Cryo-Save Group N.V. Annual report Confident about thefuture

Transcription

1 Cryo-Save Group N.V. Annual report 2008 Confident about thefuture

2 Cryo-Save Group is a profitable emerging healthcare services group whose business focuses on the collection, processing and storage of human adult stem cells collected from the umbilical cord blood, and the umbilical cord itself, at birth. TheGroupcurrently tradesin38 countries, principally in Europe. It operates four laboratories where it has to date stored in excess of 100,000 stem cell samples. Management estimates that the Group has 50% of the total cord blood stem cell storage market in Europe. Contents 01 Business & financial highlights 02 Facts & figures 04 Industry leaders 06 Global reach 08 What our customers say 10 Chairman s statement 12 Chief Executive s review 14 Operating & financial review 18 Board of Directors 20 Report of Directors 23 Remuneration report 25 Corporate governance 28 Consolidated income statement 29 Consolidated balance sheet 30 Consolidated statement of changes in equity 31 Consolidated cash flow statement 32 Notes to the consolidated financial statements 58 Company income statement 58 Company balance sheet 59 Notes to the Company financial statements 62 Other information on the financial statements 64 Information for shareholders 65 Advisers

3 Cryo-Save Group N.V. Annual report Business & financial highlights Financial highlights > Revenue up 67% to b29.5 million (2007: b17.7 million) > EBITDA b4.0 million (2007: b4.4 million) > Underlying* Profit before taxation b3.9 million (2007: b4.5 million) > Underlying* Earnings per share 7.2 euro cents (2007: 10.3 euro cents) > Net cash from operations b1.9 million (underlying** 2007: b1.7 million) IFRS figures > Operating profit b2.3 million (2007: b4.2 million) > Profit for the year b2.6 million (2007: b3.9 million) > Earnings per share 5.5 euro cents (2007: 10.3 euro cents) Operational highlights > Number of samples stored up 21% to 25,169 (2007: 20,814) > Strong organic growth especially in Spain, Italy, Hungary and South Eastern European countries > Commenced operations in India, including building of processing and storage facility, and France > Launch of CryoCord Gold * Underlying profit before taxation and underlying earnings per share are the reported numbers adjusted for amortization of identified intangible assets, amounting to b1.1 million before tax. ** Underlying net cash from operations 2007 is the reported number adjusted for b3 million repaid loans by related parties.

4 02 Cryo-Save Group N.V. Annual report 2008 Facts & figures No.1 Europe s leading stem cell bank With an estimated market share of 50%, the Group is the clear leader in Europe. 2New major markets During 2008, the Group successfully introduced its services into India, and explored opportunities to start operations in France. The market potential in India is substantial. There are about 200,000 births per year in the urban upper and middle class customer segments and over 27 million births per year in total. France represents potentially the largest market in Europe with around 850 thousand births per year. 38 Countries With a representation in 38 countries in total, the Group has the widest geographical spread of any company active in the marketplace. The European countries alone represent a total annual birthrate of over 5 million. In the Middle-Eastern countries the total birthrate increases rapidly and reached a level of more than 2 million in In the other countries where the Group is active(indiaandsouthafrica), the annual birthrate in the targeted market segments is about 300 thousand.

5 Cryo-Save Group N.V. Annual report % Diseases treated 20 years ago only one disease could be treated with umbilical stem cells; ten years ago only a handful. Today umbilical cord stem cells have been successfully used in the treatment and support of more than 85 primarily bone-marrow related diseases. Revenue growth in 2008 In 2008, the Group grew revenue by 67% to b29.5 million driven by a combination of the price increase successfully implemented during 2008, a 21% increase in sales volume and the impact from acquisitions. +21% Samples stored in ,000 The number of samples stored grew by 21% during the year to 25,169. This increase was entirely organic, as all of the acquisitions made were with partners who already stored their samples with the Group. Stem cell samples saved At the year end 2008 the Group had saved over 95,000 samples. On 12 March 2009, the Group announced the storage of the 100,000th sample, underlining its leading position in Europe.

6 04 Cryo-Save Group N.V. Annual report 2008 Opinion For me, the excitement of regenerative medicine is to give people a greater quality of life as they grow older. The ability to use your own body to manage serious disease is closer than ever before, thanks to the advances in research. Prof. McGuckin, President Novus Sanguis Consortium France

7 Cryo-Save Group N.V. Annual report Industry leaders Consultation with industry leaders, both in and outside Cryo-Save, is important in order to communicate with clinicians and (potential) customers to improve decision making regarding the use, efficiency and medical applications of umbilical cord stem cells. Prof. Dr. Albert Ramon Founder and President of ITERA 20 years ago no one believed that cord blood was useful. Now we know that cord blood is a major source of stem cells the potential of which for treating disease is immense. Dr. Schirren, Gynaecologist Germany Based on scientific facts storing my children s umbilical stem cells does not only mean security for today but also a big promise for tomorrow. Clinical trials In March 2009, 2,465 clinical trials are being conducted with adult stem cells. 2,465

