| Tue 23 Aug 2011, 7:05 | | GIJ - Gijima Group Limited - Audited results for the year ended 30 June 2011 |
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GIJ
GIJ
GIJ - Gijima Group Limited - Audited results for the year ended 30 June 2011
Gijima Group Limited
(previously Gijima Ast Group Limited)
Registration number 1998/021790/06
Share code: GIJ ISIN: ZAE000147443
("Gijima" or "the Group" or "the Company")
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2011
Highlights
Strong second half EBITDA of R119,5 million
Full year performance impacted by settlement with Department of Home Affairs in
first half of R373,9 million
Professional Services under pressure
Strong performance in Managed Services
Summarised consolidated income statement
for the year ended 30 June 2011
Audited Audited
Notes 30 June 2011 30 June 2010
R`000 R`000
Revenue 2 566 582 2 943 417
Other operating income 3 553 3 913
Income 2 570 135 2 947 330
(Loss)/earnings before interest, (211 807) 285 674
tax, depreciation and amortisation
charges (EBITDA)
EBITDA before settlement and related 162 140 285 674
expense
Settlement and related expenses 5 (373 947) -
Depreciation and amortisation (46 358) (44 686)
charges
Operating (loss)/profit 4 (258 165) 240 988
Financial income 8 363 22 609
Financial expenses (32 099) (34 375)
Net financial expense (23 736) (11 766)
(Loss)/profit before tax (281 901) 229 222
Income tax 73 153 (75 059)
(Loss)/profit for the year (208 748) 154 163
Total (loss)/profit attributable to:
Owners of the parent (209 990) 158 610
Non-controlling interest 1 242 (4 447)
(208 748) 154 163
Basic (loss)/earnings per ordinary (21,84) 16,37
share (cents)
Diluted (loss)/earnings per ordinary (21,76) 16,31
share (cents)
Headline (loss)/earnings per (21,73) 16,44
ordinary share (cents)
Diluted headline (loss)/earnings per (21,65) 16,37
ordinary share (cents)
Weighted average number of shares 961 565 968 666
(000`s)
Diluted number of shares (000`s) 965 167 972 455
Number of shares in issue (000`s) 961 565 961 565
Calculation of headline
(loss)/earnings
(Loss)/profit attributable to owners (209 990) 158 610
of the parent
Loss on sale of property, plant and 1 415 827
equipment and intangible assets
Tax effect (396) (232)
Headline (loss)/earnings (208 971) 159 205
Summarised consolidated statement of comprehensive income
for the year ended 30 June 2011
Audited Audited
30 June 2011 30 June 2010
R`000 R`000
(Loss)/profit for the year (208 748) 154 163
Other comprehensive income
Currency translation differences for foreign (29 194) 9 812
operations
Currency translation on the net investments 24 638 (11 169)
for foreign operations
Income tax on other comprehensive income (41) (55)
Total comprehensive (loss)/income for the (213 345) 152 751
year
Total comprehensive (loss)/income
attributable to:
Owners of the parent (214 587) 157 198
Non-controlling interest 1 242 (4 447)
(213 345) 152 751
Notes to the summarised consolidated financial statements
1 Statement of compliance
These summarised Gijima Group Limited (`the Group`) financial results for the
year ended 30 June 2011 constitute a summary, prepared in accordance with the
JSE Limited Listings Requirements; the South African Companies Act (Act 71 of
2008), as amended; and the recognition and measurement requirements of
International Financial Reporting Standards and the presentation and disclosure
requirements of International Accounting Standard 34 and the AC 500
interpretation as issued by the Accounting Practices Board of SAICA, of the
Group`s audited financial statements.
These summarised consolidated financial statements do not include all of the
information required for full annual financial statements, and should be read in
conjunction with the consolidated financial statements of the Group as at and
for the year ended 30 June 2011.
This summarised announcement has been audited by the company`s auditors, KPMG
Inc., who have expressed an unqualified audit opinion.
Their audit report is available for inspection at the company`s registered
office. The company`s June 2011 results are available to the user on the
company`s website: www.gijima.com
The summarised consolidated financial statements have been prepared by Pierre
Joubert, CA(SA), the Group Manager, Financial Accounting.
These summarised consolidated annual financial statements were approved by the
Board of Directors on 18 August 2011.
2 Significant accounting policies
The accounting policies applied by the Group in these summarised consolidated
annual financial statements are the same as those applied by the Group in its
consolidated financial statements as at and for the year ended 30 June 2010.
