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Home > Investor Relations > Announcements
Announcements

CSF GROUP PLC
(“CSF” or the “Group”)

HALF-YEAR RESULTS
For the Six Months Ended 30 September 2011

CSF Group plc (AIM: CSFG), the leading provider of data centre facilities and services in South East Asia and the largest provider of data centre services in Malaysia, is pleased to announce its unaudited half-yearly results for the six months ended 30 September 2011.

Financial highlights:

  • Group revenue 96.8% higher at RM91.7m (£18.4m*) as compared to RM46.6m (£9.4m*) in H1 2011
  • Profit before tax of RM30.1m (£6.0m*) is lower compared to RM32.5m (£6.5m*) in H1 2011 mainly due to the recognition of the gain on the sale and leaseback of CX1 in H1 2011 of RM22.5m (£4.5m*)
  • EPS of 15.53 sen (3.12p*) per share is lower compared to 18.75 sen (3.77 p*) per share in H1 2011 mainly due to the recognition of the gain on the sale and leaseback of CX1 in H1 2011 which contributed to additional basic earnings per share of 14.04 sen (2.82 p*)
  • Cash position as at 30 September 2011 of RM58.2m (£11.7m*) as compared to RM82.1m (£16.5m) as at 31 March 2011

Operational highlights

  • Our Malaysian data centres, CX1, CX2 and CX3 operated on a full occupancy basis throughout the financial period
  • The development of Phase 1 of CX5 data centre is near completion and we are in the process of finalising the tenancy agreement for the rental of Block A of CX5
  • Commenced Phase 1 of fit-out works at CXJ data centre in Jakarta, Indonesia which is scheduled for completion in early calendar year 2012
  • Signed a collaboration agreement with Pacific Link Telecom (Asia) Limited (“PLTA”) and Jiangsu Communications Services Co. Ltd. (“JCS”) to develop new business opportunities, particularly in China
  • Ongoing strategy to develop high quality data centres in Malaysia, Singapore, Vietnam, Thailand and Indonesia continues at pace

* The pro forma balances in pounds Sterling are included solely for convenience. The pro forma 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 2011 of RM4.9738 : £1.00.  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.

Adrian Yong, CEO of CSF Group, commented

"The Group continues to make strong strategic progress unpinned by the delivery of another good set of financial results.  Despite widely reported capital market turbulence we remain buoyed by increasing demand for our services across the South East Asia region.  We continue to execute our stated growth strategy, which has seen CSF successfully expand into Indonesia whilst pursuing other opportunities in China and Thailand."

For further information:

CSF Group
Adrian Yong, Chief Executive
+44 (0)20 7466 5000 (on the day)
+603 8318 1313 (thereafter)

Cenkos Securities (Nominated Adviser & Broker)
Ian Soanes or Elizabeth Bowman
+44 (0)20 7397 8900

Buchanan Communications
Jeremy Garcia / Gabriella Clinkard
+44 (0)20 7466 5000

CHAIRMAN'S STATEMENT

We are pleased to report another solid set of results for the Group as we look to enhance our position as a leading provider of data centre solutions across South East Asia.

The Group’s commitment towards enhancing the quality of its services and products has been well received by its customers as demonstrated by the increase in both revenue and profit from operations.

Our existing order book and business pipeline continue to strengthen as we seek to expand our regional presence.  We have made considerable progress with CX5 and our new facility in Jakarta, Indonesia, CXJ will add an additional 120,000 sq ft of data centre space for the Group.

Results

Revenue for the six months to 30 September 2011 increased 96.8% to RM91.7m (£18.4m*) as compared with RM46.6m (£9.4m*) in the comparative period, with data centre rental and maintenance revenue increasing by RM2.6m (£0.5m*) or 7.3%. The revenue for H1 FY 2012 includes ‘non recurring revenue’ recognised from the design and fit out of CX5 of RM49.7m (£10.0m*). The average gross margin increased to 42.2% (H1 2011: 33.0%) mainly due to the attainment of full occupancy of all our commissioned data centres.

Profit from operations was RM29.5m (£5.9m*) compared to RM31.8m (£6.4m*) in H1 2011 and profit before taxation was RM30.0m (£6.0m*) as compared to RM32.5m (£6.5m*) in H1 2011 mainly due to the recognition of the gain on sale (and leaseback) of the CX1 data centre in H1 2011 of RM22.5m (£4.5m*). Profit before taxation excluding the gain on disposal of property, plant and equipment was RM28.2m (£5.7m*) compared to RM10.0m (£2.0m*) in H1 2011.

The net cash used in operating activities was RM3.5m (£0.7m*) as compared to net cash used of RM9.6m (£1.9m*) in H1 2011. The Group’s cash position has decreased by RM23.9m (£4.8m*) from RM82.1m (£16.5m*) as at 31 March 2011 to RM58.2m (£11.7m*) as at 30 September 2011 mainly due to a net cash outflow from operating activities of RM3.2m (£0.6m*), an interim dividend paid amounting to RM15.0m (£3.0m*) for financial year ended 31 March 2011, the advances made to Integrated DC Builders Sdn. Bhd. amounting to RM5.0m (£1.0m*) for the development of CX5.

Growth strategy

CSF’s broad strategy remains unchanged and we continue to focus on achieving profitable growth and increasing our sustainable revenues, while investing in the longer-term core assets of the business – our expertise, our employees and our customers. The Group has made significant progress in Vietnam and Indonesia and will continue to capitalise on opportunities in the region.

