GijimaAst declares maiden dividend

Johannesburg, 30 Aug 2007

GijimaAst's turnaround strategy will see the company issue its first dividend of 1.5c per share.

The JSE-listed company yesterday reported 5.3% growth in revenue, to R2.1 billion, for the year ended 30 June. GijimaAst last broke the R2 billion mark in 2003. In the same year, it declared a R62 million headline loss.

However, this year's results see GijimaAst deliver a 90% jump in headline earnings to R53 million, from R28 million in 2006.

In his first presentation to analysts, newly-appointed CEO Jonas Bogoshi said the benefits of the company's client-centric structure were beginning to filter through.

"Our client-centric business model means our customers have a single point of contact with GijimaAst. Our clients aren't interested in which of our divisions they are dealing with; they just want to understand their options and see delivery," he said.

In order to ensure this strategy continues to bear fruit, GijimaAst has prioritised people development and organisational transformation as its strategic goals for the coming year.

"We are seeing a far more innovative attitude from our client-facing employees. To enhance this, we have launched a sales academy to deliver training on the breadth of our offerings to our employees. Through this initiative, our staff will be fully-equipped to go out and grow revenue from both current and new clients."

Feeling the squeeze

Despite a strong delivery on the bottom line, Bogoshi noted the company's profit margins were taking strain from pricing pressure.

Of its three divisions, only Professional Services saw its operating margin grow from 3.6% in 2006 to 4.3%. Its largest division, Infrastructure Managed Services, posted an operating margin decline to 6.8% from 7.1% year-on year. Its Industry Niche Solutions division saw operating margin fall to 0.6% from 2.3% in 2006.

"Like the rest of the industry, we are feeling the effects of ongoing client pressure to reduce costs. However, our service delivery optimisation programme and cost cutting initiatives are helping us to counter ongoing commoditisation pressures."

The company is targeting margins of between 8% and 9%, he added.

"I am cautiously optimistic about our future."