CRYOSITE LIMITED — Annual Report 2016

Aug 23, 2016

==> picture [595 x 78] intentionally omitted <==

24/8/2016 Company Announcements Office Australian Securities Exchange

Cryosite full year profit result Appendix 4E, Annual report and Dividend announcement

Cryosite (ASX: CTE): Following is the Appendix 4E, Annual Report and dividend announcements.

Operating Result Summary

While revenue increased 3% to $10.1m, profit before tax of $439k was down $168k from the previous corresponding period. The reduction in profit was driven result of decisions made by the Board to continue focusing on its long term strategy of investing in sales, marketing and other initiatives to improve competitiveness in its existing operations and to develop additional revenue streams in new markets to position the Company for continuing growth performance in the following years.

Cash Position

A Company maintains a strong balance sheet with no debt and has $3.7m cash on hand as at 30 June 2016. The Company continues to generate cash flows with $474k cash inflow from operating activities for the period.

Dividends

As a result of the strength of the balance sheet and expected growth in the Company’s operations the directors have determined that an unfranked final dividend of 0.5 (half cent) per share will be paid.

Key dates for the dividend payout are

• “Ex Dividend Payment” trading commences - 7[th] September 2016

• “Record Date”- last date for CTE Register - 8[th] September 2016

• Dividend payment Date - 4[th] October 2016

Stephen Roberts Chair

About Cryosite:

Cryosite (ASX: CTE) is a unique Australian biotech company that pioneered private autologous Cord Blood Banking in 2002, directed allogeneic Family Banking in 2011, and in 2014 has developed methods for the cryopreservation and expansion of Mesenchymal Stem Cells from umbilical cord tissue.

Cryosite also provides specialised Biorepository, Clinical Trials Logistics, Commercial Drug Distribution, contract Cellular Therapies manufacturing and associated consultancy services to commercial clients both within Australia and internationally. Cryosite’s facilities are NATA accredited (ISO15189) and its Cord Blood Stem Cell cryopreservation and storage laboratories are fully licensed by the TGA.

==> picture [595 x 65] intentionally omitted <==

Cryosite Limited ABN 86 090 919 476 Appendix 4E Full year report

0B Results for announcement to the market

1. Details of Reporting Period

The financial information contained in this report is for the year ended 30 June 2016. Comparative amounts (unless otherwise indicated) relate to the year ended 30 June 2015.

2. Results for Announcement to the Market

2. Results for Announcement to the Market
				$A'000
2.1 Revenue from ordinary activities:	Up	3.0%	to	10,137
2.2 Profit from ordinary activities after tax attributable	Down	33.5%	to	302
to members:
2.3 Net profit for the period attributable to members:	Down	33.5%	to	302

3. Dividends

The Board of Cryosite has on the 24th August 2016 determined and is pleased to announce the payment of an unfranked dividend of $0.005 (half cent) per ordinary share.

The key dates are:

Ex Dividend Payment: trading commences 7[th] September 2016 Record Date - last date: for CTE share register 8[th] September 2016 Dividend payment Date: 4[th] October 2016

4. Commentary on the results to the market

The audited annual accounts are attached. Please refer to these for full results and commentary.

1B5. NTA backing		Previous
		corresponding
	Current period	Period
Net tangible asset backing per ordinary security	6.0 cents	6.7 cents

8

CRYOSITE LIMITED

ABN 86 090 919 476

Annual Report

for the year ended 30 June 2016

Table of Contents

Table	of Contents
		Page
Corporate	Information	1
Directors’	Report	2
Auditor’s Independence Declaration		14
Corporate	Governance Statement	15
Directors’	Declaration	16
Consolidated Statement of Comprehensive Income		17
Consolidated Statement of Financial Position		18
Consolidated Statement of Changes in Equity		19
Consolidated Statement of Cash Flow		20
Notes to the Financial Statements
1	Corporate Information	21
2	Summary of Significant Accounting Policies	21
3	Significant Accounting Judgements, Estimates and Assumptions	31
4	Segment Information	34
5	Revenue	35
6	Expenses	35
7	Income Tax	36
8	Earnings Per Share	38
9	Dividends Paid and Proposed	38
10	Cash and Cash Equivalents	38
11	Cash Flow Statement Reconciliation	39
12	Current Assets - Trade and Other Receivables	39
13	Current Assets – Inventories	40
14	Current Assets – Prepayments	40
15	Non-Current - Trade and Other Receivables	41
16	Non-Current Assets – Investments in Subsidiaries	41
17	Non-Current Assets - Plant and Equipment	42
18	Non-Current Assets - Intangible Assets	42
19	Trade and Other Payables	44
20	Current Liabilities – Unearned Income	44
21	Non-Current Liabilities - Unearned Income	44
22	Non-Current Liabilities – Provisions	45
23	Contributed Equity and Accumulated Losses	46
24	Reserves	46
25	Commitments and Contingencies	46
26	Events After Balance Date	47
27	Auditors’ Remuneration	47
28	Related Party Disclosures	48
29	Shared-Based Payments Expense	48
30	Key Management Personnel	50
31	Financial Instruments	51
32	Parent Entity Financial Information	54
Independent Audit Report		56
ASX Additional Shareholder Information		58

CRYOSITE LIMITED – ANNUAL REPORT

Corporate Information

ABN 86 090 919 476

DIRECTORS

Stephen Roberts (Non-Executive Chair) Andrew Kroger(Non-Executive Director) Graeme Moore (Executive Director)

COMPANY SECRETARY

Bryan Dulhunty (CoSA Life Science - Corporate)

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: corporate@cryosite.com

SHARE REGISTER

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

AUDITORS

Mazars Risk & Assurance Pty Limited Level 12, 90 Arthur Street NORTH SYDNEY NSW, 2060 Telephone: +61 2 9922 1166

INTERNET ADDRESS

www.cryosite.com www.cryositeservices.com

1

Directors’ Report

The directors present their report together with the financial statements on the consolidated entity (the Group) consisting of Cryosite Limited (the Company) and the entity it controlled for the year ended 30 June 2016.

DIRECTORS

The following people held the office of director during the year

Stephen Roberts (Non-Executive Chair) – appointed 8/12/2015 Andrew Kroger (Non-Executive Director) - appointed 21/11/2011 Christina (Christy) Boyce (Non-Executive Director) - appointed 3/6/2013, resigned 8/12/2015 Graeme Moore (Executive Director) - appointed 22/9/2008

During the year, Andrew Kroger resigned as Non-Executive Chair on 8[th] April 2016 and became a NonExecutive Director. Stephen Roberts was appointed Executive Chair on the 8[th] April 2016 until 8[th] July 2016 and is now Non-Executive Chair having joined the board as a Non-Executive Director on 8[th] December 2015.

Names, qualifications, experience and special responsibilities

Stephen Robert, B. Business, Executive MBA (INSEAD) Non-Executive Chair

Mr Roberts has over 25 year’s business, management and consulting experience in highly successful international companies. Stephen is currently Chair of Growth Farms Australia Ltd and a number of private and unlisted companies. He was on the boards of Cancer Council Australia and New South Wales for nearly a decade and remains on the Social Ventures Leadership Council. His past roles include CEO & Senior partner of Mercer Investments Asia Pacific, Managing Director of Russell Investments Australasia and Senior Vice President of BT Funds Management. Mr Roberts is a Fellow and Graduate of the Institute of Company Directors and is trained as a Chartered Accountant. Mr Roberts was appointed to the Board on 8 December 2015.

Andrew Kroger, BEc. LLB Non-Executive Director

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 the 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.

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

Graeme Moore holds the position of Executive Director Operations and Business Development. Mr Moore has held positions as Chief Operating Officer and Quality and Regulatory Affairs Manager. Mr Moore joined Cryosite in July 2005 after a 20-year career in biomedical science, manufacture of therapeutic goods, quality management and regulatory affairs, including nine years with the Australian Red Cross Blood Service. Mr Moore was appointed to the Board on 22 September 2008.

COMPANY SECRETARY

Bryan Dulhunty, BEc, CA

Company Secretarial Services for Cryosite Limited are provided by CoSA Life Science - Corporate, an independent Company Secretarial firm specialising in the Life science industry.

Mr Dulhunty founded CoSA in 2001 after extensive experience in a major international accounting firm and both large and small publicly listed entities. Mr. Dulhunty is has been Executive Chairman, Managing Director non-executive director and company secretary of a number of listed and unlisted biotechnology companies

2

Directors’ Report continued

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

Director	Ordinary shares
Andrew Kroger	13,316,906
Stephen Roberts	644,873

EARNINGS PER SHARE

Basic earnings per share 0.64 cents (2015: 0.97 cents) Diluted earnings per share 0.64 cents (2015: 0.96 cents)

DIVIDENDS

A final unfranked dividend for the year ended 30 June 2015 of 0.5 cents per ordinary share was declared and paid during the financial year. An interim unfranked dividend of 0.5 cents per ordinary share in respect of the 2016 financial year was declared and paid during the financial year.

