TIDMCSFG
RNS Number : 6126I
CSF Group PLC
27 November 2018
27 November 2018
CSF Group plc
("CSF" or "the Group")
HALF-YEAR RESULTS
For the six months ended 30 September 2018
CSF Group plc (AIM: CSFG), a provider of data centre facilities
and services in South East Asia, today announces its unaudited
half-year results for the six months ended 30 September 2018.
Financial highlights:
-- Group revenue of RM9.9m (GBP1.8m*) (H1 2018(#) : RM11.9m (GBP2.2m*)).
-- Gross profit margin of 34.8% (H1 2018(#) : gross profit margin of 45.1%).
-- Loss before tax of RM1.2m (GBP0.2m*) (H1 2018(#) : profit
before tax of RM2.0m (GBP0.4m*)).
-- Earnings per share: loss of 0.78 sen (0.15p*) per share (H1
2018(#) : earnings of 0.81 sen (0.15p*) per share).
-- Net cash generated from operating activities of RM3.0m
(GBP0.6m*) (H1 2018(#) : net cash generated from operating
activities of RM4.3m (GBP0.8m*)).
-- Closing unrestricted cash position as at 30 September 2018 of
RM52.6m (GBP9.7m*) (31 March 2018: RM49.2m (GBP9.1m*)).
-- Net assets as at 30 September 2018 of RM56.8m (GBP10.5m*) (31
March 2018: RM58.1m (GBP10.7m*)).
Operational highlights:
-- Continuing to seek potential customers for the capacity at
the Group's remaining data centres.
-- Exploring value-added services to increase the Group's revenue stream.
-- Continuing to seek to improve operational efficiency.
* The figures in pounds Sterling are included solely for
convenience. The figures in pounds Sterling are stated, as a matter
of arithmetical computation only, on the basis of all current and
prior year balances being translated from Malaysian Ringgits into
pounds Sterling at the rate prevailing on 30 September 2018 of
RM5.4070 : GBP1.00. This translation should not be construed as
meaning that the Malaysian Ringgit amounts actually represent, have
been, or could be converted into the stated number of pounds
Sterling.
# The 6-month financial period from 1 April 2017 to 30 September 2017.
For further information:
CSF Group plc
Phil Cartmell, Chairman +603 8311 9563
Allenby Capital Limited (Nominated Adviser
& Broker)
Nick Naylor / Alex Brearley +44 (0)20 3328 5656
CHAIRMAN'S STATEMENT
Overview of the six months ended 30 September 2018
The Group's monthly revenue is still insufficient to cover its
monthly operating overheads, and this has been exacerbated by
intense competition and pricing pressure experienced by the
maintenance and the design and development segments of the Group's
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 for growing the rental
revenue of the CX1 data centre, albeit limited by space and power
capacity, 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 Group incurred a loss for the financial period of RM1.3m
(GBP0.2m*) (H1 2018: profit of RM1.3m (GBP0.2m*)). The loss was
mainly attributable to a net provision of allowance for doubtful
debts of RM0.7m (GBP0.1m*) and the absence of dividend income of
RM0.7m (GBP0.1m*) received in June 2017, in conjunction with the
disposal of the Group's 20% equity interest in an associate in
Vietnam which was completed during the financial year ended 31
March 2017.
As at 30 September 2018, the Group had cash and cash equivalents
of RM52.6m (GBP9.7m*) (31 March 2018: RM49.2m (GBP9.1m*)). This
represents the cash that is available to the Group, and excludes
restricted cash items, such as fixed deposits pledged for banking
facilities and deposits held on behalf of the Company's Employee
Benefit Trust.
Current trading
As highlighted in the Group's results for the year ended 31
March 2018, which were announced in July 2018, the Group continues
to follow-up on a number of key strategic initiatives and is
pursuing a pipeline of potential customers and business alliances
and remains focused on these plans going forward.
The Board and management have also undertaken a number of
strategic initiatives to seek to improve the Group's cash reserves,
secure new customers, create additional revenue streams and strive
to improve operational efficiency.
