The Department of Home Affairs' contention of the 'Who Am I Online' contract will not prevent the Gijima Group from delivering increases in earnings when it reports on 2010 financial year later this month.
That's according to a trading update issued by the company this morning. In it, the company advised shareholders that it expected basic earnings per share (EPS) and headline earnings per share (HEPS) for the year ended 30 June to improve by between 35% and 55% on the previous year's figures.
The company explained its profits in previous reporting periods had been impacted by foreign exchange translation differences on consolidation of its inter-group loan accounts denominated in foreign currencies.
Gijima advised shareholders that the estimates reflected a “conservative approach to recognising the revenue earned... in relation to the "Who Am I Online" contract with the Department of Home Affairs”.
“These translation differences no longer impact the company's profits and are, from 1 July 2009, recorded within the Company's equity. This treatment is in line with International Accounting Standard 21... and follows management's assessment and classification of the underlying inter-group loan accounts as part of Gijima's net investment in the relevant non-trading foreign operations,” the statement said.
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When these foreign exchange translation differences are eliminated from the 2009 financial year - for like-by-like comparative purposes - Gijima's EPS and HEPS for the financial year are expected to improve by up to 10%, in the range of 15c and 17c.
Gijima continues to seek a “commercial resolution” to the contended “Who Am I” contract in order to avoid litigation-led dispute resolution.
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