TIDMCSFG
RNS Number : 1342Z
CSF Group PLC
13 December 2017
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR")
13 December 2017
CSF Group plc
("CSF" or "the Group")
HALF-YEAR RESULTS
For the six months ended 30 September 2017
CSF Group plc (AIM: CSFG), a provider of data centre facilities
and services in South East Asia, today announces its unaudited
half-year results for the six months ended 30 September 2017.
Financial highlights:
-- Group revenue of RM39.5m (GBP7.0m*) (H1 2017(#) : RM37.4m
(GBP6.7m*)). The Group revenue comprises revenue from continuing
operations and discontinued operations of RM11.8m (GBP2.1m*) and
RM27.7m (GBP4.9m*), respectively.
-- The gross profit margin from continuing operations of 13.5%
and gross loss margin from discontinued operations of 24.4%, giving
rise to an overall higher gross loss margin of 10.9% (H1 2017(#) :
gross loss margin of 7.3%).
-- Loss before tax of RM13.3m* (GBP2.4m*) (H1 2017(#) : loss
before tax of RM6.2m** (GBP1.1m*)). The loss before tax comprises
profit before tax from continuing operations of RM2.0m (GBP0.3m*)
and loss before tax from discontinued operations of RM15.3m
(GBP2.7m*)
-- Earnings per share: loss of 8.75 sen (1.56p*) per share (H1
2017(#) : loss of 4.46 sen (0.79p*) per share).
-- Net cash generated from operating activities of RM4.3m
(GBP0.8m*), mainly due to the deferment of lease rental payments
during the negotiations relating to the disposal of CSF CX Sdn Bhd
as discussed under "Operational highlights" below (H1 2017(#) : net
operating cash inflow of RM0.6m (GBP0.1m*)).
-- Closing unrestricted cash position as at 30 September 2017 of
RM60.8m (GBP10.8m*) (31 March 2017: RM58.0m (GBP10.3m*)).
-- Net liabilities as at 30 September 2017 of RM69.1m
(GBP12.3m*) (31 March 2017: RM55.2m (GBP9.8m*)).
Operational highlights:
-- Entered into a Share Purchase Agreement (the "Share SPA") on
28 September 2017 to dispose of CSF CX Sdn Bhd (the "Disposal"),
the tenant and operator of the Group's CX2 and CX5 data centres.
Pursuant to the Share SPA, the transfer of the Group's
shareholdings in CSF CX to the Purchaser ("Share Transfer") has
occurred. As announced on 1 November 2017, the completion of the
Share SPA remains conditional upon a number of outstanding
conditions being satisfied including, inter alia, the receipt of
various regulatory consents and certain restructuring activities
being undertaken in CSF CX following the Share Transfer.
-- Continuing to work with the Purchaser of CSF CX towards
achieving completion of the Share SPA.
-- Continuing to focus, pursue and follow up on a pipeline of
potential customers and marketing activities in the Company's
remaining business.
-- Undertaken an internal strategic review of the Group's
remaining assets and subsidiaries, in order to examine alternative
operating structures for the Group's overall business. This process
is ongoing; and
-- Re-organisation of the Group's management to increase focus
on the maintenance and data centre design and development business,
the provision of data centre services via our CX1 data centre, and
corporate advisory business.
* The proforma balances in pounds Sterling are included solely
for convenience. The proforma balances in pounds Sterling are
stated, as a matter of arithmetical computation only, on the basis
of all current and prior year balances being translated from
Malaysian Ringgits into pounds Sterling at the rate prevailing on
30 September 2017 of RM5.6213 : GBP1.00. This translation should
not be construed as meaning that the Malaysian Ringgit amounts
actually represent, have been, or could be converted into the
stated number of pounds Sterling.
** Includes a reversal and utilisation of provision for onerous
leases of RM11.70m (GBP2.1m*) and provision for doubtful debts of
RM0.8m (GBP0.1m*).
# The 6-month financial period from 1 April 2016 to 30 September 2016.
For further information:
CSF Group plc
Phil Cartmell, Chairman +603 8318 1313
Allenby Capital Limited (Nominated Adviser
& Broker)
Nick Naylor / Alex Brearley +44 (0)20 3328 5656
CHAIRMAN'S STATEMENT
Overview of the six months ended 30 September 2017
The Group entered into a Share Purchase Agreement (the "Share
SPA") on 28 September 2017 to dispose of CSF CX (the "Disposal")
and is working with the Purchaser to fulfill the remaining
conditions to the agreement. The Board expects that the Disposal
will improve the Group's financial position, principally due to the
elimination of the net liabilities of CSF CX and the elimination of
the Group's obligations on the leases payable, and the return of
cash deposits pledged for banking facilities and rental deposits
(approximately RM6m (GBP1.1m*)) in connection with CX2 and CX5. As
noted below, the revenue attributable to CSF CX for the period
under review has been classified as revenue from discontinued
operations and amounts to RM27.7m. On this basis, and barring any
significant increases in the revenue from the Group's remaining
businesses, the Group's revenue is expected to be significantly
lower after the completion of the Disposal. The Group intends to
apply the returned cash deposits towards its working capital.
The Group and the Purchaser continue to work together towards
achieving completion of the Disposal, which is expected to occur
within a deadline that falls in early May of 2018.
The Group's unaudited half-year results are presented in a form
that segregates continuing operations and discontinued operations.
