CSF founder Adrian Yong steps down under a cloud
Aug 08, 2013
JUST two months after painting a rosy picture of the future of CSF Group Plc, founder Adrian Yong (pic) has surprisingly stepped down from his role as chief executive officer of the data centre company he spent over 12 years building.
The loss is mainly attributed to the company making a full allowance for doubtful debts in respect of the outstanding amounts owed by two of its customers. The total allowance for doubtful debts for the current year amounts to RM37.6 million as compared to RM4 million for 2012.
A less conservative management may have written off part of the debt but this way if any is paid then it is a bonus. "It also means that the loss can be blamed on the previous management," notes Andrew Hore, Editor of AIM Journal, a monthly magazine focusing on London's AlM Market.
At the same time, the company also shared the initial phase of a strategic review it commisioned which identified three key strategies to be implemented by management. Curiously one of them is the rather basic recommendation to strengthen sales and marketing.
It is not clear what role the poor results and strategic review played, if any, in Yong’s abrupt departure. But Hore, tells DNA that companies tend to use poor health in announcements when directors leave even though they may have been sacked.
"It is normally a way of being kind. Some people do have to resign because of bad health but I would not be surprised if it was not strictly true in the case of the CSF CEO. The business has been doing badly. The other investors quite obviously lost patience with him and even though I think he owned 27% of CSF there was enough pressure to get him off the board."
CSF had given a hint of what was to come when in a March 27 announcement, the company advised that RM33 million (US$10.2 million) of revenue related to two key tenants of its data centres in Cyberjaya, Selangor, will likely not be collected and thus have a material impact on its performance.
An example of this can be gleaned from its 2013 statement where it explains that a decrease in revenue from the design and development of data centre facilities was
Cartmell will be responsible for overseeing the appointment of a new CEO and executive management structure whilst ensuring the company’s commercial and strategic development remains unaffected.
Commenting on this, Hore says that the fact that Cartmell has taken over as chairman suggests that the nominated adviser/remaining institutional shareholders feel they need someone to make sure the problems are sorted out.
"Cartmell has gone into a number of quoted companies and taken over the reins when the previous boss has left or the investors want to ease them out," notes Hore who adds that Cartmell has to shoulder some responsibility too for what has happened since he was on the CSF board since around the time of its listing.
It is not clear if Yong’s departure will have any impact on any targets or plans set for the data centre and shared services and outsourcing sector under the Economic Transformation Plan. CSF is considered a key player in Malaysia’s push to be a data centre hub as it already owns 406,000 sq ft of gross lettable space in the country with a further 120,000 sq ft in Jakarta through a joint venture.
"It's a shame that he has left under a cloud, as he was one of the leaders in our data centre market," says an outsourcing player. Indeed his peers will be watching to see what Yong will do next. For that, he has plenty of time and space amidst the soaring peaks of the Himalayas to clear mind, body and soul before coming back to see how his reputation holds in light of his abrupt departure from the company he built over the past 12 years.