Final Results

RNS Number : 6531P

CSF Group PLC

21 July 2010

 

Embargoed until 7am 21 July 2010

 

 

CSF Group plc

("CSF" or "the Group")

 

 

FINAL RESULTS

For the Year Ended 31 March 2010

 

CSF Group (AIM: CSFG) is a leading provider of data centre facilities and services in South East Asia and the largest provider of data centre services in Malaysia. Today, the Company is announcing its first set of results since its admission to AIM on 22 March 2010.  

 

HIGHLIGHTS:

 

·; Revenue higher at RM64.2m (£13.0m*) and gain on sale and leaseback of RM38.0m (£7.7m*) - significantly ahead of market expectations

·; Profit before tax increased significantly to RM44.5m (£9.0m*) (FY09: RM0.5m or £0.1m*) - significantly ahead of market expectations

·; Rental revenue increased 133% to RM32.1m (£6.5m*)

·; Development of CX5, with earthworks already in progress and physical construction to commence in September 2010 - will become Malaysia's largest data centre

·; First contract awarded in Vietnam

·; Established Technical Knowledge Bank and implemented KPI targets to ensure future excellence

 

* The translation of the financial statements into pro forma balances in pounds Sterling is included solely for convenience. The pro forma balances in pounds Sterling are stated, as a matter of arithmetical computation only, on the basis of all balances being translated from Malaysian Ringgits into pounds Sterling at the rate prevailing on 31 March 2010 of RM4.93 : £1.00. 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.

 

 

Dato' Ting Heng Peng, Chairman of CSF Group, commented, "The Board is pleased to report a year of notable successes. Revenue grew and profitability improved as the recurring data centre rental revenue strengthened. With the completion of the placing and admission to AIM, the Group has made good progress in positioning itself to capitalise on future business opportunities in the local and regional fronts."

 

Adrian Yong, CEO of CSF Group, said, "The business has made steady progress since flotation and, looking forward, we are confident that we will emerge as a leader in the South East Asian data centre market."

 

For further information:

 

CSF Group +603 8318 1313

Adrian Yong, Chief Executive

 

Leander (Financial PR) +44 (0)7795 168 157

Christian Taylor-Wilkinson

 

Cenkos Securities (Nominated Adviser and Broker) +44 (0)20 7397 8900

Ian Soanes or Elizabeth Bowman

CHAIRMAN'S STATEMENT

 

The Board is pleased to report strong results for the CSF Group ("Group") for 2010. Group revenue grew by 15% from RM55.9m (£11.3m*) in 2009 to RM64.2m (£13.0m*) in 2010 and profit before tax increased significantly from RM0.5m (£0.1m*) in 2009 to RM44.5m (£9.0m*) mainly due to the gain on sale and leaseback of the CX2 data centre of RM38.0m (£7.7m*). The Group's data centre business posted a 133% increase in rental revenue from RM13.7m (£2.8m*) in 2009 to RM32.1m (£6.5m*) in 2010 as a result of the commissioning of the CX2 data centre in January 2009. The revenue from the design, fit-out and maintenance of data centres decreased by RM10.1m (£2.1m*) from RM42.2m (£8.6m) in 2009 to RM32.1m (£6.5m) in 2010 as the Group moved away from project-based, non-recurring revenues to focus on building a business based on recurring rental revenue. Overall, the Group is in a stronger position with the data centre rental business driving revenue and profit growth.

 

The Group had a number of notable successes in 2010, including the successful placement raising gross proceeds of £28m for the Group in conjunction with the admission of the Group onto AIM. The proceeds from the placement enable the Group to expand the capacity of its data centres and hence grow the recurring rental revenue stream. Notwithstanding the strategy of growing its data centre rental business, the Group has continued to develop its design and fit-out division by keeping up to date with knowledge of the latest data centre infrastructure technology and designs. The directors intend to continue to undertake projects to fit-out data centres for third parties. Such projects are expected to continue to generate recurring revenues in the form of after-sale maintenance services on the equipment supplied and installed by the Group.

 

Since the year-end, the Group has been able to take steps towards expanding its data centre rental business through its role in the development of CX5 whilst continuing to secure tenants for the remaining data centre space at CX2.

 

The Group has also made an in-road into the Vietnamese data centre market following the awarding of a contract for the supply and installation of chiller equipment and accessories at Viettel IDC's data centre at Song Than, Binh Duong Province, Vietnam.

 

The management team and other employees of the Group continue to work towards the common vision of the Group, that is to become the region's leading and trusted solution provider in all aspects of data centre infrastructure service, and to enhance delivery of the Group's products and services to customers in terms of quality, reliability and timeliness.

 

In summary, the board is very pleased that the Group has made good progress in positioning itself to capitalise on future business opportunities in the local and regional fronts.

