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Home > Investor Relations > Announcements
Announcements

 
 
CSF Group plc
(“CSF” or “the Group”)
 
 
FINAL RESULTS
For the Year Ended 31 March 2012
 
CSF Group (AIM: CSFG) is a leading provider of data centre facilities and services in South East Asia and the largest provider of data centre services in Malaysia. Today, the Company is announcing its results for the financial year ended 31 March 2012.  
 
Financial highlights:
 
·        Revenue increased 83.5% to RM208.0m (£42.4m*) (FY2011: RM113.3m (£23.1m*)
 
·        Profit before tax increased 10.5% to RM55.0m (£11.2m*) (FY2011: RM49.8m or £10.2m*)
 
·        Rental and maintenance revenue increased 25.4% at RM82.4m (£16.8m*) (FY2011: RM67.4m (£13.8m*)
 
Operational highlights:
 
 
·        Completion of the construction of CX5 data centre together with the fit-out of critical power infrastructure and associated cooling for Block A.
 
·        Block A of CX5 is fully tenanted
 
·        Enhancement of revenue for CX2 data centre through increases in rental rates
 
·        Ongoing development and marketing activities for Blocks B and C of CX5 on schedule with expectation of full occupancy by the end of financial year 2014
 
·        Commissioned CXJ in Jakarta, Indonesia through our joint venture, with tenancy agreements signed with a number of customers
 
·        Ongoing discussions to develop a data centre in Singapore, Johor, East Malaysia and China
 
* The translation of the financial statements into pro forma balances in pounds Sterling is 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 balances being translated from Malaysian Ringgits into pounds Sterling at the rate prevailing on 31 March 2012 of RM4.9021 : £1.00.  This translation should not be construed as meaning that the Malaysian Ringgit amounts actually represent, or have been or could be converted into the stated number of pounds Sterling.
 
Dato’ Ting Heng Peng, Chairman of CSF Group, commented, “There is an improvement in results across all business segments and management’s core focus over the next 2 years is to increase the occupancy of Blocks B and C of CX5 while continuing to pursue new development projects to increase the Group’s data centre capacity in order to grow its recurring revenue streams.”
 
 
Adrian Yong, CEO of CSF Group, said, “Our business continues to expand its operational footprint across the region, leveraging the strong reputation CSF has cultivated over many years of high quality service. The development of CX5 is gathering pace with successful rental and fit-out of the remaining blocks now our key strategic goal. We have received strong levels of interest across our existing customer base and we firmly believe the facility will be occupied by the end of financial year 2014. Our business continues to be well placed for future growth.”
 
For further information:
 
CSF Group
+603 8318 1313
Adrian Yong, Chief Executive
 
Buchanan (Financial PR)
+44 (0) 20 7466 5000
Jeremy Garcia / James Strong
 
Cenkos Securities (Nominated Adviser and Broker)
+44 (0) 20 7397 8900
Ian Soanes or Bobbie Hilliam

CHAIRMAN’S STATEMENT
 
The Board is pleased to report another year of strong results for the CSF Group for 2012 driven by increases in revenue and profit across all business segments. Group revenue increased by 83.5% from RM113.3m (£23.1m*) in 2011 to RM208.0m (£42.4m*) in 2012 with profit before tax increasing from RM49.8m (£10.2m*) in 2011 to RM55.0m (£11.2m*) in 2012. The profit before tax for 2012 includes a share of loss of PT Cyber CSF, our jointly controlled entity in Indonesia, of RM2.0m (£0.4m*).
 
Revenue from data centre rental and maintenance increased by 22.2% from RM67.4m (£13.8m*) in 2011 to RM82.4m (£16.8m*) in 2012 driven mainly by the enhancement in rental rates in our CX2 data centre.
 
The design and development of data centre facilities segment continued to perform well with revenue increasing by 173.5% from RM45.9m (£9.4m*) in 2011 to RM125.6m (£25.6m*) in 2012 mainly due to the revenues associated with the development of the CX5 data centre.
 
With the attainment of full occupancy of CX2 at the end of the previous financial year, the Group focused on adding more data centre capacity by the completing Phase 1 of the development of CX5 and undertaking Phase 1 of the fit-out of CX Jakarta. CX5 was launched in January 2012 providing an additional 201,000 sq ft of data centre capacity, out of which 67,000 sq ft (the entire Block A) was tenanted with effect from April 2012. Our joint-venture company in Indonesia has substantially completed the fit-out of the first 2 levels (out of a total of 8 levels) of the data centre and the demand for space in CX Jakarta remains encouraging.
 
The management continues to build a pipeline of potential customers for Blocks B and C of CX5 and envisage full occupancy of the entire CX5 by the end of financial year 2014.
 
In recognition of the anticipated demand for more data centre capacity and in line with the Group’s planned expansion across the South East Asia region, CSF continues to evaluate opportunities to develop data centres in Malaysia, Singapore, Indonesia, Thailand and Vietnam. These projects are also expected to deliver recurring revenues in the form of data centre rental and also after-sale maintenance services on the equipment supplied and installed by the Group.
 
The Board extends its appreciation and gratitude to the management team and other employees of the Group for achieving a number of significant milestones and for the delivery of good financial results.
 
In summary, the Board is pleased that there is an improvement in results across all business segments and is fully supportive of the management team’s core focus over the next 2 years which is to complete the fit-out and occupation of Blocks B and C of CX5 while continuing to pursue new development projects to increase the Group’s data centre capacity in order to grow its recurring revenue streams.

CHIEF EXECUTIVE’S REVIEW
 
Introduction
 
The close of the 2012 financial year marks the achievement of a number of strategic operational milestones for the Group. During this period our principal focus has included the following:
 
·        The completion of the development of our CX5 data centre adding 201,000 sq ft of data centre capacity
 
·        The launch of the data centre in Jakarta, Indonesia (“CXJ”) adding 120,000 sq ft of data centre capacity in a high-growth market and the subsequent fit-out of the first 2 levels (out of a total of 8 levels) of the data centre for rental to customers
 
·        Enhancing our service offerings and the quality of our data centres in the area of data communications infrastructure via the acquisition of Third Wave Infrasys Sdn Bhd in April 2012
 
·        The release of Version 4 of our Standard Operating Processes to enable consistent delivery of services throughout all Computer Exchanges
 
The above achievements have further enhanced the Group’s position as a market leader in the design and development of high specification data centres and provider of Data Centre infrastructure services in South East Asia.
 
I am pleased to report that we have made significant progress on all these objectives and will go into more detail in the ‘Operational Review’.
 
The Group recorded total revenue of RM208.0m (£42.4m*), an increase of RM94.6m (£19.3m*) or 83.5%, with increases in revenue in both our data centre rental and the design and development business segments. The Group’s profit from operations increased by 10.5% from RM48.6m (£9.9m*) in 2011 to RM53.6m (£10.9m*) in 2012.
 
We achieved positive operating cash flows in the current financial year which marks a significant improvement from the position in the previous financial year. We expect a significant collection of the receivables associated with the CX5 development in due course amounting to approximately RM85.0m (£17.3m*).
 
