TIDMCSFG
RNS Number : 2869R
CSF Group PLC
08 December 2016
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR")
8 December 2016
CSF Group plc
("CSF" or "the Group")
HALF-YEAR RESULTS
For the six months ended 30 September 2016
CSF Group plc (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 its unaudited
half-year results for the six months ended 30 September 2016.
Financial highlights:
-- Group revenue of RM37.4m (GBP7.0m*) (H1 2016(#) : RM34.1m (GBP6.4m*)).
-- Lower gross loss margin of 7.3% (H1 2016(#) : gross loss margin of 66.2%).
-- Loss before tax of RM6.2m* (GBP1.2m*) (H1 2016(#) : profit
before tax of RM1.8m** (GBP0.3m*)).
-- Earnings per share: loss of 4.46 sen (0.83p*) per share (H1
2016(#) : earnings of 0.72 sen (0.14p*) per share).
-- Net cash generated from operating activities of RM0.6m
(GBP0.1m*), mainly due to improved collection of overdue
receivables (H1 2016(#) : net operating cash outflow of RM6.6m
(GBP1.2m*)).
-- Closing cash and cash equivalents position as at 30 September
2016 of RM42.0m (GBP7.8m*) (31 March 2016: RM43.6m (GBP8.1m*)).
-- Net liabilities as at 30 September 2016 of RM27.5m (GBP5.1m*)
(31 March 2016: RM20.1m (GBP3.8m*)).
Operational highlights:
-- Ongoing fit-out works for a new tenancy contract at CX2 for commencement in H2 2017.
-- Enhancing the connectivity at CX1, CX2 and CX5 to create
additional revenue streams and provide additional opportunities for
marketing the Group's data centres.
-- The debt settlement agreement has been finalised with the
freeholder of CX1, CX2 and CX5 whilst the supplemental lease
agreements are being finalised, to improve operating cash flow.
-- Continuing to focus, pursue and follow up on a pipeline of
potential customers and marketing activities.
* The proforma balances in pounds Sterling are included solely
for convenience. The proforma balances in pounds Sterling are
stated, as a matter of arithmetical computation only, on the basis
of all current and prior year balances being translated from
Malaysian Ringgits into pounds Sterling at the rate prevailing on
30 September 2016 of RM5.3602 : GBP1.00. This translation should
not be construed as meaning that the Malaysian Ringgit amounts
actually represent, have been, or could be converted into the
stated number of pounds Sterling.
** Includes a reversal and utilisation of provision for onerous
leases of RM23.0m (GBP4.3m*) and reversal of impairment of tangible
assets of RM13.1m (GBP2.4m*).
# The 6-month financial period from 1 April 2015 to 30 September 2015.
For further information:
CSF Group plc
Phil Cartmell, Chairman +603 8318 1313
Allenby Capital Limited (Nominated Adviser
& Broker)
Nick Naylor / Alex Brearley +44 (0)20 3328 5656
CHAIRMAN'S STATEMENT
Overview of the six months ended 30 September 2016
The Group continued to incur a gross loss during the six months
ended 30 September 2016, as both the CX2 and CX5 data centres have
not yet attained an optimum level of occupancy. Fit-out works for a
new tenancy contract are ongoing, but will only start to generate
rental revenue in the second half of the 2017 financial year.
The loss before tax for the six month period was RM6.2m
(GBP1.2m*), compared to the profit before tax in the corresponding
period in the previous financial year of RM1.8m (GBP0.3m*). This
was mainly due to the inclusion of the following items in the
results for the previous six month period:
(i) reversal and utilisation of a provision of onerous lease of RM23.0m (GBP4.3m*); and
(ii) reversal of impairment of tangible assets of RM13.1m (GBP2.4m*).
As at 30 September 2016, the Group had cash and cash equivalents
of RM42.0m (GBP7.8m*) (31 March 2016: RM43.6m (GBP8.1m*)). This
represents cash that is available to the Group, and excludes
restricted cash items, such as deposits held on behalf of the
Company's Employee Benefit Trust.
Progress with the restructuring of the lease rental payments
has, to a certain extent, reduced the burden on operating cash
flow, thereby allowing the Group to focus on securing new tenancy
contracts. The Group has executed a debt settlement agreement with
the freeholder of CX1, CX2 and CX5 and is in the process of
finalising revised lease agreements. The Board looks forward to
making further announcements in respect of formal revised lease
agreements as and when appropriate.
