ANNUALREPORT2013ABN 86 090 919 476Australia’s Family Cord Blood Bank Directors
Andrew Kroger
(Non-Executive Chairman)
Christina Boyce
(Non-Executive Director)
Gordon Milliken
(Managing Director)
Graeme Moore
(Executive Director)
Company Secretary
Bryan Dulhunty
Registered Office
13a Ferndell Street
South Granville, NSW 2142
T: +61 2 8865 2000
F: +61 2 8865 2092
E: corporate@cryosite.com
www.cryosite.com
Share Register
Link Market Services Limited
Level 8, 580 George Street
Sydney, NSW 2000
T: +61 1300 554 474
F: +61 2 9287 0303
Bankers
Commonwealth Bank of Australia
27a South Street, Granville, NSW 2142
Auditors
Duncan Dovico, Chartered Accountants
Level 12, 90 Arthur Street
Northn Sydney, NSW 2060
T: +61 2 9922 1166
F: +61 2 9922 2044
LIMITED
CRYOSITE LIMITED
ABN 86 090 919 476
Annual Report
for the year ended 30 June 2013
Australia’s Family Cord Blood Bank
CRYOSITE LIMITED – ANNUAL REPORT
Table of Contents
Corporate Information
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Directors’ Declaration
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flow
Notes to the Financial Statements
Corporate Information
Summary of Significant Accounting Policies
Significant Accounting Judgements, Estimates and assumptions
Segment Information
Revenue
Expenses
Income Tax
Earnings Per Share
Dividends paid and Proposed
Cash and Cash Equivalents
Cash Flow Statement Reconciliation
Current Assets - Trade and Other Receivables
Current Assets – Inventories
Current Assets – Prepayments
Non-Current - Trade and Other Receivables
Non-Current Assets – Investments in Subsidiaries
Non-Current Assets - Plant and Equipment
Non-Current Assets - Intangible Assets
Trade and other payables
Current Liabilities – Unearned Income
Non-Current Liabilities - Unearned Income
Non-Current Liabilities – Provisions
Contributed Equity
Accumulated Losses and Reserves
Commitments and Contingencies
Events After Balance Date
Auditors’ Remuneration
Related Party Disclosures
Shared-Based Payments Expense
Superannuation
Key Management Personnel
Financial Instruments
Parent Entity Financial Information
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Australia’s Family Cord Blood Bank
CRYOSITE LIMITED – ANNUAL REPORT
Corporate Information
ABN 86 090 919 476
DIRECTORS
Andrew Kroger (Non-Executive Chairman)
Christina (Christy) Boyce (Non-Executive Director)
Gordon Milliken (Managing 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
+61 2 8865 2000
Telephone:
+61 2 8865 2090
Fax:
Email:
corporate@cryosite.com
SHARE REGISTER
Link Market Services Limited
Level 8, 580 George Street
SYDNEY NSW, 2000
Telephone:
+61 1300 554 474
AUDITORS
Duncan Dovico Chartered Accountants
Level 12, 90 Arthur Street
NORTH SYDNEY NSW, 2060
Telephone:
+61 2 9922 1166
INTERNET ADDRESS
www.cryosite.com
2
Australia’s Family Cord Blood Bank
Directors’ Report
The directors present their report together with the financial statements on the consolidated entity consisting of
Cryosite Limited and the entity it controlled for the year ended 30 June 2013.
DIRECTORS
The following people held the office of director during the year
Andrew Kroger (Non-Executive Chairman)
Christina (Christy) Boyce (Non-Executive Director) – Appointed 3 June 2013
Gordon Milliken (Managing Director)
Graeme Moore (Executive Director)
Names, qualifications, experience and special responsibilities
Andrew Kroger, BEc. LLB Non-Executive Chairman
Mr Kroger has had a career in stockbroking, law and general management including two years running
Forsayth Group in 1990 which was Australia’s ninth largest gold producer at that time. Mr Kroger is 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.
Christina (Christy) Boyce, BEc, MBA, GAICD, Non-Executive Director
Ms Boyce has over 20 years strategic consulting and management experience. She is currently a director Port
Jackson Partners, a consulting firm providing strategic advice to Boards, CEOs and senior management. She
was a senior executive at NBN Co during its establishment. Prior to this, she worked at McKinsey & Co for 14
years, where she was a partner. Ms Boyce has worked extensively with companies on growth, strategy
development and business restructuring across a range of industries including retail, telecommunications and
consumer goods, in Australia and overseas. She holds a Masters of Management (with distinction) from the
Kellogg Graduate School of Management at Northwestern University and a Bachelor of Economics from the
University of Sydney. She was appointed to the Board in June, 2013.
Gordon Milliken, Dip. Med. Tech. Grad. Dip. Ops. Mgt - Managing Director
Mr Milliken has extensive experience in a variety of positions in the commercial medical and veterinary
technology fields. Mr Milliken is one of the founding members of Cryosite and has been instrumental in
setting up the operational core of the company. He has been involved with the company on a full-time basis
since it was established in 1999, and assumed the position of Managing Director in February 2002. Mr
Milliken has a Diploma of Medical Technology and a Graduate Diploma in Operations Management. Mr
Milliken was appointed to the board of Cryosite in March, 2002.
Graeme Moore, B.App.Sc (Biomed), MHA, Executive Director
Graeme Moore is the Quality and Regulatory Affairs Manager and Chief Operating Officer. Graeme joined
Cryosite in July 2005 after a decade with the Australian Red Cross Blood Service. Graeme has over 20 years
experience in biomedical science, manufacture of therapeutic goods, quality management and regulatory
affairs. Graeme brings expertise in the regulation and manufacture of cellular therapies and process re-
engineering to the company. Graeme is also responsible for ensuring that Cryosite’s systems retain the
capacity to meet client’s needs in a constantly changing technological and regulatory environment. Mr Moore
was appointed to the Board in September, 2008.
3
Australia’s Family Cord Blood Bank
Directors’ Report continued
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 biotechnology 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 has been Executive Chairman, Managing Director
non-executive director and company secretary of a number of listed and unlisted biotechnology companies
As at the date of this report the relevant interests of the directors in the shares and options of Cryosite Limited
were:
Director
Andrew Kroger
Gordon Milliken
Graeme Moore
Christina Boyce
EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
DIVIDENDS
Ordinary shares
Options over ordinary shares
10,706,943
1,290,415
-
60,636
-
-
300,000
-
2.68 cents (2012: 2.19 cents)
2.65 cents (2012: 2.17 cents)
A final unfranked dividend for the year ended 30 June 2012 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
2013 financial year was declared and paid during the financial year.
The total dividends declared and paid were $466,397 (2012: $233,198). No further dividends have been
recommended at the date of this report
CORPORATE INFORMATION
Corporate structure
Cryosite Limited is a company limited by shares that is incorporated and domiciled in Australia. Cryosite
Limited is the ultimate parent company. Cryosite Limited has prepared a consolidated financial report which
incorporates Cryosite Distribution Pty Limited, a company incorporated and domiciled in Australia that it
controlled during the financial year.
Nature of operations and principal activities
The company provides a number of highly specialised biologistics-based services that are grouped into two
reporting segments:
- Biological Services, and
- Warehousing & Distribution Services.
4
Australia’s Family Cord Blood Bank
Directors’ Report continued
Biological Services
Biological Services incorporate the activities of the private cord blood service, adult stem cell storage and
general biorepository management.
Warehousing & Distribution Services
Distribution Services includes the clinical trials logistics service and the other distribution based services
including the importation and distribution of the products of the American Type Culture Collection and
laboratory diagnostics products.
Employees
The consolidated entity has 35 full-time equivalent employees as at 30 June 2013 (2012: 30 employees).
OPERATING RESULTS FOR THE YEAR
The Directors have pleasure in reporting to shareholders the results for the last year’s operations. Profit for the
year after income tax was $1,249,961 (2012: $1,022,479).
The results of the Company’s implemented strategies were not only reflected in the operating profit but also in
the operating cash flow inflows of $1,939,971 (2012:$1,880,212). There were no significant one-off
contributions to the cash flow result. Net capital expenditure for year was $379,160 (2012: $181,664). The
Company continues to generate positive cash flows with cash and cash equivalents at the end of the year being
$5,777,097 (2012: $4,524,750).
REVIEW OF OPERATIONS
The summary of the financial results reflects the continuing growth performance of the company. As noted in
last year’s report, one of the important points to make in relation to the results is that they are as the result of
organic growth and not due to any one-off or unexpected event.
The company provides services divided in to two market segments, biological services and warehousing and
distribution. In order for shareholders to have a clear understanding of the two categories of services, a brief
recap will be useful.
Biological Services
Perhaps the best recognised of the services in this segment is the private cord blood storage business. In 2002
Cryosite pioneered the private collection processing and long-term storage of cord blood. The service includes
expectant parents contracting Cryosite to arrange for their baby’s cord blood to be collected by an obstetrician
or mid-wife and shipping the blood to Cryosite’s laboratory. Cryosite processes the blood to separate the part
of the blood which contains the stem cells and then cryopreserves the stem cells for long-term storage in liquid
nitrogen so that they may be used in the future to treat a range of haematological conditions.
Because the storage and release of cord blood in Australia is regulated by the Therapeutic Goods
Administration, Cryosite operates in a highly regulated environment compared to similar overseas companies.
This has a number of consequences for Cryosite. On one hand, regulatory compliance is always associated
with additional costs. Compliance requires the development and maintenance of a sophisticated, companywide
Quality Management System and associated operational procedures. However, Cryosite has been able to
leverage the quality system to advantage in other services, including the warehousing and distribution service.
From an operations perspective, although we are continually looking at ways to improve our systems, there
were no significant changes that needed to be implemented during the year to ensure our continued compliance
to the regulatory guidelines.
5
Australia’s Family Cord Blood Bank
Directors’ Report continued
Cryosite is committed to ensuring that it provides a safe and harmonious working environment to ensure
minimal disruption to operations and high training and recruitment costs resulting from staff turnover. Due to
the nature of the cord blood service, the laboratory operates every day of the year, so maintaining a solid team
of appropriately qualified, trained and experienced scientists is a key part of Cryosite's human resources
management strategy.
Other services include biorepository management. The outsourcing of the storage of biological specimens is
not a highly developed concept in Australia with most collections, including tissue, serum and plasma and cell
cultures generally held in widely disseminated public research institution, diagnostic facilities and hospitals.
However, Cryosite does maintain a diverse client base and the service continues to make an acceptable
contribution to the financial results. Cryosite also has a number of clinical trial clients who take advantage of
this service. We also continued our long-term agreement to provide services for the off-site storage of adult
stem cells for the Peter MacCallum Hospital in Melbourne.
Briefly, biorepository management involves Cryosite signing agreements with clients to receive the material
and conduct an audit of the material to ensure that the material received is consistent with the information
provided by the client. The material is then transferred to the appropriate storage equipment, such as ultra-low
temperature mechanical freezers or liquid nitrogen tanks. An inventory of the material is prepared for future
tracking and inventory confirmation. The material may remain at Cryosite for extended periods of time, or
may be returned to the client or forwarded to other parties.
