Acqn., Placing & Open Offer

JETCAM INTERNATIONAL HOLDINGS LIMITED 30 September 1999 JETCAM INTERNATIONAL HOLDINGS LIMITED ('JETCAM' or 'the Company') Proposed Acquisition of Camtek Limited Placing and Open Offer of 3,280,260 new Ordinary Shares at 90p per share JETCAM develops and markets software systems for computer programming of punching and cutting machines used in sheet metal fabrication. JETCAM, which listed on the Alternative Investment Market ('AIM') in April 1999, announces the acquisition of Camtek Limited ('Camtek') for £4 million. Camtek, a UK company, develops and markets CAM software systems for computer numerical control programming of machines in the metal cutting and fabrication industry. * Acquisition of Camtek for a consideration of £4 million, of which £2.5 million is to be satisfied in cash and the balance by the issue of 1,666,667 new ordinary shares at a price of 90p * Placing and open offer of 3,280,260 new ordinary shares at 90p per share to raise £2.65 million, net of expenses * Camtek reported a profit before tax and exceptional items of £421,000 for the year ended 30 September 1998 and will have estimated net assets of £720,000 at completion of the acquisition. * The vendors of Camtek have warranted that Camtek's profit before tax for the current year ending 30 September 1999 will be not less than £531,000 * Geoffrey Hawkesford, co-founder of Camtek, will join the Board of JETCAM as an Executive Director with effect from completion of the acquisition, which is expected to take place following the Special General Meeting of JETCAM on 26th October 1999 * Acquisition of Camtek substantially increases the size of JETCAM and the integration of the two companies UK operations should enhance the group's market profile and give the opportunity for cost savings and accelerated profit development. * Encouraging outlook for the enlarged Group Ivan Stern, Chief Executive and Deputy Chairman of JETCAM, commented: 'When we listed on AIM earlier this year, we were confident of our ability to make acquisitions in this highly fragmented sector. Camtek represents a fantastic opportunity, effectively doubling the size of JETCAM with little cross-over in terms of customer base. 'We are extremely excited at the opportunities that are now available to the enlarged group. Moreover, this acquisition will provide investors and potential investors with a much sought after increase in the liquidity in JETCAM's shares.' 30 September 1999 ENQUIRIES JETCAM International Holdings Limited Tel: 00 377 97 97 16 40 John Wright College Hill Tel: (00 44)20 7 4572020 Nicola Weiner John East & Partners Limited Tel: (00 44)20 7 6282200 John East David Worlidge JETCAM INTERNATIONAL HOLDINGS LIMITED ('JETCAM' or 'the Company') Proposed Acquisition of Camtek Limited Placing and Open Offer of 3,280,260 new Ordinary Shares at 90p per share Introduction It was announced today that JETCAM has conditionally agreed to acquire the entire issued share capital of Camtek, a company whose principal activity is the development and marketing of CAM software systems for computer numerical control programming of machines in its primary market areas of metal cutting and fabrication. These are complementary activities to the business of your Company. The consideration for the acquisition is £4 million, of which £1.5 million is to be satisfied by the allotment and issue of the Consideration Shares, with the balance of £2.5 million payable in cash. For the year ended 30 September, 1998, Camtek earned a profit before tax and exceptional items of £421,000 and had net assets of £934,000 at that date. The principal Vendors, being Mr Geoffrey Hawkesford and Mr Mike Anstey, have warranted that Camtek's profit before tax for the year ending 30 September, 1999, after adjustment in accordance with the Acquisition Agreement, will be not less than £531,000. The Company also proposes to raise £2.65million (net of expenses) by way of the Placing and Open Offer of 3,280,260 new Ordinary Shares at a price of 90p per share. Information on JETCAM History The business of JETCAM was conceived by Ivan Stern and William King in 1986 to develop and market software systems for computer numerical control programming of punching and cutting machines used in sheet metal fabrication and product development began in February of that year. Ivan Stern was responsible for system design and William King for implementation. The business was transferred to JETCAM Corporation Pty. Limited in 1987, following formal incorporation of that company in Australia and its first product was launched later that year. Successive releases of new product versions led to the introduction of the present range, JETCAM Expert, in 1997. In 1991 JETCAM Europe GmbH was established to distribute JETCAM products throughout Europe. JETCAM International was established in 1992 and was the main trading company of the JETCAM group until its acquisition by the Company in April 1999. JETCAM