Ann: Market Update, page-6

Capital re-cycling to be in a position to participate in the next raising... it's what hedge funds do.

No matter, though, because it does not change the intrinsic value of the company, nor the tailwinds that are supporting its Revenues and Profits.

On the subject of intrinsic value, CLG's EV is currently around $230m (for easy maths Mkt Cap of $190m and Net Debt of ~$40m).

Which, based on the expression of "confidence" of hitting $43m of EBITDA in FY2024 (notwithstanding the previous stated position of "at least $43m"), means an EV/EBITDA multiple of just 5.3x .

With D&A possibly coming in at close to $10m this year (was $5.0m inn FY2023 but depreciable asset base has more than doubled , so EBIT = $33m, and EV/EBIT = 6.9x.

No matter which way it is viewed, neither of those are at all demanding multiples, so I think the stock is fundamentally undervalued today.

Of course, the logical question is what are the correct EV multiples?

My view is that the "circular economy" space is hot to trot which, ordinarily would call for premium-to-market multiples.

However, in CLG's case this cannot be justified because of the absence (or lack of track record) of obvious organic growth. That, and the fact that it is a roll-up story - funded by a requirement for fresh equity.

So, instead of EV/EBITDA of 10x (corresponds to EV/EBIT of around 13x, or a Pre-Tax FCF Yield of 7.5%, which is where I think the market multiple should be given current capital market conditions), I think CLG can today support a 7.0x EV/EBITDA (~9.0x EV/EBIT).

On that basis, the implied equity valuation for the company is $260m (i.e., share price around 50c / 51c)

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