CALIX LIMITED — Investor Presentation 2021

Aug 23, 2021

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Important Disclaimer

This presentation has been prepared by Calix Limited (ABN 36 117 372 540) (“Company”).

SUMMARY INFORMATION

This presentation contains summary information about the Company and its subsidiaries (“Calix”) and their activities current as at 24[th] August, 2021. The information in this presentation is a general background and does not purport to be complete.

NOT FINANCIAL PRODUCT ADVICE

This presentation is for information purposes only and is not a prospectus, product disclosure statement or other offer document under Australian law or the law of any other jurisdiction. This presentation is not financial product or investment advice, a recommendation to acquire Calix securities or accounting, legal or tax advice. It has been prepared without taking into account the objectives, financial or tax situation or needs of individuals. Before making an investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial and tax situation and needs and seek legal and taxation advice appropriate to their jurisdiction. Calix is not licensed to provide financial product advice in respect of Calix securities. Cooling off rights do not apply to the acquisition of Calix securities.

FINANCIAL DATA

All dollar values are in Australian dollars ($ or A$) and financial data is presented as at or for the full financial year ended 30 June 2021, unless stated otherwise.

PAST PERFORMANCE

Past performance information given in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of the Company's views on its future financial performance or condition. Investors should note that past performance, including past share price performance, of Calix cannot be relied upon as an indicator of (and provides no guidance as to) future Calix performance including future share price performance.

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INVESTMENT RISK

An investment in Calix securities is subject to investment and other known and unknown risks, some of which are beyond the control of Calix, including possible delays in repayment and loss of income and principal invested. Calix does not guarantee any particular rate of return or the performance of Calix, nor does it guarantee the repayment of capital from Calix or any particular tax treatment. Persons should have regard to the risks outlined in this presentation and appendices.

NOT AN OFFER

This presentation is not and should not be considered an offer or an invitation to acquire Calix securities or any other financial products and does not and will not form any part of any contract for the acquisition of Calix securities.

This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States or to, or for the account or benefit of, any 'U.S. person‘ (as defined in Regulation S under the U.S. Securities Act (“U.S. Person”)). The new shares to be offered and sold in the placement (“Offer”) have not been, and none of them will be, registered under the U.S. Securities Act or the securities laws of any state or other jurisdiction of the United States. In addition, Calix has not been, and will not be, registered under the U.S. Investment Company Act of 1940, as amended (the "U.S. Investment Company Act") in reliance on the exception from the definition of “investment company” provided by Section 3(c)(7) thereof. The New Shares to be offered and sold in the Offer may not be offered and sold to, directly or indirectly, any person in the United States or any person that is, or is acting for the account or benefit of, a U.S. Person except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws and pursuant to an exception from the registration requirements of the U.S. Investment Company Act provided by Section 3(c)(7) thereof. This presentation may not be distributed or released in the United States or to any U.S Person. The distribution of this presentation in other jurisdictions outside Australia may also be restricted by law and any such restrictions should be observed. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. Offers in Australia of the shares are only being made to persons who are “sophisticated investors” or “professional investors” (within the meaning of section 708(8) and section 708(11) of the Australian Corporations Act (Act) respectively) or otherwise pursuant to one or more exemptions under Section 708 of the Act so that it is lawful to offer the shares in Australia without disclosure to investors under Part 6D.2 of the Act.

