| Wed 3 Mar 2010, 17:05 | | MFL - Metrofile Holdings Limited - Unaudited Group Results For The Six Months |
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MFL
MFL
MFL - Metrofile Holdings Limited - Unaudited Group Results For The Six Months
Ended 31 December 2009
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 2009
- Revenue up 9,8%
- EBITDA up 7,3%
- Normalised HEPS up 15,9%
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
R`000 Notes 2009 2008 2009
Revenue 197 286 179 703 371 097
Operating income before 62 274 58 044 118 015
interest, taxation and
depreciation (EBITDA)
Depreciation (6 940) (5 880) (12 039)
Operating profit before 55 334 52 164 105 976
finance costs and
exceptional items
Net finance costs (17 603) (27 311) (46 636)
Finance income 111 1 744 2 330
Finance costs (15 201) (19 592) (37 345)
Interest paid on loans (14 836) (23 644) (43 254)
Interest (paid)/received 1 (365) 4 052 5 909
relating to financial
instruments
Fair value adjustments on 2 (9 463) (11 621)
financial instruments
Once-off interest cost 3 (2 513)
Profit before taxation 37 731 24 853 59 340
Taxation 4 (12 122) (7 341) (17 189)
Profit for the period 25 609 17 512 42 151
Attributable to:
Owners of the parent 25 394 17 512 42 128
Non-controlling interests 215 23
Attributable profit 25 609 17 512 42 151
Further information
Number of ordinary shares in 408 085 393 997 393 997
issue (thousands)
Weighted average number of 399 719 393 997 393 997
ordinary shares in issue
(thousands)
Earnings per ordinary share
Earnings per ordinary share 6,4 4,4 10,7
(cents)
Headline earnings per
ordinary share
Headline earnings per 6,3 4,4 10,7
ordinary share (cents)
Normalised headline earnings
per ordinary share
Normalised headline earnings 7,2 6,2 12,8
per ordinary share (cents)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
Notes 2009 2008 2009
R`000
Profit for the period 25 609 17 512 42 151
Other comprehensive income (239) 219 222
for the period net of tax
IFRS2 Equity reserve 519 192 574
relating to share schemes
Hedge accounting for fair 6 (740) (330)
value on interest rate swaps
Currency movement on (18) 27 (22)
translation of foreign
subsidiary
Total comprehensive income 25 370 17 731 42 373
for the period
Attributable to:
Owners of the parent 25 155 17 731 42 350
Non-controlling interests 215 23
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
as at as at as at
31 December 31 December 30 June
R`000 Note 2009 2008 2009
ASSETS
Non-current assets 443 998 395 746 410 553
Property, plant and 270 469 235 052 249 868
equipment
Goodwill 5 169 992 160 499 160 499
Deferred tax asset 3 537 195 186
Current assets 85 847 83 453 90 580
Inventories 14 716 13 250 16 558
Trade receivables 53 521 48 976 54 450
Other receivables 5 085 6 326 4 109
Financial instruments: Fair 6 2 158
value of interest rate
swaps
Bank balances 12 525 12 743 15 463
Total assets 529 845 479 199 501 133
EQUITY AND LIABILITIES
Equity and reserves 214 095 147 127 171 771
Equity attributable to 212 901 147 127 171 746
owners of the parent
Non-controlling interests 1 194 25
Non-current liabilities 222 133 252 157 233 285
Interest-bearing 7 214 124 243 916 226 070
liabilities
Deferred taxation liability 8 009 8 241 7 215
Current liabilities 93 618 79 915 96 077
Trade payables 11 299 10 406 12 850
Other payables 19 065 20 933 23 153
Deferred revenue 5 093 4 708 5 491
Financial instruments: Fair 6 1 070 330
value of interest rate
swaps
Bank overdraft 140
Provisions 4 600 3 644 5 470
Taxation 16 408 9 295 16 150
Interest-bearing 7 35 943 30 929 32 633
liabilities
Total equity and 529 845 479 199 501 133
liabilities
Net asset value per 52,2 37,3 43,6
ordinary share (cents)
Notes:
1. This represents cash (paid)/received on the interest rate swaps.
2. This was the mark to market change in the fair value of the interest rate
swap contracts held by the group. This was not a cash flow item and is not
regarded as a normal trading item. If the swaps had met the requirements of
hedge accounting under International Financial Reporting Standards ("IFRS"),
this charge would have gone through reserves. The cash flow cost from the swaps
amounted to R0,4 million for the current period.
