CRYOSITE LIMITED — Interim / Quarterly Report 2008

Feb 20, 2008

Cryosite Limited ABN 86 090 919 476 Appendix 4D

Half year report

Six months ended 31 December 2007 (‘current period’) and 31 December 2006 (‘previous corresponding period’)

Results for announcement to the market

Results for announcement	to the market	to the market
Revenue from ordinary activities: Profit from ordinary activities after tax attributable to members: Net profit for the period attributable to members:	$A'000 Up 66.4% to 3,812 Up 300% to 429 Up 300% to 429
NTA backing	Current period	Previous corresponding Period
Net tangible asset backing per ordinary security	8.4 cents	5.8 cents

An explanation of the result of the current period is set out in the Directors Report contained in the attached audit reviewed half-year Financial Report.

Full Financial details of the Company are also contained in the attached audit reviewed half-year Financial Report

Dividends: It is not proposed that any dividend will be paid. No dividends were paid in the previous corresponding period.

CRYOSITE LIMITED ABN 86 090 919 476

Half-Year Financial Report

31 December 2007

C RYOSITE L IMITED – H ALF -Y EAR F INANCIAL R EPORT

Table of Contents

	PAGE NO.
Directors’ Report	3
Auditor’s Independence Declaration	4
Directors’ Declaration	5
Condensed Income Statement	6
Condensed Balance Sheet	7
Condensed Cash Flow Statement	8
Condensed Statement of Changes in Equity	9
Notes to the Half-year Financial Statements	10-25
Independent Audit Report to the Members of Cryosite Limited	26-27

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Directors’ Report

Your directors submit their report for the half-year ended 31 December 2007.

Directors

The directors of Cryosite Limited (the “company”) in office during the half year, and until the date of this Report are set out below. Directors were in office for this entire period unless otherwise stated.

Richard Grellman - Chairman

Gordon Leonard Milliken - Managing Director

Theodore Onisforou - Non-executive Director

Professor Ronald Penny AO - Non-executive Director

Catherine Brenner – Non-executive Director

Review of Operations

The group increased revenue during the half-year by 66.4% over the corresponding period last year to $3,811,867 (2006: $2,290,963).

The consolidated net profit for the period was $428,855 (2006: $107,256) an increase of 300%. The positive result for the half-year reflects a continuation of the growth experienced in the last quarter of the previous financial year as reported in the annual report for the 12 months to 30 June 2007.

The increase in revenue and net profit for the period resulted from continued growth in all areas of the group’s operations. In addition to this, there was a significant contribution resulting from the agreement with Animal Health Australia for the warehousing and distribution of the equine influenza virus vaccine. The very effective response to the disease outbreak means that it is likely that this was a one-off circumstance.

In November, the company signed a lease for new premises in preparation for a complete relocation of operations in the middle of 2008. The financial report includes relocation costs including accelerated depreciation of fixed assets at Lane Cove.

Auditor’s Independence Declaration

A statement of independence has been provided by our auditors, Ernst & Young, and follows this Director’s Report on page 4.

Signed in accordance with a resolution of the directors.

Richard Grellman Chairman

Date: 20 February 2008

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Auditor’s Independence Declaration to the Directors of Cryosite Limited

In relation to our review of the financial report of Cryosite Limited for the half-year ended 31 December 2007, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

Ernst & Young

Ian Campbell Partner 20 February 2008

Liability limited by a scheme approved under Professional Standards Legislation.

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Directors’ Declaration

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

• (1) In the opinion of the directors:

• (a) the financial statements and notes of the consolidated entity:

• (i) give a true and fair view of the financial position as at 31 December 2007 and the performance for the half-year ended on that date of the consolidated entity; and

• (ii) comply with Accounting Standard AASB 134 “Interim Financial 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.

• (2) This declaration has been made in accordance with a resolution of directors.