The total dividends declared were $468,597(2015: $702,894). A final dividend of 0.5 cents per ordinary share has 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

Cryosite (ASX: CTE) is a unique Australian biotech and biologics logistics company. The company’s highly specialised biologics based services are grouped into two business lines – Individualised Consumer Biologics and Scientific Processing and Logistics.

Cryosite pioneered private autologous Cord Blood Banking in 2002, directed allogeneic Family Banking in 2011, and in 2014 has developed and commercialised methods for the cryopreservation of Mesenchymal Stem Cells (MCS’s) from umbilical cord tissue.

Cryosite also provides specialised Bio-repository, Clinical Trials Logistics, Commercial Drug Distribution, contract Cellular Therapies manufacturing and associated consultancy services to commercial clients both within Australia and internationally. Cryosite’s facilities are NATA accredited (ISO15189) and its Cord Blood Stem Cell cryopreservation and storage laboratories are fully licensed by the TGA.

The board recently changed the names of the business segments to better reflect the nature of their operations.

Individualised Consumer Biologics (formerly known as Biological Services)

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

Scientific Processing and Logistics (formerly known as Warehousing and Distribution)

These services included the clinical trials logistics service and the other storage and distribution based services including the importation and distribution of laboratory diagnostic products.

3

Directors’ Report continued

Employees

The consolidated entity has 39 full-time equivalent employees as at 30 June 2016 (2015: 37 employees).

Cryosite recognises the value of diversity in the workplace and is committed to providing equal opportunity for all its staff. Over 54% of current employees are female. Of its 39 employees there are numerous religions and cultures and where possible offer flexible work practices and work life balance as a key retention tool. Cryosite is also committed to providing a workplace free from any form of harassment, bullying and discrimination.

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 $302,466 (2015: $455,170). Revenue increased to $10,136,503 up 3% from 2015 revenue of $9,843,855.

During the year the Company continued its marketing investment across various media areas to build brand awareness and penetration in the cord blood and tissue category and ultimately our market share. The Company’s investment in online media continues to be successful having contributed well to revenue performance of Cord Blood and Tissue this year. Additional investments in the traditional areas of marketing such as exhibitions, conventions and advertising have also been effective. The Company expects to continue to invest in these activities in the future.

In March 2016, the Company acquired a number of assets, including customers and trademarks, from a former competitor Stemlife that was liquidated in February 2016.The Company expects to leverage these assets in the future in conjunction with the Cryosite’s ongoing business.

During the year the Company undertook a review of its IT operating systems which resulted in an initial investment in the invoicing system. The Company plans further investments in this area in 2017 to generate more efficiencies in its operations.

During the year, the Company made changes to its executive team and structure appointing Andrew Shine as CEO replacing Joseph Saad who had left in December 2015. Andrew comes with a strong background in health services having worked with Monash IVF, Icon Cancer Care and Virtus Health in Australia as well as Trinity Biotech in Ireland. Mark Byrne, previously CFO of the listed company Appen, was recently appointed as CFO replacing Mark Marshall who left on the 30[th] June 2016. These changes to the management structure incurred one off costs.

The executive team believe that the current strategies of building our marketing capabilities as well as building partnerships with doctors and hospitals is essential if we are to achieve sustainable growth in the Individualised Consumer Biologics business. The team sees opportunities in the Scientific Processing Logistics business through the building of closer relationships with key customers as well as exploring new areas with this segment.

There are a number of risks and opportunities that continue to face the business moving forward and we envisage 2017 financial year to be one of investment and ongoing consolidation.

The Company generated a positive $474,608 operating cash flow and maintained a healthy cash balance of $3,651,581 at June 30[th] , notwithstanding a $468,596 dividend payment during the year.

REVIEW OF OPERATIONS

During 2016 the Company made significant investments in sales & marketing to improve competitiveness, particularly in the competitive cord blood market. This has resulted in an 3% increase revenue for the company. EBITDA has come in at $1,010,921 (2015: $1,056,275) driven by these marketing and sales costs as well as one-off expenses associated with changes to management.

4

Directors’ Report continued

Individualised Consumer Biologics

Cryosite manages three different services within the Individualised Consumer Biologics business.

Cord Blood & Tissue

Cryosite pioneered private banking of cord blood to treat a range of haematological conditions in Australia in 2002. In 2011 Cryosite consolidated its reputation as the industry market leader in 2011 when it obtained the first TGA license for the directed allogeneic release of cord blood (“Family Banking”), and again in 2014 when Cryosite offered patent protected methodology for banking umbilical cord tissue.

During 2015, the combination of expanding the cord tissue business and additional investment in sales and marketing resources has resulted in this services’ revenue growing 15% over last year.

Contract GMP Manufacturing

Cryosite’s expertise in the storage and distribution of temperature controlled biologics and medicines, clinical trials logistics and the Australian regulatory environment, enables the Company to also provide clients with contracted sophisticated storage and distribution options for their manufactured products. These services include contract Good Manufacturing Practice (GMP), manufacturing of specialised cell therapy products and the provision of associated consultancy services.

Revenue and operating profit from contract GMP manufacturing and associated services decreased in 2016 driven by the reduced volume of work from a key client which has downsized its Australian business.

Biorepository

Biorepository services offers specialised GMP level storage, distribution and traceability to clients who have specific material requirements around quality and commercial value which could potentially by compromised by loss of environment control or failure. In additional to a comprehensive range storage options, Cryosite also offers segregation by risk category and value added services including assistance with risk assessment, import, export and containment requirements, temperature controlled distribution and regulatory advice.

Biorepository revenue continues to increase year on year achieving an increase of 11% in 2016 (4% in 2015). The revenue improvement has been primarily driven through the provision of higher value Biorepository services to existing clients, and continued provision of contract manufacturing services to existing clients.

Segment Summary

In summary, Individualised Consumer Biologics revenue results were $5,292,738 (2015: $4,975,847) representing a positive 6% increase driven primarily by the continued success of Cryosite’s new cord tissue service. Overall EBITDA came in at $420,321 (2015: $453,215) down to increased investment in the cord blood and tissue services and reduced profitability from the GMP manufacturing services.

Scientific Processing and Logistics

Historically Cryosite managed two services within the Scientific Processing and Logistics business.

Clinical Trials

Cryosite’s Clinical Trials Logistics service has established itself over many years as a high quality and cost effective partner for local and international clinical trial sponsors (pharmaceutical and biopharmaceutical companies) and Contract Research Organisations (CROs) for the warehousing and distribution of investigational drugs. Cryosite’s expertise in cold, frozen and cryogenic storage and distribution has enabled the Company to successfully support client’s changing needs for management of biologic based drugs, and for these services to comply with applicable international standards.

In 2016 this service grew 12% over 2015 driven by the increase in the number of individual clinical trials under management. The ability to identify and meet client’s demands to support highly customised trials of

5

Directors’ Report continued

increasing complexity, and the provision of value added services, that has enabled Clinical Trials operations to maintain their profitability over the last 12 months and grow 8%.

Commercial Drug Distribution

This business was severely affected by the discontinuation of several major client contracts in specific personal biologics segment of adult stem processing and storage. Cryosite is engaging in market wide consultation to support the re-emergence of this service. We remain a preferred supplier of high value drug logistical services to the world’s major pharmaceutical companies.

Segment Summary

The overall segment revenue for 2016 was $4,843,765 (2015: $4,868,008) and EBITDA of $590,600 (2015: $603,060).

BUSINESS GROWTH AND OUTLOOK

Competitive Environment

Business outlook summary

Cryosite is in a unique position offering the following services within the -

Individualised Consumer Biologics business

• Cord Blood and Tissue Banking

• Contract GMP Manufacturing

• Biorepository Services

Scientific Processing and Logistics business

• Clinical Trial Logistics

• Commercial Drug Distribution

And biological scientific and logistical consulting services

No other company in our segments offers the same array of services under the one roof.

In the Cord Blood and Tissue market there is one major competitor which is privately owned companies. The best information we have at our disposal suggests that Cryosite is the second largest player in cord blood and tissue banking with a market share of approximately 35%.

Total Market penetration for the category is around 1% of the annual birth rate. Cryosite’s penetration is around 0.3%. Our challenge as a business and as a category is to reach the penetration levels of other developed countries which ranges between 3-5%. Awareness levels are still relatively low for the category.

As stated the market has been relatively static over the past 10 years. Outside of peaks in the birth rate driven by Government incentives such as the baby bonus, the category has been relatively stable and inherently linked to the national birth rate. One off competitor events such as discounting, the introduction of tissue banking and family banking has resulted in market share movement from one player to the other but has not resulted with real category growth.

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

While traditional operations within both the Individualised Consumer Biologics and the Scientific Processing and Logistics segments will be subject to an increasingly competitive business environment during 2016, both segments are expected to provide incremental organic growth due to the pursuit of new clients in these areas.

