DGL GROUP LIMITED — Annual Report 2021

Aug 30, 2021

APPENDIX 4E

PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2021

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Lodged with ASX under Listing Rule 4.3A

Contents

Results for announcement to the market Net tangible assets Control over other entities Preliminary financial statements Compliance statement

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1. Company Details

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Name of reporting entity: DGL Group Limited ABN: 71 002 802 646 Reporting period: 1 July 2020 ‐ 30 June 2021 Prior corresponding reporting period: 1 July 2019 ‐ 30 June 2020 The Group was listed on the ASX on 24 May 2021

2. Results for announcement to the market

2. Results for announcement to the market
				$'000
Revenue from ordinary activities	Up	51%	to	154,477
Profit from ordinary activities attributable to	Up	1081%	to	47,165
members
Net comprehensive income for the year	Up	1490%	to	68,423
attributable to members

No dividend has been paid during the financial year or in the previous corresponding period. No dividend has been proposed or declared since the end of the financial year.

On 15 March 2021, a debt amounting to $40.275 million to DGL Commercial Limited, now known as Rapaki Property Group Limited (an entity that is not part of the DGL consolidated group and a related party of Simon Henry) was forgiven and all rights to call for repayment were unconditionally rescinded by Rapaki Property Group Limited and Simon Henry.

The forgiveness of the debt is treated as revenue and is non‐taxable income for the Group.

Review of Operations

The Group comprises three operating segments: Chemical Manufacturing, Warehousing and Distribution and Environmental Solutions.

A description of the operating segments are set out below.

Chemical Manufacturing

Segment description

DGL’s Chemical Manufacturing division produces its own range of specialty chemicals and undertakes advanced formulation and contract manufacturing on behalf of third parties. The division provides a versatile, end to end solution for its customers. Operations are focused on deriving chemicals from complex reactions in controlled environments.

Key activities

In January 2021, DGL acquired the Chem Pack business, expanding the Chemical Manufacturing division’s manufacturing capabilities. Chem Pack has a long history in chemicals manufacturing, having been established in 1993, and holds strong relationships with many customers across several market segments. With the knowledge, experience and intellectual property gained, the division is now able to offer a turn‐key solution across more industries and markets. The Chem Pack business has been successfully integrated into the DGL Group and is performing in line with management’s expectations. The business has been leveraged to and continues to benefit from excellent growing conditions across Australia’s agricultural regions. DGL has also progressed its expansion into the New Zealand market, providing storage for its chemicals products for the first time abroad. It is developing distribution relationships for its products, with a view to bringing manufacturing capacity onshore over the long‐term.

Warehousing and Distribution

Segment description

The Warehousing and Distribution division offers transport, logistics and warehousing services focusing on hazardous goods across Australia and New Zealand. Key components of the services provided by the division include freight forwarding, inventory management, warehousing, and transport. DGL has developed an in‐house stock management system that enables integration with customer supply chain systems, creating a one‐stop‐shop management system for dangerousgoods through to food‐gradeproducts.

Key activities

The period also saw a positive take‐up from customers as additional services were provided. The approach is a key part of DGL’s strategy to achieve Total Product Management for customers and divisional cross‐sell of services. DGL’s plan to expand its inter‐state transport and bulk tanker network in Australia saw it purchase a road tanker in NSW which will bring synergies and greater control over NSW distribution. Additional services include the commencement of swinglift services in Victoria.

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Environmental Solutions

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The Environmental Solutions division undertakes resource recovery and hazardous waste management activities. Its core activities comprise liquid waste treatment, ULAB recycling, lead smelting and refining.

Segment description The Environmental Solutions division undertakes resource recovery and hazardous waste management activities. Its core activities comprise liquid waste treatment, ULAB recycling, lead smelting and refining. Key activities In New South Wales, DGL operates a wastewater treatment plant to process liquid waste generated from its end‐of‐ life lead acid batteries (ULABs) recycling plant and third‐party clients. The wastewater treatment plant processed 53,000 tonnes of liquid waste in FY21, ahead of the prospectus forecast of 50,000m3. Plans for a new state‐of‐the‐ art liquid waste treatment plant on the same site are underway.

