CSE

Half-year financial statement on consolidated results for the six months ended 30 June 1999.

These figures have not been audited.

		Group			Company
		S$'000		%	S$'000		%
		Jan-Jun 1999	Jan-Jun 1998	Change	Jan-Jun 1999	Jan-Jun 1998	Change
1.(a)	Turnover	34,902	25,494	37	31,672	25,417	25
1.(b)	Investment income	0	0	0	0	0	0
1.(c)	Other income including interest income	152	87	75	146	86	70
2.(a)	Operating profit before income tax, minority interests, extraordinary items, interest on borrowings, depreciation and amortisation, foreign exchange gain/(loss) and exceptional items	5,040	3,639	38	4,847	3,473	40
2.(b)(i)	Interest on borrowings	29	84	65	0	84	0
2.(b)(ii)	Depreciation and amortisation	253	164	54	142	136	4
2.(b)(iii)	Foreign exchange gain/(loss)	121	116	(4)	113	(46)	346
2.(c)	Exceptional items	0	0	0	0	0	0
2.(d)	Operating profit before income tax, minority interests and extraordinary items but after interest on borrowings, depreciation and amortisation, foreign exchange gain/(loss) and exceptional items	4,879	3,507	39	4,818	3,207	50
		Group			Company
		S$'000		%	S$'000		%
		Jan-Jun 1999	Jan-Jun 1998	Change	Jan-Jun 1999	Jan-Jun 1998	Change
2.(e)	Income derived from associated companies	16	(31)	152	0	0	0
2.(f)	Less income tax	1,049	600	75	902	600	50
2.(g)(i)	Operating profit after tax before deducting minority interests	3,846	2,876	34	3,916	2,607	50
2.(g)(ii)	Less minority interests	0	0	0	0	0	0
2.(h)	Operating profit after tax attributable to members of the company	3,846	2,876	34	3,916	2,607	50
2.(i)(i)	Extraordinary items	0	0	0	0	0	0
2.(i)(ii)	Less minority interests	0	0	0	0	0	0
2.(i)(iii)	Extraordinary items attributable to members of the company	0	0	0	0	0	0
2.(i)(iv)	Transfer to/from Exchange Reserve	0	0	0	0	0	0
2.(i)(v)	Transfer to Capital Reserve	0	0	0	0	0	0
2.(i)(vi)	Transfer to Reserve Fund	3,846	2,876	34	3,816	2,607	50
2.(j)	Operating profit after tax and extraordinary items attributable to members of the company	3,846	2,876	34	3,916	2,607	50

Group Figures
		Jan-Jun 1999	Jan-Jun 1998
3.(a)	Earnings per share based on 2(h) above after deducting any provision for preference dividends:-
3.(a)(i)	Based on existing issued share capital	1.65 cents	1.43 cents
3.(a)(ii)	On a fully diluted basis	1.65 cents	1.43 cents
3.(b)	Net tangible asset backing per ordinary share	13.19 cents	5.48 cents

4.(a) Amount of any adjustment for under or overprovision of tax in respect of prior years

NIL

4.(b) Amount of any pre-acquisition profits

NIL

4.(c) Amount of profits on any sale of investments and/or properties

Sale of investments/properties	$Profit/(Loss)
NIL	$0.00

4.(d) Any other comments relating to Paragraph 4
NIL

5. Review of the performance of the company and its principal subsidiaries
The Group's turnover for the first six months ended 30 June 1999 increased by 37% from $25.5M to $34.9M compared to the corresponding period in the previous year. Net profit before tax of the group increase by 41% in line with the increase in turnover.

The new orders received for the first six months ended 30 June 1999 increased 148% from $12.4M to $30.8M compared to the corresponding period in the previous year.

Turnover & operating profit by activities

	Industrial Business	Enterprise Integration	Infrastructure & networking	Consolidated Total
	$'000	$'000	$'000	$'000
First half 1999
Turnover	7,498	7,576	19,828	34,902
Profit before tax	1,408	1,993	1,495	4,896
First half 1998
Turnover	7,617	12,823	5,054	25,494
Profit before tax	1,356	1,644	476	3,476

The Industrial business experienced a slight decline in turnover for the first six months ended 30 June 1999 of 2% from $7.6M to $7.5M compared to the corresponding period in the previous year. However, net profit before tax of the Industrial business increased by 4% in line with better gross margin contribution from the US operations.

The Enterprise Integration business experienced a decline in turnover for the first six months ended 30 June 1999 of 41% from $12.8M to $7.6M compared to the corresponding period in the previous year due to a smaller number of project milestones completed. However, net profit before tax of the Enterprise Integration business increased by 21% due to completion of milestone of projects with higher gross margin and better project cost management.

The Infrastructure & Networking business quadrupled its turnover for the first six months ended 30 June 1999 from $5.1M to $19.8M compared to the corresponding period in the previous year due to strong growth from networking business derived from government projects. Net profit before tax of the infrastructure & networking business increased by 214% in line with the increase in turnover.

