Annual financial statement
Page 1
2026 Reports Appendix 4E Directors’ Report Financial Statements PolyNovo Limited ABN 96 083 866 862 26 August 2026
Page 2
PolyNovo Limited | 30 June 2026 Contents Appendix 4E 2 Directors’ Report 4 Remuneration Report 18 Auditor’s independence declaration 30 Consolidated statement of comprehensive income 31 Consolidated statement of financial position 32 Consolidated statement of changes in equity 33 Consolidated statement of cash flows 34 Notes to the consolidated financial statements 35 Consolidated entity disclosure statement 86 Directors’ declaration 87 Independent auditor’s report to the members of PolyNovo Limited 88 Shareholder information 93 Corporate directory 95 1
Page 3
PolyNovo Limited Appendix 4E Preliminary final report 1. Company details Name of entity: PolyNovo Limited ABN: 96 083 866 862 Reporting period: For the year ended 30 June 2026 Previous period: For the year ended 30 June 2025 2. Results for announcement to the market $'000 Revenues from ordinary activities up 16.1% to 149,984 Profit from ordinary activities after tax attributable to the owners of PolyNovo Limited down 44.4% to 7,341 Profit for the year attributable to the owners of PolyNovo Limited down 44.4% to 7,341 Comments The profit for the Group after providing for income tax amounted to $7,341,000 (30 June 2025: $13,214,000). 3. Net tangible assets Reporting period Previous period Cents Cents Net tangible assets per ordinary security 11.46 10.63 right-of-use assets and lease liabilities. 4. Dividends Current period There were no dividends paid, recommended or declared during the current financial period. Previous period There were no dividends paid, recommended or declared during the previous financial period. 2 Net tangible assets are defined as the net assets of the Group less intangible assets, deferred tax assets,
Page 4
PolyNovo Limited Appendix 4E Preliminary final report 5. Audit qualification or review Details of audit/review dispute or qualification (if any): The financial statements have been audited and an unmodified opinion has been issued. 6. Attachments Details of attachments (if any): The Financial Report of PolyNovo Limited for the year ended 30 June 2026 is attached. 7. Signed Amy Demediuk Date: 26 August 2026 Company Secretary 3
Page 5
Directors’ Report The Directors of PolyNovo Limited (PolyNovo, Company or we), present the Directors’ Report, together with the Financial Report, of the Company and its controlled entities (the Group) for the year ended 30 June 2026 and the related Auditor’s Report. Board of Directors and Executives The details of Directors and Senior Management during the year and until the date of this report are set out below. Directors were in office for the entire period unless otherwise stated. Mr Leon Hoare Non-executive Chair GradDipBus, AssocDipAppSc (Orth), FAICD Mr Hoare was appointed a Director of PolyNovo on 27 January 2016 and became Chair on 28 October 2025. He is an accomplished commercial leader with expertise across multiple life sciences sectors. Until December 2025, Mr Hoare served as Managing Director of Lohmann & Rauscher, Australia and New Zealand (ANZ), a privately held European medical device company, and led the establishment of its ANZ subsidiary. Previously, he was Managing Director of Smith & Nephew (S&N) ANZ, one of S&N’s largest global subsidiaries outside the United States. During his 24 years with Smith & Nephew, Mr Hoare held multiple executive roles, including President of its Asia-Pacific Advanced Wound Management (AWM) businesses for five years. He was also one of three Regional Presidents on the AWM Global Executive Management team. His career also includes a senior role at Bristol-Myers Squibb and as Vice Chair of the Medical Technology Association of Australia, Australia’s peak medical device industry body. Mr Hoare is currently a Non-Executive Director of Medical Developments International Ltd (ASX: MVP), where he is Chair of the People & Culture Committee. Mr Hoare is Chair of the Board and the Nominations Committee. Mr Robert Douglas Non-executive Director MBA, BEng Electrical Engineering, BSc Mr Douglas was appointed a Director of PolyNovo on 14 October 2025. Mr Douglas has more than thirty-five years of experience in medical device technology, specialising in digital health. He also has a decade of experience in public company governance, including audit, risk management, and compliance oversight. Mr Douglas had several strategy and operational roles before joining Resmed Inc. Australia (NYSE: RMD, ASX: RMD) in 2001. Since then, he has had various roles in the U.S. and Australia including Vice President Corporate Marketing, Vice President Operations and President and Chief Operating Officer from 2013 to 2023. Resmed is a global medical device and software applications company providing solutions to diagnose, treat and manage respiratory disorders and improve care in out-of-hospital settings. Mr Douglas is currently a member of the Board of Directors and Audit Committee for Globus Medical Inc. (NYSE: GMED), a global musculoskeletal medical technology company. Mr Douglas is a member of the Audit and Risk Committee. 4
Page 6
Dr Robyn Elliott Non-executive Director BSc (Hons) Chemistry, PhD Inorganic Chemistry Dr Elliott was appointed a Director of PolyNovo on 28 October 2019 and was appointed to the position of Acting Chief Executive Officer on 11 March 2025 until 1 December 2025. Following a transition period, Dr Elliott resumed her role as Non-Executive Director from 12 December 2025. Until recently, Dr Elliott was Global Head, Strategic Portfolio Management at CSL Behring, a role responsible for governance oversight and business value delivery from a multi-billion-dollar capital expansion portfolio. Dr Elliott previously held Strategic Expansion and Quality Senior Director roles within CSL, was the Managing Director at IDT Australia and commenced her career at DBL Faulding. Dr Elliott is a member of the Remuneration Committee and the Audit and Risk Committee. Ms Christine Emmanuel-Donnelly Non-executive Director BSc (Hons) Chemistry, MSc Enterprise, Cert.Int.Prop.Law, MAICD Ms Emmanuel-Donnelly was appointed a Director of PolyNovo on 13 May 2020. Ms Emmanuel-Donnelly is an accomplished IP and business development professional with more than 30 years of local and international experience. Ms Emmanuel-Donnelly has a Bachelor of Science with a major in Economics (Hons: Chem) from Monash University, Certificate in Intellectual Property Law from Queen Mary College, University of London, and Master of Enterprise from Melbourne University. She has been on the Board of the Institute of Patent and Trade Mark Attorneys of Australia for over a decade. Ms Emmanuel-Donnelly is currently Chair of Impedimed Ltd (ASX: IPD) and on the Board of Medical Developments International Ltd (ASX: MVP). Previously, Ms Emmanuel-Donnelly was Executive Manager of Business Development and Commercial at the CSIRO, was in-house IP Counsel for Unilever in the United Kingdom, and practised as a patent and trade mark attorney for Wilson Gunn (UK), Davies Collison Cave and Griffith Hack. Ms Emmanuel-Donnelly is Chair of the Remuneration Committee and a member of the Nominations Committee. Dr Charmaine Gittleson Non-executive Director Bsc, MBBCh, GAICD Dr Gittleson was appointed a Director of PolyNovo on 1 April 2026. Dr Gittleson brings extensive global experience across healthcare, life sciences and governance, with a background spanning clinical practice and research, medical leadership, regulatory strategy, product development and board oversight. She is the former Chief Medical Officer of CSL, where she held senior global leadership roles across clinical research and development, regulatory engagement and patient safety, including extended tenure in the United States. Dr Gittleson is currently Chair of Percheron Therapeutics Ltd (ASX: PER), and a Non-Executive Director of Imugene Limited (ASX: IMU) and George Medicines Ltd. She previously served as Chair of Patrys Ltd (ASX: PAB). She is also a Graduate of the Australian Institute of Company Directors. Dr Gittleson is a member of the Remuneration Committee and the Nominations Committee. 5
Page 7
Mr Andrew Lumsden Non-executive Director MA (Hons) in Accountancy & Finance, CA, AGIA ACG, MAICD Mr Lumsden was appointed a Director of PolyNovo on 4 June 2021. He is an accomplished Chartered Accountant and finance executive with more than 25 years’ experience locally and internationally. He holds a Master of Arts in Accountancy and Finance (First Class Hons) and a Graduate Diploma in Applied Corporate Governance from the Governance Institute of Australia. He is also a member of the Australian Institute of Company Directors. Mr Lumsden previously served as Chief Executive Officer of Wellcom Worldwide Australasia having previously held the roles of Group Chief Financial Officer and Group Chief Operating Officer. Prior to joining Wellcom, Mr Lumsden was a Senior Manager within the Audit and Assurance practice of PricewaterhouseCoopers. Mr Lumsden is the Chair of the Audit and Risk Committee and a member of the Nominations Committee. Mr David Williams Former Non-executive Chair Mr Williams was appointed as a Non-executive Director on 28 February 2014, Chair on 13 March 2014 and resigned on 27 October 2025. Ms Amy Demediuk General Counsel and Company Secretary LLB (Hons), MIPL Ms Demediuk joined PolyNovo in February 2026. She has extensive experience in senior legal and governance roles across ASX-listed healthcare and technology companies. Most recently, Ms Demediuk was General Counsel (Global R&D and Strategy) at CSL, where she spent more than 16 years in senior legal roles across Australia, Asia Pacific and the United States. She began her career at Arnold Bloch Leibler, holds a Bachelor of Law and Masters of Intellectual Property Law from the University of Melbourne and a Graduate Diploma in Applied Corporate Governance from the Governance Institute of Australia. Mr Bruce Peatey Chief Executive Officer MBA, BAppSc Mr Peatey joined PolyNovo in December 2025. He has extensive international experience across healthcare, medical devices, and biotechnology, and within the ASX-listed company environment, having worked in Australia, the U.S. and Singapore. Most recently, he led the U.S., Canadian and Latin American businesses for Dentsply Sirona, overseeing a US$1.3B operation and previously managed the Asia Pacific region. Mr Peatey brings deep expertise in commercial leadership, product launches, market expansion, and organisational development. His earlier career includes roles with Abbott Laboratories, Baxter Healthcare and Biosensors International. He holds qualifications in Applied Science and an MBA. 6
Page 8
Mr Jan Gielen Chief Financial Officer CA, Bachelor Bus (Acc) Mr Gielen joined PolyNovo in December 2018. Mr Gielen has extensive experience in CFO and Finance Director roles for fast growing PE and VC backed businesses and played an important part in expanding these businesses globally. Mr Gielen had a long involvement from inception with ICIX, a leading SaaS platform supporting global retailers and manufacturers where he served as Finance Director in Silicon Valley. Mr Gielen’s most recent role was CFO of CardioScan for 6 years, Australia’s largest cardiac reporting provider, which during his tenure expanded to Hong Kong, Singapore and North America. Mr Gielen holds a Bachelor of Business (Accounting) degree from Monash University, is a member of the Institute of Chartered Accountants, and commenced his career with Pitcher Partners. Review of Operations Corporate and Organisational Structure PolyNovo Limited, the ultimate parent entity of the PolyNovo Group, is a public company listed on the Australian Securities Exchange (ASX). As of 30 June 2026, PolyNovo had ten wholly owned subsidiaries: 1. PolyNovo Biomaterials Pty Limited 2. NovoSkin Pty Ltd 3. NovoWound Pty Ltd 4. PolyNovo NZ Ltd 5. PolyNovo UK Ltd 6. PolyNovo North America LLC (PNA LLC) 7. PolyNovo Singapore Private Ltd 8. PolyNovo Ireland Ltd 9. PolyNovo Biomaterials India Private Ltd 10. PolyNovo Hong Kong Ltd The first three subsidiary companies listed above are Australian proprietary companies whilst the other entities are the trading and employment entities for those countries. Principal Activities and Operations PolyNovo’s principal activity is the development of innovative medical devices for medical applications, utilising its proprietary bioabsorbable polymer technology NovoSorb®. NovoSorb® is a family of medical grade polymers that can be used to manufacture medical devices designed to support tissue regeneration and repair. NovoSorb® has significant advantages over competitor bioabsorbable polymers in terms of design flexibility, bioabsorption, and biocompatibility. The NovoSorb® polymer can be expressed in a variety of physical formats including foam, coatings, fibres, plastic structures, films, and biologic carriers. NovoSorb® BTM NovoSorb® Biodegradable Temporising Matrix (BTM) is a bilayer dermal matrix for the regeneration of the dermis when lost through extensive surgery, trauma or burn. With the NovoSorb® BTM matrix in place, the dermal layer is regenerated and once fully integrated, the wound can be closed definitively with the application of a skin graft or through secondary intention healing. NovoSorb® BTM is sold directly by PolyNovo in Australia, Hong Kong, India, Malaysia, New Zealand, Singapore, United Kingdom, and the United States. The Company utilises distributors to support its sales footprint in other markets. 7
Page 9
Independent clinical evidence supporting the use of NovoSorb® products continue to grow, with 500+ articles and abstracts published to date. U.S. Pivotal Trial funded by Biomedical Advanced Research and Development Authority (BARDA) The U.S. pivotal randomised controlled trial, funded by BARDA, is designed to support an on‑label indication for NovoSorb® BTM in full thickness burns in the United States. The Clinical Study Report (CSR) has now been finalised based on 12-month patient follow up data and supports proceeding with the Premarket Approval (PMA) submission. Following the appointment of Chief Quality & Regulatory Affairs Officer, Allison Myers, the Company has prioritised the completion, validation and documentation of key manufacturing and supplier processes and expects to submit its full PMA application before the end of calendar year 2026, incorporating the eighteen‑month follow‑up data into the final submission package. Securing a PMA brings the U.S. market in line with many other markets where this indication is already cleared by regulators. NovoSorb® MTX NovoSorb® MTX has broad potential applicability in burns, chronic, trauma, and surgical wounds, providing increased treatment pathways for clinicians. NovoSorb® MTX and NovoSorb® BTM are complementary, and clinicians use both products for the treatment of soft tissue defects. NovoSorb® MTX received FDA 510(k) clearance with a 2 mm thickness in 2022 and is commercially available across 6 markets. U.S. Outpatient Changes to skin substitute pricing in the U.S. outpatient setting is expected to reinforce the market opportunity for NovoSorb® matrices. In anticipation of changing market dynamics, the NovoSorb® SynPath® brand was developed, which has an existing HCPCS code and offers the fastest pathway to market. A comprehensive clinical evidence package was submitted to the Centers for Medicare and Medicaid Services (CMS) on 31 October 2025, to support Medicare coverage for NovoSorb® BTM under the skin substitute LCDs. The newly established outpatient rules offer a clinical and reimbursement pathway with Medicare and Federal accounts, and further opportunity within the private payor system is currently being reviewed to understand its potential and negotiate coverage. In parallel, resources have been invested to optimise the business for a changing reimbursement environment. A dedicated team has been assembled to support the outpatient strategy, bringing experienced marketing, market access and reimbursement, and market development individuals who have a proven record of success at competitive companies. Regulatory update EMEA: • NovoSorb® MTX registration is currently underway in the UK • NovoSorb® BTM has been registered in 7 new European countries: o Baltics: Latvia, Lithuania, Estonia o Balkans: Croatia, Slovenia, Albania, Serbia Registrations are in progress for Bosnia and Herzegovina, North Macedonia, Montenegro, and Kosovo. 8
Page 10
APAC: • NovoSorb® MTX has been registered in Hong Kong (previously supplied under voluntary provisions) and registration process in Taiwan is ongoing. • Plans to enter Japan are progressing with PolyNovo’s Japanese distributor and regulatory plans are advancing in consultation with the Japanese PMDA. Americas: • NovoSorb® BTM has been registered in Brazil with NovoSorb® MTX registration progressing. • New registrations for NovoSorb® BTM and NovoSorb® MTX are in progress in Mexico. Research and Development activities The Company has completed a strategic review of new product development to optimise value creation, leverage resources and respond to an evolving macro environment. The Company has appointed a Chief Scientific Officer and is in the process of implementing a formal New Product Development (NPD) and Portfolio Prioritisation framework to support disciplined innovation, prioritise investment decisions and align product development activities with strategic growth opportunities. This process is designed to evaluate, prioritise and sequence product, indication and platform opportunities, supported by cross-functional governance and clear decision- making criteria. Hernia Repair and Plastics and Reconstructive Devices The Company has completed significant technical development work and generated encouraging pre-clinical data with current hernia device prototypes. However, industry dynamics have evolved significantly since the program commenced. PolyNovo is currently assessing potential commercialisation options and capital allocation priorities within its broader strategic plan for the NovoSorb® platform. PolyNovo has a broader platform opportunity across NovoSorb® BTM, NovoSorb® MTX and implantable devices. All programs, existing and future, are assessed against market size, regulatory complexity, competitive landscape, time to commercialisation, capital intensity, and expected returns. Manufacturing Capability PolyNovo continues to invest in advanced manufacturing capability to support growth. During FY26, the Company further expanded its production footprint in Port Melbourne, completing construction of its new manufacturing facility, subject to regulatory approval, quality and safety assessments. The Company's manufacturing footprint supports a growing portfolio of products including NovoSorb® BTM, NovoSorb® MTX and NovoSorb® SynPath®. Its manufacturing model provides oversight of quality and performance while supporting the Company's strategy to grow share and impact across existing and future markets. Financial Position As at 30 June 2026, the Group maintained a strong financial position. Cash and cash equivalents were $35,424,000 and the Group had total borrowings of $3,632,000 comprising the equipment finance facility ($2,218,000) and the insurance premium funding facility ($1,414,000). Capital expenditure during FY26 was directed principally towards completion of the new Port Melbourne manufacturing facility. The Directors consider the Group’s liquidity and capital resources to be sufficient to fund its operations and strategic objectives. 9
Page 11
Status of Markets The Company achieved 16.7% in global commercial sales growth for FY26. Strong NovoSorb® sales growth was recorded in many markets, notably in the U.S. up 15.6% in AUD (21.1% in constant currency) and ROW up 20.0% in AUD (21.9% in constant currency). The ROW increase includes strong performances in ANZ (up 26.0%), UK (up 12.9%), India (up 35.4%), and Hong Kong (up 43.0%). Inflation has increased some costs in all markets including wages. The Company maximises interest earned on cash deposits via high interest term deposits while managing the cash requirements for capital expenditure and operational requirements. To manage the impact of higher inflation and interest costs, cash flow forecasts are maintained and the Group has a level of discretion in managing cash outflows in response to rising costs. Significant Changes in the State of Affairs Other than as set out in this report, the Directors are unaware of any significant change in the state of affairs of the Group during the year ended 30 June 2026. Strategic Overview and Likely Developments The Company’s strategic focus over the next 12 months, and the likely developments in its operations, include: • progressing the U.S. PMA submission for NovoSorb® BTM in full thickness burns; • executing the U.S. outpatient and reimbursement strategy; • continuing global commercial expansion of NovoSorb® BTM and NovoSorb® MTX through direct markets and distributor arrangements; • embedding the NPD and portfolio prioritisation framework to guide disciplined investment in the NovoSorb® platform; and • scaling manufacturing capacity at the expanded Port Melbourne facility. Significant Events After the Balance Date The Directors are not aware of any other matters or circumstances since the end of the financial year other than those announced to the ASX, or otherwise dealt with in this report, which have significantly affected, or may significantly affect, the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial years. Financial Results PolyNovo Limited reported total revenue (including interest and other income) for the year ended 30 June 2026 of $149,984,000, an increase of 16.1% (20.3% in constant currency) from the prior year’s $129,186,000. The net profit after tax (NPAT) of $7,341,000 for FY26 was a decrease of 44.5% from the prior year’s net profit of $13,214,000. The prior year NPAT included an income tax benefit of $5,695,000 whereas for FY26 an income tax expense of $477,000 was reported. Earnings before interest, tax, depreciation, and amortisation (EBITDA)1 of $12,060,00, an increase of 8.1% from prior years EBITDA of $11,244,000. Several factors contributed to the result including: • Revenue from the sale of commercial products for FY26 increased by 16.7% to $138,440,000 from the prior year’s $118,634,000. • Revenue from BARDA for FY26 decreased by 38.8% to $5,266,000 from the prior year’s $8,609,000. • Other Income includes an insurance claim related to the R&D Innovation Centre of $6,016,000, interest income of $135,000 and $126,000 from Victorian State Government supporting the development, manufacture and commercialisation of new products. • Employee related expenses increased by 5.7% to $78,806,000. 10
