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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Csf Group | LSE:CSFG | London | Ordinary Share | JE00B61NN442 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.70 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2020 to Apr 2025
TIDMCSFG
RNS Number : 9898V
CSF Group PLC
27 July 2018
27 July 2018
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 audited full year results for the year ended 31 March 2018.
Financial highlights:
Hot Features
Premium
* Group revenue from continuing operations of RM23.9m
(GBP4.4m*) (FY2017: RM26.4m (GBP4.9m*))
* Profit before tax ("PBT") of RM113.9m (GBP21.1m*),
including gain on disposal of subsidiary, compared to
the loss before tax of RM33.2m (GBP6.1m*) in FY2017.
The PBT comprises loss before tax ("LBT") from
continuing operations of RM2.8m (GBP0.5m*) as
compared to PBT of RM5.3m (GBP1.0m*) in FY2017 and
PBT of RM115.8m (GBP21.4m*) from discontinued
operations as compared to LBT of RM39.9m (GBP7.4m*)
in FY2017
* LPS for continuing operations of 1.78 sen (0.33p*)
per share as compared to EPS 3.30 sen (0.61p*) per
share in FY2017 and EPS for discontinued operations
of 72.37 sen (13.38p*) as compared to LPS of 24.93
sen (4.61p*) in FY2017
* Closing unrestricted cash position as at 31 March
2018 of RM49.2m (GBP9.1m*) (FY2017: RM58.0m
(GBP10.7m*))
Operational highlights:
* The Group completed the transfer of its shareholdings
in CSF CX to its purchaser in exchange for the
consideration of RM2.00 (being approximately
GBP0.37*) on 1 November 2017. Control of CSF CX
passed to the purchaser at this date. The Share SPA
was conditional upon, inter alia, the receipt of
various regulatory consents. All outstanding
conditions were fulfilled by 8 May 2018
* 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, certain cash deposits lodged by the
Group for rental deposits in connection with the CX2
and CX5 data centres, amounting to RM9.1m (GBP1.7m*),
have been refunded to the Group.
The Company will make a further announcement in due course when
electronic copies of its audited annual report and accounts for
the year ended 31 March 2018 are made available from the Company's
website.
For further information, please contact:
CSF Group Phil Cartmell, Chairman +603 8311 9563 Allenby Capital (Nominated Adviser and Broker) Nick Naylor / Alex Brearley +44 (0) 20 3328 5656
CHAIRMAN'S STATEMENT
The Board is pleased to report the successful disposal (the "Disposal") during the period of CSF CX Sdn Bhd ("CSF CX"), the Group's loss making subsidiary and also the tenant and operator of the CX2 and CX5 data centres. Albeit for a nominal consideration, the Disposal has significantly reduced the Group's operating losses and cash burn rate, and improved the Group's financial position.
Following the completion of the Disposal, the Group has been able to focus on improving the operational efficiency of its remaining data centre (i.e. CX1), whilst identifying additional sources of revenue from CX1 and other business divisions.
The Group's monthly revenues are still insufficient to cover its monthly operating overheads, and this has been exacerbated by the intense competition and pricing pressure experienced by the maintenance and the design and development segments of the business. The Board also notes that significant capital expenditure will be required for the replacement of aging equipment at the CX1 data centre and will continue to work closely with management in the careful planning and implementation of the Group's capital expenditure budget.
The Board will continue to support the efforts of management in implementing its stated business strategies in 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 preserving the Group's financial resources.
The Board expects for the Group to be able to reduce its operating losses in the next financial year, following the completion of the Disposal, although on significantly decreased revenues.
Phil Cartmell
Chairman
27 July 2018
CHIEF EXECUTIVE OFFICER'S REVIEW
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 reported a profit for the financial year of RM113.0m (GBP20.9m*), which was mainly attributable to the recognition of a gain on disposal of CSF CX Sdn Bhd ("CSF CX") of RM132.6m (GBP24.5m*). On 28 September 2017, the Group entered into a sale and purchase agreement (the "Share SPA") to dispose of its entire equity interest in CSF CX (the "Disposal"), the tenant and operator of the CX2 and CX5 data centres, for a cash consideration of RM2.00 (approximately GBP0.37*). The Share SPA was conditional upon, inter alia, the receipt of various regulatory consents. The Group completed the transfer (the "Share Transfer") of its shareholdings in CSF CX to the purchaser in exchange for the consideration of RM2.00 (being approximately GBP0.37*) on 1 November 2017. Control of CSF CX passed to the purchaser at this date. All outstanding conditions were fulfilled by 8 May 2018.
