CLOSE THE LOOP LTD. — Investor Presentation 2024

Feb 25, 2024

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INVESTOR PRESENTATION 1H’24

A S X : C L G 26 February 2024

Disclaimer

Presenters

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Joe Foster Chief Executive Officer

Agenda

3

5 1H’24 Highlights

Our Business

14

Management focus areas

Marc Lichtenstein Chief Financial Officer

11 Financial statements

The following disclaimer applies to this presentation. You should read this disclaimer carefully before reading or making any other use of this presentation or any information contained in this presentation. By accepting this presentation, you represent and warrant that you are entitled to receive this presentation in accordance with the restrictions, and agree to be bound by the limitations, contained within it. This presentation has been prepared by Close the Loop Limited ACN 095 718 317 (“Close the Loop Group”, “Close the Loop” or the “Company”) and does not constitute or form part of, and should not be construed as, an offer, solicitation or invitation to subscribe for, underwrite or otherwise acquire, any securities of Close the Loop or any member of its group nor should it or any part of it form the basis of, or be relied on in connection with, any contract to purchase or subscribe for any securities of Close the Loop or any member of its group, nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever.

This presentation is not a prospectus, product disclosure statement or other disclosure document under Australian law (or any other law) and has not been lodged with the Australian Securities and Investments Commission (or any other regulatory body in Australia or abroad). This presentation contains summary information about Close the Loop and its related bodies corporate and their activities, which is current as at the date of this presentation. The information included in this presentation is of a general nature and does not purport to be complete nor does it contain all the information which a prospective investor should consider when making an investment decision.

Each recipient of this presentation should make its own enquiries and investigations regarding all information in this presentation including but not limited to the assumptions, uncertainties and contingencies which may affect the future operations of Close the Loop and the impact that different future outcomes may have on Close the Loop. This presentation has been prepared without taking account of any person’s investment objectives, financial situation or particular needs. Before making an investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs, make their own assessment of the information and seek legal, financial, accounting and taxation advice appropriate to their jurisdiction in relation to the information and any action taken on the basis of the information.

The information included in this presentation has been provided to you solely for your information and background and is subject to updating, completion, revision and amendment and such information may change materially. Unless required by applicable law or regulation, no person (including Close the Loop) is under any obligation to update or keep current the information contained in this presentation and any opinions expressed in relation thereto are subject to change without notice. No representation or warranty, express or implied, is made as to the fairness, currency, accuracy, reasonableness or completeness of the information contained herein.

None of Close the Loop’s advisers, directors, officers, employees or agents have authorised, permitted or caused the issue, despatch or provision of this presentation nor, except to the extent referred to in this presentation, made or purported to make any statement in this presentation. Neither Close the Loop nor any other person accepts any liability and Close the Loop, its related bodies corporate and advisers their respective directors, officers and employees, to the maximum extent permitted by law, expressly disclaim all liabilities and responsibility for any loss howsoever arising, directly or indirectly, from this presentation or its contents.

DELIVERING OUR ZERO WASTE TO LANDFILL PROMISE

Close the Loop is a global leader in the fast-growing circular economy

Our recovery and sustainable solutions reduce waste to landfill by collecting consumer electronics, e- waste and plastic waste streams and repurpose them into value added products

We are deeply integrated with our OEM partners, retailers and industry bodies, where Close the Loop is developing and expanding its capabilities to take back more product to grow volume across our global network

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Collecting from over 260,000 CLG sites

Re-manufacture over 500,000 electronic consumables per year Processes over 25 million print consumables per year What can’t be reused is recycled

$$$ $$$

$$$

THE HIGHER THE VOLUME, THE HIGHER THE VALUE

3

OEM: Original Equipment Manufacturer

Electronic Consumable: Laptop, PC, Printer, Monitor, Gaming, Large format printers

DELIVERING OUR STRATEGIC GROWTH OBJECTIVES

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ISP Tek Services has delivered:

1. Repositioned Close the Loop as a circular economy leader in the US, the world’s largest market

2. Delivered revenue and EBITDA growth in 1H’24 ahead of our expectations

4. Provided access to the world’s largest OEMs with deep and broad partnership discussions taking place

Opened significant expansion opportunities in new geographies, with an initial focus on Australia and Europe

