14 November 2006

South Africa: Paracon Benefits From 'Strong Demand' for IT Skills

Johannesburg — TECHNOLOGY staffing supplier Paracon has pushed up its profit by more than a third after enjoying a "significant demand" for the hi-tech skills it places in both permanent and contract jobs.

Paracon's resourcing division generated 79% of its overall R635m turnover for the year to September 20, which was up 19% from R533m a year ago.

Attributable profit jumped from R33m to R44m and headline earnings a share of 11,6c were up 36% from 8,6c.

Its profit margin rose from 7,3% to 8,6%, triggering a capital distribution of 8c a share, up from 6c last year.

Paracon was the largest supplier of skilled technicians to the private sector and was well positioned to capitalise on growing demand, said CEO Mark Jurgens.

Global trends showed many technicians were looking for flexible contract work to gain wider experience and improve their skills, and Paracon could offer those opportunities, Jurgens said.

The downside was a national skills shortage that could inhibit Paracon's growth, he said, so the company had made some acquisitions to alleviate that.

Last month it had acquired rival recruitment specialist The Personnel Concept to boost Paracon's offerings to existing clients and to enable it to tackle previously untapped opportunities, Jurgens said.

At the close of its financial year Paracon also bought 34,6% of India's Nihilent Technologies so some of its work can be carried out offshore. Nihilent should contribute to Paracon's results next year by giving it access new markets and skills, Paracon said.

Paracon also bought a minority stake in Mondial IT Solutions last month to increase its skills in enterprise resource planning software developed by the German developer SAP.

A strict focus on cash management and strong cash flows has left R115m in cash on hand, despite paying out R23m in a capital distribution to shareholders in March and repurchasing shares for R18,7m.

Jurgens expects organic growth to continue as trading conditions remain buoyant.

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