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7 August 2001 DEAR STAKEHOLDER My predecessor started the practice of writing to our stakeholders from time to time to keep them abreast of developments within the IST group and its environment. This letter is similarly intended to update you on our current activities and prospects. Operational activities As you may have seen, it was announced last week that Telkom had extended IST Telecom's supply contract for the UMC 1000 digital loop carrier for a further two years. This is a very significant contract, which has generated revenues of more than R20 million per year for the division since 1998. IST Telecom currently has tenders totalling some R1 billion under adjudication. Also indicative of the generally high level of activity throughout the group, IST Industrial has recently submitted tenders worth R100 million while IST Otokon has tenders to the value of R45 million awaiting adjudication. With its R45 million Swaziland Electricity Board project now nearing completion, IST Energy is looking at a number of interesting opportunities in Southern Africa and abroad. Along with Eskom Enterprises it has pre-qualified for Morocco's national SCADA system and it was also a member of Eskom Enterprises1 recent delegation to Iraq. As we noted in the annual report, IST Dynamics earlier this year secured some major international orders and now earns 80% of its income offshore. IST Data has capitalised on new market opportunities to gain further contracts. The PBMR project Against the background of a growing acceptance of the need for nuclear power as a viable energy-supply option for the future, the Pebble Bed Modular Reactor project continues to generate considerable interest worldwide. Officials of the US Nuclear Regulatory Commission and Department of Energy visited the PBMR company earlier this year to obtain the latest information on the status of the project, and it is interesting to note that PBMR was the only nuclear reactor design mentioned by name in the US National Energy Policy published in May. Two months ago, IST completed the basic design of the three major sub- systems for which we are responsible, and this has been incorporated in the PBMR company's detailed feasibility study. This study is currently being reviewed by that company's shareholders and is also scheduled to be submitted to the South African government this month. If the project eventually goes ahead, IST hopes to be appointed as a key sub-system supplier for the demonstrator plant and later for the first production plants. I must stress, however, that these are very early days. At this stage, IST still keeps PBMR in the `blue-sky' rather than the `bankable' column of its prospects list, and investors would be well advised to do the same. Petroman The Petroman fuel management system is now operational at all the Total and Namdeb sites for which it was originally intended. There have, however, been some hardware problems at Namdeb which are currently being addressed. All costs have been fully provided for. In spite of the gestation difficulties we have had with this product, we remain confident about its potential. With virtually all the major oil companies having indicated an interest in Petroman, IST Dynamics have now taken it over and are developing it to a higher level of refinement where it may well find an international market. The interim results Our results for the six months to 31 August will be published on or about 18 October 2001. At this stage, indications are that we shall meet the turnover and profit targets we have set for ourselves, and that the group is well on track to meet its stated earnings target of 10 cents per share for the year to 28 February 2002. I hope you will have found this information useful. If there is anything else you need to know about the group, please do not hesitate to contact me. Harry Coetzee Chief Executive For further information call Harry Coetzee on (012) 348 8705 or cell 082 881 9255 Issued by du Plessis Associates on behalf of IST Group. dPA contact : Kathy du Plessis on tel : 011-728-4701 mobile : 083 266 5847 e-mail : ist@dpapr.com
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