Paracon Holdings maintained a reasonably performance in the six months ended 31 March 2009, with group turnover up 6% to R464,5-million from R438,7-million last year.
EBITDA decreased by 7% to R40,4-million from R43,4-million, mainly as a result of the lower contribution from the Business Solutions division.
The decrease in high margin permanent placements impacted margins slightly with the EBITDA margin on revenue of 8,7% down from the 9,3% achieved for the full year ended 30 September 2008.
Investment income decreased in line with expectations to R4,5-million from R6,6-million in the comparative period due to the reduction in interest rates and the reduced cash balances as a result of the share repurchase at the end of last year.
In terms of the share repurchase, 36,3-million shares were repurchased at a total cost of R54,2-million from Paracon's BEE partner WDB Investment Holdings in a strategic BBBEE initiative.
The contribution from associates – India-based Nihilent Technologies and South African SAP services provider Mondial IT Solutions – was disappointing. In particular, Nihilent suffered weak trading conditions in the period. Although Nihilent managed to post an operating profit, the impact of the volatility in foreign currency movements during the period resulted in the inclusion of significant foreign exchange translation losses in Nihilent's results.
Paracon Resourcing, which comprises both contracting and permanent placement income, contributed 87% of the group's turnover for the period.
Paracon's core competence – the contracting business – has remained stable with strong client demand.
However, permanent placements have seen a decline in demand, in addition to a longer sales lead time as clients curtail their expenditure. In particular The Personnel Concept, which focuses on the placement of high-end financial services candidates, performed below expectations.
Overall the division's turnover increased by 8% to R403,8-million from R373,8-million.
The decrease in permanent placement income affected EBITDA margins with the division achieving EBITDA of R45,2-million on a par with the R45,1-million
in the comparative six months to 31 March 2008.
Business Solutions, although stable, performed slightly below expectations during the period, contributing R60,6-million, or 13%, to group turnover and R7,6-million to EBIDTA.
Lower contributions from the professional services and networking operations accounted for the majority of the decline. In particular, the devaluation of the rand during the period reduced income derived from the provision of Indian skills and has limited the opportunities in this area.