Final Results

CSF Group plc

("CSF" or "the Group")

FINAL RESULTS

For the Year Ended 31 March 2012

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 results for the financial year ended 31 March 2012.  

Financial highlights:

·; Revenue increased 83.5% to RM208.0m (£42.4m*) (FY2011: RM113.3m (£23.1m*)

·; Profit before tax increased 10.5% to RM55.0m (£11.2m*) (FY2011: RM49.8m or £10.2m*)

·; Rental and maintenance revenue increased 25.4% at RM82.4m (£16.8m*) (FY2011: RM67.4m (£13.8m*)

Operational highlights:

·; Completion of the construction of CX5 data centre together with the fit-out of critical power infrastructure and associated cooling for Block A.

·; Block A of CX5 is fully tenanted

·; Enhancement of revenue for CX2 data centre through increases in rental rates

·; Ongoing development and marketing activities for Blocks B and C of CX5 on schedule with expectation of full occupancy by the end of financial year 2014

·; Commissioned CXJ in Jakarta, Indonesia through our joint venture, with tenancy agreements signed with a number of customers

·; Ongoing discussions to develop a data centre in Singapore, Johor, East Malaysia and China

* 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 2012 of RM4.9021 : £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, "There is an improvement in results across all business segments and management's core focus over the next 2 years is to increase the occupancy of Blocks B and C of CX5 while continuing to pursue new development projects to increase the Group's data centre capacity in order to grow its recurring revenue streams."

Adrian Yong, CEO of CSF Group, said, "Our business continues to expand its operational footprint across the region, leveraging the strong reputation CSF has cultivated over many years of high quality service. The development of CX5 is gathering pace with successful rental and fit-out of the remaining blocks now our key strategic goal. We have received strong levels of interest across our existing customer base and we firmly believe the facility will be occupied by the end of financial year 2014. Our business continues to be well placed for future growth."

For further information:

CSF Group +603 8318 1313

Adrian Yong, Chief Executive

Buchanan (Financial PR) +44 (0) 20 7466 5000

Jeremy Garcia / James Strong

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

Ian Soanes or Bobbie Hilliam

CHAIRMAN'S STATEMENT

The Board is pleased to report another year of strong results for the CSF Group for 2012 driven by increases in revenue and profit across all business segments. Group revenue increased by 83.5% from RM113.3m (£23.1m*) in 2011 to RM208.0m (£42.4m*) in 2012 with profit before tax increasing from RM49.8m (£10.2m*) in 2011 to RM55.0m (£11.2m*) in 2012. The profit before tax for 2012 includes a share of loss of PT Cyber CSF, our jointly controlled entity in Indonesia, of RM2.0m (£0.4m*).

Revenue from data centre rental and maintenance increased by 22.2% from RM67.4m (£13.8m*) in 2011 to RM82.4m (£16.8m*) in 2012 driven mainly by the enhancement in rental rates in our CX2 data centre.

The design and development of data centre facilities segment continued to perform well with revenue increasing by 173.5% from RM45.9m (£9.4m*) in 2011 to RM125.6m (£25.6m*) in 2012 mainly due to the revenues associated with the development of the CX5 data centre.

With the attainment of full occupancy of CX2 at the end of the previous financial year, the Group focused on adding more data centre capacity by the completing Phase 1 of the development of CX5 and undertaking Phase 1 of the fit-out of CX Jakarta. CX5 was launched in January 2012 providing an additional 201,000 sq ft of data centre capacity, out of which 67,000 sq ft (the entire Block A) was tenanted with effect from April 2012. Our joint-venture company in Indonesia has substantially completed the fit-out of the first 2 levels (out of a total of 8 levels) of the data centre and the demand for space in CX Jakarta remains encouraging.

The management continues to build a pipeline of potential customers for Blocks B and C of CX5 and envisage full occupancy of the entire CX5 by the end of financial year 2014.

In recognition of the anticipated demand for more data centre capacity and in line with the Group's planned expansion across the South East Asia region, CSF continues to evaluate opportunities to develop data centres in Malaysia, Singapore, Indonesia, Thailand and Vietnam. These projects are also expected to deliver recurring revenues in the form of data centre rental and also after-sale maintenance services on the equipment supplied and installed by the Group.