NO ADVICE

FUTURE PERFORMANCE

This presentation contains certain "forward-looking statements". The words "expect", “future”, "anticipate", "estimate", "intend", "believe", "guidance", "should", "could", "may", "will", "predict", "plan" and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Forward-looking statements, opinions and estimates provided in this presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forwardlooking statements, including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Such forward-looking statements are by their nature subject to significant uncertainties and contingencies and are based on a number of estimates and assumptions that are subject to change (and in many cases are outside the control of Calix and its directors) which may cause the actual results or performance of Calix to be materially different from any future results or performance expressed or implied by such forward-looking statements. The forward-looking statements should not be relied on as an indication of future value or for any other purpose.. No representation, warranty or assurance (express or implied) is given or made in relation to any forward-looking statement by any person (including the Company). In particular, no representation, warranty or assurance (express or implied) is given that the occurrence of the events expressed or implied in any forward-looking statements in this presentation will actually occur. Actual results, performance or achievement may vary materially from any projections and forward-looking statements and the assumptions on which those statements are based. The forward-looking statements in this presentation speak only as of the date of this presentation. Subject to any continuing obligations under applicable law, the Company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statements in this presentation to reflect any change in expectations in relation to any forwardlooking statements or any change in events, conditions or circumstances on which any such statement is based. Nothing in this presentation will under any circumstances create an implication that there has been no change in the affairs of Calix since the date of this presentation.

None of Calix’s respective advisers or any of their respective affiliates, related bodies corporate, directors, officers, partners, employees and agents, have authorised, permitted or caused the issue, submission, dispatch or provision of this presentation and none of them makes or purports to make any statement in this presentation and there is no statement in this presentation which is based on any statement by any of them. For the avoidance of doubt, the advisers and their respective affiliates, related bodies corporate, directors, officers, partners, employees and agents have not made or purported to make any statement in this presentation and there is no statement in this presentation which is based on any statement by any of them. To the maximum extent permitted by law, Calix and its advisers and their respective affiliates, related bodies corporate, directors, officers, partners, employees and agents exclude and disclaim all liability, for any expenses, losses, damages or costs incurred by you as a result of your participation in the Offer and the information in this presentation being inaccurate or incomplete in any way for any reason, whether by negligence or otherwise. To the maximum extent permitted by law, Calix and its advisers and their respective affiliates, related bodies corporate, directors, officers, partners, employees and agents make no representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of information in this presentation and Calix’s advisers and its affiliates, related bodies corporate, directors, officers, partners, employees and agents, take no responsibility for any part of this presentation or the Offer. Calix and Calix’s advisers and their affiliates, related bodies corporate, directors, officers, partners, employees and agents make no recommendations as to whether you or your related parties should participate in the Offer nor do they make any representations or warranties to you concerning the Offer, and you represent, warrant and agree that you have not relied on any statements made by any of them in relation to the Offer and you further expressly disclaim that you are in a fiduciary relationship with any of them. Statements made in this presentation are made only as the date of this presentation. The information in this presentation remains subject to change without notice. Calix reserves the right to withdraw the Offer or vary the timetable for the Offer without notice.

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Our core technology platform

A patented platform technology with 3 key features

Renewable

energy-ready

Chemical / Mineral Processing.

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CO 2 capture

When processing limestone, gas exhaust is high purity CO2

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Highly-active materials

Highly porous “honeycomb” structure = more chemical- and/or bio-activity

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Mineral “Honeycomb”

A New Type of Kiln...

The “Calix Flash Calciner”

25 patent families covering core technology and applications

A$100m has been invested to date in developing the technology.

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Our business opportunities and ESG tailwinds

Multiple “shots on goal” ESG opportunity using the one patented core platform technology

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		Water	CO2 Mitigation	Biotech		Advanced Batteries	Sustainable Processing
	Our Business	• Safe, environmentally friendly water treatment product • In-market since 2014 • Growing revenue engine for the business • Successful US acquisition 2019	• Direct CO2 separation for cement and lime – no theoretical energy penalty • Developing with €28m of EU funding • Partnering with some of the largest cement and lime companies	• Safe, environmentally friendly biotech product – multiple applications • Crop Protection – initial sales • Anti-Foul Marine Coatings – major trial underway	•	• Targeting safe, environmentally friendly, more recyclable, better performing batteries Highly prospective early results • Substantial global battery development network	• Targeting renewable-energy driven industrial processes • First license agreement executed- energy storage • Several opportunities being developed – chemical industries
	ESG Issue	Waste water discharge limits becoming tougher	Top economies, and cement companies, committing to net zero CO2 by 2050	Increasing concern wrt biocides and their impact on the environment	Increasing concern wrt expensive battery materials and their recyclability, cost, safety and provenance		Industrial processes coming under increasing pressure to identify how they will electrify
	ESG Examples	Germany taken to court by the EU for polluting European waterways with P and N	The price of CO2 – as measured by the EU Emissions Trading Scheme - has jumped ~10-fold in 4 years	The EU has banned one of the largest selling broad spectrum fungicides from Feb 2021 - Mancozeb		Tesla announces a return to simpler, cheaper, safer chemistries at Battery Day - September 2020	Recent Deloitte survey found industrial manufacturers targeting 45% overall electrification by 2035