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 is no significant cash outlay other
than the sums required to cover the committed lease rentals and
other necessary operating overheads, subject to any further capital
expenditure to replace ageing equipment or expenditure required to
generate new revenue streams.
Outlook
The Board and management team remain focused in implementing the
Group's key strategies, as outlined above, and on pursuing the
pipeline of potential customers and business alliances.
Dividends
The Board does not propose any payment of dividends in respect
of the six month period ended 30 September 2018.
Trading in the Company's shares on AIM
On 12 November 2018 the Company announced that, following its
extraordinary general meeting held on 24 September 2018 and the
resignation of Mr Phil Cartmell as the Company's Chairman and as a
director with effect from the close of business on 31 December
2018, its nominated adviser, Allenby Capital Limited ("Allenby
Capital"), gave the Company three months' notice of its
resignation, pursuant to the nominated adviser agreement between
the Company and Allenby Capital. As a consequence, Allenby Capital
will cease to act as the Company's nominated adviser at the close
of business on 31 December 2018. The Company also announced that it
had recently met with a number of potential replacement nominated
advisers, but was turned down by them for various reasons.
The board of CSF has been unable to make further progress on
this matter since 12 November 2018 and, as a consequence, it now
believes that it will not be possible for the Company to appoint a
replacement nominated adviser before 31 December 2018. If the
Company fails to appoint a replacement nominated adviser before the
close of business on 31 December 2018, the Company's shares will be
suspended from trading on AIM there afterwards. If, following such
suspension, the Company fails to appoint a replacement nominated
adviser within one month of the date that its shares are suspended
from trading on AIM, the admission of the Company's shares to
trading on AIM will be cancelled.
Phil Cartmell
Chairman
CSF Group plc
* The figures in pounds Sterling are included solely for
convenience. The figures in pounds Sterling are stated, as a matter
of arithmetical computation only, on the basis of all current and
prior year balances being translated from Malaysian Ringgits into
pounds Sterling at the rate prevailing on 30 September 2018 of
RM5.4070 : GBP1.00. This translation should not be construed as
meaning that the Malaysian Ringgit amounts actually represent, have
been, or could be converted into the stated number of pounds
Sterling.
CHIEF FINANCIAL OFFICER'S REVIEW
Introduction
The Group recorded a basic loss per share ("LPS") of 0.78 sen
(0.15p*) (H1 2018: earnings of 0.81 sen (0.15p*)).
Financial results
Proforma
6 months 6 months 6 months 6 months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
RM'000 RM'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
-------------- -------------- -------------- --------------
Group revenue from continuing
operations 9,878 11,858 1,827 2,193
-------------- -------------- -------------- --------------
Revenue from discontinued
operations - 27,684 - 5,120
-------------- -------------- -------------- --------------
Total Group revenue 9,878 39,542 1,827 7,313
-------------- -------------- -------------- --------------
Continuing Operations:
-------------- -------------- -------------- --------------
Gross profit 3,441 5,352 636 990
-------------- -------------- -------------- --------------
Other operating income 60 734 11 136
-------------- -------------- -------------- --------------
Administrative expenses (4,978) (4,878) (920) (902)
-------------- -------------- -------------- --------------
Net allowance for doubtful
debts (668) 257 (123) 48
-------------- -------------- -------------- --------------
Operating (loss) / profit
from continuing operations (2,145) 1,465 (396) 271
-------------- -------------- -------------- --------------
Net finance income 801 673 148 124
-------------- -------------- -------------- --------------
Foreign exchange gain /
(loss) 185 (126) 34 (23)
-------------- -------------- -------------- --------------
Profit before tax of continuing
operations (1,159) 2,012 (214) 372
-------------- -------------- -------------- --------------
Tax (97) (712) (18) (132)
-------------- -------------- -------------- --------------
(Loss) / Profit from continuing
operations (1,255) 1,300 (232) 240
-------------- -------------- -------------- --------------
Discontinued Operations: -
-------------- -------------- -------------- --------------
Gross loss - (9,664) - (1,787)
