MPG – 2020 Interim Results Release
NZX, ASX and Media Release 25 November 2019
Traction made in Australia and New Zealand,
in difficult market conditions
Summary of the unaudited results for the six months ended 30 September 2019 (1H20)
1
$m New Zealand Australia Group
1H20 1H19 1H20 1H19 1H20 1H19
Revenue 109.6 113.0 27.1 27.5 136.7 140.5
Segmental EBIT pre NZ IFRS 16
2
16.3 17.0 (2.2) (1.3)
Segmental EBIT 17.2 (2.3)
EBIT pre NZ IFRS 16 13.6 15.5
EBIT 14.5
NPAT pre NZ IFRS 16 8.3 9.1
NPAT 7.7
Group revenue of $136.7m (‐3%), EBIT of $14.5m (‐6%) and NPAT of $7.7m (‐15%), impacted by variable activity
and heightened competition in the Upper North Island and Victoria
Continued improvement and stability in customer service levels across New Zealand and Australia
Sydney based operations to
be consolidated and focused on supplying double glazing products, improving
Australian profitability going forward
Reported net debt reduced to $73.4m (1.9x net debt to EBITDA), down $21.9m from 12 months ago
Metro Performance Glass (NZX.MPG, ASX.MPP, Metroglass) today released interim results for the 2020 financial year with group
performance
slightly behind the same period last year. This was principally due to variable customer demand levels and
increased competition in the upper North Island of NZ and Victoria, Australia.
Group revenue for the six months to 30 September 2019 (1H20) of $136.7m was 3% below the prior comparable period (1H19).
New Zealand revenue declined 3% to $109.6m while Australian revenue in NZ dollars fell 1% to $27.1m. Including the impacts
from accounting standard changes
2
, Group earnings before interest and tax (EBIT) for the half year was $14.5m, down from
$15.5m in 1H19 and net profit after tax (NPAT) in 1H20 was $7.7m, down from $9.1m in 1H19.
Net debt has declined by $21.9m year on year to $73.4m, supported by a $5.3m reduction of
working capital. Over the past six
months net debt reduced by $10.0m.
New Zealand performance
Metroglass is operating in an increasingly competitive market, with variable levels of construction activity across the country.
In the first half of the year, New Zealand revenue declined 3% to $109.6m, impacted by softness in
the Auckland residential
window fabricator and merchant segments in particular. Retrofit sales were marginally below last year, and commercial glazing
revenue declined 6% to $22.8m. Pleasingly profitability has improved in the South Island in a very challenging market, following
a restructure to better align with lower activity levels.
In New Zealand,
including the impacts from accounting standard changes, EBIT rose 2% with lower revenue offset by improved
margins. Gross profit increased from 51.0% to 52.8% following prior price increases and a higher value product mix. Metroglass
1
All prior period comparisons are to the half year ended 30 September 2018 (1H19) unless otherwise stated.
2
The NZ IFRS 16 lease accounting standard was adopted in 1H20 with no adjustments made to prior years. Financial reporting impacts from these
changes are detailed in note 9 to the financial statements.
2
New Zealand operations delivered improved customer experiences and operational performance through sustained continuous
improvement initiatives.
Metroglass CEO Simon Mander said “Our commitment to delivering the best customer service in our market enabled us to
strengthen our relationships with key customers, and further differentiate our offering. This approach will continue to be
critical
given the highly competitive markets we operate in.”
Australian performance
In Australia we have been implementing a state‐by‐state plan to improve Australian Glass Group’s (AGG) operational and
financial performance. In the first half of the year, the business made significant progress on many fronts and is now
receiving
increasingly positive feedback from customers.
AGG’s revenue grew 1% in Australian dollar terms in 1H20 versus the prior comparable six‐month period, including 3% growth
in the key double‐glazing segment. Including the impacts from accounting standard changes, AGG’s EBIT loss increased from
$1.3m in 1H19 to $2.3m in 1H20
on the back of adverse foreign exchange and pricing movements in a competitive market.
“We have had a clear plan and milestones in place for AGG, and pleasingly the business has continued to build on the operational
improvements seen in the latter stages of FY19. Our customers, new and returning,
have reacted positively” said Mr. Mander.
New South Wales (NSW) restructure
AGG’s Victorian and Tasmanian operations are profitable, and the NSW business has significantly improved its operational
performance and customer service. In the last 6 months double glazing sales in NSW grew by 19%, however this was offset by
declines in
margins and volumes of other processed glass.
Despite our best efforts NSW has continued to be a loss‐making business. While we continue to see long term value and
opportunity in the NSW market as the penetration of double‐glazing increases, this will take time. Going forward, Sydney
operations will
be consolidated and focused on supplying double glazing to window manufacturers, with local production of
non‐window or processed glass being discontinued.
Mr. Mander said “We remain cognisant of the deteriorating market conditions across Australia, and the challenges that AGG
has continued to face. This restructure will regrettably impact a significant
number of our Sydney based staff and our priority
is to support those affected.
“We believe these changes will provide an improved competitive position and financial performance over the medium term.”
In FY20, the restructure will have a one‐off cash impact of $2.5m (of which $1.1m is already provided
for) and an estimated
asset write‐off totalling $3.5m. The transition is planned to be completed by the end of March 2020.
Market conditions and outlook
Elevated levels of residential and non‐residential construction in New Zealand are expected to continue in the near term,
however we expect further softness in
certain regional markets in the near term, including in Auckland.
In south east Australia leading indicators point to softening in Australian residential construction activity in the near term,
impacting multi‐residential approvals in particular. AGG is primarily involved in the new detached housing and alterations and
additions segments which have
been less impacted to date but are also expected to decline.
Mr. Mander said “Market competition has intensified in both countries with several glass processors having introduced new
capacity to the market in the last 12‐18 months. We are confident that Metroglass is building its resilience by focusing on
production
reliability, pricing and cost management and by creating stronger relationships with key channel participants.”
For the 12 months to 31 March 2020, the Group now anticipates:
Group EBIT in the range of $21m ‐ $24m, excluding:
o The impact of the change to IFRS 16 which we expect to increase
reported EBIT by ~$1.7m
o A net abnormal charge of approximately $5m related to the restructure of NSW (asset write‐off of
$3.5m and cash costs of $2.5m, less $1.1m already provided for)
Reduction in net debt of circa. $15m (inclusive of impacts from the restructuring of NSW)
/ends
3
HALF YEAR RESULTS WEBCAST AND CONFERENCE CALL:
Metro Performance Glass Limited will release its results for the 6 months ended 30 September 2019 at 8:30am (NZDT) on
Monday, 25 November 2019, followed by a briefing for investors, analysts and media at 10am.
You can listen to the webcast via the
company’s website: http://www.metroglass.co.nz/investor‐centre or directly:
https://globalmeet.webcasts.com/starthere.jsp?ei=1270342&tp_key=3693305f3d. Please allow extra time prior to the webcast
to visit the site and download streaming media software if required. An online archive of the event will be available after 2pm
on the day.
To join the conference call, participants will need to dial in to one of the numbers below at least 5 minutes prior to the scheduled
call
time and identify yourself to the operator. When prompted, please quote the conference code: 8210337.
New Zealand Toll Free 0800 423 970 International +64 (0)9 9133 622
Australia Toll Free 1800 573 793 United states/ Canada 800‐458‐4121
Australia (Melbourne) +61 (0)3 8317 0932 United Kingdom Toll Free 0800 358 6377
Australia (Sydney) +61 (0)2 9193 3706
For further information please contact:
Andrew Paterson
, Investor Relations
(+64) 027 403 4323
andrew.paterson@metroglass.co.nz
---
INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2019
Chair and CEO review 2
Interim report: Management review 7
Independent review report 12
Statement of comprehensive income 14
Statement of financial position 15
Statement of change in equity 17
Statement of cash flows 20
Notes to the financial statements 21
Company directory 37
INTERIM FINANCIAL STATEMENTS 2019
1
Metro Performance Glass
is at the forefront of
providing high-performance
glass and industry-leading
service to Australasian
residential and commercial
construction markets. We
have an extensive network
of seven Australasian
processing plants and twelve
distribution or retail sites
across New Zealand.
We are Australasia’s leading
manufacturer and installer
of double-glazed windows
for both new residential
and retrofit markets. We
also process annealed,
toughened, laminated,
painted and digitally-
printed glass products
for applications ranging
from mirrors, showers,
balustrades and kitchen
splashbacks to commercial
façades. Living by our
purpose of making lives
brighter every day.
METRO PERFORMANCE GLASS LIMITED
INTERIM FINANCIAL STATEMENTS 2019
2
Traction made in Australia
and New Zealand, in
difficult market conditions
The Metroglass Group is empowered by
a team of close to 1,200 passionate people,
driven by our purpose of Making Lives
Brighter Every Day. At the heart of our
strategy is the dedication to providing
excellent service to our customers.
In the first half of this year, the Metroglass
team made progress on a series of
initiatives to ensure the company remains
focused on its key customers, is resilient in
a range of market conditions, and will build
a base for improved financial performance
in the future.
Changing economic momentum and
increasingly competitive markets in
New Zealand and Australia offer both
challenges and opportunities for us.
To create value for our shareholders,
we will continue to deliver a differentiated,
market-leading customer proposition
while prudently managing our costs and
use of capital.
Financial results for the group in the first
half of the 2020 financial year were slightly
behind the same period last year. This was
principally due to variable demand levels
from our customers and increased
competition mainly in the upper North
Island of New Zealand and Victoria,
Australia.
Group revenue of $136.7 million was 3%
lower than the same six-month period last
year, and Group EBIT declined 6% to
CHAIR’S REVIEW
CHAIR AND
CEO REVIEW
Peter Griffiths
CHAIR
Simon Mander
CEO
3
12CHA1IR’12S2 1SERVCSCHIH2CVRW345
$14.5 million. We reduced our net debt by
$21.9 million year on year following strong
cash generation and improved management
of working capital.
NEW ZEALAND
In New Zealand, Metroglass is operating in
an increasingly competitive market, with
variable levels of construction activity
across the country. During this period new
processing capacity has come online and
the level of imports has also grown.
Whilst there has been an increase in the
total number of building consents issued
over the past 12 months, the levels of
actual construction activity within our core
segments have continued broadly in line
with last year. Feedback from our customer
base has consistently highlighted softness
in actual activity and reduced books of
forward work. This dynamic has been
particularly evident in the upper North
Island market.
The New Zealand business is committed to
providing a differentiated and market
leading customer experience. Against the
prior comparable six month period, both
delivery-on-time-in-full (DIFOT) and
late-tail-DIFOT performance improved by
~2%. Our customer defect rate (as
measured by external reworks) reduced by
approximately one third in 1H20 compared
with 1H19.
We are continually looking to improve our
customer interactions. A good example of
this is the recent introduction of a
simplified and online generic producer
statement (PS1) platform for our
customers. This solution reduced the lead
times for our customers to access
compliance documents that are required
for certain balustrades and pool fences
from weeks to days.
Our people are pivotal to the success of
Metroglass. Over the past six months we
have deployed a series of initiatives that
are focussed on ensuring that our people
are supported, engaged and well trained.
These initiatives include training our people
managers on having courageous
conversations with their teams, and the
development of a learning management
system, that is to be deployed across the
business in 2H20.