The Group continues to trade in line with market expectations. Over the last two years, we have maintained a dividend policy of distributing approximately one-third of our net profits as dividends and going forward we hope to be able to adopt a similar dividend policy.
 
Key GROWTH STRATEGY
 
The Group’s activities over the last 12 months culminated in a significant increase in our data centre capacity. Much has been achieved during this period and our strategic goal of becoming the leading data centre provider in South East Asia remains a key priority.
 
As a management team we aim to achieve controlled and sustainable growth in revenue, EBITDA, earnings per share and operating cash flows. To this end we have outlined our long term strategic growth drivers as follows:
 
·        Generate greater levels of recurring revenue which in turn will provide the Group with enhanced visibility of earnings
 
·        Prudent financial management with principal focus on increasing operational cash flows
 
·        Focus on improving key performance indicators such as recurring revenue targets, profit margins, return on capital employed and growth rate for data centre rental revenue.
 
·        Foster closing working relationships with key customers in order to utilize high levels of cross selling of CSF’s key services
 
·        Frequent engagement with users of data centres and other blue chip companies in order to update our understanding of their requirements and commercial drivers
 
·        Increased engagement with Telcos and cable/fiber operators to establish internet hubsin our Computer Exchanges
 
·        Continue to leverage our market leading position in Malaysia, Indonesia, Vietnam, Thailand and Singapore
 
·        Generate greater levels of brand penetration by focusing effort and marketing our products and services globally
 
·          Develop closer ties within other key growth geographies of large users of data centres, including those based in the USA and China
 
·          Undertake a leadership role in the establishment of Data Centre standards and best practices via our membership as founding member of The Uptime Institute (TUI) – an independent organisation regarded as aleading authority in providing certifications, independent research, and thought leadership for the enterprise data centre industry and for data centre professionals – Asia Chapter.
 
KEY Market dynamics
 
Recent studies confirm that cloud services, virtualisation technologies and new networking fabrics are driving the expansion of the data centre market, fuelled further by the anticipated rise in the number of users of internet and smartphones. The number of data centres is expected to grow over the next two years, with the most growth occurring among large and super-sized data centres. Data centre operators are expected to increase their capacity in order to offer and capture market share of next-generation computing models that promise to streamline operations and reduce infrastructure footprints.
 
Enterprises in Malaysia have recently begun embracing the “software-as-a-service” delivery model. Their interest is primarily driven by the lower total cost of ownership in the services model, the conversion of capital expenditure to predictable operating expenditure and the ability to scale up or down depending on business needs. Based on this trend and the Malaysian government’s continuing support of the data centre industry, the Malaysian data centre services market is expected to grow at around 16.0 percent per annum over the next 5 years with Cloud Computing to be an important driver of growth as Malaysian enterprises demonstrate increasing interest in Cloud services.
 
The recent commencement in operations of CXJ marks the beginning of the Group’s development of a solid foothold into the Indonesian data centre market. We believe that there will be opportunities to develop data centres outside of Jakarta where we can cater to the potentially huge domestic market and capitalise on lower real estate and labour costs. Our entry into the Indonesian market is opportune as the Indonesian economy is expected to continue to grow strongly.
 
Singapore is the largest market in South East Asia by data centre space at present. We believe that Singapore will continue to be the destination of choice for locating IT hubs by multinational firms as evidenced by the recent announcement by Google that it will build one of its three new data centres in Singapore and the recent announcement by Savvis to expand facilities in Singapore
 
Thailand with a population of over 60 million and with the growing penetration rate of mobile and internet users continues to present a good opportunity for CSF to expand our data centre offerings. The catastrophic flooding in Bangkok last year has also resulted in many organizations looking to develop substantial Disaster Recovery Centres further fuelling future demand for our services.
 
Vietnam, which had high economic growth over the last 10 years, is presently experiencing growth pains with high inflation and lending rates as well as a depreciating currency. However, we will time our new development in HCM City to meet the growth when the economy picks up.
 
The demand for data centre upgrades, virtualisation, and data/storage/traffic growth bodes well for all categories in the data centremarket. The development of support infrastructure for the data centre industry remains a priority for the respective governments of Malaysia, Indonesia, Singapore and Thailand. Cable landing-points, and domestic connectivity are continuously being enhanced for sustained growth. The governments’ pro-active involvement in the investment and development of such support infrastructure will increase the market for data centres and related services in the region.
 
Operational Review
 
We continue to make significant progress across our business with particular reference to the following:
 
·        Completion of the construction of our CX5 data centre together with the fit-out of critical power infrastructure and associated cooling for Block A
 
·        Block A of CX5 was fully tenanted
 
·        Enhancement of revenue for our CX2 data centre through increases in rental rates
 
·        Ongoing marketing activities for Blocks B and C of CX5 with our expectation being full occupancy by the end of financial year 2014
 
·        Commissioned CXJ in Jakarta, Indonesia through our joint venture, with tenancy agreements signed with a number of customers
 
·        Ongoing discussions to develop a data centre in Singapore, Johor, East Malaysia and China
 
Data Centre Projects
 
CX1 and CX2 and CX3
Our CX1, CX2 and CX3 data centres continued to operate efficiently and increases in revenues were recorded for CX1 and CX2. We invested approximately RM3.1m (£0.6m*) during the year to upgrade the data centre capacity of CX2 in order to cater for the increased power density requirements of certain customers.
 
 
Data centre in Hanoi, Vietnam (“CX4”)
Our data centre in Hanoi, Vietnam with 3,500 sq ft of net rentable space and is referred to as “CX4”, and is owned and operated by a joint-venture company in Vietnam (in which the Group has a 20% equity interest). The controlling interest in the joint-venture company is held by a Vietnamese company controlled by the Hanoi state government.
 
The progress of the joint-venture company has been hindered by the adverse economic environment in Vietnam over the last 2 years. Although the financial impact on the Group is relatively small, we believe that the joint-venture company will become profitable in the medium term and more importantly, our participation will allow us to capitalise on the forthcoming growth of the data centre market in Vietnam.
 
CX5
The development of CX5 – a facility comprising 3 blocks of 5-storey buildings, with a total gross floor area of approximately 580,000 sq ft and approximately 201,000 sq ft of net data centre space together with critical power infrastructure and associated cooling – is progressing on schedule based on the following key milestones:
 
·        Phase 1 - completed the construction of Block A, Block B and Block C together with fit-out of critical power infrastructure and associated cooling for Block A;
·        Phase 2 (by end of calendar year 2012) – the fit-out of critical power infrastructure and associated cooling for Block B; and
·        Phase 3 (by end of calendar year 2013) – the fit-out of critical power infrastructure and associated cooling for Block C.
 
We both project manage and supply and fit-out core infrastructural equipment for the facility. Upon completion of each block, CSF will enter into a long-term lease agreement for the rental of the block. A tenant has already been secured for Block A and we have built a pipeline of potential tenants to occupy Blocks B and C. The potential tenants are large corporations that will demand a high level of service and technical features within their data centre. In fitting-out Blocks B and C, it is necessary to take into consideration the design, power capacity and other requirements of these potential tenants.
 
