DGL Group faces continued suspension after audit disclaimer

DGL Group Limited announced a revised statutory net loss after tax of ($27.9 million) for FY25, an increase from the previously disclosed ($24.6 million), primarily due to an additional $3.2 million goodwill impairment. Despite this, the company reported underlying EBITDA of $52.1 million and positive operating cash flow of $44.7 million. PKF Melbourne Audit & Assurance issued a disclaimer of opinion on DGL's FY25 financial statements, citing difficulties in confirming stocktake variances at two sites during a new ERP system implementation and concerns over potential management override of controls due to weaknesses in internal control and corporate governance processes.

The ASX has suspended DGL's securities from quotation, a status that will persist until the company demonstrates compliance with Listing Rules. DGL attributed the stocktake variances to production shrinkage, uncaptured bulk liquid transfers, and unprocessed open work orders. Management proactively recorded a $400,000 write-down against inventory to mitigate overstatement risk.

DGL has secured a waiver from its bank syndicate, confirming that the audit disclaimer and ASX suspension do not constitute an Event of Default under its Facility Agreement. The company is implementing enhanced inventory management systems, processes, and comprehensive control enhancements, along with a group-wide ERP system, to strengthen its financial controls and reporting capabilities. Proceeds from the sale of three non-strategic properties, totaling approximately $25.7 million, are expected to reduce net debt by 24% before December 31, 2025.