CLOSE THE LOOP LTD. - Annual Report 2022

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Close the Loop Ltd ABN: 91 095 718 317

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APPENDIX 4E

1.1 Company details

Name of entity: Close the Loop Limited ABN: 91 095 718 317 Reporting period: For the year ended 30 June 2022 Previous period: For the year ended 30 June 2021

1.2 Results for announcement to the market

					$’000
Revenues from ordinary activities	Up	/~~Down~~	162%	to	70,132
Profit/(Loss) from ordinary activities after tax attributable to the members of Close the Loop Limited	Up	/~~Down~~	8%	to	4,606
Net Profit/(Loss) for the year attributable to the members of Close the Loop Limited	Up	/~~Down~~	8%	to	4,606

Dividends

Close the Loop Limited has not paid any dividends in the year ending 30 June 2022 nor does it propose to pay any dividends.

Close the Loop Limited does not have a dividend reinvestment plan in place.

Comments

On the 30 November 2021, Close the Loop Limited (ASX: CLG) completed the acquisition of 100% of the share capital of OF Packaging Pty Ltd. The transaction is accounted for as a reverse acquisition of Close the Loop Limited and its controlled entities by OF Packaging Pty Ltd.

Please refer to the Review of Operations for an explanation of the results.

This Appendix 4E should be read in conjunction with the Annual Report of Close the Loop Limited for the year ended 30 June 2022. Refer to ASX announcement on the 26 August 2022. This report should also be read in conjunction with any public announcements made by Close the Loop Limited in accordance with the continuous disclosure requirements arising under the Corporations Act 2001 and ASX listing rules.

The information provided in this report contains all the information required by ASX Listing Rule 4.3A.

1.3 Net tangible assets

1.3 Net tangible assets
	30 June 2022	30 June 2021
Net tangible assets per ordinary security	7.31 cents	0.96 cents

The net tangible asset per security for the period ended 30 June 2021 is based on the audited financial results of Close the Loop Limited for that financial year.

1.4 Control gained over entities

Name of entities	Date controlgained
OF Packaging Pty Ltd	30 November 2021
OF Flexo Pty Ltd	30 November 2021
OF Resource Recovery Holdings Pty Ltd	30 November 2021
OF Resource Recovery Pty Ltd	30 November 2021
Foster International Packaging (Pty) Ltd	30 November 2021
Oceanic Agencies Pty Ltd	1 December 2021
Crasti and Company Pty Ltd	31 March 2022
Close the Loop Polymers Pty Ltd	7 March 2022

Given that the acquisition of OF Packaging Pty Ltd by Close the Loop Limited is deemed to be a reverse acquisition in accordance with Australian Accounting Standards the profit contribution from OF Packaging and its

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wholly owned subsidiary OF Flexo Pty Ltd of $4,302,394 (2021: $4,251,648) for the period is material to the understanding of the report.

The contribution from all other entities that control was gained over in the reporting period are deemed to be material are included in the Annual Report of Close the Loop Limited for the year ending 30 June 2022.

1.5 Loss of Control over entities

There was no loss of control over any entities during the reporting period.

1.6 Details of associated and joint venture entities

Close the Loop Limited does not have any interest in joint venture or associated entities.

1.7 Details of returns to shareholders

Close the Loop Limited did not make any distributions to shareholders nor were there any share buy backs during the year ended 30 June 2022.

1.8 Audit

The financial statements were subject to an audit by the auditors and the unmodified audit report is attached as part of the Annual Report.

All foreign entities in the Close the Loop Limited group have used International Financial Reporting Standards as the accounting standards by which they have reported and been included in the Annual Report for the period ending 30 June 2022.

1.9 Attachments

The Annual Report of Close the Loop Limited for the year ended 30 June 2022 is attached.

1.10 Signed

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Signed: ____ Gregory Toll Director

Date: 26 August 2022

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Annual Report 30 June 2022

Close the Loop Ltd ABN: 91 095 718 317

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Corporate governance statement ................................................................................................................... 6 Directors report ................................................................................................................................................ 7 Auditor's independence declaration ............................................................................................................ 28 Consolidated statement of profit or loss and other comprehensive income .......................................... 29 Consolidated statement of financial position ............................................................................................. 31 Consolidated statement of changes in equity ............................................................................................ 33 Consolidated statement of cash flows......................................................................................................... 34 Notes to the consolidated financial statements ......................................................................................... 35 Directors' declaration .................................................................................................................................... 81 Independent auditor's report to the members of Close the Loop Limited ............................................... 82 ASX additional information ........................................................................................................................... 83

General Information

The financial statements cover Close the Loop Limited as a consolidated entity consisting of Close the Loop Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Close the Loop Limited’s functional and presentation currency.

Close the Loop Limited is a listed public company limited by shares, incorporated, and domiciled in Australia. Its registered office and principal place of business are:

Principal registered office Principal place of business 208 Hume Highway 208 Hume Highway Somerton VIC 3062 Somerton VIC 3062 Australia Australia

A description of the nature of the consolidated entity's operations and its principal activities are included in the directors' report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of directors, on 26 August 2022.

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CORPORATE GOVERNANCE STATEMENT

Corporate Governance Framework

The Board is committed to ensuring the sustained, long-term growth, performance and success of the Company, as well as representing and serving the best interests of all Company stakeholders, including security holders, customers and employees.

The Australian Stock Exchange Principles for listed entities are intended to promote investor confidence and assist companies in meeting stakeholder expectations. A copy of Close the Loop’s corporate governance statement that is current as at 30 June 2022, that meets the requirements of the Australian Stock Exchange Listing Rules, can be found on its website at www.ctlgroup.com.au/corporate-governance/.

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DIRECTORS’ REPORT

The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of Close the Loop Limited (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2022.

Directors

The following persons were directors of Close the Loop Limited during the whole of the financial half-year and up to the date of this report, unless otherwise stated:

Name, and independence status	Appointment/ Resignation Date	Qualifications, experience, special responsibilities, and other directorships
Gregory Toll Independent Non- Executive Director	appointed 23 November 2017	Greg was appointed a director of Close the Loop in November 2017 and became the chairman of Close the Loop in November 2019. Before joining Close the Loop, Greg was CEO and Executive Chairman of Clean TeQ Holdings Limited (ASX: CLQ) (now known as Sunrise Energy Metals Limited (ASX: SRL)), where he was appointed as CEO in 2007 then to the chair role, which he held until November 2013. Greg holds a Bachelor of Science (Veterinary) degree with first class honours and is a graduate of the Australian Institute of Company Directors. Greg is a member of the Board’s Audit and Risk Committee and the chair of the Board’s Nomination and Remuneration Committee.
Marc Lichtenstein Executive Director, Chief Financial Officer , and Company Secretary	appointed 4 October 2021	Marc joined Close the Loop in 2017 as CFO and is a Director of Close the Loop. Marc has been the Company Secretary of Close the Loop since 8 August 2017. For more than 25 years, Marc has led and worked in a number of senior roles in a range of listed and private companies across a wide range of industries. He has extensive experience in leading businesses through significant periods of change including IPOs, significant capital raises, exponential periods of growth and major acquisitions. Marc is a Fellow of Chartered Accountants Australia & New Zealand (FCA), qualified as a Chartered Secretary (FCIS) and Graduate of the Australian Institute of Company Directors. Marc also holds a Bachelor of Business, with distinction, degree from RMIT University. Marc is a member of the Board’s Nomination and Remuneration Committee.
Darren Brits Executive Director and Chief Operating Officer	appointed 30 November 2021	Darren has 22 years’ experience and has spent the last several of these years in high level operational executive roles and on the board of directors of commercial and consumer-facing companies. Darren has a core focus on commercial operations and integration. Darren has established, grown and led a number of business start-ups and is a co-founder of the OF Packaging Group.

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Grant Carman Non-Executive Director	appointed 30 November 2021	Grant has more than 30 years’ experience in corporate finance. Previous roles have included CFO for ORIX Australia, GM Finance & Shared Services NAB, CEO of National Australia Corporate Advisory, Director of Acquisitions at Ferrier Hodgson CA, and Group Financial Controller at Faulding. Grant is currently Non-Executive Chairman of RPM Automotive Group Limited (ASX:RPM). He holds a B.Ec (Comm) and an MBA from The University of Adelaide and he is a Fellow of Chartered Accountants Australia & New Zealand (FCA). Grant is the chair of the Board’s Audit and Risk Committee and a member of the Board’s Nomination and Remuneration Committee.
Joseph Foster Executive Director Chief Executive Officer	appointed 30 November 2021	Joe has more than 40 years’ experience in the flexible packaging industry, with experience in engineering, production, technical, sales and marketing. Joe has a global view of the packaging world from running his own businesses spanning across countries in multiple continents. Joe is a fellow of the Australian Institute of Packaging and a co-founder of the OF Packaging Group. Joe is a member of the Board’s Nomination and Remuneration Committee.
Lawrence Jaffe Executive Director Chief Commercial Officer	appointed 30 November 2021	Lawrence was CEO and Managing Director of RPM Australasia until 2015 and stepped down when the company sold off its largest divisions. He remained on as Non-Executive Chairman until the company listed on ASX and is now Strategic Director for that group. In 2016, Lawrence brought together the founders of the OF Packaging Group, becoming CFO and executive chairman. Lawrence holds a Bachelor of Commerce and Graduate Diploma of Accounting from Rhodes University. Lawrence is a member of the Board’s Audit and Risk Committee. Lawrence is currently a director of RPM Automotive Group Limited (ASX: RPM).
Silvio Salom Non-Executive Director	resigned 30 November 2021	Silvio was appointed a Director of Close the Loop in December 2007. Silvio sits on numerous boards and advisor groups in various positions, including Sky and Space, Adacel, SunJive Studios and Ceventus. He has a Bachelor of Engineering from Monash University, a Master of Engineering Science from the University of Melbourne and a Master of Fine Art from the Academy of Art University, San Francisco. Silvio is also a Fellow of the Australian Institute of Company Directors.
Christopher Trafford Non-Executive Director	resigned 30 November 2021	Chris is an experienced company director, having had roles on numerous boards in the corporate, government and non-profit sectors as well as public company directorships. Chris was previously the Chairman of Close the Loop from 2003 until 2010, and re-joined the board in December 2019. Chris holds a Bachelor of Commerce from The University of Melbourne, has been a Fellow of The Australian Institute of Company Directors, and a psychologist. In addition, Chris has had extensive involvement in the establishment and management of a number of businesses in corporate and allied health, environmental services and consulting sectors.

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Directors' Meetings

Directors' Meetings
	Board Meetings		Audit Committee Meetings		Nomination and Remuneration Committee Meetings
	Attended	Held	Attended	Held	Attended	Held
Greg Toll	12	12	2	2	1	1
Marc Lichtenstein	10	10			1	1
Darren Brits	6	6
Grant Carman	6	6	2	2	1	1
Joseph Foster	6	6			1	1
Lawrence Jaffe	6	6	2	2
Silvio Salom	6	6
Christopher Trafford	6	6

Principle Activities

The principal activity of the consolidated group during the financial year was the collection and recycling of imaging consumables, paper and cartons and any other activity incidental thereto as well as the production and sale of TonerPlas.

As a result of the merger with the OF Pack Group on 30 November 2021 and ASX listing the consolidated entity also provides premium and innovative flexible and carton packaging, flexographic print packaging, seafood packaging and bulk storage solutions.

There were no other significant changes in the nature of the activities of the Group during the year.

Operating and financial review

Overview of the Group

With locations across Australia, Europe, South Africa and the United States, Close the Loop create innovative products and packaging that includes recyclable and made-from recycled content, as well as collect, sort, reclaim and reuse resources that would otherwise go to landfill. From recovering print consumables, eyewear, cosmetics, and phone cases, through-to the reusing of toner and post-consumer soft plastics for an asphalt additive, the Group is focused on the future, sustainability and the circular economy.

Well positioned within the circular economy, Close the Loop consists of the merging of two secondary business groups - Close the Loop and O F Pack. The combining of these two entities allows for end-to-end solutions across packaging and consumables to a variety of markets, with advanced innovation in product development, as well as end of life take-back and recovery systems for complex waste streams to greatly reduce waste to landfill.

Shareholder Returns

	2022	2021
Profit attributable to the owners of the company	$4,606,000	$4,252,000
Basic EPS	2.39 cents	2,125,824 cents
Dividends paid	$1,023,000	$392,516
Dividends per share	$5,115	$1,963
Change in share price	103%	-
Return on capital employed	3.1%	53.3%

Net profit amounts and earnings per share have been calculated in accordance with Australian Accounting Standards. Dividends were paid by OF Packaging Pty Ltd prior to the acquisition of OF Packaging Pty Ltd by Close the Loop Limited. Comparatives for 2021 relate to OF Packaging and its wholly owned subsidiary OF Flexo Pty Ltd. The 2021 basic earnings per share is impacted by the small number of OF Packaging Pty Ltd shares on issue at 30 June 2021.

Returns to shareholders increased through both dividends and capital growth. Dividends for 2022 and 2021 were fully franked and it is expected that dividends in future years will continue to be fully franked.

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The return on capital employed has been impacted by the profit attributed to owners of the company as this includes the performance of the combined group for a seven month period rather than the full 12 month period and includes the initial public offer costs. The return on capital employed for the full year is 14%.

Investments for future performance

Close the Loop Limited acquired leading seafood bulk commercial packaging provider, Oceanic Agencies Pty Ltd (Oceanic) on 1 December 2021. Oceanic Agencies is a Queensland-based business and a major Australian supplier providing both packaging and materials handling for the aquaculture, wild caught and post-harvest sectors of the seafood industry. Oceanic generated revenue of $6.0 million for the full financial year ended 30 June 2022.

The Oceanic acquisition marks Close the Loop’s expansion in the growing commercial and bulk seafood packaging industry. It delivers on the Company’s strategy to grow within the niche packaging and recycling space. It complements Close the Loop’s range of flexible packaging that caters for some retail seafood brands.

Close the Loop Limited strengthened its position in the bulk packaging market via the acquisition of leading Australian bulk packaging business, Crasti & Company Pty Ltd (Crasti & Co.). This transaction was settled on 31 March 2022. Crasti & Co. generated revenue of $2.5 million for the 3 month period ended 30 June 2022.

Crasti & Co. is one of Australia’s largest Flexible Intermediate Bulk Container (FIBC) and bulk packaging suppliers. Crasti & Co. is a market leader in ensuring that all its FIBCs meet stringent Australian safety standards and has led the industry in developing these strict standards. Since the acquisition of Crasti & Co. CtL has created take back programs that allow both Crasti & Co. and Oceanic packaging to be recycled through its proprietary solutions.

Close the Loop has used the cash and assets in a form readily convertible to cash that it had at the time of listing on the ASX on 2 December 2021 in a way that is consistent with its business objectives as highlighted in its prospectus dated 22 October 2021 and ASX announcements released to the market since its listing date.

Review of financial condition

Details of the financial condition of the company and its capital structure and treasury policy are included in the financial statements for the year ending 30 June 2022.

Review of principal business (Close the Loop Limited)

On 30 November 2021, Close the Loop Limited (‘CtL’) completed the acquisition of 100% of the share capital in OF Packaging Pty Ltd and its controlled subsidiary (‘OF Pack’). In accordance with accounting standards, this acquisition has been accounted for as a reverse acquisition business combination.

In applying the requirements of AASB 3 Business Combinations to the Group the reporting structure is as follows:

Close the Loop Limited is the legal parent entity to the Group; and
OF Packaging Pty Ltd, which is neither the legal parent nor legal acquirer, is deemed to be the accounting acquirer.

On 2 December 2021, Close the Loop Limited successfully completed its initial public offer and listed on the Australian Stock Exchange (“ASX”).

The profit for the consolidated group after providing for income tax and non-controlling interest amounted to $4,598,000 (2021 profit of $4,252,000).

The profit before interest, tax, depreciation, and amortisation (“EBITDA”) attributable to the members of the parent entity for the year ended 30 June 2022 is $9,500,000 (30 June 2021: $6,336,000).

The financial results for the reporting period are based on the full year reporting period for OF Packaging and its wholly owned subsidiary, OF Flexo and seven months of trading for the balance of the Close the Loop Group. The capital raising costs incurred during the reporting period are included in the OF Packaging annual trading result as it was responsible for the payment of Australian Stock Exchange listing process.

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Close the Loop performance was underpinned by strong growth in both the packaging and resource recovery businesses. We are seeing strong demands for recyclable ready packaging and recycled content which are products that are readily available through the various divisions. With foreign exchange movement and raw material increases putting margins under pressure, these increased costs are being passed on when possible.

Review of Operating Entities

The OF Packaging businesses experienced strong sales during the period, improving throughputs and refining manufacturing equipment lines and operations. The OF Flexo division has traded ahead of budget throughout the period with high demand for locally produced packaging containing high percentages of recycled content and more recyclable ready packaging. South Africa achieved strong sales growth which drove improved performance. The resource recovery division is showing positive growth following strong demands from international markets for recycled cardboard with stable prices.

For the Close the Loop division, the US business has gained momentum as trading conditions rebounded strongly with collection volumes exceeding pre-COVID levels. Europe continues to track ahead of budget with strong growth from its existing customer base and the expansion of new service offerings. Australian operations were impacted by labour market challenges and some plant constraints both of which are expected to be rectified in the first half of financial year 2023.

The OF Packaging divisions all experienced strong trade through the provision of the full range of product development, R&D, manufacturing and recycling services via five divisions: specialised flexible packaging through OF Pack, and its separate South African operations; digital printing and pouch manufacturing through The Pouch Shop (TPS); flexographic printing and bag converting through OF Flexo which is experiencing increased demand for local production of flexible packaging for horticulture, pet food and confectionery markets; bag closure through Inno Bag.

The acquisition of Oceanic Agencies and Crasti & Co. have strengthened the Packaging division’s capability as it added to the Company’s presence in the bulk and commercial seafood packaging sector and increased cross selling opportunities across the Packaging divisions. The packaging division has begun to realise these cross selling opportunities with its existing customer base. OF Resource Recovery, which provides recycling, reuse, and waste services, also experienced strong sales growth due to efficiencies generated by new production equipment and optimising of factory staffing and processes.

The Close the Loop division increased its processing volumes during the period, introducing several new collection programs in cosmetics, eyeglasses, phone case covers and power tools, complementing its traditional imaging consumables business.

Business across the division’s three main markets is returning to normal with collection volumes approaching preCOVID levels. The European operation is expanding its service offering that will see it become more ingrained in the supply chain of its existing customers which will allow it to offer similar recycling services to that of the US business. Discussions are advanced with several OF Packaging customers to integrate Close the Loop’s recovery and reuse services into their supply chains.

A fire broke out on the TonerPlas® production line at the Close the Loop Operations, Somerton facility in Victoria, Australia on 9 June 2022. As a result, the TonerPlas® line is expected to be offline for six months. Plans were under way to upgrade the line in the 2023 financial year to meet increased demand, so these upgrades will now occur at the same time and we will take the opportunity to realign and improve of the production flow of the Somerton facility to allow for future growth. The Company expects the maximum impact would be $1.5 million including insurance excess and additional warehouse costs. The revenue impact of this incident is expected to be approximately $600,000 in the 2023 financial year. At 30 June 2022 an impairment of $1,343,938 was recognised for fixed assets deemed to be destroyed in the fire. The company incurred environmental clean-up cost associated with the fire at the Somerton facility of $1,145,678 during the year ended 30 June 2022. The company is insured and expects to recover both the environmental clean up costs and the impairment of the assets lost in the fire less the insurance policy premium excess.

