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Home > Investor Relations > Announcements
Announcements

Half Year Results

CSF GROUP PLC
(“CSF” or the “Group”)

HALF-YEAR RESULTS
For the Six Months Ended 30 September 2010

CSF Group plc (AIM: CSFG), the leading provider of data centre facilities and services in South East Asia and thelargest provider of data centre services in Malaysia, is pleased to announce its unaudited half-yearly results for the six months ended 30 September 2010.

Financial highlights:

  • Revenue 22.7% higher at RM39.5m (£8.1m*) as compared to RM32.2m (£6.6m*) in H1 2010
  • Profit before tax increased significantly to RM32.5m (£6.6m*) as compared to RM4.6m (£0.9m*) in H1 2010. This was driven by the sale and leaseback of CX1 which gave rise to a profit of RM22.5m (£4.6m*)
  • Data centre rental revenue increased 18.9% to RM19.7m (£4.0m*)
  • EPS up 490% to 18.75 sen (3.83 p*) per share (H1 2010: 3.17 sen (0.65 p*) per share)
  • Cash position as at 30 September 2010 of RM121.8m (£24.9m*) as compared to RM167.4m (£34.2m) as at 31 March 2010

Operational highlights

  • CX2 now 72% occupied and is expected to be fully tenanted by the end of the current financial year
  • Appointed Lead Mechanical and Electrical Services Contractor for the CX5 development project for a contract sum of RM86m (£17.6m*)
  • Agreements for the development CX5 now signed:
    • Earthworks already completed and physical construction in progress
  • Development of CX5 is progressing in line with expectations
  • Secured a number of contracts for the management and maintenance of third party data centres
  • The first "CSF" branded 3,500 sq ft data centre was commissioned in Hanoi Vietnam
  • Ongoing strategy to develop high quality data centres in Malaysia, Singapore, Vietnam, Thailand and Indonesia continues to gain market traction

* 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 2010 of RM4.89 : £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 first six months of the new financial year has started strongly and we continue to work hard to achieve the financial results and to meet our commitments to customers, vendors, investors and other business partners. Our current sales pipeline continues to look healthy for both our design and development and our fit-out and maintenance business divisions. Therefore, we remain confident in achieving continuing growth through the second half of the year and beyond."

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 / James Strong
+44 (0)20 7466 5000

CHAIRMAN'S STATEMENT

We had another busy and successful half year and are pleased to report a robust trading performance with increases in revenue and profit from operations by 22.7% and 283.9% respectively, from the prior year. The operating profit margin, excluding the profit from the sale and leaseback of CX1 of RM22.5m (£4.6m*), increased by 12.0% from RM8.3m (£1.7m*) in H1 FY 2010 to RM9.3m (£1.9m*) in H1 FY 2011 mainly due to the increase in data centre rental income.

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 revenue and profit from operations. Our order book and new business pipeline continues to strengthen as we expand our operational footprint and grow our market presence.

Results

Revenue for the six months to 30 September 2010 increased 22.7% to RM39.5m (£8.1m*) as compared with RM32.2m (£6.6m*) in the prior year, with the data centre rental revenue increasing by RM3.1m (£0.6m*). The revenue for H1 FY 2011 includes project management fee on CX5 of RM3.4m (£0.7m*) in relation to CX5, principally on project management services. The average gross margin increased to 36.2% (H1 2010 : 34.5%).

Profit from operations increased by 283.9% to RM31.8m (£6.5m*) from RM8.3m (£1.7m*) in H1 2010 and profit before taxation was RM32.5m (£6.6m*) as compared to RM4.6m (£0.9m*) in H1 2010 mainly due to the recognition of the gain on sale (and leaseback) of the CX1 data centre of RM22.5m (£4.6m*) and the increase in revenue derived from the rental of the data centres to RM19.7m (£4.0m*) from RM16.6m (£3.4m*) in H1 2010.

