| Mon 18 Nov 2002, 12:18 | | Paracon Holdings - Audited Results For The Year En |
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Paracon Holdings - Audited Results for the year ended 30 September 2002
Paracon Holdings
AUDITED RESULTS for the year ended 30 September 2002
- Maiden Dividend of 2.5 cents per share
- Turnover from continued operations up 10% to R387,7 million
- Headline earnings per share up 3% to 9.8 cents
- Cash generated from operations up 30% to R52,7 million
- Cash balances of R72,6 million
abridged group income statement
Audited Audited
12 months ended 12 months ended
30 Sept 2002 30 Sept. 2001
R`000 R`000
Turnover 445 430 455 737
Continued operations 387 719 351 907
Discontinued operations - 57 711 103 830
offshore
Earnings before interest, tax,
depreciation
and amortisation (EBITDA) 36 361 42 256
Continued operations 37 084 37 729
Discontinued operations - (723) 4 527
offshore
Depreciation 2 574 1 876
33 787 40 380
Investment income 9 147 11 837
Profit before headline earning 42 934 52 218
adjustments and taxation
Headline earning adjustments 30 073 7 359
Amortisation of goodwill 8 274 6 320
Loss on disposal of offshore 5 638 280
subsidiary
Impairment of goodwill of 15 519 759
offshore subsidiary
Cost of pursuing potential 642 -
acquisition
Profit before taxation 12 861 44 859
Taxation 9 831 13 131
Profit after taxation 3 030 31 727
Outside shareholders` share of 322 (425)
profits/(losses)
Attributable profit 3 352 31 302
Headline earnings per share 9.8 9.5
(cents)
Basic earnings per share (cents) 1.0 7.7
Weighted average number of
ordinary
shares in issue (`000) 342 464 408 561
Number of ordinary shares in
issue net of treasury shares and
cancelled shares (`000) 339 844 362 600
group balance sheet
Audited Audited
30 Sept 2002 30 Sept 2001
R`000 R`000
Assets
Non-current assets 63 937 90 592
Tangible assets 5 693 6 092
Intangible assets 55 782 76 499
Loan to WDB Technologies 2 462 151
Loan to share incentive trust - 7 850
Current assets 111 451 130 939
Trade and other receivables 38 828 68 498
Cash and cash equivalents 72 623 62 441
Total assets 175 388 221 531
Equity and liabilities
151 468 170 060
Share capital and premium 58 323 72 691
Non-distributable reserves 730 1 506
Distributable reserves 92 415 89 144
Equity capital and reserves 151 468 163 341
Minority interests - 6 719
Deferred taxation 97 1 977
Current liabilities 23 823 49 494
Trade and other payables 16 206 28 282
Vendor liabilities - 12 840
Taxation 7 617 8 372
Total equity and liabilities 175 388 221 531
Net asset value per share (cents) 44.6 45.0
Net tangible asset value per share 28.2 23.9
(cents)
abridged group cash flow statement
Audited Audited
Year ended Year ended
30 Sept 2002 30 Sept 2001
R`000 R`000
CASH FLOWS FROM OPERATING ACTIVITIES 51 867 35 358
Cash generated by operations 52 744 40 579
Investment Income 9 147 11 837
Taxation paid (10 024) (17 058)
CASH FLOWS FROM INVESTING ACTIVITIES (17 673) (17 058)
CASH FLOWS FROM FINANCING ACTIVITIES (8 907) (35 284)
Net increase/(decrease) in cash and
cash equivalents 25 287 (20 641)
Cash and cash equivalents at beginning 62 441 84 590
of the year
Less: Cash in business disposed of (15 105) (1 508)
Cash and cash equivalents at end of the 72 623 62 441
year
Abridged group statement of changes in equity
Audited Audited
year ended year ended
30 Sept 2002 30 Sept 2001
R`000 R`000
Balance at beginning of year 163 341 163 385
Net proceeds from issue of shares - 10 996
Prefrerence shares redeemed (4 499) -
Treasury shares purchased (5 489) (15 814)
Shares repurchased and cancelled (4 461) (26 231)
NDR - foreign currency translation (776) (297)
reserve
Attributable profit 3 352 31 302
151 468 163 341
COMMENTARY
Divisional performances
South Africa
The performance of the two divisions, IT Services and Business Solutions, has
been stable in the past year despite both divisions having to operate in a
depressed IT market. Turnover from the South African operations increased by 10%
to R387,7 million and EBITDA decreased slightly by 2% to R37,1 million.
IT Services
This division supplies skilled IT resources to local and international markets
and continues to support an extensive blue chip client base.