Corporation Pty Limited and JETCAM Europe GmbH were dissolved in 1992 and January 1999, respectively and all trading is now carried out through the JETCAM Group. The two-man team of Ivan Stern and William King, subsequently augmented by two administrative support staff, constituted the entire headcount of JETCAM International until the end of 1996. From the beginning of 1997, JETCAM International steadily strengthened its management, development, technical support and, through its arrangements with B.A.S.E, its administrative resources and established JETCAM UK in May 1998. The JETCAM Group now employs a total of 15 staff and, through consultancy arrangements and its arrangements with B.A.S.E., utilises the services of a further 8 people. The audited financial statements for the three year period ended 31 December 1998 show that JETCAM's business has been consistently profitable and self-financing. Revenues have grown to approximately £1.6 million with a profit, before and after taxation, of £825,000 for the year ended 31 December 1998. Today, over 2000 JETCAM software systems are installed worldwide for use with more than 120 different types of computer numerical control machines. The JETCAM Group's sales growth in recent years has not been fully reflected in profit growth, as the infrastructure has been increased to facilitate further growth in future years. The Company is entitled to, and is dependent on, all proprietary intellectual property rights in respect of JETCAM products with the exception of a specialised software library, which has recently been purchased for integration into JETCAM Expert. In May 1999, JETCAM issued 441,430 ordinary shares, which were placed with investors at 70p per share and its entire issued ordinary share capital was admitted to trading on AIM. Current Products The JETCAM Expert series of software programs provides an efficient, easy to use method for creating computer numerical control code to program metal punching and cutting machines. By combining the Directors' understanding of sheet metal processing technology with modern computer programming practices, JETCAM Expert succeeds in automating most of the steps needed to create computer numerical control code from CAD design drawings. End user product prices range from US$7,800 to US$30,000 or occasionally more, depending on model and options. The Directors consider that the key points that distinguish JETCAM Expert products from the competition are: * ease of training, use and installation; * the degree of automation possible; * speed of performance; and * high reliability coupled with low maintenance and post-sales support. Sales are made through the Company's UK subsidiary, a dealer network and original equipment manufacturers. In the year ended 31 December 1998 original equipment manufacturers provided approximately 56 per cent of JETCAM Group revenues, and the Directors consider that they will continue to provide a high proportion of sales in the future. JETCAM International also introduced a software maintenance program in 1997, which is expected to provide recurring and steadily increasing income. Product Development The development plans for JETCAM Expert contain a number of new features. As well as small improvements, the Directors believe that the move towards further automation of the process from component drawing to computer numerical control code, should enhance the Company's competitive advantage and bring benefits to users. At the same time, product demonstrations will be made easier and more compelling and the recent change to a fully operational Windows version of the product will facilitate this process. In the last quarter of 1999 JETCAM intends to release its 3D modelling and unfolding package, JETCAM 3D Expert. Already supplied in pre-release form, this is designed specifically for the computer numerical control machine user, to deal with the problems of three dimensional sheet metal component design and manufacturing construction. Used in conjunction with JETCAM Expert, the Directors believe that this will provide a well adapted tool to simplify handling of this type of work, either on its own, or in association with general purpose computer aided design packages. On 29 June, 1999 JETCAM entered into heads of agreement with Factory Automation Systems Inc., for the purchase of a non- exclusive licence to utilise its press brake simulation software. This software is used for programming press brake machines in the manufacture of sheet metal components and to give a three dimensional depiction of the bending process. The consideration for the purchase of the licence is US$100,000, together with a royalty payable at 8 per cent. of sales of JETCAM products incorporating this software. This modest outlay is expected by the Directors to accelerate the launch of JETCAM's Bend Expert product, which extends further the Company's product range for machine shop applications. In the longer term, there