TIDMCSFG
RNS Number : 9898V
CSF Group PLC
27 July 2018
27 July 2018
CSF Group plc
("CSF" or "the Group")
FINAL RESULTS
CSF Group (AIM: CSFG), a provider of data centre facilities and
services in South East Asia, today announces its audited full year
results for the year ended 31 March 2018.
Financial highlights:
* Group revenue from continuing operations of RM23.9m
(GBP4.4m*) (FY2017: RM26.4m (GBP4.9m*))
* Profit before tax ("PBT") of RM113.9m (GBP21.1m*),
including gain on disposal of subsidiary, compared to
the loss before tax of RM33.2m (GBP6.1m*) in FY2017.
The PBT comprises loss before tax ("LBT") from
continuing operations of RM2.8m (GBP0.5m*) as
compared to PBT of RM5.3m (GBP1.0m*) in FY2017 and
PBT of RM115.8m (GBP21.4m*) from discontinued
operations as compared to LBT of RM39.9m (GBP7.4m*)
in FY2017
* LPS for continuing operations of 1.78 sen (0.33p*)
per share as compared to EPS 3.30 sen (0.61p*) per
share in FY2017 and EPS for discontinued operations
of 72.37 sen (13.38p*) as compared to LPS of 24.93
sen (4.61p*) in FY2017
* Closing unrestricted cash position as at 31 March
2018 of RM49.2m (GBP9.1m*) (FY2017: RM58.0m
(GBP10.7m*))
Operational highlights:
* The Group completed the transfer of its shareholdings
in CSF CX to its purchaser in exchange for the
consideration of RM2.00 (being approximately
GBP0.37*) on 1 November 2017. Control of CSF CX
passed to the purchaser at this date. The Share SPA
was conditional upon, inter alia, the receipt of
various regulatory consents. All outstanding
conditions were fulfilled by 8 May 2018
* Continuing to pursue a pipeline of potential
customers and marketing activities
* Ongoing discussions with several potential customers
* Enhanced marketing efforts focusing on potential
customers and resellers
* Post period, certain cash deposits lodged by the
Group for rental deposits in connection with the CX2
and CX5 data centres, amounting to RM9.1m (GBP1.7m*),
have been refunded to the Group.
The Company will make a further announcement in due course when
electronic copies of its audited annual report and accounts for
the year ended 31 March 2018 are made available from the Company's
website.
For further information, please contact:
CSF Group
Phil Cartmell, Chairman +603 8311 9563
Allenby Capital (Nominated Adviser and
Broker)
Nick Naylor / Alex Brearley +44 (0) 20 3328 5656
CHAIRMAN'S STATEMENT
The Board is pleased to report the successful disposal (the
"Disposal") during the period of CSF CX Sdn Bhd ("CSF CX"), the
Group's loss making subsidiary and also the tenant and operator of
the CX2 and CX5 data centres. Albeit for a nominal consideration,
the Disposal has significantly reduced the Group's operating losses
and cash burn rate, and improved the Group's financial
position.
Following the completion of the Disposal, the Group has been
able to focus on improving the operational efficiency of its
remaining data centre (i.e. CX1), whilst identifying additional
sources of revenue from CX1 and other business divisions.
The Group's monthly revenues are still insufficient to cover its
monthly operating overheads, and this has been exacerbated by the
intense competition and pricing pressure experienced by the
maintenance and the design and development segments of the
business. The Board also notes that significant capital expenditure
will be required for the replacement of aging equipment at the CX1
data centre and will continue to work closely with management in
the careful planning and implementation of the Group's capital
expenditure budget.
The Board will continue to support the efforts of management in
implementing its stated business strategies in sustaining the
rental revenue of the CX1 data centre, growing the design and
development and maintenance business, and identifying further cost
reduction measures, with the objective of preserving the Group's
financial resources.
The Board expects for the Group to be able to reduce its
operating losses in the next financial year, following the
completion of the Disposal, although on significantly decreased
revenues.
Phil Cartmell
Chairman
27 July 2018
CHIEF EXECUTIVE OFFICER'S REVIEW
Overview of the Year
CSF Group is a provider of data centre facilities and services
in South East Asia. The Group's revenue is generated from the
provision of data centre design and development services, support
and maintenance agreements and the rental of data centre space. The
Group's business model is to lease its data centre facilities from
a freeholder, rather than own the property assets underlying its
data centres.
The Group reported a profit for the financial year of RM113.0m
(GBP20.9m*), which was mainly attributable to the recognition of a
gain on disposal of CSF CX Sdn Bhd ("CSF CX") of RM132.6m
(GBP24.5m*). On 28 September 2017, the Group entered into a sale
and purchase agreement (the "Share SPA") to dispose of its entire
equity interest in CSF CX (the "Disposal"), the tenant and operator
of the CX2 and CX5 data centres, for a cash consideration of RM2.00
(approximately GBP0.37*). The Share SPA was conditional upon, inter
alia, the receipt of various regulatory consents. The Group
completed the transfer (the "Share Transfer") of its shareholdings
in CSF CX to the purchaser in exchange for the consideration of
RM2.00 (being approximately GBP0.37*) on 1 November 2017. Control
of CSF CX passed to the purchaser at this date. All outstanding
conditions were fulfilled by 8 May 2018.
The loss for the previous financial year of RM34.6m (GBP6.4m*)
was mainly attributable to the operating loss of CSF CX.
The Group recorded a total gross profit margin of 1.0% in the
current financial year as compared to a total gross loss margin of
3.9% in FY2017 mainly due to the cessation of the recognition of
the gross losses of CSF CX with effect from 1 November 2017 (the
date of completion of the Share Transfer).
