Sigma and CWG Merger Risks and Management Overview

69 69 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key Risks - Risks Relating to the Proposed Merger Key Risk Historical liabilities of CWG Analysis of merger opportunity Risks associated with existing contractual arrangements Funding Summary If the Proposed Merger completes, Sigma may become directly or indirectly exposed to liabilities that CWG may have incurred or is liable for in the past as a result of prior acts or omissions, including liabilities which were not identified during the due diligence enquiries or which are greater than expected, or for which were accepted as a tolerable risk. Such liabilities may adversely affect the financial performance or position of Sigma after the Proposed Merger. CWG has its own corporate, tax, regulatory and risks frameworks. Following an initial period, MergeCo will make an election as to the most appropriate corporate, tax, regulatory and risk frameworks to adopt. However, there is a risk that CWG's existing frameworks were inadequate. For example, if CWG's tax and regulatory frameworks were inadequate, there is a risk that CWG has not properly identified and responded to changes in tax laws or other laws and regulations which apply to it. There is a risk that CWG could be exposed to unexpected liabilities resulting from past non-compliances by CWG with applicable laws or regulations, which may impact on the financial performance or position of Sigma. It may also have other impacts, such as attracting greater scrutiny from regulators or cause reputational damage. Sigma has undertaken financial, tax, legal, commercial and technical analysis of CWG in order to determine its attractiveness to Sigma and whether to proceed with the Proposed Merger. It is possible that despite such analysis and the best estimate assumptions made by Sigma, the conclusions drawn are inaccurate or are not realised. To the extent that the actual results achieved by the Proposed Merger are different to those indicated by Sigma's analysis, there is a risk that the performance of Sigma following the Proposed Merger may be different (including in a materially adverse way) from what is reflected in this presentation. There is also a risk that Sigma's assessment of matters such as the taxation consequences of the Proposed Merger is challenged by revenue authorities, which can involve future expenditure to consider and defend such challenges or to meet any additional costs or claims. A number of material customer and supplier contracts to which CWG is a party contain provisions which will give the counterparty a right to terminate the contract because of the change in control of CWG which will occur at Completion. Contracts may also be terminable for convenience on short notice or at will. Whilst the MIA includes obligations for the Merger Parties to seek the consent of the relevant counterparties to the change of control for certain contracts deemed material as agreed between Sigma and CWG, there is a risk that either CWG or Sigma has not identified all contracts which are material to their respective businesses and Sigma is not entitled to terminate the MIA for failure to obtain those consents. Investors should note that, generally, supply contracts with franchisee pharmacies do not include minimum purchase obligations, such that a customer may, at any time, decrease the volume of goods and services procured from or provided to the Merger Party, or cease to procure or provide any goods or services at all, regardless of any change of control provision. There is a risk that, as a result of the Proposed Merger, customers and suppliers of CWG may choose to decrease the volume of goods and services procured from or provided to CWG, or cease procuring from or providing any goods or services to CWG. Customers and suppliers may also choose not to renew their contracts with CWG after their term, as a result of the Proposed Merger. The breach, termination or non-renewal of material contracts or loss of business could have adverse consequences for MergeCo, including adverse effects on MergeCo's operational and financial performance. As described on page 29 of the presentation, it is intended that the cash component of the consideration for the Proposed Merger (Cash Consideration) will be funded through of the proceeds of a new debt facility (Debt Facility). To that end, Sigma has received a credit approved commitment letter from Australia and New Zealand Banking Group Limited (ABN 11 005 357 522) and National Australia Bank Limited (ABN 12 004 044 937) for a new $1.0 billion debt facility to fund the cash consideration required under the transaction and refinance existing CWG indebtedness. If the Debt Facility is terminated, this could result in Sigma not having access to sufficient capital to fund the Proposed Merger. The debt commitment letters received by Sigma contain conditions precedent to drawdown on customary terms including the lenders are satisfied of each of the due diligence reports prepared in connection with the Proposed Merger including vendor due diligence on Sigma, and successful completion of the Entitlement Offer (which would not be satisfied if the Underwriting Agreement were terminated). In this event, Sigma would need to seek alternative sources of funding, which may result in Sigma incurring additional costs (for example, by way of interest payments on debt) and/or restrictions being imposed on the manner in which Sigma conducts its business and deals with its assets (for example, by way of restrictive covenants binding upon Sigma). There is no guarantee that alternative funding could be sourced on terms satisfactory to Sigma or at all. Any of these outcomes could have a material adverse impact on Sigma's financial position, prospects and reputation.

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