| Fri 3 Sep 2010, 17:00 | | MFL - Metrofile Holdings Limited - Audited group results for the year ended 30 |
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MFL
MFL
MFL - Metrofile Holdings Limited - Audited group results for the year ended 30
June 2010
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 2010
- Revenue up 10,4%
- EBITDA up 7,1%
- PBT up 29,2%
- Cash generated from operations up 11,9%
- Normalised HEPS up 14,1%
CONDENSED CONSOLIDATED INCOME STATEMENT
Audited Audited
12 months 12 months
ended ended
30 June 30 June
R`000 Notes 2010 2009
Revenue 409 563 371 097
Operating income before interest, taxation
and depreciation ("EBITDA") 126 434 118 015
Depreciation (14 792) (12 039)
Operating profit before finance costs 111 642 105 976
Net finance costs (34 953) (46 636)
Finance income 380 2 330
Finance costs (32 913) (37 345)
Interest paid on loans (30 210) (43 254)
Interest (paid)/received relating to
financial instruments 1 (2 703) 5 909
Fair value adjustments on financial
instruments 2 - (11 621)
Once-off interest cost 3 (2 420) -
Profit before taxation 76 689 59 340
Taxation 4 (23 433) (17 189)
Profit for the year 53 256 42 151
Attributable to:
Owners of the parent 52 945 42 128
Non-controlling interests 311 23
Attributable profit 53 256 42 151
Further information
Number of ordinary shares in issue (thousands) 408 085 393 997
Weighted average number of ordinary shares
in issue (thousands) 403 868 393 997
Earnings per ordinary share
Earnings per ordinary share (cents) 13,1 10,7
Headline earnings per ordinary share
Headline earnings per ordinary share (cents) 13,1 10,7
Normalised headline earnings per ordinary share
Normalised headline earnings per ordinary share (cents) 14,6 12,8
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
12 months 12 months
ended ended
30 June 30 June
R`000 Note 2010 2009
Profit for the year 53 256 42 151
Other comprehensive income for the
year net of tax (1 184) (352)
Hedge accounting for fair value on interest
rate swaps 5 (1 041) (330)
Currency movement on translation of foreign
subsidiary (143) (22)
Total comprehensive income for the year 52 072 41 799
Attributable to:
Owners of the parent 51 761 41 776
Non-controlling interests 311 23
CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
Audited Audited
as at as at
30 June 30 June
R`000 Notes 2010 2009
ASSETS
Non-current assets 460 004 410 553
Property, plant and equipment 286 466 249 868
Goodwill 6 169 943 160 499
Deferred tax asset 3 595 186
Current assets 86 463 90 580
Inventories 10 221 16 558
Trade receivables 58 909 54 450
Other receivables 3 542 4 109
Bank balances 13 791 15 463
Total assets 546 467 501 133
EQUITY AND LIABILITIES
Equity and reserves 242 259 171 771
Equity attributable to owners of the parent 240 929 171 746
Non-controlling interests 1 330 25
Non-current liabilities 228 476 233 285
Interest-bearing liabilities 7 221 784 226 070
Deferred taxation liability 6 692 7 215
Current liabilities 75 732 96 077
Trade payables 8 958 12 850
Other payables 29 864 27 355
Deferred revenue 7 065 5 491
Financial instruments - fair value of
interest rate swaps 5 1 904 330
Provisions 1 683 1 268
Taxation 3 992 16 150
Interest-bearing liabilities 7 22 266 32 633
Total equity and liabilities 546 467 501 133
Net asset value per ordinary share (cents) 59,0 43,6
Notes:
1. This represents cash (paid)/received on the interest rate swaps and includes
an amount of R1,7 million which was paid in order to close out the old swaps
when the debt was refinanced on 1 April 2010.
2. This was the mark to market change in the fair value of the old 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 been able to be hedge
accounted under IFRS, this charge would have gone through reserves. The cash
flow cost from the swaps is reflected in a separate line in the income statement
and treated as a credit to interest paid.
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 recoupment`s as well as deemed capital
gains.
4. The taxation charge for the year 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. During April 2010 the existing interest rate swaps, which were due to expire
in March 2011, were closed out and new swaps were entered into in order to align
to the new debt package. The new swaps comply with hedge accounting requirements
and as a result all movements are accounted for directly through reserves.
6. Goodwill arose from the acquisition of the 35% minority shareholding in
Metrofile (Pty) Limited in prior years and 100% of Innovative Document
Management (Pty) Limited and 55% of Cleardata (Pty) Limited in the current year.
