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MFL
MFL
MFL - Metrofile Holdings - Audited Group Results For The Year Ended
30 June 2009
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")
AUDITED GROUP RESULTS FOR THE YEAR ENDED 30 JUNE 2009
- Revenue up 12,5%
- EBITDA up 11,0%
- Normalised HEPS up 23,0%
CONDENSED CONSOLIDATED INCOME STATEMENT
Audited Audited
12 months 12 months
ended ended
30 June 30 June
R`000 Notes 2009 2008
Revenue 371 097 329 935
Operating income before interest, 118 015 106 291
taxation and depreciation (EBITDA)
Depreciation (12 039) (10 752)
Operating profit before net finance 105 976 95 539
costs and exceptional items
Net finance costs (46 636) (22 638)
Finance income 2 330 5 138
Finance costs (37 345) (44 832)
Interest paid on loans (43 254) (50 157)
Interest received relating to 1 5 909 5 325
financial instruments
Fair value adjustments on financial 2 (11 621) 4 780
instruments
Once-off reversal of finance cost - 12 276
provision
Exceptional items - 2 368
Profit before taxation 59 340 75 269
Taxation (17 189) (15 956)
Profit for the year 42 151 59 313
Attributable to:
Owners of the parent 42 128 59 313
Non-controlling interests 23 -
Attributable profit 42 151 59 313
Further information
Number of ordinary shares in issue 393 997 393 997
(thousands)
Weighted average number of ordinary 393 997 393 997
shares in issue (thousands)
Earnings per ordinary share
Earnings per ordinary share (cents) 10,7 15,1
Headline earnings per ordinary
share
Headline earnings per ordinary 10,7 14,4
share (cents)
Normalised headline earnings per
ordinary share
Normalised headline earnings per 12,8 10,4
ordinary share (cents)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
12 months 12 months
ended ended
30 June 30 June
R`000 2009 2008
Profit for the year 42 151 59 313
Other comprehensive income for the 222 -
year net of tax
IFRS2 Equity reserve relating to 574 -
share schemes
Hedge accounting for fair value on (330) -
interest rate swaps
Currency movement on translation of (22) -
foreign subsidiary
Total comprehensive income for the 42 373 59 313
year
Attributable to:
Owners of the parent 42 350 59 313
Non-controlling interests 23 -
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
as at as at
30 June 30 June
R`000 Notes 2009 2008
ASSETS
Non-current assets 410 553 366 169
Property, plant and equipment 249 868 205 559
Goodwill 3 160 499 160 499
Deferred tax asset 186 111
Current assets 90 580 104 156
Inventories 16 558 10 502
Trade receivables 54 450 48 335
Other receivables 4 109 4 881
Financial instruments - Fair value 4 - 11 621
of interest rate swaps
Bank balances 15 463 28 817
Total assets 501 133 470 325
EQUITY AND LIABILITIES
Equity and reserves 171 771 129 396
Equity attributable to owners of 171 746 129 396
the parent
Non-controlling interests 25 -
Non-current liabilities 233 285 267 648
Interest-bearing liabilities 5 226 070 257 342
Deferred taxation liability 7 215 10 306
Current liabilities 96 077 73 281
Trade payables 12 850 8 471
Other payables 23 153 22 254
Deferred revenue 5 491 4 186
Financial instruments - Fair value 4 330 -
of interest rate swaps
Provisions 5 470 4 693
Taxation 16 150 4 347
Interest-bearing liabilities 5 32 633 29 330
Total equity and liabilities 501 133 470 325
Net asset value per ordinary share 43,6 32,8
(cents)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Audited Audited
12 months 12 months
ended ended
30 June 30 June
R`000 2009 2008
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash generated from operations 118 578 107 120
before net working capital changes
(Increase)/decrease in net working (1 988) 3 989
capital
Cash generated from operations 116 590 111 109
Net finance costs paid (35 015) (39 694)
Normal taxation paid (10 602) (15 926)
Net cash inflow from operating 70 973 55 489
activities
Net cash outflow from investing (56 358) (39 189)
activities
Net cash outflow from financing
activities:
Loans repaid (27 969) (27 614)
Net decrease in cash and cash (13 354) (11 314)
equivalents
Cash and cash equivalents at the 28 817 40 131
beginning of the year
Cash and cash equivalents at the 15 463 28 817
end of the year
Represented by:
Bank balances 15 463 28 817
STATEMENT OF CHANGES IN EQUITY
Accumu-
Share Share lated Other
R`000 capital premium losses reserves
Balance at 1 July 2007 2 421 502 904 (435 242) -
Total comprehensive income - - 59 313 -
for the year ended 30 June
2008
Balance at 30 June 2008 2 421 502 904 (375 929) -
Minority contribution on
acquisition of subsidiary
Total comprehensive income - - 42 128 222
for the year ended 30 June
2009
Balance at 30 June 2009 2 421 502 904 (333 801) 222
Attributable
to
owners Non-
