DGL GROUP LIMITED — Annual Report 2023

Oct 8, 2023

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ANNUAL REPORT 2023

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 For The Year Ended 30 June 2023

dglgroup.com

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 FOR THE YEAR ENDED 30 JUNE 2023

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CONTENTS PAGE
Joint letter from Chairman and Chief Executive Officer 1
Directors' Report 2
Remuneration Report 14
Auditor's Independence Declaration 18
Consolidated Statement of Profit or Loss and Other Comprehensive Income 19
Consolidated Statement of Financial Position 20
Consolidated Statement of Changes in Equity 21
Consolidated Statement of Cash Flows 22
Notes to the Financial Statements 23
Directors' Declaration 63
Independent Auditor's Report 64
Additional Information for Listed Public Companies 68
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DGL GROUP LIMITED AND CONTROLLED ENTITIES JOINT LETTER FROM CHAIRMAN AND CHIEF EXECUTIVE OFFICER - FINANCIAL YEAR 2023

INTRODUCTION

Twelve months after the disruption and dislocation experienced during the global pandemic, the 2023 financial year saw DGL deliver sound results. Despite macro-economic challenges, volatile pricing, labour shortages, and rising inflation, we experienced strong customer demand, resulting in growth in revenue, an increase in our underlying earnings before interest, tax, depreciation & amortisation (EBITDA) and improved cash conversion.

FINANCIAL ACHIEVEMENTS

In the 12 months to June 30, 2023, revenue increased by 26 per cent to a record $466.0 million, resulting in underlying EBITDA of $64.1 million.

At the same time, we experienced a strong underlying operating cashflow conversion rate of 118 per cent, up 41 per cent on the previous year.

Overall, our indicative inventory days fell from 75 days in financial year 2022 (FY22) to 46 days in financial year 2023 (FY23), as operations and supply chains normalised following DGL’s strategic decision during the pandemic to leverage our strong balance sheet and undertake a deliberate strategy of procuring higher levels of inventory.

INTEGRATION

DGL’s central focus is to provide a safe and inclusive workplace for all its employees, and we are pleased to report that there were no major safety and environmental incidents in FY23 - a testament to the dedication and focus of everyone in the business. Our staff’s health and wellbeing is important for DGL, which is why we have continued to invest in our people and culture and improve internal processes and compliance.

We have also continued to update and modify our environmental, social and governance credentials and certification, including climate risks and greenhouse emissions.

THE YEAR AHEAD

We are positive about the year ahead, with significant opportunities to drive organic growth and deliver further integration benefits from our acquisitions.

We are well structured, have a strong balance sheet and ample liquidity and are confident of further growth in the years to come.

Thank you to everyone at DGL for your hard work and your commitment to the business and thank you to our shareholders for your continuing support.

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Peter Lowe Chairman

Simon Henry Chief Executive Officer

1

DGL GROUP LIMITED AND CONTROLLED ENTITIES DIRECTORS' REPORT

The directors present their report on the consolidated entity (referred to herein as the Group) consisting of DGL Group Limited and its controlled entities for the financial year ended 30 June 2023.

General Information

Directors

The following persons were directors of DGL Group Limited during the whole of the financial year and up to the date of this report, unless otherwise stated.

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|---|---|
|Peter Lowe|Peter has over 30 years' experience in CEO and CFO roles. He is an experienced director who has held|
|Chairman and Non-Executive Director|numerous non-executive directorships on listed, private and government owned organisations.|
|Member of the Audit and Risk|Peter is currently the Chair of United Energy Distribution Holdings Pty Ltd, Multinet Group Holdings Pty Ltd,|
|Committee|Lochard Energy Pty Ltd and DBNGP Holdings Pty Ltd. He is also a director of Australian Gas Networks Limited.|
|Member of the Remuneration|Peter has previously held roles at PwC, Fosters Brewing Group and Utilicorp United Inc.|
|Committee|Other current directorships of listed companies|
|Appointed 1 April 2021|N/A|
|Former directorships of other listed companies (last 3 years)|
|Mayfield Childcare Limited - resigned 22 August 2022|

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|---|---|
|Simon Henry|Simon has been the CEO of the Company since 1999. He has over 35 years' experience in industrial property|
|Founder, Executive Director and Chief|development, logistics, international trading, manufacturing, and production in Australia, New Zealand and|
|Executive Officer|Asia-Pacific.|
|Appointed 22 May 2012|Other current directorships of listed companies|
|N/A|
|Former directorships of other listed companies (last 3 years)|
|N/A|
|Denise Brotherton|Denise is a highly experienced business leader and adviser with more than 27 years' experience working with|
|Non-Executive Director|high growth companies, including privately-owned and ASX-listed companies.|
|Chair of Audit and Risk Committee|Denise is currently a tax partner with professional services firm, BDO and was previously a tax partner at EY.|
|Member of Remuneration Committee|Other current directorships of listed companies|
|Appointed 1 April 2021|N/A|
|Former directorships of other listed companies (last 3 years)|
|N/A|
|Robert McKinnon|Robert has over 40 years' finance and management experience in light manufacturing and industrial sectors in|
|Non-Executive Director|Australia, New Zealand, and Canada. Robert has extensive executive and board experience across a diverse|
|Chair of Remuneration Committee|range of ASX-listed companies. This includes executive roles in Capral, Austal and Fleetwood.|
|Member of Audit and Risk Committee|Other current directorships of listed companies|
|Appointed 1 April 2021|Peet Limited|
|Former directorships of other listed companies (last 3 years)|
|M8 Sustainable - resigned 14 October 2020|
|Robert Sushames|Robert has over 20 years' experience in the manufacturing and agricultural chemical industry. He has|
|Executive Director, Director of|experience in international procurement, chemical processing plants, contract manufacturing, and|
|Manufacturing|warehousing. Robert has diverse operational experience in medium-sized enterprises as a second generation|
|Appointed 1 April 2021|family business owner.|
|Other current directorships of listed companies|
|N/A|
|Former directorships of other listed companies (last 3 years)|
|N/A|

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2

DGL GROUP LIMITED AND CONTROLLED ENTITIES DIRECTORS' REPORT

Andrew Draffin Company Secretary Appointed 11 January 2021

Andrew is an experienced ASX company secretary with a strong focus on governance and financial reporting. Andrew is currently a Partner at DW Accounting & Advisory Pty Ltd.

Shareholdings of directors and other key management personnel

The interests of each Director and other key management personnel, directly and indirectly, in the shares and options of the Company at the date of this report are as follows:

this report are as follows:
	Date of this report		30 June 2023
	Ordinary Shares	Share Options	Ordinary Shares	Share Options
Peter Lowe	50,000	-	50,000	-
Simon Henry	151,290,229	-	151,290,229	-
Denise Brotherton	35,614	-	35,614	-
Robert McKinnon	50,000	-	50,000	-
Robert Sushames	1,150,000	-	1,150,000	-

Meetings of directors

During the financial year, 19 meetings of directors were held. Attendances by each director during the year were as follows:

Peter Lowe Simon Henry Denise Brotherton Robert McKinnon Robert Sushames	Full meetings of directors	Full meetings of directors	Meetings of Committees	Meetings of Committees	Meetings of Committees	Meetings of Committees
			Audit and Risk		Remuneration
	A	B	A	B	A	B
	18	19	7	7	2	2
	16	19	*	*	*	*
	18	19	7	7	2	2
	19	19	7	7	2	2
	18	19	*	*	*	*

A = Number of meetings attended

B = Number of meetings held during the time the director held office or was a member of the committee during the year

• Not a member of the relevant committee

Principal Activities and Significant Changes in Nature of Activities

• DGL Group was established in 1999 by current CEO and Founder, Simon Henry. Mr Henry's vision for DGL was to address a gap in the market for a fully integrated end-to-end specialty chemicals and dangerous goods business.

DGL has now established itself as an integrated business that can offer a wide range of products and services to its diverse customer base.

• Its service offering includes chemical formulation & manufacturing, warehousing & distribution, and waste management & recycling. The Group's vision is to leverage its asset base, customer relationships, and trusted brand to further expand the products and services offered across the full chemical lifecycle and ultimately, develop itself as a one stop shop for its customers. DGL operates in three interconnected segments:

• (a) Procurement, manufacturing, formulation, and packing of specialised chemical and materials product

• The chemical manufacturing industry is large and diverse. It provides materials and formulations to a range of industry sectors, as well as supplying products to end-use consumer and industrial companies. It is common for chemical suppliers to outsource manufacturing for reasons including to reduce risk, minimise capital expenditure and focus on their core activities such as innovation and marketing. Specialised manufacturers can offer procurement, formulation, compliance, production, labelling, packaging and logistics services.

• The total basic chemical and chemical products manufacturing sector in Australia and New Zealand is projected to grow to circa $41 billion by 2026.¹

• (b) Logistics and storage of dangerous and specialised goods

• Services include logistics, transportation and freight management, inventory management, packaging and warehousing of dangerous and specialised goods.

• Dangerous goods, being substances that potentially pose a risk to life and health, require specialist skills and appropriate licences as incorrect storage and handling of dangerous goods and chemicals can result in spills, contamination, explosions, fires, burns, corrosive action and release of toxic fumes/gases.

• The integrated general logistics (excluding postal and courier services) service market in Australia and New Zealand is projected to grow to circa $112 billion by 2026. Within this market, it is estimated that dangerous goods logistics will account for approximately $1.2 billion by 2026.¹

(c) Hazardous waste management market in Australia

• The waste management industry provides services across multiple sectors including waste collection, waste transport, processing, recycling, recovery and disposal.

• Hazardous waste comprises approximately 10% of the total $15 billion waste management industry and are classified as wastes deemed to be potentially harmful to human health or the environment.¹

• ¹ Frost & Sullivan, Market report on Dangerous Goods Logistics, Contract Manufacturing of Chemicals and Hazardous Waste Management/Recycling Services Markets in Australia and New Zealand, 29 March 2021, commissioned by the Company.

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DGL GROUP LIMITED AND CONTROLLED ENTITIES DIRECTORS' REPORT

Review of Operations

The Group comprises three operating segments: Chemical Manufacturing, Warehousing & Distribution and Environmental Solutions. A description of each operating segment is set out below:

Chemical Manufacturing

Segment description

DGL provides materials and formulations to a range of industries, as well as supplying products to end-user consumer and industrial companies. Related services provided also include procurement, full-service formulation and packing services, formulation development, and contract manufacturing.

The Chemical Manufacturing segment holds a high level of process and product intellectual property. These processes often involve reaction chemistry of dangerous raw materials and are highly automated according to individual customer requirements.

DGL supplies a diverse range of customers primarily in Australia (~95% of sales revenue) and New Zealand (~5%) in several different sectors including agriculture, automotive, construction, mining, and utilities. Through acquisitions and the growth of DGL over the past year, the Group has reduced its reliance on key manufacturing customers. The largest manufacturing customer represents 4.4% of the Group's FY23 pro-forma revenue, down from 8.5% in FY22, as the number of, and value contributed by, other customers has increased.

Key activities

Statutory sales revenue of the Chemical Manufacturing segment has increased from $235 million in FY22 to $282 million in FY23 (includes intercompany transactions). The statutory Chemical Manufacturing segment result from continuing operations before tax and interest decreased from $46.5 million in FY22 to $41.7 million in FY23 (includes intercompany transactions). Excluding $15.0m contribution from one off supply imbalance in FY 22, this represents a $10.2m increase.

A focus on consolidation of acquisitions has enhanced the segment’s ability to provide a full service offering across all Australian states setting the platform for future revenue and volume growth. DGL’s own brand product portfolio has been enhanced through additional product registrations and further automotive offerings. The segment is continuing to explore further expansion of the established Australian product offerings into the NZ market.

Investment in new formulation and blending plants at existing Chemical Manufacturing sites has continued, notably the additional herbicide plant commissioned in Victoria in FY23.

Strengthening relationships with utility services across the eastern seaboard of Australia were reflected in the extension of several key contracts and continuing to explore further opportunities for co-location of treatment plants and other services.

The opportunities for Chemical Manufacturing to have cross-selling opportunities into the Logistics segment vastly increased during FY23, through services of freight forwarding and clearance and 3PL storage of finished products manufactured by segment operations. Volume growth in the segment has supported additions to the Logistics fleet to support segment customers, increasing value-add and full-service offering.

Operationally, a focus on reducing manufacturing timeframes has helped to reduce inventory levels and provide more timely customer delivery performance and flexibility.

In FY23, DGL acquired and integrated three businesses into the Chemical Manufacturing segment (Flexichem, Chempac (NZ) and Triox). This has expanded the segment's capabilities further into the agricultural, automotive, construction and industrial sectors and the ability to service those sectors from a single site in all Australian states.

Overview of acquisitions

Flexichem was acquired on 1 September 2022. Flexichem specialises in complex silicone-based manufacturing targeted at industrial, water treatment and specialty product applications for both domestic and export customers. The Flexichem acquisition gives DGL a strategic chemical manufacturing base in Adelaide with a strong technical base in chemical development and 1,200 tonnes of additional chemical manufacturing capacity.

Chempac (NZ) was acquired on 1 December 2022. Chempac (NZ) is engaged in chemical manufacturing, packaging and distribution of finished goods. There are strong synergies with the wider DGL Group around chemical manufacturing, which bring efficiencies coupled with the opportunity to expand further into the industrial chemical sector plus integration efficiencies with the nearby Bondlast operation.

Triox was acquired on 1 June 2023. Triox is a niche manufacturer and supplier of pest control products for the agriculture sector with strong competitive positioning. The acquisition enhances Chemical Manufacturing’s capabilities and expands the product offering with further opportunities to leverage existing customer relationships and expand sales to the Agrichemical sector.

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DGL GROUP LIMITED AND CONTROLLED ENTITIES

DIRECTORS' REPORT

Throughout much of FY23, the segment continued to experience supply chain disruption and a tight labour market. In the final stages of FY23, signs emerged of these constraints starting to ease.

Logistics

Segment description

The Logistics segment offers transport, logistics and warehousing services focusing on hazardous goods across Australia and New Zealand. Key components of the services provided by the segment include freight forwarding, inventory management, warehousing, and transport.

DGL has capacity to store approximately 200,000 tonnes of chemical and general products across Australia and New Zealand. DGL employs specially trained staff and fully accredited processes to provide safe and secure handling and storage of goods across multiple product types. All sites cater for racked, and/or block stacked pallet storage. DGL also caters for toxic gases with its upper and lower tier major hazard facility licences. During the FY23 period, the warehouses continued to be highly utilised.

DGL also provides national and international logistics through its own fleet and transport via partners across Australia and New Zealand. The segment’s fleet includes more than 330 owned trucks, trailers and road tankers across Australia and New Zealand, licensed to carry dangerous goods. The segment can provide solutions for wharf cartage, bulk tankers, local, interstate and line haul transport.

DGL's Logistics services both the Chemical Manufacturing and Environmental Solutions segments. This provides a significant advantage for customers as it allows for greater assurances over supply and a significant growth opportunity for DGL.

Key activities

Statutory sales revenue of the Logistics segment has increased from $62.8 million in FY22 to $103.1 million in FY23. The statutory Logistics segment result from continuing operations increased from $13.8 million in FY22 to $20.5 million in FY23 (includes intercompany transactions).

High utilisation of DGL’s logistics network and continued demand for the company’s warehousing and distribution services supported strong growth of this segment.

Logistics acquired four businesses during FY23 contributing to the segment's revenue growth and service offering (Clarkson, Nightingale, NLW and DLF).

Overview of acquisitions

Clarkson & Connolly Transport (Clarkson) was acquired on 1 September 2022. Clarkson focuses on providing general freight services for the agricultural and building sectors in the mid-West and wheatbelt regions of Australia. Clarkson offers an opportunity to grow DGL’s freight services to DGL Manufacturing customers and opens up more organic growth opportunities in the WA agricultural chemical sector.

Nightingale Transport (Nightingale) was acquired on 7 February 2023. Nightingale provides a national logistics service to blue-chip clients in the mining, agricultural and infrastructure sectors. The acquisition of Nightingale gives DGL the opportunity to consolidate Environmental Solutions collections and expand the Group’s transport capabilities nationally.

NLW Group (NLW) was acquired on 1 March 2023. NLW specialises in providing warehousing, transport and logistics services for a variety of industries, including mining, agriculture and manufacturing. The acquisition of NLW increases DGL’s storage and service capabilities in North QLD for Chemical Manufacturing, Environmental Solutions and the Group customer base. NLW also helps reduce the number of service providers for DGL’s customers and strengthens DGL’s partnerships with them.

DLF Global Logistics (DLF) was acquired on 1 March 2023. DLF is a full-function international logistics business that solidifies DGL’s presence in freight forwarding and expands its influence in the Australasian market. DLF provides access to the highly attractive manufacturing and construction verticals and plentiful opportunities for cross-selling between segments.

In FY23, DGL accomplished significant milestones, driving growth and enhancing its service offerings. Notably, the Logistics segment

broadened its freight forwarding capabilities. This expansion was complemented by the establishment of a customs clearing unit, further strengthening DGL's service portfolio. These strategic moves have amplified DGL's capacity to cater to a wider array of customer needs within the Group.

The Logistics segment is actively exploring opportunities for growth and diversification. Considerations encompass the augmentation of the fleet, expansion into new geographical areas and the incorporation of varied service types, such as port services, container transport and bulk tanker operations. Noteworthy is the potential internal utilisation of DGL's fleet, supplanting the use of any subcontractors across the Group. This comprehensive approach aligns with the overarching goal of delivering an integrated service, delivering heightened value to clients spanning all three segments. By streamlining their supplier base, clients can optimise cost-efficiency and supply chain effectiveness.

An additional driver of revenue growth stemmed from cross-segment customer referrals, with intercompany revenue experiencing strong growth. This growth underscores the progressively pivotal role of Logistics in bridging DGL sites with our customer base.

Despite these achievements, operational challenges were encountered. The interplay of rapidly escalating operational costs and supply chain disruptions impacted the earnings of the segment. While fuel cost escalations were largely offset through sensible use of fuel levies, a concerted emphasis will be placed on re-evaluation of pricing structures and cultivation of margin expansion in FY24. Heightened utilisation rates were balanced by disruptions in the workforce, similar to experience in FY22. A notable operational metric is the efficiency of storage facilities, which tend to peak within the 90-95% utilisation range. Most warehousing sites consistently surpassed this optimal range, indicative of robust operational activity.

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DGL GROUP LIMITED AND CONTROLLED ENTITIES DIRECTORS' REPORT

In summation, FY23 has been marked by strategic expansion, robust revenue growth and a diligent response to operational challenges. The orchestrated initiatives have bolstered DGL's service offerings, positioning the company for sustained growth and resilience in a dynamic business landscape.

Environmental Solutions

Segment description

The Environmental Solutions segment undertakes resource recovery and hazardous waste management activities. Its core activities comprise liquid waste treatment, end-of-life lead acid batteries (ULAB) recycling, lead smelting and refining.

ULAB recycling is undertaken at two EPA licensed recycling facilities located in New South Wales and Victoria. ULABs are recycled in state-of-the-art highly, automated recycling facilities. The segment relies on an established and mature collection network of suppliers located throughout Australia. The primary outputs from the ULAB recycling process are lead products, scrap plastic and waste. Lead products are sold to overseas smelters, scrap plastic is sold to a local recycler and the waste streams are further processed and safely disposed in landfill.

The segment's site in Laverton North, Victoria has lead smelting and refining capabilities. This is to allow the conversion of intermediate lead material into more refined products, which are sold to a wider global market.

DGL operates a wastewater treatment plant to process liquid waste generated from its end-of-life lead acid batteries recycling plant in New South Wales. The plant also treats liquid waste from industrial customers, who include aluminium extruders, galvanisers and wastewater customers. Material progress has been made towards the development and construction a state-of-the-art liquid waste treatment plant on the same site capable of treating significantly greater volumes of liquid waste.

