened in on behalf of the company with leave of the court under section 237 of the Corporations Act 2001 .

AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES

The directors have received the auditors’ independence declaration which is included on Page 15 of this report.

No director of Cryosite is currently or was formerly a partner of Duncan Dovico.

Non-audit services were provided by the entity’s auditor, Duncan Dovico 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.

Gordon Milliken Managing Director

Date: 25 August 2010

DUNCAN DOVICO

Auditors’ Independence Declaration

In accordance with section 307C of the Corporations Act 2001, I declare that, to the best of my knowledge and belief, during the year ended 30 June 2010 there have been:

(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Cryosite Limited and its controlled entities during the period.

Duncan Dovico Chartered Accountants

==> picture [157 x 70] intentionally omitted <==

Rosemary Megale Partner

Sydney, 25[th] August 2010

LEVEL 12, 90 ARTHUR STREET, NORTH SYDNEY NSW 2060  PO BOX 1994 , NORTH SYDNEY NSW 2059 T: (02) 9922 1166  F: (02) 9922 2044  E: [email protected]  ABN 19 173 326 199 Liability limited by a scheme approved under Professional Standards Legislation

D U N C A N D O V I C O C H A R T E R E D A C C O U N T A N T S

CRYOSITE LIMITED –ANNUAL REPORT

Corporate Governance Statement

Cryosite is committed to implementing the highest possible standards of corporate governance. In determining what those high standards should involve, Cryosite has turned to the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (ASX Principles) and has a corporate governance framework that reflects those recommendations within the structure of the Company.

The Board of Cryosite has recently approved an updated series of policies and charters in line with the 30 June 2010 amendments to the ASX Principles. The Company’s policies and charters together form the basis of the Company’s governance framework.

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, 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 a leader in its field.

In certain instances, due to the size and stage of development of Cryosite and its operations, it may not be practicable or necessary to implement the ASX Principles in their entirety. In these instances Cryosite has identified the areas of divergence.

In accordance with its Shareholder Communications Policy, Cryosite has made its corporate governance policies and charters publicly available on its website (www.Cryosite.com).

1. Lay solid foundations for management and oversight

The Company has established the functions reserved to the Board and those delegated to senior executives.

The Board of Directors of Cryosite has the primary responsibility for guiding and monitoring the business and affairs of Cryosite including compliance with the Cryosite corporate governance objectives and for setting the strategic direction of the Company. The Board Charter confirms this responsibility and sets out the roles and responsibilities of the Board and the functions reserved to the Board. The Board Charter is available on the Company’s website.

In carrying out its governance role, the main task of the Board is to oversee the performance of Cryosite. The Board is committed to Cryosite’s compliance with all of its contractual, statutory, ethical and any other legal obligations, including the requirements of any regulatory body.

It is the role of senior management to manage Cryosite in accordance with the direction and delegations of the Board and the responsibility of the Board to oversee the activities of management in carrying out these delegated duties.

The non-executive Chairman annually assesses the performance of the Managing Director and other executive directors. During the year the performance of the Managing Director and senior executives were assessed, areas for improvement were identified and strategies adopted to implement improvements.

CRYOSITE LIMITED –ANNUAL REPORT

continued Corporate Governance Statement

2. Structure the board to add value

The Board is comprised of three Directors, the Chairman Theodore Onisforou, the Managing Director Gordon Milliken and Executive Director Graeme Moore. This Board structure is not in accordance with recommended ASX principles but the Board believes that due to the current development stage and size of the Company the interests of shareholders are currently best served by a small closely involved Board.

Further details about the Directors, including their tenure, skills, experience and expertise relevant to the position of director are set out in the Directors’ Report.

Due to the Board size and structure, the Company has not established Nomination, Remuneration or Audit Committees. The Directors believe performance of these sub-committees duties are more effectively dealt with by the Board at present.

The Board has considered and believes that there is currently an appropriate mix of skills, diversity and experience on the Board. As set out in the Board Charter, in selecting new directors, the Board will ensure that the candidate has the appropriate range of skills, experience, expertise and diversity that will best complement Board effectiveness. In addition, any candidate must confirm that they have the necessary time to devote to their Cryosite Board position.

No board performance review was undertaken in the last 12 months.

Individual Directors are entitled to obtain advice from independent external advisers in relation to any Board matter, at the expense of the Company, with the consent of the Chairman.

3. Promote ethical and responsible decision-making

Code of Conduct

To ensure that Cryosite maintains the highest standards of integrity, honesty and fairness in its dealings with all stakeholders, the Company has an established a formal Code of Conduct (Code). This Code acts as a guide for compliance with legal and other obligations to stakeholders. These stakeholders include customers, shareholders, employees, suppliers, business partners, the community and environment in which Cryosite operates.

All Cryosite employees (including Directors, employees, consultants, contactors, advisors and all other individuals that represent Cryosite) play an important role in establishing, maintaining and enhancing the reputation of Cryosite by ensuring high standards of ethics and behaviour are observed. Employees are required to comply with the Code, Cryosite policies and all applicable laws and report any genuine suspicions of noncompliance. A copy of this Code is available on the Company’s website.

Diversity

The Company had recently updated its suite of governance policies in light of the 30 June 2010 amendments to the ASX Principles. The Company has reflected its policy on diversity throughout the suite of documents, in particular in the Company’s Code of Conduct and Board Charter, not in a separate diversity policy.

The Board has not established measurable objectives for achieving gender diversity at present however the Board is committed to considering the issue of diversity at least annually. At present Cryosite has 28 employees (including consultants to the Company). Of these 14 are female. Of the 3 executive roles within the Company none is currently carried out by a female. There are currently no female board members.

Securities Trading Policy

Cryosite has a policy applying to all Directors, officers and employees of Cryosite relating to the prohibition against insider trading, and prescribes certain requirements for dealing in Cryosite’ securities. A copy of this Policy is available on the Company’s website.

CRYOSITE LIMITED –ANNUAL REPORT

continued Corporate Governance Statement

4. Safeguard integrity in financial reporting

The Company has not established an audit committee as recommended by the ASX Principles as the Board believes that due to the small size of the Company this role is more effectively dealt with by the Board directly.

