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Cs Computer Services Holdings Limited - Report Back On Investigation At Cs
Release Date: 24/02/2004 16:00:02 Code(s): CSH
CS COMPUTER SERVICES HOLDINGS LIMITED - REPORT BACK ON INVESTIGATION AT CS
HOLDINGS AND CHANGES TO THE BOARD
CS COMPUTER SERVICES HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1996/015131/06)
Share Code: CSH
ISIN Code : ZAE000022034
("CS Holdings" or "the Company")
REPORT BACK ON INVESTIGATION AT CS HOLDINGS AND CHANGES TO THE BOARD
The Board of Directors ("the Board") of CS Holdings Limited ("CSH") announce
that they have conducted an internal investigation into issues which had been
raised in the media about the financial treatment of a transaction concluded in
December 2002, and a possible conflict of interest pertaining to this
transaction and other transactions. The investigation focused to a large extent
on the transaction concluded in December 2002 in terms of which 80% of the
rights of CSH in the software and revenue stream of EDD (an electronic document
delivery system) were sold to an overseas investor ("the transaction"). This
sale was subsequently cancelled.
2. After due and careful investigation the Board has come to the following
conclusions: -
2.1 The transaction was initially perceived to be in the interest of CSH and
its subsidiary, and a first tranche payment was received from the purchaser
prior to the cancellation thereof;
2.2 The transaction was cancelled in August 2003, after taking into account the
possible tax implications, the effect of AC133 as well as concerns expressed by
the auditors regarding the accounting treatment of the transaction. These
factors no longer rendered the transaction viable and in August 2003 the
contracting parties agreed to cancel the transaction on terms and conditions
satisfactory to both of them;
2.3 The financial results of CSH, for the year ended 30 June 2003, which
reflected the cancellation of the transaction had been approved by the Board and
the auditors at the time;
2.4 CSH did not suffer any loss as a consequence of the transaction and its
cancellation;
2.5 Worldwide Africa Investments Holdings Limited ("Worldwide") confirms that
it did not suffer any financial loss in respect of the shares issued to
Worldwide by CSH during December 2002 as the price for such shares had already
been fixed;
2.6 The Board believes that management should have communicated the conclusion
of the transaction and the accounting treatment thereof to the Board prior to
finalization of the 2002 interim results. The Board regards such failure as an
error of judgment;
2.7 The Board has taken steps to ensure that a more conservative approach will
be taken with regard to the recognition of income in the future.
3. The Board is aware that Havadel Finance (Pty) Limited ("Havadel"), a
company owned and controlled by Hans van der Laan, has been rendering advisory
services to CSH in terms of an agreement with the Company which was approved by
the Board in 1999. It was known to the Board that Mr Hans van der Laan is the
former husband of Annette van der Laan.
4. The Board is satisfied that neither Havadel nor Hans van der Laan received
any commission or payment in respect of the transaction other than the payments
due in respect of the advisory services contract and that neither Hans van der
Laan nor Havadel have had any interest of any nature whatsoever in the purchase,
construction and erection of the offices of CSH in Midrand.
5. The Board is satisfied that the relationship of the CEO, Mr Van der Laan
and Havadel were fully disclosed to it. However, with immediate effect, the
consultancy arrangement which exists between CSH and Havadel has been
terminated.
6. As a result of the recent adverse publicity and with due regard to the best
interests of the CSH business, the Chief Executive Officer of CSH, Annette van
der Laan has decided to resign from the company which resignation has been
accepted with regret by the Board which expresses its gratitude for the
considerable services rendered by Annette van der Laan to CSH.
7. An executive director of CSH, Mr Dave Vink has been appointed as acting CEO
with immediate effect. A senior Reunert executive, Mr Pat Gallagher has been
seconded to CSH to assist and support Dave Vink and the management team during
this transition phase.
8. The Board of CSH has full confidence in the management of the Company and
look forward to the continued support of all stakeholders.
JOHANNESBURG
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