Variable activity and heightened
competition in the upper North Island
contributed to New Zealand revenue
declining 3% versus the prior comparable
six-month period from $113.0 million to
$109.6 million. Pleasingly profitability has
To create value for
our shareholders,
we will continue to
deliver a differentiated,
market-leading
customer proposition
while prudently
managing our costs
and use of capital.”
METRO PERFORMANCE GLASS LIMITED
INTERIM FINANCIAL STATEMENTS 2019
4
improved in the South Island in a very
challenging market, following a restructure
of the local footprint to better align with
lower activity levels in the Canterbury
region.
New Zealand EBIT increased from
$17.0 million in 1H19 to $17.2 million in 1H20,
inclusive of a net benefit of $0.9 million
from changes to lease accounting
standards.
AUSTRALIA
In Australia we have been implementing a
state-by-state plan to improve Australian
Glass Group’s (AGG) operational and
financial performance. In the first half of
the year, the business made significant
progress on many fronts and is now
receiving increasingly positive feedback
from customers.
The improvements in AGG’s customer service
metrics which emerged in the late stages of
FY19 have continued throughout the first
half of FY20. Against the prior comparable
six month period, AGG’s delivery-on-time-in-
full (DIFOT) increased 10% and the customer
defect rate (as measured by external
reworks) declined 22%.
Improved service levels and increased
marketing efforts have delivered increased
double-glazing sales. Many new accounts
have been opened and historic accounts
reactivated. One of these marketing
initiatives was to include AGG’s product
specifications in the widely used Australian
Window Energy Rating Scheme (WERS)
system. This significantly increased the
visibility of AGG’s products to the market
and made it easier for architects and
window fabricators to choose them.
AGG grew revenue by 1% in Australian dollar
terms in 1H20 versus the prior comparable
six-month period, including 3% growth in
the key double-glazing segment.
AGG’s EBIT loss increased from $1.3 million
in 1H19 to $2.3 million in 1H20, inclusive of a
$0.1 million net cost from the changes to
lease accounting standards, on the back of
adverse foreign exchange and pricing
movements in a competitive market.
New South Wales restructure
AGG’s Victorian and Tasmanian operations
are profitable, and the New South Wales
business has significantly improved its
operational performance and customer
service. In the last 6 months double
glazing sales in NSW grew by 19%,
however this was offset by declines in
margins and volumes of other processed
glass. Despite our best efforts NSW has
continued to be a loss-making business.
While we continue to see long term value
and opportunity in the NSW market as the
penetration of double glazing increases,
this will take time.
Going forward, Sydney based operations
will be consolidated and focused on
supplying window manufacturers with
double glazing, with local production of
non-window or processed glass
production being discontinued. The
physical footprint in Sydney will decrease
from four buildings to two and operating
costs will materially reduce.
This restructure will regrettably impact
a significant number of our Sydney
staff and our priority is to support
those affected.
We believe these changes will provide an
improved competitive position and
financial performance over the medium
term. In FY20, the restructure will have a
one-off cash impact in FY20 of $2.5 million
(of which $1.1 million is already provided
for) and an estimated asset write-off
totalling $3.5 million. The transition is
planned to be completed by the end of
March 2020.
5
12CHA1IR’12S2 1SERVCSCHIH2CVRW345
CAPITAL MANAGEMENT
Over the last twelve months Metroglass
has reduced net debt by $21.9 million,
supported by a reduction in working capital
of $5.3 million. Over the past six months
net debt reduced by $10.0 million.
In May 2018 the board announced that the
company would prioritise debt reduction
and target a net debt to EBITDA ratio of
1.5 times. At 30 September 2019 this ratio
was 1.9 times, with net debt at $73.4 million.
We expect to reach our leverage target
during first half of FY21 and at that time
the board will have the opportunity to
review the capital management position.
We will update shareholders further with
the Metroglass FY20 results release in May
next year.
$21.9M
NET DEBT REDUCTION
OVER THE LAST 12 MONTHS
$5.3M
REDUCTION IN
WORKING CAPITAL
OVER THE LAST 12 MONTHS
METRO PERFORMANCE GLASS LIMITED
INTERIM FINANCIAL STATEMENTS 2019
6
MARKET CONDITIONS AND OUTLOOK
Future market conditions are increasingly
difficult to predict, and industry
commentators are forecasting a broad
range of different market trajectories.
Elevated levels of residential and non-
residential construction in New Zealand
should continue to provide a generally
supportive market environment. However,
we expect to see further softness in
certain regional markets in the near term,
including in Auckland.
The mix of building consents has shifted
towards multi-residential dwellings in
recent years following the growth in
apartments, retirement villages and town
houses. This extends the typical time period
between a consent and completion and
changes the mix of glass products
demanded.
In south east Australia leading indicators
point to significant softening in Australian
residential construction activity in the near
term, impacting multi-residential approvals
in particular. AGG is primarily involved in the
new detached housing and alterations and
additions segments which have been less
impacted to date but are also expected to
decline.
Market competition has intensified in both
countries with several glass processors
having introduced new capacity to the
market in the last 12-18 months. We are
confident that Metroglass is building its
resilience by focusing on production
reliability, pricing and cost management
and by creating stronger relationships
with key channel participants.
For the 12 months to 31 March 2020, the
Group now anticipates Group EBIT in the
range of $21 million – $24 million. This
excludes:
1. the impact of the change to IFRS 16
(lease accounting standards) which we
expect to increase reported EBIT by
~$1.7 million, and
2. a net abnormal charge of
approximately $5 million related to the
restructure of NSW (asset write-off
of $3.5 million and cash costs of
$2.5 million, less $1.1 million already
provided for).
We also anticipate a reduction in net debt
of circa. $15 million (inclusive of impacts
from the restructuring of NSW).
PETER GRIFFITHS
Chair
SIMON MANDER
CEO
7
12CHA1IR’12S2 1SERVCSCHIH2CVRW345
SUMMARY
Group revenue of $136.7 million for the six
months to 30 September 2019 (1H20) was
3% below the prior comparable period
(1H19). New Zealand revenue declined 3% to
$109.6 million while Australian revenue in
NZ$ fell 1% to $27.1 million. Group earnings
before interest and tax (EBIT) for the half
year was $14.5 million inclusive of the net
benefit of $0.9m from the changes to lease
accounting standards, down from
$15.5 million in 1H19. Net profit after tax
(NPAT) for 1H20 was $7.7 million.
In New Zealand, Metroglass remains
committed to delivering the best customer
service in our market. The strength of our
customer relationships is critical, with our
people energised to go above and beyond
to ensure our customers are successful.
Our customer survey in June this year
demonstrated that this is one of the
reasons why they partner with us. We
have responded to their feedback by
implementing improvement initiatives
focused on product quality, lead times and
delivery performance.
New Zealand delivered EBIT of $17.2 million,
up 2% on the prior period, inclusive of a net
benefit of $0.9 million from the changes to
lease accounting standards, with lower
revenue offset by an improved underlying
gross profit.
Australian Glass Group (AGG) continued to
deliver improved operational performance
in the half, reinforcing their service-led
value proposition to customers. The
success of these improvements is
becoming apparent with AGG’s 1H20
revenue increasing 1% in Australian dollar
terms. This result was also supported by
further scaling up in our Tasmanian
operations, the roll out of marketing
initiatives and additional sales resources
focused on customer acquisition.
AGG’s EBIT loss increased from $1.3 million
in 1H19 to $2.3 million in 1H20, inclusive of a
$0.1 million net cost from the changes to
lease accounting standards, on the back of
adverse foreign exchange and pricing
movements in a competitive market.
INTERIM REPORT: MANAGEMENT REVIEW
EARNINGS SUMMARY
$mNew ZealandAustraliaGroup
1H201H191H201H191H201H19
Revenue109.6 113.0 27.127.5 136.7140.5
Segmental EBIT pre-IFRS1616.3 17.0 (2.2)(1.3)
Segmental EBIT17.2 (2.3)
EBIT pre-IFRS16 13.615.5
EBIT14.5
NPAT pre-IFRS168.39.1
NPAT7.7
All values stated herein are in New Zealand dollars (NZD) unless otherwise stated. The financial reporting impacts of the
new lease accounting standard (IFRS-16) are detailed in note 9 to the financial statements on page 35.
METRO PERFORMANCE GLASS LIMITED
INTERIM FINANCIAL STATEMENTS 2019
8
New Zealand $109.6 million (-3%)
Total revenue in New Zealand declined by
$3.4 million or 3%. Nationally, residential
revenue declined by 2% through softness
in the window fabricator and merchant
segments, which impacted the Auckland
region in particular.
Commercial glazing revenue declined 6%
in 1H20 to $22.8 million, following delays to
several projects, along with an increased
use of imported window suites across
the sector.
Revenue from the RetroFit double-glazing
channel declined 3% to $11.8 million in 1H20.
While interest levels increased in the period
(as measured by the number of leads
received) this was offset by a reduced
average contract size as more consumers
elected to break up their retrofitting work
into multiple partial installations.
Australia $27.1 million (-1%)
In Australian dollar terms, Australian Glass
Group (AGG) revenue increased 1% in 1H20
versus 1H19. This includes 3% growth in
key double-glazing segment. The NZD
appreciated year on year which meant that
in NZ dollar terms, AGG’s revenue declined
1% to $27.1 million.
Sustained operational performance
improvements across the business and
established marketing programs have
provided an improved platform and value
proposition for AGG to win additional work
and new customers. Additional sales
resources are now in place to capitalise on
this and pleasingly the number of active
customers is 3% ahead of the same period
last year.
Tasmania, which was a greenfield start-up
in early 2018, has continued to scale up well,
growing market share and increasing
production efficiency as volumes have
increased.
GROUP REVENUE BY SEGMENT ($M)
$136.7 million, -$3.8 million
Residential
(NZ)
Commercial Glazing
(NZ)
74.9
76.7
22.8
24.2
12.2
27.5
140.5136.7
(3%)(3%) (NZ)
(2%)
11.8
27.1
Retrofit
(NZ)
Metroglass GroupAustralian Glass
Group (AU)
1H201H19
(3%)(6%)(1%)
9
12CHA1IR’12S2 1SERVCSCHIH2CVRW345
Group EBIT for the half year fell by
$1.0 million to $14.5 million.
New Zealand
New Zealand’s EBIT of $17.2 million was up
1% on the prior comparable period, after
factoring in the IFRS 16 lease accounting
standard benefit of $0.9 million.
Within this result, lower revenue was offset
by an improved gross profit margin. Gross
profit was supported by prior price
increases and a higher value product mix.
Savings were also achieved in material costs
following improved inventory management.
Offsetting these improvements, the
business faced increased costs relating
to labour, distribution (largely fuel), and
customer service.
In the South Island, the profitability of the
region has increased as we benefit from
the restructuring of the South Island
operations. This saw the business reducing
its footprint from four sites to two and
enabled an improved customer service.
Australia
AGG’s EBIT loss increased from $1.3 million in
1H19 to $2.3 million in 1H20, inclusive of
additional net costs from the IFRS 16 lease
accounting standard of $0.1 million.
Factory costs increased proportionally with
the increase in processing volumes in the
period. However, increased competition and
a weaker Australian dollar placed pressures
on margins and adversely impacted EBIT.
The continued ramp up of Tasmania,
alongside improved operating performance
in Victoria and New South Wales has enabled
a renewed focus on winning new work and
customers. The business introduced
additional sales and marketing resources
in the period, which were offset partially by
a reduction in overheads.