The Board discusses directly with the auditors, each half year and full year financial aspects of the Company.

Information about the procedure for the selection and appointment of the external auditor, and for the rotation of external audit engagement partners are set out on the Company’s website.

5. Make timely and balanced disclosure

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, including a Continuous Disclosure Policy and a Shareholder Communications Policy. A copy of the policies, ASX announcements and other publications are available on the Company’s website.

6. Respect the rights of shareholders

As set out above the Company has a Continuous Disclosure Policy and a Shareholder Communications Policy to promote effective communication with shareholders and encourage their participation at general meetings. A copy of both policies is available on the Company’s website.

7. Recognise and manage risk

The Company has established a system of risk oversight and management and internal control. The basis of this system is the Company’s Risk Management Policy which formalises and communicates Cryosite’ approach to the management of risk. A copy of the Policy is available on the Company’s website.

The Board requires Management to design and implement the risk management and internal control system to manage the Company’s material business risks and report to the Board regarding the management of those risks. The Board has received a statement in writing from the Managing Director attesting to the effectiveness of the Company’s management of its material business risks.

The Board has received assurance from the Managing Director that the declaration provided in accordance with section 295A of the Corporations Act is based 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 has not established a remuneration committee as recommended by the ASX Principles. The Board believes that due to the current development stage and size of the Company these matters are best handled by the Board itself.

The Remuneration Report and further details about the remuneration policy of Cryosite are set out in the Directors’ Report. The Remuneration Report clearly distinguishes between the structure of Non-Executive Directors’ remuneration and that of executives.

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 are only remunerated by way of fees in the form of cash and their statutory superannuation contributions.

The Company’s policy regarding the prohibiting entering into transactions in associated products which limit the economic risk of participating in unvested entitlements under any equity-based remuneration schemes is set out in the Company’s Securities Trading Policy. A copy of the Policy is available on the Company’s website

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 2010 and of their performance for the year ended on that date; and
- (ii) complying with Accounting Standards and Corporations Regulations 2001 and other mandatory professional reporting requirements; 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 2010.

On behalf of the Board

Gordon Milliken Managing Director

Date: 25 August 2010

CRYOSITE LIMITED –ANNUAL REPORT

Consolidated Statement of Comprehensive Income

FOR THE YEAR ENDED 30 JUNE 2010 Notes	Consolidated 2010 2009 $ $	Parent 2010 2009 $ $
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 Profit(Loss) from continuing operations before income tax Income tax (expense)benefit 7 Profit(Loss) from continuing operations after income tax Net Profit(Loss) attributable to members of the parent Other comprehensive income Other comprehensive income for the year, net of tax Total comprehensive income(loss) for the year 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	5,968,601 6,158,392	3,107,166 3,266,473 170,992 162,393 1,400,000 1,300,000
	170,992 162,393
	- -
	6,139,593 6,320,785 (13,533) (12,189) (3,279,387) (3,174,199) (265,165) (217,818) (800,278) (732,359) (1,768,443) (2,391,725)	4,678,158 4,728,866 (13,533) (12,189) (2,429,668) (2,222,481) (215,471) (173,079) (800,278) (732,359) (1,760,746) (2,386,529)
	12,787 (207,505) (8,175) 214,754	(541,538) (797,771) 578,123 781,834
	4,612 7,249	36,585 (15,937)
	4,612 7,249	36,585 (15,937)
	- -	- -
	4,612 7,249	36,585 (15,937)
	Cents Cents 0.01 0.02 0.01 0.02

CRYOSITE LIMITED –ANNUAL REPORT

Statement of Financial Position

AS AT 30 JUNE 2010 Notes	Consolidated 2010 2009 $ $	Parent 2010 2009 $ $
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		2,045,065 1,326,791 960,562 1,197,157 45,630 49,397 30,859 232,981

	2,045,065 1,326,791
	1,171,347 1,403,175 45,630 53,358
	43,710 247,171
		3,082,116 2,806,326
	3,305,752 3,030,495
		1,434,601 1,550,920 20 20 754,059 763,422 2,187,881 2,008,382 - -
	1,434,601 1,550,920
	- - 754,059 763,422 2,187,881 2,009,719 - -
	4,376,541 4,324,061	4,376,561 4,322,744
	7,682,293 7,354,556	7,458,677 7,129,070
	1,102,546 1,207,373 313,261 285,968	902,156 1,040,974 310,561 283,268
	1,415,807 1,493,341	1,212,717 1,324,242
	1,653,220 1,459,989 - 1,188 258,579 59,728	1,649,395 1,453,464 - - 258,579 59,728
	1,911,799 1,520,905	1,907,974 1,513,192
	3,327,606 3,014,246	3,120,691 2,837,434
	4,354,687 4,340,310	4,337,986 4,291,636
	8,138,766 8,138,766 236,727 226,962 (4,020,806) (4,025,418)	8,138,766 8,138,766 236,727 226,962 (4,037,507) (4,074,092)
	4,354,687 4,340,310	4,337,986 4,291,636

CRYOSITE LIMITED –ANNUAL REPORT

Statement of Cash Flows

FOR THE YEAR ENDED 30 JUNE 2010 Notes	Consolidated Parent 2010 2009 2010 2009 $ $ $ $
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 Proceeds on disposal of plant and equipment Purchase of intangibles 18 Net cash flows (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Net cash flows from financing activities Net increase(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 10	6,789,594 6,807,346 6,789,594 6,807,346 (5,957,586) (6,252,951) (5,957,586) (6,252,951) 159,182 167,652 159,182 167,652 (13,533) (12,189) (13,533) (12,189)
	977,657 709,858 977,657 709,858
	(274,383) (1,329,368) (274,383) (1,329,368) 15,000 - 15,000 - - (28,977) - (28,977)
	(259,383) (1,358,345) (259,383) (1,358,345)
	- - - -
	- - - -
	718,274 (648,487) 718,274 (648,487) 1,326,791 1,975,278 1,326,791 1,975,278
	2,045,065 1,326,791 2,045,065 1,326,791

