Sectors Shares

METROFILE HOLDINGS LIMITED - Unaudited Summarised Group Results For The Six Months Ended 31 December 2017

Release Date: 13/03/2018 17:45
Code(s): MFL
 
Wrap Text
Unaudited Summarised Group Results For The Six Months Ended 31 December 2017

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")

UNAUDITED SUMMARISED GROUP RESULTS
for the six months ended 31 December 2017

Revenue up R456,1m (2016: R380,7 million)
EBITDA UP R127,6m (2017: R127,6 million)
EPS UP 18,6c (2016: 16,7 cents)
HEPS DOWN 15,6c (2016: 16,7 cents)
DPS UNCHANGED 13,0c (2016: 13,0 cents)

Summarised consolidated income statement
                                                         Unaudited      Unaudited        Audited
                                                        six months     six months      12 months
                                                             ended          ended          ended
R'000                                                  31 Dec 2017    31 Dec 2016    30 Jun 2017
Revenue                                                    456 050        380 651        769 239
Earnings before interest, taxation,
depreciation and amortisation (EBITDA)                     127 573        127 456        247 329
Depreciation                                               (20 376)       (17 556)       (34 917)
Operating profit before finance costs                      107 197        109 900        212 412
Net finance costs                                          (15 781)        (8 882)       (18 056)
Finance income                                                 825          1 791          3 649
Finance costs                                              (16 606)       (10 673)       (21 705)
Profit on disposal of business                              12 544              -              -
Profit before taxation                                     103 960        101 018        194 356
Taxation                                                   (25 975)       (27 610)       (54 979)
Profit for the period                                       77 985         73 408        139 377
Attributable to:
Owners of the parent                                        77 474         70 777        135 019
Non-controlling interests                                      511          2 631          4 358
Profit for the period                                       77 985         73 408        139 377
Further information
Number of ordinary shares in issue      (thousands)        416 164        422 846        421 103
Weighted average number of
ordinary shares in issue                (thousands)        417 233        424 994        425 954
Basic earnings per ordinary share
Basic earnings per ordinary share           (cents)           18,6           16,7           31,8
Diluted earnings per ordinary share
Diluted earnings per ordinary share         (cents)           18,6           16,7           31,8
Headline earnings per ordinary share
Headline earnings per ordinary share        (cents)           15,6           16,7           31,8
Dividend per ordinary share
Interim dividend per ordinary share
– proposed/paid                             (cents)           13,0           13,0           13,0
Final dividend per ordinary share
– proposed/paid                             (cents)                                         17,0

Summarised consolidated statement of cash flows
                                                         Unaudited      Unaudited         Audited
                                                         12 months      12 months       12 months
                                                             ended          ended           ended
R'000                                                  31 Dec 2017    31 Dec 2016     30 Jun 2017
Cash generated from operations before net  
working capital changes                                    129 101        129 994         251 620
(Increase)/decrease in net working capital                  (9 473)         8 477          24 568
Cash generated from operations                             119 628        138 471         276 188
Net finance costs paid                                     (15 781)        (8 882)        (18 056)
Normal taxation paid                                       (31 595)       (33 231)        (60 191)
Net cash inflow from operating activities                   72 252         96 358         197 941
Net cash outflow from investing activities:   
Investment in property: expansion                          (23 266)       (24 305)        (37 669)
Investment in plant and equipment:expansion                (21 895)       (15 252)        (36 398)
Investment in plant and equipment: replacement              (6 027)        (1 707)         (5 832)
Proceeds on disposal of property,  
plant and equipment                                            479            352           1 326
Translation of foreign fixed assets                            450              –           1 827
Investment in associate and joint venture                   (1 500)             –          (7 259)
Proceeds on disposal of business                            12 545              –               –
Acquisition of business                                    (77 862)             –               –
Net cash outflow from financing activities: inflow/(outflow)  
Issue of shares                                                  –              –          39 234
Purchase of treasury shares                                (19 937)       (11 009)        (58 732)
Dividends paid                                             (71 214)       (80 823)       (135 900)
Loans repaid                                                (2 244)       (16 733)        (34 317)
Loans drawn down                                           129 515         75 000          75 000
Net (decrease)/increase  
in cash and cash equivalents                                (8 704)        21 881            (779)
Cash and cash equivalents at the  
beginning of the period                                     24 593         25 372          25 372
Cash and cash equivalents at the end of the period          15 889         47 253          24 593
Represented by:   
Bank balances                                               31 505         48 170          27 866
Bank overdrafts                                            (15 616)          (917)         (3 273)