The results from discontinued operations refer to the financial
results of CSF CX, which is in the process of being disposed, as
elaborated above. Consequently, the assets and liabilities of CSF
CX are classified as assets and liabilities held for sale on the
balance sheet.
The Group continued to incur a gross loss (comprising gross
profit of RM5.4m (GBP1.0m*) from continuing operations and gross
loss of RM9.7m (GBP1.7m*) from discontinued operations) during the
six months ended 30 September 2017, as both the CX2 and CX5 data
centres have not yet attained an optimum level of occupancy.
Loss for the financial period (comprising profit from continuing
operations of RM1.3m (GBP0.2m*) and loss from discontinued
operations of RM15.3m (GBP2.7m*)) amounted to RM14.0m** (GBP2.5m*)
(H1 2017: RM7.1m (GBP1.3m*) comprising profit from continuing
operations of RM1.4m (GBP0.2m*) and loss from discontinued
operations of RM8.5m (GBP1.5m*)). The lower loss in H1 2017 was
mainly attributable to a net reversal of provision for onerous
leases of RM11.7m (GBP2.1m*), a net reversal of allowance for
doubtful debts of RM0.8m (GBP0.1m*) and a reversal of restructuring
costs of RM0.3m (GBP0.05m*).
As at 30 September 2017, the Group had cash and cash equivalents
of RM60.8m (GBP10.8m*) (31 March 2017: RM58.0m (GBP10.3m*)). This
represents the cash that is available to the Group, and excludes
restricted cash items, such as fixed deposits pledged for banking
facilities and deposits held on behalf of the Company's Employee
Benefit Trust.
Current trading
As highlighted in the Group's results for the year ended 31
March 2017, which were announced in September 2017, the Group
continues to follow-up on a number of key strategic initiatives and
pursue a pipeline of potential customers and business alliances,
and remains focused on these plans going forward.
The Board and management will continue to implement measures to
reduce the burn rate of the Group's cash reserves. The Board will
continue to ensure that there is no significant cash outlay other
than the sums required to cover the committed lease rentals and
other necessary operating overheads, subject to any further capital
or operating expenditure that may be required in relation to
tenancy contracts.
The Board and management have also undertaken a number of
strategic initiatives to seek to improve the Group's cash reserves,
secure new customers, create additional revenue streams and strive
to improve operational efficiency in order to reduce costs.
The Board has also recently undertaken an internal strategic
review of the Group's assets and subsidiaries, in order to examine
alternative operating structures for the Group's overall business.
This process is ongoing.
Outlook
The Board and management team remain focused on completing the
Disposal and in implementing its key strategies, as outlined above,
and on pursuing the pipeline of potential customers and business
alliances. An update will be made to shareholders on this progress
in due course.
Dividends
The Board does not propose any payment of dividends in respect
of the six month period ended 30 September 2017.
Phil Cartmell
Chairman
CSF Group plc
* The proforma balances in pounds Sterling are included solely
for convenience. The proforma balances in pounds Sterling are
stated, as a matter of arithmetical computation only, on the basis
of all current and prior year balances being translated from
Malaysian Ringgits into pounds Sterling at the rate prevailing on
30 September 2017 of RM5.6213 : GBP1.00. This translation should
not be construed as meaning that the Malaysian Ringgit amounts
actually represent, have been, or could be converted into the
stated number of pounds Sterling.
** Includes a reversal and utilisation of provision for onerous
leases of RM11.70m (GBP2.1m*) and provision for doubtful debts of
RM0.8m (GBP0.1m*).
CHIEF FINANCIAL OFFICER'S REVIEW
Introduction
The Group recorded basic loss per share ("LPS") of 8.75 sen
(1.56p*) (H1 2017: 4.46 sen (0.79p*)).
Financial results
Proforma
---------------------------------- ------------------------------ ------------------------------
6 months 6 months 6 months 6 months
ended ended ended ended
30 September 30 September 30 September 30 September
2017 2016 2017 2016
RM'000 RM'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
---------------------------------- -------------- -------------- -------------- --------------
Group revenue from continuing
operations 11,858 13,882 2,109 2,470
---------------------------------- -------------- -------------- -------------- --------------
Revenue from discontinued
operations 27,684 23,566 4,925 4,192
---------------------------------- -------------- -------------- -------------- --------------
Total Group revenue 39,542 37,448 7,034 6,662
---------------------------------- -------------- -------------- -------------- --------------
Continuing Operations:
---------------------------------- -------------- -------------- -------------- --------------
Gross profit 5,352 7,005 952 1,246
---------------------------------- -------------- -------------- -------------- --------------
Other operating income 734 - 131 -
---------------------------------- -------------- -------------- -------------- --------------
Administrative expenses (4,878) (5,624) (867) (1,000)
---------------------------------- -------------- -------------- -------------- --------------
Net allowance for doubtful
debts 257 33 46 6
---------------------------------- -------------- -------------- -------------- --------------
Reversal of restructuring
costs - 332 - 59
---------------------------------- -------------- -------------- -------------- --------------
Operating profit from continuing
operations 1,465 1,746 262 311
---------------------------------- -------------- -------------- -------------- --------------
Net finance income 673 605 120 108
---------------------------------- -------------- -------------- -------------- --------------
Foreign exchange losses (126) - (22) -
---------------------------------- -------------- -------------- -------------- --------------
Profit before tax of continuing
operations 2,012 2,351 360 419