EBIT VARIANCE ANALYSIS
$14.5 million, -$1.0 million
1H19 EBIT
Lower revenue
(largely UNI residential)
15.5
1.7
2.0
1.0
1.2
0.1
13.6
0.9
14.5
0.4
0.1
0.2
NZ gross profit
% improvement
AGG revenue
AGG gross profit
% declin
e
IFRS-16
lease changes
1H20 EBIT
1H20 EBIT
pre-IFRS 16
Other Group cost
s
Tr
anslation impact
(AUD to NZD)
Costs: OtherCosts: Other
New ZealandAustralia*
*Note: The three bars relating to Australia are presented in NZ dollars, on a constant currency basis.
METRO PERFORMANCE GLASS LIMITED
INTERIM FINANCIAL STATEMENTS 2019
10
BALANCE SHEET AND CASH FLOWS
Total working capital for the group declined
year on year from $36.6 million to $31.2
million as at 30 September 2019 through
active management of trade debtors and
improved inventory management processes.
Net debt decreased by $21.9 million to
$73.4 million compared with 1H19. This
represents a reduction of $10.0 million in
the 6 months to 30th September 2019.
Capital expenditure totalled $4.3 million
in the first half of the financial year,
up from $2.3 million in the prior
corresponding period.
11
INTERIM FINANCIAL STATEMENTS 2019
FINANCIAL
STATEMENTS
METRO PERFORMANCE GLASS LIMITED
INTERIM FINANCIAL STATEMENTS 2019
12
PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand
T: +64 9 355 8000, F: +64 9 355 8001, pwc.co.nz
Independent review report
to the shareholders of Metro Performance Glass Limited
Report on the consolidated interim financial statements
We have reviewed the accompanying consolidated interim financial statements of Metro Performance
Glass Limited (the Company) and its subsidiaries (the Group) on pages 14 to 36, which comprise the
consolidated interim statement of financial position as at 30 September 2019, and the consolidated
interim statement of comprehensive income, the consolidated interim statement of changes in equity
and the consolidated interim statement of cash flows for the half year ended on that date, and selected
explanatory notes.
Directors’ responsibility for the consolidated interim financial statements
The Directors are responsible on behalf of the Company for the preparation and fair presentation of
these consolidated interim financial statements in accordance with International Accounting Standard
34 Interim Financial Reporting (IAS 34) and New Zealand Equivalent to International Accounting
Standard 34 Interim Financial Reporting (NZ IAS 34) and for such internal control as the Directors
determine is necessary to enable the preparation of consolidated interim financial statements that are
free from material misstatement, whether due to fraud or error.
Our responsibility
Our responsibility is to express a conclusion on the accompanying consolidated interim financial
statements based on our review. We conducted our review in accordance with the New Zealand
Standard on Review Engagements 2410 Review of Financial Statements Performed by the
Independent Auditor of the Entity (NZ SRE 2410). NZ SRE 2410 requires us to conclude whether
anything has come to our attention that causes us to believe that the consolidated interim financial
statements, taken as a whole, are not prepared in all material respects, in accordance with IAS 34 and
NZ IAS 34. As the auditors of the Company, NZ SRE 2410 requires that we comply with the ethical
requirements relevant to the audit of the annual financial statements.
A review of consolidated interim financial statements in accordance with NZ SRE 2410 is a limited
assurance engagement. The auditor performs procedures, primarily consisting of making enquiries,
primarily of persons responsible for financial and accounting matters, and applying analytical and
other review procedures.
The procedures performed in a review are substantially less than those performed in an audit
conducted in accordance with International Standards on Auditing (New Zealand) and International
Standards on Auditing. Accordingly, we do not express an audit opinion on these consolidated interim
financial statements.
We are independent of the Group. Our firm carries out other services for the Group in the areas of tax
compliance, assistance analysing and evaluating property lease options for two leased sites and agreed
upon procedures relating to covenant certificates and the annual report. The provision of these other
services has not impaired our independence.
13
12CHA1IR’12S2 1SERVCSCHIH2CVRW345
PwC17
Emphasis of matter
We draw attention to note 5 to the consolidated interim financial statements which describes the key
assumptions used in the impairment model of the Australian Cash Generating Unit CGU and that no
impairment has been recognised during the period.
Note 5 also indicates that the most sensitive assumption in the assessment of the value-in-use
calculation for the Australian CGU is compound annual revenue growth. There is significant
uncertainty regarding the forecast annual revenue growth due to the following factors: Australian
national building code regulatory changes affecting energy efficient requirements will not be
confirmed until 2022; the extent to which the penetration rate of double glazed windows increases
both before and after the code changes; the continuing competitive proposition of the Group’s
products compared to competitors, and therefore the expectation of an increase in market share.
Further, the note also discloses that a change in compound annual revenue growth for the Australian
CGU from 6.6% to 6.1% would result in an impairment.
Our conclusion is not modified in respect of this matter.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that these
consolidated interim financial statements of the Group do not present fairly, in all material respects,
the financial position of the Group as at 30 September 2019, and its financial performance and cash
flows for the half year then ended, in accordance with IAS 34 and NZ IAS 34.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our review work has been
undertaken so that we might state to the Company’s shareholders those matters which we are required
to state to them in our review report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the shareholders, as a body, for our
review procedures, for this report, or for the conclusion we have formed.
For and on behalf of:
Chartered Accountants Auckland
25 November 2019
METRO PERFORMANCE GLASS LIMITED
INTERIM FINANCIAL STATEMENTS 2019
14
CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
FOR THE HALF YEAR ENDED 30 SEPTEMBER (UNAUDITED)
CONSOLIDATEDCONSOLIDATED
Sep-19
$’000
Sep-18
$’000
Sales revenue136,691 140,520
Cost of sales(72,910)(75,468)
Gross Profit63,781 65,052
Distribution and glazing related expenses(24,253)(24,453)
Selling and marketing expenses(7,736)(6,986)
Administration expenses(17,298)(18,123)
Operating profit14,494 15,490
Interest expense(3,751)(2,655)
Interest income101 5
Profit before income taxation10,844 12,840
Income taxation expense(3,128)(3,710)
Profit for the period7,716 9,130
Other Comprehensive Income
Exchange differences on translation
of foreign operations(231)513
Cash flow hedges645 953
Total comprehensive income for the period
attributable to shareholders8,13010,596
Earnings per share
Basic / Diluted Earnings per share (cents per share)4.24.9
The Board of Directors authorised these financial statements for issue on 25 November 2019.
For and on behalf of the Board:
Peter Griffiths Willem (Bill) Roest
Chairman Director
The above statement of comprehensive income should be read in conjunction with the
accompanying notes. Refer to Notes 8 and 9 specifically relating to the impact of adoption
of NZ IFRS 16 Leases.
INTERIM FINANCIAL STATEMENTS 2019
15
CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
AT 30 SEPTEMBER (UNAUDITED)
CONSOLIDATEDCONSOLIDATED
(AUDITED)
CONSOLIDATED
Sep-19
$’000
Mar-19
$’000
Sep-18
$’000
Assets
Current assets
Cash and cash equivalents3,063 5,488 2,709
Trade and other receivables38,416 38,839 42,152
Inventories22,471 22,934 24,023
Derivative financial instruments1,570 172 1,104
Income tax asset– – 1,344
Other current assets5,337 5,345 4,855
Total current assets70,857 72,778 76,187
Non-current assets
Property, plant and equipment63,758 64,581 65,765
Right-of-use assets54,873– –
Deferred tax5,7474,958 3,207
Intangible assets146,288146,442 158,634
Total non-current assets270,666215,981 227,606
Total assets341,523288,759 303,793
Liabilities
Current liabilities
Bank overdraft– – 2,538
Trade and other payables29,657 29,286 29,597
Contract liabilities1,249 1,080 1,081
Income tax liability2,459 2,408 1,534
Derivative financial instruments255659 321
Lease liabilities6,173 – –
Provisions1,065 916 936
Total current liabilities40,85834,349 36,007
METRO PERFORMANCE GLASS LIMITED
INTERIM FINANCIAL STATEMENTS 2019
16
AT 30 SEPTEMBER (UNAUDITED)
CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION (CONT.)
CONSOLIDATEDCONSOLIDATED
(AUDITED)
CONSOLIDATED
Sep-19
$’000
Mar-19
$’000
Sep-18
$’000
Non-current liabilities
Deferred tax liabilities– 1,947 3,132
Interest bearing liabilities76,441 88,832 95,402
Derivative financial instruments1,9811,057 689
Lease liabilities56,907 – –
Lease incentive– 2,650 2,622
Provisions3,902 2,961 3,098
Total non-current liabilities139,23197,447 104,943
Total liabilities180,089131,796140,950
Net assets161,434 156,963 162,843
Equity
Contributed equity306,837 306,693 306,653
Retained earnings25,162 21,329 25,417
Group reorganisation reserve(170,665)(170,665)(170,665)
Share based payments reserve805 725 612
Foreign currency translation
reserve(235)(4)762
Cash flow hedge reserve(470)(1,115)64
Total equity161,434 156,963 162,843
The above statement of financial position should be read in conjunction with the
accompanying notes.
INTERIM FINANCIAL STATEMENTS 2019
17
CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
FOR THE HALF YEAR ENDED 30 SEPTEMBER (UNAUDITED)
CONSOLIDATED
CONTRIBUTED
EQUITY
RESERVESRETAINED
EARNINGS
TOTAL
$’000$’000$’000$’000
Opening balance as at
1 April 2018306,653 (170,550)24,233 160,336
Change in accounting policy
(adoption of NZ IFRS 9 and
NZ IFRS 15)– – (905)(905)
Restated total equity at
1 April 2018306,653 (170,550)23,328 159,431
Profit for the period– – 9,130 9,130
Movement in foreign currency
translation reserve– 513 – 513
Other comprehensive income
for the period– 953 – 953
Total comprehensive income
for the period– 1,466 9,130 10,596
Dividends Paid– – (7,041)(7,041)
Payments received on
management incentive
plan shares– – – –
Movement in share based
payments reserve– (143)– (143)
Total transactions with
owners, recognised directly
in equity– (143)(7,041)(7,184)
Unaudited closing balance at
30 September 2018306,653 (169,227)25,417 162,843
METRO PERFORMANCE GLASS LIMITED
INTERIM FINANCIAL STATEMENTS 2019
18
CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY (CONT.)
FOR THE HALF YEAR ENDED 30 SEPTEMBER (UNAUDITED)
CONTRIBUTED
EQUITY
RESERVESRETAINED
EARNINGS
TOTAL
$’000$’000$’000$’000
Opening balance as at
1 October 2018306,653 (169,227)25,417 162,843
Loss for the period–– (4,088)(4,088)
Movement in foreign currency
translation reserve–(766)– (766)
Other comprehensive income
(loss) for the period–(1,179)– (1,179)
Total comprehensive income
(loss) for the period–(1,945)(4,088)(6,033)
Dividends Paid––––
Payments received on
management incentive
plan shares40 40
Movement in share based
payments reserve–113 –113
Total transactions with
owners, recognised directly
in equity40 113 –153
Audited closing balance at
31 March 2019306,693 (171,059)21,329 156,963
INTERIM FINANCIAL STATEMENTS 2019
19
CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY (CONT.)
