CRYOSITE LIMITED — Interim / Quarterly Report 2011

Feb 22, 2011

Cryosite Limited ABN 86 090 919 476 Appendix 4D

Half year report

Six months ended 31 December 2010 (‘current period’) and 31 December 2009 (‘previous corresponding period’)

Results for announcement to the market

			$A'000
Revenue from ordinary activities:	Up	6.1% to	3,328
Profit from ordinary activities after tax attributable to	Up	664.5% to	163
members:
Net profit for the period attributable to members:	Up	664.5% to	163

NTA backing	Current period	Previous corresponding Period
Net tangible asset backing per ordinary security	9.7 cents	9.2 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.

This information should be read in conjunction with the annual financial report of Cryosite Limited as at 30 June 2010.

CRYOSITE LIMITED ABN 86 090 919 476

Half-Year Financial Report

31 December 2010

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Table of Contents

	PAGE NO.
Directors’ Report	3
Auditor’s Independence Declaration	4
Directors’ Declaration	5
Condensed Consolidated Statement of Comprehensive Income	6
Condensed Consolidated Statement of Financial Position	7
Condensed Consolidated Statement of Cash Flows	8
Condensed Consolidated Statement of Changes in Equity	9
Notes to the Half-year Financial Statements	10-17
Independent Review Report to the Members of Cryosite Limited	18-19

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Directors’ Report

Your directors submit their report for the half-year ended 31 December 2010.

Directors

The directors of Cryosite Limited and its controlled entities (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.

Theodore Anthony Onisforou – Chairman

Gordon Leonard Milliken – Managing Director

Graeme Allen Moore – Executive Director

Principal Activities

Cryosite was established in 2000, it has developed into a unique company that provides a number of integrated biologistics services. The services are categorised into two groups, Biological Services and Warehousing and Distribution. The biological services include the private cord blood service. Cryosite pioneered private cord blood collection in Australia and is recognised as the country’s premier cord blood bank. Biorepository management and adult stem cell storage are also part of the biological services. The Warehousing and Distribution service includes the Clinical Trial Logistics and the services associated with the American Type Culture Collection distribution agreement.

Review of Operations

Group revenue increased during the half-year by 6.1% over the corresponding period last year to $3,327,942 (2009: $3,136,149).The consolidated net profit attributable to members of the parent for the period was $163,274 (2009: $21,358).

The company has operated out of the new South Granville premises for over 12 months and we are now realising some of the anticipated benefits of the upgraded premises. This has been particularly important for the clinical trial logistics service where the combined effects of both larger capacity and improved systems has helped Cryosite attract a number of new clients.

Interest in the clinical trial service in particular remains very high and we anticipate that we will continue to attract a regular number of new client’s as well as retain a steady flow of new projects from our existing clients.

Auditor’s Independence Declaration

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

Signed in accordance with a resolution of the directors made pursuant to s.306(3) of the Corporations Act 2001 .

Theo Onisforou Chairman Sydney, 23 February 2011

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DUNCAN DOVICO

-

Auditor’s Independence Declaration to the Directors of Cryosite Limited

In accordance with section 307C of the Corporations Act 2001 , I am pleased to provide the following declaration of independence to the directors of Cryosite Limited.

As lead audit partner for the review of the financial statements of Cryosite Limited for the half-year ended 31 December 2010, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• (a) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• (b) any applicable code of professional conduct in relation to the review.

DUNCAN DOVICO CHARTERED ACCOUNTANTS

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ROSEMARY MEGALE

Partner

Dated: 23rd February, 2011

Place: Sydney

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

LEVEL 12, 90 ARTHUR STREET, NORTH SYDNEY NSW 2060 � PO BOX 1994 , NORTH SYDNEY NSW 2059 T: (02) 9922 1166 � F: (02) 9922 2044 � E: email@duncandovico.com.au � ABN: 19 173 326 199 4 Liability limited by a scheme approved under the Professional Standards Legislation

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Directors’ Declaration

The Directors of Cryosite Limited declare that:

1. The financial statements and notes are in accordance with the Corporations Act 2001 including:

2. (a) in the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and

3. (b) in the directors’ opinion, complying with accounting standard AASB134 Interim Financial Reporting .

Signed in accordance with a resolution of the directors made pursuant to s.303(5) of the Corporations Act 2001 .

