| Mon 14 Nov 2005, 9:00 | | Paracon Holdings Limited - Audited Annual Results |
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Paracon Holdings Limited - Audited Annual Results For The Year Ended 30
September 2005
PARACON HOLDINGS LIMITED
Registration number 1997/008181/06
ISIN: ZAE 000029674 Share code: PCN
("Paracon" or "the Group")
Delivering Technology / Empowering People
AUDITED ANNUAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005
HIGHLIGHTS
Turnover up by 46%
EBITDA up by 63%
Headline earnings per share up by 45%
Attributable earnings up by 129%
Distribution to shareholders up by 100%
Cash flow from operating activities up by 106%
Cash balances of R112 million
ABRIDGED GROUP INCOME STATEMENT
For the year ended 30 September 2005
Audited Audited
% 30 Sep 2005 30 Sep 2004
increase R"000 R"000
Turnover 46 533,444 365,934
Earnings before interest, taxation,
depreciation and amortisation
(EBITDA) 63 39,025 23,925
Depreciation 977 2,140
74 38,048 21,785
Investment income 7,450 8,665
Profit before headline earnings
adjustments and taxation 49 45,498 30,450
Headline earnings adjustments - 8,304
Profit before taxation 105 45,498 22,146
Taxation 12,415 7,680
Attributable profit 129 33,083 14,466
Reconciliation of basic to
headline earnings:
Headline earnings adjustments - 8,304
Headline earnings 45 33,083 22,770
Cents per share
- Headline earnings 45 8.6 5.9
- Basic earnings 128 8.6 3.8
Weighted average number of shares
in issue ("000) 386,814 385,221
Number of shares in issue - net of
treasury shares ("000) 383,310 387,384
ABRIDGED GROUP CASH FLOW STATEMENT
For the year ended 30 September 2005
Audited Audited
30 Sep 2005 30 Sep 2004
R"000 R"000
Cash flows from operating activities 43,393 21,075
Cash generated from operations 42,251 20,112
Investment income 7,450 8,665
Taxation paid (6,308) (7,702)
Cash flows from investing activities (20,761) (13,437)
Cash flows from financing activities (15,345) (12,626)
Net increase/(decrease) in cash and
cash equivalents 7,287 (4,988)
Cash and cash equivalents at the beginning
of year 105,112 109,728
Foreign currency translation reserve - 372
Cash and cash equivalents at the end
of year 112,399 105,112
GROUP BALANCE SHEET
Audited Audited
30 Sep 2005 30 Sep 2004
R"000 R"000
ASSETS
Non-current assets 73,835 61,476
Tangible assets 2,023 2,305
Intangible assets 71,446 58,559
Financial assets - 50
Deferred taxation 366 562
Current assets 164,485 143,537
Trade and other receivables 52,086 38,425
Cash and cash equivalents 112,399 105,112
Total assets 238,320 205,013
EQUITY AND LIABILITIES
Equity capital and reserves 195,050 177,311
Share capital and premium 58,402 73,746
Non-distributable reserves 730 730
Distributable reserves 135,918 102,835
Current liabilities 43,270 27,702
Amount due to vendor 1,625 -
Trade and other payables 34,184 26,153
Taxation 7,461 1,549
Total equity and liabilities 238,320 205,013
Net asset value per share (cents) 50.9 45.8
Net tangible asset value per share (cents) 32.2 30.7
GROUP STATEMENT OF CHANGES IN EQUITY
Ordinary Non- Total
share capital distributable Distributable shareholders"
and premium reserves reserves equity
R"000 R"000 R"000 R"000
Balance at
1 October 2003 86,909 358 87,832 175,099
Treasury shares sold 2,504 - 537 3,041
Treasury shares
purchased (5,635) - - (5,635)
Foreign currency
translation differences - 372 - 372
Capital distribution (10,032) - - (10,032)
Profit for the year - - 14,466 14,466
Balance at
1 October 2004 73,746 730 102,835 177,311
Treasury shares
purchased (3,687) - - (3,687)
Capital distribution (11,657) - - (11,657)
Profit for the year - - 33,083 33,083
Balance at
30 September 2005 58,402 730 135,918 195,050
SEGMENT ANALYSIS
For the year ended 30 September 2005
% 30 Sep 2005 30 Sep 2004
increase R"000 R"000
Turnover
Paracon Resourcing 48 440,364 297,870
Business Solutions 37 93,098 68,064
46 533,444 365,934
EBITDA
Paracon Resourcing 51 43,990 29,086
Business Solutions 23 10,602 8,585
Central costs 13 (15,567) (13,746)
63 39,025 23,925
COMMENTS
INTRODUCTION
The directors are pleased to report Paracon"s excellent results for the year
which show meaningful growth in all key performance indicators.
FINANCIAL RESULTS
The Group"s outstanding results reflect increases across the board driven by
both organic and acquisitive growth. Turnover increased by 46% to R533,4
million from R365,9 million. EBITDA grew substantially by 63% to R39,0 million
from R23,9 million with the EBITDA margin on revenue improving to a healthy
7,3% from 6,5%.
Headline earnings of R33,1 million, translated into headline earnings per share
of 8,6 cents reflecting a 45% increase. In addition with the adoption of AC140
in terms of which goodwill is no longer amortised, basic earnings per share
increased by 128% to 8,6 cents from 3,8 cents.