There are also ongoing discussions with potential business partners in Singapore, Thailand and Indonesia to develop data centres at viable cost levels and at locations that permit scalability in terms of space and power. We remain on target to achieve our medium to long-term goal of managing an interconnected and integrated hub of data centres strategically located across South East Asia.

Data Centre Rental

The Group achieved full occupancy at CX2 with effect from March 2011 with CX1 and CX2 operating at full occupancy throughout the financial period.  The development and build of Phase 1 of CX5 is near completion and we are in the process of finalising the tenancy agreement for the rental of Block A. The Company is currently negotiating with a reputable tenant for this space and it is expected that whilst these negotiations may take longer than initially anticipated this high calibre organisation will provide a flagship tenant for the CX5 building and assist with the procurement of tenants for Blocks B and C.

CXJ, our facility in Jakarta, Indonesia increased our net data centre space capacity by approximate 120,000 sq ft. The Group commenced Phase 1 of the fit-out works at CXJ which is scheduled for completion in early calendar year 2012 in accordance with the customer’s site preparation schedule. The Group actively continues to pursue a number of new potential customers.

Our recent collaboration with Pacific Link Telecom (Asia) Limited (“PLTA”) and Jiangsu Communications Services Co. Ltd. (“JCS”), should enable the Group to continue to pursue and work on opportunities across South East Asia region and aspires to secure regional telecommunications companies as customers.

Maintenance

The Group’s maintenance revenue has continued to grow and we have secured a number of new maintenance contracts during H1 2012. Our maintenance division has continued to record a significant improvement in its internal key performance indicators which include measurements of efficiency in carrying out scheduled maintenance and also ad hoc requests for services.

Design and Fit-out of Data Centre Facilities

CSF continues to enhance its market position and the works carried out at CX5 and CXJ are a testament of the Group’s reputation as a leading and reliable solutions provider in the field of data centre infrastructure services. The Group continues to pursue external opportunities across the region working closely with all business partners.

The Group is currently working with a business partner to prepare formal proposals to various government ministries regarding the integration of the civil services network. These include the housing of digital information and the proposed shared services centres of various government ministries in the existing and future data centres of the Group.

Recent initiatives

The Group’s colloboration with PLTA and JCS is expected to form a strong platform for the marketing CSF’s data centres and related services to Chinese-owned enterprises. PLTA’s strategy is to entice international telecommunications service providers to set up their internet points of presence (“POP”) in common data centres managed by PLTA on a co-location basis. JCS’s core competencies in supplying, installing and maintaining  data centre equipment, are expected to complement CSF’s experience and reputation of building high quality purpose-built data centres.

The recent flood crisis in Thailand has fuelled the demand for data centre space and the Information and Communication Technology Ministry of Thailand has stated that preparedness and recovery strategies are being detailed for nationwide communications systems, including fixed-line and mobile phone service, data backup centres, servers and call centres. In addition, a group of leading data centre operators, led by TCC Group, is considering setting up a "data centre park" to accommodate businesses and deal with future natural disasters. CSF is already negotiating potential business partners in Thailand and is certainly poised to capitalise on the encouraging demand for data centre space in the country.

Subsequent to the crisis in Japan in March 2011, the Group continues to attend to several enquiries from Japanese firms to locate their data centre operations to alternative locations such as Malaysia and Singapore.

Staff

The success of CSF and its present stature are the results of the hard work of our people. It is their knowledge, skill, professionalism and commitment that drives this company forward and I would like to thank them all for their significant contribution throughout the period. CSF aspires to be the employer of choice that encourages constructive communication between the management and the other employees and will strive to cultivate a working environment based on the principles of meritocracy, fairness, integrity and responsibility.

The Group continues to search and recruit new talents who can contribute positively and to partake in bringing the Group to greater heights.

Dividends

The Board does not propose any payment of dividends in respect of the six months period ended 30 September 2011 (H1 2010: Nil) but expects to pay a dividend in respect of the 31 March 2012 financial year subsequent to the end of the financial year.

Outlook and current trading

Our key business focus for the second half of 2012 is to ensure that the development of CX5 and CXJ remains on schedule and also to endeavour to secure customers for the tenancy of Blocks B and C of CX5, and CXJ in addition to finalising the agreement with the tenant for Block A.

Trading has remained strong since the end of the interim period within the Group’s businesses and the Board expects that profit before tax for the full financial year will be in line with market expectations.

Our ongoing discussions with the proposed tenant for Block A of CX5 may result in this tenant commencing its occupancy after the year end. However the Board believes that this short-term timing difference will be outweighed by the benefits obtained from securing such a high calibre anchor tenant for CX5, increasing the profile of what is already the most advanced data centre building in the region. In addition, the Group has continued to develop a strong pipeline of potential tenancies for the building and our balance sheet remains robust with cash of RM58.2m (£11.7m*) at 30 September 2011. The Board is confident that demand for our products and services will be sustained, driven by our reputation and established market presence in Malaysia and South East Asia.

Dato' Ting Heng Peng
Independent Non-Executive Chairman
CSF Group plc

* The pro forma balances in pounds Sterling are included solely for convenience. The pro forma 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 2011 of RM4.9738 : £1.00.  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.