6

Directors’ Report continued

Of note was the acquiring of a number of smaller new accounts which has assisted in minimising the loss of other distribution business.

The past year has seen Cryosite identify and implement new initiatives in both our Individualised Consumer Biologics and the Scientific Processing and Logistics segments. The Individualised Consumer Biologics segment now provides cord tissue MSC banking to parents, and specialised contract GMP manufacturing and associated consultancy services to therapeutic and regenerative medicine companies involved in the development and commercialisation of proprietary technologies. The Scientific Processing and Logistics segment now provides specialised commercial drug distribution. The development and launch of our Corporate Website in the first half of the new financial year will also increase our exposure to potential clients as well as providing a platform to implement an outreach program. These initiatives are expected to position the Company to maintain growth in the longer term.

SHARE OPTIONS

As at the date of this report, there were nil (2015: 300,000) 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

Other than detailed in the above there were no significant changes in the state of affairs of the Group during the year.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

It should be noted that Graeme Moore is serving out a period of notice and his employment will end on 6 October 2016. He remains a director.

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 the Company to strengthen its market position during the next financial year.

ENVIRONMENTAL REGULATIONS

The Company provides a range of services that require compliance to a variety of regulatory and statutory bodies, including the Therapeutic Goods Administration (TGA), the Department of Agriculture, Fisheries and Forestry (DAFF), the NSW Department of Health, and the Office of the Gene Technology Regulator (OGTR). Additionally, the Company must comply with the quality system requirements of many of its customers. The Company has implemented a company-wide quality management system to ensure that it meets or exceeds the requirements of all these interests. Cryosite also holds accreditation for ISO 15189 (Medical Laboratories) from the Australian National Association of Testing Authorities (NATA).

There have been no significant known breaches of the consolidated entity’s licence conditions or any regulations to which it is subject. 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 and tissue 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

7

Directors’ Report continued

viability. As referred to in other parts of this report, Cryosite is committed to mitigating risks in this area by the implementation and maintenance of a company-wide Quality Management System.

INSURANCE OF DIRECTORS AND OFFICERS

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 three executives in the Parent and the Group receiving the highest remuneration.

This has been audited by Mazars Risk & Assurance Pty Limited and is included within the scope of the audit report on pages 9-12.

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 or CEO. 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.

Any options that have vested will be forfeited, if not exercised, within three months of cessation of employment. The Company may terminate the employee's 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 but not been exercised will be forfeited.

8

Directors’ Report continued

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:-

Stephen Roberts Chair (Non-executive) (appointed 8/12/2015) Andrew Kroger Director (Non-executive) Christina Boyce Director (Non-executive) (resigned 8/12/2015) Joseph Saad Chief Executive Officer (resigned 18/12/2015) Andrew Shine Chief Executive Officer (appointed 14/6/2016) Graeme Moore Executive Director Mark Marshall Chief Financial Officer (resigned 30/6/2016) Mark Byrne Chief Financial Officer (appointed 20/6/2016)

Due to the relatively small number of employees, apart from Joseph Saad, Graeme Moore, Mark Marshall, Andrew Shine and Mark Byrne, there were or are no other executives having authority and responsibility for planning, directing and controlling the activities of the entity either directly or indirectly during the current year.

COMPENSATION FOR KEY MANAGEMENT PERSONNEL

Year Ended 30 June 2016 Non-Executive Directors Andrew Kroger Christina Boyce Stephen Roberts (1) Subtotal: non-executive directors Executive directors Graeme Moore Other Key management personnel Joseph Saad (2) Mark Marshall (2) Andrew Shine (2) Mark Byrne (2) Subtotal executive KMP Total	Short Term Benefits Post-employment benefits Other long term benefits Share based payments Termination benefits Total
	Salary & Fees Other Cash benefits Superannuation Long service leave Options $ $ $ $ $ $ $
	72,500 - 6,888 - - - 79,388 26,087 - 2,478 - - - 28,565 78,721 - 7,478 - - - 86,199
	177,308 - 16,844 - - - 194,152
	205,434 - 21,290 18,675 - - 245,399 53,055 - 11,175 - - 75,962 140,191 159,700 - 15,171 - - - 174,871 10,045 - 954 - - - 11,000 6,322 - 601 - - - 6,923
	229,122 - 27,901 - - 75,962 332,985
	611,864 - 66,036 18,675 - 75,962 772,536

(1) Includes $46,326 (inclusive superannuation) payment made during the year for additional executive services

(2) Where directors or key personnel resigned or were appointed during the year payments shown above are the period served.

9

Directors’ Report continued

Year Ended 30 June 2015 Non-Executive Directors Andrew Kroger Christina Boyce Subtotal: non-executive directors Executive directors Graeme Moore (1) Other Key management personnel Joseph Saad (2) Mark Marshall Subtotal executive KMP Total	Short Term Benefits Post-employment benefits Other long term benefits Share based payments Termination benefits Total
	Salary & Fees Other Cash benefits Superannuation Long service leave Options $ $ $ $ $ $ $
	75,000 - 7,125 - - - 82,125 60,000 - 5,700 - - - 65,700
	135,000 - 12,825 - - - 147,825
	263,237 16,500 25,007 10,030 - - 314,774 108,974 - 10,353 - - - 119,327 116,900 - 33,443 - - - 150,343
	225,874 - 43,796 - - - 269,670
	624,111 16,500 81,628 10,030 - - 732,269

(1) Includes one-off $87,055 payment made during the year as recognition for the period Mr Moore served as interim CEO

(2) Where directors or key personnel resigned or were appointed during the year payments shown above are the period served.

OPTIONS GRANTED AS PART OF REMUNERATION FOR THE YEAR ENDED 30 JUNE 2016

There were no options granted during the year (2015: Nil).

OPTION HOLDINGS OF KEY MANAGEMENT PERSONNEL

	Graeme Moore Total No. * - No.
Balance held at 1 July 2015 300,000 - 300,000 Balance held at 30 June 2016 300,000 - 300,000 Options issued under the Employee Share Options Scheme. Graeme Moore Total No. ** - No.	300,000 - 300,000
	300,000 - 300,000
Balance held at 1 July 2014 Balance held at 30 June 2015	300,000 - 300,000
	300,000 - 300,000

• Options issued under the Employee Share Options Scheme.

10

Directors’ Report continued

OPTIONS VESTED OF KEY MANAGEMENT PERSONNEL

	Graeme Moore Total No. - No.*
Balance vested at 1 July 2015 Options expired Balance vested at 30 June 2016 Exercisable	300,000 - 300,000 (300,000) (300,000)
	- - -
	- - -

• Options issued under the Employee Share Options Scheme.

	Graeme Moore Total No. -* No.
Balance vested at 1 July 2014 Options exercised Balance vested at 30 June 2015 Exercisable	300,000 - 300,000 - - -
	300,000 - 300,000
	300,000 - 300,000

• 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.

During the year, the last options associated with this plan expired and the plan no longer exists. Details of the plan are outlined in Note 29 of the Accounts.

11

Directors’ Report continued

SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL

Shares held in Cryosite Limited	Balance 1st July 2015 Balance on appointment / (resignation) On market purchases Balance 30 June 2016 Ord Ord Ord Ord
Andrew Kroger Stephen Roberts (1) Christina Boyce (1) Graeme Moore Joseph Saad Mark Marshall Andrew Shine Mark Byrne	11,975,816 - 1,341,090 13,316,906 644,873 644,873 - 644,873 100,637 139,830 149,202 289,032 - - - - - - - - - - - - - - - - - - - -
	12,721,326 784,703 1,490,292 14,250,811

Shares held in Cryosite Limited	Balance 1st July 2014 Balance on appointment / (resignation) On market purchases Balance 30 June 2016 Ord Ord Ord Ord
Andrew Kroger Christina Boyce Graeme Moore Joseph Saad Mark Marshall	11,706,943 - 268,873 11,975,816 60,636 - 40,000 100,636 - - - - - - - - - - - -
	11,767,579 - 308,873 12,076,452

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, 19 meetings of directors were held. Attendances were as follows:

Directors	Directors Meetings Eligible to attend	Directors Meetings Eligible attended
Andrew Kroger	19	19
Stephen Roberts	14	14
Christina Boyce	5	5
Graeme Moore	19	17

12

Directors’ Report continued

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 has 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 Mazars Risk and Assurance Pty Ltd.

Non-audit services were provided by the entity’s auditor, Mazars Risk and Assurance Pty Ltd 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 2001.

The directors are of the opinion that the services disclosed in Note 27 to the financial statements do not compromise the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:

• All non-audit services have been reviewed and approved to ensure that they do not impact the integrity or objectivity of the auditor;

None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for the Company, acting as an advocate for the Company or jointly sharing economic risks and rewards.

This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.

On behalf of the directors

Stephen Roberts Chair

Date: 24[th] August 2016

13

==> picture [190 x 47] intentionally omitted <==

Auditors’ Independence Declaration

In accordance with section 307C of the Corporations Act 2001, I declare that, to the best of my knowledge and belief, during the year ended 30 June 2016 there has been:

• (i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 relation to the audit; and

• (ii) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Cryosite Limited and its controlled entity during the year.