The Board extends its appreciation and gratitude to the management team and other employees of the Group for achieving a number of significant milestones and for the delivery of good financial results.

In summary, the Board is pleased that there is an improvement in results across all business segments and is fully supportive of the management team's core focus over the next 2 years which is to complete the fit-out and occupation of Blocks B and C of CX5 while continuing to pursue new development projects to increase the Group's data centre capacity in order to grow its recurring revenue streams.

CHIEF EXECUTIVE'S REVIEW

Introduction

The close of the 2012 financial year marks the achievement of a number of strategic operational milestones for the Group. During this period our principal focus has included the following:

·; The completion of the development of our CX5 data centre adding 201,000 sq ft of data centre capacity

·; The launch of the data centre in Jakarta, Indonesia ("CXJ") adding 120,000 sq ft of data centre capacity in a high-growth market and the subsequent fit-out of the first 2 levels (out of a total of 8 levels) of the data centre for rental to customers

·; Enhancing our service offerings and the quality of our data centres in the area of data communications infrastructure via the acquisition of Third Wave Infrasys Sdn Bhd in April 2012

·; The release of Version 4 of our Standard Operating Processes to enable consistent delivery of services throughout all Computer Exchanges

The above achievements have further enhanced the Group's position as a market leader in the design and development of high specification data centres and provider of Data Centre infrastructure services in South East Asia.

I am pleased to report that we have made significant progress on all these objectives and will go into more detail in the 'Operational Review'.

The Group recorded total revenue of RM208.0m (£42.4m*), an increase of RM94.6m (£19.3m*) or 83.5%, with increases in revenue in both our data centre rental and the design and development business segments. The Group's profit from operations increased by 10.5% from RM48.6m (£9.9m*) in 2011 to RM53.6m (£10.9m*) in 2012.

We achieved positive operating cash flows in the current financial year which marks a significant improvement from the position in the previous financial year. We expect a significant collection of the receivables associated with the CX5 development in due course amounting to approximately RM85.0m (£17.3m*).

The Group continues to trade in line with market expectations. Over the last two years, we have maintained a dividend policy of distributing approximately one-third of our net profits as dividends and going forward we hope to be able to adopt a similar dividend policy.

Key GROWTH STRATEGY

The Group's activities over the last 12 months culminated in a significant increase in our data centre capacity. Much has been achieved during this period and our strategic goal of becoming the leading data centre provider in South East Asia remains a key priority.

As a management team we aim to achieve controlled and sustainable growth in revenue, EBITDA, earnings per share and operating cash flows. To this end we have outlined our long term strategic growth drivers as follows:

·; Generate greater levels of recurring revenue which in turn will provide the Group with enhanced visibility of earnings

·; Prudent financial management with principal focus on increasing operational cash flows

·; Focus on improving key performance indicators such as recurring revenue targets, profit margins, return on capital employed and growth rate for data centre rental revenue.

·; Foster closing working relationships with key customers in order to utilize high levels of cross selling of CSF's key services

·; Frequent engagement with users of data centres and other blue chip companies in order to update our understanding of their requirements and commercial drivers

·; Increased engagement with Telcos and cable/fiber operators to establish internet hubsin our Computer Exchanges

·; Continue to leverage our market leading position in Malaysia, Indonesia, Vietnam, Thailand and Singapore

·; Generate greater levels of brand penetration by focusing effort and marketing our products and services globally

·; Develop closer ties within other key growth geographies of large users of data centres, including those based in the USA and China

• Undertake a leadership role in the establishment of Data Centre standards and best practices via our membership as founding member of The Uptime Institute (TUI) - an independent organisation regarded as aleading authority in providing certifications, independent research, and thought leadership for the enterprise data centre industry and for data centre professionals - Asia Chapter.

KEY Market dynamics

Recent studies confirm that cloud services, virtualisation technologies and new networking fabrics are driving the expansion of the data centre market, fuelled further by the anticipated rise in the number of users of internet and smartphones. The number of data centres is expected to grow over the next two years, with the most growth occurring among large and super-sized data centres. Data centre operators are expected to increase their capacity in order to offer and capture market share of next-generation computing models that promise to streamline operations and reduce infrastructure footprints.

