-- Revenue growth of +6.7%, ahead of guidance
-- Platform set for growth
SYDNEY, Aug. 25, 2014 /PRNewswire/ -- Recall Holdings
Limited (ASX: REC), a global leader in information management,
today releases its first set of full year results. Unless otherwise
stated, all financials in this announcement are presented on a pro
forma basis, as if the legal entity structure of Recall as at
18 December 2013 (date of Demerger
from Brambles) was in existence for both reporting periods[1]. The
Recall Board believes that the pro forma financial information is
the most appropriate basis on which to assess Recall's performance
for these results. Financials are presented in USD and comparisons
to the prior corresponding period are presented on a constant
currency basis[i].
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Pro forma
financial highlights
|
FY14
Actual
FX
|
FY14
Constant
FX
|
FY13
Actual
FX
|
Change %
Constant FX
|
|
|
|
|
|
Revenue
|
$836.1M
|
$861.0M
|
$807.1M
|
+6.7%
|
|
|
|
|
|
Underlying
EBITDA
|
$199.6M
|
$208.5M
|
$196.8M
|
+5.9%
|
|
|
|
|
|
Underlying
profit
|
$133.1M
|
$140.5M
|
$135.4M
|
+3.7%
|
|
|
|
|
|
Underlying EPS (US
cents per share)
|
22.4
|
|
|
|
|
|
|
|
|
Dividend (AUD cents
per share)
|
8.0
|
|
|
|
- Demerger from Brambles successfully completed
- Strong revenue growth of +6.7% - ahead of guidance
- Growth in underlying profit of +3.7% - in line with
guidance
- Carton holdings increased by +9.2% - all regions delivered net
carton growth
- Document Management Solutions (DMS) revenue growth +9.1%
- Major new customer wins provide strong momentum for FY15 and
beyond
- Six acquisitions completed; adding approximately $44 million in incremental revenue in FY15
- Net debt reduced to $484 million
at 30 June 2014, down from
$502 million at 31 December 2013 (net debt to EBITDA was
approximately 2.4X at 30 June
2014)
- Organisation build out substantially complete - overhead cost,
as a percent of revenue, to plateau in FY15
- Continuous improvement program (IMPACT) driving cost
efficiencies
- Commenced implementation of a major Facility Optimisation
Program
- Digital strategy supporting future growth to launch in
FY15
- Secure Destruction Services (SDS) strategic review - North
American improvement plan implemented and German SDS business to be
sold
- First dividend determined - 8.0 Australian cents per share
Commenting on the results, President and CEO Doug Pertz said, "During our first financial
year as a public company, Recall has established a platform for
growth and made progress across each of our three strategic
objectives: sustainable profitable growth, operational excellence
and innovation for the future, which includes a truly
differentiated digital strategy. I would like to thank our
shareholders, customers and employees for your support during what
has been a rewarding first year.
"Recall generated sales revenue growth of +6.7%, ahead of
guidance provided at the half year trading update. This accelerated
growth was achieved through +3.0% organic and +3.7% acquisition
growth. Storage/retention revenue grew by +7.0% and service and
activity was also up +7.1%.
"The group revenue performance was underpinned by growth of
+9.1% in DMS, where net carton volumes increased +9.2%. All regions
generated net carton growth. Data Protection Services (DPS) revenue
was up +11.7%, due to organic growth and the impact of the
acquisition of Recall Singapore.
"Overall revenue and earnings were negatively impacted by SDS,
which experienced an -8.6% revenue decline due to the re-pricing of
a major customer and finalisation of a large contract in
North America in FY13. After a
full strategic review, the North American SDS unit implemented a
business improvement plan, which should result in improved margins
and revenue growth in FY15. In addition, the German SDS business
will be sold.
"Recall had a number of large customer wins in FY14, including
HSBC, QBE, a Canadian Government agency and BNP Paribas Personal
Finance, supporting strong organic growth momentum into FY15 and
beyond. Six acquisitions have been completed since Demerger and our
acquisition pipeline is building. These are significant
achievements that will continue to accelerate sustainable
profitable growth.
"As a key component of our third strategic objective, innovation
for the future, Recall is developing unique digital services to
enable customers to secure, manage and govern all their physical
and digital content, regardless of where it resides. Two products
are in development, the Recall Customer Portal and an Information
Governance Solution, which are targeted at both current and
potential Recall customers, with a focus on the SME market. Trials
are underway and commercial deployment is scheduled during
FY15."
