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Australia’s Family Cord Blood Bank
ANNUAL REPORT
2014
www.cryosite.com
121 Creative BOTANYABN 86 090 919 476
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 and Accumulated Losses
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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Independent Audit Report
ASX Additional Shareholder Information
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1
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)
Graeme Moore (Acting CEO)
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 2 8260 7111
AUDITORS
Duncan Dovico Risk & Assurance Pty Limited
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 (the Group)
consisting of Cryosite Limited (the Company) and the entity it controlled for the year ended 30 June 2014.
DIRECTORS
The following people held the office of director during the year
Andrew Kroger (Non-Executive Chairman)
Christina (Christy) Boyce (Non-Executive Director)
Gordon Milliken (Managing Director) – resigned 9th April 2014
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. 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. Christy is
currently a Non-Executive Director of Monash IVF Group. 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 and resigned the 9th April 2014.
Graeme Moore, B.App.Sc (Biomed), MHA, Executive Director
Graeme Moore was appointed acting CEO in April 2014 and had previously held positions as Chief Operating
Officer and Quality and Regulatory Affairs Manager. Mr Moore joined Cryosite in July 2005 after a 20 year
career in biomedical science, manufacture of therapeutic goods, quality management and regulatory affairs,
and 9 years with the Australian Red Cross Blood Service. Mr Moore was appointed to the Board on 22
September, 2008.
COMPANY SECRETARY
Bryan Dulhunty, BEc, CA
Company Secretarial Services for Cryosite Limited are provided by CoSA Life Science - Corporate, an
independent Company Secretarial firm specialising in the Life science industry.
Mr Dulhunty founded CoSA in 2001 after extensive experience in a major international accounting firm and
both large and small publicly listed entities. Mr. Dulhunty is has been Executive Chairman, Managing Director
non-executive director and company secretary of a number of listed and unlisted biotechnology companies
3
Australia’s Family Cord Blood Bank
Directors’ Report continued
As at the date of this report the relevant interests of the directors in the shares and options of Cryosite Limited
were:
Director
Ordinary shares
Options over ordinary shares
Andrew Kroger
Graeme Moore
Christina Boyce
EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
DIVIDENDS
11,706,943
-
60,637
-
300,000
-
1.08 cents (2013: 2.68 cents)
1.07 cents (2013: 2.65 cents)
A final unfranked dividend for the year ended 30 June 2013 of 1.0 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
2014 financial year was declared and paid during the financial year.
The total dividends declared and paid were $700,693 (2013: $466,397). 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
Cryosite (ASX: CTE) is a unique Australian biotech company that pioneered private autologous Cord Blood
Banking in 2002, directed allogeneic Family Banking in 2011, and in 2014 has developed and commercialised
methods for the cryopreservation and expansion of MCS’s from umbilical cord tissue.
Cryosite also provides specialised Bio-repository, Clinical Trials Logistics, Commercial Drug Distribution,
contract Cellular Therapies manufacturing and associated consultancy services to commercial clients both
within Australia and internationally. Cryosite’s facilities are NATA accredited (ISO15189, ISO17025) and its
Cord Blood Stem Cell cryopreservation and storage laboratories are fully licensed by the TGA.
The company’s highly specialised biologistics-based services are grouped into two reporting segments:
- Biological Services, and
- Warehousing & Distribution Services.
Biological Services
Biological Services includes the private cord blood and tissue banking service, adult stem cell storage,
bioarchive & biorepository services and contract GMP manufacturing service.
Warehousing & Distribution Services
Distribution Services includes the clinical trials logistics service, commercial drug distribution and the other
storage and distribution based services including the importation and distribution of the products of the
American Type Culture Collection and laboratory diagnostics products.
4
Australia’s Family Cord Blood Bank
Directors’ Report continued
Employees
The consolidated entity has 34 full-time equivalent employees as at 30 June 2014 (2013: 35 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 $505,602 (2013: $1,249,961).
The financial performance of the Group in the second half of the financial year suffered as anticipated in the
announcement to the market on 23 December 2013. This deterioration was a result of the Group’s decision to
implement a long term business growth strategy involving new development activities in both the biological
services and warehousing and distribution segments. This, together with termination payments made to the
previous Managing Director and legal expenses associated with the evaluation of business development
opportunities, contributed to the decrease in profit from operations in 2014. We are pleased to be able to advise
that as a result of these investments we are beginning to see growth across all segments of the Group reflected
in an improvement on the previously advised full-year profit forecast from continuing operations before
income tax from a range of $500k - $600k to an actual of $678,314.
The results of the Group’s implemented strategies were not only reflected in the operating profit but also in the
operating cash flow inflows of $1,542,536 (2013:$ 1,939,971). Net capital expenditure for year was $427,670
(2013: $379,160). The Company continues to generate positive cash flows with cash and cash equivalents at
the end of the year being $6,252,193 (2013: $5,777,097).
REVIEW OF OPERATIONS
During 2014 the Company made significant investments in sales & marketing and R&D to improve
competitiveness in its existing operations and to develop additional revenue streams in new markets. These
investments together with $271,400 related to one-off expenses associated with personnel changes and legal
fees incurred in relation to evaluation of business development opportunities, have resulted in a short term
decline in Group’s EBITDA performance reflected in the financial report. The absence of these one off costs
together with our investments in sales, marketing and R&D, have positioned the Company for continuing
growth performance in the following years.
Biological Services Segment
Cord blood & Tissue
Cryosite pioneered private banking of cord blood to treat a range of haematological conditions in Australia in
2002. At that time Cryosite was the only TGA licensed cord blood bank, and the stem cells were only available
for autologous use. The next significant milestone in the Australian cord blood market occurred in 2012 when
Cryosite obtained the first TGA license for the directed allogeneic release of cord blood. While the
introduction of Family Banking provided an initial marketing advantage, 2014 has seen increased competition
and discounting within the cord banking sector, and Cryosite has needed to invest in additional sales and
marketing capacity to maintain its 2013 sales. These factors have led to a reduction in cord blood operating
profit contribution relative to last year though we expect improved performance as a result of these
investments.
To grow market share and profitability in its cord blood operations, Cryosite invested in R&D and advanced
GMP cell processing capability during 2014 and has successfully commercialised a method to cryopreserve
and expand a patent protected source of mesenchymal stem cells (MCS’s) from umbilical cord tissue. MSC’s
are a different type of stem cell to those currently banked from cord blood. Commencing Q3 2014, Cryosite
will offer cord tissue MSC banking and future cell expansion options to parents. MSC banking complements
Cryosite’s existing business model and is expected to add an important additional revenue stream to Cryosite’s
existing cord blood operations. While cord tissue derived MSCs are not currently licensed for use as a
therapeutic product in Australia, our market research has identified that Cryosite’s highly developed and
differentiated MSC product will yield a significant uptake rate from parents who currently choose to bank their
child’s cord blood.
5
Australia’s Family Cord Blood Bank
Directors’ Report continued
Contract GMP manufacturing
The extension of Cryosite’s current GMP manufacturing capabilities to include advanced stem cell processing
and expansion has also enabled Cryosite to identify new business opportunities and expand the range of
specialised services it can provide to commercial clients in both the Biological Services and Warehouse &
Distribution Services segments. These services now include contract Good Manufacturing Practice (GMP)
manufacturing of specialised cell therapy products and the provision of associated consultancy services.
Cryosite’s expertise in the storage and distribution of frozen and cryogenic biologics and medicines, clinical
trials logistics and the Australian regulatory environment, enables the Company to also provide clients with
sophisticated storage and distribution options for their manufactured products.
In 2013, Cryosite entered into an agreement with the regenerative medicine company Regeneus (ASX: RGS)
to develop methods to cryopreserve adipose derived stem cells for OE and other indications. Cryosite now
provides routine contract manufacturing, storage and distribution services for this commercial product
(HiQCell+®). In 2014, contract GMP manufacturing made a pleasing contribution to Biological Services
revenue and segment operating profit and this is expected to be maintained during 2015. Cryosite has also
entered into an agreement to provide GMP manufacturing services to Regeneus to cost effectively fast-track
the production of Regeneus’ off-the shelf Progenza® product for preclinical and clinical trials for market entry
into Japan, and to explore other opportunities for the development and manufacture of new stem cell products
for human application.