With the completion of Phase 1, we officially launched CX5 in January 2012 and the tenancy for Block A commenced in April 2012.
 
In accordance with our financial plan, we have, up to 31 March 2012, advanced RM72.0m (£14.7m*) to the project owner for the development of CX5 and RM30.0m (£6.1m*) is expected to be repaid to us in due course. In addition, we also expect to receive a contracted fee of RM25.0m (£5.1m*) in relation to the development of CX5 within the same time frame.
 
The Group expects the balance of the advances of RM20.0m (£4.1m*) and RM22.0m (£4.5m*) to be repaid by the end of financial year 2013 and 2014, respectively, in line with the completion of Block B and Block C.
 
Data centre in Jakarta, Indonesia (“CXJ”)
The joint-venture company in Indonesia known as PT Cyber-CSF (“Cyber-CSF”), in which CSF holds a 49% interest, commenced to lease the new purpose-built, state of the art data centre facility from our Indonesian partner in August 2011. Since then, Cyber-CSF has substantially completed the fit-out of the first 2 levels (out of a total of 8 levels) of the data centre and a number of customers have commenced tenancy in July 2012 at the data centre.
 
The management of Cyber-CSF continues to pursue potential customers from a wide array of industries including telecommunications, financial institutions, internet service providers and media.
 
As outlined previously, we expect Cyber-CSF to incur a loss in the first 2 years of operations becoming profitable by financial year 2015. Cyber-CSF is expected to obtain separate financing facilities and the Group will provide financial support for the purpose of capital expenditure and working capital of Cyber-CSF until its financing facilities are in place. The total loans and advances to Cyber-CSF amounted to RM5.5m (£1.1m*) as at 31 March 2012 and subsequent to the financial year end, the Group provided additional loans and advances to Cyber CSF amounting to RM5.4m (£1.1m*).
 
Other opportunities
The Group is negotiating with a third-party organisation which is co-owned by a government agency to design and build a data centre in Sarawak, East Malaysia on a turnkey contract basis. Upon the completion of the data centre, the Group expects to lease and manage the data centre on a joint-venture basis with the aforementioned company.
 
The Group has also submitted a proposal to a customer to develop a data centre in Johor, Malaysia based on a build-and-transfer arrangement, referred to as CX6. We are currently waiting for a formal letter of award from the customer. Upon receiving the letter of award, we expect to be able to deliver the facility to the customer within a period of 12 to 18 months from the date of commencement of development.
 
Our team in Singapore is in advanced discussion with potential customers. Our Singaporean team has identified a suitable site and is currently negotiating with a property developer in Singapore. Our aim is for the developer to fund the construction of the facility with an undertaking by the Group to lease and operate the facility on a long term basis.
 
We continue to pursue other opportunities in Malaysia, Singapore, Indonesia, Thailand and Vietnam.
 
Data Centre Rental
 
With the launch of CX5, the Group now has 406,000 sq ft of data centre space in Malaysia and the recent commissioning of CXJ added 120,000 sq ft of capacity, bringing the total data centre capacity of the Group to 526,000 sq ft (excluding 3,500 sq ft of data centre space in Hanoi, Vietnam operated by our 20%-owned associate).
 
The lease rental cost payable by CSF for Block A of CX5 covers the office building and the data centre building structures and general infrastructure for Blocks B and C. Due to the upfront associated costs of the office building and Blocks B and C, the contribution from CX5 is expected to be minimal for the financial periods up to March 2013. We continue to expect the overall profit contribution of CX5 to be significant once new tenants are secured for Blocks B and C and this remains a key strategic priority for the Group.

 

Within 2 years, we have more than doubled our data centre capacity from 205,000 sq ft to 526,000 sq ft and with a significant amount of cash associated with the development of CX5 expected to flow into the Group within the next 1 month. This demonstrates the Group’s ability to grow our data centre capacity (and rental revenue) while minimising substantial cash outlay or incurring high levels of debt. We believe this prudent financial management will further strengthen the Group’s long term financial position.
 
Maintenance
 
The Group’s maintenance revenue remained stable and we continue to pursue new contracts to enhance our recurring revenue streams. Our maintenance division continues to record improvements 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
 
In view of the resource requirements for CX5, CXJ and the new data centre development project in Sarawak, the Group has continued to strengthen its design and fit-out division through regular, structured training programmes for its engineers and technicians. A number of senior executives have been assigned to supervise the operations of CXJ, and we continue to work with our Indonesian partner to recruit employees under Cyber-CSF.
 
Although our design and fit-out division has been significantly involved in the development of CX5 and in the fit out of CXJ, we continue to pursue external projects.
 
We are continuing to work with a company engaged by the Ministry of Defence in Malaysia to develop and manage the first defence and security technology park in South East Asia known as the Malaysian Defence and Security Technology Park (“MDSTP”) under the terms of the collaboration agreement with the same. In this regard, we are identifying opportunities to design and build data centres, and/or to supply data centre infrastructural equipment to companies that are planning to establish a hub in the MDSTP.

 

The Group continues to receive enquiries from potential customers who would like to develop their in-house data centres and is working towards securing these projects.
 
As a strategy to maintain the Group’s leadership position, we will always ensure that our technical employees are constantly kept abreast of the latest data centre designs and technology. In addition to high levels of security and operational reliability of mission critical computing systems, large corporations today expect data centres to provide high quality telecommunications facilities, content distribution networks, key internet exchange points and cloud computing hubs. In recognition of this requirement, the Group acquired Third Wave Infrasys Sdn Bhd (“Third Wave”), a company with experience in providing networking and connectivity solutions in April 2012, for a cash consideration of RM5.0m (£1.0m*) payable over the next 3 financial years. From a strategic perspective, the acquisition of Third Wave is expected to strengthen our expertise and resources to work with telecommunications service providers to make CSF Computer Exchanges the data centres of choice offering high quality infrastructure and excellent connectivity.
 
The Group’s design and fit-out division is negotiating with equipment manufacturers to explore the development of certain equipment under our own brand name. We believe that the manufacturing and marketing of equipment under our brand name would enable us to realise cost savings in the medium to long term as well as leverage the CSF brand further.
 
Recent Initiatives
 
Pursuing opportunities in China
In September 2011 we announced a collaboration with Pacific Link Telecom (Asia) Limited (“PLTA”) and Jiangsu Communications Services Co. Ltd. (“JCS”) which will be mutually beneficial to all parties concerned and will accelerate the demand for the Group’s data centres and related products and services across the region.
 
Based on feedback from PLTA and JCS, there are many Chinese businesses that are keen to look at offshore data centre facilities. We will therefore continue to work with our partners to identify opportunities to develop data centres for Chinese businesses outside of China as this strategy will mitigate the risks associated with our entry into the Chinese market.
 
However, there are also specific projects in China that we are currently evaluating. Such projects will only be undertaken when we are able to secure a reasonable guaranteed return on investment.
 