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The business (excluding ISP Tek Services) has delivered:

1. Produced strong free cash flow

2. Invested into Recovery plant and equipment for future growth (ITAD, TonerPlas)

Launched pan-European multi-vendor collection programme

Maintained EBITDA margins from Packaging despite a challenging macro environment

ISP Tek Services has delivered ahead of expectations and is presenting the Company with strategic global growth opportunities as per acquisition rationale

DELIVERING STRONG FINANCIAL METRICS

$106.2m REVENUE[1]

$22.7m EBITDA

Exceeding FY24 guidance of $200m Upgrading FY24 guidance to $44m to $46m $55.7m $17.2m CASH NET CUSTOMER Up 12.6% since 30 June 2023 RECEIPTS[3]

$15.2m UNDERLYING NPBT

Adds back intangible amortisation of $8.3m, a non-cash, business combination adjustment

$26.2m NET DEBT[2] Reduced $11.8m since 30 June 2023

76% cash conversion in 1H’24

1. Revenue plus other income 2. Borrowings less cash at bank

2. Receipts from customers less payment to suppliers

CLG acquired ISP Tek Service in 1H’23, 1H’24 is the first reporting period that includes the full impact of ISP Tek Services, Alliance Paper and Plastic Recycling

REVENUE BREAKDOWN

DIVISION 1H’23

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36% Recovery
64% Packaging
DIVISION 1H’24
31%
Recovery
Packaging
69%
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REGIONAL 1H’23

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4%
12%
Australia
USA
20%
Europe
64%
South Africa
REGIONAL 1H’24
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4% [6%]
Australia
31%
USA
Europe
59% South Africa
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REVENUE[1]

$106.2m Exceeding FY24 guidance of $200m

Total Revenue ($’m)

120

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100
80
60
106
40
59
20 43
34
0
21H1 22H1 23H1 24H1
1. Revenue plus other income
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100

Commentary:

• First reporting period that includes the full impact of ISP Tek Services, Alliance Paper and Plastic Recycling

• Strong growth from Recovery Division driven by increased volumes and new programs

• ISP Tek Services has performed better than expected and opened opportunities in other jurisdictions, expanding refurbishment and remanufacturing opportunities across the group for consumer and commercial electronic equipment

• Packaging revenue down 14%, with DP industrial dispute in Australia and international shipping delays in the Red Sea

• Macro conditions and logistics challenges have improved since year end

EBITDA

$22.7m

FY24 guidance upgraded to $44m to $46m

EBITDA ($’m)

25

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20
15
23
10
5 9
7
5
0
21H1 22H1 23H1 24H1
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Commentary:

• Recovery Division has performed strongly

• EBITDA as a percentage of revenue at 21%

• Packaging EBITDA has been consistent despite shipping and industrial delays with management actively reducing costs to maintain margins

• Increase in volume resulting in operational efficiencies with gross profit margin up from 33% to 36%

CASH CONVERSION

$17.2m

Net cash receipts from customers[1]

Net cash receipts from customers ($’m)

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20
18
16
14
12
10
17
8
6
4
7
2
1
0
22H1 23H1 24H1
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Commentary:

• 76% net cash[1] conversion to EBITDA

• Investment in working capital

• • Investment in plant and equipment (TonerPlas, ITAD)

• Net debt decreases $11.8m ($26.2m)

• Repayment of borrowings $4.2m

• Finance costs $5.4m

• Receipts from customers less payment to suppliers

INCOME STATEMENT

	Revenue	1H’24 103.1	1H’23 58.6	Change 76%
	Cost of Sales	65.8	39.4	67%
	Gross Profit	37.3	19.2	94%
	Operating Expenditure	17.0	10.2	67%
	Other Income1	3.0	0.5	500%
	EBITDA	22.7	9.5	139%
	Depreciation & Amortisation Operating Profit Underlying NPBT2	11.0 12.4 15.2	3.2 6.3 5	244% 97% 204%