Net cash used in operating activities was RM9.6m (£2.0m*) as compared to net cash generated of RM3.2m in H1 FY 2010. The Group's cash position has decreased by RM45.6m (£9.3m*) from RM167.4m (£34.2m*) as at 31 March 2010 to RM121.8m (£24.9m*) as at 30 September 2010 mainly due to loan advances of RM31.6m (£6.5m*) made to Integrated DC Builders Sdn Bhd, the owner of the CX5 project.

The proceeds from the sale of CX1 of RM49.4m (£10.1m) was substantially utilised to repay the term loan associated with the development of CX1 of RM44.7m (£9.1m*).

Design, Fit-out and Maintenance of Data Centre Facilities

CSF continues to enhance its market position having recently secured contracts to fit-out data centres for several financial institutions in Malaysia. The Group is also spearheading a plan to review and assess the durability of existing data centre equipment for a number of key customers.  This initiative is expected to prolong the useful life of key equipment to ensure the customers' continuing reliance on CSF's experience and support is maintained.

The Group continues to receive inquiries from potential customers who would like to develop their in-house data centres and we are working towards securing these projects. These projects are expected to generate recurring revenues in the form of after-sale maintenance services on the equipment supplied and installed by the Group.

A number of contracts were secured for the management and maintenance  of the data centres of third parties for periods ranging from one year to three years, a further testament to the Group's reputation as the leading solutions provider in all aspects of data centre infrastructure service. There is ongoing assessment of new equipment vendors in order to broaden the Group's customer base and to further enhance its in-house technical capabilities.

New Data Centre Projects

The Group entered into a Partnership Agreement with Permodalan Nasional Berhad ("PNB") and Integrated DC Builders Sdn Bhd ("IDCB") with regards to the development of CX5, which, upon completion, is expected to be Malaysia's largest independent data centre at 201,000 net sq ft. Concurrently with the execution of the partnership agreement, the Group entered into a Lease Agreement and Agreement to Lease with PNB.

CX5 is due to be constructed, together with the fit out of critical power infrastructure and associated cooling, in 3 phases:-

Phase 1 - construction of Block A, Block B and Block C together with the fit out of Block A;

Phase 2 - fit out of Block B; and

Phase 3 - fit out of Block C

The Group has been appointed project manager to assist in the design, construction, completion and management of CX5.

Upon completion of all three development stages the Group will operate the entire CX5 facility under a lease agreement from PNB - duplicating the similar management agreements that currently exist for CX1 and CX2.

Earthworks have been completed and the physical construction works commenced in August 2010. We expect to be on target to complete the construction and fit-out of Block A of CX5 in late calendar year 2011.

The Group was also appointed as the Lead Mechanical and Electrical Services Contractor for the CX5 development project for a contract sum of RM86m (£17.6m*) receivable over the life of the contract, none of which has been recognised as revenue in the current financial period.

The project owner has undertaken to procure a tenant for the entire Block A and we are in advanced discussions with several sizeable and reputable companies for the tenancy of Block B. We will shortly start marketing efforts for Block C (expected completion in 2013).

The Group in collaboration with its business partners in Vietnam, completed the development of a 3,500 sq ft data centre in Hanoi, Vietnam. The data centre was commissioned in July 2010 ahead of schedule and trial runs are being conducted by certain customers.

The Group continues to pursue opportunities in Malaysia, Singapore, Vietnam, Thailand and Indonesia to develop high quality data centres in these countries.

Data Centre Rental

With the recent finalisation of a tenancy agreement with an established multinational telecommunications companyfor the rental of 11,450 square feet of space at the CX2 data centre, approximately 79% of the Group's current capacity of 205,000 sq ft of net data centre space is tenanted. The Group is in negotiation with several parties to rent the remaining data centre space before the end of the current financial year. The Group's data centre rental revenue continues to grow in line with the Directors' expectations.

The Board believes that the timing of the completion of CX5 will coincide with the attainment of full or optimum occupancy of the existing data centre capacity of the Group. As CX5 is expected to double the Group's existing data centre capacity, the growth in the Group's data centre rental revenue will be sustainable over the next 3 financial years.