During the year, we completed an upgrade to the biorepository section of the facility. At a cost of
approximately $75,000 a new, more energy efficient internal ceiling was fitted and a new air-conditioning
system installed to the part of the area that houses the mechanical freezers. This has two significant outcomes,
firstly it will dramatically reduce our power bill and secondly, it will help ensure the longevity of the freezer
units. As we now have a total of 30 freezers, made up mostly of high performance ultra-low temperature units
that operate at minus 80°C, and 24 liquid nitrogen tanks this is also an important part of our risk management
strategy and business continuity planning that helps us maintain optimal physical operating conditions to
minimise the risk of equipment failure.
As previously mentioned, it is being able to leverage the quality system developed for the cord blood service
that has allowed us to spread the cost of establishing and maintaining other revenue sources in a cost effective
manner.
Warehousing and Distribution
The logistics for investigational drugs and the distribution of specialty biological material from the American
Type Culture Collection (ATCC) makes up the majority of the warehousing and distribution part of our
business.
The process of taking a drug from the initial discovery phase to full commercialisation is long, complex and
costly. There are a number of trends in successful drug development that are of benefit to the part of the
clinical supply chain in which Cryosite operates. Of these, one of the most important of is the adoption of the
outsourcing model for much of the development chain. This includes the warehousing and distribution of the
investigational drugs.
With drug development costs so high, any breakdown in the chain can have serious direct and indirect costs
and may ultimately delay the commercialisation of a potential blockbuster drug. The cost of this can be
counted in the tens of millions of dollars. Cryosite, in having established itself as a high quality and cost
effective distribution partner in this part of the supply chain is therefore considered to be a preferred local
partner for this important service.
6
Australia’s Family Cord Blood Bank
Directors’ Report continued
Cryosite's role is to work with the trial sponsors; most commonly pharmaceutical or biopharmaceutical
companies, or increasingly, an international depot will outsource supply of the Australian and New Zealand
trial sites to Cryosite. The trial service requirements are agreed and Cryosite is ready to receive the drug
shipment, transfer the drugs to the climate-controlled storage areas and establish and maintain an inventory of
all study drugs and ancillary materials. Cryosite will receive computerised request to recall drugs from storage
and ship them under the required conditions to the study investigators who are responsible for enrolling the
study patients and manage the study site, generally large teaching hospitals. Any unused medication is
returned to Cryosite who are responsible for ensuring that all medications a have been accounted for. At the
conclusion of the trial, any unused medication is usually destroyed by licensed contractors.
In order to ensure that Cryosite is able to provide the range of services to the required standard, Cryosite has
continued to work hard to ensure smooth service delivery. With the number of trials continuing to increase,
and with an increase in complexity of many of the trials the highly manual and customized nature of the work
resulted in the need to recruit additional staff. The increase in employee number to 35 was mainly to service
the clinical trial logistics requirements. Since the move from the Lane Cove facility to the South Granville site,
the number of trials being managed as almost doubled to well over 400.
One very important development during the year was the commencement of a new project to provide logistics
for a highly valuable commercial drug that required very specialised cold-chain management. We are pleased
to report that the project was successfully planned and implemented and has been smoothly integrated into the
routine operational systems.
The ATCC distribution service remained quite flat during the year, however, the agreement has recently been
extended to the end of 2014 under more favourable terms to Cryosite..
BUSINESS GROWTH AND OUTLOOK
Competitive Environment
Until the merger of two other cord blood companies in 2010, Cryosite was the market leader as regards both
of market share and innovation. Cryosite is now the second biggest service with an estimated 45% of the total
cord blood market. The size of the private cord blood market in Australia is unclear, however, industry
estimates of up to 1.5% of birth is generally accepted. With the total number of births in Australia around
300,000 per year, this means that the market is somewhere between 3,000 and 4,500.
In common with similar cord blood companies both locally and internationally, Cryosite is investigating
methods of expanding revenue from an expansion and extension of our current cord blood activities. In the
meantime, Cryosite is continuing to achieve consistent annual increases in the number of cord blood clients
and is pleased to report that this year we set another record for new clients. We are continuing to refine and
develop our marketing strategy to take advantage of Cryosite’s well established brand name with both medical
professionals and prospective customers to ensure that we continue to achieve our historical growth rates and
maintain or increase our market share.
Cryosite in partnership with the regenerative medicine company, Regeneus, has completed the development of
a procedure for storing a patient's regenerative stem cells harvested from their own adipose (fat) tissue. Now
when a patient has a HiQCell® procedure, a stem cell therapy treatment for osteoarthritis, additional cells can
be stored as a patient's own "biobank" for future injections. The partnership utilises Cryosite’s specialised
capabilities in cryopreservation and cellular therapies and offers patients improved medical outcomes, greater
convenience and cost effectiveness.
We do not anticipate any significant change in the biorepository management service, however, as previously
noted, the involvement in this activity fits very well into our integrated business model and has valuable spin-
off effects by enabling Cryosite to offer a complete range of biologistics oriented services to a diverse range of
clients.
7
Australia’s Family Cord Blood Bank
Directors’ Report continued
The pharmaceutical industry continues to change as it strives for greater innovation to bring new drugs to
market. The changes are driven by corporate takeovers, mergers and strategic alliances. The predictable
consequence of this activity is that fewer new trials are initiated. Whilst this will reduce the size of the market
in general, such a shift in the direction of drug development is very positive for Cryosite.
We are already experiencing a shift from managing traditional chemically-based investigational drugs to more
sophisticated biopharmaceutical ones. Biopharmaceutical are most commonly monoclonal-based drugs and
require more complex management than do more traditional types of drugs. This means carefully controlled
refrigerated or frozen storage, monitoring and shipping. As this is an area in which Cryosite has a world class
facility and considerable experience, we have been able to attract and maintain a valuable number of the
world’s leading biopharmaceutical development companies in our client base.
As we have gained some valuable experience with our first commercial drug distribution agreement, we are
considering options as to how we can take advantage of similar opportunities in the future.
SHARE OPTIONS
As at the date of this report, there were 520,000 (2012: 520,000) unissued ordinary shares under options. Refer
to the remuneration report for further details of the options outstanding. Option holders do not have any right,
by virtue of the option, to participate in any share issue of the company or any related body corporate.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the consolidated entity during the year.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
There were no significant events after the balance date that will have a material effect on the operations of the
consolidated entity.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Board is confident that subject to any unforeseen circumstances, the benefits of its common infrastructure
and operations systems to support the business units will allow it to increase revenue, improve margins and
overall financial performance of the Company during the next financial year.
REGULATORY ENVIRONMENT
The company provides a range of services that require compliance to a variety of regulatory and statutory
bodies, such as the Therapeutic Goods Administration (TGA), the National Association of Testing Authorities
(NATA), the Department of Agriculture, Fisheries and Forestry (DAFF) and the NSW Department of Health,
the Office of the Gene Technology Regulator (OGTR), as well as the quality system requirements of many of
its customers. The company has implemented a company-wide quality management system to ensure that we
meet or exceed the requirements of all these interests. Cryosite also holds accreditation for ISO 15189
(Medical laboratories) and ISO/IEC 17025 (testing and calibration laboratories) from 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 to. The company, to the best of its knowledge, is not subject to any specific
environmental regulations.
BUSINESS RISKS
There is a great deal of research activity being undertaken in the stem cell area, both embryonic and adult. It is
possible that research may uncover new therapies to supersede the current established uses of cord blood stem
cells thus affecting the number of parents who might consider private cord blood storage.
8
Australia’s Family Cord Blood Bank
Directors’ Report continued
Most of the services that Cryosite provide to generate income require some form of statutory licensing or
compliance authority. The failure by Cryosite to attain and maintain such licences and approvals would have a
significant negative effect on the company’s ability to continue to provide such services and to maintain its
viability. As referred to in other parts of this report, Cryosite is committed to obviating risks in this area by the
implementation and maintenance of a company-wide Quality Management System.
INSURANCE OF DIRECTORS AND OFFICERS
During the financial year, the Company has paid a premium in respect of a contract, insuring all the Directors
and Officers against liability, except wilful breach of duty, of a nature that is required to be disclosed under
section 300 (8) of the Corporations Act 2001. In accordance with commercial practice, further details of the
nature of the liabilities insured against and the amount of the premium have not been disclosed.
In addition to the above, the Directors and certain Officers of the Company have entered into a Deed of
Indemnity and Access confirming the Company’s obligation to maintain an adequate Director and Officer
Liability insurance policy and confirming the individual Directors’ and Officers’ right to access board papers
and other Company documents. In return, the individual Directors and Officers have agreed to allow the
Company to conduct the case for the defence should the event arise.
The Company has not otherwise, during or since the end of the financial year, indemnified or agreed to
indemnify an Officer or Auditor of the Company or of any related body corporate against a liability incurred as
such an Officer or Auditor.
REMUNERATION REPORT
This remuneration report outlines the director and executive remuneration arrangements of the Company and
the Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the
purposes of this report, key management personnel (KMP) of the Group are defined as those persons having
authority and responsibility for planning, directing and controlling the major activities of the Company and the
Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company,
and includes the five executives in the Parent and the Group receiving the highest remuneration.
This has been audited by Duncan Dovico Chartered Accountants and is included within the scope of the audit
report on pages 62 and 63.
Remuneration philosophy
The Company recognises the importance of structuring remuneration packages of its key management
personnel so as to attract and retain people with the qualifications, skills and experience to help the company
achieve the required objectives. However, the Company understands that whilst it is still in the development
phase of its growth, a prudent position must be observed in the total remuneration expense.
A fixed remuneration package is determined by the Chairman for the Managing Director. Any additional
compensation is determined by the Board as deemed appropriate.
Non-Executive Directors
Total remuneration paid to non-executive directors is determined by the Board from time to time for
presentation to and resolution by shareholders at the Annual General Meeting. The current maximum
aggregate remuneration paid to non-executive directors is $350,000 per year.
The directors are paid a set amount per year and apart from reimbursement of expenses incurred on the
company’s behalf, are not eligible for any additional payments.
Executive directors and other key management personnel are employed on rolling contracts.
9
Australia’s Family Cord Blood Bank
Directors’ Report continued
Any options that have vested or that will vest during the notice period will be forfeited. The company may
terminate the contract without notice if serious misconduct has occurred. Where termination with cause occurs,
the executive is only entitled to that portion of remuneration that is fixed, and only up to the date of
termination. On termination with cause, any options that have vested will be forfeited.
Due to the size of the Company, a Remuneration Committee has not been established. The Company does
compare remuneration paid to key management personnel with other similar companies to ensure consistency.
Key Management Personnel
Details of the nature and amount of each element of remuneration for key management personnel of the
company which includes those key management personnel receiving the highest compensation for the financial
year are as follows:-
Andrew Kroger
Christina Boyce
Gordon Milliken
Graeme Moore
Philip Alger
Chairman (Non-executive)
Director (Non-executive)
Managing Director
Executive Director
Chief Financial Officer
Due to the relatively small number of employees, apart from Gordon Milliken, Graeme Moore and Philip
Alger there are no other executives having authority and responsibility for planning, directing and controlling
the activities of the entity either directly or indirectly.