3. Net tangible assets

Net tangible asset backing per ordinary share at 30 June 2021, 64.55 cents.

4. Entities over which control has been gained or lost during the year

Name of entity: Chem Pack Pty Ltd Date of control gained: 1 January 2021 Contribution to reporting entity's profit: $3,017,052 Name of entity: DGL Manufacturing Pty Ltd Date of control gained: 31 March 2021 Contribution to reporting entity's profit: $271,029 Name of entity: DGL Warehousing & Distribution Pty Ltd Date of control gained: 31 March 2021 Contribution to reporting entity's profit: $1,398,218 Name of entity: DGL (NZ) Limited Date of control gained: 1 April 2021 Contribution to reporting entity's profit: $18,360,991 Name of entity: DGL Manufacturing Limited Date of control gained: 1 April 2021 Contribution to reporting entity's profit: $9,686,097 Name of entity: DGL Warehousing (NZ) Limited Date of control gained: 1 April 2021 Contribution to reporting entity's profit: $24,719,285

5. Dividend reinvestment plans

Not applicable

6. Details of associates and joint venture entities

Not applicable

7. Foreign entities

The results of the New Zealand subsidiaries, DGL (NZ) Limited, DGL Manufacturing Limited and DGL Warehousing (NZ) Limited have been compiled using International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

8. Audit

This report should be read in conjunction with the preliminary financial report. The financial statements in the preliminary financial report are in the process of being audited.

9. Attachments

The preliminary financial report of DGL Group Limited and its controlled entities for the year ended 30 June 2021 are attached.

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DGL Group Limited ABN: 71 002 802 646

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PRELIMINARY STATEMENT OF CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 30 June 2021

Note Sales revenue 2(a) Cost of sales Other income 2(b) IPO costs Employee benefits expense Administration and general expenses Legal and professional fees Occupancy expense Depreciation and amortisation expense Impairment expense Finance costs Profit before income tax Tax expense Profit after income tax expense for the year Other comprehensive income: Items that may be reclassified subsequently to profit or loss: Gain on derivative contract held as hedging instruments Exchange differences on translating foreign operations, net of tax Items that will not be reclassified subsequently to profit or loss: Revaluation gain on land and buildings, net of tax Total other comprehensive income for the year Total comprehensive income for the year Profit for the year attributable to DGL Group Limited shareholders Total comprehensive income attributable to: DGL Group Limited shareholders Earnings per share Basic earnings per share (cents) Diluted earnings per share (cents)	2021 (unaudited) 2020 (unaudited) $'000 $'000 Group
	154,477 102,153 (93,682) (61,172)
	60,795 40,981 40,901 1,816 (2,067) ‐ (24,835) (17,049) (6,455) (5,786) (1,676) (1,024) (4,254) (4,213) (10,467) (10,380) (271) ‐ (2,169) (1,414)
	49,502 2,931 (2,337) 1,076
	47,165 4,007
	66 ‐ (352) 307 21,544 ‐
	21,258 307
	68,423 4,314
	47,165 4,007
	47,165 4,007
	68,423 4,314
	68,423 4,314
	78 N/A 78 N/A

The above statement should be read in conjunction with the accompanying notes.

