26th Sep 2014 09:05
LONDON (Alliance News) - CSF Group PLC posted a widened pretax loss for the year to end-March, as tenancy contracts expiring or being suspended hit revenue in its data centre rental business.
The data centre company posted a pretax loss of MYR129.8 million, widened from MYR30.2 million a year before, as a decline in revenue to MYR103.5 million from MYR143.1 million was compounded by a MYR13.1 million impairment charge and a MYR62.5 million provision for onerous leases.
CSF said its immediate focus is filling the remaining capacity in its CX5 data centre, and addressing the non-renewal of certain tenancy contracts at its CX2 data centre. The company said that as a result of competitive pressure on data centre rental prices, reducing lease rental rates is critical to the medium- to long-term viability of its data centre rental business.
Even if its data centres attain full capacity, CSF explained, the data centre rental division will operate at a loss based on the subsisting lease rental rates payable to the lessor of its CX1, CX2 and CX5 data centres. It's lease rental commitments for CX5 are "substantial", CSF said, and as a result it needs to reduce the burn rate of its cash reserve.
In an effort to preserve cash, it has opted not to pay a dividend.
It is continuing to pursue its pipeline of design and fit-out customers to supplement the under performance of the data rental business. It is hoping to generate higher levels of recurring revenue, which will provide it with greater earnings visibility.
Shares in CSF are trading down 4.4% at 2.75 pence Friday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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