ASG sues Victoria over cancelled contract

Perth-based IT service provider ASG Group is taking the Victorian government to court over the decision to terminate a contract to build a new business management system.

The company announced in a market update that it has initiated legal proceedings against the state of Victoria over the decision by the Victorian Department of Environment, Land, Water and Planning to terminate an application implementation project.

The department advised ASG that it has taken the strategic decision to adopt a whole-of-government model for its enterprise resource planning (ERP) systems instead.

ASG asserted that its contract obliges the state to indemnify ASG for liabilities and expenses as a result of the contract termination, but that negotiations with the department over the terms of the settlement have failed.

The company does not expect the legal action to have an adverse material impact on its profitability and has maintained its guidance of revenue in the range of $185 million to $190 million in FY16.

ASG reported $88.2 million in revenue for the first half of the financial year, up 12.6% year-on-year.

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