Marketing to US-Based companies
As the largest data centre users today are based in the USA, we are working on proposals to offer data centre space and related services to US based companies to take advantage of the lower development costs and operating costs in South East Asia. We are currently negotiating with one of the state energy commissions in Malaysia to provide a competitive long-term tariff. We believe that this initiative will provide a compelling incentive for US-based companies to relocate or to expand their data centre facilities to Malaysia.
 
Identifying investment targets
As a strategy to enhance our technical capabilities and to allow our resource base to cope with the growing demand for our data centre space and related products and services, we will continue to identify acquisition or investment opportunities. Our assessment of acquisition or investment targets will be based on factors including the enhancement of recurring revenue streams, the broadening and enhancement of technical resources, and reasonable returns on investment.
 
 
Current trading and outlook
 
Our immediate focus is to complete the occupation of our CX5 data centre by securing tenants for the two remaining blocks and fitting them out while we continue to pursue new data centre development opportunities to cater for the anticipated increase demand for data centre capacity in the long run. We will continue to ensure that new developments are undertaken based on thorough commercial assessment and with a high degree of financial prudence.
 
Our trading continues to gain good market traction and we are confident that demand for our products and services will be sustained, driven largely by a combination of our own market reputation, ongoing marketing initiatives and the strong demand for data centre services in Malaysia and South East Asia. On this basis, the Board is pleased to report that CSF expects revenue and profit to be in line with current market expectations.
 
CHIEF FINANCIAL OFFICER’S REVIEW
 
A.      Introduction
 
The Group’s revenue and profits for the financial year are in line with market expectations with demand for our services remaining high, whilst our net cash balance as at the financial year end exceeded market expectation due to an increase in the collection of trade receivables in the last quarter of the financial year. The expansion of our business to Indonesia continues to progress well and the marketing for blocks B and C in CX5 is now gathering positive momentum.
 
The Group’s profit from operations increased to RM53.6m (£10.9m*) from RM48.6m (£9.9m*) in 2011.
 
The profit from operations for the current financial year includes the share of loss after tax of a jointly controlled entity, PT Cyber CSF in Indonesia, of RM2.0m (£0.4m*) (2011 – Nil) and a charge for equity settled employee expenses of RM­­1.2m (£0.3m*) as compared to RM0.9m (£0.2m*) in 2011.
 
The profit from operations in 2011 also includes a gain from the sale (and leaseback) of data centre of RM24.6m (£5.0m*). In 2012, there was no sale and leaseback transaction and most of the profit from design and development activities was generated from the contract revenue and fit-out revenue associated with the CX5 development project.
 
The increase in profit from operations is analysed in Section E below.
 
Profit before tax increased from RM49.8m (£10.2m*) in 2011 to RM55.0m (£11.2m*) in 2012. The profit before tax for 2012 includes a share of loss of a jointly-controlled entity of RM2.0m (£0.4m*). Although the profit before tax of the Group increased, the effective tax rate for the current financial year was higher resulting in a decrease in total comprehensive income (excluding the share of loss after tax of a jointly controlled entity) from RM47.7m (£9.7m*) in 2011 to RM45.8m (£9.3m*) in 2012. The reason for the higher effective tax rate as explained further in Section G below.
 
The Group recorded basic earnings per share (“EPS”) of 27.36 sen (5.58p*) as compared with 29.79 sen (6.08p*) in 2011. Excluding the effects of the Group’s share of loss in PT Cyber CSF, the basic EPS of the Group would amount to 28.63 sen (5.84p*).
 
The Group maintained a dividend policy of distributing approximately one-third of its net profits as dividends.
 
With the launch of CX5 in January 2012 and the commissioning of CX Jakarta in August 2011 which contributed additional capacity of 201,000 sq ft and 120,000 sq ft respectively, the Group’s data centre rental capacity increased from 205,000 sq ft as at 31 March 2011 to 526,000 sq ft as at 31 March 2012.
 
B.      Financial results
 
The financial results of the Group are summarised below:
 
 
 
 
 
Proforma*
 
 
2012
2011
 
 
2012
2011
 
 
RM’000
RM’000
 
 
£’000
£’000
 
 
 
 
 
 
 
 
 
Total Group Revenue
207,964
113,339
 
 
42,423
23,120
 
Gross profit
78,634
39,367
 
 
16,041
8,031
 
Gain on sale of property, plant and equipment
68
24,555
 
 
14
5,009
 
Share of loss after tax of jointly-controlled entity
(2,024)
-
 
 
(413)
-
 
Share of loss after tax of associates
(165)
(376)
 
 
(33)
(77)
 
Share based payment
(1,249)
(892)
 
 
(255)
(182)
 
Profit from operations
53,557
48,559
 
 
10,926
9,906
 
Net finance income / (cost)
1,049
1,792
 
 
214
366
 
Other gain / (loss)
390
(559)
 
 
79
(114)
 
Profit before tax
54,996
49,792
 
 
11,219
10,157
 
Tax
(11,209)
(2,132)
 
 
(2,286)
(435)
 
Total comprehensive income for the financial year
 
43,787
 
47,660
 
 
 
8,933
 
9,722
 
Basic EPS
27.36 sen
29.79 sen
 
 
5.58p
6.08p
 
Weighted average number of ordinary shares for basic EPS (’000)
 
160,014
 
160,000
 
 
 
160,014
 
160,000
 
 
 
 
 
 
 
 
 
                   
 
 
 
 
 
Proforma*
 
 
2012
2011
 
 
2012
2011
 
Key Performance Indicators
 
 
 
 
 
 
 
Gross profit margin
37.8%
34.7%
 
 
37.8%
34.7%
 
Profit from operations (excluding gain on sale of property, plant and equipment, and share of loss after tax of jointly-controlled entity and associate) margin
 
 
 
26.8%
 
 
 
21.5%
 
 
 
 
 
26.8%
 
 
 
21.5%
 
Trade receivables turnover (days)
139
158
 
 
139
158
 
Trade payables turnover (days)
100
99
 
 
100
99
 
Quick ratio
4.4
7.9
 
 
4.4
7.9
 
 
 
 
 
 
 
 
 
                 
 
C.        Revenue
 
 
 
 
 
Proforma*
 
 
2012
2011
 
 
2012
2011
 
 
RM’000
RM’000
 
 
£’000
£’000
 
 
 
 
 
 
 
 
 
Data centre rental income
74,288
59,225
 
 
15,154
12,082
 
Maintenance income
8,086
8,197
 
 
1,650
1,672
 
 
82,374
67,422
 
 
16,804
13,754
 
Design and development of data centre facilities income
 
125,590
 
45,917
 
 
 
25,619
 
9,367
 
Total Group revenue
207,964
113,339
 
 
42,423
23,121
 
 
 
 
 
 
 
 
 
                 
 
The Group recorded total revenue of RM208.0m (£42.4m*), an increase of RM94.6m (£19.3m*) or 83.5%.
 
Data centre rental and maintenance revenue increased by RM15.1m (£3.1m*) or 25.4% mainly attributable to the enhancement of rental revenues from the CX2 data centre.
 
The increase in revenue from the design and development of data centre facilities was mainly attributable to an increase in the works carried out on the CX5 project. The Group recognised revenue of RM110.1m (£22.5m*) from project management and fit-out works relating to CX5 for the current financial year as compared to RM17.9 (£3.7m*) in 2011.
 
