Let's turn to slide five. I want to take a moment to talk about our share price. We're very concerned about where our share price sits today. I want investors in DGL Group Ltd to know that we are willing to make whatever tough decisions we have to make across the business, to do everything within our power to restore shareholders' value. That is central to all of our decisions now. Let's go through the financial performance. Our revenue was up on last year by 4%. Our cash conversion at 110% is up on last year. Our underlying EBITDA is down on last year at 52.1%. Our underlying net profit after tax at 9.4% is down on last year. We have reported a statutory net profit after tax loss of AUD 24.6 million. I'll go into more details on this further through the pack. Next slide, please.
The key drivers in FY 2025: strong performance in our chemical formulation businesses, particularly in crop protection. We've increased the scale of our production. We've broadened the range of products we can produce and formulate, and the customers and the geographical regions that we cover. We've expanded capacity in our chemical warehousing and transport fleet. We've received a positive contribution from the acquisitions that we made throughout FY 2025. We're seeing an increased contribution from our global logistics operations. We look at the negative impacts in FY 2025, particularly our lead business. There's been a substantial increase in competition for used lead-acid batteries, and this has had a substantial negative effect on our results. We have taken measures to stem these losses. Some of our key mining customers had significantly lower demand, and this has affected us. We're seeing increased competition throughout our AdBlue business across Australia.
We're also migrating from inefficient warehouses to more modern, efficient warehouses. This involves substantial cost. We have to pay the rent of the old warehouse and the new warehouse as we move. We've invested millions in rolling out a group-wide ERP system, replacing some 30 existing systems that have come into the business through the acquisitions that we have made since listing. We have written down goodwill, particularly in our lead business, and we've also written down the value of our plant and equipment relating to those elements of the businesses that aren't performing. Next slide, please. The actions we are taking to address the performance. We're closing our lead operation in Victoria, and we will sell the site. We're investing in those elements of the business and those divisions in the business that are performing well, particularly chemical formulation.
We are close to completing the development of our large liquid waste treatment plant in New South Wales, and we hope that it'll come on stream early in calendar 2026. We're investing in more modern, efficient warehousing sites and investing in a more modern and efficient transport fleet. We have managed to reduce our headcount across the business by 4%. As I've mentioned, we are investing to consolidate our operating systems into one group-wide ERP system and expect to see significant benefits from this rollout. We're on track to complete this rollout in calendar 2025. Let's turn to the next slide. Health and safety, something that's dear to my heart. DGL is a chemical company. We move in excess of a million tons a year of chemicals through our network of assets, 1,000 staff, 5,000 customers. We have 85 sites.
Health and safety is at the forefront of everything we do. We are proud of our safety record. We have a well-developed and well-structured health and safety department. We've invested in new systems to improve our training and efficiency. We will never take our eye off being safe operators. Let's have a look at the next slide. DGL has three primary divisions. The first one is chemical manufacturing. We provide a service to our customers right through from the procurement, often abroad, of raw materials, transportation, customs, formulation, packaging, production of labels, warehousing, and distribution to a wide range of industries across Australia and New Zealand and to a wide range of customers. We're also increasing our exports of materials that we've formulated into Australia globally now. Logistics, primarily focused on the safe storage of chemicals and the transportation of chemicals. We have significantly increased our storage capacity.
These are licensed premises and often purpose-built for the storage of chemicals. Environmental services, this division is primarily focused on the treatment of industrial liquid waste. As I've mentioned, we're developing a large treatment facility in New South Wales, and we're on target to come on stream early calendar 2026, and we'll be in a position to treat in excess of 50,000 tons a year of liquid waste. Let's have a look at the next slide. Over the past 25 years, we've developed a network of licensed sites stretching from Darwin in the north to Christchurch in the south in New Zealand. We operate from 85 sites. That said, we are consolidating out of some of our smaller sites into larger, more efficient sites. Let's have a look at the next slide. Right, the next slide, please.
