TIDMCSFG
RNS Number : 6704S
CSF Group PLC
26 September 2014
For Immediate Release 26 September 2014
CSF Group plc
("CSF" or "the Group")
FINAL RESULTS
For the Year Ended 31 March 2014
CSF Group (AIM: CSFG), a leading provider of data centre
facilities and services in South East Asia and the largest provider
of data centre services in Malaysia, today announces full year
results for the year ended 31 March 2014.
Financial highlights:
-- Group revenue at RM103.5m (GBP19.0m*) (FY2013: RM143.1m (GBP26.3m*)).
-- Loss before tax at RM129.8m (GBP23.9m*) (FY2013 loss before
tax: RM30.2m (GBP5.6m*)) due to lower data centre revenue at
RM61.9m (GBP11.4m*) (FY2013: RM102.6m (GBP18.9m*)) driven by:
o Provision of onerous leases of RM62.5m (GBP11.5m*) (FY2013:
Nil))
o Provision of doubtful debts on advances made to finance the
fit-out of data centre
o Operating expenditure of the joint-venture in Indonesia of
RM20.9m (GBP3.8m*) (FY2013: Nil)).
-- EPS at loss 82.78 sen (loss 15.23p*) per share (FY2013: loss
20.51 sen (loss 3.78 p*) per share).
-- Closing cash position as at 31 March 2014 of RM19.8m
(GBP3.7m*) (FY2013: RM61.9m (GBP11.4m*)).
Operational highlights:
-- Completed Block B fit-out works at CX5 and received repayment
of RM20.0m (GBP3.7m*) in April 2014 on advances to the project
owner for the development of CX5.
-- Ongoing Block C fit-out works at CX5 data centre which is
scheduled for completion by first half of financial year 2015.
-- Completed the sale of its investment in PT Cyber CSF in May
2014 - resulting in cost savings of more than RM0.5m (GBP0.1m) per
month.
-- Good progress on new data centre rental - new tenancy
contracts were secured for some of the capacity at CX5.
-- Currently pursuing a pipeline of potential customers
alongside ongoing development and marketing activities for CX2 and
CX5.
* 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 Ringgit Malaysia into pounds Sterling at the rate
prevailing on 31 March 2014 of RM5.4336 : GBP1.00. This translation
should not be construed as meaning that the Ringgit Malaysia
amounts actually represent, or have been or could be translated
into the stated number of pounds Sterling.
For further information:
CSF Group +603 83181313
Phil Cartmell, Interim Chairman
Cenkos Securities (Nominated Adviser and Broker) +44 (0) 20 7397 8900
Bobbie Hilliam / Elizabeth Bowman
Buchanan (Financial PR) +44 (0) 20 7466 5000
Jeremy Garcia / Gabriella Clinkard
INTERIM CHAIRMAN'S STATEMENT
Overview of the Year
Despite progress on a number of strategic initiatives during the
period, the Group continued to experience a challenging 12 months
of trading. As a result, the Group incurred a net loss of RM132.5m
(GBP24.4m*) for FY2014 (FY2013: RM32.8m (GBP6.0*)) which were
mainly attributable to the following one off items;
(i) the operating loss of the data centre rental business
(excluding bad debt provisions and provision for onerous leases) of
RM28.5m (GBP5.3m*);
(ii) bad debt provisions of RM16.9m (GBP3.1m*) comprising a
provision for doubtful debts relating to loans and advances given
to PT Cyber CSF, the Group's joint-venture in Jakarta, Indonesia of
RM20.9m (GBP3.8m*) - the Group has divested its entire equity
interest in the same - net of reversal of provisions for bad debts
recovered; and
(iii) provision for onerous leases of RM62.5m (GBP11.5m*)
recognised in the financial current year as a result of the
uncertainty as to whether future revenues will be adequate to cover
the lease rental and other operating costs of CX5.
The Group had a closing cash position of RM19.8m (GBP3.7m*) at
the year end and approximately RM84.2m (GBP15.5m*) tied up as
working capital relating to the development of CX5. This additional
working capital will be collected progressively by the end of
FY2015 in line with the completion of the sale of Block B
(completed in April 2014) and Block C (expected to be completed by
the third quarter of FY2015). To-date, IDCB repaid RM21.6m
(GBP4.0m*) in line with the completion of the sale of Block B at
CX5. The Group's cash position as at 17 September 2014 stands at
RM40.6m (GBP7.5m*).
The completion and sale of Block C is contracted between the
developer of CX5 (the seller of the facility) and the sovereign
fund (the buyer of the facility) and is not dependent on the
securing of tenants by CSF.
The Group recorded total revenue of RM103.5m (GBP19.0m*), a
decrease of RM39.6m (GBP7.3m*) or 27.7%. The decrease in total
revenue was mainly attributable to the decrease in revenue from the
data centre rental business due to the suspension and/or expiry of
certain customer contracts which were subsequently terminated.
Since my appointment as interim chairman to oversee future
strategy and the formation of a committee ("the Committee") to
oversee the business operations headed by Michael Leong, the
Director of Corporate Development of CSF, in July 2013, the
following key initiatives have been undertaken:
(i) Closure of Singapore office - resulting in average cost
savings of approximately RM0.15m (GBP0.028m*) per month;
(ii) Completed the divestment of CSF's equity interest in PT
Cyber CSF - resulting in average cost savings of approximately
RM0.67m (GBP0.12m*) per month and received RM8.9m (GBP1.6m*) of net
proceed from the disposal in May 2014;
(iii) Commenced discussions with the sovereign fund (the lessor
of the CX1, CX2 and CX5 data centres) to request for a reduction in
lease rental rates. Although discussions are still ongoing, the
Board is cautiously optimistic that the outcome will be favourable;
and
(iv) Secured new data centre rental customers contributing
additional revenue of approximately RM0.21m (GBP0.04m*) per month
at CX2. The Group also secured a new tenancy contract for
approximately 45% of the capacity at CX5 Block B with a first right
and option to utilise the remaining 55% of the capacity at Block B
and 50% of the capacity at Block C ("the First Right and Option").
The First Right and Option Arrangement does not preclude the Group
from entering into tenancy contracts with other customers as long
as written notice is given to the counterparty to the First Right
and Option;
(v) Submitted an application for a government grant which will
enable the Group to seek a partial reimbursement for the capital
expenditure incurred / to be incurred in connection with a tenancy
contract.