8 06 Cryo-Save Group N.V. Annual report 2008 Growing markets Cryo-Save is Europe s leading stem cell bank, not only in terms of market share, but also in setting the highest standards in stem cell storage, and in commitment to research to further improve cryopreservation techniques. Adopting these standards also in India has proven to be very beneficial to us. Dr. Ramesh Cryo-Save / Chief Technical Officer / India

9 Cryo-Save Group N.V. Annual report Global reach Cryo-Save operates in 38 countries across Europe, Middle East, India and South Africa. We operate laboratories for processing and storage of samples in Belgium, Germany, Dubai and India. Our geographic spread provides not only a wide addressable market, but also a robust business model with no geographic dependency. 1 Europe 2 Middle East 3 India 4 South Africa Growth in existing and new markets The market potential in the 38 countries in which we operate is still largely untapped. In Europe around 1% of births stem cells are stored, and in India, South Africa and Middle East even below 1%. This gives the Group plenty of room for growth in these countries. Total revenue % 33% Spain 17% Hungary 14% Italy 12% South Eastern Europe (including Greece) 24% Other countries

10 08 Cryo-Save Group N.V. Annual report 2008 Save for life I have saved the stem cells for all my three children and I can truly recommend Cryo-Save. Maria Heinzelmann Germany

11 Cryo-Save Group N.V. Annual report What our customers say Valentina Zago Italy After contacting some private banks and reading the information, my choice at last has fallen on Cryo-Save. The solidity of the company is a guarantee that all other companies in the field cannot beat and the engagement in research is admirable and fundamental. The service has been excellent, starting from the support with all bureaucratic matters to the transport of the sample to the laboratory. I m truly happy I made this choice. I hope many other future mothers will take the possibility to preserve their baby s stem cells into consideration and will not lose this unique opportunity to preserve such a great treasure! Maria Heinzelmann Germany Before the birth of our first child I had never heard about the possibilities of storing stem cells from umbilical cord blood until a friend asked me if I would do it. I discussed the possibility with my Gynaecologist right away and he explained more possibilities to me. After reading the informationfrom thedifferent companies,ichose Cryo-Save, because the company made a really good and trustworthy impression. We received the collection kit very promptly and also my doctor was really satisfied and pleasantly surprised about the high quality kit and good documentation. I have saved the stem cells for all my three children and I can truly recommend Cryo-Save. Dani Eneva Bulgaria Iamapsychologist and work with children who have development problems due to cerebral injuries or neurological diseases. I started looking at studies/ information that describe(s) the positive results with stem cell treatment. That way I learned that there is a lot of data regarding the use of stem cells as an alternative method of treatment for children and adults in certain malignant blood disorders. We selected Cryo-Save as they are the market leader and work in three continents. Also, we knew that Cryo-Save is one of the few in this industry that store them in two different locations for security reasons. We are pleased that we made this investment, and we are impressed by the high level of service provided by Cryo-Save Bulgaria. Janine Stieger-Langenegger Switzerland The competent and friendly customer service without putting pressure on us to buy and the sincere explanation of the whole process from the collection kit all the way to the cryopreservation of the stem cells left us feeling positive and confident about saving our child s stem cells with Cryo-Save. We are really happy that, should anything happen to our daughter Melinda, we have her stem cells saved, which hopefully will help to treat her. Rachel Kahlon United Arab Emirates We are not sure where technology and science will take us. Personally, it was the thought that Sophia might one day turn round and say Why didn t you save my stem cells? that made up our minds. Cryo-Save made the storage of her cells incredibly simple and our obstetrician was happy to do it. There just didn t seem to be a strong reason not to. Fingers crossed, they won t be needed, but we feel reassured having them there.

12 10 Cryo-Save Group N.V. Annual report 2008 Chairman s statement The Group delivered on all its strategic objectives including acquiring seven entities, expanding its operations across Europe, and starting new operations in India and France. This has expanded the Group s international reach to 38 countries, providing not only a wide addressable market, but also a robust business model with no single geographic dependency. During the year, the Group also launched its new product CryoCord Gold that allows customers to store the umbilical cord tissue itself containing mesenchymal stem cells ( MSCs ), in addition to the hematopoietic stem cells ( HSCs ) taken from umbilical cord blood. The Group is also expanding its laboratory and storage capability, by building a new state-of-the-art processing and storage facility in Belgium and it acquired a new site in France. To support, manage and develop all of these activities, the Group has also accelerated its investment in its international operational infrastructure. Marc Waeterschoot Chairman Overview I am pleased to report on another year of solid performance across the Group characterized by organic growth, increasing revenues and profits and strong cash generation. During the year we achieved an organic growth of 21% in the number of samples stored, a revenue growth of 67%, EBITDA of b4.0 million and generated b1.9 million net cash from operations. This was despite the Group making substantial investments in our international organization and new geographic markets, and the difficult macro-economic conditions prevalent in the fourth quarter of the year was an exciting year of investment and transition. As a result of all the investments made during the year, Cryo-Save was transformed from a company with a central lab in Belgium, with sales offices and business partners, into a multinational firm with subsidiaries across Europe,Asia,andSouthAfrica.This transitionlaid the foundations for the strong growth in 2008, and placed us well ahead of our competitors in coming years. Financial performance Cryo-Save s leading position in its markets was underpinned by a good financial performance, given the current economic environment, that saw revenue increase to b29.5 million, up 67% on the prior year. EBITDA was b4.0 million, including b0.6 million start-up expenses for IndiaandFrance,and thegroupgeneratednet cash from operations of b1.9 million. The total number of samples stored grew by 21% during the year to 25,169 (2007: 20,814). As at 31 December 2008, the Group had stored more than 95,000 samples, confirming its position as Europe s market leading stem cell storage group. Theglobaleconomicdownturnimpacted the number of samples stored in Q4 2008, but the Group s revenue increased as a result of the successful introduction of price increase, especially in Hungary and Spain. Q storage volume was 6% below that of Q3 2008, but remained stable month on month and slightly above that of Q The storage volumes in the second half of the year were also impacted by a strategic decision not to extend the contract with one of the leading maternity hospitals in Athens, Greece although profitability of the Greek subsidiary improved. At year end 2008, our cash position was b4.7 million, net of b7.5 million investment in the new office in France, and the building under construction in Belgium. These two properties will be refinanced via a sale and lease back agreement in the first half of This will further strengthen the Group s healthy cash position.