-------------- -------------- -------------- --------------
Other operating income - 36 - 7
-------------- -------------- -------------- --------------
Administrative expenses - (2,837) - (525)
-------------- -------------- -------------- --------------
Allowance for doubtful
debts - (546) - (101)
-------------- -------------- -------------- --------------
Provision for onerous leases - 3,140 - 581
-------------- -------------- -------------- --------------
Operating (loss) / profit
from discontinued operations - (9,871) - (1,826)
-------------- -------------- -------------- --------------
Net finance cost - (5,439) - (1,006)
-------------- -------------- -------------- --------------
Loss from discontinued
operations - (15,310) - (2,832)
-------------- -------------- -------------- --------------
Loss for the financial
period (1,255) (14,010) (232) (2,591)
-------------- -------------- -------------- --------------
Foreign currency translation (60) 102 (11) 19
-------------- -------------- -------------- --------------
Total comprehensive loss
for the period (1,315) (13,908) (243) (2,572)
-------------- -------------- -------------- --------------
Basic EPS for continuing
operations (0.78) 0.81 (0.15)p 0.15p
-------------- -------------- -------------- --------------
Basic LPS for discontinued
operations - (9.56) - (1.77)p
-------------- -------------- -------------- --------------
Basic LPS for the Group (0.78) (8.75) (0.15)p (1.62)p
-------------- -------------- -------------- --------------
Revenue
Proforma
6 months 6 months 6 months 6 months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
RM'000 RM'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
-------------- -------------- -------------- --------------
Data centre rental
income
* Continuing operations 5,907 6,063 1,093 1,121
- 27,684 - 5,120
* Discontinued operations
-------------- -------------- -------------- --------------
Total data centre
rental income 5,907 33,747 1,093 6,241
-------------- -------------- -------------- --------------
Maintenance income 1,294 2,989 239 553
-------------- -------------- -------------- --------------
Sub-total 7,201 36,736 1,332 6,794
-------------- -------------- -------------- --------------
Design and fit-out
of data centre facilities 2,602 2,531 481 468
-------------- -------------- -------------- --------------
Consultancy 75 275 14 51
-------------- -------------- -------------- --------------
Total Group revenue 9,878 39,542 1,827 7,313
-------------- -------------- -------------- --------------
Data centre rental revenue (from continuing operations)
decreased by 2.6% from RM6.1m (GBP1.1m*) in H1 2018 to RM5.9m
(GBP1.1m*) in the six months under review, mainly due to the
reduction of the rental rate on the renewal of a tenancy contract
with effect from 1 July 2018.
The decrease in maintenance revenue by RM1.7m (GBP0.3m*) was
mainly attributable to the non-renewal of maintenance contracts by
certain customers.
Gross profit / (loss) margin
In respect of continuing operations, the Group recorded a lower
gross profit margin of 34.8% as compared to 45.1% in H1 2017,
mainly due to lower data centre rental income from the CX1 data
centre, and lower maintenance revenue as explained in "Revenue"
above.
(Loss) / Profit from operations
The Group incurred an operating loss of RM2.1m (GBP0.4m*)
compared to an operating profit of RM1.5m (GBP0.3m*) in the
corresponding period, mainly due to the following factors:
(i) decrease in maintenance income by RM1.7m (GBP0.3m*);
(ii) net increase in allowance for doubtful debts of RM0.67m
(GBP0.12m*) as compared to a net decrease in allowance for doubtful
debts of RM0.26m (GBP0.05m*), representing an adverse variance of
RM0.93m (GBP0.17m*); and
(iii) dividend income of RM0.7m (GBP0.1m*) recorded in H1 2018,
in conjunction with the disposal of the Group's 20% equity interest
in an associate in Vietnam which was completed during the financial
year ended 31 March 2017, which did not recur in the current
period;
Cash and working capital
As at 30 September 2018 the Group had cash and cash equivalents
(excluding fixed deposits pledged for banking facilities and
deposits held on behalf of the Employee Benefit Trust) of RM52.6m
(GBP9.7m*). The Group recorded net cash generated from operating
activities of RM3.0m (GBP0.6m*) (H1 2018: RM4.2m (GBP0.8m*)),
mainly due to the return of rental deposits in connection with the
CX2 and CX5 data centres, amounting to RM9.07 (GBP1.7m*) million in
May 2018, which was partly offset by the making of bonus payments
to certain of the Company's executive directors, management and
employees amounting to RM5.4 (GBP1.0m*) million in June 2018 (as
announced on 24 July 2018).
