Paracon powers ahead with strong interim results

Paracon Holdings Limited (Paracon), a leading provider of IT services and solutions, today announced its interim results for the six months ended June 2000. Paracon achieved excellent results with headline earnings per share up 39% to 4,3 cents compared to 3,1 cents for the same six month period in 1999.

Turnover for the six months under review amounted to R132,4 million, compared to R55,5 million in the previous year, representing a 138% increase. Operating profit before interest and taxation increased 95% to R17,7 million compared to R9,1 million.

Commenting on the results, Mark Jurgens, CEO of Paracon, said, " We are very pleased with these results as they further entrench the group as a leader in the large and fast growing sectors of the IT industry, namely staffing and outsourcing."

The group achieved solid growth from their international operations, which contributed 36% to turnover. Operating margins are lower offshore than in South Africa and this resulted in a decline in operating margins for the group to 13,35%.

"This offshore initiative is integral to the future of the group as it not only provides a major revenue stream, but also enables effective skills transfer, with opportunities for IT professionals to gain experience in the overseas subsidiaries," explained Jurgens.

Paracon`s balance sheet remains strong with cash reserves in excess of R87,6 million, providing the group with a solid platform for growth, both organically and through acquisition.

"The group has adopted a strict quality policy and only focus on the acquisition of companies which are strategically positioned and complementary to Paracon`s operations. In-depth financial and operational reviews are performed to ensure quality of earnings and growth potential before the acquisitions are made," added Jurgens.

Acquisitions during the past six months included 51% of Mercury Technologies, an IT solutions company operating in New York. This was effective from 1 February. Paracon also acquired 100% of DPCC, an IT services company, effective from 1 January 2000.

"Our Mercury acquisition provides complete Internet-based solutions, which include application developments focusing on Java, world-class web designers and database design and implementation. It also enables Paracon SA to deliver offshore development from within South Africa, ensuring Rand-based development costs."

The recently formed CRM division is making inroads in this competitive arena through the SalesLogix business partner program. Jurgens believes that this division is well positioned to leverage its existing expertise in systems integration, outsourcing, e-commerce development and project management.

The US subsidiary, Paracon International, is in the process of building a support infrastructure to facilitate the distribution of the group`s proprietary recruitment software in the US market. It is the group`s intention to continue expanding its presence offshore, both organically and by acquisition.

"Given the performance of each division, we are confident that the group will continue on its strong growth path in the future," said Jurgens.