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Preliminary audited group results for the year ended 30 June 2014
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")
PRELIMINARY AUDITED GROUP RESULTS
for the year ended 30 June 2014
NORMALISED REVENUE NORMALISED EBITDA
7,2% 13,1%
NORMALISED EPS NORMALISED HEPS
17,3% 8,6%
DIVIDENDS PER SHARE
36,4%
Summarised income statement
Note 3
Normalised
Audited Audited unaudited
12 months 12 months 12 months
ended ended ended
30 June 30 June 30 June
R'000 2014 2013 2014
Revenue 675 260 590 163 632 498
Earnings before interest, taxation and
depreciation and amortisation (EBITDA) 252 859 187 492 212 029
Depreciation (30 459) (27 724) (29 015)
Operating profit before finance costs 222 400 159 768 183 014
Net finance costs (12 630) (16 566) (12 630)
Finance income 1 380 3 541 1 380
Finance costs (14 010) (20 107) (14 010)
Profit before taxation 209 770 143 202 170 384
Taxation (53 674) (35 135) (42 646)
Profit for the year 156 096 108 067 127 738
Attributable to:
Owners of the parent 154 808 106 753 126 450
Non-controlling interests 1 288 1 314 1 288
Attributable profit 156 096 108 067 127 738
Further information
Number of ordinary shares in issue (thousands) 423 240 420 253 423 240
Weighted average number of ordinary shares
in issue (thousands) 422 315 418 978 422 315
Basic earnings per ordinary share
Basic earnings per ordinary share (cents) 36,7 25,5 29,9
Diluted earnings per ordinary share
Diluted earnings per ordinary share (cents) 36,3 25,2 29,7
Headline earnings per ordinary share
Headline earnings per ordinary share (cents) 34,4 25,5 27,7
Dividend per ordinary share
Interim divided per ordinary share paid (cents) 7,0 4,5 7,0
Final dividend per ordinary share proposed/paid (cents) 8,0 6,5 8,0
Summarised statement of comprehensive income
Note 3
Normalised
Audited Audited unaudited
12 months 12 months 12 months
ended ended ended
30 June 30 June 30 June
R'000 2014 2013 2014
Profit for the year 156 096 108 067 127 739
Other comprehensive income for the period net of tax 3 087 1 334 3 087
Hedge accounting for fair value on interest rate swaps 960 1 573 960
Currency movement on translation of foreign subsidiary 2 127 (239) 2 127
Total comprehensive income for the year 159 183 109 401 130 826
Attributable to:
Owners of the parent 156 803 108 204 128 446
Non-controlling interests 2 380 1 197 2 380
Summarised statement of financial position
Audited Audited
as at as at
30 June 30 June
R'000 Note 2014 2013
ASSETS
Non-current assets 593 583 550 540
Property 1 234 673 207 451
Plant and equipment 186 024 170 405
Goodwill 171 666 171 666
Deferred taxation 1 220 1 018
Current assets 216 583 144 710
Inventories 12 947 10 219
Trade receivables 92 798 99 768
Other receivables 2 75 073 8 514
Taxation - 311
Bank balances 35 765 25 898
Total assets 810 166 695 250
EQUITY AND LIABILITIES
Equity and reserves 567 822 461 012
Equity attributable to owners of the parent 561 794 457 364
Non-controlling interests 6 028 3 648
Non-current liabilities 107 886 117 327
Interest-bearing liabilities 92 696 104 812
Deferred taxation 15 190 12 515
Current liabilities 134 458 116 911
Trade and other payables 56 062 61 956
Deferred revenue 11 237 10 601
Bank overdraft 485 576
Provisions 2 216 1 989
Taxation 16 332 5 720
Interest-bearing liabilities 48 126 36 069
Total equity and liabilities 810 166 695 250
Net asset value per ordinary share (cents) 132,7 108,8
Notes:
1. Property is reflected after having accounted for the disposal of the buildings destroyed in KwaZulu-Natal
amounting to R15,0 million and after the acquisition of two properties in Johannesburg and Cape Town
amounting to R40,0 million.
2. Other receivables includes an amount of R64,0 million in respect of the insurance claim proceeds relating to the
KwaZulu-Natal fire; R39,5 million of this amount has been received post the year end.
3. Accounting requirements necessitated the recognition of the full 36 months' business interruption insurance
proceeds of which 27 months relate to future periods; the results excluding the future years' proceeds are
therefore considered normalised.