On behalf of the Board

Richard Grellman Chairman

Date: 20 February 2008

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Condensed Income Statement

For The Half-Year Ended 31 December 2007

Notes	Consolidated 2007 2006 $ $
Revenues 2 Expenses 2 Costs of providing services Finance costs Marketing expenses Occupancy expenses Administration expenses Profit from operations before tax Income tax expense 3 Profit after tax from operations Net Profit attributable to members of the parent Earnings per share (cents per share) Basic profit for the half-year 4 Diluted profit for the half-year 4	3,811,867 2,290,963 (2,150,435) (1,264,100) (4,141) (3,991) (163,070) (125,180) (229,662) (187,753) (836,189) (604,711)
	428,855 107,256 - - 428,855 107,256
	428,855 107,256
	0.92 0.23 0.90 0.22

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Condensed Balance Sheet

As at 31 December 2007

	Consolidated as at 31 December 2007 as at 30 June 2007 $ $
ASSETS Current Assets Cash and cash equivalents Trade and other receivables Inventories Prepayments Total Current Assets Non-current Assets Trade and other receivables Deferred income tax asset Plant and equipment Intangible assets Total Non-current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Unearned income Total Current Liabilities Non-current Liabilities Unearned income Provisions Total Non-current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed capital Share option reserve Accumulated losses TOTAL EQUITY	1,849,662 1,581,522 1,813,738 1,334,577 32,854 28,229 209,707 188,030
	3,905,961 3,132,358
	1,505,912 1,552,318 547,480 547,480 834,154 817,084 357,707 348,426
	3,245,253 3,265,308
	7,151,214 6,397,666
	1,094,619 933,997 110,207 260,487
	1,204,826 1,194,484
	1,639,028 1,436,126 33,162 31,091
	1,672,190 1,467,217
	2,877,016 2,661,701 4,274,198 3,735,965
	8,138,766 8,035,506 186,303 180,185 (4,050,871) (4,479,726)
	4,274,198 3,735,965

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Condensed Cash Flow Statement

For The Half-Year Ended 31 December 2007

Notes	Consolidated 2007 2006 $ $
Cash flows from operating activities Receipts from customers Payments to suppliers and employees Finance income Borrowing costs Net cash flows from operating activities Cash flows from investing activities Purchase of plant and equipment Purchase of intangibles Net cash flows (used in) investing activities Cash flows from financing activities Share issue costs Net cash flows (used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 11	3,930,061 2,552,243 (3,574,908) (2,269,550) 114,054 88,247 (4,141) (3,991)
	465,066 366,949
	(169,626) (25,369) (27,300) (177,825)
	(196,926) (203,194)
	- (69)
	- (69)
	268,140 163,686 1,581,522 1,301,877
	1,849,662 1,465,563

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Condensed Statement of Changes in Equity For The Half-Year Ended 31 December 2007

CONSOLIDATED Notes	Attributable to equityholders of theparent
	Issued capital Accumulated losses Reserves Total equity $ $ $ $
At 1 July 2007 Profit for the period Write back provision for GST on IPO no longer required6 Amortisation of employee share based payments2(ii) & 7 At 31 December 2007 At 1 July 2006 Profit for the period Share issue costs At 31 December 2006	8,035,506 (4,479,726) 180,185 3,735,965 - 428,855 - 428,855 103,260 - - 103,260 - - 6,118 6,118
	8,138,766 (4,050,871) 186,303 4,274,198
	8,035,575 (5,402,470) 180,185 2,813,290 - 107,256 - 107,256 (69) - - (69)
	8,035,506 (5,295,214) 180,185 2,920,477

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Notes to the Half-Year Financial Statements

For The Half-Year Ended 31 December 2007

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

(a) Basis of Preparation

This general purpose condensed financial report for the half year ended 31 December 2007 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001 .

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.

It is recommended that the half-year financial report be read in conjunction with the annual report for the year ended 30 June 2007 and considered together with any public announcements made by Cryosite Limited during the half year ended 31 December 2007 in accordance with the continuous disclosure obligations of the ASX listing rules.