Key activities

Statutory sales revenue of the Environmental Solutions ("Environmental") segment has increased from $88.4 million in FY22 to $110.4 million in FY23 (includes intercompany transactions). The statutory Environmental Solutions segment result from continuing operations before tax and interest decreased from $13.4 million in FY22 to $12.4 million in FY23.

Earnings growth is attributable to both the scaling of the Environmental Solutions segment but also exclusion of corporate costs in the FY23 figures.

Supply chain disruptions impacted the Environmental Solutions segment.

During FY23, DGL acquired and integrated four businesses into the Environmental Solutions segment, contributing to the segment's revenue growth and service offering (Aquadex, BTX, Acacia Ridge and Envirostore). This expanded the segment’s presence in the growing water treatment and waste sectors and its reach in those sectors across Australia.

Overview of acquisitions

Aquadex was acquired on 1 October 2022. Aquadex specialises in the manufacturing and distribution of chemicals for chlorine products and water treatment. The acquisition enhanced DGL's existing water treatment chemical business and provided access to a list of customers including large utilities and blue-chip mining groups.

BTX was acquired on 1 October 2022. BTX provides bespoke chemistry and innovative technologies to the municipal, mining, environmental and industrial sectors throughout Australia. The acquisition enhances the existing service offering of both the Environmental Solutions and Chemical Manufacturing segments and significantly widens the accessible market. BTX also increases the breadth of intellectual property within both segments.

Acacia Ridge was acquired on 1 November 2022. Acacia Ridge has wide experience in handling ISO tank containers & road tankers and provides a range of services to meet customer needs. Acacia Ridge enjoys a strong and successful reputation within the industry and provides DGL pivotal access to the bulk chemical and materials sector.

Envirostore was acquired on 8 May 2023. Envirostore is an environmental services business offering advice and consulting on chemical waste disposal, dangerous goods and hazardous substances, with an in-house training centre and dangerous goods warehouse facilities. The Envirostore acquisition provides DGL with an entry point into the expanding Victoria waste management sector.

Environmental Solutions has invested in new machinery to increase our processing capability in FY24. Upgrades to the polypropylene stream from its battery recycling operation are now in operation. This converts the plastic to a more marketable end product.

Progress on the new liquid waste treatment plant has been further delayed by consents and regulatory approvals. Plant commissioning is now planned for Q3 FY24. Customer interest in this capability remains high and there is a strong pipeline of opportunities for management to pursue.

Segment management are actively diversifying the customer base domestically and internationally, which de-risks reliance on key customers and regulatory complexity. In particular, significant revenue and volume potential exists for water treatment with local mining operations. Reducing the reliance on lead-acid battery recycling continues to be a major focus and the Envirostore acquisition demonstrates the commitment to diversify and further opportunities are being explored in all major Australian states.

There are several examples of Environmental Solutions working closer with the other two operating segments. Environmental Solutions has integrated Logistics staff onsite at Unanderra to handle container and bulk transport internally. This move has provided a cost saving and more efficient service for the finished goods and liquid waste transportation. The acquisition of Nightingale Transport, which is located close to the Unanderra site, has enhanced cross-selling and integration opportunities within the group.

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DGL GROUP LIMITED AND CONTROLLED ENTITIES

DIRECTORS' REPORT

Manufacturing technical services are working with Environmental Solutions operational staff to explore water treatment chemicals that can be formulated and supplied internally to be tailored to DGL's specific requirements and reduce costs. Reciprocating, Environmental Solutions is working with Manufacturing to treat liquid waste generated from various formulation processes to reduce external waste disposal costs and assessments are being undertaken to potentially expand this capability within the group.

Group Operating Results

The consolidated profit of the Group after providing for income tax amounted to $19.2 million. (2022: $27.9 million). On an underlying basis, adjusting for one off items (including acquisition costs, impairment expenses, and the tax impact of these items) the underlying profit of the Group after providing for income tax amounted to $22.6m (2022: $33.6 million).

Financial Position

The net assets of the Group have increased by $27.8 million from $305.8 million as at 30 June 2022 to $333.6 million as at 30 June 2023.

There was a significant decrease in the current assets and current liabilities of DGL Group from 30 June 2022 to 30 June 2023. Current assets decreased from $144.6 million to $135.5 million and current liabilities decreased from $88.9 million to $67.6 million.

The decrease in current assets was primarily attributable to the sale of elevated inventory levels held as at 30 June 2022 as a result of a strategic management decision aimed at assuring supply to customers. In addition, Group Management has driven improvements in working capital management with focus on cash collection efforts reducing trade receivables and focus on inventory management, as well as price reductions, reducing inventory levels.

The decrease in current liabilities is reflective of a circa $22.1 million reduction of secured trade payables owing to the restructure of the group’s funding arrangements in August 2022. The overall decrease in working capital is net of increases of circa $5 million, following the acquisition of eleven businesses in FY23. The overall net decrease in current assets and liabilities has been reflected in increased operating cash flows.

Total assets increased from $502.3 million to $509.8 million. Along with the noted increase in current assets, goodwill has increased by $45.8 million following the acquisition of 11 businesses in FY23, right of use assets have increased by $3.4 million with several additional leased sites and property plant & equipment has increased by $27.6 million from $218.8 million to $246.4 million. The increase in property, plant & equipment is primarily attributable to businesses acquired during FY23 plus additions to the Logistics segment transport fleet.

Total liabilities increased from $196.6 million to $236.2 million. Apart from the noted decrease in trade and other payables, borrowings increased by $58.4 million (in part due to the reclassification from secured payables to borrowings under new funding arrangements) and lease liabilities increased by $3.4 million. The total bank facility (Borrowings and other ancillaries) is $145.7 million (excluding facilities such as credit cards and bank guarantees). The total amount of the bank facility drawn at 30 June 2023 is $125.4 million. Most of the debt has a maturity date of August 2024. As at 30 June 2023, DGL remains well within covenant limits (capitalisation ratio, fixed charge cover ratio, leverage ratio) set by its financiers.

Dividend Paid or Recommended

It is not recommended that a dividend be declared and no dividends were paid or declared during and since the end of the financial year.

The Company does not intend, or expect, to declare nor pay any dividends. The current dividend policy of the Company is to reinvest all free cash flows in the business to maximise growth.

Matters Subsequent to the End of the Financial Year

On 3 July 2023, the Company acquired the business and assets of Qblend Pty Ltd. Qblend provides a powder blending and repacking service to customers in the mining, agriculture and industrial sectors.

On 1 August 2023, the Company acquired the business and assets of Kinnear Transport. Kinnear provides chemical and distribution service to customers in Western Australia.

On 14 August 2023 the Company announced its intention to conduct an on-market share buy-back program of up to 10% of its issued shares. The program will commence on the 30 August 2023 for up to a 12-month period.

Outlook and Key Business Strategies and Prospects

DGL’s vision is to be Australasia’s leading fully integrated, end-to-end chemicals and materials business. To achieve this, the Company has four strategic priorities to drive growth;

• Drive cross-selling of DGL’s services to its customers

• Achieve further economies of scale

• Investment in capital projects

• Identified acquisitions

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DGL GROUP LIMITED AND CONTROLLED ENTITIES DIRECTORS' REPORT

These are explained further as follows:

1. Drive cross-selling of DGL’s services to its customers

2. A core component of DGL’s growth strategy is to create greater cross usage of services by customers across DGL’s three core divisions. DGL’s three divisions encompass all stages of the chemical and hazardous good lifecycle, from formulation through to disposal and recycling. This allows for a significant level of cross-sell to provide DGL’s customer base with a one stop shop approach to chemical supply chain solutions. This is further supported by the trend towards consolidation of suppliers which DGL is well positioned to benefit from.

As a demonstration of this strategy in FY22, newly acquired businesses continue to provide opportunities to expand DGL's product and service offerings to its customers, geographies, and new sectors. Greater product offerings will allow our customers to rationalise suppliers, benefiting DGL.

DGL expects to continue to assess the best way to align the growing business units to facilitate cross-selling capabilities. It also expects to continue redeploying staff from acquisitions to Group wide roles. DGL also plans to improve the collection and dissemination of data and information across the Group, which will facilitate the spread of intellectual property and promote cross-selling opportunities.

1. Achieve further economies of scale

To achieve further economies of scale, DGL is focused on the increased buying opportunities as well as increasing utilisation and leveraging Group assets and infrastructure. DGL has experienced significant earnings improvement in recent years through operating efficiencies and more effective utilisation of assets.

In line with this strategic priority, there has been material growth in the intercompany sales of Warehousing and Distribution, a significant link between sites and customers of DGL establishing distribution relationships to support growth. In addition to redeploying employees Group wide to drive cross-selling, there has been more effective utilisation of DGL’s extensive workforce between divisions, sharing skills and resources (e.g. sharing engineering and procurement expertise across Group). Utilising balance sheet strength and scale plus the capabilities of DGL’s teams across divisions, DGL was able to achieve procurement and supply chain margin benefits, highlighting the benefits of Group expertise, buying power, and balance sheet strength that accompanies our growing scale.

We will continue to assess procurement and supply chain opportunities from the recent business acquisitions. We are planning a move to increase production and batch sizes to increase efficiency of runs and rationalising some customer requirements to the most efficient operations (balancing proximity to customers with more efficient plant and production runs).

1. Investment in capital projects

Investing in capital projects is key to driving growth through organic opportunities and growing DGL’s asset base. This is primarily achieved through expanding existing sites and investing long-term in strategic property, plant and equipment.

In FY23, DGL continued to invest in expanding its network and services, notably establishing new manufacturing facilities, with the successful commissioning of new plant at Derrimut in Victoria. The planned commissioning of a liquid waste treatment plant (LWTP) in FY24 and additional processing capacity will support diversification of the Environmental Solutions service offering.

DGL will continue to assess operating focused capital projects to increase capacity and capabilities. DGL is continuing to work on new opportunities with new and existing customers, new products, and new geographies which may require capital investment. These opportunities will be assessed on a case-by-case basis as will projects relating to strategic property.

1. Identified acquisitions

DGL has undertaken a number of successful business acquisitions since its formation. The Group sees significant consolidation opportunities in Australia and New Zealand in each of its divisions, with opportunities to add capabilities and customers and continues to assess potential acquisitions. DGL has stringent criteria for assessing acquisitions, including:

• Compatibility with DGL’s existing operations;

• Bringing a diverse customer base;

• Adding to DGL’s geographical spread; or,

• Bringing new products to DGL’s suite of chemicals products.

Key Business Risks

1. Risk Management Policy

DGL’s Board and management recognise risk management as an integral aspect of all of the Group’s business operations. Risk Management is the responsibility and duty of all staff at DGL. The process of identifying, reporting and managing risk remains at the core of all processes to ensure that DGL achieves its strategic goals and objectives in pursuit of its vision.

Strategic context

DGL’s vision is to build a diverse international business capable of delivering a wide range of industrial solutions across the chemical industry. In doing so, we are continuously looking for ways to encourage business process improvement, identify challenges, determine key solutions and measure the results.

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DGL GROUP LIMITED AND CONTROLLED ENTITIES

DIRECTORS' REPORT

Risk Management is an important tool to create and protect value, thereby helping to improve performance, encourage innovation and support the achievement of DGL’s vision. It is therefore important that our core values are kept front of mind when day-to-day tasks are undertaken at DGL, across all the Logistics, Chemical Manufacturing and Environmental Solutions segments.

Management across the three segments have highlighted that the key objectives of the Group are:

• To provide a safe working environment for employees and stakeholders

• To adhere to environmental best practice and regulated guidelines

• To achieve sustainable growth and be a market leader

• To boost efficiency and collaboration as an integrated team; and

• To deliver innovative and value-added solutions to our customers

Purpose

The purpose of the Risk Management Policy is to provide guidance to all stakeholders in identifying, reporting, and managing risk. It is important that we promote a culture of risk awareness among staff to understand, assume responsibilities and proactively manage risks. Everyone at DGL is empowered to identify risk and have the tools available to be able to bring these to the attention of management and the Board. This helps to increase the confidence that any identified risks associated with the key decisions made are managed in a way that achieves our desired outcomes.

This Risk Management Policy is designed to:

• Define clear roles and responsibilities for staff, management, the Audit & Risk Committee and the Board

• Follow a structured risk management approach with decision-making and reporting lines

• Establish a comprehensive risk management framework based on DGL’s risk appetite

This policy is supported by the Risk Management Framework guided by ISO 31000:2018 Risk Management – Guidelines

Risk Appetite

The Board is ultimately responsible for DGL’s Risk Management Framework. It has considered the nature and extent of risks it is willing to take in pursuit of DGL’s strategic objectives and vision. The Board has assessed DGL’s risk appetite, which is set at a level that balances opportunities for business development and growth in areas of potentially higher risk, whilst maintaining the continuity of DGL’s operations, reputation and stakeholder satisfaction.

DGL’s overall risk appetite profile represents a balanced perspective on the management of risk. It takes into account both the value protection and value creation elements of risk and demonstrates the level of risk DGL is willing to accept across nine categories.

Risk Appetite Statements

Through consultation and collaboration within the Group, it was identified that the categories below represent the areas of key risk to DGL. For this reason, it is important that DGL articulates its appetite for risk across each of the categories to enable better risk-informed decision-making as DGL pursues its objectives. This document considers DGL’s appetite for risk across the following categories:

• Strategic: responsiveness to industry and technology changes; entering new markets; expanding existing services; mergers and acquisitions

• Financial: returns to shareholders and long-term financial sustainability; cash flow and financial management; balance sheet strength

• Operations & Infrastructure: efficient, commercial and resilient internal processes; asset integrity and reliability; business continuity

• management

• Competition & Markets: customer engagement; pricing; growth and service offering; monitoring competitor actions

• Legal, Regulatory & Compliance: legal and compliance management

• Health, Safety & Wellbeing: worker health and safety; public safety

• People & Culture: talent and culture management; fraud and ethical conduct; employee engagement and change management; supplier

• management

• Reputation & Ethics: trust of our customers shareholders and other stakeholders to operate

• Environmental: probability and consequence of an adverse environmental event

2. Risk Management Framework

DGL's risk management methodology is outlined in 5 key steps:

Step 1: Scope, Context and Criteria – It is important to start with a clear understanding of what we are trying to achieve and the current operating environment. This will help to identify risks that stand in the way of achieving our objectives, assist in defining the scope and purpose of the risk assessment and who is the right person to determine the risk rating criteria for the assessment of risks. The context of the risk management process should be established by considering internal and external factors, in conjunction with the organisation’s objectives, plans, projects, processes and activities.

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DGL GROUP LIMITED AND CONTROLLED ENTITIES

DIRECTORS' REPORT

Step 2: Risk Assessment – Consider the threats and uncertainties (the risks) associated with achieving our objectives. Identifying risks should be part of our day-to-day operations as well as conducted systematically. This is an iterative and collaborative process, drawing on the knowledge and views of various stakeholders.

Step 3: Risk Treatment – This refers to the process of selecting and implementing control measures to address the risk identified. Risk treatment is based on the assessment of the residual risk and its corresponding control effectiveness.

Step 4: Recording and Reporting – DGL uses a Risk Register to record and maintain its risks, controls and treatments. Risks should follow the organisational escalation process.

Step 5: Monitor and Review - The purpose of monitoring and review is to assure and improve the quality and effectiveness of process design, implementation and outcomes. Monitoring and review should take place in all stages of the process. Monitoring and review includes planning, gathering and analysing information, recording results and providing feedback.

To ensure ongoing overview of the Risk Management process, risk reviews are part of standing meetings at the Audit & Risk Committee and Board meetings. At least twice a year, the Audit & Risk Committee does a deep dive / detailed review on a key risk to ensure a good understanding of the key risks and how they are managed.

3. Business Assurance Plan

Based on discussions between external advisers and management, the ARC have approved a business assurance plan for the next three years, with FY24 reviews already underway or planned.

Environmental, Social and Corporate Governance

A Company's Environmental, Social, and Corporate Governance (ESG) framework evaluates the extent to which an organisation works on behalf of social goals, beyond profit maximisation on behalf of shareholders. DGL’s approach to ESG is guided by the United Nations Sustainability Development Goals:

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Our Environmental, Social and Government approach centres on the following United
Nations Sustainability Development Goals:
05 GENDER EQUALITY
CLEAN WATER AND
06
SANITATION
07 AFFORDABLE AND CLEAN ENERGY
INDUSTRY, INNOVATION AND
09
INFRASTRUCTURE
RESPONSIBLE CONSUMPTION AND
12
PRODUCTION
13 CLIMATE ACTION
PEACE, JUSTICE AND STRONG
16
INSTITUTIONS
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In our role as an end-to-end supply chain service, with ever-growing reach into critical industries such as agriculture, automotive, transport, manufacturing, home and garden, food, and pharmaceutical, we play a role in managing ESG risks and impacts.

DGL Group is committed to implementing a company-wide environmental, social and corporate governance framework that encompasses all its business units, evidenced by notable achievements and initiatives.

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DGL GROUP LIMITED AND CONTROLLED ENTITIES DIRECTORS' REPORT

Our ESG Framework targets six priority areas:

1. Clean Water

• Volume of potable water produced estimated at 125,000 megalitres per annum

• 60,000 megalitres per annum will be disinfected with Green Chlorine by end FY25

• 5,000,000 litres of mine wastewater processed

2. Waste minimisation & recycling

• 30,000 tonnes of liquid waste processed in FY23

• Cross-segment support from Environmental Solutions team to Chemical Manufacturing to minimise all waste and effluent streams

• Liquid Waste Treatment Plant to be commissioned in FY24

3. Energy management

• Four sites with solar energy providing a major source of electrical power and a further three under review. Two sites provided a combined

• $100k saving in

FY23

4. Carbon footprint

• Particulate reduction through use of AUSblue products is estimated at 2,500MT of NOx per annum

• On-site Green Chlorine modules to save in excess of 350,000km per annum of transportation

• Strategic acquisitions such as Nightingale Transport, enable DGL to provide sustainable supply chains for our customers

• Customer use of DGL coagulant products reduces their carbon footprint by up to 25%

5. Diversity

• Community support through employment in regional locations

• New group payroll system implementation to support reporting and targeting of diversity measures

6. Modern slavery

• Board ratification of Modern Slavery Statement, published on the DGL website

• Development of group Procurement function, alongside ISO certified processes, will help ensure compliance of DGL’s

• supplier base Standardised supplier survey in place

Since IPO in 2021, DGL recognises it is maturing and in the early stages of its ESG journey, but the Board and management are committed through FY24 and beyond, to achieving best practise outcomes that will be supported by robust systems and targeted key measures.

Environmental Issues

The Group's operations are subject to licence requirements issued under the Protection of the Environment Operations Act 1997 (NSW) ("POEO Act") in relation to its business of processing used lead acid battery and industrial residues and manufacturing chemical products including treatment processes, immobilisation of by-products, disposal of effluent streams and transportation of materials that are subject to specific approvals from and close scrutiny by the Commonwealth and State departments.

The Group operates in highly regulated industries where there are stringent regulatory and compliance measures in place to ensure safety in operations, and environmental and quality standards.

