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&lt;br /&gt; 3. SEGMENT INFORMATION CONTINUED&lt;br /&gt; (b) Segment information continued&lt;br /&gt; Cardiovascular&lt;br /&gt; Orthopedic &amp; non-orthopedic Total&lt;br /&gt; $$$&lt;br /&gt; Parent&lt;br /&gt; 30 June 2010&lt;br /&gt; Revenue from external parties 5,500 - 5,500&lt;br /&gt; Total segment revenue 5,500 - 5,500&lt;br /&gt; Net (loss) after tax (6,827,114) (4,394,047) (11,221,161)&lt;br /&gt; Net loss after tax includes the following items:&lt;br /&gt; Research and development 6,788,883 - 6,788,883&lt;br /&gt; <a title="Mesoblast Annual Report 2011 page 1" href="http://viewer.zmags.com/publication/1eeaeb6c?page=1">Annual Report 2011</a> Annual Report 2011<a title="Mesoblast Annual Report 2011 page 2" href="http://viewer.zmags.com/publication/1eeaeb6c?page=2">Contents </a> Contents <a title="Mesoblast Annual Report 2011 page 3" href="http://viewer.zmags.com/publication/1eeaeb6c?page=3">Message from theChairmanThe Mesoblast Board o</a> Message from theChairmanThe Mesoblast Board o<a title="Mesoblast Annual Report 2011 page 4" href="http://viewer.zmags.com/publication/1eeaeb6c?page=4">Chief Executive&rsquo;s ReportI am delighted to repor</a> Chief Executive&rsquo;s ReportI am delighted to repor<a title="Mesoblast Annual Report 2011 page 5" href="http://viewer.zmags.com/publication/1eeaeb6c?page=5">Strategic AlliancesIn December 2010 we entered i</a> Strategic AlliancesIn December 2010 we entered i<a title="Mesoblast Annual Report 2011 page 6" href="http://viewer.zmags.com/publication/1eeaeb6c?page=6">Orthopedic ProgramsMesoblast is developing innov</a> Orthopedic ProgramsMesoblast is developing innov<a title="Mesoblast Annual Report 2011 page 7" href="http://viewer.zmags.com/publication/1eeaeb6c?page=7">Eye Disease ProgramsOur lead ophthalmic indicati</a> Eye Disease ProgramsOur lead ophthalmic indicati<a title="Mesoblast Annual Report 2011 page 8" href="http://viewer.zmags.com/publication/1eeaeb6c?page=8">Directors&rsquo; ReportThe Board of Directors of Meso</a> Directors&rsquo; ReportThe Board of Directors of Meso<a title="Mesoblast Annual Report 2011 page 9" href="http://viewer.zmags.com/publication/1eeaeb6c?page=9">Principal Activities &amp; StrategyReview of Operat</a> Principal Activities &amp; StrategyReview of Operat<a title="Mesoblast Annual Report 2011 page 10" href="http://viewer.zmags.com/publication/1eeaeb6c?page=10">In July, Cephalon stockholders voted to approvea</a> In July, Cephalon stockholders voted to approvea<a title="Mesoblast Annual Report 2011 page 11" href="http://viewer.zmags.com/publication/1eeaeb6c?page=11">Fraction less than 40%, a population that histori</a> Fraction less than 40%, a population that histori<a title="Mesoblast Annual Report 2011 page 12" href="http://viewer.zmags.com/publication/1eeaeb6c?page=12">Global RecognitionIn March, Chief Executive Silv</a> Global RecognitionIn March, Chief Executive Silv<a title="Mesoblast Annual Report 2011 page 13" href="http://viewer.zmags.com/publication/1eeaeb6c?page=13">ExpenditureIn line with the Group's policy and t</a> ExpenditureIn line with the Group's policy and t<a title="Mesoblast Annual Report 2011 page 