CHIEF FINANCIAL OFFICER'S REVIEW

Introduction

The Group recorded basic earnings per share (“EPS”) of 15.53 sen (3.12 p*) as compared to 18.75 sen (3.77 p*) for the 6 months period ended 30 September 2010. The profit for the 6-month period ended 30 September 2010 included a gain from the sale (and leaseback) of the CX1 data centre of RM22.5m (£4.5m*).

Financial results

 

 

Proforma

 

6 months ended 30 September 2011
RM'000
(unaudited)

6 months ended 30 September 2010
RM’000
(unaudited)
(Restated)¹

6 months ended 30 September 2011
£’000
(unaudited)

6 months ended 30 September 2010
£’000
(unaudited)
(Restated)¹

Total Group revenue

 

91,714

 

46,607

 

18,439

 

9,371

Gross profit

 

38,678

 

15,381

 

7,776

 

3,093

Gain on sale of property, plant and equipment

 

1,873

 

22,456

 

377

 

4,515

Allowance for doubtful debts

(2,731)

-

(549)

-

Share-based payment

 

(625)

 

(268)

 

(126)

 

(54)

Profit from operations

 

29,533

 

31,781

 

5,937

 

6,389

Net finance income / (cost)

 

537

 

719

 

108

 

145

Profit before tax

30,070

32,500

6,045

6,534

Tax

(5,221)

(2,506)

(1,049)

(504)

Other comprehensive income

(17)

-

(3)

-

Total comprehensive income for the period

24,832

29,994

4,993

6,030

Basic EPS

15.53 sen

18.75 sen

3.12 p

3.77 p

Note 1: Certain comparative figures have been restated as a result of the reclassification of data centre depreciation, staff costs and cost of electricity reimbursed by customers to cost of sales which were previously reported under administrative expenses. In addition, the amount relating to the reimbursement of electricity consumed by customers has been reclassified from other operating income to revenue. The details are disclosed in Note 18.

Revenue

 

 

Proforma

 

6 months ended 30 September 2011
RM'000
(unaudited)

6 months ended 30 September 2010
RM’000
(unaudited)
(Restated)

6 months ended 30 September 2011
£’000

(unaudited)

6 months ended 30 September 2010
£’000
(unaudited)
(Restated)

Data centre rental income

 

33,665

 

32,122

 

6,768

 

6,458

Maintenance income

 

4,215

 

3,196

 

847

 

643

Design and fit-out of data centre facilities

 

53,834

 

11,289

 

10,824

 

2,270

Total Group revenue

 

91,714

 

46,607

 

18,439

 

9,371

Data centre rental and maintenance revenue increased by 7.3% to RM37.9m (£7.6m*) from RM35.3m (£7.1m*) in H1 2011 mainly due to the attainment of full occupancy of CX2 in March 2011 and ad hoc requests for maintenance services requested by certain customers.

Revenue from the design and fit-out of data centre facilities increased to RM53.8m (£10.8m*) from RM11.3m (£2.7m*) mainly attributable to the revenue derived from project management services and fit-out works carried out at CX5 of RM49.7m (£10.0m*).

Gross profit margin

The Group’s gross profit (GP) margin of 42.2% is higher than the average GP margin of H1 2011 of 33.0% mainly due to the higher gross profit margin on design and fit-out of data centre facilities. The gross profit margin on the revenue from the data centre rental and maintenance was fairly consistent with that of H1 2011 (33.3% in H1 2012 compared to 35.4% in H1 2011).

The increase in gross profit margin on design and fit-out of data centre facilities (48.4% in H1 2012 compared to 25.5% in H1 2011) was mainly due to an increase in the amount of project management and consultancy revenue which generated relatively higher profit margins.

Profit from operations

Profit from operations is RM29.5m (£5.9m*) compared to RM31.8m (£6.4m*) in H1 2011 mainly due to the recognition of the gain on sale (and leaseback) of the CX1 data centre in H1 2011 of RM22.5m (£4.5m*). Excluding the effects of the gain on sale (and leaseback) of CX1, the profit from operations of H1 2012 is significantly higher compared to H1 2011 mainly because of the significant increase in revenue and higher average gross profit margin as explained above,

Cash and working capital

The Group’s net cash generated from operations before working capital movement and net finance costs is RM34.2m (£6.9m*) compared to RM10.3m (£2.1m*) in H1 2011 mainly attributable to the significant increase in revenue and gross profit as explained above.

The Group recorded a net working capital outflow of RM34.7m (£7.0m*) which comprises mainly the net working capital outflow relating to project management services and fit-out works carried out at CX5 amounting to RM21.8m (£4.4m*). Excluding the trade receivables relating to CX5, the outstanding trade receivables at 30 September 2011 amount to RM47.4m (£9.5m*) compared to RM38.8m (£7.8m*) at 30 September 2010. The increase in trade receivables is mainly attributable to increased revenue as described above and a temporary delay in payment by certain customers due to administrative process changes at these customers.

Critical accounting judgement and key sources of estimation uncertainty

The areas of critical accounting judgement and key sources of estimation uncertainty as disclosed on pages 47 to 48 of the Group’s Annual Report for the year ended 31 March 2011 remain valid for the six months ended 30 September 2011.

Going concern

The directors have prepared financial projections, including cash flows, for a period up to 31 March 2013. Based on these projections and taking into consideration the current financial position of the Group, the directors have a reasonable expectation that the Company 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 half-yearly information for the 6 months ended 30 September 2011.

