| Fri 14 May 2004, 10:59 | | INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MAR 04 |
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Jse: Pcn
Release Date: 14/05/2004 10:10:01 Code(s): PCN
PARACON HOLDINGS LIMITED - INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH
2004 AND FURTHER CAUTIONARY ANNOUNCEMENT
PARACON HOLDINGS LIMITED
Registration number 1997/008181/06
ISIN: ZAE 000029674 Share Code: PCN
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2004 AND FURTHER CAUTIONARY
ANNOUNCEMENT
GROUP INCOME STATEMENT
Unaudited Unaudited
six six Audited
months months year
ended ended ended
31 Mar 04 31 Mar 03 30 Sep 03
R"000 R"000 R"000
Turnover 167,357 166,905 344,927
Earnings before interest, tax, 11,413 10,006 16,365
depreciation and amortisation
(EBITDA)
Depreciation 1,043 1,227 2,577
10,370 8,779 13,788
Investment income and foreign 4,114 2,474 7,072
exchange loss
Profit before amortisation and 14,484 11,253 20,860
taxation
Amortisation of goodwill 4,437 3,665 7,534
Profit before taxation 10,047 7,588 13,326
Taxation 4,058 3,973 5,933
Attributable profit 5,989 3,615 7,393
Reconciliation of basic to headline
earnings:
- Amortisation of goodwill 4,437 3,665 7,534
Headline earnings 10,426 7,280 14,927
Cents per share:
Headline earnings per share 2.7 2.1 4.2
Basic earnings per ordinary share 1.5 1.1 2.1
Weighted average number of ordinary 389,101 339,065 352,885
shares in issue (`000)
Number of ordinary shares in issue 383,668 335,094 392,187
net of treasury and cancelled shares
(`000)
ABRIDGED GROUP CASH FLOW STATEMENT
Unaudited Unaudited
six six Audited
months months year
ended ended ended
31 Mar 04 31 Mar 03 30 Sep 03
R"000 R"000 R"000
CASH FLOWS FROM OPERATING ACTIVITIES 14,188 7,463 19,016
Cash generated from operations 13,570 19,394 33,205
Dividend paid - (8,495) (8,495)
Investment income 4,114 2,474 7,072
Taxation paid (3,496) (5,910) (12,766)
CASH FLOWS FROM INVESTING ACTIVITIES (1,112) (332) (6,645)
CASH FLOWS FROM FINANCING
ACTIVITIES (Note 1) (15,174) (2,391) 25,106
NET INCREASE IN CASH AND
CASH EQUIVALENTS (2,098) 4,740 37,477
Cash and cash equivalents at the 109,728 72,623 72,623
beginning of the period
Foreign currency translation 8 (372)
difference
Cash and cash equivalents atthe end 107,638 77,363 109,728
of period
Note 1 - This includes the cash distribution to shareholders out of share
premium amounting to R10,0 million
GROUP BALANCE SHEET
Unaudited Unaudited Audited
31 March 31 March 30 Sept
2004 2003 2003
R"000 R"000 R"000
Assets
Non-current assets 54,125 62,133 59,783
Tangible assets 3,117 5,096 3,988
Intangible assets 50,586 55,014 55,322
Financial assets 152 2,023 212
Deferred taxation 270 - 261
Current assets 130,545 105,057 136,483
Trade and other receivables 22,907 27,694 26,755
Cash and cash equivalents 107,638 77,363 109,728
Total assets 184,670 167,190 196,266
Equity and liabilities
Equity capital and reserves 165,923 144,197 175,099
Share capital and premium 71,735 56,239 86,909
Non-distributable reserves 367 422 358
Distributable reserves 93,821 87,536 87,832
Deferred taxation - 60 -
Current liabilities 18,747 22,933 21,167
Trade and other payables 16,304 14,470 17,995
Vendor liabilities 610 2,650 1,900
Taxation 1,833 5,813 1,272
Total equity and liabilities 184,670 167,190 196,266
Net asset value per share (cents) 43.2 43.0 44.6
Net tangible asset value per share (cents) 30.1 26.6 30.5
ABRIDGED GROUP STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
31 Mar 31 Mar 30 Sept
2004 2003 2003
Balance at beg of year 175,099 151,468 151,468
Net proceeds from issue of shares - - 11,728
Dividend paid/distribution to (10,032) (8,495) (8,495)
shareholders via reduction in capital
Treasury shares purchased (5,141) - (2,273)
Sale of Treasury shares - - 17,740
Shares repurchased and cancelled - (2,083) (2,090)
NDR - foreign currency translation 8 (308) (372)
reserve
Attributable profit 5,989 3,615 7,393
165,923 144,197 175,099
SEGMENT ANALYSIS
Unaudited Unaudited Unaudited Audited
6 months 6 months 6 months year
ended ended ended ended
31 Mar 2004 30 Sep 2003 31 Mar 2003 30 Sep 2003
R"000 R"000 R"000 R"000
TURNOVER
Paracon Resourcing 132,988 141,636 125,762 267,398
Business Solutions 34,369 36,386 41,143 77,529
167,357 178,022 166,905 344,927
EBITDA
Paracon Resourcing 10,016 11,015 10,351 21,366
Business Solutions 1,397 (4,656) 2,122 (2,534)
- Bad debt write off - - (2,467) (2,467)
11,413 6,359 10,006 16,365
FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcement dated 7 April 2004
wherein it was announced that Paracon has entered into a binding memorandum of
understanding regarding a proposed acquisition, which was subject to, inter
alia, the successful completion of a due diligence, which is still in progress.