Bio repository
The trend in types of material under management by the Biorepository service is consistent with the range of
specialised “high end” services Cryosite is able to provide. Client material now often comprises cell and seed
banks, modified bacterial and virus stock, and GMOs intended for use in the manufacture of phase 1/phase 2
investigational products for international clinical trials, and research material that may have considerable
future commercial value. This material requires GMP level storage, distribution and traceability as its quality
and commercial value may be compromised by loss of environmental control or failure to anticipate long term
regulatory requirements. In additional to a comprehensive range storage options, Cryosite also offers
segregation by risk category and value added services including assistance with risk assessment, import, export
and containment requirements, temperature controlled distribution and regulatory advice.
Revenue and operating profit from Biorepository services increased in 2014. The revenue improvement has
been primarily driven through the provision of higher value Biorepository services to existing clients, and the
provision of contract manufacturing services to new clients. As stated above, Cryosite is well positioned to
support clients’ changing needs for more comprehensive and integrated services.
Segment Summary
In summary, Biological Services segment results were encouraging. Revenue increased during 2014 although
with additional investments made in this segment the overall operating profit was marginally down on last
year’s result. The success of Cryosite’s new contract manufacturing service made a timely contribution to
segment revenue and largely compensated for the decrease in operating profit from cord blood services that
resulted from the Company’s investment in the development of its new Cord Tissue service and additional
marketing capability. Despite increasing competition for cord blood sales, the launch of Cryosite’s new Cord
Tissue service and increased marketing capacity is expected to enable an increase in segment operating profit
in 2015. The additional revenue from contract manufacturing services is expected to be maintained during
2015, resulting in an overall positive outlook for the segment.
Warehousing and Distribution Segment
Clinical Trials
Cryosite’s Clinical Trials Logistics service has established itself over many years as a high quality and cost
effective partner for local and international trial sponsors (pharmaceutical and biopharmaceutical companies)
and Contract Research Organisations (CROs) for the warehousing and distribution of investigational drugs.
Cryosite’s expertise in cold, frozen and cryogenic storage and distribution has enabled the Company to
successfully support client’s changing needs for management of biologic based drugs, and for these services to
comply with applicable international standards.
6
Australia’s Family Cord Blood Bank
Directors’ Report continued
By leveraging the expertise and systems in its Biological Services segment, Cryosite has also been able to
provide an expanded range of value added services, including complex protocol development and process
qualification, which are particularly applicable to the global growth in cold chain biologic based drugs. It
should be noted that these sophisticated services are able to be provided cost effectively as they comprise
routine operations within Cryosite’s Biological Services segment. While the number of individual clinical
trials under management has increased, it is the ability to identify and meet client’s demands to support highly
customised trials of increasing complexity, and the provision of value added services, that has enabled Clinical
Trials operations to maintain their contribution to segment revenue in 2014. To identify and capitalise on these
opportunities Cryosite has invested in additional marketing and business development resources, which while
positioning the Company in this sector going forward, has resulted in a net reduction in operating profit
compared to the previous year.
Commercial drug distribution
Cryosite’s expertise in warehousing, distribution and biological services enabled Cryosite to secure its first
contract for distribution of a highly temperature sensitive commercial drug in 2013. Commercial distribution
has now been successfully integrated into routine operations, making an important contribution to Clinical
Trials results in 2014.
ATCC
The renegotiated agreement with ATCC has resulted in an increase in revenue and operating profit from the
ATCC distribution services during 2014.
Segment Summary
In summary, results for the Warehousing & Distribution Services segment reflected incremental organic
growth in Clinical Trials operations, new business created through provision of specialised commercial drug
distribution, and the increase in revenue and GP from the renegotiated ATCC distribution contract. While the
investment in additional marketing and business development has resulted in a net reduction in operating profit
compared to the previous year, we expect these investments to facilitate improvement in segment operating
profits in 2015.
BUSINESS GROWTH AND OUTLOOK
Competitive Environment
Business outlook summary
While traditional operations within the Biological and Warehousing & Distribution Service segments will be
subject to an increasingly competitive business environment during 2015, both segments are expected to
provide incremental organic growth due to the increasingly specialised value added service offerings each
segment can provide.
The past year has seen Cryosite identify and implement new business operations in both market segments. The
Biological Services segment now provides cord tissue MSC banking to parents, and specialised contract GMP
manufacturing and associated consultancy services to therapeutic and regenerative medicine companies
involved in the development and commercialisation of proprietary technologies. The Warehousing and
Distribution segment now provides specialised commercial drug distribution, and has commenced protocol
development for cryogenic and GMO investigational products for a large international client. These initiatives
are expected to improve revenue and net operating profit in 2015 and further position the Company to maintain
growth in the longer term.
Leveraging Cryosite’s unique combination of Biorepository, Clinical Trials Logistics and TGA licensed stem
cell manufacturing services to create specialised service offerings for existing as well as new clients, offers the
promise of an exciting future for the Company. The initial successes reported in commercial drug distribution
and contract GMP manufacturing, are early indicators of the Company’s ability to adapt and succeed in both
market segments.
7
Australia’s Family Cord Blood Bank
Directors’ Report continued
SHARE OPTIONS
As at the date of this report, there were 300,000 (2013: 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
Other than detailed in the above there were no significant changes in the state of affairs of the Group during
the year.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
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, including the Therapeutic Goods Administration (TGA), the Department of Agriculture, Fisheries and
Forestry (DAFF), the NSW Department of Health, and the Office of the Gene Technology Regulator (OGTR).
Additionally, the Company must comply with the quality system requirements of many of its customers. The
Company has implemented a company-wide quality management system to ensure that it meets or exceeds the
requirements of all these interests. Cryosite also holds accreditation for ISO 15189 (Medical laboratories) 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. 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.
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 mitigating risks in this area by
the implementation and maintenance of a company-wide Quality Management System.
INSURANCE OF DIRECTORS AND OFFICERS
The Company has paid a premium in respect of a contract, insuring all the Directors and Officers against
liability, except wilful breach of duty, of a nature that is required to be disclosed under section 300 (8) of the
Corporations Act 2001. In accordance with commercial practice, further details of the nature of the liabilities
insured against and the amount of the premium have not been disclosed.
8
Australia’s Family Cord Blood Bank
Directors’ Report continued
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 Risk & Assurance Pty Limited and is included within the scope of
the audit report on pages 60 and 61.
Remuneration philosophy
The Company recognises the importance of structuring remuneration packages of its key management
personnel so as to attract and retain people with the qualifications, skills and experience to help the Company
achieve the required objectives. However, the Company understands that whilst it is still in the development
phase of its growth, a prudent position must be observed in the total remuneration expense.
A fixed remuneration package is determined by the Chairman for the Managing Director or CEO. Any
additional compensation is determined by the Board as deemed appropriate.
Non-Executive Directors
Total remuneration paid to non-executive directors is determined by the Board from time to time for
presentation to and resolution by shareholders at the Annual General Meeting. The current maximum
aggregate remuneration paid to non-executive directors is $350,000 per year.
The directors are paid a set amount per year and apart from reimbursement of expenses incurred on the
Company’s behalf, are not eligible for any additional payments.
Executive directors and other key management personnel are employed on rolling contracts.
Any options that have vested will be forfeited, if nor exercised, within three months of cessation of
employment. The Company may terminate the employee's contract without notice if serious misconduct has
occurred. Where termination with cause occurs, the executive is only entitled to that portion of remuneration
that is fixed, and only up to the date of termination. On termination with cause, any options that have vested
but not been exercised will be forfeited.
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.
9
Australia’s Family Cord Blood Bank
Directors’ Report continued
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
Mark Marshall
Chairman (Non-executive)
Director (Non-executive)
Managing Director (Part year)
Executive Director
Chief Financial Officer (Part year)
Chief Financial Officer (Part year)
Due to the relatively small number of employees, apart from Gordon Milliken, Graeme Moore , Philip Alger
and Mark Marshall , there were or are no other executives having authority and responsibility for planning,
directing and controlling the activities of the entity either directly or indirectly during the current year.