* The pro forma balances in pounds Sterling are included solely for convenience. The pro forma 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 2011 of RM4.9738 : £1.00. 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 2011

 

Note

6 months to 30 September
2011
RM'000

6 months to 30 September 2010
RM'000

Proforma
6 months to 30 September
2011
£'000

Proforma
6 months to 30 September
2010
£'000

 

 

(unaudited)

(unaudited)
(Restated Note 18)

(unaudited)

(unaudited)
(Restated Note 18)

 

 

 

 

 

 

Revenue

5

91,714

46,607

18,439

9,371

Cost of sales

 

(53,036)

(31,226)

(10,663)

(6,278)

 

 

 

 

 

 

Gross profit

 

38,678

15,381

7,776

3,093

Other operating income

 

420

164

84

33

Gain on sale of property, plant and equipment

 

6

 

1,873

22,456

 

377

 

4,515

Administrative expenses

 

(8,082)

(5,952)

(1,625)

(1,198)

Allowance for doubtful debts

 

(2,731)

-

(549)

-

Share-based payment

7

(625)

(268)

(126)

(54)

 

Total operating expenses

 

 

(11,438)

(6,220)

 

(2,300)

 

(1,252)

 

 

 

 

 

 

Operating profit

 

29,533

31,781

5,937

6,389

 

Finance income

 

 

637

1,148

 

128

 

231

Finance costs

 

(100)

(429)

(20)

(86)

 

 

 

 

 

 

Profit before tax

 

30,070

32,500

6,045

6,534

Tax

 

(5,221)

(2,506)

(1,049)

(504)

 

 

 

 

 

 

Profit for the financial period

 

24,849

 

29,994

 

4,996

 

6,030

Other comprehensive income
Exchange differences on translation of foreign operations

 

(17)

 

-

 

(3)

 

-

 

 

 

 

 

 

Total comprehensive income for the period

 

24,832

 

29,994

 

4,993

 

6,030

 

 

 

 

 

 

EPS
-     Basic (sen)

8

15.53

 

18.75

 

3.12 p

 

3.77 p

-     Diluted (sen)

8

15.41

 

18.72

 

3.01 p

 

3.76 p

CONDENSED CONSOLIDATED BALANCE SHEET
As at 30 September 2011

 

 

 

Note

As at
30 September
2011
RM'000

As at
31 March 2011
RM'000

Proforma
As at
30 September
2011
£'000

Proforma
As at
31 March
2011
£'000

 

 

(unaudited)

(audited)

(unaudited)

(unaudited)

Non-current assets

 

 

 

 

 

Property, plant and equipment 

 

24,023

24,014

4,830

4,828

Interest in associate

 

309

309

62

62

Investments

 

263

263

53

53

Other receivable

9

53,427

66,347

10,742

13,339

Deferred tax asset

 

3,847

4,781

773

962

 

 

 

 

 

 

 

 

81,869

95,714

16,460

19,244

 

 

 

 

 

 

Current assets

 

 

 

 

 

Inventories

 

4,238

3,385

852

681

Trade and other receivables

 

86,367

63,706

17,365

12,808

Short term investment

10 

30,000

-

6,031

-

Restricted cash

 

6,380

6,009

1,283

1,208

Cash and cash equivalents 

 

58,161

82,073

11,694

16,501

 

 

 

 

 

 

 

 

185,146

155,173

37,225

31,198

 

 

 

 

 

 

Total assets

 

267,015

250,887

53,685

50,442

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

 

49,714

47,274

9,995

9,505

Current tax liabilities

 

5,153

2,653

1,036

533

Obligations under finance leases 

 

106

118

22

24

 

 

 

 

 

 

 

 

54,973

50,045

11,053

10,062

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Obligations under finance leases 

 

418

465

84

93

Lease rental payable

 

5,019

3,620

1,009

728

Deferred tax liabilities

 

-

609

-

123

 

 

 

 

 

 

 

 

5,437

4,694

1,093

944

 

 

 

 

 

 

Total liabilities

 

60,410

54,739

12,146

11,006

 

 

 

 

 

 

Net assets

 

206,605

196,148

41,539

39,436

 

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

 

78,922

78,922

15,868

15,868

Share premium

 

104,436

104,436

20,997

20,997

Share option reserve

 

1,517

892

305

179

Shares held under Employee Benefit Trust 

 

(2,300)

(2,300)

(463)

(463)

Other reserve

 

(66,153)

(66,153)

(13,300)

(13,300)

Retained earnings

 

90,183

80,351

18,132

16,155

 

 

 

 

 

 

Total equity

 

206,605

196,148

41,539

39,436

 

 

 

 

 

 

CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the 6 months ended 30 September 2011

 

6 months ended
30 September
 2011
RM'000


6 months ended
30 September 2010
RM'000

Proforma
6 months ended
30 September 2011
£'000

Proforma 
6 months ended 
30 September 2010
£'000

 

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Net cash (outflow) / inflow from operating activities (Note 11)

(3,289)

 

(9,583)

 

(661)

 

(1,927)

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

Interest received

637

1,148

128

231

Capital expenditure

(1,038)

(4,858)

(209)

(977)

Proceeds from sale of property, plant and equipment, net of associated costs

 

-

 

49,435

 

-

 

9,939

Loan advances to a third party

(5,000)

(31,600)

(1,005)

(6,353)

 

 

 

 

 

Net cash (used in) / generated from investing activities

 

(5,401)

 

14,125

 

(1,086)

 

2,840

 

 

 

 

 

Financing activities

 

 

 

 

