Wrap Text
Unaudited interim results for the period ended 31 December 2013
Gijima Group Limited
(previously Gijima Ast Group Limited)
Registration number 1998/021790/06
Share code: GIJ ISIN: ZAE000176533
("Gijima" or "the Group" or "the Company")
Unaudited interim results for the period ended 31 December 2013
Highlights – Turnaround shows traction
Positive EBITDA from R100 million loss
Significant annuity contract renewals concluded – R1,6 billion
Targeted savings of R200 million per annum achieved
Permanent CEO, CFO and CSO (Chief Sales Officer) appointed
Empowerment Levels remain at Level 2 AAA, BBBEE rating
Top line pressure remains
Condensed consolidated statement of profit and loss
for the period ended 31 December 2013
Unaudited Unaudited Audited
31 December 31 December 30 June
2013 2012 2013
Notes R'000 R'000 R'000
Continuing operations
Revenue 741 330 911 207 1 848 388
Other operating income 2 261 400 493
Income 743 591 911 607 1 848 881
Profit/(loss) before interest, tax,
depreciation and amortisation charges
(EBITDA) 2 681 (100 260) (290 356)
Depreciation and amortisation charges (20 365) (23 100) (45 240)
Operating loss 3 (17 684) (123 360) (335 596)
Financial income 3 199 1 010 2 878
Financial expenses (13 086) (19 476) (38 560)
Net financial expense (9 887) (18 466) (35 682)
Loss before tax (27 571) (141 826) (371 278)
Income tax 2 774 35 621 78 044
Loss for the period from
continuing operations (24 797) (106 205) (293 234)
Discontinued operations
Profit from discontinued operation,
net of tax – 82 471 82 471
Loss for the period (24 797) (23 734) (210 763)
Total loss attributable to:
Owners of the parent (25 114) (24 411) (212 168)
Non-controlling interest 317 677 1 405
(24 797) (23 734) (210 763)
Weighted average number of shares ('000) 7 126 571 48 078 50 955
Diluted number of shares ('000) 7 126 571 48 078 50 955
Number of shares in issue ('000) 7 198 078 48 078 198 078
Loss per share
Basic loss per ordinary share (cents) (19,84) (50,77) (416,38)
Basic loss per share restated for
rights issue (cents) (19,84) (50,77) (416,38)
Diluted loss per ordinary share (cents) (19,84) (50,77) (416,38)
Diluted loss per share restated for
rights issue (cents) (19,84) (50,77) (416,38)
Loss per share – continuing operations
Loss attributable to:
Owners of the parent (25 114) (106 882) (294 639)
Non-controlling interest 317 677 1 405
(24 797) (106 205) (293 234)
Basic loss per ordinary share (cents) (19,84) (222,31) (578,23)
Basic loss per share restated for
rights issue (cents) (19,84) (222,31) (578,23)
Diluted loss per ordinary share (cents) (19,84) (222,31) (578,23)
Diluted loss per share restated for
rights issue (cents) (19,84) (222,31) (578,23)
Condensed consolidated statement of comprehensive income
for the period ended 31 December 2013
Unaudited Unaudited Audited
31 December 31 December 30 June
2013 2012 2013
Notes R'000 R'000 R'000
Loss for the period (24 797) (23 734) (210 763)
Other comprehensive income
Items that may be reclassified subsequently
to profit or loss
Currency translation differences of
foreign operations 5 (16 201) 39 361 44 176
Currency translation on the net investments
of foreign operations – 13 342 12 988
Reclassification of currency translation on net
investments of foreign operations from
non-distributable reserves – (39 190) (38 836)
Reclassification of currency translation
differences on foreign operations from other
comprehensive income 5 16 201 – 38 341
Tax effect on foreign currency translation
differences – (452) (2 825)
– 13 061 53 844
Items that may not be reclassified
subsequently to profit or loss
Revaluation of property, plant and equipment – – –
Total comprehensive loss for the period (24 797) (10 673) (156 919)
Total comprehensive (loss)/income
attributable to:
Loss attributable to owners of the parent (25 114) (11 350) (158 324)
Profit attributable to non-controlling interest 317 677 1 405
(24 797) (10 673) (156 919)