Licence or Accreditation

Chemical Manufacturing

ISO 9001: 2015 quality management system ISO 14001 Environmental Certification

ISO 45001 WHS Certification EPA Environmental Protection Licenses Dangerous Goods Storage Licenses VDA AdBlue Brand Certification Trade Waste Discharge Consents Australian Pesticides and Veterinary Medicines Authority Kosher Accreditation

UL/NSF Certification

Poisons Licenses AgSafe Premises Accreditation Australian Organic Certified Operation

ensures products and services are consistently maintained at a high level of quality promotes environmental performance through more efficient use of resources and reduction of waste

promotes reduction of occupational injuries and diseases required under Australian regulations required under Australian regulations

ensures products and services are consistently maintained at the high level of quality enables discharge of treated wastewater from site

Australian law requires veterinary chemical products to be registered by APVMA Verifies that the ingredients, production process including all machinery, and/or foodservice process complies with the standards of kashrut

Ensures certified products, materials, components or services complies with the technical requirements of the referenced standard

licence to sell or supply by wholesale schedule 7 Poisons ensures that stores are compliant with all jurisdictional regulations licence to supply or direct the application of the Australian Organic trademark

11

DGL GROUP LIMITED AND CONTROLLED ENTITIES

DIRECTORS' REPORT

Australian Pesticides and Veterinary Medicines Authority	The Australian Pesticides and Veterinary Medicines Authority has a defined role as the
Registrations (APVMA)	regulator of agricultural and veterinary chemicals in Australia.
	APVMA are the independent statutory authority responsible for assessing and registering
	pesticides and veterinary medicines proposed for supply in Australia.
Hazardous Location Certificate	required under New Zealand regulations to store high risk dangerous goods
MPI Transitional Facility	required under New Zealand regulations to unpack imported sea containers
Logistics
ISO 9001:2015 quality management system	ensures products and services are consistently maintained at a high level of quality
Dangerous Goods Storage Licenses	required under Australian regulations
National Heavy Vehicle Accreditation Scheme	demonstrates compliance with general duty requirements under road transport law
HACCP CODEX: 2003	customers who store food grade products at warehouses require this quality
Biosecurity Approved	required under Australian regulations to handle quarantined goods
Major Hazard Facility, Upper and Lower tier	required under New Zealand regulations to store high risk dangerous goods
MPI NZ (Storage and handling of dangerous goods) Poisons Licenses EPA Waste Management & Transport Licenses Bulk Dangerous Goods Transport MPI NZ VDA approval USEPA import licence Environmental Solutions EPA Environmental Protection Licenses Dangerous Goods Storage Licenses Environmental Export Licenses Trade Waste Discharge Consents Poisons Licenses ARCP Reportable Priority Waste	required under New Zealand regulations to store and handle dangerous goods required under Australian regulations to store poisonous goods required under Australian regulations to transport waste products required under Australian regulations to transport dangerous goods required under New Zealand regulations to unpack imported sea containers allows for the diesel exhaust fluid produced to be sold under the AdBlue brand U.S. Environmental Protection Agency (USEPA) Licence to import Dangerous Goods and Hazardous Substances into the USA waste management and recycling authorisation required under Australian regulations to store dangerous goods required under Australian regulations to export certain products permits discharge of wastewater generated into the sewer network licence to sell or supply by wholesale schedule 7 Poisons licence to use explosives (Security Sensitive Ammonium Nitrate) permit to transport

Audit/Non-Audit Services

Auditors' remuneration is disclosed in Note 7. In addition, PKF Melbourne also provided corporate finance and transactional services and tax planning and GST advice. Refer to Note 7 for further details. The directors are satisfied that the provision of non-audit services during the year are compatible with the general standard of independence for auditors and did not compromise the independence requirements of the Corporations Act 2001.

Indemnifying Officers or Auditor

During the year, the Group entered into an insurance policy to insure certain officers of the Company and its controlled entities. The officers of the Group covered by the insurance policy include the Directors named in this report.

The Directors' and Officers' Liability Insurance provides cover against all costs and expenses that may be incurred in defending civil or criminal proceedings that fall within the scope of indemnity and that may be brough against the officers in their capacity as officers of the Group or a related body corporate.

The insurance policy does not contain details of the premium paid in respect of individual officers of the Group. Disclosure of the nature of the liability cover and the premium paid is subject to a confidentiality clause under the insurance policy.

The Group has entered into an agreement with the Directors and certain officers to indemnify these individuals against any claims and related expenses which arise as a result of work completed in their respective capabilities.

The Group nor any of its related bodies corporate have provided any insurance for any auditor of the Group or a related body corporate.

Capital Raising and Capital Structure

As at 30 June 2023, the Company has 284,911,205 fully paid ordinary shares. During the year, a total of 5,718,657 fully paid ordinary shares were issued. Please refer to note 23 for further details.

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DGL GROUP LIMITED AND CONTROLLED ENTITIES DIRECTORS' REPORT

Summary of Options

There are no options on issue at the date of this report.

Proceedings on Behalf of Group

No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings other than listed below.

The Group currently has no open litigation matters.

The previously reported matter re alleged breach of vendor warranties and associated counterclaim involving DGL Manufacturing Limited and Simon Henry (personally), concluded when all parties agreed a ‘walk away’ settlement.

Rounding of amounts

The Company is 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.

Corporate Governance Statements

In accordance with Australian Securities Exchange ("ASX") Listing Rules, the Company's Annual Corporate Governance Statement is available on the Company's website at https://www.dglinvestors.com/investor-centre/?page=corporate-governance and released separately to the ASX Announcements in the form of an Appendix 4G.

Auditor's Independence Declaration

A copy of the auditor's independence declaration as required by section 307c of the Corporations Act 2001 is attached on page 18.

13

DGL GROUP LIMITED AND CONTROLLED ENTITIES DIRECTORS' REPORT

REMUNERATION REPORT - AUDITED

This remuneration report sets out remuneration information for non-executive directors, executive directors and other key management personnel.

Remuneration Policies

The Group's remuneration policy aligns Director and Executive objectives with shareholder and business objectives by providing appropriate remuneration packages comprising of a fixed remuneration component and additional discretionary employment benefits. The Board believes the remuneration policy for its Directors and Executives to be appropriate and effective. However, the remuneration framework for all DGL Group senior executives is being reviewed by the Board's Remuneration Committee, with a plan to implement a balanced scorecard approach for assessing at-risk remuneration to greater attract and retain people with necessary qualifications, skills and experience to assist the company in achieving its desired results.

The Group has a Nomination and Remuneration Committee to assist the Board achieve its objective to ensure the Group:

• has a Board with effective composition, size and commitment to adequately discharge its responsibilities and duties, having regard to the Board

• skills matrix;

• has coherent remuneration policies and practices to attract and retain executives and directors who can reasonably be expected to create value for shareholders;

• observes those remuneration policies and practices; and

• fairly and responsibly rewards executives having regard to the performance of the Group, the performance of the executives and the general external pay environment.

Remuneration Structure

In accordance with best practice corporate governance, the structure of Executive Director and Non-Executive Director remuneration is separate and distinct.

Remuneration of Executive Directors and Key Management Personnel

Objective

The Board aims to reward Executives with a level and mix of remuneration commensurate with their position and responsibilities within the Group.

Structure

In determining the level of Executive remuneration, the Board considers external reports on market levels of remuneration for comparable executive roles.

The Executive directors and key management personnel have entered into employment contracts with the Company.

Remuneration of Non-Executive Directors

Objective

The Board seeks to set an aggregate remuneration at a level which provides the Group with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.

Structure

Under the Constitution, the Directors decide the total amount paid to all Directors as remuneration for their services as a Director. However, subject to ASX Listing Rules, the total amount paid to all Non-Executive Directors for their services must not exceed an aggregate maximum amount of $800,000 per annum or such maximum amount determined by the Company at a general meeting of shareholders.

Non-Executive Directors may be reimbursed for all business related expenses properly incurred by them in connection with the Company's business.

Non-Executive Directors may be paid such additional or special remuneration if they, at the request of the Board, perform any extra services.

There are no retirement benefit schemes for Non-Executive Directors, other than statutory superannuation contributions.

Key Management Personnel (KMP)

During FY23, a reorganisation of the leadership team and promotions into the leadership team resulted in four additional roles meeting the definition of KMP in AASB 124. Full year remuneration for these executives is disclosed below.

Employment Contracts

Remuneration and other terms of employment for Executive Directors and KMP are formalised in written agreements, the major provisions of which are as follows as at 30 June 2023.

Simon Henry - Chief Executive Officer

(a) Employment Contract - Permanent ongoing (b) Remuneration - A$630,000 (opted out of KiwiSaver contributions), A$20,000 car allowance (c) Executive's notice period - 6 months¹

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DGL GROUP LIMITED AND CONTROLLED ENTITIES DIRECTORS' REPORT

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||||
|---|---|---|
|Robert Sushames|-|Executive Director, Director of Manufacturing|
|(a)|Employment Contract|- Permanent ongoing|
|(b)|Remuneration|- A$350,000 exclusive of superannuation contributions, fully expensed company vehicle|
|(c)|Executive's (and Company's) notice period|- 6 months¹|
|Ryan Aisher|-|Chief Operating Officer|
|(a)|Employment Contract|- Permanent ongoing|
|(b)|Remuneration|- NZ$250,000 exclusive of compulsory contributions to KiwiSaver, fully expensed company vehicle|
|(c)|KMP (and Company's) notice period|- 2 months¹|
|Ben Halsey|(resigned 23 December 2022) -|Chief Financial Officer|
|(a)|Employment Contract|- Permanent ongoing|
|(b)|Remuneration|- NZ$285,000 exclusive of compulsory contributions to KiwiSaver.|
|(c)|KMP (and Company's) notice period|- 6 weeks¹|
|Rob Perkins|(appointed 24 January 2023) -|Chief Financial Officer|
|(a)|Employment Contract|- Permanent ongoing|
|(b)|Remuneration|- NZ$350,000 exclusive of compulsory contributions to KiwiSaver, fully expensed car park space|
|(c)|KMP (and Company's) notice period|- 3 months¹|
|Aaron Bardell|-|Director, DGL Warehousing & Distribution|
|(a)|Employment Contract|- Permanent ongoing|
|(b)|Remuneration|- A$250,000 exclusive of superannuation contributions, $18,000 vehicle allowance|
|(c)|KMP (and Company's) notice period|- 8 weeks¹|
|Bill Say|-|Commercial Manager, DGL Group|
|(a)|Employment Contract|- Permanent ongoing|
|(b)|Remuneration|- A$250,000 exclusive of superannuation contributions, $18,000 vehicle allowance|
|(c)|KMP (and Company's) notice period|- 8 weeks¹|
|Keith Mau|-|GM Environmental Solutions|
|(a)|Employment Contract|- Permanent ongoing|
|(b)|Remuneration|- A$250,000 exclusive of superannuation contributions, fully expensed company vehicle|
|(c)|KMP (and Company's) notice period|- 2 months¹|
|Alex Wing|(appointed 20 February 2023) -|GM Operations, Manufacturing|
|(a)|Employment Contract|- Permanent ongoing|
|(b)|Remuneration|- A$165,000 exclusive of superannuation contributions. A$17,500 vehicle allowance|
|(c)|KMP (and Company's) notice period|- 8 weeks¹|

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¹ In the event of fraud or other serious misconduct, the Company may terminate Executive Directors' and KMP employment agreements at any time without notice.

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||||
|---|---|---|
|Position held as at 30 June 2023 and any changes during the year|Contract details (duration & termination)|
|Peter Lowe|Chairman and Non-Executive Director|No fixed term|
|Simon Henry|Founder, Executive Director and Chief Executive Officer|No fixed term|
|Denise Brotherton|Non-Executive Director|No fixed term|
|Robert McKinnon|Non-Executive Director|No fixed term|
|Robert Sushames|Executive Director and Director of Manufacturing (previously General Manager of|No fixed term|
|DGL Manufacturing (Australia) Pty Ltd)|

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DGL GROUP LIMITED AND CONTROLLED ENTITIES

DIRECTORS' REPORT

Remuneration of Directors and other Key Management Personnel (KMP) for the Year Ended 30 June 2023

2023	Short-term Benefits Salaries, fees, allowances Post employment Benefits Superannuation/KiwiSaver Share based benefits Shares Total $ $ $ $
Peter Lowe Simon Henry Denise Brotherton Robert McKinnon Robert Sushames Ryan Aisher Ben Halsey (resigned 23 December 2022) Rob Perkins (appointed 24 January 2023) Aaron Bardell Bill Say Keith Mau Alex Wing (appointed 20 February 2023)	110,000 - - 110,000 623,713 - - 623,713 60,000 - - 60,000 73,059 7,671 - 80,730 350,000 36,750 - 386,750 227,979 6,839 - 234,818 160,907 9,068 141,385 311,360 128,111 3,843 - 131,954 343,769 43,901 94,339 482,009 259,667 27,265 - 286,932 250,000 26,250 - 276,250 45,625 4,791 - 50,416
	2,632,830 166,378 235,724 3,034,932

Remuneration of Directors and other Key Management Personnel (KMP) for the Year Ended 30 June 2022

2022	Short-term Benefits Salaries, fees, allowances Post employment Benefits Superannuation Share based benefits Shares Total $ $ $ $
Peter Lowe 110,002 - - 110,002 Simon Henry 598,601 - - 598,601 Denise Brotherton 80,000 - - 80,000 Robert McKinnon 73,059 7,306 - 80,365 Robert Sushames 350,000 35,000 - 385,000 Ryan Aisher 209,372 6,281 - 215,653 Ben Halsey (appointed 14 September 2021) 179,405 8,919 116,704 305,028 1,600,439 57,506 116,704 1,774,649 Balance at beginning of Year Granted as Remuneration during the year Issued on Exercise of Options during the Year Other changes during the year Balance at End of year Peter Lowe 50,000 - - - 50,000 Simon Henry 150,917,729 - - 372,500 151,290,229 Denise Brotherton 25,000 - - 10,614 35,614 Robert McKinnon 50,000 - - - 50,000 Robert Sushames 1,000,000 - - 150,000 1,150,000 Ryan Aisher 45,000 - - - 45,000 Ben Halsey (resigned 23 December 2022) 17,033 48,280 - 34,687 100,000 Rob Perkins (appointed 24 January 2023) - - - - - Aaron Bardell 108,872 18,382 - - 127,254 Bill Say 366,666 - - 16,800 383,466 Keith Mau 5,000 - - - 5,000 Alex Wing (appointed 20 February 2023) - - - - - Directors' and KMP Shareholdings* The number of ordinary shares in DGL Group Limited held by each Director and KMP of the Group during the financial year are as follows:	110,002 - - 110,002 598,601 - - 598,601 80,000 - - 80,000 73,059 7,306 - 80,365 350,000 35,000 - 385,000 209,372 6,281 - 215,653 179,405 8,919 116,704 305,028
	1,600,439 57,506 116,704 1,774,649

No options were granted to Directors or KMPs during the year.

*Balance as at 23 December 2022.

16

DGL GROUP LIMITED AND CONTROLLED ENTITIES DIRECTORS' REPORT

The Directors' Report, incorporating the Remuneration Report, is signed in accordance with a resolution of the Board of Directors made pursuant to s.298(2) of the Corporations Act 2001.

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Peter Lowe Chairman

==> picture [112 x 38] intentionally omitted <==

Simon Henry Chief Executive Officer

17

AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF DGL GROUP LIMITED

In relation to our audit of the financial report of DGL Group Limited for the year ended 30 June 2023, I declare to the best of my knowledge and belief, there have been:

• (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 ; and

• (b) no contraventions of any applicable code of professional conduct.

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PKF
28 August 2023
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Kenneth Weldin Partner

PKF Melbourne Audit & Assurance Pty Ltd ABN 75 600 749 184 Level 12, 440 Collins Street, Melbourne, Victoria 3000

T: +61 3 9679 2222 F: +61 3 9679 2288 www.pkf.com.au Liability limited by a scheme approved under Professional Standards Legislation

PKF Melbourne Audit & Assurance Pty Ltd is a member firm of the PKF International Limited family of separately owned firms and does not accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.

18

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2023

Note Sales revenue 3 Cost of sales Other income 3 Acquisition costs relating to business combinations Employee benefits expense 4 Administration and general expenses Legal and professional fees Occupancy expense Depreciation & amortisation expense Impairment expense Finance costs 4 Profit before income tax Tax expense 5 Net profit from continuing operations Other comprehensive income: Items that may be reclassified subsequently to profit or loss when specific conditions are met: Gain on derivative contract held as hedging instruments, net of tax Exchange differences on translating foreign operations, net of tax Items that will not be reclassified subsequently to profit or loss: Hedging gains reclassified to profit and loss, net of tax Revaluation gain on land and buildings, net of tax Total other comprehensive income/(loss) for the year Total comprehensive income for the year Net profit attributable to: Owners of the parent entity Total comprehensive income attributable to: Owners of the parent entity Earnings per share Basic and diluted earnings per share (cents) 8	Group 2023 $000 2022 $000 465,994 369,789 (294,302) (231,914)
	171,692 137,875 2,644 869 (3,056) (3,622) (75,188) (47,387) (23,342) (16,937) (2,841) (2,702) (9,396) (6,152) (22,395) (17,126) - (969) (7,636) (2,100)
	30,482 41,749 (11,240) (13,851)
	19,242 27,898
	76 196 368 (1,855) (196) - 111 26,409 359 24,750
	19,601 52,648
	19,242 27,898
	19,242 27,898
	19,601 52,648
	19,601 52,648
	6.79 10.31

The accompanying notes form part of these financial statements.

19

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2023

Note Assets Current Assets Cash & cash equivalents 9 Trade & other receivables 10 Inventories 11 Asset held for sale 12 Other financial assets 13 Other assets 17 Total Current Assets Non-Current Assets Property, plant & equipment 15 Intangible assets 16 Right-of-use assets 18 Total Non-Current Assets Total Assets Liabilities Current Liabilities Lease liabilities 18 Trade & other payables 19 Borrowings 20 Current tax liabilities 21 Provisions 22 Total Current Liabilities Non-Current Liabilities Lease liabilities 18 Borrowings 20 Deferred tax liabilities 21 Provisions 22 Total Non-Current Liabilities Total Liablities Net Assets Equity Issued capital 23 Reserves 30 Retained earnings Total Equity	Group 2023 $000 2022 $000 36,919 25,448 52,445 56,568 37,444 48,153 - 6,629 108 262 8,538 7,527
	135,454 144,587
	246,419 218,830 144,101 98,472 43,871 40,457
	434,391 357,759
	569,845 502,346
	14,206 10,904 33,480 62,274 6,409 3,423 3,996 5,333 9,499 6,977
	67,590 88,911
	32,047 30,983 121,525 66,057 13,387 9,770 1,661 837
	168,620 107,647
	236,210 196,558
	333,635 305,788
	258,364 250,118 (7,615) (6,982) 82,886 62,652
	333,635 305,788

The accompanying notes form part of these financial statements.

20

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2023

Consolidated Group Balance at 1 July 2021 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 Total transactions with owners and other transfers Balance at 30 June 2022 Balance at 1 July 2022 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 transactions Shares issued during the year Transaction costs net of tax Sale of Shands Road Total transactions with owners and other transactions Balance at 30 June 2023	Share Capital $000 Retained Earnings $000 192,249 34,754 - 27,898 - -	Reserves	Total $000 195,271 27,898 24,750
		Asset Revaluation Reserve $000 Cash Flow Hedge Reserve $000 Merger Acquisition Reserve $000 Foreign Currency Translation Reserve $000 22,477 66 (54,230) (45) - - - - 26,409 196 - (1,855)
	- 27,898	26,409 196 - (1,855)	52,648
	57,579 - 290 -	- - - - - - - -	57,579 290
	57,869 -	- - - -	57,869
	250,118 62,652	48,886 262 (54,230) (1,900)	305,788
	250,118 62,652 - 19,242 - -	48,886 262 (54,230) (1,900) - - - - 111 (120) - 368	305,788 19,242 359
	- 19,242	111 (120) - 368	19,601
	8,662 - (416) - - 992	- - - - - - - - (992) - - -	8,662 (416) -
	8,246 992	(992) - - -	8,246
	258,364 82,886	48,005 142 (54,230) (1,532)	333,635

The accompanying notes form part of these financial statements.

