Centurion Q4 net profit falls 61% on fair value loss

Manchester Student Village South in Manchester. Centurion's student accommodation assets in Britain and Australia were operating at close to full capacity for the academic year.
Manchester Student Village South in Manchester. Centurion's student accommodation assets in Britain and Australia were operating at close to full capacity for the academic year.PHOTO: CENTURION CORPORATION

But accommodation provider reports 46% net profit jump in its core business

A strong showing by Centurion Corporation's accommodation business was not enough to prevent a fall in fourth-quarter earnings.

A net fair valuation loss sent net profit in the three months to Dec 31 tumbling 61 per cent to $2.9 million.

But the company said net profit in its core business jumped 46 per cent to $13.4 million.

The group's investment properties, comprising worker and student accommodation assets, were valued by independent valuers as at the end of 2016. A net fair valuation loss of $3.1 million was recognised in the fourth quarter, reversing a net fair valuation gain of $3.6 million a year earlier.

Revenue for the quarter jumped 23 per cent to $34.8 million, as the contribution from the accommodation business grew by 26 per cent, or $7.1 million, in 2016.

  • AT A GLANCE

  • NET PROFIT: $2.9 million (-61%)

    REVENUE: $34.8 million (+23%)

    DIVIDEND: 1 cent per share (unchanged)

For the full year, net profit fell by 16 per cent to $28.7 million despite an increase in revenue of 15 per cent to $120.3 million. Earnings per share for the quarter stood at 0.4 cent, down from 0.99 cent a year earlier. Net asset value per share stood at 53.06 cents as at Dec 31, lower than the 53.49 cents at the end of 2015.

Centurion said most of its local accommodation properties were operating at close to full capacity so the group's outlook for this segment remains positive.

Recent policy changes to the Foreign Employee Dormitory Act (Feda) stipulating more stringent housing guidelines will place Centurion's Feda-licensed assets in a strong position to compete with alternatives such as factory-converted dormitories, said the group.

Centurion's overseas assets also pulled their weight in contributing to the group's increase in revenue.

Worker accommodation assets in Malaysia have seen higher occupancy rates, owing to the gradual relaxation of the hiring freeze of foreign workers in the manufacturing sector.

Student accommodation assets in Britain and Australia were also operating at close to full capacity for the 2016/2017 academic year.

Centurion added that it finalised plans to develop a new accommodation block in RMIT Village, Australia. When completed, it is expected to perform well and boost the group's earnings.

"We will remain on the lookout for asset enhancement and investment opportunities in our commitment to continue delivering value to all our stakeholders," said Centurion chief executive Kong Chee Min.

A final dividend of one cent a share was recommended, unchanged from a year ago.

Centurion's shares closed 1.5 cents lower at 40.5 cents yesterday.

A version of this article appeared in the print edition of The Straits Times on March 02, 2017, with the headline 'Centurion Q4 net profit falls 61% on fair value loss'. Print Edition | Subscribe