Reconciliation of headline earnings
Audited Audited
12 months 12 months
ended ended
30 June 30 June
R'000 2014 2013
Profit attributable to owners of the parent 154 808 106 753
Profit on sale of property, plant and equipment (13 203) (168)
Tax effect of above items 3 697 47
Headline earnings 145 302 106 632
Headline earning per ordinary share (cents) 34,4 25,5
Summarised segmental information
Revenue EBITDA
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 2014 2013 2014 2013
Metrofile Records Management 549 274 476 657 190 114 132 540
CSX Customer Services 67 381 71 362 971 2 426
Property Companies 50 610 42 865 50 610 42 865
Other 69 659 53 198 11 165 9 661
Inter-group (61 664) (53 919) - -
Total 675 260 590 163 252 860 187 492
Operating profit Tangible assets
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 2014 2013 2014 2013
Metrofile Records Management 166 226 110 682 313 367 256 900
CSX Customer Services 285 1 793 20 702 23 215
Property Companies 50 610 42 865 234 673 207 771
Other 5 279 4 428 68 536 35 697
Total 222 400 159 768 637 278 523 583
"Metrofile Records Management" represents the Metrofile record storage, records management, data protection and
scanning business units which are managed and operated geographically.
"Other" includes Metrofile Holdings Limited, Metrofile Management Services (Pty) Limited, Africa operations, the
Rainbow Paper Management business and, the confidential record destruction business, Cleardata (Pty) Limited.
Finance costs have not been reflected on the segmental report as the marjority relates to Metrofile (Pty) Limited
which encompasses the "Metrofile Records Management" and "CSX Customer Services" divisions; the balance of
the finance costs relate to Cleardata (Pty) Limited.
Summarised statement of cash flows
Audited Audited
12 months 12 months
ended ended
30 June 30 June
R'000 2014 2013
Cash generated from operations before
net working capital changes 252 044 194 216
Increase in net working capital (67 349) (4 544)
Increase in normal net working capital (3 315) (4 544)
Increase in net working capital due to insurance claim (64 034) -
Cash generated from operations 184 695 189 672
Net finance costs paid (12 630) (16 566)
Dividends declared (56 943) (37 639)
Normal taxation paid (40 277) (27 032)
Net cash inflow from operating activities 74 845 108 435
Net cash outflow from investing activities:
Investment in property: expansion (43 712) (31 974)
Investment in plant and equipment: expansion (33 958) (32 059)
Investment in property plant and
equipment: replacement (16 450) (6 938)
Proceeds on disposal of property,
plant and equipment 34 140 849
Net cash outflow from financing activities:
Loans repaid (40 907) (92 870)
Loans drawn down 36 000 34 000
Net increase/(decrease) in cash and cash equivalents 9 958 (20 602)
Cash and cash equivalents at the beginning of the year 25 322 45 924
Cash and cash equivalents at the end of the year 35 280 25 322
Represented by:
Bank balances 35 765 25 898
Bank overdrafts (485) (576)
Summarised statement of changes in equity
Total
equity
before
Accumu- minority Non-
Share Share lated Other apportion- controlling
capital premium losses reserves ment interest Total
Audited R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance at
30 June 2012 2 558 539 866 (162 443) 2 822 382 803 2 451 385 254
Shares issued in
terms of share
schemes 25 16 019 - - 16 044 - 16 044
IFRS 2 Equity
reserve relating
to share schemes - - - 3 996 3 996 - 3 996
Share scheme
settlement - - (13 662) (2 382) (16 044) - (16 044)
Dividends declared - - (37 639) - (37 639) - (37 639)
Total comprehensive
income for the
year ended
30 June 2013 - - 106 753 1 451 108 204 1 197 109 401
Balance at
30 June 2013 2 583 555 885 (106 991) 5 887 457 364 3 648 461 012
Shares issued in
terms of share
schemes 18 15 008 - - 15 026 - 15 026
IFRS 2 Equity
reserve relating
to share schemes - - - 4 570 4 570 - 4 570
Share scheme
settlement - - (12 763) (2 263) (15 026) - (15 026)
Dividends declared - - (56 943) - (56 943) - (56 943)
Total comprehensive
income for the
year ended
30 June 2014 - - 154 808 1 995 156 803 2 380 159 183
Balance at
30 June 2014 2 601 570 893 (21 889) 10 189 561 794 6 028 567 822
Commentary on results
Profile
Metrofile is the market leader in both physical and digital information and records management in Africa and is represented in
the six major provinces of South Africa, Mozambique, Nigeria and, through the CSX Customer Services brand, has contracts in
numerous other African countries.