21

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2023

Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received/ other income Finance costs Income tax paid Net cash generated by operating activities 25 Cash flows from investing activities Purchase of property, plant & equipment Receipts from sale of property, plant & equipment Payments for acquisition costs Purchase of intangibles Purchase of subsidiary Purchase of business and assets Release of term deposits for bank guarantees Cash acquired from acquisition of subsidiary Net cash used in by investing activities Cash flows from financing activities Payments of capital raising costs Loan repayments made to related parties Net proceeds from short-term financing activities Proceeds from borrowings Repayment of lease liabilities Net cash provided by (used in) financing activities Net increase/(decrease) 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 9	Group 2023 $000 2022 0000 514,820 339,831 (441,687) (305,906) 2,644 695 (6,133) (1,317) (10,384) (5,401)
	59,260 27,902
	(24,892) (47,871) 15,984 451 (3,056) (3,622) (896) (2,024) (28,244) (25,321) (31,422) (30,862) - 1,368 2,495 2,289
	(70,031) (105,592)
	(41) (153) - (1,498) (22,092) 22,092 57,664 48,342 (13,374) (9,480)
	22,157 59,303
	11,386 (18,387) 25,448 43,830 85 5
	36,919 25,448

The accompanying notes form part of these financial statements.

22

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

The Directors of DGL Group Limited and its subsidiaries ("the Group") submit herewith the annual report of the Group for the financial year ended 30 June 2023. The separate financial statements of the parent entity, DGL Group Limited, have not been presented within this financial report as permitted by the Corporations Act 2001.

The financial statements were authorised for issue on 28 August 2023 by the directors of the company.

Note 1 Summary of Significant Accounting Policies

Basis of Preparation

The general purpose financial statements on which the Financial Information has been based have been prepared in accordance with the Corporations Act, 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 statements are presented below and have been consistently applied unless stated otherwise.

The financial information except for cashflow 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.

(a) Principles of Consolidation

The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by DGL Group Limited at the end of the reporting period. Controlled entities are entities the Parent controls. The Parent controls an entity when it 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 over the entity.

Where controlled entities have entered or left the Group during the year, the financial performance of those entities are included only for the period of the year that they were controlled. A list of controlled entities are contained in Note 14 to the financial statements.

In preparing the consolidated financial statements, all intragroup balances and transactions between entities in the consolidated group have been eliminated in full on consolidation.

Business Combinations

Business combinations occur where an acquirer obtains control over one or more businesses.

A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is obtained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exemptions).

When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is remeasured each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date. All transaction costs incurred in relation to business combinations, other than those associated with the issue of a financial instrument, are recognised as expenses in profit or loss when incurred.

The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.

Goodwill

Goodwill is carried at cost less any accumulated impairment losses. Goodwill is calculated as the excess of the sum of: (i) the consideration transferred at fair value;

(ii) any non-controlling interest (determined under either fair value or proportionate interest method); and (iii) the acquisition date fair value of any previously held equity interest;

over the acquisition date fair value of any identifiable assets acquired and liabilities assumed.

The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall form the cost of the investment in the separate financial statements.

Goodwill on acquisitions of subsidiaries is included in intangible assets.

Goodwill is tested for impairment annually and is allocated to the Group's cash-generating units or groups of cash-generating units, representing the lowest level at which goodwill is monitored and not larger than an operating segment. Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity disposed of.

(b) Accounting for Common Control

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.

23

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 1 Summary of Significant Accounting Policies (continued)

(c) Income Tax

The income tax expense (income) for the year comprises current income tax expense (income) and deferred tax expense (income).

Current income tax expense charged to profit or loss is the tax payable on taxable income for the current period. Current tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority using tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses.

Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to items that are recognised outside profit or loss or arising from a business combination.

Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability, where there is no effect on accounting or taxable profit or loss.

• A deferred tax liability shall be recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from:

• the initial recognition of goodwill; or

• the initial recognition of an asset or liability in a transaction which:

• is not a business combination; and

• at the time of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. With respect to non-depreciable items of property, plant and equipment measured at fair value and items of investment property measured at fair value, the related deferred tax liability or deferred tax asset is measured on the basis that the carrying amount of the asset will be recovered entirely through sale.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where: (i) a legally enforceable right of set-off exists; and (ii) the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

Tax consolidation

The company and its wholly-owned Australian resident entities have formed a tax-consolidated group and are therefore taxed as a single entity from that date. The head entity within the tax-consolidated group is DGL Group Limited.

Due to the existence of a tax funding arrangement between the entities in the tax-consolidated group, amounts are recognised as payable to or receivable by the company and each member of the group in relation to the tax contribution amounts paid or payable between the parent entity and the other members of the tax-consolidated group in accordance with the arrangement.

Any current tax liabilities (assets) and deferred tax assets arising from unused tax losses of the subsidiaries are assumed by the head entity in the tax consolidated group and are recognised as amounts payable (receivable) to (from) other entities in the tax consolidated group. Any difference between these amounts and amounts payable (receivable) under the tax funding agreement is recognised by the head entity as an equity injection or distribution.

(d) Fair Value of Assets and Liabilities

The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the requirements of the applicable accounting standard.

Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly (i.e. unforced) transaction between independent, knowledgeable and willing market participants at the measurement date.

As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data.

24

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 1 Summary of Significant Accounting Policies (continued)

To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous market available to the entity at the end of the reporting period (i.e. the market that maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction costs and transport costs).

For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use the asset in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use.

The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial instruments, by reference to observable market information where such instruments are held as assets. Where this information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective note to the financial statements.

(e) Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes direct materials, direct labour and an appropriate proportion of variable and fixed overheads.

Overheads are applied on the basis of normal operating capacity. Costs are assigned on the basis of weighted average costs.

(f) Property, Plant & Equipment

Each class of property, plant & equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses.

Property

Freehold land & buildings are carried at their fair value, based on periodic valuations by external independent valuers, less accumulated impairment losses and accumulated depreciation for buildings.

Increases in the carrying amount arising on revaluation of land and buildings are credited to a revaluation surplus in equity. Decreases that offset previous increases of the same asset are recognised against revaluation surplus directly in equity; all other decreases are recognised in profit or loss.

Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset.

Plant & equipment

Plant & equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and any accumulated impairment. In the event the carrying amount of plant & 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.

The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

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 expenses in profit or loss during the financial period in which they are incurred.

Depreciation

The depreciable amount of all fixed assets including buildings and capitalised leased assets, but excluding freehold land, is depreciated on a straight-line or diminishing value basis over the asset’s useful life to the Consolidated Group commencing from the time the asset is held ready for use.

The depreciation rates used for each class of depreciable assets are:

==> picture [328 x 77] intentionally omitted <==

----- Start of picture text -----

||||
|---|---|---|
|Class of Fixed Asset|Depreciation Rate|
|Straight line|Diminishing value|
|Buildings|2.0% - 25.0%|2.0% - 25.0%|
|Plant and equipment|4.0% - 67.0%|2.5% - 67.0%|
|Office equipment|10.0% - 67.0%|5.0% - 67.0%|
|Leasehold improvements|2.0% - 25.0%|-|
|Motor vehicles|10.0% - 40.0%|5.0% - 25.0%|

----- End of picture text -----

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are recognised in profit or loss in the period in which they arise. Gains shall not be classified as revenue. When revalued assets are sold, amounts included in the revaluation surplus relating to that asset are transferred to retained earnings.

25

DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 1 Summary of Significant Accounting Policies (continued)

(g) Leases (the Group as lessee)

• At inception of a contract, the Group assesses if the contract contains or is a lease. If there is a lease present, a right-of-use asset and a corresponding lease liability is recognised by the Group where the Group is a lessee. However, all contracts that are classified as short-term leases (lease with remaining lease term of 12 months or less) and leases of low- value assets are recognised as an operating expense on a straight-line basis over the term of the lease.

Initially, the lease liability is measured at the present value of the lease payments still to be paid at commencement date. The lease payments are discounted at the interest rate implicit in the lease. If this rate cannot be readily determined, the Group uses the incremental borrowing rate.

Lease payments included in the measurement of the lease liability are as follows:

• fixed lease payments less any lease incentives;

• variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;

• the amount expected to be payable by the lessee under residual value guarantees;

• the exercise price of purchase options, if the lessee is reasonably certain to exercise the options;

• lease payments under extension options, if lessee is reasonably certain to exercise the options; and

• payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.

Subsequently, the lease liability is measured by a reduction to the carrying amount of any payments made and an increase to reflect any interest on the lease liability.

The right-of-use asset is an initial measurement of the corresponding lease liability less any incentives and initial direct costs. Subsequently, the measurement is the loss less accumulated depreciation (and impairment if applicable).

Right-of-use assets are depreciated over the lease term or useful life of the underlying asset, whichever is the shortest. Where a lease transfers ownership of the underlying asset, or the cost of the right-of-use asset reflects that the Group anticipates to exercise a purchase option, the specific asset is depreciated over the useful life of the underlying asset.

(h) Financial Instruments

Recognition and Initial Measurement

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions to the instrument. For financial assets, this is the date that the Group commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).

Financial instruments (except for trade receivables) are initially measured at fair value plus transactions costs except where the instrument is classified ‘at fair value through profit or loss’ in which case transaction costs are expensed to profit or loss immediately. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted.

Trade receivables are initially measured at the transaction price if the trade receivables do not contain a significant financing component or if the practical expedient was applied as specified in AASB 15.63.

Classification and Subsequent Measurement

Financial liabilities

The Group's financial liabilities are trade and other payables, leases and borrowings. They are recognised at the amount payable.

Financial asset

The Group's financial assets are cash and cash equivalents and trade and other receivables. They are measured at the amount expected to be recovered.

Impairment of Trade Receivables

The Group recognises a loss allowance for expected credit losses on trade receivables. The Group adopts the simplified approach to impairment as applicable under AASB9.

Expected credit losses

In line with AASB 9, trade debtors are reviewed in accordance with the simplified approach to measuring expected credit losses based on the payment profile of sales over a period of four years and the corresponding historical credit losses experienced within this period, which is reassessed annually. DGL Group’s assessment of trade receivables and loss allowances did not indicate a material change to trade receivables and loss allowances.

26

DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 1 Summary of Significant Accounting Policies (continued)

• (i) Impairment of Assets

At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. The assessment will include the consideration of external and internal sources of information, including dividends received from subsidiaries, associates or joint ventures deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs of disposal and value in use, to the asset’s carrying amount. Any excess of the asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in accordance with another Standard (e.g. in accordance with the revaluation model in AASB 116: Property, Plant and Equipment ). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that other Standard.

Where it is not possible to estimate the recoverable amount of an individual asset, the entity estimates the recoverable amount of the cashgenerating unit to which the asset belongs.

Impairment testing is performed annually for goodwill, intangible assets with indefinite lives and intangible assets not yet available for use.

When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

• (j) 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 and 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 useful lives of finite 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.

• (k) Foreign Currency Transactions and Balances

Functional and presentation currency

The functional currency of the entities within the Group are currencies of the primary economic environment in which that entity operates. The financial statements are presented in Australian dollars, which is DGL Group Limited's functional currency.

Transaction and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in profit or loss, except exchange differences that arise from net investment hedges.

(l) Employee Benefits

Short-term employee benefits

Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee benefits are benefits (other than termination benefits) that are expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related service, including wages, salaries and sick leave. Short-term employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled.

The Group’s obligations for short-term employee benefits such as wages, salaries and sick leave are recognised as part of current trade and other payables in the statement of financial position. The Group’s obligations for employees’ annual leave and long service leave entitlements are recognised as provisions in the statement of financial position.

Other long-term employee benefits

Provision is made for employee's long service leave and annual leave entitlements not expected to be settled wholly within 12 months after the end of the annual reporting period in which the employees render the related service. Other long-term employee benefits are measured at the present value of the expected future payments to be made to employees. Expected future payments incorporate anticipated future wage and salary levels, durations of service and employee departures and are discounted at rates determined by reference to market yields at the end of the reporting period on corporate bonds that have maturity dates that approximate the terms of the obligations. Upon the measurement of obligations for other long-term employee benefits, the net change in the obligation is recognised in profit or loss as part of employee benefits expense.

The Group's obligation for long-term employee benefits are presented as non-current provisions in its statement of financial position, except where the Group does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period, in which case the obligations are presented as current provisions.

27

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 1 Summary of Significant Accounting Policies (continued)

Retirement benefit obligations

All employees of the Group receive defined contribution superannuation entitlements, for which the Group pays the fixed superannuation guarantee contribution to the employee's superannuation fund of choice. All contributions in respect of employee's defined contribution entitlements are recognised as an expense when they become payable. The Group's obligation with respect to employees' entitlements are recognised as an expense when they become payable. The Group's obligation with respect to employees' defined contribution entitlements is limited to its obligation for any unpaid superannuation guarantee contributions at the end of the reporting period. All obligations for unpaid superannuation guarantee contributions are measure at undiscounted amounts expected to be paid when the obligation is settled and are presented as current liabilities in the Group's statement of financial position.

(m) Provisions

Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period.

(n) Cash & Cash Equivalents

Cash and cash equivalents include cash on hand, deposits available on demand with banks, other short-term highly liquid investments with original maturities of 3 months or less, and bank overdrafts. Bank overdrafts are reported within borrowings in current liabilities on the statement of financial position.

(o) Revenue and Other Income

The core principle of AASB 15 is that revenue is recognised on the basis that reflects the transfer of promised goods or services to customers at an amount that reflects the consideration the Group expects to receive in exchange for those goods and services.

Revenue recognition relating to the provision of services is determined with reference to the stage of completion of the transaction at the end of the reporting period and where outcome of the contract can be estimated reliably. Stage of completion is determined with reference to the services performed to date as a percentage of total anticipated services to be performed.

Where the outcome cannot be estimated reliably, revenue is recognised only to the extent that related expenditure is recoverable.

Revenue is recognised by applying a five-step model as follows:

1. Identify the contract with the customer

2. Identify the performance of obligations

4. Determine a transaction price. Quotes are based on scope of work, price of input materials (if any) and the estimated resources required to complete the goods or services.

5. Allocate the transaction price to the performance obligations.

6. Recognise revenue as and when control of the performance obligations is transferred.

Revenue is recognised when control of the products has been transferred to the customer. For such transactions, this is when the products are delivered to the customer or other location as directed by the customer and as stated in the contract or purchase order. Revenue from these sales are based on the price stipulated in the purchase order or contract as negotiated by the sales team. Revenue is then only recognised to the extent that there is a high probability that a significant reversal of revenue will not occur.

A receivable will be recognised on recognition of revenue. The Group's right to consideration is deemed unconditional at this time as only the passage of time is required before payment of that consideration is due. There is no significant financing component because sales are generally made within a credit term of 7 to 90 days.

Generally the timing of the payment for rendering of services corresponds closely to the timing of satisfaction of the performance obligations. However, where there is a difference, it will result in the recognition of a receivable, contract asset or contract liability.

All revenue stated are net of the amount of goods and services tax (GST).

The timing of revenue recognition for the Group’s key revenue streams as they relate to specific performance obligations are outlined in the table below:

table below:
Segment	Main revenue streams and performance obligations	Revenue recognition pattern
Environmental solutions	Processing of used lead batteries to recover lead Liquid Waste Treatment	Point in time (on transfer of control, usually upon container being loaded onto ship at port of departure) Overtime
Chemical manufacturing	Formulation and packaging of chemical and material products	Point in time (on transfer of control, usually on delivery)
Logistics	Warehousing - storage of customer goods Distribution - delivery of dangerous goods for customers	Overtime (related to the period of storage) Point in time (on completion of delivery)
Corporate	Rental income	Overtime (related to the period of tenancy)

28

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 1 Summary of Significant Accounting Policies (continued)

(p) Trade & Other Receivables

Trade & other receivables include amounts due from customers for goods sold and services performed in the ordinary course of business. Receivables expected to be collected within 12 months of the end of the reporting period are classified as current assets. All other receivables are classified as non-current assets.

Trade & other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment.

(q) Trade & Other Payables

Trade & other payables represent the liabilities for goods and services received by the Group that remain unpaid at the end of the reporting period. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability. Trade & other payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method.

(r) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable.

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

Cash flows are presented on a net basis. The GST components of cash flows arising from investing or financing activities which are recoverable or payable are presented as operating cash flows included in receipts from customers or payments to suppliers.

• (s) Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

Where the Group retrospectively applies an accounting policy, makes a retrospective restatement or reclassifies items in its financial statements, an additional (third) statement of financial position as at the beginning of the preceding period in addition to the minimum comparative financial statements is presented.

(t) Rounding of Amounts

The Parent Entity has applied the relief available to it under ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191. Accordingly, amounts in the financial statements have been rounded to the nearest $1,000.

(u) New and Amended Accounting Policies Adopted by the Group

The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. There has been no material impact on the Group's financial statements for the year ended 30 June 2023.

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

(v) Hedge accounting

At the inception of a hedge relationship, the Group identifies the appropriate risks to be managed by documenting the relationship between the hedging instrument and the hedged item, along with risk management objectives and the strategy for undertaking various hedge transactions.

The Group documents whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk. That is, whether the hedging relationships meet all of the following hedge effective requirements:

• there is an economic relationship between the hedged item and the hedging instrument;

• the effect of credit risk does not dominate the value changes that result from that economic relationship; and

• the hedged ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group uses to hedge the quantity of hedged item.

When the hedging relationship ceases to meet the hedging ratio requirement, the Group rebalances the hedge so that it meets the qualifying criteria again.

Cash flow hedges

The effective portion of the changes in fair value of the hedging instrument is not recognised directly in profit and loss, but to the extent the hedging relationship is effective, it is recognised in other comprehensive income and accumulated under the heading Cash Flow Hedging Reserve, limited to the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss relating to the ineffective portion (balancing figure) is recognised immediately in profit or loss.

Hedge accounting on cash flow hedge instruments is discontinued prospectively when the hedge relationship no longer meets the qualifying criteria. Amounts recognised in the cash flow hedging reserve that are related to the discontinued hedging instrument will immediately be reclassified to profit or loss.

29

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 1 Summary of Significant Accounting Policies (continued)

(w) Critical Accounting Estimates and Judgements

The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group.

Key Estimates and Judgements

Performance obligations under AASB 15

To identify a performance obligation under AASB 15, the promise must be sufficiently specific to be able to determine when the obligation is satisfied. Management exercises judgement to determine whether the promise is sufficiently specific by taking into account any conditions specified in the arrangement, explicit or implicit, regarding the promised goods or services. In making this assessment, Management includes the nature/ type, cost/ value, quantity and the period of transfer related to the goods or services promised.

Impairment

In assessing potential impairment, management estimates the recoverable amount of each asset or cash-generating unit based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate.

All impairment losses are recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. To determine the recoverable amount, Management estimates expected future cash flows from each cash-generating unit and determines a suitable discount rate in order to calculate the present value of operating results. These assumptions relate to future events and circumstances. The actual results may vary, and may cause significant adjustments to the Group's assets within the next financial year.

In most cases, determining the applicable discount rate involves estimating the appropriate adjustments to market risk and the appropriate adjustment to asset-specific risk factors.

Useful lives of depreciable assets

Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Actual results, however, may vary due to technical obsolescence, particularly relating to software and IT equipment.

Income tax

The Group is subject to income taxes in which jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax payable based on the Group's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

Recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that future taxable amounts will be available.

Business Combinations

On the acquisition of a company or business, a determination of the fair value of assets and liabilities is performed, which requires the application of judgement. Future events could cause the assumptions used by the Group to change which could have an impact on the results and net position of the Group.

Valuation of land and buildings

Land and buildings are stated at fair value. Formal valuations were last performed in FY22 based on a combination of valuation performed by an independent professional valuer and directors’ valuations. Observable market prices adjusted as necessary for any difference in the future, location or condition of the specific asset are used in performing the valuation. The directors reviewed the value of land and buildings as at 30 June 2023 and deemed them to remain appropriate. Assessing the fair value of land and buildings requires significant judgment and estimates.

30

DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 2 Parent Information

The following information has been extracted from the books and records of the financial information of the parent entity set out below and has been prepared in accordance with Australian Accounting Standards.

