Market Update – ACG sale process – capital raise

Metro Performance Glass
5 Lady Fisher Place
East Tamaki
Auckland 2013

Market Release
NZX: MPG, ASX: MPP
6 March 2024

Metroglass trading update, FY24 Guidance
Metro Performance Glass today provides an update on trading and provides guidance on its anticipated results
for the FY24 year which are due to be released in May 2024.
CEO Simon Mander said “Activity in the residential sector softened through the second half of 2023, impacting
demand for glass. The beginning of the calendar year was particularly weak as the sector restarted slower than
expected after the Christmas holiday period. Reduced supply chain costs were supportive. Uptake of high
value LowE glass continues to increase, reaching circa 50% of the double-glazing sales mix for the financial year
to date, and this quarter increased to 60%. In late February 2024 we ceased processing glass at our Wellington
factory and closed a regional branch in Auckland. During the year we reduced headcount in New Zealand by
10%.”
Australian Glass Group (AGG) continues to deliver satisfactory financial and operational performance at a time
of residential sector softness partially offset by the penetration of double glazing in new residential buildings.
The capital programme is on track which will expand capacity and improve plant reliability.
AGG sale process
As we have previously communicated, the board has been pursuing the divestment of AGG to reduce
debt. The sale process continues to advance but has extended longer than anticipated. The company expects
to provide a further update prior to the annual results in May 2024.
Q4 Market Outlook
Economic forecasts suggest a restrained 2024 with stubbornly high inflation and interest rates placing
downward pressure on the sector, offset by underlying housing demand from immigration.
Metroglass expects demand for glass to be flat for at least the next 12 months in New Zealand. The business
has resized to meet expected demand whilst ensuring customer service and quality is not compromised.
In Australia, demand for AGG’s products and services remains solid supported by national construction code
changes increasing double-glazing usage in residential buildings. AGG’s niche positioning providing some
protection from wider sector softening.
Financial Update
Consistent with our November release, market volatility has continued. Whilst we typically experience a loss in
January, the result was significantly worse than we had anticipated primarily driven by lower sales in New
Zealand. In Australia, trading was also subdued most notably in Tasmania. February trading improved but did
not catch-up January trading and was ultimately behind what we previously anticipated at our half year
release, for both NZ and AGG, albeit to a greater degree in NZ.
For the financial year ending 31 March 2024 Metroglass expects to achieve Group EBIT before significant items
in the range of $7.0 million to $8.0 million vs. $11.8 million in FY23. Net debt is expected to be circa $55 million
vs. $60.1 million in FY23.
Due to the combined trading performing in January and February 2024, Metroglass revises previously provided
management forecasts for AGG. AGG is expected to achieved revenue, EBITDA and EBIT of approximately AUD
$74.0 million, AUD $11.0 million, AUD $6.0 million
1
respectively.

1
Excluding Group management fee of NZD 0.5 million

Metroglass’ existing bank facilities mature in October 2024. The Company and its banking syndicate are about
to commence working on the conditions for and terms of a potential renewal. The banking syndicate has been
supportive, and is anticipated to remain supportive, while the Company enacts the plans required to reduce
debt and increase profitability. This support includes a relaxation of financial covenants for all test dates up to
and including 30 September 2024.
Board Response & Changes
The very tough trading conditions and uncertain short-term outlook (particularly in NZ) requires the company
to do everything it can to improve profitability, as quickly as possible. The NZ business needs an exceptionally
clear focus and immediate step-change in performance.
The company has implemented cost reduction programs in NZ, which has unfortunately impacted many staff.
However, this performance improvement must be accelerated and expanded in scope.
Although there may be future impact on our team, that is not the core focus. Our people continue to be the
company’s single most important strength, so our focus will be more on creating the environment and
conditions for staff to perform at their best.
This process starts with the board, who agreed today to reduce its numbers from 6 to 4. Peter Griffiths and
Jenn Bestwick have retired from the board. The board will suspend sub-committee fees for the remaining
Directors until the business performance improves markedly. This will immediately save cost.
The remaining four Directors, three of whom joined the Board within the last 4-months, have agreed to
increase (greatly in some cases) their time and energy commitment to help management develop and enact
plans to improve NZ performance at pace, as well as provide additional input in respect of the company’s debt
reduction plans.
Outgoing chair Peter Griffiths said “I am sad to retire from the board without having completed the
turnaround we embarked upon. Given the challenges the company faces, it is appropriate that I do my part to
help the company save costs”.
Shawn Beck has been appointed Chairperson. Whilst new to the board, he is not new to performance
improvement situations in tough conditions, debt reduction strategies and execution and has significant
experience in public and private companies with intense governance requirements.
Shawn comments “Today we as a board have committed to build a new pathway quickly. We are rolling our
sleeves up and as a board we will do what it takes to help management improve performance. The business
has a great team, led by Simon, and we will engage with them directly, with speed and clear purpose”.

/Ends
For further information, please contact:
Liam Hunt, Investor Relations
(+64) 0 22 010 4377, liam.hunt@metroglass.co.nz
Authorised for release by the Metro Performance Glass Board

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5 Lady Fisher Place
East Tamaki
Auckland, 2013

PO Box 58 144
Botany
Manukau
Auckland, 2163

P 09 927 3000
F 09 914 3325

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Market update – Australian Glass Group sale process – capital raise

As announced in February 2023, the board of Metroglass at the time initiated a process
to investigate the potential sale of Australian Glass Group (AGG) in order to reduce its
bank debt.

Following an extensive process and detailed discussions with a preferred party, a
revised offer has been received. Following evaluation of that offer, the board has
reached the view that progressing an offer on those revised terms would not be in the
best interests of the company or its shareholders.

While the board intends to continue to keep all options open, including in relation to
AGG, its intention is to now retain its investment in AGG and progress a capital raise to
further reduce its debt level, create the conditions for AGG to grow and improve the
New Zealand business.

While Metroglass was disappointed not to achieve the result initial indications
suggested, there are tangible benefits to retaining AGG. AGG is well run, it continues to
perform well despite reduced activity levels in Australia, it generates strong cash flows
and provides diversification benefits for the group. It is also well positioned to benefit
from investments in new equipment made last year and, with further investment, from
the adoption of new building regulations which are expected to drive the uptake of
double glazed glass. In addition, retaining AGG’s experienced management team
within the group will have benefits as it looks to improve the performance of the New
Zealand operations.

Metroglass will continue to advance the details of its capital raise with its advisers, and
expects to finalise those details of the raise on or shortly after its annual results
announcement in late May. Assuming market conditions are appropriate and that there
are no material changes to the outlook, its current intention is to raise at least $15m of
capital by way of an entitlement offer available to all existing shareholders. A
placement may also form part of the capital raise.

While the board has chosen to progress a capital raise as a means of reducing bank
debt, until the terms of the raise are finalised, it will continue to investigate all options
that deliver a satisfactory outcome for the company and maximise value for MPG
shareholders, including a sale of AGG if a satisfactory offer is received.

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Metroglass provided a trading update and an update on its FY24 guidance on 6 March.
That announcement is attached as Appendix 1. Further to the announcement this
morning that Metroglass’s chief executive officer has stepped down the board and
company are in the process of updating their outlook for FY25 and will provide an
update when this process is complete.

Contact:
Tony Candy
Chief Financial Officer - Tony.Candy@metroglass.co.nz
09 927 3010