Accordingly, shareholders are advised to continue to exercise caution in dealing
in their Paracon shares on the JSE Securities Exchange South Africa, until a
further announcement has been made.
COMMENTARY ON RESULTS
The overall results reflect an improved performance on the prior year with an
increase in headline earnings per share of 29% from 2.1 cents per share in March
2003 to 2.7 cents per share in March 2004. Turnover remained constant at R167,4
million in March 2004 compared to R166,9 million in March 2003 whilst EBITDA
increased by 14% from the prior period.
Efforts in rationalising Paracon Business Solutions into a more focused, smaller
operation is reflected in the segmental results. Notwithstanding the decrease in
turnover in the division, the division generated profits, a comforting
turnaround from the prior year.
Paracon Resourcing accounts for 79% of turnover and continues to generate
annuity income and excellent cash flows. The division"s growth has been hampered
by the drop in number of billable contractors in the prior year and by
constraints in tax and labour laws. Whilst market conditions remain difficult,
the last quarter has seen increased activity at various clients. The proposed
acquisition referred to above will further entrench Paracon"s position as the
market leader in this arena.
Paracon"s balance sheet continues to be strong with significant cash balances
and no long-term liabilities. Working capital remains excellent with a current
ratio of 7 times and debtors collection period at 26 days.
Cash generated from operations of R13,6 million translates to a cash conversion
ratio of 133%. Cash flows from financing activities amounting to R15, 2 million
which comprises of the capital distribution to shareholders of R10, 0 million in
February and R5,1 million spent on a general share repurchase.
Dividends/distribution to shareholders
The company"s policy is to declare an annual dividend/cash distribution to
shareholders at the time of the publication of the September year-end results.
Therefore no dividend/distribution has been declared at this interim period.
PROSPECTS
Notwithstanding the improvement in the results, markets remain tough and we
continue to adopt a conservative view for the remainder of the year. The
proposed acquisition referred to in the aforementioned cautionary announcement
will increase our market share and improve our capacity to serve a wider range
of clients.
BLACK ECONOMIC EMPOWERMENT ("BEE")
We continue with our BEE endeavors to improve our empowerment profile overall
and remain committed to all areas of BEE, including shareholding, employment
equity, affirmative procurement and skills development. Our Empowerdex "A"
rating and our success in the recent financial mail BEE company ranking is
testament to our commitment and progress.
On behalf of the board
Mark Jurgens Mireille Levenstein
Chief Executive Officer Group Financial Director 14 May 2004
ACCOUNTING POLICIES
The interim results for the period ended 31 March 2004 have been prepared in
accordance with South African statements of Generally Accepted Accounting
Practice on a basis consistent with the previous year.
TRANSFER SECRETARIES:
Computershare Limited,
70 Marshall Street,
Johannesburg 2001
SPONSOR:
Nedbank Capital
SECRETARY AND REGISTERED OFFICE:
RJ Wasley, Paracon Holdings Limited.
300 Kent Avenue, Randburg, 2194
DIRECTORS:
G Andrews (Chairman)*+/-, G Bentley, V Dlamini*, M Jurgens (CEO), M Levenstein,
S Sebotsa*,
C Stein*, R Taylor*, A Wilson*, C Vorster*
* Non-executive +/- Independent