Statement of Financial Position Assets Current Assets Non-current Assets Total Assets Liabilities Current Liabilities Non-current Liabilities Total Liabilities Net Assets Equity Issued Capital Retained earnings Reserves Total Equity Statement of Profit or Loss and Other Comprehensive Income Profit/(Loss) for the year Other comprehensive income Total comprehensive income	2023 $000 2022 $000 24,650 19,371 386,143 321,436
	410,793 340,807
	15,963 24,104 129,848 53,964
	145,811 78,068
	264,982 262,739
	258,364 250,118 (19,742) (13,739) 26,360 26,360
	264,982 262,739
	(6,003) (3,192) - 20,790
	(6,003) 17,598

The parent entity has no contingent liabilities as at 30 June 2023 (30 June 2022: nil).

The parent entity had contractual commitments of $618,000 as at 30 June 2023 (30 June 2022: nil)

The parent entity had bank guarantees totalling $2,602,000 (30 June 2022: $1,868,000) covering rental leases, environmental protections, and export licenses. The parent entities assets are pledged as collateral against the groups borrowings. In addition there are cross guarantees entered into by DGL Group Limited as identified in note 32.

Note 3 Revenue and Other Income

The Group has recognised the following amounts relating to revenue in the statement of profit or loss.

p g g g p . Continuing operations Revenue from contracts with customers Other sources of revenue Total sales revenue Other income - Miscellaneous income - Interest received - Administration revenue - Fuel tax credits income - Gain on sale of fixed assets - Covid-19 stimulus - Gain on bargain purchase Total other income (a) Revenue disaggregation The revenue is disaggregated by the following segments: - Environmental Solutions - Chemical Manufacturing - Logistics - Corporate - rental income	Group 2023 $000 2022 $000 460,415 363,294 5,579 6,495
	465,994 369,789
	68 66 460 15 196 271 599 419 1,308 - 13 29 - 69
	2,644 869
	Group 2023 $000 2022 $000 109,785 87,166 271,225 229,859 84,259 52,605 725 159
	465,994 369,789

31

DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 4 Profit for the Year
Profit before income tax from continuing operations includes the following specific expenses: (a) Expenses Interest expense on financial liabilities not classified as fair value through profit or loss: - related party loan Interest expense on lease liabilities Employee benefits expense - defined contribution superannuation expense Bad debts expense Loss on disposal on sale of property, plant and equipment	Group 2023 $000 2022 $000 - 72 1,503 783 5,348 3,043 340 155 - 394
Note 5 Tax Expense
Note (a) The components of tax (expense) income comprise: Current tax Deferred tax 21 Prior period adjustment (b) The prima facie tax on profit from ordinary activities before income tax is reconciled to income tax as follows: Prima facie tax payable on profit from ordinary activities before income tax at applicable underlying rate: - consolidated group Add: Tax effect of: - non-deductible expenses - under-provision for income tax in prior years - unrecognised tax losses - other Less: Tax effect of: - non-taxable income - utilisation of previously recognised tax losses - other Income tax attributable to entity	Group 2023 $000 2022 $000 (7,304) (6,740) (3,211) (5,669) (725) (1,442)
	(11,240) (13,851)
	9,091 12,525 896 1,086 725 1,442 648 - 198 -
	11,558 15,053 (318) - - (612) - (590)
	11,240 13,851

32

DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 6 Key Management Personnel Compensation

Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid or payable to each member of the Group’s key management personnel (KMP) for the year ended 30 June 2023.

The totals of remuneration paid to KMP of the company and the Group during the year are as follows:

totals of remuneration paid to KMP of the company and the Group during the year are as follows:
Short-term employee benefits Post-employment benefits Other short-term benefits Total KMP compensation	2023 $ 2022 $ 2,632,830 1,600,439 166,378 57,506 235,724 116,704
	3,034,932 1,774,649

During FY23, a reorganisation of the leadership team and promotions into the leadership team resulted in four additional roles meeting the definition of KMP in AASB 124.

Short-term employee benefits

These amounts include fees and benefits paid to the non-executive chair and non-executive directors as well as all salary, paid leave benefits, fringe benefits and cash bonuses awarded to executive directors and other key management personnel.

Post-employment benefits

These amounts are the current year’s costs of providing for the KMP's superannuation contributions made during the year and postemployment life insurance benefits.

Other short term benefits

For details of other transactions with KMP, refer to note 27.

Note 7 Auditor’s Remuneration
Remuneration of the auditor for: - auditing or reviewing the financial statements of the Group - auditing or reviewing the financial statements of subsidiaries Non-audit services - PKF Melbourne - Corporate finance and transactional services - Tax planning and GST advice	Group 2023 $ 2022 $ 329,000 143,000 20,131 92,121
	349,131 235,121
	188,810 295,000 282,680 60,000
	471,490 355,000
Note 7 Earnings per Share
(a) Reconciliation of earnings to profit or loss from continuing operations Profit Earnings used in the calculation of dilutive 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 Basic and diluted earnings per share from continuing operations (cents)	Group 2023 $000 2022 $000 19,242 27,898
	19,242 27,898
	No. No. 283,431 270,671
	283,431 270,671
	6.79 10.31

33

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

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Note 9 Cash & Cash Equivalents
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Note Cash at bank and on hand 25	Group 2023 $000 2022 $000 36,919 25,448 36,919 25,448

The Group has bank guarantees in place totalling $4,341,000 with Australia and New Zealand Banking Group Limited. These guarantees are in place covering the rental leases, environmental protections, and export licenses. The Australia and New Zealand Banking Group Limited guarantees are secured against the assets of the Group pledged with the Australia and New Zealand Banking Group Limited.

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Note 10 Trade & Other Receivables
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Note 10 Trade & Other Receivables
Current Trade receivables Provision for impairment Other receivables Total current trade & other receivables Credit risk	Group 2023 $000 2022 $000 51,210 55,956 (543) (212)
	50,667 55,744 1,778 824
	52,445 56,568

The Group has no significant concentration of credit risk with respect to any single counterparty or group of counterparties other than those receivables specifically provided for and mentioned within this note. The main source of credit risk to the Company is considered to relate to the class of assets described as 'trade & other receivables'.

The following table details the Group's trade and other receivables exposed to credit risk (prior to collateral and other credit enhancements) with ageing analysis and impairment provided for thereon. Amounts are considered as "past due" when the debt has not been settled within the terms and conditions agreed between the Company and the customer or counterparty to the transaction. Receivables that are past due are assessed for impairment by ascertaining solvency of the debtors and are provided for where there are specific circumstances indicating that the debt may not be fully repaid to the Group.

The balances of receivables that remain within initial trade terms (as detailed in the table below) are considered to be of high credit quality.

Days past due < 30 30 - 60 2023 $000 $000 Expected loss rate Gross carrying amount 48,981 1,041 Loss allowance - - 2022 Expected loss rate Gross carrying amount 53,143 1,299 Loss allowance - - (a) Financial Assets Measured at Amortised Cost Note Trade & other Receivables - Total current	60 - 90 > 90 $000 $000 16.9% 100.0% 776 412 (131) (412) 20.9% 498 1,016 - (212) Group 2023 $000 2022 $000 52,445 56,568	Total $000 1.1% 51,210 (543) 0.4% 55,956 (212)
Total financial assets measured at amortised cost less provision for impairment 28	52,445 56,568

(b) Collateral Pledged

Bank loans are secured over registered fixed and floating charges over all assets of the Group.

34

DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

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Note 11 Inventories
Group
2023 2022
$000 $000
Current
At cost:
Raw materials and spares 27,877 35,308
Work in progress 527 590
Finished goods 9,040 12,255
37,444 48,153
Note 12 Asset held for sale
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Property held for sale 64 Broad Street	Group 2023 $000 2022 $000 - 6,629
	- 6,629

The held for sale asset in 2022 relates to a property in Christchurch, New Zealand which was sold in July 2022. An impairment expense of $969,000 was recognised in the 2022 financial period as the fair value less costs to sell were lower than the carrying amount. The fair value less costs to sell represents the actual value received by DGL Group for the property.

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Note 13 Other Financial Assets
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Note 13 Other Financial Assets
Current Derivative cashflow hedge	Group 2023 $000 2022 $000 108 262
	108 262

35

DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 14 Interests 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 Group. Each subsidiary’s principal place of business is also its country of incorporation.

incorporation.
		Ownership interest held by the Group
Name of subsidiary	Principal place of business	2023	2022
DGL Manufacturing Pty Ltd	Australia	100%	100%
Flexichem Australia Pty Ltd	Australia	100%	-
DGL Warehousing & Distribution Pty Ltd	Australia	100%	100%
DGL Industries Pty Ltd	Australia	100%	100%
DGL Global Logistics Pty Ltd NLW Group Pty Ltd DGL Manufacturing Australia Pty Ltd Labels Connect Pty Ltd Triox Pty Ltd DGL (NZ) Limited DGL Manufacturing Limited DGL Warehousing NZ Limited DGL AusBlue Pty Ltd Opal Australasia Pty Ltd AusTech Chemicals Pty Ltd Total Bio Group Pty Ltd Total Coolant Management Solutions Pty Ltd Aquadex Pty Ltd BTX Group Pty Ltd Acacia Ridge Container Park Pty Ltd DGL North America Pty Ltd DGL Group Inc	Australia Australia Australia Australia Australia New Zealand New Zealand New Zealand Australia Australia Australia Australia Australia Australia Australia Australia Australia United States of America	100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%	- - 100% 100% - 100% 100% 100% 100% 100% 100% 100% 100% - - - - -

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.

(b) Significant Restrictions

Other than the following, there are no significant restrictions over the Group’s ability to access or use assets, and settle liabilities, of the Group.

All borrowings are secured by a charge over the assets of DGL Group. DGL Group is in full compliance with the financial covenants set by it’s lenders.

36

DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

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Note 15 Property, Plant & Equipment
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Note 15 Property, Plant & Equipment
Land & Buildings Freehold land at: Fair value Total land Buildings at: Fair value Accumulated depreciation Total buildings Total land & buildings Plant & equipment: Leasehold improvements At cost Accumulated depreciation Plant and equipment At cost Accumulated depreciation Motor Vehicles At cost Accumulated depreciation Plant under construction At cost Accumulated amortisation Total plant & equipment Total property, plant & equipment	Group 2023 $000 2022 $000 99,151 104,692
	99,151 104,692
	56,195 57,319 (3,321) (2,243)
	52,874 55,076
	152,025 159,768
	1,383 754 (166) (90)
	1,217 664
	68,419 59,389 (30,326) (25,542)
	38,093 33,847
	41,028 16,074 (5,036) (2,366)
	35,992 13,708
	19,092 10,847 - (4)
	19,092 10,843
	94,394 59,062
	246,419 218,830

37

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 15 Property, Plant & Equipment (continued)

• (a) Movements in Carrying Amounts

Movements in carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year.

Group Balance at 1 July 2021 Additions Disposals Acquisitions through business combinations Revaluation and impairment increments / (decrements) Depreciation expense Reclassification⁽ⁱ⁾ Impairment expense Movement in foreign currency Balance at 30 June 2022 Balance at 1 July 2022 Additions Disposals Acquisitions through business combinations Depreciation expense Reclassification Movement in foreign currency Balance at 30 June 2023	Land Buildings Leasehold Improvements Plant & Equipment Motor Vehicles Plant Under Construction Total $000 $000 $000 $000 $000 $000 $000 31,259 64,109 551 25,237 2,676 9,389 133,221 20,356 17,493 56 4,763 3,546 2,339 48,553 - (5) - (691) (149) (109) (954) 2,465 1,835 87 10,134 8,674 - 23,195 23,612 7,468 - - - - 31,080 - (1,201) (30) (5,523) (1,029) (2) (7,785) 27,000 (32,869) - - - (760) (6,629) - (969) - - - - (969) - (785) - (73) (10) (14) (882)
	104,692 55,076 664 33,847 13,708 10,843 218,830
	104,692 55,076 664 33,847 13,708 10,843 218,830 12 285 468 5,856 8,989 9,282 24,892 (6,108) (1,359) - (195) (385) - (8,047) - - 138 1,744 16,316 - 18,198 - (1,502) (53) (5,130) (2,643) (2) (9,330) - 387 - 1,912 - (1,046) 1,253 555 (13) - 59 7 15 623
	99,151 52,874 1,217 38,093 35,992 19,092 246,419

⁽ⁱ⁾ The reclassification between Land & Buildings relates to the land element of the Group's New Zealand properties that was recorded under Buildings in the prior reporting period.

38

DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

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Note 16 Intangible Assets
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		Group
		2023 2022
		$000 $000
Goodwill
Cost		139,931 94,128
Accumulated impairment losses		(844) (844)
		139,087 93,284
Trademarks and certification
Cost		438 437
Accumulated amortisation		(189) (162)
		249 275
Software Cost Accumulated amortisation		1,764 1,309 (1,311) (829)
		453 480
Software under development Cost		1,479 1,917
		1,479 1,917
Hydroproc Process Cost Accumulated amortisation		2,217 2,217 (1,554) (1,554)
		663 663
Registrations and brands Cost Accumulated amortisation		2,207 1,853 (37) -
		2,170 1,853
Total intangible assets		144,101 98,472
Consolidated Group: Year ended 30 June 2022 Balance at the beginning of the year Additions Acquisitions through business combinations (see note 31) Amortisation charge Reclassification Movement in foreign currency Reclassification to profit and loss Tax impact	Goodwill Trademarks and Certification Software Software under development Hydroproc Process Registration and Brands Total $000 $000 $000 $000 $000 $000 $000 26,386 265 665 - 663 - 27,979 - - 107 1,917 - - 2,024 67,756 32 20 - - 700 68,508 - (22) (255) - - - (277) (765) - - - - 765 - (93) - 4 - - - (89) - - (61) - - - (61) - - - - - 388 388
	93,284 275 480 1,917	663 1,853 98,472

39

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

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|||||||||
|---|---|---|---|---|---|---|---|
|Note 16|Intangible Assets (continued)|
|Goodwill|Trademarks and|Software|Software under|Hydroproc|Registration|Total|
|Certification|development|Process|and Brands|
|$000|$000|$000|$000|$000|$000|$000|
|Year ended 30 June 2023|
|Balance at the beginning of the year|93,284|275|480|1,917|663|1,853|98,472|
|Additions|-|-|56|840|-|-|896|
|Acquisitions through business combinations (see note 31)|45,760|-|-|-|-|255|46,015|
|-|-|-|
|Amortisation charge|(26)|(85)|(38)|(149)|
|Reclassification|-|-|-|(1,253)|-|-|(1,253)|
|Movement in foreign currency|43|-|2|(25)|-|-|20|
|Tax impact|-|-|-|-|-|100|100|
|Closing value at 30 June 2023|139,087|249|453|1,479|663|2,170|144,101|

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Impairment disclosures

Goodwill impairment assessment

Goodwill is allocated to cash-generating units which are based on the group’s reporting segments.

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||||
|---|---|---|
|2023|2022|
|$000|$000|
|Environmental Solutions|19,347|-|
|Manufacturing|101,208|89,168|
|Logistics|18,532|4,116|
|Total|139,087|93,284|

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The value in use calculations use cash flow forecasts based on financial budgets approved by management covering a five-year period. The FY24 budget takes into account the full year impact of acquisitions undertaken in FY23 as well as growth expected from capital investments in existing businesses and the current market trading conditions. Budgeted growth beyond FY24 is based on cumulative past performance and management's expectations of market development.

The following key assumptions were used in the value-in-use calculations:

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|||||
|---|---|---|---|
|Growth Rate|Discount Rate|Terminal Growth Rate|
|Environmental Solutions|5.00%|10.15%|2.50%|
|Manufacturing|5.00%|10.15%|2.50%|
|Logistics|6.00%|8.85%|2.50%|

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Management has carried out a sensitivity analysis and believe that any reasonably possible change in the key assumptions would not cause the book value of any of the cash generating units, or groups of cash generating units to exceed their recoverable amount.

Note 17 Other Assets

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||||
|---|---|---|
|Group|
|2023|2022|
|$000|$000|
|Current|
|Prepayments|6,503|6,346|
|Bond and security deposits|1,986|1,107|
|Others|49|74|
|8,538|7,527|

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40

DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 18 Right-of-use Assets and Lease Liabilities

The Group's lease portfolio predominantly relates to land & buildings. These leases have an average of 7 years remaining in their lease term (if all available options are taken up).

Options to extend or terminate

The option to extend or terminate is contained in several of the property leases of the Group. There were no extension options for equipment leases. These clauses provide the Group opportunities to manage leases in order to align with its strategies. All of the extension or termination options are only exercisable by the Group. The extension options or termination options which were reasonably certain to be exercised have been included in the calculation of the lease liability and by extension, the right of use asset.

(i) AASB 16 related amounts recognised in the Consolidated Statement of Financial Position

Right-of-use assets Cost Accumulated depreciation Total right-of-use asset Lease Liabilities Current Non-current Total lease liabilities Movements in carrying amounts of Right-of-use assets Opening net carrying amount Acquisitions through business combinations⁽ⁱ⁾ Additions Depreciation expense Movement in foreign exchange Net carrying amount ⁽ⁱ⁾ Refer to Note 31: Business Combinations for further information. (ii) AASB 16 related amounts recognised in the statement of profit or loss Depreciation charge related to right-of-use assets Interest expense on lease liabilities Total cash outflows for leases	Group 2023 $000 2022 $000 76,528 61,638 (32,657) (21,181)
	43,871 40,457
	Group 2023 $000 2022 $000 14,206 10,904 32,047 30,983
	46,253 41,887
	40,457 22,719 7,565 5,809 7,852 19,639 (12,822) (9,064) 819 1,354
	43,871 40,457
	Group 2023 $000 2022 $000 12,822 9,064 1,503 783 Group 2023 $000 2022 $000 13,374 9,480

41

DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

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Note 19 Trade & Other Payables
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Current Unsecured liabilities Trade payables Sundry payables and accrued expenses Contingent consideration Secured liabilities Trade payables	Group 2023 $000 2022 $000 25,966 32,071 6,514 8,111 1,000 - - 22,092 33,480 62,274

In the prior year, DGL had a secured trade finance facility provided by ANZ. The utilised amount was classified as secured trade payables. The facility involved providing security over the future cash flows of specific trade receivables and inventories, which met certain criteria, in return for cash finance on a contracted percentage of the security provided. The facility was restructured into a long-term working capital facility on 30 August 2022.

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Note 20 Borrowings
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Notes Current Secured liabilities - amortised cost: Bank loans Other loans Total current borrowings Non-current Secured liabilities - amortised cost: Bank loans Other loans Total non-current borrowings Total borrowings 28 (a) Total current and non-current secured liabilities: Bank loans Other loans	Group 2023 $000 2022 $000 3,901 1,772 2,508 1,651
	6,409 3,423
	121,518 66,018 7 39
	121,525 66,057
	127,934 69,480
	Group 2023 $000 2022 $000 125,419 67,790 2,515 1,690
	127,934 69,480

(b) [Collateral provided]

The Group holds loans related to equipment finance that are secured against the equipment purchased. On 30 August 2022, the Group entered into a long-term multi-option facility agreement with ANZ Banking Group Limited (“ANZ”) under which it had availability of two separate facilities that are secured by a first ranking security charge over the Groups assets and property excluding those covered by finance leases.

Facility A, purpose to refinance existing Financial Indebtedness of the Group and to fund acquisitions

Facility B, purpose to provide financing of working capital and general corporate purposes Facilities drawn as at 30 June 2023

42

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 20 Borrowings (continued) Facility A - effective blended rate 6.44% p.a. Facility B - effective rate 5.99% p.a. Equipment finance facilities - effective interest rate 6.4% p.a. Overdraft facility Total Bank loans The bank loans carried an effective blended interest rate of 3.20% p.a. as at 30 June 2022	Amount Drawn $000 Total facility $000 72,208 75,000 25,709 37,000 27,502 30,736 - 3,000
	125,419 145,736

Under the terms of the agreement for Facility A and Facility B, the group is required to comply with the following financial covenants:

• The Leverage Ratio of the Group is no more than 3:1

• The Fixed Charge Cover Ratio of the Group is at least 2:1; and

• The Debt to Capitalisation Ratio of the Group is no more than 0.5:1

The Group complied with all of its debt covenants during the year.

