Announcement PDF Cryosite Limited Corporate Governance Statement 1 Introduction Cryosite Limited (Cryosite or Company) strives to constantly demonstrate the highest standards of corporate governance, which are in line with the Company’s core values, to protect and enhance shareholders’ longterm interests. The board of Cryosite Limited (Board) is responsible for the overall corporate governance of the Company and is accountable to shareholders in discharging its duties. The Board is committed to maximising performance, generating appropriate levels of shareholder value and financial return, and sustaining the growth and success of the Company. In this document, the Board has set out the principles it has adopted and the framework of rules, systems and processes to ensure these principles are appropriately implemented. The Board has not adopted all of the recommendations of the 4th edition of the ASX Corporate Governance Council’s Principles and Recommendations (ASX Principles), as the Board believes that, given the size of Cryosite, more appropriate, efficient and cost-effective methods can be implemented in some instances. Where the Board has not followed a recommendation, the reasons for not following the recommendation are set out in the relevant section of this statement. The Board regularly reviews its governance and compliance practices and ensures that the corporate governance framework remains relevant. This Corporate Governance Statement reports against the ASX Principles, is current as at 20 August 2024, has been approved by the Board and is available on the Company’s website at www.cryosite.com. The purpose of publishing this statement is to provide clarity and to instil confidence in investors and other stakeholders. The corporate governance practices set out in this document, unless otherwise stated, have been in place for the entire reporting period. 1 Cryosite Limited Corporate Governance Statement 2 Corporate Governance Principles Principle 1. Lay solid foundations for management and oversight A listed entity should clearly delineate the respective roles and responsibilities of its board and management and regularly review their performance. Recommendation 1.1 – A listed entity should have and disclose a board charter setting out: (a) the respective roles and responsibilities of its board and management; and (b) those matters expressly reserved to the board and those delegated to management. The Board operates under the general principles set forth in its charter, which provides a framework for the effective operation of the Board. The charter outlines the responsibilities of the Board and the responsibilities that the Board has delegated to management. The Board Charter can be found at www.cryosite.com. The Board’s responsibilities include: • defining the Company's purpose, setting strategic objectives and direction; • protecting and enhancing the Company’s assets value; • monitoring and reviewing the Company’s performance against its strategic objectives; • reviewing internal controls, codes of conduct and legal compliance; • reviewing the Company’s accounts; • reviewing and approving the operating budget for the Company; • evaluating the performance and determining the remuneration of the Chief Executive Officer and Senior Management; • ensuring that the material risks to which the company is exposed have been identified and that adequate control and reporting mechanisms are in place; • approving transactions relating to acquisitions, divestments and capital expenditure, which are above the delegated authority limits; • approving financial and dividend policies; and • appointing directors, the Company Secretary and the Chief Executive Officer. The Senior Executive Team is responsible for implementing the entity’s strategic objectives, while operating within the values, code of conduct, budget and risk appetite set by the Board. The Senior Executive Team is also responsible for providing the Board with accurate, timely and clear information on the Company’s operations to enable the Board to perform its responsibilities. This is not just limited to information about the financial performance of the Company, but also its compliance with material legal and regulatory requirements and any conduct that is materially inconsistent with the values or code of conduct of the Company. The nature of matters reserved to the Board and those delegated to management will depend on the size, complexity and ownership structure of the Company, and will be influenced by its history and culture and by the respective skills of its directors and management. These may vary over time as the Company evolves. The Board will regularly review the division of functions between the Board and management to ensure that it continues to be appropriate to the needs of the Company. The Board Charter further states the Company’s policy on when and how directors may seek independent professional advice at the expense of the Company. This generally happens whenever directors, especially non-executive directors, judge such advice necessary for them to discharge their responsibilities as directors. 