METROFILE HOLDINGS LIMITED – Unaudited Summarised Group Interim Results

2019/03/15 10:21:00
SENS announcement for JSE listed company: MFL
                        

MFL 201903150020A
Unaudited Summarised Group Interim Results

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 INTERIM RESULTS
for the six months ended 31 December 2018

REVENUE
UP R490.2m
7.5%

EBITDA
Down R123.7m
(3.0%)

EPS
Down 10.2c
(45.2%)

HEPS
Down 10.2c
(34.6%)

DPS
Down 5.0c
(61.5%)

SUMMARISED CONSOLIDATED INCOME STATEMENT
Restated
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
R’000 Note 31 Dec 18 31 Dec 17 30 Jun 18
Revenue 490 197 456 050 952 988
Earnings before interest, taxation, depreciation and
amortisation (EBITDA) 123 747 127 573 270 175
Depreciation and amortisation (22 575) (20 376) (42 506)*
Operating profit 101 172 107 197 227 669
Net finance costs (33 554) (15 781) (46 241)
Finance income 850 825 1 502
Finance costs (34 404) (16 606) (47 743)
Acquisition-related expenses – – (15 495)
Profit on sale of a subsidiary – 12 544 7 592
Profit before taxation 67 618 103 960 173 525
Taxation (26 885) (25 975) (49 671)
Profit for the year 40 733 77 985 123 854
Attributable to:
Owners of the parent 42 343 77 474 127 613
Non-controlling interests (1 610) 511 (3 759)
Profit for the year 40 733 77 985 123 854
Further information
Number of ordinary shares in issue
(excluding treasury shares) (thousands) 416 191 416 164 416 164
Weighted average number of ordinary shares
in issue (thousands) 416 173 417 233 417 233
Basic earnings per ordinary share
Basic earnings per ordinary share (cents) 10.2 18.6 30.6
Diluted earnings per ordinary share
Diluted earnings per ordinary share (cents) 10.2 18.6 30.6
Headline earnings per ordinary share
Headline earnings per ordinary share (cents) 10.2 15.6 28.9
Dividend per ordinary share
Interim scrip dividend/dividend per
ordinary share – proposed/paid (cents) 5.0 13.0 13.0
Final dividend per ordinary share –
paid (cents) – – 8.0

* Restated – refer to note in commentary.

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 18 31 Dec 17 30 June 18 31 Dec 18 31 Dec 17 30 June 18
Records Management 344 322 321 744 671 673 78 420 85 484 162 191
CSX Customer Services 52 517 40 058 79 457 5 213 (613) (1 514)
Property Companies
(Occupied by Records
Management
businesses) 41 693 36 689 73 853 41 693 36 689 73 853
Tidy Files 71 381 72 195 158 928 4 250 8 520 19 656
Other 28 423 27 760 55 014 (5 829) (2 507) 15 989
Intergroup (48 139) (42 396) (85 937) – – –
Total 490 197 456 050 952 988 123 747 127 573 270 175
South African operations 417 317 409 117 842 238 105 930 122 418 254 931
Non-South African
operations 72 880 46 933 110 750 17 817 5 155 15 244

Operating profit Tangible assets
Restated
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 18 31 Dec 17 30 June 18 31 Dec 18 31 Dec 17 30 June 18
Records Management 63 402 71 703 134 194 433 600 346 636 411 637
CSX Customer Services 4 608 (3 568) (2 794) 28 920 33 469 37 453
Property Companies
(Occupied by Records
Management
businesses) 41 693 36 689 73 853 349 277 341 398 343 971
Tidy Files 1 702 5 705 14 236 43 034 38 617 41 984
Other (10 233) (3 332) 8 180 65 488 65 024 58 131
Total 101 172 107 197 227 669 920 319 825 144 893 176
South African operations 87 028 104 869 218 408 799 000 747 245 772 960
Non-South African
operations 14 144 2 328 9 261 121 319 77 899 120 216

‘Records Management’ represents the global document storage & management and scanning business units which are
managed and operated geographically.

‘Other’ includes Metrofile Holdings, Global Continuity, Cleardata and Dexterity.

SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Restated Total equity
Share Share Accumulated Other before minority
R’000 capital premium profits/(losses) reserves apportionment Non-controlling Total
Balance at 30 June 2017 2 675 559 811 49 566 11 955 624 007 23 636 647 643
Purchase of Treasury Shares (19 937) (19 937) (19 937)
IFRS 2 Equity reserve relating to share schemes 5 076 5 076 5 076
Share scheme settlement (6 498) (6 498) (6 498)
Purchase of remaining non-controlling interest of subsidiary (1 016) (1 016) (7 724) (8 740)
Dividends declared (125 979) (125 979) (125 979)
Total comprehensive income for the period ended 30 June 2018 127 613 5 417 133 030 (2 742) 130 288
Balance at 30 June 2018 2 675 539 874 50 184 15 950 608 683 13 170 621 853
Share scheme settlement (86) (86) (86)
Sale of non-controlling interest of subsidiary 5 976 5 976 (5 228) 748
Dividends declared (34 522) (34 522) (34 522)
Total comprehensive income for the period ended 31 December 2018 42 343 1 338 43 681 (546) 43 135
Balance at 31 December 2018 2 675 539 874 63 981 17 202 623 732 7 396 631 128

SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Restated
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
R’000 31 Dec 18 31 Dec 17 30 June 18
Profit for the period 40 733 77 985 123 854
Other comprehensive income for the period net of tax*
Currency movement on translation of foreign subsidiary 2 402 (2 273) 6 434
Total comprehensive income for the period 43 135 75 712 130 288
Attributable to:
Owners of the parent 43 681 76 205 133 030
Non-controlling interests (546) (493) (2 742)

* All items will subsequently be reclassified to profit and loss.

SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
R’000 31 Dec 18 31 Dec 17 30 June 18
Cash generated from operations
before net working capital changes 112 860 129 101 255 577
(Increase) decrease in net working capital (4 908) (9 473) (24 594)
Cash generated from operations 107 952 119 628 230 983
Net finance costs paid (33 559) (15 781) (46 241)
Normal taxation paid (28 175) (31 595) (51 361)
Net cash inflow from operating activities 46 218 72 252 133 381
Net cash outflow from investing activities:
Investment in plant and equipment: expansion (16 954) (45 161) (64 523)
Investment in plant and equipment: replacement (12 874) (6 027) (15 818)
Proceeds on disposal of property, plant and equipment 583 479 13 623
Effects of foreign currency differences on fixed assets – 450 (2 598)
Acquisition of investment in unlisted associate and
joint venture – – –
Increase in loans to associate company – (1 500) (1 500)
Acquisition of subsidiaries (3 616) (77 862) (335 516)
Proceeds on disposal of subsidiary 12 545 12 235
Net cash inflow (outflow) from financing activities:
Issue of shares in terms of vendor placements – – –
Purchase of Treasury shares – (19 937) (19 937)
Dividends paid (34 522) (71 214) (125 682)
Loans repaid (128) (2 244) (14 147)
Long-term liabilities raised 19 835 129 515 444 932
Net increase in cash and cash equivalents (1 458) (8 704) 24 450
Cash and cash equivalents at the beginning of the year 49 043 24 593 24 593
Cash and cash equivalents at the end of the year 47 585 15 889 49 043
Represented by:
Bank balances 57 990 31 505 52 331
Bank overdrafts (10 405) (15 616) (3 288)

SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Restated
Unaudited Unaudited Audited
as at as at as at
R’000 Notes 31 Dec 18 31 Dec 17 30 June 18
ASSETS
Non-current assets 1 165 874 878 588 1 155 118
Property 1 359 213 341 069 359 213
Plant and equipment 240 064 229 590 230 605
Goodwill 488 052 287 963 484 437*
Intangible assets 60 298 – 59 636*
Investment 9 331 8 796 9 353
Long-term receivable 1 977 2 528 2 419
Deferred tax asset 6 939 8 642 9 455
Current assets 327 072 251 957 300 939
Inventories 32 948 27 267 34 747
Trade receivables 185 954 155 508 184 726
Other receivables 50 180 35 241 29 135
Taxation – 2 436 –
Bank balances 57 990 31 505 52 331
Total assets 1 492 946 1 130 545 1 456 057
EQUITY AND LIABILITIES
Equity and reserves 631 128 625 633 621 853
Equity attributable to owners of the parent 623 732 610 215 608 683
Non-controlling interests 7 396 15 418 13 170
Non-current liabilities 660 549 348 602 640 877
Interest-bearing liabilities 2 613 107 321 948 597 118
Deferred taxation liability 47 442 26 654 43 759
Current liabilities 201 269 156 310 193 327
Trade and other payables 99 356 84 954 101 765
Deferred revenue 18 058 13 986 13 661
Bank overdraft 10 405 15 616 3 288
Provisions 1 015 899 4 093
Taxation 1 985 – 3 786
Interest-bearing liabilities 2 70 450 40 855 66 734
Total equity and liabilities 1 492 946 1 130 545 1 456 057

* Restated – refer to note in commentary.