Enterprises in Malaysia have recently begun embracing the "software-as-a-service" delivery model. Their interest is primarily driven by the lower total cost of ownership in the services model, the conversion of capital expenditure to predictable operating expenditure and the ability to scale up or down depending on business needs. Based on this trend and the Malaysian government's continuing support of the data centre industry, the Malaysian data centre services market is expected to grow at around 16.0 percent per annum over the next 5 years with Cloud Computing to be an important driver of growth as Malaysian enterprises demonstrate increasing interest in Cloud services.

The recent commencement in operations of CXJ marks the beginning of the Group's development of a solid foothold into the Indonesian data centre market. We believe that there will be opportunities to develop data centres outside of Jakarta where we can cater to the potentially huge domestic market and capitalise on lower real estate and labour costs. Our entry into the Indonesian market is opportune as the Indonesian economy is expected to continue to grow strongly.

Singapore is the largest market in South East Asia by data centre space at present. We believe that Singapore will continue to be the destination of choice for locating IT hubs by multinational firms as evidenced by the recent announcement by Google that it will build one of its three new data centres in Singapore and the recent announcement by Savvis to expand facilities in Singapore

Thailand with a population of over 60 million and with the growing penetration rate of mobile and internet users continues to present a good opportunity for CSF to expand our data centre offerings. The catastrophic flooding in Bangkok last year has also resulted in many organizations looking to develop substantial Disaster Recovery Centres further fuelling future demand for our services.

Vietnam, which had high economic growth over the last 10 years, is presently experiencing growth pains with high inflation and lending rates as well as a depreciating currency. However, we will time our new development in HCM City to meet the growth when the economy picks up.

The demand for data centre upgrades, virtualisation, and data/storage/traffic growth bodes well for all categories in the data centremarket. The development of support infrastructure for the data centre industry remains a priority for the respective governments of Malaysia, Indonesia, Singapore and Thailand. Cable landing-points, and domestic connectivity are continuously being enhanced for sustained growth. The governments' pro-active involvement in the investment and development of such support infrastructure will increase the market for data centres and related services in the region.

Operational Review

We continue to make significant progress across our business with particular reference to the following:

·; Completion of the construction of our CX5 data centre together with the fit-out of critical power infrastructure and associated cooling for Block A

·; Block A of CX5 was fully tenanted

·; Enhancement of revenue for our CX2 data centre through increases in rental rates

·; Ongoing marketing activities for Blocks B and C of CX5 with our expectation being full occupancy by the end of financial year 2014

·; Commissioned CXJ in Jakarta, Indonesia through our joint venture, with tenancy agreements signed with a number of customers

·; Ongoing discussions to develop a data centre in Singapore, Johor, East Malaysia and China

Data Centre Projects

CX1 and CX2 and CX3

Our CX1, CX2 and CX3 data centres continued to operate efficiently and increases in revenues were recorded for CX1 and CX2. We invested approximately RM3.1m (£0.6m*) during the year to upgrade the data centre capacity of CX2 in order to cater for the increased power density requirements of certain customers.

Data centre in Hanoi, Vietnam ("CX4")

Our data centre in Hanoi, Vietnam with 3,500 sq ft of net rentable space and is referred to as "CX4", and is owned and operated by a joint-venture company in Vietnam (in which the Group has a 20% equity interest). The controlling interest in the joint-venture company is held by a Vietnamese company controlled by the Hanoi state government.

The progress of the joint-venture company has been hindered by the adverse economic environment in Vietnam over the last 2 years. Although the financial impact on the Group is relatively small, we believe that the joint-venture company will become profitable in the medium term and more importantly, our participation will allow us to capitalise on the forthcoming growth of the data centre market in Vietnam.

CX5

The development of CX5 - a facility comprising 3 blocks of 5-storey buildings, with a total gross floor area of approximately 580,000 sq ft and approximately 201,000 sq ft of net data centre space together with critical power infrastructure and associated cooling - is progressing on schedule based on the following key milestones:

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

·; Phase 2 (by end of calendar year 2012) - the fit-out of critical power infrastructure and associated cooling for Block B; and

·; Phase 3 (by end of calendar year 2013) - the fit-out of critical power infrastructure and associated cooling for Block C.

