In a statement on Monday (18 May), the board of directors of Centurion Corporation Limited offered clarification to recent media reports, including an article in the Straits Times on 16 May titled ‘Why foot the bill for dorm operators that have profited for years?‘, citing the Group’s (Centurion Corp together with its subsidiaries) profit numbers in connection with discussions on the workers accommodation business in Singapore.
The media reports and commentary in question have mentioned that the Group reported net profits of S$73.1 million and S$103.8 million for the fourth quarter ended 31 December 2019 (Q4 2019) and full-year ended 31 December 2019 (FY 2019), respectively.
The Company clarified that the net profit figures referred to in the media reports include a one-time net fair valuation gains of S$66.3 million recorded during Q4 2019.
Fair valuation gains and losses are recorded during the fourth quarter of each year as the Company, based on its accounting policy, has its investment properties re-valued by independent valuers at year end.
As fair valuation gains or losses are non-cash items and do not reflect a company’s operating performance, the Group discloses Net Profits from Core Business Operations excluding such one-off accounting gains or losses, consistently in the Company’s results announcements annually as well as in the Company’s annual report.
Unlike what was stated in the media reports, excluding one-off items, Net Profit from the Group’s Core Business Operations attributable to equity holders was S$11.3 million in 4Q 2019 and S$38.2 million for FY 2019, respectively.
According to the Group, these numbers are more representative and were derived from its global portfolio, which includes the Purpose Built Workers Accommodation (PBWA) business in Singapore and Malaysia, as well as the Purpose Built Student Accommodation in Singapore, Australia, the UK, US, and South Korea.
The Group revealed that its PBWA business accounted for about 65 per cent of the Group’s revenue for FY 2019, of which the share of Singapore and Malaysia business accounted for approximately 88 per cent and 12 per cent, respectively, of the total revenue from the PBWA business.
The Group went on to explain that its PBWA business involves real estate development and investment which is capital intensive, and requires financing from banks and financial institutions.
It added that the total value of its PBWA assets, as at the end of FY 2019, was approximately S$873.8 milllion. The Returns on PBWA business from its assets deployed was 6.57 per cent in FY 2019.
The segment margins, as previously released in the form of presentation slides for FY2019 results, does not include the financing costs to fund the development of these PBWA properties and the depreciation costs for the use of these operational properties.
The Group assured that it adopts the fair valuation model to fair value its properties annually and accordingly these properties are not required to be depreciated under the accounting rules. This is said to be in line with most real estate companies in Singapore.
“Centurion is committed to providing sustainable, safe and high-quality accommodation properties as well as developing management platforms and expertise to deliver living environments that meet regulatory and ethical standards, and are conducive to the mental and physical wellness of its migrant workers and student residents,” the statement concluded.