CRYOSITE LIMITED –ANNUAL REPORT

Statement of Changes in Equity

==> picture [177 x 9] intentionally omitted <==

----- Start of picture text -----

||
|---|
|FOR THE YEAR ENDED 30 JUNE 2010|

----- End of picture text -----

FOR THE YEAR ENDED 30 JUNE 2010
Note	Attributable to equity holders of theparent
	Contributed capital Accumulated losses $ $	Share options reserves Total equity $ $
CONSOLIDATED At 30 June 2008 Total comprehensive income for the year Amortisation of share based payments At 30 June 2009 Total comprehensive income for the year Amortisation of share based payments At 30 June 2010 PARENT At 30 June 2008 Comprehensive income for the year Amortisation of share based payments At 30 June 2009 Comprehensive income for the year Amortisation of share based payments At 30 June 2010	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) - 4,612 - -	226,962 4,340,310 - 4,612 9,765 9,765
	8,138,766 (4,020,806)	236,727 4,354,687
	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) - 36,585 - -	226,962 4,291,636 - 36,585 9,765 9,765
	8,138,766 (4,037,507)	236,727 4,337,986

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2010

1 CORPORATE INFORMATION

The financial report of Cryosite Limited for the year ended 30 June 2010 was authorised for issue in accordance with a resolution of the directors on 25 August 2010.

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 consolidated financial statement of Cryosite Limited group and the separate financial statements of Cryosite Limited also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

(b) New accounting standards and interpretations

Cryosite Limited had to change some of its accounting policies as the result of new or revised accounting standards which became operative for the annual reporting period commencing 1 July 2009. The affected policies and standards are:

AASB 8 Operating Segments
AASB 101 Presentation of Financial Statements (revised)

The adoption of AASB 8 Operating Segments has caused the Group to revise its segment reporting in a manner that is consistent with its internal reporting.

The group has applied the revised AASB 101 Presentation of Financial Statements which became effective on 1 January 2009. The revised standard requires the separate presentation of a statement of comprehensive income and a statement of changes in equity. All non-owner changes in equity must now be presented in the statement of comprehensive income. As a consequence, the group had to change the presentation of its financial statements. Comparative information has been re-presented so that it is also in conformity with the revised standard.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

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.

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:	2010	2009
- Leasehold improvements:	Lease term	Lease term
Plant and equipment:
- Fixtures and fittings	5 – 10 years	5 – 10 years
- Information technology	2 - 2.5years	2.5 – 5 years
- Warehouse equipment	4 - 10 years	10 years
- Office furniture & equipment	2.5 – 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 2010

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(f) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the strategic steering committee.

Change in accounting policy

The group has adopted AASB 8 Operating Segments from 1 July 2009. AASB 8 replaces AASB 114 Segment Reporting. The new standard requires a 'management approach', under which segment information is presented on the same basis as that used for internal reporting purposes. In addition, the segments are reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker.

(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

Research and development costs

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

(i) 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.

(j) 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% (2009: 17.5%).

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(k) 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.

(l) 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.

(m) 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.

(n) 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 statement of comprehensive income 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.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(o) Share-based payment transactions

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

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

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

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

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

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

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

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

(p) 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.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(p) Leases continued

Operating lease payments are recognised as an expense in the statement of comprehensive income on a straightline 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.

(q) 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.
Dividend revenue is recognised when the Company’s right to receive the payment is established.

(r) 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:

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED (r) Income tax and Other taxes continued

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

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 statement of comprehensive income.

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 Statement of Cash Flow 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.

(s) 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.

(t) 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 2010

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(u) 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 2010

3 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS CONTINUED

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 statement of comprehensive income.

(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

The company has now fully completed construction of the Granville site and the company has now received from the site contractor an estimate of the present value of anticipated costs of future restoration that may be required at maturity of the leased premises. This provision includes 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 will be 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 2010

4 SEGMENT INFORMATION

Identification of Reportable Segments

The group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (the chief operating decision makers) in assessing performance and in determining the allocation of resources. The segment information provided is consistent with the internal management reporting. The segment information presented as at 30 June 2009 comprised one business segment being biological services. Due to the adoption of the new standard AASB 8 “Segment Reporting”, services have been divided into two segments being Biological Services and Warehousing and Distribution.

Operating Segment

30 June 2010 - Consolidated Total segment revenue Segment profit before EBITDA 30 June 2009 – Consolidated Total segment revenue Segment profit before EBITDA Total Segment assets 30 June 2010 30 June 2009	Biological Services Warehousing & Distribution Total $ $ $ 3,240,201 2,899,392 6,139,593
	58,757 82,792 141,549
	3,396,844 2,923,941 6,320,785
	98,180 108,317 206,497
	4,389,028 3,293,265 7,682,293 4,256,195 3,098,361 7,354,556

A reconciliation of operating EBITDA before operating profit before income tax is provided as follows:

Operating EBITDA Interest revenue Depreciation and amortisation Finance costs Profit before tax	Consolidated 30 June 2010 $ 30 June 2009 $ 141,549 206,497 170,992 162,393 (286,221) (564,206) (13,533) (12,189)
	12,787 (207,505)

An entity shall report a measure of liabilities for each reportable segment if such an amount is regularly provided to the chief operating decision maker.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

5 OTHER REVENUE AND INCOM E

	Consolidated Parent 2010 2009 2010 2009 $ $ $ $
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 Impairment amortisation of software development 18 (e) Relocation expenses Impairment depreciation (included above) 17(i) Additional rent (included above) 6(b) Additional occupancy and relocation costs	170,992 162,393 170,992 162,393
	13,533 12,189 13,533 12,189
	682,942 740,663 682,942 740,663
	1,686,194 1,458,598 1,686,194 1,458,598 227,158 240,652 227,158 240,652 9,765 11,973 9,765 11,973
	1,923,117 1,711,223 1,923,117 1,711,223
	286,221 189,589 284,884 189,121 - 67,087 - 67,087 - 307,530 - 307,530
	286,221 564,206 284,884 563,738
	- 67,087 - 67,087 150,628 399,991 150,628 399,991 169,757 66,033 169,757 66,033
	320,385 533,111 320,385 533,111

The company has now completed relocation of all personnel and equipment to South Granville and has terminated the lease over the premises at Lane Cove. All costs in relation to relocation and make-good of the terminated lease have now been incurred. 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 2010