We both project manage and supply and fit-out core infrastructural equipment for the facility. Upon completion of each block, CSF will enter into a long-term lease agreement for the rental of the block. A tenant has already been secured for Block A and we have built a pipeline of potential tenants to occupy Blocks B and C. The potential tenants are large corporations that will demand a high level of service and technical features within their data centre. In fitting-out Blocks B and C, it is necessary to take into consideration the design, power capacity and other requirements of these potential tenants.

With the completion of Phase 1, we officially launched CX5 in January 2012 and the tenancy for Block A commenced in April 2012.

In accordance with our financial plan, we have, up to 31 March 2012, advanced RM72.0m (£14.7m*) to the project owner for the development of CX5 and RM30.0m (£6.1m*) is expected to be repaid to us in due course. In addition, we also expect to receive a contracted fee of RM25.0m (£5.1m*) in relation to the development of CX5 within the same time frame.

The Group expects the balance of the advances of RM20.0m (£4.1m*) and RM22.0m (£4.5m*) to be repaid by the end of financial year 2013 and 2014, respectively, in line with the completion of Block B and Block C.

Data centre in Jakarta, Indonesia ("CXJ")

The joint-venture company in Indonesia known as PT Cyber-CSF ("Cyber-CSF"), in which CSF holds a 49% interest, commenced to lease the new purpose-built, state of the art data centre facility from our Indonesian partner in August 2011. Since then, Cyber-CSF has substantially completed the fit-out of the first 2 levels (out of a total of 8 levels) of the data centre and a number of customers have commenced tenancy in July 2012 at the data centre.

The management of Cyber-CSF continues to pursue potential customers from a wide array of industries including telecommunications, financial institutions, internet service providers and media.

As outlined previously, we expect Cyber-CSF to incur a loss in the first 2 years of operations becoming profitable by financial year 2015. Cyber-CSF is expected to obtain separate financing facilities and the Group will provide financial support for the purpose of capital expenditure and working capital of Cyber-CSF until its financing facilities are in place. The total loans and advances to Cyber-CSF amounted to RM5.5m (£1.1m*) as at 31 March 2012 and subsequent to the financial year end, the Group provided additional loans and advances to Cyber CSF amounting to RM5.4m (£1.1m*).

Other opportunities

The Group is negotiating with a third-party organisation which is co-owned by a government agency to design and build a data centre in Sarawak, East Malaysia on a turnkey contract basis. Upon the completion of the data centre, the Group expects to lease and manage the data centre on a joint-venture basis with the aforementioned company.

The Group has also submitted a proposal to a customer to develop a data centre in Johor, Malaysia based on a build-and-transfer arrangement, referred to as CX6. We are currently waiting for a formal letter of award from the customer. Upon receiving the letter of award, we expect to be able to deliver the facility to the customer within a period of 12 to 18 months from the date of commencement of development.

Our team in Singapore is in advanced discussion with potential customers. Our Singaporean team has identified a suitable site and is currently negotiating with a property developer in Singapore. Our aim is for the developer to fund the construction of the facility with an undertaking by the Group to lease and operate the facility on a long term basis.

We continue to pursue other opportunities in Malaysia, Singapore, Indonesia, Thailand and Vietnam.

Data Centre Rental

With the launch of CX5, the Group now has 406,000 sq ft of data centre space in Malaysia and the recent commissioning of CXJ added 120,000 sq ft of capacity, bringing the total data centre capacity of the Group to 526,000 sq ft (excluding 3,500 sq ft of data centre space in Hanoi, Vietnam operated by our 20%-owned associate).

The lease rental cost payable by CSF for Block A of CX5 covers the office building and the data centre building structures and general infrastructure for Blocks B and C. Due to the upfront associated costs of the office building and Blocks B and C, the contribution from CX5 is expected to be minimal for the financial periods up to March 2013. We continue to expect the overall profit contribution of CX5 to be significant once new tenants are secured for Blocks B and C and this remains a key strategic priority for the Group.

Within 2 years, we have more than doubled our data centre capacity from 205,000 sq ft to 526,000 sq ft and with a significant amount of cash associated with the development of CX5 expected to flow into the Group within the next 1 month. This demonstrates the Group's ability to grow our data centre capacity (and rental revenue) while minimising substantial cash outlay or incurring high levels of debt. We believe this prudent financial management will further strengthen the Group's long term financial position.

