27th Dec 2013 08:58
LONDON (Alliance News) - Data Centre provider CSF Group PLC Friday said that it swung to a pretax loss in the first half of its financial year, as it lost two key tenants in its centres and booked writedowns for onerous leases and doubtful debts.
That prompted the company's auditors to warn about its future as a going concern, but the company said it disagreed with that prognosis.
The company, which provides data centre facilities and services in South East Asia and is the largest provider of data centre services in Malaysia, reported a pretax loss of RM88.7 million for the six months to end-September, from a profit of RM1.4 million a year earlier.
Its revenues declined to RM45.3 milllion, from RM63.9 million, as data centre revenue declined to RM30.5 million, from RM51.0 million. It also wrote off RM40.0 million for onerous leases, and RM31.0 million for doubtful debts on advances made to finance the fit-out of the data centre and operating expenditure of its joint-venture in Indonesia.
The company had previously warned that it was going to lose two key tenants at its centres.
"Whilst we concur that the basis of preparation remains appropriate, in our opinion the company has made inadequate disclosure of the material uncertainty in relation to going concern. This uncertainty arises from the risk of delay to forecast significant contractual receipts which the company is reliant upon in order to continue as a going concern," auditor Deloitte LLP said in its statement attached to the accounts.
"We disagree with the directors who do not deem the uncertainties described above to be material. In our opinion, the interim financial information requires disclosure of this matter as a material uncertainty relating to the ability of the company to continue as a going concern and to realise its assets and discharge its liabilities in the normal course of business," the auditor added.
CSF responded: "The company is expecting significant cash payments during 2014 linked to the development of CX5. These payments are legally binding subject to an independent inspection process, which in the case of Block B is already well progressed. We do not expect any significant delay in these payments but are confident that should a delay occur, any cash shortfall could be mitigated with sensible cash management."
In August, the company had highlighted a strategic review it was undertaking, looking at pricing, customer relationships, and its operations.
"The group has completed the initial phase of a strategic business review and continues to focus on two core business priorities, which are developing network connectivity in all CSF data centres to improve the fiber optic connectivity between the data centres and exploring opportunities for potential strategic partnership programmes with global service providers to deliver a total package to end users," it said in a statement.
CSF said it would make a RM3.7 million capital investment to connect its three data centre facilities in Cyberjaya, Malaysia, with fiber optics. It expects to complete the work in the first quarter of 2014.
CSF Group shares were down 29% at 5.60 pence early Friday.
By Steve McGrath; [email protected]; @stevemcgrath1
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