3 Dividend paid
A cash dividend from income reserves of 2,5 cents per share was paid to
shareholders on 29 November 2010 in respect of the 2010 financial year. The last
date to trade to qualify for this dividend was 19 November 2010.
Audited Audited
30 June 2011 30 June 2010
R`000 R`000
4 Operating (loss)/profit
The following material items have been
included in the calculation of operating
(loss)/profit:
Exchange rate gains/(losses) on translation 3 343 (1 409)
Loss on sale of businesses and property, (1 415) (595)
plant and equipment
1 928 (2 004)
5 Dispute settlement
The following material items relate to costs incurred by Gijima as part of a
settlement agreement between Gijima Holdings (Pty) Ltd, a wholly-owned
subsidiary of Gijima Group Limited and the Department of Home Affairs (DHA)
regarding the Who Am I Online (WAIO) contract. The impact of the direct
settlement and related expenses have been included in the operating loss for the
year ended 30 June 2011.
Audited Audited
30 June 2011 30 June 2010
R`000 R`000
Settlement expenses (357 740) -
Settlement-related expenses (16 207) -
Gross settlement cost (373 947) -
Deferred tax 104 705 -
Net of tax (269 242) -
6 Contingent liabilities
At 30 June 2011 the Group had contingent liabilities in respect of registered
performance bonds, bank lease and other guarantees to the value of R5,3 million
(June 2010: R3,8 million).
Summarised consolidated segmental analysis
for the year ended 30 June 2011
Audited Audited
30 June 2011 30 June 2010
R`000 R`000
Revenue
Professional Services 949 810 1 458 219
Managed Services 1 648 085 1 520 030
2 597 895 2 978 249
Internal revenue adjustment (31 313) (34 832)
Consolidated revenue 2 566 582 2 943 417
Segment results
Professional Services (6 911) 158 092
Managed Services 144 964 106 509
Settlement expenses (357 740) -
Settlement-related expenses (16 207) -
Unallocated expenses (46 007) (35 379)
Other corporate expenses (25 614) (22 204)
Exchange rate gains/(losses) on translation 3 343 (1 409)
Net financial expense (23 736) (11 766)
Consolidated (loss)/profit before tax (281 901) 229 222
Summarised consolidated statement of financial position
as at 30 June 2011
Audited Audited
30 June 2011 30 June 2010
R`000 R`000
ASSETS
Non-current assets 387 227 300 776
Property, plant and equipment 81 621 91 334
Intangible assets 154 163 138 285
Trade and other receivables 17 301 -
Deferred tax assets 134 142 71 157
Current assets 825 210 1 313 751
Inventories 26 506 42 554
Trade and other receivables 693 666 927 944
Current tax assets 16 211 184
Cash and cash equivalents 88 827 343 069
Total assets 1 212 437 1 614 527
EQUITY AND LIABILITIES
Equity attributable to owners of the parent 265 542 501 620
Non-controlling interest (3 205) (4 447)
Non-current liabilities 237 403 416 222
Interest-bearing liabilities 152 729 300 706
Operating lease liability 23 778 27 821
Amounts due to vendors 2 463 6 065
Deferred tax liabilities 58 433 81 630
Current liabilities 712 697 701 132
Trade and other payables 552 194 687 095
Short-term borrowings 150 000 -
Operating lease liability 3 607 -
Provisions 2 931 6 119
Bank overdrafts 2 352 3 152
Amounts due to vendors 1 613 2 039
Current tax liabilities - 2 727
Total equity and liabilities 1 212 437 1 614 527
Summarised consolidated statement of cash flows
for the year ended 30 June 2011
Audited Audited
30 June 2011 30 June 2010
R`000 R`000
Cash flows from operating activities
Cash (utilised in)/generated from (16 625) 309 329
operations before working capital changes
Working capital changes (104 643) (225 105)
Net financial expense (25 627) (15 585)
Interest received 9 316 22 161
Interest paid (34 943) (37 746)
Dividend paid (24 039) (73 105)
Tax paid (35 400) (28 697)
Net cash used in operating activities (206 334) (33 163)
Cash flows from investing activities
Purchase of software (15 242) (7 114)
Purchase of property, plant and equipment (21 799) (29 382)
Decrease in amounts due to vendors (2 090) -
Business acquired (10 000) (4 900)
Net cash used in investing activities (49 131) (41 396)
Cash flows from financing activities
Repayment of short-term borrowings (1 676) (201 003)
Increase in finance liability 3 699 (201 003)
Repayment of interest-bearing borrowings - (256 000)
Own shares acquired - (12 912)
Proceeds from short-term borrowings - 100 000
Proceeds from interest-bearing borrowings - 300 000
Net cash generated from/(used in) financing 2 023 (69 915)
activities
Net decrease in cash and cash equivalents (253 442) (144 474)