COMPENSATION FOR KEY MANAGEMENT PERSONNEL
Short term
benefits
Post employ-
ment
benefits
Other long
term benefits
Share-based
payments
Total
Year ended 30
June 2013
Non-executive
Directors
Andrew Kroger (i)
Christina Boyce
Sub-total: non-executive
directors
Executive directors
Gordon Milliken
Graeme Moore
Other key management
personnel
Philip Alger
Sub-total executive KMP
Total
Long
service
leave
Options
Salary &
Fees
$
75,000
5000
80,000
Other
cash
benefits
$
-
-
-
Super-
annuation
$
6,750
450
7,200
$
-
-
-
145,063
173,469
30,000
21,600
24,937
24,932
3,699
3,673
120,078
-
24,923
438,610
51,600
74,792
2,217
9,589
518,610
51,600
81,992
9,589
$
$
-
-
-
-
-
-
-
-
81,750
5,450
87,200
203,699
223,674
147,218
574,591
661,791
10
Australia’s Family Cord Blood Bank
Directors’ Report continued
COMPENSATION FOR KEY MANAGEMENT PERSONNEL CONTINUED
Short term
benefits
Post employ-
ment
benefits
Other long
term benefits
Share-based
payments
Total
Long
service
leave
Options
Salary &
Fees
$
45,192
31,250
76,442
Other
cash
benefits
$
-
-
-
Super-
annuation
$
4,067
2,813
6,880
$
-
-
-
152,006
179,514
36,000
27,600
49,918
49,237
2,508
6,139
121,395
-
49,930
1,996
452,915
63,600
149,085
10,643
529,357
63,600
155,965
10,643
$
$
-
-
-
-
-
-
-
-
49,259
34,063
83,322
240,432
262,490
173,321
676,243
759,565
Year ended 30
June 2012
Non-executive
Directors
Andrew Kroger (i)
Theodore Onisforou (i)
Sub-total: non-executive
directors
Executive directors
Gordon Milliken
Graeme Moore
Other key management
personnel
Philip Alger
Sub-total executive KMP
Total
(i) Where directors resigned or were appointed during the year payments shown above are for the period
served as a director.
OPTIONS GRANTED AS PART OF REMUNERATION FOR THE YEAR ENDED 30 JUNE 2013
There were no options granted during the year (2012: Nil).
OPTION HOLDINGS OF KEY MANAGEMENT PERSONNEL
Graeme Moore
No
Philip Alger
No.*
Total
No.
Balance held at 1 July 2012
300,000
220,000
520,000
Balance held at 30 June 2013
300,000
220,000
520,000
* Options issued under the Employee Share Options Scheme.
Graeme Moore
No
Philip Alger
No.*
Total
No.
Balance held at 1 July 2011
300,000
220,000
520,000
Balance held at 30 June 2012
300,000
220,000
520,000
* Options issued under the Employee Share Options Scheme.
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Australia’s Family Cord Blood Bank
Directors’ Report continued
OPTIONS VESTED OF KEY MANAGEMENT PERSONNEL
Graeme Moore
No. *
Philip
Alger
No. *
Total
No.
Balance vested at 1 July 2012
300,000
220,000
520,000
Balance vested at 30 June 2013
300,000
220,000
520,000
Exercisable
300,000
220,000
520,000
* Options issued under the Employee Share Options Scheme.
Graeme Moore
No. *
Philip
Alger
No. *
Total
No.
Balance vested at 1 July 2012
300,000
220,000
520,000
Balance vested at 30 June 2013
300,000
220,000
520,000
Exercisable
300,000
220,000
520,000
* Options issued under the Employee Share Options Scheme.
Terms and conditions of options issued under employee share scheme details
On 18 February 2002, Cryosite established an Employee Share Option Plan (“the Plan”). The Plan is designed
to assist in the retention and motivation of employees and directors of the Company.
The terms and conditions of the Plan are as follows:
Options may be granted under the Plan to an employee or director of the Company or any of its subsidiaries, or
to a person who renders services to the Company, or to any of its subsidiaries and is eligible to be a participant
in the Plan under the terms of the Income Tax Assessment Act 1936 and Income Tax Assessment Act 1997
and by any instrument issued by ASIC and applicable to the Company (“eligible participant”).
The Cryosite Board will determine the number of share options granted to each eligible participant.
The total number of share options granted under the Plan will be limited to 5% of the total number of issued
shares at the time the offer or grant of options is made. Options will be issued for no consideration.
The Board will determine the Option Exercise Price after considering the volume weighted average of the
prices at which shares were traded on ASX during the one month period before the date of the offer.
Options will expire at the end of eight years from the option grant date or if the participant ceases to be an
employee or director of, or render services to the Company or any of its Subsidiaries for any reason
whatsoever.
12
Australia’s Family Cord Blood Bank
Directors’ Report continued
SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL
Shares held in
Cryosite Limited
Andrew Kroger
Christina Boyce
Gordon Milliken
Graeme Moore
Philip Alger
Total
Shares held in
Cryosite Limited
Andrew Kroger
Gordon Milliken
Theodore
Onisforou
Graeme Moore
Philip Alger
Total
Balance
1 July 2012
Ord.
Balance on
appointment/resig
nation
Ord.
9,314,276
-
1,290,415
-
-
10,604,691
Balance
1 July 2011
Ord.
-
1,288,415
4,125,004
-
-
5,413,419
-
21,696
-
-
-
21,696
Balance on
appointment/
resignation
Ord.
1,980,610
-
(4,125,004)
-
-
(2,144,394)
On market
purchases
Balance
30 June 2013
Ord.
Ord.
1,392,667
38,941
-
-
-
10,706,943
60,637
1,290,415
-
-
1,431,608
12,057,995
On market
purchases
Ord.
7,333,666
2,000
Balance
30 June 2012
Ord.
9,314,276
1,290,415
-
-
-
-
-
-
7,335,666
10,604,691
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, 10 meetings of directors were held. Attendances were as follows:
Directors
Andrew Kroger
Gordon Milliken
Graeme Moore
Directors Meetings
Eligible to attend
Directors Meetings
Attended
10
10
10
10
10
10
13
Australia’s Family Cord Blood Bank
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 have been brought or intervened in on behalf of the company with leave of the court under
section 237 of the Corporations Act 2001.
AUDITOR’`s INDEPENDENCE DECLARATION AND NON-AUDIT SERVICES
The directors have received the auditor’s independence declaration which is included on Page 15 of this report.
No director of Cryosite is currently or was formerly a partner of Duncan Dovico Chartered Accountants.
Non-audit services were provided by the entity’s auditor, Duncan Dovico Chartered Accountants 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
Gordon Milliken
Managing Director
Date: 28 August 2013
14
Australia’s Family Cord Blood Bank
DUNCAN DOVICO DUNCAN DOVICO CHARTERED ACCOUNTANTS 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 Professional Standards Legislation 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 2013 there have been: (i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in 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. DUNCAN DOVICO CHARTERTED ACCOUNTANTS Rosemary Megale Partner Sydney, 28th August 2013. Corporate Governance Statement
Cryosite is committed to implementing the highest possible standards of corporate governance. In determining
what those high standards should involve, Cryosite has turned to the ASX Corporate Governance Council’s
Corporate Governance Principles and Recommendations (ASX Principles) and has a corporate governance
framework that reflects those recommendations within the structure of the Company.
The Board of Cryosite approved an updated series of policies and charters in line with the amendments to the
ASX Principles. The Company’s policies and charters together form the basis of the Company’s governance
framework. and were in place for the financial year ended 30 June 2013 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).
1. Lay solid foundations for management and oversight
The Company has established the functions reserved to the Board and those delegated to senior executives.
The Board of Directors of Cryosite have the primary responsibility for guiding and monitoring the business
and affairs of Cryosite, including compliance with the company’s corporate governance objectives and for
setting the strategic direction of the Company. The Board Charter confirms this responsibility and sets out the
roles and responsibilities of the Board. The Board Charter is available on the Company’s website.
In carrying out its governance role, the main task of the Board is to oversee the performance of Cryosite. The
Board is committed to Cryosite’s compliance with all of its contractual, statutory, ethical and any other legal
obligations, including the requirements of any regulatory body.
It is the role of senior management to manage Cryosite in accordance with the direction and delegations of the
Board and the responsibility of the Board to oversee the activities of management in carrying out these
delegated duties.
16
Australia’s Family Cord Blood Bank
Corporate Governance Statement continued
2. Structure the board to add value
The Board is comprised of four Directors, the Chairman Andrew Kroger, Non-Executive Director, Christina
Boyce, the Managing Director, Gordon Milliken and Executive Director, Graeme Moore. This Board structure
is not in accordance with recommended ASX principles but the Board believes that due to the current
development stage and size of the Company the interests of shareholders are currently best served by a small
closely involved Board.
Further details about the Directors, including their tenure, skills, experience and expertise relevant to the
position of director are set out in the Directors’ Report.
Due to the Board size and structure, the Company has not established Nomination, Remuneration or Audit
Committees. The Directors believe performance of these sub-committees duties are more effectively dealt with
by the Board at present.
The Board has considered and believes that there is currently the appropriate mix of skills, diversity and
experience on the Board. As set out in the Board Charter, in selecting new directors, the Board will ensure that
the candidate has the appropriate range of skills, experience, expertise and diversity that will best complement
Board effectiveness. In addition, any candidate must confirm that they have the necessary time to devote to
their Cryosite Board position.
No board performance review was undertaken in the last 12 months. There has been one additional board
member appointed during the financial year.
The Company’s director induction program includes the culture and values of the company, meeting
arrangements; and director interaction with each other, senior executives and other stakeholder.
The current directors possess key skills in the Company’s industry and have experience in the industry. The
director’s on-going education comprises of maintaining their knowledge in key developments and industry that
the company operates.
Individual Directors are entitled to obtain advice from independent external advisers in relation to any Board
matter, at the expense of the Company, with the consent of the Chairman.
3. Promote ethical and responsible decision-making
Code of Conduct
To ensure that Cryosite maintains the highest standards of integrity, honesty and fairness in its dealings with
all stakeholders, the Company has an established a formal Code of Conduct (Code). This Code acts as a guide
for compliance with legal and other obligations to stakeholders. These stakeholders include customers,
shareholders, employees, suppliers, business partners, the community and environment in which Cryosite
operates.
All Cryosite employees (including Directors, employees, consultants, contactors, advisors and all other
individuals that represent Cryosite) play an important role in establishing, maintaining and enhancing the
reputation of Cryosite by ensuring high standards of ethics and behaviour are observed. Employees are
required to comply with the Code, Cryosite policies and all applicable laws and report any genuine suspicions
of non-compliance. A copy of this Code is available on the Company’s website.
Diversity
Diversity includes but is not limited to gender, age, ethnicity and cultural background.
17
Australia’s Family Cord Blood Bank
Corporate Governance Statement continued
The Company has reflected its policy on diversity throughout the suite of documents, in particular in the
Company’s Code of Conduct and Board Charter, not in a separate diversity policy.
The company is aware of the benefits of diversity. It has benefited from all available talent, promotes
appointment of well qualified personnel, and has maximised achievement of corporate goals through diversity.
The company is committed to the transparency of board processes including the review and appointment of
directors.
The Board has not established measurable objectives for achieving gender diversity at present however the
Board is committed to considering the issue of diversity at least annually. At present Cryosite has 35
employees (including consultants to the Company). Of these, 17 are female. Of the 3 executive roles within
the Company none is currently carried out by a female. There is currently one female board member.
Securities Trading Policy
Cryosite has a policy applying to all Directors, officers and employees of Cryosite relating to the prohibition
against insider trading, and prescribes certain requirements for dealing in Cryosite’ securities. A copy of this
Policy is available on the Company’s website.
