CRYOSITE LIMITED

LIMITED

Directors

Andrew Kroger (Non-executive Chairman) Gordon Milliken (Managing Director) Graeme Moore (executive Director)

Company Secretary Bryan Dulhunty

Registered Office 13a Ferndell Street South Granville, NSW 2142 T: +61 2 8865 2000 F: +61 2 8865 2092 E: [email protected] www.cryosite.com

Share Register Link Market Services Limited Level 8, 580 George Street Sydney, NSW 2000 T: +61 2 8280 7111 F: +61 2 9287 0303

Bankers Commonwealth Bank of Australia 27a South Street, Granville, NSW 2142

Auditors Duncan Dovico, Chartered Accountants Level 4, 5-9 Harbourview Crescent Milsons point, NSW 1516 T: +61 2 9922 1166 F: +61 2 9922 2044

LIMITED

ABN 86 090 919 476

Annual Report

for the year ended 30 June 2012

CRYOSITE LIMITED – ANNUAL REPORT

Table	of Contents
		Page
Corporate	Information	2
Directors’	Report	3
Auditor’s Independence Declaration		14
Corporate	Governance Statement	15
Directors’	Declaration	19
Consolidated Statement of Comprehensive Income		20
Consolidated Statement of Financial Position		21
Consolidated Statement of Changes in Equity		22
Consolidated Statement of Cash Flow		23
Notes to the Financial Statements
1	Corporate Information	24
2	Summary of Significant Accounting Policies	24
3	Significant Accounting Judgements, Estimates and assumptions	32
4	Segment Information	35
5	Revenue	36
6	Expenses	36
7	Income Tax	37
8	Earnings Per Share	39
9	Dividends paid and Proposed	40
10	Cash and Cash Equivalents	40
11	Cash Flow Statement Reconciliation	41
12	Current Assets - Trade and Other Receivables	42
13	Current Assets – Inventories	43
14	Current Assets – Prepayments	43
15	Non-Current - Trade and Other Receivables	43
16	Non-Current Assets – Investments in Subsidiaries	43
17	Non-Current Assets - Plant and Equipment	44
18	Non-Current Assets - Intangible Assets	45
19	Current Liabilities - Trade and other payables	45
20	Current Liabilities – Unearned Income	46
21	Non-Current Liabilities - Unearned Income	46
22	Non-Current Liabilities – Provisions	46
23	Contributed Equity	48
24	Accumulated Losses and Reserves	48
25	Commitments and Contingencies	49
26	Events After Balance Date	49
27	Auditors’ Remuneration	50
28	Related Party Disclosures	50
29	Shared-Based Payments Expense	50
30	Superannuation	53
31	Key Management Personnel	53
32	Financial Instruments	55
33	Parent Entity Financial Information	59
Independent Audit Report		61
ASX Additional Shareholder Information		63

CRYOSITE LIMITED – ANNUAL REPORT

Corporate Information

ABN 86 090 919 476

DIRECTORS

Andrew Kroger (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 2012.

DIRECTORS

The following people held the office of director during the year

Andrew Kroger (Non-Executive Chairman) – Appointed 21 November 2011 Gordon Milliken (Managing Director) Graeme Moore (Executive Director) Theodore Onisforou (Chairman) – Resigned 21 November 2011.

Names, qualifications, experience and special responsibilities

Andrew Kroger , BEc. LLB Non-Executive Chairman

Mr Kroger has had a career in stockbroking, law and general management including two years running Forsayth Group in 1990 which was Australia’s ninth largest gold producer at that time. Mr Kroger is currently a Director of a listed investment fund, Strategic Pooled Development Limited and owner of Process Wastewater Technologies LLC, a company with its major business being in wastewater in the United States. Mr Kroger has a Bachelor of Economics and a Bachelor of Laws from Monash University. Mr. Kroger was appointed to the Cryosite Limited board in November 2011.

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 reengineering 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. Mr. Dulhunty is both a director and company secretary of a number of listed and unlisted biotechnology companies.

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
Andrew Kroger	9,314,276	-
Gordon Milliken	1,290,415	-
Graeme Moore	-	300,000

EARNINGS PER SHARE

Basic earnings per share 2.19 cents (2011: 0.7 cents) Diluted earnings per share 2.17 cents (2011: 0.7 cents)

DIVIDENDS

A maiden interim unfranked dividend of 0.5 cents was declared and paid during the financial year.

The total dividend declared and paid was $233,198 (2011: Nil). No further dividends have been recommended at the date of this report

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 30 full-time equivalent employees as at 30 June 2012 (2011: 25 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 after income tax was $1,022,479 (2011: $334,305). The profit from continuing operations was $1,022,479 (2011: $305,394) before the recognition of Income tax expense of $Nil (2011: benefit of $28,911).

The results of the Company’s implemented strategies was not only reflected in the operating profit but also in the operating cash flow inflows of $1,880,212, an increase of 32.5% over 2011 ($1,419,354). There were no significant one-off contributions to the cash flow result. Net capital expenditure for year was $181,664 (2011: $699,257). The Company continues to generate positive cash flows with cash and cash equivalents at the end of the year being $4,524,750 (2011: $2,910,943).

REVIEW OF OPERATIONS

As is evident from the summary of financial performance, Cryosite finished the year with strong revenue growth, a record profit and paid the company’s first dividend. The results were based on previous significant investments in organisational improvements that have laid the foundations for continued growth. It is also important to stress that the results were due to a combination of organic growth, careful attention to cost control and productivity improvements and not any unexpected opportunity or one-off event.

We have previously highlighted the importance of making the relatively costly decision to move the business to new premises, and our confidence that the improved facility would result in a significant increase in new client numbers and corresponding revenue. This year’s results have justified that confidence by achieving a number of financial milestones that have already been mentioned.

The excellent financial outcome from the warehousing and distribution service was underpinned by the sustained growth in the clinical trials logistics service. Since moving to the South Granville site the number of active trials being serviced has increased from around 200 to over 300 at the time of last report and is now heading toward the 400 target. As well as the increase in the total number of trials, there was also an increase in the proportion of trials that require cold-chain management. Cold-chain trials are more complex to manage and therefore attract higher fees which are reflected in the improved margins. The increased number of trials combined with the fixed cost nature of this service is such that we are now enjoying very good economies of scale and correspondingly improved gross margins.

Although we are always on the lookout for new opportunities, 2011 was also in part a period of consolidation. In the previous report we made mention of having successfully commissioned the new facility and had made some additional investment in the infrastructure. We had also allocated significant resources in order to improve operational efficiency and to help underpin the quality system and improve productivity. The successful outcome of this programme played an important part in achieving the solid financial results.

The cord blood service also achieved excellent results. This was in large part due to the changes noted in last year’s report regarding the change in Cryosite's regulatory licence approvals. Cryosite's leadership in private cord blood storage was reinforced by being the first private cord blood company in Australia to obtain licence approval to offer directed allogenic release of cord blood. This “Family Banking” approval once again provided Cryosite with a valuable competitive marketing advantage over other cord blood companies who were limited to autologous release.

There was a slight decline in the number of orders for the ATCC distribution service and this, combined with some additional shipping cost resulted in reduced contribution.

Once again, one of the well recognised strengths of Cryosite is the quality management system that forms the back-bone of the operations. An integral part of the system is the external assessment of the system by both regulatory bodies and clients. Cryosite was once again the subject of a number of quality system audits. These included both client and regulatory body audits. The successful outcome of the audits confirmed the high level of competency displayed by our staff, the high standard of the facility design and fit-out and appreciation of the company’s commitment to quality.