During the year ended 30 June 2022 the Group incurred one off costs of $2,432,809 as a result of its successful initial public offer and listing on the Australian Stock Exchange (“ASX”) on 2 December 2021. The ASX listing costs have impacted the net profit for the 2022 financial year.

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Significant Changes in the State of Affairs

On 30 November 2021 Close the Loop Limited acquired 100% of the shares in OF Packaging Pty Ltd and its wholly owned subsidiary OF Flexo Pty Ltd and OF Resource Recovery Holdings Pty Ltd and its wholly owned subsidiary OF Resource Recovery Pty Ltd. On 30 November 2021 84.75% of the shares in Foster International Packaging (Pty) Ltd were acquired by Close the Loop Limited. On 1 December 2021 Close the Loop Limited acquired 100% of the shares in Oceanic Agencies Pty Ltd. On 2 December 2021 Close the Loop Limited commenced trading on the Australian Stock Exchange with the code CLG. On 31 March 2022 Close the Loop completed the acquisition of Crasti & Co Pty Ltd via an asset sale agreement.

There were no other significant changes in the state of affairs of the consolidated group during the financial year.

Dividends

There were no dividends paid, recommended or declared during the current or previous financial year by Close the Loop Limited.

Events Subsequent to reporting date

On 26 July 2022 the company announced that it has acquired thermal paper and paper products group, Alliance Paper Pty Ltd (Alliance) for a total purchase price of $1 and will require an investment in working capital of approximately $4.5 million. Alliance is a leading Australian supplier of thermal paper and associated paper products and services. It is the largest and longest-serving supplier and converter of paper roll products in the Australian market. The acquisition is being funded through cash and bank debt and is expected to settle on 30 August 2022.

Since 30 June 2022, the company has commenced discussions with a number of potential acquisition targets for share and or asset purchases for business that are complimentary to the current service offerings of the Group. At the time of this report no binding agreements have been entered into with any of these potential acquisition targets.

With effect from 25 July 2022, the company has restructured some of its Australian banking facilities to ensure that wherever possible it banks with one major Australian financial institution. Accordingly, on this date all outstanding loan facilities with Commonwealth Bank of Australia (“CBA”) were replaced by similar facilities with corresponding terms to the CBA facilities by the Group’s Australian banker, National Australia Bank.

Other than the matters discussed above, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years.

Likely developments

The Group will continue to pursue its policy of increasing the profitability and market share of its major business sectors during the next financial year. This will require further investment in areas such as recycling capability and sale of goods and services, which have performed well over recent years and offer sound opportunities for future development.

Further information about likely developments in the operations of the Group and the expected results of those operations in future financial years has not been included in this report because disclosure of the information would be likely to result in unreasonable prejudice to the Group.

Environmental regulation

The Group’s operations are subject to significant environmental regulation under both Commonwealth and State legislation in relation to its recycling and packaging activities.

The operations of the consolidated group are subject to certain environmental regulations under the Commonwealth and State legislation in Australia, the European Union legislation and the State of Kentucky, in the United States of America.

Compliance with the requirements of environmental regulations and with specific requirements of site environmental licences was substantially achieved across all operations with no instances of non-compliance in

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relation to licence requirements noted. Based on the results of enquiries made, the board is not aware of any significant breaches during the period covered by this report.

Directors' interests

The relevant interest of each director in the shares, debentures, interests in registered schemes and rights or options over such instruments issued by the companies within the Group and other related bodies corporate, as notified by the directors to the ASX in accordance with S205G(1) of the Corporations Act 2001 , at the date of this report are as follows:

:
	Ordinary Fully Paid	Options
Darren Brits	3,299,941	-
Grant Carman	25,000	-
Gregory Toll	2,200,000	-
Joseph Foster	64,324,025	-
Lawrence Jaffe	65,928,058	3,000,000
MarcLichtenstein	1,500,081	1,000,000

Share options

Unissued shares under options

All options were granted in the current and previous financial years. No options have been granted since the end of the financial year.

At the date of this report unissued shares of the Group under option are:

Grant Date	Expiry Date	Exercise Price	Number of shares
2 December 2022	2 December 2024	0.30	11,000,000

All unissued shares are ordinary shares of the Company.

All options expire on the earlier of their expiry date or the exercise of the options. 11,000,000 options were issued as part of the initial public offering of shares in the Company during the reporting period.

No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the company or of any other body corporate.

All employee related options were issued to certain employees pursuant to an Employee Share Option Plan passed at the AGM held in October 2006 as part of their contractual arrangement with the entity. All of these options were exercised or expired during the year end 30 June 2022.

No options were issued to Directors and executives as remuneration during the year. During the course of the financial year, 305,000 options expired without being exercised. No other options expired without being exercised during the year.

No other options over issued shares or interests in a controlled entity were granted during or since the end of the financial year and there were no options in controlled entities outstanding at the date of this report.

Shares issued on exercise of options

During or since the end of the financial year, the Group issued ordinary shares of the Company as a result of the exercise of options as follows (there are no amounts unpaid on the shares issued):

s (there are no amounts unpaid on	the shares issued):
Number of shares	Amount paid on each share
70,000	20 cents

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There were no other ordinary shares of Close the Loop Limited issued on the exercise of options during the year ended 30 June 2022 and up to the date of this report.

Indemnification and insurance of officers and auditors

The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith.

During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

Non-audit services

As a result of Close the Loop Limited acquiring the OF Pack entities as part of IPO on 30 November 2021, the Group has changed its auditor from BDO Audit Pty Ltd to Nexia Australia Pty Ltd. Nexia Australia were the auditor of the OF Pack entities and prepared the investigating accountants report as part of the IPO process. The Group’s auditor appointment will be ratified at its AGM scheduled for November 2022. Nexia Australia and the lead audit partner, Ben Bester, will be the auditor of the Group for the first time for the year ended 30 June 2022. In accordance with the Corporations Act 2001 and Nexia Australia partner rotation requirements, the next rotation of the lead partner of Close the Loop Limited is planned to occur after the completion of the 30 June 2027 financial year audit.

During the year Nexia Australia, the Group’s auditor, has performed certain other services in addition to the audit and review of the financial statements.

The board has considered the non-audit services provided during the year by the auditor and in accordance with written advice provided by resolution of the audit committee, is satisfied that the provision of those non-audit services during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:

all non-audit services were subject to the corporate governance procedures adopted by the Group and have been reviewed by the audit committee to ensure they do not impact the integrity and objectivity of the auditor; and
the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants , as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for the Group, acting as an advocate for the Group or jointly sharing risks and rewards.

Details of the amounts paid to the auditor of the Group, Nexia Australia, and its network firms for audit and nonaudit services provided during the year are set out below.

Services other than audit and review of financial statements:
Regulatory assurance services
Investigating Accounts Report
Other assurance services
Due diligence services
Other services
Review undertaken by BDO and its network firms
Opening balance review undertaken by BDO and its network firms
Opening balance review undertaken by overseas Nexia network firms
BDO Tax review
Audit of financial statements by overseas auditors
Audit and review of financial statements - Nexia
Total paid

2022
$
150,000
20,000
183,782
23,000
11,022
8,500
92,154
90,000
578,458

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Proceedings on behalf of the Company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.

Lead auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors' report.

This report is made in accordance with a resolution of directors, pursuant to section 306(3)(a) of the Corporations Act 2001.

Rounding of Amounts

The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

Remuneration report – audited

The Directors present the Remuneration Report (the Report) for the Company for the year ended 30 June 2022. This Report forms part of the Directors’ Report and has been audited in accordance with Section 300A of the Corporations Act 2001. The information provided in this report has been audited as required by section 308(3C) of the Corporations Act 2001.

This Remuneration Report (Report) sets out Close the Loop’s Executive remuneration framework, as well as the remuneration arrangements for the Key Management Personnel (KMP) of Close the Loop for the year ended 30 June 2022. References to Executives in this Report are to Executive KMP who report to the CEO.

Key Developments in FY22

On 30 November 2021 Close the Loop Limited acquired 100% of the shares in OF Packaging Pty Ltd and its wholly owned subsidiary OF Flexo Pty Ltd and OF Resource Recovery Holdings Pty Ltd and its wholly owned subsidiary OF Resource Recovery Pty Ltd. On 30 November 2021 84.75% of the shares in Foster International Packaging (Pty) Ltd were acquired by Close the Loop Limited. Close the Loop Limited commenced trading on the ASX on the 2 December 2021. The comparative information for 30 June 2021 remuneration report represents remuneration for OF Packaging Pty Ltd and its wholly owned subsidiary OF Flexo Pty Ltd. For the period ended, 30 June 2022, this report represents the remuneration of OF Packaging Pty Ltd and its wholly owned subsidiary OF Flexo Pty Ltd for the period 1 July 2021 to 30 November 2021 and the consolidated remuneration for Close the Loop Group for the period post-acquisition from 1 December 2021 to 30 June 2022.

Refer to note 41 in the Financial Statements, for further information regarding the acquisition.

Review of remuneration structure - audited

Remuneration strategy and governance

The Board is responsible for ensuring that Close the Loop’s remuneration strategy and framework support the Group’s performance and that executives and Non-Executive Directors are rewarded fairly and responsibly with regard to legal and corporate governance requirements. The responsibilities of the Remuneration Committee is that it oversees remuneration matters and, where appropriate, makes recommendations on any changes to remuneration structure. The Committee is comprised of Greg Toll and Grant Carman, two independent NonExecutive Directors and two Executive Directors: Joe Foster (CEO) and Marc Lichtenstein (CFO).

Close the Loop’s Key Management Personnel (KMP) are assessed each year and comprise the Executive Directors of the Company and select senior executives who have the authority and responsibility for planning, directing and controlling the Company’s activities directly or indirectly. As a result of the most recent review, this involved rebalancing executive remuneration by changing the mix of long-term incentive plans (LTIP), base salary, and STI components for both the CEO and executives. These changes capture Close the Loop’s continued evolution from its unlisted private origins to a global circularly integrated sustainability company, where competitive remuneration is an important factor in attracting and retaining executive talent.

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Principles of compensation - audited

Compensation packages include a mix of fixed and variable compensation, and short and long-term performancebased incentives.

As a global end to end solutions providing company, Close the Loop is dependent on highly-skilled, specialist team members to execute our strategy. Our ability to attract, retain, reward, and motivate our people is fundamental to our long-term success. The remuneration strategy is aligned with the Company’s purpose, vision and shareholders’ interests.

The objective of determining remuneration levels is to:

Set competitive remuneration packages to attract, retain and motivate high quality Directors and executives who will generate value for shareholders and ensure they are consistent with the Company’s strategic goals and human resources objectives; and
Establish remuneration strategies that are fair and reasonable having regard to the performance of the Company and the relevant director or executive.

Our executive remuneration framework has been carefully and purposefully developed to enable this by offering:

Fixed remuneration competitive with the market;
Short-term incentives based on challenging individual and Company-wide targets; and
An equity plan that is aligned with Close the Loop’s strategy, ensuring a focus on execution and longterm value creation.

The Board reviews and makes recommendations on the Company’s remuneration policies, procedures and practices. It also defines the individual packages offered to Executive Directors and KMP’s for recommendation to the Board. During the current and previous financial years, matters of remuneration and nomination were determined at a board level by the Nomination and Remuneration Committee.

During the year to 30 June 2022, a comprehensive review of the Company’s remuneration strategy was carried out to ensure alignment with its strategy and appropriate levels of remuneration relative to its industry peers, and this was completed in conjunction with the acquisition.

As part of this review, advisors were engaged to review the remuneration structure of the Company, including incentive practises and third party software was used for market research for KMPs and employees. The Board did not receive a report that included provision of remuneration recommendations, as defined in the Corporations Act.

In accordance with Corporate Governance best practice (Recommendation 8.2), the structure of Non-Executive Director and executive remuneration is separate and distinct as follows:

Executive KMPs

The table below represents the target remuneration mix for group executives in the current year. The short-term incentive is provided at target levels, and the long-term incentive amount is provided based on the value granted in the current year.

ent year.
		At Risk
	Fixed remuneration	Short-term incentive	Long-term incentive
CEO	50%	25%	25%
CFO, COO	50%	25%	25%
Other executives	50%	25%	25%

Fixed Compensation

The fixed remuneration component which consists of the base salary and retirement benefits (superannuation), is reviewed annually based on individual skills, experience, accountabilities, performance, leadership and behaviours.

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Performance linked compensation

Short-term incentives (STI)

An at-risk component of remuneration is set as a percentage of base salary which is calculated based on achievement against a range of Company-wide performance measures (financial and non-financial) and individual objectives. The STI rewards the delivery of key strategic and financial objectives and is aligned to Close the Loop’s goals for growth and operational discipline.

Short-term incentives (STI) are an at risk component of remuneration that is structured to reward progress towards and alignment with Close the Loop’s strategic and financial objectives and create value for customers, employees and shareholders in the financial period. STI payments are set as a percentage of base salary and are based on level of responsibility.

STI is calculated based on achievement against a range of organisational performance measures (financial and non-financial). The STI performance metrics have been chosen as they focus the CEO, CFO, CCO and COO on growing global revenue and creating valued customer experiences while at the same time maintaining operational discipline. STI payments comprise 100% cash.

Element	Details
Purpose	Focus participants on delivery of business objectives over a one-year
	period
Target opportunity (% base salary)	CEO 50%, CFO 50%, CCO 50%, COO 50% (pro-rated from 1
	December 2021 - 30 June 2022 for FY22, as the STI plan was
	implemented with a start date of 1 December 2021)
Maximum opportunity (% base	100% satisfaction of the STI performance metrics results in the
salary)	following STI opportunity as a % of base salary:
	•CEO 50%, CFO 50%, CCO 50%, COO 50%
	•Outperformance is possible
Performance period	Performance is measured from 1 December 2021 to 30 June 2022.
	Next Financial year will be 1 July 2022 to 30 June 2023.
Conditions	The award of any 2022 STI will be subject to the following
	performance gateways, i.e. no 2022 STI award will be paid unless:
	the Group’s EBITDA for FY22 meets or exceeds the prospectus
	forecast proforma EBITDA of $12.355 million.
Financial objectives (60%)	The percentage of the Group Performance Component of the 2022
	STI Award that will be paid out will be determined by reference to
	Group revenue and EBITDA generated during the Performance
	Period. In order for any of the Group Performance Component to be
	paid out, a threshold level of performance must be achieved which is
	the achievement of the proforma prospectus revenue and EBITDA for
	FY22.
Non-financial objectives (40%)	Non-financial metrics are based on:
	•Customer growth; and
	•Individual key performance indicators (KPIs) – Goals aligned to
	Company strategic objectives.
Target setting	The targets set at the beginning of each financial year are reviewed
	and approved by the Board and are aligned to Close the Loop’s
	longer-term strategic objectives.
Evaluation of performance	Performance against financial and non-financial objectives is
	determined at the end of the financial period after review of executive

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Element

Details

performance by the CEO and CFO. All STI calculations are subsequently then presented to the Board for final approval. Pay vehicle 100% of STI awarded is paid in cash. Forfeiture and termination Unless the Board determines otherwise, if the executive ceases employment, all STI awards not yet paid are forfeited.

Malus and clawback

If the Board becomes aware of a material misstatement in the Company’s financial statements, or a KMP has committed an act of fraud, negligence or gross misconduct, engaged in an act which has brought a Group Company into disrepute, breached their duties or obligations to the Group, failed to comply with any restrictive covenant or that some other event has occurred which, as a result, means the 2022 STI Award should be reduced or extinguished, or should not vest, then the Board may clawback or adjust any such award at its discretion to ensure that key management personnel do not derive any unfair benefit.

Close the Loop’s performance and short-term incentive (STI) outcomes

Close the Loop achieved record revenue growth in FY22, to achieve our strongest year ever. In FY22, EBITDA, net profit and operating cash flow increased strongly compared to FY21. This reflects top-line growth together with close management of expenses and considered capital allocation. Also, there was no major security breach in FY22 so all initial conditions for short term incentives were met. Whilst record results have been achieved by the Group since listing STIs will only be considered for FY22 once the final audited results have been published.

Long-term incentives (LTI)

An at-risk component is set as a percentage of base salary and granted annually subject to approval at the Annual General Meeting to participating executives, which entitles the executive to Close the Loop shares on vesting of the option and payment of the exercise price. Options are subject to a three-year vesting period and vest based on satisfaction of the vesting conditions. Vesting is subject to continued employment, which provides an additional time-based retention incentive. The LTI rewards delivery against longer-term strategy and shareholder value creation. The creation and approval of the new LTI will be established at the Company’s first Annual General Meeting post acquisition which is scheduled for November 2022.

In November 2021, upon completion of the IPO process and the acquisition of the OF Pack Group by Close the Loop, the Company made a onetime grant at the time of the acquisition of 5,000,000 Long Term Incentive (LTI) options under the employee share option plan (ESOP) to assist in the motivation, reward and retention of key personnel. All share options refer to options over ordinary shares of Close the Loop Limited, which are exercisable on a one-for-one basis under the Employee Share Option Plan (ESOP). Vested LTI Options are exercisable from the end of the relevant Vesting Period until the Expiry Date. The LTI Options cannot be cash settled. The options vested immediately upon issue and must be exercisable within 2 years of the issue date.

Element	Details
Purpose	Rewards delivery against longer-term strategy and sustained shareholder value creation. Provides alignment between shareholder, customer, and executive outcomes and time-based retention through multi-year exercisable timeframe.
Grant Date	2 December 2021
Vesting Conditions	Options vested in full upon successful completion of the IPO process.
Performance period	$0.30 calculated as a 50% premium on the Offer Price set out in the Company’s Prospectus. The exercise price acts as an in-built performance hurdle, incentivising executives to create value that increases the Close the Loop share price above the exercise price over the vesting period.

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Element	Details
Expiry Date	Any vested but unexercised Options will lapse on the 2nd anniversary of the grant date.
Forfeiture and termination	If an employee’s employment is terminated or they resign prior to the Vesting date, all unvested options will lapse and they will have 30 days to exercise any vested options.

Future LTI plan not yet granted

Annual KMP LTI grants are subject to approval at the Annual General Meeting which is expected to occur in November 2022, including number of options based on option value and exercise price which will be determined based on the maximum of volume weighted average share price prior to the AGM. The options granted are subject to the satisfaction of vesting conditions relating to the Company’s total shareholder return (TSR) and continued employment with the Company.

TSR measures the growth in the price of the Company’s shares as a percentage factoring in dividends notionally being reinvested in shares. The TSR hurdle will measure the Company’s TSR compound annual growth rate (CAGR) for the period commencing on 1 July 2022 and ending on 30 June 2025. Options will fully vest with achievement of 20% or more CAGR over the measurement period with partial vesting for less than 20% CAGR subject to a minimum threshold.

The first grant under this scheme is under consideration for the FY22 AGM.

Consequences of performance on shareholder wealth

In considering the Group’s performance and benefits for shareholder wealth, the remuneration committee have regard to the following indices in respect of the current financial year and the previous financial years.

	2022		2021
Profit attributable to owners of the company	$4,606,000		$4,252,000
Dividends paid*	$1,023,000		$392,516
Operating income growth		8%	N/A
Change in share price	20.5	cents	N/A
Share price at 30 June	40.5	cents	20 cents**
Return on capital employed		3.1%	53.3%

Dividends were paid by OF Packaging Pty Ltd prior to the acquisition of OF Packaging by Close the Loop Limited.