Current trading
As highlighted in the Group's results for the year ended 31
March 2016, which were announced in July 2016, the Group remains
focused on filling the remaining capacity at its CX2 and CX5 data
centres. It has also undertaken a number of strategic initiatives
to improve its cash reserves, secure new customers, create
additional revenue streams and strive to improve operational
efficiency in order to reduce costs.
The Board has also recently undertaken an internal strategic
review of the Group's assets and subsidiaries, in order to examine
alternative operating structures for the Group's overall business.
This process is ongoing.
Outlook
The Board and management team remains focused on its key
strategies, as outlined above, and on pursuing the pipeline of
potential customers and business alliances. An update will be made
to shareholders on this progress in due course.
Dividends
The Board does not propose any payment of dividends in respect
of the six month period ended 30 September 2016.
Phil Cartmell
Chairman
CSF Group plc
* The proforma balances in pounds Sterling are included solely
for convenience. The proforma balances in pounds Sterling are
stated, as a matter of arithmetical computation only, on the basis
of all current and prior year balances being translated from
Malaysian Ringgits into pounds Sterling at the rate prevailing on
30 September 2016 of RM5.3602 : GBP1.00. This translation should
not be construed as meaning that the Malaysian Ringgit amounts
actually represent, have been, or could be converted into the
stated number of pounds Sterling.
CHIEF FINANCIAL OFFICER'S REVIEW
Introduction
The Group recorded basic earnings per share ("EPS") loss of 4.46
sen (0.83p*) (H1 2016: profit of 0.72 sen (0.14 p*)).
Financial results
Proforma
--------------------------- ------------------------------ ------------------------------
6 months 6 months 6 months 6 months
ended ended ended ended
30 September 30 September 30 September 30 September
2016 2015 2016 2015
RM'000 RM'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
--------------------------- -------------- -------------- -------------- --------------
Total Group revenue 37,448 34,072 6,986 6,356
--------------------------- -------------- -------------- -------------- --------------
Gross loss (2,731) (22,550) (510) (4,207)
--------------------------- -------------- -------------- -------------- --------------
Other operating income 95 8 18 1
--------------------------- -------------- -------------- -------------- --------------
Administrative expenses (8,258) (8,088) (1,541) (1,509)
--------------------------- -------------- -------------- -------------- --------------
Bad debts written
off - (51) - (10)
--------------------------- -------------- -------------- -------------- --------------
Net allowance for
doubtful debts 757 (1,160) 141 (216)
--------------------------- -------------- -------------- -------------- --------------
Reversal of impairment
of tangible assets - 13,100 - 2,444
--------------------------- -------------- -------------- -------------- --------------
Reversal of restructuring
cost 332 - 62 -
--------------------------- -------------- -------------- -------------- --------------
Reduction of contingent
consideration - 950 - 177
--------------------------- -------------- -------------- -------------- --------------
Provision for onerous
leases 11,738 23,025 2,190 4,296
--------------------------- -------------- -------------- -------------- --------------
Profit from operations 1,933 5,234 360 976
--------------------------- -------------- -------------- -------------- --------------
Net finance income
/ (cost) (882) 369 (164) 69
--------------------------- -------------- -------------- -------------- --------------
Unwinding of discounts
on provision (7,238) (3,825) (1,350) (714)
--------------------------- -------------- -------------- -------------- --------------
Loss / (profit) before
tax (6,187) 1,778 (1,154) 331
--------------------------- -------------- -------------- -------------- --------------
Tax (949) (619) (177) (115)
--------------------------- -------------- -------------- -------------- --------------
Loss / (profit) for
the financial period (7,136) 1,159 (1,331) 216
--------------------------- -------------- -------------- -------------- --------------
Foreign currency
translation (237) (704) (44) (131)
--------------------------- -------------- -------------- -------------- --------------
Total comprehensive
(loss) / income for
the period (7,373) 455 (1,375) 85
--------------------------- -------------- -------------- -------------- --------------
Basic (LPS) / EPS (4.46 sen) 0.72 sen (0.83p) 0.14p
--------------------------- -------------- -------------- -------------- --------------
Revenue
Proforma
---------------------------- ------------------------------ ------------------------------
6 months 6 months 6 months 6 months
ended ended ended ended
30 September 30 September 30 September 30 September
2016 2015 2016 2015
RM'000 RM'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
---------------------------- -------------- -------------- -------------- --------------
Data centre rental
income 33,101 26,826 6,175 5,005
---------------------------- -------------- -------------- -------------- --------------
Maintenance income 3,356 4,794 626 894
---------------------------- -------------- -------------- -------------- --------------
36,457 31,620 6,801 5,899
---------------------------- -------------- -------------- -------------- --------------
Design and fit-out
of data centre facilities 991 2,452 185 457
---------------------------- -------------- -------------- -------------- --------------
Total Group revenue 37,448 34,072 6,986 6,356
---------------------------- -------------- -------------- -------------- --------------
Data centre rental revenue increased by 23.4% from RM26.8m
(GBP5.0m*) in H1 2016 to RM33.1m (GBP6.2m*) in the six months under
review, mainly due to the commencement of two new tenancy contracts
at CX5 which commenced in July 2015 and October 2015 respectively.