Cash and cash equivalents at the beginning 339 917 484 391
of the year
Cash and cash equivalents at the end of the 86 475 339 917
year
Summarised consolidated statement of changes in equity
for the year ended 30 June 2011
Non-
Share Share Distributable distributable
capital premium reserves reserves
Group R`000 R`000 R`000 R`000
Balance at 1 July 2009 974 654 609 (169 858) (58 038)
Profit for the year 158 610
Other comprehensive
income
Currency translation 9 757
differences
Currency translation (11 169)
on net investments
Total comprehensive - - 158 610 (1 412)
income for the year
Transactions with
owners, recorded
directly in equity
Share-based payment 2 752
transactions
Dividend paid (73 105)
Own shares acquired (13) (12 899)
Total transactions (13) (12 899) (70 353) -
with owners
Balance at 30 June 961 641 710 (81 601) (59 450)
2010
Loss for the year (209 990)
Other comprehensive
income
Currency translation (29 235)
differences
Currency translation 24 638
on net investments
Total comprehensive - - (209 990) (4 597)
income for the year
Transactions with
owners, recorded
directly in equity
Share-based payment 2 548
transactions
Dividend paid (24 039)
Total transactions - - (21 491) -
with owners
Balance at 30 June 961 641 710 (313 082) (64 047)
2011
Non-
controlling Total
Total interest equity
Group R`000 R`000 R`000
Balance at 1 July 2009 427 687 - 427 687
Profit for the year 158 610 (4 447) 154 163
Other comprehensive
income
Currency translation 9 757 9 757
differences
Currency translation (11 169) (11 169)
on net investments
Total comprehensive 157 198 (4 447) 152 751
income for the year
Transactions with
owners, recorded
directly in equity
Share-based payment 2 752 2 752
transactions
Dividend paid (73 105) - (73 105)
Own shares acquired (12 912) (12 912)
Total transactions (83 265) - (83 265)
with owners
Balance at 30 June 501 620 (4 447) 497 173
2010
Loss for the year (209 990) 1 242 (208 748)
Other comprehensive
income
Currency translation (29 235) (29 235)
differences
Currency translation 24 638 24 638
on net investments
Total comprehensive (214 587) 1 242 (213 345)
income for the year
Transactions with
owners, recorded
directly in equity
Share-based payment 2 548 2 548
transactions
Dividend paid (24 039) (24 039)
Total transactions (21 491) - (21 491)
with owners
Balance at 30 June 265 542 (3 205) 262 337
2011
Review of Results
Gijima is one of South Africa`s leading Information, Communication and
Technology (ICT) Services groups. It offers end to end Managed Infrastructure
and Professional Services from its 80 points of presence within Southern Africa
and its operations in Australia, Asia, North and South America.
Results for the financial year ended 30 June 2011 have been negatively affected
by the financial impact of the dispute with the Department of Home Affairs (DHA)
on the Who Am I Online (WAIO) contract. We believe the settlement with the DHA
was the best solution possible for both parties, as it is important for our
relationships with the Government and clients alike. The dispute with the DHA
had a severe impact on Gijima`s performance for the year, not only in terms of
the settlement expenses and loss of revenue from the WAIO contract itself over
this period, but also on the Company`s ability to trade optimally under the
overhang of the impasse that has now been resolved. No revenue was recorded on
the WAIO contract during the financial year.
Revenue reduced by 12,8% from the previous year, with Earnings before Interest,
Tax, Depreciation and Amortisation reflecting a loss of R211,8 million, which
includes settlement expenses of R373,9 million.
The Managed Services Division achieved an 8% revenue growth as a result of
improvements in the Distributed Computing, Unified Communications and Hosting
environments. Strong margin improvements owing to a favourable services mix,
coupled with an optimisation drive, resulted in a 36% growth in profits. This
was achieved despite the cash investment over the period in Gijima`s iSC
(Integrated Services Centre), a world class services hub. The ISC is fully
operational, and is contributing to both improvements in customer satisfaction
and savings; which are achieved through remote resolution. The Unified
Communications environment is poised for strong growth, particularly in the
applications environment around mobility. Strategic relationships with various
market leaders are being established to ensure that Gijima is well positioned to
ride the mobile wave.
