Johannesburg - The Management of embattled Gijima, which yesterday posted a loss of R210.7 million for the year to June, planned to continue rightsizing the business but its return to profitability remained uncertain, chief executive Eileen Wilton said.
Full-year losses widened from R50.5m for the previous year as the firm incurred once-off costs from events such as the disposal of the MineERP unit, which was no longer considered core to Gijima’s main business, and the issue of a R150m rights offer earlier this year.
Wilton said operating losses incurred in the first six months of the year amounted to just under R50m and narrowed to about R10m during the second half.
She said about two-thirds of Gijima’s expenses were people related. During the year, the company cut 500 jobs to reach a staff complement of 2 000. This would be trimmed further by reducing headcount in back-office services such as human resources and finance, although Wilton could not yet provide figures. “We’re feeling satisfied that we’re on the right track.”
Group revenue declined to R1.85 billion from R2.21bn for the comparative period. Liesel Tweedie, the interim chief financial officer, said Gijima hoped to be profitable by year-end in 2014.
Despite poor results, it appeared that investor confidence in Gijima may be returning if the 7.53 percent rise to lift the share price to R1 by the close of trade on the JSE is any indication. The stock had declined 74.06 percent for the year to date by mid-morning yesterday, while the JSE all share gained 12.28 percent in the year to date.
But at least one equity analyst said that there was no quick fix to Gijima’s challenges.
Dirk Noeth, an analyst at Avior Research, said: “Rightsizing may help a bit, but what [Gijima] needs really is to stem the decline in revenue without having to take on risky contracts which threaten the liquidity of the entire business.
“For that it needs to regain the confidence of the market, both public and private sector, that the business will be able to deliver on service contracts, now and in future. That remains the key challenge and unfortunately there’s no quick fix to this,” Noeth added.
Wilton said the turnaround plan had focused on gaining revenue, retaining existing customers, decreasing costs and dealing with a subcontractor that was not performing. Gijima has applied to liquidate the supplier.
During the year Gijima did not lose clients and its order book gained more than R3bn worth of business.
Wilton said the firm would look to invest in new age offerings such as its mobility platform. The firm was focusing on integrating this offering with its end user computer offering. Gijima had also launched a new data security offering.
A new chief executive will be announced next week. - Business Report