13 Cryo-Save Group N.V. Annual report Strong organic growth, profitable and cash generative Listing on AIM The listingonaimlondonstockexchangeprovided us the funds required to pursue our strategic objectives in Despite the strong performance and delivery against all of our strategic objectives, our share price dropped significantly. Market expectations were based on economic circumstances before the economic crisis started, and it was unclear to us what would happen in recession. Also our share price suffered from the general trend of divesting small cap funds, especially on AIM, and our disappointment regarding the performance of our previous broker and nomad. However, we saw a strong recovery of the share price at the end of 2008, without any announcements. Strategy As already indicated above, during the year under review we delivered on all our strategic objectives including achieving organic growth in almost all our markets, commencing operations in India and France, the successful completion of several acquisitions and the launch of CryoCord Gold. However, this does not mean that we have reached our ultimate goals. On the contrary, these are just the first steps in achieving our ultimate ambition of becoming the world s leading stem cell storage company. Further steps in 2009 include the further international roll-out of CryoCord Gold, and the launch of our new product Cryo-Lip, which involves the collection of fat tissue containing MSCs obtainedfromliposuction,in thefirst half of Medical developments It has now been over 30 years since the first stem cell transplants were attempted and 20 years since the first validated success. Since then, the terms stem cells and regenerative medicine have moved from theories, to practice. For umbilical cord blood transplants, there has, in recent years, been an exponential explosion of new therapies. Originally it was mostly blood-related diseases that were being treated. Now, regenerative medicine, the ability to heal and support the body, has become a reality. Leading adult stem cell scientists, including those working at Cryo-Save, were some of the first to show that umbilical cord, and cord blood could produce stem cells. They pioneered the strategy to be the first to turn them into liver, nervous tissues, blood vessels and pancreas tissues. In preclinical trials (pre-human testing) stem cells have now been proven to support liver, cardiac, kidney and nervous diseases amongst others. The possibility then, that diseases, previously categorized as untreatable, or poor outcomes could benefit from stem cell therapy, started to show promise. Now around 20 human organbased tissues canbemadefromcordandcordblood in the laboratory. Clinical trials using stem cells from humans to treat humans,havenow moved from not only blood related problems, to treating organ-based diseases. Advances have shown that human umbilical cord blood can aid in the support of Type 1 Diabetes, Cerebral Palsy, Metabolic liver diseases, Beta Thalassaemia, Sickle Cell Disease, and a wide rangeofimmunedeficiencies,particularly inchildren. While these trials need more development, the range of new diseases treated in only the last few years, has been astounding. This leads then to the direct need to consider stem cell banking. People In 2008 we grew from 63 to 196 employees with operations spread across Europe, India and South Africa. We welcomed new employees from the acquired entities to become part of the Cryo-Save Group. I am very excited to see their commitment to the Group in this fast moving business; they also bring vital local experience to our global operation. We recruited several senior managers especially in the sales and marketing organization and general management of countries to manage the growth of the Group. I would like to thank all employees for their hard work and dedication. They are the basis of our success. Outlook 2009 We proudly announced on 12 March 2009 the storage of our 100,000th sample in our facilities. Despite the worldwide economic downturn, the number of samples stored in the fourth quarter of 2008 and the first two months of 2009 remained stable. We will benefit from the price increases implemented during 2008 on a full year basis in 2009, and from the start of operations in India and France. We have also taken appropriate measures to save costs where possible, andmadeourcostbasemore variable. The strong performance in the last quarter of 2008, under difficult economic circumstances, is a clear sign that we are well equipped to pursue our strategic objectives combined with a healthy profit and cash generation. We are recommending to shareholders a dividend of one euro cent per share the firstin thecompany s history. This is a clear demonstration of our confidence for the future. Marc Waeterschoot Chairman 23 March 2009

