Final Results

18 July 2011

CSF Group plc

("CSF" or "the Group")

FINAL RESULTS

For the Year Ended 31 March 2011

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 2011.  

Financial highlights:

● Revenues up 59.8% to RM113.3m (£23.3m*) (FY2010: RM70.9m (£14.6m*);

● Profit from operations includes a gain from the sale (and leaseback) of data centres of RM24.6m (£5.0m*);

● Profit before tax up 12% to RM49.8m (£10.2m*) (FY2010: RM44.5m or £9.1m*);

● Rental and maintenance revenue up 42.5% at RM67.4m (£13.8m*) (FY2010: RM47.3m (£9.7m*);

Operational highlights:

● Continue to support the development of our CX5 data centre, which continues to progress on schedule;

● Attained full occupancy for our CX2 data centre from March 2011;

● Commissioned CX4, a 3,500 sq ft data centre located in Hanoi, Vietnam (of which CSF has a 20% interest);

● Developed the Group presence in Singapore in anticipation of future demand in the region;

● Entered into an 'agreement-in-principle' with an Indonesian company enabling CSF to operate a state-of-art data centre of approximately 120,000 sq ft in Jakarta, Indonesia. The formal agreements are expected to be executed before September 2011and the data centre is expected to be ready for service in December 2011;

● Enhanced our human resources programme recruiting additional engineers and technicians to support CSF's growth.

Note

1 The revenue of RM113.3m (£23.3m*) includes reimbursement of electricity consumed by customers of RM14.5m (£3.0m). The percentage increase of 59.8% was computed based on the comparative revenue for 2010 of RM70.9m (£14.6m*) after the restatement to include reimbursement of electricity consumed by customers of RM6.7m (£1.4m*).

* 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 2011 of RM4.8687 : £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 improved results from each of the business segments further demonstrate the effectiveness of the Group's strategies and a result of the discipline and efficiency of the Group's management in implementing these strategies."

Adrian Yong, CEO of CSF Group, said, "Our expansion plans continue to gather pace as we look to increase both our customer base and our geographic presence across South East Asia. Having consolidated our position as the leading data centre service provider in the region, demand for our technical expertise market leading service offering remains strong. We therefore remain confident in achieving continuing growth in the current financial year."

For further information:

CSF Group +603 8318 1313

Adrian Yong, Chief Executive

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

Jeremy Garcia / Gabriella Clinkard

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 for 2011 driven by the management's commitment in achieving business objectives and the robust demand for data centre space and services. Group revenue increased by 59.8% from RM70.9m (£14.6m*) in 2010 to RM113.3m (£23.3m*) in 2011 with profit before tax increasing from RM44.6m (£9.1m*) in 2010 to RM49.8m (£10.2m*) in 2011.

Revenue from data centre rental and maintenance increased 42.4% from RM47.3m (£9.7m*) in 2010 to RM67.4m (£13.8m*) in 2011 driven by an increase in occupancy of the CX2 data centre and securing of several new maintenance contracts during the year.

The design and development of data centre facilities also performed well with revenue increasing by RM22.3m (£4.6m*) from RM23.6m (£4.8m*) in 2010 to RM45.9m (£9.4m*) in 2011 following the commencement of project management and fit-out revenue streams for CX5 data centre. Overall, the Group is in a stronger position with the data centre rental and maintenance business driving revenue and profit growth.

We also achieved a number of key milestones during the year, including the attainment of full occupancy of the CX2 data centre and the commencement of expansion into Indonesia and Singapore. The Group, in partnership with a reputable property developer in Indonesia, has formed a joint-venture company in Indonesia to lease a newly constructed state of the art purpose built data centre - referred to as "CX Jakarta" or "CXJ" - located in Jakarta, Indonesia and sub-lease the space to customers in Indonesia. CXJ is expected to be ready for operation by the end of calendar year 2011.

The Group also formed a new wholly-owned subsidiary in Singapore and recruited several key employees to market the Group's data centre services and products in Singapore.

We have also expanded our services into Hanoi, Vietnam via an 'associate agreement' and have now commissioned a "CSF" branded data centre of approximately 3,500 sq ft of net rentable space in Hanoi, referred to as "CX4". The project has been completed ahead of schedule and a number of customers have already been secured. Although the contribution from the associate is not expected to be significant, we are confident that the experience gained from the development of CX4 will enable the Group to further expand its business in Vietnam.