14" href="http://viewer.zmags.com/publication/1eeaeb6c?page=14">The balances arising on acquisition, at their fai</a> The balances arising on acquisition, at their fai<a title="Mesoblast Annual Report 2011 page 15" href="http://viewer.zmags.com/publication/1eeaeb6c?page=15">Share OptionsShares under optionUnissued ordina</a> Share OptionsShares under optionUnissued ordina<a title="Mesoblast Annual Report 2011 page 16" href="http://viewer.zmags.com/publication/1eeaeb6c?page=16">Shares issued on exercise of optionsDetail of sh</a> Shares issued on exercise of optionsDetail of sh<a title="Mesoblast Annual Report 2011 page 17" href="http://viewer.zmags.com/publication/1eeaeb6c?page=17">Environmental RegulationsThe Board considers tha</a> Environmental RegulationsThe Board considers tha<a title="Mesoblast Annual Report 2011 page 18" href="http://viewer.zmags.com/publication/1eeaeb6c?page=18">Information on DirectorsBrian Jamieson, Non</a> Information on DirectorsBrian Jamieson, Non<a title="Mesoblast Annual Report 2011 page 19" href="http://viewer.zmags.com/publication/1eeaeb6c?page=19">Michael Spooner, Non-executive Director BCoM, ACA</a> Michael Spooner, Non-executive Director BCoM, ACA<a title="Mesoblast Annual Report 2011 page 20" href="http://viewer.zmags.com/publication/1eeaeb6c?page=20">Meetings of DirectorsThe number of meetings of t</a> Meetings of DirectorsThe number of meetings of t<a title="Mesoblast Annual Report 2011 page 21" href="http://viewer.zmags.com/publication/1eeaeb6c?page=21">A. Remuneration Principles and PoliciesBoard po</a> A. Remuneration Principles and PoliciesBoard po<a title="Mesoblast Annual Report 2011 page 22" href="http://viewer.zmags.com/publication/1eeaeb6c?page=22">(b) Executive payThe executive pay and reward fr</a> (b) Executive payThe executive pay and reward fr<a title="Mesoblast Annual Report 2011 page 23" href="http://viewer.zmags.com/publication/1eeaeb6c?page=23">The share price increase from 2010 to 2011 is att</a> The share price increase from 2010 to 2011 is att<a title="Mesoblast Annual Report 2011 page 24" href="http://viewer.zmags.com/publication/1eeaeb6c?page=24">Remuneration detailsDetails of the remuneration </a> Remuneration detailsDetails of the remuneration <a title="Mesoblast Annual Report 2011 page 25" href="http://viewer.zmags.com/publication/1eeaeb6c?page=25">Post-employment Share-basedbene&#64257;ts </a> Post-employment Share-basedbene&#64257;ts <a title="Mesoblast Annual Report 2011 page 26" href="http://viewer.zmags.com/publication/1eeaeb6c?page=26">The relative proportions of remuneration that are</a> The relative proportions of remuneration that are<a title="Mesoblast Annual Report 2011 page 27" href="http://viewer.zmags.com/publication/1eeaeb6c?page=27">C. Share-Based CompensationOptions to purchase </a> C. Share-Based CompensationOptions to purchase <a title="Mesoblast Annual Report 2011 page 28" href="http://viewer.zmags.com/publication/1eeaeb6c?page=28">All share options issued to key management person</a> All share options issued to key management person<a title="Mesoblast Annual Report 2011 page 29" href="http://viewer.zmags.com/publication/1eeaeb6c?page=29">Value of options held by key management personnel</a> Value