Maintenance

The Group's maintenance revenue remained stable and we continue to pursue new contracts to enhance our recurring revenue streams. Our maintenance division continues to record improvements in its internal key performance indicators which include measurements of efficiency in carrying out scheduled maintenance and also ad hoc requests for services.

Design and Fit-out of Data Centre Facilities

In view of the resource requirements for CX5, CXJ and the new data centre development project in Sarawak, the Group has continued to strengthen its design and fit-out division through regular, structured training programmes for its engineers and technicians. A number of senior executives have been assigned to supervise the operations of CXJ, and we continue to work with our Indonesian partner to recruit employees under Cyber-CSF.

Although our design and fit-out division has been significantly involved in the development of CX5 and in the fit out of CXJ, we continue to pursue external projects.

We are continuing to work with a company engaged by the Ministry of Defence in Malaysia to develop and manage the first defence and security technology park in South East Asia known as the Malaysian Defence and Security Technology Park ("MDSTP") under the terms of the collaboration agreement with the same. In this regard, we are identifying opportunities to design and build data centres, and/or to supply data centre infrastructural equipment to companies that are planning to establish a hub in the MDSTP.

The Group continues to receive enquiries from potential customers who would like to develop their in-house data centres and is working towards securing these projects.

As a strategy to maintain the Group's leadership position, we will always ensure that our technical employees are constantly kept abreast of the latest data centre designs and technology. In addition to high levels of security and operational reliability of mission critical computing systems, large corporations today expect data centres to provide high quality telecommunications facilities, content distribution networks, key internet exchange points and cloud computing hubs. In recognition of this requirement, the Group acquired Third Wave Infrasys Sdn Bhd ("Third Wave"), a company with experience in providing networking and connectivity solutions in April 2012, for a cash consideration of RM5.0m (£1.0m*) payable over the next 3 financial years. From a strategic perspective, the acquisition of Third Wave is expected to strengthen our expertise and resources to work with telecommunications service providers to make CSF Computer Exchanges the data centres of choice offering high quality infrastructure and excellent connectivity.

The Group's design and fit-out division is negotiating with equipment manufacturers to explore the development of certain equipment under our own brand name. We believe that the manufacturing and marketing of equipment under our brand name would enable us to realise cost savings in the medium to long term as well as leverage the CSF brand further.

Recent Initiatives

Pursuing opportunities in China

In September 2011 we announced a collaboration with Pacific Link Telecom (Asia) Limited ("PLTA") and Jiangsu Communications Services Co. Ltd. ("JCS") which will be mutually beneficial to all parties concerned and will accelerate the demand for the Group's data centres and related products and services across the region.

Based on feedback from PLTA and JCS, there are many Chinese businesses that are keen to look at offshore data centre facilities. We will therefore continue to work with our partners to identify opportunities to develop data centres for Chinese businesses outside of China as this strategy will mitigate the risks associated with our entry into the Chinese market.

However, there are also specific projects in China that we are currently evaluating. Such projects will only be undertaken when we are able to secure a reasonable guaranteed return on investment.

Marketing to US-Based companies

As the largest data centre users today are based in the USA, we are working on proposals to offer data centre space and related services to US based companies to take advantage of the lower development costs and operating costs in South East Asia. We are currently negotiating with one of the state energy commissions in Malaysia to provide a competitive long-term tariff. We believe that this initiative will provide a compelling incentive for US-based companies to relocate or to expand their data centre facilities to Malaysia.

Identifying investment targets

As a strategy to enhance our technical capabilities and to allow our resource base to cope with the growing demand for our data centre space and related products and services, we will continue to identify acquisition or investment opportunities. Our assessment of acquisition or investment targets will be based on factors including the enhancement of recurring revenue streams, the broadening and enhancement of technical resources, and reasonable returns on investment.

Current trading and outlook

Our immediate focus is to complete the occupation of our CX5 data centre by securing tenants for the two remaining blocks and fitting them out while we continue to pursue new data centre development opportunities to cater for the anticipated increase demand for data centre capacity in the long run. We will continue to ensure that new developments are undertaken based on thorough commercial assessment and with a high degree of financial prudence.