Condensed consolidated segmental analysis
for the period ended 31 December 2013
Unaudited Unaudited Audited
31 December 31 December 30 June
2013 2012 2013
R'000 R'000 R'000
Revenue
Systems Engineering 67 524 109 280 229 362
Services 493 163 569 012 1 169 727
Specialised Solutions 183 162 240 789 459 196
MineRP Businesses – 86 017 86 017
743 849 1 005 098 1 944 302
Elimination of discontinued operations – (86 017) (86 017)
Internal revenue adjustment (2 519) (7 874) (9 897)
Consolidated revenue 741 330 911 207 1 848 388
Segment results
Systems Engineering (30 173) (132 853) (254 163)
Services 17 162 8 591 (31 407)
Specialised Solutions 12 960 21 753 38 448
MineRP Businesses – 82 335 83 082
MineRP Businesses segment results – (22 476) (21 729)
Reclassification of currency translation on net
investments as part of disposal of business from
non-distributable reserves – 41 332 41 332
Profit on disposal of business – 63 479 63 479
Consolidated segment results (51) (20 174) (164 040)
Discontinued operations – (89 323) (88 260)
Elimination of discontinued operations – 15 488 16 551
Elimination of reclassification of currency translation
on net investments as part of disposal of business
from non-distributable reserves – (41 332) (41 332)
Elimination of profit on disposal of business – (63 479) (63 479)
(51) (109 497) (252 300)
Unallocated expenses (27 520) (32 329) (118 978)
Other corporate expenses (13 434) (11 899) (22 363)
Retrenchment costs (3 379) – (16 393)
Reclassification of currency translation differences
from non-distributable reserves – – (38 341)
Reclassification of currency translation of net investments
from non-distributable reserves – (2 496) (2 496)
Exchange rate losses on translation (820) 532 (3 703)
Net financial expense (9 887) (18 466) (35 682)
Consolidated loss before tax of continuing operations (27 571) (141 826) (371 278)
Condensed consolidated statement of financial position
as at 31 December 2013
Unaudited Unaudited Audited
31 December 31 December 30 June
2013 2012 2013
Notes R'000 R'000 R'000
ASSETS
Non-current assets 441 791 401 538 440 478
Property, plant and equipment 56 606 77 013 66 590
Intangible assets 115 526 131 245 123 877
Trade and other receivables 14 458 – 14 458
Deferred tax assets 255 201 193 280 235 553
Current assets 491 816 550 690 601 691
Inventories 71 535 39 195 26 741
Trade and other receivables 296 087 421 988 371 965
Current tax assets – 436 –
Cash and cash equivalents 124 194 89 071 202 985
Total assets 933 607 952 228 1 042 169
EQUITY AND LIABILITIES
Equity attributable to owners of the parent 184 872 221 552 209 986
Non-controlling interest (1 288) (2 333) (1 605)
Non-current liabilities 303 887 336 677 285 341
Interest-bearing liabilities 203 606 256 501 202 765
Operating lease liability 22 326 18 697 20 282
Deferred tax liabilities 77 955 61 479 62 294
Current liabilities 446 136 396 332 548 447
Trade and other payables 376 336 365 378 452 649
Short-term portion of interest-bearing liabilities 6 26 000 – 50 000
Operating lease liability – 2 066 –
Provisions 43 348 28 888 41 155
Bank overdrafts – – 4 404
Current tax liabilities 452 – 239
Total equity and liabilities 933 607 952 228 1 042 169
Condensed consolidated statement of cash flows
for the period ended 31 December 2013
Unaudited Unaudited Audited
31 December 31 December 30 June
2013 2012 2013
R'000 R'000 R'000
Cash flows from operating activities
Cash generated from/(used in) operations before working
capital changes 5 117 (114 101) (170 904)
Working capital changes (42 542) 21 866 94 982
Net financial expense (10 000) (25 051) (31 312)
Interest received 3 087 1 169 2 889
Interest paid (13 087) (26 220) (34 201)
Tax paid (1 000) (5 898) (4 317)
Net cash used in operating activities (48 425) (123 184) (111 551)
Cash flows from investing activities
Purchase of intangible assets (1 363) (1 097) (2 803)
Purchase of property, plant and equipment (1 440) (8 610) (11 411)