The Metrofile Records Management division operates from 44 facilities, at 21 locations, covering more than 83 800 square metres
of warehousing and office space. In accordance with its owner/lessee model, 66,5% of these facilities are owned by the group.
The rest of the group's divisions lease their premises. Services include records storage and management, image processing,
backup storage and management, records management software and records management consultancy, business continuity
and IT continuity, file plan development, confidential records destruction, paper recycling as well the sale and maintenance of 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 ("MIC") which owns
34,7% of Metrofile's equity.
Strategy
Our strategy is aligned to the continued requirement for businesses to manage all types of records, both active and archived,
whether they be in physical or digital format. The regulatory and compliance environment makes it an imperative for businesses
of all sizes, regardless of industry, to enhance their processes with regards to records of all types. We remain focused on
cross selling the group's diverse range of services to both new and existing customers whilst innovating and targeting relevant
acquisitions. The group continually reviews its strategic and operational risks to satisfy both risk appetite and the preservation
of our client's records.
Metrofile's geographical expansion into Africa and the Middle East remains driven by the demand of both existing and new
customers that have a need for similar services to those received in South Africa. With Metrofile now being established in
Mozambique and Nigeria the expansion into other African countries and the Middle East is the focus for 2015.
Financial review
Revenue increased by 14,4% to R675,3 million, EBITDA by 34,9% to R252,9 million and EBIT by 39,2% to R222,4 million;
the results are however exaggerated due the insurance proceeds in respect of the fire experienced, in October 2013, by the
Metrofile Records Management business. Normalised revenue increased by 7,2% to R632,5 million, normalised EBITDA by
13,1% to R212,0 million and normalised EBIT by 14,5% to R183,0 million.
The Metrofile Records Management division, didn't meet expectations in the second six months due to the completion
of scanning projects and the lack of replacement thereof which has given rise to structural changes in the Johannesburg
environment. The general state of the economy, the platinum mining sector strikes and the required investment in terms of our
strategy impacted the results, but management remain confident that they are well positioned for the future. The Cleardata
business continued to experience strong growth due to the increased demand for confidential destruction services whilst the
Rainbow Paper Management business had a strong year with the introduction of exports. The Protection of Personal Information
Act will support growth in all three of the previously mentioned business units.
The CSX Customer Services business unit had another poor year despite a reasonable first six months; it is however a business
with long lead times and further work recently secured in Africa places it in a solid position for 2015. The turning of the Global
Continuity business took longer than expected but with new management, an operational restructure and the implementation of
the Online Managed Backup solution it remains an important part of the group's future. The Mozambique business continues to deliver
whilst the Nigerian business is now fully operational but as expected ran at losses for the first year as it is a green fields
operation. Several key contracts have been signed and the focus going forward is on growing the customer base. Metrofile is in
the final stages of a majority acquisition in one of its target countries and discussions are taking place in several other countries.
Cash generation and working capital management remained positive. The cash generated from operations and the working
capital changes are both skewed by the proceeds in the insurance claim, however the increase in net working capital relating
to normal trading amounted to R4,3 million whilst the Trade receivables improved by R7,0 million. Net finance costs reduced by
R3,9 million in line with the continued reduction in the group's debt level.
Diluted earnings per share ("EPS") and headline earnings per share ("HEPS") increased by 44,0% and 34,9% respectively to
36,3 cents and 34,4 cents (2013: 25,2 cents and 25,5 cents) whilst the total dividend per share increased by 36,4% to 15,0 cents
(2013: 11,0 cents). The group's dividend policy remains at 2,0 times cover and is based on Normalised EPS of 29,9 cents.
As planned, the CAPEX of R94,1 million was partially due to the acquisition of two buildings previously rented totalling
R40,0 million and racking of R20,9 million required for growth. The acquisition of the two buildings will increase the owned
premises percentage to 66,5%.
Basis of preparation and accounting policies
The group results have been prepared, under the supervision of Mr RM Buttle, CA (SA). The preliminary financial information
has been prepared in accordance with the framework concepts and measurement and recognition requirements of International
Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and the Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the information as
required by IAS 34: Interim Financial Reporting, the JSE Listings Requirements and the requirements of the Companies Act of
South Africa. The report has been prepared using accounting policies that comply with IFRS which are consistent with those
applied in the financial statements for the year ended 30 June 2013.
