Gijima turns its fortunes around

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Independent Newspapers

Chief executive Eileen Wilton says Gijima is pursuing new markets in Africa. Photo: Simphiwe Mbokazi

Johannesburg - Turning around a company that experienced explosive growth, then saw its share price tank, becoming a penny stock in the market, is no easy task.

The events that occurred at technology group Gijima almost a year-and-a-half ago – when it made an operating loss of R210 million – have been a catalyst in driving a new turnaround strategy to ensure the company, which has a turnover of about R1.8 billion, returns to profitability.

In an interview with Business Report yesterday, chief executive Eileen Wilton said she had to ensure that the group got its numbers right by slashing costs. That move is now yielding a saving of about R20m a month. Essentially, the costs that the company incurs are made up of employees and outdated leases.

According to Wilton, the company has managed to gain benefits from downsizing its staff complement without exceeding the industry norm, while it managed to retain 100 percent of its private sector customers, which make up about 70 percent of the group’s business engagements.

A core aspect of the group’s turnaround strategy was the retention of its private sector customer base. “We have recorded 100 percent of annuity renewal… so we have done well in customer retention,” she said.

Gijima has concluded several contract renewals (over R3bn) in the past 12 months, renewing more than a third of its annual annuity base.

“These renewals have been won against competing suppliers through tender procurement processes.

“In addition to this, new contracts have recently been awarded, which is an important indication that our continued efforts to attract and retain significant clients, even in a strong competitive environment is successful,” she said.

The company has appointed a new sales director and chief financial officer who will look at starting a major transformation drive to bring the company back to high-growth levels.

As to whether the turnaround has yielded tangible results, Wilton argued that it had, pointing to the company’s first-half numbers reported in March.

Gijima has also been embroiled in various lawsuits involving sub-contractors that are suing the company for millions of rands over unpaid invoices. This has fuelled speculation in the market that the company may have been experiencing cash flow problems.

Koba IT Solutions and Isiqina Property Holdings instituted action against Gijima in 2011.

Wilton said the company had defended both matters and a trial date had not been set.

In the Anderson Scanning Technologies (AST) matter, Wilton said Gijima had been successful in its final liquidation application and the judgment in the South Gauteng High Court was awarded in its favour for a final liquidation order of AST.

“There are, therefore, no cash flow implications for Gijima who was awarded costs of the intervention application brought by Andrew Anderson.

“Gijima’s turnover is approximately R1.8bn and, with due respect, a dispute of about R800 000 is not about to bring cash flow problems to Gijima,” she said.

She said the company’s Africa strategy, broader macro-economic environment and growth for the future needed to be taken to account.

“In addition to driving the growth of Gijima in our tough local market, we also are looking for growth opportunities north of our borders into Africa, where those economies are growing at a faster rate,” Wilton said.

She revealed that the strategy to expand in Africa would replicate services and solutions that the company had excelled in locally in countries north of the border.

“Business problems we solve in South Africa are often not unique, and although they have unique regional or country elements to them, they are common. Therefore, it is relatively simple to take these solutions and replicate them in other geographies.

“This strategy of replicating existing business solutions is very clear and we will utilise the IP and skills of South Africans to deliver these business solutions into Africa,” she said.


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