Centurion sinks into the red with S$3.8m net loss for H2 FY2020

CENTURION Corporation, with its purpose-built worker and student accommodation (PBWA and PBSA respectively) assets having been disrupted by the Covid-19 pandemic, expects to see a slow recovery in occupancy for most of its markets in the year ahead, it said in an earnings call on Friday.

David Phey, the group’s head of corporate communications, said: “As the Covid situation normalises and vaccine rollouts are achieved, this will improve… However, uncertainties remain in terms of the pace at which this recovery will happen, and possible economic spinoff results from the Covid impact. So we do anticipate some headwinds still."

The accommodation provider swung into the red for the second half of its fiscal year ended Dec 31, 2020, posting a net loss of S$3.8 million. This is a reversal from its S$81.9 million net profit in the year-ago period.

In H2 FY2020, Centurion  also reported revenue decline of 11 per cent year on year (y-o-y) to S$61.8 million. This was attributed to lower occupancy due to Covid-19 across nearly the group's entire portfolio, particularly in its student accommodation portfolio in Australia and the United Kingdom (UK), said the group in a bourse filing on Thursday.

The group's student accommodation assets in the UK experienced the largest impact from the pandemic for the half year, it added. Revenue in the country was affected by the early lease termination offered for the final semester of the UK academic year 19/20, resulting in even lower occupancy during the summer stays in Q3 FY2020.

In Melbourne, the group's dwell Village Melbourne City saw an occupancy rate of just 28 per cent in the second half of last year, a plunge from 88 per cent in the year-ago period.

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However, Centurion remains optimistic about its PBSA portfolio. Divestment of these assets is not on the cards at the moment, even if recovery in 2021 remains slow.

“Certainly not,” said group chief executive Kong Chee Min in response to a question about the divestment of its assets. “It is a very highly sought after asset class.”

He added: "If you look at the market, a lot of students still want to go on-campus (to) study, they have to live somewhere. This is only a temporary situation... I’m sure that the demand will come back and it will come back very strongly."

Centurion’s loss per share in H2 FY2020 stood at 0.46 Singapore cent, compared with earnings per share of 9.74 cents in the previous corresponding period.

Additionally, the board will not be recommending a dividend payment for the full year of 2020. In FY2019, Centurion paid out total dividend of two Singapore cents.

As at Dec 31, 2020, the group also recognised a net fair-valuation loss of S$27.6 million for H2 FY2020, compared with a net fair-valuation gain of S$66.3 million in H2 FY2019. "The fair-valuation loss was a reflection of the market conditions taking into account the Covid-19 pandemic," said Centurion.

Excluding adjustments made for fair-value losses on investment properties and assets held for sale, fair-value loss on rent guarantee, and others, the group's net profit from core business operations would otherwise have been S$20.3 million for the half-year period.

For the full year, the group's net profit slumped 83 per cent y-o-y to S$17.2 million, while revenue declined by a smaller margin of 4 per cent y-o-y to S$128.4 million.

The decrease in revenue was partially offset by revenue contribution of S$9.8 million from properties added to its portfolio in 2019, as well as management fee income from three factory-converted worker dormitories and revenue from the two quick-build dormitories that commenced operations in H2 FY2020.

Meanwhile, government support schemes and gains on the group's disposal of its Shanghai asset also boosted Centurion's increase in other income and gains from S$0.9 million in FY2019 to S$4.8 million in FY2020.

As at Dec 31, 2020, the group's net gearing ratio stood at 48 per cent, an improvement from 51 per cent in the year-ago period. It also recorded an increase in cash and cash equivalents of S$37.5 million in FY2020.

Separately, the group said in its Friday earnings call that it will halt its optical disc business by April.

“The manufacturing business due to Covid has also been badly affected, so we have decided to cease the operations… We will run only as and when there is demand, (and) will not actively pursue that business anymore,” said Mr Kong.

Shares of Centurion closed at S$0.34 on Friday, down S$0.01 or 2.86 per cent.