The Group's closing cash position decreased from RM58.0m
(GBP10.7m*) as at 31 March 2017 to RM49.2m (GBP9.1m*) as at the
year-end mainly due to the utilisation of cash reserves to fund the
working capital requirements of CSF CX up to the date of completion
of the Share Transfer. However, the Group received the refund of
cash deposits lodged by the Group for rental deposits in connection
with CX2 and CX5 data centres amounting to RM9.1m (GBP1.7m*), on 31
May 2018.
Although the Group has been able to significantly reduce its
recurring operating losses as a result of the Disposal, the Board
is conscious that the Group's monthly revenues are still
insufficient to cover its monthly operating overheads and that
significant capital expenditure will be required for the
replacement of aging equipment at the Group's remaining data
centre, CX1. CX1 is a commercial data centre facility located in
the Selangor state of Malaysia, which has been in operation since
2003 with a total net floor area of approximately 37,500 square
feet.
Following completion of the Disposal, the Group has continued to
operate its maintenance and data centre design and development
business. In addition, the Group also continued to market its data
centre services in respect of its CX1 data centre.
Current Trading
The Board and management will continue to implement measures to
reduce the burn rate of the Group's cash reserves. The Board will
continue to ensure that there are no significant cash outlays other
than the sums required to cover the Group's committed lease rentals
and other necessary operating overheads, subject to any further
capital or operating expenditure that may be required in relation
to tenancy contracts.
In view of the accumulated losses of the Group, the Board is not
recommending the payment of a dividend.
Data Centre Rental
Following the completion of the disposal of CSF CX, the Group
has approximately 37,500 sq ft of data centre space and
approximately 1 MW of IT power capacity in Malaysia.
During the year, the Group successfully renegotiated a contract
with an existing tenant at CX1. The Group continues to actively
pursue new customers directly and is working closely with a network
of resellers and business partners to identify additional sources
of revenue from CX1 and other business divisions.
The fibre optic cable linking CX1, CX2 and CX5 commissioned in
the prior year has started to generate initial revenues for the
Group and the management has now implemented cross-connect charges
for the utilisation of network connectivity to/from and within the
CX1 data centre.
Maintenance, Design and Fit-out of Data Centres
The maintenance and the design and development segments of the
business have experienced intense competition and pricing pressure
during the year. Notwithstanding this, management continues to
pursue new contracts to enhance our recurring maintenance revenue
streams and other revenues from design and fit-out projects.
Strategy
Our strategy remains clear and consistent, and involves focusing
on achieving growth in sustainable revenues, while carefully
implementing our capital expenditure plans to ensure that the
Group's financial position is preserved. We will continue to invest
in our employees - in terms of enhancing their technical knowledge
and competency - and remain focused on improving the quality of our
service to customers.
Michael Leong
Chief Executive Officer
27 July 2018
CHIEF FINANCIAL OFFICER'S REVIEW
Introduction
The Group incurred a net profit of RM113.0m (GBP20.9m*) for
FY2018 as compared to a net loss of RM34.6m (GBP6.4m*) in FY2017.
The basic loss per share ("LPS") for continuing operations amounted
to 1.78 sen (0.33p*) per share as compared to earnings per share
("EPS") of 3.30 sen (0.61p*) per share in FY2017, whilst the EPS
for discontinued operations amounted to 72.37 sen (13.38p*) as
compared to a LPS of 24.93 sen (4.61p*) per share in FY2017.
The net profit for FY2018 was mainly attributable to the gain on
the disposal of CSF CX amounting to RM132.6m (GBP24.5m*), a
reversal of an overprovision for project costs of RM8.5m (GBP1.6m*)
and a net decrease in a provision for onerous leases of RM3.1m
(GBP0.6m*) as compared to a net increase of RM8.2m (GBP1.5m*) in
FY2017, which was partly offset by RM32.7m (GBP6.0m*) of bad debts
written off and a net increase in the allowance for doubtful debts
of RM28.0m (GBP5.2m*) as compared to a net decrease of RM1.1m
(GBP0.2m*) in FY2017.
The Group's closing cash position decreased from RM58.0m
(GBP10.7m*) as at 31 March 2017 to RM49.2m (GBP9.1m*) as at the
year-end. Based on the Group's unrestricted cash and bank balances
at the financial year end of RM49.2m (GBP9.1m*), the restricted
cash of RM2.1m (GBP0.4m*) and the net current assets balance of
RM55.9m (GBP10.3m*) and taking into consideration the Group's
financial projections, including cash flows, for the period up to
30 September 2019, the Board believes that the Group has adequate
resources to continue in operational existence for the foreseeable
future.