Our trading continues to gain good market traction and we are confident that demand for our products and services will be sustained, driven largely by a combination of our own market reputation, ongoing marketing initiatives and the strong demand for data centre services in Malaysia and South East Asia. On this basis, the Board is pleased to report that CSF expects revenue and profit to be in line with current market expectations.

CHIEF FINANCIAL OFFICER'S REVIEW

A. Introduction

The Group's revenue and profits for the financial year are in line with market expectations with demand for our services remaining high, whilst our net cash balance as at the financial year end exceeded market expectation due to an increase in the collection of trade receivables in the last quarter of the financial year. The expansion of our business to Indonesia continues to progress well and the marketing for blocks B and C in CX5 is now gathering positive momentum.

The Group's profit from operations increased to RM53.6m (£10.9m*) from RM48.6m (£9.9m*) in 2011.

The profit from operations for the current financial year includes the share of loss after tax of a jointly controlled entity, PT Cyber CSF in Indonesia, of RM2.0m (£0.4m*) (2011 - Nil) and a charge for equity settled employee expenses of RM--1.2m (£0.3m*) as compared to RM0.9m (£0.2m*) in 2011.

The profit from operations in 2011 also includes a gain from the sale (and leaseback) of data centre of RM24.6m (£5.0m*). In 2012, there was no sale and leaseback transaction and most of the profit from design and development activities was generated from the contract revenue and fit-out revenue associated with the CX5 development project.

The increase in profit from operations is analysed in Section E below.

Profit before tax increased from RM49.8m (£10.2m*) in 2011 to RM55.0m (£11.2m*) in 2012. The profit before tax for 2012 includes a share of loss of a jointly-controlled entity of RM2.0m (£0.4m*). Although the profit before tax of the Group increased, the effective tax rate for the current financial year was higher resulting in a decrease in total comprehensive income (excluding the share of loss after tax of a jointly controlled entity) from RM47.7m (£9.7m*) in 2011 to RM45.8m (£9.3m*) in 2012. The reason for the higher effective tax rate as explained further in Section G below.

The Group recorded basic earnings per share ("EPS") of 27.36 sen (5.58p*) as compared with 29.79 sen (6.08p*) in 2011. Excluding the effects of the Group's share of loss in PT Cyber CSF, the basic EPS of the Group would amount to 28.63 sen (5.84p*).

The Group maintained a dividend policy of distributing approximately one-third of its net profits as dividends.

With the launch of CX5 in January 2012 and the commissioning of CX Jakarta in August 2011 which contributed additional capacity of 201,000 sq ft and 120,000 sq ft respectively, the Group's data centre rental capacity increased from 205,000 sq ft as at 31 March 2011 to 526,000 sq ft as at 31 March 2012.

B. Financial results

The financial results of the Group are summarised below:

C. Revenue

The Group recorded total revenue of RM208.0m (£42.4m*), an increase of RM94.6m (£19.3m*) or 83.5%.

Data centre rental and maintenance revenue increased by RM15.1m (£3.1m*) or 25.4% mainly attributable to the enhancement of rental revenues from the CX2 data centre.

The increase in revenue from the design and development of data centre facilities was mainly attributable to an increase in the works carried out on the CX5 project. The Group recognised revenue of RM110.1m (£22.5m*) from project management and fit-out works relating to CX5 for the current financial year as compared to RM17.9 (£3.7m*) in 2011.

D. Gross profit margin

The Group's gross profit margin increased from 34.7% in 2011 to 37.8% in 2012. This is mainly attributable to an increase in gross profit margin on data centre rentals as tabulated below:

D. Gross profit margin (Cont'd)

The increase in gross profit margin on data centre rental to 30.7% from 22.0% in 2011 is mainly due to the increase in revenues from the CX2 data centre compared to the previous financial year as a result of increased in rental rates.

Gross profit margin on maintenance income increased from 48.0% in 2011 to 54.4% in 2012 mainly due to the effective management of cost of spare parts. Gross profit margin on design and development of data centre facilities decreased from 48.9% in 2011 to 41.0% in 2012 mainly due to the undertaking of fit-out works which carried lower relatively gross profit margins.

