DGL GROUP LIMITED — Interim / Quarterly Report 2023

Feb 27, 2023

DGL Group Ltd Level 4, 91 William Street Melbourne, VIC 3000 Melbourne, Australia e info@dglgroup.com

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ASX RELEASE

28 February 2023

H1 FY23 Results

DGL Group Continues to Perform Strongly

Melbourne, Australia - DGL Group Limited ( ASX: DGL , “ DGL ” or the “ Company ”), a specialist chemicals business that manufactures, transports, stores and processes chemicals and hazardous waste, is pleased to announce its half year results for the period ended 31 December 2022.

H1 FY23 Highlights:

• Continued growth across key financial metrics, in pursuit of enhanced capabilities and scale

• Sales revenue of $217.2 million (+52% versus pcp)

• Underlying EBITDA of $29.7 million (+30% versus pcp)

• NPAT of $10.4 million (+22% versus pcp)

• 6 acquisitions successfully integrated during the half

• Underlying operating cash flow conversion of 108%

• All business segments delivered safe and reliable operational performance, growing revenues

• Strong balance sheet with flexibility to support future growth with ~1.1x Net Debt/EBITDA[1]

Commenting on the performance, DGL Founder and Chief Executive Officer, Simon Henry, said:

“The Group continues to perform strongly and we continue to experience record demand for our services.”

Continued growth across key financial metrics

During H1 FY23, DGL is pleased to have increased its sales revenue 52% versus the prior corresponding period (“pcp”) to $217.2 million. Underlying EBITDA during the half also grew to $29.7 million (+30% versus pcp) .

Encouragingly, all business segments continued to deliver safe and reliable operational performance, growing revenues, each positively contributing to EBITDA – Manufacturing (~65%), Warehousing & Distribution (~22%) and Environmental (~13%).

Effective inventory management during H1 FY23 resulted in cash flow conversion of 108%.

Operational highlights enhancing capabilities and scale

From an operational perspective, DGL continued to undertake strategic investment in pursuit of

1 Net Debt to revised FY23 underlying EBITDA guidance.

enhanced capabilities and scale. During the half, organic contribution was 69% of Group EBITDA growth, the balance coming from the successful completion and integration of strategic acquisitions completed during the last twelve months, including in H1 FY23: Flexichem, Aquadex, BTX, Acacia Ridge Container Park, Clarkson Freightlines and Chempac NZ. Collectively, these six acquisitions totaled $37.7 million (cash plus scrip) during the half. DGL remains confident in its ability to continue to extract value within the highly fragmented industry it operates in. With numerous small-scale operators, there is an attractive and long runway of potential strategic acquisitions available to DGL.

As a result of continued growth, both organic and via strategic acquisition, further scale enhancement was observed during the half, notably DGL’s strengthened and highly skilled workforce, increased network strength via addition of several strategically located assets as well as enhanced transport and logics network. Likewise, as DGL’s portfolio of licenses, accreditations and regulatory approvals continue to grow, so does its active customer base, reflecting a trusted brand.

Underlying growth strategy intact, diversifying revenue streams

This continued execution against DGL’s underlying strategy of expanding IP, capabilities, geographic footprint as well as products & solutions available to new and existing customers provides the Company the confidence to achieve its future growth objectives. Specifically, during H1 FY23, DGL Ausblue was successfully awarded a Commonwealth Technical Grade Urea stockpile contract in December 2022 for the supply, storage and distribution of ~7,500 tonnes of Technical Grade Urea. While not a significant contract in isolation, this win illustrates execution against strategy and also highlights the increased benefit of ongoing scale enhancements to DGL’s operations.

Significant growth in DGL’s capabilities and capacity has resulted in reduced reliance on specific geographies, markets, and customers – further de-risking the operations. DGL has materially diversified its agriculture exposure, now representing only ~29% of total revenues, from ~49% at the time of DGL’s initial public offering (“IPO”, 24 May 2021). Additionally, DGL’s reliance on key customers has reduced – Top 5 customers now representing ~26% of total revenues (from ~43% at IPO).

Balance sheet flexibility to support future growth

DGL’s history of generating strong free cash flows has supported its recent growth strategy, as outlined. Net working capital ($66.0 million) remained stable during H1 FY23. Movement in net working capital associated with acquisitions in H1 FY23 was +$4.7m, with inventories associated with acquisitions completed during H1 FY23 at $3.8 million, at balance date. Although taking on additional inventory from acquisitions during the half, the total inventory balance as at 31 December 2022 remained relatively stable ($47.2 million versus $48.2 million as at 30 June 2022). Indicative inventory days reduced from 75 to 62 days as a result, as the Company’s operations and supply chains normalised following H2 FY22, where DGL undertook a deliberate strategy to procure higher levels of inventory, permitted by a strong balance sheet.

This disciplined investment – particularly with respect to property – provides strategic flexibility & security, another competitive advantage of DGL. During the half, property, plant & equipment grew $5.5 million, with $10.7 million and $1.7 million spent on growth and maintenance capex respectively. Further, despite $34.8 million borrowings drawn down to fund acquisitions, net debt remains at very comfortable levels of $79.8 million as at 31 December 2022 (~1.1x Net Debt / EBITDA[2] ). DGL continues to proactively assess the strategic value of its property portfolio and constantly reviews all PP&E for appropriateness, disposing of assets when not required, typically replacing them.

2 Net Debt to revised FY23 underlying EBITDA guidance.

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Summary and outlook

DGL has updated its full-year FY23 EBITDA guidance as provided at the 2022 AGM to include an additional ~$1.5 million EBITDA contribution from recently announced acquisitions[1] , with underlying EBITDA now expected in the range of $71.5 - $73.5 million.