MAZARS RISK & ASSURANCE PTY LIMITED

==> picture [143 x 65] intentionally omitted <==

Rosemary Megale Director

Sydney, 24th August 2016.

MAZARS RISK & ASSURANCE PTY LIMITED ABN: 39 151 805 275

LEVEL 12, 90 ARTHUR STREET, NORTH SYDNEY NSW 2060 PO BOX 1994, NORTH SYDNEY NSW 2059 TEL: +61 2 9922 1166 - FAX: +61 2 9922 2044 EMAIL: mail@mazars.com.au

==> picture [72 x 42] intentionally omitted <==

LIABILITY LIMITED BY A SCHEME, APPROVED UNDER THE PROFESSIONAL STANDARDS LEGISLATION

Corporate Governance

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 were in place for the financial year ended 30 June 2015 and to the date of signing of the directors’ report.

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).

15

Directors Declaration

• (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 2016 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 2016.

On behalf of the Board

Stephen Roberts Chair

Date: 24th August 2016

16

Consolidated Statement of Profit and Loss and Other Com rehensive Income p

Comprehensive Income
FOR THE YEAR ENDED 30 June 2016 Notes	2016 2015 $ $
Sale of goods and rendering of services Other revenue 5 Revenues Expenses Finance costs 6(a) Costs of providing services Marketing expenses Occupancy expenses Administration expenses Total 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 Shares options expired 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	10,043,674 9,594,375 92,829 249,480 10,136,503 9,843,855 - (2,420) (6,021,042) (5,395,655) (551,900) (693,806) (552,403) (628,515) (2,571,893) (2,516,889) (9,697,238) (9,237,285) 439,265 606,570 (136,799) (151,400) 302,466 455,170 302,466 455,170 239,118 - - - 541,584 455,170 Cents Cents 0.64 0.97 0.64 0.96

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

17

Consolidated Statement of Financial Position

AS AT 30 June 2016 Notes	2016 2015 $ $
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 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 Trade and other payables 19 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	3,651,581 4,167,302 2,875,562 1,752,492 119,986 90,459 290,457 255,688
	6,937,586 6,265,941
	636,996 560,502 312,976 449,776 1,206,049 1,456,641 563,672 389,895
	2,719,693 2,856,814
	9,657,279 9,122,755
	1,109,743 882,308 369,890 347,165 480,020 532,344
	1,959,653 1,761,817
	442,000 442,350 3,611,598 3,108,217 265,723 265,936
	4,319,321 3,816,503
	6,278,974 5,578,320
	3,378,305 3,544,435
	5,861,788 5,861,788 - 239,118 (2,483,483) (2,556,471)
	3,378,305 3,544,435

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

18

Consolidated Statement of Changes in Equity

FOR THE YEAR ENDED 30 June 2016 CONSOLIDATED At 1 July 2015 Total comprehensive income for the year Transactions with owners in their capacity as owners Share options expired Equity dividends declared At 30 June 2016 At 1 July 2014 Total comprehensive income for the year Transactions with owners in their capacity as owners Return of Capital Equity dividends declared At 30 June 2015	Attributable to equity holders of the company Contributed capital Accumulated losses Share options reserves Total equity $ $ $ $	Attributable to equity holders of the company Contributed capital Accumulated losses Share options reserves Total equity $ $ $ $
	5,861,788 (2,556,471) - 541,584 - - - (468,596)	239,118 3,544,435 - 541,584 (239,118) (239,118) - (468,596)
	5,861,788 (2,483,483)	- 3,378,305
	8,204,766 (2,308,747) - 455,170 (2,342,978) - - (702,894)	239,118 6,135,137 - 455,170 - (2,342,978) - (702,894)
	5,861,788 (2,556,471)	239,118 3,544,435

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

19

Consolidated Statement of Cash Flows

FOR THE YEAR ENDED 30 June 2016 Notes	2016 2015 $ $
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers inclusive of GST Payments to suppliers and employees inclusive of GST Interest received Interest paid Net cash flows from operating activities 11 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of plant and equipment 17 Disposal of leasehold improvements Purchase of Stemlife assets Software Development Costs Interest received – term deposits Net cash flows (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Equity dividend paid Return of Capital Net cash flows (used in) financing activities Net (decrease)/ increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 10	8,923,985 10,373,020 (8,459,308) (9,016,280) 9,931 62,582 - (2,420)
	474,608 1,416,902
	(386,426) (485,161) - 5,000 (152,763) - (48,402) (146,139) 82,897 153,348
	(504,694) (472,952)
	(485,635) (685,863) - (2,342,978)
	(485,635) (3,028,841)
	(515,721) (2,084,891) 4,167,302 6,252,193
	3,651,581 4,167,302

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

20

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

1 CORPORATE INFORMATION

The financial report of Cryosite Limited and the controlled entity (the Group) for the year ended 30 June 2016 was authorised for issue in accordance with a resolution of the directors on 24[th] August 2016.

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

(b) Changes in accounting policy, accounting standards and interpretations.

(i) New standards effective

The accounting policies adopted are consistent with those of the previous financial years except the following which the Group adopted from 1 July 2015:

• AASB 2015-3 Amendments to Australian Accounting Standards arising from Withdrawal of AASB 1031 Materiality

• This amendment completes the withdrawal references of AASB 1031 in all Australian Accounting Standards and Interpretations, allowing that Standard to be effectively withdrawn.

The adoption of this standard did not have any impact on the current period or any prior period and is not likely to affect future periods.

21

FOR THE YEAR ENDED 30 June 2016

Notes to the Financial Statements

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(ii) Standards and Interpretations in issue not yet adopted

At the date of authorisation of the financial statements, the Standards and Interpretations that were issued but not yet effective are listed below:

effective are listed below:
	Effective date	Expected to be
	(annual periods	initially applied in
	beginning	the financial year
**Standard/Interpretation **	on or after)	ending
AASB 9 Financial Instruments and the relevant amending	1 January 2018	30 June 2019
standards
AASB 15 Revenue from Contracts with Customers,	1 January 2017	30 June 2019
AASB 2014-5, Amendments to Australian Accounting
Standards arising from AASB 15 and AASB 2015-8
Amendments to Australian Accounting Standards –
Effective date of AASB 15
AASB 16 Leases	1 January 2019	30 June 2020
AASB 2014-3 Amendments to AAS – Accounting for	1 January 2016	30 June 2017
Acquisitions of Interests in Joint Operations
AASB 2014-4 Amendments to AAS – Classification of	1 January 2016	30 June 2017
Acceptable Methods of Depreciation and Amortisation
AASB 2014-9 Amendments to AAS – Equity Method in	1 January 2016	30 June 2017
Separate Financial Statements
AASB 2015-1 Amendments to AAS – Annual	1 January 2016	30 June 2017
Improvements to Australian Accounting Standards 2012-
2014 Cycle
AASB 2015-2 Amendments to AAS – Disclosure Initiative:	1 January 2016	30 June 2017
Amendments to AASB 101
AASB 2015-5 Amendments to AAS – Investment Entities	1 January 2016	30 June 2017
Applying the Consolidation Exception
AASB 2016-1 Amendments to Australian Accounting	1 January 2017	30 June 2018
Standards – Recognition Deferred Tax Assets for
Unrealised Losses
AASB 2016-2 Amendments to Australian Accounting	1 January 2017	30 June 2018
Standards – Disclosure Initiative: Amendments to AASB
107

22

FOR THE YEAR ENDED 30 June 2016

Notes to the Financial Statements

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(c) Basis of consolidation

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

Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

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

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

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

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

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

(d) Foreign currency translation

Both the functional and presentation currency of Cryosite Limited and its Australian subsidiary is Australian dollars (A$). Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date.

(e) Plant and equipment

Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of the plant and 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:	2016	2015
- Leasehold improvements:	Lease term	Lease term
Plant and equipment:
- Fixtures and fittings	5 – 10 years	5 – 10 years
- Information technology	2 - 3 years	2 - 3 years
- Warehouse equipment	4 - 10 years	4 - 10 years
- Office furniture and equipment	2.5 – 8 years	2.5 – 8 years
Plant and 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.

23

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(f) Segment reporting

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

(g) Intangible assets

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit or loss as the expense category that is consistent with the function of the intangible assets.

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Licence fees

Where licences are acquired for the purposes of assisting in research and development or for the entity’s use of patented techniques or processes in conducting operations, the costs are capitalised. Licenses acquired during the financial year have been assessed as having a useful life in line with that of the underlying patent and associated methodologies.

Software development

Software development costs are capitalised at the direct costs and amortised on a straight line basis over the period of their expected benefit being their finite life of 3 years. Amortisation starts at the time that the technology is activated and is used by both internal and external customers. The capitalised costs of platform technology include the direct costs of external consultants and any supporting software acquired from a third party.