(b) Changes in Accounting Policies

Since 1 July 2007, the Group has adopted the following Standards and Interpretations, mandatory for annual reporting periods beginning on or after 1 July 2007. The adoption of these Standards and Interpretations did not have any effect on the financial position or performance of the group.

AASB 7 Financial Instruments: Disclosures

(c) Summary of Significant Accounting Policies:

(i) Basis of consolidation

The consolidated financial statements comprise the financial statements of Cryosite Limited and its subsidiary as at 31 December each year (“the Group”).

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

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

All intercompany 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.

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Notes to the Half-Year Financial Statements

For The Half-Year Ended 31 December 2007

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES (continued)

(c) Summary of Significant Accounting Policies (continued)

(ii) 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.

(iii) Plant and equipment

Plant and equipment is stated at cost less accumulated depreciation and any impairment in value.

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

Major depreciation rates are:	2007	2006
Leasehold improvements:	Lease term	Lease term
Plant and equipment:
- fixtures and fittings	10 – 20 years	10 – 20 years
- information technology	2.5 – 5 years	2.5 – 5 years
- warehouse equipment	10 years	10 years
- office furniture & equipment	6 – 8 years	6 – 8 years
Plant & equipment under lease	8 years	8 years

Impairment

The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.

For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount.

The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the period the item is derecognised.

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Notes to the Half-Year Financial Statements For The Half-Year Ended 31 December 2007

1. BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT (continued)

(c) Summary of significant accounting policies (continued)

(iv) Borrowing costs

Borrowing costs are recognised as an expense when incurred.

(v) Intangible assets

Acquired both separately and from a business combination

Intangible assets acquired separately are capitalised at cost and from a business combination are capitalised at fair value as at the date of acquisition. Following initial recognition, the cost model is applied to the class of intangible assets.

The useful lives of these intangible assets are assessed to be either finite or indefinite.

Where amortisation is charged on assets with finite lives, this expense is taken to the income statement through the ‘administrative expenses’ line item.

Intangible assets, excluding development costs, created within the business are not capitalised and expenditure is charged against profits in the period in which the expenditure is incurred.

Intangible assets are tested for impairment where an indicator of impairment exists, and in the case of indefinite lived intangibles annually, either individually or at the cash generating unit level. Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis.

Research and development costs Research costs are expensed as incurred.

Development expenditure incurred on an individual project is carried forward when its future recoverability can be reasonably regarded as assured.

Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less and accumulated amortisation and accumulated impairment losses.

Any expenditure carried forward is amortised over the period of expected future sales from the related project.

The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use, or more frequently when an indicator of impairment arises during the reporting year indicating that the carrying value may not be recoverable.

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Notes to the Half-Year Financial Statements

For The Half-Year Ended 31 December 2007

1. BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT (continued)

(c) Summary of significant accounting policies (continued)

(v) Intangible assets (continued)

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

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

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

(vi) Recoverable amount of assets

At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator to impairment exists, the Group makes a formal estimate of the recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.

Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

(vii) 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.

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Notes to the Half-Year Financial Statements

For The Half-Year Ended 31 December 2007

1. BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT (continued)

(c) Summary of significant accounting policies (continued)

(viii) Trade and other receivables

Trade receivables (Current), which generally have 30 day terms, are recognised and carried at original invoice amount less a provision for any uncollectible amounts.

Trade receivables (Non-current), which generally have terms in excess of 12 months, are carried at their net present value. The expected net cash flows have been discounted to their present value using a market determined risk adjusted discount rate of 17.5% (2006: 17.5%).

An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written-off when identified

(ix) Cash and cash equivalents

Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and shortterm deposits with an original maturity of three months or less.

For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

(x) Provisions

Provisions are recognised when the Group has a present obligation (legal, or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.

If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

(xi) 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).