3. The once off interest cost relates to a SARS liability which arose out of the
degrouping which occurred post the Section 311 restructure in 2004. The interest
relates to timing differences of the recoupments as well as deemed capital
gains.
4. The taxation charge for the period includes a charge relating to deemed
capital gains as per note 3. The capital gain amounted to R0,8 million and
relates to the 2005 financial year; as a result of this gain the tax bases of
the property companies have increased by R16,2 million.
5. Goodwill arose from the acquisition of the 35% minority shareholding in
Metrofile (Pty) Limited, 100% of Innovative Document Management (Pty) Limited
and 55% of Cleardata (Pty) Limited and is assessed for impairment on an annual
basis.
6. 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.
7. 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. All borrowings are
JIBAR linked and are approximately 56% hedged by way of the interest rate swaps
(30 June 2009: 52%).
8. All the assets have been pledged as security against certain loans to the
group.
SEGMENTAL INFORMATION
Net sales revenue
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
R`000 2009 2008 2009
Metrofile Records Management 156 342 141 208 290 307
CSX Customer Services 31 857 31 232 66 248
Property Companies
Other 9 087 7 263 14 542
Total 197 286 179 703 371 097
Indirect costs
Operating profit
Gross margin
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
R`000 2009 2008 2009
Metrofile Records Management 81 255 76 447 155 364
CSX Customer Services 7 884 7 315 15 458
Property Companies 16 186 13 445 28 134
Other (1 033) (1 161) (2 196)
Total 104 292 96 046 196 760
Indirect costs (48 958) (43 882) (90 784)
Operating profit 55 334 52 164 105 976
"Metrofile Records Management" represents the Metrofile document storage and
image processing business units which are managed and operated geographically.
The "Property companies" are all wholly owned subsidiaries of Metrofile (Pty)
Limited and charge rentals on owned properties to the Metrofile Records
Management segment.
"Other" includes all divisions and entities which are at this stage not material
to the group`s results; these include Metrofile Holdings Limited, Africa
operations, the paper management business and with effect from 1 January 2010
Cleardata (Pty) Limited.
The majority of assets and resultant depreciation relate to Metrofile Records
Management, therefore a table has not been prepared in this regard. It should
however be noted that the majority of inventory relates to CSX Customer
Services.