Current Trading and Outlook
The Group's immediate focus remains filling remaining capacity
in CX5 data centre and to address the non-renewal of certain
tenancy contracts at our CX2 data centre by securing replacement
contracts with suitable and credible customers. Given the
competitive pressure on data centre rental prices, the Board
realises that even if the data centres attain full occupancy, the
Group's data centre rental division will operate at a loss based on
the subsisting lease rental rates payable to the sovereign fund.
Therefore, the initiative to reduce the lease rental rates is
absolutely critical to the medium to long term viability of the
Group's data centre rental business.
Meanwhile, management continues to pursue the Group's pipeline
of design and fit-out customers in order to generate adequate cash
flows to supplement the temporary underperformance of the data
centre rental segment. The Board will continue to ensure that new
developments are undertaken based on thorough commercial assessment
and with a high degree of financial prudence.
Within 2 years, the Group has almost doubled its data centre
capacity from 205,000 sq ft to 406,000 sq ft and with a significant
amount of cash associated with the development of CX5 expected to
flow into the Group progressively up to the third quarter of
FY2015. However, the lease rental commitments on CX5 are
substantial and the Board recognises the urgent need to reduce the
burn rate of our cash reserve. The Board will ensure that there is
no significant cash outlay other than sums required to cover the
committed lease rentals and other necessary operating overheads,
subject to any further capital or operating expenditure that may be
required in relation to tenancy contracts.
In line with this aim of preserving cash, the Board is not
recommending the payment of a dividend.
The Board and Management aim to achieve controlled and
sustainable growth in revenue, EBITDA, earnings per share and
operating cash flows. A key part of this will be the generation of
greater levels of recurring revenue through a network of resellers
and business partnerships which in turn will provide the Group with
greater earnings visibility.
Data Centre Projects
CX1, CX2 and CX3
The Group's CX1 and CX3 data centres continued to operate
efficiently.
Although CX2's utilization has suffered a decline in occupancy
rate to approximately 86% of installed technical power mainly
attributable to the downsizing of the data centre operations of
certain customers due to the competitive business environment in
which they operate.
The Group invested approximately RM1.7m (GBP0.32m*) during the
year to upgrade the data centre capacity of CX2 in order to cater
for the increased power capacity requirements of certain
customers.
CSF Computer Exchange 5 (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 - completed the fit-out of critical power
infrastructure and associated cooling for Block B; and
-- Phase 3 - the fit-out of critical power infrastructure and
associated cooling for Block C by third quarter of FY2015
CSF 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 agreements for the
rental of each block.
As mentioned above, the Group recently secured a tenancy
contract which requires the Group to procure and fit-out additional
equipment amounting to approximately RM13.0m at CX5 Block B. The
Group might need to incur additional capital expenditure when the
customer exercises its First Right and Option as elaborated
above.
In accordance with its financial plan, the Group has up to 31
March 2014, advanced RM78.0m (GBP14.3m*) to the project owner for
the development of CX5 out of which RM30.0m (GBP5.5m*) was repaid
in the previous financial year and RM20.0m (GBP3.7m*) was repaid in
April 2014.
The Group expects the balance of the advances and trade
receivables totaling RM62.6m (GBP11.5m*) as at 17 September 2014 to
be repaid progressively by the end of FY2015 in line with the
completion of the sale of Block C by the third quarter of
FY2015.
CSF Computer Exchange Jakarta (CXJ) in Jakarta, Indonesia
The joint-venture company in Indonesia known as PT Cyber CSF
("Cyber CSF"), in which CSF holds a 49% interest, continues to
suffer operating losses. The Board therefore resolved to dispose of
the investment. The Group completed the sale of its investment in
PT Cyber CSF and received net proceeds of RM8.9m (GBP1.6m*) in May
2014.
Other opportunities
The Group continues to pursue and identify opportunities to form
business alliances with a view of securing large data centre rental
and/or development contracts from local and foreign customers.
Data Centre Rental
The Group now has 406,000 sq ft of data centre space after
disposing the entire equity interest of PT Cyber CSF in Jakarta,
Indonesia (excluding 3,500 sq ft of data centre space in CX4,
Hanoi, Vietnam operated by our 20%-owned associate).
A customer had contracted for Block A and the tenancy commenced
on 1 April 2012. Due to the delay experienced by the customer in
securing a large government contract, the customer requested for a
suspension of the contract for Block A for a period of nine months
commencing 1 April 2013. On this basis, the Group reserved the
right to contract with other potential customers for the space in
Block A. The tenancy contract was subsequently terminated.
The Group also secured a new tenancy contract for a significant
amount of capacity at CX5 Block B. In order to ensure that we can
fulfill the requirements under this contract, we hired a senior
executive with experience in managing the site preparation and
fit-out of technically advanced data centres - with emphasis on
high levels of security and operational reliability of mission
critical computing systems. This person will also be able to assist
in technical and commercial negotiations with existing and
potential customers.
The Board approved the investment in a fibre-optic network
connecting CX1, CX2 and CX5 at an estimated cost of RM3.5m
(GBP0.64m*) which will allow the customers of CX2 and CX5 to
connect to the internet gateway located at CX1. We believe this
investment will improve the quality of internet service to the
existing customers of our CX2 and CX5 data centres and ultimately
attract more customers into these data centres.
Maintenance
The Group's maintenance revenue remained stable and the
management continues to pursue new contracts to enhance our
recurring revenue streams. The Group's maintenance division was
commendable in meeting the internal key performance indicators
which include measurements of efficiency in carrying out scheduled
maintenance and also in completing ad hoc requests for
services.
Design and Fit-out of Data Centres
As the development of CX5 comes nearer to completion, the
Group's design and fit-out division is actively pursuing external
projects. Under a new head of sales who was appointed early in the
financial year, a reasonable sales pipeline was established for the
said division. The Group completed a contract to fit-out a data
centre for a customer in Thailand, whereby the Group earned a
project management fee of THB16.0m, i.e. approximately RM1.6m
(GBP0.29m*). This project also marks the Group's first significant
fit-out contract outside of Malaysia.
The Board and the management recognise the importance of
maintaining the Group's leadership position in data centre design
and operational standards and in this regard, we have continued to
subject our engineers and technicians to regular, structured
training programmes.