E. Profit from operations

Profit from operations increased to RM53.6m (£10.9m*) from RM48.6m (£9.9m*) in 2011 as analysed below:

Operating profit from data centre rental, maintenance, and design and development of data centre facilities increased as a result of the increase in revenue as described in Section C above, and also the increase in the average gross profit margin as explained in Section D above.

The gain on sale of property, plant and equipment in 2011 comprises the gain on sale and leaseback of the CX1 data centre completed in April 2010, i.e. early in the 2011 financial year.

F. Net finance income

The net finance income comprises mainly the interest income receivable on bank deposits stated net of finance cost arising from charges on banking facilities and interest cost incurred on bank borrowings.

Finance income decreased to RM1.2m (£0.25m*) from RM2.3m (£0.47m*) in 2011 mainly due to the utilisation of cash for the development of CX5.

Finance cost for the financial year decreased from RM0.5m (£0.10m*) in 2011 to RM0.2m (£0.04m*) in 2012 mainly attributable to the settlement of the term loan associated with the development of CX1 in April 2010.

G. Taxation

The current tax charge for the year equates to circa 20.4% of profit before tax, as compared to the statutory corporate tax rate in Malaysia of 25%, reflecting the tax exemption on the turnkey fee receivable from the development of CX5 partially offset by the non-availability of tax relief on losses incurred by certain companies within the Group including the jointly-controlled entity and the associate.

The lower effective tax rate for previous the financial year (of 4.3%) was mainly attributable to the tax-exemption on the gain from the sale of data centre in 2011.

H. Earnings per share

Basic earnings per share was 27.36 sen (5.58p*) compared to 29.79 sen (6.08p*) in 2011. The weighted average number of shares during the year used for basic EPS calculation is 160,013,785 (2011: 160,000,000). Diluted EPS was 27.36 sen (5.58p*) compared to 28.42 sen (5.80p*) in 2011. The weighted average number of shares during the year used for diluted EPS calculation is 160,013,785 (2011: 167,685,000).

I. Dividends

On 12 April 2012, the Board declared an interim dividend for the year ended 31 March 2012 of 9.412 sen (1.920p*) per share amounting to RM15.1m (£3.1m*). The interim dividend was paid on 4 May 2012.

The Board does not propose any further payment of dividends in respect of the 2012 financial year. Over the last two years, the Group maintained a dividend policy of distributing approximately one-third of its net profits as dividends and hopes to adopt a similar policy going forward.

J. Cash and treasury

The Group's net cash generated by operations before working capital movements and net finance costs increased to RM54.2m (£11.1m*) from RM24.5m (£5.0m*) in 2011 mainly due to the increase in total revenue. The working capital requirement of the Group increased to RM43.9m (£9.0m*) from RM36.2m (£7.4m*) in 2011 mainly due to the higher net increase in balance of trade receivables of RM97.1m (£19.8m*) as compared with RM57.4m (£11.7m*) in 2011.

The trade receivables balance increased from RM57.4m (£11.7m*) as at 31 March 2011 to RM97.1m (£19.8m*) as at 31 March 2012 mainly because the trade receivables associated with the development of CX5 increased by RM42.3m (£8.6m*) from RM10.3m (£2.1m*) as at 31 March 2011 to RM52.6m (£10.7m*) as at 31 March 2012 were not due for collection as at the financial year end. Approximately RM30.0m (£6.1m*) of the trade receivables associated with the development of CX5 is expected to be settled in due course with settlement of the balance by the end of financial year 2013.

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

During the financial year, the Group advanced RM13.0m (£2.7m*) to Integrated DC Builders Sdn Bhd for the development of CX5, bringing the total advances to IDCB to RM72.0m (£14.7m*) as at 31 March 2012. IDCB expects to repay RM30.0m (£6.1m*) of the advances in due course and to repay the remaining amount of the advances by the end of financial years 2013 and 2014 based on the negotiated terms between the Group and IDCB.

The total loans and advances of RM5.5m (£1.1m*) to PT Cyber CSF, the jointly-controlled entity in Indonesia comprised loans of RM4.8m (£1.0m*) to fund its capital expenditure and RM0.7m (£0.1m*) to fund its working capital requirements.