The aforementioned contracts were signed several months before the
commencement of the respective tenancy periods as fit-out works had
to be carried out before the customers commence to pay rental.
The decrease in maintenance revenue by RM1.4m (GBP0.3m*) was
mainly attributable to the non-renewal of a comprehensive
maintenance contract which expired in H1 2016.
Gross loss margin
The Group incurred a lower gross loss margin of 7.3% (H1 2016:
gross loss margin of 66.2%), mainly due to lower lease rental
expenses on CX1, CX2 and CX5 resulting from the restructuring of
the lease rental payments with the freeholder, effective from
January 2016.
Profit from operations
Profit from operations for the financial period amounted to
RM1.9m** (GBP0.4m*) (H1 2016: RM5.2m (GBP1.0m*)). The profit in H1
2016 was mainly attributable to a reversal and utilisation of a
provision for onerous leases of RM23.0m (GBP4.3m*) and reversal of
impairment of tangible assets of RM13.1m (GBP2.4m*).
Cash and working capital
As at 30 September 2016 the Group had cash and cash equivalents
(excluding deposits held on behalf of the Employee Benefit Trust)
of RM42.0m (GBP7.8m*). The Group recorded net cash generated from
operating activities of RM0.6m (GBP0.1m*), compared to a net
operating cash outflow of RM6.6m (GBP1.2m*) in H1 2016, which was
mainly due to improved collection of overdue receivables.
The net cash outflow generated from investing activities of
RM1.5m (GBP0.3m*) was mainly due to the purchase of additional
plant and equipment of RM2.1m (GBP0.4m) for the refurbishment and
the upgrading of infrastructure at CX1 and CX2.
Critical accounting judgment and key sources of estimation
uncertainty
The areas of critical accounting judgment and key sources of
estimation uncertainty as disclosed on pages 37 to 39 of the
Group's Annual Report for the year ended 31 March 2016 remain valid
for the six months ended 30 September 2016.
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 (below).
Lee King Loon
Chief Financial Officer
CSF Group plc
* The proforma balances in pounds Sterling are included solely
for convenience. The proforma balances in pounds Sterling are
stated, as a matter of arithmetical computation only, on the basis
of all current and prior year balances being translated from
Malaysian Ringgits into pounds Sterling at the rate prevailing on
30 September 2016 of RM5.3602 : GBP1.00. This translation should
not be construed as meaning that the Malaysian Ringgit amounts
actually represent, have been, or could be converted into the
stated number of pounds Sterling.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 6 months ended 30 September 2016
Proforma Proforma
6 months 6 months 6 months 6 months
to 30 September to 30 September to 30 September to 30 September
2016 2015 2016 2015
Note RM'000 RM'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue 37,448 34,072 6,986 6,356
Cost of sales (40,179) (56,622) (7,496) (10,563)
Gross loss (2,731) (22,550) (510) (4,207)
Other operating income 95 8 18 1
Administrative expenses (8,258) (8,088) (1,541) (1,509)
Net allowance for doubtful
debts 757 (1,160) 141 (216)
Bad debts written off - (51) - (10)
Reversal of impairment
of tangible assets - 13,100 - 2,444
Reversal of restructuring
cost 332 - 62 -
Reduction of contingent
consideration - 950 - 177
Provision for onerous
leases 5 11,738 23,025 2,190 4,296
Total operating expenses 4,569 27,776 852 5,182
Operating profit 1,933 5,234 360 976
Finance income 626 686 117 128
----------------- ----------------- ----------------- -----------------
Interest payable on bank
loans, overdrafts and
finance leases (1,508) (317) (281) (59)
Unwinding of discounts
on provisions (7,238) (3,825) (1,350) (714)
Finance costs (8,746) (4,142) (1,631) (773)
(Loss) / profit before
tax (6,187) 1,778 (1,154) 331
Tax (949) (619) (177) (115)
(Loss) / profit for the
financial period (7,136) 1,159 (1,331) 216
Other comprehensive loss