7 INCOME TAX

	Consolidated	Consolidated	Parent
	2010	2009	2010	2009
	$	$	$	$
(a) Income tax expense
The major components of income tax are:
Statement of comprehensive income
Current income (benefit)expense	(19,441)	(123,171)	605,739	442,721
Added (applied) to unrecognised
losses	19,441	123,171	(18,253))	123,171
Recognition of temporary differences	(8,175)	50,068	(9,363)	50,068
Origination/reversal of temporary
differences	-	164,686	-	165,874
Income tax (expense) benefit
reported in the Statement of
comprehensive income	(8,175)	214,754	578,123	781,834

(b) Numerical reconciliation between aggregate tax (expense)benefit recognised in the statement of comprehensive income and tax (expense)benefit 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 profit(loss) before tax from continuing operations At the statutory income tax rate of 30% (2009: 30%) Share-based payments (equity settled) Other items (net) Intercompany dividends Recognition of previously unrecorded losses against current year taxable income Recognition of temporary differences Income tax (expense)benefit	12,787 (207,505) (541,538) (797,771)
	(3,836) 62,252 162,462 239,332 (2,930) (3,592) (2,930) (3,592) (6,951) (17,145) (5,763) (17,145) - - 420,000 390,000 13,717 123,171 13,717 123,171 (8,175) 50,068 (9,363) 50,068
	(8,175) 214,754 578,123 781,834

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

7 INCOME TAX continued

7 INCOME TAX continued
	Balance sheet		Balance sheet
	Consolidated		Parent
	2010	2009	2010	2009
	$	$	$	$
(c) Recognised deferred tax assets and liabilities
Deferred income tax at 30 June relates to the following:
Deferred income tax assets
Post-employment benefits	79,334	69,317	79,334	69,317
Provision for tax and audit fees	4,389	9,900	4,389	9,900
Provision for doubtful debts	79,500	79,500	79,500	79,500
Impairment and depreciation of plant
& equipment for book purposes	(3,961)	49,899	(3,961)	49,899
Impairment amortisation of intangibles
for book purposes	122,336	123,203	122,336	123,203
Amortisation of Section 40-880
uniform capital allowances	47,234	535	47,234	535
Depreciation of fixed assets expensed
in prior years	-	6,971	-	6,971
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	(13,689)	(14,819)	(13,689)	(14,819)
Net deferred tax asset	754,059	762,234	754,059	763,422
Comprised of :
Deferred tax asset	754,059	763,422	754,059	763,422
Deferred tax liability	-	(1,188)	-	-
	754,059	762,234	754,059	763,422

There is a temporary difference of $ 823,388, 2009:$815,103 ) 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 (expense) benefit related to items of other comprehensive income

There were no items of comprehensive income during the year giving rise to any income expense (benefit).

(e) Tax losses

The Group has tax losses arising in Australia of $4,207,679 (2009: $4,180,063) that are available for offset against future taxable profits of the company. The deferred income tax asset of $1,262,304 (2009: $1,254,019) arising from these losses has been brought to account to the extent of $438,916 (2009: $438,916) at reporting date, as realisation of the benefit is now regarded as probable.

As at 30 June 2010, the Group has unrecognised tax losses of $2,744,626 (2009: Loss of $2,717,010) and an unrecognised deferred tax asset of $823,388 (2009: $815,103).

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

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 $587,486 (2009: $565,892) was recognised as tax consolidation contributions during the financial year as below:

financial year as below:
	Parent 2010 2009 $ $
Total reduction in tax payable of Cryosite Limited Total increase to intercompany assets of Cryosite Limited	(587,486) (565,892) 587,486 565,892

8 EARNINGS PER SHARE

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

	Consolidated 2010 $	Consolidated 2009 $
Net profit attributable to ordinary equity holders of the parent	4,612	7,249
	No of shares.	No of shares.
Weighted average number of ordinary shares for basic and dilutive 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 (2009: Nil).

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

10 CASH AND CASH EQUIVALENTS

	Consolidated Parent 2010 2009 2010 2009 $ $ $ $
Cash at bank and in hand Short-term deposits	300,457 355,821 300,457 355,821 1,744,608 970,970 1,744,608 970,970
	2,045,065 1,326,791 2,045,065 1,326,791

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 $2,045,065 (2009: $1,326,791).

Reconciliation of cash

For purposes of the Statement of Cash Flow, cash and cash equivalents as at 30 June 2010 and the prior year 2009 are as shown above.

11 STATEMENT OF CASH FLOW RECONCILIATION

	Consolidated	Consolidated	Parent
	2010	2009	2010	2009
	$	$	$	$
Reconciliation of the net profit after
tax to the net cash flows from
operations
Net profit(loss)	4,612	7,249	36,585	(15,937)
*Adjustments for non-cash items*
Depreciation and amortisation of
non-current assets	286,221	189,589	284,884	189,121
Impairment of non-current assets	-	374,617	-	374,617
Share based payments expense	9,765	11,973	9,765	11,973
Increase in allowance for
impairment loss on trade receivables	-	264,999	-	264,999
(Decrease)Increase in employee
benefits – LSL	(6,149)	15,878	(6,149)	15,878
Dividend received from wholly-
owned subsidiary	-	-	(1,400,000)	(1,300,000)

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

11 CASH FLOW RECONCILIATION continued

	Consolidated 2010 2009 $ $	Parent 2010 2009 $ $
*Changes in assets and liabilities* Decrease in trade and other receivables Decrease(Increase) in inventory Decrease(Increase) in other assets Decrease(Increase) in deferred tax asset (Decrease)Increase in trade and other creditors Increase(decrease) in unearned income Increase in employee benefits – annual leave Net cash flow from operating activities	247,342 114,326 7,728 (4,403) 304,266 (119,366) 8,175 (214,754) (144,004) 46,104 220,164 (5,735) 39,537 29,381	1,655,903 1,302,893 3,767 (4,374) 299,133 (112,676) 9,363 (215,942) (177,995) 171,685 222,864 (1,760) 39,537 29,381
	977,657 709,858	977,567 709,858

