| Mon 22 Nov 2004, 12:36 | | Audited results for the year ended 30 September 04 |
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Paracon - Audited results for the year ended 30 September 2004
Paracon Holdings Limited
(Incorporated in the Republic of South Africa)
Registration Number 1997/008181/06
ISIN: ZAE000029674
Share code: PCN
(`Paracon` or `the company`)
Audited results for the year ended 30 September 2004
HIGHLIGHTS
Headline earnings per share up 40%
Earnings per share up 79%
EBITDA up 46%
Cash distribution up 20%
Cash and cash equivalents at R105 million
ABRIDGED GROUP INCOME STATEMENT
AUDITED AUDITED
year ended year ended
% 30 Sep 2004 30 Sep 2003
change R`000 R`000
Turnover 6 365,934 344,927
Earnings before interest,
tax, depreciation
and amortisation (EBITDA) 46 23,925 16,365
Depreciation 2,140 2,577
21,785 13,788
Investment income and foreign 23 8,665 7,072
exchange loss
Profit before headline
earning adjustments
and taxation 46 30,450 20,860
Headline earning adjustments: 8,304 7,534
Amortisation of goodwill 8,005 7,534
Final foreign currency
translation difference on
discontinued offshore 299 -
operations
Profit before taxation 66 22,146 13,326
Taxation 7,680 5,933
Attributable profit 96 14,466 7,393
Reconciliation of basic to
headline earnings:
- Headline earnings 8,304 7,534
adjustments
Headline earnings 53 22,770 14,927
Cents per share
Headline earnings per share 40 5.9 4.2
Basic earnings per share 79 3.8 2.1
Weighted average number of
shares in issue (`000)
385,221 352,885
Number of shares in issue net
of treasury shares (`000)
387,384 392,187
ABRIDGED GROUP CASH FLOW STATEMENT
AUDITED AUDITED
year ended year ended
30 Sep 2004 30 Sep 2003
R`000 R`000
CASH FLOWS FROM OPERATING 21,075 19,016
ACTIVITIES
CASH FLOWS FROM INVESTING (13,437) (6,645)
ACTIVITIES
CASH FLOWS FROM FINANCING (12,626) 25,106
ACTIVITIES (note 1)
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (4,988) 37,477
Cash and cash equivalents at the 109,728 72,623
beginning of the year
Foreign currency translation 372 (372)
difference
Cash and cash equivalents at the 105,112 109,728
end of the year
Note 1: This includes the cash
distribution to shareholders out of
share premium amounting to
R10,0 million.
GROUP BALANCE SHEET
AUDITED AUDITED
30 Sep 2004 30 Sep 2003
R`000 R`000
Assets
Non-current assets 61,476 59,783
Tangible assets 2,305 3,988
Intangible assets 58,559 55,322
Investments 50 212
Deferred taxation 562 261
Current assets 143,537 136,483
Trade and other receivables 38,425 26,755
Cash and cash equivalents 105,112 109,728
Total assets 205,013 196,266
Equity and liabilities
Equity capital and reserves 177,311 175,099
Share capital and premium 73,746 86,909
Non-distributable reserves 730 358
Distributable reserves 102,835 87,832
Current liabilities 27,702 21,167
Trade and other payables 26,153 17,995
Vendor liabilities - 1,900
Taxation 1,549 1,272
Total equity and liabilities 205,013 196,266
Net asset value per share (cents) 45.8 44.6
Net tangible asset value per share 30.7 30.5
(cents)
ABRIDGED GROUP STATEMENT OF CHANGES IN EQUITY
AUDITED AUDITED
year ended year ended
30 Sep 2004 30 Sep 2003
R`000 R`000
Balance at beginning of year 175,099 151,468
Net proceeds of share issues - 11,728
Distribution to shareholders via (10,032) -
reduction in capital
Treasury shares purchased (5,634) (2,273)
Treasury shares sold 3,040 17,740
Shares repurchased and cancelled - (2,090)
Non distributable reserves 372 (372)
Dividends paid - (8,495)
Attributable profit 14,466 7,393
177,311 175,099
SEGMENT ANALYSIS
AUDITED AUDITED
year ended year ended
30 Sep 2004 30 Sep 2003
R`000 R`000
TURNOVER
Paracon Resourcing 297,870 267,398
Business Solutions 68,064 77,529
TOTAL TURNOVER 365,934 344,927
EBITDA
Paracon Resourcing 22,213 21,366
Business Solutions 1,712 (2,534)
- Bad debt - (2,467)
TOTAL EBITDA 23,925 16,365
COMMENTARY
The directors of Paracon are pleased to report an excellent improvement in the
Group`s performance for the year ended
30 September 2004.
TRADING PERFORMANCE
The group reports within two divisions, namely Paracon Resourcing and Paracon
Business Solutions:
Paracon Resourcing - The division experienced improved trading conditions and
increasing customer demand, especially by clients in the financial services
industry, during the second half of the year. It successfully focused on growing
its contractor and client bases organically and through acquisition.
