PEAK PROCESSING LIMITED — Capital/Financing Update 2020

Dec 14, 2020

(ASX:AGH)

CAPITAL RAISING PRESENTATION

DECEMBER 2020

IMPORTANT NOTICE AND DISCLAIMER

This presentation is dated 15 December 2020 and has been prepared by Althea Group Holdings Limited (ACN 626 966 943) (Althea or the Company) in connection with (a) an institutional placement of new fully paid ordinary shares (New Shares) in the Company (Placement) and (b) an offer of New Shares to eligible shareholders under a share purchase plan (SPP) (the Placement and SPP together being the Offer). PAC Partners Securities Limited is acting as lead manager to the Offer. By attending an investor presentation or briefing, or accepting, accessing or reviewing this presentation, you are agreeing to the following restrictions and limitations.

Summary information

This presentation contains summary information about Althea's activities current as at the date of this presentation. The information in this presentation is of a general background nature and does not purport to be complete, include all information that prospective investors would require to evaluate their investment in Althea, or to contain all of the information which would be required to be disclosed in a prospectus, product disclosure statement or other offer document under Australian law or under any other law. This presentation has not been filed, registered or approved by regulatory authorities in any jurisdiction. This presentation should be read in conjunction with Althea's periodic and continuous disclosure announcements filed with the Australian Securities Exchange, available at www.asx.com.au.

Not an offer

This presentation is for information purposes only and is not a prospectus, product disclosure statement or other disclosure or offering document under Australian law. This presentation is not, and does not constitute an offer to sell or the solicitation, invitation or recommendation to purchase any security (including New Shares) or any other financial product nor does it constitute financial product advice. Neither this document nor any of the information contained in this document will form the basis of any contract or commitment.

The Placement will be conducted under section 708A of the Corporations Act 2001 (Cth) (Corporations Act) (or equivalent provisions in legislation in other jurisdictions which permit offers to institutional investors without a prospectus or equivalent document) and will be made available to new institutional investors and certain existing institutional shareholders. The SPP will only be made available to eligible shareholders in Australia and New Zealand and will be conducted in accordance with ASIC Corporations (Share and Interest Purchase Plans) Instrument 2019/547. Determination of eligibility of investors for the purposes of the Offer is determined by reference to a number of matters, including legal requirements and the discretion of the Company. To the maximum extent permitted by law, the Company and the Lead Manager each disclaim any liability in respect of the exercise of that discretion or otherwise.

This presentation does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States. The securities referred to in this presentation have not been, and will not be, registered under the Securities Act of 1933 (US Securities Act) or the securities laws of any state or other jurisdiction of the United States and may not be offered or sold in the United States unless the securities have been registered under the US Securities Act or are offered and sold in a transaction exempt from, or not subject to, the registration requirements of the US Securities Act and any other applicable securities laws.

The distribution of this document in jurisdictions outside Australia may be restricted by law and you should observe any such restrictions. If you come into possession of this presentation, you should observe such restrictions. Any non-compliance with these restrictions may contravene applicable securities laws. By accessing this presentation, you represent and warrant that you are entitled to receive such presentation in accordance with these restrictions and agree to be bound by the limitations contemplated by them.

Not financial product advice or offer

The information in this presentation does not constitute financial product or investment advice (nor tax, accounting or legal advice) nor is it a recommendation to subscribe for or acquire New Shares and does not and will not form any part of any contract for the subscription or acquisition of New Shares. This presentation does not take into account the investment objectives, financial situation, taxation situation or needs of any particular investor. Prospective investors should consider the appropriateness of the information having regard to their own investment objectives, individual financial circumstances and seek legal, accounting and taxation advice appropriate to their jurisdiction, before making any investment decision. Althea is not licensed to provide investment or financial product advice in respect of Althea shares. Cooling off rights do not apply to the acquisition of New Shares pursuant to the Offer.