12 CURRENT ASSETS - TRADE AND OTHER RECEIVABLES

	Consolidated Parent 2010 2009 2010 2009 $ $ $ $
Trade receivables Allowance for impairment loss (a) Other receivables Related party Carrying amount of trade and other receivables	1,278,243 1,529,002 642,677 749,908 (264,999) (264,999) (264,999) (264,999) 1,013,244 1,264,003 377,678 484,909 158,103 139,172 140,874 118,149 - - 442,010 594,099 1,171,347 1,403,175 960,562 1,197,157

(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. No impairment loss (2009: $264,999) 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 2010 2009 2010 2009 $ $ $ $
At the beginning of the period Charge for the year At the end of the period	264,999 - 264,999 - - 264,999 - 264,999 264,999 264,999 264,999 264,999

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

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* *$ $ $ $ $ $ $
2010 Current Non-Current Total Consolidated Current Non-Current Total Parent 2009 Current Non-Current Total Consolidated Current Non-Current Total Parent	1,278,243 161,307 338,113 238,897 76,109 198,818 264,999 1,252,811 1,252,811 - - - - -
	2,531,054 1,414,118 338,113 238,897 76,109 198,818 264,999
	642,677 161,307 95,391 39,344 17,876 63,760 264,999 1,252,811 1,252,811 - - - - -
	1,895,488 1,414,118 95,391 39,344 17,876 63,760 264,999
	1,529,002 291,412 369,708 229,947 235,880 137,056 264,999 1,369,130 1,369,130 - - - - -
	2,898,132 1,660,542 369,708 229,947 235,880 137,056 264,999
	749,908 291,412 103,444 45,184 15,474 29,395 264,999 1,369,130 1,369,130 - - - - -
	2,119,038 1,660,542 103,444 45,184 15,474 29,395 264,999

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 2010

13 CURRENT ASSETS – INVENTORIES

	Consolidated Parent 2010 2009 2010 2009 $ $ $ $
Consumables at cost 45,630 53,358 45,630 49,397 Total inventories at cost 45,630 53,358 45,630 49,397 14 CURRENT ASSETS – PREPAYMENTS Prepayments 43,710 247,171 30,859 232,981 15 NON-CURRENT ASSETS - TRADE AND OTHER RECEIVABLES Trade receivables 1,252,811 1,369,130 1,252,811 1,369,130 Security deposits 181,790 181,790 181,790 181,790 Carrying amount of non-current trade and other receivables 1,434,601 1,550,920 1,434,601 1,550,920 Trade receivables Trade receivables due under term payment plans 1,252,811 1,369,130 1,252,811 1,369,130	45,630 53,358 45,630 49,397
	45,630 53,358 45,630 49,397
	1,434,601 1,550,920 1,434,601 1,550,920
	1,252,811 1,369,130 1,252,811 1,369,130

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 2010 2009 2010 2009 $ $ $ $
Investments at cost Investment in controlled entity Name – Cryosite Distribution Pty Limited	- - 20 20
	Equity interest held by the consolidated entity Investment 2010 2009 2010 2009 % % $ $
Country of incorporation – Australia	100 100 20 20

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

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 2010 2009 2010 2009 $ $ $ $
*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 Disposals at cost Disposals accumulated depreciation Impairment Depreciation expense At 30 June 2010 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		- - - - - - - -
		- - - -
	(i) (i) (i) (i)	2,009,719 937,027 2,008,382 935,222 479,383 1,329,368 479,383 1,329,368 (769,825) - (765,095) - 754,825 - 750,095 - - (67,087) - (67,087) (286,221) (189,589) (284,884) (189,121)
		2,187,881 2,009,719 2,187,881 2,008,382
		2,187,881 2,009,719 2,187,881 2,008,382
		3,332,837 3,623,279 3,332,837 3,618,549 (1,144,956) (1,410,873) (1,144,956) (1,407,480) - (202,687) - (202,687)
		2,187,881 2,009,719 2.187,881 2,008,382

(i) Where it was anticipated that plant and equipment would not be relocated to the Granville site depreciation was accelerated to write off those assets prior to relocation. As the relocation has now been completed all assets that were not relocated have been disposed of. 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 2010

18 NON-CURRENT ASSETS - INTANGIBLE ASSETS

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

	Consolidated Parent 2010 2009 2010 2009 $ $ $ $
*Software development* At the beginning of the period net of accumulated amortisation Additions Impairment amortisation expense At the end of the period net of accumulated amortisation At cost Accumulated amortisation Impairment amortisation Net carrying amount	- 278,553 - 278,553 - 28,977 - 28,977 - (307,530) - (307,530)
	- - - -
	1,020,533 1,020,533 1,020,533 1,020,533 (713,003) (713,003) (713,003) (713,003) (307,530) (307,530) (307,530) (307,530)
	- - - -

19 CURRENT LIABILITIES - TRADE AND OTHER PAYABLES

	Consolidated Parent 2010 2009 2010 2009 $ $ $ $
Trade payables Other payables Annual leave Total payables	328,231 459,288 193,273 363,270 563,447 576,754 498,015 506,373 210,868 171,331 210,868 171,331
	1,102,546 1,207,373 902,156 1,040,974

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 2010

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 $ $
2010 Consolidated Parent 2009 Consolidated Parent	328,231 160,475 127,780 193,273 97,235 65,623	33,726 6,250 27,289 3,126
	459,288 239,328 80,493 363,270 170,478 55,340	777 138,690 - 137,452

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 2010 2009 2010 2009 $ $ $ $
Unearned service revenue	313,261 285,968 310,561 283,268

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 2010 2009 2010 2009 $ $ $ $
Unearned service revenue	1,653,220 1,459,989 1,649,395 1,453,464

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 2010

22 NON-CURRENT LIABILITIES - PROVISIONS

	Consolidated 2010 2009 $ $	Parent 2010 2009 $ $
Long service leave Lease make-good Balance at end of the period (a) Movements in provisions Long service leave Balance at beginning of the period Arising during the year Written back on resignation Balance at end of the period	53,579 59,728 205,000 -	53,579 59,728 205,000 -
	258,579 59,728	258,579 59,728
	59,728 43,850 8,203 15,878 (14,352) -	59,728 43,850 8,203 15,878 (14,352) -
	53,579 59,728	53,579 59,728

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.

