ASX-listed ICT services provider, Data#3 (ASX:DTL) has squashed concerns shareholders may have after the Australian Government Information Management Office (AGIMO) released a request for tender on a contract it currently maintains.
Data#3 landed the contact in 2008 with the Department of Defence and it runs through to October next year.
In a statement to the ASX, the service provider stated its Microsoft Large Account Reseller contract with AGIMO, had not ‘doubled the licensing division’s revenue to $292.8 million in the year it was finalized and continued to be a major share of earnings,’ as indicated in a previous media report.
Data#3 CFO, Brem Hill, stated in its full year shareholder briefings for 2008/09 the Federal Government contract generated revenues of $81 million in that financial year of a total software licensing revenue of $298.2 million, representing about 27 per cent.
“While the contract was significant in revenue terms and presented ongoing opportunity within both Federal Government and other jurisdictions, sales margin was extremely low and not material to the division’s bottom line,” Hill said.
Data#3 managing director, John Grant, said the work it done with AGIMO and other Federal Government agencies covered in the contract was best practice in software licensing and had been recognised by both Microsoft and its customers.
“We will have had a four year relationship with the Federal Government by the time this latest extension is completed next year. In this time we’ve overcome substantial complexity both across government agencies and within Microsoft and delivered substantial value both in licensing and asset management,” Grant said. “We welcome the opportunity to bid for renewal of the contract and build on the value we have already delivered to the government.”
AGIMO’s request for tender indicated it would like to appoint a panel consisting of one or more suppliers that all agencies can access. The contract would be valid for three years, with three 12 month extension options.