DGL Group Limited (DGL) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Annual General Meeting of DGL Group Limited. My name is Tim Hosking. I'm a Non-Executive Director and Chairman of the company, and as such, I'll chair the meeting today. We have a quorum, and I'll now formally declare the meeting open. I'd like to take this opportunity to introduce my colleagues in attendance today. We have Simon Henry, Managing Director, CEO and Founder of the company; John West, a Non-Executive Director; Liz Smith, also a Non-Executive Director; and Hanna Posa, our General Counsel and Joint Company Secretary. We're also joined by members of the senior DGL executive team and by the company's auditors, Ken Weldon and Sarah Leal from PKF Melbourne, who are in attendance today to answer any questions relating to the financial report and the conduct of the audit process. Before I proceed any further, I'd like to just address a few housekeeping items. In terms of questions, this is a virtual meeting. Shareholders will be able to submit questions via the Q&A window. To ask a question at the bottom of the Zoom screen, there's a Q&A button. Please tap that button, type in your question and hit send. Your question will be read aloud by our Company Secretary, unless you indicate a preference to ask it out aloud yourself. If you'd like to do so, please indicate this when you write in your question and submit it. We'll also ask shareholders to type each question in separately. This will give all shareholders a fair and reasonable opportunity to ask a question. If your question relates to the financial statements or a specific resolution, we'll address the question at the time that, that item of business is put forward. I'll hold comments and questions until the resolution has been introduced and shareholders have been invited to ask questions. If we receive multiple questions that are similar, we'll group them together or answer the broadest question that covers the others. Please keep your questions to the topic of each resolution. Any question not related to a resolution will be considered after the conclusion of the formal business of the meeting when we open the floor to general questions. Please submit any questions now. If you haven't already, our Company Secretary will moderate the questions as they come through. We remind shareholders that questions and comments must be relevant to the business of this meeting. I'd also note as a listed company, we can only respond to questions that we can answer using publicly available information. We'll conduct the formal business of the meeting after an introductory addressed by me and a presentation by our CEO to provide an update on business activities. Both updates have been released to the ASX prior to this meeting. We'll also address some of the questions that have been asked by shareholders prior to the meeting in these opening remarks. There are three items of ordinary business. The first is the receipt of financial statements and the accompanying reports for the year ended 30 June 2025. Item 2 is the adoption of the remuneration report for the year ended 30 June 2025 and Item 3 is the election of Elizabeth Smith as Non-Executive Director. The results of all resolutions will be lodged with the ASX and published on the company's website shortly after the conclusion of the AGM. Please note that I intend to vote all open proxies which I hold as Chair of the meeting in favor of Resolutions 1 and 2, unless I've been directed otherwise. This includes the resolution that relates to the remuneration of key management personnel. The Board recommends that shareholders vote in favor of these resolutions. Any directors that have an interest in a resolution abstain from making a recommendation. Before I put each resolution to the meeting there will be an opportunity to ask questions about that resolution. I'll propose each resolution in order of the item of business and declare the valid number -- the number of valid proxies that I hold as chair. I'll put all resolutions to the meeting and then call a poll on each resolution. I've appointed James Barry of Group to act as returning officer. If a shareholder has already voted by proxy, you won't need to vote again unless you want to change your vote. And voting in the poll is entirely optional with shareholders who have not lodged their proxy beforehand are encouraged to vote in the poll. Before proceeding with the business as outlined in the Notice of Meeting, I'd like to take this opportunity to say a few words. And firstly, to note that we're holding this AGM as an online meeting today to allow the broadest access for our shareholders, and we're pleased to see so many in attendance. As we stated previously, FY '25 was a transitional year DGL and this has proved true in more ways than one. Our business performance and our operational transformation has been overshadowed by disclaimed audit