---------------------------------- -------------- -------------- -------------- --------------
Tax (712) (949) (127) (169)
---------------------------------- -------------- -------------- -------------- --------------
Profit from continuing
operations 1,300 1,402 233 250
---------------------------------- -------------- -------------- -------------- --------------
Discontinued Operations:
---------------------------------- -------------- -------------- -------------- --------------
Gross loss (9,664) (9,736) (1,719) (1,732)
---------------------------------- -------------- -------------- -------------- --------------
Other operating income 36 95 6 17
---------------------------------- -------------- -------------- -------------- --------------
Administrative expenses (2,837) (2,634) (505) (469)
---------------------------------- -------------- -------------- -------------- --------------
Allowance for doubtful
debts (546) 724 (97) 128
---------------------------------- -------------- -------------- -------------- --------------
Provision for onerous leases 3,140 11,738 559 2,088
---------------------------------- -------------- -------------- -------------- --------------
Operating (loss) / profit
from discontinued operations (9,871) 187 (1,756) 32
---------------------------------- -------------- -------------- -------------- --------------
Net finance cost (5,439) (8,725) (968) (1,552)
---------------------------------- -------------- -------------- -------------- --------------
Loss from discontinued
operations (15,310) (8,538) (2,724) (1,520)
---------------------------------- -------------- -------------- -------------- --------------
Loss for the financial
period (14,010) (7,136) (2,491) (1,270)
---------------------------------- -------------- -------------- -------------- --------------
Foreign currency translation 102 (237) 18 (42)
---------------------------------- -------------- -------------- -------------- --------------
Total comprehensive loss
for the period (13,908) (7,373) (2,473) (1,312)
---------------------------------- -------------- -------------- -------------- --------------
Basic EPS for continuing
operations 0.81 sen 0.88 sen 0.14p 0.16p
---------------------------------- -------------- -------------- -------------- --------------
Basic LPS for discontinued
operations (9.56 sen) (5.34 sen) (1.70p) (0.95p)
---------------------------------- -------------- -------------- -------------- --------------
Basic LPS for the Group (8.75 sen) (4.46 sen) (1.56p) (0.79p)
---------------------------------- -------------- -------------- -------------- --------------
Revenue
Proforma
-------------------------------- ------------------------------ ------------------------------
6 months 6 months 6 months 6 months
ended ended ended ended
30 September 30 September 30 September 30 September
2017 2016 2017 2016
RM'000 RM'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
-------------------------------- -------------- -------------- -------------- --------------
Data centre rental
income
* Continuing operations 6,063 9,535 1,078 1,696
27,684 23,566 4,925 4,192
* Discontinued operations
-------------------------------- -------------- -------------- -------------- --------------
Total data centre
rental income 33,747 33,101 6,003 5,888
-------------------------------- -------------- -------------- -------------- --------------
Maintenance income 2,989 3,356 532 597
-------------------------------- -------------- -------------- -------------- --------------
Sub-total 36,736 36,457 6,535 6,486
-------------------------------- -------------- -------------- -------------- --------------
Design and fit-out
of data centre facilities 2,531 991 450 176
-------------------------------- -------------- -------------- -------------- --------------
Consultancy 275 - 49 -
-------------------------------- -------------- -------------- -------------- --------------
Total Group revenue 39,542 37,448 7,034 6,662
-------------------------------- -------------- -------------- -------------- --------------
Data centre rental revenue increased by 1.9% from RM33.1m
(GBP5.9m*) in H1 2017 to RM33.7m (GBP6.0m*) in the six months under
review, mainly due to the increase in consumption of electricity by
certain customers. There have not been any significant tenancy
contracts won or lost during the period under review.
The decrease in maintenance revenue by RM0.4m (GBP0.07m*) was
mainly attributable to the non-renewal of certain maintenance
contracts which expired during H1 2017.
Gross profit / (loss) margin
In respect of the continuing operations, the Group recorded a
lower gross profit margin of 46.2% compared to 50.5% in H1 2017,
mainly due to lower data centre rental income from the CX1 data
centre, and lower maintenance revenue. The lower data centre
revenue from CX1 was mainly due to the downward revision of rental
rates upon the renewal of tenancy agreements with certain
customers. In respect of the discontinued operations, the Group
incurred a lower gross loss margin of 34.9% (H1 2017: gross loss
margin of 41.3%) mainly due to higher data centre rental income
from the CX2 and CX5 data centres from increased occupancy.
(Loss) / Profit from operations
In respect of the continuing operations, the Group's profit was
similar to that of the corresponding period.
In respect of the discontinued operations, the Group incurred a
loss of RM15.3m (GBP2.7m*) compared to a loss of RM8.5m (GBP1.5m*)
in the corresponding period, mainly due to the following
factors:
(i) net increase in allowance for doubtful debts of RM0.55m
(GBP0.1m*) as compared to a net decrease in allowance for doubtful
debts of RM0.72m (GBP0.13m*), representing an adverse variance of
RM1.27m (GBP0.23m*);
(ii) reversal of restructuring costs in the corresponding period
of RM0.3m (GBP0.06m*) which did not recur in the current
period;
(iii) the lower net utilisation of provisions for onerous leases
of RM3.1m (GBP0.6m*) as compared to RM11.7m (GBP2.1m*) in the
corresponding period, which led to an adverse variance of RM8.6m
(GBP1.5m*); and
(iv) lower net finance cost of RM5.4m (GBP0.97m*) as compared to
RM8.7m (GBP1.55m*) in the corresponding period, a favorable
variance of RM3.3m (GBP0.58m*).