Decrease in amounts due to vendors – (1 915) (1 915)
Short term loan to sub-contractor – – (28 538)
Proceeds from the disposal of business – 175 000 175 000
Cash and cash equivalents from disposal of business – (22 679) (22 678)
Net cash (used in)/generated from investing activities (2 803) 140 699 107 655
Cash flows from financing activities
Proceeds from rights issue – – 150 000
Repayment of short-term borrowings (23 159) (45 479) (49 966)
Share issue expenses – – (14 592)
Proceeds from bridge funding – – 50 000
Repayment of bridge funding – – (50 000)
Net cash (used in)/generated from financing activities (23 159) (45 479) 85 442
Net (decrease)/increase in cash and cash equivalents (74 387) (27 964) 81 546
Cash and cash equivalents at the beginning
of the period 198 581 117 035 117 035
Cash and cash equivalents at the end of the period 124 194 89 071 198 581
Condensed consolidated statement of changes in equity
for the period ended 31 December 2013
Non- Non-
Share Share Distributable distributable controlling Total
capital premium reserves reserves Total interest equity
Group R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance at 1 July 2012 961 641 710 (363 867) (45 902) 232 902 (3 010) 229 892
(Loss)/profit for the period (24 411) – (24 411) 677 (23 734)
Other comprehensive income
Currency translation differences – 38 909 38 909 – 38 909
Currency translation on net investments – (25 848) (25 848) – (25 848)
Total comprehensive (loss)/income for the period – – (24 411) 13 061 (11 350) 677 (10 673)
Transactions with owners, recorded directly in equity
Total transactions with owners
Balance at 31 December 2012 961 641 710 (388 278) (32 841) 221 552 (2 333) 219 219
(Loss)/profit for the period (187 757) – (187 757) 728 (187 029)
Other comprehensive income – – – – –
Currency translation differences – 2 442 2 442 – 2 442
Reclassification of currency translation differences – 38 341 38 341 – 38 341
Total comprehensive (loss)/income for the period – – (187 757) 40 783 (146 974) 728 (146 246)
Transactions with owners, recorded directly in equity – –
Conversion to non-par value share capital 641 710 (641 710) – – – – –
Rights issue of shares 150 000 – – – 150 000 – 150 000
Share issue expenses (14 592) – – – (14 592) – (14 592)
Total transactions with owners 777 118 (641 710) – – 135 408 – 135 408
Balance at 30 June 2013 778 079 – (576 035) 7 942 209 986 (1 605) 208 381
(Loss)/profit for the period – – (25 114) – (25 114) 317 (24 797)
Total comprehensive (loss)/income for the period – – (25 114) – (25 114) 317 (24 797)
Transactions with owners, recorded directly in equity
Total transactions with owners – – – – – – –
Balance at 31 December 2013 778 079 – (601 149) 7 942 184 872 (1 288) 183 584
Notes to the condensed consolidated financial statements
1 Statement of compliance
These condensed Gijima Group Limited ('the Group') unaudited interim financial results for the period ended
31 December 2013 are prepared in accordance with the JSE 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
Financial Pronouncements as issued by the Financial Reporting Standards Council, of the Group's unaudited interim
financial statements.
These condensed consolidated financial statements do not include all of the information required for full 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 2013.
The Group's results for the period ending 31 December 2013 are available to the user on the company's website:
www.gijima.com
The condensed consolidated financial statements have been prepared by Pierre Joubert CA(SA), the Group
Manager, Financial Accounting.
These condensed consolidated financial statements were approved by the Board of Directors on 26 March 2014.
2 Significant accounting policies
The accounting policies applied by the Group in these condensed consolidated interim 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 2013.