On behalf of the Directors

Theo Onisforou Chairman

Sydney, 23 February 2011

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Condensed Consolidated Statement of Comprehensive Income

For The Half-Year Ended 31 December 2010

Notes	Consolidated 2010 2009 $ $
Revenues 2 Expenses Costs of providing services Finance costs Marketing expenses Occupancy expenses Administration expenses Profit from operations before tax Income tax benefit Profit after tax from operations Net Profit attributable to members of the parent Other comprehensive income Other comprehensive income for the period, net of tax Total comprehensive income for the half-year Earnings per share (cents per share) Basic EPS for the half-year 4 Diluted EPS for the half-year 4	3,327,942 3,136,149 (1,865,670) (1,781,327) (5,642) (6,720) (100,650) (110,561) (507,567) (451,362) (696,385) (766,913)
	152,028 19,266 11,246 2,092
	163,274 21,358
	163,274 21,358
	- -
	163,274 21,358
	0.35 0.04 0.35 0.04

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

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Condensed Consolidated Statement of Financial Position As at 31 December 2010

Notes	Consolidated as at 31 December 2010 as at 30 June 2010 $ $
ASSETS Current Assets Cash and cash equivalents 10 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 1(d) Total Non-current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Unearned income Provisions 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	2,402,894 2,045,065 984,564 1,171,347 35,862 45,630 236,915 43,710
	3,660,235 3,305,752
	1,354,799 1,434,601 765,305 754,059 2,414,335 2,187,881 - -
	4,534,439 4,376,541
	8,194,674 7,682,293
	1,056,232 891,678 339,685 313,261 255,281 239,687
	1,651,198 1,444,626
	1,779,230 1,653,220 243,894 229,760
	2,023,124 1,882,980
	3,674,322 3,327,606
	4,520,352 4,354,687
	8,138,766 8,138,766 239,118 236,727 (3,857,532) (4,020,806)
	4,520,352 4,354,687

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

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Condensed Consolidated Statement of Cash Flow For The Half-Year Ended 31 December 2010

Notes	Consolidated 2010 2009 $ $
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 Proceeds on disposal of plant & equipment Net cash flows (used in) investing activities Cash flows from financing activities Net cash flows from financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	3,619,316 3,751,902 (2,936,196) (3,281,778) 120,830 76,799 (5,642) (6,720)
	798,308 540,203
	(481,127) (111,587) 40,648 -
	(440,479) (111,587)
	- -
	- -
	357,829 428,616 2,045,065 1,326,791
	2,402,894 1,755,407

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

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Condensed Consolidated Statement of Changes in Equity For The Half-Year Ended 31 December 2010

CONSOLIDATED Notes	Attributable to equity holders of theparent
	Contributed capital Accumulated losses Employee equity benefits reserve Reserves Total equity $ $ $ $ $
At 1 July 2010 Profit for the period Other Comprehensive Income Transactions with Owners in their capacity as owners: Amortisation of employee share based payments 2(ii) & 5 At 31 December 2010 At 1 July 2009 Profit for the period Other Comprehensive Income Transactions with Owners in their capacity as owners: Amortisation of employee share based payments2(ii) At 31 December 2009	8,138,766 (4,020,806) - 236,727 4,354,687 - 163,274 - - 163,274 - - - - - - - - 2,391 2,391
	8,138,766 (3,857,532) - 239,118 4,520,352
	8,138,766 (4,025,418) - 226,962 4,340,310 - 21,358 - - 21,358 - - - - - - - - 6,873 6,873
	8,138,766 (4,004,060) - 233,835 4,368,541

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

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Notes to the Financial Statements For The Half-Year Ended 31 December 2010

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

(a) Basis of Preparation

This general purpose condensed financial report for the half-year ended 31 December 2010 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001 .Compliance with AASB 134 Interim Financial Reporting ensures compliance with International Financial Reporting Standard IAS 34 Interim Financial Reporting.

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 2010 and considered together with any public announcements made by Cryosite Limited during the half-year ended 31 December 2010 in accordance with the continuous disclosure obligations of the ASX listing rules.

The same accounting policies and methods of computation have been followed in this interim financial report as were applied in the most recent annual financial statements.

(b) Changes in Accounting Policies

The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current reporting period.