Cash and working capital
As at 30 September 2017 the Group had cash and cash equivalents
(excluding fixed deposits pledged for banking facilities and
deposits held on behalf of the Employee Benefit Trust) of RM60.8m
(GBP10.8m*). The Group recorded net cash generated from operating
activities of RM4.3m (GBP0.8m*), compared to a net operating cash
inflow of RM0.6m (GBP0.1m*) in H1 2017. The higher net cash
generated from operating activities is mainly due to the deferment
of lease rental payments during the negotiations relating to the
disposal of CSF CX Sdn Bhd as elaborated in Note 8 below.
The net cash outflow from investing activities of RM1.7m
(GBP0.3m*) was mainly due to the purchase of additional plant and
equipment of RM2.5m (GBP0.5m*) for the refurbishment and the
upgrading of infrastructure at CX1, CX2 and CX5.
Critical accounting judgment and key sources of estimation
uncertainty
The areas of critical accounting judgment and key sources of
estimation uncertainty as disclosed on pages 38 to 40 of the
Group's Annual Report for the year ended 31 March 2017 remain valid
for the six months ended 30 September 2017.
Going concern
These financial statements have been prepared on a going concern
basis. The directors' consideration of going concern and the
associated uncertainties are provided in Note 1.
Lee King Loon
Chief Financial Officer
CSF Group plc
* The proforma balances in pounds Sterling are included solely
for convenience. The proforma balances in pounds Sterling are
stated, as a matter of arithmetical computation only, on the basis
of all current and prior year balances being translated from
Malaysian Ringgits into pounds Sterling at the rate prevailing on
30 September 2017 of RM5.6213 : GBP1.00. This translation should
not be construed as meaning that the Malaysian Ringgit amounts
actually represent, have been, or could be converted into the
stated number of pounds Sterling.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 6 months ended 30 September 2017
Proforma Proforma
6 months 6 months 6 months 6 months
to 30 September to 30 September to 30 September to 30 September
2017 2016 2017 2016
Note RM'000 RM'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
Continuing operations:
Revenue 11,858 13,882 2,109 2,470
Cost of sales (6,506) (6,877) (1,157) (1,224)
Gross loss 5,352 7,005 952 1,246
Other operating income 734 - 131 -
Administrative expenses (4,878) (5,624) (867) (1,000)
Net allowance for doubtful
debts 257 33 46 6
Reversal of restructuring
costs - 332 - 59
Total operating expenses (4,621) (5,259) (821) (935)
Operating profit 1,465 1,746 262 311
Finance income 680 624 121 111
Finance costs (7) (19) (11) (3)
Foreign exchange losses (126) - (22) -
Profit before tax 2,012 2,351 360 419
Tax (712) (949) (127) (169)
Profit from continuing
operations 1,300 1,402 233 250
Loss from discontinued
operations 6 (15,310) (8,538) (2,724) (1,312)
Loss for the financial
period (14,010) (7,136) (2,491) (1,270)
Other comprehensive income
/ (loss)
Foreign currency translation 102 (237) 18 (42)
Total comprehensive loss
for the period (13,908) (7,373) (2,473) (1,312)
Earnings per share for
continuing operations
* Basic (sen) 7 0.81 0.88 0.14p 0.16p
* Diluted (sen) 7 0.81 0.88 0.14p 0.16p
Loss per share for discontinued
operations
* Basic (sen) 7 (9.56) (5.34) (1.70)p (0.95)p
* Diluted (sen) 7 (9.56) (5.34) (1.70)p (0.95)p
----------------- -----------------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2017
Note Proforma Proforma
As at As at As at As at
30 September 31 March 30 September 31 March
2017 2017 2017 2017
RM'000 RM'000 GBP'000 GBP'000
(unaudited) (audited) (unaudited) (unaudited)
Non-current assets
Property, plant and equipment 2,619 27,318 466 4,860
Other investments 21 20 4 4
Trade and other receivables 123 210 22 37
Deferred tax asset 137 137 24 24
2,900 27,685 516 4,925
Current assets
Inventories 719 667 128 119
Trade and other receivables 4,907 39,209 873 6,975
Current tax assets 373 329 66 59
Restricted cash 3,782 14,056 673 2,500
Cash and cash equivalents 10 62,997 60,313 11,207 10,729
Assets classified as held
for sale 8 64,657 - 11,502 -
137,435 114,574 24,449 20,383
Total assets 140,335 142,259 24,964 25,307
Current liabilities
Trade and other payables 19,670 42,134 3,499 7,495
Bank borrowings 986 1,260 175 224
Obligations under finance
leases - 50 - 9
Liabilities directly associated
with assets classified as
held for sale 8 187,174 - 33,297 -
207,830 43,444 36,971 7,728
Non-current liabilities
Obligations under finance
leases - 100 - 18
Trade and other payables 1,641 80,643 292 14,346
Provision for onerous leases 5 - 73,300 - 13,040
1,641 154,043 292 27,404
-------------- ----------- -------------- ------------
Total liabilities 209,471 197,487 37,263 35,132
============== =========== ============== ============
Net liabilities (69,136) (55,228) (12,299) (9,825)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Cont'd)
As at 30 September 2017
Note Proforma Proforma
As at As at As at As at
30 September 31 March 30 September 31 March
2017 2017 2017 2017
RM'000 RM'000 GBP'000 GBP'000
(unaudited) (audited) (unaudited) (unaudited)