Unaudited Unaudited Audited
31 December 31 December 30 June
2013 2012 2013
Notes R'000 R'000 R'000
3 Operating loss
The following material items have been
included in the calculation of
operating loss
Continuing operations
Exchange rate losses on translation
of foreign currency 15 381 532 (3 703)
Exchange rate losses on reclassification
of currency translation on net investments
from non-distributable reserves – (2 496) (2 496)
Reclassification of currency translation
differences of foreign operations from
non-distributable reserves 5 (16 201) – (38 341)
Loss on sale of property, plant
and equipment (126) (188) (347)
Provision for impairment of current assets 2 573 – (78 493)
Discontinued operations
Exchange rate losses on translation
of foreign currency – (1 063) (1 063)
Exchange rate gains on reclassification
of currency translation on net investments
from non-distributable reserves – 41 332 41 332
Profit on disposal of business – 63 479 63 479
Loss on sale of property, plant
and equipment – (11) (11)
1 627 101 585 (19 643)
4 Headline loss
Loss per share – consolidated operations
Headline loss per ordinary share (cents) (6,98) (211,67) (516,29)
Headline loss per share restated for
rights issue (cents) (6,98) (211,67) (516,29)
Diluted headline loss per ordinary
share (cents) (6,98) (211,67) (516,29)
Diluted headline loss per share restated
for rights issue (cents) (6,98) (211,67) (516,29)
Calculation of headline earnings/(loss)
Loss attributable to owners of the parent (25 114) (24 411) (212 168)
Reclassification of currency translation
differences from non-distributable
reserves 5 16 201 – 38 341
Reclassification of currency translation
on net investments from non-distributable
reserves – (38 836) (38 836)
Tax effect of reclassification on net
investments – 24 819 12 811
Profit on disposal of business – (63 479) (63 479)
Loss on sale of property, plant and
equipment 126 199 358
Tax effect (35) (56) (100)
Headline loss (8 822) (101 764) (263 073)
Loss per share – continuing operations
Headline loss per ordinary share (cents) (6,97) (191,86) (497,60)
Headline loss per share restated for
rights issue (cents) (6,97) (191,86) (497,60)
Diluted headline loss per ordinary
share (cents) (6,97) (191,86) (497,60)
Diluted headline loss per share restated
for rights issue (cents) (6,97) (191,86) (497,60)
Calculation of headline loss
Loss attributable to owners of the parent (25 114) (106 882) (294 639)
Reclassification of currency translation
differences from non-distributable
reserves 5 16 201 – 38 341
Reclassification of currency translation
on net investments from non-distributable
reserves – 2 496 2 496
Loss on sale of property, plant and equipment 126 188 347
Tax effect (35) 11 956 (97)
Headline loss (8 822) (92 242) (253 552)
5 Unbundling of International operations
Foreign currency translation reserve position from consolidation (FCTR):
The assets and liabilities of foreign operations are translated to South African Rand at foreign exchange rates at
the reporting date. The revenues and expenses of foreign operations are translated to South African Rand at rates
approximating the foreign exchange rates at the dates of the transactions. Foreign exchange differences arising on
the translation are recognised directly in other comprehensive income as 'currency translation differences'.
As a result of the process to unwind the foreign operations that started in June 2013, the foreign exchange
differences arising on the translation was reclassified from the statement of comprehensive income to the statement
of profit and loss as the translation differences no longer have substance in anticipation of the deregistration process.
Foreign currency translation reserve position (FCTR): R'000
Recognised in other comprehensive income until December 2013 –
Recognised in other comprehensive income for the period ended 31 December 2013 (16 201)
Currency translation differences of foreign operations (16 201)
Income tax impact –
Reclassification of currency translation differences to the statement of profit and loss 16 201
Balance at 31 December 2013 –
6 Short-term portion of interest-bearing borrowings
The repayment terms of the following senior debentures have changed as follows:
- R10 million with a maturity date of 30 November 2013 deferred to 30 May 2014.
- R9 million with a maturity date of 28 February 2014 deferred to 31 August 2014.
7 Share consolidation
On 9 May 2013 the Shareholders approved a share consolidation of 1 share for every 20 held. Consolidated shares
began trading under the new ISIN ZAE000176533 with effect from commencement of business on Monday, 15 July
2013. The record date in respect of the Share Consolidation was Friday, 19 July 2013 and the consolidated shares
issue was performed on Monday, 22 July 2013.
The impact of the share consolidation is:
- Authorised share capital of 5 000 000 000 consolidates to 250 000 000 ordinary share capital of non-par value
- Issued share capital of 3 968 357 379 consolidates to 198 417 869 ordinary share capital of non-par value.
As a result of the share consolidation the prior year comparitives is restated to reflect the consolidated shares of
1 share for every 20 held.
8 Contingent liabilities
At 31 December 2013 the Group had contingent liabilities in respect of registered performance bonds, bank lease
and other guarantees to the value of R13,6 million (June 2013: R12,1 million).
9 Segment analysis
From 1 July 2012 the Group implemented a new reporting structure comprising of mainly Systems Engineering, Services
and Specialised Solutions as disclosed. The segments disclosed by the Group in these condensed consolidated interim
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 2013.
Commentary
Review of performance
Gijima is one of South Africa's leading Information, Communication and Technology (ICT) Services groups and our Level 2
AAA empowerment rating makes us one of the top 20 most empowered JSE listed companies. Gijima offers application
services, infrastructure configuration and implementation, as well as end-to-end managed outsource services through
our national footprint.