The loss for the previous financial year of RM34.6m (GBP6.4m*) was mainly attributable to the operating loss of CSF CX.
The Group recorded a total gross profit margin of 1.0% in the current financial year as compared to a total gross loss margin of 3.9% in FY2017 mainly due to the cessation of the recognition of the gross losses of CSF CX with effect from 1 November 2017 (the date of completion of the Share Transfer).
The Group's closing cash position decreased from RM58.0m (GBP10.7m*) as at 31 March 2017 to RM49.2m (GBP9.1m*) as at the year-end mainly due to the utilisation of cash reserves to fund the working capital requirements of CSF CX up to the date of completion of the Share Transfer. However, the Group received the refund of cash deposits lodged by the Group for rental deposits in connection with CX2 and CX5 data centres amounting to RM9.1m (GBP1.7m*), on 31 May 2018.
Although the Group has been able to significantly reduce its recurring operating losses as a result of the Disposal, the Board is conscious that the Group's monthly revenues are still insufficient to cover its monthly operating overheads and that significant capital expenditure will be required for the replacement of aging equipment at the Group's remaining data centre, CX1. 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 37,500 square feet.
Following completion of the Disposal, the Group has continued to operate its maintenance and data centre design and development business. In addition, the Group also continued to market its data centre services in respect of its CX1 data centre.
Current Trading
The Board and management will continue to implement measures to reduce the burn rate of the Group's cash reserves. The Board will continue to ensure that there are no significant cash outlays other than the sums required to cover the Group's 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 view of the accumulated losses of the Group, the Board is not recommending the payment of a dividend.
Data Centre Rental
Following the completion of the disposal of CSF CX, the Group has approximately 37,500 sq ft of data centre space and approximately 1 MW of IT power capacity in Malaysia.
During the year, the Group successfully renegotiated a contract with an existing tenant at CX1. The Group continues to actively pursue new customers directly and is working closely with a network of resellers and business partners to identify additional sources of revenue from CX1 and other business divisions.
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 has now implemented cross-connect charges for the utilisation of network connectivity to/from and within the CX1 data centre.
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 this, management continues to pursue new contracts to enhance our recurring maintenance revenue streams and other revenues from design and fit-out projects.
Strategy
Our strategy remains clear and consistent, and involves focusing on achieving growth in sustainable revenues, while carefully implementing our capital expenditure plans to ensure that the Group's financial position is preserved. We will continue to invest in our employees - in terms of enhancing their technical knowledge and competency - and remain focused on improving the quality of our service to customers.
Michael Leong
Chief Executive Officer
27 July 2018
CHIEF FINANCIAL OFFICER'S REVIEW
Introduction
The Group incurred a net profit of RM113.0m (GBP20.9m*) for FY2018 as compared to a net loss of RM34.6m (GBP6.4m*) in FY2017. The basic loss per share ("LPS") for continuing operations amounted to 1.78 sen (0.33p*) per share as compared to earnings per share ("EPS") of 3.30 sen (0.61p*) per share in FY2017, whilst the EPS for discontinued operations amounted to 72.37 sen (13.38p*) as compared to a LPS of 24.93 sen (4.61p*) per share in FY2017.
The net profit for FY2018 was mainly attributable to the gain on the disposal of CSF CX amounting to RM132.6m (GBP24.5m*), a reversal of an overprovision for project costs of RM8.5m (GBP1.6m*) and a net decrease in a provision for onerous leases of RM3.1m (GBP0.6m*) as compared to a net increase of RM8.2m (GBP1.5m*) in FY2017, which was partly offset by RM32.7m (GBP6.0m*) of bad debts written off and a net increase in the allowance for doubtful debts of RM28.0m (GBP5.2m*) as compared to a net decrease of RM1.1m (GBP0.2m*) in FY2017.
