Nompumelelo Magwaza
DESPITE posting another loss from continuing operations of R152.4 million for the year to June from R293.2m in 2013, Gijima chief executive Eileen Wilton said the IT group had turned a corner and was ready for growth and profit-making strategies.
Wilton said that although the loss was being reduced, “it was not reducing fast enough”.
Shortly after releasing its results yesterday, Gijima announced its plan to raise R100 million through a rights offer to ensure that it had sufficient working capital without incurring additional debt.
Gijima said proceeds from the rights offer would be used to recapitalise the company to ensure compliance with all the securitisation covenants, as well as to settle a bridge loan, among other things.
The announcement coupled with the group’s poor performance sent Gijima’s share price into a decline. It fell as much as 31.48 percent.
The shares ended the day 24.07 percent weaker at 41c.
“The rights offer is not to do with shoring up our cash flow. It is to do with growth,” Wilton said. She added that the firm had a couple of projects under its belt and did not have sufficient working capital to manage them.
Wilton expressed her disappointment with the group’s top-line figures.
Gijima’s revenue dropped by 17 percent to R1.52 billion.
“The turnover figures are disappointing and one of the key factors that impacted on these figures was a knock-on consequence of the mining industrial action earlier this year,” she said.
About 70 percent of Gijima’s revenue comes from the private sector, of which 60 percent comes from the mining industry. The public sector contributes about 30 percent towards the firm’s revenue.
“Unfortunately that was a disappointing outcome… and something we could not do anything about,” she said.
Wilton said that when she went to the markets a few years ago, she had promised them that the company would reduce its loss-making position. Gijima had achieved that through the 69 percent improvement in earnings before interest, tax, depreciation and amortisation (Ebitda).
Wilton said she had also delivered on the promise that Gijima would drive a savings agenda to ensure that costs were in line with revenue.
“And we have delivered on the R200m worth of savings, which we have achieved in this reporting period.”
Wilton said Gijima was approaching the second year of its three-year turnaround strategy, and projected that the group could at least come with cost savings of about R60m going forward.
Lehlohonolo Mokenela, an ICT research analyst at Frost & Sullivan, said Gijima had gone on an extensive turnaround strategy which, despite declining revenues, had seen a 69 percent improvement in Ebitda, compared with 2013.
“Having seemingly steadied the ship, and [with] further growth expected for cloud and data centre services, Gijima should begin to focus more on driving revenue growth.”
Mokenela added that Gijima should consider diversifying its revenue sources more evenly across different verticals.