Foreign currency translation (237) (704) (44) (131)
Total comprehensive (loss)
/ income for the period (7,373) 455 (1,375) 85
(LPS) / EPS
* Basic (sen) 6 (4.46) 0.72 (0.83) p 0.14 p
* Diluted (sen) 6 (4.46) 0.72 (0.83) P 0.14 P
----------------- -----------------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2016
Note Proforma Proforma
As at As at
As at As at 30 September 31
30 September 31 March 2016 March
2016 2016 GBP'000 2016
RM'000 RM'000 GBP'000
(unaudited) (audited) (unaudited) (unaudited)
Non-current assets
Property, plant and equipment 25,140 25,640 4,690 4,783
Interest in associate - - - -
Other investments 155 155 29 29
Trade and other receivables 323 360 60 67
25,618 26,155 4,779 4,879
Current assets
Inventories 1,016 1,781 190 332
Trade and other receivables 55,180 64,503 10,294 12,034
Current tax assets 265 175 49 33
Restricted cash 14,131 14,055 2,636 2,622
Cash and cash equivalents 8 44,269 45,823 8,259 8,549
114,861 126,337 21,428 23,570
Total assets 140,479 152,492 26,207 28,449
Current liabilities
Trade and other payables 38,541 44,338 7,190 8,272
Current tax liabilities 1,779 854 332 159
Bank borrowings 916 1,164 171 217
Obligations under finance
leases 110 140 21 26
41,346 46,496 7,714 8,674
Non-current liabilities
Obligations under finance
leases 125 165 23 31
Bank borrowings - 334 - 62
Trade and other payables 72,876 67,492 13,596 12,593
Deferred tax liabilities 232 232 43 43
Provision for onerous leases 5 53,400 57,900 9,962 10,802
126,633 126,123 23,624 23,531
-------------- ----------- -------------- ------------
Total liabilities 167,979 172,619 31,338 32,205
============== =========== ============== ============
Net liabilities (27,500) (20,127) (5,131) (3,756)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2016
Note Proforma Proforma
As at As at
As at As at 30 September 31
30 September 31 March 2016 March
2016 2016 GBP'000 2016
RM'000 RM'000 GBP'000
(unaudited) (audited) (unaudited) (unaudited)
Equity/ (deficit)
Share capital 78,936 78,936 14,726 14,726
Share premium 104,499 104,499 19,495 19,495
Shares held under Employee
Benefit Trust (2,300) (2,300) (429) (429)
Other reserve (66,153) (66,153) (12,342) (12,342)
Translation reserve (1,003) (766) (187) (143)
Accumulated loss (141,479) (134,343) (26,394) (25,063)
Total capital deficit (27,500) (20,127) (5,131) (3,756)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the 6 months ended 30 September 2016
6 months Proforma Proforma
ended 6 months 6 months ended
6 months ended 30 September ended 30 September
30 September 2015 30 September 2015
2016 RM'000 2016 GBP'000
RM'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
Net cash generated from /
(used in) operating activities
(Note 7) 596 (6,601) 111 (1,231)
Investing activities
Interest received 626 686 117 128
Capital expenditure (2,084) (1,485) (389) (277)
Repayment of advances from
the owner of a development
project - 27,936 - 5,212
Net cash generated from investing
activities (1,458) 27,137 (272) 5,063
Financing activities
Repayment of obligations
under finance leases (70) (82) (13) (15)
Increase in restricted cash (76) (2,339) (14) (437)
Repayment of borrowings (582) (582) (109) (109)
Net cash used in financing
activities (728) (3,003) (136) (561)
Net (decrease) / increase
in cash and cash equivalents (1,590) 17,533 (297) 3,271
Cash and cash equivalents
at beginning of financial
period (Note 8) 43,572 29,182 8,129 5,444
Cash and cash equivalents
at end of financial period
(Note 8) 41,982 46,715 7,832 8,715
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 6 months ended 30 September 2016
Shares held under Employee Benefit Trust Share option reserve Accumulated loss Translation
Share capital Share premium RM'000 Other reserve RM'000 RM'000 reserve Total
RM'000 RM'000 (unaudited) RM'000 (unaudited) (unaudited) RM'000 RM'000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
At 1 April 2015 78,936 104,499 (2,300) (66,153) 4,117 (102,134) (403) 16,562