 

 

CHIEF EXECUTIVE'S REVIEW

 

Introduction

 

The Group completed its initial public offering and was admitted to the AIM market of the London Stock Exchange on 22 March 2010, including the successful placement of 50,909,091 new Ordinary Shares at a price of 55 pence per share ("IPO Price") to raise gross proceeds of £28m for the Group.

We will continue to implement the strategies that we believe will strengthen and consolidate our position as a leading data centre services and solutions provider in the South East Asian region. Our strategies are to:

 

·; Enhance the Group's position as a provider of a full range of high quality data centre infrastructure solutions and services;

 

·; Increase the Group's long-term, committed income by expanding our data centre portfolio including sourcing sites which allow for scalability;

 

·; Expand into countries such as Vietnam, Thailand and Indonesia, which are all considered to be supply-constrained markets; and

 

·; Build a regionally recognised brand.

 

While focusing on the implementation of our existing business plans, we are mindful of the requirement to formulate new strategies and form new business alliances in order to stay ahead of our competitors.

 

With our firm commitment to implement our business strategies and to provide quality data centres and services to our customers, we are in a position to lead the South East Asian Data Centre market.

 

 

New Data Centre Projects

 

The Group has embarked on the development of a 201,000 sq ft data centre in Cyberjaya, Malaysia, known as CX5. CX5 will have a higher technical specification that the existing CX data centres, in particular higher power density. The Group is working with two other parties, to develop the new facility. Pursuant to the Group's agreement with the two parties, one party will be responsible for procuring the financing of the development of CX5 whilst the other party will own the data centre upon completion and lease the facility to the Group. The Group's principal role is to act as a contractor to project manage the design and construction of the facility and it is the intention that the Group will lease and manage the facility upon completion. The Group's design and fit-out division was recently awarded a contract to fit-out the core infrastructural equipment for CX5.

 

The development plans for CX5 were approved by the relevant authorities in April 2010. Earthworks are already in progress and the physical construction works are scheduled to commence in September 2010. We expect to be on target to complete the construction and fit-out of Block A of CX5 in late calendar year 2011.

 

CX5 will comprise 3 blocks of 5-storey buildings, with a total gross floor area of approximately 580,000 sq ft and approximately 201,000 sq ft of net data centre space together with critical power infrastructure and associated cooling. CX5 shall be constructed together with the critical power infrastructure and associated cooling in 3 phases as follows:

 

·; Phase 1 - the construction of Block A, Block B and Block C together with fit-out of critical power infrastructure and associated cooling for Block A;

 

·; Phase 2 - the fit-out of critical power infrastructure and associated cooling for Block B; and

 

·; Phase 3 - the fit-out of critical power infrastructure and associated cooling for Block C.

 

A tenant has already been secured for the entire Block A and we have started to market to several sizeable and reputable companies for the tenancy of Block B. We will shortly start marketing efforts for Block C (expected completion in 2013).

 

As in the case of our existing data centres, namely CX1, CX2 and CX3, we believe that CX5 will also prove attractive to large Malaysian and international companies, and we hope to secure a similar profile of major tenants for CX5.

 

The Group is in discussion with its business partners in Vietnam to participate in the development of a 3,500 sq ft data centre in Hanoi, Vietnam by providing expertise in data centre design and project management. The data centre, expected to be commissioned by the end of financial year 2011, will be the first "CSF" branded data centre in Vietnam and we believe that this data centre will showcase our capabilities and propel us to the forefront of the data centre industry in the aforesaid country.

 

We will continue to work with our business partners in Vietnam, Thailand and Indonesia to develop high quality data centres in these countries.

 

 

Design, Fit-out and Maintenance of Data Centre Facilities

 

The Group has continued to strengthen its design and fit-out division by keeping up to date with the latest data centre infrastructure technology and designs. A combination of our past experience and our evolving knowledge of data centre infrastructure technology is expected to be manifested in the visual and technological enhancements of CX5 as compared to our earlier data centres.

 

The Group's design and fit-out division was recently awarded a contract by Viettel-CHT Company Ltd ("Viettel IDC"), a joint venture between two leading mobile operators in Vietnam and Taiwan, for the supply and installation of chiller equipment and accessories at Viettel IDC's data centre at Song Than, Binh Duong Province, Vietnam.

 

The Group has also received a number of inquiries from potential customers who would like to develop their in-house data centres and we are working towards securing these projects. Undertaking projects to fit-out data centres for third parties are expected to generate recurring revenues in the form of after-sale maintenance services on the equipment supplied and installed by the Group.

 

The Group's design and fit-out division is currently assessing new equipment vendors and negotiating distribution rights. The aforementioned strategy broadens the range of products that we are able to offer to customers, and this would in turn enhance our competitiveness and increase our market share.

 

 

 

Data Centre Rental

 

The Group currently has 205,000 sq ft of net data centre space out of which approximately 75% is tenanted. The Group is in negotiation with several parties to rent the remaining data centre space by December 2010. The Group's data centre rental revenue continues to grow in line with the Director's expectations.