Critical accounting judgment and key sources of estimation
uncertainty
The areas of critical accounting judgment and key sources of
estimation uncertainty as disclosed on pages 47 to 48 of the
Group's Annual Report for the year ended 31 March 2018 remain valid
for the six months ended 30 September 2018.
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.
Lee King Loon
Chief Financial Officer
CSF Group plc
* The figures in pounds Sterling are included solely for
convenience. The figures in pounds Sterling are stated, as a matter
of arithmetical computation only, on the basis of all current and
prior year balances being translated from Malaysian Ringgits into
pounds Sterling at the rate prevailing on 30 September 2018 of
RM5.4070 : GBP1.00. This translation should not be construed as
meaning that the Malaysian Ringgit amounts actually represent, have
been, or could be converted into the stated number of pounds
Sterling.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
For the 6 months ended 30 September 2018
Proforma Proforma
6 months 6 months 6 months 6 months
to 30 September to 30 September to 30 September to 30 September
2018 2017 2018 2017
Note RM'000 RM'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
Continuing operations:
Revenue 9,878 11,858 1,827 2,193
Cost of sales (6,437) (6,506) (1,191) (1,203)
Gross profit 3,441 5,352 636 990
Other operating income 60 734 11 136
Administrative expenses (4,978) (4,878) (921) (902)
Net allowance for doubtful
debts (668) 257 (123) 48
Total operating expenses (5,646) (4,621) (1,044) (855)
Operating (loss) / profit (2,145) 1,465 (397) 271
Finance income 806 680 149 126
Finance costs (5) (7) (1) (1)
Foreign exchange gain
/ (loss) 185 (126) 34 (23)
(Loss) / Profit before
tax (1,159) 2,012 (214) 372
Tax (97) (712) (18) (132)
(Loss) / Profit from
continuing operations (1,255) 1,300 (232) 240
Loss from discontinued
operations 6 - (15,310) - (2,832)
Loss for the financial
period (1,255) (14,010) (232) (2,591)
Other comprehensive income
/ (loss)
Foreign currency translation (60) 102 (11) 19
Total comprehensive loss
for the period (1,315) (13,908) (243) (2,572)
Earnings per share for
continuing operations
* Basic (sen) 7 (0.78) 0.81 (0.15)p 0.15p
* Diluted (sen) 7 (0.78) 0.81 (0.15)p 0.15p
Loss per share for discontinued
operations
* Basic (sen) 7 - (9.56) - (1.77)p
* Diluted (sen) 7 - (9.56) - (1.77)p
----------------- -----------------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2018
Note Proforma Proforma
As at As at As at As at
30 September 31 March 30 September 31 March
2018 2018 2018 2018
RM'000 RM'000 GBP'000 GBP'000
(unaudited) (audited) (unaudited) (unaudited)
Non-current assets
Property, plant and equipment 4,440 3,991 821 738
Other investments 9 9 2 2
Trade and other receivables 40 40 7 7
Deferred tax asset 161 161 30 30
4,649 4,201 860 777
Current assets
Inventories 199 277 37 51
Trade and other receivables 7,041 17,698 1,302 3,273
Current tax assets 1,787 1,341 330 248
Restricted cash 2,130 2,130 394 394
Cash and cash equivalents 9 52,595 49,184 9,727 9,096
63,752 70,630 11,791 13,063
Total assets 68,401 74,831 12,650 13,840
Current liabilities
Trade and other payables 8,719 14,403 1,612 2,664
Bank borrowings 723 339 133 63
9,442 14,742 1,745 2,726
Non-current liabilities
Trade and other payables 2,153 1,968 398 364
Onerous lease provision 5 - - - -
2,153 1,968 398 364
-------------- ----------- -------------- ------------
Total liabilities 11,595 16,710 2,145 3,090
============== =========== ============== ============
