CSF : HALF-YEAR RESULTS For Six Months Ended 30 September 2015

Embargoed until 7am 15 November 2010

Embargoed until 7am 14 December 2015

CSF Group plc

("CSF" or "the Group")

HALF-YEAR RESULTS For the six months ended 30 September 2015

CSF Group plc (AIM: CSFG), a leading provider of data centre facilities and services in South East Asia and the largest provider of data centre services in Malaysia, today announces its unaudited half-year results for the six months ended 30 September 2015.

Financial highlights:

• Group revenue of RM34.1m (£5.1m*) (H1 2015: RM47.5m (£7.1m*)).

• Profit before tax of RM1.8m** (£0.3m*) compared to a loss before tax of RM6.4m (£1.0m*) for the corresponding period of the previous financial year.

  
  

• Earnings per share : 0.72 sen (0.11p*) per share (H1 2015: loss of 4.15 sen (loss 0.62p*) per share).

  
  

• Closing cash position as at 30 September 2015 higher at RM46.7m (£7.0m*) (31 March 2015: RM29.2m (£4.4m*)). The higher cash position was mainly due to cash receipts of advances and trade receivable from the CX5 project owner upon the completion of Block C of CX5 in June 2015, amounting to RM31.4 million (£4.7m*).

  
  

  Operational highlights:

  
  

• Completed the fit-out works for two new tenancy contracts at Block A and Block B of CX5 in time for the commencement of the tenancies in July 2015 and October 2015 respectively.

  
  

• Completed the negotiations with the freeholder of CX1, CX2 and CX5 data centres to restructure the lease rental payments in December 2015. The freeholder has agreed to revise the terms of the leases of CX1, CX2 and CX5 that includes rescheduled terms of payment that would improve the operating cash flow of the Group especially in the earlier years and a revision of the lease period to 9 years commencing 1 January 2016 with an option to extend for an additional 16 years.

  
  

• Enhancement of the terms of certain tenancy agreements in order to arrive at rental prices that are more commensurable to the level of data centre infrastructure and services provided to the tenants.

  
  

• Continuing to pursue the pipeline of potential customers.

  
  

  • The proforma balances in pounds Sterling are included solely for convenience. The proforma balances 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 2015 of RM6.6715 : £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.

    
    

    ** Includes a reversal and utilisation of provision of onerous leases of RM23.0m (£3.5m*) and reversal of impairment of tangible assets of RM13.1m (£2.0m*).

    
    

    For further information:

    
    

    CSF Group Phil Cartmell, Chairman	[phone]
    Allenby Capital Limited (Nominated Adviser & Broker) Nick Naylor / David Hart / Alex Brearley	[phone]

    
    

    
    

    CHAIRMAN'S STATEMENT

    
    

    Overview of the current financial period

    
    

    The Group continued to incur gross loss during the six months ended 30 September 2015 as both the CX2 and CX5 data centres have not yet attained the optimum level of occupancy. The recently completed fit out works for two new tenancy contracts only started to generate rental revenue in H1 2016 and H2 2016 respectively.

    
    

    The profit before tax for the financial period was RM1.8m (£0.3m*) compared to the loss before tax of the corresponding period of the previous financial year ("H1 2015") of RM6.4m (£1.0m*) mainly due to the inclusion of the following items in the results of H1 2016:

    
    

  • reversal and utilisation of provision of onerous lease of RM23.0m (£3.5m*); and

    
    

  • reversal of impairment of tangible assets of RM13.1m (£2.0m*).

As at 30 September 2015 the Group has cash and cash equivalents of RM46.7m (£7.0m*) (31 March 2015: RM29.2m (£4.4m*)). In addition, the Group has approximately RM36.9m (£5.5m*) (31 March 2015: RM68.4m (£10.3m*)) tied up as working capital for the development of CX5 which will be received progressively in line with the expiry of the warranty period of certain components of the fit-out works, which is expected to end in the first half of financial year ending 31 March 2018.

The Group has completed its negotiations with the freeholder of CX1, CX2 and CX5 data centres to restructure the lease rental payments in December 2015. The salient terms agreed by the freeholder are as follows:

1. Settlement of the outstanding lease rental payable accrued up to 31 December 2015 by way of monthly instalments over a period of ten (10) years commencing on 1 January 2016 ("Debt Settlement"). The monthly instalment payments, which shall include finance charges, shall be lower in the earlier years and progressively increasing thereafter;

   
   

2. Restructured schedule of lease rental payments commencing 1 January 2016 whereby the lease rental payments shall be lower in the earlier years and progressively increasing thereafter ("Restructured Lease Rental Payments"); and

   
   

3. The tenure of the leases for CX1, CX2 and CX5 shall be 9 years commencing 1 January 2016 with an option to extend by an additional 16 years subject to lease rental rates to be mutually agreed between the parties at the relevant time ("Revised Lease Period").

The above terms will be encapsulated in the following agreements to be executed in due course between the Group and the freeholder:

1. Debt Settlement Agreement pertaining to the Debt Settlement; and

   
   

2. Supplemental Lease Agreement pertaining to the Restructured Lease Rental Payments and the Revised Lease Period.

The completion of the restructuring of the lease rental payments will reduce the burden on operating cash flow whilst allowing the Group to focus on securing new tenancy contracts in order to further reduce the burn rate of its cash reserve.

Current trading and outlook

As highlighted in last year‟s results, which were announced in July 2015, the Group remains focused on filling the remaining capacity of its data centres. It has also undertaken a number of strategic initiatives to improve its financial performance.

Given the need to reduce the burn rate of our cash reserves, the Board will continue to ensure that there is no significant cash outlay other than sums required to cover the 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.

The Board believes that the key strategic initiatives that are being undertaken have positioned the business in the right direction and seen some positive development in the Group, the Board remains focused on these plans going forward.

The Board and management team continue to follow-up on the key strategies and pursue the pipeline of potential customers and business alliances. An update will be made to shareholders on this progress in due course.

Dividends

The Board does not propose any payment of dividends in respect of the six month period ended 30 September 2015 (H1 2015: Nil).

Phil Cartmell Chairman CSF Group plc

* The proforma balances in pounds Sterling are included solely for convenience. The proforma balances 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 2015 of RM6.6715 : £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.