Page 12
• Research and development expenses (which include clinical expenses) decreased by 36.9% to $5,340,000. This decline is in line with expectations and is largely attributable to the decrease in expenses associated with the BARDA trial, as patient recruitment is complete and the CSR has been finalised. • Depreciation and amortisation increased by 3.8% to $3,456,000 while loss on write-off of assets amounts to $4,717,000 primarily due to assets write-off resulting from the R&D Innovation Centre fire incident. • Corporate, administrative, and overhead expenses increased by 15.2% to $34,471,000. This increase was primarily attributable to foreign exchange movements, with the Group recognising an unrealised foreign exchange loss of $2,678,000 in FY26 compared to an unrealised foreign exchange gain of $2,220,000 in FY25. Excluding this non-cash foreign exchange impact, underlying corporate, administrative and overhead expenses were slightly lower than the prior year despite continued growth in business activity. 1 EBITDA is a non-IFRS financial measure that has not been audited. It is presented to assist users to understand the underlying performance of the Group and is reconciled to statutory net profit after tax in the Financial Report. R&D Tax Incentives During FY26, the Company received a non-refundable tax offset of $2,437,000 (non-cash) in relation to the FY25 R&D tax incentive scheme. As the Company has exceeded the $20.0 million R&D cash tax threshold being the maximum revenue allowable for the claiming of a cash refund, a deduction is recognised against taxable income. Dividends No amounts were paid or recommended to be paid by the Directors by way of dividend in FY26. Indemnification and Insurance of Directors and Officers During the year ended 30 June 2026, the Company indemnified its Directors, Company Secretary and Executive Officers in respect of any acts or omissions giving rise to a liability to another person (other than the Company or a related party) unless the liability arose out of conduct involving a lack of good faith. In addition, the Company indemnified the Directors and the Company Secretary against any liability incurred by them in their capacity as Directors or Company Secretary in successfully defending civil or criminal proceedings in relation to the Company. No monetary restriction was placed on this indemnity. The Company has insured its Directors, Company Secretary and Executive Officers for the period under review. Under the Company’s Directors’ and Officers’ Liability Insurance Policy, the Company shall not release to any third party or otherwise publish details of the nature of the liabilities insured by the policy or the amount of the premium. Accordingly, the Company relies on section 300(9) of the Corporations Act 2001 to exempt it from the requirement to disclose the nature of the liability insured against and the premium amount of the relevant policy. Indemnification of Auditors To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young Australia, as part of the terms of its engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young Australia during or since the financial year. Board and Committee Meetings Details of the number of meetings of the Board and its committees held during the year, together with attendance by Directors in their capacity as members of those bodies, are set out in the table below. Directors may attend committee meetings by invitation from time to time; such attendance is not reflected in the attendance statistics unless the Director was a member of the relevant committee. 11
Page 13
Full Board8 Audit and Risk Committee Remuneration and Nomination Committee* Remuneration Committee Nominations Committee Total numbers of meetings held 17 4 3 1 1 Director Role Meetings attended Meetings eligible to attend Meetings attended Meetings eligible to attend Meetings attended Meetings eligible to attend Meetings attended Meetings eligible to attend Meetings attended Meetings eligible to attend Mr Leon Hoare1 Non- Executive Chair 17 17 2 2 2 2 1 1 Mr Robert Douglas2 Non- Executive Director 11 11 3 3 2 2 Dr Robyn Elliott3 Non- Executive Director 17 17 3 3 3 3 1 1 Ms Christine Emmanuel- Donnelly4 Non- Executive Director 17 17 1 2 3 3 1 1 1 1 Dr Charmaine Gittleson5 Non- Executive Director 3 3 1 1 1 1 Mr Andrew Lumsden6 Non- Executive Director 15 17 4 4 1 1 1 1 Mr David Williams7 Non- Executive Director 7 8 1 Mr Leon Hoare was appointed Chair of the Board on 28 October 2025 and Chair of the Nominations Committee when it was formed on 28 April 2026. Mr Hoare was appointed to the Audit and Risk Committee on 18 August 2025 and stepped down from the committee on 4 December 2025. 2 Mr Robert Douglas joined the Board, the Audit and Risk Committee and the former combined Remuneration & Nominations Committee on 14 October 2025. He retired from the Remuneration & Nominations Committee on 8 April 2026 and remains a member of the Audit and Risk Committee. 3 Dr Robyn Elliott temporarily ceased her role as a Non-Executive Director on 11 March 2025 upon her appointment as Acting Chief Executive Officer and Managing Director. During this period, she did not attend Audit and Risk Committee meetings and ceased membership of that Committee on 18 August 2025 and was reappointed on 4 December 2025. Dr Elliott resumed her role as a Non-Executive Director on 1 December 2025. She was a member of the former combined Remuneration & Nominations Committee and, following the establishment of separate committees on 28 April 2026, was appointed a member of the Remuneration Committee. 4 Ms Christine Emmanuel-Donnelly was appointed to the Audit and Risk Committee on 18 August 2025 and stepped down from the committee on 4 December 2025. She served as Chair of the former combined Remuneration & Nominations Committee and, following the establishment of separate Remuneration and Nomination Committees on 28 April 2026, was appointed Chair of the Remuneration Committee and a member of the Nomination Committee. 5 Dr Charmaine Gittleson joined the Board on 1 April 2026. Following the establishment of separate Remuneration and Nomination Committees on 28 April 2026, she was appointed a member of both committees. 6 Mr Andrew Lumsden is Chair of the Audit and Risk Committee. He was appointed to the former combined Remuneration & Nominations Committee on 18 August 2025 and retired from the Remuneration & Nominations Committee on 25 November 2025 and following the establishment of separate Remuneration and Nomination Committees on 28 April 2026, was appointed a member of the Nominations Committee. 7 Mr David Williams resigned from the Board on 27 October 2025. 8The meeting count reflects a number of out-of-cycle Board meetings held during FY26 as circumstances required. *Effective 28 April 2026, the Board established separate Remuneration and Nomination Committees, replacing the former combined Remuneration & Nomination Committee. 12
Page 14
Business Risks There are inherent risks associated with the development of pharmaceutical, medical products and medical devices to a marketable stage. The clinical trial process is designed to assess the safety and efficacy of a drug or medical device prior to commercialisation, and a significant proportion of drugs and medical devices fail one or both criteria. The Company has a robust risk management framework, employing mitigation strategies appropriate to the Company size, in line with our commercial product development. A summary of key risks applicable to the Company and accompanying mitigation strategies are captured below. Risk Description Mitigation Concentration of manufacturing The Company's manufacturing operations are currently concentrated at its Port Melbourne facility. Any significant disruption to manufacturing operations may adversely affect the Company's ability to supply products to customers. Additional manufacturing facilities would require regulatory approvals before products manufactured at those facilities can be supplied to customers, which may affect the timing of any expansion of manufacturing capacity. The Company continues to invest in manufacturing capacity and operational resilience to support future growth and reduce concentration risk. Manufacturing continuity is supported through business continuity and disaster recovery planning, The Company maintains inventory across multiple warehousing locations in Australia and overseas and continues to assess opportunities to further diversify its manufacturing and supply chain footprint. Product innovation Increased competition exposes the Company to the risk of losing market share. This risk may be exacerbated by a failure to produce innovative products and services beyond the current core offering. The Company is also exposed to the risk that our products are superseded by medical advancements, resulting in alternative products or treatments being commercialised. Product development priorities are assessed regularly having regard to market dynamics, customer needs, competitive developments and technological advancement. The Company has appointed a Chief Scientific Officer and is implementing a formal NPD and Portfolio Prioritisation framework to support disciplined innovation, prioritise investment decisions and align product development activities with strategic growth opportunities. This process is designed to evaluate, prioritise and sequence product, indication and platform opportunities, supported by cross-functional governance and clear decision-making criteria. The Company continues to invest in research and development activities to expand clinical applications for its technology platform and maintain its competitive position. Intellectual Property The Company relies on patents, trade marks, confidential information and proprietary know-how to maintain its competitive position. Intellectual property may be compromised through cyber security incidents, unauthorised disclosure, infringement by third parties or other failures to adequately protect proprietary information. The Company maintains a portfolio of patents and trade marks, supported by internal governance processes, confidentiality obligations, access controls and specialist external intellectual property advisers. 13
Page 15
Risk Description Mitigation Reliance on suppliers The Company relies on third-party suppliers for key raw materials, components and services required for the manufacture and distribution of its products. Disruption to the supply, quality or availability of these inputs, or the loss of a critical supplier, may adversely affect the Company's operations, manufacturing capacity, customer service levels and financial performance. The Company maintains close relationships with key suppliers and actively monitors supplier performance, capacity and continuity risks. Inventory levels for critical materials are managed to support continuity of supply, and the Company continues to evaluate opportunities to diversify and strengthen its supplier base where appropriate. Supply chain resilience is regularly reviewed as part of operational planning and risk management activities. Product liability As the developer, manufacturer and supplier of medical devices, the Company is exposed to product liability risks arising from product defects, quality failures, manufacturing issues, adverse clinical outcomes, or other circumstances that may result in patient harm, product recalls, litigation, regulatory action or reputational damage. The Company maintains robust quality systems across product design, testing, manufacturing and post-market surveillance. These systems are intended to support product safety, quality and regulatory compliance. The Company also maintains product liability insurance. Legal and Regulatory The Company is subject to a wide range of legal and regulatory requirements in relation to our products, their sale, health and safety, employment, and corporate regulation. Failure to comply with any legal and regulatory requirements could negatively impact the Company’s operations, customers, employees, and shareholders. Risk exposure is mitigated through governance frameworks, policies, procedures, training, monitoring and oversight mechanisms designed to support compliance with applicable legal and regulatory requirements. During FY26, the Company strengthened its governance and compliance capability through the appointment of a General Counsel & Company Secretary, who has led the development and implementation of enhanced governance and compliance frameworks. This has included the introduction and refresh of key policies, procedures and controls across areas including corporate governance, compliance, commercial interactions, continuous disclosure and legal operations. The Company’s Regulatory Affairs, Medical Affairs and Legal functions support the business through the provision of advice, training, monitoring and ongoing assessment of legal, regulatory and policy developments. 14
Page 16
Risk Description Mitigation Global Tariff Uncertainty The Company operates in multiple jurisdictions and is exposed to changes in international trade policy, tariffs, sanctions, import and export controls, market access requirements, and supply chain regulations. Changes to these regimes may increase costs, disrupt supply chains, delay market access, impose additional compliance obligations, or adversely affect the Company's financial performance and operations. The Company actively monitors developments in international trade policy, tariffs and market access conditions that may affect its operations and supply chains. During FY26, management engaged with relevant government stakeholders, including the Australian Department of Foreign Affairs and Trade (DFAT), to better understand the potential implications of developing tariff measures and broader trade policy developments for the Company's business. The Company continues to assess the impact of existing and proposed tariff arrangements on its operations, pricing and supply chain. Existing inventory holdings in the United States, together with the Company's manufacturing economics and supply chain arrangements, assist in mitigating the impact of current tariff settings. Management continues to evaluate opportunities to enhance supply chain resilience, preserve customer access and minimise any adverse financial impacts arising from future changes in trade policy or tariff regimes. Climate and sustainability The Company is exposed to climate-related and broader sustainability risks and to evolving climate-related financial disclosure obligations (including AASB S2). The Company is progressing its sustainability and climate-related reporting, including greenhouse gas inventory and readiness for mandatory climate-related financial disclosure, and manages environmental matters under its Environment Policy. 15
Page 17
PolyNovo Limited Directors’ Report 30 June 2025 Forward-looking Statements This Directors' Report contains forward-looking statements regarding PolyNovo's business, operations, financial performance, growth prospects, strategy, market opportunities and the anticipated development and commercialisation of its products and technologies. Forward-looking statements can generally be identified by words such as "anticipate", "believe", "expect", "intend", "may", "plan", "predict", "project", "should", "target", "will" and similar expressions. Forward-looking statements are based on information available to the Company as at the date of this Directors' Report and reflect the Company's current expectations, assumptions and beliefs. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors, many of which are beyond the Company's control, that may cause actual results, performance or achievements to differ materially from those expressed or implied by the forward- looking statements. Except as required by law, PolyNovo does not undertake any obligation to update or revise any forward- looking statement, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on forward-looking statements. Directors’ Shareholdings and Declared Interests As at 30 June 2026, the Directors of PolyNovo collectively hold 23,422,798 shares in the Company. As at the date of this report the interests of the Directors in the Company’s shares are: Directors Shares held directly Shares held indirectly Mr Leon Hoare - 1,146,009 Mr Robert Douglas 151,000 Dr Robyn Elliott 94,789 - Ms Christine Emmanuel-Donnelly - 270,789 Dr Charmaine Gittleson - - Mr Andrew Lumsden - 200,000 Mr David Williams (Ceased to be a director on 27 October 2025, holding as at date of cessation) - 21,655,000 Total 94,789 23,422,798 As at 30 June 2026, no Director has an interest in any contract or proposed contract with PolyNovo other than disclosed below. Further details of the equity interests of Non-Executive Directors can be found in the Remuneration Report. Auditor Ernst & Young (EY) continues in office in accordance with section 327b (2) of the Corporations Act 2001. Non- audit Services During the year ended 30 June 2025, the amount received, or due and receivable for non- audit services provided by the Company’s auditor EY are shown below. The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that auditor independence was not compromised. Non-audit services $ Taxation services and other services 298,337 16
Page 18
The auditor has provided a written declaration that no professional engagement for the Group has been carried out during the financial year that would impair Ernst & Young’s independence as auditor. The declaration is set out on page 33 and forms part of this Directors’ Report. Rounding and Non-IFRS Information Amounts in this report have been rounded in accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2026/183. EBITDA and other non-IFRS financial measures referred to in this report have not been audited and should be read together with the statutory results in the Financial Report. 17
Page 19
DRAFTING NOTE: This Rem Report has been drafted on the basis that Rem Co will endorse the FY27 rem policy and framework in on 18 August, and the Board will approve it on 25 August. Remuneration Report Remuneration Committee Chair Introduction FY26 was a year of significant change for PolyNovo, with the appointment of a new Chief Executive Officer and executive leadership transition . Against this backdrop, the Remuneration Committee remained focused on ensuring that remuneration outcomes support the Company's strategy, drive accountability and align with the interests of shareholders. During the year, the Committee undertook a comprehensive review of the Company's remuneration framework. In doing so, we considered shareholder feedback, proxy adviser observations, evolving market practice and external benchmarking conducted with the supp ort of external advisers. While the review confirmed that the FY26 framework appropriately supported business performance and executive retention during a period of leadership transition, it also identified opportunities to strengthen alignment with long -term shareholder value crea tion and enhance disclosure of the link between performance and reward. During the year, the Board also separated the Remuneration & Nomination Committee into standalone Remuneration and Nomination Committees. The Board considers this an important step in the Company's governance evolution, enabling deeper focus on executive r emuneration strategy, performance and reward alignment, while supporting a dedicated focus on Board composition, succession planning, talent development and Board renewal. The Board believes executive remuneration should be transparent, appropriately performance -based and closely aligned to the creation of sustainable shareholder value. As a result, the Board has approved a revised remuneration framework that will be implemented from FY27, including the introduction of a long-term incentive plan and enhanced disclosure of performance outcomes. We believe these changes will strengthen the alignment between executive reward, sustainable business performance and long -term shareholder returns, while helping PolyNovo continue to attract, motivate and retain high-calibre talent. On behalf of the Remuneration Committee, I thank our shareholders for their ongoing engagement and feedback, which has informed the evolution of our remuneration framework. Christine Emmanuel-Donnelly Chair, Remuneration Committee 18
Page 20
