Gijima says it's back on track for profits

"We have been through a very difficult period. We lost projects and staff but our restructuring is well under way now‚" Gijima chief financial officer Carlos Ferreira said.

Gijima's capital raising plan‚ which aims to raise R150m‚ sees shareholders being offered 309 shares for every 100 shares they hold at the moment.

Gijima released its financial results for the six months to December‚ last week. The group reported a loss of R23m for the six months‚ compared with a profit of R28.5m recorded in the six-month period the year before. Gijima's share price lost as much as 40% of its value on Tuesday (2 April) but recovered‚ to close 26.67% down at 11c.

The financial results were hindered by the company losing contracts with Absa and the South African Police Service and incurring losses from a contract with the Department of Home Affairs which failed.

Gijima's main shareholder is billionaire‚ Robert Gumede.

As many as 70% of the shareholders have agreed to take up the recapitalising offer‚ including Gumede's Guma Group which owns 36.5% of Gijima‚ Allan Gray‚ which has 23.8% and Investec Asset Management‚ which has 10%.

Projects that really hurt

Detailing the projects which hurt Gijima‚ Ferreira said the home affairs contract to overhaul its information technology infrastructure hurt tremendously.

"It was a headache for us but we finally have it out of our system and are focused on getting Gijima back on course‚" he said.

Gijima was awarded a contract in June 2008 to overhaul the Department of Home Affairs' information technology infrastructure. The contract was for a system that covered the design‚ development and implementation of an integrated core system for the department‚ including all business processes of both its civic and immigration divisions.

In April 2010‚ the department contested the validity of the contract.

Gijima disputed this contention and the parties entered into negotiations to reach an agreement. That agreement was reached in 2011 but Gijima has struggled to pay the costs since.

Gijima spent around R374m to end the process.

The prolonged effects of this failed deal played a role in Gijima being downgraded on its national scale ratings in the long- and short-term by agency Global Credit Rating late last year.

The outlook on both ratings was negative‚ given the political and macro-economic uncertainty that could lead to further delays in the roll-out of government and private sector information technology services.