Market

The Malaysian economy is fast moving from agriculture to manufacturing and technology with MSC Malaysia (a world-class hub for the development and nurturing of the nation's ICT industry) a major government initiative for this transition. The government, via MSC Malaysia and other government bodies encourages investment and development of the technology industry. Customer demand for data centres in Malaysia is mainly from the corporate sector, telecommunications industry, financial services and the public sector. Over the next five years, the financial sector is expected to grow rapidly as Malaysia seeks to become a hub for Islamic banking. While there will be competition from the Middle East, Malaysia's moderate government policies will help it gain business. Similarly, an increasing proportion of the customer base of Malaysia's data centres is expected to be comprised of foreign customers as the country attracts more foreign businesses to operate from Malaysia.. Therefore, the demand for data centre space and related services in Malaysia remain encouraging.

Singapore remains the nexus of data centre activity in the South East Asian region. Sheltered against extreme weather conditions and earthquakes, Singapore is a well developed communications infrastructure with extensive international connectivity.

Based on ongoing inquiries with business partners, the Group reaffirms its view that there will be significant growth in demand for data centre space and related services in Vietnam, Thailand and Indonesia. We also believe that these respective governments will enhance their efforts in encouraging foreign direct investments especially in the area of information technology and telecommunications.

On the regional front, the Group's initial strategy was to penetrate the data centre markets in Vietnam, Thailand and Indonesia. More recently, this strategy has been expanded to include Singapore. The Group is undertaking discussions with several parties for the establishment of the Group's data centre services in 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 communication between the management and 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.

Strategy

CSF's broad strategy remains unchanged and we continue to focus on achieving profitable growth in 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 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 that is to manage an interconnected and integrated hub of data centres strategically located across South East Asia.

Dividends

The Board does not propose any payment of dividends in respect of the six months period ended 30 September 2010 but expects to pay a dividend in respect of the financial year following year end.

Outlook and current trading

Our key business focus for H2 FY 2011 is to increase the occupancy of CX2, to ensure that the development of CX5 continues to be on schedule and also to endeavour to secure customers for the tenancy of Blocks B and C of CX5.

Trading has remained strong since the end of the interim period within both the design, fit-out and maintenance business and our data centre rental business. We have created a substantial pipeline of opportunities and our balance sheet remains strong with cash of RM121.8m (£24.9m*) at 30 September 2010.

The Group is confident that demand for our products and services will be sustained driven by a combination of reputation and established market presence in Malaysia and South East Asia.

On this basis, the Board expects that profits for the full financial year will be in line with current market expectations.

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 2010 of RM4.89 : £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 18.75 sen (3.83 p*) as compared to 3.17 sen (0.65 p*) for the 6 months period ended 30 September 2009. The profit from operations of the current financial period includes a gain from the sale (and leaseback) of the CX1 data centre of RM22.5m (£4.6m*).

Financial results

 

 

Proforma

 

6 months ended 30 September 2010
RM'000
(unaudited)

6 months ended 30 September 2009
RM'000
(unaudited)

6 months ended 30 September 2010
£'000
(unaudited)

6 months ended 30 September 2009
£'000
(unaudited)

Data centre rental income

 

19,735

 

16,591

 

4,036

 

3,393

Design and fit-out of data centre facilities

 

19,795

 

15,587

 

4,048

 

3,188

Total Group revenue

 

39,530

 

32,178

 

8,084

 

6,580

Gross profit

14,303

11,116

2,925

2,273

Gain on sale of data centre

 

22,456

 

-

 

4,592

 

-

Share-based payment

 

(268)

 

-

 

(55)

 

-

Profit from operations

 

31,781

 

8,279

 

6,499

 

1,693

Net finance income / (cost)

 

719

 

(3,674)

 

147

 

(751)

Profit before tax

32,500

4,605

6,646

942

Tax

(2,506)

(1,144)

(512)

(234)

Profit after tax

29,994

3,461

6,134

708

Basic EPS

18.75 sen

3.17 sen

3.83 p

0.65 p

Data centre rental income increased by 18.9% to RM19.7m (£4.0m*) from RM16.6m (£3.4m*) in H1 2010 mainly due to the increase in occupancy in CX2. The revenue from the design and fit-out of data centre facilities for H1 FY 2011 includes RM3.4m (£0.7m*) in relation to CX5, principally on project management services.