The DHA dispute significantly impacted the Professional Services Division, where
revenues were down 35% on the previous year, and profit reduced by 104%. The
Systems Integration unit was particularly impacted by the DHA settlement due to
the non-revenue generating additional costs it carried for the majority of the
year. The ERP business however showed excellent growth, with significant SAP
contract wins during the financial year. SAP in the cloud is achieving strong
focus and demand is expected to surge over the next 18 months. This is also
bolstered by the OpenERP (Business Edge) solution which is gaining momentum. The
Mining Technical Solutions business produced solid results, with an improvement
in revenue and profit for the year. Its MineRP set of products is a
revolutionary world first and is gaining traction in the world market, and is
playing a significant role in Gijima`s internationalisation. Gijima`s training
and placement business had a difficult year in what was a rather subdued
marketplace, but is expected to improve over the coming months, as activity
within the placement space picks up.
The Group`s depreciation and amortisation was marginally higher than the prior
year, as capital expenditure remained largely unchanged.
The Group`s net financial expense ended the year R12 million higher than last
year, primarily as a result of lower average cash balances held during the year.
Gijima`s interest expense ended the year lower than last year as a result of a
reduced debt level despite being impacted by a discounting cost of R3,8 million
relating to a large project.
Due to the loss incurred, the Group had a positive tax charge of R73,2 million.
The deferred tax asset of R134,1 million includes a future calculated tax loss
of R67,4 million.
The Group`s cash balances reduced to R86,5 million at 30 June 2011. The WAIO
related expenses were the most significant contributor to the utilisation of
cash in operations before working capital changes of R16,6 million. The Group`s
investment in working capital contributed R104,6 million to the reduction of
R253,4 million in cash balances during the year. The investment in working
capital is mostly related to a single project that is managed on construction
contract principles with long intervals between milestone payment dates. Capital
expenditure for the year amounted to R37 million.
As part of the Group`s trade receivables securitisation programme of R300
million, R150 million of the debentures issued are due to expire in June 2012.
The Group anticipates rolling this debt forward well before the expiry date.
Dividends
The board has elected to suspend the payment of dividends for the time being.
The board will continue to review the financial position of the Group and is
committed to the continuation of dividend payments as soon as conditions allow.
Prospects
Gijima has restructured over the last seven months, and its business model has
been altered to reflect an organisation where client centricity is the primary
focus. This positioning will allow for improved industry and client
understanding to better translate solutions that differentiate it from its
peers. As part of the reorganisation, Gijima has brought in several senior
leading IT industry executives to drive the various client centric initiatives.
Gijima is continuing to invest in its people to ensure innovation and
certification as a top priority. This investment is coupled to an aggressive
optimisation process within the engine of the organisation. The new delivery
model will result in a leaner, more agile organisation to ensure that speed to
market is improved whilst still maintaining service levels which are in excess
of 98%.
Whilst conditions will continue to be difficult for the foreseeable future,
particularly given the persistent doubts about a global recovery, Gijima is
looking to consolidate its position as a leading ICT company in SA. According to
local research, the ICT services market is forecast to grow at a compound annual
growth rate of 8,7% over the next four years. Apart from client refreshes and
system upgrades, the key areas contributing to this growth of virtualisation,
unified communications and security are all focus areas where Gijima has built a
strong competence and market presence.
RW Gumede PJ Bogoshi CJH Ferreira
Non-executive Chief Executive Chief Financial
Chairman Officer Officer
22 August 2011
Directors:
RW Gumede (Non-executive Chairman)
PJ Bogoshi (Chief Executive Officer)
CJH Ferreira (Chief Financial Officer)
DM Zwane-Chikura (Chief Operating Officer) +
M Macdonald*
JE Miller*
AFB Mthembu*
JCL van der Walt*
AH Trikamjee*
N Fakude*
* Non-executive
+ Appointed 21 June 2011
Company Secretary:
Ithemba Governance and Statutory Solutions (Pty) Ltd
Monument Office Park, Block 5, Suite 102, 79 Steenbok Avenue
Monument Park
Sponsor:
RAND MERCHANT BANK
(A division of FirstRand Bank Limited)
Registered Office:
47 Landmarks Avenue, Kosmosdal, Samrand, South Africa
(012) 675 5000
Transfer Secretaries:
Link Market Services South Africa (Proprietary) Limited
(Registration number 2000/007239/07)
13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein, 2001
(PO Box 4844, Johannesburg, 2000)
Date: 23/08/2011 07:05:50 Produced by the JSE SENS Department.
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