Equity / (deficit)
Share capital 78,936 78,936 14,042 14,042
Share premium 104,499 104,499 18,590 18,590
Shares held under Employee
Benefit Trust (2,300) (2,300) (409) (409)
Other reserve (66,153) (66,153) (11,768) (11,768)
Translation reserve (1,144) (1,246) (204) (222)
Accumulated loss (182,974) (168,964) (32,550) (30,058)
Total capital deficit (69,136) (55,228) (12,299) (9,825)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the 6 months ended 30 September 2017
6 months Proforma Proforma
ended 6 months 6 months ended
6 months ended 30 September ended 30 September
30 September 2016 30 September 2016
2017 RM'000 2017 GBP'000
RM'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
Net cash generated from
operating activities (Note
9) 4,298 596 765 106
Investing activities
Interest received 838 626 149 111
Capital expenditure (2,541) (2,084) (452) (371)
Net cash used in investing
activities (1,703) (1,458) (303) (260)
Financing activities
Borrowing from revolving
line of credit 60 - 11 -
Repayment of obligations
under finance leases (25) (70) (4) (12)
Decrease / (increase) in
restricted cash 1,098 (76) 195 (14)
Repayment of borrowings (334) (582) (59) (104)
Net cash used in / (generated
from) financing activities 799 (728) 143 (130)
Net increase / (decrease)
in cash and cash equivalents 3,394 (1,590) 605 (284)
Cash and cash equivalents
classified under assets
held for sale (Note 8) (554) - (99) -
Cash and cash equivalents
at beginning of financial
period (Note 9) 57,998 43,572 10,318 7,751
Cash and cash equivalents
at end of financial period
(Note 9) 60,838 41,982 10,824 7,467
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 6 months ended 30 September 2017
Shares held under Employee Benefit Trust Accumulated loss Translation
Share capital Share premium RM'000 Other reserve RM'000 reserve Total
RM'000 RM'000 (unaudited) RM'000 (unaudited) RM'000 RM'000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
At 1 April 2016 78,936 104,499 (2,300) (66,153) (134,343) (766) (20,127)
Loss for the
period - - - - (7,136) (237) (7,373)
At 30 September
2016 78,936 104,499 (2,300) (66,153) (141,479) (1,003) (27,500)
At 1 April 2017 78,936 104,499 (2,300) (66,153) (168,964) (1,246) (55,228)
Loss for the period - - - - (14,010) 102 (13,908)
At 30 September 2017 78,936 104,499 (2,300) (66,153) (182,974) (1,144) (69,136)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 6 months ended 30 September 2017
Shares held under Employee Benefit Trust Translation
Share capital Share premium GBP'000 Other reserve Accumulated loss reserve Total
GBP'000 GBP'000 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Proforma
At 1 April 2016 14,042 18,590 (409) (11,768) (23,899) (136) (3,580)
Loss for the
period - - - - (1,269) (42) (1,311)
At 30 September
2016 14,042 18,590 (409) (11,768) (25,168) (178) (4,891)
At 1 April 2017 14,042 18,590 (409) (11,768) (30,058) (222) (9,825)
Loss for the period - - - - (2,492) 18 (2,474)
At 30 September 2017 14,042 18,590 (409) (11,768) (32,550) (204) (12,299)
Notes 1 to 12 form an integral part of the condensed
consolidated interim financial results.
1. General information
This announcement of condensed consolidated interim financial
results was approved for issue by the Board of Directors on 13
December 2017 and is unaudited.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards (IFRSs), this announcement does not itself contain
sufficient information to comply with IFRSs. In September 2017, the
Group published full financial statements for the year ended 31
March 2017 that comply with IFRSs, which were delivered to the
Jersey Registrar of Companies in October 2017.
(i) Basis of preparation
The annual financial statements of the Group are prepared in
accordance with IFRSs as adopted by the European Union. The
condensed consolidated interim financial results have been prepared
in accordance with the accounting policies the Group intends to use
in preparing its next annual financial statements. The condensed
consolidated interim financial results should be read in
conjunction with the annual financial statements for the year ended
31 March 2017, which have been prepared in accordance with IFRSs as
adopted by the European Union.
(ii) Proforma Sterling figures
The proforma balances in pounds Sterling are included solely for
convenience. The proforma balances in pounds Sterling are stated,
as a matter of arithmetical computation only, on the basis of all
current and prior year balances being translated from Malaysian
Ringgits into pounds Sterling at the rate prevailing on 30
September 2017 of RM5.6213 : GBP1.00 This translation should not be
construed as meaning that the Malaysian Ringgit amounts actually
represent, have been or could be converted into the stated number
of pounds Sterling.
(iii) Basis of accounting
The accounting policies adopted are consistent with those of the
annual financial statements for the year ended 31 March 2017, as
described in those financial statements.
Taxes on income in interim periods are accrued using the tax
rate that would be applicable to expected total annual
earnings.