Financial results
The financial results of the Group are summarised below:
Proforma*
2018 2017 2018 2017
RM'000 RM'000 GBP'000 GBP'000
Group revenue from continuing
operations 23,901 26,435 4,417 4,886
Group revenue from discontinued
operations 31,967 55,985 5,909 10,348
Total Group Revenue 55,868 82,420 10,326 15,234
CONTINUING OPERATIONS:
Gross profit 9,647 12,692 1,782 2,345
Other operating income 9,470 1,756 1,750 325
Gain on disposal of property,
plant and equipment 1,027 - 190 -
Gain/(Loss) on disposal
of other investment 41 (11) 8 (2)
Administrative expenses (18,748) (9,735) (3,465) (1,800)
Bad debts written off (32,707) - (6,045) -
Net reversal of allowance
for doubtful debts 28,503 (23) 5,268 (4)
Operating (loss)/profit
from continuing operations (2,767) 4,679 (512) 864
Finance income 1,450 1,353 268 250
Net foreign exchange (loss)/gain (608) 737 (112) 136
Finance costs (14) (41) (3) (7)
(Loss)/Profit before tax
of continuing operations (1,939) 6,728 (359) 1,243
Tax (907) (1,445) (167) (267)
(Loss)/Profit from continuing
operations (2,846) 5,283 (526) 976
DISCONTINUED OPERATIONS:
Gross loss (9,064) (15,930) (1,675) (2,944)
Other operating income 52 184 10 34
Administrative expenses (4,762) (7,240) (880) (1,338)
Net reversal of allowance
for doubtful debts (546) 1,077 (101) 199
Provision for onerous leases 3,140 (8,163) 580 (1,509)
Operating loss from discontinued
operations (11,180) (30,072) (2,066) (5,558)
Finance income 172 321 32 59
Gain on disposal of subsidiary 132,649 - 24,518
Finance costs (5,828) (10,153) (1,077) (1,877)
Profit/(Loss) from discontinued
operations 115,813 (39,904) 21,407 (7,376)
Profit/(Loss) for the financial
year 112,967 (34,621) 20,881 (6,400)
Gain/(Loss) on foreign currency
translation 382 (480) 70 (89)
Total comprehensive income/(loss)
for the financial year 113,349 (35,101) 20,951 (6,489)
Basic (LPS)/EPS for continuing (1.78
operations sen) 3.30 sen (0.33p) 0.61p
Basic EPS/(LPS) for discontinued 72.37 (24.93
operations sen sen) 13.38p (4.61p)
70.59 (21.63
Basic EPS/(LPS) sen sen) 13.05p (4.00p)
Weighted average number
of ordinary shares for basic
EPS ('000) 160,029 160,029 160,029 160,029
==================================== ========== =========== ========== ==========
Financial results (Continued)
Proforma*
2018 2017 2018 2017
RM'000 RM'000 GBP'000 GBP'000
KEY PERFORMANCE INDICATORS
Gross profit from continuing
operations 9,647 12,692 1,782 2,345
Gross loss from discontinued
operations (9,064) (15,930) (1,675) (2,944)
Gross profit/(loss) 583 (3,238) 107 (599)
Total Group Revenue 55,868 82,420 10,326 15,234
Gross profit/(loss) margin 1.0% (3.9%) 1.0% (3.9%)
Trade receivables turnover
(days) 34 330 34 330
Trade payables turnover (days) 10 60 10 60
Quick ratio 29.1 7.0 29.1 7.0
================================= ======== ========= ======== ========
Revenue
Proforma*
2018 2017 2018 2017
RM'000 RM'000 GBP'000 GBP'000
Data centre rental income
- Continuing operations 17,593 18,570 3,252 3,432
* Discontinued operations 29,630 47,956 5,477 8,864
------- ------- -------- --------
47,223 66,526 8,729 12,296
Maintenance income 5,217 7,183 964 1,328
Consultancy income 522 - 96 -
------- ------- -------- --------
52,962 73,709 9,789 13,624
Design and development of
data centre facilities income
* Continuing operations 569 683 105 126
* Discontinued operations 2,337 8,028 432 1,484
------- ------- -------- --------
2,906 8,711 537 1,610
------- ------- -------- --------
Total Group revenue 55,868 82,420 10,326 15,234
------- ------- -------- --------
Total revenue decreased from RM82.4m (GBP15.2m*) in FY2017 to
RM55.9m (GBP10.3m*) in FY2018, mainly due to the cessation of
recognition of the revenue (and costs) of CSF CX as a result of the
completion of transfer of the Group's shareholdings in CSF CX on 1
November 2017 to the purchaser (the "Share Transfer") pursuant to
the disposal of CSF CX (the "Disposal"). The decrease in data
centre rental income attributable to the Disposal amounted to
RM18.3m (GBP3.4m*). The decrease in maintenance income of RM2.0m
(GBP0.4m*) was mainly attributable to the non-renewal of
comprehensive maintenance contracts. The Group also recorded lower
revenue from its design and development segment, due to its larger
fit-out contracts having been completed during the previous
financial year with no large contracts secured in the current
year.
The consultancy income was contributed by CSF Capital Advisory
Sdn Bhd, which has provided financial and non-financial consultancy
services since April 2017. This company was dormant in FY2017.
Gross profit/(loss)
The Group recorded a total gross profit margin of 1.0% in the
current financial year as compared to a total gross loss margin of
3.9% in FY2017, as tabulated below:
Proforma*
2018 2017 2018 2017
RM'000 RM'000 GBP'000 GBP'000
CONTINUING OPERATIONS:
Gross profit on data centre
rental 7,732 8,055 1,429 1,488
Gross profit on maintenance 2,702 4,255 499 786
Gross (loss)/profit on design
and development (889) 382 (164) 71
Gross profit on consultancy 102 - 18 -
-------- --------- -------- --------
Total gross profit from continuing
operations 9,647 12,692 1,782 2,345
-------- --------- -------- --------
DISCONTINUED OPERATIONS:
Gross loss on data centre
rental (9,594) (18,572) (1,773) (3,432)
Gross profit on design and
development 530 2,642 98 488
-------- --------- -------- --------
Total gross loss from discontinued
operations (9,064) (15,930) (1,675) (2,944)
-------- --------- -------- --------
Total gross profit/(loss) 583 (3,238) 107 (599)
Total revenue 55,868 82,420 10,326 15,234
Total gross profit/(loss)
margin 1.0% (3.9%) 1.0% (3.9%)
Loss from operations
The Group recorded a loss from operations from continuing
operations of RM2.8m (GBP0.5m*) as compared to a profit from
operations from continuing operations of RM4.7m (GBP0.9m*) in
FY2017. The adverse variance of RM7.4m (GBP1.4m) is analysed
below:
RM'000 GBP'000
Decrease in gross profit from continuing
operations (3,045) (563)
Increase
in
administrative
expenses (9,013) (1,665)
Increase
in
bad
debts
written
off,
net
of
reversal
of
allowance
for
doubtful
debts (4,181) (773)
Increase
in
other
operating
income 7,714 1,425
Gain
on
disposal
of
plant
and
equipment 1,027 190
Other
items 52 10
------------ ------------
(7,446) (1,376)
------------ ------------
The decrease in gross profit from continuing operations is
explained in Gross Profit/(Loss) above.
