PARA­CON HOLD­INGS

Finweek English Edition - - Companies & Markets - BELINDA AN­DER­SON

SKILLS SWEET SPOT DE­SPITE THE ECO­NOMIC SLOW­DOWN, in­for­ma­tion and com­mu­ni­ca­tion tech­nol­ogy skills provider Para­con plays in a sweet spot that – com­bined with an­nu­ity in­come and a busi­ness model that can scale up – should see it rel­a­tively cush­ioned from the worst of the cri­sis. For the year to Septem­ber, Para­con re­ported head­line earn­ings per share growth of 19% to 20,9c, be­fore first time and one-off secondary tax on com­pa­nies costs re­lated to share­holder dis­tri­bu­tions and share buy­backs that saw R99m ef­fec­tively paid back to share­hold­ers dur­ing the year (R61,7m in buy­backs and R37,3m in cash dis­tri­bu­tions).

HEPS of 19c (af­ter the STC costs) put Para­con on a his­toric mul­ti­ple of 6,9 times. Turnover grew by 16% to R916,3m, while Para­con con­tin­ued to gen­er­ate good cash from op­er­a­tions: R100m for the year.

Para­con op­er­ates two di­vi­sions: re­sourc­ing and busi­ness so­lu­tions. The re­sourc­ing divi­sion ac­counts for 85% of rev­enue. But al­though the busi­ness so­lu­tions divi­sion brings higher mar­gins to the ta­ble, its op­er­at­ing mar­gins were down from 15,3% to 13,8% over the year, while re­sourc­ing’s mar­gins im­proved from 11,2% to 11,6%, tak­ing the to­tal to 9,3% from 9,2% pre­vi­ously. OP­POR­TU­NI­TIES • Con­tin­ued de­mand for spe­cial­ist skills. • To pick up ac­qui­si­tions at good prices in cur­rent cli­mate. RISKS Un­cer­tainty re­lat­ing to cur­rent eco­nomic jit­ters and the im­pact on its clients. In­dian as­so­ciate com­pany Ni­hi­lent per­formed worse than ex­pected and the rand’s de­val­u­a­tion af­fected Para­con’s share of that. Para­con says it’s “con­cerned” about Ni­hi­lent’s per­for­mance.

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