Note 21 Tax

Current Income tax payable Non-Current Group Deferred tax liabilities Property, plant & equipment - tax allowance Land & buildings revaluation Other Balance at 30 June 2022 Property, plant & equipment - tax allowance Land & buildings revaluation Other Balance at 30 June 2023 Deferred tax assets Provisions and accruals Tax losses Transaction costs on equity issue Other Balance at 30 June 2022 Provisions and accruals Transaction costs on equity issue Other Balance at 30 June 2023	Opening Balance Recognised in Profit & Los $000 $000 1,300 3,639 4,311 253 241	Group 2023 $000 2022 $000 3,996 5,333
		3,996 5,333 s Charged directly to Equity Exchange Differences Closing Balance $000 $000 $000 - - 4,939 - 5,064 - 9,375 - - 494
	5,864 3,880	5,064 - 14,808
	4,939 2,889 9,375 494 774	- - 7,828 - 111 - 9,486 (80) - 1,188
	14,808 3,663	31 - 18,502
	1,846 1,497 3,065 (3,065 1,573 786 (221	- - 3,343 ) - - - - (443) - 1,130 ) - - 565
	7,270 (1,789	) (443) - 5,038
	3,343 239 1,130 565 213	- - 3,582 - (375) - 755 - - 778
	5,038 452	(375) - 5,115

43

DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

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Note 22 Provisions
Group
2023 2022
Current $000 $000
Employee Benefits 8,280 6,253
Site cleanup and disposal of battery acid and other chemicals 1,219 724
Total 9,499 6,977
Non-Current
Employee Benefits 1,661 837
Total 1,661 837
Analysis of Total Provisions
Current 9,499 6,977
Non-current 1,661 837
11,160 7,814
Group
2023 2022
$000 $000
Site cleanup and disposal of battery acid and other chemicals
Opening Balance 724 44
Net movement in provisions 495 680
Total 1,219 724
The net $495,000 movement in site clean up provision includes $500,000 in relation to the estimated remediation costs for the Tomago, NSW site to
comply with EPA requirements.
Note 23 Issued Capital
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284,911,205 fully paid ordinary shares (2022: 279,192,548 fully paid ordinary shares) (a) Ordinary Shares At the beginning of the reporting period Shares issued during the year Less: capital raising costs Add: DTL effect of capital raising costs At the end of the reporting period	No 279,192,548 5,718,657	Group 2023 $000 2022 $000 258,364 250,118
		258,364 250,118 Group 2023 2022 . $’000 No. $’000 250,118 257,000,000 192,249 8,662 22,192,548 57,579 - (41) - (153) - (375) - 443
	284,911,205	258,364 279,192,548 250,118

On 11 July 2022, 53,324 fully paid ordinary shares were issued at $2.72 per share. The share issuance was to certain members of the executive management team following a remuneration review. No cash was raised.

On 2 September 2022, 725,689 fully paid ordinary shares were issued at $1.59 per share. The share issuance was to settle the share acquisition of Flexichem Australia Pty Ltd. No cash was raised.

On 6 September 2022, 278,149 fully paid ordinary shares issued at $1.46 per share. The share issuance was to settle the acquisition of the business and assets of Clarkson Freightlines Pty Ltd. No cash was raised.

On 4 October 2022, 2,943,925 fully paid ordinary shares were issued at $1.49 per share. The share issuance was to settle the share acquisition of Aquadex Pty Ltd. No cash was raised.

On 4 October 2022, 677,570 fully paid ordinary shares were issued at $1.49 per share. The share issuance was to settle the share acquisition of BTX Group Pty Ltd. No cash was raised.

44

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 23 Issued capital (continued)

On 2 November 2022, 1,000,000 fully paid ordinary shares were issued at $1.51 per share. The share issuance was to settle the share acquisition of Acacia Ridge Container Park Pty Ltd. No cash was raised.

On 28 December 2022, 40,000 fully paid ordinary shares were issued at $1.50 per share. The share issuance was to the former CFO as a payment for extension of employment past the contractual notice period to 23 December 2022. No cash was raised.

• (b) Capital Management

Management controls the capital of the Group in order to maintain a sustainable debt to equity ratio, generate long-term shareholder value and ensure that the Group can fund its operations and continue as a going concern.

The Group’s debt and capital include ordinary share capital and financial liabilities, supported by financial assets.

The Group is not subject to any externally imposed capital requirements other than bank covenants by funding partners.

Management effectively manages the Group’s capital by assessing the Group's financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues.

Note Total borrowings and lease liabilities Trade & other payables Less cash & cash equivalents 9 Net debt Total equity Total net debt and equity Gearing ratio	Group 2023 $000 2022 $000 174,187 131,754 32,480 62,274 (36,919) (25,448)
	169,748 168,580 333,635 305,788
	503,383 474,368
	34% 36%
Note 24 Operating Segments
General Information Identification of reportable segments

The Group has identified its operating segments based on the internal reports that are reviewed and used by the board of directors (chief operating decision makers) in assessing performance and in determining the allocation of resources.

The Group is managed primarily on the basis of product category and service offerings as the diversification of the Group's operations inherently have notably different risk profiles and performance assessment criteria. Operating segments are therefore determined on the same basis.

Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics and are also similar with respect to the following:

• the products sold and/or services provided by the segment; and

• the type or class of customer for the products or service.

Types of products and services by segment

(i) Environmental Solutions The Group's Environmental Solutions segment is focused on resource recovery and waste management. Its core activities comprise liquid waste treatment, end-of-life lead acid battery ("ULAB") recycling and lead smelting and refining.

ULAB recycling is undertaken at two EPA licensed recycling facilities located in New South Wales and Victoria. The division relies on an established and mature collection network of suppliers located throughout Australia. ULABs are recycled in state-of-the-art recycling facilities which are highly automated. The primary outputs from the ULAB recycling process are lead products, scrap plastic and waste.

The segment's lead smelter in Laverton North, Victoria has lead smelting and refining capabilities. This is to allow the conversion of intermediate lead material into valuable end products, which are sold to a wider global market.

The segment operates a waste water treatment plant at its New South Wales ULAB recycling plant to process liquid waste generated from its own plant and from external customers.

• (ii) Chemical Manufacturing

The Group's Chemical Manufacturing segment produces its own range of speciality chemicals and undertaken advanced formulation and contract manufacturing on behalf of third parties. The Group believes the segment provides a versatile, end to end solution for its customers.

45

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 24 Operating segment (continued)

Operations are focused on deriving chemicals from complex reactions in controlled environments. Using internally developed intellectual property, the division also manufactures DGL branded goods.

(iii) Logistics

The Group's Logistics segment offers transport, logistics and warehousing services focusing on dangerous and hazardous goods across Australia and New Zealand. The segment also manages logistics and distribution for other goods including food, pharmaceutical products, agricultural products, security sensitive goods and temperature-controlled products.

Key components of the services provided by the Logistics segment include freight forwarding, inventory management, warehousing, and transport.

(iv) Corporate costs

The Group's Corporate Costs segment represents costs incurred by the Group not allocated to the operating segments.

Basis of accounting for purposes of reporting by operating segments

(a) Accounting policies adopted

Unless stated otherwise, all amounts reported to the Board of Directors, being the chief operating decision makers with respect to operating segments, are determined in accordance with accounting policies that are consistent with those adopted in the annual financial statements of the Group.

(b) Intersegment transactions

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

Intersegment loans payable and receivable are initially recognised at the consideration received/to be received net of transaction costs. If intersegment loans receivable and payable are not on commercial terms, these are not adjusted to fair value based on market interest rates. This policy represents a departure from that applied to the statutory financial statements.

(c) Segment assets

Where an asset is used across multiple segments, the asset is allocated to the segment that receives the majority of the economic value from the asset. In most instances, segment assets are clearly identifiable on the basis of their nature and physical location.

(d) Segment liabilities

Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include trade and other payables and certain direct borrowings.

(e) Segment information

(i) Segment performance

Year ended 30 June 2023	Environmental Solutions Chemical Manufacturing Logistics Corporate Costs Eliminations Total $000 $000 $000 $000 $000 $000	Environmental Solutions Chemical Manufacturing Logistics Corporate Costs Eliminations Total $000 $000 $000 $000 $000 $000
REVENUE External sales Inter-company revenue Total segment revenue Underlying EBITDA Depreciation & amortisation Underlying EBIT Reconciliation of segment result to group net profit/loss before tax Finance costs Acquisition costs Site rectification expense	109,785 271,225 84,259 725 - 465,994 593 10,633 18,840 5,731 (35,797) -
	110,378 281,858 103,099 6,456 (35,797) 465,994
	12,438 41,732 20,538 (7,987) (2,652) 64,069
	(3,116) (8,743) (12,222) (928) 2,614 (22,395) 9,322 32,989 8,316 (8,915) (38) 41,674
		(7,636) (3,056) (500)
Net profit before tax from continuing operations		30,482

46

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 24 Operating segment (continued)
	Environmental	Chemical	Logistics	Corporate	Eliminations	Total
	Solutions	Manufacturing		Costs
Year ended 30 June 2022	$000	$000	$000	$000	$000	$000
REVENUE
External sales	87,166	229,894	52,569	160	-	369,789
Inter-company revenue	1,276	4,825	10,193	3,490	(19,784)	-
Total segment revenue	88,442	234,719	62,762	3,650	(19,784)	369,789
Underlying EBITDA	13,437	46,524	13,779	(5,318)	(2,856)	65,566
Depreciation & amortisation	(2,726)	(6,258)	(9,618)	(955)	2,431	(17,126)
Underlying EBIT	10,711	40,266	4,161	(6,273)	(425)	48,440
Reconciliation of segment result to group net profit/loss before	tax
Finance costs Acquisition costs Impairment expenses						(2,100) (3,622) (969)
Net profit before tax from continuing operations						41,749
30 June 2023 (ii) Segment assets and liabilities	Environmental Solutions $000	Chemical Manufacturing $000	Logistics $000	Corporate Costs $000	Eliminations $000	Total $000
Segment assets Segment liabilities Segment assets include: - Additions to non-current assets (other than financial assets and deferred tax) 30 June 2022	78,803 (24,143) 37,895 Environmental Solutions $000	245,416 (46,214) 20,094 Chemical Manufacturing $000	112,244 (38,926) 44,711 Logistics $000	152,174 (144,359) 296 Corporate Costs $000	(18,792) 17,432 - Eliminations $000	569,845 (236,210) 102,996 Total $000
Segment assets Segment liabilities Segment assets include: - Additions to non-current assets (other than financial assets and deferred tax)	42,274 (19,261) 502	245,548 (72,688) 61,487	69,850 (36,778) 21,837	159,768 (84,181) 47,085	(15,094) 16,350 -	502,346 (196,558) 130,911

(ii) Segment assets and liabilities

(iii) Revenue by geographical region

Revenue, including revenue from discontinued operations, attributable to external customers is disclosed below, based on the location of the selling entity.

	30 June 2023 $000 30 June 2022 $000
Australia New Zealand United States of America	438,295 352,929 27,303 16,860 396 -
Total revenue	465,994 369,789

(iv) Assets by geographical region

The location of segment assets by geographical location of the assets is disclosed below:

	30 June 2023 $000 30 June 2022 $000
Australia New Zealand United States of America	492,734 411,633 76,289 90,713 822 -
Total revenue	569,845 502,346

47

DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

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Note 25 Cash Flow Information
Group
2023 2022
$000 $000
Reconciliation of Cash Flows from Operating Activities with Profit after Income Tax
Profit after income tax 19,242 27,898
Non-cash flows in profit
Depreciation and amortisation 22,395 17,126
Impairment - 969
Non-operating cash flows in profit
Acquisition costs 3,056 3,622
Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries:
Decrease/(Increase) in trade and term receivables 9,333 (30,016)
(Increase) in prepayments (899) (1,173)
Decrease/(Increase) in inventories 16,907 (22,671)
Increase/(Decrease) in trade payables and accruals (11,444) 21,347
Increase/(Decrease) in income taxes payable (2,761) 2,988
Increase in deferred taxes payable 3,617 6,656
Increase/(Decrease) in provisions (186) 1,156
Net cash generated by operating activities 59,260 27,902
Note 26 Events After the Reporting Period
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On 3 July 2023, the Group acquired the business and assets of QBlend Pty Ltd. QBlend provides a powder blending and repacking service to customers in the mining, agriculture and industrial sectors.

On 1 August 2023, the Group acquired the business and assets of Kinnear Transport. Kinnear provides a chemical storage and distribution service to customers in Western Australia.

On 14 August 2023 the Company announced its intention to conduct an on-market share buy-back program of up to 10% of its issued shares. The program will commence on the 30 August 2023 for up to a 12-month period.

Note 27 Related Party Transactions

Related Parties

(a) The Group's main related parties are as follows:

• i. Key Management Personnel:

The Board, the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Executive Managers who have authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, including any director (whether executive or otherwise) of that entity are considered key management personnel.

For details of disclosures relating to key management personnel, refer to note 6.

ii. Other Related Parties

Other related parties include entities controlled by the ultimate parent entity and entities over which key management personnel have joint control.

(b) Transactions with related parties:

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

The following transactions occurred with related parties:

i. Loans from Other Related Parties Beginning of the year Loan and interest repayment made Interest charged Loan converted to shares (See note 23) Non-operating cash flows in profit	Group 2023 $ 2022 $ - 8,481,371 - (1,498,134) - 72,113 - (7,055,350)
	- -

48

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 27 Related Party Transactions (continued)

ii.	Transactions with Simon Henry & his controlled entities
	Administration revenue charged to Simon Henry and his controlled entities	255,363	270,928
	Rental and related expenses charged by Simon Henry and his controlled entities	210,204	98,542
iii.	Transactions with other related parties
	Company secretarial fees and reimbursement of expenses, paid to DW Accounting & Advisory Pty Ltd, of which	151,733	165,186
	Mr Andrew Draffin is a director and shareholder. DW Accounting & Advisory Pty Ltd is a shareholder of DGL
	Group Limited.
	Due diligence and professional training fees paid to BDO Australia, of which Denise Brotherton is a Partner	709,878	157,955
	Rental and related expenses charged by entities that Mr Robert Sushames or his close family members have an	1,525,084	1,318,943
	interest in.
	Cleaning services provided by D&A Enterprise in which a close relative of Aaron Bardell has an interest	4,160	-
	Purchase consideration of 120 Fulton Drive acquired from Belbrae Investments	-	5,806,432

All transactions noted above have been carried out on an arms-length basis.

Note 28 Financial Risk Management

The Group’s financial instruments consist mainly of cash and cash equivalents, leases, borrowings, trade and other receivables and trade and other payables.

The totals for each category of financial instruments, measured in accordance with AASB 9: Financial Instruments as detailed in the accounting policies to these financial statements, are as follows:

Note Financial Assets Financial assets at amortised cost - cash & cash equivalents 9 - trade & other receivables 10 Financial assets at fair value - other financial assets 13 Total Financial Assets Financial Liabilities Financial liabilities at amortised cost - lease liabilities 18 - trade & other payables 19 - borrowings 20 Financial liabilities at fair value - contingent consideration 19 Total Financial Liabilities	Group 2023 $000 2022 $000 36,919 25,448 52,445 56,568 108 262
	89,472 82,278
	46,253 41,887 32,480 62,274 127,934 69,480 1,000 -
	207,667 173,641

Financial Risk Management Policies

The Audit & Risk Committee (ARC) has been delegated responsibility by the Board of Directors for, among other issues, managing financial risk exposures of the Group. The ARC monitors the Group’s financial risk management policies and exposures and approves financial transactions within the scope of its authority. It also reviews the effectiveness of internal controls relating to financial risk. The ARC will meet on a quarterly basis and minutes of the ARC are reviewed by the Board.

The ARC’s overall risk management strategy seeks to assist the consolidated group in meeting its financial targets, while minimising potential adverse effects on financial performance. Its functions include the review of the use of hedging derivative instruments, credit risk policies and future cash flow requirements.

Specific Financial Risk Exposures and Management

The main risks the Group is exposed to through its financial instruments are credit risk, liquidity risk and market risk consisting of interest rate risk, foreign currency risk and other price risk (commodity and equity price risk). There have been no substantive changes in the types of risks the Group is exposed to, how these risks arise, or the Board’s objectives, policies and processes for managing or measuring the risks from the previous period.

49

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 28

Financial risk management (continued)

a. Credit risk

• Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss to the Group.

Credit risk is managed through the maintenance of procedures (such as the utilisation of systems for the approval, granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring of the financial stability of significant customers and counterparties), ensuring to the extent possible that customers and counterparties to transactions are of sound credit worthiness. Such monitoring is used in assessing receivables for impairment. Depending on the division within the Group, credit terms are generally 7 to 90 days from the invoice date.

Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating or in entities that the ARC has otherwise assessed as being financially sound. Where the Group is unable to ascertain a satisfactory credit risk profile in relation to a customer or counterparty, the risk may be further managed through title retention clauses over goods or obtaining security by way of personal or commercial guarantees over assets of sufficient value which can be claimed against in the event of any default.

Significant increase in credit risk for financial instruments

The Group evaluates and compares the risk of a default on a financial instrument at the reporting date with the risk of a default on the financial instrument at the date of initial recognition. To support the evaluation process, the Group takes into consideration both quantitative and qualitative information that is reasonable and justifiable, including past experience and prospective information that is publicly available. Prospective information taken into consideration includes the future volatility of the industries in which the Group’s debtors are in, obtained from industry expert reports, financial news report, governmental bodies, as well as taking into consideration multiple external sources of current and future economic information that Group's core operations can relate to.

Credit Risk Exposures

The maximum exposure to credit risk by class of recognised financial assets at the end of the reporting period, excluding the value of any collateral or other security held is equivalent to the carrying amount and classification of those financial assets (net of any provisions) as presented in the statement of financial position. Credit risk also arises through the provision of financial guarantees given to third parties in relation to obligations under its bank facility.

The Group has no significant concentration of credit risk with any single counterparty or group of counterparties. However, on a geographic basis, the Group has significant credit risk exposures to Australia and New Zealand given the substantial operations in those regions. Details with respect to credit risk of trade and other receivables is provided in note 10.

Trade and other receivables that are neither past due or impaired are considered to be of high credit quality. Aggregates of such amounts are as detailed at note 10.

b. Liquidity risk

Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages this 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; and

• comparing the maturity profile of financial liabilities with the realisation profile of financial assets.

The table below reflects an undiscounted contractual maturity analysis for financial liabilities.

Cash flows realised from financial assets reflect management’s expectation as to the timing of realisation. Actual timing may therefore differ from that disclosed. The timing of cash flows presented in the table to settle financial liabilities reflects the earliest contractual settlement dates and does not reflect management’s expectations that banking facilities will be rolled forward.

Financial liability and financial asset maturity analysis

Consolidated Group	Within 1 Year 1 to 5 years Over 5 years Total 2023 $000 2022 $000 2023 $000 2022 $000 2023 $000 2022 $000 2023 $000 2022 $000
Financial liabilities due for payment Bank overdrafts and loans Trade & other payables Lease liabilities Total expected outflows	6,409 3,423 121,525 66,057 - - 127,934 69,480 33,480 62,274 - - - - 33,480 62,274 14,206 10,904 32,047 25,464 - 5,519 46,253 41,887
	54,095 76,601 153,572 91,521 - 5,519 207,667 173,641

50

DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

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Note 28 Financial risk management (continued)
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||||||||||
|---|---|---|---|---|---|---|---|---|
|Within 1 Year|1 to 5 years|Over 5 years|Total|
|Consolidated Group|2023|2022|2023|2022|2023|2022|2023|2022|
|$000|$000|$000|$000|$000|$000|$000|$000|
|Financial Assets - cash flows realisable|
|Cash & cash equivalents|36,919|25,448|-|-|-|-|36,919|25,448|
|Trade, term and loan receivables|52,445|56,568|-|-|-|-|52,445|56,568|
|Total anticipated inflows|89,364|82,016|-|-|-|-|89,364|82,016|
|Net (outflow) / inflow on financial instruments|35,269|5,415|(153,572)|(91,521)|-|(5,519)|(118,303)|(91,625)|

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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. Refer to note 20(b) for further details.

c. Market Risk

• i. Interest rate risk

Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period whereby a future change in interest rates will affect future cash flows and earnings volatility on floating rate instruments. The Group does not hold any financial liabilities at fair value through profit and loss, as such any reasonable change in interest rates as at 30 June would not impact the results of the Group.

