TechnologyOne’s profit for the six months ending March was impacted to the tune of millions of dollars thanks to its troubled Brisbane City Council project.
According to the company’s latest financial results, its total consulting profit was down by $4.1 million compared to the same period the previous year, impacted “significantly” by its troubled project with the Brisbane City Council (BCC).
The publicly-listed enterprise software vendor was awarded the contract for the BCC’s local government systems (LGS) project on 30 June 2015 to build a software solution for $50 million over 10 years, a deal which has since come under considerable scrutiny.
On 2 May, the council issue TechnologyOne with a notice to show cause regarding the local government systems (LGS) project. It is understood that such a notice is the first step taken when a party wishes to pursue legal action.
Also in May, TechnologyOne hit back at its accuser, offering a detailed list of its version of the events leading to the current state of affairs, which may end up being resolved through legal action.
“As the chronology provided shows, the BCC LGS Project was not in trouble when the Lord Mayor made his statement on 25 January 2017,” TechnologyOne former chief and executive chairman, Adrian Di Marco, said at the time.
Now, the company has revealed that the issues surrounding the BCC LGS project has impacted its consulting services business unit by $2 million.
TechnologyOne said it had been “frustrated by BCC to deliver against the contract, as BCC is attempting to protect their negotiating position”.
Another factor contributing to various costs that pulled at the company’s profit tally for the period was its Evolve customer conference, which is held every three years, and incurred costs of around $1.8 million.
The company told shareholders that it expected its full year results for its total consulting profit will be down by approximately $1.5 million.
Overall, however, the company’s revenues were up by 13 per cent to $113.9 million for the period, while after tax profit was up by 10 per cent, to $8 million.