Investment risk

An investment in shares in Althea is subject to known and unknown risks, some of which are beyond the control of Althea and its directors, including possible loss of income and principal invested. Althea does not guarantee any particular rate of return or the performance of Althea, nor does it guarantee any particular tax treatment. Investors should have regard to (amongst other things) the risk factors outlined in this document when making their investment decision. See "Key Risks" section of this document for certain risks relating to an investment in Althea shares.

IMPORTANT NOTICE AND DISCLAIMER

Future performance and forward-looking statements

This presentation may contain forward-looking statements and comments about future events, including statements regarding Althea's current intentions, objectives, plans, expectations, assumptions and beliefs about future events, including the industry and markets in which Althea operates, Althea's expectations in relation to the financial and operating performance of its business, the potential impact and duration of the COVID-19 pandemic, the timetable and outcome of the Offer and the proceeds thereof. The words "anticipate", "believe", "expect", "project", "predict", "will", "forecast", "estimate", "likely", "intend", "outlook", "should", "could", "may", "target", "plan" and other similar expressions can generally be used to identify forward-looking statements. Indications of, and guidance or outlook on, future earnings or financial position or performance are also forward looking statements. Investors and prospective investors are cautioned not to place undue reliance on these forward-looking statements (particularly in light of the current economic climate and significant volatility, uncertainty and disruption caused by the COVID-19 pandemic) as they involve inherent risk and uncertainty (both general and specific) and should note that they are provided as a general guide only. There is a risk that such predictions, forecasts, projections and other forward looking statements will not be achieved. Subject to any continuing obligations under applicable law, Althea does not undertake any obligation to publicly release the result of any revisions to these forward-looking statements to reflect events or circumstances after the date of this presentation, to reflect any change in expectations in relation to any forward looking statements or any change in events, conditions or circumstances on which any such statements are based. While due care has been used in the preparation of forecast information, actual results may vary in a materially positive or negative manner. Forward looking statements are provided as a general guide only and should not be relied on as an indication or guarantee of future performance. They are subject to known and unknown risks, including the risk factors described under "Key Risks", uncertainty, assumptions and contingencies, many of which are outside Althea's control, and are based on estimates and assumptions that are subject to change and may cause actual results, performance or achievements to differ materially from those expressed or implied by such statements.

Past performance information (including past share price performance of Althea) given in this document is given for illustrative purposes only and is not necessarily a guide to future performance and no representation or warranty is made by any person as to the likelihood of achievement or reasonableness of any forward looking statements, forecast financial information, future share price performance or any underlying assumptions. Nothing contained in this document nor any information made available to you is, or shall be relied upon as, a promise, representation, warranty or guarantee as to the past, present or the future performance of Althea.

Financial data

All currency amounts are in Australian Dollars unless otherwise noted. All Althea references starting with "FY" refer to the financial year for Althea, ending 30 June, unless indicated otherwise. Investors should note that financial data in this presentation include "non-IFRS financial information" under Regulatory Guide 230 (Disclosing non-IFRS financial information) published by the Australian Securities and Investments Commission and also "non-GAAP financial measures" within the meaning of Regulation G of the US Securities Exchange Act of 1934 and have not been audited or reviewed. The non-IFRS/non GAAP measures in this presentation include Annualised Contract Value (ACV). Althea believes this non-IFRS/non-GAAP financial information provides useful information to users in measuring the financial performance and conditions of Althea. The non-IFRS financial information and these non-GAAP financial measures do not have a standardised meaning prescribed by AIFRS and therefore may not be comparable to similarly titled measures presented by other entities, nor should they be construed as an alternative to other financial measures determined in accordance with AFIRS. Investors are cautioned not to place undue reliance on any non-IFRS financial measures included in this presentation.

Effect of rounding

A number of figures, amounts, percentages, estimates, calculations of value and fractions in this presentation are subject to the effect of rounding. Accordingly, the actual calculation of these figures may differ from the figures set out in this presentation.

