JSE-listed outsourcing company Gijima says its headline and earnings per share loss will narrow in the year to June.
In a trading update, the company says basic earnings per share and headline earnings per share for the 12 months are expected to improve to a loss of between 5c and 5.5c from last year's reported basic loss per share of 21.84c and headline loss per share of 21.73c.
Both figures were impacted by a number of once-off items totalling 4.66c a share, which included optimisation costs and costs associated with its implementation of a new client-centric model.
Gijima's new client-centric business model involves deep restructuring of the company's operations. It is part of Gijima's Vision 2025 plan, which it initiated in early 2011, in a bid to become more competitive.
Headline and earnings per share will also be affected by the loss of a contract and insourcing of a “significant portion” of a deal it had with Absa.
Gijima lost about half of an Absa contract earlier this year, and also lost out on a large portion of a State IT Agency deal to provide desktop services to the police. Last year's headline and earnings per share also includes a once-off expense related to Gijima's settlement with the Department of Home Affairs over the “Who Am I Online” contract.
Gijima was awarded the R2.3 billion deal in 2007 to modernise the department's IT infrastructure and systems. In April 2010, the department cancelled the deal, arguing the contract was invalid. Gijima reached a settlement with the department in March last year.
Settling with the department resulted in Gijima incurring R374 million in costs, of which R263 million related to home affairs debt that was written off. In addition, the company wrote off another R80 million in future discounts, which it promised the department, and another R30 million in expenses related to the settlement.
Earlier this month, Gijima said it was in the process of wrapping up the terms of agreements relating to the potential disposal of its mining technology and consulting businesses - MineRP - to a consortium led by RMB Corvest, a subsidiary of RMB Private Equity.
Gijima says MineRP is not core and requires considerable investment to maintain its competitive position.
Gijima expects to release its results around 26 September.
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