FOR THE HALF YEAR ENDED 30 SEPTEMBER (UNAUDITED)
CONTRIBUTED
EQUITY
RESERVESRETAINED
EARNINGS
TOTAL
$’000$’000$’000$’000
Opening balance at
1 April 2019306,693 (171,059)21,329 156,963
Change in accounting policy
(adoption of NZ IFRS 16)– – (3,883)(3,883)
Restated total equity
at 1 April 2019306,693 (171,059)17,446153,080
Profit for the period– –7,716 7,716
Movement in foreign currency
translation reserve– (231)– (231)
Other comprehensive income
(loss) for the period– 645 – 645
Total comprehensive income
(loss) for the period– 414 7,716 8,130
Dividends Paid– – – –
Payments received on
management incentive
plan shares144 – – 144
Movement in share based
payments reserve– 80 – 80
Total transactions with
owners, recognised directly
in equity144 80 – 224
Unaudited closing balance at
30 September 2019306,837 (170,565)25,162 161,434
The above statement of changes in equity should be read in conjunction with the
accompanying notes.
METRO PERFORMANCE GLASS LIMITED
INTERIM FINANCIAL STATEMENTS 2019
20
CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
FOR THE HALF YEAR ENDED 30 SEPTEMBER (UNAUDITED)
CONSOLIDATEDCONSOLIDATED
2019
$’000
2018
$’000
Cash flows from operating activities
Receipts from customers137,520 138,813
Payments to suppliers and employees(110,561)(119,725)
Interest received101 5
Interest paid(3,732)(2,910)
Income taxes paid(4,412)(6,808)
Net cash inflow from operating activities18,916 9,375
Cash flows from investing activities
Payments for property, plant & equipment(3,889)(2,237)
Payments for intangible assets(407)(110)
Net cash outflow from investing activities(4,296)(2,347)
Cash flows from financing activities
Lease liabilities payments(3,172)–
Repayment of borrowings(15,500)(3,910)
Drawdown of borrowings1,565 7,644
Payments received on management incentive
plan shares144 –
Dividend paid–(7,042)
Net cash inflow/(outflow) from financing activities(16,963)(3,308)
Net increase/(decrease) in cash and cash equivalents(2,343)3,720
Cash and cash equivalents at the beginning
of the period5,488 (3,497)
Effects of exchange rate changes on cash
and cash equivalents(82)(52)
Cash and cash equivalents at end of the period3,063171
The above statement of cash flows should be read in conjunction with the
accompanying notes.
INTERIM FINANCIAL STATEMENTS 2019
21
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PREPARATION
Reporting Entity
These consolidated financial statements
are for Metro Performance Glass Limited
('the Company') and its subsidiaries
(together, 'the Group'). The Group supplies
processed flat glass and related products
primarily to the residential and commercial
building sectors. The Company is a
for-profit entity for financial reporting
purposes and has operations and sales in
New Zealand and Australia.
Statutory base
The Company is a limited liability company
incorporated and domiciled in New Zealand.
The address of its registered office is 5
Lady Fisher Place, East Tamaki, Auckland.
The incorporation date for Metro
Performance Glass Limited was 30 May
2014 and as part of a group reorganisation
was listed on the New Zealand Securities
Exchange (NZSX) on 29 July 2014.
The comparative trading results presented
encompass the 6 month period from 1 April
2018 to 30 September 2018.
Basis of preparation
These consolidated financial statements
have been approved for issue by the Board
of Directors on 25 November 2019.
The Group's unaudited condensed
consolidated interim financial statements
have been prepared in accordance with
Generally Accepted Accounting Practice
(NZ GAAP). They comply with New Zealand
equivalent International Financial
Reporting Standards NZ IAS 34; Interim
Financial Reporting and International
Accounting Standard IAS 34: Interim
Financial Reporting.
These consolidated financial statements
are presented in New Zealand dollars and
rounded to the nearest thousand. These
financial statements do not include all
the information required for full financial
statements, and consequently should be
read in conjunction with the full financial
statements of the Group for the period
ended 31 March 2019. Other than the
effects of the adoption of NZ IFRS 16
Leases outlined in notes 8 and 9, the same
accounting policies, presentation and
methods of computation have been followed
in these condensed financial statements
as were applied in the preparation of the
Group's audited financial statements for
the period ended 31 March 2019.
Metro Performance Glass Limited is a
limited liability company registered under
the New Zealand Companies Act 1993 and
is a Financial Market Conduct reporting
entity under Part 7 of the Financial Markets
Conduct Act 2013. The financial statements
of the Group have been prepared in
accordance with the requirements of the
NZX Main Board Listing Rules.
Historical cost convention
The consolidated financial statements have
been prepared under the historical cost
convention, as modified by the revaluation
of financial assets and financial liabilities at
fair value through profit or loss.
Principles of consolidation
The consolidated financial statements
incorporate the assets and liabilities of all
subsidiaries of Metro Performance Glass
Limited ('the company' or 'the parent entity')
as at 30 September 2019 and the results of
all subsidiaries for the period then ended.
METRO PERFORMANCE GLASS LIMITED
INTERIM FINANCIAL STATEMENTS 2019
22
12CHAIC2ICRHI’21A2S EVCHEIW 1V1’ VSIACVCH3H1CAI451V5E CHE6I4’21C76
Subsidiaries are all entities over which the
Group has control. It is a controlled entity
of Metro Performance Glass if Metro
Performance Glass is exposed and has a
right to variable returns from the entity
and is able to use its power over the entity
to affect those returns. Subsidiaries are
fully consolidated from the date on which
control is transferred to the Group. They
are de-consolidated from the date that
control ceases.
Intercompany transactions, balances
and unrealised gains on transactions
between Group companies are eliminated.
Unrealised losses are also eliminated unless
the transaction provided evidence of the
impairment of the asset transferred.
FOREIGN CURRENCY TRANSLATION
Functional and presentation currency
The consolidated financial statements are
presented in New Zealand dollars, which
is Metro Performance Glass Limited's
functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated
using the exchange rates prevailing at
the dates of the transactions. Foreign
exchange gains and losses resulting from
the settlement of such transactions and
from the translation at period end exchange
rates of monetary assets and liabilities
denominated in foreign currencies are
recognised in profit and loss. They are
deferred in equity if they relate to qualifying
cash flow hedges and qualifying net
investment hedges or are attributable
to part of the net investment in a
foreign operation.
1. BASIS OF PREPARATION (CONT.)
The results and financial position of foreign
operations that have a functional currency
different from the presentation currency
are translated into the presentation
currency as follows:
• assets and liabilities for each balance
sheet presented are translated at
the closing rate at the date of that
balance sheet
• income and expenses for each statement
of profit or loss and statement of
comprehensive income are translated at
average exchange rates (unless this is
not a reasonable approximation of the
cumulative effect of the rates prevailing
on the transaction dates, in which case
income and expenses are translated
at the dates of the transactions), and
• all resulting exchange differences are
recognised in other comprehensive income.
Goods and Services Tax (GST)
The statement of comprehensive income
has been prepared so that all components
are stated exclusive of GST. All items in
the statement of financial position are
stated net of GST, with the exception of
receivables and payables, which include
GST invoiced.
Changes in accounting disclosures
Consistent with the change in accounting
disclosure in Note 1 to the 31 March 2019
consolidated financial statements, certain
comparatives have been restated in the
Australian business to conform with the
current year's presentation and to improve
consistency across operating segments.
• The Group reclassified dispatch labour
amounting to $2.1m from Cost of sales to
Distribution and glazing related expenses
to align group treatment.
INTERIM FINANCIAL STATEMENTS 2019
23
12CHAIC2ICRHI’21A2S EVCHEIW 1V1’ VSIACVCH3H1CAI451V5E CHE6I4’21C76
These changes have also been made
to comparatives in the Segment
Information note.
2. FINANCIAL PERFORMANCE
Segment Information
Operating segments of the Group at
30 September 2019 have been determined
based on financial information that
is regularly reviewed by the Board in
conjunction with the Chief Executive Officer
and Chief Financial Officer, collectively
known as the Chief Operating Decision
Maker for the purpose of allocating
resources, assessing performance and
making strategic decisions.
Substantially all of the Group's revenue is
derived from the sale of glass and related
products and services. This revenue is
split by channel only at the revenue level
into Commercial, Residential and Retrofit.
Commercial revenue reflects sales through
four specific commercial glazing operations
in New Zealand. The allocation of sales
between residential and commercial can
be difficult as the Group does not always
know the end use application. Following the
acquisition of AGG on 1 September 2016
the Group operates in two geographic
segments, New Zealand and Australia.
Group costs consist of insurance,
professional services, director fees and
expenses, listing fees and share incentive
scheme costs.
METRO PERFORMANCE GLASS LIMITED
INTERIM FINANCIAL STATEMENTS 2019
24
12CHAIC2ICRHI’21A2S EVCHEIW 1V1’ VSIACVCH3H1CAI451V5E CHE6I4’21C76
SEP-19
New Zealand
$’000
Australia
$’000
Eliminations
& Other
$’000
Group
$’000
Commercial Glazing22,834––22,834
Residential74,93827,077 –102,015
Retrofit11,842 ––11,842
Total revenue109,614 27,077 –136,691
Gross Profit57,9555,826 –63,781
Segmental EBITDA pre
NZ IFRS 1621,543 (428)–21,115
NZ IFRS 16 Lease adjustment3,390 1,431 –4,821
Segmental EBITDA24,933 1,003–25,936
Group Costs––(484)(484)
Group EBITDA–––25,452
Depreciation and amortisation7,686 3,272 –10,958
EBIT17,247 (2,269)(484)14,494
Segment Assets345,202 70,539 (74,218)341,523
Segment Non-current
Assets (excluding Deferred
tax assets)228,25050,919 (14,250)264,919
Segment Liabilities79,98869,836 30,265 180,089
2. FINANCIAL PERFORMANCE (CONT.)
INTERIM FINANCIAL STATEMENTS 2019
25
12CHAIC2ICRHI’21A2S EVCHEIW 1V1’ VSIACVCH3H1CAI451V5E CHE6I4’21C76
SEP-18
New Zealand
$’000
Australia
$’000
Eliminations
& Other
$’000
Group
$’000
Commercial Glazing24,194––24,194
Residential76,66127,485–104,146
Retrofit12,180––12,180
Total revenue113,03527,485–140,520
Gross Profit57,6707,382–65,052
Segmental EBITDA22,301568–22,869
Group Costs––(130)(130)
Group EBITDA–––22,739
Depreciation and amortisation5,3341,915–7,249
EBIT16,967(1,347)(130)15,490
Segment Assets275,12971,640(42,976)303,793
Segment Non-current
Assets (excluding Deferred
tax assets)185,06453,585(14,250)224,399
Segment Liabilities29,14855,13356,669140,950
3. PROPERTY, PLANT AND EQUIPMENT
There have been no material changes in the estimated useful life of key items of plant and
machinery or any significant disposals. The depreciation expense for the six months ended
30 September 2019 was $5.63m (September 2018: $5.35m).
2. FINANCIAL PERFORMANCE (CONT.)
METRO PERFORMANCE GLASS LIMITED
INTERIM FINANCIAL STATEMENTS 2019
26
12CHAIC2ICRHI’21A2S EVCHEIW 1V1’ VSIACVCH3H1CAI451V5E CHE6I4’21C76
4. FINANCIAL INSTRUMENTS
Management determines the classification
of the Group's financial liabilities at
initial recognition. The Group's financial
liabilities for the periods covered by these
consolidated interim financial statements
consists of overdrafts, loans, trade and
other payables, interest rate swaps and
forward exchange contracts.