opinion and the resulting suspension from the ASX. I'll refer to our operating performance briefly before discussing the audit and the ASX listing situation. Revenue increased to $481 million in FY '25, with gross margins improving 1.7% to $204 million. Cash flow from operations was strong, generating over $44 million in FY '25, up 27% on FY '24. We had a relatively strong performance in manufacturing, increased logistics revenues and contribution from acquisitions. Headwinds included cost pressures, increased competition for used lead acid batteries, resulting in losses in that segment, normalization in pricing for AdBlue automotive products and reduced demand in the mining sector. In response, DGL has discontinued lead battery recycling at its Laverton, Victoria facility, which has since been sold, and we've consolidated battery recycling operations at DGL's Unanderra facility in New South Wales. Underlying EBITDA in FY '25 was $52 million, down 18% on FY '24. Restructure costs and one-off items, including write-downs of purchased goodwill, plant and equipment and software, resulted in an underlying statutory net loss after tax of $28 million in FY '25. We've received a number of questions relating to dividends and buybacks, and we understand the value of dividends for some shareholders. and the value of buybacks to increase earnings per share. As in the past, our intention in the medium term is to reinvest our cash flow back into the business to drive our growth strategy. We've paused acquisitions in the current environment, but we're continuing with selective investments to increase capacity to generate longer-term shareholder value. Although notwithstanding the current ASX suspension, we're very conscious that our share price has been below the company's IPO price and that many shareholders have experienced a negative return on DGL shares. We can't give a time frame on the share price recovery after we regain quotation but we are working hard -- very hard to deliver the performance required to drive positive shareholder returns. DGL received a disclaimer of opinion from its auditor PKF for the financial year ended 30 June 2025. The disclaimer of opinion relates principally to stock take variances at two sites and to identify internal control weaknesses. As a result of the disclaimer opinion, DGL shares are suspended from trading on the ASX, as I'm sure you're aware. The Board recognizes the seriousness of this matter and the concerns it raises for our shareholders and other stakeholders. DGL doesn't disagree with the key audit matters raised by the auditor or that a modification of opinion was warranted in the circumstances. However, DGL does not agree with the rationale for the final disclaimer opinion issued by the auditor. The Board has confidence in the integrity of the financial information presented in the company's FY '25 annual report. The auditor's substantive procedures did not identify any material audit adjustments other than adjustments to lease accounting and an inventory write-down, which DGL recognized in its FY '25 accounts. nor did the audit process identify material misstatements arising from any control failures which supports the Board's confidence in the underlying integrity of the financial records. DGL continues to make substantial investments. have been strengthening its control environment, including implementing our new ERP system, which will provide enhanced controls and reporting capabilities across the group. As we've disclosed, DGL experienced a fraud incident in August last year by an individual in a newly acquired business. The incident wasn't financially material, so it wasn't announced at the time. After taking steps to limit the individual's access to systems, we advised our auditor and investigated the incident. The individual immediately admitted to the fraud and offered to repay the funds. There was no evidence found at the time or since of other fraud in the business. After very carefully assessing the situation, it was evident that the individual held key customer relationships and market intellectual property that was far more valuable to DGL than the potential loss. After extensive further consideration, we made a commercial decision to retain the individual in a more junior role and with restricted system access. During this period, key customer relationships and market IP was transferred to others in the DGL Group. At our auditor's request, we engaged a forensic accountant to investigate the fraud incident. The independent investigation did not identify evidence of any additional fraudulent transactions by the individual other than those that we identified ourselves. As a result of this managed process, we recovered 70% of the lost funds with a net loss of $130,000. Importantly, we successfully protected key customer relationships worth far more to DGL in terms of shareholder value. The individual has since left DGL