Eve Health : Appendix 4C - December Quarter 2021

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31 January 2022

December 2021 Quarterly Update

Meluka Growth Increases

• Group1 unaudited revenues of $1.1m for the quarter, up 8% QoQ, Meluka Australia revenue up 30% QoQ
• Meluka Australia unaudited half year revenues up 34% on HY21 to $750k and excluding China/Taiwan up 142% on HY21
• Half year revenue growth in all existing markets of Australia, US and Canada
• Strong initial sales performance in Japan, with growth every quarter to date since launch
• Alliance entered into with health and wellness company Neptune Bio-Innovations to significantly expand Meluka Australia's national retail distribution channel
• Diabetes pre-meal drink to be launched as Omni-DTM under licence agreement between Omni Innovation (38% EVE) and Myopharm Limited
• Meluka Australia to be one of the first Australian businesses to launch on WhatsApp commerce

EVE Health Group (ASX:EVE, EVE or the Company), a vertically integrated health, nutrition and wellness company, has today released its Appendix 4C Report for the three-month period to 31 December 2021 and is pleased to provide a review of operational progress during the quarter.

The December quarter saw Group1 revenues of $1.1 million, up $0.1m on the prior quarter. Growth was led by Meluka Australia which was up 30% QoQ and has YTD unaudited revenue of $750,000 in FY22. The revenue has increased 34% compared to the prior half year. Australian revenue is up 359%, US revenue is up 21% and Canada revenue up 492% on the prior half year period. In addition, the launch into Japan started better than expected with revenue in the December quarter doubling that of the September quarter. The primary driver of this growth has been Meluka Australia's probiotic beverage line which recorded the strongest growth of 427% from the prior corresponding half year period.

The sale of bulk oils in the Australian market was again slower in the quarter. Sales of our 2021 organic tea tree harvest have been subdued due to lower demand from European and US markets as a result of lengthy shipping timeframes. Wholesale buyers are increasingly unwilling to accept extended delivery schedules created by global shipping constraints and are reverting to sourcing product from local markets or purchasing conventional oil instead of organic. Jenbrook's sales team are actively pursuing customers locally in Australia to sell the balance of the 2021 harvest.

The following is a summary of the breakup of group1 revenue by category, region and sales channel for the quarter and YTD.

1 Group revenue includes the revenue from all 100% owned subsidiaries as well as associates Naturally Australian Products (49% owned by EVE) and Omni Innovation (38% owned by EVE), the figures for associates are not consolidated into the Appendix 4C.

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Bulk	Contract
manufacturing, 18%
sales, 45%
	Branded product
	sales, 37%

Figure 1: Breakdown of sales across EVE companies by product type in December quarter

China

North	Asia (Excl
America,
56%	China), 4%
	Australia, 40%

Figure 2: Breakdown of sales across EVE companies by region in December quarter

Wholesale,

63%

Direct to

Consumer,

37%

Figure 3: Breakdown of sales across EVE companies by sales channel in December quarter

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Operational Progress

Meluka Australia

Continued Product Development

The Company recently announced an expansion of its product development in the probiotics space (See ASX release 19 October 2021), expediting the development of new products under a Collaboration Agreement with Probiotics Australia.

Meluka Australia's ambitious new product development program is progressing well. A new Collagen Probiotic Concentrate drink was released in December and four new probiotic products are expected to be launched before the end of the March 2022 quarter. The focus for the new products is expanding on the success of the established probiotic products. As at the date of publishing the Collagen Probiotic Concentrate release has been a great success and a further production run is already planned. We expect to introduce this product into the US in Q4 FY22.

Pioneering New eCommerce Channels

Meluka Australia is excited to be one of the first businesses in Australia to be launching its eCommerce store on WhatsApp commerce. Direct messaging channels are believed to be the future of eCommerce and Meluka Australia has taken the opportunity to leverage this exciting opportunity to launch its store via this evolving and rapidly growing eCommerce channel. The launch is expected to take place during February.

Alliance Agreement with Neptune Bio-Innovations

Meluka Australia has entered into an Alliance Agreement (the Agreement) with Australian health and wellness company, Neptune Bio-Innovations. Neptune Bio-Innovations has a range of consumer products in the health and wellness space and distribution agreements with various Australian food and pharmacy networks.

Under the Agreement, Meluka Australia and Neptune Bio-Innovations will establish an Australian sales force to seek and manage distribution opportunities for members of the alliance, raise awareness of the alliance members products, increase sales through distribution opportunities while providing a low-cost opportunity for each party to access a dedicated sales network.

Neptune Bio-Innovations' sales & marketing director, Mr Mark Nguyen, who was previously Head of Sales at Eco Farms, a leading distributor of organic and natural food products in Australia, will be managing this alliance. Neptune-Bio currently has distribution arrangements in place with several high-profile distributors across FMCG retailers, pharmacy and organic goods distribution channels, including Eco Farms, Symbion, API, Vero Foods and Born Organics. These networks will be available for Meluka's products as part of the Alliance.