The Group's closing cash position decreased from RM58.0m (GBP10.7m*) as at 31 March 2017 to RM49.2m (GBP9.1m*) as at the year-end. Based on the Group's unrestricted cash and bank balances at the financial year end of RM49.2m (GBP9.1m*), the restricted cash of RM2.1m (GBP0.4m*) and the net current assets balance of RM55.9m (GBP10.3m*) and taking into consideration the Group's financial projections, including cash flows, for the period up to 30 September 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*
2018 2017 2018 2017
RM'000 RM'000 GBP'000 GBP'000
Group revenue from continuing
operations 23,901 26,435 4,417 4,886
Group revenue from discontinued
operations 31,967 55,985 5,909 10,348
Total Group Revenue 55,868 82,420 10,326 15,234
CONTINUING OPERATIONS:
Gross profit 9,647 12,692 1,782 2,345
Other operating income 9,470 1,756 1,750 325
Gain on disposal of property,
plant and equipment 1,027 - 190 -
Gain/(Loss) on disposal
of other investment 41 (11) 8 (2)
Administrative expenses (18,748) (9,735) (3,465) (1,800)
Bad debts written off (32,707) - (6,045) -
Net reversal of allowance
for doubtful debts 28,503 (23) 5,268 (4)
Operating (loss)/profit
from continuing operations (2,767) 4,679 (512) 864
Finance income 1,450 1,353 268 250
Net foreign exchange (loss)/gain (608) 737 (112) 136
Finance costs (14) (41) (3) (7)
(Loss)/Profit before tax
of continuing operations (1,939) 6,728 (359) 1,243
Tax (907) (1,445) (167) (267)
(Loss)/Profit from continuing
operations (2,846) 5,283 (526) 976
DISCONTINUED OPERATIONS:
Gross loss (9,064) (15,930) (1,675) (2,944)
Other operating income 52 184 10 34
Administrative expenses (4,762) (7,240) (880) (1,338)
Net reversal of allowance
for doubtful debts (546) 1,077 (101) 199
Provision for onerous leases 3,140 (8,163) 580 (1,509)
Operating loss from discontinued
operations (11,180) (30,072) (2,066) (5,558)
Finance income 172 321 32 59
Gain on disposal of subsidiary 132,649 - 24,518
Finance costs (5,828) (10,153) (1,077) (1,877)
Profit/(Loss) from discontinued
operations 115,813 (39,904) 21,407 (7,376)
Profit/(Loss) for the financial
year 112,967 (34,621) 20,881 (6,400)
Gain/(Loss) on foreign currency
translation 382 (480) 70 (89)
Total comprehensive income/(loss)
for the financial year 113,349 (35,101) 20,951 (6,489)
Basic (LPS)/EPS for continuing (1.78
operations sen) 3.30 sen (0.33p) 0.61p
Basic EPS/(LPS) for discontinued 72.37 (24.93
operations sen sen) 13.38p (4.61p)
70.59 (21.63
Basic EPS/(LPS) sen sen) 13.05p (4.00p)
Weighted average number
of ordinary shares for basic
EPS ('000) 160,029 160,029 160,029 160,029
==================================== ========== =========== ========== ==========
Financial results (Continued)
Proforma*
2018 2017 2018 2017
RM'000 RM'000 GBP'000 GBP'000
KEY PERFORMANCE INDICATORS
Gross profit from continuing
operations 9,647 12,692 1,782 2,345
Gross loss from discontinued
operations (9,064) (15,930) (1,675) (2,944)
Gross profit/(loss) 583 (3,238) 107 (599)
Total Group Revenue 55,868 82,420 10,326 15,234
Gross profit/(loss) margin 1.0% (3.9%) 1.0% (3.9%)
Trade receivables turnover
(days) 34 330 34 330
Trade payables turnover (days) 10 60 10 60
Quick ratio 29.1 7.0 29.1 7.0
================================= ======== ========= ======== ========
Revenue
Proforma*
2018 2017 2018 2017
RM'000 RM'000 GBP'000 GBP'000
Data centre rental income
- Continuing operations 17,593 18,570 3,252 3,432
* Discontinued operations 29,630 47,956 5,477 8,864
------- ------- -------- --------
47,223 66,526 8,729 12,296
Maintenance income 5,217 7,183 964 1,328
Consultancy income 522 - 96 -
------- ------- -------- --------
52,962 73,709 9,789 13,624
Design and development of
data centre facilities income
* Continuing operations 569 683 105 126
* Discontinued operations 2,337 8,028 432 1,484
------- ------- -------- --------
2,906 8,711 537 1,610
------- ------- -------- --------
Total Group revenue 55,868 82,420 10,326 15,234
------- ------- -------- --------
Total revenue decreased from RM82.4m (GBP15.2m*) in FY2017 to RM55.9m (GBP10.3m*) in FY2018, mainly due to the cessation of recognition of the revenue (and costs) of CSF CX as a result of the completion of transfer of the Group's shareholdings in CSF CX on 1 November 2017 to the purchaser (the "Share Transfer") pursuant to the disposal of CSF CX (the "Disposal"). The decrease in data centre rental income attributable to the Disposal amounted to RM18.3m (GBP3.4m*). The decrease in maintenance income of RM2.0m (GBP0.4m*) was mainly attributable to the non-renewal of comprehensive maintenance contracts. The Group also recorded lower revenue from its design and development segment, due to its larger fit-out contracts having been completed during the previous financial year with no large contracts secured in the current year.