COMPENSATION FOR KEY MANAGEMENT PERSONNEL
Short term benefits
Post-
employment
benefits
Salary &
Fees
Other cash
benefits
Super-
annuation
Other long
term
benefits
Long
service
leave
Share-
based
payments
Options
Total
$
75,000
60,000
135,000
$
-
-
-
$
6,938
5,563
12,501
$
-
-
-
226,174
182,019
25,000
21,600
34,771
16,837
35,733
3,044
67,332
59,557
-
-
20,321
30,640
-
20,271
535,082
46,600
102,569
59,048
670,082
46,600
115,070
59,048
$
$
-
-
-
-
-
-
-
-
-
81,938
65,563
147,501
321,678
223,500
87,653
110,468
743,299
890,800
Year ended 30
June 2014
Non-executive
Directors
Andrew Kroger
Christina Boyce
Sub-total: non-executive
directors
Executive directors
Gordon Milliken (i) (ii)
Graeme Moore
Other key management
personnel
Mark Marshall (i)
Philip Alger (i) (ii)
Sub-total executive KMP
Total
(i)
(ii)
Where directors or key personnel resigned or were appointed during the year payments shown above
are for the period served.
Amounts paid are inclusive of eligible termination payments paid in respect of the period of service
10
Australia’s Family Cord Blood Bank
Directors’ Report continued
COMPENSATION FOR KEY MANAGEMENT PERSONNEL CONTINUED
Short term benefits
Salary &
Fees
$
75,000
5,000
80,000
Other
cash
benefits
$
-
-
-
Post-
employment
benefits
Super-
annuation
$
6,750
450
7,200
145,063
173,469
30,000
21,600
24,937
24,932
120,078
-
438,610
51,600
24,923
74,792
Other long
term
benefits
Long
service
leave
Share-
based
payments
Options
Total
$
-
-
-
3,699
3,673
2,217
9,589
$
$
-
-
-
-
-
-
-
-
81,750
5,450
87,200
203,699
223,674
147,218
574,591
661,791
518,610
51,600
81,992
9,589
Year ended 30
June 2013
Non-executive
Directors
Andrew Kroger (i)
Christina Boyce (i)
Sub-total: non-executive
directors
Executive directors
Gordon Milliken
Graeme Moore
Other key management
personnel
Philip Alger
Sub-total executive KMP
Total
(i)
(ii)
Where directors or key personnel resigned or were appointed during the year payments shown above
are for the period served.
Amounts paid are inclusive of eligible termination payments paid in respect of the period of service.
OPTIONS GRANTED AS PART OF REMUNERATION FOR THE YEAR ENDED 30 JUNE 2014
There were no options granted during the year (2013: Nil).
OPTION HOLDINGS OF KEY MANAGEMENT PERSONNEL
Graeme Moore
No
Philip Alger
No.*
Total
No.
Balance held at 1 July 2013
Options Exercised
Balance held at 30 June 2014
* Options issued under the Employee Share Options Scheme.
300,000
-
300,000
220,000
(220,000)
520,000
(220,000)
-
300,000
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.
11
Australia’s Family Cord Blood Bank
Directors’ Report continued
OPTIONS VESTED OF KEY MANAGEMENT PERSONNEL
Balance vested at 1 July 2013
Options exercised
Balance vested at 30 June 2014
Exercisable
Graeme Moore
No. *
Philip
Alger
No. *
Total
No.
300,000
220,000
520,000
-
(220,000)
(220,000)
300,000
300,000
-
-
300,000
300,000
* 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
Mark Marshall
Philip Alger
Total
Shares held in
Cryosite Limited
Andrew Kroger
Christina Boyce
Gordon Milliken
Graeme Moore
Philip Alger
Total
Balance
1 July 2013
Ord.
10,706,943
60,637
1,290,415
-
-
-
12,057,995
Balance
1 July 2012
Ord.
9,314,276
-
1,290,415
-
-
10,604,691
Balance on
appointment/
(resignation)
Ord.
-
-
(1,290,415)
-
-
-
(1,290,415)
Balance on
appointment/
(resignation)
Ord.
-
21,696
-
-
-
21,696
On market
purchases
Balance
30 June 2014
Ord.
Ord.
1,000,000
-
-
-
-
-
11,706,943
60,637
-
-
-
-
1,000,000
11,767,580
On market
purchases
Ord.
Balance
30 June 2013
Ord.
1,392,667
38,941
-
-
-
10,706,943
60,637
1,290,415
-
-
1,431,608
12,057,995
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, 11 meetings of directors were held. Attendances were as follows:
Directors
Directors Meetings
Eligible to attend
Directors Meetings
Attended
Andrew Kroger
Gordon Milliken
Graeme Moore
Christina Boyce
11
9
11
11
11
9
11
11
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
Graeme Moore
Acting CEO
Date: 27 August 2014
14
Australia’s Family Cord Blood Bank
DUNCAN
DOVICO
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 2014 there has 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 RISK & ASSURANCE PTY LIMITED
Rosemary Megale
Director
Sydney, 27th August 2014
D U N C A N D O V I C O R I S K & A S S U R A N C E P T Y L I M I T E D
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 39 151 805 275
Liability limited by a scheme approved under Professional Standards Legislation
15
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 were in place for the financial year ended 30 June 2014 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 three Directors, the Chairman Andrew Kroger, Non-Executive Director, Christina
Boyce and Executive Director and Acting CEO, Graeme Moore.
Only the non-executive director Christina Boyce is deemed to be independent. The Chairman Andrew Kroger
due to his shareholding in the Company is deemed not to be independent and Graeme Moore due to his
executive role is also deemed not to be independent.
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.
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 34
employees (including consultants to the Company). Of these, 24 are female. Of the 2 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.
The Board before it approves the Companies annual financial statements receives a declaration from its CEO
and CFO that in their opinion the financial records of the entity have been properly maintained and that the
financial statements comply with the appropriate accounting standards and give a true and fair view of the
financial position and performance of the entity.
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 not established a Risk 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.
18
Australia’s Family Cord Blood Bank
Corporate Governance Statement continued
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.
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 Company does not have an internal audit function.
Directors at each Board Meeting, review in detail risk events that have occurred since the previous Board
meeting, review changes in procedures to enable a more appropriate response to risk and discuss any new risk
factors that the Company faces.
The Company is exposed to general economic, environmental and social sustainability risks. Cryosite does
operate in a highly government regulated market and has appropriate staff and management systems in place to
deal with these risks.
The directors have conducted an annual review of its risk management framework identifying changes in
material business risks faced by the Entity and the appropriate respond should those risks eventuate.
The Board has received assurance from the acting CEO and CFO 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.
Directors routinely evaluate the performance of key executive in line with its remuneration policy. An
evaluation of key executive’s performance was undertaken during the year.
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 prohibits entering into transactions in associated products which limit the economic risk of
participating in unvested entitlements under any equity-based remuneration schemes. This 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
2014 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 2014.
On behalf of the Board
Graeme Moore
Acting CEO
Date: 27 August 2014
20
Australia’s Family Cord Blood Bank
Consolidated Statement of Profit and Loss and Other
Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2014
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
Total expenses
Profit from continuing
operations before income tax
Income tax (expense)benefit
7
Profit from continuing
operations after income tax
Net Profit attributable to
members of the company
Other comprehensive income
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
2014
$
9,171,014
250,182
9,421,196
(6,600)
(4,558,229)
(627,365)
(658,677)
(2,892,011)
(8,742,882)
678,314
(172,712)
2013
$
8,497,803
266,656
8,764,459
(7,825)
(4,068,932)
(414,519)
(640,332)
(2,451,853)
(7,583,461)
1,180,998
68,963
505,602
1,249,961
505,602
1,249,961
-
-
-
-
-
-
Total comprehensive income for the year
505,602
1,249,961
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
1.08
1.07
The above consolidated statement of profit and loss and other comprehensive income should be read in
conjunction with the accompanying notes.