Save for the proposed investment in IPACS Asia Pte Ltd announced on 5 August 1999, in the opinion of the Directors, no item, transaction or event of a material and unusual nature has arisen between the date up to which this report refers and the date on which this report is issued which would substantially affect the results of the Company or of the Group.

6. Commentary on current year prospects
Barring unforeseen circumstances, the Directors expect the performance of the Group for the second half of the year to be maintained.

7. Dividend

(a) Any dividend declared for the present financial period? None
(b) Any dividend declared for the previous corresponding period? None

(c) Date payable

NIL

(d) Books closing date

NIL

(e) Any other comments relating to Paragraph 7

NIL

8. Details of any changes in the company's issued share capital
The Company on 22 January 1999:

i. sub-divided each existing ordinary share of S$1.00 each in the authorised and issued and paid-up share capital of the company into 20 ordinary shares of $0.05 each.

ii. capitalised a total of $7.3 million from the revenue reserve and $1.2 million from the share premium account, by way of a bonus issue of 170,639,175 new shares to the existing shareholders, in proportion of 21 new shares for every 4 shares held, such shares credited as fully paid. The resultant issued and paid up share capital of the company was $10,157,093.75 comprising 203,141,875 ordinary shares of $0.05 each; and

iii. issued 36,000,000 new shares pursuant to the invitation at $0.42 per share. The new shares rank pari passu in all respects with the existing shares of the company. The resultant issued and paid up share capital of the company was increased to $11,957,093.75 comprising 239,141,875 ordinary shares of $0.05 each.

The company was admitted to the official list of the Stock Exchange of Singapore Dealing and Automated Quotation System ("SESDAQ") on 10 February 1999.

During the period, the Group granted 1,000,000 options under the Executives Share Option Scheme.

9. Comparative figures of the group's borrowings and debt securities

(a) Amount repayable in one year or less, or on demand

As at 30/6/1999		As at 31/12/1998
Secured	Unsecured	Secured	Unsecured
0	0	0	2,000,000

(b) Amount repayable after one year

As at 30/6/1999 As at 31/12/1998

Secured

Unsecured

Secured

Unsecured

0

0

0

0

(c) Any other comments relating to Paragraph 9

NIL

10. Balance sheet

10. Year 2000 ("Y2K") Statement

Y2K Compliance Definition

The Company defines Y2K compliance to mean that neither the performance nor functionality of its information technology goods and services (whether used internally or supplied to its customers) shall be adversely affected to a significant extent by dates prior to, during and after the Year 2000. In particular, Y2K compliance also means:

(i) no valid value for current date will cause any interruption in the operation of its IT systems;

(ii) all manipulations of date or time related data will produce the required results for all valid date prior to, during and after the Year 2000;

(iii) if the date elements in interface and data storage specify the century, they will permit specification of the correct century either explicitly or by unambiguous algorithms or inferencing rules; and where any date element is represented without a century, the correct century shall be unambiguous for all manipulations involving that element; and

(iv) the Year 2000 will be recognised as a Ieap year.

Impact on the Group's Business

The Group recognises that the Y2K problem will have some impact on its business as its customers, key business partners and suppliers embark on their own initiatives and programmes to address the problem. There is no absolute assurance that the Y2K problem will not materially affect the Group's operations and financial results. The Group has, however, made all efforts to ensure that any impact on its business will be minimised with no disruption to its provision of IT goods and services or undue exposure to liabilities for the provision of such goods and services which are non-compliant.

Actions to Address Y2K Issue

As a leading IT company, the Group has since 1997 embarked on an extensive programme to address the Y2K issue with respect to its business as a provider of IT goods and services. All steps were taken to assess the Y2K readiness of its infrastructure and to ensure that all internal systems were Y2K compliant. A comprehensive inventory of hardware and software systems in use across all business units within the Group was compiled by the Group. All critical systems have been identified, assessed and tested. Wherever necessary the systems have been replaced and/or modified to meet the standards of Y2K compliance.

The Group is also working closely with its customers and suppliers to prepare for Year 2000. Certification of goods and services as Y2K compliant is underway and vendors are required to furnish statements of compliance for the products which they supply to the Group and its customers. All suppliers are sourced only from vendors who satisfy the criteria for Y2K compliance set by the Group.

The Group's Y2K effort is spearheaded by a central Y2K Committee chaired by its Chief Executive Officer and comprising other senior staff members. The Committee sets the Y2K policy guidelines including best practices for the Group and meets regularly to update and review its Y2K programme.

Progress of Y2K Effort

As at 30 June 1999, all major and critical systems and software in the Group have been internally tested to be Y2K ready.

In addition, the Group is also putting in place contingency plans to support its business and key customers in order to minimise any potential impact to its operations.

Estimated Costs of Y2K Programme

The estimated cost of the Group's Y2K compliance programme is S$0.5 million of which the majority has been incurred. Out of S$0.5 million, S$0.3 million will be capitalised and S$0.2 million will be expensed off.

BY ORDER OF THE BOARD

Yvonne Choo
Company Secretary
16/8/1999