The average gross profit (GP) margin of 36.2% is higher than the average GP margin of H1 2010 of 34.5% mainly due to the undertaking of development and fit-out projects during the financial period which carried relatively higher GP margins.

Financial results (Cont'd)

The completion of the sale (and leaseback) of the CX1 data centre gave rise to a gain of RM22.5m (£4.6m*).

The Group recorded a net finance income of RM0.7m (£0.15m*) as compared with a net finance cost of RM3.7m (£0.75m*) in H1 2010 mainly due to the utilisation of the proceeds from the sale of CX1 to fully settle the term loan associated with the development of CX1.

Debt to equity ratio

 

 

Proforma

 

As at 30 September 2010
RM'000
(unaudited)

As at 31 March 2010
RM'000
(unaudited)

As at 30 September 2010
£'000
(unaudited)

As at 31 March 2010
£'000
(unaudited)

Total borrowings

638

48,365

130

9,891

Total shareholders' equity

 

177,858

 

147,596

 

36,372

 

30,183

Debt to equity ratio

0.004

0.3

0.004

0.3

The total borrowings as at 30 September 2010 comprises obligations under finance leases whilst the total borrowings as at 31 March 2010 comprises bank borrowings and obligations under finance leases.

The debt to equity ratio of the Group decreased substantially from 0.3 as at 31 March 2010 to 0.004 as at 30 September 2010 mainly due to the full settlement of the Group's term loan facility by way of the utilisation of the proceeds from the sale of CX1.

Cash and treasury

 

 

Proforma

 

6 months ended 30 September 2010
RM'000
(unaudited)

6 months ended 30 September 2009
RM'000
(unaudited)

6 months ended 30 September 2010
£'000
(unaudited)

6 months ended 30 September 2009
£'000
(unaudited)

Cash generated from operations before working capital movement and net finance costs

 

 

 

9,417

 

 

 

6,351

 

 

 

1,925

 

 

 

1,299

Working capital movements

 

(18,281)

 

(6,808)

 

(3,738)

 

(1,392)

Net interest (income) / cost

 

(719)

 

3,674

 

(147)

 

751

Net cash (outflow) / inflow from operating activities

 

 

(9.583)

 

 

3,217

 

 

(1,960)

 

 

658

Proceeds from sale of property, plant and equipment

 

 

49,435

 

 

-

 

 

10,109

 

 

-

Capital expenditure

 

(4,858)

 

(20,223)

 

(993)

 

(4,136)

Loan advances to a third party

 

(31,600)

 

-

 

(6,462)

 

-

Net cash from other investing activities

 

1,148

 

68

 

235

 

14

Net cash inflow / (outflow) before financing activities

 

 

4,542

 

 

(16,938)

 

 

929

 

 

(3,464)

Financing activities

 

(47,045)

 

13,863

 

(9,621)

 

2,835

Net cash outflow

(42,503)

(3,075)

(8,692)

(629)

The Group recorded a net working capital outflow of RM18.3m (£3.7m*) mainly due to the retention payments made to contractors and suppliers associated with the development of CX2. The proceeds from the sale of property, plant and equipment of RM49.4m (£10.1m*) represents the proceeds from the sale of CX1 out of which RM44.7m (£9.1m*) was utilised to repay the term loan associated with the development of CX1. The net cash outflow from financing activities includes the aforementioned repayment of term loan of RM44.7m (£9.1m*) and the advances made to Integrated DC Builders Sdn Bhd ("IDCB") of RM31.6m (£6.5m*) for the development of CX5.

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 43 to 44 of the Group's Annual Report for the year ended 31 March 2010 remain valid for the six months ended 30 September 2010.

Going concern

The directors have prepared financial projections, including cash flows, for a period up to 31 March 2012. 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 2010.