** This is the share price that was set to raise funds as part of the initial public offer as part of the listing process.

Profit is one of the financial performance targets considered in setting the Short Term Incentive (STI). Profit amounts have been calculated in accordance with Australian Accounting Standards. Operating income is operating profit as reported in the statement of profit or loss.

Key management personnel

The Report details the remuneration arrangements for the Company’s Key Management Personnel (KMP):

Executive KMP
Non-Executive Directors

Close the Loop’s KMP comprise all Directors and those executives who have specific authority and responsibility for planning, directing and controlling the activities of the Group. In this report, the term “Executive KMP” refers to KMP excluding Non-Executive Directors.

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	Country of	Position	Period position was held during
	Residence		the year
Executive Directors
Joe Foster	Australia	Chief Executive Officer	Appointed as a Director and CEO
		(CEO)	on 30 November 2021 of Close the
			Loop Limited
Marc Lichtenstein	Australia	Chief Financial Officer	Full year (Joint CEO 1 July 2021 to
		(CFO)	30 November 2021, CFO
			1 December 2021 – 30 June 2022
			of Close the Loop Limited)
Lawrence Jaffe	Australia	Chief Commercial	Appointed as a Director and CCO
		Officer (CCO)	on 30 November 2021 of Close the
			Loop Limited
Darren Brits	Australia	Chief Operating Officer	Appointed as a Director and COO
		(COO)	on 30 November 2021 of Close the
			Loop Limited
Non-Executive Directors
Greg Toll	Australia	Chairman, Independent	Full Year of Close the Loop Limited
		Non-Executive Director
Grant Carman	Australia	Independent	Appointed as a Director on 30
		Non-Executive Director	November 2021
Silvio Salom	Australia	Independent	Resigned 30 November 2022
		Non-Executive Director
Chris Trafford	Australia	Independent	Resigned 30 November 2022
		Non-Executive Director
Executive KMP
Tom Ogonek	USA	President USA & EU	Full year (Joint CEO 1 July 2021 to
			30 November 2021, President USA
			& EU 1 December 2021 – 30 June
			2022 of Close the Loop Limited)

Service contracts

The following is a summary of the current major provisions of the agreement relating to remuneration of the Executive Directors and executive KMP.

Joe Foster – Chief Executive Officer

Employment Conditions Commencement date: 30 November 2021 Remuneration and other benefits: Base remuneration of $308,251 per annum plus superannuation Life insurance premiums paid by Close the Loop Incentives: Target STI of 50% of base salary, awarded as cash, subject to achievement of target. Term: Ongoing until notice is given by either party Review: Annually Notice period required on termination 6 months by either party

Marc Lichtenstein – Chief Financial Officer

Employment Conditions Commencement date: 30 November 2021 Remuneration and other benefits: Base remuneration of $350,000 per annum plus superannuation Incentives: Target STI of 50% of base salary, awarded as cash, subject to achievement of target. Term: Ongoing until notice is given by either party Review: Annually Notice period required on termination 6 months by either party

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Lawrence Jaffe – Chief Commercial Officer Employment Conditions Commencement date: 30 November 2021 Remuneration and other benefits: Base remuneration of $300,000 per annum plus superannuation Life insurance premiums paid by Close the Loop Incentives: Target STI of 50% of base salary, awarded as cash, subject to achievement of target. For any new entity or new business sourced or identified directly by Lawrence, which is successfully acquired by Close the Loop, Lawrence is entitled to:

A salary increase of 1.5% of the acquisition price (with his salary capped at $300,000 per annum plus superannuation); and

	For any new entity or new business sourced or identified directly by Lawrence, which is successfully acquired by Close the Loop, Lawrence is entitled to: •A salary increase of 1.5% of the acquisition price (with his salary capped at $300,000 per annum plus superannuation); and
	•A one-off bonus payment equivalent to 1.5% of the acquisition
	price,
	subject to the Board approving that acquisition.
Term:	Ongoing until notice is given by either party
Review:	Annually
Notice period required on termination	6 months by either party
Darren Brits – Chief Operating Officer
Employment Conditions
Commencement date:	30 November 2021
Remuneration and other benefits:	Base remuneration of $239,605 per annum plus superannuation
	Life insurance premiums paid by Close the Loop
Incentives:	Target STI of 50% of base salary, awarded as cash, subject to
	achievement of target.
Term:	Ongoing until notice is given by either party
Review:	Annually
Notice period required on termination	6 months by either party
Tom Ogonek – President USA & EU
Employment Conditions
Commencement date:	30 November 2021
Remuneration and other benefits:	Base remuneration of US$250,000 per annum plus 401K retirement
	plan with matching contributions of up to 3% of the base
	remuneration and a 50% match for contributions between 3% and
	5% of the base remuneration.
Incentives:	Target STI of 50% of base salary, awarded as cash, subject to
	achievement of target.
Term:	Ongoing until notice is given by either party
Review:	Annually
Notice period required on termination	6 months by either party
Services from remuneration consultants

During and since the year ended 30 June 2022 the Nomination and Remuneration Committee has not engaged any remuneration consultant to the board to review the amount and elements of the key management personnel remuneration and provide recommendations in relation thereto.

Non-executive directors

The Board seeks to set Non-Executive Directors’ remuneration at a level that provides the Company with the ability to attract and retain Directors of a high calibre whilst incurring a cost that is acceptable to shareholders.

Shareholders approve the maximum aggregate remuneration for Non-Executive Directors. The Board recommends the actual payments to Directors and the Board is responsible for ratifying any recommendations, if appropriate. Under the Constitution, the Board may decide the total amount paid by the Company to each Director as remuneration for their services as a Director. However, under the Constitution and the ASX Listing Rules, the

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total amount of fees paid to all Non-Executive Directors in any financial year must not exceed the aggregate amount of Non-Executive Directors, fees approved by Shareholders at the Company’s general meeting. This amount has been fixed by the Company at $300,000 per annum and is set based on advice from external advisors with reference to fees paid to other non-executive directors of comparable companies. The base fee for the Chairperson is $90,000 per annum. Base fees for other directors are $40,000 per annum.

The amount of aggregate remuneration and the manner in which it is apportioned amongst Directors is reviewed annually.

Directors’ base fees cover all main board activities and membership of committees. Directors will not receive additional fees for being a member of a Board Committee or any committee meetings they attended.

Non-executive directors do not receive performance-related compensation and are not provided with retirement benefits apart from statutory superannuation. All Non-Executive Directors’ fees are inclusive of statutory superannuation contributions.

Directors' and executive officers' remuneration – audited

The following table of Directors and KMP remuneration has been prepared in accordance with accounting standards and the Corporations Act 2001 requirements, for the period from 1 July 2021 to 30 June 2022. Directors’ and executives’ remuneration is accounted for as a reverse acquisition business combination.

Joe Foster became a director on 5 November 2016 and Darren Brits became a director on 1 February 2016 of O F Packaging Pty Ltd. Accordingly, they are the only two employees that were employees for the full year and in the prior year as the acquisition of O F Packaging Pty Ltd by Close the Loop Limited has been accounted for as a reverse acquisition business combination. Lawrence Jaffe was a consultant to O F Packaging prior to the acquisition on 30 November 2021 when he became an employee of the company. Greg Toll, Grant Carman, Marc Lichtenstein and Tom Ogonek become Directors and or KMP of the combined Group with effect from 30 November 2022.

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			Short term		Post- employment	Other long term	Share-based payments
		Salary and fees (C)	STI cash bonus (A)	Non- monetary benefits	Super- annuation benefits	(C)	Options (B)	Total	Proportion of remuneration performance related
Directors
Non-executive directors
Greg Toll (Chairperson)	2022	52,500	-	-	-		-	52,500	-
Grant Carman	2022	23,333	-	-	-		-	23,333	-
Sub-total non- executive directors' remuneration	2022	75,833	-	-			-	75,833	-
Executive directors
Joseph Foster CEO	2022	201,023	30,000	-	19,376	45,577	-	295,976	10.1%
	2021	80,400	15,000	-	11,343	3,711	-	110,454	13.6%
Darren Brits COO	2022	176,872	30,000	-	16,818	31,199	-	254,889	11.8%
	2021	80,000	-	-	7,600	2,154	-	89,754	-
Lawrence Jaffe CCO	2022	147,670	95,813	-	-	-	177,000	420,483	22.8%
Marc Lichtenstein CFO and Company Secretary	2022	204,167	30,000	-	20,417	17,500	59,000	331,084	9.1%
Total directors' remuneration	2022	729,732	185,813	-	56,611	94,276	236,000	1,302,432	14.3%
	2021	160,400	15,000	-	18,943	5,865	-	200,208	7.5%
Executives
Tom Ogonek President USA & EU	2022	200,928	30,000	-	-	15,402	59,000	305,330	10.3%
Total executives' remuneration	2022	200,928	30,000	-	-	15,402	59,000	305,330	10.3%
Total directors' and executive officers' remuneration	2022	1,006,493	215,813	-	56,611	109,678	295,000	1,683,595	12.8%
	2021	160,400	15,000	-	18,943	5,865	-	200,208	7.5%

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A The short-term incentive bonus is for performance during the respective financial year using the criteria set out above. The amount will be finally determined in late August 2022 after performance reviews are completed and approved by the remuneration committee.

B The fair value of the options is calculated at the date of grant using the Black Scholes option-pricing model and allocated to each reporting period evenly over the period from grant date to vesting date. The value disclosed is the portion of the fair value of the options recognised as an expense in each reporting period.

C In accordance with AASB 119 Employee Benefits, annual leave is classified as an other long term employee benefit.

Analysis of bonuses included in remuneration – audited

Details of the vesting profile of the short-term incentive cash bonuses awarded as remuneration to each director of the Company, and other key management personnel are detailed below.

	Short-term incentive bonus	Short-term incentive bonus	Short-term incentive bonus
	Included in remuneration $(A)	% vested in year	% forfeited in year (B)
KMP
Joe Foster	$30,000	15%	85%
Marc Lichtenstein	$30,000	15%	85%
Lawrence Jaffe	$95,813	65%	35%
Darren Brits	$30,000	17%	83%
TomOgonek	$30,000	15%	85%

A Amounts included in remuneration for the financial year represent the amount related to the financial year based on achievement of personal goals and satisfaction of specified performance criteria. The remuneration committee approved these amounts on 15 August 2022.

B The amounts forfeited are due to the performance or service criteria not being met in relation to the current financial year and the amount of the short-term bonus forfeited is a result of the company only being listed for 7 months.

Equity Instruments

All options refer to options over ordinary shares of Close the Loop Limited, which are exercisable on a one-forone basis under the executive share plan (ESP).

Rights and options over equity instruments granted as compensation - audited

Details of options over ordinary shares in the Company that were granted as compensation to each key management person during the reporting period and details of options that vested during the reporting period are as follows:

as follows:
Options	Number of options granted during 2021-22	Grant date	Fair value per option at grant date $	Exercise price per option $	Expiry date	Number of options vested during 2021-22
Lawrence Jaffe	3,000,000	2 December 2021	0.059	0.30	2 December 2023	3,000,000
Marc Lichtenstein	1,000,000	2 December 2021	0.059	0.30	2 December 2023	1,000,000
Tom Ogonek	1,000,000	2 December 2021	0.059	0.30	2 December 2023	1,000,000

All options expire on the earlier of their expiry date or termination of the individual’s employment. The options vested in full upon the listing of Close the Loop Limited on 2 December 2022. The options are exercisable up to two years from grant date.

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Exercise of options granted as compensation – audited

During the reporting period, the following shares were issued on the exercise of options previously granted as compensation to a Close the Loop Inc, USA, based employee:

	Number of shares	Amount paid $/share
Don Menke	70,000	20 cents

There were 300,000 employee options with a strike price of 20 cents per share that expired on 30 April 2022 that were not exercised by one employee and a former employee. Neither of these two people were considered KMP. There are no amounts unpaid on the shares issued as a result of the exercise of the options in the 2021-22 financial year.

Details of equity incentives affecting current and future remuneration – audited

Details of vesting profiles of the options held by each key management person of the Group are detailed below.

	Instrument		Grant date	% vested inyear	% forfeited in year (A)	Financial years in which grant vests
Lawrence Jaffe	Options	3,000,000	2 December 2021	100%	-	1 July 2021
Marc Lichtenstein	Options	1,000,000	2 December 2021	100%	-	1 July 2021
Tom Ogonek	Options	1,000,000	2 December 2021	100%	-	1 July 2021

A The percentage forfeited in the year represents the reduction from the maximum number of instruments available to vest due to performance criteria not being achieved.

Analysis of movements in equity instruments - audited

The value of options over ordinary shares in the Company granted and exercised by each key management person during the reporting period is detailed below.

person during the reporting period is detailed below.
	Granted in year $(A)	Value of rights or options exercised in year $(B)
Lawrence Jaffe	177,000	-
Marc Lichtenstein	59,000	-
Tom Ogonek	59,000	-

A The value of options granted in the year is the fair value of the options calculated at grant date. The total value of the options granted is included in the table above. This amount is allocated to remuneration over the vesting period (i.e. in years 1 July 2021 to 1 July 2023).

B The value of options exercised during the year is calculated as the market price of shares of the Company as at close of trading on the date the options were exercised after deducting the price paid to exercise the option.

Options and rights over equity instruments

The movement during the reporting period, by number of options over ordinary shares in the Company held, directly, indirectly, or beneficially, by each key management person, including their related parties, is as follows:

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	Held at 1 July 2021	Granted as compensation	Exercised	Lapsed	Forfeited	Held at 30 June 2022	Vested during the year	Vested and exercisable at 30 June 2022
Lawrence Jaffe	-	3,000,000	-	-	-	3,000,000	3,000,000	3,000,000
Marc Lichtenstein	-	1,000,000	-	-	-	1,000,000	1,000,000	1,000,000
Tom Ogonek	-	1,000,000	-	-	-	1,000,000	1,000,000	1,000,000

No KMP options lapsed during the year which were granted during the financial year ended 30 June 2022

Key management personnel transactions - audited

Loans to and from key management personnel and their related parties

Details regarding loans outstanding at the end of the reporting period due and payable to key management personnel and their related parties, where the individual’s aggregate loan balance exceeded $10,000 in the reporting period, are as follows:

reporting period, are as follows:
	Balance 1 July 2021 $	Balance 30 June 2022 $	Interest not paid $	Highest balance in period $
Joe Foster	252,677	16,442	-	252,677

Unsecured loans issued by Joe Foster to the company during the year ended 30 June 2022 amounted to $16,442. During the year, the company repaid $200,000 of the balance outstanding on the loan. No interest is payable on the loans.

There were no other loans or any other related party transactions which have not been mentioned in this report to KMP or their related parties during the current or previous financial years.

Other transactions with key management personnel

A number of key management personnel (KMP), or their related parties, hold positions in other entities that result in them having control, or joint control, over the financial or operating policies of those entities.

A number of these entities transacted with the Group during the year. The terms and conditions of the transactions with KMP and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-key management personnel related entities on an arm’s length basis.

From time to time, directors of the Group, or their related entities, may purchase goods from the Group. These purchases are on the same terms and conditions as those entered into by other Group employees or customers and are trivial or domestic in nature.

Movements in shares

The movement during the reporting period in the number of ordinary shares in the Company held, directly, indirectly, or beneficially, by each key management person, including their related parties, is as follows:

	Held at 1 July 2021	Shares issued / acquired	Shares disposed (A)	Held at 30 June 2022 (B)
Greg Toll	-	2,200,000	-	2,200,000
Grant Carman	-	25,000	-	25,000
Joe Foster	100	64,323,925	-	64,324,025
Marc Lichtenstein	-	1,500,081	-	1,500,081
Lawrence Jaffe	-	65,928,058	-	65,928,058
Darren Brits	100	3,299,841	-	3,300,941
Tom Ogonek	-	2,000,080	-	2,000,080
Total	200	139,277,085	-	139,277,285

CtL Ltd Group Annual Report 30 June 2022 - Final

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A Other changes represent shares that were purchased or sold during the year.

B 100% of shares held at 30 June 2022 would be classified as “restricted securities” for the purpose of Chapter 9 of the ASX Listing Rules. The Escrowed Shares will be subject to escrow until the first year anniversary of the Company completing its listing on the ASX. These shares will become unrestricted on 2 December 2022. 500,000 shares issued to Tom Ogonek remain restricted until 17 June 2023.

This Directors' report is made out in accordance with a resolution of the directors:

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Signed: ____ Date: 26 August 2022 Gregory Toll Director

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CtL Ltd Group Annual Report 30 June 2022 - Final

Page 27 of 85

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Consolidated statement of profit or loss and other
comprehensive income
For the year ended 30 June 2022
Note
Revenue from continuing operations
Revenue
8
Cost of sales
Gross profit
Expenses
Other income
9A
Bargain purchase acquisition gain
41
Selling and distribution expenses
Administration expenses
Occupancy costs
Asset impairment
9B
Costs associated with capital raise
Other expenses
Operating profit
Finance costs
9B
Profit before income tax expense from continuing operations
Income tax benefit / (expense)
12
Profit after income tax expense from continuing operations
Profit after income tax expense for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Total comprehensive income for the year
Profit for the year is attributable to:
Non-controlling interest
Owners of Close the Loop Limited
Total comprehensive income for the year is attributable to:
Continuing operations
Non-controlling interest
Continuing operations
Earnings per share for profit attributable to the owners of
Close the Loop Limited
Basic earnings per share
10
Diluted earnings per share
10

Consolidated
30 June 2022
$’000
30 June 2021
$’000
70,132
26,812
(49,098)
(18,471)
21,034
8,341
1,039
1,941
222
-
(132)
-
(9,140)
(3,689)
(15)
(1,344)
-
(2,433)
-
(5,498)
(603)
3,733
5,990
(757)
(208)
2,976
5,782
1,622
(1,530)
4,598
4,252
4,598
4,252
(99)
-
4,499
4,252
(8)
-
4,606
4,252
4,606
4,252
(8)
-
4,598
4,252
Cents
Cents
2.39
2,125,824
2.31
2,125,824

The above Statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.

CtL Ltd Group Annual Report 30 June 2022 - Final

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information for 30 June 2021 represents the results of OF Pack only. The Statement of Profit or Loss and other Comprehensive Income for the period ended 30 June 2022 represents the results of OF Pack for the period from 1 July 2021 to 30 November 2021 and the consolidated results for OF Pack and Close the Loop Group for the period post-acquisition from 1 December 2021 to 30 June 2022.

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CtL Ltd Group Annual Report 30 June 2022 - Final

Page 30 of 85

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Consolidated statement of financial position
As at 30- June 2022
Note
Assets
Current assets
Cash and cash equivalents
13
Trade and other receivables
14
Inventories
15
Other
16
Total current assets
Non-current assets
Investments
17
Property, plant, and equipment
18
Right-of-use assets
19
Intangibles
20
Deferred tax
12
Other
16
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
21
Borrowings
22
Lease liabilities
23
Income tax
12
Provisions
24
Deferred revenue
25
Other
26
Total current liabilities
Non-current liabilities
Borrowings
22
Lease liabilities
23
Provisions
24
Deferred revenue
25
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
27
Reserves
28
Retained profits
Non-controlling interest
Total equity

Consolidated
30 June 2022
$’000
30 Jun 2021
$’000
10,333
5,612
21,078
4,728
5,423
713
3,189
363
40,023
11,416
164
210
6,194
651
13,715
1,222
29,910
993
1,822
40
436
144
52,241
3,260
92,264
14,676
10,329
1,354
4,683
2,420
2,422
203
54
840
1,856
178
1,180
-
802
-
21,326
4,995
3,971
517
13,154
1,117
433
65
152
-
17,710
1,699
39,036
6,694
53,228
7,982
41,695
427
(899)
-
12,105
7,555
327
-
53,228
7,982

The above consolidated statement of financial position is to be read in conjunction with the accompanying notes.

