| Mon 12 Nov 2007, 10:30 | | PCN - Paracon Holdings - Audited Annual Results Fo |
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PCN
PCN
PCN - Paracon Holdings - Audited Annual Results For The Year Ended 30
September 2007 ("The Year") and dividend declaration
Paracon Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number 1997/008181/06
ISIN: ZAE 000029674
Share code: PCN
("Paracon" or "the group")
AUDITED ANNUAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2007 ("the year")
Highlights
- Turnover up by 25%
- EBITDA up by 33%
- Headline earnings per share up by 52%
- Basic earnings per share up by 55%
- Distribution to shareholders up by 25%
- Cash generated from operations up by 43%
Cash balances of R115 million
Abridged Group Income Statement
for the year ended 30 September 2007
Audited Audited
year ended year ended
30 Sept 30 Sept
% 2007 2006
increase R`000 R`000
Turnover 25 792 265 635 404
Earnings before interest, taxation,
depreciation and
amortisation (EBITDA) 33 72 945 55 037
Depreciation 1 112 887
Amortisation of trademarks 395 -
Profit from operations 32 71 438 54 150
Investment income 8 286 7 708
Profit on sale of associate 957 -
Share of profits from associates 9 533 22
Profit before taxation 46 90 214 61 880
Taxation 23 184 17 782
Profit for the year 52 67 030 44 098
Reconciliation of basic to headline
earnings:
Profit on sale of associate 957 -
Headline earnings 66 073 44 098
Earnings per ordinary share (cents)
- Headline earnings 52 17.6 11.6
- Basic earnings 55 17.9 11.6
Weighted average number of ordinary
shares in issue (`000) 374 121 379 828
Number of ordinary shares in issue -
net of treasury shares (`000) 374 121 370 356
Abridged Group Cash Flow Statement
for the year ended 30 September 2007
Audited Audited
year ended year ended
30 Sept 30 Sept
% 2007 2006
increase R`000 R`000
Cash flows from operating
activities 23 59 601 48 632
Cash generated from operations 43 79 939 55 952
Investment income 8 286 7 708
Taxation paid (28 624) (15 028)
Cash flows from investing activities (29 500) (4 212)
Cash flows from financing activities (29 951) (41 671)
Net increase in cash and cash
equivalents 150 2 749
Cash and cash equivalents at
beginning of year 115 148 112 399
Cash and cash equivalents at end of
year 115 298 115 148
Group Balance Sheet
as at 30 September 2007
Audited Audited
2007 2006
R`000 R`000
Assets
Non-current assets 126 692 85 723
Property, plant and equipment 1 842 2 357
Intangible assets 99 864 71 446
Investment in associates 24 414 11 655
Deferred taxation 572 265
Current assets 182 415 176 510
Trade and other receivables 67 117 61 362
Cash and cash equivalents 115 298 115 148
Total assets 309 107 262 233
EQUITY AND LIABILITIES
Equity reserves 240 439 197 477
Current liabilities 68 668 64 756
Amount due to vendors - 10 266
Trade and other payables 59 064 44 376
Taxation 9 604 10 114
Total equity and liabilities 309 107 262 233
Net asset value per share (cents) 64.3 53.3
Net tangible asset value per share (cents) 37.6 34.0
Segment Analysis
for the year ended 30 September 2007
R`000 Turnover EBITDA
Paracon Resourcing 689 721 77 052
Business Solutions 102 544 15 737
Central costs - (19 844)
792 265 72 945
At the beginning of the financial year, the group reshuffled and
restructured various business units to optimise capabilities. This
resulted in a merging of certain business units to extract efficiencies.
As a result, it would be meaningless to compare the divisional segmented
results (both at the turnover and EBITDA level) to those of prior years
as the reported segments are not comparable.
Group Statement Of Changes In Equity
for the year ended 30 September 2007
Ordinary share
capital Treasury Non-distributable
and premium shares reserve
R`000 R`000 R`000
Balance at 1
October 2005 67 194 (8 792) 730
Treasury shares
purchased (13) (18 647) -
Capital distribution (23 828) 817 -
Profit for the year - - -
Balance at 30 September
2006 43 353 (26 622) 730
Issue of shares 5 883 - -
Capital distribution (32 079) 2 128 -
Profit for the year - - -
Balance at 30 September
2007 17 157 (24 494) 730
Total
Distributable shareholders`
reserve equity
R`000 R`000
Balance at 1 October 2005 135 918 195 050
Treasury shares purchased - (18 660)
Capital distribution - (23 011)
Profit for the year 44 098 44 098
Balance at 30 September 2006 180 016 197 477
Issue of shares - 5 883
Capital distribution - (29 951)
Profit for the year 67 030 67 030
Balance at 30 September 2007 247 046 240 439
Commentary
The directors of Paracon are pleased to report another year of strong
growth in all the divisions. The demand for specialist skills in South
Africa has boosted performance across the various businesses within the
group.
Paracon`s common denominator underlying all its divisions is the supply
of skilled resources within various service offerings. The robust South
African economy and the resultant demand for skills has enabled
Paracon`s two divisions - Paracon Resourcing and Paracon Business
Solutions - to achieve record results.