 

With the completion of CX5, the data centre space of the Group is expected to increase to 406,000 sq ft. As CX5 is expected to be of higher power density compared to the existing data centres operated by the Group, the data centre rental revenue contribution from CX5 is expected to be significant.

 

 

Recent Initiatives

 

Development of Technical Knowledge Bank

We realise the importance of keeping abreast of the latest developments in data centre infrastructure technology and have recently implemented formal procedures to develop a Technological Knowledge Bank that would ultimately enhance the knowledge of all personnel of the Group's design and fit-out division and also the data centre rental division while ensuring that such knowledge is properly recorded, retained and updated regularly.

 

Key Performance Indicators

We have also recently implemented key performance indicators ("KPI's") that would assist us in measuring the operational and financial results of our various business divisions. These KPI's, which include certain key financial and operational ratios as discussed in the Chief Financial Officer's report have been systematically communicated to employees throughout the organisation and would serve to ensure that all employees work towards achieving our common objectives.

 

 

Strategy

 

Our strategy remains a clear and consistent focus on achieving growth in profitability and increasing our sustainable revenues, while investing in the longer-term core assets of the business - our expertise, our employees and our customers. We will continue to recognise the importance of building a strategic alliance with our suppliers, business partners and investors.

 

We will continue to pursue our plans to expand our business to Vietnam, Thailand and Indonesia, capitalising on the significant opportunities that these markets offer and will endeavour to develop data centres at locations that permit scalability in terms of space and power. We will also continue to implement our current business strategies while formulating new initiatives to expedite the growth of our presence in the aforementioned countries. Our medium to long-term goal is to establish an interconnected and integrated hub of data centres strategically located across South East Asia.

 

We believe that increasing internet penetration and the enhancement of information and communications technology will remain the top priority of most governments in this region and being a leader in this region would make us the first choice provider of data centre services and solutions.

 

The enhancement in global connectivity and rising costs of real estate may give rise to an increasing trend of multinational corporations developing new data centres in the South East Asian region or even relocating existing data centres to this region. Being at the forefront of the data centre industry in this region, we are well poised to benefit from this trend.

 

 

 

 

CHIEF FINANCIAL OFFICER'S REVIEW

 

Introduction

 

The Group has achieved a number of milestones this year, the most significant one being the completion of its initial public offering and admission to the AIM market on 22 March 2010.

 

The Group's profit from operations increased to RM47.0m (£9.5m*) from RM5.3m (£1.1m*) in 2009.

 

The Group recorded basic earnings per share ("EPS") of 35.65 sen (7.23p*) as compared to a loss per share of 1.94 sen (0.40p*) in 2009. The profit from operations of the current financial year includes a gain from the sale (and leaseback) of a data centre of RM38.0m (£7.7m*), a charge for equity settled listing related expenses of RM7.0m (£1.4m*) and a gain of RM2.5m (£0.5m) relating to the waiver of non-trade debt.

 

 

Financial results

 

The financial results of the Group are summarised below:

 

 

			Proforma*
Year ended 31 March	2010 RM'000	2009 RM'000	2010 £'000	2009 £'000
Data centre rental income	32,061	13,739	6,503	2,787
Design and fit-out of data centre facilities	32,131	42,215	6,518	8,563
Total Group Revenue	64,192	55,954	13,021	11,350
Gross Profit	33,539	13,304	6,803	2,699
Gain on sale of data centre	38,048	-	7,718	-
Share-based payment	(7,000)	-	(1,420)	-
Operating profit	46,967	5,343	9,527	1,084
Net finance costs	(4,925)	(4,861)	(999)	(986)
Other gain	2,500	-	507	-
Profit Before Tax	44,542	482	9,035	98
Tax	(5,150)	(2,596)	(1,045)	(527)
Profit After Tax	39,392	(2,114)	7,990	(429)
Basic EPS	35.65 aen	(1.94) aen	7.23 p	(0.39) p

 

 

  

Revenue

 

The Group recorded total revenue of RM64.2m (£13.0m*), an increase of RM8.2m (£1.7m*). This was mainly attributable to an increase in data centre rental income following the commissioning of the CX2 data centre in January 2009. The effect of the increase in data centre rental income was partially offset by the decrease in revenue derived from design and fit-out of data centre facilities as more resources from this segment were shifted towards enhancing the data centre facilities that are directly managed and operated by the Group, namely CX1, CX2 and CX3.

 

The Group continued to focus on expanding its customer base by enhancing the quality of the in-house data centre space and also by increasing efforts in marketing data centre services and solutions in order to secure new projects to fit-out data centres for third parties. Subsequent to 31 March 2010, the Group commenced the development of CX5 and the project continues to progress in line with the Directors' expectations.

 

 

Gross profit margin

 

Gross margin improved to 52.2% (2009: 23.8%) mainly due to the shift in revenue mix towards data centre rental which generates a relatively higher gross margin. Data centre rental revenue accounted for 49.9% (2009: 24.6%) of total revenue for the year.

