Paracon to be more 'conservative'

By Staff Writer for Paracon

Johannesburg, 11 May 2009

IT solutions and staff resourcing business Paracon Holdings has decided to become more conservative with its finances, following an 8% drop in operating profit.

The company which offers released its interim results for the six months ended march 2009, this morning, with several bleak figures on the board. Operating profit dropped from R42.6 million to R39.3 million, and EBITDA decreased by 7%, from R43.4 million to R40.4 million.

The company attributes the EBITDA drop to a lower contribution by its Business Solutions Division, which deals with business software modelling and networking. “The board expects market conditions to remain challenging in the short-term and, therefore, has adopted a conservative view for the remainder of the year to 30 September,” it notes.

Despite the lower profit, the company still upped its turnover figure by 6%, to R464.5 million from R438.7 million in the same period last year. It is confident its public sector business will help boost its financials over the next year.

“Paracon remains well-placed to take advantage of an upturn in demand. The group's excess cash enables Paracon to assess potential acquisition opportunities that may arise from market consolidation,” explains the company's results statement.

One possible consolidation opportunity may come in the form of ailing IT company Faritec.

Paracon says not only does it have a solid cash balance, it also has been growing its annuity revenue base, which by all analyst accounts could be the income that keeps a company afloat during the troubled economic times. “The directors are confident that Paracon is positioned to emerge strongly from the downturn.”

The company's headline earnings per share fell by 21%, to 8c per share, from last year's 10.1c per share. Paracon did not declare a dividend for the half year.