and the business he was employed in continues to perform strongly. In terms of the ASX listing situation, the Board knows that the extended period of suspension from the ASX is a major concern for shareholders. We've been working constructively with the ASX to achieve reinstatement of quotation at the earliest opportunity. As we've announced, the ASX has confirmed that an audit report for the half year period to 31 December will be acceptable to the ASX on the basis that there's no modifications of a pervasive nature. This would allow ASX to reinstate DGL securities to quotation subject to ASX being satisfied that DGL is compliant -- is in compliance with the listing rules at the time. This will take some time after the audit, and we expect this to occur by the end of February or in March next year. This is the shortest path we found to lifting the suspension and we'll update the market if there's any change to this timetable. Over the last year, we've had a focus on the comprehensive integration of some 30 business and asset acquisitions. This includes operational integration as well as integration of the multitude of systems used by the businesses acquired by DGL in recent years. Group-wide ERP and finance, logistics management and HR and payroll systems will replace over 30 existing stand-alone systems, leading to cost savings, productivity gains, better management information, improved internal controls and improved customer service in FY '26. As many companies experience, the ERP implementation is taking longer than we planned, but the project is progressing well. The first phase of implementing these three group-wide systems will be completed by the end of this calendar year with full implementation expected in the first half of 2026. On our property strategy, we continue to take a pragmatic approach to property, where we like to own and control properties that are critical to our operations due to having licenses or where we have specialized manufacturing or processing facilities. We're agnostic about owning generic properties such as warehouses. As we've announced, we've sold three noncore properties in the current half year, with net proceeds of approximately $25.6 million, above the combined book value. In relation to our debt, DGL operates a moderate level of debt, and the company is within its banking covenants. We note that the proceeds from the property sales that I've just referred to have recently applied to reducing DGL's debt by approximately 22%. We acknowledge and we appreciate the continued support of our banking syndicate through this period. Turning to the Board. We're very pleased to welcome Liz Smith as an independent Non-Executive Director. Liz joined the Board in March this year and bring strong finance, accounting, governance and other skills, and has recently become Chair of our Audit and Risk Committee. We now have a majority of independent directors on the Board. I'd like to thank Robert Sushames who left DGL earlier this year for his long contribution to DGL as an Executive Director. We're commencing a recruitment process for the Chief Financial Officer role, and we're grateful to Gagan Singh, our Financial Controller, who stepped into this role on an interim basis. Before I move to closing remarks, it's appropriate to comment on the proxy voting on our remuneration. [Audio Gap] operating. We've received a high proportion of proxies voting against the remuneration report, and subject to voting at the meeting today, it seems likely that we'll receive a first strike. Consultation with some shareholders indicates that the negative vote, at least in part, reflects frustration regarding our general financial performance, and, in particular, the difficult circumstances with the suspension from quotation on the ASX. We understand this frustration, and we take this vote against the remuneration report seriously. In closing, I'd like to say that we're very proud of the critical role played by DGL in supporting industry across Australia and New Zealand. There's no shortage of challenges in delivering a wide range of services, given the cost pressures in the economy, and the general business pressures facing DGL's more than 5,000 customers in Australia and New Zealand. I'd like to thank the Board, the management team and in particular, our dedicated employees across the group who work hard to serve our customers while keeping our operations safe and protecting the community and the environment. I thank them for all their efforts. Finally, I'd like to thank our shareholders for their support and for their patients while we work through this period. We're working hard to resolve the current suspension and audit position while also improving our performance to deliver the returns that you're looking for. I'll now hand over to Simon Henry, our Chief Executive, to provide an update on the business and the outlook for the current financial year.