Cents
2.68
2.65
21
Australia’s Family Cord Blood Bank
Consolidated Statement of Financial Position
AS AT 30 JUNE 2014
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
2014
$
2013
$
6,252,193
1,897,295
61,984
144,465
5,777,097
1,638,738
66,087
378,495
8,355,937
7,860,417
796,195
-
603,373
1,622,665
255,310
857,294
-
851,933
1,792,583
-
3,277,543
3,501,810
11,633,480
11,362,227
1,094,075
392,662
448,415
1,235,286
368,071
464,138
1,935,152
2,067,495
396,850
2,920,750
245,591
171,450
2,619,136
239,918
3,563,191
3,030,504
5,498,343
5,097,999
6,135,137
6,264,228
23
24
23(a)
8,204,766
239,118
(2,308,747)
8,138,766
239,118
(2,113,656)
6,135,137
6,264,228
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 2014
CONSOLIDATED
At 1 July 2012
Attributable to equity holders of the company
Contributed
capital
$
Accumulated
losses
$
Share
options
reserves Total equity
$
$
8,138,766
(2,897,220)
239,118
5,480,664
Total comprehensive income for the year
-
1,249,961
-
1,249,961
Transactions with owners in their capacity
as owners
Equity dividends declared
At 30 June 2013
At 1 July 2013
Total comprehensive income for the year
Proceeds from shares issued (Options
exercised)
Transactions with owners in their capacity
as owners
Equity dividends declared and paid
-
-
8,138,766
-
(466,397)
(2,113,656)
-
-
239,118
-
(466,397)
6,264,228
8,138,766
(2,113,656)
239,118
6,264,228
-
505,602
66,000
-
-
(700,693)
-
-
-
505,602
66,000
(700,693)
At 30 June 2014
8,204,766
(2,308,747)
239,118
6,135,137
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 2014
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
Intellectual Property Licence
Interest received – term deposits
Net cash flows (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Equity dividend paid
Proceeds from share issue (options exercised)
Net cash flows (used in) financing activities
11
17
2014
$
2013
$
9,304,742
(7,780,481)
24,875
(6,600)
9,074,283
(7,226,741)
99,954
(7,825)
1,542,536
1,939,671
(427,670)
(255,310)
250,182
(432,798)
(379,160)
-
167,561
(211,599)
(700,642)
66,000
(634,642)
(475,725)
-
(475,725)
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
475,096
5,777,097
1,252,347
4,524,750
Cash and cash equivalents at end of year
10
6,252,193
5,777,097
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 2014
1
CORPORATE INFORMATION
The financial report of Cryosite Limited and the controlled entity (the Group) for the year ended 30 June 2014
was authorised for issue in accordance with a resolution of the directors on 26 August 2014.
Cryosite Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on
the Australian Stock Exchange.
The nature of the operations and principal activities of the Group are described in the Directors’ Report.
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The financial report is a general purpose financial report, which has been prepared in accordance with the
requirements of the Corporations Act 2001, and Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards Board.
The financial report has been prepared on a historical cost basis, except when otherwise stated.
(a) Compliance with IFRS
The financial report complies with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
(b) Changes in accounting policy, accounting standards and interpretations.
(i) Changes in accounting policies, new and amended 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 2013:
AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Items of Other
Comprehensive Income (effective from 1 January 2013). Requires entities to group items presented in other
comprehensive income (OCI) on the basis of whether they are potentially reclassifiable to profit or loss
subsequently (reclassification adjustments). Requires tax associated with items presented before tax to be
shown separately for each of the two groups of OCI items (without changing the option to present items of
OCI either before tax or net of tax).
AASB 10 Consolidated Financial Statements (effective from 1 January 2013) establishes a new control model
which broadens the situations where an entity is considered to be controlled by another entity and includes new
guidance for applying the model to specific situations, including when acting as a manager may give control,
the impact of potential voting rights and when holding less than a majority voting rights may give rise to
control.
AASB 11 Joint Arrangements (effective from 1 January 2013) uses the principles of control in AASB 10 and
as a result the determination of whether joint control exists may change. Further, there is no longer an option to
account for jointly controlled entities using proportionate consolidation but rather its accounting is dependent
upon the nature of the rights and obligations arising from the arrangement. Joint operations which give the
venturers the right to the underlying asset and obligations themselves is accounted for by recognising the share
of those assets and obligations. Joint ventures that give the venturers a right to the net assets is accounted for
using the equity method.
25
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
AASB 12 Disclosure of interest in other entities (effective from 1 January 2013) includes all disclosures relating to
the entity’s interest in subsidiaries, joint arrangements and associates. Additional disclosures have been made in
respect of judgements made by management to determine whether control exists where the entity is not a wholly
owned subsidiary.
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. AASB 13 does not change when an entity is required to use fair
value, but rather, provides guidance on how to determine fair value when fair value is required or permitted.
Application of this definition may result in different fair values being determined for the relevant assets. AASB 13
also expands the disclosure requirements for all assets or liabilities carried at fair value. This includes information
about the assumptions made and the qualitative impact of those assumptions on the fair value determined.
AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel
Disclosure Requirements of AASB 124. This amendment removes the individual KMP disclosure requirements for
all disclosing entities in relation to equity holdings, loans and other related party transactions.
(b) Basis of consolidation
The consolidated financial statements comprise the financial statements of Cryosite Limited and its subsidiary (‘the
Group’) as at 30 June each year.
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an
entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that
control ceases.
The financial statements of the subsidiary are prepared for the same reporting year as the parent company, using
consistent accounting policies.
Adjustments are made to bring into line any dissimilar accounting policies that may exist.
All inter-company balances and transactions have been eliminated in full.
Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be
consolidated from the date on which control is transferred out of the Group.
Investments in subsidiaries held by Cryosite Limited are accounted for at cost in the separate financial statements of
the parent entity, less any impairment charges.
(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.
26
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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
2014
Lease term
5 – 10 years
2 - 2.5 years
4 - 10 years
2.5 – 8 years
5 years
2013
Lease term
5 – 10 years
2 - 2.5 years
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
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever
there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation
method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period.
Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in
the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in
accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement
of profit or loss as the expense category that is consistent with the function of the intangible assets.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either
individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine
whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is
made on a prospective basis.
Licence fees
Where licences are acquired for the purposes of assisting in research and development or for the entity’s use of
patented techniques or processes in conducting operations, the costs are capitalised. Licenses acquired during the
financial year have been initially assessed as having a useful life in line with that of the underlying patent and
associated methodologies.
The assessment of useful life is reviewed annually by the Board to determine whether the assumptions made
continue to be appropriate and supportable. If not, the useful life assessment is changed on a prospective basis.
(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.
27
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(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% (2013: 13.9%).
(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.
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.
28
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(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.
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.
29
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(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.
- 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.
30
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance date.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and
the same taxation authority.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement of
comprehensive income.
Revenues, expenses and assets are recognised net of the amount of GST except:
where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in
which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as
applicable; and
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 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
FOR THE YEAR ENDED 30 JUNE 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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) Fair value measurement
The Group measures financial instruments at fair value at each balance sheet date. Fair values of financial
instruments measured at amortised cost are disclosed at Note 32.
Fair value is the price that would be received to sell an asset or pair to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption that
the transaction to sell the asset or transfer the liability takes place either:
-
-
In the principle market for the asset or liability; or
In the absence of a principal market, in the most advantageous market for the asset or liability accessible to
the Group.
A fair value measurement of a non financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that
would use the asset in the highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
For the purpose of fair value disclosure, the Group has determined classes of assets and liabilities on the basis of the
nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy.
(v) Current versus non-current classification
The Group presents assets and liabilities in statement of financial position based on current/non-current
classification.
An asset as current when it is:
• Expected to be realised or intended to sold or consumed in normal operating cycle;
• Held primarily for the purpose of trading;
• Expected to be realised within twelve months after the reporting period, or
• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period.
All other assets are classified as non-current. A liability is current when:
It is expected to be settled in normal operating cycle;
It is held primarily for the purpose of trading;
It is due to be settled within twelve months after the reporting period, or
•
•
•
• There is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
32
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(w) 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 2014. The new
standards, interpretations and amendments are not expected to have a significant impact on the financial statements.
