Brisbane-based software vendor, TechnologyOne (ASX:TNE), has announced it has resolved its dispute with the Brisbane City Council (BCC) over its local government systems (LGS) program in a confidential settlement.
The issue became public in January when the BCC revealed there were problems with the delivery of the system, which could result in a cost blowout of $60 million.
In a brief statement filled with the Australian Securities Exchange (ASX) on 5 December, TechnologyOne told shareholders that in good faith, both parties resolved their differences on a without fault basis.
TechnologyOne said the terms of the settlement were confidential and there would be no impact on its earnings as a result of the settlement.
In June 2015, the Brisbane City Council awarded TechnologyOne a contract for the replacement of 13 IT systems that supports the council’s core business functions.
After the BCC made the delivery issues public, TechnologyOne quickly returned fire, telling its shareholders that the majority of the project’s estimated costs blowout had been entirely at the hands of the council.
In May, the BCC issued TechnologyOne with a notice to show cause, effectively giving the company 28 days to prove why it should keep the contract.
In July, TechOne warned the BCC it would pursue legal action claiming damages worth $50 million or more over project “delays”.
At the time, TechnologyOne noted that a long and drawn out court case could expose Brisbane ratepayers to the multimillion-dollar damages claim.
Brisbane council meetings revealed that a legal settlement between the parties could cost BCC up to $5 million.
In late November the software vendor announced its financial results for the 2017 financial year with the cloud business delivering in $2.5 million profit for the year ending September, a significant change compared to the previous year $2.2 million loss.
Total revenue for the year was $273.2 million, a 10 per cent growth compared to the previous reporting year when the software vendor posted $249 million. Net profit after tax (NPAT) was up eight per cent, posting $44.5 million.