CtL Ltd Group Annual Report 30 June 2022 - Final

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As set out in Note 6 to the Financial Statements, as a result of the acquisition of OF Packaging Pty Ltd (‘OF Pack’) and its controlled entity by Close the Loop Limited and its controlled entities (‘Close the Loop’), the Consolidated Statement of Financial Position as at 30 June 2021 reflects the balances of OF Pack only, while the Consolidated Statement of Financial Position as at 30 June 2022 reflects the balances of the post-acquisition consolidated Group including OF Pack and Close the Loop.

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CtL Ltd Group Annual Report 30 June 2022 - Final

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Consolidated statement of changes in equity For the year ended 30 June 2022

Consolidated Balance at 1 July 2020 Profit after income tax expense for the year, net of tax Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with owners in their capacity as owners: Dividends paid Balance at 30 June 2021 Consolidated Balance at 1 July 2021 Profit after income tax expense for the year, net of tax Foreign exchange movement Total comprehensive income for the year Transactions with owners in their capacity as owners: Movement in issued shares (Note 27) Business combination (Note 41) Option reserve Dividends paid Balance at 30 June 2022	Issued capital $’000 427 - - - - 427 Issued capital $’000 427 - - - 41,268 - - - 41,695	Reserves $’000 - - - - - - Reserves $’000 - - (99) (99) - (765) (35) - (899)	Retained profits $’000 3,696 4,252 - 4,252 (393) 7,555 Retained profits $’000 7,555 4,606 - 4,606 - 967 - (1,023) 12,105	Non- controlling interest $’000 - - - - - - Non- controlling interest $’000 - (8) - (8) - 335 - - 327	Total equity $’000 4,123 4,252 -
					4,252 (393)
					7,982
					Total equity $’000 7,982 4,598 (99)
					4,499 41,268 537 (35) (1,023)
					53,228

As set out in Note 6 to the Financial Statements, as a result of the acquisition of OF Packaging Pty Ltd (‘OF Pack’) and its controlled entity by Close the Loop Limited and its controlled entities (‘Close the Loop’), the comparative information for 30 June 2021 represents results of OF Pack only. The Statement of Changes in Equity for the period ended 30 June 2022 represents the results of OF Pack only for the period 1 July 2021 to 30 November 2021 and the consolidated results for OF Pack and Close the Loop Group post-acquisition for the period from 1 December 2021 to 30 June 2022.

The above Statement of Changes in Equity is to be read in conjunction with the accompanying notes.

CtL Ltd Group Annual Report 30 June 2022 - Final

Page 33 of 85

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Consolidated statement of cash flows For the year ended 30 June 2022 Notes Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Other revenue Interest and other finance costs paid Income taxes paid Net cash (used in)/from operating activities 31 Cash flows from investing activities Payment for purchase of business, net of cash acquired Payments for investments Payments for property, plant, and equipment Proceeds from related companies Net cash used in investing activities Cash flows from/(used in) financing activities Proceeds from share issue net of issue costs Proceeds from borrowings Dividends paid Repayment of borrowings Repayment of lease liabilities Net cash from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year 13	Consolidated 30 June 2022 $’000 30 June 2021 $’000 74,747 31,152 (76,582) (23,163) (1,835) 7,989 820 1 (758) (208) (1,375) (1,578) (3,148) 6,204 (3,431) - - (316) (596) (311) - 108 (4,027) (519) 11,361 - 1,950 (1,111) (1,023) (393) (575) - (490) (178) 11,223 (1,682) 4,048 4,003 5,612 1,572 9,660 5,612	Consolidated 30 June 2022 $’000 30 June 2021 $’000 74,747 31,152 (76,582) (23,163) (1,835) 7,989 820 1 (758) (208) (1,375) (1,578) (3,148) 6,204 (3,431) - - (316) (596) (311) - 108 (4,027) (519) 11,361 - 1,950 (1,111) (1,023) (393) (575) - (490) (178) 11,223 (1,682) 4,048 4,003 5,612 1,572 9,660 5,612
		7,989 1 (208) (1,578)
		6,204
		- (316) (311) 108
		(519)
		- (1,111) (393) - (178)
		(1,682)
		4,003 1,572
		5,612

As set out in Note 6 to the Financial Statements, as a result of the acquisition of OF Packaging Pty Ltd (‘OF Pack’) and its controlled entity by Close the Loop Limited and its controlled entities (‘Close the Loop’), the comparative information for 1 July 2020 to 30 June 2021 represents results of OF Pack only. The Statement of Cash Flows for the period ended 30 June 2022 represents the results of OF Pack only for the period 1 July 2021 to 30 November 2021 and the consolidated cash flows for OF Pack and Close the Loop Group for the period from 1 December 2021 to 30 June 2022.

The above Statement of Cash Flows is to be read in conjunction with the accompanying notes.

CtL Ltd Group Annual Report 30 June 2022 - Final

Page 34 of 85

Notes to the Financial Statements 30 June 2022

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Note 1. Reporting entity

Close the Loop Limited (the “Company”) is a company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on the Australian Securities Exchange (“ASX”).

The Company’s registered office is at 208 Hume Highway, Somerton, Victoria, 3062. These consolidated financial statements comprise the Company and its subsidiaries (together referred to as the “Group” or “Close the Loop” and individually “Group companies”).

The Group is a for-profit entity and is primarily involved in collection and recycling of imaging consumables, paper and cartons and any other activity incidental thereto as well as providing premium and innovative flexible and carton packaging, flexographic print packaging, seafood packaging and storage solutions.

Note 2. Basis of accounting

The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards adopted by the Australian Accounting Standards Board (“AASBs”) and the Corporations Act 2001 . The consolidated financial statements comply with International Financial Reporting Standards (“IFRS”) adopted by the International Accounting Standards Board (“IFRIC”). They were authorised for issue by the Board of Directors on 25 August 2022.

This report is to be read in conjunction with any public announcements made by Close the Loop Limited during the reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 and Australian Securities Exchange Listing Rules.

The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/ Directors’ Reports) Instrument 2016/191 and in accordance with that instrument, amounts in the consolidated financial statements and directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated.

Details of the Group’s accounting policies are included in Note 5. Changes to significant accounting policies are described in Note 5.

i. Historical cost convention

The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through other comprehensive income, investment properties, certain classes of property, plant and equipment and derivative financial instruments.

Note 3. Functional and presentation currency

Items included in the Consolidated Financial Statements of each Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The Consolidated Financial Statements are presented in Australian dollars, which is the Company’s functional and presentation currency.

Foreign currency transactions are translated to Australian dollars at the rates of exchange ruling at the dates of the transactions. Amounts receivable and payable in foreign currencies at balance date are translated at the rates of exchange ruling on that date. Exchange differences relating to amounts payable and receivable in foreign currencies are brought to account as exchange gains or losses in statement of Consolidated Profit or Loss and other Comprehensive Income in the financial period in which the exchange rates change.

The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity.

The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.

CtL Ltd Group Annual Report 30 June 2022 - Final

Page 35 of 85

Notes to the Financial Statements 30 June 2022

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Note 4. Use of judgements estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.

i. Coronavirus (COVID-19) pandemic

Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the consolidated group based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain, staffing and geographic regions in which the consolidated group operates. Other than as addressed in specific notes, there does not currently appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the consolidated group unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic.

ii. Allowance for expected credit losses

The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit loss rate for each group. These assumptions include recent sales experience and historical collection rates.

iii. Provision for impairment of inventories

The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of the provision is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that affect inventory obsolescence.

iv. Impairment of property, plant and equipment

The consolidated group assesses impairment of property, plant and equipment at each reporting date by evaluating conditions specific to the consolidated group and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in use calculations, which incorporate a number of key estimates and assumptions.

v. Lease term

The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods to be included in the lease term. In determining the lease term, all facts and circumstances that create an economical incentive to exercise an extension option, or not to exercise a termination option, are considered at the lease commencement date. Factors considered may include the importance of the asset to the consolidated group's operations; comparison of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of significant leasehold improvements; and the costs and disruption to replace the asset. The consolidated group reassesses whether it is reasonably certain to exercise an extension option, or not exercise a termination option, if there is a significant event or significant change in circumstances.

vi. Incremental borrowing rate

Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to discount future lease payments to measure the present value of the lease liability at the lease commencement date. Such a rate is based on what the consolidated group estimates it would have to pay a third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset, with similar terms, security and economic environment.

CtL Ltd Group Annual Report 30 June 2022 - Final

Page 36 of 85

Notes to the Financial Statements 30 June 2022

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vii. Employee benefits provision

As discussed in note 24, the liability for employee benefits expected to be settled more than 12 months from the reporting date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account.

viii. Unprocessed inventory provision

ClozDloop BV (“CDL”) has unprocessed recycling consumables on hand. The Directors have estimated the cost of processing these consumables to be $766,000 for the current year under review. As a reliable estimate can be made of the amount of the obligation and it is a present obligation as a result of a past event, the amount has been recognised as a provision. This provision was recognised as an expense in the accounting records of CDL for year end 30 June 2017 which was prior to the acquisition of a 60% interest in CDL at 1 October 2016. At the date of this report Close the Loop has an 80% interest in CDL.

ix. Business combinations

Business combinations are initially accounted for on a provisional basis. The fair value of assets acquired, liabilities and contingent liabilities assumed are initially estimated by the consolidated entity taking into consideration all available information at the reporting date. Fair value adjustments on the finalisation of the business combination accounting are retrospective, where applicable, to the period the combination appeared and may have an impact on the assets and liabilities, depreciation and amortisation reported.

Note 5. Significant accounting policies

The principal accounting policies adopted are consistent with those of the corresponding interim reporting period, unless otherwise stated.

i. New or amended Accounting Standards and Interpretations adopted

The consolidated entity has adopted all the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.

The principal accounting policies adopted in the preparation of the financial statements are set out either in the respective notes or below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

ii. Going concern

The Financial Statements have been prepared on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.

As at 30 June 2022, the Group’s net asset position was $53.228 million (30 June 2021: $7.982 million). The increase in the Group’s net asset position has improved due to the capital raising of $12 million and acquisition of Close the Loop, Foster International Packaging, OF Resource Recovery, Oceanic Agencies and Crasti & Co which have all contributed to the profitability of the consolidated group since their respective acquisition dates.

There is a surplus in current assets less current liabilities of $18.697 million at 30 June 2022 (30 June 2021 $6.421 million). The Company has borrowings of $8.654 million at 30 June 2022 (30 June 2021 $2.937 million) and has sufficient cash to meet all committed liabilities and future expected liabilities for a period of at least 12 months from the date of signing of these financial statements.

iii. Parent entity information

In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated group only. Supplementary information about the parent entity is disclosed in note 37.

iv. Current and non-current classification

Assets and liabilities are presented in the statement of financial position based on current and non-current classification.

CtL Ltd Group Annual Report 30 June 2022 - Final

Page 37 of 85

Notes to the Financial Statements 30 June 2022

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An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the consolidated group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in the consolidated group's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

v. Inventories

The costs of conversion of inventories include costs directly related to the units of production, such as direct labour. They also include a systematic allocation of fixed and variable production overheads that are incurred in converting materials into finished goods. Fixed production overheads are those indirect costs of production that remain relatively constant regardless of the volume of production, such as depreciation and maintenance of equipment and the cost of factory management and administration. Variable production overheads are those indirect costs of production that vary directly, or nearly directly, with the volume of production, such as indirect materials and indirect labour.

vi. Derivative financial instruments

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

Derivatives are classified as current or non-current depending on the expected period of realisation.

Cash flow hedges

Cash flow hedges are used to cover the consolidated group's exposure to variability in cash flows that is attributable to particular risks associated with a recognised asset or liability or a firm commitment which could affect profit or loss. The effective portion of the gain or loss on the hedging instrument is recognised in other comprehensive income through the cash flow hedges reserve in equity, whilst the ineffective portion is recognised in profit or loss. Amounts taken to equity are transferred out of equity and included in the measurement of the hedged transaction when the forecast transaction occurs.

Cash flow hedges are tested for effectiveness on a regular basis both retrospectively and prospectively to ensure that each hedge is highly effective and continues to be designated as a cash flow hedge. If the forecast transaction is no longer expected to occur, the amounts recognised in equity are transferred to profit or loss.

If the hedging instrument is sold, terminated, expires, exercised without replacement or rollover, or if the hedge becomes ineffective and is no longer a designated hedge, the amounts previously recognised in equity remain in equity until the forecast transaction occurs.

vii. Investments and other financial assets

Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless an accounting mismatch is being avoided.

Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the consolidated group has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off.

Financial assets at fair value through profit or loss

CtL Ltd Group Annual Report 30 June 2022 - Final

Page 38 of 85

Notes to the Financial Statements 30 June 2022

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Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss.

Impairment of financial assets

The consolidated group recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the consolidated group's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain.

Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are recognised as expense in profit or loss during the financial period in which they are incurred.

viii. Foreign currency translation

The financial statements are presented in Australian dollars, which is Close the Loop Limited's functional and presentation currency.

Foreign currency transactions

Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Foreign operations

The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.

ix. Impairment of non-financial assets

Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-inuse is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

CtL Ltd Group Annual Report 30 June 2022 - Final

Page 39 of 85

Notes to the Financial Statements 30 June 2022

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x. Finance costs

Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred.

xi. Goods and Services Tax (“GST”) and other similar taxes

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority

Note 6. Principles of Consolidation

i. Reverse acquisition accounting

On 30 November 2021, Close the Loop Limited (‘CtL’) completed the acquisition of 100% of the share capital in OF Packaging Pty Ltd and its controlled subsidiary, OF Flexo Pty Ltd (‘OF Pack’). In accordance with accounting standards, this acquisition has been accounted for as a reverse acquisition business combination.

In applying the requirements of AASB 3 Business Combinations to the Group the reporting structure is as follows:

Close the Loop Limited is the legal parent entity to the Group; and
OF Packaging Pty Ltd, which is neither the legal parent nor legal acquirer, is deemed to be the accounting acquirer.

The consolidated financial information incorporated the assets and liabilities of all entities deemed to be acquired by OF Pack including CtL and the results of these entities from 30 November 2021, being for the period from which those entities are accounted for as being acquired by OF Pack. The assets and liabilities of Close the Loop Limited acquired by OF Pack were recorded at fair value whilst the assets and liabilities of OF Pack were maintained at their book value. The impact of all transactions between entities in the Group were eliminated in full. The impact on equity of treating the formation of the Group as a reverse acquisition is discussed in more detail in Note 41.

AASB 3 Business Combinations requires that Consolidated Financial Statements prepared following a reverse acquisition shall be issued under the name of the legal parent (i.e., Close the Loop Limited) but be a continuation of the financial statements of the legal subsidiary (i.e., OF Packaging Pty Ltd, the acquirer for accounting purposes). The implications of applying AASB 3 on each of the attached financial statements comparatives are as follows:

ii. Statements of financial position

The Statement of Financial Position as at 30 June 2021 represents OF Pack only. The Statement of Financial Position for 30 June 2022 reflects the consolidated position of OF Pack and Close the Loop.

iii. Statement of profit and loss and other comprehensive income

The Consolidated Statement of Profit or Loss and Other Comprehensive Income for the period 1 July 2020 to 30 June 2021 represent the results of OF Pack only. The Statement of Profit or Loss and other Comprehensive Income for the period ended 30 June 2022 represents the results of OF Pack for the period from 1 July 2021 to 30 November 2021 and the consolidated results for OF Pack and Close the Loop Group for the period postacquisition from 1 December 2021 to 30 June 2022. The Close the Loop Group from 1 December 2021 includes Foster International Packaging (Pty) Ltd, Oceanic Agencies Pty Ltd and OF Resource Recovery Holdings Pty Ltd and its wholly owned subsidiary OF Resource Recovery Pty Ltd. Crasti & Co Pty Ltd was acquired on 31 March 2022 and included in the statement of profit and loss and other comprehensive income from that date.

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Notes to the Financial Statements 30 June 2022

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iv. Statement of changes in equity

The Consolidated Statement of Changes in Equity for the period 1 July 2020 to 30 June 2021 comprises OF Pack only. The 1 July 2020 opening retained earnings and other equity balances recognised in the consolidated entity are those of OF Pack before the business combination, not those of Close the Loop. The profit for the year, being the results of OF Pack only for the period from 1 July 2021 to 30 November 2021 and the consolidated results for OF Pack and Close the Loop for the period from 1 December 2021 to 30 June 2022. The Close the Loop Group from 1 December 2021 includes Foster International Packaging (Pty) Ltd, Oceanic Agencies Pty Ltd and OF Resource Recovery Holdings Pty Ltd and its wholly owned subsidiary OF Resource Recovery Pty Ltd. Crasti & Co Pty Ltd was acquired on 31 March 2022 and included in the statement of changes in equity from that date.

v. Statement of cash flows

The Statement of Cash Flows represents cash flows of OF Pack only for the period 1 July 2020 to 30 June 2021. The 30 June 2022 Statement of Cash Flows represents cash flows of OF Pack only for the period from 1 July 2021 to 30 November 2021 and the cash flows for OF Pack and Close the Loop for the period from 1 December 2021 to 30 June 2022. The Close the Loop Group from 1 December 2021 includes Foster International Packaging (Pty) Ltd, Oceanic Agencies Pty Ltd and OF Resource Recovery Holdings Pty Ltd and its wholly owned subsidiary OF Resource Recovery Pty Ltd.

vi. Subsidiaries included in the financial statements

Subsidiaries are all those entities over which the consolidated group has control. The consolidated group controls an entity when the consolidated group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated group. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated group.

Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the consolidated group. Losses incurred by the consolidated group are attributed to the non-controlling interest in full, even if that results in a deficit balance.

Where the consolidated group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated group recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

Note 7. Operating segments

i. Identification of reportable operating segments

The consolidated entity is organised into two operating segments based on differences in products and services provided: resource recovery and packaging. These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources. There is aggregation of operating segments.

The CODM reviews EBITDA (earnings before interest, tax, depreciation, and amortisation). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements.

The information reported to the CODM is monthly.

ii. Types of products and services

The principal products and services of each of these operating segments are as follows:

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Notes to the Financial Statements 30 June 2022

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30 June 2022
Packaging	Provides premium and innovative flexible and carton packaging as well as bulk storage packaging solutions.
Resource recovery	The takeback, recovery and reuse of complex waste streams including imaging consumables, cosmetics, paper and cartons and products associated there with.

iii. Intersegment transactions

An internally determined transfer price is set for all intersegment sales. This price is reset and is based on what would be realised in the event the sale was made to an external party at arm’s length. Intersegment transactions are eliminated on consolidation.

iv. Intersegment receivables, payables, and loans

Intersegment loans are initially recognised at the consideration received, net of transaction costs. Intersegment loans receivable and loans payable that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on consolidation.

