Sep 28, 2010
Gijima negotiating with DHA over cancelled contract, profit upBack
© Reuse this
The company's headline earnings a share increased to 16,44c a share in the year ended June 30, 2010, from 11,39c a share in the previous financial year.
Gijima CEO Jonas Bogoshi told Engineering News Online that the company's results were a testimony of its business model to improve working capital management and operational efficiencies.
The information and communication company also shifted its focus to higher margin services, accompanied by multi-year contracts, while increasing its market share in the public sector to 48% from 44% the previous year.
However, one such R2,45-billion multi-year contract, Who Am I Online (WAIO), that Gijima inked with the DHA at the end of 2007, had gone sour in April this year, when the department declared the contract invalid reportedly owing to failure to perform.
Gijima disputed the DHA's findings, and is currently negotiating with government. "As a company, we need to work hard to find a resolution that will be in the best interest of government and Gijima and both parties are now at a level where that may realise."
Bogoshi said that current negotiations were more focused on the budget allowed by the National Treasury for projects such as the WAIO, rather than issues originally stated by the DHA.
Over the past three years, the department had spent almost a R1-billion on the WAIO project.
Gijima believed that even if the contract were not resumed, it would probably not have a cash flow impact or the effect would be minimal.
However, Frost & Sullivan ICT industry analyst Protea Hirschel said that although the company was pursuing all options to resolve the issue, the cancellation of such a large contract could cast a "cloud of uncertainty" around the company's ability to deliver on complex projects.
Nevertheless, Gijima had secured a number of new public sector clients in recent months, including the Department of Rural Development and Land Reform, as well as a multi-year project for the South African National Roads Agency Limited to bring tolling to Gauteng's freeways. Bogoshi also pointed out that none of the company's private sector contracts have been cancelled to date.
Meanwhile, Gijima CFO Carlos Ferreira said that the company anticipated that public sector spending would remain constrained in 2011, while private sector spending might show slow improvement.
He predicted an overall growth of between 0% and 4% in the ICT industry for the next financial year.
However, Bogoshi noted that Gijima had plans to increase its market share in Africa, and other parts of the world during its 2011 financial year.
"Our newly developed mining software had proved popular on the African continent and we intend to use this as a base to further expand our services and offerings into the continent.
"Some of our software solutions developed for the South African public services sector can also be applied in the rest of the continent, and we intend to explore these possibilities and to step into that gap."
Hirschel agreed that potential growth plans into Africa could prove profitable for the company. "Providing services to government in Africa that are looking to update identity systems would allow the group to leverage its extensive internal expertise in identity management solutions and complex e-government deployments.
"However, Gijima may have to work harder in this sector to overcome questions potential customers may have because of the WAIO debacle," she concluded.
Edited by: Mariaan Webb© Reuse this Comment Guidelines (150 word limit)
Creamer Media Senior Researcher and Deputy Editor Online
Other ICT News
Recent Research Reports
Water 2015: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2015 Report considers the aforementioned issues, not only in the South African context but also in the African and global context in terms of supply and demand, water stress and insecurity, and access to water and sanitation, besides others.
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
Road and Rail 2015: A review of South Africa's road and rail sectors (PDF Report)
Creamer Media’s Road and Rail 2015 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail infrastructure and network, the funding and maintenance of these respective networks, and...
Defence 2015: A review of South Africa's defence sector (PDF Report)
Creamer Media’s Coal 2015 report examines South Africa’s coal industry with regards to the business environment, the key participants in the sector, local demand, export sales and coal logistics, projects being undertaken by the large and smaller participants in the...
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
This Week's Magazine
The BMW Group will invest R6-billion at BMW Group South Africa’s (BMW SA’s) Rosslyn plant to produce the next-generation X3 sports-activity vehicle (SAV) for the local and export markets. Rosslyn will continue production of the current 3 Series through its lifecycle,...
The lack of consequences for poor performance and transgressions on the part of contractors remains a significant hurdle to tackling South Africa’s service delivery challenges, delegates heard at the Consulting Engineers South Africa Infrastructure Indaba, on...
City of Ekurhuleni executive mayor Mondli Gungubele earlier this month officially named the city’s bus rapid transit (BRT) system, Harambee.
About 58% of unstructured data stored by companies is dark data, which means that the value or regulatory importance of the data has not been determined. Subsequently, most of the stored data add costs, rather than increasing revenue or reduce regulatory risks, says...
Effective logistics, import/export and manufacturing consulting services require detailed industry knowledge and experience, but can add significant value to these industries by providing expert advice on various technical elements in their value chains, says...