2 Cryosite Limited Corporate Governance Statement Recommendation 1.2 - A listed entity should: a) undertake appropriate checks before appointing a director or senior executive or putting someone forward for election as a director; and b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director. Before the appointment of a director, the Company ensures that appropriate checks are undertaken. These include checks as to the person’s character, experience, education, criminal record and bankruptcy history. When a candidate stands for election or re-election as a director, security holders are provided with the following information to enable them to make an informed decision on whether or not to elect or re-elect the candidate: • • • • • biographical details, including their relevant qualifications and experience and the skills they bring to the Board; details of any other material directorships currently held by the candidate; in the case of a candidate standing for election as a director for the first time: – confirmation that the Company has conducted appropriate checks into the candidate’s background and experience; – if those checks have revealed any information of concern, that information; – details of any interest, position or relationship that might influence, or reasonably be perceived to influence, in a material respect their capacity to bring an independent judgement to bear on issues before the Board and to act in the best interests of the Company as a whole rather than in the interests of an individual security holder or other party; and – if the Board considers that the candidate will, if elected, qualify as an independent director, a statement to that effect; in the case of a candidate standing for re-election as a director: – the term of office currently served by the director; and – if the Board considers the director to be an independent director, a statement to that effect; and statement by the Board as to whether it supports the election or re-election of the candidate and a summary of the reasons why. Recommendation 1.3 - A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment. The Company has in place a letter of appointment, in the case of appointing a non-executive director, and a service contract, in the case of appointing an executive director or other senior executives, ensuring that the person appointed is personally accountable to the Company for any breach of such agreement between the person and the Company. The exception to the above is where the Company is engaging a bona fide professional services firm to provide the services of a CFO, Company Secretary or other senior executive on an outsourced basis. In this case, the agreement is between the Company and the professional services firm. In the case of a non-executive director, the agreement generally sets out: • the term of appointment; • the time commitment envisaged, including any expectations regarding involvement with board committee work and any other special duties attaching to the position; • remuneration, including superannuation entitlements; • the requirement to disclose directors’ interests and any matters which may affect the director’s independence; • the requirement to comply with legal and regulatory requirements, ASX Listing Rules and key corporate policies, including the Company’s code of conduct and its trading policy; • the Company’s policy on when directors may seek independent professional advice at the expense of the Company; 3 Cryosite Limited Corporate Governance Statement • • • • the circumstances in which the director’s office becomes vacant; indemnity and insurance arrangements; ongoing rights of access to corporate information; and ongoing confidentiality obligations. Recommendation 1.4 - The Company Secretary of a listed entity should be accountable directly to the board, through the Chair, on all matters to do with the proper functioning of the Board. The Company Secretary is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board. The Company Secretary supports the effectiveness of the Board by: • • • • • advising the Board and its committees on governance matters and processes; monitoring that the Board and committees’ policies and procedures are followed; coordinating the timely completion and despatch of Board and committee papers; ensuring that the business at Board and committee meetings is accurately captured in the minutes; and helping to organise and facilitate the induction and professional development of directors. Each director is able to communicate directly with the Company Secretary and vice versa. The decision to appoint or remove a company secretary is made or approved by the Board. Recommendation 1.5 - A listed entity should • have and disclose a diversity policy; • through its board or a committee of the board set measurable objectives for achieving gender diversity in the composition of its board, senior executives and workforce generally; and • disclose in relation to each reporting period: the measurable objectives set for that period to achieve gender diversity; the entity’s progress towards achieving those objectives; and either: the respective proportions of men and women on the board, in senior executive positions and across the whole workforce (including how the entity has defined “senior executive” for these purposes); or if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under that Act. While the Company values diversity and recognises the benefits it can bring to the organisation’s ability to achieve its goals, the Company, due to the size of the Board and the small number of employees, has not followed the recommendations set out above. The current diversity of employees is set out in the Company’s Annual Report. The Company’s Diversity Policy can be found at www.cryosite.com. Recommendation 1.6 - A listed entity should: a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and b) disclose for each reporting period whether a performance evaluation has been undertaken in accordance with that process during or in respect of that period. While the Board values the importance and the benefits of conducting a self-evaluation of the performance of the Board, its committees and individual directors, due to the size of the Board and the fact that most of the directors were recently appointed, the Board resolved not to complete a formal review of its performance in this reporting period. 