Proceeds from finance leases

-

630

-

127

Repayment of obligations under finance leases

 

(59)

 

(58)

 

(12)

 

(12)

Increase in restricted cash

(371)

(2,434)

(75)

(498)

Repayment of borrowings

-

(45,183)

-

(9,084)

Dividend paid

(15,000)

-

(3,016)

-

 

 

 

 

 

Net cash used in financing activities

 

(15,430)

 

(47,045)

 

(3,103)

 

(9,458)

 

 

 

 

 

Net decrease in cash and cash equivalents

(24,120)

(42,503)

(4,850)

(8,545)

Cash and cash equivalents at beginning of financial period (Note 12)

 

80,461

 

164,327

 

16,177

 

33,038

 

 

 

 

 

Cash and cash equivalents at end of financial period

 

56,341

 

121,824

 

11,327

 

24,493

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 6 months ended 30 September 2011 and 30 September 2010

 

 

 

Share capital
RM'000
(unaudited)

Share  premium
RM'000
(unaudited)

 

Shares held under Employee Benefit Trust
RM'000
(unaudited)

Other  reserve
RM'000
(unaudited)

Retained earnings
RM'000
(unaudited)

Total
RM'000
(unaudited)

 

 

 

 

 

 

 

At 1 April 2010

78,922

104,436

(2,707)

(66,153)

33,098

147,596

Profit for the period

-

-

-

-

29,994

29,994

Share based payment

-

-

-

-

268

268

 

 

 

 

 

 

 

At 30 September 2010

78,922

104,436

(2,707)

(66,153)

63,360

177,858

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 April 2011

78,922

104,436

(2,300)

(66,153)

81,243

196,148

Profit for the period

-

-

-

-

24,832

24,832

Dividend paid

-

-

-

-

(15,000)

(15,000)

Share based payment

-

-

-

-

625

625

 

 

 

 

 

 

 

At 30 September 2011

 

78,922

 

104,436

 

(2,300)

 

(66,153)

 

91,700

 

206,605

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 6 months ended 30 September 2011 and 30 September 2010

 

 

Proforma

 

 

 

Share capital
£'000
(unaudited)

Share  premium
£'000
(unaudited)

Shares held under Employee Benefit Trust
£'000
(unaudited)

Other  reserve
£'000
(unaudited)

Retained earnings
£'000
(unaudited)

 

 

Total
£'000
(unaudited)

 

 

 

 

 

 

 

At 1 April 2010

15,868

20,997

(544)

(13,300)

6,655

29,676

Profit for the period

-

-

-

-

6,030

6,030

Share based payment

-

-

-

-

54

54

 

 

 

 

 

 

 

At 30 September 2010

15,868

20,997

 

(544)

(13,300)

12,739

35,760

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 April 2011

15,868

20,997

(463)

(13,300)

16,334

39,436

Profit for the period

-

-

-

-

4,993

4,993

Dividend paid

-

-

-

-

(3,016)

(3,016)

Share based payment

-

-

-

-

126

126

 

 

 

 

 

 

 

At 30 September 2011

15,868

20,997

 

(463)

(13,300)

18,437

41,539

Notes 1 to 18 form an integral part of the condensed consolidated interim financial results.

  1. General information

    The Company was incorporated in Jersey as a public par value company limited by shares under the laws of Jersey. The registered address of the Company is Ordnance House, 31 Pier Road, St Helier, Jersey.

    The Company has its primary listing on AIM, a market operated by the London Stock Exchange.

    These condensed consolidated interim financial results were approved for issue by the Board of Directors on 28 November 2011 and are unaudited.

    The financial information contained in the interim report also does not constitute statutory accounts.  The financial information for the year ended 31 March 2011 is based on the statutory accounts for the year ended 31 March 2011, which were approved by the Board of Directors on 18 July 2011 and delivered to the Jersey Registrar of Companies in August 2011. The auditor reported on those accounts: the report was unqualified, and did not draw attention to any matters by way of emphasis.

    1. 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.
    2. 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 2011, which have been prepared in accordance with IFRSs as adopted by the European Union.
    3. Going concern
      The directors have prepared financial projections, including cash flows, for a period up to 31 March 2013. Based on these projections and taking into consideration the current financial position of the Group, the directors have a reasonable expectation that the Company 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 half-yearly information for the 6 months ended 30 September 2011.
    4. Proforma
      The pro forma balances in pounds Sterling are included solely for convenience. The pro forma 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 2011 of RM4.9738 : £1.00.  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.
    5. Basis of accounting
      The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 March 2011, 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.

  2. 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.
  3. Share-based payments

    Equity settled share based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non market-based vesting conditions. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest. At the balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non market-based vesting conditions.
  4. Advances to a third party for a development project

    During this period the Group advanced cash loans of RM5.0 to Integrated DC Builders Sdn Bhd (“IDCB”), the developer of the CX5 data centre. Such loans are either interest free or the effective interest rate is below a fair market rate. The notional interest income on the loan computed based on the difference between the effective rate and a fair market rate is included as a part of the contract revenue receivable by the Group relating to the Group’s services in connection with the development of CX5.
  5. 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 centre facilities.

    The Group has changed the presentation of the segmental reporting to better reflect the operational financial results, therefore the comparative figures were updated accordingly to conform with the presentation for current financial year.