AASB 9 Financial Instruments – Effective from 1 January 2018
AASB 9 includes requirements for the classification and measurement of financial assets. It was further amended by
AASB 2010-7 to reflect amendments to the accounting for financial liabilities. These requirements improve and
simplify the approach for classification and measurement of financial assets compared with the requirements of
AASB 139. The main changes are described below.
a. Financial assets that are debt instruments will be classified based on
(1) the objective of the entity's business model for managing the financial assets;
(2) the characteristics of the contractual cash flows.
b. Allows an irrevocable election on initial recognition to present gains and losses on investments in equity
instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments
that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on
disposal of the instrument.
c. Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing
so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring
assets or liabilities, or recognising the gains and losses on them, on different bases.
d. Where the fair value option is used for financial liabilities the change in fair value is to be accounted for as
follows:
• The change attributable to changes in credit risk are presented in other comprehensive income (OCI)
• The remaining change is presented in profit or loss
If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit
risk are also presented in profit or loss. Consequential amendments were also made to other standards as a result of
AASB 9, introduced by AASB 2009-11 and superseded by AASB 2010-7 and 2010-10. The AASB issued a revised
version of AASB 9 (AASB 2013-9) during December 2013. The revised standard incorporates three primary
changes:
• New hedge accounting requirements including changes to hedge effectiveness testing, treatment of hedging
costs, risk components that can be hedged and disclosures
• Entities may elect to apply only the accounting for gains and losses from own credit risk without applying
•
the other requirements of AASB 9 at the same time
In February 2014, the IASB tentatively decided that the mandatory effective date for AASB 9 will be 1
January 2018
AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non Financial Assets – Effective
from 1 January 2014
AASB 2013-3 amends the disclosure requirements in AASB 136 Impairment of Assets. The amendments include
the requirement to disclose additional information about the fair value measurement when the recoverable amount
of impaired assets is based on fair value less costs of disposal.
Annual Improvements 2010 – 2012 Cycle – Annual Improvements to IFRS 2010 – 2012 Cycle – Effective 1 July
2014.
This standard sets out amendments to International Financial Reporting Standards (IFRSs) and the related bases for
conclusions and guidance made during the International Accounting Standards Board’s Annual Improvements
process. These amendments have not yet been adopted by the AASB. The following items are addressed by this
standard:
•
IFRS 2 -Clarifies the definition of 'vesting conditions' and 'market condition' and introduces the definition
of 'performance condition' and 'service condition'.
33
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
•
•
•
•
IFRS 3 -Clarifies the classification requirements for contingent consideration in a business combination by
removing all references to IAS 37.
IFRS 8 -Requires entities to disclose factors used to identify the entity's reportable segments when
operating segments have been aggregated. An entity is also required to provide a reconciliation of total
reportable segments' asset to the entity's assets.
IAS 16 & IAS 38 -Clarifies that the determination of accumulated depreciation does not depend on the
selection of the valuation technique and that it is calculated as the difference between the gross and net
carrying amounts.
IAS 24 -Defines a management entity providing KMP services as a related party of the reporting entity.
The amendments added an exemption from the detailed disclosure requirements in paragraph 17 of IAS
24 for KMP services provided by a management entity. Payments made to a management entity in respect
of KMP services should be separately disclosed.
AASB 1031 Materiality – Effective 1 January 2014
The revised AASB 1031 is an interim standard that cross-references to other Standards and the Framework (issued
December 2013) that contain guidance on materiality. AASB 1031 will be withdrawn when references to AASB
1031 in all Standards and Interpretations have been removed.
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.
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;
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which
is the higher if its fair value less costs of disposal and value in use. The value in use calculation is based on a
discounted cash flow model. The recoverable amount is sensitive to the discount rate used for the discounted cash
flow model as well as the expected future cash inflows and the growth rates used for extrapolation purposes.
Capitalised development costs
Initial capitalisation of development costs is based on managements judgement that technological and economical
feasibility is confirmed, usually when a product development project has reached a defined milestone. In
determining the amounts to be capitalised, management makes assumptions regarding the expected future cash
generation of the project, discount rates to be applied and the expected period of benefit. At 30 June 2014, the
carrying amount of capitalised development costs was $NIL. (2013: $NIL).
34
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
3
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS CONTINUED
(i) Significant accounting judgements
Revenue Recognition - Long term Cord Blood Storage Contracts
Long term cord blood storage contracts involve the calculation of an estimate of the costs of providing the storage
service over the term of the contract. As these contracts are long term in nature, estimates are required in respect of
the following:
- Cost of provision of up front service;
- Cost of provision of ongoing long term storage service; and
-
Interest component in relation to deferred payment.
These calculations impact the overall balance of revenue, unearned revenue and debtors at year end. In determining
these amounts, a present value calculation is performed in respect of the deferred components of the contract, which
involves the determination of an appropriate discount rate. The estimate of the discount rate is reviewed on an
annual basis by the directors to ensure that it is reasonable and reflective of current risks and returns.
In the 2012 financial year, the Board re assessed the discount rate applied to the calculation of the present value of
the long term contracts to 13.9%. This change in discount rate was determined after a detailed assessment of
historical default risk, costs of capital and the risk free rate. That change in this discount rate resulted in a change in
accounting estimates in accordance with AASB 108. The 13.9% rate is assessed as appropriate at the date of this
report.
The reduction in the discount rate during 2012 resulted in an alteration of the allocation of future revenue between
cord blood and interest. The change accelerated the recognition of cord blood revenue over the term of the contract.
As that resulted in a prospective change to the amount of revenue recognised, the impacts of the accelerated cord
blood revenue were apportioned in revenue over the remaining average contract life. In relation to the 2014
financial year, an amount of $6,264 was taken to the profit and loss resultant from the above re assessment.
Revenue Recognition - Long term Tissue Storage Contracts
Long term tissue storage contracts involve the calculation of an estimate of the costs of providing the storage service
over the term of the contract. As these contracts are long term in nature, estimates are required in respect of the
following:
- Cost of provision of up front service;
- Cost of provision of ongoing long term storage service; and
-
Interest component in relation to deferred payment.
These calculations impact the overall balance of revenue, unearned revenue and debtors at year end. In determining
these amounts, a present value calculation is performed in respect of the deferred components of the contract, which
involves the determination of an appropriate discount rate. The estimate of the discount rate is reviewed on an
annual basis by the directors to ensure that it is reasonable and reflective of current risks and returns.
Assumptions and Qualitative Impacts of Fair Value Assumptions
When the fair values of financial assets and financial liabilities recorded in the statement of financial position
cannot be measured based upon quoted prices in active markets, their fair value is measured using valuation
techniques, including discounted cash flow modelling. The inputs to these models are taken from observable
markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values.
Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions
about these factors could affect the reported fair value of financial instruments.
35
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
3
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS CONTINUED
Taxation
Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws and the amount
and timing of future taxable income. The group’s accounting policy for taxation requires management’s judgement
as to the types of arrangements considered to be a tax on income in contrast to an operating cost. Judgement is also
required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised in the statement
of financial position. Deferred tax assets, including those arising from un recouped tax losses, capital losses and
temporary differences, are recognised only where it is considered more likely than not that they will be recovered,
which is dependent on the generation of sufficient future taxable profits.
The Group has $1,222,079 unconfirmed (2013: $2,039,774) tax losses carried forward and recognised on the
statement of financial position. Assumptions about the generation of future taxable profits and repatriation of
retained earnings depend on management’s estimates of future cash flows. Judgements are also required about the
application of income tax legislation. These judgements and assumptions are subject to risk and uncertainty, hence
there is a possibility that changes in circumstances will alter expectations, which may impact on the amount of
deferred tax liabilities or assets recognised on the statement of financial position and the amount of other tax losses
and temporary differences not yet recognised. In such circumstances, some or all of the carrying amounts of
recognised deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to
the statement of comprehensive income.
Share based payment transactions
The group measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined using a binomial model. The
accounting estimates and assumptions relating to equity-settled share based payments would have no impact on the
carrying amounts of assets and liabilities within the next annual reporting period but may impact on expenses and
equity.
Estimated useful lives of assets
The estimation of the useful lives of assets and their residual values has been based on historical experience as well
as manufacturers’ warranties. In addition, the condition of assets is assessed at least once per year and considered
against the remaining useful life. Adjustments to useful lives are made when considered necessary. The estimated
useful life of licenses acquired has been based upon the useful life of the patents and associated methodologies
underpinning the license. The assessment of useful life is reviewed annually by the Board to determine whether the
assumptions made continue to be appropriate and supportable given the license conditions and underlying patents.
If the useful life assessment is assessed as inappropriate, either due to a change in license conditions or patents, it is
changed on a prospective basis.
As at 30 June 2014 the Board has assessed a finite life on the license fee in line with the underlying patents and
associated methodologies. No amortisation charge has been recorded for the current financial year due to the
immaterial nature of the charge in this initial year of acquisition.
