| Tue 14 May 2002, 0:00 | | Paracon Holdings - Unaudited Results For The Six M |
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Paracon Holdings - Unaudited Results for the six months ended 31 March 2002
PARACON HOLDINGS LIMITED
Registration number 1997/008181/06
300 Kent Avenue, Randburg, 2194
ISIN Code : ZAE 000029674
Share Code: PCN
Unaudited results for the six months ended 31 March 2002
* Revenue from continued operations up 21% to R235,4 million
* Headline earnings up 9% to 5.2 cents per share
* Cash flow from operating activities up 55% to R32,9 million
* Cash and cash equivalents at R80,2 million
* Net asset value per share at 50 cents per share
* Tangible net asset value at 27 cents per share
Group income statement
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
% 31 March 31 March 30 Sept.
Increase/ 2002 2001 2001
(decrease) R`000 R`000 R`000
Turnover 5 235 377 225 198 455 737
Continued operations 21 235 377 195 243 415 241
Discontinued operations - 29 955 40 496
Earnings before interest, tax, depreciation
and amortisation (EBITDA) (8) 20 057 21 720 42 256
Continued operations 1 20 057 19 857 40 834
Discontinued operations - 1 863 1 422
EBITDA margin 8.52% 9.65% 9.27%
Depreciation 1 236 950 1 876
18 821 20 770 40 380
Investment income 4 571 6 977 11 837
Profit before headline earning adjustments
and taxation 23 392 27 747 52 217
Headline earning adjustments 4 317 3 752 7 359
Amortisation of goodwill 4 317 2 960 6 320
Net loss and impairment on - 792 1 039
investments
Profit before taxation 19 075 23 995 44 858
Taxation 5 791 7 262 13 131
Profit after taxation 13 284 16 733 31 727
Outside shareholders` share of (186) 407 425
profits/(losses)
Attributable profit 13 470 16 326 31 302
Cents per share
Headline earnings per ordinary 9 5.2 4.8 9.5
share (fully diluted)
Headline earnings from continued operations
per ordinary share 15 5.2 4.5 9.3
Basic earnings per ordinary share 1 3.9 3.9 7.7
Cash flow per ordinary share 90 9.6 5.0 8.7
Weighted average number of ordinary
shares in issue (`000) 344 266 422 656 408 561
Number of ordinary shares in issue
net
of treasury shares (`000) 340 514 427 525 362 600
Abridged group balance sheet
Unaudited Unaudited Audited
31 March 2002 31 March 30 Sept.
2002 2001
R`000 R`000 R`000
Assets
Non-current assets 88 200 77 422 90 592
Tangible assets 7 117 7 528 6 092
Intangible assets 77 201 54 651 76 499
Investments 71 29 151
Deferred taxation - 8 786 -
Loan to share incentive trust 3 811 6 428 7 850
Current assets 133 082 180 083 130 939
Trade and other receivables 52 845 66 322 68 498
Cash and cash equivalents 80 237 113 761 62 441
Total assets 221 282 257 505 221 531
Equity and liabilities
Equity capital and reserves 176 380 194 221 170 060
Share capital and premium 63 443 114 855 72 691
Non-distributable reserves 4 154 2 294 1 506
Distributable reserves 102 612 74 166 89 144
Shareholders` interest 170 209 191 315 163 341
Minority interests 6 171 2 906 6 719
Deferred taxation 2 467 1 586 1 977
Current liabilities 42 435 61 698 49 494
Trade and other payables 23 622 29 105 28 282
Loans - 6 890 -
Vendor liabilities 11 200 13 943 12 840
Taxation 7 613 11 760 8 372
Total equity and liabilities 221 282 257 505 221 531
Net asset value per share (cents) 50.0 44.7 45.0
Net tangible asset value per share (cents) 27.3 32.0 23.9
Abridged group Cash flow statement
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 March 2002 31 March 2001 30 Sept. 200
R`000 R`000 R`000
CASH FLOWS FROM OPERATING 32 884 21 202 35 358
ACTIVITIES
Cash generated from operations 39 000 27 117 52 416
Taxation paid (6 116) (5 915) (17 058)
CASH FLOWS FROM INVESTING (9 878) (6 706) (22 223)
ACTIVITIES
CASH FLOWS FROM FINANCING (5 210) 14 675 (35 284)
ACTIVITIES
Net increase/(decrease) in cash and
cash equivalents 17 796 29 171 (22 149)
Cash and cash equivalents at 62 441 84 590 84 590
beginning of the period
Cash and cash equivalents at end of 80 237 113 761 62 441
the period
Abridged group statement of changes in equity
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 March 2002 31 March 2001 30 Sept.
2001
Balance at beginning of period 163 341 163 385 163 385
Net proceeds of share issues - 11 113 10 996
Treasury shares purchased (5 465) - (15 814)
Shares repurchased and cancelled (3 783) - (26 231)
Non distributable reserves 2 646 491 (297)
Attributable profit 13 470 16 326 31 302
170 209 191 318 163 341
The interim results for the period ended 31 March 2002 are consistent with
the Group`s accounting policies and are in compliance with South African
Statements of Generally Accepted Accounting Practice.