Remuneration Report (Audited) The Directors of PolyNovo present the audited Remuneration Report for PolyNovo Limited and its controlled entities (the Group) for the year ended 30 June 2026, prepared in accordance with section 300A of the Corporations Act 2001. This report outlines the Company's remuneration framework and remuneration outcomes for the Chief Executive Officer, other Key Management Personnel ( KMP) and Non -Executive Directors. PolyNovo's approach to remuneration is guided by the Company's strategy, growth ambitions and operating environment, and is intended to align executive reward with sustainable business performance, long - term shareholder returns and sound governance practices. The Remuneration Policy established in FY24 continue d to underpin our approach to both fixed and variable rewards in FY26. The Board remains committed to ensuring that our remuneration practices support the attraction, motivation and retention of high-calibre talent and align executive remuneration with sustainable business performance and shareholder returns . During FY26, the Board undertook a review of the remuneration framework to ensure it remains fit -for-purpose in response to evolving market practice and shareholder expectations. 1. Key Management Personnel Key Management Personnel (KMP) are those persons who are responsible for planning, directing and controlling the activities of the Group. For FY26, the KMP comprised of the Non -Executive Directors and the Executives whose details are set out below. 1.1 Non-Executive Directors Mr Leon Hoare – Non-Executive Director and appointed Non-Executive Chair 27 October 2025 Mr Andrew Lumsden – Non-Executive Director and Chair of the Audit and Risk Committee Ms Christine Emmanuel-Donnelly – Non-Executive Director and Chair of the Remuneration Committee Mr Robert Douglas – Non-Executive Director appointed 14 October 2025 Dr Robyn Elliott – Non-Executive Director from 12 December 2025 Dr Charmaine Gittleson – Non-Executive Director appointed 1 April 2026 Mr David Williams – Non-Executive Chair resignation effective 27 October 2025 1.2 Executive KMP Mr Bruce Peatey – Chief Executive Officer appointed 1 December 2025 Mr Jan Gielen – Chief Financial Officer Dr Robyn Elliott – Acting CEO/Managing Director from 11 March 2025 to 1 December 2025. Following a transition period, Dr Elliott resumed her role as Non-Executive Director from 12 December 2025. 2. Remuneration Strategy Our remuneration strategy aims to align executive reward with Company performance and the creation of sustainable shareholder value, while attracting, motivating and retaining high -calibre talent. The Company's remuneration strategy is implemented through its Remuneration Policy and executive remuneration framework and is underpinned by the key remuneration principles set out below. 19
Page 21
In FY26, the executive remuneration framework comprised fixed remuneration and a sho rt-term incentive (STI), with no broad-based long-term incentive (LTI) in place for executives. While the framework provided a link between performance and reward, the Board recognised that it offered limited leverage to differentiate outcomes based on sustained long-term performance. No structural changes were made to the executive remuneration framework during FY26. This reflected the Board's focus on maintaining stability and continuity during a period of executive leadership transition, including the appointment of an Acting Chief E xecutive Officer and the subsequent recruitment of a permanent Chief Executive Officer. Attract, motivate and retain talent Support the execution of business strategy Alignment with business performance and sustainable shareholder return Fairness, equity and consistency PolyNovo operates in global and local markets where it competes for a limited pool of talent. To attract, motivate and retain high-calibre talent, PolyNovo aims to provide a market-competitive reward opportunity which encourages retention and high performance. Apply performance metrics that support PolyNovo’s strategic objectives and business performance expectations. Apply performance metrics that are explicitly defined, valid, verifiable and relevant to the employee’s role in the Company. Create alignment between executive remuneration, sustainable business performance and shareholder returns, including through long- term equity-based incentive plans. Structure remuneration arrangements to achieve equity for like positions. Implement a robust remuneration decision- making process and performance review system. 2.1 FY26 Executive Remuneration Framework Total Fixed Remuneration (TFR) Short-Term Incentive (STI) Long-Term Incentive (LTI) TFR consists of base salary and superannuation (Australian-based KMP) or 401k (USA-based KMP) and aims to attract, motivate and retain the best talent. TFR is set in relation to the external market and takes into account the size and complexity of the role along with individual responsibilities, experience and skills. STI is an annual cash incentive designed to reward performance against annual financial and individual objectives, with measures aligned to the Company’s strategic priorities. The STI framework provides appropriate differentiation on pay- for-performance principles and is linked to both business and individual performance outcomes. In FY26, the STI plan comprised financial objectives (EBITDA and Revenue) weighted at 80%, and individual objectives weighted at 20%. Refer to section 3.2 for FY26 STI outcomes. STI was the primary at-risk component of executive The Company did not operate a broad-based long-term incentive framework for executives in FY26. The CEO was awarded a discretionary one-off equity grant in FY26 – refer to section 5.1. The Board recognises the importance of long-term incentives in aligning executive remuneration with sustained shareholder value. A new LTI framework will be implemented from FY27. 20
Page 22
remuneration, with no equity deferral. The STI opportunities for each of the Executive KMP are: CEO (50%) of annual gross base salary at target. CFO (30%) of annual gross base salary at target. 2.2 Executive Remuneration Framework Review During FY26, the Board undertook a comprehensive review of the executive remuneration framework, informed by shareholder feedback, proxy adviser commentary, evolving market practice and increasing expectations regarding pay-for-performance alignment and disclosure. In support of this review, the Board engaged external advisers to assess the effectiveness of the current framework and identify opportunities to strengthen alignment between executive reward, Company performance and long-term shareholder value creation. The review confirmed that the Company's remuneration strategy remains appropriate; however, enhancements to the remuneration framework were identified to strengthen long -term alignment, increase remuneration at risk and improve transparency of remuneration outcomes. Key areas identified for enhancement include: • introduction of a formal long-term incentive framework; • increased performance leverage through deferred and equity-based remuneration; • stronger alignment between remuneration outcomes and sustainable financial performance; and • improved transparency of remuneration disclosures. The Board has approved a revised remuneration framework for FY27 comprising fixed remuneration, a redesigned STI plan and a formal long-term incentive plan. The framework is supported by a new Remuneration Policy, which will be implemented from FY27. The changes are intended to strengthen alignment with shareholder value creation, support the attraction and retention of executive talent, and address evolving market and shareholder expectations. 2.3 Group Performance The table below outlines key five-year performance metrics. Our remuneration framework is designed to demonstrate the link between performance and reward. Measure FY2026 FY2025 FY2024 FY2023 FY2022 Share price at year end 0.92 1.20 2.45 1.55 1.35 Dividend paid - - - - - EBITDA ($’000) 12,060 11,244 2,432 (4,219) (836) Total revenue ($’000) 149,984 129,186 104,763 66,536 41,891 Earnings/(loss) per share 1.06 cents 1.91 cents 0.76 cents (0.72) cents (0.18) cents 21
Page 23
3. FY26 Remuneration Outcomes 3.1 Total Fixed Remuneration Executive KMP total fixed remuneration is based on the incumbent’s qualifications, skills and experience, performance in their role, business criticality and market demand. TFR is reviewed annually or upon promotion. Fixed remuneration for Mr. Jan Gielen, CFO, increased by 3.5% in FY26, taking his gross annual base salary to $310,500. Non-Executive Directors’ fees are determined within an aggregate Directors’ fee pool limit, which is approved by shareholders. At the 2025 Annual General Meeting, shareholders approved an increase to this limit from $850,000 to $1,000,000. There were no changes to Directors' fees during FY26. For a detailed breakdown please refer to section 7.1. 3.2 KMP performance against FY26 STI Measures The FY26 STI measures were designed to align executive remuneration with the achievement of the Company's financial and strategic objectives. For FY26, 80% of the STI opportunity for KMP was linked to financial performance measures, comprising Global Gross Revenue (40% weighting) and Group EBITDA (40% weighting) targets established by the Board at the beginning of the financial year. The remaining 20% was linked to the achievement of individual strategic objectives. Global Gross Revenue of $149.984 million represented 95% of target performance, this resulted in 50% vesting of the Revenue measure, equivalent to 20% of the total STI opportunity. The Group EBITDA target was not achieved and, accordingly, no STI was payable in respect of this measure. The table below summarises the FY26 STI financial performance measures, targets and outcomes. Individual strategic objectives were assessed by the Board against predetermined performance measures aligned to the execution of the Company's strategic priorities. The Board determined the achievement of these objectives for the relevant executive KMP. Following its assessment of the financial and non -financial performance measures, the Board approved overall FY26 STI outcomes of 34.5% of target for Mr Bruce Peatey and 40% of target for Mr Jan Gielen, as detailed in the table below. KMP STI Target % of base STI Target $ STI Achievement % STI Achievement $ Equity STI Mr Bruce Peatey 50% $173,425 34.5% $59,832 NA in FY26 Mr Jan Gielen 30% $93,150 40.0% $37,260 NA in FY26 Dr Robyn Elliott NA NA NA NA NA Measure Weighting Target Outcome Global Gross Revenue 40% $157,874,000 $149,984,000 Group EBITDA 40% $15,358,000 $12,060,000 22
Page 24
34, Dr Robyn Elliott was not eligible to participate in the STI plan during FY26 in her capacity as Acting CEO/Managing Director. 3.3 Performance against LTI conditions Not applicable during the 2025-26 financial year. 4. Service Contracts Details of contractual arrangements for KMPs are set out in the table below. Non -Executive Directors enter into a service agreement with the Group in the form of a letter of appointment, which summarises the Board policies and terms, including fees. Contract term CEO CFO Former Acting CEO/ Managing Director Contract type Ongoing Ongoing Ongoing Notice period 3 months (by the Executive and Company) 3 months (by the Executive and Company) 1 month (by the Executive and Company) 5. Long-Term Incentives As PolyNovo did not operate a formal Long -Term Incentive (LTI) plan during FY26, equity-based awards granted during the year were made on a discretionary basis as part of the remuneration arrangements for the current Chief Executive Officer. The Company intends to introduce a formal LTI plan in FY27. Details of the discretionary award granted during FY26 are set out below. 5.1 CEO One-Off Equity Award On 1 December 2025, PolyNovo granted the CEO, Mr Bruce Peatey Alignment Share Appreciation Rights (ASARs) under the Employee Option Plan. This was a one -off equity award provided on commencement and does not form part of an ongoing long-term incentive framework for executives. The grant has a face value of $600,000, representing 100% of base salary, and was made at no cost to the CEO. A total of 920,691 ASARs were granted, determined using a Black -Scholes valuation methodology. The vesting hurdle is service -based, requiring continued employment as CEO through to 1 December 2028, with a 5-year exercise period. The value received on exercise will reflect share price appreciation, calculated as the difference between the grant date share price and the exercise date share price. The Board considers the CEO commencement award to be a one-off recruitment arrangement reflecting the competitive executive market and the need to attract a high -calibre CEO. The award does not form part of the Company's ongoing remuneration framework and is not intended to establish a precedent for future executive appointments. 5.2 Other KMP Incentives No other Executive KMP participated in long-term incentive arrangements during FY26. 5.3 Former CEO Incentives On 29 July 2022, PolyNovo granted 5 million shares options in five equal tranches to the former CEO. None of the vesting hurdles were met before the former CEO ceased to be a KMP from 11 March 2025. 23
Page 25
All share options were forfeited upon the cessation of employment. The accumulated share options expense was fully reversed in FY25 and the net reversal amount is $1,497,000 AUD. 6. Remuneration Consultants The Remuneration Committee has established protocols governing the engagement of remuneration consultants to ensure independence and appropriate Board oversight. During FY26, the Committee engaged external advisers to provide advice in relation to the review of the Company's remuneration framework, market practice and executive benchmarking. No remuneration recommendations, as defined in the Corporations Act 2001, were provided during the year. Where remuneration consultants are engaged, the Committee is responsible for approving the engagement, overseeing the scope of work and receiving advice directly from the consultant. These arrangements are designed to ensure the independence of any advice received and to minimise the potential for undue influence by management. 7. Key Management Personnel Statutory Remuneration Tables The KMP remuneration disclosures set out below have been prepared in accordance with the Corporations Act 2001 and relevant Australian Accounting Standards. Amounts included in the share -based payments column represent the accounting fair value of equity awards recognised during the reporting period and do not represent cash remuneration received by the executive. The ultimate value, if any, realised by participants will depend on the satisfaction of applicable service and/or performance conditions and may differ materially from the amounts disclosed. 24
Page 26
7.1 Key Management Personnel Remuneration 2026 and 2025 Short-term Long-term Table A Cash salary & fees Cash bonus Equity bonus Super- annuation / US pension plan 401(k) Leave allowances Share options & share awards1 Termination benefits Total Performance based Directors $ $ $ $ $ $ $ $ % Mr Leon Hoare 2 (Chair/Non-Executive Director) 2026 160,380 - - - - - - 160,380 - 2025 106,578 - - - - - - 106,578 - Mr Robert Douglas3 (Non-Executive Director) 2026 83,626 - - - - - - 83,626 - 2025 - - - - - - - - - Dr Robyn Elliott 4 (Non-Executive Director) 2026 58,072 - - 6,969 - - - 65,041 - 2025 70,733 - - 8,134 - - - 78,867 - Ms Christine Emmanuel – Donnelly (Non-Executive Director) 2026 105,586 - - 12,670 - - - 118,256 - 2025 103,086 - - 11,855 - - - 114,940 - Dr Charmaine Gittleson 5 (Non-Executive Director) 2026 22,230 - - 2,668 - - - 24,897 - 2025 - - - - - - - - - Mr Andrew Lumsden (Non-Executive Director) 2026 118,256 - - - - - - 118,256 - 2025 117,728 - - - - - - 117,728 - Mr David Williams 6 (Former Chair/Non-Executive Director) 2026 55,000 - - 6,600 - - - 61,600 - 2025 165,000 - - 18,975 - - - 183,975 - Mr Bruce Rathie 7 (Former Non-Executive Director) 2026 - - - - - - - - - 2025 23,896 - - 2,748 - - - 26,644 Sub total compensation for Directors 2026 603,150 - - 28,907 - - - 632,056 - 2025 587,021 - - 41,712 - - - 628,733 - 25
Page 27
PolyNovo Limited Directors’ Report 30 June 2026 9 Short-term Long-term Table A Cash salary & fees Cash bonus Equity bonus Super- annuation / US pension plan 401(k) Leave allowances Share options & share awards1 Termination benefits Total Performance based KMP $ $ $ $ $ $ $ $ % Mr Bruce Peatey 8 2026 350,000 59,832 - 17,500 33,941 80,9798 - 542,252 26% 2025 - - - - - - - - - Mr Jan Gielen 2026 310,877 37,260 - 30,000 32,131 - - 410,268 9% 2025 300,000 60,000 - 29,932 (2,244) - - 387,688 15% Dr Robyn Elliott 4 2026 378,060 - - 14,207 (17,969) - - 374,299 0% 2025 212,443 - - 24,431 20,528 - - 257,402 0% Mr Swami Raote 9 2026 - - - - - - - - - 2025 563,171 187,3339 187,333 41,540 (26,655) (1,496,635) 577,1609 33,246 (3375%) Sub total compensation for Other Key Management Personnel 2026 1,038,937 97,092 - 61,707 48,103 80,979 - 1,326,819 13% 2025 1,075,614 247,333 187,333 95,903 (8,372) (1,496,635) 577,160 678,336 (157%) Total compensation for all Key Management Personnel 2026 1,642,087 97,092 - 90,614 48,103 80,979 - 1,958,876 9% 2025 1,662,635 247,333 187,333 137,615 (8,372) (1,496,635) 577,160 1,307,069 (81%) 1The figures provided under the share options & shares awards column are based on accounting values and do not reflect actual payments received by KMP. 2Mr Leon Hoare was appointed as Chair effective from 27 October 2025. 3Mr Robert Douglas was appointed Non-Executive Director effective from 14 October 2025. 4Dr Robyn Elliott temporarily held the position of Acting CEO/Managing Director from 11 March 2025 to 1 December 2025. Following a transition period, Dr Elliott resumed her role as Non-Executive Director from 12 December 2025, with Non- Executive Director remuneration recommencing from 15 December 2026. 5Dr Charmaine Gittleson was appointed Non-Executive Director effective from 1 April 2026. 6Mr David Williams resigned as Chair and Non-Executive Director effective from 27 October 2025. 7Mr Bruce Rathie retired as Non-Executive Director effective from 30 September 2024. 8Mr Bruce Peatey was appointed as Chief Executive Officer effective from 1 December 2025. On commencement, PolyNovo granted the CEO Alignment Share Appreciation Rights (ASARs) under the Employee Option Plan. This was a one-off equity award provided on commencement and does not form part of an ongoing long-term incentive framework for executives. 9Mr Swami Raote ceased employment on 10 June 2025. 26
Page 28
7.2 Share options and awards granted or exercised in FY26 During the year ended 30 June 2026, the Board approved discretionary Alignment Share Appreciation Rights (ASARs) for the Chief Executive Officer as part of his executive remuneration arrangements. No awards were granted under a formal Long-Term Incentive plan during the year. Details of awards granted during FY26 are set out below. TABLE B KMP Balance at 1 July 2025 Granted during the year Exercised during the year Forfeited during the year Balance at 30 June 2026 Mr Bruce Peatey - 920,691 - - 920,691 Total - 920,691 - - 920,691 7.3 Movements in shares of the Company The movement during the reporting period in the number of shares in the Company held either directly or indirectly by each of the key management personnel, including their related parties, is set out in the table below: TABLE C Balance at 1 July 20251 Granted as compensation On exercise of options Net change other2 Balance at date of resignation/ change of role3,4 Balance at 30 June 2026 Directors Mr Leon Hoare 1,096,009 - - 50,000 n/a 1,146,009 Ms Christine Emmanuel- Donnelly 270,789 - - - n/a 270,789 Mr Andrew Lumsden 100,000 - - 100,000 n/a 200,000 Mr David Williams3 21,420,635 - - 234,365 21,655,000 n/a Dr Robyn Elliott4 74,789 - - 20,000 n/a 94,789 Mr Robert Douglas5 - - - 151,000 n/a 151,000 Dr Charmaine Gittleson6 - - - - n/a - Other Key Management Personnel Mr Bruce Peatey7 - - - 55,555 n/a 55,555 Mr Jan Gielen 445,000 - - -145,000 n/a 300,000 Dr Robyn Elliott4 74,789 - - 20,000 94,789 n/a 1 Opening balance excludes shares held by closely related parties where there is no control or significant influence by the KMP . 2 ‘Net Change Other’ reflects shares privately acquired or disposed during the year. 3 David Williams resigned effective 27 October 2025. 4 From 11 March 2025, Dr Robyn Elliott was appointed Acting CEO/Managing Director. Dr Elliott remained a member of the Board of Directors and performed a management role. Following a transition period, Dr Elliott resumed her role as Non-Executive Director from 12 December 2025. 5 Mr Robert Douglas was appointed as Non-Executive Director on 14 October 2025. 6 Dr Charmaine Gittleson was appointed as Non-Executive Director on 1 April 2026. 7 Mr Bruce Peatey was appointed CEO on 1 December 2025. 27
Page 29
PolyNovo Limited Directors’ Report 30 June 2026 11 8. Loans to Key Management Personnel No loans were made to, or outstanding in respect of, any Director or other Key Management Personnel, including their closely related parties, during the year ended 30 June 2026. 9. Other Key Management Personnel Transactions Other than the remuneration arrangements, shareholdings and equity -based incentives disclosed elsewhere in this report, there were no other transactions with KMP or their closely related parties during the year ended 30 June 2026. End of Remuneration Report - Audited. 28
Page 30
This Directors’ Report, incorporating the Remuneration Report, has been signed in accordance with a Resolution of the Directors made on 26 August 2026. Proceedings on behalf of the Company No person has applie d to the Court unde r section 237 of the Corporations Act 2001 for leave t o bring proceedings on behalf of the Company, or to intervene in the proceedings to whic h the Compa ny is a party for the purpose taking responsibility on behalf of the Company for all or part of those proceedings. This report is made in accordance with the resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001. On behalf of the Directors Leon Hoare Chair 29