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.
Closing Remarks
The Board believes the key initiatives already undertaken will
yield positive results. In addition, the Group continues to
dedicate adequate resources to support the Committee in the
implementation of the key initiatives and the performance of
contractual obligations to the Group's customers. The Board and the
management are fully committed towards increasing the recurring
revenue streams of the Group and while lowering its operating
costs.
As mentioned earlier, the initiative to reduce the lease rental
rates is absolutely critical to the medium to long term viability
of the Group's data centre rental business. In this regard, the
Board will support the management's efforts in negotiating for more
favourable lease rental terms and targets to complete the
negotiations by the third quarter of FY2015.
The Board remains focused on protecting the Company's cash
position, securing customers for the data centre rental business,
and implementing the various cost control and cash preservation
measures that have been established.
Management continues to explore opportunities with a number of
strategic partners in order to deliver an end-to-end service
package to new and existing customers.
CHIEF FINANCIAL OFFICER'S REVIEW
A. Introduction
Several tenancy contracts either expired or were suspended
during the course of the financial year resulting in a loss of data
centre rental revenue. In addition, the Group made a net allowance
for doubtful debts of RM16.9m (GBP3.1m*) and provision for onerous
leases of RM62.5m (GBP11.5m*). On this basis, the Group reported a
lower revenue of RM103.5m (GBP19.0m*), a decrease of RM39.6m
(GBP7.3m*) or 27.7% from the previous financial year and a net loss
of RM132.4m (GBP24.4m*) compared to a net loss RM32.8m (GBP6.0m*)
in the previous financial year.
We made a full allowance for doubtful debts of RM20.9m
(GBP3.8m*) in respect of the loans and advances to PT Cyber CSF.
The Group has divested its entire equity interest in the
joint-venture in May 2014. The Group collected approximately RM4.8m
(GBP0.9m*) of trade receivables that were previously considered to
be doubtful and consequently, we made a reversal of allowance for
doubtful debts of the same amount. On this basis, the net allowance
for doubtful debts for the current year amounts to RM0.8m
(GBP0.1m*) as compared to RM37.6m (GBP6.9m*) for 2013. The
provision for onerous leases was made as a result of the
uncertainty as to whether future revenues will be adequate to cover
the lease rental and other operating costs of CX5.
With the abovementioned expiry and suspension of tenancy
contracts, the occupancy rate for CX2 decreased to approximately
86% of installed technical power whilst Block A of CX5 became
substantially "vacant although there were several new customers
secured during the year.
As a result of the significant allowance for doubtful debts and
provision for onerous leases, the Group registered a loss from
operations of RM129.2 (GBP23.8m*) as compared to a loss from
operations of RM30.9m (GBP5.7m*) in 2013. The loss from operations
is analysed in "Loss from Operations" below.
The Group recorded a basic loss per share ("LPS") of 82.78 sen
(15.23p*) as compared to a basic LPS of 20.51 sen (3.78p*) in
2013.
B. Financial results
The financial results of the Group are summarised below:
Proforma*
======================
2014 2013 2014 2013
RM'000 RM'000 GBP'000 GBP'000
Total Group Revenue 103,508 143,090 19,050 26,334
Gross (loss) / profit (7,084) 31,129 (1,304) 5,729
Gain on sale of property,
plant and equipment 20 2,627 4 483
Allowance for doubtful
debts (16,917) (37,616) (3,113) (6,923)
Impairment of tangible
assets (13,100) - (2,411) -
Provision of onerous leases (62,500) - (11,502) -
Share of loss after tax
of jointly-controlled entity (7,660) (6,122) (1,410) (1,127)
Share of loss after tax
of associates - (144) - (27)
Share based payment (728) (1,248) (134) (230)
(Loss) / Profit from operations (129,210) (30,893) (23,779) (5,686)
Net finance (cost) / income (462) 616 (85) 113
Other (loss) / gain (173) 49 (33) 9
(Loss) / Profit before
tax (129,845) (30,228) (23,896) (5,564)
Tax (2,620) (2,597) (482) (478)
Total comprehensive income
for the financial year (132,465) (32,825) (24,378) (6,042)
(82.78 (20.51
Basic (LPS) / EPS sen) sen) (15.23p) (3.78p)
Weighted average number
of ordinary shares for
basic EPS ('000) 160,029 160,029 160,029 160,029
Proforma*
====================
2014 2013 2014 2013
Key Performance Indicators
Gross profit margin (6.84%) 21.8% (6.84%) 21.8%
(Loss) / Profit from operations
(excluding gain on sale
of property, plant and
equipment, allowance for
doubtful debts, impairment
of tangible assets, provision
of onerous leases and share
of loss after tax of jointly-controlled
entity and associate) margin (28.1%) 7.2% (28.1%) 7.2%
Trade receivables turnover
(days) 374 262 374 262
Trade payables turnover
(days) 95 106 95 106
Quick ratio 4.5 4.0 4.5 4.0
C. Revenue
(Proforma*)
======================
(2014) (2013) (2014) (2013)
(RM'000) (RM'000) (GBP'000) (GBP'000)
(Data centre rental income) (61,901) (102,622) (11,392) (18,886)
(Maintenance income) (9,648) (8,862) (1,776) (1,631)
---------- ---------- ---------- ----------
(71,549) (111,484) (13,168) (20,517)
(Design and development
of data centre facilities
income) (31,959) (31,606) (5,882) (5,817)
---------- ---------- ---------- ----------
(Total Group revenue) (103,508) (143,090) (19,050) (26,334)
---------- ---------- ---------- ----------
The Group recorded total revenue of RM103.5m (GBP19.1m*), a
decrease of RM39.6m (GBP7.3m*) or 27.7%. The decrease in data
centre rental revenue was mainly attributable to the expiry and
suspension of several tenancy contracts as elaborated above.
Maintenance revenue increased by RM0.7m (GBP0.14m*) mainly due to
more ad hoc requests received for repair and upkeep of third party
data centres.
Revenue from the design and development division remained
unchanged from the previous year as the Group recognised the
fit-out revenue of RM16.8m (GBP3.1m*) for the final phase of the
CX5 project and RM15.1 (GBP2.8m*) in respect of other smaller
projects.