The financial instruments that primarily expose the Group to interest rate risk are borrowings and cash and cash equivalents.

The Group does not currently enter into interest rate hedges. Management regularly assesses funding arrangements to ensure it maintains access to necessary liquidity and manages cashflow volatility arising from interest rate changes.

ii. Foreign currency risk

Exposure to foreign currency risk may result in the fair value or future cash flows of a financial instrument fluctuating due to movement in foreign exchange rates of currencies in which the Group holds financial instruments which are held in other currencies than the AUD functional currency of the Group.

The Group has entered into foreign exchange forward contracts to manage a portion of the foreign currency risk associated with booked purchase transactions in USD.

With overseas operations in New Zealand, fluctuations in the NZ Dollar to AU Dollar exchange rate impact on the Group’s will impact on the Group's equity.

Sensitivity Analysis

The following table indicates the impact of how profit and equity values reported at the end of the reporting period would have been affected by changes in the relevant risk variable that management considers to be reasonably possible as at 30 June.

These sensitivities assume that the movement in a particular variable is independent of other variables.

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||||
|---|---|---|
|Group|
|Profit|Equity|
|Year ended 30 June 2023|$’000|$’000|
|AUD strengthens 10% against the USD|(37)|(238)|
|AUD weakens 10% against the USD|131|296|
|AUD strengthens 10% against the NZD|(502)|(4,438)|
|AUD weakens 10% against the NZD|613|5,424|
|Group|
|Profit|Equity|
|Year ended 30 June 2022|$’000|$’000|
|AUD strengthens 10% against the USD|26|(37)|
|AUD weakens 10% against the USD|(26)|37|

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iii. Other price risk

Other price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices largely due to demand and supply factors (other than those arising from interest rate risk or foreign currency risk) for commodities. The price of lead affects the Group's environmental segment. The Group held no financial instruments at 30 June 2023 (30 June 2022: nil) that would be impacted by a change in the price of lead.

51

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 28 Financial risk management (continued)

Fair Values

Fair value estimation

The fair values of financial assets and financial liabilities are presented in the following table and can be compared to their carrying amounts as presented in the statement of financial position. Refer to note 29 for detailed disclosures regarding the fair value measurement of the Group’s financial assets and financial liabilities.

Differences between fair values and carrying amounts of financial instruments with fixed interest rates are due to the change in discount rates being applied by the market since their initial recognition by the Group.

Management do not believe there are any material differences between carrying values of financial assets and their fair value.

Note 29 Fair Value Measurements

The Group measures and recognises the following assets and liabilities at fair value on a recurring basis after initial recognition: - financial assets at fair value through other comprehensive income; and

• freehold land and buildings.

• contingent consideration

• (a) Fair value hierarchy

AASB 13: Fair Value Measurement requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value measurements into one of three possible levels based on the lowest level that an input that is significant to the measurement can be categorised into as follows:

Level 1 Level 2 Level 3

Measurements based on quoted prices Measurements based on inputs other than quoted Measurements based on unobservable (unadjusted) in active markets for identical prices included in Level 1 that are observable for the inputs for the asset or liability. assets or liabilities that the entity can access asset or liability, either directly or indirectly. at the measurement date.

The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all significant inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more significant inputs are not based on observable market data, the asset or liability is included in Level 3.

Valuation techniques

The Group selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available to measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the asset or liability being measured. The valuation techniques selected by the Group are consistent with one or more of the following valuation approaches:

Market approach: valuation techniques that use prices and other relevant information generated by market transactions for identical or similar assets or liabilities.

Income approach: valuation techniques that convert estimated future cash flows or income and expenses into a single discounted present value. Cost approach: valuation techniques that reflect the current replacement cost of an asset at its current service capacity.

Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the asset or liability, including assumptions about risks. When selecting a valuation technique, the Group gives priority to those techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are developed using market data (such as publicly available information on actual transactions) and reflect the assumptions that buyers and sellers would generally use when pricing the asset or liability are considered observable, whereas inputs for which market data are not available and therefore are developed using the best information available about such assumptions are considered unobservable.

The following tables provide the fair values of the Group’s assets and liabilities measured and recognised on a recurring basis after initial recognition and their categorisation within the fair value hierarchy.

Recurring fair value measurements Note Non-financial assets Freehold land 15 Buildings 15 Total non-financial assets recognised at fair value on a recurring basis Recurring fair value measurements Note Non-financial assets Freehold land 15 Buildings 15 Total non-financial assets recognised at fair value on a recurring basis	30 June 2023 Level 1 $000 Level 2 $000 Level 3 $000 Total 4000 - 99,151 - 99,151 - 52,874 - 52,874
	- 152,025 - 152,025
	30 June 2022 Level 1 $000 Level 2 $000 Level 3 $000 Total 4000 - 104,692 - 104,692 - 55,076 - 55,076
	- 159,768 - 159,768

52

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 29 Fair Value Measurements (continued)

• (b) Valuation techniques and inputs used to measure Level 2 fair values

Non-financial assets

Freehold land (i) Market approach using recent observable market data for similar properties; income approach using discounted cash flow methodology Buildings (i) Market approach using recent observable market data for similar properties; income approach using discounted cash flow methodology

• (i) The fair value of freehold land and buildings is determined periodically based on valuations by an independent valuer. At the end of each intervening period, the directors will review the independent valuation and, when appropriate, update the fair value measurement to reflect current market conditions using a range of valuation techniques, including recent observable market data and discounted cash flow methodologies or seek updated independent valuations.

There were no changes during the period in the valuation techniques used by the Group to determine Level 2 fair values.

Note 30 Reserves

• a. Foreign Currency Translation Reserve

The foreign currency translation reserve records exchange differences arising on translation of a foreign controlled subsidiary.

susary. Balance at the beginning of the period Exchange differences on translating foreign operations, net of tax Asset Revaluation Reserve The asset revaluation reserve records revaluations of land and buildings. Balance at the beginning of the period Revaluation gain on land and buildings, net of tax Transfer on asset disposal Tax effect	Group 2023 $000 2022 $000 (1,900) (45) 368 (1,855) (1,532) (1,900) Group 2023 $000 2022 $000 48,886 22,477 - 31,473 (992) - 111 (5,064) 48,005 48,886

• b. Asset Revaluation Reserve

c. Cash Flow Hedge Reserve

The asset revaluation reserve records revaluations of hedging instruments

e asse revauaon reserve recors revauaons o egng nsrumens Balance at the beginning of the period Gain on derivative contract held as hedging instruments, net of tax Hedging gains reclassified to profit and loss, net of tax	Group 2023 $000 2022 $000 262 66 76 196 (196) - 142 262

d. Merger Acquisition Reserve

When the Company acquired DGL Manufacturing Pty Ltd, DGL Warehousing & Distribution Pty Ltd, DGL (NZ) Limited, DGL Manufacturing Limited and DGL Warehousing NZ Limited, the transactions were assessed as a transaction involving entities under common control.

In accordance with the accounting policy adopted, all assets and liabilities will be recorded at their book value at the date of acquisition. The remaining difference between the fair value of the consideration paid and the book value of the net assets acquired is allocated to equity.

Balance at the beginning of the period Movements during the year Total Reserves Foreign Currency Translation Reserve Asset Revaluation Reserve Cash Flow Hedge Reserve Merger Acquisition Reserve	Group 2023 $000 2022 $000 (54,230) (54,230) - -
	(54,230) (54,230)
	Group 2023 $000 2022 $000 (1,532) (1,900) 48,005 48,886 142 262 (54,230) (54,230)
	(7,615) (6,982)

53

DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

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Note 31 Business Combinations
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Summary of Business Combinations during the financial year
During the financial reporting period, the Group acquired 100% of the share capital of six companies as well as the business and assets of	a further five
companies. A summary of the combinations is as follows:
	Fair Value
	$'000
Purchase consideration
- Cash	59,666
- Contingent consideration	1,000
- Ordinary Shares	8,457
	69,123
Less:
- Cash & cash equivalents - Receivables - Other assets - Inventories - Intangibles - Right-of-use assets - Property, plant & equipment - Trade & other payables - Income tax liabilities - Lease liabilities - Borrowings - Provisions	2,495 5,214 105 6,198 255 7,822 18,357 (5,458) (1,521) (7,549) (790) (1,765)
Identifiable assets acquired and liabilities assumed	23,363
Goodwill provisionally accounted for	45,760
(a) Acquisition of business & assets from Clarkson & Connolly Transport On 1 September 2022, DGL Warehousing & Distribution Pty Ltd acquired the business and assets of Clarkson & Connolly Transport Trust (Trading as Clarkson Freightlines). Clarksons focuses on providing general freight services for the agricultural and building industries in the Midwest and Wheatbelt regions of Western Australia. The total acquisition price was $6,656,000, of which $6,250,000 was settled by cash and $406,000 settled via the issue of fully paid ordinary shares. Fair Value $'000 Purchase consideration - Cash 6,250 - Ordinary Shares⁽ⁱ⁾ 406
	6,656
Less: - Property, plant & equipment - Provisions	2,962 (52)
Identifiable assets acquired & liabilities assumed	2,910
Goodwill⁽ⁱⁱ⁾provisionally accounted for	3,746

(i) The consideration paid to acquire the business and assets of Clarkson & Connolly Transport Trust includes 278,149 fully paid ordinary shares issued in the Group. The fair value of the shares in the Group has been determined based on the current market price of the shares at the date of acquisition.

(ii) The goodwill is attributable to the high profitability of the acquired business and the significant synergies expected to arise after the Group's acquisition of the business and assets of Clarkson & Connolly Transport Trust. No amount of goodwill is deductible for tax purposes.

(b) Acquisition of Flexichem Australia Pty Ltd

On 1 September 2022, DGL Manufacturing Pty Ltd acquired 100% of Flexichem Australia Pty Ltd. Flexichem specialises in complex silicone-based manufacturing targeted for water treatment, industrial and specialty product applications for both domestic and export customers.

The total acquisition price was $8,419,000, of which $7,269,000 was settled by cash and $1,150,000 settled via the issue of fully paid ordinary shares.

54

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 31 Business Combinations (continued)
	Fair Value
	$'000
Purchase consideration
- Cash	7,269
- Ordinary Shares⁽ⁱ⁾	1,150
	8,419
Less:
- Cash & cash equivalents	400
- Receivables⁽ⁱⁱ⁾	1,447
- Inventories	1,872
- Right-of-use assets	1,482
- Property, plant & equipment - Trade & other payables - Income tax liabilities - Lease liabilities - Provisions	215 (500) (270) (1,209) (218)
Identifiable assets acquired & liabilities assumed	3,219
Goodwill⁽ⁱⁱⁱ⁾provisionally accounted for	5,200

(i) The consideration paid to acquire Flexichem Australia Pty Ltd includes 725,689 fully paid ordinary shares issued in the Group. The fair value of the shares in the Group was determined based on the current market price of the shares at the date of acquisition.

• (ii) The directors believe the receivables were fully recoverable and the fair value recognised represents the gross contractual amounts receivable.

(iii) The goodwill is attributable to the high profitability of the acquired business and the significant synergies expected to arise after the Group's acquisition of Flexichem Australia Pty Ltd. No amount of goodwill is deductible for tax purposes.

(c) Acquisition of Aquadex Pty Ltd

On 1 October 2022, the Company acquired 100% of Aquadex Pty Ltd. Aquadex specialises in the manufacturing and distribution of chemicals for chlorine products and water treatment.

The total acquisition price was $5,484,000, of which $98,000 was settled by cash, $4,386,000 settled via the issue of fully paid ordinary shares and $1,000,000 as contingent consideration

Purchase consideration - Cash - Contingent consideration - Ordinary Shares⁽ⁱ⁾	Fair Value $'000 98 1,000 4,386
	5,484
Less: - Cash & cash equivalents - Receivables⁽ⁱⁱ⁾ - Other assets - Inventories - Right-of-use assets - Property, plant & equipment - Trade & other payables - Income tax liabilities - Lease liabilities - Borrowings - Provisions	161 151 17 619 76 854 (603) (48) (76) (786) (51)
Identifiable assets acquired & liabilities assumed	314
Goodwill⁽ⁱⁱⁱ⁾provisionally accounted for	5,170

(i) The consideration paid to acquire Aquadex Pty Ltd includes 2,943,925 fully paid ordinary shares issued in the Group. The fair value of the shares in the Group has been determined based on the current market price of the shares at the date of acquisition.

(ii) The directors believe the receivables were fully recoverable and the fair value recognised represents the gross contractual amounts receivable.

(iii) The goodwill is attributable to the high profitability of the acquired business and the significant synergies expected to arise after the Group's acquisition of Aquadex Pty Ltd. No amount of goodwill is deductible for tax purposes.

55

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 31 Business Combinations (continued)

(d) Acquisition of BTX Group Pty Ltd

On 1 October 2022, the Company acquired 100% of BTX Group Pty Ltd. BTX Group provides bespoke chemistries and innovative technologies to the municipal, mining, environmental and industrial sectors throughout Australia.

The total acquisition price was $9,707,000, of which $8,697,000 was settled by cash and $1,010,000 settled via the issue of fully paid ordinary shares.

	Fair Value
	$'000
Purchase consideration
- Cash	8,697
- Ordinary Shares⁽ⁱ⁾	1,010
	9,707
Less:
- Cash & cash equivalents - Receivables⁽ⁱⁱ⁾ - Inventories - Right-of-use assets - Property, plant & equipment - Trade & other payables - Income tax liabilities - Lease liabilities - Provisions	1,281 1,844 1,587 192 55 (2,267) (678) (192) (18)
Identifiable assets acquired & liabilities assumed	1,804
Goodwill⁽ⁱⁱⁱ⁾provisionally accounted for	7,903

(i) The consideration paid to acquire BTX Group Pty Ltd includes 677,570 fully paid ordinary shares issued in the Group. The fair value of the shares in the Group has been determined based on the current market price of the shares at the date of acquisition.

(ii) The directors believe the receivables were fully recoverable and the fair value recognised represents the gross contractual amounts receivable.

(iii) The goodwill is attributable to the high profitability of the acquired business and the significant synergies expected to arise after the Group's acquisition of BTX Group Pty Ltd.

No amount of goodwill is deductible for tax purposes.

(e) Acquisition of Acacia Ridge Container Park Pty Ltd

On 1 November 2022, the Company acquired 100% of Acacia Ridge Container Park Pty Ltd. Acacia Ridge has a number of years' experience in handling ISO Tank Containers and Road Tankers, whilst providing a range of services to meet all customer needs.

The total acquisition price was $5,271,000, of which $3,766,000 was settled by cash and $1,505,000 settled via the issue of fully paid ordinary shares.

Purchase consideration - Cash - Ordinary Shares⁽ⁱ⁾	Fair Value $'000 3,766 1,505
	5,271
Less: - Cash & cash equivalents - Receivables⁽ⁱⁱ⁾ - Right-of-use assets - Property, plant & equipment - Trade & other payables - Income tax liabilities - Lease liabilities - Provisions	617 600 5,815 499 (653) (29) (5,815) (289)
Identifiable assets acquired & liabilities assumed	745
Goodwill⁽ⁱⁱⁱ⁾provisionally accounted for	4,526

(i) The consideration paid to acquire Acacia Ridge Container Park Pty Ltd includes 1,000,000 fully paid ordinary shares issued in the Group. The fair value of the shares in the Group has been determined based on the current market price of the shares at the date of acquisition.

(ii) The directors believe the receivables were fully recoverable and the fair value recognised represents the gross contractual amounts receivable.

(iii) The goodwill is attributable to the high profitability of the acquired business and the significant synergies expected to arise after the Group's acquisition of Acacia Ridge Container Park Pty Ltd. No amount of goodwill is deductible for tax purposes.

56

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 31 Business Combinations (continued)

(f) Acquisition of business and assets from Chempac (NZ) 2016 Limited

On 1 December 2022, DGL Manufacturing Limited acquired the business and assets of Chempac (NZ) 2016 Limited. Chempac (NZ) is a business engaged in chemical manufacturing, packaging and distribution of finished goods based in East Tamaki, Auckland.

The total acquisition price was $3,155,000, which was settled by cash.

The figures below have been converted using the spot rate at 1 December 2022.

The figures below have been converted using the spot rate at 1 December 2022.
	Fair Value
	$'000
Purchase consideration
- Cash	3,155
	3,155
Less:
- Other assets	3
- Inventories - Property, plant & equipment - Provisions	250 359 (24)
Identifiable assets acquired & liabilities assumed	588
Goodwill⁽ⁱ⁾provisionally accounted for	2,567

(i) The goodwill is attributable to the high profitability of the acquired business and the significant synergies expected to arise after the Group's acquisition of the business and assets of Chempac (NZ) 2016 Limited. No amount of goodwill is deductible for tax purposes.

(g) Acquisition of business and assets from Nightingale Transport

On 7 February 2023, DGL Warehousing & Distribution Pty Ltd acquired the business and assets of Nightingale Transport. Nightingale Transport provides national logistics services for the steel, agricultural and infrastructure industries and is based in Queensland.

The total acquisition price was $18,500,000, which was settled by cash.

Purchase consideration - Cash	Fair Value $'000 18,500
	18,500
Less: - Property, plant & equipment - Inventories - Provisions	12,962 490 (466)
Identifiable assets acquired & liabilities assumed	12,986
Goodwill⁽ⁱ⁾provisionally accounted for	5,514

(i) The goodwill is attributable to the high profitability of the acquired business and the significant synergies expected to arise after the Group's acquisition of the business and assets of Nightingale Transport. No amount of goodwill is deductible for tax purposes.

57

DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 31 Business Combinations (continued)

(h) Acquisition of NLW Group Pty Ltd

On 1 March 2023, DGL Warehousing & Distribution Pty Ltd acquired 100% of NLW Global Pty Ltd. NLW is a logistics and warehousing company based in Townsville, Queensland.

The total acquisition price was $3,130,000, which was settled by cash.

The total acquisition price was $3,130,000, which was settled by cash.
	Fair Value
	$'000
Purchase consideration
- Cash	3,130
	3,130
Less:
- Cash & cash equivalents	34
- Receivables⁽ⁱ⁾ - Other assets - Property, plant & equipment - Trade & other payables - Income tax liabilities - Provisions - Borrowings	297 30 206 (191) (480) (118) (4)
Identifiable assets acquired & liabilities assumed	(226)
Goodwill⁽ⁱⁱ⁾provisionally accounted for	3,356

(i) The directors believe the receivables were fully recoverable and the fair value recognised represents the gross contractual amounts receivable.

(ii) The goodwill is attributable to the high profitability of the acquired business and the significant synergies expected to arise after the Group's acquisition of NLW Group Pty Ltd.

No amount of goodwill is deductible for tax purposes.

(i) Acquisition of business and assets from DLF Global Logistics

On 1 March 2023,, DGL Global Logistics Pty Ltd acquired the business and assets of DLF Global Logistics. DLF Global Logistics provides international air and ocean freight forwarding services and is based in Melbourne, Australia.

The total acquisition price was $1,793,000, which was settled by cash.

Purchase consideration - Cash	Fair Value $'000 1,793
	1,793
Less: - Income tax liabilities - Provisions	4 (11)
Identifiable assets acquired & liabilities assumed	(7)
Goodwill⁽ⁱ⁾provisionally accounted for	1,800

(i) The goodwill is attributable to the high profitability of the acquired business and the significant synergies expected to arise after the Group's acquisition of the business and assets of DLF Global Logistics.