The consultancy income was contributed by CSF Capital Advisory Sdn Bhd, which has provided financial and non-financial consultancy services since April 2017. This company was dormant in FY2017.
Gross profit/(loss)
The Group recorded a total gross profit margin of 1.0% in the current financial year as compared to a total gross loss margin of 3.9% in FY2017, as tabulated below:
Proforma*
2018 2017 2018 2017
RM'000 RM'000 GBP'000 GBP'000
CONTINUING OPERATIONS:
Gross profit on data centre
rental 7,732 8,055 1,429 1,488
Gross profit on maintenance 2,702 4,255 499 786
Gross (loss)/profit on design
and development (889) 382 (164) 71
Gross profit on consultancy 102 - 18 -
-------- --------- -------- --------
Total gross profit from continuing
operations 9,647 12,692 1,782 2,345
-------- --------- -------- --------
DISCONTINUED OPERATIONS:
Gross loss on data centre
rental (9,594) (18,572) (1,773) (3,432)
Gross profit on design and
development 530 2,642 98 488
-------- --------- -------- --------
Total gross loss from discontinued
operations (9,064) (15,930) (1,675) (2,944)
-------- --------- -------- --------
Total gross profit/(loss) 583 (3,238) 107 (599)
Total revenue 55,868 82,420 10,326 15,234
Total gross profit/(loss)
margin 1.0% (3.9%) 1.0% (3.9%)
Loss from operations
The Group recorded a loss from operations from continuing operations of RM2.8m (GBP0.5m*) as compared to a profit from operations from continuing operations of RM4.7m (GBP0.9m*) in FY2017. The adverse variance of RM7.4m (GBP1.4m) is analysed below:
RM'000 GBP'000
Decrease in gross profit from continuing
operations (3,045) (563)
Increase
in
administrative
expenses (9,013) (1,665)
Increase
in
bad
debts
written
off,
net
of
reversal
of
allowance
for
doubtful
debts (4,181) (773)
Increase
in
other
operating
income 7,714 1,425
Gain
on
disposal
of
plant
and
equipment 1,027 190
Other
items 52 10
------------ ------------
(7,446) (1,376)
------------ ------------
The decrease in gross profit from continuing operations is explained in Gross Profit/(Loss) above.
The increase in administrative expenses was mainly due to the provision of one-off bonus payments to the executive management team of RM10.4m (GBP1.9m*), which was approved by the Board in recognition of the hard work, commitment and commendable efforts in substantially improving the financial position of the Company under the stewardship of the Board of Directors in respect of the successful completion of the disposal of CSF CX, further details of which were announced on 24 July 2018.
Loss from operations (Continued)
The increase in other operating income was mainly attributable to the accounting of the cash deposits lodged by the Group for rental deposits in connection with CX2 and CX5 data centres of RM9.1m (GBP1.7m*), refundable to the Group upon completion of the disposal of CSF CX.
In the current year, bad debts of RM32.7m (GBP6.0m*) were written off and the effect was partly offset by net reversal of allowance for doubtful debts of RM28.5m (GBP5.3m*). The bad debts written off mainly consist of trade receivables of RM29.3m (GBP5.4m*) that were due from Integrated DC Builders Sdn Bhd, which has been wound up during this financial year.
Taxation
The Group recorded a tax charge for the year in spite of reporting a loss for the year, which was mainly due to tax payable by a profitable subsidiary which was not subject to group tax relief.
Earnings per share
Basic and diluted earnings per share ("EPS") was 70.59 sen (13.05p*) as compared to a loss per share ("LPS") of 21.63 sen (4.00p*) in FY2017. The weighted average number of shares during the year used for basic and diluted LPS calculation is 160,028,667 (FY2017: 160,028,667).
Dividends
The Board does not propose any payment of dividends in respect of the current financial year.
