According to Eileen Wilton, CEO of JSE listed IT services provider Gijima, the company’s turnaround strategy has shown significant progress. This she revealed at the announcement of Gijima’s 2013 interim financial results.
Gijima has restored profitability, with earnings before interest, tax and depreciation (EBITDA) showing a positive result of R2,7 million, from a reported loss of R100 million in the comparative period up to 31 December 2012.
Wilton said this was despite continued pressure on top-line performance, resulting in a 19% drop in revenue, because of a tough market, the full impact of the expiry of two contracts from FY 2012, and certain customer delays in awarding contracts. No dividend has been declared for the period under review.
Wilton said that in the last 12 months Gijima has concluded contract renewals, in some cases with increased scope, to the value of R1,6 billion, thereby renewing more than a third of our annual annuity base. “This is an important indication that our continued efforts to attract and retain significant clients, even in a strong competitive environment, are demonstrating Gijima’s ability to provide service-delivery excellence.
“The quality of clients that Gijima has – including 14 of the top 25 JSE-listed companies – is evidence that Gijima remains a relevant and key player in the ICT industry in Southern Africa,” she said.
The company’s efficiency drive resulted in targeted savings of approximately R200 million per annum, without exceeding the industry norms in terms of staff turnover. Overhead support-structure cost savings, together with a focus on delivery efficiency, delivered significant and sustainable savings.
Lower finance charges were incurred for the period due to debenture redemptions of R 45 million in December 2012 together with higher interest rates on cash balances. Further debenture redemptions of R 24 million were made in August and November 2013.
Currency translation differences from the unwinding of foreign operations resulted in the reduction of the effective tax credit to 10%.
The reduction of the cash balances at 31 December 2013 to R124 million, from R199 million at 30 June 2013, were partly as a result of senior debenture repayments of R24 million.
The Systems Engineering division houses the company’s various project environments, including custom and packaged application solutions, as well as infrastructure projects.
The division experienced a disappointing six months, ending the period 38% down on revenue compared to December 2012. The division’s earnings before interest and tax improved by R100 million compared to the previous period, but still incurred a R30 million loss, mainly as a result of reduced revenues.