Metro Performance Glass : MPP 1H22 Interim Report

Interim Financial Statements

FOR THE HALF YEAR ENDED 30 SEPTEMBER 2021

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METRO PERFORMANCE GLASS LIMITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2021

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Contents

Chair Letter

Chief Executive Officer's Review Consolidated Interim Financial Statements Consolidated Interim Statement of Comprehensive Income Consolidated Interim Statement of Financial Position Consolidated Interim Statement of Changes in Equity Consolidated Interim Statement of Cash Flows

Notes to the Consolidated Interim Financial Statements Company Directory

FRONT COVER IMAGE: Victoria University Glass Facade

INSIDE FRONT COVER IMAGE: Textured Glass Residential Door



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METRO PERFORMANCE GLASS LIMITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2021

Chair

Letter

onlyRecent events in Australia and New Zealand have reminded us, yet again, that the future is uncertain. It seems just a short time since our AGM, where we were hoping for a financial year increasingly free of the pandemic and were predicting a return to dividend payments,

useas our debt levels declined.

The situation changed very rapidly, and the company was confronted with a range of Covid-19-related restrictions and international supply chain disruptions for a significant portion of the first half of the 2022 financial year. Consequently, Metroglass has not achieved the profit and cash flow goals we had set out for the half-year period.

personalDuring the initial four months the business performed well, with solid sales demand

nd a strong future order book.

Our New Zealand business had diversified the weighting across its product mix and broadened the customer base in the Residential segment. The new revenues generated were partially offsetting

the impact of competitive pressures in the North Island. We continued to see sustained sales momentum in our Retrofit egment, and process improvements in the commercial glazing unit were reflected in our consistent project execution and encouraging growth in our forward book.

On 17 August Metroglass closed all four processing plants in New Zealand as the country moved to Alert Level 4 lockdown. Three of our plants were able to resume operations 14 days later. However,

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our largest facility, in Auckland, remained closed for a total of 35 days. The loss of sales revenue, limited distribution capability and reduced manufacturing capacity had a material impact on our results.

With last year's experience to draw on, the Metroglass team were able to react swiftly, focusing on the safety and wellbeing of our people, maintaining connections with our customers and preparing for the resumption of operations once alert levels allowed.

We were eligible for the first two rounds of the New Zealand Government's wage subsidy, receiving $2.2 million. As we had done in the previous lockdowns, we continued to pay our people in full. We took a number of other short-term steps to minimise the financial impact on the business including discussions with our landlords. We also ensured our banking syndicate were fully cognisant of the consequences of the lockdown period.

At Australian Glass Group (AGG), who has experienced an even more prolonged Covid-19 outbreak, all three processing plants have fortunately managed to remain operational. This has allowed the business to achieve steady sales revenues. It is clear, however, that the state-by-stateCovid-19 restrictions have caused a continuous series of disruptions on construction sites and to supply chains, and reduced labour availability. Difficulties with timely customer delivery and cost impacts have decreased AGG's profitability.

Despite this, AGG is continuing to achieve consistent growth in its double-glazing markets that are at the core of our strategy in Australia. The long-awaited National Construction Code changes supporting the adoption of double glazing are anticipated in

Chair Letter

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the 2022 and 2023 calendar years. We are well positioned with a strong service offering and product suite to benefit from the expected increase in demand.

For the first half of the 2022 financial year the Group had sales revenue of $116.9 million and achieved an EBIT1 of $3.0 million. This is our second year with Covid-19 disruptions. Metroglass had similar revenue in the prior comparable period, which also included an Alert Level 4 lockdown. However, the EBIT result was reduced by higher glass and freight costs, a lower wage subsidy contribution, and the prolonged Covid-19 disruptions in Australia. Price increases were implemented in both countries to reflect these changes in costs.

Our historic focus on applying our cash flow towards reducing debt placed Metroglass in a strong position to cope with the immediate impacts of the recent Covid-19 outbreaks.

We agreed with the banks to extend the timing of covenant relief in recognition of the short- term impacts of Covid-19. As at 30 September 2021 net debt was $47.8 million, and at a similar level to 31 March 2021.

As a result of the impact on Metroglass' financials, the board took the prudent decision to not consider a dividend alongside the 2022 interim results. We understand that this is disappointing for shareholders. It remains the board's intention to return to a conservative and sustainable dividend policy as soon as business conditions allow.

It is clear that the level of uncertainty has greatly increased since the emergence of the Delta strain of Covid-19 in New Zealand and Australia. At the time of writing, changes to the manner in which the pandemic is to be managed in New Zealand are being announced. Also, various Australian states have strongly mandated vaccines for all people in the construction industry. As vaccination levels increase in both New Zealand and Australia, we expect this will create a more certain business environment for Metroglass.

Residential dwelling consents in New Zealand and approvals in Australia continue to support a material pipeline of work despite

1. Earnings before interest, tax and before significant items

Peter Griffiths

CHAIR

the pandemic. As we saw from last year's experience, customer demand remained strong, and the construction sector was able to rebound promptly. However, supply chain difficulties and the consequent increased costs will be with us for some time to come.

The group continues to closely monitor changes in Covid-19 restrictions in both countries while retaining our commitment to deliver on our strategic objectives:

1. To maintain our leadership position and refine our sales mix to take advantage of opportunities in an increasingly competitive New Zealand market
2. To grow and improve the profitability of our Australian business and benefit from increasing demand for double glazing
3. To ensure our balance sheet remains strong and sufficient to cope with future risks and opportunities.

On behalf of the board, I would like to thank Metroglass' employees for their dedication and commitment during a very challenging period.

Peter Griffiths

CHAIR

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