JSE-listed outsourcing company Gijima aims to raise R150 million in a bid to ensure it has sufficient working and investment capital for the future.
Interim CEO Eileen Wilton says Gijima needs to invest in new and fresh technology, as well as skills.
Last Thursday, Gijima released its interim results for the six months to December, and said it ended the period with cash and cash equivalents of R89 million, compared with R200.9 million in the six months to December 2011.
Gijima made an operating loss from continuing operations of R123 million in the six months to December, partially due to pressure on its top line. The company, which recorded a gain of R33 million in the year-ago period, says it is positioned for strong growth after a challenging operational period. In the first half of the year, revenue from continuing operations was down 23%.
Positive stance
Wilton is "very confident" Gijima is a strong company after completing its turnaround strategy. Wilton took over the reins last October, pending a replacement for Jonas Bogoshi, who resigned in September.
Its services business is delivering the appropriate margins, and 90% of income from that unit is annuity, Wilton adds. However, the unit saw revenue 24% lower year-on-year due to the loss of two deals.
Although not naming the deals, in calendar 2012, Gijima lost the South African Police Service contract for desktop computers, and also experienced a decline in income due to Barclays' decision to in-source more than half of its contract with Absa.
Cleaning up
While the outlook is good, there have been issues Gijima has needed to get right, notes Wilton. She says its Vision 2025, which moves the company to being more client-centric, takes Gijima from being a firm that "flogs" things, to one that targets specific offerings to its customers.
However, the new model has taken a while to settle and the sales team has needed to develop a new way of going to market, explains Wilton. She says there has been a lag in the numbers, but Gijima is building up steam and has attracted good talent.
The cost base has been adjusted to match the revenue stream, says Wilton. She says a thorough review of the system engineering unit has been completed and has been cleaned up.
The systems engineering division experienced a disappointing six months and performed well below expectation. Revenue dropped 61% and a loss of R132.8 million was recorded against last year's break-even level.
Its large project, which Wilton did not name, earns revenue based on milestones, and this will start showing in the next financial year.
Wilton adds that Gijima is focusing on revenue generation, and has closed units that do not contribute to the top line. She could not give forward-looking indications of revenue and profit growth, but is confident Gijima will continue to be strong.
Gijima's turnaround strategy is starting to gain traction in terms of meeting revenue and cost-reduction targets, says Wilton. In the past two quarters, the company has signed two outsourcing deals, each worth more than R150 million, one for three years and one for five, she adds.
Wilton notes that, in the deal range of between R20 million and R50 million, Gijima has secured orders worth almost R1 billion. She adds that the turnaround may take some time to filter through into Gijima's numbers.
The solutions division recorded revenue growth of 31%, while operating profit improved 83%.
Meanwhile, Gijima has also announced that Nolitha Fakude has resigned as a non-executive director due to "increased work-related commitments in her capacity as an executive of a large, global group and limited availability".
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