Robust cash flows were supported by the efficient working capital management
which resulted in an increase in cash on hand to R112,4 million. Cash flows
from operating activities leapt to R43,4 million from R21,1 million with R42,2
million generated from operations translating into a 110% cash conversion
ratio. The cash outflow from financing activities included the R11,7 million
cash distribution paid to shareholders in March 2005. The cash outflow from
investing activities reflected the R20,1 million paid in consideration for the
acquisition (see `Review of Operations" below).
The balance sheet remained strong with no long-term liabilities, reflecting a
net asset value per share of 50,9 cents compared with 45,8 cents for the
previous year. Net tangible assets per share also improved to 32,2 cents from
30,7 cents. Debtors" collections continue to be exemplary with the Group"s
debtors days at 29 days.
REVIEW OF OPERATIONS
Paracon Resourcing is the Group"s founding division responsible for 83% of
total turnover. As one of SA"s leading specialist-generalist IT resourcing
providers for private sector and Government, the division produced
outstanding results for the year. Paracon Resourcing particularly benefited
from the buoyant demand for specialist IT resources especially within the
financial, insurance and ICT sectors. The acquisition of Faritec Resourcing
in Gauteng was successfully integrated during the year.
The networking services previously offered by Paracon Business Solutions,
were expanded during the year following the acquisition of Ivory Networking
Services in April 2005. Within this division Paracon Networking was
consequently established with the critical mass to establish a competitive
presence in the market. Paracon Professional Services also performed well in
all competency areas.
The Group"s strong performance reflects our successful service-centric approach
and uncompromising focus on quality and delivery.
BLACK ECONOMIC EMPOWERMENT (BEE)
Paracon remains committed to transformation. We are particularly pleased to
have maintained our EmpowerDex "A" rating and to have achieved a significantly
improved BEE ranking in the 2005 EmpowerDex/Financial Mail survey. In this
survey Paracon was ranked the 20th empowered company on the JSE Limited and
rose to 4th place in the ICT sector.
We continue to seek diversity on the board of directors, as reflected by our
new appointments during the year. Together with our BEE partner WDB Investment
Holdings, we will continue to enhance our BEE status across all facets of
economic empowerment.
DIRECTORS
During the year we welcomed to the board as non-executive directors Dimension
Data Holdings plc chairman, Jeremy Ord and Tandi Nzimande, the Chief Financial
Officer of WDB Investment Holdings. Shafiq Daniels, Managing Director of
Paracon Cape Town, joined the board as an executive director.
Vusi Dlamini and Andrew Wilson resigned from the board and we thank them for
their contribution to the Group.
APPRECIATION
We would like to thank management and staff for their dedication and sheer hard
work that have contributed to the Group"s performance. Thank you also to all
our stakeholders and particularly our shareholders, customers, contractors and
partners for their continued support.
DISTRIBUTION TO SHAREHOLDERS
In light of the Group"s surplus cash reserves and strong cash generation, the
board is pleased to recommend a substantially higher annual capital
distribution to shareholders. The board therefore recommends a distribution to
be paid out of share premium, of 6,0 cents per share for 2005 (2004: 3,0
cents). Shareholders will be asked to consider, and if deemed fit, to approve
the capital distribution at the annual general meeting of Paracon to be held on
Tuesday, 21 February 2006.
In compliance with STRATE the following dates will be applicable to the capital
distribution:
Last day to trade Friday, 3 March 2006
Trading commences ex distribution Monday, 6 March 2006
Record date Friday, 10 March 2006
Payment date Monday, 13 March 2006
Share certificates may not be dematerialised or rematerialised between Monday,
6 March 2006 and Friday, 10 March 2006, both days inclusive.
OUTLOOK
The directors are optimistic about Paracon"s prospects for the year ahead. The
market looks set to remain buoyant and demand from our customers continues
unabated. Our business model is well aligned with emerging market trends which
positions the Group to continue to achieve growth in the year ahead.
ACCOUNTING POLICIES
The annual financial statements have been audited by Grant Thornton whose
unqualified audit report is available for inspection at Paracon"s registered
office.
The accounting policies applied in preparing this report are consistent with
those applied in the annual financial statements for the previous year ended 30
September 2004, and have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice and the Companies Act,(Act
61 of 1973) as amended.
With effect from 1 October 2005, Paracon has adopted International Financial
Reporting Standards (IFRS). The effective transition date is therefore
1 October 2004. The impact of IFRS on the Group"s results has been assessed
and it is anticipated that there will be no effect on the 2005 results reported
above.
On behalf of the board
Mark Jurgens Mireille Levenstein
Chief Executive Officer Group Financial Director 14 November 2005
TRANSFER SECRETARIES:
Computershare Investor Services 2004 (Pty) Limited
Ground Floor, 70 Marshall Street
Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
SPONSOR:
Merchant Sponsors (Proprietary) Limited
SECRETARY AND REGISTERED OFFICE:
R J Wasley
Paracon Holdings Limited
300 Kent Avenue, Randburg, 2194
DIRECTORS:
G Andrews (Chairman)*
G Bentley, S Daniels, M Jurgens (CEO)
M Levenstein, T Nzimande, J Ord*
S Sebotsa*, C Stein* * Non-executive Independent
Date: 14/11/2005 09:00:13 AM Produced by the JSE SENS Department