are other areas where the Directors see the opportunity to make a major impact on the market, focussed on the needs of the sheet metal fabrication shop, which will continue to be its prime area of expertise. The Market The Directors believe that the JETCAM Group's existing and planned products have a total annual end user market of about $240 million. Taking into account the sales mix, the Directors believe that the JETCAM Group's current market penetration equates to approximately 3.5 per cent. Competition In the computer aided manufacturing sector, the Directors believe that competition comes from three principal sources: i) independent companies, similar to JETCAM, which supply software supporting most major computer numerical control machines; ii) machine tool manufacturers which develop their own software; and iii)small suppliers serving local customers. Competitive Advantage and Barriers to Competition JETCAM has evolved, and continues to develop, a system which the Directors believe is more versatile and easier to use than competitive products, providing a considerable measure of automation, and which experience shows to be reliable, so that post-sales support requirement is low. JETCAM software contains complex algorithms which the Directors believe would be difficult to replicate and are based on over twelve years' experience in building a detailed understanding of the variety and complexity of computer numerical control machine characteristics and their continuing evolution. The Directors believe that JETCAM's software is of high quality, in terms of ease of training, reliability and maintainability. Great stress has been laid on these aspects since product inception, with the result that JETCAM International receives very few reports of problems from its user base of over 2000 installations. Market and Growth Opportunities The Directors believe that JETCAM is unusual in the breadth of computer numerical control machines which it services, in its international presence and in its reputation as a supplier of quality products. Many computer numerical control machine users employ equipment from different sources. The JETCAM Group's products provide a single software standard for a majority of these machines reducing training allowing the same job to be executed on different machines without reprogramming and minimising the need for computer numerical control programmers. The Directors believe, therefore, that the Company's software has the potential to establish itself as a standard for the industry. The enhancements currently being implemented in JETCAM's products, following the recent release of the Windows version, are intended to make the products easier to use and further automate the process which turns a drawing into computer numerical control instructions. The Directors believe that downward pressure on pricing will be lessened by being able to demonstrate more easily to the user the real value which the software brings to the tasks. The Directors believe that this should make it easier to obtain new original equipment manufacturer customers as a continuation of the process towards achieving industry standard status. It should also allow the independent dealer network already in place to be expanded and made more effective. The new product initiatives described above are intended to add new means of increasing revenues and profitability. In addition to increasing product sales, in mid-1997 JETCAM introduced maintenance agreements which generate incremental revenue and add recurring income to the existing business. The JETCAM Expert product range continues to be developed and new products are scheduled to be released to cover other already well- defined sheet metal fabrication shop requirements. The Directors believe that there is an opportunity for one software system supplier to become the dominant provider in what they perceive to be a fragmented market and that the JETCAM Group's products, market presence and reputation, position it to be able to achieve this. The Directors believe, therefore, that JETCAM's business will grow through the continuing development of its existing products, the release of new products and associated development of its original equipment manufacturer and other reseller channels. Financial Record The JETCAM Group's results for the three years ended 31 December 1998 are summarised below. Year ended 31 December 1996 1997 1998 £'000 £'000 £'000 Revenues 1,383 1,282 1,635 Cost of Sales (49) (75) (63) Gross Profit 1,334 1,207 1,572 Profit before and 766 603 825 after tax The results for the year ended 31 December 1997 were adversely affected by three factors: * currency fluctuations, which impacted on the value of sales; * development of the WindowsTM version of JETCAM Expert; and * an increase in the infrastructure of JETCAM International to facilitate anticipated growth. Information on Camtek History Camtek was formed in 1983 by Geoffrey Hawkesford, its