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 Proprietary Limited amortising and revolving facilities.
Short-term interest-bearing liabilities include the portions of the Metrofile Proprietary Limited amortising loan facility and
Group company loan agreements payable within one year. The Metrofile Proprietary Limited borrowings are JIBAR linked,
whilst the other borrowings are prime linked.

RECONCILIATION OF HEADLINE EARNINGS
Restated
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
R’000 31 Dec 18 31 Dec 17 30 June 18
Profit attributable to owners of the parent 42 343 77 474 127 613
Profit on disposal of subsidiary – (12 544) (7 592)
Loss (profit) on disposal of plant and equipment 139 71 48
Tax effect of above items 21 72 194
Headline earnings 42 503 65 073 120 263
Headline earning per ordinary share (cents) 10.2 15.6 28.9

RECONCILIATION OF NORMALISED EARNINGS
Restated
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
R’000 31 Dec 18 31 Dec 17 30 June 18
Headline earnings for purposes of headlines earnings per share – – 120 263
Adjusted for after tax: – – 12 024
Acquisition-related costs – – –
Normalised headline earnings for purposes of normalised
headline earnings per share – – 132 287
Normalised headline earnings per share (NHEPS) (cents) – – 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 and Information Management division operates from 70 facilities (physical box storage
warehouses), at 40 locations, covering 122 580 square metres of warehousing space.

Metrofile is a 57.4% black-owned company. Its empowerment partner and shareholder of reference,
Mineworkers Investment Company (‘MIC’), owns 36.95% of Metrofile’s equity.

Overview of interim results

Revenue increased 7.5% to R490.2 million mainly due to the Kenya acquisition and good performance by CSX
Customer Services. EBITDA declined by 3% to R123.7 million. Basic Earnings Per Share (EPS) decreased by 45.2%
to 10.2 cents per share and Headline Earnings Per Share (HEPS) by 34.6% to 10.2 cents per share. The decrease
was largely due to the material higher interest charge and the higher effective tax rate of 40% for the period.

Cash generated from operations declined by 9.7%.

Capital expenditure incurred to date amounted to R29.8 million, R17.0 million of which was expansion.

The Group’s gross interest-bearing debt was R694 million, which is higher than the Board’s planned maximum debt
utilisation. The Board has accordingly declared a scrip dividend with a cash alternative to facilitate the ongoing
reduction in debt.

Growth outside of South Africa

Markets outside South Africa still offer significant growth opportunities particularly in Kenya, Mozambique
and Zambia.

Notwithstanding the unresolved socio-economic and political disruption in the Gulf Cooperation Council (GCC)
States of the Middle East, Metrofile recorded revenue growth of 55% from our operations outside of South Africa,
which contributed 14.9% of the total revenue for the period.

Corporate activity

The Group disposed of 38% of its shareholding in Nigeria to a local partner in August 2018.

Basis of preparation and accounting policies

The summarised consolidated unaudited interim financial results are prepared in accordance with the framework
concepts and the 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 Limited 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 2018.

The Group results have been prepared, under the supervision of Mr Pfungwa Serima BSc (CompSc) and Business
Studies.

The accounting policies and basis of preparation for the financial statements are in all material respects consistent
with those applied in the 2018 annual financial statements apart from the adoption of new IFRSs that became
effective on 1 January 2018.The changes in accounting policies reflected below are also expected to be reflected
in the Group’s consolidated financial statements as at and for the year ending 30 June 2019.

The Group adopted IFRS 15: Revenue from Contracts with Customers and IFRS 9: Financial Instruments from
1 July 2018. A number of other new standards and emendments to existing standards became effective from
1 January 2018, but these do not have a material impact on the Group’s financial statements.
The effect of initially applying these standards is mainly follows:

IFRS 15: Revenue from Contracts with Customers

Apart from providing more extensive disclosure on the Group’s revenue transactions, the application of IFRS 15 has
not had a significant impact on the financial position and/or financial perfomance of the Group as described above
and, accordingly, no adjustment was made on the opening reserves.

IFRS 9 Financial Instruments

The standard sets out the requirements for recognising and measuring financial assets, financial liabilities and
some contracts to buy or sell non-financial items. This standard replaces IAS 39: Financial Instruments: Recognition
and measurement.

The principles with regards to the classification and measurement of financial assets and liabilities, measuring
impairment allowances for financial assets have been amended due to the implementation of the new accounting
standard, IFRS 9: Financial Instruments, applicable to all accounting periods beginning on or after 1 January 2018.
IFRS 9 has had no material impact on the financial results.