Profit for the
period - - - - - 1,159 (704) 455
At 30 September
2015 78,936 104,499 (2,300) (66,153) 4,117 (100,975) (1,107) 17,017
At 1 April 2016 78,936 104,499 (2,300) (66,153) - (134,343) (766) (20,127)
Loss for the period - - - - - (7,136) (237) (7,373)
At 30 September 2016 78,936 104,499 (2,300) (66,153) - (141,479) (1,003) (27,500)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 6 months ended 30 September 2016
<------------------------------------------------------------------------------------ Proforma
------------------------------------------------------------------------------->
Shares held under Employee Benefit Trust Share option reserve Translation
Share capital Share premium GBP'000 Other reserve GBP'000 Accumulated loss reserve Total
GBP'000 GBP'000 (unaudited) GBP'000 (unaudited) GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
At 1 April 2015 14,726 19,495 (429) (12,342) 768 (19,054) (75) 3,089
Profit for the
period - - - - - 216 (131) 85
At 30
September 2015 14,726 19,495 (429) (12,342) 768 (18,838) (206) 3,174
At 1 April 2016 14,726 19,495 (429) (12,342) - (25,063) (143) (3,756)
Loss for the period - - - - - (1,331) (44) (1,375)
At 30
September 2016 14,726 19,495 (429) (12,342) - (26,394) (187) (5,131)
======
======= ======= ======== ========= ==== ========= ======= ==============
Notes 1 to 10 form an integral part of the condensed
consolidated interim financial results.
1. General information
This preliminary announcement of condensed consolidated interim
financial results was approved for issue by the Board of Directors
on 8 December 2016 and is unaudited.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards (IFRSs), this announcement does not itself contain
sufficient information to comply with IFRSs. In September 2016, the
Group published full financial statements for the year ended 31
March 2016 that comply with IFRSs, which were delivered to the
Jersey Registrar of Companies in September 2016.
(i) Basis of preparation
The annual financial statements of the Group are prepared in
accordance with IFRSs as adopted by the European Union. The
condensed consolidated interim financial results have been prepared
in accordance with the accounting policies the Group intends to use
in preparing its next annual financial statements. The condensed
consolidated interim financial results should be read in
conjunction with the annual financial statements for the year ended
31 March 2016, which have been prepared in accordance with IFRSs as
adopted by the European Union.
(ii) Proforma
The proforma balances in pounds Sterling are included solely for
convenience. The proforma balances in pounds Sterling are stated,
as a matter of arithmetical computation only, on the basis of all
current and prior year balances being translated from Malaysian
Ringgits into pounds Sterling at the rate prevailing on 30
September 2016 of RM5.3602 : GBP1.00 This translation should not be
construed as meaning that the Malaysian Ringgit amounts actually
represent, have been or could be converted into the stated number
of pounds Sterling.
(iii) Basis of accounting
The accounting policies adopted are consistent with those of the
annual financial statements for the year ended 31 March 2016, as
described in those financial statements.
Taxes on income in interim periods are accrued using the tax
rate that would be applicable to expected total annual
earnings.
1. General information (Cont'd)
(iv) Forward-looking statements
Certain statements in these condensed consolidated interim
financial results are forward-looking. Although the Group believes
that the expectations reflected in these forward-looking statements
are reasonable, we can give no assurance that these expectations
will prove to have been correct. Because these statements involve
risks and uncertainties, actual results may differ materially from
those expressed or implied by these forward-looking statements.
