TIDMCSFG
RNS Number : 1673S
CSF Group PLC
29 September 2017
Embargoed until 7am 29 September 2017
CSF Group plc
("CSF" or "the Group")
FINAL RESULTS
CSF Group (AIM: CSFG), a provider of data centre facilities and
services in South East Asia, today announces its full year results
for the year ended 31 March 2017.
Financial highlights:
-- Group revenue of RM82.4m (GBP15.0m*) (FY2016: RM84.0m (GBP15.3m*))
-- Loss before tax of RM33.2m (GBP6.0m*) compared to the loss
before tax of RM33.0m (GBP6.0m*) in FY2016
-- EPS loss of 21.63 sen (loss 3.93p*) per share (FY2016: EPS
loss 22.70 sen (loss 4.12p*) per share)
-- Closing unrestricted cash position as at 31 March 2017 of
RM58.0m (GBP10.5m*) (FY2016: RM43.6m (GBP7.9m*))
Operational highlights:
-- Increase in the Group's cash position due to efforts in
implementing tighter credit control and revised lease payments
-- Finalised debt settlement agreement improving operating
cash flow
-- Continuing to pursue a pipeline of potential customers and
marketing activities
-- Ongoing discussions with several potential customers
-- Enhanced marketing efforts focusing on potential customers
and resellers
-- Post period, the Group recently entered into a conditional
agreement to dispose of CSF CX subsidiary (the "Conditional
Disposal"), the tenant and operator of the Group's CX2 and CX5 data
centres
-- At present, the Conditional Disposal is subject to conditions
precedent and CSF will provide further updates as and when
appropriate
* The translation of the financial statements into pro forma
balances in pounds Sterling is included solely for convenience and
information. 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 2017 of RM5.5053 :
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.
Electronic copies of CSF's audited annual report and accounts
for the year ended 31 March 2017 will shortly be available from the
Company's website: www.csf-group.com.
For further information, please contact:
CSF Group
Phil Cartmell, Chairman +603 8318 1313
Allenby Capital (Nominated Adviser and
Broker)
Nick Naylor / Alex Brearley +44 (0) 20 3328 5656
CHAIRMAN'S STATEMENT
Overview of the Year
CSF Group is a provider of data centre facilities and services
in South East Asia. The Group's revenue is generated from the
provision of data centre design and development services, support
and maintenance agreements and the rental of data centre space. The
Group's business model is to lease its data centre facilities from
a freeholder, rather than own the property assets underlying its
data centres.
The Group incurred a loss for the financial year ended 31 March
2017, which was principally due to its CX2 and CX5 data centres
having not yet attained an optimum level of occupancy. The Group
reported an increase in gross loss from RM1.5m (GBP0.3m*) in FY2016
to RM3.2m (GBP0.6m*) in the current financial year. Notwithstanding
the higher gross loss, the Group reported a slightly lower net loss
of RM34.6m (GBP6.3m*) for the year under report as compared to a
net loss of RM36.3m (GBP6.6m*) in FY2016. The net loss in the prior
year was mainly attributable to a provision for doubtful debts of
RM30.0m (GBP5.5m*) to cover the inherent risks associated with
trade receivables that are expected to be collected over a longer
period of time, offset by a net reduction in the provision for
onerous leases of RM10.9m (GBP2.0m*) and reversal of impairment of
tangible assets of RM13.1m (GBP2.4m*). Although there was a net
reversal of provision for doubtful debts of RM1.0m (GBP0.2m*) in
the current financial year, the Group recorded a net increase in
the provision of onerous leases of RM8.2m (GBP1.5m*) due to
revisions in the outlook of the data centre rental business.
The higher gross loss in the year under report is mainly due to
the reduction in gross profit of the maintenance segment and design
and development segment of the business resulting from a decline in
revenue in each of these segments, coupled with higher costs
incurred in respect of comprehensive maintenance contracts.
As reported in the prior year, in December 2015 the Group
completed its negotiations with the freeholder of CX1, CX2 and CX5
data centres to restructure the lease rental payments. The Group
has finalised the debt settlement agreement but supplemental lease
agreements remain to be finalised. Following the completion of the
Conditional Disposal, further details of which are below, CX2 and
CX5 will no longer form part of the Group, but CSF will continue to
seek to finalise the supplemental lease agreement in respect of
CX1.
The revised lease payments and the management's commendable
effort in implementing tighter credit control had resulted in an
increase in the Group's closing cash position from RM43.6m
(GBP7.9m*) as at 31 March 2016 to RM58.0m (GBP10.5m*) as at the
year-end.
Notwithstanding the increase in cash position, the Group is
conscious that monthly revenues are presently insufficient to cover
monthly operating overheads and the capital expenditure required
for the replacement of aging data centre equipment. In this regard,
the management continues to identify areas for cost reduction,
including discussions with the freeholder for further
concessions.
The Group recently entered into an agreement to dispose of its
entire equity interest in CSF CX Sdn Bhd ("CSF CX"), the
loss-making subsidiary which is also the operator and lessee of the
CX2 and CX5 data centres, to BDC AssetCo Pte Ltd for a cash
consideration of RM2.00 (approximately GBP0.36*) (the "Conditional
Disposal").