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DGL Group Limited ABN: 71 002 802 646

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PRELIMINARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION

For the year ended 30 June 2021

Note Assets Current Assets Cash and cash equivalents Trade and other receivables Inventories Other financial assets Other assets Total Current Assets Non‐Current Assets Property, plant and equipment 3 Deferred tax assets Intangible assets 4 Right‐of‐use assets Total Non‐Current Assets Total Assets Liabilities Current Liabilities Trade and other payables Lease liabilities Borrowings 5 Other financial liabilities 6 Current tax liabilities Provisions Total Current Liabilities Non‐Current Liabilities Other financial liabilities 6 Lease liabilities Deferred tax liabilities Provisions Total Non‐Current Liabilities Total Liabilities Net Assets EQUITY Issued capital 7 Reserves Retained earnings Total Equity	2021 (unaudited) 2020 (unaudited) $'000 $'000 Group
	43,830 1,719 22,528 11,396 14,420 4,753 1,634 1,396 3,937 1,328
	86,349 20,592
	133,221 95,514 7,270 5,356 27,979 4,002 22,719 25,166
	191,189 130,038
	277,538 150,630
	17,139 10,121 7,028 8,135 21,139 23,040 100 68,735 2,345 212 3,051 1,894
	50,802 112,137
	8,481 ‐ 16,754 16,470 5,864 633 366 231
	31,465 17,334
	82,267 129,471
	195,271 21,159
	192,249 130,615 (31,732) (52,990) 34,754 (56,466)
	195,271 21,159

The above statement should be read in conjunction with the accompanying notes.

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DGL Group Limited ABN: 71 002 802 646

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PRELIMINARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2021

Consolidated Group Balance at 1 July 2019 Comprehensive income Profit for the year Other comprehensive income for the year Premium on assets acquired Total comprehensive income for the year Transactions with owners, in their capacity as owners, and other transfers Shares issued during the year Transaction costs net of tax Total transactions with owners and other transfers Balance at 30 June 2020 Balance at 1 July 2020 Comprehensive income Profit for the year Other comprehensive income for the year Total comprehensive income for the year Transactions with owners, in their capacity as owners, and other transfers Shares issued during the year Transaction costs net of tax Capital reduction as per Section 258F of the Corporations Act 2001 Total transactions with owners and other transfers Balance at 30 June 2021		Reserves
	Share Capital Retained Earnings	Asset Revaluation Reserve Other components of Equity Foreign Currency Translation Reserve	Total
	$'000 $'000	$'000 $'000 $'000	$'000
	78,578 (60,473) ‐ 4,007 ‐ ‐ ‐ ‐	933 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 307 ‐ (54,230) ‐	19,038 4,007 307 (54,230)
	‐ 4,007	‐ (54,230) 307	(49,916)
	52,037 ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ ‐	52,037 ‐
	52,037 ‐	‐ ‐ ‐	52,037
	130,615 (56,466)	933 (54,230) 307	21,159
	130,615 (56,466) ‐ 47,165 ‐ ‐	933 (54,230) 307 ‐ ‐ ‐ 21,610 ‐ (352)	21,159 47,165 21,258
	‐ 47,165	21,610 ‐ (352)	68,423
	109,800 ‐ (4,111) ‐ (44,055) 44,055	‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐	109,800 (4,111) ‐
	61,634 44,055	‐ ‐ ‐	105,689
	192,249 34,754	22,543 (54,230) (45)	195,271

The above statement should be read in conjunction with the accompanying notes.

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DGL Group Limited ABN: 71 002 802 646

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PRELIMINARY STATEMENT OF CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 30 June 2021

Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received/ other income Finance cost Income tax paid Net cash generated by operating activities 13 Cash flows from investing activities Proceeds from disposal of property, plant and equipment Purchase of property, plant and equipment Purchase of intangibles Purchase of subsidiary Cash acquired from acquisition of subsidiary Net cash (used in)/generated by investing activities Cash flows from financing activities Proceeds from issue of shares Payments of capital raising costs Repayment of borrowings ‐ other Proceeds from borrowings from related parties Proceeds from borrowings Repayment of lease liabilities Net cash provided by (used in) financing activities Net increase in cash held Cash and cash equivalents at beginning of financial year Effect of exchange rates on cash holdings in foreign currencies Cash and cash equivalents at end of financial year	2021 (unaudited) 2020 (unaudited) $'000 $'000 Group
	156,456 106,283 (135,828) (89,652) 51 ‐ (1,570) (1,400) (80) ‐
	19,029 15,231
	‐ ‐ (19,318) (24,357) (18) ‐ (28,635) ‐ 2,090 ‐
	(45,881) (24,357)
	100,000 ‐ (5,410) ‐ (19,585) ‐ ‐ 8,682 ‐ 9,039 (6,044) (6,575)
	68,961 11,146
	42,109 2,020 1,719 (305) 2 4
	43,830 1,719

The above statement should be read in conjunction with the accompanying notes.