As outlined at the AGM, earnings are expected to be skewed towards second half (~40% H1 / ~60% H2), while underlying operating cash flow conversion is expected to be in the range of 90 - 95%. These two metrics remain unchanged since guidance provided at AGM.

DGL's strategy continues to focus on growing organically and through acquisitions that drive earnings growth and provide strategic value to DGL.

• ENDS -

Approved for release by the Board of DGL.

CONTACT Investor and media relations

Barbara Furci DGL Group Limited +64 9 309 9254 or barbara.furci@dglgroup.com

ABOUT DGL GROUP LIMITED

DGL is a well-established, founder-led, diversified industrial group, specializing in the manufacture, transport, storage of chemicals and processing of hazardous waste. The Company has a strong track record of revenue and earnings growth.

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DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 APPENDIX 4D HALF-YEAR REPORT FOR THE PERIOD ENDED 31 DECEMBER 2022

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1. Details of the reporting period and the prior corresponding period Current period: 1 July 2022 - 31 December 2022 Prior corresponding period: 1 July 2021 - 31 December 2021

2.	Up/Down Change (%) Results for announcement to the market Half-year ended 31 December 2022 ($'000) Half-year ended 31 December 2021 ($'000)
	Revenue from ordinary activities Up 52% 22% Up 37% 217,203 143,040 Profit from ordinary activities after tax attributable to members 10,403 8,546 Total comprehensive income for the period attributable to members 12,514 9,102 Up

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

3. 4.	Net tangible Assets Half-year ended 31 December 2022 30 June 2022
	Details of entities over which control has beengained Net tangible assets per security 0.74 0.78
	Name of entity: Flexichem Australia Pty Ltd Date of control: 1 September 2022 308,928 $ Name of entity: BTX Group Pty Ltd Date of control: 1 October 2022 1,283,263 $ Name of entity: Aquadex Pty Ltd Date of control: 1 October 2022 528,537 $ Name of entity: Acacia Ridge Container Park Pty Ltd Date of control: 1 November 2022 77,468 $ Profit from ordinary activities during the period attributable to the Group Profit from ordinary activities during the period attributable to the Group Profit from ordinary activities during the period attributable to the Group Profit from ordinary activities during the period attributable to the Group

5. Attachment

The Half Year Report of DGL Group Limited for the half-year ended 31 December 2022 is attached.

6. Audit qualification or review

The financial statements were subject to a review by the auditors and the review report is attached as part of the Half Year Report.

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DGL GROUP LIMITED AND CONTROLLED ENTITIES

ABN: 71 002 082 646

Financial Report For The Half-Year Ended 31 December 2022

DGL GROUP LIMITED AND CONTROLLED ENTITIES

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ABN: 71 002 802 646 Financial Report For The Half-Year Ended 31 December 2022

Financial Report For The Half-Year Ended 31 December 2022
CONTENTS	Page
Directors' Report	1
Auditor's Independence Declaration	3
Consolidated Statement of Profit or Loss and Other Comprehensive Income	4
Consolidated Statement of Financial Position	5
Consolidated Statement of Changes in Equity	6
Consolidated Statement of Cash Flows	7
Notes to the Financial Statements	8
Directors' Declaration	25
Independent Auditor's Review Report	26

DGL GROUP LIMITED AND CONTROLLED ENTITIES DIRECTORS' REPORT

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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 half-year ended 31 December 2022.

Directors

The following persons were directors of DGL Group Limited during the half-year, and at the date of this report, unless otherwise stated.

Peter Lowe Chairman and Non-Executive Director Simon Henry Founder, Executive Director and Chief Executive Officer Denise Brotherton Non-Executive Director Robert McKinnon Non-Executive Director Robert Sushames Executive Director, General Manager - DGL Manufacturing Australia Pty Ltd

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 the Group 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 and manufacturing, warehousing and distribution, and waste management and 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 industries:

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

• 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.

(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.

(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.

Dividends Paid or Declared

No dividends have been paid or declared during the half-year ended 31 December 2022, or at the date of this report.

Review of Operations

Chemical Manufacturing

DGL’s Chemical Manufacturing segment produces its own range of specialty chemicals and undertakes advanced Segment formulation and contract manufacturing on behalf of third parties. The segment provides a versatile, end to end solution for description its customers. Operations are focused on deriving chemicals from complex reactions in controlled environments. Since June 2022, DGL has acquired Flexichem Australia Pty Ltd, Chempac NZ (2016) Limited, Bondlast, Aquadex Pty Ltd and BTX Group Pty Ltd to expand the Chemical Manufacturing segment’s manufacturing capabilities further into Agricultural, Mining and Industrial sectors. These businesses are currently being integrated into the DGL Group and are performing in line with management’s expectations. Key activities DGL continues to focus on organic growth in the manufacturing segment through the expansion of its range of products, services and geographies, cross selling to existing and acquired customers, and through the development of capital projects.