* 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 2010 of RM4.89 : £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 2010

 

Note

6 months to 30 September
2010
RM'000

6 months to 30 September 2009
RM'000

Proforma
6 months to 30 September
2010
£'000

Proforma
6 months to 30 September
2009
£'000

 

 

(unaudited)

(unaudited)

(unaudited)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

5

39,530

32,178

8,084

6,580

Cost of sales

 

(25,227

(21,062)

(5,159)

(4,307)

 

 

 

 

 

 

Gross profit

 

14,303

11,116

2,925

2,273

Other operating income

 

8,598

2,385

1,758

488

Gain on sale of property, plant and equipment

 

6

 

22,456

-

 

4,592

 

-

Administrative expenses

 

(13,308)

(5,222)

(2,721)

(1,068)

Share-based payment

7

(268)

-

(55)

-

 

Total operating expenses

 

 

(13,576)

(5,222)

 

(2,776)

 

(1,068)

 

 

 

 

 

 

Operating profit

 

31,781

8,279

6,499

1,693

 

Finance income

 

 

1,148

68

 

235

 

14

Finance costs

 

(429)

(3,742)

(88)

(765)

 

 

 

 

 

 

Profit before tax

 

32,500

4,605

6,646

942

Tax

 

(2,506)

(1,144)

(512)

(234)

 

 

 

 

 

 

Profit/(loss) for the financial period

 

29,994

 

3,461

 

6,134

 

708

 

 

 

 

 

 

EPS
-     Basic (sen)

8

18.75

 

3.17

 

3.83 p

 

0.65 p

-     Diluted (sen)

8

18.72

 

3.17

 

3.83 p

 

0.65 p

CONDENSED CONSOLIDATED BALANCE SHEET
As at 30 September 2010

 

 

 

Note

As at
30 September
2010
RM'000

As at
31 March 2010
RM'000

Proforma
As at
30 September
2010
£'000

Proforma
As at
31 March
2010
£'000

 

 

(unaudited)

(audited)

(unaudited)

(unaudited)

Non-current assets

 

 

 

 

 

Property, plant and equipment 

 

11,825

7,498

2,418

1,533

Investments

 

898

898

184

184

Other receivable

9

31,600

-

6,462

-

Deferred tax asset

 

2,268

3,654

464

747

 

 

 

 

 

 

 

 

46,591

12,050

9,528

2,464

 

 

 

 

 

 

Current assets

 

 

 

 

 

Inventories

 

5,032

7,175

1,029

1,467

Trade and other receivables

 

38,838

35,234

7,942

7,205

Restricted cash

 

6,041

3,607

1,235

738

Cash and cash equivalents 

 

121,824

167,443

24,913

34,242

Assets held for sale

 

-

26,862

-

5,493

 

 

 

 

 

 

 

 

171,735

240,321

35,119

49,145

 

 

 

 

 

 

Total assets

 

218,326

252,371

44,647

51,609

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

 

36,304

53,442

7,423

10,928

Current tax liabilities

 

3,483

2,050

712

419

Obligations under finance leases 

 

130

38

27

8

Borrowings

 

-

3,569

-

730

Liabilities directly associated with assets classified as held for sale

 

 

-

 

44,730

 

-

 

9,147

 

 

 

 

 

 

 

 

39,917

103,829

8,162

21,232

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Obligations under finance leases 

 

508

28

104

6

Deferred tax liabilities

 

43

918

9

188

 

 

 

 

 

 

 

 

551

946

113

194

 

 

 

 

 

 

Total liabilities

 

40,468

104,775

8,275

21,426

 

 

 

 

 

 

Net assets

 

177,858

147,596

36,372

30,183

 

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

 

78,922

78,922

16,139

16,139

Share premium

 

104,436

104,436

21,357

21,357

Shares held under Employee Benefit Trust 

 

(2,707)

(2,707)

(553)

(553)

Other reserve

 

(66,153)

(66,153)

(13,473)

(13,528)

Retained earnings

 

63,360

33,098

12,902

6,768

 

 

 

 

 

 

Total equity

 

177,858

147,596

36,372

30,183

 

 

 

 

 

 

CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the 6 months ended 30 September 2010

 

 

 

6 months ended
30 September
 2010
RM'000

 

6 months ended
30 September 2009
RM'000

Proforma
6 months ended
30 September 2010
£'000

Proforma 
6 months ended 
30 September 2009
£'000

 