of the controlling Total
R`000 parent interests equity
Balance at 1 July 2007 70 083 - 70 083
Total comprehensive income 59 313 - 59 313
for the year ended 30 June
2008
Balance at 30 June 2008 129 396 - 129 396
Minority contribution on - 2 2
acquisition of subsidiary
Total comprehensive income 42 350 23 42 373
for the year ended 30 June
2009
Balance at 30 June 2009 171 746 25 171 771
RECONCILIATION OF HEADLINE EARNINGS
Audited Audited
12 months 12 months
ended ended
30 June 30 June
R`000 2009 2008
Profit attributable to owners of the 42 128 59 313
parent
Capital profit on disposal of investments - (2 368)
Loss/(profit) on sale of plant and 11 (46)
equipment
Tax effect of above items (3) 13
Headline earnings 42 136 56 912
Headline earnings per ordinary share 10,7 14,4
(cents)
RECONCILIATION OF NORMALISED HEADLINE EARNINGS
Audited Audited
12 months 12 months
ended ended
30 June 30 June
R`000 2009 2008
Headline earnings 42 139 56 912
Non-recurring reversal of finance cost - (12 544)
provision
Fair value adjustments on financial 11 621 (4 780)
instruments
Tax effect of fair value adjustment (3 254) 1 338
Normalised headline earnings* 50 506 40 926
Normalised headline earnings per ordinary 12,8 10,4
share (cents)
* Normalised headline earnings are adjusted for non-trading items relating to
financial instruments and MGX legacy issues; these earnings represent the
results of the normal business operations and are included to give clarity to
investors.
Notes:
1. This represents cash received on the interest rate swaps.
2. This is the mark to market change in the fair value of the interest rate
swap contracts held by the group. This is not a cash flow item and is not
regarded as a normal trading item. If the swaps had been able to be hedge
accounted under IFRS, this charge would have gone through reserves. The cash
flow benefit from the swaps amounted to R5 909 million for the financial year
and has totalled R11 004 million over the period of the swaps to date. This is
reflected in a separate line in the income statement and treated as a credit
to interest paid.
3. Goodwill arose from the acquisition of the 35% minority shareholding in
Metrofile (Pty) Limited and is assessed for impairment on an annual basis.
4. During March 2009 the existing interest rate swaps, which were due to
expire towards the end of the 2009 calendar year, were closed out and new
swaps were entered into. The new swaps comply with hedge accounting
requirements and as a result all movements are allocated directly through
reserves. The comparative figure was raised and reversed through the income
statement.
5. Long-term interest-bearing liabilities include the Metrofile Senior and
Mezzanine loans. Short-term interest-bearing liabilites include the portions
of the Metrofile Senior and Mezzanine loans payable in one year. All
borrowings are JIBAR linked and are approximately 52% hedged by way of the
interest rate swaps (30 June 2008: 75%).
6. No segmental analysis has been reported as the group traded in only one
segment and mainly in Southern Africa. IFRS 8: Operating Segments, will be
effective for the 2010 financial year.
7. All the assets have been pledged as security against certain loans to the
group.
COMMENTARY ON RESULTS
Profile
Metrofile, an associate of the Mineworkers Investment Company (MIC), is the
market leader in information and records management across Africa. It operates
from 20 facilities in the major provinces of South Africa and one facility in
Mozambique, covering a total of 63 000 m2 of space and managing 18 billion
documents.
Metrofile offers customers a full outsourced service that ranges from offsite
storage of records to onsite file management, image processing, backup and
paper management and other information, document and access solutions
including consultancy, software and records destruction. In addition, records
management training is provided through the Metrofile Training Academy and
imaging and document handling equipment is supplied and serviced through CSX.
Strategy
Metrofile is focused on cross selling the group`s diverse information and
records management services and equipment to both new and existing private and
public sector customers and the development of additional services that are
aligned with Metrofile`s existing core businesses. Capacity is being increased
to enable the group to meet the growing demand for its products and services
from customers affected by expanded regulatory and governance obligations and
requirements.
Metrofile`s growth strategy incorporates expansion into African countries
where existing customers have a need for similar services to those received in
South Africa.