14 12 Cryo-Save Group N.V. Annual report 2008 Chief Executive s review Organic growth The 21% increase from 20,814 in 2007 to 25,169 in 2008 in the number of samples stored was entirely organic as all of the acquisitions made by the Group during the period were of partners whoalready stored their samples with the Group. The bulk of this growth was achieved in Italy, Spain, Hungary and South Eastern Europe. Organic revenue growth was achieved through a combination of increase in storage volumes and by a price increase, to bring the Group s prices more in line with its competitors in the European countries in which the Group operates. Price increases in the key markets of Hungary and Spain were only implemented in Q4 2008, under challenging economic circumstances, but despite this increase, the Group did not see any adverse impact on its sales volume. Spain and Hungary remained the Group s largest markets, and Italy developed very well in 2008, doubling the number of samples under storage compared to Rob Koremans Chief Executive Officer During the year the Group continued to grow strongly, generated cash from its operations, remained debt free and successfully delivered against all of its strategic objectives, specifically: > Organic growth as a result of developing existing markets, particularly Spain, Italy, Hungary and SouthEasternEurope,andenteringnew markets in France and India; > Implemented price increases across most markets; > Acquisitive growth completing the acquisition of seven subsidiaries and business partners in Germany, Hungary, Czech Republic, South Africa, Spain and South Eastern Europe; > Significant investment in international commercial and laboratory infrastructure; > Development andlaunchofcryocordgoldand Cryo-Lip. Acquisitions Cryo-Save acquired the following entities during 2008: Sejtbank in Hungary (January), Archiv Bunek in CzechRepublic(January),CrioCordinSpain(June),and StemCell in Germany (January). Cryo-Save also acquired the remaining 50% of the shares in Cryo-Save Balcanica (July),whichoperates insoutheasterneurope,andin Cryo-Save South Africa (March). In addition, Cryo-Save acquired Output Pharma Services GmbH,inGermany (January),alogistical service provider to pharmaceutical companies. The Group will benefit from Output s logistical experience in Germany, and will achieve synergies by housing its two former offices of Cryo-Save GmbH and Cryo-Care GmbH in the office of Output, well located at the Aachen hospital site. Furthermore Output has lab facilities that can also be used by Cryo-Save for processing and storage. By the end of 2008, the acquisitions were successfully integrated into the Group. One of the goals for 2009 is to adopt an increasingly integrated approach to sales and marketing across these recently acquired businesses. New markets in India and France During 2008, the Group successfully introduced its services into India with the establishment in March 2008 of a whollyowned subsidiary. The Group invested b1.2 million to build a laboratory (b0.8 million) and start marketing and sales activities (b0.4 million), immediately assuming a leading position as the only international operator with an established track record. The market potential is substantial as currently there are some 200,000 births per year in the urban upper and middle class customer segment, and 27 million births per year in total in India.

15 Cryo-Save Group N.V. Annual report Successful delivery against all our strategic objectives in 2008 The Group s experience and industry knowledge of state-of-the-art stem cell processing facilities has enabled the Indian subsidiary to be licensed by the Indian authorities to start operations within only nine months. The Indian operation is headquartered in Bangalore, from where it operates its processing and storage facility which has the same equipment, techniques and procedures as the Group s other laboratories. There are also sales offices in Mumbai, Ahmedabad, Delhi and Pune and the objective is to become successfulin thesefive important and highly populated cities first, before expanding sales activities to other major cities across India. India did not contribute to the Group s storage and revenue figures for 2008 as sales only started in November The Group expensed b0.4 million of start-up costs in its income statement in Cryo-Save plans to scale up its investment in its Indian subsidiary and Asia Pacific region to meet the emerging demands of these high-growth markets. Ahead of schedule, in the second half of 2008, Cryo-Save explored opportunities to start operations in France. This represents potentially the largest market in Europe with 850,000 births per year. The Group acquired a property for a net consideration of b3.5 million in Lyon in September 2008 and expensed b0.2 million of start-up costs in its income statement in The Group is currently pilot marketing in three regions of France in conjunction with a public banking organization. Samples will be stored in the French laboratory as soon as it is built and accredited. The official launch of sales activities in France is expected mid Development of new products In June 2008 the Group launched its new product CryoCord Gold, which consists of the collection and storage of the umbilical cord tissue itself containing Mesenchymal Stem Cells (MSCs), in addition to the Hematopoietic Stem Cells (HSCs) takenfromcordblood.spainand thebenelux were the first markets to introduce the product, with a phased roll out to other countries which is planned for completion in Cryo-Save is the first stem cell storage company to offer this service to customers. The development of the second new product, Cryo-Lip, which involves the collection and storage of fat tissue containing MSCs obtained via liposuction from adults, progressed well in Validation has been completed, and the phased launch is scheduled for the first half of Rob Koremans Chief Executive Officer 23 March 2009 International infrastructure During 2008, Cryo-Save invested significantly in building up its senior management to support and lead the international growth and further development of the Group. This included the appointment of an International Marketing Director, area directors for Southern and NorthernEurope,GeneralManagersinItaly,Germany andfrance,agroupfinancialcontroller anda webbased communications manager. No further senior appointments are currently planned in 2009, except for our new scientific director, who was appointed on 1 January In 2008 Cryo-Save started to develop an integrated sales and marketing approach for its services, especially acrosseurope.during thelast six monthperiod thegroup also successfully developed a new website which was launched in February 2009, and new marketing materials including flyers and brochures. However, the Group remains committed to its strategy of physician-enabled marketing and will not spend extensively on consumer marketing.