Cash and treasury
Proforma*
2018 2017 2018 2017
RM'000 RM'000 GBP'000 GBP'000
Cash generated from/(used
in) operations before
working capital movements
and net finance income/cost (16,313) (24,492) (3,015) (4,529)
Working capital movements 6,913 36,138 1,277 6,681
Net finance cost 4,220 8,520 780 1,575
----------- ----------- ---------- ----------
(5,180) 20,166 (958) 3,727
Capital expenditure (3,939) (7,020) (728) (1,297)
Net cash (used in)/generated
from other investing activities (1,468) 1,674 (271) 309
----------- ----------- ---------- ----------
Net cash (outflow)/inflow
before financing activities (10,587) 14,820 (1,957) 2,739
Net cash generated from/(used
in) other financing activities 1,746 (394) 323 (73)
----------- ----------- ---------- ----------
Net cash (outflow)/inflow (8,841) 14,426 (1,634) 2,666
----------- ----------- ---------- ----------
The Group recorded a lower net cash used by operations before working capital movements and net finance cost of RM16.3m (GBP3.0m*) which was mainly due to the Disposal.
Cash and treasury (Continued)
The decrease in working capital movements from RM36.1m (GBP6.7m*) in FY2017 to RM6.9m (GBP1.3m*) in FY2018 was mainly due to the collection of a significant amount of overdue trade receivables in the previous financial year which did not recur in the current year. The decrease in net finance cost from RM8.5m (GBP1.6m*) in FY2017 to RM4.2m (GBP0.8m*) in FY 2018 was mainly due to the reduction in financing facilities attributable to the Disposal.
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
27 July 2018
* 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 (2018 and 2017) being translated from Ringgit Malaysia into pounds Sterling at the rate prevailing on 31 March 2018 of RM5.4102 : 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 PROFIT OR LOSS AND OTHER Comprehensive Income
Proforma Proforma
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2018 2017 2018 2017
Note RM'000 RM'000 GBP'000 GBP'000
Continuing operations:
Revenue 3 23,901 26,435 4,417 4,886
Cost of sales 3 (14,254) (13,743) (2,635) (2,541)
--------------- ----------- ----------- -----------
Gross profit 9,647 12,692 1,782 2,345
Other operating income 9,470 1,756 1,750 325
Gain on disposal of property,
plant and equipment 1,027 - 190 -
Gain/(Loss) on disposal of other
investment 41 (11) 8 (2)
Administrative expenses (18,748) (9,735) (3,465) (1,800)
Bad debts written off (32,707) - (6,045) -
Net reversal of allowance for
doubtful debts 28,503 (23) 5,268 (4)
Total operating expenses (22,952) (9,758) (4,242) (1,804)
Operating (loss)/profit (2,767) 4,679 (512) 864
Finance income 1,450 1,353 268 250
Net foreign exchange (loss)/gain (608) 737 (112) 136
Finance costs (14) (41) (3) (7)
--------------- ----------- ----------- -----------
(Loss)/Profit before tax (1,939) 6,728 (359) 1,243
Tax 5 (907) (1,445) (167) (267)
--------------- ----------- ----------- -----------
(Loss)/Profit from continuing
operations (2,846) 5,283 (526) 976
Discontinued operations:
Profit/(Loss) from discontinued
operations 4 115,813 (39,904) 21,407 (7,376)
--------------- ----------- ----------- -----------
Profit/(Loss) for the financial
year 112,967 (34,621) 20,881 (6,400)
Other comprehensive income
Gain/(Loss) on foreign currency
translation 382 (480) 70 (89)
--------------- ----------- ----------- -----------
Total comprehensive profit/(loss)
for the financial year 113,349 (35,101) 20,951 (6,489)
=============== =========== =========== ===========
(LPS)/EPS for continuing operations
* Basic (Malaysian sen) 6 (1.78) 3.30 (0.33)p 0.61p
* Diluted (Malaysian sen) 6 (1.78) 3.30 (0.33)p 0.61p
EPS/(LPS) for discontinued operations
* Basic (Malaysian sen) 6 72.37 (24.93) 13.38p (4.61)p
* Diluted (Malaysian sen) 6 72.37 (24.93) 13.38p (4.61)p
.