D. Gross loss margin
The Group recorded a gross loss margin of 6.84% in the current
financial year as compared to a gross profit margin of 21.8% in
2013. This was mainly attributable to the gross loss margin on data
centre rentals as tabulated below:
Proforma*
2014 2013 2014 2013
RM'000 RM'000 GBP'000 GBP'000
Data centre rental revenue 61,901 102,622 11,392 18,887
Direct expenses
Data centre lease rental
expense (51,006) (48,931) (9,387) (9,005)
Data centre depreciation (3,201) (2,854) (589) (525)
Other direct expenses (28,057) (28,808) (5,164) (5,302)
Total direct expenses (82,264) (80,593) (15,140) (14,832)
Gross (loss) / profit on
data centre rental (20,363) 22,029 (3,748) 4,055
Gross (loss) / profit margin
on data centre rental (32.9%) 21.5% (32.9%) 21.5%
D. Gross loss margin (Cont'd)
The gross loss margin on data centre rental of 32.9% was mainly
due to the significantly lower revenue for CX5 Block A and CX2 of
RM0.5m (GBP0.09m*) and RM50.1m (GBP9.2m*) recognised in current
financial year, as compared to RM23.5m (GBP4.3m*) and RM61.2m
(GBP11.3m*) recognised in the previous financial year.
Gross profit margin on maintenance income increased from 44.3%
in 2013 to 56.5% in 2014 mainly due to more ad hoc requests for
repair and upkeep of third party data centres which generated
higher profit margins. Gross profit margin on design and
development of data centre facilities increased from 16.4% in 2013
to 24.5% in 2014 mainly due to more projects secured with better
profit margins compared to last financial year.
E. (Loss)/ Profit from operations
The Group registered a loss from operations of RM129.2m
(GBP23.8m*) compared to a loss from operations of RM30.9m
(GBP5.7m*) in 2013 as analysed below:
Proforma*
====================
2014 2013 2014 2013
RM'000 RM'000 GBP'000 GBP'000
Operating (loss) / profit
from data centre rental,
maintenance, and design
and development of data
centre facilities (28,359) 9,175 (5,219) 1,690
Gain on sale of property,
plant and equipment 20 2,627 4 483
Other operating income
- other 1,030 1,187 190 218
Allowance for doubtful
debts (16,917) (37,616) (3,113) (6,923)
Impairment of tangible
assets (13,100) - (2,411) -
Provision for onerous leases (62,500) - (11,502) -
Management restructuring
costs (1,724) - (317) -
Share of loss after tax
of jointly-controlled entity (7,660) (6,122) (1,410) (1,127)
Share of loss after tax
of associate - (144) - (27)
----------- --------- ---------- --------
Total operating loss (129,210) (30,893) (23,779) (5,686)
----------- --------- ---------- --------
The higher operating loss incurred in the current year was
mainly attributable to the gross loss recorded by the data centre
rental division and the provision for onerous leases as described
in "Gross (loss) / profit margin" and "Introduction" above. In
addition, the Group incurred costs relating to the restructuring of
the management and development of a detailed plan to improve the
Group's performance amounting to RM1.7m (GBP0.3m*).
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 for the current year of RM1.1m (GBP0.19m*) was
similar to that of the previous financial year of RM1.2m
(GBP0.21m*).
Finance cost for the financial year increased to RM1.5
(GBP0.28m*) from RM0.54m (GBP0.10m*) in 2013 mainly due to
additional banking facilities obtained for the purposes of
undertaking fit-out contracts.
G. Taxation
The Group incurred a tax charge for the year in spite of
reporting a loss for the year mainly because the non-availability
of tax relief on losses incurred by certain companies within the
Group including the jointly-controlled entity and the
associate.
H. Earnings per share
Basic and diluted loss per share ("LPS") was 82.78 sen (15.23p*)
compared to a LPS of 20.51 sen (3.78p*) in 2013. The weighted
average number of shares during the year used for basic and diluted
LPS calculation is 160,028,667 (2013: 160,028,667).
I. Dividends
The Board does not propose any further payment of dividends in
respect of the current financial year.
J. Cash and treasury
Proforma*
====================
2014 2013 2014 2013
RM'000 RM'000 GBP'000 GBP'000
Cash (used by) / generated
from operations before
working capital movements
and net finance income
/ cost (27,796) 11,109 (5,116) 2,044
Working capital movements (9,256) 13,806 (1,703) 2,541
Net finance cost / income 462 (616) 85 (113)
----------- --------- ---------- --------
(36,590) 24,299 (6,734) 4,472
Proceeds from sale of property,
plant and equipment 78 4,018 14 739
Loans to the owner of a
development project - (6,000) - (1,104)
Repayment of loans by the
owner of a development
project - 30,033 - 5,527
Loans and advances to the
jointly-controlled entity (2,980) (21,885) (548) (4,028)
Capital expenditure (2,439) (5,695) (449) (1,048)
Acquisition of a subsidiary (1,200) 335 (221) 62
Net cash from other investing
activities 1,078 1,432 198 263
----------- --------- ---------- --------
Net cash inflow / (outflow)
before financing activities (42,053) 26,537 (7,740) 4,883
Dividends paid - (15,049) - (2,770)
Net cash for other financing
activities (38) (2,360) (7) (434)
---------- --------
Net cash inflow / (outflow) (42,091) 9,128 (7,747) 1,679
----------- --------- ---------- --------
The Group recorded net cash used by operations before working
capital movements and net finance income / cost of RM27.8
(GBP5.1m*) as compared to net cash generated of RM11.1m (GBP2.0m*)
in 2013 mainly due to the decrease in total revenue. On this basis,
the Group recorded a negative movement in working capital of RM9.3m
(GBP1.7m*) as compared to a positive working capital movement of
RM13.8m (GBP2.5m*) in 2013. The positive working capital movement
in 2013 mainly due to the significant collection of trade
receivables associated with the CX5 project during 2013 of RM55.0m
(GBP10.1m*) in line with the completion of the sale of Phase 1 of
CX5 by the developer, namely Integrated DC Builders Sdn Bhd
("IDCB") to the freeholder. The remaining trade receivables
associated with the development of CX5 (Phases 2 and 3) of RM37.2m
(GBP6.8m*) are expected to be collected with the completion of the
sale of Block B (completed in April 2014) and Block C (expected to
be completed by the third quarter of FY2015).