Disclaimer

No representation or warranty, express or implied, is made as to the accuracy, reliability, completeness or fairness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, the Company makes no guarantees or any representations or warranties, express or implied, as to or takes responsibility for, the accuracy, reliability, completeness, currency or fairness of the information, opinions and conclusions contained in this presentation. Althea does not represent or warrant that this presentation is complete or that it contains all material information about Althea or which a prospective investor or purchaser may require in evaluating a possible investment in Althea or an acquisition or other dealing in Althea shares. To the maximum extent permitted by law, Althea expressly disclaims any and all liability, including, without limitation, any liability arising out of fault or negligence, for any direct, indirect, consequential or contingent loss or damage arising from the use of information contained in this presentation including representations or warranties or in relation to the accuracy or completeness of the information, statements, opinions or matters, express or implied, contained in, arising out of or derived from, or for omissions from, this presentation including, without limitation, any financial information, any estimates or projections and any other financial information derived therefrom.

Statements made in this presentation are made only at the date of the presentation. Althea is under no obligation to update this presentation. The information in this presentation remains subject to change without notice. Althea reserves the right to withdraw or vary the timetable for the Offer without notice.

BUSINESS UPDATE

PUBLICATION 1 - FINANCIAL FORECASTS & VALUATION METRICS

Years ending June $m	18(A)	19(A)	20(e)	21(e)	22(e)
Sales revenue	0.0	0.8	5.2	26.9	62.4
Sales growth	n/a	6873%	580%	416%	132%
Operating costs	-1.9	-7.9	-18.8	-20.1	-26.6
EBITDA	-1.9	-7.3	-15.4	-5.5	6.4
NPAT (reported)	-1.9	-8.7	-17.2	-7.4	4.4
NPAT (adjusted)	-1.9	-7.3	-17.2	-7.4	4.4
EPS (adjusted)	-0.9	-3.6	-7.4	-2.8	1.6
EPS growth	nm	292%	106%	-62%	-157%
DPS	0.0	0.0	0.0	0.0	0.0
P/E	-41.8	-10.7	-5.2	-13.6	24.1
EV / EBITDA	-46.8	-10.3	-5.0	-14.4	12.3
EV / Sales	nm	97.7	14.7	2.9	1.3

Source: Phillip Capital Estimates, Ground floor opportunity in Germany; Canada launch imminent, 7 May 2020, Wayne Sanderson, Phillip Capital, NB: FY18 & FY'19 eps use post IPO share count

PUBLICATION 2 -RECOMMENDATIONS:
Company	Althea GroupAGH:AU	Bod AustraliaBDA:AU	CannGroupCAN:AU
Recommendation	Spec Buy PT $1.45	Spec Buy PT $0.73	Spec Buy PT $0.87
Revenue FY'21F	$20.5m	$15.6m	$16.1m
Growth	305%	237%	2386%
Revenue FY'22F	$45.1m	$27.9m	$24.8m
Growth	120%	79%	54%
EBITDA FY'21F	-$4.0m	-$1.9m	-$2.7m
EBITDA FY'22F	$7.9m	$1.3m	$-2.7m
EV / Revenue FY'21F	7.7x	3.1x	8.8x
EV / Revenue FY'22F	3.5x	1.7x	5.7x
EV / EBITDA FY'21F	-29x	-25x	-23x
EV / EBITDA FY'22F	19.9x	37.1x	-53x
Theme:	Patient Access	Patient Access: CBD	Cultivation &Production
Research:	FN AGH 14 09 20	FN BDA 3 12 20	FN CAN 26 11 2020

Source: Medicinal Cannabis | AGH | BDA | CAN. Domestic and Global Outlook 2021, 3 December 2020, Alex Smith, PAC Partners

