This was achieved on the back of a 30% increase in Group turnover to S$105.1 million for the nine months of 2002 compared to S$80.9 million for the same period in 2001.

The improvement in performance was due primarily to the increase in stage completion of projects in the Americas, Europe/Middle East and Asia and the absence of one-time write-offs experienced in the previous year. The Group had accounted for S$1.1 million of goodwill amortization in the nine months ended 30 September 2002.

In August, the Group completed the acquisition of a Louisiana based system integrator, Control Concepts & Technology Corporation (CCT). This acquisition will enable the Group to accelerate penetration of the Gulf of Mexico’s upstream oil and gas automation integration business.

The Group continues to make significant sales in the Gulf of Mexico. The major projects secured in 3Q2002 include:

US$2.75 million contract to provide instrumentation and electrical construction services for US Total Fina Elf Matterhorn;

US$1.0 million contract to provide chemical injection module for the new El Pasco Marco deepwater development project; and

US$2.4 million contract to provide the chemical injection module for British Petroleum Mad Dog project.

In the United Kingdom (UK), the Group was awarded a S$4.4 million contract to deploy an environment monitoring system. The contract reaffirms the long term working relationship between the Environment Agency, a UK government funded public body responsible for environmental protection and improvement, and the Group’s UK subsidiary, Servelec.

In Singapore, the Group was awarded a S$3.5 million contract to supply a control system to Sembcorp Engineering and Constructors Pte Ltd for the Tunnel Ventilation and Environment Control System for the Stage 1 of the Circle Line (SMRT Project).

Geographically, the contributions are 25%, 57% and 18% for turnover and 28%, 51% and 21% for profit before tax and goodwill amortization for Asia, the Americas and Europe/Middle East respectively.

The Group’s two divisions, Industrial business unit and IT Consulting business unit, contributed 84% and 16% to turnover and 88% and 12% to profit before tax and goodwill amortization respectively.

In first nine months of 2002, the Group generated S$14.3 million positive cash flow from operating activities compared to S$0.6 million for the same period in 2001. With the acquisition of CCT, the Group increased its bank borrowing to S$40.4 million at the end of 3Q2002. In 4Q2002, the Group intends to use part of its cash holding of S$10.9 million at the end of 3Q2002 to reduce its bank borrowings. Based on the Group’s shareholders’ fund before minority interest of S$35.6 million, the Group’s gross gearing ratio is 1.1 times at the end of 3Q2002.

The operating environment remains difficult for the Group. The Group will continue to focus on its core competencies in Industrial Automation and Information Technology and build on its global presence and industry domain knowledge to serve its customers.

The order book registered by the Group at the end of 3Q2002 was valued at S$90.1 million, an increase of 45.8% compared to S$61.8 million at the end of 3Q2001. The Group recognizes revenue on a progressive billing basis matching the cost of project to the milestones achieved. It expects to recognize approximately 25% of the order book in 4Q2002. The Group also expects to continue to report approximately 40% of its revenue from recurring short-term orders (i.e. orders received and delivered within 3 months).

With the improved performance for the nine months ended 30 September 2002 over the corresponding period in 2001, the performance for the Group in FY2002 will be significantly better than FY2001.

CSE Systems & Engineering Limited is a global system integrator listed on the main board of the Singapore Exchange (SGX: CSE Sys), operating in the Americas, Europe, the Middle East and Asia. With over 600 employees worldwide, the Group provides state-of-the-art, cost-effective total integrated industrial automation and information technology solutions to clients globally in the energy (Oil & Gas/Power), chemical/petrochemical, water and telemetry, healthcare, banking and finance and public sectors. Visit www.cse.com.sg for more information.

Contact Information
CSE Systems & Engineering Ltd
Lim Boon Kheng @ boonkheng@cse.com.sg
CFO
Tel: 9735-2618

Submitted by Tan San-Ju, Company Secretary on 11/11/2002 to the SGX