Lease make-good Balance at beginning of the period Arising during the year Balance at end of the period	- - - - 205,000 - 205,000 -
	205,000 - 205,000 -

Nature and timing of lease make-good provision

In accordance with the lease agreement with Allsup Pty Limited, the Group must restore the leased premises in Granville to its original condition at the end of the lease in 2015.

A provision of $205,000 was raised during the year in respect of the Group’s obligation to remove leasehold improvements from the leased premises and is included in the carrying amount of plant and equipment. Because of the long-term nature of the liability, the greatest uncertainty in estimating the provision is the actual cost that will ultimately be incurred.

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	Consolidated Parent 2010 2009 2010 2009 $ $ $ $
Ordinary shares	8,138,766 8,138,766 8,138,766 8,138,766

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

23 CONTRIBUTED EQUITY CONTINUED

*Movement in ordinary shares on issue*	2010 Shares No. $	2009 Shares No. $
Beginning of the financial year End of the financial year	46,639,563 8,138,766	46,639,563 8,138,766
	46,639,563 8,138,766	46,639,563 8,138,766

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.

24 ACCUMULATED LOSSES AND RESERVES

(a) Movements in accumulated losses

(a) Movements in accumulated losses
	Consolidated 2010 2009 $ $	Parent 2010 2009 $ $
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	(4,025,418) (4,032,667) 4,612 7,249	(4,074,092) (4,058,155) 36,585 (15,937)
	(4,020,806) (4,025,418)	(4,037,507) (4,074,092)
	236,727 226,962	236,727 226,962
	226,962 214,989 9,765 11,793	226,962 214,989 9,765 11,973
	236,727 226,962	236,727 226,962

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.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

25 COMMITMENTS AND CONTINGENCIES CONTINUED

The lease on the commercial property at Lane Cove in Sydney matured on 25 April 2010.

Future minimum rentals payable under commercial property leases as at 30 June 2010 are as follows:

	Consolidated 2010 2009 $ $	Parent 2010 2009 $ $
Within one year After one year but not more than five years After five years	294,500 445,836 1,300,585 1,254,043 119,764 465,242	294,500 445,836 1,300,585 1,254,043 119,764 465,242
	1,714,849 2,165,121	1,714,849 2,165,121

(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 2010 are as follows:

	Consolidated Parent 2010 2009 2010 2009 $ $ $ $
Within one year After one year but not more than five years	140,769 170,768 140,769 170,768 197,376 305,053 197,376 305,053
	338,145 475,821 338,145 475,821

(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 2010 and the date of this report which had or may have had a significant effect on the company.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

27 AUDITOR’S REMUNERATION

Ernst and Young resigned as auditors to the group on 11 November 2009. Duncan Dovico was appointed as auditors on 25 November 2009.

auditors on 25 November 2009.
	Consolidated Parent 2010 2009 2010 2009 $ $ $ $
Amounts received or due and receivable by Duncan Dovico 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 Amounts received or due and receivable by Ernst & Young 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	28,929 - 28,929 - - - - -
	28,929 - 28,929 -
	43,424 62,395 43,424 62,395 - - - -
	43,424 62,395 43,424 62,395

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 $1,400,000 (2009: $1,300,000).

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

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 2010 2009 2010 2009 $ $ $ $
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	9,765 24,706 9,765 24,706 - (12,733) - (12,733)
	9,765 11,973 9,765 11,973

The share-based payment plans are described below. There have been no cancellations or modifications to any of the plans during 2010 and 2009.

(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:

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 11

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

29 SHARE-BASED PAYMENTS EXPENSE CONTINUED

(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:

	2010 Options No. WAEP $	2009 Options No. WAEP $
Balance at beginning of period Option expiring or forfeited during the 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	1,070,000 (550,000) - - - - - -	1,370,000 - $0.30 (300,000) $0.30 - $0.30
	520,000 -	1,070,000
	- - 200,000 - 146,666 -	312,500 $0.40 100,000 - 73,333 -
	346,666 -	485,833 237,500
	346,666	723,333

Share based option payments:

Parties to option agreement Parties to option agreement Parties to option agreement Graeme Moore Catherine Brenner R Grellman – Chairman (Resigned 4 Philip Alger March 2008) Rights Granted and grant date Rights Granted and grant date Rights Granted and grant date Share options granted 1 December 2007 300,000 Share options granted 500,000 Share options granted on Graeme Moore 300,000 1 December 2007 27 November 2002 Philip Alger 220,000 Option exercise price Option exercise price Option exercise price One third at $0.20 per share One third at $0.20 per share Fixed at $0.40 per share One third at $0.30 per share One third at $0.30 per share One third at $0.40 per share One third at $0.40 per share

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

29 SHARE-BASED PAYMENTS EXPENSE CONTINUED

(c) Summary of options granted under the ESOP

Parties to option agreement	Parties to option agreement	Parties to option agreement	Parties to option agreement
Graeme Moore Philip Alger		Catherine Brenner	R Grellman – Chairman (Resigned 4 March 2008)
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 30 October 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	$5,634 $4,131 $9,765	$-	$-
Prior year’s expense taken to account $24,706 ($12,733)			$-
Value of options forfeited Value of options forfeited $ - $- Balance at the end of the financial year not yet expensed			Value of options forfeited $-
Graeme Moore Philip Alger Total	$1,382 $1,009 $2,391	$-	$-
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.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

30 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.

31 KEY MANAGEMENT PERSONNEL

(a) Key management personnel

Non-executive directors

Non-executive directors
Theodore Onisforou	Chairman (Non-executive)
Key management personnel
Gordon Milliken	Managing Director
Graeme Moore	Executive Director
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 three (3) key management personnel having authority and responsibility for planning, directing and controlling the activities of the entity either directly or indirectly.