CX2 and CX5 are carrier-neutral multi-storey commercial data
centre facilities located in the Selangor state of Malaysia, which
occupy a total net floor area of approximately 345,000 square feet.
The Group commenced to lease CX2 and CX5 in 2009 and 2012
respectively from an independent third party (the freeholder).
The Conditional Disposal is conditional upon, inter alia, the
receipt of various regulatory consents and is also subject to
certain timing restrictions. There can be no certainty that the
Conditional Disposal's conditions can be fulfilled within the
prescribed timeframe and there is a possibility that the
transaction might not complete, in which case the Conditional
Disposal would be terminated without any material financial
compensation being paid by either CSF or the purchaser of CSF
CX.
The Board expects that the Conditional Disposal will improve the
Group's financial position, principally due to the elimination of
the net liabilities of CSF CX and the elimination of the Group's
obligations on the leases payable, and the return of cash deposits
pledged for banking facilities and rental deposits (approximately
up to RM6 million (GBP1.1 million*)) in connection with CX2 and
CX5. The Group intends to apply the proceeds from the Conditional
Disposal and the returned cash deposits towards additional working
capital.
Following completion of the Conditional Disposal, the Group will
continue its maintenance and data centre design and development
business. In addition the Group will also continue to market its
data centre services in respect of its CX1 data centre. CX1 is a
commercial data centre facility located in the Selangor state of
Malaysia, which has been in operation since 2003 with a total net
floor area of approximately of 45,500 square feet.
Current Trading
In conjunction with seeking to progress the Conditional
Disposal, the Group continues to focus on filling the available
capacity of the CX2 and CX5 data centres and recognizes the
importance of forging business partnerships that would attract more
technology companies to utilise the Group's data centres.
Therefore, the Board and management team continue to follow-up on a
number of key strategic initiatives and pursue a pipeline of
potential customers and business alliances, and remains focused on
these plans going forward.
The Board and management will continue implement measures to
reduce the burn rate of the Group's cash reserves. The Board will
continue to ensure that there is no significant cash outlay other
than the 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. Following the completion of the Conditional
Disposal, the Group is expected to have additional working capital
from the return of cash deposits pledged for banking facilities and
rental deposits (approximately up to RM6m (GBP1.1m*)) in connection
with CX2 and CX5.
In view of the accumulated losses of the Group, the Board is not
recommending the payment of a dividend.
Data Centre Rental
During the year, the Group successfully renegotiated the
contract with an existing tenant and secured a new tenancy contract
with a large multinational company. The Group continues to actively
pursue new customers directly and is working closely with a network
of resellers and business partners to fill in the remaining
available capacity at CX2 and CX5 to a sustainable level.
The fibre optic cable linking CX1, CX2 and CX5 commissioned in
the prior year has started to generate initial revenues for the
Group and the management have now implemented cross-connect charges
for the utilisation of network connectivity within each data centre
facility and also across the three data centres.
Following the completion of the Conditional Disposal of CSF CX,
the Group will have approximately 45,500 sq ft of data centre space
and approximately 1 MW of IT power capacity in Malaysia.
Maintenance, Design and Fit-out of Data Centres
The maintenance and the design and development segments of the
business have experienced intense competition and pricing pressure
during the year. Notwithstanding, the management continues to
pursue new contracts to enhance our recurring maintenance revenue
streams and other design and fit-out projects revenue.
Outlook
The Board will continue to support the efforts of the management
in implementing its stated business strategies including the
Conditional Disposal, which the Board believes will improve the
Group's financial position.
The Board will therefore prioritise the implementation of the
Conditional Disposal. Thereafter, the Group can better focus its
resources towards sustaining the rental revenue of the CX1 data
centre, growing the design and development and maintenance
business, and identifying further cost reduction measures, with the
objective of returning the Group to profitability.
The Board is cautiously optimistic that the Group's financial
results will show an improved net trading position in the next
financial year, following the completion of the Conditional
Disposal of CSF CX, although on significantly decreased
revenues.
Phil Cartmell
Chairman
29 September 2017
CHIEF FINANCIAL OFFICER'S REVIEW
Introduction
The Group incurred a net loss of RM34.6m (GBP6.3m*) for FY2017
as compared to a net loss of RM36.3m (GBP6.6m*) in FY2016 which
translated to basic loss per share ("LPS") of 21.63 sen (3.93p*) as
compared to a basic ("LPS") of 22.70 sen (4.12p*) in FY2016.
The lower net loss for FY2017 was mainly attributable to lower
bad debt provisions of RM1.04m (GBP0.1m*) as compared to RM30.0m
(GBP5.5m*) in FY2016 which was partly offset by the net increase in
onerous leases of RM8.2m (GBP1.5m*) as compared to a net decrease
of RM10.9m (GBP2.0m*) in FY2016. The net increase in onerous leases
was mainly due to revisions in the outlook of the data centre
rental business over the longer term.
The Group's closing cash position increased from RM43.6m
(GBP7.9m*) as at 31 March 2016 to RM58.0m (GBP10.5m*) as at the
year-end, mainly due improvement in the management of customer
credit.