managing director, and Mike Anstey, its technical director. The company has traded profitably since its inception as a developer of CAM and computer integrated manufacturing software systems on which it is dependent. It has evolved into a team of 32 personnel, working in research and development, systems creation and support, application support and customer training, together with sales and administration, for its core business, which is metal cutting and fabrication. In 1992, Camtek acquired and developed the freehold premises in the centre of Malvern, Worcestershire, which are adjacent to the leasehold premises which it continues to occupy. Camtek established a subsidiary in the USA in 1995, which commenced trading in May 1998. Products and Services Camtek's main product is the PEPS Production Engineering Productivity System which is PC based and comprises two modules. PEPSFAB, the fabrication module, develops numerical control data for punching and nibbling, laser, plasma or flame profiling and water jet cutting machines; PEPSCUT simplifies the programming of wire electrical discharge cutting machines and milling, turning and routing machine tools. Applications for these products can be found in a wide range of industries, including the automotive, military, machine tool, aerospace, fabrication and marine industries and are designed to be used in machine shops worldwide. Customers Camtek has an installed base of over 8,000 systems worldwide. For the year ended 30 September 1998, approximately 80 per cent. of sales were to agents, distributors, or equipment manufacturers and 20 per cent. of sales to end users. Approximately 45 per cent of sales were derived from the top three customers and approximately 60 per cent. from the top 12 customers. Financial Record The Camtek Group's results for the three years ended 30 September 1998 are summarised below. Year ended 30 September 1996 1997 1998 £'000 £'000 £'000 Revenues 1,338 1,668 2,106 Cost of Sales (586) (710) (822) Gross Profit 802 958 1,284 Profit before tax & exceptional items 69 189 421 Exceptional items 82 89 (199) Profit before tax 151 278 222 Reasons for the Acquisition The Directors and Proposed Director consider that Camtek's competitors fall into the same categories as those of JETCAM, with the occasional exception of approximately six large CAD/CAM suppliers. When JETCAM's ordinary shares were admitted to AIM in May 1999, the Directors stated that they perceived the sheet metal computer numerical control programming software market as being very fragmented. They further stated that they believed that admission to AIM would provide the Company with the ability to make acquisitions, which they intended to finance either by further issues of Ordinary Shares or the proceeds of further issues of Ordinary Shares, as appropriate. The acquisition of Camtek is the first such acquisition. The business of Camtek is complimentary to the business of JETCAM. Both companies are engaged in the production of computer numerical control programming software for use in metal cutting and fabrication. There is hardly any customer overlap and Camtek's PEPSCUT software provides an extension to JETCAM's product range. Furthermore, the premises and facilities at Camtek's premises in Malvern provide a future opportunity for the integration of JETCAM UK. Details of the Acquisition The consideration for the Acquisition is £4 million, of which £1.5 million is to be satisfied by the issue at the Placing Price of the Consideration Shares credited as fully paid and the balance of £2.5 million is payable in cash on completion of the Acquisition, which is scheduled to take place as soon as is practicable following the Special General Meeting. Prior to completion of the Acquisition, it is intended that the Vendors will have received £400,000 in cash from Camtek, by way of a special dividend, and will also have had the ownership of two properties with an aggregate book value of £183,000 transferred into their own names. The resultant net assets of Camtek at completion of the Acquisition are expected to be approximately £720,000. It is a term of the Acquisition that the Vendors give irrevocable undertakings to JETCAM, John East & Partners and Townsley that, subject to certain exceptions, they will not sell the Consideration Shares at any time during the first 12 months after Admission without the prior written consent of John East & Partners and Townsley. The Vendors have additionally undertaken only to sell the Consideration Shares through Townsley for a period of 12 months following the initial 12 month period. Current Trading The unaudited interim results for the six months ended 30 June, 1999 were announced earlier today and show a profit before and after taxation of £300,000 on sales of £902,000. The Directors believe that the outlook for the year as a whole is still in line with original expectations for a satisfactory result. The factors that will contribute to this are