CRYOSITE LIMITED — Interim / Quarterly Report 2004

Feb 8, 2004

Cryosite Limited

Appendix 4D

Half year report
Six months ended ('current period') 31 December 2003

Results for announcement to the market

				\$A'000
2.1 Revenue from ordinary activities:	Up	13.5%	- to	1.115
2.2 (Loss) from ordinary activities after tax attributable to members:	down	27.5%	- to	(480).
2.3 Net (loss) for the period attributable to members:	down	27.5%	to	(480)

Dividends (distributions)		Amount per security		Franked amount per security
2.4 Dividends			-0.
Previous corresponding period			-0		- 0
2.5 Record date for determining entitlements to N/A no dividends have been declared or the dividend: (in the case of a trust, distribution) (see item 15.2)	paid.

3. NTA backing		Previous corresponding
	Current period	Period
Net tangible asset backing per + ordinary security	6.6 cents	9.1 cents

4. Details of controlled entities.

4.1 Control gained over entities having material effect

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

Cryosite Limited

ABN 86 090 919 476

Appendix 4D

Half year report Six months ended ('current period') 31 December 2003 continued

4.2 Control lost over entities having material effect

Name of entity (or group of entities)

No entities were disposed of during the period

Date from which control was lost	N/A
Contribution to consolidated profit (loss) from ordinary activities and extraordinary items from sale of interest
leading to loss of control	З.

1. Details of dividends: No dividends have been declared or proposed.

6. Details of dividend reinvestment plans:	N/A
7. Details of associate and joint ventures:	N/A
8. Foreign entities:	N/A
9. Details of audit dispute or audit qualification:	N/A

• 1. Other significant information: Refer to the attached reviewed Half year financial report
• 1. Commentary on results for the period: Refer to the attached Directors' Report included in the Half year financial report
• 1. Audited accounts: The report is based on the attached half year financial report which has been reviewed.

ABN 86 090 919 476

Half-Year Financial Report

For the six months ended 31 December 2003

Directors' Report

Your directors submit their report for the half-year ended 31 December 2003.

DIRECTORS

The names and details of the company's directors in office during the half-year and until the date of this report are as follows. Directors were in office for this entire period.

Richard Grellman FCA - Non-executive Chairman Theodore Onisforou, B.Com, L.L.B - Non-Executive Director Professor Ronald Penny, AO, DSc, MD, FRACP, FRCPA - Non-Executive Director Dr Peter French, BSc. MSc. PhD. MBA - Non-Executive Director Gordon Leonard Milliken, Dip. Med. Tech. Grad. Dip. Ops. Mgt - Managing Director

REVIEW AND RESULTS OF OPERATIONS

Highlights:

• Revenue increased by 13.5% to \$1,114,654
• Loss decreased by 27.5% to \$479,659 $\bullet$
• Clinical Trials Logistics expanded
• Client list growing
• Cord blood annuity income increasing

The cord blood service has been successfully introduced and we remain confident that due to the long-term contacts involved with individual customers, this service will provide significant cash flow for a long time. As the pioneer private cord blood service that covers all of Australia we will to continue to explore the most cost-effective means to successfully market our service.

We are continuing to build up an impressive list of archival storage clients who have entrusted the secure storage of often invaluable samples with Cryosite including Johnson and Johnson Clinical Research, St. Vincent's Hospital and Proteome Systems. We are in negotiations with a number of groups about potentially very large contacts. We are hopeful that one of these which involves an agreement with a well known TGA licenced cancer research institute based in Melbourne to store and ship adult stem cells will be announced shortly, and expect that we will have more definite news on the outcome of the other negotiations by the middle of the year. Further refinements to our Internet based Sample Management and Inventory software, Cryobyte, are continuing, however, we do not have any plans for any significant enhancements at present.

As we have previously reported, our exclusive distribution agreement with the American Type Culture Collection continues to provide excellent returns which we expect to continueThe clinical trails logistics service has increased significantly. A capital expenditure programme to construct a number of dedicated temperature-controlled storage rooms was completed and will help ensure that we are able to meet the very demanding requirements of clinical trial and pharmaceutical company clients. Our current client list includes, Boehringer Ingelheim, Icon Clinical Research, Omnicare Clinical Research, Novotech and Trident Clinical Research.