(v) Going concern
The Directors have prepared financial projections, including
cash flows, for a period up to 31 March 2018. 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:
-- As at 30 September 2016, the Group's cash and cash
equivalents, excluding deposits held on behalf of the Employee
Benefit Trust, stand at RM42.0 million;
-- 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 having outright ownership of its data centres. 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 CX2 and
is in active discussions with a number of other potential tenants
to secure an adequate level of occupancy;
-- The Group has completed the restructuring with the freeholder
on the lease rental payments on CX1, CX2 and CX5, with the revised
lease rental rates commencing on 1 January 2016 whereby the lease
rental payments shall be lower in the earlier years and
progressively increasing thereafter. The outstanding lease rental
accrued up to 31 December 2015 will be settled over an extended
period;
-- The funding requirements of existing and proposed new
ventures and/or projects.
1. General information (Cont'd)
(v) Going concern (Cont'd)
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.
Notwithstanding the foregoing, the financial projections show that
with the completion of the restructuring of the lease rental
commitments, the Group will be able to sustain its working capital
requirements for a period of not less than 18 months. However, the
Group will need to secure additional revenues in order to achieve a
sustainable business model.
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
half-yearly financial statements for the period ended 30 September
2016.
2. Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 March each year. Control is
achieved where the Company has the power to govern the financial
and operating policies of an investee entity so as to obtain
benefits from its activities.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated statement of comprehensive
income from the effective date of acquisition or up to the
effective date of disposal, as appropriate. Where necessary,
adjustments are made to the financial statements of subsidiaries to
bring the accounting policies used into line with those used by the
Group. All intra-group transactions, balances, income and expenses
are eliminated on consolidation.
Under the purchase method of accounting, the cost of an
acquisition is measured as the aggregate of the fair values of the
assets acquired, liabilities incurred or assumed and equity
instruments issued at the date of exchange. The excess of
acquisition cost over the net fair value of the identifiable
assets, liabilities and contingent liabilities represents goodwill,
while the shortfall is immediately credited to the consolidated
statement of comprehensive income.
Goodwill is reviewed annually for impairment or more frequently
if events or changes in circumstances indicate that the carrying
value may be impaired.
3. Revenue recognition and contract accounting
Revenue represents amounts receivable for work carried out in
the rental of data centre space (including reimbursement for
electricity consumed by customers), design and development of data
centre facilities and the maintenance of data centres.
Revenue from design and development 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 and 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 sales invoiced exceed the value of
work completed, the excess is shown as deferred income, within
other financial assets. When it is probable that total fit-out
costs will exceed contract revenue, the expected loss is recognised
as an expense immediately.
Income from support and maintenance agreements and the rental of
data centre space is recognised on a straight line basis over the
period of the related activity. Data centre space is rented out
under operating leases.
4. Segment reporting
The management regularly reviews segment information based on
the key products and services provided to its customers; rental of
data centre space, maintenance including support of data centres,
and the design and development of data centres.
Data centre Design and development of data
6 months ended rental centres Consolidated
30 September 2016 RM'000 Maintenance RM'000 RM'000 RM'000
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue 33,101 3,356 991 37,448
Cost of Sales (38,489) (1,279) (411) (40,179)
Gross (loss) / profit (5,388) 2,077 580 (2,731)
Other operating income 95 - - 95
Provision for onerous leases 11,738 - - 11,738
Administrative cost (2,368) (208) (60) (2,636)
Write back of doubtful debts 753 - 4 757
Staff costs (2,717) (257) (79) (3,053)
Segment depreciation (7) (6) (24) (37)
Segment result 2,106 1,606 421 4,133
Corporate costs (2,858)
Reversal of restructuring cost 332
Gain on foreign exchange 326
Finance income 626
Finance cost (8,746)
Loss before tax (6,187)
Tax (949)
Loss for the financial period (7,136)
Other comprehensive loss
Foreign currency translation (237)
Total comprehensive loss for the
period (7,373)
4. Segment reporting (continued)
Data centre Design and development of data
6 months ended rental centres Consolidated
30 September 2015 RM'000 Maintenance RM'000 RM'000 RM'000
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue 26,826 4,794 2,452 34,072
Cost of Sales (53,669) (1,289) (1,664) (56,622)
Gross (loss) / profit (26,843) 3,505 788 (22,550)
Other operating income 6 - 2 8
Provision for onerous leases 23,025 - - 23,025
Administrative cost (2,324) (594) (169) (3,087)
Allowance for doubtful debts (804) - (647) (1,451)
Write back of doubtful debts - - 291 291
Bad debts written off - - (165) (165)
Staff costs (2,417) (404) (129) (2,950)
Segment depreciation (10) (8) (34) (52)
Segment result (9,367) 2,499 (63) (6,931)
Bad debts written back 114
Corporate costs (2,809)
Reversal of impairment of
tangible assets 13,100
Reduction of contingent
consideration 950
Gain on foreign exchange 810
Finance income 686
Finance cost (4,142)
Profit before tax 1,778
Tax (619)
Profit for the financial period 1,159
Other comprehensive loss
Foreign currency translation (704)
Total comprehensive income for
the period 455
5. Provision for onerous leases
As at As at
30 September 31 March
2016 2016
Movement in provision for onerous leases RM'000 RM'000
(unaudited) (audited)
At start of financial period/ year 57,900 61,200
Additional provision 4,350 26,063
Utilisation of provision (16,088) (37,013)
Unwinding of discount 7,238 7,650
At end of financial period/ year 53,400 57,900
The Group's business model is to lease data centres and commit
to lease rentals and certain other costs of ownership. As such, the
Group needs to achieve a certain level of rental income from
tenants over the life of the data centre lease such that revenue
received will exceed costs.