Based on the Group's unrestricted cash and bank balances at the
financial year end of RM58.0m (GBP10.5m*), the restricted cash of
RM14.1m (GBP2.6m*) and the net current assets balance of RM71.1m
(GBP12.9m*) and taking into consideration the financial
projections, including cash flows, for the period up to 31 March
2019, the Board believes that the Group has adequate resources to
continue in operational existence for the foreseeable future.
Financial results
The financial results of the Group are summarised below:
Proforma*
2017 2016 2017 2016
RM'000 RM'000 GBP'000 GBP'000
Total Group Revenue 82,420 83,987 14,971 15,256
Gross loss (3,238) (1,529) (589) (277)
Other operating income 1,940 105 352 19
(Loss) / gain on disposal
of other investment (11) 3 (2) 1
Administrative expenses (16,975) (19,388) (3,083) (3,522)
Allowance for doubtful
debts, net 1,054 (30,050) 191 (5,458)
Bad debts written off - (51) - (9)
Reduction of contingent
consideration - 950 - 173
Impairment of tangible
assets reversal - 13,100 - 2,380
Net movement on onerous
leases (8,163) 10,950 (1,483) 1,989
Loss from operations (25,393) (25,910) (4,614) (4,704)
Net finance (cost) / income (1,282) 274 (233) 50
Unwinding of discounts
on provision (7,238) (7,650) (1,315) (1,390)
Other gain 737 291 134 53
Loss before tax (33,176) (32,995) (6,028) (5,991)
Tax (1,445) (3,331) (262) (605)
Foreign currency translation (480) (363) (87) (66)
Total comprehensive loss
for the financial year (35,101) (36,689) (6,377) (6,662)
(21.63 (22.70
Basic LPS sen) sen) (3.93p) (4.12p)
Weighted average number
of ordinary shares for
basic EPS ('000) 160,029 160,029 160,029 160,029
Proforma*
2017 2016 2017 2016
Key Performance Indicators
Gross loss margin (3.9%) (1.8%) (3.9%) (1.8%)
Loss from operations (excluding
allowance for doubtful
debts, reduction of contingent
consideration, impairment
of tangible assets and
net movement) margin (20.6%) (24.8%) (20.6%) (24.8%)
Trade receivables turnover
(days) 330 442 330 442
Trade payables turnover
(days) 60 84 60 84
Quick ratio 7.0 7.0 7.0 7.0
Revenue
Proforma*
2017 2016 2017 2016
RM'000 RM'000 GBP'000 GBP'000
Data centre rental income 66,526 63,959 12,084 11,618
Maintenance income 7,183 8,579 1,305 1,558
------- ------- -------- --------
73,709 72,538 13,389 13,176
Design and development
of data centre facilities
income 8,711 11,449 1,582 2,080
------- ------- -------- --------
Total Group revenue 82,420 83,987 14,971 15,256
------- ------- -------- --------
The total revenue recorded remained broadly unchanged at RM82.4m
(GBP15.0m*) as compared to RM84.0m (GBP15.3m*) in FY2016.
The increase in data centre rental revenue of RM2.6m (GBP0.5m*)
was mainly attributable to new customers secured during the year
and a higher utilization of data centre capacity by certain
existing customers. The decrease in maintenance revenue of RM1.4m
(GBP0.2m*) was mainly attributable to the non-renewal of a
comprehensive maintenance contract.
Gross loss
The Group recorded a gross loss margin of 3.9% in the current
financial year as compared to a gross loss margin of 1.8% in FY2016
as tabulated below:
Proforma*
2017 2016 2017 2016
RM'000 RM'000 GBP'000 GBP'000
Gross loss on data centre
rental (10,517) (13,559) (1,910) (2,463)
Gross profit on maintenance 4,255 5,846 773 1,062
Gross loss on design and
development 3,024 6,184 549 1,124
Total gross loss (3,238) (1,529) (588) (277)
Total revenue 82,420 83,987 14,971 15,256
Total gross loss margin (3.9%) (1.8%) (3.9%) (1.8%)
This higher gross loss margin was mainly attributable to the
lower gross profit margin of the maintenance segment and higher
gross loss margin of the design and development segment, which was
partly offset by the lower gross loss margin of the data centre
rental segment as tabulated below:
Proforma*
2017 2016 2017 2016
RM'000 RM'000 GBP'000 GBP'000
Maintenance revenue 7,183 8,579 1,305 1,558
Direct expenses (2,928) (2,733) (532) (496)
Gross profit on maintenance 4,255 5,846 773 1,062
Gross profit margin on
maintenance 59.2% 68.1% 59.2% 68.1%
Gross loss (Cont'd)
Proforma*
2017 2016 2017 2016
RM'000 RM'000 GBP'000 GBP'000
Design and development
revenue 8,711 11,449 1,582 2,080
Direct expenses (5,687) (5,265) (1,033) (956)
Gross loss on design and
development 3,024 6,184 549 1,124
Gross loss margin on design
and development 34.7% 54.0% 34.7% 54.0%
Proforma*
2017 2016 2017 2016
RM'000 RM'000 GBP'000 GBP'000
Data centre rental revenue 66,526 63,959 12,084 11,618
Direct expenses (77,043) (77,518) (13,994) (14,081)
Gross loss on data centre
rental (10,517) (13,559) (1,910) (2,463)
Gross loss margin on data
centre rental (15.8%) (21.2%) (15.8%) (21.2%)
The lower gross profit margin on maintenance revenue of 59.2% as
compare to 68.1% in FY2017 was mainly due to higher costs incurred
on the comprehensive maintenance contracts.
