Lesley Stones
28 August 2008
column
Johannesburg — SHARES in GijimaAst gained almost 10% early yesterday to touch 82c as shareholders welcomed news the technology group had more than doubled its headline earnings per share.
Posting a figure of 11,7c after last year's modest 5,54c was one of the highlights of a strong recovery process. Last year's dividend of 1,5c was raised to 3,5c because its patient shareholders finally needed to see a return on their investment, said chairman Robert Gumede.
Net profit for the year to June also doubled from R56,6m to R112,2m on revenue growth of 25% to R2,5bn. The figures were partly boosted by a foreign exchange gain of R48m caused by a weaker rand.
Cost-cutting efforts helped the operating profit margin inch up to 6,8%, with chief financial officer Carlos Ferreira saying: "It's improving all the time but we can still do better."
One figure that displeased Ferreira was an increase of R196m in debtors, leaving it with R674m in trade receivables due to a tough debt collection environment.
"We deal with blue-chip clients and the government and they are not known to be the quickest payers . As much as we love them it's difficult to extract cash out of them," Ferreira said.
Gumede said a few years ago GijimaAst was in a sorry state of declining revenue, huge losses, low morale, a skills exodus, a weak balance sheet and serious debts .
"We have turned around all the negatives," he said.
It now had R170m in the kitty, a strong balance sheet, was investing more in training and was winning major public and private sector contracts. "We have crossed the Rubicon," he said. "It's happened much quicker than expected but more is to come."
Gumede is now stepping down as executive chairman to focus on his other businesses, but will remain nonexecutive chairman. He will also remain its largest investor, with a 37% stake.
The company has streamlined its divisions around operations that include supplying hardware, enterprise resource planning software, developing industry-specific software, consultancy and networking services.
One of its major wins was the home affairs Who Am I Online tender to modernise SA's identification system. GijimaAst believes it is about to be awarded a major tender by Sanlam, pushing out two technology companies that work for the insurance house.
GijimaAst's managed services division performed less well than expected with a profit growth of 20%, dampened because many rivals offer similar services. That meant more emphasis had to be put on its professional services division, which grew its profit 82% on a revenue up just 22% because the margins are much healthier. Its professional services include systems integration and industry-specific software.
Be the first to Write a Comment!
Copyright © 2008 Business Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