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’).

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Notes to the Half-Year Financial Statements

For The Half-Year Ended 31 December 2007

1. BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT (continued)

(c) Summary of significant accounting policies (continued)

(xi) Share-based payment transactions

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.

(xii) Leases

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

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

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

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

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Notes to the Half-Year Financial Statements

For The Half-Year Ended 31 December 2007

1. BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT (continued)

(c) Summary of significant accounting policies (continued)

(xii) Leases (continued)

Operating lease payments are recognised as an expense in the income statement on a straightline basis over the lease term.

Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

(xiii) Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

• Revenue from the archival storage of biological samples is recognised over the period that storage occurs.

• Revenue from the rendering of non-storage services, such as collection or distribution of biological samples, is recognised upon the delivery of the service to the customers.

• Revenue where services are provided in advance of payment under a long term contract are recognised at net present value with the balance outstanding taken to receivables. A corresponding amount is recognised as unearned income in the balance sheet.

• Interest revenue is recognised on a proportional basis taking into consideration the interest rates applicable to the financial assets.

(xiv) Income tax

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

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

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

• In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carryforward 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

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Notes to the Half-Year Financial Statements

For The Half-Year Ended 31 December 2007

1. BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT (continued)

(c) Summary of significant accounting policies (continued)

(xiv) Income tax (continued)

• business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

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

(xv) Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

• where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivables and payables are stated with the amount of GST included

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(xvi) Contributed equity

Ordinary share capital bears no special terms or conditions affecting income or capital entitlements of the shareholders. Ordinary share capital is recognised at the fair value of the consideration received by the company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

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Notes to the Half-Year Financial Statements

For The Half-Year Ended 31 December 2007

1. BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT (continued)

(c) Summary of significant accounting policies (continued)

(xvii) Share options reserve

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

(xviii) Earnings per share

Basic EPS is calculated as net profit attributable to members, 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, 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 period 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.

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Notes to the Half-Year Financial Statements

For The Half-Year Ended 31 December 2007

Notes	Consolidated 2007 2006 $ $
2. REVENUE AND EXPENSES Specific items Profit before income tax expense includes the following revenues and expenses whose disclosure is relevant in explaining the performance of the entity: (i) Revenue Rendering of services Interest income (ii) Expenses Included within expenses are the following amounts: Depreciation & amortisation Employee benefits Expense of share-based payments - employee share scheme7 - other options7	3,706,154 2,195,750 105,713 95,213
	3,811,867 2,290,963
	170,576 96,143 911,067 671,254 4,299 - 1,819 -

3. INCOME TAX

As at 31 December 2007 the group has accumulated tax losses (recognised and unrecognised) of $4,700,920 (30 June 2007: $5,135,893) that are available for offset against future taxable profits of the company. Of these losses $1,463,053 (30 June 2007: $1,463,053) has been recorded as a deferred tax asset. The deferred income tax asset of $1,410,276 (30 June 2007: $1,540,769) has been brought to account to the extent of $438,917 (30 June 2007: $438,917)

4. EARNINGS PER SHARE

Basic earnings per share amounts are calculated by dividing net profit for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period (adjusted for the effects of dilutive options)

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

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Notes to the Half-Year Financial Statements For The Half-Year Ended 31 December 2007

4. EARNINGS PER SHARE continued

	Consolidated Consolidated 31 December 2007 30 June 2007 $ $
Net profit attributable to equity holders of the parent	428,855 922,744
	No of shares. No of shares.
Weighted average number of ordinary shares for basic earnings per share Effect of dilution : Share options Adjusted weighted average number of ordinary shares for diluted earnings per share	46,639,563 46,639,563 1,082,760 1,280,412
	46,722,323 47,919,975

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

5. DIVIDENDS PAID OR PROPOSED

No dividends have been provided for or paid (2006:Nil).