(c) Intangible Asset

The intangible asset which relates to the Cryobyte LS software has a carrying value of nil as at 31 December 2010. Its treatment is consistent with the year ended 30 June 2010 in which the Board decided to fully amortise the costs associated with the software as the ongoing development had been suspended due to their relocation to the new premises.

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Notes to the Financial Statements For The Half-Year Ended 31 December 2010

Notes	Consolidated 2010 2009 $ $
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 Profit on disposal of plant & equipment (ii) Expenses Included within expenses are the following amounts: Depreciation & amortisation Employee benefits Expense of share-based payments - employee share scheme 6 - other options 6	3,171,840 3,055,924 120,692 80,225 35,410 -
	3,327,942 3,136,149
	249,435 96,217 1,018,144 940,858 2,391 6,873 - -

3. 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)

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Notes to the Financial Statements For The Half-Year Ended 31 December 2010

4. EARNINGS PER SHARE Continued

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

Net profit attributable to equity holders of the parent	Consolidated Consolidated Consolidated 31 December 2010 30 June 2010 31 December 2009 $ $ $ 163,274 4,612 21,358
	No of shares. No ofshares. No ofshares.
Weighted average number of ordinary shares for basic earnings per share	46,639,563 46,639,563 46,639,563

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

4. DIVIDENDS PAID OR PROPOSED

No dividends have been provided for or paid at the reporting date (30 June 2010: Nil).

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Notes to the Financial Statements For The Half-Year Ended 31 December 2010

5. EMPLOYEE BENEFITS

Share based payments

Share Options

Options over ordinary shares:

Employee share scheme

At the end of the period there were 520,000 (30 June 2010: 520,000) un-issued ordinary shares in respect of which options were outstanding under the employee share scheme.

	31 December 2010 No. of Options Exercise price Expense for period $	30 June 2010 No. of Options Exercise price Expense for period $	30 June 2010 No. of Options Exercise price Expense for period $
Balance at beginning of period 520,000 - - Options expiring or forfeited during the period - - - Expense for options outstanding during period - - 2,391 Balance at end of period 520,000 - 2,391 Exercisable at end of period Graeme Moore 300,000 0.30 Philip Alger 220,000 0.30 Sub-Total Key management personnel 520,000 Other employees - - 520,000 0.30	520,000 - - - - - - - 2,391	1,070,000 (550,000) -	- - - - - 9,765
	520,000 - 2,391	520,000	- 9,765
		200,000 146,666	0.25 0.25
	520,000 - -	346,666 -	-
	520,000 0.30	346,666	0.25

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.

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Notes to the Financial Statements For The Half-Year Ended 31 December 2010

6. EMPLOYEE BENEFITS continued

Share based payments continued

Share Options continued

The terms and conditions of the Plan are as follows:

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

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

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

Options will be issued for no consideration.

The Board will determine the Option Exercise Price after considering the volume weighted average of the prices at which shares were traded on ASX during the one month period before the date of the offer.

Options will expire at the end of eight years from the option grant date or if the participant ceases to be an employee or director of, or render services to, the Company or any of its Subsidiaries for any reason whatsoever.

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.

There were no options issued at the reporting date that are not exercisable.

Other options

At the end of the half-year there were nil (30 June 2010: 170,000) unissued ordinary shares in respect of which options were outstanding, issued for the provision of services.

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Notes to the Financial Statements

For The Half-Year Ended 31 December 2010

5. EMPLOYEE BENEFITS continued

Share based payments continued

Other options continued

Other optionscontinued
	31 December 2010 30 June2010 No. of Options. Expense for period $ Options No. Expense for year $ 170,000 - 335,000 - (170,000) - (165,000) - - - 170,000 - - - - 170,000 0.40 -
Balance at beginning of year Options expiring during the period1 Balance at end of period Exercisable at end of period RGrellman

1 170,000 options vested to Mr Grellman expired on 1 December 2010

Parties to optionagreement	RGrellman – FormerChairman(resigned on 4 March 2008)
Rights Granted andgrant date	500,000 Share Optionsgranted on 27 November 2002
Optionexercise price	Fixed at40 cents pershare
Vesting period	170,000 on 27 November 2005 Optionsmust be exercisednolaterthan5 yearsfromvesting date.
Vesting requirements	No vesting conditions apply, options granted as part of remuneration package as Chairman.
Weighted average fair value peroptionat grant date	$0.21
Expenseforthe period	$-
Prior year’s expense taken to account	$-
Value ofoptionsforfeited	$-
Balance at the end of the financial period 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 overthe previous12 months.
Expected volatility	The expected volatility used was 0.708 with an interest-free risk rate of 5.05%. Themarket share price at date ofgrant was 38 cents.