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DGL GROUP LIMITED AND CONTROLLED ENTITIES DIRECTORS' REPORT

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Environmental Solutions

Segment description	The Environmental Solutions segment undertakes resource recovery and hazardous waste management activities. Its core activities comprise liquid waste treatment, ULAB recycling, lead smelting and refining and ISO tank cleaning, repair, and maintenance.
Key activities	Since June 2022, DGL acquired Acacia Ridge Container Park Pty Ltd further expanding the Environmental Solutions segment. This acquisition grows our environmental solutions capabilities in Queensland. However, it also adds value and benefit to our chemical warehousing services and distribution offering. The Victorian lead smelter continues to exceed management’s expectations. The other principal activities of the Environmental Solutions segment in 1H FY23 were end-of-life battery recycling and liquid waste treatment. Progress continues on the new liquid waste treatment plant in NSW.
Warehousing and Distribution
Segment description	The Warehousing and Distribution segment offers global logistics, and warehousing and transport services across Australia and New Zealand. Key components of the services provided by the segment include freight forwarding, customs clearance, inventory management, warehousing, and transport.
Key activities	DGL’s Warehousing and Distribution segment has experienced significant demand for its services. In response to issues around supply chains including shipping delays, DGL’s customers have been increasing their stock holdings, resulting in a high utilisation of warehousing and distribution assets. DGL has successfully integrated the acquisitions of Temples Pty Ltd and Clarkson & Connolly Transport Trust (trading as Clarkson Freightlines) into the Warehousing and Distribution segment and the acquired businesses are performing in line with management’s expectations. These acquisitions bolster a robust and rapidly expanding DGL presence across Western Australia. DGL’s inhouse customs clearance service continues to increase our international freight capabilities which aligns with DGL’s strategy to maximise its cross-selling opportunities.

Matters Subsequent to the End of the Half-Year

On 19 January 2022, the Company announced the acquisition of the business and assets of Nightingale Transport (Qld) Pty Ltd and Nightingale Freightlines Pty Ltd (collectively, “Nightingales”). Nightingales provides a national logistics service to blue-chip clients in the mining, agricultural and infrastructure sectors.

The total acquisition price is $18.2m and will be funded by cash.

Likely Developments and Expected Results of Operations

The Group expects to continue to execute its business plan, in line with its strategic objectives as outlined in its 2022 Annual Report.

Auditor's Independence Declaration

A copy of the auditor's independence declaration, as required under section 307C of the Corporations Act 2001, is set out on page 3.

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Mr Peter Lowe Chairman Dated: 28 February 2023

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AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF DGL GROUP LIMITED

In relation to our review of the financial report of DGL Group Limited for the half-year ended 31 December 2022, 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.

This declaration is made in respect of DGL Group Limited and the entities it controlled during the financial period.

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PKF Melbourne, 28 February 2023

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Kenneth Weldin Partner

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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.

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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Note Sales revenue 2 Cost of sales Other income 2 Covid-19 stimulus Acquisition costs relating to business combinations Employee benefits expense Administration & general expenses Legal & professional fees Occupancy expense Depreciation & amortisation expense Finance costs Profit before income tax Tax expense Net profit for the half-year Other comprehensive income: Items that may be reclassified subsequently to profit or loss: (Loss)/Gain on derivative contracts held as hedging instruments Exchange differences on translating foreign operations, net of tax Total other comprehensive income for the half-year Total comprehensive income for the half-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) 4	31 December 2022 31 December 2021 $000 $000 217,203 143,040 (138,014) (89,563) Group
	79,189 53,477 1,448 295 10 19 (2,027) (2,341) (33,533) (19,466) (11,334) (7,125) (1,829) (1,413) (4,227) (2,863) (10,516) (7,240) (2,932) (799)
	14,249 12,544 (3,846) (3,998)
	10,403 8,546
	(78) 63 2,189 493
	2,111 556
	12,514 9,102
	10,403 8,546
	10,403 8,546
	12,514 9,102
	12,514 9,102
	3.69 3.25

The accompanying notes form part of these financial statements.

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DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022

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Note Assets Current Assets Cash & cash equivalents Trade & other receivables 5 Inventories 6 Other financial assets Assets held for sale 7 Other assets Total Current Assets Non-Current Assets Property, plant & equipment 9 Intangible assets 10 Right-of-use assets 11 Deferred tax assets Total Non-Current Assets Total Assets Liabilities Current Liabilities Lease liabilities 11 Trade & other payables 12 Borrowings 13 Current tax liabilities Provisions Total Current Liabilities Non-Current Liabilities Lease liabilities 11 Borrowings 13 Deferred tax liabilities Provisions Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital 14 Reserves 18 Retained earnings Total Equity	31 December 2022 30 June 2022 $000 $000 24,415 25,448 61,994 56,568 47,176 48,153 183 262 1,862 6,629 11,419 7,527 Group
	147,049 144,587
	224,399 218,830 127,245 98,472 45,228 40,457 4,466 5,038
	401,338 362,797
	548,387 507,384
	11,846 10,904 43,187 62,274 3,573 3,423 3,241 5,333 8,453 6,977
	70,300 88,911
	35,221 30,983 100,653 66,057 14,247 14,808 862 837
	150,983 112,685
	221,283 201,596
	327,104 305,788
	258,920 250,118 (5,793) (6,982) 73,977 62,652
	327,104 305,788

The accompanying notes form part of these financial statements.

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DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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Balance at 31 December 2021 Profit for the half-year Balance at 1 July 2021 Consolidated Group Shares issued during the half-year Other comprehensive income for the year Comprehensive income Transactions with owners, in their capacity as owners, & other transfers Total comprehensive income for the year Transaction costs net of tax Total transactions with owners & other transfers Total transactions with owners & other transfers Balance at 31 December 2022 Sale of Shands Road Shares issued during the half-year Transaction costs net of tax Transactions with owners, in their capacity as owners, & other transfers Balance at 1 July 2022 Comprehensive income Profit for the half-year Other comprehensive income for the year Total comprehensive income for the year	Share Capital Retained Earnings $000 $000 192,249 34,754 - 8,546 - -	Reserves	Total $000 195,271 8,546 556
		Asset Realisation Reserve Cash Flow Hedge Reserve Merger Acquisition Reserve Foreign Currency Translation Reserve $000 $000 $000 $000 22,477 66 (54,230) (45) - - - - - 63 - 493
	- 8,546	- 63 - 493	9,102
	54,259 - (77) -	- - - - - - - -	54,259 (77)
	54,182 -	- - - -	54,182
	246,431 43,300	22,477 129 (54,230) 448	258,555
	250,118 62,652 - 10,403 - -	48,886 262 (54,230) (1,900) - - - - - (78) - 2,189	305,788 10,403 2,111
	- 10,403	- (78) - 2,189	12,514
	8,662 - 140 - - 922	- - - - - - - - (922) - - -	8,662 140 -
	8,802 922	(922) - - -	8,802
	258,920 73,977	47,964 184 (54,230) 289	327,104

The accompanying notes form part of these financial statements.