 

 

Operating profit

 

Operating profit increased to RM47.0m (£9.5m*) from RM5.3m (£1.1m*) in 2009 mainly due to the profit recognised from the sale (and leaseback) of the CX2 data centre during the year amounting to RM38.0m (£7.7m*). Excluding the effects of the profit recognised from the sale and leaseback, the margin on operating profit increased to 13.9% from 9.5% in 2009 as a result of increase in data centre rental income and gross margins.

 

Excluding the costs of electricity consumed at the Group's data centre facilities, which are substantially reimbursable by customers, administrative expenses increased to RM18.2m (£3.7m*) from RM6.9m (£1.4m*) in 2009 mainly due to the commissioning of CX2 in January 2009 which gave rise to additional administrative costs. Other operating income, comprising amounts reimbursed by customers for electricity consumed, increased to RM7.2m (£1.5m*) from RM2.6m (£0.5m*) in 2009 due to the aforementioned commissioning of CX2 in January 2009.

 

The Group has not incurred any significant research and development expenses during the year. However, the Group recognises the importance of R&D and in line with the management's strategies to develop the Group's Technical Knowledge Bank, the Group intends to establish a R&D budget going forward.

 

The Group continues to focus on increasing its revenues while ensuring that the core cost base is maintained at an appropriate level. The Group will continue to grow its business through careful planning and the effective utilisation of resources.

 

  

Net finance costs

 

The net finance costs comprise mainly the interest costs on the term loans utilised to finance the development of our CX1 and CX2 data centres net of interest receivable on cash balances.

 

Despite the lower balance of borrowings as at 31 March 2010 as compared to the balance as at 31 March 2009, net finance costs were consistent at RM4.9m (£1.0m*) in 2010 and 2009. This was mainly due to the further drawdown of the term loan during the financial year to finance additional capital expenditure for the CX2 data centre which gave rise to additional interest costs up to the date of completion of the sale and leaseback of CX2 as detailed below.

 

 

Taxation

 

The taxation charge for the year was RM5.2m (£1.0m*) equating to circa 12% of profit before tax, as compared to the statutory corporate tax rate in Malaysia of 25%, reflecting the tax exemptions available on the profit derived from the sale (and leaseback) of CX2 and the profits derived from the rental of CX1 and CX2 (pre-sale). The taxation charge in 2009 was RM2.6m (£0.5m) equating to 539% of profit before tax, as compared to the statutory corporate tax rate of 25%, mainly due to losses incurred in the subsidiary involved in the development of the CX2 data centre, which were not available for set off against the profits of other subsidiaries. The losses incurred by the aforesaid subsidiary were mainly attributable to the fact that the CX2 data centre was only commissioned in January 2009 and the rental income was insufficient to cover the operating and finance costs incurred during that year.

 

 

Earnings per share

 

Basic earnings per share was 35.65 sen (7.23p*), a turnaround from the loss per share of 1.94 sen (0.39p*) in 2009. The weighted average number of shares during the year used for EPS calculation was 110,485,679 (2009: 109,090,909).

 

 

Dividends

 

A dividend of RM29.0m (£5.9m*) was paid by CSF CX SDN BHD on 25 November 2009 prior to admission of the Group onto AIM. The Board does not propose any further payment of dividends in respect of the financial year.

 

 

Cash and treasury

  

Year ended 31 March			Proforma*
	2010	2009	2010	2009
	RM'000	RM'000	£'000	£'000
Cash generated from operations before working capital movements and net finance costs	10,670	(2,619)	2,166	(531)
Working capital movements	(18,923)	24,878	(3,838)	5,046
Net finance costs	4,925	5,367	998	1,089
	(3,328)	27,626	(674)	5,604
Proceeds from sale of property, plant and equipment	175,265	153	35,551	31
Capital expenditure	(22,693)	(111,637)	(4,603)	(22,644)
Acquisition of a subsidiary	-	(26,050)	-	(5,283)
Dividend paid pre-admission to AIM	(29,000)	-	(5,882)	-
Net cash from other investing activities	(176)	65	(36)	13
Net cash inflow before financing activities	120,068	(109,843)	24,356	(22,279)
Financing activities	38,330	120,382	7,774	24,418
Net Cash Inflow	158,398	10,539	32,130	2,139

 

 

 

The Group's net cash generated by operations before working capital movements and net finance costs increased to RM10.7m (£2.2m*) from a net outflow position of RM2.6m (£0.5m*) in 2009 mainly due to the increase in data centre rental revenue. The working capital of the Group was in a deficit position of RM18.9m (£3.8m*) as compared to a surplus position of RM24.9m (£5.0m*) in 2009 mainly due to the net decrease in the balance of trade and other payables of RM5.7m (£1.2m*) as compared to the net increase of RM43.5m (£8.8m*) in 2009.