Regional results
Recall regions made significant progress in FY14. The Americas
reported sales revenue growth of +4.1%, driven substantially by
increased DMS volume and pricing, offset by reduced SDS revenue. In
addition, all Brazilian services lines realised double-digit
growth. Europe delivered +8.0%
revenue growth, driven by a rebound in DMS activity and supported
by sales productivity gains. Revenue in Asia grew significantly, including the Recall
Singapore acquisition[2], supported by positive organic growth in
volume and activities.
Within Australia/New Zealand, revenue declined by -0.9%. In a
competitive market environment, Recall generated positive carton
growth and maintained its leading market position. The increase in
service revenues and volume gains was offset by strategic pricing.
With a focus on sales and marketing, supported by operational
improvement programs, revenue growth and earnings improvement is
expected in FY15. Additionally, Recall has signed a Letter of
Intent with one of Australia's
leading banks to provide exclusive records management services as
part of a long term agreement and recently completed a tuck-in
acquisition of Access Records Management.
Financials
During 2014, the focus on operational excellence delivered a
gross margin improvement of 0.8 ppts. Recall is targeting further
improvement through the Facility Optimisation Program, increased
racking and building utilisation rates, continued control over
direct costs and a greater focus on strategic sourcing.
Overhead costs increased as a percentage of revenue
predominantly due to the build-out of sales and marketing
capabilities.
Cash flow generation improved in the second half of FY14.
Consequently, net debt at 30 June
2014 was $484 million, down
from $502 million at 31 December 2013. This reduction included an
outflow of $47 million for the
acquisition of CitiStorage. At 30 June
2014, the net debt to EBITDA ratio was approximately 2.4x,
and well within Recall's financing covenant of less than 3.5x.
Total capital expenditures during the year were $72.8 million, the majority of which was for
business growth. In particular, Recall invested in racking
capacity, client acquisition costs and new DMS facilities in the
USA, Canada, Brazil, Malaysia, India and Thailand.
The Board has determined that a final dividend of 8.0 AUD cents
per share, which will be unfranked and classified as 100% conduit
foreign income, will be paid in Australian dollars on 23 October 2014, to those shareholders on the
Recall register on 1 October
2014.
Outlook and dividend policy
Recall is confident that actions taken during FY14 have
established the platform for accelerating sustainable, profitable
growth.
Organic growth momentum is building, driven by recent customer
wins and supported by re-investment in sales and marketing
capabilities. In addition, acquisitions completed during FY14 and
to date in FY15 will add revenue growth of over +5% in FY15.
The re-investment in sales, marketing and other resources is
substantially complete. Due to the full year impact of costs added,
overhead as a percentage of revenue is expected to plateau in late
FY15. In addition, incremental operating and capital costs related
to digital product development will be incurred.
In FY15, Recall expects to deliver revenue growth approaching
high single digits, and EBIT growth to be less than revenue growth,
on a constant currency basis, and after adjusting for the expected
disposal of the German SDS business.
The effective tax rate of the group in FY15 is expected to be
approximately 37%.
Recall's Board has adopted a dividend policy with a long term
target dividend pay-out ratio of 55-70% of net profit after tax,
after taking account of the future funding needs of the business.
This policy will be kept under review by the Board and may change
over time.
The Board has confirmed that Recall intends to frank future
dividends to the extent practicable, which is likely to mean
partial franking in the medium term. The unfranked component of
Recall's dividends paid to non-Australian residents is intended to
be conduit foreign income to the extent possible and therefore not
subject to Australian withholding tax. However, there is a risk
that some or all of the unfranked component may be subject to
Australian withholding tax.
Recall's outlook is based on assumptions regarding present and
future business strategies and the environment in which Recall will
operate in the future. Recall's future results are subject to
market conditions and unforeseen circumstances and risks that may
arise. This earnings release, the investor presentation, Appendix
4E, and conference call / webcast details are all available on the
company's Investor Relations website at Recall.com.
For further information, please contact:
Investor
Relations
|
US Media
enquiries
|
Bill Frith
|
MSLGROUP
|
Senior Director,
Investor Relations
|
David Sprague or
Amanda Fountain
|
Bill.Frith@recall.com
|
Recall@mslgroup.com
|
+61-2-9582-0244
|
+1-781-684-0770
|
About Recall
Recall is a global leader in information
management solutions, offering customers complete management of
their physical and digital information. Recall's innovative
solutions empower organizations to make better business decisions
throughout the information lifecycle, while assuring regulatory
compliance and eliminating unnecessary resources, time and costs.
Recall services more than 80,000 customer accounts in over 300
dedicated facilities, spanning five continents in 24 countries. For
more information, please visit recall.com.
