Information and communications group Gijima on Monday announced that it had reached a settlement with the Department of Home Affairs over a disputed R2,5-billion contract.

But the JSE-listed company’s share price fell by more than 7% to 77c a share on the news, as it announced that it would incur certain “manageable” losses.

The settlement related to the Who Am I Online project taken on by Gijima in 2008, to overhaul the department’s information technology infrastructure. However, in April last year, the department declared the contract invalid reportedly owing to failure to perform.

Negotiations between the two parties had now reached a conclusion that would bring the project back in line with the R2,27-billion budget as set out by the National Treasury, including the R1,4-billion already spent to date.

Gijima, which will publish its interim results on Wednesday, expects to report a loss of between 27,5c a share and 28,5c a share for the financial period ended December 31.

This was compared with positive earnings of 8,8c a share and headline earnings a share of 8,83c for the comparable six-month period the previous year.

The settlement would see the company having to write down certain invoices, future support and maintenance services and all direct cost linked to the settlement.