In addition to pursuing tenancy contracts for CXJ and CX5, the Group will continue to pursue new contracts 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.

The improved results from each of the business segments further demonstrates the effectiveness of our growth strategy and the discipline and efficiency of our management in implementing these strategies successfully.

The Board extends its appreciation and gratitude to the management team and other employees of the Group for their dedication and contribution towards achieving the Group's vision and business objectives.

In summary, the Board is very pleased that the Group has delivered on its commitments and consolidated its position as the leading data centre service provider in South East Asia.

CHIEF EXECUTIVE'S REVIEW

Introduction

More than one year has passed since our initial public offering and admission to trading the AIM market of the London Stock Exchange. During this time, our principal focus has been towards the fulfillment of our key listing objectives which include:

·; Maintaining the Group position as a market leader in the design and development of high specification data centres in South East Asia;

·; Focus on growing recurring revenue streams from the leasing and operation of data centre space as well as maintenance services;

·; Funded by proceeds from the IPO, accelerate the development of its next data centre, CX5, a new 201,000 net sq. ft. facility in Cyberjaya; and

·; Expand its data centre portfolio in Malaysia and neighbouring countries including Indonesia, Thailand and Vietnam.

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

Key growth strategy

We believe the actions taken over the last 12 months to expand our geographical footprint throughout the South East Asian market whilst investing in our own infrastructure and people continue to position CSF for growth. Much has been achieved over the 12 months but this is just the starting point.

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

• Achieve market leading positions in our core markets of Malaysia, Indonesia, Vietnam, Thailand and Singapore

• Further geographic expansion into other emerging economies

• Continue to drive recurring revenue across our business (target 31% of revenue)

• Greater emphasis on cross sell of services across our customer base

• Foster JV partnerships to accelerate growth

• Expand blue chip customer base including telecommunication companies, financial institutions and internet service providers

KEY Market dynamics

With relatively good economic growth demonstrated in the four key South East Asian markets - Indonesia, Malaysia, Singapore and Thailand - we expect the demand for data centres in these countries is expected to grow significantly. There have been a number of new investment in data centre assets over the past twelve months, and several large scale data centre developments have been announced through to the end of 2012. Total data centre capacity in the four countries is expected to increase by more than 60% over the next five years.

The Group's recent entry into the Indonesian market is premised on the market statistics which show that Indonesia presents a potentially huge domestic market, lower real estate and labour costs, relatively fewer high quality data centres and most data centres are concentrated in Jakarta - hence there is a potential demand for data centres to be located outside of Jakarta.

The data centre market in Malaysia is expected to grow as data centre services outsourcing is regarded as a key investment area for Malaysia. This follows on from recent comments made by the Prime Minister, who cited data centres as one of the key projects in Malaysia's economic development plan.

Singapore is the largest market by space at present, and may become even larger if the government proposal for the development of a specialised industrial park for data centres with infrastructure, and premium facilities goes ahead.

Thailand also presents a good opportunity for business expansion as there are relatively fewer data centres owned by third-party vendors although there will be challenges posed by factors such as political uncertainty and potentially less developed infrastructure outside of Bangkok.

We expect the demand for data centres to remain strong as more companies outsource their IT infrastructure and implement disaster recovery and business continuity solutions. Enterprise customers are becoming more aware of the benefits of cloud-based, pay-per-use hosting services which will invariably lead to an increase in demand for data centre space.

Operational Review

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

·; Continue to support the development of our CX5 data centre, which continues to progress on schedule;

·; Attained full occupancy for our CX2 data centre from March 2011;

·; Commissioned CX4, a 3,500 sq ft data centre located in Hanoi, Vietnam (of which CSF has a 20% interest);

·; Developed the Group presence in Singapore in anticipation of future demand in the region

·; Entered into an 'agreement-in-principle' with an Indonesian company enabling CSF to operate a state-of-art data centre of approximately 120,000 sq ft in Jakarta, Indonesia. The formal agreements are expected to be executed before September 2011 and the data centre is expected to be ready for service in December 2011;

·; Enhanced our human resources programme recruiting additional engineers and technicians to support CSF's growth.

Data Centre Projects

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 (by end 2011) - 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 2012) - the fit-out of critical power infrastructure and associated cooling for Block B; and

·; Phase 3 (by end 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. Physical construction works commenced in September 2010 and the construction of the building is now at an advanced stage. We are now finalising technical evaluations and procurement of the core infrastructural equipment to be fitted out in the data centre in due course. We expect to be on target to complete the construction and fit-out of Block A of CX5 in late calendar year 2011.

