| Mon 7 Mar 2011, 7:30 | | GIJ - Gijima Group Limited - Resolution between the department of home affairs |
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GIJ
GIJ
GIJ - Gijima Group Limited - Resolution between the department of home affairs
and Gijima over contract, withdrawal of cautionary notice and trading
statement
GIJIMA GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1998/021790/06
Share code: GIJ
ISIN: ZAE000147443
("Gijima" or "the Company")
RESOLUTION BETWEEN THE DEPARTMENT OF HOME AFFAIRS AND GIJIMA OVER CONTRACT,
WITHDRAWAL OF CAUTIONARY NOTICE AND TRADING STATEMENT
Shareholders are referred to the cautionary announcement released on SENS on
24 February 2011.
Shareholders are also referred to the various SENS announcements released
since April 2010 wherein Gijima reported that it had received a letter dated
13 April 2010 from the Department of Home Affairs ("the Department"), in which
the Department contended 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 awarded the ground-breaking 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 approximately R1.4 billion, is
estimated to be approximately R2.27 billion. This is in line with the Treasury
budget of R2.23 billion for the project, which was conditionally approved in
2009.
As part of the settlement Gijima has agreed to incur certain manageable losses
which will be a once-off impact during this financial period.
The cautionary notice released on SENS on 24 February 2011 is accordingly
withdrawn.
Trading Statement
Gijima is currently finalising its results for the six months ended 31
December 2010, which are planned to be released on SENS on or about 9 March
2011.
The settlement with the Department had an adverse once-off impact on the
Company`s earnings per share ("EPS") of 27.99 cents for the six months ended
31 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.
Against the background of the once-off impact of the settlement with the
Department, as well as the impact of the issue on Gijima`s other operations,
shareholders are advised that Gijima`s reported basic earnings per share and
headline earnings per share ("HEPS") for the six months ended 31 December 2010
are expected to reduce to a loss of between 27.5 cents and 28.5 cents from the
reported EPS of 8.80 cents and HEPS of 8.83 cents for the six months ended 31
December 2009.
The financial information on which this trading statement is based has not
been audited and reported on by the Company`s external auditors.
Samrand
7 March 2011
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 07/03/2011 07:30:01 Produced by the JSE SENS Department.
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