The gross trade receivables balance increased from RM104.3m
(GBP19.2m*) as at 31 March 2013 to RM107.4 (GBP19.8m*) as at 31
March 2014 mainly due to delayed payment on some receivables.
The Group's capital expenditure was mainly for the purchase of
new equipment to increase the capacity of the CX2 data centre.
J. Cash and treasury (Cont'd)
As at 31 March 2014, the outstanding advances to IDCB amounted
to RM47.9m (GBP8.8m*), out of which RM20.0m (GBP3.7m*) was repaid
in April 2014. IDCB expects to fully repay the remaining
outstanding advances progressively by the third quarter of FY2015
in line with the completion of Block B (completed in April 2014)
and Block C of CX5.
During the year, additional loans and advances of RM3.0m
(GBP0.55m*) were given to PT Cyber CSF, the jointly-controlled
entity in Indonesia to fund its capital expenditure and working
capital requirements, bringing the total loans and advances to PT
Cyber CSF to RM31.0m (GBP5.7m*) as at 31 March 2014. As discussed
in "Introduction" and "Loss from operations" above, full allowance
for doubtful debts was made in respect of the loans and advances to
PT Cyber CSF.
On 1 April 2012, the Group completed the acquisition of Third
Wave Infrasys Sdn Bhd ("TWSB") for RM5.0m (GBP0.92m*) payable over
3 financial years. During the year, RM1.2m (GBP0.22m*) was paid to
the former shareholders of TWSB after TWSB met the profit guarantee
for the financial year ended 31 March 2013. TWSB has contributed
positively to the revenue and profit of the Group in the 2014
financial year and is expected to continue to do so in the future
years. The remaining payment of RM1.4m (GBP0.27m*) and RM1.9m
(GBP0.34m*) will be payable upon meeting the profit guarantee for
financial year ended 31 March 2014 and 31 March 2015.
K. Post Balance Sheet Events
The Group completed the sale of its investment in PT Cyber CSF,
the joint-venture in Jakarta, Indonesia and received net proceeds
of RM8.9m (GBP1.6m*) in May 2014.
The Group commenced discussion with the freeholder of the CX1,
CX2 and CX5 data centres which encompassed a revision of the terms
of the lease agreements pertaining to the aforementioned data
centres. The discussions are still ongoing, the Board is cautiously
optimistic that the outcome will be favourable.
L. Critical accounting judgement and key sources of estimation uncertainty
The areas of critical accounting judgement and key sources of
estimation uncertainty are disclosed in Note 4.
M. Going concern
These financial statements have been prepared on a going concern
basis. The directors' consideration of going concern and the
associated uncertainties are provided in Note 1.
* 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 Ringgit Malaysia into pounds Sterling at the rate
prevailing on 31 March 2014 of RM5.4336 : GBP1.00. This translation
should not be construed as meaning that the Ringgit Malaysia
amounts actually represent, or have been or could be translated
into the stated number of pounds Sterling.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2014
Proforma
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2014 2013 2014 2013
Note RM'000 RM'000 GBP'000 GBP'000
Revenue 3 103,508 143,090 19,050 26,334
Cost of sales 3 (110,592) (111,961) (20,354) (20,605)
----------- ----------- ----------- -----------
Gross (loss)/ profit (7,084) 31,129 (1,304) 5,729
Other operating income 1,030 1,187 190 219
Net gain on sale of property,
plant and equipment 20 2,627 4 483
Gain on disposal of other
investment 27 273 5 50
Share of loss after tax
* associate - (144) - (27)
* joint venture (7,660) (6,122) (1,410) (1,127)
----------- ----------- ----------- -----------
Administrative expenses (20,574) (20,979) (3,786) (3,860)
Share based payment (728) (1,248) (134) (230)
Net allowance for doubtful
debts
* others 3,992 (37,616) 735 (6,923)
* joint-venture 4 (20,909) - (3,848) -
Impairment of tangible assets (13,100) - (2,411) -
Provision for onerous leases 5 (62,500) - (11,503) -
Management restructuring
cost (1,724) - (317) -
----------- ----------- ----------- -----------
Total operating expenses (115,543) (59,843) (21,264) (11,013)
----------- ----------- ----------- -----------
Operating loss (129,210) (30,893) (23,779) (5,686)
Finance income 1,051 1,159 193 213
Finance costs (1,513) (543) (278) (100)
Net foreign exchange (loss)/
gain (173) 49 (32) 10
----------- ----------- ----------- -----------
Loss before tax (129,845) (30,228) (23,896) (5,563)
Tax (2,620) (2,597) (482) (478)
----------- ----------- ----------- -----------
Total comprehensive income
for the financial year (132,465) (32,825) (24,378) (6,041)
=========== =========== =========== ===========
EPS
* Basic (Malaysian sen) 6 (82.78) (20.51) (15.23)p (3.78)p
* Diluted (Malaysian sen) 6 (82.78) (20.51) (15.23)p (3.78)p
All results derive from continuing operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2014
Proforma
As at As at As at As at
31 March 31 March 31 March 31 March
Note 2014 2013 2014 2013
RM'000 RM'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 11,825 25,548 2,176 4,702
Interest in associate - - - -
Other Investments 172 213 32 39
Goodwill 3,750 3,750 690 690
Other receivables - 74,890 - 13,783
Deferred tax asset 729 377 134 69
---------- ----------
16,476 104,778 3,032 19,283
---------- ---------- ---------- ----------
Current assets
Inventories 2,978 3,984 548 733
Trade and other receivables 137,740 77,235 25,351 14,214
Current tax assets 495 1,740 91 320
Restricted cash 13,231 13,109 2,435 2,413
Cash and cash equivalents 21,972 64,025 4,044 11,783
176,416 160,093 32,469 29,463
---------- ---------- ---------- ----------
Total assets 192,892 264,871 35,501 48,746
========== ========== ========== ==========
Current liabilities
Trade and other payables 54,829 60,763 10,091 11,183
Current tax liabilities 491 212 90 39
Bank borrowings 3,213 - 592 -
Obligations under finance
leases 140 90 26 16
Investment held for sale 7 6,392 - 1,176 -
65,065 61,065 11,975 11,238
---------- ---------- ---------- ----------
Non-current liabilities
Interest in joint venture - 7,758 - 1,428
Obligations under finance
leases 445 285 82 52
Bank borrowings 225 3,213 41 591
Trade and other payables 16,679 12,835 3,069 2,362
Deferred tax liabilities 80 80 15 15
Onerous lease provision 5 62,500 - 11,503 -
---------- ---------- ---------- ----------
79,929 24,171 14,710 4,448
---------- ---------- ---------- ----------