… With significant thematic tailwinds, Calix’s business is very well positioned to benefit

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Summary of achievements – FY21

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	Water	CO2 Mitigation	Biotech	Advanced Batteries	Sustainable Processing
•	Strong growth of	• Low Emissions Lime and Cement project passes pre-FEED milestone	• Crop protection product continues successful results and initial sales in Europe		• Calix electric calciner ordered by Saltx for their novel energy storage system
•	36% in core product sales Improved gross margins on sales from 24% to 27%	• MOU’s executed with Adbri and Tarmac for CO2 mitigation projects or lime in Australia and the UK • Part of successful “HILT-CRC” bid for $39m in Australian government funding – heavy industry decarbonisation	• 3 Materials Transfer agreements executed for marine coatings and trials commenced • $1m secured under the Australian Governments Modern Manufacturing Modernisation Fund to advance biotech capability	• Highly prospective early results – capital raised to in- house capability	• MOU executed with Pilbara minerals for “midstream” lithium salt JV • MOU executed with RHIMagnesita for joint development of CO2 mitigation solution for refractory industry

March 2021: Successfully raised $19m through a Placement and subsequent Share Purchase Plan (SPP), providing additional funding for the Company to invest in its advanced battery development program and accelerate the development of its other lines of business.

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Summary of Results FY21 – Continued Revenue Growth

SALES REVENUES AND PROJECT AND GRANT REVENUES CONTINUE GROWTH TRAJECTORY

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Key Take-aways…

Revenue & Other Income

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35
30
25
36%
20
GROWTH to
19.2m
15
10
5
0
FY 19 FY 20 FY 21
Product Sales R&D Incentives Project Grants
A$m
revenue
total sales
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22%
GROWTH to
29.9m
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total revenue
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Strong growth in total sales & revenue

Project grant income continues with R&D projects funded for up to 3 years

Gross profit & other income up on growing margins

Operating profit remains positive + re-investment for growth continues

Sales Breakdown

• Aus / South East Asia revenue were down ~16% ($0.7m) largely due to COVID impacts ($0.5m) on our SEA business compared to FY20

• US revenues continued their growth – up ~12% since acquiring the business in December 2019

• Overall gross margin grew to 27% (up from 23% pcp)

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Summary of Results FY21 - Profit & Loss Highlights

ACCELERATING SALES, MAINTAINING +VE OPERATING PROFIT AND RE-INVESTING FOR FUTURE GROWTH

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	FY21 ($m’s)	FY20 ($m’s)	Comment
Sales revenue	19.2	14.1	Up 36%
Total revenue	29.9	24.5	Up 22%
Gross Profit & Other income	15.7	13.7	Up 15%
Sales & Marketing expenses	5.9	5.0
R&D	7.1	5.6
Admin	2.6	1.7
Operating Profit	0	1.5

Despite COVID, we continued to grow sales from our municipal & industrial customers – wastewater treatment an “essential service”.

The impact of our plant upgrades in the US are starting to flow through to growing gross margin – up from 23% to 27% compared to FY20.

Project grant income continues to flow through, with R&D projects funded for up to 3 years.

