South African IT resourcing and business solutions provider Paracon Holdings on Monday reported a 24 percent increase in headline earnings per share to 10.1 cents for the six months ended March from 8.2 cents a year ago.

Group policy is to declare an annual dividend or cash distribution.

Turnover was up 15 percent to R438.7-million, while attributable profit grew 24 percent to R37.8-million. Earnings before interest, tax, depreciation and amortisation (EBITDA) was up 29 percent to R43.4-million.

The group said its two divisions - Paracon Resourcing and Business Solutions – continued to capitalise on the ICT skills shortage in South Africa to deliver excellent performances for the interim period.

Paracon Resourcing performed well in line with expectations, driving revenue to R373.8-million - a contribution of 85 percent to total group revenue.

Paracon Business Solutions performed ahead of expectations and delivered strong results during the interim period, contributing 15 percent to group turnover amounting to R65-million.

Growth in this division was fuelled by the demand for networking services and the success of the black graduate programme, as well as the continued provision of skills from India.

Paracon said that as a specialised resource provider, the acute shortage of skills in the South African market represented both opportunities and challenges to the group.

"The prevailing shortage of specialised skills within our client base enables Paracon to take advantage of its entrenched position as the leading provider of ICT skills in South Africa.

"However, notwithstanding the access to skills from India, the supply of suitably skilled resources in the South African market remains a challenging constraint for the group. In addition, the increase in the emigration of skilled resources is becoming a significant concern," the group said.

Looking ahead to the second six months, margins are expected to reduce slightly from this record high, following the recent conclusion of several large contracts which are lower in margin.

The directors remain optimistic about Paracon's prospects. The positive growth trend in earnings is expected to continue for the remainder of the financial year, they said.

I-Net Bridge