Investors liked the numbers in yesterday’s half year report from Brisbane-based TechOne shares with the shares up 4.5% to $5.78 in a market that eased overall.
That’s the highest they have been this year after being undermined by investors concerns over the contract problems with the Brisbane City Council.
A solid profit rise, talk of suing over contract problems with the huge Brisbane City Council and an interim dividend up 10% to 2.6 cents a share.
The company said revenues were up by 13% to $113.9 million for the half year, while after tax profit was up by 10%, to $8 million.
The half year was shrouded in controversy after Brisbane Lord Mayor Graham Quirk publicly attacked out the company about a project that has allegedly over-run.
Executive chairman and company founder Adrian Di Marco said yesterday the dispute would now likely result in legal action from TechOne.
According to the results, its total consulting profit was down by $4.1 million in the half year compared to the same period the previous year, impacted “significantly” by its troubled project with the Brisbane City Council (BCC). The company warned that it expected its full year results for its total consulting profit will be down by approximately $1.5 million.
The company, an enterprise software vendor was awarded the contract for the BCC’s local government systems (LGS) project in June 2015 to build a software solution for $50 million over 10 years, a deal which has since come under considerable scrutiny.
On May 2, 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. The company hit back with its own version of the dispute. The market though liked the news that its cloud business was at last performing well
Mr Di Marco said; ”For the whole year we think we will have a cloud profit of $2.5 million, while last year it made a full-year loss of $2.2 million. So to get to a profit is quite a significant turnaround from that."
The company grew licence fees by 30% to $24.1 million and cloud service fees were up 93% to $19.9 million.
The chairman said it would increase investment in a new generation of products, after its cloud operations achieved profitability for the first time in the half year.
