GijimaAst bucks trend

By Nicola Mawson, Contributing journalist

Johannesburg, 25 Aug 2009

Listed outsourcing company GijimaAst has delivered a solid set of results for the year ended 30 June, bucking the general trend in the ICT sector.

GijimaAst says revenue grew 20%, to R3 billion. Earnings per share were down slightly from 11.63c, to 11.39c. But, adding back the foreign exchange loss of R51 million, normalised earnings per share grew 88%, to 15.14c.

The company grew organic revenue 20% and operating profit 82%, which bolstered its operating margin to 9.4%, an improvement on the previous year's margin of 6.2%. At employee level, revenue improved 11% and operating profit 69%.

Its focus on containing cash, which it started early in the year, improved its cash position from R171 million, to R484 million. As a result of its performance, the company boosted dividends by 43%, to 5c a share.

“The economic downturn has had a varying impact on different parts of the business. The overall impact has not been as severe as in other parts of the industry due to the nature of the group's revenue profile and especially the group's high percentage of long-term services contracts,” GijimaAst says.

However, business units that have high exposure to the hard hit mining sector, such as GMSI, have come under pressure. In addition, the units that are dependent to a large degree on product sales, such as Distributed Computing Services and Unified Communications, have seen revenues hit by the downturn.

Paying dividends

A year-and-a-half ago, GijimaAst decided to consolidate the group into fewer business units. This year's results are the first reported after the business was realigned. “The increased margins confirm the effectiveness of these structural improvements,” the company notes.

During the year, it focused on growing its presence in the public and financial services sectors, as well as expanding its offerings to its major outsourced clients, boosting the higher margin professional services business and improving efficiencies in managed services by introducing new delivery models.

As a result, the public sector contributed 44% of revenue, up from 38% last year. The professional services division increased its revenue contribution from 43% to 51%, and margins expanded in both divisions.

During the year, GijimaAst invested an additional R4 million in the roll-out of the IT Infrastructure Library framework and R19 million in the implementation of a SAP enterprise resource planning system.

GijimaAst says companies are moving towards outsourcing and - while the ICT industry is not sheltered from the economic downturn - it is well-positioned to take advantage of the shift.