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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