There is strong evidence of technology refresh among large companies, but the focus is on hardware and conditions remain competitive in the services arena, says GijimaAst CEO John Miller.
Commenting on the group`s results for the six months to December, which were released this morning, Miller says: "Our clients` requirements are evolving towards value-based business models and there is a drive towards improved business processes to maintain their own differentiation.
"Technology is seen as the enabler rather than the driver and infrastructure is increasingly being viewed as an integrated platform. This is putting pressure on service providers to offer integrated technology capability."
GijimaAst has reported an 84% decline in fully diluted headline earnings per share (HEPS) to 1.07c from 6.58c for the same period a year before. Actual HEPS fell from 12.04c to 1.07c.
The prior-year results have been restated to comply with international financial reporting standards, which the group is adopting for the first time, having reported according to South African generally accepted accounting standards until now.
Revenue from continuing operations rose from R736.28 million to R879.5 million, but gross profit fell from R209.32 million to R169.06 million. Operating profit of R24.32 million compared with a previous R20.33 million.
Pre-tax profit declined from R26.02 million to R25.68 million while an R18.27 million profit from continuing operations compared with a loss of R75.05 million previously.
The group`s attributable profit of R8.6 million is up from a prior-year loss of R80.21 million. Basic earnings of 1.05c per share compare with a prior-year loss of 40.75c a share.
CEO John Miller says the integration of Gijima Info Technologies Afrika was completed in early September, and the interim results include only three months of operations as an integrated company.
"While we have made significant progress in meeting our strategic imperatives, we have yet to receive the benefit of revenue growth from the merger," he says. However, he adds that the group`s pipeline of prospective business has increased significantly.
"Headline earnings do not yet reflect the benefit of the merger and were lower than the comparative period, largely as a result of foreign currency translation differences and the amortisation of contracts due to the merger."
Miller says an important part of the Gijima integration was the merger of all infrastructure activities into the newly formed managed services division to meet clients` convergent requirements. A software division was formed to centralise the group`s offerings and supplier agreements.
"Our clients` changing needs are reflected in our strategic positioning. Our business development initiatives are increasingly leading sales which add value directly into our clients` business processes."
He adds that government`s Accelerated and Shared Growth Initiative of SA, the 2010 Soccer World Cup, the digitisation of broadcasting and the deregulation of the telecommunications sector will provide the catalyst for ICT opportunities.
GijimaAst has signed an agreement with Chinese telecommunications equipment provider ZTE Corporation to focus on the telecommunications market.
The GijimaAst share was trading at 67c this morning, up 1c or 1.5% from yesterday`s close.
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