I will pass the pack to our CFO, Frank Izzo, here to take you through the financial slides.
Thanks, Simon, and good morning, everyone. I'll start with slide 13 of the presentation, which shows DGL's financial performance. Both revenues and gross margins for FY 2025 improved year on year, demonstrating resilience despite the challenges we've faced during the year. Strong demand in the crop protection segment drove the revenue improvement. This was offset by lower volumes in our ULAB businesses, normalizing market prices for AdBlue products, and lower activity in the mining sector. This cropping lead demand also underpinned the gross margin increase, along with an uplift from two completed acquisitions. Turning to slide 14, you can see our underlying EBITDA for FY 2025 was down year on year, again driven by the challenges in the ULAB market and reduced market pricing for AdBlue products. Underlying end was impacted by increased operating costs during the year.
Cost reduction initiatives implemented in the second half partly offset these challenges, and I'll touch on our cost drivers in more detail in the following slides. Turning to slide 15, which is the financial overview for FY 2025 compared to last year. As I touched on in the previous slides, our revenues and gross margins have improved, finishing AUD 16.4 million and AUD 3.5 million higher than last year, respectively. Higher headcount, occupancy costs, and inflationary pressures led to our expenses being 10% higher than last year. Our underlying net profit after tax for FY 2025 was AUD 3.5 million, which was down AUD 12.2 million versus the same period last year. Our statutory net loss after tax for the year was AUD 24.6 million, which includes AUD 28 million of non-recurring items during the year.
The major non-cash, non-recurring items during the year included an impairment of goodwill in the environmental services division of AUD 13.9 million and AUD 12.6 million in write-downs of property, plant, and equipment, which are mostly related to the closure and proposed sale of our non-core Labyrinth ULAB recycling site. Over to slide 16, which shows our divisional performance. This slide summarizes the key themes that have impacted our three divisions during FY 2025. Manufacturing earnings have been stable, supported by improved cropping conditions, increased capacity, and acquisitions. Earnings for our logistics division have benefited from increased fleet and warehouse capacity, and our environmental division has been impacted by the aforementioned ULAB market challenges. During the year, we right-sized the cost base of both of our ULAB recycling facilities, and in addition, we've ceased operating the Labyrinth site and now hold it as an asset for sale.
Turning to slide 17, here we show the year-on-year movement in operating expenses. Our people costs increased AUD 12.5 million year on year, which relates to acquired headcount and increased headcount in the Parramatta Shared Services office. Our property costs increased AUD 3.3 million year on year through the expansion of our physical footprint, as well as inflationary pressures on property outgoings across our sites. During the second half, we right-sized the cost base of the lead business through headcount reductions. We also ceased operations of non-core battery recycling facility at Labyrinth. The full year impact of these initiatives will be realized in FY 2025. We continue to focus on costs, with particular focus on site consolidations and efficiency improvements. Turning to slide 18, our balance sheet. On this slide, we note our balance sheet strength with significant net tangible assets of AUD 204 million that provide a solid platform for future growth.
Increases in our assets held for sale balance include the Labyrinth battery recycling facility and other non-core assets. Intangibles have reduced primarily due to the goodwill impairment recognized in the environmental division, and we've reduced our net debt by AUD 19 million during the year. As of 30 June 2025, DGL's net debt balance was AUD 94.6 million. Turning to slide 19, we provide some further insight into our capital allocation and efficiency. Our net working capital balance as of 30 June 2025 was lower year on year, driven by the stronger cropping season, which normalized our working capital phasing. We also improved our working capital management. Our net operating assets at FY 2025 year-end were AUD 465 million. AUD 153 million of this balance relates to DGL's strategic land and building holdings, which have hard-to-acquire licenses that provide high barriers to entry.