ANALYST COVERAGE

2020 KEY ACHIEVEMENTS -ALTHEA

Australianmarketgainingmomentum	Continued patient growth-Atotal of 11,841 Althea patients to dateAlthea Concierge™driving HCP growth-Over 810 prescribing Healthcare Professionals (HCPs)Portfolio expansion-Successful uptake of Althea CBD100 with further preparations under developmentProposed TGA reclassification may see CBD products become available over the counter-Under proposed TGAreclassification of low-dose CBD products (schedule 3)
Europeanmarketexpansion	-November 2020 revenue of $110,378 -up 48% MoMIncreasing revenuePrivately owned clinics-MyAccess Clinics has over 500 patients in treatmentEncouragingpatient trend-Early prescription trends following similar pattern to AustraliaGermany expansion-Althea products approved for sale in Germany, initial shipment expected Dec 2020
Building aglobal brandthroughlicensingopportunities	Brand recognition-Althea is quickly becoming one of the medicinal cannabis brands of choice for doctors and patientsgloballyUnique Selling Proposition-Althea's premium product quality, combined with registered medical device AltheaConcierge™, enable the Company and its distribution partners to maintain healthy sales margins whilst increasing marketshare-The Company recently signed a wholesale supply agreement with South African cannabis company,South AfricaAfriCann, to import a range of Althea branded finished products for sale and distribution in South Africa-The Company is considering further distribution opportunitiesFurther licence agreements	6

FY20 KEY ACHIEVEMENTS AUSTRALIA -PATIENT AND HCP GROWTH

Total Doctors

800

Total Patients

12,000

2021 KEY TARGETS -AUSTRALIA

One of Australia's Leading Providers

Solidify Althea's position as one of Australia's leading providers of medicinal cannabis

30,000 Patients Target

Targeting 30,000 total patients in Australia by the end of 2021

Althea Concierge™

20%

of customer sales to be facilitated online via Althea Concierge™ by the end of 2021

New Products

2021

Several prescription and nonprescription cannabis products currently in development for 2021

2021 KEY TARGETS -EUROPE

UNITED KINGDOM GERMANY

Althea cannabis oils are Initial Product Delivery Expected In-field representatives Gap in Education Dec '20 HCPs Scale Up Operations Increase size of in-field 2021 10-15K Patients Target accumulated patients by

representative team and engage more doctors at wholly-owned medicinal cannabis clinic, MyAccess Clinics, in 2021

the end of 2021, noting it's not always possible to measure the quantity of patients in the UK due to MHRA regulations

expected to resonate with German doctors and Althea Concierge™ is cornerstone to Althea's marketing strategy

currently in training and will commence interactions with German HCPs imminently

9

HIGH GROWTH MARKETS

Australia – Market Opportunity

25.4m

2019 Population

18,549

Patients estimated to have accessed medicinal cannabis products as at 31/12/2019 1

15 –20%

Month-on-month patient growth 2

30k –50k

Estimated active patients by the end of 2020 2

66.87m 2019 Population

2.9m Potential medical cannabis patients 3

Up to 1%

Of the UK population could be medicinal cannabis patients by 2028 – Market Intelligence consultants 'Prohibition Partners' forecast 4

UK – Market Opportunity Germany – Market Opportunity

82.9m 2019 Population

60,000

Patients treated with medicinal cannabis in 2019 facilitated by insurance reimbursement 5

90%

Of the German population are covered by public health insurers 6

Peak Processing Solutions

Peak is one of the industry leading manufacturers of cannabis 2.0 products for the Canadian recreational cannabis market. Peak work collaboratively with customers to develop their brand aspirations and deliver consumer products to market with a focus on:

Quality Efficiency Innovation

2020 Key Achievements

• Althea's wholly-owned subsidiary Peak Processing Solutions commenced commercial operations in September 2020, having successfully obtained its Standard Processing Licence from Health Canada
• Peak will manufacture Cannabis 2.0 products on behalf of third parties, as well as supply medicinal products to Althea's pharmaceutical operations, greatly reducing Althea's cost of goods sold
• Agreements with multiple customers already in place, including the Collective Project (sister company of Collective Arts Brewing), Electric Brands, Earth Kisses Sky and US-based cannabis beverage brand, Tinley's™