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Net cash (outflow) / inflow from operating activities (Note 10)

(9,583)

 

3,217

 

(1,960)

 

658

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

Interest received

1,148

68

235

14

Capital expenditure

(4,858)

(20,223)

(993)

(4,136)

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

 

49,435

 

-

 

10,109

 

-

Loan advances to a third party

(31,600)

-

(6,462)

-

 

 

 

 

 

Net cash generated from /(used in) investing activities

 

14,125

 

(20,155)

 

2,889

 

(4,122)

 

 

 

 

 

Financing activities

 

 

 

 

Proceeds from finance leases

630

-

129

-

Repayment of obligations under finance leases

 

(58)

 

(38)

 

(12)

 

(8)

Increase in restricted cash

(2,434)

(611)

(498)

(125)

New bank loans raised

-

14,351

-

2,935

Repayment of borrowings

(45,183)

(2,737)

(9,240)

(560)

Advances from directors

-

2,898

-

593

 

 

 

 

 

Net cash (used in) / generated from financing activities

 

(47,045)

 

13,863

 

(9,621)

 

2,835

 

 

 

 

 

Net decrease in cash and cash equivalents

(42,503)

(3,075)

(8,692)

(629)

Cash and cash equivalents at beginning of financial period (Note 11)

 

164,327

 

5,929

 

33,605

 

1,212

 

 

 

 

 

Cash and cash equivalents at end of financial period

 

121,824

 

2,854

 

24,913

 

583

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 6 months ended 30 September 2010 and 30 September 2009

 

 

 

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 2009

52,603

-

-

(66,153)

19,999

6,449

Profit for the period

-

-

-

-

3,461

3,461

 

 

 

 

 

 

 

At 30 September 2009

52,603

-

-

(66,153)

23,460

9,910

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 6 months ended 30 September 2010 and 30 September 2009

 

 

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 2009

10,757

-

-

(13,528)

4,089

1,318

Profit for the period

-

-

-

-

708

708

 

 

 

 

 

 

 

At 30 September 2009

10,757

-

 

-

(13,528)

4,797

2,026

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 April 2010

16,139

21,357

(553)

(13,528)

6,768

30,183

Profit for the period

-

-

-

-

6,134

6,134

Share options issued

-

-

-

55

-

55

 

 

 

 

 

 

 

At 30 September 2010

16,139

21,357

 

(553)

(13,473)

12,902

     36,372

Notes 1 to 16 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 15 November 2010 and are unaudited.

    The information for the year ended 31 March 2010 does not constitute the Group's statutory accounts. The statutory accounts for the year ended 31 March 2010 were approved by the Board of Directors on 21 July 2010 and delivered to the Jersey Registrar of Companies in August 2010. The auditors' report on those accounts 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 2010, 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 2012. 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 2010.
    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 2010 of RM4.89 : £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 2010, 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

    Revenue represents amounts receivable for work carried out in the rental of data centre space, fitting out data centres and the maintenance of data centres.

    Revenue from contract work 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 fit-out 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 fit-outs 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 fit-outs 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

    As set out in note 9, the Group has made cash advances to Integrated DC Builders Sdn Bhd to provide additional working capital for the development of the CX5 data centre. Such advances have been made on an interest free basis. In assessing the fair value of the various income streams receivable by the Group in relation to CX5, the Directors have considered the extent to which such income streams represent income to the Group in consideration for the provision of these advances on an interest free basis. This income has been recognised within revenue at the estimated fair value of the interest free element of the advances.
  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 and the design and development of data centre facilities. The design and fit-out of data centre facilities includes the support and maintenance of data centres.

    The Group operates exclusively in Malaysia.

