Johannesburg, 14 Nov 2001
IT services and business solutions company Paracon Holdings has reported a 55% increase in turnover for the year to 30 September 2001, although its operating margin fell from 13.29% to 9.27%.
Financial director Mireille Levenstein says the margin was impacted by the results of San Francisco-based PCN, which was significantly affected by the downturn in the US economy.
PCN`s results were included up to 30 June, when Paracon sold its stake in the company. The US company contributed to a 24% decline in revenue from discontinued operations.
The margins were also affected by the first full-year inclusion of SilverLine, a high-revenue, low-margin company acquired the previous year.
Levenstein says the group is continuing its efforts to improve margins in the medium term.
In addition to the sale of the PCN stake, the group`s stake in New York-based Mercury Technologies was increased to 61% and its results have been consolidated in the group`s figures.
Mercury was affected by the World Trade Centre attacks on 11 September, as it is in the same area. Because the area was closed down for a large part of the month, billing and debt collection could not go ahead.
Levenstein says the 55% rise in turnover is mainly attributable to SilverLine`s inclusion, as well as local growth.
While the US now accounts for 23% of revenue (31% previously), the group expects that to drop to about 20% going forward.
Levenstein says the reason headline earnings per share increased only marginally is because the comparative period included the run-up to Y2K, "when we did very well".
CEO Mark Jurgens says the group is pleased with the results, which were achieved in a period which he describes as the toughest Paracon has seen.
He says the group`s prospects remain strong with a consultant base offering an extensive range of skills and experience.
He adds that he is confident the group will continue to create shareholder value in coming years.
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