Page 31
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Ernst & Young 8 Exhibition Street Melbourne VIC 3000 Australia GPO Box 67 Melbourne VIC 3001 Tel: +61 3 9288 8000 Fax: +61 3 8650 7777 ey.com/au Auditor’s independence declaration to the directors of PolyNovo Limited As lead auditor for the audit of the financial report of PolyNovo Limited for the financial year ended 30 June 2026, I declare to the best of my knowledge and belief, there have been: a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; b. No contraventions of any applicable code of professional conduct in relation to the audit; and c. No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit. This declaration is in respect of PolyNovo Limited and the entities it controlled during the financial year. Ernst & Young Matt Biernat Partner 26 August 2026 30
Page 32
PolyNovo Limited Consolidated statement of comprehensive income For the year ended 30 June 2026 Consolidated Note 30 June 2026 30 June 2025 $'000 $'000 The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes Revenue Revenue from contracts with customers 4 143,706 127,243 Interest and other income 5 6,278 1,943 149,984 129,186 Expenses Changes in inventories of finished goods and work in progress (15,225) (5,195) Employee-related expenses 6 (78,806) (74,522) Research and development expenses (5,340) (8,458) Depreciation and amortisation expenses 7 (2,686) (2,697) Corporate, administrative and overhead expenses 7 (34,471) (29,913) Interest expense 7 (921) (882) Loss on derecognition/ write-off of assets 8 (4,717) - Profit before income tax (expense)/benefit 7,818 7,519 Income tax (expense)/benefit 9 (477) 5,695 Profit after income tax (expense)/benefit for the year attributable to the owners of PolyNovo Limited 7,341 13,214 Other comprehensive income Items that may be reclassified subsequently to profit or loss Gain/(loss) on translation of foreign operation 552 (704) Other comprehensive income/(loss) for the year, net of tax 552 (704) Total comprehensive income for the year attributable to the owners of PolyNovo Limited 7,893 12,510 Cents Cents Earnings per share for profit attributable to the owners of PolyNovo Limited Basic earnings per share 10 1.06 1.91 Diluted earnings per share 10 1.05 1.89 31
Page 33
PolyNovo Limited Consolidated statement of financial position As at 30 June 2026 Consolidated Note 30 June 2026 30 June 2025 $'000 $'000 The above consolidated statement of financial position should be read in conjunction with the accompanying notes Assets Current assets Cash and cash equivalents 11 35,424 33,535 Trade and other receivables 12 22,180 24,386 Contract cost assets - 37 Insurance claim receivables 13 1,591 - Inventories 14 9,836 14,492 Other financial assets 25 50 50 Other assets 15 4,802 4,599 Total current assets 73,883 77,099 Non-current assets Property, plant and equipment 16 32,084 26,425 Right-of-use assets 17 11,969 11,794 Intangibles 18 413 661 Deferred tax assets 9 13,107 10,768 Other assets 15 681 661 Total non-current assets 58,254 50,309 Total assets 132,137 127,408 Liabilities Current liabilities Trade and other payables 19 16,844 22,539 Interest-bearing loans and borrowings 20 2,072 1,495 Lease liabilities 21 1,021 912 Deferred income 22 120 283 Provisions 23 3,089 2,640 Income tax provision 9 1,544 13 Total current liabilities 24,690 27,882 Non-current liabilities Interest-bearing loans and borrowings 20 1,560 2,217 Lease liabilities 21 12,960 12,511 Deferred income 22 1,594 908 Provisions 23 636 628 Total non-current liabilities 16,750 16,264 Total liabilities 41,440 44,146 Net assets 90,697 83,262 Equity Issued capital 24 191,758 191,758 Reserves 24 (5,499) (5,593) Accumulated losses 24 (95,562) (102,903) Total equity 90,697 83,262 32
Page 34
PolyNovo Limited Consolidated statement of changes in equity For the year ended 30 June 2026 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes 7 Contributed Equity Other Reserves Acquisition of Non- Controlling Interest Reserves Accumulated Losses Total Equity Consolidated $'000 $'000 $'000 $'000 $'000 Balance at 1 July 2024 191,601 5,934 (9,294) (116,117) 72,124 Profit after income tax benefit for the year - - - 13,214 13,214 Other comprehensive income for the year, net of tax - (704) - - (704) Total comprehensive income for the year - (704) - 13,214 12,510 Issue of share capital 157 - - - 157 Share-based payments (note 25) - (1,529) - - (1,529) Balance at 30 June 2025 191,758 3,701 (9,294) (102,903) 83,262 Contributed Equity Other Reserves Acquisition of Non- Controlling Interest Reserves Accumulated Losses Total Equity Consolidated $'000 $'000 $'000 $'000 $'000 Balance at 1 July 2025 191,758 3,701 (9,294) (102,903) 83,262 Profit after income tax expense for the year - - - 7,341 7,341 Other comprehensive income for the year, net of tax - 552 - - 552 Total comprehensive income for the year - 552 - 7,341 7,893 Issue of share capital - - - - - Share-based payments (note 26) - (458) - - (458) Balance at 30 June 2026 191,758 3,795 (9,294) (95,562) 90,697 33
Page 35
PolyNovo Limited Consolidated statement of cash flows For the year ended 30 June 2026 Consolidated Note 30 June 2026 30 June 2025 $'000 $'000 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes Cash flows from operating activities Payment of interest on borrowings (237) (118) Payment of interest on lease liabilities (675) (646) Payments to suppliers and employees (128,018) (124,381) Receipt from BARDA reimbursements and advances 6,153 9,486 Receipt from grant income 825 1,415 Receipt from insurance claim 3,497 - Receipt from other income excluding insurance claim 540 825 Receipts from customers 142,023 117,061 Payment of income tax (999) (494) Net cash from operating activities 23,109 3,148 Cash flows from investing activities Payments for property, plant and equipment (13,797) (13,931) Interest received 137 715 Net cash used in investing activities (13,660) (13,216) Cash flows from financing activities Proceeds from borrowings - 2,441 Repayment of principal on borrowings (3,688) (3,918) Repayment of principal on lease liabilities (1,565) (914) Net cash used in financing activities (5,253) (2,391) Net increase/(decrease) in cash and cash equivalents 4,196 (12,459) Cash and cash equivalents at the beginning of the financial year 33,535 45,907 Effects of exchange rate changes on cash and cash equivalents (2,307) 87 Cash and cash equivalents at the end of the financial year 11 35,424 33,535 34
Page 36
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 1. Corporate Information The Financial Report of Poly Novo Limited (the Company) and its controlled entities (the Group) for the year ended 30 June 2026 was authorised for issue in accordance with a resolution of the Directors on 26 August 2026. PolyNovo Limited, a for -profit entity, is a company incorporated in Australia, whose shares are publicly traded on ASX Limited (ASX code: PNV). The Company operates predominantly in the medical device and healthcare industry and has operations in Australia, New Zealand, United States, United Kingdom, Ireland, Singapore, India and Hong Kong Special Administrative Region, China ("Hong Kong SAR"). Note 2. Summary of Material Accounting Policies (a) Basis of preparation The general-purpose financial report has been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, International Financial Reporting Standards (IFRS) and the Corporations Act 2001. The Financial Report has been prepared on a historical cost basis. The Financial Report is presented in Australian dollars. The financial statements have been prepared in accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2026/183 and are rounded to the nearest thousand dollars, unless otherwise stated. The consolidated financial statements provide comparative information in respect of the previous period. Where necessary, comparatives have been reclassified and repositioned for consistency with current year disclosures. (b) Going concern The financial statements of the Group have been prepared on a going concern basis. The Group’s operations are subject to major risks due primarily to the nature of the research, development and commercialisation to be undertaken. These risks may materially impact the financial performance and position of the Group, including the value of recorded assets and the future value of its shares, options and performance rights. The financial statements take no account of the consequences, if any, of the effects of unsuccessful research, development and commercialisation of the Group’s projects. The Directors considered its ability to meet its debts and obligations taking into account all available information about the future. The Group has a level of discretion in managing cash outflows in response to any changes or unexpected demands on working capital or operating conditions. The accounting policies that are material to the consolidated entity are set out either in the respective notes or below. The accounting policies adopted are consistent with those of the previous financial year, unless otherwise stated. 35
Page 37
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 2. Summary of Material Accounting Policies (continued) (c) Statement of compliance The Financial Report complies with Australian Accounting Standards as issued by the Australian Accounting Standards Board and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. The Group has adopted all applicable new and amended Australian Accounting Standards and AASB Interpretations that apply as of 1 July 2025. Those Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective, have not been adopted. AASB 2022-6 Amendments to Australian Accounting Standards – Classification of Liabilities as current or non- current In December 2022, the AASB issued AASB 2022 -6 which amends AASB 101 to improve the information an entity provides in its financial statements about liabilities arising from loan arrangements for which the entity’s right to defer settlement of those liabili ties for at least twelve months after the reporting period is subject to the entity complying with conditions specified in the loan arrangement. AASB 18 Presentation and disclosure in financial statements AASB 18 replaces AASB 101 as the standard describing the primary financial statements and sets out requirements for the presentation and disclosure of information in AASB-compliant financial statements. Amongst other changes, it introduces the concept of t he “management-defined performance measure” to financial statements and requires the classification of transactions presented within the statement of profit or loss within one of five categories – operating, investing, financing, income taxes, and discontinued operations. It also provides enhanced requirements for the aggregation and disaggregation of information. The amendments are effective for annual reporting periods beginning 1 January 2027. The group is currently assessing the impact the amendments will have on the financial statements. 36
Page 38
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 2. Summary of Material Accounting Policies (continued) (d) Critical accounting policy, judgements and estimates The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. In preparing the consolidated financial statements, the significant estimates, judgements and assumptions made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty are disclosed in the respective notes. Fire Incident in R&D Innovation Centre On 4 November 2025, a fire occurred at PolyNovo’s new standalone R&D Innovation Centre. Despite the fire affecting only a small section of the facility, following insurance specialist investigation, the resultant smoke damage has rendered the significant majority of the R&D equipment, including the specialised HVAC system, unusable. The office area within the same building was unaffected and returned to normal use in April 2026 following completion of cleaning and restoration works. Following the incident, the Group assessed the recoverability of the affected assets in accordance with AASB 136 Impairment of Assets . Equipment and leasehold improvements with a carrying amount of $2,039,000 and construction in progress with a carrying amount of $ 2,678,000 were determined to be unrecoverable and were written off. Accordingly, the Group recognised a write-off of assets of $4,717,000 during the year ended 30 June 2026 (refer to note 8). The cost of rebuilding and restoring the R&D Innovation Centre is covered under the Group's insurance policy. The Company's insurers have provided written notice of indemnity and accepted the underlying claim. Consequently, it is considered virtually certain that the Group will recover the insured losses. During the year ended 30 June 2026, the Group recognised insurance claim income of $6,016,000 relating to the recovery of losses arising from the fire incident. As at 30 June 2026, the Group had received insurance proceeds of $3,497,000 in cash. A further $928,000 had been invoiced and recognised within trade and other receivables. The remaining $1,591,000 represents insurance claim receivable relating to claims submitted but not yet settled. The insurance claim receivable has been measured based on management's best estimate of the amounts expected to be recovered under the insurance policy, taking into account the status of claims submitted, supporting documentation provided to the insurer and a probability-weighted assessment of anticipated claim outcomes (note 13). Subsequent to the reporting date, the Group has continued to receive insurance claim proceeds. As at the date of this report, cumulative cash receipts relating to the insurance claim totalled $ 4,425,000. 37
Page 39
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 2. Summary of Material Accounting Policies (continued) (e) Basis of consolidation The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 30 June 2026. The Group controls an investee if and only if the Group has: • power over the investee (that is, rights that give it the ability to direct the relevant activities of the investee); • exposure, or rights, to variable returns from its involvement with the investee; and • the ability to use its power over the investee to affect its returns. (f) Financial Instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial Assets Classification and measurement Financial assets are initially recognised at fair value and are subsequently measured at either amortised cost, fair value through other comprehensive income (FVOCI), or fair value through profit or loss (FVPL). The classification is based on two criteria: The Group’s business model for managing the assets; and whether the instruments’ contractual cash flows represent ‘solely payments of principal and interest’ on the principal amount outstanding (the SPPI criterion). Financial Liabilities Classification and measurement The Group’s financial liabilities include loans and borrowings and payables that are classified at fair value through profit or loss as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. For the purposes of subsequent measurement, after initial recognition, interest -bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Amortised cost is calculated by taking into account any discount or premium on ac quisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss. For more information, refer to note 20. 38
Page 40
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 2. Summary of Material Accounting Policies (continued) (g) Foreign currency translation The functional currency of each of the entities in the Group must reflect the primary economic environment in which the entity operates. Accordingly, the relevant functional currencies are Australian dollars for Australian entities and US dollars for the U S entity, Canadian dollars for Canada entity, Singapore dollars for Singapore entity, New Zealand dollars for New Zealand entity, Rupees for India entity, Hong Kong dollars for Hong Kong entity, British pound sterling for UK entity and Euro for European entities. Foreign currency items are translated to Australian currency on the following basis. • Transactions are converted at exchange rates approximating those in effect at the date of the transaction. • On consolidation, the assets and liabilities of the foreign operation are translated into Australian dollars at the rate of exchange prevailing at the reporting date except for retained earnings which is translated at a historic rate of exchange pertaining to the relevant financial year. The Statement of Comprehensive Income is translated at an average exchange rate over the financial year. • The exchange difference arising on translation for consolidation are recognised in the balance sheet as a foreign currency translation reserve. On disposal of a foreign operation, the reserve is reclassified to profit or loss. Note 3. Segment Information Operating Segment PolyNovo has only one reporting segment being the development of the NovoSorb technology for use in a range of biodegradable medical devices. The chief operating decision-maker is the Chief Executive Officer of PolyNovo Limited. The chief operating decision -maker reviews the results of the business on a single entity basis and assesses business performance in order to make decisions about resource allocation in order to progress the commericalisation of the PolyNovo technology. Pe rformance assessment is based on EBITDA (earnings before interest, tax, depreciation and amortisation). This measure is different from the profit or loss reported in the consolidated financial statements which is shown after net interest and tax expense. Consolidated 30 June 2026 30 June 2025 $'000 $'000 Net Profit After Tax 7,341 13,214 Interest income (135) (487) Interest expense 921 882 Depreciation and amortisation 3,456 3,330 Income tax benefit 477 (5,695) EBITDA 12,060 11,244 39
Page 41
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 3. Segment Information (continued) Consolidated 30 June 2026 30 June 2025 $'000 $'000 Revenue from contracts with customers Geographical areas United States of America 107,393 96,985 Australia and New Zealand 10,015 7,950 Other countries 26,298 22,308 143,706 127,243 During the year ended 30 June 2026, sales to BARDA in the United States of America, represented 4% (30 June 2025: 7%) of total sales revenue from contracts with customers. Consolidated 30 June 2026 30 June 2025 $'000 $'000 Non-current assets Geographical areas United States of America 5,757 2,880 Australia and New Zealand 52,334 44,263 Other countries 163 3,138 Total 58,254 50,281 Note 4. Revenue from contracts with customers Revenue from Contracts with Customers The Group is in the business of designing, manufacturing and selling biomedical devices. Revenue from contracts with customers is recognised when performance obligations pursuant to that contract are satisfied by the Group. The Group has identified the following main categories of revenue: 40
Page 42
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 4. Revenue from contracts with customers (continued) Commercial product sales The group revenue primarily consists of the sale of its NovoSorb® BTM (Biodegradable Tempori sing Matrix) product. Revenue is recorded when the customer takes possession of the product. All contracts with customers are standardised and satisfy the criteria of transaction approval, identification of each party’s rights, payment terms, commercial substance, and probable collection based on the customer’s ability and intention to pay. Revenue is recognised at a point in time when control over the product transfers to the customer, which is assessed to be at the time of receipt of goods by the customer. The group also sells NovoSorb® BTM and derivative product in certain overseas territories via a distributor model. The sales are made direct to a distributor being the customer of PolyNovo Limited, with the distributor permitted to resell the NovoSorb® BTM product to an end user. The group has assessed these arrangements to consider that control passes to the distributor at the point the distributor takes possession of the product. The group consider themselves to be acting as principal in the sale of goods to distributors and recognise revenue on a gross basis. All contracts with distributors are standardised, and satisfy the criteria of transaction approval, identification of each party’s rights, payment terms, commercial substance, and probable collection based on the customer’s ability and intention to pay. Re venue is recognised at a point in time when control over the product transfers to the distributor as the customer, which is assessed to be at the time of receipt of goods by the distributor. Biomedical Advanced Research and Development Authority (BARDA) revenue PolyNovo and BARDA are parties to a cost -plus-fixed-fee contract for the development and commercialisation of NovoSorb® BTM for the treatment of severe thermal burns. Under the arrangement, PolyNovo is required to provide the research and development servi ces, personnel, materials, equipment and facilities necessary to undertake specified activities and deliverables, including non-clinical, clinical, manufacturing and regulatory activities supporting product approval and commercialisation. Judgement has been applied to consider that the license of intellectual property and research and development activities are not distinct. Revenue is recognised over time based on input measures of specified costs, with the performance obligations are sati sfied over time. BARDA is considered a customer in accordance with AASB 15 as the nature of services performed by PolyNovo are considered part of the group’s licence of intellectual property and normal research and development operating activities and in exchange, consider ation is to be paid as the group progresses with its research and development of a mass scalable severe thermal burns product. Consolidated 30 June 2026 30 June 2025 $'000 $'000 BARDA revenue 5,266 8,609 Commercial product sales 138,440 118,634 143,706 127,243 41
