Paracon net profit up 46%

By Staff Writer for Paracon
Johannesburg, 07 May 2007

Recruitment and business solutions provider, Paracon, has seen strong growth for the half-year ending 31 March, with the company delivering 26% growth in turnover and 46% growth in net profit.

Turnover for the period grew from R304 million to R382.4 million, with net profit increasing 46%, to R31 million.

Earnings before interest, taxation, depreciation and amortisation (EBITDA) increased 30%, to R33.6 million, reflecting an improved EBITDA margin of 88%.

In line with an earlier trading update, headline earnings per share rose 50%, to 8.2c from 5.5c at this time last year, boosted by strong performances across all divisions.

CEO, Mark Jurgens, says organic growth accounted for a large portion of Paracon's success during the period.

"Demand for IT specialists continues unabated across all industry sectors as a result of a thriving economy that is driving business development and expansion."

Jurgens says Paracon's recent acquisition of The Personnel Concept and the group's 34.6% share in India-based Nihilent Technologies, contributed to results ahead of expectations.

The company's two divisions, Paracon Resourcing and Paracon Business Solutions, reported turnover growth ahead of budget, with the resourcing business accounting for 88% of the group's turnover. This translates to a contribution of R334.6 million.

Paracon Business Solutions also performed well and contributed R48 million, or 12%, of group turnover.

Financial director, Mireille Levenstein, says the capacity to service increasing demand for specialist networking skills helped drive the division's performance. "Nihilent partnered with Paracon on certain key client projects, which alleviated the challenge of local skills availability to an extent."

Levenstein adds that cash from operations was significantly higher than the previous half-year, with an increase of 78%, to R47.4 million. Its total cash outflows of R59.7 million covered vendor payments for The Personnel Concept and Nihilent, as well as the annual distribution to Paracon shareholders. At the end of the period, Paracon had R94 million cash-on-hand, and no long-term liabilities.