Summarised segmental information
                                                                          REVENUE                                                   EBITDA
                                                   Unaudited            Unaudited             Audited        Unaudited           Unaudited       Audited
                                                  six months           six months           12 months       six months          six months     12 months
                                                       ended                ended               ended            ended               ended         ended
R'000                                            31 Dec 2017          31 Dec 2016         30 Jun 2017      31 Dec 2017         31 Dec 2016   30 Jun 2017
Records Management                                   321 744              313 867             629 701           85 484              91 623       165 304
Property Companies
(Occupied by Records Management businesses)           36 689               33 082              66 964           36 689              33 082        66 964
Tidy Files                                            72 195                    –                   –            8 520                   –             –
CSX Customer Services                                 40 058               31 400              69 337             (613)             (2 541)       (2 362)
Other                                                 27 760               41 335              85 983           (2 507)              5 292        17 423
Intergroup                                           (42 396)             (39 033)            (82 746)               –                   –             –
Total                                                456 050              380 651             769 239          127 573             127 456       247 329
South African operations                             409 117              338 037             682 726          122 418             121 738       235 635
Non-South African operations                          46 933               42 614              86 513            5 155               5 718        11 694
                                                                 OPERATING PROFIT                                          TANGIBLE ASSETS
                                                   Unaudited            Unaudited             Audited        Unaudited           Unaudited       Audited
                                                  six months           six months           12 months       six months          six months     12 months
                                                       ended                ended               ended            ended               ended         ended
R'000                                            31 Dec 2017          31 Dec 2016         30 Jun 2017      31 Dec 2017         31 Dec 2016   30 Jun 2017
Records Management                                    71 703               77 984             138 589          346 636             327 686       337 861
Property Companies
(Occupied by Records Management businesses)           36 689               33 082              66 964          341 398             305 742       318 151
Tidy Files                                             5 705                    –                   –           38 617                   –             –
CSX Customer Services                                 (3 568)              (2 723)             (3 439)          33 469              24 589        32 428
Other                                                 (3 332)               1 557              10 298           65 024              97 799        62 047
Total                                                107 197              109 900             212 412          825 144             755 816       750 487
South African operations                             104 869              107 022             205 407          747 245             682 926       674 040
Non-South African operations                           2 328                2 878               7 005           77 899              72 890        76 447
"Records Management" represents the global document storage and management and scanning business units which are managed and operated geographically.
"Other" includes Metrofile Holdings, Rainbow Paper Management, Global Continuity and Cleardata.

Summarised consolidated statement of changes in equity
                                                                                                                     Total equity
                                                                                                                           before
                                                                      Share      Share Accumulated         Other         minority          Non-
                                                                    capital    premium       profits    reserves    apportionment   controlling     Total
Balance at 30 June 2016                                               2 625    579 359        50 047      11 367          643 398        16 943   660 341
Purchase of Treasury Shares                                               -    (11 009)            -           -          (11 009)            -   (11 009)
IFRS2 Equity reserve relating to share schemes                            -          -             -       3 477            3 477             -     3 477
Minority contribution on acquisition of subsidiary                        -          -             -           -                -         2 886     2 886
Share scheme settlement                                                   -          -             -      (2 797)          (2 797)            -    (2 797)
Dividends declared                                                        -          -       (80 823)          -          (80 823)            -   (80 823)
Total comprehensive income for the period ended 
31 December 2016                                                          -          -        70 777      (2 344)          68 433         1 086    69 519
Balance at 31 December 2016                                           2 625    568 350        40 001       9 703          620 679        20 915   641 594
Purchase of Treasury Shares                                               -    (47 723)            -           -          (47 723)            -   (47 723)
Shares issued                                                            50     39 184             -           -           39 234             -    39 234
IFRS2 Equity reserve relating to share schemes                            -          -             -       2 721            2 721             -     2 721
Reversal of prior year non-controlling interest and loss of joint         -          -             -           -                -             -         -
venture                                                                   -          -           731           -              731         1 700     2 431
Dividends declared                                                        -          -       (55 407)          -          (55 407)            -   (55 407)
Total comprehensive income for the period ended 30 June 2017              -          -        64 242        (469)          63 773         1 021    64 794
Balance at 30 June 2017                                               2 675    559 811        49 567      11 955          624 008        23 636   647 644
Purchase of Treasury Shares                                               -    (19 937)            -           -          (19 937)            -   (19 937)
IFRS2 Equity reserve relating to share schemes                            -          -             -       2 548            2 548             -     2 548
Acquisition of remaining 30% shareholding in Cleardata                    -          -         7 725           -            7 725        (7 725)        –
Disposal of 100% shareholding in Rainbow Paper Management                 -          -        (4 952)          -           (4 952)            -    (4 952)
Share scheme settlement                                                   -          -             -      (3 996)          (3 996)            -    (3 996)
Dividends declared                                                        -          -       (71 386)          -          (71 386)            -   (71 386)
Total comprehensive income for the period ended  
31 December 2017                                                          -          -        77 474      (1 269)          76 205          (493)   75 712
Balance at 31 December 2017                                           2 675    539 874        58 428       9 238          610 215        15 418   625 633