16 14 Cryo-Save Group N.V. Annual report 2008 Operating & financial review The 2008 performance of Cryo-Save was characterized by the following: Financial highlights > Revenue up 67% to b29.5 million (2007: b17.7 million); > EBITDA b4.0 million (2007: b4.4 million); > Underlying* Profit before taxation b3.9 million (2007: b4.5 million); > Underlying* Earnings per share 7.2 euro cents (2007: 10.3 euro cents); > Net cash from operations b1.9 million (underlying** 2007: b1.7 million). IFRS figures > Operating profit b2.3 million (2007: b4.2 million); > Profit for the year b2.6 million (2007: b3.9 million); > Earnings per share 5.5 euro cents (2007: 10.3 euro cents). Operational highlights > Number of samples stored up 21% to 25,169 (2007: 20,814); > Strong organic growth especially in Spain, Italy, Hungary andsoutheasterneuropeancountries; > Commenced operations in India, including building of processing and storage facility, and France; > Launch of new service offering CryoCord Gold. * Underlying profit before taxation and underlying earnings per share are the reported numbers adjusted for amortization of identified intangible assets amounting to b1.1 million before tax. ** Underlying net cash from operations 2007 is the reported number adjusted for b3 million repaid loans by related parties. Operating review Key geographies Spain, Hungary, Italy and the South Eastern European region were the geographies that successfully generated the key volume growth for the Group. Germany and Greece were behind the Board expectations. Germany mainly becauseofanincreasein the regulatory environment whilst Greece suffered from local competition with lower ethical and quality standards. The Group also decided in June 2008 not to extend a contract with one of the leading maternity hospitals in Athens, due to too high commission fees. As a consequence, the profitability of the Greek subsidiary improved, although the number of samples stored was reduced by 2,000 on an annual basis. Spain Spain was Cryo-Save s largest market in After the acquisition of CrioCord in June 2008, the Group continued to operate with two subsidiaries, CrioCord and Cryo-Save Espana, both of which have a strong brand name in the Spanish market. Sales volume grew by 42% compared to 2007, strengthening the Group s market position in Spain. During 2008 CrioCord benefited from contracts signed with private insurers and maternity hospitals, which gave the business a significant competitive advantage. CrioCord also started joint marketing campaigns with private insurers in the second half of the year, which created more awareness and credibility for its services amongst potential customers. Prices in Spain are traditionally low, but CrioCord and Cryo-Save Espana increased their prices in Q4 2008, to bring them in line with most of their competitors. The Group did not experience any adverse impact of this price increase, on the contrary, sales remained strong. Hungary Cryo-Save acquired its Hungarian partner Sejtbank as of 1 February By increased marketing spend in combination with a targeted promotion campaign towards pregnant women, Sejtbank strengthened its leading position, resulting in sales volume up 15% on Although local competition is strong in Hungary, Sejtbank increased its prices in Q4 2008, to bring it in line with its competitors.likespain,sejtbankdidnot seeanegative impact on sales volume from this price increase. A view of the storage facility with the continuously monitored dewars that contain the stem cells.

17 Cryo-Save Group N.V. Annual report Operating & financial reviewcontinued Italy During 2008 the Group clearly benefited from the investments made in the Italian sales force. Sales volume more than doubled compared to 2007, in combination with a price increase from the beginning of Italy is the first country where the Group has introduced its Controlled Sharing Program which allow customers to opt for combined private/public storage. The Italian operationalsooffers thecustomersadownpayment facility. On 1 October 2008 a General Manager was appointed in Italy to further strengthen and manage the organization s growth in this important market. South Eastern Europe (including Greece) In July 2008 the Group acquired the remaining 50% of the shares in its joint venture Cryo-Save Balcanica, which has been the Group s leading distributor in Greece since 2005,andoperates in thesoutheasterneuropean countries through a partnership model. During 2008 the Group suffered from fierce competition from small local players in Greece, resulting in a decrease of sales. Cryo-Save remains fully committed to its high ethical standards and qualitative business procedures, and does not compromise its standards or service quality. As a result the Group chose not to pursue some sectors of the Greek market. Sales were also lower in the second half of 2008 because the Group chose not to extend a contract with one of the leading maternity hospitals in Athens which had requested prohibitively high fees for Cryo-Save to render its services. As a consequence, volume decreased but profitability increased. InJanuary 2008 theprices were increased in Greece, in line with the rest of the Group s European markets without any adverse effect on sales volume. In response to these market conditions, the Greek operation changed its sales strategy during the year to engage local sales agents who are closer to the markets in which Cryo-Save Balcanica operates. Sales in the countries in the South Eastern European region (Romania, Bulgaria, Croatia, Serbia, Slovenia, Cyprus, Malta, Macedonia) almost tripled compared to 2007, making it a successful and important region for the Group. Cryo-Save successfully operates with partners in these countries, which work exclusively with the Group. Other countries The other countries, including Switzerland, South Africa, Czech Republic, The Netherlands, and Belgium account for 24% of the revenue of the Group. The number of samples stored from Swiss customers was 20% up on The remaining countries all showed a performance in line with previous year. Financial review Revenue Group revenue increased by 67% to b29.5 million (2007: b17.7 million). Revenue was positively impacted by the release of deferred revenue of b0.3 million, representing income for the annual storage of all stored samples. Revenue growth was driven by a combination of the price increase implemented during 2008 across the Group s operations, to be in line with most of its competitors, and the sales volume growth of 21% (2008: 25,169 samples stored, 2007: 20,814 samples stored). Acquisitions contributed b6.8 million during 2008, excluding b1.8 million revenue from Output Pharma Services GmbH. The acquisitions impacted revenue as on completion, thegroup recognized thefullcustomer feeas revenueinsteadof theprocessingand storagefee the Group used to receive from its partners. The Group also consolidated 100% of the revenue of Cryo-Save s previous joint ventures in South Eastern Europe and South Africa. Geographical breakdown of revenue: 2008 in 2007 in e 000 b 000 Spain 9,778 5,051 Hungary 4,942 1,989 Italy 4,177 1,824 South Eastern Europe (including Greece) 3,426 3,474 Other countries 5,375 4,868 Sub-total revenue from samples stored 27,698 17,206 Other revenue 1, Total 29,485 17,706 Other revenue relates to sales from Output Pharma Services GmbH, acquired in January 2008, that provides services to pharmaceutical companies. Gross profit and gross margin Gross profit increased by 78% to b20.2 million (2007: b11.3 million). The impact from acquisitions, and the price increase, which was introduced across the Group during 2008, were the main drivers for growth. Operating expenses Operatingexpenses,excludingdepreciationand amortization, as planned increased to b16.3 million (2007: b6.9 million) reflecting the Group s acquisitions and substantial investment programme to support the international growth strategy. The consolidation of operating expenses from acquisitions, mainly relating to marketing and sales expenses of the acquired entities, amounted to b4.3 million.