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 are currently identifying tenants to occupy Blocks B and C.

During the financial year we advanced RM59.0m (£12.1m*) to the project owner for the development of CX5 and expect to advance an additional RM11.0m (£2.3m*) up to the end of calendar year 2011. The Group expects RM30.0m (£6.2m*) of the advances to be repaid by early financial year 2013 with the balance to be fully paid by the end of financial year 2014.

Data centre in Hanoi, Vietnam ("CX4")

Our data centre in Hanoi, Vietnam has 3,500 sq ft of net rentable space and is referred to as "CX4", was commissioned in July 2010 5 months ahead of schedule. This is the first "CSF" branded data centre in Vietnam 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.

A number of customers are already leasing the space in CX4 and although the financial contribution is relatively small, we believe that this will enable to Group to showcase our capabilities and propel us to the forefront of the data centre industry in region.

Data centre in Jakarta, Indonesia ("CXJ")

Following an agreement-in-principle with PT Karyagraha Nusantara ("KN") signed in March 2011, a joint-venture company known as PT Cyber-CSF ("Cyber-CSF") was established in Indonesia in July 2011. CSF holds a 49% interest Cyber-CSF and our principal activity will be to provide data centre management services across Indonesia.

KN is part of a group of companies considered to be one of the largest and most experienced commercial property developers in Indonesia and has been involved in the development and management of some of Jakarta's most prestigious office buildings, including a 32-storey office building known as Cyber 2. Its flagship property, Cyber 1 building, houses more than 200 telecommunication ("telco") operators and is the predominant hub for telco carriers in Indonesia.

Cyber-CSF will lease a new purpose-built, state of the art data centre facility from KN on a long term basis, and engage external contractors to fit-out the building. The cost of fitting-out the building will be borne by Cyber-CSF. Once fit out is completed, Cyber-CSF will operate and manage the data centre and procure tenants.

The partnership with KN will increase our data centre capacity by more than 20% (approx. 120,000 sq ft). This agreement delivers CSF with instant access into the largest economy in South East Asia whilst working in partnership with an established Indonesian party with long standing relationships with telcos and access to the emerging Indonesian market place. Indonesia, with a population exceeding 230 million, has been enjoying growth rates exceeding 5% over the last few years and presents the Group with good opportunities.

As CXJ has not been fitted-out with ancillary equipment yet, we will assume the role of project manager and design consultant (for the site preparation at CXJ) and will also supply and install some of the ancillary data centre equipment.

Data centre in Jakarta, Indonesia ("CXJ")

We expect Cyber-CSF will incur a loss in the first 2 years of operations becoming profitable within three years. However, Cyber-CSF is expected to obtain separate financing facilities without any significant capital contribution from the Group.

Other opportunities

We believe that there are many corporations, especially multinationals, that prefer to house their data centres in Singapore in spite of the relatively higher cost structure. Our team in Singapore is in discussion with potential customers and addressing the requirements of these customers. In conjunction with these discussions, our Singaporean team is also identifying a suitable site on which to construct a data centre.

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

Data Centre Rental

Our CX2 data centre attained full occupancy in March 2011. One of the new tenants is Pacific Link Telecom (Asia) Pte Ltd ("PLTA"), a company established by one of the major shareholders of Pacific Link Telecom, Inc. ("PLT"). PLTA rented 17,500 sq ft of space at CX2 and expects to utilise the data centre space as a hub in Asia for major telecommunication companies ("telcos") and also to establish an internet exchange with these telcos.

The Group currently has approximately 205,000 sq ft of net data centre space which is already fully occupied. CXJ, expected to be commissioned in December 2011, will add 120,000 sq ft to the Group's capacity. Although recently launched, KN and the Group are already in advanced negotiations with several customers for the rental of approximately 47,000 sq ft of data centre space in aggregate at CXJ.

With the completion of CX5 and the inclusion of CX4 and CXJ, the data centre space of the Group is expected to increase to more than 525,000 sq ft by the end of the next financial year.

As CX5 is expected to be of higher power density compared to the existing data centres operated within our current portfolio, the average data centre rental revenue contribution from CX5 is expected to be significantly higher than our CX1 and CX2 data centres. In addition, the data centre rental rates in Jakarta, Indonesia are expected to be higher than the rental rates of our CX1 and CX2 data centres at a similar level of power density to CX5.