The Group measures all financial liabilities,
with the exception of interest rate swaps
and forward exchange contracts, at
amortised cost in the periods covered
by these consolidated interim financial
statements. Interest rate swaps and
forward exchange contracts are measured
at fair value with changes in fair value
recognised in other comprehensive income.
Financial liabilities measured at amortised
cost are non-derivative financial liabilities
with fixed or determinable payments that
are not quoted in an active market. Trade
and other payables, bank overdrafts and
loans are classified as financial liabilities
measured at amortised cost.
Fair value measurement of financial
assets and liabilities
The Group's financial assets and liabilities
by category are summarised as follows:
Cash and cash equivalents
These are short term in nature and their
carrying value is equivalent to their fair
value.
Trade and other receivables
These assets are short term in nature and
are reviewed for impairment; their carrying
value approximates their fair value.
Trade payables and borrowings
Trade payables and borrowings are
measured at amortised cost. The fair value
of trade and other payables approximates
carrying value due to their short term
nature. The carrying value of the Group's
bank borrowings also represents the
fair value of the borrowings due to
management's assessment that the
interest rates approximate the market
interest rate for a commercial loan of a
comparable lending period.
Interest rate swaps and forward
exchange contracts
These financial instruments were measured
at fair value based on valuations provided
by Westpac Banking Corporation and Bank
of New Zealand. All significant inputs were
based on observable market data and
accordingly have been categorised as level
2. At balance date, the fair value of interest
rate swaps are $2.2m liability (March 2019:
$1.2m liability) and the fair value of forward
exchange contracts are $1.6m asset (March
2019: $0.3m liability).
INTERIM FINANCIAL STATEMENTS 2019
27
12CHAIC2ICRHI’21A2S EVCHEIW 1V1’ VSIACVCH3H1CAI451V5E CHE6I4’21C76
5. INTANGIBLE ASSETS
The Group tests intangible assets for
impairment to ensure they are not carried
at above their recoverable amounts:
• at least annually for goodwill with
indefinite lives; and
• where there is an indication that the
assets may be impaired (which is
assessed at least each reporting date).
These tests for impairment are performed
by assessing the recoverable amount of
each individual asset or cash generating
unit (CGU) through a value-in-use
calculation. The value-in-use calculation
uses pre-tax cash flow projections based
on financial projections approved by the
Directors covering a five-year period. Cash
flows beyond the five-year period are
extrapolated using estimated long term
growth rates.
Impairment tests using value-in-use
calculations of the Australian CGU and
New Zealand CGU have been performed at
31 March 2019, as part of the annual tests,
and again at 30 September 2019 due to
impairment indicators.
Key assumptions in the 30 September 2019 value-in-use calculations (and the equivalent
assumptions in the 31 March 2019 calculations) are as follows:
SEP-19MAR-19
New ZealandAustraliaNew ZealandAustralia
Compound annual revenue
growth – 5 years(1.0%)6.6%0.5%6.9%
Long term growth rate2.0%2.0%2.0%2.0%
Discount rate (post tax)8.8%8.3%9.9%9.9%
During the six months ended 30 September
2019, the Australian cash generating
unit (CGU) achieved lower revenue and
earnings before interest and tax than the
prior comparable period and forecast.
Accordingly, the Group reviewed the
recoverable amount of the Australian CGU
goodwill. This review concluded that the
recoverable amount of the Australian CGU
is estimated to exceed the carrying value
at 30 September 2019 by $6.9 million. The
Group will reassess the value of goodwill
again at year-end.
The most sensitive assumption in the
assessment of our value-in-use calculation
for the Australian CGU is compound
annual revenue growth. External forecasts
currently predict a slowdown in the
construction of new detached houses for
the next three to four years. However, we
see considerable opportunity in Australia as
continuing regulatory changes and shifting
consumer preferences drive an increase
in demand for high quality double glazed
windows. Our future revenue projections
are based on an assumed growth in the
size of the market for double glazed
units in south eastern Australia due to
an increase in the penetration of double
glazed windows that exceeds the effect of
METRO PERFORMANCE GLASS LIMITED
INTERIM FINANCIAL STATEMENTS 2019
28
12CHAIC2ICRHI’21A2S EVCHEIW 1V1’ VSIACVCH3H1CAI451V5E CHE6I4’21C76
5. INTANGIBLE ASSETS (CONT.)
a decline in new house construction. We also
anticipate an increase in our market share
due to our strong competitive proposition
in this market. Together these factors
are forecast to lead to increased sales of
these products.
There are some significant uncertainties
to the revenue growth forecasts. Whilst
individual states have already made
changes to their building codes, and the
Australian national building code regulations
affecting energy efficient requirements for
commercial buildings have also changed,
the proposed residential changes will
not be confirmed until 2022. Current
indications are that these changes are a
strong possibility. The extent to which the
penetration rate of double glazed windows
increase both before and after the code
changes is uncertain. The continuing
competitive proposition of the Group's
products, and therefore our expectation
of an increased market share, are also
uncertain due to the effectiveness of
competitor actions in the double glazed
windows market.
Despite the uncertainties, we have
confidence that our strategy has
traction and the outlook is positive. It
is the considered view of the Directors
that the forecast revenue assumptions
are reasonable. This is based on our
understanding of the market, expected
changes in the market and the revenue
growth achieved in the six months ended
30 September 2019 over the previous
corresponding period (in Australian
dollar terms).
If the demand does not meet expectations
a further impairment of goodwill may be
required. The sensitivity analysis below
shows an impairment would be required if
the annual growth rates for the next five
years are below 6.1%.
The long term growth rate is based on long
term population growth rates in Australia
and the increased use and prevalence of
glass products in our markets.
The discount rate (post tax) represents the
current market assessment of the risks
specific to the CGU, taking into account
the time value of money and individual
risks of the underlying assets that have
not been incorporated in the cash flow
estimates. The discount rate calculation
is based on the specific circumstances
of the CGU and its operating segments
and is derived from its weighted average
costs of capital (WACC). The discount rate
applied is based on a report prepared by
an independent third party. This reduced
from the discount rate at 31 March 2019
on account of market reductions in interest
rates (risk free rates) and the consideration
of market specific risks.
INTERIM FINANCIAL STATEMENTS 2019
29
12CHAIC2ICRHI’21A2S EVCHEIW 1V1’ VSIACVCH3H1CAI451V5E CHE6I4’21C76
The following summarises the changes in key assumptions at which an impairment would
occur for the Australian CGU, with all other assumptions remaining constant:
THRESHOLD FOR
IMPAIRMENT
MOVEMENT FROM
RATE USED IN THE
IMPAIRMENT TEST
Compound annual revenue growth6.1%(0.5%)
Long term growth rate1.0%(1.0%)
Discount rate (post tax)9.1%0.8%
5. INTANGIBLE ASSETS (CONT.)
New Zealand CGU
Sensitivity analyses performed by management indicate no impairment to the goodwill
associated with the New Zealand CGU.
There have been no changes to the estimated useful life of other intangible assets.
The amortisation expense for the six months ended 30 September 2019 was $1.4m
(September 2018: $1.8m).
METRO PERFORMANCE GLASS LIMITED
INTERIM FINANCIAL STATEMENTS 2019
30
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6. RELATED PARTY TRANSACTIONS
Related Parties
There have been no material changes in
the nature or amount of related party
transactions since 31 March 2019.
7. EVENTS AFTER BALANCE DATE
On 22 November 2019, the Board approved
a plan to restructure the New South Wales
business in Australia. The operations based
in Sydney will be scaled down and focused
on the production of window glass only. This
will result in an estimated net cash outflow
of $2.5m relating to restructure costs (of
which $1.1m is already provided) and a $3.5m
write-down in assets. This restructure will
occur within the current financial year.
We believe these changes will provide an
improved competitive position and financial
performance over the medium term.
8. LEASES
Right-of-use assets for property leases
were measured on a retrospective basis as
if the new rules had always been applied,
adjusted by the amount of any lease
incentives received or restoration costs
estimated. Other right-of-use assets
were measured at the amount equal to
the lease liability. There were no onerous
lease contracts that would have required
an adjustment to the right-of-use assets
at the date of initial application.
Lease liabilities were measured at the
present value of the remaining lease
payments, discounted using the Group's
incremental borrowing rate as of 1 April
2019. The weighted average incremental
borrowing rate applied to the lease liabilities
on 1 April 2019 was 5.12%.
On transition, the Group applied the
following practical expedients:
• accounting for operating leases with
a remaining lease term of less than
12 months as at 1 April 2019 as short
term leases
• the use of hindsight in determining the
lease term where the contract contains
options to extend or terminate the lease.
Estimates and judgements applied
In the process of adopting NZ IFRS 16,
a number of judgements and estimates
have been made. These include:
• incremental borrowing rate at the time
of adoption
• lease terms, including any rights or
renewal that the Group are reasonably
certain will be exercised.
• foreign exchange conversion rates
• application of practical expedients and
recognition exemptions allowed by the
new standards, including those in respect
of low value assets and short term
lease exemptions.
The following tables show the movements
and analysis in relation to the right-of-use
assets and lease liabilities, created on the
adoption of NZ IFRS 16.
INTERIM FINANCIAL STATEMENTS 2019
31
12CHAIC2ICRHI’21A2S EVCHEIW 1V1’ VSIACVCH3H1CAI451V5E CHE6I4’21C76
Right-of-use Assets
TOTAL
$’000
Opening net book value 1 April 2019
Recognised on transition58,344
Additions149
Depreciation for the period(3,962)
Foreign exchange impact342
Closing net book value 30 September 201954,873
Cost85,967
Accumulated depreciation(31,094)
Net book value at 30 September 201954,873
The recognised right-of-use asset relate to the following types of assets:
30 SEP 191 APR 19
$’000$’000
Property54,479 57,864
Motor vehicles277 349
Equipment117 131
Total right-of-use assets54,873 58,344
8. LEASES (CONT.)
METRO PERFORMANCE GLASS LIMITED
INTERIM FINANCIAL STATEMENTS 2019
32
12CHAIC2ICRHI’21A2S EVCHEIW 1V1’ VSIACVCH3H1CAI451V5E CHE6I4’21C76
Lease liabilities
TOTAL
$’000
Operating lease commitments disclosed as at 31 March 201947,195
Discounted at the incremental borrowing rate at 1 April 201938,182
Less: Short-term leases(50)
Adjustments as a result of different treatment of extension and
termination options27,626
Opening lease liabilities recognised 1 April 201965,758
Additions149
Interest for the period1,649
Lease payments made(4,825)
Foreign exchange impact349
Lease liabilities at 30 September 201963,080
Lease liabilities maturity analysis
MINIMUM LEASE
PAYMENTS
INTERESTPRESENT
VALUE
$’000$’000$’000
Within one year9,255 (3,082)6,173
One to five years28,531 (9,722)18,809
Beyond five years48,777 (10,679)38,098
Lease liabilities at
30 September 201986,563 (23,483)63,080
Current6,173
Non-current56,907
Lease liabilities at 30 September 201963,080
8. LEASES (CONT.)
INTERIM FINANCIAL STATEMENTS 2019
33
12CHAIC2ICRHI’21A2S EVCHEIW 1V1’ VSIACVCH3H1CAI451V5E CHE6I4’21C76
Lease related expenses included in the Statement of Comprehensive Income
TOTAL
$’000
For the six months ended 30 September 2019
Depreciation3,962
Short-term leases274
Interest on leases1,649
Interest on make-good provisions76
Total5,961
Lease payments included in the Statement of Cashflows
TOTAL
$’000
For the six months ended 30 September 2019
Total cash outflow in relation to leases4,825
9. ACCOUNTING STANDARDS
Except as described below, the accounting
policies applied are consistent with those
of the annual financial statements for the
year ended 31 March 2019, and as described
in those annual financial statements.