a strengthening of sales to the company's major OEM customer, an aggressive marketing campaign promoted by a new marketing manager, a dealer management, development and expansion programme, additional emphasis on the Company's recurring maintenance income and the anticipated launch of new products in the second half of the year. Camtek has had a successful year's trading and the principal Vendors have warranted that its profit before tax for the year ending 30 September, 1999, after adjustment in accordance with the Acquisition Agreement, will be not less than £531,000. Future Prospects for the Enlarged Group The Acquisition will substantially increase the size of JETCAM Group. The Directors and Proposed Director believe that the JETCAM Group will benefit from the Acquisition, due to an increased customer base and increased product range which will provide the opportunity to sell a wider range of products, including the new products described above, to all customers, and will further benefit from greater size from which to make further acquisitions. They also believe that the integration of the two UK operations should result in enhanced market visibility and worthwhile cost savings. Although one customer providing approximately 10 per cent of Camtek's turnover in the year ended 30 September 1998 has indicated that the Acquisition will lead to the current relationship being terminated, the Directors and Proposed Director do not consider that this would have a material adverse impact on the Enlarged Group and feel justified in looking to the future with confidence. Directors, Proposed Director and Senior Management of the Enlarged Group Directors George Kynoch (Non-Executive Chairman), aged 52, was appointed a director and chairman of the Company in June 1999 and is also non- executive chairman of Silvertech International plc, London Marine Group Limited, Mountwest 146 Limited, Benson Group Limited and is also a director of Midmar Energy Limited and WML Group plc. He has over 20 years' experience in industry and was chief executive of G & G Kynoch plc (the predecessor of Kynoch Group plc), the listed designer and manufacturer of healthcare equipment for use in contamination control. He was also Grampian Industrialist of the Year in 1988 and received the Highland Business Award. Mr Kynoch was the Scottish Office Industry and Local Government Minister from 1995 to 1997, while serving as Member of Parliament for Kincardine and Deeside between 1992 and 1997. Ivan Stern (Chief Executive and Deputy Chairman), aged 53, is the co-founder of JETCAM and its predecessor companies. Prior to establishing JETCAM, he was between 1984 and 1986 a director of and a shareholder in The Portable Computer Company Pty. Limited in Australia, to which he had emigrated from Czechoslovakia in 1970. Between 1970 and 1984, he was employed by various companies in the electronic and computer industry, including his own company, Stern Electronic Services Pty. Limited, between 1981 and 1984. He moved to Germany in 1991 and to Monaco in 1993. He is responsible for development and marketing. William King (Technical Director), aged 37, is the other co- founder of JETCAM and its predecessor companies. He is the head of software development with responsibility for creating the architecture to implement application in the most efficient and flexible manner. John Wright (Business Development Director), aged 57, joined JETCAM in January 1997. His responsibilities include strategic business and sales development and administration. His early career was spent with ICL and Xerox Data Systems Limited, where he was UK Sales Manager. In 1976 he became UK managing director of Systems Engineering Laboratories Inc., a Florida based supplier of real-time computers, becoming Vice-President Europe in 1978 and Vice-President International in 1980. He subsequently held senior positions with TYX Corporation, Cadence Design Inc. and ANACAD GmbH, before joining the Company. Mr Wright was the founder in 1976 of The Span Consultancy which became one of the leading suppliers of computer consultancy personnel in the UK, prior to its acquisition by Computer People Limited (which is now part of Delphi Group plc) in 1994. Peter Radzim (Managing Director of JETCAM International), aged 45, is Ivan Stern's brother. He joined the JETCAM Group in April 1998 with responsibility for ongoing JETCAM 3D Expert development and product release and to take responsibility for the development of a new product for production control. His background is in the sheet metal industry and he continues to own a sheet metal fabrication company and a metal finishing company in Australia. He brings to JETCAM invaluable experience in all aspects of the practicalities of running a successful sheet metal fabrication operation. Ian Ilsley, FCCA (Finance Director,) aged 50, is a certified accountant, a member of The Society of Trust and Estate Practitioners and a Fellow of the Institute of