Advantage Settles Dispute, Restates Surplus
June 14, 2002
Advantage Group Ltd today announced it had been successful in negotiating a full and final settlement for an outstanding legal dispute, at a significantly reduced amount to the provision in its financial statements.
The net result is that the forecast surplus for the group for the year ending 30 June, 2002 will increase from $2.157 million to $4.479 million.
The directors had provided $2.954 million for settlement of the dispute with the vendors of Advantage Retail Solutions Limited. The dispute related to the amount of the purchase price. The settlement requires payment of $632,000 resulting in an excess provision of $2.322 million.
"The successful negotiation means that drawn-out legal proceedings are avoided," Advantage Chairman Evan Christian said.
Advantage Group currently has a capital notes issue in the market seeking to raise $10 million with a provision for oversubscription of $5 million at a minimum interest rate of 10% pa. The prospectus includes a profit forecast for the group of $2.157m. The restated forecast surplus for the group for the year ending 30 June 2002 of $4.479 million (made up of $ 2.157 million plus the excess provision of $ 2.322 million) is based on the attached assumptions. This excess provision will be reported as an unusual item in the Statement of Financial Performance.
Issued on behalf of Advantage by NBPR (Sarah Williams, 09 913 1830 or 021 928125).
Assumptions for Forecast The principal assumptions underlying the consolidated profit forecast for Advantage Group Limited for the year ending 30 June 2002 are set out below. They are based on events and conditions existing as at 5 June 2002. They are also based upon the Group's current accounting policies.
1 There will be no material change in the existing general economic, legislative or competitive environments, which will significantly effect the activities and operations of the Group from 5 June 2002.
2 The Group's existing operations and activities will continue.
3 Forecast revenues and margins are based upon known contracts and orders combined with Directors' estimates to 30 June 2002.
Foreign Currency Translation
4 There will be no material changes in exchange rates of countries where the Group has material trading interests with. For the purposes of this forecast exchange rates of USD 0.435 and AUD 0.81 have been utilised
5 The $950,000 cost of the Capital Notes issue will be directly off-set against the funds raised and charged against the Statement of Financial Performance in equal instalments until the First Election Date.
6 Advantage Computers Limited has brought an action against Advantage. This was heard in the High Court in August 2001, with judgement yet to be given. The Board are of the view that adequate provision has been made for any possible outcome. The forecasts assume this judgement is not finalised prior to 30 June 2002.
7 The Company and Advantage Group (Aust.) Pty Limited have recently issued High Court proceedings against the vendors of KCS Australia Pty Limited seeking the return of the consideration paid for the business and cancellation of the 2,052,286 Company Shares issued to the vendors as part of that consideration and held in escrow. The vendors of KCS Australia Pty Ltd (Whitewolf) have brought an action against the Company subsequent to Advantage Group (Aust.) Pty Limited rescinding the sale and purchase agreement for Whitewolf. The Board are of the view that any cash payment required has been adequately provided for.