    6 months ended
    30 September 2011

    Data centre
     rental
    RM'000

    Maintenance   
    RM'000

    Design and development of data centre facilities   
    RM'000

    Consolidated
    RM'000

     

    (unaudited)

    (unaudited)

    (unaudited)

    (unaudited)

    Revenue

    33,665

    4,215

    53,834

    91,714

    Cost of Sales

    (23,211)

    (2,041)

    (27,784)

    (53,036)

     

     

     

     

     

    Gross profit

    10,454

    2,174

    26,050

    38,678

     

     

     

     

     

    Other operating income

    372

    5

    43

    420

    Administrative cost  

    (982)

    (83)

    (3,251)

    (4,316)

    Staff costs  

    (1,282)

    (716)

    (1,646)

    (3,644)

    Segment depreciation  

    -

    (11)

    (91)

    (102)

     

     

     

     

     

    Segment result  

    8,562

    1,369

    21,105

    31,036

     

     

     

     

     

    Corporate costs

     

     

     

    (3,376)

    Gain on sale of property, plant and equipment

     

     

     

    1,873

    Finance income

     

     

     

    637

    Finance cost

     

     

     

    (100)

     

     

     

     

     

    Profit before tax

     

     

     

    30,070

    Tax

     

     

     

    (5,221)

     

     

     

     

     

    Profit for the financial period

     

     

     

    24,849

    Other comprehensive income

     

     

     

    (17)

     

     

     

     

     

    Total comprehensive income for the period

     

     

     

    24,832



    6 months ended
    30 September 2010

    Data centre
     rental
    RM'000

    Maintenance   
    RM'000

    Design and development of data centre facilities
    RM'000

    Consolidated
    RM'000

     

    (unaudited)
    (Restated)

    (unaudited)
    (Restated)

    (unaudited)
    (Restated)

    (unaudited)
    (Restated)

    Revenue

    32,122

    3,196

    11,289

    46,607

    Cost of Sales

    (21,831)

    (986)

    (8,409)

    (31,226)

     

     

     

     

     

    Gross profit

    10,291

    2,210

    2,880

    15,381

     

     

     

     

     

    Other operating income

    -

    40

    124

    164

    Administrative expenses  

    (598)

    (177)

    (534)

    (1,309)

    Staff costs  

    (735)

    (650)

    (942)

    (2,327)

    Segment depreciation  

    -

    (18)

    (56)

    (74)

     

     

     

     

     

    Segment result  

    8,958

    1,405

    1,472

    11,835

     

     

     

     

     

    Corporate costs

     

     

     

    (885)

    Gain on sale of property, plant and equipment

     

     

     

    22,456

    Foreign exchange losses

     

     

     

    (1,625)

    Finance income

     

     

     

    1,148

    Finance cost

     

     

     

    (429)

     

     

     

     

     

    Profit before tax

     

     

     

    32,500

    Tax

     

     

     

    (2,506)

     

     

     

     

     

    Profit for the financial period

     

     

     

    29,994

  6. Gain on sale of property, plant and equipment

     

    Six months ended 30 September 2011

    Six months ended 30 September 2010

     

    (unaudited)

    (unaudited)

     

     

     

    Gain on sale of CX1 data centre

    -

    22,456

    Recognition of deferred gain on disposal of CX2 in prior year

    1,873

    -

     

     

     

     

    1,873

    22,456


    The accounting treatment of sale and leaseback transactions are determined by an assessment of the nature of the subsequent leaseback, the fair value of the sale price and the fair value of the subsequent lease payments. Assets are de-recognised if certain criteria are met and any profit or loss arising from the transaction is recognised immediately in the income statement. The corresponding rentals payable are charged to income on a straight-line basis over the term of the relevant lease.

    Included in the gain on sale of property, plant and equipment in the previous financial period is the gain on sale of the CX1 data centre amounting to RM22,456,000.

    On 19 April 2010, CSF Advisers Sdn Bhd, a wholly-owned subsidiary of the Group, completed the sale and leaseback on the CX1 data centre for net consideration of RM49,435,000. The sale of the CX1 data centre reduced the net book value of property, plant and equipment by RM26,979,000.
  7. Share-based payment

    In March 2010, the Board of Directors approved the establishment of a Share Option Plan. Under the plan, the Group may grant to the employees (including directors, executive and non-executive) of the Group of up to five (5%) of the Group’s issued ordinary share capital. As of 30 September 2011, options were granted to the employees and directors of the Group that give them the entitlement to subscribe for a total of 7,715,000 shares in the Company. The Group adopted the Black Scholes model in determining the fair value of share options. The key inputs considered in computing the fair value include the share price volatility of the Company and its peers, staff turnover rate of the Group and the vesting period of the Share Option Plan. The options had a total fair value as of 30 September 2011 of RM3,591,000 (GBP722,000) and the charge to the income statement for the current financial period amounts to RM625,000 (GBP126,000) (6 month period ended 30 September 2010 : RM268,000).
  8. Earnings per share

    The calculation for earnings per share, based on the weighted average number of shares, is shown in the table below:

     

    Six months ended 30 September 2011

    Six months ended 30 September 2010

     

    (unaudited)

    (unaudited)

     

     

     

    Net profit for the financial period after taxation attributable to members (RM'000)

    24,832

    29,994

     

     

     

    Weighted average number of ordinary shares for basic earnings per share ('000)

    160,000

    160,000

     

     

     

    Weighted average number of ordinary shares for diluted earnings per share ('000)

    161,306

    160,265

     

     

     


    The number of ordinary shares for basic earnings per share at 30 September 2011 is the weighted average number of ordinary shares of CSF Group plc in issue.

