Slide 1: Acquisition Presentation
Acquisition Presentation Close the Loop Group to acquire 100% of American refurbished Electronics business ISP Tek Services registered in Southlake, TX, USA
Slide 2: Disclaimer
Disclaimer 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 t
Slide 3: Strategic acquisition that provides significant scale with immediate EPS accretion
Strategic acquisition that provides significant scale with immediate EPS accretion USA growth acceleration EPS accretive • Company HQ is in Texas • Strong business fundamentals with US$32M revenue in CY21 • The owners have over 30 with adjusted NPAT of US$8.7M* years of trading history in this space
Slide 4: Transaction Summary
Strategic acquisition that provides significant scale with immediate EPS accretion Transaction Summary • CLG to pay US$35M in cash upon closure of the transaction • Earnout of up to US$5M if CY23 EBITDA exceeds US$12M • US$11M of CLG shares to be issued at settlement based on the 30 day VWAP. ISP fo
Slide 5: Group Financial Profile – Income Summary (post acquisition)
Group Financial Profile – Income Summary (post acquisition) Proforma Group as at settlement • ISP Tek Services converted at an exchange rate of date based on historicals AUD/USD 70 cents $M (AUD) • CLG proforma based on 1H23 annualised Revenue 199.2 • ISP /CTC historicals based on TTM12 at Oct 22 Gr
Slide 6: Pro Forma Balance Sheet
Pro Forma Balance Sheet Pro forma B/S Assets ($m) Cash and cash equivalents 56.0 Trade and other receivables 23.9 Inventories 11.6 Other assets 7.2 Total Current Assets 98.7 Property, plant & equipment 12.4 Intangibles 115.2 Right of use assets 12.6 Other 1.5 Total Non-Current Assets 141.7 Liabiliti
Slide 7: Introduction to ISP
Introduction to ISP • Based out of Dallas, Texas, USA • ISP Tek Services is a Tier 1 full consumer electronics life cycle management authorised refurbisher for several market leading OEMs • The merger of the ISP Tek Services into the Group delivers on the Close the Loop strategy of focusing on resou
Slide 8: ISP – Key Product Refurbishment Categories
ISP –Key Product Refurbishment Categories Notebooks Chromebooks All-in-One Monitors Systems Desktop PCs Gamer PCs Ink Jet Printers Commercial Printers
Slide 9: Refurbishment Focus
Refurbishment Focus • Everything remade to OEM standards with highest standard data cleansing • Focus on quality refurbishment • Remanufactured devices have a defect rate <1% • Scalable Proprietary Automated ( AI ) based testing and data collection software reduces the need for added skilled labour
Slide 10: Life Cycle of Refurbished Products from Purchase
Life Cycle of Refurbished Products from Purchase PRODUCT PURCHASE PRODUCT RESELL PRODUCT RETURN Circa. 4% of products returned by end customer REFURBISHMENT Products undergo refurbishment process for resell
Slide 11: Growth Opportunities
Growth Opportunities STAGE ONE STAGE TWO STAGE THREE International Expansion • ISP Tek Services will use the Close the Loop global footprint to expand its service offering to OEMs to make it the global solution of choice for OEMs • The European location will become the same size as the current USA I
Slide 12: How ISP Tek fit into the Circular Economy
How ISP Tek fit into the Circular Economy
Slide 13: Circular Economy Client Onboard (Existing or Tailored Program)
Circular Economy Client Onboard (Existing or Tailored Program) Recover Products • Notebooks • Chromebooks • Ink Jet Printers Products are recovered from • Gaming PC’s multiple collection sites across • All in one systems USA and Canada • Monitors • Commercial Printers
Slide 14: Circular Economy
Circular Economy Create • Remade to OEM standards • Highest data cleansing process • Three stage quality control Products are sorted, categorised and processed through the • All products hold 90 day OEM remanufacturing process. guarantee.
Slide 15: Circular Economy
Circular Economy Re-use • Notebooks • Chromebooks • Ink Jet Printers • Gamer PC’s • All in one systems Products are sold back • Monitors to retailers and online • Commercial Printers platforms
Slide 16: Acquisition drives strong share of segment
Acquisition drives strong share of segment Resource Recovery / Packaging – pre 1H23 Resource Recovery / Packaging – post acquisitions 36.7 37.2 63.3 62.8 Resource Recovery Packaging Resource Recovery Packaging • Significant re-weighting to North America and stronger diversification across geographie
Slide 17: Creating a more valuable group
Creating a more valuable group • Close the Loop and ISP Tek Services combined will be a highly profitable, cash flow generating company servicing the circular economy • The new Group can provide full recovery life cycle solutions of choice to OEMs • Creates a platform for stronger organic growth • C
Slide 18: Capital Raising Overview
Capital Raising Overview INDICATIVE TIMETABLE Announcement of the Offer and trading halt lifted Friday, 17 March 2023 DvP Settlement of the Unconditional Placement Wednesday, 22 March 2023 Allotment of Unconditional Placement Shares Thursday, 23 March 2023 Lodge Notice of Meeting for shareholders to
Slide 19: Funded using debt and equity placement, in-line with capital management strategy
Funded using debt and equity placement, in-line with capital management strategy US$45,000,000 of US$ Senior Secured Term Loan Amount US$7,500,000 Multi-Currency Revolving Credit Facility US$5,000,000 Delayed Draw Term Loan Facility Term 6.5 years from closing Interest Rate SOFR or BBSW plus 675 bps
Slide 20: Risk Factors
Risk Factors • There are a number of factors, both specific to Close the Loop and of a general nature, which may affect the future operating and financial performance of Close the Loop, its products, the industries in which it operates and the outcome of an investment in Close the Loop. • There can
Slide 21: Acquisition Risks – Information risk
ACQUISITION RISKS • CLG has undertaken a due diligence review in respect of the acquisition of ISP (Acquisition). Despite taking reasonable efforts, CLG may not have been able to verify the accuracy, reliability or completeness of all the information provided against independent data. ISP acquisitio
Slide 22: Acquisition Risks – Warranties and employees
ACQUISITION RISKS ISP acquisition – The Sale and Purchase Agreements contain a number of representations, warranties and indemnities. These are subject to certain financial claims thresholds and other limitations, Warranties and and could be subject to the warranter or indemnifier's capacity to make
Slide 23: Key Risks Associated with Close the Loop's Business
KEY RISKS ASSOCIATED WITH CLOSE THE LOOP'S BUSINESS Sales and revenue • CLG’s revenue depends on the extent and timing of future product sales. risk • There is a risk that due to current economic factors, expected revenue levels may not be realised at all. • There is a risk that future events may ha
Slide 24: Key Risks Associated with Close the Loop's Business
KEY RISKS ASSOCIATED WITH CLOSE THE LOOP'S BUSINESS • There is an inherent risk of defective workmanship or materials in the manufacture of products sold by CLG Warranty risk and • Defective products may have a materially adverse impact on CLG’s reputation, its ability to achieve sales and commercia
Slide 25: General Risk Factors
GENERAL RISK FACTORS • On completion of the Placement, the New Shares may trade on ASX at higher or lower prices than the issue price. Investors who decide to sell their New Shares after the Placement may not receive the amount of their original investment. The price at which the New Shares trade on
Slide 26: Contact Us
v Contact Us investors@ctlgroup.com.au