Within less than 2 years, we will have doubled our data centre capacity from 205,000 sq ft to more than 525,000 sq ft. This demonstrates the Board's commitment towards growing our data centre rental revenue and also places us at the forefront as the largest provider of carrier-neutral data centre space in South East Asia.

Maintenance

The Group's maintenance revenue has continued to grow and we have secured a number of new maintenance contracts during the financial year. Our maintenance division has recorded a significant improvement 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 and CXJ, the Group has continued to strengthen its design and fit-out division by recruiting additional engineers and technicians. With regards to the operations of CXJ, we are current working with KN to recruit employees under the new Indonesian joint-venture company and we also intend to second a few experienced technical personnel from CSF to develop the resources to manage the CXJ facility.

Although our design and fit-out division has had significant commitment to the development of CX5 and also in planning for the fit out of CXJ, we continue to pursue external projects. We recently entered into a collaboration agreement 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") and also to market the initiative to Malaysian and international investors. Under this agreement, CSF's role is to provide advisory services in the following areas:

·; design and development of data centres within the MDSTP;

·; operating and managing data centres;

·; preparation of proposals to develop data centres including costing and pricing strategies; and

·; formulation of marketing strategies for the provision of data centre related services.

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

The importance of keeping abreast with the latest data centre designs and technologies is key to the Group maintaining its leadership position, and one of the strategies that we intend to implement is to invest in companies that possess intellectual properties with a culture of research and development in related data center infrastructure activities, in particular energy management and reduction of carbon footprint.

The Group's design and fit-out division has identified a number of new equipment vendors and are currently conducting a technical evaluation of the products. We believe that working with new equipment vendors will broaden our range of product offerings that will in turn enhance our technical knowledge and competitiveness in the market.

Recent Initiatives

Pursuing opportunities in China

Our association with PLT creates a good opportunity for us to market products and services to Chinese businesses. PLT is already a service provider to several large Chinese corporations and we are currently reviewing a possible collaboration with PLT to jointly market our products and services to Chinese businesses capitalising on PLT's rapport with the same.

Based on our preliminary assessment of the Chinese market, there are many Chinese businesses that are keen to house their data centre facilities and operations outside of China. We believe that the South East Asian region, by virtue of geographical distance from China, is an ideal location for this purpose. This strategy of developing data centres for Chinese businesses outside of China mitigates the risks associated with our present unfamiliarity with the relevant rules and regulations in China.

Addressing inquiries from Japan

The recent crisis in Japan has resulted in several enquiries from Japanese firms to locate their data centre operations to safer locations such as Malaysia and Singapore.

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 have established formal procedures to identify, evaluate and review investment opportunities, and to monitor the performance or progress of these investments. These formal procedures, which include the formation of an Investment Supervision Committee, enhance the accountability of individuals who are directly responsible for each project or investment and also provide a higher degree of certainty that the investments will generate the minimum required returns to the Group within the prescribed time frame.

Outlook and current trading

Trading remains strong with good market traction within both the design, fit-out and maintenance business and our data centre rental business. Our new business pipeline continues to gather momentum with enquiries now coming from across the region.

The Group is confident that demand for our products and services will be sustained, driven largely by a combination of our own market reputation coupled with 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 pre-tax profit to be in line with current market expectations.

CHIEF FINANCIAL OFFICER'S REVIEW

A. Introduction

The Group's results for the financial year are in line with market expectations and in addition we have undertaken a number of initiatives to expand our business in the South East Asia region.

The Group's profit from operations increased to RM48.6m (£10.0m*) from RM47.0m (£9.6m*) in 2011. The increase in profit from operations is analysed in Section E below.

The profit from operations for the current financial year includes a gain from the sale (and leaseback) of data centres of RM24.6m (£5.0m*) as compared to RM38.0m (£7.8m*) in 2010.

The profit from operations in 2011 also includes a charge for equity settled employee expenses of RM0.9m (£0.2m*) as compared to RM7.0m (£1.4m*) in 2010. The charge in 2010 comprised mainly the equity settled listing expenses arising from the Company's initial public offering and admission to AIM in March 2010.

The Group recorded basic earnings per share ("EPS") of 29.79 sen (6.12p*) as compared with 35.65 sen (7.32p*) in 2010. Despite the increase in profit for the financial year, the Group's basic EPS decreased because of the lower weighted average number of ordinary shares applied in the computation of basic EPS for 2010 as a result of the new shares issued in conjunction with the admission onto AIM in March 2010. The weighted average number of ordinary shares applied in computing the basic EPS for 2011 is 160,000,000 as compared to 110,485,679 for 2010.