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DGL Group Limited ABN: 71 002 802 646

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NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS

For the year ended 30 June 2021

Note 1:

Summary of Significant Accounting Policies

Basis of Preparation

The preliminary financial statements on which the Financial Information has been based is in accordance with the Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board and International Financial Reporting Standards as issued by the International Accounting Standards Board. The Company is a for‐profit entity for financial reporting purposes under Australian Accounting Standards. Material accounting policies adopted in the preparation of the Financial Information are presented below and have been consistently applied unless stated otherwise.

The Financial Information except for cash flow information, has been prepared on an accrual basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected non‐current assets, financial assets and financial liabilities.

Other than adopting Accounting for Common Control Acquisitions noted below, there have been no material changes in the Company's application of its significant accounting policies as presented in the Company's IPO Prospectus. Readers of this report should refer to Appendix A of the Company's IPO Prospectus for details of those accounting policies.

Accounting for Common Control Acquisitions

Where the acquisition of entities that are deemed to be under common control occurs, the pooling of interest method is adopted for business combinations under common control.

Existing book values for assets and liabilities at the date of acquisition will be recognised and fair value adjustments including new intangibles or goodwill will not be recognised. Any premium between the fair value of consideration paid and the book value of net assets is debited to a separate category of equity.

Note 2:

Revenue and other income

(a) Revenue Continued operations Revenue from contracts with customers Other sources of revenue The revenue is disaggregated by the following divisions - Environmental Solutions - Chemical Manufacturing - Warehousing & Distribution (b) Other income - Miscellaneous income - Interest received - Government subsidies - Debt forgiveness1	2021 (unaudited) 2020 (unaudited) $'000 $'000 Group
	153,038 100,889 1,439 1,264
	154,477 102,153
	60,499 60,612 55,399 10,733 38,579 30,808
	154,477 102,153
	500 1,315 51 33 75 468 40,275 ‐
	40,901 1,816

1On 15 March 2021, a debt amounting to $40.275 million to DGL Commercial Limited now known as Rapaki Property Group Limited (an entity that is not part of the DGL consolidated group and a related party of Simon Henry) was forgiven and all rights to call for repayment were unconditionally rescinded by Rapaki Property Group Limited and Simon Henry.

The forgiveness of the debt is treated as revenue and is non‐taxable income for the Group.

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DGL Group Limited ABN: 71 002 802 646

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NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS

For the year ended 30 June 2021

Note 3:

Property, plant and equipment

Note 3: Property, plant and equipment
Opening Balance Additions Disposals Reclassification Closing Balance Acquisitions through business combinations Transfer to Right‐of‐use assets Revaluation and impairment Depreciation expense Movement in foreign currency	Land Buildings Leasehold Improvement Plant and Equipment Motor Vehicles Plant under construction Total $'000 $'000 $'000 $'000 $'000 $'000 $'000
	24,133 41,308 276 20,408 471 8,918 95,514 34 5,371 31 3,567 1,276 749 11,028 ‐ 5 ‐ (104) (70) ‐ (169) ‐ ‐ ‐ 3,928 281 ‐ 4,209 ‐ ‐ ‐ (93) 1,053 ‐ 960 ‐ ‐ 263 ‐ ‐ (263) ‐ 7,092 17,969 ‐ (289) (67) ‐ 24,705 ‐ (399) (19) (2,171) (266) (1) (2,856) ‐ (145) ‐ (9) (2) (14) (170)
	31,259 64,109 551 25,237 2,676 9,389 133,221

Note 4:

Intangible assets

Opening Balance Additions Disposals Acquisitions through business combinations Amortisation charge Closing Balance Movement in foreign currency	Goodwill Trademarks and Certifications Software Hydroproc Process Total
	$'000 $'000 $'000 $'000 $'000
	2,302 267 770 663 4,002 ‐ 19 190 ‐ 209 ‐ ‐ (8) ‐ (8) 24,084 ‐ ‐ ‐ 24,084 ‐ (21) (285) ‐ (306) ‐ ‐ (2) ‐ (2)
	26,386 265 665 663 27,979

Note 5

Borrowings

Note 5 Borrowings
CURRENT Secured Lease liability Bank loans Other loans Total current borrowings Total borrowings	Group
	2021 (unaudited) 2020 (unaudited)
	$'000 $'000
	77 1,462 16,130 21,558 4,932 20
	21,139 23,040
	21,139 23,040

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DGL Group Limited ABN: 71 002 802 646

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NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS

For the year ended 30 June 2021

Note 6

Other Financial Liabilities

Note 6 Other Financial Liabilities
CURRENT Related party loans NON‐CURRENT Related party loans	2021 (unaudited) 2020 (unaudited) $'000 $'000 Group
	100 68,735
	100 68,735
	8,481 ‐
	8,481 ‐

The above related party loans were provided by Mr Simon Henry, Group CEO.

The relevant agreements for the loans were entered into on 31 December 2020. The loans were provided by Mr Simon Henry for the Group Members' working capital purposes.

The principal amounts of the loans provided by Mr Simon Henry when the agreement was entered into was $7.211 million.

On 20 March 2021, $40.275 million owing to DGL Commercial Limited now known as Rapaki Property Group Limited (an entity that does not form part of the DGL consolidated group and a related party of Mr Simon Henry) was forgiven and all rights to call for repayment were unconditionally rescinded by Rapaki Property Group Limited and Mr Simon Henry.

Note 7

Issued Capital

(a) Share Capital

The share capital of DGL Group Limited (the Company) consists of 257,000,000 fully paid ordinary shares at 30 June 2021.

(b) Movement in ordinary share capital

Movement in ordinary share capital
At the beginning of the reporting period Shares issued during the year Less: capital raising costs Share split during the year Section 258F of Corporations Act At the end of the reporting period	Number of shares Amount
	$'000 52,037,860 130,615 109,800,000 109,800 ‐ (4,111) 95,162,140 ‐ ‐ (44,055)
	257,000,000 192,249

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DGL Group Limited ABN: 71 002 802 646

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NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS

For the year ended 30 June 2021

Note 8

Earnings per share

te 8 nings per share
ic earnings per share (cents) (a) Reconciliation of earnings to profit or loss Profit Earnings used to calculate basic EPS (b) Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS Weighted average number of ordinary shares outstanding during the year used in calculating dilutive EPS	78 N/A
	2021 (unaudited) 2020 (unaudited) $'000 $'000 Group
	47,165 4,007
	47,165 4,007
	No. No. 60,848 N/A 60,848 N/A

Basic earnings per share (cents)

Note 9

Operating Segments

The Group operates in 3 segments, Environmental Solutions, Chemical Manufacturing and Warehousing and Distribution.

Note 10

Events Subsequent to Reporting Date

Other than the following, the directors are not aware of any significant events since the end of the reporting period. On 5 July 2021, the Company announced it was acquiring 100 % of Labels Connect. Labels Connect is the main supplier of packaging labels to DGL's Chem Pack business. The total purchase consideration is $1,549,900 and comprises of:

• cash payment of $550,000; and

‐ issuance of 909,000 fully paid ordinary shares at an issue price of $1.10 per share.

The shares will be issued on 1 October 2021 and will be held in escrow until 1 January 2022.

On 12 July 2021, the Company announced it was acquiring a property, 120 Fulton Drive, Derrimut, Victoria for a total consideration of $5.5 million.