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DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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Cash flows from operating activities Receipts from customers Payments to suppliers & employees Interest received/ other income Finance costs GST refunded Income tax paid Net cash generated by operating activities Cash flows from investing activities Proceeds from sale of property, plant & equipment Purchase of property, plant & equipment Purchase of intangibles Purchase of subsidiary Purchase of business & assets Cash acquired from acquisition of subsidiary (see note 19) Net cash used in investing activities Cash flows from financing activities Payments of capital raising costs Repayments of short-term financing loans Loans from related parties - net amount repaid Proceeds from borrowings Repayment of lease liabilities Net cash provided by financing activities Net decrease in cash held Cash & cash equivalents at beginning of financial year Effect of exchange rates on cash holdings in foreign currencies Cash & cash equivalents at end of financial year	31 December 2022 31 December 2021 $000 $000 215,924 118,659 (185,884) (102,141) 1,462 249 (2,301) (449) 38 284 (6,770) (1,536) Consolidated Group
	22,469 15,066
	13,424 - (15,857) (25,810) (26) (73) (19,830) (21,269) (9,405) (21,542) 2,459 2,082
	(29,235) (66,612)
	(41) (77) (22,092) - - (1,526) 34,038 29,709 (6,169) (4,244)
	5,736 23,862
	(1,030) (27,684) 25,448 43,830 (3) 2
	24,415 16,148

The accompanying notes form part of these financial statements.

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DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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These consolidated financial statements and notes represent those of DGL Group Limited and Controlled Entities (the “consolidated group” or “group”).

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

Note 1 Summary of Significant Accounting Policies

These general purpose financial statements for the interim half-year reporting period ended 31 December 2022 have been prepared in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001, as appropriate for 'for profit' entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard (IFRS) IAS 34 Interim Financial Reporting.

The interim financial reporting does not include all the notes of the type usually included in the annual financial report. It is therefore recommended that this financial report be read in conjunction with the financial report for the year ended 30 June 2022 and any public announcements made by the Company since 30 June 2022 in accordance with continuous disclosure obligations arising under the Corporations Act 2001.

The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the Company's annual financial report for the financial year ended 30 June 2022.

Basis of Preparation

The financial statements have been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

Amendments to Accounting Standards and new Interpretations that are mandatory, effective from the current reporting period

The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current reporting period.

New Accounting Standards and Interpretations published but not yet adopted

There have been no new standards published but not yet adopted that would have a material impact upon either the Company's reported financial performance or its financial position.

Note 2 Revenue & Other Income

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

Continued operations Total sales revenue Other income - Miscellaneous income - Interest received - Administration revenue - Fuel tax credits income - Gain on sale of fixed assets - Discount on Purchase Total other income (a) Revenue disaggregation - Environmental Solutions - Chemical Manufacturing - Warehousing & Distribution The revenue is disaggregated by the following divisions: Revenue from contracts with customers Other sources of revenue	31 December 2022 31 December 2021 $000 $000 213,680 140,556 3,523 2,484 Group
	217,203 143,040
	25 11 158 8 132 144 303 63 830 - - 69
	1,448 295
	44,524 45,163 136,832 73,887 32,324 21,506
	213,680 140,556

Timing of income recognition of products and services transferred to customers is at a point in time. Warehousing & distribution revenue is recognised over time relating to the period of storage.

Note 3 Dividends

No dividends have been paid, declared or recommended for payment during the reporting period.

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DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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Earnings per Share (EPS) Note 4
(a) (b) Profit Weighted average number of ordinary shares outstanding during the year used in calculating diluted EPS Basic and diluted earnings per share from continuing operations Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS Earnings used in the calculation of basic and diluted EPS Reconciliation of earnings to profit or loss	31 December 2022 31 December 2021 $000 $000 10,403 8,546 10,403 8,546 No. No. 281,959 263,333 281,959 263,333 3.69 3.25 Group
Trade & Other Receivables Note 5
Trade receivables Provision for impairment Current Other receivables Total current trade & other receivables	31 December 2022 30 June 2022 $000 $000 61,263 55,956 (237) (212) 61,026 55,744 968 824 61,994 56,568 Group

The Group applies the general approach to providing for expected credit losses prescribed by AASB 9. Under the general approach, at each reporting period, the entity would assess whether the financial instruments are credit impaired and if:

• the credit risk of the financial instrument increased significantly since initial recognition, the entity measures the loss allowance of the financial instrument at an amount equal to the lifetime expected credit losses; and

• there was no significant increase in credit risk since initial recognition, the entity measures the loss allowance of the financial instrument at an amount equal to 12-month expected credit losses.

To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due.