Interest has not been reflected on the segmental report as the majority of the
interest relates to Metrofile (Pty) Limited which includes all material
divisions reflected above.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
R`000 2009 2008 2009
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash generated from operations 60 957 59 049 118 578
before net working capital changes
Increase in net working capital (4 243) (4 746) (1 988)
Cash generated from operations 56 714 54 303 116 590
Net finance costs paid (15 090) (17 848) (35 015)
Normal taxation paid (8 578) (4 543) (10 602)
Net cash inflow from operating 33 046 31 912 70 973
activities
Net cash outflow from investing (16 568) (35 042) (56 358)
activities
Net cash outflow from financing
activities:
Loans repaid (19 556) (13 491) (27 969)
Loans raised 547
Net decrease in cash and cash (3 078) (16 074) (13 354)
equivalents
Cash and cash equivalents at the 15 463 28 817 28 817
beginning of the period
Cash and cash equivalents at the 12 385 12 743 15 463
end of the period
Represented by:
Bank balances 12 525 12 743 15 463
Bank overdrafts (140)
STATEMENT OF CHANGES IN EQUITY
Accumu-
Share Share lated Other
R`000 capital premium losses reserves
Balance at 1 July 2008 2 421 502 904 (375 929)
Total comprehensive income for 17 512 219
the period ended 31 December
2008
Balance at 31 December 2008 2 421 502 904 (358 417) 219
Minority contribution on
acquisition of subsidiary
Total comprehensive income for 24 616 3
the period ended 30 June 2009
Balance at 30 June 2009 2 421 502 904 (333 801) 222
Shares issued in terms of 87 15 913
vendor placements for
acquisitions
Minority portion of reserves
relating to acquisition of
subsidiary
Total comprehensive income for 25 394 (239)
the period ended 31 December
2009
Balance at 31 December 2009 2 508 518 817 (308 407) (17)
Total
equity
before
minority Non-
apportion- controlling
R`000 ment interests Total
Balance at 1 July 2008 129 396 129 396
Total comprehensive income for 17 731 17 731
the period ended 31 December
2008
Balance at 31 December 2008 147 127 147 127
Minority contribution on 2 2
acquisition of subsidiary
Total comprehensive income for 24 619 23 24 642
the period ended 30 June 2009
Balance at 30 June 2009 171 746 25 171 771
Shares issued in terms of 16 000 16 000
vendor placements for
acquisitions
Minority portion of reserves 954 954
relating to acquisition of
subsidiary
Total comprehensive income for 25 155 215 25 370
the period ended 31 December
2009
Balance at 31 December 2009 212 901 1 194 214 095
RECONCILIATION OF HEADLINE EARNINGS
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
R`000 2009 2008 2009
Profit attributable to owners 25 394 17 512 42 128
of the parent
(Profit)/loss on sale of plant (135) (21) 11
and equipment
Tax effect of above items 38 6 (3)
Headline earnings 25 297 17 497 42 136
Headline earning per ordinary 6,3 4,4 10,7
share (cents)
RECONCILIATION OF NORMALISED HEADLINE EARNINGS
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
R`000 2009 2008 2009
Headline earnings 25 297 17 497 42 136
Non-recurring taxation and 3 286
interest cost
Fair value adjustments on 9 463 11 621
financial instruments
Tax effect of fair value (2 650) (3 254)
adjustment
Normalised headline earnings* 28 583 24 310 50 502
Normalised headline earnings 7,2 6,2 12,8
per ordinary 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.
COMMENTARY ON RESULTS
Profile
Established in 1983, Metrofile is the information and records management market
leader in Africa and is represented in all the major provinces of South Africa.
Metrofile operates from 20 facilities covering more than 63 000m2 of warehousing
space and manages more than 18 billion records on behalf of its customers.
Metrofile remains the only company in Africa capable of supporting all its
customers` information and records management requirements. Services offered
include both in and outsourced solutions designed to help business and
government to increase their operating efficiency and customer service, as well
as to meet their legislative and corporate governance requirements. These
services include file plan development, training in all aspects of records
management, the supply of files, active file management (on and off-site),
archival of records (on and off-site), image processing, data protection, backup
management, paper management and confidential records destruction. Metrofile
also supplies and maintains a wide range of business equipment including
scanners, library security systems, mailing and packaging machines.
Metrofile has been listed on the JSE Limited ("JSE") since 1995 and its ordinary
shares are quoted in the Support Services sector of the JSE. Its largest
shareholder is its empowerment partner, Mineworkers Investment Company (Pty)
Limited which owns 32,4% of Metrofile`s equity.
Strategy
Metrofile`s focus is to continue cross selling the group`s diverse range of
services whilst expanding its footprint into smaller cities within South Africa,
the first of which will be Nelspruit. Government opportunities remain a primary
strategic focus and the acquisitions concluded within the reporting period will
enhance the group`s service offering to all clients.
Metrofile`s growth strategy includes continuation of the expansion into Africa
where demand is driven by both existing customers that have a need for similar
services to those received in South Africa, and the business requirement to
improve efficiencies and comply with best practice in terms of international
standards. Metrofile is operating ahead of expectations in Mozambique and,
notwithstanding delays in the start up process, expect to be established in
Nigeria before the end of the current financial year.
