GijimaAst gears for growth

Johannesburg, 28 Sep 2006

GijimaAst`s organisational structure, while running at higher cost than it should, is geared to handle revenue of up to R2.5 billion without the need for organic growth.

And this, says CEO John Miller, is exactly where he is aiming to take the company. In addition, he expects margins to move closer to double-digit figures within the next two years. Currently, margins are just below 6%.

Miller, addressing analysts at the company`s year-end results presentation yesterday, said he aims to grow the company`s revenue and take costs out.

"There are no more excuses," he said, promising to grow the company.

While not prepared to give a target, the figure does run to "tens of millions", a figure that was also touted when discussing the opportunity that DTS presented.

GijimaAst recently acquired the 30% in DTS that it did not own from Absa for R85 million, which the company says is cheap at the price. Stripping out the once-off secondary tax charge on dividends, this year`s headline earnings per share would have been 40% improved thanks to the acquisition, had it happened a year ago.

No retrenchment plan

The acquisition will enable the company to see more cost savings, which it will ring-fence in order to demonstrate at the next annual presentation.

While the company has a focus on cost savings, it does not have a retrenchment plan in place and expects that natural attrition will aid in trimming duplicated job functions. However, it does expect all staff to perform well. Costs for its 3 357 staff - including contractors - make up over half of its operating expenses.

"The last thing we want to do is cut the muscle out of this business; we can cut the fat."

The company, with R176 million in the bank, has also not ruled out acquisitions. However, Miller said these will be made wisely and he would rather hang onto the cash.

The company`s shares closed unchanged on its results release at 60c after seeing a high of 61c.