6. CONTINGENT LIABILITIES

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

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Notes to the Financial Statements For The Half-Year Ended 31 December 2010

7. SUBSEQUENT EVENTS

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

8. SEGMENT INFORMATION

Identification of Reportable Segments

The group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (the chief operating decision makers) in assessing performance and in determining the allocation of resources. The segment information provided is consistent with the internal management reporting.

Two reportable segments have been identified as follows:

Biological Services Private cord blood services, biorepository management and adult stem cell storage.

Warehousing & Distribution Clinical trial logistics and American Type Culture Collection distribution services.

The accounting policies used by the Group in reporting segments internally are the same as those contained in note 1 to the accounts and in the 30 June 2010 annual financial report.

Operating Segments

31 December 2010 – Consolidated Total segment revenue Segment profit before EBITDA 31 December 2009 – Consolidated Total segment revenue Segment profit before EBITDA Total Segment assets 31 December 2010 30 June 2010	Biological Services Warehousing & Distribution Total $ $ $ 1,688,467 1,483,373 3,171,840
	142,263 144,150 286,413
	1,556,383 1,499,541 3,055,924
	16,262 25,716 41,978
	4,844,534 3,350,140 8,194,674
	4,389,028 3,293,265 7,682,293

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Notes to the Financial Statements For The Half-Year Ended 31 December 2010

8. SEGMENT INFORMATION continued

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

Operating EBITDA Interest revenue Depreciation and amortisation Finance costs Profit before tax	Consolidated 31 December 2010 $ 31 December 2009 $ 286,413 41,978 120,692 80,225 (249,435) (96,217) (5,642) (6,720)
	152,028 19,266

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DUNCAN DOVICO

TO THE MEMBERS OF CRYOSITE LIMITED

REPORT ON THE HALF YEAR FINANCIAL REPORT

Scope

We have reviewed the financial report of Cryosite Limited for the half-year ended 31 December 2010 comprising of the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows for the six months 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 consolidated entity are responsible for the preparation 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 control 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.

Auditors Responsibility

Our responsibility is to express a conclusion on the half-yearly financial report based on our review. We conducted our review in accordance with Auditing Standard on review Engagements ASRE 2410 Review of Interim and Other Financial Reports 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 half-year financial report is not in accordance with the Corporation Act 2001 including giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and its performance for the six months ended on that date; and complying with Australian Accounting Standards AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As auditor of Cryosite Limited and its controlled entities ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-yearly 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 assurances that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion.

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

LEVEL 12, 90 ARTHUR STREET, NORTH SYDNEY NSW 2060 � PO BOX 1994 , NORTH SYDNEY NSW 2059 T: (02) 9922 1166 � F: (02) 9922 2044 � E: email@duncandovico.com.au � ABN: 19 173 326 199 18 Liability limited by a scheme approved under the Professional Standards Legislation

DUNCAN DOVICO

Independence

In conducting our review, we complied with the independence requirements of the Corporations Act 2001. We have given to the directors of the company a written Auditors Independence Declaration, a copy of which is included in the financial statements.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Cryosite Limited and it’s controlled entities is not in accordance with the Corporations Act 2001, including:

• i) giving a true and fair view of the consolidated entity’s financial position at 31 December 2010 and of its performance for the six months ended on that date; and

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

DUNCAN DOVICO CHARTERED ACCOUNTANTS

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ROSEMARY MEGALE

Partner

Dated: 23rd February, 2011

Place: Sydney

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

LEVEL 12, 90 ARTHUR STREET, NORTH SYDNEY NSW 2060 � PO BOX 1994 , NORTH SYDNEY NSW 2059 T: (02) 9922 1166 � F: (02) 9922 2044 � E: email@duncandovico.com.au � ABN: 19 173 326 199 Liability limited by a scheme approved under the Professional Standards Legislation

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