Johannesburg, 14 May 2002
IT services and consulting company, Paracon, has seen some growth for the six months to March, despite the difficulties experienced by the group`s US operations.
The listed company has grown its revenue on its continued operations by 21% to R235.4 million.
Headline earnings also grew by 9% to 5.2c per share and net asset value came in at 50c per share.
"We are satisfied with our results in these tough market conditions. Our local operations, especially our Business Solutions division in SA, produced pleasing results," says Paracon CEO Mark Jurgens.
"Unfortunately, we were disappointed with the performance of our US subsidiary which affected our overall group margins."
The group`s US subsidiary, Mercury Technologies, was severely impacted by the 11 September attacks, as its operations are in close proximity to the site of the Twin Towers. Its client base largely comprised financial institutions working in and around the area, all of which suffered disruptions to their businesses.
However, Jurgens says the group has seen a moderate improvement at Mercury, which has managed to turn a "small profit" for March, and management says there is an improved outlook for the next six months.
According to Jurgens, the group has increased its focus on working capital management, resulting in an improved debtors period from 47 to 42 days.
The performance of Paracon IT Services has been stable in the past six months and Jurgens says although no acquisitions were made during the past six months, IT Services has strengthened its brand in its preferred market segments.
"The majority of clients are large blue chip companies that have curtailed their IT spend over the past period. Despite this, IT Services continues to generate a large annuity-based revenue stream," he says.
Cash generated from operations increased by 55% to R32.9 million and overall cash on hand stands at R80.2 million.
Paracon management says the large cash balances have made it necessary to review its standing on dividend pay-outs and investors can expect an announcement when the group`s year-end results are released.
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