| Mon 13 Nov 2006, 9:00 | | Paracon - Audited annual results for the year ende |
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PCN
PCN
Paracon - Audited annual results for the year ended 30 September 2006
Paracon Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/008181/06)
ISIN: ZAE 000029674 Share code: PCN
("Paracon" or "the group")
Audited annual results for the year ended 30 september 2006
Highlights
Turnover up 19%
EBITDA up 41%
Headline earnings per share up 36%
Distribution to shareholders up 33%
Cash generated from operations up 32%
Cash balances of R115 million
Abridged Group Income Statement
For the year ended 30 September 2006
Audited Audited
% 30 Sep 2006 30 Sep 2005
increase R"000 R"000
Turnover 19% 635 404 533 444
Earnings before interest,
taxation,
depreciation and
amortisation
(EBITDA) 41% 55 037 39 025
Depreciation (887) (977)
Profit from operations 42% 54 150 38 048
Investment income 7 708 7 450
Share of profits from 22 -
associate
Profit before taxation 36% 61 880 45 498
Taxation (17 782) (12 415)
Attributable profit 33% 44 098 33 083
Headline earnings per share 36% 11.6 8.6
Basic earnings per share 36% 11.6 8.6
Weighted average number of
shares in issue (`000) 379 828 386 814
Number of shares in issue
net of treasury shares 370 356 383 310
(`000)
Group Balance Sheet
Audited Audited
30 Sep 2006 30 Sep 2005
R"000 R"000
Assets
Non-current assets 85 723 73 835
Property, plant and equipment 2 357 2 023
Goodwill 71 446 71 446
Investment in associates 11 655 -
Deferred taxation 265 366
Current assets 176 510 164 485
Trade and other receivables 61 362 52 086
Cash and cash equivalents 115 148 112 399
Total assets 262 233 238 320
EQUITY AND LIABILITIES
Equity capital and reserves 197 477 195 050
Share capital and premium 16 731 58 402
Non-distributable reserves 730 730
Distributable reserves 180 016 135 918
Current liabilities 64 756 43 270
Amount due to vendor 10 266 1 625
Trade and other payables 44 376 34 184
Taxation 10 114 7 461
Total equity and liabilities 262 233 238 320
Net asset value per share (cents) 53.3 50.9
Net tangible asset value per share (cents) 34.0 32.2
Abridged Group Cash Flow Statement
For the year ended 30 September 2006
Audited Audited
30 Sep 2006 30 Sep 2005
R"000 R"000
Cash flows from operating activities 48 632 43 393
Cash generated from operations 55 952 42 251
Investment income 7 708 7 450
Taxation paid (15 028) (6 308)
Cash flows from investing activities (4 212) (20 761)
Cash flows from financing activities (41 671) (15 345)
Net increase in cash and
cash equivalents 2 749 7 287
Cash and cash equivalents at beginning
of year 112 399 105 112
Cash and cash equivalents at end
of year 115 148 112 399
Group Statement of Changes in Equity
For the year ended 30 September 2006
Ordinary
share Non- Total
capital distribu- Distribu- share-
and table table holders"
premium reserves reserves equity
R"000 R"000 R"000 R"000
Balance at 1 Oct 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 1 Oct 2005 58 402 730 135 918 195 050
Treasury shares purchased (18 660) - - (18 660)
Capital distribution (23 011) - - (23 011)
Profit for the year - - 44 098 44 098
Balance at 30 Sep 2006 16 731 730 180 016 197 477
Segment Analysis
For the year ended 30 September 2006
% 30 Sep 2006 30 Sep 2005
increase R"000 R"000
Turnover
Paracon Resourcing 14% 502 302 440 346
Business Solutions 43% 133 102 93 098
19% 635 404 533 444
EBITDA
Paracon Resourcing 28% 56 462 43 990
Business Solutions 51% 16 053 10 602
Central costs 12% (17 478) (15 567)
41% 55 037 39 025
Commentary
The directors of Paracon are pleased to report a year of strong organic
growth in all divisions. The group"s results reflect buoyant
trading conditions and the significant demand for specialist ICT
skills.
Paracon Resourcing, which accounts for 79% of the group"s turnover,
recorded an excellent performance driven mainly by the demand for
ICT specialists. Turnover of R502,3 million grew 14% from the
previous year and EBITDA of R56,5 million was 28% higher. Notably
Paracon Resourcing continues to generate significant annuity
revenue and healthy cash flows, strengthening the group"s position
as a leading IT skills recruiter. The shortage of suitably
skilled resources remains a challenging constraint in the face of
ongoing demand.