1. General information (Cont'd)
(iv) Forward-looking statements
Certain statements in these condensed consolidated interim
financial results are forward-looking. Although the Group believes
that the expectations reflected in these forward-looking statements
are reasonable, we can give no assurance that these expectations
will prove to have been correct. Because these statements involve
risks and uncertainties, actual results may differ materially from
those expressed or implied by these forward-looking statements.
(v) Going concern
The Group's business activities, together with the factors
likely to affect the future development, performance and position
are set out in the Chairman's Statement. The financial position of
the Group, its cash flows and liquidity positions are described in
the Chief Financial Officer's Review. In addition, the notes to
financial statements include foreign currency risk management,
interest rate risk management, credit risk management and liquidity
risk management.
As at 30 September 2017, the Group's cash and cash equivalents
excluding deposits held on behalf of the Employee Benefit Trust
stand at RM60.8 million.
The Directors have prepared financial projections, including
cash flows, for a period up to 31 March 2019 which include a
scenario that assumes that the Disposal of CSF CX completes in
accordance with the terms of the Share SPA. The Disposal of CSF CX
is discussed in Note 8 below. Under this scenario, the Group's
operating losses and cash outflows are forecast to significantly
reduce. As disclosed in Note 6 below, the revenue attributable to
CSF CX (classified as revenue from discontinued operations) for the
period under review amounts to RM27.7m. On this basis, and barring
any significant increases in the revenue from the Group's remaining
businesses, the Group's revenue is expected to be significantly
lower after the completion of the Disposal.
The projections include sensitivity testing to consider a
reasonable worst case scenario which also assumes that the Disposal
of CSF CX does not complete.
Based on these projections and taking into consideration the
current financial position of the Group and future capital and
lease commitments, the Directors have a reasonable expectation that
the Group has adequate resources to continue in operational
existence for the foreseeable future. Thus they continue to adopt
the going concern basis of accounting in preparing the annual
financial statements. In reaching this conclusion the directors
have paid particular attention to the following factors:
-- The positive progress that is already being made in
restructuring the business and the heightened focus on cash
management;
-- The existing cash reserves of the business, and the fact that
the Group has low levels of bank borrowings with low financial
covenants;
-- The Group's business model is to lease its data centres as
opposed to outright ownership. As a result, the Group is committed
to regular lease rental payments, which constitute a significant
proportion of the Group's cost base. The Group therefore needs to
achieve a certain level of tenant occupancy to cover the minimum
lease and other costs of ownership of a given data centre;
(v) Going concern (Cont'd)
-- Pursuant to the Disposal of CSF CX, the administration and
operations of CX2 and CX5 are currently under the purview of the
Purchaser of CSF CX, although the Group still provides assistance
to the Purchaser on certain aspects of the business of CSF CX which
include ongoing negotiations with potential customers that were
already in the pipeline prior to the Disposal;
-- Due to changes in the data centre rental market, current
market rentals have declined. In this regard the group are
monitoring closely its cost and looking at ways to improve the
operation and procurement process including working closely with
its suppliers to reduce the overall cost;
-- The Group has completed the restructuring with the freeholder
on the lease rental payments on CX1, CX2 and CX5, with the revised
lease rental rates commencing on 1 January 2016 whereby the lease
rental payments shall be lower in the earlier years and
progressively increasing thereafter. The outstanding lease rental
accrued up to 31 December 2015 is currently being restructured
between CSF CX (under the ownership of the Purchaser) and the
freeholder as a condition to the Disposal of CSF CX; and
-- The funding requirements of existing and proposed new ventures and/or projects.
Given prevailing market conditions and the current level of
revenue for the Group's remaining businesses (after the Disposal of
CSF CX), the Group is forecast to continue to make operating losses
and have operating cash outflows, albeit at significantly reduced
amounts. The Board is continuing to review the Group's business
model with the aim of establishing sustainable profitable
trading.
Notwithstanding the above and taking into consideration the
current financial position, future capital and lease commitments of
the Group, the directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future. Thus they continue to adopt the going
concern basis of accounting in preparing the consolidated financial
statements for the period ended 30 September 2017.
It should be noted that if the Disposal of CSF CX does not
complete and the Group were to continue in its current state with
no change to its customer base or further reduction in the
freeholder lease rentals, its cash reserves would be depleted by
the end of the 1(st) quarter of the financial year ending 2020.
2. Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 March each year. Control is
achieved where the Company has the power to govern the financial
and operating policies of an investee entity so as to obtain
benefits from its activities.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated statement of comprehensive
income from the effective date of acquisition or up to the
effective date of disposal, as appropriate. Where necessary,
adjustments are made to the financial statements of subsidiaries to
bring the accounting policies used into line with those used by the
Group. All intra-group transactions, balances, income and expenses
are eliminated on consolidation.
Any contingent consideration to be transferred by the group is
recognised at fair value at the acquisition date. Subsequent
changes in fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with
IAS 39 either in profit or loss or as a change to other
comprehensive income. Contingent consideration that is classified
as equity is not re-measured, and its subsequent settlement is
accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of
the consideration transferred and the fair value on non-controlling
interest over the net identifiable assets acquired and liabilities
assumed.
3. Revenue recognition and contract accounting
Revenue represents amounts receivable for work carried out in
the rental of data centre space (including reimbursement for
electricity consumed by customers), design and development of data
centre facilities, the maintenance of data centres and imputed
interest on loans to data centre developers.
Revenue from contract works is recognised in the Consolidated
Statement of Comprehensive Income based on the stage of completion
which is determined based on the contract costs incurred for work
performed to date in proportion to the estimated total contract
costs.
