| Thu 30 Aug 2007, 17:45 | | MFL- Metrofile Holdings - Reviewed group results f |
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MFL
MFL
MFL- Metrofile Holdings - Reviewed group results for the year ended 30 June 2007
METROFILE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1983/012697/06)
Share code: MFL & ISIN: ZAE000061727
("Metrofile Holdings" or "the company" or "the group")
METROFILE HOLDINGS LIMITED REVIEWED GROUP RESULTS FOR THE YEAR ENDED 30 JUNE
2007
CONDENSED CONSOLIDATED INCOME STATEMENT
Reviewed Audited
12 months 12 months
ended ended
R`000 Note 30 June `07 30 June `06
Revenue 299 740 276 246
Operating income before 102 068 86 511
depreciation and exceptional
items
Depreciation (11 144) (12 760)
Exceptional gains 1 486 2 121
Operating profit before finance 92 410 75 872
costs
Income from investments 2 077
Net finance costs (44 838) (46 695)
Finance income 2 709 1 072
Fair value adjustments on 3 892 1 568
financial instruments
Finance costs 1 (51 439) (49 335)
Profit before taxation 47 572 31 254
Taxation 1 (8 362) (3 843)
Profit for the year 39 210 27 411
Attributable to:
- Equity holders of the parent 35 261 18 461
- Minority interest 3 949 8 950
Attributable profit 39 210 27 411
Earnings per ordinary share
Earnings per ordinary share 13,9 27,5
(cents)
Further information
Number of ordinary shares in 393 997 74 077
issue (thousands)
Number of ordinary shares in 6 877
treasury (thousands)
Number of ordinary shares in 393 997 67 200
issue after deducting treasury
shares (thousands)
Weighted average number of 252 337 67 200
ordinary shares in issue
(thousands)
CONDENSED CONSOLIDATED BALANCE SHEET
Reviewed Audited
as at as at
R`000 Note 30 June `07 30 June `06
ASSETS
Non-current assets
Property, plant and equipment 174 708 167 836
Goodwill 2 160 499
Current assets 110 478 67 481
Inventories 12 034 9 248
Trade receivables 46 640 36 193
Other receivables 11 673 8 145
Bank balances 40 131 13 895
Total assets 445 685 235 317
EQUITY AND LIABILITIES
Equity capital and reserves 70 084 (265 270)
Equity attributable to equity 70 084 (277 432)
holders of parent
Minority interest 12 162
Non-current liabilities 312 996 430 787
Interest-bearing provisions 3 11 669 32 981
Interest-bearing subordinated
redeemable convertible loans
219 522
Interest-bearing liabilities 4 292 666 171 531
Deferred taxation liability 8 661 6 753
Current liabilities 62 605 69 800
Trade payables 10 580 10 266
Other payables 14 883 24 681
Deferred revenue 4 028 3 374
Provisions 4 829 5 073
Taxation 5 582 8 944
Interest-bearing liabilities 4 22 703 17 462
Total equity and liabilities 445 685 235 317
Net asset/(liability) per 17,8 (412,8)
ordinary share (cents)
Notes:
1. The finance costs for the year include R2,1 million of interest provisions
relating to potential claims that still need to be finalised and R5,7
million interest on Metrofile Holdings Limited Loan notes, which were
settled by the way of rights issue.
The low taxation charge is the result of reversing a provision of R6
million which is no longer required.
2. Goodwill arose from the acquisition of the 35% minority shareholding in
Metrofile (Pty) Limited.
3. Long-term interest-bearing provisions include possible claims related to
certain dormant subsidiaries from the old MGX Group.
The possible claims should be resolved before the end of the current
calendar year.
4. Long-term interest-bearing liabilities include the Metrofile Senior and
Mezzanine loans. Short-term interest-bearing liabilities include the
portions of the Metrofile Senior and Mezzanine loans payable in one year.
5. No segmental analysis has been reported as the group trades in only one
segment and only in South Africa.