Finally, turning to slide 20, I'd like to talk to our cash flow. Our operating cash flow for the year was AUD 44.7 million, and our cash flow conversion remained high at 110%. Investing cash outflows for the year were AUD 6.4 million, which relate to CapEx items offset by proceeds from the disposal of non-core properties in New Zealand. Finally, our financing cash outflows were AUD 42 million, which relate to our significant debt reduction and lease repayments. With that, I'll hand back over to Simon.
Thanks very much, Frank. Slide 21. Actually, slide 22. DGL's business strategy. DGL is a company that's been built to service the chemical industry, primarily throughout Australia and New Zealand, but increasingly more globally as well now. We work in highly regulated markets. The regulations and licenses and permits needed to manage and formulate and treat chemicals are increasingly difficult to obtain and actually increasingly difficult to comply with. On one hand, this makes life tough for us, but on the other hand, it's a fantastic barrier to entry. DGL is a substantial and well-established business, and we will continue to invest and focus on what we do well, which is the safe management of chemicals. Let's turn to the next slide. We will continue to invest for growth. We will invest in plant and equipment to increase our manufacturing capacity and capabilities.
We will invest in our plants to improve automation and reduce cost. We will invest in our road fleet, pulling two trailers where we might have pulled one in the past to increase efficiency. We look at our property portfolio. We will continue to rationalize our own property portfolio. We will sell those assets that we deem non-core, and we will continue to invest into assets that we deem necessary to own. We don't necessarily have to own all the sites we work from, but we do like to own the sites that are specialized. We don't need to own a generic warehouse. We're currently developing a chemical manufacturing facility in Christchurch and expanding our capacity and building a new site in Queensland. We have invested millions of dollars in fine-tuning and streamlining our operating systems.
We've invested substantially in our logistics software, which will make our operations more efficient and will reduce our operating costs and provide our customers with a better level of service. As we've mentioned, we're investing and rolling out a group-wide ERP system to replace some 30 underlying existing systems. We're on target to complete this work by the end of calendar 2025. Let's have a look at the next slide. Alex, I'll hand this over to you.
Thank you, Simon. Yes, we're proud of our progress made in FY 2025 to unify our systems. DGL has built a supportive and integrated network to align with the integrated service offering that we deliver to our customers. This network links our divisions and integrated services together, allowing ease of information flow and improved communication. We have four key software systems in our network: HR and payroll are software systems. These improve our compliance and also our reporting capability are expected to be completed in the first half of FY 2026. The next is our health and safety system. We increased or we moved over to the new system through FY 2025, and this has provided improved training, reporting, and visibility across our operations. As Simon mentioned, we've progressed well with our integrated ERP system. This is one system for all finance for the group, as well as all manufacturing sites.
This will improve our reporting timeframes, reduce our administration expenses, and certainly improve our insights for management across the business, allowing for better coordination of our national services for our customers. Lastly, as Simon mentioned, our one logistics management system. This is across all of our ANZ warehousing sites so far, with this network to be integrated across all of our warehousing and transport logistics services in the first half of FY 2026, a key market differentiator for us. Please turn to slide 25, please. One highlight through FY 2025 is we have increased both full and partial container imports. This growth has been through customer demand and DGL supporting our customers with efficient and timely international supply. DGL's global services pair well with our network of assets across Australia and New Zealand through the importing of raw materials or consumables for our customers, but also supporting the export of finished goods.
Recent geopolitical challenges have allowed DGL to support customers to supply into the U.S. markets, achieving customer satisfaction and continuity of supply, as well as reducing supply chain disruption and supporting growth. DGL expects these export channels to continue through FY 2026. Back to you, Simon.
Thank you very much, Alex. Let's look at the outlook. Yes, on slide 27. We're currently enjoying strong demand for our services and products throughout Australia and New Zealand and globally. We've had some challenges, and we've faced them head-on. We will close those elements of the businesses that aren't performing and focus on those bits that are. We have strong demand for our transport and warehousing network, and as I've mentioned, we continue to invest and expand capacity. We look at the outlook for FY 2026. We expect significantly improved results in FY 2026 as a result of the hard decisions we've made in FY 2025. We've been running two administration networks across the business as we build our shared services, our hub in Parramatta, but this is nearly completed now, so there will be a substantial reduction in our administration expenses.