Intellectual Property

The costs of the Stemlife assets are capitalised and amortised on a straight line basis over the period of their expected benefit being their finite life of 9 years. Amortisation starts at the time of the acquisition. These costs include the direct costs paid to Stemlife for the assets and the legal fees incurred in the transaction.

The assessment of useful life is reviewed annually by the Board to determine whether the assumptions made continue to be appropriate and supportable. If not, the useful life assessment is changed on a prospective basis.

(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.

24

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

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 24 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 13.9% (2015: 13.9%).

(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 provisions 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 nonaccumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. Unused sick leave on termination of employment is forfeited.

Long Service Leave

The liability for long service leave is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to 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.

25

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(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 (‘equity-settled transactions’) under the Employee Share Option Plan (ESOP) or individually negotiated share based payment arrangements.

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

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

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

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of directors of the Group, will ultimately vest. This opinion is formed based on the best available information at balance date.

No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.

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

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

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

In the case where outstanding equity-settled awards have expired, the relevant amounts in respect to these awards in the share option reserves are transferred to retained earnings.

(o) Leases

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.

26

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(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 and tissue 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 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

27

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

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.

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

(q) Income tax and other taxes continued

• 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 bares 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

28

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

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 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:

• 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) Fair value measurement

The Group measures financial instruments at fair value at each balance sheet date. Fair values of financial instruments measured at amortised cost are disclosed at Note 31.

Fair value is the price that would be received to sell an asset or pair to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principle market for the asset or liability; or

• In the absence of a principal market, in the most advantageous market for the asset or liability accessible to the Group.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in the highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

For the purpose of fair value disclosure, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy.

29

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(w) Current versus non-current classification

The Group presents assets and liabilities in statement of financial position based on current/non-current classification.

• An asset as current when it is:

• Expected to be realised or intended to sold or consumed in normal operating cycle;

• Held primarily for the purpose of trading;

• Expected to be realised within 12 months after the reporting period, or

• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

• A liability is current when:

• It is expected to be settled in normal operating cycle;

• It is held primarily for the purpose of trading;

• It is due to be settled within 12 months after the reporting period, or

• There is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period

The Group classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

30

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

3 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the financial statements requires management to make judgements, estimates 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 and estimates under different assumptions and conditions.

Management has identified the following critical accounting estimates and judgements:

Capitalised Development Costs

Initial capitalisation of development costs is based on management’s judgement that technological and economic feasibility is confirmed, usually when a product development project has reached a defined milestone. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefit. At 30 June 2016, the carrying amount of capitalised development costs was $133,309 (2015: $104,339).

Revenue Recognition - Long Term Cord Blood Storage Contracts

Long term cord blood storage contracts involve the calculation of an estimate of the costs of providing the storage service over the term of the contract. As these contracts are long term in nature, estimates are required in respect of the following:

• Cost of provision of up front service;

• Cost of provision of ongoing long term storage service; and

• Interest component in relation to deferred payment.

These calculations impact the overall balance of revenue, unearned revenue and debtors at year end. In determining these amounts, a present value calculation is performed in respect of the deferred components of the contract, which involves the determination of an appropriate discount rate. The estimate of the discount rate is reviewed on an annual basis by the directors to ensure that it is reasonable and reflective of current risks and returns.

Further, in determining the costs of providing these services, the incremental costs incurred in the storage of cord blood is assessed and reviewed annually and forms the basis upon which the amount of revenue and profit is recognised.

Revenue Recognition - Long Term Tissue Storage Contracts

Long term tissue storage contracts involve the calculation of an estimate of the costs of providing the storage service over the term of the contract. As these contracts are long term in nature, estimates are required in respect of the following:

• Cost of provision of up front service;

• Cost of provision of ongoing long term storage service; and

• Interest component in relation to deferred payment.

These calculations impact the overall balance of revenue, unearned revenue and debtors at year end. In determining these amounts, a present value calculation is performed in respect of the deferred components of the contract, which involves the determination of an appropriate discount rate. The estimate of the discount rate is reviewed on an annual basis by the directors to ensure that it is reasonable and reflective of current risks and returns.

In determining the costs of providing these services, the incremental costs incurred in the storage of tissue is assessed and reviewed annually and forms the basis upon which the amount of revenue and profit is recognised.

31

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

3 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS CONTINUED

Taxation

Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws and the amount and timing of future taxable income. 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 un recouped 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.

The Group has $272,591 unconfirmed (2015: $647,472) tax losses carried forward and recognised on the statement of financial position. 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 or assets 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 and their residual values 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. The estimated useful life of licenses acquired has been based upon the useful life of the patents and associated methodologies underpinning the license. The assessment of useful life is reviewed annually by the Board to determine whether the assumptions made continue to be appropriate and supportable given the license conditions and underlying patents. If the useful life assessment is assessed as inappropriate, either due to a change in license conditions or patents, it is changed on a prospective basis.

As at 30 June 2016 the Board has assessed a finite life on the license fee in line with the underlying patents and associated methodologies which are reviewed on a regular basis.

Long Service Leave Provision

The liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account.

32

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

3 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS CONTINUED

Make Good Provisions

A provision has been made for the present value of anticipated costs for future restoration of 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. The appropriateness of the make good provision is assessed annually.

Impairment of Receivable Balances

Included in the receivable balance at year end is an allowance for impairment loss of $92,603 (2015: $90,000). A provision is recognised when there is objective evidence that an individual receivable is impaired. The provision for impairment if receivable requires a degree of estimation and judgement. The level of the provision is regularly assessed and takes into account client activity with the group, ageing of receivables, historical collections and other specific knowledge of the individual debtor.

Impairment of Non-Financial Assets other than Indefinite Life Intangible Assets

The Company assesses impairment of non-financial assets other than indefinite life intangible assets at each reporting date by evaluating conditions specific to the Company and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.

Acquisition of Stemlife Cord Blood Storage Contracts

During the year, the Company acquired a number of assets from a third party in liquidation, Stemlife, which included a trademark, website and customer contracts. Management has defined this as an asset acquisition due to the nature of the asset agreement with Stemlife and the fact that the Company is not acquiring an ongoing business. All future business from the customer contracts will be generated through the Company and not Stemlife which is a third party entity.

Management has reviewed these assets and determined that, for the purposes of valuation, the customer contracts acquired reflect the true value of the acquisition as to date the trademark has not been used and the website has been disconnected. These customer contracts have been valued at the original cost and amortised over 9 years based on the estimated useful life of the benefits associated with these customer contracts. This useful life was determined after taking into the length and aging of the customer contracts. An impairment test has been performed using a value-in-use calculation, which incorporated a number of key estimates and assumptions. outlined in Note 18.

33

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

4 SEGMENT INFORMATION

Identification of Reportable Segments

The consolidated entity is organised into two operating segments; Individualised Consumer Biologics (formerly known as Biological Services) and Scientific Processing and Logistics (formerly known as Warehousing & Distribution). These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers “CODM”) in assessing performance and in determining the allocation of resources.

There is no financial impact due to the change in name of the segments.

The CODM reviews EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements.

The information reported to the CODM is at least on a monthly basis.

30 June 2016 - Consolidated Total segment revenue Segment profit before ITDA 30 June 2015 - Consolidated Total segment revenue Segment profit before ITDA Total Segment assets 30 June 2016 30 June 2015	Individualised Consumer Biologics Scientific Processing and Logistics Total $ $ $
	5,292,738 4,843,765 10,136,503
	420,322 590,600 1,010,921
	4,975,847 4,868,008 9,843,855
	453,215 603,060 1,056,275
	5,945,593 3,711,683 9,657,276
	5,466,078 3,656,676 9,122,754

A reconciliation of operating EBITDA is provided as follows:

Operating EBITDA Interest revenue Depreciation and amortisation Finance costs Profit before tax	Consolidated 30 June 2016 30 June 2105 $ $
	1,010,921 1,056,275 92,829 210,457 (664,485) (657,742) 0 (2,420)
	439,265 606,570

34

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

5 REVENUE

Consolidated

Revenue Sale of goods and rendering of services Other Revenue R & D Tax Offset Interest income Total other revenue 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 (d) Depreciation- Plant & Equipment Depreciation – plant & equipment 17 (e) Amortisation of Intangibles Amortisation of Intangibles 18	30 June 2016 30 June 2015 $ $
	10,043,674 9,594,375
	- 39,023 92,829 210,457
	92,829 249,480
	10,136,503 9,843,855
	- 2,420
	366,710 382,972
	3,033,382 3,109,402 274,379 288,979
	3,307,761 3,398,381
	637,017 646,188
	27,388 11,554

35

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

7 INCOME TAX

(a) Income tax expense

The major components of income tax are:

Statement of comprehensive income Current income tax expense R&D tax offset Income tax expense reported in the statement of comprehensive income	Consolidated 30 June 2016 30 June 2015
	(136,799) (153,597) - 2,197
	(136,799) (151,400)

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

A reconciliation between tax 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 Income tax calculated at 30% (2015: 30%) Other items (net) Income tax (expense) benefit (c) Recognised deferred tax assets and liabilities Deferred income tax at 30 June relates to the following Deferred income tax assets Post-employment benefits Superannuation contributions Provision for tax and audit fees Provision for doubtful debts Impairment and depreciation of plant & equipment for book purposes Amortisation of Section 40-880 - uniform capital allowances Losses available for offset against future taxable income Amortisation of intangibles (Intellectual Property) Deferred tax liabilities Consumables Net deferred tax assets	439,265 606,570
	(131,779) (181,971) (5,020) 30,571
	(136,799) (151,400)
	163,309 173,958 - (9) 15,300 14,922 27,781 27,000 57,898 58,082 - 6,649 81,777 194,242 2,907 2,070
	348,972 476,914 (35,996) (27,138)
	312,976 449,776

36

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

7 INCOME TAX CONTINUED

(d) Tax (expense) benefit related to items of other comprehensive income.