The increase in administrative expenses was mainly due to the
provision of one-off bonus payments to the executive management
team of RM10.4m (GBP1.9m*), which was approved by the Board in
recognition of the hard work, commitment and commendable efforts in
substantially improving the financial position of the Company under
the stewardship of the Board of Directors in respect of the
successful completion of the disposal of CSF CX, further details of
which were announced on 24 July 2018.
Loss from operations (Continued)
The increase in other operating income was mainly attributable
to the accounting of the cash deposits lodged by the Group for
rental deposits in connection with CX2 and CX5 data centres of
RM9.1m (GBP1.7m*), refundable to the Group upon completion of the
disposal of CSF CX.
In the current year, bad debts of RM32.7m (GBP6.0m*) were
written off and the effect was partly offset by net reversal of
allowance for doubtful debts of RM28.5m (GBP5.3m*). The bad debts
written off mainly consist of trade receivables of RM29.3m
(GBP5.4m*) that were due from Integrated DC Builders Sdn Bhd, which
has been wound up during this financial year.
Taxation
The Group recorded a tax charge for the year in spite of
reporting a loss for the year, which was mainly due to tax payable
by a profitable subsidiary which was not subject to group tax
relief.
Earnings per share
Basic and diluted earnings per share ("EPS") was 70.59 sen
(13.05p*) as compared to a loss per share ("LPS") of 21.63 sen
(4.00p*) in FY2017. The weighted average number of shares during
the year used for basic and diluted LPS calculation is 160,028,667
(FY2017: 160,028,667).
Dividends
The Board does not propose any payment of dividends in respect
of the current financial year.
Cash and treasury
Proforma*
2018 2017 2018 2017
RM'000 RM'000 GBP'000 GBP'000
Cash generated from/(used
in) operations before
working capital movements
and net finance income/cost (16,313) (24,492) (3,015) (4,529)
Working capital movements 6,913 36,138 1,277 6,681
Net finance cost 4,220 8,520 780 1,575
----------- ----------- ---------- ----------
(5,180) 20,166 (958) 3,727
Capital expenditure (3,939) (7,020) (728) (1,297)
Net cash (used in)/generated
from other investing activities (1,468) 1,674 (271) 309
----------- ----------- ---------- ----------
Net cash (outflow)/inflow
before financing activities (10,587) 14,820 (1,957) 2,739
Net cash generated from/(used
in) other financing activities 1,746 (394) 323 (73)
----------- ----------- ---------- ----------
Net cash (outflow)/inflow (8,841) 14,426 (1,634) 2,666
----------- ----------- ---------- ----------
The Group recorded a lower net cash used by operations before
working capital movements and net finance cost of RM16.3m
(GBP3.0m*) which was mainly due to the Disposal.
Cash and treasury (Continued)
The decrease in working capital movements from RM36.1m
(GBP6.7m*) in FY2017 to RM6.9m (GBP1.3m*) in FY2018 was mainly due
to the collection of a significant amount of overdue trade
receivables in the previous financial year which did not recur in
the current year. The decrease in net finance cost from RM8.5m
(GBP1.6m*) in FY2017 to RM4.2m (GBP0.8m*) in FY 2018 was mainly due
to the reduction in financing facilities attributable to the
Disposal.
Critical accounting judgement and key sources of estimation
uncertainty
The areas of critical accounting judgement and key sources of
estimation uncertainty are disclosed in Note 1 (vi) to the
Financial Statements below.
Going concern
These financial statements have been prepared on a going concern
basis. The directors' consideration of going concern and the
associated uncertainties are provided in Note 1 (v) to the
Financial Statements below.
Lee, King Loon
Chief Financial Officer
27 July 2018
* The translation of the financial statements into pro forma
balances in pounds Sterling is included solely for convenience and
information. The pro forma balances in pounds Sterling are stated,
as a matter of arithmetical computation only, on the basis of all
balances (2018 and 2017) being translated from Ringgit Malaysia
into pounds Sterling at the rate prevailing on 31 March 2018 of
RM5.4102 : GBP1.00. This translation should not be construed as
meaning that the Ringgit Malaysia amounts actually represent, or
have been or could be translated into the stated number of pounds
Sterling.