The migration from inefficient warehouses to modern warehouses or more efficient warehouses is almost complete. We're expecting these business decisions that we have made to start showing results in FY 2026. We are well focused on integrating or completing the integration of the businesses we've bought since listing. It's a hard job. It's harder than I expected. There are various challenges with licenses and taxation, but we are well focused on achieving this consolidation over the coming months. Let's look at the next slide. Investment highlights. DGL Group Ltd is a well-established company now operating throughout Australia and New Zealand, providing services in a highly regulated industry with significant barriers to entry. We're able to offer our customers a unique service offering, multiple disciplines and services on one platform. We're the only company that has this capability operating in Australia and New Zealand.
We're well diversified across various industries and geographical regions. We don't carry any one singular exposure as such. We are all working hard to complete the integration of the businesses we've bought since our IPO in 2021. We have substantial assets and licenses and capabilities and IP that will support strong growth for years to come. I'd like to open up the presentation to questions, please.
Thank you, Simon. I will now read out the questions that have been submitted. We've received a few questions and will endeavor to answer them all. If there are any missed, we will address them by email. The first question is, can you provide some detail on the non-core and non-strategic properties currently being sold?
We haven't actually released the subject property details to the market at this time, so I'm reluctant to do it on this call. That said, we are completely committed to disposing of assets that are no longer core, and we will continue to reinvest in assets that we deem necessary for the future growth of the business.
Thanks, Simon. The second question is, can you provide an update on the new liquid waste treatment facility, including completion status, approvals, timing on first orders, and target clients?
We already treat significant quantities of liquid waste in New South Wales. The new plant is a substantially bigger plant than our existing plant. There is a complex, multi-tiered process of different licenses and permits needed to operate the plant. It's not a binary event where you have one permit and you can operate. We have most of the licenses in place, and we expect to have the remaining licenses in place by Christmas and construction completed, and therefore be able to start operating the new plant in the new year.
Thanks, Simon. The next question is, what is the nature of the import and export services in countries where DGL has no industrial base?
We produce specialized chemicals or formulate specialized chemicals and manufacture chemicals in Australia that are in demand globally. We're producing chemicals in Australia and simply exporting them to our customers abroad. We think, I think it was 20-odd countries that we export to now. It's a feather in our cap that we can be competitive in Australia and export to the U.S. and Asia and into Europe with these highly regulated, quite complex chemical formulations. We like the business when we will be investing in this element of our operations to expand our international sales.
Thank you, Simon. The next question is, with the closure of the Labyrinth lead-acid battery recycling facility and two other such facilities remaining, does DGL intend to retain them or exit this line of business entirely?
No, we only have two lead recycling facilities, one in Victoria and one in New South Wales. We're planning to close the Victorian operation, but we plan to retain the New South Wales operation. The New South Wales operation is integrated into our liquid waste treatment facility, and without getting into the complex chemistry, we actually need to recycle lead to obtain some of the raw materials that we use for treating other waste streams.
Thank you, Simon. The next question is, are we looking at reduced capital investment in FY 2026?
DGL remains well capitalized and enjoys good relations with our bank, and as I've mentioned, we are disposing of non-core property assets, so we have available funds, and we will continue to invest in our business to support organic growth and also to carry out M&A activity where we see it being of benefit to our business.
Thank you, Simon. The next question is, what level of CapEx is expected in FY 2026, and how much relates to growth versus maintenance or replacement?
I'm going to answer that at a high level because I'm not able to release figures that aren't commonly known to the market. At a high level, our repairs and maintenance equal our depreciation on plant and equipment, but as I've said in the previous question, we remain well capitalized to invest into capital projects or CapEx where we deem them as strategic and where they'll provide strong growth for the group.
Thank you, Simon. The next question is, is DGL confident in the AdBlue business in the medium to long term? Can it see competition easing?