Growth in opex represents increased investment in R&D, engineering and commercial support, including new people, to strengthen capability across our lines of business

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Summary of Results FY21– Balance Sheet highlights

GROWING OUR ASSET BASE, VERY LOW DEBT, BUILDING BALANCE SHEET STRENGTH

	30 June 21 ($m’s)	30 June 20 ($m’s)	Comment
Total Assets	51.6	42.8
Total Liabilities	13.5	16.6
Net Assets/Total Equity	38.1	26.2
Excluding deferred revenue
Current assets	27.0	19.4
Current liabilities	5.2	8.3
Net surplus of current assets over current liabilities [ex deferred revenue]	21.8	11.1
Property, plant & equipment	14.5	14.6
Intangible assets, including goodwill	8.9	8.0

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Capital raise in March, strongly supported by new and existing investors, heavily oversubscribed, provides strong base as we accelerate investment in our Lines of Business.

Cash on hand of $15.1m and $8m in grants & rebates receivable over the next quarter. We have no debt – and undrawn facilities of $4m

Continue to take conservative approach to the carrying value of our R&D Plant assets - (LEILAC-1) written down to zero. However, Leilac-2 is unlikely to be impaired as aggressively. Intangibles increased as we have finalised the IER acquisition accounting and continued investment in patent portfolio. To date, all – R&D has been expensed as incurred not capitalised as intangible asset

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Summary of Results FY21 – Cash Flow Statement highlights

CONTINUED UNDERLYING PRUDENT MANAGEMENT OF CASH

	FY21 ($m’s)	FY20 ($m’s)	Comment
Operating Cashflows	(8.1)	10.2
Receipts from govt bodies	7.1	16.3
Payments to LEILAC partners	(4.3)	-
Investing Cashflows	(6.9)	(16.2)
PPE	(6.3)	(5.7)
Intangibles	(0.6)	(0.8)
Business acquired	-	(9.6)	IER acquisition
Financing Cashflows	19.1	12.6
New share issue	19.2	15.3
Movement in debt	0.2	(2.4)
Cash at end of period	15.1	11.1

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Operating cashflow during FY21 impacted by timing of grant funding profile (FY20 v FY21). Further $8m due in next 3 months to fund investments made in FY21.

Capex investment predominantly in core tech / Leilac ($5.1m) and in the expansion of US water manufacturing capability and grow margin ($1.2m).

March cap raise helps to position the business for planned investment in Advanced Battery and Biotech – development facilities recently supplemented with further grant funding via AusIndustry.

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Our next 12 months’ priorities…

REVENUES, MARGINS, PROJECT EXECUTION AND DEAL FLOW… AND ACCELERATION TARGET ITEMS FROM RECENT CAP RAISE

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	Water	CO2 Mitigation	Biotech	Advanced Batteries	Sustainable Processing
Revenue and Gross		Cement and Lime	Crop Protection		Refractories
Margin growth via…
		• Successful test	• 2nd license agreement	Successful full cell results	• Convert MOU to full
US:	1 new plant	campaign conclusion –			Project or License
•	1 major new US state	LEILAC-1Results into	• APVMA approval	Initial positive pouch cell	agreement
	entry	public domain soon…		results
			Marine Coatings		Spodumene
EU:		• Successful BOD –	• Successful initial trials	Scale-up production trials	• Successful feasibility
•	First partner	LEILAC-2	with MTA partners	– cathode materials	study
	agreement				• Convert MOU to full
•	Convert paid	• Convert at least two	Next new biotech	First battery module –	Project or License MOU
	trials to customers	MOU’s to full project /	application…	commercial format
•	1 new plant	license agreements -			Develop next new
		“full-scale” application			sustainable processing
Asia:					application
•	Re-establish Chinese
	AQUA-Cal+ sales

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Coming Up Next…

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• Investor webinar – Lines of Business achievements and outlook – Thursday September 2 - Registration is available at https://bit.ly/387QrbG

• Agenda:

10:00: Introductory comments + Re-Cap FY21 Financial Results

10:20: Water Business

10:40: CO 2 Business

11:00: Sustainable Processing

11:20: Biotech

11:40: Advanced Batteries

11:55: Conclusions / summary

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Board of Directors

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Peter Turnbull, AM Non-Executive Chair

