| Thu 19 May 2005, 9:41 | | Paracon Holdings - Interim Results For The Six Mon |
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Paracon Holdings - Interim Results For The Six Months Ended 31 March 2005
PARACON HOLDINGS
Registration number 1997/008181/06
ISIN: ZAE000029674 Share Code: PCN
DELIVERING TECHNOLOGY/EMPOWERING PEOPLE
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2005
HIGHLIGHTS
- TURNOVER UP 42%
- EBITDA UP 46%
- HEADLINE EARNINGS PER SHARE UP 41%
- BASIC EARNINGS PER SHARE UP 146%
Group Income Statement
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
% 2005 2004 2004
increase R`000 R`000 R`000
Turnover 42 237,174 167,357 365,934
Earnings before
interest, taxation,
depreciation and
amortisation
(EBITDA) 46 16,684 11,413 23,925
EBITDA margin 7.0% 6.8% 6.5%
Depreciation 590 1,043 2,140
16 094 10,370 21,785
Investment income 3,774 4,114 8,665
Profit before headline
earnings adjustments
and taxation 19,868 14,484 30,450
Headline earnings
adjustments - 4,437 8,304
Profit before taxation 19,868 10,047 22,146
Taxation 5,229 4,058 7,680
Profit for the period 144 14,639 5,989 14,466
Reconciliation of basic
to headline earnings:
Profit for the period 14,639 5,989 14,466
Amortisation of goodwill - 4,437 8,304
Headline earnings 14,639 10,426 22,770
Cents per share:
Headline earnings per share 41 3.8 2.7 5.9
Basic earnings per share 146 3.8 1.5 3.8
Weighted average
number of ordinary
shares in issue (`000) 387,384 389,101 385,221
Number of ordinary
shares in issue net
of treasury shares (`000) 387,384 383,668 387,384
Abridged Group Cash Flow Statement
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2005 2004 2004
R`000 R`000 R`000
Cash flows from operating activities 18,765 14,188 21,075
Cash generated from operations 18,256 13,570 20,112
Investment income 3,774 4,114 8,665
Taxation paid (3,265) (3,496) (7,702)
Cash flows from investing activities (11,433) (1,112) (13,437)
Cash flows from
financing activities
(Note 1) (11,652) (15,174) (12,626)
Net decrease in cash
and cash equivalents (4,320) (2,098) (4,988)
Cash and cash equivalents
at the beginning of the year 105,112 109,728 109,728
Foreign currency
translation difference - 8 372
Cash and cash equivalents
at the end of the year 100,792 107,638 105,112
Note 1 - Financing activities include the distributions to shareholders out
Of share premium
Group Balance Sheet
Unaudited Unaudited Audited
31 March 31 March 30 Sept
2005 2004 2004
R`000 R`000 R`000
Assets
Non-current assets 67,737 62,133 61,476
Tangible assets 1,991 5,096 2,305
Intangible assets 65,161 55,014 58,559
Financial assets 50 2,023 50
Deferred taxation 535 - 562
Current assets 141,632 130,545 143,537
Trade and other receivables 40,840 22,907 38,425
Cash and cash equivalents 100,792 107,638 105,112
Total assets 209,369 192,678 205,013
Equity and liabilities
Equity capital and reserves 180,298 165,923 177,311
Share capital and premium 62,094 71,735 73,746
Non-distributable reserves 730 367 730
Distributable reserves 117,474 93,821 102,835
Non-current liabilities
Current liabilities 29,071 18,747 27,702
Vendor liabilities - 610 -
Trade and other payables 25,586 16,304 26,153
Taxation 3,485 1,833 1,549
Total equity and liabilities 209,369 184,670 205,013
Net asset value per share (cents) 46.5 43.0 46.2
Net tangible asset value per share (cents) 29.7 26.6 31.0
Abridged Group Statement Of Changes In Equity
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2005 2004 2004
R`000 R`000 R`000
Balance at beginning of year 177,311 175,099 175,099
Capital distribution
to shareholders (11,652) (10,032) (10,032)
Treasury shares purchased - (5,141) (5,634)
Sale of treasury shares - - 3,040
Non distributable reserves - 8 372
Profit for the period 14,639 5,989 14,466
180,298 165,923 177,311
Segment Analysis
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 Sept
2005 2004 2004
R`000 R`000 R`000
Turnover
Paracon Resourcing 202,998 132,988 297,870
Business Solutions 34,176 34,369 68,064
237,174 167,357 365,934
EBITDA
Paracon Resourcing 19,806 13,228 29,086
Business Solutions 4,035 4,608 8,585
Central costs (7,157) (6,423) (13,746)
16,684 11,413 23,925
COMMENTS
INTRODUCTION
The directors are pleased to report Paracon`s excellent performance for the
six months ended 31 March 2005 (`the interim period`). The group, specifically
the Paracon Resourcing division, reflected the positive impact of the ICT
sector`s recovery and the resultant increase in demand for specialist IT
resources.