 
D.      Gross profit margin
 

The Group’s gross profit margin increased from 34.7% in 2011 to 37.8% in 2012. This is mainly attributable to an increase in gross profit margin on data centre rentals as tabulated below:

 
 
 
 
 
Proforma*
 
 
2012
2011
 
 
2012
2011
 
 
RM’000
RM’000
 
 
£’000
£’000
 
 
 
 
 
 
 
 
 
Data centre rental revenue
74,288
59,225
 
 
15,154
12,082
 
Direct expenses
 
 
 
 
 
 
 
Data centre lease rental expense
(25,510)
(25,064)
 
 
(5,204)
(5,113)
 
Data centre depreciation
(2,054)
(911)
 
 
(419)
(186)
 
Other direct expenses
(23,911)
(20,252)
 
 
(4,878)
(4,131)
 
Total direct expenses
(51,475)
(46,227)
 
 
(10,501)
(9,430)
 
Gross profit on data centre rental
22,813
12,998
 
 
4,653
2,652
 
Gross profit margin on data centre rental
30.7%
22.0%
 
 
30.7%
22.0%
 
 
 
 
 
 
 
 
 
                 

 
The increase in gross profit margin on data centre rental to 30.7% from 22.0% in 2011 is mainly due to the increase in revenues from the CX2 data centre compared to the previous financial year as a result of increased in rental rates.
 
Gross profit margin on maintenance income increased from 48.0% in 2011 to 54.4% in 2012 mainly
due to the effective management of cost of spare parts. Gross profit margin on design and 
development of data centre facilities decreased from 48.9% to 2011 to 41.0% in 2012 mainly due to 
the undertaking of fit-out works which carried lower relatively gross profit margins
 

E.      Profit from operations  

Profit from operations increased to RM53.6m (£10.9m*) from RM48.6m (£9.9m*) in 2011 as analysed below:
 

 

 
 
 
Proforma*
 
 
2012
2011
 
 
2012
2011
 
 
RM’000
RM’000
 
 
£’000
£’000
 
 
 
 
 
 
 
 
 
Operating profit from data centre rental, maintenance, and design and development of data centre facilities
 
 
54,352
 
 
23,874
 
 
 
 
11,087
 
 
4,870
 
Gain on sale of property, plant and equipment
68
24,555
 
 
14
5,009
 
Other operating income - other
1,326
506
 
 
271
103
 
Share of loss after tax of jointly-controlled entity
(2,024)
-
 
 
(413)
-
 
Share of loss after tax of associate
(165)
(376)
 
 
(33)
(77)
 
Total operating profit
53,557
48,559
 
 
10,926
9,905
 
 
 
 
 
 
 
 
 
                 
 
 
Operating profit from data centre rental, maintenance, and design and development of data centre 
facilities increased as a result of the increase in revenue as described in Section C above, and also
 the increase in the average gross profit margin as explained in Section D above.
 
The gain on sale of property, plant and equipment in 2011 comprises the gain on sale and leaseback
 of the CX1 data centre completed in April 2010, i.e. early in the 2011 financial year. 

F.         Net finance income

 
The net finance income comprises mainly the interest income receivable on bank deposits stated net of finance cost arising from charges on banking facilities and interest cost incurred on bank borrowings.
 
Finance income decreased to RM1.2m (£0.25m*) from RM2.3m (£0.47m*) in 2011 mainly due to the utilisation of cash for the development of CX5.
 
Finance cost for the financial year decreased from RM0.5m (£0.10m*) in 2011 to RM0.2m (£0.04m*) in 2012 mainly attributable to the settlement of the term loan associated with the development of CX1 in April 2010.
 
 
G.      Taxation
 
The current tax charge for the year equates to circa 20.4% of profit before tax, as compared to the statutory corporate tax rate in Malaysia of 25%, reflecting the tax exemption on the turnkey fee receivable from the development of CX5 partially offset by the non-availability of tax relief on losses incurred by certain companies within the Group including the jointly-controlled entity and the associate.
 
The lower effective tax rate for previous the financial year (of 4.3%) was mainly attributable to the tax-exemption on the gain from the sale of data centre in 2011.
 
 
H.      Earnings per share
 
Basic earnings per share was 27.36 sen (5.58p*) compared to 29.79 sen (6.08p*) in 2011. The weighted average number of shares during the year used for basic EPS calculation is 160,013,785 (2011: 160,000,000). Diluted EPS was 27.36 sen (5.58p*) compared to 28.42 sen (5.80p*) in 2011. The weighted average number of shares during the year used for diluted EPS calculation is 160,013,785 (2011: 167,685,000).
 
 
I.       Dividends
 
On 12 April 2012, the Board declared an interim dividend for the year ended 31 March 2012 of 9.412 sen (1.920p*) per share amounting to RM15.1m (£3.1m*). The interim dividend was paid on 4 May 2012.
 
The Board does not propose any further payment of dividends in respect of the 2012 financial year. Over the last two years, the Group maintained a dividend policy of distributing approximately one-third of its net profits as dividends and hopes to adopt a similar policy going forward.

 
J.      Cash and treasury
 
 
 
 
 
Proforma*
 
 
2012
2011
 
 
2012
2011
 
 
RM’000
RM’000
 
 
£’000
£’000
 
 
 
 
 
 
 
 
 
Cash generated from operations before working capital movements and net finance income / cost
 
54,182
 
24,530
 
 
 
11,053
 
5,004
 
Working capital movements
(43,876)
(36,218)
 
 
(8,951)
(7,388)
 
Net finance income
(1,049)
(1,792)
 
 
(214)
(366)
 
 
9,257
(13,480)
 
 
1,888
(2,750)
 
Proceeds from sale of property, plant and equipment
 
184
 
51,536
 
 
 
38
 
10,513
 
Loans to the owner of a development project
(13,000)
(58,970)
 
 
(2,652)
(12,029)
 
Loans and advances to the jointly-controlled entity
 
(5,068)
 
-
 
 
 
(1,034)
 
-
 
Capital expenditure
(3,130)
(17,506)
 
 
(639)
(3,571)
 
Net cash from other investing activities
1,221
2,252
 
 
249
459
 
Net cash outflow before financing activities
(10,924)
(36,168)
 
 
(2,229)
(7,378)
 
Dividends paid
(15,000)
-
 
 
(3,060)
-
 
Net cash for other financing activities
(1,735)
(47,698)
 
 
(354)
(9,730)
 
Net cash outflow
(27,659)
(83,866)
 
 
(5,643)
(17,108)
 
 
 
 
 
 
 
 
 
                 
 
The Group’s net cash generated by operations before working capital movements and net finance costs increased to RM54.2m (£11.1m*) from RM24.5m (£5.0m*) in 2011 mainly due to the increase in total revenue. The working capital requirement of the Group increased to RM43.9m (£9.0m*) from RM36.2m (£7.4m*) in 2011 mainly due to the higher net increase in balance of trade receivables of RM97.1m (£19.8m*) as compared with RM57.4m (£11.7m*) in 2011.
 
