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Further to our earlier announcement dated 31 March 2000 on the above matter, we are pleased to provide hereunder additional information for public release :-
i. On the instructions of Transmission Project Services Sdn. Bhd. ("TPS"), the Statement of Claims were served on the First, Second and Third Defendants on 9th March 2000. This shall then be the date when TPS instituted litigation proceedings.
ii. The material litigation will not have any operational impact on the Group as the matter is still at the documentation stage and no business operations have commenced as yet. TPS has fulfilled its obligations under the Conditional Licensing Agreements dated 12 August 1999 (hereinafter referred to as "the agreement") with the payment of the sum of AUD800,000 to the Licensor, Greathall Overseas Limited ("Greathall") on 16 August 1999. The balance of AUD600,000 shall not be due and payable to the Licensor in view of the fact that the Defendants have failed to complete and satisfy the conditions of the agreement. The Licensing arrangements shall not be able to contribute to the Group's future earnings until all the outstanding issues have been cleared and resolved.
In accordance with the accounting policy of the Group, the license fee will be amortised over three (3) years beginning from the financial year ended 31st December, 2000. However, in the event that TPS fails in its legal proceedings for the refund of the sums paid to Greathall, TPS will write off the investment of AUD800,000 immediately in the year it is realised. The effect of this write-off in the financial year ended 31st December 1999 will be a decrease in earnings per share by 12 sen from 88 sen to 76 sen and decrease in net tangible assets per share by 11 sen from 341 sen to 330 sen.
iii. The Company does not expect any losses to the Group arising from this litigation because it involves a clear breach of the terms of the agreement by the Defendants.
iv. Our solicitor is of the view that this is a straight forward debt recovery claim, therefore there are strong grounds for TPS to succeed in its claim.