Summarised consolidated statement of financial position
                                                                Unaudited     Unaudited       Audited
                                                               six months    six months     12 months
                                                                    ended         ended         ended
R'000                                                  Notes  31 Dec 2017   31 Dec 2016   30 Jun 2017
ASSETS         
Non-current assets                                                878 588       743 913       769 061
Property                                                  1       341 069       304 439       317 803
Plant and equipment                                               229 590       214 727       220 300
Goodwill                                                          287 963       217 177       216 938
Intangible assets                                                       -         1 770             –
Investment in unlisted associates                                   8 796           449         7 739
Long-term receivable                                                2 528           525           375
Deferred tax asset                                                  8 642         4 826         5 906
Current assets                                                    251 957       236 125       212 009
Inventories                                                        27 267        18 805        19 068
Trade receivables                                                 155 508       126 702       134 582
Other receivables                                                  35 241        42 448        30 493
Taxation                                                            2 436             –             –
Bank balances                                                      31 505        48 170        27 866
         
Total assets                                                    1 130 545       980 038       981 070
EQUITY AND LIABILITIES         
Equity and reserves                                               625 633       641 594       647 643
Equity attributable to owners of the parent                       610 215       620 679       624 007
Non-controlling interests                                          15 418        20 915        23 636
Non-current liabilities                                           348 602       199 850       181 978
Interest-bearing liabilities                              2       321 948       174 263       156 904
Deferred taxation liability                                        26 654        25 587        25 074
Current liabilities                                               156 310       138 594       151 449
Trade and other payables                                           84 954        66 856        73 761
Deferred revenue                                                   13 986        13 413        12 968
Bank overdraft                                                     15 616           917         3 273
Provisions                                                            899           137         2 351
Taxation                                                                –           764         2 814
Interest-bearing liabilities                              2        40 855        56 507        56 282
Total equity and liabilities                                    1 130 545       980 038       981 070

Notes:
1.  The majority of the groups properties have been pledged as security against certain loans to the group.
2.  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 comprehensive income
                                                              Unaudited       Unaudited        Audited
                                                             six months      six months      12 months
                                                                  ended           ended          ended
R'000                                                       31 Dec 2017     31 Dec 2016    30 Jun 2017
Profit for the period                                            77 985          73 408        139 377
Other comprehensive income for the period net
of tax*
Currency movement on translation of foreign
subsidiaries                                                     (2 273)         (3 889)        (5 064)
Total comprehensive income for the period                        75 712          69 519        134 313
Attributable to:  
Owners of the parent                                             76 205          68 433        132 206
Non-controlling interests                                          (493)          1 086          2 107
*All items will subsequently be reclassified to profit and loss

Reconciliation of headline earnings       
                                                              Unaudited      Unaudited         Audited
                                                             six months     six months       12 months
                                                                  ended          ended           ended
R'000                                                       31 Dec 2017    31 Dec 2016     30 Jun 2017
Profit attributable to owners of the parent                      77 474         70 777         135 019
Profit on disposal of Rainbow business                          (12 544)             -               -
Loss/(profit) on disposal of plant and equipment                     71            (71)           (132)
Tax effect of above items                                            72             65             314
Headline earnings                                                65 073         70 771         135 201
Headline earning per ordinary share        (cents)                 15,6           16,7            31,8
      
Commentary on the results
Metrofile is Africa's market leader in records and information
management, offering a range of physical storage and digital
services, as well as the confidential destruction and recycling of records.
Founded and listed in South Africa, the Group is growing steadily in the
Middle East and other African countries.