Financial review
Despite the slowdown in the economy, results for the period were satisfactory
with revenue increasing by 9,8% to R197,3 million and EBITDA by 7,3% to R62,3
million. Headline earnings per share ("HEPS") increased by 42,5% to 6,3 cents
(2009: 4,4 cents) although the more relevant measure is normalised HEPS, which
increased by 15,9% to 7,2 cents (2009: 6,2 cents). These are calculated after
adjusting HEPS for once-off items and also for the accounting effects of changes
in the fair value of the interest rate swaps.
Cash generated by the business remains strong and continues to be applied to
investing in capital items required for growth and the reduction of the group`s
debt.
The group`s gearing has improved with the repayment of loans in line with
funding agreements. 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 with regular valuations performed on an open market basis. Although no
valuation was undertaken in the current period, the most recent 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.
During the period Metrofile acquired 100% of Innovative Document Management
(Pty) Limited, 100% of Infovault (Pty) Limited and 55% of Cleardata (Pty)
Limited. These acquisitions were made by way of vendor placements which resulted
in a further 14,1 million shares being issued. The table below represents the
"provisional" at acquisition fair value of net assets acquired, in aggregate for
all three investments, as no investment is individually considered material.
Rm
Property, plant and equipment 11,4
Deferred tax asset 3,2
Current assets 2,0
Long-term liabilities (6,9)
Current liabilities (2,2)
Non-controlling interests (1,0)
Net asset value acquired 6,5
Paid by way of vendor placements 16,0
Net asset value acquired (6,5)
Goodwill 9,5
Accounting policies
Group results have been prepared in accordance with the recognition and
measurement principles of 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. The same accounting policies and methods of
computation were applied as in the prior year annual financial statements except
for IFRS8: Operating Segments and IFRS3 (Revised): Business Combinations which
became effective in the current period.
Certain accounting pronouncements became effective during the prior financial
year; however these do not have a material impact on either transactions or
disclosures.
Related parties
There have been no changes since the previous financial year to the arm`s length
consulting agreement with the Mineworkers Investment Company. In terms of the
agreement, fees of R0,38 million (December 2008: R0,34 million) were paid to the
Mineworkers Investment Company during the period under review.
Directorate and corporate governance
There have been no changes to the board since the 2009 financial year end with
composition remaining at two executive and six non-executive directors, of which
four are independent.
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 came before the labour court in September 2009, however the trial did not
proceed as not all the applicants were present. At this stage no future date has
been set by the court.
Commitments
Operating lease commitments amount to R12,8 million for the next five years.
Metrofile (Pty) Limited had planned capital expansions of R22,7 million and
replacement projects of R11,8 million for the 2010 financial year, of which
R16,6 million has been incurred for the six month period whilst a further R 2,4
million has been committed for the balance of the year.
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 this report.
Outlook
The recent acquisitions support our growth plans and expand our offering to our
customers, the benefits of which will manifest over time. Notwithstanding the
challenges in the current economic environment, the group expects steady growth
in Revenue, EBITDA and normalised HEPS. Working capital management, cost savings
and cash flow remain key focus areas whilst striving to grow revenues in line
with our strategic plans. The above information has not been reviewed or
reported on by the company`s auditors.
CHRISTOPHER SEABROOKE GRAHAM WACKRILL
Non-executive Chairman Chief Executive Officer
3 March 2010
Cleveland
Gauteng
Directors:
CS Seabrooke*p (Chairman)
AP Nkuna* (Deputy Chairman)
GD Wackrill (CEO)
RM Buttle (CFO)
CN Mapaure* IN Matthews*^, N Medupe*^, SR Midlane*^
*Non-executive
^Independent
Company Secretary:
LM Thompson
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
Date: 03/03/2010 17:05:01 Produced by the JSE SENS Department.
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