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
36
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
3
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS CONTINUED
Make good provisions continued
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.
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 2014 – Consolidated
Total segment revenue
Segment profit before ITDA
30 June 2013 – Consolidated
Total segment revenue
Segment profit before ITDA
Total Segment assets
30 June 2014
30 June 2013
Biological
Services
$
Warehousing &
Distribution
$
Total
$
4,497,967
334,656
4,923,234
697,660
9,421,196
1,032,316
4,104,718
390,072
4,659,741
1,114,922
8,764,459
1,504,994
6,777,506
6,510,401
4.855,974
4,782,863
11,633,480
11,293,264
A reconciliation of operating EBITDA is provided as follows:
Operating EBITDA
Interest revenue
Depreciation and amortisation
Finance costs
Profit before tax
Consolidated
30 June 2014
$
1,032,316
250,182
(597,584)
(6,600)
678,314
30 June 2013
$
1,504,994
266,656
(582,827)
(7,825)
1,180,998
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.
37
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
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
(d) Depreciation and amortisation
Depreciation – plant & equipment
7(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
30 June 2014
$
30 June 2013
$
9,171,014
8,497,803
250,182
9,421,196
266,656
8,764,459
6,600
7,825
417,833
458,727
2,826,340
274,641
3,100,981
2,371,805
239,865
2,611,670
17
597,584
582,827
(189,625)
361,252
(361,252)
16,913
68,963
(172,712)
68,963
(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% (2013:
30%)
Other items (net)
Recognition of previously unrecorded losses
against current year taxable income
Recognition of income tax losses previously
unrecognised
Income tax (expense)benefit
678,314
1,237,373
(203,495)
(371,212)
13,870
16,913
-
(172,712)
9,960
361,252
68,963
68,963
38
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
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
Superannuation contributions
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
2014
$
2013
$
146,285
449
15,162
37,986
41,898
-
13,266
149,315
-
14,124
25,986
31,173
24,452
14,777
366,924
611,932
(18,597)
(19,826)
603,373
851,933
603,373
-
603,373
851,933
-
851,933
(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 unconfirmed tax losses arising in Australia of $1,223,079 (2013: $2,039,774) that are available for
offset against future taxable profits of the company. The deferred income tax asset of $366,924 (2013: $611,932)
arising from these losses has been brought to account in its entirety at reporting date, as realisation of the benefit is
now regarded as probable.
Tax consolidation
Effective from 1 July 2002, Cryosite Limited and its 100% owned subsidiary formed a tax consolidated group. On
formation of the tax consolidated group, the entities in the tax consolidated group agreed to enter into a tax sharing
deed which will, in the opinion of the directors, limit the joint and several liability of the wholly-owned entities in
the case of default by the head entity Cryosite Limited. The tax sharing deed was signed on 12 May 2011.
39
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
7
INCOME TAX continued
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
2014
$
2013
$
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)
1.08 cents
1.07 cents
2.68 cents
2.65 cents
Basic EPS disclosure
Earnings used in EPS calculation
Net profit attributable to ordinary equity holders of the parent
505,602
505,602
1,249,961
1,249,961
Weighted average number of ordinary shares for basic earnings per share
46,804,111
46,639,563
No of shares.
No of shares.
Diluted EPS disclosure
Earnings used in diluted EPS calculation
Net profit attributable to ordinary equity holders of the parent
505,602
505,602
1,249,961
1,249,961
Diluted EPS disclosure continued
No of shares.
No of shares.
Weighted average number of ordinary shares for basic earnings per share
46,804,111
46,639,563
Shares deemed to be used for no consideration – options
355,452
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
40
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
9
DIVIDENDS PAID OR PROPOSED ON ORDINARY SHARES
Declared and paid during the year:
Dividends on ordinary shares
Final unfranked dividend for 2013
1.0 cents per share
Interim unfranked dividend for 2014: 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
Consolidated
2014
$
2013
$
466,395
234,298
233,199
233,198
700,693
466,397
511,310
5,740,883
6,252,193
199,913
5,577,184
5,777,097
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 $6,252,193 (2013:
$5,777,097).
Reconciliation of cash
For purposes of the Statement of Cash Flow, cash and cash equivalents as at 30 June 2014 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
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
Decrease (Increase) in inventory
Decrease (Increase) in other assets
Decrease (Increase) in deferred tax asset
Increase (decrease) in trade and
other creditors
Increase in unearned income
Increase (Decrease) in allowance for impairment loss on trade
receivables
Increase (Decrease) in employee benefits –
annual leave
Net cash flow from operating activities
505,602
1,249,961
597,584
(7,876)
582,827
17,922
(487,636)
4,103
234,030
248,560
84,189
326,205
(309,686)
(13,122)
(120,312)
(68,963)
191,397
369,632
40,000
(32,000)
(2,225)
1,542,536
72,015
1,939,671
41
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
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
Consolidated
2014
$
1,892,354
(126,619)
1,765,735
131,560
2013
$
1,538,067
(86,619)
1,451,448
187,290
1,897,295
1,638,738
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 to 24 months or annually. A provision for
impairment loss is recognised when there is objective evidence that an individual trade receivable is impaired.
During the financial year the allowance was increased by $40,000 (2013: decreased by $32,000) 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.
Movements in the provision for impairment loss were as follows:
At the beginning of the year
Increase/(reduction) in impairment
loss during the year
At the end of the year
(b) Analysis of trade receivables
86,619
118,619
40,000
126,619
(32,000)
86,619
At 30 June, the ageing analysis of trade receivables is as follows:
Total
Not yet
due
$
$
0-30
Days
$
31-60
Days
$
1,892,354
796,195
646,892
796,195
795,616
-
168,922
-
61-90
Days
PDNI*
$
87,468
-
+91
Days
PDNI*
$
+91
Days
CI**
$
82,062
-
111,394
-
2,688,549 1,443,087
795,616
168,922
87,468
82,062
111,394
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
2014
Current
Non-Current
Total
Consolidated
2013
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.
42
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
12 CURRENT ASSETS - TRADE AND OTHER RECEIVABLES continued
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.
13
CURRENT ASSETS – INVENTORIES
Consumables at cost
Total inventories at cost
14
CURRENT ASSETS - PREPAYMENTS
Consolidated
2014
$
2013
$
61,984
61,984
66,087
66,087
Prepayments
144,465
378,495
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
796,195
857,294
796,195
857,294
796,195
857,294
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
2014
%
100
2013
%
2014
$
2013
$
100
20
20
43
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
17
NON-CURRENT ASSETS - PLANT AND EQUIPMENT
Leasehold
improvements
$
Fixtures
and
fittings
$
Information
technology
Warehouse
equipment
$
$
Office
furniture &
equipment
$
Total
$
Cost
At 1 July 2012
Additions
Disposals
At 30 June 2013
Additions
Disposals
At 30 June 2014
205,000
-
-
205,000
-
-
205,000
Depreciation and Impairment
At 1 July 2012
Depreciation charge
for the year
Impairment
Disposals
At 30 June 2013
(76,876)
(38,438)
-
-
(115,314)
72,521
-
-
72,521
-
-
72,521
(52,418)
(7,953)
-
-
(60,371)
443,076
28,503
-
471,579
13,863
-
485,442
3,427,347
350,657
-
3,778,004
407,660
-
4,185,664
33,517
-
-
33,517
6,147
-
39,664
4,181,461
379,160
-
4,560,621
427,670
4,988,291
(319,326)
(80,705)
(1,706,143)
(453,961)
(30,448)
(1,770)
(2,185,211)
(582,827)
-
-
(400,031)
-
-
(2,160,104)
-
-
(32,218)
-
-
(2,768,038)
Depreciation charge
for the year
Impairment
Adjustments
Disposals
At 30 June 2014
Net book value – 30
June 2013
Net book value – 30
June 2014
(38,438)
(7,950)
(49,324)
(499,893)
(1,979)
(597,584)
-
-
-
(153,752)
-
(4)
-
(68,325)
-
-
-
(449,355)
-
-
-
(2,659,997)
-
-
-
(34,197)
-
(4)
-
(3,365,626)
89,686
12,150
71,548
1,617,900
1,299
1,792,583
51,248
4,196
36,087
1,525,667
5,467
1,622,665
18
NON-CURRENT ASSETS - INTANGIBLE ASSETS
Consolidated
2014
$
2013
$
(a) Reconciliation of carrying amounts at the beginning and the end of the year
Software development and licence fees
At cost
Accumulated amortisation
Impairment
Licence acquired
Net carrying amount
1,020,533
(713,003)
(307,530)
255,310
255,310
1,020,533
(713,003)
(307,530)
-
-
During the financial year, the Group entered into an exclusive licensing agreement within Australia and New
Zealand to assist with the in-house development of new technologies to develop the range of stem cell service
offerings. The Directors have assessed a finite life to the license in line with the underlying patents and associated
methodologies. No amortisation has been charged for this initial year of acquisition due to the immaterial nature of
the charge. The assessment of useful life is reviewed annually by the Board to determine whether the assumptions
made continue to be appropriate and supportable. If not, the useful life assessment is changed on a prospective
basis.