The lower gross profit margin on the design and development
segment in the current financial year was mainly due to a project
in undertaken in the prior financial year that earned a relatively
high profit margin in that year.
The lower gross loss margin on data centre rental of 15.8% as
compared to 21.2% in FY2016 was mainly due to the increase in data
centre rental revenue as elaborated in "Revenue" above.
Loss from operations
The Group recorded a loss from operations of RM25.4m (GBP4.6m*)
compared to a loss from operations of RM25.9m (GBP4.7m*) in 2016 as
analysed below:
Proforma*
2017 2016 2017 2016
RM'000 RM'000 GBP'000 GBP'000
Operating loss from data
centre rental, maintenance,
and design and development
of data centre facilities (18,284) (20,860) (3,322) (3,788)
Allowance for doubtful
debts, net 1,054 (30,050) 191 (5,458)
Reduction of contingent
consideration - 950 - 173
Impairment of tangible
assets reversal - 13,100 - 2,380
Net movement on onerous
leases (8,163) 10,950 (1,483) 1,989
Total operating loss (25,393) (25,910) (4,614) (4,704)
----------- ----------- ---------- ----------
Loss from operations (Cont'd)
Notwithstanding the higher gross loss margin as explained above,
the aggregate operating loss of the three (3) business segments was
lower mainly due to better cost control measures as reflected by a
reduction in administrative expenses from RM19.4m (GBP3.5m*) in
FY2016 to RM17.0 (GBP3.0m*) in FY2017.
In the prior year, general provision for doubtful debts of
RM30.0m (GBP5.5m*) was made to cover the inherent risks associated
with trade receivables that are expected to be collected over a
longer period. The effects of the general provision for doubtful
debts was partly offset by the decrease in net provision for
onerous leases of RM11.0m (GBP2.0m*) and the reversal of impairment
of tangible assets of RM13.1m (GBP2.4m*).
In the current year, the Group recognised a net increase in
onerous leases due to revisions in the longer-term outlook of the
data centre rental business.
Net finance cost
The Group recorded net finance cost of RM1.3m (GBP0.2m*) as
compared to net finance income of RM0.3m (GBP0.05m*) as a result of
the interest incurred to the freeholder for the debt associated
with lease rental which is repayable pursuant to a debt settlement
agreement with the freeholder.
Taxation
The Group recorded a tax charge for the year in spite of
reporting a loss for the year mainly due to tax payable by a
profitable subsidiary which was not subject to group tax
relief.
Earnings per share
Basic and diluted loss per share ("LPS") was 21.63 sen (3.93p*)
compared to a LPS of 22.70 sen (4.12p*) in 2016. The weighted
average number of shares during the year used for basic and diluted
LPS calculation is 160,028,667 (2016: 160,028,667).
Dividends
The Board does not propose any payment of dividends in respect
of the current financial year.
Cash and treasury
Proforma*
2017 2016 2017 2016
RM'000 RM'000 GBP'000 GBP'000
Cash generated from / (used
in) operations before working
capital movements and net
finance income / cost (24,492) (23,559) (4,449) (4,279)
Working capital movements 36,138 7,500 6,564 1,362
Net finance cost / income 8,520 7,376 1,548 1,340
----------- ----------- ---------- ----------
20,166 (8,683) 3,663 (1,577)
Repayment of loans by the
owner of a development
project - 27,936 - 5,074
Capital expenditure (7,020) (4,083) (1,275) (744)
Net cash from other investing
activities 1,674 1,484 304 270
----------- ----------- ---------- ----------
Net cash inflow before
financing activities 14,820 16,654 2,692 3,023
Net cash from financing
activities (394) (2,264) (71) (410)
---------- ----------
Net cash inflow 14,426 14,390 2,621 2,613
----------- ----------- ---------- ----------
The Group recorded a higher net cash used by operations before
working capital movements and net finance cost of RM24.4m
(GBP4.4m*) and positive movement in working capital of RM36.1m
(GBP6.6m*) was mainly due to a decrease in total revenue as
explained in C above, whilst certain long overdue trade receivables
were collected during the year.
The gross trade receivables balance decreased from RM104.3m
(GBP18.9m*) as at 31 March 2016 to RM44.4m (GBP8.1m*) as at 31
March 2017.
Non-adjusting event after the financial year-end
On 28 September 2017, the Group entered into a Sale and Purchase
Agreement to dispose of its entire equity interest in CSF CX Sdn
Bhd ("CSF CX"), a wholly-owned subsidiary, for a cash consideration
of RM2.00 (GBP0.36) ("Conditional Disposal"). The Board expects
that the completion of the Conditional Disposal will improve the
Group's financial position, principally due to the elimination of
the net liabilities of CSF CX and the elimination of the Group's
obligations on the leases payable, and the return of cash deposits
pledged for banking facilities and rental deposits (approximately
up to RM6 million (GBP1.1 million*)) in connection with the CX2 and
CX5 data centres.