Operating segment information

Consolidated 30 June 2022 Revenue Sales to external customers Intersegment sales Total sales revenue Other revenue Total segment revenue Intersegment eliminations Unallocated revenue Total revenue EBITDA Depreciation and amortisation Finance costs Profit before income tax expense Income tax expenses Profit after income tax expense Assets Segment assets Intersegment eliminations Unallocated assets Total assets Liabilities Segment liabilities Intersegment eliminations Unallocated liabilities: Total liabilities	Resource Recovery $’000 26,812 - 26,812 (29) 26,783 2,725 5,187 560 (3,022) (386) (3,408) 41,257 26,789	Packaging $’000 43,320 - 43,320 1,389 44,709 6,775 580 197 5,998 2,008 8,006 51,007 12,247	Total $’000 70,132 -
			70,132 1,360
			71,492 - -
			71,492
			9,500 5,767 757
			2,976 1,622
			4,598
			92,264 - -
			92,264
			39,036 - -
			39,036

At 30 June 2021 the consolidated entity only operated one business segment being the packaging segment in one geography.

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Notes to the Financial Statements 30 June 2022

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Geographical segment information

Consolidated 30 June 2022 Revenue Sales to external customers Intersegment sales Total sales revenue Other revenue Total segment revenue Intersegment eliminations Unallocated revenue Total revenue EBITDA Depreciation and amortisation Finance costs Profit before income tax expense Income tax expenses Profit after income tax expense Assets Segment assets Intersegment eliminations Unallocated assets Total assets Liabilities Segment liabilities Intersegment eliminations Unallocated liabilities Total liabilities	Australia $’000 47,587 - 47,587 1,308 48,895 5,114 3,657 386 1,071 2,105 3,176 64,108 15,096	USA $’000 13,303 - 13,303 (56) 13,247 3,382 1,463 341 1,578 (383) 1,195 20,604 9,489	Europe $’000 3,209 - 3,209 29 3,238 674 622 26 26 (3) 23 3,530 13,171	South Africa $’000 6,033 - 6,033 79 6,112 330 25 4 301 (97) 204 4,022 1,280	Total $’000 70,132 -
					70,132 1,360
					71,492 - -
					71,492
					9,500 5,767 757
					2,976
					4,598
					92,264 - -
					92,264
					39,036 - -
					39,036

At 30 June 2021 the consolidated entity only operated one business segment being the packaging segment in one geography, Australia.

v. Accounting policy for operating segments

Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.

Note 8. Revenue

A. Revenue Streams

The Group generates revenue primarily from the sale of packaging materials and collection and recycling services provided to its customers. Other sources of revenue include government grants and interest revenue.

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Notes to the Financial Statements 30 June 2022

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From continuing operating activities Revenue from contracts with customers Sale of goods Collection revenue	Consolidated 30 June 2022 $’000 30 June 2021 $’000 53,220 26,812 16,912 - 70,132 26,812	Consolidated 30 June 2022 $’000 30 June 2021 $’000 53,220 26,812 16,912 - 70,132 26,812
		26,812

B. Disaggregation of revenue form contracts with customers

In the following table, revenue from contracts with customers is disaggregated by primary geographical segment, major products and service lines and timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue with the Group’s reportable segments.

Consolidated Primary geographical markets Australia US Europe South Africa Timing of revenue recognition Products transferred at a point in time Products and services transferred over time Revenue from contracts with customers	Resource Recovery 30 June 2022 $’000 30 June 2021 $’000 10,299 - 13,304 - 3,209 - - - 26,812 - 9,900 - 16,912 - 26,812 -	Reporting segments Packaging 30 June 2022 $’000 30 June 2021 $’000 37,287 26,812 - - - - 6,033 - 43,320 26,812 43,320 26,812 - - 43,320 26,812	Total 30 June 2022 $’000 30 June 2021 $’000 47,586 26,812 13,304 - 3,209 - 6,033 - 70,132 26,812 53,220 26,812 16,912 - 70,132 26,812	Total 30 June 2022 $’000 30 June 2021 $’000 47,586 26,812 13,304 - 3,209 - 6,033 - 70,132 26,812 53,220 26,812 16,912 - 70,132 26,812
				26,812
				26,812 -
				26,812

C. Revenue recognition policies

The consolidated group recognises revenue as follows:

i. Revenue from contracts with customers

Revenue is recognised at an amount that reflects the consideration to which the consolidated group is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated group: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when

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Notes to the Financial Statements 30 June 2022

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or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised.

Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability.

ii. Recycling Revenue

Recycling revenue relates to the company's recycling services. Revenue is recognised when the performance obligation is satisfied, which typically occurs at the time of processing. The company has entered into service agreements with its customers, under which the company accepts used ink and toner cartridges from these companies and recycles them in environmentally responsible ways. Recycling may consist of:

Breaking down the materials in the cartridge and re-purposing them (manufacturing plastic from cartridge pieces);
Processing the cartridges for re-use printer cartridges; and
Disposing of the cartridges without dumping the waste into landfills.

The type of recycling performed is governed by the company's service agreements with its customers. Each customer's recycling program is specially tailored to meet the customer's needs and is specifically analysed for revenue recognition.

iii. Re-manufactured Cartridge and Bottle Revenue

Re-manufactured cartridge and bottle revenues are those generated through the sale of the re-manufactured cartridges and bottles or cartridge and bottle component materials (plastic, metals, cartridge sales, and toner). Revenue is recognised when the performance obligation is satisfied, which typically occurs at the point in time when control of the product transfers to the customer. The company processes cartridges and bottles in-house so that they can be re-used. These remanufactured cartridges and bottles are sold to companies that re-fill the cartridges and bottles and sell them. Component materials are also sold to companies that use plastic to manufacture their products.

iv. Sale of packaging materials

For sales of packaging and related goods to the customer, revenue is recognised when control of the goods has transferred, being when the goods have been shipped to the customer’s specific location. Following delivery, the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility when on selling the goods and bears the risks of obsolescence and loss in relation to the goods. A receivable is recognised by the company when the goods are delivered to the customer as this represents the point in time at which the right to consideration becomes unconditional, as only the passage of time is required before payment is due. No element of financing is deemed present as the sales are made with a credit term of 30 to 60 days (dependent on specific customers), which is consistent with market practice.

Historically returns are very minimal and therefore no refund liability will be recognised at the point of sale. The company uses its accumulated experience to estimate the number of returns. It is considered highly probable that there will be no significant returns.

v. Government grants

Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate.

vi. Interest

Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using

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Notes to the Financial Statements 30 June 2022

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the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

vii. Other revenue

Other revenue is recognised when it is received or when the right to receive payment is established.

Note 9. Income and expenses

A. Other income

Note Bad Debt Recovery Government grants Foreign Exchange Gains Supplier rebates Licence fees – related party Other Income Other income	Consolidated 30 June 2022 $’000 30 June 2021 $’000 - 55 409 494 177 871 124 - 240 - 89 521 1,039 1,941	Consolidated 30 June 2022 $’000 30 June 2021 $’000 - 55 409 494 177 871 124 - 240 - 89 521 1,039 1,941
		1,941

B. Other expenses

Note
Profit before income tax from continuing operations includes the
following expenses:
Depreciation
Depreciation on property, plant and equipment
Depreciation on right-of-use assets
Impairment as a result of Somerton facility fire
Total depreciation
Amortisation
Amortisation of non-current assets
Total depreciation and amortisation
Finance costs
Interest and finance charges paid/payable on borrowings
Interest and finance charges paid/payable on lease liabilities
Interest income received
Finance costs expensed
Net foreign exchange movement
Net foreign exchange (gain)

Consolidated
30 June 2022
$’000
30 June 2021
$’000
1,402
55
2,013
144
1,344
-
4,759
199
1,008
147
5,767
346
401
125
521
83
(165)
-
757
208
(177)
(871)

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Notes to the Financial Statements 30 June 2022

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C. Accounting policy for cost of sales

When inventories are sold, the carrying amount of those inventories will be recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories shall be recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, shall be recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

There was not any write-down of inventories to fair value less costs to sell. There was no amount reversed of any write-down of inventories recognised during the current financial year arising from an increase in net realisable value.

Note 10. Earnings per share

ote 10. Earnings per share
Earnings per share for profit from continuing operations Profit after income tax Non-controlling interest Profit after income tax attributable to the owners of Close the Loop Limited Basic earnings per share (cents) Diluted earnings per share (cents0 Weighted average number of ordinary shares Weighted average number of ordinary shares used in calculating basic earnings per share Adjustments for calculation of diluted earnings per share: Options over ordinary shares Weighted average number of ordinary shares used in calculating diluted earnings per share	Consolidated 30 June 2022 $’000 30 June 2021 $’000 4,598 4,252 (8) - 4,606 4,252 2.39 2,125,824 2.31 2,125,824 193,057,549 200 6,419,178 - 199,476,727 200
		4,252
		2,125,824 2,125,824 200 -
		200

The weighted average number of ordinary shares used in the calculation of earnings per share is based on the number of OF Packaging Pty Ltd shares on issue up until 1 December 2021 and the pro-rata number of Close the Loop Limited shares on issue for the 7 months from 1 December 2021 to 30 June 2022. The earnings per share for 30 June 2021 is based on the earnings of OF Packaging Pty Ltd and its wholly owned subsidiary.

Note 11. Share-based payment arrangements

The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognised as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

A. Description of share-based payment arrangements

At 31 December 2021, the Group had the following share-based payment arrangements.

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Notes to the Financial Statements 30 June 2022

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i. Employee share option programs (equity-settled)

At the time of the business combination on 30 November 2021 there was an employee option plan in place where 375,000 options had been granted to two non-management employees (one current and one former employee). During the year 70,000 options with a strike price of 20 cents were exercised by one of the employees, with the balance of the options expiring on 30 April 2022. The 375,000 options were vested. No further options were issued under this plan or are proposed to be issued under this plan.

ii. Rights and options over equity instruments granted as compensation

Options	Number of options granted during 2021-22	Grant date	Fair value per option at grant date $	Exercise price per option $	Expiry date	Number of options vested during 2021-22
Lawrence Jaffe	3,000,000	2 December 2021	0.059	0.30	2 December 2023	3,000,000
Marc Lichtenstein	1,000,000	2 December 2021	0.059	0.30	2 December 2023	1,000,000
Tom Ogonek	1,000,000	2 December 2021	0.059	0.30	2 December 2023	1,000,000

B. Measurement of fair values

i. Equity-settled share-based payment arrangements

The fair value of the employee share options (see (A)(i) and (A)(ii)) has been measured using the Black-Scholes formula. Service and non-market performance conditions attached to the arrangements were not taken into account in measuring fair value.

The inputs used in the measurement of the fair values at grant date of the equity-settled share-based payment plans were as follows.

	Consolidated	Consolidated
	Grant date	Measurement date
	30 November 2021	2 December 2021
Fair value	5.9 cents	5.9 cents
Share price	20 cents	20 cents
Exercise price	30 cents	30 cents
Expected volatility (weighted-average)	75%	75%
Expected life (weighted-average)	2 years	2 years
Expected dividends	-	-
Risk-free interest rate (based on government bonds)	1.5%	1.5%

Expected volatility has been based on an evaluation of the historical volatility of the Company's share price, particularly over the historical period commensurate with the expected term. The expected term of the instruments has been based on historical experienced and general option holder behaviour.

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Notes to the Financial Statements 30 June 2022

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C. Reconciliation of outstanding share options

The number and weighted-average exercise prices of share options under the share option programs (see (A)(i) and (A)(ii)) were as follows.

Outstanding at 1 July Forfeited during the year Exercised during the year Granted during the year Outstanding at 30 June Exercisable 30 June	2022 Number of options Weighted average exercise price 375,000 20 cents 305,000 20 cents 70,000 20 cents 5,000,000 30 cents 5,000,000 30 cents 5,000,000 30 cents	2021 Number of options Weighted average exercise price 375,000 20 cents - - - - - - 375,000 20 cents 375,000 20 cents	2021 Number of options Weighted average exercise price 375,000 20 cents - - - - - - 375,000 20 cents 375,000 20 cents
			20 cents
			20 cents

D. Expense recognised in profit or loss

During the financial year end 30 June 2022 an amount of $35,130 was expensed as result of the share based payment for the issue of the options.

Note 12. Income taxes

A. Amounts recognised in profit or loss

Current tax expense
Current year tax
Deferred tax
Aggregate income tax expense
Numerical reconciliation of income tax expense/(benefit) and
tax at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 30% (2021: 26%)
Tax effect amounts which are not deductible/(taxable) in
calculating taxable income:
Non-assessable income
Non-deductible expenses
Timing differences
Current year tax losses not recognised
Difference in overseas tax rates
Change in tax rates
Prior year tax adjustment
Difference in overseas tax rates
Listing costs recognised in current period
Research and development tax benefit
Prior year under provision of deferred income tax
Recognition of previously unrecognised tax losses
Income tax expense

Consolidated
30 June 2022
$'000
30 June 2021
$'000
218
1,570
(1,836)
(40)
(1,622)
1,530
2,887
5,782
866
1,504
(22)
36
223
15
133
895
1,860
(67)
(284)
54
(113)
(471)
(110)
(55)
(330)
(1,471)
(1,622)
1,530

Income tax expense

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Notes to the Financial Statements 30 June 2022

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B. Deferred tax asset

Deferred tax asset comprises temporary differences attributable to: Amounts recognised in profit or loss: Property, plant and equipment - tax allowance Employee benefits Leases Accrued expenses Unrealised foreign exchange Tax loss carry-forward Black hole expense Other Deferred tax asset . Current tax liability Current tax liability comprises: Income tax liability Australian entity Foreign entity	Consolidated 30 June 2022 $'000 30 June 2021 $'000 (2,739) 387 129 820 3 7 2,578 37 594 46 1,822 40 Consolidated 30 June 2022 $'000 30 June 2021 $'000 - 840 54 - 54 840	Consolidated 30 June 2022 $'000 30 June 2021 $'000 (2,739) 387 129 820 3 7 2,578 37 594 46 1,822 40 Consolidated 30 June 2022 $'000 30 June 2021 $'000 - 840 54 - 54 840
		840

C. Current tax liability

D. Unrecognised tax losses:

The company has accumulated tax losses which have not been recognised as deferred tax assets. The consolidated balance of the tax losses carried forward as of 30 June 2022 was $14,382,420. (30 June 2021: $0)

E. Accounting policy for income tax

The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. The 100% owned Australian companies have formed a tax consolidated group with effect from 30 November 2021 with Close the Loop Limited being the head entity in the tax consolidated group.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:

When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

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Notes to the Financial Statements 30 June 2022

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Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.

Note 13. Cash and cash equivalents

Current assets Bank balances Call deposits Cash and cash equivalents in the statement of financial position Bank overdrafts repayable on demand and used for cash management purposes Cash and cash equivalents in the statement of cash flows	Consolidated 30 June 2022 $'000 30 June 2021 $'000 10,333 5,736 - - 10,333 5,736 (673) (124) 9,660 5,612	Consolidated 30 June 2022 $'000 30 June 2021 $'000 10,333 5,736 - - 10,333 5,736 (673) (124) 9,660 5,612
		5,736 (124)
		5,612

A. Accounting policy for cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other shortterm, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the statement of cash flows presentation purposes, cash and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the statement of financial position.

Note 14. Trade and other receivables

Note Current Assets Trade receivables 14A Less: Provision for doubtful debts Loan advanced to landlord Other trade receivables Non-Current Assets Loan advanced to landlord 16	Consolidated 30 June 2022 $'000 30 June 2021 $'000 17,583 4,781 (288) (200) 17,295 4,581 30 - 3,753 147 21,078 4,728 120 -

As at 30 June 2022, a loan advanced to the landlord to remove debris from the adjoining land remains outstanding. The loan is repayable monthly over 10 years.

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Notes to the Financial Statements 30 June 2022

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A. Allowance for expected credit losses

Movements in the allowance for expected credit losses are as follows:

Opening balance Receivables written off during the year as uncollectable Increase in provision due to business combination Receivables deemed to be uncollectable Closing balance	Consolidated 30 June 2022 $'000 30 June 2021 $'000 200 227 - (14) 14 - 74 (13) 288 200	Consolidated 30 June 2022 $'000 30 June 2021 $'000 200 227 - (14) 14 - 74 (13) 288 200
		200

B. Accounting policy for trade and other receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days.

The consolidated group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.

Other receivables are recognised at amortised cost, less any allowance for expected credit losses.

Note 15. Inventories

Current At cost: Raw materials and consumables Finished goods Goods in transit	Consolidated 30 June 2022 $'000 30 June 2021 $'000 607 125 4,360 588 456 - 5,423 713	Consolidated 30 June 2022 $'000 30 June 2021 $'000 607 125 4,360 588 456 - 5,423 713
		713

A. Accounting policy for inventories

Inventories represent mainly packaging materials, consumables and processed toner. Inventories are stated at the lower of cost and net realisable value on a 'first in first out' basis. Cost comprises of purchase, import duties and other taxes and transport, handing and other costs directly attributable to the acquisition of materials and services.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

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Notes to the Financial Statements 30 June 2022

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Note 16. Other Assets

Current Assets Prepayments Income tax refund due Other deposits Other current assets Non-Current Assets Loan receivable Capitalised costs Other deposits	Consolidated 30 June 2022 $'000 30 June 2021 $'000 1,311 363 843 133 902 - 3,189 363 120 95 15 - 301 49 436 144	Consolidated 30 June 2022 $'000 30 June 2021 $'000 1,311 363 843 133 902 - 3,189 363 120 95 15 - 301 49 436 144
		363
		95 - 49
		144

Note 17. Investments

Non-Current Assets Investment in listed entity – at cost Investments	Consolidated 30 June 2022 $’000 30 June 2021 $’000 93 93 71 117 164 210

Note 18. Property, plant and equipment

Non-Current Assets Leasehold improvements - at cost Less: Accumulated depreciation Plant and equipment - at cost Less: Accumulated depreciation Office and Computer Equipment Less: Accumulated depreciation Motor Vehicles Less: Accumulated depreciation	Consolidated 30 June 2022 $'000 30 June 2021 $'000 1,514 46 (1,061) (8) 453 38 30,081 692 (24,840) (174) 5,241 518 3,353 195 (3,171) (143) 182 52 165 55 (97) (16) 68 39

CtL Ltd Group Annual Report 30 June 2022 - Final

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Notes to the Financial Statements 30 June 2022

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otes to the Financial Statements 0 June 2022
Capital works in progress	Consolidated 30 June 2022 $'000 30 June 2021 $'000 250 4 6,194 651
		651

A. Reconciliation of carrying amount

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

Note Balance at 1 July 2020 Additions Disposals Depreciation expense Balance at 30 June 2021 Balance at 1 July 2022 Additions Acquisitions through business combinations 40 Transfers in(out) Disposals Effect of movements in exchange rates Depreciation expense Impairment (B) Balance at 30 June 2022	Leasehold Improvements $’000 48 - - (10) 38 38 65 446 - - 4 (100) - 453	Plant and equipment $'000 411 275 - (168) 518 518 440 6,639 44 - 102 (1,158) (1,344) 5,241	Office and Computer Equipment $'000 Motor Vehicles $'000 66 21 - 25 - - (14) (7) 52 39 52 39 54 37 173 159 - - - (133) 13 - (110) (34) - - 182 68	Capital works in progress $'000 - 4 - - 4 4 271 (44) - 19 - - 250	Total $'000 546 304 - (199)
					651
					651 596 7,688 (133) 138 (1,402) (1,344)
					6,194

B. Impairment loss

On 9 June 2022 Close the Loop Operations Pty Ltd’s facility in Melbourne, Australia had a fire which resulted in the loss of production and processing equipment. Accordingly, this plant and equipment has been impaired and a write down in the value of the equipment of $1,343,938 has been realised in the financial year ending 30 June 2022.