44
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
19
TRADE AND OTHER PAYABLES
CURRENT LIABILTIES
Trade payables
Other payables
Total current payables
NON-CURRENT LIABILTIES
Client deposits
Total non-current payables
Fair value
Consolidated
2014
$
2013
$
481,675
612,400
1,094,075
721,542
513,744
1,235,286
396,850
396,850
171,450
171,450
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
$
481,675
452,382
23,431
31-60
Days
$
2,492
61-90
Days
$
3,370
721,542
314,508
326,997
77,704
2,333
+91
Days
$
-
-
2014
Consolidated
2013
Consolidated
Other balances within trade and other payables are not past due. It is expected that these other balances will be paid
20
CURRENT LIABILITIES - UNEARNED INCOME
Unearned service revenue
Consolidated
2014
$
2013
$
392,662
368,071
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
2,920,750
2,619,136
Represents cord blood revenues received in advance for services to be rendered under long-term storage contracts.
45
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
22
CURRENT LIABILITIES - PROVISIONS
Annual leave
Long service leave
Dividends payable
NON – CURRENT LIABILITIES - PROVISIONS
22
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
363,466
83,559
1,390
448,415
365,691
97,108
1,339
464,138
40,591
205,000
245,591
34,918
205,000
239,918
365,691
(2,225)
363,466
293,676
72,015
365,691
132,026
(7,876)
124,150
114,104
17,922
132,026
Nature and timing of long service leave provision
For the relevant accounting policy and the significant estimations and assumptions applied in the measurement of
this provision refer to Note 3.
Dividends
Balance at beginning of the year
Declared during the year
Final 2013 plus 2014 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
1,339
700,693
10,667
466,397
(700,642)
1,390
(475,725)
1,339
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.
The current lease agreement provides for an extension and the current provision is considered adequate based on the
Company contemplating an extension of the lease for a further term.
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.
46
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
23
CONTRIBUTED EQUITY
Ordinary shares
Movement in ordinary shares on issue
2014
2013
8,204,766
8,138,766
2014
Shares
No.
$
2013
Shares
No.
$
Beginning of the financial year
Options exercised
46,639,563
220,000
8,138,766
66,000
46,639,563
-
8,138,766
-
End of the financial year
46,859,563
8,204,766
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 dividends declared
Balance at the end of the year
24
RESERVES
Share options reserve
Movements in share options reserve
Balance at the beginning of the year
Balance at the end of the year
Consolidated
2014
$
2013
$
(2,113,656)
505,602
(700,693)
(2,308,747)
(2,897,220)
1,249,961
(466,397)
(2,113,656)
239,118
239,118
239,118
239,118
239,118
239,118
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 2014 are as follows:
Within one year
After one year but not more than five years
Consolidated
2014
$
344,520
119,764
464,284
2013
$
331,261
464,284
795,545
47
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
25
COMMITMENTS AND CONTINGENCIES continued
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.
(a) Operating lease commitments – Group as lessee - continued
Future minimum rentals payable under non-cancellable operating leases as at 30 June 2014 are as follows:
Consolidated
2014
$
23,493
18,892
42,385
2013
$
37,299
50,014
87,313
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.
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 2014
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
2014
$
2013
$
73,552
67,609
11,985
85,537
5,390
72,999
48
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
28
RELATED PARTY DISCLOSURES
The consolidated financial statements include the financial statements of Cryosite Limited and its wholly owned
subsidiary Cryosite Distribution Pty Limited. For details, refer to Note 16.
Cryosite Limited is the ultimate parent entity.
Cryosite Distribution Pty Limited neither has a bank account nor does it hold any cash in its own right. All receipts
and payments for this entity are made by Cryosite Limited, with the amounts charged against an inter-company loan
account. No interest is payable on this balance and no amounts are due and payable.
Cryosite Limited and Cryosite Distribution Pty Limited are part of a tax consolidation group and has entered into a
tax funding agreement. Under this agreement, payments are to be made for tax losses transferred between entities in
the group. Refer to Note 7.
Cryosite Limited has received a dividend from Cryosite Distribution Pty Limited for $Nil (2013: $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
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.
(a) Employee Share Option Plan continued
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.
49
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
29
SHARE-BASED PAYMENTS EXPENSE CONTINUED
(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:
2014
2013
Options
No.
520,000
-
(220,000)
300,000
-
300,000
300,000
WAEP
Cents
Options
WAEP
No.
Cents
-
-
-
-
-
30
30
520,000
-
-
520,000
220,000
300,000
520,000
30
-
30
30
30
30
30
Balance at beginning of year
Issued during the year
Exercised during the year
Balance at end of the year
Balance at year end comprised as follows:
- Philip Alger
- Graeme Moore
Share based options payment:
Parties to option agreement - Graeme Moore
Rights Granted and grant date
Share options granted 1 December 2007 Graeme Moore 300,000
Option exercise price
One third at $0.20 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 - Nil
Prior year’s expense taken to account $-
Value of options forfeited $-
Balance at the end of the financial year not yet expensed $-
Calculation of fair value of option
Valuation was made using the binomial method in accordance with the requirements of accounting standards.
Calculations were based on the expected contractual life of the options using the average weekly historical
share price of the company over the previous 12 months.
The expected volatility used was 79% with an interest-free risk rate of 6.70%.
The market share price at date of grant was 19 cents.
50
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
30
SUPERANNUATION
The Group contributed the equivalent of 9.25% 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)
Key management personnel
Gordon Milliken
Graeme Moore
Mark Marshall
Philip Alger
Managing Director (retired 9/4/14)
Executive Director and Acting CEO
Chief Financial Officer (part year)
Chief Financial Officer (part year)
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
2014
$
2013
$
140,000
12,951
152,951
556,682
102,569
59,048
-
718,299 *
80,000
7,200
-
-
87,200
490,210
74,792
9,589
-
574,591
Total compensation
871,250
661,791
*Including termination payments
51
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
32
FINANCIAL INSTRUMENTS
The Group’s principal financial liabilities comprise of trade payables. The Group has various financial assets such
as trade receivables, cash and short-term deposits, which arise directly from its operations.
The Group does not enter into any derivative transactions. The main risks arising from the Group’s financial
instruments are cash flow interest rate risk and credit risk. The Board of Directors reviews and monitors each of
these risks.
(a)
The Group’s exposure to the risk of changes in market interest rates relates primarily to:
Interest rate risk
-
-
cash and cash deposits with floating interest rates; and
assessments of appropriate discount rates for deferred arrangements.
The consolidated entity's exposure to interest rate risk and the effective weighted average interest rate for classes of
financial assets is set out below:
2014
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
Note
10
10
12
Weighted
average
effective
interest rate
%
Floating
interest
rate
$
Fixed
interest
rates
$
Non
interest
bearing
$
Total
$
3.21
0.015
3.8
5,740,883
511,310
-
-
-
-
5,740,883
511,310
-
6,252,193
446,520
446,520
2,246,970
2,246,970
2,693,490
8,945,683
Financial liabilities
Trade creditors and accruals –
maturing at various dates during the
year ending 30 June 2014.
19
2.5
452,382
-
641,693
1,094,075
2013
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
$
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
52
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
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%
Post Tax Profit
Higher (Lower)
2014
$
80,970
(59,681)
2013
$
111,431
(83,573)
Discount rate sensitivity analysis
The following sensitivity analysis is based on a discount rate of 13.9% (2013: 13.9%) 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
Consolidated
Up by 2%
Down by 2%
Price risk – Equity and Commodity
(b)
The Group has no exposure to commodity and equity securities price risk.