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

The quality management programme at Cryosite is very closely aligned with the company’s risk management policy. In common with most modern technology focused businesses, Cryosite is heavily reliant on developing and maintaining a highly sophisticated and robust computer network to support operations. In recognition of the importance to our clients of Cryosite having a sound business continuity plan in case of a system failure, a major server virtulisation project was completed.

The biorepository service and the storage of adult stem cells for the Peter MacCallum Cancer Institute continued to operate smoothly and to make important contributions to the results.

Like many technology focused businesses, the availability of a workforce with the appropriate level of qualification and skills is a vital component of our planning. As the result of experiencing some difficulty in attracting staff to fill new positions needed to support the increase in work, Cryosite is now an approved sponsor for applicants under the 457 visa programme. This has allowed us to build an appropriate skills base of employees to ensure that we have the appropriate human resources available to meet our needs.

BUSINESS GROWTH AND OUTLOOK

Competitive environment

Cryosite pioneered private autologous cord blood stem cell banking in Australia in 2002 and in 2012 continued the commitment to innovation and market leadership through the commencement of Australia’s first Family Cord Blood Banking option. Family Cord Blood Banking means a child’s cord blood stem cells can be used to treat both themselves and other compatible family members including brothers, sisters and cousins. Previously, cord blood had only been available for routine release to treat the child from whom it had been collected. The introduction of this storage option with no increase in cord blood storage fee resulted in a strong increase in the total number of cord blood clients.

Whilst this service is no longer exclusive to Cryosite we believe that the legacy value of Cryosite’s first-tomarket with this extension to its service will continue to resonate positively with both expectant parents and obstetricians to ensure that Cryosite remains in a strong competitive position in the private cord blood storage market.

The competitive environment for the clinical trial services market remains quite keen. However, Cryosite continues to maintain a sizable proportion of the market thanks to having attracted and retained a significant of large clients who represent a mixture of Top Ten international pharmaceutical companies, contract research organisations as well as smaller emerging biopharmaceutical companies. Although it is difficult to obtain accurate data on the number of new trials being conducted in the region, we are confident that we will continue to attract a steady flow of new projects from both existing and new clients.

Over the years we have highlighted our long-term strategy to look for opportunities that take advantage of our integrated services business model. It was this approach that facilitated our expansion into the clinical trial logistics service and then into the management of high value commercial drugs. Cryosite has recently signed its first agreement for the distribution of such a drug for a major international pharmaceutical company. We will use the experience from this project to seek out other similar opportunities.

Another market segment that we are targeting for expansion involves human regenerative medicine. The first step in this development was the recent announcement that Cryosite has signed a collaborative agreement with Regeneus to develop protocols for the cryopreservation of human regenerative stem cells.

Regeneus is a Sydney-based regenerative medicine company that develops and commercialises proprietary technologies for the preparation of in-clinic and off-the-shelf therapies using adipose derived regenerative cells including mesenchymal stem cells for the treatment of musculoskeletal and other inflammatory conditions in humans. We see this as a significant opportunity to capitalise on the existing infrastructure, technical skills and regulatory experience.

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

The ATCC distribution service contribution is expected to be flat and in line with this year’s results. As we noted in the last report, the total market for these products is stagnant and is not likely to experience any increase in the short to medium term. Competition from suppliers of similar products also remains high. However, the service is well integrated into our operations and remains an important part of our service offering.

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 (2011: 520,000) unissued ordinary shares under options. Refer to the remuneration report for further details of the options outstanding. Option holders do not have any right, by virtue of the option, to participate in any share issue of the company or any related body corporate.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

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

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

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

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

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

REGULATORY ENVIRONMENT

The company provides a range of services that require compliance to a variety of regulatory and statutory bodies, such as the Therapeutic Goods Administration (TGA), the National Association of Testing Authorities (NATA), the Australian Quarantine Inspection Service (AQIS) and the NSW Department of Health, the Office of the Gene Technology Regulator OGTR), as well as the quality system requirements of many of its customers. The company has implemented a company-wide quality management system to ensure that we meet or exceed the requirements of all these interests.

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

BUSINESS RISKS

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

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

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

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 insurance policy and confirming the individual Directors’ and Officers’ right to access board papers and other Company documents. In return, the individual Directors and Officers have 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 pages 61 and 62.

Remuneration philosophy

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

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

Non-Executive Directors

Total remuneration paid to non-executive directors is determined by the Board from time to time for presentation to and resolution by shareholders at the Annual General Meeting. The current maximum aggregate remuneration paid to non-executive directors is $350,000 per year.

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

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.

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

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:-

Andrew Kroger Chairman (Non-executive) – Appointed 21 November 2011 Theodore Onisforou Chairman (Non-executive) – Resigned 21 November 2011 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

	Short term benefits Post employ- ment benefits Other long term benefits Salary & Fees Other cash benefits Super- annuation Long service leave $ $ $ $	Short term benefits Post employ- ment benefits Other long term benefits Salary & Fees Other cash benefits Super- annuation Long service leave $ $ $ $	Share- based payments Options $	Total $
Year ended 30 June 2012 Non-executive Directors Andrew Kroger (i) Theodore Onisforou (i) Sub-total: non-executive directors Executive directors Gordon Milliken Graeme Moore Other key management personnel Philip Alger Sub-total executive KMP Total	45,192 - 4,067 31,250 - 2,813	- -	- -	49,259 34,063
	76,442 - 6,880	-	-	83,322
	152,006 36,000 49,918 179,514 27,600 49,237 121,395 - 49,930	2,508 6,139 1,996	- - -	240,432 262,490 173,321
	452,915 63,600 149,085	10,643	-	676,243
	529,357 63,600 155,965	10,643	-	759,565

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

Directors’ Report	continued	continued
	Short term benefits Post employ- ment benefits Other long term benefits Salary & Fees Other cash benefits Super- annuation Long service leave $ $ $ $		Share- based payments Options $	Total $
Year ended 30 June 2011 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
	108,188 36,000 49,994 126,646 27,600 42,677 87,218 - 49,994	1,845 14,377 2,379	- 1,382 1,009	196,027 212,682 140,600
	322,052 63,600 142,665	18,601	2,391	549,309
	397,052 63,600 149,415	18,601	2,391	631,059

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

OPTIONS GRANTED AS PART OF REMUNERATION FOR THE YEAR ENDED 30 JUNE 2012

There were no options granted during the year (2011: Nil).

OPTION HOLDINGS OF KEY MANAGEMENT PERSONNEL

	Graeme Moore Philip Alger Total No No.* No.
Balance held at 1 July 2011 300,000 220,000 520,000 Options issued(expiring) during the year - - - Balance held at 30 June 2012 300,000 220,000 520,000 Options issued under the Employee Share Options Scheme. Graeme Moore Philip Alger Total No No. No. Balance held at 1 July 2010 300,000 220,000 520,000 Options issued (expiring) during the year - - - Balance held at 30 June 2011 300,000 220,000 520,000	300,000 220,000 520,000 - - -
	300,000 220,000 520,000
Balance held at 1 July 2010 Options issued (expiring) during the year Balance held at 30 June 2011

Options issued under the Employee Share Options Scheme.

