Wrap Text
Preliminary audited group results for the year ended 30 June 2016
METROFILE HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1983/012697/06)
Share code: MFL
ISIN: ZAE000061727
("Metrofile" or "the Company" or "the group")
PRELIMINARY AUDITED GROUP RESULTS
for the year ended 30 June 2016
DIVIDENDS PER SHARE
NORMALISED HEPS NORMALISED REVENUE NORMALISED EBITDA FOR THE YEAR
33,8 cents per share R796,5 million R253,0 million 30,0 cents per share
UP UP UP UP
4,6% 10,5% 6,9% 42,9%
Summarised consolidated income statement
Normalised Normalised
Audited Audited Unaudited Unaudited
12 months 12 months 12 months 12 months
ended ended ended ended
30 June 30 June 30 June 30 June
R'000 2016 2015 2016 2015
Revenue 777 577 701 898 796 497 720 873
Earnings before interest, taxation, depreciation
and amortisation (EBITDA) 235 024 218 426 253 045 236 603
Depreciation (35 737) (31 636) (36 362) (32 320)
Operating profit before finance costs 199 287 186 790 216 683 204 283
Net finance costs (14 687) (13 084) (12 805) (12 402)
Finance income 4 646 7 492 4 646 7 492
Finance costs (19 333) (20 576) (17 451) (19 894)
Profit before taxation 184 600 173 706 203 878 191 881
Taxation (48 949) (46 244) (54 347) (51 333)
Profit for the year 135 651 127 462 149 531 140 548
Attributable to:
Owners of the parent 130 129 124 620 144 009 137 706
Non-controlling interests 5 522 2 842 5 522 2 842
Profit for the year 135 651 127 462 149 531 140 548
Further information
Number of ordinary shares in issue (thousands) 425 084 427 084 425 084 427 084
Weighted average number of ordinary shares
in issue (thousands) 425 944 425 831 425 944 425 831
Basic earnings per ordinary share
Basic earnings per ordinary share (cents) 30,6 29,3 33,9 32,3
Diluted earnings per ordinary share
Diluted earnings per ordinary share (cents) 30,6 29,2 33,9 32,3
Headline earnings per ordinary share
Headline earnings per ordinary share (cents) 30,5 29,3 33,8 32,3
Dividend per ordinary share
Interim dividend per ordinary share – paid (cents) 11,0 9,0 11,0 9,0
Final dividend per ordinary share – proposed/paid (cents) 19,0 12,0 19,0 12,0
Summarised consolidated
statement of comprehensive income
Normalised Normalised
Audited Audited Unaudited Unaudited
12 months 12 months 12 months 12 months
ended ended ended ended
30 June 30 June 30 June 30 June
R'000 2016 2015 2016 2015
Profit for the year 135 651 127 462 149 531 140 548
Other comprehensive income for the year net of tax* 656 (773) 656 (773)
Hedge accounting for fair value on interest rate swaps – 133 – 133
Currency movement on translation of foreign subsidiary 656 (906) 656 (906)
Total comprehensive income for the year 136 307 126 689 150 187 139 775
Attributable to:
Owners of the parent 130 551 123 812 144 431 136 898
Non-controlling interests 5 756 2 877 5 756 2 877
* All items will subsequently be reclassified to profit and loss.
Reconciliation of headline earnings
Normalised Normalised
Audited Audited Unaudited Unaudited
12 months 12 months 12 months 12 months
ended ended ended ended
30 June 30 June 30 June 30 June
R'000 2016 2015 2016 2015
Profit attributable to owners of the parent 130 129 124 620 144 009 137 706
Profit on disposal of plant and equipment (294) (231) (294) (231)
Tax effect of above items 179 205 179 205
Headline earnings 130 014 124 594 143 894 137 680
Headline earning per ordinary share (cents) 30,6 29,3 33,8 32,3
Summarised segmental information
Revenue EBITDA
Audited Audited Audited Audited
12 months 12 months 12 months 12 months
ended ended ended ended
30 June 30 June 30 June 30 June
R'000 2016 2015 2016 2015
Records Management 612 318 545 217 159 346 145 224
Property Companies
(Occupied by Records Management businesses) 59 901 53 366 59 901 53 366
CSX Customer Services 95 997 95 975 (1 060) 6 512
Other 79 904 70 992 16 837 13 324
Intergroup (70 543) (63 652) – –
Total 777 577 701 898 235 024 218 426
Operating profit Tangible assets
Audited Audited Audited Audited
12 months 12 months 12 months 12 months
ended ended ended ended
30 June 30 June 30 June 30 June
R'000 2016 2015 2016 2015
Records Management 131 438 121 423 339 755 405 372
Property Companies
(Occupied by Records Management businesses) 59 901 53 366 294 785 259 106
CSX Customer Services (1 647) 5 788 23 590 22 346
Other 9 595 6 213 67 088 56 555
Total 199 287 186 790 725 218 743 379
"Other" includes Metrofile Holdings, Rainbow Paper Management, Global Continuity, Cleardata and Lexie Legal Services.