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

$000 $000 - - 60,248 525 - - - - 53,143 1,299 - - (a) Financial Assets Measured at Amortised Cost Trade & other Receivables — Total current Total financial assets measured at amortised cost Expected loss rate Expected loss rate Loss allowing provision >30 days past due 30 June 2022 31 December 2022 Gross carrying amount Loss allowing provision Current Gross carrying amount	$000 $000 $000 - 80.6% 0.4% 196 294 61,263 - (237) (237) - 20.9% 0.4% 498 1,016 55,956 - (212) (212) 31 December 2022 30 June 2022 $000 $000 61,994 56,568 61,994 56,568 >60 days past due >90 days past due Total Group

(b) Collateral Pledged

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

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DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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Note 6 Inventories
Current At cost: Raw materials & stores Finished goods Work in progress	31 December 2022 30 June 2022 $000 $000 38,253 35,308 301 590 8,622 12,255 47,176 48,153 Group
Assets held for sale Note 7
Property held for sale 64 Broad Street Lot 1, 70 Irongate Road	31 December 2022 30 June 2022 $000 $000 - 6,629 1,862 - 1,862 6,629 Group

During the financial period, Shands Road was transferred to Assets held for Sale. On 20 December 2022, the property sold for $6,795,661 (NZD $7,488,964).

The held for sale asset in 2023 relates to a property in Hawkes Bay, New Zealand. The sale process of this property is currently underway.

The held for sale asset in 2022 relates to a property in Christchurch, New Zealand which was sold in July 2022.

Note 8 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.

country of incorporation.
		Ownership interest held by
		the Group
Name of subsidiary	Principal place of business	31 December	30 June 2022
		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	Australia	100%	-
DGL Manufacturing Australia Pty Ltd	Australia	100%	100%
Labels Connect Pty Ltd	Australia	100%	100%
DGL (NZ) Limited	New Zealand	100%	100%
DGL Manufacturing Limited	New Zealand	100%	100%
DGL Warehousing NZ Limited	New Zealand	100%	100%
DGL AusBlue Pty Ltd	Australia	100%	100%
Opal Australasia Pty Ltd	Australia	100%	100%
AusTech Chemicals Pty Ltd	Australia	100%	100%
Total Bio Group Pty Ltd	Australia	100%	100%
Total Coolant Management Solutions Pty Ltd	Australia	100%	100%
Aquadex Pty Ltd	Australia	100%	-
BTX Group Pty Ltd	Australia	100%	-
Acacia Ridge Container Park Pty Ltd	Australia	100%	-
DGL North America Pty Ltd	Australia	100%	-
DGL Group Inc	United States of America	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.

10

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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Property, Plant & Equipment Note 9

At cost Plant & equipment: Accumulated depreciation Buildings at: At cost Plant & equipment Land & Buildings Total buildings Leasehold Improvements — directors' valuation At cost At cost — directors' valuation — independent valuation 30 June 2022 Total land Accumulated amortisation Total land & buildings — independent valuation 30 June 2022 Freehold land at: Accumulated depreciation Motor Vehicles Plant under construction Total property, plant & equipment Total plant & equipment Accumulated depreciation Accumulated depreciation Accumulated depreciation

31 December 2022 30 June 2022 $000 $000 77,166 79,160 22,430 25,532 - - 99,596 104,692 33,432 41,381 22,667 15,938 (2,592) (2,243) 53,507 55,076 153,103 159,768 1,071 754 (111) (90) 960 664 64,949 59,389 (28,669) (25,542) 36,280 33,847 23,948 16,074 (3,595) (2,366) 20,353 13,708 13,703 10,847 - (4) 13,703 10,843 71,296 59,062 224,399 218,830 Group

The Group’s land and buildings were revalued at 30 June 2022 and based on a mix of independent and director valuations. The directors have not noted any impairment indicators to their valuations at 31 December 2022.

At the date of this report, The Environmental Protection Authority ("EPA") is reviewing DGL Group’s environmental assessment of the Tomago site with a view to progressing to remediation works as required by an EPA Prevention Notice. A prospective purchaser is occupying the site with an option to purchase once the Prevention Notice is lifted.

(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 reporting period.

Balance at 31 December 2022 Acquisitions through business combinations(i) Depreciation expense Balance at 1 July 2022 Group Movement in foreign currency Reclassification Additions Disposals	Land Buildings Leasehold Improvement Plant and Equipment Motor Vehicles Plant under construction Total $000 $000 $000 $000 $000 $000 $000 104,692 55,076 664 33,847 13,708 10,843 218,830 3 374 230 3,593 4,422 3,874 12,496 (4,433) (1,869) - (53) (170) - (6,525) - - 87 1,488 3,371 - 4,946 (2) (756) (21) (2,704) (990) (1) (4,474) (1,784) - - 56 - (1,029) (2,757) 1,120 682 - 53 12 16 1,883
	99,596 53,507 960 36,280 20,353 13,703 224,399

(i) Refer to Note 19: Business Combinations for further information.