4. Safeguard integrity in financial reporting
The Company has not established an audit committee as recommended by the ASX Principles as the Board
believes that due to the small size of the Company this role is more effectively dealt with by the Board
directly.
The Board discusses directly with the auditors, each half year and full year financial aspects of the Company.
Information about the procedure for the selection and appointment of the external auditor, and for the rotation
of external audit engagement partners are set out on the Company’s website.
5. Make timely and balanced disclosure
The Company has established written policies and procedures designed to ensure compliance with ASX
Listing Rule disclosure requirements and to ensure accountability at a senior management level for that
compliance, including a Continuous Disclosure Policy and a Shareholder Communications Policy. A copy of
the policies, ASX announcements and other publications are available on the Company’s website.
6. Respect the rights of shareholders
As set out above the Company has a Continuous Disclosure Policy and a Shareholder Communications Policy
to promote effective communication with shareholders and encourage their participation at general meetings.
A copy of both policies is available on the Company’s website.
If considered necessary, the Company will arrange for advance notice of significant group briefings and make
them widely accessible on the Company’s website. The company has included its results announcements on its
website and through the ASX.
7. Recognise and manage risk
The Company has established a system of risk oversight and management and internal control. The basis of
this system is the Company’s Risk Management Policy which formalises and communicates Cryosite’s
approach to the management of risk. A copy of the Policy is available on the Company’s website.
18
Australia’s Family Cord Blood Bank
Corporate Governance Statement continued
The Board requires Management to design and implement the risk management and internal control system to
manage the Company’s material business risks and report to the Board regarding the management of those
risks.
The Board has received a statement in writing from the Managing Director attesting to the effectiveness of the
Company’s management of its material business risks.
The Board has received assurance from the Managing Director that the declaration provided in accordance
with section 295A of the Corporations Act is based on a sound system of risk management and internal control
and that the system is operating effectively in all material respects.
8. Remunerate fairly and responsibly
The Company has not established a remuneration committee as recommended by the ASX Principles. The
Board believes that due to the current development stage and size of the Company these matters are best
handled by the Board itself.
The Remuneration Report and further details about the remuneration policy of Cryosite are set out in the
Directors’ Report. The Remuneration Report clearly distinguishes between the structure of Non-Executive
Directors’ remuneration and that of executives.
The Company’s policy is to reward executives with a combination of fixed remuneration and equity
incentives, structured to drive improvements in shareholder value. Non-executive directors are only
remunerated by way of fees in the form of cash and their statutory superannuation contributions.
The Company’s policy regarding the prohibiting entering into transactions in associated products which limit
the economic risk of participating in unvested entitlements under any equity-based remuneration schemes is
set out in the Company’s Securities Trading Policy. A copy of the Policy is available on the Company’s
website.
19
Australia’s Family Cord Blood Bank
Directors’ Declaration
In accordance with a resolution of the directors of Cryosite Limited, I state that:
(1)
In the opinion of the directors:
(a)
the financial statements and notes of the consolidated entity are in accordance with the
Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the consolidated entity’s financial position as at 30 June
2013 and of its performance for the year ended on that date; and
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 2013.
On behalf of the Board
Gordon Milliken
Managing Director
Date: 28 August 2013
20
Australia’s Family Cord Blood Bank
Consolidated Statement of Profit and Loss and Other
Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2013
Notes
5
6(a)
Sale of goods and rendering of
services
Other revenue
Revenues
Expenses
Finance costs
Costs of providing services
Marketing expenses
Occupancy expenses
Administration expenses
Profit from continuing
operations before income tax
Income tax (expense)benefit
7
Profit from continuing
operations after income tax
Net Profit attributable to
members of the company
Other comprehensive income
Items that will not be reclassified
subsequently to profit or loss
Items that may be reclassified subsequently
to profit or loss
Other comprehensive income for the year,
net of tax
2013
$
8,497,803
266,656
8,764,459
(7,825)
(4,068,932)
(414,519)
(640,332)
(2,451,853)
1,180,998
68,963
2012
$
7,757,568
263,528
8,021,096
(10,215)
(3,908,814)
(349,576)
(589,309)
(2,140,703)
1,022,479
-
1,249,961
1,022,479
1,249,961
1,022,479
-
-
-
-
-
-
Total comprehensive income for the year
1,249,961
1,022,479
Earnings per share for profit from
continuing operations attributable to the
ordinary equity holders of the company
Basic earnings per share
Diluted earnings per share
8
8
Cents
2.68
2.65
Cents
2.19
2.17
The above consolidated statement of profit and loss and other comprehensive income should be read
in conjunction with the accompanying notes.
21
Australia’s Family Cord Blood Bank
Consolidated Statement of Financial Position
AS AT 30 JUNE 2013
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Total Current Assets
Non-current Assets
Trade and other receivables
Investments in subsidiaries
Deferred tax asset
Plant and equipment
Intangible assets
Total Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Unearned income
Provisions
Total Current Liabilities
Non-current Liabilities
Trade and other payables
Unearned income
Provisions
Total Non-current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Share option reserves
Accumulated losses
TOTAL EQUITY
Notes
10
12
13
14
15
16
7 (c)
17
18
19
20
22
19
21
22
2013
$
2012
$
5,777,097
1,638,738
66,087
378,495
4,524,750
1,157,122
52,965
258,183
7,860,417
5,993,020
857,294
-
851,933
1,792,583
-
998,084
-
782,970
1,996,250
-
3,501,810
3,777,304
11,362,227
9,770,324
1,235,286
368,071
464,138
1,048,638
335,960
372,139
2,067,495
1,756,737
171,450
2,619,136
239,918
-
2,281,615
251,308
3,030,504
2,532,923
5,097,999
4,289,660
6,264,228
5,480,664
23
24
23(a)
8,138,766
239,118
(2,113,656)
8,138,766
239,118
(2,897,220)
6,264,228
5,480,664
The above consolidated statement of financial position should be read in conjunction with the
accompanying notes.
22
Australia’s Family Cord Blood Bank
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2013
Attributable to equity holders of the company
Contributed
capital
$
Accumulate
d losses
$
Share
options
reserves
$
Total
equity
$
CONSOLIDATED
At 1 July 2011
8,138,766
(3,686,501)
239,118
4,691,383
Total comprehensive income for the year
Transactions with owners in their capacity
as owners
Equity dividends declared
-
-
1,022,479
(233,198)
-
-
1,022,479
(233,198)
At 30 June 2012
8,138,766
(2,897,220)
239,118
5,480,664
Total comprehensive income for the year
Transactions with owners in their capacity
as owners
Equity dividends declared and paid
-
-
1,249,961
(466,397)
-
-
1,249,961
(466,397)
At 30 June 2013
8,138,766
(2,113,656)
239,118
6,264,228
The above consolidated statement of changes in equity should be read in conjunction with the
accompanying notes.
23
Australia’s Family Cord Blood Bank
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2013
Notes
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers inclusive of GST
Payments to suppliers and employees
Interest received
Interest paid
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment
Proceeds on disposal of plant and equipment
Interest received – term deposits
11
17
2013
$
2012
$
9,074,283
(7,226,741)
99,954
(7,825)
8,707,596
(6,928,132)
110,963
(10,215)
1,939,671
1,880,212
(379,160)
-
167,561
(181,664)
-
137,781
Net cash flows (used in) investing activities
(211,599)
(43,883)
CASH FLOWS FROM FINANCING ACTIVITIES
Equity dividend paid
(475,725)
(222,522)
Net cash flows (used in) financing activities
(475,725)
(222,522)
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
1,252,347
4,524,750
1,613,807
2,910,943
Cash and cash equivalents at end of year
10
5,777,097
4,524,750
The above consolidated statement of cash flows should be read in conjunction with the accompanying
notes
24
Australia’s Family Cord Blood Bank
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2013
1
CORPORATE INFORMATION
The financial report of Cryosite Limited for the year ended 30 June 2013 was authorised for issue in
accordance with a resolution of the directors on 21 August 2013.
Cryosite Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on
the Australian Stock Exchange.
The nature of the operations and principal activities of the Group are described in the Directors’ Report.
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The financial report is a general purpose financial report, which has been prepared in accordance with the
requirements of the Corporations Act 2001, and Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards Board.
The financial report has been prepared on a historical cost basis, except when otherwise stated.
(a) Compliance with IFRS
The consolidated financial statement of Cryosite Limited group complies with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
(b) Basis of consolidation
The consolidated financial statements comprise the financial statements of Cryosite Limited and its subsidiary
as at 30 June each year (‘the Group’).
Subsidiaries are all those entities over which the group has the power to govern the financial and operating
policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing whether a group controls another entity.
The financial statements of the subsidiary are prepared for the same reporting year as the parent company,
using consistent accounting policies.
Adjustments are made to bring into line any dissimilar accounting policies that may exist.
All inter-company balances and transactions have been eliminated in full.
Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be
consolidated from the date on which control is transferred out of the Group.
Investments in subsidiaries held by Cryosite Limited are accounted for at cost in the separate financial
statements of the parent entity, less any impairment charges.
25
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(c) Foreign currency translation
Both the functional and presentation currency of Cryosite Limited and its Australian subsidiary is Australian
dollars (A$).
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated
at the rate of exchange ruling at the balance sheet date.
(d) Plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses.
Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the
parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying
amount of the plant & equipment as a replacement only if it is eligible for capitalisation. All other repairs and
maintenance are recognised in the statement of comprehensive income as incurred.
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:
Major depreciation rates are:
- Leasehold improvements:
Plant and equipment:
- Fixtures and fittings
- Information technology
- Warehouse equipment
- Office furniture & equipment
Plant & equipment under lease
2013
Lease term
5 – 10 years
2 - 2.5years
4 - 10 years
2.5 – 8 years
5 years
2012
Lease term
5 – 10 years
2 - 2.5years
4 - 10 years
2.5 – 8 years
5 years
The assets’ residual values, useful lives and amortisation methods are reviewed and adjusted if appropriate.
An item of plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal.
(e) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the Board.
(f) Intangible assets
Research and development costs
Research and development costs incurred relate to Cryobyte® an inventory and environmental monitoring
system.
26
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(g) 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.
(h) Trade and other receivables
Trade receivables (current), which generally have 30 day terms, are recognised initially at fair value less an
allowance for impairment.
Collectability of trade receivables is reviewed on an ongoing basis and individual debts that are known to be
uncollectible are written off when identified. An impairment provision is recognised when there is objective
evidence that the group may not be able to collect the receivable.
Trade receivables (non-current), which generally have terms in excess of 12 months, are carried at their net
present value. The expected net cash flows have been discounted to their present value using a market
determined risk adjusted discount rate of 13.9% (2012: 17.5%).
(i) 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.
(j) 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.
(k) Employee leave benefits
Wages, salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled
within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to
the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled.
Expenses for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates
paid or payable. Unused sick leave on termination of employment is forfeited.
27
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Long service leave
The liability for long service leave is recognised and measured as the present value of expected future
payments to be made in respect of services provided by employees up to the reporting date using the projected
unit credit method. Consideration is given to the expected future wage and salary levels, experience of
employee departures, and periods of service. Expected future payments are discounted using market yields at
the reporting date on national government bonds with terms to maturity and currencies that match, as closely
as possible, the estimated future cash outflows.
(l) 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.
(m) 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.