of options held by key management personnel<a title="Mesoblast Annual Report 2011 page 30" href="http://viewer.zmags.com/publication/1eeaeb6c?page=30">Value of options yet to vest after the end of the</a> Value of options yet to vest after the end of the<a title="Mesoblast Annual Report 2011 page 31" href="http://viewer.zmags.com/publication/1eeaeb6c?page=31"> Auditor!s Independence DeclarationAs</a> Auditor!s Independence DeclarationAs<a title="Mesoblast Annual Report 2011 page 32" href="http://viewer.zmags.com/publication/1eeaeb6c?page=32">Corporate GovernanceMesoblast Limited (the Comp</a> Corporate GovernanceMesoblast Limited (the Comp<a title="Mesoblast Annual Report 2011 page 33" href="http://viewer.zmags.com/publication/1eeaeb6c?page=33">The term in of&#64257;ce held by each director in of&#64257;ce </a> The term in of&#64257;ce held by each director in of&#64257;ce <a title="Mesoblast Annual Report 2011 page 34" href="http://viewer.zmags.com/publication/1eeaeb6c?page=34">2.4 Board committeesThe following committees hav</a> 2.4 Board committeesThe following committees hav<a title="Mesoblast Annual Report 2011 page 35" href="http://viewer.zmags.com/publication/1eeaeb6c?page=35">Principle 3. Promote ethical and responsibledeci</a> Principle 3. Promote ethical and responsibledeci<a title="Mesoblast Annual Report 2011 page 36" href="http://viewer.zmags.com/publication/1eeaeb6c?page=36">4.3 Formal charterThe audit and risk committee o</a> 4.3 Formal charterThe audit and risk committee o<a title="Mesoblast Annual Report 2011 page 37" href="http://viewer.zmags.com/publication/1eeaeb6c?page=37">Principle 7. Recognize and manage risk7.1 Estab</a> Principle 7. Recognize and manage risk7.1 Estab<a title="Mesoblast Annual Report 2011 page 38" href="http://viewer.zmags.com/publication/1eeaeb6c?page=38"></a> <a title="Mesoblast Annual Report 2011 page 39" href="http://viewer.zmags.com/publication/1eeaeb6c?page=39">Financial Statementsfor the year ended 30 June 2</a> Financial Statementsfor the year ended 30 June 2<a title="Mesoblast Annual Report 2011 page 40" href="http://viewer.zmags.com/publication/1eeaeb6c?page=40">Consolidated Income Statementfor the year ended </a> Consolidated Income Statementfor the year ended <a title="Mesoblast Annual Report 2011 page 41" href="http://viewer.zmags.com/publication/1eeaeb6c?page=41">Consolidated Statement ofComprehensive Incomefo</a> Consolidated Statement ofComprehensive Incomefo<a title="Mesoblast Annual Report 2011 page 42" href="http://viewer.zmags.com/publication/1eeaeb6c?page=42">Consolidated Statement ofChanges in Equityfor t</a> Consolidated Statement ofChanges in Equityfor t<a title="Mesoblast Annual Report 2011 page 43" href="http://viewer.zmags.com/publication/1eeaeb6c?page=43">Consolidated Balance Sheetas at 30 June 2011</a> Consolidated Balance Sheetas at 30 June 2011<a title="Mesoblast Annual Report 2011 page 44" href="http://viewer.zmags.com/publication/1eeaeb6c?page=44">Consolidated Statement of Cash Flowsfor the year</a> Consolidated Statement of Cash Flowsfor the year<a title="Mesoblast Annual Report 2011 page 45" href="http://viewer.zmags.com/publication/1eeaeb6c?page=45">Notes to the Financial Statementsfor