4 Cryosite Limited Corporate Governance Statement Recommendation 1.7 - A listed entity should: a) have and disclose a process for evaluating the performance of its senior executives at least once every reporting period; and b) disclose for each reporting period whether a performance evaluation has been undertaken in accordance with that process during or in respect of that period. The process for assessing the performance of the CEO and the executive team is described in the Remuneration Report, which forms part of the Directors’ Report and is included in the Company’s Annual Report. Performance reviews for all Senior Executives have been undertaken for the performance period ending 30 June 2024. Principle 2. Structure the Board to add value The board of a listed entity should be of an appropriate size and collectively have the skills, commitment and knowledge of the entity and the industry in which it operates, to enable it to discharge its duties effectively and to add value. The Board considers its size and composition regularly to ensure it has the appropriate mix of skill sets and is of a size that is conducive to making appropriate decisions and to represent the best interests of the Company as a whole. The Company’s Constitution provides for a minimum of three directors and a maximum of ten directors. Directors are appointed to the Board to achieve a combination of governance skills and industry insight and an appropriate level of diversity. All directors are expected to exercise independence in their decision making and business judgement. The skills, experience and expertise relevant to the position of each director of the Company, as at the date of the Annual Report, are included in the Directors’ Report. The Company’s Constitution specifies that no director, except the managing director, may hold office for a period in excess of 3 years, or beyond the third annual general meeting following the director’s election, whichever is the longer, without submitting himself or herself for re-election. Additionally, at every annual general meeting, one-third of the previously elected directors, and if their number is not a multiple of three, then the number nearest to, but not exceeding one third, must retire from office and submit for re-election. Details of the current directors, their qualifications and the term they have held office is set out in the Directors’ Report which forms part of the Company’s Annual Report. Recommendation 2.1 - The board of a listed entity should: a) have a nomination committee which: has at least three members, a majority of whom are independent directors; and is chaired by an independent director, and disclose: the charter of the committee; the members of the committee; and as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively. 5 Cryosite Limited Corporate Governance Statement While Cryosite has a combined Nomination and Remuneration Committee, it does not comply with this recommendation, as the committee is only comprised of two directors, one of whom is deemed to be independent. Given the size of the Cryosite Board, the Board is satisfied with the number of the committee members. The charter of the committee is available at www.cryosite.com. The members of the committee, the number of times the committee has met in the reporting period and the attendance of members at those meetings are available in the Company’s Annual Report. Recommendation 2.2 - A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership. The current Board skills cover an appropriate balance of skills, knowledge, independence and diversity for a company the size of Cryosite. Details of each director’s experience and qualifications are set out in the Company’s Annual Report and are available on the Company’s website at www.cryosite.com. Skills and Experience Corporate Governance Senior Management Strategic Analysis Accounting, Audit and Risk Management Finance, Mergers and Acquisitions, Asset and Project Management Medical and Pharmaceutical Industry Warehousing, Transport and Logistics Information Technology and Cyber Security Legal Government Relations and Regulatory Affairs Marketing, Brand Management and Investor Relations Environmental, Social and Governance Recommendation 2.3 - A listed entity should disclose: a) the names of the directors considered by the board to be independent directors; b) if a director has an interest, but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position or relationship in question and an explanation of why the board is of that opinion; and c) the length of service of each director. 