Troubled JSE-listed technology services company Gijima’s share price was hammered lower on Tuesday, falling by more than 50% in intraday trading, after it revealed it was being forced to do a huge rights offer to raise cash to stave off financial disaster.

But interim CEO Eileen Wilton, who stepped into the role following the resignation of Jonas Bogoshi at the end of last year, says she is confident a turnaround plan she’s leading will mean that the money raised through the rights offer, which is supported by the company’s biggest institutional shareholders, will be sufficient to see it through.

On Thursday, Gijima turned in interim results to end-December 2012 that showed its top line under significant pressure. Revenue fell by 23% over the same six-month period a year earlier. This flowed through to the bottom line, with the company reporting a headline loss of 9,59c/share from a profit of 1,49c before.

Wilton, a former chief information officer at both Anglo American and Old Mutual, says her focus is on improving Gijima’s top-line performance and addressing problems in the company’s systems integration division and in its product sales area. The services business, Gijima’s largest and which includes infrastructure IT outsourcing, has continued to perform to expectations, Wilton says.

The products business has met its targets for the first quarter of 2013. The systems integration business is now profitable, Wilton says. “We had one large project where, based on the delivery of milestones, there is a revenue mismatch. With the benefit of hindsight, we should have matched the inflow of cash with the outflow.”

She expects that this project — she can’t name the client because of confidentiality — will starting paying dividends in the next financial year.

“I can’t give you forward-looking projections, but we have met our targets for three months out of three, since the turnaround plan agreed to in November,” Wilton says. “We feel satisfied that we have the right plans and can deliver on expectations.”

Gijima needs to cut about 250 jobs from its workforce of 2 500. This includes a process to “part ways” with employees who “don’t perform”.

Wilton says Gijima has a “strong talent pool” and its expertise in SAP, Microsoft, Oracle and other technologies stand it in good stead for future growth. This, coupled with its “sticky” customer base in outsourcing, means good annuity income.

“There’s no doubt this is a challenging period, but I’m buoyed by the prospect of this turnaround.”

The proposed rights offer is expected to be put to a shareholder vote in the next few weeks. “We have done all the sensible things people needed us to do. We’ve been put through our paces, not only by our board but also our investors. We feel confident our numbers are rock solid.” — (c) 2013 NewsCentral Media