Thank you very much, Tim. I think you've covered off most of the important elements that I was going to cover off. So I'll make mine brief. Now if we can turn to the FY '25 financial performance, Tim has covered off these numbers. Obviously, very pleased there with our cash conversion, our revenue closing in on $0.5 billion a year. but obviously some challenges with our net profit and our statutory net profit that we are working on. We could go to the next slide, please. Key drivers in FY '25, our manufacturing businesses continue to do well, and we continue to invest in them, chemical manufacturing and exporting chemicals from our plants in Australia into the U.S. and other markets abroad, strong focus on agricultural chemicals. We do see chemical manufacturing and packaging as very central to our operations. And our Global Logistics division continues to prosper and expand. If we look at the -- some of the challenges we faced in the financial year, and as Tim alluded to, increased competition for lead acid batteries. We've taken the pragmatic step and closed down our Victorian operation and sold the plant and focused our energies on our New South Wales plant. We need to run the New South Wales plant because the battery breaking businesses are joined at the hip to our liquid waste treatment business on the same site. Now we have invested substantially moving to more efficient warehouses and then considerable cost pressures across the business that I work with Alex and others on to reduce and manage and we have also written down the value of assets primarily connected to our lead acid battery operation. We'll go to the next slide. We look at the business and we look at what we can do to improve performance. Clearly, we will close and dispose of loss-making businesses as we need to. We're completely pragmatic about this. We will continue to invest in those channels and elements of the business that prosper and do well. and where we are well established. We are moving from dated inefficient warehouses to new facilities, so significant cost moving a warehouse and chemicals and all the systems we have in them but we do notice immediately an uptick in utilization and attracting national customers. And this process has been going on for the last few years, and it's been intense over the last 12 months, but most of the moving is now completed. Since listing, we acquired some 30 businesses, and a lot of work is going on to integrate these businesses into one operating unit. It's a tough job, it costs millions of dollars to do it. It ties up our senior managers and we're very much looking forward to getting to the other side of it, so we can concentrate on growing the business. As Tim spoke about, we are rolling out a group-wide ERP system. I'm going to say that most of the heavy lifting of this has been done. And over the next 6 months, we expect to have it fully completed. We're also bringing 30 different payroll systems to one. And once again, most of the heavy lifting here has been done and there's been a significant capital investment into these elements of the business, but the end result is that DGL will be a highly efficient operation. Go to the next slide. DGL is made up of three divisions: Chemical Manufacturing and Formulation is the procurement of chemicals, the packaging, the manufacturing, label printing, the full suite of services. We look at the Central division, which is logistics, primarily transport, both packaged and bulk and warehousing throughout New Zealand and Australia, and also Global Logistics of moving chemicals around the world. Final division is Environmental. This is primarily focused on the treatment of liquid industrial wastes at our Unanderra site. Pleased to be able to advise today that the site, the major development that we've been carrying out there for the past few years and investing some $15 million will come on stream after Christmas, and we hope to start treating waste in the plant in January. Let's move to the next slide. Overall divisional performance. Manufacturing, as I've mentioned, is very key and very central to our operations. We continue to invest our capacity, expand our customer base and our product range. We continue to invest to automate our plants. Logistics, as mentioned, moving to big new efficient warehouses, investing heavily in our IT systems to automate and ensure that we provide the accuracy and the interface and the real-time reporting to our customers. These warehouses are normally licensed to manage all classes of chemicals, including flammable. It's a complex regulated industry, but that's what we're doing and we do a lot of it. We are seeing significantly improved utilization of our warehouse network throughout Australia and New Zealand. In Environmental division, as mentioned, we've closed in our loss-making business in Victoria, and we are focusing on the other elements of our environmental operation, our packaged waste and our liquid waste treatment in New South Wales. Next slide, please. DGL is a chemical company. We can't get away from the fact that we work with complex and sometimes dangerous chemicals. But that's all we do, and we are really focused on safety. We've got a well-developed health and safety team and framework across the business. Considerable amount of our Board meeting time is devoted solely to health and safety and analyzing events and working out systems to be a better and safer operation. We have group-wide training. It's a very central focus of DGL's culture, health and safety and protecting the environment. We will continue to invest to expand our services and our geographical reach and capabilities. We will continue to invest in the integration of the businesses we've bought since the IPO. There's still considerable cost to be taken out of the business through this integration, but it's not easy work, and it's expensive, a lot of capital and a lot of time going into it. but we have made very good progress over the last 12 months. Integrating these businesses onto one platform positions us very well to offer our broad customer base multiple services from one group, and we are seeing better utilization of our divisions by our customers. And as I've mentioned more than once now, group-wide ERP to bring all our operations onto one software platform, this will speed up our reporting, our ability to report key metrics to the markets, and it will simplify our finance department and speed up our reporting and the accuracy of our stock management. We go to the next slide. Moving from one software system to another is never easy. Rolling out the new ERP system in our large Victoria operation significantly impacted on production earlier this year. and revenue is down as a result, and we are fully committed to catching up. We'll have most of the catch-up done by Christmas. And we sincerely hope that we'll catch up the remainder over the second half of the year. I don't think I've ever met a company that's rolled out a group-wide system that hasn't had a few headaches along the road, but we are well focused on getting this resolved, and as I've mentioned, the majority of the heavy lifting is now done. Logistics, as I've mentioned, better warehouses, better trucks, more efficient trucks, better software, improve performance and improve utilization. In the Environmental, division focus is on the profit-making elements of this division, and obviously, extracting full value out of our soon-to-be commissioned liquid waste treatment plant in New South Wales. Moving along to the outlook. As mentioned, revenue was down primarily as a result of the ERP rollout and the inability to process orders, but we are well committed to catching up these. These are shortfalls. October was a good month for us and broadly on target with their expectations for the business. November will be better than October. It shows us what the business is capable of doing. We continue to reinvest our free cash and our earnings back into the business to grow the scale of the business and to invest for efficiency and to improve our profit margins. Everyone on this call is acutely aware that our shares have been suspended. As Tim has mentioned, we don't agree with the auditor's opinion, and I won't go back into that in detail. And I do want to reassure everyone that the Board and I and our senior management is very focused and working very hard to ensure that we achieve the audit that we need at half year for our shares to come out of suspension. I think I'll hand the AGM back to our Chairman here.

