Bermuda Computer Services Issues Year-End Earnings Report

"Consolidated earnings of the Company for the year ending 31st December 2002 amounted to $176,112 compared with a profit of $256,538 in 2001. The results for 2001 included a gain on sale of investments of $246,076. The profit before this gain on sale of investments was $10,462.

Total assets of the group as at 31st December 2002 amounted to $3,447,147 including fixed assets of $2,271,322 compared with total assets of $3,853,995 and fixed assets of $2,456,965 a year ago. The Company had cash and time deposits of $440,946 as at 31st December 2002 compared with $527,286 last year. Shareholders' equity has increased from $2,323,512 to $2,499,624. The Company did not pay dividends in the year. In July 2000, the Directors voted to suspend quarterly dividends to ensure that the company had sufficient cash to fund its continuing investment in Transact Limited.

BCS Agencies Limited

This subsidiary company is responsible for sales, service and support to all IBM corporate customers in Bermuda. The contribution to earnings (after allocation of corporate overheads) amounted to $619,684 as compared to 2001 when the earnings of BCS Agencies totaled $546,699.

Although IBM and the global information technology industry in general contracted in 2002 for the second year in a row, BCS Agencies was able to experience slight growth in sales. This led, yet again, to another year of record business results for BCS Agencies and IBM in Bermuda.

Tough economic conditions continued to affect corporate customer attitudes toward spending. However, several Bermuda customers, especially in the Insurance and Finance sectors, took the opportunity to invest in their IT infrastructures in order to position themselves for the inevitable market correction.

Sales of the IBM award-winning eServers - iSeries (formerly AS/400) and pSeries (formerly RS/6000) remained strong. Customers continued to invest in this "bullet-proof" midrange server technology, which runs businesses of every industry and size here in Bermuda, from retail and hospitality to finance services, insurance and public sectors.

Software sales were also particularly brisk in 2002. Many customers sought IBM's Lotus, Tivoli and Websphere solutions to facilitate their eBusiness initiatives. These products form the foundation of IBM's cross-platform software portfolio that will continue to be a focus for BCS Agencies and the IBM Software Business Partners in Bermuda whom we support.

Looking ahead to 2003, we hope to capitalize further on the benefits gained by IBM's year-end acquisition of PWC Consulting. The group, now named Business Consulting Services, falls under IBM's Global Services brand. We now have access to over 60,000 professionals in industries ranging from financial services to health care, with business process expertise in areas like supply chain, customer relationship management, human capital solutions and business transformation outsourcing. Given our customers' demands for high-quality professional services, access to this type of resource should have positive impact on our local services business.

We are continuing to build on our talents and strengths while investing in our people's skills and our business partnerships to prepare for the demands that our customers will place on us to help them make the right IT decisions and ensure their successes.

BCS Properties Limited

This subsidiary company holds title to the land and building at 20 Dundonald Street. The contribution to earnings (after allocation of corporate overheads) amounted to $77,330 as compared to $2,762 in 2001. The income increased largely due to a reduction of $67,612 in interest on the mortgage. Since the building was purchased in 1999, lump sum principal payments have been applied against the mortgage. It is anticipated that with lump sum payments in 2003, the mortgage will be fully paid by the end of May 2003. The building has approximately 3,400 sq. ft. space available for rent. There are two areas available for rent on the ground floor each about 1,700 sq. ft. One is an office area and the other was used as a service/repair shop.

The Computer Centre

This division of the Company, which handled sales and service of IBM Personal Computers and other related peripherals, was closed at the end of 2000. During 2002, there were a few miscellaneous sales of inventory resulting in a profit of $490 compared with a loss of $49,143 in the previous year.

Transact Limited

In July 2000 we advised Shareholders that the payment of quarterly dividends would be suspended, "until Transact-e-Biz.com is profitable or we decide to refinance the development cost of this new business". We further noted that we anticipated entry into the market at the level noted would cost a minimum of $1.5 million. The parent company has advanced a total of $1,250,000 to date of the $1.5 million that has been approved for this project.

In 2002, (after allocation of corporate overheads) Transact lost $453,384 as compared with a loss of $491,167 in 2001. The projection for 2003 indicates that the company will incur a loss of $243,000.

The continuing investment in 2002, which was written off as incurred, was $402,111 compared with $397,603 in 2001, $317,903 in 2000 and $8,163 in 1999. Included in this cost are interest and rent paid to the parent company amounting to $24,000 compared with $48,987 in 2001. We are confident that demand for the solutions, which we've developed will continue to grow. Transact successfully launched its dial Internet service in February 2002 and launched its DSL service at the end of November 2002. The Company is developing additional services to be launched later this year. We still feel there is a significant market for our Application Service Provider offerings and for our Disaster Recovery and Storage Management offerings utilizing our advanced communications systems and the Internet. As a result we expect steady revenue growth throughout 2003.

Our thanks go to all our staff who have worked hard to achieve the results reported."

Signed By:

Donald P. Lines

Chairman