Consolidated Statement of financial position
Proforma Proforma
As at As at As at As at
31 March 31 March 31 March 31 March
2018 2017 2018 2017
RM'000 RM'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 3,991 27,318 738 5,049
Other Investments 9 20 2 4
Trade receivables 40 210 7 39
Deferred tax asset 161 137 30 25
4,201 27,685 777 5,117
---------- ----------
Current assets
Inventories 277 667 51 123
Trade and other receivables 17,698 39,209 3,271 7,247
Current tax assets 1,341 329 248 61
Restricted cash 2,130 14,056 394 2,598
Cash and cash equivalents 49,184 60,313 9,091 11,148
70,630 114,574 13,055 21,177
---------- ----------
Total assets 74,831 142,259 13,832 26,294
========== ========== ========== ==========
Current liabilities
Trade and other payables 14,403 42,134 2,662 7,788
Bank borrowings 339 1,260 63 233
Obligations under finance
leases - 50 - 9
14,742 43,444 2,725 8,030
---------- ----------
Non-current liabilities
Obligations under finance
leases - 100 - 18
Trade and other payables 1,968 80,643 364 14,906
Onerous lease provision - 73,300 - 13,548
---------- ---------- ---------- ----------
1,968 154,043 364 28,472
---------- ---------- ---------- ----------
Total liabilities 16,710 197,487 3,089 36,502
========== ========== ========== ==========
Net assets/(liabilities) 58,121 (55,228) 10,743 (10,208)
========== ========== ========== ==========
Equity
Share capital 78,936 78,936 14,590 14,590
Share premium account 104,499 104,499 19,315 19,315
Shares held under Employee
Benefit Trust (2,300) (2,300) (425) (425)
Other reserve (66,153) (66,153) (12,227) (12,227)
Translation reserve (864) (1,246) (160) (230)
Accumulated loss (55,997) (168,964) (10,350) (31,231)
---------- ---------- ---------- ----------
Total surplus/(capital
deficiency) 58,121 (55,228) 10,743 (10,208)
========== ========== ========== ==========
CONSOLIDATED STATEMENT OF CASH FLOW
Proforma Proforma
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2018 2017 2018 2017
RM'000 RM'000 GBP'000 GBP'000
Net cash (used in)/from operating
activities (5,180) 20,166 (958) 3,727
----------- ----------- ----------- -----------
Investing activities
Interest received 1,622 1,674 300 309
Additions to property, plant
and equipment (3,939) (7,020) (728) (1,297)
Proceeds from sale of property,
plant and equipment 500 - 92 -
Disposal of subsidiary (3,590) - (663) -
Net cash used in investing
activities (5,407) (5,346) (999) (988)
----------- ----------- ----------- -----------
Financing activities
Repayments of obligations under
finance leases (29) (155) (5) (29)
Decrease/(Increase) in restricted
cash 2,696 (1) 498 -
Repayment of borrowings (334) (1,164) (62) (215)
(Repayment)/Borrowings from
revolving line of credit (587) 926 (108) 171
Net cash from/(used in) financing
activities 1,746 (394) 323 (73)
----------- ----------- ----------- -----------
Net (decrease)/increase in
cash and cash equivalents (8,841) 14,426 (1,634) 2,666
Cash and cash equivalents at
beginning of financial year 57,998 43,572 10,720 8,054
----------- ----------- ----------- -----------
Cash and cash equivalents at
end of financial year 49,157 57,998 9,086 10,720
=========== =========== =========== ===========
CONSOLIDATED STATEMENT OF CASH FLOW (Continued)
Proforma Proforma
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2018 2017 2018 2017
RM'000 RM'000 GBP'000 GBP'000
Profit/(Loss) for the financial
year 112,967 (34,621) 20,881 (6,400)
Adjustments for:
Increase/(Decrease) in allowance
for slow moving inventories 132 (101) 24 (19)
Increase/(Decrease) in allowance
for diminution of investment 11 (1) 2 -
Decrease in allowance for
doubtful debts (27,957) (1,054) (5,167) (195)
Bad debts written off 32,707 - 6,045 -
Depreciation of property,
plant and equipment 3,475 5,342 643 986
Interest expense 5,842 10,194 1,080 1,884
Interest income (1,622) (1,674) (300) (309)
(Gain)/Loss on disposal of
other investment (41) 11 (8) 2
Gain on disposal of subsidiary (132,649) - (24,518) -
Gain on disposal of property,
plant and equipment (1,027) - (190) -
Gain/(Loss) on foreign currency
translation 382 (480) 70 (89)
Net movement on onerous leases (3,140) 8,163 (580) 1,509
Tax 907 1,445 167 267
----------- ----------- ----------- -----------
Operating cash outflows before
movements in working capital (10,013) (12,777) (1,851) (2,364)
Decrease in inventories 258 1,215 47 225
(Increase)/Decrease in receivables (24,042) 26,621 (4,444) 4,921
Increase in payables 30,697 8,302 5,674 1,535
----------- ----------- ----------- -----------
Cash (used in)/generated
by operations (3,100) 23,361 (574) 4,317
Interest paid (137) (373) (25) (69)