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 1 (vi) to the
Financial Statements below.
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 (v) to the
Financial Statements below.
Lee, King Loon
Chief Financial Officer
29 September 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2017
Proforma
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2017 2016 2017 2016
Note RM'000 RM'000 GBP'000 GBP'000
Revenue 82,420 83,987 14,971 15,256
Cost of sales (85,658) (85,516) (15,560) (15,533)
----------- ----------- ----------- -----------
Gross loss (3,238) (1,529) (589) (277)
Other operating income 1,940 105 352 19
(Loss) / gain on disposal
of other investment (11) 3 (2) 1
Administrative expenses (16,975) (19,388) (3,083) (3,522)
Bad debts written off - (51) - (9)
Net allowance for doubtful
debts 1,054 (30,050) 191 (5,458)
Reduction of contingent
consideration - 950 - 173
Impairment of tangible assets
reversal - 13,100 - 2,380
Net movement on onerous
leases (8,163) 10,950 (1,483) 1,989
Total operating expenses (24,084) (24,489) (4,375) (4,447)
Operating loss (25,393) (25,910) (4,614) (4,704)
Finance income 1,674 1,481 304 269
Net foreign exchange gain 737 291 134 53
----------- ----------- ----------- -----------
Interest payable on bank
loans, overdrafts and finance
lease (2,956) (1,207) (537) (219)
Unwinding of discounts on
provisions (7,238) (7,650) (1,315) (1,390)
----------- ----------- ----------- -----------
Finance costs (10,194) (8,857) (1,852) (1,609)
----------- ----------- ----------- -----------
Loss before tax (33,176) (32,995) (6,028) (5,991)
Tax (1,445) (3,331) (262) (605)
----------- ----------- ----------- -----------
Loss for the financial year (34,621) (36,326) (6,290) (6,596)
Other comprehensive income
Foreign currency translation (480) (363) (87) (66)
----------- ----------- ----------- -----------
Total comprehensive loss
for the financial year (35,101) (36,689) (6,377) (6,662)
=========== =========== =========== ===========
EPS
* Basic (Malaysian sen) (21.63) (22.70) (3.93)p (4.12)p
* Diluted (Malaysian sen) (21.63) (22.70) (3.93)p (4.12)p
All results derive from continuing operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2017
Proforma
As at As at As at As at
31 March 31 March 31 March 31 March
2017 2016 2017 2016
RM'000 RM'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 27,318 25,640 4,962 4,657
Interest in associate - - - -
Other Investments 20 155 4 28
Goodwill - - - -
Trade receivables 210 360 38 65
Deferred tax asset 137 - 25 -
27,685 26,155 5,029 4,750
---------- ---------- ---------- ----------
Current assets
Inventories 667 1,781 121 324
Trade and other receivables 39,209 64,503 7,122 11,717
Current tax assets 329 175 60 32
Restricted cash 14,056 14,055 2,553 2,553
Cash and cash equivalents 60,313 45,823 10,955 8,323
114,574 126,337 20,811 22,949
---------- ---------- ---------- ----------
Total assets 142,259 152,492 25,840 27,699
========== ========== ========== ==========
Current liabilities
Trade and other payables 42,134 44,338 7,654 8,054
Current tax liabilities - 854 - 155
Bank borrowings 1,260 1,164 229 211
Obligations under finance
leases 50 140 9 25
43,444 46,496 7,892 8,445
---------- ---------- ---------- ----------
Non-current liabilities
Obligations under finance
leases 100 165 18 30
Bank borrowings - 334 - 61
Trade and other payables 80,643 67,492 14,648 12,259
Deferred tax liabilities - 232 - 42
Onerous lease provision 73,300 57,900 13,314 10,517
---------- ---------- ---------- ----------
154,043 126,123 27,980 22,909
---------- ---------- ---------- ----------
Total liabilities 197,487 172,619 35,872 31,354
========== ========== ========== ==========
Net liabilities (55,228) (20,127) (10,032) (3,655)
========== ========== ========== ==========
Equity
Share capital 78,936 78,936 14,338 14,338
Share premium account 104,499 104,499 18,982 18,982
Shares held under Employee
Benefit Trust (2,300) (2,300) (418) (418)
Other reserve (66,153) (66,153) (12,016) (12,016)
Share option reserve - - - -
Translation reserve (1,246) (766) (226) (139)
Accumulated loss (168,964) (134,343) (30,692) (24,402)
---------- ---------- ---------- ----------
Total capital deficiency (55,228) (20,127) (10,032) (3,655)
========== ========== ========== ==========
CONSOLIDATED STATEMENT OF CASH FLOW
For the year ended 31 March 2017
Proforma Proforma
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2017 2016 2017 2016
RM'000 RM'000 GBP'000 GBP'000
Net cash from / (used in) operating
activities 20,166 (8,683) 3,663 (1,577)
----------- ----------- ------------- -------------
Investing activities
Interest received 1,674 1,481 304 269
Repayment of advances from
the owner of a development
project - 27,936 - 5,074
Additions to property, plant
and equipment (7,020) (4,083) (1,275) (744)
Proceeds from sale of other
investment - 3 - 1
Net cash (used in) / generated
from investing activities (5,346) 25,337 (971) 4,600
