Althea : Quarterly Activities/Appendix 4C Cash Flow Report

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ASX Announcement I 11 July 2022

Althea Group Holdings (ASX:AGH)

Quarterly Results and Highlights for the period ending 30 June 2022

AGH achieves record quarter with $6.5 million in receipts from customers,

$22 million for FY2022 - up 113% on previous year

Financial Highlights:

Group

• AGH achieved $22 million in receipts from customers for FY2022 - an increase of 113% from the previous year
• AGH also achieved another record quarter with $6.5 million in receipts from customers for the period ending 30 June 2022 - an increase of 130% from the previous corresponding period
• Net cash used in operating activities decreased by 50% during the Quarter, down to an all- time low of $1.1 million, a result of increased sales and strict cost controls
• The Company remains fully funded with $6.6 million of cash on hand and no debt

Division

• Recreational cannabis - AGH's wholly owned subsidiary, Peak Processing Solutions ('Peak'), achieved a record $3.6 million in receipts from customers for the Reporting Period
• Pharmaceutical cannabis - AGH's global cannabis-based medicines business, ('Althea'), achieved $2.9 million in receipts from customers for the Quarter

11 July 2022: Althea Group Holdings Limited (ASX:AGH) ('AGH', or 'the Company'), a global leader in the manufacturing, sales and distribution of cannabis-basedmedicines and recreational cannabis products, is pleased to present its Appendix 4C cash flow statement and operational update for the quarter ended 30 June 2022 ('Quarter', 'Reporting Period').

Financial update for the Quarter

AGH achieved $22 million in receipts from customers for FY2022 - an increase of 113% from the previous year. The Company also achieved another record quarter with $6.5 million in receipts from customers for the quarter ending 30 June 2022 - an increase of 130% from the previous corresponding period.

Net cash used in operating activities for the Reporting Period was an all time-low $1.1 million, down from $2.2 million in the prior quarter, a result of increased sales and strict cost controls.

Additionally, the Company is finalising its annual review of operating expenditure and has identified approximately $1 million in annualised savings (derived mainly from corporate overheads). These further cost saving measures will be implemented in the current quarter.

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Further highlights for the Quarter include:

• Peak achieved $10.8 million in receipts from customers for FY2022 - an increase of $9.4 million over the previous year
• Peak achieved $3.6 million in receipts from customers for the Reporting Period - an increase of $2.9 million from the previous corresponding period
• Althea achieved $11.2 million in receipts from customers for FY2022 - an increase of $2.5 million over the previous year
• Althea achieved $2.9 million in receipts from customers for the Reporting Period - an increase of 41% from the previous corresponding period

The chart below summarises cash inflows and outflows during the Quarter.

Chart 1: Bridging chart for quarter ended 30 June 2022 ('000)

Below is a summary of the notable movement in expenses in the Quarter:

Product Costs (Stock in advance) -

• Althea continues to invest in purchasing stock to support the future growth in sales, and continuous supply, of its cannabis-based medicines to patients around the globe

Closing Cash Balance -

• As at 30 June 2022, AGH remains fully funded with $6.6 million of cash on hand and no debt

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Operational update for the Quarter

Recreational cannabis - Peak Processing Solutions

Peak achieved a record $3.6 million in receipts from customers for the Reporting Period, culminating in $10.8 million for FY2022, which is an increase of $9.4 million over the previous year.

Of note, due to key customer delays in providing input materials for Peak to process, along with supply chain disruptions for certain core components, the launch of multiple new products produced by Peak, including the first cannabis beverage for signature customer Boston Beer Company, will now rollover into the next (quarterly) purchasing cycle for provincial distributors.

The above issues impacted sales and cash receipts for the Quarter, however, it is expected that this will be reconciled in future quarters as the majority of products in question have achieved listing status with provincial distributors and will be included from Q1 FY2023.

Peak has completed a review of its procurement practices and entire supply chain to identify mitigation opportunities to deal with current global supply chain interruptions.

Peak became EBITDA positive as of October 2021.

Pharmaceutical cannabis - Althea

Althea achieved a record $2.9 million in receipts from customers for the Reporting Period, culminating in $11.2 million for FY2022 - an increase of $2.5 million over the previous year.

The FY2022 result was achieved despite serious macro headwinds throughout the year, including but not limited to prolonged COVID-19 restrictions - which prevented the sales team from calling on doctors as they normally would, COVID-19 related staff impacts, along with the flooding witnessed in Queensland and Northern NSW.

