CSG loses appeal in Fuji Xerox case

IT services company CSG Limited (ASX:CSV) has lost an appeal against an unfavourable verdict in its court battle against Fuji Xerox Australia.

An appeals court has found that Fuji Xerox validly terminated prior agreements under which CSG had been acting as a dealer for the company in Brisbane and Maroochydore, CSG said in a statement.

The Supreme Court of New South Wales Court of Appeal handed down the decision in the long-running case on Monday.

Fuji Xerox had terminated the agreement last year, not long after CSG announced a $31 million deal to become dealer for Fuji Xerox rival Canon and take over the company's Australian print services group.

Fuji Xerox then sought and won a court decision requiring CSG to allow customers in Brisbane and Maroochydore the choice of having Fuji Xerox take over their accounts directly.

In a market update, CSG said that as the appeal related to the validity of the termination of the dealer agreements, it is not possible to determine whether it will be liable for damages to Fuji Xerox, or how much it may need to pay.

When it lodged its appeal in November last year, CSG estimated that the decision could impact net profit by between $3 million and $4 million — but only in the worst case scenario whereby every customer decided to jump ship.

Realistically, the company had estimated no material impact, and its FY11 results seem to bear this out. The company reported 26.2 per cent higher profit of $40.2 million, in a result aided greatly by the Canon deal.

CSG shares fell 2.75 per cent during Monday's trading to $1.060.

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