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

OPTIONS VESTED OF KEY MANAGEMENT PERSONNEL

	Graeme Moore Philip Alger Total No. No. No.**
Balance vested at 1 July 2011 Balance vested at 30 June 2012 Exercisable	300,000 220,000 520,000
	300,000 220,000 520,000
	300,000 220,000 520,000

Options issued under the Employee Share Options Scheme.

	Graeme Moore Philip Alger Total No. No. No.
Balance vested at 1 July 2010 Options vested 1 December 2010 Balance vested at 30 June 2011 Exercisable	200,000 146,666 346,666 100,000 73,334 173,334
	300,000 220,000 520,000
	300,000 220,000 520,000

Options issued under the Employee Share Options 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.

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.

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL

Shares held in Cryosite Limited	Shares held in Cryosite Limited	Balance 1 July 2011 Balance on appointment/resig nation On market purchases Balance 30 June 2012 Ord. Ord. Ord. Ord.
Theodore Onisforou Andrew Kroger Gordon Milliken Graeme Moore Philip Alger Total Shares held in Cryosite Limited		4,125,004 (4,125,004) - - - 1,980,610 7,333,666 9,314,276 1,288,415 - 2,000 1,290,415 - - - - - - - -
		5,413,419 (2,144,394) 7,335,666 10,604,691
		Balance 1 July 2010 Balance on appointment/ resignation On market purchases Balance 30 June 2011 Ord. Ord. Ord. Ord.
Theodore Onisforou (i) Gordon Milliken Graeme Moore Philip Alger Total		4,021,504 - 103,500 4,125,004 1,288,415 - - 1,288,415 - - - - - - - -
		5,309,919 - - 5,413,419

LOANS TO KEY MANAGEMENT PERSONNEL

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

OTHER TRANSACTIONS AND BALANCES WITH KEY MANAGEMENT PERSONNEL

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

DIRECTORS’ MEETINGS

During the financial year, 7 meetings of directors were held. Attendances were as follows:

Directors	Directors Meetings	Directors Meetings
	Eligible to attend	Attended
Andrew Kroger	5	5
Gordon Milliken	7	7
Graeme Moore	7	7
Theodore Onisforou	2	2

CRYOSITE LIMITED – ANNUAL REPORT

continued Directors’ Report

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’s INDEPENDENCE DECLARATION AND NON-AUDIT SERVICES

The directors have received the auditor’s independence declaration which is included on Page 14 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: 23 August 2012

��

==> picture [96 x 50] intentionally omitted <==

��

�� �� ��
��

��

==> picture [143 x 64] intentionally omitted <==

��

��[��] ��

��

��

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 approved an updated series of policies and charters in line with the 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 have the primary responsibility for guiding and monitoring the business and affairs of Cryosite, including compliance with the company’s 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. 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, and 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.

CRYOSITE LIMITED – ANNUAL REPORT

continued Corporate Governance Statement

2. Structure the board to add value

The Board is comprised of three Directors, the Chairman Andrew Kroger, 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 the 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. There has been no nomination received for a proposed board member during the financial year.

The Company’s director induction program includes the culture and values of the company, meeting arrangements; and director interaction with each other, senior executives and other stakeholder. The current directors possess key skills in the Company’s industry and have experience in the industry. The director’s on-going education comprises of maintaining their knowledge in key developments and industry that the company operates.

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 non-compliance. A copy of this Code is available on the Company’s website.

Diversity

Diversity includes but is not limited to gender, age, ethnicity and cultural background.

CRYOSITE LIMITED – ANNUAL REPORT

continued Corporate Governance Statement

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 company is aware of the benefits of diversity. It has benefited from all available talent, promotes appointment of well qualified personnel, and has maximised achievement of corporate goals through diversity.

The company is committed to the transparency of board processes including the review and appointment of directors.

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 30 employees (including consultants to the Company). Of these 17 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.

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.

If considered necessary, the Company will arrange for advance notice of significant group briefings and make them widely accessible on the Company’s website. The company has included its results announcements on its website and through the ASX.

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’s approach to the management of risk. A copy of the Policy is available on the Company’s website.

CRYOSITE LIMITED – ANNUAL REPORT

continued Corporate Governance Statement

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 and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:
- (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of its performance for the year ended on that date; and
- (ii) complying with Accounting Standards, 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) Note 2(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.
(3) 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 2012.

On behalf of the Board

Gordon Milliken Managing Director

Date: 23 August 2012

CRYOSITE LIMITED – ANNUAL REPORT

Consolidated Statement of Comprehensive Income

FOR THE YEAR ENDED 30 JUNE 2012 Notes	2012 2011 $ $
Sale of goods and rendering of services Other revenue 5 Revenues Expenses 6 Finance costs Costs of providing services Marketing expenses Occupancy expenses Administration expenses Profit from continuing operations before income tax Income tax (expense)benefit 7 Profit from continuing operations after income tax Net Profit attributable to members of the company Other comprehensive income Other comprehensive income for the year, net of tax Total comprehensive income 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	7,757,568 6,432,973 263,528 226,793
	8,021,096 6,659,766 (10,215) (11,282) (3,908,814) (3,420,178) (349,576) (301,467) (589,309) (593,309) (2,140,703) (2,028,136)
	1,022,479 305,394 - 28,911
	1,022,479 334,305
	1,022,479 334,305
	- -
	1,022,479 334,305
	Cents Cents 2.19 0.7 2.17 0.7

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

CRYOSITE LIMITED – ANNUAL REPORT

Consolidated Statement of Financial Position

AS AT 30 JUNE 2012 Notes	2012 2011 $ $
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 (c) Plant and equipment 17 Intangible assets 18 Total Non-current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables 19 Unearned income 20 Provisions 22 Total Current Liabilities Non-current Liabilities Unearned income 21 Provisions 22 Total Non-current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 23 Share option reserves 24 Accumulated losses 23(a) TOTAL EQUITY	4,524,750 2,910,943 1,157,122 1,246,091 52,965 27,984 258,183 163,242
	5,993,020 4,348,260
	998,084 1,116,684 - - 782,970 782,970 1,996,250 2,377,220 - -
	3,777,304 4,276,874
	9,770,324 8,625,134
	1,048,638 1,128,584 335,960 337,165 372,139 304,274
	1,756,737 1,770,023
	2,281,615 1,922,131 251,308 241,597
	2,532,923 2,163,728
	4,289,660 3,933,751
	5,480,664 4,691,383
	8,138,766 8,138,766 239,118 239,118 (2,897,220) (3,686,501)
	5,480,664 4,691,383

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

CRYOSITE LIMITED – ANNUAL REPORT

Consolidated Statement of Changes in Equity

FOR THE YEAR ENDED 30 JUNE 2012

Attributable to equity holders of the company

CONSOLIDATED At 1 July 2010 Total comprehensive income for the year Transactions with owners in their capacity as owners Amortisation of share based payments At 30 June 2011 Total comprehensive income for the year Transactions with owners in their capacity as owners Equity dividends declared and paid At 30 June 2012	Contributed capital Accumulated losses $ $	Share options reserves Total equity $ $
	8,138,766 (4,020,806) - 334,305 - -	236,727 4,354,687 - 334,305 2,391 2,391
	8,138,766 (3,686,501) - 1,022,479 - (233,198)	239,118 4,691,383 - 1,022,479 - (233,198)
	8,138,766 (2,897,220)	239,118 5,480,664

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

CRYOSITE LIMITED – ANNUAL REPORT

Consolidated Statement of Cash Flows

FOR THE YEAR ENDED 30 JUNE 2012 Notes	2012 2011 $ $
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 Interest received – term deposits Net cash flows (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Equity dividend paid Net cash flows (used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 10	8,707,596 6,988,936 (6,928,132) (5,664,559) 110,963 106,258 (10,215) (11,281)
	1,880,212 1,419,354
	(181,664) (699,257) - 40,647 137,781 105,134
	(43,883) (553,476)
	(222,522) -
	(222,522) -
	1,613,807 865,878 2,910,943 2,045,065
	4,524,750 2,910,943

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2012

1 CORPORATE INFORMATION

The financial report of Cryosite Limited for the year ended 30 June 2012 was authorised for issue in accordance with a resolution of the directors on 23 August 2012.