28
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(m) Share-based payment transactions (continued)
Where the terms of an equity-settled award are modified, as a minimum, an expense is recognised as if the
terms had not been modified. In addition, an expense is recognised for any increase in the value of the
transaction as a result of the modification, as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any
expense not yet recognised for the award is recognised immediately. However, if a new award is substituted
for the cancelled award, and designated as a replacement award on the date that it was granted, the cancelled
and new award are treated as if they were a modification of the original award, as described in the previous
paragraph.
(n) Leases
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of
the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower,
at the present value of the minimum lease payments.
Lease payments are apportioned between the finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged
directly against income.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease
term.
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as
operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount
of the leased asset and recognised over the lease term on the same bases as the lease income.
Operating lease payments are recognised as an expense in the statement of comprehensive income on a
straight-line basis over the lease term. Operating lease incentives are recognised as a liability when received
and subsequently reduced by allocating lease payments between rental expense and reduction of the liability.
(o) Revenue
Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent
that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured.
The following specific recognition criteria must also be met before revenue is recognised:
- Revenue from the archival storage of biological samples is recognised over the period that storage occurs.
- Revenue from the rendering of non-storage services, such as collection or distribution of biological samples,
is recognised upon the delivery of the service to the customers.
- Revenue from cord blood services is recognised in the accounting period in which the services are rendered.
Where the Group has a long term contract with its customers to provide cord blood services, a receivable is
recognised at its net present value with a corresponding amount recognised as unearned income in the
statement of financial position (Refer Note 20 and 21).
- Interest revenue is recognised as interest accrues using the effective interest method. This is a method of
calculating the amortised cost of a financial asset and allocating the interest income over the relevant period
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.
29
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(o) Revenue (continued)
- Dividends: revenue is recognised when the Company’s right to receive the payment is established.
(p) Income tax and other taxes
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities based on the current period’s taxable income. The tax rates
and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance
date.
Deferred income tax is provided on all temporary differences at the balance date between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
Except where the deferred income tax liability arises from the initial recognition of an asset or liability in
a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
In respect of taxable temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, except where the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused
tax assets and unused tax losses, to the extent that it is probable that the taxable profit will be available against
which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses
can be utilised:
Except where the deferred income tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable profit or loss; or
In respect of deductible temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the
temporary differences will reverse in the foreseeable future and taxable profit will be available against which
the temporary differences can be utilised. The carrying amount of deferred income tax assets is reviewed at
each balance date and reduced to the extent that it is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent
that it has become probable that future tax profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance date.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same
taxable entity and the same taxation authority.
30
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(p) Income tax and other taxes continued
Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement of
comprehensive income.
Revenues, expenses and assets are recognised net of the amount of GST except:
where the GST incurred on a purchase of goods and services is not recoverable from the taxation
authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of
the expense item as applicable; and
receivables and payables are stated with the amount of GST included the net amount of GST recoverable
from, or payable to, the taxation authority is included as part of receivables or payables in the statement of
financial position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash
flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation
authority, are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
taxation authority.
(q) Contributed equity
Contributed capital bears no special terms or conditions affecting income or capital entitlements of the
shareholders. Ordinary share capital is recognised at the fair value of the consideration received by the
company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a
reduction of the share proceeds received.
(r) Share options reserve
The share options reserve captures the equity component of the company’s equity settled transactions of the
share based payments schemes.
(s) Impairment of assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs
to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash inflows which are largely independent of the cash inflows from
other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered
an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
(t) 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.
31
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(t) Earnings per share continued
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.
(u) New Accounting Standards and Interpretations
The accounting policies adopted are consistent with those of the previous financial year except the following
which the Group adopted from 1 July 2012:
Amendments to AASB 101‘Presentation of Financial Statements’
The amendment (part of AASB 2011-9 ‘Amendments to Australian Accounting Standards - Presentation of
Items of Other Comprehensive Income’ introduce new terminology for the statement of comprehensive
income and income statement. Under the amendments to AASB 101, the statement of comprehensive income
is renamed as a statement of profit or loss and other comprehensive income and the income statement is
renamed as a statement of profit or loss. Further, the amendments to AASB 101 require items of other
comprehensive income to be grouped into two categories in the other comprehensive income section: (a) items
that will not be reclassified subsequently to profit or loss and (b) items that may be reclassified subsequently to
profit or loss when specific conditions are met. The amendments have been applied retrospectively, and hence
the presentation of items of other comprehensive income has been modified to reflect the changes. Other than
the above mentioned presentation changes, the application of the amendments to AASB 101 does not result in
any impact on profit or loss, other comprehensive income and total comprehensive income.
There are no other new and revised Standards and Interpretations adopted in these financial statements
affecting the reporting results or financial position.
(v) New accounting standards and interpretations but not yet effective
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
effective have not been adopted by the entity for the annual reporting period ended 30 June 2013. The new
standards, interpretations and amendments are not expected to have a significant impact on the financial
statements.
AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from
AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9
(December 2010) (effective for annual reporting periods beginning on or after 1 January 2015). AASB 9
Financial Instruments addresses the classification, measurement and de-recognition of financial assets and
financial liabilities. The standard is expected to be initially applied in the financial year ending 30 June 2016.
AASB 10 ‘Consolidated Financial Statements’ and AASB 2011-7 ‘Amendments to Australian Accounting
Standards arising from the consolidation and Joint Arrangements standards’ (effective for annual reporting
periods beginning on or after 1 January 2013). Under AASB 10, there is only one basis for consolidation. That
is control. In addition, AASB 10 includes a new definition of control that contains three elements: (a) power
32
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(v) New accounting standards and interpretations but not yet effective continued
over an investee, (b) exposure, or rights, to variable returns from its involvement with the investee, and (c) the
ability to use its power over the investee to affect the amount of the investor's returns. The standard is
expected to be initially applied in the financial year ending 30 June 2014.
AASB 12 Disclosure of Interests in Other Entities (effective for annual reporting periods beginning on or after
1 January 2013). AASB 12 is a disclosure standard and is applicable to entities that have interests in
subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure
requirements in AASB 12 are more extensive than those in the current standards. The standard is expected to
be initially applied in the financial year ending 30 June 2014.
AASB 13 Fair Value Measurement (effective from 1 January 2013) establishes a single source of guidance for
determining the fair value of assets and liabilities when fair value is required or permitted. Application may
result in different fair values being determined for the relevant assets. AASB 13 also expends the disclosure
requirements for all assets or liabilities carried at fair value including assumptions made and the qualitative
impact of those assumptions on the fair value determined. The standard is expected to be initially applied in
the financial year ending 30 June 2014.
AASB 119 Employee Benefits (effective from 1 January 2013). The revised standard changed the definition of
short-term employee benefits. The distinction between short-term and other long-term employee benefits is
now based on whether the benefits are expected to be settled wholly within 12 months after the reporting date.
The standard is expected to be initially applied in the financial year ending 30 June 2014.
AASB 2011-4 Amendments to Australian Accounting Standards to remove Individual Key Management
Personnel Disclosure Requirement: These amendments are applicable to annual reporting periods beginning on
or after 1 July 2013 with early adoption not permitted. They amend AASB 124 ‘Related Party Disclosures’ by
removing disclosure requirements for individual key management personnel. As the aggregate disclosures are
still required by AASB 124, it is expected that the amendments will not have a material impact on the
consolidated entity.
3
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually evaluates its
judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses.
Management bases its judgements and estimates on historical experience and on other various factors it
believes to be reasonable under the circumstances, the result of which form the basis of the carrying values of
assets and liabilities that are not readily apparent from the source. Actual results may differ from these
estimates under different assumptions and conditions.
Management has identified the following critical accounting policies for which significant judgements,
estimates and assumptions are made. Actual results may differ from these estimates under different
assumptions and conditions and may materially affect financial results or the financial position reported in
future periods.
Further details of the nature of these assumptions and conditions may be found in the relevant notes to the
financial statements.
33
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
3
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
CONTINUED
(i) Significant accounting judgements
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions
of future events. The key estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period is;
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences as management considers that it is
probable that future profits will be available to utilise those temporary differences.
Impairment of non-financial assets
The group assesses impairment of all assets at each reporting date by evaluating conditions specific to the
Group and to the particular asset that may lead to impairment. If an impairment trigger exists the recoverable
amount of the asset is determined.
Capitalised development costs
Development costs are only capitalised by the Group when it can be demonstrated that the technical feasibility
of completing the intangible asset is valid so that the asset will be available for sale or use.
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.
In the current financial year, the Board re assessed the discount rate applied to the calculation of the present
value of the long term contracts. This re assessment resulted in a decrease of the discount rate on prior year of
4 percentage points to a market determined risk adjusted discount rate of 13.9% (2012: 17.5%). This change
in discount rate was determined after a detailed assessment of historical default risk, costs of capital and the
risk free rate. The change in this discount rate results in a change in accounting estimates in accordance with
AASB 108.
The reduction in the discount rate results in an alteration of the allocation of future revenue between cord
blood and interest. The change will accelerate the recognition of cord blood revenue over the term of the
contract.
As this result in a prospective change to the amount of revenue recognised, the impacts of the accelerated cord
blood revenue will be apportioned in revenue over the remaining average contract life. In relation to the 2013
financial year, an amount of $6,264 was taken to the profit and loss.
34
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
3
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
CONTINUED
Taxation
The group’s accounting policy for taxation requires management’s judgement as to the types of arrangements
considered to be a tax on income in contrast to an operating cost. Judgement is also required in assessing
whether deferred tax assets and certain deferred tax liabilities are recognised in the statement of financial
position. Deferred tax assets, including those arising from unrecouped tax losses, capital losses and temporary
differences, are recognised only where it is considered more likely than not that they will be recovered, which
is dependent on the generation of sufficient future taxable profits.
Assumptions about the generation of future taxable profits and repatriation of retained earnings depend on
management’s estimates of future cash flows. Judgements are also required about the application of income
tax legislation. These judgements and assumptions are subject to risk and uncertainty, hence there is a
possibility that changes in circumstances will alter expectations, which may impact on the amount of deferred
tax liabilities recognised on the statement of financial position and the amount of other tax losses and
temporary differences not yet recognised. In such circumstances, some or all of the carrying amounts of
recognised deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or
charge to the statement of comprehensive income.
Share based payment transactions
The group measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined using a binomial model.
The accounting estimates and assumptions relating to equity-settled share based payments would have no
impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact
on expenses and equity.
Estimated useful lives of assets
The estimation of the useful lives of assets 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.
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.
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.
35
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
4
SEGMENT INFORMATION
Identification of Reportable Segments
The consolidated entity is organised into two operating segments; Biological Services and 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.
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.
Operating Segment
30 June 2013 – Consolidated
Total segment revenue
Segment profit before ITDA
30 June 2012 – Consolidated
Biological
Services
$
Warehousing &
Distribution
$
Total
$
4,104,718
390,072
4,659,741
1,114,922
8,764,459
1,504,994
Total segment revenue
Segment profit before ITDA
3,996,608
357,463
4,024,488
974,337
8,021,096
1,331,800
Total Segment assets
30 June 2013
30 June 2012
6,510,401
5,526,736
4,782,863
4,243,588
11,293,264
9,770,324
A reconciliation of operating EBITDA is provided as follows:
Operating EBITDA
Interest revenue
Depreciation and amortisation
Finance costs
Profit before tax
Consolidated
30 June 2013
$
30 June 2012
$
1,504,994
266,656
(582,827)
(7,825)
1,331,803
263,528
(562,637)
(10,215)
1,180,998
1,022,479
An entity shall report a measure of liabilities for each reportable segment if such an amount is regularly
provided to the chief operating decision maker.
