TechnologyOne has announced that its dispute with Brisbane City Council (BCC) over the delivery of an IT systems replacement program has come to a resolution.
The Australian Securities Exchange (ASX)-listed enterprise technology company did not disclose the terms of the settlement, but said it won't impact its earnings.
"In good faith, both parties have now resolved their differences on a without fault basis," TechnologyOne said in a disclosure to the ASX.
The dispute concerned a AU$122 million contract to deliver the Local Government Systems (LGS) Program that TechnologyOne was awarded in June 2015.
At the start of the year, Brisbane Lord Mayor Graham Quirk directed council officers to renegotiate the contract with the company after learning of an 18-month delay in deployment and a potential AU$60 million cost blowout.
BCC had stopped making payments to TechnologyOne between October 2016 and May 2017, after it was decided the company needed to deliver "significant" milestones first. However, the council paid AU$750,000 in June after being issued a breach notice by TechnologyOne in May for failure to pay invoices.
BCC had issued a second notice to show cause -- the first was issued in May -- as to why the council should not terminate the contract to deliver the LGS, detailing material breaches of the contract that the council alleged had been committed by TechnologyOne.
In July, BCC formally terminated its contract with the company.
In a statement at the time, BCC said it had advised TechnologyOne it was pulling the pin as a result of the Brisbane-based company's "persistent and ongoing contract breaches, significant and unacceptable delays in progressing the contract, and a complete loss of faith in the company's ability to deliver a replacement system for council's IT systems".
TechnologyOne had previously said there appeared to be "confusion and misunderstanding" within BCC on the history and status of the project, adding that the council had requested "substantially more" functionality than was originally tendered for.
Describing it as a "legal tactic", founder, former CEO, and now chairman of TechnologyOne Adrian Di Marco said BCC had been insisting that the company configure a system "strictly in accordance" with the contract established in 2015 that did not "reflect" the council's current business requirements.
"Had BCC been commercially sensible and not been driven to improve their negotiating position, BCC would be on track for a new digitally enabled system by January 2018," TechnologyOne said in its ASX investor presentation in May.
Last month, TechnologyOne reported an after-tax profit of AU$44.5 million for the 12 months ending September 30, 2017, compared to AU$41.3 million reported in the previous year.
Revenue for the year was AU$272.5 million, up from AU$248.1 million in 2016; while earnings before interest, taxes, depreciation, and amortisation (EBITDA) was AU$61.6 million in 2017, compared to AU$56.4 million the previous year.
Di Marco in November said TechnologyOne is eyeing "huge opportunities" over the next five years as more organisations move to the cloud, and it looking to capitalise on the continued use of mobile devices. He said there are also opportunities as AI starts to become a "real thing" within the enterprise.
The Department of Finance is leading the implementation of a whole-of-government Shared and Common Services Program and the Australian Communications and Media Authority is next in line for the upgrade.
The certification TechnologyOne received from IRAP does not give it an automatic green light to provide the Australian government with a SaaS solution, rather it is a way of showing customers it is serious about continuous improvement and ticking as many compliance boxes as possible.
The ongoing contractual dispute has had another development, with Brisbane City Council pulling the plug on its multimillion-dollar contract, claiming TechnologyOne was simply out of its depth.
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