Each Alliance member will be responsible for provision of their products to the alliance, Meluka's being a range of premium honeys, probiotic products, and essential oils. While Neptune Bio-Innovations'responsibilities will include presenting alliance members products to potential distributors, managing the relationship with distributors and appointing and managing the sales team. Each member of the alliance will pay costs of the alliance in accordance with their proportion of the alliance. Initially, there is proposed to be four members of the alliance.

Each member of the Alliance will receive the revenue generated by their own product sales. The Company cannot comment on the impact of the Agreement on the Company's revenue at this stage.

The Alliance has identified two other proposed members, which are anticipated to be members before the commencement date of the Alliance. Each member of the alliance will pay an equal split of the costs incurred by the Alliance.

The alliance arrangement will commence in February.

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North America Distribution expansion opportunities

Discussions with new distribution partners in both the US and Canada have continued during the quarter. Large distributer partners in the US and Canada are interested in Meluka's product range and it is expected that once comprehensive broker representation is established in both markets these distributers will take on the Meluka Australia product range. Meluka expects to achieve this soon after the new products arrive in its US warehouse.

New Product of the Year

The Australian Organic Annual Industry Awards celebrate excellence in the organic industry. The awards are coordinated by the Australian peak organic industry body, Australian Organic Limited (AOL) and are in their seventh year. The awards recognise the outstanding and innovative contributions members of the organic industry have made over the past year.

At their award ceremony - hosted virtually on 12 November - the Company's 'Meluka Apple Cider Vinegar infused Raw Honey' was named New Product of the Year for 2021. The award was judged by a panel of industry experts.

The product was only launched in the Australian market in April 2021, with the product conceived and developed internally to combine the health benefits of apple cider vinegar while addressing issues consumers face (a burning taste) by combining it with organic raw honey. The product is already the second highest performance honey product in the Meluka Australia range. The success of the product both commercially and critically, is a vindication of the Company's investment in its team and capabilities to develop unique health and wellness products.

Meluka Australia was also a finalist in the Exporter of the Year category.

Image 1: 2021 New Product of the Year Award

Asia

The Company is continuing to see strong growth in its newest market, Japan. Sales on Amazon Japan were a record for the quarter. Currently we have six core products available for the Japanese market and it is expected that once the new shipment of six new products, which are expected to clear customs during February 2022, then sales will continue to grow quickly as Meluka's brand awareness becomes established in this new market. The new products include Meluka's botanical range of honey which is expected to be very well received in the Japanese market with no other similar products currently available to the Japanese consumers.

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The timing of these new products is aligned with Japan's largest food expo, Foodex, which will be held in March. Meluka Australia has been chosen to display its products as part of the popular Australian pavilion and will be promoted by in country NSW trade officials alongside Meluka Australia CEO Ben Rohr.

Currently shipping timeframes are approximately 4-6 weeks excluding customs clearance.

Jenbrook

The Company owns and operates the Robyndale organic tea tree plantation in the Bungawalbin Valley in Northern New South Wales. Harvesting of the final areas of plantation were not completed during the quarter due to boggy ground conditions and heavy rainfall events being experienced. The 2021 harvest remains at

5.5 tonnes of organic tea tree oil. Areas remaining to be harvested will be incorporated into the 2022 harvest figures.

In the interim the company has been focussing on maintenance of machinery and equipment for the forthcoming 2022 harvest and has been trialling new methods of wild craft harvesting to improve production rates and lower the cost profile for this style of harvesting. So far, the harvest team achieved a 40% reduction in the total time to harvest a bin in the old growth forest. Trials are continuing in accessible areas of the forest.

Sales of the 2021 harvest have been very slow due to lower demand from European and US markets as a result of lengthy shipping timeframes. Wholesale buyers are increasingly unwilling accept extended delivery schedules resulting from global logistics/shipping issues. Many buyers are reverting to sourcing product from local markets or purchasing conventional oil instead of organic. Jenbrook's sales team are actively pursuing customers locally in Australia to sell the balance of the 2021 harvest.

Naturally Australian Products Inc (49% EVE)

Naturally Australian Products (NAP), the US distribution business held 49% by EVE, which sells bulk essential oils and extracts to North American businesses recorded revenue of $0.45 million in the quarter. Growth continues to be temporarily hampered by supply and logistics delays getting essential oils into the US.

NAP is owned 49% by EVE, accordingly it is accounted for as an investment in an associate, meaning its revenue is not consolidated into the Appendix 4C.

Omni Innovation (38% EVE)

The Company's licensee, Myopharm Limited ("Myopharm"), an unlisted Australian‐ biotechnology company, continued to progress to a full‐ scale consumer launch in Australia of then pre meal glycaemic control product for Type 2 diabetes and Pre Type 2 diabetes.

Since entering into the licencing agreement, Myopharm, supported by Omni Innovation, have been continuing to progress activities towards a consumer launch of Omni Innovation's product with activities including brand development, packaging development and work to establish consumer pathways.

Under brand name, Omni-DTM the product was recently launched to participants at the Australasian Diabetes Congress, this step is in the leadup to a full consumer launch early in 2022 through healthcare and allied health network in Australia.

Omni Innovation has also licensed the product to Myopharm for China, Europe and the UK and these launched are also expected to follow later in 2022.

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