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 preparation

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 complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

(b) 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.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

2 SUMMARYOF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(c) 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.

(d) 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 the statement of comprehensive income as incurred.

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

Major depreciation rates are:	2012	2011
- Leasehold improvements:	Lease term	Lease term
Plant and equipment:
- Fixtures and fittings	5 – 10 years	5 – 10 years
- Information technology	2 - 2.5years	2 - 2.5years
- Warehouse equipment	4 - 10 years	4 - 10 years
- Office furniture & equipment	2.5 – 8 years	2.5 – 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.

(e) 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.

(f) 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).

(g) Intangible assets

Research and development costs

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

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(h) 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.

(i) 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% (2011: 17.5%).

(j) Cash and cash equivalents

Cash and cash equivalents in the statement of financial position 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 statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

(k) 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.

(l) 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.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

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 the 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.

(m) 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.

(n) 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 (‘equitysettled 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.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(n) Share-based payment transactions (continued)

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.

(o) Leases

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

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

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

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

Operating lease payments are recognised as an expense in the statement of comprehensive income on a straight-line basis over the lease term. Operating lease incentives are recognised as a liability when received and subsequently reduced by allocating lease payments between rental expense and reduction of the liability.

(p) 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 from cord blood services is recognised in the accounting period in which the services are rendered. Where the Group has a long term contract with its customers to provide cord blood services, a receivable is recognised at its net present value with a corresponding amount recognised as unearned income in the statement of financial position (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

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(p) Revenue (continued)

using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

Dividends: revenue is recognised when the Company’s right to receive the payment is established.

(q) 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 date.

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

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

Except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

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

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

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 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 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.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(q) Income tax and other taxes continued

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 statement of financial position.

Cash flows are included in the Statement of Cash Flows 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.

(r) 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.

(s) Share options reserve

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

(t) Impairment of assets

Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

(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:

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(u) Earnings per share continued

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.

(v) New Accounting Standards and Interpretations

The accounting policies adopted are consistent with those of the previous financial year except the following which the Group adopted from 1 July 2011:

AASB 124 Related Party Disclosures (December 2009) simplifies the definition of a related party, clarifying its intended meaning and eliminating inconsistencies from the definition; effective 1 January 2011.

AASB 2009-12 Amendments to Australian Accounting Standards (AASB 5, 8, 108, 110, 112, 119, 133, 137 & 139 and interpretations 2, 4, 16, 1039 & 1052) making numerous editorial changes; effective 1 January 2011.

AASB 2010-4 Amendments to Australian Accounting Standards arising from the Annual Improvements Project (AASB1, 7, 101, 134 and interpretation 13) emphasises the interaction between quantitative and qualitative AASB 7 disclosures and the nature and extent of risks associated with financial instruments; effective 1 January 2011.

AASB 2010-5 Amendments to Australian Accounting Standards (AASB 1, 3, 4, 5, 101, 107, 112, 118, 119, 121, 132, 133, 134, 137, 139, 140, 1023 & 1038 and interpretations 112, 115, 127, 132 & 1042) making numerous editorial changes; effective 1 January 2011.

AASB 1054 Australian Additional Disclosures this standard, with AASB 2011-1 relocates all Australian specific disclosures from other standards to one place; effective 1 July 2011.

(w) Changes in Accounting Standards

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Group for the annual reporting period ended 30 June 2012. The new standards, interpretations and amendments are not expected to have a significant impact on the financial statements.

AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) (effective from 1 January 2013). AASB 9 Financial Instruments addresses the classification, measurement and de-recognition of financial assets and financial liabilities. The standard is not applicable until 1 January 2013 but is available for early adoption. When adopted, the standard will affect in particular the company’s accounting for its available-for-sale financial assets, since AASB 9 only permits the recognition of fair value gains and losses in other comprehensive income if they relate to equity investments that are not held for trading.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

AASB 10 Consolidated Financial Statements (effective from 1 January 2013) establishes a new control model which broadens the situations when an entity is considered to be controlled by another entity and includes new guidance for applying the model to specific situations, including when acting as a manager may give control, the impact of potential voting rights and when holding less the a majority voting rights may give control. Some entities may need to prepare consolidated financial statements where they previously did not. Flow on effects include whether an entity is a small or large proprietary company with associated reporting and audit obligations, which is decided based on numbers in consolidated financial statements.

AASB 11 Joint Arrangements (effective from 1 January 2013) defines joint control and it removes the option to account for jointly controlled entities using proportionate consolidation. Accounting for a joint arrangement is dependent on the nature of the rights and obligations arising from the arrangement. Joint operations that give the venturers right to the underlying assets and obligations themselves is accounted for by recognising the share of those assets and obligations. Joint ventures that give the venturers a right to the net assets is accounted for using the equity method.

AASB 12 Disclosure of Interests in Other Entities (effective from 1 January 2013) includes all disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates and structures entities. New disclosures are introduced about the judgments made by management to determine whether control exists, and to require summarised information about joint arrangements, associates and structured entities and subsidiaries with non-controlling interests.

AASB 13 Fair Value Measurement (effective from 1 January 2013) establishes a single source of guidance for determining the fair value of assets and liabilities when fair value is required or permitted. Application may result in different fair values being determined for the relevant assets. AASB 13 also expends the disclosure requirements for all assets or liabilities carried at fair value including assumptions made and the qualitative impact of those assumptions on the fair value determined.

AASB 119 Employee Benefits (effective from 1 January 2013). The revised standard changed the definition of short-term employee benefits. The distinction between short-term and other long-term employee benefits is now based on whether the benefits are expected to be settled wholly within 12 months after the reporting date.

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 policies 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 .

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

3 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS CONTINUED

(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.

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 statement of financial position. 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 dependent 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 statement of financial position 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.

