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MFL
MFL
MFL - Metrofile - Unaudited group results for the six months ended 31 December
2007
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 GROUP RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2007
REVENUE UP 9,1%
EBIT UP 14,2%
CASH GENERATED FROM OPERATIONS UP 57,9%
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited Reviewed Audited
Six months Six months 12 months
ended ended ended
R`000 Note 31 Dec 07 31 Dec 06 30 Jun 07
Revenue 163 531 149 912 299 740
Operating income
before depreciation
and exceptional
items
53 282 47 707 101 817
Depreciation (5 286) (5 709) (10 894)
Exceptional items 38 1 486
Operating profit
before finance
costs (EBIT) 47 996 42 036 92 409
Net finance costs (18 419) (29 767) (44 838)
Finance income 2 481 571 2 709
Fair value
adjustments on
financial 2 047 (1 935) 3 892
instruments
Finance costs 1 (22 947) (28 403) (51 439)
Profit before 29 577 12 269 47 571
taxation
Taxation 1 (8 019) 242 (8 362)
Profit for the year 21 558 12 511 39 209
Attributable to:
Equity holders of 21 558 8 562 35 260
the parent
Minority interest 3 949 3 949
Attributable profit 21 558 12 511 39 209
Earnings per
ordinary share
Earnings per
ordinary share
(cents) 5,5 9,5 14,0
Further information
Number of ordinary
shares in issue
(thousands)
393 997 393 997 393 997
Weighted average
number of ordinary
shares in issue
(thousands)
393 997 90 282 252 337
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited Reviewed Audited
as at as at as at
R`000 Notes 31 Dec 07 31 Dec 06 30 Jun 07
ASSETS
Non-current assets
Property, plant 183 348 167 671 174 708
and equipment
Goodwill 160 499 157 972 160 499
Current assets 117 016 93 167 110 478
Inventories 9 848 10 272 12 034
Trade receivables 46 425 46 044 46 640
Other receivables 2 14 260 5 422 11 673
Bank balances 46 483 31 429 40 131
Total assets 460 863 418 810 445 685
EQUITY AND
LIABILITIES
Equity capital and
reserves
Equity
attributable to
equity holders
of the parent 91 641 43 384 70 083
Non-current 291 814 327 955 312 996
liabilities
Interest-bearing 3 11 179 11 669
provisions
Interest-bearing 4 280 439 308 958 292 666
liabilities
Deferred taxation 11 375 7 818 8 661
liability
Current 77 408 47 471 62 606
liabilities
Trade payables 8 988 5 290 10 580
Other payables 13 510 19 770 14 883
Deferred revenue 3 798 3 772 4 028
Provisions 3 812 4 224 4 829
Taxation 5 920 5 974 5 583
Interest-bearing 4 28 835 8 441 22 703
liabilities
Interest-bearing 3 12 545
provisions
Total equity and 460 863 418 810 445 685
liabilities
Net asset per
ordinary share
(cents) 23,3 11,0 17,8
NOTES:
1. The finance costs for the six months included R0,9 million of interest
provisions relating to potential claims that still needed to be finalised.
The low taxation charge for the 2007 year was the result of reversing a
provision of R6 million which was no longer required.
2. Other receivables include the interest rate swap assets of R8,9 million
(2006: R1,6 million and 30 June 2007 R6,8 million).
3. Long-term interest-bearing provisions include anticipated claims related to
certain dormant subsidiaries from the old "MGX" Group.
The anticipated claim should be resolved before the end of the current financial
year.
4. Long-term interest-bearing liabilities include the Senior and Mezzanine
loans. Short-term interest-bearing liabilities include the portions of the
Senior and Mezzanine loans payable in one year. All borrowings are JIBAR linked
and are approximately 75% hedged by way of the interest rate swaps.
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 the borrowings of the
group.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Reviewed Audited
Six months Six months 12 months
ended ended ended
R`000 31 Dec 07 31 Dec 06 30 Jun 07
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash generated from
operations before
net working capital changes 57 350 50 738 102 734
Increase in net working (6 444) (18 490) (25 836)
capital
Cash generated from 50 906 32 248 76 898
operations
Net finance costs paid (19 592) (29 767) (44 838)
Normal taxation paid - (4 966) (7 744) (15 890)
current year
Normal taxation paid - prior (17 344) (17 344)
year
Net cash inflow/(outflow)
from operating
activities 26 348 (22 607) (1 174)
Net cash outflow from (13 353) (5 458) (19 980)
investing activities
Net cash inflow/(outflow)
from financing activities
Net cash inflow from rights 138 168 138 500
issue
Loans repaid (6 761) (321 311) (321 670)
Loans raised 118 603 5 656
Proceeds from new financing 320 000 320 000
facilities
Convertible loan notes repaid (91 861) (95 096)
Net increase in cash and cash 6 352 17 534 26 236
equivalents
Cash and cash equivalents at
the beginning of the period
40 131 13 895 13 895
Cash and cash equivalents at
the end of the period
46 483 31 429 40 131
Represented by:
Bank balances 46 483 31 429 40 131
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attri-
Share Share butable
capital premium losses
R`000 R`000 R`000
Balance at 1 July 2006 408 195 656 (473 497)
Profit for the six months 8 562
ended 31 December 2006
Rights offer 1 163 134 343
Minority acquisition 850 172 905
Profit on sale of nil
paid letters 2 994
Balance at
31 December 2006 2 421 502 904 (461 941)
Profit for the six months 26 699
ended 30 June 2007
Balance at 30 June 2007 2 421 502 904 (435 242)
Profit for the six months 21 558
ended 31 December 2007
Balance at
31 December 2007 2 421 502 904 (413 684)
Attri-
butable
to equity Minority
holders Share-
of the holder
parent interest Total
R`000 R`000 R`000
Balance at 1 July 2006 (277 433) 12 162 (265 271)
Profit for the six months 8 562 3 949 12 511
ended 31 December 2006
Rights offer 135 506 135 506
Minority acquisition 173 755 (16 111) 157 644
Profit on sale of nil
paid letters 2 994 2 994
Balance at
31 December 2006 43 384 43 384
Profit for the six months 26 699 26 699
ended 30 June 2007
Balance at 30 June 2007 70 083 70 083
Profit for the six months 21 558 21 558
ended 31 December 2007
Balance at
31 December 2007 91 641 91 641
RECONCILIATION OF HEADLINE EARNINGS
Unaudited Reviewed Audited
Six months Six months 12 months
ended ended ended
R`000 31 Dec 07 31 Dec 06 30 Jun 07
Profit to ordinary 21 558 8 562 35 261
shareholders
Capital profit on disposal of (38) (38)
investments
Negative goodwill on (480)
acquisition of investments
(Profit)/loss on sale of (26) 5 225
plant and equipment
Headline earnings 21 532 8 529 34 968
Headline earnings per
ordinary share (cents)
5,5 9,4 13,9
COMMENTARY ON RESULTS
METROFILE`S PROFILE
Metrofile is quoted in the "Support Services - Business Support Services" sector
of the JSE Limited ("JSE").