2021 GROUP STRATEGY

AUSTRALIADrive FurtherGrowth	Solidify Althea's position -As one of Australia's leading providers of medicinal cannabisUpsize sales team -To reach more Australian doctors, educating them about Althea medicinal cannabisIncremental growth in patient numbers –Increase patient base in 2021Increase online sales -Via Althea Concierge™Develop new product offerings -For the prescription cannabis and potential non-prescription cannabis market
UNITED KINGDOMScale Operations	Scale up operations in 2021 -Including increasing in-field representative team and engaging more doctors atAlthea's dedicated medicinal cannabis clinic, MyAccess ClinicsAccelerate patient growth –Throughout 2021
GERMANYProduct Launch& Education	Imminent product launch –Altheaproducts expected to be delivered in December 2020, with in-fieldrepresentatives currently undertaking product training and to commence interactions with HCPs imminentlyFocus on HCP education –Althea medicinal cannabis extract products are expected to resonate with the widerGerman medical community, with Althea Concierge™the cornerstone to Althea's market access
CANADAPeak ProcessingSolutions	Across a number of adult-use cannabis categoriesOnboard further customers -Achieve revenue & EBITDA milestones –Following the granting of Peak's Health Canada licence in September 2020Shipping finished products to Althea expected in December 2020

OFFER DETAILS

Placement & Share Purchase Plan (SPP)

1Althea reserves the right to increase or scale back the amount raised via the SPP

CAPITAL RAISE OVERVIEW

Offer Size &

Placement Placement will result in 13,636,364 new shares being issued, representing 5.2% of AGH's issued capital. The placement is not underwritten. SPP1 Althea will offer all shareholders with registered address in Australia or New Zealand an opportunity to participate in a non-underwritten SPP. Eligible shareholders will be able to apply for up to $30,000 worth of new shares. Ranking New shares issued under the Placement and SPP will rank equally with existing AGH shares on issue. Offer Price The institutional placement and share purchase plan is priced at $0.44 per share, representing: • 10.2% discount to the last traded price on 10/12/2020 of $0.4900 per share

• 20.2% discount to the 5-day VWAP to 10/12/2020 of $0.5513 per share

Structure Institutional placement raising up to A$6.0 million and an SPP to raise up to A$3.0 million.

• 17.5% discount to the 15-day VWAP to 10/12/2020 of $0.5330 per share

Lead Manager PAC Partners Securities Limited

EQUITY RAISING OVERVIEW

Cash		Key Terms
Cash On Hand –30 September 2020	A$6.9million	Offer price	A$0.44
Funds Raised (Placement)	A$6.0 million	Number of placement shares to be issued	13,636,364
Funds Raised (Share Purchase Plan)	A$3.0 million 2	Number of shares issued under SPP1	6,818,182
Cash On Hand Post Placement	A$16.0 million	Total shares on issue post-transaction1,2	260,380,404
		Market capitalisation at the Offer price1,2	A$114,567,377

USE OF FUNDS

Use of funds1		$m	%
Sales &Marketing	Market Access:
	Increase the number of in-field representatives educating doctors about Althea medicinal cannabis, resulting in more prescribers•and incremental growth
	MyAccess Clinics –UK:	A$2.0m	22.2%
	•Recruitment of further specialist prescribers
	12-month advertising campaign -Drive patients to the clinic, maximiseprescriber utilisationand generate growth in Althea•prescriptions
Inventory	Incremental growth requires additional stock on hand. Althea's aim is to consistently have 3-6 months' worth of forecasted salesininventory, in any territory, at any given time	A$2.0m	22.2%
	Further planned development including:
	Online sales to be made available in UK and Germany•
Althea	Enhanced App features for patients•
Concierge™	App to be made available for HCPs (prescribers)•	A$1.0m	11.1%
	Base version to be made available in French•
	Seek medical device registration in UK, Germany (medical app), South Africa and France –to complement existing Therapeutic•Goods Administration registration
Research &Development	Research and development of several non-prescription cannabis products used for the treatment of minor ailments, including: (i)•low-dose CBD products for sale under 'schedule 3' in Australia2 and (ii) a range of Cannabis Health Products (CHPs) for sale inCanada. Non-prescription cannabis products would be available in pharmacies and specific health claims allowed following theproduct registration process, which will require clinical evidence3Develop novel prescription cannabis preparations, which would be added to the existing Althea product range•Cost of production for if and when new products are launched at market•	A$3.7m	41.1%
Fees	Fees associated with undertaking the capital raise	A$0.3m	3.4%
Total1		A$9.0m	100%