Page 43
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 5. Interest and other income Interest income Interest income is recognised when the Group has the right to receive the interest payment using the effective interest rate method. Other income Other income is recognised when it is probable that the economic benefits will flow to the Group and the amount can be measured reliably. Government grants Government grants are recognised at their fair value when there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received. Grants related to depreciable assets are recognised as income over the periods in which the related depreciation on those assets is charged. Consolidated 30 June 2026 30 June 2025 $'000 $'000 Interest income 135 487 Other income 6,143 1,456 6,278 1,943 Other income comprised the following major components: - Insurance claim income of $6,016,000 recognised in relation to the fire incident (refer to note 2) - Grant income of $126,000 recognised in relation to the research and development grant (refer to note 22) Note 6. Employee-related expenses Liabilities for wages, salaries and annual leave expected to be settled within 12 months of the reporting date and pro -rata long service leave for employees with over seven years of service, are recognised in current liabilities. Wages, salaries, annual le ave and long service leave are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for pro -rata long service leave for employees with less than seven years of service are recognised in non -current liabilities and are measured as the present value of the expected future payments to be made. 42
Page 44
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 6. Employee-related expenses (continued) Consolidated 30 June 2026 30 June 2025 $'000 $'000 Wages and salaries (including sales commission) 65,553 63,199 Employer retirement contributions (including superannuation and U.S. pension) 3,392 2,940 Share-based payments expense (458) (1,451) Other 10,319 9,834 78,806 74,522 Share-based payment expense (refer to note 26) The net share -based payment credit for the year ended 30 June 2026 was $458,000, comprising the recognition of share option expense of $279,000 and the reversal of previously recognised expense related to forfeited share options of $737,000. The net share -based payment credit for the year ended 30 June 2025 was $1,451,000, comprising the recognition of share option expense of $1,532,000, the reversal of previously recognised expense related to forfeited share options of $3,061,000, the issuance of shares to the former CEO of $157,000, and other adjustments of $79,000. Other employee-related expenses Other employee-related expenses primarily comprise US statutory employer contributions of $3,092,000 (2025: $2,786,000), health insurance contributions of $3,052,000 (2025: $2,661,000), payroll tax of $975,000 (2025: $830,000), and directors' fees of $601,000 (2025: $587,000). Note 7. Other operating expenses Research and development costs Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate: • The technical feasibility of completing the intangible asset so that the asset will be available for use or sale; • Its intention to complete and its ability and intention to use or sell the asset; • How the asset will generate future economic benefits; • The ability to measure reliably the expenditure during development. No development expenditure has been capitalised. 43
Page 45
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 7. Other operating expenses (continued) Depreciation and amortisation expenses In addition to the depreciation and amortisation expenses listed below, depreciation relating to manufacturing of $770,000 ($522,000 for depreciation of fixed assets and $248,000 for depreciation of lease assets) is included in the cost of inventory. Total depreciation and amortisation expenses amount in the year ended 30 June 2026 is $3,456,000 (2025: $3,330,000). Refer to note 16 for property, plant and equipment reconciliation and note 17 for right -of-use assets reconciliation. Consolidated 30 June 2026 30 June 2025 $'000 $'000 Depreciation - laboratory equipment 545 648 Depreciation - office equipment 573 539 Depreciation - leasehold improvements 254 271 Subtotal 1,372 1,458 Amortisation - right of use assets 1,066 991 Amortisation - intangible assets 248 248 Subtotal 1,314 1,239 Total 2,686 2,697 Consolidated 30 June 2026 30 June 2025 $'000 $'000 Corporate, administrative and overhead expenses Insurances 3,339 3,073 Professional fees 820 928 Investor relations and share registry expenses 341 407 Consultants and contractors’ expenses 5,447 6,917 Communication expenses 1,716 1,512 Travel expenses 6,707 6,999 Marketing expenses 4,931 4,447 Realised foreign exchange loss 610 246 Unrealised foreign exchange (gain)/ loss 2,678 (2,220) Other expenses 7,882 7,604 34,471 29,913 Included in other expenses are third party logistic warehousing fees of $1,368,000 (2025: $1,283,000), dues and subscriptions of $1,195,000 (2025: $1,203,000) and IT software licences of $1,628,000 (2025: $1,328,000). 44
Page 46
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 7. Other operating expenses (continued) Consolidated 30 June 2026 30 June 2025 $'000 $'000 Interest expenses Short-term loan 64 72 Equipment finance loan 173 46 Lease liability associated with right-of-use assets 675 646 Other 9 118 921 882 The Group has secured equipment finance facilities and short-term loan, further details on loan facility are disclosed in note 20. Note 8. Loss on derecognition/ write-off of assets Following the fire incident, the Group assessed the recoverability of the affected assets in accordance with AASB 136 Impairment of Assets. Equipment and leasehold improvements with a carrying amount of $2,039,000 and construction in progress with a carrying amount of $2,678,000 were determined to be unrecoverable and were written off. Accordingly, the Group recognised a write-off of assets of $4,717,000 during the year ended 30 June 2026 (refer to note 2). Note 9. Income tax (expense)/ benefit Current income tax Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporti ng date in the countries where the Group operates and generates taxable income. Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax r egulations are subject to interpretation and establishes provisions where appropriate. 45
Page 47
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 9. Income tax (expense)/ benefit (continued) Deferred tax Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets are recognised for deductible temporary differences, the carry forward of unused tax credits and unused tax losses, except in certain specific circumstances. Deferred tax assets are recognised to the extent that it is probable that taxa ble profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised. Deferred tax liabilities are recognised for taxable temporary differences, except in certain specific circumstances. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognis ed deferred tax assets are re -assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. In assessing the recoverability of deferred tax assets, the Group relies on the same forecast assumptions used elsewhere in the financial statements and in other management reports, which reflect the potential impact of climate-related development on the business, such as increased cost of production as a result of measures to reduce carbon emission. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. The Group offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes l evied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. Sales tax Expenses and assets are recognised net of the amount of sales tax, except in certain specific circumstances. The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. Cash flows are included in the Cash Flow Statement on a gross basis (that is, includi ng GST) and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed exclusive of t he amount of GST recoverable from, or payable to, the taxation authority. 46
Page 48
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 9. Income tax (expense)/ benefit (continued) Significant estimates and assumptions - deferred taxes arising from unused tax losses Deferred tax assets are recognised for unused tax losses to the extent that it is probable that future taxable profit will be available against which those losses can be utilised. Significant management judgement is required in determining the amount of deferred tax assets to recognise, including assessing the timing and level of future taxable profits and the availability of tax planning strategies. Based on management’s assessment of the recoverability of unused tax losses and forecast future taxable profits, the Group recognised deferred tax assets of $4,851,000 in respect of unused tax losses of the Australian tax consolidated group and $1,220,000 in respect of unused tax losses of PolyNovo UK during the year ended 30 June 2025. During the year ended 30 June 2026, the Group recognised an incremental net deferred tax asset of $222,000 in respect of unused tax losses of the Australian tax consolidated group. The Group continues to review the quantum and recoupment of the tax losses for each entity in the Group at each reporting date. (a) Income tax (expense)/ benefit Consolidated 30 June 2026 30 June 2025 $'000 $'000 Current income tax (expense)/ benefit 309 (1,319) Deferred income tax benefit - origination and reversal of temporary differences 2,403 1,178 Deferred income tax (expense)/benefit - carried forward tax losses (2,801) 6,855 Aggregate Income tax (expense)/ benefit (89) 6,714 Reconciliation of income tax expense to prima facie tax payable Profit before income tax 7,818 7,519 Tax expense at the statutory tax rate of 30% (2,345) (2,256) Tax effect of permanent differences: - Research and development credits (1,553) (1,412) - Share-based payments 81 522 - Meals and entertainment (365) (341) - Other (34) (398) Subtotal (4,216) (3,885) Deferred income tax (expense)/benefit comprises: Temporary differences 2,317 (1,729) Prior year tax losses recognised during the year 222 6,071 Prior year tax losses and credits recouped 1,690 6,938 Effect of lower tax rate in other jurisdictions (102) (681) Income tax (expense)/ benefit (89) 6,714 47
Page 49
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 9. Income tax (expense)/ benefit (continued) Reconciliation of income tax (expense)/ benefit recognised in profit or loss statement Consolidated 30 June 2026 30 June 2025 $'000 $'000 Income tax (expense)/ benefit per above table (89) 6,714 Withholding tax expense (388) (1,019) Total (477) 5,695 Withholding tax expenses The Group has an interest -bearing intercompany loan in place between its Australian and North American entities. The intercompany loan is eliminated at the consolidation level. During the year ended 30 June 2026, interest on the intercompany loan was fully settled, and withholding tax of $388,000 was withheld by the North American entities under the Australia-United States tax treaty. The withholding tax will be claimed as a foreign income tax offset in the Australian income tax return. (b) Deferred tax assets and liabilities Consolidated 30 June 2026 30 June 2025 $'000 $'000 Deferred tax assets 13,442 11,998 Deferred tax liabilities (335) (1,230) Net deferred tax assets 13,107 10,768 Deferred tax balance reflects temporary differences attributable to: Deferred tax assets Carried forward tax losses 5,838 5,902 Share-based payments 249 306 Property, plant and equipment 196 117 Right-of-use assets and associated lease liabilities 597 483 Intercompany interest expense 2,157 2,473 Employee benefits 1,007 885 Deferred revenue 514 580 Other accruals and provisions 1,946 1,071 Other 938 181 Total deferred tax assets 13,442 11,998 Deferred tax liabilities Prepaid expenses (156) (223) Trade and other receivables (96) (211) Property, plant and equipment - (22) Other (83) (774) Total deferred tax liabilities (335) (1,230) 48
Page 50
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 9. Income tax (expense)/ benefit (continued) Deferred tax assets and liabilities by jurisdiction Australia North America United Kingdom Total ($'000) ($'000) ($'000) ($'000) Deferred tax assets 8,888 3,790 764 13,442 Deferred tax liabilities (96) (239) - (335) Net deferred tax assets by jurisdiction 8,792 3,551 764 13,107 (c) Deferred tax assets not brought to account Consolidated 30 June 2026 30 June 2025 $'000 $'000 Deferred tax assets not recognised Deferred tax assets not recognised comprises temporary differences attributable to: Unrecognised, unconfirmed tax losses for which no deferred tax asset has been recognised 50,504 62,411 Deductible temporary differences - no deferred tax asset has been recognised 208 154 Total 50,712 62,565 Consolidated 30 June 2026 30 June 2025 $'000 $'000 Potential tax benefit - tax effect of the deferred tax assets disclosed above 15,214 18,552 49
Page 51
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 9. Income tax (expense)/ benefit (continued) (d) Current income tax liability Consolidated 30 June 2026 30 June 2025 $'000 $'000 Income tax liability 1,544 13 Note 10. Earnings per share Consolidated 30 June 2026 30 June 2025 $'000 $'000 Profit after income tax attributable to the owners of PolyNovo Limited 7,341 13,214 Number Number Weighted average number of ordinary shares used in calculating earnings per share 690,842,991 690,722,173 Adjustments for calculation of diluted earnings per share: Options over ordinary shares 7,354,243 7,634,973 698,197,234 698,357,146 Cents Cents Basic earnings per share 1.06 1.91 Diluted earnings per share 1.05 1.89 Basic earnings per share Basic earnings per share as the net profit attributable to the shareholders of PolyNovo Limited, excluding any costs of servicing equity other than ordinary shares, divided by the weighted average number of ordinary shares outstanding during the financial year. Diluted earnings per share Diluted earnings per share is calculated as the net profit attributable to shareholders, adjusted for: • the costs of servicing equity (other than dividends); • the after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and • other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares. The resultant net profit is divided by the weighted average number of ordinary shares and dilutive potential ordinary shares. 50
Page 52
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 10. Earnings per share (continued) At 30 June 2026 and at 30 June 2025, there existed share options that if vested, would result in the issue of additional ordinary shares over the period to FY2029. There were no further transactions involving ordinary shares or potential ordinary shares be tween the reporting date and the date of completion of these financial statements. Between the reporting date and the issue date of the 26 August 2026 Financial Report, there have been no transactions involving ordinary shares or potential ordinary shares that would impact the calculation of EPS disclosed in the table above. Note 11. Cash and cash equivalents Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and short -term highly liquid deposits with a maturity of three months or less, that are held for the purpose of meeting short -term cash commitments and a re readily convertible to a known amount of cash and subject to an insignificant risk of changes in value. For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Group’s cash management. Cash and cash equivalents are denominated in: Consolidated 30 June 2026 30 June 2025 $'000 $'000 AUD 5,275 13,333 USD 19,122 13,957 NZD 767 569 GBP 2,900 2,246 EUR 3,168 1,596 CAD 2,837 1,307 INR 237 30 HKD 1,118 497 Total 35,424 33,535 Consolidated 30 June 2026 30 June 2025 $'000 $'000 Cash at bank 32,616 26,629 Short term deposits 2,808 6,906 35,424 33,535 Cash at bank earns interest at floating rates based on daily bank deposit rates, except for the term deposit of $2,808,000 at the weighted average interest rate of 2.18%. 51
Page 53
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 11. Cash and cash equivalents (continued) Reconciliation of net profit before income tax to net cash flow from operating activities Consolidated 30 June 2026 30 June 2025 $'000 $'000 Net profit before income tax 7,818 7,519 Adjustments for non-cash items: Depreciation and amortisation 3,456 3,330 Share-based payment benefit (458) (1,451) Loss on inventory write-off 1,515 286 Loss on derecognition/ write-off of assets 4,717 - Unrealised foreign exchange rate differences 370 (2,132) Doubtful debt expense 395 385 Interest received classified as investment activities (137) (715) Income tax (740) (494) Change in assets and liabilities during the financial year: (Increase)/ decrease in trade receivables 2,206 (3,664) Increase in prepayments (223) (1,386) Decrease in contract assets 37 343 (Increase)/ decrease in inventory 4,656 (5,520) Decrease in Insurance contracts 4,425 - Increase/ (decrease) in payables (5,696) 4,277 Increase in provisions 457 520 Increase in deferred income 523 1,191 Increase/ (decrease) in insurance premium funding arrangement (212) 659 Net cash inflows from operating activities 23,109 3,148 Note 12. Trade and other receivables Trade and other receivables and contract assets are initially recorded at fair value and subsequently measured at amortised cost. Trade and other receivables and contract assets are written off against their carrying amounts and expensed in the income statement when all collection efforts have been exhausted and the asset is considered uncollectable. Factors indicating there is no re asonable expectation of recovery include insolvency and significant time period since the last invoice was issued. 52
Page 54
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 12. Trade and other receivables (continued) Significant estimates and assumptions - expected credit loss The Group recognises an allowance for expected credit losses (ECLs). ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive. The shortfall is then dis counted at an approximation to the asset’s original effective interest rate. For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward -looking factors specific to the debtors and the economic environment. The method applied categorises trade receivables and BARDA income receivables into various customer segments, then to determine the ECL amount, an assessment of the correlation between historical observed default rates and forecast econ omic conditions is applied. The provision matrix is initially based on the Group’s historical observed default rates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. Generally, trade receivables are written off if past due for more than one year. The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Group has ass essed forecast economic conditions in all regions. This assessment is reflected in the application of the provision matrix to calculate ECL’s. The Group’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future. Consolidated 30 June 2026 30 June 2025 $'000 $'000 Current assets Trade receivables (net of expected credit losses) 21,025 22,717 BARDA income receivables 320 702 GST receivables and other receivables 827 941 1,147 1,643 Interest receivable 8 26 Total trade and other receivables 22,180 24,386 53
Page 55
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 12. Trade and other receivables (continued) Consolidated 30 June 2026 30 June 2025 $'000 $'000 Financial assets and non-financial assets Trade receivables (net of expected credit losses) 21,025 22,717 BARDA Income receivables 320 702 GST receivables and other receivables 115 138 Interest receivable 8 26 Total financial assets 21,468 23,583 GST receivables and other receivables 712 803 Total non-financial assets 712 803 Total trade and other receivables 22,180 24,386 Trade receivables relate to invoices to customers for sale of goods and PolyNovo's BARDA project representing invoiced and un-invoiced services for labour and sub-contractor expenses. The changes in the balance of trade receivables and the information about the credit exposure are disclosed in note 25. BARDA income receivables BARDA income receivables are initially recognised for revenue earned from the provision of research and development services as receipt of consideration is conditional on the acceptance by the customer. Upon completion of the milestone and acceptance by the customer, the amounts recognised as BARDA income receivables are reclassified to trade receivables. As at 30 June 2026, the Group has BARDA income receivables of $320,000 (30 June 2025: $702,000). Amounts are invoiced in the month following satisfaction of the performance obligation. There are no significant expected credit losses related to the BARDA income receivables, as the credit risk of US Federal Government Agency is low. The Group has an agreement with BARDA to provide research and development ser vices until September 2027 for the Pivotal Trial. In the year ended 30 June 2024, BARDA had committed an additional funding of USD$10 million. This increased the total funding commitment from BARDA to USD$25 million for the Pivotal Trial. Expected credit loss Based on the business failure rates by class of customers and Dun & Bradstreet credit score the Expected Credit Losses relating to trade receivables and contract assets the Group has recognised $786,000 as at 30 June 2026 (30 June 2025: $417,000). The Group uses a provision matrix to measure its expected credit loss. Set out below is information about the credit risk exposure on the Group’s trade receivables and BARDA income receivables using a provision matrix as at 30 June 2026: 54