----------- ----------- ------------- -------------
Financing activities
Repayments of obligations under
finance leases (155) (140) (28) (25)
Increase in restricted cash (1) (960) - (174)
Repayment of borrowings (1,164) (1,164) (211) (211)
Borrowings from revolving line
of credit 926 - 168 -
Net cash used in financing
activities (394) (2,264) (71) (410)
----------- ----------- ------------- -------------
Net increase in cash and cash
equivalents 14,426 14,390 2,621 2,613
Cash and cash equivalents at
beginning of financial year 43,572 29,182 7,914 5,301
----------- ----------- ------------- -------------
Cash and cash equivalents at
end of financial year 57,998 43,572 10,535 7,914
=========== =========== ============= =============
CONSOLIDATED STATEMENT OF CASH FLOW (Cont'd)
For the year ended 31 March 2017
Proforma
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2017 2016 2017 2016
RM'000 RM'000 GBP'000 GBP'000
Loss for the financial year (34,621) (36,326) (6,290) (6,596)
Adjustments for:
Allowance for slow moving
inventories (101) 482 (18) 88
Allowance for diminution
of investment (1) (2) - -
Allowance for doubtful debts (1,054) 30,050 (191) 5,458
Bad debts written off - 51 - 9
Depreciation of property,
plant and equipment 5,342 4,989 970 906
Reduction of contingent consideration - (950) - (173)
Reversal of impairment of
tangible
assets - (13,100) - (2,380)
Interest expense 10,194 8,857 1,852 1,609
Interest income (1,674) (1,481) (304) (269)
Loss / (gain) on disposal
of other investment 11 (3) 2 (1)
Foreign currency translation (480) (363) (87) (66)
Net movement on onerous leases 8,163 (10,950) 1,483 (1,989)
Tax 1,445 3,331 262 605
----------- ----------- ----------- -----------
Operating cash outflows before
movements in working capital (12,777) (15,415) (2,321) (2,799)
Decrease/(Increase) in inventories 1,215 (209) 221 (38)
Decrease/(Increase) in receivables 26,621 (13,411) 4,836 (2,436)
Increase in payables 8,302 21,120 1,508 3,836
----------- ----------- ----------- -----------
Cash used in operations 23,361 (7,915) 4,244 (1,437)
Interest paid (373) (559) (68) (102)
Income taxes paid (2,822) (209) (513) (38)
----------- ----------- ----------- -----------
Net cash used in operating
activities 20,166 (8,683) 3,663 (1,577)
=========== =========== =========== ===========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Shares
Share premium held Other Share Translation Accumulated
Capital account under reserve option reserve loss Total
RM'000 RM'000 Employee RM'000 reserve RM'000 RM'000 RM'000
Benefit RM'000
Trust
RM'000
At 1 April 2015 78,936 104,499 (2,300) (66,153) 4,117 (403) (102,134) 16,562
Expiry of share
options - - - - (4,117) - 4,117 -
Total
comprehensive
loss for the
year - - - - - (182) (31,154) (31,336)
At 31 March
2016 78,936 104,499 (2,300) (66,153) 4,117 (766) (134,343) (20,127)
Total
comprehensive
loss for the
year - - - - - (480) (34,621) (35,101)
At 31 March
2017 78,936 104,499 (2,300) (66,153) - (1,246) (168,964) (55,228)
========== ========= ========== ========= ========= ============= ============= ===========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
PROFORMA
Share Shares Share
Proforma Share premium held Other option Translation Accumulated
Capital account under reserve reserve reserve loss Total
GBP'000 GBP'000 Employee GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Benefit
Trust
GBP'000
At 1 April 2015 14,338 18,982 (418) (12,016) 748 (73) (18,554) 3,007
Expiry of share
options - - - - (748) - 748 -
Total
comprehensive
loss for the
year - - - - - (66) (6,596) (6,662)
At 31 March
2016 14,338 18,982 (418) (12,016) - (139) (24,402) (3,655)
Total
comprehensive
loss for the
year - - - - - (87) (6,290) (6,377)
At 31 March
2017 14,338 18,982 (418) (12,016) - (226) (30,692) (10,032)
========== ========= ========== ========= ========== ============= ============= ==========
1. General information
The Preliminary Announcement and the final accounts of the Group
were approved by the Board of Directors on 29 September 2017. The
financial information set out in this Preliminary Announcement does
not constitute the Group's statutory accounts for the year ended 31
March 2017 but is derived from those accounts. The statutory
accounts for 2017 will be delivered to the Jersey Registrar of
Companies in September 2017. The auditors have reported on the 2017
accounts and their report was unqualified and did not draw
attention to any matters by way of emphasis.
(i) Basis of preparation
The consolidated financial statements of CSF Group plc, for the
year ended 31 March 2017 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 on or
before 30 September 2017.
(ii) Pro forma
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
2017 of RM5.5053: 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 accounting policies adopted are consistent with those of the
annual financial statements for the year ended 31 March 2017, as
described in those financial statements.
