Listed outsourcing company Gijima has suspended its dividend payout for the time being, as a once-off cost related to settling the “Who Am I Online” dispute hurt cash flow and hampered earnings.
The company this morning published its results for the six months to December and said revenue was 15.6% lower than last year, at R1.2 billion. Its R85 million net profit from a year ago was wiped out as the company reported a R270 million loss.
The company says its results are “disappointing” and largely reflect the impact of the dispute with home affairs and its subsequent settlement. “We believe the settlement with the Department of Home Affairs was the best solution possible for both parties, as it is important for our relationships with government and our clients.”
On Monday, Gijima said it had reached a settlement with Home Affairs after the department canned the “Who Am I Online” contract almost a year ago. The settlement impacted earnings per share by R27.99c, as Gijima wrote down invoices and absorbed legal costs.
The outsourcing company was awarded the contract in June 2008. The project aims to replace the department's outdated and obsolete legacy systems, as well as improve security. Home affairs cancelled the deal last April, after declaring it invalid, and the parties have been in talks for several months to try and resolve the issue.
So far, R390.4 million has been spent on “Who Am I” since implementation started in 2008. The total cost is expected to be R2.27 billion. Gijima did not earn any revenue from the deal in the first six months of the year.
In addition, the settlement resulted in once-off costs, which caused Gijima's basic earnings per share to drop to a loss of 28.25c, from a profit of 8.80c a year ago. Gijima expected to incur a loss of between 27.5c and 28.5c a share.
Its headline loss per share was 28.24c, compared with per share earnings of 8.83c last year. Gijima had expected the headline loss per share to be in the same range of between 27.5c and 28.5c a share.
Gijima's cash balances also dropped to R130.2 million, from R622.5 million a year ago, partially as a result of expenses related to the settlement with home affairs.
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