Earnings of Mainboard-listed dormitory operator Centurion Corporation slipped 10% to $9.1 million in 2Q2020 ended June 30, from the $10.2 million posted a year ago.

This comes on the back of a 5% dip in its revenue to $31.1 million in 2Q2020, mainly due to the impact of the early lease termination allowed at its student accommodation facilities in the UK from May 1 and the lower occupancy at its dwell Village Melbourne City (formerly known as RMIT Village) in Australia.

The group was also hit by $1.3 million in additional expenses incurred to manage the spread of Covid-19 infections at its five purpose-built workers’ accommodation (PBWA) facilities in Singapore. 

Still, a further decline was mitigated by revenue contributions from its newly-added PBWA assets – Westlite Junipar in Singapore which commenced operations in 3Q19 and dwell Archer House in the UK which took off in 4Q19.

Overall, Centurion’s earnings for 1H2020 was up 16% to $21.0 million, from $18.0 million in 1H2019.

On a fully diluted basis, this translates to earnings per share of 2.5 cents, up from 1H19’s 2.15 cents.

Revenue for the first half of the year was up 4% to $66.6 million due to the strong 13% year-on-year increase in income in 1Q2020 ended March, prior to the Covid-19 outbreak. The stronger performance comes from the income generated by the group’s new portfolio assets.

In this time, the dormitory operator posted higher distribution (20%) and administrative (18%) expenses, following the additional manpower cost and other costs incurred for the Covid-19 precautionary measures undertaken.

Still, the group notes that support schemes and government grants they received helped to offset the higher costs.

As at June 30, cash and cash equivalents stood at $63.8 million, up from the $50.3 million it was at in the corresponding year before.

No final dividend has been declared for 1H2020, compared to the 1.0 cents disbursed previously, as the group looks to conserve its cash resources.

“We seek our shareholders’ understanding in these challenging times, as we act prudently to manage cash flow in view of the near to medium-term uncertainties resulting from the COVID-19 pandemic,” said CEO Kong Chee Min.

Kong cautions that full impact of the Covid-19 health-turned-economic crisis remains to be seen, even as countries relax the measures placed to curb the spread of infections.

To mitigate the anticipated impact of the knock-on effects to the wider community, Centurion is “focused on strengthening our operating and management capabilities and efficiencies while taking steps to conserve cash,” he stresses.

Looking ahead, Kong believes the outlook for the group’s purpose-built student accommodation (PBSA) business remains resilient thanks to a pent-up demand which will drive a fast recovery once travel normalises and on-campus programmes take off.

As for its PBWA segment, the group has been working closely with employers and the government to manage the migrant worker residents through the quarantine and movement restrictions imposed on them.

So far, residents at three blocks at its Westlite dormitories are pending clearance from the Covid-19 infection. Of this, two blocks are dedicated to housing Covid-19 negative residents who are the most vulnerable to infection.

The group is looking to clear all these blocks by the end of the month.

“Despite the pandemic situation, we continue to work hard to pursue new opportunities for the Group,” says Kong. 

“In the long term, we remain confident in the fundamentals of our business and the resilience of our strategic asset classes”.

As at 9.12am, shares in Centurion were trading 0.5 cents higher, or 1.4% up, at 35.5 cents.