    The number of ordinary shares for diluted earnings per share at 30 September 2011 is the weighted average number of ordinary shares of CSF Group plc that would have been in issue had all the share options been exercised.
  9. Other receivable (non-current)

     

    As at 30 September 2011
    RM'000

    As at 31 March
    2011
    RM'000

     

     

     

    Loans to Integrated DC Builders Sdn Bhd ("IDCB") for the development of the CX5 data centre

    33,970

    58,970

    Contract revenue accrued

    19,457

    7,377

     

     

     

     

    53,427

    66,347


     

    As at 30 September 2011
    RM'000

    As at 31 March
    2011
    RM'000

     

     

     

    Brought forward as start of financial period / year

    66,347

    -

    Loans to IDCB during the period / year

    5,000

    58,970

    Conversion of advances to Redeemable Preference Shares in IDCB

    (30,000)

    -

    Contract revenue accrued during the financial period / year

    12,080

    7,377

     

     

     

     

    53,427

    66,347


    On 2 September 2011, the Group converted a portion of the advances to IDCB amounting to RM30,000,000 to 100,000 Redeemable Preference Shares ("RPS") in IDCB issued at a price of RM300 per share.
  10. Short term investment

    On 2 September 2011, the Group converted a portion of the advances to Integrated DC Builders Sdn. Bhd. (“IDCB”) amounting to RM30,000,000 to 100,000 Redeemable Preference Shares (“RPS”) in IDCB issued at a price of RM300 per share. The RPS carry a coupon rate of 6.5% per annum.
  11. Note to the cash flow statement

     

    6 months ended 30 September 2011
    RM'000

    6 months ended 30 September 2010
    RM'000

     

    (unaudited)

    (unaudited)

     

     

     

    Profit for the financial period

    24,849

    29,994

    Adjustments for:

     

     

    Allowance for doubtful debts

    2,731

    -

    Depreciation of property, plant and equipment

    1,029

    413

    Interest expense

    100

    429

    Interest income

    (637)

    (1,148)

    Gain on sale of property, plant and equipment

    -

    (22,456)

    Share based payment

    625

    268

    Unrealised gain on foreign exchange

    (14)

    -

    Tax

    5,221

    2,127

     

     

     

    Operating cash inflows before movements in working capital

    33,904

    9,627

    (Increase) / decrease in inventories

    (853)

    2,143

    Increase in receivables

    (37,473)

    (3,286)

    Increase / (decrease) in payables

    3,633

    (17,138)

     

     

     

    Cash generated by / (used in) operations

    (789)

    (8,654)

    Interest paid

    (100)

    (429)

    Income taxes paid

    (2,400)

    (500)

     

     

     

    Net cash outflow from operating activities

    (3,289)

    (9,583)

     

     

     

  12. Cash and cash equivalents

     

    Six months ended 30 September 2011

    Six months ended 30 September 2010

     

    (unaudited)

    (unaudited)

     

     

     

    Cash and cash equivalents

    82,073

    167,443

    Overdraft

    -

    (3,116)

     

     

     

    Cash and cash equivalents- statement of financial position

     

    82,073

     

    164,327

    Deposit held on behalf of employee benefit trust

     

    (1,612)

     

    -

     

     

     

    Cash and cash equivalents at beginning of the financial period - cash flow

     

    80,461

     

    164,327

     

     

     

    Cash and cash equivalents

    58,161

    121,824

    Overdraft

    -

    -

     

     

     

    Cash and cash equivalents- statement of financial position

     

    58,161

     

    121,824

    Deposit held on behalf of employee benefit trust

     

    (1,820)

     

    -

     

     

     

    Cash and cash equivalents- statement of financial position

     

    56,341

     

    121,824

     

     

     

  13. Dividend

    The Board does not propose any payment of dividends in respect of the six months period to 30 September 2011 (2010: Nil).
  14. Commitments

     

    As at
    30 September
    2011
    RM'000

    As at
    31 March
     2011
    RM'000

     

    (unaudited)

    (audited)

     

     

     

    Commitment for a loan to IDCB for development of CX5 data centre

    16,030

    21,030

     

     

     


    The commitment amount as disclosed above represents the remaining balance of a loan of RM80,000,000 to IDCB for development of the CX5 data centre. As at 30 Sept 2011, the Group has loaned RM63,970,000 to IDCB.
  15. Operating Lease Arrangements

     

    6 months ended 30 September 2011
    RM’000

    6 months ended 30 September 2010
    RM’000

     

    (unaudited)

    (unaudited)

     

     

     

    Operating lease expense

    12,637

    12,427

     

     

     


    As at 30 September 2011, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

     

    As at
    30 September
    2011
    RM'000

    As at
    31 March
    2011
    RM'000

     

    (unaudited)

    (audited)

     

     

     

    Within one year

    22,475

    25,274

    In the second to fifth years

    95,520

    101,099

    After five years

    220,450

    224,709

     

     

     

     

    338,445

    351,082

  16. Contingencies

    The Group holds a number of guarantees with various banks in respect of banking facilities as follows:

     

    As at
    30 September
    2011
    RM'000

    As at
    31 March 2011
    RM'000

     

    (unaudited)

    (audited)

     

     

     

    Banking guarantees

    7,460

    7,460

     

     

     