C. Accounting policy for property, plant and equipment

Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment over their expected useful lives. The depreciation rates used for each class of depreciable assets are:

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Notes to the Financial Statements 30 June 2022

Property, plant and equipment:

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Office and computer equipment 15% to 33%
- Plant and equipment 10% to 25%
Motor vehicles 25%
Leasehold improvements 10%
Others 10% to 25%

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. In the event the carrying amount of plant and equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and impairment losses are recognised in profit or loss. A formal assessment of recoverable amount is made when impairment indicators are present.

Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter.

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

Capital work in progress represents costs incurred to construct, assemble and/or install an asset. Once completed, the asset will be transferred to its relevant class of property, plant and equipment.

Note 19. Right of use assets

ote 19. Right of use assets
Non-Current Assets Buildings - right-of-use Less: Accumulated depreciation Plant and equipment - right-of-use Less: Accumulated depreciation	Consolidated 30 June 2022 $'000 30 June 2021 $'000 9,670 1,030 (4,179) (233) 5,491 797 11,201 582 (2,977) (157) 8,224 425 13,715 1,222
		797 582 (157)
		425 1,222

Note Balance at 1 July 2020 Additions Disposals Depreciation expense Balance at 30 June 2021 Balance at 1 July 2022 Additions Acquisitions through business combinations 40 Disposals Effect of movements in exchange rates Depreciation expense Balance at 30 June 2022	Buildings $’000 891 - (94) 797 797 759 5,139 - 224 (1,428) 5,491	Plant and equipment $'000 200 275 - (50) 425 425 - 8,099 - 285 (585) 8,224	Total $'000 1,091 275 - (144) 1,222 1,222 759 13,238 - 509 (2,013) 13,715

CtL Ltd Group Annual Report 30 June 2022 - Final

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Notes to the Financial Statements 30 June 2022

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The consolidated group leases land and buildings for its offices and warehouses under agreements of between 1 to 10 years with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated. The consolidated group also leases plant and equipment under agreements of between 1 to 5 years.

The consolidated group leases office equipment under agreements of less than one year. These leases are either short-term or low-value, so have been expensed as incurred and not capitalised as right-of-use assets.

A. Accounting policy for right-of-use assets

A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.

Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the consolidated group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.

The consolidated group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.

Note 20. Intangible assets and goodwill

Non-Current Assets Goodwill Less: Impairment Customer Relationships Less: Accumulated amortisation Patents and trademarks - at cost Less: Accumulated amortisation Software created – at cost Less: Accumulated amortisation	Consolidated 30 June 2022 $’000 30 June 2021 $’000 20,266 970 (1) - 20,265 970 8,498 - (620) - 7,878 - 1,302 23 (730) - 572 23 1,500 - (305) - 1,195 - 29,910 993	Consolidated 30 June 2022 $’000 30 June 2021 $’000 20,266 970 (1) - 20,265 970 8,498 - (620) - 7,878 - 1,302 23 (730) - 572 23 1,500 - (305) - 1,195 - 29,910 993
		970
		- -
		-
		23 -
		23
		- -
		-
		993

A. Reconciliations

Reconciliations of the written down values at the beginning and end of the current financial half-year are set out below:

CtL Ltd Group Annual Report 30 June 2022 - Final

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Notes to the Financial Statements 30 June 2022

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0 June 2022
Consolidated Balance at 1 July 2021 Additions through business combinations (Note 41) Additions Amortisation expense Balance at 30 June 2022 Balance at 1 July 2020 Amortisation expense Balance at 30 June 2021	Goodwill $’000 970 19,295 - - 20,265 970 - 970	Customer relationships $'000 - 8,498 - (620) 7,878 - - -	Patents and Trademarks $’000 23 632 - (83) 572 23 - 23	Software created $’000 - 1,500 - (305) 1,195 - - -	Total $’000 993 29,925 - (1,008)
					29,910
					993 -
					993

B. Impairment considerations

At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Group makes a formal estimate of the recoverable amount. Where the carrying value of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

The recoverable amount is the greater of fair value less costs to sell or the asset’s value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows.

An impairment is recorded if its recoverable amount is less than its carrying amount. The recoverable amount is the higher of fair value less cost to disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate.

C. Goodwill and goodwill impairment testing

Goodwill represents the excess of purchase consideration over the fair value of net assets acquired in a business combination. Goodwill is carried at cost less accumulated impairment losses and is tested for impairment annually or more frequently, if events or changes in circumstances indicate that it might be impaired.

For the purpose of impairment testing, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash generating units). Goodwill is allocated to cash generating units (CGUs), or groups of CGUs, expected to benefit from synergies of the business combination.

The majority of the Company’s goodwill at 30 June 2022 relates to the acquisition of Close the Loop Limited, OF Resource Recovery Pty Ltd, Oceanic Agencies Pty Ltd, Foster International Packaging (Pty) Ltd and Crasti & Company Pty Ltd. These acquisitions were acquired with the intention of delivering benefits of revenue growth and synergy to the group. The lowest level within the group for which information about goodwill is monitored for internal management purposes is the CGUs for each acquisition. The Group has determined that goodwill is tested at a CGU level.

The Of Pack Group had some historical goodwill at 1 July 2021 which relates to the historical business combination that formed OF Pack and the business combination regarding the acquisition of OF Flexo Pty Ltd by Of Packaging Pty Ltd. This historical goodwill has been tested at year end and no impairment was necessary at 30 June 2022.

The recoverable amount of the Company CGUs was calculated on the basis of value in use using a discounted cash flow model. Future cash flows were projected for 5 years for each CGU, with key assumptions being CGU earnings which is based on expected future performance indicators of the CGU.

CtL Ltd Group Annual Report 30 June 2022 - Final

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Notes to the Financial Statements 30 June 2022

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i. Key assumptions

Key assumptions used in the value in use approach to test for impairment relate to the discount rate and the medium-term and long-term growth rates applied to projected cash flows. A value in use model is sensitive to the following inputs:

ii. Discount rate

The discount rates used in the discounted cash flow model reflect the Group’s estimate of the time value of money and risks specific to the Company CGU. Discount rates are based on the Group’s weighted average cost of capital (WACC), adjusted for market risk and specific risk factors. The post-tax discount rate for each relevant CGU is as follows:

Cash Generating Unit	Discount Rate
OF Packaging	13.5%
OF Flexo	16.0%
OF Resource Recovery	16.5%
Oceanic Agencies	16.5%
Crasti & Company	16.0%
Foster International Packaging	22.0%
Close the Loop Limited CGUs:
- Australia	16.5%
- USA	14.5%
- Europe	17.0%

iii. Projected cash flows

The projected cash flows are derived from 2022 actual results and 2023 to 2027 financial projections approved by the Board. This reflects the best estimate of the of the CGU group cash flows at the time of this report. Projected cash flows can differ from future actual cash flows and results of operations.

iv. Long-term growth rate into perpetuity

Long-term growth rate of 2.5% is used into perpetuity, based on the expected long-range growth rate for the industry.

v. Sensitivity range for impairment testing assumptions

As at 30 June 2022, management has identified that for the carrying amount to exceed the recoverable amount the discount rate would need to increase significantly for each CGU before any impairment was required to be made.

No impairment arose as a result of goodwill impairment testing for the period ended 30 June 2022.

D. Accounting policy for intangible assets

Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.

i. Customer Relationships, Patents and trademarks

Patents, trademarks, customer relationships and licences are recognised at cost of acquisition. Patents and trademarks have a finite life and are carried at cost less accumulated amortisation and any impairment losses. Intangible assets are amortised over their estimated useful life which range from 10 to 15 years.

CtL Ltd Group Annual Report 30 June 2022 - Final

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Notes to the Financial Statements 30 June 2022

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Note 21. Trade and other payables

ote 21. Trade and other payables
Note Trade payables Sundry payables and accruals Contingent consideration	Consolidated 30 June 2022 $'000 30 June 2021 $'000 6,142 1,450 2,218 84 1,969 - 10,329 1,534
		1,534

A. Contingent consideration – Oceanic Agencies Pty Ltd and Crasti & Company Pty Ltd

AASB 3: Business Combinations requires Close the Loop Limited to recognise the acquisition date fair value of the contingent consideration as part of the goodwill calculation. The obligation to pay the contingent consideration has been classified as a liability in accordance with AASB 132: Financial Instruments: Recognition and Measurement. Contingent consideration represents an estimate of the fair value of future instalments payable to the vendors of Oceanic Agencies and Crasti & Company which are based on future estimates of earnings before interest, tax, depreciation and amortisation (EBITDA). Close the Loop has made an assessment of the performance of both Oceanic Agencies and Crasti & Company over future accounting periods when consideration is payable. The terms under which the consideration is calculated and paid is part of the acquisition agreement. The consideration will only be paid if specified future events occur or conditions are met. The amount of contingent consideration recorded at the end of future reporting periods will be re-evaluated to reflect its fair value.

B. Accounting policy for trade and other payables

These amounts represent liabilities for goods and services provided to the consolidated group prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.

Note 22. Borrowings

Current liabilities Bank overdraft Bank loans Other borrowings Notes payable Directors’ loan Trade finance Convertible note Finance lease liabilities Non-current liabilities Bank loans Notes payable Related party loans Other borrowings Finance lease liabilities	Consolidated 30 June 2022 $'000 30 June 2021 $'000 673 - 2,227 652 1,128 - 598 - 16 - - 837 - 783 42 148 4,683 2,420 2,154 163 1,596 - - 346 53 - 169 8 3,971 517 8,654 2,937

CtL Ltd Group Annual Report 30 June 2022 - Final

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Notes to the Financial Statements 30 June 2022

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i. Trade assist facility

The group obtained a trade assist facility with a limit of $700,000 (30 June 2021: $0) with the Commonwealth Bank of Australia (“CBA”). The facility is secured as follows:

First ranking charge over the whole of the assets and rights, present and future, of Close the Loop Ltd together with relevant insurance assigned to CBA;
Unlimited guarantee by Close the Loop Technologies Pty Ltd and Close the Loop Operations Pty Ltd, supported by first ranking charges over the whole of the assets and rights, present and future; and
Acceptable insurance policy on accounts receivable, in the name of the Close the Loop Ltd, where CBA is listed as joint insured and first-loss payee.

At 30 June 2022 $521,078 of this facility was used. This facility was extinguished after 30 June 2022.

ii. Bank loans

The group refinanced a bank loan of $1,050,000 (30 June 2021: $0) to provide financial assistance for ClozDloop BV. This loan was obtained from Commonwealth Bank of Australia with 1 year term, with a variable interest rate of 4.15% per annum, and due to mature on 5 July 2022. This loan was repaid in full after year end in July 2022.

iii. Line of credit facility

CtL Inc established a US$1,500,000 line of credit with a US bank during May 2012. On September 17, 2021, the Company amended the agreement which reduced the revolving balance to US$750,000 and removed restrictive financial covenants. The agreement was further amended on June 17, 2022 to reduce the line of credit limit to US$600,000 and reinstate restrictive financial covenants. The line of credit is secured by business assets of CtL Inc and requires CtL Inc to meet certain restrictive covenants. The company was in compliance with these covenants as of June 30, 2022 and none of this facility was in use at that date.

As of June 30, 2022, the line of credit required the Company to meet certain restrictive covenants. Management believes the Company was in compliance with these covenants as of June 30, 2022.

The weighted average rate at June 30, 2022 was 4.00%. The Company had outstanding borrowings of $8,654,000 and $2,937,000 at June 30, 2022 and 2021, respectively.

iv. Note payable

Notes payable as of 30 June 2022 consists of the following:

$1,152,031 (US$836,144) note payable due in monthly instalments of $32,915 (USD$23,890) principal plus interest at a variable rate of LIBOR plus 2.50% (4.47% and 2.64% as at 30 June 2022 and 30 June 2021 respectively). This note is secured by business assets and matures in April 2025. The note is subject to a fixed rate interest swap of 4.819%.

$941,381 (US$683,254) note payable due in monthly instalments of $19,563 (USD$14,199) principal plus interest at a fixed rate of 5.138%. This note was secured by Close the Loop Inc's assets and matures in December 2026.

v. OF Packaging group facilities

OF Packaging Pty Ltd has following facilities with NAB Australia:

	30 June 2022	30 June 2021
	$'000	$'000
NAB Invoice finance	1,000	1,000
Documentary letter of credit – trade finance facility	1,000	1,000
Commercial Cards	50	50
Revolving leasing limit	200	200
Bank Guarantee	40	40
Bank overdraft	200	200
Business market loan	1,520	-

Facilities are secured with a security interest and charge over all of the present and future rights, property and undertaking of O F Packaging Pty Ltd. It is further secured by a guarantee and Indemnity of $1,000,000 given by

CtL Ltd Group Annual Report 30 June 2022 - Final

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Notes to the Financial Statements 30 June 2022

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Brendan Yee, Darren Jay Brits, Joseph Patrick Foster and Regan Patrick Foster. The group complies with bank covenants requirements.

O F Packaging Pty Ltd has a $1,520,000 Business Market Loan facility with NAB. Facilities are secured with a security interest and charge over all of the present and future rights, property and undertaking of O F Packaging Pty Ltd. It is further secured by a guarantee and Indemnity of $1,000,000 given by Brendan Yee, Darren Jay Brits, Joseph Patrick Foster and Regan Patrick Foster. The group complies with bank covenants requirements.

In 2021, OF Packaging Pty Ltd issued a convertible note which only converted to ordinary shares on successful completion of the then proposed ASX transaction. If the listing on the ASX was unsuccessful for whatever reason the convertible notes would be deemed to have zero value and terminate. The convertible note was converted to Close the Loop Limited shares on 30 November 2021.

vi. Finance lease liability

Lease liabilities are secured by the underlying leased assets.

Financing arrangements

Unrestricted access was available at the reporting date to the following lines of credit:

Total facilities Credit standby arrangement and loan facilities Used at the reporting date Credit standby arrangement and loan facilities Unused at the reporting date Credit standby arrangement and loan facilities	Consolidated 30 June 2022 $'000 30 June 2021 $'000 5,470 2,200 3,976 163 1,494 2,037	Consolidated 30 June 2022 $'000 30 June 2021 $'000 5,470 2,200 3,976 163 1,494 2,037
		163
		2,037

vii. Accounting policy for borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method.

Note 23. Lease Liabilities

Current liabilities Lease liabilities Non-current liabilities Lease liabilities	Consolidated 30 June 2022 $'000 30 June 2021 $'000 2,422 203 2,422 203 13,154 1,117 13,154 1,117 15,576 1,320

Refer to note 39 for further information on financial instruments.

CtL Ltd Group Annual Report 30 June 2022 - Final

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Notes to the Financial Statements 30 June 2022

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i. Accounting policy for lease liabilities

A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated group's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.

Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.

Note 24. Provisions

Current liabilities Employee benefits Other - unprocessed inventory Non-current liabilities Employee benefits Provision for income tax Other - unprocessed inventory Carrying amount at the start of the year Additional provisions recognised due to business combination Translation difference Carrying amount at the end of the year	Consolidated 30 June 2022 $'000 30 June 2021 $'000 1,090 178 766 - 1,856 178 126 65 307 - 433 65 2,289 243 Consolidated 30 June 2022 $'000 30 June 2021 $'000 - - 766 - - - 766 -	Consolidated 30 June 2022 $'000 30 June 2021 $'000 1,090 178 766 - 1,856 178 126 65 307 - 433 65 2,289 243 Consolidated 30 June 2022 $'000 30 June 2021 $'000 - - 766 - - - 766 -
		-

i. Accounting policy for provisions

Provisions are recognised when the consolidated group has a present (legal or constructive) obligation as a result of a past event, it is probable the consolidated group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.

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Notes to the Financial Statements 30 June 2022

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ii. Accounting policy for employee benefits

Short-term employee benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the (undiscounted) amounts expected to be paid when the liabilities are settled.

Other long-term employee benefits

The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Note 25. Deferred revenue

ote 25. Deferred revenue
Current liabilities Deferred revenue - government grants Deferred revenue – customer contracts Non-current liabilities Deferred revenue	Consolidated 30 June 2022 $'000 30 June 2021 $'000 430 - 750 - 1,180 - 152 - 152 - 1,332 -
		- -
		- -

i. Accounting policy for deferred revenue

Government grants are not recognised until there is reasonable assurance that the consolidated group will comply with the conditions attaching to them and that the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the consolidated group recognises as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the consolidated group should purchase, construct or otherwise acquire non-current assets (including property, plant and equipment) are recognised as deferred income in the consolidated statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Receipts from customers without any services being provided are recognised as deferred revenue until such time as goods or services are provided to the customer and the company is entitled to the revenue that then is recognised in the profit or loss for the period.

Note 26. Other current liabilities

Other current liabilities Indirect taxes payable Contract liabilities	Consolidated 30 June 2022 $'000 30 June 2021 $'000 792 - 10 - 802 -	Consolidated 30 June 2022 $'000 30 June 2021 $'000 792 - 10 - 802 -
		-

CtL Ltd Group Annual Report 30 June 2022 - Final

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Notes to the Financial Statements 30 June 2022

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Note 27. Equity – issued capital

Note 27. Equity – issued capital
Ordinary shares – fully paid A. Movements in ordinary share capital Balance at the beginning of the year Elimination of issued capital in OF Packaging Close the Loop issued capital at pre- acquisition Share buyback Issue of shares pursuant to prospectus Issue of bonus shares Shares issued upon conversion of Close the Loop convertible notes Deemed fair value of shares issued to OF Packaging Group Vendors on Reverse Acquisition (Refer to Note 41) Shares issued to pre-IPO investors Issue of shares due to conversion of employee options Issue of shares for IPO services Issue of shares for IPO services Transaction costs relating to share issues Balance	30 June 2022 Shares 335,451,478 Date 1 Jul 2021 30 Nov 2021 1 Jul 2021 2 Nov 2021 30 Nov 2021 30 Nov 2021 30 Nov 2021 30 Nov 2021 30 Nov 2021 17 Dec 2021 8 Apr 2022 17 Jun 2022	30 June 2021 Shares 98,200,478 Shares 200 (200) 98,200,018 (3,003,203) 60,000,000 4,516,302 9,500,000 150,978,361 9,190,000 70,000 3,000,000 3,000,000 335,451,478	30 June 2022 $’000 41,695 Issue price $0.25 $0.20 $0.20 $0.10 $0.10 $0.20 $0.25 $0.25	30 June 2021 $’000 427
				$’000 427 - - 12,000 - - 27,620 919 14 750 750 (785)
				41,695

There were no movements in the share capital in the year ended 30 June 2021.

i. Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital.

Every member present at a meeting in person or by proxy shall have one vote.