6. All the assets have been pledged as security against certain loans to the
group.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Reviewed Audited
12 months 12 months
ended ended
R`000 30 June `07 30 June `06
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations before 102 734 84 814
net working capital changes
(Increase)/decrease in net working (25 836) 9 260
capital
Cash generated from operations 76 898 94 074
Net finance costs (44 838) (46 695)
Dividends received 2 077
Normal taxation paid - current year (15 890) (7 806)
Taxation settlements paid - prior year (17 344) (5 616)
Net cash (outflow)/inflow from (1 174) 36 035
operating activities
Net cash outflow from investing (24 482) (29 243)
activities
Net cash inflow/(outflow) from
financing activities
Net cash inflow from rights issue 138 503
Loans repaid (317 168) (30 160)
Loans raised 5 656 27 893
Proceeds from new financing 320 000
facilities
Convertible loan notes repaid (95 099)
Net increase in cash and cash 26 236 4 524
equivalents
Cash and cash equivalents at the 13 895 9 371
beginning of the year
Cash and cash equivalents at the end of 40 131 13 895
the year
Represented by:
Bank balances 40 131 13 895
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Non- Attri- Minorit Total
capital premium distri- butable y share- R`000
R`000 R`000 butable loss holder
reserve R`000 interes
s t
R`000 R`000
Balance at 1 July 408 195 656 (2 (491 3 212 (295
2005 918) 957)) 599)
Profit for the year 18 461 8 950 27 411
Foreign currency 2 918 2 918
reserve
Balance at 30 June 408 195 656 (473 496) 12 162 (265
2006 270)
Profit for the year 35 261 3 949 39 210
Rights offer 1 163 134 343 135 506
Minority acquisition 848 172 905 (16 157 642
111)
Treasury shares 2 2 994 2 996
cancelled
Balance at 30 June 2 421 505 898 (438 70 084
2007 235)
RECONCILIATION OF HEADLINE EARNINGS
Reviewed Audited
12 months 12 months
ended ended
R`000 30 June `07 30 June `06
Profit to ordinary shareholders 35 261 18 461
Capital (profit)/loss on sale of (38) 3 084
investments
Negative goodwill on acquisitions (480)
Net recovery of loans previously (5 259)
impaired
Loss/(profit) on sale of plant and 225 (89)
equipment
Headline earnings 34 968 16 197
Headline earning per ordinary share 13,9 24,1
(cents)
COMMENTARY ON RESULTS
METROFILE HOLDINGS PROFILE
Metrofile Holdings is quoted in the "Support Services - Business Support
Services" sector of the JSE Limited (JSE).
Metrofile is the South African market leader in the management of business
records through its 16 storage centres and locations throughout South Africa. It
provides full life cycle paper and electronic records management on-site or off-
site, including collation, scanning, digital conversions, physical or electronic
preservation and destruction services.
Building on 25 years of experience, Metrofile is today the market leader in on-
site and off-site multimedia document management and information storage for all
sectors of the economy. With 25% of its equity held by the Mineworkers
Investment Company (Pty) Limited, Metrofile has the empowerment credentials to
operate successfully across the private and public sectors.
Metrofile`s aim is to capitalise on the value and growth potential for
shareholders and stakeholders of our group by entrenching our position as the
most trusted provider of content management services in South Africa through
innovation, proven systems and expanding our network of storage centres and
locations to ensure that our clients comply with legal and corporate governance
requirements.
RESTRUCTURING
The year under review was the final step in a five-year recovery plan that has
seen the group return to its core skills and business of document management, as
results for the year clearly demonstrate. The convertible debt of R320 million
in its operating subsidiaries has been refinanced and rescheduled over six years
to be in line with its projected cash flows. The debt in the holding company and
its subsidiaries was settled through a rights issue which raised a net amount of
R135 million. In addition, the group acquired all of the minority interests in
Metrofile (Pty) Limited in exchange for holding company shares.
The holding company now has sufficient cash on hand to deal with the few
remaining provisions and contingent liabilities of the old MGX Group and has
authority to issue a further 10 million shares for cash if needed for this
purpose only.