Directors. He has been managing director of B.A.S.E and its controlling shareholder since 1984. Frank Lewis (Non-Executive Director), aged 53, qualified as a chartered accountant in his native South Africa and qualified as a chartered accountant in the UK following his arrival here in 1989. He has been Group Finance Director of Kerrington plc since November 1994 and from 1989 until then was chief executive of City Corporate Services Limited and three other companies as a result. Prior to leaving South Africa he was, for four years, finance director and deputy managing director of Computer Warehouse Limited, a national computer retail and distribution company based in Cape Town. Proposed Director Geoffrey Hawkesford (Managing Director of Camtek), aged 51, is the joint founder of Camtek and is responsible for product development and commercial activities. Mr Hawkesford graduated from the University of Aston in 1971, with a first class degree in mechanical engineering. In 1977 he joined Counting House Computer Systems Limited, ultimately being appointed technical director. In 1981 he joined NC Riter Limited as technical director before leaving to found Camtek in 1983. Proposed Senior Management Mike Anstey (Technical Director of Camtek), aged 43, is the joint founder of Camtek and is responsible for product development and programming. He has an honours degree in Combined Studies (Mathematics and Computing) attained at Leicester Polytechnic in 1978. Prior to founding Camtek, he joined Counting House Computer Systems Limited in 1978 as a computer programmer and NC Riter Limited in 1982 as senior programmer. John Didcote (Sales Director of Camtek), aged 54, joined Camtek from NC Riter Limited in 1986. He was appointed sales director in October 1990 and is responsible for worldwide sales of the Company. Employees The Enlarged Group will employ or engage a total of 55 staff including the Executive Directors, 18 in engineering, 12 in technical support, 7 in sales and 18 in general management, market development, administration and finance. Corporate Governance The Directors intend to comply with the combined Code on the Principles of Good Governance and the code of Best Practice. They have established audit and remuneration committees which comprise the two non-executive directors. Frank Lewis is the chairman of the audit committee and George Kynoch the chairman of the remuneration committee. Share Option Scheme and other arrangements The Company has established the Share Option Scheme to provide an incentive to senior executives, full time consultants and key employees. Options over a total of 223,5000 Ordinary Shares were granted under the Share Option Scheme to qualifying participants at the time of the original admission to AIM. The Company also granted at the time options over 360,828 Ordinary Shares to each of The Brampton Group Ltd and Vigan Securities SA, which companies are owned by the family trusts of John Wright and Ian Ilsely respectively. In addition, options over 451,035 Ordinary Shares were granted to Garnham & Co Limited, a company in which Ian Ilsley is interested. Following the completion of the Proposals, it is intended that options will be granted to certain directors and the senior management of Camtek. Dividends and Dividend Policy Subject to compliance with Bermuda law, the Directors intend to recommend, in respect of each year, an interim dividend and a final dividend, which will normally be paid in April and October respectively. The interim dividend will normally represent approximately one third of the total dividend that may be paid in respect of any year. The Directors have today announced an interim dividend in respect of the six month period ended 30th June, 1999 of 0.8p per share. The Directors intend to follow a progressive dividend policy in the future, having regard to the investment requirements of the Enlarged Group. Reasons for and Use of Proceeds of the Placing and Open Offer The consideration for the Acquisition, as set out above, is £4 million, of which £1.5 million is to be satisfied by the issue of the Consideration Shares with the balance of £2.5 million being payable in cash. The Placing and Open Offer will raise gross proceeds of approximately £2.95 million for the Company and will provide the cash element of the consideration for the Acquisition, with the balance being utilised to pay for the costs of the implementation of the Propsoals and to provide working capital generally for the Enlarged Group. Details of the Placing and Open Offer The Company is proposing to raise approximately £2.95 million (before expenses) by the issue of the Placing Shares pursuant to the Placing and Open Offer. Accordingly, 3,280,260 new Ordinary Shares have been conditionally placed by Townsley, subject to Qualifying Shareholders having the right to apply for such shares under the Open Offer at a price of 90p per share free of expenses pro rata to their existing shareholdings on the