Restatement in terms of IFRS 3

Acquisition of Metrofile Records Management (Kenya), formerly G4S

In January 2018, the Group acquired a 100% shareholding in Metrofile Records Management (Kenya) Proprietary Limited
Kenya for a purchase consideration of R259.4 million which was paid in cash. In terms of the agreement, a further payment of
R3.6 million was made in December 2018 following a purchase price adjustment, bringing the total consideration paid to R263 million.
The purchase price allocation for the identifiable assets acquired and the liabilities was provisional as at
30 June 2018. Subsequent to year-end, the assessment of fair values allocated to the individual components and
the purchase price allocation was finalised, resulting in a revised allocation to the fair values of assets, liabilities
and goodwill as reflected below.

In terms of IFRS 3: Business Combinations, the Group restated the 2018 statement of financial position, statement
of comprehensive income and statement of changes in equity and accompanying notes to reflect the
abovementioned changes as if they had occurred as at the acquisition date.

30 June 2018
R’000 R’000
Previously
Carrying value of acquiree’s net assets at the acquisition date Restated reported
Net identifiable assets and liabilities at 30 June 21 583 21 583
Value of customers acquired 61 692 –
Deferred tax liability (on value of customers) (18 508)
Net identifiable assets and liabilities acquired 64 767 21 583
Goodwill on acquisition 194 633 237 817
Net consideration paid 259 400 259 400

IMPACT OF RESTATEMENT ON STATEMENT OF FINANCIAL POSITION
30 June 2018
R’000 R’000
Previously
Carrying value of acquiree’s net assets at the acquisition date Restated reported
Non-current assets
Goodwill 484 437 527 621
Intangible assets 59 636 –
Non-current liabilities
Deferred tax liabilities 43 759 25 867

IMPACT OF RESTATEMENT ON INCOME STATEMENT FOR THE PERIOD
ENDED 30 JUNE 2018
30 June 2018
R’000 R’000
Previously
Restated reported
Amortisation of the value of customers acquired (2 056) –
Taxation 617 –
Impact on net profits (1 439) –

Related parties

In terms of a consulting agreement, and as approved at the Annual General Meeting, fees of R0.98 million
(2017: R0.81 million) were paid to MIC during the period under review.

Dividend

Shareholders are informed that the Board has resolved to declare an interim scrip dividend of 5 cent, with a cash
alternative. A further announcement setting out the full terms and salient dates will be published in due course.

Metrofile directors have advised that, to the extent they or any of their associates have shares in the Company, they
intend to accept the scrip alternative.

Directorate and Corporate Governance

Mr L Rood was appointed alternate to Mr C Seabrooke, effective 1 February 2019, Mrs PK Dludla resigned, effective
8 March 2019 and, as announced, Mr S Mansingh will be appointed as CFO, effective 1 April 2019, which will
result in the board comprising of two executive and seven non-executive directors, of which four are independent
directors.

Commitments

Metrofile owns or leases premises based on the prevailing economic realities in each country where we operate.
Operating lease commitments amount to R87.6 million for the next five years. Capital investment plans for the full
financial year amount to R84.6 million.

Share issues and buy-backs

There were no share buy-backs during the period under review. There are accordingly 416 164 210 shares in issue,
net of treasury shares, at 31 December 2018.

Value creation strategy

Metrofile intends to enhance its growth prospects and expansion by:
– restructuring our operating model;
– strategic acquisition and expansion;
– enhancing our client relationships; and
– nimble and tailor-made solutions.

These will be achieved through the following key strategic pillars:
– Secure Storage
– Business Support Services
– Products and Solutions
– Digital Services

Prospects

Trading conditions remain difficult, but we anticipate a better second half.

Our digital services strategy continues to progress and will grow through co-innovation with existing and new
customers as well as selected joint ventures with specialised digital solution providers.

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
15 March 2019

Corporate information

Registered office: 41 Wordsworth Avenue Senderwood Bedfordview 2007
www.metrofilegroup.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),
MZ Abdulla*, P Langeni(#)*, LE Mthimunye^*, GD Wackrill*, SV Zilwa^*, L Rood^* (Alternate)
(#) Lead independent ^Independent *Non-executive

Company Secretary: P Atkins

Date: 15/03/2019 10:21:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (‘JSE’).
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.

GO TO SHOP CART

Follow us:

Search Articles:Advanced Search
Click a Company:
server: 172.17.0.2