Gijima’s share price tanked on Wednesday after the company revealed it has decided to suspend dividend payouts, with no indication that the payments will be reinstated any time soon.
The JSE-listed technology group released a grim set of interim results Wednesday, just two days after it announced a settlement agreement with the department of home affairs.
The company has had to pay a once-off settlement cost of R373,9m and has agreed to cut back on the budgeted amount for the project.
The dispute between home affairs and Gijima, which has taken 10 months to resolve, contributed to the company reporting a net loss of R270m for the six months to December 2010.
Revenue was more than 15% lower over the same period last year.
The poor performance has prompted Gijima’s board to suspend the payment of dividends until conditions improve.
Earlier this week, Gijima CEO Jonas Bogoshi tried to assure shareholders that the impact of the settlement would be once off, saying he expected the next half of the year to be better.
However, Investors are voting with their feet, selling the share down 19,5% to 62c in late afternoon trade on Wednesday.
The home affairs contract is Gijima’s largest deal with government and makes up 15% of the group’s annual revenue.
The project should result in the overhaul of the department’s technology infrastructure, and includes the design, development, implementation and maintenance of its core systems.
The system will link the Home Affairs National Identification System to systems operated by the SA Police Service, the national health-care service and emergency services. — Candice Jones, TechCentral