There was one new standard applied during
the period which had a material impact.
• NZ IFRS 16: Leases (effective from
periods beginning on or after 1 January
2019). This standard replaces the current
guidance in NZ IAS 17.
Transition
The Group has adopted NZ IFRS 16
retrospectively from 1 April 2019, but has
not restated comparatives for the 2019
reporting period, as permitted under
the specific transitional provisions in the
standard. The reclassifications and the
adjustments arising from the new leasing
rules are therefore recognised in the
opening balance sheet on 1 April 2019.
The Group leases mainly relate to buildings
which were all classified as operating
leases until 31 March 2019. Payments
made under operating leases (net of
any incentives received from the lessor)
were previously charged to profit or
loss on a straight line basis over the
period of the lease. Rental contracts
are typically made for fixed periods of
1 to 16 years but may have extension
options. Lease terms are negotiated on
an individual basis and contain a wide
range of terms and conditions. The lease
agreements do not impose any covenants,
but leased assets may not be used as
security for borrowing purposes.
8. LEASES (CONT.)
METRO PERFORMANCE GLASS LIMITED
INTERIM FINANCIAL STATEMENTS 2019
34
12CHAIC2ICRHI’21A2S EVCHEIW 1V1’ VSIACVCH3H1CAI451V5E CHE6I4’21C76
9. ACCOUNTING STANDARDS (CONT.)
From 1 April 2019, leases are recognised as
a right-of-use asset and a corresponding
liability. Each lease payment is allocated
between the lease liability and the finance
cost. The finance cost is charged to
profit and loss over the lease period so
as to produce a constant periodic rate of
interest on the remaining balance of the
liability for each period. The right-of-use
asset is depreciated over the shorter of
the asset's useful life and the lease term
on a straight line basis.
Assets and liabilities arising from a lease are
initially measured on a present value basis.
Lease liabilities include the net present
value of the following lease payments:
• fixed payments, less any lease incentives
receivable and
• variable lease payments that are based
on an index or a rate.
The lease payments are discounted using
the interest rate implicit in the lease. If that
rate cannot be determined, the Group's
incremental borrowing rate is used, being
the rate that the Group would have to
pay to borrow the funds necessary to
obtain an asset of similar value in a similar
economic environment with similar terms
and conditions.
Right-of-use assets are measured at
cost comprising the amount of the initial
measurement of lease liability and any
restoration costs. These assets are
subsequently depreciated using the straight
line method from the commencement date
to the end of the lease term.
Payments associated with short term
leases and leases of low value assets are
recognised on a straight-line basis as
an expense in profit or loss. Short term
leases are leases with a lease term of 12
months or less. Low value assets comprise
IT equipment and small items of office
furniture.
In addition to the opening balance sheet
lease liabilities and right-of-use assets
impact on transition disclosed below, the
Group has recognised $1.5m of deferred
tax assets and a cumulative net impact to
retained earnings of $3.9m as a result of
the accounting standard adoption. Included
in the net impact of retained earnings is a
$2.78m reduction of fixed lease increases
and incentives that have been derecognised.
For comparative period analysis purposes,
the adoption of the accounting standard
has affected the following items of
the income statement and statement
of cashflows:
• In the income statement 'finance costs'
included interest expense associated
with lease liabilities, and 'administration
expenses' includes depreciation
associated with right-of-use assets.
• In the statement of cash flows lease
payments are now split between principal
repayments classified within 'financing
activities' and interest repayments
classified within 'operating activities'.
Previously lease payments were included
within 'payments to suppliers and
employees' within operating activities.
The tables below provide further detail in
relation to the impacts of NZ IFRS 16 on the
consolidated Statement of Comprehensive
Income and the consolidated Statement of
Financial Position.
INTERIM FINANCIAL STATEMENTS 2019
35
12CHAIC2ICRHI’21A2S EVCHEIW 1V1’ VSIACVCH3H1CAI451V5E CHE6I4’21C76
Impact of NZ IFRS 16 on the Statement of Comprehensive Income and earnings per share
for the six months ended 30 September 2019
PRE NZ IFRS 16ADJUSTMENTS
UNDER
NZ IFRS 16
POST
NZ IFRS 16
$’000$’000$’000
Sales revenue136,691 –136,691
Cost of sales(73,590)680 (72,910)
Gross profit63,101 680 63,781
Distribution and glazing related expenses(24,336)83 (24,253)
Selling and marketing expenses(7,812)76 (7,736)
Administration expenses(17,318)20 (17,298)
Operating profit13,63585914,494
Interest expense(2,026)(1,725)(3,751)
Interest income101 –101
Profit before income taxation11,710 (866)10,844
Income taxation expense(3,370)242 (3,128)
Profit for the period8,340(624)7,716
Other Comprehensive Income
Exchange differences on translation
of foreign operations(147)(84)(231)
Cash flow hedges645 645
Total comprehensive income for the
period attributable to shareholders8,838(708)8,130
Earnings per shareCentsCentsCents
Basic / Diluted Earnings per share4.5(0.3)4.2
9. ACCOUNTING STANDARDS (CONT.)
METRO PERFORMANCE GLASS LIMITED
INTERIM FINANCIAL STATEMENTS 2019
36
12CHAIC2ICRHI’21A2S EVCHEIW 1V1’ VSIACVCH3H1CAI451V5E CHE6I4’21C76
Impact of NZ IFRS 16 on the Statement of Financial Position at 30 September 2019
Assets and liabilities have both increased as a result of the change in accounting policy
relating to leases. At 30 September 2019 the Statement of Financial Position accounts
affected by the change are detailed below:
PRE NZ IFRS 16ADJUSTMENTS
UNDER
NZ IFRS 16
POST
NZ IFRS 16
$’000$’000$’000
Right-of-use assets–54,87354,873
Deferred tax assets4,0001,7475,747
Impact on total assets4,00056,62060,620
Current lease incentive135 (135)–
Current lease liabilities–6,1736,173
Non-current lease incentive2,675 (2,675)–
Non-current lease liabilities–56,90756,907
Deferred tax liabilities–––
Non-current provisions2,961 941 3,902
Impact on Total liabilities5,77161,21166,982
Impact on Net assets(1,771)(4,591)(6,362)
9. ACCOUNTING STANDARDS (CONT.)
INTERIM FINANCIAL STATEMENTS 2019
37
COMPANY DIRECTORY
insight
creative.co.nz
MPG017
REGISTERED OFFICE
5 Lady Fisher Place
East Tamaki
Auckland 2013
New Zealand
Email: glass@metroglass.co.nz
Phone: +64 (09) 927 3000
BOARD OF DIRECTORS
Peter Griffiths - Non-Executive Chair and
Member of the Audit and Risk Committee
Angela Bull - Non-Executive Director and
Chair of the People and Culture Committee
Gordon Buswell - Non-Executive Director
and Member of the People and Culture
Committee
Russell Chenu - Non-Executive Director and
Member of the Audit and Risk Committee
Willem (Bill) Roest - Non-Executive Director
and Chair of the Audit and Risk Committee
Rhys Jones - Non-Executive Director
and Member of the People and Culture
Committee
SENIOR LEADERSHIP
Simon Mander - Chief Executive Officer
John Fraser-MacKenzie - Chief Financial
Officer
Robyn Gibbard - General Manager Upper
North Island
Gareth Hamill - General Manager Lower
North Island
Andrew Dallison - General Manager
South Island
Barry Paterson - General Manager
Commercial Glazing
Dayna Saunders - Human Resources Director
Amandeep Kaur - Group Safety and Wellbeing
Manager
AUDITOR
PricewaterhouseCoopers
22/188 Quay Street
Auckland 1142
New Zealand
LAWYERS
Bell Gully
Vero Centre
48 Shortland Street
Auckland 1140
New Zealand
BANKERS
Bank of New Zealand Limited
Westpac New Zealand Limited
SHARE REGISTRAR
Link Market Services
Level 11, Deloitte Centre
80 Queen Street, Auckland 1010
PO Box 91976, Auckland 1142
FURTHER INFORMATION ONLINE
This Interim Report, all our core governance
documents (our Constitution, some of our
key Policies and Charters), our Investor
relations policies and all our announcements
can be viewed on our website:
http://www.metroglass.co.nz/investor-
centre/
METROGLASS.CO.NZ
---
Strictly
confidential
and
not
for
public
release
FY20
Interim
Results
Presentation
25
November
2019
Metro
Performance
Glass
Strictly
confidential
and
not
for
public
release
1
This
presentation
(“
Presentation
”)
has
been
prepared
by
Metro
Performance
Glass
Limited
(Company
Number
5267882)
(“
Metro
Performance
Glass
”).
Please
do
not
read
this
Presentation
in
isolation
This
presentation
contains
some
forward
looking
statements
about
Metro
Performance
Glass
and
the
environment
in
which
the
company
operates.
Forward
looking
statements
can
generally
be
identified
by
the
use
of
forward
looking
words
such
as
“anticipate”,
“expect”,
“likely”,
“intend”,
“should”,
“could”,
“may”,
“propose”.
“will”,
“believe”,
“forecast”,
“estimate”,
“outlook”,
“target”,
“guidance”
and
other
similar
expressions.
Forward
looking
statements,
opinions
and
estimates
provided
in
this
Presentation
are
inherently
uncertain
and
are
based
on
assumptions
and
estimates
which
are
subject
to
certain
risks,
uncertainties
and
change
without
notice.
Because
these
statements
are
forward
looking,
Metro
Performance
Glass’
actual
results
could
differ
materially.
Any
past
performance
information
in
this
Presentation
should
not
be
relied
upon
as
(and
is
not) an
indication
of
future
performance.Media
releases,
management
commentary
and
analysts
presentations
are
all
available
on
the
company’s
website.
Please
read
this presentation
in
the
wider
context
of
material
previously
published
by
Metro
Performance
Glass.
There
is
no
offer
or
investment
advice
in
this
Presentation
This
presentation
is
not
an
offer
of
securities,
or
a
proposal
or
invitation
to
make
any
such
offer.
It
is
not
investment
advice or
a
securities
recommendation,
and
does
not
take
into
account
any
person’s
individual
circumstances
or
objectives.
Every
investor
should
make
an
independent
assessment
of
Metro
Performance
Glass
on
the
basis
of
independent
expert
financial
advice.
All
information
in
this
Presentation
is
current
at
the
date
of
this
Presentation,
and
all
currency
amounts
are
in
NZ
dollars, unless
otherwise
stated.
Metro
Performance
Glass
is
under
no
obligation
to,
and
does
not
undertake
to,
update
the
information
in
this
Presentation,
including
any
assumptions.
