JSE-listed ICT company, GijimaAst, benefited from better market conditions during the six months ended 31 December 2006.
The group reported a 15.1% increase in revenue to R1 billion compared to R879 million a year ago, despite cost pressures in its traditional outsourcing activities and restricted deal flow from the public sector.
Improved profitability yielded operating profit of R31.9 million (R24.3 million), an increase of 31.3%. Headline earnings per share increased by 26.3% to 1.16c per share from 0.95c in the comparable period.
Since the merger of AST and Gijima in May 2005, integration benefits have been realised through successive interventions. In the year following the merger, the software and professional services businesses were put together operationally and duplicate management layers were eliminated with sustainable efficiencies and long-term cost savings.
Integration of the Infrastructure Services business units was catalysed by the acquisition of Absa's 30% minority holding in AST Distributed Technology Services from September 2006.
During the six months, the group also followed through with the company realignment, cementing the client-centric structure and culture throughout to enhance services rendered to clients. In addition, all businesses were migrated onto a single consolidated enterprise resource planning financial system to introduce further long-term efficiencies.
John Miller, Chief Executive Officer of GijimaAst, explains: "Although we incurred once-off costs amounting to R25.6 million associated with the integration of our Infrastructure Services businesses, ongoing annual cost savings exceeding R17.6 million have been unlocked. Had we not incurred these costs, together with an exceptional STC charge relating to the DTS acquisition, the group would have reported headline earnings of 3.51c per share for the first six months of the financial year."
Less than two years after the merger, GijimaAst is now an operationally integrated business. In order to drive the efficiencies already achieved to the next level, the focus has turned to business processes and optimisation of operational systems across the group. An operationally driven margin optimisation programme will further eliminate duplication, unlocking significant further cost savings on a sustainable basis.
During the six months under review, the group also continued its focus on transformation at all levels, while retaining the skills attracted to the group in the previous year. The workforce continued to transform, with the black staff complement increasing from 26% to 30%. GijimaAst's empowerment status was further strengthened with Robert Gumede's appointment as executive chairman with effect 1 January 2007, resulting in a 54% black board of directors. It remains the most empowered company in the ICT services industry, as evidenced by the Empowerdex AA rating which was recently reaffirmed.
"We are optimistic about GijimaAst's prospects," concludes Miller. "Our confidence is based on our ability to compete on an equal footing in this highly competitive market. Our group is now fully aligned with our clients in both the commercial and public sectors, which will continue to support higher revenue flows. The margin optimisation initiatives should ensure that our profitability is optimal. As such, we are positive that the group will deliver increasing value to shareholders going forward."
Find attached a copy of GijimaAst's interim results announcement as released this morning on SENS.
The group presentation to investors will be at 10am today at the Southern Sun Grayston, corner Rivonia and Grayston drives, Sandown. A copy of this presentation will be available on GijimaAst's Web site from this afternoon. (www.gijima.co.za).
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