6 Cryosite Limited Corporate Governance Statement An independent director is a non-executive director who is not a member of management and who is free of any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the independent exercise of their judgement. The Board considers that an independent director is a non-executive director who: • • • • • • • • is independent of management; is not a substantial shareholder of the Company or an officer of or otherwise associated directly with a shareholder of the Company; within the last three years, has not been employed in an executive capacity by the Company or an entity of the Company or been a director after ceasing to hold any such employment; within the last three years has not been a principal of a material professional adviser or a material consultant to the Company or another group member, or an employee of or materially associated with the service provider; is not a material supplier or customer of the Company or other group member, or an officer of or otherwise associated directly or indirectly with a material supplier or customer; has not served on the Board for a period which could, or could reasonably be perceived to, materially interfere with the director’s ability to act in the best interests of the Company; free of any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the independent exercise of their unfettered and independent judgement; and otherwise meets the criteria for independence set out in the Corporate Governance Principles and Recommendations 4th Edition published by the ASX Corporate Governance Council, where "material" means equivalent to 5% or more of the Company's gross revenue or expenditure (whichever is the greater) in any one financial year. The Board regularly assesses independence by considering the existence of relationships which might affect independent status as described in the list above, together with the materiality thresholds set by the Board. Currently, Director Scott Thomas is considered by the Board to be an independent director. The tenure of each director is disclosed in the Company’s Annual Report. Recommendation 2.4 – The majority of the board should be independent Directors Cryosite did not comply with this recommendation during most of the reporting period. Two out of four directors did not meet the requirement of independence due to their substantial holdings in the Company. Mr Andrew Kroger (non-executive director, resigned on 25 June 2024) held 26.72% of Cryosite’s total issued capital as of 25 June 2024. Mr Mark Kerr currently holds 18.44% of Cryosite’s total issued capital. Additionally, Mr Andrew Kerr has transitioned to an executive director role, effective from 20 August 2024. The Board, as of the date of this statement, comprises three non-executive directors, one of whom is considered independent. Recommendation 2.5 – The chair of the board of a listed entity should be an independent director and in particular, should not be the same person as the CEO of the entity: The Chair of Cryosite is a non-independent, non-executive director at the date of this statement. The Chair is responsible for leading the Board and ensuring that the Board is functioning in a sound and efficient manner. The role of the Chair, more specifically, is to ensure the directors are properly briefed on all matters relevant to their role and responsibilities and to help facilitate effective and constructive board discussions. 7 Cryosite Limited Corporate Governance Statement The Chair, in accepting the position, acknowledged that it will require a significant time commitment and has confirmed that other positions held will not hinder the required performance of the role. The CEO is responsible for implementing the Company’s strategies and policies as approved by the Board. The role of the CEO is separate from the role of the Chair. This separation ensures that no single person has unfettered powers of decision, and it heightens the level of accountability of management to the Board and of the Board to shareholders. Recommendation 2.6 - A listed entity should have a program for inducting new directors and for periodically reviewing whether there is a need for existing directors to undertake professional development to maintain the skills and knowledge needed to perform their role as directors effectively. The induction provided to new directors enables them to actively participate in board decision-making as soon as possible. The induction includes being presented with key strategic, financial and relevant operational documents, and the facilitation of meetings with existing directors and senior executives to ensure all relevant and material information is explained thoroughly. The induction also includes an explanation of the existing human resources structure of the Company, and the roles and responsibilities of key senior executives. The Board is given board papers, prepared by senior management, prior to every board meeting held. These papers include, but are not limited to, a CEO update, an operational update, financial reporting package, investor relations update, and other topical strategic documents relevant to the Company’s operations and performance. Directors are entitled to request any additional information from management when they consider such information necessary to make informed decisions. Principle 3. Instil a culture of acting lawfully, ethically and responsibly A listed entity should instil and continually reinforce a culture across the organisation of acting lawfully, ethically and responsibly. Recommendation 3.1 - A listed entity should articulate and disclose its values. The Board sets the Company’s statement of values and charges the senior executive team with the responsibility of reflecting those values across the organisation. This includes ensuring that all employees receive appropriate training to help them understand the Company’s values and how to apply those values in their day-to-day work. Further, the senior executives continually reference and reinforce