Revenue on design and development activity is recognised over
the period of the activity and in accordance with the underlying
contract. Revenue is measured by reference to the fair value of
consideration received or receivable from customers. Cost
overspends on design and development are recognised as they arise
and cost under-spends recognised when it is known with reasonable
certainty, the final position of the relevant contract. Where
design and development projects are in progress and where sales
invoiced exceed the cost of work completed, the excess is shown as
deferred income, within other financial assets. When it is probable
that total fit-out costs will exceed contract revenue, the expected
loss is recognised as an expense immediately.
Income from support and maintenance agreements and the rental of
data centre space is recognised on a straight line basis over the
period of the related activity. Data centre space is rented out
under operating leases.
4. Segment reporting
The management regularly reviews segment information based on
the key products and services provided to its customers; rental of
data centre space, maintenance including support of data centres,
and the design and development of data centres.
Data centre Design and development
6 months ended rental of data centres Consultancy Consolidated
30 September 2017 RM'000 Maintenance RM'000 RM'000 RM'000 RM'000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Revenue 33,747 2,989 2,531 275 39,542
Cost of Sales (38,097) (1,327) (3,837) (593) (43,854)
Gross (loss) / profit (4,350) 1,662 (1,306) (318) (4,312)
Other operating income 46 - 724 - 770
Provision for onerous
leases 3,140 - - - 3,140
Administrative cost (3,906) (4) 5 - (3,905)
Allowance for doubtful
debts (539) - - - (539)
Write back of doubtful
debts - - 250 - 250
Staff costs (991) (235) (103) - (1,329)
Segment depreciation (7) (5) (21) - (33)
Segment result (2,397) 1,418 (451) (318) (5,958)
Corporate costs (2,448)
Gain on foreign exchange (126)
Finance income 838
Finance cost (5,604)
Loss before tax (13,298)
Tax (712)
Loss for the financial
period (14,010)
4. Segment reporting (Cont'd)
Data centre Design and development of
6 months ended rental data centres Consultancy Consolidated
30 September 2016 RM'000 Maintenance RM'000 RM'000 RM'000 RM'000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Revenue 33,101 3,356 991 - 37,448
Cost of Sales (38,489) (1,279) (411) - (40,179)
Gross (loss) / profit (5,388) 2,077 580 - (2,731)
Other operating income 95 - - - 95
Provision for onerous
leases 11,738 - - - 11,738
Administrative cost (2,368) (208) (60) - (2,636)
Allowance for doubtful - - - - -
debts
Write back of doubtful
debts 753 - 4 - 757
Staff costs (2,717) (257) (79) - (3,053)
Segment depreciation (7) (6) (24) - (37)
Segment result 2,106 1,606 421 - 4,133
`
------------ ------------------- -------------------------- ------------
Corporate costs (2,858)
Reversal of restructuring
cost 332
Gain on foreign exchange 326
Finance income 626
Finance cost (8,746)
Loss before tax (6,187)
Tax (949)
Loss for the financial
period (7,136)
Other comprehensive loss
Foreign currency
translation (237)
Total comprehensive loss
for the period (7,373)
5. Provision for onerous leases
As at As at
30 September 31 March
2017 2017
Movement in provision for onerous leases RM'000 RM'000
(unaudited) (audited)
At start of financial period / year 73,300 57,900
------------- ---------
Additional provision 5,590 24,250
Utilisation of provision (8,730) (16,087)
------------- ---------
Net (utilisation) / additional provision (3,140) 8,163
Unwinding of discount 4,220 7,237
Re-classification to liabilities directly (74,380) -
associated with assets classified as held
for sale
At end of financial period / year - 73,300
The Group's business model is to lease data centres and commit
to lease rentals and certain other costs of ownership. As such, the
Group needs to achieve a certain level of rental income from
tenants over the life of the data centre lease such that revenue
received will exceed costs.
The provision for onerous leases in the financial statements
represents the present value of the future lease payments that the
Group is presently obliged to make under non-cancellable operating
lease contracts, less revenue expected to be earned on the lease.
The estimate may vary as a result of changes in the utilisation of
the data centres. The unexpired terms of the leases is nine (9)
years with an option to extend by an additional sixteen (16)
years.
The provision for onerous leases are in respect of CSF CX Sdn
Bhd ("CSF CX"), a wholly-owned subsidiary of the Group. The Group
is in the process of completing the disposal of CSF CX as discussed
in Note 8 below. Hence, the provision for onerous leases have been
re-classified to liabilities directly associated with assets
classified as held for sale.
6. Discontinued operations
6 months 6 months
ended 30 ended 30
September September
2017 2016
RM'000 RM'000
Note (unaudited) (unaudited)
Revenue 27,684 23,566
Cost of sales (37,348) (33,302)
Gross loss (9,664) (9,736)
Other operating income 36 95
------------ ------------
Administrative expenses (2,837) (2,634)
Net allowance for doubtful
debts (546) 724
Provision for onerous leases 5 3,140 11,738
------------ ------------
Total operating expenses (243) 9,828
Operating loss (9,871) 187
Finance income 158 2
------------ ------------
Interest payable on bank
loans, overdraft and finance
leases (1,377) (1,489)
Unwinding of discounts
on provisions (4,220) (7,238)
------------ ------------
Finance cost (5,597) (8,727)
Loss for the period from
discontinued operations (15,310) (8,538)
Net cash (used in) / generated from
operating activities (6,333) 1,805
Net cash used in investing activities (717) (1,673)
Net cash generated from / (used in)
financing activities 725 (1,207)
Decrease in cash and cash equivalents (6,325) (1,075)
The results of the discontinued operations are in respect of CSF
CX Sdn Bhd ("CSF CX"), a wholly-owned subsidiary of the Group. The
Group is in the process of completing the disposal of CSF CX as
discussed in Note 8 below.