the year en</a> Notes to the Financial Statementsfor the year en<a title="Mesoblast Annual Report 2011 page 46" href="http://viewer.zmags.com/publication/1eeaeb6c?page=46">1. SIGNIFICANT ACCOUNTING POLICIESStatement of </a> 1. SIGNIFICANT ACCOUNTING POLICIESStatement of <a title="Mesoblast Annual Report 2011 page 47" href="http://viewer.zmags.com/publication/1eeaeb6c?page=47">1. SIGNIFICANT ACCOUNTING POLICIES CONTINUEDNew</a> 1. SIGNIFICANT ACCOUNTING POLICIES CONTINUEDNew<a title="Mesoblast Annual Report 2011 page 48" href="http://viewer.zmags.com/publication/1eeaeb6c?page=48">1. SIGNIFICANT ACCOUNTING POLICIES CONTINUED(b) </a> 1. SIGNIFICANT ACCOUNTING POLICIES CONTINUED(b) <a title="Mesoblast Annual Report 2011 page 49" href="http://viewer.zmags.com/publication/1eeaeb6c?page=49">1. SIGNIFICANT ACCOUNTING POLICIES CONTINUED(d) </a> 1. SIGNIFICANT ACCOUNTING POLICIES CONTINUED(d) <a title="Mesoblast Annual Report 2011 page 50" href="http://viewer.zmags.com/publication/1eeaeb6c?page=50">1. SIGNIFICANT ACCOUNTING POLICIES CONTINUED(f) </a> 1. SIGNIFICANT ACCOUNTING POLICIES CONTINUED(f) <a title="Mesoblast Annual Report 2011 page 51" href="http://viewer.zmags.com/publication/1eeaeb6c?page=51">1. SIGNIFICANT ACCOUNTING POLICIES CONTINUEDThe </a> 1. SIGNIFICANT ACCOUNTING POLICIES CONTINUEDThe <a title="Mesoblast Annual Report 2011 page 52" href="http://viewer.zmags.com/publication/1eeaeb6c?page=52">1. SIGNIFICANT ACCOUNTING POLICIES CONTINUEDThe </a> 1. SIGNIFICANT ACCOUNTING POLICIES CONTINUEDThe <a title="Mesoblast Annual Report 2011 page 53" href="http://viewer.zmags.com/publication/1eeaeb6c?page=53">1. SIGNIFICANT ACCOUNTING POLICIES CONTINUED(q) </a> 1. SIGNIFICANT ACCOUNTING POLICIES CONTINUED(q) <a title="Mesoblast Annual Report 2011 page 54" href="http://viewer.zmags.com/publication/1eeaeb6c?page=54">1. SIGNIFICANT ACCOUNTING POLICIES CONTINUED(u) </a> 1. SIGNIFICANT ACCOUNTING POLICIES CONTINUED(u) <a title="Mesoblast Annual Report 2011 page 55" href="http://viewer.zmags.com/publication/1eeaeb6c?page=55">1. SIGNIFICANT ACCOUNTING POLICIES CONTINUED </a> 1. SIGNIFICANT ACCOUNTING POLICIES CONTINUED <a title="Mesoblast Annual Report 2011 page 56" href="http://viewer.zmags.com/publication/1eeaeb6c?page=56">30 June 2011 30 June 2010$$2. REVENUE </a> 30 June 2011 30 June 2010$$2. REVENUE <a title="Mesoblast Annual Report 2011 page 57" href="http://viewer.zmags.com/publication/1eeaeb6c?page=57">3. SEGMENT INFORMATION(a) Description of segment</a> 3. SEGMENT INFORMATION(a) Description of segment<a title="Mesoblast Annual Report 2011 page 58" href="http://viewer.zmags.com/publication/1eeaeb6c?page=58">3. SEGMENT INFORMATION CONTINUED(b) Segment info</a> 3. SEGMENT INFORMATION CONTINUED(b) Segment info<a title="Mesoblast Annual Report 2011 page 59" href="http://viewer.zmags.com/publication/1eeaeb6c?page=59">3. SEGMENT INFORMATION CONTINUED(c) Segment rec</a> 3. SEGMENT INFORMATION CONTINUED(c) Segment rec<a title="Mesoblast Annual Report 2011 page 60" href="http://viewer.zmags.com/publication/1eeaeb6c?page=60">Consolidated Parent30 June 20</a> Consolidated Parent30 June 20<a title="Mesoblast Annual Report 2011 page 61" href="http://viewer.zmags.com/publication/1eeaeb6c?page=61">5. REMUNERATION