Consolidated Statement of PROFIT OR LOSS AND OTHER Comprehensive
Income
Proforma Proforma
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2018 2017 2018 2017
Note RM'000 RM'000 GBP'000 GBP'000
Continuing operations:
Revenue 3 23,901 26,435 4,417 4,886
Cost of sales 3 (14,254) (13,743) (2,635) (2,541)
--------------- ----------- ----------- -----------
Gross profit 9,647 12,692 1,782 2,345
Other operating income 9,470 1,756 1,750 325
Gain on disposal of property,
plant and equipment 1,027 - 190 -
Gain/(Loss) on disposal of other
investment 41 (11) 8 (2)
Administrative expenses (18,748) (9,735) (3,465) (1,800)
Bad debts written off (32,707) - (6,045) -
Net reversal of allowance for
doubtful debts 28,503 (23) 5,268 (4)
Total operating expenses (22,952) (9,758) (4,242) (1,804)
Operating (loss)/profit (2,767) 4,679 (512) 864
Finance income 1,450 1,353 268 250
Net foreign exchange (loss)/gain (608) 737 (112) 136
Finance costs (14) (41) (3) (7)
--------------- ----------- ----------- -----------
(Loss)/Profit before tax (1,939) 6,728 (359) 1,243
Tax 5 (907) (1,445) (167) (267)
--------------- ----------- ----------- -----------
(Loss)/Profit from continuing
operations (2,846) 5,283 (526) 976
Discontinued operations:
Profit/(Loss) from discontinued
operations 4 115,813 (39,904) 21,407 (7,376)
--------------- ----------- ----------- -----------
Profit/(Loss) for the financial
year 112,967 (34,621) 20,881 (6,400)
Other comprehensive income
Gain/(Loss) on foreign currency
translation 382 (480) 70 (89)
--------------- ----------- ----------- -----------
Total comprehensive profit/(loss)
for the financial year 113,349 (35,101) 20,951 (6,489)
=============== =========== =========== ===========
(LPS)/EPS for continuing operations
* Basic (Malaysian sen) 6 (1.78) 3.30 (0.33)p 0.61p
* Diluted (Malaysian sen) 6 (1.78) 3.30 (0.33)p 0.61p
EPS/(LPS) for discontinued operations
* Basic (Malaysian sen) 6 72.37 (24.93) 13.38p (4.61)p
* Diluted (Malaysian sen) 6 72.37 (24.93) 13.38p (4.61)p
.
Consolidated Statement of financial position
Proforma Proforma
As at As at As at As at
31 March 31 March 31 March 31 March
2018 2017 2018 2017
RM'000 RM'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 3,991 27,318 738 5,049
Other Investments 9 20 2 4
Trade receivables 40 210 7 39
Deferred tax asset 161 137 30 25
4,201 27,685 777 5,117
---------- ----------
Current assets
Inventories 277 667 51 123
Trade and other receivables 17,698 39,209 3,271 7,247
Current tax assets 1,341 329 248 61
Restricted cash 2,130 14,056 394 2,598
Cash and cash equivalents 49,184 60,313 9,091 11,148
70,630 114,574 13,055 21,177
---------- ----------
Total assets 74,831 142,259 13,832 26,294
========== ========== ========== ==========
Current liabilities
Trade and other payables 14,403 42,134 2,662 7,788
Bank borrowings 339 1,260 63 233
Obligations under finance
leases - 50 - 9
14,742 43,444 2,725 8,030
---------- ----------
Non-current liabilities
Obligations under finance
leases - 100 - 18
Trade and other payables 1,968 80,643 364 14,906
Onerous lease provision - 73,300 - 13,548
---------- ---------- ---------- ----------
1,968 154,043 364 28,472
---------- ---------- ---------- ----------
Total liabilities 16,710 197,487 3,089 36,502
========== ========== ========== ==========
Net assets/(liabilities) 58,121 (55,228) 10,743 (10,208)
========== ========== ========== ==========
Equity
Share capital 78,936 78,936 14,590 14,590
Share premium account 104,499 104,499 19,315 19,315
Shares held under Employee
Benefit Trust (2,300) (2,300) (425) (425)
Other reserve (66,153) (66,153) (12,227) (12,227)
Translation reserve (864) (1,246) (160) (230)
Accumulated loss (55,997) (168,964) (10,350) (31,231)
---------- ---------- ---------- ----------
Total surplus/(capital
deficiency) 58,121 (55,228) 10,743 (10,208)
========== ========== ========== ==========
CONSOLIDATED STATEMENT OF CASH FLOW
Proforma Proforma
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2018 2017 2018 2017
RM'000 RM'000 GBP'000 GBP'000
Net cash (used in)/from operating
activities (5,180) 20,166 (958) 3,727
----------- ----------- ----------- -----------
Investing activities
Interest received 1,622 1,674 300 309
Additions to property, plant
and equipment (3,939) (7,020) (728) (1,297)
Proceeds from sale of property,
plant and equipment 500 - 92 -
Disposal of subsidiary (3,590) - (663) -
Net cash used in investing
activities (5,407) (5,346) (999) (988)
----------- ----------- ----------- -----------
Financing activities
Repayments of obligations under
finance leases (29) (155) (5) (29)
Decrease/(Increase) in restricted
cash 2,696 (1) 498 -
Repayment of borrowings (334) (1,164) (62) (215)
(Repayment)/Borrowings from
revolving line of credit (587) 926 (108) 171
Net cash from/(used in) financing
activities 1,746 (394) 323 (73)
----------- ----------- ----------- -----------
Net (decrease)/increase in
cash and cash equivalents (8,841) 14,426 (1,634) 2,666
Cash and cash equivalents at
beginning of financial year 57,998 43,572 10,720 8,054
----------- ----------- ----------- -----------
Cash and cash equivalents at
end of financial year 49,157 57,998 9,086 10,720
=========== =========== =========== ===========
CONSOLIDATED STATEMENT OF CASH FLOW (Continued)
Proforma Proforma
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2018 2017 2018 2017
RM'000 RM'000 GBP'000 GBP'000
Profit/(Loss) for the financial
year 112,967 (34,621) 20,881 (6,400)
Adjustments for:
Increase/(Decrease) in allowance
for slow moving inventories 132 (101) 24 (19)
Increase/(Decrease) in allowance
