Despite the worst information technology market in years, Bermuda Computer Services has benefited from companies reinvesting in technology as well as the recent reinsurance boom.

BCS Agencies Limited (IBM's exclusive agent in Bermuda) IBM President and CEO, Sam Palmisano commenting on the significance of the first half of 2002, said: "This was an important time for our company. We had to win sales and sign contracts despite just about the worst industry conditions we've seen in a generation.

"BCS Agencies Limited found the business environment during the 1st-half of 2002 quite challenging.

"However, similar to our global-reaching partner, we were also able to build on our strengths and work towards the long-term interests of our customers, partners and stakeholders. This approach allowed for sustained performance during a difficult time."

Recognising that economic activity is highly cyclical, several BCS customers used the past period to reinvest in their IT infrastructure.

Network consultation, design and implementation as well as server and software sales and support remained an area of focus for the company, the expectation being that those institutions will be well suited to better reap the benefits of the economic turnaround.

Many organisations also used the past several months to reconsider their disaster recovery policies and practices.

Coupled with IBM's resources, BCS's Business Recovery and Resumption Services team was commissioned to ensure that customers in Bermuda are able to quickly recover their IT operations in the event of unsuspecting failures or downtime.

The influx of new reinsurance companies in Bermuda provided another area of unexpected but welcomed business.

The company said: "Many of these organisations rely on IBM's workhorse server - iSeries (AS/400) - for their mission-critical business due to the reliability of the server and the strength of the industry-specific applications written for it.

"We were able to provide servers to some of these new customers as well as upgrade the environments of some established reinsurers as this market continued to grow."

The ability to provide new solutions to the changing requirements of BCS's customer-base should provide continued growth as traditional hardware and services sales slowly rebound. The company said they anticipated a stronger second-half to 2002 as the economic turbulence subsided and customers' confidence was reinstated.

Concerning BCS Properties Limited, last year, the land and building at 20 Dundonald Street was transferred to this holding company at net book value.

The directors segregated the property from the trading companies as the first step in the process to make the property a distinct operating entity, responsible for its own financing and earnings.

With the closure of The Computer Centre, the amount of space required by the BCS Group has declined and income generated by rent from group subsidiaries is accordingly lower.

The area that was the service shop for The Computer Centre is available to be rented.

Concerning Transact Limited, the company said that in the wake of the burst e-commerce bubble, Transact switched its focus to the domestic market.

Transact has transformed itself into a complete e-business service provider specialising in Internet services, application services and managed hosting services.

In February 2002, Transact successfully launched its Dial Internet Service and anticipates launching DSL Internet service in September.

For the six months ending June 2002 Transact's revenue was $179,122 down $360,293 from the corresponding period last year.

This decline is primarily due to the wind-down of the AT&T Global Network service.

In July 2000 the company advised Shareholders that the payment of quarterly dividends would be suspended, "until Transact is profitable or we decide to refinance the development cost of this new business".

They also noted that anticipated entry into the market at the level noted would cost a minimum of $1.5 million.

The accumulated losses of Transact, which reflect the company's continuing investment in the development of this business, amounted to $937,345 at June 30th 2002.

To this cost was added the cost of the systems and equipment purchased for this purpose amounting to $507,843 less accumulated depreciation of $352,285 (included in our losses to date).

This brings our total investment to date to $1,092,903 ($818,540 at June 2001).

The company concluded: "Going forward through to the end of 2002, we forecast a steady decline in losses."