The trade receivables balance increased from RM57.4m (£11.7m*) as at 31 March 2011 to RM97.1m (£19.8m*) as at 31 March 2012 mainly because the trade receivables associated with the development of CX5 increased by RM42.3m (£8.6m*) from RM10.3m (£2.1m*) as at 31 March 2011 to RM52.6m (£10.7m*) as at 31 March 2012 were not due for collection as at the financial year end. Approximately RM30.0m (£6.1m*) of the trade receivables associated with the development of CX5 is expected to be settled in due course with settlement of the balance by the end of financial year 2013.
 
The Group’s capital expenditure was mainly for the purchase of new data centre equipment for the CX2 data centre.
                                                                                                                          
During the financial year, the Group advanced RM13.0m (£2.7m*) to Integrated DC Builders Sdn Bhd for the development of CX5, bringing the total advances to IDCB to RM72.0m (£14.7m*) as at 31 March 2012. IDCB expects to repay RM30.0m (£6.1m*) of the advances in due course and to repay the remaining amount of the advances by the end of financial years 2013 and 2014 based on the negotiated terms between the Group and IDCB.
 
The total loans and advances of RM5.5m (£1.1m*) to PT Cyber CSF, the jointly-controlled entity in Indonesia comprised loans of RM4.8m (£1.0m*) to fund its capital expenditure and RM0.7m (£0.1m*) to fund its working capital requirements.
 
The loan to PT Cyber CSF was provided pursuant to a loan agreement to provide up to US$10.3m (£6.4m*) to fund the capital expenditure associated with the fit-out of the first 2 levels of the data centre in Jakarta, Indonesia (“CXJ”). The Board of Directors has approved the provision of an additional US$1.5m (£0.9m*) by the Group to fund the working capital requirements of PT Cyber CSF in the 2013 financial year.
 
K.     Post Balance Sheet Events
 
The Group has completed the acquisition of Third Wave Infrasys Sdn Bhd (“TWSB”) for RM5.0m (£1.0m*) which is payable over the next 3 financial years. TWSB is expected to contribute positively to the revenue and profit of the Group in the 2013 financial year.
 
Subsequent to the financial year end, the Group provided additional loans and advances to PT Cyber CSF amounting to RM5.4m (£1.1m*). PT Cyber CSF has substantially completed the fit-out of the first 2 levels (out of a total of 8 levels) of the data centre in Jakarta, Indonesia (“CXJ”) and has secured tenancies for the more than 60% of the data centre space within the first 2 levels and a number of customers have commenced tenancy in July 2012 at the data centre.
 
PT Cyber CSF is expected to continue to incur a loss in the first 2 years of operations becoming profitable by financial year 2015. The Group intends to provide financial support to PT Cyber CSF while it obtains financing facilities on its own accord.
 
L.      Other comments
 
As a Group we will continue to strive to increase the levels of recurring revenue generated by our operations and to ensure that we maximise revenue-generating opportunities with key customers. The Group will also seek to utilise its cash resources in order to generate optimum returns for our shareholders.
 
The translation of the financial statements into pro forma balances in pounds Sterling is 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 balances being translated from Malaysian Ringgits into pounds Sterling at the rate prevailing on 31 March 2012 of RM4.9021 : £1.00.  This translation should not be construed as meaning that the Malaysian Ringgit amounts actually represent, or have been or could be converted into the stated number of pounds Sterling.
 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2012
 
 
 
 
 
 
Proforma
 
 
Year ended
31 March
2012  
Year ended
31 March
2011
Year ended
31 March
2012
Year ended
31 March
2011
 
Note
RM’000
RM’000
£’000
£’000
 
 
 
 
 
 
Revenue
 
207,964
113,339
42,423
23,120
Cost of sales
 
(129,330)
(73,972)
(26,382)
(15,089)
 
 
 
 
 
 
Gross profit
 
78,634
39,367
16,041
8,031
Other operating income
 
1,326
506
271
103
Gain on sale of property, plant and equipment
 
68
24,555
14
5,009
Share of loss after tax of
 
 
 
 
 
-     associate
 
(165)
(376)
(33)
(77)
-     jointly controlled entity
 
(2,024)
-
(413)
-
Other administrative expenses
 
(19,058)
(14,601)
(3,888)
(2,978)
Allowance for doubtful debts
 
(3,975)
-
(811)
-
Share based payment
 
(1,249)
(892)
(255)
(182)
Total operating expenses
 
(24,282)
(15,493)
(4,954)
(3,160)
 
 
 
 
 
 
Operating profit
 
53,557
48,559
10,926
9,906
Finance income
 
1,221
2,302
249
469
Finance costs
 
(172)
(510)
(35)
(104)
Net foreign exchange gain/(losses)
 
390
(559)
79
(114)
 
 
 
 
 
 
Profit before tax
 
54,996
49,792
11,219
10,157
Tax
 
(11,209)
(2,132)
(2,286)
(435)
 
 
 
 
 
 
Total comprehensive income for the financial year
 
43,787
47,660
8,933
 
9,722
 
 
 
 
 
 
Earnings Per Share
 
 
 
 
 
-       Basic (Malaysian sen)
 
27.36
29.79
5.58p
6.08p
-       Diluted (Malaysian sen)
 
27.36
28.42
5.58p
5.80p
 
 
 
 
 
 
All results derive from continuing operations.

 
 
 
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2012
 
 
 
 
Proforma
 
 
 
 
As at
31 March
2012
RM’000
As at
31 March 2011
RM’000
As at
31 March
2012
£’000
As at
31 March
2011
£’000
Non-current assets
 
 
 
 
 
Property, plant and equipment
 
23,032
24,014
4,698
4,899
Interest in associate
 
144
309
29
63
Interest in jointly controlled entity
 
-
-
-
-
Other investments
 
263
263
54
54
Other receivables
 
41,969
66,347
8,561
13,534
Deferred tax asset
 
2,852
4,781
582
975
 
 
68,260
95,714
13,924
19,525
 
 
 
 
 
 
Current assets
 
 
 
 
 
Inventories
 
4,170
3,385
851
691
Trade and other receivables
 
133,832
63,706
27,301
12,995
Short term investment
 
30,000
-
6,120
-
Current tax assets
 
44
-
9
-
Restricted cash
 
7,628
6,009
1,556
1,226
Cash and cash equivalents
 
54,644
82,073
11,147
16,742
Assets held for sale
 
1,424
-
290
-
 
 
231,742
155,173
47,274
31,654
Total assets
 
300,002
250,887
61,198
51,179
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
Trade and other payables
 
64,779
47,274
13,214
9,644
Current tax liabilities
 
656
   2653
134
541
Obligations under finance leases 
 
92
118
19
24
 
 
65,527
50,045
13,367
10,209
 
 
 
 
 
 
Non-current liabilities
 
 
 
 
 
Obligations under finance leases
 
375
465
76
95
Trade and other payables
 
6,418
3,620
1,309
738
Deferred tax liabilities
 
1,421
609
290
124
 
 
8,214
4,694
1,675
957
Total liabilities
 
73,741
54,739
15,042
11,166
Net assets
 
226,261
196,148
46,156
40,013
 
 
 