7. Earnings / Loss per share
The calculation for earnings / loss per share, based on the
weighted average number of shares, is shown in the table below:
6 months 6 months
ended ended
30 September 30 September
2017 2016
(unaudited) (unaudited)
Net profit from continuing operations
(RM'000) 1,300 1,402
Net loss from discontinued operations
(RM'000) (15,310) (8,538)
Net loss for the financial period
after taxation attributable to members
(RM'000) (14,010) (7,136)
Weighted average number of ordinary
shares for basic earnings per share
('000) 160,029 160,029
Weighted average number of ordinary
shares for diluted earnings per share
('000) 160,029 160,029
The number of ordinary shares for diluted earnings / loss per
share is the weighted average number of ordinary shares of CSF
Group plc in issue.
8. Assets and liabilities classified as held for sale
As at 30 As at
September 31 March
2017 2017
RM'000 RM'000
(unaudited) (audited)
Assets classified as held for sale
Property, plant and equipment 24,502 -
Trade and other receivables 30,423 -
Restricted cash 9,178 -
Cash and cash equivalents 554 -
------------ ----------
Total assets of subsidiary held for 64,657 -
sale
============ ==========
Liabilities directly associated with
assets classified as held for sale
Trade and other payables 112,794 -
Provision for onerous leases 74,380 -
------------ ----------
Total liabilities of subsidiary held 187,174 -
for sale
============ ==========
The assets and liabilities classified as held for sale are in
respect of CSF CX Sdn Bhd ("CSF CX"), a wholly-owned subsidiary of
the Group. The Group is in the process of completing the disposal
of CSF CX pursuant to the Share Purchase Agreement (the "Share
SPA") entered into between CSF International Limited ("CSFI"), a
wholly-owned subsidiary of CSF Group Plc and BDC AssetCo Pte Ltd
("BAC", or the "Purchaser"), an investee company of Bain Capital
Partners Asia Fund III and Bridge Data Centres (International) Pte
Ltd, on 28 September 2017.
On 1 November 2017, CSFI completed the transfer (the "Share
Transfer") of its shareholdings in CSF CX to Bridge Data Centres
Malaysia Holdings Sdn Bhd, a wholly-owned subsidiary of BAC, in
exchange for the consideration of RM2.00 (being approximately
GBP0.36).
The completion of the Share SPA remains conditional upon a
number of outstanding conditions being satisfied including, inter
alia, the receipt of various regulatory consents and certain
restructuring activities being undertaken in CSF CX following the
Share Transfer. The Group and the Purchaser continue to work
together towards achieving completion of the Disposal, which is
expected to occur within a deadline that falls in early May of
2018.
9. Note to the Cash Flow Statement
6 months 6 months
ended 30 ended 30
September September
2017 2016
RM'000 RM'000
(unaudited) (unaudited)
Loss for the financial period (14,010) (7,136)
Adjustments for:
Allowance for doubtful debts 539 -
Allowance for doubtful debts written back (250) (757)
Depreciation of property, plant and equipment 2,737 2,586
Foreign currency translation 102 (237)
Interest expense 5,604 8,746
Interest income (838) (626)
Reversal of restructuring cost - (332)
Provision for onerous leases (3,140) (11,738)
Tax 712 949
Operating cash outflow before movements
in working capital (8,544) (8,545)
(Increase) / decrease in inventories (52) 765
Decrease in receivables 3,500 10,117
Increase / (decrease) in payables 10,260 (1,409)
Cash generated from operations 5,164 928
Interest paid (111) (217)
Income taxes paid (755) (115)
Net cash generated from operating activities 4,298 596
10. Cash and cash equivalents
As at As at
31 March 31 March
2017 2016
RM'000 RM'000
(unaudited) (unaudited)
Cash and cash equivalents- statement of
financial position 60,313 45,823
Deposit held on behalf of employee benefit
trust (2,315) (2,251)
__________ _________
Cash and cash equivalents at beginning
of the financial period - cash flow 57,998 43,572
As at As at
30 September 30 September
2017 2016
RM'000 RM'000
(unaudited) (audited)
Cash and cash equivalents- statement of
financial position 62,997 44,269
Deposit held on behalf of employee benefit
trust (2,159) (2,287)
__________ _________
Cash and cash equivalents at the end of
the financial period - cash flow 60,838 41,982
11. Dividend
The Board does not propose any payment of dividends in respect
of the six month period to 30 September 2017 (H1 2017: Nil).
12. Contingencies
The Group holds a number of guarantees with various banks in
respect of banking facilities as follows:
As at As at
30 September 31 March
2017 2017
RM'000 RM'000
(unaudited) (audited)
Banking guarantees 28,000 28,000
-ends-
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR TTBATMBABBAR
(END) Dow Jones Newswires
December 13, 2017 02:00 ET (07:00 GMT)
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