Ann: Investor presentation, page-3

I'm relatively new to this company and wondering if anyone would be able to help me. Im trying to understand the capital management practices of the Somnomed Board and why have taken this approach (I might be missing something). Over the course of the FY23 year they have borrowed a significant amount of money to fund their loss making operation in an environment of increasing interest rates which come with increased borrowing costs and normally decreased asset valuations. Then when issuing the full year results which includes a deterioration in profit they decide to raise capital at a significant discount to the past years share price and therefore significantly impacting shareholder returns moving forward. I know as I write this I have the benefit of hindsight however even when looking back I can't picture what the board were thinking when racking up the debt instead of a capital raise at the start of the financial year.

To go down this path at the start of the year I can only imagine they were thinking one of the following:
- that they were going to step change their profitability and not require further capital and manage the debt internally. If so their forecasting attempts were way off
- that there was going to be some major catalyst for a step change in valuation which would mean raising at a higher valuation, if so, what was it?
- they had an inflated view of what the value of the company is worth and were looking for a better valuation, if so it feels like they are gambling with shareholder return.

Any thoughts on the above would be appreciated.