Net assets 56,806 58,121 10,507 10,749
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Cont'd)
As at 30 September 2018
Note Proforma Proforma
As at As at As at As at
30 September 31 March 30 September 31 March
2018 2018 2018 2018
RM'000 RM'000 GBP'000 GBP'000
(unaudited) (audited) (unaudited) (unaudited)
Equity
Share capital 78,936 78,936 14,599 14,599
Share premium 104,499 104,499 19,327 19,327
Shares held under Employee
Benefit Trust (2,300) (2,300) (425) (425)
Other reserve (72,219) (66,153) (13,357) (12,235)
Translation reserve (924) (864) (171) (160)
Accumulated loss (51,186) (55,997) (9,466) (10,356)
Total equity 56,806 58,121 10,507 10,749
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the 6 months ended 30 September 2018
6 months Proforma Proforma
ended 6 months 6 months ended
6 months ended 30 September ended 30 September
30 September 2017 30 September 2017
2018 RM'000 2018 GBP'000
RM'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited)
Net cash generated from
operating activities (Note
9) 3,026 4,298 560 795
Investing activities
Interest received 806 838 149 155
Capital expenditure (806) (2,541) (149) (470)
Net cash used in investing
activities - (1,703) - (315)
Financing activities
Borrowing from revolving
line of credit 385 60 71 11
Repayment of obligations
under finance leases - (25) - (5)
Decrease / (increase) in
restricted cash - 1,098 - 203
Repayment of borrowings - (334) - (62)
Net cash generated from
financing activities 385 799 71 148
Net increase / (decrease)
in cash and cash equivalents 3,411 3,394 631 628
Cash and cash equivalents
classified under assets
held for sale (Note 8) - (554) - (102)
Cash and cash equivalents
at beginning of financial
period (Note 10) 49,157 57,998 9,091 10,726
Cash and cash equivalents
at end of financial period
(Note 10) 52,568 60,838 9,722 11,252
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 6 months ended 30 September 2018
Shares held under Employee Benefit Trust Accumulated loss Translation
Share capital Share premium RM'000 Other reserve RM'000 reserve Total
RM'000 RM'000 (unaudited) RM'000 (unaudited) RM'000 RM'000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
At 1 April 2017 78,936 104,499 (2,300) (66,153) (168,964) (1,246) (55,228)
Loss for the
period - - - - (14,010) 102 (13,908)
At 30 September
2017 78,936 104,499 (2,300) (66,153) (182,974) (1,144) (69,136)
At 1 April 2018 78,936 104,499 (2,300) (66,153) (55,997) (864) 58,121
Realisation of other reserve
arising from the disposal
of a subsidiary - - - (6,066) 6,066 - -
Loss for the period - - - - (1,255) (60) (1,315)
At 30 September 2018 78,936 104,499 (2,300) (72,219) (51,186) (924) 56,806
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 6 months ended 30 September 2018
Shares held under Employee Benefit Trust Translation
Share capital Share premium GBP'000 Other reserve Accumulated loss reserve Total
GBP'000 GBP'000 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Proforma
At 1 April 2017 14,599 19,327 (425) (12,235) (31,249) (230) (10,214)
Loss for the
period - - - - (2,591) 19 (2,572)
At 30 September
2017 14,599 19,327 (425) (12,235) (33,840) (212) (12,786)
At 1 April 2018 14,599 19,327 (425) (12,235) (10,356) (160) 10,749
Realisation of
other reserve
arising from the
disposal of a
subsidiary - - - (1,122) 1,122 - -
Loss for the
period - - - - (232) (11) (243)
At 30 September
2018 14,599 19,327 (425) (13,357) (9,466) (171) 10,507
Notes 1 to 12 form an integral part of the condensed
consolidated interim financial results.