The provision for onerous leases in the financial statements
represents the present value of the future lease payments that the
Group is presently obliged to make under non-cancellable operating
lease contracts, less revenue expected to be earned on the lease.
The estimate may vary as a result of changes in the utilisation of
the data centres. The unexpired terms of the leases is 9 years with
an option to extend by an additional 16 years.
6. (Loss) / Earnings per share
The calculation for (loss) / earnings per share, based on the
weighted average number of shares, is shown in the table below:
6 months ended 6 months ended
30 September 30 September
2016 2015
(unaudited) (unaudited)
Net (loss) / profit for the financial
period after taxation attributable
to members (RM'000) (7,136) 1,159
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 to the net loss per share. As the Group is
currently in a loss making position change 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. Note to the Cash Flow Statement
6 months 6 months
ended 30 ended 30
September September
2016 2015
RM'000 RM'000
(unaudited) (unaudited)
(Loss) / profit for the financial period (7,136) 1,159
Adjustments for:
Allowance for doubtful debts - 1,451
Allowance for doubtful debts written back (757) (291)
Bad debts written off - 51
Depreciation of property, plant and equipment 2,586 2,315
Foreign currency translation (237) (704)
Interest expense 8,746 4,142
Interest income (626) (686)
Reversal of impairment of tangible assets - (13,100)
Reduction of contingent consideration - (950)
Reversal of restructuring cost (332) -
Provision for onerous leases (11,738) (23,025)
Tax 949 619
Operating cash outflow before movements
in working capital (8,545) (29,019)
Decrease / (increase) in inventories 765 (301)
Decrease / (increase) in receivables 10,117 (2,308)
(Decrease) / increase in payables (1,409) 25,570
Cash generated from / (used in) operations 928 (6,058)
Interest paid (217) (317)
Income taxes paid (115) (226)
Net cash generated from (used in) operating
activities 596 (6,601)
8. Cash and cash equivalents
As at As at
30 September 30 September
2016 2015
RM'000 RM'000
(unaudited) (unaudited)
Cash and cash equivalents- statement of
financial position 45,823 31,379
Deposit held on behalf of employee benefit
trust (2,251) (2,197)
__________ _________
Cash and cash equivalents at beginning
of the financial period - cash flow 43,572 29,182
As at As at
30 September 31 March
2016 2016
RM'000 RM'000
(unaudited) (audited)
Cash and cash equivalents- statement of
financial position 44,269 45,823
Deposit held on behalf of employee benefit
trust (2,287) (2,251)
__________ _________
Cash and cash equivalents at the end of
the financial period - cash flow 41,982 43,572
9. Dividend
The Board does not propose any payment of dividends in respect
of the six month period to 30 September 2016 (H1 2016: Nil).
10. Contingencies
The Group holds a number of guarantees with various banks in
respect of banking facilities as follows:
As at As at
30 September 31 March
2016 2016
RM'000 RM'000
(unaudited) (audited)
Banking guarantees 21,487 25,037
-ends-
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR TPBFTMBTMMBF
(END) Dow Jones Newswires
December 08, 2016 02:00 ET (07:00 GMT)
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