for diminution of investment 11 (1) 2 -
Decrease in allowance for
doubtful debts (27,957) (1,054) (5,167) (195)
Bad debts written off 32,707 - 6,045 -
Depreciation of property,
plant and equipment 3,475 5,342 643 986
Interest expense 5,842 10,194 1,080 1,884
Interest income (1,622) (1,674) (300) (309)
(Gain)/Loss on disposal of
other investment (41) 11 (8) 2
Gain on disposal of subsidiary (132,649) - (24,518) -
Gain on disposal of property,
plant and equipment (1,027) - (190) -
Gain/(Loss) on foreign currency
translation 382 (480) 70 (89)
Net movement on onerous leases (3,140) 8,163 (580) 1,509
Tax 907 1,445 167 267
----------- ----------- ----------- -----------
Operating cash outflows before
movements in working capital (10,013) (12,777) (1,851) (2,364)
Decrease in inventories 258 1,215 47 225
(Increase)/Decrease in receivables (24,042) 26,621 (4,444) 4,921
Increase in payables 30,697 8,302 5,674 1,535
----------- ----------- ----------- -----------
Cash (used in)/generated
by operations (3,100) 23,361 (574) 4,317
Interest paid (137) (373) (25) (69)
Income taxes paid (1,943) (2,822) (359) (521)
----------- ----------- ----------- -----------
Net cash (used in)/generated
by operating activities (5,180) 20,166 (958) 3,727
=========== =========== =========== ===========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Shares held
Share premium under Other Translation Accumulated
Capital account Employee reserve reserve loss Total
RM'000 RM'000 Benefit RM'000 RM'000 RM'000 RM'000
Trust
RM'000
At 1 April 2016 78,936 104,499 (2,300) (66,153) (766) (134,343) (20,127)
Total
comprehensive
loss for the
year - - - - (480) (34,621) (35,101)
At 31 March
2017 78,936 104,499 (2,300) (66,153) (1,246) (168,964) (55,228)
Total
comprehensive
income for the
year - - - - 382 112,967 113,349
At 31 March
2018 78,936 104,499 (2,300) (66,153) (864) (55,997) 58,121
========== ============= ============= ============= ============= ============= ===========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued)
Share Shares held
Share premium under Other Translation Accumulated
Proforma Capital account Employee reserve reserve loss Total
GBP'000 GBP'000 Benefit GBP'000 GBP'000 GBP'000 GBP'000
Trust
GBP'000
At 1 April 2016 14,590 19,315 (425) (12,227) (141) (24,831) (3,719)
Total
comprehensive
loss for the
year - - - - (89) (6,400) (6,489)
At 31 March
2017 14,590 19,315 (425) (12,227) (230) (31,231) (10,208)
Total
comprehensive
income for the
year - - - - 70 20,881 20,951
At 31 March
2018 14,590 19,315 (425) (12,227) (160) (10,350) 10,743
========== ============= ============= ============= ============= ============== ==========
1. General information
The Preliminary Announcement and the final accounts of the Group
were approved by the Board of Directors on 27 July 2018. The
financial information set out in this Preliminary Announcement does
not constitute the Group's statutory accounts for the year ended 31
March 2018 but is derived from those accounts. The statutory
accounts for 2018 will be delivered to the Jersey Registrar of
Companies in August 2018. The auditors have reported on the 2018
accounts and their report was unqualified and did not draw
attention to any matters by way of emphasis.
(i) Basis of preparation
The consolidated financial statements of CSF Group plc, for the
year ended 31 March 2018 have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the EU.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria, this announcement does not itself contain
sufficient information to comply with IFRS. The Company expects to
publish full financial statements that comply with IFRS on or
before 30 September 2018.
(ii) Pro forma balances
The inclusion of pro forma balances in pounds Sterling is
included solely for convenience. The pro forma balances in pounds
Sterling are stated, as a matter of arithmetical computation only,
on the basis of all balances (2018 & 2017) being translated
from Malaysian Ringgits into pounds Sterling at the rate prevailing
on 31 March 2018 of RM5.4102 : GBP1.00. This translation should not
be construed as meaning that the Malaysian Ringgit amounts actually
represent, or have been or could be converted into the stated
number of pounds Sterling.
(iii) Basis of accounting
The accounting policies adopted are consistent with those of the
annual financial statements for the year ended 31 March 2018, as
described in those financial statements.
(iv) Forward-looking statements
Certain statements in these condensed consolidated financial
results are forward-looking. Although the Group believes that the
expectations reflected in these forward-looking statements are
reasonable, we can give no assurance that these expectations will
prove to have been correct. Because these statements involve risks
and uncertainties, actual results may differ materially from those
expressed or implied by these forward-looking statements.
(v) Going concern
The Group's business activities, together with the factors
likely to affect the future development, performance and position
are set out in the Chairman's Statement. The financial position of
the Group, its cash flows and liquidity positions are described in
the Chief Financial Officer's Review. In addition, the notes to
financial statements include foreign currency risk management,
interest rate risk management, credit risk management and liquidity
risk management.
As at 31 March 2018, the Group's cash and cash equivalents
excluding deposits held on behalf of the Employee Benefit Trust
stand at RM49.2 million.