Building on almost 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 26% of its equity held by the Mineworkers
Investment Company, Metrofile has the empowerment credentials to operate
successfully across the private and public sectors.
Our purpose is to enable people and organisations to access secure information
and assets rapidly, intelligently and cost-effectively. In doing so, we provide
the peace of mind that enables customers to make informed decisions, to act with
confidence and integrity and to focus on their core business.
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.
MGX LEGACY
The group still has provisions of R12,5 million for contingencies arising from
the former MGX group (of which Metrofile was a part) and which it expects to
resolve or quantify before the current financial year-end and as a consequence
have now been disclosed under current liabilities.
FINANCIAL REVIEW
The results for the first six months were in line with expectations. Revenue
increased by 9,1% to R163,5 million and EBITDA increased by 11,7% to R53,3
million. Headline earnings per share ("HEPS") were 5,5 cents (2006: 9,4 cents)
and earnings per share ("EPS") were 5,5 cents (2006: 9,5 cents).
Shareholders should note that the 2006 results were stated after accounting for
a number of once off items. To assist shareholders, it has been calculated that
if the refinancing and issue of new shares had taken place on 1 July 2006, and
if there had been no exceptional items, capital gains, reversal of tax
provisions or interest on provisions for claims still unresolved, then HEPS and
EPS on the full number of shares now in issue would have been 3,5 cents for the
six-month period ended 31 December 2006 and 9,5 cents for the full financial
year ended 30 June 2007.
ACCOUNTING POLICIES
In terms of the Listing Requirements of the JSE, the group results have been
prepared in accordance with the International Financial Reporting Standards
("IFRS") IAS 34 - Interim Financial Reporting, the Listing Requirements of the
JSE and the South African Companies Act. The same accounting policies and
methods of computation were applied as in the prior financial year and
comparative period.
RELATED PARTIES
There have been no changes to the arm`s length agreement with Mineworkers
Investment Company since the previous reporting periods.
DIRECTORATE AND CORPORATE GOVERNANCE
Ms Ndumi Medupe was appointed to the board of directors, as independent non-
executive director, and as a member of the audit committee with effect from 1
February 2008.
DIVIDENDS
No dividends have been declared for the current period and it is not the
intention that any dividends will be declared or paid in the foreseeable future.
CONTINGENT LIABILITIES
ILLEGAL STRIKE
During the previous year a number of the group`s employees embarked on an
illegal strike. The company followed the required procedures and dismissed the
employees. The employees took the matter to the CCMA who ruled in favour of the
company. The employees appealed and the matter has been scheduled to be heard by
the labour court during March 2008.
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 R10,6 million. This will be funded from free cash flows
generated by operating activities and surplus funds available from its parent
company.
POST-BALANCE SHEET EVENTS
No events material to the understanding of the report have occurred in the
period between the period end date and the date of the report.
Possible government contract
During the fourth quarter of the previous financial year, shareholders were
advised that the company expected to participate in a substantial new government
contract which had been awarded to a consortium to which the company was a
contractor. No final terms have been communicated to the company and management
is of the view that the project may have been deferred by the relevant
department for an undetermined period. Metrofile will accordingly not be
budgeting for this contract for the time being.
PROSPECTS
The group is in the process of enhancing its systems and expanding its storage
capacity in South Africa. In addition, it has expanded its operations into
Mozambique and is examining opportunies in other African countries.
The power shortages in RSA are not expected to have any material impact on the
group`s results at the present time.
The group expects growth in revenue and operating profits for the current
financial year.
Christopher Seabrooke
Non-executive Chairman
Graham Wackrill
Chief Executive Officer
29 February 2008
Cleveland
Gauteng
Registered office: 3 Gowie Road, The Gables, Cleveland, Johannesburg
Registration number: 1983/012697/06
Sponsor: Standard Bank
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited, 70
Marshall Street, Johannesburg, 2001
Directors: CS Seabrooke* (Chairman), GD Wackrill (CEO), RM Buttle, K Pillay*, SR
Midlane*, IN Matthews*, N Medupe*, P Nkuna* *Non-executive
Company Secretary: LM Thompson
Date: 29/02/2008 07:05:12 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
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employees and agents accept no liability for (or in respect of) any direct,
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