Paracon Business Solutions also posted impressive growth, with turnover
up by 43% to R133,1 million and EBITDA up by 51% to R16,1 million.
In particular, the Networking division delivered a strong
performance ahead of expectations.
Financial Commentary
Turnover increased by 19% to R635,4 million from R533,4 million in 2005.
From an increased turnover base, EBITDA grew by 41% to R55,0
million with EBITDA margins improving from 7.3% to 8,6%. The
growth in headline earnings to R44,1 million from R33,1 million in
the previous year translated into a 36% growth in headline
earnings per share to 11.6 cents, from 8.6 cents.
The balance sheet remains strong with no long-term gearing. Robust cash
flows were supported by efficient working capital management which
further reduced debtors" days to 28 days. Cash generated from
operations increased to R56,0 million from R42,3 million, equating
to a 103% cash conversion ratio. Cash flows from financing
activities of R41,7 million represent the R23 million capital
distribution to shareholders in March 2006 and R18,7 million for
shares repurchased, announced on SENS on 12 July 2006.
Paracon announced the acquisition of a 34,6% stake in Nihilent
Technologies ("Nihilent"), a business consulting and technology
services company based in India, at the time of interim results on
8 May 2006. The annual financial results set out above do not
reflect the acquisition as the agreement was concluded and became
unconditional only during September 2006. The amount paid for the
stake in Nihilent in October 2006 is reflected in the balance
sheet as a vendor liability.
Black Economic Empowerment
Paracon remains committed to transformation. Our Empowerdex `A" rating
and our success in the annual EmpowerDex/Financial Mail survey is
testament to our commitment and progress. In this survey of Top
BEE Companies, Paracon ranked number 1 on JSE Limited in terms of
BEE ownership and 6th in the ICT sector and 16th overall in SA"s
Top 200 companies in terms of BEE.
Distribution to Shareholders
The board is pleased to recommend an annual capital distribution to
shareholders, to be paid out of share premium, of 8,0 cents per
share (2005: 6,0 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 Friday, 16
February 2007.
In compliance with STRATE the following dates will be applicable to the
capital distribution:
Last day to trade Friday, 2 March 2007
Trading commences ex distribution Monday, 5 March 2007
Record date Friday, 9 March 2007
Payment date Monday,12 March 2007
Share certificates may not be dematerialised or rematerialised between
Monday, 5 March 2007 and Friday, 9 March 2007, both days
inclusive.
Post Balance Sheet Events - Acquisitions
Shareholders are referred to the SENS announcement dated 26 October 2006
in respect of Paracon"s acquisition of 100% of the equity in The
Personnel Concept (Proprietary) Limited ("The Personnel Concept").
With a focus on recruitment for the Information Technology,
Finance and Engineering sectors, The Personnel Concept is the only
specialist consultancy of its kind in South Africa with a 24 year
track record in these industries. Its reputable brand, supported
by a strong management team, has positioned The Personnel Concept
as the market leader in specialised recruitment in South Africa.
The acquisition will consolidate and further boost Paracon"s
service offering in this area.
Paracon has also acquired a 25% shareholding in Mondial IT Solutions, a
comprehensive ICT solutions provider specialising in the provision
of SAP skills. This reflects a strategic investment in skills
resourcing as it enhances Paracon"s access to specialised SAP
skills for which there is high demand.
Both acquisitions were effective 1 October 2006 and were funded largely
out of cash reserves.
Outlook
The directors remain optimistic about Paracon"s prospects for the year
ahead. The market looks set to remain robust with continued demand
from our customers for skilled resources. Our business model which
is well aligned with emerging market trends, has positioned the
group to achieve continued growth. In addition, the acquisitions
of Nihilent and The Personnel Concept offer further exciting
opportunities for Paracon for the coming year.
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 and have been prepared in accordance with
International Financial Reporting Standards (IFRS) and the
Companies Act .
On behalf of the board
Mark Jurgens Mireille Levenstein
Chief Executive Officer Group Financial Director
13 November 2006
Transfer Secretaries:
Computershare Investor Services 2004 (Proprietary) Limited
Ground Floor, 70 Marshall Street
Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Sponsors:
Merchant Sponsors (Proprietary) Limited
Company 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: 13/11/2006 09:00:19 AM Produced by the JSE SENS Department