The Directors have prepared financial projections, including
cash flows, for a period up to 30 September 2019. The projections
include sensitivity testing to consider a reasonable worst case
scenario. Based on these projections and taking into consideration
the current financial position of the Group and future capital and
lease commitments, the Directors have a reasonable expectation that
the Group has adequate resources to continue in operational
existence for the foreseeable future. Thus they continue to adopt
the going concern basis of accounting in preparing the annual
financial statements. In reaching this conclusion the directors
have paid particular attention to the following factors:
-- The disposal of CSF CX Sdn Bhd ("CSF CX") has improved the
Group's financial position due to the elimination of the net
liabilities of CSF CX and the elimination of the Group's
obligations on the lease payable;
-- The return of rental deposits in connection with the CX2 and
CX5 data centres, amounting to RM9.07 million on 31 May 2018;
-- The existing cash reserves of the business, and the fact that
the Group has low levels of bank borrowings with low financial
covenants;
-- The Group's business model is to lease its data centres as
opposed to outright ownership. As a result, the Group is committed
to regular lease rental payments, which constitute a significant
proportion of the Group's cost base. The Group therefore needs to
achieve a certain level of tenant occupancy to cover the minimum
lease and other costs of ownership of a given data centre;
-- Due to changes in the data centre rental market, current
market rentals have declined. In this regard the group are
monitoring closely its cost and looking at ways to improve the
operation and procurement process including working closely with
its suppliers to reduce the overall cost;
-- The Group has completed the restructuring with the freeholder
on the lease rental payments on CX1, with the revised lease rental
rates commencing on 1 January 2016 whereby the lease rental
payments shall be lower in the earlier years and progressively
increasing thereafter; and
-- The funding requirements of existing and proposed new ventures and/or projects.
Given prevailing market conditions, the Group is forecast to
continue to make operating losses and have operating cash outflows.
The Board is continuing to review the Group's business model with
the aim of establishing sustainable profitable trading.
(v) Going concern (Continued)
Notwithstanding the above and taking into consideration the
current financial position, future capital and lease commitments of
the Group, the directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future. Thus they continue to adopt the going
concern basis of accounting in preparing the consolidated financial
statements for the year ended 31 March 2018.
(vi) Critical accounting judgement and key sources of estimation uncertainty
In the application of the Group's accounting policies, which are
described in note 3, the directors are required to make judgements
(other than those involving estimations) that have a significant
impact on the amounts recognised and to make estimates and
assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
Critical judgements in applying the Group's accounting
policies
The directors have not made any critical judgements in the
process of applying the Group's accounting policies and that have
the most significant effect on the amounts recognised in financial
statements.
Key sources of estimation uncertainty
Provision for bad and doubtful debts
The provision for bad and doubtful debts includes the assessment
of amounts receivable on an individual and collective basis. For
individual provisions, events and circumstances such as breaching
credit terms, evidence of the debtor experiencing financial
difficulties, and potentially the probability of the debtor
entering bankruptcy or financial reorganisation are considered.
Based on these indicators a judgement is made whether a provision
is required. In respect of a collective assessment, the estimation
of the future settlement profile of trade receivables is
judgemental and includes consideration of past experience in
collecting payments, an increase in the number of delayed payments
past the credit period as well as observable changes in the
economic conditions that correlate with default on receivables.
The Group made an allowance for doubtful debts pertaining to
trade receivables aged six months and above.
Deferred tax asset recognition
The Group recognises deferred tax assets to the extent that it
is probable that taxable profits will be available to utilise the
asset. At each statement of financial position date, the Directors
review the forecast taxable profits of the Group to assess the
recoverability of the deferred tax asset. To the extent that it is
no longer probable that sufficient taxable profits will be
available for carry forward tax losses, the carrying amount of the
deferred tax asset is not recognised.
2. Revenue recognition and contract accounting
Revenue represents amounts receivable for work carried out in
the rental of data centre space (including reimbursement for
electricity consumed by customers), design and development of data
centre facilities, the maintenance of data centres and imputed
interest on loans to data centre developers.
Revenue from contract works is recognised in the Consolidated
Statement of Comprehensive Income based on the stage of completion
which is determined based on the contract costs incurred for work
performed to date in proportion to the estimated total contract
costs.
Revenue on design and development activity is recognised over
the period of the activity and in accordance with the underlying
contract. Revenue is measured by reference to the fair value of
consideration received or receivable from customers. Cost
overspends on design and development are recognised as they arise
and cost under-spends recognised when it is known with reasonable
certainty, the final position of the relevant contract. Where
design and development projects are in progress and where sales
invoiced exceed the cost of work completed, the excess is shown as
deferred income, within other financial assets. When it is probable
that total fit-out costs will exceed contract revenue, the expected
loss is recognised as an expense immediately.
Income from support and maintenance agreements and the rental of
data centre space is recognised on a straight line basis over the
period of the related activity. Data centre space is rented out
under operating leases.
3. REPORTING SEGMENTS
The Management regularly reviews segment information based on
the key products and services provided to its customers; rental of
data centre space, maintenance (including support of data centres),
the design and development of data centre facilities, and
consultancy services.