1 Assumes full take-up of $3.0m Share Purchase Plan. Althea reserves the right to increase the amount raised via the SPP

2 Subject to Therapeutic Goods Administration's decision regarding the down scheduling of CBD. If CBD is not down scheduled, funds will be allocated to the remaining Research & Development items

3 In Australia, subject to Therapeutic Goods Administration's decision regarding the down scheduling of CBD. If CBD is not down scheduled, funds will be allocated to the remaining Research & Development items

Capital Raising Timetable1
Record Date for SPP	5.00pm (AEDT) Friday 11 December 2020
Trading Halt	Friday11December 2020
Bookbuild Conducted for Placement	Monday 14December 2020
Announcement of Placement and SPP	Tuesday 15December 2020
Settlement of Capital Raising	Friday18December 2020
Issue of New Shares	Monday 21December 2020
SPP Offer Opens	Monday 21 December 2020
Trading of New Shares	Tuesday 22 December 2020
SPP Offer Closes	5.00pm (AEDT) Friday 15 January 2021
Announcement of SPP results	Wednesday 20 January 2021
Issue Date	Wednesday 27 January 2021
Quotation of New Shares on ASX	Monday 1 February 2021

INDICATIVE CAPITAL STRUCTURE

	CurrentShareholdings	Shareholdingpost-CapitalRaising	Shareholdingpost-SPP1	Capital StructurePost Capital Raising & SPP1
Existing Shareholders	239,925,859	239,925,859	239,925,859
Participants in Placement		13,636,364	13,636,364	Existing Shareholders5.2%Participants in Placement2.6%92.1%
Share Purchase Plan (SPP)1			6,818,182	Share Purchase Plan
Total	239,925,859	253,562,223	260,380,404

KEY RISKS SPECIFIC TO ALTHEA

Overview of Risks

This section describes some of the potential risks associated with an investment in Althea. It does not list every risk that may be associated with Althea and the occurrence or consequences of some of the risks described in this section are partially or completely outside the control of Althea, its Directors and Management. The risks included in this section have been selected based on an assessment of a combination of the probability of the risk occurring and the consequences if that risk materialised. The assessment is based on the knowledge of the directors and management of Althea as at the date of this document. The risks may change or other risks may emerge after that date. The risks outlined in this section should be considered in conjunction with the other information disclosed in this document and in the company's periodic and continuous disclosure announcements disclosed via the ASX and available at www.asx.com.au (company code: AGH) or www.althea.life

Before investing or increasing your investment in Althea, you should consider whether this investment is suitable for you having regard to publicly available information and your personal circumstances and following consultation with your professional advisors. The risks identified in this section are general in nature and regard has not been had to the investment objectives, financial situation, tax position or particular needs of any investor.

Risks relating to the cannabis industry

• Risks in relation to the cannabis industry generally: There are no guarantees or assurances that Althea will achieve its business objectives, or that any products that Althea manufactures will be commercially exploitable

• Uncertainties associated with production inputs: The ability for Althea to operate is dependent on a number of key inputs and their related costs. These inputs include raw materials, electricity, water and skilled labour. As with any manufacturing operation, the availability of reputable suppliers of key inputs and any significant interruption or change in availability or costs of key inputs could materially impact Althea's operations and profitability

• In addition, the manufacture of cannabis products requires a deep understanding of cannabis specific techniques and technologies. The competitiveness and financial performance of Althea may be adversely affected if it fails to continue to invest in understanding and implementing manufacturing technologies and processes

• Change to laws and regulations: The operations of Althea are subject to a variety of laws, regulations and guidelines in Australia, Canada, the United Kingdom, Europe and South Africa. As the medicinal cannabis industry continues to evolve, it is likely that there will continue to be changes to existing legislation and/or the interpretation of the legal requirements which govern the operations and contractual obligations of Althea. This could impact adversely on the assets, operations and the financial performance of Althea, and the medicinal cannabis industry in general