11

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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Intangible Assets Note 10	Intangible Assets Note 10
Goodwill Trademarks & Certification Software Software under development $000 $000 $000 $000 93,284 275 480 1,917 Additions - 101 22 450 28,113 - 1 - Amortisation charge - (13) (41) - Movement in foreign currency 143 - 3 12 121,540 363 465 2,379 Net carrying amount Software Accumulated amortisation & impairment losses Registrations & Brands Net carrying amount Net carrying amount Net carrying amount Net carrying amount Cost Cost (a) Movements in Carrying Amounts Hydroproc Process Accumulated amortisation & impairment losses Net carrying amount Cost Cost Accumulated amortisation & impairment losses Cost Goodwill Accumulated amortisation & impairment losses Trademarks & certification Accumulated impairment losses Software under development Accumulated amortisation & impairment losses Total intangible assets Acquisitions through business combinations(i) Closing value at end of reporting period Cost Balance at the beginning of reporting period		31 December 2022 30 June 2022 $000 $000 122,384 94,128 (844) (844) 121,540 93,284 539 437 (176) (162) 363 275 1,336 1,309 (871) (829) 465 480 2,379 1,917 - - 2,379 1,917 2,217 2,217 (1,554) (1,554) 663 663 1,859 1,853 (24) - 1,835 1,853 127,245 98,472 Hydroproc Process Registration & Brands Total $000 $000 $000 663 1,853 98,472 - 6 579 - - 28,114 - (24) (78) - - 158 Group
	121,540 363 465 2,379	663 1,835 127,245

(i) Refer to Note 19: Business Combinations for further information.

Goodwill impairment testing

The Board is not aware of any indicators of potential impairment, determining that no impairment is required to the carrying amount of goodwill at 31 December 2022.

12

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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Note 11

Leases

The Group's lease portfolio relates to buildings only. 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 probable to be exercised have been included in the calculation of the right-of-use asset.

(i) AASB 16 related amounts recognised in the balance sheet

(i) AASB 16 related amounts recognised in the balance sheet
Right-of-use assets Leased buildings Accumulated depreciation Total right-of-use asset Lease Liabilities Current Non-Current Total lease liabilities Movements in carrying amounts Leased buildings: Opening net carrying amount Acquisitions through business combinations(i) Addition to right-of-use assets Depreciation expense Movement in foreign exchange Net carrying amount (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 (i)Refer to Note 19: Business Combinations for further information.	31 December 2022 30 June 2022 $000 $000 71,672 61,638 (26,444) (21,181) Group
	45,228 40,457
	31 December 2022 30 June 2022 $000 $000 11,846 10,904 35,221 30,983 Group
	47,067 41,887
	40,457 22,719 7,565 5,809 2,157 19,639 (5,947) (9,064) 996 1,354
	45,228 40,457
	31 December 2022 31 December 2021 $000 $000 5,947 3,937 610 350 31 December 2022 31 December 2021 $000 $000 6,169 4,244 Group Group

13

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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Note 12 Trade & Other Payables
Trade payables Secured liabilities Trade payables Sundry payables & accrued expenses Unsecured liabilities Current	31 December 2022 30 June 2022 $000 $000 36,698 32,071 6,489 8,111 - 22,092 43,187 62,274 Group

DGL had a secured trade finance facility provided by ANZ. The utilised amount was classified as secured trade payables above. 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 (refer also Note 13).

(a) Financial liabilities at amortised cost classified as trade & other payables Trade & other payables — Total current — Total non-current	31 December 2022 30 June 2022 $000 $000 43,187 62,274 - - 43,187 62,274 Group
Note 13 Borrowings
(a) Total borrowings Current Bank loans Other loans Total current & non-current secured liabilities: Total non-current borrowings Non-Current Total current borrowings Bank loans Other loans Bank loans Other loans Secured liabilities - amortised cost: Secured liabilities - amortised cost:	31 December 2022 30 June 2022 $000 $000 3,323 1,772 250 1,651 3,573 3,423 100,247 66,018 406 39 100,653 66,057 104,226 69,480 31 December 2022 30 June 2022 $000 $000 103,570 67,790 656 1,690 104,226 69,480 Group Group

The bank loan carries an effective interest rate of 5.20% p.a. (30 June 2022: 3.30% p.a)

(b) Collateral provided

On 30 August 2022, the Group entered into a long-term multi-option facility agreement with ANZ Banking Group Limited (“ANZ”). Loans, working capital and asset finance are secured by a first ranking security charge over all Group assets and property.

14

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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Note 14 Issued Capital

			Group	Group	Group
			31 December	30	June 2022
			2022
			$000		$000
284,911,205 fully paid ordinary shares (30 June 2022: 279,192,548 fully paid ordinary		shares)	258,920		250,118
			258,920		250,118
The	Group has authorised share capital amounting to 284,911,205 ordinary shares.
			Group
(a)	Ordinary Shares	31 December 2022			30 June	2022
		No.	$000		No.	$000
	At the beginning of the reporting period	279,192,548	250,118	257,000,000		192,249
	Shares issued during the year	5,718,657	8,662		22,192,548	57,579
	Less: capital raising costs	-	140		-	290
	At the end of the reporting period	284,911,205	258,920	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 issued to certain members of the executive management team following a recent 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.

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 bonus payment for extension of employment past the contractual notice period to 23 December 2022. No cash was raised.

Note 15 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 & 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.

15

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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Note 15: Operating Segments (continued)

(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.

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) Warehousing and Distribution

The Group's Warehousing and Distribution 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 Warehousing and Distribution 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

Segment performance
Six months ending 31 December 2022	Environmental Solutions Chemical Manufacturing Warehousing & Distribution Corporate Costs Total $000 $000 $000 $000 $000
REVENUE External sales Inter-company revenue Intersegment elimination Total segment revenue Deprecation & amortisation Reconciliation of segment result to group net profit/loss before Intersegment elimination Net profit before tax from continuing operations Segment result from continuing operations before tax	44,883 137,126 34,784 410 217,203 1 4,341 6,709 2,795 13,846 - - - - (13,846)
	44,884 141,467 41,493 3,205 217,203
	(1,384) (4,147) (5,751) (535) 3,019 17,958 1,090 (7,346) 14,721
	tax	(472)
		14,249

16

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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Note 15: Operating Segments (continued)

