Challenging year for Paracon

IT resourcing and solutions group Paracon Holdings says the year to 30 September was its most challenging period since listing on the JSE in 1999.

"The year was characterised by ongoing difficult trading conditions and a decrease in corporate spending which impacted the group`s results," says CEO Mark Jurgens, who describes the overall results as disappointing.

Turnover fell from R445.43 million to R344.83 million, although on a continued operations basis, the decline was from R387.72 million. The profit for the year increased from R3.35 million to R7.39 million, but headline earnings per share plunged from 9.8c to 4.2c.

The group reports within two divisions - Paracon Resourcing, which accounts for 78% of turnover, and Paracon Business Solutions.

"The financial year has been challenging for Paracon Resourcing, with a drop in the number of billable contractors in the first quarter, prompting a speedy response to changing market conditions," Jurgens says.

"The number of contractors stabilised over the last nine months, however, and our major clients remained supportive, despite evident margin pressure."

Paracon Business Solutions, however, had a disappointing year. "The challenging market with longer sales cycles, a significant bad debt, margin pressure and overruns on projects were the major contributors for the losses incurred in the division," he says.

He says the group expects the challenging market conditions to continue for some time. "While this will place some constraints on organic growth, Paracon has impressive intellectual capital in the ICT space and remains firmly entrenched as the strategic ICT partner of choice." He says the current cash position will enable Paracon to take advantage of any acquisition opportunities.

Related story:
Paracon earnings to disappoint