B. Financial results

The financial results of the Group are summarised below:

Note 1 : Certain comparative figures have been restated as a result of the reclassification of data centre depreciation, staff costs and cost of electricity reimbursed by customers to cost of sales which were previously reported under administrative expenses..  In addition, the amount relating to the reimbursement of electricity consumed by customers has been reclassified from other operating income to revenue. The details are disclosed in Note 36 to the Financial Statements.

C. Revenue

The Group recorded total revenue of RM113.3m (£23.3m*), an increase of RM42.4m (£8.7m*) or 59.8%.

Data centre rental and maintenance revenue increased by RM20.1m (£4.1m*) or 42.5% mainly attributable to the increase in occupancy of the CX2 data centre and the undertaking of more maintenance works during the financial year.

The increase in revenue from the design and fit-out of data centre facilities was partially attributable to the works carried out on the CX5 project. The Group recognised revenue of approximately RM17.9 (£3.7m) from project management and fit-out works relating to CX5 for the current financial year.

D. Gross profit margin

The Group's gross profit has increased by 55.2% from RM25.4m (£5.2m*) in 2010 to RM39.4m (£8.1*) in 2011. This is principally a result of the increase in revenue as described above, the effect of which is partly offset by a decrease in gross profit margin on data centre rentals as tabulated below:

The decrease in gross profit margin on data centre rental to 22.0% from 35.7% in 2010 is mainly due to increased occupancy costs following the sale and leaseback transactions of CX1 in April 2010 and CX2 in November 2009, as the operating lease rental charges exceed the previous depreciation charges. This is partly offset by reduced finance costs, as described in Section F below. In addition, the recognition of the full effects of the lease rental expense on CX2 since the beginning of the financial year whereas the occupancy rate of CX2 increased progressively throughout the year until the attainment of full occupancy in March 2011, and as such CX2 only attained maximum revenue generation capacity at the end of the financial year.

Gross profit margin on maintenance income decreased from 62.5% in 2010 to 48.0% in 2011 mainly due to increase in staff costs. Gross profit margin on design and development of data centre facilities increased from 26.1% in 2010 to 48.9% in 2011 mainly due to the undertaking of more design and consultancy work which earned significantly higher gross profit margins.

E. Profit from operations

Profit from operations increased to RM48.6m (£10.0m*) from RM47.0m (£9.6m*) in 2010 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, the effect of which is partly offset by the decrease gross profit margin on data centre rental as explained in Section D above.

The gain on sale of a data centre comprises the gain on sale and leaseback of the CX1 data centre in April 2010. The prior year gain relates to the sale and leaseback of CX2 in November 2009.

The share based payment expense on IPO in 2010 represents the equity-settled expense associated with the initial public offering and admission of the Company onto AIM.

The Group has not incurred any significant research and development expenses during the year. However, the Group recognises the importance of R&D and is in the process of discussion with several potential business alliances to jointly undertake R&D activities.

The Group's undertakings during the financial year provide a strong foundation for us to deliver on our commitments and corporate objectives in the forthcoming financial year.

F. Net finance income

The net finance income comprises mainly the interest income receivable on bank deposits stated net of interest cost incurred on the term loan previously utilised to finance the development of data centres.

Interest income increased to RM2.3m (£0.5m*) from RM0.5m (£0.10m*) in 2010.

Following the completion of the sale of the CX1 data centre in April 2010, the term loan associated with the development of the said data centre was settled in full and the interest cost for the financial year decreased substantially to RM0.5m (£0.10m*) from RM5.4m (£1.1m*) in 2010.

G. Taxation

The current tax charge for the year equates to circa 4.3% of profit before tax, as compared to the statutory corporate tax rate in Malaysia of 25%, reflecting the tax exemption on the profit arising on the sale (and leaseback) of CX1 and the utilisation of tax allowance to off-set taxable profits.

H. Earnings per share

Basic earnings per share was 29.79 sen (6.12p*) as compared to 35.65 sen (7.32p*) in 2010. The weighted average number of shares during the year used for EPS calculation is 160,000,000 (2010: 110,485,679). The lower weighted average number of shares used in the calculation of EPS in 2010 is because of the effects of the new shares issued in conjunction with the admission onto AIM in March 2010.

