Gijima yesterday announced that its multi-year turnaround strategy is showing significant progress, with a net loss for the full-year 2014 reduced substantially to R89-million from R290-million in 2013.
The 69% improved performance in earnings before interest, tax depreciation and amortisation (EBITDA) over the comparable reporting period, was delivered following the implementation of a multi-year turnaround strategy announced at the beginning of the 2014 financial year.
“The turnaround strategy is showing significant traction and as we have stabilised the business, the focus can now be on ensuring revenue generation is at the required levels.” CEO Eileen Wilton, says at the announcement of Gijima’s 2014 full-year financial results.
“The efficiency drive has resulted in the achievement of targeted cost savings of some R200-million per annum. This was achieved without exceeding the industry norm in terms of staff turnover. Strong focus continues to be applied in all areas of the business to ensure improved profitability and to provide a sound basis for growth, and in particular the development of a high-performance sales environment,” she says.
Gijima renewed multi-year annuity contracts to the value of R1,6-billion and in some instances an increased in scope was achieved. “This is an important indication that the continued efforts to retain significant clients, even in the face of stiff competition, demonstrate our capability and they are a testament to our ability to provide service delivery excellence,” says Wilton.
While Gijima’s financial performance continues to improve, the company’s revenues were 17% down compared to the prior year. A continued tough market, the full effect of the expiry of two significant contracts from FY2012 and industrial action in the mining sector which forms a material part of Gijima’s business has negatively impacted the company’s top line. In addition to this, customer delays in awarding contracts has also impacted negatively.
No dividend has been declared for the year.
During the year, Gijima incurred lower finance charges due to a debenture holding redemption following a redemption of R41-million.
With the appointment of Robert Gumede as Executive Chairman, and Eileen Wilton as permanent CEO, the Group has stabilised the executive management team by appointing Ernst Roth as CFO; Maphum Nxumalo as Chief Operating Officer; Bill Hoggarth as Chief Sales Officer and Bheki Khumalo as Human Resources Executive.
“The turnaround activities are progressing well and this is reflected in the numbers,” says Wilton, adding that the company was now ready to explore growth opportunities on the rest of the continent.
As part of its strategy to provide stability, Gijima’s lead shareholder Guma is concluding a fully underwritten R100-million rights offer. In a show of confidence in the business, other shareholders have given irrevocable undertakings to support the rights offer. Furthermore, Gijima has renegotiated a debenture capital repayment holiday for two years, along with new covenants in line with the turnaround strategy.
“The rights offer is a responsible business decision to fund capital expenditure for growth and working capital for large projects and not to repay debt. The capital we are seeking to raise will allow us to continue to deliver on our promise, ultimately enabling the company to carry on building a profitable business, which provides us with a sound basis for growth,” Wilton says.
