Genetic Signatures Limited

You guys can see me okay?

Yes, thank you, Mike.

I need to get the background.

Yes, at the moment you're just fuzzy.

It's okay, it works. I think so. Daniel, give us the cue. No. like just changing it now so Daniel will introduce us yeah

Hello and welcome to the first half FY26 presentation for Genetic Signatures. Today we have Chair Caroline Waldron and Interim Chief Financial Officer Anne Lockwood who will take us through the call today. There is a Q&A function at the bottom of your screen so please send through any questions that you have and they'll be read out at the conclusion of the presentation. I will now hand it over to Caroline.

Thank you, Daniel. Good morning, everyone, and thank you for joining us today. As Daniel said, my name is Caroline, and I'm in the room with my board colleague and managing director, Anne Lockwood, outgoing CEO, Alison Rositer, and incoming CEO, Maria Hallas. Also attending virtually are my fellow directors, Jen Harry and Mike Aker. I trust you have had the opportunity to read our first half 26 results released this morning along with the slide deck. We are here today to discuss these results and the initiatives we are currently undertaking to grow our sales in the US as well as consolidate our Australian business. You will also hear from our incoming CEO, Maria Hallas. The slide deck which has been uploaded to the ASX website is for you to peruse at your pleasure. I'm going to speak to the summary that is contained in slide number three. While the company's first half performance has been consistent with its quarterly announcement, the board and management acknowledge that our ambitious growth in US sales of our FDA approved enteric test has not had the original market penetration expected. Nevertheless, our fundamentals for the US market expansion remain robust. In particular, our three base technology and intellectual property continue to provide a distinctive advantage compared to other products in terms of the range and specificity of pathogen detection. This is supported by early positive feedback from live customer sites, as well as the signing of two new customers during the period. In addition to continued sales efforts, we also commenced two initiatives which we feel are important to the company's future growth. First, the board has initiated a forensic review of the company's operational and financial performance. The review will include a line-by-line analysis of operating costs with a view to reducing the company's costs proportionately to the business while ensuring that its scale and growth opportunities are not compromised. Savings from this review will be realized over FY27. We will be able to share details once our incoming CEO Maria has had the opportunity to stress test the underlying assumptions and resulting recommendations from the review. We believe having our business streamlined will benefit our forward growth. Second, we continue to progress our next generation instrument development in response to large laboratories in the US who are looking for deeper automation and throughput. Concurrently, the board has also appointed advisors to assist with a full review of our marketing approach, commercialization of our existing product portfolio, and strategy for future growth. We will keep you informed of any decisions we make in accordance with our continuous disclosure obligations. Once Maria starts in her role, she will determine the type of support the company will need going forward In the interim, the company's finance function continues to operate under established governance frameworks with direct oversight from Anne Lockwood. I now invite Anne to present you with the company's 1H26 financials.

Perfect. Thank you, Caroline, and good morning, everyone. Daniel, if we could move to slide five, please. Thank you. On this slide, I will just go through the highlights and on the next slide, I'll provide more detail and context around the numbers. So revenue was up to 8.7 from prior year 8.5 comparative half. That's a $200,000 growth. Unfortunately, our gross profit was down to $100,000 to $4.8 million from $5 million in the prior half. That was driven by our gross margin being down to 55.7 from 58.8 in the comparative half. Our underlying operating loss improved $2 million to $6.4 million loss from 8.4 comparative in the prior half. This is net of the non-recurring impairment expenses we incurred in the prior half of $6.8 million. At 31 December, we had $29.9 million of cash compared to 30 June, 25, $31.3 million. Our net assets declined by $6 million. This was actually as a result of improved working capital position of 4.3 million and the cash used of 1.4 million and a half. Daniel, if we could just move to the next slide, please. Okay, as we said, the revenue was up by $200,000. This was driven by steady sales in Australia and we had growth in the US and UK of $200,000 driven by new customers. Whilst not a large number, as Caroline has pointed out, these new customers are providing a great cornerstone for establishment of stronger revenue bases and customer bases in these regions. gross profit and margin declined by $200,000. This was due to an increase in cost of consumables and raw materials in the first half of FY26, mainly relating to respiratory kits. This cost increase actually did incur, started to incur in the second half of FY25. Our full year margin for FY25 was 55%. So that was a result of us looking through our supply chain and testing different suppliers to ensure the robustness of our supply chain and sustainability in our supply chain. Therefore, we were buying in smaller batches and we weren't getting leverage off buying at larger scale for price discounts. That started to turn around in this half and we're certainly now we've bedded down our suppliers and we've got customers we are starting to buy in larger batches and receive the benefits of those lower costs. So we would look to start to improve our cost of sales position further in this second half going forward. Our underlying net profit before tax of 6.4 compared to 8.4 million in the prior year was largely driven by an improved R&D tax incentive income of 1.6, but we also did recognise cost savings or reductions from the prior period of $600,000. $400,000 of that was driven by above the EBITDA line costs and $200,000 was in relation to depreciation and amortisation. Operating expenses did decline as a percentage of revenue, so we are starting to take some positive steps. As outlined, our cash and cash equivalents are at $29.9 million. We did use $1.4 million in the first half of the year. Our cash today is sitting at approximately $28 million. Our cash used in operations were $5.2 million, but to be really transparent, we had that improved working capital position of $4.3 million. 2.4 million of that related to the government grant and 1.9 million of that related to underlying operations. So normalising for that, we had a cash burn in the first half of around $7 million. just over a million dollars a month. As Caroline has pointed out, the board recognises that that is too high and our operating costs are running at a level higher than what is sustainable for the current status of the business. So we are undertaking a review and that is well advanced. And as soon as Maria starts, that will be... place of priority that her and I focus on together to put that under a microscope and ensure that we reduce that cash burn. That concludes the numbers and the overview, and I'll hand back to Caroline to work through the outlook slide.