Disclaimer
To
the
maximum
extent
permitted
by
law,
Metro
Performance
Glass
and
its
affiliates
and
related
bodies
corporate,
officers,
employees,
agents
and
advisors
make
no
representation
or
warranty
(express
or
implied)
as
to
the
currency,
accuracy,
reliability
or
completeness
of the
information
in
this
Presentation
and
disclaim
all
liability
for
the
information
(whether
in
tort
(including
negligence)
or
otherwise)
to
you
or
any
other
person
in
relation
to
this
Presentation,
including
any
error
in
it.
Disclaimer
Strictly
confidential
and
not
for
public
release
Summary
of
the
first
half
FY20
In
New
Zealand
we
continued
to
improve
our
customer
experience
and
differentiate
our
offering,
in
an
increasingly
competitive
and
variable
market.
Australian
Glass
Group
grew
revenue
in
the
key
double
‐
glazing
segment
and
continued
to
deliver
improved
operational
performance.
We
have
strengthened
the
group
balance
sheet,
with
net
debt
reduced
by
$21.9m
year
on
year
and
$10.0m
over
the
past
6
months.
2
Strictly
confidential
and
not
for
public
release
1H20:
Key
financial
outcomes
Group
revenue
of
$136.7m
declined
3%
vs.
1H19,
EBIT*
of
$14.5m
(
‐
6%)
and
NPAT*
of
$7.7m
(
‐
15%)
in
challenging
markets,
supported
by
stable
New
Zealand
performance
and
Australian
double
glazing
growth
NZ
revenue
of
$109.6m
(
‐
3%)
and
EBIT*
of
$17.2
(+2%),
with
broad
softness
in
the
residential
sector,
particularly
in
the
upper
North
Island.
Service
levels
continue
to
improve
Australia
revenue
maintained
in
soft
market,
EBIT*
loss
of
$2.3m
vs.
loss
of
$1.3m
1H19,
with
higher
volumes
offset
by
lower
pricing
and
adverse
foreign
exchange
movements
Net
debt
declined
$21.9
million
year
on
year
to
$73.4
million,
supported
by
a
$5.3m
reduction
of
working
capital
*
Inclusive
of
impacts
from
the
new
lease
accounting
standard
(NZ
IFRS
16).
This
was
adopted
in
1H20
with
no
adjustments
made
to
prior
years.
Further
details
are
provided
in
note
9
of
the
interim
financial
statements.
3
1234
Strictly
confidential
and
not
for
public
release
Our
strategy
at
a
glance
4
Our goals
Deliver
the best
customer
service
in
our
market
Develop our
organisational
capabilities
Uphold our
scale
strength
through
leading
products
&
distribution
Leverage that
scale
to
deliver
best
product
value
Strictly
confidential
and
not
for
public
release
Executing
on
our
strategy
•
Positive
feedback
received
in
recent
customer
survey
1
with
NZ
rated
7.3/10
and
AGG
rated
8/10
•
Continued
improvements
in
service
levels
and
product
quality
in
1H20
(vs.
1H19)
•
NZ
DIFOT
up
2%
•
NZ
external
reworks
down
32%
•
AGG
DIFOT
up
10%
•
AGG
external
reworks
down
22%
•
Embedding
a
culture
of
safety
and
wellbeing,
supported
by
tools,
frameworks
and
leadership
•
Rolling
12
month
voluntary
turnover
in
NZ
reduced
from
28%
to
22%
year
on
year
•
Courageous
coaching
conversations
training
provided
to
more
than
150
people
leaders
•
Developing
learning
management
system
for
launch
in
H2
FY20
•
AGG
grew
its
customer
base
by
3%
in
1H20
•
Launched
market
‐
leading
LowE
‘Extreme’
double
glazing
for
the
premium
window
market
•
Continued
to
demonstrate
market
leadership
and
the
potential
of
glass
as
the
sole
glass
supplier
for
TV3’s
“The
Block
NZ”
•
Introduced
improved
technical
specification
process
for
generic
balustrades
and
pool
fencing
–
significantly
reducing
lead
‐
times
for
customers
•
Continuous improvement
being
embedded
across
the
plant
network
•
Christchurch
restructure
completed
supporting
improved
South
Island
profitability
5
1
Question:
“On
a
scale
of
1
to
10,
how
likely
are
you
to
recommend
Metroglass
to
a
friend
or
colleague?”
Deliver
market
leading
customer
service
Develop
our
organisational
capabilities
Uphold
scale
strength
through
product
&
channel
leadership
Leverage
our
scale
to
deliver
solutions
efficiently
Strictly
confidential
and
not
for
public
release
6
•
Using
a
9
month
lag,
residential
dwelling
consents
for
12
months
to
30
September
19
rose
+6.7%
•
North
Island
+9.8%
•
South
Island
‐
1.2%
Canterbury
‐
8.8%
Total
NZ
residential
consents
(9
month
lagged,
by
number)
NZ
non
‐
residential
consents
(by
value
$bn)
2
•
The
value
of
non
‐
residential
dwelling
consents
for
the
12
months
to
30
September
19
rose
+12.7%
•
North
Island
+7.6%
•
South
Island
+26.3%
31,123
33,217
7.6
30,339
+2.4%
+6.7%
+12.7%
+4.9%
1. Source:
Statistics
NZ,
rolling
month
residential
dwelling
consents.
Detached
hosing
consents
lagged
by
9
months,
multi
‐
residential
consents
lagged
by
12
months.
2. Source:
Statistics
NZ,
value
of
non
‐
residential
consents
(new
plus
altered).
No
lag
applied.
Residential
construction
in
NZ
remains
at
elevated
levels,
with
the
mix
of
consents
increasingly
weighted
towards
multi
‐
dwellings
6.7
6.4
On
a
lagged
basis,
for
the
12
months
to
30
September
2019:
•
Multi
‐
dwelling
consents
rose
+22%
(12
month
lag)
•
Detached
house
consents
were
flat
(9
month
lag)
•
The
proportion
of
multi
‐
dwelling
consents
has
increased
from
32%
in
1H19,
to
36%
in
1H20.
This
shift
has
extended
the
average
time
between
a
consent
and
completion,
and
changes
the
mix
of
glass
products
demanded
NZ
detached
housing
(9
month
lagged)
and
multi
‐
residential
(12
month
lagged)
consents
(by
number)
1
2.1
1.8
2.3
4.3
4.9
5.3
Sept
2017
Sept
2018
Sept
2019
South
Island
North
Island
8,952
8,631
8,528
21,447
22,492
24,689
Sept
2017
Sept
2018
Sept
2019
South
Island
North
Island
‐
5,000
10,000
15,000
20,000
25,000
Sept
2012 Sept
2013 Sept
2014 Sept
2015 Sept
2016 Sept
2017 Sept
2018 Sept
2019
Detached
Housing
(6m
lag)
Multi
‐
residential
(12m
lag)
Strictly
confidential
and
not
for
public
release
New
Zealand
is
focused
on
delivering
better
quality
and
stable
service
levels
as
competitive
activity
intensifies
across
the
country
7
•
Delivering
a
consistent
experience
for
our
customers
is
critical
for
their
success
and
enables
stronger
relationships
‐
Customer
service
levels
continue
to
trend
positively
with
DIFOT
up
2%
and
external
reworks
down
32%
‐
Variable
market
activity,
particularly
in
the
Upper
North
Island,
impacted
sales,
however
GP%
increased
with
a
higher
value
mix
•
Maintained,
and
continue
to,
focus
on
efficient
operations
and
ensuring
prudent
operational
expenditure
•
Voluntary
staff
turnover
declined
from
28%
to
22%
in
1H20
vs.
1H19
on
a
rolling
12
month
basis
•
Introduced
an
improved
technical
specification
process
for
generic
balustrades
and
pool
fencing.
This
provided
customers
with
a
Producer
Statement
#1
(PS1)
in
1.5
days
on
average,
down
from
40+
days
in
the
same
period
last
year
Strictly
confidential
and
not
for
public
release
36,179
38,426
38,323
29,670
29,586
29,174
Sept
2017
Sept
2018
Sept
2019
VIC
NSW
ACT
TAS
8
South
east
Australia
house
approvals
(6mth
lagged,
by
number)
1
South
east
Australia
alterations
&
additions
(by
value
A$bn)
2
•
Detached
dwelling
(house)
approvals
in
south
east
Australia,
lagged
6
months,
for
the
12
months
to
30
September
19 grew
+1%
•
Victoria
‐
0%,
NSW
‐
1%,
ACT
+26%
Tasmania
+28%
•
Counter
to
the
broader
market
activity
levels,
the
penetration
of
double
glazing
in
Australia
is
increasing
as
supported
by
increasing
energy
efficiency
requirements
for
buildings
•
The
value
of
alterations
and
additions
for
the
12
months
to
30
September
19
declined
by
‐
3%
•
Victoria
‐
3%,
NSW
‐
5%,
ACT
+39%,
TAS
+21%
68,847
71,357
71,753
Residential
construction
activity
in
south
east
Australia
is
flat
but
expected
to
soften
1. Source:
Australian
Bureau
of
Statistics,
number
of
residential
dwelling
approvals
(12
months
to
30
September
2019)
with
a
6
month
lag
applied
2. Source:
Australian
Bureau
of
Statistics,
value
of
alterations
and
additions
(12
months
to
30
September
2019).
No
lag
applied.
+3.6%
+0.6%
5.5
5.8
5.7
+5.5%
‐
2.6%
2.7
2.8
2.7
2.6
2.8
2.7
Sept
2017
Sept
2018
Sept
2019
VIC
NSW
ACT
TAS
Strictly
confidential
and
not
for
public
release
•
Australian
revenue
in
AUD
increased
1%,
including
3%
growth
in
our
key
doubling
glazing
segment
•
Improved
operational
performance
across
all
states,
with
DIFOT
+10%
and
external
reworks
down
22%
vs.
1H19
•
Increased
customer
confidence
in
quality
and
delivery
performance
,
reinforced
by
positive
feedback
in
July
customer
survey
•
AGG’s
branding
strategy
has
seen
double
glazing
sales
increase,
supported
by
sales
of
premium
soft
coat
LowE
products
+15%
•
Tasmania
continues
its
growth
trajectory
from
start
‐
up
to
profitable
and
competitive
business
AGG
has
turned
around
its
operating
performance
and
has
begun
increasing
share
in
key
doubling
glazing
segments
9
Strictly
confidential
and
not
for
public
release
•
AGG’s
Victorian
and
Tasmanian
operations
are
profitable,
and
the
New
South
Wales
business
has
significantly
improved
its
operational
performance
and
customer
service.
In
the
last
6
months
double
glazing
sales
in
NSW
grew
by
19%,
however
this
was
offset
by
declines
in
margins
and
volumes
of
other
processed
glass
•
Despite
our
best
efforts
NSW
has
continued
to
be
a
loss
‐
making
business.