    Pursuant to the agreement between Permodalan Nasional Berhad (“PNB”), Integrated DC Builders Sdn Bhd (“IDCB”) and CSF Advisers Sdn Bhd executed on 11 August 2010 pertaining to the development of the CX5 data centre, CSF Advisers Sdn Bhd (“CSF Advisers”) issued a corporate guarantee and undertaking in favour of PNB that CSF Advisers shall unconditionally and irrevocably guarantee the due performance and observance by IDCB of all the agreements, covenants, undertakings and obligations of IDCB contained in the Joint Venture Agreement, and CSF shall undertake as follows:-
    1. to continue with the design, construction, completion and management of CX5 and the undertaking of the CX5 project;
    2. to continue with the sale of the building and infrastructure to PNB
    3. to enter into a novation agreement with IDCB and PNB (for the novation by IDCB of all IDCB’s rights, interest, obligations, benefits and liabilities under the Joint Venture Agreement to CSF as the new project owner of CX5 in the event of the continuation of the design, construction, completion and management of CX5 by CSF Advisers.
    4. to enter into the respective novation agreements with IDCB and PNB for the novation by IDCB of all IDCB’s rights, interest, obligations, benefits and liabilities under the Joint Venture Agreement to CSF as the new project owner and beneficial owner of CX5 in the event of the continuation of the design, construction, completion and management of CX5 by CSF; and
    5. pursuant to the sale of the building and infrastructure, to undertake to lease the asset from PNB.
  17. Related party transactions

    Key management compensation amounted to RM1,726,000 for the six months to 30 September 2011 (2010: RM563,000).

    Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

    During the 6 months period ended 30 September 2011, Group subsidiaries entered into the following transactions with related parties which are not members of the Group:

     

    6 months ended
    30 September 2011

     

     

    Note

     

    Sale of goods and services
    RM'000

     

    Purchase of goods and services
    RM'000

    Amount owed by related parties
    RM'000

    Amount owed to related parties
    RM'000

     

     

    (unaudited)

    (unaudited)

    (unaudited)

    (unaudited)

    Qualtech Sdn Bhd

    (i)

    9

    -

    -

    -

    ML Strategic
    Corporate Advisory
    Sdn Bhd
    Infovery Sdn Bhd

    (i)

     

    -

     

    108

     

    -

     

    18

    Infovery Sdn Bhd

    (i)

    -

    -

    3

    -

     

     

     

     

     

     

     

     

    9

    108

    3

    18

     

     

     

     

     

     

     

    6 months ended
    30 September 2010

     

     

    Note

     

    Sale of goods and services
    RM'000

     

    Purchase of goods and services
    RM'000

    Amount owed by related parties
    RM'000

    Amount owed to related parties
    RM'000

     

     

    (unaudited)

    (unaudited)

    (unaudited)

    (unaudited)

    Qualtech Sdn Bhd

    (i)

    24

    -

    168

    -

    ML Strategic
    Corporate Advisory
    Sdn Bhd

     

    (i)

     

    -

     

    18

     

    -

     

    3

    Infovery Sdn Bhd

    (ii)

    -

    -

    3

    -

    Thoo Soon Huat

    (ii), (iii)

    117

    -

    -

    -

     

     

     

     

     

     

     

     

    141

    18

    171

    3

     

     

     

     

     

     


    1. These are related parties as the Directors of the Group control jointly or have significant influence over these entities.
    2. These are transactions with shareholders and directors of the Group and include director advances and director loans to the Group.
    3. Mr Thoo Soon Huat is a director of Atlas CSF Sdn Bhd, a wholly-owned subsidiary of the Company and is considered to be one of the key management personnel of the Group.

    Guarantees for Group borrowings

    As at 30 September 2011, the security for banking facilities of RM15.5 million includes a joint and several guarantee by Yong Kwet On, Wong Chow Ming and Thoo Soon Huat. In addition, the security of banking facilities of RM13.7 million includes a joint and several guarantee by Yong Kwet On and Wong Chow Ming.

  18. Comparative figures

    The following comparative figures have been restated in the 6 months ended 30 September 2010. The restatement is a result of the reclassification to cost of sales of depreciation of data centres, certain staff costs and the cost of electricity reimbursed by customers, which were previously reported under administrative expenses. In addition, the amount relating to the reimbursement of electricity consumed by customers has been reclassified from other operating income to revenue.

     

    As previously reported
    RM'000

    Reclassificatio

    RM'000

    As restated

    RM'000

    Revenue

    39,530

    7,077

    46,607

    Cost of sales

    (25,227)

    (5,999)

    (31,226)

    Other operating income

    8,598

    (8,434)

    164

    Administrative expenses

    (13,308)

    7,356

    (5,952)

INDEPENDENT REVIEW REPORT TO CSF GROUP PLC

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2011 which comprises the condensed consolidated statement of comprehensive income, condensed consolidated statement of financial position, condensed consolidated cash flow statement, condensed consolidated statement of changes in equity and the related notes 1 to 18. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Auditing Practices Board.  Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Directors’ responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules of the London Stock Exchange.

As disclosed in note 1, the annual financial statements of the company are prepared in accordance with IFRSs as adopted by the European Union.  The condensed set of financial statements included in this half-yearly financial report have been prepared in accordance with the accounting policies the group intends to use in preparing its next annual financial statements.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2011 is not prepared, in all material respects, in accordance the AIM Rules of the London Stock Exchange.

 

Deloitte LLP
Chartered Accountants and Statutory Auditor
Gatwick, UK
28 November 2011