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CSF Group PLC - HALF-YEAR RESULTS

Tue, 27th Nov 2018 09:58

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 (£1.8m*) (H1 2018: RM11.9m (£2.2m*)).

 

?       Gross profit margin of 34.8% (H1 2018: gross profit margin of 45.1%).

 

?       Loss before tax of RM1.2m (£0.2m*) (H1 2018: profit before tax of RM2.0m (£0.4m*)).

 

?       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 (£0.6m*) (H1 2018: net cash generated from operating activities of RM4.3m (£0.8m*)). 

 

?       Closing unrestricted cash position as at 30 September 2018 of RM52.6m (£9.7m*) (31 March 2018: RM49.2m (£9.1m*)).

 

?       Net assets as at 30 September 2018 of RM56.8m (£10.5m*) (31 March 2018: RM58.1m (£10.7m*)).

 

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 : £1.00. 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 (£0.2m*) (H1 2018: profit of RM1.3m (£0.2m*)). The loss was mainly attributable to a net provision of allowance for doubtful debts of RM0.7m (£0.1m*) and the absence of dividend income of RM0.7m (£0.1m*) 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 (£9.7m*) (31 March 2018: RM49.2m (£9.1m*)). 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 : £1.00. 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 ended

30 September 2018

RM'000

(unaudited)

6 months ended

 30 September 2017

RM'000

(unaudited)

6 months ended

30 September 2018

£'000

(unaudited)

6 months ended

 30 September 2017

£'000

(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 ended

 30 September 2018

RM'000

(unaudited)

6 months ended

 30 September 2017

RM'000

(unaudited)

6 months ended

 30 September 2018

£'000

(unaudited)

6 months ended

 30 September 2017

£'000

(unaudited)

Data centre rental income

- Continuing operations

- Discontinued operations

 

 5,907

-

 

 6,063

27,684

 

 1,093

-

 

 1,121

5,120

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 (£1.1m*) in H1 2018 to RM5.9m (£1.1m*) 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 (£0.3m*) 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 (£0.4m*) compared to an operating profit of RM1.5m (£0.3m*) in the corresponding period, mainly due to the following factors:

 

(i)      decrease in maintenance income by RM1.7m (£0.3m*);

 

(ii)     net increase in allowance for doubtful debts of RM0.67m (£0.12m*) as compared to a net decrease in allowance for doubtful debts of RM0.26m (£0.05m*), representing an adverse variance of RM0.93m (£0.17m*); and

 

 

 

(iii)       dividend income of RM0.7m (£0.1m*) 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 (£9.7m*). The Group recorded net cash generated from operating activities of RM3.0m (£0.6m*) (H1 2018: RM4.2m (£0.8m*)), mainly due to the return of rental deposits in connection with the CX2 and CX5 data centres, amounting to RM9.07 (£1.7m*) 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 (£1.0m*) 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 : £1.00. 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

 

Note

6 months to 30 September

2018 RM'000

6 months to 30 September 2017

RM'000

Proforma

6 months to 30 September

2018

£'000

Proforma

6 months to 30 September

2017

£'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

As at

30 September

2018

RM'000

 

As at 31 March 2018

RM'000

Proforma

As at

30 September

2018

£'000

Proforma

As at

31 March

2018

£'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

As at

30 September

2018

RM'000

 

As at 31 March 2018

RM'000

Proforma

As at

30 September

2018

£'000

Proforma

As at

31 March

2018

£'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 ended 30 September

 2018

RM'000

 

6 months ended 30 September 2017

RM'000

Proforma

6 months ended 30 September 2018

£'000

Proforma

6 months ended 30 September 2017

£'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

 

 

 

 

 

 

 

 

Share capital

RM'000

(unaudited)

Share  premium

RM'000

(unaudited)

 

 

 

Shares held under Employee Benefit Trust

RM'000

(unaudited)

Other reserve

RM'000

(unaudited)

 

 

 

 

 

Accumulated loss

RM'000

(unaudited)

 Translation

reserve

RM'000

(unaudited)

        Total

     RM'000

   (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

 

 

 

 

 

 

 

 

 

Share capital

£'000

(unaudited)

Share  premium

£'000

(unaudited)

 

Shares held under Employee Benefit Trust

£'000

(unaudited)

Other reserve

£'000

(unaudited)

 Accumulated loss

£'000

(unaudited)

 Translation

reserve

£'000

(unaudited)

 

 

 

       Total

       £'000

(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 : £1.00  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         

30 September 2018

Data centre

 rental

RM'000

Maintenance RM'000

Design and development of data centres   

RM'000

Consultancy   

RM'000

Consolidated

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)

 

 

6 months ended         

30 September 2017

Data centre

 rental

RM'000

Maintenance RM'000

Design and development of data centres   

RM'000

Consultancy   

RM'000

Consolidated

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

 

Tax

 

 

 

 

2,012

 

(712)

 

 

 

 

     

____________

 

 

 

 

 

 

Profit from continuing operations

Loss from discontinued operations

 

 

 

 

  

1,300

 

(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

 

 

 

Movement in provision for onerous leases

As at 30 September

2018

RM'000

As at 31 March

2018

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 ended 30 September 2018

RM'000

6 months ended 30 September 2017

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 ended

 30 September 2018

6 months ended

 30 September 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 September 2018

 

 As at 30 September 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 ended 30 September 2018

RM'000

6 months ended 30 September 2017

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 equipment

(31)

-

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

31 March 2018

As at

31 March 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 2018

30 September

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 30 September

2018

RM'000

As at 31 March 2018

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
Date   Source Headline
4th Feb 20197:00 amRNSAIM - Cancellation - CSF Group plc
1st Feb 20195:45 pmRNSFTSE Russell - CSF Group
28th Jan 20195:00 pmRNSCSF Group PLC - Notice of AGM and Posting of Documents
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