1. General information
This announcement of condensed consolidated interim financial
results was approved for issue by the Board of Directors on 27
November 2018 and is unaudited.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards (IFRSs), this announcement does not itself contain
sufficient information to comply with IFRSs. In July 2018, the
Group published full financial statements for the year ended 31
March 2018 that comply with IFRSs, which were delivered to the
Jersey Registrar of Companies in August 2018.
(i) Basis of preparation
The annual financial statements of the Group are prepared in
accordance with IFRSs as adopted by the European Union. The
condensed consolidated interim financial results have been prepared
in accordance with the accounting policies the Group intends to use
in preparing its next annual financial statements. The condensed
consolidated interim financial results should be read in
conjunction with the annual financial statements for the year ended
31 March 2018, which have been prepared in accordance with IFRSs as
adopted by the European Union.
(ii) Sterling figures
The figures in pounds Sterling are included solely for
convenience. The figures in pounds Sterling are stated, as a matter
of arithmetical computation only, on the basis of all current and
prior year balances being translated from Malaysian Ringgits into
pounds Sterling at the rate prevailing on 30 September 2018 of
RM5.4070 : GBP1.00 This translation should not be construed as
meaning that the Malaysian Ringgit amounts actually represent, 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.
Taxes on income in interim periods are accrued using the tax
rate that would be applicable to expected total annual
earnings.
1. General information (Cont'd)
(iv) Forward-looking statements
Certain statements in these condensed consolidated interim
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 the 2018 Annual Report. In
addition, the notes to the annual financial statements for the year
ended 31 March 2018 include statements regarding foreign currency
risk management, interest rate risk management, credit risk
management and liquidity risk management.
As at 30 September 2018, the Group's cash and cash equivalents
excluding deposits held on behalf of the Employee Benefit Trust
stand at RM52.6 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 Bridge Data Centres Malaysia Sdn Bhd
(formerly known as CSF CX Sdn Bhd) ("BDCM") has improved the
Group's financial position due to the elimination of the net
liabilities of BDCM and the elimination of the Group's obligations
on the lease payable in respect of the CX2 and CX5 data
centres;
-- 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;
(v) Going concern (Cont'd)
-- Due to changes in the data centre rental market, current
market rentals have declined. In this regard the Group are
monitoring closely its costs and examining ways to improve the
Group's operations and its procurement process, including working
closely with its suppliers to reduce its overall costs;
-- The Group has completed the restructuring with the freeholder
on the lease rental payments on CX1, with revised lease rental
rates having commenced on 1 January 2016, whereby the lease rental
payments shall be lower in the earlier years and progressively
increasing thereafter; and
-- The capital expenditure requirements to replace ageing
equipment and/or for generating new revenue streams.
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.
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 period ended 30 September 2018.
2. Basis of consolidation
The condensed consolidated financial statements incorporate the
financial statements of the Company and entities controlled by the
Company (its subsidiaries) made up to 30 September 2018. Control is
achieved where the Company has the power to govern the financial
and operating policies of an investee entity so as to obtain
benefits from its activities.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated statement of comprehensive
income from the effective date of acquisition or up to the
effective date of disposal, as appropriate. Where necessary,
adjustments are made to the financial statements of subsidiaries to
bring the accounting policies used into line with those used by the
Group. All intra-group transactions, balances, income and expenses
are eliminated on consolidation.
Any contingent consideration to be transferred by the group is
recognised at fair value at the acquisition date. Subsequent
changes in fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with
IAS 39 either in profit or loss or as a change to other
comprehensive income. Contingent consideration that is classified
as equity is not re-measured, and its subsequent settlement is
accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of
the consideration transferred and the fair value on non-controlling
interest over the net identifiable assets acquired and liabilities
assumed.
3. 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.
4. Segment reporting
The Group's 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.