36
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
5
REVENUE
Revenue
Sale of goods and rendering of
services
Other Revenue
Interest income
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
Consolidated
2013
$
2012
$
8,497,803
7,757,568
266,656
8,764,459
263,528
8,021,096
7,825
10,215
458,727
488,018
2,371,805
239,865
2,076,343
307,528
2,611,670
2,383,871
(d) Depreciation and amortisation
Depreciation – plant & equipment
17
582,827
562,637
37
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
7
INCOME TAX
(a) Income tax expense
The major components of income tax are:
Statement of comprehensive income
Current income expense
(Applied) to carry forward tax losses
Recognition of income tax losses
previously unrecognised
Income tax (expense) benefit
reported in the Statement of
comprehensive income
Consolidated
2013
$
2012
$
361,252
(361,252)
68,963
68,963
301,900
(301,900)
-
-
(b) Numerical reconciliation between aggregate tax benefit(expense) recognised in the statement of
comprehensive income and tax benefit(expense) calculated per the statutory income tax rate
A reconciliation between tax benefit(expense) and the product of accounting profit before income tax
multiplied by the Group’s applicable income tax rate follows:
Accounting profit before tax from
continuing operations
At the statutory income tax rate of
30% (2012: 30%)
Share-based payments (equity settled)
Other items (net)
Recognition of previously unrecorded
losses against current year taxable
income
Recognition of income tax losses
previously unrecognised
Income tax (expense)benefit
1,237,373
1,022,479
(371,212)
(306,744)
-
9,960
-
4,844
361,252
301,900
68,963
68,963
-
-
38
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
7 INCOME TAX continued
(c) Recognised deferred tax assets
and liabilities
Deferred income tax at 30 June relates
to the following:
Deferred income tax assets
Post-employment benefits
Provision for tax and audit fees
Provision for doubtful debts
Impairment and depreciation of plant
& equipment for book purposes
Impairment amortisation of intangibles
for book purposes
Amortisation of Section 40-880
uniform capital allowances
Losses available for offset against
future taxable income
Deferred income tax liabilities
Consumables
Net deferred tax asset
Comprised of :
Deferred tax asset
Deferred tax liability
Consolidated
2013
$
2012
$
149,315
14,124
25,986
31,173
24,452
14,777
122,334
14,094
35,586
19,633
73,355
25,597
611,932
508,261
(19,826)
(15,890)
851,933
782,970
851,933
-
851,933
782,970
-
782,970
(d) Tax (expense) benefit related to items of other comprehensive income.
There were no items of comprehensive income during the year giving rise to any income expense (benefit).
(d) Tax losses
The Group has tax losses arising in Australia of $2,039,774 (2012: $3,089,814) that are available for offset
against future taxable profits of the company. The deferred income tax asset of $611,932 (2012: $926,944)
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.
39
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
7
INCOME TAX continued
Tax consolidation
Effective from 1 July 2002, Cryosite Limited and its 100% owned subsidiary formed a tax consolidated group.
On formation of the tax consolidated group, the entities in the tax consolidated group agreed to enter into a tax
sharing deed which will, in the opinion of the directors, limit the joint and several liability of the 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.
Consolidated
2013
$
2012
$
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)
2.68 cents
2.65 cents
2.19 cents
2.17 cents
Basic EPS disclosure
Earnings used in EPS calculation
Net profit attributable to ordinary equity holders of the parent
1,249,961
1,249,961
1,022,479
1,022,479
No of shares.
No of shares.
Weighted average number of ordinary shares for basic earnings per share
46,639,563
46,639,563
Diluted EPS disclosure
Earnings used in diluted EPS calculation
Net profit attributable to ordinary equity holders of the parent
1,249,961
1,249,961
1,022,479
1,022,479
40
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
Consolidated
2013
$
2012
$
8
EARNINGS PER SHARE CONTINUED
Diluted EPS disclosure continued
No of shares.
No of shares.
Weighted average number of ordinary shares for basic earnings per share
46,639,563
46,639,563
Shares deemed to be used for no consideration – options
520,000
520,000
Weighted average number of ordinary shares used in the calculation of
diluted EPS
47,159,563
47,159,563
There have been no other transactions involving ordinary shares or potential ordinary shares since the reporting
date and before completion of these financial statements.
9
DIVIDENDS PAID OR PROPOSED ON ORDINARY SHARES
Declared and paid during the year:
Dividends on ordinary shares
Final unfranked dividend for 2012
0.5 cents per share
Interim unfranked dividend for 2013:
0.5 cents per share
Total dividends paid
No dividends have been declared or recommended at the date of this report.
10
CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short-term deposits
233,199
-
233,198
233,198
466,397
233,198
199,913
5,577,184
121,074
4,403,676
5,777,097
4,524,750
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 $5,777,097 (2012:
$4,524,750).
41
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
10
CASH AND CASH EQUIVALENTS CONTINUED
Reconciliation of cash
For purposes of the Statement of Cash Flow, cash and cash equivalents as at 30 June 2013 and the prior year
are as shown above.
11
STATEMENT OF CASH FLOW RECONCILIATION
Reconciliation of the net profit after tax to the net cash flows from operations
Net profit
1,249,961
1,022,479
Consolidated
2013
$
2012
$
Adjustments for non-cash items
Depreciation and amortisation of non-current assets
Increase in employee benefits – LSL
Changes in assets and liabilities
(Increase) decrease in trade and
other receivables
(Increase) in inventory
(Increase) in other assets
(Increase) in deferred tax asset
Increase(decrease) in trade and
other creditors
Increase in unearned income
(Decrease) in allowance for
impairment loss on trade
receivables
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
(a) Allowance for impairment loss
582,827
17,922
562,637
23,029
(309,686)
(13,122)
(120,312)
(68,963)
191,397
369,632
353,949
(24,981)
(235,734)
-
(76,946)
358,279
(32,000)
(146,380)
72,015
43,880
1,939,671
1,880,212
1,538,067
(86,619)
1,451,448
187,290
1,119,386
(118,619)
1,000,767
156,355
1,638,738
1,157,122
Trade receivables are non-interest bearing. Term payment plans are offered to customers under cord blood
collection contracts. Customers have an option of payment in full, over 3 months, or annually. A provision for
impairment loss is recognised when there is objective evidence that an individual trade receivable is impaired.
During the financial year the allowance was reduced by $32,000 (2012: $146,380) to cover bad debts written
off during year. When there is an impairment loss, it has been included in the administration expense item. No
individual debtor amount within the impairment allowance at year end is material
42
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
CURRENT ASSETS - TRADE AND OTHER
12
RECEIVABLES CONTINUED
Movements in the provision for impairment loss were as follows:
At the beginning of the year
Reduction in impairment loss during
the year
At the end of the year
(b) Analysis of trade receivables
Consolidated
2013
$
2012
$
118,619
264,999
(32,000)
86,619
(146,380)
118,619
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
PDNI*
$
+91
Days
PDNI*
$
+91
Days
CI**
$
1,538,067
857,294
245,670
857,294
598,318
-
334,114
-
124,531
-
169,176
-
66,258
-
2,395,361 1,102,964
598,318
334,114
124,531
169,176
66,258
1,119,386
998,084
100,854
998,084
399,760
-
206,658
-
77,587
-
261,932
-
72,595
-
2,117,470 1,098,938
399,760
206,658
77,587
261,932
72,595
2013
Current
Non-Current
Total
Consolidated
2012
Current
Non-Current
Total
Consolidated
* Past due not impaired (“PDNI”) ** Past due considered impaired
Receivables past due but not considered impaired have been reviewed and it is believed that payment will be
received in full.
Other balances within trade and other receivables do not contain impaired assets and are not past due. It is
expected that these other balances will be received when due.
(c) Related party receivables
Related party receivables are interest free and not considered past due or impaired.
(d) Fair value and credit risk
Due to the nature of these receivables, their carrying value is assumed to approximate their fair value. The
maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security, nor is it the
Group’s policy to transfer (on-sell) receivables to special purpose entities.
43
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
13
CURRENT ASSETS – INVENTORIES
Consumables at cost
Total inventories at cost
14
CURRENT ASSETS - PREPAYMENTS
Consolidated
2013
$
2012
$
66,087
52,965
66,087
52,965
Prepayments
378,495
258,183
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
857,294
998,084
857,294
998,084
857,294
998,084
The maximum exposure to credit risk at the time of reporting is the carrying value of the receivables.
16
NON-CURRENT ASSETS - INVESTMENTS IN SUBSIDIARIES
Investments at cost
Investment in controlled entity
Equity interest held by the
consolidated entity
Investment
-
-
Name – Cryosite Distribution Pty Limited
Country of incorporation – Australia
2013
%
100
2012
%
2013
$
2012
$
100
20
20
44
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
17
NON-CURRENT ASSETS - PLANT AND EQUIPMENT
(a) Reconciliation of carrying amounts of plant and equipment at the
beginning and end of the year
Leasehold Improvements
At the beginning of the year net of accumulated depreciation and impairment
Depreciation expense
At the end of the year net of accumulated depreciation and impairment
At cost
Accumulated depreciation
Net carrying amount
Fixtures and fittings
At the beginning of the year net of accumulated depreciation and impairment
Depreciation expense
At the end of the year net of accumulated depreciation and impairment
At cost
Accumulated depreciation
Net carrying amount
Information technology
At the beginning of the year net of accumulated depreciation and impairment
Additions at cost
Depreciation expense
At the end of the year net of accumulated depreciation and impairment
At cost
Accumulated depreciation
Net carrying amount
Warehouse equipment
At the beginning of the year net of accumulated depreciation and impairment
Additions at cost
Depreciation expense
At the end of the year net of accumulated depreciation and impairment
Consolidated
2013
$
2012
$
128,124
(38,438)
89,686
205,000
(115,314)
89,686
20,103
(7,953)
12,150
72,521
(60,371)
12,150
123,750
28,503
(80,705)
71,548
471,579
(400,031)
71,548
1,721,204
350,657
(453,961)
1, 617,900
166,562
(38,438)
128,124
205,000
(76,876)
128,124
28,056
(7,953)
20,103
72,521
(52,418)
20,103
142,314
64,076
(82,640)
123,750
443,076
(319,326)
123,750
2,033,549
117,591
(429,936)
1,721,204
At cost
Accumulated depreciation
Net carrying amount
3,778,004
(2,160,104)
1,617,900
3,427,347
(1,706,143)
1,721,204
45
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
17
continued
NON-CURRENT ASSETS - PLANT AND EQUIPMENT
Office furniture & equipment
At the beginning of the year net of accumulated depreciation and impairment
Depreciation expense
At the end of the year net of accumulated depreciation and impairment
At cost
Accumulated depreciation
Net carrying amount
Consolidated
2013
$
2012
$
3,069
(1,770)
1,299
33,517
(32,218)
1,299
6,739
(3,670)
3,069
33,517
(30,448)
3,069
Total plant and equipment net carrying amount
1,792,583
1,996,250
18
NON-CURRENT ASSETS - INTANGIBLE ASSETS
(a) Reconciliation of carrying amounts at the beginning and the end of the year
Software development
At cost
Accumulated amortisation
Impairment amortisation
Net carrying amount
19
TRADE AND OTHER PAYABLES
CURRENT LIABILTIES
Trade payables
Other payables
Total current payables
NON-CURRENT LIABILTIES
Client deposits
Total non-current payables
1,020,533
(713,003)
(307,530)
1,020,533
(713,003)
(307,530)
-
-
721,542
513,744
436,904
611,734
1,235,286
1,048,638
171,450
171,450
-
-
46
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
19
TRADE AND OTHER PAYABLES continued
Fair value
Trade payables are non-interest bearing and are normally settled on 30 to 90 day terms. Therefore their
carrying value is assumed to be their fair value.