In July and October 2004 two strategic acquisitions were concluded respectively
- Time Quantum Cape Town for a purchase consideration of R11,1 million, which
has strengthened our position in this region, and the contracting division of
Faritec for a consideration of R7,0 million. Both businesses bring to the Group
impressive client portfolios and skills-bases.
Paracon Resourcing accounted for 81% of Group turnover and 93% of Group EBITDA
and continues to generate significant annuity revenue and healthy cash flows.
Paracon Business Solutions - Following an extremely challenging year in 2003,
the division was rationalised into a smaller, more focused operation. The
deliberate restructuring was done to limit the inherent risks associated with an
IT solutions business and to minimise activity. Notwithstanding the resultant
decrease in turnover, a small operating profit was generated, reflecting a
comforting turnaround from the previous year.
Paracon Business Solutions accounted for 19% of Group turnover and 7% of Group
EBITDA.
FINANCIAL PERFORMANCE
Headline earnings increased by 53% to R22,8 million, with headline earnings per
share showing a 40% increase to 5.9 cents per share. Turnover increased by 6%
from R344,9 million in 2003 to R365,9 million in 2004, while EBITDA increased by
46% from R16,4 million to R24,0 million in 2004. Attributable profit increased
by 96% from R7,4 million in 2003 to R14,5 million in 2004.
As the acquisition of Time Quantum Cape Town was completed in the last quarter
of the year, it had minimal impact on the Group`s overall performance for the
year. The Faritec contracting acquisition became unconditional only subsequent
to year-end and therefore is not accounted for in these results.
The balance sheet continues to be strong with cash balances of R105,1 million
and no long-term liabilities. Debtors` collections are excellent with Group
debtor days at 31 days (2003: 32 days). The Group`s current ratio at 5.2 times
is a reflection of the strength of the balance sheet. Net tangible asset value
and net cash per share have remained stable at 30,7 cents per share (2003: 30,5
cents) and 27,1 cents per share (2003: 27,9 cents) respectively.
The Group continues to generate cash on a monthly basis and has a significant
portion of its turnover as annuity business. Cash flows from operating
activities were robust at R21,1 million. As no working capital assets were
acquired in respect of the Time Quantum Cape Town acquisition, Paracon`s
operating cash flows were adversely affected with debtors increasing by R4,3
million from the acquisition. Notwithstanding this, cash generated from
operations of R20,1 million resulted in a cash conversion ratio
of 92%.
Cash outflows from financing activities included R10,0 million spent on the cash
distribution to shareholders in February 2004. Cash outflows from investing
activities included R11,3 million paid for the purchase of Time Quantum Cape
Town.
EMPOWERMENT AND TRANSFORMATION
Paracon continues to make significant progress in further enhancing its
empowerment status across the seven key pillars of economic empowerment. We are
confident of our empowerment profile in anticipation of the ICT sector charter.
Our Empowerdex `A` rating is testament of our commitment and progress in this
regard.
TIME QUANTUM GAUTENG
As previously announced on 28 June 2004, Paracon acquired an exclusive option,
exercisable on or before 30 November 2004, to acquire the IT contracting and
services business of Time Quantum Gauteng for R34,5 million. To date Paracon has
not exercised the option and is currently negotiating to extend the option
period. Shareholders will continue to be advised of developments in this regard.
OUTLOOK
Our BEE credentials and strategic acquisitions offer the Group promising growth
opportunities in both the public and private sectors. The recent general upturn
in both the economy and the ICT industry should further assist the Group in
reaching higher targets in the coming years.
CAPITAL DISTRIBUTION
As a result of the Group`s surplus cash reserves, the Board is pleased to
recommend a capital distribution to shareholders, to be paid out of share
premium, of 3.0 cents per share (2003: 2.5 cents). Shareholders will be asked to
consider, and if deemed fit, to approve the capital distribution at the annual
general meeting of the Company to be held on Tuesday, 15 February 2005.
In compliance with STRATE, the following dates will be applicable to the capital
distribution:
Last day to trade Friday, 25 February 2005
Trading commences ex distribution Monday, 28 February 2005
Record date Friday, 4 March 2005
Payment date Monday, 7 March 2005
Share certificates may not be dematerialised or rematerialised between Monday,
28 February 2005 and Friday, 4 March 2005, both days inclusive.
ACCOUNTING POLICIES
The annual financial statements have been audited by Grant Thornton whose
unqualified audit report is available for inspection at the Group`s registered
address.
The accounting policies used in preparing this report are consistent with those
used in the annual financial statements, which have been prepared in accordance
with South African Statements of Generally Accepted Accounting Practice on a
basis consistent with the previous year.
On behalf of the board
Mark Jurgens Mireille Levenstein
Chief Executive Officer Group Financial 22 November 2004
Director
TRANSFER SECRETARIES:
Computershare Investor Services 2004 (Pty) Ltd,
Ground Floor, 70 Marshall Street
Johannesburg 2001
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
Sponsor
Nedbank Capital
Directors:
G Andrews (Chairman)* G Bentley, V Dlamini*,
M Jurgens (CEO), M Levenstein, S Sebotsa*,
C Stein*, A Wilson* (*non-executive)
