The Board of IT&e Limited ('IT&e')(ASX: ITE)(AIM: ITEL)(ITJEF: PNK), a leading provider of software and consulting services to the global financial markets, is pleased to announce that a new customer ('Partner') has selected IT&e's RAZOR product as its core risk management application.
The Partner cannot be named at this time for commercial confidentiality reasons internal to the Partner. However IT&e expects to be able to name the Partner soon once clearance has been received to do so.
The soon to be launched Partner exchange and clearinghouse, will offer risk functionality well beyond the current industry standard for the Central Counter-Party (CCP) market space. IT&e and the Partner have executed a license agreement which will enable the Partner exchange and clearinghouse to make use of RAZOR's high-performance risk engine to meet all in-house risk management needs as well as to provide real-time risk information to their members.
This transaction constitutes the third large CCP risk technology mandate awarded to IT&e, and further distances RAZOR from the competition in this high-impact market segment. It also represents a milestone for IT&e in providing coverage to exchanges across the globe - Asia (ASX), Europe (LCH Clearnet) and the Americas (the Partner).
John Groetch, IT&e's Chief Operating Officer for the Americas said, "This win demonstrates RAZOR's leadership in the CCP realm where we expect enormous growth opportunities as the OTC marketplace continues evolving toward centralized clearing and settlement. Inter-dealer strains are currently evident across all tiers of the OTC markets, and regulatory and capital drivers further underline the need for a new model that inherently reduces counterparty credit risk and optimizes capital allocation. The Partner team is rife with thought leaders and industry stalwarts who we believe are setting a new standard for the OTC marketplace."
Besides an upfront license payment, this transaction includes an annuitised payment stream with additional upside potential dependent upon exchange participation levels. This deal also involves partnered development and deployment between IT&e and one of the world leading exchange software providers. IT&e will release further details of this deal whenhen releasing its financial results for Financial Year 2008.
In addition to this significant deal, IT&e has also recently closed a Razor License and Maintenance Agreement with a major UK financial institution. In that particular case Razor will be used to address the client's Economic Capital planning requirements.
Because of the timing of the two transactions, the full revenue impact will not be refelcted in Financial Year 2008. That circumstance, the previously announced loss of a joint venture to develop PTX and because two other large deals in negotiation have spilled over to Financial Year 2009 means that IT&e will not achieve an operating profit in Financial Year 2008. Actual results have not been finalised and will be subject to usual accounting adjustments around revenue recognition and carrying value of goodwill. At this time IT&e expects to make an operating loss for Financial Year 2008 in the range of $3.7m to $4.2m.