(ii) (iii)	Six months ending 31 December 2021	Environmental Solutions Chemical Manufacturing Warehousing & Distribution Corporate Costs Total $000 $000 $000 $000 $000	Environmental Solutions Chemical Manufacturing Warehousing & Distribution Corporate Costs Total $000 $000 $000 $000 $000
	REVENUE External sales Inter-company revenue Intersegment elimination Total segment revenue Deprecation & amortisation Reconciliation of segment result to group net profit/loss before Intersegment elimination Net profit before tax from continuing operations Segment assets 31 December 2022 Segment result from continuing operations before tax	45,495 75,010 22,496 39 143,040 1,167 1,686 3,470 49 6,372 - - - - (6,372)
		46,662 76,696 25,966 88 143,040
		(1,348) (2,366) (4,485) (95) 7,337 8,620 1,567 (4,867) 12,657
		tax Environmental Solutions Chemical Manufacturing Warehousing & Distribution Corporate Costs $000 $000 $000 $000	(113)
			12,544
			Total $000
	Segment assets Segment assets include: — Reconciliation of segment assets to group assets Intersegment eliminations Unallocated assets: — Goodwill on consolidation Total group assets 30 June 2022 Additions to non-current assets (other than financial assets and deferred tax)	76,814 206,485 123,738 333,821 1,883 12,519 (23) - Environmental Solutions Chemical Manufacturing Warehousing & Distribution Corporate Costs $000 $000 $000 $000	740,858 14,379 (266,324) 73,853
			548,387
			Total $000
	Segment assets Segment assets include: — Reconciliation of segment assets to group assets Intersegment eliminations Unallocated assets: — Goodwill on consolidation Total group assets Segment liabilities 31 December 2022 Additions to non-current assets (other than financial assets and deferred tax)	66,501 191,425 120,199 295,570 502 61,487 21,837 47,085 Environmental Solutions Chemical Manufacturing Warehousing & Distribution Corporate Costs $000 $000 $000 $000	673,695 130,911 (219,118) 52,807
			507,384
			Total $000
	Segment liabilities Reconciliation of segment liabilities to group liabilities Intersegment eliminations Total group liabilities	35,128 121,812 83,764 85,733	326,437 (105,154)
			221,283

17

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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Note 15: Operating Segments (continued)

15: Operating Segments (continued)
Environmental Solutions Chemical Manufacturing Warehousing & Distribution Corporate Costs 30 June 2022 $000 $000 $000 $000	Total $000
Segment liabilities 30,320 56,580 52,727 147,637 Reconciliation of segment liabilities to group liabilities Intersegment eliminations Total group liabilities	287,264 (85,668)
	201,596

• (iv) Revenue by geographical region

Revenue, including revenue from discontinued operations, attributable to external customers is disclosed below, based on the location of the external customer:

external customer:
	31 December 2022 31 December 2021 $000 $000
Australia New Zealand Total revenue	203,677 135,249 13,526 7,791
	217,203 143,040

• (v) Assets by geographical region

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

The location of segment assets by geographical location of the assets is disclosed below:
	31 December 2022 30 June 2022 $000 $000
Australia New Zealand Total Assets	657,275 582,982 83,583 90,713
	740,858 673,695

Note 16 Events After the Reporting Period

On 19 January 2022, the Company announced the acquisition of the business and assets of Nightingale Transport (Qld) Pty Ltd and Nightingale Freightlines Pty Ltd (collectively, “Nightingales”). Nightingales provides a national logistics service to blue-chip clients in the mining, agricultural and infrastructure sectors.

The total acquisition price is $18.2m and will be funded by cash.

18

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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Note 17 Related Party Transactions

Related Parties

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

• i. Key Management Personnel:

Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity are considered key management personnel.

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. ii. iii. End of the reporting period Loan repayment made Loan converted to shares Beginning of the reporting period Administration revenue charged to Simon Henry and his controlled entities Rental and related expenses charged by Simon Henry and his controlled entities Rental and related expenses charged by Spalding Holdings Pty Ltd, of which Mr Robert Sushames parents have an interest in. Purchase consideration of 120 Fulton Drive acquired from Belbrae Investments Pty Ltd, of which Mr Robert Sushames parents are shareholders. Interest charged Loans from Simon Henry Transactions with Simon Henry & his controlled entities Due dilligence and professional training fees paid to BDO Australia, of which Denise Brotherton is a Partner Company secretarial fees and reimbursement of expenses, paid to DW Accounting & Advisory Pty Ltd, of which Mr Andrew Draffin is a director and shareholder. DW Accounting & Advisory Pty Ltd is a shareholder of DGL Group Limited. Transactions with other related parties	31 December 2022 31 December 2021 $000 $000 - 8,481 - (1,498) - (7,055) - 72 Group
	- -
	132 144 75 89 114 93 512 - 519 151 - 5,806

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

19

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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Note 18 Reserves a. Foreign Currency Translation Reserve

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

Balance at the beginning of the period Foreign currency movements during the reporting period	31 December 2022 30 June 2022 $000 $000 (1,900) (45) 2,189 (1,855) Group
	289 (1,900)

• b. Asset Revaluation Reserve

The asset revaluation reserve records revaluations of land and buildings.

