Somnomed Ltd Ord

Well, good morning everyone and welcome to Somnamed's results presentation for the FY26 full year. My name is Jane Lowe and I will be your moderator for today's session. With me today are Karen Borg, who is CEO, and Yifei Guo, who is CFO of Somnamed. They will take us through the results presentation which was lodged with the ASX this morning. A bit of housekeeping before we kick off. Today's webinar is being recorded, including the Q&A, and we will post this on Somnamed's website following the completion of the webinar. We will invite you to ask questions at the end of the presentation, and you can do so either via the online Q&A function or by using the raise your hand function in the Zoom ribbon at the bottom of your screen. If you'd like to ask a question that way, we will take you off mute so that you can use audio for that. For now, though, I'll pass over to Karen to kick off the presentation. Thank you, Karen.

Great. Thanks, Jane. Before we begin, I'd like to draw your attention to the disclaimer on the screen. Today's presentation contains forward-looking statements which involve risks and uncertainties. Actual results may differ from those anticipated and investors should not place undue reliance on these statements. So, now let's have a look at the company highlights. Looking at these dynamics around the Somnamed Business and then we'll look at our financial and operating highlights. Now Somnamed's vision is a world where oral appliance therapy is the standard of care for obstructive sleep apnea treatment or OSA. Our mission is to set the standard for outcomes, innovation and patient experience while helping drive the transformation of sleep medicine worldwide. The market opportunity remains vast. Approximately 1 billion people globally suffer from obstructive sleep apnea, which presents a significant opportunity for market penetration with the appropriate therapy. At the same time, increasing consumer awareness, growth in GLP-1 therapies and rising demand for CPAP alternatives continue to expand the oral appliance therapy market. Importantly, we also operate within a large potential customer market of more than 700,000 dentures across our key regions. While we ultimately service the patient, our customer is the dentist, so every extra dentist we build a relationship with has the potential to support our market penetration. As the global market leader in oral appliances for OSA, we believe Somnamed is well positioned to drive growth. Looking at our financial highlights, FY26 delivered a solid financial result and demonstrated our continued disciplined approach to cost and capital management EBITDA increased 19% to 10.9 million with EBITDA margin improving to 9.6% Revenue increased 3% to 114.5 million with North America leading the results This is in line with preliminary unaudited results provided in the ASX announcement on the 27th of July this year We invested $5.7 million in capital expenditure with more than 50% of capex spend driven by growth initiatives and capacity investment. And we generated positive operating cash flow before leases of $8.3 million and after leases of $5.2 million while maintaining a solid 30 June closing cash position of $17.2 million and $16.8 of net cash. Overall, the business has established a strong foundation from which to advance and deliver on its strategic priorities. Looking at the operational highlights, FY26 was a year of focused execution, strengthening the foundation of our strategic priorities. During FY26 and into FY27, our leadership team transitioned to a single CEO structure which is a privilege to step into. Greg Knight was appointed as Chief Operating Officer and Nathan Minich joining as Chief Marketing Officer. In late July, Amrita Blixted announced her decision to step down as Co-CEO. The Board and I thank Amrita for her leadership and service to Somnamed over the last six years, initially as Non-Executive Director and later as Co-CEO. It was a real pleasure working with Amrita as Co-CEO. The partnership we built was instrumental in the company's turnaround and in shaping a strong platform for Somnamed's future. I sincerely wish her well and all that lies ahead. We delivered a number of production improvements. Manufacturing capacity expanded by over 20% in FY26 and by over 40% across two years. Manufacturing production times improved by more than 50% across two years. We advanced the controlled market release of Virtus, our purpose-built solution for OSA patients with coexisting sleep bruxism. Virtus uniquely addresses their dental needs and is engineered to withstand the intense clenching and grinding forces that typically damage standard oral appliance therapy appliances, a meaningful opportunity given that more than half of all OSA patients experience bruxism. For dentists and patients, versus filled a critical gap in care by providing a durable solution where traditional oat appliances often fail. I will now hand over to you, Faye, to take you through the financial results in more detail.

Thank you, Karen. FY26 represented a year of solid performance for Somnamed. The first half revenue was up 13% or 8% in constant currency with this outcome driven by growth in both North America and Europe. In a tale of two halves, the second half revenue was down by 7%, or less than 1% in constant currency, impacted by a change in European market dynamics and the significant appreciation of the Australian dollar against our key currencies. EBITDA increased 19% to $10.9 million, and the EBITDA margin improved from 8.2% to 9.6%, reflecting higher revenue, improved gross margin and disciplined operating cost management. Operating cash flow after lease payments increased 8% to $5.2 million compared with $4.8 million in the prior year owing to both revenue growth and cost management. Turning now to regional performance, Europe, our largest and most mature region, contributed $61.9 million in revenue for the full year, up a reported 1%, but down 1% on a constant currency basis. While first half growth was strong, second half sales were impacted by structural shifts in key European markets, slowing the pace at which patients were able to access oral appliance therapies. These included changes to clinical eligibility and public payer reimbursement criteria, plus a shift in patient referral pathways. In response to these challenges, the company has restructured its European commercial, administrative and operational leadership to strengthen customer focus and is reviewing its commercial and product strategies to respond to the changing environment. North America is our primary growth region. and continued to perform strongly, contributing $45.8 million in FY26 revenue, up 6% on a reported basis and 11% on a constant currency basis. APAC, our first commercial region, contributed $6.8 million of revenue for FY26, down 3% on a reported basis and 2% on a constant currency basis. Cost of living pressures impacted patient demand across these largely non-reimbursed markets. While regional dynamics varied throughout FY26, all markets remained strategically important and continued to provide attractive long-term opportunities. Turning to the P&L statement with a few notable call-outs, operating expenses were tightly managed with year-on-year total op-ex growth of less than 3%. The other line within the EBITDA section increased primarily due to higher share-based payment expenses which were non-cash in nature and margins improved across all key metrics despite European market dynamics and the foreign exchange headwinds. Turning to the balance sheet, cash and cash equivalents ended the year at $17.2 million broadly unchanged from the prior year, with net cash increasing from $16.5 million to $16.8 million. Trade receivables reduced materially during the period, reflecting improved collections performance and working capital management. The balance sheet remains strong and provides flexibility to support future investments and growth. The business delivered operating cash flow before lease payments of $8.3 million and after lease payments of $5.2 million. One-off expenses were slightly higher at $0.9 million up from $0.5 million in the prior year as a result of cashed settlement of prior year and current year one-off cost provisions. Capital expenditure totalled $5.7 million consisting primarily of investment in manufacturing infrastructure and research and development activities. free cash flow was negative $0.6 million reflecting these planned growth investments. The sale of 2.86 million shares through the Employee Share Trust delivered net proceeds of $2 million during the year to the business. An important note here on foreign exchange adjustments which reflects the appreciation of the Australian dollar against key currencies primarily the USD and the Euro in FY26 and in particular in half too. Approximately 95% of the company's revenues are derived in non-AUD currencies. Overall, we continue to balance growth investments with disciplined cash management. I will now hand back to Karen to take you through our strategy and outlook.