LONDON (Alliance News) - CSF Group PLC Friday said its pretax loss narrowed in the last financial year but warned it is "imperative" to reduce the lease rental rates of its data centres to make its rental division viable, and said it is "cautiously optimistic" that its financial results will improve in the current financial year.
The data facility and service provider, which operates in South East Asia, reported a GBP5.9 million pretax loss in the year ended March 31, significantly narrower than the GBP23.7 million loss made a year earlier despite revenue falling to GBP15.0 million from GBP18.9 million.
The loss narrowed mainly because a GBP11.4 million provision of onerous leases and a GBP2.4 million impairment made in the 2014 financial year were not repeated. Allowances for doubtful debt fell to GBP154,000 from GBP3.1 million and CSF also booked a GBP3.1 million gain on the disposal of its joint venture.
In Malysian Ringgit, which it reports in, the pretax loss was MYR32.0 million from MYR129.8 million and revenue was MYR81.8 million, down from MYR103.5 million.
The decrease in total revenue was mainly attributable to the decrease in revenue from the design and development business as most of the fit-out works relating to CX5 had been completed in the previous financial year, it said in a statement.
The CX5 is one of two data centres that the company is currently focused on. CSF is aiming to fill the available capacity at both the CX2 and CX5 data centres. However, the company warned that these data centres will still operate at a loss even at full capacity.
"Given the competitive pressure on data centre rental prices and the operational cost structure of the data centre rental business, the board recognises that even if the data centres attain full occupancy, the group's data centre rental division will operate at a loss based on the existing lease rental rates payable to the freeholder," said the company.
"Therefore, the proposal to reduce the lease rental rates is imperative for the viability of the group's data centre rental business," it added.
"In this regard, the board will support the management's efforts in securing the agreement of the freeholder to more favourable lease rental terms and targets to complete this exercise by the second quarter of the 2016 financial year," said CSF.
CSF is also keeping a tight reign on its cash and said it will work "tirelessly to reduce the burn rate" of its cash reserves. At the end of March, the company's cash balance stood at MYR29.2 million, or around GBP5.3 million, which is up from MYR19.8 million or GBP3.6 million at the end of the last financial year.
The cash balance improved after CSF received the repayment of MYR20 million, or GBP3.6 million of the cash advances by the developer of CX5 upon the completion of Block B of CX5, it said.
"The board will continue to support the efforts of the management in implementing its stated business strategies which it believes will place the group on a solid foundation from which it can return to profitability in the near term," said CSF.
"The priority for the board and management is to conserve the group's cash reserves, secure customers for the data centre rental business, and strive to improve operational efficiency in order to reduce costs," it added. "The board is cautiously optimistic that the group's financial results will improve in the current financial year.
CSF Group shares were up 2.9% to 1.80 pence per share on Friday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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