Metrofile continues to enjoy a good relationship with MIC and is focused on
enhancing the current level 5 BBBEE contributor status.
Financial review year
Results for the year were satisfactory with revenue increasing by 12,5% to
R371,1 million and EBITDA increasing by 11,0% to R118,0 million.
Although headline earnings per share ("HEPS") reduced by 25,7% to 10,7 cents
(2008: 14,4 cents), the more relevant measure is normalised HEPS. This is
calculated after adjusting HEPS for a number of once-off items that arose from
the restructure of the old MGX Group and also for the accounting effects of
changes in the fair value of the interest rate swaps (i.e. not the
benefit/cost from those swaps); the changes would have been accounted for
through the NDR if hedge accounting had applied. Normalised HEPS for the
period increased by 23,0% to 12,8 cents (2008: 10,4 cents).
The group`s gearing has improved with repayment of loans in line with funding
agreements. Although cash has reduced by R13 million since 30 June 2008 due to
the investment in further facilities, cash generated by operations remains
strong. Metrofile is in compliance with all its bank covenants and current
projections indicate that the group will continue to meet the payment
schedules as recorded in the six year refinancing agreements concluded in
2006.
Metrofile has chosen to continue to account for the property portfolio on a
cost basis; however, it should be noted that regular valuations are performed
on an open market basis. Although no valuation was undertaken in the current
financial year, the last valuation performed in June 2008 indicated that the
fair value of the property portfolio was R78,7 million higher than reflected
in the statement of financial position.
Capital expenditure
Additional storage facilities in Johannesburg, Cape Town and Durban were
completed during the year. Investment in new facilities and racking amounted
to R56,4 million for the year; however, expenditure in this regard will be
significantly lower in the year ahead.
Accounting policies
Group results have been prepared in accordance with the recognition and
measurement principles of International Financial Reporting Standards (IFRS),
including IAS 34: Interim Financial Reporting, the requirements of the South
African Companies Act of 1973, as amended, and the Listing Requirements of the
JSE Limited. The same accounting policies and methods of computation were
applied as in the prior year annual financial statements.
Certain accounting pronouncements became effective during the current
financial year, however, these do not have a material impact on either
transactions or disclosures.
Related parties
There have been no changes to the arm`s length consulting agreement with the
MIC since the previous financial year. In terms of the agreement, fees of
R0,66 million (2008: R0,59 million) were paid to the MIC during the period
under review.
Directorate and corporate governance
Mr Keshan Pillay resigned from the board of directors on 10 September 2008.
The vacancy was filled by Ms Cynthia Mapaure who joined the board on 27
February 2009. The board currently comprises two executive and six non-
executive directors.
Dividends
No dividends have been declared for the current period. It is not the
company`s intention to declare or pay dividends in the foreseeable future.
Contingent liabilities
During 2006 a number of the group`s employees embarked on an illegal strike.
The matter was scheduled to be heard by the labour court during March 2009,
however, the hearing did not go ahead and has been rescheduled to be heard
during September 2009.
Commitments
Operating lease commitments amount to R23,9 million for the next five years.
Metrofile (Pty) Limited has planned capital expansions of R22,7 million and
replacement projects of R11,8 million for the 2010 financial year.
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 this report.
Report of the independent auditors
The auditors, Deloitte & Touche, have issued their unmodified audit opinion on
the Group`s condensed consolidated financial statements for the year ended 30
June 2009. A copy of their audit report is available for inspection at the
company`s registered office.
Prospects
A number of opportunities are currently being pursued which will lead to
further growth in the existing business and the expansion of our service range
and African footprint. The group therefore expects steady growth in EBITDA and
in normalised HEPS, notwithstanding the slowdown in the economy. This
forecast information has not been reviewed or reported on by the company`s
auditors.
CHRISTOPHER SEABROOKE GRAHAM WACKRILL
Non-executive Chairman Chief Executive Officer
2 September 2009
Cleveland
Gauteng
Registered office:
3 Gowie Road, The Gables, Cleveland, Johannesburg
www.metrofile.com
Sponsor:
Standard Bank
Transfer secretaries:
Computershare Investor Services Limited
70 Marshall Street, Johannesburg, 2001
Directors:
CS Seabrooke* (Chairman)AP Nkuna* (Deputy Chairman)
GD Wackrill (CEO)RM Buttle (CFO)CN Mapaure*
IN Matthews*, N Medupe*, SR Midlane*
*Non-executive
Company Secretary:
LM Thompson
Date: 02/09/2009 17:00:01 Produced by the JSE SENS Department.
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