7. Long-term interest-bearing liabilities include the Metrofile (Pty) Limited
amortising and bullet loans which have a six-year tenor as well as instalment
sale agreements entered into by Cleardata (Pty) Limited in order to finance
mobile shredding units. Short-term interest-bearing liabilities include the
portions of the Metrofile amortising loan and Cleardata instalment sale
agreements payable within one year. The Metrofile borrowings are JIBAR linked
and are approximately 70% hedged by way of the interest rate swaps (30 June
2009: 52%), whilst the Cleardata borrowings are prime linked and uncovered.
8. All the assets have been pledged as security against certain loans to the
group.
CONDENSED SEGMENTAL INFORMATION
Sales revenue Operating profit
Audited Audited Audited Audited
12 months 12 months 12 months 12 months
ended ended ended ended
30 June 30 June 30 June 30 June
R`000 2010 2009 2010 2009
Metrofile Records
Management 325 753 297 633 167 776 157 503
CSX Customer Services 70 146 66 248 17 840 17 599
Property Companies - - 32 372 28 134
Other 20 995 14 542 7 192 2 956
Intergroup (7 331) (7 326) - -
Total 409 563 371 097 225 180 206 192
Indirect costs (113 538) (100 216)
Operating profit before
finance costs 111 642 105 976
"Metrofile Records Management" represents the Metrofile document storage and
scanning divisions which are managed and operated geographically.
The "Property Companies" are wholly owned subsidiaries of Metrofile (Pty)
Limited which charge rentals on owned properties to the Metrofile Records
Management segment.
"Other" includes Metrofile Holdings, 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 relates to all material
divisions reflected above.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
12 months 12 months
ended ended
30 June 30 June
R`000 2010 2009
Cash generated from operations before net
working capital changes 127 412 118 578
Decrease/(increase) in net working capital 3 051 (1 988)
Cash generated from operations 130 463 116 590
Net finance costs paid (34 954) (35 015)
Normal taxation paid (35 591) (10 602)
Net cash inflow from operating activities 59 918 70 973
Net cash outflow from investing activities:
Investment in property, plant and equipment (40 370) (56 645)
Proceeds on disposal of property, plant and equipment 701 287
Acquisition of subsidiaries (16 000) -
Net cash outflow from financing activities:
Issue of shares in terms of vendor placements 16 000 -
Loans repaid* (30 821) (27 969)
Loans raised 8 900 -
Net decrease in cash and cash equivalents (1 672) (13 354)
Cash and cash equivalents at the beginning of the year 15 463 28 817
Cash and cash equivalents at the end of the year 13 791 15 463
* This amount represents the net position as an amount of R236,6 million was
repaid against the "old" debt and raised as "new" debt on 1 April 2010.
Represented by:
Bank balances 13 791 15 463
CONDENSED STATEMENT OF CHANGES IN EQUITY
Accumu-
Share Share lated Other
R`000 capital premium losses reserves
Balance at
30 June 2008 2 421 502 904 (375 929) -
Minority portion of reserves
relating to acquisition
of subsidiary - - - -
IFRS 2 Equity reserve relating
to share schemes - - - 574
Total comprehensive
income for the year - - 42 128 (352)
Balance at 30 June 2009 2 421 502 904 (333 801) 222
Shares issued in terms of
vendor placements
for acquisitions 87 15 913 - -
Minority portion of reserves
relating to acquisition
of subsidiary - - - -
IFRS 2 Equity reserve
relating to share schemes - - - 1 422
Total comprehensive
income for the year - - 52 945 (1 184)
Balance at 30 June 2010 2 508 518 817 (280 856) 460
Total
equity
before
minority Non-
apportion- controlling
R`000 ment interest Total
Balance at
30 June 2008 129 396 - 129 396
Minority portion of reserves
relating to acquisition of subsidiary - 2 2
IFRS 2 Equity reserve relating to share
schemes 574 - 574
Total comprehensive income for the year 41 776 23 41 799
Balance at 30 June 2009 171 746 25 171 771
Shares issued in terms of vendor
placements for acquisitions 16 000 - 16 000
Minority portion of reserves
relating to acquisition of subsidiary - 994 994
IFRS 2 Equity reserve relating
to share schemes 1 422 - 1 422
Total comprehensive
income for the year 51 761 311 52 072
Balance at 30 June 2010 240 929 1 330 242 259
RECONCILIATION OF HEADLINE EARNINGS
Audited Audited
12 months 12 months
ended ended
30 June 30 June
R`000 2010 2009
Profit attributable to owners of the parent 52 945 42 128
(Profit)/loss on sale of plant and equipment (152) 11
Tax effect of above items 43 (3)
Headline earnings 52 836 42 136
Headline earning per ordinary share (cents) 13,1 10,7
RECONCILIATION OF NORMALISED HEADLINE EARNINGS
Audited Audited
12 months 12 months
ended ended
30 June 30 June
R`000 2010 2009
Headline earnings 52 836 42 136
Non-recurring taxation 773 -
Non-recurring finance costs 6 614 -
Fair value adjustments on financial instruments - 11 621
Tax effect of above adjustments (1 174) (3 254)
Normalised headline earnings* 59 049 50 503
Normalised headline earning per ordinary share (cents) 14,6 12,8
*Normalised headline earnings are adjusted for non-recurring items relating to
financial instruments and 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 23 facilities covering more than 68 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
customer`s records management requirements. Services offered include both in and
out sourced 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 ("MIC") 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 with in South
Africa, the first of which was Nelspruit which opened in May 2010. Government
opportunities remain a primary strategic focus whilst 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
ser vices 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 is
finalising negotiations with an international partner for Nigeria; the
termination of the relationship with the previous partner has delayed the start-
up of this operation.
