A MATTER OF RECORD - JSE MAGAZINE

A MATTER OF RECORD

Information management company Metrofile has been resurrected by great teamwork, says CEO Graham Wackrill

A MATTER OF RECORD

The extent of troubles that Metrofile found itself in a decade ago would have sunk most business leaders but Graham Wackrill, its CEO, didn’t walk away. ‘I think it was stubbornness,’ he says. ‘I started the original company in 1983 and there was no way I was going to let everything be wiped out.’

It wasn’t his fault that the business had been led astray by a takeover holding company, leaving Metrofile with hundreds of millions of rands of debt. At the time of the merger with JSE-listed MGX Holdings in 1997, everything seemed positive. ‘The MGX vision was right,’ says Wackrill. ‘They wanted to provide information services such as storage, conversion and [records] destruction. It was a good fit for all of us, and basically they left us alone.’

However, he says, MGX strayed from that strategy in 2002 after it acquired a number of IT services companies ‘that quite frankly were delivering nothing’. Banking consortiums took over in 2003, selling off the IT ‘problems’ and gaining control of Metrofile, having identified it as the source for debt recovery largely because it had always been cash positive and generated profits.

In 18 months, MGX had gone from a position of having R180 million in the bank to a R600 million debt situation. The blow came when R360 million of that debt was delivered onto Metrofile’s balance sheet, plus R100 million into the listed entity.

‘A restructuring in 2006 and again in 2010, and a situation where Standard Bank became the lead financier having taken out all the other banks, brought our rates way down. We’ve gone from gearing of some 450% to our current 44%. We may be under-borrowed but we now have a war chest. In fact, not only do we no longer have debt, we actually don’t have enough of it,’ Wackrill jokes.

It was a remarkable team effort considering that in 2004 its shares were worth just two cents (today they’re R4.50). Market capital in 2003 was a mediocre R67 000 (now a very healthy R2 billion). And Wackrill is happy with Metrofile’s recent results given the tough economic environment.

‘As time passes and you move further away from the past, you begin looking forward to the future’

‘This type of business is immune to many of the swings that impact on other industries but over the past six months we are finding the business environment to be negative. It feels like a holding pattern, particularly with the big conglomerates and banking groups with whom we do business. Despite this, we are reasonably happy with our growth in normalised headline earnings of 8.8% and normalised revenues of just over 11%. Our dividends have increased by 28%.’

There are also many positive growth plans in the pipeline for Metrofile. One of those is its Africa strategy, which includes expansion into Mozambique and Nigeria. The Mozambican market is performing well, though the same cannot be said of Nigeria, says Wackrill. ‘It’s been an uphill battle from day one. There are so many challenges – such as infrastructure – but we really have to be in Nigeria considering its over 170 million-strong population.’ He says Metrofile’s tenacity in that market stems from it being the only player. ‘We understand compliance and our banking clients understand banking and insurance.’

Zambia is another African country where the company is active. At the end of 2014, Metrofile bought a stake in an existing business there, keeping the previous owner in charge. Recently Metrofile also renewed its relationship with some of its past UAE partners, which, says Wackrill, ‘provides us with positive outcomes in the government space. UAE government departments pay’.

Wackrill says SA is on par with the rest of the world in terms of information management, with the main focus being access to information – paper or otherwise. In SA, paper is still filling 800 000 boxes a year for Metrofile, and ‘we are heavily weighted with FICA, credit acts and systems that require hard copy, which is still the most economical storage base.

‘The cloud, scanning paper to digital and the confidential destroying of paper are some of the services that Metrofile benchmarks against international standards on an annual basis, and we have not been found wanting even though, considering where we have come from, we tend to incline towards conservatism.’

Wackrill is philosophical about Metrofile’s journey. ‘As time passes and you move further away from the past, you begin looking forward to the future. I’m very proud of our resurrection, the way the team pulled together, put their heads down and turned inward for solutions. Many of those people have been with the organisation for 14 years. They understood that, for better or worse, we were in it together. And together we overcame.’

By Kerry Dimmer