6. ISSUED CAPITAL

A provision of $111,000 was made in 2004 to cover GST incurred on the IPO in May 2002 which may have been incorrectly claimed as an input tax credit. A ruling has now been issued by the Australian Taxation Office that no adjustment is required . The provision less expenses incurred has been written back at 31 December 2007 against equity.

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Notes to the Half-Year Financial Statements For The Half-Year Ended 31 December 2007

7. EMPLOYEE BENEFITS

a) Share based payments

Share Options

Options over ordinary shares:

Employee share scheme

At the end of the period there were 1,070,000 (30 June 2007: 550,000) un-issued ordinary shares in respect of which options were outstanding under the employee share scheme.

	31 December 2007 30 June 2007 No.of Options Exercise price Expense for period $ No.of Options Exercise price Expense for period $
Balance at beginning of period Options granted during the period Balance at end of period Exercisable at end of period	550,000 - - 550,000 - - 520,000 - 4,299 - - -
	1,070,000 - 4,299 550,000 - -
	550,000 40 cents - 440,000 40 cents -

Terms and conditions of options issued under employee share scheme details

On 18 February 2002, Cryosite established an Employee Share Option Plan (“the Plan”). The Plan is designed to assist in the retention and motivation of employees and directors of the Company.

The terms and conditions of the Plan are as follows:

Options may be granted under the Plan to an employee or director of the Company or any of its subsidiaries, or to a person who renders services to the Company, or to any of its subsidiaries and is eligible to be a participant in the Plan under the terms of the Income Tax Assessment Act 1936 and Income Tax Assessment Act 1997 and by any instrument issued by ASIC and applicable to the Company (“eligible participant”).

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

The total number of share options granted under the Plan will be limited to 5% of the total number of issued shares at the time the offer or grant of options is made.

Options will be issued for no consideration.

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Notes to the Half-Year Financial Statements

For The Half-Year Ended 31 December 2007

7. EMPLOYEE BENEFITS continued

a) Share based payments continued

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.

The exercise price of each initial option issued under the Plan was the retail offer price included in the prospectus (40 cents) for the Initial Public Offering.

For the initial options granted to employees and the Executive Director under the Plan, 20% will become exercisable after the first anniversary of listing on ASX and an additional 20% will become exercisable each anniversary of listing thereafter. The Company was listed on the ASX on 9 May 2002.

The terms and conditions for options issued in the current period are :-

Exercise date 1 December 2008 1 December 2009 1 December 2010	No of options exercisable Exercise price per option 173,333 20 cents 173,333 30 cents 173,334 40 cents 520,000

Options will expire 5 years from exercise date

Other options

At the end of the year there were 800,000 (30 June 2007: 525,000) unissued ordinary shares in respect of which options were outstanding, issued for the provision of services.

	31 December 2007 30 June 2007
	No. of Options. Expense for period $ Options No. Expense for year $
Balance at beginning of year Options expiring during the year Granted to Catherine Brenner (Non-executive director) Balance at end of period	525,000 - 675,000 - (25,000) - (150,000) - 300,000 1,819 - -
	800,000 1,819 525,000 -

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Notes to the Half-Year Financial Statements For The Half-Year Ended 31 December 2007