There will always be competition. We are a substantial player in the business. By combining our AdBlue production with some of our other chemical formulation sites, we're able to reduce our unit cost production probably below that of our competitors and remain a very, very competitive operation. No, I don't fear the competition. I think DGL is well positioned to thrive in that industry.
Thanks, Simon. The next question is, how much are the cost savings expected in operating costs in FY 2026 as a result of shared services and system consolidation?
Once again, we haven't released a number, so I'm not going to quote a number here. I'm willing to say that they are substantial, and it's been a really significant project bringing all our services together in Parramatta, moving our head office from Auckland to Parramatta, and obviously enjoying the benefits of the software that I've referred to being rolled out across the group. The savings are substantial.
Thanks, Simon. The next question is, has there been any progress in securing contracts with top-tier multinational clients at higher margins?
Not comfortable to go into granular detail about customer contracts on this call, but in the last couple of years, we have successfully become accredited suppliers and manufacturers to some of the world's biggest chemical companies. We're their Australian agent, you might say, and this has been a sort of a significant milestone in DGL's development. We are increasingly focusing on national accounts. One of the advantages of running a network of sites across Australia and New Zealand is that we are in the unique position to formulate chemicals for our customers close to their customers, which negates the need for them to ship them around.
Thank you, Simon. The next question is, given companies such as DHL, FedEx, and Mainfreight already provide domestic logistics services, what is the advantage for DGL in maintaining its own fleet, and what are the main challenges DGL faces competing with these operations?
Mainfreight is a wonderful company, and we do compete with Mainfreight in chemical logistics. Mainfreight really is a pick and pack operation. Chemicals come into their warehouses, then they distribute them. That's not quite what we do. We handle the chemicals. We pump them from one tank to the next. We bulk them up. We downpack them. We formulate them. We're quite different. We don't see ourselves as a vanilla logistics business at all. We see the logistics as being the glue in the center of our business for handling chemicals. We also handle chemicals that other companies aren't prepared to handle.
Thank you, Simon. The next question is, do you see FY 2026 profitability reverting to FY 2024 levels or better?
We're not giving a forecast number, a range. We are completely comfortable, as it stands today, that our financial results for FY 2026 will be substantially better than FY 2025.
Thank you, Simon. The next question is, you mentioned growth has been impacted by the slower Australian economy. Is DGL still winning market share from competitors, and are the incentives for business development and sales staff appropriately structured?
It's true that Australia and New Zealand have had subdued economic conditions in that post-COVID recession or post-COVID boom. Yes, we are winning market share. We are seeing competitors leave the business simply because the compliancy is too great. Margins are always under pressure. It's our job to run an efficient company, managing sales staff to sell chemicals, or we don't actually sell chemicals. We formulate chemicals. The best way to market your services and products is to provide a good service at a good price. I'm comfortable that the remuneration structure we have across the businesses is fit for purpose.
Thank you, Simon. The next question is, how much is the export-import contributing to profitability, and how does this compare to previous years?
We don't declare a breakdown of the profit margin between import and export, but our exports are growing at a rapid rate, and it's a major area of focus for us.
Thank you, Simon. The next question is, is DGL considering divesting its lead business, given the limited competitive advantage and increasing market pressures on profitability?
If I understand the question correctly, we are closing our Victoria lead-acid battery recycling business, and it's an asset being held for sale. We are divesting of that part of our operation. We're not planning on divesting any other elements of our operations.
Thank you, Simon. The next question is, with an impact of AUD 3.5 million on revenue exceeding AUD 400 million, what is the maximum level of cost reductions realistically achievable overall, and how much of this could be achieved in FY 2026?
Yeah, so once again, we're not giving guidance for FY 2026, but as I've said, the closure of our Labyrinth plant, the migration from inefficient warehouses to more modern warehouses, the fine-tuning and establishment of our shared services hub in Parramatta, and the benefits we expect to reap from the rollout of a unified operating system, the contribution from those in FY 2026 will be substantial. We're not giving a number.