 

The trade receivables balance increased from RM29.0m (£5.9m) as at 31 March 2009 to RM35.2 (£7.1m*) as at 31 March 2010 mainly due to certain customers not paying on time during the year. Most of the slow-paying customers have settled a substantial portion of the overdue amounts subsequent to the financial year end.

 

On 13 November 2009, the Group completed the sale and leaseback of its CX2 data centre for total net proceeds of RM165.3m (£33.5m*) resulting in a net profit on sale of RM38.0m (£7.7m*). The transaction resulted in a decrease in the carrying amount of the property, plant and equipment of the Group by RM127.3m (£25.8m*) and the balance of the term loan by RM95.1m (£19.3m*) as a substantial portion of the proceeds was utilised to repay the term loan attributable to the development of CX2.

 

The Group's capital expenditure was mainly for the purchase of new data centre equipment for the CX2 and CX1 data centres.

 

In conjunction with the completion of the initial public offering and admission to AIM on 22 March 2010, the Group undertook a placing in which gross proceeds of £28.0m (RM138.0m*) was raised through the issue of 50.9 million new ordinary shares at 55p.

 

 

Debt to Equity Ratio

			Proforma*
	2010 RM'000	2009 RM'000	2010 £'000	2009 £'000
Total borrowings	48,365	129,284	9,810	26,224
Total shareholders' equity	147,596	6,449	29,940	1,309
Debt to equity ratio	0.3	20.0	0.3	20.0

 

 

 

The debt to equity ratio of the Group decreased from 20.0 as at 31 March 2009 to 0.3 as at 31 March 2010 due to the combination of a reduction in borrowings and an increase in shareholders' equity. The decrease in borrowings was mainly attributable to the completion of the sale and leaseback of the CX2 data centre, with a part of the proceeds used to repay in full the term loan associated with the development of CX2. The increase in shareholders' equity was mainly attributable to proceeds of the IPO.

 

In April 2010, the borrowings relating to the CX1 data centre were settled on completion of the CX1 sale and leaseback.

 

 

Post Balance Sheet Events

 

The Group completed the sale and leaseback of the CX1 data centre on 15 April 2010. The proceeds of the disposal were RM49.3m (£10.0m*) and the profit on the sale is expected to be approximately RM22.5m (£4.6m*). The lease agreement provides that the purchaser agrees to lease CX1 to the Group for an initial term of fifteen years (commencing on the completion of the sale of CX1), at a staggered rental ranging from RM0.4m (£0.08m*) per month for the first three years to RM0.49m (£0.10m*) per month for the last six years of the initial term.

 

During the period from [May 2010 to July 2010], the Group advanced RM21.6m (£4.4m*) to Integrated DC Builders Sdn Bhd ("IDCB"), the owner of the CX5 data centre, to expedite the development of CX5, in accordance with the terms of agreement with IDCB and in line with the Group's cash flow budget.

 

 

Going concern

 

The directors have prepared financial projections including cash flows for a period up to 31 March 2012. Based on these projections and taking into account the current position of the Group, including cash of RM167.4m (£33.9m*) as at 31 March 2010 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 financial statements.

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 March 2010

 

 

	Note	Year ended 31 March 2010 RM'000	Year ended 31 March 2009 RM'000	Proforma Year ended 31 March 2010 £'000	Proforma Year ended 31 March 2009 £'000
Revenue	3	64,192	55,954	13,021	11,350
Cost of sales		(30,653)	(42,650)	(6,218)	(8,651)
Gross profit		33,539	13,304	6,803	2,699
Other operating income		7,248	2,574	1,470	522
Gain on sale of property, plant and equipment	4	38,048	125	7,718	25
Administrative expenses		(24,868)	(9,967)	(5,044)	(2,021)
Share based payment		(7,000)	-	(1,420)	-
Impairment loss on unquoted investments		-	(693)	-	(141)
Total operating expenses		(31,868)	(10,660)	(6,464)	(2,162)
Operating profit		46,967	5,343	9,527	1,084
Finance income		509	110	103	22
Finance costs Other gain	5	(5,434) 2,500	(4,971) -	(1,102) 507	(1,008) -
Profit before tax		44,542	482	9,035	98
Tax		(5,150)	(2,596)	(1,045)	(527)
Profit/(loss) for the financial year		39,392	(2,114)	7,990	(429)
EPS - Basic (Malaysian sen)	6	35.65	(1.94)	7.23p	(0.39p)
- Diluted (Malaysian sen)	6	35.63	(1.94)	7.23p	(0.39p)

 

 

 

