Having conquered the private sector, the document storage specialist sets its sights on uncharted government territory, where there`s room for growth aplenty ANYONE betting on the collapse of leading records management company Metrofile, under the weight of debt left by parent company MGX, should have reviewed the odds by now.

In its interim results for the period to December 2005, the company had clawed its way up from a R2.8 million loss year-on-year to a R3.8 million profit. As a result, it also reported headline earnings a share of 2.3c up from a loss of 4.8c last year.

Although Metrofile`s not out of the woods just yet, having to pay off a R330 million interest-bearing debt - as Metrofile Holdings` only active company, there is light at the end of the tunnel. CEO Graham Wackrill attributed the revenue climb to improved market penetration and the securing of new government business.

This follows a black empowerment deal in February last year, in which the Mineworkers Investment Company (MIC) bought a 25% stake in Metrofile.

"Prior to becoming empowered we were excluded from a lot of government business, but now it`s a lot easier to inform government of our service offering and to contract with government," Wackrill informs iWeek.

The turmoil at its parent company notwithstanding, Metrofile has come a long way since launching in 1983 as the first offsite storage company in SA.

It claims to have captured about 85% of predominantly private sector offsite paper storage business in the country, and 30% of outsource scanning and output management business.

"About two years ago, we decided to redirect our focus, as we saw a future in bringing our systems and operations into the sphere of government.

Government is still behind the times in a lot of records management respects," he continues, noting that there is opportunity for growth in both government offsite paper storage and outsource scanning and output management.

Although Wackrill is unable to detail the government contracts it has won of late, due to the confidentiality agreement it signs with clients, he does admit that they have been pretty much ad hoc until now, and that Metrofile is still pursuing a fistful of major government deals.

Metrofile has some 5 000 SA customers, ranging from those the size of the Big Four banking groups, to companies with a few hundred boxes in storage.

Africa is also beckoning. "We get approached all the time by companies in Africa," says Wackrill, and as a result it has entered into negotiations with firms in Ghana, Mozambique, Nigeria and Zimbabwe, although there is nothing concrete to report yet.

"Because of legislation and other [corporate governance] issues, there is a far greater focus on records management today than there was five years ago," he observes. Yet the local market is still concentrated, with Wackrill noting there are only three major players in the records management market, and a few smaller players - a phenomenon he ascribes to the substantial capital layout required to enter the business "properly".

"We spend millions of rands on our operations every year, on our purpose-built facilities, on the inhouse development of software systems, other technologies and equipment, and training staff," he points out - all this in an effort to benchmark itself according to international standards.

This effort includes Metrofile`s divisional director for marketing, Paul Mullon, chairing the international standards body for electronic media storage.

"Because we got into the game late - the UK, for example, got its first offsite records storage facility in the 1950s - all our facilities are purpose built and right up there with the best," maintains Wackrill. "Moreover, our first client was a US company, so they came with pretty high standards."

Following its MGX merger and fallout, Metrofile added what is today its scanning and microfilming division. Four years on, paper-based records management still accounts for 75% to 85% of its business, the rest being digital.

"I don`t ever foresee a future with a paperless office, although the electronic side of information management is showing a much steeper growth curve than paper ever did."

Nonetheless, it is currently moving into two more facilities - one in Hermanstad in Pretoria, and another at its Cleveland operation in Johannesburg - built at a cost of some R8 million.

Keeping ahead of the technology wave and skills shortage are general industry challenges, but more particular to Metrofile, Wackrill predicts that his biggest challenge for the year is the second-round restructuring of the company`s debt, "which will be sorted out in the next couple of months".