Thanks, Simon. The next question is, given the share price is at an all-time low and free cash flow has increased, does management have confidence in pursuing an on-market share buyback?
It's a subject that comes up regularly in our board discussions. The consensus in the board at this time is that we will continue to invest into the business and grow the business. We do not rule out buying shares back, but to answer the question clearly, at this time we have focused on growth.
Thanks, Simon. The next question is, across the industries DGL services with chemical solutions, which sector currently generates the most revenue, and which sector presents the general growth opportunity, and what steps is DGL taking to increase market share in these areas?
Without having the technical details in front of me, I believe that crop protection is our biggest single industry that we focus on, and we are investing substantially in it to increase our capacity, our production capacity. We're exporting crop protection products now. We will continue to expand our capacity, our automation to reduce costs. We will expand to further broaden the range of products that we can produce, and we will expand our range of services and products to cover an increasing customer base. Crop protection remains a very key element of DGL's business and operations.
Thank you, Simon. The next question is, what is the percentage of revenue generated coming from contract sales versus one-time orders?
We don't have a split on that. We have 5,000 + customers, and we have all nature of commercial agreements with those customers, from long-term contracts to spot contracts to everything in between, but we don't have a split of that.
Thanks, Simon. The next question is, is DGL considering how best to structure incentives for site managers to drive organic sales growth while reducing unnecessary spending?
I'll pass that question to Alex Wing, our Chief Operating Officer, as he runs the operations.
Thanks, Simon. As Simon mentioned earlier, we are comfortable with how we remunerate and reward our staff across the board. We aren't looking for incentive schemes for the staff at the minute, but it has been something that's been talked about and discussed across the board. We do think that the way that we manage both visibility of our organic growth as well as limit our wasteful spending at sites, we do have clear visibility there. A key element that we're focusing on is not only through rewarding staff, but also through applying the right training and support for them to do their roles out at sites. There's a key focus from my side on both leadership as well as competency across our operations teams. We've certainly seen great progress in their work out at the site level across FY 2025.
I'm expecting that to very much continue through FY 2026 and beyond.
Thanks, Alex. The next question is, where does DGL see the greatest potential for margin expansion over the medium to long term?
There are two ways of increasing your margin. One is to reduce your costs, and that's something we're very focused on. I've talked about it: administration, efficiency, automation, and obviously to provide quality chemicals to our customers. We're focused on both of these elements to improve our margins.
Thanks, Simon. The next question is, what timeframe do you foresee to return share price to above IPO levels?
I'm a brave man, but I'm not willing to predict or forecast future share prices. I want everyone to understand, as I said at the outset of this presentation, that we acknowledge that the share price is a significant concern, and we're prepared to do whatever it takes to recover shareholders' value as quickly as we can do it.
Thanks, Simon. The next question is, following on from the buyback question, how does the board assess value creation from investing in growth versus buybacks, and would further asset sales be considered to fund future buybacks?
We have no plans at this time to sell assets and buy shares back. I want to state very clearly here that the Board is focused on growing DGL Group Ltd. We're focused on investing our free cash flow back into the business to grow the scale, to grow our geographical reach and our capacity and our licensed network. That said, I want to state this clearly, we do not rule out buying shares back, but at this time, we are focused on building out the company and investing for growth.
Thanks, Simon. One final question before we wrap up. Have you ceased further acquisitions until you have current costs under control?
No, we will continue to acquire businesses that we think bring significant strategic value to DGL. We have most certainly slowed the rate of acquisition from where we were post-IPO, but no, we will continue to buy businesses, and we are highly selective in what we buy.
Thanks, Simon. That brings us to an end of the Q&A session. I'll hand this back to you, Simon.
Thank you very much. I'd like to thank everyone for attending the presentation, and I look forward to the opportunity of speaking with you all in our mid-year results. Thank you.