"Records Management" represents the global document storage and management and scanning business units which are managed
and operated geographically.
Summarised consolidated
statement of financial position
Audited Audited
as at as at
30 June 30 June
R'000 Notes 2016 2015
ASSETS
Non-current assets 722 858 660 262
Property 1 292 835 258 349
Plant and equipment 204 317 202 051
Goodwill 218 573 194 615
Intangible assets 1 868 –
Investment in associate 449 –
Long-term receivable 559 1 574
Deferred tax assets 4 257 3 673
Current assets 227 506 281 405
Inventories 19 443 14 549
Trade receivables 136 293 121 245
Other receivables 2 46 053 25 094
Bank balances 25 717 120 517
Total assets 950 364 941 667
EQUITY AND LIABILITIES
Equity and reserves 660 341 630 407
Equity attributable to owners of the parent 643 398 617 520
Non-controlling interests 16 943 12 887
Non-current liabilities 144 942 175 160
Interest-bearing liabilities 3 123 297 156 125
Deferred taxation liability 21 645 19 035
Current liabilities 145 081 136 100
Trade and other payables 69 658 71 305
Deferred revenue 13 427 12 331
Bank overdraft 345 49
Provisions 2 678 2 436
Taxation 9 768 2 616
Interest-bearing liabilities 3 49 205 47 363
Total equity and liabilities 950 364 941 667
Net asset value per ordinary share (cents) 151,4 144,6
Notes:
1. The majority of the group's properties have been pledged as security against certain loans to
the group.
2. Other receivables includes a prepayment on land acquired for which transfer had not been registered at 30 June 2016.
3. Long-term interest-bearing liabilities represent the Metrofile (Pty) Ltd amortising and revolving
facilities. Short-term interest-bearing liabilities include the portions of the Metrofile (Pty) Ltd
amortising loan facility and group company loan agreements payable within one year. The
Metrofile (Pty) Ltd borrowings are JIBAR linked, whilst the other borrowings are prime linked.
Summarised consolidated statement of cash flows
Audited Audited
12 months 12 months
ended ended
30 June 30 June
R'000 2016 2015
Cash generated from operations before
net working capital changes 229 066 222 315
(Increase)/decrease in net working capital (41 208) 38 211
Increase in normal net working capital (41 208) (25 823)
Decrease in net normal working capital
due to insurance claim – 64 034
Cash generated from operations 187 858 260 526
Net finance costs paid (14 687) (13 084)
Dividends paid (97 835) (72 297)
Normal taxation paid (39 724) (58 568)
Net cash inflow from operating activities 35 612 116 577
Net cash outflow from investing activities
Investment in property: expansion (21 786) (6 354)
Investment in plant and equipment: expansion (44 578) (35 536)
Investment in property: replacement – (17 322)
Investment in plant and equipment: replacement (7 192) (7 952)
Proceeds on disposal of property, plant and equipment 1 506 1 684
Additions to Intangible assets (1 967) –
Investment in associate company (449) -
Acquisition of subsidiary (25 256) (28 575)
Net cash outflow from financing activities
Loans repaid (30 986) (35 253)
Loans drawn down – 97 919
Net (decrease))/increase in cash and cash equivalents (95 096) 85 188
Cash and cash equivalents at the beginning of the year 120 468 35 280
Cash and cash equivalents at the end of the year 25 372 120 468
Represented by:
Bank balances 25 717 120 517
Bank overdrafts (345) (49)
Summarised consolidated statement of changes in equity
Total equity
before
Accumulated Non- Non-
Share Share profits/ Other controlling controlling
R'000 capital premium (losses) reserves interest interest Total
Balance at 30 June 2014 (audited) 2 601 570 893 (21 889) 10 189 561 794 6 028 567 822
Shares issued in terms of share schemes 24 18 043 18 067 18 067
IFRS 2 Equity reserve relating to share schemes 4 211 4 211 4 211
Share scheme settlement (12 474) (5 593) (18 067) (18 067)
Minority contribution on acquisition of subsidiary 3 982 3 982
Dividends declared (72 297) (72 297) (72 297)
Total comprehensive income
for the year ended 30 June 2015 124 620 (808) 123 812 2 877 126 689
Balance at 30 June 2015 (audited) 2 625 588 936 17 960 7 999 617 520 12 887 630 407
Purchase of treasury shares (9 577) (9 577) (9 577)
IFRS 2 Equity reserve relating to share schemes 4 440 4 440 4 440
Share scheme settlement (1 494) (1 494) (1 494)
Minority contribution on acquisition of subsidiary (1 700) (1 700)
Dividends declared (98 042) (98 042) (98 042)
Total comprehensive income
for the year ended 30 June 2016 130 129 422 130 551 5 756 136 307
Balance at 30 June 2016 (audited) 2 625 579 359 50 047 11 367 643 398 16 943 660 341
Commentary on the results
Profile
Metrofile is the dominant service provider in both physical and
digital information and records management in Africa.