    6 months ended
    30 September 2010

    Data centre
     rental
    RM'000

    Design and development of data centre facilities   
    RM'000

    Intercompany trading
    RM'000

    Consolidated
    RM'000

     

    (unaudited)

    (unaudited)

    (unaudited)

    (unaudited)

     

    Revenue

     

     

     

     

    External sales

    19,735

    19,795

    -

    39,530

    Intercompany trading 

    -

    538

    (538)

    -

     

     

     

     

     

    Total revenue 

    19,735

    20,333

    (538)

    39,530

     

     

     

     

     

    Segment depreciation 

    339

    74

    -

    413

     

     

     

     

     

    Segment result 

    2,125

    8,895

    (34)

    10,986

     

     

     

     

     

    Corporate costs

     

     

     

    (1,393)

    Foreign exchange loss

     

     

     

    (268)

    Gain on sale of property, plant and equipment

     

     

     

     

    22,456

    Net finance income

     

     

     

    719

     

     

     

     

     

    Profit before tax

     

     

     

    32,500

    Tax

     

     

     

    (2,506)

     

     

     

     

     

    Profit for the financial period

     

     

     

    29,994



    6 months ended
    30 September 2009

    Data centre
     rental
    RM'000

    Design and development of data centre facilities   
    RM'000

    Intercompany trading
    RM'000

    Consolidated
    RM'000

     

    (unaudited)

    (unaudited)

    (unaudited)

    (unaudited)

     

    Revenue

     

     

     

     

    External sales

    16,591

    15,587

    -

    32,178

    Intercompany trading 

    -

    12,897

    (12,897)

    -

     

     

     

     

     

    Total revenue 

    16,591

    28,484

    (12,897)

    32,178

     

     

     

     

     

    Segment depreciation 

    5,163

    75

    -

    5,238

     

     

     

     

     

    Segment result 

    6,707

    2,736

    (1,290)

    8,153

     

     

     

     

     

     

     

     

     

     

    Foreign exchange gain

     

     

     

    126

    Net finance costs

     

     

     

    (3,674)

     

     

     

     

     

    Profit before tax

     

     

     

    4,605

    Tax

     

     

     

    (1,144)

     

     

     

     

     

    Profit for the financial period

     

     

     

    3,461

  6. Gain on sale of property, plant and equipment

    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 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 2010, options were granted to the employees and directors of the Group that give them the entitlement to subscribe for a total of 7,560,000 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 2010 of RM3,745,000 (GBP 767,000) and the charge to the income statement for the current financial period amounts to RM268,000 (£55,000) (6 month period ended 30 September 2009 : Nil).
  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 2010

    Six months ended 30 September 2009

     

    (unaudited)

    (unaudited)

     

     

     

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

    29,994

    3,461

     

     

     

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

    160,000

    109,091

     

     

     

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

    160,265

    109,091

     

     

     


    The number of ordinary shares for basic earnings per share at 30 September 2010 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 2010 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.

    The number of ordinary shares for basic and diluted earnings per share at 30 September 2009 is the number of ordinary shares of CSF Group plc in issue immediately prior to admission to AIM.
  9. Other receivable

    The non-current other receivable comprises an amount of RM31,600,000 owing by Integrated DC Builders Sdn Bhd ("IDCB"), the owner and developer of the CX5 data centre. The amount represents the cash advances given by CSF Advisers Sdn Bhd ("CSFA") to IDCB to provide working capital for the development of the CX5 data centre.

    Based on the agreement between CSFA and IDCB, the cash advances of up to RM30.0 million are convertible into 100,000 6.5% cumulative redeemable preference shares on or before 30 September 2011.
  10. Note to the cash flow statement

     

    6 months ended 30 September 2010
    RM'000

    6 months ended 30 September 2009
    RM'000

     

    (unaudited)

    (unaudited)

     

     

     

    Profit for the financial period

    29,994

    3,461

    Adjustments for:

     

     

    Allowance for doubtful debts

    -

    84

    Amortisation of debt issuance cost

    -

    371

    Depreciation of property, plant and equipment

    413

    5,238

    Interest expense

    429

    3,742

    Interest income

    (1,148)

    (68)

    Gain on sale of property, plant and equipment

    (22,456)

    -

    Share based payment

    268

    -

    Tax

    2,127

    1,144

     

     

     

    Operating cash inflows before movements in working capital

    9,627

    13,972

    Decrease in inventories

    2,143

    2,160

    Increase in receivables

    (3,286)

    (4,949)