those values in their interactions with staff. Our values can be found at www.cryosite.com. Recommendation 3.2 - A listed entity should: a. have and disclose a code of conduct for its directors, senior executives and employees; and b. ensure that the board or a committee of the board is informed of any material breaches of that code. As part of its commitment to recognising the legitimate interests of stakeholders, the Company has established a code of conduct to guide all directors and employees, particularly the CEO and other senior executives, in respect of the ethical and compliant behaviour expected by the Company. In summary, the code requires that, at all times, all Company personnel act with the utmost integrity and objectivity, complying with the letter and the spirit of the law and the Company’s policies. A copy of the code of conduct can be found at www.crysoite.com. Material breaches of the Company’s code of conduct are reported to the Audit and Risk Committee in a timely manner. 8 Cryosite Limited Corporate Governance Statement Recommendation 3.3 - A listed entity should: a. have and disclose a whistleblower policy; and b. ensure that the board or a committee of the board is informed of any material incidents reported under that policy. The Company has established a whistleblower policy that can be found at www.cryosite.com. The policy: • clearly identifies the types of concerns that may be reported under the policy and how and to whom reports may be made (including to senior executives and the Board); • explains how the confidentiality of the whistleblower’s identity is safeguarded and the whistleblower is protected from retaliation or victimisation; • outlines the processes to follow up and investigate reports made under the policy; • provides for the training of employees about the whistleblower policy and their rights and obligations under it; • provides for the training of managers and others who may receive whistleblower reports about how to respond to them; and • states that the policy will be periodically reviewed to check that it is operating effectively and whether any changes are required to the policy. Material incidents under the policy are reported to the Audit and Risk Committee in a timely manner. Recommendation 3.4 - A listed entity should: a. have and disclose an anti-bribery and corruption policy; and b. ensure that the board or a committee of the board is informed of any material breaches of that policy. The Company does not have a standalone anti-bribery and corruption policy. The Company has incorporated this policy within its code of conduct. Principle 4. Safeguard the integrity of corporate reports A listed entity should have appropriate processes to verify the integrity of its corporate reports. Recommendation 4.1: The board of a listed entity should: a) have an audit committee which: 1. has at least three members, all of whom are non-executive directors and a majority of whom are independent directors; and 2. is chaired by an independent director, who is not the chair of the board, and disclose: • the charter of the committee; • the relevant qualifications and experience of the members of the committee; and • in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner. While Cryosite has a combined Audit and Risk Committee, it does not fully comply with this recommendation, as the committee is only comprised of two members, one of whom is an independent director. The Chair of the Audit and Risk Committee is not the Chair of the Board. 9 Cryosite Limited Corporate Governance Statement The committee provides an efficient mechanism to ensure that an effective internal control framework exists within the Company. This includes internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial information as well as non-financial considerations such as the benchmarking of operational key performance indicators. The main responsibilities of the committee are to assist the Board in fulfilling its statutory and corporate governance responsibilities by providing an: • • • • oversight of systems of risk management, compliance and control; oversight of reporting financial information; oversight of external audit function; and other external audit matters. The Company policy is to appoint an external auditor who demonstrates quality and independence. The performance of the external auditor is reviewed annually and applications for tender of external audit services are requested as deemed appropriate, taking into consideration the assessment of performance, existing value and tender costs. It is the auditor’s policy to rotate audit engagement partners at least once every five years. An analysis of the fees paid to the external auditors is provided in the notes to the Financial Statements, which form part of the Annual Report. A breakdown of fees for non-audit services is provided in the Directors’ Report. It is the policy of the external auditors to provide an annual declaration of their independence to the Company. The external auditor will attend the annual general meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the audit report. The charter of the committee is available at www.cryosite.com. The members, their relevant qualifications, the number of times the committee met and the attendance of members at those meetings are available in the Company’s Annual Report. Recommendation 4.2 - The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration 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 and that the opinion has been formed on the