The group is represented in the six major provinces of South Africa, Botswana,
Mozambique, Nigeria, Zambia, the United Arab Emirates, Qatar,
Oman and, through subsidiary CSX Customer Services, undertakes
contracts in various other African countries. The Metrofile Records
Management division operates from 44 facilities, at 21 locations,
covering more than 87 136 square metres of warehousing and office
space. In accordance with its owner/lessee model, 68% of these
facilities are owned by the group. The rest of the group's divisions
lease their premises. In order to optimise operational efficiency,
Metrofile has a long-term target of owning approximately 70% of the
properties from which the Metrofile Records Management division operates.
Services include physical and digital Records Storage and
Management, Image Processing, Backup Storage and Management,
Records Management Software and Records Management
Consultancy, Business Continuity and IT Continuity, File plan
development, Confidential Records Destruction, Paper Recycling
as well as the sale and maintenance of a wide range of business
equipment, including scanners, library security systems, mailing and
packaging machines.
Metrofile has been listed on the JSE Limited ("JSE") since 1995
and its ordinary shares are quoted in the "Support Services"
sector of the JSE. Metrofile is a black-owned company with black
ownership amounting to 53,36% whilst its largest shareholder is its
empowerment partner, Mineworkers Investment Company ("MIC")
which owns 34,41% of Metrofile's equity.
Strategy
Metrofile will continue to expand its services in the information
management sector, through both innovation and acquisition.
The continued focus on cross-selling the group's diverse range of
services to both new and existing customers remains a key part of
the group's international strategy. The necessity for businesses to
not only archive but manage all types of records, whether they be in
physical or digital format, positions the group well to assist companies
with their record-keeping requirements, thereby mitigating risk to the organisation.
The group's expansion strategy continues to take cognisance of potential target
countries' business and political environment, governance, market
attractiveness, language, infrastructure, logistics, education and
labour force, potential client industries and overall risk.
Financial review
IFRS required that 36 months' business interruption insurance
proceeds relating to a fire at a facility in 2013 be recognised in full in
the 2014 financial year. Normalised results are accordingly presented
again, recognising this receipt over 36 months in order to present
more representative results for each affected reporting period.
Normalised revenue increased by 10,5% to R796,5 million, whilst
normalised EBITDA increased by 6,9% to R253,0 million.
Normalised headline earnings increased by 4,5% to R143,9 million.
Normalised basic earnings per share ("EPS") increased by 5,0% to
33,9 cents and normalised headline earnings per share ("HEPS")
increased by 4,6% to 33,8 cents. It should be noted that during the
period the group incurred non-recurring costs of R8,7 million after tax
equal to 2 cents per share arising from Head Office restructuring and
one-off CEO transition costs.
Cash generated from operations before net working capital changes
increased by 3,0% whilst the cash generated from operations
decreased by 27,9%.
Capital investments of R73,6 million were effected mainly for
expansion and included the development of new facilities in
Mbombela and Cape Town, and the purchase of racking, equipment
and mobile shredding units of R44,6 million required for growth.
The group's total interest bearing debt amounted to R172,5 million
at the year end, which equates to a Debt: Normalised EBITDA ratio
of 0,68 times.
Dividend policy
The Board has targeted maintaining debt levels at least at 1,5 times
EBITDA. However, continued strong cash generation has resulted in
leverage remaining below this level. The Board has accordingly resolved
to reduce dividend cover from 1,5 times to a target range of 1,25 to
1,5 times with effect from the 2016 financial year. In addition, until
the minimum debt levels are achieved, the Board has further resolved to
pay dividends with cover below the target range. The dividend for 2016
has accordingly been increased by 42,9% to 30 cents per share
representing cover of 1,1 times.
Acquisitions
In line with its bolt-on geographical acquisition strategy, the group
acquired interests in the following subsidiaries during the period:
- 100% shareholding in Document Bank Botswana (Botswana)
– effective 1 January 2016;
- 49% shareholding in Al Bidda Metrofile LLC (Qatar) – effective
1 January 2016;
- 40% shareholding in Lexie Legal Services (Pty) Ltd (South Africa)
– effective 1 January 2016; and
- 51% shareholding in E-File Teejan LLC via E-File Masters LLC
(Oman) – effective 1 February 2016.