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

(e) Tax losses

The Group has unconfirmed tax losses arising in Australia of $272,591 (2015: $647,472) that are available for offset against future taxable profits of the company. The deferred income tax asset of $81,777 (2015: $194,247) arising from these losses has been brought to account in its entirety at reporting date, as realisation of the benefit is now regarded as probable.

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 wholly-owned 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.

8 EARNINGS PER SHARE The following reflects the income used in the basic and diluted earnings per share computations: 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 Weighted average number of ordinary shares for basic earnings per share	Consolidated 2016 2015 $ $
	0.64 0.97 0.64 0.96
	302,466 455,170 302,466 455,170
	No of shares. No of shares.
	46,859,563 46,859,563

37

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

8 EARNINGS PER SHARECONTINUED Diluted EPS disclosure Earnings used in diluted EPS calculation Net profit attributable to ordinary equity holders of the parent Diluted EPS disclosure continued 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	Consolidated 2016 2015 $ $
	302,466 455,170 302,466 455,170
	No of shares. No of shares.
	46,859,563 46,859,563 124,932 300,000
	46,984,495 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
	2016	2015
Declared and paid during the year:	$	$
Declared
Final unfranked dividend
0.5 cents per share for 2016 (1.0 cents per share for
2014)	234,298	468,596
Interim unfranked dividend
0.5 cents per share for 2016 (0.5 cents per share for
2015)	234,298	234,298
Total Declared	468,596	702,894
Total Dividends Paid	485,636	685,863
No further dividends have been declared or recommended at the date of this report.
10 CASH AND CASH EQUIVALENTS
Cash at bank and on hand	583,913	489,605
Short-term deposits	3,067,668	3,677,697
	**3,651,581 **	4,167,302

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 $3,651,581 (2015: $4,167,302).

Reconciliation of cash

For purposes of the Statement of Cash Flow, cash and cash equivalents as at 30 June 2016 and the prior year are as shown above.

38

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

11 STATEMENT OF CASH FLOW RECONCILIATION

Reconciliation of the net profit after tax to the net cash flows from operations

Net profit Less: Transfer to investing activities Adjustments for non-cash items Depreciation and amortisation of non-current assets (Decrease) Increase in employee benefits – LSL Changes in assets and liabilities (Increase) Decrease in trade and other receivables Increase in inventory Increase in other assets Decrease in deferred tax asset Increase (Decrease) in trade and other creditors Increase in unearned income Increase (Decrease) in allowance for impairment loss on trade Receivables (Decrease) Increase in employee benefits – annual leave Net cash flow from operating activities 12 CURRENT ASSETS – TRADE AND OTHER RECEIVABLES Trade receivables Allowance for impairment loss (a) Other receivables Carrying amount of trade and other receivables		Consolidated
		2016 2015 $ $
		302,466 455,170 (82,897) (153,348) 664,405 652,742 (11,132) 43,993 (1,202,167) 417,112 (29,528) (28,475) (34,767) (111,223) 136,800 153,597 227,086 (166,267) 526,107 141,970 2,603 (36,619) (24,366) 48,250
		474,608 1,416,902
		2,760,521 1,716,790 (92,603) (90,000)
		2,667,918 1,626,790 207,644 125,702
		2,875,562 1,752,492

(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 12 to 24 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 increased by $2,603 (2015: decreased by $36,619) after bad debts written off during the year reflecting an improvement in collections. When there is an impairment loss, it has been included in the administration expense item. No individual debtor amount within the impairment allowance at year end is material.

Movements in the provision for impairment loss were as follows:

At the beginning of the year Increase/(reduction) in impairment loss during the year At the end of the year	90,000 126,619 2,603 (36,619) 92,603 90,000

39

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

12 CURRENT ASSETS – TRADE AND OTHER RECEIVABLES CONTINUED

(b) Analysis of trade receivables

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

	Total Not yet due 0-30 Days 31-60 Days 61-90 Days +91 Days +91 Days PDNI PDNI CI* *$ $ $ $ $ $ $
2016 Current Non-Current Total Consolidated 2015 Current Non-Current Total Consolidated	2,760,521 1,851,833 550,046 209,094 49,334 38,252 61,962 636,996 636,996
	3,397,517 2,488,829 550,046 209,094 49,334 38,252 61,962
	1,716,790 1,247,770 278,840 96,807 19,363 30,648 43,362 560,502 560,502 - - - - -
	2,277,292 1,808,272 278,840 96,807 19,363 30,648 43,362

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

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) 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.

13 CURRENT ASSETS – INVENTORIES Consumables at cost Total Inventories at cost 14 CURRENT ASSETS – PREPAYMENTS Prepayments	Consolidated 2016 2015 $ $
	119,986 90,459
	119.,986 90,459
	290,457 255,688

40

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

15 NON-CURRENT ASSETS – TRADE AND OTHER RECEIVABLES

15 NON-CURRENT ASSETS – TRADE AND OTHER RECEIVABLES
Trade receivables Carrying amount of non-current trade and other receivables Trade receivables Trade receivables due under term payment plans	Consolidated 2016 2015 $ $
	636,996 560,502
	636,996 560,502
	636,996 560,502

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

16 INVESTMENT IN CONTROLLED ENTITY

Name – Cryosite Distribution Pty Limited	Equity interest held by the consolidated entity Investment 2016 2015 2016 2015 % % $ $
Country of incorporation – Australia	100 100 20 20

41

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

17 NON-CURRENT ASSETS – PLANT AND EQUIPMENT

		Leasehold	Fixtures	Fixtures	Information Warehouse Office	Information Warehouse Office	Information Warehouse Office	Information Warehouse Office	Total
	improvements			and	technology equipment furniture &
		$		fittings			equipment
				$		$	$	$	$
Cost
At 1 July 2014		205,000		72,521		485,442	4,185,664	39,664	4,988,291
Additions			-		-	123,277	356,341	5,543	485,161
Disposals		(5,000)			-	(419,517)	(827,988)	(31,212)	(1,283,717)
At 30 June 2015		200,000		72,521		189,202	3,714,017	13,995	4,189,735
Additions			-		-	28,082	358,344	-	386,426
Disposals			-		-	-	-	-	-
At 30 June 2016		200,000		72,521		**217,284 **	**4,072,361 **	13,995	**4,576,161 **
Depreciation and	Impairment
At 1 July 2014		(153,752)		(68,325)		(449,355)	(2,659,997)	(34,197)	(3,365,626)
Depreciation charge		(46,248)		(4,196)		(45,575)	(547,444)	(2,725)	(646,188)
for the year
Disposals			-		-	419,516	827,992	31,212	1,278,720
At 30 June 2015		(200,000)		(72,521)		(75,414)	(2,379,449)	(5,710)	(2,733,094)
Depreciation charge			-		-	(60,394)	(573,753)	(2,871)	(637,018)
for theyear
At 30 June 2016		(200,000)		(72,521)		(135,808)	(2,953,202)	(8,581)	(3,370,112)
Net book value –	30		-		-	113,788	1,334,568	8,285	1,456,641
June 2015
Net book value –	30		-		-	81,476	1,119,159	5,414	1,206,049
June 2016

18 NON-CURRENT ASSETS – INTANGIBLE ASSETS

Licenses Licence fee - at cost Less Accumulated amortisation Net Carrying Amount Software development Software development -at cost Less Accumulated amortisation Net Carrying Amount Intellectual Property Stemlife storage contracts - at cost Less Accumulated amortisation Net Carrying Amount Total Net Carrying Amount	Consolidated 2016 2015 $ $
	255,310 255,310 (13,800) (6,900)
	241,510 248,410
	194,541 146,139 (22,352) (4,654)
	172,189 141,485
	152,763 - (2,790) -
	149,973 -
	563,672 389,895

42

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

18 NON-CURRENT ASSETS – INTANGIBLE ASSETS CONTINUED

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

Balance at 1 July 2014 Amortisation expense Balance at 30 June 2015 Additions Amortisation expense Balance at 30 June 2016	Licences Software development Intellectual property Total $ $ $ $ 255,310 146,139 - 401,449 (6,900) (4,654) - (11,554)
	248,410 141,485 - 389,895 - 48,402 152,763 201,165 (6,900) (17,698) (2,790) (27,388)
	241,510 172,189 149,973 563,672

License Fee

During the 2014 financial year, the Company entered into an exclusive licensing agreement within Australia and New Zealand to assist with the in-house development of new technologies to develop the range of stem cell service offerings. The Directors have assessed a finite life to the license in line with the underlying patents and associated methodologies. An amortisation of $6,900 has been charged for this year. The assessment of useful life is reviewed annually by the Directors to determine whether the assumptions made continue to be appropriate and supportable. If not, the useful life assessment is changed on a prospective basis.