(iv) Forward-looking statements
Certain statements in these condensed consolidated 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 Group's business activities, together with the factors
likely to affect the future development, performance and position
are set out in the Chairman's Statement. The financial position of
the Group, its cash flows and liquidity positions are described in
the Chief Financial Officer's Review. 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 2017, the Group's cash and cash equivalents
excluding deposits held on behalf of the Employee Benefit Trust
stand at RM58.0 million.
The Directors have prepared financial projections, including
cash flows, for a period up to 31 March 2019. 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;
-- Due to changes in the data centre rental market, current
market rentals have declined. In this regard the group are
monitoring closely its cost and looking at ways to improve the
operation and procurement process including working closely with
its suppliers to reduce the overall cost;
-- 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.
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 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 2017. It should be noted
that if the Group were to continue in its current state with no
change to its customer base or further reduction in the freeholder
lease rentals, its cash reserves would be depleted by FY2020. The
Group has also considered the scenario in which the proposed
Conditional Disposal of CSF CX completes. Under this scenario, the
Group's operating losses and cash outflows are forecast to
significantly reduce.
(vi) Critical accounting judgement and key sources of estimation uncertainty
Critical judgements in applying the Group's accounting
policies
In the process of applying the Group's accounting policies, the
Directors must make estimates and assumptions that affect the
amounts recognised in the financial statements. Several of these
estimates and judgments are related to matters that are inherently
uncertain as they pertain to future events. These estimates and
judgments are evaluated at each reporting date and are based on
historical experience, internal controls, advice from external
experts and other factors, including expectations of future events
that are believed to be reasonable under the circumstances. The
resulting accounting estimates may vary from the actual results.
The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are as follows:
Revenue recognition
Revenue from the installation, integration and fit-out of
equipment is recognised over the period of the related fit-out
activity, which requires the Directors to consider the costs
incurred to the balance sheet date and estimate the costs to
completion of the contract. The estimation of costs to complete on
contracts is judgemental and requires an estimate of the cost of
materials, labour hours and cost, and time to complete. The
estimate of the total costs to complete is based on historical
experience and status of each project. The estimates are reviewed
regularly and revised as necessary. Any significant change in these
estimates will result in a change to the revenue recognition and
the margin for future periods.
Key sources of estimation uncertainty
Provision for bad and doubtful debts
The provision for bad and doubtful debts includes the assessment
of amounts receivable on an individual and collective basis. For
individual provisions, events and circumstances such as breaching
credit terms, evidence of the debtor experiencing financial
difficulties, and potentially the probability of the debtor
entering bankruptcy or financial reorganisation are considered.
Based on these indicators a judgment is made whether a provision is
required. In respect of a collective assessment, the estimation of
the future settlement profile of trade receivables is judgemental
and includes consideration of past experience in collecting
payments, an increase in the number of delayed payments past the
credit period as well as observable changes in the economic
conditions that correlate with default on receivables.
The Group made general allowance for doubtful debts pertaining
to trade receivables aged six months and above.
Recoverability of amounts owing from IDCB
Trade receivables includes an aggregate amount of RM29.3m due
from IDCB, the developer of the CX5 data centre. During the
financial year, the Group received RM3.0 million. The Group made a
100% provision for doubtful debts in the prior year as the balance
of trade receivables of RM29.3 million is expected to be collected
over a longer period of time.
Onerous lease assessment
The Group's business model is to lease data centres, and as such
the Group is 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. If this is not the
case, then the data centre lease rental contract could be
onerous.
In order to calculate onerous lease obligations the directors
are required to estimate the future tenancy profile of a data
centre, which is inherently judgemental as the unexpired terms of
the leases for nine years and the estimate may vary as a result of
changes in the utilisation and price of a data centre's space.
Impairment of property, plant and equipment
The Group assesses whether there are any indicators of
impairment for all non-financial assets at each reporting date.
Non-financial assets are tested for impairment when there are
indications that the carrying amounts may not be recoverable.
When value in use calculations are undertaken, the directors are
required to estimate the expected future cash flows from the assets
or cash generating unit and choose a suitable discount rate in
order to calculate the present value of those cash flow. The
estimate may vary depends on the market interest rate, utilisation
and price of the data centre space.
Deferred tax asset recognition
The Group recognises deferred tax assets to the extent that it
is probable that taxable profits will be available to utilise the
asset. At each balance sheet date, the Directors review the
forecast taxable profits of the Group to assess the recoverability
of the deferred tax asset. To the extent that it is no longer
probable that sufficient taxable profits will be available, the
carrying amount of the deferred tax asset is reduced.
2. Revenue recognition and contract accounting
Revenue represents amounts receivable for work carried out in
the rental of data centre space (including reimbursement for
electricity consumed by customers), design and development of data
centre facilities, the maintenance of data centres and imputed
interest on loans to data centre developers.
Revenue from contract works is recognised in the Consolidated
Statement of Comprehensive Income based on the stage of completion
which is determined based on the contract costs incurred for work
performed to date in proportion to the estimated total contract
costs.