6 months ended Data centre Design and development of
30 September rental data centres Consultancy Consolidated
2018 RM'000 Maintenance RM'000 RM'000 RM'000 RM'000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Revenue 5,907 1,294 2,602 75 9,878
Cost of Sales (5,214) (702) (7) (514) (6,437)
Gross profit / (loss) 693 592 2,595 (439) 3,441
Other operating income 30 30 - - 60
Provision for onerous - - - - -
leases
Administrative cost (1,827) (266) (170) (53) (2,316)
Allowance for doubtful
debts (611) - (57) - (668)
Write back of doubtful - - - -
debts -
Staff costs (837) (175) (77) (12) (1,101)
Segment depreciation - (26) - - (26)
Segment result (3,245) (436) (303) (65) (609)
Corporate costs (1,536)
Gain on foreign exchange 185
Finance income 806
Finance cost (5)
Loss before
tax (1,159)
Tax (97)
Loss for the financial
period (1,255)
Other comprehensive loss
Loss on foreign currency
translation (60)
-------------
Total comprehensive loss
for the financial period (1,315)
=============
4. Segment reporting (Cont'd)
Design and
Data centre development of
6 months ended rental Maintenance data centres Consultancy Consolidated
30 September 2017 RM'000 RM'000 RM'000 RM'000 RM'000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Revenue 8,390 2,989 204 275 11,858
Cost of Sales (4,612) (1,239) (63) (592) (6,506)
Gross profit / (loss) 3,778 1,750 141 (317) 5,352
Other operating income 10 - 724 - 734
Administrative cost (1,145) (4) 5 - (1,144)
Allowance for doubtful debts 7 - - 7
Write back of doubtful debts - - 250 - 250
Staff costs (915) (235) (103) - (1,253)
Segment depreciation (7) (5) (21) - (33)
Segment result 1,728 1,506 996 (317) 3,913
Corporate costs (2,448)
Gain on foreign exchange (126)
Finance income 680
Finance cost (7)
____________
Profit before tax 2,012
(712)
Tax
____________
Profit from continuing operations 1,300
Loss from discontinued operations (15,310)
-------------
Loss for the financial period (14,010)
Other comprehensive income
Gain on foreign currency
translation 102
-------------
Total comprehensive loss for the
financial period (13,908)
=============
5. Onerous lease provision
As at As at
30 September 31 March
2018 2018
Movement in provision for onerous leases RM'000 RM'000
(unaudited) (audited)
At start of financial period / year - 73,300
-------------- ---------
Additional provision - 5,590
Utilisation of provision - (8,730)
-------------- ---------
Net (utilisation) / additional provision - 3,140
Unwinding of discount - 4,220
Disposal of subsidiary - (74,380)
At end of financial period / year - -
The Group's business model is to lease data centres and commit
to lease rentals and certain other costs of ownership. As such, the
Group needs to achieve a certain level of rental income from
tenants over the life of the data centre lease such that revenue
received will exceed costs.
The onerous leases provision solely related to Bridge Data
Centres Malaysia Sdn Bhd (formerly known as CSF CX Sdn Bhd)
("BDCM"), and was subsequently derecognised as a result of the
disposal of BDCM.
6. Discontinued operations
6 months 6 months
ended 30 ended 30
September September
2018 2017
RM'000 RM'000
Note (unaudited) (unaudited)
Revenue - 27,684
Cost of sales - (37,348)
Gross loss - (9,664)
Other operating income - 36
------------ ------------
Administrative expenses - (2,837)
Net allowance for doubtful
debts - (546)
Provision for onerous leases 5 - 3,140
------------ ------------
Total operating expenses - (243)
Operating loss - (9,871)
Finance income - 158
------------ ------------
Interest payable on bank
loans, overdraft and finance
leases - (1,377)
Unwinding of discounts
on provisions - (4,220)
------------ ------------
Finance cost - (5,597)
Loss for the period from
discontinued operations - (15,310)
Net cash used in operating activities - (6,333)
Net cash used in investing activities - (717)
Net cash generated from financing
activities - 725
Decrease in cash and cash equivalents - (6,325)
The results of the discontinued operations are in respect of
Bridge Data Centres Malaysia Sdn Bhd (formerly known as CSF CX Sdn
Bhd) ("BDCM"), which was previously a wholly-owned subsidiary of
the Group. The Group completed the transfer of board and management
control of BDCM during financial year ended 31 March 2018.