With thorough knowledge of the changing corporate landscape and responsibilities
that determine our customers` needs, a clear understanding of our organisational
strengths and potential, and the commitment of all our people, Metrofile is now
well placed to implement its comprehensive strategic blueprint for sustainable
growth and shareholder returns.
FINANCIAL REVIEW
The results for the year were pleasing. Revenue increased by 8,5% to R299,7
million and EBITDA increased by 16,8% to R103,5 million.
We do not believe it is useful to comment on actual HEPS or EPS for this
financial year as these metrics have been affected by the substantial increase
in the number of shares in issue and the reduction of debt at different points
in the reporting period, the continued need to raise interest charges on
provisions for creditors where the claims concerned have not yet been finally
determined, and the reversal of a R6 million provision for taxation which is no
longer required.
To assist shareholders, we note that if the refinancing and issue of new shares
had taken place on 1 July 2006, there had been no exceptional items, capital
gains, reversal of tax provisions or interest on claims still to be settled,
HEPS and EPS on the full number of shares now in issue would have been 9,5 cents
for the year under review. The results for the second six months were
significantly better than the interim results, due to reversal of provisions
which were provided for in prior periods.
ACCOUNTING POLICIES
In terms of the Listings Requirements of the JSE, the group results have been
prepared in accordance with IAS 34 - Interim Financial Reporting, the Listings
Requirements of the JSE and the South African Companies Act. The same accounting
policies and methods of computation were applied as in the prior year annual
financial statements.
AUDITORS` REVIEW OPINION
The results have been reviewed by Deloitte & Touche whose review report is
available for inspection at the company`s registered office. The report no
longer contains a matter of emphasis with regard to going concern.
DIRECTORATE AND CORPORATE GOVERNANCE
Danisa Baloyi resigned as a director and Messers Paul Nkuna and Richard Buttle
were appointed to the board of directors during the year under review. The board
currently comprises two executive and five non-executive directors.
Dividends
No dividends have been declared for the current year and it is not the intention
that any dividends will be declared or paid in the foreseeable future.
CONTINGENT LIABILITIES
MGX/EUREKA PENSION FUND
The trustees are in the process of transferring the assets of this pension funds
to other funds subject to approval from the Financial Services Board. The
company is of the view that there will be no shortfalls for which it is liable.
It is expected that this matter will be resolved before the end of this
financial year.
ILLEGAL STRIKE
During the year a number of the group`s employees embarked on an illegal strike.
The company followed the required procedures and the CCMA ruled in the company`s
favour. The employees appealed and the matter still has to be heard by the
labour court.
COMMITMENTS
- Operating lease commitments for the next five years amount to R12,1 million.
- Metrofile (Pty) Limited has committed to certain capital expansion and
replacement projects of R18 million. This will be funded from free cash flows
generated by operating activities and surplus funds available from its parent
company.
GOVERNMENT BUSINESS
Shareholders are referred to the announcement that was released at the end of
May 2007. The final terms have still not been forwarded to the company and
shareholders will be advised further in due course.
POST-BALANCE SHEET EVENTS
No events material to the understanding of the report have occurred in the
period between the year-end date and the date of the report.
PROSPECTS
The year ahead is one of consolidation and includes expansion of storage
capacity and enhancement of systems. Prospects for the coming year are
satisfactory. Reported HEPS and EPS are again likely to be distorted by
movements in provisions, interest and taxation arising from historic MGX
matters.
Christopher Seabrooke
Non-executive Chairman
Graham Wackrill
Chief Executive Officer
30 August 2007
Cleveland
Gauteng
Registered office: 3 Gowie Road, The Gables, Cleveland, Johannesburg
Registration number: 1983/012697/06 www.metrofileholdings.com
Sponsor: Standard Bank
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited, 70
Marshall Street, Johannesburg, 2001
Directors: CS Seabrooke* (Non-executive Chairman), GD Wackrill (Chief Executive
Officer), RM Buttle, K Pillay*, SR Midlane*, IN Matthews*, P Nkuna*
*Non-executive
Company Secretary: LM Thompson
Date: 30/08/2007 17:45:01 Produced by the JSE SENS Department.
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