Financial review
Revenue increased by 10,4% to R409,6 million and EBITDA by 7,1% to R126,4
million. Headline earnings per share ("HEPS") increased by 22,4% to 13,1 cents
(2009: 10,7 cents) although the more relevant measure is normalised HEPS, which
increased by 14,1% to 14,6 cents (2009: 12,8 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 (i.e. not the benefit/cost from
those 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 through the repayment of loans in line with
funding agreements. Metrofile refinanced its debt with Standard Bank in April
2010, resulting in the elimination of any form of mezzanine debt. The new debt
is split between a six year amortising loan of R150,0 million and a six-year
bullet loan amounting to R86,6 million. The new loans represent a more
favourable overall interest rate than the previous package and allow more
freedom with regard to the utilisation of excess cash generated. The loan
agreements require 67% cover in terms of interest rate swaps, for which
new four-year swap agreements were established in April 2010. The group
remains compliant 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 with excess cash being available for additional
repayments, business expansion and dividends.
Metrofile has chosen to continue to account for the property portfolio on a cost
basis with valuations performed, from time to time, on an open market basis.
During the year 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 3,6
Current assets 2,0
Long-term liabilities (7,3)
Current liabilities (2,2)
Minority interest (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 International Financial Reporting Standards ("IFRS"),
AC 500 standards as issued by Accounting Practices Board and the information as
required by IAS 34: Interim Financial Reporting, the requirements of the South
African Companies Act of 1973, as amended, and the Listings Requirements of the
JSE. 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, except for the adoption of IFRS 8: Operating Segments, these do
not have a material impact on either transactions or disclosures.
The disclosure of the share-based payments was previously disclosed as other
comprehensive income; it is now disclosed directly in the statement of changes
in equity for both the current and prior year.
Audit opinion
The auditors, Deloitte & Touche, have issued their unmodified opinion on the
group`s financial statements for the year ended 30 June 2010.
Related parties
There have been no changes since the previous financial year to the arm`s length
consulting agreement with the MIC. In terms of the agreement, fees of R0,72
million (2009: R0,66 million) were paid to the MIC during the year 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 directors.
Dividends
No dividends have been declared for the current period, however it is expected
that the company will begin the payment of dividends in the 2011 financial year.
Contingent liabilities
During 2006 a number of the group`s employees embarked on an illegal strike. The
matter was due to come before the labour court on 26 July 2010, however the case
was withdrawn by order of the court, at the request of the former employees.
Commitments
Operating lease commitments amount to R28,4 million for the next five years.
Metrofile (Pty) Limited has planned capital expansions of R35,5 million and
replacement projects of R13,0 million for the 2011 financial year; whilst a
total amount of R40,4 million was invested in the 2010 financial year. Building
expansions amounting to R20 million form part of the capital expansions and will
be funded by way of an additional CAPEX facility arranged as part of the debt
restructure. This facility amounts to R20 million repayable over six years after
drawdown.
Subsequent 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, apart from the
withdrawal of the labour case noted above.
Outlook
The recent acquisitions support our growth plans and expand our offering to our
customers, the benefits of which will manifest over time. Not withstanding the
challenges in the current economic environment, the group expects continued
steady growth in revenue, EBITDA and normalised HEPS. This statement has not
been reviewed or audited by Metrofile`s auditors.
CHRISTOPHER SEABROOKE GRAHAM WACKRILL
Non- Executive Chairman Chief Executive Officer
3 September 2010
Cleveland
Gauteng
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
Registered office
3 Gowie Road, The Gables, Cleveland
Johannesburg, 2094
www.metrofile.com
Sponsor
Standard Bank
Transfer secretaries
Computershare Investor Services
(Proprietary) Limited
70 Marshall Street
Johannesburg, 2001
Date: 03/09/2010 17:00:03 Produced by the JSE SENS Department.
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