Okay. Thank you, Simon. I'll now proceed to the business of the meeting as outlined in the Notice of Meeting. I propose to take the Notice of Meeting and the accompanying Explanatory Memorandum as read. The first item of business is to table and receive the Financial Statements, Directors' Report and Auditor's Report of the company for the year ended 30 June 2025. A copy of the Annual Report was lodged with ASX and it was sent to shareholders who requested it. The company's auditors are in attendance if shareholders wish to direct any questions to them. I'd like to invite questions -- shareholders to ask questions on the report. Hanna, do we have any questions?

Yes, we do have a question received, which has been addressed to the auditor. Given the recent suspension from the ASX under the listing rules, does the auditor have confidence that the CEO, CFO and senior management of DGL are capable of executing their legal responsibilities to the shareholders? If so, then do you foresee any issues for the management team in meeting their listing requirements over the coming year?

I'll refer this to our auditor, Ken Weldon. Ken, are you able to comment?

Can I just check that you can hear me, Tim?

We can.

Excellent. Thank you. I'd like to thank the shareholder for the question. I'll give some initial comments and address the question directly. Just in relation to questions of an auditor at an AGM under the Corporations Act, we can comment upon the conduct of the audit, the preparation and content of our Auditors' Report, the accounting policies adopted by the company in relation to the preparation of the financial statements and the independence of the audit in relation to this conduct. So firstly, I thank the shareholder for the question. The matters raised in that question relate to management's responsibilities and decisions, and in particular, that relate to events outside of FY '25 and by definition, outside of the date of the 17th of October, which is when our opinion was signed. It does not really relate to the scope of the audit for that period. So I think that would be an appropriate term for that back to you as Chair for you and all management to address and the shareholders can consider that response.

Okay. Thanks, Ken. Well, in relation to the listing requirements and our obligations, we know that the ASX suspension is a major concern for shareholders. As I touched on earlier, we've been working constructively with the ASX on our reinstatement of quotation and they've confirmed that a satisfactory audit at the half year rather than the more typical review process for the half year will be acceptable for lifting the suspension. Obviously, we also need to comply with the other listing rules at the time, which we don't expect to be an issue. In terms of timing, we think this will occur hopefully by the end of February, but if not in March next year. And we have looked at alternatives, but that's the shortest path that we found back to relisting on the ASX. Simon mentioned the half year audit is going to require additional work and internal preparation has already commenced for that. But we're confident we'll achieve a satisfactory audit opinion.

Chair, the next question is, did the auditors complaint to any authorities? And did that lead ASX to continue its suspension?

Not that DGL is aware of, but I'll ask our auditor if he'd like to add to that.

Yes. Thank you. So under the legislation, when I prepare a disclaimer of opinion and that in and of itself is something that has to be reported to ASIC and I did that on the day that I lodged the opinion. And as the consequence of that, the ongoing suspension of the business having lost its accounts as of 30 September was included in that response, but that is an entirely standard and normal report under the circumstances.

Thanks, Ken. I can add to that, that there are other matters that have been raised with DGL by ASX ASIC or the ATO in relation to that.

And thank you. So the next question is regarding the financial statements and the audit outcome and the dependency to reinstate ASX trading, if the company disagrees with the auditor's findings or opinion that maintains its position, why doesn't the Board consider a second opinion, specifically getting another reputable audit firm to redo the FY '25 audit?

We did look at redoing the FY '25 audit as a potential way of resolving this situation. Unfortunately, with the passing of time, that becomes reasonably impractical. And a good example is how do you go back 4 or 5 months and redo the stock take and the inventory when things have moved on. We're a continuous manufacturing business, and it's very, very hard to backtrack to what the financial situation was there. So after taking some pretty extensive advice and talking to the ASX, we've settled on a full audit for the half year as being the appropriate way to confirm the accounts and move forward from this situation.

Thank you. So there are no further questions on the financial report.

