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MFL
MFL
MFL - Metrofile Holdings Limited - Unaudited group results for the six months
ended 31 December 2010
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 2010
- Revenue up 11,5%
- EBITDA up 9,6%
- Cash generated from operations up 9,9%
- Normalised HEPS up 15,3%
- Maiden dividend Declared
Condensed income statement
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
R`000 Notes 2010 2009 2010
Revenue 220 045 197 286 409 563
Earnings before interest, 68 250 62 274 126 434
taxation and depreciation
("EBITDA")
Depreciation (9 070) (6 940) (14 792)
Operating profit before 59 180 55 334 111 642
finance costs
Net finance costs (12 630) (17 603) (34 953)
Finance income 541 111 380
Finance costs (13 171) (17 714) (35 333)
Profit before taxation 46 550 37 731 76 689
Taxation (12 191) (12 122) (23 433)
Profit for the period 34 359 25 609 53 256
Attributable to:
Owners of the parent 34 045 25 394 52 945
Non-controlling interests 314 215 311
Attributable profit 34 359 25 609 53 256
Further information
Number of ordinary shares 408 085 408 085 408 085
in issue (thousands)
Weighted average number of 408 085 399 719 403 868
ordinary shares in issue
(thousands)
Earnings per ordinary 8,3 6,4 13,1
share (cents)
Headline earnings per 8,3 6,3 13,1
ordinary share (cents)
Normalised headline 8,3 7,2 14,6
earnings per ordinary
share (cents)
Dividend per share (cents) 2,0 - -
Condensed statement of comprehensive income
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
R`000 Notes 2010 2009 2010
Profit for the period 34 359 25 609 53 256
Other comprehensive income (2 145) (758) (1 184)
for the period net of tax
Hedge accounting for fair 1 (2 125) (740) (1 041)
value on interest rate
swaps
Currency movement on (20) (18) (143)
translation of foreign
subsidiary
Total comprehensive income 32 214 24 851 52 072
for the period
Attributable to:
Owners of the parent 31 900 24 636 51 761
Non-controlling interests 314 215 311
Condensed statement of financial position
Unaudited Unaudited Audited
as at as at as at
31 December 31 December 30 June
R`000 Notes 2010 2009 2010
ASSETS
Non-current assets 467 137 443 998 460 004
Property, plant and 294 129 270 469 286 466
equipment
Goodwill 169 943 169 992 169 943
Deferred tax asset 3 065 3 537 3 595
Current assets 101 840 85 847 86 463
Inventories 11 857 14 716 10 221
Trade receivables 62 141 53 521 58 909
Other receivables 4 799 5 085 3 542
Bank balances 23 043 12 525 13 791
Total assets 568 977 529 845 546 467
EQUITY AND LIABILITIES
Equity and reserves 275 594 214 135 242 259
Equity attributable to 273 950 212 901 240 929
owners of the parent
Non-controlling interests 1 644 1 234 1 330
Non-current liabilities 219 600 222 133 228 476
Interest-bearing 2 210 480 214 124 221 784
liabilities
Deferred taxation 9 120 8 009 6 692
liability
Current liabilities 73 783 93 618 75 732
Trade payables 8 699 11 299 8 958
Other payables 25 768 23 633 29 864
Deferred revenue 8 298 5 093 7 065
Financial instruments - 1 4 855 1 070 1 904
Fair value of interest
rate swaps
Bank overdraft 81 140 -
Provisions 196 32 1 683
Taxation 2 377 16 408 3 992
Interest-bearing 2 23 509 35 943 22 266
liabilities
Total equity and 568 977 529 845 546 467
liabilities
Net asset value per 67,1 52,2 59,0
ordinary share (cents)
Reconciliation of headline earnings
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
R`000 2010 2009 2010
Profit attributable to owners of 34 045 25 394 52 945
the parent
Loss/(profit) on sale of plant 9 (135) (152)
and equipment
Tax effect of above item (3) 38 43
Headline earnings 34 051 25 297 52 836
Headline earning per ordinary 8,3 6,3 13,1
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 2010 2009 2010
Headline earnings 34 051 25 297 52 836
Non-recurring taxation - 773 773
Non-recurring finance charges - 2 513 6 614
Tax effect of above adjustments - - (1 174)
Normalised headline earnings* 34 051 28 583 59 049
Normalised headline earning per 8,3 7,2 14,6
ordinary share (cents)
* Normalised headline earnings are adjusted for non-trading 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.