No amount of goodwill is deductible for tax purposes.

58

DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 31 Business Combinations (continued)

(j) Acquisition of business and assets from Envirostore

On 8 May 2023, the company acquired the business and assets of Envirostore Chemical Consulting Limited. Envirostore is an Environmental services business offering advice and consulting services.

The total acquisition price was $1,724,000, which was settled by cash.

The total acquisition price was $1,724,000, which was settled by cash.
	Fair Value
	$'000
Purchase consideration
- Cash	1,724
	1,724
Less:
- Inventories	22
- Property, plant & equipment	49
- Provisions	(97)
Identifiable assets acquired & liabilities assumed	(26)
Goodwill⁽ⁱ⁾provisionally accounted for	1,750

(i) The goodwill is attributable to the high profitability of the acquired business and the significant synergies expected to arise after the Group's acquisition of the business and assets of Envirostore Chemical Consulting Limited. No amount of goodwill is deductible for tax purposes.

(k) Acquisition of Triox Pty Ltd

On 1 June 2023, DGL Manufacturing Australia Pty Ltd acquired 100% of Triox Pty Ltd. Triox supplies high-quality products for the home garden and agricultural markets.

The total acquisition price was $5,284,000, which was settled by cash.

agricultural markets. The total acquisition price was $5,284,000, which was settled by cash.
Purchase consideration - Cash	Fair Value $'000 5,284
	5,284
Less: - Cash & cash equivalents - Receivables⁽ⁱ⁾ - Other assets - Intangibles - Property, plant & equipment - Right-of-use assets - Inventories - Trade & other payables - Lease liabilities - Income tax liabilities - Provisions	2 875 55 255 196 257 1,358 (1,244) (257) (20) (421)
Identifiable assets acquired & liabilities assumed	1,056
Goodwill⁽ⁱⁱ⁾provisionally accounted for	4,228

(i) The directors believe the receivables were fully recoverable and the fair value recognised represents the gross contractual amounts receivable.

(ii) The goodwill is attributable to the high profitability of the acquired business and the significant synergies expected to arise after the Group's acquisition of Triox Pty Ltd.

No amount of goodwill is deductible for tax purposes.

59

DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 32 Deed of Cross Guarantee

On the 5 June 2023 DGL Group Limited entered into a Deed of Cross Guarantee with the following wholly owned entities:

• DGL Manufacturing Pty Ltd

• Flexichem Australia Pty Ltd

• DGL Warehousing & Distribution Pty Ltd

• DGL Industries Pty Ltd

• DGL Global Logistics Pty Ltd

• NLW Group Pty Ltd

• DGL Manufacturing Australia Pty Ltd

• Labels Connect Pty Ltd

• DGL AusBlue Pty Ltd

• Opal Australasia Pty Ltd

• AusTech Chemicals Pty Ltd - Total Bio Group Pty Ltd - Total Coolant Management Solutions Pty Ltd - Aquadex Pty Ltd

• BTX Group Pty Ltd

• Acacia Ridge Container Park Pty Ltd

Under the deed each company guarantees the debts of the others. By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare a financial report and directors’ report under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785.

The above companies represent a ‘closed group’ for the purposes of the instrument and as there are no other parties to the deed of cross guarantee that are controlled by DGL Group Limited, they also represent the ‘extended closed group’.

Set out below are a consolidated statement of financial positions, a consolidated statement of profit or loss and other comprehensive income and a summary of movements in consolidated retained earnings for the year ended 30 June 2023 of the closed group assuming all members of the group were members from 1 July 2022 or, if at a later date, from the date DGL Group Limited gained control of the entity.

Statement of Profit or Loss and Other Comprehensive Income

Sales revenue Cost of sales Other income Acquisition costs relating to business combinations Employee benefits expense Administration and general expenses Legal and professional fees Occupancy expense Depreciation and amortisation expense Finance costs Profit before income tax Tax expense Net profit from continuing operations Other comprehensive income: Items that may be reclassified subsequently to profit or loss when specific conditions are met: Gain on derivative contract held as hedging instruments, net of tax Items that will not be reclassified subsequently to profit or loss: Hedging gains reclassified to profit or loss, net of tax Revaluation gain on land and buildings, net of tax Total other comprehensive income/(loss) for the year Total comprehensive income for the year	2023 $000 437,722 (279,651)
	158,071 1,509 (2,952) (67,647) (21,092) (2,016) (8,110) (19,480) (7,246)
	31,037 (10,886)
	20,151
	76 (196) 111
	(9)
	2 0,142

60

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 32 Deed of Cross Guarantee (continued)

Consolidated Statement of Financial Position

Assets Current Assets Cash & cash equivalents Trade & other receivables Inventories Other assets Total Current Assets Non-Current Assets Investments in subsidiaries Inter-company receivables Property, plant & equipment Intangible assets Right-of-use assets Total Non-Current Assets Total Assets Liabilities Current Liabilities Lease liabilities Trade & other payables Borrowings Current tax liabilities Provisions Total Current Liabilities Non-Current Liabilities Lease liabilities Borrowings Deferred tax liabilities Provisions Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital Reserves Retained earnings Total Equity Summary of Movements in Consolidated Retained Earnings Opening retained earnings Profit for the year Closing retained earnings	2023 $000 34,379 48,710 32,574 5,742
	121,405
	44,480 23,057 191,235 134,340 38,007
	431,119
	552,524
	17,229 29,032 3,902 3,976 8,527
	62,666
	22,853 121,526 13,240 1,648
	159,267
	221,933
	330,591
	258,354 23,442 48,795
	330,591
	28,644 20,151
	48,795
Note 33 Contingent Liabilities

The Group currently has no open litigation matters.

61

DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023

Note 34 Capital Commitment

The table below reflects the capital commitments the Group had entered into as at the end of the financial year.

Acquisition of business and assets of Qblend - cash consideration Acquisition of business and assets of Kinnear - cash consideration Acquisition of Flexichem Pty Ltd - cash consideration - consideration shares Acquisition of Clarkson Freightlines - cash consideration - consideration shares Acquisition of BTX Pty Ltd - cash consideration - consideration shares Acquisition of Aquadex Pty Ltd - cash consideration - consideration shares Acquisition of Acacia Ridge Container Park Pty Ltd - cash consideration - consideration shares Purchase of land in Queensland, Australia Purchase of Property, Plant & Equipment	Group 2023 $000 2022 $000 750 -
	750 - 7,750 -
	7,750 - - 4,650 - 1,550
	- 6,200 - 6,250 - 500
	- 6,750 - 5,800 - 1,450
	- 7,250 - 700 - 6,300
	- 7,000 - 3,500 - 1,500
	- 5,000 - 3,800 618 -
	9,118 53,000

Note 35 Company Details

The registered office of the company is:

DGL Group Limited Level 4, 91 William Street Melbourne Vic 3000

The principal places of business are:

DGL Warehousing and Distribution 739 Progress Road Wacol, QLD 4076 Brisbane, Australia

DGL Environmental Solutions 201 Five Islands Road Unanderra NSW 2526 Wollongong, Australia

DGL Chemical Manufacturing 120 Fulton Drive Derrimut VIC 3026 Melbourne, Australia

62

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 DIRECTORS' DECLARATION

In accordance with a resolution of the directors of DGL Group Limited, the directors of the company declare that:

1. the financial statements and notes, as set out on pages 19 to 62, are in accordance with the Corporations Act 2001 and:

2. (a) comply with Australian Accounting Standards applicable to the entity, which, as stated in accounting policy note 1 to the financial statements, constitutes compliance with International Financial Reporting Standards; and

3. (b) give a true and fair view of the financial position as at 30 June 2023 and of the performance for the year ended on that date of the consolidated group;

4. in the directors' opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and

5. 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.

6. At the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group identified in note 32 will be able to meet any liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in note 32.

Director

==> picture [104 x 35] intentionally omitted <==

Dated this 28 August 2023

63

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DGL GROUP LIMITED

Report on the Financial Report

Auditor’s Opinion

We have audited the accompanying financial report of DGL Group Limited (the Company), which comprises the consolidated statement of financial position as at 30 June 2023, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity, and the consolidated statement of cash flows for the year then ended, notes to the financial statements, including material accounting policy information, and the Directors’ Declaration of the Company and the consolidated entity (the Group) comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year.

In our opinion, the accompanying financial report of the Company is in accordance with the Corporations Act 2001 , including:

(a) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2023 and of its financial performance for the year ended on that date; and

• (b) complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report.

We are independent of the consolidated entity in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

A Key Audit Matter is a matter that, in our professional judgement, was of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

Key audit matter – Business combinations How our audit addressed this matter As described in note 31, the Group entered into agreements to acquire Our procedures included, but were not limited to, the following: 100% of the equity in the following entities: evaluating the Group’s accounting treatment against the Acacia Ridge Container Park Pty Ltd requirements of AASB 3, key transaction agreements, and our Aquadex Pty Ltd understanding of the acquisitions and respective industries. BTX Group Pty Ltd assessing the methodology applied to recognise the fair value of Flexichem Australia Pty Ltd identifiable assets acquired and liabilities assumed.

Acacia Ridge Container Park Pty Ltd Aquadex Pty Ltd BTX Group Pty Ltd Flexichem Australia Pty Ltd NLW Group Pty Ltd Triox Pty Ltd

validating inputs of the components of the business combinations to underlying support including settlement contracts.

The Group also entered into agreements to acquire the business and assets of the following entities:

performing an assessment based on the guidance provided in AASB 3, paragraph B7-B12, to determine whether the acquisitions are classified as share purchase or business asset acquisitions.

• Chempac (NZ) 2016 Limited Clarkson & Connolly Transport Trust Nightingale Transport DLF Global Logistics Envirostore Chemical Consulting

assessing Management’s determination of the point at which control was gained of each acquiree.

assessing the provisional allocation of purchase price for each entity acquired to the significant identifiable assets acquired – including any intangibles other than goodwill – and liabilities assumed.

All acquisitions were accounted in accordance with AASB 3 Business Combinations . The acquisition date fair value of the total consideration transferred in respect of these acquisitions was $69.1m.

• reviewing the accounting entries associated with each business combination.

Significant judgements were formed by Management in valuing the acquired identifiable assets and allocation to goodwill with respect to these acquisitions. On this basis we have considered these business combinations to be a Key Audit Matter.

reviewing the related financial statement disclosures for the acquisitions for consistency with the relevant financial reporting standards.

PKF Melbourne Audit & Assurance Pty Ltd ABN 75 600 749 184 Level 12, 440 Collins Street, Melbourne, Victoria 3000

T: +61 3 9679 2222 F: +61 3 9679 2288 www.pkf.com.au

Liability limited by a scheme approved under Professional Standards Legislation

PKF Melbourne Audit & Assurance Pty Ltd is a member firm of the PKF International Limited family of separately owned firms and does not accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.

64

Key audit matter – Impairment of goodwill and other intangible assets

As of 30 June 2023, the carrying value of goodwill and other intangibles was $144.1m (2022: $98.5m), as disclosed in note 16 of the financial report. The accounting policy in respect of these assets is outlined in note 1 (j) Intangible Assets . Goodwill of $45.7m was recognised on the acquisitions during the year as noted above.

An annual impairment test of goodwill and other indefinite life intangibles is required under AASB 136 Impairment of Assets . Management’s testing has been performed using a discounted cash flow model (impairment model) to estimate the value-in-use of the Cash Generating Unit (CGU) to which the intangible assets have been allocated.

The evaluation of the recoverable amount requires the Group to exercise significant judgement in determining key assumptions, which include:

5-year cash flow forecast

• growth rate and terminal growth factor discount rate

The outcome of the impairment assessment could vary if different assumptions were applied. As a result, the evaluation of the recoverable amount of intangibles in accordance with the requirement of AASB 136 Impairment of Assets is a Key Audit Matter.

How our audit addressed this matter

Our procedures included, but were not limited to, assessing and challenging:

• the appropriateness of Management’s determination of the CGU to which goodwill and indefinite life intangibles are allocated.

• the application of an indefinite useful life to these intangible assets.

• the reasonableness of the financial year 2024 budget approved by the Directors, comparing to current actual results, and considering trends, strategies and the current economic climate.

• the inputs used in the impairment model, including the approved budget.

• the determination of the discount rate applied in the impairment model, comparing to available industry data.

• the short to medium term growth rates applied in the forecast cash flow, considering historical results and available industry data.

• the arithmetic accuracy of the impairment model.

• Management’s sensitivity analysis around the key drivers of the cash flow projections, to consider the likelihood of such movements occurring sufficient to give rise to an impairment.

• the appropriateness of the disclosures including those relating to sensitivities in assumptions used in note 16.

65

Key audit matter – Revenue recognition

The Group’s sales revenue amounted to $466m during the year (2022: $369.8m). Note 3 provides a breakdown of this revenue.

Note 1 (o) Revenue and Other Income describes the accounting policies applicable to the following distinct revenue streams in accordance with AASB 15 Revenue from Contracts with Customers :

Formulation and packaging of chemical and material products

Processing of used lead acid batteries to recover lead

Liquid waste treatment

Storage of customer goods Delivery of dangerous goods for customers

Rental income

The recognition of revenue and associated unearned revenue is considered a Key Audit Matter due to the varied timing of revenue recognition relative to the different revenue streams, consideration of business combinations, and the relative complexity of processes supporting the accounting for each.

Key audit matter – Inventory Valuation and Existence

The Group held inventory with a carrying value of $37.4m as at 30 June 2023 (2022: $48.2m), as disclosed in note 11 of the financial report.

AASB 102 Inventories requires entities to value inventory at the lower of cost and net realisable value. In considering the valuation and existence of inventories across the Group we had regard to:

• The changing mix and profile of inventory held across the Group’s diverse operating businesses.

• A range of inventory management and accounting practices across the various business combinations and efforts required to apply a consistent approach at year end.

• Judgement applied in estimating future selling prices and provisions for quality or obsolescence issues in a changing economic environment.

Due to these factors, we consider valuation and existence of Inventory to be a Key Audit Matter.

How our audit addressed this matter

Our procedures included, but were not limited to, the following:

• assessing the accuracy of revenue cut-off and completeness of revenue deferred in accordance with the principles of AASB 15 as of the year-end.

• assessing the reasonableness against expectation of recognised revenue through each of the revenue streams, using data analytics and comparison to prior year and budgeted results.

• for a sample of contracts across each revenue stream - with emphasis on new revenue streams acquired during the period - evaluating the contracts and agreeing revenue amounts to the records accumulated as inputs to the financial statements, including supporting billing systems and bank records; these procedures enabled our assessing the values recorded and the timing of revenue recognition as appropriate to the completion of performance obligations and the timeframe of product delivery.

• assessing the consistency of design of the Group’s accounting policies in respect of revenue recognition against the criteria prescribed by AASB15.

How our audit addressed this matter

Our procedures included, but were not limited to, the following:

• attending multiple stock counts across each business and cash generating unit to observe the controls in place and investigate any weaknesses in place.

• performing sample stock counts to confirm both existence and completeness, including reperforming a count of a sample of items and verifying against the final inventory listings.

• performing cut off procedures to verify that inventory has been recorded in the correct accounting period.

• performing analytical procedures in relation to inventory turnover, ageing and margin yield.

• testing a sample of inventory additions during the year to assess the accuracy of costing by validating these transactions to supporting invoices and other appropriate documentation.

• testing the valuation methods applied to closing inventory and validating that inventory was recorded at the lower of cost and net realisable in line with AASB 102 Inventories.

• performing net realisable value testing and reviewing the adequacy of any inventory provisions.

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Other Information

The Directors are responsible for the other information. The other information comprises the information included in the consolidated entity’s annual report for the year ended 30 June 2023 but does not include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report.

In connection with our audit of the financial report, our responsibility is to read the other information and in doing so, we consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If based on the work we have performed, we conclude that there is a material misstatement of this information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Directors for the Financial Report

The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the Directors are responsible for assessing the consolidated entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the consolidated entity or cease operations, or have no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue the auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the consolidated entity’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and other related disclosures made by the Directors.

• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the consolidated entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the consolidated entity to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the consolidated entity to express an opinion on the group financial report. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on the Remuneration Report

Auditor’s Opinion

We have audited the Remuneration Report included in the Directors’ Report for the year ended 30 June 2023.

In our opinion, the Remuneration Report of DGL Group Limited for the year then ended complies with Section 300A of the Corporations Act 2001 .

Responsibilities

The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

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Kenneth Weldin Partner

PKF Melbourne, 28 August 2023

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DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES

The following information is current as at 25th September 2023:

1. Shareholding

2. a. Distribution of Shareholders

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||||
|---|---|---|
|Category (size of holding)|No. of HoldersNo. of Ordinary Shares|
|1 – 1,000|2,029|1,056,030|
|1,001 – 5,000|1,969|5,239,228|
|5,001 – 10,000|698|5,387,594|
|10,001 – 100,000|908|25,111,288|
|100,001 – and over|119|243,495,570|
|5,723|280,289,710|

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• b. The number of shareholdings held in less than marketable parcels is nil (2022: nil)

• c. The names of the substantial shareholders listed in the holding company’s register are:

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||||
|---|---|---|
|Number|
|No. of Fully Paid|% Held of Issued|
|Ordinary Shares|Ordinary Capital|
|Mr Simon Henry|151,290,229|53.98%|
|Citicorp Nominees Pty Limited|16,878,375|6.02%|

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d. Voting Rights

The voting rights attached to each class of equity security are as follows:

Ordinary shares

• Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote on a show of hands.

e. 20 Largest Shareholders — Ordinary Shares

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|||||
|---|---|---|---|
|Number of Ordinary|% Held of Issued|
|Name|Fully Paid Shares Held|Ordinary Capital|
|1.|Mr Simon Henry|151,290,229|53.98%|
|2.|Citicorp Nominees Pty Limited|16,878,375|6.02%|
|3.|National Nominees Limited|11,038,282|3.94%|
|4.|Aveley Investments Pty Ltd - |6,317,312|2.25%|
|5.|Spalding Holdings Pty Ltd - |8,164,000|2.92%|
|6.|HSBC Custody Nominees (Australia) Limited|4,367,236|1.56%|
|7.|Mr Kenneth Joseph Hall - |3,703,813|1.32%|
|8.|4TIGES Capital Pty Ltd|3,355,355|1.20%|
|9.|JP Morgan Nominees Australia Pty Limited|3,075,421|1.10%|
|10.|Bond Street Custodians Limited - |1,632,000|0.58%|
|11.|Sharesies Nominee Limited - |1,602,367|0.57%|
|12.|BNP Paribas Nominees Pty Ltd HUB24 Custodial Serv Ltd - |1,429,558|0.51%|
|13.|Aquapac Pty Ltd|1,100,000|0.39%|
|14.|WJ & GF Shaw Ltd - The Shaw Family|1,059,205|0.38%|
|15.|Mr Raymond James Allan|1,016,105|0.36%|
|16.|Nine Lions Pty Ltd - |1,007,194|0.36%|
|17.|Mr Robert William Sushames - Sushames Family|1,000,000|0.36%|
|18.|Lightbrass Pty Ltd - |947,374|0.34%|
|19.|Spalding Holdings Pty Ltd - |848,420|0.30%|
|20.|ASB Nominess Limited - <184200 A/C>|845,263|0.30%|
|217,913,509|77.75%|

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1. The name of the company secretary is Andrew John Draffin.

2. The address of the principal registered office in Australia is Level 4, 91 William Street, Melbourne Vic 3000. Telephone is +61 3 8611 5333.

3. Registers of securities are held at the following addresses Link Market Services Limited Level 12, 680 George Street Sydney NSW 2000

4. Stock Exchange Listing

Quotation has been granted for all the ordinary shares of the company on all Member Exchanges of the Australian Securities Exchange Limited.

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