The Company anticipates a significantly higher level of sales activity across all territories in FY2023 as market access returns to pre-COVID-19 levels.

Althea's Australian receipts from customers for FY2022 was a record $9.2 million - an increase of 14% from the previous year.

Pleasingly, Althea's UK receipts from customers increased by 216% in FY2022 up to $1.9 million. The Company's UK business is nearing positive EBITDA, having right-sized its cost base over the last 12 months in line with the country's highly regulated approach to medicinal cannabis.

Althea is expecting regulatory reform in the UK in FY2023, having recently contributed to a report on the state of the industry for the UK government, in association with The Centre for Medicinal Cannabis.

In addition to scaling its European operations in the UK, Germany, and recently receiving product approval in Ireland (ASX Announcement 20 May 2022), Althea has a range of innovative new products set for launch during the first quarter of FY2023. The Company believes new product development is cornerstone to its market share leadership and plans to reach more doctors and patients than ever before, with these new preparations.

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AGH CEO, Joshua Fegan said: "Both the quarterly and FY2022 results were the best yet for AGH. With too many headwinds to mention this past year, we are very pleased to now be approaching a cash flow positive position. Peak is proving to be one of the most promising recreational cannabis businesses in North America, quickly establishing itself as the leading supplier of cannabis beverages in Canada within a year of commencing operations. At the same time, Althea managed to grow in all territories despite sub-optimal trading conditions over the last 12 months, with our sales team's access to doctors limited due to COVID-19 restrictions, impacting sales. Althea continues to see very strong underlying demand for its cannabis-based medicines and aims this financial year to return to pre COVID-19 growth rates."

In item 6 of the Appendix 4C cash flow report for the Quarter, payments to Related Parties of $185,000 comprised of salary paid to Chief Executive Officer and their associates and fees paid to Non-Executive Directors.

-ENDS-

Authorised by: Robert Meissner, Company Secretary

For further information, please contact:

Althea Group Holdings Ltd	Media & Investor Enquiries
Joshua Fegan	Dan Francome
CEO & Managing Director	Media & Investor Relations
M: 1300 70 20 20	P: [phone]
E: [e-mail]	E: [e-mail]

Althea Group Holdings Limited (ASX:AGH)

Althea Group Holdings Ltd ('AGH') is a global leader in the manufacturing, sales and distribution of cannabis-based medicines and recreational cannabis products. AGH services these sectors via two distinct business units. Althea, the company's pharmaceutical business, offers a comprehensive range of cannabis-based medicines which are made available to patients via prescription. Peak Processing Solutions, AGH's recreational cannabis business, produces legal cannabis products purchased by adult consumers in retail stores.

AGH operates in highly regulated and legal cannabis markets across the world with burgeoning operations in Europe, North America, Australia and Africa.

To learn more about Althea Group Holdings, please visit: www.altheagroupholdings.com

For more information on Peak, please visit: www.peakprocessing.com

For more information on Althea, please visit: www.althea.life

Rule 4.7B

Appendix 4C

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Quarterly cash flow report for entities subject to Listing Rule 4.7B

Name of entity
Althea Group Holdings Limited
ABN	Quarter ended ("current quarter")
78 626 966 943	30 June 2022
Consolidated statement of cash flows	Current quarter	Year to date
	$A'000	(12 months)
		$A'000

1. Cash flows from operating activities

1.1	Receipts from customers	6,549	21,954
1.2	Payments for
	(a)	research and development		(106)
	(b)	product manufacturing and operating	(3,393)	(10,723)
		costs
	(c)	advertising and marketing	(172)	(1,156)
	(d)	leased assets	(128)	(506)
	(e)	staff costs	(3,574)	(14,270)
	(f)	administration and corporate costs	(1,046)	(4,975)

1.3 Dividends received (see note 3)

1.4	Interest received	1	2
1.5	Interest and other costs of finance paid	(10)	(44)
1.6	Income taxes paid
1.7	Government grants and tax incentives	643	798
1.8	Other (provide details if material)
1.9	Net cash from / (used in) operating	(1,130)	(9,026)
	activities

2. Cash flows from investing activities

2.1 Payments to acquire or for:

1. entities
2. businesses

(c)	property, plant and equipment	(181)	(984)
(d)	investments
(e)	intellectual property		(61)

1. other non-current assets

ASX Listing Rules Appendix 4C (17/07/20)	Page 1
+ See chapter 19 of the ASX Listing Rules for defined terms.