OF AUDITORS(a) PricewaterhouseCo</a> 5. REMUNERATION OF AUDITORS(a) PricewaterhouseCo<a title="Mesoblast Annual Report 2011 page 62" href="http://viewer.zmags.com/publication/1eeaeb6c?page=62">9. PROPERTY, PLANT AND EQUIPMENTTotal^At 1 July</a> 9. PROPERTY, PLANT AND EQUIPMENTTotal^At 1 July<a title="Mesoblast Annual Report 2011 page 63" href="http://viewer.zmags.com/publication/1eeaeb6c?page=63">10. DEFERRED TAX ASSETS </a> 10. DEFERRED TAX ASSETS <a title="Mesoblast Annual Report 2011 page 64" href="http://viewer.zmags.com/publication/1eeaeb6c?page=64">11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY ME</a> 11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY ME<a title="Mesoblast Annual Report 2011 page 65" href="http://viewer.zmags.com/publication/1eeaeb6c?page=65">12. INTANGIBLE ASSETS </a> 12. INTANGIBLE ASSETS <a title="Mesoblast Annual Report 2011 page 66" href="http://viewer.zmags.com/publication/1eeaeb6c?page=66">Consolidated Parent </a> Consolidated Parent <a title="Mesoblast Annual Report 2011 page 67" href="http://viewer.zmags.com/publication/1eeaeb6c?page=67">Consolidated Parent </a> Consolidated Parent <a title="Mesoblast Annual Report 2011 page 68" href="http://viewer.zmags.com/publication/1eeaeb6c?page=68">17. ISSUED CAPITAL CONTINUED(b) Movements in ord</a> 17. ISSUED CAPITAL CONTINUED(b) Movements in ord<a title="Mesoblast Annual Report 2011 page 69" href="http://viewer.zmags.com/publication/1eeaeb6c?page=69">17. ISSUED CAPITAL ConTInUED(c) ordinary shares</a> 17. ISSUED CAPITAL ConTInUED(c) ordinary shares<a title="Mesoblast Annual Report 2011 page 70" href="http://viewer.zmags.com/publication/1eeaeb6c?page=70">18. RESERVES CONTINUED(c) Nature and purpose of </a> 18. RESERVES CONTINUED(c) Nature and purpose of <a title="Mesoblast Annual Report 2011 page 71" href="http://viewer.zmags.com/publication/1eeaeb6c?page=71">20. BUSINESS COMBINATIONDuring the reporting ye</a> 20. BUSINESS COMBINATIONDuring the reporting ye<a title="Mesoblast Annual Report 2011 page 72" href="http://viewer.zmags.com/publication/1eeaeb6c?page=72">Parent Parent30 June </a> Parent Parent30 June <a title="Mesoblast Annual Report 2011 page 73" href="http://viewer.zmags.com/publication/1eeaeb6c?page=73">24. SHARE-BASED PAYMENTSThe Group has adopted a</a> 24. SHARE-BASED PAYMENTSThe Group has adopted a<a title="Mesoblast Annual Report 2011 page 74" href="http://viewer.zmags.com/publication/1eeaeb6c?page=74">24. SHARE-BASED PAYMENTS coNTiNuED(i) The follo</a> 24. SHARE-BASED PAYMENTS coNTiNuED(i) The follo<a title="Mesoblast Annual Report 2011 page 75" href="http://viewer.zmags.com/publication/1eeaeb6c?page=75"> </a> <a title="Mesoblast Annual Report 2011 page 76" href="http://viewer.zmags.com/publication/1eeaeb6c?page=76">24. SHARE-BASED PAYMENTS CONTINUED(b) Existing </a> 24. SHARE-BASED PAYMENTS CONTINUED(b) Existing <a title="Mesoblast Annual Report 2011 page 77" href="http://viewer.zmags.com/publication/1eeaeb6c?page=77">24. SHARE-BASED PAYMENTS CONTINUED(c) Fair valu</a> 24. SHARE-BASED PAYMENTS CONTINUED(c) Fair valu<a title="Mesoblast Annual Report 2011 page 78" href="http://viewer.zmags.com/publication/1eeaeb6c?page=78">24. SHARE-BASED