 
 
 
Equity
 
 
 
 
 
Share capital
 
78,936
78,922
16,102
16,100
Share premium account
 
104,499
104,436
21,317
21,304
Shares held under Employee Benefit Trust
 
(2,300)
(2,300)
(469)
(469)
Other reserve
 
(66,153)
(66,153)
(13,495)
(13,495)
Share option reserve
 
2,141
892
437
182
Retained earnings
 
109,138
80,351
22,264
16,391
Total equity
 
226,261
196,148
46,156
40,013
 
 

 
CONSOLIDATED STATEMENT OF CASH FLOW
For the year ended 31 March 2012
 
 
Year ended
31 March
2012
RM’000
Year ended
31 March
2011
RM’000
Proforma Year
ended
31 March
2012
£’000
Proforma Year
ended
31 March
2011
£’000
 
 
 
 
 
 
Profit for the financial year
 
43,787
47,660
8,933
9,722
Adjustments for:
 
 
 
 
 
Allowance for doubtful debts
 
3,975
-
811
-
Bad debts written off
 
23
-
5
-
Depreciation of property, plant and equipment
 
2,563
1,500
522
306
Interest expense
 
172
510
35
104
Interest income
 
(1,221)
(2,302)
(249)
(470)
Gain on sale of property, plant and equipment
 
(68)
(24,555)
(14)
(5,009)
Share based payment
 
1,249
892
255
182
Share of loss after tax of associate
 
165
376
34
77
Share of loss after tax of jointly controlled entity
 
2,024
-
413
-
Tax
 
11,209
2,132
2,286
435
 
 
 
 
 
 
Operating cash inflows before movements in working capital
 
63,878
26,213
 
13,031
 
5,347
Decrease in inventories
 
(785)
3,790
(160)
773
Increase in receivables
 
(61,592)
(35,849)
(12,565)
(7,313)
Decrease in payables
 
 18,501
(4,159)
3,744
(848)
 
 
 
 
 
 
Cash (used in) / generated by operations
 
20,002
(10,005)
 
4,080
 
(2,041)
Interest paid
 
(172)
(510)
(35)
(104)
Income taxes paid
 
(10,573)
(2,965)
(2,157)
(605)
 
 
 
 
 
 
Net cash inflow/(outflow) from operating activities
 
9,257
(13,480)
1,888
 
(2,750)
 
 
 
 
 
 
Investing activities
 
 
 
 
 
Interest received
 
1,221
2,302
249
469
Loans to the owner of a development project
 
(13,000)
(58,970)
(2,652)
(12,029)
Loan to joint venture
 
(5,068)
-
(1,034)
-
Additions to property, plant and equipment
 
(3,130)
(17,506)
(639)
(3,571)
Proceeds from sale of property, plant and equipment
 
184
51,536
38
10,513
Investment in joint venture
 
(388)
-
(79)
-
Purchase of investments
 
-
(50)
-
(10)
 
 
 
 
 
 
Net cash used in investing activities
 
(20,181)
(22,688)
(4,117)
(4,628)
 
 
 
 
 
 

 
CONSOLIDATED STATEMENT OF CASH FLOW
For the year ended 31 March 2012 (Cont’d)
 
 
 
 
Year ended
31 March
2012
RM’000
 
 
Year ended
31 March
2011
RM’000
Proforma Year
ended
31 March
2012
£’000
Proforma Year
ended
31 March
2011
£’000
Financing activities
 
 
 
 
 
Repayments of obligations under finance leases
 
(116)
(113)
(24)
(23)
Increase in restricted cash
 
(1,619)
(2,402)
(330)
(490)
Repayment of borrowings
 
-
(45,183)
-
(9,217)
Dividend paid
 
(15,000)
-
(3,060)
-
 
 
 
 
 
 
Net cash used in financing activities
 
(16,735)
(47,698)
(3,414)
(9,730)
 
 
 
 
 
 
Net decrease in cash and cash equivalents
 
(27,659)
(83,866)
(5,643)
(17,108)
 
 
 
 
 
 
Cash and cash equivalents at beginning of financial year
 
 
80,461
 
164,327
16,414
 
33,522
 
 
 
 
 
 
Cash and cash equivalents at end of financial year
 
 
52,802
 
80,461
10,771
 
16,414
 
 
 
 
 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
 
 
 
 
 
 
 
Share
 Capital
RM’000
Share premium account
RM’000
Shares held under Employee Benefit Trust
RM’000
 
Other reserve
RM’000
Share option reserve
RM’000
 
Retained earnings
RM’000
 
 
Total
RM’000
 
 
 
 
 
 
 
 
 
At 1 April 2010
 
78,922
104,436
(2,707)
(66,153)
-
33,098
147,596
 
 
 
 
 
 
 
 
 
Total comprehensive income for the year
 
 
-
 
-
 
-
 
-
 
-
 
47,660
 
47,660
Share based payment
 
-
-
-
-
892
-
892
Shares disposed by
   Employee Benefit Trust
 
 
-
 
-
 
407
 
-
 
-
 
(407)
 
-
 
 
 
 
 
 
 
 
 
At 31 March 2011
 
78,922
104,436
(2,300)
(66,153)
892
80,351
196,148
Total comprehensive income for the year
 
 
-
 
-
 
-
 
-
 
-
 
43,787
 
43,787
Exercise of employee stock option
 
 
14
 
63
 
-
 
-
 
-
 
-
 
77
Share based payment
 
-
-
-
-
1,249
-
1,249
Dividend paid
 
-
-
-
-
-
(15,000)
(15,000)
 
 
 
 
 
 
 
 
 
At 31 March 2012
 
78,936
104,499
(2,300)
(66,153)
2,141
109,138
226,261

 
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
PROFORMA
 
 
Proforma
 
 
Share
 Capital
£’000
 
Share premium account
£’000
Shares held under Employee Benefit Trust
£’000
 
 
Other reserve
£’000
 
Share option reserve
£’000
 
Retained earnings
£’000
 
 
Total
£’000
 
 
 
 
 
 
 
 
 
At 1 April 2010
 
16,100
21,304
(552)
(13,495)
-
6,752
30,109
 
 
 
 
 
 
 
 
 
Total comprehensive income for the year
 
 
-
 
-
 
-
 
-
 
-
 
9,722
 
9,722
Share based payment
 
-
-
-
-
182
-
182
Shares disposed by Employee Benefit Trust
 
 
-
 
-
 
83
 
-
 
-
 
(83)
 
-
At 31 March 2011
 
16,100
21,304
(469)
(13,495)
182
16,391
40,013
 
 
 
 
 
 
 
 
 
Total comprehensive income for the year
 
 
-
 
-
 
-
 
-
 
-
 
8,933
 
8,933
Exercise of employee stock option
 
 
2
 
13
 
-
 
-
 
-
 
-
 
15
Share based payment
 
-
-
-
-
255
 
255
Dividend paid
 
-
-
-
-
-
(3,060)
(3,060)
 
At 31 March 2011
 
 
16,102
 
21,317
 
(469)
 
(13,495)
 
437
 
22,264
 
46,156
 
 
 
 
 
 
 
 
 
 
 
 

 
        
 
 
1.      General information
           
         The Preliminary Announcement and the final accounts of the Group were approved by the Board of Directors on 4 July 2012. The financial information set out in this Preliminary Announcement does not constitute the Group’s statutory accounts for the year ended 31 March 2012 but is derived from those accounts. The statutory accounts for 2012 will be delivered to the Jersey Registrar of Companies in September 2012. The auditors have reported on the 2012 accounts and their report was unqualified and did not draw attention to any matters by way of emphasis. 
 
