TechnologyOne seeks to put Brisbane City Council saga behind it

Row causes $2M profit hit, but no further impact expected over full year

TechnologyOne has put the Brisbane City Council saga behind it, expecting the dispute to have no further impact on profits.

In a half year report announced to the ASX this morning, the company said the row over the project had cost the business $2 million, but it did “not expect any further impact on our profits and losses over the full year”.

Results for the half year ending March 31 exceeded market expectations, the company said, with revenue up 13 per cent and net profit before tax up 10 per cent. Total consulting profit, however, fell $4.1 million due in part to the actions of Brisbane City Council, the report said.

TechnologyOne and the council have been involved in a long running disagreement over a contract to replace 13 outdated customer service systems.

At the beginning of the year Brisbane Lord Mayor Graham Quirk blasted the company, announcing the work could end up 18 months behind schedule and $60 million more expensive than anticipated.

In response, the Brisbane-headquartered software company said the council was to blame for poorly defined business processes leading to a significant increase in the project’s scope.

In today’s report, TechnologyOne said it had been “frustrated by BCC to deliver against the contract, as BCC is attempting to protect their negotiating position”.

Other factors in the consulting services profit drop were a $1.6 million company conference and the opening of a consulting practice in the UK.

Initial license fees grew strongly over the half year, up 30 per cent “which exceeded our expectations, because several deals closed earlier than anticipated,” the report states. The company brought on 30 new customers in the six months to March.

TechnologyOne increased its research and development investment, putting $23.6 million into developing its Ci Enterprise Suite, Ci Anywhere product and it’s cloud offerings. Cloud service fees rose by 93 per cent, with the expectation profits will be $2.5m for the full year. The SaaS offering currently serves 199 customers.

"TechnologyOne Cloud has now moved from a loss position to profit, and will continue to grow quickly and profitably over the next five years, as we prove the substantial benefits of our 'mass production architecture'," the company said.

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