'Who Am I Online' settlement reached

Outsourcing company Gijima says it has reached a resolution with the Department of Home Affairs over the canned 'Who Am I Online' (WAIO) contract.

Gijima was awarded the contract in June 2008 to overhaul the department's IT infrastructure. The contract covered the design, development and implementation of an integrated core system.

“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,” says the company.

“The full and final settlement agreement has been signed by all parties, but is subject to the fulfilment of certain suspensive conditions.”

Gijima adds that 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 have a once-off impact during this financial period.

Gijima says it will release its results for the six months ended 31 December 2010 on or about 9 March.

“The settlement with the department had an adverse once-off impact on the company's earnings per share (EPS) of 27.99c 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.”

The company advises its shareholders that, against the background of the impact of the settlement with the DHA, as well as the impact of the issue on Gijima's other operations, 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 27.5c and 28.5c from the reported EPS of 8.80c and HEPS of 8.83c for the six months ended 31 December 2009.

It adds that the financial information in this trading statement has not been audited and reported on by the company's external auditors.

The WAIO contract was set to replace the department's outdated and obsolete legacy systems, as well as improve security. However, the deal with Gijima was “put on hold” last year after a “dispute”, says Treasury's Estimates of National Expenditure for the 2011 financial year.

According to the estimates book, handed out along with other documents ahead of finance minister Pravin Gordhan's budget speech, the total cost of the project is estimated at R2.2 billion over five years.

Home affairs minister Nkosazana Dlamini-Zuma said the matter was hampering the department's IT progress, since the delay in rolling out the smart ID card project is due to this ongoing dispute with Gijima.