CONSOLIDATED BALANCE SHEET As at 31 March 2010	As at 31 March 2010 RM'000	As at 31 March 2009 RM'000	Proforma As at 31 March 2010 £'000	Proforma As at 31 March 2009 £'000
Non-current assets
Property, plant and equipment	7,498	145,401	1,521	29,493
Investments	898	179	182	36
Deferred tax asset	3,654	5,487	741	1,113
	12,050	151,067	2,444	30,642
Current assets
Inventories	7,175	9,926	1,457	2,016
Trade and other receivables	35,234	29,044	7,147	5,891
Restricted cash	3,607	2,719	732	552
Cash and cash equivalents	167,443	5,929	33,964	1,203
Assets held for sale	26,862	-	5,449	-
	240,321	47,618	48,749	9,662
Total assets	252,371	198,685	51,193	40,304
Current liabilities
Trade and other payables	53,442	61,689	10,840	12,513
Current tax liabilities	2,050	412	416	84
Obligations under finance leases	38	117	8	24
Borrowings	3,569	9,483	724	1,924
Liabilities directly associated with assets classified as held for sale	44,730	-	9,073	-
	103,829	71,701	21,061	14,545
Non-current liabilities
Borrowings	-	119,647	-	24,269
Obligations under finance leases	28	37	6	8
Deferred tax liabilities	918	851	186	173
	946	120,535	192	24,450
Total liabilities	104,775	192,236	21,253	38,995
Net assets	147,596	6,449	29,940	1,309
Equity
Share capital	78,922	52,603	16,009	10,670
Share premium	104,436	-	21,183	-
Shares held under Employee Benefit Trust	(2,707)	-	(547)	-
Other reserve	(66,153)	(66,153)	(13,418)	(13,418)
Retained earnings	33,098	19,999	6,713	4,057
Total equity	147,596	6,449	29,940	1,309

 

CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 March 2010		Year ended 31 March  2010 RM'000	Year ended 31 March 2009 RM'000	Proforma Year ended 31 March 2010 £'000	Proforma Year ended 31 March 2009 £'000
(Loss)/profit for the financial year		39,392	(2,114)	7,990	(429)
Adjustments for:
Allowance for doubtful debts		84	94	17	19
Bad debts written off Allowance no longer required		- (333)	18 -	- (67)	4 -
Amortisation of debt issuance cost		502	506	102	103
Depreciation of property, plant and equipment		6,503	3,136	1,319	636
Interest expense		4,932	4,971	1,000	1,008
Dividend income Diminution in value written back		- (34)	(1) -	- (7)	- -
Interest income		(509)	(110)	(103)	(22)
Income from waiver of debt		(2,500)	-	(507)	-
Gain on sale of property, plant and equipment		(38,048)	(125)	(7,718)	(25)
Impairment of other investment Share based payment		- 7,000	693 -	- 1,420	141 -
Tax		5,150	2,596	1,045	527
Operating cash inflows before movements in working capital		22,139	9,664	4,491	1,962
Decrease/(increase) in inventories		2,751	(6,513)	559	(1,321)
(Increase) in receivables		(15,927)	(12,116)	(3,231)	(2,458)
(Decrease)/increase in payables		(5,747)	43,507	(1,166)	8,825
Cash generated by operations		3,216	34,542	653	7,008
Interest paid		(4,932)	(4,954)	(1,000)	(1,005)
Income taxes paid		(1,612)	(1,962)	(327)	(399)
Net cash (outflow) / inflow from operating activities		(3,328)	27,626	(674)	5,604
Investing activities
Interest received		509	64	103	13
Additions to property, plant and equipment		(22,693)	(111,637)	(4,603)	(22,644)
Proceeds from sale of property, plant and equipment, net of associated costs		175,265	153	35,551	31
Purchase of investments		(685)	-	(139)	-
Acquisition of Atlas CSF Sdn Bhd		-	(26,050)	-	(5,283)
Other investing activities		-	1	-	-
Dividend paid pre-admission to AIM		(29,000)	-	(5,882)	-
Net cash generated from /(used in) investing activities		123,396	(137,469)	25,030	(27,883)

 

CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 March 2010 (Cont'd)	Year ended 31 March  2010 RM'000	Year ended 31 March 2009 RM'000	Proforma Year ended 31 March 2010 £'000	Proforma Year ended 31 March 2009 £'000
Financing activities
Proceeds from issue of shares, net of expenses	123,755	9,999	25,102	2,028
Repayments of obligations under finance leases	(88)	(403)	(18)	(82)
(Increase) in restricted cash	(888)	(2,054)	(180)	(417)
New bank loans raised	-	131,039	-	26,580
Repayment of borrowings	(83,947)	(7,448)	(17,028)	(1,511)
Advances from directors	-	2,399	-	487
Repayment to a former director	-	(12,500)	-	(2,535)
Amortised debt issuance costs	(502)	(650)	(102)	(132)
Net cash generated from financing activities	38,330	120,382	7,774	24,418
Net increase in cash and cash equivalents	158,398	10,539	32,130	2,139
Cash and cash equivalents at beginning of financial year	5,929	(4,610)	1,203	(934)
Cash and cash equivalents at end of financial year	164,327	5,929	33,333	1,203

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 March 2010

 