(b) Compensation for key management personnel

	Consolidated Parent 2010 2009 2010 2009 $ $ $ $
Non-executive directors Short-term employee benefits Post-employment benefits Other long-term benefits Share-based payment Sub-total non-executive directors Key management personnel Short-term employee benefits Post-employment benefits Other long-term benefits Share-based payment Sub-total key management personnel Total compensation	75,000 120,000 75,000 120,000 6,750 10,800 6,750 10,800 - - - - - (12,733) - (12,733)
	81,750 118,067 81,750 118,067
	362,514 299,246 362,514 299,246 113,889 141,621 113,889 141,621 6,990 11,454 6,990 11,454 9,765 24,706 9,765 24,706
	493,158 477,027 493,158 477,027
	574,908 595,094 574,908 595,094

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

31 KEY MANAGEMENT PERSONNEL CONTINUED

(c) Shareholdings of key management personnel

Shares held in Cryosite Limited 30 June 2010	Balance at beginning of period Granted as remuneration On exercise of options On market purchases Balance 30 June 2010 Ord. Ord. Ord. Ord. Ord.
Theodore Onisforou Gordon Milliken Graeme Moore Philip Alger Total Shares held in Cryosite Limited 30 June 2009	3,751,337 - - 270,167 4,021,504 1,048,415 - - 240,000 1,288,415 - - - - - - - - - -
	4,799,752 - - 510,167 5,309,919
	Balance at beginning of period Granted as remuneration On exercise of options On market purchases Balance 30 June 2008 Ord. Ord. Ord. Ord. Ord.
Theodore Onisforou Gordon Milliken Graeme Moore Philip Alger Total	3,751,337 - - - 3,751,337 1,048,415 - - - 1,048,415 - - - - - - - - - -
	4,799,752 - - - 4,799,752

Total

Shareholdings of directors who resigned during the year have not been included in the above table.

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

30 June2010	Theodore Onisforou Gordon Milliken Graeme Moore Catherine Brenner Philip Alger Total No. No. No. No. No.* No.
Balance held at 1 July 2009 - 312,500 300,000 - 220,000 832,500 Options expired during the period - (312,500) - - - (312,500) Balance held at 30 June 2010 - - 300,000 - 220,000 520,000 Options issued under the employee share scheme Theodore Onisforou Gordon Milliken Graeme Moore Catherine Brenner Philip Alger Total 30 June2009 No. No. No. No. No. No.	- 312,500 300,000 - 220,000 832,500 - (312,500) - - - (312,500)
	- - 300,000 - 220,000 520,000
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

Options issued under the employee share scheme

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

31 KEY MANAGEMENT PERSONNEL CONTINUED

(e) Options Vested of key management personnel

	Theodore Onisforou Gordon Milliken Graeme Moore Philip Alger Total No. No. No. No*. No.	Theodore Onisforou Gordon Milliken Graeme Moore Philip Alger Total No. No. No. No*. No.
Balance vested at 1 July 2009 - 312,500 100,000 73,333 485,833 Options vested 1 December 2009 - - 100,000 73,333 173,333 Options expired during the period - (312,500) - - (312,500) Balance vested at 30 June 2010 - - 200,000 146,666 346,666 Not exercisable - - - - - Exercisable 30 June 2010 - - 200,000 146,666 346,666 Options issued under the employee share scheme. Theodore Onisforou Gordon Milliken Graeme Moore 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 30 June 2009 - 312,500 100,000 73,333 485,833	- 312,500 100,000 73,333 485,833 - - 100,000 73,333 173,333 - (312,500) - - (312,500)
	- - 200,000 146,666 346,666
	- - - - -
	- - 200,000 146,666 346,666
		Philip Alger Total No. No. - 312,500 73,333 173,333 73,333 485,833* - - 73,333 485,833
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 - - - 100,000
	- 312,500 100,000
	- - -
	- 312,500 100,000

Options issued under the employee share scheme.

32 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:

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

32 FINANCIAL INSTRUMENTS CONTINUED

(a) Interest rate risk continued

2010 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 2010 10 4.8 Cash and cash equivalents 10 0.3 Current receivables – maturing at various dates during year ending 30 June 2010 12 3.8 Non-current receivables 15 3.8 Financial liabilities Trade creditors and accruals – maturing at various dates during the year ending 30 June 2010. 19 2009 CONSOLIDATED Note Weighted average effective interest rate %	1,744,608 - 300,457 - 68,188 95,083 181,790 1,250,108	- 1,744,608 - 300,457 1,008,076 1,171,347 2,703 1,434,601
	2,295,043 1,345,191	1,010,779 4,651,013
	- -	1,102,546 1,102,546
	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 - 355,821 - 45,803 93,369 181,790 1,369,130	- 970,970 - 355,821 1,264,003 1,403,175 - 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 2010

32 FINANCIAL INSTRUMENTS CONTINUED

(a) Interest rate risk continued

2010

2010
PARENT
Financial assets Interest bearing deposits – maturing at various dates during year ending 30 June 2010 10 4.8 Cash and cash equivalents 10 0.3 Net current receivables – maturing at various dates during year ending 30 June 2010 12 3.8 Net non-current receivables 15 3.8 Financial liabilities Trade creditors and accruals – maturing at various dates during the year ending 30 June 2010 19 2009 PARENT	1,744,608 300,457 68,188 181,790	- - 95,083 1,250,108	- 1,744,608 - 300,457 797,291 960,562 2,703 1,434,601
	2,295,043	1,345,191	799,994 4,440,228
	-	-	902,156 902,156

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 4.5 Financial liabilities Trade creditors and accruals – maturing at various dates during the year ending 30 June 2009 19 -	970,970 355,821 66,839 181,790	- - 93,369 1,369,130	- 970,970 - 355,821 1,036,949 1,197,157 - 1,550,920
	1,575,420	1,462,499	1,036,949 4,074,868
	-	-	1,040,974 1,040,974

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:

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

32 FINANCIAL INSTRUMENTS CONTINUED

(a) Interest rate risk continued

(a) Interest rate risk continued
	Post Tax Profit Higher (Lower) 2010 2009 $ $
Consolidated Up by 2.0% Down by 1.5% Parent Up by 2.0% Down by 1.5%	39,892 57,180 (29,918) (42,885)
	39,892 57,180 (29,918) (42,885)

(b) Price risk – Equity and Commodity

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

(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 securitize 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 securitize 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.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

32 FINANCIAL INSTRUMENTS CONTINUED

(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.