Other payables are non-interest bearing and are on ranging from 30 days to 12 months terms. Their carrying
value is assumed to be fair value.
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
$
721,542
314,508
326,997
77,704
2,333
-
436,904
67,113
255,390
85,980
17,876
10,545
2013
Consolidated
2012
Consolidated
Other balances within trade and other payables are not past due. It is expected that these other balances will be
paid.
Consolidated
2013
$
2012
$
20
CURRENT LIABILITIES - UNEARNED INCOME
Unearned service revenue
368,071
335,960
Represents cord blood revenues received in advance for services to be rendered under long-term storage
contracts.
21
NON-CURRENT LIABILITIES - UNEARNED INCOME
Unearned service revenue
2,619,136
2,281,615
Represents cord blood revenues received in advance for services to be rendered under long-term storage
contracts.
47
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
22
CURRENT LIABILITIES - PROVISIONS
Annual leave
Long service leave
Dividends payable
22
NON – CURRENT LIABILITIES - PROVISIONS
Long service leave
Lease make good
(a) Movements in provisions
Annual leave
Balance at beginning of the year
Arising during the year
Long service leave
Balance at beginning of the year
Arising during the year
Consolidated
2013
$
2012
$
365,691
97,108
1,339
293,676
67,796
10,667
464,138
372,139
34,918
205,000
46,308
205,000
239,918
251,308
293,676
72,015
249,796
43,880
365,691
293,676
114,104
17,922
91,075
23,029
132,026
114,104
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
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
10,667
466,397
-
233,198
(475,725)
(222,531)
1,339
10,667
205,000
205,000
-
205,000
205,000
Nature and timing of lease make-good provision
In accordance with the lease agreement with Allsup Pty Limited, the Group must restore the leased premises in
Granville to its original condition at the end of the lease in 2015 in the absence of an extension of the lease
period.
48
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
22
NON – CURRENT LIABILITIES - PROVISIONS
Nature and timing of lease make-good provision continued
The provision of $205,000 was raised in respect of the Group’s obligation to restore the leased premises is
included in the carrying amount of plant and equipment. Because of the long-term nature of the liability, the
greatest uncertainty in estimating the provision is the actual cost that may ultimately be incurred.
For the relevant accounting policy and the significant estimations and assumptions applied in the measurement
of this provision refer to Note 3.
23
CONTRIBUTED EQUITY
Ordinary shares
Movement in ordinary shares on issue
Consolidated
2013
$
2012
$
8,138,766
8,138,766
2013
Shares
No.
2012
Shares
No.
$
$
Beginning of the financial year
46,639,563
8,138,766
46,639,563
8,138,766
End of the financial year
46,639,563
8,138,766
46,639,563
8,138,766
Terms and condition of contributed equity
Ordinary shares
Ordinary shares carry the right to receive dividends and entitle their holder to one vote, either in person or by
proxy, at a meeting of the company.
(a) Movements in accumulated losses
Balance at the beginning of the year
Net profit for the year
Equity dividend 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
2013
$
2012
$
(2,897,220)
1,237,373
(466,397)
(2,126,244)
(3,686,501)
1,022,479
(233,198)
(2,897,220)
239,118
239,118
239,118
239,118
239,118
239,118
49
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
24
RESERVES continued
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 2007, the company entered into an 8 year lease over a commercial property at South Granville
in Sydney.
Future minimum rentals payable under commercial property leases as at 30 June 2013 are as follows:
Within one year
After one year but not more than five years
Consolidated
2013
$
2012
$
331,261
464,284
795,545
318,529
795,545
1,114,074
Commercial Property Security deposits
The security deposit for the lease at Granville is covered by a bank guarantee for $181,790 issued by the
Commonwealth Bank of Australia. No collateral is held as security.
Plant and equipment
The Group currently has a number of operating leases on items of plant and equipment used in day to day
operations of the business.
Leases have an average life of 5 years with renewal terms included in the contracts. Renewals are at the option
of the specific entity that holds the lease.
There are no restrictions placed upon the lessee by entering into these leases.
Future minimum rentals payable under non-cancellable operating leases as at 30 June 2013 are as follows:
Within one year
After one year but not more than five years
(b) Plant and equipment commitments
There are no capital expenditure commitments at reporting date.
(c) Contingent Liabilities
The Group is not aware of any contingent liabilities at reporting date.
Consolidated
2013
$
2012
$
37,299
50,014
87,313
63,590
12,575
76,165
50
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
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
2013 and the date of this report which had or may have had a significant effect on the company.
27
AUDITOR’S REMUNERATION
Amounts received or due and receivable by Duncan Dovico for:
- Audit or review of the financial report of the entity and any other entity in the
consolidated group
- Other services in relation to the entity and any other entity in the consolidated
group
Consolidated
2013
$
2012
$
67,609
53,058
5,390
72,999
6,000
59,058
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 will enter into
a tax funding agreement. Under this agreement, payments are to be made for tax losses transferred between
entities in the group. Refer to Note 7.
Cryosite Limited has received a dividend from Cryosite Distribution Pty Limited for $Nil (2012: $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.
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
51
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
29
SHARE-BASED PAYMENTS EXPENSE CONTINUED
(a) Employee Share Option Plan continued
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.
(b) 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:
Balance at beginning of year
Balance at end of the year
Graeme Moore
Philip Alger
2013
2012
Options
No.
WAEP
Cents
Options
WAEP
No.
Cents
520,000
520,000
300,000
220,000
520,000
-
-
30
30
30
520,000
520,000
300,000
220,000
520,000
-
-
30
30
30
52
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
29
SHARE-BASED PAYMENTS EXPENSE CONTINUED
(b) Summary of options granted under the ESOP continued
Share based options payment:
Parties to option agreement
Graeme Moore Philip Alger
Rights Granted and grant date
Share options granted 1 December 2007
Graeme Moore 300,000 Philip Alger 220,000
Option exercise price
One third at $0.20 per share, One third at $0.30 per share One third at $0.40 per share
Vesting period
One third on 1 December 2008 One third on 1 December 2009 One third on 1 December 2010
Options must be exercised no later than 30 November 2015.
Vesting requirements
Options granted under ESOP as part of remuneration package. Options will lapse on cessation of employment with the
company.
Weighted average fair value per option at grant date $0.11
Expense for the year
Graeme Moore $-
Philip Alger $-
Total $-
Prior year’s expense taken to account $-
Value of options forfeited $-
Balance at the end of the financial year not yet expensed $-
Calculation of fair value of option
Valuation was made using the binomial method in accordance with the requirements of accounting standards. Calculations
were based on the expected contractual life of the options using the average weekly historical share price of the company
over the previous 12 months.
The expected volatility used was 79% with an interest-free risk rate of 6.70%.
The market share price at date of grant was 19 cents.
53
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
30
SUPERANNUATION
The Group contributes the equivalent of 9% of employees’ wages to their superannuation fund of choice as
required by Australian law. Employees may also elect to make salary sacrifice to their nominated
superannuation fund.
31
KEY MANAGEMENT PERSONNEL
(a) Key management personnel
Non-executive directors
Andrew Kroger
Christina Boyce
Chairman (Non-executive)
Director (Non-executive) – Appointed 3 June 2013
Key management personnel
Gordon Milliken
Graeme Moore
Philip Alger
Managing Director
Executive Director
Chief Financial Officer
Key management personnel held their positions for the whole of the financial year other than as stated above.
Due to the relatively small number of employees, there are only three (3) key management personnel having
authority and responsibility for planning, directing and controlling the activities of the entity either directly or
indirectly.
(b) Compensation for key management personnel
Non-executive directors
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payment
Sub-total non-executive directors
Key management personnel
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payment
Sub-total key management personnel
Consolidated
2013
$
2012
$
80,,000
7,200
-
-
87,200
490,210
74,792
9,589
-
574,591
76,442
6,880
-
-
83,322
516,515
149,085
10,643
-
676,243
Total compensation
661,791
759,565
54
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
31
KEY MANAGEMENT PERSONNEL continued
(c) Shareholdings of key management personnel
Shares held in Cryosite
Limited
30 June 2013
Andrew Kroger
Christina Boyce –
appointed 3 June 2013
Gordon Milliken
Graeme Moore
Philip Alger
Total
Shares held in Cryosite
Limited
30 June 2012
Andrew Kroger
Theodore Onisforou –
resigned 21 November 2011
Gordon Milliken
Graeme Moore
Philip Alger
Total
Balance at
beginning of
year
Ord.
Movement on
appointment/
resignation
Ord.
On market
purchases
Ord.
Balance
30 June 2013
Ord.
9,314,276
-
1,392,667
10,706,943
-
21,696
38,941
-
-
-
-
-
-
60,637
1,290,415
-
-
21,696
1,431,608
12,057,995
1,290,415
-
-
10,604,691
Balance at
beginning of
year
Ord.
Movement on
appointment/
resignation
Ord.
On market
purchases
Ord.
Balance
30 June 2012
Ord.
-
1,980,610
7,333,666
9,314,276
4,125,004
1,288,415
-
-
5,413,419
(4,125,004)
-
-
-
(2,144,394)
-
2,000
-
-
-
1,290,415
-
-
7,335,666
10,604,691
(d) Option holdings of key management personnel (Consolidated)
30 June 2013
Balance held
at 1 July 2012
Balance held
at 30 June
2013
Andrew
Kroger
No.
Christina
Boyce
No.
Gordon
Milliken
No. *
Graeme
Moore
No. *
Philip
Alger
No.*
Total
No.
-
-
-
-
-
-
300,000
220,000
520,000
300,000
220,000
520,000
* Options issued under the employee share scheme
30 June 2012
Balance held
at 1 July 2011
Balance held
at 30 June
2012
Andrew
Kroger
No.
Gordon
Milliken
No. *
Graeme
Moore
No. *
Philip
Alger
No.*
Total
No.
-
-
-
-
300,000
220,000
520,000
300,000
220,000
520,000
* Options issued under the employee share scheme
55
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
31
KEY MANAGEMENT PERSONNEL continued
(e) Options Vested of key management personnel
Andrew
Kroger
No.
Christina
Boyce
No.
Gordon
Milliken
No. *
Graeme
Moore
No. *
Philip Alger
No*.
Total
No.
Balance
vested at
1 July 2012
Balance
vested at 30
June 2013
Exercisable
30 June 2013
-
-
-
-
-
-
-
-
-
300,000
220,000
520,000
300,000
220,000
520,000
300,000
220,000
520,000
* Options issued under the employee share scheme.