Okay. So this was something that we've already referred to in our release today. So as I've said, to just wrap up, Australia, we expect to remain steady. Our focus on international markets continues with pace. Product-wise, we know the advantages of our three-base technology, and we will continue to build out our customer base with the products that we do have. At the same time, we're not sitting on our hands under the auspices of our Technology Committee. There is a deep process in place for identifying and developing new products and automation. Anne has talked to the financial discipline already, and I won't repeat that. And I've also talked to you already about the advisors that are helping us to review the options available to us to deliver shareholder value. And the significance of the cash position is not to be understated. So I'm going to hand over with that to Maria to say a few words.

Thank you, Caroline. And to our shareholders, I would like to thank you for your continued support. And I want to acknowledge that directly because whilst today's results are not mine, the responsibility for what's coming next is. But before outlining my plans, I would like to recognize the significant improvements already implemented by the board and management. because these actions have been necessary and they provide an important foundation for what comes next. Going forward, I will undertake a focused and hands-on 90-day program and I expect to deliver a clear and executable plan to reset performance and project the company growth. My approach is built around two core objectives and these are aligned with the company strategy, and that is cost discipline and revenue acceleration. But underlying all of this is AI as a core enabler. So let me begin with cost discipline first, as this is where I can see immediate opportunities. There are definitely near-term savings available, including through the disciplined application of AI across marketing, admin, and internal workflows. Activities such as campaign development, marketing collateral creation, customer segmentation, reporting, and routine admin processes can be materially streamlined. Turning to revenue growth. I am committed to exploring ways to drive greater sales growth through the US market, which remains our most significant opportunity. The company's FDA-cleared easy screen parasite kit provides a unique value proposition in that market with its broad detection capabilities. It is targeting a large addressable market in the US, but given the scale and complexity of that market, A focused market intelligence and AI will play an important role in strengthening our commercial execution. From improving targeting and lead qualification to optimizing resource allocation, we will use data and, as previously mentioned, automation to ensure that our efforts are concentrated exactly where returns are highest. We will also evaluate how AI can be embedded within our product development, deployment and regulatory processes, and particularly to shorten time to market, which is critical, improve scalability, but most importantly, to enhance customer value and experience. This represents an opportunity for meaningful differentiation and a stronger and more competitive product portfolio. In summary, Genetic Signatures has strong foundations, a differentiated product portfolio built on the proprietary three-based technology platform. With focused execution and continued shareholder support, I believe we can build momentum and deliver sustainable growth. Thank you.

Thank you, Maria. I'm going to open it now for any questions that Anyone has? I suspect the questions, Daniel, will appear on the pop-up screen. So questions have been typed in.

Yeah. So we have a Q&A function at the bottom of your screen. So if you have any Q&A, please type in those questions. We don't have any questions currently. I'll just give it a minute so that people have the opportunity to do so. Yeah.

Thank you.

We have a question here from David Willis. Who is doing the external review?

Well, we have appointed advisors. I don't believe that it is necessary for us to disclose who, but they are advisors who we feel have the right skills to provide that review. And we were very careful and thoughtful about the way in which we went about appointing people who understood our space in the market and the opportunities that could arise for us.

We have a second question. Can you talk through the plans to become profitable with the existing current revenue? and not including revenue growth. So at the current state of revenue, how does the business plan to become profitable?

Well, as we've outlined, we are undertaking a review of the operating costs of the current base of revenue. There would need to be significant costs for us to become, cuts to become profitable. We are still very focused on making sure we're investing for the future. For example, in our instrumentation that we really need to go through that process so that we can offer customers, particularly in the U.S., instruments that have got greater automation and great throughput because that then becomes far more commercially viable for them to have those instruments in their labs. So that does cost money and it will take a little bit of time but what we are looking at is making sure that the business is absolutely sustainable throughout that process and while we go through that instrument automation and process, which will, as we've already disclosed, will take a couple of years.

We have another question from Tim Hogg. What is the strategy for improving sales in the US?

Well, I'm going to throw that question to our US-based director, Mike Aker, who is on the call. Mike, you might have... Well, yeah, I could talk about... Okay, perfect. Thank you.

Can you hear me okay?

Yes, thank you.

So I'm convinced we selected the right product. I mean, I don't know if this will answer the strategy for that, but I have the reality is we engaged all of the large laboratories in the country which have the majority of the business on selecting actually what would make a difference for them. They've also been active participants with the design of the specifications for the instrumentation that is being built. I have yet to talk to any customer, large or small, that was not excited about it. I'm convinced we selected the right targets with the right platform with the right players. I think it's just a matter of us getting the instrumentation done. I think the biggest part for the larger laboratories is looking for higher throughput automation. Based on what we have now, not even considering the advantages of the hands-free time. It's much, much simpler. It increases the capacity by instrument by about three times of what they could do now. Hopefully that answers the question.

Thank you, Mike.

We have another question. Are the customer ultimately the lab or the doctors who prescribe the tests?

is that for me or I mean our customers are those providing the service whether it's a hospital whether it's a laboratory those are our customers okay we have no further questions I'd like to thank everyone for joining the call this morning and appreciate everyone who

hosted the call. So thanks again.