Risk of adverse events, product liability or other safety issues

• There is a risk that the products sold by Althea may cause serious or unexpected side effects, including risk or injury to consumers. Should any of Althea's products be associated with safety risks such as misuse or abuse, inadvertent mislabelling, tampering by unauthorised third parties or product contamination or spoilage, a number of materially adverse outcomes could occur to Althea
• These adverse outcomes include the risk that regulatory authorities may revoke approvals that have been granted to Althea, impose more onerous facility standards or product labelling requirements or force Althea to conduct a product recall. Althea could also be subject to regulatory action or be sued and held liable for any harm caused to customers in those circumstances
• Althea maintains rigorous standards in respect of product safety and has insurance coverage to mitigate these risks in a manner customary with industry practice. However, Althea cannot guarantee that all such risks will be adequately managed through maintaining its rigourous standards or its insurance policies. These risks could result in the loss or delay in generating revenue, loss of market share, failure to achieve market acceptance, diversion of development resources, damage to Althea's reputation and/or increased insurance costs

KEY RISKS SPECIFIC TO ALTHEA (CONTINUED)

General risks relevant to investing in Althea

• Economic Conditions: Althea's business is exposed to changes in general global economic conditions. For example, adverse macroeconomic conditions, such as economic recessions, downturns or extended periods of uncertainty or volatility, may influence pricing of cannabis products, thereby affecting Althea's future financial performance, operating performance and share price

• Taxation risk: There is the potential for changes to tax laws in Australia, Canada, the United Kingdom, Europe and South Africa. Any change to the current rates of taxes imposed on Althea is likely to affect returns to Althea's shareholders. An interpretation of taxation laws by a relevant tax authority that is contrary to the view of those laws adopted by Althea may lead to an increase in the amount of tax to be paid by Althea or cause changes in the carrying value of tax assets in Althea's financial statements. In addition, any change in tax rules and tax arrangements could have an adverse effect on the level of dividend franking and shareholder returns

• Market Conditions: Stock market conditions may affect the value of Althea's quoted securities regardless of Althea's operating performance. Stock market conditions are affected by many factors such as:

  • general economic outlook;
  • introduction of tax reform or other new legislation;
  • interest rates and inflation rates;
  • change in investor sentiment toward particular market sectors;
  • the demand for, and supply of, capital; and
  • terrorism or other hostilities

• The market price of securities can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general and industrial stocks in particular. Neither Althea nor its directors warrant the future performance of Althea, or any return on an investment in Althea

• Shareholders may suffer dilution: In the future, Althea may elect to issue shares or engage in fundraisings, including to fund acquisitions that Althea may decide to make. While Althea will be subject to the constraints of the ASX Listing Rules regarding the percentage of its capital that it is able to issue within a 12-month period (other than where exceptions apply), shareholders may be diluted as a result of such future issues and fundraisings

• Currency movements may be unfavourable: Althea does not maintain a formal foreign currency hedging policy. Accordingly, adverse movements in the exchange rate between the Australian dollar and any other foreign currencies as a result of Althea's operations and any other future international expansion, may cause Althea to incur foreign currency losses. Such losses may impact and reduce Althea profitability and ability to pay dividends and fund its operations

• Force majeure events may occur: Events may occur within or outside Australia and Canada that could impact upon the Australian or global economy, Althea's operations and/or the price of Althea's shares. The events include, but are not limited to, acts of terrorism, outbreaks of international hostilities, fires, floods, earthquakes, labour strikes, civil wars, natural disasters, outbreaks of disease or other natural or man-made events or occurrences that can have an adverse effect on Althea's operations and its ability to conduct its business. Althea has only a limited ability to insure against some of these risks.