Total liabilities 144,994 85,236 26,685 15,686
========== ========== ========== ==========
Net assets 47,898 179,635 8,816 33,060
========== ========== ========== ==========
Equity
Share capital 78,936 78,936 14,527 14,527
Share premium account 104,499 104,499 19,232 19,232
Shares held under Employee
Benefit Trust (2,300) (2,300) (423) (423)
Other reserve (66,153) (66,153) (12,175) (12,175)
Share option reserve 4,117 3,389 758 624
(Accumulated loss)/ Retained
earnings (71,201) 61,264 (13,103) 11,275
---------- ---------- ---------- ----------
Total equity 47,898 179,635 8,816 33,060
========== ========== ========== ==========
CONSOLIDATED STATEMENT OF CASH FLOW
For the year ended 31 March 2014
Proforma
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2014 2013 2014 2013
RM'000 RM'000 GBP'000 GBP'000
Loss for the financial year (132,465) (32,825) (24,378) (6,041)
Adjustments for:
Allowance for slow moving
inventories 39 216 7 40
Allowance for diminution
of investment 41 - 8 -
Allowance for doubtful debts:
* Others 766 37,616 141 6,923
* Joint venture 20,909 - 3,848 -
Allowance for doubtful debts
written
back (4,758) - (876) -
Bad debts written off 194 - 36 -
Depreciation of property,
plant and equipment 3,353 2,986 617 550
Impairment of tangible assets 13,100 - 2,411 -
Interest expense 1,513 543 278 100
Interest income (1,051) (1,159) (193) (213)
Impairment of investment - 50 - 9
Net gain on sale of property,
plant and equipment (20) (2,627) (4) (483)
Gain on disposal of other
investment (27) (273) (5) (50)
Property, plant and equipment - 1 - -
written off
Share based payment 728 1,248 134 230
Share of loss after tax of
associate - 144 - 27
Share of loss after tax of
jointly controlled entity 7,660 6,122 1,410 1,127
Onerous leases 62,500 - 11,503 -
Tax 2,620 2,597 482 478
----------- ----------- ----------- -----------
Operating cash (outflows)
/ inflows before movements
in working capital (24,898) 14,639 (4,581) 2,697
Decrease in inventories 967 189 178 35
(Increase)/Decrease in receivables (8,748) 15,631 (1,610) 2,874
Decrease in payables (1,475) (2,014) (271) (371)
----------- ----------- ----------- -----------
Cash (used in) / generated
by operations (34,154) 28,445 (6,284) 5,235
Interest paid (973) (543) (179) (100)
Income taxes paid (1,464) (3,603) (269) (663)
----------- ----------- ----------- -----------
Net cash (outflow) / inflow
from operating activities (36,591) 24,299 (6,732) 4,472
=========== =========== =========== ===========
CONSOLIDATED STATEMENT OF CASH FLOW (Cont'd)
For the year ended 31 March 2014
Proforma Proforma
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2014 2013 2014 2013
RM'000 RM'000 GBP'000 GBP'000
Net cash (outflow)/ inflow
from operating activities (36,591) 24,299 (6,732) 4,472
----------- ----------- ------------- -------------
Investing activities
Interest received 1,051 1,159 193 213
Loans to the owner of a development
project - (6,000) - (1,104)
Loans to joint venture (2,980) (21,885) (549) (4,028)
Repayment of advances from
the owner of a development
project - 30,033 - 5,527
Additions to property, plant
and equipment (2,439) (5,695) (450) (1,048)
Net proceeds from sale of property,
plant and equipment 78 4,018 14 739
Proceeds from sale of other
investment 27 273 5 50
Purchase of new subsidiary,
net of cash (1,200) 335 (221) 63
----------- ----------- ------------- -------------
Net cash (used in) / generated
by investing activities (5,463) 2,238 (1,008) 412
----------- ----------- ------------- -------------
Financing activities
Repayments of obligations under
finance leases (140) (92) (26) (16)
Increase in restricted cash (122) (5,481) (23) (1,009)
Drawdown of borrowings 225 3,213 41 591
Dividend paid - (15,049) - (2,770)
Net cash used in financing
activities (37) (17,409) (8) (3,204)
----------- ----------- ------------- -------------
Net (decrease)/ increase in
cash and cash equivalents (42,091) 9,128 (7,748) 1,680
Cash and cash equivalents at
beginning of financial year 61,930 52,802 11,398 9,718
----------- ----------- ------------- -------------
Cash and cash equivalents at
end of financial year 19,839 61,930 3,650 11,398
=========== =========== ============= =============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share premium Shares held Other Share option (Accumulated Total
Capital account under reserve reserve loss) / RM'000
RM'000 RM'000 Employee RM'000 RM'000 Retained
Benefit Trust earnings
RM'000 RM'000
At 1 April
2012 78,936 104,499 (2,300) (66,153) 2,141 109.138 226,261
Total
comprehensive
income for
the year - - - - - (32,825) (32,825)
Share based
payment - - - - 1,248 - 1,248
Dividend paid - - - - - (15,049) (15,049)
At 31 March
2013 78,936 104,499 (2,300) (66,153) 3,389 61,264 179,635
Total
comprehensive
income for
the year - - - - - (132,465) (132,465)
Share based
payment - - - - 728 - 728
At 31 March
2014 78,936 104,499 (2,300) (66,153) 4,117 (71,201) 47,898
========== ============== ============== ============== ============= ============== ==========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
PROFORMA
Proforma Share Share premium Shares held Other reserve Share option (Accumulated Total
Capital account under GBP'000 reserve loss) / GBP'000
GBP'000 GBP'000 Employee GBP'000 Retained
Benefit Trust earnings
GBP'000 GBP'000
At 1 April
2012 14,527 19,232 (423) (12,175) 394 20,086 41,641
Total
comprehensive
income for
the year - - - - - (6,041) (6,041)
Share based
payment - - - - 230 - 230
Dividend paid - - - - - (2,770) (2,770)
At 31 March
2013 14,527 19,232 (423) (12,175) 624 11,275 33,060
Total
comprehensive
income for
the year - - - - - (24,378) (24,378)
Share based
payment - - - - 134 - 134
At 31 March
2014 14,527 19,232 (423) (12,175) 758 (13,103) 8,816
========== ============== ============== =============== ============= ============= ==========
1. General information
The Preliminary Announcement and the final accounts of the Group
were approved by the Board of Directors on 26 September 2014. The
financial information set out in this Preliminary Announcement does
not constitute the Group's statutory accounts for the year ended 31
March 2014 but is derived from those accounts. The statutory
accounts for 2014 will be delivered to the Jersey Registrar of
Companies in October 2014. The auditors have reported on the 2014
accounts and their report was unqualified but did contain an
emphasis of matter as described below.