Year ended 31 March Data centre Design and development
2018 rental Maintenance of data centre facilities Consultancy Consolidated
RM'000 RM'000 RM'000 RM'000 RM'000
Revenue 17,593 5,217 569 522 23,901
Cost of sales (9,861) (2,515) (1,458) (420) (14,254)
------------ ------------ --------------------------- ------------ -------------
Gross profit/(loss) 7,732 2,702 (889) 102 9,647
Other operating income 265 - 9,205 - 9,470
Administrative cost (3,951) (93) 106 - (3,938)
Net allowance for doubtful
debts (1,025) (3,179) 32,707 - 28,503
Allowance for slow moving
inventories - (132) - - (132)
Allowance for diminution of
investment - (11) - - (11)
Bad debts written off - - (32,707) - (32,707)
Gain on disposal of property,
plant and equipment - 500 - - 500
Realised gain on disposal of
property, plant and equipment - 527 - - 527
Segment depreciation (13) (9) (42) - (64)
------------ ------------ --------------------------- ------------ -------------
Segment result 3,008 305 8,380 102 11,795
Corporate cost (14,603)
Finance income 1,450
Gain on disposal of other
investment 41
Net foreign exchange loss (608)
Finance costs (14)
-------------
Loss before tax (1,939)
Tax (907)
-------------
Loss from continuing operations (2,846)
Profit from discontinued
operations 115,813
Profit for the financial year 112,967
Other comprehensive income
Gain on foreign currency
translation 382
Total comprehensive income for
the financial year 113,349
=============
3. REPORTING SEGMENTS (Continued)
Year ended 31 March 2017 Data centre Design and development
rental Maintenance of data centre facilities Consolidated
RM'000 RM'000 RM'000 RM'000
Revenue 18,570 7,183 683 26,435
Cost of sales (10,514) (2,928) (301) (13,743)
------------ ------------ --------------------------- -------------
Gross profit 8,056 4,255 382 12,692
Other operating income 58 - 1,698 1,756
Administrative cost (2,784) (1,135) (657) (4,576)
Net allowance for doubtful debts (78) 55 - (23)
Allowance for slow moving inventories - - 101 101
Allowance for diminution of investment - - 2 2
Segment depreciation (15) (11) (49) (75)
------------ ------------ --------------------------- -------------
Segment result 5,237 3,163 1,477 9,877
Corporate cost (5,187)
Finance income 1,353
Loss on disposal of other investment (11)
Net foreign exchange gain 737
Finance costs (41)
-------------
Profit before tax 6,728
Tax (1,445)
-------------
Profit from continuing operations 5,283
Loss from discontinued operations (39,904)
Loss for the financial year (34,621)
Other comprehensive income
Loss on foreign currency translation (480)
Total comprehensive loss for
the financial year (35,101)
=============
4. GAIN ON DISPOSAL OF SUBSIDIARY
Discontinued operations
On 28 September 2017, the group entered into a Sale and Purchase
Agreement to dispose of its entire equity in CSF CX Sdn Bhd ("CSF
CX"), a wholly-owned subsidiary, for a cash consideration of
RM2.00. The disposal was completed on 1 November 2017, on which
date control of CSF CX passed to the acquirer.
The results of the discontinued operations, which have been
included in the consolidated statement of profit or loss and other
comprehensive income, were as follows:
Period ended Year ended
31 October 31 March
2017 2017
RM'000 RM'000
Revenue 31,967 55,985
Expenses (48,803) (95,889)
Loss before tax (16,836) (39,904)
Gain on disposal of discontinued operations 132,649 -
Net gain attributable to discontinued operations
(attributable to owners of the Company) 115,813 (39,904)
============= ===========
During the year, CSF CX used RM2.6 million, RM1.3 million and
RM0.4 million (2017: RM83.5 million, RM6.1 million and RM1.7
million) in operating activities, investing activities and
financing activities respectively.
A gain of RM132.6 million arose on the disposal of CSF CX, being
the difference between the proceeds of disposal and the carrying
amount of the subsidiary's net liabilities.
5. tax
Year ended Year ended
31 March 31 March
2018 2017
RM'000 RM'000
Tax on current financial year 525 1,796
Tax in respect of prior financial years 406 18
----------- -----------
Total current tax 931 1,814
Deferred tax liability (24) (137)
Deferred tax asset - (232)
----------- -----------
Total tax charge 907 1,445
=========== ===========
Malaysian corporation tax is calculated for the year ended 31
March 2018 at a rate of 24% (2017: 24%).
The tax charge for the financial year can be reconciled to the
loss in the Consolidated Statement of Comprehensive Income as
follows:-
Year ended Year ended
31 March 31 March
2018 2017
RM'000 RM'000
Profit before tax 130,711 6,728
Malaysian corporation tax rate 24% 24%
Tax at the Malaysian corporate tax rate 31,371 1,615
Tax effect of:
Expenses that are not deductible in determining
taxable profit (28,880) 228
Income that is not taxable in determining
taxable profit (460) (365)
Realisation of deferred tax not previously
recognised - 14
Deferred tax assets not recognised (1,535) 304
Over provision in prior year
406 18
* Current tax 5 (369)
* Deferred tax
----------- -----------
907 1,445
=========== ===========
6. earnings per share
The calculations for earnings per share, based on the weighted
average number of shares, are shown in the table below.
Year ended Year ended
31 March 31 March
2018 2017
Net profit from continuing operations (RM'000) 129,803 5,283
Net loss from discontinued operations (RM'000) (16,836) (39,904)
----------- -----------
Net profit/(loss) for the financial year
after taxation attributable to members
(RM'000) 112,967 (34,621)
=========== ===========
Weighted average number of ordinary shares
for basic earnings per share ('000) 160,029 160,029
=========== ===========
Weighted average number of ordinary shares
for diluted earnings per share ('000) 160,029 160,029
=========== ===========
The number of ordinary shares for diluted earnings per share is
the weighted average number of ordinary shares of CSF Group plc in
issue.
7. DIVID
The Board does not propose any payment of dividends in respect
of the current financial year.
8. CONTINGENCIES
The Group holds a number of guarantees with various banks in
respect of banking facilities as follows:
As at As at
31 March 31 March
2018 2017
RM'000 RM'000
Banking guarantees 905 22,298
==== =======
-ENDS-
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR GRGDRISDBGIR
(END) Dow Jones Newswires
July 27, 2018 03:54 ET (07:54 GMT)
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