Page 56
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 12. Trade and other receivables (continued) Trade and other receivables and BARDA income receivables 1-30 Days 30-60 Days 60-90 Days 90+ Days Total Gross carrying amount ($000) 18,489 1,255 324 2,063 22,131 Expected credit loss ($000) (16) (6) (18) (746) (786) Net balance ($000) 18,473 1,249 306 1,317 21,345 Note 13. Insurance claim receivables The Group holds insurance coverage for losses arising from damage to the affected property, plant and equipment, leasehold improvements, and certain other costs incurred as a result of the fire at the R&D Innovation Centre (refer to note 2). During the year ended 30 June 2026, the Group recognised insurance claim income of $6,016,000 relating to the recovery of losses arising from the fire incident. As at 30 June 2026, the Group had received insurance proceeds of $3,497,000 in cash. A further $928,000 had been invoiced and recognised within trade and other receivables. The remaining $1,591,000 represents insurance claim receivable relating to claims submitted but not yet settled. The insurance claim receivable has been measured based on management's best estimate of the amounts expected to be recovered under the insurance policy, taking into account the status of claims submitted, supporting documentation provided to the insurer and a probability-weighted assessment of anticipated claim outcomes. Note 14. Inventories Inventory is measured at cost for raw materials and packaging materials. A standard cost has been derived for finished goods and semi -finished goods. The standard cost includes an allocation of materials, direct labour, freight expenses to third party logistics and manufacturing overheads. The value of finished goods and semi-finished goods may include an allocation of manufacturing variances incurred during the period if it is determined that the relevant production remains in inventory at balance date. Consolidated 30 June 2026 30 June 2025 $'000 $'000 Current assets Raw materials 871 1,089 Work in progress 2,315 2,122 Finished goods 7,709 11,568 Provision for finished goods (1,059) (287) 6,650 11,281 Total 9,836 14,492 55
Page 57
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 14. Inventories (continued) During the year, inventory-related costs of $6,357,000 were recognised within cost of goods sold (30 June 2025: $1,549,000), comprising inventory write -offs of $1,515,000 (30 June 2025: $286,000) and manufacturing overheads of $4,842,000 that were expensed due to production levels being below normal capacity (30 June 2025: $1,263,000). Note 15. Other assets Consolidated 30 June 2026 30 June 2025 $'000 $'000 Current assets Accrued revenue - 773 Prepayments 4,802 3,826 4,802 4,599 Non-current assets Security deposits 681 661 The current prepayment includes the prepaid insurance of $1,978,000 (30 June 2025: $1,303,000) and other prepaid expenses. The non-current security deposit relates predominantly to PolyNovo's long-term lease of office premises in Port Melbourne and San Diego, USA, including the security deposit of $151,000 due to the leaseback of office premises at Unit 1/316 - 320 Lorimer Street, Port Melbourne. The prior year accrued revenue balance related to sales to the German distributor, for which the goods had been collected by the customer's nominated courier by 30 June 2025, but had not yet been invoiced at year end. Note 16. Property, plant and equipment Construction in progress is stated at cost, net of accumulated impairment losses. Plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset, as follows: Property 25 to 40 years Office equipment 3 to 10 years Laboratory plant and equipment 3 to 13.33 years Leasehold improvements 3 to 20 years 56
Page 58
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 16. Property, plant and equipment (continued) Impairment The carrying values of plant and equipment are reviewed for impairment at each reporting date, when events or changes in circumstances indicate that the carrying value may be impaired. An asset is impaired when its carrying value exceeds its estimated reco verable amount. In this instance, the asset is written down to its recoverable amount and the impairment loss recognised in the Statement of Comprehensive Income. For impairment testing purposes, the recoverable amount of an asset is estimated as the higher of its fair value less cost of disposal and its ‘value -in-use’. Value -in-use is calculated by discounting, the estimated future cash flows derived from use of th e asset, using a pre -tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Derecognition Plant and equipment is de-recognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on de -recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is recognised in the Statement of Comprehensive Income. Reconciliations of the carrying amount at the beginning and end of the current and previous financial year are set out below: Laboratory Plant & Equipment Office Equipment Leasehold Improvements Construction in Progress Total $'000 $'000 $'000 $'000 $'000 As at 30 June 2026 Cost 6,051 3,798 7,929 24,037 41,815 Accumulated depreciation (3,865) (2,823) (3,043) - (9,731) Carrying amount at 30 June 2026 2,186 975 4,886 24,037 32,084 Carrying amount at 1 July 2025 3,785 1,104 5,080 16,456 26,425 Additions (at cost) 643 410 262 10,971 12,286 Transfer from CIP to FA (at cost) 161 132 419 (712) - Derecognition/ write-off of assets (1,559) (83) (397) (2,678) (4,717) Depreciation expense (844) (573) (478) - (1,895) Foreign exchange difference - (15) - - (15) Carrying amount at 30 June 2026 2,186 975 4,886 24,037 32,084 57
Page 59
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 16. Property, plant and equipment (continued) Laboratory Plant & Equipment Office Equipment Leasehold Improvements Construction in Progress Total $'000 $'000 $'000 $'000 $'000 As at 30 June 2025 Cost 7,909 3,414 7,661 16,456 35,440 Accumulated depreciation (4,124) (2,310) (2,581) - (9,015) Carrying amount at 30 June 2025 3,785 1,104 5,080 16,456 26,425 Carrying amount at 1 July 2024 2,896 1,113 4,592 3,918 12,519 Additions (at cost) 397 445 54 14,908 15,804 Transfer from CIP to FA (at cost) 1,444 81 785 (2,310) - Depreciation expense (952) (539) (351) - (1,842) Disposals - - - (60) (60) Foreign exchange difference - 4 - - 4 Carrying amount at 30 June 2025 3,785 1,104 5,080 16,456 26,425 Note 17. Right-of-use assets The Group recognises right of use assets at the commencement of a lease. Right of use assets cost comprises the initial measurement of the corresponding lease liability, lease payments made at or before the commencement date and any initial direct costs. Right of use assets are subsequently measured at cost less accumulated depreciation and impairment losses. Right of use assets are reviewed for impairment under the same policy as our property, plant and equipment assets. Right of use assets are depreciated on a straight -line basis over the shorter of the lease term and the estimated useful life of the assets as follows: Property 4 to 20 years Office equipment 4 to 5 years Manufacturing equipment 3 years Significant estimates and assumptions - incremental borrowing rate for property lease PolyNovo applies judgement to determine incremental borrowing rate for property lease because the interest rate implicit in lease is not readily determinable for the arrangement. The incremental borrowing rate is determined based on the interest that the lessee would have to pay to borrow over a similar term, the funds necessary to obtain an asset of a similar value to the right -of-use asset in a similar economic environment, and observable inputs such as market interest rates are used as applicable. Further details on incremental borrowing rate are disclosed in note 21. 58
Page 60
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 17. Right-of-use assets (continued) Consolidated 30 June 2026 30 June 2025 $'000 $'000 Non-current assets Right-of-use assets 16,639 15,625 Accum Depn - Right of use assets (4,670) (3,831) 11,969 11,794 The Group has lease contracts for various items of property, office equipment and lease equipment used in its operations. Leases of property generally have lease terms between 3 and 20 years, while office and manufacturing equipment generally have lease terms between 3 and 5 years. On 1 December 2025, US office extended the lease for its San Diego premises. The extended lease term expires on 28 Feb 2032 and includes a further three -year renewal option. In assessing the lease term under AASB 16 Leases, management concluded that it is reasonably certain the renewal option will be exercised and therefore included the additional three -year period in the measurement of the lease liability and right-of-use asset. As a result of the lease extension, the Group recognised a lease liability of $1,623,000 and a corresponding right-of-use asset of $1,623,000. The right -of-use asset is depreciated on a straight -line basis over the assessed lease term. Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period. Total $'000 Carrying amount as at 1 July 2024 11,647 Additions 1,379 Amortisation expense (1,239) Foreign currency exchange differences 7 Carrying amount as at 30 June 2025 11,794 Total $'000 Carrying amount as at 1 July 2025 11,794 Additions 1,476 Amortisation expense (1,314) Foreign currency exchange difference 13 Carrying amount as at 30 June 2026 11,969 59
Page 61
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 17. Right-of-use assets (continued) The following are the amounts recognised in profit or loss statement during the year. Consolidated 30 June 2026 30 June 2025 $'000 $'000 Amortisation expense of right-of-use assets 1,314 1,239 Interest expense on lease liabilities 675 646 Total amount recognised in profit or loss 1,989 1,885 During the year, the Group had total cash outflows for leases of $2,240,000 (2025: $1,560,000). Group as lessor The Group has not entered into any leases as lessor. Note 18. Intangibles Intangible assets acquired separately or in a business combination are initially measured at cost. The cost of an intangible asset acquired in a business combination is its fair value as at the date of acquisition. The intangible assets carried by the Group, being intellectual property assets had a definite useful life on acquisition. Internally generated intangible assets are capitalised if the product is at development phase. Costs that are directly attributable to a product’s development phase are recognised as intangible assets, provided all of the following recognition requirements are met: • the product is technically and commercially feasible, • the Group intends to and has sufficient resources to execute a commercial outcome from the product, • the Group has the ability to derive income from the product and will generate probable future economic benefits from the product, and • the development costs can be measured reliably. Development costs not meeting these criteria for capitalisation are expensed as incurred. Directly attributable costs include employee costs incurred on development along with an appropriate portion of relevant overheads. Expenditure on the research phase of projects is recognised as an expense as incurred and is recognised in the Statement of Comprehensive Income (profit or loss) in the year in which the expenditure is incurred. 60
Page 62
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 18. Intangibles (continued) Impairment of intangible and other assets Intangible assets that have an indefinite useful life are not subject to amortisation. They are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets including definite li ved intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Group conducts an annual impairment assessment review of asset values, which is used as a source of information to assess for any indicators of impairment. External factors, such as changes in expected future processes, technology and economic conditio ns, are also monitored to assess for indicators of impairment. If any indication of impairment exists, an estimate of the asset’s recoverable amount is calculated which is based on – higher of its fair value less cost of disposal and its ‘value -in-use’. Value-in- use is calculated by discounting, the estimated future cash flows derived from use of the asset, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Significant estimates and assumptions - impairment of tangibles Impairment exists when the carrying value of an asset exceeds its recoverable amount. For the intangible assets that have finite economic lives, PolyNovo considers indicators of impairment and if an indicator exists, will determine the recoverable amount o f the intangible asset. For the indefinite life intangibles and goodwill, the recoverable amount is determined every year. An estimate is provided on the useful life of the current intangible asset based on the existing patent period. Intangible assets, comprising intellectual property, were acquired through the business combination with PolyNovo Biomaterials Pty Ltd on 17 December 2008. The acquired intangible assets were initially recognised at fair value. Following the consistent commercial sales of NovoSorb ® BTM, amortisation of intangible assets commenced in FY2018 over the remaining finite life through to March 2028 being the remaining patent life period over which economic benefits will be consumed. No indicators of impairment related to the NovoSorb technology have been identified as at 30 June 2026. 61
Page 63
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 18. Intangibles (continued) Consolidated 30 June 2026 30 June 2025 $'000 $'000 Non-current assets Intangibles (i) Cost Opening balance 2,520 2,520 Additions - - Closing balance 2,520 2,520 (ii) Accumulated amortisation Opening balance (1,859) (1,611) Amortisation for the year (248) (248) Closing balance (2,107) (1,859) Net book value 413 661 Note 19. Trade and other payables Trade and other payables are carried at amortised cost. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid. The amounts are unsecured and are normally settled on 30-day terms. Due to the short-term nature of these payables amortised cost approximates to fair value. Consolidated 30 June 2026 30 June 2025 $'000 $'000 Current liabilities Trade payables 4,221 6,939 Other payables 12,623 15,600 Total trade and other payables 16,844 22,539 62
Page 64
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 19. Trade and other payables (continued) Consolidated 30 June 2026 30 June 2025 $'000 $'000 Financial liabilities and non-financial liabilities Trade payables 4,221 6,939 Other payables 10,696 12,478 Total financial liabilities 14,917 19,417 Other payables 1,927 3,122 Total non-financial liabilities 1,927 3,122 Total trade and other payables 16,844 22,539 Trade payables are non-interest bearing and are normally settled on 30-day terms. Included in other payables are accrued commission of $5,044,000 (30 June 2025: $4,721,000), PO accruals of $1,023,000 (30 June 2025: $957,000) and other accrued liabilities of $2,693,000 (30 June 2025: $2,418,000). Note 20. Interest-bearing loans and borrowings Consolidated 30 June 2026 30 June 2025 $'000 $'000 Current liabilities Equipment Finance - current 658 965 Short term loan - current 1,414 530 2,072 1,495 Non-current liabilities Equipment Finance - non current 1,560 2,217 Refer to note 25 for further information on financial risk management objectives and policies. (a) Interest bearing facility details Financing Facilities Facility Amount Maturity Date Interest rate (weighted average) Interest expense $'000 % $'000 Equipment finance 7,500 October 2025 - June 2030 6.42% 173 Short term loan 1,916 August 2026 7.33% 64 63
Page 65
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 20. Interest-bearing loans and borrowings (continued) Equipment finance facility The purpose of this facility is to fund the capital expenditure items such as manufacturing equipment and R&D equipment. As at 30 June 2026, the Group had a revolving equipment finance facility with a limit of $7,500,000. Amounts drawn under the facility are repayable over five years from the date of each drawdown and bear interest at rates ranging from 2.98% to 6.62% per an num. The outstanding balance as at 30 June 2026 was $2,218,000. No additional covenant requirements, except that PolyNovo needs to maintain a minimum cash balance of $1,285,000 at all times, reflective of 12 months interest payable and principal repayments of the facility. In June 2025, the Group entered into an additional equipment finance facility to support the purchase of R&D equipment for the new Innovation Centre. The facility was drawn down in June 2025 up to the limit, with repayments scheduled monthly over the 5 -year term. Total drawn down amount is $2,441,000 and the interest rate is 6.62% per annual. The facility does not include any residual or balloon payment, and there were no deposits or trade-ins applied to the transaction. Short-term loans Short-term loans relate to insurance premium funding for the Group. Note 21. Lease liabilities The Group applies a single recognition and measurement approach for all leases, except for short -term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. The lease payments include fixed payments (including in -substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate and amounts expected to be paid under residual value guarantees. Lease payments on short -term leases and leases of low -value assets are recognised as an expense on a straight-line basis over the lease term. Subsequent to initial recognition, lease liabilities are measured at amortised cost. Lease liabilities are remeasured if there is a modification, such as a change in the lease term, a change in the in -substance fixed lease payments or a change in the assessment to purchase the underlying asset. The Group’s lease liabilities are inclusive of extension options the Group is reasonably certain to exercise based upon our judgement as of the reporting date. Lease extension options that the Group is not reasonably certain to exercise as of the reporting date are appropriately excluded from the lease liabilities. 64
Page 66
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 21. Lease liabilities (continued) Refer to note 17 for details of changes to the Group's lease portfolio during the year. Significant estimates and assumptions - lease term PolyNovo applies judgement to determine a lease term for leases with extension, termination or purchase options. PolyNovo also considers lease modifications where we continue to use the same underlying asset for an extended term. Our lease terms are negotiated on an individual basis and contain a range of different terms and conditions, with fixed term period between 3 to 20 years. The lease term assessment is reviewed if a significant event or change in circumstances occurs which affects this assessment and that is within our control as a lessee. Significant estimates and assumptions - incremental borrowing rate for property lease Refer to note 17 for details of estimates and assumptions made in relation to incremental borrowing rate used in the valuation of right-of-use assets and their corresponding lease liabilities. Consolidated 30 June 2026 30 June 2025 $'000 $'000 Current liabilities Lease liability – current 1,021 912 Non-current liabilities Lease liability - non current 12,960 12,511 Note 22. Deferred income Deferred income represents amounts received in advance of the provision of goods or services and is recognised as a liability until the related performance obligations are satisfied. Revenue is subsequently recognised in the statement of comprehensive income. Consolidated 30 June 2026 30 June 2025 $'000 $'000 Current liabilities Deferred income 120 283 Non-current liabilities Deferred income 1,594 908 65
Page 67
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 22. Deferred income (continued) The majority of the Group's deferred income balance relates to a government grant received under the Industry R&D Infrastructure Grant program. During the year ended 30 June 2025, the Group was awarded an Industry R&D Infrastructure Grant of $2,000,000 by the Department of Jobs, Skills, Industry and Regions to support the purchase of research and development equipment and the construction of the n ew Innovation Centre. The grant proceeds were received in full during the year ended 30 June 2026. In accordance with the Group's accounting policy, grant income is recognised in profit or loss on a systematic basis over the periods in which the related costs are incurred. During the year ended 30 June 2026, $126,000 of the grant was recognised as other income. As at 30 June 2026, the cumulative amount recognised as other income was $222,000. Following the fire incident, construction of the Innovation Centr e was suspended, and no further grant income was recognised. As at 30 June 2026, the remaining $1,778,000 of the grant was recognised as deferred income. The remaining deferred income balance primarily relates to amounts associated with contract cost assets. These amounts are recognised in profit or loss over the relevant contract period, resulting in a corresponding reduction in deferred income during the year. Note 23. Provisions Provisions are recognised when all three of the following conditions are met: • The Group has a present or constructive obligation arising from a past transaction or event • It is probable that an outflow of resources will be required to settle the obligation • A reliable estimate can be made of the obligation. Provisions recognised reflect our best estimate of the expenditure required to settle the present obligation at the reporting date. Consolidated 30 June 2026 30 June 2025 $'000 $'000 Current provisions Annual leave 2,671 2,345 Long service leave 418 295 Total current provisions 3,089 2,640 Non-current provisions Long service leave 404 396 Make good 232 232 Total non-current provisions 636 628 66