Condensed segmental information
Sales revenue
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
R`000 2010 2009 2010
Metrofile Records Management 176 483 159 545 325 753
CSX Customer Services 31 915 31 857 70 146
Property Companies - - -
Other 15 490 9 087 20 995
Intergroup (3 843) (3 203) (7 331)
Total 220 045 197 286 409 563
Indirect costs
Operating profit before finance
costs
Operating profit
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
R`000 2010 2009 2010
Metrofile Records Management 91 756 81 255 167 776
CSX Customer Services 8 898 9 010 17 840
Property Companies 17 433 16 186 32 372
Other 5 670 2 130 7 192
Intergroup - - -
Total 123 757 108 581 225 180
Indirect costs (64 577) (53 247) (113 538)
Operating profit before finance 59 180 55 334 111 642
costs
"Metrofile Records Management" represents the Metrofile document storage and
image processing business units which are managed and operated geographically.
"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 statement of cash flows
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
R`000 2010 2009 2010
Cash generated from operations 70 134 60 957 127 412
before net working capital
changes
(Increase)/decrease in net (7 782) (4 243) 3 051
working capital
Cash generated from operations 62 352 56 714 130 463
Net finance costs paid (12 630) (15 090) (34 953)
Normal taxation paid (13 807) (8 578) (35 592)
Net cash inflow from operating 35 915 33 046 59 918
activities
Net cash outflow from investing
activities:
Investment in property, plant and (16 928) (16 568) (40 370)
equipment
Proceeds on disposal of property, 244 - 701
plant and equipment
Acquisition of subsidiaries - (16 000) (16 000)
Net cash outflow from financing
activities:
Issue of shares in terms of - 16 000 16 000
vendor placements
Loans repaid* (10 060) (19 556) (30 821)
Loans raised - - 8 900
Net increased/(decrease) in cash 9 171 (3 078) (1 672)
and cash equivalents
Cash and cash equivalents at the 13 791 15 463 15 463
beginning of the period
Cash and cash equivalents at the 22 962 12 385 13 791
end of the period
* This amount included for 30
June 2010 represents the net
position as an amount of R236,6
millionwas repaid against the
"old"debt and raised as "new"
debt
Represented by:
Bank balances 23 043 12 525 13 791
Bank overdrafts (81) (140) -
Condensed statement of changes in equity
Accumu-
Share Share lated Other
R`000 capital premium losses reserves
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
IFRS2 Equity reserve 519
relating to share schemes
Total comprehensive income 25 394 (758)
for the period ended 31
December 2009
Balance at 31 December 2 508 518 817 (308 407) (17)
2009
IFRS2 Equity reserve 903
relating to share schemes
Total comprehensive income 27 551 (426)
for the period ended 30
June 2010
Balance at 30 June 2010 2 508 518 817 (280 856) 460
IFRS2 Equity reserve 1 121
relating to share schemes
Total comprehensive income 34 045 (2 145)
for the period ended 31
December 2010
Balance at 31 December 2 508 518 817 (246 811) (564)
2010
Total
equity
before
minority Non-
apportion- controlling
R`000 ment interest Total
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 - 994 994
reserves relating to
acquisition of subsidiary
IFRS2 Equity reserve 519 519
relating to share schemes
Total comprehensive income 24 636 215 24 851
for the period ended 31
December 2009
Balance at 31 December 212 901 1 234 214 135
2009
IFRS2 Equity reserve 903 903
relating to share schemes
Total comprehensive income 27 125 96 27 221
for the period ended 30
June 2010
Balance at 30 June 2010 240 929 1 330 242 259
IFRS2 Equity reserve 1 121 1 121
relating to share schemes
Total comprehensive income 31 900 314 32 214
for the period ended 31
December 2010
Balance at 31 December 273 950 1 644 275 594
2010
Notes:
1. 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.