The property houses the head office of Chem Pack Pty Ltd and includes warehouse facilities purpose built for the formulation and storage of chemicals.

Under the acquisition of Chem Pack, the Company obtained an option to purchase various properties that Chem Pack leases and operates from in Fulton Drive. After completion of relevant due diligence, 120 Fulton Drive was selected as the property that is most crucial to the business of Chem Pack and most complimentary to the broader DGL Group.

This transaction is a related party transaction. The vendor of 120 Fulton Drive is Belbrae Investments Pty Ltd. Sheamus Sushames is a director of Belbrae Investments Pty Ltd and is the original owner of Chem Pack. His son Robert Sushames is a director of DGL Group Limited.

On 15 July 2021, the Company announced it had acquired a multi‐purpose chemical facility in Townsville, Queensland for $2.45 million.

The facility, which the Company had previously leased as a storage hub, will be turned into a chemicals formulation and storage facility, ensuring the Company can produce agricultural, mining and waste and water treatment chemicals at the site to distribute to customers across North Queensland. These products were previously formulated in New South Wales and transported to North Queensland customers.

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DGL Group Limited ABN: 71 002 802 646

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NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS

For the year ended 30 June 2021

Note 10: Events Subsequent to Reporting Date (continued)

The acquisition will require a capital investment of around $5 million to turn the property into a processing facility, and once completed and fully operational, is expected to generate revenue across a number of manufacturing opportunities, including the manufacturing of aluminium chloralhydrate, shotcrete accelerator and liquid fertiliser blending, as well as toll manufacturing for a major customer.

On 4 August 2021, the Company announced the strategic acquisition of Opal Australasia ("Opal") for $8.6 million.

Opal is a specialist contract formulator and packaging business based in the Kwinana Industrial Area, one of Western Australia's most important strategic industrial areas. The company has been operating profitably for nearly 20 years, and is one of only two independent agricultural chemical toll manufacturing companies in WA. The acquisition will provide the Company with access to a suite of agricultural customers on Australia's west coast and increase the Company's manufacturing capacity to in excess of 150,000 tonnes p.a.

The acquisition price of $8.6 million, includes property valued at approximately $4.3 million. The acquisition will be funded by both cash and shares, with the share component valued at $1.9 million.

The Company has entered into other business acquisition agreements which are currently subject to a due diligence period and are therefore conditional on the satisfactory completion of due diligence. The terms of the agreements remain confidential to all parties until they become binding and unconditional. The potential acquisitions are in line with the use of funds commentary as disclosed in the Company's IPO Prospectus and the company's strategy.

Note 11

Interest in Subsidiaries

(a) Information about Principal Subsidiaries

The subsidiaries listed below have share capital consisting solely of ordinary shares or ordinary units which are held directly by the Group. The proportion of ownership interests held equals the voting rights held by the Group.

Name of subsidiary	**Country of Incorporation **	Ownership interest held	Ownership interest held	Proportion of non‐	Proportion of non‐
		by the Group		controlling interests
		2021	2020	2021	2020
DGL Manufacturing Pty Ltd1	Australia	100%	‐	‐	‐
DGL Warehousing & Distribution	Australia	100%	‐	‐	‐
Pty Ltd1
DGL Industries Pty Ltd1	Australia	100%	‐	‐	‐
DGL (NZ) Limited2	New Zealand	100%	‐	‐	‐
DGL Manufacturing Limited2	New Zealand	100%	‐	‐	‐
DGL Warehousing (NZ) Limited2	New Zealand	100%	‐	‐	‐
Chem Pack Pty Ltd	Australia	100%	‐	‐	‐

1 DGL Manufacturing Pty Ltd, DGL Warehousing & Distribution Pty Ltd and DGL Industries Pty Ltd were acquired on 31 March 2021. The acquisition effective date has been treated as 1 July 2019 under the pooling of interests method.

2 DGL (NZ) Limited, DGL Manufacturing Limited and DGL Warehousing (NZ) Limited were acquired on 1 April 2021. The acquisition effective date has been treated as 1 July 2019 under the pooling of interests method.

