JSE-Listed Metrofile Earnings Inch Up 1% – TechFinancials

Metrofile
Metrofile. Image source: dmos.co.za

JSE-listed Metrofile, a leading document and electronic information management specialist in Africa and the Middle East, posted a 1% rise in headline earnings per share (HEPS) for the six months to end-December 2021. HEPS is South Africa’s main profit gauge.

Metrofile said revenue increased by 4% to R474 million.

The company said MRM Middle East has demonstrated significant growth over the past 18 months and is now its largest region outside of South Africa for both revenue and operating profit contribution.

Secure storage contributed 58% to group revenue and was down 5% year-on-year due to a 5% reduction in paper services and paper storage being flat year-on-year.

Digital services contributed 20% to group revenue and was up 43% year-on-year mainly as a result of an increase in digital projects in South Africa as well as an increase in digitisation activities in the Middle East.

Metrofile said digital services is now its second largest revenue stream contributor and growth over the past 18 months has demonstrated the effect of the group’s introduction of relevant digital service offerings.

Metrofile added that the addition of IronTree to the group will enhance its core capabilities in providing value-add services for virtual storage and information risk management.

Metrofile deepened its suite of digital services – backup, disaster recovery, cybersecurity and specialised virtual private server (VPS) hosting – through its acquisition of IronTree. For more read: JSE-Listed Metrofile Buys of Cybersecurity Specialists IronTree

“Our acquisition of IronTree has been an important step in our strategy and towards creating value for our clients,” Pfungwa Serima, CEO of Metrofile, says.

“Our net debt has improved and our clients have reacted favourably.

“We have also started to see an increase in office activity due to less restrictive lockdown measures.  We are pleased with our operating and financial performance during the first six months and expect an improvement in the second half of the financial year.”

However, Metrofile’s operating profit before acquisition-related costs decreased by 2% to R112 million mainly as a result of a decline in higher-margin paper services’ activities, offset by increased digital services. EBITDA increased by 1% to R157 million.

The group’s net debt was reduced by 5% to R448 million for the 12 month period since 31 December 2020 despite the new acquisition.

The board has reviewed the dividend policy in light of Metrofile’s healthy cash generation and reduced net debt levels and has resolved to update the dividend cover policy to a range of between 1.5x and 2.0x. Interim cash dividend of 9 cents per share has been declared, payable from income reserves.

Turning to outlook, Serima says Metrofile anticipates achieving growth by extending and defending market position in the information storage space, as well as scaling its position in information management through growing digital services offerings

He concludes, “With our current gearing levels, we will continue to focus on appropriate levels of capital allocation, improving efficiencies and integrating our services to provide enhanced value to our clients. Predictable annuity-based revenue will continue to be the key characteristic in both information storage and information management service offerings.”