Cryosite is a company that is able to service a wide spectrum of organisations that are involved in clinical research and development and biotechnology. Our business is very much aligned with the

Directors' Report continued

general rate of activity by all groups that fit into these general classifications. It is therefore vital that the company continues to develop its range of services and marketing opportunities to maximise our returns. The company will continue to use its funds to develop a range of integrated services based on its intellectual property, know-how and physical assets. Cryosite aims to succeed in creating value in that portfolio and in turn see that reflected in higher share value.

Signed in accordance with a resolution of the directors.

Richard Grellman Chairman

Sydney, 28 January 2004

Condensed Statement of Financial Performance

HALF-YEAR ENDED 31 DECEMBER 2003		Consolidated
		2003	31 December 31 December 2002
		\$	S
Revenue from ordinary activities	$\overline{c}$	1,114,654	982,008
Expenses from ordinary activities	$\overline{2}$
Borrowing costs expense		(1,998)	(4,105)
Costs of providing services		(710.923)	(647, 811)
Marketing expenses		(194, 105)	(246, 111)
Occupancy expenses		(131, 195)	(128, 632)
Administration expenses		(556, 092)	(616, 837)
Loss from Ordinary Activities before Income Tax Benefit		(479, 659)	(661, 488)
Income Tax Benefit Relating to Ordinary Activities
Net Loss from Ordinary Activities after Income Tax Benefit		(479.659)	(661, 488)
Total Changes in Equity other than those Resulting from Transactions with Owners as Owners Attributable to Members of Cryosite
Limited		(479, 659)	(661, 488)
Basic earnings/(loss) per share (cents per share) Diluted earnings/(loss) per share (cents per share)		(1.4) (1.4)	(1.9) (1.9)

Condensed Statement of Financial Position

HALF YEAR ENDED 31 DECEMBER 2003

Consolidated

	31 December 2003	30 June 2003
	\$	\$
Current Assets
Cash assets	1,102,357	1,635,477
Receivables	574.461	512,811
Inventories	14,553	19,650
Other $-$ prepayments	107,004	96,429
Total Current Assets	1,798,375	2,264,367
Non-Current Assets
Receivables	412,076	117,677
Plant and equipment	1,139,251	1,142,573
Total Non-Current Assets	1,551,327	1,260,520
TOTAL ASSETS	3,349,702	3,524,617
Current Liabilities
Payables	456,204	447,789
Interest-bearing liabilities		1,155
Unearned income	82,198	31,558
Provisions	22.849	22,909
Total Current Liabilities	561.251	503,411
Non-Current Liabilities
Unearned income	456,270	251,372
Total Non-Current Liabilities	456,270	251,372
TOTAL LIABILITIES	1,017,251	754,783
NET ASSETS	2.332,181	2,769,834
EQUITY
Contributed equity	6,722,639	6,680,633
Accumulated losses	(4,390,458)	(3,910,799)
TOTAL EQUITY	2,332,181	2,769,834

Condensed Statement of Cash Flows

HALF-YEAR ENDED 31 DECEMBER 2003

Consolidated

	2003	31 December 31 December 2002
	S	\$
Cash Flows from Operating Activities
Receipts from customers	1,168,932	920,298
Payments to suppliers and employees	(1,594,769)	(1,468,239)
Interest received	30.681	28,707
Borrowing costs paid	(1,997)	(4,106)
Net Cash Flows (Used In) Operating Activities	(397, 153)	(523, 340)
Cash Flows from Investing Activities
Proceeds on sale of plant & equipment		12,194
Purchase of plant & equipment	(134.812)	(170, 920)
Net Cash Flows (Used In) Investing Activities	(134, 812)	(158, 726)
Cash Flows from Financing Activities
Repayment of finance lease principal	(1, 155)	(1, 945)
Net Cash Flows (Used in) Financing Activities	(1, 155)	(1, 945)
NET (DECREASE) IN CASH HELD	(533, 120)	(684, 011)
Add opening cash brought forward	1,635,477	2,897,892
CLOSING CASH CARRIED FORWARD	1.102,357	2,213,881

Notes to the Half Year Financial Statements

1. BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT.

The half-year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.

The half-year financial report should be read in conjunction with the Annual Financial Report of Crvosite Limited as at 30 June 2003. It is also recommended that the half-year financial report be considered together with any public announcements made by Cryosite Limited and its controlled entities during the half-year ended 31 December 2003 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.