Balance at the beginning of the period Asset revaluation movement during the year Sale of property (64 Broad Street - see note 7) Tax effect Cash Flow Hedge Reserve The asset revaluation reserve records revaluations of hedging instruments Balance at the beginning of the period Asset revaluation movement during the year Merger Acquisition Reserve 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	31 December 2022 30 June 2022 $000 $000 48,886 22,477 - 31,473 (922) - - (5,064) Group
	47,964 48,886
	31 December 2022 30 June 2022 $000 $000 262 66 (78) 196 Group
	184 262
	31 December 2022 30 June 2022 $000 $000 (54,230) (54,230) - - Group
	(54,230) (54,230)
	31 December 2022 30 June 2022 $000 $000 289 (1,900) 47,964 48,886 184 262 (54,230) (54,230) Group
	(5,793) (6,982)

• c. Cash Flow Hedge Reserve

• d. Merger Acquisition Reserve

20

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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Note 19 Business Combinations

Summary of Business Combinations during the financial year

During the financial reporting period, the Group acquired 100% of the share capital of four companies as well as the business and assets of a further two companies. A summary of the combinations is as follows:

Purchase consideration - Cash - Ordinary Shares Less: - Cash & cash equivalents - Receivables - Other assets - Inventories - Right-of-use assets - Property, plant & equipment - Trade & other payables - Income tax liabilities - Lease liabilities - Borrowings - Provisions Identifiable assets acquired and liabilities assumed Goodwill provisionally accounted for	Fair Value $'000 29,235 8,457
	37,692
	2,459 4,042 20 4,429 7,565 4,944 (3,930) (1,025) (7,565) (708) (652)
	9,579
	28,113

(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 $6,656,098, of which $6,250,000 was settled by cash and $406,098 settled via the issue of fully paid ordinary shares.

Purchase consideration - Cash - Ordinary Shares(i) Less: - Property, plant & equipment - Provisions Identifiable assets acquired & liabilities assumed Goodwill(ii) provisionally accounted for	Fair Value $'000 6,250 406
	6,656
	2,962 (52)
	2,910
	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.

21

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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Note 19: Business Combinations (continued)

(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 siliconebased manufacturing targeted for water treatment, industrial and specialty product applications for both domestic and export customers.

The total acquisition price was $8,419,698, of which $7,269,481 was settled by cash and $1,150,217 settled via the issue of fully paid ordinary shares.

Purchase consideration - Cash - Ordinary Shares(i) Less: - Cash & cash equivalents - Receivables(ii) - Inventories - Right-of-use assets - Property, plant & equipment - Trade & other payables - Income tax liabilities - Lease liabilities - Provisions Identifiable assets acquired & liabilities assumed Goodwill(iii) provisionally accounted for	Fair Value $'000 7,269 1,150
	8,419
	400 1,447 1,973 1,482 215 (328) (270) (1,482) (218)
	3,219
	5,200

(i) The consideration paid to acquired Flexichem Australia Pty Ltd includes 725,689 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 are fully recoverable and no provision for impairment is required.

(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 $4,484,323, of which $97,875 was settled by cash and $4,386,448 settled via the issue of fully paid ordinary shares.

Purchase consideration - Cash - Ordinary Shares(i) 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 Identifiable assets acquired & liabilities assumed Goodwill(iii) provisionally accounted for	Fair Value $'000 98 4,386
	4,484
	161 151 17 619 76 854 (682) (48) (76) (708) (51)
	313
	4,171

22

DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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Note 19: Business Combinations (continued)

• (i) The consideration paid to acquired 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 are fully recoverable and no provision for impairment is required.

• (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.

(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 $9,706,467, of which $8,696,888 was settled by cash and $1,009,579 settled via the issue of fully paid ordinary shares.

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

(i) The consideration paid to acquired 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 are fully recoverable and no provision for impairment is required.

(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 $5,270,645, of which $3,765,645 was settled by cash and $1,505,000 settled via the issue of fully paid ordinary shares.

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

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DGL GROUP LIMITED AND CONTROLLED ENTITIES ABN: 71 002 802 646 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

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Note 19: Business Combinations (continued)

• (i) The consideration paid to acquired 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 are fully recoverable and no provision for impairment is required.

• (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.

(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 $3,155,073, which was settled by cash.

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

Purchase consideration - Cash Less: - Other assets - Inventories - Property, plant & equipment - Provisions Identifiable assets acquired & liabilities assumed Goodwill(i) provisionally accounted for	Fair Value $'000 3,155
	3,155
	3 250 359 (24)
	588
	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.

24

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

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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 4 to 24, are in accordance with the Corporations Act 2001 and:

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

3. (b) give a true and fair view of the Group's financial position as at 31 December 2022 and of its performance for the half-year ended on that date; and

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.

Signed in accordance with a resolution of Directors made pursuant to section 303(5)(a) of the Corporations Act 2001.

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Director Mr Peter Lowe

Dated this 28 February 2023

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

Report on the Half-Year Financial Report

Conclusion

We have reviewed the accompanying half-year financial report of DGL Group Limited (the Company) and its subsidiaries (collectively, the Group), which comprises the consolidated statement of financial position as at 31 December 2022, 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 half-year ended on that date, a statement of accounting policies, other selected explanatory notes, and the directors’ declaration.

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of DGL Group Limited is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the consolidated financial position of the Group as at 31 December 2022, and of its consolidated financial performance for the half-year ended on that date; and

• (b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

Basis for conclusion

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity (ASRE 2410).Our responsibilities are further described in the Auditor’s Responsibilities for the Review of the Half-Year Financial Report section of this report. We are independent of the Group in accordance with 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 annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

Directors’ Responsibility for the Half-Year Financial Report

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

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.

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Auditor’s Responsibility for the Review of the Half-Year Financial Report

Our responsibility is to express a conclusion on the half-year financial report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter that causes us to believe that the halfyear financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group’s consolidated financial position as at 31 December 2022 and its consolidated performance for the half-year ended on that date, and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

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PKF Melbourne, 28 February 2023

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Kenneth Weldin Partner

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