Thanks, Hanna. As there's no further questions on the financial report, we'll now move forward to the formal resolutions to be considered by the meeting. All resolutions will be put to a poll, which will be conducted once all of the resolutions have been put to this meeting. Resolution 1 relates to the adoption of the Remuneration Report for the year ended 30 June 2025 as found in the Annual Report. The Corporations Act requires the Remuneration Report to be up for adoption at the meeting. However, the vote on the resolution is advisory only and does not bind the directors or the company. The Board will, however, take the outcome of the vote into consideration when reviewing remuneration practices and policies in the future. I now put the resolution to shareholders to consider, and if thought fit, pass the following resolution as an ordinary resolution that the Remuneration Report of DGL which forms part of DGL's 2025 Annual Report for the financial year ended 30 June 2025 be adopted. Voting exclusions are contained in the Explanatory Memorandum accompanying the Notice of Meeting. And the proxies received for Resolution 1 are shown on the screen now, and I put the resolution to members. Are there any questions from shareholders online specifically in relation to this resolution?

No questions on this resolution.

Thank you, Hanna. I'll now proceed to the next item on the agenda. Resolution 2 relates to the election of Elizabeth Smith. I now put the resolution to shareholders to consider and if thought fit, to pass the following resolution, that Elizabeth Smith, the Director who was appointed by the Board following the 2024 Annual General Meeting, and being eligible for election, be and is hereby elected a Director of the company. Proxies received for Resolution 2 are shown on the screen now, and I put the resolution to members. I'd like to add that Liz is an experienced Non-Executive Director and an independent Director of DGL. Her career includes corporate finance partner roles at William Buck and Grant Thornton and audit experience at Ernst & Young. Liz is a Director of the Australian Red Cross and ASX-listed companies Pureprofile and Nuchev. Liz brings strong skills in terms of finance and accounting, strategy, M&A, risk and governance and extensive experience advising businesses. Are there any questions from shareholders online specifically in relation to this resolution?

Not specifically for this resolution, no.

Okay. Thanks, Hanna. Now that all resolutions have been put to the meeting, I now direct that a poll be held for each of the resolutions. As Chairman, I'll be voting all proxies received outlined -- as previously outlined in favor of each resolution. James Barry will conduct the poll as Returning Officer and voting is now open. Shareholders who have not lodged their proxy beforehand are encouraged to vote on the poll now. If a shareholder has already voted by proxy, you don't need to vote again unless you want to change your vote. Voting in the poll is entirely optional. For shareholders and visitors who are not voting, please click on skip poll. To cast your vote, please click on for, against or abstain for each of the two resolutions, then click submit. If any shareholder is having difficulty in voting online, please note this in the Q&A function and our team will endeavor to assist you. These are the two resolutions that have been put to the meeting that we're now conducting the poll for. Please now complete your voting. [Voting]

Okay. Thank you. I now declare the poll closed. And that concludes the formal business of today's Annual General Meeting. I declare the meeting formally closed at 2:38 p.m. The results of these resolutions will be released to the ASX shortly after the AGM concludes. I now open the opportunity for questions of a more general nature from shareholders. As mentioned in my opening remarks, we can only ask questions on the basis -- sorry, we can only answer questions on the basis of publicly available information. And I'd also, again, ask shareholders to type in questions separately. This way we can give all shareholders the opportunity to ask a question. Where a shareholder has submitted multiple questions, we may move to questions from other shareholders first to ensure everybody has an opportunity. Please enter your question by clicking on the Q&A button located at the bottom of your Zoom screen.

Hanna, do we have any questions?

Yes, there are a number of questions submitted. So where we've received multiple questions that are similar, I'll amalgamate them into the one question or I'll read out the broadest question, which will cover the others. Chair, the first question is, do you have confidence in the CEO? And if so, do you as Chair, believe you have the independence from the CEO, who is the majority shareholder to fulfill your role without undue influence?

Thank you for the question. Yes. I and the Board have confidence in the CEO. Simon Henry is the founder of DGL, and he's still the majority shareholder. We have a good working relationship with open communication, and there's no compromise on independence, and I note the company has a majority of independent directors. Key decisions that we make go through me to the Board for consideration and the CEO accepts guidance and oversight. And I'd also say that the Board dynamic is constructive and appropriate and the CEO respects the role of the Board. He respects my independence, and I know that he respects the other Directors' independence.