J. Cash and treasury (Cont'd)

The loan to PT Cyber CSF was provided pursuant to a loan agreement to provide up to US$10.3m (£6.4m*) to fund the capital expenditure associated with the fit-out of the first 2 levels of the data centre in Jakarta, Indonesia ("CXJ"). The Board of Directors has approved the provision of an additional US$1.5m (£0.9m*) by the Group to fund the working capital requirements of PT Cyber CSF in the 2013 financial year.

K. Post Balance Sheet Events

The Group has completed the acquisition of Third Wave Infrasys Sdn Bhd ("TWSB") for RM5.0m (£1.0m*) which is payable over the next 3 financial years. TWSB is expected to contribute positively to the revenue and profit of the Group in the 2013 financial year.

Subsequent to the financial year end, the Group provided additional loans and advances to PT Cyber CSF amounting to RM5.4m (£1.1m*). PT Cyber CSF has substantially completed the fit-out of the first 2 levels (out of a total of 8 levels) of the data centre in Jakarta, Indonesia ("CXJ") and has secured tenancies for the more than 60% of the data centre space within the first 2 levels and a number of customers have commenced tenancy in July 2012 at the data centre.

PT Cyber CSF is expected to continue to incur a loss in the first 2 years of operations becoming profitable by financial year 2015. The Group intends to provide financial support to PT Cyber CSF while it obtains financing facilities on its own accord.

L. Other comments

As a Group we will continue to strive to increase the levels of recurring revenue generated by our operations and to ensure that we maximise revenue-generating opportunities with key customers. The Group will also seek to utilise its cash resources in order to generate optimum returns for our shareholders.

* 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 2012 of RM4.9021 : £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

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 March 2012

All results derive from continuing operations.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 March 2012

CONSOLIDATED STATEMENT OF CASH FLOW

For the year ended 31 March 2012

CONSOLIDATED STATEMENT OF CASH FLOW

For the year ended 31 March 2012 (Cont'd)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

PROFORMA

1. General information

The Preliminary Announcement and the final accounts of the Group were approved by the Board of Directors on 4 July 2012. The financial information set out in this Preliminary Announcement does not constitute the Group's statutory accounts for the year ended 31 March 2012 but is derived from those accounts. The statutory accounts for 2012 will be delivered to the Jersey Registrar of Companies in September 2012. The auditors have reported on the 2012 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 2012 have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU.

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria, this announcement does not itself contain sufficient information to comply with IFRS. The Company expects to publish full financial statements that comply with IFRS in late 2012. 

The directors have prepared financial projections, including cash flows, for a period up to 31 March 2014. 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) Pro forma balances

The inclusion of pro forma balances in pounds Sterling is included solely for convenience. The pro forma balances in pounds Sterling are stated, as a matter of arithmetical computation only, on the basis of all balances being translated from Malaysian Ringgits into pounds Sterling at the rate prevailing on 31 March 2012 of RM4.9021 : £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.

1. General information (Cont'd)

(iii) Basis of accounting

The consolidated financial statements have been prepared on the historical cost basis, except for the valuation of listed investments. The principal accounting policies adopted are consistent with previous financial year.

2. Revenue recognition and contract accounting

Revenue represents amounts receivable for work carried out in the rental of data centre space (including reimbursement for electricity consumed by customers), design and development of data centre facilities, the maintenance of data centres and imputed interest on loans to data centre developers.

Revenue from contract works is recognised in the consolidated statement of comprehensive income based on the stage of completion which is determined based on the contract costs incurred for work performed to date in proportion to the estimated total contract costs.

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

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

The Group advanced cash loans to Integrated DC Builders Sdn Bhd ("IDCB"), the developer of the CX5 data centre. Such loans are either interest free or the effective interest rate is below a fair market rate. The notional interest income on the loan computed based on the difference between the effective rate and a fair market rate is included as a part of the contract revenue receivable by the Group relating to the Group's services in connection with the development of CX5.

3. Sale and leaseback transaction

The sale of assets under a sale and leaseback transaction is treated as a disposal of the assets after the transfers of substantially all the risk and rewards incidental to ownership of an asset 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, maintenance (including) support of data centres, and the design and development of data centre facilities.