Where applicable, goodwill has been recognised on the acquisitions
as the group's cash-generating units are expected to benefit from the
synergies of the combinations.
Basis of preparation and accounting policies
The directors take full responsibility for the preparation of these
Preliminary Audited Group Results. The group results have been
prepared, under the supervision of Mr MC McGowan, CA(SA). The
summarised financial information has been prepared in accordance
with the framework concepts and measurement and recognition
requirements of International Financial Reporting Standards (IFRS),
the SAICA Financial Reporting Guidelines as issued by the Accounting
Practices Committee and Financial Reporting Pronouncements as
issued by the Financial Reporting Standards Council, the information
as required by IAS 34: Interim Financial Reporting, the JSE Listings
Requirements and the requirements of the Companies Act of South
Africa. The report has been prepared using accounting policies that
comply with IFRS which are consistent with those applied in the
financial statements for the year ended 30 June 2015.
Certain accounting pronouncements became effective during the
current financial year; however, these do not have an impact on either
transactions or disclosures.
Audit opinion
The independent auditors, Deloitte & Touche, have issued their
unmodified audit opinion, on the consolidated financial statements for
30 June 2016 year-end, in accordance with International Standards
on Auditing. These financial statements have been derived from the
consolidated financial statements and are consistent in all material
respects, with the consolidated financial statements. A copy of the
audit report on the summarised financial statements, the audited financial
statements and the audit report are available for inspection at
the Company's registered office. The auditor's report does not necessarily
report on the information contained in this announcement. Shareholders
are therefore advised that in order to obtain a full understanding of
the nature of the auditor's engagement, they should obtain a full copy
of the auditor's report, together with the accompanying consolidated
financial information from the issuer's registered office. Any reference
to future financial performance included in this announcement, has not
been reviewed or reported on by the Company's auditors.
Related parties
In terms of a consulting agreement, and as approved at the Annual
General Meeting, the MIC fees of R1,44 million (2015: R1,35 million)
were paid during the period under review.
Directorate and corporate governance
The Board currently comprises of two executive and six non-executive
directors, of whom four are independent directors. Mr IN Matthews
remains the lead independent director. As advised previously,
Mr P Serima took over as CEO from Mr G Wackrill who retired on
31 March 2016. Mr Wackrill remains on the Board as a non-executive director.
Dividends
As explained under Dividend Policy, the Board has agreed a dividend
for the full year of 30 cents per share.
Notice is hereby given that a final gross cash dividend of
19,0 cents per share in respect of the year ended 30 June 2016 has
been declared payable to the holders of ordinary shares recorded
in the books of the Company on Friday, 7 October 2016. The last
day to trade cum-dividend will therefore be Tuesday, 4 October
2016 and Metrofile shares will trade ex-dividend from Wednesday,
5 October 2016. Payment of the dividend will be made on Monday,
10 October 2016. Share certificates may not be dematerialised or
rematerialised between Wednesday, 5 October 2016 and Friday,
7 October 2016, both days inclusive. Withholding tax on dividends will
be deducted for all shareholders who are not exempt in terms of the
legislation at a rate of 15% which will result in a final net cash dividend
of 16,15 cents per share. The Company's issued share capital remains
unchanged at 425 084 010 shares. The Company's tax number is 9375066710.
Commitments
The group continues to monitor and optimise its balance of owned
and leased premises to ensure the continued availability of space to
meet expansionary demand relative to the cost of unutilised facilities.
Operating lease commitments amount to R104,3 million for the next
five years. Capital investment plans for the forthcoming financial year
amount to R130,0 million.
Events after the reporting date
There have been no material events after the reporting date.
Outlook
Metrofile anticipates continued growth in the challenging economic
and business environments, both locally and on the African continent.
The group will continue to seek growth opportunities across all business
units, both locally and internationally, in cradle to grave document
management solutions. At this stage, Metrofile expects to resume its
historic earnings growth profile in the forthcoming financial year.
This statement has not been reviewed or audited by Metrofile's
auditors.
Christopher Seabrooke Pfungwa Serima
Non-executive Chairman Chief Executive Officer
29 August 2016
Senderwood
Gauteng
Corporate information
Registered office
41 Wordsworth Avenue
Senderwood
Bedfordview
2007
www.metrofileholdings.com
Sponsor
The Standard Bank of South Africa Limited
Transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001
Directors
CS Seabrooke^* (Chairman)
MS Bomela* (Deputy Chairman)
PG Serima (CEO)
MC McGowan (CFO)
P Langeni^*
CN Mapaure*
IN Matthews#*
GD Wackrill*
SV Zilwa^*
# Lead independent
^ Independent
* Non-executive
Company Secretary
P Atkins
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