2. 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 (Pty) Limited amortising loan and Cleardata instalment
sale agreements payable within one year. The Metrofile (Pty) Limited borrowings
are JIBAR linked and are approximately 76% hedged by way of the interest rate
swaps (30 June 2010 - 70%), whilst the Cleardata borrowings are prime linked and
uncovered.
3. All the assets have been pledged as security against certain loans to the
group.
Commentary on results
Profile
Metrofile is the market leader in information and records storage management 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.
Services include insourced and outsourced solutions to help business and
government to increase their operating efficiency and meet their legislative and
corporate governance requirements. These services comprise 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 will continue to expand its services in the information management
sector whilst focusing on cross selling the group`s diverse range of services to
both new and existing customers including Government.
Metrofile`s expansion into Africa will be driven by the demand of existing
customers that have a need for similar services to those received in South
Africa. Metrofile already owns 51% of Metrofile Mozambique and has now finalised
terms with an international partner with respect to a Nigerian operation and
expansion into other African countries will commence once the Nigerian business
is fully operational.
Financial review
Revenue increased by 11,5% to R220,0 million and EBITDA by 9,6% to R68,3 million
whilst a new debt package and more favourable interest rates resulted in lower
finance costs.
Headline earnings per share ("HEPS") increased by 31,7% to 8,3 cents while
normalised HEPS increased by 15,3% to 8,3 cents. Normalised HEPS are calculated
after adjusting HEPS for non-recurring items and for the accounting effects of
changes in the fair value of the interest rate swaps.
Cash generated by the group remains high and gearing continues to improve.
Currently 76% of the group`s debt is covered by interest rate swaps.
Metrofile accounts for its property portfolio on a cost basis. During the
current reporting period there were no additions to the portfolio.
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. 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
period, however these do not have an impact on either transactions or
disclosures.
Share-based payments were previously disclosed in other comprehensive income;
they are now disclosed directly in the statement of changes in equity for both
the current and prior periods.
Related parties
In terms of the consulting agreement with the MIC fees of R0,42 million were
paid during the period under review.
Directorate and corporate governance
Mrs Mary Bomela joined the board in September 2010 as a non-executive director.
The board now comprises two executive and seven non-executive directors, of whom
four are independent directors.
Dividends
The improvements in the group`s financial structure and cash flows have enabled
the board to introduce a policy of paying interim and final dividends for the
first time. These will be calculated on a minimum of four times cover, with an
ultimate target of three times cover.
Notice is hereby given that an interim cash dividend of 2 cents per share in
respect of the period ended 31 December 2010 has been declared payable to the
holders of ordinary shares recorded in the books of the company on Friday, 8
April 2011. The last day to trade cum dividend will therefore be Friday, 1 April
2011 and Metrofile shares will trade ex dividend from Monday, 4 April 2011.
Payment of the dividend will be made on Monday, 11 April 2011. Share
certificates may not be dematerialised or rematerialised between Monday, 4 April
2011 and Friday, 8 April 2011, both days inclusive.
Commitments
Operating lease commitments amount to R35,1 million for the next five years.
Capital expansions for the 2011 financial year amount to R28,5 million (revised
from R35,5 million as at 30 June 2010) and replacement projects total R13,0
million. The new investment in property, plant and equipment for the reporting
period amounted to R16,9 million.
Post-balance sheet events
There have been no material post-balance sheet events.
Outlook
Metrofile expects to continue to grow revenue, EBITDA and HEPS in the period
ahead and anticipates similar growth to the first half for the year as a whole.
The recovery in the economy has enhanced opportunities for the group. However,
clients are still cautious in committing spend to project related business.
This statement has not been reviewed or audited by Metrofile`s auditors.
CHRISTOPHER SEABROOKE GRAHAM WACKRILL
Non-Executive Chairman Chief Executive Officer
10 March 2011
Cleveland
Gauteng
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")
Directors:
CS Seabrooke+ (Chairman)
AP Nkuna* (Deputy Chairman)
GD Wackrill (CEO)
RM Buttle (CFO)
MS Bomela*
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: 10/03/2011 07:30:00 Produced by the JSE SENS Department.
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