Sigma and CWG Merger Risks and Management Overview

- Risks that are Common to Both Sigma and CWG NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key Risks Key Risk Loss of critical infrastructure Risks inherent in franchise arrangements, including protections under franchising laws and Australian and international pharmacy ownership laws Summary If a Merger Party were to lose critical infrastructure, this could cause significant business interruption. The loss of a critical site, such as a wholesale distribution centre, permanently or for a sustained period could be as a result of a number of unforeseen factors, including a climate-related event such as a flood, or bushfire, or a pandemic. There could also be an unforeseen outage due to a cyber- attack (refer to the risk factor titled "Cyber risk") for more further information). There is an associated risk that a Merger Party's business continuity plans are not effective or are not followed properly in the event of a disaster. The impact of such a loss could include the need for increased short-term or contract labour, inventory replacement costs, data loss, significant disruptions for customers (and the consequential reputational damage to the Merger Party), the need for capital expenditure or repair costs. It could also impact on the affected Merger Party's ability to deliver products in full and on time to its customers, which could result in lost sales, contractual or regulatory breaches, or negatively impact upon that Merger Party's competitive position. Any of these could have a material adverse effect on the affected Merger Party's financial operations or performance. A Merger Party's financial performance is dependent to varying degrees on the success of its franchisees. Pharmacies which operate under a Merger Party's licensed brand operate within competitive environments and there is a risk that franchisees do not operate their franchise effectively, or in accordance with their franchise agreement. It is not guaranteed that franchised pharmacies will be operated to a uniformly-high standard, nor that end-customers will experience a uniform in-store experience, and this could have adverse implications for their Merger Party franchisor, including reputational damage, regulatory investigation or sanction or reduced revenue from franchise fees or wholesale purchases. Although Merger Party franchisees are or may be incentivised to acquire certain products or volumes from their relevant Merger Party franchisor, there is no legal obligation on them to do so. There is a risk that franchisee pharmacies may reduce or cease their level of ordering of products or services provided by their respective Merger Party, prompted by a pharmacist's desire for change or by the performance, service or offerings of the Merger Party. This could have a material adverse effect on that Merger Party's financial performance. In addition, if a franchisor has a significant degree of influence or control over a franchisee entity's employment and payroll-related affairs and the franchisee breaches a civil remedy provision under the Fair Work Act 2009 (Cth) (Fair Work Act) (such as failing to pay wages correctly, contravening a modern award or enterprise agreement, misrepresenting independent contractor arrangements, etc), then the franchisor (in this case, being a Merger Party with respect to its franchisees) may be exposed to penalties for breaching the Fair Work Act and ordered to pay compensation (such as unpaid wages) to the franchisee's employees, unless the franchisor can prove they have taken reasonable steps to prevent the contravention by the franchisee. As franchisees, these pharmacies have certain statutory protections under the Franchising Code of Conduct (Franchising Code) which is a mandatory industry code under the Competition and Consumer Act 2010 (Cth). The Franchising Code prohibits certain terms being included in franchise agreements and imposes substantial disclosure regimes, as well as imposing a general obligation on franchisors and franchisees to act towards each other in good faith. The franchisor (in this case, being a Merger Party with respect to its franchisees) may be exposed to regulatory action and substantial penalties for breaching the Franchising Code. Additionally, pharmacy franchisees may seek to argue that elements of their agreements with their franchisor and / or supplier are illegal or void under Australia's pharmacy ownership laws, and therefore unenforceable (which may involve a claim by pharmacy franchisees that certain historical fees received under franchise or other arrangements should be repayable or that future fees should be reduced). If a Merger Party is in a dispute with a franchisee, the position adopted by the franchisee may include additional claims under pharmacy ownership laws (which may not be available to non-pharmacy franchisees), which may make the dispute more protracted or difficult to resolve in a manner satisfactory to the relevant Merger Party. 62 62

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