Metrofile Holdings has reported headline earnings of 2.3c a share for the six months to December, reversing a prior-year loss of 4.8c a share.
The company`s business consists of a 65% stake in Metrofile, a business record management specialist.
Revenue rose to R136.63 million from R117.3 million for the same period a year-earlier.
"Revenue was ahead of budget due to improved market penetration and the securing of new government business," says CEO Graham Wackrill.
A pre-tax profit compares with a prior loss of R2.42 million. The group achieved an attributable profit of R3.84 million, compared with a loss of R2.84 million previously.
Basic earnings per share amounted to 2.3c, up from a loss of 4.2c per share.
On the balance sheet, current assets, including bank balances of R9.72 million (2004: R8.06 million), amounted to R65.02 million (R89.95 million), against current liabilities of R69.58 million (R105.79 million).
A net liability of 434.5c per share at the end of the period compares with a previous liability of 476.9c per share.
Cash of R42.19 million (R31.25 million) was generated from operations.
Going concern
"The profit for the period was negatively affected by additional provisions of R5.9 million that were raised in Metrofile Holdings for potential creditor claims and R3.9 million for financial instrument exposure in Metrofile in terms of IAS39 [an accounting standard]."
Wackrill says interest-bearing debt in the subsidiary totals R300 million, most repayable by 4 March 2009. "In Metrofile Holdings, loan notes and provisions total R121.6 million, excluding intergroup loan notes of R279.2 million," he adds.
The company auditor, Deloitte & Touche, has included in its report a matter of emphasis with respect to going concern.
However, while the balance sheet shows net liabilities, Wackrill says the board regards the company as a going concern.
Among other reasons, he says, the total of the compulsory convertible subordinated loans, the provisions that may become subordinated loans and the estimated value of goodwill and trademarks in Metrofile not reflected in the consolidated balance sheet, are together enough to restore commercial solvency.
The group is also looking at restructuring and at a possible rights issue.
Wackrill says the group expects better revenue and operating results from Metrofile and positive headline earnings per share for Metrofile Holdings for the full year.
The Metrofile Holdings share, which closed 5c or 3.8% down at 127c yesterday, was untraded early this morning.
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