18 16 Cryo-Save Group N.V. Annual report 2008 Operating & financial reviewcontinued The Group expensed start-upcosts for itsnew operations in India (b0.4 million) and France (b0.2 million) in In India sales activities started in November 2008 and the laboratory has been accredited by the Indian authorities. Over 30 people have been recruited, mainly sales staff. In France the new General Manager was appointed on 1 October 2008, together with some employees to start up the business. The Group incurred the full year impact of the Italian and German sales organization which were recruited during 2007 and early 2008, as well as the costs of the new GeneralManagersfor thesecountries,bothof whom started at 1 October Operating expenses of these two countries, excluding the acquired company Output Pharma Services GmbH in Germany increased by b1.7 million in total compared to The Group substantially strengthened its internal organization as outlined above. The Group also experienced costs related to its shares being traded on AIM. Employment Full time equivalents (FTEs) increased from 63 to 196, half of which was caused by organic growth, mainly reflecting the startof theoperations inindia, theincreaseof sales staff in Italy, and the appointment of senior sales and marketing management. Acquisitions were the other reason for growth. EBITDA EBITDA was b4.0 million (2007: b4.4 million) as a result of strategic decisions to accelerate the Group s international investment and growth strategy. Operating profit Underlying operating profit (operating profit before b1.1 million amortization) was b3.4 million (2007: b4.2 million). Amortization relates to the identified intangible assets (brand name, customer database) of the acquired companies. Reported operating profit was b2.3 million (2007: b4.2 million). Finance income and costs Finance income increased from b0.4 million in 2007 to b1 million in 2008 mainly because of the interest on bank deposits (b0.4 million) and translation differences of the Hungarian Forint (b0.2 million). The increase of finance costs of b0.4 million is mainly caused by the non-cash unwinding of the net present value of earn-out liabilities regarding the acquisitions. Pretax profit The Group s underlying pretax profit (pretax profit before b1.1 million amortization) was b3.9 million (2007: b4.5 million) with reported profit before tax of b2.9 million (2007: b4.5 million). Taxation The 2008 effective tax rate was 10.2% (2007: 13.9%). Taxation in countries with high profits like Spain and Hungary with tax rates around 30% and 20% respectively, was more than offset in 2008 by profits in Switzerland taxable at 10%, and by untaxed profits in The Netherlands due to previously unrecognized tax losses. Earnings per share Underlying earnings per share were 7.2 euro cents (2007: 10.3 euro cents). Reported basic and diluted earnings per share amounted to 5.5 euro cents (2007: 10.3 euro cents). Profit for the year Profit for the year was b2.6 million (2007: b3.9 million). Dividend TheBoardis recommendingamaidendividendof b0.01 per share for the year ended 31 December Ifapprovedat theannualgeneralmeeting, thedividend will be paid on 2 July 2009 to shareholders on the register at 5 June The ex-dividend date will be 3 June A view of the racks that contain thecordblood samples whichare stored in liquid nitrogen at -196 C.