basis of: 2 Offer Shares for every 11 Existing Ordinary Shares held at the close of business on the Record Date and so on in proportion for any greater number of Existing Ordinary Shares then held. Fractional entitlements will not be allocated but will be aggregated and sold for the benefit of the Company. The maximum entitlement of each Qualifying Shareholder is indicated on the Application Form accompanying this document. Qualifying Shareholders may apply for any number of Offer Shares up to their maximum entitlement. The Directors of JETCAM, who in aggregate beneficially own 17.6 million Existing Ordinary Shares, representing 97.55 per cent of the present issued ordinary share capital, have maximum aggregate entitlements under the Open Offer to 3.2 million Offer Shares. The Directors have irrevocably undertaken not to take up their entitlements, which have been placed firm with institutional and other investors. An Application Form, containing details of Qualifying Shareholders entitlements to the Offer Shares will be sent to Qualifying Shareholders today. The terms of the Open Offer provide the Qualifying Shareholders who make valid applications for up to and including their maximum pro rata entitlement will be entitled to receive all such Offer Shares. An application to subscribe for Offer Shares may only be made on the Application Form. Each Application Form will be personal to the Qualifying Shareholder(s) named thereon and may not be assigned or transferred other than to satisfy bona fide market claims pursuant to the Rules of the London Stock Exchange. Qualifying Shareholders should be aware that the Open Offer is not a rights issue and that Townsley will not attempt to procure subscribers in the market for Offer Shares not applied for on behalf of those Qualifying Shareholders who do not apply for their entitlements. To be treated as valid, completed Application Forms and payment in full must be received by IRG plc by 3.00pm on 25th October 1999. The Placing and Open Offer is subject to the satisfaction, inter alia, of the following conditions on or before 1st November, 1999, (or such later date being not later than 30th November, 1999, as the Company, John East & Partners and Townsley may agree): i) the passing without amendment of the Resolution at the Special General Meeting; ii) the subscription monies for the Placing Shares being received in full; iii) the Placing Agreement becoming unconditional in all respects and not having been rescinded in accordance with its terms; and iv) Admission becoming effective by 9.00 a.m. on 1st November 1999, (or such later time or date not being later than 9.00 a.m. on 30th November 1999 as the Company, John East & Partners and Townsley may agree). The Placing Shares will, when issued and fully paid, rank pari passu in all respects with the existing ordinary shares, including the right to receive all dividends and other distributions hereafter declared, made or paid, save that they will not rank for the interim dividend declared in respect of the six month period ended 30 June 1999. Marketability Application will be made for the New Ordinary Shares to be admitted to trading on AIM. Assuming that the Resolution is duly passed at the Special General Meeting, it is expected that Admission will become effective and trading in the New Ordinary Shares will commence on 5th November, 1999. John East & Partners has been appointed as the Company's nominated adviser and Townsley & Co as the Company's nominated broker for this purpose. It is emphasised that no application has been or is being made for admission of Ordinary Shares to the Official List of the London Stock Exchange. The rules of AIM are less demanding than those of the Official List. Pro Forma Net Assets of the Enlarged Group The pro forma net assets of the Enlarged Group as at 30th June, 1999, taking into account the Placing, the Acquisition and the expenses of the Proposals amounted to approximately £5 million. Timetable of Principal Events 30 September 1999 Record Date for Open Offer 27 September 1999 Latest time for splitting Application Forms 3pm on 21 October in respect of the Open Offer (to satisfy bona fide market claims only) Latest time for receipt of Forms of Proxy 11.00am on 24 October for the Special General Meeting Latest time for receipt of Application Forms 3.00pm on 25 October and payment in full Special General Meeting 11.00am on 26 October Admission effective and trading expected to 1 November Commence Share certificates in respect of New Ordinary 8 November Shares despatched by Placing Statistics Placing price 90 p Number of Placing Shares 3,280,260 Number of Consideration Shares 1,666,667 Number of Ordinary Shares in issue following the 22,988,357 Proposals Market capitalisation following Admission £20.69 million at the Placing Price Net proceeds receivable by the Company pursuant £2.65 million to the Placing and Open Offer

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