The Records Management division operates from 52 facilities, at
27 locations, covering 101 309 square metres of warehousing and office space.

Metrofile is a 57,4% black-owned company. Its empowerment partner
and shareholder of reference, Mineworkers Investment Company
("MIC"), owns 37.24% of Metrofile's equity.

Overview of interim results
Revenue increased by 19.8% to R456,1 million, and EBITDA remained
relatively unchanged at R127,6 million. Basic earnings per share ("EPS")
increased by 11.4% to 18.6 cents per share, whilst headline earnings per
share ("HEPS") decreased by 6.6% to 15.6 cents per share, as a result of
the gain on sale of Rainbow Paper Management of R12,5 million

Cash generated from operations before net working capital changes
remained relatively unchanged at R129,1 million, while cash generated
from operations decreased 13.6% to R119,6 million.

R51,2 million in capital expenditure was incurred of which R45,2 million
was expansionary capex.

The Group's net interest-bearing debt amounted to R378,4 which equates
to an annualised Debt: EBITDA ratio of approximately 1,48 times. After
the acquisition of G4S Secure Data Solutions (Kenya) Limited, which
was effective after the reporting date, debt is expected to increase to
R659,8 million which represents a 2.59 times multiple to current
annualised EBITDA. The Board has targeted maintaining debt levels of 
between 1,5 - 2,5x sustainable EBITDA.

Business growth during the reporting period has been adversely
impacted by continued weak economic condition in South Africa, the
continued delay in the implementation of a governmental contract in
South Africa, and the ongoing embargo implemented against Qatar by
selected GCC States.

Alleged irregularities at a subsidiary company
It was previously reported that alleged irregularities were discovered in
Cleardata, (a non-materials subsidiary) which were subject to a forensic audit. 
The forensic audit has been substantially concluded. As a result thereof, 
criminal charges were initiated against a former executive. The alleged 
irregularities appear to have reduced the reported earnings of this division 
in prior periods but no current expense has been incurred in addition. 


Growth outside of South Africa
Markets outside of South Africa continue to offer significant growth
opportunities, as evidenced by improved operating performance in
Botswana, Mozambique and Zambia.

Notwithstanding the unresolved socio-economic and political disruption
in the GCC States of the Middle East, Metrofile recorded revenue growth
of 10,1% from our operations outside of South Africa, which contributed
10,3% of the total revenue for the period.

The Group continues to seek strategic acquisitions in targeted
geographies in Africa and the Middle East.

Corporate Activity
In line with its acquisition strategy, and focus on core cradle to grave
Records and Information Management business, the following changes
in investments occurred during the period:

Acquisition of Tidy Files (SA) Proprietary Limited
In July 2017, the Group acquired a 100% interest in Tidy Files (SA)
Proprietary Limited, a company registered and operating in South Africa
for a consideration of R77,9 million from cash resources. Tidy Files is
a leading provider of end-to-end document management and storage
solutions in Southern Africa, renowned for the design, supply and
implementation of Paper-based and Electronic Document and Records
Management Solutions.

Acquisition of Minority Shareholder's Interest in Cleardata Proprietary Limited
During the period, the Group acquired the remaining 30% minority
interest in Cleardata for cnominal value.

Disposal of Rainbow Paper Management Proprietary Limited
The Group disposed of its 100% interest in Rainbow Paper Management
Proprietary Limited, resulting in a profit on disposal of investment of
R12,5 million.

Value creation strategy
Metrofile intends to enhance its growth prospects and expansion by:
-  Targeting more direct growth organic growth in South Africa;
-  Broadening its offering of products and services, particularly in the
   digital space;
-  Expanding in Africa, the Middle East and other emerging markets
   through acquisition and partnerships; and
-  Evolving into a technology company grounded on record storage.
More specifically, Metrofile is:
-  Rolling out best practices from each business unit across the group;
-  Re-inventing and enhancing our services based on shifting customer needs;
-  Bringing in new or outsource partners in complementary niches; and
-  Continuing its focus on acquiring relevant, complementary
   businesses in the technology and RIM sectors.

Basis of preparation and accounting policies
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
and AC 500 Standards 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. These interim results
were prepared using accounting policies that comply with IFRS, and are
consistent with those applied in the financial statements for the year ended
30 June 2017.

