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Johannesburg - JSE-listed information and communications technology company Gijima AST [JSE:GIJ] said on Monday that it had reached an amicable settlement agreement with the department of home affairs to continue with its R2.27bn contract to overhaul the department's information technology infrastructure.
However, Gijima said its settlement with the department had an adverse once-off effect on its earnings per share of 27.99 cents for the six months ended December 2010.
In April, Gijima reported that it had received a letter from the department, in which it contested the validity of a contract it concluded with Gijima in June 2008 for the Who Am I Online (WAIO) system. Gijima disputed this contention.
Gijima was initially awarded the contract in June 2008 to overhaul the department's information technology infrastructure. The contract for the WAIO system covers the design, development and implementation of an integrated core system for the department, including all business processes of both its civics and immigration divisions.
"Gijima and its funding partners have reached an amicable settlement agreement with the department to map a way forward for the completion of the WAIO project. The full and final settlement agreement has been signed by all parties, but is subject to the fulfilment of certain suspensive conditions.
"The settlement brings the project back in line with the original objectives and cost estimates. The total final capital cost of the items in the scope of this project, including expenditure to date of about R1.4bn, is estimated to be about R2.27bn," Gijima said.
As part of the settlement, Gijima agreed to incur certain manageable losses that would have a once-off impact during this financial period.
Gijima underlined an adverse once-off impact on its earnings per share of 27.99c for the six months ended December 2010.
"This comprises the writing down of certain invoices and the future rendering of support and maintenance services as well as all direct costs that are linked to the settlement, namely legal fees, the cost of skills retention over the duration of the issue at hand, as well as the investment in restructuring the project team to align with Gijima's involvement in the project," it said.
However, Gijima said its settlement with the department had an adverse once-off effect on its earnings per share of 27.99 cents for the six months ended December 2010.
In April, Gijima reported that it had received a letter from the department, in which it contested the validity of a contract it concluded with Gijima in June 2008 for the Who Am I Online (WAIO) system. Gijima disputed this contention.
Gijima was initially awarded the contract in June 2008 to overhaul the department's information technology infrastructure. The contract for the WAIO system covers the design, development and implementation of an integrated core system for the department, including all business processes of both its civics and immigration divisions.
"Gijima and its funding partners have reached an amicable settlement agreement with the department to map a way forward for the completion of the WAIO project. The full and final settlement agreement has been signed by all parties, but is subject to the fulfilment of certain suspensive conditions.
"The settlement brings the project back in line with the original objectives and cost estimates. The total final capital cost of the items in the scope of this project, including expenditure to date of about R1.4bn, is estimated to be about R2.27bn," Gijima said.
As part of the settlement, Gijima agreed to incur certain manageable losses that would have a once-off impact during this financial period.
Gijima underlined an adverse once-off impact on its earnings per share of 27.99c for the six months ended December 2010.
"This comprises the writing down of certain invoices and the future rendering of support and maintenance services as well as all direct costs that are linked to the settlement, namely legal fees, the cost of skills retention over the duration of the issue at hand, as well as the investment in restructuring the project team to align with Gijima's involvement in the project," it said.