19 Cryo-Save Group N.V. Annual report Operating & financial reviewcontinued Cash flow The Group generated net cash from operations of b1.9 million (2007: b1.7 million, excluding the one-off b3 million redemption of loans by related parties). Working capital increased due to higher trade receivables (b1.1 million) and tax assets (b1.0 million). Trade receivables increased in line with the growth of the business, mainly caused by higher volume and higher prices, whilst the average days of outstanding receivables did not change materially. Tax assets include a one-off VAT receivable of b0.7 million relating to the purchase of the French building, which will be collected in In 2008 the Group spent b24.4 million on acquisitions (2007: b1.8 million) and b9.0 million on property, plant and equipment mainly related to the new buildings in Belgium and France. The buildings are expected to be refinanced in The Group repurchased 1,615,000 own shares in 2008, which are kept in treasury, for an amount of b3.1 million. As a result, the cash position decreased from b39.5 million to b4.7 million at 31 December Balance sheet Variance e 000 b 000 b 000 Non-current assets 49,803 3,768 46,035 Current assets 14,345 48,146 33,801 Total equity 43,053 42, Non-current liabilities 13,653 3,669 9,984 Current liabilities 7,442 5,324 2,118 Non-current assets The Group acquired seven entities in The total consideration amounted b30.9 million including contingent earn out liabilities, resulting in goodwill of b25.1 million. For all acquisitions the purchase price has been allocated to the acquired assets and liabilities within 12 months from the acquisition date, including b12.0 million identified intangible assets. These intangible assets will be amortized under IFRS over their useful life, and consequently a deferred tax liability of b2.8 million was recognized. The group invested b9 million in property, plant and equipment, consisting of b7.2 million relating to the two new buildings, b1.5 million to laboratory and office equipment, and b0.3 million to other assets. The Group financed the investment in buildings from its own funds, but is negotiating with its bankers to refinance these investments with a sale and lease back arrangement. In 2008 the Group capitalized b0.4 million expenditures relating to the development of the new products CryoCord Gold and Cryo-Lip, and a new website. Amortization will start in Current assets The main change compared to 2007 is the decrease in the cash balance as a result of acquisitions and investment in buildings. Trade and other receivables did not materially change on balance, although trade receivables increased with b1.1 million mainly caused by the acquisitions which trade receivables now are consolidated, and the organic growth of revenue due to higher volume and prices. Total equity and share buy-back Totalequityincreased withb0.1 million on balance, to b43.1 million at year end 2008, mainly due to the profit for the year of b2.6 million and a decrease of b3.1 million related to repurchased shares of the Company. Other movements in equity, on balance b0.5 million, related to foreign exchange differences on investments, share based payments and revaluations. During 2008 the Group acquired 1,615,000 own shares under its share buy-back programme. At 31 December 2008 the Group held 1,770,000 own shares in treasury, which are recorded at cost, representing the market price on the acquisition date. Non-current liabilities Non-current liabilities of b13.7 million (2007: b3.7 million) contains amongstothers thepresent valueofdeferred revenue, amounting to b4.9 million, that cover the estimated remaining costs of the 20 years storage period. The increase from b3.7 million to b4.9 million is the balance of additions to deferred revenue due to the storage of new samples in 2008 less the release to the income statement for the storagein 2008,and thedifferencebetween the present value as at 31 December 2008 and 2007 respectively. Furthermore, contingent liabilities based on predefined performance criteria to former shareholders of Sejtbank, Archiv Bunek and CrioCord ( earn-out payments ) according to the sale and purchase agreements, were recognized at their net present value estimated at b5.8 million. Current liabilities Current liabilities increased from b5.3 million to b7.4 million, mainly due to other payables, that include the short-term part of deferred considerations to former shareholders of acquired companies (b0.7 million), and expense accruals that directly relate to the growth of the operations. R. Koremans A.P. van Tulder 23 March 2009

20 18 Cryo-Save Group N.V. Annual report 2008 Board of Directors Marc Waeterschoot (Belgium, 1949) Executive Director, Chairman of the Board Marc Waeterschoot co-founded the Company in 2000 andhas leditsgrowth.m.waeterschoot is aqualified pharmacist and clinical pathologist having previously beenamember of theboardofdirectorsof the state university of Ghent, Unilabs SA and DLMC. He has over 35 years of industry expertise having managed and worked for a variety of healthcare companies, most notably Labo Medicom. 3 Rob Koremans (The Netherlands, 1962) Executive Director, Chief Executive Officer Rob Koremans is a medical doctor with over 20 years of marketing and management experience in the healthcare industry. He joined the Company in August 2007, following a successful international career with major companies including Serono (managing director and Vice President Europe) and Grunenthal (Executive Board member). 2 Arnoud van Tulder (The Netherlands, 1961) Executive Director, Chief Financial Officer Previously Vice President Corporate Accounting with WoltersKluwer,apubliccompany,beforehejoined the Company in August He is a qualified chartered accountant and worked for KPMG for over 10 years.