	Note	Share capital RM'000	Share premium RM'000	Shares held under Employee Benefit Trust RM'000	Other reserve RM'000	Retained earnings RM'000	Total RM'000
At 1 April 2008		2,501	-	-	-	22,113	24,614
Loss for the year		-	-	-	-	(2,114)	(2,114)
New shares issued		9,999	-	-	-	-	9,999
Acquisition of Atlas		-	-	-	(26,050)	-	(26,050)
Acquisition of CSF International Ltd		52,603	-	-	(52,603)	-	-
Elimination of investment in subsidiaries against other reserve		(12,500)	-	-	12,500	-	-
At 31 March 2009		52,603	-	-	(66,153)	19,999	6,449
Profit for the year Share based payment		- -	- -	- -	- -	39,392 7,000	39,392 7,000
New shares issued		25,112	113,001	-	-	-	138,113
Shares transferred to Employee Benefit Trust		-	-	(2,707)	-	2,707	-
Expenses of issue of equity shares		-	(12,874)	-	-	-	(12,874)
Shares issued in respect of equity settled share based payment		1,207	4,309	-	-	(5,516)	-
Cash settled share based payment Dividend paid pre-admission to AIM		-   -	-   -	-   -	-   -	(1,484)   (29,000)	(1,484)   (29,000)
At 31 March 2010		78,922	104,436	(2,707)	(66,153)	33,098	147,596

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 March 2010

 

PROFORMA

 

	Note	Share capital £'000	Share premium £'000	Shares held under Employee Benefit Trust £'000	Other reserve £'000	Retained earnings £'000	Total £'000
At 1 April 2008		507	-	-	-	4,486	4,993
Loss for the period		-	-	-	-	(429)	(429)
New shares issued		2,028	-	-	-	-	2,028
Acquisition of Atlas		-	-	-	(5,283)	-	(5,283)
Acquisition of CSF International Ltd		10,670	-	-	(10,670)	-	-
Elimination of investment in subsidiaries against other reserve		(2,535)	-	-	2,535	-	-
At 31 March 2009		10,670	-	-	(13,418)	4,057	1,309
Profit for the year Share based payment		- -	- -	- -	- -	7,990 1,420	7,990 1,420
New shares issued		5,094	22,921	-	-	-	28,015
Shares transferred to Employee Benefit Trust		-	-	(547)	-	547	-
Expenses of issue of equity shares		-	(2,611)	-	-	-	(2,611)
Share issued in respect of equity settled share based payment		245	873	-	-	(1,118)	-
Cash settled share based payment Dividend paid pre-admission to AIM		-   -	-   -	-   -	-   -	(301)   (5,882)	(301)   (5,882)
At 31 March 2010		16,009	21,183	(547)	(13,418)	6,713	29,940

 

 

 

1. General information

The Preliminary Announcement and the final accounts of the Group were approved by the Board of Directors on 21 July 2010. The financial information set out in this Preliminary Announcement does not constitute the Group's statutory accounts for the year ended 31 March 2010 but is derived from those accounts. The accounts for the year ended 31 March 2010 are the first set of accounts for the Group. The statutory accounts for 2010 will be delivered to the Jersey Registrar of Companies in September 2010. The auditors' report on the 2010 accounts 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 2010 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union (EU), including International Accounting Standards (IAS) and Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC).

 

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria, this announcement does not itself contain sufficient information to comply with IFRS. The Company expects to publish full financial statements that comply with IFRS in late 2010. 

 

The directors have prepared financial projections, including cash flows, for a period up to 31 March 2012. Based on these projections and taking into consideration the current financial position of the Group, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

 

(ii) Translation

 

The translation of the financial statements into pro forma balances in pounds Sterling is included solely for convenience. The pro forma balances in pounds Sterling are stated, as a matter of arithmetical computation only, on the basis of all balances being translated from Malaysian Ringgits into pounds Sterling at the rate prevailing on 31 March 2010 of RM4.93 : £1.00. 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

For the purpose of Initial Public Offer ("IPO"), there was a reorganisation of the Group. CSF Group plc was incorporated on 16 October 2009. On 12 March 2010, CSF Group plc acquired, in a share for share exchange, CSF international Limited. On 29 January 2010 CSF International Limited acquired, in a share for share exchange, CSF Advisers Sdn Bhd including its subsidiary Atlas CSF Sdn Bhd and CSF CX Sdn Bhd.

The businesses transferred to CSF Group plc were not previously held by a single legal entity. These entities have been ultimately controlled and managed by the same parties before and after the transfer to CSF Group plc and that control is not transitory (common control). IFRS does not provide specific guidance on accounting for common control transactions. The Directors have selected an accounting policy using the 'hierarchy' described in paragraphs 10 - 12 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. The hierarchy permits the consideration of pronouncement of other standard-setting bodies. The Directors have adopted a policy of accounting for business combinations between entities under common control in accordance with guidance under US GAAP 805-10-15. This guidance produces a result that is similar to pooling. The consolidated accounts have been prepared as if each of the entities within the Group at 12 March 2010 had been held by CSF Group plc from the earlier of 1 April 2008 or the date of incorporation.