I. Dividends

On 8 April 2011, the Board declared an interim dividend for the year ended 31 March 2011 of 9.375sen (1.925p*) per share amounting to RM15.0m (£3.1m*). The interim dividend was paid on 29 April 2011.

The Board does not propose any further payment of dividends in respect of the 2011 financial year.

J. Cash and treasury

The Group's net cash generated by operations before working capital movements and net finance costs increased to RM24.5m (£5.0m*) from RM10.7m (£2.2m*) in 2010 mainly due to the increase in total revenue. The working capital requirement of the Group increased to RM36.2m (£7.4m*) from RM18.9m (£3.9m*) in 2010 mainly due to the higher net increase balance of trade receivables of RM57.4m (£11.8m*) as compared with RM27.9m (£5.7m*) in 2010.

 The trade receivables balance increased from RM27.9m (£5.7m) as at 31 March 2010 to RM57.4 (£11.8m*) as at 31 March 2011 mainly due to certain customers not paying on time during the year and certain customers being on deferred payment terms. Most of the slow-paying customers have settled a substantial portion of the overdue amounts subsequent to the financial year end.

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

On 15 April 2010, the Group completed the sale and leaseback of its CX1 data centre for total net proceeds of RM49.4m (£10.2m*) resulting in a net profit on sale of RM22.5m (£4.6m*). The transaction resulted in a decrease in the carrying amount of the property, plant and equipment of the Group by RM27.0m (£5.5m*) and the balance of the term loan by RM45.2m (£9.3m*) as a substantial portion of the proceeds was utilised to repay the term loan attributable to the development of CX1.

During the financial year, the Group advanced RM59.0m (£12.1m*) to Integrated DC Builders Sdn Bhd for the development of CX5. The Group expects RM30.0m (£6.2m*) of the advances to be repaid by early financial year 2013 with the balance to be fully paid by the end of financial year 2014.

K. Post Balance Sheet Events

The Group together with its business partner in Indonesia, PT Karyagraha Nusantara ("KN") formalised the establishment of the joint-venture company with the incorporation of PT Cyber-CSF ("Cyber-CSF") in Indonesia. The equity interest in Cyber-CSF held by KN and the Group is 51% and 49%, respectively. Cyber-CSF will principally be engaged in providing data centre management services in Indonesia.

Cyber-CSF will lease a newly constructed state of the art purpose-built data centre building - consisting of approximately 120,000 sq ft on rentable data centre space - from KN on a long term basis.

The Group is currently planning for the fit-out of CXJ on a phase-by-phase basis as and when potential customers commit to rent the space. The fit-out costs will be borne with Cyber-CSF.

We expect that Cyber-CSF will incur a loss in the first 2 years of operations and become profitable with effect from the third year. However, Cyber-CSF is expected to obtain financing facilities on its own accord without any significant capital contribution from the Group.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 March 2011

Note 1 : Certain comparative figures have been restated as a result of reclassification of depreciation amount of a data centre, staff costs and cost of electricity reimbursed by customers to cost of sales which were previously reported under administrative expenses.  In addition, the amount relating to the reimbursement of electricity consumed by customers has been reclassified from other operating income to revenue. The details are disclosed in Note 36 to the Financial Statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 March 2011

CONSOLIDATED STATEMENT OF CASH FLOW

For the year ended 31 March 2011

CONSOLIDATED STATEMENT OF CASH FLOW

For the year ended 31 March 2011 (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 18 July 2011. The financial information set out in this Preliminary Announcement does not constitute the Group's statutory accounts for the year ended 31 March 2011 but is derived from those accounts. The statutory accounts for 2011 will be delivered to the Jersey Registrar of Companies in September 2011. The auditors have reported on the 2011 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 2011 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 2011. 

The directors have prepared financial projections, including cash flows, for a period up to 31 March 2013. 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 2011 of RM4.8687 : £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 accounting policy for revenue was changed during the year to include reimbursement for electricity consumed by customers. The reimbursement for electricity consumed by customers was previously included in other operating income. The aforementioned change in accounting policy resulted in an increase in revenue by RM14.5m (2010: RM6.7m). Save for the foregoing, 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 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.

During the financial year, the Group have changed the presentation of the segmental reporting to better reflect the operational financial results, therefore the comparative figures were updated accordingly to conform with the presentation for current financial year.

All of the Group's revenue from external customers is derived from its subsidiaries based in Malaysia.