Income taxes paid (1,943) (2,822) (359) (521)
----------- ----------- ----------- -----------
Net cash (used in)/generated
by operating activities (5,180) 20,166 (958) 3,727
=========== =========== =========== ===========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Shares held
Share premium under Other Translation Accumulated
Capital account Employee reserve reserve loss Total
RM'000 RM'000 Benefit RM'000 RM'000 RM'000 RM'000
Trust
RM'000
At 1 April 2016 78,936 104,499 (2,300) (66,153) (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)
Total
comprehensive
income for the
year - - - - 382 112,967 113,349
At 31 March
2018 78,936 104,499 (2,300) (66,153) (864) (55,997) 58,121
========== ============= ============= ============= ============= ============= ===========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued)
Share Shares held
Share premium under Other Translation Accumulated
Proforma Capital account Employee reserve reserve loss Total
GBP'000 GBP'000 Benefit GBP'000 GBP'000 GBP'000 GBP'000
Trust
GBP'000
At 1 April 2016 14,590 19,315 (425) (12,227) (141) (24,831) (3,719)
Total
comprehensive
loss for the
year - - - - (89) (6,400) (6,489)
At 31 March
2017 14,590 19,315 (425) (12,227) (230) (31,231) (10,208)
Total
comprehensive
income for the
year - - - - 70 20,881 20,951
At 31 March
2018 14,590 19,315 (425) (12,227) (160) (10,350) 10,743
========== ============= ============= ============= ============= ============== ==========
1. General information
The Preliminary Announcement and the final accounts of the Group were approved by the Board of Directors on 27 July 2018. The financial information set out in this Preliminary Announcement does not constitute the Group's statutory accounts for the year ended 31 March 2018 but is derived from those accounts. The statutory accounts for 2018 will be delivered to the Jersey Registrar of Companies in August 2018. The auditors have reported on the 2018 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 2018 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 2018.
(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 (2018 & 2017) being translated from Malaysian Ringgits into pounds Sterling at the rate prevailing on 31 March 2018 of RM5.4102 : 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 2018, 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 2018, the Group's cash and cash equivalents excluding deposits held on behalf of the Employee Benefit Trust stand at RM49.2 million.
The Directors have prepared financial projections, including cash flows, for a period up to 30 September 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 disposal of CSF CX Sdn Bhd ("CSF CX") has improved the Group's financial position due to the elimination of the net liabilities of CSF CX and the elimination of the Group's obligations on the lease payable;
-- The return of rental deposits in connection with the CX2 and CX5 data centres, amounting to RM9.07 million on 31 May 2018;
-- 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;
-- 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, 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; and
-- The funding requirements of existing and proposed new ventures and/or projects.
Given prevailing market conditions, 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.
(v) Going concern (Continued)
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 2018.
(vi) Critical accounting judgement and key sources of estimation uncertainty
In the application of the Group's accounting policies, which are described in note 3, the directors are required to make judgements (other than those involving estimations) that have a significant impact on the amounts recognised and to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Critical judgements in applying the Group's accounting policies
The directors have not made any critical judgements in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in financial statements.
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 judgement 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 an allowance for doubtful debts pertaining to trade receivables aged six months and above.
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 statement of financial position 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 for carry forward tax losses, the carrying amount of the deferred tax asset is not recognised.
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. REPORTING SEGMENTS
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), the design and development of data centre facilities, and consultancy services.