7. Loss per share
The calculation for loss per share, based on the weighted
average number of shares, is shown in the table below:
6 months 6 months
ended ended
30 September 30 September
2018 2017
(unaudited) (unaudited)
Net (loss) / profit from continuing
operations (RM'000) (1,255) 1,300
Net loss from discontinued operations
(RM'000) - (15,310)
Net loss for the financial period
after taxation attributable to members
(RM'000) (1,255) (14,010)
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.
8. Assets and liabilities classified as held for sale
As at 30 As at
September 30 September
2018 2017
RM'000 RM'000
(unaudited) (unaudited)
Assets classified as held for sale
Property, plant and equipment - 24,502
Trade and other receivables - 30,423
Restricted cash - 9,178
Cash and cash equivalents - 554
-------------- ---------------
Total assets of subsidiary held for
sale - 64,657
============== ===============
Liabilities directly associated with
assets classified as held for sale
Trade and other payables - 112,794
Provision for onerous leases - 74,380
-------------- ---------------
Total liabilities of subsidiary held
for sale - 187,174
============== ===============
The assets and liabilities classified as held for sale as at 30
September 2017 were in respect of Bridge Data Centres Malaysia Sdn
Bhd (formerly known as CSF CX Sdn Bhd) ("BDCM"), which was
previously a wholly-owned subsidiary of the Group. The Group has
completed the disposal of BDCM pursuant to the Share Purchase
Agreement (the "Share SPA") entered into between CSF International
Limited ("CSFI"), a wholly-owned subsidiary of CSF Group Plc and
BDC AssetCo Pte Ltd ("BAC", or the "Purchaser"), an investee
company of Bain Capital Partners Asia Fund III and Bridge Data
Centres (International) Pte Ltd, on 28 September 2017.
9. Note to the Cash Flow Statement
6 months 6 months
ended 30 ended 30
September September
2018 2017
RM'000 RM'000
(unaudited) (unaudited)
Loss for the financial period (1,255) (14,010)
Adjustments for:
Allowance for doubtful debts 668 539
Allowance for doubtful debts written back - (250)
Depreciation of property, plant and equipment 385 2,737
Foreign currency translation (60) 102
Interest expense 5 5,604
Interest income (806) (838)
Gain on disposal of property, plant and (31) -
equipment
Provision for onerous leases - (3,140)
Tax 97 712
Operating cash outflow before movements
in working capital (995) (8,544)
Decrease / (Increase) in inventories 78 (52)
Decrease in receivables 9,990 3,500
(Decrease) / Increase in payables (5,499) 10,260
Cash generated from operations 3,574 5,164
Interest paid (5) (111)
Income taxes paid (543) (755)
Net cash generated from operating activities 3,026 4,298
10. Cash and cash equivalents
As at As at
31 March 31 March
2018 2017
RM'000 RM'000
(unaudited) (audited)
Cash and cash equivalents- statement of
financial position 49,184 60,313
Deposit held on behalf of employee benefit
trust (27) (2,315)
__________ __________
Cash and cash equivalents at beginning
of the financial period - cash flow 49,157 57,998
As at As at
30 September 30 September
2018 2017
RM'000 RM'000
(unaudited) (unaudited)
Cash and cash equivalents- statement of
financial position 52,595 62,997
Deposit held on behalf of employee benefit
trust (27) (2,159)
__________ _________
Cash and cash equivalents at the end of
the financial period - cash flow 52,568 60,838
11. Dividend
The Board does not propose any payment of dividends in respect
of the six month period to 30 September 2018 (H1 2018: Nil).
12. Contingencies
The Group holds a number of guarantees with various banks in
respect of banking facilities as follows:
As at As at
30 September 31 March
2018 2018
RM'000 RM'000
(unaudited) (audited)
Banking guarantees 2,000 2,000
-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
IR UBOKRWUAAURA
(END) Dow Jones Newswires
November 27, 2018 04:58 ET (09:58 GMT)
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