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.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

3 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS CONTINUED

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 statement of financial position by adjusting both the expense or asset and provision.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

4 SEGMENT INFORMATION

Identification of Reportable Segments

Operating Segment

30 June 2012 - Consolidated Total segment revenue Segment profit before EBITDA 30 June 2011 - Consolidated Total segment revenue Segment profit before EBITDA Total Segment assets 30 June 2012 30 June 2011	Biological Services Warehousing & Distribution Total $ $ $
	3,996,608 4,024,488 8,021,096
	357,463 974,337 1,331,800
	3,432,173 3,227,603 6,659,766
	210,440 381,363 591,803
	5,526,736 4,243,588 9,770,324
	4,824,576 3,800,558 8,625,134

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 2012 $ 30 June 2011 $
	1,331,803 591,803 263,528 226,793 (562,637) (501,920) (10,215) (11,282)
	1,022,479 305,394

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

Consolidated 2012 2011 $ $

5 REVENUE

Revenue Sale of goods and rendering of services Other Revenue Bank and STMM interest

services Other Revenue Bank and STMM interest 6 EXPENSES (a) Finance costs Interest - insurance premium funding (b) Lease payments Lease payments-operating leases (c) Employee benefits expense Wages and salaries Superannuation costs Share-based payments expense (d) Depreciation and amortisation Depreciation – plant & equipment 17	7,757,568 6,432,973 263,528 226,793
	8,021,096 6,659,766
	10,215 11,282
	488,018 510,963
	2,076,343 1,736,276 307,528 292,340 - 2,391
	2,383,871 2,031,007
	562,637 501,920

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

7 INCOME TAX

7 INCOME TAX
	Consolidated 2012 2011 $ $
(a) Income tax expense The major components of income tax are: Statement of comprehensive income Current income expense 301,900 118,070 (Applied) to unrecognised losses (301,900) (118,070) Recognition of temporary differences - 28,911 Income tax (expense) benefit reported in the Statement of comprehensive income - 28,911 (b) Numerical reconciliation between aggregate tax benefit(expense) recognised in the statement of comprehensive income and tax benefit(expense) calculated per the statutory income tax rate	301,900 118,070 (301,900) (118,070) - 28,911
	- 28,911

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 before tax from continuing operations At the statutory income tax rate of 30% (2011: 30%) Share-based payments (equity settled) Other items (net) Recognition of previously unrecorded losses against current year taxable income Recognition of temporary differences Income tax (expense)benefit	1,022,479 305,394
	(306,744) (91,618) - (717) 4,844 (1,742) 301,900 94,077 - 28,911
	- 28,911

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

7 INCOME TAX continued

7 INCOME TAX continued
	Consolidated 2012 2011 $ $
(c) Recognised deferred tax assets and liabilities Deferred income tax at 30 June relates to the following: Deferred income tax assets Post-employment benefits Provision for tax and audit fees Provision for doubtful debts Impairment and depreciation of plant & equipment for book purposes Impairment amortisation of intangibles for book purposes Amortisation of Section 40-880 uniform capital allowances Losses available for offset against future taxable income Deferred income tax liabilities Consumables Net deferred tax asset Comprised of : Deferred tax asset Deferred tax liability	122,334 102,261 14,094 15,594 35,586 79,500 19,633 (3,580) 73,355 122,259 25,597 36,415 508,261 438,916 (15,890) (8,395)
	782,970 782,970
	782,970 782,970 - -
	782,970 782,970

There is a temporary difference of $ 403,418 ( 2011: $705,318) for which no deferred tax asset is recognised on the statement of comprehensive income 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).

(d) Tax losses

The Group has tax losses arising in Australia of $3,089,814 (2011: $3,814,113) that are available for offset against future taxable profits of the company. The deferred income tax asset of $926,944 (2011: $1,144,234) arising from these losses has been brought to account to the extent of $508,261 (2011: $438,916) at reporting date, as realisation of the benefit is now regarded as probable.

As at 30 June 2012, the Group has unrecognised tax losses of $1,395,611 (2011: Loss of $2,351,060) and an unrecognised deferred tax asset of $418,683 (2011: $705,318).

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

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 deed 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 tax sharing deed was signed on 12 May 2011.

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 $Nil (2011: $675,665) tax effected was recognised as tax consolidation contributions during the financial year as below:

In Cryosite Limited $Nil (2011: $675,665) tax effected was recognised during the financial year as below:	as tax consolidation contributions
	Parent 2012 2011 $ $
Total reduction in tax payable of Cryosite Limited Total increase in intercompany assets of Cryosite Limited	- (675,665) - 675,665

8 EARNINGS PER SHARE

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

8 EARNINGS PER SHARE The following reflects the income used in the basic and diluted earnings per	share computations:
	Consolidated 2012 2011 $ $
Basic earnings per share (from continuing operations) Diluted earnings per share (from continuing operations) Basic EPS disclosure Earnings used in EPS calculation Net profit attributable to ordinary equity holders of the parent	2.19 0.7 2.17 0.7
	1,022,479 334,305 1,022,479 334,305
	No of shares. No of shares.
Weighted average number of ordinary shares for basic earnings per share	46,639,563 46,639,563

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

9 EARNINGS PER SHARE CONTINUED

Diluted EPS disclosure

Diluted EPS disclosure
Earnings used in diluted EPS calculation Net profit attributable to ordinary equity holders of the parent	1,022,479 334,305 1,022,479 334,305
	No of shares. No of shares.
Weighted average number of ordinary shares for basic earnings per share Shares deemed to be used for no consideration – options Weighted average number of ordinary shares used in the calculation of diluted EPS	46,639,563 46,639,563 520,000 520,000
	47,159,563 47,159,563

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

	Consolidated 2012 2011 $ $
Declared and paid during the year: Dividends on ordinary shares Interim unfranked dividend for 2012: 0.5 cents per share (2011: Nil)	233,198 -

No dividends have been declared or recommended at the date of this report.

10 CASH AND CASH EQUIVALENTS

10 CASH AND CASH EQUIVALENTS
	Consolidated 2012 2011 $ $
Cash at bank and on hand Short-term deposits	121,074 397,077 4,403,676 2,513,866
	4,524,750 2,910,943

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

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

The fair value of cash and cash equivalents for the consolidated group and parent entity is $4,524,750 (2011: $2,910,943).

Reconciliation of cash

For purposes of the Statement of Cash Flow, cash and cash equivalents as at 30 June 2012 and the prior year are as shown above.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

11 STATEMENT OF CASH FLOW RECONCILIATION

11 STATEMENT OF CASH FLOW RECONCILIATION
	Consolidated
	2012	2011
	$	$
Reconciliation of the net profit after tax to the net cash flows from operations
Net profit	1,022,479	334,305
*Adjustments for non-cash items*
Depreciation and amortisation of non-current assets	562,637	501,920
Write off of noncurrent asset	-	2,760
Share based payments expense	-	2,391
Increase in employee benefits – LSL	23,029	37,496
*Changes in assets and liabilities*
Decrease in trade and other
receivables	353,949	62,668
(Increase)Decrease in inventory	(24,981)	17,646
(Increase) in other assets	(235,734)	(60,973)
(Increase) in deferred tax asset	-	(28,911)
Increase(decrease) in trade and
other creditors	(76,946)	218,309
Increase in unearned income	358,279	292,815
(Decrease) in allowance for
impairment loss on trade
receivables	(146,380)	-
Increase in employee benefits –
annual leave	43,880	38,928
Net cash flow from operating
activities	1,880,212	1,419,354
Trade receivables	1,119,386	1,351,702
Allowance for impairment loss (a)	(118,619)	(264,999)
	1,000,767	1,086,703
Other receivables	156,355	159,388
Carrying amount of trade and
other receivables	1,157,122	1,246,091

(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. During the financial year the allowance was reduced by $146,380 (2011: Nil) to cover bad debts written off during year. When there is an impairment loss, it has been included in the administration expense item. No individual amount within the impairment allowance is material.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

11 STATEMENT OF CASH FLOW RECONCILIATION CONTINUED

Movements in the provision for impairment loss were as follows:

	Consolidated 2012 2011 $ $
At the beginning of the year Reduction in impairment loss during the year At the end of the year	264,999 264,999 (146,380) -
	118,619 264,999

(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* *$ $ $ $ $ $ $
2012 Current Non-Current Total Consolidated 2011 Current Non-Current Total Consolidated	1,119,386 100,854 399,760 206,658 77,587 261,932 72,595 998,084 998,084 - - - - -
	2,117,470 1,098,938 399,760 206,658 77,587 261,932 72,595
	1,351,702 209,275 444,336 211,814 60,975 160,303 264,999 1,116,684 1,116,684 - - - - -
	2,468,386 1,325,959 444,336 211,814 60,975 160,303 264,999

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

12 CURRENT ASSETS - TRADE AND OTHER RECEIVABLES

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

Notes to the Financial Statementscontinued
13 CURRENT ASSETS – INVENTORIES	Consolidated 2012 2011 $ $
Consumables at cost Total inventories at cost 14 CURRENT ASSETS - PREPAYMENTS Prepayments 15 NON-CURRENT ASSETS - TRADE AND OTHER RECEIVABLES Trade receivables Security deposits Carrying amount of non-current trade and other receivables Trade receivables Trade receivables due under term payment plans	52,965 27,984
	52,965 27,984
	258,183 163,242
	998,084 1,116,684 - -
	998,084 1,116,684
	998,084 1,116,684

Non-current trade receivables are not considered impaired.

Security deposits

The security deposit for the lease at Granville is covered by a bank guarantee for $181,790 issued by the Commonwealth Bank of Australia. No collateral is held as security.

The maximum exposure to credit risk at the time of reporting is the carrying value of the receivables.

16 NON-CURRENT ASSETS - INVESTMENTS IN SUBSIDIARIES

		Consolidated 2012 2011 $ $
Investments at cost Investment in controlled entity Name – Cryosite Distribution Pty Limited	Equity interest held by the consolidated entity 2012 2011 % %	- -
		Investment 2012 2011 $ $
Country of incorporation – Australia	100 100 20 20

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

17 NON-CURRENT ASSETS - PLANT AND EQUIPMENT

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

		Consolidated 2012 2011 $ $
*Leasehold Improvements* At the beginning of the year net of accumulated depreciation and impairment Depreciation expense At the end of the year net of accumulated depreciation and impairment At cost Accumulated depreciation Net carrying amount *Fixtures and fittings* At the beginning of the year net of accumulated depreciation and impairment Additions at cost Depreciation expense At the end of the year net of accumulated depreciation and impairment At cost Accumulated depreciation Net carrying amount *Information technology* At the beginning of the year net of accumulated depreciation and impairment Depreciation expense At the end of the year net of accumulated depreciation and impairment At cost Accumulated depreciation Net carrying amount *Warehouse equipment* At the beginning of the year net of accumulated depreciation and impairment Additions at cost Disposals at cost Disposals accumulated depreciation Depreciation expense At the end of the year net of accumulated depreciation and impairment At cost Accumulated depreciation Net carrying amount		166,562 205,000 (38,438) (38,438)
		128,124 166,562
		205,000 205,000 (76,876) (38,438)
		128,124 166,562
		28,056 30,560 - 4,671 (7,953) (7,175)
		20,103 28,056
		72,521 72,521 (52,418) (44,465)
		20,103 28,056
		142,314 51,933 64,076 121,113 (82,640) (30,732)
		123,750 142,314
		443,076 379,000 (319,326) (236,686)
		123,750 142,314
		2,033,549 1,890,613 117,591 568,408 - (29,542) - 24,304 (429,936) (420,234)
		1,721,204 2,033,549
		3,427,347 3,309,756 (1,706,143) (1,276,207)
		1,721,204 2,033,549

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

Notes to the Financial Statementscontinued	Notes to the Financial Statementscontinued
17 NON-CURRENT ASSETS - PLANT AND EQUIPMENT continued Consolidated 2012 2011 $ $
*Office furniture & equipment* At the beginning of the year net of accumulated depreciation and impairment Additions at cost Disposals at cost Depreciation expense At the end of the year net of accumulated depreciation and impairment At cost Accumulated depreciation Net carrying amount Total plant and equipment net carrying amount	6,739 9,775 - 2,306 - - (3,670) (5,342)
	3,069 6,739
	33,517 33,517 (30,448) (26,778)
	3,069 6,739
	1,996,250 2,377,220

18 NON-CURRENT ASSETS - INTANGIBLE ASSETS (a) Reconciliation of carrying amounts at the beginning and the end of the year Consolidated 2012 2011 $ $	18 NON-CURRENT ASSETS - INTANGIBLE ASSETS (a) Reconciliation of carrying amounts at the beginning and the end of the year Consolidated 2012 2011 $ $
*Software development* At cost Accumulated amortisation Impairment amortisation Net carrying amount	1,020,533 1,020,533 (713,003) (713,003) (307,530) (307,530)
	- -

19 CURRENT LIABILITIES - TRADE AND OTHER PAYABLES	Consolidated 2012 2011 $ $
Trade payables Other payables Total payables Fair value	436,904 434,362 611,734 694,222
	1,048,638 1,128,584

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

19 CURRENT LIABILITIES - TRADE AND OTHER PAYABLES continued

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

	Total Not Yet due 0-30 Days 31-60 Days 61-90 Days +91 Days $ $ $ $ $
2012 Consolidated 2011 Consolidated	436,904 67,113 255,390 85,980 17,876 10,545
	434,362 21,953 291,059 121,047 303 -

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

20 CURRENT LIABILITIES - UNEARNED INCOME
	Consolidated 2012 2011 $ $
Unearned service revenue	335,960 337,165

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

21 NON-CURRENT LIABILITIES - UNEARNED INCOME

21 NON-CURRENT LIABILITIES - UNEARNED INCOME
	Consolidated 2012 2011 $ $
Unearned service revenue	2,281,615 1,922,131

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

22 CURRENT LIABILITIES - PROVISIONS

22 CURRENT LIABILITIES - PROVISIONS
	Consolidated 2012 2011 $ $
Annual leave Long service leave Dividends payable	293,676 249,796 67,796 54,478 10,667 -
	372,139 304,274

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

22 NON – CURRENT LIABILITIES - PROVISIONS
Long service leave	46,308	36,597
Lease make good	205,000	205,000
	251,308	241,597
(a) Movements in provisions
Annual leave
Balance at beginning of the year	249,796	210,868
Arising during the year	43,880	38,928
	293,676	249,796
Long service leave
Balance at beginning of the year	91,075	53,579
Arising during the year	23,029	37,496
	114,104	91,075
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.
Dividends
Balance at beginning of the year	-	-
Declared during the year	233,198	-
Interim dividends paid during
the year	(222,531)	-
Balance at end of the year	10,667	-
Lease make-good provision
Balance at beginning of the year	205,000	-
Arising during the year	-	205,000
Balance at end of the year	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.

The provision of $205,000 was raised in respect of the Group’s obligation to restore the leased premises 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 may 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.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

23 CONTRIBUTED EQUITY

23 CONTRIBUTED EQUITY
		Consolidated 2012 2011 $ $ 8,138,766 8,138,766 2011 Shares No. $
Ordinary shares *Movement in ordinary shares on issue*	2012 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.