    Decrease in payables

    (17,138)

    (4,019)

     

     

     

    Cash (used in) / generated by operations

    (8,654)

    7,164

    Interest paid

    (429)

    (3,742)

    Income taxes paid

    (500)

    (205)

     

     

     

    Net cash (outflow) / inflow from operating activities

    (9,583)

    3,217

     

     

     

  11. Cash and cash equivalents at beginning of the financial period

     

    Six months ended 30 September 2010

    Six months ended 30 September 2009

     

    (unaudited)

    (unaudited)

     

     

     

    Cash and cash equivalents - balance sheet

    167,443

    5,929

    Overdraft

    (3,116)

    -

     

     

     

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

     

    164,327

     

    5,929

     

     

     

  12. Dividend

    The Board does not propose any payment of dividends in respect of the six months period to 30 September 2010 (2009: Nil).
  13. Capital commitments

    The Group has entered into contractual commitments for the fit-out of a data centre as set out below:

     

    As at
    30 September
    2010
    RM'000

    As at
    31 March
     2010
    RM'000

     

    (unaudited)

    (audited)

     

     

     

    Commitments

    14,840

    -

     

     

     

  14. Operating Lease Arrangements

    As at 30 September 2010, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

     

    As at
    30 September
    2010
    RM'000

    As at
    31 March 
    2010
    RM'000

     

    (unaudited)

    (audited)

     

     

     

    Within one year

    25,275

    19,867

    In the second to fifth years

    101,100

    79,469

    After five years

    233,486

    192,051

     

     

     

     

    359,861

    291,387

     

     

     

  15. Contingencies

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

     

    As at
    30 September
    2010
    RM'000

    As at
    31 March 2010
    RM'000

     

    (unaudited)

    (audited)

     

     

     

    Banking guarantees

    7,547

    6,996

     

     

     


    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.
  16. Related party transactions

    Key management compensation amounted to RM563,000 for the six months to 30 September 2010 (2009: RM498,000).

    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 2010, Group subsidiaries entered into the following transactions with related parties which are not members of the Group

     

    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)

    Vista One Sdn Bhd

    (i)

    -

    -

    -

    -

    C2 Consult Sdn Bhd

    (i)

    -

    -

    -

    -

    Vista Cybersystem
    Sdn Bhd

    (i)

     

    -

     

    -

     

    -

     

    -

    Qualtech Sdn Bhd

    (i)

    24

    -

    168

    -

    ML Strategic
    Corporate Advisory
    Sdn Bhd
    Infovery Sdn Bhd
    Thoo Soon Huat

    (i)

     

    (i)
    (ii), (iii)

     

    -
    -
    117

     

    18
    -

     

    -
    3
    -

     

    3
    -
    -

     

     

     

     

     

     

     

     

    141

    18

    171

    3

     

     

     

     

     

     

     

    6 months ended
    30 September 2009

     

     

    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)

    Vista One Sdn Bhd

    (i)

    -

    54

    -

    -

    C2 Consult Sdn Bhd

    (i)

    -

    11

    -

    167

    Vista Cybersystem
    Sdn Bhd

    (i)

     

    -

     

    176

     

    -

     

    90

    Qualtech Sdn Bhd

    (i)

    21

    -

    119

    -

    Yong Kwet On

    (ii)

    -

    -

    -

    50

    ML Strategic
    Corporate Advisory
    Sdn Bhd

     

    (i)

     

    -

     

    18

     

    -

     

    6

    Wong Chow Ming

    (ii)

    -

    -

    7,000

    5,247

    Joseph Ting & Co

    (i)

    -

    102

    30

    -

     

     

     

     

     

     

     

     

    21

    361

    7,149

    5,560

     

     

     

     

     

     


    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 2010, 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, Wong Chow Ming.

    As at 30 September 2009, the security for banking facilities of RM107.8 million includes a joint and several guarantee by Wong Chow Ming and Ow Yong Hoong Peen (a former shareholder of certain subsidiaries of the Company). In addition, the security of banking facilities of RM50.0 million includes a joint and several guarantee by Yong Kwet On and Ow Yong Hoong Peen.