Thank you, Chair. The next question is, will you consider providing more regular market updates on a monthly or bimonthly basis?

Okay. We clearly recognize the need to keep shareholders fully informed and in particular, during this critical period. And we follow the ASX requirements carefully in terms of continuous disclosure of matters as they arise. But I think our current preference is that we update shareholders through market announcements as key matters arise rather than providing updates on a fixed schedule.

Thank you, Chair. Has DGL's aggressive acquisition strategy contributed to the current negative impact to share price? It appears that the company has tried to expand too quickly at the expense of shareholder value.

That's an interesting question, and it's probably got a double-sided answer, but I'll make a comment, Simon, and then perhaps you might like to enter that. But the acquisition strategy has contributed to DGL by giving DGL a wonderful set of business capabilities and assets that we can utilize to assist our 5,000 industrial -- 5,000-plus industrial customers across Australia and New Zealand. It's positioned the company very well in the industry, but it hasn't come without growing pain. And so we've referred to the need to refocus as we've done over the last 12 months on the full integration of these businesses. which we acknowledge that we haven't done well enough to date, and we're in the process of cleaning that up. And that includes consolidating systems, removing duplication of activity so that we can get our cost base down. There's a very intense focus on that. So we think it positions the company very well going forward, but it hasn't been without its difficulties, all the way through. Do you have anything you want to add, Simon?

Yes. Thank you, Tim, and thank the shareholder for the question. We had a very clear strategy that we set out in the IPO of raising funds and moving into what I saw as a very fragmented industry and buying the necessary components to build or amalgamate a substantial industrial business. So we have acquired the assets and the licenses and the geographical coverage to achieve that. We've stopped buying businesses and dramatically slowed down the rate. We're very selective now. And now we're in the boring tough phase of pushing those 30 businesses into one. completely clear minded about what we have to do. As I've mentioned, the majority of the heavy lifting is now done. We have invested millions and millions to bring these groups together onto one operating platform. We see the green shoots coming through now through this integration and what the business is capable of doing. So working with our senior managers and our Board, we are solely focused on completing the integration, the rollout of these systems to improve our margins and improve our profit in the near future.

Thank you, Simon. The next question is, can you provide more details on the fraud matter? Why was only 70% of the money recovered? And why wasn't the matter brought before the police?

Okay. Thank you for the question. 70% of the funds were recovered. I mean some of the funds had effectively been frittered away, they've gone. The individual gave us security over certain key assets that the individual had and we benefited from that in the recoveries that we made. The remaining amount we agreed to settle the position, move the individual on. But I would put in context that of the $430,000-odd that we recovered -- of the fraud, we recovered the vast majority of it. and the benefit of the customer relationships that we retained through that process was effectively in the millions of dollars. So in terms of the commercial outcome, we think we were very much on the right side of that, and it was a good outcome in the end. In terms of involving the police, we did take advice on that. There wasn't a requirement to inform the police, and we didn't feel that, that would assist the process in terms of either recovering funds or protecting shareholder value by moving customer relationships to others within the group.

Thank you, Chair. And the next question is, does DGL expect further property sales during the financial year.

Do you want me to answer that, Tim? Or are you good with it?

Go on, sure, happy for you to answer it, Simon.

Just in the operations. No, we're not planning to sell any more properties this financial year. As we've spoken about, we are pragmatic when it comes to property. We dispose of properties that we no longer need or that are not core or key to our operations. We continue to invest in new property. We are building a purpose-built production facility in Christchurch in New Zealand. It will come on stream after Christmas, and we'll bring three different businesses under one roof and extract significant savings. So once again, we're just completely pragmatic to the ownership of property of what we own, what we can rent, what we don't need and what we need to buy.

Thank you, Simon. The next question is, are you taking measures to retain the production and skilled workers in these times often overlooked and can cause an impact on operations when key lower order personnel are lost.

Simon, that might be one for you.

Hanna, can you please read the question once more?

Certainly. Are you taking measures to retain the production and skilled workers in these times? This is something that's often overlooked and can cause any impact on operations when key lower order personnel are lost.

It's a very valid question, Australia still enjoys low unemployment. So creating an inclusive, rewarding and respectful culture across DGL is key to retaining good employees across the full spectrum of skills. Alex Wing, our COO, has done considerable work on this across the group. And I think the broad culture that exists in DGL today is very positive. And by and large, we do not have any problem retaining and attracting talent to the business.