Certain accounting pronouncements became effective during the
current financial period; however, these do not have an impact on either
transactions or disclosures.

Related parties
In terms of a consulting agreement, and as approved at the Annual
General Meeting, fees of R0,81 million (2016: R0,77 million) were paid to
MIC during the period under review.

Directorate and corporate governance
The board currently comprises of two executive and eight non-executive
directors, of whom five are independent directors.

Mr IN Matthews remains the lead independent director, however, as per
the SENS announcement he will retire on 30 June 2018.

Ms S Zilwa, a member of the Audit, Governance and Risk Committee,
was appointed as the Chairman of the Committee with effect from
1 July 2017, in place of Mr IN Matthews, who remains on the Committee
as a Committee member.

Ms L Mthimunye-Bakoro was appointed as an Independent Non­
Executive Director and a member of its Audit, Governance and Risk
Committee and Social, Ethics and Transformation Committee with
effect from 1 July 2017.

Dividends
The Board has targeted maintaining debt levels at least at 1,5 times
EBITDA. At the end of the previous financial year, the Board resolved to
reduce dividend cover from a target of 1,5 times to a target range of 1,25
to 1,5 times and until the minimum debt levels were achieved, the Board
resolved to pay dividends with cover below the target range.

The interim dividend for the period of 13,0 cents per share represents
dividend cover of 1,2 times interims HEPS.

Notice is hereby given that an interim gross cash dividend of 13,0 cents
per share in respect of the period ended 31 December 2017 has been
declared payable, from income reserves, to the holders of ordinary
shares recorded in the books of the Company on Friday, 13 April 2018.

The last day to trade cum-dividend will therefore be Tuesday, 10 April
2018 and Metrofile shares will trade ex-dividend from Wednesday,
11 April 2018. Payment of the dividend will be on Monday, 16 April
2018. Share certificates may not be dematerialised or rematerialised
between from Wednesday, 11 April 2018 (which is ex-date) to Friday,
13 April 2018, 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 20% which will result in a final net cash dividend of 
10.4 cents per share. The Company's issued share capital at the period end is
435 140 268 shares and the Company's tax number is 9375/066/71/0.

Commitments
Metrofile owns or leases premises based on the prevailing economic
realities in each country where we operate. Operating lease commitments
amount to R86,7 million for the next five years. Capital investment plans
for the full financial year amount to R108,6 million.

Events after the reporting date
Acquisition of G4S Secure Data Solutions (Kenya) Limited
As previously announced, in January 2018, the Group acquired a 100%
interest in the issued share capital of G4S Secure Data Solutions (Kenya)
Limited, the largest records management company in East Africa, for
a maximum purchase consideration of KES2.125 billion (approximately
R281,4 million.)

Establishment of Dexterity Digital Solutions (Pty) Limited
In line with the Group's value creation strategy to provide annuity related
services in the cloud environment, which compliment the traditional
annuity based RIM offering, the Group acquired a 62.5% investment in
Dexterity Digital Solutions (Pty) Limited.

There have been no other material events after the reporting date.

Share issues and Buy-backs
During the year, under the share repurchase program sanctioned by the
Board, a total of 5 000 000 shares were acquired at a price range of
R3,96 to R4,01 (average price R3,99).

There are accordingly 416 164 210 shares in issue, net of treasury
shares, at 31 December 2017.

Outlook and opportunities
Data and information management is growing in importance as
the world becomes increasingly digitally connected. As the value
of transforming raw data into usable information is recognised and
becomes widespread, the wealth of data that Metrofile stores or
digitises is increasingly a sought-after resource. Metrofile remains
well placed in the forefront of an industry that is evolving rather than
shrinking. Metrofile anticipates a stronger second half earnings. 

This statement has not been reviewed or audited by Metrofile's auditors.

Christopher Seabrooke         Pfungwa Serima
Non-executive Chairman        Group Chief Executive Officer

Senderwood, Gauteng
13 March 2018

Corporate information
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")

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
Rosebank Towers, 15 Biermann Avenue, Rosebank 2196

Directors: CS Seabrooke^* (Chairman), MS Bomela* (Deputy Chairman),
PG Serima (CEO), MC McGowan (CFO), P Langeni^*, CN Pongwani*, L  Mthimunye-Bokovo*
IN Matthews†*, GD Wackrill*, SV Zilwa^* Company Secretary: P Atkins
†Lead independent ^Independent *Non-executive



Date: 13/03/2018 05:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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