 

2. Revenue recognition

 

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

Revenue from contract 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 fit-out activity is recognised over the period of the activity and in accordance with the underlying contract. Revenue is measured by reference to the fair value of consideration received or receivable from customers. Cost overspends on fit-outs are recognised as they arise and cost under-spends recognised when it is known with reasonable certainty the final position of the relevant contract. Where fit-outs are in progress and where sales invoiced exceed the cost of work completed, the excess is shown as deferred income, within other financial assets. When it is probable that total fit-out costs will exceed contract revenue, the expected loss is recognised as an expense immediately.

 

Income from support and maintenance agreements and the rental of data centre space is recognised on a straight line basis over the period of the related activity. Data centre space is rented out under operating leases.

 

3. Sale and leaseback transaction

 

The sale of assets under a sale and leaseback transaction is treated as a disposal of the assets concerned and any profit or loss arising from the transaction is recognised immediately in the income statement. The corresponding rentals payable are charged to income on a straight-line basis over the term of the relevant lease.

 

4. Segment reporting

 

The management regularly reviews segment information based on the key products and services provided to its customers; rental of data centre space and the design and development of data centre facilities. The design and fit-out of data centre facilities includes the support and maintenance of data centres. The profitability of the segment is reviewed based on IFRS.

 

The Group operates exclusively in Malaysia.

 

 

Year ended 31 March 2010	Data centre  rental RM'000	Design and development of data centre facilities RM'000	Intercompany trading RM'000	Consolidated RM'000
Revenue
External sales	32,061	32,131	-	64,192
Intercompany trading	-	13,699	(13,699)	-
Total revenue	32,061	69,277	(13,699)	64,192
Segment depreciation	5,852	651	-	6,503
Segment result	11,656	8,584	(1,290)	18,950
Corporate costs				(7,022)
Gain on sale of property, plant and equipment				38,048
Net finance costs				(5,434)
Profit before tax				44,542
Tax				(5,150)
Profit for the financial year				39,392

 

 

 

 

 

Year ended 31 March 2009	Data centre  rental RM'000	Design and development of data centre facilities RM'000	Intercompany trading RM'000	Consolidated RM'000
Revenue
External sales	13,739	42,215	-	55,954
Intercompany trading	-	27,062	(27,062)	-
Total revenue	13,739	69,277	(27,062)	55,954
Segment depreciation	2,993	143	-	3,136
Segment result	2,341	5,796	(2,706)	5,431
Foreign exchange loss				(88)
Net finance costs				(4,861)
Profit before tax				482
Tax				(2,596)
Loss for the financial year				(2,114)

 

 

5. Gain on sale of property, plant and equipment

 

Included in the gain on sale of property, plant and equipment is the gain on sale of the CX2 data centre amounting to RM38,043,276.

 

On 13 November 2009, CSF CX Sdn Bhd completed a sale and leaseback on the said data centre for net consideration of RM165,274,000. The sale of the CX2 data centre reduced the net book value of property, plant and equipment by RM127,231,000.

 

6. Other gain

 

The other gain relates to the waiver of a non-trade debt owing to Applied Business System Sdn Bhd ("ABS"), a third party. The non-trade debt related to the management buyout of a subsidiary company before it became part of the Group.

 

7. Earnings/(loss) per share

 

The calculation for earnings/ (loss) per share, based on the weighted average number of shares, are shown in the table below:

 

 

	Year ended 31 March 2010	Year ended 31 March 2009
Net profit/(loss) for the financial year after taxation attributable to members (RM'000)	39,392	(2,114)
Weighted average number of ordinary shares for basic earnings per share ('000)	110,486	109,091
Weighted average number of ordinary shares for diluted earnings per share ('000)	110,559	109,091

 

 

The number of ordinary shares for basic earnings per share at 31 March 2010 is the number of ordinary shares of CSF Group plc in issue immediately prior to admission to AIM.

 

The number of ordinary shares for diluted earnings per share at 31 March 2010 is the number of ordinary shares of CSF Group plc that would have been in issue had all the share options been exercised.

 

 

8. Dividend

	Year ended 31 March 2010 RM'000	Year ended 31 March 2009 RM'000
Amounts recognised as distributions to equity holders in the period:
Dividend paid	29,000	-

 

The dividend was declared and paid pre-admission to AIM by CSF CX Sdn Bhd on 25 November 2009.

The directors do not propose the payment of any further dividends in respect of the financial period.

 

 

 

9. Contingencies 

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

	As at 31 March 2010 RM'000	As at 31 March 2009 RM'000
Banking guarantees	6,996	4,555

 

 

-ends-

 

 

 

This information is provided by RNS

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