(a) Movements in accumulated losses

(a) Movements in accumulated losses
	Consolidated 2012 2011 $ $
Balance at the beginning of the year Net profit for the year Equity dividend declared Balance at the end of the year 24 RESERVES	(3,686,501) (4,020,806) 1,022,479 334,305 (233,198) -
	(2,897,220) (3,686,501)
	Consolidated 2012 2011 $ $
Share options reserve Movements in share options reserve Balance at the beginning of the year Value of compensation benefit during the year Balance at the end of the year	239,118 239,118
	239,118 236,727 - 2,391
	239,118 239,118

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

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

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.

Future minimum rentals payable under commercial property leases as at 30 June 2012 are as follows:

	Consolidated 2012 2011 $ $
Within one year After one year but not more than five years	318,529 307,127 795,545 1,116,843
	1,114,074 1,423,970

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 2012 are as follows:

	Consolidated 2012 2011 $ $
Within one year After one year but not more than five years	63,590 93,971 12,575 76,165
	76,165 170,136

(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 OCCURRING AFTER THE REPORTING PERIOD

The directors are unaware of any event or transaction that has occurred between the balance date of 30 June 2012 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

27 AUDITOR’S REMUNERATION

27 AUDITOR’S REMUNERATION
	Consolidated 2012 2011 $ $
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	53,058 44,500 6,000 9,500
	59,058 54,000

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 $Nil (2011: $1,575,000).

29 SHARE-BASED PAYMENTS EXPENSE

(a) Recognised share based payment expenses

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

	Consolidated 2012 2011 $ $
Expense arising from equity-settled share-based payment transactions	- 2,391
	- 2,391

The share-based payment plans are described below. There have been no cancellations or modifications to any of the plans during 2012 and 2011.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

29 SHARE-BASED PAYMENTS EXPENSE CONTINUED

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

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 13.

(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:

	2012 2011 Options No. WAEP $ Options No. WAEP $
Balance at beginning of year Balance at end of the year Graeme Moore Philip Alger	520,000 - 520,000 -
	520,000 - 520,000 -
	300,000 - 300,000 - 220,000 - 220,000 -
	520,000 - 520,000 -

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

29 SHARE-BASED PAYMENTS EXPENSE CONTINUED

(c) Summary of options granted under the ESOP continued

Share based options payment:

Parties to option agreement

Graeme Moore Philip Alger

Rights Granted and grant date

Share options granted 1 December 2007 Graeme Moore 300,000 Philip Alger 220,000

Option exercise price

One third at $0.20 per share, One third at $0.30 per share One third at $0.40 per share

Vesting period

One third on 1 December 2008 One third on 1 December 2009 One third on 1 December 2010 Options must be exercised no later than 30 November 2015.

Vesting requirements

Options granted under ESOP as part of remuneration package. Options will lapse on cessation of employment with the company.

Weighted average fair value per option at grant date $0.11

Expense for the year Graeme Moore $- Philip Alger $- Total $-

Prior year’s expense taken to account $2,391

Value of options forfeited $-

Balance at the end of the financial year not yet expensed $-

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.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

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

Andrew Kroger Chairman (Non-executive) – Appointed 21 November 2011 Theodore Onisforou Chairman (Non-executive) – Resigned 21 November 2011

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

(b) Compensation for key management personnel
	Consolidated 2012 2011 $ $
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	76,442 75,000 6,880 6,750 - - - -
	83,322 81,750
	516,515 385,651 149,085 142,666 10,643 18,601 - 2,391
	676,243 549,309
	759,565 631,059

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

31 KEY MANAGEMENT PERSONNEL continued

(c) Shareholdings of key management personnel

Shares held in Cryosite Limited 30June 2012	Balance at beginning of year Movement on appointment/ resignation On market purchases Balance 30 June 2012 Ord. Ord. Ord. Ord.
Andrew Kroger – appointed 21 November 2011 Theodore Onisforou – resigned 21 November 2011 Gordon Milliken Graeme Moore Philip Alger Total Shares held in Cryosite Limited 30June 2011	- 1,980,610 7,333,666 9,314,276 4,125,004 (4,125,004) - - 1,288,415 - 2,000 1,290,415 - - - - - - - -
	5,413,419 (2,144,394) 7,335,666 10,604,691
	Balance at beginning of year Movement on appointment/ resignation On market purchases Balance 30 June 2011 Ord. Ord. Ord. Ord.
Theodore Onisforou Gordon Milliken Graeme Moore Philip Alger Total	4,021,504 - 103,500 4,125,004 1,288,415 - - 1,288,415 - - - - - - - -
	5,309,919 - 103,500 5,413,419

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

30 June 2012	Andrew Kroger Gordon Milliken Graeme Moore Philip Alger Total No. No. No. No.* No.
Balance held at 1 July 2011 - - 300,000 220,000 520,000 Balance held at 30 June 2012 - - 300,000 220,000 520,000 Options issued under the employee share scheme Andrew Kroger Gordon Milliken Graeme Moore Philip Alger Total 30 June 2011 No. No. No. No. No.	- - 300,000 220,000 520,000
	- - 300,000 220,000 520,000
Balance held at 1 July 2010 - - 300,000 220,000 520,000 Balance held at 30 June 2011 - - 300,000 220,000 520,000 * Options issued under the employee share scheme	- - 300,000 220,000 520,000
	- - 300,000 220,000 520,000

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

31 KEY MANAGEMENT PERSONNEL continued

(e) Options Vested of key management personnel

	Andrew Kroger Gordon Milliken Graeme Moore Philip Alger Total No. No. No. No*. No.
Balance vested at 1 July 2011 - - 300,000 220,000 520,000 Balance vested at 30 June 2012 - - 300,000 220,000 520,000 Exercisable 30 June 2012 - - 300,000 220,000 520,000 Options issued under the employee share scheme. Andrew Kroger Gordon Milliken Graeme Moore Philip Alger Total No. No. No. No. No.	- - 300,000 220,000 520,000
	- - 300,000 220,000 520,000
	- - 300,000 220,000 520,000
Balance vested at 1 July 2010 Options vested 1 December 2010 Balance vested at 30 June 2011 Exercisable 30 June 2011	- - 200,000 146,666 346,666 100,000 73,334 173,334
	- - 300,000 220,000 520,000
	- - 300,000 220,000 520,000

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

32 FINANCIAL INSTRUMENTS CONTINUED

2012 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 2012 10 5.27 Cash and cash equivalents 10 2.15 Current receivables – maturing at various dates during year ending 30 June 2012 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 2012. 19 3.69 2011 CONSOLIDATED Note Weighted average effective interest rate %	4,403,676 - - 4,403,676 121,074 - - 121,074 45,630 59,431 1,052,061 1,157,122 - 998,084 - 998,084
	4,570,380 1,057,515 1,052,061 6,679,956
	67,113 - 981,525 1,048,638
	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 2011 10 5.69 Cash and cash equivalents 10 2.20 Current receivables – maturing at various dates during year ending 30 June 2011 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 2011. 19 5.77	2,513,866 - - 2,513,866 397,077 - - 397,077 39,549 93,456 1,113,086 1,246,091 - 1,116,684 - 1,116,684
	2,950,492 1,210,140 1,113,086 5,273,718
	21,953 - 1,106,631 1,128,584

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

32 FINANCIAL INSTRUMENTS CONTINUED

Interest rate sensitivity analysis

The following sensitivity analysis is based on interest rate risk exposures in existence at the balance 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:

would have been affected as follows:
	Post Tax Profit Higher (Lower) 2012 2011 $ $
Consolidated Up by 2.0% Down by 1.5%	68,646 46,690 (51,484) (35,022)

Net present value sensitivity analysis

The following sensitivity analysis is based on a discount rate of 17.5% (2011: 17.5%) risk exposures in existence at the balance date. If the discount rate had moved, as illustrated in the tables below, with all other variables held constant, post tax profit would have been affected as follows

	Post Tax Profit Higher (Lower) 2012 2011 $ $
Consolidated Up by 2% Down by 2%	(31,680) (35,066) 36,347 39,184

(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 securitise its trade and other receivables.