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DGL Group Limited ABN: 71 002 802 646

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NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS

For the year ended 30 June 2021

Note 11: Interest in Subsidiaries (continued)

(b) Acquisition of subsidiary under AASB 3: Business Combinations

On 1 January 2021, the Company acquired 100% of Chem Pack Pty Ltd. Chem Pack operates a contract formulation and packing business based in Victoria. It has facilities required to manufacture, fill and/or blend liquid products used in the agriculture industry. It can manage many product ranges and provide all forms and pack sizes of chemical Liquids including aerosol cans.

The total acquisition price was $25,247,852. A further payment of $13,186,735 is payable for net working capital and other completion adjustments as per the Chem Pack Contract.

‐ Purchase consideration: ‐ Cash ‐ Ordinary shares Less: Cash and cash equivalents Receivables Inventories Other current assets Property, plant and equipment Deferred tax assets Right‐of‐use assets Intangible assets Payables Borrowings Current tax liabilities Deferred tax assets Provisions Identifiable assets acquired and liabilities assumed Goodwill provisionally accounted for	Fair value $000 28,635 9,800
	38,435
	2,090 12,536 6,233 180 4,474 461 4,970 174 (8,846) (5,407) (517) (526) (1,298)
	14,524
	23,911

Note 12

Contingent liability

The Group currently has one open ligitation matter in relation to the 100% owned subsidiary, DGL Manufacturing Limited.

DGL Manufacturing Limited has sued a vendor for breach of vendor warranties in respect of the sale of chemical tanks which it is claimed do not comply with the Weights and Measurements Act (if used in public trade). The relief sought is approximately $590,000, being the estimated costs of bringing the tanks to a compliance standard.

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DGL Group Limited ABN: 71 002 802 646

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NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS

For the year ended 30 June 2021

Note 13

Capital Commitments

The table below reflects the capital commitments the Company has entered into as at 30 June 2021.

The table below reflects the capital commitments the Company has entered into as at	30 June 2021.
Acquisition of Labels Connect ‐ cash consideration ‐ consideration shares Development of new warehouse in Mount Wellington, New Zealand Construction of warehouse in Hawke's Bay, New Zealand	2021 (unaudited) 2020 (unaudited) $'000 $'000 Group
	550 ‐ 826 ‐
	1,376 ‐ 4,188 ‐ 4,653 ‐
	10,217 ‐

Note 13 Cash Flow Information

Note 13 Cash Flow Information
Profit after income tax Non‐cash flows in profit Depreciation Debt forgiveness (Increase)/decrease in trade and term receivables (Increase)/decrease in prepayments (Increase)/decrease in inventories Increase/(decrease) in trade payables and accruals Increase/(decrease) in income taxes payable Increase/(decrease) in deferred taxes payable (Increase)/decrease in provisions (Increase)/decrease in deferred taxes receivable Net cash generated by operating activities Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries: Reconciliation of Cash Flows from Operating Activities with Profit after Income Tax	2021 (unaudited) 2020 (unaudited) $'000 $'000 Group
	47,165 4,007 10,467 10,380 (40,275) ‐ (657) (2,651) (1,709) (1,238) (3,434) (2,182) 2,002 5,013 1,616 212 5,231 (79) 76 ‐ (1,453) 1,769
	19,029 15,231

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DGL Group Limited ABN: 71 002 802 646

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NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS

For the year ended 30 June 2021

COMPLIANCE STATEMENT

The financial information provided in Appendix 4E is based on the annual financial report which is being prepared in accordance with Australian Accounting Standards or standards acceptable to the ASX.

The reporting and the accounts upon which the report is based used the same accounting policies.

In the Directors' Opinion, this report does give a true and fair view of the matters disclosed.

This report is based on accounts which are in the process of being audited.

The financial report is not likely to be the subject of dispute or qualification.

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Mr Simon Henry Executive Director Dated: 30 August 2021

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