Year ended 31 March Data centre Design and development
2018 rental Maintenance of data centre facilities Consultancy Consolidated
RM'000 RM'000 RM'000 RM'000 RM'000
Revenue 17,593 5,217 569 522 23,901
Cost of sales (9,861) (2,515) (1,458) (420) (14,254)
------------ ------------ --------------------------- ------------ -------------
Gross profit/(loss) 7,732 2,702 (889) 102 9,647
Other operating income 265 - 9,205 - 9,470
Administrative cost (3,951) (93) 106 - (3,938)
Net allowance for doubtful
debts (1,025) (3,179) 32,707 - 28,503
Allowance for slow moving
inventories - (132) - - (132)
Allowance for diminution of
investment - (11) - - (11)
Bad debts written off - - (32,707) - (32,707)
Gain on disposal of property,
plant and equipment - 500 - - 500
Realised gain on disposal of
property, plant and equipment - 527 - - 527
Segment depreciation (13) (9) (42) - (64)
------------ ------------ --------------------------- ------------ -------------
Segment result 3,008 305 8,380 102 11,795
Corporate cost (14,603)
Finance income 1,450
Gain on disposal of other
investment 41
Net foreign exchange loss (608)
Finance costs (14)
-------------
Loss before tax (1,939)
Tax (907)
-------------
Loss from continuing operations (2,846)
Profit from discontinued
operations 115,813
Profit for the financial year 112,967
Other comprehensive income
Gain on foreign currency
translation 382
Total comprehensive income for
the financial year 113,349
=============
3. REPORTING SEGMENTS (Continued)
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 18,570 7,183 683 26,435
Cost of sales (10,514) (2,928) (301) (13,743)
------------ ------------ --------------------------- -------------
Gross profit 8,056 4,255 382 12,692
Other operating income 58 - 1,698 1,756
Administrative cost (2,784) (1,135) (657) (4,576)
Net allowance for doubtful debts (78) 55 - (23)
Allowance for slow moving inventories - - 101 101
Allowance for diminution of investment - - 2 2
Segment depreciation (15) (11) (49) (75)
------------ ------------ --------------------------- -------------
Segment result 5,237 3,163 1,477 9,877
Corporate cost (5,187)
Finance income 1,353
Loss on disposal of other investment (11)
Net foreign exchange gain 737
Finance costs (41)
-------------
Profit before tax 6,728
Tax (1,445)
-------------
Profit from continuing operations 5,283
Loss from discontinued operations (39,904)
Loss for the financial year (34,621)
Other comprehensive income
Loss on foreign currency translation (480)
Total comprehensive loss for
the financial year (35,101)
=============
4. GAIN ON DISPOSAL OF SUBSIDIARY
Discontinued operations
On 28 September 2017, the group entered into a Sale and Purchase Agreement to dispose of its entire equity in CSF CX Sdn Bhd ("CSF CX"), a wholly-owned subsidiary, for a cash consideration of RM2.00. The disposal was completed on 1 November 2017, on which date control of CSF CX passed to the acquirer.
The results of the discontinued operations, which have been included in the consolidated statement of profit or loss and other comprehensive income, were as follows:
Period ended Year ended
31 October 31 March
2017 2017
RM'000 RM'000
Revenue 31,967 55,985
Expenses (48,803) (95,889)
Loss before tax (16,836) (39,904)
Gain on disposal of discontinued operations 132,649 -
Net gain attributable to discontinued operations
(attributable to owners of the Company) 115,813 (39,904)
============= ===========
During the year, CSF CX used RM2.6 million, RM1.3 million and RM0.4 million (2017: RM83.5 million, RM6.1 million and RM1.7 million) in operating activities, investing activities and financing activities respectively.
A gain of RM132.6 million arose on the disposal of CSF CX, being the difference between the proceeds of disposal and the carrying amount of the subsidiary's net liabilities.
5. tax
Year ended Year ended
31 March 31 March
2018 2017
RM'000 RM'000
Tax on current financial year 525 1,796
Tax in respect of prior financial years 406 18
----------- -----------
Total current tax 931 1,814
Deferred tax liability (24) (137)
Deferred tax asset - (232)
----------- -----------
Total tax charge 907 1,445
=========== ===========
Malaysian corporation tax is calculated for the year ended 31 March 2018 at a rate of 24% (2017: 24%).
The tax charge for the financial year can be reconciled to the loss in the Consolidated Statement of Comprehensive Income as follows:-
Year ended Year ended
31 March 31 March
2018 2017
RM'000 RM'000
Profit before tax 130,711 6,728
Malaysian corporation tax rate 24% 24%
Tax at the Malaysian corporate tax rate 31,371 1,615
Tax effect of:
Expenses that are not deductible in determining
taxable profit (28,880) 228
Income that is not taxable in determining
taxable profit (460) (365)
Realisation of deferred tax not previously
recognised - 14
Deferred tax assets not recognised (1,535) 304
Over provision in prior year
406 18
* Current tax 5 (369)
* Deferred tax
----------- -----------
907 1,445
=========== ===========
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
2018 2017
Net profit from continuing operations (RM'000) 129,803 5,283
Net loss from discontinued operations (RM'000) (16,836) (39,904)
----------- -----------
Net profit/(loss) for the financial year
after taxation attributable to members
(RM'000) 112,967 (34,621)
=========== ===========
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 in issue.
7. DIVID
The Board does not propose any payment of dividends in respect of the current financial year.
8. CONTINGENCIES
The Group holds a number of guarantees with various banks in respect of banking facilities as follows:
As at As at
31 March 31 March
2018 2017
RM'000 RM'000
Banking guarantees 905 22,298
==== =======
-ENDS-
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR GRGDRISDBGIR
(END) Dow Jones Newswires
July 27, 2018 03:54 ET (07:54 GMT)
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