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CS COMPUTER SERVICES HOLDINGS LIMITED - TRADING UPDATE AND CAUTIONARY
ANNOUNCEMENT
CS COMPUTER SERVICES HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1996/015131/06)
Share code: CSH ISIN: ZAE000022034
("CS Holdings" or "the company")
TRADING UPDATE
TRADING UPDATE
In CS Holdings" results for the six months to 31 December 2002, the company
reported that the pipeline of potential business increased considerably in
value, as well as in quality, compared to the same period of the previous
financial year. Substantial contracts were available in the marketplace and CS
Holdings had the appropriate skills, credentials and capacity to compete for
these contracts with a high probability of success. This still remains true,
however, a number of these contracts have either been delayed or awarded much
later than anticipated. Furthermore, the extreme US dollar/Rand exchange rate
fluctuations have negatively affected some of CS Holdings" major customers in
the mining and manufacturing sectors, which in turn affected their IT expansion
programs.
Consequently, CS Holdings" sales during the third quarter were considerably
slower than expected although the company has taken a conscious decision to
preserve its intellectual assets and IT skills base, and therefore its operating
cost, to protect its competitive advantage over the long term. Shareholders are
advised that the aforementioned delays and conditions resulted in a considerable
attributable loss for the third quarter of the financial year, though management
expects the fourth quarter to be profitable. For the full financial year ending
30 June 2003, management expects the company to be profitable before the
amortisation of goodwill, although headline earnings per share for this period
will be substantially lower than the corresponding prior period.
PROSPECTS
Although predominantly to be reflected in next year"s results, the total
order intake in the fourth quarter has been most satisfying with a value in
excess of R200 million of executable work for the next financial year. These new
sales, together with current annuity business, translate into a committed order
book of close on R400 million of executable revenue for the next financial year.
The new sales include a number of exciting long term assignments such as SARS"
FIMS SAP project valued at R100 million over two years of which CS Holdings will
receive the majority of the business as the prime consortium partner.
CS Holdings has consistently produced solid financial results since its
listing and has established itself as a leading South African IT player with
meaningful empowerment credentials and a firm track record. Through organic
growth and strategic acquisitions, CS Holdings has gained the relevant skills in
order to position itself as a complete IT outsourcing service provider and
strategic business solution partner. The company exercises tight working capital
and fiscal control, and management is confident that its current positioning
will result in long-term sustainable growth.
CAUTIONARY ANNOUNCEMENT
Shareholders are advised that the forecast financial information has not been
reviewed and reported on to the JSE Securities Exchange South Africa (`JSE") by
the company"s auditors and that they should exercise caution in dealing in their
securities until the aforementioned review and report to the JSE has been
finalised.
Johannesburg
30 May 2003
Sponsors
Gensec Bank Limited
(Registration number 1996/004744/06
Corporate Finance Advisory
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