(a) Basis of accounting

The half-year financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, applicable accounting standards including AASB 1029 "Interim Financial Reporting" and other mandatory professional reporting requirements (Urgent Issues Group Consensus Views).

The half-year financial report has been prepared in accordance with historical cost convention.

For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period.

$\sim$

$\sim$ $\sim$

(b) Changes in accounting policy

There have been no material changes to accounting policies during the half-year.

	51 December	31 December
	2003	2002
	S	\$
LOSS FROM ORDINARY ACTIVITIES.
(a) Specific items
Loss from ordinary activities before income tax
expense includes the following revenues and
expenses whose disclosure is relevant in explaining
the financial performance of the entity:
(i) Revenue from ordinary activities
Revenue from services	1.084.978	915,001
Interest income	29,676	67,007
	1.14654	982,008

	31 December 2003	31 December 2002
LOSS FROM ORDINARY ACTIVITIES 2. continued	S	\$
(ii) Expenses
Depreciation
- Software	(56, 850)	(51,306)
- Plant $\&$ equipment	(60.156)	(55, 332)
- Leased assets	(828)	(828)
Total depreciation	(117,834)	(107, 466)
Amortisation
- Leasehold improvements	(20, 106)	(19, 562)
Total depreciation & amortisation	(137.940)	(127, 028)

Notes to the Half Year Financial Statements continued

3. CONTINGENT ASSETS AND LIABILITIES.

The Company is not aware of any contingent liabilities neither at the end of the half year nor at the date of this report.

4. SEGMENT INFORMATION

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

5. SUBSEQUENT EVENTS

Since the last annual reporting date there have not been any subsequent material events that have or will affect the results of Cryosite Limited and its controlled entity.

Directors' Declaration

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

In the opinion of the directors:

• the financial statements and notes of the consolidated entity : $(a)$
• give a true and fair view of the financial position as at 31 December 2003 and $(i)$ of the performance for the half-year ended on that date of the consolidated entity; and
• comply with Accounting Standard AASB 1029 "Interim Financial $(ii)$ Reporting" and Corporations Regulations 2001; and
• $(b)$ there are reasonable grounds to believe that the company will be able to pay its debts, as and when they become due and payable.

Signed in accordance with a resolution of the directors.

Mr R. Grellman

Chairman

Sydney, 28 January 2004

EII FRNST & YOUNG

The Ernst & Young Building 321 Kent Street Sydney NSW 2000 Australia

Tel 61-2-9248-5555 Fax 61 2 9262 6565 DX Sydney Stock Exchange 10172

GPO Box 2646 Sydney NSW 2001

Independent review report to members of Cryosite Limited

Scope

The financial report and directors' responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows and accompanying notes to the financial statements for the consolidated entity comprising both Cryosite Limited (the company) and the entity it controlled during the period, and the directors' declaration for the company, for the period ended 31 December 2003.

The directors of the company are responsible for preparing a financial report that gives a true and fair view of the financial position and performance of the consolidated entity, and that complies with Accounting Standard AASB 1029 "Interim Financial Reporting", in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Review approach

We conducted an independent review of the financial report in order to make a statement about it to the members of the company, and in order for the company to lodge the financial report with the Australian Stock Exchange and the Australian Securities and Investments Commission.

Our review was conducted in accordance with Australian Auditing Standards applicable to review engagements, in order to state whether, on the basis of the procedures described, anything has come to our attention that would indicate that the financial report is not presented fairly in accordance with the Corporations Act 2001, Accounting Standard AASB 1029 "Interim Financial Reporting" and other mandatory professional reporting requirements in Australia, so as to present a view which is consistent with our understanding of the consolidated entity's financial position, and of its performance as represented by the results of its operations and cash flows.

A review is limited primarily to inquiries of company personnel and analytical procedures applied to the financial data. These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Independence

We are independent of the company, and have met the independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

EU ERNST & YOU INC.

Statement

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the financial report of the consolidated entity, comprising Cryosite Limited and the entities it controlled during the period is not in accordance with:

• $(a)$ the Corporations Act 2001, including:
• giving a true and fair view of the financial position of the consolidated entity, at 31 $(i)$ December 2003 and of its performance for the period ended on that date; and
• complying with Accounting Standard AASB 1029 "Interim Financial Reporting" $(ii)$ and the Corporations Regulations 2001; and
• $(b)$ other mandatory financial reporting requirements in Australia.

Ernst & Young

Douglas Bain Partner Sydney 6 February 2004