JSE-listed Paracon Holdings says it has abandoned plans to acquire the contracting and services business of Time Quantum Gauteng.
At the same time, the group says its results for the six months to 31 March are likely to show a 30% to 40% increase in headline earnings per share over the same period a year before.
Paracon says in a trading update issued late yesterday that it is experiencing improved trading conditions, specifically in the Paracon Resourcing division.
For the six months to March 2003, Paracon achieved a 28.6% increase in headline earnings per share to 2.7c.
This means the group expects earnings of 3.5c to 3.8c a share for the latest interim period.
It adds that since goodwill is no longer amortised, as a result of the adoption of International Financial Reporting Standards 3, basic earnings per share are expected to be 140% to 160% higher than the 1.5c of the prior-year period.
A shadow was cast over the acquisition of Time Quantum Gauteng at the end of November last year, when the original option to buy the business lapsed and Paracon extended it.
Paracon announced in June that it had acquired Time Quantum Consulting`s Cape Town-based IT contracting and services business for R11.1 million and that it had been granted an exclusive option, exercisable on or before 30 November, to buy the Gauteng services business.
The price tag for the Gauteng business was R34.5 million.
It explained that the option was entered into because certain undisclosed criteria needed to be satisfied before the option was exercised.
Paracon said in December that it had extended the option because Time Quantum Gauteng had been "unable to resolve certain issues satisfactorily".
The group now says it will not exercise the option as Time Quantum Gauteng was unable to satisfy its requirements.
"The directors of Paracon believe that it is in the best interests of shareholders not to acquire Time Quantum Gauteng under these circumstances," it adds.
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