Page 68
Consolidated 30 June 2026 30 June 2025 $'000 $'000 191,758 191,601 - 157 191,758 191,758 Consolidated 30 June 2026 30 June 2025 690,842 690,232 - 546 - 64 PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 24. Equity Note 24. Equity (a) Movement in contributed equity Contributed equity at beginning of year Issue of share capital Contributed equity at end of year Number of shares authorised and fully paid On issue at start of year Exercise of options Issue of share capital - short term incentives On issue at end of year 690,842 690,842 Ordinary shares are classified as equity and recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. During the year ended 30 June 2025, three employees exercised share options under the cashless exercise facility. Prior to exercise, the employees collectively held 1,150,000 share options. Under the facility, 603,782 options were forfeited in lieu of payi ng the exercise price in cash, and the remaining 546,218 options were exercised into ordinary shares. The value of options exercised was equivalent in value to the difference between the aggregate exercise price otherwise payable and the market value of the shares at the date of exercise. In addition, the Group issued 64,022 ordinary shares to the former CEO, with a value of $157,000, following the assessment of the achievement of the applicable key performance indicators. During the year ended 30 June 2026, there was no movement in the number of ordinary shares on issue. 67
Page 69
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 24. Equity (continued) (b) Reserves Consolidated 30 June 2026 30 June 2025 $'000 $'000 Share-based payments reserve (i) 4,858 5,316 Foreign currency translation reserve (ii) (1,063) (1,615) Acquisition of non-controlling interest reserve (iii) (9,294) (9,294) Balance at end of period (5,499) (5,593) Consolidated 30 June 2026 30 June 2025 $'000 $'000 (i) Share-based payments reserve Balance at beginning of period 5,316 6,845 Share-based payments movement * (458) (1,529) Balance at end of period 4,858 5,316 * Details of share-based payment movement refer to note 6 Employee-related expenses. Consolidated 30 June 2026 30 June 2025 $'000 $'000 (ii) Foreign currency translation reserve Opening balance (1,615) (911) Translation of foreign operations 552 (704) Balance at end of period (1,063) (1,615) This reserve represents on consolidation, the translation of the foreign operation into Australian dollars. The exchange difference is recognised in the balance sheet as a reserve. Consolidated 30 June 2026 30 June 2025 $'000 $'000 (iii) Acquisition of non-controlling interest reserve Opening balance (9,294) (9,294) Transactions with non-controlling interest - - Balance at end of year (9,294) (9,294) 68
Page 70
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 24. Equity (continued) This reserve represents the premium paid by PolyNovo Limited for the non -controlling interest in a previous period in subsidiary entities PolyNovo Biomaterials Pty Ltd, NovoSkin Pty Ltd and NovoWound Pty Ltd. (c) Accumulated losses Consolidated 30 June 2026 30 June 2025 $'000 $'000 Accumulated losses at beginning of year (102,903) (116,117) Net profit attributable to members of the parent 7,341 13,214 Accumulated losses at end of financial year (95,562) (102,903) Note 25. Financial Risk Management Objectives and Policies (a) Financial instruments The Group’s financial instruments comprise cash and cash equivalents, trade and other receivables, trade and other payables and other financial liabilities. Consolidated 30 June 2026 30 June 2025 $'000 $'000 Cash and cash equivalents * 35,424 33,535 Trade and other receivables 21,468 23,583 Other financial assets ** 50 50 Total financial assets 56,942 57,168 Trade and other payables 14,917 19,417 Short term loan 1,414 530 Equipment finance facility 2,218 3,182 Lease liabilities 13,981 13,423 Total financial liabilities 32,530 36,552 * As at 30 June 2026, PolyNovo Limited holds a number of short-term term deposits of $2,808,000, at the weighted average interest rate of 2.18%. ** As at 30 June 2026, $50,000 is held in a term deposit maturing on 17 March 2027 at an interest rate of 5.10% 69
Page 71
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 25. Financial Risk Management Objectives and Policies (continued) (b) Risk management policy The Group has a formal risk management policy and framework. The Group’s approach to risk management involves identifying, assessing and managing risk, including consideration of identified risks, in the context of the Group’s values, objectives and strategies. The Board is responsible for overseeing the implementation of the risk management system and reviews and assesses the effectiveness of the Group’s implementation of that system. The Group seeks to ensure that its exposure to risks that are likely to impact its financial performance, continued growth and survival are minimised in a cost-effective manner (c) Material accounting policies Details of the material accounting policies and methodologies adopted in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2. (d) Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain an optimal capital structure, the Group may issue new shares or reduce its capital, subject to the provisions of the Company’s Constitution and any relevant regulatory requirements. The capital structure of the Group consists of debt and equity attributed to equity holders of the Group comprising contributed equity, reserves and accumulated losses as disclosed in note 24. The Board monitors the need to raise additional equity from the equity markets based on its ongoing review of PolyNovo’s actual and forecast cash flows, which are provided by ma nagement. (e) Financial risk management The key financial risks the Group is exposed to through its operations are: • interest rate risk; • credit risk; • liquidity risk; and • foreign currency risk Interest rate risk Interest rate risk arises when the value of a financial instrument fluctuates as a result of changes in market interest rates. The Group is exposed to interest rate risks in relation to its holdings in cash and cash equivalents. The objective of managing interest rate risk is to minimise the Group’s exposure to fluctuations in interest rates. To manage this risk, the Group locks a portion of the Group’s cash and cash equivalents into term deposits. The required maturity period of term deposits is determined based on the Group’s cash flow forecast with particular focus on the timing of cash requirements. In addition, the Group consi ders the lower interest rate received on cash held in the Group’s operating account compared to placing funds on term deposit. Account is also taken of the costs associated with early withdrawal of a term deposit should access to cash and cash equivalents be required. The table below sets out the Group's exposure to interest rate risk at 30 June 2026 (and for the prior year), including the applicable interest rates at year-end for financial assets and liabilities. 70
Page 72
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 25. Financial Risk Management Objectives and Policies (continued) 30 June 2026 Interest rate Floating interest rate Fixed interest rate Non- interest bearing Total 0 to 90 days 91 to 365 days 1 to 5 years over 5 years % $’000 $’000 $’000 $’000 $’000 $’000 $’000 Financial assets Cash and cash equivalents 2.18% 32,616 2,808 - - - - 35,424 Other financial assets 5.10% - - 50 - - - 50 Trade and other receivables - - - - - - 21,468 21,468 Total financial assets 32,616 2,808 50 - - 21,468 56,942 Financial liabilities Trade and other payables - - - - - - 14,917 14,917 Short term loan 7.33% - 952 462 - - - 1,414 Equipment Finance Facility 6.42% - 213 445 1,560 - - 2,218 Lease liabilities 4.98% - 602 1,706 2,852 8,821 - 13,981 Total financial liabilities - 1,767 2,613 4,412 8,821 14,917 32,530 71
Page 73
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 25. Financial Risk Management Objectives and Policies (continued) 30 June 2025 Interest rate Floating interest rate Fixed interest rate Fixed interest rate Fixed interest rate Fixed interest rate Non- interest bearing Total 0 to 90 days 91 to 365 days 1 to 5 years over 5 years $’000 $’000 $’000 $’000 $’000 $’000 $’000 Financial assets Cash and cash equivalents 3.56% 26,629 6,906 - - - - 33,535 Other financial assets 4.56% - - 50 - - - 50 Trade and other receivables - - - - - - 23,583 23,583 Total financial assets 26,629 6,906 50 - - 23,583 57,168 Financial liabilities Trade and other payables - - - - - 19,417 19,417 Short term loan 7.01% - 530 - - - - 530 Equipment Finance Facility 5.95% - 283 682 2,217 - - 3,182 Leases liabilities 4.82% - 233 677 3,530 8,983 - 13,423 Total financial liabilities - 1,046 1,359 5,747 8,983 19,417 36,552 As noted above, cash is invested in term deposits of varying maturity terms to maximise interest income as well as to meet the timing of operational cash flow requirements. All term deposits are with the NAB and U.S. Bank, to ensure market interest rates are achieved without compromising the security of funds on deposit. The analysis below details the impact on the Group’s profit after tax and equity if the interest rate associated with the closing balance of financial assets was to fluctuate by the margins below, assuming all other variables had remained constant: 72
Page 74
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 25. Financial Risk Management Objectives and Policies (continued) 2026 Post tax profit increase/(decrease) 2025 Post tax profit increase/(decrease) $’000 $’000 + 1% (100 basis points) 326 335 - 1% (100 basis points) (326) (335) The range of +1%/-1% as an assumption is based on current macro-market economic conditions in which the group holds its cash and cash equivalent balances. Credit risk Credit risk arises when a counterparty defaults on its contractual obligations, resulting in a financial loss to the Group. The Group is exposed to credit risk via its cash and cash equivalents and receivables. To reduce risk exposure in relation to its holdings of cash and cash equivalents, they are placed on deposit with the Group’s main bankers, the National Australia Bank ( S&P Rating AA/A -1+, Moody’s rating Aa1/P -1). A change to the Group’s bankers requires Board approval. BARDA income receivables have low credit risk as it is a project with USA government. While commercial product sales to hospitals and distributors continued to increase during the year, trade receivables decreased compared with the prior year, reflecting improved collections and working capital management. The Group continues to closely mon itor customer credit risk and collection performance as sales volumes grow. The ageing analysis of trade and other receivables is set out below. 0 - 30 days 30 - 60 days 60 - 90 days 90+ days Total $’000 $’000 $’000 $’000 $’000 30 June 2025 Trade and other receivables 17,676 1,204 842 3,861 23,583 30 June 2026 Trade and other receivables 18,593 1,253 306 1,316 21,468 The Group considers the maximum credit risk from potential default of the counter party to be equal to the carrying amount of the asset. Receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to credit loss is not significant. 73
Page 75
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 25. Financial Risk Management Objectives and Policies (continued) Liquidity risk Liquidity risk arises if the Group encounters difficulty in raising funds to meet its financial liabilities. The Group is exposed to liquidity risk via its trade and other payables and its trade finance and equipment finance facilities. Responsibility for managing liquidity risk rests with the Board, who regularly review liquidity risk by monitoring the undiscoun ted cash flow forecasts and actual cash flows provided to them by management. This process is undertaken to ensure that the Group continues to be able to meet its debts as and when they fall due. Contracts are not entered into unless the Board is satisfied that there is sufficient cash flow to fund the additional commitment. The Board determines when reviewing the undiscounted cash flow forecasts whether the Group needs to raise additional working capital from its existing shareholders, the equity capital m arkets or other available external sources. The Board may also review the timing of internal programs if necessary to moderate cash requirements. A maturity analysis of financial liabilities is set out below. 30 June 2025 Less than 3 months 3 to 12 months 1 to 5 years Over 5 years Total Undiscounted amount $’000 $’000 $’000 $’000 $’000 Trade and other payables 17,588 1,677 152 - 19,417 Interest-bearing loans and borrowings* 814 681 2,217 - 3,712 Lease Liabilities 393 1,144 5,527 11,811 18,875 Total 18,795 3,502 7,896 11,811 42,004 30 June 2026 Less than 3 months 3 to 12 months 1 to 5 years Over 5 years Total Undiscounted amount $’000 $’000 $’000 $’000 $’000 Trade and other Payables 13,688 588 632 9 14,917 Interest-bearing loans and borrowings* 1,165 907 1,560 - 3,632 Lease Liabilities 422 1,264 6,044 11,695 19,425 Total 15,275 2,759 8,236 11,704 37,974 * Interest-bearing loans and borrowings include short term loan and equipment finance loan facility. 74
Page 76
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 25. Financial Risk Management Objectives and Policies (continued) Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s op erating activities (when revenue or expense is denominated in a foreign currency) and the Group’s net investments in foreign subsidiaries. The Group operates internationally and is exposed to foreign currency risk arising from transactions and balances denominated in currencies other than the functional currency of the respective entities. The Group's principal foreign currency exposures aris e from USD and GBP denominated transactions, reflecting the scale of its operations in the United States and the United Kingdom. To mitigate foreign currency risk, the Group maintains cash and cash equivalents in a range of foreign currencies, including USD, GBP, EUR, NZD, HKD, INR and SGD, to support operational requirements in those jurisdictions. Foreign currency -denominated trade and other payable balances expose the Group to some foreign currency risk. However, these balances are generally infrequent and of low value and, accordingly, are not considered to expose the Group to significant foreign currency risk. The Group may also enter into foreign exchange forward contracts on an ad hoc basis to manage certain foreign currency transaction exposures. These contracts are not designated as cash flow hedges and are typically entered into for periods aligned with the underlying exposure, generally ranging from one to three months. Sensitivity analysis The following table illustrates the sensitivity of the Group's profit before tax and equity to reasonably possible changes in foreign exchange rates, with all other variables held constant. The analysis is also presented separately for USD and GBP, being the Group's most significant foreign currency exposures. The impact of all other foreign currencies is not individually material and is therefore included within the total foreign currency sensitivity presented below. 75
Page 77
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 25. Financial Risk Management Objectives and Policies (continued) Change in AUD rate Effect on profit before tax/ pre-tax equity % $'000 Group 30 June 2026 5.00% (1,132) (5.00%) 1,132 30 June 2025 5.00% (1,374) (5.00%) 1,374 USD 30 June 2026 5.00% (1,015) (5.00%) 1,015 30 June 2025 5.00% (655) (5.00%) 655 GBP 30 June 2026 5.00% (97) (5.00%) 97 30 June 2025 5.00% (226) (5.00%) 226 Remaining contractual maturities Details about the financial guarantee contracts are provided in note 22. The amounts disclosed in the above tables are the maximum amounts allocated to the earliest period in which the guarantee could be called upon. The consolidated entity does not expect these payments to eventuate. Note 26. Share-based payments Employee share-based payment plans The Group provides benefits to employees in the form of share -based payment transactions, whereby employees render services in exchange for shares or rights over shares. The PolyNovo Employee Share Option Plan is in place. Information relating to this Plan is set out below and in the Remuneration Report section of the Directors’ Report. Significant estimates and assumptions - share-based payments Estimating fair value for share -based payment transactions requires selection of the most appropriate valuation model, which in turn is dependent on the terms and conditions of the share -based payment granted. Determination of the most appropriate inputs t o the valuation model, including the expected life of the share option, volatility and dividend yield, is also required. The models and related assumptions used for estimating the fair value of share -based payment transactions are disclosed below and in th e Remuneration Report. 76
Page 78
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 26. Share-based payments (continued) Share options movement During the year ended 30 June 2026, no share options were granted or exercised by the Group. A total of 1,150,000 share options were forfeited following the resignation of employees. The remaining share options were granted in prior periods and vest subject to the achievement of applicable performance conditions and continued employment with PolyNovo. The fair value of share options granted in prior periods was estimated at the grant d ate by an independent third party using a Black-Scholes methodology. The fair value is recognised as employee expense (with a corresponding increase in equity) over the vesting period. The dilutive effect, if any, of outstanding share options is reflected in the computation of diluted earnings per share. Alignment Share Appreciation Rights (ASARs) movement On 1 December 2025, the Group granted the Chief Executive Officer a one -off grant of Alignment Share Appreciation Rights (ASARs) with a fair value of $600,000, equivalent to one year’s base salary. The grant comprises 920,691 ASARs. The ASARs will vest subject to a three-year service period. Upon exercise of vested ASARs, the number of shares to be issued will be determined based on the increase in the market value of PolyNovo Limited shares from the grant date to the exercise date. T he market value at exercise date is determined by reference to the 20 -trading day volume weighted average price (VWAP) of PolyNovo Limited shares traded on the ASX. The exercise period commences from the vesting date (being the third anniversary of the commencement of employment) and expires on the fifth anniversary of the grant date, being 1 December 2030. The fair value of the ASARs was estimated at the grant date by an independent third party using an appropriate valuation methodology. The fair value is recognised as employee expenses (with a corresponding increase in equity) over the vesting period. The dilutive effect, if any, of outstanding ASARs is reflected in the computation of diluted earnings per share. 77
Page 79
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 26. Share-based payments (continued) Retention Rights movement On 5 June 2026, the Group granted 76,702 retention rights to an employee as part of the Group’s retention grant program. The retention rights were granted for nil consideration and vest subject to the employee remaining employed by the Group until the vest ing date. The retention rights will vest on 5 June 2027, being 12 months from the grant date. Upon vesting, the rights will automatically be exercised and the employee will be allocated shares in the Group. The fair value of the retention rights was estimated at the grant date and is recognised as employee expenses (with a corresponding increase in equity) over the vesting period. The dilutive effect, if any, of outstanding retention rights is reflected in the computation of diluted earnings per share. Employee share-based payment details are summarised in below table. 30 June 2026 Balance at 1 July 2025 Share options and awards granted Share options and awards exercised Share options and awards forfeited Balance at 30 June 2026 Share-based payments expense recognised during the year $ Key management personnel Mr Bruce Peatey - 920,691 - - 920,691 80,979 Other employees 1,900,000 76,702 - (1,150,000) 826,702 (538,684) Total 1,900,000 997,393 - (1,150,000) 1,747,393 (457,705) Note 27. Key management personnel disclosures The key management personnel compensation disclosures required by the Corporations Act 2001 are provided in the Remuneration Report in the Directors’ Report. (a) Details of key management personnel The key management personnel of the Group are those persons having the authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, during the financial year ended 30 June 2025 and 30 June 2026. PolyNovo’s key management personnel are its directors’ and members of the Senior Management team. Details of each Director and Senior Executive, who are classified as key management personnel, are provided in the Remuneration Report. 78