Revenue on design and development activity is recognised over
the period of the activity and in accordance with the underlying
contract. Revenue is measured by reference to the fair value of
consideration received or receivable from customers. Cost
overspends on design and development are recognised as they arise
and cost under-spends recognised when it is known with reasonable
certainty, the final position of the relevant contract. Where
design and development projects are in progress and where sales
invoiced exceed the cost of work completed, the excess is shown as
deferred income, within other financial assets. When it is probable
that total fit-out costs will exceed contract revenue, the expected
loss is recognised as an expense immediately.
Income from support and maintenance agreements and the rental of
data centre space is recognised on a straight line basis over the
period of the related activity. Data centre space is rented out
under operating leases.
3. 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 2017 Data centre Design and development
rental Maintenance of data centre facilities Consolidated
RM'000 RM'000 RM'000 RM'000
Revenue 66,526 7,183 8,711 82,420
Cost of sales (77,043) (2,928) (5,687) (85,658)
------------ ------------ --------------------------- -------------
Gross profit / (loss) (10,517) 4,255 3,024 (3,238)
Other operating income 242 - 1,698 1,940
Administrative cost (10,024) (1,134) (658) (11,816)
Allowance for doubtful debts 1,027 - 27 1,054
Allowance for slowing stock - - 101 101
Allowance for diminution of investment - - 2 2
Unwinding of discounts on provision (7,238) - - (7,238)
Net movement on onerous leases (8,163) - - (8,163)
Segment depreciation (15) (11) (49) (75)
Other operating income 242 - 1,698 1,940
------------ ------------ --------------------------- -------------
Segment result (34,688) 3,110 4,145 (27,433)
Corporate cost (5,187)
Finance income 1,674
Loss on disposal of other investment (11)
Net foreign exchange loss 737
Finance costs (2,956)
Loss before tax (33,176)
Tax (1,445)
-------------
Loss for the financial year (34,621)
Other comprehensive income
Foreign currency translation (480)
-------------
Total comprehensive loss for
the financial year (35,101)
=============
Year ended 31 March 2016 Data centre Design and development
rental Maintenance of data centre facilities Consolidated
RM'000 RM'000 RM'000 RM'000
Revenue 63,959 8,579 11,449 83,987
Cost of sales (77,518) (2,733) (5,265) (85,516)
------------ ------------ --------------------------- -------------
Gross profit / (loss) (13,559) 5,846 6,184 (1,529)
Other operating income 65 - 40 105
Administrative cost (9,827) (1,300) (1,481) (12,608)
Allowance for doubtful debts (571) - (29,479) (30,050)
Allowance for slowing stock - - (482) (482)
Allowance for diminution of investment - - 2 2
Bad debts written off - - (165) (165)
Unwinding of discounts on provision (7,650) - - (7,650)
Net movement on onerous leases 10,950 - - 10,950
Segment depreciation (21) (16) (68) (105)
------------ ------------ --------------------------- -------------
Segment result (20,613) 4,530 (25,449) (41,532)
Non-trade bad debts written back 114
Reduction of contingent consideration 950
Corporate cost (6,195)
Finance income 1,481
Gain on disposal of other investment 3
Reversal of impairment loss 13,100
Net foreign exchange gain 291
Finance costs (1,207)
-------------
Loss before tax (32,995)
Tax (3,331)
-------------
Loss for the financial year (36,326)
Other comprehensive income
Foreign currency translation (363)
-------------
Total comprehensive loss for
the financial year (36,689)
=============
4. Onerous leases
As at As at
31 March 31 March
2017 2016
RM'000 RM'000
Movement in provision of onerous
leases
At start of financial year 57,900 61,200
Additional provision during the financial
year 24,250 26,063
Utilisation of provision (16,087) (37,013)
Unwinding of discount 7,237 7,650
At end of financial year 73,300 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 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 is nine years
with an option to extend by an additional 16 years.
5. 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
2017 2016
Net loss for the financial year
after taxation attributable to
members (RM'000) (34,621) (36,326)
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 the inclusion of potential
ordinary shares associated 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.
6. Dividend
The Board does not propose any payment of dividends in respect
of the current financial year.
7. Contingencies
The Group holds a number of guarantees with various banks in
respect of banking facilities as follows:
As at 31 As at
March 2017 31 March
2016
RM'000 RM'000
Bank guarantees 22,298 25,037
8. Non-adjusting event after the financial year-end
On 27 September 2017, the Group entered into a Sale and Purchase
Agreement to dispose of its entire equity interest in CSF CX Sdn
Bhd ("CSF CX"), a wholly-owned subsidiary, for a cash consideration
of RM2.00 ("Conditional Disposal"). The Board expects that the
completion of the Conditional Disposal will improve the Group's
financial position, principally due to the elimination of the net
liabilities of CSF CX and the elimination of the Group's
obligations on the leases payable, and the return of cash deposits
pledged for banking facilities and rental deposits (approximately
up to RM6 million (GBP1.1 million*)) in connection with the CX2 and
CX5 data centres.
- ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BRGDCSXDBGRI
(END) Dow Jones Newswires
September 29, 2017 02:01 ET (06:01 GMT)
Csf Group (LSE:CSFG)
Historical Stock Chart
Von Dez 2024 bis Jan 2025
Csf Group (LSE:CSFG)
Historical Stock Chart
Von Jan 2024 bis Jan 2025