While
we
continue
to
see
long
term
value
and
opportunity
in
the
NSW
market
as
the
penetration
of
double
glazing
increases,
this
will
take
time
•
Going
forward,
Sydney
operations
will
be
consolidated
and
focused
on
supplying
double
glazing
to
window
manufacturers,
with
local
production
of
non
‐
window
or
processed
glass
being
discontinued
•
This
restructure
will
regrettably
impact
a
significant
number
of
our
Sydney
staff
and
our
priority
is
to
support
those
affected
•
We
believe
these
changes
will
provide
an
improved
competitive
position
and
financial
performance
over
the
medium
term
•
In
FY20,
the
restructure
will
have
a
one
‐
off
cash
impact
of
$2.5
million
(of
which
$1.1
million
is
already
provided
for)
and
an
estimated
asset
write
off
totalling $3.5
million
•
The
transition
is
planned
to
be
completed
by
the
end
of
March
2020
Update
on
New
South
Wales
10
Strictly
confidential
and
not
for
public
release
1H20:
Metroglass
Group
revenue
(NZ$m)
11
Note: The allocation of sales between residential and commercial applicatio
ns is difficult as Metroglass doesn’t always know the end use of a piece of
glass. The categorisation methodology is
consistent across periods, however Commercial Glazing revenue will include some level of residential glazing sales and services.
(1%)
(3%)
NZ
(6%)
(3%)
(2%)
(3%)
$74.9m
$22.8m
$11.8m
$27.1m
$136.7m
$76.7m
$24.2m
$12.2m
$27.5m
$140.5m
Residential
(NZ) Commercial
Glazing
(NZ)
Retrofit
(NZ)
Australian
Glass
Group
(AU)
Metro
Glass
Group
1H20
1H19
Strictly
confidential
and
not
for
public
release
1H20:
Financial
results
summary
12
1. Unless otherwise stated, financial results are inclusive
of impacts from the new lease accounting standard (NZ IFRS
‐
16). Further details are provided in note 9 to the interim financial
statements.
2. The definitions for all non
‐
GAAP measures of financial performance are
provided on slide 18 of this release.
3. The full segment note is available in note 2 of the interim financial statements.
Segment
results
(NZ$m)
3
Under
IFRS
16
%
change
Pre
IFRS
16
1H20
1H20
1H19
New
Zealand
Revenue
109.6 113.0
‐
3%
109.6
Gross
profit
%
52.8% 51.0%
52.1%
Segmental EBIT
17.2 17.0
2%
16.3
AustraliaRevenue
27.1 27.5
‐
1%
27.1
Gross
profit
%
21.5% 26.9%
22.3%
Segmental
EBIT
(2.3) (1.3)
‐
69%
(2.2)
NZ$
million
1
Under
IFRS
16
%
change
Pre
IFRS
16
1H20
1H20 1H19
Revenue
136.7 140.5
‐
3%
136.7
EBITDA
2
25.5
22.7
12%
20.6
Depreciation
&
amortisation 11.0
7.2
51%
7.0
EBIT
14.5
15.5
‐
6%
13.6
Net
profit
for
the
period
7.7
9.1
‐
15%
8.3
Basic
EPS
(cents)
4.2
4.9
‐
15%
4.5
Total
dividend
declared
(cps)
3.60
n.a.
Strictly
confidential
and
not
for
public
release
15.5
13.6
14.5
1.7
2.0
1.0
0.1
1.2
0.2
0.1
0.4
0.9
1H19 EBIT
Lower revenue
(largely UNI residential)
NZ gross profit % improvement
Costs: Other
AGG revenue
AGG gross profit % decline
Costs: Other
Translation impact
(AUD to NZD)
Other Group costs
1H20 EBIT pre‐IFRS 16
NZ IFRS‐16 lease changes
1H20 EBIT
EBIT
bridge:
1H19
to
1H20
($m)
13
* Increments shown in Australian dollars.
New
Zealand
Australia*
Strictly
confidential
and
not
for
public
release
1H20:
Group
summary
cash
flow
&
balance
sheet
14
•
The
group
achieved
reductions
in
working
capital
for
the
second
successive
year
through
close
management
of
trade
debtors
and
inventory
•
Net
operating
cash
flows
doubled
versus
the
prior
comparable
period,
supported
by
reduced
tax
payments
and
the
impact
of
NZ
IFRS
16
lease
accounting
standards
•
Reported
net
debt
decreased
by
$21.9m
year
on
year
and
$10.0m
over
the
past
six
months.
Group
gearing
2
decreased
from
36.9%
at
30
September
2018
to
31.2%
at
30
September
2019
•
At
30
September
2019
the
ratio
of
net
debt
to
EBITDA
was
1.9
times
•
Right
‐
of
‐
use
assets
and
lease
liabilities
are
now
shown
on
the
balance
sheet
following
the
adoption
of
the
NZ
IFRS
16
accounting
standard
Notes:1. Net working capital: trade & other receivables + inventory
‐
trade & other payables.
2. Gearing: net interest bearing debt / (net interest bearing debt + equity).
Key
balance
sheet
items
(NZ$m)
1H20
1H19
Pre
NZ
IFRS
16
1H20
Net
working
capital
1
31.2
36.6
31.2
Property
plant
&
equipment
63.8
65.8
63.8
Total
assets
341.5
303.8
284.9
Right
of
use
assets
54.9
n/a
n/a
Lease
liabilities
63.0
n/a
n/a
Net
debt
73.4
95.2
73.4
Total
shareholders
equity
161.4
162.8
166.0
Key cash
flow
items
(NZ$m)
1H20
1H19
Pre
NZ
IFRS
16
1H20
EBITDA
25.5
22.7
20.6
Operating
cash
flows
18.9
9.4
15.7
Capital
expenditure
4.3
2.3
4.3
Dividends
paid
‐
7.0
‐
Strictly
confidential
and
not
for
public
release
1H20:
Net
debt
and
cash
flows
15
95.2
83.3
73.4
125.0
27.1
3.7
4.4
4.3
3.2
1.5
Net debt (30 Sept 18)
Net debt (31 Mar 19)
Net operating cashflows
Interest paid
Tax paid
Capital expenditure
Lease payments
Foreign exchange & other
Net debt (30 Sept 19)
Total Bank Facility
Strictly
confidential
and
not
for
public
release
FY20
outlook
The
market
•
In
NZ,
building
consents
to
remain
at
elevated
levels,
weighted
increasingly
towards
multi
‐
residential
dwellings.
While
leading
indicators
suggest
no
significant
change
to
this
in
the
near
team,
we
expect
further
softness
in
certain
regional
markets,
including
Auckland
•
In
Australia,
leading
indicators
point
to
a
further
softening
of
residential
construction
activity
in
the
near
term,
impacting
multi
‐
residential
approvals
in
particular.
AGG
is
primarily
involved
in
the
new
detached
housing
and
alterations
and
additions
segments
which
have
been
less
volatile
but
are
also
expected
to
decline
16
Revised
outlook
for
the
2020
financial
year
•
Group
EBIT
in
the
range
of
$21m
‐
$24m,
excluding:
•
the
impact
of
the
change
to
IFRS
16
(lease
accounting
standards)
which
we
expect
to
increase
reported
EBIT
by
~$1.7
million
•
a
net
abnormal
charge
of
approximately
$5m
related
to
the
restructure
of
NSW
(asset
write
off
of
$3.5m
and
cash
costs
of
$2.5m,
less
$1.1m
already
provided
for)
•
Reduction
in
net
debt
of
circa.
$15m
(inclusive of
impacts
from
the
restructure
of
NSW)
Strictly
confidential
and
not
for
public
release
Q&A
session
Strictly
confidential
and
not
for
public
release
Appendix:
Explanation
of
non
‐
GAAP
profit
measures
18
Non
‐
GAAP
financial
information
•
Group
results
are
reported
under
NZ
IFRS.
This
presentation
includes
non
‐
GAAP
financial
measures
which
are
not
prepared
in
accordance
with
NZ
IFRS,
being:
•
EBITDA:
Earnings
before
interest,
tax,
depreciation
and
amortisation
•
Segmental
EBIT:
Earnings
before
interest
and
tax
(EBIT)
for
either
the
New
Zealand
or
Australia
segment
of
the
Group
•
EBIT
pre
‐
IFRS
16:
Earnings
before
interest
and
tax
(EBIT)
adjusted
to
remove
the
impact
of
changes
from
NZ
IFRS
16
(lease
accounting
standard)
•
NPAT
pre
‐
IFRS
16:
Profit
for
the
period
(NPAT)
adjusted
to
remove
the
impact
of
changes
from
NZ
IFRS
16
(lease
accounting
standard)
•
We
believe
that
these
non
‐
GAAP
financial
measures
provide
useful
information
to
readers
to
assist
in
the
understanding
of
our
financial
performance,
financial
position
or
returns,
but
that
they
should
not
be
viewed
in
isolation,
nor
considered
as
a
substitute
for
measures
reported
in
accordance
with
NZIFRS
•
Non
‐
GAAP
financial
measures
may
not
be
comparable
to
similarly
titled
amounts
reported
by
other
companies
Six
months
to
30
September
1H20
1H19
($M)
($M)
Profit
for
the
period
(GAAP)
7.7
9.1
Add:
taxation
expense
3.1
3.7
Add:
net
finance
expense
3.7
2.7
Earnings
before
interest
and
tax
(EBIT)
(GAAP)
14.5
15.5
Add:
depreciation
&
amortisation
11.0
7.2
EBITDA
25.5
22.7
EBIT
(GAAP)
14.5
Add:
Impact
of
NZ
IFRS
16
changes
(0.9)
EBIT
pre
‐
IFRS
16
13.6
15.5
Profit
for
the
period
(GAAP)
7.7
Add:
Impact
of
NZ
IFRS
16
changes
0.6
NPAT
pre
‐
IFRS
16
8.3
9.1
Strictly
confidential
and
not
for
public
release
Contact
information
Metro
Performance
Glass
Limited
5
Lady
Fisher
Place,
East
Tamaki
Auckland
2013,
New
Zealand
Ph:
(+64)
09
927
3000
www.metroglass.co.nz/
19
Simon
Mander
–Chief
Executive
Officer
Simon.Mander@metroglass.co.nz
(+64)
029
636
2661
John
Fraser
‐
Mackenzie
–Chief
Financial
Officer
john.fraser
‐
mackenzie@metroglass.co.nz
(+64)
027
551
6751
Andrew
Paterson
–Investor
Relations
andrew.paterson@metroglass.co.nz
(+64)
027
403
4323
---
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Updated as at 8 May 2019
Results for announcement to the market
Name of issuer Metro Performance Glass Limited
Reporting Period 6 months to 30 September 2019
Previous Reporting Period 6 months to 30 September 2018
Currency NZ$
Amount (000s) Percentage change
Revenue from continuing
operations
$136,691 Down 3%
Total Revenue $136,691 Down 3%
Net profit/(loss) from continuing
operations
$7,716 Down 15%
Total net profit/(loss) $7,716 Down 15%
Interim/Final Dividend
Amount per Quoted Equity
Security
Not Applicable
Imputed amount per Quoted
Equity Security
Not Applicable
Record Date Not Applicable
Dividend Payment Date Not Applicable
Current period Prior comparable period
Net tangible assets per Quoted
Equity Security
$0.08 $0.02
A brief explanation of any of the
figures above necessary to
enable the figures to be
understood
Accompanying this announcement are the Group’s unaudited
consolidated financial statements for the six months ended 30
September 2019. These financial statements and the half year result
commentary dated 25 November 2019 provide the balance of
information requirements in accordance with NZX Listing Rule 3.5 and
Appendix 2.
Authority for this announcement
Name of person
authorised to
make this announcement
Andrew Paterson
Contact person for this
announcement
Andrew Paterson
Contact phone number +64 27 403 4323
Contact email address Andrew.Paterson@metroglass.co.nz
Date of release through MAP
25 November 2019
Unaudited financial statements accompany this announcement.
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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