Thank you, Simon. And the next question is, is there any end in sight regarding the driver shortage.

I'll ask Elon Musk. No, driving trucks is hard work, our trucks carry chemicals, trucks go long distances. They're big heavy trucks. Once again, it's about creating the right culture in the business, having the right gear and attracting and retaining skilled and experienced drivers. Everyone faces the same challenges. Those who get it right will prosper, those who don't will wither.

Thank you, Simon. The next question is, the company has made many acquisitions, and it's making large-scale investments in new factories and equipment, including a new liquid waste treatment facility. It says it's increased its client base to include large international companies and an exporting business. This has all occurred during a period of declining profitability. The question is over what time frame does DGL expect an uplift in profitability, reflecting the scale of these acquisitions and these investments.

I'll start off on that, but Simon, feel free to add to it. I think we have gone through a very important transition over the last 12 months, and that period isn't over. It does involve the integration of businesses, the reduction of the costs and the better utilization of assets. We think we're through the worst of that, and we think we're going to start to see the benefits in the second half of this financial year. But in reality, they're probably going to emerge over a longer time frame than that. But there's substantial positives that we think we can drive from the acquisitions that have been made. Simon, will you like to add anything?

Thank you. So we have made the hard choices to invest profit and free cash back into the business to lay the foundations to build a bigger group. I do -- or I have reflected on the reality that if we were to flatline the business and not invest in these systems and the integration, our profit would be higher but our growth prospects in future years could be lower. So the Board and I and senior managers and collectively have agreed to invest back into the business to build on efficient operational platform. And this is obviously taking millions of dollars to establish but we are laying the foundations to build a really great industrial business, and I'm completely comfortable with the hard decisions that we are making.

Thanks, Simon. The next question is also addressed to Simon. Other than property and ERP, can you talk about the main investments the company was and is undertaking in the recent months to strengthen the company's market position and profitability?

Thank you, Hanna. I've talked about property investments in the industrial facility that we're building in Christchurch. And we've still got a significant investment in the completion of the liquid waste treatment plant in New South Wales. We have moved from dated warehouses to modern warehouses. These are multimillion dollar investments in equipment and infrastructure. We are investing in filling lines and automated filling lines and more efficient production equipment. So there is ongoing investment right across the business. We are disposing of inefficient trucks and trailing gear and investing in better equipment. So there is a whole raft of investment initiatives that will improve our group-wide profitability in the near and medium and long term.

Thanks, Simon. The next question is, considering the current suspension situation, does the Board see themselves as buyers of DGL stock once the suspension is lifted should the share price come under pressure?

Look, I don't know the circumstances and the situation, and it's probably not something we should comment on. But the Board has in the past been supportive of the DGL shares in terms of investing personal money in it. I'd expect that over time to continue, but I can't be specific about when and where and why. Thanks, Hanna.

Thanks, Chair. The next question is, when is the double up in overhead expected to be resolved? And is DGL expecting further reductions in headcount?

Do you want me to answer that, Tim?

Sure, Simon. Yes.

So the double up and as is worded in the question, we're past that peak. So we're now on the downside, and the savings are coming through. Alex and I and Gagan have a well-developed budget that we are tracking to achieve and our administration costs, we still see broad terms between sort of 30% and 40% savings from where we sit today. A lot of that will be achieved over the next 6 months, and I believe the balance will be achieved over the 6 months into the first half of FY '27. But we are past the peak and now the savings are coming through.

Thanks, Simon. The next question is, can you please comment on the reason for Frank Izzo's resignation?

I'll cover that, if you like. Look, after extensive consideration between the CEO and the Board and a lot of discussion, we came to the conclusion that the CFO wasn't the right person in the role at this time, and it's as simple as that, and we've made a change. I don't really want to go into more detail than that at this stage.

Thanks, Chair. We do have further questions, but these have already been addressed in the early discussion in the Chair's responses. So there are no further questions now.

Thank you, Hanna. Just giving an opportunity for any last questions to come in. But if there are no further questions, that concludes today's Annual General Meeting. I'd like to thank you all for your attendance and your ongoing support for DGL and we look forward to providing further updates soon.