GijimaAST has reported a revenue uncrease of 25%, to R1,5-billion, for the six months ended 31 December 2008. This pushes the company's EBIDTA up by 67% to R129-million and net cash balances up 158% to R336-million.
The group believes these results are evidence that its strategy of maximising shareholder value by focusing on profitable growth, market leadership, service excellence and being an employer of choice is gaining traction.
It also implemented a plan to mitigate against theuncertainties of the anticipated economic downturn during the reported period, with the focus being to contain expenditure, maximise cash holdings and tightly manage working capital. This resulted in the cash holdings of the group increasing by R165-million to R336-million.
The 25% increase in revenue was achieved primarily through the strong growth of 60% in the professional services division, according to a statement from the group. In this division, operating profit advanced 136% due to a successful roll-out of various large projects and enhanced margins achieved.
Managed services continued to improve its operating margin with a 48% profit increase, despite muted revenue growth.
GijimaAst`s operating profits were impacted by exchange rate gains and losses on consolidation of its wholly-owned intercompany loan accounts denominated in foreign currencies. These gains and losses do not have any impact on the group's cash flow or operations.
The volatility in foreign currency movements experienced during the six months ended 31 December 2008 resulted in the inclusion of a R32-million exchange rate loss for the period, compared to an exchange rate gain of R7-million reported in the comparative reporting period. Should the impact of exchange rate translation gains and losses be eliminated in the current and comparative reporting periods, GijimaAst's normalised earnings per share for the six months ended 31 December 2008 would have improved by 92%.
EBITDA margin (before exchange rate gains and losses) increased from 6,4% for the comparative period to 8,6% in the current period. The increased margin was achieved through continuous cost containment and economies of scale benefits realised through increased revenue.
The group's income tax expense includes a provision of R5,2-million for the proposed settlement of a prior year tax dispute. Cash generated from operations before working capital changes increased by 91% as a result of the improved operating performance of the business.
The enhanced working capital focus of the group resulted in a positive working capital inflow of R65-million and a healthy growth in cash balances, which was augmented by the accessing of an additional R100-million on the group's debtor securitisation programme.
During the period under review, GijimaAst continued with the standardisation of its business processes, investing R11,3-million on the upgrade of its SAP ERP system. It also furthered the implementation of an ITIL unified framework for service management for R11-million while investing R2-million on leadership development and R1-million on the project management office.
Most of the Gauteng operations were consolidated into an enlarged head office campus which required an investment of R15-million.
The group expects IT expenditure to grow at a compound annual growth rate (CAGR) of 9,7% in the next five years, with IT services in particular growing at a CAGR of 11,7%.
This will be driven primarily by government infrastructure spending and technology refresh cycles.