7. EMPLOYEE BENEFITS continued

a) Share based payments continued

Other options continued

	31 December 2007 30 June 2007 No. of Options. Exercise price $ Expense for period $ Options No. Exercis e Price $ Expense for year $	31 December 2007 30 June 2007 No. of Options. Exercise price $ Expense for period $ Options No. Exercis e Price $ Expense for year $	31 December 2007 30 June 2007 No. of Options. Exercise price $ Expense for period $ Options No. Exercis e Price $ Expense for year $
Exercisable at end of period R Grellman C Brenner M Hale	500,000 0.40 500,000 0.40 - - - - - - 25,000 0.40
Parties to option agreement	R Grellman – Chairman	C Brenner – Non- executive director	M Hale – Advertising and Marketing Consultant
Rights Granted and grant date	500,000 Share options granted on 27 November 2002	300,000 Share options granted on 1 December 2007	450,000 Share options granted on 1 July 02
Option exercise price	Fixed at 40 cents per share	100,000 at 20 cents per share 100,000 at 30 cents per share 100,000 at 40cents per share	Fixed at 40 cents per share
Vesting period	165,000 on 27 November 2003 165,000 on 27 November 2004 170,000 on 27 November 2005 Options must be exercised no later than 5 years from vesting date.	100,000 on 1 December 2008 100,000 on 1 December 2009 100,000 on 1 December 2010 Options must be exercised no later than 5 yearsfromvesting date.	Options vest at the rate of 12,500 per month from grant date. Options will be exercisable within 3 years of vesting in multiples of 10,000
Vesting requirements	No vesting conditions apply, options granted as part of remuneration package as chairman.	No vesting conditions apply, options granted as part of remuneration package as non-executive director	Options vest on continued supply of marketing consulting services to the company. The contract for supply of marketing services was cancelled by M Hale, effective 31 August 2004. The Options not vesting by that date wereforfeited.

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Notes to the Half-Year Financial Statements

For The Half-Year Ended 31 December 2007

7. EMPLOYEE BENEFITS continued

a) Share based payments continued

Share based option payments continued

Weighted average fair value per option at grant date	$0.21	$0.11	$0.04
Expenseforthe period	$-	$1,819	$-
Prior year’s expense takento account	$-	$-	$-
Value of options forfeited	$-	$-	$1,000
Balance at the end of the financial period not yet expensed	$-	32,181	$-
Parties to option agreement	R Grellman – Chairman	C Brenner – Non- executive director	M Hale – Advertising and Marketing Consultant
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.	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.	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.
Expected volatility	The expected volatility used was 0.708 with an interest-free risk rate of 5.05%. The market share price at date of grant was 38 cents.	The expected volatility used was 0.79 with an interest-free risk rate of 6.70%. The market share price at date of grant was 19 cents.	The expected volatility used was 0.708 with an interest-free risk rate of 5.05%. The market share price at date of grant was 64 cents.

8. CONTINGENT LIABILITIES

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

9. EVENTS AFTER THE BALANCE SHEET DATE

The directors are unaware of any event or transaction that has occurred between the last annual reporting date and the date of this report that may have a significant effect on the company.

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Notes to the Half-Year Financial Statements

For The Half-Year Ended 31 December 2007

10. SEGMENT INFORMATION

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

11. ADDITIONAL INFORMATION

Reconciliation of cash

For the purposes of the Condensed Cash Flow Statement, cash and cash equivalents comprise the following at 31 December 2007:

	31 December 2007 30 June 2007 31 December 2006
	$ $ $
Cash at bank and in hand Short-term deposits
	357,516 330,496 156,521
	1,492,146 1,251,026 1,309,042
	1,849,662 1,581,522 1,465,563

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To the members of Cryosite Limited

Report on the Condensed Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Cryosite Limited, which comprises the condensed balance sheet as at 31 December 2007, and the condensed income statement, condensed statement of changes in equity and condensed cash flow statement for the half-year ended on that date, other selected explanatory notes and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the half-year end or from time to time during the half-year.

Directors Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation and fair presentation of the half-year financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the half-year 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.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2007 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 and other mandatory financial reporting requirements in Australia. As the auditor of Cryosite Limited and the entities it controlled during the half-year, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Liability limited by a scheme approved under Professional Standards Legislation.

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Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the Directors’ Report. The Auditor’s Independence Declaration would have been expressed in the same terms if it had been given to the directors at the date this auditor’s report was signed.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the interim financial report of Cryosite Limited is not in accordance with the Corporations Act 2001 , including:

• (i) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2007 and of its performance for the half-year ended on that date; and

• (ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

Ernst & Young

Ian Campbell Partner Sydney 20 February 2008

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