Post Tax Profit
Higher (Lower)
2014
$
(6,251)
6,251
2013
$
(8,825)
8,825
Credit risk
(c)
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade and other
receivables. The Group's exposure to credit risk arises from potential default of the counter party, with a maximum
exposure equal to the carrying amount of these instruments. Exposure at balance date is addressed in each
applicable note.
The Group trades with a number of types of customers, the main ones being:
Incorporated companies
-
- Research institutes both private and academic
-
Individuals.
Incorporated companies:
The Group trades with recognised, publicly listed companies and large unlisted proprietary companies and as such
collateral is not requested nor is it the Group's policy to securitise its trade and other receivables.
Research institutes both private and academic
The Group also trades with research institutes that are either publicly, privately or government owned along with
recognised universities. Such customers are subject to credit search and collateral is not requested nor is it the
Group's policy to securitise its trade and other receivables.
Individuals:
The Group ensures that credit card information is obtained for all individual customers.
It is the Group's policy that all customers who wish to trade on credit terms are subject to credit verification
procedures including an assessment of their independent credit rating, financial position, past experience and
industry reputation. Risk limits are set for each individual customer in accordance with parameters set by the
Board. These risk limits are regularly monitored.
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.
53
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
32
FINANCIAL INSTRUMENTS CONTINUED
Liquidity risk
(d)
The Group has assessed liquidity risk to be low at balance date and at the date of this report based on total current
assets, including cash and equivalents, of $8,355,937 at balance date less current liabilities of $1,935,152, an excess
of current assets over current liabilities amounting to $6,420,785. The Group generated a positive $1,542,536 cash
flow from operations during the current year.
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 2014
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
$
6,252,193
1,784,442
8,036,635
-
-
-
6,252,193
107,912
107,912
406,117
406,117
390,078
2,688,549
390,078
8,940,742
1,094,075
1,094,075
-
-
-
-
-
-
1,094,075
1,094,075
Net maturity
6,942,560
107,912
406,117
390,078
7,846,667
Maturity analysis of financial assets and liabilities based on management’s expectation (continued).
Year ended
30 June 2013
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
$
5,777,097
1,563,630
7,340,727
1,235,286
6,105,441
-
-
-
5,777,097
74,882
74,882
371,707
371,707
485,813
2,496,032
485,813
8,273,129
-
-
-
1,235,286
74,882
371,707
485,813
7,037,843
54
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
32
FINANCIAL INSTRUMENTS CONTINUED
(e)
Capital management
When managing capital, the boards’ objective is to ensure the entity continues as a going concern as well as to
maintain returns to shareholders. The board also aims to maintain a capital structure that ensures the lowest cost of
capital available to the entity.
The Board of Directors is responsible for assessing financial risks, related controls and other financial risk
management strategies. The Company deploys its assets and liabilities so as to manage risk at commercially
appropriate levels, bearing in mind the constraints imposed by the consolidated entity’s size, results and other
financial circumstances. The Company aims to balance opportunities to improve profitability against related risks of
losses of assets or the incurrence of additional liabilities.
Fair value
(f)
All financial assets and liabilities have been disclosed in the financial statements and notes thereto at their carrying
value, which approximates their net fair values.
The fair value of the assets and liabilities is included at the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or liquidation sale.
Fair values of balances related to long term revenue contracts are determined using a discounted cash flow method
using discount rates that reflect the appropriate level of risk over the life of the long term revenue stream.
PARENT ENTITY FINANCIAL INFORMATION
33
The individual financial statements for the parent entity show the following aggregate amounts:
AS AT 30 JUNE 2014
(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
2014
$
2013
$
8,156,668
3,277,563
7,645,197
3,501,830
11,434,231
11,147,027
1,754,154
3,563,191
1,870,546
3,030,504
5,317,345
4,901,050
8,204,766
239,118
(2,326,998)
8,138,766
239,118
(2,131,907)
6,116,886
6,245,977
505,602
1,249,961
505,602
-
1,249,961
55
Australia’s Family Cord Blood Bank
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2014
33
PARENT ENTITY FINANCIAL INFORMATION continued
(e) GUARANTEES ENTERED INTO BY THE PARENT ENTITY
No guarantees have been entered into by the parent entity in relation to the debts of its subsidiaries.
(f) COMMITMENTS AND CONTINGENCIES OF THE PARENT ENTITY
Commitments and contingencies for the parent entity are the same as those disclosed in Note 25.
56
Australia’s Family Cord Blood Bank
DUNCAN
DOVICO
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 2014, 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 2014.
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.
D U N C A N D O V I C O R I S K & A S S U R A N C E P T Y L I M I T E D
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 39 151 805 275
Liability limited by a scheme approved under Professional Standards Legislation
57
DUNCAN
DOVICO
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)
(ii)
giving a true and fair view of the consolidated entity’s financial position as at 30
June 2014 and of its performance for the year ended on that date; and
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 2014. 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 2014, complies with
section 300A of the Corporations Act 2001.
DUNCAN DOVICO RISK & ASSURANCE PTY LIMITED
Rosemary Megale
Director
Sydney, 27th August 2014
D U N C A N D O V I C O R I S K & A S S U R A N C E P T Y L I M I T E D
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 39 151 805 275
Liability limited by a scheme approved under Professional Standards Legislation
58
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 22 August 2014.
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
2014
2013
Shareholder
No. of shares % of issued capital No. of shares % of issued capital
Andrew John Kroger
11,706,943
Cell Care Australia Pty. Ltd
10,709,334
24.98
22.96
10,706,943
10,709,334
22.96
22.96
Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
SHAREHOLDER
LISTED ORDINARY SHARES
CELL CARE AUSTRALIA PTY LTD
COFAX BAY PTY LIMITED
PROCESS WASTEWATER
TECHNOLOGIES LIMITED
FITEL NOMINEES LIMITED
UBS WEALTH MANAGEMENT
AUSTRALIA NOMINEES PTY LTD
BELL POTTER NOMINEES LTD
KHAEMET PTY LTD
MR ALISTAIR DAVID STRONG
CORNISH GROUP INVESTMENTS PTY
LTD
MR THEO ONISFOROU
MRS ERICA MARGARET STRONG
NARON NOMINEES PTY LTD
MR STEPHEN ROBERTS
H F A ADMINISTRATION PTY LIMITED
ANADYOMENE PTY LTD
SUNNYIT PTY LTD
WIFAM INVESTMENTS PTY LTD
ASIA UNION INVESTMENTS PTY LTD
ONMELL PTY LTD
RNT SUPER PTY LTD
TOTAL
Number of
shares
10,639,995
9,314,276
2,392,667
2,000,000
1,814,700
1,758,236
1,290,418
1,060,000
1,050,300
1,008,753
880,000
839,416
644,994
480,000
400,000
320,500
300,000
300,000
299,910
287,500
37,081,655
% of ordinary
shares
22.71%
19.88%
5.11%
4.27%
3.87%
3.75%
2.75%
2.25%
2.24%
2.15%
1.88%
1.79%
1.38%
1.02%
0.85%
0.68%
0.64%
0.64%
0.64%
0.61%
79.11%
59
Australia’s Family Cord Blood Bank
ASX Additional Shareholder Information
DISTRIBUTION OF EQUITY SECURITIES
Number of shareholders by size of holding
1,000
5,000
10,000
100,000
and over
1
1,001
5,001
10,001
100,001
Total
Voting Rights
Ordinary Shares
Number of
Holders
Number of
Shares
37
248
76
157
39
557
18,962
932,494
632,442
4,965,428
40,310,237
46,859,563
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 48 and they hold 31,479 shares.
60
Australia’s Family Cord Blood Bank
Directors
Andrew Kroger
(Non-Executive Chairman)
Christina Boyce
(Non-Executive Director)
Graeme Moore
(Acting CEO)
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
Auditors
Duncan Dovico, Chartered Accountants
Level 12, 90 Arthur Street
Northn Sydney, NSW 2060
T: +61 2 9922 1166
F: +61 2 9922 2044
Cryosite is established with the specific
objective of providing
specialised
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
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Australia’s Family Cord Blood Bank
ANNUAL REPORT
2014
www.cryosite.com
121 Creative BOTANYABN 86 090 919 476