 
 (i)     Basis of preparation
        
The consolidated financial statements of CSF Group plc, for the year ended 31 March 2012 have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the EU.
 
While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria, this announcement does not itself contain sufficient information to comply with IFRS.  The Company expects to publish full financial statements that comply with IFRS in late 2012. 
 
The directors have prepared financial projections, including cash flows, for a period up to 31 March 2014. 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 annual financial statements.
 
(ii)     Pro forma balances
 
         The inclusion of pro forma balances in pounds Sterling is 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 balances being translated from Malaysian Ringgits into pounds Sterling at the rate prevailing on 31 March 2012 of RM4.9021 : £1.00.  This translation should not be construed as meaning that the Malaysian Ringgit amounts actually represent, or have been or could be converted into the stated number of pounds Sterling.
 

(iii)       Basis of accounting
 
The consolidated financial statements have been prepared on the historical cost basis, except for the valuation of listed investments. The principal accounting policies adopted are consistent with previous financial year.
 
 
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.   
The Group advanced cash loans 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.
 
 
3.      Sale and leaseback transaction
 
The sale of assets under a sale and leaseback transaction is treated as a disposal of the assets after the transfers of substantially all the risk and rewards incidental to ownership of an asset concerned 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.
 
 
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 centre facilities.
 
 
 
 
 
Year ended 31 March 2012
Data centre
 rental
RM’000
Maintenance
RM’000
Design and development
 of data centre facilities   
RM’000
Consolidated
RM’000
 
 
 
 
 
 
Revenue
74,288
8,086
125,590
207,964
 
 
 
 
 
Cost of sales
(51,475)
(3,688)
(74,167)
(129,330)
 
 
 
 
 
Gross profit
22,813
4,398
51,423
78,634
 
 
 
 
 
Other operating income
1,166
14
146
1,326
Administrative cost
(1,425)
(151)
(1,548)
(3,124)
Allowance for doubtful debts
(412)
-
(3,563)
(3,975)
Staff costs
(1,507)
(1,525)
(6,616)
(9,648)
Segment depreciation
-
(20)
(190)
(210)
 
 
 
 
 
Segment result
20,635
2,716
39,652
63,003
Corporate cost
 
 
 
(7,325)
Finance income
 
 
 
1,221
Net foreign exchange gain
 
 
 
390
Gain on disposal of property, plant and equipment
 
 
 
68
Share of loss of associate
 
 
 
(165)
Share of loss of jointly controlled entity
 
 
 
 
(2,024)
Finance costs
 
 
 
(172)
 
 
 
 
 
Profit before tax
 
 
 
54,996
Tax
 
 
 
(11,209)
 
 
 
 
 
Profit after tax
 
 
 
43,787
 
 
        
Year ended 31 March 2011
Data centre
 rental
RM’000
Maintenance
RM’000
Design and development of data centre facilities   
RM’000
Consolidated
RM’000
 
 
 
 
 
 
Revenue
59,225
8,197
45,917
113,339
 
 
 
 
 
Cost of sales
(46,227)
(4,266)
(23,479)
(73,972)
 
 
 
 
 
Gross profit
12,998
3,931
22,438
39,367
 
 
 
 
 
Other operating income
-
124
382
506
Administrative cost
(864)
(255)
(782)
(1,901)
Staff costs
(2,760)
(1,520)
(2,743)
(7,023)
Segment depreciation
-
(144)
(445)
(589)
 
 
 
 
 
Segment result
9,374
2,136
18,850
30,360
Corporate cost
 
 
 
(5,980)
Finance income
 
 
 
2,302
Net foreign exchange losses
 
 
 
(559)
Gain on disposal of property, plant and equipment
 
 
 
24,555
Share of loss of associate
 
 
 
(376)
Finance costs
 
 
 
(510)
 
 
 
 
 
Profit before tax
 
 
 
49,792
Tax
 
 
 
(2,132)
 
 
 
 
 
Profit after tax
 
 
 
47,660
 
 
 
 
 
 
 
 
5.      Gain on sale of property, plant and equipment
 
         The gain on sale of property, plant and equipment in the year ended 31 March 2011 includes a gain on sale of the CX1 data centre amounting to RM22,456,000. On 19 April 2010, the Group completed a sale and leaseback on the CX1 data centre for a 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.
 
 
6.      Earnings per share
 
The calculations for earnings per share, based on the weighted average number of shares, are shown in the table below.
 
 
 
Year ended 31 March 2012
 
Year ended 31 March 2011
 
 
 
 
 
Net profit for the financial year after taxation attributable to members (RM’000)
 
 
43,787
 
 
47,660
 
 
 
 
 
Weighted average number of ordinary shares for basic earnings per share (’000)
 
 
160,014
 
 
160,000
 
 
 
 
 
Weighted average number of ordinary shares for diluted earnings per share (’000)
 
 
160,014
 
 
167,685
 
 
 
 
 
 
 
 
 
 
 
The number of ordinary shares for diluted earnings per share is the number of ordinary shares of CSF Group plc that would have been in issue had all the dilutive share options been exercised.
 
 
7.      Dividend
 
 
 
Year ended 31 March 2012
 
Year ended 31 March 2011
 
 
RM’000
 
RM’000
 
 
 
 
 
Amounts recognised as distributions to equity holders in the year:
 
 
 
 
 
 
Dividend paid
 
15,000
 
-
 
 
 
 
 
        
On 12 April 2012, the Company announced an interim dividend for the year ended 31 March 2012 of RM0.09412 per share amounting to RM15,062,000. The directors do not recommend any further dividends in respect of the current financial year ended 31 March 2012.

 
 
8.      Contingencies
 
         The Group holds a number of guarantees with various banks in respect of banking facilities as follows:
 
 
 
As at 31 March 2012
 
As at 31 March 2011
 
 
RM’000
 
RM’000
 
 
 
 
 
Bank guarantees
 
11,038
 
7,460
 
 
 
 
 
 
9.      Commitment
 
 
 
As at 31 March 2012
 
As at 31 March 2011
 
 
RM’000
 
RM’000
 
 
 
 
 
Commitment for a loan to IDCB for the development of the CX5 data centre
 
 
8,030
 
 
21,030
 
 
 
 
 
 
         The commitment amount as disclosed above represents the remaining balance of a loan of RM80,000,000 to IDCB for the development of the CX5 data centre. As at 31 March 2012, the Group has loaned RM71,970,000 to IDCB.
 
 
 
 
 
-ends-