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METROFILE HOLDINGS LIMITED - Preliminary audited group results for the year ended 30 June 2014

Release Date: 01/09/2014 15:00
Code(s): MFL     PDF:  
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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 Matthews†
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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