Gijima continues downward spiral - CNBC Africa

Gijima continues downward spiral


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Gijima continues to post losses. PHOTOS:

Although slight improvements have been noted for the year ended 30 June 2014, the group reported a  full year loss of 152.4 million rand for the period, compared to a loss of 210.8 million rand in 2013 while revenue dropped by 330 million rand to 1.52 billion rand, a 17 per cent decrease.  

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) improved by 69 per cent from a loss of 290 million rand in 2013 to a loss of 89 million rand this year.

(WATCH VIDEO: Gijima's share Price Tumble )

Headline loss of 77 cents per share was posted, an improvement from 5.16 rand per share last year.

“Sixty per cent of our private sector revenue is generated from the mining and industrial sector, and the group was negatively impacted by the series of mining and manufacturing sector issues over the last year. The revenue is also reflective of the full effect of the expiry of two significant contracts from 2012, as well as customer delays in awarding contracts,” said [DATA GIJ:Gijima Group Limited] in a statement.

No dividend has been declared for the year.

Gijima, with black percentage ownership at 75.97 per cent, is one of the top 20 most empowered Johannesburg Stock Exchange (JSE) listed companies, and offers application services, infrastructure configuration and implementation as well as end to end managed outsource services.

The group said however that over the period, 1.6 billion rand was received from key clients through contact renewals indicating that client retention remains a driver of growth for the company.

Gijima achieved a cost saving of 200 million rand per annum through its turnaround strategy without exceeding the industry norm in terms of staff turnover.

(READ MORE: Gijima looks to turnaround strategy to improve results)

“The turnaround strategy is showing significant traction and as we have now stabilised the business, the focus can now be on ensuring revenue generation is at the required levels,” continued the statement.

“Strong focus in all areas of the business continues to ensure profitability and to provide a sound basis for growth, and in particular the development of a high-performance sales environment.”

The company is also planning a second rights offer to raise 100 million rand from shareholders, which will be fully underwritten by Gijima’s chairman, Robert Gumede’s Guma group of companies.

“Service delivery excellence remains the bedrock of the organisation, and significant efforts are being made to build on this to ensure that the material improvements to date are continued. New markets are also being explored, specifically in Africa and in state-owned entities which are beginning to show traction,” concluded the group.

“The turnaround strategy is showing significant progress in terms of cost reduction and a return to profitability. Gijima continues to attract and retain top talent.”