PAYMENTS CONTINUED(d) Share opt</a> 24. SHARE-BASED PAYMENTS CONTINUED(d) Share opt<a title="Mesoblast Annual Report 2011 page 79" href="http://viewer.zmags.com/publication/1eeaeb6c?page=79">24. SHARE-BASED PAYMENTS CONTINUED(d) Share opt</a> 24. SHARE-BASED PAYMENTS CONTINUED(d) Share opt<a title="Mesoblast Annual Report 2011 page 80" href="http://viewer.zmags.com/publication/1eeaeb6c?page=80">25. KEY MANAGEMENT PERSONNEL CONTINUED(b) Key m</a> 25. KEY MANAGEMENT PERSONNEL CONTINUED(b) Key m<a title="Mesoblast Annual Report 2011 page 81" href="http://viewer.zmags.com/publication/1eeaeb6c?page=81">25. KEY MANAGEMENT PERSONNEL CONTINUED(c) Key m</a> 25. KEY MANAGEMENT PERSONNEL CONTINUED(c) Key m<a title="Mesoblast Annual Report 2011 page 82" href="http://viewer.zmags.com/publication/1eeaeb6c?page=82">26. RELATED PARTY TRANSACTIONS(a) Parent entity</a> 26. RELATED PARTY TRANSACTIONS(a) Parent entity<a title="Mesoblast Annual Report 2011 page 83" href="http://viewer.zmags.com/publication/1eeaeb6c?page=83">Consolidated Parent </a> Consolidated Parent <a title="Mesoblast Annual Report 2011 page 84" href="http://viewer.zmags.com/publication/1eeaeb6c?page=84">Consolidated Parent </a> Consolidated Parent <a title="Mesoblast Annual Report 2011 page 85" href="http://viewer.zmags.com/publication/1eeaeb6c?page=85">27. FINANCIAL RISK MANAGEMENTFinancial risks im</a> 27. FINANCIAL RISK MANAGEMENTFinancial risks im<a title="Mesoblast Annual Report 2011 page 86" href="http://viewer.zmags.com/publication/1eeaeb6c?page=86">27. FINANCIAL RISK MANAGEMENT CoNTINuEd(a) Marke</a> 27. FINANCIAL RISK MANAGEMENT CoNTINuEd(a) Marke<a title="Mesoblast Annual Report 2011 page 87" href="http://viewer.zmags.com/publication/1eeaeb6c?page=87">27. FINANCIAL RISK MANAGEMENT CONTINUED(b) Cred</a> 27. FINANCIAL RISK MANAGEMENT CONTINUED(b) Cred<a title="Mesoblast Annual Report 2011 page 88" href="http://viewer.zmags.com/publication/1eeaeb6c?page=88">Directors&rsquo; DeclarationIn accordance wit</a> Directors&rsquo; DeclarationIn accordance wit<a title="Mesoblast Annual Report 2011 page 89" href="http://viewer.zmags.com/publication/1eeaeb6c?page=89">87</a> 87<a title="Mesoblast Annual Report 2011 page 90" href="http://viewer.zmags.com/publication/1eeaeb6c?page=90">88</a> 88<a title="Mesoblast Annual Report 2011 page 91" href="http://viewer.zmags.com/publication/1eeaeb6c?page=91">Shareholder InformationA. SUBSTANTIAL S</a> Shareholder InformationA. SUBSTANTIAL S<a title="Mesoblast Annual Report 2011 page 92" href="http://viewer.zmags.com/publication/1eeaeb6c?page=92">Shareholder InformationcontinuedD. TWENTY</a> Shareholder InformationcontinuedD. TWENTY<a title="Mesoblast Annual Report 2011 page 93" href="http://viewer.zmags.com/publication/1eeaeb6c?page=93">Mesoblast Limited ABN 68 109 431 870Board of Dir</a> Mesoblast Limited ABN 68 109 431 870Board of Dir<a title="Mesoblast Annual Report 2011 page 94" href="http://viewer.zmags.com/publication/1eeaeb6c?page=94">92</a> 92<a title="Mesoblast Annual Report 2011 page 95" href="http://viewer.zmags.com/publication/1eeaeb6c?page=95"></a> <a title="Mesoblast Annual Report 2011 page 96" href="http://viewer.zmags.com/publication/1eeaeb6c?page=96"></a>