In forming their opinion on the financial statements, which was
not modified, the auditors considered the adequacy of the
disclosure made in paragraph (iv) of note 1 and note 5 to this
preliminary announcement concerning the Group's ability to continue
as a going concern and the basis of calculation of the onerous
lease provision.
The Group is forecast to continue to make operating losses and
have operating cash outflows for the foreseeable future and the
financial projections show the Group needs to complete negotiations
with its landlord to reduce the level of lease rental commitments
on its data centres in order to have a sustainable business model.
The Group's onerous lease provision has been calculated based on
management's best estimate which assumes a reduction in the lease
rental commitments on its data centres will be agreed. The ability
of the Group to complete negotiations to reduce the level of lease
rental commitments is inherently uncertain.
These conditions, along with the other matters explained in
paragraph (iv) of note 1 and note 5 to this preliminary
announcement, indicate the existence of a material uncertainty
that:
-- may cast significant doubt over the Group's ability to continue as a going concern; and
-- may cause the company's future onerous lease obligations to
be materially different from the amount provided.
The preliminary announcement does not include the adjustments
that would result if the company was unable to continue as a going
concern.
(i) Basis of preparation
The consolidated financial statements of CSF Group plc, for the
year ended 31 March 2014 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
2014.
1. General information (Cont'd)
(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
2014 of RM5.4336 : GBP1.00. 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.
(iv) Going concern
The Group's business activities, together with the factors
likely to affect the future development, performance and position
are set out in the Interim Chairman's Statement. The financial
position of the Group, its cash flows and liquidity positions are
described in the Chief Financial Officer's Statement. In addition,
the notes to financial statements include foreign currency risk
management, interest rate risk management, credit risk management
and liquidity risk management.
As at 31 March 2014, the Group's cash and cash equivalents
excluding deposits held on behalf of the Employee Benefit Trust
stand at RM19.8 million.
The Directors have prepared financial projections, including
cash flows, for a period up to 31 March 2017. The projections
include sensitivity testing to consider a reasonable worst case
scenario. Based on these projections and taking into consideration
the current financial position of the Group and future capital and
lease commitments, the Directors have a reasonable expectation that
the Group has adequate resources to continue in operational
existence for the foreseeable future. Thus they continue to adopt
the going concern basis of accounting in preparing the annual
financial statements. In reaching this conclusion the directors
have paid particular attention to the following factors:
-- The positive progress that is already being made in
restructuring the business and the heightened focus on cash
management;
-- The existing cash reserves of the business, and the fact that the Group has low levels of bank borrowings with low financial covenants;
-- The Group's business model is to lease its data centres as
opposed to outright ownership. As a result, the Group is committed
to regular lease rental payments, which constitute a significant
proportion of the Group's cost base. The Group therefore needs to
achieve a certain level of tenant occupancy to cover the minimum
lease and other costs of ownership of a given data centre;
-- The Group has already secured new tenants for part of CX5 and is in active discussions with a number of other potential tenants to secure an adequate level of occupancy;
1. General information (Cont'd)
-- Due to changes in the data centre rental market, current market rentals for the Group's data centre space are below the fixed costs of the Group's data centres. The Group is in active negotiations with the landlord of CX1, CX2 and CX5 to reduce the operating lease payments to a sustainable level, and is confident that a rent reduction will be agreed in the short term;
-- The Group received significant cash receipts of RM20.0
million upon the completion of blocks B of CX5 in April 2014 and is
to due to receive additional significant cash receipts of RM49.7
million on the completion of block C of CX5, which is expected to
complete in winter 2014. This will provide a short term increase in
cash reserves, however will increase the level of lease rental
payments. Such receipts are governed by legal agreements between
the Group, the developer and the freeholder;
-- The proceeds received from the disposal of the investment in PT Cyber CSF in May 2014;
-- The funding requirements of existing and proposed new ventures and/or projects.
Given prevailing market conditions and the current levels of
occupancy in the Group's data centres, the Group is forecast to
continue to make operating losses and have operating cash outflows.
The Board is continuing to review the Group's business model with
the aim of establishing sustainable profitable trading.
Furthermore, the financial projections show that the Group needs to
complete negotiations to reduce the level of lease rental
commitments in order to have a sustainable business model and that
the cash receipts from IDCB are required to enable the Group to
continue to operate within its existing facilities in the short
term. The directors note that the receipt of proceeds for block C
of CX5 is governed by existing contractual arrangements and that
based on the current status of the development and discussions with
the freeholder they have no reason to believe that the receipt of
proceeds will be subject to significant delay or other issue. The
directors believe that they will be successful in negotiating a
lease rental reduction and therefore reducing the cost base of the
Group to a sustainable level, and that such rental reduction can be
achieved without other adverse impacts on the Group. On this basis
they continue to adopt the going concern basis. However, there is
inherent uncertainty around the timing, amount and other impacts of
any lease rental reduction, which is considered to represent a
material uncertainty that may cast significant doubt over the
Group's ability to continue as a going concern and, therefore, the
Group may be unable to realize its assets and discharge its
liabilities in the normal course of business.
Notwithstanding the above and taking into consideration the
current financial position, future capital and lease commitments of
the Group, the directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future. Thus they continue to adopt the going
concern basis of accounting in preparing the consolidated financial
statements for the year ended 31 March 2014. The financial
statements do not include the adjustments that would result if the
company was unable to continue as a going concern.