Selected financial data
Pro forma income
statement
|
|
FY14
|
FY
14
|
FY
13
|
%
Change
|
US
$M
|
Actual
FX
|
Constant
FX
|
Actual
FX
|
Constant
FX
|
|
|
|
|
|
Revenue
|
836.1
|
861.0
|
807.1
|
6.7%
|
Operating
costs
|
703.0
|
720.5
|
671.6
|
7.3%
|
Underlying
profit
|
133.1
|
140.5
|
135.4
|
3.7%
|
UP margin
%
|
15.9%
|
16.3%
|
16.8%
|
|
Depreciation and
amortisation
|
66.5
|
68.0
|
61.4
|
10.8%
|
Underlying
EBITDA
|
199.6
|
208.5
|
196.8
|
5.9%
|
Underlying EBITDA
%
|
23.9%
|
24.2%
|
24.4%
|
|
Pro forma cash
flow statement
|
|
FY
14
|
FY
13
|
US
$M
|
Actual
FX
|
Actual
FX
|
Underlying
profit
|
133.1
|
135.4
|
Depreciation and
amortisation
|
66.5
|
61.4
|
Underlying
EBITDA
|
199.6
|
196.8
|
Change in working
capital
|
(22.7)
|
25.5
|
Proceeds on
disposals
|
6.8
|
10.9
|
Other
|
(0.7)
|
(1.8)
|
Operating cash
flow
|
182.9
|
231.4
|
Capital
expenditure
|
(72.8)
|
(78.4)
|
Operating cash
flow after capex
|
110.1
|
153.0
|
|
|
|
|
|
|
|
|
Statutory balance sheet
The balance sheet presented below has been extracted from the
Appendix 4E which has been prepared on the basis of statutory
requirements under International Financial Reporting Standards
(IFRS) and Australian Accounting Standards (AAS), such that the
results of entities acquired as part of the demerger from Brambles
Limited (Brambles) have only been included from their date of
acquisition. Therefore, Recall's statutory financial position and
financial performance as at and for the year ended 30 June 2014 includes a number of material
entities not included within the 2013 financial results.
|
|
FY14
|
FY
13
|
US
$M
|
Actual
FX
|
Actual
FX
|
ASSETS
|
|
|
Cash and cash
equivalents
|
72.1
|
6.1
|
|
Trade and other
receivables
|
177.5
|
66
|
|
Inventories / Other
assets
|
18.6
|
0.8
|
|
Total current
assets
|
268.2
|
72.9
|
|
Property, plant and
equipment
|
432.3
|
68.7
|
|
Goodwill
|
651.0
|
125.8
|
|
Intangible
assets
|
107.6
|
38.0
|
|
Other
assets
|
8.9
|
0.5
|
|
Total non-current
assets
|
1,199.8
|
233.0
|
|
Total
assets
|
1,468.0
|
305.9
|
|
|
|
|
LIABILITIES
|
|
Current
liabilities
|
|
|
|
Trade and other
payables
|
174.5
|
36.4
|
|
Tax
payable
|
8.3
|
0.9
|
|
Provisions
|
26.3
|
4.3
|
|
Total current
liabilities
|
209.1
|
41.6
|
|
Non-current
liabilities
|
|
|
|
Borrowings
|
552.2
|
0.0
|
|
Provisions
|
10.1
|
5.4
|
|
Deferred tax
liabilities
|
75.2
|
8.0
|
|
Other
liabilities
|
22.0
|
9.2
|
|
Total non-current
liabilities
|
659.5
|
22.6
|
|
Total
liabilities
|
868.6
|
64.2
|
|
|
|
|
|
Net
assets
|
599.4
|
241.7
|
|
EQUITY
|
|
Contributed
equity
|
545.7
|
71.4
|
|
Reserves
|
(171.2)
|
(36.4)
|
|
Retained
earnings
|
224.9
|
206.7
|
|
Total
equity
|
599.4
|
241.7
|
[1] Due to corporate restructuring leading up to Demerger, not
all of REC's subsidiary companies were part of REC for the entire
12 month period to 30 June 2014. As
such, REC's statutory reported results as presented in the Appendix
4E will differ from the consolidated pro forma results of the REC
group.
[2] Recall Singapore was accounted for as a joint venture until
31 October 2013 (date of
acquisition), and consequently no revenue was reported until that
time.
_____________________________
[i] Constant currency results are presented by translating both
current and prior corresponding period foreign currency results
into USD at the exchange rates applicable in the comparable period,
so as to show relative performance between the two periods before
the translation impact of currency fluctuations.