GIJ - Gijima Group Limited - Resolution between the department of home affairs

GIJ - Gijima Group Limited - Resolution between the department of home affairs  
and Gijima over contract, withdrawal of cautionary notice and trading           
statement                                                                       
GIJIMA GROUP LIMITED                                                            
(Incorporated in the Republic of South Africa)                                  
Registration number 1998/021790/06                                              
Share code: GIJ                                                                 
ISIN:  ZAE000147443                                                             
("Gijima" or "the Company")                                                     
RESOLUTION BETWEEN THE DEPARTMENT OF HOME AFFAIRS AND GIJIMA OVER CONTRACT,     
WITHDRAWAL OF CAUTIONARY NOTICE AND TRADING STATEMENT                           
Shareholders are referred to the cautionary announcement released on SENS on    
24 February 2011.                                                               
Shareholders are also referred to the various SENS announcements released       
since April 2010 wherein Gijima reported that it had received a letter dated    
13 April 2010 from the Department of Home Affairs ("the Department"), in which  
the Department contended the validity of a contract it concluded with Gijima    
in June 2008 for the Who Am I Online (WAIO) system. Gijima disputed this        
contention.                                                                     
Gijima was awarded the ground-breaking contract in June 2008 to overhaul the    
Department`s information technology infrastructure. The contract for the WAIO   
system covers the design, development and implementation of an integrated core  
system for the Department, including all business processes of both its Civics  
and Immigration Divisions.                                                      
Gijima and its funding partners have reached an amicable settlement agreement   
with the Department to map a way forward for the completion of the (WAIO)       
project. The full and final settlement agreement has been signed by all         
parties, but is subject to the fulfilment of certain suspensive conditions.     
The settlement brings the project back in line with the original objectives     
and cost estimates. The total final capital cost of the items in the scope of   
this project, including expenditure to date of approximately R1.4 billion, is   
estimated to be approximately R2.27 billion. This is in line with the Treasury  
budget of R2.23 billion for the project, which was conditionally approved in    
2009.                                                                           
As part of the settlement Gijima has agreed to incur certain manageable losses  
which will be a once-off impact during this financial period.                   
The cautionary notice released on SENS on 24 February 2011 is accordingly       
withdrawn.                                                                      
Trading Statement                                                               
Gijima is currently finalising its results for the six months ended 31          
December 2010, which are planned to be released on SENS on or about 9 March     
2011.                                                                           
The settlement with the Department had an adverse once-off impact on the        
Company`s earnings per share ("EPS") of 27.99 cents for the six months ended    
31 December 2010. This comprises the writing down of certain invoices and the   
future rendering of support and maintenance services as well as all direct      
costs that are linked to the settlement, namely legal fees, the cost of skills  
retention over the duration of the issue at hand, as well as the investment in  
restructuring the project team to align with Gijima`s involvement in the        
project.                                                                        
Against the background of the once-off impact of the settlement with the        
Department, as well as the impact of the issue on Gijima`s other operations,    
shareholders are advised that Gijima`s reported basic earnings per share and    
headline earnings per share ("HEPS") for the six months ended 31 December 2010  
are expected to reduce to a loss of between 27.5 cents and 28.5 cents from the  
reported EPS of 8.80 cents and HEPS of 8.83 cents for the six months ended 31   
December 2009.                                                                  
The financial information on which this trading statement is based has not      
been audited and reported on by the Company`s external auditors.                
Samrand                                                                         
7 March 2011                                                                    
Sponsor                                                                         
RAND MERCHANT BANK (A division of FirstRand Bank Limited)                       
Date: 07/03/2011 07:30:01 Supplied by www.sharenet.co.za                     
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