REVIEW OF OPERATIONS
Paracon Resourcing is the group`s founding division and accounts for 86% of
group turnover. The division posted impressive growth motivated partly by the
demand for IT specialists from Gauteng`s financial services sector. Its
position as the market leader was further entrenched by the integration of the
contracting businesses of Time Quantum in Cape Town and Faritec Contracting
(`the acquisitions`) during the interim period.
Paracon Business Solutions produced steady results driven mainly by project
management services. During May 2005 Paracon acquired the businesses of Ivory
Systems (Pty) Ltd and Ivory Networking (Pty) Ltd (`the Ivory businesses`),
which will expand the division`s capability and client base. The Ivory
businesses provide networking services and solutions to mid-size clients. The
small acquisition of the Ivory businesses will have no material effect on the
overall performance of the group for the 2005 year.
BLACK ECONOMIC EMPOWERMENT (BEE)
Paracon`s recent achievements in this area reflect its ongoing commitment to
transformation. The group was ranked in the top 20 empowered companies listed
on the JSE Securities Exchange SA by the 2005 Empowerdex / Financial Mail
survey. Complimenting this was the major accomplishment of a 4th place
ranking within the ICT sector, a leap from last year`s 9th place. Together
with its BEE partner, WDB Investment Holdings, the group endeavours to enhance
its empowerment status across all facets of economic empowerment.
FINANCIAL RESULTS
Turnover, generated to a large extent by annuity contracts, increased by 42%
from R167,4 million to R237,2 million as a result of market buoyancy and the
incorporation into the results of the acquisitions. EBITDA rose by 46% from
R11,4 million to R16,7 million with EBITDA margins improving slightly to 7,0%.
Earnings per share increased by 146% to 3,8 cents, aided further by the
implementation of AC 140, Business Combinations whereby goodwill is no longer
amortised but rather reviewed for impairment. (In terms of AC140, the
comparative 2004 figures are not restated.) The growth in headline earnings to
R14,6 million from R10,4 million translated into a 41% growth in headline
earnings per share to 3,8 cents from 2,7 cents.
The continued absence of long-term liabilities and healthy cash reserves of
R100,8 million reflect the ongoing strength of Paracon`s balance sheet.
Debtors` collections were exceptional with the group`s debtor days at 29 days
at 31 March 2005. It is anticipated that debtors` days going forward will
approximate 35 days. Notwithstanding that cash balances were impacted by the
R11,6 million capital distribution in March 2005, the group experienced robust
cash flows with cash generated from operations of R18,3 million.
DISTRIBUTION TO SHAREHOLDERS
In accordance with group policy to declare a dividend or capital distribution
to shareholders at year-end, no distribution has been declared for the interim
period.
OUTLOOK
In light of the group`s performance and the current buoyancy in the market,
Paracon is confident of achieving continued growth for the full year to 30
September 2005. The anticipated recovery of the ICT sector should
result in further organic growth, particularly in the Resourcing division.
ACCOUNTING POLICIES
The interim results have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice on a basis consistent
with the audited annual financial statements for the year ended 30 September
2004, which includes the policy on goodwill resulting from the implementation
of AC 140, Business Combinations, applied prospectively.
On behalf of the board
Mark Jurgens Mireille Levenstein
Chief Executive Officer Group Financial Director 19 May 2005
Transfer Secretaries:
Computershare Investor Services 2004 (Pty) Ltd
Ground Floor, 70 Marshall Street
Johannesburg 2001
Sponsor:
Nedbank Capital
Secretary Registered Office:
R J 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*, A Wilson*
* Non-executive
