Slide 1: Investor presentation: Equity raising – July 2020
Investor presentation Equity raising – July 2020 1
Slide 2: Disclaimer: important notice
Disclaimer: important notice IMPORTANT: You must read the following before continuing. This notice and disclaimer applies to this investor presentation (Presentation) and you are therefore advised to read this carefully before reading or making any other use of this Presentation or any information c
Slide 3: Disclaimer: important notice
Disclaimer: important notice Past performance Prospective investors should note that past performance, including the past share price performance of Cann and any historical information or pro-forma historical information in this Presentation cannot be relied upon as an indicator of (and provides no
Slide 4: Table of contents
Table of contents Executive summary 1. Strengthening the core business model 2. Positive industry fundamentals 3. Growth strategy gaining momentum 4. Equity raise & funding update Appendix 4
Slide 5: Executive summary
Executive summary • Cann is seeking to raise $14.3m by way of an institutional placement to fund working capital while Cann pursues near-term growth opportunities (“Placement”) Announcement of • $0.40 Offer Price, which represents a 51.2% discount to the closing price of Cann Group shares on 14 July
Slide 6: 1. Strengthening the core business model
1. Strengthening the core business model 6
Slide 7: A vertically integrated medicinal cannabis producer, supplying markets in Australia & overseas
A vertically integrated medicinal cannabis producer, supplying markets in Australia & overseas Production Manufacturing Distribution Existing facilities currently provide Arrangements with IDT Australia Ltd to manufacture Active Pharmaceutical National distribution agreement with 1,200kg p.a. in cap
Slide 8: 2. Positive industry fundamentals
2. Positive industry fundamentals 8
Slide 9: Australian industry momentum continues to be positive
Australian industry momentum continues to be positive Cann, with its focus on the cultivation & manufacture of bio-pharmaceutical grade products, is well positioned to address growing demand for GMP products in Australia • Australian demand is expected to require 7,300kg of dry flower production¹ •
Slide 10: Global market – strong demand for GMP medicinal cannabis products
Global market – strong demand for GMP medicinal cannabis products • Continued shortage of GMP compliant product in key target markets Export potential growing worldwide – German Pharmacopoeia Monograph for Cannabis Extracts came Medicinal cannabis market size forecast into effect 1 June 2020 increas
Slide 11: 3. Growth strategy gaining momentum
3. Growth strategy gaining momentum 11
Slide 12: Multiple pillars of growth
Multiple pillars of growth Supply/offtake agreements Product pipeline Mildura expansion Strategic M&A supporting revenue growth • Cann continues to execute on a B2B • Cann is developing a range of value- • Cann remains committed to Mildura • Cann Group continues to review strategy added finished pro
Slide 13: Cann has existing supply agreements in place covering most legalised markets
Expanding offtake opportunities Cann has existing supply agreements in place covering most legalised markets Additional offtake arrangements currently being pursued in markets including Australia, Germany, Poland, France & South America Source: Prohibition Partners 13
Slide 14: FY21 revenue forecasts are underpinned by existing contracts
Driving revenue growth FY21 revenue forecasts are underpinned by existing contracts Contracts under negotiation3: Potential estimated $19.4m-$26.0m revenue in first Executed contracts2: Estimated $8.0m-$9.7m FY21 revenue full year of contracts, with a portion of this revenue contribution expected to
Slide 15: Commercial products launched – manufactured under GMP conditions
Product pipeline Commercial products launched – manufactured under GMP conditions • Cann has commenced sales – via the Special Access Scheme (SAS) in Australia – of several product formulations • Current products / formulations include: – Finished oil products – Bulk extract (API) – Finished dose dr
Slide 16: Mildura remains a critical component of expansion plans
Future Mildura development Mildura remains a critical component of expansion plans • Cann continues to progress funding options to proceed with staged Mildura expansion – timing impacted by Covid-19 • Discussions continue regarding a proposed bank loan facility and other funding alternatives • Cann
Slide 17: 4. Equity raise & funding update
4. Equity raise & funding update 17
Slide 18: Key details of the equity raise
Key details of the equity raise • Cann is seeking to raise $14.3m by way of an institutional placement to help fund the business while it pursues near-term growth opportunities • $0.40 Offer Price, which represents a 51.2% discount to the closing price of Cann Group shares on 14 July 2020 and a 56.0
Slide 19: Investment highlights
Investment highlights FY20 FY21(f) Strong commercial momentum evidenced by new customer contracts and others under negotiation Sales A$0.5m Sales A$15m Increased certainty around growing and sustainable revenues 3000kgs DFE A stronger business case to support Mildura expansion plans 52kgs DFE
Slide 20: Sources and uses of funds
Sources and uses of funds Sources • $24.3m capital raising to fund working capital requirements Institutional placement $14.3m • Current cash burn rate of approximately $1.3m per month Share Purchase Plan1 $10m Total Sources $24.3m Uses2 Working capital $20.1m Product development $0.9m R&D $1.3m Mar
Slide 21: Pro forma impact of offer
Pro forma impact of offer Capital raise provides support for Cann revenue guidance for FY21 of A$15m Post-equity raise pro forma Offer price of $0.40 Pre-raise ordinary shares 142.9m 62.6% Pre-raise market capitalisation (at offer price) $57.2m New shares issued (Placement + SPP)1 60.8m 26.6% Maximu
Slide 22: Offer timetable
Offer timetable Indicative timetable Date Trading halt commences Wednesday 15 July Placement bookbuild Thursday 16 July SPP Record Date 7:00pm Thursday 16 July Trading halt lifted Friday 17 July SPP offer opens Wednesday 22 July Settlement of new Placement shares Thursday 23 July Allotment of new Pl
Slide 23: Appendix
CANN GROUP LIMITED Appendix GROUP LIMITED.
Slide 24: Key risks
Key risks Topic Summary Cann is proposing to build its third facility (being at an undisclosed location in the vicinity of Mildura) (Mildura Facility), by way of a staged construction and commissioning process, comprising three stages. Upon commissioning at the first stage (1A), Cann intends to oper
Slide 25: Key risks
Key risks Topic Summary Cann’s business, and specifically the business of its wholly owned subsidiary, Cannoperations Pty Ltd (Cannoperations) operates in a highly regulated industry, which brings a number of industry risks common amongst those who operate in this space. These are described below, a
Slide 26: Key risks
Key risks Topic Summary Cann’s ability to continue the production of cannabis and/or the manufacture of products derived from cannabis at the same pace as it is currently producing or at all, and its ability to continue to increase both its production capacity and actual production, may be adversely
Slide 27: Key risks
Key risks Topic Summary Cann’s business activities include the need to innovate and use techniques which can assist in both risk mitigation and cost reductions. Failure to invest in both innovation and new technology may significantly impact on Cann’s operations and capacity to generate revenue. Can
Slide 28: Foreign selling restrictions
Foreign selling restrictions New Zealand Hong Kong Singapore This Presentation has not been registered, filed with or approved by any This Presentation has not been, and will not be, registered as a prospectus This Presentation and any other materials relating to the New Shares have New Zealand regu
Slide 29: Cann Group Limited
Cann Group Limited Tel: +61 3 9095 7088 contact@canngrouplimited.com 29