Certain accounting pronouncements became effective during the current financial year; however, these do not have an impact
on either transactions or disclosures.
Audit opinion
The independent auditors, Deloitte & Touche, have issued their unmodified audit opinions, on the group's financial statements
for the 30 June 2014 year-end and on these summarised group financial statements, in accordance with International Standards
on Auditing. These summarised financial statements have been derived from the group financial statements and are consistent in
all material respects, with the group financial statements. A copy of the group financial statements and the audit reports on
the group financial statements and these summarised financial statements are available for inspection at the company's
registered office. Any reference to future group financial performance included in this announcement, has not been reviewed or
reported on by the company's auditors.
Related parties
In terms of a consulting agreement, and as approved at the Annual General Meeting, the MIC fees of R1,3 million (2013:
R1,2 million) were paid during the year under review.
Directorate and corporate governance
The structure of the Board and sub-committees remains unchanged with the exception of a transition between the new CFO,
Mark McGowan, appointed on 1 August 2014 and the outgoing CFO, Richard Buttle, who remains on as an Executive Director
until 31 October 2014.
The Board comprises three executive and six non-executive directors, of whom four are independent directors. Mr Nigel Matthews
remains the lead independent director.
Dividends
The continued improvements in the group's financial structure and cash flows have enabled the Board to improve the dividend
cover, for the full year, from 2,3 times in the comparative year to approximately 2,0 times for the current year whilst
simultaneously reducing net debt. The cover is based on Normalised EPS.
Notice is hereby given that a final gross cash dividend of 8,0 cents per share in respect of the year ended 30 June 2014 has
been declared payable to the holders of ordinary shares recorded in the books of the company on Friday, 3 October 2014. The
last day to trade cum-dividend will therefore be Friday, 26 September 2014 and Metrofile shares will trade ex-dividend from
Monday, 29 September 2014. Payment of the dividend will be made on Monday, 6 October 2014. Share certificates may not
be dematerialised or rematerialised between Monday, 29 September 2014 and Friday, 3 October 2014, both days inclusive.
Withholding tax on dividends will be deducted for all shareholders who are not exempt in terms of the legislation at a rate of 15%
which will result in a final net cash dividend of 6,800 cents per share. No credits in terms of Secondary Taxation on Companies
(STC) were available for utilisation. The company's share issued share capital remains unchanged at 423,239,994 shares,
between the year-end and the date of the dividend declaration. The company's tax number is 9375066710.
Commitments
The group continues to monitor and optimise its balance of owned and leased premised to ensure the continued availability
of space to meet expansionary demand relative to the cost of unutilised facilities. Operating lease commitments amount to
R77,2 million for the next five years. Capital expansions for the 2014 financial year amount to R54,8 million excluding any
building developments and purchases.
Events after the reporting date
There have been no material events after the reporting date other than the receipt of R38,9 million in respect of the insurance
proceeds and the signing of a new funding agreement giving the group access to R300,0 million in total compared to the current
debt level of R140,8 million.
Outlook
Several new offerings, the securing of contracts as well as the African and Middle East expansions have Metrofile well positioned for
the year ahead. Taking into account the fact that the group has received an upfront payment for the next 27 months in respect
of business interruption insurance proceeds it is expected that the group will see a continuation of its growth in Normalised
revenue, Normalised EBITDA, Normalised earnings and dividends in year ahead.
This statement has not been reviewed or audited by Metrofile's auditors.
CHRISTOPHER SEABROOKE GRAHAM WACKRILL
Non-Executive Chairman Chief Executive Officer
1 September 2014
Senderwood
Gauteng
Directors:
CS Seabrooke (Chairman)
MS Bomela* (Deputy Chairperson)
GD Wackrill (CEO)
MC McGowan (CFO)
RM Buttle
P Langeni
IN Matthewsâ€
CN Pongweni*
SV Zilwa
†Lead independent
Independent
*Non-executive
Company Secretary:
P Atkins
Registered office:
41 Wordsworth Avenue
Senderwood, Bedfordview, 2007
www.metrofileholdings.com
Sponsor:
The Standard Bank of South Africa Limited
Transfer secretaries:
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001
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