The Directors have assessed the net carrying amount for 2016 to be reasonable and not impaired.

Software Development

During the 2015 and 2016 financial years, the Company has invested in the development of in-house software to enhance its operating capability. These costs include the direct costs of external consultants and any supporting software acquired from a third party. The assessment of useful life is reviewed annually by the Board to determine whether the assumptions made continue to be appropriate and supportable. If not, the useful life assessment is changed on a prospective basis.

The Directors have assessed the net carrying amount for 2016 to be reasonable and not impaired.

Intellectual Property

During the year the Company acquired the storage contracts from a liquidated company called Stemlife. The cost reflects the direct costs paid to Stemlife and the legal fees incurred in the transaction. The assessment of useful life is reviewed annually by the Directors to determine whether the assumptions made continue to be appropriate and supportable. If not, the useful life assessment is changed on a prospective basis.

The Directors assessed the recoverable amount of these storage contracts based on its value in use and found the current valuation to be reasonable and not impaired.

Value in use was determined by discounting the future cashflows generated from the storage contracts and are based on the following key assumptions:

• Cashflows were projected based on actual operating results over a projected 5-year period.

• Revenue projections for years 2017 to 2021 was based on reviewing the storage contracts from customers and applying various rates to assess the probability of repeat business from these customers. These probabilities were based on the historical rates.

• All future years of the model use a constant rate of 3% which does not exceed the long-term average growth rate of the industry; and

• A pre-tax discount of 17.6 % based on weighted average cost of capital.

43

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

19 TRADE AND OTHER PAYABLES CURRENT LIABILTIES Trade payables Other payables Total current payables NON-CURRENT LIABILTIES Client deposits Total non-current payables Fair value	Consolidated 2016 2015 $ $
	450,439 298,002 659,304 584,306
	1,109,743 882,308
	442,000 442,350
	442,000 442,350

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 month terms. Their carrying value is assumed to be fair value.

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 $ $ $ $ $ $
2016 Consolidated 2015 Consolidated	450,439 362,470 72,938 5,916 9,115 -
	298,002 257,985 1,877 - 38,140 -

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 Unearned service revenue	Consolidated 2016 2015 $ $
	369,890 347,165

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

21 NON-CURRENT LIABILITIES – UNEARNED INCOME

Unearned service revenue

3,611,598 3,108,217

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

44

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

22 PROVISIONS Current Annual leave Long service leave Dividends payable Non-current Long service leave Lease make good (a) Movements in provisions Annual leave Balance at beginning of the year Arising / (taken) during the year Long service leave Balance at beginning of the year Arising / (taken) during the year		Consolidated 2016 2015 $ $
		387,350 411,716 91,288 102,207 1,382 18,421 480,020 523,344 65,723 65,936 200,000 200,000 265,723 265,936 411,716 363,466 (24,366) 48,250 387,350 411,716 168,143 124,150 (11,132) 43,993 157,011 168,143

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 Final 2015 plus 2016 Interim dividends paid during the year Balance at end of the year Lease make-good provision Balance at beginning of the year Arising during the year Balance at end of the year	18,421 1,390 468,596 702,894 (485,635) (685,863)
	1,382 18,421
	200,000 205,000 - (5,000)
	200,000 200,000

Nature and timing of lease make-good provision

In accordance with the current lease agreement with Allsup Pty Limited for the premises in Granville, at the end of the in October 2019, the Group may either restore the leased premises in Granville to its original condition or alternatively remove unfixed chattels and equipment and pay an amount of $150,000 (excluding GST). The current lease agreement provides for an extension and the current provision is considered adequate based on the Company’s current renewal negotiation with Allsup Pty Limited and the understanding reached to date.

The provision of $200,000 has been raised in respect of the Group’s obligation to reflect this arrangement regarding the leased premises and is included in the carrying amount of plant and equipment. Because of the long-term nature of the liability, the greatest uncertainty in estimating the provision is the actual cost that may ultimately be renegotiated and finalised with Allsup Pty Limited covering either a renewal of the existing or negotiating a new lease with them though $200,000 is considered fairly stated in either circumstance.

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

45

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

23 CONTRIBUTED EQUITY Ordinary shares Movement in ordinary shares on issue	2016 Shares No. $		2016 2015 $ $	2016 2015 $ $
			5,861,788 5,861,788 2015 Shares No. $
Beginning of the financial year Return of capital End of the financial year	46,859,563 5,861,788 - -	46,859,563 -		8,204,766 (2,342,978)
	46,859,563 5,861,788	46,859,563		5,861,788

Terms and conditions 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 Balance at the beginning of the year Share option reserve adjustment for expiry of options Net profit for the year Equity dividends declared Balance at the end of the year 24 RESERVES Share options reserve Movements in share options reserve Balance at the beginning of the year Balance at the end of the year	Consolidated 2016 2015 $ $
	(2,556,471) 239,118 (2,308,747) - 302,466 455,170 (468,596) (702,894)
	(2,483,483) (2,556,471)
	- 239,118
	239,118 239,118
	- 239,118

During the year 300,000 options expired and this balance was transferred to equity. 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.

25 COMMITMENTS AND CONTINGENCIES

(a) Operating lease commitments – Group as lessee

Commercial property

On 1 November 2015, the company entered into a four-year lease over a commercial property at South Granville in Sydney.

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

Within one year After one year but not more than five years	Consolidated 2016 2015 $ $
	237,880 119,764 573,167 -
	811,047 119,764

46

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

25 COMMITMENTS AND CONTINGENCIES CONTINUED

Commercial Property Security deposits

The security deposit for the lease at Granville is covered by a bank guarantee for $152,227 issued by the Commonwealth Bank of Australia. No collateral is held as security.

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 five 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 2016 are as follows:

Within one year After one year but not more than five years	Consolidated 2016 2015 $ $
	14,640 15,679 29,280 51,945
	43,920 67,624

(a) Plant and equipment commitments

There are no capital expenditure commitments at reporting date.

(b) 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 2016 and the date of this report which had or may have had a significant effect on the company. It should be noted that Graeme Moore is serving out a period of notice and his employment will end on 6 October 2016. He remains a director.

27 AUDITOR’S REMUNERATION

27 AUDITOR’S REMUNERATION
Amounts received or due and receivable by Mazars 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	Consolidated 2016 2015 $ $
	61,530 75,260 10,920 7,079
	72,450 82,339

47

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

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 inter-company 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 has entered 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 (2015: $Nil).

29 SHARE-BASED PAYMENTS EXPENSE

(a) 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.

On 30 November 2015, all unexercised options expired and the plan was terminated.

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

Terms and conditions of options issued under employee share scheme details

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.

48

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

(a) 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:

	2016 2015 Options No. WAEP Cents Options No. WAEP Cents 300,000 30 300,000 30 - - - - (300,000) 30 - - - - 300,000 30 - - 300,000 30 - - 300,000 30
Balance at beginning of year Issued during the year Expired during the year Balance at end of the year Balance at year end comprised as follows: - Graeme Moore Share based options payment:
Parties to option agreement –Graeme Moore
Rights Granted and grant date Share options granted 1 December 2007 Graeme Moore 300,000
Option exercise price One third at$0.20per share,One third at$0.30per share,One third at$0.40per 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 valueper option atgrant date $0.11
Expense for the year –Nil
Prior year’s expense taken to account$-
**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 shareprice at date ofgrant was 19 cents.

49

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

30 KEY MANAGEMENT PERSONNEL

(a) Key management personnel

Non-executive directors

Stephen Roberts Chairman (Non-executive) (appointed 8/12/2015) Andrew Kroger Director (Non-executive) Christina Boyce Director (Non-executive) (resigned 8/12/2015)

KKey management personnel

Joseph Saad	Chief Executive Officer (resigned 18/12/2015)
Andrew Shine	Chief Executive Officer (appointed 14/6/2016)
Graeme Moore	Executive Director
Mark Marshall	Chief Financial Officer (resigned 30/6/2016)
Mark Byrne	Chief Financial Officer (appointed 20/6/2016)

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.