Paracon Resourcing achieved turnover of R690 million and grew EBITDA to
R77 million. The division continues to contribute the lion`s share of
group results, accounting for 87% of total turnover. The Personnel
Concept, which focuses solely on permanent placements, boosted the
division`s results with a strong performance.
Paracon Business Solutions also posted impressive results fuelled by
significant demand in networking services and benefiting from the
provision to clients of skills from India. Turnover in this division
amounted to R103 million with EBITDA of R16 million.
The shortage of suitably skilled resources remains Paracon`s greatest
challenge. To alleviate the skills shortage in the medium term and at
the same time further its commitment to BEE, Paracon has successfully
instituted a number of initiatives to bring new skills into the market.
These include classroom and practical training as well as learnership
programmes for black graduates.
The recently announced acquisition of project management consulting and
training company, The X-Pert Group (Proprietary) Limited (`X-Pert`),
offers exciting opportunities for Paracon including expanding Paracon`s
existing service offering to its clients and accessing a wider range of
skills. The acquisition of X-Pert is not included in the annual
financial results as the agreement was concluded post year-end. The
acquisition will be funded out of existing cash resources and will not
have a significant impact on Paracon.
Financial commentary
Turnover increased by 25% to R792 million from R635 million in 2006.
Organic growth accounted for 21% of the 25% increase, with the
acquisition of The Personnel Concept accounting for the balance. EBITDA
rose by 33% from R55 million to R73 million, with a pleasing improvement
in operating margins from 8,6% in 2006 to 9,2% in 2007. The improvement
in the margins arose as a result of volumes increasing within the same
support structures and also due to the increase in permanent placements
within the group.
Paracon`s associates, Indian based Nihilent Technologies and Mondial IT
Solutions, posted excellent results exceeding budget. In accordance with
IAS 28, these results are equity accounted and are therefore not
included in turnover and operating profit. However the impact of the
share of profits from associates contributed 17% of the total 52% growth
in headline earnings per share from 11,6 cents in 2006 to 17,6 cents in
2007.
The balance sheet demonstrates the stability of the group with no long-
term gearing and significant cash reserves. Cash flows remain healthy
with cash generated from operations increasing by 43% to R80 million
equating to a 110% cash conversion ratio. Continued focus on accounts
receivables resulted in debtors` days of 27 days (2006: 28 days). Cash
flows from financing activities included the R30 million net capital
distribution paid to shareholders in March 2007.
Black Economic Empowerment
In line with the BBBEE codes of Good Practice, Paracon remains committed
to transformation at all levels of the organisation. The `Level 4`
rating and the group`s success in the annual EmpowerDex/Financial Mail
survey affirms Paracon`s ongoing progress in this regard.
Distribution to shareholders
The board is pleased to declare a dividend and propose a capital
reduction distribution to shareholders totalling 10,0 cents per share
(2006: 8,0 cents) to be distributed as follows:
- A dividend of 5,0 cents per share; and
- A capital reduction distribution of 5,0 cents per share to be paid out
of share premium. Shareholders will be asked to consider, and if deemed
fit, to approve the capital reduction distribution at the annual general
meeting of Paracon to be held on Wednesday, 27 February 2008.
In compliance with STRATE the following dates will be applicable to both
the dividend and the capital reduction distribution ("distributions"):
Last day to trade cum distributions Friday, 7 March 2008
Trading commences ex distributions Monday, 10 March 2008
Record date Friday, 14 March 2008
Payment date Monday, 17 March 2008
Share certificates may not be dematerialised or rematerialised between
Monday, 10 March 2008 and Friday, 14 March 2008, both days inclusive.
Outlook
With prospects for the South African economy anticipated to remain
buoyant, demand for specialist skills is expected to continue. Paracon
is ideally positioned to continue capitalising on this demand.
Accounting policies
The annual financial statements have been audited by Grant Thornton,
Registered Auditors Chartered Accountants (SA), whose unqualified audit
report is available for inspection at Paracon`s registered office.
The accounting policies applied in preparing the annual financial
statements are consistent with those applied in the annual financial
statements for the previous year and have been prepared in accordance
with International Financial
Reporting Standards (IFRS), IAS 34 and the Companies Act, 1973.
On behalf of the board.
Mark Jurgens Mireille Levenstein
Chief Executive Officer Chief Financial Officer
12 November 2007
Directors: G Andrews (Chairman)*#, G Bentley, M Jurgens (CEO), M
Levenstein
(CFO) T Nzimande*, J Ord*, S Sebotsa*#, C Stein*#
* Non-executive # Independent
Sponsors: Merchant Sponsors (Proprietary) Limited
Company Secretary: R J Wasley
Registered Office: 300 Kent Avenue, Randburg, 2194
Transfer Secretaries: Computershare Investor Services 2004 (Proprietary)
Limited Ground Floor, 70 Marshall Street, Johannesburg 2001, (PO Box
61051, Marshalltown, 2107)
Date: 12/11/2007 10:30:01 Produced by the JSE SENS Department.
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