Paracon is a leading provider of IT services and solutions, operating
through two business units - IT Services and Business Solutions.
OPERATIONAL REVIEW
Paracon is well established as a leader in the supply of IT services and
solutions in South Africa and the achievements of both business units have
strengthened Paracon`s positioning in the marketplace.
IT Services
Paracon IT Services supplies skilled IT resources to the local and
international markets.
IT Services` performance has been stable in the past six months. The
majority of clients are large blue chip companies who have curtailed their
IT spend over the past period. Despite this, IT Services continues to
generate a large annuity based revenue stream.
Although no acquisitions were made during the past six months, IT Services
has strengthened its brand in its preferred market segments.
Business Solutions
The Business Solutions division offers IT solutions which include
application software development, E-commerce applications, IT outsourcing,
professional services and proprietary software packages.
The Business Solutions division in South Africa has performed well during
the past six months.
Despite the difficult market conditions, the E-commerce and Software
Engineering divisions have recorded real growth in their operations. Both
divisions have successfully closed a number of large projects during this
period.
Application testing and database management services have been added to the
services offered by Business Solutions, providing new avenues for growth.
The Professional Services division has also grown significantly during this
period.
The performance of Paracon`s offshore US subsidiary, Mercury Technologies,
has been disappointing in the past six months. The company is situated close
to the World Trade Center site and its clients are the large financial
institutions in the New York area. The reduction in corporate IT spend in
the USA, and more particularly in the financial services sector, has
resulted in its operations being severely affected. Indications are that the
market has stabilised. With its strong client base and low infrastructure
costs, Mercury is well positioned to take advantage of any upswing in the US
economy.
Financial commentary
Balance Sheet and Cash Flow Statement
Paracon Holdings continues in its generation of outstanding operating cash
flows and reports an extremely strong balance sheet.
In the past six months, Paracon has continued with its share repurchase
program and has bought 22,1 million shares to add to the shares acquired in
the previous financial year. A total of 87,0 million shares have been
repurchased of which 37,6 million are held as treasury shares.
Despite the share buy backs and vendor payments, overall cash balances have
increased by R17,8 million to R80,2 million as a result of efficient working
capital management. In particular, trade receivables have been reduced from
47 to 42 days through increased focus and expansion of the collections team.
Cash generated from operations amounted to R39,0 million, translating into
an excellent cash conversion ratio of 183%.
Income Statement
The South African operations reflect growth in turnover and EBITDA of 19,2%
and
11,5% respectively compared to the six months ended 31 March 2001. This
growth is largely attributable to the Business Solutions division.
For the reasons previously noted, our offshore operations, Mercury
Technologies, performed poorly in the past six months and its results
impacted the overall Group margins. Mercury`s performance has improved
slightly with a small profit generated for the month of March 2002 and it
has an improved outlook for the next six months.
Despite Mercury`s performance, turnover from continued operations increased
by 21% to R235,3 million compared to R195,2 million in 2001 and EBITDA from
continued operations remained stable with a 1% increase to R20,1 million.
Attributable earnings decreased from the comparable period as a result of
both an increase in the charge for goodwill amortisation and a decrease in
investment income, after utilising cash resources for share repurchases.
Headline earnings per share increased by 9% to 5,2 cents per share from 4,8
cents per share.
PROSPECTS
Paracon Holdings has entrenched itself as a leader in the IT services and
solutions market in South Africa. Its performance in these difficult
conditions has been stable and profits are realised consistently throughout
the year. Paracon believes that both its client base and resource base
places the Group in a strong position to deliver shareholder value. It is
clear that Paracon has potential to grow significantly in a more buoyant
market.
Paracon`s considerable cash balances and cash flow generation ensures that
it can continue to consider strategic acquisitions and fund further growth.
DIVIDENDS
The Company`s policy to date has been not to pay dividends. However, as a
result of the significant cash generation of the businesses, the large cash
balances and the strength of the balance sheet, the directors of Paracon
Holdings are intending to review this policy at the time of the September
year-end results.
On behalf of the board
Mark Jurgens Mireille Levenstein
Chief Executive Officer Group Financial Director 14 May 2002
DIRECTORS:
G S Andrews (Chairman)*, G C Bentley,
C D Stein*, J Coetzee*,J L Cumming,
M A Jurgens, M N J Levenstein,
R K C Taylor*,R J Wasley, R Wilkinson
* Non executive
M Bowman* (Alt)
D C Hughson* (Alt)
TRANSFER SECRETARIES:
Mercantile Registrars Limited, Mercantile Lisbon House,
142 West Street, Sandown, 2195
SECRETARY AND
REGISTERED OFFICE:
RJ Wasley, Paracon Holdings Limited
Registration number 1997/008181/06
300 Kent Avenue, Randburg, 2194
ISIN: ZAE 000029674 Share Code: PCN
Date: 14/05/2002 07:50:53 AM Produced by the SENS Department