Shares issued to key management personnel and Directors as part of the employee share plans under borrowing arrangements are disclosed in note 28.

ii. Accounting policy for issued capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

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Notes to the Financial Statements 30 June 2022

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Note 28. Reserves

ote 28. Reserves
Foreign currency reserve Hedging reserve Share-based payments reserve Other reserves	Consolidated 30 June 2022 $'000 30 June 2021 $'000 (933) - 29 - - - 5 - (899) -
		-

i. Foreign currency reserve

The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign operations.

ii. Hedging reserve - cash flow hedges

The reserve is used to recognise the effective portion of the gain or loss of cash flow hedge instruments that is determined to be an effective hedge in relation to interest swap contracts.

iii. Other reserve

The other reserve relates to the acquisition of the additional interest in ClozDloop BV.

iv. Share-based payments reserve

Options under the Employee Share Option Plan or contractual arrangement:

Under the Close the Loop Ltd Employee Share Option Plan, approved at the 2006 AGM, share options have been granted to certain overseas full-time employees. These options are vested and exercisable on or before the expiry date only as and when certain performance based KPI’s and targets have been achieved by the respective individual. The exercise price is $0.20 (30 June 2020: $0.20) per share. The Options grant no voting or dividend rights and are not transferable. All options under this plan were exercised or expired during the year ended 30 June 2022.

The Parent Entity established the Employee Share Option Plan in October 2006 as a long-term incentive scheme to recognise talent and motivate employees to strive for group performance.

Grant Date	Expiry date	Number of options granted	Exercise price per option
1 April 2012	30 April 2022	375,000	$0.20

As part of the Australian Stock Exchange (ASX) listing process options were issued with the following characteristics:

Grant Date	Expiry date	Number of options granted	Exercise price per option
2 December 2021	2 December 2023	11,000,000	$0.30

CtL Ltd Group Annual Report 30 June 2022 - Final

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Notes to the Financial Statements 30 June 2022

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A summary of the movements of all company options issued is as follows: Options outstanding at the beginning of the year Options expired that were not exercised Options issued as part of the IPO Options exercised Options outstanding at the end of the year	30 June 2022 No. of options 375,000 (305,000) 11,000,000 (70,000) 11,000,000	30 June 2021 No. of options 375,000 - - -
		375,000

v. Measurement of fair values

Fair value of options granted to employees and short-term borrowings is deemed to represent the value of employee services received over the vesting periods.

The weighted average fair value of options granted during the year was $0.059. As at reporting date, no options have been exercised. These values were calculated using the Black Scholes Merton option-pricing model applying the following inputs:

•	Weighted average expected life of the option	2 years
•	Expected share price volatility	75%
•	Risk-free interest rate	1.5%

Historical share price volatility has been the basis for determining expected share price volatility as it is assumed that this is indicative of future volatility.

The life of the options is based on the historical exercise patterns, which may not eventuate in the future. During the current financial year, 305,000 options (30 June 2021: nil) previously vested were cancelled and $35,130 (US$25,497) related compensation cost was reversed (30 June 2020: $Nil).

vi. Movements in Reserves

Movements in each class of reserve during the current and previous financial year are set out below:

Balance at 1 July 2020 Movements Balance at 30 June 2021 Foreign operations – foreign currency translation differences Movement in reserves as a result of business combination Expiry of employee options Fair value gain on interest rate swap Balance at 30 June 2022	Foreign currency translation reserves $'000 - (99) (834) - - (933)	Hedge reserve $'000 - 29 - - 29	Share- based Payments reserves $'000 - 35 (35) - -	Other reserve $'000 - 5 - - 5	Total $'000 - (99) (765) (35) - (899)

CtL Ltd Group Annual Report 30 June 2022 - Final

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Notes to the Financial Statements 30 June 2022

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Note 29. Equity – dividends

Dividends paid during the financial year were as follows:

Dividend for the year ended 30 June 2022 (30 June 2021) of 511,596 cents (30 June 2021: 196,500 cents) per ordinary share	Consolidated 30 June 2022 $’000 30 Jun 2021 $’000 1,023 393

On various dates from 1 July 2021 to 30 November 2021, prior to the business combination with Close the Loop Limited, the directors of OF Packaging Pty Ltd declared interim dividends for the year ending 30 June 2022 of 511,596 cents per ordinary share in total to be paid on various dates throughout the 5-month period ended 30 November 2021, a total estimated distribution of $1,023,000 based on the number of ordinary shares on issue as at 30 November 2021. The number of OF Packaging Pty Ltd shares on issue was consistent throughout the reporting period. There are no dividends declared or paid from 30 November 2021 onwards.

i. Accumulated profits reserve

The accumulated profits reserve represents profits of entities within the Group transferred to a separate reserve to preserve their profit character. Such profits are available to enable payment of franked dividends in future years. Dividends of $1,023,000 (2021: $393,000) were distributed from the profits reserve during the year.

	30 June 2022	30 June 2021
	$’000	$’000
Dividend franking account
Amount of franking credits available to shareholders of Close the Loop
Limited for subsequent financial years	1,584	1,623

The ability to use franking credits is dependent upon the ability to declare dividends. In accordance with the tax consolidation legislation, the Company as the head entity in the tax-consolidated group has also assumed the benefit of $1,584 thousand (2021: $1,623 thousand) franking credits.

Note 30. Capital management

The key objectives of the Company when managing capital is to safeguard its ability to continue as a going concern and maintain optimal benefits to stakeholders. The Company defines capital as its equity and net debt. There has been no change to capital risk management policies during the year.

The Company manages its capital structure and makes funding decisions based on the prevailing economic environment and has a number of tools available to manage capital risk. These include maintaining a diversified debt portfolio, the ability to adjust the size and timing of dividends paid to shareholders and the issue of new shares.

The Board monitors a range of financial metrics including return on capital employed and gearing ratios. A key objective of the Company's capital risk management is to maintain compliance with the covenants attached to the Company's debts. The company complied with all lending covenants throughout the year ended 30 June 2022.

The Group monitors capital using a ratio of 'net debt' to 'adjusted equity'. Net debt is calculated as total liabilities (as shown in the statement of financial position) less cash and cash equivalents. Adjusted equity comprises all components of equity other than amounts accumulated in the hedging and cost of hedging reserves.

The Group's policy is to keep the ratio below 2.00. The Group's net debt to adjusted equity ratio at 30 June 2022 was as follows.

CtL Ltd Group Annual Report 30 June 2022 - Final

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Notes to the Financial Statements 30 June 2022

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Note Total liabilities Less: cash and cash equivalents Net debt Total equity Less: hedging reserve 28 Less: cost of hedging reserve Adjusted equity Net debt to adjusted equity ratio	Consolidated 30 June 2022 $'000 30 June 2021 $'000 39,036 6,694 (10,333) (5,612) 28,703 1,082 53,228 7,982 (29) - - - 53,199 7,982 1.9 times 7.4 times	Consolidated 30 June 2022 $'000 30 June 2021 $'000 39,036 6,694 (10,333) (5,612) 28,703 1,082 53,228 7,982 (29) - - - 53,199 7,982 1.9 times 7.4 times
		1,082
		7,982 - -
		7,982
		7.4 times

Note 31. Reconciliation of cash flows from operating activities

Cash flows from operating activities
Profit for the year after income tax expense
Adjustments for:
Depreciation
Amortisation
Tax expense
Changes in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease/(increase) in inventories
Decrease/(increase) in deferred tax assets
Increase in prepayments
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions and employee benefits
Increase/(decrease) in provision for income tax
Net cash from operating activities

Consolidated
30 June 2022
$’000
30 June 2021
$’000
4,598
4,252
2,946
121
3,021
225
(1,622)
8,743
4,598
(8,737)
840
(1,185)
671
(2,233)
(40)
262
(3,771)
(14)
4,252
82
(479)
67
3,148
6,204

Note 32. Commitments

As at 1 July 2020, the consolidated group's lease commitments have been captured within the lease liability amount on the statement of financial position following the adoption of AASB 16 Leases. The company did not have any other commitments as at 30 June 2022 or 30 June 2021.

CtL Ltd Group Annual Report 30 June 2022 - Final

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Notes to the Financial Statements 30 June 2022

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Note 33. Key management personnel disclosures

Short-term employee benefits Post-employment benefits Long-term benefits Director fees (short-term benefits)	Consolidated 30 June 2022 $'000 30 June 2021 $'000 1,146 175 57 19 110 6 76 - 1,389 200	Consolidated 30 June 2022 $'000 30 June 2021 $'000 1,146 175 57 19 110 6 76 - 1,389 200
		200

Key management personnel disclosures

Key management personnel include those people having authority and responsibility for planning, directing and controlling the activities of the group either directly or indirectly. This includes the Board of Directors, the Chief Executive Officer, and the Chief Financial Officer who is the Company Secretary.

Note 34. Contingent liabilities

As part of the acquisition of Oceanic Agencies Pty Ltd there is potential contingent consideration payable in the form of a 12 month earn out capped at $750,000. This has been taken up as a liability at 30 June 2022.

As part of the acquisition of Crasti and Company Pty Ltd there is potential contingent consideration payable in the form of a 12 month earn out capped at $1,780,000. This has been taken up as a liability at 30 June 2022.

The Directors are not aware of any other material contingent liabilities as at 30 June 2022 except for the matters noted in note 22 in respect of borrowings and facilities.

Note 35. Contingent assets

The consolidated group has been formally notified that it has been indemnified by its insurers as a result of the fire at its Somerton facility. At 30 June 2022 no amounts have been recorded for the insurance proceeds that will be received during the 2023 financial year as an accurate determination of the amount to be received has not been finalised to date.

Note 36. Related party transactions

The group's main related parties are the Directors of the company and key management personnel.

i. Key management personnel

Disclosures relating to key management personnel are set out in note 33.

ii. Transactions with related parties

Options

On 30 April 2009, options were granted to certain employees pursuant to an Employee Share Option Plan passed at the AGM held in October 2006. Included in the ordinary shares are shares issued under the Employee Share Option Plan which are financed by borrowing arrangements. All borrowing arrangements were settled during the course of the year ended 30 June 2022 and none of these options or borrowing arrangements remain outstanding at year end.

iii. Transactions with directors and director related entities

Silvio Salom, was also a Director of Close the Loop Nominees Pty Ltd. Director fees for the services of Silvio Salom were paid to Close the Loop Nominees Pty Ltd. All services were based on normal commercial terms and conditions. The amount paid or payable for the financial year has been disclosed in Key Management Personnel Compensation in note 33.

CtL Ltd Group Annual Report 30 June 2022 - Final

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Notes to the Financial Statements 30 June 2022

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iv. Receivable from and payable to related parties

The wholly owned group consists of Close the Loop Ltd ("CtL Ltd") and its wholly owned controlled entities:

Close the Loop Operations Pty Ltd ("CtL Operations")
Close the Loop Technologies Pty Ltd ("CtL Technologies")
Close the Loop Europe NV ("CtL Europe NV")
Close the Loop (Europe) Limited ("CtL Europe")
Close the Loop Inc ("CtL Inc")
ClozDloop BV ("CDL")
ClozDloop France
ClozDloop s.r.o.
TonerPlas Pty Ltd
Close the Loop Recovery Limited
O F Packaging Pty Ltd
O F Flexo Pty Ltd
O F Resource Recovery Pty Ltd
O F Resource Recovery Holdings Pty Ltd
Foster International Packaging (Pty) Ltd
Oceanic Agencies Pty Ltd
Crasti & Company Pty Ltd
Close the Loop Polymers Pty Ltd

Percentage interests in these controlled entities are set out in note 38.

v. Management fees, strategic fees and advice and know how charged to/from controlled entities

CtL Ltd incurs costs managing and overseeing its operations in Australia, Europe, South Africa and the USA. In addition, it incurs certain costs in relation to management and oversight. These costs are recovered through levying a management fee. During the financial year, CtL Ltd charged each operating business in the consolidated group management fees in proportion to their estimated annual revenue contribution to the consolidated group. During the financial year, CtL Ltd charged management fees, strategic fees, advice and know how charges and recharged corporate salaries to group companies of $991,820 (30 June 2021: $0).

OF Packaging Pty Ltd has received a licence fee from Foster International Packaging Pty Ltd based on 7% of revenue per annum which generated intercompany licence fees of $375,864 (2021: $0) since the business combination was completed on 30 November 2021. The 7% licence fee is paid after any other head office intercompany management fees are deducted from the gross amount of the licence fee due and payable.

vi. Dividends paid by controlled entities

CtL Ltd invested in CtL Inc in the form of redeemable preference shares with a dividend yield of 9% p.a. During the current financial year, CtL Inc paid CtL Ltd, $156,772 (US$108,000) (30 June 2021: $0) as a dividend on its shares.

vii. Loans advanced to ClozDloop BV by Close the Loop Inc.

In April of 2017, Close the Loop Inc. issued a line of credit with a related party, ClozDloop BV. The related party can borrow up to $5,806,358 (US$4 million) and interest is due annually in April at a rate of 2.82%. The note may be repaid at any time in whole or in part without a penalty. As at 30 June 2022, the balance was $5,861,563 (US$4,038,031) which includes principle and interest (30 June 2021: $0).

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Notes to the Financial Statements 30 June 2022

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Note 37. Parent entity information

Result of parent entity Profit/(Loss) for the period Other comprehensive income for the year, net of tax Total comprehensive income/(loss) for the period Financial position of parent entity at year end Total current assets Total non-current assets Total assets Total current liabilities Total non-current liabilities Total liabilities Total equity of the parent entity comprising of Share capital Retained earnings Total equity	Parent 2022 $’000 (2,423) - (2,423) 10,624 12,179 22,803 2,251 280 2,531 27,789 (7,517) 20,272	Parent 2021 $’000 4,033 -
		4,033
		10,873 2,340
		13,213
		4,018 1,290
		5,308
		427 7,478
		7,905

i. Guarantees entered into by the parent entity in relation to the debts of its subsidiaries

The parent entity has provided a letter of support to ClozDloop BV for audit purposes.

ii. Contingent liabilities

The parent entity had two contingent liabilities as at 30 June 2022 both of which are disclosed in note 34 and no contingent liabilities at 30 June 2021.

iii. Capital commitments - Property, plant and equipment

The parent entity had no capital commitments for property, plant and equipment as at 30 June 2022, other than the capital equipment that will be required to rebuild the Somerton facility as a result of the fire. There were no capital commitments at 30 June 2021.

iv. Significant accounting policies

The accounting policies of the parent entity are consistent with those of the consolidated group, as disclosed in note 1, except for the following:

Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in associates are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impairment of the investment.

Note 38. Interests in subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 6:

CtL Ltd Group Annual Report 30 June 2022 - Final

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Notes to the Financial Statements 30 June 2022

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	Principal place of	Ownership	interest
Name	business / Country of	30 June 2022	30 June	2021
	incorporation	%	%
Close the Loop Operations Pty Ltd	Australia	100%		-
Close the Loop Technologies Pty Ltd	Australia	100%		-
Close the Loop Europe NV	Belgium	100%		-
Close the Loop (Europe) Limited	United Kingdom	100%		-
Close the Loop Inc	United States of America	100%		-
ClozDloop BV	Belgium	80%		-
ClozDloop France	France	80%		-
ClozDloop s.r.o.	Czech Republic	80%		-
TonerPlas Pty Ltd	Australia	100%		-
Close the Loop Recovery Limited	Canada	100%		-
O F Packaging Pty Ltd	Australia	100%		-
O F Flexo Pty Ltd	Australia	100%		100%
O F Resource Recovery Pty Ltd	Australia	100%		-
O F Resource Recovery Holdings Pty Ltd	Australia	100%		-
Foster International Packaging (Pty) Ltd	Australia	84.75%		-
Oceanic Agencies Pty Ltd	Australia	100%		-
Crasti & Company Pty Ltd	Australia	100%		-
Close the Loop Polymers Pty Ltd	Australia	60%		-

Subsidiary financial statements used in the preparation of these consolidated financial statements have also been prepared as at the same reporting date as the group’s financial statements.

i. Significant restrictions

There are no significant restrictions over the group’s ability to access or use assets, and settle liabilities, of the group.

Note 39. Financial instruments – Fair values and risk management

A. Financial risk management objectives

The consolidated group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated group. The consolidated group uses derivative financial instruments such as forward foreign exchange contracts to hedge certain risk exposures. Derivatives are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The consolidated group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk.

Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors ('the Board'). These policies include identification and analysis of the risk exposure of the consolidated group and appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the consolidated group's operating units. Finance reports to the Board on a monthly basis.

B. Market risk

i. Foreign currency risk

The group is exposed to foreign exchange movements due to subsidiary companies operating in the source currency of the region in which they trade. These foreign currency exposures are not hedged by the group. Future profit and losses from ongoing operations of subsidiary companies which are consolidated to form the group and cash flows generated by these business units will be impacted by foreign currency movements.

ii. Price risk

The consolidated group is not exposed to any significant price risk.

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Notes to the Financial Statements 30 June 2022

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iii. Interest rate risk

The consolidated group's main interest rate risk arises from long-term borrowings and cash and cash equivalents. The group has no material exposure to floating rate instruments.

iv. Sensitivity analysis

There are no exposures to changes in interest rates that would have a material impact on how profit and equity values are reported at the end of the reporting period. These sensitivities also assume that the movement in a particular variable is independent of other variables.

C. Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated group. The consolidated group has a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit limits. The consolidated group obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The consolidated group does not hold any collateral.

Credit risk is managed through maintaining procedures ensuring, to the extent possible, that customers and counterparties to transactions are of sound credit worthiness, which includes the utilisation of systems for the approval, granting and renewal of credit limits, the regular monitoring of exposures against such limits and the monitoring of the financial stability of significant customers and counterparties. Such monitoring is used in assessing receivables for impairment. Depending on the division within the group, credit terms are generally 30 days from the date of invoice.

Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating or in entities that the Board has otherwise assessed as being financially sound.

The consolidated group has no significant concentrations of credit risk exposure with any single counterparty or group of counterparties. Details with respect to credit risk of trade and other receivables are provided in note 14. Trade and other receivables that are neither past due nor impaired are considered to be of high credit quality. Aggregates of such amounts are detailed in note 14.

Credit risk related to balances with banks and other financial institutions is managed by the Board. Such policy requires that surplus funds are only invested with counterparties with a Standard and Poor’s rating of at least AA-.

D. Liquidity risk

Vigilant liquidity risk management requires the consolidated group to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.

The consolidated group manages liquidity risk through the following mechanisms:

preparing forward-looking cash flow analyses in relation to its operating, investing and financing activities;
using derivatives that are only traded in highly liquid markets;
monitoring undrawn credit facilities;
obtaining funding from a variety of sources;
maintaining a reputable credit profile;
managing credit risk related to financial assets;
only investing surplus cash with major financial institutions;
comparing the maturity profile of financial liabilities with the realisation profile of financial assets; and
the Directors monitor borrowings maturity periods, effect on cash flow and the need to renegotiate borrowings terms.

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Notes to the Financial Statements 30 June 2022

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i. Remaining contractual maturities

The table below reflects an undiscounted contractual maturity analysis for non-derivative financial liabilities. The timing of cash flows presented in the table to settle financial liabilities reflect the earliest contractual settlement dates and do not reflect management’s expectations that banking facilities will not be rolled forward.

The following tables detail the consolidated group's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.