Page 80
` PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 27. Key management personnel disclosures (continued) (b) Compensation by category: key management personnel Consolidated 30 June 2026 30 June 2025 $'000 $'000 Short term 1,739 2,097 Post-employment - superannuation 91 138 Leave allowances 48 (8) Share-based payments 81 (1,497) Termination benefits - 577 1,959 1,307 (c) Interests held by key management personnel As at 30 June 2026, the Chief Executive Officer, Bruce Peatey, held 920,691 Alignment Share Appreciation Rights (ASARs). Details refer to note 26. (d) Loans to key management personnel No loans have been made to Directors of PolyNovo or to any other key management personnel, including their personally related entities. (e) Other transactions with Directors There were no related party transactions during the year ended 30 June 2026. Note 28. Auditor's Remuneration The auditor of PolyNovo Limited is Ernst & Young (Australia). The amounts received, or due and receivable, by Ernst & Young for audit and other services were as follows: 79
Page 81
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 28. Auditor's Remuneration (continued) Consolidated 30 June 2026 30 June 2025 $ $ Amounts received, or due and receivable, by Ernst and Young (Australia) for: 1. Audit and review of the statutory financial reports of the Group and subsidiaries 415,412 379,525 2. Other non-audit services - Tax Compliance 32,180 27,910 - Other advice 104,500 82,450 Subtotal 552,092 489,885 Amounts received, or due and receivable, by overseas member firms of Ernst and Young (Australia) for: 1. Audit of the financial report of any controlled entities 32,575 73,559 2. Other non-audit services - Tax Compliance 159,649 212,668 - Other advice 2,008 66,637 Subtotal 194,232 352,864 Total auditor's remuneration 746,324 842,749 The Directors are satisfied that the provision of non -audit services during the current period is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of each type of non -audit service provided means that auditor’s independence was not compromised. Note 29. Parent entity information Parent 30 June 2026 30 June 2025 $'000 $'000 Profit after income tax 7,727 709 Total comprehensive income 7,727 709 80
Page 82
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 29. Parent entity information (continued) Statement of financial position Parent 30 June 2026 30 June 2025 $'000 $'000 Total current assets 117,539 109,357 Total assets 124,665 112,986 Total current liabilities 17,372 15,307 Total liabilities 18,781 16,215 Equity Issued capital 191,758 191,758 General reserve (1,106) (648) Accumulated losses (84,768) (94,339) Total equity 105,884 96,771 In accordance with the terms and conditions of the NAB facility arrangements disclosed in note 20, the parent entity, PolyNovo Limited, has provided a cross -guarantee in conjunction with wholly owned subsidiaries Novoskin Pty Ltd and Novowound Pty Ltd. The aggregate amount payable by the cross - guarantors is limited to $16,800,000 excluding interest and penalties. 81
Page 83
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 30. Controlled Entities The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2 'Summary of Material Accounting Policies': Ownership interest Principal place of business / 30 June 2026 30 June 2025 Name Country of incorporation % % PolyNovo Limited Australia 100% 100% PolyNovo North America LLC United States 100% 100% PolyNovo Biomaterials Pty Ltd Australia 100% 100% NovoSkin Pty Ltd Australia 100% 100% NovoWound Pty Ltd Australia 100% 100% PolyNovo NZ Limited New Zealand 100% 100% PolyNovo Singapore Private Ltd Singapore 100% 100% PolyNovo UK Limited United Kingdom 100% 100% PolyNovo Ireland Ltd Ireland 100% 100% PolyNovo Hong Kong Limited Hong Kong special administrative Region, China 100% 100% PolyNovo Biomaterials India Private Limited India 100% 100% Note 31. Deed of cross guarantee PolyNovo Limited and certain wholly owned Australian subsidiaries are parties to a Deed of Cross Guarantee under ASIC Corporations (Wholly -owned Companies) Instrument 2016/785. The Deed provides relief to those wholly owned subsidiaries from the requiremen t to prepare, have audited and lodge individual financial reports under Chapter 2M of the Corporations Act 2001 (Cth), provided the conditions of the Instrument continue to be satisfied. Under the Deed of Cross Guarantee, each entity guarantees the debts of the other entities that are parties to the Deed. The Deed becomes enforceable in the circumstances set out in the Corporations Act 2001 (Cth) and the terms of the Deed. As at 30 June 2026, the parties to the Deed of Cross Guarantee and within the closed group comprised: PolyNovo Limited (ACN 083 866 862) PolyNovo Biomaterials Pty Ltd (ACN 108 176 049) NovoSkin Pty Ltd (ACN 142 999 880) NovoWound Pty Ltd (ACN 143 000 908) The consolidated financial information for the closed group is presented below. 82
Page 84
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 31. Deed of cross guarantee (continued) Closed Group Consolidated 30 June 2026 30 June 2025 $'000 $'000 Consolidated statement of profit or loss Revenue from contracts with customers 42,564 56,096 Interest and other income 15,206 9,362 57,770 65,458 Changes in inventories of finished goods and work in progress (4,931) (887) Employee-related expenses (24,992) (21,805) Research and development expenses (5,066) (8,189) Depreciation and amortisation expenses (3,068) (2,945) Corporate, administrative and overhead expenses (19,197) (14,238) Interest expense (841) (827) Loss on derecognition/ write-off of assets (4,717) - (62,812) (48,891) (Loss)/Profit before income tax (5,042) 16,567 Income tax benefit 2,038 4,797 (Loss)/Profit after income tax (3,004) 21,364 Other comprehensive income Items that may be reclassified subsequently to profit or loss Gain/(loss) on translation of foreign operation - - Other comprehensive income for the year, net of tax - - Total comprehensive (loss)/income (3,004) 21,364 Closed Group Consolidated 30 June 2026 30 June 2025 $'000 $'000 Summary of movements in consolidated retained earnings Retained earnings at the beginning of the year (81,550) (102,914) Profit for the year (3,004) 21,364 Retained earnings at the end of the year (84,554) (81,550) 83
Page 85
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 31. Deed of cross guarantee (continued) Closed Group Consolidated 30 June 2026 30 June 2025 $'000 $'000 Consolidated statement of financial position Current assets Cash and cash equivalents 15,807 18,409 Trade and other receivables 71,107 81,244 Contract cost assets - 37 Insurance contracts issued that are assets 1,591 - Inventories 5,370 7,721 Other financial assets 50 50 Investment 3,269 2,306 Total current assets 97,194 109,767 Non-current assets Property, plant and equipment 31,779 26,153 Right-of-use assets 10,531 11,603 Intangibles 413 661 Deferred tax assets 8,793 6,754 Other assets 8 26 Total non-current assets 51,524 45,197 Total Assets 148,718 154,964 Current liabilities Trade and other payables 11,122 13,912 Interest-bearing loans and borrowings 2,072 1,495 Lease liabilities 810 731 Deferred income 305 275 Provisions 2,033 1,746 Total current liabilities 16,342 18,159 Non-current liabilities Interest-bearing loans and borrowings 1,560 2,217 Lease liabilities 11,659 12,467 Deferred income 1,409 908 Provisions 395 396 Total non-current liabilities 15,023 15,988 Total Liabilities 31,365 34,147 Net Assets 117,353 120,817 84
Page 86
PolyNovo Limited Notes to the consolidated financial statements 30 June 2026 Note 31. Deed of cross guarantee (continued) Consolidated 30 June 2026 30 June 2025 $'000 $'000 Equity Issued capital 205,367 205,367 Other reserves (3,460) (3,000) Accumulated losses (84,554) (81,550) Total Equity 117,353 120,817 Note 32. Related party transactions Related party transactions are disclosed under note 27 Key management personnel. Note 33. Commitments and Contingencies Following the fire incident, the reconstruction of the new Innovation Centre commenced during the year. As at 30 June 2026, the Group had entered into building construction contracts with total capital commitments of $1,250,000. Note 34. Events after the reporting period Other than disclosed in Note 2, no matter or circumstance has arisen since 30 June 2026 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years. 85
Page 87
PolyNovo Limited Consolidated entity disclosure statement As at 30 June 2026 Entity name Entity type Place formed / Country of incorporation Ownership interest (%) Tax residency PolyNovo Limited Body corporate Australia Australia PolyNovo Biomaterials Pty Ltd Body corporate Australia 100.00% Australia NovoSkin Pty Ltd Body corporate Australia 100.00% Australia NovoWound Pty Ltd Body corporate Australia 100.00% Australia PolyNovo NZ Limited Body corporate New Zealand 100.00% New Zealand PolyNovo Singapore Private Ltd Body corporate Singapore 100.00% Singapore PolyNovo Hong Kong Limited Body corporate Hong Kong Special Administrative Region, China ("Hong Kong SAR") 100.00% Hong Kong SAR PolyNovo Biomaterials India Private Limited Body corporate India 100.00% India PolyNovo UK Limited Body corporate United Kingdom 100.00% United Kingdom PolyNovo Ireland Limited Body corporate Ireland 100.00% Ireland PolyNovo North America LLC Body corporate United States 100.00% United States None of the entities within the Group is considered to be a dual tax resident. 86
Page 88
PolyNovo Limited Directors' declaration 30 June 2026 1. In the opinion of the Directors PolyNovo Limited (the 'Company'): a) The consolidated financial statements and notes that are set out on pages 31 to 85 and the Remuneration Report in sections 18 to 28 in the Directors' Report, are in accordance with the Corporations Act 2001, including: ● giving a true and fair view of the Group's financial position as at 30 June 2026 and of its performance for the year ended on that date; and ● complying with Australian Accounting Standards and Corporations Regulations 2001; and b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. c) the consolidated entity disclosure statement required by Section 295(3A) of the Corporations Act 2001 is true and correct. 2. The directors have been given declarations required by Section 295A of the Corporations Act 2001 from the chief executive officer and chief financial officer for the financial year ended 30 June 2026. 3. The directors draw attention to note 2 to the consolidated financial statements, which includes a statement of compliance with International Financial Reporting Standards. Signed in accordance with a resolution of the directors Mr Leon Hoare Chair 26 August 2026 87
Page 89
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Ernst & Young 8 Exhibition Street Melbourne VIC 3000 Australia GPO Box 67 Melbourne VIC 3001 Tel: +61 3 9288 8000 Fax: +61 3 8650 7777 ey.com/au Independent auditor’s report to the members of PolyNovo Limited Report on the audit of the financial report Opinion We have audited the financial report of PolyNovo Limited (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2026, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to the consolidated financial statements, including material accounting policy information, the consolidated entity disclosure statement and the Directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2026 and of its consolidated financial performance for the year ended on that date; and b. Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to audits of the financial report of public interest entities in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit proc edures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report. 88
Page 90
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Recognition of revenue Why significant How our audit addressed the key audit matter The Group recognised revenue of $143.7 million from the sale of commercial products and revenue from services performed in respect of research and development activities, as disclosed in Note 4 of the financial statements. For sales of commercial products, revenue is recognised upon delivery of the product to the customer. The Group sells to customers in various geographical territories through a combination of direct sales channels and distribution arrangements. Services revenue is recognised as the services are delivered. Notes 2, 3 and 4 of the financial statements outline the Group's accounting policies with respect to revenue recognition and revenue disclosures. Revenue recognition was considered a key audit matter because: ▪ Revenue is the Group's most significant financial statement balance and is a key performance measure used by investors and other users of the financial statements; ▪ The Group continues to expand across multiple geographical markets and distribution channels, resulting in a large volume of transactions requiring assessment of the timing of revenue recognition; and ▪ There is a risk that revenue may be recognised in the incorrect reporting period due to the volume of transactions occurring around year end, differing customer delivery arrangements and the use of manual processes and controls within the revenue cycle. Our audit procedures with respect to the Group’s revenue recognition included: ▪ Obtaining an understanding of the Group's revenue streams, including changes in customer, distributor and contractual arrangements, and assessing whether these changes impacted the timing and measurement of revenue recognition. ▪ Obtaining an understanding of the Group's revenue recognition processes, evaluating the design and implementation of key controls within the revenue cycle, and testing the operating effectiveness of key revenue controls on a sample basis. ▪ Using data analytic tools to assess the full population of commercial sales revenue transactions during the year including: ▪ performing correlation analysis between revenue, receivables and cash; ▪ targeted audit procedures over material items that did not correlate as expected; and ▪ testing a sample of cash journals to determine that the cash recorded represents real cash received from third party customers in relation to revenue recognised. ▪ Performing substantive testing of services revenue by vouching samples selected to supporting evidence and assessing the recognition of revenue based on contractual terms. ▪ Assessing revenue cut off on a sample basis to determine whether revenue was recognised in the correct period with reference to supporting documentation including contracts, purchase orders, proof of delivery, cash receipts and credit notes. ▪ Assessing the appropriateness the disclosures in relation to the Group’s revenue recognition and disaggregation of revenue in accordance with AASB 15 Revenues from Contracts with Customers as outlined in Notes 2, 3 and 4 of the financial statements. Information other than the financial report and auditor’s report thereon The Directors are responsible for the other information. The other information comprises the information included in the Company’s 2026 annual report other than the financial report and our auditor’s report thereon. We obtained the Directors’ report that is to be included in the annual report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the annual report after the date of this auditor’s report. 89
Page 91
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Our opinion on the financial report does not cover the other information and we do not and will not express any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the financial report The Directors of the Company are responsible for the preparation of: ▪ The financial report (other than the consolidated entity disclosure statement) that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001; and ▪ The consolidated entity disclosure statement that is true and correct in accordance with the Corporations Act 2001; and for such internal control as the Directors determine is necessary to enable the preparation of: ▪ The financial report (other than the consolidated entity disclosure statement) that gives a true and fair view and is free from material misstatement, whether due to fraud or error; and ▪ The consolidated entity disclosure statement that is true and correct and is free of misstatement, whether due to fraud or error. In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor ’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: ▪ Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not 90
Page 92
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. ▪ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. ▪ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors. ▪ Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. ▪ Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. ▪ Plan and perform the Group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Group as a basis for forming an opinion on the Group financial report. We are responsible for the direction, supervision and review of the audit work performed for the purposes of the Group audit. We remain solely responsible for our audit opinion. We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated to the Directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 91
Page 93
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Report on the audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 18 to 28 of the Directors’ report for the year ended 30 June 2026. In our opinion, the Remuneration Report of PolyNovo Limited for the year ended 30 June 2026, complies with section 300A of the Corporations Act 2001. Responsibilities The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Ernst & Young Matt Biernat Partner Melbourne 26 August 2026 92
Page 94
PolyNovo Limited Shareholder information 30 June 2026 Additional Information Required by ASX For the year ended 30 June 2026 Ordinary Shares As at 7 August 2026, there were 690,842,991 ordinary shares on issue held by 18,734 shareholders. Each ordinary share carries one vote per share. Top 20 Shareholders as at 7 August 2026 Shareholders Number of shares % Units J P Morgan Nominees Australia Pty Limited 58,676,167 8.49 HSBC Custody Nominees (Australia) Limited 53,477,032 7.74 Citicorp Nominees Pty Limited 41,830,253 6.05 Moggs Creek Pty Ltd (Moggs Creek Super A/C) 19,394,477 2.81 BNP Paribas Noms Pty Ltd 18,508,538 2.68 BNP Paribas Nominees Pty Ltd (IB AU Noms Retailclient) 13,476,413 1.95 BNP Paribas Nominees Pty Ltd (HUB24 Custodial Serv Ltd) 12,521,540 1.81 Lateral Innovations Pty Ltd 10,924,103 1.58 Jekl Super Pty Ltd (Kittel Fam SF A/C) 8,355,000 1.21 SCJ Pty Limited (Jermyn Family A/C) 5,000,000 0.72 Netwealth Investments Limited (Wrap Services A/C) 4,954,215 0.72 BNP Paribas Nominees Pty Ltd (Agency Lending A/C) 3,740,506 0.54 Dr George Bousounis Commonwealth 3,664,694 0.53 BNP Paribas Nominees Pty Ltd (Clearstream) 3,621,566 0.52 Mr Paul Gerard Brennan 3,569,796 0.52 Mr David Kenley 3,520,000 0.51 Mr Evan Philip Clucas + Ms Leanne Jane Weston (Kuranga Nursery Super A/C) 3,149,149 0.46 Mr David Kenley 3,139,855 0.45 Dr Marcus James Dermot Wagstaff + Mrs Lara Kate Wagstaff 3,072,166 0.44 Mr Christopher Mark Dawborn + Ms Leanne Nelms (Haskali Super Fund AC A/C) 2,900,000 0.42 Total 277,495,470 40.15 Unquoted Securities Share options and awards over unissued shares As at 30 June 2026, a total of 1,747,393 share options and awards over ordinary shares are on issue held by four employees. Share options and awards do not carry a right to vote. PolyNovo issued 997,393 share awards and forfeited 1,150,000 share options during the year ended 30 June 2026. Details of the share options issued are included in note 26. The range of shareholders based on number of shares held as at 7 August 2026 is as follows: 93
Page 95
PolyNovo Limited Shareholder information 30 June 2026 Range of units as at 10 August 2026 Number of holders Number of shares 1 to 1,000 5,225 2,832,923 1,001 to 5,000 6,059 16,756,661 5,001 to 10,000 2,479 19,255,755 10,001 to 100,000 4,254 133,296,365 100,001 and over 717 518,701,287 Total 18,734 690,842,991 Holding less than a marketable parcel 3,037 956,533 Voting rights Clauses 45 to 54 of the Company’s Constitution stipulate the voting rights of members. In summary but without prejudice to the provisions of the Constitution, every member present in person or by representative, proxy or attorney shall have one vote on a show of hands and on a poll have one vote for each share held by the member. Quotation of the Company's Shares PolyNovo has been granted official quotation for its shares on the Australian Securities Exchange (ASX Code: PNV). 94
Page 96
PolyNovo Limited Corporate directory 30 June 2026 Non-executive Chair Mr Leon Hoare Non-executive Directors Ms Christine Emmanuel-Donnelly Mr Andrew Lumsden Dr Robyn Elliott Mr Robert Douglas Dr Charmaine Gittleson Chief Executive Officer Mr Bruce Peatey Company secretary Ms Amy Demediuk Registered office Unit 2/ 320 Lorimer Street Port Melbourne Victoria 3207 T (03) 8681 4050 F (03) 8681 4099 Share register Computershare Investor Services Pty Ltd Yarra Falls 452 Johnson Street Abbotsford, Victoria 3067 T 1300 850 505 Auditor Ernst & Young 8 Exhibition St Melbourne Victoria 3000 Stock exchange listing PolyNovo Limited shares are listed on the Australian Securities Exchange (ASX code: PNV) Website www.polynovo.com 95