Balance vested at
1 July 2010
Options vested 1 December
2010
Balance vested at 30 June
2012
Exercisable 30 June 2012
Andrew
Kroger
No.
Gordon
Milliken
No. *
Graeme
Moore
No. *
Philip
Alger
No*.
Total
No.
-
-
-
-
-
-
200,000
146,666
346,666
100,000
73,334
173,334
300,000
220,000
520,000
300,000
220,000
520,000
* Options issued under the employee share scheme.
FINANCIAL INSTRUMENTS
32
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.
Interest rate risk
(a)
The Group’s exposure to the risk of changes in market interest rates relates primarily to cash and cash deposits
with floating interest rates.
The consolidated entity's exposure to interest rate risk and the effective weighted average interest rate for
classes of financial assets is set out below:
56
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
32
FINANCIAL INSTRUMENTS CONTINUED
2013
CONSOLIDATED
Financial assets
Interest bearing deposits – maturing
at various dates during year ending
30 June 2014
Cash and cash equivalents
Current receivables – maturing at
various dates during year ending 30
June 2014
Non-current receivables
Note
10
10
12
15
Weighted
average
effective
interest rate
%
Floating
interest
rate
$
Subject
to
discount
rates
$
Non
interest
bearing
$
Total
$
3.42
0.15
3.80
3.80
5,577,184
199,913
-
-
-
-
5,577,184
199,913
-
-
5,777,097
75,199
857,294
932,493
1,563,539
-
1,563,539
1,638,738
857,294
8,273,129
Financial liabilities
Trade creditors and accruals –
maturing at various dates during the
year ending 30 June 2013.
19
2.81
314,508
-
920,778
1,235,286
2012
CONSOLIDATED
Financial assets
Interest bearing deposits – maturing
at various dates during year ending
30 June 2013
Cash and cash equivalents
Current receivables – maturing at
various dates during year ending 30
June 2013
Non-current receivables
Note
10
10
12
15
Weighted
average
effective
interest rate
%
Floating
interest
rate
$
Subject
to
discount
rates
$
Non
interest
bearing
$
Total
$
5.27
2.15
3.8
3.8
4,403,676
121,074
-
-
-
-
4,403,676
121,074
45,630
-
4,570,380
59,431
998,084
1,057,515
1,052,061
-
1,052,061
1,157,122
998,084
6,679,956
Financial liabilities
Trade creditors and accruals –
maturing at various dates during the
year ending 30 June 2013.
19
3.69
67,113
-
981,525
1,048,638
57
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
32
FINANCIAL INSTRUMENTS CONTINUED
Interest rate sensitivity analysis
The following sensitivity analysis is based on interest rate risk exposures in existence at the balance date. If
interest rates had moved, as illustrated in the tables below, with all other variables held constant, post tax profit
would have been affected as follows:
Consolidated
Up by 2.0%
Down by 1.5%
Net present value sensitivity analysis
Post Tax Profit
Higher (Lower)
2013
$
111,431
(83,573)
2012
$
68,646
(51,484)
The following sensitivity analysis is based on a discount rate of 13.9% (2012: 17.5%) risk exposures in
existence at the balance date. If the discount rate had moved, as illustrated in the tables below, with all other
variables held constant, post tax profit would have been affected as follows
Post Tax Profit
Higher (Lower)
2013
$
(8,825)
8,825
2012
$
(31,680)
36,347
Consolidated
Up by 2%
Down by 2%
(b)
Price risk – Equity and Commodity
The Group has no exposure to commodity and equity securities price risk.
(c)
Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade and
other receivables. The Group's exposure to credit risk arises from potential default of the counter party, with a
maximum exposure equal to the carrying amount of these instruments. Exposure at balance date is addressed
in each applicable note.
The Group trades with a number of types of customers, the main ones being:
Incorporated companies
-
- Research institutes both private and academic
-
Individuals.
Incorporated companies:
The Group trades with recognised, publicly listed companies and large unlisted proprietary companies and as
such collateral is not requested nor is it the Group's policy to securitise its trade and other receivables.
58
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
32
FINANCIAL INSTRUMENTS CONTINUED
Research institutes both private and academic
The Group also trades with research institutes that are either publicly, privately or government owned along
with recognised universities. Such customers are subject to credit search and collateral is not requested nor is it
the Group's policy to securitise its trade and other receivables.
Individuals:
The Group ensures that credit card information is obtained for all individual customers.
It is the Group's policy that all customers who wish to trade on credit terms are subject to credit verification
procedures including an assessment of their independent credit rating, financial position, past experience and
industry reputation. Risk limits are set for each individual customer in accordance with parameters set by the
Board. These risk limits are regularly monitored.
There are no significant concentrations of credit risk within the Group. There are no transactions that are not
denominated in the functional currency of the Group.
(d)
Liquidity risk
The Group has assessed liquidity risk to be low balance date and at the date of this report.
Maturity analysis of financial assets and liabilities based on management’s expectation.
The risk implied from the values shown in the table below, reflects a balanced view of cash inflows and
outflows. Trade payables and other financial liabilities mainly originate from investment in working capital
such as inventories and trade receivables. These assets are considered in the Group’s overall liquidity risk. To
monitor existing financial assets and liabilities as well as enable an effective controlling of future risks the
Directors monitor the expected settlement of financial assets and liabilities.
Year ended
30 June 2013
Consolidated
Financial Assets
Cash and cash
equivalents
Trade and other
receivables
Consolidated
Financial liabilities
Trade and other
payables
Less than 6
months
$
6-12 months
$
1-5 years
$
Greater than
5 years
$
Total
$
5,777,097
1,563,630
7,340,727
-
-
-
5,777,097
74,882
74,882
371,707
371,707
485,813
2,496,032
485,813
8,273,129
1,235,286
1,235,286
-
-
-
-
-
-
1,235,286
1,235,286
Net maturity
6,105,441
74,882
371,707
485,813
7,037,843
59
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
32
(d)
FINANCIAL INSTRUMENTS CONTINUED
Liquidity risk continued
Maturity analysis of financial assets and liabilities based on management’s expectation (continued).
Year ended
30 June 2012
Consolidated
Financial Assets
Cash and cash
equivalents
Trade and other
receivables
Consolidated
Financial liabilities
Trade and other
payables
Net maturity
Less than 6
months
$
6-12 months
$
1-5 years
$
Greater than
5 years
$
Total
$
4,524,750
1,107,280
5,652,040
1,048,638
4,603,402
-
-
-
4,524,750
49,842
49,842
375,736
375,736
622,348
2,155,206
602,338
6,679,956
-
-
-
1,048,638
49,842
375,736
602,338
5,631,318
(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.
60
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
33
PARENT ENTITY FINANCIAL INFORMATION
The individual financial statements for the parent entity show the following aggregate amounts:
AS AT 30 JUNE 2013
(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
Other comprehensive income for
the year, net of tax
Total comprehensive income for
the year
2013
$
7,645,197
3,501,830
11,147,027
1,870,546
3,030,504
4,901,050
8,138,766
239,118
(2,131,907)
6,245,977
2012
$
5,751,212
3,777,324
9,528,536
1,533,200
2,532,923
4,066,123
8,138,766
239,118
(2,915,471)
5,462,413
1,249,961
1,022,479
-
-
1,249,961
1,022,479
(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.
61
Australia’s Family Cord Blood Bank
DUNCAN DOVICO DUNCAN DOVICO CHARTERED ACCOUNTANTS 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 Professional Standards Legislation INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CRYOSITE LIMITED Report on the Financial Report We have audited the accompanying financial report of Cryosite Limited and its controlled entity which comprises the consolidated statement of financial position as at 30 June 2013, 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 2013. 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. DUNCAN DOVICO DUNCAN DOVICO CHARTERED ACCOUNTANTS 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 Professional Standards Legislation 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 2013 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 2013. 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 2013, complies with section 300A of the Corporations Act 2001. DUNCAN DOVICO CHARTERTED ACCOUNTANTS Rosemary Megale Partner Sydney, 28th August 2013. 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 30 August 2013.
Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
SHAREHOLDER
LISTED ORDINARY SHARES
Number of
shares
% of ordinary
shares
CELL CARE AUSTRALIA PTY LTD
COFAX BAY PTY LIMITED
BELL POTTER NOMINEES LTD
FITEL NOMINEES LIMITED
PROCESS WASTEWATER TECHNOLOGIES
LIMITED
CORNISH GROUP INVESTMENTS PTY LTD
KHAEMET PTY LTD
MR THEO ONISFOROU
MR ALISTAIR DAVID STRONG
MRS ERICA MARGARET STRONG
NARON NOMINEES PTY LTD
MR STEPHEN ROBERTS
UBS WEALTH MANAGEMENT AUSTRALIA
NOMINEES PTY LTD
H F A ADMINISTRATION PTY LIMITED
MARALECHA CORPORATION PTY LTD
ANADYOMENE PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED
SUNNYIT PTY LTD
ASIA UNION INVESTMENTS PTY LTD
ONMELL PTY LTD
TOTAL
DISTRIBUTION OF EQUITY SECURITIES
Number of shareholders by size of holding
1
1,001
5,001
10,001
100,001
Total
1,000
5,000
10,000
100,000
and over
10,709,334
9,314,276
3,758,236
2,000,000
1,392,667
1,050,300
1,034,918
1,008,753
1,000,000
865,000
839,416
644,994
614,384
480,000
435,316
400,000
345,710
300,500
300,000
299,910
36,793,714
22.96%
19.97%
8.06%
4.29%
2.99%
2.25%
2.22%
2.16%
2.14%
1.85%
1.80%
1.38%
1.32%
1.03%
0.93%
0.86%
0.74%
0.64%
0.64%
0.64%
78.89%
Ordinary Shares
Number of
Holders
Number of
Shares
34
229
77
153
41
534
15,137
902,807
639,715
4,713,570
40,368,334
46,639,563
64
Australia’s Family Cord Blood Bank
ASX Additional Shareholder Information continued
Substantial shareholders
The names of any substantial shareholders who have notified the Company in accordance with section 671B of
the Corporations Act 2001 are:
Relevant interest
2013
2012
Shareholder
No. of shares % of issued capital No. of shares % of issued capital
Cell Care Australia Pty. Ltd
10,709,334
Andrew John Kroger
10,706,943
22.96
22.96
10,240,498
9,314,276
21.97
19.97
Voting Rights
All ordinary shares carry one vote per share without restriction.
Number of shareholders holding less than a marketable parcel
The number of shareholders holding less than a marketable parcel of shares is 25 and they hold 6,137 shares.
65
Australia’s Family Cord Blood Bank
Cryosite is established with the specific
specialised
objective of providing
outsourced logistics services to a wide
range of clients including the research,
medical, pharmaceutical, veterinary and
biotechnology industries.
Cryosite provides professional, reliable
and cost effective support services,
tailored to meet individual customer
needs. Our Quality Management System
ensures compliance with all necessary
regulations and detailed documentation
control. Operations are carried out in a
NATA accredited (ISO/IEC 17025) facility
and in compliance with current Code of
Good Manufacturing Practices (cGMP).
The facility is AQIS approved under
section 46a of the Quarantine Act for the
quarantine of class 5.1 goods.
Cryosite Limited, ABN 86 090 919 476
is an Australian public listed company
registered on the main board of the
Australian Stock Exchange with the code
“CTE”.
LIMITED
www.cryosite.com121 Creative BOTANY