Helen Fisher Jack Non-Executive Hamilton Director Non-Executive Director

CEO and Managing Director of Bio • 30 years multidisciplinary experience 30 years multidisciplinary experience Capital Impact Fund (BCIF), a Nonin local and overseas energy Executive director and Chair of the industries, including as a Director of Audit and Risk Management NWS Ventures (Woodside NorthCommittee of Paradigm West Shelf project). Biopharmaceuticals Ltd (ASX:PAR) and • Currently the Chairman of AnteoTech Chair of the Victorian branch of Ltd (ASX:ADO). Previous NonAusBiotech. Executive Director positions include Renu Energy (ASX:RNE) and DUET Previously a partner of Deloitte, and Group (ASX:DUE).

Experienced Chair and Non-Executive Director with significant board and senior executive experience in the Australian and global resource, energy and technology commercialisation sectors.

• 30 years multidisciplinary experience 30 years multidisciplinary experience in local and overseas energy industries, including as a Director of NWS Ventures (Woodside NorthWest Shelf project).

Non-Executive Director of Karoon Energy Ltd. (ASX: KAR) Chair of medtech Auxita Pty Ltd, and President of the Chartered Governance Institute (London).

Previously a partner of Deloitte, and led Deloitte’s life sciences practice in Australia for 5 years, specialising in the financial services sector, with significant M&A transactions and strategic tax advice to publicly listed and large multinational companies.

Chair of Calix Remuneration and Nomination Committee, and Member of Audit and Risk Management Committee.

• Chair of Calix Technology Committee, and member of Audit and Risk, and Rem and Nom Committees.

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Lance Phil Dr Mark O’Neill Hodgson Sceats Non-Executive Managing Executive Director Director & Chief Director And Executive Officer Chief Scientist

• London-based director of DFB Australia, with 36 years of experience in international securities and investments in the UK, Australia, USA and Far East.

• 14 years of multidisciplinary

• Co-founder of Calix, and a member of Calix’s Technology Committee.

• experience with Shell, including as the General Manager and Alternate Director of its subsidiary Fuelink Pty Ltd, a $700m revenue, 300-employee distribution and sales subsidiary.

• Qualified physical chemist with over 52 years’ experience, numerous academic roles, and numerous fellowships and recognitions.

• Chair of MediaZest Plc and EP&F Capital Plc.

• 7 years running a private consultancy providing strategy and M&A services across energy, food, infrastructure and water sectors.

• CEO of the Australian Photonics CRC for 14 years.

• Author of more than 145 academic papers in physical chemistry and inventor of 42 patented inventions.

• Joined Calix in 2013 as CEO, became a Director in 2014 and is a member of Calix’s Technology Committee.

Chair of Calix Audit and Risk Management Committee.

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Listed on the ASX in July, 2018

ASX:CXL

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Share Price Performance Since Listing

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S&P
ASX200
1st Escrow Release
3rd Escrow Release Final IPO Escrow Release
~6.6m Shares
~8.4m Shares ~20.6m Shares
2nd Escrow Release 2.4m warrants
~54.0m Shares
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Further Equity Detail As at 23 August 2021	Further Equity Detail As at 23 August 2021
Free Float	160.0m shares
Warrants to be exercised by July 2022 ($0.66 Strike Price)	0.1m warrants
Employee Incentive Scheme Rights	7.2m rights

As at 23 August 2021	As at 23 August 2021
Shares on issue	~160.0m
Share price for IPO Capital Raise	$0.53 per share
Share price on IPO	$0.62 per share
Current Share price	$3.40 per share
Market capitalisation	~$544m

Major shareholders As at 23 August 2021	Major shareholders As at 23 August 2021
Board & Management	14.5%
Nicholas Merriman and associates	6.8%
Australian Super Pty Ltd	6.6%
Regal Funds Management	5.4%
Paul Crowther	5.3%

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Managing Director & CEO phodgson@calix.global +61 2 8199 7400

CFO & Company Secretary dcharles@calix.global +61 2 8199 7400

Investor Relations +61 401 809 653

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