ERP.com gets nod

By Nicola Mawson, Contributing journalist

Johannesburg, 12 Feb 2007

An independent assessment has determined ERP.com's disposal of iServe for R10.7 million is fair, says the JSE-listed firm.

The company told shareholders that audit and advisory company KPMG Services has looked at the terms and conditions of the disposal, and says the terms and conditions are "fair and reasonable to ERP.com shareholders".

In December, ERP.com said it had entered into an agreement with Gateway Technologies to sell the SAP implementation and consulting services subsidiary. ERP said at the time that iServe had been under-performing.

"iServe has been engaged in a long-term fixed price contract for the implementation of SAP at a major customer. The contract is milestone-payment-based and iServe has been significantly under-performing, resulting in non-achievement of the specific milestones."

ERP.com said iServe had accumulated losses of about R20 million as a result. However, it entered into an agreement with the customer to pay a "break fee" of R10.5 million in order to be released from the contract and its obligations taken over by Gateway.

ERP.com said remaining in the contract would "result in the company incurring significant additional losses and expose the group to an unacceptable level of risk". In addition, it noted the sale is in line with its strategy of disposing of operations that do not support its core business of information risk management.