A continued tough market, the full effect of the expiry of two significant contracts from FY 2012, as well as customer delays
in awarding contracts, have resulted in continued pressure to top line performance, with revenues 19% down compared
to December 2012. However, business profitability has improved significantly, with EBITDA showing a positive result of
R 2,7 million, from a reported loss of R100 million in the comparative period up to 31 December 2012.
Significant contract renewals
Over the last 12 months, R1,6 billion from the renewal of contracts together with, in some instances an increased scope,
has been concluded. This is an important indication that the continued efforts to attract, and retain significant clients,
even in the face of stiff opposition, demonstrate our capability and are a testament to our ability to provide service delivery
excellence.
Turnaround
The turnaround activities progressed and reflect in the numbers as is evident in the EBITDA result. The efficiency drive has resulted in the
achievement of targeted cost savings of some R200 million per annum. This was achieved without exceeding the industry norm in terms of
staff turnover. Strong focus in all areas of the business continues to ensure profitability and to provide a sound basis for growth.
Finance charges and tax
Lower finance charges were incurred for the period due to debenture redemptions of R45 million in December 2012 together with higher
interest rates on cash balances. Further debenture redemptions of R24 million were made in August and November 2013.
Currency translation differences from the unwinding of foreign operations resulted in the reduction of the effective tax credit to 10%.
Overview of specific businesses within Gijima
The Systems Engineering division houses the Company's various project environments, including custom and packaged application
solutions, as well as infrastructure projects.
The division experienced a disappointing six months, ending the period 38% down on revenue compared to December 2012. While
incurring a loss of R30 million for the period, a notable R100 million improvement compared to the previous period on a substantially lower
revenue base.
The Services division is responsible for the outsourcing and applications support businesses which include field operations for end-user
computing, an integrated services centre and support and maintenance of business' applications.
Revenue for the division was 13% lower than the comparative period, predominantly as a result of the full effect of the expiry of two major
contracts during the second half of 2012. Profit however doubled, to R17 million, as a result of efficiency programmes taking hold.
The Specialised Solutions division which includes the training and placement business, voice business (with our partner NEC) and the
Namibian operation, delivered performance levels below expectations, with revenue down 24% compared to December 2012.
The training and placement business as well as the voice business reported improved revenue performance, although margins came under
pressure in both areas.
The Namibian operation disappointed, falling short of budget and the comparative period's performance for both revenue and profitability
due to pending legislative changes in Namibia related to foreign owned companies.
The targeted 70:30 split of business between Private and Public Sector remains a key objective. The Public Sector business remained at
35% for the period ended 31 December 2013.
Dividends
No dividend has been declared for the period.
Leadership
Since implementing our Turnaround strategy the following major changes have been made in the top management structure:
- Eileen Wilton was appointed CEO on 10 October, 2013;
- Ernst Röth has been appointed CFO, with effect from 1 April, 2014;
- A Chief Sales Officer has been appointed, with effect from 1 May 2014; and
- A number of other significant appointments have been made in the executive management committee.
Outlook
The results of strategic decisions taken are proving that the Company is forging its way back on track as it continues to build on service
delivery excellence. New markets are also being explored, specifically in Africa and in State Owned Entities which are beginning to show
traction. Gijima counts 14 of the top 25 JSE listed companies as clients which is evidence that the company remains a key player in the
ICT industry in South Africa. The turnaround strategy is showing significant progress in terms of cost reduction and a return to profitability.
On behalf of the Board
RW Gumede EA Wilton L Tweedie
Executive Chairman Chief Executive Officer Interim Chief Financial Officer
31 March 2014
Directors:
Mr RW Gumede (Executive Chairman) 1
Ms EA Wilton (Chief Executive Officer) 2
Ms L Tweedie (Interim Chief Financial Officer) 3
Mr GE Röth (Chief Financial Officer) 4
Mr M Macdonald*
Mr JCL van der Walt *
Mr AH Trikamjee* 5
Dr MHR Bussin*
Ms SV Zilwa*
Mr RT Edmond*
*Non-executive
1 Appointed 10 October 2013 as Executive Director;
2 Appointed 10 October 2013 as permanent Chief Executive
Officer;
3 Stepped down, effective 1 April 2014;
4 Appointed, effective 1 April 2014;
5 Appointed 23 September 2013 as Lead Independent
Director
Company Secretary:
Ithemba Governance and Statutory Solutions
Proprietary Limited
Monument Office Park, Block 5
Suite 102, 79 Steenbok Avenue, Monument Park, 0181
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)
www.gijima.com
Date: 31/03/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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