| Thu 4 Sep 2003, 16:34 | | Settles Crawford Litigation and Withdrawal Of Caut |
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ADvTECH Settles Crawford Litigation and Withdrawal Of Cautionary Announcement
ADVTECH LIMITED
Incorporated in the Republic of South Africa
(Registration number 1990/001119/06)
Share code: ADH ISIN: ZAE000013819
("ADvTECH" or "the company")
ADvTECH SETTLES CRAWFORD LITIGATION AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Following the cautionary announcement dated 25 August 2003, regarding the
litigation between the company and Graeme Robert Crawford ("GRC"), shareholders
of ADvTECH are advised that final settlement has been reached between the
parties. By agreement, the settlement has been made an award ("the award") by
the arbitrator, The Honourable Mr Justice Kumleben.
The litigation proceedings, which commenced in 1999, were the result of
claims against GRC for breach of a restraint of trade agreement with ADvTECH,
diversion of a corporate opportunity for the benefit of himself instead of
ADvTECH, in breach of the fiduciary duties owed by him to the company, certain
non-disclosures relating to employee benefits and unauthorised granting of
bursaries to GRC family members.
In terms of the settlement and without prejudice and admission of liability:
* GRC will deliver 15 394 874 ADvTECH shares ("the award shares") to ADvTECH;
* GRC will make a payment to ADvTECH of R5 250 000, plus interest to the date
of payment, by no later than Monday, 8 December 2003; and
* ADvTECH has agreed to GRC"s continued use of the name and trademark
"Reddam", and will not seek to enforce title thereto. This agreement also serves
to clarify that Reddam is in no way related to ADvTECH"s prestigious Crawford
Schools Group and will assist in eliminating confusion in the market which had
been caused in this regard.
At the share price ruling on 2 September 2003, of 58 cents, the award is
valued at R14,2 million. The Board"s decision to settle at this time will enable
the company to focus on operations and growth, following the excellent progress
made in the last year. The decision also takes account of the substantial legal
costs incurred to date and the fact that the limited availability of legal teams
would have protracted the matter to at least the end of 2004.
Part of the award will be treated as a recoupment of legal costs incurred in
2003 and the shares will be acquired by the ADvTECH Share Incentive Trust ("the
Trust"). During the current financial year, the company issued 10 million share
options to 36 senior staff members (no executive directors were included), which
increased the number of share options for which the Trust does not hold shares
to 17,9 million. The directors propose to utilise the award shares received from
GRC to minimise the effect of future dilution.
2. The financial effects
Set out in the table below are the financial effects of the award on
ADvTECH"s pro forma results for the 12 months ended 30 June 2003. These have
been prepared for illustrative purposes only, to provide information on how the
award would have impacted on the results and financial position of ADvTECH. The
notional diluted basis takes into account the uncovered share incentive scheme
options mentioned above which could be exercised in the future.
Pro forma
Unaudited figures unaudited figures
for 12 months for 12 months
to 30 June to 30 June
2003 2003
before Pro forma after Percentage
the award effects the award change
(cents) Note (cents) (cents) (%)
Headline earnings per share 6,2 1 1,5 7,7 24,2
Notional diluted headline
earnings per share 6,0 2 1,7 7,7 28,3
Net asset value per share 49,8 3 3,0 52,8 6,0
Gearing (%) 33 4 29 (12,1)
Notes:
1. Assumes the receipt of the cash portion of the award on 1 July 2002 and
consequent interest saving (after tax) computed at 14,5%.
2. Assumes that the award shares received are sold to the Trust, reducing the
uncovered options as noted above.
3. Assumptions as per note 1 and includes the loan to the Trust arising on the
sale of the award shares to the Trust.
4. Assumes the benefits to both shareholders" funds and borrowings of the cash
portion of the award and the increase in shareholders" funds from the sale of
the award shares.
3. Other litigation
ADvTECH"s claim against the former vendors of the Communicate Group is
currently in progress. The litigation sub-committee of the Board and the
company"s legal teams are now able to focus their full attention on concluding
this matter in the interest of shareholders.
4. Withdrawal of cautionary announcement
Shareholders are advised that they no longer need to exercise caution when
dealing in their ADvTECH shares on the JSE Securities Exchange South Africa.
Johannesburg
4 September 2003
Sponsor
BRIDGE CAPITAL
Reporting accoutants and auditors
Deloitte & Touche Chartered Accountants (SA)
Registered Accountants and Auditors
Date: 04/09/2003 04:30:04 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