The ongoing market slump forced many of IT Services` clients to curtail their IT
spend and carry out large-scale retrenchments, which constrained growth in
turnover. Turnover grew by 4% from R289,5 million to R302,6 million and EBITDA
margins decreased slightly from 8.3% in 2001 to 8.1% in 2002. Notwithstanding
operating in a market where the demand for IT skills is constantly changing, IT
Services continues to generate a large annuity-based revenue stream, and has
strengthened its standing in its preferred market segments. This success was
largely achieved through being passionately customer-orientated and delivery-
driven. Consequently, the division`s overall financial performance can be seen
as encouraging.
Business Solutions
The division offers tailor-made IT solutions which include project management,
software engineering, data recovery, proprietary software solutions, testing,
technical consulting and outsourcing services.
The division has performed well during the past year with a 37% increase in
turnover from R62,4 million to R85,2 million as a result of the conclusion of
several large contracts and the expansion of both our client base and our
service offerings. The challenging environment impacted the division`s margins
which decreased to 14,7% from 19,4%.
The growth in the division, both in clients and in skills, bodes well for the
future.
USA - Discontinued operations
Paracon no longer has operations offshore, following the sale of its equity
stake in New York-based Mercury Technologies during the last quarter of this
financial year. A detailed announcement regarding the sale appeared on SENS on
26 September 2002. The ongoing tough market conditions in the USA severely
hampered the company`s performance, with its client base cutting costs and the
company suffering increasing margin pressure.
Mercury`s results up to the date of disposal have been disclosed as discontinued
operations. With a turnover of R57,7 million and an operating loss of R0,7
million, the negative impact on group margins was significant. In addition, the
loss on disposal and impairment of goodwill (amounting to R5,6 million and R15,5
million respectively) have significantly affected attributable profit and basic
earnings per share. Notwithstanding these write downs, the disposal has allowed
Paracon to exit a loss making operation whilst protecting its share of the
excess cash resources in Mercury.
Balance sheet and cash flows
Paracon reports an extremely strong balance sheet and continues to generate
excellent operating cash flows.
The level of assets and liabilities have decreased considerably from the prior
year as Mercury`s assets and liabilities are no longer consolidated. The balance
sheet at year end includes only the assets and liabilities from the South
African operations.
The debtors` collection period has improved from 47 days to 38 days, reflecting
the continued focus by management on working capital as well as improvement in
the back office administration.
During the financial year, the group repurchased 22,8 million shares of which
10,1 million have been cancelled. Paracon currently holds 37,6 million shares as
treasury shares, representing 9.97% of the total shares in issue.
Operating cash flows continue to be outstanding with cash generated from
operations increasing by 30% to R52,7 million from R40,6 million in the prior
year. This translates to a cash conversion ratio of 156%.
Prospects
Paracon is well entrenched as a reliable supplier of IT services and solutions
to organisations across a variety of industry sectors.
Paracon remains committed to the enhancement of shareholder value and believes
that both its client and resource bases place the company in a strong position
to deliver on this objective.
Dividend policy and declaration of dividend
The directors have reviewed the Group`s cash requirements and they believe that
Paracon has sufficient cash reserves to declare a dividend and still fund future
growth. Consequently the board has declared a dividend of 2,5 cents per share
for the year ended 30 September 2002.
This amounts to approximately 25% of headline earnings per share. This policy
will be reviewed regularly and may be changed at the discretion of the
directors.
The dividend will be paid on Tuesday 17 December 2002. The last day to trade in
the shares for the purpose of entitlement to the dividend will be Friday 6
December 2002. The shares will commence trading ex dividend on Monday 9 December
2002 and the record date will be Friday 13 December 2002. Share certificates may
not be dematerialised or rematerialised between Monday, 9 December 2002 and
Friday, 13 December 2002, both days inclusive.
Accounting policies and audit opinion
The annual financial statements for the year ended 30 September 2002 are
consistent with the Group`s accounting policies and are in compliance with South
African Statements of Generally Accepted Accounting Practice. The financial
statements have been audited by Grant Thornton Kessel Feinstein, whose audit
opinion is available for inspection at the Group`s registered address.
On behalf of the board
Mark Jurgens Mireille Levenstein
Chief Executive Officer Group Financial Director 18 November 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)
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
TRANSFER
SECRETARIES:
Computershare Investor Services Limited
70 Marshall Street, Johannesburg 2001
Your strategic IT partner of choice
Date: 18/11/2002 11:00:00 AM Produced by the JSE SENS Department
