Gijima settles with SITA

JSE-listed Gijima has reached an out of court settlement with the State IT Agency (SITA) over a contract that the agency cancelled last month, without giving the company sufficient notice.

Earlier this month, Gijima filed papers against SITA to stop it cancelling a five-year-old contract to supply and maintain hardware for services to the South African Police Services, worth about R20 million a month.

Gijima said in the court papers that it was entitled to a month's notice, and not the five days' notice the agency gave. It also wanted to stop SITA hiring Khauleza to take over the contract “during the period of operation” of the deal.

The court hearing, scheduled for the first week of February, was postponed so that the parties could reach an agreement. Gijima CFO Carlos Ferreira says an out-of-court settlement with SITA was reached in the past few days.

Ferreira says the agreement will see Gijima retain part of the initial contract, while Khauleza will take over some parts. He cannot define which aspects each company will carry out, as the details still need to be finalised. However, Ferreira says Gijima will lose some revenue from the new arrangement.

The deal was entered into in September 2006, and came into effect the next month. In November last year, the R19.6 million-a-month contract was extended on a month-to-month basis, “until further notice for termination”.