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. 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 2014 Data centre Design and development
rental Maintenance of data centre facilities Consolidated
RM'000 RM'000 RM'000 RM'000
Revenue 61,901 9,648 31,959 103,508
Cost of sales (82,264) (4,193) (24,135) (110,592)
------------ ------------ --------------------------- -------------
Gross profit / (loss) (20,363) 5,455 7,824 (7,084)
Other operating income - - 1,029 1,029
Administrative cost (3,719) (463) (1,597) (5,779)
Allowance for doubtful debts 2,192 (212) 2,012 3,992
Allowance for slowing stock - - (39) (39)
Allowance for diminution of investment - - (41) (41)
Bad debts written off - - (195) (195)
Onerous leases (62,500) - - (62,500)
Staff costs (4,410) (838) (2,628) (7,876)
Segment depreciation (44) (20) (69) (133)
------------ ------------ --------------------------- -------------
Segment result (88,844) 3,922 6,296 (78,626)
Allowance for doubtful debts
- joint venture (20,909)
Management restructuring costs (1,724)
Impairment of tangible assets (13,100)
Corporate cost (7,238)
Finance income 1,051
Net foreign exchange loss (173)
Gain on disposal of property, plant and
equipment 20
Gain on disposal of other investment 27
Share of loss of jointly controlled entity (7,660)
Finance costs (1,513)
-------------
Loss before tax (129,845)
Tax (2,620)
-------------
Loss after tax (132,465)
=============
Year ended 31 March 2013 Data centre Design and development
rental Maintenance of data centre facilities Consolidated
RM'000 RM'000 RM'000 RM'000
Revenue 102,622 8,862 31,606 143,090
Cost of sales (80,593) (4,934) (26,434) (111,961)
------------ ------------ --------------------------- -------------
Gross profit 22,029 3,928 5,172 31,129
Other operating income 821 - 366 1,187
Administrative cost (2,575) (318) (1,705) (4,598)
Allowance for doubtful debts (37,254) (29) (333) (37,616)
Staff costs (5,631) (891) (2,630) (9,152)
Segment depreciation (40) (17) (63) (120)
------------ ------------ --------------------------- -------------
Segment result (22,650) 2,673 807 (19,170)
Corporate cost (8,357)
Finance income 1,159
Net foreign exchange gain 49
Gain on disposal of property, plant and
equipment 2,627
Gain on disposal of other investment 273
Share of loss of associate (144)
Share of loss of jointly controlled entity (6,122)
Finance costs (543)
-------------
Loss before tax (30,228)
Tax (2,597)
-------------
Loss after tax (32,825)
=============
4. Allowance for doubtful debts - joint venture
The allowance pertain to amount owing by PT Cyber CSF,
Indonesia. The said amount, which arose mainly to fund its capital
expenditure and working capital requirement. As at 31 March 2014,
the Group has provided an allowance of RM20,909,000 for impairment
of the unsecured advances to PT Cyber CSF.
5. Onerous leases
As at As at
31 March 31 March
2014 2013
RM'000 RM'000
Movement in provision of onerous
leases
At start of financial year - -
Additional provision during the financial 62,500 -
year
Provision no longer required - -
At end of financial year 62,500 -
========= =========
The Group's business model is to lease data centres and
committed to lease rentals and certain other costs of ownership. As
such, the Group needs to achieve a certain level of rental income
from tenants over the life of the data centre lease such that
revenue received will exceed costs.
The provision of onerous leases in the financial statements
represents the present value of the future lease payments that the
Group is presently obliged to make under non-cancellable operating
lease contracts, less revenue expected to be earned on the lease.
The estimate may vary as a result of changes in the utilisation of
the data centres. The unexpired terms of the leases range from 8 to
10 years.
The onerous lease provision included in long term liabilities
has been calculated on the assumption that the Group will agree a
reduction in ongoing lease rental costs in respect of certain of
its data centres. Whilst the directors expect such a lease rental
reduction to be successfully negotiated, there is no legal
agreement in place as at the date of approval of these financial
statements, and it is inherently uncertain whether such a legal
agreement will be achieved. If such an agreement is not reached
then the onerous lease provision would be increased from RM62.5
million to RM161.3 million.
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 Year ended
31 March 31 March
2014 2013
Net (loss) for the financial year
after taxation attributable to
members (RM'000) (132,465) (32,825)
Weighted average number of ordinary
shares for basic earnings per
share ('000) 160,029 160,029
Weighted average number of ordinary
shares for diluted earnings per
share ('000) 160,029 160,029
The number of ordinary shares for diluted earnings per share is
the weighted average number of ordinary shares of CSF Group plc
that would have been in issue. The calculation of the diluted
earnings per share does not assume conversion, exercise or other
issue of potential ordinary shares that would increase the net
profit or decrease the net loss per share. As the Group is
currently in a loss making position than the inclusion of potential
ordinary shares associated with share options in the diluted loss
per share calculation would serve to decrease the net loss per
share. On that basis, no adjustment has been made for diluted loss
per share.
7. Investment held for sale
As at As at
31 March 31 March
2014 2013
RM'000 RM'000
Investment, at cost 388 -
Group share of post-acquisition loss (15,805) -
---------- ----------
(15,417) -
Loan to PT Cyber CSF 9,025 -
---------- ----------
(6,392) -
========== ==========
The investment held for sale was reclassified from Interest in
Joint Venture. On 24 March 2014, the Group had entered into an
agreement with a third party to dispose of its entire interest in
PT Cyber CSF including the settlement of the net amount owing by PT
Cyber CSF to the Group for a net consideration USD2,732,483
(RM8,921,284) which was received in full by the Group on 22 May
2014.
8. Dividend
Year ended Year ended
31 March 31 March
2014 2013
RM'000 RM'000
Amounts recognised as distributions
to equity holders in the year:
Dividend paid - 15,049
9. Contingencies
The Group holds a number of guarantees with various banks in
respect of banking facilities as follows:
As at 31 As at
March 2014 31 March
2013
RM'000 RM'000
Bank guarantees 25,507 19,922
10. Commitment
As at 31 As at
March 2014 31 March
2013
RM'000 RM'000
Commitment for a loan to IDCB
for the development of the CX5
data centre 2,030 2,030
The commitment amount as disclosed above represents the
remaining balance of a loan of RM80,000,000 to the project owner
for development of the CX5 data centre. As at 31 March 2014, the
Group has loaned RM77,970,000 to IDCB.
-ends-
This information is provided by RNS
The company news service from the London Stock Exchange
END
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