30 KEY MANAGEMENT PERSONNEL CONTINUED

(b) Compensation for key management personnel

Non-executive directors Short-term employee benefits Post-employment benefits Sub-total non-executive directors Key Management Personnel Short-term employee benefits Post-employment benefits Other long-term benefits Sub-total key management personnel Total compensation*	Consolidated 2016 2015 $ $
	177,308 135,000 16,844 12,825
	194,152 147,825
	510,518 505,611 49,191 68,803 18,675 10,030
	578,384 584,444
	772,536 732,269

• includes termination payments

50

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

31 FINANCIAL INSTRUMENTS

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

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

(a) Interest rate risk

The Group’s exposure to the risk of changes in market interest rates relates primarily to:

• cash and cash deposits with floating interest rates; and

• assessments of appropriate discount rates for deferred arrangements.

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:

2016 CONSOLIDATED Note Weighted average effective interest rate %	Floating interest rate $ Fixed interest rates $ Non- interest bearing $ Total $
Financial assets Interest bearing deposits – maturing at various dates during year ending 30 June 2016 10 2.82 Cash and cash equivalents 10 1.47 Current receivables – maturing at various dates 12 - Non-current receivables 15 - Financial liabilities Trade creditors and accruals – maturing at various dates during the year ending 30 June 2016. 19 2.2 2015 CONSOLIDATED Note Weighted average effective interest rate %	3,067,668 - - 3,067,668 583,913 - - 583,913 - - 2,875,562 2,875,562 - - 636,996 636,996
	3,651,581 - 3,512,558 7,164,139
	362,470 - 747,273 1,109,743
	Floating interest rate $ Fixed interest rates $ Non- interest bearing $ Total $
Financial assets Interest bearing deposits – maturing at various dates during year ending 30 June 2015 10 3.14 Cash and cash equivalents 10 0.015 Current receivables – maturing at various dates 12 - Non-current receivables 15 - Financial liabilities Trade creditors and accruals – maturing at various dates during the year ending 30 June 2015. 19 2.2	3,677,697 - - 3,677,697 489,605 - - 489,605 - - 1,752,492 1,752,492 - - 560,502 560,502
	4,167,302 - 2,312,994 6,480,296
	257,988 - 624,323 882,311

51

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

Interest rate sensitivity analysis

The Group has no material exposure to any probable interest volatility.

(b) Credit risk

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

The Group trades with a number of types of customers, the main ones being:

• Incorporated companies

• Research institutes both private and academic

• Individuals.

Incorporated Companies:

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

Research institutes both private and academic

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

Individuals:

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

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

(c) Credit risk continued 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 has assessed liquidity risk to be low at balance date and at the date of this report based on total current assets, including cash and equivalents, of $6,937,586 at balance date less current liabilities of $1,959,653, an excess of current assets over current liabilities amounting to $5,520,684. The Group generated a positive $474,608 cash flow from operations during the current year.

52

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

31 FINANCIAL INSTRUMENTS CONTINUED

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 2016	Less than 6 months 7-12 months 1-5 years Greater than 5 years Total $ $ $ $ $
Consolidated Financial Assets Cash and cash equivalents Trade and other receivables Consolidated Financial liabilities Trade and other payables Net maturity Year ended 30 June 2015	3,651,581 - - - 3,651,581 2,344,485 416,033 542,996 94,003 3,397,517
	5,996,066 416,033 542,996 94,003 7,049,098
	1,109,743 - - - 1,109,743
	1,109,743 - - - 1,109,743
	4,886,323 416,033 542,996 94,003 5,939,355
	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	4,167,302 - - - 4,167,302 1,439,345 277,444 408,548 151,955 2,277,292
	5,606,647 277,444 408,548 151,955 6,444,594
	882,308 - - - 882,308
	882,308 - - - 882,308
	4,724,339 277,444 408,548 151,955 5,562,286

53

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

31 FINANCIAL INSTRUMENTS CONTINUED

(e) Capital management

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

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

(f) Fair value

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

The fair value of the assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Fair values of balances related to long term revenue contracts are determined using a discounted cash flow method using discount rates that reflect the appropriate level of risk over the life of the long term revenue stream.

32 PARENT ENTITY FINANCIAL INFORMATION

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

AS AT 30 June 2016	2016 2015 $ $
(a) STATEMENT OF FINANCIAL POSITION Total Current Assets Total Non-Current Assets TOTAL ASSETS (b) LIABILITIES Total Current Liabilities Total Non-Current Liabilities TOTAL LIABILITIES (c) EQUITY Contributed equity Share option reserves Accumulated losses TOTAL EQUITY (d) TOTAL COMPREHENSIVE INCOME Net Profit of the parent entity for the year net of income tax Shares options expired Total comprehensive income for the year	5,995,293 6,051,733 2,961,450 2,856,834
	8,956,743 8,908,567
	4,650,879 1,565,879 4,561,058 3,816,503
	9,211,937 5,382,382
	5,861,788 5,861,788 - 239,118 (6,116,982) (2,574,722)
	(255,194) 3,526,184
	302,466 455,170 239,188 -
	541,584 455,170

54

Notes to the Financial Statements

FOR THE YEAR ENDED 30 June 2016

33 PARENT ENTITY FINANCIAL INFORMATION continued

(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.

55

==> picture [190 x 47] intentionally omitted <==

Independent Auditor’s Report to the members of Cryosite Limited and its controlled entity

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 2016, and the consolidated statement of profit and loss and other 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 2016.

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.

MAZARS RISK & ASSURANCE PTY LIMITED ABN: 39 151 805 275 LEVEL 12, 90 ARTHUR STREET, NORTH SYDNEY NSW 2060 PO BOX 1994, NORTH SYDNEY NSW 2059 TEL: +61 2 9922 1166 - FAX: +61 2 9922 2044 EMAIL: mail@mazars.com.au

LIABILITY LIMITED BY A SCHEME, APPROVED UNDER THE PROFESSIONAL STANDARDS LEGISLATION

==> picture [72 x 42] intentionally omitted <==

==> picture [190 x 47] intentionally omitted <==

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 2016 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 2016 as outlined on pages 8 to 12 of the financial report. 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 2016, complies with section 300A of the Corporations Act 2001 .

MAZARS RISK & ASSURANCE PTY LIMITED

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

Rosemary Megale Director

Sydney, 24th August 2016.

MAZARS RISK & ASSURANCE PTY LIMITED ABN: 39 151 805 275

LEVEL 12, 90 ARTHUR STREET, NORTH SYDNEY NSW 2060 PO BOX 1994, NORTH SYDNEY NSW 2059 TEL: +61 2 9922 1166 - FAX: +61 2 9922 2044 EMAIL: mail@mazars.com.au

==> picture [72 x 42] intentionally omitted <==

LIABILITY LIMITED BY A SCHEME, APPROVED UNDER THE PROFESSIONAL STANDARDS LEGISLATION

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 19 August 2016.

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
		2016			2015
	No. of		% of issued	No. of		% of issued
Shareholder	shares		capital	shares		capital
Andrew Kroger and related
entities	13,316,906		28.42	11,975,816		25.56
Cell Care Australia Pty. Ltd	9,229,995		19.70	10,639,995		22.71

TWENTY LARGEST SHAREHOLDERS

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

SHAREHOLDERS ANDREW KROGER AND RELATED ENTITIES CELL CARE AUSTRALIA PTY LTD CORNISH GROUP INVESTMENTS PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED BELL POTTER NOMINEES LTD MR ALISTAIR DAVID STRONG KHAEMET PTY LTD TOOTCAN SUPERANNUATION SERVICES PTY LTD NARON NOMINEES PTY LTD MR STEPHEN ROBERTS SUNNYIT PTY LTD H F A ADMINISTRATION PTY LIMITED MR NIGEL STRONG CASTLEREAGH EQUITY PTY LTD WIFAM INVESTMENTS PTY LTD CVF AUSTRALIA PTY LTD WHEEN FINANCE PTY LIMITED NATIONAL NOMINEES LIMITED MR PETER HOWELLS M N J HOLDINGS PTY LTD

LISTED ORDINARY SHARES No of shares % of ordinary shares 13,316,906 28.42% 9,229,995 19.70% 2,500,000 5.34% 2,100,000 4.48% 1,758,236 3.75% 1,725,000 3.68% 1,290,418 2.75% 1,008,753 2.15% 839,416 1.79% 644,873 1.38% 601,000 1.28% 480,000 1.02% 325,000 0.69% 300,000 0.64% 300,000 0.64% 289,032 0.62% 257,917 0.55% 257,496 0.55% 215,730 0.46% 214,931 0.46%

37,654,703 80.36%

58

ASX Additional Shareholder Information

DISTRIBUTION OF EQUITY SECURITIES

Number of Shareholders by Size of Holding Range 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and Over Total	Ordinary Shares Number of holders Number of Shares 32 13,765 240 901,253 70 560,685 152 4,880,351 42 40,503,509
	536 46,859,563

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 shares is 88 and they hold 108,192 shares.

59