• COVID-19 and long-term impacts: The impact and ongoing implications of COVID-19 will continue to cause broader global economic impact with the threat of ongoing outbreaks. Given the high degree of uncertainty surrounding the extent and duration of COVID-19, it is not possible to assess the impact on Althea's business with certainty. However, preventative measures have affected, and can be expected to continue to adversely affect, consumer behaviour and business activity and precipitate sudden changes and volatility in regional and global economic conditions and financial markets.

• Contractual risks: Althea's ability to generate revenue from certain parts of its business is heavily reliant on customer contracts. There is also no guarantee or certainty that any agreement to which Althea is a party will be renewed or, if they are renewed, the terms that may apply to such renewal. There is a risk that actual or potential customers will be unable to obtain or retain all necessary licences and permits required to acquire and resell Althea's products. The ability of Althea to comply with its obligations under its future customer contracts may also be contingent on external factors, including but not limited to the uncertainties and changes associated with the medical cannabis legislative regime in Canada. If any of these agreements are terminated, Althea's revenue and profitability may be undermined and may have a material adverse impact on Althea's financial performance and prospects. While Althea may be able pursue a legal remedy in the event of any default or may be to negotiate alternate arrangements with third parties, these processes are likely to be time consuming, costly and disruptive to Althea and Peak's respective businesses

KEY RISKS SPECIFIC TO ALTHEA (CONTINUED)

General risks relevant to investing in Althea (continued)

• General investment risks: The price at which Althea's shares are quoted on the ASX may increase or decrease due to a number of factors. These factors may cause the shares to trade at prices below the price at which the shares are being offered under the Placement. There is no assurance that the price of the shares will increase following their issue and quotation on the ASX, even if Althea's earnings or sales increase. Some of the factors which may affect the price of the Shares include:
  • fluctuations in the domestic and international market for listed stocks;
  • general economic conditions, including interest rates, inflation rates, exchange rates, commodity and oil prices or changes to government fiscal, monetary or regulatory policies, legislation or regulation;
  • inclusion in or removal from market indices;
  • the nature of the markets in which Althea operates; and
  • general operational and business risks
• Other factors which may negatively affect investor sentiment and influence Althea's share price specifically or the stock market more generally, include acts of terrorism, an outbreak of international hostilities, fires, floods, earthquakes, labour strikes, civil wars, natural disasters, outbreaks of disease or other man-made or natural events

FOREIGN SELLING RESTRICTIONS

International Offer Restrictions

This Presentation does not constitute an offer of shares of the Company in any jurisdiction in which it would be unlawful. The shares may not be offered or sold in any country outside Australia except to the extent permitted below:

United States

Neither the shares nor the entitlements have been, or will be, registered under the U.S. Securities Act or the securities laws of any state of the United States and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act. The shares will be offered and sold outside the United States in offshore transactions in accordance with Regulation S and in the United States under an available exemption from, or in transactions not subject to, the registration requirements of the U.S. Securities Act. In addition, until 40 days after the commencement of the offering of any securities, an offer or sale of securities within the United States by a dealer, whether or not participating in this offering, may violate the registration requirements of the U.S. Securities Act if such offer or sale is made otherwise than in accordance with an available exemption from, or in transactions not subject to, the registration requirements of the U.S. Securities Act. Neither the U.S. Securities Exchange Commission, any state securities commission in the United States, nor any other United States or other regulatory authority has approved or disapproved of the Securities or passed upon the adequacy of this Presentation. Any representation to the contrary is a criminal offence in the United States

ALTHEA GROUP HOLDINGS LIMITED (ASX:AGH)

For further information, please contact:

Althea

Josh Fegan, CEO & Managing Director 1300 70 20 20 | contact@althea.life

Media Enquiries

Dan Francome, Media Relations +613 9650 5096 | dfrancome@althea.life

Investor Relations

Jane Morgan, Investor Relations Partner +61 405 555 618 | jm@janemorganmanagement.com.au

Althea Group Holdings Limited ACN 626 966 943 Registered office: Suite 2, Level 37, 360 Elizabeth Street, Melbourne, 3000, Victoria, Australia www.althea.life