Gijima’s run-in with Home Affairs lowers profits

2011-08-24 13:37

Information and communications technology firm Gijima was forced to write off R373 million and retrench 200 employees after the government had terminated a multibillion-rand contract with the company.

Gijima chief executive Jonas Bogoshi said the R373 million included R500 000 in legal fees.

However, Gijima and the department of home affairs reached an out-of-court settlement agreement whereby the company was paid R374 million, said Bogoshi.

“The settlement has enabled us to move forward as a group, to service our clients more effectively, and to concentrate on growth prospects ahead. We are confident that we are recovering from this impact and continue to deliver value for our stakeholders,” he said.

The home affairs department awarded Gijima the Who-Am-I-Online contract – which was initially worth R2.37 billion and eventually climbed to R4.5 billion – in 2007.

The contract aimed to revamp the home affairs administrative system and to prevent fraud.

In a letter the department disputed the contract last year accusing Gijima of non-delivery and denying the authority of the accounting officer to sign the contract on behalf of Home Affairs.

Bogoshi said the Institute of Directors did an assessment on whether the Gijima board had performed well in dealing with the dispute over the home affairs contract.

The institute found that the board had conducted itself as leaders who acted in the best interest of all stakeholders, said Bogoshi.

The financial results showed that Gijima’s revenue was down by 12.8% to R2.6 billion.

Bogoshi said the company was stabilising and in the second half of the financial period managed to generate R80 million in revenue.

He said Gijima’s professional services division’s revenue dropped by 36% and the profit was reduced by 104%.

He described the retrenching of staff as a painful period of the company’s history but added that Gijima had retained its highly-skilled employees and more money would be spent on further up-skilling the personnel.

Bogoshi revealed the company’s Vision 2025 and said Gijima would strive to focus more on growing its professional services business by offering products like Apple’s iPads.

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