Consolidated - 2022 Non-derivatives Non-interest bearing Trade payables Related party borrowings Interest-bearing - variable Bank overdraft Bank loans Notes payable Lease liability Total non-derivatives Consolidated - 2021 Non-derivatives Non-interest bearing Trade payables Interest-bearing - variable Related party loans Bank loans Trade finance Convertible note Lease liability Total non-derivatives	1 year or less $'000 6,467 16 673 2,227 598 42 10,023 1 year or less $'000 1,534 - 652 837 783 148 3,954	1 year or less $'000 6,467 16 673 2,227 598 42 10,023 1 year or less $'000 1,534 - 652 837 783 148 3,954	Between 1 and 5 years $'000 2,154 1,596 167	Over 5 years $'000 Over 5 years $'000 -	Remaining contractual maturities $'000 Remaining contractual maturities $'000 -
			3,917
			Between 1 and 5 years $'000 - 346 163 - - 8 517

ii. Financial assets pledged as collateral

Certain financial assets have been pledged as security for debt and their realisation into cash may be restricted subject to terms and conditions attached to the relevant debt contracts.

E. Fair value of financial instruments

Investments are carried at fair value based on market rates 30 June 2022.

Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.

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Notes to the Financial Statements 30 June 2022

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F. Fair value measurement

i. Accounting policy for fair value measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Due to the short term nature of trade receivables and payables, the cost is assumed to be fair value.

Note 40. Auditors remuneration

During the financial year the following fees were paid or payable for services provided by the auditor of the company:

Audit and review services
Auditors of the Group – Nexia Australia
Audit and review of financial statements
Other auditors
Half year review
Audit and review of financial statements
Assurance services
Auditors of the Group – Nexia Australia
Other assurance services
Other auditors
Other assurance services
Other services
Auditors of the Group – Nexia Australia
Investigating accountants report
Other auditors
Taxation advice and tax compliance services
Total Auditors remuneration

Consolidated
30 June 2022
$'000
30 June 2021
$'000
90
39
90
39
184
-
92
-
276
-
20
-
20
-
34
-
34
-
150
-
150
-
9
-
579
39

Note 41. Business combinations

In accordance with AASB, 3 reverse acquisitions on 30 November 2021, OF Packaging Pty Ltd acquired 100% of the ordinary shares of Close the Loop Limited and its subsidiaries for the total consideration via the issue of 109,213,116 shares with a value of $21,842,623. Close the Loop is a resource recovery business specialising in recycling complex waste streams with operations in Australia, USA, and Europe. It is the legal entity that listed

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Notes to the Financial Statements 30 June 2022

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on the Australian Stock Exchange on 2 December 2021. The goodwill of $7,522,000 represents the expected synergies from merging this business with the packaging division and expanding the service offering of the Group to circular integration for the existing customer base of both entities. The acquired business contributed revenues of $21,303,000 and loss before tax of $4,408,000 to the consolidated entity for the period from 1 December to 30 June 2022. If the acquisition occurred on 1 July 2021, the full year contributions would have been revenues of $35,124,000 and profit before tax of $2,093,000. The values identified in relation to the acquisition of Close the Loop are accounted for on a provisional basis as at 30 June 2022.

Details of the acquisition are as follows:

Cash and cash equivalents Trade receivables Prepayments and other debtors Plant and equipment / Right of use assets Inventory Deferred tax asset Intangibles Trade payables Deferred revenue Borrowings Lease liability Employee benefits Net assets acquired Goodwill Acquisition-date fair value of the total consideration transferred Representing: Cash paid or payable to vendors Close the Loop shares issued to vendors Total Acuisition costs exensed to rofit or loss	Fair value $’000 558 7,064 1,210 19,924 529 463 10,219 (6,601) (1,552) (4,823) (12,121) (549)
	14,321 7,522
	21,843
	- 21,843
	21,843
	-

Acquisition costs expensed to profit or loss

On 30 November 2021, Close the Loop Limited acquired 100% of the ordinary shares of OF Resource Recovery Holdings Pty Ltd and its wholly owned subsidiary for total consideration via the issue of 15,414,020 shares with a value of $3,082,804. This paper and carton recycling business operates in the recycling industry. It was acquired as part of the IPO to expand the recycling capabilities of the Close the Loop Group’s service offering. The goodwill of $3,416,000 represents the expected synergies from merging this business with the recycling division and expanding the service offering of the Group. The acquired business contributed revenues of $5,143,000 and profit before tax of $548,000 to the consolidated entity for the period from 1 December to 30 June 2022. If the acquisition occurred on 1 July 2021, the full year contributions would have been revenues of $8,178,000 and profit before tax of $762,000. The values identified in relation to the acquisition of OF Resource Recovery Holdings Pty Ltd are accounted for on a provisional basis as at 30 June 2022.

Details of the acquisition are as follows:

	Fair value
	$’000
Cash and cash equivalents	587
Trade receivables	472
Other debtors	54
Plant and equipment / Right of use assets	1,294
Inventory	25
Deferred tax asset	388

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Notes to the Financial Statements 30 June 2022

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Trade payables Deferred tax liability Financial liabilities Lease liabilities Employee benefits Net assets acquired Goodwill Acquisition-date fair value of the total consideration transferred Representing: Cash paid or payable to vendors Close the Loop shares issued to vendors Total Acquisition costs expensed to profit or loss	Fair value $’000 (1,172) (307) (611) (935) (128)
	(333) 3,416
	3,083
	- 3,083
	3,083
	-

On 30 November 2021, Close the Loop Limited acquired 84.75% of the ordinary shares of Foster International Packaging (Pty) Ltd for total consideration via the issue of 8,855,147 shares with a value of $1,771,029. This flexible and carton packaging business operates in the packaging industry in Southern Africa. It was acquired as part of the IPO to expand the global packaging capabilities of Close the Loop Group’s service offering. The discount on acquisition of $222,000 has been provisionally accounted for, whilst management undertake a review of the fair values of the assets acquired. The acquired business contributed revenues of $5,480,000 and profit before tax of $301,000 to the consolidated entity for the period from 1 December to 30 June 2022. If the acquisition occurred on 1 July 2021, the full year contributions would have been revenues of $8,641,000 and profit before tax of $612,000. The values identified in relation to the acquisition of Foster International Packaging (Pty) Ltd are accounted for on a provisional basis as at 30 June 2022.

Details of the acquisition are as follows:

Cash and cash equivalents
Trade receivables
Investments
Inventory
Plant & equipment / Right of use asset
Deferred tax asset
Other debtors
Trade payables
Deferred tax liability
Financial liabilities
Lease liabilities
Net assets acquired
Recognised amount of non-controlling interest
Discount on acquisition attributable to Close the Loop
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid or payable to vendor

Fair value
$’000
887
1,695
88
699
39
33
8
(442)
(24)
(584)
(48)
2,351
(358)
(222)
1,771
-

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Notes to the Financial Statements 30 June 2022 Close the Loop shares issued to vendors Total Acquisition costs expensed to profit or loss	Fair value $’000 1,771 1,771 -

On 1 December 2021, Close the Loop Limited acquired 100% of the ordinary shares of Oceanic Agencies Pty Ltd for total consideration of $4,284,000 with $2,500,000 paid at settlement and the balance in the form of an earn out of up to $750,000 based on the financial performance of the business in the 12 months to 30 November 2022. The total consideration paid includes a working capital adjustment. This seafood packaging and bulk solution provider operates in the seafood packaging industry in Australia. The acquisition strengthens Close the Loop’s bulk and commercial seafood packaging capability, in a growing and highly complementary sector to its existing seafood business. The goodwill of $2,933,000 represents the expected synergies from merging this business with the packaging division and leveraging the current knowledge and know-how of OF Packaging’s seafood packaging business. The acquired business contributed revenues of $4,430,000 and profit before tax of $646,000 to the consolidated entity for the period from 1 December to 30 June 2022. If the acquisition occurred on 1 July 2021, the full year contributions would have been revenues of $6,004,000 and profit before tax of $688,000. The values identified in relation to the acquisition of Oceanic Agencies Pty Ltd are accounted for on a provisional basis as at 30 June 2022.

Details of the acquisition are as follows:

Cash and cash equivalents
Trade receivables
Inventory
Other Receivables
Plant and equipment
Trade payables
Deferred tax liability
Other Payables
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid or payable to vendor
Acquisition costs expensed to profit or loss
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: cash and cash equivalents
Less: payments to be made in future periods
Net cash used

Fair value
$’000
769
302
219
451
87
(219)
(3)
(255)
1,351
2,933
4,284
4,284
17
4,284
(769)
(1,015)
2,500

On 31 March 2022, Close the Loop Limited acquired the assets and liabilities of Crasti & Company Pty Ltd for total consideration of $4,387,500 plus inventory with $5,512,480 paid at settlement which includes the payment

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Notes to the Financial Statements 30 June 2022

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of $2,271,508 for inventory and the balance in the form of an earn out of up to $1,780,000 based on the financial performance of the business in the 12 months to 31 March 2023. The total consideration paid includes a working capital adjustment. Crasti & Company is one of Australia’s largest Flexible Intermediate Bulk Container (FIBC) and bulk packaging suppliers. The acquisition strengthens Close the Loop’s bulk and flexible packaging capability, in a growing and highly complementary sector to its existing packaging business. The goodwill of $3,384,000 represents the expected synergies from merging this business with the packaging division and leveraging the current knowledge and know-how of OF Packaging’s packaging business. The acquired business contributed revenues of $2,513,000 and profit before tax of $409,000 to the consolidated entity for the period from 1 April to 30 June 2022. If the acquisition occurred on 1 July 2021, the full year contributions would have been revenues of $11,469,000 and profit before tax of $1,438,000. The values identified in relation to the acquisition of Crasti & Company Pty Ltd are accounted for on a provisional basis as at 30 June 2022.

Details of the acquisition are as follows:

Cash and cash equivalents Trade receivables Inventory Other Receivables Plant and equipment Trade payables Deferred tax liability Employee entitlements Net assets acquired Goodwill Acquisition-date fair value of the total consideration transferred Representing: Cash paid or payable to vendor Acquisition costs expensed to profit or loss Cash used to acquire business, net of cash acquired: Acquisition-date fair value of the total consideration transferred Less: cash and cash equivalents Less: payments to be made in future periods Net cash used	Fair value $’000 - - 2,272 - - - - (144)
	2,128 3,384
	5,512
	5,512
	84
	5,512 - (1,780)
	3,732

Note 42. Events after the reporting period

On 25 July 2022 Close the Loop Limited entered into an agreement to acquire all of the shares of Alliance Paper Pty Ltd and its fully owned subsidiary Sustain Paper Pty Ltd for $1 payable at completion in cash plus any working capital requirements of the business payable at competition in cash. Completion is expected to occur on 30 August 2022. The acquisition is being funded by capital raised in the Initial Public Offering and bank debt. Due to the proximity of the acquisition to the release of the year end financial statements, it is impracticable at this stage to include other disclosures in relation to the business combination such as the purchase price accounting including the fair value of net assets acquired, any prospective intangibles or the amount of revenue or profit or loss post acquisition due to the acquisition accounting not being finalised at the date of the release of the 30 June 2022 full year report.

Subsequent to 30 June 2022, the company has commenced discussions with a number of potential acquisition targets for share and or asset purchases for business that are complimentary to the current service offerings of

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Notes to the Financial Statements 30 June 2022

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the Group. At the time of this report no binding agreements have been entered into with any of these potential acquisition targets.

The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has been financially positive for the consolidated entity up to 30 June 2022, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.

No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in future financial years.

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2 DIRECTORS DECLARATION

In the opinion of the directors of Close the Loop Limited:

The attached consolidated financial statements and notes comply with the Corporations Act 2001 , the Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements:
the attached financial statements and notes give a true and fair view of the consolidated group's financial position as at 30 June 2022 and of its performance for the financial year ended on that date; and
There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief executive officer and chief financial officer for the financial year ended 30 June 2022.

Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001 .

On behalf of the directors

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Signed: ____ Date: 26 August 2022 Gregory Toll Director

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3 ASX ADDITIONAL INFORMATION

This section contains additional information required by the Australian Securities Exchange Limited listing rules not disclosed elsewhere in this report.

Shareholdings (as at 15 August 2022)

Substantial shareholders

A substantial shareholder is one who has a relevant interest in 5 per cent or more of the total issued shares in the Company. Following are the substantial shareholders in the Company based on notifications provided to the Company under the Corporations Act 2001:

Shareholder	Ordinary shares	Percentage
Foster Packaging Holdings Pty Ltd	64,308,920	19.17%
Lawrence Warren Jaffe	65,876,294	19.64%
Brendan Yee	61,630,918	18.37%

Substantial option holders

A substantial option holder is one who has a relevant interest in 20 per cent or more of the equity securities in an unquoted class total issued shares in the Company. Following are the substantial shareholders in the Company based on notifications provided to the Company under the Corporations Act 2001:

Option holder	Options	Percentage
Lawrence Warren Jaffe	3,000,000	27%

Unquoted equity securities

Options

There are 11 million options on issue that are not quoted securities.

Voting rights

Ordinary shares

Each Shareholder entitled to vote may vote in person or by proxy, attorney or representative. On a poll, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder shall, in respect of each Share held by that person or in respect of which the person is appointed proxy, attorney or representative, has one vote for each Share held.

Options

here are no voting rights attached to the options.
istribution of equity security holders
Ordinary shares
Category
Total
holders
Units
Percentage of
issued capital
1 – 1,000
14
1,986
0.00
1,001 – 5,000
269
725,360
0.22
5,001 – 10,000
207
1,770,332
0.53
10,001 – 100,000
605
24,322,707
7.25
100,001 and over
222
308,631,093
92.00
1,317
335,451,478
100.00

Options
Total
holders
Units
-
-
-
-
-
-
-
-
12
11,000,000
12
11,000,000

There are no voting rights attached to the options.

Distribution of equity security holders

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There are 25 shareholders holding less than a marketable parcel of shares each (i.e., less than $500 per parcel of shares) based on the closing price of AUD 0.42 on 15 August 2022 representing a total of 14,175 shares. The minimum marketable parcel of shares is 1,191 shares on 15 August 2022.

Securities purchased on-market

There were no securities purchased on market.

Securities exchange

The Company is only listed on the Australian Securities Exchange.

On-market buy-back

There is no current, past or planned on-market buy-back activity.

Twenty largest shareholders

wenty largest shareholders
Name 1 FOSTER PACKAGING HOLDINGS PTY LTD 2 OMNIVERSE HOLDINGS PTY LTD 3 CITICORP NOMINEES PTY LIMITED 4 DE SIMONE NOMINEES PTY LTD FUND A/C> 5 J P MORGAN NOMINEES AUSTRALIA PTY LIMITED 6 1 PITWO PTY LTD 7 REGAN PATRICK FOSTER 8 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 9 HARRY DANIEL SYKES 10 ALTOR CAPITAL MANAGEMENT PTY LTD ALPHA FUND A/C> 11 MR LAWRENCE WARREN JAFFE + MRS PAULEY JAFFE 12 RYCO NOMINEES PTY LTD 13 GIUSEPPE DE SIMONE 14 BNP PARIBAS NOMINEES PTY LTD RETAILCLIENT DRP> 15 ANGELA KRISTEN OGONEK 16 BNP PARIBAS NOMS PTY LTD 17 TOLL ASSOCIATES PTY LIMITED 18 MR LAWRENCE WARREN JAFFE A/C> 19 TOM OGONEK 20 MR DAVID ALLEN WEINSTEIN Total Securities of Top 20 Holdings Total Remaining Holders Balance Total Securities on Issue		Number of ordinary shares held 62,640,114 60,094,279 38,968,416 10,480,215 8,486,771 7,507,010 6,890,363 6,564,356 4,951,144 3,700,000 3,300,000 3,292,388 3,235,137 2,596,134 2,500,000 2,251,618 2,200,000 2,100,000 2,000,080 1,713,915	Percentage of capital held 18.67% 17.91% 11.62% 3.12% 2.53% 2.24% 2.05% 1.96% 1.48% 1.10% 0.98% 0.98% 0.96% 0.77% 0.75% 0.67% 0.66% 0.63% 0.60% 0.51%
		235,471,940 99,979,538 335,351,478	70.20% 29.80% 100.00%

Restricted securities

The company has the following fully paid ordinary restricted securities that are subject to voluntary escrow:

Name Fully Paid Ordinary Shares Escrowed 12 Months from Date of ASX Listing Shares Escrowed 12 Months from Date of Quotation Shares Escrowed 12 Months from Date of Quotation Total Restricted Securities	Number of ordinary shares Date escrow period ends 141,044,745 1 December 2022 3,000,000 8 April 2023 3,000,000 17 June 2023 147,044,745	Holders 95 2 2
		99

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Other information

Close the Loop Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares.

Offices and Officers

Principal registered office 208 Hume Highway Somerton VIC 3062 Australia Telephone: 1800 242 473 Facsimile: 03 9930 8695

Principal place of business 208 Hume Highway Somerton VIC 3062 Australia

Company Secretary Marc Lichtenstein

Location of Share Registry

Computershare Investor Services Pty Limited Yarra Falls, 452 Johnston Street Abbotsford VIC 3067 Telephone: 1300 850 505 Telephone: +61 3 9415 4000 (international)

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AI assistant

CLOSE THE LOOP LTD. — Annual Report 2022

64659_rns_2022-08-25_4606ca20-d4a3-4530-bc83-bfdf6d4bc9e1.pdf

APPENDIX 4E

1.1 Company details

1.2 Results for announcement to the market

Dividends

Comments

1.3 Net tangible assets

1.4 Control gained over entities

1.5 Loss of Control over entities

1.6 Details of associated and joint venture entities

1.7 Details of returns to shareholders

1.8 Audit

1.9 Attachments

1.10 Signed

Annual Report 30 June 2022

General Information

CORPORATE GOVERNANCE STATEMENT

Corporate Governance Framework

DIRECTORS’ REPORT

Directors

Directors' Meetings

Principle Activities

Operating and financial review

Overview of the Group

Investments for future performance

Review of financial condition

Review of principal business (Close the Loop Limited)

Review of Operating Entities

Dividends

Events Subsequent to reporting date

Likely developments

Environmental regulation

Directors' interests

Share options

Indemnification and insurance of officers and auditors

Non-audit services

Proceedings on behalf of the Company

Lead auditor's independence declaration

Rounding of Amounts

Remuneration report – audited

Key Developments in FY22

Review of remuneration structure - audited

Remuneration strategy and governance

Principles of compensation - audited

Executive KMPs

Fixed Compensation

Performance linked compensation

Short-term incentives (STI)

Element

Details

Malus and clawback

Close the Loop’s performance and short-term incentive (STI) outcomes

Long-term incentives (LTI)

Future LTI plan not yet granted

Consequences of performance on shareholder wealth

Key management personnel

Service contracts

Non-executive directors

Directors' and executive officers' remuneration – audited

Equity Instruments

Rights and options over equity instruments granted as compensation - audited

Exercise of options granted as compensation – audited

Details of equity incentives affecting current and future remuneration – audited

Analysis of movements in equity instruments - audited

Options and rights over equity instruments

Key management personnel transactions - audited

Loans to and from key management personnel and their related parties

Other transactions with key management personnel

Movements in shares

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Note 1. Reporting entity

Note 2. Basis of accounting

i. Historical cost convention

Note 3. Functional and presentation currency

Note 4. Use of judgements estimates and assumptions

i. Coronavirus (COVID-19) pandemic

ii. Allowance for expected credit losses

iii. Provision for impairment of inventories

CLOSE THE LOOP LTD. Annual Report 2022

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