GijimaAst share up on results

By Leon Engelbrecht, ITWeb senior writer

Johannesburg, 28 Aug 2008

Investors have rewarded JSE-listed IT services company GijimaAst for a set of strong financial results and the promise of more in future.

The company's share gained about 10% yesterday, to peak at 82c. At 10am this morning, it was still holding on to the gains, trading at around 80c a share.

GijimaAst CE Jonas Bogoshi yesterday announced a 25% increase in revenue, to R2.515 billion from R2.017 billion the year before. He said earnings before interest, tax, depreciation and amortisation improved by 70% and operating profit by 81%, allowing the company to declare a 3.5c a share dividend.

"We always wanted to get our revenue growth above industry average... that has happened... 25% growth is very good," Bogoshi told ITWeb after announcing the results.

The one jarring note in what was otherwise a symphony of success was the increase in the debtors' book, which stood at R196 million at 30 June.

Bogoshi said "the debtors issue is not one we expected".

His CFO, Carlos Ferreira, added: "The one number that is disappointing in my mind is that debts have gone up to about R200 million."

He added the balloon in debt was somewhat artificial in that it reflected an increase in late payment by major corporate and government clients, not an increase in credit risk to the business.

"Government is not known as the fastest payer in town," said Ferreira.

Bogoshi added that most of the amount due has since been collected and steps have been taken to better invoice and liaise with late payers.

"Collections have not been what we wanted them to be. If you look at those guys, a misalignment on invoicing has a huge impact on your results.

"The public sector remains a bit of a challenge, but SITA [the State IT Agency] has improved the way they pay. It is much more streamlined, still taking a bit long, but not like before."

He conceded the issue had impacted on the average time between invoicing and payments, causing it to slip from 45 to 54 days.

Mystery deal

Bogoshi would not be drawn on a mystery deal that fell through during the year. In a Stock Exchange News Service announcement yesterday, GijimaAst said the board had contemplated a potential corporate transaction.

"However, negotiations were terminated and the cautionary announcement withdrawn, when it was clear that key stakeholders from both sides were unable to reach agreement on the business model which would have ensued going forward."

Bogoshi said he "can't talk about the details. It was not a buy or sell, it was really about a combination of two companies trying to find a model [to work together]. They may still come back... they saw value in the business."

Business prospects

Bogoshi noted GijimaAst and partners IBM and Siemens have started phase one of implementing "Who am I online", the Department of Home Affairs' signature turnaround project.

"We did the phase zero, which was accepted. Home affairs was very happy and signed off. The priority for now is movement control; how do you expedite the movement of people in and out of SA?

"Today, we don't have the systems to do that. With the volume of people coming, it is not possible to use the existing system. For those who require visas... today it is a manual process. That must be automated and digitised: digital photos, signatures and fingerprints. All that will be done."

Briefly speaking about business prospects, Bogoshi was upbeat about winning part of the government's multibillion-rand Integrated Financial Management System, as well as GijimaAst's prospects at Sanlam, Impala Platinum, at the land affairs department and with the home affairs smart ID card project.