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

Year ended 30 June 2010	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 2009	2,045,065 - - - 2,045,065 1,050,222 121,125 411,963 1,022,638 2,605,948
	3,095,287 121,125 411,963 1,022,638 4,651,013
	1,102,546 - - - 1,102,546
	1,992,741 121,125 411,963 1,022,638 3,548,467
	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	1,326,791 - - - 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
	1,226,931 437,282 104,423 1,304,877 3,073,513

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

FOR THE YEAR ENDED 30 JUNE 2010

32 FINANCIAL INSTRUMENTS CONTINUED

(d) Liquidity risk continued Year ended 30 June 2010 Less than 6 months 6-12 months 1-5 years Greater than 5 years Total $ $ $ $ $	(d) Liquidity risk continued Year ended 30 June 2010 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 2009	2,045,065 - - - 2,045,065 839,437 121,125 411,963 1,022,638 2,395,163
	2,884,502 121,125 411,963 1,022,638 4,440,228
	902,156 - - - 902,156
	1,982,346 121,125 411,963 1,022,638 3,538,072
	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	1,326,791 - - - 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
	1,187,312 437,282 104,423 1,304,877 3,033,894

(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.

DUNCAN DOVICO

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 statement of financial position as at 30 June 2010, and the statement of comprehensive income, statement of cash flows and statement of changes in equity 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 ended 30 June 2010.

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 Australian Accounting Standards (including the Australian Accounting Interpretation) and the Corporations Act 2001 . This responsibility includes establishing and maintaining internal control 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, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements , that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.

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 the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control 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 control.

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.

Our procedures include reading the other information in the Annual Report to determine whether it contains any material inconsistencies with the financial report.

Our audit did not involve an analysis of the prudence of business decisions made by directors or management.

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

D U N C A N D O V I C O C H A R T E R E D A C C O U N T A N T S

LEVEL 12, 90 ARTHUR STREET, NORTH SYDNEY NSW 2060  PO BOX 1994 , NORTH SYDNEY NSW 2059

T: (02) 9922 1166  F: (02) 9922 2044  E: [email protected]  ABN 19 173 326 199 Liability limited by a scheme approved under Professional Standards Legislation

DUNCAN DOVICO

Independence

In conducting our audit, we have complied with independence requirements of the Corporations Act 2001 .

Auditor’s Opinion

In our opinion:

a) the financial report of Cryosite Limited is in accordance with the Corporations Act 2001 , including:
(i) giving a true and fair view of the company’s and the consolidated entity’s financial position as at 30 June 2010 and of its 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 ; and
b) the consolidated financial report also complies with International Financial Reporting Standards as disclosed in Note 2.

Report on the Remuneration Report

We have audited the Remuneration Report for the year ended 30 June 2010. 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 2010, complies with section 300A of the Corporations Act 2001 .

Duncan Dovico Chartered Accountants

==> picture [157 x 71] intentionally omitted <==

Rosemary Megale Partner

Sydney, 25[th] August 2010

LEVEL 12, 90 ARTHUR STREET, NORTH SYDNEY NSW 2060  PO BOX 1994 , NORTH SYDNEY NSW 2059 T: (02) 9922 1166  F: (02) 9922 2044  E: [email protected]  ABN 19 173 326 199 Liability limited by a scheme approved under Professional Standards Legislation

D U N C A N D O V I C O C H A R T E R E D A C C O U N T A N T S

AI assistant

CRYOSITE LIMITED — Annual Report 2010

64714_rns_2010-08-25_57be30d3-6964-461d-8778-58368618d7e2.pdf

Cryosite Limited ABN 86 090 919 476 Appendix 4E Full year report Twelve months ended 30 June 2010 (‘current period’) And the twelve months ended 30 June 2009 (‘previous corresponding period’)

Results for announcement to the market

4. Details of controlled entities.

4.1 Control gained over entities having material effect

Cryosite Limited

Appendix 4E Full year report

Twelve months ended 30 June 2010 (‘current period’) And the twelve months ended 30 June 2009 (‘previous corresponding period’) continued

4.2 Control lost over entities having material effect

5. Details of dividends:

CRYOSITE LIMITED

Annual Report

TABLE OF CONTENTS

Independent Audit Report

Corporate Information

ABN 86 090 919 476

DIRECTORS

COMPANY SECRETARY

REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS

SHARE REGISTER

AUDITORS

INTERNET ADDRESS

Directors’ Report

DIRECTORS

Names, qualifications, experience and special responsibilities

Theodore Onisforou, BCom, LLB – Non-Executive Chairman

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

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

COMPANY SECRETARY

Bryan Dulhunty, BEc, CA

continued Directors’ Report

EARNINGS PER SHARE

DIVIDENDS

CORPORATE INFORMATION

Corporate structure

Nature of operations and principal activities

Biological Services

Warehousing & Distribution Services

Employees

continued Directors’ Report

OPERATING RESULTS FOR THE YEAR

REVIEW OF OPERATIONS

continued Directors’ Report

BUSINESS GROWTH AND OUTLOOK

continued Directors’ Report

COMPETITIVE ENVIRONMENT

continued Directors’ Report

SHARE OPTIONS

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

REGULATORY ENVIRONMENT

continued Directors’ Report

BUSINESS RISKS

INSURANCE OF DIRECTORS AND OFFICERS

REMUNERATION REPORT

Remuneration philosophy

Non-Executive Directors

continued Directors’ Report

Key Management Personnel

COMPENSATION FOR KEY MANAGEMENT PERSONNEL

continued Directors’ Report

OPTIONS GRANTED AS PART OF REMUNERATION FOR THE YEAR ENDED 30 JUNE 2010

OPTION HOLDINGS OF KEY MANAGEMENT PERSONNEL

continued Directors’ Report

OPTIONS VESTED OF KEY MANAGEMENT PERSONNEL

continued Directors’ Report

SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL

Loans to key management personnel

OTHER TRANSACTIONS AND BALANCES WITH KEY MANAGEMENT PERSONNEL

continued Directors’ Report

DIRECTORS’ MEETINGS

PROCEEDING ON BEHALF OF THE COMPANY

AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES

Auditors’ Independence Declaration

Corporate Governance Statement

1. Lay solid foundations for management and oversight

continued Corporate Governance Statement

CRYOSITE LIMITED Annual Report 2010