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

Research institutes both private and academic

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

Individuals:

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

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

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

(d) Liquidity risk

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

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

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

Year ended 30 June 2012	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	4,524,750 - - - 4,524,750 1,107,280 49,842 375,736 622,348 2,155,206
	5,652,040 49,842 375,736 602,338 6,679,956
	1,048,638 - - - 1,048,638
	4,603,402 49,842 375,736 602,338 5,631,318

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

32 FINANCIAL INSTRUMENTS CONTINUED

(d) Liquidity risk continued

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

Maturity analysis of finan	cial assets and liabilities based on management’s expectation(continued).
Year ended 30 June 2011	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	2,910,943 - - - 2,910,943 1,156,252 89,840 393,724 722,959 2,362,775
	4,067,195 89,840 393,724 722,959 5,273,718
	1,128,584 - - - 1,128,584
	2,990,611 89,840 393,724 722,959 4,197,134

(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.

33 PARENT ENTITY FINANCIAL INFORMATION

The individual financial statements for the parent entity show the following aggregate amounts:

AS AT 30 JUNE 2012
	2012	2011
	$	$
(a) STATEMENT OF FINANCIAL POSITION
Total Current Assets	5,751,212	4,112,221
Total Non-current Assets	3,777,324	4,276,894
TOTAL ASSETS	9,528,536	8,389,115

CRYOSITE LIMITED – ANNUAL REPORT

Notes to the Financial Statements continued

33 PARENT ENTITY FINANCIAL INFORMATION continued

(a) STATEMENT OF FINANCIAL POSITION continued
	2012	2011
	$	$
(b) LIABILITIES
Total Current Liabilities	1,533,200	1,553,605
Total Non-current Liabilities	2,532,923	2,162,378
TOTAL LIABILITIES	4,066,123	3,715,983
(c) EQUITY
Contributed equity	8,138,766	8,138,766
Share option reserves	239,118	239,118
Accumulated losses	(2,915,471)	(3,704,752)
TOTAL EQUITY	5,462,413	4,673,132
(d) TOTAL COMPREHENSIVE
INCOME
Net Profit of the parent entity for
the year net of income tax	1,022,479	332,755
Other comprehensive income for
the year, net of tax	-	-
Total comprehensive income for
the year	1,022,479	332,755

(e) GUARANTEES ENTERED INTO BY THE PARENT ENTITY

No guarantees have been entered into by the parent entity in relation to the debts of its subsidiaries.

(f) COMMITMENTS AND CONTINGENCIES OF THE PARENT ENTITY

Commitments and contingencies for the parent entity are the same as those disclosed in Note 25.

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 and its controlled entity which comprises the consolidated statement of financial position as at 30 June 2012, and the consolidated statement of comprehensive income, consolidated statement of cash flows and consolidated 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 entity it controlled at the year’s end or from time to time during the financial year ended 30 June 2012.

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 consolidated 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 and its controlled entity is in accordance with the Corporations Act 2001 , including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 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 2012. 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 2012, complies with section 300A of the Corporations Act 2001 .

DUNCAN DOVICO CHARTERED ACCOUNTANTS

==> picture [149 x 67] intentionally omitted <==

Rosemary Megale Partner

Sydney, 23[rd] August 2012.

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

ASX Additional Shareholder Information

Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 31 August 2012.

Twenty largest shareholders

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

SHAREHOLDER

LISTED ORDINARY SHARES

	Number of	% of ordinary
	shares	shares
CELL CARE AUSTRALIA PTY LTD	9,347,281	20.04%
MR ANDREW KROGER	7,333,666	15.72%
BELL POTTER NOMINEES LTD	5,956,455	12.77%
FITEL NOMINEES LIMITED	2,300,300	4.93%
COLAX BAY PTY LIMITED	1,980,610	4.25%
KHAEMET PTY LTD	1,034,918	2.22%
MR THEO ONISFOROU	1,008,753	2.16%
MR ALISTAIR DAVID STRONG	1,000,000	2.14%
CELL CARE AUSTRALIA PTY LTD	943,137	2.02%
MRS ERICA MARGARET STRONG	850,000	1.82%
NARON NOMINEES PTY LTD	839,416	1.80%
MR STEPHEN ROBERTS	644,994	1.38%
ONMELL PTY LTD	602,000	1.29%
H F A ADMINISTRATION PTY LIMITED	480,000	1.03%
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED	436,378	0.94%
ANADYOMENE PTY LTD	400,000	0.86%
SUNNYIT PTY LTD	300,500	0.64%
PERSHING AUSTRALIA NOMINEES PTY LTD	300,000	0.64%
ASIA UNION INVESTMENTS PTY LTD	300,000	0.64%
AUSTRALIAN EXECUTOR TRUSTEES LIMITED	291,690	0.63%
MR STEVEN BANN	260,000	0.56%
TOTAL	36,610,098	78.50%

DISTRIBUTION OF EQUITY SECURITIES

Number of shareholders by size of holding

ber of shareholders by size of holding
	Ordinary Shares Number of Holders Number of Shares
1 1,000 1,001 5,000 5,001 10,000 10,001 100,000 100,001 and over Total	30 12,398 217 884,207 68 552,056 150 4,769,607 43 40,421,295
	508 46,639,563

CRYOSITE LIMITED – ANNUAL REPORT

ASX Additional Shareholder Information continued

Substantial shareholders

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

Relevant interest

		2012		2011
Shareholder	No. of shares	% of issued capital	No. of shares	% of issued capital
Cell Care Australia Pty. Ltd	10,240,498	21.97	9,297,361	19.93
Andrew John Kroger	9,314,276	19.97

Voting Rights

All ordinary shares carry one vote per share without restriction.

Number of shareholders holding less than a marketable parcel

The number of shareholders holding less than a marketable parcel of 3,545 shares is 52 and they hold 42,920 shares.

==> picture [331 x 287] intentionally omitted <==

Cryosite is established with the specific objective of providing specialised outsourced logistics services to a wide range of clients including the research, medical, pharmaceutical, veterinary and biotechnology industries.

Cryosite provides professional, reliable and cost effective support services, tailored to meet individual customer needs. our Quality Management System ensures compliance with all necessary regulations and detailed documentation control. operations are carried out in a NAtA accredited (ISo/IeC 17025) facility and in compliance with current Code of Good Manufacturing practices (cGMp). the facility is AQIS approved under section 46a of the Quarantine Act for the quarantine of class 5.1 goods.

Cryosite Limited, ABN 86 090 919 476 is an Australian public listed company registered on the main board of the Australian Stock exchange with the code “Cte”.

LIMITED

AI assistant

CRYOSITE LIMITED — Annual Report 2012

64714_rns_2012-09-26_7ab156cc-58f3-41ff-82e1-3ac3e27742f6.pdf