Listed information technology (IT) services company, Raw Capital Partners Limited (Raw Capital), has today paid a $33,000 fine following an Australian Securities and Investments Commission (ASIC) investigation into its alleged failure to properly inform the market about the loss of a significant IT service contract.

Raw Capital agreed to pay the fine to comply with an infringement notice issued by ASIC on 18 June 2007. The notice alleges that the company failed to comply with the continuous disclosure obligations contained in the Corporations Act (the Act) by not immediately notifying the Australian Securities Exchange (ASX) that it had lost a long-standing agreement with Optus Networks Pty Limited (Optus) for the provision of IT services (the Agreement).

The Agreement provided approximately 67 per cent of Raw Capital’s revenue for the 2005 and 2006 financial years.

ASIC believes that Raw Capital became aware on 31 October 2006 that the Agreement was not to be renewed beyond its expiry on 28 February 2007 but did not announce that information to the ASX until the afternoon of 24 November 2006. This announcement followed the service of a notice by ASIC on Raw Capital requiring the production of documents relating to the Agreement.

Raw Capital elected to comply with the infringement notice. As provided under the Act, compliance with the notice is not an admission of guilty or liability, and Raw Capital is not regarded as having contravened subsection 674(2) of the Act (Obligation of an entity to provide information to market operator).

An extract of the notice is attached.

Further information about ASIC’s administration of infringement notices is available at http://www.asic.gov.au/clerp9, under ‘continuous disclosure’.

Extract of infringement notice - Details of the alleged contravention

The facts

Raw Capital is a public company listed on ASX Limited ("ASX") and conducts a computer technology services business.

In September 2001 Raw Capital entered into an agreement with Optus Networks Pty Limited ("Optus") for the provision to Optus of network, server, desktop and application support services ("the Optus Agreement"). The Optus Agreement was varied and extended over time by way of variation agreements.

On about 30 August 2006 the Optus Agreement was extended until 28 February 2007 with an option, exercisable at Optus' sole discretion, to extend the term of the agreement until 31 August 2007 by Optus giving notice to Raw Capital prior to 31 December 2006.

On 30 October 2006, Mr Douglas Wong, Raw Capital's Managing Director, sent an email to Mr Glenn Seward, the General Manager for Business Improvement and Systems at Optus, suggesting that immediate discussions be held as to whether Optus intended to extend the Optus Agreement beyond 28 February 2007.

On 30 October 2006 Mr Seward telephoned Mr Wong and during the conversation advised that Optus would not be extending the Optus Agreement. Mr Wong nominated Mr Gregg Clough, who was then Raw Capital's Service Delivery and Contracts Manager, to work through the expiry of the Optus Agreement.

On 31 October 2006 in discussions with Mr Seward, Mr Clough sought Optus' assistance in Raw Capital meeting redundancy and other employee liabilities that would arise from the expiry of the Optus Agreement.

Following these discussions, at about 1.05pm on 31 October 2006, Mr Clough sent an email to Mr Wong confirming that Optus would not be extending the Optus Agreement and that he had discussed the matter of Raw Capital's employee liabilities with Mr Clough. Mr Wong saw this email no later than about 1.17pm on 31 October 2006, when he responded to it.

On 22 November 2006, ASIC served a notice to produce books on Raw Capital requiring the company to produce documents relating to the Optus Agreement.

At about 5.41pm on 24 November 2006, Raw Capital released an announcement to ASX entitled "Agreement with Optus Networks Pty Ltd" ("the Announcement"). The Announcement contained the following information:

Optus Networks Pty Limited ("Optus") did not intend to renew the agreement with Raw Capital for the provision of network, server, desktop and application support services beyond its expiry on 28 February 2007. ("the Information")

The Optus Agreement was Raw Capital's major support services contract, which over the 2 previous financial years had provided approximately 67% of Raw Capital's revenue.

The Contravention

This Infringement Notice has been issued because ASIC believes that Raw Capital contravened subsection 674(2) of the Act in the period from 31 October 2006 to 5.41pm on 24 November 2006, when Raw Capital made the Announcement to ASX, in that:

(a) Raw Capital is an entity to which subsection 674(2) of the Act applies.

(b) From 31 October 2006, Mr Wong came into possession of the Information in the course of his duties as Managing Director of Raw Capital.

(c) By reason of the matters referred to in paragraph (b) above, from 31 October 2006 Raw Capital became aware of the Information.

(d) The Information was information that a reasonable person would expect, if it were generally available, to have a material effect on the price or value of securities of Raw Capital, because:

• Raw Capital is a company whose business is focussed on the provision of IT services.
• Notes to the Financial Statements in the Annual Financial Reports of Raw Capital for the 2006, 2005, 2004 and 2003 financial years stated:

"A significant proportion of the revenue of [Raw Capital] is derived from two main managed services outsourcing customers, Singtel Optus Pty Limited and Energy Australia."

• The Optus Agreement provided approximately 67% of Raw Capital's revenue for the 2005 and 2006 financial years.

(e) From 31 October 2006, ASX Listing Rule 3.1A (the exception to ASX Listing Rule 3.1) did not apply to the Information because a reasonable person would have expected the Information to be disclosed to ASX and none of the matters referred to in Listing rule 3.1A.3 applied to the Information.

(f) Consequently, from 31 October 2006, ASX Listing Rule 3.1 required Raw Capital to tell ASX of the Information.

(g) Between 31 October 2006 and 5.41pm on 24 November 2006, when Raw Capital made the Announcement to ASX, the Information was not generally available.

(h) Raw Capital did not tell ASX of the Information until 5.41pm on 24 November 2006, when the company made the Announcement to ASX.