1. Includes interest received

2. Excluding amortization of business combinations (non-cash)

BALANCE SHEET

	Statement of financial position Assets Cash and cash equivalents Trade and other receivables Inventories	31 Dec 2023 $’m 55.7 29.9 19.7	30 Jun 2023 $’m 49.5 26.1 15.9
	Other	3.7	5.1
	Total current assets	109.0	96.6
	Property, plant, and equipment	20.7	20.2
	Right-of-use assets	22.8	20.8
	Intangibles	146.4	131.3
	Other	4.3	2.4
	Total non-current assets	194.2	174.7
	Liabilities
	Trade and other payables	26.5	29.2
	Borrowings	14.8	16.1
	Lease liabilities	3.4	3.8
	Income tax	4.1	1.6
	Other Total current liabilities Borrowings Lease liabilities Deferred tax liability	12.7 61.5 67.1 21.0 19.7	3.1 53.8 71.4 19.6 1.4
	Other	1.0	1.1
	Total non-current liabilities	108.8	93.5
	Net assets	132.9	124.0

31 Dec 2023 31 Dec 2022 $’m $’m

CASH FLOW

Receipts from customers Payments to suppliers and employees Cash flows from operating activities	98.3 (81.1) 17.2	64.7 (58.1) 6.6
Other revenue	1.5	0.5
Interest and other finance costs paid	(4.1)	(0.7)
Business combination costs	-	(0.3)
Income taxes paid	(2.3)	(0.1)
Net cash (used in)/from operating activities	12.3	6.0
Cash flows from investing activities
Acquisition of subsidiary	-	(2.7)
Payments for property, plant and equipment	(3.2)	(2.2)
Net cash used in investing activities	(3.2)	(4.9)
Cash flows from/(used in) financing activities
Proceeds from share issue net of issue costs	4.7	-
Net Proceeds from borrowings 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 half-year	- (4.2) (2.6) (2.1) 7.0 49.5	6.0 (2.1) (1.7) 2.2 3.3 9.7
Effects of exchange rate changes on cash and cash equivalents	(0.8)	-
Cash and cash equivalents at the end of the financial half-year	55.7	13.0

MEDIUM TERM OUTLOOK

• Expansion of ISP Tek Services model into new geographies and broadening of product offering for existing and new OEMs

• Capitalising on the $1.4bn[1] ITAD opportunity in Australia where the Company is strongly positioned to leverage existing relationships

• Launching multi vendor program across Europe

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• ISP Tek Service well positioned to take advantage of HP’s refurbishment and remanufacturing strategy

• https://www.statista.com/outlook/tmo/data-center/servers/australia-oceania

THE GLOBE HAS A CIRCULARITY PROBLEM

THE PROBLEM

RECOVERY:

• A small percentage of consumer electronics is reused

• Major OEMs have ambitious ESG targets to increase circularity in the economy

• All OEMs will want to partner with providers to achieve these goals and Close the Loop is at the forefront of this global market trend

PACKAGING[1] :

• There will be more plastic than fish in the oceans by 2050

• 95% of disposable plastic value lost after its use, estimated at roughly $100 billion annually

• Health issues are clear, with scientists finding microplastics in human blood for the first time in March 2022

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1. https://www.weforum.org/impact/accelerating-reuse-models-world-free-of-plastic-waste/

HP CIRCULARITY OBJECTIVES, CLOSE THE LOOP PROVIDING SOLUTIONS

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Investor Presentation
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https://www8.hp.com/h20195/v2/GetPDF.aspx/c08636600.pdf

HP CIRCULARITY OBJECTIVES, CLOSE THE LOOP PROVIDING RECOVERY AND PACKAGING SOLUTIONS

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https://www8.hp.com/h20195/v2/GetPDF.aspx/c08636600.pdf

INVESTMENT PROPOSITION

The circular economy is in its infancy with only a small percentage of consumer electronics and plastics being recovered, reused or recycled

Close the Loop is positioned to lead the circular economy’s global growth being the first to market due to its deep integrations with OEMs and innovative product development

The volume of consumer electronics and plastics is set to grow with regulatory and social pressure placed on companies, with 2025 being a key milestone

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Q&A

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Contact us investors@ctlgroup.com.au