21 Cryo-Save Group N.V. Annual report Werner Spinner (Germany, 1948) Non-Executive Director, member of the Audit Committee and Remuneration Committee Werner Spinner served for 30 years with Bayer A.G. where he was a member of the Executive Board until Since 2003 he has served among others on the boards of HulstaGroupGmbH,GFKAG,andas achairmanofboth BIOTEST AG and Grunenthal/Dalli-Group. Currently he is member of thefollowingboards:altanaag,csmn.v., and Senator USA. Mr Spinner holds an MBA from Köln Universityandis agraduateof theharvarduniversity Advanced Management Program. 5 Johan Goossens (Monaco, 1955) Non-Executive Director, Chairman of the Remuneration Committee Johan Goossens co-founded the Company in 2000 having gained over 20 years experience in private andinvestment banking, starting withkbcin1979 and holding positions at a number of other institutions, including Nedee & Co, Defever and BNP-Naegelmackers. He left BNP-Naegelmackers in 1994 to focus on Beurstips, a weekly investment magazine published in Belgium, which he founded in This publication grew to be one of the most successful Belgian investor magazines and was sold by J. Goossens in J. Goossens holds a Bachelor of Economics degree from the High School of Ghent as well as a postgraduate qualification in marketing. 6 Walter van Pottelberge (Belgium, 1944) Non-Executive Director, Chairman of the Audit Committee and member of the Remuneration Committee Walter van Pottelberge joined the Company s Board as a non-executive Director in W. Van Pottelberge was chief executive officer of ING Insurance Belgium-Luxembourg for eight years up until W. Van Pottelberge was also president of the executive committee of Mercator Bank NV between 2003 and He served on the advisory board of Goffin bank since 2005 where he was also Chairman of the Audit Committee. W. Van Pottelberge serves on various other company boards andorganizations includingubcan.v.,delare,voka, Argenta (where he serves as a member of the Audit Committee), Inventive Designers, Private Insurer (president of the Audit Committee), Record Credit Services (president of the Audit Committee), Gudrun Group, the University of Antwerp and Vlerik Leuven Management School. W. Van Pottelberge holds a university degree in physics and actuarial science from Leuven University.

22 20 Cryo-Save Group N.V. Annual report 2008 Report of Directors The Directors present their report together with the financial statements for the year ended 31 December Principal activities and review of business The principal activities of the Group are the collection, processing and storage of hematopoietic stem cells ( HSCs ) collected from umbilical cord blood and mesenchymal stem cells ( MSCs ) collected from the umbilical cord itself at birth. These activities and the review of the business are discussed and analyzed in the Operating and Financial review (we refer to page 14). Strategy The Group s strategy is to pursue organic growth in its existing markets, geographic growth into new markets, and to strengthenitsleadingpositionbyacquisitionofexisting partners or complementary independent businesses, and by development of new products. In 2008 the Group delivered on all of these strategic objectives. It achieved significant organic growth of over 20% of samples stored, it commenced activities in India andfrance,acquired sevencompanies andintroduced CryoCord Gold. The Group strengthened its international infrastructure with several senior management appointments to manage this multinational organization and control further growth. For more details regarding the deliveries on the Group s strategy we refer to page Accomplishments While executing its comprehensive strategy, the Group accomplished an organic growth of 21% to 25,169 samples stored, a 67% revenue increase to b29.5 million, EBITDA of b4.0 million and b1.9 million net cash from operations. In combination with the accelerated investments in new markets in India and France and the international infrastructure, and taking into account the difficult economic circumstances in the fourth quarter of 2008 which were not foreseen at the IPO, these results reflect the strong market position of Cryo-Save and the unique opportunities of its business. Investments According to plan the Group invested the resources from the IPO in November 2007 in acquiring existing partners and remaining shares of joint ventures, in starting activities in new countries, in marketing and sales activities and laboratories, and in development of new products. Research and development The Group continued its strategy of applied research, avoiding significant investments in research with uncertain results and funding requirements. Up to date the Group has been very successful in doing so. With limited resources it clearly benefited from participation in the prestigious EUCrystalproject.Researchin thepast resultedalsoin thedevelopment of twonew products,cryocordgoldand Cryo-Lip. CryoCord Gold has been launched successfully in Spain and the Benelux in 2008 and will be rolled out to other countries in Cryo-Lip is almost ready to be commercialized, and will be introduced to the Spanish market first in the second quarter of Crystal In 2007 Cryo-Save, together with several European scientific partners, was selected by the European Commission to conduct research into cryo-preservation techniques for adult stem cells. The EU Crystal project has now passed its second year of scientific work and the midterm evaluation review meeting was hosted by Cryo-Save in November The external reviewers commented on the standardised protocols and concluded that the project has significant potential to influence clinical delivery of stem cell therapies. During 2008 all nine deliverables planned were submitted to the EU and nearly all planned milestones have been achieved, along with positive feedback from the external reviewers. Cryo-Save made a breakthrough into the storage of different tissues containing stem cells. During 2009, which will be the last year of the project, optimized protocols will lead to standardised procedures in stem cell preservation. ITERA In October 2008 Cryo-Save sponsored a successful seminar organized by the International Tissue Engineering Research Association, ITERA. This seminar provided a forum for the exchange of information about the theme from the basic research to the pre-clinical and clinical applications. Furthermore, Cryo-Save moderated the first ITERA consensus meeting on the use, efficacy and applications of stem cells from umbilical cord blood and the umbilical cord itself. Scientific Advisory Board The Group s Scientific Advisory Board met several times during 2008 and advised the Group on scientific and ethical developments within the industry.